Judge Rules “Game Over” In Dismissing A Homeowner’s Wrongful Foreclosure Suit After Multiple Prior Suits On The Same Issues Were Dismissed.

In Gillies v. JPMorgan Chase Bank, NA, (2017) 7 Cal.App.5th 907, the Second District Court of Appeals of California ruled that the “game is over” for a borrower that remained in possession of property for eight years after defaulting on payment of his mortgage.

In this case, Attorney Douglas Gillies (“Gillies”) appealed the loss of his 4th lawsuit challenging mortgage lender JPMorgan Chase’s (“Chase”) efforts to foreclose on his real property. Each lawsuit contained similar allegations of wrongful foreclosure actions and lack of standing to foreclose on the part of Chase.

In 2009, Gillies defaulted on a $500,000 loan from Chase. A deed of trust to Gillies’ property in Santa Barbara was recorded to secure that loan. Gillies subsequently defaulted on the loan payments. Prior to a foreclosure sale of the property, Gillies filed his first complaint alleging that the notice of mortgage default was not properly recorded, and that Chase and its trustee (California Reconveyance Company (“CRC”)) did not properly record the notice of sale. Gillies’ complaint was dismissed for failure to state facts sufficient to constitute a cause of action.

In 2011, CRC again recorded a notice of trustee’s sale. Gillies filed his second action, alleging that that the notice of default was defective and that Chase violated code section 2923.52, part of the California Foreclosure Prevention Act, by giving premature notice of sale.  Again, the trial court dismissed Gillies’ complaint. The dismissal was affirmed at the appellate level.

In 2012, CRC recorded its 3rd notice of trustee’s sale. Gillies filed a third lawsuit against Chase, this time in federal court. He offered allegations similar to those in his previous suits, including an argument that he should prevail because his name was misspelled as “Dougles” rather than “Douglas” in the notice. Once again, Gillies’ complaint was dismissed by the trial court, and dismissal was affirmed on appeal to the 9th Circuit.

In 2015, a new trustee recorded a 4th notice of trustee’s sale. Gillies filed his 4th complaint. He alleged violations of the Homeowners Bill of Rights, lack of standing to foreclose, unlawful substitution of trustee, fraud, injunctive relief, and damages. He also obtained a temporary restraining order and filed an application for a preliminary injunction. Chase once again demurred, arguing that none of Gillies’ allegations stated facts sufficient to constitute a cause of action. The trial court found for Chase and sustained the demurrer, dismissing the case without leave to amend. The appellate court affirmed with this decision.

Stating that, “Somewhere along the line, litigation must cease,” the Court explained the doctrine of res judicata (claim preclusion). Under the doctrine, “all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief.” Weikel v. TCW Realty Fund II Holding Co. (1997) 55 Cal.App.4th 1234.  In this case, Res judicata applied because while Gillies used different legal theories in each of his lawsuits, they all sought to vindicate the same “primary right.” A plaintiff’s primary right is the right to be free from a particular injury. Here, Gillies tried four times to vindicate the same primary right with his different theories of wrongful foreclosure.

In a final admonishment, the Court sent a message to litigants that fail to comply with the final judgments of courts by stating “[n]o litigant has an entitlement to file a lawsuit seeking relief from an alleged wrong and then not follow the court’s ruling denying relief. By submitting to the court to resolve a dispute, a litigant who is willing to abide by an order granting relief must be willing to abide by an order denying relief. This is lost upon Gillies. The sanctity and integrity of a final judgment must be honored or there is no such thing as a final judgment.” (See People v. Barragan, (2004) 32 Cal.4th 236, 255.)

 

 ©2017 Miles J. Dolinger.  This article is not intended to and does not constitute legal advice or a solicitation for the formation of an attorney-client relationship.