Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 TRAN THTUY LE, Case No.: 26-CV-1570 JLS (VET)

12 Plaintiff, ORDER (1) DENYING AS MOOT 13 v. DEFENDANT KIND’S MOTION TO DISMISS, (2) GRANTING IN PART 14 THE TURNKEY FOUNDATION INC. AND DENYING IN PART d/b/a ARBOR FINANCIAL GROUP, 15 DEFENDANT ARBOR’S MOTION KIND LENDING, LLC, and DOES 1–50, TO DISMISS AND/OR QUASH 16 inclusive, SERVICE AND (3) GRANTING 17 Defendants. PLAINTIFF’S MOTION TO AMEND/CORRECT. 18 19 (ECF Nos. 2, 11, 13) 20 21 Presently before the Court is Defendant Kind Lending, LLC’s (“Kind”) Motion to 22 Dismiss (ECF No. 2), Plaintiff’s Response in Opposition (ECF No. 5) and Defendant 23 Kind’s Reply (ECF No. 7). Also before the Court is Defendant Arbor Financial Group’s 24 (“Arbor”) Motion to Dismiss and/or Quash Service (“Arbor Mot.,” ECF No. 11) and 25 Plaintiff’s Response in Opposition (“Opp’n,” ECF No. 15). Also before the Court is 26 Plaintiff’s Motion to Amend/Correct the First Amended Complaint (“Mot. to Amend,” 27 ECF No. 13) and Defendant Kind’s Notice of Non-opposition (ECF No. 14). 28 / / / 1 For the reasons set forth below, the Court DENIES AS MOOT Defendant Kind’s 2 Motion (ECF No. 2), GRANTS IN PART and DENIES IN PART AS MOOT Defendant 3 Arbor’s Motion (ECF No. 11), and GRANTS Plaintiff’s Motion to Amend (ECF No. 13). 4 BACKGROUND 5 This case arises from an attempted cash-out refinance loan between Plaintiff and 6 Defendants. See ECF No. 1, Ex. 2 ¶ 15. Plaintiff alleges that over a 70-day period, 7 Defendants falsely represented the loan was clear to close, id. at ¶ 37, failed to underwrite 8 the loan correctly, id. at ¶ 58, and attempted to substitute inferior terms after discovering 9 the underwriting failure, id. at ¶ 65–67. 10 Plaintiff sued in Superior Court and filed the First Amended Complaint before any 11 defendant appeared. Opp’n at 2. Plaintiff served Defendant Kind on February 10, 2026. 12 ECF No. 1 at 4. Kind removed the action on March 12, 2026. ECF No. 1. Plaintiff had 13 not served Defendant Arbor in Superior Court. Mot. to Dismiss at 2; Opp’n at 1. 14 Kind moved to dismiss the First Amended Complaint, arguing that Plaintiff failed 15 to state a claim against Kind as the potential loan purchaser. ECF No. 2-1 at 1. Plaintiff 16 conceded dismissal for claims under California’s Real Estate Settlement Procedures Act 17 but maintained the sufficiency of the remaining claims against Kind. ECF No. 5 at 3. 18 On June 10, 2026, the final day for service on Arbor within the ninety-day deadline 19 under Rule 4(m), Plaintiff submitted the Superior Court summons and the First Amended 20 Complaint to the Orange County Sheriff’s Department. Opp’n at 2. The Sheriff’s 21 authorized agent served Arbor on June 30, 2026. ECF No. 8. Arbor moved to dismiss the 22 First Amended Complaint and quash service on August 20, 2026. 23 MOTION TO QUASH SERVICE 24 “The purpose of process is to give the addressee notice of the proceeding against 25 him.” Beecher v. Wallace, 381 F.2d 372, 373 (9th Cir. 1967). “Sufficiency of service of 26 process prior to removal is governed by state law, while service after removal is governed 27 by Federal Rules of Civil Procedure 4.” Dolan v. Nationstar Mortg. LLC, No. 25-CV- 28 2242-GPC-BJW, 2025 WL 3649273, at *1 (S.D. Cal. Dec. 16, 2025); see 28 U.S.C. § 1448. 1 Actual notice is not substitute for compliance with Rule 4. S.E.C. v. Ross, 504 F.3d 1130, 2 1138–39 (9th Cir. 2007) (quoting Omni Cap. Int’l Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 3 104 (1987)). “Once a defendant challenges service, the plaintiff bears the burden of 4 establishing valid service pursuant to Federal Rule of Civil Procedure 4.” Shoup v. JAG 5 Welding, FAB & Servs., Inc., No. 24-CV-1776 JLS (AHG), 2025 WL 1208916, at *2 (S.D. 6 Cal. Apr. 25, 2025). “If the plaintiff is unable to satisfy his burden of demonstrating 7 effective service, a court may either dismiss the action or quash service and allow the 8 plaintiff to serve the defendant again.” Id. (citing Stevens v. Sec. Pac. Nat'l Bank, 538 F.2d 9 1387, 1389 (9th Cir. 1976)). “Where it appears that effective service can be made and 10 there is no unfair prejudice to the defendant, quashing service rather than dismissing the 11 action, and leaving the plaintiff free to effect proper service, is the appropriate course.” 12 Wick Towing, Inc. v. Northland, No. C15-1864JLR, 2016 WL 3461587, at *2 (W.D. Wash. 13 June 21, 2016). 14 Here, Plaintiff does not dispute that the process and service of process was 15 ineffective. Opp’n at 4. Arbor does not allege any unfair prejudice that resulted from 16 ineffective service other than a delay filing the present motion. Arbor Mot. at 5–6. Thus, 17 the Court finds the suitable remedy is to quash service and extend the timeline for service. 18 See Fed. R. Civ. P. 4(m). 19 In light of the foregoing, the Court GRANTS IN PART Defendant Arbor’s Motion 20 to Dismiss and/or Quash Service (ECF No. 11) as to quashing service. 21 MOTION TO AMEND 22 I. Legal Standard 23 Motions to amend are governed by Federal Rule of Civil Procedure 15, which, as 24 relevant here, provides that a party may amend its pleading once as a matter of course 25 within twenty-one days of service of a motion under Rule 12(b) but otherwise must obtain 26 either leave of the court or the written consent of the adverse party in order to amend. Fed. 27 / / / 28 / / / 1 R. Civ. P. 15(a); Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) 2 (citing Fed. R. Civ. P. 15(a)). 3 The rule requiring leave of court also limits the amendment of pleadings in actions 4 removed from state court. See Schnabel v. Lui, 302 F.3d 1023, 1037 (9th Cir. 2002) 5 (“When a state court action is removed to federal court, the removed action is treated as if 6 the original action has been commenced in federal court.”). Thus, if a plaintiff files a first 7 amended complaint as of right in state court before removal, a plaintiff may not again 8 amend its complaint without first obtaining either the opposing party’s written consent or 9 leave of court. See e.g., Hosp. Mktg. Concepts, LLC v. Inter-Cont’l Hotels Corp., No. 10 SACV151342JVSDFMX, 2015 WL 13284964, at *1 (C.D. Cal. Oct. 21, 2015); Howell v. 11 City of Fresno, No. CVF07371OWWTAG, 2007 WL 1501844, at *2 (E.D. Cal. May 23, 12 2007). 13 The general policy provided by Rule 15(a)(2) that “[t]he court should freely give 14 leave when justice so requires” is “to be applied with extreme liberality.” Eminence Cap., 15 LLC, 316 F.3d at 1051 (citing Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 16 712 (9th Cir. 2001)). Accordingly, leave should be “freely given” absent “undue delay, 17 bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies 18 by amendments previously allowed, undue prejudice to the opposing party by virtue of 19 allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 20 182 (1962); see also Yakama Indian Nation v. State of Wash. Dep’t of Revenue, 176 F.3d 21 1241, 1246 (9th Cir. 1999) (“Amendment under the Federal Rules of Civil Procedure 22 should be granted unless amendment would cause prejudice to the opposing party, is sought 23 in bad faith, is futile, or creates undue delay.”) (internal quotation omitted). Of these 24 factors, prejudice is the most important. Eminence Cap., LLC, 316 F.3d at 1052. “The 25 party opposing amendment bears the burden of showing prejudice.” DCD Programs, Ltd. 26 v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). 27 In deciding whether to grant leave to amend, a trial court “should be guided by the 28 underlying purpose of Rule 15(a) . . . to facilitate decisions on merits, rather than on 1 technicalities or pleadings.” James v. Pliler, 269 F.3d 1124, 1126 (9th Cir. 2001) (citing 2 United States v. Webb, 655 F.2d 977, 979–80 (9th Cir. 1981)). Absent prejudice or a strong 3 showing of the other Foman factors, there is a presumption in favor of granting leave to 4 amend. Eminence Cap., LLC, 316 F.3d at 1052 (internal citation omitted). 5 II. Discussion 6 Plaintiff does not oppose the dismissal of the third cause of action against both 7 Defendants under California’s Real Estate Settlement Procedures Act. Mot. to Amend at 8 2; see ECF No. 1-2 at 22–24. But Plaintiff maintains the remaining claims and asserts the 9 amendment will “strengthen the claims with facts drawn from the loan file . . . .” Id. 10 Plaintiff argues no party will suffer prejudice because no scheduling order has issued and 11 no discovery has been taken. Id. at 3. Plaintiff also adds Tory Le, the co-borrower, as a 12 plaintiff and two Arbor employees as co-defendants. Mot. to Amend at 2. Although most 13 of the claims in the proposed amendment are reorganized from the First Amended 14 Complaint, Plaintiff adds a claim under the Equal Credit Opportunity Act. ECF No. 13-4 15 at 33. Kind does not oppose Plaintiff’s proposed amendment. ECF No. 14. 16 The Court finds that Defendants are not prejudiced by Plaintiff’s proposed 17 amendment. Although there is an additional claim, the initial complaint made Defendants 18 sufficiently aware of the nature of Plaintiff’s claims. Kohler v. Flava Enters., Inc., No. 10- 19 CV-730-IEG NLS, 2011 WL 666899, at *2 (S.D. Cal. Feb. 17, 2011). Further, the case is 20 in its infancy, and the Court has not yet set the cutoff dates for discovery and amending the 21 pleadings. 22 The Court finds that permitting amendment promotes judicial economy and 23 conserves both the Parties’ and the Court’s resources by avoiding both briefing and 24 deciding Arbor’s Motion to Dismiss that is potentially obviated by the proposed 25 amendment. 26 / / / 27 / / / 28 / / / 1 In light of the foregoing, the Court GRANTS Plaintiff's Motion to Amend (ECF 2 ||No. 13) and DENIES AS MOOT Defendant Kind’s Motion to Dismiss (ECF No. 2) and 3 || DENIES IN PART AS MOOT Defendant Arbor’s Motion to Dismiss and/or Quash 4 || Service (ECF No. 11) as to dismissal. 5 CONCLUSION 6 In sum, the Court DENIES AS MOOT Defendant Kind’s Motion to Dismiss (ECF 7 ||No. 2); GRANTS IN PART and DENIES IN PART AS MOOT Defendant Arbor’s 8 || Motion to Dismiss and/or Quash Service (ECF No. 11); and GRANTS Plaintiff's Motion 9 Amend (ECF No. 13). 10 The Court QUASHES Plaintiff's attempted service on Defendant Arbor and 11 || Plaintiff SHALL SERVE Defendant Arbor in accordance with Federal Rule of Civil 12 Procedure 4 no more than thirty (30) days after the electronic filing date of this order. 13 || Plaintiff SHALL FILE AND SERVE the Second Amended Complaint, previously 14 ||docketed as ECF No. 13-4, within seven (7) days of the date on which this Order is 15 || electronically docketed. 16 IT IS SO ORDERED. 17 || Dated: September 25, 2026 tt 18 jt Janis L. Sammartino United States District Judge 19 20 21 22 23 24 25 26 27 28