Opinion
A150606
10-30-2018
CHANHT REATREY KEO, Plaintiff and Appellant, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Marin County Super. Ct. No. 1600280)
Plaintiff Chanht Reatrey Keo appeals from a summary judgment granted in favor of defendants Nationstar Mortgage and Mortgage Electronic Registration Systems, Inc. (MERS) in an action she filed alleging violations of federal and state law during a nonjudicial foreclosure. Keo contends the trial court erred in finding her causes of action time-barred or barred by res judicata. We affirm.
BACKGROUND
This is Keo's third appearance in this court related to the foreclosure of her property, and this is the second lawsuit to allege that defendants lack the authority to foreclose. (See Keo v. Bank of America, N.A. (Feb. 25, 2015, A138826) [nonpub. opn.]; Keo v. Nationstar Mortgage, LLC (Sept. 28, 2015, A141781) [nonpub. opn.] [appeals by Keo from dismissal in favor of two groups of defendants].) In those opinions, we summarized the factual allegations and procedural background as follows:
We take judicial notice of our prior opinions on our own motion. (Evid. Code, §§ 451, subd. (a), 452, subd. (a) & (d), 459.)
"In December 2008, Keo executed a promissory note for $417,000 with Countrywide Bank, FSB (Countrywide). The note was secured by a deed of trust that named ReconTrust Company as the trustee, and Mortgage Electronic Registration System, Inc. (MERS) as the beneficiary and sole nominee for the lender, its successors, and assigns. It also identified Cal Land as the escrow company.
"Two and a half years later, in August 2011, MERS recorded an assignment, transferring all its interest under the deed of trust, to Bank of America Home Loans Servicing, LP, including but not limited to 'the right to foreclose and sell the [p]roperty.'
"By then, Keo was behind in her payments, and on September 15, 2011, a substitution of trustee was recorded on behalf of Bank of America, N.A., as successor by merger to Countrywide and Bank of America Home Loans Servicing, LP, designating Quality Loan Service Corporation (Quality Loan) as the new trustee under the deed of trust.
"Also on September 15, Quality Loan recorded an un-notarized Notice of Default for $79, 511.31, the amount required as of September 13 to reinstate the loan. In December, Quality Loan recorded a notice of trustee's sale, but Bank of America represents, and Keo does not dispute, there has been no sale of the property to date.
"In April 2012, Keo filed [her first] case against Bank of America, Quality Loan, and Countrywide Bank asserting nine causes of action: breach of the covenant of good faith and fair dealing, 'concealment,' unjust enrichment, wrongful foreclosure, violation of Civil Code section 1788.17, misrepresentation/fraud, breach of contract, quiet title, and declaratory relief. Bank of America interposed a demurrer, asserting none of plaintiff's claims stated facts sufficient to constitute a cause of action. The trial court sustained the demurrer with leave to amend the claims for wrongful foreclosure, misrepresentation/fraud against Countrywide Bank only, quiet title, and declaratory relief.
"Keo filed a first amended complaint (FAC), reasserting her causes of action for wrongful foreclosure, misrepresentation/fraud, quiet title, and declaratory relief, and adding a new claim for 'recoupment.' She also added six new defendants: BAC [Bank of America Corporation], MERS, Bryan Cave, Jessica T. Ehsanian (a Bryan Cave attorney), Nationstar Mortgage LLC and Cal Land. The only allegations regarding Cal Land were that it never 'gave any accounting or evidence' of the loan funding, and that its agent 'ochestrated this manipulation of [Keo's] need to finance.'
"On its own motion under Code of Civil Procedure section 436, the court struck Ehsanian as a defendant from the FAC."
"Bank of America (individually and as successor to Countrywide and Bank of America Home Loans Servicing, LP), Bryan Cave, MERS and Cal Land filed demurrers. The court granted the Bank's request for judicial notice of: (a) the deed of trust, (b) the assignment of the deed of trust from MERS to Bank of America Home Loans Servicing, LP, BAC, (c) the substitution of trustee on behalf of Bank of America, N.A. (as successor by merger to Countrywide and Bank of America Home Loans Servicing, LP), designating Quality Loan as the new trustee under the deed of trust[,] substitution of Quality Loan as trustee by Bank of America as the successor in interest to BAC, (d) the notice of default and election to sell under the deed of trust, and (e) the notice of trustee's sale. Keo opposed the Bank's demurrer, but did not file any opposition to Cal Land's demurrer.
"Given the absence of any opposition to Cal Land's demurrer, the trial court sustained it without leave to amend. The court also sustained Bank of America's demurrer without leave to amend. As to the wrongful foreclosure and quiet title claims, the court ruled the FAC failed to allege facts showing Keo suffered prejudice from any of the asserted irregularities in the foreclosure process." (Keo v. Bank of America, N.A., supra, A138826.)
"In August 2013, after successfully setting aside the default entered against it, Nationstar also demurred to the FAC. The sole allegation as to Nationstar was that it 'is the new servicer for the alleged "loan" effective November 01, 2012. N[ationstar] is located at 350 Highland Drive, Lewisville, TX 75067.'
"After a number of continuances of the hearing on the demurrer in order for Keo's attorneys to review 'new evidence,' the trial court sustained Nationstar's demurrer without leave to amend in March 2014 and entered a judgment of dismissal." (Keo v. Nationstar Mortgage, LLC, supra, A141781.) We affirmed.
In January 2016, Keo filed the instant case against Countrywide Bank, Quality Loan, ReconTrust, Nationstar Mortgage, LLC, and MERS, asserting four causes of action: (1) violation of Civil Code section 2924, subdivision (a)(6), (2) violation of title 15 United States Code section 1641(g) (hereafter section 1641(g)), (3) violation of title 15 United States Code section 1635 (hereafter section 1635), and (4) breach of the implied covenant of good faith and fair dealing. Bank of America, as a successor to Countrywide Bank and ReconTrust, filed a demurrer, which the court sustained without leave to amend. Nationstar and MERS moved for summary judgment on all four causes of action, which the trial court granted in December 2016. This appeal is from the summary judgment in favor of Nationwide and MERS.
DISCUSSION
We review a trial court's grant of summary judgment de novo, and " 'liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.' " (Hartford Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 286.)
Res Judicata Precludes the First Cause of Action
In her first cause of action, Keo alleged defendants violated Civil Code section 2924 subdivision (a)(6), which requires that any entity who records a notice of default or "otherwise initiate[s] the foreclosure process," must be the holder of the promissory note and deed of trust. (Civ. Code, § 2924, subd. (a)(6).) The trial court concluded this claim is barred by res judicata, as it alleges a violation of the same primary right she asserted in her prior wrongful foreclosure case.
" 'Res judicata' describes the preclusive effect of a final judgment. . . ." (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) Relitigation is precluded "only if (1) the decision in the prior proceeding is final and on the merits; (2) the present action is on the same cause of action as the prior proceeding; and (3) the parties in the present action or parties in privity with them were parties to the prior proceeding." (Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82.) The doctorine bars a claim that could have been brought in the prior suit, "whether or not it was actually asserted or decided." (Ivanoff v. Bank of America, N.A. (2017) 9 Cal.App.5th 719, 727.)
California courts apply the " 'primary rights' " theory to determine "whether two proceedings involve identical causes of action." (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) Under the primary rights theory, the "cause of action is the right to obtain redress for a harm suffered, regardless of the specific remedy sought or the legal theory. . . advanced." (Id. at p. 798.) Therefore, "[w]hen two actions involving the same parties seek compensation for the same harm, they generally involve the same primary right." (Ibid.)
Keo contends res judicata does not apply because "there was never a final ruling on the merits in the prior [wrongful foreclosure] case." However, a judgment of dismissal following the sustaining of a demurrer—the result in Keo's prior suit—"may be on the merits" for the purposes of res judicata, if the other elements of res judicata are satisfied. (Ojavan Investors, Inc. v. California Coastal Com. (1997) 54 Cal.App.4th 373, 384.)
Here, there is no question that the parties to the prior case and in the instant action are the same.
Keo's prior lawsuit and the instant case also involve the same primary right. That she labeled her first lawsuit as one for "wrongful foreclosure," and in her first cause of action in the instant action purports to assert a statutory claim under Civil Code section 2924 subdivision (a)(6), does not change the fact that in both lawsuits she challenged the defendants' right to foreclose, including on the ground they lacked authority to do so because they supposedly did not have an adequate interest in the property. In fact, in her wrongful foreclosure case, Keo claimed defendant lacked "standing" to foreclose, and, in that regard, she referred to the requirements of Civil Code section 2924. She therefore cannot, in this case, take a second bite of the apple under the rubric of a statutory claim, rather than a "wrongful foreclosure" claim.
Limitations Periods Bar the Second and Third Causes of Action
Keo asserted two claims under the federal Truth in Lending Act (TILA; 15 U.S.C. § 1601 et seq.). Both are time-barred.
Second Cause of Action (15 U .S.C. § 1641(g))
In her second cause of action, Keo alleged defendants violated section 1641(g), which requires a creditor to notify the borrower within 30 days of a mortgage loan being sold, transferred, or assigned. On its face, section 1641(g) requires notice of transfer or assignment of the underlying mortgage loan, not assignment of the deed of trust, itself, which is the action Keo challenges in her complaint. (Barr v. Flagstar Bank, F.S.B. (U.S. Dist. Ct. D. Md., Sept. 17, 2014, Civ. A. No. RDB-13-2654) 2014 WL 4660799.) Accordingly, it is doubtful Keo has adequately alleged any claim under section 1641(g). We need not, and do not decide this issue, however, because her claim is plainly time-barred.
Section 1641(g) claims are subject to a one-year statute of limitations, which begins to run 31 days after a loan is sold or transferred. (15 U.S.C. § 1640(e); Vargas v. JP Morgan Chase Bank, N.A. (C.D. Cal. 2014) 30 F.Supp.3d 945, 949 (Vargas).) Keo alleged defendants violated section 1641(g), by failing to notify her the deed of trust was assigned to new parties "[o]n or about" August 1, 2011 and January 15, 2013. Accordingly, the one-year limitations period expired "on or about" August 31, 2012 and February 14, 2014—long before she filed suit in January 2016.
There is no merit to Keo's assertion that the limitations period is "inapplicable" because "there has never been notice of the alleged transfer of the loan." As the district court observed in Vargas, a borrower cannot use the very requirement of the statute—to give notice—as a basis for disregarding the statutory limitation period. (Vargas, supra, 30 F.Supp.3d at p. 949.) Further, since the transfers were publically recorded, Keo had a "reasonable opportunity to discover the underlying facts of the TILA violation within the limitations period." (McQuinn v. Bank of America, N.A. (2016) 656 Fed.Appx. 848, 850.)
Given that Keo's second cause of action is time-barred, we need not, and do not, consider whether summary judgment was properly granted on additional grounds. --------
Third Cause of Action (15 U .S.C. § 1635)
In her third cause of action, Keo alleged defendants violated section 1635, which grants a borrower the right to rescind a loan, including when the lender has failed to make certain disclosures. Again, there is some doubt whether section 1635 applied to the instant loan transaction. (See Champlaie v. BAC Home Loans Servicing, LP (E.D. Cal. 2009) 706 F.Supp.2d 1029, 1042 [right to rescission under TILA did not apply to residential mortgage loan].) However, we again need not decide this issue, since the claim is also time-barred.
Section 1635 provides for an "unconditional" right of rescission for three days. If the lender fails to make statutorily required disclosures, the borrower has three years in which to rescind. (Jesinoski v. Countrywide Home Loans, Inc. (2015) 135 S.Ct. 790, 792.) The borrower need not file suit within this three-year period; it is sufficient if the borrower provides "written notice of [an] intention to rescind within three years of [the] loan's consummation." (Id. at p. 793.)
Keo gave notice of an intent to rescind in June 2015—more than six years after she received the loan in December 2008. Accordingly, Keo did not even attempt to rescind until any statutory right to do so had long-expired.
Keo nevertheless contends her rescission claim is not time-barred because the loan transaction was assertedly "never consummated," citing Jackson v. Grant (9th Cir. 1989) 890 F.2d 118, 120-121 (Jackson). In Jackson, the "Mortgage Loan Disclosure Statement and Statement of Loan Terms" informed the borrower that the real estate broker with which she had been dealing "will not be the lender" and that the lender "is presently not known." (Id. at p. 119.) Moreover, the name of the lender "was left blank on the Promissory Note and Deed of Trust." (Ibid.) The borrower was, however, given statutory notice about her rescission rights. (Ibid.) Three years later, just before a balloon payment was due, the borrower gave notice of rescission. (Ibid.) The majority concluded there had been no "consummation" at the time the plaintiff signed the documentation because the other party to the transaction, i.e., the lender, was not then identified. (Id. at pp. 121-122.) And because further statutory notice was not supplied when the contract was "consummated" (upon identification of the lender and funding of the loan), the borrower's notice of rescission was timely. (Id. at pp. 121-122.) The dissent was of the view the result subverted the consumer-protection purpose of the statute and, instead, the rescission provisions had been parlayed by the borrower into a scheme to defraud creditors who had gone out of their way to assist the borrower in trying to keep her property. (Id. at pp. 122-123 (dis. opn. of Trott, J.).) Suffice it to say, there are no allegations in this case remotely similar to the facts in Jackson. Indeed, the recorded deed of trust, signed by Keo, clearly identified her lender.
The Fourth Cause of Action Is Duplicative
In her fourth cause of action, Keo alleged a breach of the implied covenant of good faith and fair dealing. She claimed defendants breached the implied covenant by (a) "breaching TILA and not informing Plaintiffs that the Loan was sold" and (b) "misrepresenting the ownership interest in the Loan and the authority to foreclose" and enforcing a contract known to be "illegal and unconscionable." In short, in her fourth cause of action, Keo recycled her claims under a different heading. This does not save them from either the bar of the statute of limitations or the preclusive effect of res judicata. In fact, claims that rely "on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action . . . may be disregarded as superfluous as no additional claim is actually stated." (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)
Claims Newly Raised on Appeal
In her briefing, Keo raises several new claims. For example, in her opening brief, she now claims defendants cannot enforce the promissory note because the deed of trust and note are "irreparably split." This claim is apparently offered in support of her first cause of action under Civil Code section 2924, subdivision (a)(6), but it is not a claim she ever made below, either in her complaint or in her opposition to defendants' summary judgment motion. An appellant cannot secure a reversal of a summary judgment by raising a wholly new claim on appeal. (See Falcon v. Long Beach Genetics, Inc. (2014) 224 Cal.App.4th 1263, 1275 [defendant's burden in moving for summary judgment " ' "only requires that he or she negate plaintiff's theories of liability as alleged in the complaint" ' "; a moving party need not " ' " ' "refute liability on some theoretical possibility not included in the pleadings" ' " ' "].) In any case, even if this new claim were considered an augmentation of Keo's first cause of action, it would fail for the same reason as the remainder of her first cause of action—the preclusive effect of the adverse judgment in her first lawsuit.
In her reply brief, Keo raises another new contention—that the definition of "beneficiary" and "fiduciary" in the California Probate Code should inform the meaning of beneficiary in this context and define the limits of MERS' authority. We generally will not consider issues raised for the first time in a reply brief, and we decline to do so here. (In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 214.)
DISPOSITION
The judgment is affirmed. Respondents to recover costs on appeal.
/s/_________
Banke, J. We concur: /s/_________
Humes, P.J. /s/_________
Margulies, J.