On 03/25/2013 KARAN J RUSSELL filed a Contract - Other Contract lawsuit against WELLS FARGO BANK N A. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are BARBARA A. MEIERS, MAUREEN DUFFY-LEWIS and TERESA A. BEAUDET. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
BARBARA A. MEIERS
TERESA A. BEAUDET
RUSSELL KARAN J.
ALL PERSONS CLAIMING ANY LEGAL OR EQUITA-
CHASE FINANCE LLC
DOES 1 - 50
NDEX WEST LLC
WELLS FARGO BANK N.A.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.
FRESHMAN RONALD H. ESQ.
BARRETT DAFFIN FRAPPIER TREDER & WEISS
KEESAL YOUNG & LOGAN
TREDER EDWARD A. ESQ.
FULBRIGHT & JAWORSKI
MERRIS JENNY LEE
TREDER EDWARD ALAN ESQ.
1/31/2019: Notice of Deposit - Jury
2/22/2019: Case Management Statement
5/8/2019: Amended Complaint
5/16/2019: Certificate of Mailing for
6/7/2019: Case Management Statement
7/11/2019: Motion to Strike (not initial pleading)
4/24/2013: CIVIL DEPOSIT
10/3/2013: NOTICE OF MOTION AND MOTION TO SET VACATE ORDER ON DEMURRER; ETC
3/13/2014: Minute Order
3/18/2014: NOTICE OF RULING ON PLAINTIFF?S MOTION TO VACATE ORI)ER ON DEMURRER
1/29/2016: SUBSTITUTION OF ATTORNEY-CIVIL
2/25/2016: CASE MANAGEMENT STATEMENT
3/11/2016: Minute Order
5/12/2016: VERIFIED SECOND AMENDED COMPLAINT 1. DECLARATORY RELIEF 2. INVALIDITY OF CONTRACTS 3. CANCELLATION OF INSTRUMENTS, ETC
5/31/2016: Minute Order
9/12/2016: NOTICE OF ENTRY OF JUDGMENT
10/12/2016: NOTICE OF APPEAL (UNLIMITED CIVIL CASE)
Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Demurrer - with Motion to Strike (CCP 430.10)Read MoreRead Less
Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Case Management ConferenceRead MoreRead Less
DocketCase Management Statement; Filed by Chase Finance LLC (Defendant); Wells Fargo Bank, N.A. (Defendant); Mortgage Electronic Registration Systems, Inc. (Defendant)Read MoreRead Less
DocketNotice (of Errata re: Notice of Motion and Motion to Strike Portions of the Third Amended Complaint); Filed by Chase Finance LLC (Defendant); Wells Fargo Bank, N.A. (Defendant); Mortgage Electronic Registration Systems, Inc. (Defendant)Read MoreRead Less
DocketDemurrer - with Motion to Strike (CCP 430.10); Filed by Chase Finance LLC (Defendant); Wells Fargo Bank, N.A. (Defendant)Read MoreRead Less
DocketMotion to Strike (not initial pleading) (Portions of the Second Amended Complaint); Filed by Chase Finance LLC (Defendant); Wells Fargo Bank, N.A. (Defendant); Mortgage Electronic Registration Systems, Inc. (Defendant)Read MoreRead Less
DocketDemurrer - without Motion to Strike; Filed by Mortgage Electronic Registration Systems, Inc. (Defendant)Read MoreRead Less
DocketRequest for Judicial Notice; Filed by Mortgage Electronic Registration Systems, Inc. (Defendant)Read MoreRead Less
DocketRequest for Judicial Notice; Filed by Chase Finance LLC (Defendant); Wells Fargo Bank, N.A. (Defendant)Read MoreRead Less
DocketDeclaration (Declaration of Jenny L. Merris re: Meet and Confer Effforts); Filed by Chase Finance LLC (Defendant); Wells Fargo Bank, N.A. (Defendant); Mortgage Electronic Registration Systems, Inc. (Defendant)Read MoreRead Less
DocketCIVIL DEPOSITRead MoreRead Less
DocketDeclaration; Filed by Ndex West LLC (Defendant)Read MoreRead Less
DocketNOTICE OF FILING OF DECLARATION OF NON-MONETARY STATUS (CAL. CIV. CODE 2924!)Read MoreRead Less
DocketDECLARATION OF NON-MONETARY STATUS (CAL. CIV. CODE 29241)Read MoreRead Less
DocketNOTICE OF CASE MANAGEMENT CONFERENCERead MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
DocketComplaint; Filed by Karan J. Russell (Plaintiff)Read MoreRead Less
DocketVERIFIED COMPLAINT FOR DAMAGES 1. VIOLATION OF THE ONE ACTION RULE; ETCRead MoreRead Less
DocketSUMMONSRead MoreRead Less
DocketORDER ON COURT FEE WAIVERRead MoreRead Less
Case Number: BC503749 Hearing Date: December 16, 2019 Dept: 50
karan j. russell,
wells fargo bank n.a., et al.
December 16, 2019
[TENTATIVE] ORDER RE:
DEMURRER TO THE VERIFIED THIRD AMENDED COMPLAINT BY DEFENDANT MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.;
DEMURRER TO THE VERIFIED THIRD AMENDED COMPLAINT BY DEFENDANTS JP MORGAN CHASE BANK, N.A. AND WELLS FARGO BANK, N.A. AS TRUSTEE;
MOTION TO STRIKE PORTIONS OF THE THIRD AMENDED COMPLAINT BY DEFENDANTS JP MORGAN CHASE BANK, N.A., WELLS FARGO BANK, N.A. AS TRUSTEE AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.
On March 25, 2013, Plaintiff Karan J. Russell (“Russell”) filed this action arising out of the foreclosure of her home located at 5432 Eighth Avenue, Los Angeles, California 90034 (the “Property”). The Second Amended Complaint (“SAC”) was filed on May 12, 2016, asserting thirteen causes of action.
On August 30, 2016, the Court issued an order sustaining without leave to amend the demurrer by Defendants JPMorgan Chase Bank, N.A. (“Chase”) and Wells Fargo Bank, N.A., as Trustee for Lehman Structured Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2007-BC1 (“Wells Fargo”) to the SAC, in part because of the res judicata effect of a judgment in a prior case, Case No. BC470268 (the “Prior Action”). A judgment of dismissal as to Chase and Wells Fargo was entered on September 6, 2016.
Russell appealed the judgment, and the Court of Appeal affirmed in part and reversed in part. The Court of Appeal held that Russell had stated sufficient facts to support causes of action for violation of the Homeowner Bill of Rights (“HBOR”), violation of the Unfair Competition Law, breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel. The remittitur was filed on November 21, 2018.
The operative Third Amended Complaint (“TAC”) was filed on May 8, 2019, and asserts causes of action for (1) violations of the California Homeowner Bill of Rights, (2) violation of Business & Professions Code, (3) breach of contract, (4) breach of the covenant of good faith and fair dealing, (5) promissory estoppel, (6) wrongful foreclosure, (7) cancellation of instruments, and (8) slander of title. The sixth, seventh, and eighth causes of action were added pursuant to a stipulation filed April 15, 2019.
Chase and Wells Fargo now demur to the sixth cause of action, seventh cause of action, and eighth cause of action for failure to state facts sufficient to constitute a cause of action as to them.
Separately, Defendant Mortgage Electronic Registration Systems, Inc. (“MERS”) demurs to the entire TAC on the grounds that the TAC is barred by the doctrines of the law of the case, claim preclusion, and/or issue preclusion. MERS also demurs to the first, second, sixth, seventh, and eighth causes of action for failure to state facts sufficient to constitute a cause of action
Chase, Wells Fargo, and MERS also jointly move to strike the prayer for punitive damages and attorney’s fees as against MERS from the TAC.
Russell opposes the demurrers and the motion to strike.
Request for Judicial Notice
The Court grants Chase and Wells Fargo’s request for judicial notice as to Exhibits 1-15.
The Court grants MERS’ request for judicial notice as to Exhibits 1-15.
The Court overrules Russell’s objections to the requests for judicial notice.
The Court grants Russell’s request for judicial notice as to Exhibit 1.
A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. ((Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” ((C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. ((Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” ((Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)
Law of the Case
Under the law of the case doctrine, “the decision of an appellate court, stating a rule of law necessary to the decision of the case, conclusively establishes that rule and makes it determinative of the rights of the same parties in any subsequent retrial or appeal in the same case.” (Yu v. Signet Bank/Virginia (2002) 103 Cal.App.4th 298, 309, disapproved on other grounds.)
Because Chase, Wells Fargo, and MERS base some or all of their arguments in support of their respective demurrers on the law of the case doctrine, and specifically, the law of the case as stated by the Court of Appeal in its decision affirming in part and reversing in part the trial court’s judgment in favor of Chase and Wells Fargo, the Court finds it useful to summarize the facts and findings set forth in the Court of Appeal’s opinion.
In November 2006, Russell obtained a $391,500 residential loan, secured by a deed of trust encumbering the Property. (September 21, 2018 Court of Appeal Opinion (“Op.”), p. 3.) The deed of trust listed Russell as the borrower, BNC Mortgage, Inc. (“BNC Mortgage”) as the lender, T.D. Service Company as trustee, and MERS as the beneficiary. (Ibid.) In April 2008, MERS assigned all beneficial interest in the promissory note and deed of trust to Wells Fargo. (Ibid.) In December 2009, NDEX West, LLC (“NDEX”), acting as the agent for Wells Fargo, recorded a notice of default on the Property. On August 1, 2011, Russell entered into a trial modification agreement with Chase, under the alleged promise that Chase would work with her on a modification to ensure that she could retain ownership of the Property. (Id. at pp. 3-4.) On September 2, 2011, NDEX recorded a notice of trustee’s sale on the Property. (Id. at p. 4.)
On September 23, 2011, Russell filed a complaint against Wells Fargo, Chase, and NDEX—the Prior Action. (Op., p. 4.) Russell’s claims were largely premised on the charge that the defendants had threatened to sell the Property at a “legally void” trustee’s sale despite having “no legally enforceable interest entitling them to enforce payment or declare a default.” (Ibid.) Russell alleged that BNC Mortgage was named as lender but was not the true party to the transaction, the loan was never properly assigned to Wells Fargo, and NDEX had no authority to record the notice of default and notice of trustee’s sale against her property. (Ibid.) On February 13, 2012, Chase sent Russell a proposed Home Affordable Modification Agreement (the “Modification Agreement”). (Ibid.) Although Chase continued to accept her trial period payments, Chase “suspended” the modification due to the pending Prior Action. (Id. at p. 5.)
On November 20, 2012, the court in the Prior Action entered a judgment of dismissal against Russell and in favor of Wells Fargo, Chase, and NDEX. (Op., p. 5.) Following the dismissal, Russell contacted Chase to request that the modification be finalized. (Ibid.) Without giving Russell notification that the modification was being revoked or denied, Chase proceeded with recording a notice of trustee’s sale on the Property. (Ibid.)
On March 25, 2013, Russell filed the instant action alleging that BNC Mortgage was not the true lender, MERS had no authority to assign the loan to Wells Fargo, and Chase violated the trial period plan, proposed Modification Agreement, and the HBOR by having a notice of trustee’s sale recorded on the Property while Russell was under consideration for a loan modification (commonly referred to as “dual tracking”). (Op., pp. 5-6.) Wells Fargo and Chase demurred to the operative second amended complaint, arguing that most of the claims were barred by the judgment in the Prior Action under the res judicata doctrine and that the complaint otherwise failed to allege sufficient facts to state a cause of action. The trial court sustained Chase and Wells Fargo’s demurrer without leave to amend. (Id. at p. 7.) The trial court also noticed its own motion, under Code of Civil Procedure sections 436 and 438, to dismiss the action against the remaining defendants, including MERS. (Id. at p. 7, fn. 4.) Russell did not oppose the motion, and the trial court granted it on the same grounds as the dismissal as to Chase and Wells Fargo. (Ibid.; see also MERS’ RFJN, Ex. 12.) After severing Chase and Wells Fargo from the action, the court entered a judgment of dismissal in their favor. (Id. at p. 7.) Judgment of dismissal in favor of the remaining defendants, including MERS, was subsequently entered. (Id. at p. 7, fn. 4; see also MERS’ RFJN, Ex. 13.) Russell appealed the judgment in favor of Chase and Wells Fargo but did not appeal the judgment in favor of the other defendants. (Id. at
p. 7, fn. 4.)
The Court of Appeal held that the judgment in the Prior Action bars most of the claims asserted in this action, and specifically, those claims premised on Russell’s right to withhold performance from entities that are not proper entities to the promissory note or deed of trust, and the defendants’ duty to desist from enforcement unless they are proper parties to the contracts. (Op., pp. 9-10.) However, the Court of Appeal also held that, to the extent that Russell’s causes of action are premised on claims of “dual tracking,” those were not barred by the doctrine of res judicata. (Id. at pp. 14, 20.)
Now, MERS contends that, because Russell did not appeal the judgment of dismissal (which was entered with prejudice, see MERS’ RFJN, Ex. 13) in favor of MERS, the law of the case bars Russell’s attempt to revive her claims against MERS. “[A] dismissal with prejudice is the equivalent of a final judgment on the merits. . . .” ((Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 793.) Accordingly, “the plaintiff’s right of action is terminated and may not be revived . . . . [A] dismissal with prejudice . . . bars any future action on the same subject matter.” ((Ibid. [brackets in original].) It is undisputed that the subject matter of the TAC is the same as the SAC. It is also undisputed that MERS was dismissed with prejudice from this lawsuit. Therefore, the Court finds that the claims against MERS in the TAC are barred. MERS’ demurrer to the TAC is sustained on this ground.
Next, Chase and Wells Fargo contend that the law of the case doctrine bars Russell’s sixth (wrongful foreclosure), seventh (cancellation of written instruments), and eighth (slander of title) causes of action because the Court of Appeal already held that res judicata bars Russell’s claims stemming from the allegation that Wells Fargo and Chase did not have the proper authority (because they were not proper parties to the underlying loan) to proceed with foreclosure.
To maintain a wrongful foreclosure claim, a plaintiff must allege that “(1) the defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a mortgage or deed of trust; (2) the plaintiff suffered prejudice or harm; and (3) the plaintiff tendered the amount of the secured indebtedness or was excused from tendering.” ((Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062.) “Recognized exceptions to the tender rule include when (1) the underlying debt is void, (2) the foreclosure sale or trustee's deed is void on its face, (3) a counterclaim offsets the amount due, (4) specific circumstances make it inequitable to enforce the debt against the party challenging the sale, or (5) the foreclosure sale has not yet occurred.” ((Ibid. .) Further, a cause of action “implicitly integrated” with a wrongful foreclosure claim also fails “unless the trustor can allege and establish a valid tender.” ((Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 579.)
In support of the wrongful foreclosure cause of action in the TAC, Russell alleges that Wells Fargo “is not the beneficial holder of the debt and therefore, was the wrong party to complete the foreclosure.” (TAC, ¶ 147.) Alternatively, Russell alleges that Wells Fargo and Chase did not have a contractual basis to complete the foreclosure because Chase failed to honor the “TPP” (trial payment plan) payments Russell made during the period her loan modification was allegedly pending. (TAC, ¶ 148; see also TAC, ¶¶ 59-64.) Russell alleges that she is not required to tender “[d]ue to the lack of pecuniary interest in the Note and Deed of Trust by any Defendant.” (TAC, ¶ 81.)
Chase and Wells Fargo argue that Russell’s attempt to allege an exception to the tender requirement must fail because Russell is barred from alleging that the Assignment of Deed of Trust to Wells Fargo is void. (See Op., pp. 11-12 [discussing the rejection by the court in the Prior Action of the argument that the defendants were not proper parties to the loan contracts because of “alleged defects in the securitization process”].)
Russell counters that her wrongful foreclosure claim is not barred because new events have occurred since the Court of Appeal rendered its decision. In particular, on January 4, 2018, the Property was sold at a trustee’s sale, and on January 17, 2018, a trustee’s deed upon sale was recorded. (TAC, ¶ 177.) Russell argues that res judicata does not apply because the wrongful foreclosure claim is a new cause of action based on a new harm and implicating new rights. However, as set forth by the Court of Appeal, the res judicata doctrine is based upon the “primary right theory.” ((Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 904.) Under this theory, a “cause of action is comprised of a primary right of the plaintiff, a corresponding primary duty of the defendant, and a wrongful act by the defendant constituting a breach of that duty.” ((Ibid. [internal quotations omitted].) “[T]he primary right is simply the plaintiff’s right to be free from the particular injury suffered.” ((Ibid. .) Applying these principles, the Court finds that the primary right alleged in the SAC is the same primary right alleged in the TAC—to be free from a wrongful foreclosure—notwithstanding that the foreclosure sale had not yet occurred at the time of the filing of the SAC. (See SAC, ¶ 1 [“…Plaintiff seeks as her primary goal, to have Defendants’ foreclosure activities reversed and Defendants enjoined from further collection efforts or foreclosure for reason [sic] the loan was based on unfair and deceptive business practice which renders the contracts unenforceable.”].)
Cancellation of Written Instruments
In support of the cancellation of instruments cause of action in the TAC, Russell alleges that the Assignments of Deed of Trust, the Notice of Default, the Notices of Trustee Sale, and Trustees Deed Upon Sale are invalid and have clouded her title to the Property. (TAC, ¶ 153.) These are the same allegations pleaded in support of the cancellation of instruments cause of action in the SAC, which has been dismissed and which dismissal has been affirmed by the Court of Appeal. (See SAC, ¶¶ 8-26.) Therefore, the Court finds that Russell is barred from attempting to revive the cause of action for cancellation of written instruments.
Slander of Title
In support of the slander of title cause of action in the TAC, Russell alleges that the Assignments of Deed of Trust were executed and recorded by parties that knew or should have known that the statements made within the documents were false. (TAC, ¶ 170.) Russell alleges that MERS had no authority to transfer the beneficial interest in the Deed of Trust, NDEX never validly substituted as trustee, and that the Assignment of Deed of Trust disparaged her title. (TAC, ¶¶ 171-177.) These are the same facts alleged in the SAC. (See SAC, ¶¶ 31-34.)
As with the wrongful foreclosure cause of action, Russell argues that this slander of title claim is a “new” claim because she was newly harmed on January 4, 2018 when a trustee sale was held, and on January 17, 2018, when the trustee’s deed upon sale was recorded. (TAC,
¶ 177.) For the same reasons as set forth above, the Court finds this argument to be unavailing and concludes that the cause of action for slander of title is barred by res judicata and the law of the case.
Motion to Strike
A court may strike any “irrelevant, false, or improper matter inserted in any pleading” or any part of a pleading “not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” ((Code Civ. Proc., § 436.) A motion to strike may lie where the facts alleged do not rise to the level of “malice, oppression or fraud” required to support a punitive damages award. ((Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63-64.) “’Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others” and “’[o]ppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” ((Civ. Code, § 3294(c).) “Despicable conduct” has been described as “conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” ((Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331.)
First, as to the attorney’s fee claim alleged against MERS, because the Court sustains the demurrer as to the entire TAC as to MERS, the motion to strike as to the attorney’s fee claim is moot.
Second, the punitive damages allegation in paragraph 102, in support of the cause of action for violation of Business and Professions Code section 17200 is improper. Punitive damages are not available for UCL claims. ((Clark v. Superior Court (2010) 50 Cal.4th 605, 610.)
Third, the prayer for punitive damages is similarly improper because Russell has failed to allege any facts rising to the level of malice, oppression, or fraud. The only cause of action identified by Russell as supporting a punitive damages claim is the wrongful foreclosure cause of action, which the Court has found to be barred by res judicata and the law of the case. Therefore, the motion to strike is granted as to paragraph 6 of the prayer for relief in the TAC.
Based on the foregoing, MERS’ demurrer to the Third Amended Complaint is sustained, without leave to amend. Chase and Wells Fargo’s demurrer to the sixth, seventh, and eighth causes of action in the Third Amended Complaint is sustained, without leave to amend.
The motion to strike as to MERS is denied as moot. The motion to strike as to Chase and Wells Fargo is granted.
The Court orders Chase and Wells Fargo to file and serve their answer(s) to the Third Amended Complaint within 10 days of the date of this order.
MERS is ordered to give notice of this ruling.
DATED: December 16, 2019 ________________________________
Hon. Teresa A. Beaudet
Judge, Los Angeles Superior Court
 The Court of Appeal’s reasoning is set forth in full as follows: “As the trial court correctly concluded, the judgment in the Prior Action bars most of the claims asserted in this one. Plaintiff sued Wells Fargo and Chase in the Prior Action, and many of the claims in that case, like many of the claims in this one, were premised on the same primary right and corresponding primary duty—namely, Plaintiff’s right to withhold performance (such as loan payments) from entities that are not proper parties to the promissory note or deed of trust, and Defendants’ duty to desist from enforcement (such as foreclosure proceedings) unless they are proper parties to the loan contracts. As Plaintiff concedes in her opening brief, her claims for ‘Declaratory Relief, Invalidity of Contracts, Cancellation of Instruments, Slander of Title, and Fraud & Deceit’ are all ‘potentially subject to Res Judica[ta]’ because all are premised on this same primary right that formed the basis for her cancellation of instruments, quiet title, slander of title, and misrepresentation claims in the Prior Action.” (Op., pp. 9-10 [brackets in original].)