Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No., RG 062 925 81
Jones, P.J.
A. Lewis Chandler appeals a judgment entered after the trial court sustained a demurrer and dismissed his complaint. He contends the trial court erroneously applied the laws of collateral estoppel. We disagree and affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Michelle Balletti owned a residence located on Jean Street in Oakland. On March 3, 2004, Balletti borrowed $218,500 from respondent Fremont Investment and Loan. The loan was evidenced by a promissory note and was secured by a deed of trust on the Jean Street property. The deed of trust named respondent Mortgage Electronic Registration Systems, Inc., as the beneficiary.
On January 4, 2005, Balletti transferred title to the Jean Street property to Consumer Action Committee, a corporation that was controlled by appellant. Subsequently, Consumer Action Committee transferred title to appellant.
On June 15, 2005, Balletti filed a Chapter 7 bankruptcy. On August 18, 2005, the bankruptcy trustee filed an adversary proceeding alleging that Balletti’s transfer of the Jean Street property was fraudulent. Appellant intervened in that action.
A trial was conducted, and on July 6, 2006, the court issued a judgment in favor of the trustee and against appellant and Consumer Action Committee. The court ruled the transfers from Balletti to Consumer Action Committee, and from Consumer Action Committee to appellant were both fraudulent and it voided the deeds that were recorded as the result of those transfers. The court also ruled that title to the Jean Street property was vested in the bankruptcy trustee.
Subsequently, the bankruptcy trustee stipulated that respondent Mortgage Electronic Registrations Systems, Inc., could pursue nonjudicial foreclosure. On October 26, 2006, the property was sold at a nonjudicial foreclosure.
On December 13, 2006, appellant filed the amended complaint that is at issue in the current appeal. Seeking to establish his right to the Jean Street property, appellant alleged causes of action for declaratory relief, injunctive relief, an accounting, to set aside the October 26, 2006 trustee’s sale, and to cancel the October 26, 2006 trustee’s deed.
Respondents demurred to the complaint. They argued they were entitled to prevail, as a matter of law, because the bankruptcy court had already ruled that appellant did not have an interest in the Jean Street property, and that ruling was binding under principles of collateral estoppel.
The trial court conducted a hearing on respondent’s motion and sustained the demurrer without leave to amend, explaining its decision as follows: “[The] causes of action all rest upon [appellant’s] alleged ownership of the subject property. On July 6, 2006, approximately three months before [appellant] filed this lawsuit, the United States Bankruptcy Court issued its ‘Judgment in Adversary Proceeding No. 05-2302’ and voided, as a fraudulent transfer, the transfer by which [appellant] purports to hold title to the subject property. . . . Therefore, the doctrine of collateral estoppel precludes [appellant] from asserting ownership of the subject property or any rights associated with property ownership in the present litigation.”
While this case was being briefed, respondents filed a motion asking us to take judicial notice of documents that relate to appellant’s bankruptcy. We deferred ruling on the request until the merits of the appeal. Having now considered the request, we deny it. An appellate court can, but is not required to, take judicial notice of material that was not presented to the trial court in the first instance. (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 325.) The court declines to take judicial notice of the material respondents have identified.
Appellant contends the trial court erred when it sustained respondents’ demurrer. “In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. ‘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.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff. [Citation.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Here, appellant’s complaint contains five causes of action: declaratory relief, injunctive relief, an accounting, to set aside the October 26, 2006 trustee’s sale, and to cancel the October 26, 2006 trustee’s deed. However, as the trial court recognized, each of those causes of action is premised upon appellant having some right or interest in the Jean Street property. However, just months before appellant filed his complaint, the bankruptcy court ruled that appellant did not have any right or interest in the Jean Street property. Thus, the pivotal issue is whether that ruling is conclusive.
Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) Collateral estoppel, or issue preclusion, precludes relitigation of issues argued and decided in prior proceedings. (Ibid.) The latter doctrine is at issue here. Collateral estoppel is applied if the following prerequisites are met: “First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. [Citation.]” (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)
All of those requirements are satisfied here. All the causes of action in appellant’s complaint are premised upon his having some ownership right in the Jean Street property. That same issue, whether appellant had an ownership right in the Jean Street property, was litigated in the prior bankruptcy proceeding. Whether appellant in fact had an ownership right was actually litigated and necessarily decided in the bankruptcy court. Indeed, from the judgment, it appears that issue was the primary focus of the bankruptcy court trial. The ruling of the bankruptcy court is final. While appellant states he has appealed that ruling, the federal rule, applicable to matters decided by the bankruptcy court, is that a judgment is final for res judicata purposes until reversed on appeal. (Nathanson v. Hecker (2002) 99 Cal.App.4th 1158, 1163.) Finally, the person against whom collateral estoppel is being sought, appellant, was a party to and was named in the prior bankruptcy judgment.
We agree with the trial court and conclude appellant’s present suit is barred under principles of collateral estoppel.
None of the arguments appellant makes convinces us the trial court erred. Appellant contends the trial court should not have applied collateral estoppel because the parties in the prior suit were not the same as those who are participating in the present suit. While that is true, complete symmetry is not required. Collateral estoppel is appropriate so long as the party against whom it is being sought was a party to the prior suit. (Lucido v. Superior Court, supra, 51 Cal.3d at p. 341.) Appellant was a party to and was named in the prior bankruptcy judgment.
Next, appellant argues the prior bankruptcy judgment was not controlling because it was a declaratory judgment. Appellant is correct that a purely declaratory judgment is not necessarily claim preclusive under principles of res judicata. (Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 898.) However, the bankruptcy judgment was not purely declaratory. The court ruled appellant had no right to the Jean Street property and it voided the deeds under which appellant claimed an interest. The coercive aspects of the court’s ruling demonstrate that it did not issue a purely declaratory judgment. Furthermore, even if we were to construe the bankruptcy judgment as purely declaratory, it would not matter. While a declaratory judgment is not necessarily claim preclusive, it is issue preclusive. (Ibid.) We are applying the principles of issue preclusion here.
Next, appellant argues the bankruptcy judgment is not controlling because it has become moot and the pending appeal will be dismissed. We have no way of determining whether the federal court will dismiss the appeal as moot. However, until it does so, the judgment is binding for purposes of res judicata. (Nathanson v. Hecker, supra, 99 Cal.App.4th at p. 1163.)
Finally, appellant notes that the doctrine of collateral estoppel is equitable and he asks this court not to apply the doctrine under the facts of this case. While a court can decline to apply the doctrine of collateral estoppel when doing so would cause an injustice (see, e.g., Greenfield v. Mather (1948) 32 Cal.2d 23, 35), we are not convinced an injustice would result if we apply the doctrine here. As we read the record, it is entirely appropriate to apply collateral estoppel under the facts of this case.
III. DISPOSITION
The judgment is affirmed.
We concur: Simons, J. Needham, J.