Opinion
H041592
04-26-2017
LARRY COPPAGE, Plaintiff and Appellant, v. WMC MORTGAGE, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. CV169052)
Plaintiff Larry Coppage appeals from judgments of dismissal entered after the trial court sustained the demurrers of defendants WMC Mortgage LLC (WMC) and Quality Loan Service Corporation (Quality) to his second amended complaint for declaratory relief. He contends that the trial court (1) improperly sustained both demurrers, (2) abused its discretion in denying leave to amend, and (3) erred in denying his ex parte application for a stay of enforcement. We affirm.
Defendant and respondent WMC Mortgage LLC is the successor in interest to WMC Mortgage Corporation. We refer to these entities collectively as WMC.
I. Background
Because this appeal follows the sustaining of demurrers, we take the facts from the operative and earlier complaints, the exhibits thereto, and matters judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627 (Dodd); Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034 (Berg).)
Plaintiff bought a house on Manzanita Road in Boulder Creek in 1998. In 2004, he obtained a $454,750 loan from Argent Mortgage Company. The Argent loan was evidenced by a promissory note and secured by a deed of trust on the property.
Plaintiff refinanced the property in 2005 with a $517,000 loan from WMC. The WMC loan was evidenced by a promissory note and secured by a deed of trust on the property. The WMC deed of trust named plaintiff as the borrower, WMC as the lender, Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary, and Westwood Associates as the trustee. It reflected plaintiff's agreement to "irrevocably grant[] and convey[] to Trustee, in trust, with power of sale, the [Manzanita Road] property . . . ." It provided that "[t]he Note or a partial interest in the Note . . . can be sold one or more times without prior notice to Borrower." It also provided that "Lender, at its option, may from time to time appoint a successor trustee to any Trustee appointed hereunder by an instrument executed and acknowledge by Lender and recorded in the office of the Recorder of the county in which the Property is located." The WMC deed of trust was recorded on June 2, 2005. To evidence the payoff of the Argent loan, the trustee under the Argent deed of trust executed a "Full Reconveyance" of "all the estate, title and interest" the Argent trustee had acquired in the Manzanita Road property. The full reconveyance was recorded on July 1, 2005.
Plaintiff soon defaulted on the new loan from WMC. On May 8, 2006, WMC as the present beneficiary under the deed of trust executed a "Substitution of Trustee" replacing Westwood Associates with Quality as trustee. The substitution was recorded on August 18, 2006.
On May 15, 2006, Quality "as agent for . . . the beneficiary" WMC under the deed of trust recorded a "Notice of Default and Election to Sell Under Deed of Trust." The notice informed plaintiff that his loan was $35,056.46 in arrears as of May 8, 2006, and that the arrearage would continue to increase until he brought the loan current. He did not do so, and on August 18, 2006, Quality recorded a "Notice of Trustee's Sale."
On August 30, 2006, WMC sold plaintiff's loan to Morgan Stanley. On February 13, 2007, WMC assigned plaintiff's deed of trust to FV-1, Inc. The assignment was recorded on April 6, 2007.
The trustee's sale was conducted on March 15, 2007. FV-1 purchased the Manzanita Road property at the sale. On March 16, 2007, Quality issued a "Trustee's Deed Upon Sale" that inaccurately named WMC as the buyer of the property. Later that same day, Quality issued a corrected trustee's deed upon sale that accurately named FV-1 as the buyer. The corrected trustee's deed prominently stated that "This document is being recorded to correct the Beneficiary name on that Trustee's Deed upon sale that recorded on 03/23/07, as instrument No. 2007-0015834."
On January 22, 2009, WMC executed a quitclaim deed releasing any interest it had in the Manzanita Road Property to FV-1. The quitclaim deed prominently stated that it was issued "IN ORDER TO CORRECT THE GRANTEE NAMED IN THE [incorrect] TRUSTEE'S DEED UPON SALE RECORDED ON 03/23/2007 . . . ." The quitclaim deed was recorded on February 14, 2009.
On August 4, 2009, FV-1 prevailed in an unlawful detainer action against plaintiff. On March 10, 2010, FV-1 sold the Manzanita Road property to Paul and Mary Zehr. On February 18, 2011, the Zehrs sold the property to Tsegerada Embaye.
On April 22, 2010, MERS as nominee for WMC recorded a "Substitution of Trustee and Full Reconveyance" substituting Nationwide Title Clearing as the trustee and releasing plaintiff's deed of trust as "fully paid and/or satisfied."
Plaintiff initiated this action on October 7, 2010 with the filing of a document captioned "Petition to Rescind Trustee's Deed Upon Sale." The petition named WMC as the sole defendant. It alleged that plaintiff obtained a loan from WMC in 2005, that "the loan was paid in full," and that a " 'Full Reconveyance' " was recorded on April 22, 2010. It alleged that "no payment was ever made" at the trustee's sale reflected in the March 16, 2007 trustee deed upon sale and "no payment was made by FV-1 to WMC" for WMC's February 13, 2007 assignment of the deed of trust to FV-1. The theory of the petition was that "[s]ale is automatically [r]escinded" for failure of consideration. The petition sought rescission of the assignment of the deed of trust and of the original and corrected trustee's deeds upon sale. It also asked that plaintiff "be granted QUIET TITLE and Right of Possession" to the property.
On February 24, 2014, plaintiff filed a first amended complaint that added Quality as a defendant. WMC and Quality demurred. The record does not include copies of the first amended complaint or of the demurrer papers but the hearing transcript indicates that the court sustained the demurrers to plaintiff's "monetary relief," fraud, "cancellation of false documents," and quiet title causes of action without leave to amend. The court sustained the demurrers to plaintiff's declaratory relief cause of action with leave to amend "if you can."
Plaintiff filed an 18-page second amended complaint (the complaint) with 75 pages of exhibits. The complaint purported to assert a single cause of action for "Declaratory Relief of invalid documents." The gravamen of the complaint was that "[t]he QUITCLAIM DEED dated 02/04/2009 recorded in error by WMC MORTGAGE if left outstanding may cause serious injury or loss of property to Plaintiff." The complaint alleged that WMC could not quitclaim any interest in the property to FV-1 because WMC sold plaintiff's loan to Morgan Stanley on August 30, 2006. The complaint also alleged that plaintiff's loan was never in default but had instead been "paid in full" as evidenced by the substitution of trustee and full reconveyance that Nationwide Title Clearing recorded on April 22, 2010. It alleged that Quality had no authority to conduct the sale because Quality was "never the trustee and no ASSIGNMENT OF TRUSTEE exist[s] in the SANTA CRUZ RECORDER records." It also alleged that no notice of default or notice of trustee's sale was ever sent to plaintiff. The complaint sought "an official declaration of the status of the documents in controversy" and prayed for a declaration (1) "invalidating defendant's [sic] claim of said property," (2) declaring "all documents" recorded against the property by WMC and Quality invalid, and (3) declaring "that Plaintiff has satisfied the loan by [WMC], and that possession of property be given to plaintiff."
WMC and Quality again demurred. Quality argued among other things that plaintiff's claim was time-barred. WMC argued among other things that the complaint failed to allege the existence of an "actual controversy" and thus failed to allege facts sufficient to constitute a cause of action. (Code Civ. Proc., § 1060.)
Subsequent statutory references are to the Code of Civil Procedure unless otherwise specified.
Plaintiff argued in opposition to the demurrers that the Penal Code allows actions for falsification of documents to be brought at any time and that the trial court was required to "take as true all allegations" of the second amended complaint. WMC and Quality submitted reply briefs. The trial court conducted a hearing on September 18, 2014. The transcript of the hearing is not included in the record on appeal.
The trial court sustained the demurrers without leave to amend and dismissed plaintiff's action with prejudice.
Plaintiff filed a timely notice of appeal from the judgments of dismissal. One day later, he filed an ex parte application for a temporary stay of enforcement of the judgments "to allow plaintiff time to consider filing posttrial motions and a notice of appeal, and to evaluate the proceedings and consult with his attorney." The trial court denied the application.
II. Discussion
A. Standard of Review
Plaintiff complains that the trial court "improperly determined issues of fact without a trial or review of the documents in controversy" and "erred in finding there were no triable issues of material fact . . . ." Plaintiff misunderstands the applicable standard of review.
"In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.]' " (Blank, supra, 39 Cal.3d at p. 318.) "[F]acts appearing in exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence." (Dodd, supra, 222 Cal.App.3d at p. 1627.) We also consider matters which may be judicially noticed. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1371 (Alfaro).) "[A]ssertions contradicted by judicially noticeable facts" will not be accepted as true. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 20.) "[W]e give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]" (Blank, at p. 318.) " 'Specific factual allegations modify and limit inconsistent general statements.' [Citation.]" (Alfaro, at p. 1371.)
We "review the complaint de novo to determine . . . whether or not the trial court erroneously sustained the demurrer as a matter of law. [Citation.]" (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) "We will affirm if there is any ground on which the demurrer can properly be sustained, whether or not the trial court relied on proper grounds or the defendant asserted a proper ground in the trial court proceedings." (Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.) "If a complaint shows on its face (or from matters of which the court must or may take judicial notice . . .) that a cause of action is barred by the statute of limitations, a general demurrer for failure to state a cause of action will be sustained." (Hawkins v. Pacific Coast Bldg. Products, Inc. (2004) 124 Cal.App.4th 1497, 1502.) On appeal, " 'the plaintiff bears the burden of demonstrating that the trial court erred.' [Citation.]" (Zipperer v. County of Santa Clara (2005) 133 Cal.App.4th 1013, 1020.)
When a demurrer is sustained without leave to amend, "we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm." (Blank, supra, 39 Cal.3d at p. 318.) "The burden of proving such reasonable possibility is squarely on the plaintiff." (Ibid.) "Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of the pleading." (Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636 (Cooper).) The showing need not be made in the trial court so long as it is made to the reviewing court. (Dey v. Continental Central Credit (2008) 170 Cal.App.4th 721, 731; § 472c.)
B. Quality's Demurrer
Quality contends that its demurrer was properly sustained without leave to amend because plaintiff's declaratory relief cause of action was time-barred by section 343, the so-called catchall statute that prescribes a four-year limitations period for actions seeking "relief not hereinbefore provided . . . ." (§ 343.) Plaintiff responds that the three-year statute of limitations prescribed by section 338, subdivision (d) for actions grounded on fraud or mistake applies. We agree with Quality.
"To determine the statute of limitations which applies to a cause of action it is necessary to identify the nature of the cause of action, i.e., the 'gravamen' of the cause of action. [Citations.] '[T]he nature of the right sued upon and not the form of action nor the relief demanded determines the applicability of the statute of limitations under our code.' [Citation.]" (Hensler v. City of Glendale (1994) 8 Cal.4th 1, 22-23.) Here, the gravamen of plaintiff's action was that "[t]he QUITCLAIM DEED dated 02/04/2009 recorded in error by WMC MORTGAGE if left outstanding may cause serious injury or loss of property to Plaintiff." Plaintiff alleged that he was "unable to obtain possession, refinance, rent, or sell the property since loss of possession on 08/04/2009 when [WMC] transferred title" to the property to FV-1. Accordingly, he sought a declaration that "all documents" recorded against the property were invalid. In similar actions involving allegedly improper transfers of or restrictions on property, courts have applied section 343's four-year statute of limitations. (E.g., Moss v. Moss (1942) 20 Cal.2d 640, 643-645 [action for declaration that property settlement agreement was void as against public policy]; Dunn v. County of Los Angeles (1957) 155 Cal.App.2d 789, 798 [action for declaration that transfer was "invalid for it was obtained by . . . coercion"], 805 [action for declaration that deed allegedly procured by coercion was invalid]; Costa Serena Owners Coalition v. Costa Serena Architectural Com. (2009) 175 Cal.App.4th 1175, 1195 [homeowners' action for declaration that architectural committee's amendments to declaration of restrictions were invalid] (Costa Serena).) We conclude that section 343 governs here.
" 'As a general rule, a statute of limitations accrues when the act occurs which gives rise to the claim [citation], that is, when "the plaintiff sustains actual and appreciable harm." ' " (Costa Serena, supra, 175 Cal.App.4th at pp. 1195-1196.) Here, the only acts by Quality that plaintiff claims caused him harm were its allegedly unauthorized recording of the notice of default and notice of trustee's sale and its conduct of the sale itself. Quality performed those acts in 2006 and 2007. The four-year statute of limitations thus expired no later than mid-2011. Plaintiff did not file suit against Quality until February 2014. His action was time-barred. (§ 343.)
We reject plaintiff's contention that the three-year limitations period for actions grounded on fraud or mistake applies. (§ 338, subd. (d).) Fraud must be pleaded with specificity, " 'and the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.' [Citations.]" (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) Plaintiff did not plead any facts suggesting fraud. The record supports a conclusion that he cannot do so, since the trial court sustained Quality's demurrer to the fraud cause of action in plaintiff's first amended complaint without leave to amend because "there are time-barred considerations." Plaintiff has not challenged that ruling.
Plaintiff's complaint did not state any facts suggesting mistake either. Even if it had, a cause of action premised on allegations that the foreclosure sale was conducted because of mistake would be barred under the three-year statute of limitations that plaintiff maintains applies here.
That statute provides that a cause of action for relief on the ground of fraud or mistake "is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake." (§ 338, subd. (d).) "A cause of action for fraud or mistake accrues, and the limitations period commences to run, when the aggrieved party could have discovered the fraud or mistake through the exercise of reasonable diligence." (Sun'n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 701 (Sun'n Sand).) "Under the discovery rule, the statute of limitations begins to run when the plaintiff suspects or should suspect that [his] injury was caused by wrongdoing, that someone has done something wrong to [him]." (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110 (Jolly).)
In his reply brief, plaintiff admits that he became "aware of the numerous false documents recorded by WMC and Quality" when he received the unlawful detainer action that WMC filed on June 7, 2007. The allegations of the complaint compel the conclusion that plaintiff should have suspected no later than August 4, 2009 (when FV-1 prevailed in its unlawful detainer against him and he lost possession of the property even though he insisted that "[t]he loan was not in default") that his injury was caused by the alleged fraud or mistake. Thus, the statute of limitations began to run no later than August 4, 2009. (Sun'n Sand, supra, 21 Cal.3d at p. 701; Jolly, supra, 44 Cal.3d at pp. 1110-1111.) Plaintiff did not sue Quality until February 24, 2014. His suit against Quality was time-barred even under the three-year statute of limitations that he contends applies. (§ 338, subd. (d).)
Plaintiff argues that the statute did not begin to run until November 2013, when he obtained evidence establishing Quality's alleged wrongdoing. We reject the argument. The issue is not when he obtained evidence to support his cause of action but when the cause of action accrued. (Sun'n Sand, supra, 21 Cal.3d at p. 701.) "A plaintiff need not be aware of the specific 'facts' necessary to establish the claim; that is a process contemplated by pretrial discovery." (Jolly, supra, 44 Cal.3d at p. 1111.) "[A] suspicion of wrongdoing, coupled with a knowledge of the harm and its cause, will commence the limitations period." (Jolly, at p. 1112.) Plaintiff admits that he had that knowledge as early as June 2007. The complaint demonstrates that he had that knowledge no later than August 2009. His action against Quality was time-barred.
Plaintiff argues for the first time in his reply brief on appeal that his action against Quality was well within the statute of limitations because his first amended complaint adding Quality as a defendant related back to the October 7, 2010 filing of his original pleading. We deem this argument waived. Appellate courts ordinarily do not consider new issues raised for the first time in an appellant's reply brief because to do so " 'would deprive the respondent of an opportunity to counter the argument.' [Citation.] 'Obvious reasons of fairness militate against consideration of an issue raised initially in the reply brief of an appellant.' [Citation.]" (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764 (Reichardt).) " ' "Hence the rule is that points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before." ' [Citation.] [¶] . . . [T]he court may properly consider them as waived . . . ." (Id. at pp. 764-765.) Plaintiff offers no explanation here. He waived his relation-back argument.
We would reject the argument even if plaintiff had preserved it. "The straightforward rule is that amendment after the statute of limitations has run will not be permitted when the result is the addition of a party who, up to the time of the proposed amendment, was neither a named nor a fictitiously designated party to the proceeding." (Ingram v. Superior Court (1979) 98 Cal.App.3d 483, 492.) Plaintiff's original pleading did not name any fictitious defendants who could later be brought in under their true names. WMC was the sole defendant. Thus, plaintiff's first amended complaint adding Quality as a defendant did not relate back to the October 7, 2010 filing of his original pleading.
The cases that plaintiff relies on do not change our conclusion. Those cases are easily distinguished because each involved an amended pleading that brought a defendant originally sued under a fictitious name into the case. (Austin v. Massachusetts Bonding & Ins. Co. (1961) 56 Cal.2d 596, 599; Barnes v. Wilson (1974) 40 Cal.App.3d 199, 201-202; Smeltzley v. Nicholson Mfg. Co. (1977) 18 Cal.3d. 932, 934-935; Barrows v. American Motors Corp. (1983) 144 Cal.App.3d 1, 6-7.)
Plaintiff argues for the first time in his reply brief on appeal that he is entitled to equitable estoppel under cases holding that a defendant may be estopped from asserting the statute of limitations where its fraudulent conduct has induced the plaintiff to delay filing suit. We deem this argument waived. (Reichardt, supra, 52 Cal.App.4th at pp. 764-765.)
Because plaintiff's action against Quality was barred by the statute of limitations, the trial court did not err in sustaining Quality's demurrer. Because plaintiff has not explained how he can amend his complaint to avoid the bar of the statute of limitations, the trial court did not abuse its discretion in sustaining the demurrer without leave to amend. (Cooper, supra, 70 Cal.2d at p. 636.)
Our conclusion means that we need not reach Quality's additional arguments that the demurrer was properly sustained because the complaint failed to join indispensable parties, failed to allege an "actual controversy" between plaintiff and Quality (§ 1060), failed to allege facts showing any prejudicial irregularity in the foreclosure process, and failed to allege facts sufficient to overcome the qualified statutory privileges conferred on trustees like Quality. (Civ. Code, §§ 47, 2924.)
C. WMC's Demurrer
1. Plaintiff's Self-Representation
WMC contends that plaintiff's failure to comply with basic rules of appellate practice "should be reason enough to affirm the judgment." WMC correctly points out that plaintiff's "arguments are presented scatter-shot, without headings and without sufficient references to the record or supporting authority."
We agree that plaintiff's in propria persona status does not entitle him to lenient treatment. A self-represented party " 'is to be treated like any other party . . . .' " (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246-1247.) The rationale for this rule is that "[a] doctrine generally requiring or permitting exceptional treatment of parties who represent themselves would lead to a quagmire in the trial courts, and would be unfair to the other parties to litigation." (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 985.) Thus, whether a party is represented by counsel or self-represented, "this court is under no obligation to search the record in an effort to ascertain a sound legal reason either for reversal of the judgment, or the order in question." (People v. Gidney (1937) 10 Cal.2d 138, 142-143, disapproved on another point in People v. Hutchinson (1969) 71 Cal.2d 342, 347.) "Mere suggestions of error without supporting argument or authority other than general abstract principles do not properly present grounds for appellate review." (Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd. (2002) 100 Cal.App.4th 1066, 1078.) "We may treat arguments not properly presented as forfeited." (Foster v. Britton (2015) 242 Cal.App.4th 920, 928, fn. 6 (Foster).) As did the court in Foster, we shall respond in the interest of justice to plaintiff's legal arguments as we understand them; "however, to the extent we fail to address a point made in the opening brief, the issue is treated as forfeited." (Ibid.)
2. Actual Controversy
WMC contends that the trial court properly sustained WMC's demurrer because plaintiff did not properly plead or show how he could plead facts entitling him to declaratory relief. WMC specifically argues that plaintiff did not allege an actual controversy.
"To state a cause of action for declaratory relief under section 1060 . . . appropriate facts should be alleged from which the court may determine that an 'actual controversy relating to the legal rights and duties of the respective parties' exists." (City of Alturas v. Gloster (1940) 16 Cal.2d 46, 48.) "[T]he ' "actual, present controversy must be pleaded specifically." ' [Citation.] Thus, a claim must provide specific facts, as opposed to conclusions of law, which show a ' "controversy of concrete actuality." ' [Citation.] Whether a claim presents an ' " 'actual controversy' within the meaning of . . . section 1060 is a question of law that we review de novo." [Citation.]' [Citation.]" (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 513-514, disapproved on another ground in Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 934, 939, fn. 13 (Yvanova).)
Here, plaintiff's attempt to allege an actual controversy focused on the 2009 quitclaim deed that WMC recorded and the "serious injury or loss of property" he allegedly suffered and would continue to suffer if that deed were left outstanding. WMC maintains that plaintiff's emphasis on the quitclaim deed is a red herring. We agree.
" 'A quitclaim deed transfers whatever present right or interest the grantor has in the property. [Citation.]' " (City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 239.) "A quitclaim deed only purports to release and quitclaim whatever interest the grantor possesses at the time. [The grantor] does not thereby affirm the possession of any title . . . ." (San Francisco v. Lawton (1861) 18 Cal. 465, 475-476 (San Francisco).)
Plaintiff cannot premise his declaratory relief cause of action on the 2009 quitclaim deed. A reasonable reading of the complaint as a whole compels the conclusion that the quitclaim deed could not and did not operate to deprive plaintiff of his interest in the Manzanita Road property. Two reasons support this conclusion. First, WMC had no interest in the property to convey in 2009 because it no longer owned plaintiff's loan. The complaint admits that WMC sold the loan to Morgan Stanley on August 30, 2006. Second, plaintiff had no interest in the property to lose in 2009. He lost all interest in the property two years earlier when FV-1 purchased it at the March 15, 2007 trustee's sale, as reflected in the trustee's deed upon sale that plaintiff attached as an exhibit to his complaint. Thus, the only effect of the 2009 quitclaim deed was (as the document itself prominently proclaimed) "TO CORRECT THE GRANTEE NAMED IN THE [incorrect] TRUSTEE'S DEED UPON SALE RECORDED ON 03/23/2007 . . . ." The quitclaim deed does not show an actual controversy between plaintiff and WMC.
Plaintiff argues that WMC lacked authority to record the quitclaim deed in 2009 because it sold plaintiff's loan to Morgan Stanley in 2006. Not so. A quitclaim deed releases "whatever interest the grantor possesses at the time." (San Francisco, supra, 18 Cal. at p. 475.) That WMC had no interest to release in 2009 does not mean it lacked authority to record the quitclaim deed to correct the grantee named in the incorrect trustee's deed upon sale that Quality recorded in error. Plaintiff's focus on the quitclaim deed is misplaced.
Plaintiff's attempt to premise his declaratory relief cause of action on the substitution of trustee and full reconveyance that Nationwide Title Clearing recorded on April 22, 2010, also fails. Plaintiff maintains and his complaint alleged that the document showed that his loan was paid in full, that there was no foreclosure, and that "[a]s of 04/22/2010 [he] is the true owner [of the property] free of all liens or mortgages." Plaintiff misunderstands the purpose of the recorded reconveyance.
"The sale of any property on which there is a lien, in satisfaction of the claim secured thereby . . . extinguishes the lien thereon." (Civ. Code, § 2910; see Cornelison v. Kornbluth (1975) 15 Cal.3d 590, 606 (Cornelison).) After the obligation the deed of trust secures has been satisfied, the trustor is entitled to a reconveyance of the deed of trust. (Civ. Code, § 2941, subd. (b)(1).) The full reconveyance must be recorded. (Civ. Code, § 2941, subd. (b)(1)(A).) The purpose of these requirements is to provide trustors with proof that the obligation has been satisfied and to "free them from the liability if the original note was transferred to a bona fide purchaser for value." (Huckell v. Matranga (1979) 99 Cal.App.3d 471, 476.)
The March 15, 2007 trustee's sale of the Manzanita Road property satisfied plaintiff's obligation under the note and extinguished the lien that secured that obligation. (Civ. Code, § 2910; see Cornelison, supra, 15 Cal.3d at p. 606.) Plaintiff was therefore entitled to a reconveyance of his deed of trust. (Civ. Code, § 2941, subd. (b)(1).) The recorded document reflects the extinguishment of the obligation that the deed of trust secured and the release of the lien. It does not reflect a reconveyance to plaintiff of title to the property. Thus, it does not show an actual controversy over ownership of the property.
The adjustable rate recalculation form letters that plaintiff allegedly received from new loan servicers America's Servicing Company and Saxon Mortgage Services, Inc. (Saxon) in May and November 2007 and thereafter do not show an actual controversy on which plaintiff can premise his declaratory relief cause of action either. Those letters were not sent by or on behalf of WMC. The complaint admitted that WMC "sold the loan and had no interest after 08/30/2006." The sale of the loan occurred before the property was sold in foreclosure and long before any of the letters was sent. Thus, the letters cannot support plaintiff's allegation that an actual controversy existed in that WMC claimed his loan was in default and he claimed it was current.
The "Short-Year History Statement" that plaintiff apparently obtained from Saxon in 2010 does not show an actual controversy between plaintiff and WMC. Plaintiff asserts and the complaint alleged that the document reflected a $40,336.63 payment to Saxon in March of 2008 "which was placed in an escrow account to make the monthly payments." Elsewhere in his complaint plaintiff vaguely alleged that "an overpayment was put into an escrow account which was used to over pay the loan with plaintiff [sic] over payments being made up to September 2011" and that he was "unable to get refund of over payment . . . ." To the extent these sparse allegations suggest any controversy, they do not suggest a controversy between plaintiff and WMC because the complaint admitted that WMC sold plaintiff's loan in 2006. Plaintiff's failure to allege an actual controversy is fatal to his declaratory relief cause of action.
Plaintiff argues that a demurrer is a procedurally inappropriate method for disposing of a complaint for declaratory relief. His reliance on Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, 221 (Lockheed), disapproved on another ground in State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1036 is misplaced. Lockheed stands for the proposition that a defendant " 'cannot, on demurrer, attack the merits of the plaintiff's claim. The complaint is sufficient if it shows an actual controversy; it need not show that plaintiff is in the right.' " (Lockheed, at p. 221.) Here, we have determined that plaintiff failed to plead facts showing the existence of an actual controversy. Lockheed does not advance his position.
3. Alleged Deficiencies in the Foreclosure Process
Plaintiff argues and the complaint alleged that the challenged instruments should be cancelled because the foreclosure process did not satisfy the requirements of the foreclosure statutes, his loan was not in default, and no trustee's sale was ever conducted. WMC responds that these allegations need not be taken as true because they are contrary to facts stated in recorded instruments that plaintiff attached as exhibits to his complaint. We agree with WMC.
On appeal from the sustaining of a demurrer "facts appearing in exhibits attached to the complaint will . . . be accepted as true and, if contrary to the allegations in the pleading, will be given precedence." (Dodd, supra, 222 Cal.App.3d at p. 1627.) Here, plaintiff alleged that WMC initiated the foreclosure process when his loan was not in default. That allegation was contrary to facts appearing in the recorded notice of default and notice of trustee's sale that plaintiff attached as exhibits to his complaint. His allegation that he was never served with the notice of default or notice of trustee's sale was contrary to facts appearing in the recorded trustee's deed upon sale, which recited that the trustee "complied with all statutory requirements . . . and performed all duties required by the Deed of Trust including sending a Notice of Default and Election to Sell . . . and a Notice of Sale . . . ." His allegation that no trustee's sale was ever conducted was contrary to facts appearing in the recorded trustee's deed upon sale that he attached to his complaint. Thus, we need not accept those allegations as true. (Dodd, at p. 1627.) Without them, the complaint does not plead facts showing a failure to satisfy the requirements of the foreclosure statutes.
Plaintiff argues that WMC sold the note on July 12, 2006, and thus "had no standing or authorization to . . . record the foreclosure documents in controversy." The argument lacks merit. Plaintiff's assertion that WMC sold the note on July 12, 2006, contradicts the complaint's repeated allegations that WMC sold the note on August 30, 2006. Documents that plaintiff attached as exhibits to the complaint, including the MERS "Milestone Report" on which he relies, support the August 30, 2006 sale date allegations. The notice of default was recorded on May 15, 2006, by Quality "as agent for . . . the beneficiary" WMC under the deed of trust. The notice of trustee's sale was recorded by Quality on August 18, 2006, immediately after the recording of the substitution of trustee that replaced Westwood Associates with Quality. These dates precede WMC's sale of the loan.
Plaintiff also argues that WMC had no authority to record the trustee's deeds upon sale, the assignment of the deed of trust to FV-1, and the quitclaim deed. The argument does not advance his position. The trustee's deed upon sale that incorrectly named WMC as the buyer was executed and recorded in error by Quality. Plaintiff has not called our attention to, nor have we found, anything in the record suggesting that WMC was involved in the preparation or recording of that document. The corrected trustee's deed upon sale that named FV-1 as the buyer was also recorded by Quality. Again, plaintiff has not called our attention to, nor have we found, anything in the record suggesting that WMC was involved in the preparation or recording of that document.
WMC recorded an assignment of the deed of trust to FV-1 on April 6, 2007. That this occurred after WMC sold plaintiff's loan to Morgan Stanley is irrelevant here for two reasons. First, the assignment of a deed of trust need not be recorded. (Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 121-122.) Second and more importantly, a deed of trust "is inseparable from the note it secures, and follows it even without a separate assignment." (Yvanova, supra, 62 Cal.4th at p. 927.) WMC's August 30, 2006 sale of the loan to Morgan Stanley included the transfer of plaintiff's deed of trust. Plaintiff's complaint does not plead facts showing that WMC lacked authority to record the challenged documents.
We conclude that plaintiff's complaint failed to allege facts constituting any cause of action against WMC. Thus, the trial court did not err when it sustained WMC's demurrer.
Our conclusion means that we need not reach WMC's additional arguments that the demurrer was properly sustained because the complaint failed to join indispensable parties and because the action was time-barred.
4. Leave to Amend
Plaintiff asserts that the complaint "can be amended to show a cause of action." A laundry list of possible causes of action (including those the trial court rejected when it sustained the demurrers to plaintiff's first amended complaint without leave to amend) follows. Plaintiff does not identify any new facts. He does not explain "in what manner he can amend his complaint and how that amendment will change the legal effect of the pleading." (Cooper, supra, 70 Cal.2d at p. 636.) Thus, he has failed to satisfy his burden of demonstrating a reasonable possibility that the defects in his current complaint can be cured by amendment. (Blank, supra, 39 Cal.3d at p. 318.) The trial court did not err when it sustained WMC's demurrer without leave to amend. (Ibid.)
D. Denial of Plaintiff's Ex Parte Application for Temporary Stay of Enforcement
Plaintiff complains that the trial court improperly denied his ex parte application for a stay of enforcement "without a trial or review of documents." The argument lacks merit.
"[T]he trial court may stay the enforcement of any judgment or order." (§ 918, subd. (a).) " 'Ordinarily, the word "may" [in a statute] connotes a discretionary or permissive act; the word "shall" connotes a mandatory or directory duty.' " (Wittenberg v. Beachwalk Homeowners Assn. (2013) 217 Cal.App.4th 654, 667.) "Discretion is abused in the legal sense 'whenever it may be fairly said that in its exercise the court in a given case exceeded the bounds of reason or contravened the uncontradicted evidence.' " (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 527 (Continental Baking).) There was no abuse of discretion here.
Plaintiff cannot complain that the trial court denied his application "without a trial or review of documents." His application did not seek or even mention a trial or a review of documents. Plaintiff sought a stay in part to allow himself "time to consider filing . . . a notice of appeal . . . ." But he filed the application the day after he filed his notice of appeal. Thus, he did not need time to consider whether to appeal.
Plaintiff also sought the stay to allow himself "time to consider filing posttrial motions . . . and to evaluate the proceedings and consult with his attorney." Neither in the application nor in his briefs on appeal did he identify the posttrial motions he was contemplating. Generally, " 'the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.' (§ 916, subd. (a).) The purpose of the automatic stay provision of section 916, subdivision (a) 'is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.' [Citation.]" (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189, fn. omitted.) Here, where plaintiff failed to identify any posttrial motions that the trial court could consider notwithstanding the stay of proceedings in the trial court, we cannot say that the denial of his application exceeded the bounds of reason. (Continental Baking, supra, 68 Cal.2d at p. 527.) On this record, the denial of his application was not an abuse of discretion.
IV. Disposition
The judgments of dismissal are affirmed.
/s/_________
Mihara, J. WE CONCUR: /s/_________
Elia, Acting P. J. /s/_________
Bamattre-Manoukian, J.