IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ANSWERING BRIEF OF DEFENDANT-APPELLEE

Transcription

1 Case: /28/2013 ID: DktEntry: 11 Page: 1 of 46 DOCKET NO IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT DOUGLAS GILLIES, Plaintiff-Appellant, vs. JPMORGAN CHASE BANK, N.A, Defendant-Appellee. Appeal From a Decision of the United States District Court for the Central District of California, Case No. 2:12-CV GW-MAN, The Honorable George W. Wu ANSWERING BRIEF OF DEFENDANT-APPELLEE Richard C. Ochoa Bradley J. Dugan BRYAN CAVE LLP 120 Broadway, Suite 300 Santa Monica, CA Telephone: (310) Attorneys for Defendant-Appellee JPMorgan Chase Bank, N.A

2 Case: /28/2013 ID: DktEntry: 11 Page: 2 of 46 CORPORATE DISCLOSURE STATEMENT Pursuant to Federal Rule of Appellate Procedure 26.1, Defendant-Appellee JPMorgan Chase Bank, N.A. certifies that it is a wholly owned subsidiary of JPMorgan Chase & Co. JPMorgan Chase & Co. is publicly traded and listed on the New York Stock Exchange (symbol JPM ). No publicly held corporation directly or indirectly owns 10% or more of JPMorgan Chase & Co. s stock.

3 Case: /28/2013 ID: DktEntry: 11 Page: 3 of 46 TABLE OF CONTENTS Page I. Introduction... 1 II. Jurisdictional Statement... 4 III. Issues Presented... 4 IV. Statement of the Case... 5 V. Statement of Facts... 7 A. Gillies First Lawsuit in the California Superior Court and His Appeal to the Second District of the California Court of Appeal... 7 B. Gillies Second Lawsuit in the California Superior Court and His Appeal to the Second District of the California Court of Appeal... 9 C. Gillies Files His Third Lawsuit in the United States District Court... 9 D. Chase Files a Motion to Dismiss the Third Complaint E. The District Court s Ruling on Chase s Motion to Dismiss the Third Complaint VI. Summary of Argument VII. Argument A. Standard of Review Standard of Review on Appeal Res Judicata B. The District Court Did Not Err In Granting The Motion To Dismiss Based on Res Judicata The California Court of Appeal Already Determined in Gillies I That Chase Was the Beneficiary of the Deed of Trust Which Secured Gillies Loan A Demurrer Which Has Been Affirmed on Appeal Is A Final Judgment on the Merits Gillies' Remaining Arguments Are Not Supported By the i

4 Case: /28/2013 ID: DktEntry: 11 Page: 4 of 46 Record C. There Was No Violation of Due Process California s Nonjudicial Foreclosure Statutes Do Not Constitute State Action And Do Not Invoke the Due Process Clause of the Fourteenth Amendment The Cases Cited in the Opening Brief Do Not Apply D. The Complaint Was Barred by the Rooker-Feldman Doctrine VIII. Conclusion and Request for Relief IX. Statement of Related Cases ii

5 Case: /28/2013 ID: DktEntry: 11 Page: 5 of 46 TABLE OF AUTHORITIES Cases Page Apao v. Bank of New York, 324 F.3d 1091 (9th Cir. 2003)... 29, 30, 32 Citizens for Open Acces Tc. Tide, Inc. v. Seadrift Association, 60 Cal. App. 4th 1053 (1998) Connecticut v. Doehr, 501 U.S. 1 (1991) Davidow v. Lachman Bros. Inv. Co., 76 F.2d 186 (9th Cir. 1935) Federation of Hillside and Canyon Associations v. City of Los Angeles, 126 Cal. App. 4th 1180 (2004)... 14, 19 Flagg Bros., Inc. v. Brooks, 436 U.S. 149 (1978) Franklin & Franklin v. 7-Eleven Owners for Fair Franchising, 85 Cal. App. 4th 1168 (2000)... 15, 19 Garfinkle v. Superior Court, 21 Cal. 3d 268 (1978)... 28, 29 Gillies v. California Reconveyance Co., 2011 WL (Cal. Ct. App., April 11, 2011)... passim Gillies v. California Reconveyance Co., 2012 WL (Cal. Ct. App., Sept. 6, 2012)... passim Goddard v. Security Title Ins. & Guaranty Co., 14 Cal.2d 47 (1939)... 20, 21 Homestead Savings v. Darmiento, 230 Cal.App.3d 424 (1991) I.E. Associates v. Safeco Title Insurance Co., 39 Cal.3d 281 (1985) Johnson v. Am. Airlines, Inc., 157 Cal. App. 3d 427 (1984)... 14, 15 Lance v. Dennis, 546 U.S. 459 (2006) iii

6 Case: /28/2013 ID: DktEntry: 11 Page: 6 of 46 Leadsinger, Inc. v. BMG Music Publ g, 512 F.3d 522 (9th Cir. 2008) Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (9th Cir. 2008) Matthews v. Eldridge, 424 U.S. 319 (1976) McClain v. Apodaca, 793 F.2d 1031 (9th Cir. 1996) Migra v. Warren City School Dist. Bd. Of Educ., 465 U.S. 75 (1984) Mitchell v. W.T. Grant Co., 416 U.S. 600 (1974) Noel v. Hall, 341 F.3d 114, (9th Cir.2003) North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601 (1975) Pollock v. University of Southern California, 112 Cal. App. 4th 1416 (2003) Rose v. Ames, 68 Cal. App. 2d 444 (1945) Shuffer v. Board of Trustees, 67 Cal. App. 3d 208 (1977) U.S. Hertz, Inc. v. Niobrara Farms, 41 Cal.App.3d 687 (1974) Wolfe v. Strankman, 392 F.3d 358 (9th Cir.2004) Statutes 28 U.S.C U.S.C Cal. Civ. Code , 8, 9, 23 Cal. Civ. Code Cal. Civ. Code , 5, 13 Cal. Civ. Code 2924(a)(1) iv

7 Case: /28/2013 ID: DktEntry: 11 Page: 7 of 46 Rules Fed. R. App. P. 4(a)(1)(A)... 4 Fed. R. Civ. P. 12(b)(6)... 4 Fed. R. Civ. P v

8 Case: /28/2013 ID: DktEntry: 11 Page: 8 of 46 I. Introduction This is an appeal which seeks to reverse the District Court s grant of a motion to dismiss filed by Appellee, JP Morgan Chase Bank, N.A. ( Chase ). The District Court granted Chase s motion without leave to amend, finding that the doctrine of res judicata and the Rooker-Feldman doctrine barred the subject federal action filed by Appellant, Douglas Gillies ( Gillies or Appellant ), after he lost two previous state court cases on the same subject matter. Each of these issues raised before the District Court are the subject of this latest appeal. This Court should affirm the District Court s judgment and its rulings on Chase s motion to dismiss, because there is no question the court below properly decided the issues Gillies raises yet again in the context of the present appeal. Indeed, the instant appeal is actually Gillies third lawsuit challenging the nonjudicial foreclosure of his property and specifically, whether Chase is the beneficiary under the deed of trust that secures the loan Gillies obtained from Chase s predecessor, Washington Mutual Bank ( Washington Mutual ). Gillies s first lawsuit was filed in state court against Chase and California Reconveyance Company ( CRC ). The Superior Court of California sustained the demurrer filed by Chase and CRC without leave to amend and Gillies appealed. The California Court of Appeal affirmed the judgment, explicitly finding that

9 Case: /28/2013 ID: DktEntry: 11 Page: 9 of 46 Chase was the beneficiary under the deed of trust and the successor in interest to Washington Mutual. Three months after the judgment in Chase s favor on Appellant s first lawsuit, Gillies filed a second lawsuit in state court against CRC based on the same nonjudicial foreclosure issues. CRC filed a demurrer based on res judicata, which the state trial court sustained without leave to amend. Gillies then filed another appeal of the judgment in CRC s favor to the California Court of Appeal. The Court of Appeal affirmed the judgment. Three months after the California Court of Appeal s affirmance of the judgment in CRC s favor in Gillies s second lawsuit, Gillies tried his theories out in the United States District Court for the Central District of California by filing the instant action. The crux of Gillies argument, as before, is that there is a spelling error in the recorded foreclosure property documents in which his first name is spelled as Dougles instead of Douglas, which he claimed affected the validity of the notices of default and trustee s sale of his property. Gillies also speculated that Chase is not the beneficiary of the deed of trust and cannot locate the beneficiary, because if Chase were the lender, then Chase would have simply corrected the misspelling of Gillies s first name instead of responding to his lawsuits and subsequent appeals. 2

10 Case: /28/2013 ID: DktEntry: 11 Page: 10 of 46 However, because the California Court of Appeal had already explicitly determined that Chase was in fact the beneficiary of the deed of trust securing repayment of the loan and was entitled to foreclose, the District Court held that Gillies s instant lawsuit was nothing more than a rehashing of the prior defective causes of action contained in his first two lawsuits, which had been determined in Chase s favor and affirmed by the California Court of Appeal. That being so, the District Court did not err in finding that Gillies s latest complaint was barred by the doctrine of res judicata. The District Court also properly rejected Gillies attempted challenge to the rulings of the Superior Court and the California Court of Appeal in a federal forum. Federal courts are required, under the Rooker-Feldman doctrine, to abstain from reviewing judgments from state courts. The District Court therefore correctly declined to disturb those rulings. Finally, when all else fails, Gillies tries to get around the unequivocal preclusion of relitigation of these issues in federal court by concocting the argument that the nonjudicial foreclosure proceedings prescribed by California Civil Code 2924 et seq. violate his due process rights under the Fourteenth Amendment. For decades, both this Court and the California Supreme Court have held that the statutory nonjudicial foreclosure provisions do not constitute state action and, thus, do not implicate the Fourteenth Amendment. Gillies fails to 3

11 Case: /28/2013 ID: DktEntry: 11 Page: 11 of 46 provide any contrary authority, and his argument does not provide any basis for a reversal of the District Court s ruling. II. Jurisdictional Statement The United States District Court for the Central District of California had diversity jurisdiction over Gillies s claims arising under 28 U.S.C On February 11, 2013, the District Court entered an order dismissing with prejudice all of the claims in the Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), based on the doctrine of res judicata. The judgment is final under Federal Rule of Civil Procedure 54 and this Court has jurisdiction pursuant to 28 U.S.C Gillies s notice of appeal was timely filed on February 19, Fed. R. App. P. 4(a)(1)(A). III. Issues Presented 1. Whether the District Court erred in finding that Gillies s Complaint was barred by the doctrine of res judicata, where Gillies had filed two prior lawsuits in the Superior Court for the State of California raising the same issues of whether Chase was the beneficiary under the deed of trust and whether it had the authority to foreclose nonjudicially on the subject property, both of which were decided in Chase s favor and affirmed on appeal by the California Court of Appeal. 4

12 Case: /28/2013 ID: DktEntry: 11 Page: 12 of Whether Gillies s lawsuit in the United States District Court following adverse decisions in state court, affirmed on appeal, is barred by the Rooker- Feldman doctrine. IV. Statement of the Case Gillies s lawsuit in the United States District Court for the Central District of California asserted three causes of action for wrongful foreclosure, quiet title, and for (collectively) declaratory and injunctive relief. The premises of the Complaint were that the foreclosure sale of his property was invalid because a) Chase was not the beneficiary under the deed of trust that secured the loan Gillies obtained from Washington Mutual; and b) the foreclosure documents misspelled his first name as Dougles with an e instead of Douglas with an a, purportedly causing such confusion that the state of title was uncertain. Gillies, an attorney admitted to practice in California, omitted to disclose in his federal Complaint that he previously had filed two other lawsuits in the Superior Court for the State of California raising the same issues, and that the Superior Court in both prior cases had dismissed those actions for failure to state a claim for which relief could be granted. More specifically, Gillies s first lawsuit was filed on November 25, The trial court s decision dismissing the Complaint was affirmed by the California Court of Appeal on April 11, The California Court of Appeal held that 5

13 Case: /28/2013 ID: DktEntry: 11 Page: 13 of 46 Chase was the successor in interest to Washington Mutual and could exercise the power of sale granted to the beneficiary in the deed of trust. In regards to the misspelt name, the California Court of Appeal held that no reasonable person would be confused by such a minor spelling mistake in a first name. The second lawsuit was filed on July 13, 2011, and dismissed based on the res judicata doctrine. The California Court of Appeal affirmed on that basis on September 6, Given this procedural background, Chase filed a motion to dismiss the subject federal lawsuit on December 26, 2012, based on res judicata and the failure of each putative cause of action to state a claim for relief. In opposition, Gillies made numerous arguments to the effect that the California trial courts and Courts of Appeal had made numerous substantive errors in their respective decisions in his prior two lawsuits. Chase accordingly argued in its reply brief that Gillies was, in essence, improperly seeking review of a state court judgment in federal court, and thus, the matter was barred by the Rooker-Feldman doctrine. The District Court heard Chase s motion to dismiss on February 7, The District Court held that Gillies federal Complaint was barred by the doctrine of res judicata. The District Court found that each purported new cause of action was already addressed in Gillies s prior lawsuits, and that, even assuming the federal complaint had raised new facts or theories, they nevertheless involved 6

14 Case: /28/2013 ID: DktEntry: 11 Page: 14 of 46 the same injury to the same right as Gillies s prior state court lawsuits, such that res judicata still applied. The District Court also found that the parties were the same in both lawsuits, and that there was a final judgment on the merits in each because the order sustaining the demurrer without leave to amend was affirmed on appeal. On February 11, 2013, refusing to accept the various courts decisions, Gillies filed his appeal. V. Statement of Facts A. Gillies First Lawsuit in the California Superior Court and His Appeal to the Second District of the California Court of Appeal ( Gillies I ) Gillies filed his first lawsuit against Chase and CRC on November 25, (Appellant s Excerpt of Records ( ER ) 146). The complaint (the First Complaint ) included (1) a cause of action alleging that a notice of default was never recorded, (2) a cause of action alleging that the notice of default was not filed in compliance with California Civil Code , (3) a cause of action alleging that Chase and CRC did not properly record the notice of trustee s sale, (4) a cause of action for an injunction to prevent Chase from foreclosing on the property, and (5) a cause of action for quiet title against Chase. (ER ). Chase and CRC demurred to the complaint, which the trial court sustained without leave to amend. (ER 27; see also Gillies v. California Reconveyance Co. 7

15 Case: /28/2013 ID: DktEntry: 11 Page: 15 of 46 ( Gillies I ), 2011 WL at *1 (Cal. Ct. App., April 11, 2011)). Gillies subsequently appealed the judgment. (ER 27; see also Gillies I, 2011 WL ). Gillies argued on appeal that his name was not properly spelled on the notice of default. (ER 33; Gillies I, supra, 2011 WL at *4). He also disputed whether Chase was the successor in interest to Washington Mutual and whether the FDIC had the power to transfer the assets of Washington Mutual to Chase. (ER 32; Gillies I, supra, 2011 WL at * 4). The California Court of Appeal affirmed the trial court s ruling. (ER 27; see also Gillies I, 2011 WL ). The Court of Appeal stated that there is simply no reasonable dispute that Chase is Washington Mutual Bank s successorin-interest as to Gillies s trust deed. (ER 32). As to Gillies s arguments concerning the discrepancy in the spelling of his first name on the notice of default, the Court of Appeal held no reasonable person would be confused by such a minor error. (ER 33). The Court of Appeal also held that (1) there was no violation of either Civil Code 2924(a)(1), Civil Code or Civil Code ; (2) Gillies was not entitled to injunctive relief to prevent the nonjudicial foreclosure of the property; and (3) his quiet title claim failed because Chase was the successor-in-interest to the original lender, Washington Mutual. (ER 30-32). 8

16 Case: /28/2013 ID: DktEntry: 11 Page: 16 of 46 B. Gillies Second Lawsuit in the California Superior Court and His Appeal to the Second District of the California Court of Appeal ( Gillies II ) Three months after the Court of Appeal made its decision in Gillies I, Gillies filed a second lawsuit on July 13, 2011, this time against only CRC, but based on the same subject matter. (ER 118). The complaint (the Second Complaint ) included causes of action for declaratory relief, fraudulent transfer based on the misspelling of Gillies s first name in the foreclosure documents, a violation of California Civil Code , and injunctive relief. (ER ). CRC filed a motion to strike, based on the doctrine of res judicata. (ER 23-24). The trial court granted the motion to strike. (ER 24). Gillies appealed the decision to the California Court of Appeal. (ER 23-24). On September 6, 2012, the California Court of Appeal affirmed the trial court s ruling. (ER 23; see also Gillies v. California Reconveyance Co., 2012 WL (Cal. Ct. App., Sept. 6, 2012)). C. Gillies Files His Third Lawsuit in the United States District Court Three months after the California Court of Appeal issued its decision in Gillies II, Gillies filed his third lawsuit on December 5, 2012, resting on the same operative facts, this time in the United States District Court for the Central District of California. (ER 82). 9

17 Case: /28/2013 ID: DktEntry: 11 Page: 17 of 46 His complaint (the Third Complaint ) alleged three causes of action for wrongful foreclosure, quiet title, and declaratory and injunctive relief. (ER 82-93). As in Gillies I and II, Gillies again alleged that the Notice of Default and Notice of Trustee s Sale were invalid because the foreclosure documents spelled his first name as Dougles instead of Douglas. (See e.g. ER 88-90, 20-22, 26). Gillies again alleged that Chase was not the beneficiary under the deed of trust and therefore could not institute the nonjudicial foreclosure process. (ER 86, 7-8; ER 88, 17-18). D. Chase Files a Motion to Dismiss the Third Complaint Chase filed a motion to dismiss the Third Complaint based upon res judicata and, alternatively, based on the failure to state a cognizable claim for relief. (ER 45). Gillies filed an opposition. (ER 45). Gillies argued in his opposition that the California trial court judges, and California Courts of Appeal in Gillies I and Gillies II, made erroneous decisions in their prior rulings. (ER 58:1-3; 56:5-6; 59:15-16; 59:25-26; 59:27 61:20; 64:25-27; 65:13-16; 66:5-7). E. The District Court s Ruling on Chase s Motion to Dismiss the Third Complaint The District Court held a hearing on the motion to dismiss on February 7, (ER 45). At oral argument, Gillies argued that Chase s conduct throughout the three different lawsuits he filed demonstrated that Chase was not the lender because if Chase were the lender, it would have corrected the spelling error of 10

18 Case: /28/2013 ID: DktEntry: 11 Page: 18 of 46 Gillies s first name on the foreclosure documents (ER 16:17-17:2) even though the California Court of Appeal in Gillies I had held that Chase was the beneficiary, having succeeded to Washington Mutual s rights and obligations with respect to the subject loan. (ER 32-33). The District Court stated that [the claim] was litigated. It was litigated in state court. (ER 17:25 18:1). The District Court further stated [t]he problem is we have a judgment in state court below. I don t review state court judge decisions. (ER 16:8-10). The District Court issued a five page tentative ruling explaining how the matter was barred by res judicata, and how Gillies opposition to Chase s motion to dismiss triggered the Rooker- Feldman doctrine. (ER 4-8). VI. Summary of Argument The District Court s dismissal of Gillies Third Complaint was proper, and should be affirmed for several significant reasons. First, the Third Complaint is barred by res judicata. In the First Complaint Gillies filed in November 2009, he challenged whether Chase was the beneficiary under the Deed of Trust and whether Chase was the successor in interest to the Washington Mutual loan. (ER 32-33). The California Court of Appeal explicitly stated that Chase was the successor-in-interest to Washington Mutual and therefore was the beneficiary under the deed of trust. (Id.). In his Third Complaint, and as Gillies argues in his instant appeal, Gillies argued that Chase is not the beneficiary 11

19 Case: /28/2013 ID: DktEntry: 11 Page: 19 of 46 and cannot foreclose on the property. (ER 86-88). However, this issue was litigated in the California Court of Appeal, and because it was affirmed on appeal, it constituted a final judgment on the merits. Moreover, the First Complaint was filed against Chase (ER 146), as was the Third Complaint (ER 82), so there is privity of parties. There can be no clearer example of appropriate application of res judicata. Second, Gillies argument on appeal that Chase is not the beneficiary of the deed of trust, even for a slightly different reason, ignores the California Court of Appeal s decision in Gillies I specifically holding that Chase is the beneficiary. (ER 32-33). Gillies urges otherwise on the rationale that the beneficiary, pursuant to a provision in an unsigned adjustable rate note, 1 has the ability to correct clerical errors, such as the misspelling of Gillies s first name as Dougles instead of Douglas in the foreclosure documents and should have done so. 2 (See e.g. OB 14). Inasmuch as Gillies had the opportunity to make this argument and it involves the same subject matter as the previous lawsuits, he cannot escape the application of res judicata to this new theory as well. Third, Gillies asserted numerous arguments in his opposition to Chase s motion to dismiss as to how the California Superior Courts and the California 1 The adjustable rate note that Gillies signed, however, does not contain any such provision. (ER ). 2 Gillies does not explain why he failed to raise this argument in either of his two earlier lawsuits. 12

20 Case: /28/2013 ID: DktEntry: 11 Page: 20 of 46 Courts of Appeal made errors in their rulings in Gillies I and Gillies II. In effect, Gillies is appealing those decisions after he has exhausted his rights to appeal in state court. Because the District Court is barred under the Rooker-Feldman doctrine from reviewing state court judgments, the District Court did not err in granting the motion to dismiss with prejudice. Fourth, Gillies s resort to a constitutional attack on the nonjudicial foreclosure scheme in California Civil Code 2924 et seq. is unavailing. As a threshold matter, the statute does not implicate any state action a requisite element of any Fourteenth Amendment due process claim. This has been recognized for decades, dating back to the 1930 s. Gillies provides no contrary authority in his Opening Brief, and instead discourses on irrelevant case law from other jurisdictions that involve other states statutes that have no parallel in Section 2924 et seq. In any event, there is no evidence in the record of a violation of due process here, under the Fourteenth Amendment or otherwise. VII. Argument A. Standard of Review 1. Standard of Review on Appeal An order granting a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1030 (9th Cir. 2008); Leadsinger, 13

21 Case: /28/2013 ID: DktEntry: 11 Page: 21 of 46 Inc. v. BMG Music Publ g, 512 F.3d 522, 526 (9th Cir. 2008). A de novo standard of review is also applied to questions of res judicata. McClain v. Apodaca, 793 F.2d 1031, 1032 (9th Cir. 1996). 2. Res Judicata It is well settled that a federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered. Migra v. Warren City School Dist. Bd. Of Educ., 465 U.S. 75, (1984). Thus, federal courts apply the law of res judicata as adopted by the state that rendered the state-court judgment. Adam Bros. Farming, Inc. v. County of Santa Barbara, 604 F.3d 1142, 1148 (9th Cir. 2010). [T]he doctrine of res judicata rests upon the ground that the party to be affected... has litigated or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again to the harassment and vexation of his opponent. Citizens for Open Access Tide, Inc. v. Seadrift Association, 60 Cal. App. 4th 1053, 1065 (1998) (emphasis added). This is precisely what Gillies persists in doing. Accordingly, res judicata bars the litigation not only of issues that were actually litigated but also issues that could have been litigated. Federation of Hillside and Canyon Associations v. City of Los Angeles, 126 Cal. App. 4th 1180, 14

22 Case: /28/2013 ID: DktEntry: 11 Page: 22 of (2004) (emphasis added). It is irrelevant whether the causes of action in [the second] suit are distinct and different from those in the [first] lawsuit. Johnson v. Am. Airlines, Inc., 157 Cal. App. 3d 427, 432 (1984). [T]he question of whether a cause of action is identical for purposes of res judicata depends not on the legal theory or label used, but on the primary right sought to be protected in the two actions. The invasion of one primary right gives rise to a single cause of action. Id. Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different legal ground for relief. Id. (citations omitted). Res judicata bars a subsequent action when (1) the issues decided in the prior adjudication are identical with those presented in the later action; (2) there was a final judgment on the merits in the prior action; and (3) the party against whom the plea is raised was a party... to the prior adjudication. Pollock v. University of Southern California, 112 Cal. App. 4th 1416, 1427 (2003). In California, the rule is that the finality required to invoke the preclusive bar of res judicata occurs when the time to appeal has expired or when an appeal from the trial court judgment has been exhausted. Franklin & Franklin v. 7-Eleven Owners for Fair Franchising, 85 Cal. App. 4th 1168, 1174 (2000). 15

23 Case: /28/2013 ID: DktEntry: 11 Page: 23 of 46 B. The District Court Did Not Err In Granting The Motion To Dismiss Based on Res Judicata 1. The California Court of Appeal Already Determined in Gillies I That Chase Was the Beneficiary of the Deed of Trust Securing Gillies s Loan Gillies argues that this federal court action raises a more central issue that could only have been discovered as a result of Chase s conduct in the first two actions. (OB 20). According to Gillies, Chase cannot demonstrate that it is the beneficiary under the deed of trust or that it can locate the beneficiary. Gillies theory is based upon an unsigned adjustable rate note which provides the lender with a remedy to fix a clerical error. (OB 7; ER ). According to Gillies, because Chase refused to comply with this provision by changing Dougles to Douglas on the foreclosure documents, he somehow has new proof that Chase is not the beneficiary: Chase... was unable to contact the lender/beneficiary to request that a clerical error be corrected. Only Chase... could have known [it was] acting without the knowledge or consent of the only entity that could authorize foreclosure. (OB 14). Because Chase... [was] unable to contact the lender/beneficiary to request that a clerical error [of the foreclosure documents misspelling Gillies name] be corrected (OB 14), Chase has apparently demonstrated that it is not, and cannot locate, the beneficiary, thereby (in Gillies s logic) rais[ing] a plausible new theory. (OB 14, 23). The theory was previously available, however. 16

24 Case: /28/2013 ID: DktEntry: 11 Page: 24 of 46 As to this issue, the District Court properly concluded that the state court decisions [Gillies I and Gillies II] amply address all of the purportedly new claims, facts and theories Plaintiff contends are raised for the first time here. (ER 7). At the hearing on Chase s motion to dismiss, after Gillies argued that Chase is not the beneficiary, the District Court responded that [i]t was litigated. It was litigated in state court. (ER17:25 18:1). Gillies responded that [i]t was never discussed, (ER 18:2-3), but the record demonstrates otherwise. Therefore, the issue of whether Chase is the beneficiary is not a new issue and, indeed, was specifically addressed and definitively decided by the California Court of Appeal in Gillies I. It matters not on what basis the issue was previously decided. Gillies does not get the opportunity to present one theory and, if it does not yield the desired result, try another theory. McClain, supra, 793 F.2d at 1034 (a plaintiff cannot avoid the bar of res judicata by pleading a new legal theory in a subsequent lawsuit or seeking a different remedy for the alleged violation of the same primary right). In Gillies I, the Court of Appeals noted that Gillies argues... that Chase is not the mortgagee. He points out that Washington Mutual bank is named beneficiary of the trust deed. (ER 32; see also Gillies I, 2011 WL at *3). The Court of Appeal rejected the argument, stating: Here the trial court took judicial notice of the purchase and assumption agreement between the Federal Deposit Insurance Corporation (FDIC) as receiver for Washington Mutual Bank and Chase. The agreement provides that Chase purchases all right, title 17

25 Case: /28/2013 ID: DktEntry: 11 Page: 25 of 46 and interest of the Receiver in and to all of the assets of Washington Mutual Bank. The agreement also states that Chase specifically purchases all mortgage servicing rights and obligations of [Washington Mutual Bank]. The agreement is maintained on the FDIC s official government website, and is not reasonably subject to dispute. Thus it contains facts that may be judicially noticed. (Evid.Code, 452, subd. (h) [allows the court to take judicial notice of [f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy ].) There is simply no reasonable dispute that Chase is Washington Mutual Bank s successor-in-interest as to Gillies s trust deed. The trial court properly sustained Chase s demurrer to the fifth cause of action. (ER 32; Gillies I. at *3-4) (emphasis added). Thus, Gillies in fact presented the argument that Chase has no interest in the deed of trust in his first lawsuit, which he filed on November 25, 2009 and which resulted in a final judgment on the merits on April 11, 2011, when the Court of Appeal affirmed the trial court s ruling. Chase s defense of each of Gillies s baseless lawsuits in the California court system and again in the United States District Court hardly carries the meaning that Gillies would give it. Nevertheless, Gillies does not acquire the right to relitigate just because he conjures up a new basis for the same legal position he previously took. Even if the adjustable rate note upon which Gillies relies (ER ) were to be considered, it is irrelevant: (1) it is not signed by either party; and (2) it provides the lender not Gillies with a remedy to fix any clerical or ministerial 18

26 Case: /28/2013 ID: DktEntry: 11 Page: 26 of 46 mistake if the lender so demands. (ER ). It does not mandate that Chase fix any such error, and it does not give Gillies any right to force Chase to fix any such error. (Id.). Moreover, the adjustable rate note that Gillies did sign is different from the unsigned version in that it does not contain any such provision. (ER ). Gillies s new theory that Chase cannot be the lender because it will not correct the spelling error neither discredits the previous result nor does it destroy the res judicata bar to reargument of Chase s authority to foreclose. Finally, the doctrine of res judicata applies not only to the facts that were actually litigated, but also the issues that could have been litigated. Federal of Hillside and Canyon Associations, supra, 126 Cal. App. 4th at Gillies fails to explain why he could not have litigated his theory at an earlier time in either of his two prior lawsuits. Even assuming, arguendo, that Gillies s purported theory is new, it could have been litigated previously, and is thus barred under res judicata. The District Court accordingly did not err in dismissing the Third Complaint with prejudice. 2. A Demurrer Which Has Been Affirmed on Appeal Is A Final Judgment on the Merits Gillies argues throughout his Opening Brief that there was no final judgment on the merits. (See e.g. OB 11). Gillies is flat wrong, and he simply misconstrues California law. 19

27 Case: /28/2013 ID: DktEntry: 11 Page: 27 of 46 [I]n California the rule is that the finality required to invoke the preclusive bar of res judicata is not achieved until an appeal from the trial court judgment has been exhausted or the time to appeal has expired. Franklin & Franklin v. 7- Eleven Owners for Fair Franchising, 85 Cal. App. 4th 1168, 1174 (2000). Here, Gillies clearly exhausted his appeal of the trial courts judgments in the two state court cases. As stated above, Gillies appealed both his First Complaint and Second Complaint. (ER 23-34). In each appeal, the Court of Appeal affirmed the trial courts rulings. (Id.). Because Gillies exhausted his appeals following the sustaining of the demurrers, there was a final judgment on the merits. Gillies arguments in the Opening Brief do not change this axiomatic result. For instance, Gillies relies on Goddard v. Security Title Ins. & Guaranty Co., 14 Cal.2d 47, 52 (1939) for the proposition that a ruling on a demurrer is not a final judgment. (OB 17). Goddard, however, did not involve a judgment on the merits. In Goddard, there was a prior judgment of dismissal based upon a demurrer sustained for defects of form, under circumstances where it was possible to plead a good cause of action in another suit. Goddard, 14 Cal.2d. at 55 (emphasis added). The Court applied the rule that where the dismissal of an action does not purport to go to the merits of the case, the trial court has no authority to include within the judgment of dismissal an order which in effect precludes the plaintiff from 20

28 Case: /28/2013 ID: DktEntry: 11 Page: 28 of 46 instituting another action in which the merits of the controversy may be litigated. Id. at (emphasis added). The inquiry, therefore, is whether the demurrer was sustained on substantive grounds, which it was. Shuffer v. Board of Trustees, 67 Cal. App. 3d 208, 216 (1977). Here, as clearly evidenced by the Court of Appeal s decision in Gillies I, the demurrer was sustained because the pleaded allegations did not support any cause of action on the merits. (ER 27-34). Unlike Goddard, the demurrer was not sustained because Gillies fram[ed] the complaint on the wrong form of action. Goddard, supra, 14 Cal.2d. at 52. Because the prior action was dismissed on substantive grounds, Gillies reliance on Goddard is misplaced. Gillies exhausted his appeal of the trial court s ruling, which operates as a final judgment on the merits. Gillies further argues that res judicata does not apply when new facts are presented in the subsequent lawsuit (or, in Gillies case, the third lawsuit) which were not supplied in the prior suit. (OB 14-16) (citing to Rose v. Ames, 68 Cal. App. 2d 444 (1945) for the proposition that new facts existed in the second lawsuit because the first lawsuit was dismissed as being insufficiently alleged). This misstates the law since res judicata bars the relitigation of issues that were litigated or could have been litigated in a prior lawsuit. Federal of Hillside and Canyon Associations, supra, 126 Cal. App. 4th at

29 Case: /28/2013 ID: DktEntry: 11 Page: 29 of 46 Moreover, Gillies presented no facts in the Third Complaint that were not known or knowable at the time he filed his first action. In both the First Complaint and Third Complaint, Gillies argued that Chase was not the beneficiary and had no power to foreclose. Specifically, in Gillies I, Gillies argued that Chase was not the beneficiary of the deed of trust because the deed of trust lists Washington Mutual as the beneficiary, and Gillies also argued that the FDIC had no authority to grant Chase the assets of Washington Mutual. (ER 32, 33). In the Third Complaint, Gillies argued that Chase was not the beneficiary because Washington Mutual is listed as the lender on the deed of trust and there was no evidence that Chase was assigned the deed of trust. (ER 86, 7-8; ER 88, 18-19; ER 92, 34(a)). The allegations are nearly identical. The California Court of Appeal in Gillies I made an express finding that Chase is the beneficiary of the deed of trust. (ER 32). No new allegation or legal theory can change this decision, which was based on the merits of the allegations, not based on any procedural defect in pleading the allegations. 3. Gillies s Remaining Arguments Are Contradicted By the Record, Even Were They Otherwise Viable Although Gillies proffers a series of cursory arguments as to how the District Court erred in its written ruling when it found the complaint was barred by res judicata (ER 4-8), all are contrary to the law or the record. 22

30 Case: /28/2013 ID: DktEntry: 11 Page: 30 of 46 First, Gillies argues that the District Court erred when it stated The Complaint alleges that Chase erroneously foreclosed on Plaintiff s home because, according to Gillies, neither party contended that a foreclosure has occurred. (OB 11). However, the first cause of action in Gillies Third Complaint is explicitly titled wrongful foreclosure and, in that count, he challenges Chase s authority to foreclose. (ER 82, 86-90). Second, Gillies argues that the District Court erred when it stated Plaintiff previously filed suit against Chase in state court asserting identical and similar claims because, according to Gillies, the allegation in the federal complaint that Chase cannot identify the beneficiary was not raised in state court. (OB 11-12). Although the particular theory may not have been previously raised in state court, Gillies in both previous lawsuits asserted that Chase was not the beneficiary of his deed of trust and the issue has been put to rest through final adjudication. To quote the Court of Appeal in Gillies I : There is simply no reasonable dispute that Chase is Washington Mutual Bank s successor-in-interest as to Gillies s trust deed. (ER 32). Third, Gillies argues that the District Court erred when it held that the instant matter involves the same cause of action as his state lawsuits because, according to Gillies, the state court action alleged a failure to record a Notice of Default and the federal action alleges that Chase is not authorized by the 23

31 Case: /28/2013 ID: DktEntry: 11 Page: 31 of 46 beneficiary to foreclose. (OB 12). An examination of the record conclusively shows otherwise. In the First Complaint, Gillies alleged more than simply that a notice of default was not recorded. Gillies challenged whether Chase was the beneficiary (ER 29, 32-33), which is the same argument he makes on this appeal. Moreover, the First Complaint included a cause of action alleging (1) that a notice of default was never recorded, (2) a cause of action alleging that the notice of default was not filed in compliance with California Civil Code , (3) a cause of action alleging that Chase and California Reconveyance Company did not properly record the notice of trustee s sale, (4) a cause of action for an injunction to prevent Chase from foreclosing, and (5) a cause of action for quiet title. (ER ). Gillies argued on appeal that his name was not properly spelled on the notice of the default (ER 33; Gillies I, supra, 2011 WL at *4) and he also disputed whether Chase was the successor in interest to Washington Mutual. (ER 32; Gillies I, supra, 2011 WL at * 4). The Third Complaint also alleged a cause of action for quiet title based on the premise that Chase is not authorized to foreclose (ER 90-91), a cause of action for an injunction to prevent Chase from foreclosing (ER 91-92), and even included a nearly identical prayer as the prayer in the First Complaint. (Compare ER 93 to ER ). Moreover, the Third Complaint likewise asserted causes of action 24

32 Case: /28/2013 ID: DktEntry: 11 Page: 32 of 46 alleging that the Notice of Default and Notice of Trustee s Sale were invalid because the documents spell Gillies first name as Dougles instead of Douglas. (See e.g. ER 88-90, 20-22, 26). Similar to the allegations in his First Complaint, Gillies again alleged in his Third Complaint that Chase was not the beneficiary under the deed of trust and could not foreclose as it was never assigned any interest in the subject property. (ER 86, 7-8; ER 88, 18-19). Thus, contrary to Gillies characterization of the record in his Opening Brief, the complaints were nearly identical and involved the same causes of action for purposes of res judicata. The District Court did not err by finding that the lawsuits involved the same causes of action. Fourth, Gillies disingenuously argues that the District Court erred in abstaining from jurisdiction because, according to Gillies, the federal case does not challenge any decision of the California Court of Appeal. (OB 12-13). However, Gillies opposition to Chase s motion to dismiss expressly challenged the decision of the state court judges. (ER 58:1-3; 56:5-6; 59:15-16; 59:25-26; 59:27 61:20; 64:25-27; 65:13-16; 66:5-7). Thus, the District Court did not err. Fifth, Gillies argues that the District Court erred when it held this case supposedly raises a more central issue related to the foreclosure involving the recording of various documents because, according to Gillies, the central issue in this case is the allegation that Chase cannot identify or name the beneficiary. (OB 25

33 Case: /28/2013 ID: DktEntry: 11 Page: 33 of 46 13). As stated above in Section VII(B)(1), the District Court properly determined that the complaint was barred because the California Court of Appeal already determined that Chase was the beneficiary of the deed of trust. Sixth, Gillies argues that the District Court erred when it held It is beyond question that the instant matter involves the same causes of action as the state court actions because, according to Gillies, whether or not a Notice of Default was recorded has no bearing on a cause of action alleging that Chase is not authorized to foreclose. (OB 13). First, Gillies completely misconstrues the Court of Appeal s decision in Gillies I as the Court, in its eight page opinion, did more than address whether or not a notice of default had been recorded. (ER 27-34). Rather, the Court of Appeal held that there had been no violation of any of the nonjudicial foreclosure procedures, that Chase was the beneficiary of the deed of trust, and that the spelling error on the foreclosure documents fails to raise a material issue because no reasonable person would be confused by such a minor error. (ER 30-33). Moreover, it is facially apparent that both the First Complaint and the Third Complaint challenge whether Chase was authorized, as beneficiary of the deed of trust, to foreclose. (ER 30, 88). The District Court clearly did not err in finding that the complaints were similar. Seventh, Gillies argues that the District Court erred when it held that the complaint relies on the same facts that were previously held not to constitute a 26

34 Case: /28/2013 ID: DktEntry: 11 Page: 34 of 46 cause of action on the former demurrer because, according to Gillies, the federal complaint states facts that occurred after the demurrer in state court was sustained. (OB 13). As demonstrated above in Section VII(B)(1), the issue whether Chase is the beneficiary has been adjudicated with finality and the new facts pertaining to the content of an unsigned Adjustable Rate Note were ascertainable when Gillies I and II were decided. Eighth, Gillies argues that the District Court erred when it held that the two state complaints and the Complaint filed here allege virtually identical facts, all centering around Defendant s alleged wrongful conduct in foreclosing on Plaintiffs home because, according to Gillies, no foreclosure has been alleged or occurred. (OB 13). Again, Gillies alleged a cause of action for wrongful foreclosure in his Third Complaint. (ER 88-90). Gillies simply strains credulity when he states in his Opening Brief that he never alleged a foreclosure occurred. Accordingly, none of Gillies arguments in his Opening Brief provide a basis to reverse the District Court s ruling. The judgment should be affirmed. C. The Complaint Was Barred by the Rooker-Feldman Doctrine Gillies Third Complaint was also barred by the Rooker-Feldman doctrine because Gillies opposition to Chase s motion to dismiss repeatedly challenged the two California Court of Appeal s decisions affirming the trial courts rulings in Gillies I and Gillies II. 27

35 Case: /28/2013 ID: DktEntry: 11 Page: 35 of 46 As to the Rooker-Feldman issue, the District Court held [Gillies] first argues that this case should be able to move forward because the decisions rendered against him by the California Court of Appeal were in error. Obviously, this is not the suitable forum for those arguments, and Defendant properly discusses why the Rooker-Feldman doctrine applies. (ER 7). At the hearing on the motion to dismiss, the District Court stated [t]he problem is we have a judgment in the state court below. I don t review state court judge decisions. They are what they are. (ER 16:8-10). The District Court did not err in granting the motion to dismiss. Rooker- Feldman is a narrow doctrine, confined to cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments. Lance v. Dennis, 546 U.S. 459, 464 (2006); see also Wolfe v. Strankman, 392 F.3d 358, 363 (9th Cir.2004) (stating that the Rooker- Feldman doctrine bars a federal district court from exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgment ); Noel v. Hall, 341 F.3d 1148, 1164 (9th Cir.2003) ( If a federal plaintiff asserts as a legal wrong an allegedly erroneous decision by a state court, and seeks relief from a state court judgment based on that decision, Rooker-Feldman bars subject matter jurisdiction in federal district court ) 28

36 Case: /28/2013 ID: DktEntry: 11 Page: 36 of 46 The record amply demonstrates Gillies in his opposition made numerous statements about why the Superior Court and Courts of Appeal made erroneous decisions, including the following: Judge debellefeuille [the trial court judge in Gillies I] did not address the issue of the misspelled name at the demurrer hearing or in her order. (ER 58:1-2). The California courts decided to ignore the indexing problem and constructive notice as they found that there was actual notice. (ER 56:5-6). The indexing problem was not addressed by the trial judge in either case because the trial courts allegedly erred in not granting leave to amend the complaints. (ER 59:15-16). [T]he new issue of indexing was not raised in Gillies I because the demurrer in that case was sustained without leave to amend. (ER 59:25-26). The court of appeal misconstrued the case law which it relied on in Gillies II to dismiss the complaint based on res judicata. (ER 59:27). Gillies continued to analyze why the Court of Appeal in Gillies II was allegedly incorrect. (ER 59 60:13). The Court of Appeal in Gillies II applied a rule that is applicable to nonsuits, but not demurrers. (ER ). Gillies opposition proceeded 29

37 Case: /28/2013 ID: DktEntry: 11 Page: 37 of 46 to argue why the Court of Appeal was incorrect. (ER 60:17 61:20). The California Court of Appeal in Gillies I made an erroneous identification of the Trustor on the Notice of Default and the Notice of Trustee s Sale. (ER 64:25-27). The earlier conclusion of the trial court, which was to sustain a demurrer without leave to amend because the court could not foresee any way to amend the Complaint to state a cause of action, can be shown by subsequent pleadings to be erroneous. (ER 65:13-16). It is an abuse of discretion to sustain a demurrer without leave to amend if plaintiff shows there is a reasonable possibility any defect identified by defendant [sic] can be cured by amendment. (ER 66:5-7). [T]he court in Gillies I sustained defendant s demurrer based upon a finding that defendants had recorded a NOD, despite the fact that it was recorded under a fictitious name. (ER 64:14-15). Gillies also complains that his request in Gillies I to amend the Complaint to address the index issues was denied (ER 57:28 58:1) and that the court [in Gillies I] did not grant leave to amend. (ER 59:7). Finally, although the Court of Appeals in Gillies I already held that the Notice of Default was not defective (RJN, Ex. C), Gillies continued to argue why the Notice of Default was defective. (ER 62:11 63:3). 30