Opinion
B307030
03-02-2023
DARRYL JENKINS et al., Plaintiffs and Appellants, v. BAYVIEW LOAN SERVICING, LLC, et al., Defendants and Respondents.
Darryl Jenkins and Lynne Jenkins, in pro. per., plaintiff and appellant. Akerman, Parisa Jassim and Preston K. Ascherin for Defendants and Respondents.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. TC029244 Maurice A. Leiter, Judge. Affirmed.
Darryl Jenkins and Lynne Jenkins, in pro. per., plaintiff and appellant.
Akerman, Parisa Jassim and Preston K. Ascherin for Defendants and Respondents.
RUBIN, P. J.
Following the grant of a motion for judgment on the pleadings against them, plaintiffs filed a "Notice of Motion and Motion for Equitable Relief from Judgment on Grounds of Intrinsic Fraud [C.C.P. § 473 (b)]." (Brackets in original.) The trial court denied the motion. Plaintiffs now appeal from the trial court's order. We affirm because plaintiffs failed to state a basis for relief.
All further undesignated statutory references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises from years of litigation related to plaintiffs' default on their home loan and their efforts to avoid foreclosure.
1. Plaintiffs' Mortgage and Default
Some 17 years ago, on August 4, 2006, plaintiffs borrowed $467,500 secured by a trust deed recorded against a property in Carson, California. In January 2008, plaintiffs defaulted on their loan payments. In 2011, the trust deed was assigned to defendant Bank of New York Mellon (BoNYM). On October 15, 2013, the trustee recorded a new default notice, identifying $271,443.55 in arrears. In January 2014, the trustee noticed a trustee's sale for February 24, 2014.
2. Plaintiffs File Repeated Bankruptcy Petitions to Prevent Foreclosure
On February 21, 2014 - three days before the scheduled trustee's sale - plaintiffs filed for chapter 7 bankruptcy, identifying the Carson property as their homestead. On March 6, 2014, BoNYM moved for relief from an automatic stay. The bankruptcy court granted the motion, stating "Movant may enforce its remedies to foreclose upon and obtain possession of the Property in accordance with applicable nonbankruptcy law, but may not pursue any deficiency claim against the Debtor or property of the estate except by filing a Proof of Claim pursuant to 11 USC. § 501." The bankruptcy court ordered the unsecured debt discharged in June 2014.
Plaintiffs filed for bankruptcy several more times, each time to prevent the trustee's impending sale. The bankruptcy court regularly dismissed their filings and eventually limited plaintiffs' ability to file for bankruptcy going forward.
At one point, plaintiffs purported to take out another $467,500 loan, securing repayment to a family member through another deed of trust. This family member filed chapter 13 bankruptcy, and listed the Carson property as her address. The bankruptcy court dismissed her case as well.
3. Plaintiffs' 2017 Action Against BoNYM and the Previous Loan Servicer
On February 7, 2017, plaintiffs sued BoNYM and the prior loan servicer in Los Angeles Superior Court, case No. BC649686, alleging that defendants lacked authority under federal and state law to collect their debt and foreclose on their home. On March 7, 2018, the court sustained defendants' demurrer to plaintiffs' operative complaint without leave to amend and entered judgment of dismissal. On June 14, 2018, the court denied plaintiffs' motion for reconsideration.
The dismissal of the action against BoNYM is not the subject of this appeal but it is relevant to defendants' res judicata arguments.
4. The Present Lawsuit
On July 3, 2018, the trustee noticed a trustee's sale for August 16, 2018. After a decade of nonpayment, plaintiffs' debt was $948,387.64.
A week before the sale, plaintiffs brought suit in the Los Angeles Superior Court (case No. TC029244) against defendants BoNYM and the new loan servicer, Bayview Loan Services, LLC (Bayview) for: (1) violation of the California Rosenthal Fair Debt Collection Practices Act (FDCPA; Civ. Code, § 1788 et seq.), which prohibits unfair debt collection practices and regulates communications from debt collectors; (2) violations of sections from the Homeowner's Bill of Rights Act, which protects against wrongful nonjudicial foreclosures; (3) unfair competition; (4) cancellation of instruments; and (5) intentional infliction of emotional distress.
The day after plaintiffs filed their superior court action they also sued Bayview in small claims court, claiming Bayview had violated the FDCA and seeking damages and other relief. On September 28, 2018, the small claims court entered judgment against plaintiffs.
5. Foreclosure Sale and Unlawful Detainer Action by the New Owner
On February 14, 2019, the property was sold at a trustee's sale. The new owner filed an unlawful detainer (UD) action to evict plaintiffs. Trial began on July 22, 2019. On August 12, 2019, the trial court found in favor of the new owner and issued a writ of possession.
6. Bayview and BoNYM's Motion for Judgment on the Pleadings in the Present Lawsuit
On August 30, 2019, Bayview and BoNYM moved for judgment on the pleadings in the present lawsuit. Among other arguments, they asserted plaintiffs' claims were barred by res judicata because in their unsuccessful 2017 civil action (case No. BC649686), plaintiffs asserted the same primary rights against BoNYM and Bayview's predecessor loan servicer, with whom Bayview was in privity.
On October 8, 2019, plaintiffs filed their opposition, arguing that none of their present claims were included in the prior complaints, and specifically, they had not previously alleged violations of the FDCPA. They pointed out that the FDCPA claim is subject to the continuing violation doctrine.
A week later, Bayview and BoNYM replied that plaintiffs "miss-or avoid-the point, dedicating an entire page analyzing irrelevant issues concerning claims under the Rosenthal Act such as whether they 'may be lodged concurrently with or independently of Federal FDCPA' or 'are subject to the continuing violation doctrine.' [Record citation.] 'A claim raised in a second suit is based on the same cause of action as one asserted in a prior action if they are both premised on the same primary right.' Gillies v. JP Morgan Chase Bank, NA., 7 Cal.App.5th 907, 914 (2017) (quotation marks and citations omitted). Whether labeled an FDCPA claim or otherwise, [plaintiffs] keep suing on the same primary right: to be free from an allegedly wrongful foreclosure. So res judicata bars their claims."
On October 22, 2019, the trial court granted the motion for judgment on the pleadings without leave to amend, finding res judicata barred the claims. The court stated:
"Plaintiffs filed suit against [BoNYM] and Bayview's predecessor in interest . . . on February 7, 2017 (BC649686). The case was dismissed after two amendments failed to cure fatal deficiencies. That suit included causes of action ranging from wrongful foreclosure, [Homeowner's Bill of Rights] violations, improper debt collection, breach of contract, and unfair business practices. In the current case, Plaintiffs allege the same or similar causes of actions based on the same injury.
"Plaintiffs argue res judicata does not apply because the previous action did not allege a violation of the Rosenthal Act. (Opp. Brief, p. 5.) This argument fails to address that res judicata also applies to claims that could have been brought in the previous action. (Samara [v. Matar (2017) 8 Cal.App.5th 796,] 803.) This rule is applicable here; Plaintiffs sought the same relief on facts that occurred before the dismissal of their previous action. The only fact that may have occurred after the dismissal is the recordation of a notice of trustee's sale, but a claim on that fact would also be precluded. (Complaint p. 7.) Merely changing their legal theory is insufficient to support another suit."
On November 13, 2019, the trial court entered judgment, dismissing the case with prejudice.
7. Plaintiffs' Motion for Relief from Judgment
On March 12, 2020, plaintiffs filed their "Notice of Motion and Motion for Equitable Relief from Judgment on Grounds of Intrinsic Fraud [C.C.P. § 473 (b)]." (Brackets in original.) They argued they sufficiently alleged their claims, and the trial court abused its discretion by denying them the opportunity to amend their complaint to allege wrongful foreclosure. They claimed they were fraudulently prevented from conducting discovery, and Bayview and BoNYM supplied fraudulent recorded instruments leading to dismissal.
On July 16, 2020, Bayview and BoNYM opposed the motion for relief from judgment, pointing out that a judgment can only be set aside for extrinsic fraud, not intrinsic fraud, and plaintiffs failed to specify any extrinsic fraud. The opposition explained plaintiffs were not prevented from participating in the action as required to support extrinsic fraud; in fact they were represented by counsel during the motion for judgment on the pleadings proceedings.
Although plaintiffs' motion was denominated as one based on intrinsic fraud, the trial court treated it as based on extrinsic fraud, and on July 30, 2020, denied the motion. The court stated:
"First, plaintiffs argue they were fraudulently prevented from conducting discovery because the action was dismissed, and defendants allegedly supplied fraudulent recorded instruments that led to the dismissal. [Citation.] This is not 'fraud' extrinsic to the litigation to justify setting aside the judgment. (Manson, [Iver &York v. Black (2009) 176 Cal.App.4th 36,] 47.) Plaintiffs opposed the motion for judgment on the pleadings, and were represented by counsel at the time; they were not 'deliberately kept in ignorance' of the proceeding. Second, the motion does not outline an argument under Code of Civil Procedure, § 473[, subdivision] (b); which requires a showing of a party's own mistake, inadvertence, surprise, or excusable neglect.
"Finally, plaintiffs argue the Court abused its discretion in granting the motion for judgment on the pleadings. A motion to vacate does not substitute for an appeal or motion for reconsideration, so this does not create a basis for vacating the judgment. The Court notes the action was dismissed pursuant to the doctrine of res judicata; an issue not addressed in plaintiffs' motion."
Plaintiffs timely appealed.
DISCUSSION
Plaintiffs argue the trial court erred in denying their motion for equitable relief from the judgment.
1. Applicable Law
Plaintiffs' motion to vacate states that it is seeking equitable relief from the judgment based on intrinsic fraud and also mentions a second ground, section 473, subdivision (b). We discuss briefly the law of both.
a. Section 473, Subdivision (b) Motions to Vacate
The motion itself stated plaintiffs were seeking relief under section 473, subdivision (b). Section 473, subdivision (b) states: "The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect." "A motion to vacate under section 473 (b) '" 'is addressed to the sound discretion of the trial court, and in the absence of a clear showing of abuse . . . the exercise of that discretion will not be disturbed on appeal.'" '" (Austin v. Los Angeles Unified School Dist. (2016) 244 Cal.App.4th 918, 929.)
On appeal, plaintiffs do not make an argument based on section 473, subdivision (b). The statute is mentioned nowhere in their opening brief, and plaintiffs did not file a reply brief.
b. The Court's Inherent Equitable Power to Vacate a Judgment Based on Fraud
Beyond the statutory framework, a "party may seek relief from a final judgment by appealing to the equitable power of the court; the court, sitting in equity, can, under certain limited circumstances, set aside or modify a valid final judgment obtained by fraud, mistake or accident.... However, the only type of fraud that can be the basis of vacating a final judgment is extrinsic fraud." (In re Margarita D. (1999) 72 Cal.App.4th 1288, 1294, citations omitted.)
"Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding. [Citation.] Examples of extrinsic fraud are: . . . failure to give notice of the action to the other party, and convincing the other party not to obtain counsel because the matter will not proceed (and then it does proceed). [Citation.] The essence of extrinsic fraud is one party's preventing the other from having his day in court." (City and County of San Francisco v. Cartagena (1995) 35 Cal.App.4th 1061, 1067 (Cartagena).)
"By contrast, fraud is intrinsic and not a valid ground for setting aside a judgment when the party has been given notice of the action and has had an opportunity to present his case and to protect himself from any mistake or fraud of his adversary but has unreasonably neglected to do so. [Citation.] Such a claim of fraud goes to the merits of the prior proceeding which the moving party should have guarded against at the time. Where the defrauded party has failed to take advantage of liberal discovery policies to fully investigate his claim, any fraud is intrinsic fraud." (Cartagena, supra, 35 Cal.App.4th at pp. 1067-1068.)
2. Plaintiffs Failed to Establish Grounds for Equitable Relief
a. Intrinsic Fraud Is Not a Basis for Relief
In their motion, plaintiffs requested equitable relief from the judgment based on intrinsic fraud, asserting the foreclosure sale was fraudulent because BoNYM and Bayview lacked the authority to foreclose. On appeal, they argue the court erred in denying their motion for relief from the judgment on grounds of "intrinsic fraud."
However, as we have already stated, "the general rule is that only extrinsic fraud provides a basis for equitable relief. Ordinarily if the aggrieved party is aware of the proceeding and is not prevented from appearing, any fraud is intrinsic and not a basis for equitable relief." (In re Marriage of Guardino (1979) 95 Cal.App.3d 77, 88; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 844 [intrinsic fraud not a valid basis for relief].) As intrinsic fraud is not a basis for relief, plaintiffs have not shown the court abused its discretion in denying the motion on that ground.
c. Plaintiffs Did Not Assert Extrinsic Fraud
Even though plaintiffs' motion was denominated as one based on intrinsic fraud, the trial court also considered whether plaintiffs had made a case for relief based on extrinsic fraud. We also conclude that the fraud alleged by plaintiffs could not be construed to be extrinsic fraud, i.e. "the species of fraud that can be asserted as a defense to enforcement of a judgment." (Casey v. Hill (2022) 78 Cal.App.5th 1143, 1185.)
In their motion, plaintiffs alleged that Bayview and BoNYM "deliberately concealed information and filed fraudulent documents in this matter to support dismissal of Plaintiffs' action against them." On appeal, plaintiffs assert "the trial court erred in presuming [Bayview and BoNYM's] assignment of deed of trust and other foreclosure recorded documents were valid and sufficient to prove its ownership."
Even if it were true that Bayview and BoNYM relied on false or fraudulent documents, that is not extrinsic fraud." 'California cases uniformly hold that the introduction of perjured testimony or false documents in a fully litigated case constitutes intrinsic fraud rather than extrinsic fraud.'" (Beresh v. Sovereign Life Ins. Co. (1979) 92 Cal.App.3d 547, 554.) To demonstrate "extrinsic fraud, it is insufficient for a party to come into court and simply assert that the judgment was premised upon false facts. The party must show that such facts could not reasonably have been discovered prior to the entry of judgment." (Cartagena, supra, 35 Cal.App.4th at p. 1068.)
The fraud plaintiffs allege-that Bayview and BoNYM's foreclosure paperwork is bogus-is what their underlying lawsuit is all about and was certainly well known to plaintiffs prior to entry of judgment. Plaintiffs have failed to allege any facts, true or false, that could not reasonably been discovered before entry of judgment. As the trial court explained, plaintiffs fully participated in litigation: "Plaintiffs opposed the motion for judgment on the pleadings, and were represented by counsel at the time; they were not 'deliberately kept in ignorance' of the proceeding." The trial court did not abuse its discretion as nothing in the record establishes extrinsic fraud.
3. Plaintiffs' Res Judicata Arguments Are Not Before Us
Plaintiffs spend considerable time in their opening appellate brief on res judicata and other arguments that go to the merits of the trial court's ruling on the underlying motion for judgment on the pleadings. Those issues are not properly raised in this appeal. The notice of appeal was limited to the "Order after Motion for Equitable Relief from Judgment on Grounds of Extrinsic Fraud." For us to consider the res judicata and other arguments, plaintiffs would have had to appeal from the underlying judgment itself, not just the motion to vacate. They did not. (See Ryan v. Rosenfeld (2017) 3 Cal.5th 124, 127, 133 ["A statutory appeal from a ruling denying a section 663 motion [to vacate] is indeed distinct from an appeal of a trial court judgment and is permissible without regard to whether the issues raised in the appeal from the denial of the section 663 motion overlap with issues that were or could have been raised in an appeal of the judgment."].)
In this context, plaintiffs' use of the word "extrinsic" may be a mistake. The motion for equitable relief was based on intrinsic fraud.
References in the motion to vacate to res judicata and other merits-based arguments did not mean that the motion to vacate was legally based on those arguments. A motion to vacate is not a vehicle to relitigate a motion for judgment on the pleadings.
DISPOSITION
The judgment is affirmed. Defendants and respondents Bayview Loan Servicing, LLC and the Bank of New York Mellon are awarded costs on appeal.
WE CONCUR: BAKER, J. MOOR, J.