United States District Court, S.D. California
STEVEN H. LUCORE, SR., JUDY L. LUCORE, Plaintiffs,
U.S. BANK, NA, as Trustee for the Certificate Holders of Bank of America Funding Corporation Mortgage Pass-Through Certificates, Series 2006-H, Defendant.
(1) GRANTING DEFENDANT'S MOTION TO DISMISS; (2)
DISMISSING WITHOUT PREJUDICE PLAINTIFFS' SECOND AMENDED
COMPLAINT; (3) GRANTING DEFENDANT'S REQUEST FOR JUDICIAL
NOTICE; AND (4) GRANTING PLAINTIFFS' MOTION TO AMEND
COMPLAINT (ECF NOS. 41, 46)
Janis L. Sammartino, United States District Judge
before the Court is Defendant U.S. Bank's Motion to
Dismiss Plaintiffs' Second Amended Complaint,
(“MTD, ” ECF No. 41). Additionally, Defendant
filed a Request for Judicial Notice (“RJN”), (ECF
No. 42). Also before the Court is Plaintiffs Steven H. Lucore
and Judy L. Lucore's Opposition to, (“Lucore
Opp'n, ” ECF No. 44), the Motion to Dismiss.
Defendant did not file a reply brief.
Court vacated the hearing for Defendant's MTD and took
the matter under submission without oral argument pursuant to
Civil Local Rule 7.1(d)(1). (ECF No. 45.) After the Court
vacated the hearing, Plaintiffs filed a Motion to File a
Third Amended Complaint, (“MTN, ” ECF No. 46).
Defendant filed an Opposition to, (“U.S. Bank
Opp'n, ” ECF No. 48), and Plaintiffs filed a Reply
in support of, (“Reply, ” ECF No. 54), the motion
to amend. Having considered the parties' arguments and
the law, the Court GRANTS Defendant's
MTD (ECF No. 41), DISMISSES WITHOUT
PREJUDICE Plaintiffs' Second Amended Complaint,
(“SAC, ” ECF No. 40), and GRANTS
Defendant's RJN (ECF No. 42). The Court GRANTS IN
PART and DENIES IN PART
Plaintiffs' RJN, (ECF No. 44). Additionally, the Court
GRANTS Plaintiffs' Motion to File a
Third Amended Complaint, (ECF No. 46).
around January 6, 2009, Plaintiffs allegedly rescinded a
mortgage loan encumbering real property located at 11132
Summit Avenue, Santee, CA 92071 (the Property). (SAC ¶
7.) Defendant foreclosed the Property on August 18, 2011,
(id. ¶ 11), and pursued three eviction
proceedings in state court against Plaintiffs in February
2013, (id. ¶ 12), and in April and June 2015,
(id. ¶¶ 13-14). All eviction cases have
been dismissed. (Id. ¶¶ 11-13.) Defendant
has threatened to sell the Property since August 21, 2015.
(Id. ¶ 15.)
October 8, 2015, Plaintiffs filed a complaint alleging two
causes of action for violation of the Rosenthal Fair Debt
Collection Practices Act (“RFDCPA”) and violation
of California's Unfair Competition Law
(“UCL”) § 17200, (ECF No. 1). On October 26,
2015, Plaintiffs filed an amended complaint alleging the same
causes of action as their original complaint. (ECF No. 7.)
Defendant filed a motion to dismiss or, alternatively, to
stay the proceedings pending the outcome of related state
court litigation. (ECF No. 9.) After this action was
transferred from Judge Roger T. Benitez to this Court
pursuant to the low number rule, (ECF No. 15), the Court
stayed the proceedings pending the outcome of state court
litigation, (ECF No. 24). The Court lifted the stay on August
14, 2017, (ECF No. 39). Then, Plaintiffs' filed their
Second Amended Complaint, (“SAC, ” ECF No. 40).
The parties then filed the present motions.
Rule of Civil Procedure 12(b)(6) permits a party to raise by
motion the defense that the complaint “fail[s] to state
a claim upon which relief can be granted, ” generally
referred to as a motion to dismiss. The Court evaluates
whether a complaint states a cognizable legal theory and
sufficient facts in light of Federal Rule of Civil Procedure
8(a), which requires a “short and plain statement of
the claim showing that the pleader is entitled to
relief.” Although Rule 8 “does not require
‘detailed factual allegations, ' . . . it demands
more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). In other words, “a
plaintiff's obligation to provide the ‘grounds'
of his ‘entitle[ment] to relief' requires more than
labels and conclusions, and a formulaic recitation of a cause
of action's elements will not do.”
Twombly, 550 U.S. at 555 (alteration in original).
“Nor does a complaint suffice if it tenders
‘naked assertion[s]' devoid of ‘further
factual enhancement.'” Iqbal, 556 U.S. at
678 (alteration in original) (quoting Twombly, 550
U.S. at 557).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Id. (quoting Twombly, 550 U.S. at 570);
see also Fed. R. Civ. P. 12(b)(6). A claim is
facially plausible when the facts pled “allow the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). That is not to
say that the claim must be probable, but there must be
“more than a sheer possibility that a defendant has
acted unlawfully.” Id. (citing
Twombly, 550 U.S. at 556). “[F]acts that are
‘merely consistent with' a defendant's
liability” fall short of a plausible entitlement to
relief. Id. (quoting Twombly, 550 U.S. at
557). Further, the Court need not accept as true “legal
conclusions” contained in the complaint. Id.
at 678-79 (citing Twombly, 550 U.S. at 555). This
review requires “context-specific” analysis
involving the Court's “judicial experience and
common sense.” Id. at 679. “[W]here the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has
alleged- but it has not ‘show[n]'-‘that the
pleader is entitled to relief.'” Id.
(quoting Fed.R.Civ.P. 8(a)(2)). The Court will grant leave to
amend unless it determines that no modified contention
“consistent with the challenged pleading . . . [will]
cure the deficiency.” DeSoto v. Yellow Freight
Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting
Schriber Distrib. Co. v. Serv-Well Furniture Co.,
806 F.2d 1393, 1401 (9th Cir. 1986)).
Request for Judicial Notice
requests the Court take judicial notice of various state
court actions associated with the Property and Plaintiffs.
(See ECF No. 42.) The request is unopposed.
Federal Rule of Evidence 201, the court may take judicial
notice of “a fact that is not subject to reasonable
dispute because it can be accurately and readily determined
from sources whose accuracy cannot reasonably be
questioned.” Fed.R.Evid. 201(b). In addition, a court
also may take judicial notice of material incorporated by
reference into the complaint without converting the motion to
dismiss into a motion for summary judgment. Coto
Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir.
2010); Intri-Plex Techs., Inc. v. Crest Group, Inc.,
499 F.3d 1048, 1052 (9th Cir. 2007). Documents are
incorporated into the complaint by reference “in
situations where the complaint necessarily relies upon a
document or the contents of the document are alleged in a
complaint, the document's authenticity is not in question
and there are no disputed issues as to the document's
relevance.” Coto Settlement, 593 F.3d at 1038;
see also United States v. Corinthian Colls., 655
F.3d 984, 999 (9th Cir. 2011).
court records submitted by Defendant support its contention
that Plaintiffs' claims are barred by res judicata. A
court may take judicial notice of its own files and of
documents filed in other courts for the purpose of
determining whether a party's claims are barred by res
judicata. See, e.g., Reyn's Pasta Bella, LLC
v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir.
2006); Holder v. Holder, 305 F.3d 854, 866 (9th Cir.
2002). Here, the Court must consider whether Plaintiffs'
claims are barred by res judicata and, in the context of
Plaintiffs' Motion to Amend, (ECF No. 46), whether
amending to add a defendant would also be barred under res
judicata. Therefore, the Court GRANTS
Defendant's Request for Judicial Notice, (ECF No. 42).
also submitted a RJN as part of their Opposition.
(See Opp'n 11.) Plaintiffs request the Court
notice state court documents related to the unlawful detainer
action filed by Defendant against Plaintiffs in state court,
the Supreme Court's opinion in Jesinoski v.
Countrywide Home Loans, Inc., 135 S.Ct. 790 (2015), and
an opinion from the federal district in the District of
Oregon. (See Opp'n 14.) Plaintiffs' request
well established that that courts may consider legal
reasoning and conclusions of other federal courts without
resort to Rule 201. See, e.g., Derum v. Saks
& Co., 95 F.Supp.3d 1221, 1224 (S.D. Cal. 2015)
(citing McVey v. McVey, 26 F.Supp.3d 980, 984- 85
(C.D. Cal. 2014)). Therefore, the Court GRANTS IN
PART and DENIES IN PART
Plaintiffs' Request for Judicial Notice. The Court grants
the request with respect to documents relating to the
unlawful detainer action. The Court denies the request with
respect to the legal opinions. The Court will consider the
legal opinions for any value they might have as precedent.
argues that res judicata bars Plaintiffs' claims. (MTD
4.) The doctrine of res judicata gives conclusive effect to
former judgment in subsequent litigation involving the same
controversy. People v. Barragan, 32 Cal.4th 236, 252
(2004). Res judicata has two aspects: claim preclusion and
collateral estoppel. “Claim preclusion, the
‘primary aspect' of res judicata, acts to bar
claims that were, or should have been, advanced in a previous
suit involving the same parties. Issue preclusion, the
‘secondary aspect' historically called collateral
estoppel, describes the bar on relitigating issues that were
argued and decided in the first suit.” DKN Holdings
LLC v. Faerber, 61 Cal.4th 813, 824, (2015) (internal
quotation marks omitted) (quoting Boeken v. Philip Morris
USA, Inc., 48 Cal.4th 788, 797 (2010)). “It has
long been established that [28 U.S.C.] § 1738 does not
allow federal courts to employ their own rules of res
judicata in determining the effect of state judgments.”
Kremer v. Chem. Constr. Corp., 456 U.S. 461, 481-82
(1982); see also In re Bugna, 33 F.3d 1054, 1057
(9th Cir. 1994) (“In determining the collateral
estoppel effect of a state court judgment, federal courts
must, as a matter of full faith and credit, apply that
state's law of collateral estoppel.”).
California, the elements for applying claim preclusion to a
second suit are: “(1) the same cause of action (2)
between the same parties (3) after a final judgment on the
merits in the first suit.” DKN Holdings, 61
Cal.4th at 824 (citing, e.g., Mycogen Corp. v. Monsanto
Co., 28 Cal.4th 888, 896 (2002)). “If claim
preclusion is established, it operates to bar relitigation of
the claim altogether.” Id.
determine whether two proceedings involve identical causes of
action for purposes of claim preclusion, California courts
have ‘consistently applied the primary rights
theory.'” Id. (quoting Slater v.
Blackwood, 15 Cal.3d 791, 795 (1975)). Under the primary
rights 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.” Id. at 797-98
(quoting McKee v. Dodd, 152 Cal. 637, 641 (1908)).
In the context of res judicata, “a 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. (citing Bay
Cities Paving & Grading, Inc. v. Lawyers' Mut. Ins.
Co., 5 Cal.4th 854, 860 (1993)).
as most states, recognizes that the doctrine of res judicata
will bar not only those claims actually litigated in a prior
proceeding, but also claims that could have been
litigated.” Castle v. Mortgage Elec.
Registration Sys., Inc., No. CV 11-00538, 2011 WL
3626560, at *4 (C.D. Cal. Aug. 16, 2011) (emphasis added)
(citing Palomar Mobilehome Park Ass'n v. City of San
Marcos, 989 F.2d 362, 364 (9th Cir.1993)). Additionally,
“res judicata operates as a bar to the maintenance of a
second suit between the same parties or parties in privity
with them on them on the same cause of action.”
Rice v. Crow, 81 Cal.App.4th 725, 734 (Ct. App.
2000) (emphasis omitted) (quoting Branson v. Sun-Diamond
Growers, 24 Cal.App.4th 327, 340 (Ct. App. 1994)). The
Court applies California's claim preclusion standard.
Identity of Claims
first element requires determining whether two causes of
action are the same, using the primary rights theory. See
DKN Holdings, 61 Cal.4th at 824. The Court first
examines the previously litigated primary right. Then, the
Court will examine the primary right at issue in this
litigation to determine whether the primary rights are the
same. The Court concludes by examining the primary rights at
issue in Plaintiffs' declaratory relief cause of action.
Previously Litigated Primary Right
Court recites the following facts taken from the California
Court of Appeal's unpublished decision in Lucore v.
U.S. Bank, N.A., No. D070103, 2017 WL 694530
(Cal.Ct.App. Feb. 22, 2017) (unpublished
decision). In November 2010, Plaintiffs filed a
verified complaint in San Diego Superior Court against U.S.
Bank, Recontrust, BAC Home Loans Servicing, LP, and other
individuals (“First State Court Action”).
Id. at *2. They alleged causes of action seeking to
prevent a foreclosure sale and quiet title to the Property.
Id. Plaintiffs alleged that the notice of default on
their mortgage was void because the assignment/substitution
of trustee was recorded after filing of the notice of
trial court sustained the defendant's demurrer without
leave to amend and entered judgment in favor of the
defendants. Id. The trial court found that
Plaintiffs' complaint failed as a matter of law because
it was predicated on an erroneous allegation that Mortgage
Electronic Registration Systems, Inc. (“MERS, ”
the entity that was the original beneficiary of
Plaintiffs' Deed of Trust) did not have the authority to
substitute trustees and assign the deed of trust to a new
trustee. The court ruled that MERS had the authority under
California law to substitute trustees and, further, that the
recorded documents were valid. Id. In May 2011, a
Notice of Trustee's Sale was recorded and on August 18,
2011 Defendant purchased Property at the foreclosure sale.
2012, Plaintiffs filed an adversary proceeding against the
same defendants, including U.S. Bank, in the Southern
District of California Bankruptcy Court (“Bankruptcy
Action”). Id. They asserted various claims
including mortgage fraud, breach of contract, fraudulent
documentation recordation, and other violations of law.
Id. The bankruptcy court dismissed Plaintiffs'
adversary complaint without leave to amend. Id.
October 2013, Plaintiffs filed a complaint in San Diego
Superior Court (“Second State Court Action”).
Id. They alleged several causes of action including
wrongful foreclosure, quiet title, declaratory relief, unfair
business practices, and cancellation of instruments against
the same defendants, including U.S. Bank. Id.
Plaintiffs argued that flaws in the securitization process
meant that U.S. Bank was an improper party to the foreclosure
sale. They also argued several recording documents were
invalid due to improper signatures. Id. The
defendants demurred arguing that Plaintiffs' First State
Court Action and the Bankruptcy Action involved the same
facts and theories and the final judgments in both those
actions were entitled to preclusive effect. Id. The
trial court found that Plaintiffs' claims were barred by
res judicata and collateral estoppel. Id. Plaintiffs
appealed to the California Court of Appeal.
Court of Appeal affirmed the trial court's judgment and
concluded that the Second State Court Action concerned the
same primary rights litigated in the First State Court
Action. Id. The court affirmed the trial court on
the grounds that res judicata as to the First State Court
Action was proper, but did not reach ...