Zephyr Investors v. Silva CA4/1 ( 2014 )

Filed 12/5/14 Zephyr Investors v. Silva CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ZEPHYR INVESTORS 2010, LLC, D064762
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2011-00052681-
CU-OR-NC)
ARTHUR N. SILVA, et al.,
Defendants and Appellants.
_____________________________________
ARTHUR N. SILVA, et al.,
Plaintiffs and Appellants, (Super. Ct. No. 37-2011-00053687-
CU-OR-NC)
v.
ZEPHYR INVESTORS 2010, LLC, et al.,
Defendants and Respondents,
APPEAL from a judgment of the Superior Court of San Diego County, Robert P.
Dahlquist, Judge. Affirmed.
Samy S. Henein and Charles T. Marshall for Defendants, Plaintiffs and Appellants
Arthur N. Silva, et al.
Higgs Fletcher & Mack and Michael R. Gibson for Plaintiffs, Defendants and
Respondents Zephyr Investors 2010, LLC, et al.
Arthur N. Silva and Kimberly R. Silva (together the Silvas) defaulted on a home
loan and Zephyr Investors 2010, LLC (Zephyr) acquired the subject property at a trustee's
sale as part of a nonjudicial foreclosure. Zephyr filed suit against the Silvas to, among
other things, quiet title in the property. The Silvas filed their own suit against Zephyr,
Zephyr Partners-RE LLC, Brad Termini, Margaret Atmore, and others. These two cases
were consolidated.
Before the civil actions were filed by Zephyr and the Silvas, Zephyr successfully
pursued an unlawful detainer action against the Silvas. When the Silvas did not appeal
the unlawful detainer judgment, Zephyr filed six motions in limine seeking to dispose of
all of the Silvas' claims against Zephyr on the grounds that those claims were barred by
collateral estoppel. The superior court treated these motions in limine as a motion for
judgment on the pleadings, granted the motion, and dismissed the claims raised by the
Silvas with prejudice. The Silvas appealed the ensuing judgment.
In this appeal, the Silvas argue the court erred in treating Zephyr's motions in
limine as a motion for judgment on the pleadings. They also contend the unlawful
detainer action does not collaterally estop their claims for slander of title, cancellation of
instruments, declaratory relief, and to quiet title. Because we determine that the unlawful
detainer judgment conclusively established that Zephyr had title to the property and was
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entitled to lawful possession of it, we conclude that the Silvas' causes of action are barred
by collateral estoppel. In addition, we are satisfied that the court properly exercised its
discretion to treat the motions in limine as a motion for judgment on the pleadings.
Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Silvas signed a promissory note in the amount of $406,000 (Note), which was
secured by a deed of trust recorded against certain real property commonly known as
4907 Patina Court, Oceanside, California (Property). The Silvas defaulted on the Note.
Ultimately, a nonjudicial foreclosure was initiated that resulted in Zephyr purchasing the
Property at a trustee's sale on February 5, 2010.
On March 5, 2010, Zephyr filed an unlawful detainer action against the Silvas to
take possession of the Property. On April 20, 2010, judgment was entered in Zephyr's
favor and a writ of possession was issued.
Although the Silvas vacated the Property, they subsequently recorded a quit claim
deed against the Property, which purported to convey title to the Property from
"Kimberly R. Silva, a Married Woman" to "Arthur N. Silva, a Married Man." The Silvas
then recorded a grant deed that purported to convey title to the Property from "Arthur N.
Silva, a Married Man" to "Arthur N. Silva, a Married Man as his Sole and Own
Property." In addition to the recording of these deeds, Arthur Silva allegedly engaged in
a campaign of harassment, including claiming to officers of the Oceanside Police
Department that he owned the Property and showing the officers a copy of the grant deed,
to prevent Zephyr's use and enjoyment of the Property.
3
Zephyr then filed suit against the Silvas, seeking to quiet title and alleging
additional claims for cancellation of instruments, slander of title, injunction, trespass, and
declaratory relief (Zephyr Action). The basis of Zephyr's claims was that it had
purchased the Property at a trustee's sale and successfully prosecuted an unlawful
detainer suit against the Silvas.
In response to the Zephyr Action, the Silvas filed their own lawsuit against
Zephyr, Zephyr Partners-RE LLC, Termini, Atmore, and others (Silva Action). The
causes of action in the Silva Action were based on the Silvas' claim that the lender or loan
servicer had filed fraudulent documents against the Property and "broke[] [the] chain of
title." The Silvas did not allege that they made all payments due on the Note. Instead,
they claimed certain transfers of the Note and recording of documents related to the Note
were fraudulent, which resulted in the Silvas owning the Property apparently without
having to repay the Note.1
The Zephyr Action and the Silva Action were consolidated and set for trial.
Before trial, Zephyr filed multiple motions in limine, with the first six such motions
aimed at each of the Silvas' causes of action.2 The gist of these motions was that the
1 Because they are not pertinent to the issues before us, we do not discuss in detail
the Silvas' allegations that the transferring of the Note and recording of certain documents
somehow resulted in the Silvas owning the Property outright without having to repay the
Note. Suffice to say, these allegations appear to be little more than a misguided theory
that allegedly allows the Silvas to own the Property free and clear without honoring their
promise to repay the Note.
2 Zephyr Partners-RE LLC, Termini, and Atmore were moving parties along with
Zephyr.
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unlawful detainer judgment legally precluded all of the Silvas' claims. The Silvas
opposed the motions in limine.
After considering the pleadings and entertaining oral argument, the superior court
treated Zephyr's first six motions in limine as a motion for judgment on the pleadings and
granted it thereby dismissing all of the Silvas' claims with prejudice. In doing so, the
court emphasized that the instant action was "very similar in facts, if not identical to"
Malkoskie v. Option One Mortgage Corp. (2010) 188 Cal. App. 4th 968 (Malkoskie), and
it was "bound to follow" that case.
The Silvas timely appealed.
DISCUSSION
The Silvas raise two issues on appeal. First, they argue the superior court
improperly exercised its inherent powers in treating the first six motions in limine as a
motion for judgment on the pleadings. Second, the Silvas contend the unlawful detainer
judgment did not preclude any of their claims. We reject both contentions.
I
THE SUPERIOR COURT'S POWER TO TREAT MOTIONS
IN LIMINE AS A MOTION FOR JUDGMENT ON THE PLEADINGS
"A court's inherent powers to control litigation and conserve judicial resources
authorize it to conduct hearings and formulate rules of procedure as justice may require.
[Citations.] Exercising these powers, the court may enter judgment in favor of a
defendant when motions in limine show that, ' "even if the plaintiff's allegations were
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proved, they would not establish a cause of action." ' " (Coshow v. City of Escondido
(2005) 132 Cal. App. 4th 687, 701.)
Here, the Silvas do not take issue with a superior court's power to treat a motion in
limine as a dispositive motion. Instead, they assert the superior court should not have
done so in the instant matter because the court misconstrued the holding of Malkoskie,
supra, 188 Cal. App. 4th 968. Thus, the Silvas' argument challenging the court's treatment
of Zephyr's first six motions in limine as a motion for judgment on the pleadings actually
is aimed at the court's ruling: The court should not have granted the motion for judgment
on the pleadings based on Malkoskie. As we discuss below, we agree with the superior
court's reading of Malkoskie. Accordingly, we are satisfied the court properly treated the
motions in limine as a motion for judgment on the pleadings.
II
MOTION FOR JUDGMENT ON THE PLEADINGS
A. Standard of Review
Judgment on the pleadings is similar to a demurrer and is properly granted when
the "complaint does not state facts sufficient to constitute a cause of action against [the]
defendant." (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii); Shea Homes Limited
Partnership v. County of Alameda (2003) 110 Cal. App. 4th 1246, 1254.) We
independently review the superior court's ruling on a motion for judgment on the
pleadings to determine whether the complaint states a cause of action. In so doing, we
accept as true the plaintiff's factual allegations and construe them liberally. (Rolfe v.
California Transportation Com. (2002) 104 Cal. App. 4th 239, 242-243.) If a judgment on
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the pleadings is correct upon any theory of law applicable to the case, we will affirm it
regardless of the considerations used by the superior court to reach its conclusion.
(Schabarum v. California Legislature (1998) 60 Cal. App. 4th 1205, 1216.)
B. Analysis
The Silvas' remaining contention is that the superior court misconstrued the
holding of Malkoskie, supra, 188 Cal. App. 4th 968, and as such, mistakenly granted
Zephyr's motion for judgment on the pleadings. We disagree and determine that the
Silvas are collaterally estopped from challenging the trustee's sale or otherwise claiming
any title or interest on the Property based on the Note or corresponding deed of trust. The
unlawful detainer judgment in favor of Zephyr conclusively established that Zephyr had
title to the Property and was entitled to possession of it.
" 'Under collateral estoppel, once a court has decided an issue of fact or law
necessary to its judgment, that decision may preclude relitigation of the issue in a suit on
a different cause of action involving a party to the first case.' " (San Remo Hotel, L.P. v.
City and County of San Francisco (2005) 545 U.S. 323, 336, fn. 16; Bernhard v. Bank of
America (1942) 19 Cal. 2d 807, 813.) " 'The purposes of the doctrine are said to be "to
promote judicial economy by minimizing repetitive litigation, to prevent inconsistent
judgments which undermine the integrity of the judicial system, [and] to protect against
vexatious litigation." ' " (Syufy Enterprises v. City of Oakland (2002) 104 Cal. App. 4th
869, 878.)
Our Supreme Court has recognized the potential of an unlawful detainer judgment
to collaterally estop subsequent litigation: "Applying the traditional rule that a judgment
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rendered by a court of competent jurisdiction is conclusive as to any issues necessarily
determined in that action, the courts have held that subsequent fraud or quiet title suits
founded upon allegations of irregularity in a trustee's sale are barred by the prior unlawful
detainer judgment." (Vella v. Hudgins (1977) 20 Cal. 3d 251, 256.)
" 'The requirements for invoking collateral estoppel are the following: (1) the
issue necessarily decided in the previous proceeding is identical to the one that is sought
to be relitigated; (2) the previous proceeding terminated with a final judgment on the
merits; and (3) the party against whom collateral estoppel is asserted was a party to or in
privity with a party in the previous proceeding.' " (Syufy Enterprises v. City of Oakland,
supra, 104 Cal.App.4th at p. 878.)
The requirements of collateral estoppel are met here. The unlawful detainer action
determined that Zephyr was entitled to judgment because Zephyr established it was
entitled to possession of the Property and had duly perfected its title to the Property,
issues the Silvas have challenged here. The unlawful detainer judgment is final because
the Silvas' time for appeal has passed and there is no indication in the record that the
Silvas timely filed a notice of appeal of that judgment. (See Busick v. Workmen's Comp.
Appeals Bd. (1972) 7 Cal. 3d 967, 974-975.) And the Silvas were parties to the unlawful
detainer action.
The fundamental issue in an unlawful detainer proceeding is the plaintiff's right to
possession. (See Old National Financial Services, Inc. v. Seibert (1987) 194 Cal. App. 3d
460, 465.) But where, as here, the unlawful detainer action is brought pursuant to Code
of Civil Procedure section 1161a, subdivision (b)(3), title is also an issue. This section
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provides that an unlawful detainer action may be filed "[w]here the property has been
sold in accordance with Section 2924 of the Civil Code, under a power of sale contained
in a deed of trust . . . and the title under the sale has been duly perfected." (Code Civ.
Proc., § 1161a, subd. (b)(3).) "Indeed, because the sole basis upon which [Zephyr]
asserted its right to possession of the property was its 'duly perfected' legal title obtained
in the nonjudicial foreclosure sale, the validity of [Zephyr's] title had to be resolved in the
unlawful detainer action." (Malkoskie, supra, 188 Cal.App.4th at p. 974; italics omitted.)
Malkoskie is instructive. There, the homeowners refinanced with a loan from
Home Loans USA, Inc. The deed of trust identified Home Loans as the beneficiary and
Premier Trust Deed Services as the trustee. Later, a substitution was recorded evidencing
Alliance Title Company as the new trustee as designated by Option One Mortgage
Corporation. But there was no recorded substitution showing Option One as the new
beneficiary of record with the authority to designate a substituted trustee. (Malkoskie,
supra, 188 Cal.App.4th at p. 971.) At a trustee's sale, Wells Fargo acquired the property
on a credit bid. Two months later a substitution was recorded acknowledging assignment
of the deed of trust to Option One as the new beneficiary and another substitution was
recorded evidencing the assignment of beneficiary status from Option One to Wells
Fargo. (Id. at pp. 971-972.) The trustee's deed upon sale documenting the purchase by
Wells Fargo was recorded the same day. Wells Fargo then instituted an unlawful
detainer action under Code of Civil Procedure section 1161a, in which the homeowners
raised the affirmative defenses that the trustee's sale was invalid due to improper notice
and other unspecified " 'irregularities in the sale.' " (Malkoskie, supra, at p. 972.) At the
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time of trial, the parties agreed to entry of a stipulated judgment in favor of Wells Fargo,
and the homeowners were forcibly evicted. (Ibid.)
The homeowners then filed a lawsuit against Wells Fargo and others attacking the
authority of the defendants to foreclose, including the claim that the sale was conducted
by an improper trustee and therefore no valid title passed to Wells Fargo. Like the Silvas'
complaint, the homeowners alleged causes of action for quiet title, cancellation of
trustee's deed, and declaratory relief. (Malkoskie, supra, 188 Cal.App.4th at p. 972.) The
homeowners contended that "the issue of the improper trustee conducting the sale was
not embraced by or otherwise resolved by the stipulated judgment such that there is no
bar to plaintiffs' claims seeking to undo the foreclosure sale as invalid." (Id. at p. 973.)
The court disagreed: "By stipulating to judgment against them, plaintiffs conceded the
validity of Wells Fargo's allegations that the sale had been duly conducted and operated
to transfer 'duly perfected' legal title to the property. ' "Title is duly perfected when all
steps have been taken to make it perfect, i.e., to convey to the purchaser that which he has
purchased, valid and good beyond all reasonable doubt . . . [citation], which includes
good record title [citation] . . . [.]" [Citation.]' " (Id. at p. 975.)
Like Wells Fargo, Zephyr filed its unlawful detainer action against the Silvas
under Code of Civil Procedure section 1161a. And, like Wells Fargo, Zephyr would have
"alleged in its complaint the specific facts it contended established it had perfected legal
title to the property, including that the foreclosure sale was conducted in accordance with
Civil Code section 2924." (Malkoskie, supra, 188 Cal.App.4th at p. 974.) In the Silva
Action, the Silvas claim that they are the owners of the Property and allege the trustee's
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deed upon sale, upon which Zephyr bases its claim that it owns the Property, is
fraudulent. However, Zephyr's claim to title and possession of the Property was
determined in the unlawful detainer action. It was based on it purchasing the Property at
a trustee's sale as memorialized in the recorded trustee's deed upon sale. Therefore, the
court in the unlawful detainer action necessarily had to find the trustee's deed upon sale
valid before it could find in Zephyr's favor. By challenging the validity of the trustee's
deed upon sale in the Silva Action, the Silvas are merely trying to relitigate a resolved
issue. (See ibid.)
While there was no stipulated judgment between the Silvas and Zephyr in the
unlawful detainer action, the Silvas, like the homeowners in Malkoskie, challenge the
conduct of the foreclosure sale and the validity of the resulting transfer of title to Zephyr.
There is no suggestion in the Malkoskie opinion that the particular findings that the
proper parties conducted the trustee's sale or that Wells Fargo had valid title were
expressly included in the parties' stipulated judgment. The court in Malkoskie concluded
that the homeowners' specific "consent to judgment conclusively determined the specific
factual contentions embraced by the complaint, namely that Wells Fargo had obtained
valid record title pursuant to a nonjudicial foreclosure sale that had been duly conducted
pursuant to statute." (Malkoskie, supra, 188 Cal.App.4th at p. 975.)
Because each of the Silvas' claims against Zephyr at issue in this appeal is
premised on the alleged invalidity of the trustee's sale, we conclude that the Silvas are
collaterally estopped from asserting any of these claims in their complaint. The issues
were finally determined and are established as a matter of law. The motion for judgment
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on the pleadings therefore was properly granted. (See Shea Homes Limited Partnership
v. County of Alameda, supra, 110 Cal.App.4th at p. 1254.)
We also note that the Silva Action named Zephyr Partners-RE LLC, Termini, and
Atmore as defendants. In this appeal, the Silvas do not address why the motion for
judgment on the pleadings should not have been granted as to these two individuals and
the other Zephyr entity. The Silvas appear to have sued Zephyr Partners-RE LLC,
Termini, and Atmore because they allegedly played some role in the decision to evict the
Silvas from the Property. Because we conclude Zephyr established its right to title to and
possession of the Property at the unlawful detainer trial, there are no grounds the Silvas
may pursue claims against Zephyr Partners-RE LLC, Termini, and Atmore based on the
eviction. Accordingly, we determine the superior court did not err in granting judgment
in favor of Zephyr Partners-RE LLC, Termini, and Atmore as well.
DISPOSITION
The judgment is affirmed. Zephyr, Zephyr Partners-RE LLC, Termini, and
Atmore are entitled to their costs on this appeal.
HUFFMAN, Acting P. J.
WE CONCUR:
NARES, J.
IRION, J.
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