Opinion
E074194
06-08-2021
LATINA CONLEY, Plaintiff and Appellant, v. NATIONSTAR MORTGAGE, LLC, Defendant and Respondent.
Latina Conley, in pro per; and Michael J. Yesk, for Plaintiff and Appellant. [Retained.] Troutman Pepper Hamilton Sanders, Christopher B. Kadish, and Jared D. Bissell for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County. No. RIC1719585 Chad W. Firetag, Judge. Affirmed.
Latina Conley, in pro per; and Michael J. Yesk, for Plaintiff and Appellant. [Retained.]
Troutman Pepper Hamilton Sanders, Christopher B. Kadish, and Jared D. Bissell for Defendant and Respondent.
OPINION
RAPHAEL J.
After her home was foreclosed on, plaintiff and appellant Latina Conley alleged eight causes of action against defendant and respondent Nationstar Mortgage, LLC (Nationstar), all premised on the contention that Nationstar was never a beneficiary under the deed of trust and thus never had a right to foreclose. The trial court granted Nationstar's motion for judgment on the pleadings without leave to amend. Conley appeals, and we affirm, finding that she has failed to adequately allege a cause of action against Nationstar because judicially noticeable facts contradict her core premise.
FACTUAL AND PROCEDURAL HISTORY
In 2011, Conley obtained a loan secured by a home located in Moreno Valley. The loan was secured by a deed of trust that listed Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary and the lender's nominee. In 2012, MERS assigned the deed of trust to Bank of America, N.A., Successor by Merger to BAC Home Loans Servicing LP, FKA Countrywide Home Loans Servicing LP (Bank of America). In 2016, Bank of America assigned the deed of trust to Nationstar. The loan was in default by then.
In 2017, Nationstar executed a substitution of trustee naming Barrett Daffin Frappier Treder & Weiss, LLP (Barrett) as the new trustee. Barrett then filed a notice of default and ultimately foreclosed on the property later that year.
Conley filed suit. The trial court twice granted Nationstar's motions for judgment on the pleadings. The operative complaint, filed in 2019, alleges eight causes of action against Nationstar: (1) violation of the Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.); (2) violation of Civil Code section 2934a; (3) violation of Civil Code sections 2924 and 2924.17; (4) wrongful foreclosure; (5) cancellation of instruments; (6) negligent representation; (7) violation of the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.); and (8) quiet title. Attached to the complaint were the 2016 assignment, the 2017 substitution of trustee, a loan modification agreement from 2014, and other documents.
Nationstar filed another motion for judgment on the pleadings. Nationstar also filed a request for judicial notice of the 2011 deed of trust as well as the 2012 assignment from MERS to Bank of America. The trial court granted Nationstar's request for judicial notice.
Conley sought judicial notice as well. Specifically, Conley sought judicial notice of a published California Court of Appeal opinion, a United States Bankruptcy Court memorandum opinion, and an “addendum” to the memorandum opinion. Conley also submitted, relying on the Evidence Code provisions on expert witnesses, a 39 page declaration from Richard Kalinoski Jr., a Florida lawyer, who opined among other things that the 2012 and 2016 assignments were “unenforceable and void.” Although the trial court did not formally state whether it was granting or denying Conley's requests to consider the court opinions and the Kalinoski declaration, it characterized them as irrelevant.
The trial court granted Nationstar's motion for judgment on the pleadings, this time without leave to amend.
DISCUSSION
“‘A judgment on the pleadings in favor of the defendant is appropriate when the complaint fails to allege facts sufficient to state a cause of action. (Code Civ. Proc., § 438, subd. (c)(3)(B)(ii).) A motion for judgment on the pleadings is equivalent to a demurrer and is governed by the same de novo standard of review.' [Citation.] ‘All properly pleaded, material facts are deemed true, but not contentions, deductions, or conclusions of fact or law....' [Citation.] Courts may consider judicially noticeable matters in the motion as well.” (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777.)
“Under the doctrine of truthful pleading, the courts ‘will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed.' [Citation.] ‘False allegations of fact, inconsistent with annexed documentary exhibits [citation] or contrary to facts judicially noticed [citation], may be disregarded....'” (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400.)
Our analysis proceeds as follows: we first evaluate whether the trial court properly granted Nationstar's request for judicial notice, then consider what facts are judicially noticeable here. Because Nationstar's status as beneficiary under the deed of trust is judicially noticeable-and has thus been factually established-we then consider whether any of Conley's causes of action have been sufficiently alleged. We conclude they have not.
A. Request for Judicial Notice
Conley contends that the trial court erred in granting Nationstar's request for judicial notice of the 2012 deed of trust assignment from MERS to Bank of America. Specifically, she asserts that the 2012 assignment and “the deductions that it proffers”-namely the identity of the beneficiary-are not appropriate subjects for judicial notice.
The 2012 assignment did not transfer any interest to or from Nationstar, but is part of a larger chain of title ultimately transferring a beneficial interest from MERS, the original beneficiary, to Nationstar. Also, although Conley specifically challenges only the 2012 assignment, our analysis applies equally to the 2012 assignment as well as the other document included in Nationstar's request, the 2011 deed of trust.
“‘“Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.”'” (Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1374.) Judicial notice rulings are reviewed for abuse of discretion. (Physicians Committee for Responsible Medicine v. Los Angeles Unified School Dist. (2019) 43 Cal.App.5th 175, 182.)
Here, judicial notice was proper under Evidence Code section 452, subdivisions (c) and (h), and whether a person is a beneficiary as a legal effect of a given document is generally not a fact reasonably subject to dispute. (See Evid. Code, § 452, subds. (c) [judicial notice may be taken of “[o]fficial acts of the legislative, executive, and judicial departments of... any state”], (h) [judicial notice may be taken of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy”].)
Under Evidence Code section 452, subdivision (c), “courts have taken judicial notice of the existence and recordation of real property records, including deeds of trust, when the authenticity of the documents is not challenged.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (Fontenot), disapproved on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 939, fn. 13.) Thus, the 2012 assignment is an appropriate subject for judicial notice, as its recordation is an official act of the executive department. (See Cal-American Income Property Fund II v. County of Los Angeles (1989) 208 Cal.App.3d 109, 112, fn. 2.)
Although Conley disputes the validity of the 2012 assignment and other documents, there is no real dispute about authenticity. As discussed below, Conley's causes of action are based on theories that the assignments are void because they contained certain defects-not, for instance, based on any theory that the assignments were deliberate forgeries. We note this because Kalinosky, Conley's purported expert, opined that Nationstar “knowingly prepared and filed false documents, ” which could be read as raising authenticity as an issue. But such a reading is unwarranted. Kalinosky ultimately relies, as Conley does, only on theories that the assignments contained defects. For instance, Kalinosky opined that “[s]imply put, the underlying transfer for [the] loan... between MERS and [Bank of America in 2012] was ‘legally impossible' since the assignment... failed to include terms lawfully assigning interest under the... 2011 note....”
Moreover, under Evidence Code section 452, subdivision (h), a court may judicially notice facts that derive from the effect of a legally operative document. (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 754.) This has included, for instance, the identity of a beneficiary under a deed of trust when an effect of the document is to designate a beneficiary. (See Fontenot, supra, 198 Cal.App.4th at p. 266 [concluding on record before it that “MERS was the beneficiary under the deed of trust because, as a legally operative document, the deed of trust designated MERS as the beneficiary” and that “[g]iven this designation, MERS's status was not reasonably subject to dispute”].) This is distinct from items such as hearsay statements a document may contain, which may not be judicially noticed. (See Herrera v. Deutsche Bank National Trust Co., supra, 196 Cal.App.4th at p. 1375.)
Here, the trial court granted Nationstar's request for judicial notice, basing its ruling on the fact that the 2012 assignment designated Bank of America as the beneficiary. The assignment was recorded, and its legal effect was to name a new person as the beneficiary under the deed of trust. Under Evidence Code section 452, subdivisions (c) and (h), the trial court properly granted the request.
B. Judicially Noticeable Facts
Having determined that judicial notice was proper, it becomes apparent that, beginning 2016, Nationstar was the beneficiary under the deed of trust. Under the 2011 deed of trust, MERS was designated as the beneficiary. In 2012, MERS assigned its beneficial interest to Bank of America, designating it as the new beneficiary. And in 2016, Bank of America assigned its interest to Nationstar, designating Nationstar as the beneficiary. Contrary to Conley's contention that Nationstar's status as beneficiary relies on hearsay, Nationstar's status derives from the legal, operative effect of the documents in the chain of title.
Conley challenges Nationstar's status as beneficiary on two other grounds. First, Conley contends that Nationstar could not have had rights as a beneficiary because it was not a “‘holder in due course'” pursuant to Commercial Code section 3302. However, “‘[t]he comprehensive statutory framework established in [Civil Code sections 2924 to 2924k] to govern nonjudicial foreclosure sales is intended to be exhaustive, '” so her “reliance on the California Uniform Commercial Code provisions pertaining to negotiable instruments is misplaced.” (Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440.)
Second, Conley observes that an assignment of the deed of trust is void without the transfer of the underlying note, implicitly arguing that Nationstar never obtained ownership of the promissory note underlying the deed of trust. But judicially noticeable facts also show that the note followed the deed of trust here.
The 2011 deed of trust states that “MERS holds only legal title to the interests granted by [Conley] in this [deed of trust]; but, if necessary to comply with law or custom, MERS, (as nominee for [l]ender and [l]ender's successors and assigns), has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the [p]roperty; and to take any action required of [l]ender including, but not limited to, releasing or canceling this [deed of trust].” This language “establishes as a factual matter that MERS has the authority to exercise all of the rights and interests of the lender.” (Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 83-84, disapproved on other grounds by Yvanova v. New Century Mortgage Corp., supra, 62 Cal.4th at p. 939, fn. 13.)
Armed with such authority, MERS executed the 2012 assignment, wherein it granted to Bank of America “all beneficial interest under [the 2011 deed of trust] together with the note(s) and obligations therein described and the money due and to become due thereon with interest and all rights accrued or to accrue under said [d]eed of [t]rust.” (Italics added.) The legal effect of such language was to transfer the note along with the deed of trust. Similarly, in Bank of America's 2016 assignment, Bank of America transferred to Nationstar “all its interest” under the 2011 deed of trust. Thus, contrary to what Conley suggests, the deed of trust assignments were not void for failure to transfer the underlying note, as their legal effect was to transfer the note as well as the deed of trust.
At oral argument, Conley disputed MERS's ability to exercise a lender's rights under the note, noting that MERS holds only legal title and that the specific rights enumerated in the deed of trust are those traditionally associated with a trustee, not a lender. This overlooks the text of the deed of trust, which expressly states that MERS may exercise “any or all” of the interests granted by Conley. Moreover, MERS commonly exercises rights on behalf of a lender (as its nominee) in order to streamline what some participants in the mortgage industry have viewed as a cumbersome recording process. (See, e.g., Cervantes v. Countrywide Home Loans, Inc. (9th Cir. 2011) 656 F.3d 1034, 1038-1039 [explaining MERS's role and noting that “MERS was designed to avoid the need to record multiple transfers of the deed by serving as the nominal record holder of the deed on behalf of the original lender and any subsequent lender”].)
Accordingly, Nationstar became the beneficiary under the deed of trust starting in 2016, and Conley has not shown otherwise.
C. Conley's Causes of Action
Having confirmed Nationstar's status as beneficiary, we find, after reviewing the operative complaint and her brief on appeal, that none of Conley's causes of action are legally viable. All eight causes of action that she alleges are based on the foundational premise that Nationstar was never a beneficiary and thus had no right to foreclose. Additionally, the central claim in her appeal brief is that Nationstar was never a beneficiary. Because judicially noticeable facts contradict this, we find Conley has not stated a viable legal theory under any of her eight causes of action.
D. Kalinosky's Affidavit; Leave to Amend
Conley devotes a section of her brief to contending that the trial court should have considered the affidavit from Kalinosky, her purported expert, when ruling on the motion for judgment on the pleadings. We agree with the trial court that Kalinosky's affidavit was irrelevant. The affidavit, which primarily opined on legal issues (if not entirely), was inadmissible, as “an expert may not testify about issues of law or draw legal conclusions.” (Nevarrez v. San Marino Skilled Nursing & Wellness Centre, LLC (2013) 221 Cal.App.4th 102, 122.)
Conley also contends that the trial court abused its discretion in denying leave to amend. “‘Denial of leave to amend after granting a motion for judgment on the pleadings is reviewed for abuse of discretion.'” (Foundation for Taxpayer & Consumer Rights v. Nextel Communications, Inc. (2006) 143 Cal.App.4th 131, 135.) “To show an abuse of discretion, the plaintiff has the burden of demonstrating that ‘there is a reasonable possibility the plaintiff could cure the defect with an amendment.'” (Ibid.)
We find no abuse of discretion. Conley states that she can amend her complaint to show why the 2016 deed of trust assignment is void, citing only section 3302 of the Commercial Code. However, as we have noted, that section does not govern nonjudicial foreclosure sales. (See Debrunner v. Deutsche Bank National Trust Co., supra, 204 Cal.App.4th at p. 440.)
DISPOSITION
The judgment is affirmed. Nationstar is awarded its costs on appeal.
We concur: MILLER Acting P. J.SLOUGH J.