Opinion
2d Civil B325564
10-16-2023
ABANDONED STUDENTS, Plaintiff and Appellant, v. THE BANK OF NEW YORK MELLON et al., Defendants and Respondents.
Sunset Equity Group, Jeffre T. Lowe; Law Offices of Benjamin Donel & Associates and Benjamin Donel for Plaintiff and Appellant. Wright, Finlay & Zak and Jonathan D. Fink for Defendant and Respondent The Bank of New York Mellon. No appearance for Defendants and Respondents Clear Recon Corp, Gino Santia or Julie Santia.
NOT TO BE PUBLISHED
Superior Court County of Ventura No. 56-2022-00566272-CU-OR-VTA Ronda J. McKaig, Judge
Sunset Equity Group, Jeffre T. Lowe; Law Offices of Benjamin Donel & Associates and Benjamin Donel for Plaintiff and Appellant.
Wright, Finlay & Zak and Jonathan D. Fink for Defendant and Respondent The Bank of New York Mellon.
No appearance for Defendants and Respondents Clear Recon Corp, Gino Santia or Julie Santia.
BALTODANO, J.
Abandoned Students (AS) sued the Bank of New York Mellon (the Bank) after a trustee's sale of a property was rescinded and AS's bid for the property was returned. AS appeals from the judgment after the trial court sustained the Bank's demurrer to the first amended complaint without leave to amend. We affirm.
FACTUAL AND PROCEDURAL HISTORY
Julie and Gino Santia (the Borrowers) obtained a loan secured by a deed of trust on property in Ventura. The deed of trust was assigned to the Bank.
In June 2021, the Borrowers defaulted on the loan. Five months later, Clear Recon Corp (the Trustee) recorded a notice of trustee's sale.
The trustee's sale proceeded on January 6, 2022, and the highest bid was a third party. Eight days later, AS submitted a letter of intention to overbid pursuant to Civil Code section 2924m.
The third party is not a party to this appeal.
Further unspecified statutory references are to the Civil Code.
On February 17, 2022, AS remitted a check for an amount greater than the final bid accepted at the trustee's sale. The next day, the Trustee returned the funds and informed AS that the trustee's sale had been rescinded at the direction of the Bank. The Trustee informed AS that the Borrowers had reinstated funds prior to the foreclosure sale, but not in time to alert the Trustee to cancel the sale. In March 2022, the Trustee recorded a formal notice of recission of notice of default.
AS sued the Bank, Trustee, and Borrowers, alleging they violated section 2924m by entering into an "unlawful agreement to try to reinstate the loan after the Trustee's Sale." The Bank demurred to the complaint. The trial court sustained the demurrer with leave to amend, finding that AS failed to sufficiently allege the reinstatement of the loan was untimely.
AS filed a first amended complaint realleging the defendants violated section 2924m by untimely reinstating the loan after the January 6, 2022, trustee's sale. The Bank demurred to the first amended complaint. The trial court sustained the demurrer without leave to amend on the same ground as its previous order-that AS failed to sufficiently allege the loan reinstatement occurred after the trustee's sale was final. The court further ruled that because it "previously gave Plaintiff leave to amend to attempt to allege such facts and Plaintiff was unable to do so, [the Bank's] demurrer . . . is sustained without leave to amend."
DISCUSSION
AS contends the trial court erred in sustaining the demurrer to its first cause of action alleging the Bank violated section 2924m by untimely reinstating the loan. We conclude there was no error.
The first amended complaint alleged three causes of action. However, AS only challenges the first cause of action on appeal and has thus waived argument pertaining to the other two causes of action.
We review the trial court's order sustaining the demurrer de novo, accepting the truth of material facts properly pleaded but not contentions, deductions, or conclusions of fact or law. (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924.) A demurrer should be sustained where the complaint fails to allege facts sufficient to state a cause of action, or discloses a defense that would bar recovery. (Code Civ. Proc., § 430.10; Balikov v. Southern Cal. Gas Co. (2001) 94 Cal.App.4th 816, 819-820.)
"A power of sale in a deed of trust is a creature of contract, arising from the parties' agreement." (Bank of America v. La Jolla Group II (2005) 129 Cal.App.4th 706, 712.) The deed of trust allows the lender to exercise the power of sale only if a default occurs. A borrower has a statutory right to reinstate the loan by curing the default at any time until five business days prior to the date of sale set forth in the initial recorded notice of sale. (§ 2924c, subd. (e).) But, even after the borrower's statutory period expires, the borrower and lender may still mutually agree to reinstate the loan at a later date. (Bank of America, at p. 712.) "If, after a default, the trustor and beneficiary enter into an agreement to cure the default and reinstate the loan, no contractual basis remains for exercising the power of sale." (Ibid.) A reinstatement of the loan deprives the trustee of the power to foreclose. (Id. at p. 711, citing to Bisno v. Sax (1959) 175 Cal.App.2d 714.) Thus, if an agreement to reinstate is made prior to the trustee's sale, the sale may be invalidated and set aside. (Bank of America, at p. 713.)
Generally, a trustee's sale is deemed final upon acceptance of the last and highest bid. (Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 441 (Nguyen); § 2924h, subd. (c).) There is no conclusive presumption the sale is complete until the trustee's deed is delivered. (Moeller v. Lien (1994) 25 Cal.App.4th 822, 832 [a sale may be cancelled if there is a defect discovered in the sale after the bid is accepted but before the deed is delivered].)
AS brought an action under section 2924m, which involves the sale of property containing one to four residential units. This statute provides that certain "eligible bidders" may submit the highest and final bid to purchase property after a trustee's sale has taken place.
Significantly, section 2924m extends the time in which a trustee's sale is deemed final. (§ 2924m, subd. (c).) Where, as here, an eligible bidder submitted a bid that "exceed[ed] the last and highest bid at a trustee's sale," subdivision (c)(4) provides "[a] trustee's sale of property under a power of sale contained in a deed of trust . . . shall not be deemed final until" "[f]orty-five days after the trustee's sale." Furthermore, subdivision (f) specifies that "[t]itle to the property shall remain with the mortgagor or trustor until the property sale is deemed final as provided in this section."
Here, the first amended complaint failed to state facts to show the reinstatement was untimely. The trustee's sale would have been final on February 20, 2022, which is forty-five days after the initial trustee's sale. However, AS did not allege the loan reinstatement occurred after February 20. Instead, AS acknowledged that its bid was rescinded on February 18 due to the reinstatement of the borrower's loan. Moreover, title remained with the Borrowers and never transferred to another party. (§ 2924m, subd. (f).) Thus, there was no conclusive presumption the trustee's sale was ever complete before the loan was reinstated.
AS argues the time in which the Bank and Borrowers could agree to reinstate the loan expired on January 6, and section 2924m does not extend the time to enter into an agreement. But nothing in section 2924m supports this contention. Section 2924m does not restrict or set a deadline for when the lender and borrower could agree to cure a default. We will not read into a law a provision that does not exist and is not shown to be the intent of the lawmakers. (Midwest Motor Supply Co. v. Superior Court (2020) 56 Cal.App.5th 702, 710.)
Nguyen, supra, 105 Cal.App.4th 428 and Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, which AS relies upon to argue that the reinstatement funds must be received by the lender before the initial trustee's sale, are distinguishable for two reasons. First, these cases do not involve section 2924m and the provisions therein extending the time in which a sale is deemed final. Second, these cases involve instances where the reinstatement funds were received by the lender after the sale was deemed final. (See Nguyen, at pp. 440-441, 443 [trustee's sale was complete after the final bid at a properly conducted foreclosure sale]; Garcia, at p. 1047.) These cases do not hold that a borrower and lender cannot agree to reinstate the loan before a trustee's sale is final.
Because the complaint does not plead sufficient facts to show the reinstatement was untimely, the demurrer was properly sustained as to the first cause of action alleging the Bank violated section 2924m.
Because we conclude the demurrer was properly sustained on this ground, we need not address the alternative grounds raised in the Bank's brief.
Next, we determine whether the trial court erred when it denied leave to amend the first amended complaint. We review the trial court's order denying leave to amend for abuse of discretion, "which is demonstrated if there is a reasonable possibility that the pleading could be cured by amendment." (Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782, 796.) The plaintiff has the burden of showing that the pleading can be cured. (Ibid.)
AS has not carried its burden to show the pleading could be cured by an amendment. Because the complaint acknowledges the bid submitted by AS was rescinded before the February 20, 2022, deadline when the trustee's sale would be deemed final, there is no reasonable probability the pleading could be cured. Moreover, AS had an opportunity to cure the complaint after the court sustained the Bank's initial demurrer on the ground that it pleaded insufficient facts to show the reinstatement was untimely. AS did not include any additional facts in its first amended complaint to cure the defects raised. The trial court did not abuse its discretion in denying leave to amend.
DISPOSITION
The judgment is affirmed. Respondent shall recover costs on appeal.
We concur: YEGAN, Acting P. J., CODY, J.