Lizza v. Deutsche Bank National Trust Co.
714 F. App'x 620
| 9th Cir. | 2017Background
- Lizza, Dean, and Mauch (the Lizza Plaintiffs) sued Deutsche Bank National Trust Company alleging wrongful foreclosure, UDAP, intentional interference with prospective economic advantage (IIPEA), and related theories after foreclosure actions on their mortgage loans.
- District court dismissed their claims with prejudice and struck their Second Amended Complaint for exceeding the permitted scope of amendment.
- Plaintiffs alleged Deutsche used fraudulent or deceptive assignments and failed to record previous assignments, and advanced a late theory that Deutsche’s foreclosure practice offered only quitclaim deeds.
- Defendants showed Deutsche lawfully acquired the loans via trust agreements and thus had the right to foreclose.
- Plaintiffs conceded loan default; some IIPEA claims were time-barred under Hawaii’s two-year statute of limitations.
- The district court found amendment would be futile and striking the complaint was justified under docket-management and prejudice principles; the Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge assignments | Borrowers argued assignments were fraudulent/deceptive and invalidated foreclosure | Deutsche argued borrowers are not parties/beneficiaries of assignments and lack standing | Plaintiffs lack standing; foreclosure valid because Deutsche lawfully acquired loans |
| Wrongful foreclosure based on defective/undocumented assignments | Plaintiffs contended failure to record prior assignments and bankruptcy-related assignments voided Deutsche’s foreclosure | Deutsche showed lawful acquisition under trust agreements; recording gaps and prior bankruptcy assignments did not defeat its right to foreclose | Claims meritless; foreclosure upheld |
| UDAP under Haw. Rev. Stat. §480-2 | UDAP claim premised on same assignment/foreclosure allegations (and later quitclaim-deed theory) | Deutsche argued UDAP duplicates failed wrongful foreclosure theory and late quitclaim theory should be barred | UDAP claims fail for same reasons as wrongful foreclosure; quitclaim theory improperly added and struck |
| IIPEA and related torts; timeliness and pleading adequacy | Plaintiffs asserted IIPEA and ‘‘intentional harm to property interests’’ | Deutsche argued IIPEA claims time-barred; plaintiffs conceded default and failed to plead a legally protected interest | Dean and Mauch’s IIPEA barred by statute; Lizza’s recast claim fails as matter of law; related tort theories not recognized |
| Court’s sanction/striking of Second Amended Complaint | Plaintiffs argued they should be allowed to amend and assert quitclaim-deed theory | Deutsche argued amendment exceeded district court’s prior order and prejudiced it; dismissal appropriate given delay and futility | Ninth Circuit affirmed striking Second Amended Complaint and dismissal with prejudice; district court did not abuse discretion |
Key Cases Cited
- Brodie v. Nw. Tr. Servs., Inc., [citation="579 F. App'x 592"] (9th Cir.) (borrowers lack standing to sue on assignments to which they are not parties)
- Bank of Am., N.A. v. Reyes-Toledo, 390 P.3d 1248 (Haw. 2017) (trust acquisition can establish foreclosure rights)
- Moore v. Kayport Package Exp., Inc., 885 F.2d 531 (9th Cir. 1989) (futility and undue delay as grounds to deny leave to amend)
- Ferdik v. Bonzelet, 963 F.2d 1258 (9th Cir. 1992) (factors for dismissing for failure to comply with court orders)
- In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d 1217 (9th Cir. 2006) (prejudice from late amendment and litigation burden)
- Royal Ins. Co. of Am. v. Sw. Marine, 194 F.3d 1009 (9th Cir. 1999) (rejecting late theory amendments when facts/theory known earlier)
- Giuliani v. Chuck, 620 P.2d 733 (Haw. Ct. App. 1980) (tort for intentional harm to property requires legally protected interest)