Opinion
A152092
07-18-2018
MICHAEL FAZIO, et al., Plaintiffs and Appellants, v. NEW PENN FINANCIAL, LLC, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. HG17845796)
Plaintiffs Michael and Kim Marie Fazio defaulted on their home mortgage, and at least two nonjudicial foreclosure proceedings were initiated. The Fazios brought several lawsuits to stop these proceedings, and in this latest one they sued defendant New Penn Financial, LLC, d/b/a Shellpoint Mortgage Servicing (Shellpoint), alleging that it was an unauthorized mortgage servicer and lacked authority to participate in the most recent nonjudicial foreclosure proceeding. The Fazios seek reversal of a judgment entered after the trial court sustained Shellpoint's demurrer without leave to amend. We reject their claims and affirm.
A mortgage servicer is an entity sometimes hired " 'to administer . . . mortgages by enforcing the mortgage terms and administering the payments.' " (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 930, fn. 5 (Yvanova).)
I.
FACTUAL AND PROCEDURAL
BACKGROUND
This is at least the third case brought by the Fazios to enjoin nonjudicial foreclosure proceedings initiated against a Hayward home in which they apparently no longer reside. In a nonpublished decision in an earlier case, Fazio v. Bank of New York Mellon (Oct. 22, 2015, A144010), we rejected the Fazios' claims against the mortgage holder, the Bank of New York Mellon (BNY Mellon), on the basis that the claims were barred by principles of res judicata. (Ibid.) Specifically, we concluded that the claims were barred because the Fazios had attempted to relitigate the same primary right—whether BNY Mellon had a valid legal or equitable right, title, or interest in the property—they had previously unsuccessfully litigated. (Ibid.)
This case involves a different nonjudicial foreclosure proceeding than the one at issue in the Fazios' earlier cases, although the parties only fleetingly mention this critical fact in their briefing. The factual predicate for this case starts with a 2015 email that a representative of BNY Mellon sent to a title company after "the notice of default on which the prior proceedings relied was rescinded." Months later, in August 2016, a substitution of trustee was filed by Shellpoint as "servicer for [BNY Mellon], as Trustee," substituting the Law Offices of Les Zieve as trustee (the 2016 substitution of trustee). Two months after that, in October 2016, a "notice of default Document #2016260408" was filed by the Law Offices of Les Zieve (the 2016 notice of default). The notice initiated the nonjudicial foreclosure proceeding that the Fazios seek to enjoin in this case.
This notice of rescission was filed on January 24, 2014, and a copy of it is attached to the Fazios' amended complaint. The parties do not explain the circumstances surrounding the rescission.
The Fazios filed this lawsuit in January 2017, asserting eight causes of action against Shellpoint: (1) declaratory relief; (2) injunctive relief; (3) slander of title; (4) fraud in the inducement; (5) failure to provide an opportunity to explore alternatives to avoid foreclosure under former Civil Code section 2923.55, subdivision (b)(2); (6) unlawful substitution of trustee under Civil Code section 2934a, subdivisions (a)(1)(A) and (B); (7) cancellation of instruments; and (8) violation of Business and Professions Code section 17200 et sequitur (UCL). Shellpoint filed a demurrer, which the trial court sustained without leave to amend, except that it granted leave to amend the claims for injunctive relief, failure to provide an opportunity to avoid foreclosure, and violation of the UCL.
The Fazios then filed an amended complaint that asserted a claim for injunctive relief and a UCL claim. Shellpoint again filed a demurrer, which the trial court again sustained, this time without leave to amend any claim. Judgment was entered in Shellpoint's favor.
II.
DISCUSSION
A. The Standard of Review.
The rules governing our review of the trial court's ruling are well settled. "We review de novo the trial court's order sustaining a demurrer." (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1468 (Cansino).) In doing so, our only task is to determine whether the complaint states a cause of action. (Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 824.) We assume the truth of properly pleaded factual allegations, attachments to the complaint, facts that reasonably can be inferred from those facts expressly pleaded, and matters of which judicial notice can and has been taken. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 (Schifando).) We do not, however, treat Shellpoint's demurrer as admitting any " 'contentions, deductions[,] or conclusions of fact or law' " in the complaint. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)
Our review of the trial court's order is limited to issues that have been adequately raised and supported in the appellate briefs. (Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6; see also Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4 [issues not raised on appeal are waived].)
B. The Fazios' Claims on Appeal.
The Fazios recognize that this court previously determined that they could not relitigate whether BNY Mellon had a valid interest in the property. Accordingly, in their words, "[w]hether [BNY Mellon] is the valid holder of the Deed of Trust in the prior cases is not the issue in the present case. . . . The issue here is whether [BNY Mellon] is still entitled to foreclose in 2016-2017." They contend that BNY Mellon is not entitled to foreclose now because in the 2015 email to the title company "[it claimed it is] not the owner of the loan." Alternatively, they contend that Shellpoint is not entitled to foreclose because "[BNY Mellon] has not recognized Shellpoint as agent or servicer nor has [BNY Mellon] ratified any of Shellpoint[']s action." Thus, the Fazios contend that they sufficiently alleged that BNY Mellon lacks an interest in the property and that, even if it had an interest, Shellpoint is an unauthorized agent.
The Fazios claim that for these two reasons, the trial court erred by dismissing seven of their eight original causes of action. They have not articulated how, should we reject those reasons, they could otherwise amend the complaint to state any viable claim. (See Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.) Accordingly, we address only whether the Fazios sufficiently alleged that (1) BNY Mellon lacks an interest in the property and (2) Shellpoint lacks authority to act as an agent of BNY Mellon.
On appeal, the Fazios have forfeited their claim based on a violation of the duty to provide an opportunity to explore alternatives to avoid foreclosure. They have done so by not including the claim as an identified issue, by not presenting an argument supported with authority, and by not addressing the trial court's finding that they did not, and apparently could not, allege that the property was " ' owner-occupied.' " (See Cal. Rules of Court, rule 8.204; Estate of Sobol (2014) 225 Cal.App.4th 771, 783; Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.) Similarly, we will not consider their claim that they are entitled to relief because they tried to pay off the loan but were prevented from doing so, which they relied on for the first time at oral argument and for which they have failed to provide any legal authority. (See Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1185-1186; New Plumbing Contractors, Inc. v. Nationwide Mutual Ins. Co. (1992) 7 Cal.App.4th 1088, 1098.) Finally, they have also forfeited their claim, which is also unsupported by any authority, that they were denied their contractual rights under the acceleration clause of the deed of trust and the notice of default was therefore "void."
C. The 2015 Email Does Not Support the Fazios' Allegation that BNY Mellon Has No Interest in the Property.
Exclusively relying on the 2015 email, the Fazios contend that they have sufficiently alleged that BNY Mellon has no interest in the property. According to them, the email was sent in response to an inquiry by the title company, made in connection with a possible sale of the property, to BNY Mellon for "[t]he purpose of . . . establish[ing] a payoff for title insurance and escrow purposes." The email stated, "BNY Mellon is a trustee [and] therefore [it does] not physically own the loan or the property. [It does] not have any say in how the property is disposed, loan modifications, etc. This is the responsibility of the Servicer. Since Bank of America N.A. ("BOA") serviced the loan associated with the property, they are the direct and only contact in regards to your request." The Fazios claim this email shows BNY Mellon disclaimed its interest in the property.
We begin by agreeing with the Fazios that the issue presented has not been litigated in the prior lawsuits. As we have mentioned, in a previous decision we concluded that res judicata barred the Fazios from relitigating in the earlier foreclosure proceeding whether BNY Mellon was the holder of the mortgage involved. Here, while the Fazios have not alleged that BNY Mellon assigned or transferred its interest, they have alleged that BNY Mellon no longer maintains an interest in the property by pointing to the 2015 mail. Whether the 2015 email sufficiently supports the allegation is not identical to the issue resolved in our previous decision, and our decision here therefore does not rely on principles of res judicata. (See Levy v. Cohen (1977) 19 Cal.3d 165, 171.)
We nonetheless reject the Fazios' claim on its merits. The trial court concluded, and we agree, that "[t]he email from [BNY Mellon] does not support the conclusion that [BNY Mellon] was not the holder of the Deed of Trust, because the email merely provides notice that inquiries with regard to disposal of the property and loan modification were the responsibility of the trustee. In addition, the assertion that [BNY Mellon] does not have physical possession of the Deed of Trust does not support the claim that it is not the owner or that it does not have standing to proceed with foreclosure." (See Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440 ["nothing in the applicable statutes . . . precludes foreclosure when the foreclosing party does not possess the original promissory note"].) If anything, the 2015 email corroborates the conclusion that BNY Mellon does have an interest because it explicitly mentions that BNY Mellon "is a [t]rustee," albeit one that does "not physically own the loan or the property." Because the Fazios do not have a basis other than the email for their allegation that BNY Mellon no longer has an interest in the property, the trial court correctly determined that the allegation fails.
D. The Fazios Lack Standing to Claim that Shellpoint Is an Unauthorized Agent of BNY Mellon.
Having concluded that the Fazios failed to allege that BNY Mellon lacks an interest in the property, we turn to consider whether they can challenge Shellpoint's authority to act as an agent for BNY Mellon. We conclude they lack standing to do so.
1. The trial court properly took judicial notice of certain documents.
We begin by addressing the Fazios' contention that the trial court improperly took judicial notice of the 2016 substitution of trustee and the 2016 notice of default. The Fazios argue that the court could not take judicial notice of "the truth of the matters asserted within the documents . . . because those statements are hearsay and were in dispute." This argument is as baffling as it is unpersuasive.
The Fazios also object that the trial court improperly took judicial notice of other court documents. We need not address this objection because they fail to identify these documents or raise specific arguments about them, and we do not rely on any such documents in deciding this appeal.
First, these documents are the foundation of the Fazios' grievance. The filing of the substitution of trustee is the very thing that Shellpoint allegedly did wrong, and the notice of default started the new foreclosure proceeding that the Fazios seek to enjoin. Furthermore, the Fazios themselves rely on these documents. In their original complaint, the Fazios alleged that the "notice of default Document #2016260408" was filed by "the Law Offices of Les Zieve," and they attached a copy of the substitution of trustee as an exhibit to their first amended complaint. We assume the truth of such attachments when reviewing an order sustaining a demurrer. (Schifando, supra, 31 Cal.4th at p. 1081.) The Fazios likewise refer to these documents and their contents to advance arguments throughout their briefing. They cannot rely on the documents to support their arguments and simultaneously maintain that Shellpoint cannot do the same.
Second, while it is true enough that courts do not take judicial notice of the truthfulness and interpretation of the content of a document (see, e.g., StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 456-457, fn. 9), the Fazios have pointed to nothing showing that the trial court here did any such thing. Under the rules of judicial notice, "a court may take judicial notice of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face." (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265, disapproved on other grounds in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.) The Fazios fail to explain how the court relied on the substitution of trustee and the notice of default in a manner inconsistent with these principles.
2. The Fazios lack standing to challenge Shellpoint's status.
For purposes of reviewing the trial court's ruling sustaining the demurrer, we accept as true the Fazios' allegation that Shellpoint was not an authorized agent of BNY Mellon. (See Schifando, supra, 31 Cal.4th at p. 1081.) We conclude that the trial court nonetheless correctly determined that the Fazios lack standing to challenge Shellpoint's authority to act as BNY Mellon's loan servicer.
We accept the allegation as true even though the record, if anything, suggests that Shellpoint was an authorized agent. The 2016 substitution of trustee shows it was executed by Shellpoint "as servicer for [BNY Mellon]." And the 2016 notice of default states it was filed by the Law Offices of Les Zieve, in that entity's capacity as "either the original Trustee, the duly appointed substituted Trustee, or acting as agent for the Trustee or Beneficiary under [the deed of trust]."
In reaching this conclusion, we need not wade into the larger debate over whether borrowers ever have standing to bring a judicial challenge to enjoin a nonjudicial foreclosure before the property is sold (a preemptive action). As the trial court pointed out, a number of cases have concluded they do not. (See, e.g., Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 159; Saterbak v. JP Morgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814-816; Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1156.) At the same time, however, the Supreme Court in Yvanova, supra, 62 Cal.4th at p. 924, held that borrowers have standing to allege that their property was sold in foreclosure by an entity that received its ostensible authority through a void assignment. As we have previously pointed out, "[a]lthough Yvanova limited its holding to the post-sale context, its determination that borrowers have standing after a foreclosure sale to allege that the assignment of a deed of trust was void raises the distinct possibility that our state Supreme Court would conclude that borrowers have a sufficient injury, even if less severe, to confer standing to bring similar allegations before the sale." (Brown v. Deutsche Bank National Trust Co. (2016) 247 Cal.App.4th 275, 281.)
But the allegations here are not similar. Yvanova held "only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment." (Yvanova, supra, 62 Cal.4th at p. 924.) Here, the only basis for the Fazios' assertion that BNY Mellon no longer has an interest in the property is the 2015 email, a basis we have rejected. There were no allegations that the deed of trust was otherwise assigned, much less through a void assignment.
Instead, the Fazios alleged that Shellpoint lacks authority to act as BNY Mellon's mortgage servicer. If any party was aggrieved by Shellpoint's lack of authority, it was BNY Mellon, not the Fazios. And by arguing that there is no proof of a "ratification" of Shellpoint's authority, the Fazios themselves imply that any improper assertion of authority was not void, but at most voidable. They provide no authority for the notion that they, as borrowers, have standing to complain about the agency relationship between an entity representing the note holder and that entity's mortgage servicer. Even if Yvanova could be read to suggest that a borrower might have standing to bring a preemptive challenge to a nonjudicial foreclosure initiated by an entity that obtained the deed of trust through a void assignment, nothing in that decision suggests that a borrower has standing to bring a preemptive challenge against a mortgage servicer for its allegedly unauthorized, but ratifiable, participation in the foreclosure proceeding.
III.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
/s/_________
Humes, P.J. We concur: /s/_________
Margulies, J. /s/_________
Dondero, J.