Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-02246/USCOURTS-casd-3_15-cv-02246-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1367 Other Property Damage

---

1

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

STEVEN H. LUCORE, SR., JUDY L. 

LUCORE,

Plaintiffs,

v.

US BANK, NA, as Trustee for the 

Certificate Holders of Bank of America 

Funding Corporation Mortgage PassThrough Certificates, Series 2006-H,

Defendant.

Case No.: 15-CV-2246 JLS (MDD)

ORDER: (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)

Presently 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 Opposition1to, (“Lucore Opp’n,” ECF No. 44),

 

1 Plaintiffs also appended a Request for Judicial Notice as part of their Opposition. The Court discusses 

this request in conjunction with Defendant’s RJN.

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 1 of 24
2

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Motion to Dismiss. Defendant did not file a reply brief.

The 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). 

BACKGROUND

On or 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.)

On 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 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 2 of 24
3

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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.

MOTION TO DISMISS

I. Legal Standard

Federal 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-harmedme 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).

“To 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 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 3 of 24
4

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

“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)).

II. Analysis

A. Request for Judicial Notice

Defendant 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.

Under 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).

The 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 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 4 of 24
5

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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).

Plaintiffs 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 is 

unopposed.

It is 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.

B. Res Judicata

Defendant 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 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 5 of 24
6

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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.”).

In 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. 

“To 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)).

“California, 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)). 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 6 of 24
7

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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.

1. Identity of Claims

The 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.

a. Previously Litigated Primary Right

The 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).2 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 default. Id.

The 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 

 

2 Defendant’s RJN does not include the filings from the First and Second State Court Actions, but the RJN 

does include the California Court of Appeal’s decision in Lucore v. U.S. Bank.

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 7 of 24
8

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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. Id.

In June 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.

In 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. 

The 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 the issue of whether the 

Bankruptcy Action also barred the Second State Court Action. Id.

In September 2015, Plaintiffs filed a complaint in San Diego Superior Court against 

U.S. Bank, Recontrust, and added a new defendant, Home Servicing (“Third State Court 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 8 of 24
9

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Action”). Id. at *3. This action challenged the August 2011 foreclosure sale and asserted 

causes of action for wrongful foreclosure, quiet title, and cancellation of instruments. Id. 

Plaintiffs alleged that the foreclosure sale was invalid because Plaintiffs timely rescinded 

the mortgage note under the Truth in Lending Act. Id. The trial court sustained the 

defendants’ demurrer without leave to amend on res judicata grounds. Id.

Plaintiffs appealed to the Court of Appeal, as they did in the Second State Court 

Action. The court affirmed the trial court judgment because the causes of action in the 

Second and Third Actions involved the same primary right. Id. at *4. In both cases, 

Plaintiffs sought to recover for the loss of title to their home resulting from nonjudicial 

foreclosure. The only difference between the two actions was “the assertion of a new legal 

theory as a basis for invalidating the sale and the loan/title documents.” Id. The court 

described the different legal theories as follows: in the First and Second State Court Actions 

Plaintiffs argued that the securitization and alleged invalid assignments resulted in 

wrongful foreclosure. In the Third State Court Action, Plaintiffs argued their purported

rescission, authorized by the Truth in Lending Act, invalidated their Deed of Trust, 

resulting in a wrongful foreclosure sale. Id. The difference in legal theories did not affect 

the applicability of res judicata. Id. (citing Gillies v. JPMorgan Chase Bank, N.A., 7 Cal. 

App. 5th 907, 914 (Ct. App. 2017) (“It matters not that appellant has a new theory of 

wrongful foreclosure. It is the same primary right which appellant has always claimed.”)

The Court of Appeal also refused Plaintiffs’ request to revisit its previous decision 

that the Second State Court Action was barred by the judgment in the First State Court 

Action. Id. The court noted that a “judgment[,] having become final . . . in conclusive, 

whether matter was rightly or wrongly decided, as to all matters presented or which [c]ould 

have been presented.” Id. (alterations in original) (quoting Creditors Adjustment Co. v. 

Newman, 185 Cal. 509, 513 (1921)). The court concluded that the trial court in the Second 

State Court Action properly had jurisdiction over the parties and the subject matter, the 

judgment was final, and therefore, could not be collaterally attacked. Id. Res judicata

barred Plaintiffs’ Third State Court Action. Id. at *7.

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 9 of 24
10

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

b. Primary Right in Present Litigation

Here, Defendant argues that Plaintiffs’ SAC involves the same primary right as the 

First State Court Action. (MTD 5.) The First Action alleged that U.S. Bank’s foreclosure 

on the Property was void because the loan was rescinded. (Id.) In this action, Plaintiffs’ 

SAC alleges that they rescinded their loan in January 2009. (Id. (citing SAC ¶ 9).) Thus, 

the foreclosure sale was void. (Id. (citing SAC ¶ 13).) Plaintiffs now seek to recover based 

on violations of the RFDCPA, UCL, and declaratory relief. (See id. (citing SAC ¶¶ 19–

37).) Defendant argues these causes of action necessarily rely on the same predicate 

allegation: foreclosure on the Property was void. (Id.) Defendant urges the Court to find 

the predicate allegation to be the same primary right as previously litigated and therefore 

the SAC involves identical primary right. (See id. at 5–6.) 

Plaintiffs counter that the primary rights at issue in this case and the prior state court 

actions are distinct. (Opp’n 7.) They characterize the previous actions as challenging 

Defendant’s compliance with the non-judicial foreclosure statute. (Id.) This current action 

arises from Defendant’s unlawful detainer actions, which sought to take possession of the 

Property acquired at the August 2011 foreclosure sale. (Id.) To date, Defendant has been

unsuccessful in these actions. (Id.) Thus, Plaintiffs argue that the primary right at issue

here arises from their possession interest in the Property—at issue in the unlawful detainer 

actions—and not from their ownership interest, which they concede is barred by res 

judicata. (Id. at 9.)

The issue here is whether Defendant’s conduct in filing repeated unlawful detainer 

actions in state court gives rise to a separate primary right than was at issue in the previous 

litigation that would be barred by res judicata. The Court answers this question by first 

examining the right at issue in a nonjudicial foreclosure sale, second by examining the right 

at issue in an unlawful detainer action, and third by comparing the right in those actions to 

the primary right in this action.

California Civil Code section 2924 addresses the subject of non-judicial foreclosure 

of real property. 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 10 of

 24
11

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

[S]ections 2924 through 2924k provide a comprehensive 

framework for the regulation of a non-judicial foreclosure sale 

pursuant to a power of sale contained in a deed of trust. This 

comprehensive statutory scheme has three purposes: (1) to 

provide the creditor/beneficiary with a quick, inexpensive and 

efficient remedy against a defaulting debtor/trustor; (2) to protect 

the debtor/trustor from wrongful loss of the property; and (3) to 

ensure that a properly conducted sale is final between the parties 

and conclusive as to a bona fide purchaser. . . . As a general rule, 

the purchaser at a nonjudicial foreclosure sale receives title under 

a trustee’s deed free and clear of any right, title, or interest of the 

trustor. A properly conducted nonjudicial foreclosure sale 

constitutes a final adjudication of the rights of the borrower and 

lender.

Wells Fargo Bank v. Neilsen, 178 Cal. App. 4th 602, 613–14 (Ct. App. 2009) (internal 

citations and quotations omitted) (quoting Melendrez v. D & I Investment, Inc., 127 Cal. 

App. 4th 1238, 1249–50 (Ct. App. 2005)).

“California’s unlawful detainer statutory scheme was designed to adjudicate the 

right to possession of realty between a landlord and tenant when the tenant is in violation 

of the lease.” In re Perl, 811 F.3d 1120, 1128 (citing Knowles v. Robinson, 387 P.2d 833, 

836–37 (Cal. 1963)). “The unlawful detainer provisions authorize a summary proceeding 

that adjudicates the right to immediate possession of the property.” Id. (citing Vella v. 

Hudgins, 572 P.2d 28, 30 (Cal. 1977)). Thus, claims regarding title to the property are not 

generally litigated in an unlawful detainer action. Id. An exception to this rule is California 

Code of Civil Procedure section 1161a, which governs the right of possession by a party 

initiating an unlawful detainer proceeding after obtaining title at a nonjudicial foreclosure 

sale. Id. “The exception allows for ‘a narrow and sharply focused examination of title.’” 

Id. (quoting Vella, 572 P.2d at 30; and citing Mortg. Guarantee Co. v. Smith, 50 P.2d 835, 

836 (Cal. 1935) (noting that in actions brought under § 1161a, title is determined “as a 

necessary element of the remedy of unlawful detainer”)). Section 1161a specifically 

applies “[w]here the property has been sold in accordance with Section 2924 of the Civil 

Code, under a power of sale contained in a deed of trust executed by such person, or a 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 11 of

 24
12

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

person under whom such person claims, and the title under the sale has been duly 

perfected.” Cal. Code Civ. Proc. § 1161a(b)(3).

Here, Defendant filed an unlawful detainer action against Plaintiffs pursuant to 

section 1161a. (See Opp’n 568.) Defendant expressly alleged in its complaint that it had 

perfected legal title to the property by a foreclosure sale. (Id. at 570.) The Lucores, who 

were defendants in the unlawful detainer action, answered and pled the affirmative defense 

“[U.S. Bank] is not entitled to possession as the foreclosure sale was not duly conducted in 

compliance with Civil Code section 2924. The sale was void as a matter of law.” (Id. at 

587.) Therefore, the conduct of the foreclosure sale and the validity of the resulting transfer 

of title to U.S. Bank were directly at issue in the unlawful detainer case. The only legal 

basis that U.S. Bank could (and did) assert its right to possession of the Property was its 

“duly perfected” legal title obtained in the nonjudicial foreclosure sale. See Cal. Civ. Code 

§ 2924; Malkoski v. Option One Mortg. Corp., 188 Cal. App. 4th 968, 974 (Ct. App. 2010).

In the Third State Court Action, the California Court of Appeal described Plaintiffs’ 

primary right as “recover[y] for the loss of title to their home resulting from the August 

2011 nonjudicial foreclosure sale.” Lucore, 2017 WL 694530, at *4. In the Third State 

Court Action, Plaintiffs’ theory rested on the ability to rescind their Note under the Truth 

in Lending Act (“TILA”), resulting in a wrongful foreclosure sale and the loss of their 

home. Id. Here, Plaintiffs’ legal theory is that they are not suing based on the wrongful 

foreclosure sale and loss of their home, but on Defendant’s unlawful detainer action. 

Plaintiffs allege violations of RFDCPA stemming from the unlawful detainer 

actions. (SAC ¶¶ 12–15.) The right to title had to be resolved in the unlawful detainer 

action. Malkoski, 188 Cal. App. 4th at 974 (“Under section 1161a, Code of Civil 

Procedure, a purchaser who has acquired the title at such trustee’s sale must prove that the 

property was sold in accordance with section 2924 of the Civil Code under a power of sale 

and that title under the sale has been duly perfected. Under such unlawful detainer statutes 

title to the extent required by section 1161a not only may but must be tried. . . .” (quoting 

Bliss v. Security-First Nat’l Bank, 81 Cal. App. 2d 50, 58–59 (Ct. App. 1947))). 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 12 of

 24
13

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Plaintiffs’ RFDCPA claim also rests on an allegation that Defendant threatened to 

sell the Property on the open market without the legal right to do so. (SAC ¶ 20.) The 

RFDCPA provides statutory recourse for certain threats made by debt collectors against 

debtors. See Cal. Civ. Code § 1788.10. Here, Plaintiffs allege Defendant’s threats to sell 

the Property were without legal right to do so; the lack of legal right stemmed from the 

allegedly wrongful foreclosure on the Property. Put differently, Defendant could not sell 

or threaten to sell Plaintiffs’ Property without title to the Property. Thus, the threat to sell 

also rests on the same primary right at issue in the unlawful detainer action and the previous 

state court action. The Court finds that Plaintiffs’ RFDCPA claim ultimately rests on the 

same primary right as was asserted in the Third State Court Action.

Plaintiffs place emphasis on the fact that Defendant has been unsuccessful in its 

unlawful detainer action—Defendant has had three successive unlawful detainer actions 

dismissed. (Opp’n 7.) In May 2015, the Superior Court of San Diego entered judgment in 

favor of the Lucores because U.S. Bank did not provide evidence of the trustee’s authority 

to conduct the foreclosure sale. (Opp’n 17.) This outcome does not reflect the nature of 

the primary right at issue. Regardless of the success or failure of U.S. Bank in prosecuting 

its unlawful detainer, it could not have legally brought the claim without litigating the same 

primary right litigated in the Third State Court Action. 

c. Primary Right at Issue in Plaintiffs’ Declaratory Relief Claim

The Court also finds that Plaintiffs’ third cause of action for declaratory relief also 

relies on the same primary right as the Third State Court Action. Plaintiffs contend that 

they validly rescinded their Note and Deed of Trust and that no party could enforce the 

Note. (SAC ¶¶ 30–32.) This cause of action involves the same primary right at issue in 

the prior litigation: the right to recover their loss of title to their Property from the August 

2011 non-judicial sale. The only difference in this litigation is that Plaintiffs advance a 

new legal theory based on violation of the federal Truth in Lending Act, 15 U.S.C. § 1635. 

Plaintiffs argue that the non-judicial foreclosure is invalid because of the TILA rescission. 

However, res judicata bars claims that could have been litigated in the prior proceeding. 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 13 of

 24
14

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

See Federal Home Loan Bank of S.F. v. Countrywide Fin. Corp., 214 Cal. App. 4th 1520, 

1527 (Ct. App. 2013). Plaintiffs allegedly rescinded their Note in January 2009; their first 

state court complaint was filed in November 2010. Plaintiffs could have previously raised 

a TILA rescission claim, but failed to do so.

Moreover, Plaintiffs’ advanced the exact same TILA rescission argument in the 

Third State Court Action. See Lucore, 2017 WL 694530, at *4 (“In the Third Action, the 

Lucores argue their loan rescission means that the Deed of Trust was extinguished, 

resulting in a wrongful foreclosure sale and the loss of the home. This difference in legal 

theories does not affect the applicability of the res judicata doctrine.”). The same reasoning 

and outcome applies here; Plaintiffs’ declaratory relief claim involves the same primary 

right as previously litigated. The foregoing conclusion is true even if the previous decision 

were erroneous. See Slater, 15 Cal. 3d at 797 (citations omitted).

2. Identity of Parties

The second element requires that the prior suit be between the same parties or parties 

in privity with them. DKN Holdings, 61 Cal. 4th at 824. Here, both U.S. Bank and the 

Lucores were parties to all previous actions as well as the current litigation. Therefore, 

they are the same parties.

3. Final Judgment on the Merits 

The third element requires a final judgment on the merits. Id. A judgment obtained 

“after the sustain of a general demurrer on a ground of substance,” including “that an 

absolute defense is disclosed by the allegations of the complaint,” is “a judgment on the 

merits[] and conclusive in a subsequent suit.” Goddard v. Security Tile Ins. & Guarantee 

Co., 14 Cal. 2d 47, 52 (1939). In both the Second and Third State Court Actions, the 

defendants raised a complete defense of res judicata. See Lucore, 2017 WL 694530, at *5–

6. The First State Court Action, the Bankruptcy Action, Second State Court Action, and 

Third State Court Action were all final judgments on the merits. See id. Plaintiffs appealed 

the Second and Third State Court Actions and both of those affirmed the superior court 

judgments. The Court finds that all three elements for claim preclusion are met; therefore, 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 14 of

 24
15

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Court finds that Plaintiffs’ RFDCPA and declaratory relief claims are barred by claim 

preclusion. 

4. Effect of Claim Preclusion on UCL Cause of Action

Plaintiffs’ Unfair Competition Law (“UCL”) cause of action expressly relies on a 

violation of the RFDCPA, (SAC ¶ 24 (“Defendant U.S. Bank’s wrongful and egregious 

conduct in violation of RFDCPA is actionable under California Business & Professions 

Code [§] 17200.”).), and does not allege an alternate grounds for relief. To the extent that 

claim preclusion bars relitigation of the RFDCPA claim it must also bar Plaintiffs’ UCL.

C. Plaintiffs’ TILA Rescission

Defendant also argues, as an alternate grounds, that all causes of actions in the SAC 

are predicated on the fact that Plaintiffs validly rescinded their loan in January 2009. (MTD 

6.) Defendant argues that Plaintiffs’ SAC does not allege when the rescission notice was 

mailed, who the notice was mailed to, or a copy of the rescission notice. (Id. at 7.) Plaintiff 

does not respond to Defendant’s argument about the TILA rescission in its Opposition.

The Court understands Defendant’s points, but given the Court’s claim preclusion

finding, declines to reach the issue whether Plaintiffs’ TILA rescission claims fail as a 

matter of law.

3

In light of the foregoing, the Court GRANTS Defendant’s Motion to Dismiss, (ECF 

No. 41), and DISMISSES WITHOUT PREJUDICE Plaintiffs’ SAC, (ECF No. 40).

MOTION TO AMEND

I. Legal Standard

Pursuant to Federal Rule of Civil Procedure 15(a), a plaintiff may amend his 

complaint once as a matter of course within specified time limits. Fed. R. Civ. P. 15(a)(1). 

“In all other cases, a party may amend its pleading only with the opposing party’s written 

consent or the court’s leave. The court should freely give leave when justice so requires.” 

 

3 The Court also notes that Plaintiffs’ have, in fact, included their purported TILA rescission notice as part 

of their RJN. (See ECF No. 44, at 108–12.)

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 15 of

 24
16

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Fed. R. Civ. P. 15 (a)(2).

While courts exercise broad discretion in deciding whether to allow amendment, 

they have generally adopted a liberal policy. See United States ex rel. Ehmcke Sheet Metal 

Works v. Wausau Ins. Cos., 755 F. Supp. 906, 908 (E.D. Cal. 1991) (citing Jordan v. Cnty. 

of Los Angeles, 669 F.2d 1311, 1324 (9th Cir.), rev’d on other grounds, 459 U.S. 810 

(1982)). Accordingly, leave is generally granted unless the court harbors concerns “such 

as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to 

cure deficiencies by amendments previously allowed, undue prejudice to the opposing 

party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v. 

Davis, 371 U.S. 178, 182 (1962). “Amendments seeking to add claims are to be granted 

more freely than amendments adding parties.” Union Pac. R.R. Co. v. Nev. Power Co., 

950 F.2d 1429, 1432 (9th Cir. 1991) (citing Martell v. Trilogy Ltd., 872 F.2d 322, 324 (9th 

Cir. 1989)). Additionally, “the party opposing amendment has the burden of showing that 

amendment is not warranted.” Wizards of the Coast LLC v. Cryptozoic Entm’t LLC, 309 

F.R.D. 645, 649–50 (W.D. Wash. 2015) (citing, e.g., DCD Programs, Ltd. v. Leighton, 833 

F.2d 183, 187 (9th Cir. 1987)).

II. Analysis

Plaintiffs seek to add Bank of America, N.A., previously identified as one of the Doe 

Defendants. (MTN 2, ECF No. 46-1.) Plaintiffs’ proposed third amended complaint would 

allege all previous causes of action against both U.S. Bank and Bank of America. 

Additionally, Plaintiffs’ move to amend their SAC by adding two new causes of action: a 

malicious prosecution action and an intentional infliction of emotional distress claim 

against both U.S. Bank and Bank of America. (Id. at 17, 19.)

Defendant argues that Plaintiffs’ amendment should be denied because such an 

amendment would be futile. (U.S. Bank Opp’n 3.) Specifically, Defendant argues that if 

the Court finds that Plaintiffs’ Second Amended Complaint is barred by the doctrine of res 

judicata then adding a new defendant, under the same causes of action, would likewise be 

barred by res judicata. (See id. at 4.) Defendant also argues that the two additional causes 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 16 of

 24
17

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of action—malicious prosecution and intentional infliction of emotional distress—rely on 

the allegation that the non-judicial foreclosure of Plaintiffs’ Property by U.S. Bank is void. 

(Id.) Thus, those causes of action would likewise be barred by res judicata.

Defendant also argues that Plaintiffs’ motion is in bad faith because Plaintiffs have 

offered no justification why their present amendments could not have been raised in 

Plaintiffs’ prior motion to amend. (Id. at 5–6.) Next, Defendant argues Plaintiffs’ motion 

is an undue delay. According to Defendant, Plaintiffs knew Bank of America was their 

loan servicer and have sued them in the past. (Id. at 6.) Thus, Plaintiff presents no new 

facts, but rather new legal theories—these theories could have been raised in Plaintiffs’ 

previous amendment. Finally, Defendant argues there is prejudice to it because Defendant

will have to file a new motion to dismiss asserting the same arguments as the present 

motion to dismiss. (Id.)

In reply, Plaintiffs argue their proposed third amended complaint would not be 

barred by res judicata because their new causes of action have nothing to do with the Truth 

in Lending Act rescission or any res judicata matter concerning Plaintiffs’ prior actions. 

(Reply 6.) Plaintiffs’ new causes of action accrue “[a]s a direct result of the defendant’s 

conduct.” (Id.) Plaintiffs also argue that they uncovered the identity of the Doe defendant 

after the filing of the Second Amended Complaint, which obviates Defendant’s bad faith 

and undue delay arguments. (See id. at 6–7.) Plaintiffs do not offer an argument whether 

Bank of America would be barred under res judicata as to the RFDCPA, UCL, and 

declaratory relief causes of action.

A. Proposed Party

Plaintiffs seek to add Bank of America as a new defendant, previously identified in 

prior complaints as a “Doe 1 defendant.” (MTN 2.) The Court first examines whether, 

sitting in diversity, Plaintiffs may add a new defendant. 

“The general rule is that an amended complaint that adds a new defendant does not 

relate back to the date of filing the original complaint and the statute of limitations is 

applied as of the date the amended complaint is filed, not the date the original complaint is 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 17 of

 24
18

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

filed.” Woo v. Superior Court, 75 Cal. App. 4th 169, 176 (Ct. App. 1999) (citations 

omitted). But, “[a] recognized exception to the general rule is the substitution under 

Section 474 of a new defendant for a fictitious Doe defendant named in the original 

complaint as to whom a cause of action was stated in the original complaint.” Id. (citing 

Cal Code Civ. Proc. § 474). Where section 474 applies, “the amended complaint 

substituting a new defendant for a fictitious Doe defendant filed after the statute of 

limitations has expired is deemed filed as of the date the original complaint was filed.” Id.

(citing Austin v. Mass. Bonding & Ins. Co., 56 Cal. 2d 596, 599 (1961)).

In the Ninth Circuit, there are conflicting precedents on the issue of whether a 

complaint naming Doe defendants defeats original diversity jurisdiction as a matter of law. 

One line of cases stems from Garter-Bare Co. v. Munsingwear, Inc., 650 F.2d 975, 9871 

(9th Cir. 1980),which held that the presence of Doe defendants destroys diversity 

jurisdiction. However, six years later the Ninth Circuit decided Lindley v. General Electric 

Co., 780 F.2d 797, 800–01 (9th Cir. 1986), which held that California’s Doe defendant 

statutes are substantive law and therefore federal courts must apply the statutes under the 

Erie doctrine. Other district courts have discussed at length the split in authority. See, e.g., 

Gardiner Family, LLC v. Crimson Res. Mgmt. Corp., 147 F. Supp. 3d 1029, 1032–35 (E.D. 

Cal. 2015). For purposes of the present amendment, this Court agrees that in light of 

Lindley, applying Garter–Bare runs contrary to the Erie doctrine, and Doe pleading does 

not necessarily defeat federal diversity under 28 U.S.C. § 1332. Id. at 1034. Therefore, 

Plaintiffs may add Bank of America as a new defendant under the California “Doe” statutes 

as long as doing so would not be futile.

Although leave to amend should be freely given, “[f]utility alone can justify the 

denial of a motion to amend.” Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004) 

(quoting Nunes v. Ashcroft, 348 F.3d 815, 818 (9th Cir. 2003)); see also Saul v. United 

States, 928 F.2d 829, 843 (9th Cir. 1991) (“A district court does not err in denying leave to 

amend where the amendment would be futile . . . or would be subject to dismissal.”). “[A] 

court may exercise its discretion to deny leave to amend where the amendment is 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 18 of

 24
19

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

duplicative of existing claims[ and] . . . may also look to the sufficiency of allegations in a 

proposed amended complaint to determine if they would be futile.” Gragossian v. 

Cardinal Health Inc., No. 07-CV-1818-H (LSP), 2008 WL 2157004, at *1 (S.D. Cal. May 

21, 2008) (citing Bonin v. Calderon, 59 F.3d 815, 846 (9th Cir. 1995); and Jones v. Cmty. 

Redevelopment Agency, 733 F.2d 646, 650–51 (9th Cir. 1984)). The Court examines 

whether adding Bank of America would be futile.

Plaintiffs’ SAC alleged causes of action sounding in RFDCPA, UCL, and

declaratory relief. (See generally SAC.) The proposed third amended complaint would 

bring those same claims against Bank of America. Alleging claims that would be barred

by res judicata is grounds to deny a motion to amend as futile. See Aquino v. Cal. 

Reconveyance Co., No. 14–cv–1818–WHO, 2014 WL 5494446, at *5 (N.D. Cal. Oct. 30, 

2014) (holding that amendment would be futile and denying motion for leave to amend

where plaintiff’s five causes of action were barred by res judicata). 

1. Whether Claim Preclusion Applies to Bar Suit Against Bank of America

As previously stated, the claim preclusion aspect of res judicata applies to the 

relitigation of the same cause of action between the same parties or those in privity with 

them. DKN Holdings, 61 Cal. 4th at 824 (citations omitted). The Court previously found 

claim preclusion bars relitigation of Plaintiffs’ first three causes of action, see supra p. 14; 

Plaintiffs proposed amendment does not allege any new facts or theories that would alter 

the Court’s conclusion. The only question is whether Plaintiffs’ proposed defendant and 

new claims are barred under either claim or issue preclusion. U.S. Bank argues it is in 

privity with Bank of America so claim preclusion would apply equally to Plaintiffs’

proposed claims against Bank of America. The Court begins by examining whether claim 

preclusion would be appropriate; specifically, if there is privity between U.S. Bank and 

Bank of America.

“The concept of privity for the purposes of res judicata or collateral estoppel refers 

to a mutual or successive relationship to the same rights of property, or to such an 

identification in interest of one person with another as to represent the same legal 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 19 of

 24
20

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

rights and, more recently, to a relationship between the party to be estopped and the

unsuccessful party in the prior litigation which is ‘sufficiently close’ so as to justify 

application of the doctrine of collateral estoppel.” Citizens for Open Access to Sand & 

Tide, Inc. v. Seadrift Ass’n, 60 Cal. App. 4th 1053, 1069–70 (Ct. App. 1998) (citations 

omitted); see also Armstrong v. Armstrong, 544 P.2d 941, 946 (Cal. 1976) (“[P]rivity exists 

where the person involved is . . . so identified in interest with another that he represents the 

same legal right.” (quotation marks omitted)).

Here, Defendant argues Bank of America is in privity with U.S. Bank and therefore 

claim preclusion applies with equal affect even though Bank of America was not a party to 

the prior state court proceedings. (U.S. Bank Opp’n 4.) Defendant cites Gehron v. Trust, 

No. EDCV 15-58-JGB (SPx), 2016 WL 1399522, at *8 (C.D. Cal. Apr. 7, 2016), aff’d sub 

nom. Gehron v. Christiana Tr., 696 Fed. App’x 268 (9th Cir. 2017), for the proposition 

that the beneficiary of a deed of trust and the servicer of a loan share such a commonality 

of interest that res judicata applies to Bank of America, (U.S. Bank Opp’n 4). Gehron

relies on Ninth Circuit precedent to reach its conclusion, which does not speak to California 

res judicata standards regarding privity. See 2016 WL 1399522, at *8 (citing In re 

Gottheiner, 703 F.2d 1136, 1140 (9th Cir. 1983)). In addition, Defendant states its 

conclusion that there is privity without explaining why privity exists in the present case. 

Based on the record currently before the Court, the link between Bank of America and U.S. 

Bank is not sufficiently clear to find privity. Nor is it clear from the record that Bank of 

America and U.S. Bank stand in the same relationship as the parties in Gehron. Therefore, 

the Court declines to apply claim preclusion at this time.

2. Whether Issue Preclusion Applies to Bar Suit Against Bank of America

“[I]ssue preclusion applies: (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 one in privity with that party.” DKN Holdings, 61 Cal. 4th 

at 824 (citations omitted). The issue raised by Plaintiffs is not, as Defendant contends, 

“whether the foreclosure was void.” (U.S. Bank Opp’n 5.) The issue is whether Plaintiffs 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 20 of

 24
21

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

validly rescinded their Note under TILA’s provisions.

In November 2010, Plaintiffs filed a verified complaint in San Diego Superior Court 

against U.S. Bank and other defendants. (ECF No. 76-2, Ex. F., at 51.) They alleged 

causes of action for declaratory and injunctive relief to cancel the non-judicial foreclosure 

of the Property, “trespass on contract,” deceptive business practices, wrongful conversion, 

slander of title, violation of Civil Code section 2923.5, “filing false documents,” and 

intentional misrepresentation. (See id. at 69–86.) Plaintiffs alleged that the notice of 

default on their mortgage was void because the assignment/substitution of trustee was 

recorded after the notice of default’s filing. Plaintiffs sought damages against the 

defendants as well as restoration of title and rescission of their mortgage. (Id. at 86.) 

Plaintiffs did not allege a TILA rescission claim.

Defendants demurred, which the trial court sustained without leave to amend and 

entered judgment in favor of the defendants. (Id. at 95, 97.) The trial court ruled that 

Plaintiffs’ complaint failed as a matter of law because MERS had the authority under 

California law to substitute trustees. (Id. at 96.) Plaintiffs had signed the original deed of 

trust “that specifically stated MERS was the beneficiary of the deed of trust and therefore 

had authority to substitute the trustee and assign all interests in Plaintiffs’ loan.” (Id.) 

Therefore, Plaintiffs’ rescission of the mortgage and restoration of title claims failed as a 

matter of law. (See id.)

Plaintiffs did not raise and the opinion in the First State Court Action did not address 

Plaintiffs’ TILA rescission claim.4 Furthermore, the subsequent state court judgments all 

relied on res judicata as the basis to dismiss Plaintiffs’ complaints—no other opinion 

addressed the merits of the TILA rescission claim. Therefore, the Court finds that at this 

stage it cannot say that issue preclusion applies to bar suit against Bank of America.

/ / /

 

4 This conclusion does not affect the Court’s finding that claim preclusion bars suit against U.S. Bank 

because claim preclusion bars all claims that could have been brought.

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 21 of

 24
22

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

B. Proposed Causes of Action

Plaintiffs propose two new causes of action: malicious prosecution and intentional 

infliction of emotion distress. Both proposed claims allege that Defendant and Bank of 

America’s prosecution of an unlawful detainer case against Plaintiffs in state court create 

an actionable claim in federal court. The Court examines each in turn.

1. Malicious Prosecution

“[I]n order to establish a cause of action for malicious prosecution of either a 

criminal or civil proceeding, a plaintiff must demonstrate ‘that the prior action (1) was 

commenced by or at the direction of the defendant and was pursued to a legal termination 

in his, plaintiff’s, favor; (2) was brought without probable cause; and (3) was initiated with 

malice.’” Casa Herrera, Inc. v. Beydoun, 83 P.3d 497, 500 (Cal. 2004) (citations omitted) 

(quoting Sheldon Appel Co. v. Albert & Oliker, 47 Cal. 3d 863, 871 (1989)). To determine 

whether there was a favorable termination, a court “look[s] at the judgment as a whole in 

the prior action.” Id. (quoting Sagonowsky v. More, 64 Cal. App. 4th 122, 129 (Ct. App. 

1998)). “It is not essential to maintenance of an action for malicious prosecution that the 

prior proceeding was favorably terminated following trial on the merits.” Id. (quoting 

Lackner v. LaCroix, 25 Cal. 3d 747, 750 (1979)). “Rather, ‘[i]n order for the termination 

of a lawsuit to be considered favorable to the malicious prosecution plaintiff, the 

termination must reflect the merits of the action and the plaintiff’s innocence of the 

misconduct alleged in the lawsuit.” Id. (quoting Pender v. Radin, 23 Cal. App. 4th 1807, 

1814 (Ct. App. 1994)).

At this stage, the Court does not find that a malicious prosecution claim would 

necessarily be futile under a res judicata theory. This is because the primary right 

vindicated by a malicious prosecution action is “the right to be free from defending against 

a lawsuit initiated with malice and without probable cause.” Hindin v. Rust, 118 Cal. App. 

4th 1247, 1258 (Ct. App. 2004). The primary right previously litigated is the right to title 

of the Property. These are potentially two different primary rights: one dealing with the 

right to title and the other dealing with the conduct of judicial proceedings. At this stage 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 22 of

 24
23

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

when the Parties have not fully briefed the malicious prosecution issue, the Court cannot 

say a malicious prosecution cause of action would be futile. The Court emphasizes the 

narrowness of its conclusion: Plaintiffs’ malicious prosecution claim may well be barred 

under res judicata or other applicable law, but at this stage the Court is mindful that it 

liberally grants leave to amend causes of action.

2. Intentional Infliction of Emotional Distress

“The elements of a cause of action for intentional infliction of emotional distress 

[“IIED”] are well settled. A plaintiff must allege that (1) the defendant engaged in extreme 

and outrageous conduct with the intention of causing, or reckless disregard of the 

probability of causing, severe emotional distress to the plaintiff; (2) the plaintiff actually 

suffered severe or extreme emotional distress; and (3) the outrageous conduct was the 

actual and proximate cause of the emotional distress.” Ross v. Creel Printing & Publ’g 

Co., 100 Cal. App. 4th 736, 744–45 (Ct. App. 2002) (citing Cervantez v. J.C. Penney Co.,

24 Cal. 3d 579, 593 (1979)). “Whether treated as an element of the prima facie case or as 

a matter of defense, it must also appear that the defendants’ conduct was unprivileged.” 

Id. (quoting Cervantez, 24 Cal. 3d at 593).

Like the malicious prosecution claim, the Court finds that, at this stage, Plaintiffs’ 

proposed cause of action is not futile. Plaintiffs’ IIED claim appears to stem from 

Defendant’s conduct by filing litigation and not the primary right relating to Plaintiffs’ 

property. This may involve two distinct primary rights. The California Supreme Court has 

stated that even if the same set of facts are involved there may be two distinct harms 

resulting from those facts. See Agarwal v. Johnson, 25 Cal. 3d 932, 955 (1979) (“Although 

Agarwal’s state court claims for defamation and intentional infliction of emotional distress 

arose in conjunction with the alleged violation of Title VII, the fact remains that in the 

present action he was awarded damages for harm distinct from employment 

discrimination.”), overruled on other grounds by White v. Ultramar, Inc., 21 Cal. 4th 563 

(1999). 

As before, the Court emphasizes the narrowness of its conclusion: at this point it is 

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 23 of

 24
24

15-CV-2246 JLS (MDD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

not clear that Plaintiffs’ claim are futile based on res judicata. The Court does not have the 

benefit of full briefing on the merits of either a malicious prosecution claim or an IIED 

claim. It is also not clear how Plaintiffs’ will amend their complaint given the Court’s 

conclusion that their SAC is barred by claim preclusion. Therefore, the Court GRANTS

Plaintiffs’ Motion to Amend. The Court entertains serious doubts concerning Plaintiffs’ 

ability to cure the deficiencies outlined above, especially given that Plaintiffs have argued 

various legal theories associated with the same set of facts in three state court actions and 

in a different, but related, case before this Court.5 See Carvalho v. Equifax Info. Servs., 

LLC, 629 F.3d 876, 892 (9th Cir. 2010) (stating that a district court may deny leave to 

amend due to a litigant’s “repeated failure to cure deficiencies by amendments previously 

allowed”). However, given the fact that Plaintiffs are proceeding pro se and this is the first 

instance that the merits of their case have been heard the Court will allow Plaintiffs the 

opportunity to amend.

CONCLUSION

In light of the foregoing, the Court GRANTS Defendant’s MTD, (ECF No. 41), and

DISMISSES WITHOUT PREJUDICE Plaintiffs’ SAC, (ECF No. 40). Additionally, the 

Court GRANTS Plaintiffs’ Motion to Amend, (ECF No. 46). Plaintiffs SHALL FILE an 

amended complaint, if any, on or before thirty (30) days from the date on which this Order 

is electronically docketed. Failure to file an amended complaint within the time allotted 

may result in a dismissal of Plaintiffs’ case with prejudice. 

IT IS SO ORDERED.

Dated: February 26, 2018

 

5 The case is Lucore et al. v. Zeff et al., No. 15-CV-910 JLS (MDD).

Case 3:15-cv-02246-JLS-MDD Document 56 Filed 02/26/18 PageID.<pageID> Page 24 of

 24