Court Opinion

ID: 6103717
Source: CourtListenerOpinion
Date Created: 2022-01-14 20:02:50.227309+00
Date Added: 2024-06-11T08:53:33.341322
License: Public Domain

Filed 1/14/22 Cruz v. Valerio Townhomes Homeowners Assn. CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION FIVE

GUADALUPE CRUZ,                                              B303641

         Appellant,                                          (Los Angeles County
                                                             Super. Ct. No. LS030053)
         v.

VALERIO TOWNHOMES
HOMEOWNERS
ASSOCIATION,

         Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Virginia Keeny, Judge. Affirmed.
     Alfred O. Anyia for Appellant.
     Donahoe Young & Williams, Mark T. Young & Lucas E.
Rowe for Respondent.
                      I. INTRODUCTION

      Appellant Guadalupe Cruz owned a townhouse in Van
Nuys, California. When she defaulted on her mortgage, the
trustee under the deed of trust sold the townhouse in a
nonjudicial foreclosure sale. The sales proceeds exceeded the
amount necessary to satisfy the loan, so the trustee gave notice of
the surplus to all persons with a recorded interest in the
townhouse. Respondent Valerio Townhomes Homeowners
Association (the HOA), the homeowners association for Cruz’s
townhouse, filed a claim with the trustee for a portion of the
surplus proceeds. Because Cruz disputed the HOA’s claim, the
trustee deposited the surplus proceeds with the clerk of the
Superior Court and the trial court conducted a bench trial on the
HOA’s claim. The court entered judgment in the HOA’s favor
and directed the clerk to distribute $94,873.97 to the HOA and
the remainder to Cruz. Cruz appeals and we affirm.

                      II. BACKGROUND

      Pursuant to a deed of trust recorded on September 13,
2005, Cruz purchased a townhouse at Valerio Street in Van Nuys
California (the property). Thereafter, Cruz defaulted on the deed
of trust encumbering the property.
      On September 28, 2017, Western Progressive, LLC
(Western), trustee under Cruz’s deed of trust, sold the property
for $255,000 in a nonjudicial foreclosure sale. After the sale,
there was $115,513.95 in surplus proceeds available to claimants.
Western gave notice of the surplus proceeds to all persons with a
recorded interest in the property. (Civ. Code, § 2924j, subd. (a).)

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       Western received claims from the HOA ($52,259.25), the
Los Angeles County Tax Collector ($1,240.74), and Cruz
(unspecified). On February 15, 2018, Western mailed notice of its
intent to distribute the surplus proceeds as follows: $52,259.25 to
the HOA, $1,240.73 to the Los Angeles County Tax Collector, and
the remaining balance to Cruz. On February 22, 2018, Cruz sent
Western a letter disputing the HOA’s claim.
       Because there was a dispute about its proposed distribution
of the surplus proceeds that required a trial court’s resolution,
Western filed in the trial court a Petition and Declaration
Regarding Unresolved Claims and Deposit of Undistributed
Surplus Proceeds of Trustee’s Sale. (Civ. Code, § 2924j, subds. (b)
& (c).) Western gave notice to the claimants of its intent to
deposit the surplus proceeds with the clerk of the Superior Court.
       On March 7, 2018, the trial court ordered Western to
deposit the surplus proceeds ($111,710.31—the surplus proceeds
less Western’s fees and expenses and a filing fee) with the clerk of
the court. It set an April 19, 2018, hearing for unresolved claims.
       On April 4, 2019, the HOA submitted a claim that it was
owed $52,416.95, pursuant to a Notice of Delinquent Assessment
Lien (lien) on the property. On April 5, 2018, Cruz filed a claim
for “‘whatever amount the court deems is the remainder to the
surplus funds.’” She asserted that the HOA’s claim was “full of
over-billed dues and unearned and bogus fees.” She also
challenged the HOA’s compliance with the Davis-Stirling
Common Interest Development Act (Davis-Stirling Act).1

1    Neither the HOA’s nor Cruz’s claim is in the record on
appeal. We use the trial court’s description of the claims.

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      On July 31, 2019, following a bench trial, the trial court
issued a tentative statement of decision. In its tentative
statement of decision, it reviewed testimony and evidence the
HOA introduced concerning the HOA’s monthly assessment and
Cruz’s assessment delinquencies and late fees. According to the
HOA, Cruz had made only eight monthly payments in eight
years. On November 6, 2014, the HOA caused to be recorded on
the property the lien in the amount of $21,728.78.
      In 2015, the HOA attempted to foreclose on the lien. A few
days prior to the noticed foreclosure sale, however, Cruz filed a
Chapter 13 bankruptcy petition, preventing the sale. The trial
court took judicial notice of a Debtor’s Notice of Motion and
Motion to Avoid Junior Lien that Cruz filed in the bankruptcy
case that sought to avoid the HOA’s lien. It also took notice of
the bankruptcy court’s March 28, 2016, order denying the motion.
      The trial court’s statement of decision also reviewed
testimony and evidence Cruz offered concerning the HOA’s
alleged failure to comply with the Davis-Stirling Act and other
alleged transgressions. Reinaldo Bonifasi, Cruz’s son, testified
that he had proposed to the HOA’s board a repayment plan to
address his mother’s assessment delinquencies and late fees.
When he did not get an immediate response, he consulted an
attorney who advised him to proceed to bankruptcy.
      In its tentative statement of decision, the trial court ruled
that the HOA failed to establish a legally valid lien. It failed to
establish that it had complied with three parts of the Davis-
Stirling Act: “1) pre-lien notice; 2) notice of recordation of the

    The Davis-Stirling Act sets forth the statutory duties of
homeowners’ associations. (Ostayan v. Nordhoff Townhomes
Homeowners Assn., Inc. (2003) 110 Cal.App.4th 120, 127.)

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lien; and 3) legally binding vote by the board to record the lien.”
Accordingly, the HOA was not entitled to any part of the surplus
proceeds.
       The HOA filed objections to the trial court’s proposed
statement of decision and a request that the court take judicial
notice of documents from Cruz’s bankruptcy case. Those
documents included the HOA’s proof of claim for the lien and the
Case Summary and Claims Register that reflected that Cruz did
not file an objection to the HOA’s proof of claim.
       The HOA argued that Cruz had not challenged the validity
of the lien by objecting to the proof of claim in her bankruptcy
case resulting in the claim being deemed allowed. An allowed
claim is in the nature of a final judgment and res judicata
precluded the court from considering the lien’s validity. It also
challenged the court’s determination that it had not complied
with the Davis-Stirling Act. Based on the HOA’s objections, the
court set the matter for hearing and permitted the parties to brief
the issues further.
       On September 18, 2019, after further briefing and
argument, the trial court ruled, “I am persuaded that there is
preclusive effect that must be given to the allowance of the lien,
and that this court did not have the ability to reconsider the
validity of the lien in this proceeding.”
       On October 1, 2019, the trial court issued a new tentative
statement of decision. In this tentative statement of decision, the
court granted the HOA’s request for judicial notice of the
documents from Cruz’s bankruptcy case. It then ruled, “The lien
recorded by the HOA in 2014 is a valid and enforceable lien.
While the parties devoted days of testimony challenging and
supporting the validity of the underlying lien recorded by the

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HOA, and the HOA in its trial brief stated that the validity of the
lien was an issue for the court to decide, principles of res judicata
preclude this court from examining the validity of that lien.
Pursuant to 11 U.S.C. § 502(b), ‘[a] claim . . . , proof of which is
filed under section 501 of [Title 11], is deemed allowed, unless a
party in interest . . . objects.’ [(]11 U.S.C. § 502(b).[)] The HOA
filed a Proof of Claim in Cruz’s Chapter 13 case. Cruz did not
object. For res judicata purposes, a bankruptcy court’s order
allowing a proof of claim is a final judgment. (See Matter of
Baudoin (5th Cir. 1993) 981 F.2d 736, 742; Siegel v. Fed. Home
Loan Mortg. Corp. (9th Cir. 1998) 143 F.3d 525, 530 [(Siegel)];
United States v. Coast Wineries (9th Cir. 1942)[] 131 F.2d 643,
648; Nathanson v. Hecker (2002) 99 Cal.App.4th 1158, 1164.)”
       Because the HOA’s claim in bankruptcy court concerning
the lien was allowed, the trial court agreed that res judicata
prevented Cruz from relitigating the validity of the lien.
Accordingly, the court withdrew its determination in its original
statement of decision that the lien was invalid because it violated
the Davis-Stirling Act.
       As to the amount of the lien, the trial court reduced the
HOA’s request for fees and costs associated with filing the lien
and attorney fees to defend the lien in bankruptcy court from
$18,617.50 to $10,000. It also “advise[d]” that the reasonable
amount of the HOA’s attorney fees for prosecuting its surplus
proceeds claim was $35,000; the HOA had requested $56,330.52.
The court proposed to reduce the HOA’s attorney fees in part
because the HOA “did not raise its res judicata argument or even
brief that issue until after the evidentiary hearing and after the
court had issued its tentative statement of decision. Had the
HOA raised this issue at the first instance, the court and the

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parties would have been spared needless expense. The HOA is
not entitled to recover attorney’s fees spent litigating irrelevant
issues, e.g. the validity of the lien, which it could have prevented
with a pre-trial motion or trial brief on the issue.” If the HOA
believed it was entitled to additional fees, it could file a request.
      The HOA filed a request for $14,934.04 in additional
attorney fees. The record does not contain an express ruling from
the trial court on the HOA’s request. However, the amount by
which the judgment in the HOA’s favor—$94,873.97—exceeds the
HOA’s claimed lien—$45,539.97—is $49,334, or $4,334 more than
the tentative statement of decision’s attorney fees calculation—
$45,000.

                       III. DISCUSSION

A.    Waiver

       Cruz contends the HOA waived its res judicata2 defense to
the validity of the lien because it presented evidence in support of
the lien’s validity apart from its res judicata—or claim
preclusion—defense. Further, Cruz contends, she was prejudiced
by the HOA’s failure to establish its res judicata defense prior to
trial thus causing her to incur attorney fees in challenging the
lien’s validity and in making her responsible for the HOA’s
attorney fees incurred in litigating the issue.

2      Cruz refers to the HOA’s collateral estoppel defense.
Although the HOA discussed collateral estoppel in its objections
to the tentative statement of decision, it asserted a res judicata—
or claim preclusion—defense and the trial court ruled on that res
judicata defense.

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       “‘“[W]aiver is the intentional relinquishment of a known
right after knowledge of the facts.” [Citations.] The burden . . . is
on the party claiming a waiver of a right to prove it by clear and
convincing evidence that does not leave the matter to speculation,
and “doubtful cases will be decided against a waiver” [citation].’
[Citations.] The waiver may be either express, based on the
words of the waiving party, or implied, based on conduct
indicating an intent to relinquish the right. [Citation.]” (Waller
v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31 (Waller).)
       “‘California courts will find waiver when a party
intentionally relinquishes a right or when that party’s acts are so
inconsistent with an intent to enforce the right as to induce a
reasonable belief that such right has been relinquished.’
[Citation.]” (Waller, supra, 11 Cal.4th at pp. 33–34.) “The pivotal
issue in a claim of waiver is the intention of the party who
allegedly relinquished the known legal right.” (DRG/Beverly
Hills, Ltd. v. Chopstix Dim Sum Cafe & Takeout III, Ltd. (1994)
30 Cal.App.4th 54, 60.)
       With its objections to the court’s initial tentative statement
of decision, the HOA filed a request for judicial notice of its proof
of claim for the lien, the Case Summary, and the Claims Register
from Cruz’s bankruptcy case. Those documents served as the
basis for the HOA’s res judicata defense. Cruz does not contend
that the trial court erred in granting the HOA’s request for
judicial notice or in considering the noticed documents. On this
record, we reject Cruz’s argument that the doctrine of waiver
applied, as a matter of law, to preclude the HOA’s res judicata
defense.

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B.    Res Judicata (Claim Preclusion)3

       Cruz contends that collateral estoppel or issue preclusion
does not apply in this case. As we discuss above, the trial court
concluded that the defense of res judicata, or claim preclusion,
applied. “‘As generally understood, “[t]he doctrine of res judicata
gives certain conclusive effect to a former judgment in subsequent
litigation involving the same controversy.” [Citation.] The
doctrine “has a double aspect.” [Citation.] “In its primary
aspect,” commonly known as claim preclusion, it “operates as a
bar to the maintenance of a second suit between the same parties
on the same cause of action. [Citation.]” [Citation.] “In its
secondary aspect,” commonly known as collateral estoppel, “[t]he
prior judgment . . . ‘operates’” in “a second suit . . . based on a
different cause of action . . . ‘as an estoppel or conclusive
adjudication as to such issues in the second action as were
actually litigated and determined in the first action.’ [Citation.]”
[Citation.] “The prerequisite elements for applying the doctrine to
either an entire cause of action or one or more issues are the

3      “The law of preclusion helps to ensure that a dispute
resolved in one case is not relitigated in a later case. Although
the doctrine has ancient roots [citation], its contours and
associated terminology have evolved over time. We now refer to
‘claim preclusion’ rather than ‘res judicata’ [citation], and use
‘issue preclusion’ in place of ‘direct or collateral estoppel’
[citations]. [¶] Claim and issue preclusion have different
requirements and effects. Claim preclusion prevents relitigation
of entire causes of action. [Citation.] . . . Issue preclusion, by
contrast, prevents ‘relitigation of previously decided issues,’
rather than causes of action as a whole.” (Samara v. Matar
(2018) 5 Cal.5th 322, 326–327, fn. omitted.)

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same: (1) A claim or issue raised in the present action is identical
to a claim or issue litigated in a prior proceeding; (2) the prior
proceeding resulted in a final judgment on the merits; and (3) the
party against whom the doctrine is being asserted was a party or
in privity with a party to the prior proceeding. [Citations.]”’
(People v. Barragan (2004) 32 Cal.4th 236, 252[–]253 . . . .)”
(Boeken v. Philip Morris USA, Inc., (2010) 48 Cal.4th 788, 797.)
“Even assuming all the threshold requirements [of res judicata]
are satisfied, however, our analysis is not at an end. We have
repeatedly looked to the public policies underlying the doctrine
before concluding that [res judicata] should be applied in a
particular setting. [Citation.]” (Lucido v. Superior Court (1990)
51 Cal.3d 335, 342–343.) We review de novo the court’s
application of the doctrine of res judicata or claim preclusion.
(Association of Irritated Residents v. Department of Conservation
(2017) 11 Cal.App.5th 1202, 1218 (Association of Irritated
Residents) [“Because it is a question of law, we review de novo the
trial court’s conclusion that res judicata was applicable in this
case”].)
       Under title 11 of United States Code section 502,
subdivision (a), “[a] claim or interest, proof of which is filed under
section 501 of this title . . . , is deemed allowed, unless a party in
interest . . . objects.” The “allowance or disallowance of ‘a claim
in bankruptcy is binding and conclusive on all parties or their
privies, and being in the nature of a final judgment, furnishes a
basis for a plea of res judicata.’” (Siegel, supra, 143 F.3d at
p. 529.) California courts must give full faith and credit to a final
order or judgment of a federal court. (Levy v. Cohen (1977) 19
Cal.3d 165, 172.)

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      On January 8, 2016, the HOA filed a proof of claim in
Cruz’s Chapter 13 bankruptcy case concerning the lien. Cruz did
not object to the HOA’s proof of claim in her Chapter 13
bankruptcy case. On April 4, 2016, Cruz converted her Chapter
13 bankruptcy case to a Chapter 7 bankruptcy case. She did not
object to the HOA’s proof of claim in her Chapter 7 bankruptcy
case. By order dated July 15, 2016, the bankruptcy court
discharged Cruz’s case. The case was closed on July 19, 2016.
      Because Cruz did not object in bankruptcy court to the
HOA’s proof of claim concerning the lien, the claim was deemed
allowed. (11 U.S.C. § 502(a).) The HOA’s allowed claim was
binding on Cruz and because it was “‘in the nature of a final
judgment,’” it served as the basis for a “‘plea of res judicata.’”
(Siegel, supra, 143 F.3d at p. 529.) Cruz’s contention that the
claim raised in the bankruptcy proceeding is not identical to the
claim here is based on her contention that the value of the claims
was different. The amount of the claim sought by the HOA in
this case exceeded the amount of the lien because it included the
HOA’s request for fees and costs.
      Similarly, her contention that the validity of the HOA’s lien
was not decided on the merits because her bankruptcy case was
“dismissed” is meritless. As we discuss above, the validity of the
lien was established when the HOA filed a proof of claim in
Cruz’s bankruptcy case and Cruz did not file an objection. (11
U.S.C. § 502(a); Siegel, supra, 143 F.3d at p. 529.) An allowed
claim is the equivalent of a final judgment for res judicata
purposes. (Siegel, supra, 143 F.3d at p. 529.)
      Finally, we reject Cruz’s argument that the doctrine of res
judicata should not be applied in this case because its application
does not “comport[ ] with fairness and sound public policy.” Cruz

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does not explain why the application of the doctrine here is unfair
or against public policy. At best, she argues that she was
prejudiced by the application of the doctrine because she
expended resources in litigating the claim. Cruz cites no
authority for her contention that her expenditure of resources in
litigation renders the application of the doctrine either unfair or
against public policy and we conclude it does not. Moreover, the
trial court reduced the HOA’s requested attorney fees in this case
from $56,330.52 to $49,334 apparently based on the HOA’s
litigation of the merits of the lien’s validity.4
       On this record, we conclude that the trial court did not err
when it held that the validity of the HOA’s lien was established
in Cruz’s bankruptcy case and the lien’s validity was not subject
to reexamination. (Association of Irritated Residents, supra, 11
Cal.App.5th at p. 1218.)

4     In her opening brief’s conclusion, Cruz asks this court to
reverse the trial court’s judgment or, alternatively, to “deny
Respondent any attorney[ ] fees billed in litigating this case.”
Cruz offers no explanation or authority for her alternative
attorney fees request and we reject it as forfeited. (Badie v. Bank
of America (1998) 67 Cal.App.4th 779, 784–785 [“When an
appellant fails to raise a point, or asserts it but fails to support it
with reasoned argument and citations to authority, we treat the
point as waived”].

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                        IV. DISPOSITION

     The judgment is affirmed. The parties are to bear their
own costs on appeal.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                        KIM, J.

We concur:

             BAKER, Acting P. J.

             MOOR, J.

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