Filed 7/2/20 Diggs v. Ocwen Loan Servicing, LLC CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APRIL E. DIGGS,

Plaintiff and Appellant,

v.

OCWEN LOAN SERVICING, LLC, et al.,

Defendants and Respondents.

E072230

(Super.Ct.No. CIVDS1808275)

OPINION

APPEAL from the Superior Court of San Bernardino County. Brian F. Foster, Judge. Affirmed.

J. Wright Law Group and Jamie Wright for Plaintiff and Appellant.

Severson & Werson, Jan T. Chilton and Kerry W. Franich for Defendants and Respondents.

I. INTRODUCTION

Plaintiff and appellant, April E. Diggs, appeals from the judgment dismissing her first amended complaint (FAC) against defendants and respondents, Ocwen and U.S. Bank, following the trial court’s order sustaining defendants’ general demurrer to the FAC without leave to amend, on res judicata grounds.

We affirm the judgment of dismissal. Plaintiff claims the trial court abused its discretion in dismissing the FAC, with prejudice, because all of the claims alleged in the FAC are not barred by res judicata but constitute new claims. We conclude on de novo review that all of the claims that are or could be alleged in the FAC are barred by the claim preclusion aspect of res judicata. In a prior federal court action, which was dismissed with prejudice and adjudicated on its merits against plaintiff, plaintiff alleged claims based on the same primary right she alleges defendants violated in the FAC: her right to be free of defendants’ debt collection activities, because defendants are not authorized to collect any amounts due on her home mortgage loan, or to exercise the power of sale under the deed of trust securing the loan. Plaintiff has also not shown a reasonable possibility that she can amend her FAC to state a new cause of action.

II. BACKGROUND

A. The Allegations of the FAC

The FAC alleges that, in July 2006, plaintiff obtained a mortgage loan in the principal amount of $775,000, secured by a deed of trust against her Rancho Cucamonga home. “GreenPoint Mortgage Funding, Inc.” (GreenPoint) originated the loan. In September 2011, plaintiff stopped making payments on the loan and it went into default.

In February 2013, Ocwen advised plaintiff by letter that, effective February 16, 2013, the “servicing” of the loan was being transferred to Ocwen. At that time, the October 2011 payment was still due on the loan. In November 2013, U.S. Bank was assigned the beneficial interest under the deed of trust securing plaintiff’s mortgage loan. A notice of default was recorded in February 2016, and a notice of trustee’s sale was recorded in March 2018.

Plaintiff filed her original complaint in this action in April 2018. She filed her operative FAC in June 2018. The key allegation of the FAC is its conclusory allegation that defendants have no authority to collect any amounts due on plaintiff’s mortgage loan, because the deed of trust securing the loan was not properly transferred to “them.” The FAC does not explain why Ocwen is not authorized to service the loan or why the deed of trust was not properly transferred to U.S. Bank. Even so, the FAC alleges that defendants’ efforts to collect the loan and to exercise the power of sale violate various provisions of the California Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788, et. seq.) (the Rosenthal Act) (first cause of action) and the Unfair Competition Law (Bus. & Prof. Code, § 17200) (the UCL) (third cause of action).

The FAC also alleges a claim for intentional infliction of emotional distress (IIED) (second cause of action) based on defendants’ “extreme and outrageous” conduct in attempting to collect plaintiff’s mortgage loan. But the FAC does not allege what defendants did that was so extreme and outrageous. As support for the IIED claim, the FAC relies solely on its allegation that defendants have attempted to collect plaintiff’s loan without the authority to do so or to enforce the power of sale under the deed of trust.

Lastly, the FAC seeks injunctive relief under both the UCL and Code of Civil Procedure section 526 (fourth cause of action), restraining defendants from taking further efforts to collect plaintiff’s loan, including foreclosure proceedings. This claim for injunctive relief, like the Rosenthal Act, UCL, and IIED claims, is based solely on defendant’s unauthorized and unspecified attempts to collect plaintiff’s loan.

B. Defendants’ Demurrer and the Trial Court’s Ruling Sustaining the Demurrer

Defendants filed a general demurrer to the FAC (Code Civ. Proc., § 430.10, subd. (e)), on the ground its claims were barred by res judicata principles. The trial court agreed and granted the demurrer on this ground, without explaining what prior action precluded the FAC’s claims. Defendants also claimed the FAC failed to state facts sufficient to constitute any causes of action, but the trial court did not sustain the demurrer on this ground. The judgment of dismissal was entered on August 31, 2018. In September 2018, U.S. Bank purchased plaintiff’s property at a nonjudicial foreclosure sale.

III. DISCUSSION

A. Standard of Review

On appeal from a judgment of dismissal following an order sustaining a general demurrer to a complaint without leave to amend, we examine the complaint de novo to determine whether it states a cause of action under any possible legal theory. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) We assume the truth of the complaint’s well-pleaded factual allegations, and we may also consider judicially noticeable matters, but we do not assume the truth of any factual contentions or conclusions of fact or law. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.) If the complaint fails to state a cause of action and the plaintiff shows there is a reasonable possibility that it can be amended to state a cause of action, we reverse, but if the plaintiff does not meet this burden, we affirm the judgment of dismissal. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

B. The Demurrer Was Properly Sustained on Res Judicata Grounds

Plaintiff claims the court abused its discretion in sustaining defendants’ demurrer, without leave to amend, and dismissing the FAC on the ground it was barred by res judicata principles. She argues that, because this is the first action in which she has asserted a claim against defendants for Rosenthal Act violations, the FAC is not barred by res judicata, but states new claims against defendants.

For their part, defendants argue that the federal district court’s decision in Diggs v. Ocwen Loan Servicing LLC (C.D. Cal. 2017) 2017 U.S. Dist. LEXIS 147672 (“Diggs” or “the prior federal court action”), dismissing plaintiff’s complaint in that action against defendants on res judicata grounds, shows that the FAC is also barred by res judicata. We agree. On our own motion, we take judicial notice of the federal district court’s decision in the prior federal court action. (Evid. Code, § 459, subd. (a).)

1. The Prior Federal Court Action

In the prior federal court action, plaintiff sued defendants, Ocwen and U.S. Bank, alleging, “(1) violations of the Fair Debt Collection Practices Act (“FDCPA”), see 15 U.S.C. § 1692 et. seq.; (2) other violations of the FDCPA, see 15 U.S.C § 1692f(6); (3) violations of state law regarding the assignment of a mortgage, or the beneficial interest under a deed of trust, see Cal. Civ. Code § 2934(a)(1)(A); (4) cancellation of instruments; and (5) violation of state unfair competition laws, see Cal. Bus & Prof. Code §17200 et. seq.” (Diggs, supra, 2017 U.S. Dist. LEXIS 147672 at pp. 1-2.) The court in the prior federal court action dismissed plaintiff’s complaint, without leave to amend, and entered judgment for defendants and against plaintiff on the complaint. (Id. at p. 8.)

The court concluded the complaint was barred by res judicata, based on a prior state court action that plaintiff filed against defendants in San Bernardino County, Diggs v. U.S. National Bank Association, case No. CIVRS1401333 (Cal.Super. Ct. 2014). (Diggs, supra, 2017 U.S. Dist. LEXIS 147672 at pp. 5-6.) The court found that all three elements of res judicata applied. Both actions involved the same parties, namely, plaintiff and defendants, and both actions “concern[ed] the same nucleus of operative facts and the same legal issues . . . essentially . . . that [d]efendants lack the right to foreclose on [plaintiff’s] home or collect various loan payments.” (Id. at pp. 5-6.) Additionally, the San Bernardino County action resulted in a final adjudication of the complaint in that action on its merits, against plaintiff and in favor of defendants. (Id. at p. 6.)

2. The FAC is Barred by Res Judicata

“ ‘ “The doctrine of res judicata gives certain conclusive effect to a former judgment in subsequent litigation involving the same controversy.” ’ ” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) The res judicata doctrine has two aspects: its primary aspect, claim preclusion, and its secondary aspect, issue preclusion or collateral estoppel. (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 823-824.) Claim preclusion “acts to bar claims that were, or should have been, advanced in a previous suit involving the same parties.” (Id. at p. 824.) As we explain, the decision in the prior federal district court action, Diggs, shows that the FAC, and all of the claims that are or that could be alleged in it, are barred by the claim preclusion aspect of res judicata.

The claim preclusion aspect of res judicata precludes the relitigation of a cause of action “ ‘only if (1) the decision in the prior proceeding is final and on the merits; (2) the present action is on the same cause of action as the prior proceeding; and (3) the parties in the present action or parties in privity with them were parties to the prior proceeding’ [Citation.]” (Franceschi v. Franchise Tax Bd. (2016) 1 Cal.App.5th 247, 257 (Franceschi).) In this context, the phrase, “cause of action” has a particular meaning; it is based on the “primary right theory” of code pleading. (Id. at p. 257.)

Under the primary right theory, “ ‘a “cause of action” is comprised of a “primary right” of the plaintiff, a corresponding “primary duty” of the defendant, and a wrongful act by the defendant constituting a breach of that duty. [Citation.] . . . [¶] . . . [T]he primary right is simply the plaintiff’s right to be free from the particular injury suffered. [Citation.] It must therefore be distinguished from the legal theory on which liability for that injury is premised: “Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief.” [Citation.] The primary right must also be distinguished from the remedy sought: “The violation of one primary right constitutes a single cause of action, though it may entitle the injured party to many forms of relief, and the relief is not to be confounded with the cause of action, one not being determinative of the other.” [Citation.]’ ” (Franceschi, supra, 1 Cal.App.5th at p. 258.)

“ ‘The primary right theory . . . is invoked . . . when a plaintiff attempts to divide a primary right and enforce it in two suits. . . . [I]f the first suit has terminated in a judgment on the merits adverse to the plaintiff, the defendant in the second suit may set up that judgment as a bar under the principles of res judicata.’ [Citation.] . . . [T]he significant factor guiding the application of the doctrine is whether the “cause of action” is for invasion of a single primary right; whether the same facts are involved in both suits is not conclusive. [Citation.]” (Franceschi, supra, 1 Cal.App.5th at p. 258.)

In the FAC, as in the prior federal district court action, all three elements of the claim preclusion aspect of res judicata have been met. First, the prior federal court action and the FAC involve the same parties: plaintiff and defendants, Ocwen and U.S. Bank. Second, the prior federal court action, in which plaintiff’s complaint was dismissed with prejudice, is final adjudication on the merits of that complaint against plaintiff. (See Owens v. Kaiser Found. Health Plan, Inc. (9th Cir. 2001) 244 F.3d 708, 714 [dismissal of complaint with prejudice based on failure to prosecute constitutes final adjudication of complaint on its merits for purpose of claim preclusion].) Third, the prior federal court action and the FAC are based on the same alleged injuries to the same primary right, namely, injuries plaintiff alleges she has suffered due to defendant’s efforts to collect her home mortgage loan, and to exercise the power of sale under the deed of trust, without authority to collect the loan or to exercise the power of sale.

Plaintiff does not dispute that the prior federal court action and the FAC involve the same parties, or that the complaint in the federal court has been finally adjudicated on its merits against plaintiff. As noted, plaintiff argues that, because this is the first action in which she has asserted that defendants’ collection efforts amounted to Rosenthal Act violations, the FAC is not based on the same cause of action or primary right as the prior federal court action and is not res judicata. We disagree.

As we have stressed, the FAC, like the prior federal court action, is based on the conclusory allegation that plaintiff has suffered injury due to defendants’ efforts to collect plaintiff’s mortgage loan and to exercise the power of sale under the deed of trust securing the loan, without the requisite authority to do so. In the federal court action, plaintiff alleged that defendants’ unauthorized efforts to collect her mortgage loan violated the FDCPA, not the Rosenthal Act. But these two statutory schemes merely provide different remedies for injuries to plaintiff’s primary right to be free of defendants’ debt collection activities, because defendants are not authorized to collect plaintiff’s loan or to exercise the power of sale under the deed of trust securing the loan.

Claim preclusion bars not only the relitigation of claims resolved in a prior action; it also precludes the litigation of claims that could have been but were not brought in the prior action. (Franceschi, supra, 1 Cal.App.5th at p. 258.) “ ‘The law abhors a multiplicity of actions . . . . [A] party cannot by negligence or design withhold issues and litigate them in successive actions; he may not split his demands or defenses; he may not submit his case in piecemeal fashion.’ [Citation.]” (Ibid.) This is what plaintiff is attempting by her FAC: assert purportedly new claims for Rosenthal Act violations, related UCL violations, an IIED claim, and injunctive relief, that could have been but were not brought in the prior federal court action. This is impermissible.

Res judicata “goes beyond the four corners of the operative pleading in the prior action: ‘ “If the matter was within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged. The reason for this is manifest. 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.” ’ [Citation.]” (Franceschi, supra, 1 Cal.App.4th at p. 259.)

3. Plaintiff’s “Continuing Violation” Theory Lacks Merit

Plaintiff argues her Rosenthal Act claims and her other claims alleged in the FAC are not res judicata because they are subject to the continuing violation doctrine, and are therefore not barred by the one-year limitations period that otherwise applies to Rosenthal Act violations. (Civ. Code, § 1788.30, subd. (f).) The continuing violation doctrine permits recovery “ ‘for actions that take place outside the limitations period if these actions are sufficiently linked to unlawful conduct within the limitations period.’ ” (Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324, 343.) Plaintiff appears to argue that defendants have engaged in a continuous pattern of Rosenthal Act violations since defendants first attempted to collect plaintiff’s mortgage loan around 2013, and that these Rosenthal Act violations have continued into 2017 and 2018, after her federal district court action was dismissed on September 11, 2017. (See Diggs, supra, 2017 U.S. Dist. LEXIS 147672 at p. 8.)

This argument is not helpful to plaintiff’s position, and it blurs the distinction between whether the FAC’s claims are barred by res judicata with the unrelated question of what limitations period applies to the FAC’s alleged Rosenthal Act violations. Even if all of defendants’ alleged Rosenthal Act violations are subject to the continuing violation doctrine, the FAC’s alleged Rosenthal Act claims, and its wholly related UCL, IIED, and injunctive relief claims, are nonetheless barred by res judicata.

As we have explained, the key allegation and primary right injury underlying the entire FAC is that defendants have made ongoing, unauthorized attempts to collect plaintiff’s loan and to exercise the power of sale under the deed of trust. Because this allegation was adjudicated on its merits against plaintiff and in favor of defendants in the prior federal court action, and because the same allegation underlies the FAC’s alleged Rosenthal Act violations and its other alleged causes of action, all of the FAC’s claims are barred by res judicata, regardless of whether any part of defendant’s ongoing collection activities occurred within the Rosenthal Act’s one-year limitations period.

Lastly, plaintiff has not demonstrated a reasonable possibility that she can amend the FAC to state any cause of action. (See Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) She has not shown that defendants have injured her in any way other than through their ongoing attempts, since 2013, to collect her mortgage loan and to exercise the power of sale under the deed of trust, without having the authority to do so. Thus, we affirm the judgment dismissing the FAC, without leave to amend.

IV. DISPOSITION

The judgment dismissing the FAC, with prejudice, is affirmed. Defendants shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278.)

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

FIELDS

J.

We concur:

McKINSTER

Acting P. J.

RAPHAEL

J.