Opinion
A146795
08-08-2017
EUEL G. ALLEN, Plaintiff and Appellant, v. SELECT PORTFOLIO SERVICING, INC. et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG14727984)
Plaintiff Euel G. Allen appeals from a judgment of dismissal following the sustaining of demurrers to his second amended complaint by defendants U.S. Bank, National Association (US Bank), Select Portfolio Servicing, Inc. (Select Portfolio), and Albertelli Law Partners California P.A. (ALAW) (collectively defendants). On appeal, plaintiff contends he alleged sufficient facts to support numerous causes of action, including wrongful foreclosure. We affirm the judgment of dismissal.
BACKGROUND
In October 2006, plaintiff obtained a $448,000 loan from United Financial Mortgage Corp. (United Financial), which was secured by a deed of trust that identified First American Title (First American) as the "trustee" and identified Mortgage Electronic Registration Systems, Inc. (MERS) as "a nominee" of the lender (and it's successors and assigns) and as "beneficiary" under the security instrument. As such, MERS was authorized to exercise any of the lender's rights, including the right to foreclose. The deed of trust was recorded the same month.
Plaintiff attached copies of the pertinent loan and foreclosure documentation to his second amended complaint. We therefore consider, as did the trial court, the content of these documents in assessing the legal sufficiency of plaintiff's claims.
More than two years later, on January 20, 2009, MERS (as nominee of United Financial) executed an assignment of "all beneficial interest" in the deed of trust to LaSalle Bank NA (LaSalle) as trustee for Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA2 Trust (the securitized trust). This assignment by MERS of United Financial's beneficial interest in the deed of trust was signed by Deborah Brignac, "Vice President." The same day, LaSalle as trustee of the securitized trust (by JPMorgan Chase Bank as its attorney-in-fact), executed a substitution of trustee, substituting California Reconveyance Company (California Reconveyance) as trustee under the deed of trust. This substitution by LaSalle as trustee of the securitized trust (by JPMorgan Chase as attorney-in-fact) was also executed by Brignac, as "Vice President." Brignac, thus, signed as vice president of both MERS and JPMorgan Chase. Also on the same day, California Reconveyance issued a notice of default and election to sell. This notice by California Reconveyance was signed by Colleen Irby, as "Assistant Secretary." All three documents—the assignment of the beneficial interest in the deed of trust, the substitution of trustee under the deed of trust, and the notice of default and election to sell—were recorded two days later, on January 22, 2009.
"The mortgage securitization process has been concisely described as follows: 'To raise funds for new mortgages, a mortgage lender sells pools of mortgages into trusts created to receive the stream of interest and principal payments from the mortgage borrowers. The right to receive trust income is parceled into certificates and sold to investors, called certificateholders. The trustee hires a mortgage servicer to administer the mortgages by enforcing the mortgage terms and administering the payments. The terms of the securitization trusts as well as the rights, duties, and obligations of the trustee, seller, and servicer are set forth in a Pooling and Servicing Agreement ("PSA").' " (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 930, fn. 5 (Yvanova).)
In April, California Reconveyance issued and recorded a notice of a trustee's sale. Brignac signed this notice by California Reconveyance as "Vice President." At this juncture, plaintiff owed over $520,000 in principle, interest, and other charges.
Three years later, in March 2012, California Reconveyance issued and recorded another notice of trustee's sale. This document by California Reconveyance was signed by Derek Wear-Renee, "Assistant Secretary."
Two months later, in May 2012, MERS, as nominee for the lender United Financial executed and recorded a "corporate assignment" of the deed of trust to defendant US Bank, as successor trustee to Bank of America, as successor by merger to LaSalle as trustee of the securitized trust. This assignment by MERS conveyed, granted, sold, assigned, and transferred the deed of trust "without recourse, representation or warranty, together with all right, title and interest secured thereby, all liens, and any rights due or to become due" and was signed by Pearl M. Burett, "Vice President."
The following year, in July 2013, California Reconveyance executed a third notice of trustee's sale. Plaintiff was now in arears for over $640,000.
In February 2014, US Bank (by its attorney-in-fact defendant Select Portfolio) as trustee of the securitized trust, executed and recorded a substitution of trustee, substituting defendant ALAW (in place of California Reconveyance) as trustee under the deed of trust.
The following month, in March, ALAW signed and recorded another notice of trustee's sale, showing plaintiff owed over $650,000.
In June, plaintiff filed a complaint alleging 10 causes of action, including wrongful foreclosure. In October, he filed a first amended complaint alleging nine causes of action, many of them the same as in his original complaint.
The following month, in November 2014, the foreclosure sale took place. US Bank was the successful bidder, and a trustee's deed upon sale was recorded on November 24, 2014.
In December, defendants US Bank (the trustee of the securitized trust) and Select Portfolio (US Bank's attorney-in-fact) demurred on the grounds plaintiff failed to allege facts sufficient to support any cause of action, including because he failed to allege tender and lacked standing to challenge the securitization of his loan. Four months later, in April 2015, the trial court sustained the demurrers with leave to amend, with the caveat that plaintiff could flesh out or drop any of the causes of action he had alleged in his first amended complaint, but he could not add any new causes of action.
Pursuant to the trial court's grant of leave to amend, plaintiff filed a second amended complaint. He alleged six causes of action: wrongful foreclosure, violations of Civil Code sections 2924.17 and 2937 et seq., violation of Business and Professions Code section 17200, slander of title, and quiet title.
All further statutory references are to the Civil Code unless otherwise indicated.
The crux of plaintiff's second amended complaint is three-fold: He claims the assignment of his loan to the securitized trust was defective because it occurred after the closing date of the trust, with the result that the transferee entity and any of its successors and agents lacked authority to conduct a foreclosure sale. He claims the 2009 securitization documents were "robo-signed" by Brignac and "forged," and therefore were legally ineffective. And he claims the foreclosure sale was conducted in violation of numerous state statutes.
Plaintiff's second amended complaint shares many of the features described by the Court of Appeal in Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802 (Mendoza), which addressed the sufficiency of another wrongful foreclosure complaint filed by plaintiff's attorneys here. Said that court, "[t]he general allegations in the second amended complaint contain a long dissertation on the evils of Wall Street's greed and the securitization of predatory loans. Plaintiff's description of foreclosure abuse generally, as extracted from the popular media, is fully developed, but [his] allegations of the specific flaws in the securitization . . . [process] are quite sparse." (Id. at p. 807.)
US Bank (the trustee of the securitized trust), Select Portfolio (US Bank's attorney-in-fact) and ALAW (the most recent trustee under the deed of trust) demurred to the second amended complaint on the grounds plaintiff still failed to alleged facts sufficient to support any cause of action, including because he failed to allege tender and lacked standing. The trial court sustained the demurrers without leave to amend, ruling plaintiff failed to "allege tender or facts showing its legal inapplicability," failed to allege the fraud-related causes of action with particularity, failed to allege standing, and failed to "state facts sufficient to constitute a cognizable cause or causes of action against Defendants."
DISCUSSION
Scope of Review
Plaintiff challenges the dismissal not only of the causes of action he alleged in his second amended complaint, but also of causes of action he alleged in his first amended complaint but did not reallege in his second amended complaint, namely for breach of security interest, intentional infliction of emotional distress and declaratory relief. If the trial court had not granted plaintiff leave to re-allege these causes of action in his second amended complaint, plaintiff could, indeed, challenge their dismissal on appeal. But the court did not foreclose plaintiff from re-alleging these causes of action. Accordingly, he dropped these causes of action on his own accord, and therefore we will not consider them on appeal. (See Mendoza, supra, 6 Cal.App.5th at p. 821, fn. 6; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72 [appellate court will not consider allegations of a superseded complaint, except where trial court has denied leave to include those allegations in the amended complaint].)
We likewise need not, and do not, consider defendants' arguments in connection with these previously alleged, but dropped, causes of action.
Plaintiff also suggests this should be analyzed as a pre-foreclosure sale case, despite the fact the foreclosure sale indisputably took place nearly six months before he filed the operative second amended complaint. Clearly, any "pre-foreclosure" claims are moot. Furthermore, plaintiff, himself, alleges in his second amended complaint that he is "challenging the validity of the foreclosure sale of his residential property which occurred in Alameda County on or about November 19, 2014." We therefore analyze this as a post-foreclosure sale case.
Our standard of review is well-established: "The purpose of a demurrer is to test the sufficiency of the pleadings to state a cause of action as a matter of law. (Kan v. Guild Mortgage Co. (2014) 230 Cal.App.4th 736, 740. . . .) We must assume the truth of all properly pleaded facts as well as those that are judicially noticeable. (Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252, 1255. . . .) We are not concerned with plaintiff's ability to prove the allegations or with any possible difficulties in making such proof. Our review is de novo. (Aguilera v. Heiman (2009) 174 Cal.App.4th 590, 595. . . .) Where, as here, the trial court sustains the demurrer without leave to amend, we must decide whether there is a reasonable possibility the plaintiff can cure the defect with an amendment. (Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 813 [(Saterbak)]. . . .) If we find that an amendment could cure the defect, we must find the court abused its discretion and reverse. If not, the court has not abused its discretion. Plaintiff bears the burden of proving an amendment would cure the defect. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081. . . .)" (Mendoza, supra, 6 Cal.App.5th at p. 809.)
Wrongful Foreclosure
"To obtain the equitable set-aside of a trustee's sale or maintain a wrongful foreclosure claim, a plaintiff must allege that (1) the defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a mortgage deed of trust; (2) the plaintiff suffered prejudice or harm; and (3) the plaintiff tendered the amount of the secured indebtedness or was excused from tendering." (Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062 (Chavez).) Because defendants have consistently maintained, and the trial court twice ruled, that plaintiff cannot proceed on his wrongful foreclosure claim in the absence of alleging tender, we turn immediately to that potentially dispositive issue.
"It is settled that an action to set aside a trustee's sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security. [Citations.] This rule is premised upon the equitable maxim that a court of equity will not order that a useless act be performed. 'Equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idly and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.' " (Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 578-579 (Arnolds).) Courts have held the tender rule applies to any cause of action " 'implicitly integrated' " with an irregular, and thus, voidable foreclosure sale. (Id. at p. 579; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 121 [cause of action for breach of oral agreement to postpone trustee's sale was implicitly integrated with the voidable sale and therefore subject to the tender rule].) "A cause of action 'implicitly integrated' with the irregular sale fails unless the trustor can allege and establish a valid tender." (Arnolds, at p. 579.)
However, there are now well-"[r]ecognized exceptions to the tender rule." (Chavez, supra, 219 Cal.App.4th at p. 1062.) These include "when[:] (1) the underlying debt is void, (2) the foreclosure sale or trustee's deed is void on its face, (3) a counterclaim offsets the amount due, [or] (4) specific circumstances make it inequitable to enforce the debt against the party challenging the sale." (Ibid.)
Plaintiff does not dispute that he has never alleged tender, and he makes no claim he can do so. Rather, he contends he comes within exceptions to the rule. Although he makes an amalgam of assertions in this regard, plaintiff basically advances four theories:
The 2009 assignment of his deed of trust to the securitized trust was "void." Plaintiff alleges the securitized trust "closed" in 2007 and therefore the 2009 recorded assignment of his deed of trust by MERS (as nominee of the lender, United Financial) to LaSalle (as trustee of the securitized trust) was "void." This means, according to plaintiff, that neither LaSalle nor any subsequent entity had authority to act on behalf of the securitized trust and therefore the subsequent assignments, substitutions, and notices issued in connection with the foreclosure sale were also all "void."
Recent California law uniformly holds, however, that most asserted deficiencies in the securitization process, including an allegedly late assignment to a securitized trust, render the transaction "voidable" at the election of the trust and the mortgagor has no standing to pursue such claims. (E.g., Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 43 (Kalnoki); Mendoza, supra, 6 Cal.App.5th at pp. 811-817; Saterbak, supra, 245 Cal.App.4th at p. 815.) Mendoza's discussion of this issue is particularly thorough, and we agree with it entirely. (Mendoza, at pp. 811-817.) Thus, at best, plaintiff's allegations of defects in the assignment of the deed of trust to the securitized trust describe an assignment that was "voidable"—allegations that are insufficient to support a wrongful foreclosure claim and an exception to the tender rule. (Ibid.)
California law also uniformly holds, contrary to plaintiff's assertion, that an assignment need not be recorded at the time it is made. (Haynes v. EMC Mortgage Corp. (2012) 205 Cal.App.4th 329, 336; Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 122.) Accordingly, plaintiff gets no additional mileage out of his allegations that the 2009 "recorded" assignment occurred after the trust's 2007 closing date.
Plaintiff also claims MERS "twice" assigned the deed of trust (first to LaSalle and secondly to US Bank) and the "second" assignment was therefore necessarily "void" because, at that point, MERS no longer had any interest to assign. The first assignment, signed by MERS (as nominee of the lender, United Financial), conveyed "all beneficial interest" under the deed of trust to LaSalle (trustee of the securitized trust). The second assignment, also signed by MERS (as nominee of the lender, United Financial), was entitled a "corporate assignment" and conveyed and granted "all right, title and interest secured thereby" to US Bank as successor trustee to Bank of America as successor trustee by merger to LaSalle. Accordingly, the second assignment appears to have been an assignment of United Financial's legal interest. In any case, it was an assignment to the same entity, i.e., the securitized trust. That the securitized trust's institutional trustee may have changed is immaterial. Indeed, the assignment recites that the new institutional trustee, US Bank, was the legal successor to the initial institutional trustee. Accordingly, this is not a case like Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 557 (Sciarratta), where the plaintiff alleged her loan was first assigned to Deutsche Bank National Trust Company, trustee for the "Long Beach Mortgage Loan Trust 2006-6," and was subsequently assigned to Bank of America, as successor by merger to LaSalle as trustee for "WaMu Mortgage Pass-Through Certificates Series 2005-AR19." The plaintiff in Sciarratta thus alleged conveyances to two different securitized trusts and therefore sufficiently alleged the second assignment was entirely "void" and the entity attempting to foreclose pursuant to that assignment had no authority to do so. (Id. at pp. 563-564.) No such problem is alleged here.
Yvanova, supra, 62 Cal.4th 919, does not assist plaintiff. In that case, the Supreme Court held a mortgagor can challenge a defect in an assignment to a securitized trust that renders the assignment void, but not a defect that renders the assignment merely voidable. (Id. at pp. 923, 937-939.) As the Supreme Court explained, a voidable contract or assignment can be ratified by the parties and thereby be imbued with full legal force and effect. (Id. at pp. 929-930.) Only the parties to the agreement have the power to ratify or extinguish; consequently, allowing a borrower to challenge an assignment based on a defect that only renders it voidable would allow the borrower to exercise rights belonging exclusively to the parties to the assignment. (Id. at p. 936.) The Supreme Court did not address, however, what alleged defects render an assignment "void" and what alleged defects render an assignment only "voidable." (Id. at pp. 931, 943; see Mendoza, supra, 6 Cal.App.5th at pp. 810-811 ["By the Supreme Court's own characterization, its holding in Yvanova is a narrow one."].) The courts of appeal, however, have explored that precise issue and, as discussed above, have uniformly concluded the kinds of defects in the securitization process plaintiff alleges here render an assignment only voidable, not void.
Nor does Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 (Glaski), assist plaintiff. In that case, the Court of Appeal relied on an unpublished New York trial court decision, Wells Fargo Bank, N.A. v. Erobobo (Apr. 29, 2013, No. 31648) 2013 WL 1831799, to conclude an assignment after the closing date of a securitization trust rendered the assignment void. However, after Glaski was decided, the New York appellate court reversed Erobobo, holding "a post-closing transfer is not void, but only voidable." (Mendoza, supra, 6 Cal.App.5th at p. 812.) Accordingly, the California courts of appeal have since uniformly rejected Glaski's reasoning on this point and held "an untimely assignment to a securitized trust made after the trust's closing date is . . . merely voidable." (Saterbak, supra, 245 Cal.App.4th at p. 815; accord Kalnoki, supra, 8 Cal.App.5th at p. 43; Mendoza, at pp. 811-817 [discussing Glaski at length and explaining why its holding on voidness has been uniformly rejected by New York courts, the federal courts and the California courts of appeal].)
In sum, under Yvanova and now uniform Court of Appeal authority, plaintiff lacks standing to challenge the securitization process and, thus, cannot utilize such claims to avoid the tender rule.
Robo-signing caused the securitization process to be "void." In addition to alleging that the deed of trust was assigned to the securitized trust too late, plaintiff alleges Deborah Brignac "fraudulently" robo-signed 2009 documents, specifically the assignment to LaSalle (as trustee of the securitized trust) she signed as vice-president of MERS (the nominee of the lender, United Financial), the substitution of trustee installing California Reconveyance as trustee under the deed of trust she signed as vice-president of JP Morgan Chase as attorney-in-fact for LaSalle, and the first notice of sale she signed as vice-president of California Reconveyance. Plaintiff additionally labels these as "forged" documents, essentially claiming it is impossible that Brignac could have been vice-president of all three entities and she therefore could not have had the authority to sign on behalf of them. According to plaintiff, this alleged lack of authority also rendered the securitization of the loan, and every act and notice thereafter, "void."
We again agree with Mendoza that a plaintiff cannot create standing to challenge the securitization process by labeling allegedly robo-signed documents as having been "forged." "Although the robo-signing allegation has been launched in many cases, plaintiff fails to cite any authority in which a court set aside a trustee's sale based on a robo-signed document. To the contrary, a federal court explained: '[T]o the extent that an assignment was in fact robo-signed, it would be voidable, not void, at the injured party's option.' (Pratap v. Wells Fargo Bank, N.A. (N.D.Cal. 2014) 63 F.Supp.3d 1101, 1109.) The bank, not the borrower would be the injured party. (Ibid.)" (Mendoza, supra, 6 Cal.App.5th at p. 819 [also discussing other cases reaching the same result].)
Accordingly, plaintiff cannot rely on his robo-signing allegations to avoid the tender rule.
Failure to comply with statutory provisions governing the foreclosure process. Throughout his complaint, plaintiff alleges violations of statutory provisions governing the nonjudicial foreclosure process. He alleges, for example: "Recently the servicing rights . . . were transferred to [Select Portfolio], without notice" and in "violation of . . . [section] 2937 et seq." "[H]e did not receive any letters and/or notices from JPMorgan and/or [California Reconveyance] including the [Notice of Default] as prescribed by [section] 2924 et seq." It "appears that Plaintiff's loan servicer was changed and new Loan Number was assigned, without notice" to him "in violation of [section] 2937 et seq." Following postponements of the foreclosure sale, he received no new notices of sale "pursuant to Section 2924g." Because the securitization process was allegedly void, defendants violated section 2924, subdivision (a)(6). Because of alleged "robo-signing," the foreclosure sale violated section 2924.17, subdivision (a). "Defendants cannot prove that the non-judicial foreclosure . . . strictly complied with the tenets of . . . sections 2923.5, 2923.6, 2924, et seq., and 2937 et seq." Defendants failed to comply with the "Notice and Contact requirements of Section 2923.5." He claims these alleged statutory violations rendered the foreclosure documentation "fraudulent and defective" and the foreclosure sale "VOID, not just voidable," thus making the tender rule inapplicable.
While plaintiff lists section 2923.6 as among the alleged statutory violations, this statute, which was amended in 2012 as part of the "Homeowners Bill of Rights," prohibits a lender from proceeding with a foreclosure sale while it is working with the borrower on a loan modification—in short, the statute prohibits the practice of "dual tracking." (See Majd v. Bank of America, N.A. (2015) 243 Cal.App.4th 1293, 1302-1303 [plaintiff could base wrongful foreclosure and unfair business claims on violation of section 2923.6's dual tracking prohibitions]; Monterossa v. Superior Court (2015) 237 Cal.App.4th 747, 752-753.) Plaintiff, however, makes no allegations he asked for a loan modification, let alone, that defendants engaged in dual tracking.
Preliminarily, we observe plaintiff's allegation that defendants "cannot prove that the non-judicial foreclosure . . . strictly complied with" the nonjudicial foreclosure statutes misapprehends the general rule—that it is the foreclosed plaintiff's burden, not the defendant's burden, to adequately plead and prove that a nonjudicial foreclosure sale is void due to procedural irregularities. "The purchaser at a nonjudicial foreclosure sale generally 'receives title under a trustee's deed free and clear of any right, title or interest of the trustor.' [Citation.] 'If the trustee's deed recites that all statutory notice requirements and procedures required by law for the conduct of the foreclosure have been satisfied, a rebuttable presumption arises that the sale has been conducted regularly and properly; this presumption is conclusive as to a bona fide purchaser.' " (Kalnoki, supra, 8 Cal.App.5th at p. 45, quoting Moeller v. Lien (1994) 25 Cal.App.4th 822, 831 (Moeller).)
Here, the trustee's deed upon sale states: "All requirements of law regarding the mailing of copies of notices or the publication of a copy of the Notice of Default or the personal delivery of the copy of the Notice of Default and the posting and publication of copies of the Notice of a Sale have been complied with." Similarly, plaintiff, himself, alleged that the notice of default and election to sell stated: " 'The beneficiary or its designated agent declares that it has contacted the borrower, tried with due diligence to contact the borrower as required by California Civil Code section 2923.5, or the borrower has surrendered the property to the beneficiary or authorized agent, or is otherwise exempt from the requirements of § 2935.5.' " Thus, even if the presumption of regularity is not conclusive as to defendants, it weighs in their favor, and plaintiff cannot succeed on a vacuous allegation that "[d]efendants cannot prove" statutory compliance. We therefore turn to the specific statutory violations that plaintiff alleges rendered the foreclosure process and sale "void," bringing him within exceptions to the tender rule.
Section 2923.5: Plaintiff alleges defendants failed to contact him "to assess his financial situation" as required by section 2923.5. "The key text of section 2923.5—'key' because of the substantive obligation it imposes on lenders—basically says that a lender cannot file a notice of default until the lender has contacted the borrower 'in person or by telephone.' [Citation.] Thus an initial form letter won't do. To quote the text directly, lenders must contact the borrower by phone or in person to 'assess the borrower's financial situation and explore options for the borrower to avoid foreclosure.' " (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 221 (Mabry).)
The January 2009 notice of default and election to sell, the April 2009 notice of trustee's sale, the March 2012 notice of trustee's sale, the July 2013 notice of trustee's sale, and the March 2014 notice of trustee's sale all recited compliance with section 2923.5. Accordingly, the gist of plaintiff's claim as to this statutory provision is that defendants repeatedly lied about, and the documents falsely represented, compliance with the statute.
However, once a foreclosure sale has taken place—as has happened here—the borrower has no claim under section 2923.5. "The right of action [under section 2923.5] is limited to obtaining a postponement of an impending foreclosure to permit the lender to comply with section 2923.5." (Mabry, supra, 185 Cal.App.4th at pp. 214, 223-224, 231-235 [so holding to avoid federal preemption problems]; accord Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526 (Stebley) ["Civil Code section 2923.5 does not provide for damages, or for setting aside a foreclosure sale, nor could it do so without running afoul of federal law."].)
Accordingly, plaintiff cannot rely on section 2923.5 to support an exception to the tender rule. (See Stebley, supra, 202 Cal.App.4th at p. 526.)
Sections 2924, subdivision (a)(5) , and 2924g: Plaintiff alleges that after the foreclosure sale was postponed, as it was on numerous occasions, defendants failed to provide a new notice of sale, thus violating sections 2924, subdivision (a)(5), and 2924g.
Enacted as part of the California Foreclosure Prevention Act, effective May 21, 2009, section 2924, subdivision (a)(5), states in pertinent part: "Until January 1, 2018, whenever a sale is postponed for a period of at least 10 business days pursuant to Section 2924g, a mortgagee, beneficiary, or authorized agent shall provide written notice to a borrower regarding the new sale date and time, within five business days following the postponement." Section 2924g provides, in turn, "[i]n the event that the sale proceedings are postponed for a period or periods totaling more than 365 days, the scheduling of any further sale proceedings shall be preceded by giving a new notice of sale in the manner prescribed by Section 2924f." (§ 2924g, subd. (c)(2).) It further provides that "[t]he notice of postponement and the reason therefor shall be given by public declaration by the trustee at the time and place last appointed for sale" and the public declaration "shall also set forth the new date, time and place of sale" and that "[n]o other notice of postponement need be given." (Id., subd. (d).)
While defendants US Bank and Select Portfolio insist plaintiff "continu[es] to misinterpret" section 2924g as requiring a new notice of sale that has been postponed, they disregard the fact plaintiff quotes the language of section 2924, subdivision (a)(5), which speaks in terms of "notice to the borrower" of the "new sale date and time," even though he cites section 2924g, which, as discussed above, speaks in terms of the "notice of postponement."
As we have observed, all of the operative foreclosure documents recite compliance with notice requirements. So, again, the gist of plaintiff's claim as to these statutory provisions is that defendants repeatedly lied about, and the documents falsely represented, compliance with these statutes.
But plaintiff's claim that defendants did not, in fact, comply with section 2924, subdivision (a)(5), and section 2924g, does not support his assertion that this rendered the foreclosure documentation and foreclosure sale "void." Indeed, the remainder of subdivision (a)(5) states: "Failure to comply with this paragraph shall not invalidate any sale that would otherwise be valid. . . ." (§ 2924, subd. (a)(5).) Accordingly, at most, noncompliance with these statutes renders the sale voidable, not void ab initio. (See Chavez, supra, 219 Cal.App.4th at p. 1063 [allegation of improper notice of trustee's sale was claim that foreclosure sale was "voidable and subject to the tender requirement"].)
Additionally, plaintiff fails to allege how he was prejudiced by the alleged failure to provide notice of the final sale date. Although plaintiff alleges he did not receive "any" of the notices issued and recorded by California Reconveyance, he does not allege that he was unaware that he was in default on his loan, that he was unaware of how much he owed, or that he was unaware foreclosure proceedings had been commenced. And more to the point, he does not allege that had he received a copy of the last notice of sale, he could have and would have paid the amount due and reinstated his loan. (See Moeller, supra, 25 Cal.App.4th at pp. 830-831 [discussing ways in which defaulting borrower can stop foreclosure proceedings].) Accordingly, plaintiff has not alleged how he was actually prejudiced by this alleged statutory violation. (See Knapp v. Doherty (2004) 123 Cal.App.4th 76, 92-99 [defects in notices that were immaterial did not suffice to state statutory claims].)
Plaintiff therefore cannot rely on sections 2924, subdivision (a)(5), and 2924g to claim the foreclosure documents and sale were "void," triggering an exception to the tender rule.
Section 2924 et seq: Plaintiff additionally alleges violations of "[s]ection 2924 et seq." Sections 2924 through 2924k set forth the "comprehensive statutory framework established to govern nonjudicial foreclosure sales." (Moeller, supra, 25 Cal.App.4th at p. 834.) "The purposes of this comprehensive scheme are threefold: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser." (Moeller, at p. 830.)
"The statutory scheme can be briefly summarized as follows. Upon default by the trustor, the beneficiary may declare a default and proceed with a nonjudicial foreclosure sale. (Civ. Code, § 2924; 4 Miller & Starr [Cal. Real Estate (2d ed. 1989)] § 9:131, p. 415.) The foreclosure process is commenced by the recording of a notice of default and election to sell by the trustee. (Civ. Code, § 2924; 4 Miller & Starr, supra, at § 9:131, p. 416.) After the notice of default is recorded, the trustee must wait three calendar months before proceeding with the sale. (Civ. Code, § 2924, subd. (b); 4 Miller & Starr, supra, § 9:145, p. 471.) After the 3-month period has elapsed, a notice of sale must be published, posted and mailed 20 days before the sale and recorded 14 days before the sale. (Civ. Code, § 2924f; 4 Miller & Starr, supra, § 9:146, p. 472.) The trustee may postpone the sale at any time before the sale is completed. (Civ. Code, § 2924g, subd. (c)(1); 4 Miller & Starr, supra, § 9:148, p. 481.) If the sale is postponed, the requisite notices must be given. (Civ. Code, § 2924g, subd. (d).) The conduct of the sale, including any postponements, is governed by Civil Code section 2924g. (Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 317. . . .) The property must be sold at public auction to the highest bidder. (Civ. Code, § 2924g, subd. (a); Homestead Savings v. Darmiento (1991) 230 Cal.App.3d 424, 433. . . .)" (Moeller, supra, 25 Cal.App.4th at p. 830.)
Plaintiff posits a two-step theory as to why alleged violations of these statutes excuse him from compliance with the tender rule. He first alleges defendants had "no authority" to execute the foreclosure documentation because the securitization process was allegedly defective and thus "void." This, in turn, plaintiff maintains, resulted in defendants acting in violation of (1) section 2924, subdivision (a)(6), which requires that recorded notices of default must be by the holder of the beneficial interest under the deed of trust, the original or substituted trustee under the deed of trust, or the designated agent of the holder of the beneficial interest, and (2) section 2924.17, subdivision (a), which requires that any declaration recorded under section 2923.5 and any recorded assignment of a deed of trust, substitution of trustee, notice of default, or notice of sale, by or behalf of a mortgage servicer be "accurate and complete and supported by competent and reliable evidence." (§ 2924.17. subd. (a).) In short, plaintiff's allegations that defendants violated sections 2924, subdivision (a)(6), and 2924.17, subdivision (a), are grounded on his claims about the securitization process.
Plaintiff cannot, however, recharacterize his claims about the securitization process as "statutory violations" in order to elevate his claims from the realm of merely "voidable" to the realm of wholesale "voidness," thereby endowing himself with standing to challenge the securitization of his loan. (Cf. Mendoza, supra, 6 Cal.App.5th at pp. 810-811, 818-819 [rejecting argument plaintiff could challenge the securitization process on the ground it violated federal statutory law and thus resulted in a void assignment].) If that were all that was required to circumvent the now well-established law on standing to challenge the securitization process—as well as the law distinguishing between defects that render a transfer merely voidable and those that cause a transfer to be void ab initio—asserted statutory claims would effectively vitiate the standing requirement, resulting in the very problem Yvanova explained requires that a distinction be drawn between voidable and void transactions. (See Yvanova, supra, 62 Cal.4th at pp. 939-940.)
Additionally, as to ALAW, plaintiff disregards, in connection with his claim based on section 2924, subdivision (a), that section 2924, subdivision (b), states in pertinent part: "In performing acts required by this article, the trustee shall incur no liability for any good faith error resulting from reliance on information provided in good faith from the beneficiary regarding the nature and the amount of the default under the secured obligation, deed of trust, or mortgage." (§ 2924, subd. (b), italics added.) Section 2924, subdivision (d), in turn, specifies the mailing, publication, and delivery of notices required by the section and performance of procedures described by the foreclosure statutes "shall constitute privileged communications." While plaintiff generically alleges all defendants were agents of and conspired with one another, his specific allegations are that his loan was securitized in 2009 by United Financial (by MERS acting as its nominee) through an assignment of beneficial interest to LaSalle, as trustee for the securitized trust. In 2012, United Financial (by MERS as its nominee) assigned all right, title and interest to US Bank (as ultimate successor of LaSalle), as trustee of the securitized trust. In 2014, US Bank (by its attorney-in-fact Select Portfolio) substituted ALAW as trustee under the deed of trust. Thus, according to plaintiff's specific allegations, as well as the copies of the assignment and foreclosure documentation attached to his second amended complaint, ALAW, the final trustee under the deed of trust, did not appear on the scene until five years after the allegedly defective securitization process, and no allegations connect ALAW to that allegedly defective process so as to eliminate the protections afforded trustees by sections 2924, subdivisions (b) and (d).
And as for plaintiff's claim based on section 2924.17, subdivision (a), to the extent it involves alleged noncompliance with section 2923.5, he has no possible claim, as we have discussed above, given that the foreclosure sale had already occurred. (Stebley, supra, 202 Cal.App.4th at p. 526; Mabry, supra, 185 Cal.App.4th at pp. 214, 223-224, 231-235.)
Accordingly, for multiple reasons plaintiff cannot rely on his "section 2924 et seq." allegations to support an exception to the tender rule.
Section 2937 et seq. Plaintiff alleges, as to Select Portfolio only, that he never received notice, as required by section 2937, subdivisions (a) and (b), that the servicing of his loan allegedly was transferred from Select Portfolio to ALAW. Section 2937, subdivision (a), provides in pertinent part: "The Legislature hereby find and declares that borrowers or subsequent obligors have the right to know when a person holding a promissory note, bond, or other instrument transfers servicing of the indebtedness secured by a mortgage or deed of trust on real property. . . ." Subdivision (b), thus, requires that "[a]ny person transferring the servicing of indebtedness as provided in subdivision (a) to a different servicing agent and any person assuming from another responsibility for servicing the instrument evidencing indebtedness, . . . give written notice to the borrower . . . before the borrower . . . becomes obligated to make payments to a new servicing agent." (§ 2937, subd. (b).) Plaintiff additionally alleges, pursuant to section 2937, subdivision (g), that he "is not liable to the holder of the note, bond, or other instrument or to any servicing agent for payments made to the previous servicing agent."
Even assuming the "servicing" of his loan was transferred from Select Portfolio to ALAW, plaintiff's assertion that he did not receive the notice required by section 2937, subdivisions (a) and (b), does not allege that the foreclosure process was "void." He cites no authority, nor are we aware of any, holding that a violation of these subdivisions renders an already completed foreclosure sale, wholly and irrevocably void. In fact, section 2937, subdivision (c), states in pertinent part: "A notice of default, [or] notice of sale . . . shall not be invalidated solely because the servicing agent is changed during the foreclosure process."
Furthermore, the substantive protection provided by subdivision (g), is only against a demand by the current holder of the instrument or the new servicer for "payments made to the previous servicing agent." (§ 2937, subd. (g).) Plaintiff has not alleged that any such demand was made by ALAW. Nor has he alleged that had he received a notice of a transfer of servicing from Select Portfolio to ALAW, it would have made any difference in his ability to repay the loan. (See Amaral v. Wachovia Mortg. Corp. (E.D. Cal., Mar. 29, 2011, No. 1:09-cv-00937-OWW-GSA) 2011 WL 1205250 at p. *3 [dismissing section 2937 claim where the plaintiffs failed to allege damages as a result of the alleged statutory violation].)
At various points in his second amended complaint, plaintiff alleges his loan was "paid off in full" by "the insurance policy specifically covering [a] defaulted loan in the securitization trust," that "WAMU was paid in full for the balance of the Plaintiff's mortgage loan in the verified securitization transaction," and that "Plaintiff was not notified . . . the loan had been paid in full. We fail to see how these allegations of an insurance payout in 2009 to Washington Mutual for a supposed loss in the securitization process relate in any way to plaintiff's claim based on an alleged failure by Select Portfolio in 2014 (as attorney-in-fact for US Bank) to give notice of a change in loan servicing to ALAW, in violation of section 2937, subdivisions (a) and (b).
Accordingly, even assuming there is a private right of action to enforce section 2937, plaintiff has not alleged a statutory violation supporting an exception to the tender rule.
Defendants contend there is not, but we need not, and do not, address that issue.
In sum, none of the statutory provisions plaintiff invokes gives rise to an exception to the tender rule, and the trial court did not err in sustaining defendants' demurrers to his wrongful foreclosure cause of action. Nor did the court abuse its discretion in denying leave to amend, as plaintiff makes no claim he could, if given further leave to amend, allege tender.
Independent Statutory Claims
In addition to alleging a host of statutory violations to excuse compliance with the tender rule in connection with his cause of action for wrongful foreclosure, plaintiff also alleges two independent statutory causes of action—for alleged violations of section 2924.17 by all defendants (second cause of action) and section "2937 et seq." by Select Portfolio. For the reasons we have discussed above, neither cause of action states a viable claim. Accordingly, the trial court did not err in sustaining defendants' demurrers to these causes of action. Nor did the court abuse its discretion in denying leave to further amend, as plaintiff has not demonstrated he could make additional allegations that would cure the deficiencies in his pleading.
Unfair and Deceptive Business Act Practices
Plaintiff concedes his fourth cause of action for violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200) "depends on the success or failure" of his other "substantive causes of action." As we have explained, plaintiff's other causes of action are legally insufficient for a number of reasons. Accordingly, his section 17200 cause of action also necessarily fails, and the trial court did not err in sustaining defendants' demurrers. Nor did the court abuse its discretion in denying leave to further amend, as plaintiff has not demonstrated he could make additional allegations that would cure the deficiencies in his pleading.
Slander of Title
In his fifth cause of action for "Slander of Title," plaintiff alleges the "fraudulent Assignments of Deed of Trusts . . . between MERS and Defendants on multiple occasions are nullity [¶] . . . [and] [a]s a result, those assignments . . . created improper clouds on Plaintiff's title." Accordingly, this cause of action is also ultimately predicated on his challenge to the securitization process. For the reasons we have already discussed, plaintiff cannot circumvent his lack of standing to assert those claims by folding them into a slander of title claim. Furthermore, because plaintiff has alleged merely voidable defects in the securitization process, the securitization is legally valid (unless and until a party with standing successfully challenges it). Accordingly, plaintiff's allegations do not suffice to state any slander of title.
"The elements of a cause of action for slander of title are '(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.' " (Alpha & Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 664, italics omitted.)
Additionally, as we have discussed, section 2924 deems "the statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, to be privileged communications," pursuant to section 47. (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 325.) In his opening brief on appeal, plaintiff contends defendants' actions were not privileged because they acted with malice, "meaning ' "that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication that therefore acted in reckless disregard of the plaintiff rights." ' " (Id. at p. 336, italics omitted.) However, despite three opportunities to do so, plaintiff has not sufficiently alleged US Bank, Select Portfolio or ALAW acted with the requisite ill will or recklessness. His generic and boilerplate allegations of ill will and conspiracy are not enough to overcome the statutory privilege. " '[W]here the complaint discloses a case of qualified privilege, no malice is presumed and in order to state a cause of action the pleading must contain affirmative allegations of malice in fact.' [Citation.] This is because 'the very privilege creates a presumption that the communication is used innocently and without malice.' " (Lesperance v. North American Aviation, Inc. (1963) 217 Cal.App.2d 336, 341, fn. omitted.)
Accordingly, plaintiff's slander of title claim fails for multiple reasons, and the trial court did not err in sustaining defendants' demurrers to this cause of action. Nor did the court abuse its discretion in denying leave to further amend, as plaintiff has not demonstrated he could make additional allegations that would cure the deficiencies in his pleading.
Quiet Title
Plaintiff's sixth cause of action for quiet title is predicated on the same allegations as his wrongful foreclosure and statutory violation causes of action. It is therefore merely derivative of those causes of action, and fails for the same reasons. Accordingly, the trial properly sustained defendants' demurrers and did not abuse its discretion in denying any further opportunity to amend.
We therefore need not, and do not, address whether the tender rule, which ordinarily is a requisite of a quiet title claim, is subject to the same exceptions that can apply in connection with a wrongful foreclosure claim. Even assuming these exceptions can apply, plaintiff's allegations do not excuse him from complying with the rule in this case. (See Mendoza, supra, 6 Cal.App.5th at p. 821 [requiring tender in post-foreclosure sale context]; Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86 [same]; Stebley, supra, 202 Cal.App.4th at p. 526 [same].)
DISPOSITION
The judgment of dismissal is affirmed. Respondents to recover their costs on appeal.
/s/_________
Banke, J. We concur: /s/_________
Margulies, Acting P.J. /s/_________
Dondero, J.