Anolik v. Bank of America CA3 ( 2015 )

Filed 6/8/15 Anolik v. Bank of America CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(Sacramento)
----
JERRY I. ANOLIK, C072333
Plaintiff and Appellant, (Super. Ct. No. 34-2011-
00103488-CU-OR-GDS)
v.
BANK OF AMERICA, N.A. et al.,
Defendants and Respondents.
Plaintiff Jerry I. Anolik appeals from a judgment of dismissal entered after the trial
court sustained the demurrer of defendants Bank of America, N.A. (BofA), BAC Home
Loan Servicing, L.P. (BAC), ReconTrust Company, N.A. (ReconTrust), and Mortgage
Electronic Registration Systems, Inc. (MERS) to Anolik’s first amended complaint
without leave to amend. Anolik contends the trial court erred in concluding that the
complaint, which sought to enjoin a nonjudicial foreclosure sale, was barred by res
judicata. We agree with the trial court. The complaint is barred by the judgment in a
1
prior action in federal court by Anolik against BAC and ReconTrust. Accordingly, we
affirm the judgment.
BACKGROUND1
Patrick J. Carboni signed a promissory note and obtained a $215,000 loan from
Countrywide Home Loans, Inc. (Countrywide) in August 2007. The loan was secured by
a deed of trust against residential real property in Fair Oaks.
The deed of trust named MERS as beneficiary as nominee for the lender and its
successors and assigns. MERS later assigned its interest in the deed of trust to BAC.
Anolik alleges he acquired title to the property by grant deed in 2008 or 2009.
Although Carboni appears to have signed a grant deed in Anolik’s favor in November
2008, the instrument was not recorded until December 1, 2009.
Between October 2009 and November 2010, Anolik made monthly payments on
Carboni’s loan, which BofA accepted. Anolik alleges he made loan payments in the total
amount of $15,136. However, Anolik concedes he never assumed the loan.
In December 2010, ReconTrust, acting as trustee under Carboni’s deed of trust,
recorded a notice of trustee’s sale, setting December 29, 2010, as the sale date.
The Prior Lawsuit
On December 27, 2010, Anolik filed a lawsuit in the Sacramento County Superior
Court to halt the foreclosure sale. Anolik’s complaint alleged most of the facts set forth
above and asserted claims against BAC and ReconTrust for: (1) injunctive relief to
stop the foreclosure sale; (2) declaratory relief under Carboni’s promissory note;
(3) declaratory relief under Carboni’s deed of trust; (4) wrongful foreclosure;
1 Because this appeal follows the sustaining of a demurrer without leave to amend,
we summarize the underlying facts as alleged in the operative (first amended) complaint.
(Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal. App. 4th 238,
240.) Our summary also includes facts subject to judicial notice. (Evans v. City of
Berkeley (2006) 38 Cal. 4th 1, 6.)
2
(5) damages for wrongful foreclosure; (6) an accounting of amounts due under
Carboni’s loan; (7) violation of the federal Real Estate Settlement Procedures Act
(RESPA) (12 U.S.C. § 2601 et seq.); (8) violation of the federal Fair Debt Collection
Practices Act (FDCPA) (15 U.S.C. § 1692 et seq.) by BAC; and (9) violation of the
FDCPA by ReconTrust.
BAC and ReconTrust removed Anolik’s action to the United Stated District Court
for the Eastern District of California based on federal question jurisdiction. Anolik did
not file a motion to remand.
BAC and ReconTrust then filed a motion to dismiss Anolik’s complaint pursuant
to rule 12(b)(6) of the Federal Rules of Civil Procedure. The federal court granted the
motion in its entirety, finding that “[Anolik] lacks the requisite standing to bring the
present lawsuit, whose allegations hinge entirely on the propriety of a foreclosure to
which [Anolik] was not a party, and which involved both a default that had already
occurred, and foreclosure proceedings that had already commenced, by the time [Anolik]
memorialized any ownership interest in the property whatsoever. The Court therefore
concludes that [Anolik] lacks standing and dismisses the lawsuit on that basis.” The
federal court further found that “[Anolik] has not alleged, either in his papers or at the
time of the hearing, that he has tendered or is able to tender the amount of the secured
debt in response to Defendants’ reliance on the tender rule.” The federal court continued,
“Therefore, [Anolik] is foreclosed on that basis from proceeding with this lawsuit as
well.” The federal court concluded, “Because the Court does not believe the deficiencies
of [Anolik’s] complaint (and in particular the standing deficit) can be cured by
amendment, no leave to amend will be permitted.”
The federal court entered a judgment of dismissal on April 21, 2011. Anolik did
not appeal from the federal court’s judgment.
3
ReconTrust recorded a new notice of trustee’s sale in March 2011. Anolik filed a
Chapter 13 bankruptcy petition in April 2011, thereby halting the sale. Anolik’s
bankruptcy proceeding was closed on July 19, 2011.
The Present Lawsuit
Anolik commenced the present action in the Sacramento County Superior Court
on May 13, 2011. Anolik’s first amended complaint asserts claims against BofA,
BAC, MERS, and ReconTrust for: (1) injunctive relief to stop the foreclosure sale;
(2) declaratory relief under Carboni’s promissory note; (3) declaratory relief under
Carboni’s deed of trust; (4) wrongful foreclosure; (5) damages for wrongful foreclosure;
(6) violations of Civil Code former section 2923.52 et seq.; and (7) breach of the implied
covenant of good faith and fair dealing.
Defendants demurred to the first amended complaint. After hearing oral
argument, the trial court sustained the demurrer without leave to amend, finding that the
first amended complaint in the present action “is almost identically captioned to the
complaint in [the prior action], and addresses the same primary right and operative set of
facts as that addressed in the prior action.” The trial court continued, “Having
determined the standing issue (among others) adverse to [Anolik], and having entered
judgment, [Anolik] may not seek to relitigate the same claims against the same parties for
the same right under the same operative set of facts. Under the claim preclusion aspect of
the doctrine of res judicata, a prior judgment bars the parties (or those in privity with
them) from relitigating the ‘same cause of action’ in a subsequent proceeding.
[Citations.]” Accordingly, the trial court concluded that Anolik’s claims were barred by
the doctrine of res judicata.
On August 30, 2012, Anolik filed a notice of intention to move for a new trial.
The trial court denied the motion.
Anolik filed a timely notice of appeal.
4
DISCUSSION
I
Standard of Review
“A demurrer tests the legal sufficiency of the complaint, and the granting of leave
to amend involves the trial court’s discretion. Therefore, an appellate court employs two
separate standards of review on appeal. [Citations.] First, the complaint is reviewed de
novo to determine whether it contains sufficient facts to state a cause of action.
[Citation.] In doing so, we accept as true the properly pleaded material factual
allegations of the complaint, together with facts that may be properly judicially noticed.
Reversible error exists only if facts were alleged showing entitlement to relief under any
possible legal theory. [Citations.]” (Hernandez v. City of Pomona (1996) 49 Cal. App. 4th
1492, 1497.)
“Second, where the demurrer is sustained without leave to amend, reviewing
courts determine whether the trial court abused its discretion in doing so. [Citations.] On
review of the trial court’s refusal to grant leave to amend, we will only reverse for abuse
of discretion if we determine there is a reasonable possibility the pleading can be cured
by amendment. Otherwise, the trial court’s decision will be affirmed for lack of abuse.
[Citations.]” (Hernandez v. City of Pomona, supra, 49 Cal.App.4th at pp. 1497-1498.)
II
Res Judicata
Anolik argues the trial court erred in concluding that the doctrine of res judicata
precludes him from pursuing his current claims against defendants. We disagree.
A. Federal Law Applies to Determine the Preclusive Effect of the Federal
Court Judgment
The United States Supreme Court has recognized that, “[s]tate courts are generally
free to develop their own rules for protecting against . . . the piecemeal resolution of
disputes,” as long as they do not interfere with fundamental federal rights. (Richards v.
5
Jefferson County (1996) 517 U.S. 793, 797 [135 L. Ed. 2d 76, 83].) However, “where a
prior federal judgment was based on federal question jurisdiction, the preclusive effect of
the prior judgment of a federal court is determined by federal law. [Citations.]” (Louie v.
BFS Retail and Commercial Operations, LLC (2009) 178 Cal. App. 4th 1544, 1553,
original italics.)
Here, the federal court exercised federal question jurisdiction over Anolik’s claims
for relief under RESPA and FDCPA (28 U.S.C. § 1331) and supplemental jurisdiction
over his remaining state law claims (28 U.S.C. § 1367(a)). Thus, we look to federal law
to determine the preclusive effect of the federal court judgment in this case.
B. The Present Action Is Barred by Res Judicata
Under federal law, res judicata (or claim preclusion) arises when four conditions
exist: (1) the order or judgment must issue from a court with appropriate jurisdiction;
(2) the judgment must be final and on the merits; (3) there must be an identity of parties
or their privies; and (4) the later proceeding must involve the same cause of action as the
prior proceeding. (In re Justice Oaks II, Ltd. (11th Cir. 1990) 898 F.2d 1544, 1550.) We
consider each of these conditions in turn.
1. The Federal Court’s Jurisdiction
Preliminarily, Anolik observes that the federal court “is a court of limited
jurisdiction, in that federal courts are presumptively without jurisdiction over a civil
action and the burden of establishing jurisdiction rests upon the party asserting that
jurisdiction is present.” Anolik further observes that “the district court’s decision does
not even mention the concept of jurisdiction.”
It is not clear whether Anolik means to suggest that the federal district court
lacked jurisdiction in the prior lawsuit. To the extent that Anolik intends such an
argument, we reject it. Anolik’s original complaint asserted claims “arising under”
federal law. The complaint was removed to federal court on the basis of federal question
jurisdiction. The federal court exercised federal question jurisdiction over Anolik’s
6
federal claims and supplemental jurisdiction over the remaining state law claims. Anolik
does not appear to have challenged the exercise of subject matter jurisdiction in federal
court, and cannot properly do so here.
Anolik next argues that the federal court’s judgment “is not binding upon the state
courts, who [sic] are free to entertain a state law action based upon state law claims.” We
disagree. California gives full faith and credit to a final order or judgment of a federal
court. (Levy v. Cohen (1977) 19 Cal. 3d 165, 172; Code Civ. Proc., § 1908, subd. (a)(2).)
Consequently, the federal court’s judgment “has the same effect in the courts of this state
as it would have in a federal court.” (Levy v. Cohen, supra, at p. 172.)
Relying on Merry v. Coast Community College Dist. (1979) 97 Cal. App. 3d 214
(Merry), Anolik contends the trial court should have considered his state law claims in
spite of the federal court’s judgment. Merry is distinguishable.
In Merry, the plaintiff brought an action in federal court asserting federal claims
only. (Merry, supra, 97 Cal.App.3d at p. 219.) During the pendency of the federal
action, the plaintiff filed an action in state court alleging state common law causes of
action based on the same material facts. (Id. at p. 220.) The federal court granted the
defendants’ motion for summary judgment, thereby terminating the plaintiff’s federal
action. (Id. at pp. 219-220.) The trial court sustained the defendant’s demurrer to the
plaintiff’s complaint in the state action on the basis of res judicata. (Id. at p. 220.) The
Court of Appeal reversed.
The Merry court recognized an exception to the res judicata rule where state and
federal claims are pursued together and the federal court disposes of the federal claims
and declines to exercise pendent jurisdiction over the state law claims. (Merry, supra,
97 Cal.App.3d at p. 228 [“it has been held that a [federal court’s] refusal to exercise
pendent jurisdiction over a state claim following pretrial dismissal of a federal claim does
not bar litigation of state claims in the state court.”].) Thus, the Merry court held that a
judgment in a prior federal action will not bar a subsequent state lawsuit under the
7
principle of res judicata for claims not asserted in the federal action “where it is clear that
the federal court would have declined to exercise jurisdiction over the state claim.” (Id.
at p. 229.)
Here, unlike Merry, the federal court considered all of Anolik’s claims, both state
and federal. The federal court did not decline to exercise supplemental jurisdiction over
Anolik’s state law claims. To the contrary, the federal court carefully considered and
rejected them. Thus, we conclude that Merry is distinguishable, and the exception to the
res judicata doctrine discussed in that case does not apply here.
2. Final Judgment on the Merits
Anolik notes the doctrine of res judicata usually applies to judgments rendered
after trial on the merits. However, “Supreme Court precedent confirms that a dismissal
for failure to state a claim under Rule 12(b)(6) [of the Federal Rules of Civil Procedure]
is a ‘judgment on the merits’ to which res judicata applies.” (Stewart v. U.S. Bancorp
(9th Cir. 2002) 297 F.3d 953, 957, citing Federated Department Stores, Inc. v. Moitie
(1981) 452 U.S. 394, 399 [69 L. Ed. 2d 103, 109], fn. 3 [“[t]he dismissal for failure to state
a claim under Federal Rule of Civil Procedure 12(b)(6) is a ‘judgment on the merits’ ”].)
As the Ninth Circuit has explained, a “[r]ule 12(b)(6) dismissal” necessarily qualifies as a
judgment on the merits because “a district court analyzes the facts and legal claims in the
complaint to determine if the plaintiff has alleged a [cognizable] cause of action.”
(Stewart v. U.S. Bancorp, supra, at p. 957.) Thus, under established federal law, the
federal court’s dismissal of Anolik’s complaint qualified as a final judgment on the
merits.
3. Same Parties or Their Privies
The present action involves the same parties or their privies as the federal action.
The parties to the federal action were Anolik, BAC, and ReconTrust. The present action
includes the original parties to the federal action (Anolik, BAC, and ReconTrust) and
adds BofA and MERS.
8
The complaint alleges that BAC is a wholly owned subsidiary of BofA. Thus,
BofA and BAC are in privity for res judicata purposes. (In re Imperial Corp. of America
(9th Cir. 1996) 92 F.3d 1503, 1507 [parent-subsidiary relationship establishes privity for
purposes of res judicata].)
MERS is newly named in the present suit; however, its involvement appears to be
limited to its role as beneficiary of Carboni’s deed of trust as nominee for the lender and
its successors and assigns, including BAC. Thus, MERS is in privity with the lender or
loan servicer. (Maxwell v. U.S. Bank, N.A. (5th Cir. 2013) 544 Fed.Appx. 470, 473.)
Accordingly, we conclude the present action involves the same parties or their privies as
the federal action.
4. Same Cause of Action
Anolik argues that the federal court left certain state law claims unresolved, but
does not address the question whether the two cases involve the same cause of action.2
We conclude they do.
Federal courts apply the “ ‘transactional nucleus of facts’ ” test to determine
whether claims are identical. (Brodheim v. Cry (9th Cir. 2009) 584 F.3d 1262, 1268.)
Under that test, “[a] court is to apply four criteria to decide whether there is an identity of
claims: ‘(1) whether rights or interests established in the prior judgment would be
destroyed or impaired by prosecution of the second action; (2) whether substantially the
same evidence is presented in the two actions; (3) whether the two suits involve
2 Anolik claims that “the federal court decision only held that [Anolik’s] standing to
contest the foreclosure was absent because [Anolik] had not assumed, and consequently
was not bound by, the terms of the promissory note and deed of trust. Nothing in that
opinion reaches the state law claims that [Anolik], as owner of the real property subject to
the lien of the deed of trust, was unable to contest the validity of the nonjudicial
foreclosure sale of the property which [Anolik] owned. That state law claim remains
unadjudicated to the present day . . . .” We disagree. The federal court considered -- and
rejected -- Anolik’s claim that he has the right to challenge the foreclosure sale.
9
infringement of the same right; and (4) whether the two suits arise out of the same
transactional nucleus of facts.’ [Citation]. The fourth criterion is the most important.
[Citation.]” (Harris v. County of Orange (9th Cir. 2012) 682 F.3d 1126, 1132.) We
consider these criteria in reverse order.
First, the two lawsuits arise from the same transactional nucleus of facts. Both
lawsuits involve (1) Anolik’s claimed ownership of the property; (2) Countrywide’s loan
to Carboni and Carboni’s promissory note and deed of trust; (3) the assignment of
Carboni’s deed of trust to BAC and BAC’s nonjudicial foreclosure of that instrument;
and (4) Anolik’s monthly payments on Carboni’s loan from October 2009 through
November 2010.
Second, the two lawsuits involve the infringement of the same rights. The
complaints in the two lawsuits allege five virtually identical claims for injunctive and
declaratory relief and for wrongful foreclosure. The present action adds claims for
breach of the implied covenant of good faith and fair dealing and violations of Civil Code
former section 2923.52 and abandons Anolik’s earlier claims for an accounting and
violations of RESPA and the FDCPA. Despite these differences, both actions seek to
remedy the same basic right; namely, Anolik’s right to the property.
Third, the two lawsuits rely upon “substantially the same evidence.” The same
promissory note, deed of trust, assignment, notice of default, notices of sale, and loan
payment history would constitute the principal evidence on Anolik’s claims in both cases.
Finally, prosecution of the present lawsuit would impair rights or interests
established by the federal court’s judgment. In dismissing Anolik’s first lawsuit, the
federal judge reasoned: “Were the Court to permit [Anolik’s] now-asserted interest in the
property to subvert the foreclosure proceedings, its ruling would amount to permitting
any third party to halt foreclosure proceedings simply by claiming that it made some
payment on the loan and did not thereafter receive the requisite procedure/notice
attendant to foreclosure. Such a finding by the Court would amount to an utterly
10
unwarranted intrusion by the Court into the orderly mechanics of non-judicial
foreclosure. This the Court categorically declines to do.”
The present action seeks the same judicial intrusion into the orderly mechanics of
nonjudicial foreclosure. Accordingly, we conclude that rights or interests established in
the prior action would be destroyed or impaired if the present action proceeds. We
further conclude that the criteria for establishing an identity of claims have been met.
To summarize, we conclude that (1) the federal court’s judgment issued from a
court with appropriate jurisdiction; (2) the judgment was final and on the merits; (3) the
two lawsuits involved the same parties or their privies; and (4) the two lawsuits involved
the same cause of action. Accordingly, we conclude that the trial court correctly
determined that the doctrine of res judicata bars the present action.
III
Leave to Amend
Finally, Anolik contends the trial court abused its discretion by denying leave to
amend. Anolik insists he can amend to allege claims that do not require him to have
assumed the note and deed of trust or tendered the outstanding indebtedness. However,
Anolik’s proposed claims are based on the same set of operative facts as the claims
asserted in the prior action. As such, Anolik’s proposed claims could have been raised in
the prior action.
A “ ‘prior judgment is res judicata on matters which were raised or could have
been raised, on matters litigated or litigatable.’ ” (Wade v. Ports America Management
Corp. (2013) 218 Cal. App. 4th 648, 657, quoting Sutphin v. Speik (1940) 15 Cal. 2d 195,
202, italics omitted.) Accordingly, Anolik’s proposed claims are barred by res judicata.
(Tensor Group v. City of Glendale (1993) 14 Cal. App. 4th 154, 160.) The demurrer was
therefore properly sustained without leave to amend. (Cantu v. Resolution Trust Corp.
(1992) 4 Cal. App. 4th 857, 879.)
11
DISPOSITION
The judgment is affirmed. Defendants shall recover their costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1) & (2).)
NICHOLSON , Acting P. J.
We concur:
MAURO , J.
DUARTE , J.
12