Mahmood v. Odinma, A161704

• Court: California Court of Appeals
• Writing for the Court: Fujisaki, J.
• Docket Number: A161704
• Parties: SALEEM MAHMOOD et al., Plaintiffs, Cross-Defendants and Respondents, v. FRANCIS ODINMA et al., Defendants, Cross-Complainants and Appellants.
• Decision Date: 24 March 2022

SALEEM MAHMOOD et al., Plaintiffs, Cross-Defendants and Respondents,
v.
FRANCIS ODINMA et al., Defendants, Cross-Complainants and Appellants.

A161704

California Court of Appeals, First District, Third Division

March 24, 2022

NOT TO BE PUBLISHED

Alameda County Super. Ct. No. RG19031783

Fujisaki, J.

Defendants/cross-complainants Francis and Carol Odinma (the Odinmas) appeal from a judgment in favor of plaintiffs/cross-defendants Saleem Mahmood and Yasmeen Fatima (the Mahmoods) after the trial court granted the Mahmoods' motion for judgment on the pleadings with regard to their complaint and the Odinmas' cross-complaint. The court ruled the Odinmas' claims for judicial foreclosure and declaratory relief were barred by the doctrine of res judicata and the so-called "one action rule" (Code Civ. Proc., § 726)^[1] due to a prior judgment entered against the Odinmas in an adversarial proceeding they filed in bankruptcy court against the Mahmoods' predecessors in interest. We affirm.

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Factual and Procedural Background

The allegations of the Odinmas' cross-complaint provide the background to the parties' dispute. In 2004, the Odinmas allegedly extended a $100, 000 loan to Luis and Cynthia Lorica (the Loricas) secured by a deed of trust (the 2004 DOT) against the Loricas' real property in Newark (the Newark property). In 2006, the Odinmas again loaned money to the Loricas, who executed and delivered a second deed of trust in the amount of $180, 000 against the Newark property (the 2006 DOT) to the Odinmas. The Loricas allegedly defaulted on the loans.

In 2006, the Loricas allegedly sold the Newark property to Marilyn Bunquin for $900, 000 but failed to pay off the 2004 DOT and 2006 DOT. In connection with this sale, Bunquin obtained two secured loans in the total amount of $900, 000, and the related deeds of trust were eventually assigned to Deutsche Bank National Trust (Deutsche Bank), which obtained title to the Newark property at a nonjudicial foreclosure sale in 2008 without paying off the 2004 DOT and 2006 DOT. The Mahmoods purchased the Newark property from Deutsche Bank in 2010.

In 2019, the Mahmoods filed the instant lawsuit against the Odinmas and the Loricas to quiet title and for cancellation of the 2004 DOT and 2006 DOT, declaratory relief, and an accounting. The Mahmoods alleged that they held fee title to the Newark property, and that the 2004 DOT and 2006 DOT were not valid and enforceable liens against the Newark property.

The Odinmas then filed the aforementioned cross-complaint against the Mahmoods, the Loricas, Deutsche Bank, and others. In the first cause of action for foreclosure of deeds of trust, the Odinmas seek to judicially foreclose on the Newark property under the 2004 DOT and 2006 DOT. In the

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second cause of action for declaratory relief, the Odinmas allege there is an actual controversy regarding the validity, extent, and priority of their liens. The Mahmoods demurred to the Odinmas' cross-complaint and moved to strike the cross-complaint's references to the 2004 DOT on the grounds that (1) the lien created by the 2004 DOT had already expired pursuant to Civil Code section 882.020, subdivision (a), ^[2] and (2) the Odinmas reconveyed the 2004 DOT to the Loricas in 2005, which extinguished the subject lien. The trial court sustained the demurrer to the first cause of action without leave to amend "as to the 2004 Odinma Deed of Trust only" and denied the motion to strike as moot.

A. Motion for Judgment on the Pleadings

After answering the cross-complaint, the Mahmoods moved for judgment on the pleadings on the grounds that (1) their complaint stated causes of action sufficient for declaratory relief and cancellation of the 2004 DOT and 2006 DOT; (2) the Odinmas' answer did not state facts sufficient to constitute a defense; and (3) the Odinmas' cross-complaint did not state facts sufficient to constitute causes of action for judicial foreclosure of the 2006 DOT and declaratory relief. The Mahmoods reiterated their argument that the lien created by the 2004 DOT had expired, and they further contended that the Odinmas' claim for judicial foreclosure was barred by the one action

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rule and the doctrine of res judicata due to a final judgment entered against them in an adversary proceeding in bankruptcy court. On the latter point, the trial court granted the Mahmoods' request for judicial notice of various records of the bankruptcy court.^[3] The judicially-noticed records reflect the following facts.

In March 2008, the Loricas filed for chapter 7 bankruptcy in the United States Bankruptcy Court for the Northern District of California, case No. 08-41513. In their bankruptcy schedules, the Loricas listed an equitable interest in the Newark property and identified the Odinmas as secured creditors.

In May 2008, the Odinmas filed an adversary proceeding, No. 08-4124 (the 4124 proceeding), against the Loricas in the bankruptcy court. In their complaint, the Odinmas alleged they made several loans to the Loricas totaling $540, 000 (including the loans secured by the 2004 DOT and 2006 DOT). The Odinmas sought a determination that these debts were nondischargeable under title 11 United States Code section 523(a)(2)(A) and (6) because the loans were obtained under false pretenses and for willful and malicious injury. The Odinmas further sought a "judgment entered against [the Loricas] in the amounts according to proof as set forth in this

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complaint[.]" The Loricas filed a counterclaim against the Odinmas in the 4124 proceeding, alleging in relevant part that they repaid the Odinmas far in excess of the total amounts of the loans.

In early 2010, the bankruptcy court held a trial in the 4124 proceeding and entered judgment against the Odinmas. The judgment stated in relevant part: "A trial in the above-entitled adversary proceeding came on February 9, 2010 . . . . The Court, after considering the testimony of both Plaintiffs and . . . having stated the Court's Factual Findings and Conclusions of Law on the record and good cause appearing therefore: [¶] JUDGMENT is hereby entered in favor of the Defendants and against the Plaintiffs and the Plaintiff shall take nothing from this Complaint."

Meanwhile, the Loricas obtained a discharge in the main bankruptcy case. However, the United States Trustee later filed an adversary proceeding, No. 09-0472 (the 0472 proceeding), to revoke the discharge. The matter was resolved in August 2010 after the United States Trustee and the Loricas entered into a "Stipulation to Revoke Discharge and Entry of Judgment Thereon." According to the stipulation, the United States Trustee sought revocation of the Loricas' bankruptcy discharge under title 11 United States Code section 727(e) on the grounds that the Loricas fraudulently and intentionally failed to disclose certain assets and transfers of real estate and transferred fractional interests in real property to relatives to defraud creditors. The parties entered into the stipulation to avoid the time and expense of litigation "and in order [to] resolve the above-captioned adversary proceeding."^[4] The Loricas agreed that "any debts existing at the time their petition was filed on March 31, 2008 are forever non-dischargeable in

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bankruptcy." Based upon the stipulation, the bankruptcy court entered judgment revoking the Loricas' discharge.

B. Trial Court's Ruling

The trial court granted the Mahmoods' motion for judgment on the pleadings. In its order, the court first reiterated its demurrer ruling that "the 2004 Odinma Deed of Trust is expired under [Civil Code] section 882.020 in light of its 2006 maturity date, and the action being brought more than ten years after that date. [Citation.] The Court also found that the Odinmas had already made a judicial admission that the 2004 Odinma Deed of Trust has already been reconveyed, extinguishing the lien."^[5]

As to the 2006 DOT, the trial court found that the judgment in the 4124 proceeding that the Odinmas" 'shall take nothing from this Complaint'" was a final binding judgment that the Odinmas were owed nothing from the Loricas for their alleged loans, and accordingly, the Odinmas could not show an underlying debt to enforce the 2006 DOT. Accordingly, "[i]n light of the one action rule and the principles of res judicata as to the 2006 Odinma Deed of Trust, as well as the Court's previous findings as to the unenforceability of the 2004 Odinma Deed of Trust," the trial court granted the Mahmoods' motion for judgment on the pleadings on the Odinmas' first cause of action for judicial foreclosure.

As to the parties' competing claims for declaratory relief, the trial court found that the Odinmas "have no valid security interest in the [Newark] Property, and no right to foreclose upon, sell, acquire, or engage in any transaction that adversely affects the title, estates, interest, liens or rights of

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Plaintiffs in or to the Property." For the same reasons, the court granted judgment on the pleadings in favor of the Mahmoods on their claims for cancellation of the 2004 DOT and 2006 DOT.

The Odinmas appealed from the ensuing judgment.

Discussion

"A motion for judgment on the pleadings is equivalent to a demurrer. [Citation.] As with a demurrer, a court ruling on such a motion is tasked with evaluating whether the 'complaint . . . state[s] facts sufficient to constitute a cause of action' [citation], and in that task, may only look to 'the face of the complaint' and 'facts capable of judicial notice' and must accept as true all of the complaint's factual allegations [citation]." (Hart v. Darwish (2017) 12...