Opinion
H049638
04-19-2024
DAVID MERRITT, Plaintiff and Appellant, v. SPECIALIZED LOAN SERVICING, LLC, et al., Defendants and Respondents.
NOT TO BE PUBLISHED
(Santa Clara County Super. Ct. No. 18CV336876)
Wilson, J.
This appeal arises from two related state court actions that plaintiff and appellant David Merritt and his wife, Salma Merritt, filed in 2018 and 2020. In 2018, the Merritts filed a civil complaint alleging that defendants and respondents U.S. Bank N.A., Bank of New York Mellon, Specialized Loan Servicing, LLC, Real Time Resolutions, and several individual defendants were liable as debt collectors for their wrongdoing in connection with the attempted foreclosure sale of the Merritts' home in Sunnyvale, which they purchased with financing in 2006. On October 20, 2020, during the course of litigating this action, the trial court granted defendants' request that the Merritts be deemed vexatious litigants under Code of Civil Procedure section 391 et. seq., and entered a prefiling order requiring the Merritts to obtain leave of the presiding judge of the court prior to filing any new litigation in propria persona (as self-represented parties) as well as post a bond in the amount of $250,000 pursuant to section 391.3, subdivision (a) and section 391.7, subdivision (a).
Unspecified statutory references are to the Code of Civil Procedure.
Shortly before the prefiling order was entered, the nonjudicial foreclosure sale of the Merritts' home took place in October 2020, resulting in the Merritts filing a wrongful foreclosure action in November 2020. (Merritt et al. v. Specialized Loan Servicing, LLC et al. (Super. Ct. Santa Clara County, 2020, No. 20CV372516).) In January 2021, the trial court ordered the two cases to be consolidated for all purposes. On November 22, 2021, the trial court also granted defendant's request for a new prefiling order under section 391.7, which increased the bond amount to $500,000 and stated that the order applied regardless of whether the Merritts filed new litigation as self-represented parties or through counsel.
The Merritts now appeal the November 22, 2021 prefiling order on the grounds that there was no substantial evidence supporting the court's findings therein. In addition, while not specified in their notice of appeal, the Merritts appear to be appealing two prejudgment orders entered in both cases.
For the reasons explained below, we determine that the two prejudgment orders are not subject to review on the merits as they were not included in the notice of appeal and have been previously appealed and ruled on by this court. We further find that there was substantial evidence to support the trial court's prefiling order and affirm.
I. Factual and Procedural Background
We grant in part defendants' request for judicial notice of this court's prior opinion in the previous appeal on the same case, Merritt et al. v. Specialized Loan Servicing, LLC et al. (Aug. 11, 2022, H048463 [nonpub. opn.].) On our own motion, we also take judicial notice of this court's prior opinions in two related appeals, Merritt et al. v. Countrywide Financial Corp. et al. (Sept. 17, 2019, H041560 [nonpub. opn.].) and Merritt et al. v. Mozilo et al. (Aug. 25, 2021, H047636 [nonpub. opn.].) (Evid. Code, § 452, subd. (d)(1).) Our summary of the pertinent factual and procedural background includes some information that we have taken from these prior opinions.
In 2006, the Merritts entered into an agreement to purchase a home in Sunnyvale for $729,000. The financing for the home purchase involved two loans secured with first and second deeds of trust. The Merritts made the monthly payments on both loans until 2008, when they could no longer make the payments and defaulted on the loans. In 2009, the Merritts attempted to rescind the loan agreements and Bank of America, the loan servicer, offered to modify the loan agreements. The Merritts subsequently signed loan modification agreements acknowledging that the agreements modified and supplemented the original notes and the deeds of trust. However, the Merritts did not make any further payments on the loans.
A. First State Court Action
In 2009, the Merritts filed their first state court action arising from the financing of their 2006 home purchase. (Merritt et al. v. Countrywide Financial Corp. (Super. Ct. Santa Clara County, 2009, No. CV159993).) The defendants in that action included Bank of America, Countrywide Home Loans, Countrywide Financial Corp., JP Morgan Chase Bank, Bear Stearns, and several other individual defendants. The Merritts alleged in their complaint that the defendants were liable for predatory lending practices under several tort and statutory causes of action. After the trial court granted the defendants' motions for judgment on the pleadings and dismissed the matter without leave to amend, the Merritts appealed. This court affirmed the judgment in Merritt et al. v. Countrywide Financial Corp. et al., supra, H041560.
B. Second State Court Action
In 2018, the Merritts filed their second state court action, one of the underlying matters for the instant appeal, which similarly concerned the financing of their 2006 home purchase. (Merritt et al. v. Specialized Loan Servicing, LLC et al. (Super. Ct. Santa Clara County, 2018, No. 18CV336876).) The defendants named included U.S. Bank N.A., Bank of New York Mellon, Specialized Loan Servicing, LLC, Real Time Resolutions, and several individual defendants. The Merritts alleged that the defendants were liable as debt collectors under several tort and statutory causes of action. In addition, the Merritts alleged they properly rescinded the 2009 loan modifications such that the defendants had no authority to foreclose.
During the course of the litigation, defendants filed a motion for an order requiring the Merritts to provide security for costs and fees in the amount of $500,000 pursuant to section 391.1 on the grounds that the Merritts had been previously declared to be vexatious litigants and there was no probability that they would prevail in the case. Defendants also sought a new prefiling order requiring the Merritts to obtain leave of the presiding judge of the court in which they seek to file the litigation before filing any new litigation, whether in propria persona or by counsel in any California court, pursuant to section 391.7, subdivision (a). Over the Merritts' opposition, the trial court granted the motion in part on October 20, 2020. In its order, the trial court declared that the Merritts were vexatious litigants under section 391.7 and required them to post a bond in the amount of $250,000 pursuant to section 391.1. The order also provided that all previous prefiling orders pursuant to section 391.7, subdivision (a), would remain in full force in effect.
However, the trial court denied without prejudice defendants' request that the new prefiling order also apply to the Merritts when they are represented by counsel. The trial court acknowledged that the Merritts had used prior counsel in the past as a means to circumvent prefiling orders, and that prior counsel had simply repeated the same allegations and statements made by the Merritts when they were self-represented. Nonetheless, the trial court noted that the Merritts' current attorney had only been retained a few months prior such that there was not a sufficient basis to extend the prefiling order to filings made by counsel.
The trial court subsequently stayed all proceedings in the matter from July 2020 onwards until 10 days after the Merritts posted the required security. On January 14, 2021, the court additionally ordered that the Merritts post their bond by February 16, 2021.
While defendants' motion for a security bond and prefiling order was pending, the Merritts filed an ex parte application for a temporary restraining order and an order to show cause regarding preliminary injunction that would bar defendants from taking any action to foreclose on the Merritts' Sunnyvale home, including the trustee's sale that was set in August 2020. The Merritts argued that injunctive relief was warranted because the deed of trust was void and defendants did not have authority to foreclose. The trial court denied the ex parte application in a minute order dated September 10, 2020, finding that the Merritts had not met their burden to establish a reasonable probability of prevailing on the merits.
C. Wrongful Foreclosure Case
1. Initial Filing and Orders
On November 3, 2020, the Merritts filed a third state court action arising from the nonjudicial foreclosure sale of their Sunnyvale home that took place on October 16, 2020. (Merritt et al. v. Specialized Loan Servicing, LLC et al. (Super. Ct. Santa Clara County, 2020, No. 20CV372516).) The verified complaint names as defendants Specialized Loan Servicing, LLC, U.S. Bank N.A., and Zieve, Brodnax, and Steele, LLP. The Merritts alleged that the foreclosure was wrongful because defendants did not have authority to foreclose on a deed of trust that was void due to the Merritts rescinding the 2009 loan modifications and sought declaratory and injunctive relief.
After filing their wrongful foreclosure action, the Merritts filed an ex parte application for a temporary restraining order and an order to show cause regarding preliminary injunction restraining defendants from recording the post-foreclosure trustee's deed, transferring ownership, and evicting them from their Sunnyvale home. The Merritts did not give defendants notice of the ex parte application, and the trial court granted the application in the December 2, 2020 order, which issued the temporary restraining order as requested and an order to show cause regarding preliminary injunction. The hearing on the order to show cause was subsequently vacated and never held.
Defendants then filed an ex parte application to consolidate the wrongful foreclosure action with the pending pre-foreclosure action. In support of the application, defendants argued that the Merritts had made the same allegations in both actions-that the loan agreements had been rescinded and defendants and their predecessors had no authority to foreclose-and the Merritts' purpose in initiating the new wrongful foreclosure action was to evade compliance with the October 20, 2020 prefiling order requiring them to post a security bond.
On January 13, 2021, the trial court granted the ex parte application and ordered that the wrongful foreclosure case, No. 20CV372516, was consolidated with the preforeclosure case, No. 18CV336876, for all purposes. The court specifically ruled that "only one set of findings of fact and conclusions of law if any, and only one judgment shall be made herein with respect to the consolidated cases. All further filings shall be made only in lead Case No. 18CV336876; there shall be no further filings in Case No. 20CV372516." The trial court further ordered that case No. 20CV372516 was subject to the October 2020 vexatious litigant prefiling order entered in case No. 18CV336876, and as a result, the prosecution of case No. 20CV372516 was stayed until the Merritts posted the required $250,000 security bond.
Defendants also filed an ex parte application for an order dissolving the temporary restraining order that the trial court had issued on December 2, 2020, and denying the Merritts' requested preliminary injunction. On February 3, 2021, the trial court granted this request and indicated that the temporary restraining order had expired by operation of law. The February 3, 2021 order also indicated that the order to show cause regarding preliminary injunction was improvidently granted due to the Merritts' failure to give notice to defendants and failure to disclose either the previous denials of their requests for injunctive relief or the related case (No. 18CV336876) in which they had been declared vexatious litigants. The trial court further ordered that because the hearing on the order to show cause had been vacated and never reset, the order to show cause was considered discharged, and the Merritts' request for a preliminary injunction was denied. The trial court finally noted that because the Merritts had previously appealed earlier denials of injunctive relief in case No. 18CV336876, they were foreclosed from bringing a request for identical relief "under the guise of a new case."
The Merritts subsequently appealed the January 13, 2021 order and the February 3, 2021 order as well as several other prejudgment orders entered in case No. 18CV336876, including the September 10, 2020 order denying the preliminary injunction and the October 20, 2020 prefiling order. This court ruled that none of the orders appealed could be reviewed on the merits as they were either moot, unappealable, untimely, or abandoned. (Merritt et al. v. Specialized Loan Servicing, LLC., et al., supra, H048463.)
2. November 2021 Vexatious Litigant Order
In April 2021, defendants filed a motion requesting that the Merritts be subject to a new prefiling order. Similar to their prior motion, defendants requested that the Merritts be required to: (1) provide security for costs and fees in the amount of $500,000 pursuant to section 391.1; and (2) request permission from the presiding judge of any court prior to filing any new litigation, whether in propria persona or represented by counsel. Defendants noted that the Merritts had already been declared vexatious litigants on three prior occasions, and that the claims raised in the wrongful foreclosure case -which rested on the Merritts' argument that they successfully rescinded their loans in 2009 - had been previously litigated to final judgment, thus barring them from being raised under the doctrine of res judicata. Defendants further argued that all claims raised by the Merritts were time-barred as the longer applicable statute of limitations expired in 2013.
Although not stated in their motion, it appears this motion was filed in response to a court order entered on March 19, 2021, which overruled the previous January 13, 2021 holding that case No. 20CV372516 was subject to the same prefiling order entered in case No. 18CV336876; and directed defendants to file a new motion.
The doctrine of res judicata "gives conclusive effect to a former judgment in subsequent litigation between the same parties involving the same cause of action. A prior judgment for the plaintiff results in a merger and supersedes the new action by a right of action on the judgment. A prior judgment for the defendant on the same cause of action is a complete bar to the new action. [Citation.]" (Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 866-867.)
Defendants next argued that any new prefiling order should apply whether or not the Merritts were represented by counsel. Citing the case of In re Shieh (1993) 17 Cal.App.4th 1154 (Shieh), defendants argued that the Merritts' attorney was simply acting as a "puppet" by putting forth the same "bogus" allegations that the Merritts had been attempting to litigate since 2009. Defendants further noted that the court's primary reason for not extending the prefiling order to counsel in October 2020 was because counsel had only been recently retained, even though the court acknowledged that the Merritts had previously used counsel as a means to circumvent existing prefiling orders. However, defendants indicated that since being retained, the Merritts' current counsel had filed numerous meritless motions in his attempts to overturn or overrule prior orders, and most importantly, disrespected the October 2020 prefiling order by filing the wrongful foreclosure case based on the same allegations as case No. 18CV336876.
On August 24, 2021, the court held a hearing on defendants' motion. During the hearing, the Merritts primarily argued that the recission issue had never been litigated such that they were entitled to raise it in their wrongful foreclosure action. The Merritts further claimed that the wrongful foreclosure action was not simply a "continuation" or extension of their 2018 pre-foreclosure case, as title was now at issue, and this was their "first time" litigating against Specialized Loan Servicer. Although the trial court ultimately took the matter under submission, the court indicated on several occasions that it did not agree with the Merritts' arguments, noting that in reviewing the consolidation order and allegations in the two cases, it appeared that the matters "might be the same case just in a, you know, a different flavor," that the cases "[a]ll ... seem[ed] to have the same legal issues . on the same property," and that the filings in both cases repeatedly cross-referenced allegations and arguments between one another.
On November 22, 2021, the trial court issued an order granting defendants' request. Although the trial court did not make any explicit findings that the Merritts constituted vexatious litigants under section 391.7, the court ordered that the Merritts be required to post a bond in the amount of $500,000. The court also ordered that the Merritts were required to seek permission from the presiding judge prior to filing any new litigation whether in propria persona or through an attorney, pursuant to section 391.7, subdivision (b), and Shieh, supra, 17 Cal.App.4th at pp. 1167-1168. Finally, the court ordered that any pending motions in the matter be taken off calendar pending the Merritts' compliance with the prefiling order.
The Merritts timely appealed the November 2021 order.
3. Dismissal of Cases
On December 27, 2022, the trial court filed an order indicating that it held a case status review hearing on October 27, 2022, at which time the Merritts had not posted either of the bonds as required by the October 2020 prefiling order in case no. 18CV336876 and the November 2021 prefiling order in case no. 20CV372516. The trial court therefore dismissed both actions without prejudice. The Merritts filed a notice of appeal after the October 27, 2022 hearing appealing the dismissal, as well as several other prejudgment orders entered between 2020 and 2021.
II. Discussion
A. Orders Subject to Review
As a preliminary matter, we must first determine which orders the Merritts are requesting that we review on appeal. In their notice of appeal filed on November 24, 2021, the Merritts only indicate they are appealing the prefiling order entered on November 22, 2021. However, in their opening brief, the Merritts appear to also be challenging the January 31, 2021 order for consolidation, as well as the February 3, 2021 order dissolving the Merritts' temporary restraining order and denying their request for a preliminary injunction. Defendants argue that the Merritts should be precluded from seeking review of these two additional orders as they (1) were not included in the notice of appeal; and (2) have already been ruled on by this court in the Merritts' prior appeal. (See Merritt et al. v. Specialized Loan Servicing, LLC., et al., supra, H048463.) We agree.
The notice of appeal indicates it is for the order entered on November 23, 2021; however, it appears this was an inadvertent error as the record does not reflect any orders were entered on this date, and the accompanying proof of service refers to the "November 22, 2021 order granting Vexatious Litigant Motion ordering $500k for Bond[.]"
The California Supreme Court has instructed that "California Rules of Court, rule 8.100(a)(1) requires that, '[t]o appeal from a superior court judgment or an appealable order of a superior court, . . . an appellant must serve and file a notice of appeal in that superior court.' Rule 8.100(a)(2) further provides that '[t]he notice of appeal must be liberally construed. The notice is sufficient if it identifies the particular judgment or order being appealed.'" (K.J. v. Los Angeles Unified School Dist. (2020) 8 Cal.5th 875, 882, fn. omitted.) Thus, "Rule 8.100(a)(2)'s liberal construction requirement reflects the longstanding' "law of this state that notices of appeal are to be liberally construed so as to protect the right of appeal if it is reasonably clear what [the] appellant was trying to appeal from, and where the respondent could not possibly have been misled or prejudiced." '" (Ibid.)
In the instant matter, the notice of appeal filed by the Merritts makes no reference to any orders apart from the November 22, 2021 prefiling order. Further, prior to filing their opening brief, the Merritts did not file an amended notice of appeal or provide any further indication of their intent to include any other orders in their appeal. Accordingly, even liberally construing the notice of appeal, we cannot reasonably find that it is sufficient to include the January 13, 2021 and February 3, 2021 orders such that defendants could have been aware that the Merritts intended to appeal from these orders.
Moreover, as noted by defendants, the Merritts chose to file a separate notice of appeal from the dismissals approximately one year later in case No. H050664, which explicitly states that they are appealing the January 2021 and February 2021 orders, among others.
Moreover, even if we were to find that the Merritts' notice of appeal properly sought review of these additional orders, this court's opinion in Merritt et al. v. Specialized Loan Servicing, LLC et al., supra, H048463 addressed the Merritts' prior appeals from the same orders and dismissed both of them. With respect to the January 13, 2021 order for consolidation, this court noted that such an order is not appealable and can only be reviewed upon appeal from a subsequent judgment, citing State Farm Mut. Auto. Ins. Co. v. Superior Court (1956) 47 Cal.2d 428, 432 (State Farm) in support. While the consolidated cases have since been dismissed, this was not true at the time the Merritts filed their instant notice of appeal. Further, as there is a pending appeal from the final judgment in the case - which specifically asks for review of the January 13, 2021 order case law indicates that the order should only be reviewed as part of that appeal, not the instant one. (See State Farm, supra, 47 Cal.2d at p. 432.) Similarly, with respect to the February 3, 2021 order dissolving the temporary restraining order and denying the preliminary injunction, this court previously ruled that an appeal from the order was moot as the act sought to be enjoined - the sale of the Merritts' home - had already been performed. Since our court's previous decision, we have not been provided evidence that the sale was rescinded or otherwise cancelled. Therefore, an appeal from the February 3, 2021 order remains moot, and we do not render opinions on moot questions. (See Building a Better Redondo, Inc. v. City of Redondo Beach (2012) 203 Cal.App.4th 852, 866-867.)
We determine that the only order properly before us to review is the November 22, 2021 prefiling order.
B. November 22, 2021 Prefiling Order
The Merritts contend that there was no substantial evidence to support the trial court's finding that they were vexatious litigants subject to a prefiling order. Specifically, the Merritts appear to argue that defendants failed to present sufficient evidence demonstrating that the issues raised in their wrongful foreclosure case were res judicata and they had no reasonable probability of prevailing on the merits. Defendants respond that the Merritts should be precluded from appealing this order as the same underlying issues were previously adjudicated in their prior appeal from the October 2020 prefiling order, and even if their appeal is not so precluded, there was substantial evidence to support the trial court's findings and imposition of the prefiling order.
1. Applicable Law and Standard of Review
The vexatious litigant statutes, commencing with section 391, "provide two distinct and cumulative remedies against vexatious litigants." (Golin v. Allenby (2010) 190 Cal.App.4th 616, 634 (Golin).) The first remedy involves a defendant bringing a motion under section 391.1, which requires the court to determine that the plaintiff is a vexatious litigant and that there is no reasonable probability that he or she will prevail on the merits in the action. (Golin, supra, at p. 634.) If the court makes such a finding, it may then order the plaintiff to furnish security under section 391.3 , at which time the action is stayed from the time the motion was filed until 10 days after the plaintiff posts the required security. (§ 391.6.)
This section provides, in relevant part, that "[if] the court determines that the plaintiff is a vexatious litigant and that there is no reasonable probability that the plaintiff will prevail in the litigation against the moving defendant, the court shall order the plaintiff to furnish, for the benefit of the moving defendant, security in such amount and within such time as the court shall fix." (§ 391.3, subd. (a).)
The second remedy, which is provided under section 391.7, authorizes the court to "enter a prefiling order which prohibits a vexatious litigant from filing any new litigation in the courts of this state in propria persona without first obtaining leave of the presiding judge of the court where the litigation is proposed to be filed." (§ 391.7, subd. (a).) Although this order is typically restricted to filings by self-represented litigants, courts have previously found it permissible to extend a prefiling order to litigation filed by counsel when the record reflects counsel is simply acting as a "puppet" for a selfrepresented litigant and merely echoes or repeats the same allegations as prior pleadings. (See, e.g., Shieh, supra, 17 Cal.App.4th at pp. 1167-1168 [vexatious litigant prefiling order applied notwithstanding representation by counsel when it was apparent that the litigant was preparing his own documents even while represented]; Golin, supra, 190 Cal.App.4th at pp. 638-640 [plaintiffs were properly declared vexatious litigants when counsel did not exercise control over the representation and allowed plaintiffs to "effectively run the case as self-represented litigants"].)
While an order declaring a person to be a vexatious litigant and to furnish security under section 391.3 is not directly appealable (Golin, supra, 190 Cal.App.4th at p. 635), such an order may be reviewed in conjunction with an appeal from some subsequent otherwise appealable judgment or order. (In Re Marriage of Deal (2020) 45 Cal.App.5th 613, 618-619 (Deal), quoting In re Bittaker (1997) 55 Cal.App.4th 1004, 1008.) As an order requiring a person to obtain permission from the presiding judge or justice before filing new litigation in propria persona (§ 391.7) is injunctive in nature, it is therefore appealable under section 904.1, subdivision (a)(6). (Deal, supra, 45 Cal.App.5th at p. 619.) Accordingly, as the November 22, 2021 order included orders both to furnish security under section 391.3 and obtain permission prior to filing under 391.7, the order is appealable and can be reviewed on the merits.
"The trial court exercises its discretion in determining whether a person is a vexatious litigant. Review of the order is accordingly limited and the Court of Appeal will uphold the ruling if it is supported by substantial evidence. Because the trial court is best suited to receive evidence and hold hearings on the question of a party's vexatiousness, we presume the order declaring a litigant vexatious is correct and imply findings necessary to support the judgment. [Citations.] Of course, we can only imply such findings when there is evidence to support them. When there is insufficient evidence in support of the designation, reversal is required. [Citation.] [¶] Likewise, a court's decision that a vexatious litigant does not have a reasonable chance of success in the action is based on an evaluative judgment in which the court weighs the evidence. If there is any substantial evidence to support the court's determination, it will be upheld. [Citation.]" (Golin, supra, 190 Cal.App.4th at p. 636.)
2. The Merritts Are Not Precluded from Appealing The Current Prefiling Order
Defendants contend that the Merritts' appeal should be summarily denied under the doctrine of collateral estoppel on the basis that the appeal raises the same issues addressed by their prior appeal of the October 20, 2020 prefiling order, which this court previously affirmed in its opinion in Merritt et al. v. Specialized Loan Servicing, LLC., et al., supra, H048463. We find no merit to this contention.
Collateral estoppel precludes relitigation of issues argued and decided in a prior proceeding. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.) To demonstrate collateral estoppel, five threshold requirements must be met: (1) an identical issue was decided in a former proceeding; (2) the issue was actually litigated in the former proceeding; (3) the issue was necessarily decided in the former proceeding; (4) the decision in the former proceeding is final and on the merits; and (5) the party against whom estoppel is sought is the same as, or in privity with, the party in the former proceeding. (Ibid.)
In the instant case, while the October 20, 2020 prefiling order and the November 21, 2021 prefiling order are based on similar contentions, this court did not make any determinations on the merits of the October 20, 2020 prefiling order in its prior opinion. Indeed, we did not even reach the merits of that order as we determined the notice of appeal was untimely filed, thus giving us no jurisdiction to review the order. (See Merritt et al. v. Specialized Loan Servicing, LLC et al., supra, H048463.) Therefore, because the underlying issues from the October 2020 order were not actually litigated in the previous proceeding, we find the Merritts are not precluded from appealing the November 21, 2021 order.
3. Substantial Evidence Supported the Trial Court's Order Requiring the Merritts to Furnish Security
Although unclear, the Merritts appear to contend that they demonstrated a high probability of success on the merits of their wrongful foreclosure claim by providing "uncontroverted evidence" that (1) they had rescinded the loans; and (2) their recission claims had never been previously adjudicated. They further argue that the trial court did not properly weigh this evidence but instead were "bombarded" by defendants' paperwork and therefore relied on defendants' misrepresentations that a final judgment on the recission claims existed "somewhere."
As discussed above, the order itself does not contain any particular factual findings or indicate what evidence the trial court relied on in making its orders. However, we may imply such findings if there is substantial evidence in the record to support them. (See Golin, supra, 190 Cal.App.4th at p. 636.)
In reviewing the record, specifically the evidence provided by defendants in their motion and at the hearing, we find there was substantial evidence to support the court's order to furnish security under section 391.3. As stated above, in order to make such an order, the court was required to find that the Merritts constituted vexatious litigants within the meaning of section 391, subdivision (b). Under this section, a vexatious litigant includes a person who has filed at least five litigations in the previous seven-year period that were either "(i) finally determined adversely to the person or (ii) unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing." (§ 391, subd. (b)(1)(i).)
As the Merritts do not appear to contest this finding, defendants contend they have waived any challenges to the finding and do not provide any further argument in support. However, as this finding is required prior to ordering a plaintiff to furnish security under section 391.3, we must determine if there was substantial evidence to demonstrate the Merritts were vexatious litigants.
In reviewing defendants' motion and accompanying evidence, we find that substantial evidence demonstrated that the Merritts constituted vexatious litigants under this definition. As part of their motion, defendants provided the court with the October 20, 2020 prefiling order, wherein the trial court noted that the Merritts had filed seven different lawsuits between 2013 and 2020 (five of which were filed between 2016 and 2019) in relation to the same claims regarding their 2006 loans and modification, all of which had been decided against them. Defendants also provided court records demonstrating that in addition to the wrongful foreclosure case, the Merritts had filed two more proceedings in 2019 involving the same allegations and claims: (1) a bankruptcy proceeding in attempt to stay the foreclosure, which was denied; and (2) a different adversary proceeding against defendants, which was dismissed. As the Merritts provided no evidence demonstrating they had prevailed in any of these proceedings, the evidence as presented was sufficient to support an implied finding by the court that the Merritts had filed at least five litigations in the past seven years that were decided adversely against them.
We next turn to the second requirement under section 391.3, namely, that there is no reasonable probability that the Merritts would prevail on the merits of their action. Again, in reviewing the record, we find there was substantial evidence to imply that the court made such a finding. As detailed extensively by defendants in their motion and during the hearing, as well as by the trial court in its October 2020 order, the Merritts' first and second causes of action in the wrongful foreclosure action, which address the enforceability of the 2006 loans and the alleged recissions, had been fully adjudicated in the Merritts' prior state court actions. While the Merritts have repeatedly contended that the recission issue was never decided, no evidence was presented to support this allegation apart from their claim that defendants never provided a copy of a final judgment on this issue. Indeed, the trial court commented numerous times during the hearing that from its review of the paperwork, allegations, and arguments across the Merritts' various cases, it appeared that they were all substantially related to the same property and same legal issues.
Further, the trial court noted in its October 2020 order that even if the recission issue had never been litigated previously in the Merritts' prior court actions, the record reflected the Merritts could have raised their claim as early as 2012, and therefore were barred from bringing a claim in 2018 under the applicable three-year statute of limitations. Given that an additional two years passed before the Merritts filed their wrongful foreclosure action based on the same recission allegations, we find substantial evidence in the record to support the court's implied finding that the Merritts could not prevail on their claims as they had already been adjudicated or were barred by the applicable statute of limitations.
In conclusion, we find there was substantial evidence demonstrating that the Merritts were vexatious litigants and there was no reasonable probability of them prevailing on their claims against defendants. Therefore, there was no error in the trial court's November 21, 2021 order requiring the Merritts to furnish security under section 391.3.
4. Substantial Evidence Supported the Trial Court's Order Requiring the Merritts to Seek Permission Prior to Filing Any New Litigation Both In Propria Persona and Through Counsel
The Merritts finally argue that there was no evidence to support the court's order under section 391.7 requiring them to seek permission for any new filings whether represented by counsel or not. Specifically, the Merritts claim that there was no evidence presented that their attorneys were merely acting as a "puppet" or was otherwise unprofessional or unethical during the course of litigation. In response, defendants note the "volume of vexatious litigant activity" that took place after entry of the October 2020 prefiling order and argue that there was substantial evidence reflecting the Merritts' pattern of utilizing counsel as a means to circumvent existing pre-filing orders.
We first note that the trial court acknowledged in its October 2020 prefiling order that the Merritts' prior counsel had repeated allegations and claims made by the Merritts while self-represented, and the Merritts had previously used counsel as a means to circumvent pre-filing orders. However, the trial court's primary reason for not extending the order to the Merritts' counsel at that time was that their current counsel had only been retained shortly before the hearing on defendants' vexatious litigant motion, and there was not a sufficient basis to demonstrate that extension of the order was warranted.
In reviewing the record, particularly the pleadings and paperwork filed by the Merritts after the October 2020 prefiling order, we find there is substantial evidence to imply findings in support of the trial court's determination that the prefiling order should extend to filings by counsel. One such example is the Merritts' verified complaint in support of their wrongful foreclosure action, which was filed by counsel less than two weeks after the October 2020 prefiling order was entered; while providing a long factual and procedural history of the case, counsel made no reference to the pending 2018 action, despite the fact that the action concerned similar claims and defendants, and included similar allegations and arguments regarding the 2009 recission. Another example is counsel's filing of the Merritts' ex-parte request for a temporary restraining order and an order to show cause for a preliminary injunction, which failed to note that the Merritts had been denied similar injunctive and declaratory relief in the 2018 pre-foreclosure action. We further note that the trial court later found that these orders had been "improvidently granted" and that the Merritts' appeals from the prior denials of their requested injunctions foreclosed their request for identical relief "under the guise of a new case[.]" Accordingly, we find that that these two pleadings provided substantial evidence for the trial court to find that the Merritts had utilized counsel in an effort to circumvent the October 2020 prefiling order and obtain favorable relief by filing a new case without any reference to the previous case and adverse rulings against them. Such behavior falls within the general proposition espoused by Shieh and Golin, namely, that "where a party effectively conducts himself or herself in an action as a self-represented litigant without the professional and ethical considerations that constrain counsel, the party's nominal engagement of an attorney will not insulate him or her from the statutory consequences of the vexatious litigant provision." (Golin, supra, 190 Cal.App.4th at p. 638.)
In conclusion, we find that there was substantial evidence to imply findings in support of the trial court's orders requiring the Merritts to furnish security under section 391.3 and obtain permission prior to filing any new litigation, whether represented or not, under section 391.7.
III. Disposition
The trial court's prefiling order is affirmed.
WE CONCUR: Greenwood, P.J., Danner, J.