Boyce v. T.D. Serv. Co.

• Decision Date: 23 March 2015
• Docket Number: 2d Civil No. B255958
• Citation: 235 Cal.App.4th 429,185 Cal.Rptr.3d 356
• Court: California Court of Appeals Court of Appeals
• Parties: F. Wood BOYCE, Plaintiff and Appellant, v. T.D. SERVICE COMPANY et al., Defendants and Respondents.

235 Cal.App.4th 429

185 Cal.Rptr.3d 356

F. Wood BOYCE, Plaintiff and Appellant

v.T.D. SERVICE COMPANY et al., Defendants and Respondents.

2d Civil No. B255958

Court of Appeal, Second District, Division 6, California.

Filed March 23, 2015

Ronald H. Freshman, for Plaintiff and Appellant.

Lawrence J. Dreyfuss ; The Dreyfuss Firm, for T.D. Service Company, Defendant and Respondent.

Lisa Edgar–Dickman for PMG Mortgage Inc., dba Pacific Mortgage Group and Sandeep Bhasin, Defendants and Respondents.

Shulman Bunn; Stephanie J Shulman and PDatricia Snyder for Dave Kerr, Defendant and Respondent.

Nina Huerta ; Locke Lord for Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2007–2, Asset Backed Certificates, Series 2007–2; Homeward Residential, Inc., and Power Default Services, Inc., Defendants and Respondents.

Opinion

YEGAN, J.

“There are no free houses.” These are the words of the bankruptcy judge who allowed the instant home foreclosure to go forward. It rejected appellant's theory of “wrongful foreclosure.” Thereafter, the same theory was rejected in an unlawful detainer proceeding. Undeterred, appellant F. Wood Boyce sued his lender for “wrongful foreclosure” because the $1.155 million deed of trust was placed in a mortgage investment pool before the foreclosure. Appellant also sued the transferees/assignees to the promissory note and deed of trust, the foreclosure trustee and company that processed the foreclosure documents, and the person who purchased the property.

The trial court ruled that the action was subject to a res judicata/collateral estoppel bar and sustained, without leave to amend, demurrers to the First Amended Complaint. We affirm. The doctrine of res judicata, of which collateral estoppel is a part, encompasses both claim preclusion and issue preclusion. (Mycogen Corp. v Monsanto Co. (2002) 28 Cal.4th 888, 896–897, fn. 7, 123 Cal.Rptr.2d 432, 51 P.3d 297.) “The best way of remembering these doctrines clearly is to view collateral estoppel as a miniature of res judicata; the former applies to issues, the later to entire claims or lawsuits.” (Garner, A Dictionary of Modern Legal Usage (1995 2d ed.) p. 169.)

Facts and Procedural History

On December 5, 2006, appellant and his wife signed a $1.155 million promissory note payable to Pacific Mortgage Group (Pacific Mortgage), secured by a deed of trust on their house at 3500 La Entrada Road, Santa Barbara. The note states: “I understand that the Lender may transfer this Note.”

The same day the note was executed, Pacific Mortgage endorsed the note via an “Allonge to Note” (allonge means an attachment to a negotiable instrument) to Option One Mortgage Corporation (Option One). Option One endorsed the note in blank (the second allonge) and put it in an mortgage investment pool called the Option One Mortgage Loan Trust 2007–2, Asset–Backed Certificates, Series 2007–2 of which Wells Fargo Bank, NA (Wells Fargo) was the trustee.

Pacific Mortgage also assigned the deed of trust to Option One. On December 10, 2010, the deed of trust was assigned a second time by Sand Canyon Corporation (formerly known as Option One) to Wells Fargo.

Appellant honored his signature on the note and made payments for three and a half years. He stopped making the payments in July 2010. On December 14, 2010, a notice of default was recorded based on a $32,508.04 loan default.

Chapter 11 Bankruptcy Petition

Appellant filed an emergency bankruptcy petition on April 4, 2011 to stay the foreclosure. Appellant declared the house was worth $630,000 and that he owed $1,182,166.69 on the note. (In re Frank Wood Boyce , United States Bankruptcy Court, Central Dist. Calif., Case No. 9:11–bk–11564–RR.) Wells Fargo filed a Proof of Claim based on the note/deed of trust and a motion for relief from the automatic stay. Appellant filed an “Objection and Motion to Disallow Wells Fargo's Proof of Claim” and opposed the motion for relief from stay. The bankruptcy court conducted two hearings, inspected the original note and allonges, and factually found a “chain of control and title of the note, starting with the original payee, and then it was endorsed over to Option One, and then it was endorsed in blank, and is in the possession of counsel for Wells Fargo.” The court rejected appellant's claim that the deed of trust assignment was invalid.

The bankruptcy court granted relief from the stay and denied appellant's Objection and Motion to Disallow Wells Fargo's Proof of Claim. Appellant appealed the order which was affirmed by the United States District Court, Central District of California. (Frank W. Boyce v. Wells Fargo Bank, N.A. ) (Case Nos. CV 12–1882–GHK, CV 12–2139–GHK.)

Unlawful Detainer Action

Wells Fargo purchased the property at the trustee's sale and brought an unlawful detainer action to evict appellant. (Wells Fargo Bank, N.A. etc. v. F. Wood Boyce et al. , Super. Court County of Santa Barbara Super. Court Case No. 1385249.) (See Code Civ. Proc., § 1161a, subd. (b)(3) ; Lyons v. Santa Barbara County Sheriff's Office (2014) 231 Cal.App.4th 1499, 181 Cal.Rptr.3d 186 [where trustor holds over after trustee's sale, unlawful detainer action must be brought to evict trustor].) Appellant defended on the theory that the mortgage was invalid and claimed that Wells Fargo did not perfect title in the property. The trial court granted summary judgment for Wells Fargo which was affirmed by the Santa Barbara County Superior Court Appellate Division.

Wells Fargo sold the property to Dave Kerr. The grant deed was recorded October 7, 2013.

The Present Action—Alleged “Wrongful Foreclosure”

On October 22, 2013, appellant sued the following entities/persons: the lender (PMG Mortgage, INC. d/b/a/ Pacific MORTGAGEGROUP and Sandeep Bhasin), the loan servicer and assignee of the note and deed of trust (Homeward Residential Inc. f/k/a American Home Mortgage Servicing, Inc. f/k/a Option One Mortgage Corporation n/k/a Sand Canyon Corporation), the trustee of the Option One investment pool (Wells Fargo Bank, N.A.), the foreclosure trustee (Power Default Services, Inc.), the company that prepared and recorded the notice of default and notice of trustee's sale (T.D. Service Company), and the individual who purchased the property, Dave Kerr. The First Amended Complaint alleged causes of action for wrongful foreclosure, declaratory relief, violation of the Unfair Practices Act (Bus. & Prof. Code, § 17200 ), and quiet title.

The defendants filed demurrers and asked the court to take judicial notice of the bankruptcy orders and unlawful detainer judgment. In a 16 page order, the trial court sustained the demurrers without leave to amend. The court found that the wrongful foreclosure cause of action was subject to a res judicata/collateral estoppel bar and that the causes of action for quiet title, declaratory relief, and violation of the Unfair Practices Act were derivative of the wrongful foreclosure claim.

Res Judicata

On review, we treat the demurrer as admitting all material facts properly pleaded and consider those matters judicially noticed by the trial court. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126, 119 Cal.Rptr.2d 709, 45 P.3d 1171 ). Appellant claims that the trial court abused its discretion in taking judicial notice of the bankruptcy and unlawful detainer orders, but on demurrer, a court may consider documents and recorded documents that are contrary to the allegations in the complaint. (C.R. v. Tenet Healthcare Corp. (2009) 169 Cal.App.4th 1094, 1102, 87 Cal.Rptr.3d 424.) Although a court cannot take judicial notice of hearsay allegations in a court record, it can take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments. (Day v. Sharp (1975) 50 Cal.App.3d 904, 914, 123 Cal.Rptr. 918Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604–605, 176 Cal.Rptr. 824 ). The judgment will be affirmed “if there is any ground on which the demurrer can properly be sustained, whether or not the trial court relied on proper grounds or the defendant asserted a proper ground in the trial court proceedings. [Citation.]” (Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031, 93 Cal.Rptr.3d 405.)

Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigating the same primary right. (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897, 123 Cal.Rptr.2d 432, 51 P.3d 297.) “Under the doctrine of res judicata [claim preclusion], ‘all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date.’ [Citation.] [¶] A claim raised in a second suit is ‘based on the same cause of action’ as one asserted in a prior action if they are both premised on the same ‘primary right.’ [Citation.] ‘The plaintiff's primary right is the right to be free from a particular injury, regardless of the legal theory on which liability for the injury is based. [Citation.]’ ” ( Estate of Dito (2011) 198 Cal.App.4th 791, 801, 130 Cal.Rptr.3d 279 ; see also Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797–798, 108 Cal.Rptr.3d 806, 230 P.3d 342 ; Acuna v. Regents of University of California (1997) 56 Cal.App.4th 639, 648, 65 Cal.Rptr.2d 388 [Pomeroy primary right theory].) It matters not that appellant's new counsel has additional facts or a new theory of wrongful foreclosure. It is the same primary right which appellant has always claimed.

Here, the alleged “wrongful foreclosure” claim was adjudicated in two prior actions. In the bankruptcy proceeding, the court overruled appellant's objections to Wells Fargo's proof of claim. The order/judgment was affirmed by the United States District Court which creates a res judicata bar. (Siegel v. Federal Home Loan Mortg. Corp. (9th Cir. 1998) 143 F.3d 525, 528–531 [bankruptcy court's disallowance of claim is a final judgment and the basis for res judicata]...