Judge Thomas Falls, Case 22PSCV00197 2023-02-08 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling.

Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

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(1) Defendants; Nationstar Mortgage LLC d/b/a Mr. Cooper (erroneously sued as Nationstar Mortgage, LLC d/b/a Mr. Cooper) (“Nationstar”) and Deutsche Bank National Trust Company as Trustee for Harborview Mortgage Loan Trust Mortgage Loan Pass-Through Certificate, Series 2007-2 (“Deutsche Bank;” collectively, with Nationstar, “Bank Defendants”) DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT

(2) Defendants Mohammad Maaz, Michael Avanesian, and JT Legal Group, APC (collectively “the Attorney Defendants”) DEMURRER TO PLAINTIFF’S ENTIRE FIRST AMENDED COMPLAINT

(1) Defendants; Nationstar Mortgage LLC d/b/a Mr. Cooper (erroneously sued as Nationstar Mortgage, LLC d/b/a Mr. Cooper) (“Nationstar”) and Deutsche Bank National Trust Company as Trustee for Harborview Mortgage Loan Trust Mortgage Loan Pass-Through Certificate, Series 2007-2 (“Deutsche Bank;” collectively, with Nationstar, “Bank Defendants” or “Non-Attorney Defendants”) DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT is SUSTAINED. Leave to amend is to be determined.

(2) Defendants Mohammad Maaz, Michael Avanesian, and JT Legal Group, APC (collectively “the Attorney Defendants”) DEMURRER TO PLAINTIFF’S ENTIRE FIRST AMENDED COMPLAINT is SUSTAINED. Leave to amend is to be determined.

The court requests Plaintiff to be prepared to explain how it intends to cure the deficiencies and what legal authority would support the amended allegations that form each cause of action.[1]

This is a wrongful foreclosure case. Plaintiff ROBERT PAYNE alleges the following against Defendants: Plaintiff alleges that The Bank Defendants engaged in “dual track foreclosures” wherein a lender forecloses on a property despite being in discussions over a loan modification to save the home, and that the Attorney Defendants assisted and colluded with Bank Defendants to “dual track” Plaintiff.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain (“uncertain” includes ambiguous and unintelligible); (g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP §411.35 or (i) by §411.36. CCP §430.10. Accordingly, a demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. CCP §430.30(a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318.

The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94); it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914. Moreover, “facts appearing in exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence.” (Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1626-1627.)

The court’s ruling will first begin with a discussion of Bank Defendants’ demurrer, followed by Attorney Defendants’ demurrer.

Bank Defendants’ primary argument is that this suit violates the terms of a previous agreement between the parties. For reasons to be discussed below, even that is true, the court cannot sustain the demurrer on said grounds as it goes beyond the scope of the pleading.

On May 16, 2019, Plaintiff filed suit against the named Defendants in the case of KC070290 (“Prior Litigation”).[3] Part of the Settlement Agreement in that Prior Litigation included an explicit Covenant Not to Sue whereby “Plaintiff(s) agree not to cause claims to be made in any court or other forum against the Releases for any matter within the scope of the releases contained herein.” (Demurrer p. 4, See Agreement). Released matters are defined in the Settlement Agreement as matters that “causes of action, lawsuits, . . . controversies . . . including, without limitation, the claims made or which could have been made by Plaintiff arising from the origination or servicing of the Loan as well as in any way related to the Property . . . .” (Demurrer pp. 3-4) (emphasis added).[4]

Here, the allegations are based on the handling of the Loan such that it could have been brought in the Prior Litigation. Accordingly, the complaint falls within the scope of the release contained in the Settlement Agreement. Therefore, this action violates the covenant not to sue.

To the extent that Plaintiff has filed an opposition, it appears to argue that the Settlement Agreement was procured by fraud and that most of the allegations occurred after the Settlement Agreement. Absent details to explain how so—especially considering the FAC itself delineates allegations regarding the formation of the Loan—the court finds the argument unclear and therefore inconsequential.

Notwithstanding the foregoing, even if Plaintiff cites the Settlement Agreement in his FAC (¶56), Plaintiff has not pleaded the settlement agreement’s exact terms nor provided a copy of such to allow the court to go beyond the pleadings. Effectively, as it well established that a demurrer tests the pleading alone and not the evidence or other extrinsic matters which do not appear on the face of the pleading or cannot be properly inferred from the factual allegations of the complaint, the court cannot sustain the demurrer on the ground that it violates the Settlement Agreement.

Next, the court turns to the res judicata defense. For reasons to be discussed below, the court determines that this argument is sufficient to sustain the demurrer.

Res judicata, or claim preclusion, is a doctrine that “describes the preclusive effect of a final judgment on the merits.” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) The doctrine bars the relitigation of a cause of action that previously was adjudicated or could have been litigated in another proceeding between the same parties or parties in privity with them. (Federation of Hillside & Canyon Assns. v. City of Los Angeles (2004) 126 Cal.App.4th 1180, 1202.) Simply put, “if a plaintiff prevails in an action, the cause is merged into the judgment and may not be asserted in a subsequent lawsuit; a judgment for the defendant serves as a bar to further litigation of the same cause of action.” (Mycogen Corp., supra, 28 Cal.4th at p. 897.) Accordingly, by precluding piecemeal litigation, the doctrine promotes judicial economy as it “seeks to curtail multiple litigation causing vexation and expense to the parties and wasted effort and expense in judicial administration.” (Mycogen Corp., supra, 28 Cal.4th at p. 897, quoting 7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 280, p. 820) (italics original). To apply, the following elements must be satisfied: “(1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding or parties in privity with them were parties to the prior proceeding.” (Id.)

Though neither the FAC nor original complaint render much detail if any detail about the prior litigation and the settlement agreement such that the defense of res judicata may not be raised by demurrer unless such “former judgment is properly pleaded in a complaint,” the court finds an exception as it may take judicial notice of the former case. (See Weil v. Barthel (1955) 45 Cal.2d 835, 837 [“When a former judgment is properly pleaded in a complaint, such judgment may be considered by the trial court in determining whether it is res judicata of a plaintiff's alleged cause of action.”].) More specifically, it has been held that, in the interests of justice, the court make take judicial notice of proceedings in other cases in the same court such that the court may look at and consider the records in the first action. (See Christiana v. Rose (1950) 100 Cal.App.2d 46, 52.)

Here, case KC070290 indicates that the exact parties are involved (Nationstar and Plaintiff); exact claims are involved (wrongful foreclosure about the same property arising from Defendant’s alleged “dual tracking”);[5] there was a final judgment in the prior litigation (dismissal of bank Defendants with prejudice);[6] and there is privity between the parties. Accordingly, all elements of res judicata are established.

Therefore, as the court may reference the Prior Litigation and the Prior Litigation resulted in a final judgment, the court SUSTAINS the demurrer on the ground that Plaintiff is barred from re-litigating the matter.

As for leave to amend, that should be granted when there is a reasonable possibility that a plaintiff can cure a pleading’s defects. Here, however, as the only way to cure the pleading would be somehow expunge the Prior Litigation, the court finds that there is no possibility that Plaintiff can cure the defects. Of course, in the interest of justice, the court will hear from Plaintiff as to the issue of leave to amend.[7]

Attorney Defendants demur to the entirety of the FAC on the grounds that all actions against it are time-barred because actions stemming from attorney-based services carry a one-year statute of limitations.

CCP section 340.6 provides the following statute of limitations: “An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.”

Here, the causes of action against the Attorney Defendants are breach of contract based upon the retainer agreement; professional negligence based upon upon breach of duty to provide competent representation; breach of fiduciary duty based upon representation; fraud based upon providing competent representation; and rescission of the Settlement Agreement.[8] More specifically, the FAC alleges that “[a]s a proximate result of Attorney Defendants’ failure to provide competent representation, and to properly prepare for trial in the Wrongful Foreclosure action, as well as, the Unlawful Detainer action, Plaintiff was defenseless in attempting to negotiate a reasonable settlement by curing the default, or by buying back the Subject Property, through new financing. Attorney Defendants’ failures include, but are not limited to, 1. Their failure to file along with their Complaint an Application to obtain a Temporary Restraining Order and Preliminary Injunction, to enjoin the filing of an Unlawful Detainer action, 2. Their failure to conduct discovery and prepare for trial in the Wrongful Foreclosure matter, 3. Their failure to stay the Unlawful Detainer action, 4. Their failure to consolidate the two actions, 5. Their failure to conduct discovery and prepare for trial in the Unlawful Detainer action, 6. Their failure to properly guide Plaintiff through the attempt to settle the matter, and 7. Their failure to hold Non-Attorney Defendants to their agreements.” (FAC ¶135) (emphasis added). Simply put, the gist of the causes of action against Attorney Defendants are based upon legal representation such that CCP 340.6 governs.[9] Accordingly, claims against Attorney Defendants must have been filed by July 2020 because that is one year from the alleged harm of the July 2019 eviction,[10] but the complaint was not filed until March 2, 2022, which is about two years too late.

To the extent that Plaintiff attempts to circumvent the statute of limitations by arguing (promissory) fraud,[11] that argument also fails because the “gravamen” of the allegations—as indicated above—are imbedded in malpractice. (See Austin, fn. 8, 21 Cal.App.5th at p. 585, quoting Carter v. Prime Healthcare Paradise Valley LLC (2001) 198 Cal.App.4th 396, 412) (emphasis added) [To determine which statute of limitations governs a given cause of action, a court must “identify the nature of the cause of action, i.e., the ‘gravamen’ of the cause of action.’”].)

Therefore, as the action pertains to the attorney services, the action is time barred. Therefore, the entirety of the demurrer is sustained. If Plaintiff can offer proposed amendments as to how it can plead an actual fraud cause of action, the court will grant leave to amend.

Based on the foregoing, both demurrers are sustained. As to the action against Bank Defendants’ demurrer appears barred by res judicata, leave to amend is TBD. As to the action against Attorney Defendants appears barred by a statute of limitations, leave to amend is TBD.

Plaintiff is to be prepared with the specific amendments it intends to make and the legal authority supporting its claim. If Plaintiff fails to do, the court will deny leave to amend, meaning the entire case is dismissed as to both Defendants.

[1] The burden of proving a reasonable possibility that an amendment can cure the defect is squarely on the plaintiff. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In order to meet this burden, a plaintiff must submit a proposed amended complaint. (Total Call Internat. Inc. v. Peerless Ins. Co. (2010) 181 Cal.App.4th 161, 166.) The plaintiff must demonstrate how the complaint can be amended to state a cause of action, and such showing may be made to the trial court. (Taxpayers for Improving Public Safety v. Schwarzenegger (2009) 172 Cal.App.4th 749, 781.) Therefore, leave to amend a complaint is properly denied in sustaining a demurrer where the plaintiff does not suggest how the complaint might be amended to state a cause of action. (Grossmont Union High School Dist. V. State Dept. of Education (2008) 169 Cal.App.4th 869, 875-876.)

[2] The court notes that the Opposition does not offer a meaningful analysis nor citation to case law. Rather, the opposition merely refers to the court to the complaint for various allegations, inherently leaving the court to create Plaintiff’s arguments, which is improper for a court to do.

[3] California Rules of Court 3.300 and Local Rule 3.300, subdivision b state that "Whenever a party in a civil action knows or learns that the action or proceeding is related to another action or proceeding pending, dismissed, or disposed of by judgment in any state or federal court in California, the party must serve and file a Notice of Related Case." Here, the court docket does not reveal that Plaintiff has filed a notice of related case.

[4] It is unclear where the Settlement Agreement can be found as neither the demurrer, the declaration of counsel, nor the request for judicial notice appear to include to full text of the settlement agreement, even though the agreement is said to be “attached hereto as Exhibit 1 and incorporated herein by reference.” (Demurrer p. 3.)

[5] See also Burdette v. Carrier Corp (2008) 158 Cal.App.4th 1668, 1674-1675 [“Res judicata bars the relitigation not only of claims that were conclusively determined in the first action, but also matter that was within the scope of the action, related to the subject matter, and relevant to the issues so that it could have been raised. [Citation]. 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 litigable.”]

[6] See Wouldridge v. Burns (1968) 265 Cal.App.2d 82, 84 [“It is settled law that the dismissal of an action, With prejudice, is a bar to any future action on the same subject matter . . . A dismissal with prejudice of an action is a bar to the bringing of the same cause of action thereafter and precludes the plaintiff from litigating that issue again. [Citation]. Otherwise there would be no meaning to the ‘with prejudice’ feature.”]

[7] Based thereon, the court need not address Bank Defendant’s other arguments pertaining to statute of limitations, standing, and failure to state sufficient facts to support the causes of action.

[8] As Attorney Defendants were not a party to the Settlement Agreement, it is unclear how there is a viable cause of action against them whereas the remedy seems more appropriate against Bank Defendants.

[9] See also Austin v. Medicis (2018) 21 Cal.App.5th 577 for similar facts wherein the appellate court held that a claim against attorney for breach of contract, arising out of representation in underlying criminal case, was a claim for violation of professional obligation and thus was governed by statute of limitations for attorney malpractice and related claims, where gist of action was that attorney did not provide the full range of professional services for which he was paid, and that those he did perform were not of the quality or skill for which he was paid.

[10] And Plaintiff concedes the statute of limitations began July 2019, which but further support Attorney Defendant’s contention. (Opp. p. 5.)

[11] Though the FAC is not clear as to the exact form of fraud, considering that the allegations are about Attorney Defendants’ alleged representations to competently represent Plaintiff to avoid foreclosure but that they had no intentions of keeping that promise, the FAC sounds more in promissory fraud than actual fraud. (See Austin, supra, 21 Cal.App.5th at p. 588 [“Promissory fraud is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.”].)