Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-04536/USCOURTS-cand-3_13-cv-04536-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1601 Truth in Lending

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

NORMA PRADO,

Plaintiff,

v.

QUALITY LOAN SERVICE

CORPORATION, et al.,

Defendants.

___________________________________/

No. C-13-4536 EMC

ORDER GRANTING DEFENDANTS’

MOTIONS TO DISMISS

(Docket Nos. 9, 14)

Plaintiff Norma Prado has filed suit against Defendants Quality Loan Service Corporation,

Aurora Loan Services LLC, and Nationstar Mortgage LLC. She has asserted various claims for

relief related to the foreclosure of certain real property located in Hayward, California. Currently

pending before the Court are Defendants’ motions to dismiss. The Court finds this matter suitable

for disposition without oral argument and VACATES the hearing set for January 23, 2014. Having

considered the parties’ briefs and accompanying submissions, the Court hereby GRANTS the

motions.

I. DISCUSSION

A. Claims against Aurora

Aurora makes multiple arguments in its motion to dismiss, but the only one that the Court

need address is that Ms. Prado is barred by res judicata from bringing her claims. Aurora contends

that res judicata is applicable because Ms. Prado previously brought suit against it in state court, also

challenging its authority to foreclose, but a judgment was entered in its favor in May 2013. See

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Docket No. 10 (RJN, Exs. 12-14) (first amended complaint in state court action, court minutes

sustaining demurrer to that complaint, and judgment of dismissal).

The Court agrees with Aurora that res judicata bars Ms. Prado’s claims in the instant case. 

Under Ninth Circuit law, this Court must give the state court judgment the same preclusive effect as

would be given that judgment under the law of California. See Holcombe v. Hosmer, 477 F.3d 1094,

1097 (9th Cir. Nev. 2007). Under California law, res judicata applies where (1) a claim raised in the

present action is identical to a claim litigated in a prior proceeding; (2) the prior proceeding resulted

in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a

party to the prior proceeding. See Boeken v. Philip Morris USA, Inc., 48 Cal. 4th 788, 797 (2010). 

The second and third elements clearly have been met here. As for the first element, the

California Supreme Court has explained that “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.” Id. at 798 (internal quotation marks omitted; emphasis added). In other

words, claims in a prior and present proceeding are identical so long as the plaintiff seeks

compensation for the same harm. See id. Under this standard, the claims at issue in the instant case

are identical to the claims raised in the state court action. Even though different legal claims were

raised in the state court case, Ms. Prado seeks a remedy for the same injury in both cases – in

essence, a wrongful foreclosure.

In her papers, Ms. Prado suggests that res judicata is not a bar because the state court

judgment in favor of Aurora was obtained by fraud. The Ninth Circuit has indicated that res judicata

may be avoided where there is fraud but only where there is extrinsic fraud, and not intrinsic fraud. 

See E.& J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1287-88 (9th Cir. 1992). “Extrinsic

fraud essentially entails preventing a party ‘from presenting all of his case to the court,’ as opposed

to defrauding the party with respect to the substantive rights being adjudicated at a proceeding.” Id.

at 1287 (stating that “[t]he classic example of extrinsic fraud is where ‘the aggrieved party is kept in

ignorance of the proceeding or is in some other way induced not to appear’”); see also Portnoy v. US

Bank NA, No. S-06-2375 LKK GGH PS, 2007 U.S. Dist. LEXIS 88599, at *8 (E.D. Cal. Nov. 30,

2007) (stating that, “[i]f a party was kept ignorant of a lawsuit, induced not to appear, where a claim

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or defense was concealed from a party, or where a judgment was obtained against a party through

coercion or duress, extrinsic fraud may be established[;] [c]onversely, intrinsic fraud goes to the

merits of the original action such as where perjury or altered or forged documents were used”). 

Here, Ms. Prado has only asserted intrinsic fraud, see, e.g., Opp’n at 4 (arguing that, “since

Quality is not a lawful Trustee and none of the Defendants own the Note, you have committed a

fraudulent sale and with the fraud, the res judicata goes out the window”), and therefore her attempt

to avoid res judicata is foreclosed. 

Moreover, even Ms. Prado’s claim of intrinsic fraud is problematic – e.g., she suggests that

MERS did not have the authority to act but that is belied by the face of the deed of trust, which

deems MERS the nominee for the lender as well as its successors and assigns. See Docket No. 10

(RJN, Ex. 1) (Deed of Trust at 2-3); Zadrozny v. Bank of N.Y. Mellon, 720 F.3d 1163, 1170-71 (9th

Cir. 2013) (upholding acts by MERS as it was the nominee beneficiary under the deed of trust on

behalf of the lender); Gomes v. Mortg. Elec. Reg. Sys., No. S-11-1790 KJM GGH PS, 2012 U.S.

Dist. LEXIS 13388, at *7 (E.D. Cal. Feb. 3, 2012) (stating that “California courts have held that

MERS may properly serve as a beneficiary and nominee for the lender when the deed of trust so

specifies”).

The Court acknowledges that Ms. Prado does raise one claim that does not appear to be

barred by res judicata. More specifically, Ms. Prado suggests that Aurora engaged in wrongdoing in

July 2013 (i.e., after entry of the state court judgment) by failing to respond to a qualified written

request that she sent to it. See Compl. at 21-22 (asserting that “Plaintiff demanded . . . that these

named Defendants . . . provide proof of their right to proceed in foreclosure” and “give the name,

address and phone number of the entity or natural person who was in possession of the one original,

wet-ink signature, promissory note that was used as the ‘Corpus’ (body) as an asset for the trust to

still be valid”). 

But even if res judicata is not applicable as to this claim, there is an independent basis for

dismissal. That is, while Ms. Prado professes to be making a claim pursuant to the Fair Debt

Collection Practices Act (“FDCPA”), she is really making a claim pursuant to the Real Estate

Settlement Procedures Act (“RESPA”). See Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666

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 The Court takes judicial notice of this fact.

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(9th Cir. 2012) (discussing qualified written requests pursuant to RESPA). However, the RESPA

claim is not viable because, as this Court has previously held, “‘a request related to ownership of a

loan or validity of a loan [as opposed to servicing] is not covered by RESPA.’” Almutarreb v. Bank

of N.Y. Trust Co., N.A., No. C-12-3061 EMC, 2012 U.S. Dist. LEXIS 137202, at *11 (N.D. Cal.

Sept. 24, 2012).

B. Claims Against Nationstar

The claims against Nationstar are also dismissed. Ms. Prado has failed to allege any specific

wrongdoing by Nationstar and, based on the judicially noticeable documents, it appears that

Nationstar was not involved in the foreclosure but simply acquired the property from Aurora after

the foreclosure sale. See Docket No. 10 (RJN, Ex. 10) (quitclaim deed). 

C. Claims Against Quality

Finally, the claims against Quality are dismissed. Quality correctly argues that (1) the

RESPA claim (incorrectly labeled a FDCPA claim by Ms. Prado) is not viable because Quality was

neither the lender nor loan servicer but rather simply acted as the foreclosure trustee, see, e.g., RJN,

Ex. 2 (substitution of trustee, naming Quality as successor trustee); RJN, Ex. 3 (notice of default,

signed by Quality “as agent for beneficiary”); RJN, Ex. 11 (complaint in state court action, alleging

that Quality was the alleged substituted trustee)1; (2) the quiet title claim is essentially moot as

Quality does not claim any current title to the property; (3) the predatory lending claim is not

plausible as Quality was simply the foreclosure trustee; (4) the claim for declaratory relief is

duplicative of the other claims; and (5) the purported claim for injunctive relief is not viable because

injunctive relief is not a cause of action but rather simply a remedy.

II. CONCLUSION

 For the foregoing reasons, the Court grants the motions to dismiss. The dismissal is with

prejudice as Ms. Prado has failed to make any argument in her opposition that would suggest that

any claims against Defendants would not be futile. The critical problem for Ms. Prado is that her

claims against all Defendants ultimately rest on the alleged wrongdoing of Aurora (who was

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assigned the deed of trust by the original lender, see RJN, Ex. 6), but the claims against Aurora are

clearly barred by the doctrine of res judicata. The Court also notes that Ms. Prado’s complaint is

problematic in that it appears predicated in large part on an alleged securitization but she has failed

to show a good faith belief that her loan was ever placed into a REMIC trust; indeed, she never

names or otherwise identifies the trust in any of her papers.

Accordingly, the Court instructs the Clerk of the Court to enter judgment in accordance with

this opinion and close the file in this case. 

This order disposes of Docket Nos. 9 and 14.

IT IS SO ORDERED.

Dated: January 6, 2014

_________________________

EDWARD M. CHEN

United States District Judge

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