Opinion
G058015
01-27-2021
GAVIN GRANT, Plaintiff and Appellant, v. BANK OF AMERICA, N.A., Defendant and Respondent.
Gavin Grant, in pro. per., for Plaintiff and Appellant. McGuireWoods, Leslie M. Werlin and Adam F. Summerfield for 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2017-00898495) OPINION Appeal from a judgment of the Superior Court of Orange County, Robert J. Moss, Judge. Affirmed. Gavin Grant, in pro. per., for Plaintiff and Appellant. McGuireWoods, Leslie M. Werlin and Adam F. Summerfield for Defendant and Respondent.
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Plaintiff Gavin Grant filed this action against defendant Bank of America, N.A. (Bank of America) after it initiated nonjudicial foreclosure proceedings on his residence. The court sustained Bank of America's demurrer to Grant's second amended complaint without leave to amend and entered a judgment of dismissal as to Bank of America.
On appeal, Grant contends the court erred by sustaining the demurrer because he pleaded sufficient facts to state causes of action against Bank of America for violations of Civil Code sections 2923.55 and 2924.17, cancellation of instruments, breach of implied covenant of good faith and fair dealing, negligence, negligent misrepresentation, accounting, and a violation of Business and Professions Code section 17200. We disagree and further conclude the court did not abuse its discretion by denying Grant another opportunity to amend his complaint. We affirm the judgment.
All further statutory references are to the Civil Code unless otherwise stated.
ALLEGATIONS AND PROCEDURAL HISTORY
In 2007, Grant refinanced his home mortgage and obtained a $998,000 loan from Bank of America, which was secured by a deed of trust. The deed of trust named Bank of America as the lender and beneficiary and PRLAP, Inc., as the trustee. The loan provided for interest only payments for 10 years (from Dec. 2007 to Dec. 2017) and an adjustable interest rate after December 2012. Although these loan terms were set out in a document signed by Grant, he was allegedly unaware of them.
Grant made loan payments for a few years but did not understand how they were being applied and why his loan balance was not decreasing. He contacted Bank of America "to resolve discrepancies and cure the defects." Bank of America did not respond to his request for an accounting, ignored his dispute over the loan balance, and refused his requests to review the original promissory note and deed of trust.
In December 2015, a substitution of trustee was recorded, naming Clear Recon Corporation (Clear Recon) as the trustee. That same day, Clear Recon recorded a notice of default indicating Grant failed to make installment payments beginning in December 2009 and owed $390,560.60 in interest. Attached to the notice of default was a declaration signed by a Bank of America employee, stating the declarant had reviewed Bank of America's business records and those records reflected that the bank had "[c]ontacted the borrower to assess the borrower's financial situation and to explore options for the borrower to avoid foreclosure in accordance with California Civil Code § 2923.55(b)(2)." However, this declaration was allegedly false because Bank of America had not contacted Grant to assess his financial situation or explore his options to avoid foreclosure at that time. He also alleged the default amount was incorrectly stated in the notice of default because Bank of America had not properly applied his payments to the loan.
After receiving the notice of default, Grant applied for a loan modification with Bank of America. He was approved for a trial modification but did not accept it because Bank of America "used an exaggerated income . . . to determine his eligibility."
Clear Recon recorded a notice of trustee's sale in March 2016.
In September 2016, Grant attempted to satisfy his loan obligation by giving Bank of America a "Bankers Promissory Note" (Banker's Note), in which he promised to pay Bank of America $1.5 million in monthly installments of $10,000 until the obligation was fulfilled. The terms of the Bankers Note indicated that the holder's acceptance of the note and failure to return it within two banking days constituted acceptance as full settlement and discharge of debt. Bank of America did not return the note within the allotted time frame and never returned the original. Grant sent multiple letters to Bank of America stating that his loan was paid in full by their "acceptance" of the promissory note. But Bank of America refused to "set off" his account.
Bank of America moved forward with the nonjudicial foreclosure process, and Clear Recon recorded another notice of trustee's sale in November 2016.
In January 2017, Grant filed his complaint in the instant matter. In September 2017, Grant filed an action in federal court against Bank of America and Clear Recon for trespass, breach of contract, theft, and fraudulent claims. The federal court dismissed the action in October 2017 because it lacked subject matter jurisdiction.
In November 2018, Grant filed his second amended complaint, the operative complaint for purposes of this appeal. In it, he asserted eight causes of action against Bank of America: (1) violation of section 2923.55; (2) violation of section 2924.17; (3) cancellation of instruments; (4) breach of implied covenant of good faith and fair dealing; (5) negligence; (6) negligent misrepresentation; (7) accounting and (8) unfair and unlawful practices (Bus. & Prof. Code, § 17200). Bank of America demurred to the complaint, and the court sustained the demurrer without leave to amend and subsequently entered a judgment of dismissal. Grant timely appealed.
DISCUSSION
The bulk of Grant's appellate brief is consumed with a litany of alleged procedural and ethical errors on behalf of the trial judge. For purposes of this appeal, that focus is misplaced. We review the demurrer de novo (Tamas v. Safeway, Inc. (2015) 235 Cal.App.4th 294, 298), and thus any procedural irregularities in the underlying proceedings are inconsequential to our ruling on appeal.
His 50-page opening brief devotes only 8 pages to the merits of his causes of action, and those pages mostly consist of generic assertions that he adequately stated a cause of action, without any explanation of what allegations satisfied the elements of a particular cause of action. "'Although our review of a [demurrer] is de novo, it is limited to issues [that] have been adequately raised and supported in plaintiffs' brief. [Citations.] Issues not raised in an appellant's brief are deemed waived or abandoned.''' (Davies v. Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086, 1096.) We "will not develop the appellants' arguments for them . . . ." (Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888, 890, fn. 1.) To the extent we can discern the basis for Grant's claims of error, we address them below. To the extent we cannot, we deem the arguments waived. Violation of Section 2923 .55
In his first cause of action, Grant alleged Bank of America violated former section 2923.55. Section 2923.55 was part of the Homeowners Bill of Rights (HBOR). "The HBOR was effective January 1, 2013, and . . . the legislation sought to 'modify[ ] the foreclosure process to ensure that borrowers who may qualify for a foreclosure alternative are considered for, and have a meaningful opportunity to obtain, available loss mitigation options.'" (Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 157 (Lucioni).) Most of the statutory provisions in the HBOR place duties upon a lender before a lender can cause a notice of default to be filed. (Id. at p. 158 & fn. 4.)
References to section 2923.55 throughout this opinion are to the version of the statute in effect at the time of the alleged statutory violation in 2015. Former section 2923.55 was repealed on January 1, 2018, pursuant to a sunset provision. (Stats. 2013, ch. 76, § 15; former § 2923.55, subd. (i).) The statute was recodified effective January 1, 2019, with minor alternations not relevant to the issue here. (Stats. 2018, ch. 404, § 6.)
Section 2923.55, subdivision (a)(1) prohibited "[a] mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent" from recording a notice of default under section 2924 until 30 days after the mortgage servicer had satisfied the requirements of subdivision (b) of section 2923.55. A mortgage servicer was required under subdivision (b)(2) to "contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure." During this initial contact, the mortgage servicer was to "advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgage servicer shall schedule the meeting to occur within 14 days." (Ibid.) Either during the initial or subsequent contact, the mortgage servicer must give the borrower the United States Department of Housing and Urban Development's toll-free telephone number for finding a certified housing counseling agency. (Ibid.) The statute further required a notice of default recorded under section 2924 to "include a declaration that the mortgage servicer has contacted the borrower, [or] has tried with due diligence to contact the borrower as required by this section . . . ." (§ 2923.55, subd. (c).)
If there is "a material violation of section 2923.55," a homeowner can bring an action for injunctive relief prior to a foreclosure sale (§ 2924.12, subd. (a)(1); Lucioni, supra, 3 Cal.App.5th at p. 158), and the sale is enjoined until the violation has been "corrected and remedied." (§ 2924.12, subd. (a)(2).) After a foreclosure sale, a borrower may recover "for actual economic damages pursuant to Section 3281, resulting from a material violation of Section 2923.55" if "the violation was not corrected and remedied prior to the recordation of the trustee's deed upon sale." (§ 2924.12, subd. (b).)
Here, Grant alleged Bank of America violated section 2923.55 by failing to contact him "to assess [his] financial situation and explore options to avoid foreclosure; to advise [him] of his right to request a meeting with Defendant within 14 days; and to provide [him] the toll free number made available by the Department of Housing and Urban Development ('HUD') for housing counseling." He further alleged the declaration by a Bank of America employee attached to the notice of default, which stated Bank of America had "[c]ontacted the borrower to assess [his] financial situation and to explore options for the borrower to avoid foreclosure in accordance with California Civil Code § 2923.55(b)(2)," was false because Bank of America had not contacted him at that time. His claim contained further allegations that Bank of America violated section 2923.55 because they "feigned working with [him], and then went ahead and illegally initiated foreclosure proceedings" and "purposefully delayed communication and refused any loss mitigation options to [him]." Inconsistent with his allegation that he was refused any loss mitigation options, Grant alleged, "Defendants did not negotiate a loan modification in good faith" and defendants "implemented their scheme of delay and foreclosure" when they determined he was eligible for relief. Grant also made conclusory allegations that the notice of default was "wholly improper and invalid" and that both defendants "are guilty of malice, fraud[,] reckless behavior" "and oppression." He sought injunctive relief as well as statutory and punitive damages.
Grant's allegations fail to state a cause of action against Bank of America because, even assuming Bank of America violated section 2923.55, he could obtain neither damages nor injunctive relief for the violation because it had been remedied already. Section 2923.55 confers "a right to be contacted to 'assess' and 'explore' alternatives to foreclosure prior to a notice of default." (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 225 [discussing § 2923.5, the predecessor to § 2923.55].) Grant alleged Bank of America did not contact him to assess his financial situation and explore his options for foreclosure prior to Clear Recon recording the notice of default, but he also alleged that after receiving the notice of default, he applied for a loan modification with Bank of America and was approved, albeit with terms he found unacceptable. By reviewing Grant's application and offering him a loan modification, Bank of America remedied any violation of section 2923.55, subdivision (b)(2). (See Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1121 [concluding the loan servicer "complied with the requirements of former section 2923.55, subdivision (b)(2) by fully reviewing and processing the [homeowner's] loan modification application before recording the notice of default"].)
Because Grant brought this action preforeclosure, the only remedy available to him for a material violation of section 2923.55 was a postponement of the foreclosure sale until the violation of the statute was remedied. (§ 2924.12, subd. (a).) Bank of America had already remedied it when Grant filed his complaint. Accordingly, the court properly sustained the demurrer as to Grant's first cause of action. Violation of Section 2924 .17
In his second cause of action, Grant alleged Bank of America failed to comply with section 2924.17, subdivisions (a) or (b). Section 2924.17 was also enacted as part of the HBOR. (Stats. 2012, ch. 87, § 20.) Subdivision (a) states that "[a] declaration recorded . . . pursuant to Section 2923.55, a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924, or a declaration or affidavit filed in any court relative to a foreclosure proceeding shall be accurate and complete and supported by competent and reliable evidence." Subdivision (b) of the statute provides that "[b]efore recording or filing any of the documents described in subdivision (a), 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."
"Section 2924.17 creates a procedural right directed at the requirements for" the declaration the mortgage servicer is required to provide under section 2923.55 at the time the notice of default is recorded. (Lucioni, supra, 3 Cal.App.5th at p. 162.) "Sections 2924.17 and 2923.55 . . . place a burden on the foreclosing party to file a declaration with the notice of default, and provide requirements for the lender's diligence prior to filing that declaration. Those provisions do not create a burden on the foreclosing party to prove anything in court, other than that the declaration required by section 2923.55, subdivision (c) was filed, and that necessary steps were taken before filing it." (Id. at p. 163, italics added.)
In this cause of action, Grant alleged defendants "caused to be recorded a Notice of Default and Notice of Trustee sale that were not based on reliable competent evidence." His claim was based on allegations that the default amount stated in the notice of default and the unpaid balance in the notice of the trustee sale were not accurate. Grant alleged he had disputed his loan balance with Bank of America for several years but the bank continued to request the same amount. Essentially, Grant contends Bank of America must prove in court that the amount stated was correct. However, "Sections 2924.17 and 2923.55 do not create a right to litigate, preforeclosure, whether the foreclosing party's conclusion that it had the right to foreclose was correct." (Lucioni, supra, 3 Cal.App.5th at p. 163.) Grant, therefore, failed to state a cause of action.
Cancellation of Instruments
In his third cause of action, Grant alleged the trust deed, notice of default, and notices of trustee's sale were void and requested they be rescinded and/or cancelled. His claim is based on section 3412, which provides, "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." Grant alleged the deed of trust was void because he had tendered settlement with the Bankers Note in 2016. He further alleged the notice of trustee's sale recorded in November 2016 was void because he had tendered settlement prior to its recording. Grant alleged that at the time the documents "were created and published by the Defendants, both Defendants knew the documents were false and created and published them with the malicious intent to injure" him and to obtain the property.
Grant's allegations furnish no basis for cancelling any of the written instruments. As we explained in a related appeal (Grant v. Bank of America (Nov. 24, 2020, G058111) [nonpub. opn.]), his "Banker's Note" did not affect his obligations under the mortgage because it was never accepted. Although the Banker's Note purported to effect acceptance if Bank of America did not explicitly reject it, that provision itself needed to be accepted to be effective. Bank of America never agreed to it. Consequently, the Banker's Note did not render any of the relevant written instruments void. Additionally, Grant has not shown that any of the written instruments present a risk of serious injury. Any risk of serious injury to Grant's credit is from the fact he defaulted on his loan, not any alleged deficiencies in the notices of default or trustee's sale recorded by Clear Recon. (Cf. Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 818-819 [plaintiff failed to state a cause of action under § 3412 because she did not show how the alleged invalid assignment of her deed of trust could cause her serious injury].) Because Grant failed properly to allege a claim for cancellation of his deed of trust or the notices of default and trustee's sale, the trial court properly sustained the demurrer on this cause of action.
Breach of Implied Covenant of Good Faith and Fair Dealing
In his fourth cause of action, Grant alleges Bank of America breached the implied covenant of good faith and fair dealing within the loan contract. Specifically, Grant's claim for breach of the implied covenant of good faith and fair dealing is predicated on three theories: (1) Bank of America miscalculated his income when approving him for a trial loan modification, preventing him from being reviewed for other loan modification or foreclosure alternatives; (2) Bank of America failed to respond to his "numerous requests" regarding "payment discrepancies"; and (3) Bank of America "failed to set off" his account after he tendered the Bankers Note.
"The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349.) The implied covenant does not "impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement." (Id. at pp. 349-350.)
Grant has failed to identify any aspect of the actual agreement with Bank of America that supports a claim for breach of the implied covenant. In particular, he has not identified any aspect of the agreement that touches on loan modifications or requests concerning payment discrepancies. We cannot impose implied obligations untethered to any substantive provision in the contract. Additionally, as we explained above, the Banker's Note had no effect on the parties' rights and thus Bank of America was not required to set off the alleged settlement. Accordingly, Grant failed to state a cause of action for breach of the implied covenant of good faith and fair dealing.
Negligence
In his fifth cause of action, Grant alleged a negligence claim against Bank of America. "To state a cause of action for negligence, a plaintiff must allege (1) the defendant owed the plaintiff a duty of care, (2) the defendant breached that duty, and (3) the breach proximately caused the plaintiff's damages or injuries. [Citation.] Whether a duty of care exists is a question of law to be determined on a case-by-case basis." (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 62.)
Grant does not even mention his negligence cause of action in his brief. Accordingly, he has waived any claim of error.
Negligent Misrepresentation
In his sixth cause of action, Grant contends Bank of America misrepresented that it would "adequately review him for a loan modification." The elements of negligent misrepresentation are (1) a false statement (2) without reasonable grounds for believing it to be true; (3) the speaker intended that the plaintiff rely on it; (4) the plaintiff did, in fact, rely on it, (5) reasonably; and (6) the reliance was a substantial factor (7) in causing plaintiff's harm. (CACI No. 1903.)
Once again, Grant fails adequately to address this cause of action in his brief. He devotes two pages to quoting the elements of a fraud cause of action, but then makes no effort to explain how his allegations meet those elements. It is far from clear that they do. Even assuming Bank of America's stated intention to "adequately" review him for a loan modification is a false statement, it is unclear how he relied on that statement to his detriment. He failed to state a cause of action.
Accounting
Grant alleges that he "is in need of an accounting by and from [Bank of America], as said defendants, with no right to title, or interest in the Subject Property . . . wrongfully misapplied payments from [Grant] prior to and after the recording of the Notice of Default." However, this does not entitle him to an accounting.
"A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting." (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) Grant does not allege that Bank of America owes a balance to him.
Additionally, "'[a]n accounting is an equitable proceeding which is proper where there is an unliquidated and unascertained amount owing that cannot be determined without an examination of the debits and credits on the books to determine what is due and owing. [Citations.] Equitable principles govern, and the plaintiff must show the legal remedy is inadequate. . . . Generally, an underlying fiduciary relationship, such as a partnership, will support an accounting, but the action does not lie merely because the books and records are complex. [Citations.] Some underlying misconduct on the part of the defendant must be shown to invoke the right to this equitable remedy.'" (Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 442.) Grant has not furnished any basis for determining he was entitled to an equitable remedy, nor has he demonstrated any misconduct that would justify an accounting.
Business and Professions Code Section 17200In his eighth and final cause of action, Grant alleged Bank of America engaged in unfair, unlawful, and fraudulent business practices in violation of Business and Professions Code section 17200 et seq. (UCL). However, he does not even mention this cause of action in his opening brief and has thus waived any claim of error.
Denial of Leave to Amend
Grant contends the court abused its discretion by not granting him leave to amend his second amended complaint. To demonstrate an abuse of the court's discretion, Grant must show there is a reasonable possibility that an amendment will cure the complaint's defects. (Brenner v. City of El Cajon (2003) 113 Cal.App.4th 434, 444.) In his pleadings in the trial court and in his briefs in this court, Grant has maintained that he properly stated all of the elements of the causes of action in the second amended complaint and he has not explained how he could amend this complaint to overcome its deficiencies. Because Grant has failed to demonstrate a reasonable possibility that a further amendment will cure the defects, we conclude the court did not abuse its discretion in denying him leave to amend. (See Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994 [court did not abuse discretion in denying leave to amend where plaintiff failed to demonstrate it could cure the defect].)
DISPOSITION
The judgment is affirmed. Bank of America shall recover its costs incurred on appeal.
Bank of America's motion to strike portions of the appendix and appellant's opening brief is granted. Grant included several opposition papers that he filed in a parallel litigation but that were not before the trial court in this case. The stricken portions of the appendix are exhibits 3, 5, 6, and 7. Any references to those exhibits in the brief were disregarded and had no influence on the outcome of this appeal.
IKOLA, J. WE CONCUR: BEDSWORTH, ACTING P. J. GOETHALS, J.