Court Opinion

ID: 3006179
Source: CourtListenerOpinion
Date Created: 2015-09-30 20:03:02.988795+00
Date Added: 2024-06-11T09:33:00.341988
License: Public Domain

Filed 9/30/15 Rustling Oaks v. Citibank CA2/1
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 ONE

RUSTLING OAKS, LLC,                                                  B255897

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                     Super. Ct. No. BC 505797)
         v.

CITIBANK, N.A.,

         Defendant and Respondent.

         APPEAL from a judgment of the Superior Court of Los Angeles County. Susan
Bryant-Deason, Judge. Affirmed in part and reversed in part.
         Ecoff Law, Ecoff Landsberg and Lawrence C. Ecoff for Plaintiff and Appellant.
         Fidelity National Law Group and Patricia L. Swatt for Defendant and Respondent.
                                 _________________________________
       Rustling Oaks, LLC (Rustling Oaks), appeals from the judgment dismissing its
action after the trial court sustained without leave to amend Citibank N.A.’s demurrer to
its complaint in this action on the basis of res judicata. We conclude that res judicata is a
bar to only two of the four causes of action, and therefore reverse the judgment to allow
Rustling Oaks to proceed on the remaining causes of action.
                                     BACKGROUND
       Rustling Oaks’s complaint in this case sought to quiet title to residential property
located on Rustling Oaks Drive in Agoura Hills (the property), obtain declaratory relief
regarding the title to the property and the rights and obligations of the parties, cancel an
assignment of a deed of trust, and enjoin sale of the property. The complaint alleges that
Rustling Oaks acquired title to the property in 2012 or 2013 through the Morrison Ranch
Estates Homeowners Association (the Association), which acquired its title through a
2012 trustee’s sale foreclosing upon a delinquent assessment lien recorded in 2009.
       During the time in which Rustling Oaks alleges it and its predecessor, the
Association, acquired title there were two pertinent pending court cases that affected the
title to, and encumbrances upon, the property: a dissolution of marriage action in
Ventura County Superior Court (No. SD034117) and an action by Citibank for judicial
foreclosure in Los Angeles County Superior Court (No. BC448518). We recount the
chronology and nature of the pertinent events affecting the Property based upon the
allegations of the complaint in this case, and the superior court record in the judicial
foreclosure action, which was judicially noticed by the trial court in ruling upon
Citibank’s demurrer and by this court in deciding this appeal, following notice to the
parties.
Events preceding the judicial foreclosure action
       The declaration of covenants, conditions, and restrictions of Morrison Ranch
Estates (CCR’s) that were applicable to the property were recorded in 1979. Article VII,
paragraph 7.06(e) of that declaration provides that an assessment lien for delinquent fees
“shall be subordinate to the lien of any mortgage or mortgages or deeds of trust now or

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hereafter placed upon the properties subject to assessment” with respect to foreclosure of
such mortgage or deed of trust.
       The property was the residence of Gregory and Jacyra Norman. A 2003 deed of
trust recorded against the property listed it as the separate property of Gregory Norman.
Jacyra Norman filed for dissolution of marriage in Ventura County on May 24, 2006.
(Super. Ct. Ventura County, No. SD034117.) The Ventura County Superior Court
allowed Gregory Norman to refinance the property and therefore ordered expungement of
the lis pendens Jacyra Norman had recorded in Los Angeles County1 on August 14, 2006,
to allow the refinancing to be completed. On June 19, 2007, Gregory Norman obtained a
$700,000 loan from Quality Home Loans, secured by a deed of trust recorded against the
property on June 28, 2007. A large portion of the proceeds paid off the loan secured by
the 2003 deed of trust. The loan apparently was transferred to Countrywide Home Loans
Servicing at some point, then transferred again, this time to BAC Home Loans Servicing,
LP (BAC), on July 31, 2007. In the complaint in the judicial foreclosure action, Citibank
alleged it acquired the loan on August 1, 2007.
       Unfortunately for the state of the property’s title, Jacyra Norman did not record a
new lis pendens immediately after the refinancing, but waited until May 5, 2008, to do
so. In the interim, Gregory Norman conveyed the property to William Carter on October
23, 2007. Six days later, they entered into an agreement providing Carter would purchase
the property from Gregory Norman for $1,175,000. Then, on November 2, 2007, the
Association recorded a notice of delinquent assessments and lien. The deed by which
Gregory Norman conveyed the property to Carter and the associated purchase contract
were recorded on June 3, 2008.
       On May 22, 2008, Ventura County Superior Court Judge Charles W. Campbell
voided the “Countrywide” refinancing and enjoined “Countrywide” from foreclosing.
The dissolution action was set for trial on September 22, 2008, but Gregory Norman did

       1All documents mentioned in this opinion as “recorded” were recorded in Los
Angeles County.

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not appear. “Countrywide” appeared through counsel. The court entered judgment of
dissolution and ordered a division of property and debts. The judgment reiterated that the
“Countrywide” mortgage refinance loan was void; ordered Gregory Norman “to cure all
mortgage, tax, and homeowners’ association defaults forthwith”; ordered the sale of the
property; and specified the distribution of the proceeds, with the bulk of it to be paid to
Jacyra Norman for her community interest and other entitlements under the judgment.
       On April 8, 2009, Jacyra Norman filed a motion in the dissolution action, seeking
to void the grant deed to Carter, join Carter and “Countrywide Home Loans Inc., now
Bank of America” in the action, and enjoin “Countrywide” from selling the property
pursuant to foreclosure. On April 22, 2009, the Ventura County Superior Court ordered
the joinder of “Countrywide” and Carter and enjoined “Countrywide” from foreclosing
and Carter from transferring any interest in the property. The court’s subsequent
September 21, 2009 order after hearing on the motion “reiterate[d] the order made May
22, 2008 which voided the Countrywide refinance,” enjoined “Countrywide” from
foreclosing on the property until further court order, voided the conveyance to Carter,
awarded Jacyra Norman sole possession, and confirmed her title to the property. The
record does not indicate whether this order was recorded.
       On December 16, 2009, the Association recorded a notice of delinquent
assessment and lien in the amount of $2,365.14 (recorded document No. 20091916242),
listing only Carter as the owner of record.
       On May 10, 2010, the Ventura County Superior Court denied a motion by BAC
“erroneously named herein as ‘Countrywide Home Loans, Inc., now Bank of America,’”
to set aside the September 22, 2008 judgment and the “6-23-2009” order. The court
instead amended and clarified the judgment by granting BAC an “Equitable Lien in the
amount of $592,385.53, effective as of June 19, 2007,” with 10 percent annual interest
from the same date, plus advances, taxes, insurance, fees, and other costs BAC had paid
from that date. The signed order was filed August 12, 2010, and recorded on September
3, 2010.

                                              4
The judicial foreclosure action and events during its pendency
       On November 1, 2010, Citibank filed an action for judicial foreclosure upon the
equitable lien, naming Jacyra Norman and Does. (Super. Ct. L.A. County,
No. BC448518.) It filed a first amended complaint in the action on January 20, 2011,
naming Gregory and Jacyra Norman, William and Debra Carter, and the Association.
The first amended complaint alleged the loan was transferred from BAC to Citibank on
August 1, 2007, with BAC continuing to service the loan. Citibank alleged the sum of
the lien, taxes, insurance, and interest was $807,605.18. It requested that the court enter a
judgment declaring that the defendants’ “rights, claims, ownership, liens, titles, and
demands” were “subject, subsequent, and subordinate to” Citibank’s equitable lien and
that the defendants “and all persons claiming under her [sic] as lien claimants, judgment
creditors, claimants under a junior deed of trust, purchasers, encumbrancers, or otherwise,
be barred and foreclosed from all rights, claims, interests, or equity of redemption in the
subject Property when time for redemption has elapsed.” Citibank recorded a lis pendens
on November 3, 2010.
       On December 17, 2010, the Association recorded an amended notice of delinquent
assessment, naming Jacyra and Gregory Norman, as well as Carter. On March 4, 2011,
the Association recorded a notice of default and election to sell referring only to the
December 16, 2009 notice of delinquent assessment and identifying it by its recorded
document number (20091916242).
       On March 29, 2011, the Ventura County Superior Court issued an order clarifying
its prior judgment and ruling in the dissolution action. The order awarded title to the
property solely to Jacyra Norman, effective September 21, 2009, and declared the deed
recorded June 3, 2008, by which Gregory Norman purportedly conveyed the property to
Carter, to be void ab initio. The court’s order was recorded on April 5, 2011.
       On February 1, 2012, the Association recorded a notice of trustee’s sale. The
notice referred to both the original and the amended notices of delinquent assessment and
listed the record owner as Jacyra Norman, only.

                                              5
       Two days later, on February 3, 2012, Jacyra Norman recorded a grant deed from
the Ventura County Superior Court conveying title to her.
       On March 22, 2012, the Association foreclosed upon its lien and purportedly
acquired title to the property. The trustee’s deed on sale was recorded on June 28, 2012.
It listed Carter as the trustor and referred only to the December 16, 2009 notice of
delinquent assessment (recorded document number 20091916242).
       The Association conveyed the property to Playa Holdings, Inc., by a quitclaim
deed recorded July 30, 2012. Playa Holdings in turn conveyed the property to Rustling
Oaks by a quitclaim deed recorded September 18, 2012.
       On November 8, 2012, Bank of America, N.A., assigned to Citibank the equitable
lien set forth in the order filed August 12, 2010, in the dissolution action.
       On January 11, 2013, Rustling Oaks filed an ex parte application to either file a
complaint in intervention in the judicial foreclosure action or shorten time to file a motion
to file such a complaint. The trial court denied the application. On January 28, 2013,
Rustling Oaks filed and served its motion for leave to file a complaint in intervention,
with the hearing scheduled for February 20, 2013.
       On January 29, 2013, however, the trial court granted Citibank’s motion for
summary judgment in the judicial foreclosure action. The judgment signed by the court
and filed on March 4, 2013, included findings that Citibank “is the holder of the
Equitable Lien which is secured by” the property in issue, and that the amount of
equitable lien was $989,085.60 as of January 29, 2013. The judgment ordered the
property sold by the sheriff for payment of the equitable lien and provided: “The rights,
claims, ownership, liens, titles, and demands, if any, of the Defendants, and each of them,
are subject, and subordinate to the Equitable Lien of the Plaintiff, and the Defendants,
and all persons claiming under them as lien claimants, judgment creditors, claimants
under a junior deed of trust, purchasers, encumbrancers, or otherwise, shall be barred and
foreclosed from all rights, claims, interests, or equity of redemption in the Subject
Property when time for redemption, if any, has elapsed.”

                                              6
       The trial court took Rustling Oaks’s motion for leave to file a complaint in
intervention off calendar the same day it granted the summary judgment motion.
Rustling Oaks did not appeal from the judgment or seek a writ of mandate to compel the
trial court to rule on its motion for leave to intervene.
       On December 12, 2012,2 Rustling Oaks recorded a grant deed by the Association
in favor Rustling Oaks. The complaint in the present case alleges this was required due
to “an error in the Trustee’s Deed Upon Sale to” the Association.
The present case
       The complaint
       Rustling Oaks filed the present case on April 12, 2013, against Citibank and
Carter. Its first cause of action sought to quiet title as of July 6, 2012—allegedly the date
of the conveyance by the Association to Playa Holdings. It specifically alleged:
“Plaintiff is seeking to quiet title against the claim of Defendant Citibank asserted
through Citibank’s Equitable Lien, Judgment of Foreclosure and Order of Sale, as to the
Property. Plaintiff further is seeking to quiet title against any claim of Defendant Carter,
as to the Property. The claims of Defendants are without any right whatever, and such
Defendants have no right, title, estate, lien, or interest whatever in the above-described
property or any part thereof, which is senior to the fee simple ownership interest of
Plaintiff.”
       Rustling Oaks’s second cause of action sought declaratory relief. It alleged a
controversy “regarding the priority of liens, existence of liens and interests in the
Property,” with Rustling Oaks contending that the foreclosure upon the Association’s
assessment lien “forever discharged and extinguished BAC’s equitable lien,” and
Citibank contending “that it was assigned the 2007 Loan and Deed of Trust, that it
somehow owns an equitable lien against the Property, and that it is entitled to foreclose
on its equitable lien.” The cause of action further alleged: “Rustling Oaks asserts that:

       2
       The complaint in the present case states this occurred on December 12, 2013,
which would be eight months after the complaint itself was filed.

                                               7
(1) Citibank does not own an equitable lien against the Property, nor was it properly
assigned any Deed of Trust; (2) Rustling Oaks maintains title to the Property; (3)
Rustling Oaks’ title to the Property is not subject to the equitable lien asserted by
Citibank, or anyone else, and therefore Citibank cannot foreclose on the Property; (4)
Citibank’s Judgment of Foreclosure and Order of Sale recorded March 15, 2013 is void
and invalid, insofar as Rustling Oaks’ Motion for Leave to Intervene in the Judicial
Foreclosure Action was never considered by the Court.” The prayer of the complaint
seeks an order declaring, inter alia, that Rustling Oaks “is the fee simple owner of the
Property”; Citibank never received any title, interest, or equitable lien against the
property; and “the equitable lien asserted by Citibank was extinguished by the
[Association’s] foreclosure sale.”
       The third cause of action sought to cancel the “Assignment of Deed of Trust” by
Mortgage Electronic Registration Systems, Inc. (MERS), to Citibank recorded April 20,
2011. Rustling Oaks alleges “such transfer was ineffective, and improper, insofar as the
2007 Loan and Deed of Trust was deemed and declared void by the Family Court, and
thus could not be transferred, assigned or sold.” In addition, Rustling Oaks alleges that
MERS “was not the record holder of any beneficial interest” and thus could not transfer
anything.
       The fourth cause of action sought a temporary restraining order enjoining the sale
of the property; preliminary and permanent injunctions “rescinding and cancelling”
Citibank’s notice of default, the judgment in the judicial foreclosure action, and the
notice of sheriff’s sale; and preliminary and permanent injunctions preventing Citibank
from taking any new steps to sell the property. Rustling Oaks’s alleged sale of the
property would be inequitable, unjust, and violate due process “[b]ecause no Court . . .
has ever determined Plaintiff’s rights in an[d] to the Property, which Plaintiff alleges is
senior to that of Defendant Citibank’s, and because Plaintiff has now acquired fee simple
interest in and to the Property . . . .”

                                              8
       Citibank’s demurrer
       Citibank demurred to Rustling Oaks’s complaint on two theories: a challenge to
the validity of the Association’s foreclosure, which ultimately led to conveyance to
Rustling Oaks, and res judicata stemming from the judgment in the judicial foreclosure
case. Citibank requested judicial notice of documents submitted in support of its
summary judgment motion in the judicial foreclosure action. The trial court granted the
request for judicial notice and sustained the demurrer, without leave to amend, on the
basis of res judicata.
       Rustling Oaks filed a timely appeal.
                                      DISCUSSION
Standard of review
       “On appeal from a judgment after a demurrer is sustained without leave to amend,
we assume the truth of the properly pleaded factual allegations, facts that reasonably can
be inferred from those expressly pleaded, and facts of which judicial notice can be taken.
[Citation.] We construe the pleading in a reasonable manner and read the allegations in
context. [Citation.] We determine de novo whether the pleading alleges facts sufficient
to state a cause of action. [Citation.] We affirm the sustaining of the demurrer if the
pleading or matters that are judicially noticeable disclose a complete defense. [Citations.]
We affirm the judgment if it is correct on any ground stated in the demurrer, regardless of
the trial court’s stated reasons. [Citation.]” (Syngenta Crop Protection, Inc. v. Helliker
(2006) 138 Cal.App.4th 1135, 1181.)
       Res judicata is proper ground for demurrer, if the complaint and judicially noticed
facts demonstrate its applicability. (Planning & Conservation League v. Castaic Lake
Water Agency (2009) 180 Cal.App.4th 210, 225 (Planning & Conservation League).)
Res judicata
       “Res judicata, or claim preclusion, prevents relitigation of the same cause of action
in a second suit between the same parties or parties in privity with them.” (Mycogen
Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896 (Mycogen).) “A clear and predictable

                                              9
res judicata doctrine promotes judicial economy.” (Id. at p. 897.) It also protects the
parties from unwarranted burden and expense. (Ibid.)
       Whether a new cause of action is the same as one in a prior action is not
determined on the basis of the legal theory or relief sought, but by whether they are both
premised on a violation of the same primary right, i.e., “‘the plaintiff’s right to be free
from the particular injury suffered.’” (Mycogen, supra, 28 Cal.4th at p. 904.)
       “‘[I]n the context of a res judicata determination, privity “‘refers “to a mutual or
successive relationship to the same rights of property, or to such an identification in
interest of one person with another as to represent the same legal rights.”’”’” (Planning
& Conservation League, supra, 180 Cal.App.4th at p. 229.) “One who succeeds to the
interests of a party in the property or other subject of the action after its commencement
is bound by the judgment with respect to those interests in the same manner as if he were
a party. However, this rule does not apply where the interest is acquired before the
commencement of the action.” (Topanga Corp. v. Gentile (1963) 219 Cal.App.2d 274,
278–279.)
The trial court properly sustained the demurrer without leave to amend with
respect to the first and fourth causes of action, but not the second and third.
       1.     Rustling Oaks is in privity with the Association.
       Rustling Oaks’s claim of title to the property is as a successor in interest to the
Association, either through a conveyance to Playa Holdings, which in turn conveyed to
Rustling Oaks, or through the later conveyance from the Association to Rustling Oaks.
The Association was a party to the judicial foreclosure action, was served with process in
that action, and had an opportunity to defend the title it purportedly acquired through
foreclosure on its assessment lien and purchase at the trustee’s sale, then purported to
convey to Playa Holdings and Rustling Oaks. The Association apparently decided not to
defend its title and its default was duly entered by the court. Citibank’s summary
judgment motion addressed the bases, validity, and effect of the Association’s foreclosure
action and included as exhibits certified copies of the Association’s CCR’s, notices of

                                              10
delinquent assessments and liens, notice of default, notice of trustee’s sale, and trustee’s
deed on sale.
       Rustling Oaks’s attempts to avoid a finding of privity with the Association center
on the allegation in the first amended complaint in the judicial foreclosure action stating
that the Association was “‘named herein for notice purposes only,’” and that Citibank
alleged no wrongdoing by the Association. Nonetheless, the Association was a party
served in the judicial foreclosure action, which sought to establish the validity and
primacy of the equitable lien, not to obtain a remedy for “wrongdoing.” If the
Association wanted to preserve its purported title to the property or avoid potential
liability to its successors in interest, Playa Holdings and Rustling Oaks, it was incumbent
upon it to defend its purported title. Rustling Oaks’s argument flies in the face of the
established principle that accords full res judicata effect to a default judgment. “‘By
permitting his default to be entered he [the defendant] confessed the truth of all the
material allegations in the complaint [citations]. . . . A judgment by default is as
conclusive as to the issues tendered by the complaint as if it had been rendered after
answer filed and trial had on allegations denied by the answer. [Citations.] Such a
judgment is res judicata as to all issues aptly pleaded in the complaint and defendant is
estopped from denying in a subsequent action any allegations contained in the former
complaint.’” (Martin v. General Finance Co. (1966) 239 Cal.App.2d 438, 443.) “‘[I]t is
the opportunity to litigate that is important in these cases, not whether the litigant availed
himself or herself of the opportunity.’” (Murray v. Alaska Airlines, Inc. (2010) 50
Cal.4th 860, 869.)
       Rustling Oaks also argues it should not be deemed to be in privity with the
Association because the trial court did not allow it to intervene in the judicial foreclosure
proceeding, and the court therefore was not presented with evidence regarding the merits
of the claims it raises in its complaint in the present case. The trial court may have erred
by rebuffing Rustling Oaks’s attempt to intervene in the judicial foreclosure action.
Rustling Oaks’s remedy, however, was not to file a new action, but to take further action

                                              11
within the context of the judicial foreclosure case, e.g., move to vacate the judgment
pursuant to Code of Civil Procedure section 663 (County of Alameda v. Carleson (1971)
5 Cal.3d 730, 736), appeal from the judgment (Marsh v. Mountain Zephyr, Inc. (1996) 43
Cal.App.4th 289, 295 [nonparty who would be bound by judgment pursuant to res
judicata has standing to appeal]), or seek a writ of mandate to compel the trial court to
rule on its motion for leave to intervene. Even assuming, for the sake of argument, that
the judgment in the judicial foreclosure action was erroneous in some respect, it is,
nonetheless, as conclusive as if it were error-free. (Castro v. Higaki (1994) 31
Cal.App.4th 350, 359.) The remedy with respect to a judgment a party believes to be
erroneous is to appeal that judgment, not file a new action. (Ibid.)
       Rustling Oaks was thus in privity with the Association, and it is precluded from
relitigating all causes of action, as that term is used in the res judicata context, that were
determined in the judicial foreclosure action.
       2.     The first and fourth causes of action in the present case are barred by
       res judicata.
       The judicial foreclosure action established the existence, validity, and priority of
Citibank’s equitable lien against the property with respect to all defendants in that action
and “all persons claiming under them.” Accordingly, Rustling Oaks’s attempt in its first
cause of action to quiet its claimed title against Citibank’s lien is barred by res judicata.
The interest, if any, Rustling Oaks obtained through the Association is subordinate to
Citibank’s lien. Rustling Oaks may, of course, continue to seek to quiet title against
Carter, who did not demur.
       The fourth cause of action, seeking injunctive relief against the sheriff’s sale
ordered by the judgment in the judicial foreclosure action was premised on the
allegations that Citibank’s equitable lien is invalid or does not have priority over Rustling
Oaks’s purported title. Because the judicial foreclosure action established the validity
and priority of Citibank’s equitable lien and directed the sheriff’s sale of the property, res
judicata also bars the fourth cause of action.

                                              12
       3.     Res judicata is not a bar to the second and third causes of action.
       The second cause of action sought declaratory relief regarding the validity and
priority of Citibank’s lien, the validity of the judgment in the judicial foreclosure action,
and Rustling Oaks’s title to the property. The judgment in the judicial foreclosure case
does not reflect a determination of title, but only that Citibank’s equitable lien had
priority over all other claims and interests. Accordingly, the second cause of action was
not barred by res judicata. Citibank would more properly have moved to strike certain
allegations of that cause of action, but it failed to do so. The trial court erred by
sustaining a demurrer to the cause of action.
       Similarly, Rustling Oaks’s third cause of action, seeking cancellation of the
instrument reflecting an assignment by MERS of a deed of trust to Citibank is distinct
from any primary right adjudicated in the judicial foreclosure action. Indeed, Citibank
argues, “the First Amended Complaint in the Judicial Foreclosure Action did not seek to
foreclose on the void 2007 Deed of Trust.” Citibank’s contention that the assignment to
which the cause of action refers was irrelevant to Citibank’s equitable lien misses the
mark because the issues before the trial court were the sufficiency of the complaint and
the res judicata effect of the judgment in the judicial foreclosure action. No matter how
miniscule a benefit Rustling Oaks stands to obtain from the cancellation of the recorded
assignment of the void deed of trust, the allegations of the third cause of action are
sufficient and fall outside the scope of claims determined in the judicial foreclosure
action. The trial court therefore erred by sustaining a demurrer to that cause of action.
       Accordingly, we reverse the judgment. Rustling Oaks may proceed on the second
and third causes of action, but not the first and fourth.

                                              13
                                      DISPOSITION
       The judgment is reversed, although the order sustaining the demurrer with respect
to the first and fourth causes of action is affirmed. Each party will bear its own costs on
appeal.
       NOT TO BE PUBLISHED.

                                                  LUI, J.
We concur:

       ROTHSCHILD, P. J.

       JOHNSON, J.

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