Opinion
A150029
08-02-2018
KIYOMI ISHII, Plaintiff and Appellant, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. CIV 536572)
Kiyomi Ishii appeals from a judgment on the pleadings without leave to amend in favor of respondents Nationstar Mortgage, LLC; Mortgage Electronic Registration Systems, Inc.; and U.S. Bank, National Association (collectively, Defendants). Ishii's first amended complaint alleges nine causes of action, including wrongful foreclosure, all arising from alleged irregularities in the securitization of her home mortgage. On appeal, Ishii's primary argument is that the trial court erred in ruling that her wrongful foreclosure claim was barred by the doctrine of issue preclusion, which was found to apply because the court had previously sustained without leave to amend Defendants' demurrer to the same cause of action in a prior lawsuit that Ishii filed against them and then dismissed. We shall affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Facts Alleged
We draw our statement of the facts from the first amended complaint in this matter. In May 2007, Ishii borrowed $765,000 from Residential Mortgage Capital (Residential), and secured the loan by a deed of trust on property in the city of San Mateo. The deed of trust names Fidelity National as trustee and designates Mortgage Electronic Registration Systems, Inc. (MERS), acting as nominee for Residential and its successors and assigns, as the beneficiary.
Ishii's loan was sold several times in quick succession, eventually to a mortgage-backed securities trust of which U.S. Bank, National Association (US Bank) is trustee.
Ishii alleges that because Residential did not assign her deed of trust to any entity before the closing date of the mortgage-backed securities trust, her loan was not effectively transferred to the trust, and that therefore the attempted securitization of the loan failed, leaving U.S. Bank without any interest in the loan.
In November 2011, years after the supposed sale of Ishii's loan to the mortgage-backed securities trust and years after the closing date of that trust, MERS purported to assign the deed of trust to Aurora Bank, FSB (Aurora Bank). Six months later, in April 2012, the Wolf Firm (Wolf), purporting to act as Aurora's agent, recorded a notice of default stating that Ishii was almost $30,000 in arrears on her loan.
In June 2012, in connection with Nationstar Mortgage, LLC (Nationstar) acquiring Aurora Loan Services, LLC, Aurora assigned its interest in the deed of trust to Nationstar. A few months later, Nationstar substituted Wolf as new trustee under the deed of trust. In February 2013, Wolf recorded a notice of trustee's sale stating that the unpaid balance of the loan and other charges amounted to almost $1,000,000. The sale did not take place as scheduled. In January 2014, Nationstar assigned the deed of trust to U.S. Bank.
In July 2015, Wolf recorded another notice of trustee's sale, stating that the unpaid loan balance and other charges amounted to just over $1,000,000. Ishii does not allege that a trustee's sale has ever occurred.
B. Procedural Background
Ishii has filed two lawsuits against Defendants—this one, filed in December 2015, and an earlier one that was first filed in December 2013 in San Mateo Superior Court (CIV 525696). We describe them briefly.
1. Ishii's First Action, CIV 525696
In October 2014, Ishii filed a first amended complaint against Defendants in CIV 525696, alleging four causes of action: (1) wrongful foreclosure; (2) violation of Civil Code section 2924, subdivision (a)(6); (3) breach of the covenant of good faith and fair dealing; and (4) unfair business practices in violation of Business and Professions Code section 17200. The gravamen of Ishii's complaint was that because of defects in the securitization of her loan, the Defendants had no legal authority or standing to foreclose on her property.
Civil Code section 2924, subdivision (a)(6) states, "No entity shall record or cause a notice of default to be recorded or otherwise initiate the foreclosure process unless it is the holder of the beneficial interest under the mortgage or deed of trust, the original trustee or the substituted trustee under the deed of trust, or the designated agent of the holder of the beneficial interest. No agent of the holder of the beneficial interest under the mortgage or deed of trust, original trustee or substituted trustee under the deed of trust may record a notice of default or otherwise commence the foreclosure process except when acting within the scope of authority designated by the holder of the beneficial interest."
Our description of Ishii's first action against Defendants rests on judicially noticeable facts from documents that Defendants submitted to the trial court with their motion for judgment on the pleadings. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1162 (Daniels) [in reviewing judgment on the pleadings we may consider matters subject to judicial notice, in addition to deeming true facts alleged in the complaint].)
Defendants demurred to the complaint, the court heard arguments of counsel, and, in an order filed on February 25, 2015, the trial court sustained the demurrer without leave to amend as to the first two causes of action, and with leave to amend as to the third and fourth. With respect to the first two causes of action, the order stated, "These causes of action are based on alleged irregularities in the securitization process. Plaintiff lacks standing to assert any flaws in this process as she is not a party to the any [sic] securitization agreements. [Jenkins v. JP Morgan Chase Bank (2013) 216 Cal.App.4th 497]. The Court declines to follow Glaski v. Bank of America (2013) 218 Cal.App.4th 1079. To the extent plaintiff alleges [Wolf] was not properly substituted as trustee at the time the Notice of Default was recorded, this fact is irrelevant. The Notice of Default indicates [Wolf] acted as agent for the beneficiary. Civil Code § 2924 permits agents to initiate foreclosure proceedings."
Ishii did not amend her complaint. Instead, she voluntarily dismissed her first case in April 2015.
2 Ishii's Second Action, CIV 536572, Now on Appeal
Represented by a different attorney, Ishii filed a new complaint against Defendants in December 2015 in action CIV 536572. Defendants again demurred, and in response Ishii filed a first amended complaint alleging nine causes of action: (1) wrongful foreclosure; (2) fraud; (3) violation of Business and Professions Code section 17200 et seq.; (4) unjust enrichment; (5) accounting; (6) violation of the California Homeowners Bill of Rights; (7) slander of credit; (8) violation of the "California Consumer Protection Act"; and (9) quiet title.
Defendants answered the first amended complaint and moved for judgment on the pleadings. The day before the scheduled hearing on Defendants' motion, the trial court issued a tentative ruling, which was not contested. The trial court subsequently granted the motion without leave to amend as to all nine causes of action.
The court ruled that Ishii's first cause of action, for wrongful foreclosure, was barred by issue preclusion because the trial court had already issued an order sustaining without leave to amend a demurrer brought by the same parties as to the same cause of action alleged in Ishii's prior lawsuit, case CIV 525696. The court dismissed the second, fourth, fifth, sixth, seventh, eighth and ninth causes of action on the grounds that they were new causes of action based on the same allegations as the wrongful foreclosure claim that was dismissed without leave to amend in the prior case, and that although the ruling in that case granted Ishii leave to amend some of her claims, it did not constitute permission to add new causes of action. The court dismissed the third cause of action, for unfair competition, on the ground that an unfair competition claim requires an underlying violation of law and, in view of the trial court's ruling in her previous case, Ishii had not properly pleaded any violation of the law in her new case.
To state a claim for wrongful foreclosure, a plaintiff must plead and prove that a foreclosure sale has occurred. (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408.) As Defendants observe in their brief, Ishii has never alleged that a foreclosure sale took place. Ishii does not respond to this point, even though it suggests that, quite apart from any other alleged defects in Ishii's first amended complaints in her lawsuits against Defendants, Ishii cannot state a claim for wrongful foreclosure.
Except for making general claims that she should have been given leave to amend her complaint, Ishii does not challenge the dismissal of these seven causes of action, and we do not discuss them further.
Ishii does not directly challenge the dismissal of her unfair competition claim. Although the introduction of her brief asserts that the trial court erred in dismissing the claim because the court "failed to view Appellant in the light most favorable," the unfair competition claim is not addressed in any heading in the brief, nor identified as one of Ishii's "Issues on Appeal," nor explicated in the body of her argument. Instead, in the course of discussing collateral estoppel, Ishii simply makes the unsupported statement that, "Appellants who allege that lenders violated California law for several reasons including but not limited to for underwriting, tax services, and wire transfer fees in conjunction with home loans stated a valid cause of action" under California's unfair competition law. We do not further discuss Ishii's unfair competition claim. --------
The trial court subsequently issued a judgment of dismissal from which Ishii appeals.
DISCUSSION
A. Standard of Review
We apply the same de novo standard of review to motions for judgment on the pleadings and to general demurrers. (Daniels, supra, 246 Cal.App.4th at p. 1162.) We assume the truth of the facts pleaded in the complaint, and we consider matters subject to judicial notice, but we do not assume the truth of alleged contentions, deductions, or legal conclusions. (Ibid.) We construe the allegations liberally and exercise our own judgment to determine whether the complaint states a cause of action under any legal theory. (Ibid.) But the fact that we review the complaint independently does not mean that a plaintiff can contest a trial court ruling by simply submitting the complaint to a Court of Appeal and hoping we can discern a cause of action within it. Plaintiff has the burden to must show that the trial court erred in granting judgment on the pleadings. (See Keyes v. Bowen (2010) 189 Cal.App.4th 647, 655 (Keyes) [discussing the standard of review for demurrers].)
An appellant's burden on appeal is governed by well-established rules and standards. We presume the trial court judgment is correct; an appellant must prove otherwise by identifying errors and supporting claims of error with citation to legal authority and analysis. (Keyes, supra, 189 Cal.App.4th at pp. 655-656.) An appellant must "present each point separately in the opening brief under an appropriate heading, showing the nature of the question to be presented and the point to be made; otherwise, the point will be forfeited." (Id. at p. 666, citing Cal. Rules of Court, rule 8.204(a)(1)(B).) And arguments that are not appropriately supported by authority and analysis may be deemed forfeited. (Id. at p. 655.)
We review the trial court's denial of leave to amend for abuse of discretion. (Daniels, supra, 246 Cal.App.4th at p. 1163.) It is plaintiff's burden to show that the complaint can be amended to cure its defects. (Ibid.) B. Analysis
Ishii purports to raise four issues on appeal, as reflected in the headings of her opening brief: the trial court erred in applying the doctrine of issue preclusion to bar her wrongful foreclosure claim; the trial court's ruling in the prior action was incorrect; the trial court erred in denying leave to amend the complaint; and the trial court erred by failing to provide her due process of law under its equitable powers. We consider the issues in turn.
1. Issue Preclusion
The doctrine of issue preclusion, also called collateral estoppel, prevents " 'relitigation of previously decided issues' . . . [and] applies only '(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or in privity with that party.' " (Samara v. Matar (2018) 5 Cal.5th 322, ___ [234 Cal.Rptr.3d 446, 449], quoting DKN Holdings v. Faerber (2015) 61 Cal.4th 813, 824-825.)
In the introduction to her opening brief, Ishii contends that the trial court erred in applying issue preclusion, stating that "applicable exceptions apply to this matter." Although the argument section in Ishii's brief includes several pages discussing the law of collateral estoppel, nowhere does Ishii identify which exceptions apply, or provide any analysis showing how they apply here. Instead, she contends, without citation to authority, that issue preclusion "should not apply" because the trial court made errors in deciding her first case. Only in the conclusion to her opening brief does she identify the exception on which she apparently relies: she asserts that the prior proceeding was not fully adjudicated. This assertion is not supported by argument or authority.
Defendants argue in their brief on appeal that the prior ruling sustaining the demurrer to her wrongful foreclosure claim is sufficiently firm to be accorded preclusive effect. They rely on Border Business Park, Inc. v. City of San Diego (2006) 142 Cal.App.4th 1538, 1561-1566 (Border Business Park), a case in which a trial court order sustaining a demurrer without leave to amend barred a subsequent action through issue preclusion even though, as happened in Ishii's previous case, no final judgment was entered. The court in Border Business Park wrote, "[F]or purposes of issue preclusion . . . ' "final judgment" includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.' " (Id. at p. 1564, quoting Rest.2d Judgments, § 13.) "A prior adjudication of an issue in another action may be deemed 'sufficiently firm' to be accorded preclusive effect based on the following factors: (1) whether the decision was not avowedly tentative; (2) whether the parties were fully heard; (3) whether the court supported its decision with a reasoned opinion; and (4) whether the decision was subject to an appeal." (Id. at p. 1565.) In Ishii's case, as in Border Business Park, the decision sustaining the demurrer without leave to amend was a formal written decision with reasons, issued after a hearing where the parties were fully heard. (Id. at pp. 1561, 1565.) Further, the prior decision was subject to appeal, because if Ishii had wished to challenge it, she could have requested entry of judgment and appealed the dismissal of her wrongful foreclosure cause of action. (See id. at p. 1565.)
Ishii makes no response to Defendants' argument in her reply brief, nor does she discuss Border Business Park. On this record, we conclude Ishii has forfeited her argument that the trial court erred in ruling that her wrongful foreclosure claim is barred by issue preclusion.
2. Errors in Prior Trial Court Ruling
On appeal, Ishii identifies two errors allegedly made by the trial court in her first case (CIV 525696): the trial court incorrectly deemed "irrelevant" a fact alleged in the complaint, and the trial court ignored the doctrine of stare decisis when it declined to follow Glaski v. Bank of America, supra, 218 Cal.App.4th 1079. These issues are not properly before us, because we are not reviewing the decision on Defendants' earlier demurrer. Once the trial court ruled on Defendants' demurrer in the prior action, Ishii had several options to obtain appellate review of the decision. She could have sought immediate review by extraordinary writ, or requested entry of judgment and appealed, or amended her complaint as to the causes of action for which leave was granted and appealed after a final judgment was issued in the case. (See Weil, et al. Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2018) ¶¶ 7:151, 7:151.2.) She declined to do any of those, and therefore forfeited her challenges to the earlier order.
3. Denial of Leave to Amend
Under the heading, "Trial Court Erred by Denying Leave to Amend the Complaint," Ishii devotes several pages to describing the law governing general demurrers and judgments on the pleadings and contending that the trial court erred in failing to deem the allegations of her complaint as true. She also sets out the circumstances in which a corporation purchasing another corporation's assets assumes the seller's liabilities and sets out the elements of a wrongful foreclosure claim. Only at the end of the section does Ishii address the point identified in the heading, stating merely, "Appellant could easily resolve all issues the Trial Court raised by amending the Complaint." That is not enough: Ishii's claim that the trial court erred in denying leave to amend fails because she gives no indication of how she would amend her complaint if she were given the opportunity. (Daniels, supra, 246 Cal.App.4th at p. 1163.)
In her reply brief, Ishii contends that she "should have been given leave to amend the complaint to add allegations showing a factual basis (if any exists) for holding MERS liable for the wrongful foreclosure tort." This contention is plainly not a demonstration of how Ishii could amend her complaint to cure its defects. Ishii does not contend that there are any allegations she would add if amendment were allowed.
Accordingly, we conclude Ishii has failed to meet her burden to show how she could amend her complaint to cure its defects.
4. Due Process of Law
It is difficult to discern Ishii's final argument on appeal, headed, "Did the Trial Court Err in Failing to Afford Appellant Due Process of Law Under the Trial Court's Equitable Powers?" In this section, Ishii again sets out the elements of a wrongful foreclosure claim. Her point appears to be that the trial court erred by failing to consider the allegations of her complaint as true. It is unclear whether Ishii claims this error was made by the trial court in her first case or in her second. Either way, the claim lacks merit. Any error allegedly made by the trial court in her first case is not before us. And nothing in the ruling on Defendants' motion for judgment on the pleadings indicates that the trial court discounted any of the allegations in her first amended complaint.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
/s/_________
Miller, J. We concur: /s/_________
Kline, P.J. /s/_________
Richman, J.