Opinion
D069531
02-14-2017
ROXROY C. MORGAN, Plaintiff and Appellant, v. DEUTSCHE BANK NATIONAL TRUST CO., as Trustee, etc., et al., Defendants and Respondents.
Roxroy C. Morgan, in pro. per. Malcom Cisneros; William G. Malcolm and Brian S. Thomley for 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. Nos. 37-2011-00056339-CU-OR-NC) APPEAL from a judgment of the Superior Court of San Diego County, Earl H. Maas, III, Judge. Affirmed. Roxroy C. Morgan, in pro. per. Malcom Cisneros; William G. Malcolm and Brian S. Thomley for Defendants and Respondents.
Plaintiff Roxroy C. Morgan (plaintiff or Morgan), appearing in propria persona, contends the trial court erred when it granted pursuant to Code of Civil Procedure section 438 the motion for judgment on the pleadings of defendants Deutsche Bank National Trust Company as trustee for Harborview 2007-2 (collectively, Deutsche Bank), and Mortgage Electronic Registration Systems, Inc. (MERS) (sometimes Deutsche Bank and MERS are collectively referred to as defendants), to plaintiff's second amended complaint (SAC). Deutsche Bank acquired plaintiff's real property at a nonjudicial foreclosure sale after plaintiff defaulted on his mortgage loan payments. Plaintiff in his SAC asserted defendants "knowingly, willfully and intentionally filed false documents which wrongfully stated that they had the right to conduct the foreclosure sale and/or [to] accept title to [p]lantiff's property as a result of the false and fraudulent foreclosure sale." Plaintiff's SAC alleged causes of action against defendants for fraud and for recession of the trustee's sale.
As relevant to this appeal, defendants in their motion for judgment on the pleadings argued the SAC should be dismissed without leave to amend based on the res judicata/collateral estoppel doctrines because the issues raised in the SAC had already been fully litigated against plaintiff in a two-day bench trial in an unlawful detainer (UD) action, which action plaintiff had consolidated with the instant case. In connection with his request for consolidation, plaintiff had argued the UD action and the instant case related to the "same transaction," involved the "same parties" and required resolution of the "same issue." The trial court agreed with plaintiff and consolidated the two actions.
As discussed post, we will follow our high court's terminology and thus will use the term " 'claim preclusion' to describe the primary aspect of the res judicata doctrine and 'issue preclusion' to encompass the notion of collateral estoppel" because "these two types of preclusion . . . have different requirements." (DKN Holdings LLC. v. Faerber (2015) 61 Cal.4th 813, 824 (Faerber).)
On appeal, plaintiff claims the court erred in granting the motion for judgment on the pleadings because allegedly there "was a complete and utter failure of proof that the foreclosure sale was held in compliance with Civil Code [section] 2924." Plaintiff further claims the "facts" concerning defendants' alleged "fraud, secrecy, concealment, and unjust enrichment" were "never established in a final appeal [of the UD action] due to procedural errors by a prior counsel in perfecting the unlawful detainer appeal." As we explain, we conclude the trial court properly granted the motion for judgment on the pleadings without leave to amend. Affirmed.
FACTUAL AND PROCEDURAL OVERVIEW
Plaintiff purchased the real property that is the subject of this lawsuit in December 2006. The property is located in Oceanside, California (subject property). In connection with the purchase of the subject property, plaintiff executed a promissory note (note), promising to pay Kay-Co Investments, Inc. dba Pro30 Funding (Kay-Co) the principal amount of $440,000, plus interest. The note was secured by a deed of trust (DOT). The DOT named MERS as the "nominee" for Kay-Co and its successors and assigns and named Southland Title as trustee.
In May 2007, Central Mortgage Company dba Central Mortgage Loan Servicing Company (CMC) acquired the servicing rights to the note. In early September 2009, MERS executed an assignment of the DOT to CMC, which assignment was recorded in early January 2010.
Beginning in January 2007, plaintiff made monthly payments as required by the note. In early 2009, plaintiff defaulted on the loan. As a result, CMC caused to be filed on July 7, 2009, a notice of default and election to sell under the DOT. The July 7 notice provided the amount of default as of July 1, 2009, was about $14,000. On September 9, 2009, CMC executed a substitution of trustee, substituting as trustee of the DOT MTC Financial Inc. dba Trustee Corps (Trustee Corps) for Southland Title. The substitution was recorded in early January 2010.
Because plaintiff failed to cure the default, a notice of trustee's sale was recorded on January 8, 2010. This notice provided the sale would take place on January 28, 2010. However, on the day of the sale, plaintiff filed a bankruptcy action in the United States Bankruptcy Court, Southern District of California, case number 10-01226-PB13. That action was dismissed on April 12, 2010.
On May 13, 2010, Trustee Corps conducted a foreclosure sale of the subject property, which Deutsche Bank purchased by credit bid. However, unbeknownst to Trustee Corps and Deutsche Bank, plaintiff had filed a second bankruptcy action on April 29, 2010. Upon discovery of this second bankruptcy on or about May 20, 2010, Trustee Corps "immediately cancelled the foreclosure sale." Trustee Corps neither delivered to Deutsche Bank nor recorded a trustee's deed upon sale in connection with the May 13 foreclosure. In order to re-notice the sale, Deutsche Bank filed a motion for relief from automatic stay on December 27, 2010, which was granted on January 14, 2011.
On February 11, 2011, a second notice of sale was recorded. The February 11 notice provided a foreclosure sale of the subject property would be held on March 4, 2011. However, on February 27, 2011—ostensibly, in yet another attempt to stop foreclosure, plaintiff executed a deed granting 1 percent of his right, title and interest in the subject property to Michael Babin, an individual who had filed a bankruptcy action on or about February 7, 2011 (i.e., before the 1 percent conveyance). Upon discovery of the conveyance to Babin, Trustee Corps postponed the March 4 foreclosure sale. The bankruptcy court on March 9, 2011, terminated the automatic stay in connection with the Babin bankruptcy, which was later dismissed on May 17, 2011.
After confirming the automatic stay was lifted, Trustee Corps oversaw the nonjudicial foreclosure sale of the subject property on May 31, 2011. The subject property was sold to Deutsche Bank, the highest bidder at the sale. On June 22, 2011, an assignment of deed of trust was recorded, assigning beneficial interest in the DOT to Deutsche Bank. Also on that day, Trustee Corps recorded a trustee's deed upon sale providing Deutsche Bank as grantee of the subject property. However, the June 22 trustee's deed upon sale contained a typographical error, providing the date of sale was "05/13/2010." As a result, Trustee Corps on January 25, 2012, recorded a corrective trustee's deed upon sale, correctly listing the date of sale of the subject property as "05/31/2011," or May 31, 2011.
As a result of additional typographical errors, Trustee Corps recorded on June 5 and again on June 9, 2014, corrective trustee's deeds upon sale.
On July 7, 2011, Morgan was served with a notice to vacate. Because Morgan did not vacate the subject property, Deutsche Bank on July 15, 2011, commenced the UD action against Morgan (case No. 37-2011-00038992-CL-UD-NC). A few days later, plaintiff commenced the instant action against defendants (case No. 37-2011-00056339-CU-OR-NC), and filed an ex parte application to set aside the trustee's sale, which was denied without prejudice.
Defendants demurred to plaintiff's complaint. In response, plaintiff amended his complaint. Defendants again demurred. The court sustained the demurrer with leave to amend. Plaintiff filed his SAC, which is the operative complaint in this case.
Plaintiff in his SAC asserted that Deutsche Bank was the beneficiary of the DOT; that Deutsche Bank "had no right to accept title to [p]laintiff's [n]ote and DOT"; that defendants knew said note and DOT were "actually owned by the owners or beneficiaries of the Harborview 2007-2 Trust which was a securitization trust in to [sic] which more than 100 notes and deeds of trust had been placed by parties other than Deutsche Bank"; and that such actions by defendants, including the filing by Deutsche Bank of the UD action, "were all part of a false and fraudulent scheme concocted by Deutsche Bank, MERS [and others] . . . involved in this foreclosure process."
Plaintiff further asserted in his SAC that defendants knew at the time of the nonjudicial foreclosure sale that the bankruptcy court had imposed an automatic stay but nonetheless went forward with the sale in violation of the stay; and that defendants "knowingly, willfully and intentionally filed false documents which wrongfully stated that they had the right to conduct the foreclosure sale," as noted ante.
Defendants demurred to the SAC. The court overruled the demurrer, noting the date of the sale was at issue (because of the typographical error, which had not then been corrected). Specifically, the court found the notice of trustee's sale indicated the sale was to take place on "3/4/11," which was inconsistent with the trustee's deed upon sale, which (incorrectly) stated the subject property was sold on "5/13/10, before the stay was lifted by the [b]ankruptcy [c]ourt." Because of this conflict and the requirement that factual allegations are construed as true when ruling on a demurrer, the court found plaintiff's SAC was sufficient to establish the sale occurred before the stay was lifted.
As noted, plaintiff moved to consolidate the UD and the instant action. As also noted ante, plaintiff argued the UD action and the instant case involved the same transaction and the same parties and required resolution of the "same issue." The court granted plaintiff's request and the two cases were consolidated.
In April 2014, the court without objection ordered the consolidated cases severed for trial and expedited trial in the UD action, which it set for May 30, 2014. On May 27, 2014, Morgan—then in propria persona—propounded on Deutsche Bank special interrogatories, requests for admission and requests for production of documents. The following day, Morgan appeared ex parte seeking a continuance of the UD action. Over objection, the court granted the ex parte application and continued the trial to June 12, 2014.
On June 6, 2014, the parties stipulated to a further continuance of the UD trial to permit Morgan to obtain legal counsel and to respond to a proposed first amended complaint that Deutsche Bank sought to file in the UD action to "cure clerical errors." The court accepted the stipulation and continued trial in the UD action to July 25, 2014.
On June 16, 2014, Deutsche Bank filed a first amended complaint in the UD action. In this pleading, Deutsche Bank alleged that Morgan defaulted under the note; that as a result and at the request of the beneficiary, the trustee properly recorded a notice of default; that the trustee properly gave notice the subject property would be sold at public auction and caused a notice of sale to be recorded; that Morgan failed to cure the default; that as such, the trustee sold the subject property on May 31, 2011, to Deutsche Bank, who was the highest bidder; that the trustee executed and delivered a trustee's deed upon sale, which was recorded on June 22, 2011; and that corrective trustee's deeds upon sale were recorded to "correct clerical errors."
Deutsche Bank further alleged in its operative UD complaint that it served Morgan with a notice to vacate the subject property on July 7, 2011 (via substitute service and posting and mail delivery); that Morgan nonetheless remained in possession of the subject property; and that Deutsche Bank was then the owner of the subject property and entitled to its immediate possession.
On July 21, 2014, the parties filed a joint exhibit list containing 56 exhibits including certified copies of the note, the DOT, the assignment(s) of the DOT, the notices of default, the substitution(s) of trustee, the notices of trustee's sale, and the trustee's deeds upon sale (including corrective copies). The joint exhibit list also included many other documents including those related to the bankruptcies filed by Morgan and/or Babin and Morgan's purported transfer of a 1 percent interest in the subject property to Babin.
Trial commenced on July 30, 2014. The record shows Morgan, then represented by counsel, submitted pretrial a lengthy 27- or 28-page brief that the trial court noted "contain[ed] a significant amount of law, some of which [it] looked up so that [it] would be conversant in it." The record further shows the court recognized that Morgan was going to "attack the sale" of the subject property in the UD action.
The record shows at the close of Deutsche Bank's case in chief, after it had submitted evidence including witness testimony showing that Morgan (allegedly) had been properly served with the notice to vacate, Morgan made an oral motion for judgment in his favor in the UD action. In connection with this motion, Morgan argued the trustee's deed upon sale was invalid because it lacked an address and because the trustee's deed upon sale was "void on its face" because it allegedly failed to comply with Civil Code section 1095. The court noted that because of the briefing submitted and the complexity of the law, it would take the oral motion under submission because it was a bench trial and the court wanted to hear the rest of the evidence and study the law more closely to ensure the court got "it right." When Morgan objected, the court took a recess to consider the oral motion. After the recess, the court denied the motion.
Civil Code section 1095 provides: "When an attorney in fact executes an instrument transferring an estate in real property, he must subscribe the name of his principal to it, and his own name as attorney in fact."
Morgan next called witness Arthur L. Bonner, Jr., a licensed mortgage originator and real estate agent, who owned a "loss mitigation firm" that operated as a "real estate document analyst and mortgage securitization auditor." The record shows Deutsche Bank objected to Bonner's testimony, as he was not designated as an expert witness. The court, however, noted that this was not a "typical" UD action because there was another action "associated with it" and that, therefore, it would give Morgan "room for things that might be only allowable in that case [i.e., the instant action], but to bring them in here so that [Morgan] would have the opportunity to put on his whole case." (Italics added.) The record further shows that throughout the two-day trial, the court repeatedly noted it was giving the parties a "broader scope to put in evidence" in the UD action.
Thus, over objection Bonner testified he researched Kay-Co, the original lender and beneficiary under the DOT; that he reviewed the Harbor View 2007-2 trust, which he stated was a real estate mortgage investment conduit (REMIC); that he reviewed the "pooling and service agreement" and found it was formed in New York under New York laws; that a REMIC has a "cutoff date" and a "closing date"; that a "cutoff date" is the date in which all assets in the trust are to be identified and that a "closing date" is the last day in which the assets can be placed in a REMIC; and that in the instant case, Deutsche Bank was the trustee of the REMIC, which had a "cutoff date" of March 1, 2007, and a "closing date" of March 29, 2007.
Morgan also testified in the UD action. He testified that before the foreclosure sale, he sought a loan modification from CMC; that under the proposed loan modification, the interest rate on the loan would be 2 percent for the first 24 months, 4 percent for the next 24 months and 6 percent for the remaining life of the loan; that he also was required to make an initial payment of $1,897.66, which he "recall[ed]" making; and that on or about June 27, 2009, he received another document from CMC stating the loan modification had not been approved and the subject property was going to be sold at a trustee's sale.
On cross-examination, Morgan testified that to his knowledge, he completed the "expense sheet" that was a prerequisite to approval of his loan modification. The "expense sheet" required Morgan to make a good-faith estimate of his monthly income and expenses. Morgan further testified that he had the "expense sheet" notarized, as required; that he returned it to CMC along with a $1,000 processing fee by the required date; that he made at least one payment under the loan modification; that he could not recall how may payments he made; that he did not make continuous payments; and that he could not recall the date when he stopped making such payments. Although the June 27 letter stated Morgan should contact the trustee, Morgan initially testified he never contacted either the trustee or CMC. Later, Morgan changed his testimony and stated he made contact, but was not clear it was after receiving the June 27 letter.
Morgan testified that after he defaulted on the loan, he declared bankruptcy three times; that he (allegedly) did not declare bankruptcy to stop the foreclosure sale, but rather to "align [his] assets"; and that he listed CMC on a bankruptcy schedule as having an undisputed secure claim in connection with two of those bankruptcies.
After a short recess, the record shows Deutsche Bank moved for a directed verdict on the ground Morgan failed to pay the indebtedness owed (i.e., tender). Morgan in response argued he was not required to tender because the foreclosure sale and the trustee's deed upon sale were void, and not merely voidable. As such, Morgan renewed his own request for a directed verdict against Deutsche Bank, arguing Deutsche Bank had failed to show that Trustee Corps was a valid trustee and that Deutsche Bank was assigned rights in the subject property before the "closing date" of the REMIC, per Bonner's testimony.
Morgan also argued that Deutsche Bank failed to prove it had the right to sell the subject property, inasmuch as Kay-Co was the lender and Southland Title was the trustee and there was "no relationship" between Deutsche Bank and Kay-Co and/or Southland Title; that Deutsche Bank was a "stranger[] to the action"; that Deutsche Bank "screwed up" because it "wanted to be cheap and dirty in how [it] put things together"; and that Deutsche Bank had not proven "how it got from Kay-Co to Deutsche Bank" or "how it got from Southland [Title] . . . to Trustee Corps."
After Morgan's lengthy argument, Deutsche Bank contended it satisfied its burden when it proffered the trustee's deed upon sale, which it further contended shifted the burden to Morgan to "produce evidence that the sale was void." Because, according to Deutsche Bank, Morgan did not proffer such evidence, he was required to tender, which he failed to do. The record shows the court took the motions for directed verdict under submission.
The following day, the court allowed Deutsche Bank to call James McPherson as a rebuttal witness. McPherson testified that he was a litigation supervisor and an officer of CMC; that he personally reviewed the books and records of CMC in connection with the subject property; that CMC serviced the loan on behalf of, and as attorney-in-fact for, Deutsche Bank; and that CMC began servicing Morgan's loan in 2007. McPherson further testified that CMC received the original note and DOT on March 31, 2009, but that as soon as CMC began servicing the loan, the "custodian who held the note reflected the transfer of servicing to [CMC] and became [its] agent to hold the note. So the day [CMC] took over servicing . . . [it] had constructive possession through [its] agent of [the note]."
McPherson also testified that MERS held the beneficial interest under the DOT; that MERS held that interest "solely as nominee for the lender and lender['s] successor [and] assigns"; and that MERS was and is a "national mortgage registration system whereby MERS becomes beneficiary under a deed of trust or mortgage for whoever the servicer of the loan is at the time. [¶] So as servicing transfers from one entity to the next, MERS keeps record of those transfers in its system but . . . remains the beneficiary in the real property records until such time as an assignment from MERS to some other entity is recorded."
McPherson noted that CMC was a member of MERS. McPherson reviewed the "MERS history" for Morgan's loan. In connection with that "registration history," McPherson found the beneficial interest of the Morgan loan was transferred by Kay-Co in January 2007.
The record shows Morgan objected to much of this questioning. In response, the court noted it had given Morgan "broad latitude" in the UD action, including allowing his counsel's "30-minute monologue yesterday at the end of the day." The court further noted that in "fairness," Morgan's "guy got on the stand yesterday and, over . . . objection, . . . testif[ied] about what was going on in the State of New York, and the only place [the court] stopped him was on his—when he tried to lecture about the effect of the laws as opposed to just what he had seen. It included all kinds of hearsay, included what he knows of this corporation and that corporation, who held the beneficial interest. So [the court] will give [Deutsche Bank] the same latitude that [it] gave [Morgan]."
McPherson testified that CMC had a relationship with "RBS Financial, also known as Greenwich"; that RBS Financial/Greenwich was the "investor on the loan" that CMC was servicing; that Morgan's loan was included in a "pool of loans" that was subject to a "pooling and servicing agreement"; that although CMC was not a party to the "pooling and servicing agreement," it acquired "servicing rights" in 2007 from another servicing company; that the "closing date" for delivery of the loans into the trust pool was March 30, 2007; that assets are deposited into the trust pool by delivering the original note to the trust "either endorsed specifically to the trust or in blank, as well as an assignment of the underlying security instrument unless the security instrument is originated as a MERS loan, in which case no assignment needs to be completed"; and that because Morgan's loan was a "MERS loan," which Morgan did not dispute, there was no requirement "that the security be assigned to the trust [pool] by written and recorded assignment."
McPherson noted a borrower can access the MERS system so the borrower can find out who owns his or her loan and who services it. According to McPherson, "[w]hen a transfer of servicing occurs, that is noted on the MERS system. Same with the transfer of any kind of beneficial interest. So as the mortgage and underlying debt obligation transfer from either one investor to another or one servicer to another, that's reflected in the MERS system both so . . . the industry can know about it and so the borrower can access the MERS system." McPherson further noted that the MERS registration system "functions as an electronic system of recording instead of a paper system."
McPherson testified that based on the evidence, the Morgan asset, the "note and security, the [DOT] associated with the loan in question, were effectively transferred into the trust assets according to the terms of the [pooling and service agreement]." McPherson further testified that CMC began servicing the loans in the pooling and service agreement—including Morgan's—effective March 1, 2007, before the closing date.
With respect to the proposed loan modification agreement between CMC and Morgan, McPherson testified that on May 6, 2009, CMC sent Morgan a letter stating Morgan needed to complete some documentation (i.e., the "expense sheet"), and send CMC a $1,000 check by May 20, 2009; that after reviewing CMC records, Morgan neither submitted the "expense sheet" nor the $1,000 processing fee nor any payments as contemplated under the proposed loan modification agreement; that Morgan's loan history showed the last "regular payment" on the loan was made on December 11, 2008; that another payment was made on April 14, 2009 "with a due date" of January 1, 2009; and that no other loan payments were made by Morgan, which payments would have been reflected on the loan history report.
McPherson next testified about the series of events that led to the foreclosure of the subject property, including CMC informing Morgan by letter that he was in default under the note and DOT and that Trustee Corps was the foreclosing trustee; informing Trustee Corps by letter signed by CMC employee "Linda Dalton" that the trustee was authorized to initiate foreclosure proceedings; recording a (second) notice of trustee's sale on February 11, 2011, setting the sale of the subject property for March 4, 2011; moving for relief from the stay in bankruptcy court after Morgan granted a 1 percent interest in the subject property to an individual already in bankruptcy; and recording a trustee's deed upon sale on June 22, 2011, after the sale.
Over objection, McPherson testified the foreclosure sale occurred in May 2011, although the June 22 trustee's deed upon sale incorrectly stated the sale occurred in May 2010. Also over objection, McPherson stated in preparing to testify, he reviewed CMC's "comment history," which he described as log of "all actions that are taken on a loan, whether it be correspondence with the borrower, incoming calls, things we worked on the file, they all get recorded at the time the action was taken, whether it be correspondence or some other action." McPherson noted such records are made in the "ordinary course" of CMC's business by persons "who have personal knowledge . . . whose business duty it is to record" such information; and that in reviewing such records with respect to Morgan and his loan, it showed "Morgan had called our office basically saying he received this loan modification letter and received a trustee sale—or, excuse me, a referral to the trustee asking what was going on and why the modification wasn't being honored. And we pointed him to the fact that he was required to both fill out the modification documentation, both the modification itself and the income and expense statement, as well as return the $1,000 processing fee to us. And he was informed that the modification was not in force until we received both of those things back."
On cross examination, McPherson stated in preparing to testify in the UD action, he reviewed the note, the DOT, the comment history, the payment history, the trustee's deed(s) upon sale, the notice of default, the notice of sale, the servicing agreement, and most of the exhibits. McPherson further testified that as the loan servicer, CMC had the power to initiate the nonjudicial foreclosure on the subject property.
At closing, Deutsche Bank argued that it was required to show three elements to succeed in the UD action: first, that it acquired title "in a duly protected foreclosure sale, held in accordance with the [DOT] and a trustee's deed upon sale was thereafter recorded"; second, that notice to vacate was properly served; and third, that Morgan was in possession of the subject property. Deutsche Bank noted that Morgan admitted to being in possession of the subject property, and that the process server testified in the UD action that the notice to vacate was properly served (on John Doe, ostensibly because Morgan refused to accept service). Thus, the only remaining issue was whether the foreclosure sale was valid.
Deutsche Bank argued that the nonjudicial foreclosure sale was valid; that it provided the court with evidence "by way of a trustee's deed upon sale and three corrective trustee's deeds upon sale that all contained the recitals that [Deutsche Bank] duly perfected title in compliance with the code"; that Deutsche Bank provided competent testimony and proffered certified copies of documents to show the foreclosure sale was valid, including substituting Trustee Corps for Southland Title as the trustee; that once Deutsche Bank proffered such evidence, there was a "rebutt[able] presumption, both statutory and [under] common law, that comes from the effect of reporting such documents"; that Morgan produced no credible evidence to rebut that presumption; and that as such, Morgan was required to show he was "ready, willing and able to tender the full amount of indebtedness owed," which he failed to do.
Morgan argued that Deutsche Bank failed to show how it had any interest in the note; that the note itself stated the lender was Kay-Co and "[i]t doesn't say Deutsche Bank"; and that because Deutsche Bank "lacked standing," CMC, on behalf of Deutsche Bank, had no right to initiate the foreclosure sale.
Morgan also made many other arguments to show the sale was void, including that the date of sale was wrong on the original trustee's deed of sale; that the process server who served John Doe did not in his testimony identify Doe as Morgan, nor attempt to serve Morgan at his place of business; that the limited power of attorney between Deutsche Bank and CMC was dated after certain documents were prepared and that McPherson's testimony there was a previous limited power of attorney between the two entities was inadmissible hearsay; that the substitution of trustee was invalid because it failed to name the principal, Deutsche Bank, on the document; that Southland Title, and not Trustee Corps, was the trustee and thus, was required to initiate foreclosure proceedings; that Morgan had a valid loan modification agreement only to learn a month later he was in default; and that Morgan "believe[d] he complied completely" with the requirements of the loan modification paperwork requested by CMC.
After taking the matter under submission, the court in its July 31, 2014 order found in favor of Deutsche Bank. In so doing, the court ruled as follows:
"The evidence is clear that Defendant [Morgan] entered in[to] a loan, fell behind in payments and last made any payment in April of 2009, for the February 2009 obligation.[] Plaintiff presented persuasive evidence that it properly purchased the property for a credit bid at a foreclosure sale. Defendant was properly served and his arguments otherwise were neither persuasive [nor] credible. Plaintiff [Deutsche Bank] met each element of its cause of action for unlawful detainer, and thoroughly rebutted each allegation raised by the Defense.
McPherson testified the April 2009 payment was due for January 2009.
"The Defense raised numerous issues regarding the state of title, the corporate status of the underlying land trust, and every other issue which could be raised to muddy the title claims of Plaintiff. After all the evidence was submitted, Plaintiff's evidence was far more credible than Defendant's evidence.
"Defendant's most persuasive argument was that he was granted a modification, but the foreclosure went forward anyway. However, the document he relies upon identifies various specific steps which need to be completed for the modification to proceed. Defendant's testimony that he believes he complied with those steps was rebutted by the Plaintiff. Defendant failed to bring forth any supporting evidence (cancelled check, notary receipt, etc[.]) which supports his equivocal testimony. The Court finds Plaintiff's evidence to be more persuasive regarding this issue. The Court also notes that in NONE of the numerous filings over the past three years has Defendant ever raised this new issue of modification.
"Plaintiff shall prepare a judgment consistent with this finding. Plaintiff is awarded possession of the property and Defendant shall vacate the property."
The record shows after judgment was entered in favor of Deutsche Bank, Morgan filed a motion to vacate the judgment and enter a new judgment in his favor. Among other arguments Morgan maintained that the evidence introduced at the UD trial showed the "falsity not only of the [t]rustee's [d]eed [u]pon [s]ale, but that the '[s]ubstitution of [t]rustee' . . . are [sic] fraudulent, false and VOID as [CMC] was never the beneficiary, knew it was never the beneficiary of [Morgan's] promissory note [or] deed of trust[;] never had the legal right to [s]ubstitute the Trustee, [or] was [CMC] the legal agent of Deutsche Bank National Trust as Trustee of the Harbor View 2007-2 Trust; the alleged power-of attorney from Deutsche Bank . . . as Trustee of the Harbor View 2007-2 was never valid for any acts of [CMC] to act on its behalf[;] the acts of [CMC] occurred a year before the date of Deutsche Bank's alleged power-of-attorney[;] the power of attorney was not in compliance with Probate Code §4000 et seq. the so[-]called 'Power of Attorney Act' not being notarized [or] witness[ed] in violation of Probate Code §4121, and §4122 not being notarized nor witnessed[;] nor does the Reconstituted Agreement admitted at trial help, as that is not notarized [or] witnessed and thus cannot be a 'power-of-attorney'[;] and even if the 'power-of-attorney' [was] valid, the 'substitution of trustee' and 'assignment [of] the deed of trust' to Deutsche Bank fail, as neither the 'substitution of trustee' [nor] the ['][a]ssignment of the [d]eed of [t]rust' to Deutsche Bank could ever have happened as the original lender Kay-Co . . . had already sold and transferred the Defendant's Note and [DOT] to Greenwich Capital or RB years earlier than the '[s]ubstitution of [t]rustee' and the '[a]ssignment of the [d]eed of [t]rust[,]' as supported by the testimony of plaintiff's own star witness, James McPherson, who testified in his capacity as an officer and representative of [CMC], the servicer of the loan, that [CMC] never owned the Defendant[']s note or [DOT], that the note and [DOT] had been sold years earlier in 2007 to Greenwhich Capital or RBS . . . at time of Trial[;] and even assuming the word 'beneficiary' was inadvertently put on '[s]ubstitution of [t]rustee,' then the substitution still fails as the substitution was not in compliance with Civil Code §1095, in that the purposed principal's name, Deutsche Bank National Trust as Trustee for the Harbor View 2007-2 Trust, was written above [CMC's] name, nor at all on the document, nor does [CMC] state it is the 'attorney-in-fact' for Deutsche Bank as a Trustee or at all."
In opposing the motion, Deutsche Bank noted it was procedurally defective because it was untimely and, in any event, lacked merit.
The court in its November 14, 2014 minute order agreed with Deutsche Bank that the motion to vacate was untimely. The court also denied the motion on its merits, noting Morgan failed to establish an "incorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts."
The court in its November 14 order also denied a third party claim of right to possession of the subject property made by "Gracetta Wilson." In so doing, the court found that Wilson "has failed to establish that she has continuosly occupied the subject property from 7/15/11 through the present. [Citation.] At a minimum, [Wilson] has failed to attach to her claim a copy of the alleged written lease between her and landlord. The levying officer is directed to proceed with enforcement of the original writ of possession as deemed amended to include [Wilson] . . . ."
The appellate record does not include Wilson's claim to possession. Ostensibly, this was yet another attempt to interfere with Deutsche Bank's right of possession to the subject property. In any event, we note at the November 14 hearing the court found Wilson's claim caused it "serious concern, as many of the representations she makes under oath are inconsistent with other representations that have been made to the Court under oath, which, if she were here, [the court] would be putting everybody under oath and finding out what happened." The court went on to note that "somebody is not accurately representing the circumstances of the past three years, under oath" and that the court did not know "who that is, but it may be a lucky thing she's not here, because [the court would] seriously be considering contempt proceedings against whomever [the court] found to be incorrect." --------
Morgan in late November 2014 appealed the judgment. On January 2, 2015, the clerk of the superior court, appeals section, issued a notice of failure to clear default. The notice provided Morgan failed to designate the record on appeal as required by the California Rules of Court. As a result, on January 21, 2015, we dismissed Morgan's appeal to the UD action, case number 67073. (See Cal. Rules of Court, rule 8.121(a).) On June 15, 2015, we denied Morgan's motion to recall the remittitur and reinstate his appeal in case number 67073.
Which brings us at last to the current case. In June 2015, defendants moved for judgment on the pleadings in connection with the SAC, arguing among other grounds that the causes of action therein were barred by claim/issue preclusion. Morgan, once again appearing in propria persona, opposed the motion.
The court in its October 20, 2015 minute order granted defendants' motion. The court noted that it had read and considered plaintiff Morgan's late-filed opposition; that the SAC was barred by the doctrine of "res judicata"; and that plaintiff's "failure to comply with the appellate requirements, resulting in the dismissal of his appeal," was "fatal to the present action." The court found this ruling dispositive of the entire action. Morgan timely appealed.
DISCUSSION
I
Plaintiff initially contends the motion for judgment on the pleadings was barred by Code of Civil Procedure section 438, subdivision (g)(1). We disagree.
Subdivision (g) of Code of Civil Procedure section 438 provides: "The motion [for judgment on the pleadings] provided for in this section may be made even though either of the following conditions exist: [¶] (1) The moving party has already demurred to the complaint or answer, as the case may be, on the same grounds as is the basis for the motion provided for in this section and the demurrer has been overruled, provided that there has been a material change in applicable case law or statute since the ruling on the demurrer. [¶] (2) The moving party did not demur to the complaint or answer, as the case may be, on the same grounds as is the basis for the motion provided for in this section." (Italics added.)
Here, the record shows defendants' motion for judgment on the pleadings was based in part on principles of claim/issue preclusion arising from the judgment entered in favor of Deutsche Bank in the UD action. Clearly, the judgment in the UD action and defendants' reliance on the principles of claim/issue preclusion were not the "same grounds" under Code of Civil Procedure section 438, subdivision (g)(2) that served as the basis for defendants' demurrer to the SAC two years earlier, before the issue of whether the foreclosure was wrongful was tried in the UD action. We thus reject this contention.
II
Plaintiff next contends the court erred in sustaining the motion for judgment on the pleadings without leave to amend because he can state a cause of action for wrongful foreclosure. Again we disagree.
Initially, we note the SAC included allegations that the foreclosure sale was wrongful. Indeed, as noted, plaintiff alleged in the SAC that defendants "knowingly, willfully and intentionally filed false documents which wrongfully stated that they had the right to conduct the foreclosure sale and/or accept title to Plaintiff's property as a result of the false and fraudulent foreclosure sale." (Italics added.)
A wrongful foreclosure claim "is an equitable action to set aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that the foreclosure was improper. [Citation.] The elements of a wrongful foreclosure cause of action are: ' "(1) [T]he trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually, but not always the trustor or mortgagor), was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering." ' [Citation.]" (Sciarratta v. U.S. Bank Nat'l Ass'n (2016) 247 Cal.App.4th 552, 561-562.)
In any event, as we discuss post, the allegations/causes of action in the SAC that the foreclosure was wrongful are barred by issue preclusion. (See Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1237 (Alvarez) [noting the "principle of collateral estoppel does not depend on the legal theory used but the primary right asserted"]; see also Lumpkin v. Jordan (1996) 49 Cal.App.4th 1223, 1232 [noting issue preclusion/collateral estoppel precludes relitigation of the same issue in a different cause of action]; Evans v. Celotex Corp. (1987) 194 Cal.App.3d 741, 746-747 [recognizing issue preclusion/collateral estoppel "does not require identity of legal theories or causes of action"].)
Here, the "primary right" (see Alvarez, supra, 143 Cal.App.4th at p. 1237) asserted by plaintiff in both the UD action and in the instant case was that the nonjudicial foreclosure sale instituted by Trustee Corps was wrongful and thus void. Plaintiff admitted as much when he argued in connection with his consolidation motion that the two cases involved the same transaction, the same parties and key to issue preclusion, the same issue. We thus conclude granting plaintiff leave to amend his SAC would have been futile. (See Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 420, fn. 10 [noting the court did not error in refusing to grant plaintiff insureds leave to amend because the "defects in the original complaints [were] so substantial, there [was] simply no set of facts to which an amended complaint can relate back" and thus, "[g]ranting leave to amend in any respect, therefore, would [have] be[en] futile and [was] unwarranted"].)
III
We reach the main issue in this case: whether the judgment entered in the UD action in favor of Deutsche Bank bars litigation of the issues/claims raised in the SAC. Applying a de novo standard of review (see Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 672; Roos v. Red (2005) 130 Cal.App.4th 870, 878), we already have answered this question in the affirmative.
Claim preclusion or res judicata " ' "precludes parties or their privies from relitigating a cause of action [finally resolved in a prior proceeding]." ' [Citations.]" (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 828, 829 (Vandenberg); Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896 [noting claim preclusion "prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them"].) "Claim preclusion arises if a second suit involves: (1) the same cause of action (2) between the same parties (3) after a final judgment on the merits in the first suit. [Citations.] If claim preclusion is established, it operates to bar relitigation of the claim altogether." (Faerber, supra, 61 Cal.4th at p. 824.)
Issue preclusion or collateral estoppel "prohibits the relitigation of issues argued and decided in a previous case, even if the second suit raises different causes of action. [Citation.] Under issue preclusion, the prior judgment conclusively resolves an issue actually litigated and determined in the first action. [Citation.] There is a limit to the reach of issue preclusion, however. In accordance with due process, it can be asserted only against a party to the first lawsuit, or one in privity with a party. [Citation.]" (Faerber, supra, 61 Cal.4th at p. 824.)
"[I]ssue preclusion applies: (1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party. [Citations.]" (Faerber, supra, 61 Cal.4th at p. 825.)
Turning to the instant case, the record shows there was a "final adjudication" on the merits in the UD action on the overarching issue that is the subject of both causes of action in the SAC, namely whether the nonjudicial foreclosure sale was wrongful and thus void. (See Faerber, supra, 61 Cal.4th at p. 825.) That plaintiff's appeal of the UD judgment to this court was dismissed based on his failure to designate timely the record on appeal does not, and cannot, change our conclusion on this point. (See Franklin & Franklin v. 7-Eleven Owners for Fair Franchising (2000) 85 Cal.App.4th 1168, 1174 [noting "in California the rule is that the finality required to invoke the preclusive bar of res judicata [or issue preclusion/collateral estoppel] is not achieved until an appeal from the trial court judgment has been exhausted or the time to appeal has expired"]; Abelson v. National Union Fire Ins Co. (1994) 28 Cal.App.4th 776, 787 [noting under "California law, a judgment is not final for purposes of collateral estoppel while open to direct attack, e.g., by appeal"].)
The record further shows plaintiff in the instant case raised the "identical" wrongful foreclosure issue that was adjudicated on the merits in the UD action. Indeed, plaintiff himself made this very point when he requested the two actions be consolidated precisely because both actions involved the same issue. (See Faerber, supra, 61 Cal.4th at p. 825.)
The record also shows the issue of whether the foreclosure was wrongful was "actually litigated and necessarily decided" against plaintiff in the UD action, as summarized in great detail ante. In reaching this conclusion, we recognize that because of the summary nature of unlawful detainer proceedings, such actions ordinarily have limited preclusive effect. (See Gombiner v. Swartz (2008) 167 Cal.App.4th 1365, 1371 (Gombiner); Pelletier v. Alameda Yacht Harbor (1986) 188 Cal.App.3d 1551, 1557 (Pelletier).)
However, in cases such as the instant one, " 'full and fair' litigation of an affirmative defense—even one not ordinarily cognizable in unlawful detainer, if it is raised without objection, and if a fair opportunity to litigate is provided—will result in a judgment conclusive upon issues material to that defense." (Vella v. Hudgins (1977) 20 Cal.3d 251, 256 (Vella); see also Gombiner, supra, 167 Cal.App.4th at p. 1371 [noting "when litigants to an unlawful detainer proceeding fully try other issues besides the right of possession, the unlawful detainer judgment is conclusive as to those other litigated issues"]; Pelletier, supra, 188 Cal.App.3d at p. 1557 [noting "[l]egal and equitable claims—such as questions of title and affirmative defenses—are not conclusively established unless they were fully and fairly litigated in an adversary hearing"]; compare Martin-Bragg v. Moore (2013) 219 Cal.App.4th 367, 370, 384-385 [noting trial court abused its discretion when it refused to consolidate an unlawful detainer proceeding with a pending quiet title action because the dispute in the unlawful detainer proceeding involved " 'complex and complicated property ownership issues' " that could not be resolved summarily and further noting the defendant was "prejudiced by being forced to litigate the complex issue of title to the property under the summary procedures that govern actions for unlawful detainer"].)
Here, the record shows that the UD action was not a "typical" unlawful detainer proceeding. The UD action lasted two days and involved multiple witnesses and trial exhibits. The record also clearly shows that the court allowed the parties "a fair opportunity" (see Vella, supra, 20 Cal.3d at p. 256) to litigate fully the key issue of whether the foreclosure sale was wrongful, and thus void, as summarized in great detail ante. Indeed, the court throughout the UD action continually rejected the attempts of the parties to limit the scope of the issues and the evidence introduced in connection with those issues to the extent it benefited one party over the other.
What's more, the record also shows that plaintiff in the UD action raised myriad grounds to support his contention the foreclosure was wrongful, as summarized in his motion to vacate the UD judgment. However, after hearing all the evidence and the argument of counsel, and after taking the matter under submission, the court found Deutsche Bank submitted credible and substantial evidence showing the foreclosure sale was valid.
Regarding the last element of issue preclusion, clearly Morgan was a party in both the UD action and in the instant case. (See Faerber, supra, 61 Cal.4th at p. 825.)
Finally, we conclude applying issue preclusion in the instant case to bar relitigation of the issue of whether the nonjudicial foreclosure sale of the subject property was wrongful comports with "fairness and sound public policy." (See Vandenberg, supra, 21 Cal.4th at p. 835.) The record in the instant case shows that plaintiff's last payment on the loan was in early 2009; that plaintiff remained in possession of the subject property at least through mid-November 2014, or for almost six years after his last payment, until the court denied his motion to vacate the UD judgment; that between 2009 and 2014, plaintiff filed bankruptcy at least two times, and deeded a 1 percent interest in the subject property to a third party who then was in bankruptcy; and most importantly, that the issue of whether the nonjudicial foreclosure was wrongful was thoroughly litigated in the UD action, which litigation spanned more than three years. We thus conclude the public policies underlying issue preclusion are furthered when that doctrine is applied in the instant case. (See Lucido v. Superior Court (1990) 51 Cal.3d 335, 343 [noting the public policies underlying issue preclusion include among others "preservation of the integrity of the judicial system" and "promotion of judicial economy"].)
DISPOSITION
The judgment in favor of defendants Deutsche Bank and MERS is affirmed. Defendants to recover their costs of appeal.
BENKE, Acting P. J. WE CONCUR: NARES, J. IRION, J.