Roe v. The Bank of New York Mellon CA4/2 ( 2021 )

Filed 3/10/21 Roe v. The Bank of New York Mellon CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
KARMEL ROE,
Plaintiff and Appellant, E073763
v. (Super.Ct.No. CIVDS1719905)
THE BANK OF NEW YORK MELLON OPINION
et al.,
Defendants and Respondents.
APPEAL from the Superior Court of San Bernardino County. Donna G. Garza,
Judge. Affirmed.
Karmel Roe, in pro. per., for Plaintiff and Appellant.
Troutman Sanders and Patrick J. Kane for Defendants and Respondents.
Karmel Roe brought this action to stop the foreclosure sale of her home. She has
filed two prior actions seeking the same relief. Defendants Bank of New York Mellon
(Mellon), Wells Fargo, N.A. (Wells Fargo), and Mortgage Electronic Registration
Systems, Inc. (MERS) demurred to the first amended complaint (FAC). The trial court
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sustained the demurrer without leave to amend, concluding that the doctrine of res
judicata barred the FAC. The court entered a judgment of dismissal for defendants. We
affirm.
BACKGROUND
According to the allegations of the FAC and its exhibits, Roe became the owner of
the subject property in January 2006. She executed a deed of trust on the property
securing a note for $439,882. MERS was the beneficiary under the deed of trust and the
nominee of the lender and the lender’s successors and assigns. The lender recorded the
deed of trust in January 2006. Wells Fargo was the servicer of Roe’s mortgage loan.
Roe’s mortgage was securitized by assigning it to an investment trust.
Specifically, in October 2009, MERS assigned the deed of trust and note to Mellon in
Mellon’s capacity as trustee of the Structured Asset Mortgage Investments II Trust 2006-
AR3 (the 2006 Trust).
Roe’s attempts to challenge the foreclosure process started in 2011. In connection
with the demurrer, the trial court granted defendants’ request for judicial notice of records
in her two prior actions—the first filed in 2011 (the 2011 Action) and the second filed in
2014 (the 2014 Action).1
1 In the trial court, defendants filed a request for judicial notice of thirteen exhibits.
The clerk’s transcript omits the last three of those exhibits, which were pleadings from
the prior actions. Defendants filed a motion to augment the record with those exhibits or,
in the alternative, a request for judicial notice. Their motion also includes a fourth
document that was not part of the request for judicial notice in the trial court. In
June 2020, we issued an order deeming the motion to augment a request for judicial
notice. We grant the request for judicial notice of the three exhibits that were omitted
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I. The 2011 Action
Roe filed the 2011 Action in San Bernardino County Superior Court. (Roe v.
Countrywide Home Loans, Inc. et al. (No. CIVDS1112887).) Mellon and another
defendant removed the case to the federal district court. (Roe v. Bank of America, N.A.
et al. (No. 5:11-cv-01991-TJH-DTB).) In December 2014, Roe filed a first amended
complaint alleging 10 causes of action against numerous defendants, including MERS,
Mellon as trustee of the 2006 Trust, and two loan servicing entities. Roe alleged that the
defendants lacked the authority to foreclose because (1) the 2009 assignment of the deed
of trust occurred after the closing date of the 2006 Trust and was therefore void, (2) the
signatures of the MERS official and the notary were forged on the assignment, and (3)
the note was never physically delivered to the 2006 Trust.
The defendants moved to dismiss the first amended complaint, and the district
court granted the motion and dismissed the complaint with prejudice in February 2015.
The court ruled that Roe lacked standing to challenge the documents relating to the
securitization of her mortgage loan. The Ninth Circuit Court of Appeals affirmed the
judgment of dismissal in February 2017.
II. The 2014 Action
Roe also filed the 2014 Action in San Bernardino County Superior Court. (Roe v.
Nationstar Mortgage, LLC et al. (No. CIVDS1418338).) In July 2015, she filed a first
amended complaint alleging six causes of action against MERS, Mellon as trustee of the
from the clerk’s transcript (exhibits 1, 3, & 4) and deny the request for judicial notice of
the fourth document that was not part of the record in the trial court (exhibit 2).
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2006 Trust, and other defendants. Once more, Roe alleged that the defendants had no
right to foreclose because (1) the 2009 assignment of the deed of trust occurred after the
closing date of the 2006 Trust and was therefore void, (2) the MERS and notary
signatures were forged, and (3) the defendants did not hold the note.
In August 2017, the court granted a defense motion for summary judgment. It
concluded that Roe lacked standing to challenge the 2009 assignment of the deed of trust.
It also rejected her “‘holder of the note’” theory on the basis of Gomes v. Countrywide
Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154-1155 (note holder could name a
nominee to act on its behalf, and California’s comprehensive nonjudicial foreclosure
scheme did not permit a lawsuit to determine whether the nominee was authorized by the
note holder to initiate foreclosure). The court entered judgment for that moving
defendant (Nationstar Mortgage LLC, which Roe has not named in this case). There is
no evidence that Roe appealed that judgment.
III. The FAC and Defendants’ Demurrer
Roe brought the instant action in October 2017. While the FAC alleged that “the
wrong entities are initiating foreclosure and are using fraudulent recorded assignments,”
the FAC did not specify which defendant is seeking to foreclose, nor did it specify
whether a trustee’s sale had been scheduled. The FAC alleged that “[d]efendants”
collectively had no right to foreclose for reasons alleged in Roe’s prior actions—namely,
the untimely assignment of the deed of trust to the 2006 Trust, the forged signatures of
the MERS official and the notary, and defendants’ failure to hold the “Tangible Note.”
The FAC alleged two more theories not alleged in the prior actions: (1) In 2013, MERS
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assigned the deed of trust to Nationstar Mortgage LLC. The 2013 assignment
contradicted the 2009 assignment, rendering both of them void. Moreover, MERS had no
authority to effect the second assignment. (2) Roe had discharged her debt in a
bankruptcy proceeding, and defendants failed to appear in that case and prove their claim.
The FAC alleged a cause of action styled “lack of standing to foreclose” and other causes
of action for quiet title, slander of title, injunctive relief, and declaratory relief.
Defendants demurred and argued that the FAC was barred by res judicata, and
they also advanced several alternative arguments. The trial court sustained the demurrer
without leave to amend and entered a judgment of dismissal for defendants. It ruled that
the FAC was barred by res judicata on the basis of the 2011 and 2014 Actions.
Specifically, the court determined that Roe had based her prior actions and the FAC on
the same theories—the untimely assignment of the deed of trust, the forged signatures of
MERS and the notary, and defendants’ failure to hold the note. The court also concluded
that the two prior actions had resulted in final judgments on the merits, and the actions
had involved the same parties or parties in privity with defendants.
In the alternative, the court ruled that Roe lacked standing to challenge the
untimely assignment to the 2006 Trust and the allegedly forged signatures on the
assignment. The court also concluded that MERS had the authority to assign the deed of
trust and that Roe had failed to allege facts showing defendants had no right to pursue
foreclosure.
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STANDARD OF REVIEW
A demurrer tests whether a complaint states a cause of action as a matter of law.
(Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 809.) We
independently determine whether the complaint states facts sufficient to constitute a
cause of action. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “‘We treat the demurrer
as admitting all material facts properly pleaded, but not contentions, deductions or
conclusions of fact or law. [Citation.] We also consider matters which may be judicially
noticed.’” (Ibid.) We review the court’s decision to deny leave to amend for abuse of
discretion. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
Although the foregoing standards guide our review, we presume that an appealed
order or judgment is correct, and the appellant bears the burden of establishing reversible
error. (Eghtesad v. State Farm General Insurance Company (2020) 51 Cal.App.5th 406,
411; Keyes v. Bowen (2010) 189 Cal.App.4th 647, 655.) “We are not bound to develop
appellants’ arguments for them.” (In re Marriage of Falcone & Fyke (2008) 164
Cal.App.4th 814, 830.)
DISCUSSION
Roe fails to demonstrate that the trial court committed prejudicial error by
sustaining defendants’ demurrer on the basis of res judicata. Similarly, she fails to
demonstrate that the court abused its discretion by denying her leave to amend.
I. Res Judicata
Res judicata is an umbrella term encompassing both claim preclusion and issue
preclusion (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 823-824 (DKN
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Holdings)), and defendants argued that both aspects of the doctrine applied in this case.
The two forms of preclusion have different requirements. (Id. at p. 824.)
A. Issue Preclusion
“[I]ssue preclusion applies: (1) after final adjudication (2) of an identical issue (3)
actually litigated and necessarily decided in the first suit and (4) asserted against one who
was a party in the first suit or one in privity with that party.” (DKN Holdings, supra, 61
Cal.4th at p. 825.)
Issue preclusion bars the FAC in large part. Both of Roe’s prior actions alleged
that the 2009 assignment of the deed of trust was void because it was untimely and
forged. Both prior actions also alleged that the defendants did not hold the note. And in
both prior actions, the courts rejected the theories in ruling on a motion to dismiss or a
summary judgment motion. Those rulings are now final. Roe alleged the same theories
in the FAC, but she is precluded from relitigating those issues.
B. Claim Preclusion
Claim preclusion “‘prevents relitigation of the same cause of action in a second
suit between the same parties or parties in privity with them.’” (DKN Holdings, supra,
61 Cal.4th at p. 824.) It also requires “a final judgment on the merits in the first suit.”
(Ibid.) “To determine whether two proceedings involve identical causes of action for
purposes of claim preclusion, California courts have ‘consistently applied the “primary
rights” theory.’” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797
(Boeken).) Under that theory, a cause of action is composed of the plaintiff’s right to be
free from the particular injury suffered, a corresponding duty of the defendant, and a
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wrongful act constituting a breach of that duty. (Mycogen Corp. v. Monsanto Co. (2002)
28 Cal.4th 888, 904 (Mycogen Corp.).) “[T]he determinative factor is the harm suffered.
When two actions involving the same parties seek compensation for the same harm, they
generally involve the same primary right,” regardless of the specific remedy sought or the
legal ground for relief advanced. (Boeken, supra, at p. 798.)
“‘The most salient characteristic of a primary right is that it is indivisible . . . .’”
(Mycogen Corp., supra, 28 Cal.4th at p. 904.) A plaintiff may not divide a primary right
and enforce it in multiple actions. (Ibid.; see also id. at p. 897 [“[A]ll claims based on the
same cause of action must be decided in a single suit; if not brought initially, they may
not be raised at a later date”].) If claims involving the same primary right could have
been raised in the first proceeding but were not, they are barred. (Noble v. Draper (2008)
160 Cal.App.4th 1, 11.)
Here, the FAC alleged a new theory premised on the 2013 assignment of the deed
of trust. To the extent that the 2013 assignment constituted grounds for relief, claim
preclusion applies. The same harm is at issue in all three of Roe’s actions—an allegedly
unauthorized or invalid foreclosure process—and consequently the same primary right to
be free from that harm. Roe could have raised the 2013 assignment as grounds for relief
in the 2011 Action. She filed the first amended complaint in that action in December
2014, well after the 2013 assignment. Mellon and MERS were defendants in the 2011
Action, which resulted in a final judgment on the merits for them. Although Wells Fargo
was not a defendant, Roe does not challenge the trial court’s finding of privity with the
prior defendants.
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Instead, Roe argues that res judicata does not apply “[w]hen there are changed
conditions and new facts that were not in existence at the time the [prior] action was
filed.” (Italics added.) She does not identify what those changed conditions or new facts
are in this case. But assuming that she means the 2013 assignment, as just discussed, the
assignment was in existence at the time she amended her complaint in the 2011 Action.
The FAC alleged a second new theory—the bankruptcy court’s discharge of Roe’s
debt. The FAC does not specify when that occurred, and defendants did not ask the court
to take judicial notice of any documents that evidence the date of the alleged discharge.
However, the discharge order appears in the record because Roe requested judicial notice
of the order in connection with a motion for judgment on the pleadings. The discharge
order is dated June 28, 2013. Roe’s claim based on the discharge order is therefore
barred: She could have and should have raised it in the 2011 Action, when she amended
her complaint in December 2014. Claim preclusion prohibits this sort of piecemeal
litigation. (Mycogen Corp., supra, 28 Cal.4th at p. 897.)
In any event, as defendants argued in their demurrer points and authorities, the
alleged discharge of Roe’s debt in bankruptcy proceedings fails to state a cause of action
for other reasons. “[I]n case of debtor default on a mortgage, a creditor is not limited to a
right of foreclosure on the property; a creditor may also sue the debtor personally for any
deficiency on the debt that remains after foreclosure.” (HSBC Bank USA, N.A. v.
Blendheim (In re Blendheim) (9th Cir. 2015) 803 F.3d 477, 486.) A bankruptcy
discharge eliminates the mortgage creditor’s ability to proceed personally against the
debtor, but the creditor retains the right to foreclose on the property. (Ibid.) “A creditor
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with a lien on a debtor’s property may generally ignore the bankruptcy proceedings and
decline to file a claim without imperiling his lien, secure in the in rem right that the lien
guarantees him under non-bankruptcy law: the right of foreclosure.” (Id. at p. 485.)
Accordingly, it does not matter whether defendants failed to file a claim in Roe’s
bankruptcy proceeding or whether the court discharged her debt. The recorded deed of
trust created a valid, perfected lien on the subject property that survived the discharge.
(Cortez v. American Wheel (In re Cortez) (Bankr.9th Cir. 1995) 191 B.R. 174, 177-178.)
In sum, Roe fails to demonstrate that the court prejudicially erred by sustaining the
demurrer. Issue preclusion and claim preclusion barred the FAC.
II. Leave to Amend the FAC
As to the court’s denial of leave to amend, Roe fails to show an abuse of
discretion. Roe bears the burden of demonstrating “a reasonable possibility” that she
could cure the FAC’s defects through amendment, and to carry that burden she must
identify the specific facts she could allege and explain how those facts would cure the
defects. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081; Total Call
Internat. Inc. v. Peerless Ins. Co. (2010) 181 Cal.App.4th 161, 166, 173.) But in
opposition to the demurrer, Roe merely stated that she would add “two additional parties
and two additional causes of action.” On appeal, she asserts that she can “prove to the
court that indeed plaintiff is not precluded from filing and pleading her claim,” and she
identifies three parties and four causes of action that she would add. None of those
statements explains how the proposed amendments would overcome the preclusive effect
of the prior actions.
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DISPOSITION
The judgment is affirmed. Respondents shall recover their costs of appeal. (Cal.
Rules of Court, rule 8.278(a)(1).)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MENETREZ
J.
We concur:
RAMIREZ
P. J.
CODRINGTON
J.
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