Case Name: Suzanne D. Kwong v. Nationstar Mortgage LLC, et al.
Case No.: 18CV329898

I. Background

This is a wrongful foreclosure action brought by Suzanne D. Kwong (“Plaintiff”), who is self-represented, against various defendants, including Nationstar Mortgage LLC (“Nationstar”) and Wells Fargo Bank, N.A. (“Wells Fargo”). Plaintiff asserts the following causes of action: (1) wrongful foreclosure; (2) fraud by deceit (against Wells Fargo only); (3) fraud by deceit (against Nationstar only); and (4) unfair and deceptive practices under Business and Professions Code section 17200.

The 49-page complaint is dense with allegations, but the gravamen of the action is that various documents executed and recorded relative to Plaintiff’s real property—such as notices of default, notices of trustee’s sale, and substitutions of trustee and assignments of deed of trust—are invalid, thereby rendering void the foreclosure sale that occurred in 2015. Plaintiff further complains about loan modification practices.

Currently before the Court is a demurrer to the complaint by Wells Fargo and Nationstar (collectively “Defendants”), which is accompanied by a request for judicial notice. Plaintiff opposes the demurrer.

II. Request for Judicial Notice

Defendants request judicial notice of 22 documents that fall in one of two categories, court records or recorded real property records.

The court records comprise of documents from three prior lawsuits filed by Plaintiff related to foreclosure activity. The first action was filed in federal court in 2012, the second was filed in Santa Clara County Superior Court in 2016, and the third was filed in federal court in 2017. Court records are expressly subject to judicial notice under Evidence Code section 452, subdivision (d). As for the recorded real property records, such documents may be judicially noticed under Evidence Code section 452, subdivision (h), which permits judicial notice of facts that ae not reasonably subject to dispute and capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265, disapproved of on other grounds in Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919; see also Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1367, fn. 8.) And the documents here are minimally relevant here since they are relied on by Defendants to support arguments advanced in support of their demurrer. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [precondition to taking judicial notice is relevance to issue under review].)

Accordingly, Defendants’ request for judicial notice is GRANTED.
III. Merits of Demurrer

Defendants demur to the complaint in its entirety and each cause of action on the ground of failure to state facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).) In support, they argue that all claims are barred by the doctrine of res judicata and/or collateral estoppel. They also advance additional arguments specific to individual causes of action.

As explained below, the Court concludes Defendants’ res judicata argument is dispositive of the entire complaint. Therefore, the Court will not address any other arguments advanced in support of the demurrer to each cause of action.

“The tenets of res judicata prescribe the preclusive effect of a prior final judgment on the merits. The doctrine has two distinct aspects: claim preclusion and issue preclusion. Claim preclusion, often referred to as res judicata, provides that a valid, final judgment on the merits precludes parties or their privies from relitigating the same cause of action in a subsequent suit. Issue preclusion, or collateral estoppel, precludes relitigation of issues argued and decided in prior proceedings. Application of the doctrine of res judicata is intended to preserve the integrity of the judicial system, promote judicial economy, and protect litigants from harassment by vexatious litigation. It rests upon the sound policy of limiting litigation by preventing a party who has had one fair adversary hearing on an issue from again drawing it into controversy and subjecting the other party to further expense in its reexamination.” (City of Oakland v. Oakland Police and Fire Retirement System (2014) 224 Cal.App.4th 210, 227–228, internal quotation marks and citations omitted.) “ ‘If all of the facts necessary to show that an action is barred by res judicata are within the complaint or subject to judicial notice, a trial court may properly sustain a general demurrer. [Citation.]’ [Citation.]” (Planning and Conservation League v. Castaic Lake Water Agency (2009) 180 Cal.App.4th 210, 225.)
Here, although Defendants refer to both claim preclusion and issue preclusion in their demurrer, their analysis only clearly corresponds with claim preclusion.

“Res judicata [claim preclusion] precludes the relitigation of a cause of action [ ] 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.] Res judicata bars the litigation not only of issues that were actually litigated in the prior proceeding, but also issues that could have been litigated in that proceeding.” (Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82.)

Defendants’ res judicata argument is apparently predicated on three prior lawsuits filed by Plaintiff. Introductorily, they outline the prior cases in their recitation of procedural history. Then, in their discussion section, they preliminarily emphasize that this is the fourth lawsuit filed by Plaintiff arising out of foreclosure proceedings. Subsequently, however, they only specifically reference the second and third lawsuits in addressing the issue of claim preclusion. And the record reflects the first action filed in federal court in 2012, namely Kwong, et al. v. Wells Fargo Bank, N.A. (Case No. 5:12-cv-01362-LHK), was dismissed for failure to appear as opposed to a merits-based determination. The Court therefore assumed Defendant intended to base their res judicata argument on the second and third lawsuits, particularly the prior Santa Clara County Superior Court action filed in 2016 (Kwong, et al. v. Bank of America, N.A., et al., Case No. 16CV29227) and the subsequent federal court action filed in 2017 (Kwong, et al. v. Santa Clara County Sheriff’s Office, et al., Case No. 5:17-cv-02127-BLF).

The first amended complaint from the state court case was filed by Plaintiff against various defendants, including Defendants. The case was disposed of at the pleading stage with a judgment of dismissal entered after Defendants’ demurrer was sustained without leave to amend. The subsequent federal lawsuit was filed one week after the state court case was dismissed, and Defendants were named as parties. Wells Fargo filed a motion to dismiss, in part based on res judicata, which was granted without leave to amend. Thus, Plaintiff’s claims against Defendants in this action will be barred if the same causes of action are involved.

To determine whether two proceedings involve identical causes of action for purposes of res judicata, courts have “consistently applied the ‘primary rights’ theory.” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 97 (Boeken); see DKN Holdings, supra, 61 Cal.4th at p. 827, fn. 1; see also Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 904.) “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, supra, 48 Cal.4th at pp. 797-98.) “[F]or purposes of applying the doctrine of res judicata, … [t]he 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.” (Id., at p. 798.) “ ‘[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.” (Ibid., internal citations and emphasis omitted.)

The prior state court action alleged numerous causes of action, including a claim for wrongful foreclosure. Plaintiff challenged Defendants’ authority to foreclose on the subject property, and additionally alleged misconduct related to the securitization of the loan and processes regarding loan origination and modification. In the subsequent federal lawsuit, Plaintiff also complained about the securitization of the loan as well as the conduct of the foreclosure process. The instant action involves the same primary right, alleged harm to Plaintiff resulting from the dispossession of her property. She continues to complain about the foreclosure process and related matters that were or could have been adjudicated in the prior actions. Thus, the present action qualifies as involving the same causes of action as the former lawsuits.

In sum, the face of the complaint and mattes subject to judicial notice show this action is barred under the doctrine of claim preclusion.

With respect to whether leave to amend is warranted, Plaintiff bears the burden of demonstrating how she can amend the pleading to correct any deficiencies. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) Plaintiff does not endeavor to make such a showing, and it is otherwise unclear how she could amend the complaint to overcome the res judicata bar. Thus, leave to amend will not be granted.

Accordingly, Defendants’ demurrer to the complaint as a whole on the ground of failure to state sufficient facts is SUSTAINED WITHOUT LEAVE TO AMEND.