Judge Craig Griffin, Case Hetland v Shellpoint Mortgage Servicing et al 2022-09-12 Tentative Ruling

Judge: Craig Griffin, Case: Hetland v Shellpoint Mortgage Servicing et al, Date: 2022-09-12 Tentative Ruling

The Demurrer filed by Defendant Rushmore Loan Management Services, LLC (here “Rushmore”) is SUSTAINED as to the entire Complaint, without leave to amend.

The Complaint here presents two causes of action (each a “COA”) for: 1. Violation of California Civil Code § 2924.11, and 2. Cancellation of Instrument. The Opposition concedes that COA 2 is not applicable to and not directed to MP. (See ROA 59 at p. 5, lines 24-25 [“this cause of action is not stated against Defendant Rushmore”].) What remains at issue as to Rushmore is thus only COA 1.

COA 1 is barred as a matter of law, based on the dismissal with prejudice in the “Prior Action.” (See RJN Exs. C, D.)

The doctrine of res judicata precludes parties or their privies from relitigating a cause of action that has been finally determined by a court of competent jurisdiction. (Busick v. Workmen's Comp. Appeals Bd. (1972) 7 Cal.3d 967, 972.) Where it applies, “a new lawsuit on the same cause of action is entirely barred.” (Flynn v. Gorton (1989) 207 Cal.App.3d 1550, 1554.) The elements are: (1) A claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding. (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) A “cause of action” for these purposes means the right to obtain redress for a harm suffered, regardless of the specific remedy sought or the legal theory advanced. (Id. at 798.)

Here, the first two elements are clearly met. Both suits were premised on the same facts alleged as HBOR violations: the primary right at issue in both was the right not to be wrongfully deprived of the property, in violation of the HBOR’s requirements. (Complaint ¶¶ 25-32; RJN Ex. C at ¶¶ 63-65.) The Prior Action resulted in a final determination on the merits. (See Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, at 793 [upon dismissal with prejudice of prior lawsuit, the primary right and the breach of duty (together, the cause of action) had been adjudicated in defendant's favor]; Estate of Redfield (2011) 193 Cal.App.4th 1526, 1533 [a dismissal with prejudice is determinative of the issues in the action and precludes the dismissing party from litigating those issues again].) Plaintiff’s Opposition does not dispute and thus effectively concedes that these elements are met.

Plaintiff argues that the third element is absent because Plaintiff is not in privity with his wife, Ms. Hetland, because no damages were sought in the prior action. (ROA 59 at p. 5.) But that is both untrue (see RJN Ex. C at p. 13), and irrelevant. Argument as to the type of relief sought is pertinent to the first element, rather than the third, and as noted above, what is determinative for that element is the primary right upon which the prior claim was based – not the remedy sought therein. (Boeken, supra, 48 Cal.4th at 798.)

For the third element, “privity” does not embrace relationships between persons or entities, but rather it deals with a person's relationship to the subject matter of the litigation. (Cal Sierra Development, Inc. v. George Reed, Inc. (2017) 14 Cal.App.5th 663, 674.) It requires the sharing of “an identity or community of interest” with adequate representation of that interest in the first suit under circumstances such that the nonparty should reasonably have expected to be bound and depends on the fairness of binding one party with the result from an earlier proceeding in which it did not participate. (Id. at 672–673); Central Delta Water Agency v. Department of Water Resources (2021) 69 Cal.App.5th 170, 209.)

Here, Plaintiff’s claim is premised entirely on the rights of Ms. Hetland under the HBOR, as the borrower. (Complaint ¶¶ 1-3, 10-18, 25-28.) The requisite “identity or community of interest” is thus established, under circumstances where it is clearly fair to bind Plaintiff accordingly. Plaintiff’s COA 1 as pled is thus barred as a matter of law.

Plaintiff requests in the Opposition that even if privity is found, leave to amend should be granted “to plead allegations that took place after the dismissal of the prior case that still give rise to claims against this defendant.” (ROA 59 at p. 5.) But the burden is on the plaintiff to show that there is a reasonable possibility that the plaintiff can amend the pleading in a manner which will cure the defect. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) Plaintiff has failed to meet that burden here. Plaintiff has also failed to show how he, rather than Ms. Hetland, would have standing to assert any amended HBOR claim against Rushmore. The Court thus declines the request to grant Plaintiff leave to amend as to Rushmore.

Rushmore’s unopposed Request for Judicial Notice is GRANTED under Ev. Code § 452(c) [for Exs. A, B and E) and §452(d) [for Exs. B and C], as to the existence of and legal effects of the records, but not as to the truth of any disputed facts asserted therein. (Fontenot v. Wells Fargo Bank, NA (2011) 198 Cal.App.4th 256, 264; Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)

Counsel for Rushmore is to give notice of this ruling.