Mohsenzadeh v. JPMorgan Chase Bank et al, No. 3:2014cv02340 - Document 8 (S.D. Cal. 2015)
Court Description: ORDER Granting 4 Motion to Dismiss. Plaintiff's complaint is Dismissed as to both Defendants with prejudice. Signed by Judge Barry Ted Moskowitz on 3/25/2015. (rlu)
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Mohsenzadeh v. JPMorgan Chase Bank et al Doc. 8 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 ZAFAR MOHSENZADEH, an individual, Case No. 14cv2340 BTM-DHB ORDER GRANTING MOTION TO DISMISS Plaintiff, 17 v. JPMORGAN CHASE BANK, N.A., SUCCESSOR BY MERGER TO Chase Home Finance, LLC, a New York Corporation; NDEX WEST LLC, a California limited liability company; and DOES 1 through 50, inclusive, 18 Defendants. 13 14 15 16 19 20 21 22 23 24 25 This Motion to Dismiss arises out of the foreclosure of Plaintiff Zafar Mohsenzadeh’s mortgaged condominium and parcel located at 16907 New Rochelle Way, Unit. 86, San Diego CA 92127 (“the property”) by Defendants JPMorgan Chase Bank, N.A. (“JPMC”), the mortgage servicer and beneficiary, and NDEX West LLC (“NDEX”), the foreclosure trustee. For the reasons set forth below, the motion is GRANTED. 26 27 28 I. BACKGROUND According to the Complaint (“Compl.”), Plaintiff executed a first 1 14cv2340 BTM-DHB Dockets.Justia.com 1 position mortgage and deed of trust with Defendant JPMC on October 22, 2 2006 (Compl. ¶ 8). Having been adversely effected by the financial 3 downturn in 2010, Plaintiff contacted JPMC and applied for a loan 4 modification (Compl. ¶ 9). Due to JPMC’s alleged mishandling of Plaintiff’s 5 paper work, the process was delayed and on June 23, 2011, JPMC and 6 NDEX recorded a Notice of Default against the property (Compl. ¶¶ 11-12). 7 On April 17, 2012, JPMC sent Plaintiff notice that he qualified for a loan 8 modification if he complied with an accompanying Trial Period Plan (“TPP”) 9 setting out a 3-month payment schedule commencing on June 1, 2012 and 10 ending August 1, 2012 (Compl. ¶¶ 14-15). Plaintiff notified JPMC that he 11 accepted the TPP’s terms and made timely payments accordingly, which 12 JPMC accepted (Compl. ¶¶ 19-21). Plaintiff alleges that following his full 13 performance under the TPP, JPMC evaded his inquiries regarding the next 14 steps in securing the permanent loan modification and perpetually delayed 15 its approval, thus failing to perform under the TPP. On August 28, 2013, 16 NDEX filed a Notice of Trustee’s Sale scheduling a September 19, 2013 17 sale date, but JPMC then sent a notice dated September 23, 2013 informing 18 Plaintiff that his loan modification application was still pending review 19 (Compl. ¶¶ 29-31). A trustee’s sale of the property was again scheduled for 20 August 25, 2014, the same day the present action was filed in the Superior 21 Court of California, County of San Diego (“state court”) (Compl. ¶ 27). 22 However, as of the action’s removal to federal court, the parties’ document 23 filings do not confirm whether the property has in fact been foreclosed and 24 sold through a trustee’s sale. 25 26 27 28 II. PROCEDURAL HISTORY On August 22, 2012, Plaintiff filed a voluntary petition for Chapter 7 bankruptcy. On November 20, 2012, the Bankruptcy Court issued an order 2 14cv2340 BTM-DHB 1 discharging Plaintiff as a debtor and closed the case on March 26, 2013. 2 Though Plaintiff disclosed his interest in the property on his bankruptcy 3 schedule, he failed to disclose facts supporting his foreclosure related 4 claims against the Defendants arising from the alleged breach of the TPP. 5 On September 19, 2013, Plaintiff, acting pro per, filed a complaint in state 6 court (“First Action”) raising six statutory claims arising out of Defendants’ 7 recording of a Notice of Default against the property on June 23, 2011, 8 allegedly without complying with all of the requirements of California Civil 9 Code (“Cal. Civ. Code”) sections 2923.5 and 2924 et seq. The state court 10 dismissed the First Action with prejudice on June 10, 2014 as to JPMC and 11 June 20, 2014 as to NDEX upon sustaining JPMC’s demurrer. On August 12 25, 2014, Plaintiff, now represented by counsel, filed the present action, 13 again in state court (“Second Action”). On October 3, 2014, Defendants 14 removed to this Court. 15 16 III. ANALYSIS Defendants move to dismiss the Second Action on grounds of: (1) res 17 judicata; (2) the Rooker-Feldman doctrine; (3) judicial estoppel; and (4) Rule 18 12(b)(6) for failure to state claims of breach of contract, promissory estoppel, 19 fraud under Cal. Civ. Code § 1572, and violations of §§ 2923.6(c), 2924.12, 20 and California Business & Professions Code (“Cal. Bus. & Prof. Code”) § 21 17200, et seq. The Court finds that Plaintiff’s present claims are precluded 22 by the state court’s dispositive ruling on the merits in the First Action and 23 judicial estoppel as to the Bankruptcy Court’s discharge order. Therefore, 24 the Court need not reach Defendants’ remaining arguments. 25 The doctrine of res judicata, also known as claim preclusion, bars 26 claims for relief where there is (1) an identity of claims, (2) a final judgment 27 on the merits, and (3) privity between parties. TahoeSierra Pres. Council, 28 Inc. v. Tahoe Reg’l Planning Agency, 322 F.3d 1064, 1077 (9th Cir. 2003). 3 14cv2340 BTM-DHB 1 It also applies to those claims which could have been litigated as part of the 2 prior cause of action. See Clark v. Yosemite Cmty. Coll. Dist., 785 F.2d 781, 3 786 (9th Cir. 1986). A plaintiff “cannot avoid the bar of res judicata merely 4 by alleging conduct by the defendant not alleged in his prior action or by 5 pleading a new legal theory.” McClain v. Apodaca, 793 F.2d 1031, 1034 (9th 6 Cir. 1986). 7 A. Identity of Claims Under The Full Faith and Credit Clause, codified in 28 U.S.C. § 1738, 8 9 federal courts are required to give state court judgments the preclusive 10 effect they would be given by another court of that state. See Migra v. 11 Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 84 (1984); Maldonado v. 12 Harris, 370 F.3d 945, 951 (9th Cir. 2004). California law holds that claims 13 are identical if they deal with the same “primary right,” and differ from the 14 federal courts, which apply a “transactional nucleus of facts” test to 15 determine what constitutes the same cause of action for claim preclusion 16 purposes. Boeken v. Philip Morris USA, Inc., 48 Cal. 4th 788, 798 (2010); 17 Brodheim v. Cry, 584 F.3d 1262, 1268 (9th Cir. 2009). Under the primary rights theory, “a cause of action is (1) a primary 18 19 right possessed by the plaintiff, (2) a corresponding primary duty devolving 20 upon the defendant, and (3) a harm done by the defendant which consists in 21 a breach of such primary right and duty.” City of Martinez v. Texaco Trading 22 & Transp., Inc., 353 F.3d 758, 762 (9th Cir. 2003), citing Citizens for Open 23 Access to Sand and Tide, Inc. v. Seadrift Ass’n, 71 Cal. Rptr. 2d 77, 86 24 (1998). “[I]f two actions involve the same injury to the plaintiff and the same 25 wrong by the defendant, then the same primary right is at stake even if in the 26 second suit the plaintiff pleads different theories of recovery, seeks 27 /// 28 /// 4 14cv2340 BTM-DHB 1 different forms of relief and/or adds new facts supporting recovery.” San 2 Diego Police Officers’ Ass’n v. San Diego City Employees’ Ret. Sys., 568 3 F.3d 725, 734 (9th Cir. 2009) (quoting Eichman v. Fotomat Corp., 147 Cal. 4 App. 3d 1170, 1174 (Ct. Appl. 1983)). 5 The claims raised in the First Action were brought under: (1) Cal. Civ. 6 Code § 2923.5, et seq; (2) Cal Civ. Code § 2924 et seq; (3) Uniform 7 Commercial Code §§ 3-309, 3-301, et seq; (4) Cal. Bus. & Prof. Code § 8 17200, et seq; (5) fraudulent deceit under Cal Civ. Code. § 1709, and; (6) 9 Real Party Standing (Dkt. Nos. 4-3, 5 at p. 4). The Second Action pleads: 10 (1) breach of contract; (2) promissory estoppel; (3) actual fraud under Cal. 11 Civ. Code § 1572; (4) violation of Cal. Civ. Code § 2923.6, et seq; (5) 12 violation of Cal. Bus. & Prof. Code § 17200, et seq, and; (6) injunctive relief 13 under Cal. Civ. Code § 2924.12. The Court finds that the primary right 14 implicated in the First and Second Actions is the same, which is the right to 15 challenge a wrongful foreclosure. Plaintiff is therefore barred from bringing 16 the current complaint because it states a cause of action that was resolved 17 in the First Action. 18 To illustrate, this case is distinct from Brodheim v. Cry, 584 F.3d 1262, 19 1268-69 (9th Cir. 2009), where the Ninth Circuit Court of Appeals overturned 20 the district court’s res judicata ruling on grounds that the federal action was 21 not barred by a preceding state court decision since the claims in each 22 involved different causes of action under the primary rights theory. The 23 state court first denied the prisoner-plaintiff’s habeas petition challenging the 24 warden’s practice of allowing the prison appeals coordinator to review 25 complaints against himself. The plaintiff then filed a federal action against 26 the appeals coordinator on First Amendment grounds. The court found the 27 two causes of action to be different because the initial state action pled a 28 lack of meaningful review of grievances while the federal action alleged 5 14cv2340 BTM-DHB 1 retaliatory chilling of speech rights. The harms in each action were distinct, 2 caused at different times, by different acts and by different actors. Id. at 3 1269. 4 Plaintiff refutes the application of res judicata by relying on the 5 California Supreme Court’s decision in City of Los Angeles v. City of San 6 Fernando, which states: “[w]here a question of law essential to the judgment is actually litigated and determined by a valid and final personal judgment, the determination is not conclusive between the parties in a 8 subsequent action on a different cause of action, except where both causes of action arose out of the same subject matter or 9 transaction; and in any event it is not conclusive if injustice would result.” 10 14 Cal. 3d 199, 230 (1975) (citing Restatement of Judgments § 70)(italics in 7 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 original), disapproved on other grounds by City of Barstow v. Mojave Water Agency, 23 Cal. 4th 1224 (2000). It is undisputed that the First and Second Actions arose out of the same subject matter or transaction, specifically the mortgage of the property and its foreclosure by Defendants. However, Plaintiff claims that it would be unjust to estop him from bringing his contractual claims against Defendants because JPMC intentionally delayed performing its obligation to approve Plaintiff’s permanent loan modification and strung Plaintiff along to later avail itself of res judicata (Dkt. No. 5, at p. 5). Plaintiff also argues that the First Action was resolved on questions of law on unrelated causes of action and that the current claims could not have been previously raised (Dkt. No. 5, at p. 5). The Court finds these arguments unpersuasive. First, the timeline supports the conclusion that even if Plaintiff did not consider JPMC in breach of the TPP until after filing the First Action on September 19, 2013, and receiving JPMC’s September 23, 2013 notification that Plaintiff’s loan modification application remained pending review, Plaintiff was not precluded from later adding the new contractual claims in the First Action. After September 23, 2013, Plaintiff could still have petitioned the state court 6 14cv2340 BTM-DHB 1 to amend his complaint before it issued a tentative ruling on Defendants’ 2 demurrer on May 8, 2014, and a later order sustaining the demurrer and 3 dismissing the matter with prejudice on June 10 and June 20, 2014. 4 Additionally, Plaintiff’s assertion that his breach of contract and 5 associated promissory estoppel and fraud claims ripened only after he filed 6 the First Action is mistaken. Any breach of contract and related claims 7 arising out the TPP had accrued prior to June 10, 2014, since JPMC had 8 failed to effectuate a permanent loan modification within a month of the end 9 of Plaintiff’s successful completion of the trial period on August 1, 2012. 10 See West v. JPMorgan Chase Bank, N.A., 214 Cal. App 4th 780, 797 (2013) 11 (discussing U.S. Department of the Treasury Home Affordable Mortgage 12 Program Supplemental Directive 09–01 (Apr. 6, 2009) establishing a time 13 line for loan modification agreement implementation following a trial period). 14 Therefore, Plaintiff could have raised all six of his current contract-based 15 claims during the pendency of his bankruptcy and in the First Action. Lastly, the “injustice” exception mentioned in Los Angeles v. San 16 17 Fernando does not apply to the facts of this case because it has been 18 limited to matters of public interest. See 14 Cal. 3d at 230. For instance, 19 issue preclusion was found unjust where it would result in the inequitable 20 administration of the laws by a governmental body upon third-parties 21 similarly situated to the litigant, see Rutherford v. State of California, 188 22 Cal. App. 3d 1267, 1284 (1987), and where patently erroneous conclusions 23 of law would be given estoppel effect, see Cochran v. Union Lumber 24 Company, 26 Cal. App. 3d 423, 427 (1972). Such issues are absent here. 25 /// 26 /// 27 /// 28 /// 7 14cv2340 BTM-DHB 1 In this case, the same plaintiff, Mr. Mohsenzadeh, is seeking redress 2 for the same primary right as in the First Action, which is to avoid a wrongful 3 or procedurally deficient foreclosure. The fact that the First Action did not 4 mention the pending loan modification does not change the finding that 5 Plaintiff’s claims in both actions are grounded in the same alleged injury of 6 wrongful foreclosure and economic harm caused by the same defendants’ 7 wrongful acts in improperly foreclosing on the property, thus implicating the 8 same primary right. See Eichman v. Fotomat Corp., 147 Cal. App. 3d at 9 1175. Indeed, Plaintiff’s prayer for relief in the Second Action includes an 10 injunction against foreclosure of the property, and therefore requests a 11 remedy for the same primary right previously litigated (Dkt. No. 1-1, at p. 12 28). Furthermore, the fact that Plaintiff raises new theories of recovery 13 based on breach of contract, promissory estoppel, fraud and statutory 14 violations in the Second Action is irrelevant for purposes of claim preclusion. 15 See Rodriguez v. Bank of New York Mellon, 2014 WL 229274, at *6 (S.D. 16 Cal. Jan. 17, 2014). Plaintiff’s aim in bringing both actions is to obtain relief 17 for the allegedly wrongful foreclosure of the same property. The Court finds 18 that Plaintiff’s new claims arise from the same foreclosure process as the 19 First Action and therefore arise out of the same primary right as the 20 previously litigated claims. 21 B. Final Judgment on the Merits 22 The state court dismissed the First Action with prejudice upon 23 sustaining Defendants’ demurrer to Plaintiff’s first amended complaint. A 24 general demurrer has been held to be a judgment on the merits for purposes 25 of res judicata and collateral estoppel in California state and federal courts. 26 See Edmonson v. City of Martinez, 2000 WL 1639492, at *4 (N.D. Cal. Oct. 27 27, 2000) aff’d, 17 Fed. Appx. 678 (9th Cir. 2001); McKinney v. County of 28 Santa Clara, 110 Cal. App. 3d 787, 794 (1980). Therefore, a final judgment 8 14cv2340 BTM-DHB 1 on the merits was already rendered on the claims Plaintiff seeks to bring in 2 the Second Action. 3 C. Identity of Parties 4 5 6 Plaintiff and Defendants do not dispute that the parties are identical in both proceedings. Thus, the third element of res judicata is satisfied. To the extent Plaintiff’s claims are based on the foreclosure of the 7 property, Plaintiff’s claims are barred by the doctrine of res judicata. 8 D. Judicial Estoppel 9 Plaintiff’s bankruptcy proceeding lasted between August 22, 2012 and 10 March 26, 2013 (Dkt. No. 4-3). Meanwhile, the alleged breach of contract 11 and related claims had ripened within a month of August 1, 2012. Thus, 12 Plaintiff was on notice of a potential claim against Defendants arising from 13 his interest in the property and the TPP prior to the close of his bankruptcy. 14 Because he failed to disclose these potential claims as an asset on his 15 Chapter 7 bankruptcy schedules, or otherwise disclose them to the 16 Bankruptcy Court, Plaintiff is judicially estopped from bringing this action. 17 See Hay v. First Interstate Bank of Kalispell, N.A., 978 F. 2d 555, 557 (9th 18 Cir. 1992). 19 20 21 22 23 IV. CONCLUSION For the reasons discussed above, Defendants’ motion to dismiss is GRANTED. For the reasons stated above, Plaintiff’s complaint is DISMISSED as to both Defendants with prejudice. The Clerk shall enter judgment accordingly. 24 25 26 27 28 IT IS SO ORDERED. DATED: March 25, 2015 BARRY TED MOSKOWITZ, Chief Judge United States District Court 9 14cv2340 BTM-DHB
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