U.S. Bank Nat. Assn. v. Rosenblum CA1/5 ( 2022 )

Filed 2/23/22 U.S. Bank Nat. Assn. v. Rosenblum CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
U.S. BANK NATIONAL
ASSOCIATION, as Trustee,
Plaintiff, Cross-Defendant, A161511
and Respondent,
(San Mateo County
v. Super. Ct. No. 19-CIV-04539)
JENNIFER MAE ROSENBLUM et
al.,
Defendants, Cross-
Complainants, and Appellants.
In this partition action, Jennifer Mae Rosenblum and Frank
Rosenblum (appellants) appeal from an award of sanctions in favor of U.S.
Bank National Association, as Trustee for CSFB Mortgage-Backed Pass-
Through Certificates, Series 2004-7 (respondent). Appellants argue the trial
court erred in awarding sanctions based on the filing of their cross-complaint
asserting a quiet title claim, which the court concluded was frivolous because
the claim was precluded by this court’s prior decision in Rosenblum vs. U.S.
Bank, National Association (Apr. 1, 2016, A143027) [nonpub. opn.]
(Rosenblum I). We affirm.
1
BACKGROUND1
In 1993, Richard Hatfield purchased the real property at issue (the
Property) in his name. At the time, Jennifer and Hatfield were living
together and had two children, but were not married. Jennifer and Hatfield
subsequently separated.
In 2001, Jennifer sued Hatfield seeking joint ownership of their
property, including the Property. Jennifer filed a dissolution action, a
Marvin action,2 and apparently other actions. The cases were consolidated in
the trial court.
In 2002, Jennifer recorded a lis pendens providing notice of the pending
dissolution action in which she asserted an interest in the Property. In 2004,
Hatfield executed a deed of trust against the Property to secure a loan (the
Deed of Trust). The Deed of Trust was eventually assigned to respondent.
In 2007, a statement of decision issued in the Marvin action (the 2007
Marvin decision) finding Jennifer and Hatfield jointly owned all their
property, including the Property, and their assets were “to be divided
equally.”
In 2008, Hatfield filed for bankruptcy. Because of this filing, the
Marvin and related actions were stayed. Hatfield’s property became the
1 Substantial portions of this background summary are taken from this
court’s prior decision in Rosenblum I, supra. Jennifer Rosenblum was the
plaintiff in Rosenblum I. Hereafter, for the sake of convenience, we refer to
the Rosenblums by their first names when we refer to them separately. No
disrespect is intended.
2 Marvin v. Marvin (1976) 18 Cal.3d 660 “held that express or implied
contracts between persons living together in a nonmarital relationship should
be enforced, unless the contracts were explicitly founded on the consideration
of meretricious sexual services.” (Chodos v. Borman (2014) 227 Cal.App.4th
76, 82, fn. 1.)
2
property of his bankruptcy estate, and the estate’s trustee (Trustee) initiated
an adversary proceeding against Jennifer and respondent (or its predecessor
in interest), among others. The Trustee contended the Deed of Trust should
be paid from the proceeds of both Hatfield’s and Jennifer’s interests
in the Property; Jennifer argued the Deed of Trust attached only to Hatfield’s
50 percent interest. In 2009, the bankruptcy court issued an order agreeing
with Jennifer.
In March 2010, Jennifer and the Trustee entered into a settlement
agreement. The settlement agreement provided that Jennifer would
subordinate most of her claims in the bankruptcy proceeding and, “[i]n
consideration for [Jennifer’s] subordination of the claims set forth above,
Trustee agrees to sell to [Jennifer] . . . any and all remaining property of the
Estate . . . .” In July 2010, after judgment issued in the bankruptcy
adversary proceeding, the Trustee executed and recorded a grant deed
transferring the Property to Jennifer.
In August 2012, Jennifer executed an Interspousal Transfer Grant
Deed for the Property, conveying her interest in the Property to herself and
Frank.
In the Marvin action, Jennifer moved for final judgment pursuant to
the parties’ settlement. In February 2014, the court issued an order granting
the motion. The order referred to and attached the 2007 Marvin decision
“determining [plaintiff] and Hatfield equally owned the property they had
acquired”; noted Hatfield’s bankruptcy filing and resulting litigation; referred
to and attached the settlement agreement between the Trustee and Jennifer
providing “the Trustee agreed to sell . . . the Estate’s interest in [the
Property] to [Jennifer]”; referred to and attached the final judgment of the
bankruptcy court “determining the interests of [Jennifer] and the Trustee in
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[the Property]”; and referred to and attached the grant deed from the Trustee
granting the Trustee’s interest in the Property to Jennifer.
In March 2014, Jennifer filed a second amended complaint in an action
to quiet her title in the Property and determine that the defendants in that
case, including respondent, had no interest in the Property. Respondent
demurred, arguing the Deed of Trust encumbers 50 percent of the Property.
The trial court sustained the demurrer and issued judgment dismissing with
prejudice Jennifer’s complaint as to respondent. The appeal in Rosenblum I
followed.
In Rosenblum I, filed in April 2016, this court noted that the parties
“agree that the Deed of Trust does not encumber 50 percent of the Property,
but dispute whether it encumbers the other 50 percent.” (Rosenblum I,
supra.) Rosenblum I rejected Jennifer’s argument that she owned 100
percent of the Property based on the Marvin action final judgment. (Ibid.)
Rosenblum I concluded the 50 percent interest Jennifer purchased from the
estate as part of the settlement agreement was encumbered by the Deed of
Trust. (Ibid.) Further, Rosenblum I concluded that the order granting final
judgment in the Marvin action made clear that Jennifer “owned half of the
Property and she purchased the other half pursuant to the bankruptcy
settlement agreement.” (Ibid.) The decision held “the trial court did not err
in concluding the Deed of Trust encumbers 50 percent of the Property.”
(Ibid.)
As relevant to one of appellants’ arguments in the present appeal, the
Rosenblum I decision treated as forfeited Jennifer’s contention that “an order
sustaining a demurrer to a quiet title action is improper where the plaintiff
has a legal interest in the property at issue,” because Jennifer “failed to raise
4
[this contention] in the trial court in her opposition to U.S. Bank’s demurrer.”
(Rosenblum I, supra.)
In November 2018, Frank filed a quiet title action with respect to the
Property in the United States District Court for the Northern District of
California. The District Court dismissed the action, finding Frank’s claims
were barred because there is “no question that there is a final judgment on
the merits” in the prior actions against respondent and another defendant.
In June 2019, Frank appealed the dismissal to the United States Court of
Appeal for the Ninth Circuit.
In August 2019, respondent filed the underlying complaint for
partition, requesting sale of the Property and division of the proceeds
between appellants and respondent. In November, appellants filed a cross-
complaint to, once again, quiet title to the Property and to cancel the Deed of
Trust.3 Appellants alleged Jennifer “obtained fee simple title” to the
Property, without encumbrance by the Deed of Trust, by virtue of the final
judgment in the Marvin Action. In December, respondent filed a demurrer to
the cross-complaint, arguing, among other things, that the claims in the
cross-complaint were precluded by the decision in Rosenblum I.
On January 30, 2020, respondent served appellants notice of their
intent to move for sanctions pursuant to sections 128.5 and 128.7 of the Code
of Civil Procedure.4 On February 25, respondent filed the motion, seeking
sanctions in the amount of $12,210 against appellants and their counsel.
In March 2020, the trial court sustained the demurrer without leave to
amend.
3The cross-complaint also named other defendants, who are not
involved in the present appeal.
4 All undesignated section references are to the Code of Civil Procedure.
5
On July 10, 2020, the trial court awarded respondent $11,900 in
sanctions from appellants, but not from their counsel, under both sections
128.5 and 128.7. The court found that “the cross-complaint is objectively and
subjectively unreasonable” and that “the pleading was filed for an improper
purpose, unnecessary delay, and the cross-complaint is indisputably without
legal merit.” The court continued, “Despite the ruling of the Court of Appeal
and other courts and no new facts or law, the Rosenblums persist in trying to
relitigate issues they have already lost. Accordingly, the continued pursuit of
the quiet title action in this cross-complaint is frivolous and in bad faith.”
The present appeal followed.5
DISCUSSION
Section 128.5 provides that “[a] trial court may order a party, the
party’s attorney, or both, to pay the reasonable expenses, including attorney’s
fees, incurred by another party as a result of actions or tactics, made in bad
faith, that are frivolous or solely intended to cause unnecessary delay.”
(§ 128.5, subd. (a).) Section 128.7 provides that presenting a pleading to the
court constitutes certification that, among other things, (1) it is not presented
“primarily for an improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation;” (2) the claims
and legal contentions “are warranted by existing law or by a nonfrivolous
5 Appellants filed a motion for a new trial, which the trial court denied.
They purport to also appeal from denial of that motion, but that order is not
appealable (although it may be reviewed on appeal from the underlying
order). (Walker v. Los Angeles County Metropolitan Transportation Authority
(2005) 35 Cal.4th 15, 18.) In any event, appellants present no argument that
the trial court erred in denying the motion for a new trial.
On August 23, 2021, respondent requested that this court take judicial
notice of several filings in the federal action and in the underlying case
subsequent to issuance of the sanctions order. The request is denied.
6
argument for the extension, modification, or reversal of existing law or the
establishment of new law;” and (3) “the allegations and other factual
contentions have evidentiary support.” (§ 128.7, subd. (b).) Sanctions can be
imposed against “attorneys, law firms, or parties that have violated
subdivision (b) or are responsible for the violation.” (§ 128.7, subd. (c).)
The primary issue on appeal is whether the trial court erred in
concluding the cross-complaint was frivolous because the Rosenblum I
decision precludes appellants’ claims. “The law of preclusion helps to ensure
that a dispute resolved in one case is not relitigated in a later case. . . . We
now refer to ‘claim preclusion’ rather than ‘res judicata’ [citation], and use
‘issue preclusion’ in place of ‘direct or collateral estoppel’ [citations]. [¶]
Claim and issue preclusion have different requirements and effects. Claim
preclusion prevents relitigation of entire causes of action. [Citations.] Claim
preclusion applies only when ‘a second suit involves (1) the same cause of
action (2) between the same parties [or their privies] (3) after a final
judgment on the merits in the first suit.’ [Citation.] Issue preclusion, by
contrast, prevents ‘relitigation of previously decided issues,’ rather than
causes of action as a whole. [Citation.] It applies only ‘(1) after final
adjudication (2) of an identical issue (3) actually litigated and necessarily
decided in the first suit and (4) asserted against one who was a party in the
first suit or one in privity with that party.’ [Citation.] Courts have
understood the ‘ “necessarily decided” ’ prong to ‘require[ ] only that the issue
not have been “entirely unnecessary” to the judgment in the initial
proceeding’ [citation]—leaving room for a decision based on two grounds to be
7
preclusive as to both.” (Samara v. Matar (2018) 5 Cal.5th 322, 326–327
(Samara).)6
Appellants’ argument that the cross-complaint was not frivolous is
premised on their assertion that the Rosenblum I decision erred in several
respects. In particular, appellants argue Rosenblum I erred in concluding
Jennifer forfeited her argument that “an order sustaining a demurrer to a
quiet title action is improper where the plaintiff has a legal interest in the
property at issue” because Jennifer “failed to raise [this contention] in the
trial court in her opposition to” the demurrer. (Rosenblum I, supra.)
Appellants also assert it was error for the Rosenblum I decision “to consider
any issue concerning [the] status of the Deed of Trust.” Finally, appellants
challenge the analysis in Rosenblum I regarding the Deed of Trust.
Appellants contend those alleged errors deprive the decision of preclusive
effect in the present action.
At the outset, we decline to consider the substance of appellants’ claims
of error in the Rosenblum I decision, because it is well established that errors
in a prior decision do not deprive the decision of preclusive effect in
subsequent litigation. (Aerojet-Gen. Corp. v. Am. Excess Ins. Co. (2002)
97 Cal.App.4th 387, 399 (Aerojet-Gen. Corp.) [“a final judgment is not subject
to review in another action for an alleged error committed in the exercise of
the first court’s jurisdiction”]; see also Meridian Fin. Servs., Inc. v. Phan
(2021) 67 Cal.App.5th 657, 701 (Meridian) [citing cases and rejecting
argument against application of issue preclusion based on an alleged legal
error in a prior decision]; City of Santa Paula v. Narula (2003)
6 Although Rosenblum I involved Jennifer and not Frank, appellants do
not dispute that Frank is in privity with Jennifer.
8
114 Cal.App.4th 485, 491 [citing cases].) Appellants cite no authority to the
contrary.
Appellants also argue Rosenblum I did not decide Jennifer’s quiet title
claim on the merits because this court treated as forfeited her contention that
her interest in the Property was sufficient to defeat the demurrer. But
appellants cite no authority that a prior decision lacks claim preclusive effect
where the resolution relied in part on forfeiture of an argument. Instead, it is
well established that claim preclusion “bars the litigation not only of issues
that were actually litigated but also issues that could have been litigated.”
(Fed’n of Hillside & Canyon Assns. v. City of Los Angeles (2004)
126 Cal.App.4th 1180, 1202.) A forfeited issue is an issue within the scope of
a case that could have been litigated had it been asserted in a timely fashion.
In other words, the Rosenblum I decision was on the merits of Jennifer’s
quiet title cause of action, which included a determination that one of the
arguments put forth in support of the claim had been forfeited. (Aerojet-Gen.
Corp., supra, 97 Cal.App.4th at p. 400 [“It is the judgment that must be
rendered on the merits [citation], not every point encompassed by it.”].)
Appellants cite no authority to the contrary.7
Moreover, appellants provide no basis to conclude that the express
holding in Rosenblum I regarding the extent of respondent’s property interest
lacks issue preclusive effect in the present litigation. (Samara, supra,
5 Cal.5th at p. 327.) Appellants argue the issue was not “necessarily
7To the extent appellants suggested at oral argument that, as a
general matter, an order sustaining a demurrer (or an appeal affirming such
an order) is not a ruling on the merits, that contention has been forfeited
because it was not presented in their briefs with supporting
authorities. (People v. Thompson (2010) 49 Cal.4th 79, 110, n. 13; Kinney v.
Vaccari (1980) 27 Cal.3d 348, 356, fn. 6.)
9
decided,” but they misconstrue that requirement for application of issue
preclusion. They contend the determination of respondent’s interest was
unnecessary in Rosenblum I because the court purportedly erred in
sustaining the demurrer on that ground rather than reversing based on
appellants’ new argument that was treated as forfeited. However, “[a]n issue
is ‘ “necessarily decided’ ’ by an order if the issue was not ‘ “entirely
unnecessary” to the judgment in the initial proceeding.’ ” (Anne H. v. Michael
B. (2016) 1 Cal.App.5th 488, 498.) The conclusion that the Deed of Trust
encumbers 50 percent of the Property was entirely necessary to the
Rosenblum I decision, because that was the actual basis for the court’s
ruling.8 (Meridian, supra, 67 Cal.App.5th at pp. 701–703 [trial court
“ ‘ “necessarily decided” ’ ” unclean hands issue despite appellant’s contention
the court erred because “unclean hands is an affirmative defense that cannot
be asserted against a defendant”].)
Neither has appellant shown there were grounds for declining to apply
the claim or issue preclusion doctrines to avoid a manifest injustice or for
other reasons of fairness or public policy. (See F.E.V. v. City of Anaheim
(2017) 15 Cal.App.5th 462, 465; In re Bush (2008) 161 Cal.App.4th 133, 146.)
Appellants argue it was unfair that the Rosenblum I decision declined to
consider Jennifer’s new argument on appeal based on her interest in the
Property. But, given that the Rosenblum I decision actually determined the
8 Appellants also assert Rosenblum I’s finding that the Deed of Trust
encumbers 50 percent of the Property was “surplusage.” However, the cases
they cite are inapposite. The cases address the significance of a trial court’s
findings on appeal but say nothing about the application of the res judicata
doctrine to final judgments. (See Colberg, Inc. vs. State ex rel. Dept. of Public
Works (1967) 67 Cal.2d 408, 412, fn. 2; Kritzer vs. Lancaster (1950)
96 Cal.App.2d 1, 6.) Appellants cite no authority that rulings in an appellate
decision may be disregarded in applying the issue preclusion doctrine.
10
ultimate question of respondent’s interest in the Property, it was not unjust
for the trial court to prohibit appellants from re-litigating the quiet title
claim. As appellants state in addressing another issue, “Proof of US Bank’s
alleged title is simply the converse of the Rosenblums’ proof of their quiet
title cause of action.”
As relevant to the award of sanctions, appellants contend that, even if
their arguments against preclusion were without merit, their position was
not frivolous. The trial court did not err. As demonstrated above, appellants’
contentions were “ ‘not warranted by existing law or a good faith argument
for the extension, modification, or reversal of existing law’ ” and “ ‘any
reasonable attorney would agree that [appellants’ arguments were] totally
and completely without merit.’ ” (Ponce vs. Wells Fargo Bank (2018)
21 Cal.App.5th 253, 261.) Appellants’ repeated failure on appeal to cite
relevant authority supporting their arguments further demonstrates the
frivolousness of their contention that the Rosenblum I decision lacks
preclusive effect in the present case.9
9 Appellants also argue they acted in “good faith” in filing the cross-
complaint, so there was no basis for the trial court’s finding of “bad faith,” as
necessary for a sanctions award under section 128.5. We need not address
that issue, because appellants do not argue that section 128.7, which they
concede does not require such a finding, is insufficient to support the award
(assuming this court rejects their other arguments). In any event, the
procedural history of the litigation between the parties supports the trial
court’s finding of bad faith. Among other things, appellants cite no authority
that they were compelled to waste court resources by filing a cross-complaint
clearly subject to claim and issue preclusion, that they were unable to avoid
sanctions by voluntarily dismissing the cross-complaint without prejudice, or
that respondent was obligated to accept their terms for dismissing the
frivolous cross-complaint.
11
Appellants have not shown the trial court erred in entering the
challenged sanctions award. (See Bucur v. Ahmad (2016) 244 Cal.App.4th
175, 191 [“Filing a new complaint based on the same facts to evade a ruling
made in a previous litigation constitutes sanctionable conduct.”].)
DISPOSITION
The trial court’s order is affirmed. Respondent is awarded its costs on
appeal.
SIMONS, Acting P. J.
We concur.
NEEDHAM, J.
BURNS, J.
(A161511)
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