Filed 9/27/19 Diaz v. Bank of America CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

MARTHA L. DIAZ,

Plaintiff and Appellant,

v.

BANK OF AMERICA, N.A. et al.,

Defendants and Respondents.

G056306

(Super. Ct. No. 30-2011-00449059)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Glenda Sanders , Judge. Affirmed.

Martha L. Diaz, in pro. per., for Plaintiff and Appellant.

Bryan Cave Leighton Paisner, Stuart W. Price, Sarah B. Burwick and Traci G. Choi for Defendants and Respondents.

 

In February 2011, the Brookstone law firm filed a large class action (the Wright action) against Bank of America based on the predatory lending practices of Countrywide Financial Corporation. Bank of America had the misfortune of absorbing Countrywide just as the recession of 2008 was coming on. “The acquisition has been a headache ever since.” (Petersen v. Bank of America Corp. (2014) 232 Cal.App.4th 238, 243, fn. 5.) Among the listed plaintiffs in the Wright action was Martha Diaz.

Diaz filed for bankruptcy several months later, on May 31, 2011. But she omitted her interest in the Wright action in her statement of financial affairs. She would later provide a simple explanation for the omission: She didn’t know she was required to disclose her interest in the action. She thought she only had to disclose things of value, and at the time she did not perceive her small part of the Wright action to have any real value. She received a discharge from the bankruptcy court in September 2011.

By March 1, 2016, the Brookstone law firm had filed a fifth amended complaint (5AC) in the Wright action. However, about three months later, the Federal Trade Commission obtained a preliminary injunction and appointed a receiver preventing the firm from practicing law. (See Federal Trade Commission v. Kutzner (C.D. Cal. 2017) [2017 U.S. Dist. LEXIS 214319] (Kutzner) [describing procedural history of claims against the Brookstone firm].) Plaintiffs such as Diaz were now left in the lurch.

Diaz was among nine plaintiffs who had not listed their interest in the Wright action in their statements of financial affairs after filing bankruptcy. Bank of America demurred to the 5AC as to those specific plaintiffs on the ground that having failed to disclose the asset, they were judicially estopped from pursuing their claims. Bank of America also asserted these plaintiffs lacked standing to be plaintiffs in the Wright action because once a bankruptcy is filed, only the trustee in bankruptcy can pursue a claim belonging to the debtor’s estate. In January 2018, the trial court sustained Bank of America’s demurrers, but with leave to amend.

Diaz did not amend, and Bank of America again specifically demurred to her complaint in April 2018. Later than month, just before the hearing, Diaz filed a declaration, making the point that she had only inadvertently omitted her interest in the Wright action when she filed her statement of financial affairs. However, she did not ask for leave to amend. The trial court sustained the demurrer without leave to amend in early May, 2018. Diaz has now appealed from the ensuing judgment of dismissal.

We must affirm. A cause of action possessed by a debtor becomes property of the bankruptcy estate once the debtor files for bankruptcy. (See Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1001 (Cloud).) It is the bankruptcy trustee who must decide whether to pursue the claim. (Ibid.) Plaintiffs who are not real parties in interest do not have standing to pursue a claim. (Id. at p. 1004.)

It is possible, however, for plaintiffs who filed for bankruptcy without disclosing a cause of action (as happened in Cloud) to “regain” their lost standing by showing the bankruptcy trustee has either voluntarily, or by order of the bankruptcy court, abandoned the claim. (Cloud, supra, 67 Cal.App.4th at p. 1003.)

In the present case Diaz made no attempt in the period between January 2018 – when she was given leave to amend – and May 2018 – when the demurrer was sustained without leave to amend – to show the bankruptcy trustee had somehow abandoned her interest in the Wright action, leaving her free to pursue it. More importantly, she did not even request a stay from the trial court to reopen the bankruptcy so as to allow either a substitution of the trustee as the real party or obtain the trustee’s abandonment of the claim. (See Cloud, supra, 67 Cal.App.4th at p. 1008.)

What she did do was, on June 4, 2018, make a motion in her bankruptcy case to reopen the case to “file statement of financial affairs.” The motion was granted the same day, with the bankruptcy judge ordering the case be reopened “to allow Debtor to file amended schedules.” Diaz has brought these postjudgment facts to our attention by way of appendices to her opening brief.

It is true that a request to amend a complaint can be made for the first time on appeal. (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 746 [“The issue of leave to amend is always open on appeal, even if not raised by the plaintiff.”].) But what persuades us that we must affirm the judgment in this case is the fact that even looking at the post-record exhibits to Diaz’s opening brief, we find no indicia there has been a notice and hearing scheduled to order the trustee to abandon the Wright action. Indeed, we find no indication of any attempt to bring the matter of the Wright action to the attention of the trustee. The most we have is the reopening of the bankruptcy so that Diaz can file an amended statement. She might not even have done that. For all we know, the matter of any abandonment by the trustee might remain in limbo indefinitely.

So, at this time, Diaz has failed to show a “reasonable possibility” the defect in parties in her pleading can be cured by amendment. (See Heritage Pacific

 

Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.) Accordingly we must affirm the judgment. In the interests of justice, both sides will bear their own costs on appeal.

BEDSWORTH, ACTING P. J.

WE CONCUR:

FYBEL, J.

THOMPSON, J.