Filed 10/13/15 Cole v. J.P. Morgan Chase CA2/5
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION FIVE



KIRSTEN COLE,                                                        B258403

         Plaintiff and Appellant,                                    (Los Angeles County Super. Ct.
                                                                      No. BC496591)
         v.

J.P. MORGAN CHASE, N.A.,

         Defendant and Respondent.




         APPEAL from a judgment of the Superior Court of Los Angeles, Randolph
Rogers, Judge. Affirmed.
         The Law Offices of Duane R. Folke and Duane R. Folke for Plaintiff and
Appellant.
         Keesal, Young & Logan, David D. Piper, Esther E. Cho, for Defendant and
Respondent.
                                           ______________________
       Plaintiff and appellant Kirsten Cole appeals from a judgment of dismissal
following an order sustaining a demurrer in favor of defendant and respondent J.P.
Morgan Chase Bank, N.A. (Chase Bank), in this action arising out of a postponed
foreclosure sale on residential property and a subsequent offer for a loan modification.
Cole contends her claims are not barred by the doctrine of res judicata because they arose
after her prior action was dismissed. Specifically, Cole argues that her claims arose when
Chase Bank sent her an approval letter outlining a trial period payment plan for a loan
modification. We conclude the trial court correctly sustained the demurrer of Chase
Bank without leave to amend because Cole’s claims in the prior and current action
constitute “identical causes of action for purposes of claim preclusion.” (Boeken v. Philip
Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) We affirm the judgment.


                     FACTUAL AND PROCEDURAL HISTORY


       Because we are reviewing a judgment entered after the sustaining of a demurrer
without leave to amend, the following factual statement is drawn principally from Cole’s
second verified amended complaint. We assume the truth of all factual allegations
properly pleaded in Cole’s operative complaint, as well as matters that may be judicially
noticed. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; Code Civ.
Proc., § 430.30, subd. (a).)


Subject Property


       This case involves real property located at 6201 Shannon Valley Road, Acton,
California, 93510 (the subject property). Cole acquired title to the subject property by
grant deed, which was recorded on November 14, 2006. She obtained a residential loan
in the amount of $588,000 (subject loan) secured by a deed of trust encumbering the
subject property. The deed of trust identified Washington Mutual Bank, FA (WaMu) as

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the lender and Cole as the borrower. On September 25, 2008, Chase Bank acquired
assets and liabilities of WaMu from the Federal Deposit Insurance Corporation (FDIC),
including the subject loan.
       Cole defaulted on her loan. A notice of default and election to sell under deed of
trust was recorded on February 17, 2009. The notice confirmed that the subject loan was
$18,396.53 in arrears. A notice of trustee’s sale was recorded on May 26, 2009. A
second notice of trustee’s sale was recorded on December 8, 2010.


Proceedings in the Prior Action


       On December 20, 2010, Cole initiated the prior action against Chase Bank alleging
causes of action for breach of contract, common counts, and quiet title. (Cole v. J.P
Morgan Chase Bank (Super. Ct. L.A. County, 2011, No. MC022170).) Cole’s complaint
alleged that Chase Bank “represented to [Cole] that the property which it took as a
security interest in lending money to [Cole] was a single family dwelling” and that “it
was discovered that the property which was held as as [sic] security interest for the
indebtedness was not a single family dwelling as represented by [Chase Bank].” Cole
attached a Los Angeles County Application for Building Permit filed by a previous
owner of the subject property in July 1986, requesting a permit to build a barn on his
residential property. In a letter attached to her complaint, Cole’s counsel stated: “At the
time of the listing of the property, it was concealed from the buyer that the single family
dwelling was, in fact, a converted barn. It was disclosed to the buyer that there were
some improvements that had been done without permits, but it was not disclosed to the
buyer that a certificate of occupancy had not been issued for the structure. [¶] . . . Ms.
Cole has learned that it would be financially impractical to bring the property into a
condition where a certificate of occupancy can be issued.”
       On July 11, 2011, Cole filed a verified first amended complaint in the prior action
alleging the same allegations against Chase Bank and adding a negligence claim. As to

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the negligence cause of action, Cole alleged that Chase Bank’s predecessor, WaMu, and
by extension, Chase Bank, “was negligent in appraising the property in that the property
was not a single family dwelling and its value was not what it was represented and was
not sufficient to support the purchase price offered by [Cole]. The true facts were that a
certificate of occupancy was not issued for human occupancy of the property and
therefore, it could not be utilized as required by [Cole] for her occupancy of the
property.” On July 28, 2011, Chase Bank filed a demurrer to Cole’s first amended
complaint. On August 23, 2011, the trial court sustained Chase Bank’s demurrer with
leave to amend and ruled that Cole “may replead her causes of action for Breach of
Contract, Common Counts, Quiet Title and Negligence and must do so by September 23,
2011.”
         On October 14, 2011, Cole filed an untimely and unverified second amended
complaint adding causes of action for unjust enrichment/imposition of constructive trust
and declaratory relief. Cole also replead her claim for quiet title. Chase Bank filed a
demurrer to Cole’s second amended complaint. On November 17, 2011, the trial court
sustained the demurrer in its entirety without leave to amend and dismissed the prior
action with prejudice. In the statement of decision, the trial court “carefully explained
how each of [Cole’s] causes of action lacked legal foundation. In addition, the Court
further noted that, even had [Cole’s] contentions been meritorious, her claims were
against the FDIC, WaMu’s immediate successor in interest, and not against [Chase
Bank], which purchased certain assets, including the Deed of Trust at issue, but did not
assume the corresponding liabilities, of WaMu. Those liabilities expressly remained with
the FDIC.”
         On December 12, 2011, Chase Bank filed a notice of entry of judgment.


The Trial Period Plan


         On November 1, 2012, Chase Bank informed Cole by letter that she had been

                                             4
approved for a Trial Period Plan (TPP). The TPP consisted of payments of $1,653.19 due
on December 1, 2012, January 1, 2013, and February 1, 2013. The letter stated that the
TPP is not a permanent modification and Cole must make all three payments on time
before Chase Bank can offer her a final loan modification. If Cole failed to comply with
the terms of the plan, Chase Bank would commence foreclosure proceedings. On
November 30, 2012, Cole sent a check to Chase Bank for $1,653.19 to only cover her
first payment and expressly conditioned the cashing of the check upon the “opportunity
to address the issues brought up by” Cole’s lawsuit initiated that day. Cole failed to
make any further payments on the TPP.


Current Action


       On November 30, 2012, Cole filed a verified complaint in the current action
against Chase Bank alleging causes of action for (1) declaratory relief, (2) strict liability
in tort for sale of “defective product,” (3) breach of warranty of title and habitability, (4)
quiet title, (5) breach of fiduciary duty, (6) violation of California Business and
Professions Code section 17200 et seq., and (7) promissory estoppel/promissory fraud.
The complaint alleged that after the prior action was dismissed with prejudice, Chase
Bank had offered Cole a TPP in furtherance of a potential loan modification. Cole
argued that Chase Bank did so without remedying the claims made by her in the prior
action. Specifically, Cole argued that, concurrent with any loan modification, Chase
Bank was required to either improve the property to the point that it would be eligible for
an occupancy permit as a “Simple Family Residence,” or reduce the principal of the
outstanding loan of $564,945 to the current fair market value of $135,933.
       On February 13, 2013, Cole filed her first amended verified complaint against
Chase Bank and Investors Title Insurance Company1 alleging the same seven causes of


       1Cole listed “Investors Title Insurance Company, an underwritten title agent of
First American Title Company of California” as a named defendant in her first amended
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action, along with new causes of action for negligence in performance of an undertaking
and breach of warranty of title in provision of title insurance. Investors Title Insurances
Company was the only named defendant alleged in the two new causes of action. The
material allegations against Chase Bank were unchanged.
       On June 21, 2013, Chase Bank filed a demurrer to the first amended complaint,
arguing that Cole’s claims are barred by the doctrine of res judicata, Chase Bank is not
responsible for WaMu’s origination or servicing conduct, and Cole’s claims are time-
barred. It further argued Cole fails to state a claim for each cause of action alleged
against Chase Bank.
       On August 22, 2013, Cole filed her opposition to the demurrer, contending she is
not procedurally barred under the doctrine of res judicata from bringing her claims, and
Chase Bank is liable for its actions in connection with her loan modification.
Furthermore, Cole’s claim for breach of contract/promissory estoppel are not time-barred
because they occurred immediately prior to the filing of this case and are supported by
recent California case law. Cole is entitled to proceed with a quiet title cause of action
based upon a finding that Chase Bank should be responsible for fixing her current
circumstances. Chase Bank is liable for breach of fiduciary duty based on its failure to
act in a manner keeping with its duties as mortgagor. Cole’s claim for violation of
California Business and Professions Code section 17200 is well plead and applicable
under California law. Lastly, “declaratory relief is available where as in this case [Cole]
has fully set forth . . . the basis for ‘Declaratory Relief.’”
       In its reply filed on August 28, 2013, Chase Bank reiterated that Cole’s claims are
barred by the doctrine of res judicata. Cole’s causes of action for negligence in
performance of an undertaking and breach of warranty of title in provision of title
insurance are not alleged against Chase Bank. Cole did not plead a cause of action for



verified complaint. On April 11, 2013, First American Title Insurance Company (First
American) was substituted for Doe 1. Cole subsequently filed a request for dismissal and
a dismissal was entered as to First American.
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breach of contract and therefore any arguments relating to such a cause of action are
irrelevant. Moreover, Cole’s promissory estoppel claim is time-barred and her remaining
claims also fail.
       On November 12, 2013, the trial court sustained the demurrer with leave to amend
until December 2, 2013, finding that “the present complaint is barred by the doctrine of
res judicata.” The court reasoned that the claims made in the present action concerned
the same harms as alleged in the prior action, “the failure to provide a loan modification
and to discover the lack of a certificate of occupancy.” Additionally, the present action
was between the same parties and therefore barred by the final judgment on the merits
entered in the prior action.
       On January 22, 2014, Cole filed an untimely and verified second amended
complaint against Chase Bank, removing the negligence and breach of title insurance
causes of action, and also removing Investors Title Insurance Company as a named
defendant. Except for the removal of claims made against Investors Title Insurance
Company, the material allegations against Chase Bank remained unchanged. Cole
alleged causes of action for (1) declaratory relief, (2) strict liability in tort for sale of
“defective product,” (3) breach of warranty of title and habitability, (4) quiet title, (5)
breach of fiduciary duty, (6) violation of California Business and Professions Code
section 17200 et seq., and (7) promissory estoppel/promissory fraud. Cole stated that she
is the owner of the subject property and has been in a mortgagor-mortgagee relationship
with Chase Bank since she purchased the subject property on November 14, 2006. She
alleged the loan modification agreement identified the subject property as a single family
residence, however, the County of Los Angeles Recorder’s Office identifies the property
as a barn without a occupancy permit. Cole contends Chase Bank must “rectify in its’
new contractual relationship including the actual legal status of said real property and/or
make the loan ‘modification’ commensurate with the current legal status of the subject
real property.” Cole argued she is left “in a set of circumstances whereupon the
completion of the ‘Modification’ process with the payments of $1,653.19 . . . she will

                                                7
find herself to be the ‘Owner’ of real property that is without ‘Marketable Title’ as
represented in the contract.”
       On February 25, 2014, Chase Bank filed its demurrer to the second verified
amended complaint. Chase Bank contended Cole’s claims are barred by the doctrine of
res judicia, it is not responsible for WaMu’s origination or servicing, and Cole’s claims
are time-barred. Chase Bank further argued Cole fails to plead sufficient facts for each
cause of action. In its request for judicial notice filed concurrently with the demurrer,
Chase Bank attached the November 14, 2006 grant deed and subject loan secured by the
deed of trust; September 25, 2008 Purchase and Assumption Agreement between Chase
Bank and FDIC; February 17, 2009 notice of default and election to sell under deed of
trust; May 26, 2009 notice of trustee’s sale; and December 8, 2010 second notice of
trustee’s sale. Chase Bank also requested judicial notice of the moving papers in the
prior action, including but not limited to Cole’s second amended complaint, Chase’s
demurrer, and the trial court’s statement of decision granting the demurrer to the second
amended complaint.
       Cole filed an opposition to the demurrer on May 20, 2014, arguing her claims are
not barred by the doctrine of res judicata, because the current case involves a loan
modification agreement which was not the subject of any prior litigation.
       The trial court sustained the demurrer in its entirety without leave to amend and
dismissed the action against Chase Bank with prejudice. Judgment was entered on June
18, 2014, and a notice of entry of judgment was entered on June 24, 2014, in favor of
Chase Bank. Cole filed a notice of appeal on August 22, 2014.




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                                      DISCUSSION


Standard of Review


       “A demurrer tests the legal sufficiency of the factual allegations in a complaint.
We independently review the sustaining of a demurrer and determine de novo whether
the complaint alleges facts sufficient to state a cause of action or discloses a complete
defense. [Citation.] We assume the truth of the properly pleaded factual allegations,
facts that reasonably can be inferred from those expressly pleaded and matters of which
judicial notice has been taken. [Citation.] We construe the pleading in a reasonable
manner and read the allegations in context. [Citation.] We must affirm the judgment if
the sustaining of a general demurrer was proper on any of the grounds stated in the
demurrer, regardless of the trial court’s stated reasons. [Citation.]” (Siliga v. Mortgage
Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 81.)
       “It is an abuse of discretion to sustain a demurrer without leave to amend if there
is a reasonable probability that the defect can be cured by amendment. [Citation.] The
burden is on the plaintiff to demonstrate how the complaint can be amended to state a
valid cause of action. [Citation.] The plaintiff can make that showing for the first time
on appeal. [Citation.]” (Siliga v. Mortgage Electronic Registration Systems, Inc., supra,
219 Cal.App.4th at p. 81.)


Res Judicata/Claim Preclusion


       Cole contends her claims are not barred by res judicata because she was not trying
to revive any prior claim, but was in fact addressing claims that arose from the TPP
offered in a November 2012 letter by Chase Bank. We hold that the trial court properly
sustained Chase Bank’s demurrer because each cause of action was barred by the “claim
preclusion” concept embodied in the doctrine of res judicata.

                                              9
       The doctrine of res judicata has frequently been used “as an umbrella term
encompassing both claim preclusion and issue preclusion.” (DKN Holdings LLC v.
Faerber (2015) 61 Cal.4th 813, 823 (DKN).) Our Supreme Court recently stated that in
order “[t]o avoid future confusion, we will follow the example of other courts and use the
terms ‘claim preclusion’ to describe the primary aspect of the res judicata doctrine and
‘issue preclusion’ to encompass the notion of collateral estoppel.” (Id. at p. 824.) “Claim
preclusion ‘prevents relitigation of the same cause of action in a second suit between the
same parties or parties in privity with them.’ [Citation.] Claim preclusion arises if a
second suit involves: (1) the same cause of action (2) between the same parties (3) after a
final judgment on the merits in the first suit. [Citations.] If claim preclusion is
established, it operates to bar relitigation of the claim altogether.” (Ibid., italics omitted.)
Claim preclusion “benefits both parties and the courts because it ‘seeks to curtail multiple
litigation causing vexation and expense to the parties and wasted effort and expense in
judicial administration.’ [Citation.]” (Mycogen Corp. v. Monsanto Co. (2002) 28
Cal.4th 888, 897.) Issue preclusion “prevents relitigation of previously decided issues.”
(DKN, supra, 61 Cal.4th at p. 824.) “[I]ssue preclusion applies: (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.” (Id. at p. 825.)
       We are concerned here with claim preclusion. Cole does not dispute that the prior
and current actions involved the same parties and the judgment in the prior action was
final on the merits. The only issue on dispute is whether the current action involves the
same cause of action. “To determine whether two proceedings involve identical causes
of action for purposes of claim preclusion, California courts have ‘consistently applied
the “primary rights” theory.’ [Citation.] Under this theory, ‘[a] cause of action . . . arises
out of an antecedent primary right and corresponding duty and the delict or breach of
such primary right and duty by the person on whom the duty rests. “Of these elements,
the primary right and duty and the delict or wrong combined constitute the cause of

                                               10
action in the legal sense of the term . . . .”’ [Citation.]” (Boeken v. Philip Morris USA,
Inc., supra, 48 Cal.4th at pp. 797-798.) “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. [Citations.]” (Id. at p. 798.)
       In both actions, Cole alleged she was harmed because the subject property did not
have an occupancy permit for a single family dwelling, and therefore, at the time of
purchase she paid far above fair market value. Cole attempts to use the TPP as a vehicle
to relitigate the same harms resolved against her in the prior action by arguing the TPP
raised new claims by identifying the subject property as a single family dwelling.
       We reject Cole’s argument for two reasons. First, the TPP contains boilerplate
language explaining its terms and conditions; it does not address whether the subject
property is referred to as a single family dwelling. Second, it is irrelevant that the
specific remedy sought in the current action was a reduction on the principal on the
outstanding loan as opposed to a reduction on the “true value” of the subject property
sought in the prior action. Both actions seek redress for Cole’s assertion that she thought
she was buying a residence and ended up with a barn, and her belief that somehow the
successor to the original lender is liable for her situation. The two actions are based on
the same primary right, and Cole has merely split her causes of action. The trial court
properly sustained the demurrer to the second amended complaint and entered judgment
in favor of Chase Bank.


Denial of Leave to Amend


       The trial court’s decision to sustain the demurrer without leave to amend is a
matter of discretion. Because Cole has failed to provide a reporter’s transcript or other
suitable substitute in the record on appeal, we do not know what matters were argued or
considered by the trial court at the hearing on the demurrer. “All intendments and
presumptions are indulged to support [the trial court’s decision] on matters as to which

                                             11
the record is silent, and error must be affirmatively shown.” (Denham v. Superior Court
(1970) 2 Cal.3d 557, 564.) Cole has the burden of overcoming the presumption of
correctness. To do so, she must provide this court with an adequate record demonstrating
the alleged abuse of discretion. Because Cole did not provide an adequate record, we
apply the presumption that the trial court properly denied leave to amend.
       Moreover, “‘[Cole] must show in what manner [she] can amend [the] complaint
and how that amendment will change the legal effect of [her] pleading. [Citation.]’
[Citation.]” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) In her opening brief,
Cole did not attempt to demonstrate that her operative complaint could be amended. No
reply brief was filed. There is no basis on the record presented for granting leave to
amend on appeal.


                                     DISPOSITION


       The judgment is affirmed. Respondent J.P. Morgan Chase Bank, N.A. is awarded
its costs on appeal.




              KRIEGLER, J.


We concur:




              TURNER, P. J.




              BAKER, J.



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