DiPietro v. Wachovia
Mortgage
Filed 4/8/13
DiPietro v. Wachovia Mortgage CA1/5
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opinion has not been certified for publication or ordered published for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 FIVE
JAMES DiPIETRO,
Plaintiff and
Appellant,
v.
WACHOVIA MORTGAGE, FSB,
Defendant and Respondent.
A134181
(Napa County
Super. Ct. No. 26-36809)
The
trial court sustained, without leave to amend, a demurrer filed by defendant
Wachovia Mortgage, FSB (respondent), to a complaint filed by plaintiff James
DiPietro (appellant). We affirm.
Background
Appellant
is the owner of real property located in
an offer from defendants Svetlana Conway and Dirk Kuivenhoven to refinance the
loan on the house. At that time, Conway
and Kuivenhoven were acting on behalf of defendant Transamerican Financial
Corporation—a California corporation performing real estate services by and
through a corporate officer licensed as a real estate broker.
that appellant found acceptable.
Appellant
signed certain loan documents at his home with Conway, Kuivenhoven, and a
notary present. During the signing,
appellant noticed the loan terms were different than those he had agreed
upon. Appellant refused to sign any more
documents and rejected the loan.
Conway
and/or Kuivenhoven forged appellant’s signature on the remaining loan documents
and completed the loan transaction. The
lender was World Savings & Loan, FSB, succeeded by respondent.
Appellant
filed second and third amended complaints.
The third amended complaint alleged causes of action for
fraud, negligent misrepresentation, constructive fraud, tortuous breach of a
licensee’s duties, economic duress, intentional infliction of emotional distress,
financial elder abuse, breach of contract, negligent breach of contract, and
breach of fiduciary duty. In June
2010, appellant filed a petition seeking relief from creditors under Chapter 13
of the Bankruptcy Code and a notice of automatic stay in the civil case. Appellant sought to remove the action to
bankruptcy court and, in June 2011, the bankruptcy court issued an order to
remove and retain jurisdiction over appellant’s cancellation of instrument and
quiet title causes of action, as well as a cross-complaint filed by
respondent. The court severed and
remanded all the other causes of action to the state court.
Following
a court trial, the bankruptcy court
entered judgment in favor of respondent.
Prior to entry of the bankruptcy court’s judgment, appellant had filed a
fourth amended and operative complaint (Complaint) in the present action. Following entry of the bankruptcy court’s
judgment, respondent demurred to the causes of action against it in the Complaint,
including cancellation of instrument, quiet title, fraud, negligent
misrepresentation, constructive fraud, and financial elder abuse. The trial court sustained the demurrer to
those causes of action without leave to amend and entered a judgment dismissing
respondent from the action. This appeal
followed.
Discussion
Appellant
maintains the trial court erred in sustaining respondent’s demurrer without
leave to amend on the ground that the ultimate facts underlying appellant’s
causes of action for fraud, negligent representation, constructive fraud, and
financial elder abuse were previously adjudicated against him in the bankruptcy
court, and therefore those claims are barred by the doctrine of collateral
estoppel.
“On
demurrer a court considers the allegations on the face of the complaint and any
matter of which it must or may take judicial notice. [Citation.]
If judicially noticed records of prior litigation show the complaint is
barred by collateral estoppel, the demurrer may be sustained. [Citations.]
On appeal from the judgment of dismissal following the sustaining of the
demurrer without leave to amend, we review the order de novo to determine
whether as a matter of law the complaint is barred by collateral estoppel. [Citation.]â€
(Groves v. Peterson (2002) 100
Cal.App.4th 659, 667 (Groves).)
“Collateral
estoppel is one of two aspects of the doctrine of res judicata. In its narrowest form, res judicata
‘ “precludes parties or their privies from relitigating a
prior proceeding].†’
[Citations.] But res judicata
also includes a broader principle, commonly termed collateral estoppel, under
which an issue ‘ “necessarily
decided in [prior] litigation [may be] conclusively determined
privies . . . in a subsequent lawsuit on a different cause of action.†’
[Citation.] [¶] Thus, res
judicata does not merely bar relitigation of identical claims or causes of
action. Instead, in its collateral
estoppel aspect, the doctrine may also preclude a party to prior litigation
from redisputing issues therein
decided against him, even when those issues bear on different claims raised in
a later case.†(Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 828.) The doctrine is applied “ ‘only if
several threshold requirements are fulfilled.
First, the issue sought to be precluded from relitigation must be
identical to that decided in a former
proceeding. Second, this issue must
have been actually litigated in the former proceeding. Third, it must have been necessarily decided
in the former proceeding. Fourth, the
decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is
sought must be the same as, or in privity with, the party to the former
proceeding. [Citations.]’ [Citation.]â€
(Hernandez v. City of Pomona
(2009) 46 Cal.4th 501, 511.)
At
issue in the present case are the bankruptcy court’s findings regarding
respondent’s knowledge of the fraud perpetrated on appellant. In its memorandum after trial, the bankruptcy
court found respondent did not know “that the loan applications submitted by
Transamerican were in many cases entirely fictional, with made-up assets and income. These were supposedly signed by the potential
borrower, but in fact the signatures were forged by Transamerican
employees.†The bankruptcy court stated
that neither appellant nor respondent were aware of Transamerican’s “duplicityâ€
in forging appellant’s signature. The
bankruptcy court ultimately rejected appellant’s equitable claims for loan
cancellation and quiet title on the ground that appellant ratified the loan
after discovering Transamerican’s misconduct.
The bankruptcy court explained, “Having heard all of the evidence, the
court finds that by his conduct [appellant] has ratified [respondent’s] loan so
that, whatever rights he may have for damages, the note and deed of trust are
fully enforceable. It is clear that
within a few days of the loan escrow closing, when [respondent] learned that
some of [appellant’s] signatures had been forged, it was able to rescind the
loan. [Appellant’s] own witness
established this fact. The evidence also
shows that [respondent] was willing to do so.
By calling [respondent] and telling them that he was accepting the loan,
[appellant] deprived [respondent] of the opportunity to undo the loan and set
the parties back to their original positions.
He therefore is not entitled to equitable relief to undo the transaction.†(Fn. omitted.) The bankruptcy court’s judgment quieted title
in favor of respondent and stated, “[appellant] will take nothing against
[respondent] by the claims not remanded to state court. [Respondent] will have judgment declaring
that its note and the above-mentioned deed of trust are fully valid and
enforceable . . . .†The
judgment also stated it was “without prejudice as to all other claims and
defenses [appellant] and [respondent] may have other than those actually
decided†in the bankruptcy court’s memoradum after trial.
On
appeal, appellant fails to frame his arguments in terms of the elements
required to justify application of the collateral estoppel doctrine. He does not dispute that the issues of fact
in the bankruptcy proceeding were identical to those underlying his fraud and
elder abuse claims, that those issues of fact were actually litigated before
the bankruptcy court, that the bankruptcy court’s decision was final and on the
merits, or that the parties in the two proceedings are identical. Neither does appellant dispute that a
bankruptcy court’s findings can have collateral estoppel effect in a state
court action.
title="">[5]
Instead,
appellant argues the collateral estoppel doctrine does not apply because, even
though the evidence presented to the bankruptcy court will also be presented in
the state court action, “in upholding the enforceability of the [p]romissory
[n]ote and [d]eed of [t]rust, the [b]ankruptcy [c]ourt was concerned only with
[a]ppellant’s conduct post-close of escrow (i.e., [a]ppellant accepted the
proceeds from the loan and notified [respondent] that he would make
payments). By contrast, [a]ppellant’s
remaining damages claims are focused on the conduct of [r]espondent and the
other defendants before the close of escrow (i.e., Was [r]espondent engaged in
knowingly assisting and financially benefiting from a criminal fraud against
[a]ppellant?).†Although not so framed,
we construe appellant’s argument to be that the bankruptcy court’s findings
about respondent’s lack of knowledge of the fraud perpetrated on appellant were
not necessary to the bankruptcy
court’s ruling.
title="">[6]
It
is well established that, where a “court decides the case on one issue, the
remaining issues were ‘ “necessarily decided†’ if they were actually
litigated and not ‘ “entirely unnecessary†’ to the case. [Citation.]â€
(People v. Parham (2003) 111
Cal.App.4th 1178, 1182.) As noted
previously, in concluding appellant was “not entitled to equitable relief to
undo the transaction,†the bankruptcy court emphasized respondent’s lack of
knowledge of the fraud and willingness to rescind the loan. This demonstrates that the findings at issue
were relevant to the equitable considerations involved in appellant’s loan
cancellation and quiet title actions. (See
Herrington v. Weigel (1978) 82
Cal.App.3d 676, 687 [“Quiet title actions lie in equity and equitable
principles apply [citation].â€]; see also Gonzalez
v. Hirose (1948) 33 Cal.2d 213, 217 [same].) Appellant cites no authority to the
contrary. We conclude the bankruptcy
court’s findings regarding respondent’s knowledge of the fraud perpetrated on
appellant were not entirely unnecessary to the court’s ruling.
Because
the requirements for application of the collateral estoppel doctrine are
satisfied and appellant has not shown there is a basis to decline to apply the
doctrine, the trial court properly sustained respondent’s demurrer without
leave to amend. (Groves, supra, 100
Cal.App.4th at p. 667.)
name="_ftnref7" title="">[7]
Disposition
The trial
court’s judgment is affirmed. Costs on
appeal are awarded to respondent.
SIMONS,
J.
We concur.
JONES, P.J.
BRUINIERS, J.
pleading stage of the litigation by way of demurrer, the following summary of
the facts is derived from the allegations set forth in appellant’s operative
complaint. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
not parties to this appeal. Neither is
another defendant, Chicago Title Company.
