Judge Michael P. Linfield, Case 23STCV00752 2023-04-21 Tentative Ruling

Judge: Michael P. Linfield, Case: 23STCV00752, Date: 2023-04-21 Tentative Ruling

Case Number: 23STCV00752 Hearing Date: April 21, 2023 Dept: 34

SUBJECT: Demurrer and Motion to Strike

Moving Party: Defendants U.S. Bank, National Association; Rushmore Loan Management Services LLC; and Attorney Lender Services, Inc.

Resp. Party: None

SUBJECT: Demurrer

Moving Party: Defendants Southside Neighborhood Stabilization 2021-7 LP and Southside Community Development & Housing Corporation.

Resp. Party: None

This case (Case No. 23STCV00752) is STAYED in its entirety pending the outcomes of Case Nos. 21SMCV00965, 21STCV32101, and 22SMUD00173.

U.S. Bank Defendants’ Demurrer is DENIED without prejudice.

Southside Defendants’ Demurrer is DENIED without prejudice.

U.S. Bank Defendants’ Motion to Strike is DENIED without prejudice.

The Court schedules a Status Conference in this case in one year, on April 22, 2024 at 8:30 am. The parties are to file a Joint Status Conference Report 5 court days prior to the status conference hearing. Should the issues that caused this case to be stayed be resolved prior to then, any party may move ex parte for the Court to hold the Status Conference on an earlier date.

PRELIMINARY COMMENTS:

This demurrer is unopposed, yet plaintiff has not indicated that he is planning on filing an amended complaint. The Court finds such silence to be troubling.

The Court recognizes that Plaintiff filed this complaint in pro per and that to the pro per litigant, “law and motion proceedings . . . are baffling devices. (Bruno v. Superior Court (1990) 219 Cal.App.3d 1359, 1363 [cleaned up].) Nonetheless, as indicated below, Plaintiaff is not new to the Court system, having been involved in numerous other cases involving the same issues as presented here.

If plaintiff believed that the demurrer should be overruled, he should have filed an opposition. If plaintiff agreed that the complaint needed to be amended or should be stayed, he should have so agreed when meeting-and-conferring with defendants. Had he done so, the court and its staff would not have had to spend the time analyzing a demurrer to a complaint that even plaintiff agrees must be stayed or amended.

BACKGROUND:

I. Preliminary Note on Background Issues

This case arises from transactions involving a single piece of real property: a single-family residence located at 2096 Ridge Point Drive, Los Angeles, California 90049.

As discussed below, the claims and issues underlying this case appear to have already been litigated multiple times by the same parties across multiple cases. Due to the complex history of this case, the Court recounts, case by case, the important procedural history prior to beginning discussion of the two demurrers and one motion to strike at hand.

For the sake of clarity, the Court avoids using terms like “Plaintiff,” “Defendant,” “Cross-Complainant,” and “Cross-Defendant.” The Court uses the term “Subject Property” whenever it refers to the real property located at 2096 Ridge Point Drive, Los Angeles, California 90049.

Finally, the Court notes that there is some confusion across the filings about whether the name of one of the parties is “Leon Fingergut” or “Leon Fingerhut”. The Court uses “Leon Fingerhut”, as that appears to be the party’s name in instances when he submitted filings in propria persona.

II. Background for Case No. 20STCV31193

On August 17, 2020, Leon Fingerhut filed his Complaint in Case No. 20STCV31193 against U.S. Bank, National Association; Rushmore Loan Management Services, and Attorney Lender Services, Inc. The causes of action were for: (1) breach of contract; (2) violation of California Civil Code section 2924.17; and (3) unfair competition in violation of Business and Professions Code section 17200, et seq.

At the time this Complaint was filed, Leon Fingerhut had already filed for Chapter 13 bankruptcy, a Notice of Trustee’s Sale had been recorded against the Subject Property, and Leon Fingerhut was at risk of foreclosure regarding the Subject Property.

On January 15, 2021, Leon Fingerhut filed his First Amended Complaint. The causes of action were for: (1) breach of contract; (2) violation of Civil Code section 2924.17; (3) violation of Civil Code section 2923.6; (4) violation of Civil Code section 2923.7; (5) negligence; and (6) unfair competition in violation of Business and Professions Code section 17200, et seq.

On June 9, 2021, by request of Leon Fingerhut, the Clerk’s Office dismissed without prejudice the entire action.

On July 23, 2021, the Court: (1) found Case Nos. 20STCV31193 and 21SMCV00965 to be related; (2) designated Case No. 20STCV31193 as the lead case; and (3) noted that Case No. 20STCV31193 remains dismissed.

This dismissed case is assigned to the Honorable Lia Martin.

III. Background for Case No. 21SMCV00965

On May 26, 2021, Leon Fingerhut filed his Complaint against: (1) U.S. Bank, National Association; (2) Rushmore Loan Management Services, LLC; and (3) Attorney Lender Services, Inc. The causes of action were for: (1) breach of contract; (2) violation of Civil Code section 2924.17; (3) violation of Civil Code section 2923.6; (4) violation of Civil Code section 2923.7; (5) negligence; and (6) unfair competition in violation of Business and Professions Code section 17200, et seq. The allegations in this Complaint were nearly (if not completely) identical to those in the First Amended Complaint in Case No. 20STCV31193.

As indicated above in §II, on July 23, 2021, the Court: (1) found Case Nos. 20STCV31193 and 21SMCV00965 to be related; (2) designated Case No. 20STCV31193 as the lead case; and (3) noted that Case No. 20STCV31193 remains dismissed.

On April 29, 2022, the Court found that Case No. 21STCV32101 and 21SMCV00965 are not related within the meaning of California Rules of Court, rule 3.300.

On March 16, 2023, the Court issued its Order on Rushmore Loan Management Services, LLC’s Motion for Summary Judgment, or in the Alternative, Summary Adjudication. The Order granted summary adjudication on all eleven issues considered.

On April 18, 2023, the Court dismissed without prejudice Attorney Lender Services, Inc. from Case No. 21STCV32101.

This case is ongoing. It is assigned to the Honorable Lia Martin.

IV. Background for Case No. 21STCV32101

On August 3, 2021, Attorney Lender Services, Inc. conducted a non-judicial foreclosure sale of the Subject Property.

On August 30, 2021, Gelena Gutlin filed her Verified Complaint against: (1) U.S. Bank, National Association; (2) Rushmore Loan Management Services, LLC; and (3) Attorney Lender Services, Inc. The causes of action were for: (1) quiet title; (2) cancellation of instruments; (3) reformation of deed of trust; (4) wrongful foreclosure; (5) slander of title; and (6) declaratory and injunctive relief.

On September 20, 2021, Attorney Lender Services, Inc. conveyed title through a Trustee’s Deed Upon Sale to the Subject Property to Southside Neighborhood Stabilization 2021-7 LP. On October 4, 2021, the Trustee’s Deed Upon Sale was recorded.

On January 14, 2022, Gelena Gutlin filed her Verified First Amended Complaint against: (1) U.S. Bank, National Association; (2) Rushmore Loan Management Services, LLC; (3) Attorney Lender Services, Inc.; (4) Southside Neighborhood Stabilization 2021-7 LP; and (5) Southside Community Development & Housing Corporation. The causes of action were for: (1) quiet title; (2) cancellation of instruments; (3) reformation of deed of trust; (4) wrongful foreclosure; (5) slander of title; (6) declaratory and injunctive relief; (7) unfair business practices; (8) fraud; and (9) negligent misrepresentation.

On April 29, 2022, the Court found that Case Nos. 21STCV32101 and 21STCV00965 are not related within the meaning of California Rules of Court, rule 3.300.

On July 6, 2022, Gelena Gutlin amended her Verified First Amended Complaint to substitute Doe 3 with Leon Fingerhut.

On August 19, 2022, Leon Fingerhut filed his Answer to the Verified First Amended Complaint.

On August 23, 2022, the Court found that Case Nos. 21STCV32101 and 22SMUD00173 are related and designated Case No. 21STCV32101 as the lead case. The Court noted that the cases were not consolidated.

On August 23, 2022, the Court sustained, with leave to amend, a demurrer to the Verified First Amended Complaint. The Court also expunged the lis pendens Gelena Gutlin placed on the Subject Property.

On September 9, 2022, Gelena Gutlin filed her Second Amended Complaint against the same defendants and on the same causes of action as in her prior pleading.

On December 2, 2022, the Court sustained, without leave to amend, the demur to the Second Amended Complaint, finding that Gelena Gutlin’s factual allegations were insufficient to support her causes of action. The Court dismissed without prejudice the Second Amended Complaint.

On February 28, 2023, the Court related cases Case Nos. 23STCV00752 and 21STCV32101. The Court also found that Case Nos. 21STCV32101 and 22SMUD00173 were effectively unrelated after a prior judicial officer working on these cases accepted a peremptory challenge in Case No. 22SMUD00173.

This case is currently on appeal. It is assigned to the Honorable Michael L. Stern.

V. Background for Case No. 22SMUD00173

On February 23, 2022, Southside Neighborhood Stabilization 2021-7 filed its Verified Complaint for Unlawful Detainer against Leon Fingerhut and Gelena Gutlin. The cause of action arose from the ongoing dispute about the Subject property.

On August 23, 2022, the Court found that Case Nos. 21STCV32101 and 22SMUD00173 are related and designated Case No. 21STCV32101 as the lead case. The Court noted that the cases were not consolidated.

On December 2, 2022, the Court granted summary judgment on the unlawful detainer case in favor of Southside Neighborhood Stabilization 2021-7 and against Leon Fingerhut and Gelena Gutlin. The Court entered judgment for possession of the Subject Property against Leon Fingerhut and Gelena Gutlin, as well as all occupants who have been served pursuant to Code of Civil Procedure section 415.46 and defaulted.

As indicated above in § IV, on February 28, 2023, the Court related cases Case Nos. 23STCV00752 and 21STCV32101. The Court also found that Case Nos. 21STCV32101 and 22SMUD00173 were effectively unrelated after a prior judicial officer working on these cases accepted a peremptory challenge in Case No. 22SMUD00173.

This case is currently on appeal. It is assigned to the Honorable Alison Mackenzie.

VI. Background for Case No. 23STCV00752

On January 13, 2023, Plaintiff Leon Fingerhut filed his Complaint against Defendants Southside Neighborhood Stabilization 2021-7 LP; Southside Community Development & Housing Corporation; U.S. Bank, National Association; Rushmore Loan Management Services LLC; and Attorney Lender Services, Inc. The causes of action listed in the Complaint arise from transactions involving real property.

On December 2, 2022, in Case No. 21STCV32101, the Court dismissed without prejudice the Second Amended Complaint. That case is currently being appealed.

As indicated above, on February 28, 2023, the Court found related cases Case Nos. 23STCV00752 and 21STCV32101. The Court also found that Case Nos. 21STCV32101 and 22SMUD00173 were effectively unrelated after a prior judicial officer working on these cases accepted a peremptory challenge in Case No. 22SMUD00173.

On March 9, 2023, in this case, Defendants U.S. Bank National Association, Rushmore Loan Management Services LLC, and Attorney Lender Services, Inc. filed: (1) Demurrer; and (2) Motion to Strike. These defendants concurrently filed their Request for Judicial Notice.

Also on March 9, 2023, in this case, Defendants Southside Neighborhood Stabilization 2021-7 LP and Southside Community Development & Housing Corporation filed their Demurrer. These defendants concurrently filed: (1) Declaration of Marshall J. August; and (2) Request for Judicial Notice (submitted in multiple volumes).

No oppositions, replies, or other responses have been filed to the Demurrers or the Motion to Strike in this case.

This case is assigned to the undersigned judicial officer, the Honorable Michael P. Linfield.

ANALYSIS:

I. Preliminary Note

For the ease of analysis, the Court first considers the Demurrers concurrently and then considers the Motion to Strike separately. The Court also uses the term “Defendants” when discussing both sets of defendants. When necessary and appropriate, the Court distinguishes the two sets of defendants by using the terms “U.S. Bank Defendants” and “Southside Defendants.”

II. Request for Judicial Notice

A. U.S. Bank Defendants’ Request for Judicial Notice

U.S. Bank Defendants request that the Court take judicial notice of various items. For the reasons discussed later in this Order, the Court DENIES as irrelevant the request for judicial notice.

B. Southside Defendants’ Request for Judicial Notice

Southside Defendants request that the Court take judicial notice of various items. For the reasons discussed later in this Order, the Court DENIES as irrelevant the request for judicial notice.

III. Demurrers

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to challenge the truthfulness of the complaint; and for the purpose of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true, however improbable they may be. (Code Civ. Proc., §§ 422.10, 589.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A demurrer is brought under Code of Civil Procedure section 430.10 (grounds), section 430.30 (as to any matter on its face or from which judicial notice may be taken), and section 430.50(a) (can be taken to the entire complaint or any cause of action within).

A demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted. A demurrer for uncertainty (Code of Civil Procedure section 430.10, subdivision (f)), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Id.)

A. Discussion

Although they do not use the terms “res judicata” (i.e., claim preclusion) or “collateral estoppel” (i.e., issue preclusion), Defendants begin their Demurrers by arguing that this case should not be allowed to proceed because these are the same claims, litigated by the same parties, involving the same piece of property, using the same arguments. (U.S. Bank Defendants’ Demurrer, p. 4:3–5; Southside Defendants’ Demurrer, pp. 11–13.) As defined below, Defendants are in essence arguing that res judicata applies here.

As claim preclusion and issue preclusion are threshold issues, the Court considers them before reaching the individual arguments on each cause of action.

1. Claim Preclusion and Issue Preclusion

a. Legal Standard

“Res judicata” is a doctrine that exists both in California statute and in California common law.

“The effect of a judgment or final order in an action or special proceeding before a court or judge of this state, or of the United States, having jurisdiction to pronounce the judgment or order, is as follows:

(1) “In case of a judgment or order against a specific thing, or in respect to the probate of a will, or the administration of the estate of a decedent, or in respect to the personal, political, or legal condition or relation of a particular person, the judgment or order is conclusive upon the title to the thing, the will, or administration, or the condition or relation of the person.

(2) “In other cases, the judgment or order is, in respect to the matter directly adjudged, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing under the same title and in the same capacity, provided they have notice, actual or constructive, of the pendency of the action or proceeding.”

(Code Civ. Proc., § 1908, subd. (a)(1)–(2).)

“As generally understood, the doctrine of res judicata gives certain conclusive effect to a former judgment in subsequent litigation involving the same controversy. The doctrine has a double aspect. In its primary aspect, commonly known as claim preclusion, it operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. In its secondary aspect, commonly known as collateral estoppel, the prior judgment operates in a second suit based on a different cause of action as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action. The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are the same: (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.” (People v. Barragan (2004) 32 Cal.4th 236, 252–53 [cleaned up], emphases in original.)

“Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. ‘Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief.’” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897, quotations and internal quotation marks omitted.)

“To determine whether two proceedings involve identical causes of action for purposes of claim preclusion, California courts have consistently applied the ‘primary rights’ theory. 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 action in the legal sense of the term.” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797–98 [cleaned up].)

“In 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. 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. As we explained in Slater v. Blackwood, supra, 15 Cal.3d at page 795: ‘[T]he ‘cause of action’ is based upon the harm suffered, as opposed to the particular theory asserted by the litigant. Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief. ‘Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different legal ground for relief.’ Thus, under the primary rights theory, the determinative factor is the harm suffered. When two actions involving the same parties seek compensation for the same harm, they generally involve the same primary right.” (Boeken, supra, at 798 [cleaned up], emphases in original.)

b. Discussion

There have been (so far as the Court is aware) five cases regarding the Subject Property: Case Nos. 20STCV31193, 21SMCV00965, 21STCV32101, 22SMUD00173, and 23STCV32101.

The immediate questions at hand are: (1) whether any claims or issues raised in the present action are identical to a claim or issue litigated in any of the prior proceedings; (2) whether the prior proceeding(s) resulted in a final judgment(s) on the merits; and (3) whether the party against whom the doctrine is being asserted was party or in privity with a party to the prior proceeding. (People v. Barragan, supra, at 252–53.)

i. Certain Claims or Issues in the Present Action are Identical to Claims and Issues Litigated in Prior Proceedings

There are certain claims and issues in the present action that are identical to claims and issues that have been litigated in prior proceedings.

For example, the exact same fact pattern, causes of action (in the colloquial sense of theories of damages), and legal arguments have been made in the present case (Case No. 23STCV00752) as have been made in Case No. 21STCV32101. It seems likely that these two cases, which are currently related, are based upon the same cause of action (in the res judicata sense of that term), and it is quite likely that the other cases will also be based upon the same cause of action.

However, because of issues with other parts of the test for claim and issue preclusion, the Court does not reach at this time which of the cases the “primary rights” doctrine is satisfied. Put differently, the Court does not reach which of the cases contain the same “cause of action” (in the res judicata sense of that term).

ii. There are No Final Judgments on the Merits

There have not yet been any final judgments on the merits in any of the prior cases in a manner that has a preclusive effect on this litigation.

The first case (Case No. 20STCV31193) was dismissed without prejudice on June 9, 2021. Unlike a case that is dismissed with prejudice, a case dismissed without prejudice is not considered to be a final judgment on the merits. (See, for example, Wells v. Marina City Props., Inc. (1981) 29 Cal.3d 781, 789.) Thus, there can be no preclusive effect from Case No. 20STCV31193.

The second case (Case No. 21SMCV00965) is ongoing. Although summary judgment has been granted, the final order of dismissal has not yet been issued, and the next hearing in that matter is scheduled for June 29, 2023. Thus, there is not yet a final judgment on the merits in this case. (See, for example, Thompson v. Ioane (2017) 11 Cal.App.5th 1180, 1189.)

The third and fourth cases (Case Nos. 21STCV32101 and 22SMUD00173) are currently on appeal. Until the appeal has been decided, there are no final judgments on the merits in these cases. (See, for example, Parkford Owners for a Better Community v. Windeshausen (2022) 81 Cal.App.5th 216, 226–30.) The appropriate action for the Court to take in this situation is for the Court to stay the current litigation until the appeals have concluded so that the Court may determine whether there are final judgments on the merits in those cases. (Id. at 223.)

Due to the pending litigation in the other cases (Case Nos. 21SMCV00965, 21STCV32101, and 22SMUD00173), the Court STAYS Case No. 23STCV00752.

iii. Leon Fingerhut was a Party in the Prior Proceedings

Leon Fingerhut is a party in all five of the cases discussed. Thus, he would be bound by claim and issue preclusion, if those doctrines apply based on the results of the other parts of test for res judicata.

2. The Merits of the Demurrers

The Court does not reach the merits of the Demurrers because the Court is staying this case until there are final judgments on the merits of Case Nos. 21SMCV00965, 21STCV32101, and 22SMUD00173.

B. Conclusion

This case (Case No. 23STCV00752) is STAYED in its entirety pending the outcomes of Case Nos. 21SMCV00965, 21STCV32101, and 22SMUD00173.

U.S. Bank Defendants’ Demurrer is DENIED without prejudice.

Southside Defendants’ Demurrer is DENIED without prejudice.

IV. Motion to Strike

For the same reasons described above, U.S. Bank Defendants’ Motion to Strike is DENIED without prejudice.