Opinion
H035188
12-28-2011
MARK J. PETERSON, Plaintiff and Appellant, v. CARRINGTON MORTGAGE SERVICES, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Cruz County Super. Ct. No. CV161756)
Plaintiff and appellant Mark J. Peterson appeals from the trial court's grant of summary judgment in favor of defendant and respondent Carrington Mortgage Services, LLC on Peterson's causes of action for breach of contract, breach of the covenant of good faith and fair dealing, fraud, negligent misrepresentation, and slander of title. The claims arose after Peterson defaulted on a promissory note secured by real property and a notice of default was recorded. Carrington ultimately became the servicer of the loan and it subsequently caused a notice of sale to be recorded.
As the foreclosure process was proceeding, Peterson allegedly entered into an oral agreement with a Carrington employee to the effect that the property could be the subject of a short sale to a third-party buyer at some $300,000 less than what Peterson owed on the note, and that Carrington would forbear further foreclosure proceedings while the sale could be implemented. Carrington then allegedly reneged on the deal, significantly raising the acceptable price for any short sale of the property. Peterson filed for relief in bankruptcy, staying the foreclosure. As far as this record shows, no sale ever took place and Peterson still owns the property.
Peterson's counsel confirmed this current state of title at oral argument.
The trial court granted Carrington's motion for summary judgment. It reasoned that (1) the alleged oral agreement by Carrington was unenforceable as a matter of law under the statute of frauds (Civ. Code, § 1624); (2) the fraud claims were not actionable as they merely sought to enforce the alleged contract; and (3) because Peterson was in default when the notice of default was recorded, he was not damaged by any inaccurate information contained in that recorded document or the recorded notice of trustee's sale about the identity of the beneficiary under the deed of trust, rendering his slander of title claim without merit.
Peterson appeals, contending in some newly articulated arguments that the trial court erred in that the alleged oral contract was enforceable because it was excepted from the statute of frauds; that the statute of frauds does not operate to bar his fraud claims; and that his title to the property was slandered by erroneous information about the identity of the parties in the notice of default and notice of sale irrespective of whether he was behind in his payments. He also generally challenges Carrington's "standing" to have brought the motion for summary judgment. We reject these claims and affirm the judgment.
STATEMENT OF THE CASE
We take the facts from the papers submitted in connection with the motion for summary judgment. In some respects, this is difficult to do because the complete record on appeal has various different components submitted by both sides, some of which are duplicative. And it is not clear whether all portions of the record were actually before the trial court on the motion. Moreover, when stating facts in their briefs, both parties have cited in many instances only to the separate statements filed in connection with the motion for summary judgment, not to the evidence in the record that might support the factual statement. This creates an unacceptable burden on the court to, on its own, have to locate the evidence in the record without the benefit of meaningful citations by the parties.
A. The Note and Deed of Trust
In April 2006, Peterson purchased residential real property located in Capitola for $1,085,000. There were three small cottages situated on the property, which he intended to renovate. He paid $335,000 in cash and financed the balance of $750,000 by signing an adjustable rate balloon note, which was secured by a deed of trust affecting the property. The lender was identified in the note as New Century Mortgage Corporation. The note provided that it could be transferred, and that any party who might take the note "by transfer and who is entitled to receive payments" thereunder is called the " 'Note Holder.' " New Century Mortgage Corporation was also identified as the lender and the beneficiary under the deed of trust. Santa Cruz Title was identified as the trustee.
The deed of trust further provided that the note could be sold once or more without prior notice to the borrower, and that a sale might result in a change of the loan servicer, the entity who collects payments and performs other unspecified loan servicing obligations under the note and deed of trust. It further provided that the loan servicer could change without a sale of the note, and that the borrower would be provided with notice of any change in the servicer. It finally provided that "[i]f the Note is sold and thereafter the Loan [defined as the debt evidenced by the note and all related payment obligations plus all sums due under the deed of trust] is serviced by a Loan Servicer other than the purchaser of the Note, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred to a successor Loan Servicer and are not assumed by the Note purchaser unless otherwise provided by the Note purchaser."
The note and deed of trust were apparently packaged and securitized for sale, pooled into a trust with many other residential mortgages originated by New Century Mortgage Corporation and converted into mortgage-backed securities. According to Carrington, the loan was transferred into trust corpus by New Century Mortgage Corporation in June 2006, as evidenced by a Mortgage Loan Purchase Agreement dated June 26, 2006, which "put the [Peterson] loan into" a trust, and accompanying loan schedule, which includes the Peterson loan among many others. Specifically, Pamela Rigg, the vice-president of servicing and quality assurance for Carrington Mortgage Holdings, LLC, a parent company of Carrington, stated in her declaration in support of the motion that "[t]he loan was originated by New Century on April 28, 2006. [It] was subsequently made a part of a Delaware statutory trust known as the New Century Home Equity Loan Trust 2006-2 (the 'Trust'). [¶] On June 29, 2006, Deutsche Bank National Trust Company . . . entered into an Indenture agreement pursuant to which the Trust, among other things, granted to Deutsche, as Trustee, all of the Trust's right, title and interest in and to the mortgage loans comprising the Trust, including [Peterson's] loan. Such grant was made in trust to secure the payment of principal and interest on the mortgage loans comprising the Trust, including the [Peterson] loan."
In the world of mortgage-backed securities, "a pooling and servicing agreement is an agreement creating a trust that defines the terms under which promissory notes and their related mortgages are placed into the trust, describes how the notes and mortgages and related loan documents are transferred by and between the parties to the trust, and sets forth the various responsibilities of the parties to the trust. The promissory notes, mortgages or deeds of trust, and related loan documents are the trust res. Through the securitization process, the beneficial or ownership interests in the trust are held by investors." (In re Smoak (2011 Bankr. LEXIS 3621, *8.) Stated another way, "[s]ecuritization of residential mortgages is 'the process of aggregating a large number of notes secured by deeds of trust in what is called a mortgage pool, and then selling security interests in that pool of mortgages.' (Kurt Eggert, Held Up In Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 Creighton L. Rev. 503, 536 (2002).) The process begins with a borrower negotiating with a mortgage broker for the terms of the loan. Then, the mortgage broker either originates the loan in its own name or in the name of another entity, which presumably provides the money for the loan. Almost immediately, the broker transfers the loan to the funding entity. 'This lender quickly sells the loan to a different financial entity, which pools the loan together with a host of other loans in a mortgage pool.' Id. 538. [¶] The assignee then transfers the mortgages in the pool to another entity, which in turn transfers the loan to a special purpose vehicle ('SPV'), whose sole role is to hold the pool of mortgages. Id. 539. 'The transfer to the special purpose trust must constitute a true sale, so that the party transferring the assets reduces its potential liability on the loans and exchanges the fairly illiquid loans for much more liquid cash.' Id. 542. Next, the SPV issues securities which the assignee sells to investors. Id. 539. [¶] Once the securities have been sold, the SPV is not actively involved. It 'does not directly collect payments from the homeowners whose notes and deeds of trust are held by the SPV.' Id. 544. Rather, the servicers collect the principal and interest payments on behalf of the SPV. Id. Fees are associated with the servicing of loans in the pool." (In re Weisband (Bankr. D. Ariz. 2010) 427 B.R. 13, 17-19.)
The record contains a few pages of the document entitled "Mortgage Loan Purchase Agreement" dated June 26, 2006, which references a "Trust Estate designated as New Century Home Equity Loan Trust 2006-2" created by an Amended and Restated Trust Agreement. The Mortgage Loan Purchase Agreement also references a Servicing Agreement of the same date under which Deutsche Bank National Trust Company is Indenture Trustee and an Indenture of the same date whereby the Indenture Trustee is pledgee of a group of identified asset backed notes. Complete sets of these various documents are not in the record, precluding our analysis of them and their legal effects. But we do observe that as a jumbo loan under Fannie Mae rules and as an adjustable rate loan with a balloon payment, the Peterson loan did not fit into what the Mortgage Loan Purchase Agreement itself describes as the loans comprising the Trust. Contrary to Peterson's arguments, however, this does not mean that his loan was not transferred into the Trust, only that the transfer perhaps violated the terms of the Mortgage Loan Purchase Agreement, something that as a stranger to the Agreement, he has no standing to assert and that without complete documents, we are not in a position to determine. (Correia v. Deutsche Bank National Trust Co. (In re Correia) (B.A.P. 1st Cir. 2011) 452 B.R. 319 [debtors lacked standing to raise violations of the pooling and service agreement]; In re Almeida (Bankr. D. Mass. 2009) 417 B.R. 140, 149, fn. 4 [debtors as makers of notes were not parties or third-party beneficiaries to pooling and service agreements and therefore lacked standing to assert breach of those agreements]; Bittinger v. Wells Fargo Bank NA (S.D. Texas 2010) 744 F.Supp.2d 619, 625-626 [obligor cannot sue for breach of contract based upon pooling and servicing agreement to which it is not a party]; Livonia Property Holdings, L.L.C. v. 12840-12976 Farmington Road Holdings, L.L.C. (E.D. Mich. 2010) 717 F.Supp.2d 724, 748, affd. (6th Cir. 2010) 399 Fed. Appx. 97 [same].) Moreover, because it is undisputed that Peterson as the maker of the note granted a security interest to enforce it, he is perhaps not in a position to challenge the security based on a defect in assignment. (Noland v. Wells Fargo Bank N.A. (In re Williams) (Bankr. S.D. Ohio 2008) 395 B.R. 33, 44 [defects in assignment of mortgage may affect subsequent bona fide purchasers, but not original mortgagor].)
Peterson objected in the court below to various portions of the Rigg declaration, including these portions as lacking in foundation because the referenced documents are not attached to the declaration. According to Peterson, the statements are unsubstantiated by any "transactional evidence at all." But the trial court did not rule on any evidentiary objections and Peterson has not raised them on appeal. The declaration thus stands and is within the scope of our review, as with the rest of the record notwithstanding other evidentiary objections raised by the parties in the trial court but not on appeal.
The transfer of the loan is reflected by the later Assignment of Deed of Trust dated August 1, 2007, but not recorded until April 23, 2009, under which the deed of trust, together with the note, was assigned by New Century Mortgage Corporation to Deutsche Bank National Trust Company as Indenture Trustee for New Century Home Equity Loan Trust Series 2006-2.
Likewise on August 1, 2007, Deutsche Bank National Trust Company as Indenture Trustee for New Century Home Equity Loan Trust Series 2006-2, as the successor beneficiary under the deed of trust, executed a Substitution of Trustee whereby Malcolm ? Cisneros was substituted as trustee under the deed of trust in place of Santa Cruz Title. The Substitution of Trustee was recorded on August 9, 2007.
Malcolm ? Cisneros is a law firm that apparently acts as agent and debt collector for its clients. It also represents Carrington in this litigation both in the trial court and on appeal.
Both the August 1, 2007 Assignment of Deed of Trust and Substitution of Trustee were signed by one Frank Mercado, Jr., the former on behalf of New Century Mortgage Corporation and the latter on behalf of Deutsche Bank National Trust Company as Indenture Trustee For New Century Home Equity Loan Trust Series 2006-2. Mercado was apparently an employee of Land America Title, which provided a signature service to financial institutions for which the institutions paid a fee per document signed, a practice that has sometimes been referred to as "robo-signing" in connection with the ongoing mortgage foreclosure crisis. In the context of this crisis, "robo-signing" has been used to "describe a robotic process of the mass production of false and forged execution of mortgage assignments, satisfactions, affidavits and other legal documents related to mortgage foreclosures and legal matters being created by persons without knowledge of the facts being attested to." (See, http://en.wikipedia.org/wiki/ 2010_United_States_foreclosure_crisis, as of December 27, 2011.) The documents Mercado signed were generally assignments of mortgages and substitutions of trustee, both of which were involved here. As part of this service, Mercado signed about 1,000 such documents per month for several financial institutions.
Meanwhile, New Century Mortgage Corporation filed for relief in bankruptcy on or about April 1, 2007. As part of that "liquidation, [Carrington] purchased the servicing platform and the servicing rights to the securitizations that New Century was servicing at the time of the bankruptcy filing," as "evidenced by the Asset Purchase Agreement [dated May 21, 2007] . . . between New Century and [Carrington]." This platform included the Peterson loan. "As a result, Carrington purchased the rights to service the [Peterson] Loan for the benefit of Deutsche, as Trustee of the Trust. Carrington's right to service the Loan became effective on July 1, 2007." New Century Mortgage Corporation and Carrington jointly notified Peterson of the transfer of servicing rights by letter dated July 12, 2007. The notice instructed him to make payments due on or after July 1, 2007, to Carrington instead of New Century Mortgage Corporation.
B. Peterson's Default and Subsequent Events
Peterson stopped making payments under the note and deed of trust in April 2007, before he was notified of the change in loan servicer. As a result, New Century Mortgage Corporation, the original lender, wrote to him on April 17, 2007, and informed him of the missed payment and the imposition of late charges. According to Peterson, during May and June 2007, he attempted without success to contact New Century Mortgage Corporation to discuss his loan. But his phone calls were not returned.
Then, with no further payments from Peterson having been received, on June 22, 2007, New Century Mortgage Corporation, "as servicer of the Loan, instructed its agent, Malcolm ? Cisneros, to initiate foreclosure proceedings against [Peterson] with respect to the [p]roperty in the name of Deutsche Bank National Trust Company as Indenture Trustee for New Century Home Equity Loan Trust Series 2006-2." In this regard, the written instructions to Malcolm ? Cisneros identified the loan servicer as "New Century Mortgage" and directed that "[f]oreclosure must be filed in the name of: Deutsche Bank National Trust Company as Indenture Trustee for New Century Home Equity Loan Trust Series 2006-2."
On June 26, 2007, Malcolm ? Cisneros caused a notice of default under the note and deed of trust to be recorded in the Santa Cruz County records. Malcolm ? Cisneros was identified in the notice as the "Agent for Beneficiary" under the deed of trust and Peterson was directed to contact "Deutsche Bank National Trust Company as Indenture Trustee for New Century Home Equity Loan Trust Series 2006-2 c/o Malcolm ? Cisneros" to ascertain the amount required to be paid or to arrange for payment to stop the foreclosure. No beneficiary under the deed of trust was identified as such in the notice, which stated the amount of Peterson's default as of June 22, 2007, as $23,425.49. The notice also did not identify the then current servicer of the loan, whether New Century Mortgage Corporation or Carrington. And Carrington admits that when the notice of default was recorded, it did not know the identity of the then current beneficiary under the deed of trust, as it had not yet become the servicer of the loan.
Carrington maintains that New Century Mortgage Corporation was the loan servicer when the notice of default was recorded in June 2007, and that it was this entity that provided its agent, Malcolm ? Cisneros, with instructions to pursue foreclosure. This conclusion finds support in the record based on the written instructions received by Malcolm ? Cisneros from New Century Mortgage Corporation to initiate foreclosure. But Peterson states in his declaration that he received the notice of default "from Carrington," though what he bases this statement on is not clear. Peterson also points to the January 2008 declaration of Christina Moraga filed in Peterson's bankruptcy proceeding in connection with Carrington's motion for relief from the automatic stay. Moraga is identified in the declaration as a "Bankruptcy Specialist at Carrington Mortgage Services successor to New Century Mortgage, and its successors and/or assigns, ('Carrington Mortgage Services')." (All caps omitted.) She states in her declaration, among other things, that as a result of Peterson's default under the note and deed of trust, "Carrington Mortgage Services recorded a Notice of Default and Election to Sell against the Property on June 26, 2007." Carrington responds that this after-the-fact reference to its responsibility for recording the notice of default was intended simply to denote its capacity as successor in interest to New Century Mortgage, which was the current servicer of the loan in June 2007 and the entity, Carrington argues, actually responsible for recordation of the notice of default.
On July 17, 2007, Peterson finally spoke on the phone with Steve Nash at New Century Mortgage Corporation. Nash informed Peterson that "effective June 30, 2007 Carrington had acquired New Century's 'serving [sic] platform.' Mr. Nash suggested a short sale and offered to mail a short sale package to [Peterson]. When the package failed to arrive, [Peterson] called again and Mr. Nash had a short sale package faxed [to Peterson] on July 23, 2007." The package stated that Carrington would "consider" a short sale of the property as a default workout option and included forms for Peterson to fill out. The forms requested information about his financial status and gave a list of financial documents he needed to provide before the option would be considered. The documents requested also included a "Signed Purchase Agreement Offer," presumably from a third-party buyer of the property for the proposed short sale transaction. Peterson filled out the forms, stating that he fell behind on his mortgage payments because of unemployment, insufficient income, medical problems, and unanticipated conditions encountered by the building contractor he had hired to renovate the three cottages, two of which were by then "gutted." Peterson noted that the proposed buyer for the short sale was the contractor he had hired to do the renovations. He faxed and mailed the short sale package back to Nash on August 10, 2007. It is not clear from the record whether he submitted an offer by the contractor to buy the property in a short sale transaction. Nash called Peterson "and said that he had received and reviewed the entire package and given it over to Mr. Anthony Mendoza."
The fax receipt shows that 11 pages were successfully sent on August 10. The package of forms appears to comprise six pages and the record does not reveal what other material Peterson submitted to Carrington along with it.
According to Peterson, he orally "agreed on the terms of a short sale with Mr. Mendoza of Carrington. [They] also agreed that the lender would not proceed to foreclosure." On September 10, 2007, Peterson faxed a three-page hand-written letter dated September 7, 2007, to Mendoza, whom he addressed at "Carrington Mortgage Services" and "New Century Mortgage." The letter said, among other things, that Peterson had called several times and left messages but had not heard back. Peterson acknowledged from a prior phone conversation that Mendoza was "swamped with problem properties and that it might take several weeks to process the paperwork" Peterson had submitted. Peterson confirmed his understanding that the "contractor's purchase proposal (short sale) was generally acceptable to Carrington and New Century and that in no event would New Century proceed with the Notice of Default and Intent to Foreclose." Because Peterson was under "constant pressure" from the contractor, to whom he "owed substantial money" and who was "threatening litigation," Peterson asked whether Mendoza would agree to record a "notice canceling the default and foreclosure intentions" in order to "process the paperwork more calmly." Peterson finally asked Mendoza to let him know if he had misunderstood the situation.
On September 26, 2007, apparently after another phone conversation with Mendoza, Peterson faxed a two-page hand-written letter dated September 24, 2007, to Mendoza, again at "Carrington Mortgage Services" and "New Century Mortgage." It said, "This is to confirm our phone conversation and to confirm the substance of our deal. [¶] You have told me that at $455,000 we have a deal for the short sale. You have told me that you have authority to make this deal and that based on this deal there will be no foreclosure proceedings further. [¶] I have told you that I will fax you the addendum wherein the contractor agrees to $455,000. [¶] Please let me know if any of the above is incorrect or not your understanding."
Mendoza's version of events differs, evidencing disputed issues of fact. According to him, he spoke with Peterson in or about July 2007, when Peterson contacted Carrington to discuss the potential of a short sale of the property to a third party "as a means of working out [his] default under" the loan. On September 24, 2007, Peterson advised Mendoza that he had identified a third party who was willing to buy the property for $455,000. On or about October 1, 2007, Mendoza informed Peterson that the proposed transaction was not acceptable as a work-out of his obligation. Mendoza countered on behalf of Carrington that a short sale of the property for $700,000, its perceived fair market value, would be acceptable. Peterson rejected this proposal and never responded with another. Mendoza denies ever having entered into any agreement with Peterson for a short sale of the property or "to forbear on Carrington's right to foreclose on the Property." And he further denies in any event that he had the authority on behalf of Carrington to enter into the contract that Peterson alleges, where the "loss on the Loan transaction would have exceeded $100,000. Under such circumstances, only a Senior Vice President could have approved the short sale as a loss of such magnitude requires upper management approval. Because of the disparity between the amount offered by [Peterson], $455,000, and the approximate fair market value of the Property, $700,000, and given the fact that [Peterson] never responded to Carrington's counter offer with another offer, [Mendoza] never sought or obtained any such approval."
On September 26, 2007, Malcolm ? Cisneros, as the substituted trustee under the deed of trust, recorded a Notice of Trustee's Sale, setting a foreclosure sale of the property under the deed of trust for October 17, 2007. Like the notice of default, the notice of trustee's sale did not specifically identify as such the current holder of the note or the current beneficiary under the deed of trust.
According to Peterson, on October 2, 2007, Mendoza "repudiated the agreement for short sale and the agreement to not foreclose." Peterson filed a Chapter 13 bankruptcy petition on October 11, 2007, to stay the foreclosure. His schedules listed his debt of $799,088 under the deed of trust and identified "Deutsche Bank c/o Carrington/New Century" as the creditor. Carrington, as successor to New Century Mortgage Corporation, later filed a proof of claim in Peterson's bankruptcy proceeding in which it identified itself as the entity to whom Peterson owed money under the note and deed of trust, to wit: $53,791.94 as arrearages due thereunder.
At least as appears in this record, the property did not thereafter become the subject of any actual trustee's sale or any other transfer of ownership and Peterson remains its record owner to this day.
II. Procedural Background
A. Peterson's Complaint
Just about a year after Peterson filed his bankruptcy petition, he filed this action against Carrington on October 21, 2008. His complaint alleged causes of action for breach of contract (oral short sale agreement and forbearance); breach of the covenant of good faith and fair dealing (same); fraud (misrepresentations concerning right to foreclose and authority to enter into short sale agreement); negligent misrepresentation (same); and slander of title (publication of notice of default, lack of short sale, and no forbearance agreement).
New Century Mortgage Corporation was also named as a defendant but was apparently dismissed below and is not a party to this appeal.
Pertinent to the first two causes of action sounding in contract, the complaint alleged in its general allegations, incorporated into all causes of action, that as a result of Carrington's breach, Peterson "consulted bankruptcy counsel and filed Chapter 13 on October 11, 2007 to avoid the foreclosure." The first cause of action for breach of contract further alleged that as a result of Carrington's breach of the oral promise to engage in a work-out of Peterson's default under the note and deed of trust by cooperating in the short sale of the property and to forbear foreclosure proceedings, Peterson suffered damages to be proven at trial but exceeding $1 million. No other specific injury is alleged. And no acts by Peterson in reliance on Carrington's oral promises, or a detrimental change in position, or unconscionable injury are alleged, other than his consulting bankruptcy counsel and filing for bankruptcy protection to avoid foreclosure. Nor did Peterson allege or identify in his complaint some way in which Carrington was unjustly enriched by its conduct.
With respect to the fraud and negligent misrepresentation causes of action, Peterson's complaint alleged that Carrington, through Mendoza, falsely represented its authority "to approve the short sale agreement" and "enter into said agreement." Peterson alleged that the true facts were that Carrington had no such authority and had no right to foreclose, being neither the owner of the loan nor the beneficiary under the deed of trust, and that the misrepresentations were made "to defraud [Peterson] of the property in hopes that [he] would default on the mortgage and [Carrington] would be able to pick up the property at a drastically reduced price from the true note holder" and to "induce [Peterson] into entering the agreement to short sale the property, to prolong the period of default and force [him] further into debt." Further, Carrington's actions induced Peterson to "rel[y] on [Carrington's] misrepresentation to his detriment" and as a result of Carrington's fraud, he sustained damage "in an amount in excess of $1,000,000."
Thus, with respect to his contract and fraud causes of action, Peterson did not plead any specific facts concerning his alleged reliance or a detrimental change in position beyond consulting counsel and filing a bankruptcy petition. Nor did he allege specific facts demonstrating that he suffered an unconscionable injury or that Carrington was unjustly enriched by its allegedly false promises and representations. Nor did he plead, or attempt to plead, a cause of action seeking equitable relief based on a theory of promissory estoppel.
With respect to his slander of title cause of action, Peterson alleged that in June 2007, Carrington "willfully, maliciously and without privilege or justification published a false statement concerning [his] title, ownership and rights to the property," specifically that it "held the note concerning [his] property, that [it was] authorized to file and record a notice of default, that [it] had been given by the present beneficiary a written declaration and demand for sale." And then, "[s]tarting in July, [Carrington] published further false statements, including [that Peterson] was behind in his payments, that [he] and [Carrington] had not entered into a short sale agreement and that the property would be foreclosed on." These actions allegedly "slandered the title of [Peterson's] property, to [his] damage in a sum in excess of $1,000,000."
B. Carrington's Motion For Summary Judgment
After filing an answer, in July 2009, Carrington moved for summary judgment on Peterson's complaint and alternatively for summary adjudication of each of its five causes of action. As to the contract claims, Carrington contended that any oral agreement on its part to cooperate with a short sale of the property by accepting less than what Peterson owed on the note, or to forbear proceeding with foreclosure, constituted a modification of the note and deed of trust affecting the property and was thus barred by the statute of frauds, Civil Code sections 1624 and 1698. As to the fraud and negligent misrepresentation claims, Carrington urged that they were not actionable as they sought recovery "in tort for breach of duties that merely restate contractual obligations" without violating an independent duty. As to the cause of action for slander of title, Carrington contended that Peterson could not establish the requisite elements of the claim.
Peterson opposed the motion. As to the contract claims, his opposition in substance contended that the statute of frauds did not require a writing under the circumstances of the case and even if it did, an exception applied under Civil Code section 1624, subdivision (b)(3) to remove the alleged contract from its application. In a single sentence of the introduction to his points and authorities and though not raised by his pleadings, Peterson also asserted that the "doctrine of Promissory Estoppel and Detrimental Reliance prevents Carrington from avoiding the promise it made to not foreclose." This point was not made with respect to the alleged oral promise to cooperate in a short sale and it was not further developed as an actual argument supported by facts, authorities, and legal analysis.
In doing so, he disputed many facts in response to Carrington's separate statement of undisputed facts. But he failed to offer evidence that actually disputed the stated fact in many instances, oftentimes citing a basis of dispute that was nonresponsive to the stated fact. For example, as undisputed fact No. 4, Carrington stated that "[b]eginning in April 2007, [Peterson] got behind in his payments and defaulted on the Loan," a fact that is undisputed based on the evidence before the trial court. But Peterson disputed this fact, offering that before his April 2007 payment was 10 days late, he received a nonpayment letter from New Century Mortgage Corporation and he thereafter tried to reach New Century to tender payment, without success. These latter facts may be true, but they do not dispute that Peterson stopped making payments on the loan beginning with the payment due in April 2007, as he admitted in his deposition. There are other similar such examples. In the course of our review, we consider stated facts to be disputed only when they are actually disputed by evidence appearing in the record. And by that we do not mean allegations of the complaint, which are not evidence.
This subdivision excepts certain "qualified financial contracts" to which each party is other than a natural person and as to which there is evidence, of four specified types, sufficient to indicate that a contract was made. (Civ. Code, § 1624, subd. (b)(3).) As Peterson is a natural person, this subdivision does not operate to except his alleged oral contract with Carrington from the statute's requirement of a writing subscribed by the party to be charged, here Carrington. (Id., subd. (a).)
As to the fraud cause of action, Peterson's opposition to the motion varied from his pleading. He asserted that in addition to Carrington's alleged false promises in connection with the proposed short sale of the property, Carrington also filed pleadings and made statements in Peterson's bankruptcy proceeding, such as filing a proof of claim and seeking relief from the automatic stay in order to foreclose, that contained false statements about its own role and authority to act in relation to the note and deed of trust in a "plan to convert Peterson's home." Peterson's opposition also varied from his pleading with respect to his cause of action for negligent misrepresentation, reframing the claim as one for negligence and contending that Carrington breached its assumed duty as a loan servicer by "recklessly" recording the notice of default, violating the federal Real Estate Settlement Procedures Act codified at 12 United States Code section 2601 et seq. (RESPA) as well as Civil Code section 2924; "ma[king] a series of court filings" in Peterson's bankruptcy proceeding that were allegedly "reckless, if not fraudulent"; misrepresenting "its authority to effectuate a short sale," causing Peterson to "discontinue examining or pursuing other options"; and not processing his short sale proposal within five days, further delaying him.
As to the slander of title cause of action, Peterson contended that Carrington, which did not become the servicer of the loan until July 1, 2007, and not New Century Mortgage Corporation, published the notice of default in June 2007 and the subsequent notice of trustee's sale, both of which contained false information as to the identity of the current beneficiary, i.e., Deutsche Bank, under the deed of trust. And because the identity of the true beneficiary was false, the information contained in the notice of default as to the amount Peterson owed was also false as he didn't owe anything to Deutsche Bank, which in any event had no right to pursue foreclosure under the deed of trust because it was not its current beneficiary. Nor did he owe anything to New Century Mortgage Corporation, which was in bankruptcy and had not responded to his inquiries in May and June 2007 about where and to whom to send his payments.
In addition to the lack of pleading, there was no factual evidence before the court on the motion that Peterson detrimentally changed his position in reliance on the alleged oral contract, suffered an unconscionable injury, or that Carrington was unjustly enriched. Nor was there evidence of any specific damages suffered by Peterson in reliance on Carrington's alleged conduct, other than the assertion that he sought relief in bankruptcy to avoid the foreclosure, which Peterson admitted as an undisputed fact.
C. The Court's Ruling
At the hearing on the motion, the court announced its tentative intention to grant summary judgment, and its rationale therefor, before the parties argued the merits. At the end of the hearing, the court adopted its tentative ruling. The court's subsequent written order reflected its previously stated rationale.
As to the causes of action for breach of oral contract (short sale and forbearance) and related breach of the covenant of good faith and fair dealing, the court determined that the claims were barred by the statute of frauds under Civil Code sections 1624, 1698, and 2922. The court acknowledged that there was a disputed fact about the existence of the alleged oral contract but nevertheless concluded that such an agreement, without a writing that satisfied Civil Code section 1624, is unenforceable as a matter of law and that Peterson's unilateral letters confirming the contract that were faxed to Carrington were not writings subscribed by the party to be charged—Carrington. The court also determined that the proffered exception to the statute of frauds for a "qualified financial contract" as provided at Civil Code section 1624, subdivision (b)(3) did not apply.
Civil Code section 1624 codifies the statute of frauds. Civil Code section 1698 generally applies to also bar oral modifications of agreements that are themselves subject to the statute of frauds. Civil Code section 2922 specifically applies to mortgages, providing that a "mortgage can be created, renewed, or extended, only by writing, executed with the formalities required in the case of a grant of real property."
The court further concluded that the causes of action for fraud and negligent misrepresentation "flow from [Peterson's] alleged breach of contract. Because no valid, enforceable contract existed between the parties[,] [Peterson's] causes of action for fraud and negligent misrepresentation likewise fail as a matter of law."
As to the slander of title cause of action, the court acknowledged a disputed issue of fact about whether "the beneficiary on the subject notice of default may have been misidentified" but nevertheless concluded that it was undisputed that Peterson was not damaged by any such misidentification. "The undisputed evidence establishes that [Peterson] was in default under the subject note and deed of trust when the notice of default was recorded against the subject property."
Judgment was later entered against Peterson and in favor of Carrington. Peterson timely appealed.
DISCUSSION
I. Peterson's Contentions on Appeal
In newly articulated claims, Peterson contends that the court erred with respect to his contract causes of action because "the doctrine of equitable estoppel prohibited Carrington from asserting the statute of frauds as a defense. Further, even if Carrington could assert the statute of frauds, the doctrine of part performance requires the enforcement of the contract." As to his fraud and negligent misrepresentation causes of action, Peterson likewise argues that the doctrines of equitable estoppel and part performance render these tort claims actionable, even if they are mere restatements of his contract claims cast in tort. He further contends that even if the statute of frauds bars his contract claims, he may still maintain his causes of action based on fraud because the statute of frauds does not apply to bar fraud claims.
As to his claim for slander of title, Peterson contends that there was at least a disputed factual question as to the elements of the claim before the trial court, including damages to the "vendibility and value of the property," which precluded summary disposition of the cause of action.
In a supplemental opening brief, Peterson contends that Carrington, though named by him as a defendant in this case, "lacked standing before the trial court because [it] failed to produce evidence of an endorsed note." The argument appears to be loosely based on a theory applied by some courts around the country against parties prosecuting foreclosure actions or creditors affirmatively pursuing claims in bankruptcy proceedings without proof of the proper and perfected authority to do so through valid assignment of rights and endorsements of the assigned note by the original lender. (See, e.g., Kemp v. Countrywide Home Loans, Inc. (Bankr. D. N.J. 2010) 440 B.R. 624, 626, 629-630 [for note and mortgage to be enforceable, New Jersey law requires holder of note to have actual possession of it and note to be properly endorsed to new owner upon transfer]; Bayview Loan Servicing, L.L.C. v. Nelson (2008) 382 Ill.App.3d 1184, 1187-1188 [party initiating foreclosure did not hold mortgage or note and as stranger to mortgage, had no right to foreclose under Illinois law]; U.S. Bank National Assn. v. Ibanez (2011) 458 Mass. 637, 638, 646-654 [in postforeclosure action to establish clear title, nonjudicially foreclosing parties who were not original mortgagees failed to make required showing under Massachusetts law that they were holders of the mortgage at the time of sale, receiving assignments in chain of title only later].) Peterson appears to invoke this theory's application to all causes of action in this case and generally contends that "[w]ithout evidence of the transfer of the note," summary judgment for Carrington on his complaint was error.
See In re Alcide (Bankr. E.D. Penn. 2011) 450 B.R. 526, 532-534, for a description of issues and subsidiary issues commonly arising in the bankruptcy context in the wake of the mortgage crisis that relate to the propriety of a creditor's status as a party with authority to pursue legal action against a debtor under a note secured by a mortgage or deed of trust.
II. Standard of Review
The general standard of review for summary judgment is well established. The motion is well taken "if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment [or adjudication] as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) A moving defendant has met his burden of showing that a cause of action has no merit by establishing that one or more elements of the cause of action cannot be established or that there is a complete defense. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849-850 (Aguilar); Lackner v. North (2006) 135 Cal.App.4th 1188, 1196; Code Civ. Proc., § 437c, subds. (f)(1) & (p)(2).) The defendant does this either through evidence that conclusively negates an element of the plaintiff's cause of action or conclusively establishes a defense or by evidence the plaintiff does not possess and cannot reasonably obtain needed evidence. (Aguilar, supra, at p. 855.) Only if the defendant meets this burden does the burden shift to the plaintiff to show the existence of a triable issue of fact with respect to the cause of action or defense. (Id. at p. 850.)
We independently review an order granting summary judgment or adjudication, viewing the evidence in the light most favorable to the nonmoving party. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768; Lackner v. North, supra, 135 Cal.App.4th at p. 1196.) In performing our independent review, "we apply the same three-step analysis as the trial court. First, we identify the issues framed by the pleadings. Next, we determine whether the moving party has established facts justifying judgment in its favor. Finally, if the moving party has carried its initial burden, we decide whether the opposing party has demonstrated the existence of a triable, material fact issue." (Chavez v. Carpenter (2001) 91 Cal.App.4th 1433, 1438.)
In determining whether there are triable issues of fact, we consider all the evidence set forth by the parties, except that to which objections have been made and properly sustained. (Code Civ. Proc., § 437c, subd. (c); Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) In construing the evidence the moving party's showing is "strictly scrutin[ized]" while the opposing party's showing is viewed "liberally." (Saelzler v. Advanced Group 400, supra, 25 Cal.4th at p. 768.) Any doubts about whether the motion should have been granted "should be resolved in favor of the party opposing the motion." (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.) Notwithstanding the liberality afforded to a plaintiff's showing in opposition to summary judgment, his or her evidence remains subject to close examination. (King v. United Parcel Service, Inc. (2007) 152 Cal.App.4th 426, 433.) There is a triable issue of material fact "if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar, supra, 25 Cal.4th at p. 850.)
In performing our review, we are not bound by the trial court's stated rationale, but independently determine whether the record supports the trial court's conclusion that Peterson's claims failed as a matter of law. (Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1003.)
III. The Court Did Not Err in Granting Summary Judgment on the Complaint
A. The Contract Claims
The trial court determined that Peterson's first and second causes of action for breach of oral contract and related breach of the covenant of good faith and fair dealing, as modifications to the note and deed of trust, were barred as a matter of law under the statute of frauds, Civil Code sections 1624, 1698, and 2922. (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 547, 552-553 (Secrest) [agreement by lender to forbear from exercising the right of foreclosure under deed of trust is a modification of a contract subject to statute of frauds, and is therefore subject to statute of frauds]; see also Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 120-121 [agreement by lender to forbear from exercising right to foreclose under deed of trust comes within statute of frauds; gratuitous oral promise not to foreclose is unenforceable]; Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 673.) Peterson challenges this ruling as error, contending, for the first time, that the doctrines of equitable estoppel and part performance operated to except the alleged contract from the statute of frauds.
Peterson concedes on appeal that the alleged oral promise is subject to the statute of frauds but argues that exceptions apply to remove the contract from the statute's application.
We do not consider Peterson's single sentence of his introduction in his points and authorities below that mentions the doctrine of promissory estoppel to suffice to preserve these issues for appellate review.
The first obstacle Peterson faces is that he is pressing these contentions as exceptions to the bar of the statute of frauds for the first time on appeal. As Carrington points out, the general rule against consideration of new legal theories asserted for the first time on appeal applies to summary judgment cases. " 'Specifically, in reviewing a summary judgment, the appellate court must consider only those facts before the trial court, disregarding any new allegations on appeal. [Citations.] Thus, possible theories that were not fully developed or factually presented to the trial court cannot create a "triable issue" on appeal.' [Citation.] 'A party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant.' " (Expansion Pointe Properties Limited Partnership v. Procopio, Cory, Hargreaves & Savitch, LLP (2007) 152 Cal.App.4th 42, 54-55; Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 818, fn. 36 [appellate courts will generally decline to consider "newly minted" theories on appeal].)
Consideration on appeal of Peterson's newly proffered theories regarding exceptions to the statute of frauds is also problematic here because no such legal theory was expressed or pleaded in his complaint; nor are there facts alleged in the complaint, even liberally construed, that might suggest or invoke the application of one of these exceptions, even if not separately pleaded. The pleadings are the outer measure of materiality on a motion for summary judgment, which cannot be overcome because of triable issues of fact based on unpleaded matters. (Kendall v. Walker (2009) 181 Cal.App.4th 584, 598; FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381; Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663-1664.) Moreover, overlooking the lack of pleaded allegations, Peterson did not offer evidence in the trial court from which to demonstrate, even for the first time on appeal, that the defense of the statute of frauds to the contract claims could be overcome by one of the newly cited exceptions, or to raise a triable issue of fact on the question.
" ' "The elements of a promissory estoppel claim are '(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.' " ' " (Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 225 (Aceves).)
The California Supreme Court recognized long ago that "[t]he doctrine of estoppel to assert the statute of frauds has been consistently applied . . . to prevent fraud that would result from refusal to enforce oral contracts in certain circumstances. Such fraud may inhere in the unconscionable injury that would result from denying enforcement of the contract after one party has been induced by the other seriously to change his position in reliance on the contract [citations], or in the unjust enrichment that would result if a party who has received the benefits of the other's performance were allowed to rely upon the statute. [Citations.] In many cases both elements are present. Thus not only may one party have so seriously changed his position in reliance upon, or in the performance of, the contract that he would suffer an unconscionable injury if it were not enforced, but the other may have reaped the benefits of the contract so that he would be unjustly enriched if he could escape its obligations." (Monarco v. Lo Greco (1950) 35 Cal.2d 621, 623-624; see also Wilk v. Vencill (1947) 30 Cal.2d 104 (Wilk) [doctrine of estoppel not destructive of statute of frauds and without it, statute may perpetrate rather than prevent fraud; but plaintiff still must prove the contract, reliance, and change of position]; Phillippe v. Shapell Industries (1987) 43 Cal.3d 1247, 1262 [estoppel can be applied to prevent fraud of the sort that would inhere in situations of unconscionable injury to the promisee or unjust enrichment to the promisor]; Allied Grape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 444.) But without either unconscionable injury to the promisee, which is beyond mere monetary loss or loss of the benefit of the contractual bargain, or unjust enrichment to the promisor beyond the benefit of the bargain, estoppel to assert the statute of frauds to prevent enforcement of an oral contract does not arise. (Estate of Baglione (1966) 65 Cal.2d 192, 197-198.)
Looking to the merits of Peterson's estoppel claim, there is no evidence whatsoever in this record that he suffered from an unconscionable injury or detrimentally changed his position in reliance on the alleged contract, or that Carrington was unjustly enriched, precluding our application of the doctrine of equitable or promissory estoppel to except the alleged oral agreement from the statute of frauds. Peterson contends in briefing, without evidence, that as a result of Carrington's alleged oral promise to cooperate in a short sale and to forbear from foreclosing that he "refrained from making any further payments" on the note, leading to his bankruptcy. But he was indisputedly already in default and he was already obligated to make payments on the note. Moreover, he does not allege that he was told he could or should refrain from making further payments as part of Carrington's oral promise. That he may have done so did not detrimentally change his position or amount to his suffering an unconscionable injury. Nor does his contention in briefing, also unsupported by evidence, that he refrained from finding an "alternative buyer for the property" because he thought he had a deal with Carrington for a short sale to his contractor. That he ultimately sought legal advice and bankruptcy protection to avoid the foreclosure resulting from his already existing default, the only slice of evidence there is for his proffered reliance, does not, as a matter of law, amount to a detrimental change in position or an unconscionable injury sufficient to invoke the doctrine of promissory estoppel. What's more, it appears from the record that Peterson still owns the property. This further illustrates both that he has not suffered a detrimental change in position or unconscionable injury, and that Carrington has not been unjustly enriched or would be by successfully asserting the defense of the statute of frauds in this case.
Peterson does not argue unjust enrichment as an alternative basis for promissory estoppel, nor could he in the circumstances of this case.
Peterson cites Wilk in support of his contention that he has suffered a detrimental change in position leading to unconscionable injury. In that case, which was dismissed after the sustaining of a demurrer, a married couple owned real property and the husband signed an agreement to sell it to the plaintiff. The defendant wife orally agreed that she would also sign the purchase contract, but she later refused to do so, stating that she was selling to another at a higher price because her oral promise to plaintiff was unenforceable. Plaintiff had been negotiating to purchase another comparable house, which was sold to someone else after he relied on defendant wife's promise, depriving him of the opportunity to purchase a house in that neighborhood. Plaintiff also made some improvements to the defendants' house in reliance on the promise. (Wilk, supra, 30 Cal.2d at pp. 105-107.) Plaintiff sought specific performance and had pleaded a promise made without the intention of performing it but with the intention to induce his reliance and his consequential and detrimental change in position vis-a-vis the loss of opportunity to purchase the alternative house, a loss beyond the subject of the oral agreement. The Supreme Court reversed the judgment, concluding that plaintiff's detrimental change in position in reliance on the oral promise was sufficient to invoke estoppel against the defense of the statute of frauds in order to avoid fraud. (Id. at pp. 107-108.)
Unlike in Wilk, Peterson did not here allege a detrimental or material change in position. And even if he refrained from making further payments due on the note, sought legal advice, and filed a bankruptcy petition to avoid foreclosure, these acts are not, as a matter of law and in the context of this case, sufficient to amount to a material and detrimental change in position or an unconscionable injury or loss suffered in reliance on Carrington's alleged oral promise.
As noted by Carrington, in order to invoke the doctrine of promissory estoppel to avoid the statute of frauds, a plaintiff must show more than an oral promise. He or she must also demonstrate a material change in position resulting in substantial hardship amounting to unconscionable injury. There must be extraordinary or unusual conduct by the promisee or circumstances that would result in gross injustice. (Parker v. Solomon (1959) 171 Cal.App.2d 125, 133.) The sort of material change in position that results in unconscionable injury is beyond the loss of the benefit of the bargain and requires more than the sorts of actions ordinarily undertaken in anticipation of entry into contract. (Irving Tier Co. v. Griffin (1966) 244 Cal.App.2d 852, 865.) It is thus only where the promisee's change in position is material and the unconscionable injury substantial where the equitable doctrine of promissory estoppel will except an otherwise unenforceable oral contract from the statute of frauds. (See, e.g., Aceves, supra, 192 Cal.App.4th at pp. 227-230 [bank's oral promise to work with borrower on mortgage reinstatement and loan modification if she gave up pursuing relief in the bankruptcy court induced her detrimental reliance in that she gave up the right to chapter 13 relief through which she may have avoided foreclosure and failed to oppose bank's request for relief from stay, which was granted and led to loss of borrower's property through foreclosure]; Seymour v. Oelrichs (1909) 156 Cal. 782, 794, overruled on another ground in Sterling v. Taylor (2007) 40 Cal.4th 757, 769-770, [estoppel to assert statute of frauds applies where plaintiff accepted oral offer of employment with 10-year term and gave up other position in reliance on promise]; Carlson v. Richardson (1968) 267 Cal.App.2d 204, 208-209 [plaintiffs purchased nearby property for use as temporary residence while house on disputed property was being built, which amounted to serious change in position taking oral contract out of statute of frauds]; Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1041 [debtors' change in position by refinancing other property on unfavorable terms in order to cure default in reliance on lender's promise to delay foreclosure sufficient to invoke promissory estoppel as exception to statute of frauds].)
There is simply no evidence in this record sufficient to establish, or to raise a triable issue of fact, that Peterson detrimentally and materially changed his position or suffered an unconscionable injury in reliance on Carrington's alleged oral promise so as to except that promise from the operation of the statute of frauds. Whether equitable estoppel applies in a given case is generally a question of fact, but it is a question of law when the facts are undisputed and only one reasonable conclusion can be drawn from them. (Mt. Holyoke Homes, LP v. California Coastal Com. (2008) 167 Cal.App.4th 830, 840; Phillippe v. Shapell Industries, supra, 43 Cal.3d at p. 1272.) Here, there are no evidentiary facts supporting application of the doctrine, and only one reasonable conclusion is, as a matter of law, compelled by the evidentiary void. We accordingly reject Peterson's contention, first raised on appeal, that summary judgment on the contract claims should have been denied on the basis of promissory estoppel.
The same is true for the related statute-of-frauds exception based on the promisee's part performance of the contract, also asserted here for the first time on appeal. "Part performance allows enforcement of a contract lacking a requisite writing in situations in which invoking the statute of frauds would cause unconscionable injury. [Citation.] '[T]o constitute part performance, the relevant acts either must "unequivocally refer[]" to the contract [citation], or "clearly relate" to its terms. [Citation.] Such conduct satisfies the evidentiary function of the statute of frauds by confirming that a bargain was in fact reached. [Citation.]' [Citation.] In addition to having partially performed, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud." (Secrest, supra, 167 Cal.App.4th at p. 555; Oren Realty & Development Co. v. Superior Court (1979) 91 Cal.App.3d 229, 235.) "Two distinct elements underlie application of the part performance exception: 'first, the extent to which the evidentiary function of the statutory formalities [of the statute of frauds] is fulfilled by the conduct of the parties; second, the reliance of the promisee, providing a compelling substantive basis for relief in addition to the expectations created by the promise.' " (Sutton v. Warner (1993) 12 Cal.App.4th 415, 422.)
We have already concluded that this record does not support that Peterson detrimentally changed position to the point of unconscionable injury, or even that a triable issue of fact exists with respect to this. We now also conclude that there is no evidence in the record that Peterson partly performed, by conduct beyond simple reliance on the contract, and in such a manner that was " 'unequivocally referable' to the agreement to be enforced." (Byrne v. Laura (1997) 52 Cal.App.4th 1054, 1072; Sutton v. Warner, supra, 12 Cal.App.4th at p. 422 [part performance of oral agreement to purchase property requires buyer to take possession and make either full or part payment of the purchase price, or make substantial improvements to the property in reliance on the contract].)
Peterson contends that his faxing Mendoza the two letters confirming the alleged oral contract constitutes his part performance under the contract sufficient to invoke the part-performance exception to the statute of frauds. But Carrington is correct that these acts, even if they occurred, concern establishing the existence of a contract, not its actual performance. Our review of the record reveals no conduct by Peterson evidencing his part performance of the alleged contract, whether referable to the agreement or not. We accordingly reject his contention that the part-performance exception applies here to overcome the defense of the statute of frauds.
The trial court concluded that Peterson's causes of action for breach of oral contract and related breach of the covenant of good faith and fair dealing were barred by the statute of frauds as a matter of law, warranting summary judgment. Based on our de novo review, we make the same determination. Peterson's newly articulated contentions concerning exceptions to the statute of frauds do not change this result.
We do not separately analyze Peterson's contentions with respect to the second cause of action for breach of the covenant of good faith and fair dealing as this claim "cannot ' "be endowed with an existence independent of its contractual underpinnings." ' [Citations.] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement." (Guz v. Bechtel National Inc., supra, 24 Cal.4th at pp. 349-350.) In other words, for purposes of our review, this claim rises or falls with the first cause of action for breach of oral contract because a "cause of action for a breach of the implied contractual covenant of good faith and fair dealing cannot be stated in the absence of a valid contract to which the covenant appertains." (Pacific States Enterprises, Inc. v. City of Coachella (1993) 13 Cal.App.4th 1414, 1425.)
B. The Fraud Claims
The trial court disposed of Peterson's fraud and negligent misrepresentation claims, concluding that because they "flow[ed]" from the unenforceable contract claims, they likewise lacked merit. Peterson contends that the trial court erred in so disposing of these tort claims because even if a contract is unenforceable under the statute of frauds, the defense does not apply to bar actions based on fraud, citing Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 27 (Tenzer). Moreover, he contends, he established each of the elements of his claims for fraud and negligent misrepresentation, a species of fraud.
Peterson did not plead a claim for fraud based on a promise made without any intention of performing it, as provided at Civil Code sections 1572, subdivision 4 and 1710, subdivision 4. Rather, his claims as pleaded are for (1) fraud by intentional misrepresentation—the suggestion, as a fact, of that which is not true, by one who does not believe it to be true—as provided at Civil Code sections 1572, subdivision 1 and 1710, subdivision 1; and (2) negligent misrepresentation by the positive assertion, in a manner not warranted by the information of the person making it of that which is not true, though he believes it to be true, as provided at Civil Code section 1572, subdivision 2, or the assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true, as provided at Civil Code section 1710, subdivision 2.
It is true that in Tenzer, the Supreme Court broke with previous case law that had held that an action for fraud cannot be maintained where the allegedly fraudulent promise is unenforceable as a contract due to the statute of frauds. (Tenzer, supra, 39 Cal.3d at pp. 29-31.) The Tenzer court in essence held that the policy behind the statute of frauds—fraud prevention—was not served by refusing to permit a plaintiff to prove that he had been deceived into entering into an unenforceable contract. (Ibid.) But the court also acknowledged that "a disappointed promisee should not be allowed to present his claim for compensation to a jury simply by recasting his complaint to include an allegation of misrepresentation," noting that it is not so easy to reach a jury on such a fraud claim. (Id. at p. 30.) "To survive a motion for a nonsuit, . . . plaintiff in an action on a fraudulent promise must produce evidence of the promisor's intent to mislead him." (Ibid.) This evidence may be circumstantial but must consist of something more than mere nonperformance of an oral promise. Proof that a promise was made and not fulfilled is insufficient by itself to prove a defendant's fraudulent intent not to perform or even to reach a jury on the question. (Ibid.)
Tenzer is consistent with the Supreme Court's recognition in Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 515 (Applied Equipment) of the differences between contract and tort law. (See also Erlich v. Menezes (1999) 21 Cal.4th 543, 550-554.) The court observed in Applied Equipment that "[c]onduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law." (Applied Equipment, supra, at p. 515.) " ' "[A]n omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty." ' " (Ibid.) Such a legal duty is found in Civil Code section 1708, which imposes the obligation on every person, independent of contract, "to abstain from injuring the person or property of another, or infringing upon any of his or her rights." Thus, when a party commits fraud by false promise or misrepresentation of intention to perform a contract, he does more than merely breach the promise. He violates the independent legal duty to refrain from injuring another embodied at Civil Code section 1708. But proof of that violation of duty through the commission of fraud over and above the nonperformance of the contract is still required.
In this respect, Tenzer does not help Peterson here. On the contrary, its requirement that a plaintiff show proof of the defendant's intent to defraud beyond mere nonperformance of the unenforceable contractual promise dooms Peterson's fraud claims. This is because there is no evidence in this record of Carrington's alleged fraudulent intent beyond the fact of its nonperformance of the alleged oral contract, and no evidence of Carrington's violation of a legal duty independent of the alleged contract. Without such evidence, Peterson's fraud claims are stripped of their tortious character, leaving mere restatements of Peterson's breach of oral contract claims that, as we have concluded, are unenforceable as a matter of law. As such, we conclude they are likewise lacking in merit on this record, though for perhaps a slightly different rationale than the trial court found.
C. Slander of Title
The trial court determined that Peterson's cause of action for slander of title had no merit because it was undisputed that he was in default under the note and deed of trust. The recordation of the notice of default and notice of sale thus could not have caused him damage even if they contained false or mistaken information concerning the identity of the then-current deed of trust beneficiary. On appeal, Peterson in essence contends that the court erred notwithstanding his undisputed state of default because the false information about the beneficiary's identity in the notices revealed a question about the very authority of the party pursuing foreclosure to proceed with that process, affecting the vendability and value of the property. And, Peterson contends for the first time in briefing and without evidence, that the notice of default made it more difficult for unidentified potential buyers to purchase the property and prevented him from obtaining additional financing in order to complete renovation of the cottages. He similarly contends for the first time in briefing and without any supporting evidence that he has been damaged in that he has been forced to expend funds in an effort to clear title, though his complaint fails to seek to quiet title or pursue any other relief that would effectively expunge or strike the notice of default or notice of sale from the public record.
Slander of title is a false and unprivileged oral or written disparagement of the title to real or personal property, resulting in actual pecuniary damage. (Gudger v. Manton (1943) 21 Cal.2d 537, 541, overruled on another ground in Albertson v. Raboff (1956) 46 Cal.2d 375, 381; Seeley v. Seymour (1987) 190 Cal.App.3d 844, 857; Appel v. Burman (1984) 159 Cal.App.3d 1209, 1214.) Malice is implied in law from the unprivileged character of the act. (Gudger v. Manton, supra, at p. 543.) And a recorded document may have no effect on title, yet still give rise to a cause of action for slander of title because it is the reasonably foreseeable effect on prospective purchasers, not the strictly legal effect on title, which is the gravamen of the cause of action. (Seeley v. Seymour, supra, at pp. 858-859.) As falsity is an element of the claim, truth is a defense.
At the outset, we observe that neither the notice of default nor the notice of sale identified, as such, the then current beneficiary under the deed of trust. It thus cannot be said that either notice published false information about such identity, refuting the essence of Peterson's claim. That either notice directed contact about the amount due or to arrange for payment to stop the foreclosure to Malcolm ? Cisneros as the "Agent for Beneficiary" is of no moment. This direction alone is not a falsity, and no facts have been raised to dispute the validity of that agency, even if the same cannot be said of the identity of the principal initiating the foreclosure process. Under Civil Code section 2924, subdivision (a)(1), a "trustee, mortgagee, or beneficiary, or any of their authorized agents," may initiate the foreclosure process. (Italics added.)
But, in addition to the true information about Peterson's default contained in the recorded notices, what confirms that he has suffered no damages from slander of title as a matter of law as a result of the recordation of the notices is the state of the law in California. Even if the notices contained false information about the identity of the beneficiary under the deed of trust, calling into question the authority of the party proceeding with foreclosure, this type of information has not been held to give rise to an irregularity in the foreclosure proceedings except where the party lacking authority actually completed the foreclosure sale. (See, e.g., Pro Value Properties, Inc. v. Quality Loan Service Corp. (2009) 170 Cal.App.4th 579, 583 [trustee, who was not named in deed of trust and who had neglected to record a substitution of trustee, failed to properly perform ministerial duties provided by statutes governing foreclosure, resulting in void sale]; Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 876-878 [foreclosure sale void where original trustee completed foreclosure sale after being replaced by new trustee].) The situation is different with respect to harm suffered where there is ample time between the recordation of the notice and the sale and the deficient or false information is cured in the interim, or where a sale has not yet occurred. (See Aceves, supra, 192 Cal.App.4th at p. 232 [borrower suffered no prejudice from notice of default that mistakenly identified beneficiary; notice was not required by statute (Civ. Code, § 2924, subd. (a)(1)(A)-(D)) to identify beneficiary]; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272 (Fontenot) [prejudice not presumed from mere irregularities in foreclosure process; borrower must anticipate that note as negotiable instrument can and might be transferred to another creditor, and such transfer does not change borrower's obligation or state of default].)
Here, it appears that the property has not even been sold under the power of sale contained in the deed of trust, and, if necessary, any false information in the notices of default and sale can be corrected prior to sale. And, again, there is no doubt or disputed fact about Peterson's state of default, and the right of someone to foreclose as a result, regardless of the identity of the beneficiary.
Moreover, the record is devoid of evidence that any false information concerning the identity of the beneficiary under the deed of trust contained in the notices of default and sale caused Peterson any pecuniary damage. The record contains nothing to demonstrate that the vendability or value of his property was adversely affected, or that it was foreseeable that it would be, or that he has expended any amounts to clear title, as he now argues. (Manhatten Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1057 [pecuniary loss element of slander of title cause of action was established by declaration that removal of lis pendens was required to market condominiums or begin escrow proceedings, even though units were not yet offered for sale].) Peterson appears to contend that his pecuniary loss is presumed without evidence, which is not the case when opposing summary judgment after a moving party has met its initial burden.
D. Carrington's "Standing"
In his supplemental opening brief, Peterson challenges, for the first time on appeal, Carrington's "standing before the trial court because [it] failed to produce any evidence that the note in question was in fact transferred to [it]." This, despite the fact that it is Peterson who sued Carrington as a defendant in this litigation. The challenge is not directed to the trial court's disposition of any particular cause of action but, rather, to the entire summary judgment ruling and Carrington's entitlement to defend itself in the litigation.
"Standing" in California state courts is sometimes said to be governed by Code of Civil Procedure section 367, which provides that "[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute." (Italics added.) But as we noted in Jasmine Networks, Inc. v. Superior Court (2009) 180 Cal.App.4th 980, 990 (Jasmine), "[p]roperly understood, the concept of 'standing' contemplates a requirement that the plaintiff 'establish an entitlement to judicial action, separate from proof of the substantive merits of the claim advanced.' " This concept is largely a creature of federal law rooted in the "constitutionally limited subject matter jurisdiction" of the federal courts under Article III of the United States Constitution. (Jasmine, supra, at p. 990, italics omitted.) California, on the other hand, does not have a "case and controversy" requirement similar to the limitations on federal judicial power. (Ibid.) Code of Civil Procedure section 367 thus does not import "federal-style 'standing' requirements" that generally force plaintiffs to " 'establish an entitlement to judicial action, separate from proof of the substantive merits of the claim advanced.' " (Jasmine, supra, at p. 991, italics omitted.) Rather, the statute "simply requires that the action be maintained in the name of '[t]he person who has the right to sue under the substantive law.' " (Ibid, italics omitted.) Carrington, as a named defendant in this action, is not required to establish its right to sue or its capacity as a real party in interest in order to defend itself or bring a motion for summary judgment. Peterson cites no authority to the contrary. We accordingly reject Peterson's vague contention that Carrington was not entitled to summary judgment because it "lacked standing before the trial court."
At oral argument, Peterson's counsel appeared to recast his "loose" claim that Carrington lacked "standing before the trial court," attempting to convert it to an argument that Carrington lacked standing to pursue foreclosure under the deed of trust. We think he was claiming that under the elements of the substantive law applicable to foreclosure settings, Carrington had no right to pursue this remedy absent possession of the properly endorsed promissory note. But no variety of this claim was properly raised below. More fundamentally, this kind of challenge, to the extent we understand the belated and minimally articulated argument, is not relevant in this action in which Carrington is not affirmatively pursuing foreclosure proceedings and is instead a defendant being sued in contract and tort under the common law.
"The transformation of the home mortgage finance industry in the past 25 years, through the treatment of the stream of revenue generated by residential mortgage loans as a commodity to be sold freely in the marketplace, the rise of residential mortgage securitization and the accompanying torrent of mortgage assignments, has generated a host of legal issues in the state and federal courts. In recent years, as (purported) assignees and subsequent assignees of original mortgage lenders have sought access to the courts to remedy asserted loan repayment defaults, the defending borrowers increasingly have questioned whether the entity seeking judicial relief is the party actually entitled to enforce the mortgage loan obligation. Frequently, the issue is framed, [correctly or not], as whether the creditor movant or plaintiff has 'standing' or otherwise is a proper party before the court." (In re Alcide, supra, 450 B.R. at pp. 532-533, fn. omitted.)
A version of this theory has been raised in California, though unsuccessfully, against a creditor in the context of an action by a debtor to enjoin a nonjudicial foreclosure. (See Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1152-1157 [comprehensive statutory framework regulating nonjudicial foreclosure under Civil Code sections 2924 through 2924k does not require agent of beneficial owner to show authorization by principal before proceeding with foreclosure and statutory scheme does not provide for action by debtor to test whether party initiating foreclosure has authority to do so].) Versions have also been raised against defendants in the context of wrongful foreclosure actions brought by parties who have lost their homes, whether as a borrower or a tenant leasing property that is the subject of foreclosure, as well as in the bankruptcy context. (See Fontenot, supra, 198 Cal.App.4th at pp. 269-272 [burden not on foreclosing party to demonstrate valid assignment and party attacking foreclosure must plead and prove lack of a valid assignment and prejudice as a result]; Champlaie v. BAC Home Loans Servicing, LP (E.D. Cal. 2009) 706 F.Supp.2d 1029, 1048-1051 [Civil Code sections 2924 through 2924l establish exhaustive set of requirements to foreclose and production or possession of note is not one of them; these statutory requirements apply to foreclosure under power of sale in deed of trust in California, not those of the Commercial Code]; Quintero Family Trust v. OneWest Bank, F.S.B. (S.D. Cal. 2010) 2010 U.S. Dist. LEXIS 63659, *7, fn. 6 [facially effective date of assignment is operative over conclusory allegations of backdating, especially where debtor received actual notice of assignment that was later recorded at a time before notice of sale]; but see Ohlendorf v. Am. Home Mortg. Servicing (E.D. Cal. 2010) 2010 U.S. Dist. LEXIS 31098, *22-*24 [while possession of the note in default or recordation of assignment are not required in California to validly initiate nonjudicial foreclosure, recipient of backdated assignment may not have had authority to record notice of default under Civil Code section 2924]; U.S. Bank N.A. v. Skelton (In re Salazar) (Bankr. S.D. Cal.) 448 B.R. 814, 822-824 [relief from stay to pursue nonjudicial foreclosure denied where assignment of beneficiary was not recorded as required by Civil Code section 2932.5 and such beneficiary did not have authority to foreclose].)
Rule 8.1115 of the California Rules of Court does not prohibit citation to unpublished federal cases, which can be cited as persuasive, although not binding, authority. (Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 251, fn. 6.)
This action by Peterson in which he has sued Carrington for claims arising in tort and contract but not to enjoin a foreclosure or for wrongful foreclosure does not fit within the classes of cases in which the "standing" question in the context of a mortgage default is relevant. While the "standing" question is au courant and interesting in the context of litigation arising from the ongoing crisis of mortgage defaults, it is simply not relevant, on this record, as a basis to challenge Carrington's defense of this action or its entitlement to summary judgment. We accordingly reject Peterson's undeveloped contention that the summary judgment should be reversed on the asserted basis of Carrington's "lack of standing" or authority to proceed with a foreclosure that apparently has not occurred and that is not sought to be enjoined in this litigation.
DISPOSITION
The judgment is affirmed.
Retired Associated Justice of the Court of Appeal, Sixth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
WE CONCUR:
Rushing, P.J.
Judge of the Monterey County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
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