SCV-259061, Watland v. Deutsche Bank National Trust Company

Defendant’s Demurrer to Complaint is overruled.

It is not clear as a matter of law that res judicata from the adjudication of SCV-252322 (“the Prior Action”) bars Plaintiffs’ claims.  The specific issue, facts, and legal theories presented here were not raised or adjudicated in the Prior Action.  Even assuming that the cases do involve the same “claim” for purposes of res judicata, the Prior Action was resolved on demurrer due to failure to plead sufficient facts and on the basis that the foreclosure sale had not yet taken place, the latter being the emphasis of the ruling by the court of appeal.  Plaintiffs filed this action after the foreclosure sale had occurred, eliminating the fundamental basis for the outcome of the Prior Action, presenting completely new circumstances.  If the original case is dismissed on a general demurrer for formal defects in pleadings or simply due to failure to allege sufficient facts, as opposed to a defense actually disclosed on the face of the pleadings, res judicata will not bar the subsequent case.  Goddard v. Security Title Ins. & Guarantee Co. (1939) 14 Cal.2d 47, 52; Keidatz v. Albany (1952) 39 Cal.2d 826, 828.  Plaintiffs also are not estopped from claiming that Defendant lacked authority to foreclose merely because Plaintiffs signed a modification agreement identifying Defendant as lender.  This argument is groundless here because this is a factual question beyond the pleadings while the modification agreement does not necessarily mean that Plaintiffs agreed or admitted that Defendant was the lender.  On the facts alleged, it is possible that Plaintiffs only signed the agreement due to ignorance about the issue or facts showing that Defendant was not the true lender.  Plaintiffs may simply have been misled into believing that Defendant had authority to make the modification agreement.  The court notes that in the Prior Action the appellate court itself stated that Plaintiffs could solve this problem by explaining away their supposed admission.


Request for judicial notice is granted.