Judge Bruce G. Iwasaki, Case Number: 23STCV13327, Date: 2023-10-31 Tentative Ruling

Tentative Ruling: The Demurrer to the Complaint is sustained in its entirety without leave to amend. The Motion to Strike is moot.

This case arises from the foreclosure of real property located at 1842 W. 50th Street, Los Angeles, CA 90062 (Property). Plaintiff Salome Davis (Plaintiff) alleges that Defendant Prestige Default Services (Prestige), the foreclosure trustee, embezzled property by recording different title documents and that Defendant Prestige committed fraud by not providing notice of the Property sale.

On June 12, 2023, Plaintiff sued Defendants Mikel Hoorizadeh, Jospeh Trenk, and Prestige Default Services, LLC, alleging causes of action for (1.) embezzlement of real property, (2.) embezzlement of real property, (3.) embezzlement of real property, (4.) embezzlement of real property, (5.) fraud, (6.) embezzlement of real property, and (7.) grand theft.

Defendant Prestige demurs to the entire Complaint. Defendant also filed a motion to strike. Plaintiff opposes the demurrer and motion to strike. Defendant filed a reply. Plaintiff filed a “rebuttal” to the reply.[1]

Plaintiff’s Complaint must be dismissed because he has previously litigated the same issues in this court and lost. Accordingly, the doctrine of claim preclusion disposes of this action. The Court sustains the demurrer without leave to amend. The motion to strike is moot.

Defendant Prestige’s unopposed request for judicial notice of Exhibits A-J is granted. (Evid. Code § 452, subd. (d).)

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . ..” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.)

Defendant Prestige demurs to the Complaint on the grounds that it is barred by the doctrine of res judicata and Plaintiff has failed to state a claim.

The Complaint alleges, October 26, 2007, Plaintiff obtained a mortgage loan from Flagstar Bank, FSB in the original amount of $380,750.00; the loan was secured by a deed of trust against the Property. (Compl., ¶ 8, Ex. 1.) On June 24, 2021, Defendant Prestige recorded a Notice of Default, listing a past due amount of $64,232.40 as of June 22, 2021. (Compl., Ex. 3.) On January 3, 2022, the Trustee’s Deed Upon Sale was recorded indicating that the Property had been sold at a public auction, on December 1, 2021, to Defendant Mikel Hoorizadeh. (Compl., Ex. 5.)

The Complaint alleges that Defendant Prestige engaged in acts that constituted embezzlement under Penal Code section 504 and fraud, with respect to various foreclosure related recordings and filings. (Compl., ¶ 9-12, 14, Ex. 2 [Substitution of Trustee], Ex. 3 [Notice of Default], Ex. 4 [Notice of Trustee’s Sale], Ex. 5 [Trustee’s Deed Upon Sale], Ex. 7 [Hoorizadeh’s Complaint for Unlawful Detainer against Plaintiff].)

On demurrer, Defendant argues that Davis’s claims are all barred by the doctrine of res judicata. Plaintiff Davis previously sued, among others, Defendant Prestige in Los Angeles Superior Court asserting the same claims he raises here. He lost that case. (Los Angeles Superior Court Case No. 21STCP02447 [Prior Action].) As a result, Davis is barred from asserting the same claims in this action.

“ ‘The doctrine of res judicata rests upon the ground that the party to be affected, or some other with whom he is in privity, has litigated, or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again to the harassment and vexation of his opponent.’ [Citation.]” (Pollock v. University of Southern California (2003) 112 Cal.App.4th 1416, 1427.) “The application of the doctrine in a given case depends upon an affirmative answer to these three questions: (1) Was the issue decided in the prior adjudication identical with the one presented in the action in question? (2) Was there a final judgment on the merits? (3) Was the party against whom the plea is asserted a party to or in privity with a party to the prior adjudication? [Citations.]” (Levy v. Cohen (1977) 19 Cal.3d 165, 171; see In re Marriage of Modnick (1983) 33 Cal.3d 897, 904, fn. 6.)

The term “res judicata” is often used as an umbrella term encompassing the principles of claim preclusion and issue preclusion, viewed as two separate aspects of a single doctrine. (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.) “Claim preclusion, the ‘ “ ‘primary aspect’ ” ’ of res judicata, acts to bar claims that were, or should have been, advanced in a previous suit involving the same parties. [Citation.] Issue preclusion, the ‘ “ ‘secondary aspect’ ” ’ historically called collateral estoppel, describes the bar on relitigating issues that were argued and decided in the first suit.” [Citation].) (Id. at p. 824 [quoting Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797].)

Unlike issue preclusion, claim preclusion is directed at “entire causes of action.” (DKN Holdings, supra, 61 Cal.4th at p. 824.) Generally, “[c]laim 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.” (Ibid.) In contrast, “issue 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.)

This res judicata rule is properly raised as a defense on demurrer when all relevant facts “are within the complaint or subject to judicial notice.” (Carroll v. Puritan Leasing Co. (1978) 77 Cal.App.3d 481, 485; see Barker v. Hull (1987) 191 Cal.App.3d 221, 226-227.)

First, the issues raised in the Complaint in this action are the same as those raised in the Prior Action.

In the Prior Action, Plaintiff Davis disputed the December 1, 2021 foreclosure of the Property, sought preliminary and permanent injunctions, as well as damages due to the alleged illegal filing of the recorded Assignments of the Deed of Trust. (Def.’s RJN, Ex. B-C.) On March 18, 2022, Plaintiff amended the Complaint in the Prior Action, adding a cause of action for Declaratory Relief to Quiet Title Against all Defendants, including Defendant Prestige. (Def.’s RJN, Ex. D.) On August 15, 2022, Plaintiff filed a Second Amended Complaint in the Prior Action, alleging fraud and deceit by intentional misrepresentation, negligent misrepresentation, suppression of facts, conspiracy, as well as causes of action for involuntary trust, unjust enrichment, money had and received, conversion, and quiet title. (Def.’s RJN, Ex. E.)

Based on the judicially noticeable documents, the first element of res judicata is satisfied. In both actions, Plaintiff sought to set aside the foreclosure sale and cancel the deed, and alleged that Defendant Prestige engaged in fraudulent or unlawful acts in order to obtain title to the Property. Both actions involved the same loan and deed of trust, the same 2022 foreclosure sale, and the same real property. Moreover, the primary right at issue was the same: Plaintiff’s right to reacquire title to the Property. (See Le Parc Community Assn. v. Workers' Comp. Appeals Bd. (2003) 110 Cal.App.4th 1161, 1170 [“California law defines a ‘cause of action’ for purposes of the res judicata doctrine by analyzing the primary right at stake”].)

The judicially noticeable documents also show that Defendant Prestige was a party – a defendant – to both actions. (Def.’s RJN Exs. C-E.)

Finally, there was a final adjudication on the merits in the Prior Action. On February 12, 2023, the Superior Court sustained U.S. Bank’s Demurrer without leave to amend to the Second Amended Complaint in the Prior Action – specifically noting that Plaintiff’s fraud claims failed to allege facts with the requisite specificity. The court dismissed the Prior Action on the additional ground that Plaintiff had failed to join an indispensable party. (Def.’s RJN, Ex. F.)

Plaintiff appealed the dismissal of the Prior Action, but the appeal was dismissed on April 18, 2023 for Plaintiff’s failure to prosecute. (Def’s RJN, Ex. G.) As a result of this dismissal of the appeal, the ruling in the Prior Action became final. (Code Civ. Proc., § 913; Harsh v. Broad (1961) 198 Cal.App.2d 128, 130 [“Upon appellant's voluntary abandonment of her appeal from [an appealable] order, it became final” and binding on issues in appellant's subsequent motions.].)

Because all three criteria for application of res judicata are satisfied, the Prior Action operates as res judicata to bar the instant Complaint against Defendant Prestige.[2]

The demurrer is sustained in its entirety. The motion to strike is moot. Plaintiff shall not have leave to amend. Plaintiff’s complaint is dismissed with prejudice.

[1] The Court strikes this unauthorized sur-reply. (Code Civ. Proc., § 436.)

[2] Defendant Prestige also argues that res judicata applies based on a small claims action filed by Plaintiff. On January 5, 2022, while the Prior Action was proceeding, Plaintiff filed an action in the small claims division of the Los Angeles Superior Court against Michelle Ghidotti (Ghidotti), Case No. 22STSC00039. (Def.’s RJN, Ex. H.) Ghidotti is principal of Defendant Prestige. (Def.’s RJN, Ex. I.) Plaintiff’s small claims action against Ghidotti resulted in entry of judgment for Ghidotti and a finding that Plaintiff is not owed any money from Ghidotti. (Def.’s RJN, Ex. J.) The Court need not address this other action having already found the Complaint was barred by the Prior Action.