Larry M. Siegel Selwyn Gerber v. The Federal Home Loan Mortgage Corporation J.I. Kislak Mortgage Corporation Gunther Torriani Carolyn Paz

143 F.3d 525, 98 Daily Journal DAR 4661, 98 Cal. Daily Op. Serv. 3358, 39 Collier Bankr. Cas. 2d 1395, 1998 U.S. App. LEXIS 8782, 32 Bankr. Ct. Dec. (CRR) 695, 1998 WL 216902
Court of Appeals for the Ninth Circuit·Decided May 5, 1998·No. 97-55174·Published·Cited by 172 cases

Opinion

FERNANDEZ, Circuit Judge:

Larry M. Siegel appeals the district court’s grant of summary judgment in favor of Federal Home Loan Mortgage Corp. (“Freddie Mac”) in his tort and breach of contract action regarding foreclosures upon two properties referred to as the “Windbell property” and the “Dalton Place property.” Siegel claims that the district court erred when it concluded that this action is barred by res judicata, and when it awarded Freddie Mac attorney’s fees incurred in defending the action. 1 We affirm both the district court’s grant of summary judgment and its award of attorney’s fees.

BACKGROUND

On November 22, 1989, Siegel and Gerber, his partner, executed and delivered a Multifamily note (the Windbell note) in which they promised to pay the J.I. Kislak Mortgage Corporation (Kislak) the principal sum of $840,000 in monthly installments. The note was secured by a Deed of Trust, Assignment of Rents and Security Agreements, and by a Collateral Assignment of Leases. On November 27,1989, Siegel and Gerber executed and delivered another Multifamily note (the Dalton Place note) in which they promised to pay Kislak the principal sum of $900,000. That note was also secured by a Multifamily Deed of Trust, Assignment of Rents and Security Agreements, and a Collateral Assignment of Leases. The rider to the Dalton Place deed of trust provided that the borrower could sell or transfer his interest in the property without acceleration of the entire debt provided that “the transferee’s creditworthiness and management ability are satisfactory to Lender and the transferee has executed ... a written assumption agreement.” Kislak subsequently sold and assigned the notes and deeds of trust to Freddie Mac.

Siegel and Gerber experienced constant financial difficulty in maintaining the Dalton Place property. By the end of 1991, they attempted to sell the property. Two parties submitted offers — Andrew Hansen and Cunningham Capital Corporation. Freddie Mac determined that Hansen was an unacceptable buyer because of his lack of managerial experience, the condition of his other properties, and his limited financial resources. The second offer from Cunningham Capital Corpora *528 tion was withdrawn before Freddie Mac acted on it.

In December 1992, Siegel and Gerber defaulted on their obligations under the Wind-bell loan, and Freddie Mac foreclosed on that property. Seeking a deficiency judgment, Freddie Mae filed an action in federal district court in the Northern District of Texas. Pri- or to trial, Siegel declared bankruptcy. Sie-gel and Gerber also defaulted on the loan on the Dalton Place property.

Freddie Mac filed two proofs of claim against Siegel in the bankruptcy proceeding. One related to the Windbell property and the other to the Dalton Place property. Siegel did not file objections to those proofs of claim. Nor did the bankruptcy trustee. In March 1994, the bankruptcy court granted Freddie Mac relief from the stay so that it could foreclose on the Dalton Place property. On June 10, 1994, Siegel was discharged from bankruptcy, and that matter was closed on June 30, 1994. On August 2, 1994, Freddie Mac foreclosed on the Dalton Place property.

However, in April of 1994, Siegel and Gerber had already brought this action in the Superior Court of the State of California for the County of Los Angeles. Freddie Mac removed the action to the Federal District Court for the Central District of California in October, 1994. Freddie Mae then moved for summary judgment against Siegel on all claims because, it said, Siegel’s action was barred by the res judicata effect of the bankruptcy proceeding. 2 The district court granted Freddie Mac’s motion. After the district court granted the motion, Freddie Mac moved to recover attorney’s fees incurred in defending against Siegel’s claims. The district court granted that motion and denied Siegel’s subsequent motion for reconsideration. Siegel appealed.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to 12 U.S.C. § 1452(f). We have jurisdiction pursuant to 28 U.S.C. § 1291.

We review the district court’s grant of summary judgment de novo. See Trustees of Cal. State Univ. v. Riley, 74 F.3d 960, 963 (9th Cir.1996). In reviewing a grant of summary judgment, we must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there is any genuine issue of material fact and whether the district court correctly applied the relevant substantive law. See Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir.), amended by 125 F.3d 1281 (9th Cir.1997). The “preclusive effect of a prior judgment is a question of law subject to de novo review.” FDIC v. Jenson (In re Jenson), 980 F.2d 1254, 1256 (9th Cir.1992). In general, we review a district court’s award of attorney’s fees for an abuse of discretion. See Wing v. Asarco Inc., 114 F.3d 986, 988 (9th Cir.1997). However, we decide whether the district court applied the correct legal standard de novo. See Velarde v. PACE Membership Warehouse, Inc., 105 F.3d 1313, 1318 (9th Cir.1997). And, we review any element of legal analysis and statutory interpretation, which figures in the district court’s decision regarding attorney’s fees, de novo. See Corder v. Gates, 104 F.3d 247, 249 (9th Cir.1996).

DISCUSSION

A. Res Judicata

When Freddie Mac filed its claims in bankruptcy either Siegel or the trustee could have raised objections. They did not. Instead, in this separate case Siegel attempted to attack Freddie Mac’s right to foreclose and its other actions under the contract. The district court declared that he was barred by res judicata. He dubs that error; we disagree.

The “doctrine of res judicata bars a party from bringing a claim if a court of competent jurisdiction has rendered a final judgment on the merits of the claim in a previous action involving the same parties or their privies.” Robertson v. Isomedix, Inc. (In re Intl. Nutronics), 28 F.3d 965, 969 (9th Cir.1994). Thus, “‘[r]es judicata bars all grounds for recovery that could have been *529 asserted, whether they were or not, in a prior suit between the same parties on the same cause of action.’ ” Id. (alteration in original) (citation omitted). That applies to matters decided in bankruptcy. See id.

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Larry M. Siegel Selwyn Gerber v. The Federal Home Loan Mortgage Corporation J.I. Kislak Mortgage Corporation Gunther Torriani Carolyn Paz, 143 F.3d 525, 98 Daily Journal DAR 4661, 98 Cal. Daily Op. Serv. 3358, 39 Collier Bankr. Cas. 2d 1395, 1998 U.S. App. LEXIS 8782, 32 Bankr. Ct. Dec. (CRR) 695, 1998 WL 216902 (9th Cir. 1998).

143 F.3d 525 (Larry M. Siegel Selwyn Gerber v. The Federal Home Loan Mortgage Corporation J.I. Kislak Mortgage Corporation Gunther Torriani Carolyn Paz) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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