Opinion
A145151
05-14-2018
ERIC M. SHOCKLEY et al., Plaintiffs and Appellants, v. OCWEN LOAN SERVICING, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. MSC14-01099)
Plaintiffs Eric M. Shockley and Charles E. Fetters appeal a judgment of dismissal following a demurrer to their complaint alleging wrongful foreclosure and related claims. The court sustained the demurrer on several grounds. We conclude the action is barred by the doctrine of res judicata as plaintiffs seek to relitigate claims previously decided against them. We shall affirm the judgment on that basis.
Statement of facts
The essential facts are stated in the pleadings, exhibits to the pleadings and judicially noticed documents from related litigation submitted in connection with the demurrer.
In 2006, Shockley obtained a $452,000 mortgage loan secured by residential property in Richmond, California. Shortly after obtaining the loan, Shockley recorded a grant deed establishing joint tenancy with his domestic partner, Fetters. Notice of default on the loan was recorded three years later, in June 2009.
In November 2009, plaintiffs filed a lawsuit seeking to enjoin foreclosure. Plaintiffs alleged, among other things, that the financial institution that purchased the deed of trust from the original lender lacked standing to foreclose and failed to comply with statutory foreclosure procedures. The trial court sustained defendants' demurrer to the first amended complaint without leave to amend and entered judgment in February 2010. Plaintiffs filed two subsequent lawsuits and then voluntarily dismissed them without prejudice with demurrers pending.
This is plaintiffs' fourth lawsuit contesting foreclosure. It was initiated in May 2014, and the operative first amended complaint (complaint) was filed October 2014. Defendants demurred to the complaint on multiple grounds. Defendants' arguments included the assertion that plaintiffs' claims were adjudicated in the first lawsuit and the doctrine of res judicata bars relitigation. The trial court did not address the res judicata issue but resolved the case on other grounds. The court sustained the demurrer without leave to amend and entered a judgment of dismissal. Plaintiffs timely filed notice of appeal.
Discussion
On appeal of a judgment of dismissal following demurrer, "we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose." (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) We also consider matters that may be judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "[W]e exercise our independent judgment on whether a cause of action has been stated as a matter of law, regardless of reasons stated by the trial court. [Citation.] We affirm if the trial court's decision was correct on any theory." (Tucker v. Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 210-211.)
Defendants argue this court should affirm judgment in their favor based on res judicata, a ground not addressed by the trial court. The argument has merit.
" 'Res judicata' describes the preclusive effect of a final judgment on the merits. 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. Collateral estoppel, or issue preclusion, 'precludes relitigation of issues argued and decided in prior proceedings.' " (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) "Under the doctrine of res judicata, . . . a judgment for the defendant serves as a bar to further litigation of the same cause of action." (Id. at pp. 896-897.)
" ' "The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are [essentially] the same: (1) A claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding." ' " (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797 (Boeken).)
More recent cases have clarified that "claim preclusion applies only to the relitigation of the same cause of action between the same parties or those in privity with them" whereas issue preclusion may be asserted against a former party by "one who was not a party or privy in the first suit." (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824-825.) --------
We are concerned here with the claim preclusion aspect of res judicata. "To determine whether two proceedings involve identical causes of action for purposes of claim preclusion, California courts have 'consistently applied the "primary rights" theory.' [Citation.] Under this theory, '[a] cause of action . . . arises out of an antecedent primary right and corresponding duty and the delict or breach of such primary right and duty by the person on whom the duty rests. "Of these elements, the primary right and duty and the delict or wrong combined constitute the cause of action in the legal sense of the term . . . ." ' " (Boeken, supra, 48 Cal.4th at pp. 797-798.)
The phrase "cause of action" has a precise meaning under the doctrine of res judicata. (Boeken, supra, 48 Cal.4th at p. 798.) "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.] Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief. "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 he 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." (Ibid.)
This action is based on the same alleged injury as the previous action: wrongful foreclosure. In the 2009 action, plaintiffs' core allegations were that defendants were assignees who lacked standing to foreclose and failed to follow statutory foreclosure procedures. Plaintiffs make the same allegations in the current action.
Despite the obvious similarity, plaintiffs argue the two actions are distinct because the current complaint alleges violation of additional statutes governing foreclosure procedures that "generate entirely new causes of action." But " ' "the primary right and duty and the delict or wrong combined constitute the cause of action in the legal sense of the term" ' " for res judicata purposes. (Boeken, supra, 48 Cal.4th at p. 798.) "[T]he determinative factor is the harm suffered" not the "legal theories upon which recovery might be predicated." (Ibid.) Res judicata bars a claim based on the same injury litigated in a prior action even where, as here, the new action presents new legal theories of recovery. (Gillies v. JPMorgan Chase Bank, N.A. (2017) 7 Cal.App.5th 907, 914.)
The second element of claim preclusion is also met here: the prior proceeding resulted in a final judgment on the merits. (Boeken, supra, 48 Cal.4th at p. 797.) "A judgment entered after a general demurrer has been sustained 'is a judgment on the merits to the extent that it adjudicates that the facts alleged do not constitute a cause of action, and will accordingly, be a bar to a subsequent action alleging the same facts.' " (Crowley v. Modern Faucet Mfg. Co. (1955) 44 Cal.2d 321, 323.)
Defendants argue they are not alleging the same facts. They assert "certain information" concerning the loan assignment and foreclosure process "was not available for the previous complaint" and has been added to the present complaint. However, the inclusion of additional facts in a second complaint does not, standing alone, avoid the bar of res judicata. "[E]ven though different facts may be alleged in the second action, if the demurrer was sustained in the first action on a ground equally applicable to the second, the former judgment will also be a bar." (Keidatz v. Albany (1952) 39 Cal.2d 826, 828.) It is only where "new or additional facts are alleged that cure the defects in the original pleading" that "the former judgment is not a bar to the subsequent action . . . ." (Ibid.) Plaintiffs added facts to the present complaint and changed some factual allegations, but they have not demonstrated that these additions and changes cure the defects in the original complaint.
The third and final element of res judicata is likewise established: the two actions involve the same parties or those in privity with them. (DKN Holdings LLC v. Faerber, supra, 61 Cal.4th at p. 825.) "A privy is one who, after rendition of the judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession, or purchase." (Bernhard v. Bank of America (1942) 19 Cal.2d 807, 811.)
Shockley and Fetters are the plaintiffs in both actions. The principal defendant in both proceedings is US Bank National Association, which acquired plaintiffs' mortgage from the original lender. The other defendants in the present action are Western Progressive, LLC, the successor trustee to US Bank, and Ocwen Loan Servicing, LLC, the successor loan servicer to another defendant in the prior action. Plainly, both actions concern the same parties or those in privity with them.
Disposition
The judgment is affirmed.
Pollak, Acting P.J. We concur: Siggins, J.
Jenkins, J.