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In re Washington Mutual, Inc.

United States District Court, D. Delaware

May 23, 2017

IN RE WASHINGTON MUTUAL, INC., et al, Debtors.
v.
WASHINGTON MUTUAL INC., Appellee. NADIA YOUKELSONE, Appellant, Bankruptcy No. 08-12229 (MFW) Bankr. Adv. No. 09-50039 (MFW)

          MEMORANDUM

         I. INTRODUCTION

         Presently before the court is the pro se appeal (D.I. 1) of Nadia Youkelsone ("Youkelsone" or "Appellant") from the August 13, 2010 Order and Memorandum Opinion (collectively, the "Order") of the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). For the reasons that follow, the court will affirm the Bankruptcy Court's August 13 Order dismissing Youkelsone's Amended Complaint.

         II. BACKGROUND

         On September 26, 2008, Washington Mutual, Inc. ("WMI" or "Appellee"), a Washington-incorporated savings and loan holding company whose principal subsidiary was Washington Mutual Bank ("WMB"), filed a petition for relief under Chapter 11 of the Bankruptcy Code. In re Washington Mutual, Inc., et al, Bankr. Case No. 08-12229-MFW (Bankr. D. Del. 2008).

         On January 21, 2009, Youkelsone filed a complaint initiating the above-captioned adversary proceeding and asserting several claims against WML (See Adv. No. 09-50039-MFW (Bankr. D. Del. 2009) (hereinafter "B.D.I." 1.) On February 20, 2009, WMI filed a motion to dismiss the complaint (B.D.I. 5.), and the Bankruptcy Court granted the motion on October 8, 2009. (B.D.I. 12.) Subsequently, on November, 6, 2009, Youkelsone filed an amended complaint (the "Amended Complaint") alleging numerous causes of action against WMI: (1) abuse of process, (2) economic duress, (3) breach of contract, (4) unjust enrichment, (5) bad faith, (6) conduct in violation of section 1921(4) of the New York Real Property Actions and Proceedings Law ("NYRPAPL"), (7) conduct in violation of section 1639 of the Truth in Lending Act ("TILA"), (8) deceptive practices, (9) misrepresentation, fraud, and deceit, and (10) intentional infliction of emotional harm. (B.D.I. 13.)

         WMI filed a motion to dismiss the Amended Complaint on December 4, 2009 (B.D.I. 14), which the Bankruptcy Court granted on August 13, 2010. (B.D.I. 29.) The Bankruptcy Court dismissed the Amended Complaint on the grounds that Youkelsone's claims are barred by the statute of limitations; Youkelsone is estopped from litigating her claims by issue preclusion; and Youkelsone has failed to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (B.D.I. 28)

         III. THE PARTIES' CONTENTIONS

         On appeal, Youkelsone argues that the Bankruptcy Court erred and abused its discretion in granting the motion to dismiss. Generally, she contends that the Bankruptcy Court misapplied the standards for dismissal. (D.I. 10 at 34-36.) Appellant specifically argues that the Bankruptcy Court erred in dismissing the Amended Complaint, because: (1) the Amended Complaint properly pleaded direct liability and indirect liability (under the alter ego, corporate disregard, and agency theories of liability); (2) the Bankruptcy Court took judicial notice without procedural safeguards requiring reversal; (3) the Bankruptcy Court improperly dismissed the Complaint based on issue preclusion. (D.I. 10 at 14-30.) Appellant further argues that the Bankruptcy Court converted the motion to dismiss into a motion for summary judgment without procedural safeguards. (Id. at 30-32.) Appellant further argues that dismissal of claims based on abuse of process, conduct in violation of the TILA, and intentional infliction of emotional harm was unwarranted on the grounds of statute of limitations. (Id. at 32-34.) Finally, Youkelsone argues the Bankruptcy Court should have allowed her leave to amend the Complaint. (Id. at 36-37.)

         In response, WMI contends that the dismissal of the Amended Complaint was proper, as the Bankruptcy Court applied the correct pleading standard, which requires plaintiffs to state a claim to relief that is plausible on its face. (D.I. 11 at 1.) Appellee further argues it was proper and within the discretion of the Bankruptcy Court to take judicial notice of public materials and to consider such public materials in a Rule 12(b)(6) motion context. (Id.) According to Appellee the Bankruptcy Court did not err by dismissing Appellant's claims for economic distress, breach of contract, bad faith, and deceptive practices based on issue preclusion because an essential element of these claims (ownership of the Appellant's mortgage) was previously adjudicated against Youkelsone. (Id. at 1-2.) Appellee further asserts that it was proper to dismiss Appellant's claims for abuse of process, conduct in violation of the TILA, and intentional infliction of emotional harm as barred by the applicable statute of limitations. (Id.) Appellee contends that it was proper to dismiss the Appellant's claims relating to conduct in violation of the NYRPAPL, unjust enrichment, and fraud because the Amended Complaint's allegations of fact do not establish direct or indirect liability with respect to WMI, are merely legal conclusions, or are facially implausible. (Id. at 2.) Appellee further argues that the Bankruptcy Court did not err in denying Appellant leave to file a third complaint or ruling on the pleadings without an evidentiary hearing. (Id.)

         IV. JURISDICTION AND STANDARD OF REVIEW

         The court has appellate jurisdiction to hear all final orders and judgments from the Bankruptcy Court pursuant to 28 U.S.C. § 158(a)(1). In reviewing a case on appeal, this court reviews a Bankruptcy Court's findings of fact for clear error and its conclusions of law de novo. Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999). Mixed questions of law and fact are subject to a "mixed standard of review." Mellon Bank, N.A. v. Metro Comm., Inc., 945 F.2d 635, 641-42 (3d Cir. 1991). Under this "mixed standard of review, " the appellate court accepts findings of "historical or narrative facts unless clearly erroneous, but exercise[s] plenary review of the trial court's choice and interpretation of legal precepts and its application of those precepts to historical facts." Id. at 642 (citation omitted).

         V. DISCUSSION

         After having considered the record on appeal, the parties' submissions, the standard of review, and the applicable law, the court finds that the Bankruptcy Court committed no legal error. The court will, therefore, affirm the Bankruptcy Court's decision in this case.

         A. Rule 12(b)(6) Motion to ...


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