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Mohsenzadeh v. JPMorgan Chase Bank, N.A.

United States District Court, S.D. California

March 25, 2015

ZAFAR MOHSENZADEH, an individual, Plaintiff,
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, Defendants.

ORDER GRANTING MOTION TO DISMISS

BARRY TED MOSKOWITZ, Chief District Judge.

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.

I. BACKGROUND

According to the Complaint ("Compl."), Plaintiff executed a first position mortgage and deed of trust with Defendant JPMC on October 22, 2006 (Compl. ¶ 8). Having been adversely effected by the financial downturn in 2010, Plaintiff contacted JPMC and applied for a loan modification (Compl. ¶ 9). Due to JPMC's alleged mishandling of Plaintiff's paper work, the process was delayed and on June 23, 2011, JPMC and NDEX recorded a Notice of Default against the property (Compl. ¶¶ 11-12). On April 17, 2012, JPMC sent Plaintiff notice that he qualified for a loan modification if he complied with an accompanying Trial Period Plan ("TPP") setting out a 3-month payment schedule commencing on June 1, 2012 and ending August 1, 2012 (Compl. ¶¶ 14-15). Plaintiff notified JPMC that he accepted the TPP's terms and made timely payments accordingly, which JPMC accepted (Compl. ¶¶ 19-21). Plaintiff alleges that following his full performance under the TPP, JPMC evaded his inquiries regarding the next steps in securing the permanent loan modification and perpetually delayed its approval, thus failing to perform under the TPP. On August 28, 2013, NDEX filed a Notice of Trustee's Sale scheduling a September 19, 2013 sale date, but JPMC then sent a notice dated September 23, 2013 informing Plaintiff that his loan modification application was still pending review (Compl. ¶¶ 29-31). A trustee's sale of the property was again scheduled for August 25, 2014, the same day the present action was filed in the Superior Court of California, County of San Diego ("state court") (Compl. ¶ 27). However, as of the action's removal to federal court, the parties' document filings do not confirm whether the property has in fact been foreclosed and sold through a trustee's sale.

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 discharging Plaintiff as a debtor and closed the case on March 26, 2013. Though Plaintiff disclosed his interest in the property on his bankruptcy schedule, he failed to disclose facts supporting his foreclosure related claims against the Defendants arising from the alleged breach of the TPP. On September 19, 2013, Plaintiff, acting pro per, filed a complaint in state court ("First Action") raising six statutory claims arising out of Defendants' recording of a Notice of Default against the property on June 23, 2011, allegedly without complying with all of the requirements of California Civil Code ("Cal. Civ. Code") sections 2923.5 and 2924 et seq. The state court dismissed the First Action with prejudice on June 10, 2014 as to JPMC and June 20, 2014 as to NDEX upon sustaining JPMC's demurrer. On August 25, 2014, Plaintiff, now represented by counsel, filed the present action, again in state court ("Second Action"). On October 3, 2014, Defendants removed to this Court.

III. ANALYSIS

Defendants move to dismiss the Second Action on grounds of: (1) res judicata; (2) the Rooker-Feldman doctrine; (3) judicial estoppel; and (4) Rule 12(b)(6) for failure to state claims of breach of contract, promissory estoppel, fraud under Cal. Civ. Code § 1572, and violations of §§ 2923.6(c), 2924.12, and California Business & Professions Code ("Cal. Bus. & Prof. Code") § 17200, et seq. The Court finds that Plaintiff's present claims are precluded by the state court's dispositive ruling on the merits in the First Action and judicial estoppel as to the Bankruptcy Court's discharge order. Therefore, the Court need not reach Defendants' remaining arguments.

The doctrine of res judicata, also known as claim preclusion, bars claims for relief where there is (1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties. TahoeSierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 322 F.3d 1064, 1077 (9th Cir. 2003). It also applies to those claims which could have been litigated as part of the prior cause of action. See Clark v. Yosemite Cmty. Coll. Dist., 785 F.2d 781, 786 (9th Cir. 1986). A plaintiff "cannot avoid the bar of res judicata merely by alleging conduct by the defendant not alleged in his prior action or by pleading a new legal theory." McClain v. Apodaca, 793 F.2d 1031, 1034 (9th Cir. 1986).

A. Identity of Claims

Under The Full Faith and Credit Clause, codified in 28 U.S.C. § 1738, federal courts are required to give state court judgments the preclusive effect they would be given by another court of that state. See Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 84 (1984); Maldonado v. Harris, 370 F.3d 945, 951 (9th Cir. 2004). California law holds that claims are identical if they deal with the same "primary right, " and differ from the federal courts, which apply a "transactional nucleus of facts" test to determine what constitutes the same cause of action for claim preclusion purposes. Boeken v. Philip Morris USA, Inc., 48 Cal.4th 788, 798 (2010); Brodheim v. Cry, 584 F.3d 1262, 1268 (9th Cir. 2009).

Under the primary rights theory, "a cause of action is (1) a primary right possessed by the plaintiff, (2) a corresponding primary duty devolving upon the defendant, and (3) a harm done by the defendant which consists in a breach of such primary right and duty." City of Martinez v. Texaco Trading & Transp., Inc., 353 F.3d 758, 762 (9th Cir. 2003), citing Citizens for Open Access to Sand and Tide, Inc. v. Seadrift Ass'n, 71 Cal.Rptr.2d 77, 86 (1998). "[I]f two actions involve the same injury to the plaintiff and the same wrong by the defendant, then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery." San Diego Police Officers' Ass'n v. San Diego City Employees' Ret. Sys., 568 F.3d 725, 734 (9th Cir. 2009) (quoting Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 1174 (Ct. Appl. 1983)).

The claims raised in the First Action were brought under: (1) Cal. Civ. Code § 2923.5, et seq; (2) Cal Civ. Code § 2924 et seq; (3) Uniform Commercial Code §§ 3-309, 3-301, et seq; (4) Cal. Bus. & Prof. Code § 17200, et seq; (5) fraudulent deceit under Cal Civ. Code. § 1709, and; (6) Real Party Standing (Dkt. Nos. 4-3, 5 at p. 4). The Second Action pleads: (1) breach of contract; (2) promissory estoppel; (3) actual fraud under Cal. Civ. Code § 1572; (4) violation of Cal. Civ. Code § 2923.6, et seq; (5) violation of Cal. Bus. & Prof. Code § 17200, et seq, and; (6) injunctive relief under Cal. Civ. Code § 2924.12. The Court finds that the primary right implicated in the First and Second Actions is the same, which is the right to challenge a wrongful foreclosure. Plaintiff is therefore barred from bringing the current complaint because it states a cause of action that was resolved in the First Action.

To illustrate, this case is distinct from Brodheim v. Cry, 584 F.3d 1262, 1268-69 (9th Cir. 2009), where the Ninth Circuit Court of Appeals overturned the district court's res judicata ruling on grounds that the federal action was not barred by a preceding state court decision since the claims in each involved different causes of action under the primary rights theory. The state court first denied the prisoner-plaintiff's habeas petition challenging the warden's practice of allowing the prison appeals coordinator to review complaints against himself. The plaintiff then filed a federal action against the appeals coordinator on First Amendment grounds. The court found the two causes of action to be different because the initial state action pled a lack of meaningful review of ...


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