Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-05322/USCOURTS-cand-3_15-cv-05322-3/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JOHN C HORTON, et al.,

Plaintiffs,

v.

JPMORGAN CHASE BANK, N.A., et al.,

Defendants.

Case No. 15-cv-05322-WHO 

ORDER GRANTING MOTION TO 

DISMISS

Re: Dkt. No. 17

INTRODUCTION

When parties lose a case on the merits, whether in state or federal court, they cannot revive 

it by simply filing the same complaint again. That is what pro se plaintiffs John and Delinda 

Horton did here. The doctrine of res judicata applies. As a result, defendants JPMorgan Chase 

Bank, N.A. (“Chase”), Deutsche Bank National Trust Company (“Deutsche”), and Mortgage 

Electronic Registration Systems, Inc.’s (“MERS”) motion to dismiss is GRANTED.

BACKGROUND

Although plaintiffs’ complaint contains few cognizable facts, the following can be gleaned 

from the judicially noticeable record:

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1 Defendants’ request for judicial notice of Exhibits A –M is GRANTED. Dkt. No. 18 [“RJN”]. 

Under Federal Rule of Evidence 201(b), a judicially noticed fact must be one not subject to 

reasonable dispute because it is either (1) “generally known within the trial court’s territorial 

jurisdiction;” or (2) “can be adequately and readily determined from sources whose accuracy 

cannot reasonably be questioned.” Fed. R. Evid. 201(d). A court may “take judicial notice of 

undisputed matters of public record, including documents on file in federal or state courts.” 

Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (internal citation omitted). The 

Court takes judicial notice of Exhibits A through F as they are public records. See e.g., W. Fed. 

Sav. & Loan Ass’n v. Heflin Corp., 797 F. Supp. 790, 792 (N.D. Cal. 1992) (taking judicial notice 

of documents in a county public record, including a state court file and deeds of trust); Valasquez 

v. Mortgage Elec. Registration Sys., Inc., No. 08-cv-3818-PJH, 2008 WL 4938162, at *2-3 (N.D.

Cal. Nov. 17, 2008) (taking judicial notice of a deed of trust and notice of default). The Court 

takes judicial notice of the existence of Exhibits G through M as they are court records. See, e.g., 

Hunt v. Check Recovery Sys. Inc., 478 F. Supp. 2d 1157, 1160-61 (N.D. Cal. 2007) (“Judicial 

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On October 3, 2006, plaintiffs obtained a $432,250 loan secured by a deed of trust 

encumbering property located at 553 5th Street, Vallejo, California 94590. The deed of trust was 

recorded fifteen days later in the Solano County official records, listing MERS as the nominee 

beneficiary and Fremont General Credit Corporation as the trustee. RJN Ex. A. On July 9, 2009, 

MERS assigned all of its beneficial interest in the deed to Chase. RJN Ex., B. That same day, 

Chase substituted California Reconveyance Company (“CRC”) as the trustee in the deed. RJN, 

Exh. C. On July 10, 2009, CRC recorded a Notice of Default and Election to Sell Under Deed of 

Trust with Solano County which provided that $16,740.29 was due on the original loan. RJN, 

Exh. D. Thirteen months later, in August 2010, the unpaid balance, along with other charges, was 

recorded at $490,214.11. RJN, Exh. E. On January 3, 2011 the property was sold to Chase at a 

public auction for $98,628. RJN, Exh. F.

I. PRIOR ACTION

In December 2013, approximately two years after the sale of the property, plaintiffs filed a 

complaint in Alameda County Superior Court against defendants alleging twelve causes of action

relating to the foreclosure. RJN, Exh. G. Chase filed a demurrer, arguing that plaintiffs had failed 

to state a claim and that the claims were time-barred. RJN, Exh. H. On July 16, 2014, the state 

court dismissed all of the alleged claims but provided plaintiffs with leave to amend five of the 

claims. RJN, Exh. I. After plaintiffs filed a first amended complaint, Chase filed a second 

demurrer. RJN, Exh. K. The court granted Chase’s demurrer, dismissing all five remaining 

claims without leave to amend and dismissing the lawsuit against Chase with prejudice. RJN, 

Exh. L. Due to plaintiffs’ failure to serve the remaining defendants and failure to demonstrate 

good cause as to why the complaint should not be dismissed, the court thereafter dismissed the 

entire case without prejudice as to the other parties. RJN, Ex. M.

II. PRESENT ACTION

This lawsuit commenced in Alameda County Superior Court on April 13, 2015. Dkt. No. 

 

notice may be taken of ‘adjudicative facts’ such as court records, pleadings.”). The requests for 

judicial notice of the state court’s rulings are granted as to the existence of the opinions but not as 

to the truth of their contents. See Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001).

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1. Plaintiffs’ complaint is identical to the one filed in 2013, alleging twelve causes of action for:

(1) “unfair and unethical business practices;” (2) “breach of covenant of good fair dealings;” (3) 

“slander of title;” (4) “alter ego liability;” (5) “breach of contract;” (6) “violation of California’s 

Business and Professions Code § 17200;” (7) “violation of the Truth in Lending Act;” (8) 

“violation of California Civil Code § § 2923.6, 1572 et. seq.;” (9) “defamation;” (10) “false light;”

(11) “cancellation of assignment of the deed of trust;” (12) “cancelation of a voidable contract 

under Rev. & Tax Code §§ 23304.01, 23305A and violation of Cal. Corp. Code § 191.” Id., Exh. 

1. On November 20, 2015, defendants removed the action to this district. Currently before me is 

their motion to dismiss arguing, in part, that plaintiffs’ current lawsuit is barred by res judicata.

LEGAL STANDARD

Under Rule 12(b)(6), a district court must dismiss a complaint if it fails to state a claim 

upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to 

dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its 

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). A claim is facially plausible when 

the plaintiff pleads facts that “allo[w] the court to draw the reasonable inference that the defendant 

is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation 

omitted). While courts do not require “heightened fact pleading of specifics,” a plaintiff must 

allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 

555, 570. There must be “more than a sheer possibility that a defendant has acted unlawfully.” 

Ashcroft, 556 U.S. at 678.

In deciding whether a plaintiff has stated a claim upon which relief can be granted, the 

court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the 

plaintiff. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is 

not required to accept as true “allegations that are merely conclusory, unwarranted deductions of 

fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 

2008).

Pro se complaints are held to “less stringent standards than formal pleadings drafted by 

lawyers.” Haines v. Kerner, 404 U.S. 519, 520 (1972). Where a plaintiff is proceeding pro se, the 

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court has an obligation to construe the pleadings liberally and to afford the plaintiff the benefit of 

any doubt. Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985) (en banc). However, pro se 

pleadings must still allege facts sufficient to allow a reviewing court to determine whether a claim 

has been stated. Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). A 

pro se complaint should be dismissed if “it appears beyond doubt that the plaintiff can prove no set 

of facts in support of his claim which would entitle him to relief.” Haines, 404 U.S. at 520-21 

(internal quotation marks omitted).

DISCUSSION

Defendants argue that the complaint is barred by res judicata based on the previous 

judgment in state court. Plaintiffs’ opposition brief does not address this argument.

The doctrine of res judicata, or claim preclusion, “provides that a final judgment on the 

merits bars further claims by parties or their privies based on the same cause of action.” TahoeSierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 322 F.3d 1064, 1077 (9th Cir. 2003)

(internal citations and quotation marks omitted). “Res judicata is applicable whenever there is (1) 

an identity of claims, (2) a final judgment on the merits, and (3) privity between parties.” Id.

(internal citations and quotation marks omitted). The doctrine extends to “any claims that were 

raised or could have been raised in a prior action.” Stewart v. U.S. Bancorp, 297 F.3d 953, 956 

(9th Cir. 2002) (emphasis omitted). 

When determining whether a judgment by a California court has res judicata effect, the 

federal Full Faith and Credit Act, 28 U.S.C. § 1738, requires a California federal court to apply the 

res judicata law of California to that judgment. See San Remo Hotel, L.P. v. City & Cnty. of San 

Francisco, 545 U.S. 323, 336 (2005) (finding that the Full Faith and Credit Act “has long been 

understood to encompass the doctrines of res judicata, or ‘claim preclusion,’ and collateral 

estoppel, or ‘issue preclusion’”); Robi v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir. 1988) 

(holding that the Full Faith and Credit Act “requires federal courts to apply the res judicata rules 

of a particular state to judgments issued by courts of that state”). The application of res judicata 

under California law focuses on the same three factors as the federal res judicata doctrine: “(1) A 

claim or issue raised in the present action is identical to a claim or issue litigated in a prior 

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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 or in privity with a party to the prior 

proceeding.” Boeken v. Philip Morris USA, Inc., 48 Cal. 4th 788, 797 (2010) (internal quotation 

marks and citations omitted). Each factor is considered below.

I. IDENTITY OF THE CLAIMS

To determine whether two proceedings involve identical causes of action, California courts 

have “consistently applied the primary rights theory.” Slater v. Blackwood, 15 Cal. 3d 791, 795 

(1975). Under this theory, “the violation of a single primary right gives rise to but a single cause 

of action.” San Diego Police Officers’ Ass’n v. San Diego City Emp.’s Retirement Sys., 568 F.3d 

725, 734 (9th Cir. 2009) (internal citations and quotation marks omitted). In other words, “if 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.” Eichman v. 

Fotomat Corp., 147 Cal. App. 3d 1170, 1174 (1983). “What is critical to the [primary rights] 

analysis is the harm suffered; that the same facts are involved in both suits is not conclusive.” San 

Diego Police Officers’ Ass’n, 568 F.3d at 734 (internal citations and quotation marks omitted).

Here, this requirement has been indisputably satisfied. The complaint underlying the 

present action is identical to the complaint filed in 2013 in Alameda County Superior Court. Both 

complaints are based on the same facts, the same alleged harm, and the same twelve causes of 

action that were litigated in the prior state court proceeding.

II. FINAL JUDGMENT ON THE MERITS

The second element is also satisfied. “In California, a judgment entered after the sustaining 

of a general demurrer is a judgment on the merits, and, to the extent that it adjudicates that the 

facts alleged do not establish a cause of action, it will bar a second cause of action on the same 

facts.” Palomar Mobilehome Park Ass’n v. City of San Marcos, 989 F.2d 362, 364 (9th Cir. 

1993). In the prior case, the Alameda County Superior Court granted Chase’s second demurrer 

without leave to amend. This action dismissed all of the remaining claims and dismissed Chase 

from the lawsuit with prejudice. Following plaintiffs’ failure to show cause as to why the matter 

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should not be dismissed in its entirety, the court thereafter dismissed the case without prejudice 

with respect to the other defendants. This adjudication by the state court is sufficient to constitute 

final judgment on the merits with respect to Chase.

III. PRIVITY BETWEEN THE PARTIES

To determine privity, California “courts examine the practicalities of the situation and 

attempt to determine whether plaintiffs are sufficiently close to the original case to afford 

application of the principle of preclusion.” Armstrong v. Armstrong, 15 Cal. 3d 942, 951 (1976) 

(internal citations and quotation marks omitted). In federal and California courts, privity exists 

when the party involved is “so identified in interest with another that he represents the same legal 

right.” Zaragosa v. Craven, 33 Cal. 2d 315, 318 (1949) (internal citations and quotation marks 

omitted); see also Tahoe-Sierra, 322 F.3d at 1081 (stating that privity between parties exists when 

parties in both actions are identical or substantially identical, “that is, when there is sufficient 

commonality of interest”) (internal citations and quotation marks omitted). 

Here, the defendants bringing this motion– Chase, Deutsche, and MERS – were all parties 

to the previous state court proceeding. That proceeding ended with a judgment on the merits with 

respect to Chase and a dismissal without prejudice as to Deutsche and MERS. However, all of the 

defendants were sued in connection with plaintiffs’ challenge to the validity and enforceability of 

the deed and the parties’ roles in the foreclosure of plaintiffs’ property. These roles are highly 

interrelated. MERS was the original beneficiary of the deed of trust of which was later assigned to 

Chase. According to defendants, Deutsche was a trustee of the securitized trust at issue, of which 

Chase was the servicer of the loans contained therein. Therefore, I find there is sufficient identity 

of interest between the defendants to establish privity. See Lee v. Thornburg Mortgage Home 

Loans Inc., No. 14-cv-00602-NC, 2014 WL 4953966, at *6 (N.D. Cal. Sept. 29, 2014) (finding 

privity in a mortgage foreclosure case between the loan servicer, original lender, nominee, and 

trustee); Sepehry-Fard v. Select Portfolio Servicing, Inc., No. 14-cv-05142-LHK, 2015 WL 

1063070, at *5 (N.D. Cal. Mar. 10, 2015) (finding privity between the loan service provider, the 

beneficiary, and assignee of the trust).

Because all three elements necessary for res judicata are satisfied, the doctrine applies, and 

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plaintiffs are precluded from asserting their current claims against defendants. Accordingly, I do 

not consider defendants’ other arguments for dismissal. The motion to dismiss is GRANTED.

CONCLUSION

Plaintiffs have been trying to locate counsel. One that they thought they had retained 

turned out to be disbarred. At the hearing on this motion, Mr. Horton indicated that he has located

someone else. Plaintiffs may have sixty (60) days from the date of this Order to amend the 

complaint. This amount of time will give plaintiffs’ new counsel time to evaluate the legal merits 

of an amended complaint and to file one if appropriate, or, if new counsel does not appear, for 

plaintiffs to do so pro se. Defendants’ motion to dismiss is GRANTED WITH LEAVE TO 

AMEND. 

IT IS SO ORDERED.

Dated: March 23, 2016

______________________________________

WILLIAM H. ORRICK

United States District Judge

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