In re Koebel, Case No: 2:12-bk-12597-WB
| Decision Date | 25 April 2014 |
| Docket Number | Case No: 2:12-bk-12597-WB |
| Court | U.S. Bankruptcy Court — Central District of California |
| Parties | In re: PHILIP E. KOEBEL, Debtor(s). |
NOT FOR PUBLICATION
CLAIM NO. 8 OF OCWEN LOAN
Phillip E. Koebel, the debtor herein (the "Debtor"), filed his Motion for Disallowance of Proof of Claim No. 8-1 filed by Ocwen Loan Servicing, LLC ("Ocwen") (the "Claim").1 The Debtor asserts that the Claim should be disallowed in its entirety based on Ocwen's failure to acknowledgethe permanent loan modification entered into between the Debtor and Ocwen. Alternatively, the Debtor contends that the Claim should only be allowed in accordance with the Loan Modification Agreement. Ocwen contends that the Debtor is barred from raising his objection on the grounds of claim preclusion and issue preclusion based on the dismissal with prejudice of the Debtor's state court lawsuit against Ocwen and the subsequent dismissal of the Debtor's lawsuit filed in the District Court. Alternatively, Ocwen argues that there was no loan modification. Ocwen also filed its Motion for Relief from the Automatic Stay to proceed with a foreclosure sale on the Debtor's property. Ocwen sought relief under sections 362(d)(1) and 362(d)(4) based on allegations that the case was filed in bad faith and because the Debtor did not make post-petition payments in the full amount owing under the note. The Debtor contends that the case was filed in good faith, the loan was modified and the Debtor made payments in the modified amount. Thus, the central issue on the Motion to Disallow Ocwen's Claim and on Ocwen's Motion for Relief from Stay is whether the Debtor's loan was modified.
The Court heard argument on these motions on June 26, 2013 at 1:30 p.m. and took the matters under submission. For the reasons set forth below, the Court will deny the Motion for Disallowance of Claim and grant the Motion for Relief from the Automatic Stay because the Debtor is barred from raising his objections based on the doctrines of claim preclusion and issue preclusion. The relevant facts are as follows:
On June 23, 2008, the Debtor executed a Deed of Trust in the amount of $360,000.00 for the real property located at 255 Robinson Road, Pasadena, CA (the "Property"). A Notice of Default was recorded on July 11, 2009 as the Debtor was in arrears in the amount of $16,211.14. On July 20, 2010, Ocwen sent a letter to the Debtor that notified the Debtor that he was approved to enter into a trial period payment plan under the Home Affordable Modification Program ("HAMP") and providedthat to accept this offer, the Debtor was required to make new monthly "trial period payments" in place of his normal monthly mortgage payment. Under the trial period payment plan, the Debtor was required to make payments in the amount of $1,344.85 by September 1, 2010, October 1, 2010 and November 1, 2010.
On August 25, 2010, Ocwen sent two letters to the Debtor. One letter informed the Debtor that he was entitled to a Home Affordable Modification. This letter informed the Debtor how to accept the offer, required that the Debtor sign and return the agreement to Ocwen prior to December 1, 2010, and continue to make the trial period payments on time. The letter provided the terms of the permanent modification, including the new principal balance and interest rate, and enclosed the Home Affordable Modification Agreement (the "HAMA"). The HAMA provided that it would amend and supplement the mortgage and note on the Property if the representations of the borrower in section 1 of the HAMA continued to be true and correct. The HAMA provided that the servicer would not be obligated to modify the Loan Documents if the borrower failed to meet any one of the requirements under the Agreement, including providing a title endorsement or subordination agreement from other lienholders to maintain a first priority lien position. The modified terms of the loan required the borrower to make monthly payments of $1,344.95 for 5 years starting on December 1, 2010, with payments adjusting annually thereafter.
The second letter from Ocwen to the Debtor dated August 25, 2010 stated that the Debtor was not eligible for a Home Affordable Modification 2
On November 24, 2010, the Debtor signed the HAMA and returned it to Ocwen. The Debtor continued to make monthly payments in the amount of $1,344.95 until April 2011. On May 9, 2011, a foreclosure sale of the Property took place. On May 23, 2011, the Debtor filed a lawsuit against Ocwen and others in the Superior Court for the State of California ("State Court Action") asserting claims for Declaratory Relief, Wrongful Foreclosure, Fraud, Unjust Enrichment, Violation of California Business and Professions Code Sections 17200, et. seq., Rescission, Quiet Title, Breach of the Implied Covenant of Good Faith and Fair Dealing and Negligence. The complaint sought to unwind the foreclosure sale that occurred on May 9, 2011. The Debtor asserted that the foreclosure sale should not have occurred based on the loan modification and because Ocwen had instructed the trustee to cancel the foreclosure sale as a result of Debtor's successful completion of a loan modification.
On June 30, 2011, Ocwen sent a letter to the Debtor indicating that the Debtor was ineligible for a HAMP modification because his loan was in foreclosure. On July 6, 2011, Ocwen filed a demurrer to the complaint. The Debtor did not oppose the demurrer and the demurrer was sustained with leave to amend. The Debtor did not amend the complaint and the State Court Action was dismissed with prejudice on August 9, 2011.
On November 21, 2011, a Notice of Trustee's Sale was recorded scheduling a sale for December 23, 2011. On December 22, 2011, Debtor filed a complaint in the United States DistrictCourt for the Central District of California, against Ocwen among others, asserting claims for: (1) Violation of 12 U.S.C. § 2609; (2) Declaratory relief; (3) Wrongful Foreclosure; (4) Fraud; (5) Perrata Violation; (6) Breach of Written Permanent Modification Agreement; (7) Promissory Estoppel; (8) Negligence; (9) Violation of California Business and Professions Code Sections 17200 et. seq ("District Court Action"). The District Court issued a temporary restraining order and set an evidentiary hearing on the motion for preliminary injunction for January 17, 2012. Ocwen filed a Motion to Dismiss the District Court Action on January 13, 2012. The District Court conducted a hearing on January 17, 2012 and denied the Motion for Preliminary Injunction. The District Court ordered counsel for defendant to file a brief regarding sanctions to be imposed against the plaintiff for the expense of all actions in that matter as of December 22, 2011 and thereafter.
On January 25, 2012, Debtor filed his petition under chapter 13 of the Bankruptcy Code and on February 6, 2012, the Debtor filed a notice of bankruptcy with the District Court and voluntarily dismissed the District Court Action. On June 14, 2012, the District Court issued its 17-page minute order denying the Motion for Preliminary Injunction. The District Court found that the Debtor, an attorney, lied under oath to the District Court and admitted making false statements in his testimony at the hearing on January 17, 2012. The District Court issued terminating sanctions based on its determination that the Debtor lied under oath to get a temporary restraining order to delay the foreclosure sale of the Property. Because the District Court ordered terminating sanctions, it declined to address Debtor's notice of voluntary dismissal without prejudice. The District Court denied the defendants' request for attorneys' fees and costs without prejudice due to the existence of the automatic stay.
This Court finds that the Debtor is barred from asserting that the loan was permanently modified based on the doctrines of claim preclusion and issue preclusion. "Claim preclusion is abroad doctrine that bars bringing claims that were previously litigated as well as some claims that were never before adjudicated." Clements v. Airport Auth. of Washoe Cnty., 69 F.3d 321, 327 (9th Cir. 1995). When a state court judgment is at issue, federal courts must apply the preclusion rules of the state rendering the underlying judgment. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984); Holcombe v. Hosmer, 477 F.3d 1094, 1097 (9th Cir. 2007) (). In re Siller, 427 B.R. 872, 884 (Bankr. E.D. Cal. 2010).
In California, claim preclusion "bars relitigation of a cause of action that previously was adjudicated in another proceeding between the same parties or parties in privity with them." Citizens for Open Gov't v. City of Lodi, 205 Cal.App.4th 296, 324 (2012), reh'g denied Apr. 18, 2012. Claim preclusion applies if there has been a final decision on the merits in a prior proceeding, and the present proceeding is on the same cause of action as the prior proceeding. Id. Moreover, claim preclusion bars "not only issues that were actually litigated but also issues that could have been litigated." Id.
For claim preclusion purposes, "a dismissal with prejudice is the equivalent of a final judgment on the merits, barring the...
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