William Young v. Charles Schwab & Co., Inc.

1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 12 WILLIAM YOUNG, et al., Case No. 8:25-cv-02271-MRA-MBK 13 Plaintiffs, ORDER ACCEPTING FINDINGS AND RECOMMENDATIONS OF UNITED 14 v. STATES MAGISTRATE JUDGE 15 CHARLES SCHWAB & CO, INC., 16 et al., 17 Defendants. 18 19 20 Pursuant to 28 U.S.C. § 636, the Court reviewed the Petition, the 21 records on file, and the Report and Recommendation of the United States 22 Magistrate Judge. Additionally, the undersigned has independently reviewed 23 Plaintiffs’ objections to the Report. 24 Plaintiffs’ Complaint alleges that Defendants unlawfully froze Plaintiffs’ 25 bank accounts and allowed the transfer of funds from the accounts due to a 26 writ of execution and notice of levy served by a company called Collect Co. 27 (Dkt. 1 at 3-5, 8-11.) Collect Co. had obtained a state court judgment against 28 1 Plaintiffs, who had unsuccessfully challenged, in multiple lawsuits, the 2 validity of their assignment of their interest in a 2018 civil judgment to 3 Collect Co. (Dkt. 40 at 2-4.) The Report recommends the grant of Defendants’ 4 motion to dismiss and the dismissal of this action with prejudice. (Id. at 14.) 5 Plaintiffs’ six objections to the Report do not merit a different result. 6 First, Plaintiffs object that the Report misapplies the Rooker-Feldman 7 doctrine. (Dkt. 41 at 16-17.) The Report found that Plaintiffs’ claims are 8 barred by the Rooker-Feldman doctrine because “the basis of Plaintiffs’ 9 Complaint in this action is that the Writs of Execution and Notices of Levy 10 were unlawful because Plaintiffs never assigned their judgment to Collect Co. 11 . . . Plaintiffs essentially ask this Court to find for them on the Assignment 12 issue already decided by the state court.” (Dkt. 40 at 13.) Plaintiffs object 13 that they are not challenging a state court judgment as to the validity of the 14 assignment, but instead are challenging Defendants’ own “independent” 15 conduct in transferring Plaintiffs’ property. (Dkt. 41 at 16-17.) But as the 16 Report explained, if Plaintiff were to succeed in their claims against 17 Defendants, “it would necessarily require this Court to review the state court’s 18 determinations and find that the state court was wrong.” (Dkt. 40 at 13-14.) 19 The Court agrees with the Report that Plaintiffs’ claims are barred by the 20 Rooker-Feldman doctrine. (Dkt. 40 at 12-14.) Plaintiffs’ claims in this action 21 can succeed “only to the extent that the state court wrongly decided the issues 22 before it.” Fontana Empire Center, LLC v. City of Fontana, 307 F.3d 987, 992 23 (9th Cir. 2002) (quoting Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 25 (1987) 24 (Marshall, J., concurring). 25 Also in their first objection, Plaintiffs object that there is no final 26 judgment in their state court action as to the validity of the assignment. (Dkt. 27 41 at 17.) On the contrary, the record shows that the state court action to 28 1 which Plaintiffs refer, in Case No. 30-2022-01281968-CU-FR-CJC, was 2 dismissed with prejudice. (Dkt. 11-14 at 2-3.) 3 Second, Plaintiffs object that the Report’s collateral estoppel analysis 4 fails because the issues decided in state court are not the issues presented in 5 this action. (Dkt. 41 at 17-20.) The Report found that Plaintiffs’ claims were 6 barred by collateral estoppel because the issue of the validity of Plaintiffs’ 7 assignment to Collect Co. was already litigated and decided in prior 8 proceedings. (Dkt. 40 at 9-12.) Plaintiffs object that the issue in this action is 9 not the validity of the assignment, but rather the independent conduct of 10 Defendants in transferring their property. (Dkt. 41 at 17-18.) But Plaintiffs’ 11 attempt to characterize the issues from this action as different, because they 12 purportedly are challenging “independent” conduct, is unavailing. “Issue 13 preclusion . . . bars ‘successive litigation of an issue of fact or law actually 14 litigated and resolved in a valid court determination essential to the prior 15 judgment,’ even if the issue recurs in the context of a different claim.” Taylor 16 v. Sturgell, 553 U.S. 880, 892 (2008) (quoting New Hampshire v. Maine, 532 17 U.S. 742, 748-49 (2001)). The Court agrees with the Report that Plaintiffs are 18 improperly attempting in this action to relitigate the issue of the validity of 19 the assignment. (Dkt. 40 at 10.) Indeed, in this action, Plaintiffs again allege 20 that the assignment was invalid because they “never assigned, transferred, or 21 sold any interest in the 2018 Judgment” to Collect Co. (Dkt. 1 at 7.) “Those 22 facts are the foundation upon which Plaintiffs contend that Defendants acted 23 upon ‘fraudulent’ Writs of Execution and Notices of Levy.” (Dkt. 40 at 10.) 24 Third, Plaintiffs object that they adequately stated a claim under 42 25 U.S.C. § 1983 because Defendant Charles Schwab acted under color of state 26 law. (Dkt. 41 at 20-22.) The Report did not analyze whether Defendant 27 Charles Schwab acted under color of state law. The issue was unnecessary to 28 1 the Report’s recommendation of dismissal. Thus, the objection is misplaced. 2 Fourth, Plaintiffs object that the Report erroneously treats the 3 purported assignment as the controlling issue rather than the claims pleaded 4 in the Complaint. (Dkt. 41 at 22-24.) Specifically, Plaintiffs’ object that the 5 Report should have reviewed the adequacy of their pleading under Federal 6 Rule of Civil Procedure 12(b)(6). (Id.) But the Report properly found that 7 Plaintiffs’ claims are barred by collateral estoppel (Dkt. 40 at 8-12), which was 8 sufficient to find that Plaintiffs had failed to state a claim. See Skilstaf, Inc. v. 9 CVS Caremark Corp., 669 F.3d 1005, 1022-23 (9th Cir. 2012) (affirming 10 dismissal for failure to state a claim where claim was barred by collateral 11 estoppel). The Report was not required to examine whether there were any 12 other reasons why Plaintiffs had failed to state a claim. 13 Also in their fourth objection, Plaintiffs object that, even if the 14 assignment was valid, Defendants’ conduct still was unlawful. (Dkt. 41 at 23.) 15 But nowhere in their Complaint did Plaintiffs ask the Court to assume that 16 the assignment was valid. Instead, Plaintiffs relied exclusively on the 17 premise that the assignment was invalid because they “never assigned, 18 transferred, or sold any interest in the 2018 Judgment” to Collect Co., which 19 in turn allegedly made Defendants’ conduct unlawful. (Dkt. 1 at 7.) 20 Fifth, Plaintiffs object that the Report improperly relies upon Plaintiffs’ 21 “vexatious litigant” status instead of analyzing the claims pleaded in the 22 Complaint. (Dkt. 41 at 24-27.) The Report noted that the Orange County 23 Superior Court had declared Plaintiffs to be vexatious litigants. (Dkt. 40 at 2 24 (citing Dkt. 11-10 at 2-4)). Plaintiffs object that the Report “commits a legal 25 error by using Plaintiffs’ prior litigation status to characterize the present 26 Complaint as illegitimate before examining the conducted pleaded against the 27 Defendant banks.” (Dkt. 41 at 26.) On the contrary, the Report did not rely 28 1 | on Plaintiffs’ status as vexatious litigants in recommending dismissal of the 2 | Complaint. Instead, the Report explained in detail why the Complaint should 3 | be dismissed under the Rooker-Feldman doctrine and collateral estoppel. 4 | (Dkt. 40 at 8-14.) Thus, the objection is misplaced. 5D Sixth, Plaintiffs object that dismissal without leave to amend and with 6 | prejudice is erroneous. (Dkt. 41 at 27-29.) Leave to amend is not warranted 7 | because Plaintiffs’ claims are barred by collateral estoppel and the Rooker- 8 | Feldman doctrine. See Cooper v. Ramos, 704 F.3d 772, 784-85 (9th Cir. 2012) 9 | (amendment is futile where action is barred by collateral estoppel and the 10 | Rooker-Feldman doctrine). Moreover, the Court agrees with the Report’s 11 | recommendation to dismiss the action with prejudice. (Dkt. 40 at 14.) 12 | Dismissal with prejudice is proper because Plaintiffs’ claims are barred by 13 | collateral estoppel. See Huettig & Schromm, Inc. v. Landscape Contractors 14 | Council of Northern California, 790 F.2d 1421, 1426 (9th Cir. 1986) (dismissal 15 | with prejudice of claim barred by collateral estoppel was correct). 16 The Court accepts the findings and recommendation of the Magistrate 17 | Judge. 18 IT IS ORDERED that (1) Defendants’ Motions to Dismiss (Dkt. 11, 19, 19 | 30) are GRANTED; (2) Defendants’ Requests for Judicial Notice (Dkt. 12, 19- 20 | 2, 30-2) are GRANTED; (3) all other outstanding motions are DENIED as 21 | moot; and (4) this action is DISMISSED with prejudice. 22 23 24 | fs ) R At: 95 | Dated: August 14, 2026 ; oo HON. MONICA RAMIREZ ALMADANI 26 UNITED STATES DISTRICT JUDGE 27 28