United States of America v. Schaedler-Moore et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
NANCY SCHAEDLER-MOORE, et al.,
Defendants.
Case No.: 24-cv-978-W-AHG
ORDER DENYING DEFENDANT’S
MOTION TO JOIN PARTIES [DOC.
120]
Before the Court is Defendant Nancy Schaedler-Moore’s (“Ms. Schaedler-Moore”)
motion to join Westcor Land Title Insurance Company (“Westcor”) and Fidelity National
Title Company (“Fidelity”) under 26 U.S.C. § 7403(b) and Federal Rule of Civil
Procedure 19(a). (Mtn. [Doc. 120].) Freedom Mortgage Corporation (“Freedom”) and
Plaintiff the United States (“Plaintiff”) filed responses in opposition. (Freedom Opp’n
[Doc. 142], Gov. Opp’n [Doc. 143].) Ms. Schaedler-Moore filed a reply1 (Reply [Doc.
151].)
1 Ms. Schaedler-Moore raises several new arguments in her reply regarding Federal Rules of Civil
Procedure 14, 20, and 21. (See Reply.) “The district court need not consider arguments raised for the
first time in a reply brief.” Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir.2007). Accordingly, the Court
declines to consider them.
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The Court decides the matter of the papers submitted and without oral argument.
See CivLR 7.1(d)(1). For the reasons provided below, the Court DENIES Ms. Schaedler-
Moore motion to join parties.
I. 	PROCEDURAL BACKGROUND
This matter was initiated by Plaintiff to foreclose federal tax liens on real property
located at 1137 Columbus Way, Vista, California, 92081 (“the property”). (Complaint
[Doc. 1].) Plaintiff alleged that the property was burdened by IRS recorded notices of
federal tax liens (“NFTLs”) arising from tax assessments made against a taxpayer who
previously purchased the property. (Id. at 4-6.) Ms. Schaedler-Moore, who later acquired
the property by quitclaim deed, was named as a Defendant who may claim an interest in
the property, along with JG Wentworth Home Lending, LLC (“JG Wentworth”), and
several others. (Id. at 3-4, 9) During this matter, Freedom was substituted in place of JG
Wenworth after the beneficial interest in the subject deed of trust was transferred to
Freedom. (Docs. 23, 31.)
In response to the complaint, Ms. Schaedler-Moore asserted counterclaims and
cross-claims, including a claim for quiet title against Plaintiff and Freedom and others, as
well as statutory damages against Plaintiff. (Cross-claim [Doc. 6] at 7-10.) The Court has
since resolved claims asserted by and against Plaintiff, including granting Plaintiff’s
motion for judgment on the pleadings as to Ms. Schaedler-Moore’s counterclaims (Docs.
21, 37), entering default judgment against several defendants (Docs. 36, 39, 44, 48, 49),
and granting summary judgment against Ms. Schaedler-Moore, which ordered
foreclosure of the property to satisfy the federal tax liens (Docs. 64, 78, 79).2
2 Ms. Schaedler-Moore, now proceeding pro se, has since filed a motion to alter/amend the Court’s
summary judgment order, which is also currently pending. (Doc. 91.)
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Now before the Court is Ms. Schaedler-Moore’s motion to join Westcor Land Title
Insurance Company and Fidelity National Title Company under 26 U.S.C. § 7403(b) and
Federal Rule of Civil Procedure 19(a). (See Mtn.) The Court considers the motion below.
II. 	LEGAL STANDARD
26 U.S.C. § 7403(b) states that “[a]ll persons having liens upon or claiming any
interest in the property involved in such action shall be made parties thereto.” 26 U.S.C. §
7403(b). Under Rule 19, a party is “required” if: (1) complete relief cannot be granted in
the party's absence; or (2) the district court determines that “the absent party's
participation is necessary to protect its legally cognizable interests or to protect other
parties from a substantial risk of incurring multiple or inconsistent obligations because of
those interests.” Disabled Rts. Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861,
880 (9th Cir.2004) (quoting Fed.R.Civ.P. 19(a)). Such a legally cognizable interest “must
be more than a financial stake . . . and more than speculation about a future event.”
Makah Indian Tribe v. Verity, 910 F.2d at 555, 558 (9th Cir.1990).
Under Rule 19(a)(1)(B)(i), an absent party is necessary if it “has a legally
protected interest in the suit” and “that interest will be impaired or impeded by the suit.”
Makah, 910 F.2d at 558 (emphasis in original). “Impairment may be minimized if the
absent party is adequately represented in the suit.” Id. It is also a “fundamental principle”
that “a party to a contract is necessary, and if not susceptible to joinder, indispensable to
litigation seeking to decimate that contract.” Dawavendewa v. Salt River Project Agric.
Improvement & Power Dist., 276 F.3d 1150, 1157 (9th Cir.2002).
Alternatively, under Rule 19(a)(1)(B)(ii), an absent party is also necessary if there
is a potential risk that adjudicating an action without the absent party could leave an
existing party open to “incurring double, multiple, or otherwise inconsistent obligations.”
Fed.R.Civ.P. 19(a)(1)(B)(ii). The Ninth Circuit has stated that
“[i]nconsistent obligations” are not ... the same as inconsistent adjudications
or results. Inconsistent obligations occur when a party is unable to comply
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with one court's order without breaching another court's order concerning the
same incident. Inconsistent adjudications or results by contrast, occur when
a defendant successfully defends a claim in one forum, yet loses on another
claim arising from the same incident in another forum.
Cahill Dehe Band of Wintun Indians of the Colusa Indian Cmty. v. California, 547 F.3d
962, 976 (9th Cir.2008) (quoting Delgado v. Plaza Las Americas, Inc., 139 F.3d 1, 3 (1st
Cir.1998)).
“If an absentee is a necessary party under Rule 19(a), the second stage is for the
court to determine whether it is feasible to order that the absentee be joined.” Equal
Emp't Opportunity Comm'n v. Peabody W. Coal Co., 400 F.3d 774, 779 (9th Cir.2005).
Rule 19(a) sets forth three circumstances in which joinder is not feasible: (1) when venue
is improper; (2) when the absentee is not subject to personal jurisdiction; and (3) when
joinder would destroy subject matter jurisdiction. See id. (citing Fed.R.Civ.P. 19(a); Tick
v. Cohen, 787 F.2d 1490, 1493 (11th Cir.1986)).
III. 	DISCUSSION
Ms. Schaedler-Moore argues that Westcor and Fidelity are required parties who
must be joined to this case “so that all interests can be adjudicated in a single
proceeding.” (Mtn. at 2.) She contends that both entities possess contractual interests
arising out of the 2019 refinance because Westcor issued the title insurance policy and/or
closing protection letter(s), and Fidelity acted as trustee on the deed of trust that secured
the refinance. (Mtn. at 1-4.) According to Ms. Schaedler-Moore, the escrow and closing
procedures were intended to “ensure clean title and first-priority lien status,” and the
entities’ contractual roles allegedly create indemnity obligations, subrogation and
reimbursement rights, and interests in lien validity, priority, and enforcement. (Id. at 1-5.)
She maintains that without Westcor and Fidelity’s participation, this case cannot be fully
resolved and warns that foreclosure judgment issued in their absence would “misallocate
loss, leave the indemnity channel unresolved, and virtually guarantee separate, later
litigation about the same transactions.” (Mtn. P’s and A’s [Doc. 120-1] at 5.)
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Freedom, by contrast, argues that joinder is improper because Westcor and Fidelity
have no claim or interest in the property, and therefore, they are not required parties.
(Freedom Opp’n at 3.) Freedom emphasizes that any contractual obligations those
entities may owe, to Freedom or others, are not in dispute in this action. (Freedom Opp’n
at 3.) Although Freedom acknowledges that it benefits from the ATLA loan policy, it
does not seek to litigate that policy here, nor does it contend that resolution of this case
requires adjudication of indemnity or coverage issues. (Id.) Freedom further argues that
indemnity rights are not necessary to the entry of judgment, as this case concerns
Plaintiff’s efforts to foreclose on the property, not the allocation of contractual loss
among other parties. (Id.)
Plaintiff likewise argues that Westcor and Fidelity are not required parties because
the entities could not have a claim to the property or have any interest in it3. (Gov. Opp’n
at 3.) Plaintiff notes that Ms. Schaedler-Moore’s remaining crossclaim seeks to quiet title
only as to the existing defendants and provides no basis for naming Westcor or Fidelity
as parties. (Id. at 4.) Instead, Plaintiff contends that Ms. Schaedler-Moore is attempting to
use joinder to pursue speculative indemnity or contract-based relief, which is improper in
this foreclosure action. (Id.) Plaintiff further highlights that joinder is disfavored when
used to shift liability for one’s own defense, and that Ms. Schaedler-Moore’s motion
seeks to offload responsibility for the tax liens onto third parties who assert no current
claim to the property. (Id. at 5.)
The Court agrees with Plaintiff and Freedom. Section 7403(b) requires joinder
only of parties who currently “have liens upon or claim any interest in the property.” 26
U.S.C. § 7403(b). Ms. Schaedler-Moore has not shown, or alleged, that Westcor or
Fidelity holds a lien, ownership interest, or any present enforceable claim against the
property. Rather, her arguments rest entirely on purported contractual obligations arising
3 Plaintiff also responds to Ms. Schaedler-Moore’s request for a stay. (Gov. Oppo. at 6.) However, the
Court does not consider this request since it has already been addressed in a prior order. (See Doc. 145.)
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from the refinance transaction. Such interests fall outside the scope of Section 7403(b),
which is limited to adjudicating claims of interest to the property itself. This action
concerns foreclosure of federal tax liens, and Freedom, not Westcor or Fidelity, holds the
beneficial interest under the deed of trust encumbering the property.
For the same reasons, Rule 19(a)(1)(A) does not apply. Complete relief can be
granted among the existing parties without Westcor or Fidelity because the only relief
sought by Plaintiff is foreclosure of federal tax liens. The potential foreclosure of the
property does not require resolving alleged title insurance obligations, escrow-related
duties, or any other contractual matters arising out of the refinance.
Rule 19(a)(1)(B)(i) also does not apply. Westcor and Fidelity do not possess a
legally protected interest that will be impaired or impeded by the disposition of this
action. Ms. Schaedler-Moore’s asserted indemnity and subrogation theories are, at most,
contingent future claims dependent on outcomes not before the Court. Rule 19 does not
require joinder based on speculative or collateral financial exposure. Makah, 910 F.2d at
558. Importantly, this action does not seek to invalidate, interpret, or enforce any contract
to which Westcor or Fidelity is a party, distinguishing this case from others where joinder
is required to resolve contractual issues. See Dawavendewa, 276 F.3d at 1157.
Rule 19(a)(1)(B)(ii) likewise does not require joinder. Ms. Schaedler-Moore has
not shown that proceeding without Westcor or Fidelity would subject any existing party
to inconsistent obligations. A foreclosure judgment resolving federal tax liens would
neither preclude nor compel any future contractual claims against those entities, and it
would not create conflicting obligations. At most, Ms. Schaedler-Moore anticipates
subsequent litigation, which is not prohibited by Rule 19.
The timing of this motion further confirms that Westcor and Fidelity are not
required parties. This action has been pending since mid-2024, yet Ms. Schaedler-Moore
did not identify these entities as allegedly required until very late in the proceedings.
Earlier in opposing summary judgment, she argued that Plaintiff failed to join Freddie
Mac as a required party, an argument that the Court rejected for lack of any demonstrated
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property interest, without mentioning Westcor or Fidelity at all. The belated argument
reinforces the notion that Ms. Schaedler-Moore’s motion is defensive in nature and aimed
at shifting blame or potential liability for the refinance, rather than protecting any legally
cognizable interest threatened by this foreclosure action.
In summary, this action concerns foreclosure of federal tax liens, not alleged
defects in a refinance transaction. Any contractual or indemnity disputes Ms. Schaedler-
Moore may wish to pursue against Westcor or Fidelity are collateral matters that are
neither necessary nor appropriate for resolution here. Because Westcor and Fidelity do
not hold any interest in the property within the meaning of Section 7403(b) and are not
required parties under Rule 19, Ms. Schaedler-Moore’s motion to join them is DENIED.
IV. 	CONCLUSION & ORDER
For the above reasons, the Court finds that neither Westcor nor Fidelity are
required parties to this case. Accordingly, Ms. Schaedler-Moore’s motion is DENIED
[Doc. 120].
IT IS SO ORDERED.
Dated: February 17, 2026
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