Filed 12/11/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

CHRISTINA I. PETERSEN et al.,

 Plaintiffs and Appellants,

v.

BANK OF AMERICA et al.,

 Defendants and Respondents.

 G048387

 (Super. Ct. No. 30-2011-00449059)

 O P I N I O N

Appeals from a judgment and an order of the Superior Court of Orange 

County, Gail Andrea Andler, Judge. Appeal from judgment. Reversed and remanded 

with directions. Appeal from order. Dismissed. Motion to augment record. Granted. 

Brookstone Law, Vito Torchia, Jr., Sasan Behnood, Carlos E. MacManus 

and Deron Colby for Plaintiffs and Appellants.

Bryan Cave, Stuart W. Price, Trevor Allen and Douglas E. Winter for 

Defendants and Respondents.

* * *
2

This appeal, after a successful demurrer for misjoinder, tests the limits of 

California’s permissive joinder statute, section 378 of the Code of Civil Procedure.1 

There are no less than 965 plaintiffs listed in the caption of the third amended complaint. 

Strictly speaking, though, this is a “mass action,” not a “class action.” Had this case been 

filed prior to 2005, in all probability it would have been filed as a class action. However, 

in 2005, Congress enacted the Class Action Fairness Act (CAFA) codified at 28 U.S.C. 

§ 1332(d). (See generally Visendi v. Bank of America (9th Cir. 2013) 733 F.3d 863, 866-

867.) CAFA allows the removal to federal court of state court class actions when there is 

a class with 100 or more class members, with at least one class member from a different 

state than at least one defendant, and there is more than $5 million at stake. (Newberg on 

Class Actions, § 6:14.) That’s certainly this case – if it had been filed as a class action. 

And perhaps even if it hadn’t been so pleaded.

We face two questions of state law: First, despite the rather staggering 

number of joined plaintiffs, does the third amended complaint allege, to track the 

statutory language of section 378, the “same . . . series of transactions” that will entail 

litigation of at least one common question of law or fact?

2 Focusing on the language of 

the statute and the applicable precedent construing it, we conclude it does. Just a few 

years after section 378’s enactment in 1927, our Supreme Court declared the statute’s 

same-series-of-transactions language is to be construed broadly in favor of joinder. 

(Joerger v. Pacific Gas & Electric Co. (1929) 207 Cal. 8, 19.) It has never retreated from 

that position.

 

1 All undesignated statutory references in this opinion are to the Code of Civil Procedure.

2 Here is the complete text of section 378:

“(a) All persons may join in one action as plaintiffs if:

“(1) They assert any right to relief jointly, severally, or in the alternative, in respect of or arising 

out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact 

common to all these persons will arise in the action; or

“(2) They have a claim, right, or interest adverse to the defendant in the property or controversy 

which is the subject of the action.

“(b) It is not necessary that each plaintiff be interested as to every cause of action or as to all relief 

prayed for. Judgment may be given for one or more of the plaintiffs according to their respective right to relief.” 
3

The third amended complaint alleges that in the mid-2000’s, defendant 

Countrywide Financial Corporation developed a two-prong business strategy to increase 

its profits: First, Countrywide would use captive real estate appraisers to provide 

dishonest appraisals that would inflate home prices beyond levels that would otherwise 

prevail in an honest market; second, Countrywide would induce its borrowers – these 

plaintiffs in particular – to take loans Countrywide knew they couldn’t afford by 

misleading them as to their ability to pay their loans, including misrepresenting key terms 

of the loans themselves. Countrywide did this because it had no intention of keeping the 

loans on its books, but intended to bundle them into saleable tranches and sell them to 

investors.

The 965 plaintiffs are people who borrowed money from Countrywide in 

the mid-2000’s, to their ultimate chagrin. As we explain below, there are sufficient 

common questions of law and fact in this case to satisfy section 378, including whether a 

mortgage lender has a duty to its borrowers not to encourage “high ball,” dishonest 

appraisals and whether Countrywide really had a deliberate strategy of placing borrowers 

into loans it “knew” – and the word “knew” is a key part of the plaintiffs’ pleading – they 

couldn’t afford? 

 It is important to note at the outset that this is a procedural case, so we

express no opinion on the legal or factual merits of the plaintiffs’ claims vis-à-vis 

Countrywide’s alleged two-prong strategy. To draw a parallel to class action certification 

procedures, permissive joinder is fundamentally a procedural matter where the focus is 

not on the merits, but on whether there is sufficient commonality to satisfy the 

requirements of the relevant statute. (See Brinker Restaurant Corp. v. Superior Court

(2012) 53 Cal.4th 1004, 1024-1025.)

The applicability of section 378 is the comparatively easy question. 

Language and precedent dictate the result. The harder question is whether California’s 

procedures governing permissive joinder are up to the task of managing mass actions like 
4

this one. Again, we answer in the affirmative. And again, Brinker provides the relevant 

template. While we reverse the judgment dismissing all but one plaintiff for misjoinder, 

we emphasize that on remand the trial court will have to consider a variety of procedural 

tools with which to organize this case into appropriate and manageable subclaims and 

subclasses. (Cf. Brinker, supra, 53 Cal.4th at p. 1004 [existence of subclasses made 

ascertainment of viability of discrete types of wage and hours claims manageable].) 

While the irony of requiring the case to be divided into tranches has not escaped as, we 

are confident the trial court can handle the task.

I. FACTS

A. The Third Amended Complaint

1. Form

The operative complaint here is the third amended one, filed June 2012. It 

is over 14 inches tall. The first page is found on page 5412 of volume 19 of the clerk’s 

transcript and continues on until the proof of service after the last exhibit on page 8554 of 

volume 29. Yes, the third amended complaint is 3,142 pages long.

But its organization is more intuitive than that would suggest. The 

complaint consists of a main, narrative body of allegations totaling 208 pages, followed 

by an Appendix A that reads like a series of mini-complaints narrating the (rather similar) 

loan acquisition experiences of various plaintiffs. Most of those narratives are variations 

on the same theme: A couple went in for a loan; the amount needed was already an 

inflated figure because of Countrywide’s prior price-fixing of the relevant real estate 

market. The couple then relied on loan officers at Countrywide to place them in a loan 

they could afford, but the loan officers hid certain aspects of the loan from them, usually 

the existence of a balloon payment, sometimes negative amortization, sometimes a 

change in the terms or calculation of interest rates. And finally, when the Great 

Recession hit and the local real estate bubble burst decreasing everybody’s home values, 
5

these plaintiffs discovered they couldn’t afford their loans, couldn’t afford to refinance, 

and sustained various kinds of ensuing financial damage. 

Appendix A extends 1771 pages from the end of volume 19 of the 

reporter’s transcript through the middle of volume 25. Then begin the exhibits. Exhibit 

A consists of a series of emails acquired by plaintiffs, the upshot of which seems to be 

that there were plenty of people in Countrywide who were expressing misgivings about 

the firm’s various loan “products” and loan strategies in the mid-2000’s. Exhibit B 

consists of a few pages of Countrywide’s own published description of its various loan 

products. (Exhibit B looks like a sales brochure.) Finally come Exhibits C through 

MMM, which take up the better part of about four volumes of clerk’s transcript, 

extending a total of 1,106 pages. These appear to be a series of files consisting of form 

foreclosure documents pertaining to a subset of the plaintiffs – namely 90 or so – who are 

alleging wrongful foreclosure. These documents mostly include notices of default and 

notices of sale in individual cases.

3

B. Content

While the third amended complaint lists six entities as defendants,4 they are 

now, essentially, one defendant – Countrywide as absorbed by Bank of America. That is, 

all six entities are either directly controlled by Bank of America, which had earlier 

absorbed Countrywide, or are owned by or affiliated with either Countrywide or Bank of 

America.

5

 

3 The exception is Exhibit Q, which, for some reason, was left blank for future use. 

4 Bank of America, N.A. (B of A), Countrywide Financial Corporation and Countrywide Home 

Loans (Countrywide), ReconTrust Company, N.A. (ReconTrust), CTC Real Estate Services (CTC) and Landsafe, 

Inc (Landsafe). 

5 Bank of America took over Countrywide at the beginning of the Great Recession. (See generally 

Choi, Banktown: Assessing Blame for the Near-Collapse of Charlotte’s Biggest Banks (2011) 15 N.C. Banking Inst. 

423.) The acquisition has been a headache ever since. (See id. at p. 453 [“The Countrywide Financial acquisition 

has subjected Bank of America to large penalties and litigation costs.”].) 

In this opinion we mostly refer to “Countrywide” as the defendant because, in substance, this 

complaint primarily targets Countrywide’s loan and appraisal practices back in the mid-2000’s. 
6

Summarizing the complaint – even the abridged version consisting of just 

the 208 pages of traditional allegations – presents a challenge. Rhetorical flourishes 

abound, reminiscent of William Jennings Bryan’s famous cross of gold speech from the 

late 19th Century (which come to think of it, was also about banking).

6 The basic 

narrative has been recounted in several court decisions,

7 but it can, we think, be 

summarized in just one sentence: Sometime in the mid-2000’s, Countrywide changed the 

normal gameplan of any home mortgage lender from making a profitable loan that is paid 

back over time to a new gameplan by which it would make its profits by originating 

loans, then tranching them (chopping them up into little bits and pieces) and selling them 

on the secondary market to unsuspecting investors who would themselves assume the risk 

 

6 The famous speech even made a specific reference to a “banking conspiracy.” In that vein, the 

third amended complaint includes such exuberant allegations as:

“With greed as their motive, Defendants set out upon a massive and centrally directed fraud by 

which Defendants placed homeowners into loans which Defendants knew Plaintiffs could not afford, abandoned 

industry standard underwriting guidelines, and intentionally inflated the appraisal value of homes throughout 

California for the sole purpose of herding as many borrowers as they could into the largest loans possible which 

Defendants would then sell on the secondary market at inflated values for unimaginable, ill-gotten profit (wildly 

surpassing the profit they would make by holding the loans), knowing that their scheme would cause the precipitous 

decline in values of all homes throughout California, including those of Plaintiffs herein.”

“Like cattle, Plaintiff-borrowers were led to the slaughter by Defendants and their greed.”

“Where, as here, corporate greed exceeds the extant and imperative public need for informed 

disclosure, the law must not sanction.” 

7 See Visendi, supra, 733 F.3d 863, 866 [“Plaintiffs alleged, among other things, that the 

institutions’ deceptive mortgage lending and securitization practices decreased the value of their homes, impaired 

their credit scores, and compromised their privacy.”]; Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 

594, 599-600 [“Taking issue with industry wide mortgage banking practices, Graham seeks to hold the defendants 

responsible for the decline in his property value as well as the collapse of the real estate market.”]. 

Perhaps the most succinct statement by a published California court opinion of Countrywide’s role 

in the Great Recession can be found in Bank of America Corp. v. Superior Court (2011) 198 Cal.App.4th 862, 865 

(Bank of America 2011): “By 2005, Countrywide was the largest mortgage lender in the United States, originating 

over $490 billion in loans in that year alone. Countrywide’s founder and CEO, Angelo Mozilo determined that 

Countrywide could not sustain its business ‘unless it used its size and large market share in California to 

systematically create false and inflated property appraisals throughout California. Countrywide then used these false 

property valuations to induce Plaintiffs and other borrowers into ever-larger loans on increasingly risky terms.’ 

Mozilo knew ‘these loans were unsustainable for Countrywide and the borrowers and to a certainty would result in a 

crash that would destroy the equity invested by Plaintiffs and other Countrywide borrowers.’ [¶] Mozilo and others 

at Countrywide ‘hatched a plan to “pool” the foregoing mortgages and sell the pools for inflated value. Rapidly, 

these two intertwined schemes grew into a brazen plan to disregard underwriting standards and fraudulently inflate 

property values . . . in order to take business from legitimate mortgage providers, and moved on to massive 

securities fraud hand-in-hand with concealment from, and deception of, Plaintiffs and other mortgagees on an 

unprecedented scale.” 

In the case before us, the third amended complaint largely echoes the allegations made in Bank of 

America 2011, except the style is bit more rococo. 
7

the borrowers couldn’t repay.8 At root, everything in the third amended complaint is an 

elaboration on that theme insofar as it directly affected these plaintiff-borrowers from 

Countrywide.

In order to make the new gameplan work, Countrywide allegedly engaged 

in an interrelated series of transactions the net effect of which was to saddle the plaintiffs 

with loans they could not afford. This series consisted of two identifiable phases: Phase 

one was to create an otherwise artificial upward spiral of appreciating property values. 

This upward spiral was allegedly accomplished by Countrywide using its own captive 

appraisal company, defendant Landsafe, to “falsely” inflate all valuations. The inflated 

values took on a life of their own which inflated all property values in California.9 

Phase two was to induce borrowers to take improvident loans. Normally a 

prudent lender would want to lend to a creditworthy borrower who could pay back the 

 

8 Why were investors willing to part with their money so easily? Basically, the answer is investors 

felt confident that “the risk” had been prudently dispersed. Our colleagues in the Fifth District have provided this 

helpful description of the process: “In simplified terms, ‘securitization’ is the process where (1) many loans are 

bundled together and transferred to a passive entity, such as a trust, and (2) the trust holds the loans and issues 

investment securities that are repaid from the mortgage payments made on the loans. [Citation.] Hence, the 

securities issued by the trust are ‘mortgage-backed.’” (Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 

1082, fn. 1; see Akopyan v. Wells Fargo Home Mortgage, Inc. (2013) 215 Cal.App.4th 120, 142 [noting that because 

of securitization, “‘thinly capitalized mortgage bankers and finance companies’” were able to “‘originate loans for 

sale on the secondary market.’ [Citation.]”]; Engel & McCoy, A Tale of Three Markets: The Law and Economics of 

Predatory Lending (May 2002) 80 Tex. L.Rev. 1255, 1275 [quoted by Akopyan].)

Back to the third amended complaint. In addition to the – as it turned out, flawed – risk-spreading 

theory of securitization, the documents alleges investors thought they had insurance for loan defaults by using 

“credit default swaps,” which are forms of insurance against loan defaults. Paragraphs 142 through 146 of the third 

amended complaint constitute a Philippic against credit default swaps. (E.g., paragraph 146 a., “Nobel prizewinning economist George Akerlof predicted that CDS would cause the next meltdown . . . .”) 

9 Paragraph 98 of the third amended complaint encapsulates this allegation: “98. At Countrywide 

and Defendants’ behest, and at their direction, Landsafe Appraisals began systematically inflating the valuations 

they rendered upon the subject properties of each loan, including the loans of Plaintiffs herein. As is common 

knowledge in the real estate industry, appraisers are required to calculate the value of a home based almost entirely 

on the value of other nearby homes (called comparables aka ‘comps’). Defendants, including Countrywide and 

Bank of America seized on this vulnerability in the system. Exercising dominion over Landsafe, Countrywide 

directed, Landsafe to begin systematically inflating the valuations they rendered upon the subject properties of each 

of their loans (including loans of Plaintiffs herein), knowing that by doing so their falsely inflated valuations would 

act as comps upon which numerous other appraisers based their valuations of other homes. LandSafe’s and 

Defendants’ inflated appraisals caused other homes to be valued for more than they were worth, which in turn acted 

as the predicate for even high appraisals, and which, in turn, caused even more homes to be valued for more than 

they were worth. The result was a vicious self-feeding exponential cycle, both expected and intended by 

Defendants; the result was the intentional, systematic, artificial inflation of home values throughout California.” 

(Italics omitted.)
8

loan at the stated interest rate. But given Countrywide’s new model business plan in 

which the ultimate payees of the loans were going to be outside investors who would take 

the hindmost, Countrywide wanted to saddle borrowers with the maximum amount of 

debt possible – any risk of default would be borne by investors on the secondary market. 

Meanwhile, Countrywide would pocket loan fees, commissions and profits from the sale 

of loans after those loans were tranched and securitized. They key to the second prong, 

i.e., to inducing borrowers into financial improvidence, was to mislead them as to loan 

terms. 

The specific misleading statements allegedly made to these plaintiffs are 

scattered throughout Appendix A, so isolating them all into manageable groups is a 

chore.10 Two broad themes, however, can be identified: First, Countrywide loan officers 

and sales people are alleged to have made broad assurances to each of the plaintiffs that 

they could “afford” their loans.

11 Second, here and there in Appendix A are allegations 

that loan representatives from Countrywide did not disclose interest-rate adjustments or 

loan terms such as when an initial fixed-rate loan suddenly became an adjustable loan.

By the time of the third amended complaint, it had crystallized into four 

causes of action: intentional misrepresentation, negligent misrepresentation, unfair 

competition, and wrongful foreclosure. The first three apply to all plaintiffs, the 

foreclosure claim to only 90 of them. The wrongful foreclosure claim, interestingly 

enough, presents as pristine a common issue of law as it is possible to imagine: Its theory 

is that the various individual foreclosures were all unlawful because the eventual trustees 

who foreclosed on the loan weren’t the original agents designated in the loan papers. The 

 

10 As we stress in part II.B. of this opinion, the trial court will have the power on remand to require 

plaintiff’s counsel to undertake that chore in the first instance. 

11 In that regard there are ironic allegations of fraudulent conduct inuring to the ostensible benefit of 

some plaintiffs, who are alleged to have only qualified for their loans because, unbeknownst to them, Countrywide 

fraudulently overstated their income by physically altering their loan applications. On remand the trial court will 

have the power to require plaintiffs’ counsel to specifically identify all plaintiffs who fall into this subset.
9

claim thus presents a tidy, discrete question of law common to all 90 foreclosure 

plaintiffs. 

C. Trial Court Disposition

Defendants demurred to the third amended complaint on the ground of 

misjoinder of plaintiffs in violation of section 378.12 The trial court sustained the 

demurrer without leave to amend and dismissed all the plaintiffs “without prejudice to the 

rights of the other plaintiffs to file their own complaints,” except for first-named plaintiff 

Wright. The judge said: “The Court understands the importance of these claims to the 

homeowners, but the problem appears to be that they have been improperly joined in a 

single case based in the way the Third Amended Complaint has been written. While 

certainly plaintiff Wright is entitled to go forward with his claims, the language of the 

complaint drafted by his counsel in its fourth version sets forth separate transactions, loan 

applications and approvals, with many of the loans originating with third parties. Under 

the controlling law, CCP section 378, there appears to be a misjoinder of the plaintiffs. 

The claims of the other homeowners can still go forward, but they will have to file their 

own complaints.” 

In January 2013, a judgment of dismissal was entered in favor of 

defendants against all plaintiffs except for Wright – hence the title of the case before us 

derives from the second-named plaintiff in the caption, Christina Petersen. The dismissal 

was “without prejudice to the rights of the dismissed Plaintiffs to file their own 

complaints.” The plaintiffs filed two notices of appeal. They – that is, about 800 of the 

original 965 – filed a notice of appeal from the judgment of dismissal. It is this appeal 

with which our opinion is mainly concerned.

 

12 The defendants have filed a motion to augment the record with their memorandum of points and 

authorities in support of this demurrer, filed on October 5, 2012. The motion is granted. (Cal. Rules of Court, rule 

8.155(a).) 
10

But back in the second amended complaint, there had been a cause of 

action for fraudulent concealment. That fraudulent concealment claim had been 

dismissed on the merits, pursuant to a demurrer. The order dismissing the fraudulent 

concealment claim is also the subject of a second appeal. We do not address the 

substance of this second appeal. Because of our disposition of the appeal from the order 

dismissing all plaintiffs (but one) for misjoinder, there is no final judgment in this case. 

Accordingly, we dismiss the appeal from the fraudulent concealment cause of action 

because it would violate the one final judgment rule for us to consider its merits in this 

proceeding. (See Kurwa v. Kislinger (2013) 57 Cal.4th 1097, 1107 [noting policy against 

piecemeal appeals]; Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 813, fn. 

9 [same].) Rather, our focus is on the permissive joinder of such a large number of 

plaintiffs in this “mass action.”

II. DISCUSSION

A. Permissive Joinder Under Section 378

California procedural law is infused with a solicitude, if not an altogether 

outright preference, for the economies of scale achieved by consolidating related cases 

into a single, centrally-managed proceeding. Class actions themselves, as set forth in 

section 382, constitute the most obvious example, since they allow the adjudication of 

common issues of liability based on the aggregation of claims in one proceeding, usually 

in a context where adjudicating those claims piecemeal would be impracticable. (See 

Vasquez v. Superior Court (1971) 4 Cal.3d 800, 816; accord, City of San Jose v. Superior 

Court (1974) 12 Cal.3d 447, 457 [observing a “recognized policy favoring” “appropriate 

class actions”].) 

The affinity for economies of scale manifests itself in a number of other 

procedural contexts. These include the statutory preference in criminal law that favors 
11

consolidation of charges against multiple defendants where there is cross-admissibility13

and rules of court requiring designation of related cases to avoid “substantial duplication 

of judicial resources if heard by different judges.”

14 It even shows up in the common law 

doctrine of res judicata and the appellate doctrine of the one final judgment rule.

15

It is also manifested by the statutory provision before us now – the one that 

allows for permissive joinder in section 378. An important aspect of the Legislature’s 

drafting of the statute should not go unremarked: While many procedural statutes 

commit discretion to the trial judge, this statute commits discretion to the plaintiffs . . . to 

the plaintiffs themselves. If there is a right to relief arising out of the same series of 

transactions, it is the plaintiffs who get to decide whether to join together in a common 

action. Consider the syntax of the opening to section 378 the way the Legislature wrote 

it: “All persons may join in one action as plaintiffs if: [¶] (1) They assert any right to 

relief jointly . . . .” (Italics added.) It is the plaintiffs who make the initial decision to 

file jointly.

In this case, the key words on which that choice turns are “same . . . series 

of transactions.” As far back as the late 1920’s, in the immediate wake of the 1927 

enactment of section 378, our Supreme Court noted that the permissive joinder statute 

reflected the Legislature’s desire that joinder be liberally construed so as to prevent the 

diseconomy of a “multiplicity” of cases. Said the court in Joerger v. Pacific Gas & 

Electric Co., supra, 207 Cal. at page 19: “One of the objects of the reformed or code 

procedure is to simplify the pleadings and conduct of actions, and to permit the 

 

13 See Penal Code section 954; see generally People v. Manriquez (2005) 37 Cal.4th 547, 574 

[discussing severance and joinder of charges].

14 See California Rules of Court, rule 3.300(a)(4)). 

15 A point nicely made by Judge Posner in Arrow Gear Co. v. Downers Grove Sanitary Dist. (7th 

Cir. 2010) 629 F.3d 633, 638: “The doctrine of res judicata serves institutional as well as private interests – interests 

similar to those served by forbidding piecemeal appeals. Both res judicata and the final-judgment rule, along with a 

number of other procedural rules, aim at forcing closely related claims to be consolidated in a single proceeding, 

whether original or appellate, in order to economize on the expenditure of judicial resources for which litigants don’t 

pay.” 
12

settlement of all matters of controversy between parties in one action, so far as may be

practicable. . . . To permit a joinder where possible makes manifestly for the expeditious 

disposition of litigation without working hardship to any party defendant, and for this 

reason statutes relating to joinder should be liberally construed, unless expressly

forbidden, to the end that a multiplicity of suits may be prevented.” (Italics added.) 

The high court expressed similar sentiments – again, relatively soon after 

the statute’s enactment – in Kraft v. Smith (1944) 24 Cal.2d 124, 129. So did the Court of 

Appeal. (See Busset v. California Builders Co. (1932) 123 Cal.App. 657, 666 [noting 

joinder statures “should be liberally construed in furtherance of administrative 

efficiency”]; Morris v. Duncan (1936) 14 Cal.App.2d 635, 639; accord, Coleman v. Twin 

Coast Newspaper, Inc. (1959) 175 Cal.App.2d 650, 653 [the joinder statute “should be 

liberally construed so as to permit joinder whenever possible in furtherance of [its] 

purpose”].) The Rutter Group treatise on civil procedure before trial has accordingly 

drawn the obvious conclusion: “The requirement that the right to relief arise from the 

‘same transaction or series of transactions’ is construed broadly. It is sufficient if there is 

any factual relationship between the claims joined (and this tends to merge with the 

‘common question’ requirement, below).” (Weil & Brown, Cal. Practice Guide: Civil 

Procedure Before Trial (The Rutter Group 2014) ¶ 2:211, p. 2-60.1 (hereinafter “Rutter 

California Civil Procedure Treatise,” italics added.)

California section 378 is based on rule 20 of the Federal Rules of Civil 

Procedure (see Rodriguez v. Bethlehem Steel Corp. (1974) 12 Cal.3d 382, 407, fn. 28), 

and the federal rule has been interpreted to include the same adjuration to liberal 

application: “Requirements liberally construed: The requirements governing permissive 

joinder are construed liberally in order to promote trial convenience and to expedite final 

determination of disputes: ‘Under the Rules, the impulse is toward entertaining the 

broadest possible scope of action consistent with fairness to the parties; joinder of claims, 

parties and remedies is strongly encouraged.’” (Schwarzer et al., Cal. Practice Guide: 
13

Federal Civil Procedure Before Trial (The Rutter Group 2014) ¶ 7:138, , p. 7-57, quoting 

United Mine Workers v. Gibbs (1966) 383 US 715, 724, italics added.) 

Broad construction of section 378 has been exemplified in a series of 

appellate decisions over the years. The most instructive is Anaya v. Superior Court

(1984) 160 Cal.App.3d 228. There, multiple joinder was upheld in a case involving 

widespread exposure to hazardous chemicals. Anaya allowed the joinder of 200 plaintiffs 

on the basis that exposure to a harmful chemical involved “the same series of 

transactions” even though the plaintiffs were exposed at different times and in different 

ways. (Id. at p. 233.) In Anaya there were – as in the case at hand – lots of differences in 

the individual damages sustained by the plaintiffs from the defendant’s conduct. But the 

Anaya court pointed out that the key question was the existence of “common questions of 

law and fact,” and not whether, as the defendants had emphasized, there were 

“differences in the evidence to be presented and in the legal theories to be used by the 

various plaintiffs.” The “point” of section 378, said the court, is to allow joinder where 

“any question of law or fact common to all plaintiffs will arise.” And Anaya thought 

“any” means “any.” The word was emphasized by the court. (Ibid.) 

Broad construction was also the watchword in State Farm Fire & Casualty 

Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1113.16 In State Farm, multiple 

joinder was allowed in Northridge earthquake litigation because there was an allegedly 

fraudulent “systematic” practice of deceiving policyholders. State Farm allowed the 

joinder of 165 Northridge earthquake claimants who asserted that they were the victims 

of a clever insurance policy switch: Their earthquake endorsements to all risk policies

had been replaced with a separate earthquake policy not tethered to the all risk policy, 

resulting in lower total coverage. (Id. at p. 1099.) 

 

16 In the course of its decision, the State Farm panel attempted a definition of unfair competition that 

the Supreme Court later said was “too amorphous” to provide “guidance to courts and businesses.” (See Cel-Tech 

Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 185.) What State Farm held 

about joinder remains, to use the old phrase from the days of Shepardizing, “good law.”
14

Significantly for our purposes, the plaintiffs in State Farm further alleged 

that after the earthquake they suffered “some 15 different types of ‘improper claims 

handling processes’” which were “‘systematically, methodically and generally’”

implemented by the insurer. (State Farm Fire & Casualty Co. v. Superior Court, supra, 

45 Cal.App.4th at pp. 1099-1100.) The diversity of those claims, however, did not 

prevent joinder, even though they necessarily entailed individualized facts analogous to 

the individual loan transactions before us now. 

In some ways State Farm applies a fortiori to certain of the allegations 

before us now. While there might be a plethora of ways to “low ball” property insurance 

claims, there are comparatively few ways to “high ball” appraisals – basically, as the 

third amended complaint alleges, you can simply use non-comparable properties as 

comparables, or rely on previously-made dishonest appraisals of comparables. And, 

while bad faith insurance adjustment involves a variety of small tricks and subjective 

negotiating pressures, here the ways in which defendants allegedly misled borrowers 

constitute a discrete set of only a few items—mainly unexpected balloon payments and 

switches from fixed to adjustable rates. If the joinder of a wide variety of claims 

handling practices was appropriate under State Farm, the joinder of various forms of loan 

impropriety here seems equally correct.

A further manifestation of the broad construction required under section 

378 is found in Moe v. Anderson (2012) 207 Cal.App.4th 826. In Moe, two patients 

alleged they were victims of separate sexual assaults allegedly committed by a physician. 

To be sure, joinder was not appropriate as to the physician, since the assaults involved 

“separate and distinct” events “during separate and distinct time periods.” (Id. at p. 833.) 

But the claims against the medical group for which the physician worked was a different 

story. Joinder was appropriate as to the single employer since the same basic issue of 

negligent supervision and hiring was common to both (otherwise disparate) plaintiffs, and 

would involve the same evidence against a single defendant. The court said: “Thus, as 
15

was the case in Anaya, plaintiffs have asserted a right to relief arising out of the same 

series of transactions. So too are there common issues of law or fact. The same evidence

with respect to Healthworks’ hiring and supervision of Anderson will need to be adduced 

in separate lawsuits if joinder is not allowed.” (Id. at p. 836, italics added.) Needless to 

say, in the case before us there is much in the way of common evidence and theories of 

liability and much of the same evidence will have to be repeatedly produced if joinder is 

not allowed. Indeed, we shudder to think of the duplication of effort if even a dozen of 

the 800-or-so plaintiffs who have brought this appeal have individual trials on liability 

issues.

Finally, Adams v. Albany (1954) 124 Cal.App.2d 639 is similarly 

instructive. There, joinder of no less than 40 sets of homebuyers (recent war veterans) 

was held proper. Even though the defendant argued its alleged fraudulent scheme 

involved torts that took place at different times and places, and even though the evidence 

as to one house would have no probative value as to any other house, the appellate court 

invoked the “series of transactions” language from section 378 and said it was enough 

that defendant was alleged to have engaged in a conspiracy to defraud the veterans by 

selling them substandard housing. As here, Adams is a case where the alleged “business 

plan” of the defendant was common to multiple defendants, even if their specific 

damages might vary.

In light of State Farm, Anaya, Moe and Adams, it would be a major 

departure from California case law construing section 378 for us to uphold the trial 

court’s demurrer for misjoinder in this case. This case is merely a quantitatively – not 

qualitatively – larger version of those four, particularly State Farm and Adams. 

Here, we have already identified the two core aspects of the common plan 

alleged in the third amended complaint that necessarily will entail common evidence (1) 

whether Countrywide deliberately encouraged dishonest appraisals and (2) whether 

Countrywide encouraged its loan officers to conceal loan terms. These two aspects 
16

devolve into several questions of law or fact bearing on liability. Here are four that come 

readily to mind: (a) whether Countrywide had a conscious business plan to pressure or 

otherwise unduly influence appraisers to dishonestly inflate appraisals; (b) if it did, 

whether even such dishonest appraisals could have the cumulative effect of inflating real 

estate markets in a way that might have caused buyers and/or borrowers in those markets 

to pay more, or borrow more, than they otherwise might have; (c) even if they did, 

whether such marginally extra borrowed money constitutes cognizable damages under 

some theory of law; and (d) whether a failure to expressly warn buyers or borrowers 

about such key terms of a written loan agreement, such as changes from fixed to 

adjustable rates, or the need to make a balloon payment at the end are actionable under 

some theory of fraud or unfair business practice.

We emphasize again that this case involves essentially only one lender, 

Countrywide, operating in conjunction with its captive appraisal agents. While 

Countrywide cites a number of federal cases that concluded there had been misjoinder, 

these federal cases merely make the point that genuinely multiple defendants do not fall 

within the federal permissive joinder rule.

17 

We further emphasize that our conclusion joinder is permissible is based on 

commonality regarding liability, not damages. There is a direct parallel here (again) to 

class actions. While the individual damages among these 965 plaintiffs of course vary 

widely, that’s not the salient point. (See Brinker, supra, 53 Cal.3d at p. 1022 [“‘As a 

general rule if the defendant’s liability can be determined by facts common to all 

members of the class, a class will be certified even if the members must individually 

 

17 Visendi v. Bank of America, supra, 733 F.3d at p. 866 [misjoinder where 137 plaintiffs sued 25 

financial institutions]; Barber v. America’s Wholesale Lender (M.D.Fla. 2013) 289 F.R.D. 364, 365 [misjoinder 

where 18 different borrowers sued at least 9 different lenders]; Abraham v. Am. Home Mortg. Servicing (E.D.N.Y 

2013) 947 F.Supp.2d 222, 228-229 [misjoinder where several hundred current and former homeowners sued several 

dozen mortgage originators and servicers].) 
17

prove their damages.’ [Citations.]”].) The salient point is that liability is amenable to 

mass action treatment.

Finally, we must observe that two overall policies of the law are served by 

joinder in this instance. One is access to justice. To require these plaintiffs to file 

separately not only clogs up the courts, but also deprives them of economies of scale 

otherwise available under section 378, particularly in regard to the clearly common proof 

bearing on Countrywide’s alleged two-pronged scheme to both fix prices and mislead 

borrowers as to loan terms. As far as we can tell, the same experts and whistleblowers 

will be common to all causes of action based on variations of misrepresentation or unfair 

competition.

The second is the conservation of judicial resources. There is an obvious 

burden to the trial court if joinder is not allowed. Appendix A shows that there are some 

800 or so potential individual actions out there (assuming that 165 of the original 965 

who didn’t join this appeal no longer care), waiting to come trooping in as single snipers, 

not as one ready-made, manageable battalion. It wouldn’t take many such actions before 

the trial court would be faced with the administrivial task of setting up a grand 

coordinated action, which in all probability – because it will involve different plaintiffs 

and different actions – will be harder to manage than this one, single action. (Cf. §§ 404 

[authorizing coordination]; Stats. 1992, ch. 696, subd. (b)(1)(C), p. 91970 [“The 

Legislature further finds and declares that: [¶] . . . ‘Scarce judicial resources must be 
18

used in an efficient manner . . . .’”].)18 Put another way, mass joinder here holds the 

promise of actually decreasing trial court case management time. Unless we adopt the 

cynical view that requiring each plaintiff to proceed against the corporate defendants will 

make their cases go away, we have to consider this aspect of the case.

B. Management

And in regard to administrative tasks ahead, we must offer what we can in 

the way of guidance for the trial court on remand. We say “we must” because we believe 

sending this 3,000-plus page third amended complaint case back to the trial court without 

guidance would be nothing less than oppressive. If we’re going to send Moby Dick back 

to the trial court, we should at least provide a harpoon or two. Countrywide’s argument 

that the sheer heft of this 965-plaintiff action is unduly burdensome does carry some 

force. But we think the law of California procedure strikes a golden mean here. On the 

one hand, it is unfair to these plaintiffs to deprive them of the commonalities of proof and 

witnesses inherent in their basic theory against Countrywide. As noted, the same experts 

and whistleblowers can be anticipated to provide evidence for all these plaintiffs. On the 

other hand, it is unfair to Countrywide to saddle it with the amorphous, inchoate heap of 

allegations that currently constitutes the third amended complaint as drafted and 

structured. So let us be plain: On remand the trial court will have the power to require 

plaintiffs’ counsel to whip the third amended complaint’s desultory and scattered 

allegations against Countrywide into a tightly-structured set of manageable subclaims and 

 

18 There is a doctrinal interrelatedness in the issues of judicial economy and coordination that can cut 

in two directions at once. Section 404 is part of the general solicitude in California procedural law – also reflected 

in section 378, our state’s permissive joinder statute – that seeks the benefit of the economies of scale from the joint 

adjudication of common questions of law or fact. (See also § 404.1 [referencing convenience and “efficient 

utilization of judicial facilities and manpower” of coordination of actions involving common questions of law or 

fact”].) But this solicitude has its twists: Recently, in Corber v. Xanodyne Pharm., Inc. (9th Cir. 2014) ___ F.3d 

___ [2014 U.S.App.LEXIS 21806], the Ninth Circuit, in an en banc decision, equated requests for coordination by 

plaintiffs of more than 40 state court actions involving an allegedly defective drug as the equivalent of a request for 

joint trials, which subjected those actions to removal under CAFA. It is an interesting question, given the overlap in 

“common question” standards that govern both permissive joinder and coordination in California, whether it will be 

even possible for the plaintiffs in this case to avoid removal under CAFA. To put it plainly: Is filing an action so 

large that it is unmanageable without coordination the de facto equivalent of a request the cases be tried jointly ala 

Corber? That’s a question we’ll leave to the federal courts to sort out.
19

subclasses. Our decision does not require it to commence jury selection at Anaheim 

Stadium.19

Injustice, said Aristotle, can consist in treating unequals equally or of 

treating equals unequally. So, just as there is a procedural solicitude for consolidation to 

assure access to justice that favors joinder and class actions, there is corresponding 

contrapuntal recognition in procedural law that trial courts sometimes need to categorize 

and subdivide claims and classes to treat them effectively. We find it in such procedures 

as the discretion of trial courts to sever arbitral claims from non-arbitral ones (e.g., Doan 

v. State Farm General Ins. Co. (2011) 195 Cal.App.4th 1082, 1098-1099), the authority 

to order separate trials in order to avoid prejudice (§ 1048) and – important for our 

purpose here – the ability to organize class actions into appropriate subclasses. (See 

generally Brinker, supra, 53 Cal.4th 1004 [use of subclasses allowed court to ascertain 

validity of some claims and invalidity of others]; Aguiar v. Cintas Corp. No. 2 (2007) 144 

Cal.App.4th 121, 125 [“Because the complexities of the case on which the trial court 

relied to find class certification inappropriate can be addressed by the use of subclasses 

. . . we reverse the order denying certification and remand the matter with directions for 

the trial court to certify two subclasses of Cintas employees . . . .”]; Canon U.S.A., Inc. v. 

Superior Court (1998) 68 Cal.App.4th 1, 5 [noting obligation of trial court to consider 

possible creation of subclasses in context of class certification].)

The trial court has the authority to require the various classes and claims 

found in the third amended complaint be properly and digestibly organized. This is 

easily a “complex” action under rule 3.400(c)(5) [claims involving mass torts] of the 

California Rules of Court. As such, Judicial Administration standards contemplate the 

 

19 Consider, for example, two basic tools of early-case civil procedure that are useful in transforming 

otherwise amorphous, sprawling pleadings into tight, manageable sets of claims: The special demurrer for 

uncertainty (§ 430.10, subd. (f)) and the motion to strike irrelevant, false or improper matter (§ 436). In this case it 

will obviously be awhile before this complaint is ready for the prime time of a trial.
20

designation of one judge who will have the power to identify phases for the litigation and 

set time limits on those phases, and adjudicate legal and evidentiary sub-issues pretrial.

20 

As stated earlier, today’s decision is also without prejudice as to whether 

CAFA applies. (Cf. Bullard v. Burlington Northern Santa Fe Ry. Co. (7th Cir. 2008) 535 

F.3d 759 [CAFA removal upheld]; Koral v. Boeing Company (7th Cir. 2011) 628 F.3d 

945, 947 [CAFA removal premature, but noting “a mass action is a form of class action”] 

and Romo v. Teva Pharms. USA, Inc. (9th Cir. 2013) 731 F.3d 918, 924 [no CAFA 

removal of state court coordinated proceedings because of absence of proposal for joint 

trial].) Likewise, it is without prejudice to either side to bring a class certification 

motion. (See Cal. Rules of Court, rule 3.764(a)(1) [any party may move to certify a 

class].)

Finally, because we remand the case back to the trial court, there is, as yet, 

no final judgment, so we are dismissing the appeal from the order dismissing the cause of 

action for fraudulent concealment. Obviously we express no opinion on the merits of that 

cause of action now.

III. DISPOSITION

The judgment dismissing those plaintiffs who have filed notices of appeal 

in this action is reversed, and the case remanded with directions to conduct further 

proceedings not inconsistent with this opinion. Because this is an interlocutory appeal

without final disposition of the cause, we do not award appellate costs now. Rather, we 

 

20 We have tried here to give a little help in that regard but we do not flatter ourselves that we have 

done more than carry some wood to the carpenter. (See generally Rutherford v. Owens-Illinois, Inc. (1997) 16 

Cal.4th 953, 966; Lu v. Superior Court (1997) 55 Cal.App.4th 1264 [approving discovery referee for complex 

construction defect litigation]; Lucas v. County of Los Angeles (1996) 47 Cal.App.4th 277, 284-285 [“A court has 

inherent equity, supervisory and administrative powers, as well as inherent power to control litigation and conserve 

judicial resources. . . . Courts can conduct hearings and formulate rules of procedure where justice so demands.”]; § 

187 [“if the course of proceeding be not specifically pointed out by this Code or the statute, any suitable process or 

mode of proceeding may be adopted which may appear most conformable to the spirit of this code”]; Cal. Standards 

Jud. Admin., § 19; Rutter California Civil Procedure Treatise, supra, ¶ 12:47, pp. 12(l)-14 to 12(l)-14.1.) 
21

authorize the trial judge, at the conclusion of proceedings, to award the appellate costs of 

this appeal as he or she believes serve the interests of justice.

BEDSWORTH, ACTING P. J.

I CONCUR:

THOMPSON, J.
1

FYBEL, J., dissenting.

I respectfully dissent. I would affirm the correct decision of the trial court. 

The result of the majority’s decision to reverse the trial court will be as breathtaking as it 

is legally unsupported. The majority is approving the joinder of the claims of some 818 

plaintiff home loan borrowers with the claims of the first named plaintiff, John P. Wright, 

into a single massive lawsuit.

1

 This vast joinder of borrowers’ claims is unprecedented 

under California and federal law.

Joining the claims of so many plaintiffs not only is unprecedented, but also 

is not justified by the relevant standards and principles governing joinder. Code of Civil 

Procedure section 378, subdivision (a)(1) (section 378(a)(1)) permits joinder only if two 

requirements are satisfied: (1) the claims arise out of the same transaction or occurrence 

and (2) there is a common legal or factual question. Plaintiffs’ third amended complaint 

(the Complaint) does not come close to satisfying the standards for joinder under 

section 378(a)(1). 

Plaintiffs’ claims did not arise out of the same transaction or occurrence; 

rather, they arose out of over 1,000 separate and distinct loan and loan modification 

transactions involving different borrowers, and many third party originators and lenders. 

The loan transactions were made at different times over a six-year period; some loans 

were purchase money loans, while other loans refinanced existing ones. Each loan

 

 

1

 According to defendants Bank of America, N.A. (B of A), Bank of America Corporation, Countrywide Financial 

Corporation (Countrywide), Countrywide Home Loans, Inc. (Countrywide Home Loans), ReconTrust Company, 

N.A., CTC Real Estate Services, and LandSafe, Inc. (collectively, Defendants), 818 out of 964 dismissed plaintiffs 

appealed. I refer to the 818 appellants as Appealing Plaintiffs and refer to all plaintiffs named in the third amended 

complaint, including those who did not join in this appeal, as Plaintiffs.
2

transaction was secured by a different parcel of real property in California and involved a 

different appraisal. The loans had various terms and were at different interest rates; some 

were fixed rate loans, while others were variable rate loans. Not all lenders were the 

same. Each loan transaction involved different loan brokers and agents, who made 

different representations to each plaintiff.

The majority opinion is in error for the following five principal reasons:

1. Each Loan Transaction Is Distinct. The majority opinion, at a 

minimum, oversimplifies the Complaint’s allegations in an attempt to find commonality 

amongst the diverse claims of 818 Appealing Plaintiffs. Although the Complaint alleged 

Defendants engaged in a scheme to defraud, each of these borrowers entered into a 

different loan transaction secured by a different parcel of real property and supported by a 

different appraisal. The majority is mistaken in asserting the lender was the same for 

each loan, as many lenders were third parties who have not been named as defendants. 

For many of the Appealing Plaintiffs, the Complaint and its attachments do not include 

basic information about the loan transaction. 

2. Issues of Liability Are Not Subject to Common Proof. The majority 

opinion asserts that the issues of liability are subject to common proof and individual 

questions of damages can be addressed through trial court management. The Complaint 

itself reveals those assertions to be incorrect. As I will explain in detail, Plaintiffs did not 

allege that a common, uniform set of misrepresentations was made to each of them. Nor 

have Appealing Plaintiffs argued in any of their briefs or at oral argument that uniform 

representations were made. Thus, to recover on the cause of action for intentional 

misrepresentation or the cause of action for negligent misrepresentation, each and every 

plaintiff—yes, each one of them—will have to submit evidence to prove liability and 

damages. Likewise, each of the 90 plaintiffs asserting wrongful foreclosure must 
3

individually prove the facts specific to him or her establishing that foreclosure procedures 

were not followed. 

Resolving the claims of all 818 Appealing Plaintiffs in a single lawsuit, 

therefore, definitely would not promote judicial economy and fairness as required by law; 

quite the contrary, the “megasuit” mandated by the majority promises to be an unjustified 

administrative nightmare. 

3. Analogous Case Law Is Against Joinder. For good reason, courts which 

have addressed the issue of joinder of borrowers’ claims in the same circumstances 

presented in this lawsuit have consistently held such attempts at joinder to be improper. 

In section III., I discuss 11 opinions decided by the United States Courts of Appeals, 

including the Ninth Circuit, and United States District Courts, including the Central 

District and Northern District of California. All of them conclude that plaintiff 

borrowers, who made the same claims as Appealing Plaintiffs, were misjoined because 

each loan was a separate transaction. Federal law on joinder is the same as California 

law on joinder. Both in its analysis and conclusion, the majority opinion is in conflict 

with all of those cases. Instead, the majority relies on the principle of broad construction 

and uses that principle to stretch section 378(a)(1) past its breaking point. The California 

appellate cases which, the majority claims, exemplify the application of the principle of 

broad construction in upholding joinder, arose in very different contexts and had far 

different facts from those presented in this case. In none of those cases did joinder 

actually depend on broad construction of section 378(a)(1). 

4. This Is Not a Class Action. The majority opinion essentially recasts the 

Complaint as a class action. Let’s be plain upfront: Plaintiffs did not file the Complaint 

as a class action and the Complaint includes no class or subclass allegations. Plaintiffs 

did not ask for class certification. The question before the trial court—whether the 965 

(including Wright) plaintiffs were misjoined—was an all-or-nothing proposition. 
4

Appealing Plaintiffs never argued here or in the trial court that this lawsuit should be 

treated as a class action or divided into subclasses or subgroups. Indeed, in direct 

response to questions about subclasses posed at oral argument by my colleagues, 

Appealing Plaintiffs’ counsel flatly stated the only issue presented was whether 

Plaintiffs’ claims were properly joined, not whether subclasses could or should be 

created. 

The majority opinion’s treatment of the Complaint is reminiscent of the 

famous story told by Abraham Lincoln. A boy was asked how many legs his calf would 

have if he called its tail a leg. The boy replied, “‘Five.’” The correct answer, of course, 

is four. Calling a calf’s tail a leg “would not make it a leg.” (Rice, Reminiscences of 

Abraham Lincoln by distinguished men of his time (rev. ed. 1909) p. 242.) Likewise, 

treating a lawsuit as a class action does not make it one. The issue presented to us is 

whether the 818 Appealing Plaintiffs were properly joined under section 378(a)(1), not 

whether or under what circumstances Appealing Plaintiffs should be treated as a class.

5. This Case Should Not Be Treated as a Class Action. The majority 

advises the parties to use subclasses—a procedure peculiar to class actions—and draws a 

“direct parallel” with class actions based on supposed commonality on issues of liability, 

with only damages to be individually calculated. (Maj. opn., ante, at pp. 16-17.) The 

majority states its decision is without prejudice to whether the Class Action Fairness Act 

of 2005, 28 United States Code section 1332(d) (CAFA) applies. (Maj. opn., ante, at 

p. 20.) The majority is telling the trial court and Appealing Plaintiffs this litigation really 

should be treated as a class action, which could then be divided into the subissues and 

subclasses revealed by the majority’s reading of the Complaint. How can there be 

subclasses without a class?
5

While counsel for Defendants will be surprised by the majority’s approach, 

no one will be more surprised than counsel for Appealing Plaintiffs, who have disclaimed 

the premise on which the majority opinion rests. When asked at oral argument about the 

possibility of subclasses, Appealing Plaintiffs’ counsel stated the issue presented was 

whether the trial court erred by denying joinder. The majority erroneously calls this 

lawsuit a “‘mass action,’” (maj. opn., ante, at p. 2), but that is a term found in CAFA, 

28 United States Code section 1332(d)(11)(B), and Defendants chose not to remove this 

action to federal court.

2

The plaintiffs in any civil litigation, including the ones in this case, are 

deemed to be the masters of their complaint (Aryeh v. Canon Business Solutions, Inc.

(2013) 55 Cal.4th 1185, 1202) and are no less the masters of their litigation strategy. Our 

system is, after all, an adversarial one. Appealing Plaintiffs are represented by able 

counsel with years of civil litigation experience who made the strategic decisions to draft 

the Complaint as they did and to pursue Plaintiffs’ claims in a particular way. Plaintiffs 

chose not to bring a class action and chose not to separate themselves into subclasses or 

subgroups. It is not appropriate for us to second-guess those decisions and give 

unsolicited advice purporting to tell Appealing Plaintiffs the best way for them to draft 

their own complaint and pursue their own claims.

It bears repeating that the only issue before us on the appeal from the 

judgment of dismissal is whether the statutory requirements for joinder are satisfied based 

on the allegations of the Complaint. The trial court, after fully considering the relevant 

factors and issues, was correct to sustain, without leave to amend, Defendants’ demurrer 

to the Complaint. Any Appealing Plaintiff is free to file his or her own lawsuit, including 

a representative action under California’s unfair competition law.

 

 

2

 A “mass action” is deemed to be a class action removable to federal court if it meets specified requirements. (28 

U.S.C. § 1332(d)(11)(A).) 
6

I.

ALLEGATIONS

A.

Overview of the Complaint

The Complaint is 210 pages in length, and, in addition, has a 1,772-page 

appendix and attaches 1,259 pages of title and loan documents. Allegations specific to 

each plaintiff were made in appendix A to the Complaint. 

The Complaint asserted four causes of action: (1) intentional 

misrepresentation, (2) negligent misrepresentation, (3) unfair competition in violation of 

Business and Professions Code section 17200 et seq., and (4) wrongful foreclosure. All 

Plaintiffs sought damages for intentional misrepresentation and negligent 

misrepresentation. Of the 965 Plaintiffs, 90 were parties to the wrongful foreclosure 

cause of action. 

B.

The Parties

1. Plaintiffs

All 965 Plaintiffs are California residents. The Complaint alleged each 

plaintiff “borrowed money from one or more of the Defendants or its subsidiaries or 

affiliates or successors and assigns between January 1, 2003, and December 31, 2008, 

secured by a deed of trust on his or her California real estate(s)” and “one or more of the 

Defendants have acted as Servicer or some other control or capacity over processing the 

loan.”

Appendix A and the exhibits show Plaintiffs’ claims arose from about 

1,100 loan and loan modification transactions over the six-year period from January 1, 

2003 through December 31, 2008. As to 154 plaintiffs, appendix A to the Complaint did 
7

not identify basic information such as the lender, the location of the secured real property, 

the amount of the loan, or the status of the loan. 

2. Defendants

Countrywide and its founder and chief executive officer, Angelo Mozilo, 

were alleged to have devised the massive fraudulent scheme that is the subject of the 

Complaint. Countrywide Home Loans was the mortgage banking subsidiary of 

Countrywide. 

LandSafe, Inc., was a wholly owned subsidiary of Countrywide. The 

Complaint alleged, “Land[S]afe Appraisals is a division of Land[S]afe, which conducted 

the appraisals of Plaintiffs.”

B of A acquired Countrywide in 2008. Countrywide was merged into 

B of A, which absorbed and took over Countrywide’s operations and employees. The 

Complaint alleged B of A conducted the business formerly conducted by Countrywide 

and “ha[s] continued the unlawful practices of Countrywide since October 31, 2007, 

including . . . writing fraudulent mortgages.”

ReconTrust Company, N.A., was a wholly owned subsidiary of B of A and 

acted as trustee under the deeds of trust securing real estate loans held or serviced by 

B of A. The Complaint alleged, “B of A . . . and the other Bank Defendants . . . have 

regularly used ReconTrust to foreclose, as trustee with power of sale, trust deeds on 

California realty.” CTC Real Estate Services was alleged to have “acted alongside and in 

concert with B of A in carrying out the concealment described herein . . . .”

C.

General Allegations

The underlying theory of the Complaint is Defendants ceased acting as 

conventional lenders and instead “morphed into an enterprise engaged in systematic fraud 

upon its borrowers.” The Complaint alleged that Defendants engaged in “a massive and 

centrally directed fraud” by which they placed homeowners into loans which Defendants 
8

knew they could not afford (and on which the homeowners inevitably would default), 

abandoned industry-standard underwriting guidelines, and engaged in a market-fixing 

scheme by using inflated appraisals to artificially raise home prices throughout 

California.

According to the Complaint, the reason why Defendants were able to carry 

out this scheme was that they securitized the loans and sold them in bulk to 

“unsuspecting” third party investors at a hefty profit. Since Defendants intended to sell 

the loans, rather than hold them and earn profit from the interest generated, they allegedly 

no longer had an incentive to follow, and intentionally abandoned, sound underwriting 

standards. Defendants allegedly used intentionally inflated appraisals to justify the size 

of the loans, and the artificially inflated real estate values in turn allowed Defendants to 

continue to generate more inflated loans that could be securitized and sold in bulk to 

investors.

Not all loans were originated by Defendants, and the Complaint alleged, 

with no factual detail, that unnamed third party banks and lenders “acted at the behest and 

direction of the Countrywide Defendants, or agreed to participate—knowingly or 

unknowingly—in the fraudulent scheme.”

D.

Causes of Action of the Complaint

1. Intentional Misrepresentation

In the first cause of action, for intentional misrepresentation, Plaintiffs 

alleged Defendants, “through Defendants’ securities filings, speeches, advertisements, 

public utterances, websites, brokers, loan consultants, branches, communications with 

clients, and other media,” made a series of partial misrepresentations creating a duty to 

“speak the whole truth” and to disclose material facts. These eight partial 

misrepresentations included: 
9

1. The borrower’s loan payment would be for a specified sum, “when in 

reality such payment was only available for a limited undisclosed period of time and 

would then drastically increase.” 

2. The amount of payments under the loan would be “constant” and the 

borrower would be able to afford those payments, when in reality the loan payments later 

would increase and the borrower would not be able to afford those payments. 

3. The borrower qualified for the loan, when in reality the borrower only 

qualified because Defendants falsified income and asset documentation. 

4. Countrywide loaned money in conformance with its underwriting 

guidelines, and that its lending standards were safe. 

5. The borrower’s loan payment would cover both principal and interest, 

when in reality the payments would not cover principal and would not cover the

minimum interest on the loan resulting in deferred interest. 

6. By making the minimum payment on an adjustable rate mortgage loan 

(ARM), the borrower might defer interest when, in reality, making the minimum payment 

definitely would result in deferred interest. 

7. Payment schedules created the false impression that by making the 

recommended payments, borrowers would not negatively amortize their loans. 

8. By making the minimum payment during the initial interest rate period 

of an ARM, borrowers would be paying both interest and principal, when in reality they 

would be paying neither, resulting in negative amortization. 

In addition to those partial misrepresentations, the Complaint alleged 

Defendants made a series of affirmative misrepresentations “through Defendants’

securities filings, speeches, advertisements, public utterances, websites, brokers, loan 

consultants, branches, and communications with clients and other media.” The 13 

affirmative misrepresentations included:

1. The borrowers could afford their loans. 
10

2. Defendants’ calculations confirmed that the borrowers could afford their 

loans and could “shoulder the additional debt resulting from Defendant[s’] loans, in light 

of Plaintiffs’ other debts and expenses.” 

3. A borrower’s qualification for a loan was the same as being able to 

afford a loan. 

4. By making the minimum payment on an ARM, the borrower would not 

be deferring interest and would be paying both principal and interest. 

5. “[T]he value arrived at by Defendants’ appraisals of Plaintiffs’ property 

was indeed the true value of Plaintiffs’ property.”

6. “[T]he value arrived at by Defendants’ appraisals of Plaintiffs’ property 

was sufficient to justify the size of the loan they were being given.”

7. The actual terms of the loans, including the interest rate, whether the 

loan was variable or fixed, the duration of any fixed period, and the inclusion of a 

prepayment penalty. 

8. Defendants followed their own underwriting guidelines and made loans 

only to qualified borrowers.

9. Defendants were financially sound. 

10. “Defendants were engaged in lending of the highest caliber.”

11. The loans offered by Defendants were “safe and secure.”

12. The borrowers would be able to refinance their loans at a later time. 

13. Defendants would modify the borrowers’ loans. 

The Complaint alleged that in justifiable reliance on these partial and 

affirmative misrepresentations, Plaintiffs entered into loan and mortgage transactions into 

which they otherwise would not have entered, and which they could not afford from the 

outset or could not afford once the variable rate feature or balloon payment took effect. 

The Complaint did not allege the claimed 21 misrepresentations, or any combination of 

them, were uniformly made to all 965 Plaintiffs. As shown by appendix A and the 
11

exhibits to the Complaint, each of these loan and loan modification transactions was 

distinct. 

2. Negligent Misrepresentation

The second cause of action, for negligent misrepresentation, was based on 

the same misrepresentations that formed the basis for the intentional misrepresentation 

cause of action, but alleged those misrepresentations were made negligently. 

3. Unfair Competition

The third cause of action asserted unfair competition in violation of the 

unfair competition law, Business and Professions Code section 17200 et seq. The unfair 

competition cause of action alleged Defendants’ alleged massive scheme of fraud and 

Defendants’ fraudulent misrepresentations to Plaintiffs were fraudulent, unfair, and 

violated “numerous federal and state statutes and common law protections enacted for 

consumer protection, privacy, trade disclosure, and fair trade and commerce.”

In the unfair competition cause of action, Plaintiffs alleged they suffered 

financial injury including “loss of equity in their houses, costs and expenses related to 

protecting themselves, reduced credit scores, unavailability of credit, increased costs of 

credit, reduced availability of goods and services tied to credit ratings, increased costs of 

those services, as well as fees and costs, including . . . attorneys’ fees and costs.” As a 

remedy for unfair competition, Plaintiffs sought injunctive relief and restitution. 

4. Wrongful Foreclosure

Ninety plaintiffs asserted a fourth cause of action for wrongful foreclosure 

in violation of Civil Code section 2924. The Complaint set forth the basis for the 

wrongful foreclosure claim for each of these 90 plaintiffs. 

II.

Legal Standards Governing Joinder

Code of Civil Procedure section 378 provides that parties to an action may 

be joined as plaintiffs if their right to relief arises from the “same transaction, occurrence, 
12

or series of transactions or occurrences” and there is “any question of law or fact 

common to all.” (§ 378(a)(1).)

3

“Thus, in order to be joined together as plaintiffs in a 

lawsuit, plaintiffs must satisfy two requirements: (1) they must allege the same 

transaction or occurrence and (2) a common legal or factual question.” (State Farm Fire 

& Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1112-1113 (State Farm), 

italics added, disapproved on another ground in Cel-Tech Communications, Inc. v. Los 

Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 184-185.) 

Code of Civil Procedure section 378 is based on rule 20 of the Federal 

Rules of Civil Procedure (28 U.S.C.) (Rule 20). (Rodriguez v. Bethlehem Steel Corp. 

(1974) 12 Cal.3d 382, 407, fn. 28.) Rule 20(a)(1) provides: “(1) Plaintiffs. Persons may 

join in one action as plaintiffs if: [¶] (A) they assert any right to relief jointly, severally, 

or in the alternative with respect to or arising out of the same transaction, occurrence, or 

series of transactions or occurrences; and [¶] (B) any question of law or fact common to 

all plaintiffs will arise in the action.” 

In determining what constitutes a “transaction” or “occurrence” under 

Rule 20(a)(1)(A), federal courts have looked to rule 13(a) of the Federal Rules of Civil 

Procedure (28 U.S.C.), which governs compulsory counterclaims. (Alexander v. Fulton 

County, Ga. (11th Cir. 2000) 207 F.3d 1303, 1323, overruled on another ground in 

Manders v. Lee (11th Cir. 2003) 338 F.3d 1304, 1328, fn. 52.) “For the purposes of 

Rule 13(a), ‘“[t]ransaction” is a word of flexible meaning. It may comprehend a series of 

 

 

3

 In full, Code of Civil Procedure section 378 states: “(a) All persons may join in one action as plaintiffs if: [¶] 

(1) They assert any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same 

transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all

these persons will arise in the action; or [¶] (2) They have a claim, right, or interest adverse to the defendant in the 

property or controversy which is the subject of the action. [¶] (b) It is not necessary that each plaintiff be interested 

as to every cause of action or as to all relief prayed for. Judgment may be given for one or more of the plaintiffs 

according to their respective right to relief.”
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many occurrences, depending not so much upon the immediateness of their connection as 

upon their logical relationship.’” (Alexander v. Fulton County, Ga., supra, at p. 1323, 

quoting Moore v. New York Cotton Exchange (1926) 270 U.S. 593, 610.)

The ultimate consideration in assessing joinder of plaintiffs under Rule 20 

is whether the claims are so logically connected that resolving all issues in one lawsuit 

would promote judicial economy and fairness. As phrased by the United States Court of 

Appeals for the Second Circuit: “In determining whether a claim ‘arises out of the 

transaction . . . that is the subject matter of the opposing party’s claim’, this Circuit 

generally has taken a broad view, not requiring ‘an absolute identity of factual 

backgrounds . . . but only a logical relationship between them.’ [Citation.] This 

approach looks to the logical relationship between the claim and the counterclaim 

[citation] and attempts to determine whether the ‘essential facts of the various claims are 

so logically connected that considerations of judicial economy and fairness dictate that all 

the issues be resolved in one lawsuit.’ [Citation.]” (U.S. v. Aquavella (2d Cir. 1979) 615 

F.2d 12, 22; see Abraham v. American Home Mortgage Servicing, Inc. (E.D.N.Y 2013) 

947 F.Supp.2d 222, 228-229 (Abraham); Peterson v. Regina (S.D.N.Y. 2013) 935 

F.Supp.2d 628, 637.) “[T]he central purpose of Rule 20 is to promote trial convenience 

and expedite the resolution of disputes, thereby eliminating unnecessary lawsuits.” 

(Alexander v. Fulton County, Ga., supra, 207 F.3d at p. 1323; see Coughlin v. Rogers

(9th Cir. 1997) 130 F.3d 1348, 1351 [“Rule 20 is designed to promote judicial economy, 

and reduce inconvenience, delay, and added expense.”].)

III.

Plaintiffs’ Claims Did Not Arise from the Same 

Transaction or Occurrence or Series of

Transactions or Occurrences.

Appealing Plaintiffs assert that all of their claims for relief arise from the 

same transaction or occurrence or series of transactions or occurrences because “the 
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gravamen” of their lawsuit is “the fraudulent scheme common to all Plaintiffs” and “the 

harms alleged by Plaintiffs herein were the common result of Defendants[’] practices and 

policies.” (Boldface omitted.) A demurrer is treated as admitting all material facts 

properly pleaded (Moe v. Anderson (2012) 207 Cal.App.4th 826, 830-831 (Moe) and,

therefore, the facts alleged of a massive and systematic fraud perpetrated by Defendants

are deemed true.

But, on its face, the Complaint, along with the appendix and exhibits, 

shows Plaintiffs’ claims arose from over 1,000 separate and distinct loan and loan 

modification transactions. The appendix and the exhibits disclose the transactions 

involved different borrowers, a number of third party originators and lenders, and many 

different loan brokers and officers in different locations. 

The loan transactions were made at different times over a six-year period 

stretching from 2003, a time of prosperity, through 2008, at the peak of the financial 

crisis. Some loans were purchase money loans, while other loans refinanced existing 

ones. Each loan transaction was secured by a different parcel of real property in 

California and involved a different appraisal. The loans had various terms and were 

made at different interest rates; some were fixed rate loans while others were variable rate 

loans. As Defendants point out, as to 154 plaintiffs, the Complaint did not identify the 

lender, the location of the secured property, the loan amount, the type of loan, or the 

status of the loan. 

Contrary to the majority’s assertion, not all Appealing Plaintiffs had the 

same lender. Many had third party lenders, with names such as Millennium Mortgage 

Corp., BrooksAmerica Mortgage Corporation, Global Lending, Maverick, Hilsborough 

Corporation, PacificPan Mortgage, J&R Lending, Inc., and Dynamic Mortgage Financial 

Corporation. 
15

The claims of each plaintiff arose out of discrete facts and circumstances 

related to that plaintiff’s particular loan transaction. Such claims are not connected to 

each other and not susceptible to common proof. 

Plaintiffs have alleged three causes of action which seek damages: 

intentional misrepresentation, negligent misrepresentation, and wrongful foreclosure.

4

 

Significantly, Appealing Plaintiffs did not allege, nor do they argue, that Defendants 

uniformly made the same misrepresentations to each plaintiff by the same person, or even 

through the same medium. Instead, Plaintiffs broadly alleged Defendants made 

misrepresentations through their “securities filings, speeches, advertisements, public 

utterances, websites, brokers, loan consultants, branches, and communications with 

clients, and other media.” 

Which misrepresentations, if any, were made to a particular plaintiff, by 

whom, and through which medium, would have to be proven individually. To establish 

liability for intentional misrepresentation and negligent misrepresentation, each of the 

more than 818 Appealing Plaintiffs would have to prove the specific representations 

made to him or her, prove the representation was false, and prove reliance on that 

representation. “[I]solating” (maj. opn., ante, at p. 8) the various representations into 

thematic subgroups or “discrete, manageable categories” (ibid., fn. 12), as the majority 

directs Plaintiffs to do, would not solve the proof problem. 

For those reasons, the majority is, I believe, mistaken in concluding this is a 

case in which issues of liability are subject to common proof, leaving only damages to be 

individually proven and calculated. Even were the allegations that Defendants 

perpetrated a massive and systematic fraud proven, in order to recover damages, each 

Plaintiff would still have to prove the essential facts of his or her own case. That proof 

would need to include he or she relied on fraudulent or negligent misrepresentations to 

 

 

4

 Damages are not available for the unfair competition cause of action. (Cortez v. Purolator Air Filtration 

Products Co. (2000) 23 Cal.4th 163, 173.)
16

his or her detriment, the loan was unsuited to him or her, the value of his or her home was 

inflated due to Defendants’ actions and not some other cause, the appraisal used was in 

fact inflated, and he or she suffered damages from the inflated value. Each of the 90 

plaintiffs alleging wrongful foreclosure would have to prove individually how and why 

the foreclosure of his or her deed of trust was wrongful. 

Federal courts have addressed joinder of the claims of massive numbers of 

plaintiff borrowers under the same or similar circumstances and theories of recovery. 

Those courts consistently have concluded that groups of plaintiffs who were pursuing 

claims based on individual mortgage transactions were misjoined. In Visendi v. Bank of 

America, N.A. (9th Cir. 2013) 733 F.3d 863, 866 (Visendi), the United States Court of 

Appeals for the Ninth Circuit addressed whether 137 plaintiffs, who had sued 25 financial 

institutions, were misjoined. The plaintiffs alleged the defendants’ deceptive mortgage 

lending and securitization practices diminished the value of their homes, impaired their 

credit scores, and compromised their privacy. (Ibid.) The plaintiffs asserted eight causes 

of action, including rescission, fraud, and negligent misrepresentation. (Ibid.) The Ninth 

Circuit concluded the allegations lacked the factual similarity required for joinder under 

Rule 20(a)(1)(A): “This case involves over 100 distinct loan transactions with many 

different lenders. These loans were secured by separate properties scattered across the 

country, and some of the properties, but not all, were sold in foreclosure. While Plaintiffs 

allege in conclusory fashion that Defendants’ misconduct was ‘regular and systematic,’

their interactions with Defendants were not uniform. Factual disparities of the magnitude 

alleged are too great to support permissive joinder.” (Visendi, supra, at p. 870.)

In Barber v. America’s Wholesale Lender (M.D.Fla. 2013) 289 F.R.D. 364, 

365 (Barber), the complaint asserted claims by at least 18 different borrowers against at 

least nine different lenders arising out of 15 separate mortgages entered into with 10 

different lenders. The plaintiffs alleged they mistakenly believed they were entering into 

a “traditional borrower/lender relationship with Defendants” when in fact the loans were 
17

“‘conduit’ loans” that were to be pooled into mortgage-backed investment vehicles. (Id.

at p. 366.) The plaintiffs also alleged they suffered harm when their loans were sold to 

third party investors as part of the securitization process. (Ibid.) The district court 

concluded the plaintiffs were misjoined, even though their claims raised similar legal 

issues, because “each individual loan made by a Defendant to a Plaintiff was a separate 

‘transaction’ or ‘occurrence.’” (Id. at p. 367.) 

In Abraham, supra, 947 F.Supp.2d at page 226, the plaintiffs were several 

hundred current and former homeowners who sued several dozen mortgage originators 

and servicers. The plaintiffs alleged the defendants induced them to enter into mortgages 

based on inflated appraisals; failed to comply with underwriting guidelines; purposefully 

avoided local recordation statutes; bundled, packaged, and sold their mortgages to 

investors “while simultaneously betting against those mortgages”; and failed to use 

federal funds to help the plaintiffs as required by law. (Id. at pp. 226, 227.) As a result, 

the plaintiffs claimed, they lost equity in their homes, suffered damages to their credit 

ratings, and incurred unnecessary costs and expenses. (Ibid.) The plaintiffs asserted 

various tort causes of action, including fraud, deceit, fraudulent concealment, and 

intentional and negligent misrepresentation. (Id. at p. 226.) 

The district court granted the defendants’ motion to dismiss based on 

misjoinder under Rule 20. (Abraham, supra, 947 F.Supp.2d at pp. 226, 228-230.) The 

court concluded the “‘“essential facts of the various claims”’” were not “‘“logically 

connected”’” because “‘[t]he facts surrounding each loan transaction are separate and 

distinct.’” (Id. at pp. 228-229.) Citing a series of other district court decisions, the 

Abraham court concluded, “[i]t is well established that separate loan transactions by 

different lenders do not constitute a single transaction or occurrence and claims by 

plaintiffs who engaged in those separate transactions generally cannot be joined in a 

single action.” (Id. at p. 229.) “Here,” the court stated, “several hundred Plaintiffs have 

asserted claims against several dozen mortgage originators and service[r]s regarding 
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different mortgages issued in different states over a nine year period. . . . Plaintiffs’

separate mortgage transactions do not constitute a single transaction or occurrence under 

Rule 20.” (Ibid.) The court also concluded the plaintiffs’ allegations the defendants were 

involved in a common scheme were unsupported and speculative, and insufficient to 

establish a related series of transactions or occurrences so as to permit joinder. (Id. at 

pp. 229-230, 233-234.)

On point is Padron v. OneWest Bank (C.D.Cal., Apr. 7, 2014, 

No. 2:14-cv-01340-ODW (Ex)) 2014 U.S.Dist. Lexis 47947, page *7 (Padron), a “mass 

action” which had been removed under CAFA to federal court. In Padron, the federal 

district court addressed the issue of joinder of plaintiffs in a lawsuit alleging a theory of a 

systematic scheme to defraud carried out by the defendants that is similar, if not identical, 

to that alleged in this case. In Padron, 121 plaintiffs, who joined in a CAFA mass action, 

alleged, as Plaintiffs do in this case, that the defendants, which included the lender, 

mortgage servicers, the Federal Deposit Insurance Corporation, and a real estate 

appraiser, “‘had ceased acting as conventional money lenders and instead morphed into 

an enterprise engaged in systematic fraud upon its borrowers.’” (Padron, supra, 2014 

U.S.Dist. Lexis 47947 at pp. *5-*6.) The plaintiffs alleged the defendants placed them 

into loans the defendants knew the plaintiffs could not afford, abandoned 

industry-standard underwriting guidelines, concealed or misrepresented the loan terms to 

induce consent, and intentionally inflated appraisal values through a compliant appraisal 

company—“‘knowing that their scheme would cause the precipitous decline in values of 

all homes throughout California.’” (Id. at p. *6.) Attached to the plaintiffs’ complaint 

was a 264-page appendix providing a factual summary for each plaintiff. (Id. at 

pp. *6-*7.)

The district court dismissed all the plaintiffs except for the first one on the 

ground they had not satisfied the joinder requirements of Rule 20(a). (Padron, supra, 

2014 U.S.Dist. Lexis 47947 at pp. *5, *8-*9.) The court found the action to be “virtually 
19

identical to Visendi” in that the plaintiffs alleged the defendants had a common scheme, 

conspiracy, or policy to intentionally place them into dangerous loans, misrepresent the 

mortgage terms, artificially inflate appraisal prices, and engage in sham loan 

modifications. (Id. at pp. *12-*13.) The court agreed with the defendants that “‘the 

evocation of the vague strategy, scheme, or “conspiracy” cannot transcend the reality that 

each Plaintiff’s transaction is discrete, unique, and based on Plaintiff-specific facts and 

circumstances.’” (Id. at p. *13.) The court found no common issues of law or fact, 

stating, “it appears the only glue holding Plaintiffs’ disparate claims together is the fact 

that each involves a mortgage, and the Court will therefore have to address legal 

questions related to each mortgage.” (Id. at p. *14.) 

Visendi, Barber, Abraham, and Padron support the conclusion that each of 

the mortgage transactions that are the subject of the Complaint is a separate, distinct 

transaction. The district court in Padron addressed the matter of joinder in a complaint 

that appears to be a virtual copy of the one pleaded in this case. Granted, those federal 

cases are not controlling and can be distinguished in some respects. Any distinctions do 

not detract, however, from the central point of direct analogy: Hundreds of mortgage 

transactions, of different types, made by hundreds of borrowers, with various originators 

and lenders, with differing interest rates and terms, made over a six-year period stretching 

from times of economic prosperity to near collapse of the financial system, constitute 

separate and distinct transactions that do not arise out of the same transaction or 

occurrence or series of transactions or occurrences.

Visendi, Barber, Abraham, and Padron are but the tip of the iceberg. Many 

other federal decisions from across the nation have reached the conclusion that similar 

claims made by home loan borrowers are not susceptible to joinder, for example: 

―D’Angelis v. Bank of America, N.A. (E.D.N.Y., Jan. 16, 2014, 

No. 13-CV-5472(JS)(AKT)) 2014 U.S.Dist. Lexis 6087, page *7 (“Here, Plaintiffs’ 

claims do not arise out of the same transaction or occurrence. This case involves eight 
20

different lenders and over 100 discrete loans secured at different times for separate 

properties across twenty-eight different states.”) 

―Martin v. Bank of America, N.A. (E.D.N.Y., Mar. 12, 2014, 

No. 13 Civ. 02350 (ILG) (SMG)) 2014 U.S.Dist. Lexis 32231, pages *4, *10-*13, 

*15-*16 (District court grants motion to sever claims brought by 119 plaintiff borrowers.) 

―Garner v. Bank of America Corp. (D.Nev., May 13, 2014, 

No. 2:12-CV-02076-PMP-GWF) 2014 U.S.Dist. Lexis 66203, page *10 (“While 

Plaintiffs here allege in some detail an overarching conspiracy and coordinated conduct, 

which the Visendi plaintiffs apparently did not allege or alleged only in conclusory 

fashion, Plaintiffs’ claims nevertheless will entail individualized inquiry, such as what 

representations were made to them by their respective loan officers and whether each 

Plaintiff justifiably relied on those alleged misrepresentations.”) 

―Kalie v. Bank of America Corp. (S.D.N.Y. 2013) 297 F.R.D. 552, 555, 

557 (District court granted motion to sever claims brought by 16 plaintiffs because each 

of them “entered into a different loan transaction at a different time . . . relate[d] to a 

distinct property.”) 

―Gonzalez v. Bank of America, N.A. (N.D.Cal., Aug. 4, 2012, 

No. 12-1007-SC) 2012 U.S.Dist. Lexis 120702, pages *4-*5 (30 plaintiffs improperly 

joined because their claims arose out of at least 26 loan transactions.) 

―Richards v. Deutsche Bank National Trust Co. (C.D.Cal., Aug. 15, 2012, 

No. CV 12-4786 DSF (RZx)) 2012 U.S.Dist. Lexis 115302, page *2 (“The test for 

permissive joinder is not met in this case as each Plaintiff’s claim involves a different 

loan transaction and foreclosure. Plaintiffs’ wholly unsupported and speculative 

allegation that the various Defendants conspired to defraud each individual Plaintiff . . .

does not satisfy the requirement that Plaintiffs’ claims arise out of the same transaction, 

occurrence, or series of occurrences, nor does it obviate the need for separate proof as to 

each individual claim.”) 
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―Martinez v. Encore Credit Corporation (C.D.Cal., Sept. 30, 2009, 

No. CV 09-5490 AHM (AGRx)) 2009 U.S.Dist. Lexis 96662, pages *5-*6 (Improper 

joinder of 19 plaintiffs with claims arising out of distinct facts involving mortgages on 15 

separate properties.)

The Complaint in this case is not distinguishable in any meaningful way 

from the complaints found by these federal courts to be based on misjoinder of plaintiffs, 

except in one respect—size. The Complaint in this case, with 965 plaintiffs, 818 of 

whom have appealed, dwarfs even the largest of the federal lawsuits. 

IV.

“Broad Construction” of Code of Civil Procedure

Section 378 Does Not Justify Joinder

of 818 Appealing Plaintiffs. 

In concluding joinder is proper, the majority emphasizes that Code of Civil 

Procedure section 378 must be broadly or liberally construed. While that is an 

undisputed proposition (State Farm, supra, 45 Cal.App.4th at p. 1113; see Kraft v. Smith

(1944) 24 Cal.2d 124, 129 [“‘statutes relating to joinder should be liberally construed’”]), 

broad construction is not a substitute for rigorous application of the statutory standards to 

the Complaint. Section 378 cannot be construed broadly or liberally enough to justify 

joinder of the claims of the 818 Appealing Plaintiffs in this case. As a panel of this court 

has said, albeit in a different context, “liberal construction can only go so far.” (Soria v. 

Soria (2010) 185 Cal.App.4th 780, 789.) 

According to the majority, broad construction of Code of Civil Procedure 

section 378 is exemplified by four California appellate court opinions upholding joinder. 

I will analyze each of them and explain why none of those cases supports the majority’s 

conclusion. In Anaya v. Superior Court (1984) 160 Cal.App.3d 228, 231 (Anaya), some 

218 employees and their family members joined, in a single lawsuit, their claims they 

suffered injuries from exposure to hazardous chemicals while working for the defendants 
22

over a period of 20 to 30 years. The Court of Appeal held the plaintiffs were properly 

joined, stating: “The employees are said to have been exposed to harmful chemicals at 

one location over a period of many years by inhalation, drinking of water, and physical 

contact. Thus, they were all involved in the same series of transactions or occurrences 

and assert rights to relief therefrom. The fact that each employee was not exposed on 

every occasion any other employee was exposed does not destroy the community of 

interest linking these petitioners.” (Id. at p. 233.)

The majority finds Anaya instructive because in that case issues of liability 

were common while the differences between each plaintiff’s claim were limited to 

individual damages. In Anaya, supra, 160 Cal.App.3d at page 233, the employees 

suffered injury by exposure to the same harmful chemicals at the same location while 

working for the same employer. In marked contrast, in this case, the issues of liability 

are not common. As I have explained, even if Plaintiffs proved their allegations 

Defendants engaged in a mass and systematic fraud, each of the hundreds of Plaintiffs 

nonetheless would have to prove liability as to him or her. Plaintiffs, who are related 

only by the fact they live in California, entered into hundreds of different loan 

transactions, each secured by different real property, through a variety of brokers and 

agents, who made differing sets of representations, and the loans were funded by many 

lenders. Putting aside the difficulties in comparing a toxic tort action with a breach of 

contract/secured real property/business tort action, the analogy between Anaya and this 

case is inapt.

The majority also posits that Anaya supports joinder in this case because 

the Anaya court emphasized that Code of Civil Procedure section 378 permits joinder 

when “‘any question of law or fact common to all’ plaintiffs will arise.” (Anaya, supra, 

160 Cal.App.3d at p. 233.) Such an interpretation of section 378 relates to the second 

requirement of section 378(a)(1) and ignores the first. If joinder could be accomplished 

whenever any single common question of law or fact arises, then the scope of section 378 
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would be boundless and untethered to a requirement of section 378(a)(1) that the right 

needs to be “in respect of” or “arising out of the same transaction, occurrence, or series of 

transactions or occurrences.”

As another example of broad construction, the majority offers Moe, supra, 

207 Cal.App.4th at pages 827-828, in which two patients alleged they were victims of 

separate sexual assaults committed by a physician. The patients and their husbands sued 

the physician and his two employers for medical malpractice, battery, and various other 

torts. (Id. at p. 828.) The trial court sustained a demurrer without leave to amend based 

on misjoinder of plaintiffs, and the Court of Appeal affirmed as to the physician. (Ibid.) 

The Moe court concluded the events alleged did not constitute a single transaction 

because two sets of plaintiffs were suing for “separate and distinct sexual assaults during 

separate and distinct time periods.” (Id. at p. 833.) “[T]he gravamen of plaintiffs’ claims 

against [the physician] is the harmful sexual touching that was perpetrated against each 

victim on separate occasions.” (Id. at p. 834.) But as to the defendant employers, the 

court held the plaintiffs were properly joined because the claims against the employers 

arose from the same related series of transactions—the negligent hiring and supervision 

of the physician. (Id. at p. 835.)

Moe is apt, the majority says, because, here, as in that case, “there is much 

in the way of common evidence and theories of liability.” (Maj. opn., ante, at p. 15.) But 

Moe bears no similarity factually or legally to this case and provides no assistance in 

identifying what that common evidence or those common theories might be.

Particularly instructive, according to the majority, are State Farm, supra, 45 

Cal.App.4th 1093, and Adams v. Albany (1954) 124 Cal.App.2d 639 (Adams). In State 

Farm, supra, 45 Cal.App.4th at pages 1098-1099, the Court of Appeal held the claims of 

165 plaintiffs against their insurers were properly joined in a single action. The plaintiffs 

alleged the insurers had engaged in a systematic practice to deceive their insureds 

regarding the purchase of earthquake insurance. (Id. at p. 1113.) The plaintiffs alleged 
24

the insurers, without adequate notice of a reduction in the scope of coverage, issued 

policies of earthquake coverage to replace endorsements to coverage without a change in 

premium. (Ibid.) In addition, the complaint alleged systematic claims handling practices. 

(Ibid.) The Court of Appeal concluded those allegations established, at least at the 

pleading stage, proper joinder of the plaintiffs under Code of Civil Procedure section 378. 

(State Farm, supra, at p. 1114.)

In State Farm, supra, 45 Cal.App.4th at page 1113, each plaintiff purchased 

the same homeowners insurance policy with identical earthquake coverage from the same 

insurer, and were allegedly defrauded in precisely the same way. That is not the case 

here. The majority notes that the plaintiffs in State Farm alleged they suffered 15 

different types of improper claims handling processes, and “[i]f the joinder of a wide 

variety of claims handling practices was appropriate under State Farm, the joinder of 

various forms of loan impropriety here seems equally correct.” (Maj. opn., ante, at 

p. 14.) 

The State Farm court concluded joinder was proper, however, both because 

the plaintiffs alleged the insurers engaged in systematic claims handling practices and

because they issued policies reducing the scope of coverage without adequate notice. 

(State Farm, supra, 45 Cal.App.4th at p. 1113.) The allegations of the latter practice, the 

court stated, “clearly reflect a claim containing common facts central to the alleged 

deception.” (Ibid.) As for the former practice, the complaint alleged the defendants 

engaged in 15 different claims handling practices as to all the plaintiffs. (Id. at 

pp. 1099-1100.) The Court of Appeal noted that “[w]hile not every plaintiff may have 

been victimized by the same claims handling practice, that is a matter which can be 

resolved in discovery.” (Id. at p. 1113.) In other words, the complaint itself alleged 

claims handling practices common to all the plaintiffs. Since the Court of Appeal was 

addressing the trial court’s order overruling a demurrer, the allegations of the complaint 

had to be accepted as true, with the proviso that the claims could be sorted out in 
25

discovery. Here, the differences between the claims of each of the Appealing Plaintiffs 

are apparent from the face of the Complaint and its attachments, and Plaintiffs have 

neither alleged nor argued a systemic set of misrepresentations made uniformly to each of

them.

In Adams, supra, 124 Cal.App.2d at page 640, each plaintiff entered into 

the same contract with the same developer, who allegedly overcharged them and failed to 

build their homes in conformity with the same required plans and specifications. All the 

homes were part of the same subdivision, each of the transactions was “exactly similar in 

kind and manner of operation,” and the same misrepresentations were made to each of 

the plaintiffs. (Id. at p. 647.) The agreements and instruments involved differed only 

“for incidental variations in details.” (Ibid.) The facts of Adams are not even remotely 

similar to the allegations of the Complaint in this case.

None of these cases—Anaya, Moe, State Farm, or Adams—supports 

joinder of the 818 Appealing Plaintiffs into a single lawsuit under a broad construction of 

Code of Civil Procedure section 378. In none of these cases was broad construction the 

driving force behind the Court of Appeal’s decision to uphold joinder. In each case, the 

Court of Appeal, though noting the principle of broad construction, applied the standards 

of section 378 or its statutory predecessor to the facts at hand to reach a conclusion. 

The majority argues this case is merely a “quantitatively” larger version of 

Anaya, Moe, State Farm, and Adams. (Maj. opn., ante, at p. 15.) But, as I have 

explained, the facts and allegations of those cases are not qualitatively similar in the 

remotest way to the allegations of the Complaint. It makes far more sense to turn for 

guidance to authority that is qualitatively similar to this lawsuit. We have such authority 

in abundance: Visendi, Barber, Abraham, Padron, and the host of other federal cases 

dealing with the very issues presented by this appeal. That authority squarely 

demonstrates the trial court did not err by concluding Appealing Plaintiffs were 

misjoined. The majority attempts to distinguish Visendi, Barber, and Abraham in a 
26

footnote by describing them as “merely mak[ing] the point that genuinely multiple

defendants are inconsistent with the federal permissive joinder rule.” (Maj. opn, ante, at 

p. 16 & fn. 18.) The majority’s characterization of those cases is inaccurate and unduly 

dismissive. Indeed, as shown, the federal permissive joinder rule is the same as 

California’s.

V.

Providing Litigation Strategy to Appealing Plaintiffs Is 

Neither Appropriate nor Warranted.

The majority offers advice for dealing with a lawsuit of the 818 Appealing 

Plaintiffs. The majority advises Appealing Plaintiffs’ counsel to go back and redraft the 

“desultory and scattered” allegations of the Complaint into something briefer and to 

include subclasses to make the case more manageable. (Maj. opn., ante, at pp. 18-19.) 

The Complaint does not suffer from lack of organization, certainty, thoroughness, or

clarity. The Complaint is indeed lengthy, particularly with the attachments, but the 

length is directly attributable to the enormous number of plaintiffs joined, the causes of 

actions asserted, and the nature of the fraudulent scheme alleged. 

More importantly, Appealing Plaintiffs did not ask for our advice in 

drafting the Complaint, and it is not ours to give. Appealing Plaintiffs are the masters of 

the Complaint, and we must accept the Complaint’s allegations “at face value” (Aryeh v. 

Canon Business Solutions, Inc., supra, 55 Cal.4th at p. 1202), including its organization, 

length, and theories and modes of recovery asserted. Based on the Complaint, as 

presented to us, we must decide only whether joinder was proper. 

The majority asserts, “the ability to organize class actions into appropriate 

subclasses” is “important for our purpose here.” (Maj. opn., ante, at p. 19.) Subclasses 

are an important tool for making class actions more efficient (Vasquez v. Superior Court

(1971) 4 Cal.3d 800, 821) but, as I emphasized at the outset, this is not a class action. 

Plaintiffs chose not to bring a class action. At oral argument, Appealing Plaintiffs’ 
27

counsel confirmed this was not a class action and the creation of subclasses was not an 

issue on appeal. The majority’s speculation as to what Plaintiffs should have alleged is, 

in my view, inappropriate and is an ill-advised advisory opinion. The majority’s 

suggestion that Appealing Plaintiffs and the trial court come up with subclasses serves to 

emphasize my point: Plaintiffs were misjoined in the first place.

The majority calls this case a mass action rather than a class action, and 

says its decision is without prejudice as to whether CAFA applies. (Maj. opn, ante, at 

p. 20.) As I said at the beginning, the term “mass action” is found in CAFA, and mass 

actions are not recognized in the Code of Civil Procedure. A mass action is by definition 

a class action made removable to federal court. (28 U.S.C. § 1332(d)(11).) If Plaintiffs’ 

lawsuit is a mass action under CAFA, then Defendants, who, like Plaintiffs, are 

represented by skilled and experienced counsel, have chosen, for whatever reason, not to 

remove it. In any event, Plaintiffs’ lawsuit might not be a mass action because the 

Complaint alleges that all of the claims in the action arose from “an event or occurrence” 

within the State of California and that Plaintiffs suffered their injuries in this state. (28 

U.S.C. § 1332(d)(11)(B)(ii)(I).) 

Finally, the majority seeks to offer the trial court help in managing this 

litigation behemoth by reminding the court of its inherent power to control the order of 

issues to be tried, to supervise and control litigation, and to conserve judicial resources. 

(Maj. opn., ante, at pp. 19-20 & fn. 21.) I am sure the trial judge, who is an excellent and 

respected jurist, was well aware of those powers and the need to conserve judicial 

resources, and considered them when sustaining the demurrer for misjoinder. In any 

event, the claims have been misjoined under section 378(a)(1) for all the reasons I have 

discussed and the majority opinion is in conflict with many opinions facing the identical 

issues. 

Affirming the judgment of dismissal would not leave Plaintiffs without 

recourse or recompense. Each Plaintiff can pursue his or her own lawsuit for fraud, 
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negligent misrepresentation, and, as the case may be, wrongful foreclosure. In addition, 

the Complaint alleges a cause of action for unfair competition in violation of California’s 

unfair competition law, Business and Professions Code section 17200 et seq., based on 

the allegations that Defendants engaged in a massive conspiracy and fraudulent scheme 

to place borrowers into loans for which they were unsuited, to securitize and sell those 

loans on the secondary market, and to artificially inflate real estate prices in California. 

Business and Professions Code section 17203 permits recovery of restitution without 

individualized proof of deception, reliance, and injury. (People v. Sarpas (2014) 225 

Cal.App.4th 1539, 1548.) 

FYBEL, J.