Opinion
D075585
04-22-2020
DALE DAWALT, Plaintiff and Appellant, v. SELECT PORTFOLIO SERVICING, INC., et al., Defendants and Respondents.
Stephen F. Lopez for Plaintiff and Appellant. Kutak Rock and Steven M. Dailey for Defendants and Respondents Select Portfolio Servicing, Inc., Wells Fargo Bank, National Association, as Trustee for Structured Asset Mortgage Investments II Inc. Bear Stearns Mortgage Funding Trust 2007-AR5, Mortgage Pass-Through Certificates, Series 2007-AR5 and Mortgage Electronic Registration Systems, Inc. Parker Ibrahim & Berg, Bryant S. Delgadillo and Mariel Gerlt-Ferraro for Defendants and Respondents JPMorgan Chase Bank N.A., Structured Asset Mortgage Investments II, Inc., and EMC Mortgage LLC.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2018-00029553-CU-OR-CTL) APPEAL from judgments of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge. Affirmed. Stephen F. Lopez for Plaintiff and Appellant. Kutak Rock and Steven M. Dailey for Defendants and Respondents Select Portfolio Servicing, Inc., Wells Fargo Bank, National Association, as Trustee for Structured Asset Mortgage Investments II Inc. Bear Stearns Mortgage Funding Trust 2007-AR5, Mortgage Pass-Through Certificates, Series 2007-AR5 and Mortgage Electronic Registration Systems, Inc. Parker Ibrahim & Berg, Bryant S. Delgadillo and Mariel Gerlt-Ferraro for Defendants and Respondents JPMorgan Chase Bank N.A., Structured Asset Mortgage Investments II, Inc., and EMC Mortgage LLC.
I
INTRODUCTION
Dale Dawalt sued his lender and other entities alleging causes of action arising from the nonjudicial foreclosure of his residential property. The trial court sustained the moving defendants' unopposed demurrers to the complaint without leave to amend and entered judgments of dismissal in favor of the moving defendants. We affirm.
II
BACKGROUND
A
For purposes of this appeal, which arises from judgments of dismissal entered after the trial court sustained the moving defendants' demurrers to the complaint, we accept as true the following facts as alleged in the complaint and other matters subject to judicial notice. (Branson v. Martin (1997) 56 Cal.App.4th 300, 302.)
In 2007, Dawalt obtained a $440,000 loan from Bear Stearns Residential Mortgage Corporation (Bear Stearns). The note for the loan was secured by a deed of trust encumbering residential property in Vista. The deed of trust identified Bear Stearns as the lender, Mortgage Electronic Registrations Systems, Inc. (MERS) as the beneficiary and the nominee for Bear Stearns, and LandAmerica Southland Title as the trustee. EMC Mortgage Corporation (EMC) serviced the loan and later transferred its servicing rights to JPMorgan Chase Bank N.A. (JPMorgan).
" 'MERS is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members' interests to MERS. MERS is listed as the grantee in the official records maintained at county register of deeds offices. The lenders retain the promissory notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to investors without having to record the transaction in the public record.' " (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1151 (Gomes).)
In 2014, MERS, acting as the nominee for Bear Stearns, executed an assignment of the deed of trust. It purported to assign the deed of trust, "together with all rights, title and interest secured thereby," to Wells Fargo Bank, National Association (Wells Fargo), as trustee for the Structured Asset Mortgage Investments II Inc. Bear Stearns Mortgage Funding Trust 2007-ARS, Mortgage Pass-Through Certificates, series 2007-ARS, a securitized trust governed by New York law.
On November 18, 2016, Select Portfolio Servicing, Inc. (Select Portfolio), the alleged attorney in fact for Wells Fargo, recorded a substitution of trustee identifying T.D. Service Company (T.D. Service) as the new trustee for the deed of trust. On the same day, T.D. Service recorded a notice of default indicating Dawalt's loan was $30,293.18 in arrears. On February 9, 2017, T.D. Service recorded a notice of trustee's sale indicating the estimated unpaid balance of Dawalt's loan and other charges was $480,802.28 and the property encumbered by the deed of trust would be sold at public auction. On February 17, 2017, T.D. Service recorded a second notice of trustee's sale containing the same information as the first notice of trustee's sale.
On September 18, 2017, T.D. Service sold the property at auction to Wells Fargo. T.D. Service recorded a trustee's deed upon sale conveying the property to Wells Fargo.
B
In 2018, Dawalt filed a verified complaint against Bear Stearns, MERS, Wells Fargo, Select Portfolio, Structured Asset Mortgage Investments II Inc. (SAMI), EMC, JPMorgan, and T.D. Service. He asserted the following causes of action against all defendants: quiet title; invalidity of contracts; cancellation of instruments; breach of contract; violation of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq.); and declaratory relief. He also asserted causes of action for: wrongful foreclosure against Bear Stearns, SAMI, Wells Fargo, and Select Portfolio; slander of title against MERS, SAMI, and EMC; and violation of the Homeowner Bill of Rights (HBOR; Civ. Code, § 2920.5 et seq.) against Select Portfolio and T.D. Service.
Most of these causes of action turned on Dawalt's contention that the assignment of the note to Wells Fargo was void. Dawalt argued the assignment was void for four reasons: (1) there was no credible evidence proving the note and/or deed of trust were transferred to Wells Fargo; (2) MERS lacked authority to assign the note or the deed of trust to Wells Fargo; (3) MERS was not registered to do business in California when the deed of trust was executed and, therefore, was incapable of serving as nominee under the deed of trust; and (4) Dawalt's loan was not transferred to the securitized trust until after the trust's closing date of June 1, 2007.
In connection with the HBOR cause of action, Dawalt alleged Select Portfolio and T.D. Service: (1) recorded false instruments that were unsupported by competent or reliable evidence, in violation of Civil Code section 2924.17; and (2) failed to provide him a statement that he may request a copy of the note, deed of trust, and any applicable assignments, in violation of Civil Code section 2923.55.
Select Portfolio, Wells Fargo, and MERS filed a demurrer to the complaint and SAMI, EMC, and JP Morgan filed a separate demurrer to the complaint. The demurring defendants argued Dawalt had initiated a bankruptcy proceeding under Chapter 13 of the United States Bankruptcy Code, failed to disclose his existing or potential claims against the demurring defendants as property of the bankruptcy estate, and received a bankruptcy discharge; as a result, he was judicially estopped from filing the undisclosed claims in the present case. Alternatively, the demurring defendants argued Dawalt failed to plead facts sufficient to state the asserted causes of action. Dawalt did not oppose the demurrers, but instead filed an amended complaint largely identical to the originally-filed complaint.
The trial court sustained the demurrers without leave to amend on both grounds and entered judgments of dismissal in favor of the demurring defendants.
III
DISCUSSION
A
Legal Standard
" ' "On appeal from an order of dismissal after an order sustaining a demurrer, our standard of review is de novo, i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law." ' [Citation.] 'A judgment of dismissal after a demurrer has been sustained without leave to amend will be affirmed if proper on any grounds stated in the demurrer, whether or not the court acted on that ground.' [Citation.] In reviewing the complaint, 'we must assume the truth of all facts properly pleaded by the plaintiffs, as well as those that are judicially noticeable.' " (Gomes, supra, 192 Cal.App.4th at p. 1153.)
"Further, '[i]f the court sustained the demurrer without leave to amend, as here, we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment.... If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred.... The plaintiff has the burden of proving that an amendment would cure the defect.' [Citation.] '[S]uch a showing can be made for the first time to the reviewing court ....' " (Gomes, supra, 192 Cal.App.4th at pp. 1153-1154.)
B
Abandoned Claims
Although Dawalt asserted nine causes of action against various defendants, he appealed judgments applicable to only a subset of defendants and preserved arguments only with respect to certain defendants and causes of action. Therefore, we begin by identifying the defendants and causes of action that are not pertinent to this appeal.
First, the record does not indicate Bear Stearns or T.D. Service filed demurrers or were subject to judgments of dismissal. Further, the notice of appeal does not identify or attach an appealable order or judgment applicable to Bear Stearns or T.D. Service. As a result, Bear Stearns and T.D. Service are not parties to the appeal and we do not consider whether Dawalt alleged facts sufficient to state causes of action against them. (Mitchell v. National Auto. & Casualty Ins. Co. (1974) 38 Cal.App.3d 599, 602, fn. 1.)
Second, Dawalt proffered no argument that he alleged sufficient facts or can amend his complaint to allege causes of action against EMC or JPMorgan. Accordingly, he has abandoned any argument as to the sufficiency of the allegations against EMC and JPMorgan. (Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 9, fn. 2 (Ram).)
Finally, as to the remaining defendants—MERS, Wells Fargo, Select Portfolio, and SAMI—Dawalt makes no argument that he sufficiently alleged or can amend his complaint to allege invalidity of contracts, breach of contract, or declaratory relief causes of action. As a result, we conclude Dawalt has abandoned any claims of error relating to these causes of action. (Ram, supra, 234 Cal.App.4th at p. 9, fn. 2.)
C
We now consider the sufficiency of the allegations supporting the remaining causes of action: (1) wrongful foreclosure against Wells Fargo, Select Portfolio, and SAMI; (2) quiet title against Wells Fargo, Select Portfolio, and SAMI; (3) cancellation of instruments against MERS, Wells Fargo, Select Portfolio, and SAMI; (4) slander of title against MERS and SAMI; (5) HBOR violations against Select Portfolio; and (6) UCL violations against MERS, Wells Fargo, Select Portfolio, and SAMI.
Defendants contend Dawalt abandoned these claims because he did not file formal oppositions to the demurrers. We disagree. The question whether Dawalt alleged facts sufficient to state causes of action presents a legal question subject to our independent review. (Charpentier v. Los Angeles Rams Football Co., Inc. (1999) 75 Cal.App.4th 301, 306-307.) Further, " '[w]hile it is the plaintiff's burden to show "that the trial court abused its discretion" and "show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading" [citation], a plaintiff can make "such a showing ... for the first time to the reviewing court" [citation].' " (Mercury Ins. Co. v. Pearson (2008) 169 Cal.App.4th 1064, 1072.)
1
Wrongful Foreclosure
Wrongful foreclosure "is an equitable action to set aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that the foreclosure was improper. [Citation.] The elements of a wrongful foreclosure cause of action are: ' "(1) [T]he trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering." ' " (Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 561-562.)
As the basis for his wrongful foreclosure cause of action, Dawalt asserts the assignment of the note and promissory note from MERS to Wells Fargo was void. Based on the allegedly void assignment, he contends Wells Fargo lacked authority to initiate foreclosure of the property encumbered by the deed of trust. (See Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 927-928 (Yvanova) ["[I]f the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process."].) Dawalt proffers several arguments in support of his claim that the assignment to Wells Fargo was void.
He contends Wells Fargo did not validate its claim that it was the assignee of the note and deed of trust. In the complaint, for instance, he alleged "there [was] no actual evidence the loan, [n]ote[,] or [d]eed of [t]rust were actually sold or transferred" to Wells Fargo. It further stated there was "no evidence of any alleged 'beneficial holder' [of the note] other than [Bear Stearns], and no other entity has provided evidence of consideration for purchase of the debt ...." In short, Dawalt averred Wells Fargo did not affirmatively substantiate its authority to initiate the foreclosure of his property.
"A nonjudicial foreclosure is 'presumed to have been conducted regularly, and the burden of proof rests with the party attempting to rebut this presumption.' " (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1493.) "Given the presumption of regularity, if plaintiff contended the sale was invalid because [Wells Fargo] had no authority to conduct the sale, the burden rested with plaintiff affirmatively to plead facts demonstrating the impropriety." (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 270 (Fontenot), disapproved on another ground in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13; see Ram, supra, 234 Cal.App.4th at p. 14.)
Dawalt did not plead such impropriety. Instead, he merely alleged Wells Fargo failed to verify its claimed interest in the note and deed of trust. This is insufficient to overcome the presumption of regularity governing nonjudicial foreclosures. (Fontenot, supra, 198 Cal.App.4th at pp. 270-271; see Gomes, supra, 192 Cal.App.4th at p. 1156 ["(Borrower) has not asserted any factual basis to suspect that MERS lacks authority to proceed with the foreclosure. He simply seeks the right to bring a lawsuit to find out whether MERS has such authority. No case law or statute authorizes such a speculative suit."].) Accordingly, Dawalt's allegations do not establish a void assignment.
Similarly, Dawalt argues "[t]here [was] no document or other evidence showing that Wells [Fargo], as trustee ... ever had possession of the original note." Insofar as Dawalt suggests Wells Fargo was required to produce evidence that it physically possessed the note to initiate foreclosure, he is mistaken. The nonjudicial foreclosure statutes "do[] not mandate physical possession of the underlying promissory note in order for [the] initiation of foreclosure to be valid." (Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440.)
In the alternative, Dawalt contends the assignment was void because MERS—the nominee for Bear Stearns—never had a beneficial interest in the note or deed of trust. According to Dawalt, "Wells [Fargo] acquired nothing from MERS because at the time of the assignment, MERS [had] no beneficial interest" at all. We are not persuaded.
The deed of trust executed by Dawalt included the following provision: "MERS holds only legal title to the interests granted by [Dawalt] in [the] Security Instrument; but ... MERS (as nominee for Lender and Lender's successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property ....." Because Dawalt agreed MERS had the right to exercise the lender's interests, which encompassed the right to assign the note and deed of trust, he is foreclosed from arguing that MERS lacked authority to assign the note or deed of trust to Wells Fargo. (Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 83-84 (Siliga), disapproved on another ground in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13 [trustor's acceptance of provision stating MERS had authority to exercise lender's rights precluded trustor from contesting MERS's authority to assign note and deed of trust]; Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495, 1505-1506, disapproved on another ground in Yvanova, at p. 939, fn. 13 [same].)
"There is a further, overriding basis for rejecting a claim based solely on the alleged invalidity of the MERS assignment. Plaintiff's cause of action ultimately seeks to demonstrate that the nonjudicial foreclosure sale was invalid because [Wells Fargo] lacked authority to foreclose, never having received a proper assignment of the debt. In order to allege such a claim, it was not enough for plaintiff to allege that MERS's purported assignment of the note in the assignment of deed of trust was ineffective. Instead, plaintiff was required to allege that [Wells Fargo] did not receive a valid assignment of the debt in any manner.... The lender could readily have assigned the promissory note to [Wells Fargo] in an unrecorded document that was not disclosed to plaintiff. To state a [wrongful foreclosure] claim, plaintiff was required to allege not only that the purported MERS assignment was invalid, but also that [Wells Fargo] did not receive an assignment of the debt in any other manner. There is no such allegation." (Fontenot, supra, 198 Cal.App.4th at pp. 271-272.)
In the complaint, Dawalt also alleged the assignment to Wells Fargo was void because MERS was not registered to conduct business in California until July 2010—after execution of the deed of trust naming MERS as nominee for Bear Stearns. Dawalt does not pursue the argument on appeal and, therefore, he has abandoned it. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1169 (Daniels).)
In any event, the argument lacks merit. Generally, a foreign corporation may not conduct intrastate business without first obtaining a certificate of qualification from the Secretary of State. (Corp. Code, § 2105, subd. (a).) However, a foreign corporation does not conduct intrastate business by "[c]reating evidences of debt or mortgages, liens or security interests on real or personal property." (Id., § 191, subd. (c)(7).) It also does not conduct intrastate business by engaging in activities necessary for "[t]he ownership of any loans and the enforcement of any loans by trustee's sale, judicial process, or deed in lieu of foreclosure or otherwise." (Id., subd. (d)(3) & (7).)
The execution of the deed of trust and MERS's assignment of the trust deed and note fall within these exceptions. Thus, any failure by MERS to have a certificate of qualification from the Secretary of State at the time of the assignment did not invalidate the deed of trust or assignment. (Castaneda v. Saxon Mortg. Services (E.D.Cal. 2009) 687 F.Supp.2d 1191, 1195, fn. 3; Ramirez v. Right-Away Mortg., Inc. (N.D.Cal. Aug. 11, 2011, No. C 11-01839 WHA) 2011 U.S. Dist. Lexis 89460, at *6-7.)
" 'Although we may not rely on unpublished California cases, the California Rules of Court do not prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not binding, authority.' " (Gomes, supra, 192 Cal.App.4th at p. 1155, fn. 6.)
Finally, as noted, Dawalt alleged the assignment to Wells Fargo was void because it occurred after the securitized trust's closing date. He does not advance the argument on appeal; thus, it is abandoned. (Daniels, supra, 246 Cal.App.4th at p. 1169.)
Even if the argument were preserved, we would reject it. "[B]orrowers have standing to challenge assignments as void, but not as voidable ...." (Yvanova, supra, 62 Cal.4th at p. 939.) As numerous courts in our state have recognized, an assignment of a note to a securitized trust after the trust's closing date is voidable—not void—under New York law, which governs the securitized trust in this case. (Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 813; Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252, 1259; Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 815 (Saterbak); cf. Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1095-1098 [relying on outdated and since-overturned case law to conclude a postclosing transfer into a securitized trust is void].) In accordance with these authorities, we conclude the allegations of a postclosing assignment establish, at most, a voidable assignment—not a void assignment.
"A void contract is without legal effect. [Citation.] 'It binds no one and is a mere nullity.' [Citation.] 'Such a contract has no existence whatever.' " (Yvanova, supra, 62 Cal.4th at p. 929.) "A voidable transaction, in contrast, 'is one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance.' [Citation.] It may be declared void but is not void in itself." (Id. at p. 930.)
In sum, there is no merit to any of the arguments Dawalt proffers to support his claim of a void assignment. Therefore, we conclude Dawalt failed to allege facts sufficient to establish that the foreclosure of his property was wrongful.
2
Quiet Title
According to Dawalt, the quiet title cause of action was "dependent" on whether the assignment to Wells Fargo was void and, therefore, whether the foreclosure was wrongful. As discussed, Dawalt did not plead facts sufficient to establish a void assignment. On these grounds alone, we conclude the quiet title action fails.
Additionally, "a borrower may not ... quiet title against a secured lender without first paying the outstanding debt on which the mortgage or deed of trust is based." (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86; see Leeper v. Beltrami (1959) 53 Cal.2d 195, 216 ["Quieting title is the relief granted once a court determines that title belongs in plaintiff.... In other words, in such a case, the plaintiff must show he has a substantive right to relief before he can be granted any relief at all."].) Dawalt did not allege and does not contend on appeal that he ever repaid his outstanding indebtedness. This constitutes an independent basis on which we conclude the trial court correctly sustained the demurrers to the quiet title cause of action.
3
Cancellation of Instruments
Dawalt asserted a cause of action seeking cancellation of the assignment of deed of trust, the notice of default, the notices of a trustee's sale, and the trustee's deed upon sale, among other instruments. The complaint avers the assignment of deed of trust was void for the reasons previously discussed. It does not specify the grounds on which Dawalt seeks cancellation of the notice of default, the notices of a trustee's sale, or the trustee's deed upon sale, but simply describes these documents as "void."
Dawalt also sought cancellation of the note and the deed of trust based on allegations that defendants engaged in purportedly improper table funding, among other reasons. However, on appeal, he has not pursued these arguments or sought cancellation of the note or deed of trust. Therefore, we deem the arguments abandoned.
The right to secure cancellation of an instrument derives from Civil Code section 3412, which states as follows: "A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled." "Cancellation of an instrument is essentially a request for rescission of the instrument." (Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 523.) To plead a right to cancellation, a plaintiff must allege facts demonstrating the instrument or instruments are " 'void or voidable' " against him and would cause him " 'serious injury' " if they are not cancelled. (Ibid.)
For the reasons previously discussed, Dawalt did not plead facts to establish the assignment of deed of trust was void. Further, Dawalt was not party to the assignment of deed of trust, which was executed by MERS in favor of Wells Fargo, as trustee of the securitized trust. Accordingly, he cannot allege facts to establish the assignment of deed of trust was voidable as to him. (Yvanova, supra, 62 Cal.4th at p. 936 ["When an assignment is merely voidable, the power to ratify or avoid the transaction lies solely with the parties to the assignment; the transaction is not void unless and until one of the parties takes steps to make it so."].) Because the assignment was neither void nor voidable as to him, the cancellation of instruments cause of action fails with respect to the assignment of deed of trust. (Saterbak, supra, 245 Cal.App.4th at p. 819 ["... Saterbak fails to state a cause of action under section 3412 because she cannot allege that MERS's assignment of the (deed of trust) to the ... trust was void or voidable against her."].)
With respect to the remaining instruments (the notice of default, the notices of a trustee's sale, and the trustee's deed upon sale), Dawalt's bare assertion that the instruments were void is insufficient to establish that the instruments were, in fact, void. (Myles v. PennyMac Loan Services, LLC (2019) 40 Cal.App.5th 1072, 1075 (Myles) ["We assume the truth of the complaint's factual allegations but not its legal conclusions, such as whether a particular assignment was or was not legally void."].) Further, to the extent Dawalt averred the instruments were void because the assignment was void, these averments are insufficient to warrant cancellation because, as previously discussed, Dawalt did not allege facts sufficient to establish a void assignment.
4
Violations of the HBOR
Dawalt alleged Select Portfolio violated the HBOR in two respects. First, he averred Select Portfolio recorded false and misleading foreclosure-related documents, in violation of Civil Code section 2924.17. Second, he argued Select Portfolio did not provide him notice of his right to request a copy of the note, the deed of trust, the assignment, and his payment history, in violation of Civil Code section 2923.55.
Dawalt asserted the HBOR cause of action against a second defendant—T.D. Service. However, as previously noted, T.D. Service is not a party to this appeal.
"The Homeowner Bill of Rights (Civ. Code, §§ 2920.5, 2923.4-2923.7, 2924, 2924.9-2924.12, 2924.15, 2924.17-2924.20) ..., effective January 1, 2013, was enacted 'to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower's mortgage servicer, such as loan modifications or other alternatives to foreclosure.' " (Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal.App.4th 1267, 1272, fn. omitted.) Where a mortgage servicer, mortgagee, trustee, beneficiary, or agent commits a material violation of Civil Code sections 2924.17 or 2923.55—the provisions of the HBOR at issue in this appeal—and the violation is not corrected and remedied prior to the recordation of the trustee's deed upon sale, the violating party is liable to the borrower for "actual economic damages." (Civ. Code, § 2924.12, subd. (b).)
We begin with the alleged violation of Civil Code section 2924.17. Civil Code section 2924.17 requires foreclosure-related documents—including a notice of default, notice of sale, assignment of a deed of trust, and substitution of trustee, recorded by or on behalf of a mortgage servicer—to be accurate, complete, and supported by competent and reliable evidence. (Civ. Code, § 2924.17, subd. (a).) It further states that "[b]efore recording or filing any of the [specified] documents ... a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower's default and the right to foreclose, including the borrower's loan status and loan information." (Id., subd. (b).)
Dawalt alleged Select Portfolio recorded the substitution of trustee, as attorney in fact for Wells Fargo. However, he alleged no facts demonstrating how the substitution of trustee was inaccurate, incomplete, or otherwise violative of Civil Code section 2924.17. Instead, he generically alleged "[Selection Portfolio was] in violation of the HBOR which forbids the recording of instruments that are false and misleading." These allegations, which merely paraphrase the statutory language, do not state facts sufficient to survive a demurrer. (Hawkins v. TACA Internat. Airlines, S.A. (2014) 223 Cal.App.4th 466, 478 ["[S]imply parroting the language of [the statute] in the complaint is insufficient to state a cause of action under the statute."]; see also Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790 [there is a "general rule that statutory causes of action must be pleaded with particularity"].)
It is conceivable Dawalt intended his generic allegation to suggest the substitution of trustee was false because the assignment of the note and deed of trust to Wells Fargo—on whose behalf Select Portfolio acted—was void. However, as previously discussed, Dawalt did not allege facts sufficient to establish a void assignment.
Dawalt also alleged Select Portfolio violated a second provision of the HBOR, former Civil Code section 2923.55, which required mortgage servicers to send borrowers written statements that they may request copies of their promissory note, deed of trust, any assignment of the deed of trust, and payment histories. (Former Civ. Code, § 2923.55, subd. (b)(1)(B).) Dawalt averred Select Portfolio violated this provision of the HBOR because it "fail[ed] to provide such notice" to Dawalt.
"Many sections of the HBOR were subject to a sunset provision, effective on January 1, 2018," including Civil Code section 2923.55. (Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1115, fn. 4.) While this case was pending in the trial court, the Legislature reenacted section 2923.55 in substantially the same form as the version that was in effect when the foreclosure proceedings occurred. (Stats. 2018, ch. 404, § 6.)
This allegation fails to state a claim as well as Dawalt pleaded no facts establishing he suffered "actual economic damages" resulting from a "material" violation of the HBOR (Civ. Code, § 2924.12, subd. (b))—that is, a violation that " 'affected [the plaintiff's] loan obligations' or the loan modification process." (Cardenas v. Caliber Home Loans, Inc. (N.D.Cal. 2017) 281 F.Supp.3d 862, 869.) He pleaded no facts establishing he could have repaid his indebtedness had he received notice of his right to request foreclosure-related documents. Nor did he allege he was unable to obtain the documents that must be identified in a Civil Code section 2923.55 notice. On this record, we conclude Dawalt failed to allege facts sufficient to establish a material violation of the HBOR. (McMahon v. JPMorgan Chase Bank, N.A. (E.D.Cal. Apr. 26, 2017, No. 2:16-cv-1459-JAM-KJN) 2017 U.S. Dist. Lexis, at *4 [dismissing HBOR claim where plaintiff did "not point to any allegation in the (first amended complaint) indicating how any alleged violation of (Civ. Code,) § 2923.55 was material."]; Richardson v. Wells Fargo Bank, N.A. (C.D.Cal. Aug. 11, 2016, No. EDCV 16-873-VAP (KKx)) 2016 U.S. Dist. Lexus 107090, at *10-13 [dismissing HBOR claim because plaintiff "fail[ed] entirely to address ... how Defendant's alleged failures under Section 2923.55 were 'material' violations"].)
On the contrary, Dawalt expressly alleged Select Portfolio provided him a copy of the note for the loan. He also attached the note, the deed of trust, the assignment of deed of trust, and other foreclosure-related documents as exhibits to the complaint.
5
Slander of Title
Dawalt asserted a slander of title cause of action against MERS and SAMI based on defendants' recording of certain allegedly false documents. In particular, he based his claim on the recording of the assignment of deed of trust and the substitution of trustee.
"Slander or disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof ' "some special pecuniary loss or damage." ' [Citation.] The elements of the tort are (1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss. [Citations.] If the publication is reasonably understood to cast doubt upon the existence or extent of another's interest in land, it is disparaging to the latter's title. [Citation.] The main thrust of the cause of action is protection from injury to the salability of property [citations], which is ordinarily indicated by the loss of a particular sale, impaired marketability or depreciation in value [citations]." (Sumner Hill Homeowners' Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1030.)
Dawalt did not plead sufficient facts to state a slander of title cause of action because he did not allege a disparaging statement. (LaMothe, Cal. Civil Practice: Business Litigation (2019 supp.), Slander of Title and Trade Libel, § 65.3 ["A statement disparaging title is a necessary element of slander of title."].) The substitution of a trustee and assignment of deed of trust had no bearing on, and thus could not disparage, Dawalt's interest in the property. (Banares v. Wells Fargo Bank, N.A. (N.D.Cal. Mar. 7, 2014, No. C-13-4896 EMC) 2014 U.S. Dist. Lexis 29909, at *24-25 ["The Assignment and Substitution are not a basis for slander of title, since these do not cast doubt on Plaintiff's interest ...."]; Croskrey v. Ocwen Loan Servicing LLC (C.D.Cal. June 2, 2016, No. SA CV 14-1318-DOC (DFMx) 2016 U.S. Dist. Lexis 72301, at *22 [" 'A notice that a lender has substituted one trustee for another cannot be "reasonably understood to cast doubt upon the existence or extent of [Plaintiff's] interest in land." ' "].) Instead, "they merely substitute[d] one creditor, or one trustee, for another." (Banares, at *25.)
On appeal (though not in his complaint), Dawalt argues that defendants recorded certain other documents—the notices of default, notice of sale, and trustee's deed upon sale—that were also "false." However, the slander of title cause of action, as alleged in the complaint, was not supported by such allegations. Even if it had been supported as such, it would have been proper for the trial court to sustain the demurrers. Under Civil Code section 2924, subdivision (d), defendants' recording of the notices of default, notice of sale, and trustee's deed upon sale were privileged acts. (Schep v. Capital One, N.A. (2017) 12 Cal.App.5th 1331, 1336 (Schep).) The Legislature codified this privilege into law " 'to give trustees some measure of protection from tort liability arising out of the performance of their statutory duties.' " (Ibid.)
There is a split of authority in our state as to whether the privilege codified in Civil Code section 2924, subdivision (d) is absolute or qualified. (Schep, supra, 12 Cal.App.5th at p. 1337 [recognizing division of authority].) But we need not wade into this debate because Dawalt did not plead facts to overcome the more limited, qualified privilege. In particular, he pleaded no facts indicating the recording was done with malice, motivated by hatred or ill will, or without reasonable grounds for belief in the truth of the publication. (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 336.) Accordingly, we conclude the trial court properly sustained the demurrers to the slander of title cause of action.
6
Unfair Competition
"By proscribing 'any unlawful' business practice, 'section 17200 "borrows" violations of other laws and treats them as unlawful practices' that the unfair competition law makes independently actionable." (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) Dawalt's UCL cause of action is derivative of the other causes of action asserted in the complaint and thus "stands or falls" with those claims. (Hawran v. Hixson (2012) 209 Cal.App.4th 256, 277.)
For the reasons previously discussed, the antecedent causes of action on which the UCL cause of action depends do not stand; they fall. Therefore, the derivative UCL cause of action falls with them. (Myles, supra, 40 Cal.App.5th at p. 1075; Daniels, supra, 246 Cal.App.4th at pp. 1186-1187.)
7
Denial of Leave to Amend
The trial court sustained the demurrers without leave to amend. Therefore, Dawalt bears the burden on appeal of demonstrating how the complaint could be amended to state a valid cause of action. " ' "The assertion of an abstract right to amend does not satisfy this burden." [Citation.] The plaintiff[] must clearly and specifically state the "legal basis for amendment, i.e., the elements of the cause of action," as well as the "factual allegations that sufficiently state all required elements of that cause of action." ' " (Casiopea Bovet, LLC v. Chiang (2017) 12 Cal.App.5th 656, 664.)
Dawalt has not satisfied these requirements. He argues only that he can amend his complaint to allege additional facts showing MERS lacked authority to assign the note and, therefore, the assignment was void. But, as previously noted, he is foreclosed from arguing MERS's supposed lack of authority to assign the note. (Siliga, supra, 219 Cal.App.4th at pp. 83-84.) As Dawalt has not satisfied his burden on appeal, we conclude the trial court properly sustained the demurrers without leave to amend.
Because we conclude Dawalt did not plead facts to support the causes of action asserted or meet his burden of establishing how the complaint could be adequately amended, we do not address whether judicial estoppel principles preclude his claims.
IV
DISPOSITION
The judgments are affirmed. Respondents are entitled to their costs on appeal.
McCONNELL, P. J. WE CONCUR: O'ROURKE, J. IRION, J.