Opinion
E065726
01-19-2018
MATTHEW HAMEL et al, Plaintiffs and Appellants, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendant and Respondent.
Matthew J. Hamel and Dawn Hamel, in pro. per., for Plaintiffs and Appellants. Severson & Werson, Jan T. Chilton and Kerry W. Franich for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. CIVDS1510327) OPINION APPEAL from the Superior Court of San Bernardino County. Thomas S. Garza, Judge. Affirmed. Matthew J. Hamel and Dawn Hamel, in pro. per., for Plaintiffs and Appellants. Severson & Werson, Jan T. Chilton and Kerry W. Franich for Defendant and Respondent.
This is the second of two related appeals (case No. E065196) brought by plaintiffs and appellants Matthew Hamel and Dawn Hamel regarding the alleged wrongful foreclosure of their property in Fontana, California (the property). In this case, the Hamels challenge the judgment of dismissal entered after the trial court sustained, without leave to amend, defendant Mortgage Electronic Registration Systems, Inc.'s (MERS) demurrer to the Hamels' first amended complaint for intentional misrepresentation, breach of the covenant of good faith and fair dealing, deception and fraud, and declaratory relief. The Hamels "request a review of the reversible errors that have taken place in this case beginning at the initial hearing held September 15, 2015 and which have been perpetuated through the final hearing on this case held on January 19, 2016." MERS contends, inter alia, that res judicata bars this action. We agree that this action is barred by res judicata, and affirm the judgment of dismissal.
We believe the correct date is September 28, 2015, the date the trial court ruled on MERS's demurrer to the Hamels' original complaint.
In the Hamels' related appeal, case No. E065196, we affirm the judgment in San Bernardino County Superior Court case No. CIVDS1209212, dismissing the Hamels' action against Bear Stearns Asset Backed Securities I LLC (Bear Stearns) on the ground that the Hamels forfeited their arguments due to their failure to present a complete and coherent legal argument.
On December 22, 2016, MERS requested that we take judicial notice of certain documents filed in Superior Court case No. CIVDS1209212. The Hamels oppose the request and seek judicial notice of two documents filed in Superior Court case No. CIVDS1209212 and included in the record on appeal in case No. E065196. We grant both parties' requests for judicial notice. (Evid. Code, §§ 452, subd. (d)(1), 459, subd. (a); Cal. Rules of Court, rule 8.252(a); Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 563-564, fn. 2 [approving judicial notice of court records in related proceedings].) Moreover, on our own motion, we incorporate the record on appeal in case No. E065196 by this reference. Furthermore, oral argument in this case and case No. E065196 will be set for the same date and time.
I. PROCEDURAL BACKGROUND AND FACTS
In 2006, the Hamels borrowed $367,500 from Lenox Financial Mortgage Corporation (Lenox), and the loan was secured by a deed of trust encumbering the property. The deed of trust identified MERS as the beneficiary, as nominee for Lenox and Lenox's successors and assigns, and Fidelity National Title Insurance Company (Fidelity) as the original trustee. In January 2009, the Hamels stopped making their monthly mortgage payments.
In October 2011, MERS assigned the deed of trust to Citibank, National Association, as Trustee for Bear Stearns Asset Backed Securities Trust 2007-2 Asset Backed Certificates, Series 2007-2 (Citibank). In November 2011, Old Republic Default Management Services (Old Republic), successor trustee to Fidelity, recorded a notice of default and election to sell under the deed of trust. The Notice of Trustee's Sale was recorded on June 19, 2012.
A. The Hamels' Prior Action (Case No. CIVDS1209212).
In August 2012, the Hamels initiated a wrongful foreclosure action (case No. CIVDS1209212) against several defendants, including MERS. In the prior action, the Hamels alleged that defendants lacked standing to foreclose and that MERS "fabricat[ed]" the assignment of the deed of trust. On March 19, 2013, Old Republic filed a Notice of Rescission of Notice of Default.
On May 15, 2013, MERS demurred to the Hamels' third amended complaint. The Hamels opposed the demurrer, attacking the assignment of the deed of trust as "fraudulent." On October 4, 2013, the trial court sustained the demurrer without leave to amend and entered judgment in favor of MERS.
The Hamels appealed the judgment; however, the appeal was dismissed on March 16, 2016, as untimely. The remittitur was issued on May 17, 2016.
B. The Hamels' Present Action (Case No. CIVDS1510327).
In June 2015, Wilmington Trust, National Association, as Successor Trustee to Citibank, N.A., substituted MTC Financial Inc. dba Trustee Corps (Trustee Corps) as trustee under the deed of trust. That same month, Trustee Corps initiated foreclosure proceedings. In response, on July 23, 2015, the Hamels initiated this action against MERS, even though MERS had disposed of its interest in the property nearly four years earlier, and had obtained a judgment in the Hamels' prior action (case No. CIVDS1209212). The complaint primarily alleges that MERS was "just a nominee" and lacked standing to transfer or enforce the promissory note and deed of trust. It accuses MERS of trying to "proceed with a [f]raudulent [f]oreclosure sale."
MERS demurred, and the trial court sustained the demurrer in part, granting leave to amend as to the claims of breach of the implied covenant of good faith and fair dealing and intentional misrepresentation.
The Hamels filed the first amended complaint in October 2015, reiterating their prior allegations of intentional misrepresentation and breach of the covenant of good faith and fair dealing, but also alleging claims for "deception and fraud," "to void or cancel corporate assignment of deed of trust," and for declaratory relief. MERS demurred. On January 19, 2016, the trial court sustained the demurrer without leave to amend and dismissed the action with prejudice. Notice of the judgment was served on February 18, 2016.
II. DISCUSSION
We need not reach the merits of the Hamels' claims because we agree with MERS that this action is barred by res judicata.
A. Standard of Review.
"For purposes of reviewing a demurrer, we accept the truth of material facts properly pleaded in the operative complaint, but not contentions, deductions, or conclusions of fact or law. We may also consider matters subject to judicial notice. [Citation.] To determine whether the trial court should, in sustaining the demurrer, have granted plaintiff leave to amend, we consider whether on the pleaded and noticeable facts there is a reasonable possibility of an amendment that would cure the complaint's legal defect or defects. [Citation.]" (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. omitted.) We independently review the complaint to determine whether it contains sufficient facts to state a claim. We next determine whether the trial court abused its discretion in denying leave to amend. (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1490-1491.)
B. Res Judicata/overview.
"Under the doctrine of res judicata, a valid, final judgment on the merits is a bar to a subsequent action by parties or their privies on the same cause of action. [Citation.] In California, a 'cause of action' is defined by the 'primary right' theory. 'The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action.' [Citation.] In particular, the primary right theory provides that a cause of action consists of (1) a primary right possessed by the plaintiff, (2) a corresponding duty devolving upon the defendant, and (3) a delict or wrong done by the defendant which consists of a breach of the primary right. [Citation.] '"If the matter was within the scope of the action, related to the subject matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it . . . . A party cannot by negligence or design withhold issues and litigate them in consecutive actions. . . ."'" (Amin v. Khazindar (2003) 112 Cal.App.4th 582, 589-590.) "'[U]nder what circumstances is a matter to be deemed decided by the prior judgment? Obviously, if it is actually raised by proper pleadings and treated as an issue in the cause, it is conclusively determined by the first judgment. But the rule goes further. If the matter was within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged. . . .'" (Interinsurance Exchange of the Auto. Club v. Superior Court (1989) 209 Cal.App.3d 177, 182 (Interinsurance Exchange).)
"'In California the phrase "cause of action" is often used indiscriminately . . . to mean counts which state [according to different legal theories] the same cause of action . . . .' [Citation.] But for purposes of applying the doctrine of res judicata, the phrase 'cause of action' has a more precise meaning: The cause of action is the right to obtain redress for a harm suffered, regardless of the specific remedy sought or the legal theory (common law or statutory) advanced. [Citation.] . . . '[T]he "cause of action" is based upon the harm suffered, as opposed to the particular theory asserted by the litigant. [Citation.] . . . "Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though [the plaintiff] presents a different legal ground for relief." [Citations.]' Thus, under the primary rights theory, the 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. [Citation.]" (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 798 (Boeken); see Crowley v. Katleman (1994) 8 Cal.4th 666, 681-682 ["As far as its content is concerned, the primary right is simply the plaintiff's right to be free from the particular injury suffered. [Citation.] It must therefore be distinguished from the legal theory on which liability for that injury is premised . . . [and] the remedy sought . . . ."].)
C. Res Judicata Bars the Present Action and First Amended Complaint.
"Res judicata bars a cause of action that was or could have been litigated in a prior proceeding if '(1) the present action is on the same cause of action as the prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the parties in the present action or parties in privity with them were parties to the prior proceeding. [Citation.]' [Citation.]" (Federal Home Loan Bank of San Francisco v. Countrywide Financial Corp. (2013) 214 Cal.App.4th 1520, 1527.)
All three elements of res judicata are present here. First, the parties to the present action, the Hamels and MERS, were parties to the prior action. Second, the first amended complaint in the present action and the third amended complaint in the prior action are based on the same "cause of action" or claim of right: the alleged wrongful foreclosure under the deeds of trust and the trustee's sale of the property. Third, the prior action resulted in a final judgment on the merits, simply because it was dismissed with prejudice.
"[F]or purposes of applying the doctrine of res judicata . . . a dismissal with prejudice is the equivalent of a final judgment on the merits, barring the entire cause of action. [Citations.] . . . . 'The statutory term "with prejudice" clearly means the plaintiff's right of action is terminated and may not be revived . . . . [A] dismissal with prejudice . . . bars any future action on the same subject matter.'" (Boeken, supra, 48 Cal.4th at p. 793.) As noted, the Hamels appealed from the judgment in the prior action; however, the appeal was dismissed as untimely.
The Hamels claim that res judicata is not applicable because "the only cause of action pertaining to MERS in these suits was in the response to Old Republic . . . which filed a Declaration of Non-Monetary Status on December 10, 2012 under the First Amended Complaint." While the Hamels are unclear in their argument, the record is clear as to the alleged harm in both actions, namely, the foreclosure of the property by a party allegedly lacking the authority to enforce the promissory note and deed of trust. The present action alleges that MERS is attempting to foreclose on the property by recording a "fraudulent" assignment of the deed of trust, when MERS lacks standing to "assign or transfer any Interest in a Homeowner's Promissory Note." The prior action alleged that defendants, including MERS, "resorted to 'papering the file' by fabricating a 'Corporate Assignment of Deed of Trust,' employing individuals who have no authority or personal knowledge of the facts to which they attest, and falsely representing to Plaintiffs and to the Court that they have the right to take Plaintiffs' property away." (Boldface and italics omitted.) It further asserted that none of the defendants "owned this Deed of Trust or the corresponding note," "had the original note assigned to them," or "had the right to declare default, cause notices of default to be issued or recorded, or attempt to foreclose on Plaintiffs' interest in the Subject Property." Because the Hamels are asserting injury to the same primary right they asserted in the prior action, res judicata bars their present action. The judgment of dismissal in the prior action is final, and the Hamels cannot collaterally attack that judgment regardless of the reasons the action was dismissed, or erroneously dismissed.
Even if we assume that in the prior action the Hamels failed to assert that the foreclosure sale was void because of alleged defects in an assignment of beneficial interest under the foreclosing deed of trust, res judicata would still apply to bar the present action. Because such a claim "was within the scope of the [prior] action, related to the subject-matter and relevant to the issues, so that it could have been raised," the judgment in the prior action is conclusive on it even though it was not urged in the prior action. (Interinsurance Exchange, supra, 209 Cal.App.3d at pp. 181-182, italics omitted.)
For the reasons explained, the present action is barred by res judicata.
III. DISPOSITION
The judgment of dismissal is affirmed. MERS shall recover its costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
RAMIREZ
P. J. We concur: MCKINSTER
J. SLOUGH
J.