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stating that theory that assignment was void because loan was not transferred into trust before trust's closing date has "been repeatedly rejected because the defect would not render the assignment to the trust void, but only voidable"
Summary of this case from Nazemi v. Wells Fargo BankOpinion
A145150
02-27-2018
WILMA LIAO, Plaintiff and Appellant, v. NEW PENN FINANCIAL, LLC, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. MSC14-02355)
Wilma Liao appeals from the dismissal of her wrongful foreclosure action. She contends the trial court erred in sustaining a demurrer to the complaint without leave to amend. We affirm.
STATEMENT OF THE CASE AND FACTS
Appellant and Manuel Gonzales obtained a loan of $462,850 from Shea Mortgage, Inc. (Shea), executing a promissory note and deed of trust dated August 1, 2005, in favor of the lender, secured by the real property at 5621 Leitrim Way in Antioch. The deed of trust, which was recorded on August 12, 2005, named First American Title as trustee and Mortgage Electronic Registration Systems, Inc. (MERS) as beneficiary, "solely as nominee" for the lender and lender's successors and assigns. The complaint alleged that the original servicer of the loan was Countrywide Home Loans Servicing, LP (Countrywide), and that Bank of America, N.A. (BA) became the servicer as successor by merger to BAC Home Loans Servicing, LP, formerly known as Countrywide Home Loans Servicing, LP.
" 'MERS is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members' interests to MERS. MERS is listed as the grantee in the official records maintained at county register of deeds offices. The lenders retain the promissory notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to investors without having to record the transaction in the public record. MERS is compensated for its services through fees charged to participating MERS members.' (Mortgage Electronic Registration Sys. v. Nebraska Dept. of Banking & Finance (2005) 270 Neb. 529, 530.)" (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1151 (Gomes); see Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 931, fn. 7 (Yvanova).)
On May 2, 2012, MERS executed an assignment of deed of trust to "The Bank of New York Mellon FKA the Bank of New York [(Mellon)], as Trustee for the Certificate Holders of CWALT, Inc., Alternative Loan Trust 2005-J14, Mortgage Pass-Through Certificates, Series 2005-J14 [(Loan Trust)]." The assignment was recorded on May 11, 2012.
On July 8, 2013, Resurgent Capital Services, LP (Resurgent), as servicer for Mellon, substituted Old Republic Default Management Services, a division of Old Republic National Title Insurance Company (Old Republic) as trustee under the deed of trust. The substitution of trustee was recorded on August 15, 2013.
The complaint alleged that Resurgent was acquired by New Penn Financial, LLC (New Penn), in about October 2013 and rebranded as Shellpoint Mortgage Servicing (Shellpoint), a division of New Penn and current servicer of the loan.
Also on August 15, 2013, Old Republic recorded a notice of default, which stated that as of August 14, 2013, the loan was default in the amount of $49,321.67. Old Republic recorded a notice of trustee's sale on January 23, 2014, scheduling a foreclosure sale for February 18, 2014, followed by a second notice of trustee's sale dated December 10, 2014, scheduling a foreclosure sale for January 6, 2015. On December 12, 2014, Shellpoint (the current loan servicer, see fn. 2 ante) sent appellant and Gonzales a delinquency notice stating that the current amount necessary to cure their default was $93,977.34.
The second notice of trustee's sale, attached as exhibit G to the complaint, is unsigned and does not bear a recorder's file stamp.
On December 18, 2014, appellant and Gonzales executed and recorded a grant deed by which Gonzales granted the Antioch property to appellant.
According to the allegations of the complaint, at some unidentified point appellant submitted an application for loan modification to Shellpoint, which denied the application as incomplete and insisted, even after Gonzales conveyed his interest in the property to appellant, that Gonzales also had to submit a loan application package.
On December 24, 2014, appellant filed a complaint for wrongful foreclosure, quiet title, violation of Civil Code section 2924.17, violation of Business and Professions Code section 17200 et seq. (Unfair Competition Law, UCL), unjust enrichment and accounting against New Penn, BA, Old Republic, Mellon and MERS. The essence of the complaint was that the securitization of appellant's loan by sale of the loan to the Loan Trust in 2005 extinguished MERS's interest, rendering void the May 2, 2012, assignment of the deed of trust from MERS to Mellon.
The complaint initially alleged that appellant's loan "was sold to" the Loan Trust "on or before November 2007," and that this sale "extinguished all interest in the mortgage" formerly held by Shea and MERS. According to the complaint, the Loan Trust is a "Special Purpose Vehicle formed as a mortgage-backed securities trust in accordance with the Internal Revenue Tax Code of 1986, as amended." The complaint continues: "[I]n order for an investment entity to qualify as a REMIC, all steps in the contribution and transfer of the notes must be a 'true' and 'complete' sale between the parties in order to achieve bankruptcy remoteness. Upon formation of the REMIC-qualified MBS Trust, the Depositor sells the pooled mortgage loans in exchange for the securities certificates issued by the trust. Each step of the 'true sale' process must be supported by effective delivery and certification of acceptance of the receiving party of the endorsed mortgage note and assigned deed of trust, reflecting the complete intervening assignments and transfers of each mortgage loan from each assignor to the last assignee." Only the "Depositor" may make the final assignment and transfer of each mortgage loan to the trust, and the assignment must be made "as of the Closing Date of the trust (November 30, 2005) to maintain the favorable pass-through tax status of the trust entity." The complaint alleged that "[o]nce the trust owns a mortgage loan, only the trustee of the MBS trust has the authority to foreclose, to appoint an agent to foreclose, to assign the deed of trust or substitute a trustee under the deed of trust."
As will be seen, the complaint later alleged that "Shea sold the loan, for full loan value," to the Loan Trust on "November 30, 2005," and appellant's opposition to respondents' demurrer stated that the loan was sold to the Loan Trust "[o]n or before November 30, 2005."
REMIC is an acronym for Real Estate Mortgage Investment Conduit.
MBS is an acronym for mortgage-backed securities.
The complaint alleged that appellant's loan was first sold by Countrywide to CWALT, Inc., the "securitization Depositor," which then sold the loan to Mellon, the trustee for the Loan Trust, but that these sales "were made without the required intervening assignment of [appellant's] Deed of Trust and endorsement of the Note in contravention of the governing trust documents." When MERS purported to assign the deed of trust to Mellon on May 2, 2012, appellant alleged, MERS "no longer had any valid agency with original lender Shea." Additionally, because CWALT Inc. was not a member of the MERS registry, "MERS exited the chain of title of [appellant's] mortgage in 2005." The assignment was also void because MERS "never held any interest in the debt, that is, the Note, secured by the deed of trust" and assignment of a deed of trust without the note "is a legal nullity." Because the assignment was void, the complaint continued, the substitution of trustee from Resurgent to Old Republic was also void, as were the notice of default executed by Old Republic in August 2013, and the notice of trustee's sale issued in January 2014.
Appellant's cause of action for wrongful foreclosure alleged that the May 2012 assignment from MERS to Mellon was void because the interest in appellant's loan originally held by MERS "and its principal, Shea Mortgage, was extinguished as of November 30, 2005, when Shea sold the loan, for full loan value," to the Loan Trust. Additionally, Old Republic could not legally exercise the power of sale under the deed of trust because Old Republic was substituted on behalf of Mellon, which was an invalid trustee and invalid beneficiary. This cause of action further alleged various violations of the non-judicial foreclosure statutes and Uniform Commercial Code and claims of fraud based on the allegedly invalid assignment and related documents.
The cause of action for quiet title sought a declaration that appellant held title to the property free and clear of encumbrances in favor of Mellon because Mellon never received an effective assignment of the note or deed of trust and therefore did not hold the beneficial interest in the deed of trust that it claimed.
The cause of action for violation of Civil Code section 2924.17 alleged that New Penn, through Shellpoint, breached its statutory duty to review the various documents to substantiate the borrower's default and the right to foreclose.
The cause of action for violation of Business and Professions Code section 17200 et seq. (Unfair Competition Law or UCL) alleged that the defendants' conduct, such as executing false and misleading documents and acting as beneficiaries and trustees without legal authority constituted deceptive and fraudulent business acts or practices.
The cause of action for unjust enrichment alleged that because Mellon was an invalid beneficiary, BA and its predecessors had no right to the loan payments they collected from appellant on behalf of Mellon, and New Penn had no right to collect the payments it had attempted to collect, through Shellpoint, on Mellon's behalf.
Finally, the cause of action for accounting alleged that BA and Mellon owed appellant money they obtained from appellant under false pretenses.
Respondents demurred to the complaint on the grounds that each of the causes of action failed to state facts sufficient to constitute a cause of action. Respondents asserted, among other things, that there were no defects in the chain of title, the securitization of the loan did not affect the rights or obligations of the parties to the loan and respondents' right to foreclose, and appellant lacked standing to preemptively challenge a non-judicial foreclosure. Opposing the demurrer, appellant reiterated her theory that the sale of the loan to the Loan Trust extinguished MERS's interest and therefore rendered void the subsequent assignment from MERS to Mellon, and disputed the characterization of the case as a preemptive challenge to foreclosure.
The trial court sustained respondents' demurrer without leave to amend. The court followed the "majority rule" that "absent a dispute amongst lenders as to ownership, a party showing an assignment or other ownership interest may foreclose." The court explained that the complaint was based on the premise that a defaulting borrower could challenge the ownership interest of the foreclosing party, a position supported by Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 (Glaski), but chose to follow the "numerous" courts that had reached the contrary conclusion, citing Jenkins v JPMorgan Chase Bank (2013) 216 Cal.App.4th 497, 515 (Jenkins) and Gomes, supra, 192 Cal.App.4th 1149). Based on this determination, the court found meritless several causes of action that were based on a theory of "defective securitization" or "break in the chain of title": quiet title, violation of Civil Code section 2929.17, and unjust enrichment. Additionally, the court held that the California Uniform Commercial Code does not apply to non-judicial foreclosure proceedings; the wrongful foreclosure cause of action was insufficient because appellant had not alleged that the trustee's sale had occurred and could not do so; the quiet title cause of action failed because appellant had not alleged tender of the debt or a recognized exception to the rule requiring tender; appellant had not sufficiently alleged a predicate act or injury in the claim under Business and Professions Code section 17200; and that the cause of action for accounting was insufficient because it was based on the meritless unjust enrichment claim. The court denied leave to amend because appellant had not met her burden of showing how the complaint could be amended to change its legal effect.
The court's order was filed on April 28, 2015. Notice of entry of the court's order was filed on May 7, 2015.
Appellant filed a timely notice of appeal on May 12, 2015.
DISCUSSION
"On review from an order sustaining a demurrer, 'we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose. [Citations.]' (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) We may also consider matters that have been judicially noticed." (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) We do not assume the truth of " 'contentions, deductions or conclusions of fact or law.' " (Loeffler v. Target Corp. (2014) 58 Cal.4th 1081, 1100; Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) When the demurrer is sustained without leave to amend, " 'we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.' " (Zelig, at p. 1126, quoting Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Appellant argues that her complaint sufficiently stated a cause of action for wrongful foreclosure in that she alleged her loan was not validly transferred to the Loan Trust before the foreclosure process was instituted. In her opening brief on appeal, appellant argues that Mellon, as trustee for the Loan Trust, had no power to foreclose because appellant's loan was not properly transferred to the Loan Trust in that the assignment by which the transfer was effected was executed after the closing date of the trust. This is a different theory from that presented in the complaint, which alleged that Mellon lacked power to foreclose because at the time MERS assigned the deed of trust to Mellon, MERS had no interest to convey, the original owner of the loan having previously sold the loan to the Loan Trust. The two theories are directly inconsistent: Appellant's opening brief argues that the loan was never validly transferred to the Loan trust, while the premise of the complaint was that the loan was validly transferred; if the loan was not validly transferred (as alleged in opening brief), MERS would not have lost its role under the deed of trust (as alleged in the complaint). Appellant's reply brief returns to the allegations of her complaint, that MERS held no interest in the deed of trust when it assigned the deed of trust to Mellon.
In any event, appellant's fundamental claim is that Mellon lacked authority to initiate foreclosure proceedings. "California courts do not allow such preemptive suits because they 'would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature.' (Jenkins[, supra,] 216 Cal.App.4th [at p.] 513, disapproved on other grounds in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13; see Gomes[, supra,] 192 Cal.App.4th [at p.] 1156 ['California's nonjudicial foreclosure law does not provide for the filing of a lawsuit to determine whether MERS has been authorized by the holder of the Note to initiate a foreclosure'].) As the court reasoned in Gomes: [¶] '[The borrower] is not seeking a remedy for misconduct. He is seeking to impose the additional requirement that MERS demonstrate in court that it is authorized to initiate a foreclosure. . . . [S]uch a requirement would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy.' (Gomes, supra, at p. 1154, fn. 5.)" (Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814-815 (Saterbak), review denied July 13, 2016; Kan v. Guild Mortgage Co. (2014) 230 Cal.App.4th 736, 743.) Notably, the foreclosure statutes expressly provide for injunctive actions to prevent foreclosure in certain circumstances—but these do not include actions to challenge a foreclosing entity's authority, indicating the Legislature did not intend to authorize such challenges. (Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 158-159, review denied Nov. 30, 2016.)
As Saterbak explained, the California Supreme Court in Yvanova held that a borrower has standing to assert a wrongful foreclosure claim based on allegations that the assignment to the foreclosing entity was void. This holding resolved a split among the courts of appeal by validating the position of Glaski, supra, 218 Cal.App.4th 1079, upon which appellant relies, and rejecting that of Jenkins, supra, 216 Cal.App.4th 497, which is representative of what the trial court here described as the majority position.
In validating the Glaski court's holding that a borrower whose home has been sold in foreclosure can challenge an assignment to the foreclosing entity as void, the court expressly declined to offer an opinion on Glaski's holding that an assignment to a mortgage trust after the trust's closing date is void. (Yvanova, supra, 62 Cal.4th at pp. 931, 935.) As to this latter holding, Glask's interpretation of the governing New York law has since been repudiated. (Rajamin v. Deutsche Bank Nat. Trust Co. (2014) 757 F.3d 79, 90 (Rajamin); Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 811-817 (Mendoza); Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 42-43 (Kalnoki); Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252, 1256-1260 (Yhudai); Saterbak, supra, 245 Cal.App.4th at p. 815, fn. 5.)
Yvanova specifically limited its holding, however, to cases challenging a completed foreclosure sale: "Our ruling in this case is a narrow one. We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment. We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party's right to proceed." (Yvanova, supra, 62 Cal.4th at p. 924.)
Further, in finding standing in this situation—a completed foreclosure challenged with allegations of a void assignment—Yvanova disapproved only one of the two bases upon which Jenkins had reached the contrary conclusion. Jenkins held that a borrower lacks standing to challenge a foreclosing entity's authority both because the borrower was not a party to assignments being challenged and because "California law did not permit a 'preemptive judicial action[] to challenge the right, power, and authority of a foreclosing "beneficiary" or beneficiary's "agent" to initiate and pursue foreclosure,' which would " ' "fundamentally undermine the nonjudicial nature" ' " of the statutory nonjudicial foreclosure process. (Yvanova, supra, 62 Cal.4th at p. 933, quoting Jenkins, supra, 216 Cal.App.4th at p. 511.) Yvanova expressly declined to address the latter aspect of Jenkins. (Yvanova, at pp. 924, 934.) It thus left intact the holdings of Jenkins and other cases that had held a borrower lacks standing to preemptively challenge the authority of the entity pursuing a nonjudicial foreclosure. (E.g. Kan, supra, 230 Cal.App.4th at pp. 741-742; Jenkins, supra, 216 Cal.App.4th at pp. 512-513; Gomes, supra, 192 Cal.App.4th at pp. 1154-1156.)
Appellant's opening brief, filed five days after the opinion in Yvanova was filed, was written without the benefit of the Supreme Court's analysis in that case, or the subsequent analysis of the Saterbak court. Appellant relied upon Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, which involved a preforeclosure suit but did not challenge the lenders' authority to foreclose on the basis of an alleged absence of enforceable interest in the loan and deed of trust, and several federal district court cases denying motions to dismiss cases involving preforeclosure challenges to the authority of a foreclosing entity. (E.g., Barrionuevo v. Chase Bank, N.A. (N.D. Cal. 2012) 885 F.Supp.2d 964; Tamburri v. Suntrust Mortgage, Inc. (N.D. Cal. Dec. 15, 2011) 2011 WL 6294472; Johnson v. HSBC Bank USA, Nat. Assn. (S.D. Cal. March 19, 2012) 2012 WL 928433.) Although respondents' brief relies upon Saterbak's reaffirmation, after consideration of the Yvanova opinion, of California appellate courts' refusal to permit preemptive challenges to a foreclosing entity's authority, appellant does not so much as mention Saterbak or Yvanova in her reply brief. We agree with the Saterbak court that a preemptive suit to challenge the authority of the foreclosing entity is not permitted under California's nonjudicial foreclosure scheme.
Pfeifer, supra, 211 Cal.App.4th 1250, permitted borrowers to seek to enjoin a nonjudicial foreclosure based on violations of mortgage servicing requirements that were conditions precedent to initiating foreclosure under regulations of the Department of Housing and Urban Development that were applicable to the deed of trust in that case. The present case involves no such issues.
While a number of federal cases in California have allowed borrowers to pursue challenges to a foreclosing entity's authority (at least at the earliest stages of litigation), as appellant's citations illustrate, many of the cases decided since Yvanova and Saterbak have reached the opposite conclusion. After Yvanova was decided, several federal courts predicted that the state Supreme Court would extend its reasoning to the preforeclosure context, perceiving a borrower threatened with foreclosure by an unauthorized entity as suffering harm akin to, albeit less obvious than, that of a borrower who actually lost his or her home. (Powell v. Wells Fargo Home Mortgage (N.D. Cal. 2016) 2016 WL 1718189, at *7; Lundy v. Selene Finance, LP (N.D. Cal. 2016) 2016 WL 1059423, at *10.) After Saterbak was decided, however, those cases came to be described as representing a minority view. (Lewis v. U.S. Bank National Association (N.D. Cal., Apr. 5, 2017) 2017 WL 2903192, at *4.) The court in Wyman v. First American Title Insurance Company (N.D. Cal. 2017) 2017 WL 512869 (Wyman) stated, "With the exception of four decisions, every decision by our court of appeals and district courts in our circuit has declined to extend Yvanova to pre-foreclosure challenges, thereby adopting Saterbak and its progeny." (Id. at *3, citing Dagres v. Countrywide Bank, N.A. (9th Cir. Jan. 26, 2017) 2017 WL 371972, at *1; Bryant v. J.P. Morgan Chase Bank, N.A., (9th Cir. Dec. 22, 2016) 2016 WL 7407271, at *1; Huweih v. US Bank Trust, N.A. (N.D. Cal. Jan. 30, 2017) 2017 WL 396143, at *3; Kaurloto v. U.S. Bank (C.D. Cal. Nov. 17, 2016) 2016 WL 6808117, at *4; Karunaratne v. US Bank National Association (S.D. Cal. Nov. 15, 2016) 2016 WL 6698940, at *4; Watson v. Bank of America (S.D. Cal. Nov. 7, 2016) 2016 WL 6581846, at *17; Tobin v. Nationstar Mortgage, Inc. (C.D. Cal. May 2, 2016) 2016 WL 1948786, at *7; see also, Tjaden v. HSBC Bank USA, N.A. (9th Cir. 2017) 681 Fed.Appx. 641.) The four exceptions noted in Wyman were Lundy, Powell, Reed and Hinrichsen v. Quality Loan Service Corp. (S.D. Cal. 2016) 2016 WL 4542753. (Wyman, at *3.)
Moreover, appellant's complaint was substantively insufficient. The theory underlying the wrongful foreclosure cause of action, as portrayed in appellant's opening brief on this appeal, is that the appellant's loan was not validly assigned to the Loan Trust because it was not transferred before the trust's closing date, in violation of the trust's Pooling and Service Agreement (PSA). As previously indicated (fn. 7, ante), this theory has since been repeatedly rejected because the defect would not render the assignment to the trust void, but only voidable. (Saterbak, supra, 245 Cal.App.4th at p. 815, fn. 5; Kalnoki, supra, 8 Cal.App.5th at pp. 42-43; Mendoza, supra, 6 Cal.App.5th at pp. 811-817; Yhudai, supra, 1 Cal.App.5th at pp. 1256-1260; Rajamin, supra, 757 F.3d at pp. 88-89.) In the cited cases, the PSAs were governed by New York law, under which an assignment that fails to comply with the terms of the trust agreement is voidable, not void, because it can be ratified by the beneficiaries. (Mendoza, supra, 6 Cal.App.5th at pp. 812-814.) Appellant has neither included the PSA in the record on appeal nor represented what state's law governs it, despite the obvious significance of the issue to her appeal. Nor has she acknowledged the judicial rejection of the Glaski theory of voidness she relies upon. While this issue had not been resolved in published California cases when appellant filed her opening brief, it had been rejected by the federal appellate court in New York long before, by at least two published California cases by the time appellant filed her reply brief, and by others in the time this appeal has been pending.
Rajamin, supra, 757 F.3d 79 was filed in 2014. Saterbak, supra, 245 Cal.App.4th 808 was filed on March 16, 2016, less than a month after appellant filed her opening brief and six months before she filed her reply, and Yhudai, supra, 1 Cal.App.5th 1252, was filed on July 29, 2016, almost two months before the reply was filed. Mendoza, supra, 6 Cal.App.5th 802 and Kalnoki, supra, 8 Cal.App.5th 23, were filed on December 13, 2016, and February 1, 2017, respectively.
The theory presented in the complaint was that appellant's loan was validly transferred to the Loan Trust, resulting in MERS losing any interest under the deed of trust, years before MERS purported to assign its interest to Mellon. Appellant alleged the lender, Shea, sold the loan to the Loan Trust on November 30, 2005. Contrary to the theory offered in appellant's opening brief, this would have been a timely transfer, as the complaint alleged that the closing date of the trust was November 30, 2005. The complaint further alleged that due to this assignment of the loan to a new owner, MERS, as agent for the former owner, "exited the chain of title of [appellant's] mortgage in 2005" and therefore lacked power to assign the deed of trust to Mellon in 2012. These allegations are necessarily based upon the premise of a valid assignment of the loan to the Loan Trust."
Confusingly, the complaint in another paragraph alleged that the loan was sold to the Loan Trust "[o]n or before November 30, 2007." This allegation, of course, is not necessarily inconsistent with the allegation that the loan was transferred on November 30, 2005. The 2005 date is repeated in several allegations, as stated above, as well as in appellant's opposition to the demurrer, which stated that the loan was sold to the Loan Trust "[o]n or before November 30, 2005."
But if in fact ownership of the loan was validly transferred from Shea to the Loan Trust in 2005, the deed of trust followed as a matter of law. A deed of trust "is inseparable from the note it secures, and follows it even without a separate assignment." (Yvanova, supra, 62 Cal.4th at p. 927; Yhudai, supra, 1 Cal.App.5th at p. 1259, fn. 6; Civ. Code, § 2936 [" 'The assignment of a debt secured by mortgage carries with it the security' "].) As the Yhudai court noted in rejecting the borrower's challenge to a 2009 assignment of the deed of trust securing a loan that had been transferred to a securities trust on the closing date of the trust in 2007, "Thus, if the note was timely conveyed to the ISA Trust, as Yhudai alleged, so was the deed of trust. Although the conveyance of the note may have been separated in time from the execution, recording, and physical transfer of the instrument reflecting the assignment of the deed of trust, that gap does not alter the legal fact that the deed of trust and the right to foreclose was, as a matter of law, transferred along with the note." (Yhudai, at p. 1259, fn. 6.)
We thus conclude that appellant lacked standing to maintain her cause of action for wrongful foreclosure and, in any event, failed to allege facts demonstrating that Mellon lacked authority to initiate the foreclosure. Appellant acknowledges that her causes of action for violation of the UCL and for quiet title are based on the foundational wrongful foreclosure claim; these causes of action, therefore, are also insufficient. As appellant offers no argument regarding the causes of action for unjust enrichment and for violation of section 2924.17, we treat them as abandoned. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1177.) The cause of action for accounting, which is based upon the allegations of the cause of action for unjust enrichment, necessarily fails because an accounting is an equitable remedy that is "dependent upon a substantive basis for liability" and has "no separate viability" if the substantive cause of action is not viable. (Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal.App.4th 1018, 1023, fn. 3; Krantz v. BT Visual Images (2001) 89 Cal.App.4th 164, 178 [cause of action for accounting "stand[s] or fall[s] depending on the fate of the antecedent substantive causes of action"].)
In her reply brief on appeal, appellant argued for the first time that she had standing to challenge the foreclosure under section 22 of the deed of trust. We granted respondents' motion to strike this portion of appellant's reply brief on November 4, 2016.
Although appellant maintains the trial court erred in not providing her at least one opportunity to amend her complaint, it did so because she failed to meet her burden of showing how she could amend. The burden of proving there is a reasonable possibility the complaint could be successfully amended " 'is squarely on the plaintiff.' " (Zelig v. County of Los Angeles, supra, 27 Cal.4th at p. 1126, quoting Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Appellant asserts that she can "cure any pleading insufficiencies by pleading with more supporting facts, including more specificity in her causes of action," but fails to identify what additional facts or specificity she could provide that would change the legal effect of her complaint. She suggests that she should be allowed to amend to claim damages for intentional infliction of emotional distress in order to establish the prejudice required for a wrongful foreclosure claim, but this would not alter the fundamental defects in that claim. Her assertion that the complaint "can reasonably be amended to allege standing and to plead with sufficient particularity on [her] fraud claim," again, fails to describe what additional facts she could offer. Finally, her assertion that her cause of action for accounting can be amended to allege that " 'a balance due from the defendants can only be ascertained by an accounting' " ignores the need for a substantive basis of liability. Appellant simply offers no additional facts she would be able to allege to establish standing in the face of California caselaw precluding preforeclosure challenges such as this, or to demonstrate that Mellon lacked authority to foreclosure. We find no abuse of discretion in the trial court's decision to sustain the demurrer without leave to amend.
Appellant derives the quoted language from the trial court's order and maintains that "by implication, according to the [trial court]'s own citation," her cause of action "would be sufficiently pleaded" if alleged in these terms. She erroneously relies upon a portion of the court's order describing the general requirements for the cause of action but ignores the court's actual conclusion, which was that appellant had not sufficiently alleged a cause of action for an accounting because her allegations based the claim on a cause of action the court had determined was not viable: "Plaintiff incorporates the fifth cause of action [unjust enrichment] into this cause of action. [Complaint] pars. 76-77] Therefore, plaintiff has not met her pleading burden. (See, Glue-Fold, Inc. v. Slautterback Corp.[, supra,] 82 Cal.App.4th [at p.] 1023, fn. 3 [[t]his equitable form of remedy is dependent upon a substantive basis for liability, it has no separate viability if there is no substantive basis for liability].)"
DISPOSITION
The judgment is affirmed.
Costs are awarded to respondents.
/s/_________
Kline, P.J. We concur: /s/_________
Stewart, J. /s/_________
Tucher, J.
Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------