Filed 8/31/16 Rahman v. Capital One CA5



                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT

SUMAIRA RAHMAN et al.,
                                                                                           F070066
         Plaintiffs and Appellants,
                                                                        (Super. Ct. No. S-1500-CV-279480)
                   v.

CAPITAL ONE, N.A. et al.,                                                                OPINION
         Defendants and Respondents.



         APPEAL from a judgment of the Superior Court of Kern County. David R.
Lampe, Judge.
         Sumaira Rahman and Syed Rahman, in pro per. for Plaintiffs and Appellants.
         Doll Amir & Eley, Hunter Ely and Connie Tcheng for Defendants and
Respondents.
                                                        -ooOoo-
         Plaintiffs appeal from the judgment entered against them after defendants’
demurrer to their complaint was sustained without leave to amend. Plaintiffs assert the
elements of the causes of action in their complaint were sufficiently alleged, but fail to
address defendants’ argument that the complaint was barred by the doctrine of res
judicata. We conclude the demurrer to all causes of action was properly sustained on the
ground of res judicata and affirm the judgment.
                    FACTUAL AND PROCEDURAL BACKGROUND
       Plaintiffs, appearing in propria persona, filed a complaint against defendants,
Capital One, Mortgage Electronic Registration Systems, Inc. (MERS), Chevy Chase
Bank (collectively, defendants), and others alleging plaintiffs obtained a mortgage loan
from defendant, Chevy Chase Bank, memorialized in a promissory note secured by a
deed of trust on their principal residence. They alleged the loan was subsequently
securitized,1 but the note and deed of trust were not properly endorsed, assigned, and
transferred from one entity to another. As a result, they allege, none of the defendants
can establish proper possession, transfer, assignment, or ownership of the note and deed
of trust; accordingly, none of the defendants has a valid and enforceable secured claim
against the residence. Because the defendants do not have a perfected security interest in
the property, they do not have the right to foreclose or conduct a nonjudicial foreclosure
sale of the property.
       The complaint contained 10 counts:2 (1) lack of standing to foreclose, (2) fraud in
the concealment, (3) fraud in the inducement, (4) intentional infliction of emotional
distress, (5) slander of title, (6) quiet title, (7) declaratory relief, (8) violation of the Truth
in Lending Act (15 U.S.C. § 1601 et seq.), (9) violation of the Real Estate Settlement
Procedures Act (12 U.S.C. § 2601 et seq.), and (10) rescission. Defendants demurred to


1       The complaint alleges: “Securitization is the process whereby mortgage loans are turned
into securities, or bonds, and sold to investors by Wall Street and other firms.”
2       The complaint is divided into segments labeled as causes of action. However, “‘[i]n
California the phrase “causes of action” is often used indiscriminately … to mean counts which
state [according to different legal theories] the same cause of action ….’ [Citation.] But for
purposes of applying the doctrine of res judicata, the phrase ‘cause of action’ has a more precise
meaning: The cause of action is the right to obtain redress for a harm suffered, regardless of the
specific remedy sought or the legal theory (common law or statutory) advanced.” (Boeken v.
Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 798 (Boeken).) Because we discuss res judicata
and whether plaintiffs’ various claims constitute the same cause of action for res judicata
purposes, to avoid confusion, we will refer to the separate sections or divisions contained in
plaintiffs’ complaint as “counts.”


                                                2.
the complaint, asserting that every count was barred by res judicata, because plaintiffs
had previously filed a similar complaint, which was dismissed after the defendants’
demurrer to it was sustained without leave to amend. They also argued plaintiff Syed
Rahman lacked standing to pursue any of the counts, because the subject promissory note
and deed of trust were executed by plaintiff Sumaira Rahman only. Further, each count
failed to allege the elements necessary to state a cause of action. Plaintiffs opposed the
demurrer and defendants replied. The trial court sustained the demurrer without leave to
amend and dismissed the action. Plaintiffs appeal from the judgment of dismissal.
                                       DISCUSSION
I.     Standard of Review
       “On appeal from a dismissal after an order sustaining a demurrer, we review the
order de novo, exercising our independent judgment about whether the complaint states a
cause of action as a matter of law.” (Traders Sports, Inc. v. City of San Leandro (2001)
93 Cal.App.4th 37, 43.) “We give the complaint a reasonable interpretation,” and “deem
to be true all material facts properly pled.” (Ibid.) “‘“We also consider matters which
may be judicially noticed.”’” (Lincoln Property Co., N.C., Inc. v. Travelers Indemnity
Co. (2006) 137 Cal.App.4th 905, 911.) We must affirm the judgment if any of the
grounds asserted in the demurrer was well taken. (Aubry v. Tri-City Hospital Dist.
(1992) 2 Cal.4th 962, 967 (Aubry).) We review the denial of leave to amend for abuse of
discretion. (Ibid.)
II.    Res Judicata
       “‘Res judicata’ describes the preclusive effect of a final judgment on the merits.
Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a
second suit between the same parties or parties in privity with them.” (Mycogen Corp. v.
Monsanto Co. (2002) 28 Cal.4th 888, 896 (Mycogen).) Under the doctrine, “a judgment
for the defendant serves as a bar to further litigation of the same cause of action.” (Id. at
pp. 896–897.) In order for res judicata to bar relitigation of a claim, “‘a judgment must

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be final, on the same claim or cause of action, between the same parties, and must be an
adjudication on the merits.’” (Hi-Desert Medical Center v. Douglas (2015) 239
Cal.App.4th 717, 731.)
       A.     Same parties
       The prior action, which defendants contend precludes litigation of the current
action, was filed by the same plaintiffs, Sumaira and Syed Rahman, against Chevy Chase
Bank, Capital One, MERS, and others. (Rahman v. Chevy Chase Bank et al. (Super. Ct.
Kern County, 2012, No. S-1500-CV-276662).) Thus, as to the parties to this appeal, the
prior action was between the same parties as the current action.
       B.     Final judgment
       “[I]n California the rule is that the finality required to invoke the preclusive bar of
res judicata is not achieved until an appeal from the trial court judgment has been
exhausted or the time to appeal has expired.” (Franklin & Franklin v. 7-Eleven Owners
for Fair Franchising (2000) 85 Cal.App.4th 1168, 1174.) In the prior action, the trial
court sustained without leave to amend the demurrer of Capital One, “as successor by
merger to Chevy Chase Bank,” and MERS on December 6, 2012. The minute order and
a nunc pro tunc amended order stated “dismissal will be ordered” as to Capital One and
MERS. The record does not contain a formal judgment of dismissal of Capital One and
MERS. The docket reflects that, on April 8, 2013, the trial court dismissed the case in its
entirety with prejudice and the clerk mailed notice to the parties that day.
       The prior action against Capital One and MERS was dismissed no later than
April 8, 2013. Notice of entry was given the same day. Accordingly, plaintiffs’ time to
appeal expired at the latest 60 days thereafter—June 7, 2013. (Cal. Rules of Court,
rule 8.104(a)(1)(A).) Plaintiffs have not demonstrated any basis for extending the appeal
period. Nothing in the record suggests the dismissal was appealed. Consequently, the
record indicates a final judgment has been entered in the prior action.



                                              4.
       C.     Same claim or cause of action
              1.        First through seventh counts
       For purposes of applying the doctrine of res judicata, “cause of action [means] the
right to obtain redress for a harm suffered, regardless of the specific remedy sought or the
legal theory (common law or statutory) advanced.” (Boeken, supra, 48 Cal.4th at p. 798.)
Under the primary right theory of pleading followed in California, “‘a “cause of action”
is comprised of a “primary right” of the plaintiff, a corresponding “primary duty” of the
defendant, and a wrongful act by the defendant constituting a breach of that duty.’”
(Mycogen, supra, 28 Cal.4th at p. 904.) Thus, “‘the primary right is simply the plaintiff’s
right to be free from the particular injury suffered. [Citation.] It must therefore be
distinguished from the legal theory on which liability for that injury is premised: “Even
where there are multiple legal theories upon which recovery might be predicated, one
injury gives rise to only one claim for relief.” [Citation.] The primary right must also be
distinguished from the remedy sought: “The violation of one primary right constitutes a
single cause of action, though it may entitle the injured party to many forms of relief, and
the relief is not to be confounded with the cause of action, one not being determinative of
the other.”’” (Ibid.)
       The factual allegations of the two complaints are similar. They allege plaintiffs
owned the real property at the same specified address, and plaintiff executed a
promissory note and a deed of trust by which the property secured the note. The original
loan was with Chevy Chase Bank. The complaints allege the loan was subsequently
securitized, but the note and deed of trust were not properly endorsed, transferred or
assigned in the transactions that resulted in securitization. As a result, defendants were
not legal holders of the note and deed of trust, and could not lawfully exercise the power
of sale to conduct a nonjudicial foreclosure sale of the property. The first through
seventh counts of the complaints alleged the same claims: (1) lack of standing to
foreclose, (2) fraud in the concealment, (3) fraud in the inducement, (4) intentional

                                             5.
infliction of emotional distress, (5) slander of title, (6) quiet title, and (7) declaratory
relief. All were based on essentially the same allegations: that defendants were
attempting to conduct a nonjudicial foreclosure sale of plaintiffs’ residence, but they were
not legally entitled to do so because of defects in the endorsement and transfer of the note
and deed of trust. Thus, the first seven counts of both complaints sought redress for the
same injury and were based on the same primary right.
       In the general factual allegations portion, the current complaint added allegations
of predatory lending: that Chevy Chase Bank qualified plaintiff for a loan it knew she
could not qualify for or afford, sold her a loan product it knew or should have known she
would not be able to pay back, failed to explain the workings of the transaction and how
the rates, finance charges, cost and fees were computed, and failed to provide copies of
some loan documents to her. Although those allegations were not included in the prior
complaint, they may still be barred by res judicata if they could have been included in the
prior complaint.
       “It is axiomatic that a final judgment serves as a bar not only to the issues litigated
but to those that could have been litigated at the same time.” (Takahashi v. Board of
Education (1988) 202 Cal.App.3d 1464, 1481.) “‘If the matter was within the scope of
the action, related to the subject matter and relevant to the issues, so that it could have
been raised, the judgment is conclusive on it despite the fact that it was not in fact
expressly pleaded or otherwise urged. [Italics in original.] The reason for this is
manifest. A party cannot by negligence or design withhold issues and litigate them in
consecutive actions. Hence the rule is that the prior judgment is res judicata on matters
which were raised or could have been raised, on matters litigated or litigatable.’” (Ibid.)
Through their prior complaint, plaintiffs challenged defendants’ right to conduct a
nonjudicial foreclosure and sell the property pursuant to a power of sale in the note and
deed of trust. The scope of that action encompassed all challenges to the validity of the
loan transaction and the power of sale. Accordingly, the allegations of predatory lending

                                                6.
added to the current complaint were related to the subject matter and relevant to the
issues raised in the first action, and could have been raised in that action. Consequently,
for purposes of res judicata, these allegations were part of the same cause of action that
was presented in the prior action.
              2.        Eighth and ninth counts
       The current complaint added the eighth, ninth, and tenth counts, which were not
included in the prior complaint. The eighth count attempted to allege defendants violated
the Truth in Lending Act (15 U.S.C. § 1601 et seq.; TILA) by failing to provide plaintiff
with accurate, material disclosures as required by the TILA. Although it described some
of the provisions of the TILA and related regulations, it did not factually allege what
disclosures any of the defendants failed to make. Plaintiffs alleged they were entitled to
rescind the loan transaction and obtain damages based on defendants’ failure to provide
the required disclosures.
       The ninth count attempted to allege violations of the Real Estate Settlement
Procedures Act (12 U.S.C. § 2601 et seq.; RESPA). The allegations were
incomprehensible; they did not clearly identify any provisions of RESPA that defendants
allegedly violated, or factually allege how any of the defendants violated any of the
statutory provisions.
       Like the first seven counts of the complaint, these counts challenged the
origination and handling of plaintiffs’ home loan. All of the counts arose out of the
events surrounding execution of the promissory note and deed of trust and the subsequent
servicing and management of the loan and loan documents. Thus, for purposes of res
judicata, it appears these were issues that could have been litigated in the prior action and
were part of the same cause of action previously litigated.
              3.        Tenth count
       The tenth count was labeled “rescission.” Rescission, however, is not a cause of
action, but an equitable remedy. (Nelson v. Pearson Ford Co. (2010) 186 Cal.App.4th

                                             7.
983, 1018.) The tenth count sought rescission based on the fraud allegations, the alleged
TILA violations, and public policy. This count does not present a claim based on a
different primary right; it simply seeks a different remedy for the cause of action already
alleged. That remedy could have been alleged and pursued in the prior action.
Accordingly, for purposes of the doctrine of res judicata, the tenth count is simply a
request for another remedy based on the same cause of action presented in the prior
action.
          Thus, despite some differences in the legal theories alleged, all of the counts of the
current complaint reflect the same cause of action as the prior complaint.
          D.     On the merits
          “A judgment entered after a general demurrer has been sustained ‘is a judgment on
the merits to the extent that it adjudicates that the facts alleged do not constitute a cause
of action, and will accordingly, be a bar to a subsequent action alleging the same facts.’”
(Crowley v. Modern Faucet Manufacturing Co. (1955) 44 Cal.2d 321, 323 (Crowley).)
Defendants demurred to the complaint in the prior action on the ground the entire
complaint, and each count within it, failed to state a cause of action. The trial court
sustained the demurrer without leave to amend on the ground the complaint failed to state
facts sufficient to constitute a cause of action (Code Civ. Proc., § 430.10, subd. (e)).
          If the demurrer in the prior action was sustained on a ground equally applicable to
the later action, the prior judgment will bar the later action even if different facts are
alleged in the second complaint. (Crowley, supra, 44 Cal.2d at p. 323.) However, if the
complaint in the current action alleges new or additional facts that cure the defects in the
prior complaint, the earlier judgment is not a bar to the current action. (Ibid.) Although
plaintiffs added some facts in the current complaint that were not included in the prior
complaint and changed some factual allegations, plaintiffs have not demonstrated that
these additions and changes cured the defects in the original complaint.



                                                8.
       The demurrer in the prior action asserted the entire complaint failed because the
underlying premise—that the securitization of the loan and defendants’ lack of physical
possession of the deed of trust somehow invalidated the loan obligation or prevented the
exercise of the power of sale—was false under California law. At least the first seven
counts of plaintiffs’ current complaint were based on the same premise and the same or
similar factual allegations. Plaintiffs have not demonstrated that any change they made in
the factual allegations would change the outcome on that legal issue.
       Plaintiffs’ brief on appeal specifically addressed only their quiet title, fraud, and
intentional infliction of emotional distress counts.3 For the quiet title and fraud counts,
the brief set out the elements of the claim and asserted, without discussion, that the
elements were fully pled. For the intentional infliction of emotional distress count,
plaintiffs set out the elements, then asserted they were satisfied by certain allegations
purportedly quoted from the complaint; the quoted language, however, consisted of
conclusions rather than facts, and did not appear in that count.
       Plaintiffs have failed to demonstrate that the judgment in the prior action was not
on the merits for res judicata purposes.
       E.      Conclusion
       “An appealed judgment is presumed correct, and the appellant must affirmatively
demonstrate error.” (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408.) “An appellant
must provide an argument and legal authority to support his contentions. This burden
requires more than a mere assertion that the judgment is wrong.” (Benach v. County of
Los Angeles (2007) 149 Cal.App.4th 836, 852.) The appellant must provide a reasoned
legal argument and citations to authority demonstrating the error. (Ibid.) A judgment
dismissing an action after sustaining a demurrer without leave to amend must be affirmed


3       They also address causes of action to remove a cloud on title and for punitive damages,
but their complaint did not contain those causes of action.


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if any of the several grounds set out in the demurrer is well taken. (Aubry, supra, 2
Cal.4th at pp. 966–967.)
       Plaintiffs did not address the bar of res judicata in their appellate brief. They did
not demonstrate that any of the claims alleged in their complaint was not barred by res
judicata. Thus, they have failed to establish any error in the judgment.
III.   Leave to Amend
       Plaintiffs assert the trial court abused its discretion by failing to grant leave to
amend. “Generally it is an abuse of discretion to sustain a demurrer without leave to
amend if there is any reasonable possibility that the defect can be cured by amendment.
[Citation.] However, the burden is on the plaintiff to demonstrate that the trial court
abused its discretion. [Citations.] Plaintiff must show in what manner he can amend his
complaint and how that amendment will change the legal effect of his pleading.”
(Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)
       Plaintiffs presented no argument in support of their contention the trial court
abused its discretion by denying leave to amend. They have not suggested in what way
any of the counts of the complaint could be amended to state a viable cause of action.
They have not proposed any additions or changes that could be made to the facts alleged,
or disclosed how the additions or changes would alter the legal effect of the pleading.
Accordingly, they have not met their burden of demonstrating the trial court abused its
discretion by denying leave to amend the complaint.




                                              10.
                                   DISPOSITION
     The judgment is affirmed. Defendants are entitled to their costs on appeal.



                                                             _____________________
                                                                          HILL, P.J.
WE CONCUR:


 _____________________
FRANSON, J.


 _____________________
SMITH, J.




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