Opinion
F079568 F079956
05-04-2021
LARRY BROWN, Plaintiff and Appellant, v. U.S. BANK, N.A., et al., Defendants and Respondents.
Brian J. Jacobs for Plaintiff and Appellant. Houser, Emilie K. Edling and Robert W. Norman for Defendants and Respondents U.S. Bank, N.A., and Ocwen Loan Servicing, LLC.
NOT TO BE PUBLISHED
Order Filed Date 6/2/21
APPEAL from orders of the Superior Court of Fresno County. No. 15CECG01171 Kimberly A. Gaab, Judge.
Brian J. Jacobs for Plaintiff and Appellant.
Houser, Emilie K. Edling and Robert W. Norman for Defendants and Respondents U.S. Bank, N.A., and Ocwen Loan Servicing, LLC.
ORDER MODIFYING OPINION AND DENYING REHEARING
The Court:
It is ordered that the opinion filed herein on May 4, 2021, be modified as follows:
On pages 6 to 8, part II. of the Discussion is deleted and the following headings, paragraphs, and footnote are inserted in its place:
II. Exceptions to Dismissal of Moot Appeals
A. Estoppel
As a general rule, an appeal that has become moot should be dismissed. (E.g., In re Pablo D. (1998) 67 Cal.App.4th 759, 761.) Brown's argument that Ocwen is estopped from pursuing a motion to dismiss on mootness grounds does not convince us to deviate from this general rule.
Brown also contends this court is arguably estopped from dismissing the moot appeal because we denied his motion to stay the appeal and, in his view, insisted that he brief the appeal. This argument appears to imply we had a sua sponte obligation to dismiss the appeal for mootness when we denied Brown's motion to stay. We are aware of no such obligation. Our January 8, 2021, order notified Brown of the mootness issue. This gave him an opportunity to either voluntarily dismiss the appeal or, alternatively, brief the mootness issue and the discretionary exceptions. Brown chose the latter course. If Brown relied on the order denying his motion to stay this appeal as an implied representation that the court would consider the merits of the moot appeal, his reliance was not objectively reasonable, particularly in light of the January 8, 2021 order. Thus, the considerations of fairness and equity underlying estoppel do not require the rendition of an advisory opinion in this moot appeal.
B. Discretion to Consider Moot Appeals
The general rule that moot appeals should be dismissed is subject to discretionary exceptions that allow, but do not require, an appellate court to retain an appeal that has become moot. (Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473, 479 [three discretionary exceptions] (Cucamonga); Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2020) ¶ 5:31, p. 5-3 (Eisenberg).) First, an appellate court may retain a moot controversy when it “presents an issue of broad public interest that is likely to recur.” (Cucamonga, supra, at p. 479; see Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 869, fn. 8 [court may retain moot controversy to resolve “‘important issues of substantial and continuing public interest'”] (Abbott).) Second, an appellate court may retain a moot appeal “when there may be a recurrence of the controversy between the parties.” (Cucamonga, at p. 479.) Third, retention is appropriate “when a material question remains for the court's determination.” (Ibid.) In Cucamonga, the court exercised its discretion and decided the merits because the controversy between the parties was likely to recur “and the parties have fully litigated the issues.” (Id. at p. 480.) To summarize, when the conditions identified in one of the three exceptions are satisfied, we may, if we choose, retain the moot appeal and decide the merits. California's mootness doctrine and its exceptions do not compel us to decide a moot appeal when the conditions are met.
C. Civil Code Section 1095
One of the legal theories Brown contends should be addressed on the merits relates to defendants' compliance with Civil Code section 1095, which provides in full: “When an attorney in fact executes an instrument transferring an estate in real property, he must subscribe the name of his principal to it, and his own name as attorney in fact.” Brown argues this statute applies to assignments of deeds of trust because such an assignment transfers “an estate in real property.” (Civ. Code, § 1095.)
We have serious doubts that this issue qualifies as an “important issue[] of substantial and continuing public interest.” (Abbott, supra, 43 Cal.3d at p. 869, fn. 8.) A widely cited treatise addresses the difference between an interest in real property and an estate in real property:
“‘Estate' defined. The word ‘estate' means an interest in land that is, or may become, possessory. A person who has an estate has the right to possess and enjoy the property, either presently or in the future, for a period of time that may be long or short, definite or indefinite, depending on the nature of the particular estate. As used in relation to an ownership interest in real property, the term ‘estate' signifies the degree, quantity, nature, and extent of the interest that a person has in real property. An estate is the ownership of property measured in terms of its duration.
“‘Estate' distinguished from ‘interest.' Although all estates are interests in land, not all interests in land are estates. A security device, such as a mortgage or a deed of trust, is an interest in land that does not convey any estate in real property. The interest conveyed by such a device is merely a lien or charge on the land encumbered.” (4 Miller & Starr, Cal. Real Estate (4th ed. 2020) § 12:1, pp. 12-2 to 12-3, fns. omitted and italics added.)
Because a deed of trust is an interest in land and does not convey any estate in real property, an assignment of a deed of trust would not be “an instrument transferring an estate in real property” for purposes of Civil Code section 1095. We are aware of no published or unpublished decision that holds otherwise. Accordingly, the issue appears mundane, rather than of substantial public interest.
Furthermore, a variety of factors weigh against deciding the issue even if it was of substantial and continuing public interest. First, the application of Civil Code section 1095 to an assignment of a deed of trust is not the type of issue that will “tend to evade review.” (Conservatorship of Wendland (2001) 26 Cal.4th 519, 524, fn. 1.) Second, Adjemian is not a party to the proceedings. (See Epstein v. Superior Court (2011) 193 Cal.App.4th 1405, 1411-1412 [public interest exception not applied in the absence “of an interested, and seemingly, necessary party”]; see also Brown I, supra, 19 Cal.App.5th 1210.) Third, in the unusual procedural posture of this case-that is, an appeal from moot orders denying a preliminary injunction in a case that was subsequently dismissed and the dismissal is the subject of another appeal pending before this court-we are not inclined to offer an advisory opinion in the intermediate appeal.
D. Glaski and New York Law
The second issue Brown contends should be resolved in this appeal involves the application of McKinney's Consolidated Laws of New York Annotated: Estates, Powers and Trusts Law section 7-2.4 to the facts of this case. The interpretation and application of the New York statute is related to the question of whether the assignment of a deed of trust to a securitized mortgage pool more than 90 days after the securitized trust's closing date is void or merely voidable. (See Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 815, fn. 5 [interpreting New York statute to mean alleged defects would render assignment merely voidable, not void]; Glaski, supra, 218 Cal.App.4th at p. 1097 [interpreting statute to mean assignments would be void where plaintiff alleged facts showing beneficiaries of securitized trust would be protected rather than harmed by that interpretation].)
The statute provides: “If the trust is expressed in an instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.” Its “purpose is ‘to protect trust beneficiaries from unauthorized actions by the trustee.'” (Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1096, fn. 15 (Glaski).)
Initially, we conclude Brown has misinterpreted Glaski and that misinterpretation does not qualify as an “important issue[] of substantial and continuing public interest.” (Abbott, supra, 43 Cal.3d at p. 869, fn. 8.) Brown broadly reads Glaski as holding that a late transfer of a loan into a securitized trust is void. We read Glaski in its procedural context and conclude its holding is much narrower. The panel in Glaski determined the New York statute would be interpreted by that state's high court to mean an attempted transfer into a securitized trust is void, rather than voidable, because the plaintiff had pleaded the beneficiaries of the securitized trust would be protected from adverse tax consequences caused by the trust's loss of its status as a flow-through tax entity. Under the law governing demurrers, these allegations were accepted as true. (Glaski, supra, 218 Cal.App.4th at p. 1090.) Brown's complaint contains similar allegations about the untimely acceptance of loans into the securitized trust jeopardizing its tax status as a Real Estate Mortgage Investment Conduit. However, Brown's request for a preliminary injunction did not attempt to prove these allegations or establish the tax risk was more than theoretical. In our view, to apply the statutory interpretation adopted in Glaski beyond the pleading stage requires proof of the allegations addressing harm to the beneficiaries. Without such proof, a court could not determine whether preventing Adjemian's loan from becoming a trust asset protects or harms the beneficiaries' interests. Thus, Brown needed to present evidence supporting the allegations to show a likelihood of prevailing on the theory the assignment would be deemed void under the New York statute. Whether Brown could present such evidence if this case went to trial is a matter of speculation. Therefore, this moot appeal is not the appropriate opportunity to define how the interpretation of New York law adopted in Glaski applies after the pleading stage. Stated from another perspective, because the issue was presented in connection with a preliminary injunction (rather than a trial on the merits) and has evidentiary shortcomings, “the parties have [not] fully litigated the issue[]” at this point in the proceedings. (Cucamonga, supra, 82 Cal.App.4th at p. 480.)
We also have considered what actually would be resolved by an opinion addressing the merits. We are not the California Supreme Court or the high court of the State of New York. There is no horizontal stare decisis within the Courts of Appeal and, as a result, a decision in this appeal would not bind a different panel of this court or a panel in any other district. (Eisenberg, supra, ¶ 14:193.1, p. 14-79.) Therefore, any decision could not be accurately described as finally resolving for the public or California's superior courts the issues involving Glaski and the New York statute.
In summary, to the extent we have the discretionary authority to consider the merits of Brown's issues, we decline to exercise that authority.
There is no change in the judgment. Appellant's petition for rehearing is denied.
POOCHIGIAN, Acting P.J.
WE CONCUR: SMITH, J., DE SANTOS, J.
OPINION
THE COURT[*]
These consolidated appeals were taken from orders denying applications for a temporary restraining order to stop a nonjudicial foreclosure sale. After the appeals were filed, the nonjudicial foreclosure proceeding was rescinded. As a result, there is no longer a pending foreclosure sale to enjoin and this appeal has been rendered moot. We have considered the discretionary exceptions to the general rule that a moot appeal should be dismissed and determined not to exercise that discretionary authority in the circumstances of this case.
We therefore dismiss the consolidated appeals.
FACTS AND PROCEEDINGS
Plaintiff Larry Brown obtained 1, 117 borrower assignments transferring to him a 100 percent interest in the borrowers' causes of action relating to their home loans and a 5 percent ownership interest in the real estate securing the home loans. (Brown v. Superior Court (2018) 19 Cal.App.5th 1208, 1210 (Brown I).) In April 2015, Brown filed this civil action in Fresno Superior Court to pursue the assigned causes of action. (Id. at p. 1213.) Our opinion in Brown I described the assignments and most of the proceedings that had occurred to that point. (Id. at pp. 1212-1217.) That background information need not be repeated here.
The issues in this appeal involve a single loan, the attempts to collect that loan through a nonjudicial foreclosure proceeding, and Brown's attempts to stop the foreclosure sale. The loan in question was obtained by Arthur Adjemian in October 2005. Adjemian executed a note in the principal amount of $297,600 and secured the debt by executing a deed of trust for his residence on East Menlo Avenue in Fresno (the Property). The deed of trust stated Adjemian irrevocably granted and conveyed the Property to the trustee, with power of sale. It also stated Mortgage Electronic Registration Systems, Inc., a Delaware corporation (MERS), “is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns” and “is the beneficiary under this Security Instrument.”
On October 16, 2018, a notice of default and election to sell under deed of trust was recorded against the Property. It stated the Property was in foreclosure because Adjemian was behind on his payments, the Property could be sold without any court action, no sale date could be set until 90 days after the notice of default had been recorded, and Adjemian had the legal right to bring his account into good standing by paying the past due amounts plus permitted costs and expenses. The amount owed was stated as $44,088.35. When the notice of default was recorded, defendant U.S. Bank National Association, as Trustee for GSAA Home Equity Trust 2006-5, Asset-Backed Certificates, Series 2006-5 (U.S. Bank), asserted it was the beneficiary under the deed of trust and owner of the note. Defendant Ocwen Loan Servicing, LLC (Ocwen) was identified as the loan servicer.
On January 18, 2019, a notice of trustee's sale was recorded against the Property. It referred to a sale date on February 26, 2019, and stated the unpaid balance of the secured obligation was $329,632.16. Subsequently, the sale date was rescheduled for May 7, 2019.
On April 8, 2019, Brown filed an ex parte application for temporary restraining order and order to show cause seeking to restrain U.S. Bank and Ocwen from conducting the nonjudicial foreclosure sale. On April 24, 2019, the trial court filed a law and motion minute order denying Brown's application. In June 2019, Brown filed a notice of appeal. Such an order is appealable pursuant to Code of Civil Procedure section 904.1, subdivision (a)(6). This court assigned the appeal case No. F079568.
All unlabeled statutory references are to the Code of Civil Procedure.
On July 3, 2019, Brown filed another ex parte application for temporary restraining order and order to show cause. The application stated the Property's foreclosure sale had been rescheduled to July 9, 2019. Ocwen filed a written opposition and the hearing was held the afternoon of July 3, 2019. The trial court denied the application, stating there is no basis for ex parte relief and no showing of a likelihood of success on the merits.
“A trial court deciding whether to issue a preliminary injunction weighs two interrelated factors-the likelihood the moving party will prevail on the merits and the relative balance of interim harms that are likely to result from the granting or denial of preliminary injunctive relief. [Citations.] Generally, weighing these factors lies within the broad discretion of the superior court.” (County of Kern v. T.C.E.F., Inc. (2016) 246 Cal.App.4th 301, 315.)
On September 9, 2019, Brown filed a notice of appeal from the July 3, 2019, denial of a temporary restraining order. This court assigned the appeal case No. F079956. On February 4, 2020, we consolidated cases Nos. F079568 and F079956.
In August 2020, Brown filed a motion to stay the consolidated appeal until this court decided case No. F080566, an appeal from an order dismissing the underlying lawsuit, Fresno Superior Court case No. 15CECG01171, in its entirety. Ocwen opposed Brown's motion to stay. We denied the motion to stay and set a date for Brown to file his opening brief.
On January 8, 2021, this court filed an order denying Brown's fifth application for an extension of time to file an appellant's opening brief and directed him to address whether the consolidated appeals had become moot.
Brown's opening brief stated that, after the July 3, 2019, denial of his application, he “was subsequently advised by Respondents that Adjemian and Respondents had entered into a loan modification arrangement, and [Brown] has no information or belief that Adjemian is currently facing foreclosure proceedings.” Nonetheless, Brown argued the appeal was not moot and this court should rule on the merits of his applications.
On April 13, 2021, Ocwen filed a motion to dismiss the consolidated appeal as moot. Ocwen argued the appeal was moot because the nonjudicial foreclosure proceedings had been abandoned, Adjemian's loan was current, and no foreclosure proceedings could take place without the recording of a new notice of default. Ocwen supported its motion to dismiss by filing a request for judicial notice of the notice of rescission of notice of default recorded on October 21, 2019.
On April 29, 2021, Brown filed an opposition to the motion to dismiss. Brown contends Ocwen is estopped from pursuing its motion to dismiss because it waited more than 18 months after the appeals were filed to bring its motion. Brown also contends Ocwen has misapplied the discretionary exceptions to California's mootness doctrine because there may be a recurrence of the controversy between the parties and the merits of the preliminary injunction request presents issues of broad public interest that are likely to recur.
DISCUSSION
I. Mootness
An appeal becomes moot when an actual controversy that once was ripe no longer exists due to a change in circumstances. (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1573.) The test for mootness is whether the appellate court can “grant practical, effective relief.” (Citizens for the Restoration of L Street v. City of Fresno (2014) 229 Cal.App.4th 340, 362.)
Here, we consider two cases in which California's mootness doctrine was applied to requests for preliminary injunctions. First, in Epstein v. Superior Court (2011) 193 Cal.App.4th 1405, the plaintiffs filed an action seeking to prevent the sale of 11 state-owned office buildings. (Id. at p. 1407.) The trial court denied the plaintiffs' request for a preliminary injunction to halt the sale. The plaintiffs petitioned the Sixth Appellate District for an extraordinary writ to compel the trial court to grant the preliminary injunction. While the matter was pending, a new governor took office and the proposed sale was abandoned. (Ibid.) The Sixth District concluded the writ petition was rendered moot by the state's voluntary abandonment of the challenged transaction. (Id. at p. 1410.) As a result, it dismissed the writ petition. (Id. at p. 1412.)
Second, in MaJor v. Miraverde Homeowners Assn. (1992) 7 Cal.App.4th 618, the appellate court dismissed an appeal challenging the denial of a preliminary injunction to restrain a condominium homeowners association from enforcing certain rules against the appellant. (Id. at p. 621.) While the appeal was pending, the appellant suffered a stroke and moved from her condominium. (Id. at p. 623.) Because the appellant was no longer a resident, there was no longer an allegedly discriminatory action on the part of the defendant homeowners association to be enjoined. (Ibid.) In addition, the appellant's underlying Unruh Civil Rights Act (Civ. Code, § 51 et seq.) cause of action had been challenged by a demurrer and the trial court sustained the demurrer. (MaJor, at p. 623.) Based on the dismissal of the underlying cause of action and the absence of any continuing application of the homeowners association's rules to the appellant, the appellate court determined the appeal from the denial of a preliminary injunction was moot. (Ibid.)
Here, the nonjudicial foreclosure proceeding against Adjemian's residence on East Menlo Avenue is no longer pending. On October 21, 2019, a notice of rescission of notice of default was recorded in Fresno County as instrument No. 2019-0125464. That notice stated the present beneficiary and the trustee under the deed of trust “hereby rescind, cancel and withdraw said Notice of Breach and Notice of Default and Election to Sell, ” which notice of default had been recorded on October 16, 2018, as instrument No. 2018-0126598-00. Consequently, there is no nonjudicial foreclosure sale to enjoin and this appeal has been rendered moot. (See Epstein v. Superior Court, supra, 193 Cal.App.4th at p. 1412 [proposed sale abandoned; request for preliminary injunction was moot].)
II. Exceptions to Dismissal of Moot Appeals
As a general rule, an appeal that has become moot should be dismissed. (E.g., In re Pablo D. (1998) 67 Cal.App.4th 759, 761.) Brown's argument that Ocwen is estopped from pursuing a motion to dismiss on mootness grounds does not convince us to deviate from this general rule. Even if Ocwen was estopped, this court could consider, on its own motion, whether the appeal had become moot and should be dismissed.
Brown correctly notes the general rule that moot appeals should be dismissed is subject to discretionary exceptions. Under these exceptions, an appellate court may retain an appeal that has become moot. (Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473, 479 [three discretionary exceptions] (Cucamonga).)
For instance, a moot appeal may be retained “when there may be a recurrence of the controversy between the parties.” (Cucamonga, supra, 82 Cal.App.4th at p. 479.) Here, Brown's lawsuit was dismissed on procedural grounds, and that dismissal is being challenged in an appeal assigned case No. F080566. As a result, it is uncertain whether the issues involving the merits of claims on which the preliminary injunction was sought will recur between these parties. Consequently, we will not exercise our discretionary authority under this exception.
Another exception allows an appellate court to retain a moot appeal “when the case presents an issue of broad public interest that is likely to recur.” (Cucamonga, supra, 82 Cal.App.4th at p. 479.) Brown contends the issues likely to recur involve the application of Civil Code section 1095 and McKinney's Consolidated Laws of New York Annotated: Estates, Powers and Trusts Law section 7-2.4 to the facts of this case. The interpretation and application of the New York statute is related to the question of whether the assignment of a deed of trust to a securitized mortgage pool more than 90 days after the securitized trust's closing date is void or merely voidable. (See Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 815, fn. 5 [interpreting New York statute to mean alleged defects would render assignment merely voidable, not void]; Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1097 [interpreting statute to mean assignments would be void where plaintiff alleged facts showing beneficiaries of securitized trust would be protected rather than harmed by that interpretation; purpose of statute was to protect beneficiaries from unauthorized actions by trustees].)
The rationale for exercising the discretionary authority and decide an issue of broad public interest is the efficiency that would result to the public and court system from such a decision. On balance, we conclude a decision addressing the two issues is unlikely to achieve such efficiency-in this case or generally. For instance, it seems unlikely that a decision holding Brown failed to show a probability of prevailing on the merits of his two issues would result in his abandonment of his appeal in case No. F080566. Thus, we decline to exercise our discretionary authority and render what would amount to an advisory opinion on those issues.
DISPOSITION
The consolidated appeal is dismissed as moot. Ocwen, as the respondent moving for dismissal, shall recover its costs on appeal.
[*]Before Poochigian, Acting P.J., Smith, J. and De Santos, J.