V. Quicken Loans, Inc.

Western District of Texas, txwd-5:2019-cv-00697

REPLY to Response to Motion, filed by Quicken Loans, Inc., re [11] MOTION for Order to Show Cause filed by Defendant Quicken Loans, Inc.

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION PABLO E. GAY and ANNA J. SUBIA § aka ANNA J. SUBIA-GAY, § § Plaintiffs, § § v. § Civil Action Number: 5:19-CV-00697-OLG § QUICKEN LOANS INC., § § Defendant. § § DEFENDANT QUICKEN LOANS INC.'S REPLY IN SUPPORT OF MOTION FOR ORDER TO SHOW CAUSE WHY THIS CASE SHOULD NOT BE DISMISSED UNDER RULE 41 NOW COMES the defendant, Quicken Loans Inc. ("Quicken Loans"), and files it Reply in support of its Motion for Order to Show Cause Why this Case Should Not Be Dismissed Under Rule 41 [Doc. 11] (the "Motion"). As set forth in the Motion and this Reply, Quicken Loans respectfully requests that this Court issue an order to show cause why this case should not be dismissed pursuant to Rule1 41, Federal Rules of Civil Procedure, and Quicken Loans respectfully shows the Court the following: This is the third case involving the very same property located at 10143 Silverbrook Place, San Antonio, Texas 78254, filed by Pablo Gay and Anna Subia-Gay (collectively, "Plaintiffs") against Quicken Loans to stop a valid and properly-noticed trustee's sale. All three cases were initially filed by Plaintiffs in the Civil District Courts of Bexar County, Texas, and removed by Quicken Loans to this Court. The first case was assigned Case No. 5:18-cv-00410-OLG (the "First Action"); the second case was assigned Case No. 5:19-cv-00387-OLG (the "Second Action"); and 1 All references to rules herein are to the Federal Rules of Civil Procedure. Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3 the third case was assigned Case No. 5:19-cv-00697-OLG (the "Instant Action"). The very same day Plaintiffs voluntarily dismissed the Second Action, 2 Plaintiffs filed the Instant Action. Quicken Loans filed the Motion on October 1, 2019, and Plaintiffs filed their Response in Opposition [Doc 12] (the "Response") on October 8, 2019. In the Response, Plaintiffs make the following arguments: (1) a motion to dismiss is a more appropriate procedural mechanism to seek dismissal under Rule 41;3 (2) the causes of action in the first two cases were different because "[e]ach Trustee's sale event started a new set of causes of actions which would prevent the application of the second dismissal rule in Rule 41"; 4 and (3) Quicken Loans did not file a scheduling order in this case.5 Regarding Plaintiffs' first argument, it is true that a motion to dismiss is an appropriate procedural mechanism to seek dismissal under Rule 41, but it is not the sole procedural means for a court to enforce the rules of res judicata.6 Indeed, "[d]ismissal by the court sua sponte on res judicata grounds. . . is permissible in the interest of judicial economy where both actions were brought before the same court." Boone v. Kurtz, 617 F.2d 435, 436 (5th Cir. 1980) (citations omitted). Furthermore, this Court has "equitable power[s] concerning relations between the parties" and an "inherent power to police itself." Chambers v. NASCO, Inc., 501 U.S. 32, 46, 111 S. Ct. 2123, 2133, 115 L. Ed. 2d 27 (1991). The First Action, Second Action, and Third Action were all pending before this very Court, and Plaintiff is asking this Court to invoke its inherent powers. Indeed, the elements of res judicata are apparent from the pleadings and matters of which the Court 2 Case No. 5:19-cv-00387-OLG. 3 Response, pg. 2. 4 Id. at 3. 5 Id. 6 See, e.g., Fed. R. Civ. P. 12(h)(2), Fed. R. Civ. P. 12(c), and Fed. R. Civ. P. 56. Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3 may take judicial notice. The Court may take judicial notice of the contents of public records. See generally Louisiana ex rel. Guste v. United States, 656 F.Supp. 1310, 1314 n. 6 (W.D.La.1986), aff'd, 832 F.2d 935 (5th Cir.1987), cert. denied, 485 U.S. 1033, 108 S.Ct. 1592, 99 L.Ed.2d 907 (1988). Likewise, the Court may consider public records of prior court proceedings. See Clifton v. Warnaco, Inc., 53 F.3d 1280 n. 13 (5th Cir. 1995) (overruling argument from plaintiff that district court improperly dismissed action on res judicata grounds by taking into consideration earlier proceedings not mentioned in the complaint). Thus, this Court may take judicial notice of the prior proceedings in the First Action and the Second Action, and this Court may act accordingly under its equitable and inherent powers by issuing an order to show cause why this case should not be dismissed under Rule 41. Plaintiff's second argument is incorrect as a matter of law, and Plaintiffs cite no case law supporting the proposition that "[e]ach Trustee's sale event started a new set of causes of actions which would prevent the application of the second dismissal rule in Rule 41. . . ." 7 Plaintiffs have established a pattern of filing lawsuits in state court to prevent valid and properly-noticed trustee's sales, seeking emergency temporary restraining orders to stop the sales, and then voluntarily dismissing the lawsuits to prevent adjudication of Plaintiffs' frivolous claims. This is exactly the kind of conduct the two-dismissal rule in Rule 41(a)(1)(b) is designed to prevent. The purpose of the two dismissal rule, as "pointed out in numerous decisions, is to prevent unreasonable abuse and harassment." American Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963). In all three lawsuits, Plaintiffs have asserted causes of action against Quicken Loans for allegedly breaching the contract between Quicken Loans and Plaintiffs. Under Rule 41(a)(1)(b), "if the plaintiff previously dismissed any federal- or state-court action based on or including the 7 Id. at 3. Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3 same claim, a notice of dismissal operates as an adjudication on the merits." 8 Under Rule 41(a)(1)(B), two actions are based on the "same claim" if they are "based on the same transaction." This standard derives from the common law of res judicata as set forth in the Second Restatement of Judgments, which provides that a claim includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.9 For these purposes, "transaction" is defined pragmatically to include facts "related in time, space, origin, or motivation."10 It is well-settled that a single transaction may give rise to multiple legal theories, and that the mere presence of "a number of different legal theories casting liability on an actor. . . does not create multiple transactions and hence multiple claims."11 Here, the cruxes of all three actions are Plaintiffs' bogus allegations that Quicken Loans breached its contract with Plaintiffs. Accordingly, the series of connected transactions arising from the contract makes up the common nucleus of facts underlying the First Action, Second Action, and Instant Action. Consequently, because of Plaintiffs' prior voluntary dismissals of the First Action and Second Action, the two-dismissal rule in Rule 41(a)(1)(B) bars the claims asserted against Quicken Loans in the Instant Action under res judicata principles. Importantly, courts are bound to apply Rule 41(a)(1)(B) as written, regardless of the surrounding facts. See Lake at Las Vegas Investors Group v. Pacific Malibu Dev. Corp., 933 F.2d 724 (9th Cir. 1991) (application of the two dismissal rule "does not require an inquiry into the circumstances of the two dismissals."). Even if Plaintiffs' claims had merit, which they do not, adherence to the two dismissal rule is required. See Gioia v. Blue Cross Hospital Service, Inc., 641 8 Fed. R. Civ. P. 41(a)(1)(B). 9 Restatement Second, Judgments § 24(1). 10 Id. § 24(2). 11 Id. § 24(2), cmt b. Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3 F.2d 540, 544 (8th Cir. 1981) (noting that "it is with reluctance that we affirm the judgment of dismissal, since there may have been some merit in plaintiff's claims which they will now be foreclosed from pursuing..."); Thomas v. Wells Fargo Bank, N.A., 2013 U.S. Dist. LEXIS 135954, at *9 (N.D. Cal. 2013) (holding that Rule 41 (a)(1)(B) "does not provide the Court with any discretion to avoid the impact of the two-dismissal rule based on the Plaintiff's understanding or motivation in dismissing the second action."). Moreover, in addition to being barred by the two-dismissal rule, Plaintiffs' counsel knows that both the negligence claim and the claim under the Texas Property Code fail as a matter of law because identical claims were dismissed under Rule 12(b)(6) in another case in which counsel represented a different plaintiff in the U.S. District Court of the Western District of Texas. See Suarez v. U.S. Bank, NA, No. SA-19-CV-00704-FB, 2019 WL 3459247, at *2 (W.D. Tex. July 31, 2019). Interestingly, even though the plaintiff was different in that case, the petition was virtually identical to the petitions filed in the First Action and Second Action. Plaintiffs' third argument—that Quicken Loans did not file a scheduling order in this case—is easily dispatched because it is inaccurate and irrelevant. The Order and Advisory [Doc. 8] required "that the Plaintiff(s) confer with the Defendant(s) as required by Fed.R.Civ.P 26(f) and Local Court Rule CV-16(c) to submit a proposed scheduling order for the Court's consideration within forty-five (45) days of the filing of this Order." 12 Plaintiffs neither conferred with Quicken Loans as required by Fed.R.Civ.P 26(f) nor submitted a proposed scheduling order for the Court's consideration. Plaintiffs' counsel did, however, email a proposed scheduling order to Quicken Loans' counsel, and before the Response was ever filed, Quicken Loans' counsel had responded by email, requested some changes, and approved the proposed scheduling order, subject to the 12 Order and Advisory, pg. 1. Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3 requested changes. Plaintiffs' counsel never responded to that email or made the requested changes. Consequently, Quicken Loans' counsel ended up drafting a proposed Scheduling Order, emailing it to Plaintiffs' counsel, and after obtaining Plaintiffs' counsel's signature, Quicken Loans' counsel filed the proposed Scheduling Order [Doc. 13]. Thus, Plaintiff's third argument is without merit, and at any rate, is now moot. WHEREFORE, Quicken Loans respectfully requests that this Court enter an order to show cause why this case should not be dismissed with prejudice pursuant to Rule 41. Quicken Loans further requests all relief, at law or in equity, to which it is entitled. Respectfully submitted this 15th day of October 2019. By: /s/ Jacob Sparks Jacob Sparks Texas Bar No. 24066126 SPENCER FANE LLP 5700 Granite Parkway, Suite 650 Plano, Texas 75024 Tel: (972) 324-0300 Fax: (972) 324-0301 Email: JSparks@SpencerFane.com ATTORNEYS FOR DEFENDANT QUICKEN LOANS INC. Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3 CERTIFICATE OF SERVICE I certify that a true and correct copy of the foregoing Motion was served upon the following parties/counsel of record pursuant to the Federal Rules of Civil Procedure through the Court's ECF system on October 15, 2019: Robert C. Newark 1341 W. Mockingbird Ln., Ste. 600W Dallas, TX 75247 Email: office@newarkfirm.com 1194330420@filings.docketbird.com rob.newark@yahoo.com By: /s/ Jacob Sparks Jacob Sparks Defendant Quicken Loans Inc.'s Reply in Support of Motion for Order to Show Cause DA 404478.3