Court Opinion

ID: 6326634
Source: CourtListenerOpinion
Date Created: 2022-03-24 18:01:52.594728+00
Date Added: 2024-06-11T09:22:14.567231
License: Public Domain

Filed 3/24/22 Mahmood v. Odinma CA1/3
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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

                                      FIRST APPELLATE DISTRICT

                                                DIVISION THREE

    SALEEM MAHMOOD et al.,
         Plaintiffs, Cross-Defendants
    and Respondents,                                                    A161704

    v.                                                                  (Alameda County
    FRANCIS ODINMA et al.,                                              Super. Ct. No. RG19031783)
        Defendants, Cross-
    Complainants and Appellants.

         Defendants/cross-complainants Francis and Carol Odinma (the
Odinmas) appeal from a judgment in favor of plaintiffs/cross-defendants
Saleem Mahmood and Yasmeen Fatima (the Mahmoods) after the trial court
granted the Mahmoods’ motion for judgment on the pleadings with regard to
their complaint and the Odinmas’ cross-complaint. The court ruled the
Odinmas’ claims for judicial foreclosure and declaratory relief were barred by
the doctrine of res judicata and the so-called “one action rule” (Code Civ.
Proc., § 726)1 due to a prior judgment entered against the Odinmas in an
adversarial proceeding they filed in bankruptcy court against the Mahmoods’
predecessors in interest. We affirm.

1     Further statutory references are to the Code of Civil Procedure unless
stated otherwise.

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                 FACTUAL AND PROCEDURAL BACKGROUND
      The allegations of the Odinmas’ cross-complaint provide the
background to the parties’ dispute. In 2004, the Odinmas allegedly extended
a $100,000 loan to Luis and Cynthia Lorica (the Loricas) secured by a deed of
trust (the 2004 DOT) against the Loricas’ real property in Newark (the
Newark property). In 2006, the Odinmas again loaned money to the Loricas,
who executed and delivered a second deed of trust in the amount of $180,000
against the Newark property (the 2006 DOT) to the Odinmas. The Loricas
allegedly defaulted on the loans.
      In 2006, the Loricas allegedly sold the Newark property to Marilyn
Bunquin for $900,000 but failed to pay off the 2004 DOT and 2006 DOT. In
connection with this sale, Bunquin obtained two secured loans in the total
amount of $900,000, and the related deeds of trust were eventually assigned
to Deutsche Bank National Trust (Deutsche Bank), which obtained title to
the Newark property at a nonjudicial foreclosure sale in 2008 without paying
off the 2004 DOT and 2006 DOT. The Mahmoods purchased the Newark
property from Deutsche Bank in 2010.
      In 2019, the Mahmoods filed the instant lawsuit against the Odinmas
and the Loricas to quiet title and for cancellation of the 2004 DOT and 2006
DOT, declaratory relief, and an accounting. The Mahmoods alleged that they
held fee title to the Newark property, and that the 2004 DOT and 2006 DOT
were not valid and enforceable liens against the Newark property.
      The Odinmas then filed the aforementioned cross-complaint against the
Mahmoods, the Loricas, Deutsche Bank, and others. In the first cause of
action for foreclosure of deeds of trust, the Odinmas seek to judicially
foreclose on the Newark property under the 2004 DOT and 2006 DOT. In the

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second cause of action for declaratory relief, the Odinmas allege there is an
actual controversy regarding the validity, extent, and priority of their liens.
      The Mahmoods demurred to the Odinmas’ cross-complaint and moved
to strike the cross-complaint’s references to the 2004 DOT on the grounds
that (1) the lien created by the 2004 DOT had already expired pursuant to
Civil Code section 882.020, subdivision (a),2 and (2) the Odinmas reconveyed
the 2004 DOT to the Loricas in 2005, which extinguished the subject lien.
The trial court sustained the demurrer to the first cause of action without
leave to amend “as to the 2004 Odinma Deed of Trust only” and denied the
motion to strike as moot.
      A. Motion for Judgment on the Pleadings
      After answering the cross-complaint, the Mahmoods moved for
judgment on the pleadings on the grounds that (1) their complaint stated
causes of action sufficient for declaratory relief and cancellation of the 2004
DOT and 2006 DOT; (2) the Odinmas’ answer did not state facts sufficient to
constitute a defense; and (3) the Odinmas’ cross-complaint did not state facts
sufficient to constitute causes of action for judicial foreclosure of the 2006
DOT and declaratory relief. The Mahmoods reiterated their argument that
the lien created by the 2004 DOT had expired, and they further contended
that the Odinmas’ claim for judicial foreclosure was barred by the one action

2      Civil Code section 882.020 provides in relevant part that a lien, deed of
trust, or other instrument that creates a security interest in real property to
secure a debt “expires at, and is not enforceable by action for foreclosure
commenced, power of sale exercised, or any other means asserted after” the
later of: 10 years after the final maturity date or last date fixed for payment,
if ascertainable from the recorded evidence of indebtedness; 60 years after
the recording of the instrument that created the security interest, if the final
maturity date or last date fixed for payment is not so ascertainable; or 10
years after the timely recording of a notice of intent to preserve the security
interest.

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rule and the doctrine of res judicata due to a final judgment entered against
them in an adversary proceeding in bankruptcy court. On the latter point,
the trial court granted the Mahmoods’ request for judicial notice of various
records of the bankruptcy court.3 The judicially-noticed records reflect the
following facts.
      In March 2008, the Loricas filed for chapter 7 bankruptcy in the United
States Bankruptcy Court for the Northern District of California, case No. 08-
41513. In their bankruptcy schedules, the Loricas listed an equitable interest
in the Newark property and identified the Odinmas as secured creditors.
      In May 2008, the Odinmas filed an adversary proceeding, No. 08-4124
(the 4124 proceeding), against the Loricas in the bankruptcy court. In their
complaint, the Odinmas alleged they made several loans to the Loricas
totaling $540,000 (including the loans secured by the 2004 DOT and 2006
DOT). The Odinmas sought a determination that these debts were
nondischargeable under title 11 United States Code section 523(a)(2)(A) and
(6) because the loans were obtained under false pretenses and for willful and
malicious injury. The Odinmas further sought a “judgment entered against
[the Loricas] in the amounts according to proof as set forth in this

3      Although neither party seeks judicial notice of these records on appeal,
we are required to take judicial notice of matters properly noticed by the trial
court below, and we therefore do so sua sponte. (Evid. Code, § 459, subd. (a).)
We conclude the trial court properly took judicial notice of the bankruptcy
court records in the Mahmoods’ initial and supplemental requests. (Id.,
§ 452, subd. (d).) In addition to taking judicial notice of the existence of said
records, we take notice of facts that can be deduced or clearly derived from
their legal effect, such as names and dates contained therein, and the legal
consequences of said documents. (Julian Volunteer Fire Co. Assn. v. Julian-
Cuyamaca Fire Protection Dist. (2021) 62 Cal.App.5th 583, 600.) However,
we deny the Mahmoods’ request on appeal for judicial notice of certain
postjudgment bankruptcy court records.

                                        4
complaint[.]” The Loricas filed a counterclaim against the Odinmas in the
4124 proceeding, alleging in relevant part that they repaid the Odinmas far
in excess of the total amounts of the loans.
      In early 2010, the bankruptcy court held a trial in the 4124 proceeding
and entered judgment against the Odinmas. The judgment stated in relevant
part: “A trial in the above-entitled adversary proceeding came on February 9,
2010 . . . . The Court, after considering the testimony of both Plaintiffs and
. . . having stated the Court’s Factual Findings and Conclusions of Law on the
record and good cause appearing therefore: [¶] JUDGMENT is hereby
entered in favor of the Defendants and against the Plaintiffs and the Plaintiff
shall take nothing from this Complaint.”
      Meanwhile, the Loricas obtained a discharge in the main bankruptcy
case. However, the United States Trustee later filed an adversary
proceeding, No. 09-0472 (the 0472 proceeding), to revoke the discharge. The
matter was resolved in August 2010 after the United States Trustee and the
Loricas entered into a “Stipulation to Revoke Discharge and Entry of
Judgment Thereon.” According to the stipulation, the United States Trustee
sought revocation of the Loricas’ bankruptcy discharge under title 11 United
States Code section 727(e) on the grounds that the Loricas fraudulently and
intentionally failed to disclose certain assets and transfers of real estate and
transferred fractional interests in real property to relatives to defraud
creditors. The parties entered into the stipulation to avoid the time and
expense of litigation “and in order [to] resolve the above-captioned adversary
proceeding.”4 The Loricas agreed that “any debts existing at the time their
petition was filed on March 31, 2008 are forever non-dischargeable in

4     The caption listed only the main bankruptcy case, No. 08-41513, and
the 4272 proceeding filed by the United States Trustee.

                                        5
bankruptcy.” Based upon the stipulation, the bankruptcy court entered
judgment revoking the Loricas’ discharge.
      B. Trial Court’s Ruling
      The trial court granted the Mahmoods’ motion for judgment on the
pleadings. In its order, the court first reiterated its demurrer ruling that “the
2004 Odinma Deed of Trust is expired under [Civil Code] section 882.020 in
light of its 2006 maturity date, and the action being brought more than ten
years after that date. [Citation.] The Court also found that the Odinmas had
already made a judicial admission that the 2004 Odinma Deed of Trust has
already been reconveyed, extinguishing the lien.”5
      As to the 2006 DOT, the trial court found that the judgment in the 4124
proceeding that the Odinmas “ ‘shall take nothing from this Complaint’ ” was
a final binding judgment that the Odinmas were owed nothing from the
Loricas for their alleged loans, and accordingly, the Odinmas could not show
an underlying debt to enforce the 2006 DOT. Accordingly, “[i]n light of the
one action rule and the principles of res judicata as to the 2006 Odinma Deed
of Trust, as well as the Court’s previous findings as to the unenforceability of
the 2004 Odinma Deed of Trust,” the trial court granted the Mahmoods’
motion for judgment on the pleadings on the Odinmas’ first cause of action for
judicial foreclosure.
      As to the parties’ competing claims for declaratory relief, the trial court
found that the Odinmas “have no valid security interest in the [Newark]
Property, and no right to foreclose upon, sell, acquire, or engage in any
transaction that adversely affects the title, estates, interest, liens or rights of

5      In their amended complaint in the 4124 proceeding, the Odinmas had
expressly alleged that they reconveyed the 2004 DOT to the Loricas in 2005
“as a favor.”

                                         6
Plaintiffs in or to the Property.” For the same reasons, the court granted
judgment on the pleadings in favor of the Mahmoods on their claims for
cancellation of the 2004 DOT and 2006 DOT.
      The Odinmas appealed from the ensuing judgment.
                                  DISCUSSION
      “A motion for judgment on the pleadings is equivalent to a demurrer.
[Citation.] As with a demurrer, a court ruling on such a motion is tasked
with evaluating whether the ‘complaint . . . state[s] facts sufficient to
constitute a cause of action’ [citation], and in that task, may only look to ‘the
face of the complaint’ and ‘facts capable of judicial notice’ and must accept as
true all of the complaint’s factual allegations [citation].” (Hart v. Darwish
(2017) 12 Cal.App.5th 218, 224.) Courts “may properly take judicial notice of
a party’s earlier pleadings and positions as well as established facts from
both the same case and other cases. [Citations.] The complaint should be
read as containing the judicially noticeable facts, ‘even when the pleading
contains an express allegation to the contrary.’ ” (Cantu v. Resolution Trust
Corp. (1992) 4 Cal.App.4th 857, 877.) We review the granting of a motion for
judgment on the pleadings de novo. (People ex rel. Harris v. Pac Anchor
Transportation, Inc. (2014) 59 Cal.4th 772, 777.)
      “There are some differences between a motion for judgment on the
pleadings and a demurrer. Unlike a demurrer, a plaintiff may move for
judgment on the pleadings on the ground ‘that the complaint states facts
sufficient to constitute a cause or causes of action against the defendant and
the answer does not state facts sufficient to constitute a defense to the
complaint.’ [Citations.] Where a plaintiff brings such a motion, we assume
the defendant could have proven all of the factual allegations in its answer.
[Citation.] ‘The issue is whether the [pleading] raises an issue that can be

                                        7
resolved as a matter of law.’ ” (Alameda County Waste Management
Authority v. Waste Connections US, Inc. (2021) 67 Cal.App.5th 1162, 1174.)
      A. The 2004 DOT
      We first observe that the Odinmas raise no cogent argument
challenging the trial court’s ruling, based on its prior demurrer ruling, that
the Odinmas failed to state a cause of action as to the 2004 DOT because that
security instrument expired by operation of Civil Code section 882.020,
subdivision (a).6 Accordingly, any claim of error as to the trial court’s ruling
on the 2004 DOT is deemed abandoned. (See Bonadiman-McCain, Inc. v.
Snow (1960) 183 Cal.App.2d 58, 65.)
      B. The 2006 DOT
      As for the 2006 DOT, the Odinmas contend the trial court erred in
giving res judicata effect to the judgment in the 4124 bankruptcy proceeding.
      Res judicata is “an umbrella term” that encompasses both claim
preclusion and issue preclusion. (DKN Holdings LLC v. Faerber (2015) 61
Cal.4th 813, 823–824.) Claim preclusion bars claims that were, or should
have been, advanced in a previous suit involving the same parties, while
issue preclusion (or collateral estoppel) precludes parties and their privies
from relitigating issues that were actually decided on the merits in a prior
suit. (Id. at p. 824.) The elements of collateral estoppel are: (1) final
adjudication (2) of an identical issue (3) actually litigated and necessarily
decided in the first suit and (4) asserted against one who was a party in the

6     In an apparent attempt to challenge the trial court’s additional finding
that they judicially admitted reconveying the 2004 DOT to the Loricas in
2005, the Odinmas contend “[t]he reconveyance attached to the adversarial
complaint was not notarized and was not recorded; therefore, is not
enforceable.” However, the expiration of the 2004 DOT under Civil Code
section 882.020, subdivision (a), was an independent—and unchallenged—
basis for the trial court’s ruling.

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first suit or one in privity with that party. (Id. at p. 825.) A bankruptcy court
judgment is final for purposes of res judicata unless reversed on appeal or
modified or set aside by the bankruptcy court. (Levy v. Cohen (1977) 19
Cal.3d 165, 172; Nathanson v. Hecker (2002) 99 Cal.App.4th 1158, 1163
(Nathanson).)
      The Odinmas argue the trial court incorrectly applied the elements of
res judicata because their cross-complaint for judicial foreclosure did not
involve the same cause of action as the 4124 proceeding seeking
nondischargeability of debts due to the Loricas’ fraud. The Mahmoods
respond that the trial court’s ruling was properly based on the issue
preclusion aspect of res judicata, as both the 4124 proceeding and the instant
matter involve the identical issue of “whether the Odinmas were owed money
by the Loricas,” and this issue was actually litigated against the Odinmas
when the bankruptcy court held a trial and entered a take-nothing judgment
against them. We agree with the Mahmoods.
      An adversary proceeding under title 11 United States Code section 523
allows creditors to obtain exceptions to discharge for certain debts. At issue
in the 4124 proceeding was whether the debts secured by the 2006 DOT were
nondischargeable because the loans were obtained by “false pretenses, a false
representation, or actual fraud” (11 U.S.C. § 523, subd. (a)(2)(A)) and/or “for
willful and malicious injury” (id., subd. (a)(6)). In determining the
nondischargeability of a debt, the bankruptcy court applies a two-step
process: first, a debt must be established; second, the court must separately
review the character of the debt to determine if it fits into a statutory
exception to discharge. (Winn v. Holdaway (In re Holdaway) (Bankr. S.D.
Tex. 2008) 388 B.R. 767, 784 (Holdaway); see Katchen v. Landy (1966) 382
U.S. 323, 329 [power to allow or to disallow claims includes full power to

                                        9
inquire into validity of any alleged debt or obligation upon which claim
against estate is based].) A bankruptcy court also has jurisdiction in a
nondischargeability action to enter a money judgment. (Cowen v. Kennedy
(In re Kennedy) (9th Cir. 1997) 108 F.3d 1015, 1017–1018.)
      Here, the judicially-noticed records from the Loricas’ bankruptcy
proceedings are limited, but telling.7 In their amended complaint, the
Odinmas sought not only a determination of nondischargeability of the
alleged debts, but a judgment of recovery of those debts, including the
amounts secured by the 2006 DOT. For their part, the Loricas admitted they
borrowed a total of $720,000 from the Odinmas but alleged they had repaid
the Odinmas approximately $902,481, which included payment of a usurious
rate of interest in excess of the total loan amount. The docket in the 4124
proceeding indicates that a trial was held, the Odinmas testified as
witnesses, the parties’ exhibits were admitted, and the bankruptcy court
made findings on the record before entering a take-nothing judgment against
the Odinmas.
      As the bankruptcy records establish, there was a final adjudication in
the 4124 proceeding that necessarily involved adjudication of the identical
issue pertinent here—namely, the existence of debts secured by the 2006
DOT. Indeed, the bankruptcy court was required to make the first-step
determination of whether a debt was established before and in order to
determine whether it was dischargeable. (Holdaway, supra, 388 B.R. at
p. 784.) Critically, the court entered a take-nothing judgment against the
Odinmas without including an additional determination that any alleged

7     The relevant records include the Odinmas’ amended complaint, the
Loricas’ counterclaim, the bankruptcy court docket, and the judgment. The
record on appeal does not include the trial briefs or a transcript of the trial.

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debts were discharged. (Cf. Freeman v. Frick (In re Frick) (Bankr. N.D.Fla.
1997) 207 B.R. 731, 738 [where debt to creditors was unquestioned and court
did not find debtor liable for fraud or defalcation while acting as fiduciary,
court’s take-nothing judgment also ordered discharge of the debt].) Finally,
collateral estoppel is appropriately asserted against the Odinmas, as they
were parties to the prior suit.
      The Odinmas do not dispute the application of the elements of
collateral estoppel. Instead, they attempt to avoid the preclusive effect of the
judgment in the 4124 proceeding by contending the revocation of the Loricas’
discharge in the main bankruptcy case had the effect of striking the 4124
judgment as if it never happened. In so arguing, the Odinmas seize on the
stipulation’s language that “any debts existing at the time [the Loricas’]
petition was filed on March 31, 2008 are forever non-dischargeable in
bankruptcy.” We are not persuaded, however, as adversary proceedings in
bankruptcy “generally are viewed as ‘stand-alone lawsuits,’ and final
judgments issued in adversary proceedings are usually appealable as if the
dispute had arisen outside of bankruptcy.” (Dzikowski v. Boomer’s Sport’s &
Rec. Ctr. (In re Boca Arena, Inc.) (11th Cir. 1999) 184 F.3d 1285, 1286.) The
Odinmas cite no authority holding that revocation of a bankruptcy discharge
necessarily vacates a prior judgment entered in a “ ‘stand-alone’ ” adversary
proceeding.
      Indeed, orders and judgments in adversary proceedings brought under
title 11 United States Code section 523 are not listed among the matters
vacated by the dismissal of a bankruptcy case. (11 U.S.C. § 349(b)(2) [listing
11 U.S.C. §§ 522(i)(1), 542, 550 and 553]; see Carraher v. Morgan Elecs., Inc.
(In re Carraher) (9th Cir. 1992) 971 F.2d 327, 328 [omission of order from list
found at 11 U.S.C. § 349 ordinarily means dismissal does not affect omitted

                                       11
order].) Accordingly, in Commer. Elec., Inc. v. JGC Enters., LLC (In re JGC
Enters., LLC) (9th Cir. 2002) 40 Fed.Appx. 561, the United States Court of
Appeals for the Ninth Circuit rejected an argument by lien claimants that the
voluntary dismissal of the underlying bankruptcy case “rendered null and
void” a prior summary judgment determination that their liens were invalid
due to a procedural defect, or otherwise caused an “ ‘automatic[] revival’ of
their liens[.]” (Id. at p. 564.) “[I]t is not the case that [title 11 United States
Code section] 349 necessarily restores the parties to the position in respect to
their property rights that they held at the commencement of the case.” (Ibid.)
Likewise, the Loricas’ stipulated revocation of the discharge in the main
bankruptcy case did not render the judgment in the 4124 proceeding null and
void or automatically revive the Odinmas’ lien based on the 2006 DOT.
      Idell v. Goodman (1990) 224 Cal.App.3d 262 (Idell) does not assist the
Odinmas. There, a debtor brought a malicious prosecution action against
creditors based on their filing of an adversary proceeding in bankruptcy court
under title 11 United States Code section 727. Idell held that the debtor
failed to state a cause of action for malicious prosecution because there is no
tort in California for “malicious defense,” and an adversary proceeding under
title 11 United States Code section 727 did not seek affirmative relief, but
rather, was a defensive pleading, the sole purpose of which was to preserve
the status quo as it existed before bankruptcy proceedings had commenced.
(Idell, at p. 268.)
      Idell is distinguishable on multiple fronts. First, its rationale was
uniquely premised on the absence of a tort in California for malicious
defense; the decision simply did not address the collateral estoppel effect of
an adversary proceeding judgment in a subsequent state court suit. (Cf.
Nathanson, supra, 99 Cal.App.4th at p. 1165 [bankruptcy court order

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partially allowing creditor’s claim was res judicata in debtor’s state court
action].) Second, Idell involved an adversary proceeding under title 11
United States Code section 727, which is a claim for the complete denial of a
discharge, while a claim under title 11 United States Code section 523 is that
a debt specifically owing to the creditor is excepted from the bankruptcy
discharge. (Bankruptcy Receivables Mgmt. v. De Armond (In re De Armond)
(Bankr. C.D.Cal. 1999) 240 B.R. 51, 54.) Here, the Odinmas brought an
adversary proceeding under title 11 United States Code section 523, and
their claim for an exception to discharge was not merely defensive, as they
sought a judgment against the Loricas in the amounts of the defaulted loans.
      Relying on Mirzai v. Kolbe Foods, Inc. (In re Mirzai) (C.D. Cal. 2001)
271 B.R. 647 (Mirzai), the Odinmas further contend that where the main
bankruptcy case is dismissed before finality, the court cannot give res
judicata effect to the case. But Mirzai is distinguishable because it held that
the denial of a creditor’s proof of claim was due to the creditor’s suspended
corporate status, which was a “procedural disallowance” and “not a judgment
on the merits of the claim and should not be entitled to a preclusive effect.”
(Mirzai, at p. 654.) Here, the Odinmas fail to demonstrate that their claims
in the 4124 proceeding were denied on procedural grounds; rather, the record
shows that the bankruptcy court conducted a trial, considered oral and
written testimony, and made factual and legal findings before entering the
take-nothing judgment against the Odinmas. (See Nathanson, supra, 99
Cal.App.4th at p. 1163, fn. 2 [distinguishing Mirzai].)
      For all of these reasons, we conclude the judgment in the 4124
proceeding bars the Odinmas from relitigating the issue of the existence of a
debt secured by the 2006 DOT. Accordingly, the Odinmas cannot state a

                                       13
claim for judicial foreclosure or declaratory relief based on the 2006 DOT, and
judgment on the pleadings was properly granted.8
                                DISPOSITION
      The judgment is affirmed. The Mahmoods are entitled to their costs on
appeal.

8     Having reached this conclusion, we need not address the Mahmoods’
additional contention that the trial court properly granted judgment on the
pleadings based on the security-first aspect of section 726.

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                                 _________________________
                                 Fujisaki, J.

WE CONCUR:

_________________________
Tucher, P. J.

_________________________
Petrou, J.

A161704

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