Neal v. Select Portfolio Servicing Inc.

Background

Ralph B. Neal’s case concerned residential property on Calco Creek Drive in San Jose. The opinion states that this was the fifth case Neal had initiated concerning that property. The earlier four cases ended in judgments for the defendants after the claims were dismissed without leave to amend. The court found that the current allegations and requested relief were materially the same, even though the claims had been given different names and JP Morgan Chase Bank, N.A. was newly included as a defendant.

Neal alleged inconsistencies in the loan balance and challenged the legal authority and validity of assignments involving the deed of trust. He also alleged that an assignment was “robo-signed” and that it was uncertain who had authority concerning the mortgage. Neal sought to stop foreclosure and obtain damages.

Judicial Notice

Chase asked the court to recognize various public records, including documents from the earlier federal and state proceedings and records concerning the mortgage trust. Because these materials were public records or were referenced in the complaint, the court granted Chase’s request for judicial notice.

Motion to Dismiss

Chase moved to dismiss on several grounds, including claim preclusion, lack of standing, and failure to state a claim. The court addressed only claim preclusion, also called res judicata, which generally prevents a party from relitigating claims that were already resolved.

The court applied three elements: whether the claims were identical, whether the earlier case ended in a final judgment on the merits, and whether the parties were legally connected closely enough for the earlier judgment to apply. It found all three elements satisfied. The current claims arose from the same set of mortgage and foreclosure facts as the earlier cases; the earlier dismissals for failure to state a claim were judgments on the merits for claim-preclusion purposes; and Chase had a sufficiently close legal relationship with the parties in the earlier proceedings because of its connection to the mortgage interests.

The court therefore found that the entire action was barred by claim preclusion. It stated that no new set of facts could change that conclusion and dismissed the action with prejudice.

Vexatious-Litigant Order

Chase also requested an order requiring Neal to obtain permission before filing future suits concerning the property’s mortgage. A vexatious-litigant order is a court restriction on repetitive or abusive litigation. The court found that Neal had notice and an opportunity to respond, that the record of his five cases was adequate, and that the repeated lawsuits were frivolous and harassing because they presented the same factual case after repeated dismissals.

The court declared Neal a vexatious litigant. It ordered that, before filing another federal suit based on allegations that he was excused from paying the mortgage or based on claims stemming from the Calco Creek Property mortgage, Neal must submit the proposed complaint, a filing-request letter, and a copy of the order. The court’s general duty judge must approve the complaint before the clerk may accept it for filing. The court stated that it could not bar Neal from suing in other federal districts or in state court, although defendants could bring the order to the attention of the supervising judge if he pursued the same matters there.

Disposition

Judge Edward J. Davila granted Chase’s motion to dismiss, dismissed the action with prejudice, declared Neal a vexatious litigant, ordered him to comply with the specified refiling restrictions, and directed the clerk to close the file.