Lemke v. Mortg. Elec. Registration Sys.
| Docket Number | C096706 |
| Decision Date | 22 November 2023 |
| Parties | JOHN F. LEMKE, Plaintiff and Appellant, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. et al., Defendants and Respondents. |
| Court | California Court of Appeals |
NOT TO BE PUBLISHED
In 2006, plaintiff John F. Lemke (Lemke) borrowed $455,000 from defendant LoanCity, Inc. (LoanCity). The loan was secured by a deed of trust on real property owned by Lemke. By May 2011 the loan was in default, and in August 2012, the property was sold in a foreclosure sale to defendant U.S. Bank National Association (US Bank), as trustee for Credit Suisse First Boston Mortgage Securities Corp., CSMC Mortgage-Backed Pass-Through Certificates, Series 2006-7 (Credit Suisse) which held the note in 2012. U.S. Bank sold the property to defendants Henry and Julie Martinez (Martinez) in 2013.
In 2013, after dismissing a federal action against some of the defendants, Lemke filed an action in the Superior Court for the County of Calaveras (Lemke 2) attempting to cancel various documents that were recorded between the 2006 loan and 2013 sale, regain possession, and secure title to the property. The defendants in that action demurred to the complaint on numerous grounds. The demurrer was sustained without leave to amend, and a judgment of dismissal was entered with prejudice. Lemke appealed that judgment and lost.
Following the loss of his appeal, Lemke filed this action, again seeking to secure title in the property and cancel documents regarding the property that were recorded between 2006 and the 2013 sale. All defendants to this action except LoanCity demurred, and the trial court sustained the demurrer on the grounds that statutes of limitations barred Lemke's causes of action and this third lawsuit is barred by principles of res judicata. Lemke appeals.
We hold that Lemke's action is barred by the doctrine of res judicata. Given our holding, we affirm the judgment.
The following facts are taken from allegations in Lemke's first amended complaint (complaint) or are judicially noticeable. (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 42; Code Civ. Proc § 430.30, subd. (a); see also Evid. Code, §§ 452, subds. (d) &(h), 459, subd. (a).)
In February 2006, Lemke acquired real property in Calaveras County from Lemke Construction, Inc. The acquisition was memorialized by a grant deed dated February 10, 2006.
Also in February 2006, Lemke borrowed $455,000, from LoanCity. The note on the loan called for payments to be made to LoanCity.
Repayment of the loan was secured by a deed of trust on the real property dated February 24, 2006. Defendant Mortgage Electronic Registration Systems, Inc. (MERS) was identified as the nominee of the lender and lender's successors and as the beneficiary of the deed of trust. The trustee was Sterling Title Company.
Lemke alleges that LoanCity falsely and deceptively presented itself as the lender, when actually (1) acting as a broker for an unlicensed lender, defendant DLJ Mortgage Capital, Inc. (DLJ Mortgage), to generate loans for securitization; and (2) using funds from DLJ Mortgage for the loan. Lemke alleges neither LoanCity nor DLJ Mortgage disclosed the "true nature of the transaction" because he would not have agreed to the loan if he had known its true nature. According to the complaint, at the time the complaint was filed, LoanCity was suspended under Revenue and Taxation Code, section 23302.
According to the complaint, MERS is a third-party private registry/database. Lemke alleges an agreement between LoanCity and MERS stated that MERS had no interest in the debt or payments on the debt, and that MERS was not authorized to transfer the note or debt.
Lemke also alleges an agreement between LoanCity and MERS required MERS to deactivate the deed of trust from MERS's registration system if the underlying debt was sold, transferred, or assigned to an entity that did not have a separate agency agreement that authorized MERS to act on behalf of that entity. According to the complaint, "[f]urther, an assignment was required to be filed in the public records showing MERS was no longer engaged with the [deed of trust]."
According to the complaint, the loan was transferred to DLJ Mortgage, though Lemke takes the position that there was no actual transfer because DLJ Mortgage was always the "true lender." Then, on or before December 31, 2006, DLJ Mortgage sold the loan to Credit Suisse.
We note that according to the complaint, there is no formal record of the transfer between DLJ Mortgage Capital and Credit Suisse.
Lemke alleges MERS did not hold an agency agreement with Credit Suisse and, therefore, pursuant to the purported agreement between LoanCity and MERS, when the deed of trust was sold to Credit Suisse, the deed of trust would have been deactivated because MERS's role in the deed of trust would be terminated. Lemke also alleges MERS intentionally did not record an assignment showing its termination as nominee acting as beneficiary to make it appear as if it still had authority to assign or transfer the deed of trust, even though its authority had been terminated under the agreement.
By May 1, 2011, the loan fell into default.
In October 2011, MERS signed a corporate assignment deed of trust, transferring all beneficial interest in the February 24, 2006, deed of trust to U.S. Bank. Lemke alleges LoanCity never instructed MERS to assign or transfer the deed of trust to any entity, particularly U.S. Bank, and that at the time MERS made the transfer it no longer had any authority to act as an agent on the deed of trust. Lemke alleges U.S. Bank knew MERS lacked authority to execute this assignment. Lemke also alleges U.S. Bank has no evidence of assignment or transfer of the underlying debt. He also alleges the note on the debt has no indorsement transferring or assigning interest to U.S. Bank. Lemke alleges U.S. Bank knew or should have known it held no interest in the debt, note, or deed of trust, and that it had not purchased the debt, and did not notify Lemke that it had purchased the debt and become his creditor. Lemke alleges U.S. Bank lacked authority to take any subsequent acts in relation to the deed of trust because, Lemke claims, it was not a party to the note or a party with any authority under the deed of trust. He also alleges he owed no money to U.S. Bank.
On May 3, 2012, NDEx West, LLC (NDEx), acting as an agent for the beneficiary, recorded a notice of default and election to sell under the deed of trust. According to the notice, on May 1, 2012, Lemke was $36,886.15 in default.
In June 2012, Wells Fargo, as an agent for U.S. Bank, executed a substitution of trustee, substituting NDEx for Sterling Title Company as the trustee under the deed of trust.
On August 1, 2012, NDEx recorded a notice of trustee's sale that stated the property would be sold at a public auction sale on August 27, 2012.
At a public auction on August 27, 2012, U.S. Bank, as the highest bidder, purchased the property for $380,000 through a credit bid. A trustee's deed upon sale memorializing the sale was recorded on August 31, 2012.
US Bank later sold the property to Henry and Julie Martinez. A grant deed in which U.S. Bank granted the property to Henry and Julie Martinez was recorded on April 12, 2013. Lemke alleges Henry and Julie Martinez knew about the conflict regarding the real property and his position that it had been wrongfully foreclosed.
The instant action is Lemke's third against some of the defendants.
On September 28, 2012, Lemke filed an action (Lemke 1) in the U.S. District Court for the Eastern District of California naming Wells Fargo Bank; LoanCity; U.S. Bank as Trustee for First Boston Mortgage Securities Corp.; CSMC Mortgage Backed Pass-Through Certificates, Series 2006-7; MERS; America's Servicing Company; and NDEx West, LLC as defendants. Lemke filed a notice of voluntary dismissal of that action on January 31, 2013.
On March 13, 2013, Lemke filed Lemke 2. Lemke filed a first amended complaint in Lemke 2 on June 25, 2013 (Lemke 2 complaint). Lemke 2 complaint identified the following defendants: LoanCity; U.S. Bank; MERS; Wells Fargo Bank NDEx; Henry and Julie Martinez; unknown defendants as Doe defendants, including "Doe Investors"; and "[d]efendants on behalf of an unnamed beneficiary, conducting business in the State of California, []ALL PERSONS UNKNOWN, CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN, OR INTEREST IN THE PROPERTY . . . ADVERSE TO PLAINTIFF'[S] TITLE, OR ANY CLOUD ON PLAINTIFF'[S] TITLE THERETO," whom he alleged to be suing according to Code of Civil Procedure, section 762.020, subdivision (a). (See also Code Civ. Proc., § 762.060, subd. (a).) The complaint alleged causes of action for (1) cancelation of written instrument; (2) wrongful foreclosure; (3) quasi-contract; (4) accounting; (5) slander of title; and (6) violation of Business and Professions Code section 17200, et seq.
In the operative complaint for Lemke 2, Lemke alleged LoanCity never actually funded the loan and, therefore, the alleged note and deed of trust did not "represent the true parties or terms of a financial transaction that took place." He alleged that LoanCity, at best, served as a" 'broker'" for Doe Investors. He claimed that while the Doe Investors were at that time unknown, he could eventually identify them with documents in Lemke 2 defendants' possession.
He claimed the deed of trust, assignment of deed of trust notice of default, substitution of trustee, and trustee's deed upon sale all contained materially false information, were executed by part...
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