Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County. No. RIC510141 Gary B. Tranbarger, Judge.
Dennis Moore for Plaintiff and Appellant.
Houser & Allison, Eric D. Houser, Steve W. Pornbida and Charles T. Piccuta for Defendants and Respondents.
OPINION
Ramirez P.J.
Gwen Hammarstrom (plaintiff), refinanced her home with a loan from WMC Mortgage Corp. (WMC), through mortgage broker Residential Finance America (RFA). She subsequently defaulted on her payments and foreclosure proceedings were initiated by Cal-Western Reconveyance Corporation (Cal-Western), the substitute trustee under the deed of trust securing plaintiff’s promissory note. U.S. Bank N.A. (USB) purchased the property at the trustee’s sale and obtained possession in an unlawful detainer action. Plaintiff sued WMC, USB, and Cal-Western, along with Ocwen Loan Servicing, LLC (Ocwen), and Mortgage Electronic Registration Systems, Inc. (MERS), the beneficiary and nominee for WMC under the deed of trust, alleging 13 causes of action sounding in quiet title, fraud, slander of title, as well as to void the contract, deed of trust, and trustee’s sale, after she lost her residence in foreclosure proceedings.
Defendants Ocwen, USB, and MERS, demurred to the first amended complaint on the ground the complaint failed to state facts sufficient to constitute a cause of action, and the trial court sustained the demurrer without leave to amend. Plaintiff appeals, asserting that trial court abused its discretion by sustaining the demurrer without leave to amend. Specifically, she seeks a reversal for an opportunity to amend her complaint. We affirm.
BACKGROUND
We base our recitation of facts on the properly pleaded material factual allegations of plaintiff’s first amended complaint, the operative pleading, and any matters subject to judicial notice. (CPF Agency Corp. v. Sevel’s 24 Hour Towing Service (2005) 132 Cal.App.4th 1034, 1040-1041, citing Crowley v. Katleman (1994) 8 Cal.4th 666, 672; Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see also Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)
According to the First Amended Complaint (FAC), in 2004 plaintiff borrowed $216,000 from lender WMC to refinance her home, in order to obtain a more affordable loan. Plaintiff used the services of a mortgage broker, RFA. In connection with the refinance transaction, plaintiff executed a promissory note (the Note), secured by a deed of trust, executed on December 16, 2004.
The deed of trust identified WMC as the lender, Westwood Associates as the trustee, and MERS as the beneficiary under “this Security Instrument.” The deed of trust provided that MERS was acting “solely as nominee for Lender and Lender’s successors and assigns.” It further provided that “Borrower irrevocably grants and conveys to Trustee, in trust, with power of sale” the real property and that “[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower” and that there “also might be one or more changes of the Loan Servicer unrelated to a sale of the Note.”
Finally, the deed of trust stated, “Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in the this Security Instrument, but, if necessary to comply with law or custom, 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; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.”
The loan application executed by plaintiff reflects her monthly income as $3,837, but plaintiff alleged her true income was $1,500 per month. RFA, the mortgage broker, inflated plaintiff’s monthly income, without her knowledge, so she would qualify for the refinance loan, although her signature on the loan application certified the correctness of the information provided. Although plaintiff acknowledged she executed the documents, and admitted she received copies of them, she did not have an opportunity to review them; therefore, she was unaware that her income had been inflated or that her payments for the first five years of the loan would repay interest only.
On October 11, 2007, MERS substituted Cal-Western as trustee under the deed of trust. On October 12, 2007, Cal-Western recorded a notice of default and election to sell under deed of trust. Notice of the trustee’s sale was recorded on January 16, 2008, and the property was purchased by USB at the trustee’s sale in September 2008. The trustee’s deed upon sale reflects the conveyance by Cal-Western to USB, and shows that recording was requested by Ocwen, but the complaint does not indicate the nature of Ocwen’s involvement in the trustee’s sale or any other aspect of the transaction, other than to conclude that Ocwen, along with other defendants, was liable for various acts.
Plaintiff does not allege that she made payments under the loan agreement, and does not acknowledge she stopped making payments. However, the notice of default indicates that $8,058.34 was in arrears as of October 10, 2007.
On July 10, 2009, plaintiff filed a 13-count first amended complaint against Ocwen, WMC, USB, Cal-Western, and MERS seeking (a) to quiet title, (b) damages for slander of title, (c) damages for fraud, (d) to void the contract, (e) to void and cancel the deed of trust, (f) damages for breach of fiduciary duty, (g) damages for violation of Business and Professions Code section 17200, et seq., (h) damages for intentional infliction of emotional distress, (i) declaratory relief, (j) injunctive relief, (k) to set aside the trustee’s sale, (l) to void or cancel the trustee’s deed upon sale, and (m) restitution for unjust enrichment.
On September 17, 2009, defendants Ocwen, USB, and MERS demurred on the grounds that the complaint failed to state upon which relief may be granted as against those defendants. The hearing on the demurrer took place on November 16, 2009. The trial court sustained the demurrer without leave to amend as to all causes of action except the sixth cause of action, dismissed those claims, and expunged the lis pendens. On February 19, 2010, plaintiff appealed from the judgment of dismissal.
The sixth cause of action named RFA and Doe defendants only.
DISCUSSION
The thrust of plaintiff’s arguments is that the trial court abused its discretion by denying her an opportunity to amend her complaint because she is able to allege sufficient facts to state a cause of action for fraud, deceit, quiet title, to set aside the trustee’s sale, to void and cancel the trustee’s deed upon sale, and to void and cancel the substitution of trustee. She does not argue that her first amended complaint was legally sufficient. Therefore, we limit our review to the trial court’s denial of leave to amend the complaint. We conclude the trial court acted within its discretion.
When a demurrer is sustained without leave to amend, this court decides whether a reasonable possibility exists that amendment may cure the defect; if it can, we reverse; but if not, we affirm. (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43.) 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. (Melton v. Boustred (2010) 183 Cal.App.4th 521, 528, quoting Carman v. Alvord (1982) 31 Cal.3d 318, 324.)
The plaintiff bears the burden of proving there is a reasonable possibility of amendment. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) The plaintiff may make this showing for the first time on appeal. (Schultz v. Harney (1994) 27 Cal.App.4th 1611, 1623; Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386-1388.) “‘Nevertheless, where the nature of the plaintiff’s claim is clear, and under substantive law no liability exists, a court should deny leave to amend because no amendment could change the result.’” (Zipperer v. County of Santa Clara (2005) 133 Cal.App.4th 1013, 1020, quoting from City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459-460.)
In reviewing the sufficiency of a complaint against a general demurrer, we consider all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law. (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400.) Facts appearing in exhibits attached to a complaint will also be accepted as true and will be given precedence over any contrary allegations in the pleadings. (Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035, 1044-1045.) In addition to the complaint, we consider matters that must or may be judicially noticed, and we will not close our eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed. (Hoffman, supra, citing Blank v. Kirwan, supra, 39 Cal.3d at p. 318; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.)
We now turn to the amendments proposed by plaintiff, respecting certain specific causes of action.
a. Fraud, Deceit, and Concealment Claims
Plaintiff asserts she can allege certain facts in support of her claims for fraud, deceit and fraudulent concealment, relating to the misrepresentations and concealment of facts by RFA. However, RFA is not a named party to this action and none of the proffered new factual matters demonstrate how Ocwen, USB or MERS were liable—either directly or vicariously—for RFA’s wrongdoing. Plaintiff attempts to argue that USB ratified RFA’s fraud by accepting the benefits thereof when it purchased the property at the foreclosure sale. One must accept the fruit of the fraud with knowledge of the misrepresentations or concealments by which the fraud was perpetrated in order to be liable for fraud under a ratification theory. (McClung v. Watt (1922) 190 Cal. 155, 161 [emphasis added]; see also Central Mut. Ins. Co. v. Schmidt (1957) 152 Cal.App.2d 671, 673-674.) No knowledge of the fraud has been demonstrated.
b. Misrepresentation or Concealment by a Fiduciary
Plaintiff contends that the fraudulent misrepresentations or concealment along with RFA’s fiduciary duty amount to actionable fraud. The gravamen of this theory of liability revolves around RFA’s fiduciary duty to plaintiff, but does not demonstrate any nexus between RFA’s actions in 2004, when she applied for the refinance loan, and any conduct by Ocwen, USB or MERS.
There is no dispute that RFA is responsible to plaintiff and that there may have been a fiduciary duty owed by RFA to plaintiff. However, no nexus has been established between RFA and the demurring defendants and there is no allegation that USB, Ocwen, Cal-Western or MERS had a fiduciary obligation to plaintiff. RFA’s conduct was committed approximately four years before Cal-Western, USB, and Ocwen ever acquired any interest under the deed of trust or trustee’s sale of the property. Under no theory can the defendants be held liable for any breach of fiduciary duty owed by RFA to plaintiff.
c. Defendants’ Alleged Benefit From Fraud
Plaintiff argues that “Respondents knowingly benefitted from the fraud.” However, the assertion that she can allege sufficient facts to demonstrate USB and its servicer, Ocwen, knew of the fraud are not well taken. She alleges no facts supporting an inference that the demurring defendants reviewed the refinance loan documents, or that they were aware that the income stated on the loan application was inflated.
Further, the documentary exhibits attached to the first amended complaint and other documents of which the trial court took judicial notice, do not support an inference that the demurring defendants obtained any benefits under the refinance agreement between plaintiff and WMC. To the contrary, the documentary exhibits show that USB purchased the property at a trustee’s sale after plaintiff defaulted under the loan agreement. There is no indication the defendants obtained any interest in the property under the promissory note and deed of trust executed in 2004, nor did any of the demurring defendants receive any payments under the promissory note or deed of trust. There was no benefit to the defendants from the 2004 act of inflating plaintiff’s income on the application for a loan from WMC.
We may also take judicial notice of the documents. (Evid. Code, § 459.)
The fact that plaintiff “can further allege” that USB and Ocwen “reviewed” the loan documents does not show she is entitled to an opportunity to amend the complaint to include those allegations. On the face of the loan application, there is no indication that the entries were falsely inflated. Thus, even if the defendants had reviewed the documents, there is nothing about the documents that would indicate they were the product of the alleged fraud. Additionally, because none of the demurring defendants were lenders in the refinance transaction, any inflated earnings on the application would be irrelevant to them. Further, the defendants could only have reviewed the loan documents after the trustee’s sale, four years after the documents were executed and plaintiff received the funds from WMC to refinance her residence.
Finally, plaintiff cannot allege facts that would show USB or Ocwen ratified the acts of WMC because “[r]atification is the voluntary election by a person to adopt in some manner as his own an act which was purportedly done on his behalf by another person, the effect of which, as to some or all persons, is to treat the act as if originally authorized by him.” (Rakestraw v. Rodrigues (1972) 8 Cal.3d 67, 73.) To be effective under the equal dignities rule, a ratification can be made only in the manner that would have been necessary to confer an original authority for the act ratified, or where an oral authorization would suffice, by accepting or retaining the benefit of the act, with notice thereof. (Civ. Code, § 2310.) Because a writing was required to confer authority to enter into a contract under Civil Code section 2309, a writing was also required to ratify the prior acts relating to that agreement. (Behniwal v. Mix (2005) 133 Cal.App.4th 1027, 1039.) An allegation that the demurring defendants merely accepted or retained the benefit of RFA’s acts cannot, as a matter of law, qualify as a ratification.
d. Delayed Discovery of the Fraud
Plaintiff asserts that her claims for fraud and deceit were not barred by the statute of limitations. The demurrer, however, did not assert that the claims were barred by the statute of limitations, and plaintiff’s opposition to the demurrer did not address timeliness, so the trial court did not rule on that theory. We will not entertain the issue on appeal; contentions or theories raised for the first time on appeal are not entitled to consideration. (City of San Diego v. D.R. Horton San Diego Holding Co. (2005) 126 Cal.App.4th 668, 685.) Further, a claim by a borrower that she did not review duly recorded documents executed by her although acknowledging that copies of the documents were provided to her is not likely to satisfy the requirements for late discovery of fraud.
In any event, whether the action was timely or not, plaintiff cannot demonstrate that the demurring defendants were responsible in any way for her refinance loan, or her default in the payments under the loan.
e. Cause of Action to Void and Cancel the Substitution of Trustee
Plaintiff asserts she can state sufficient facts to constitute a cause of action to void and cancel the substitution of trustee. She bases her claim on the alleged lack of authority of MERS to substitute the trustee. However, she acknowledges that the deed of trust names MERS as the beneficiary, although she argues that MERS was not actually a beneficiary; instead it was “merely a nominee for the Lender.” As a consequence, plaintiff’s position is that MERS could not execute the substitution of trustee, making the substitution void. Plaintiff is in error.
On August 26, 2010, plaintiff requested that we take judicial notice of two unpublished federal district court decisions, one out-of-state published decision (Mortgage Elec. Registration Sys. v. Nebraska Dept. of Banking (2005) 270 Neb. 529 [704 N.W.2d 784]), and one partially published California decision. (Perlas v. GMAC Mortgage, LLC. (2010) 187 Cal.App.4th 429.) On October 29, 2010, defendant made a request for judicial notice of several federal district court cases. On November 30, 2010, plaintiff made a supplemental request for judicial notice of a published California appellate decision. (Malkoskie v. Option One Mortgage Corp. (2010) 188 Cal.App.4th 968.) We deny the requests for judicial notice. The unpublished federal trial court decisions are not relevant to our disposition of the case and are not binding authority. (People v. Zapien (1993) 4 Cal.4th 929, 989.) Published California decisions are citable authority, as are published decisions of the United States Circuit Courts of Appeals, United States District Courts, or the published decisions of other states, without the need for judicial notice.
Civil Code section 2924, subdivision (a)(1) states that a trustee, mortgagee, or beneficiary, or any of their authorized agents may initiate the foreclosure process. Plaintiff admits in her brief that MERS was the named beneficiary as well as the nominee for the lender, WMC, under the deed of trust. Plaintiff cites no authority for the proposition that the named beneficiary, or the nominee of the lender, under the deed of trust, lacks authority to initiate foreclosure proceedings.
Plaintiff acknowledged she executed the deed of trust which is attached to her complaint when she refinanced her residence. The deed of trust authorized the lender to substitute the trustee and named MERS as nominee for the lender. Thus, plaintiff agreed that MERS had the authority to initiate a foreclosure, and that MERS, as nominee of the lender, had the authority to substitute the trustee. (See Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1157-1158.)
MERS did not actually initiate the foreclosure proceedings, so the only question was whether MERS had the authority to appoint a substitute trustee under the deed of trust who conducted the trustee’s sale. Plaintiff expressly agreed that MERS had authority to act as nominee of WMC under the deed of trust. This express agreement precludes plaintiff from pursuing any causes of action based on MERS’s alleged lack of authority to substitute the trustee. (Gomes v. Countrywide Home Loans, Inc., supra, 192 Cal.App.4th at p. 1158 .)
The deed of trust, naming MERS as beneficiary and conferring upon it the power to appoint a substitute trustee, are inconsistent with the allegations of the complaint (and the proposed amendments thereto) that the substitution was void because MERS lacked any authority. The documentary exhibits compel the conclusion that the substitution of the trustee was not void on the ground it was not executed by the lender, and they are entitled to precedence in considering whether the complaint can be amended. (Banis Restaurant Design, Inc. v. Serrano, supra, 134 Cal.App.4th at pp. 1044-1045.) Because these exhibits are accepted as true (ibid.), plaintiff cannot avoid the problems of her complaint by filing an amended complaint that ignores the exhibits or contradicts her earlier pleadings. (Id. at p. 1046.)
f. Causes of Action for Quiet Title, to Set Aside the Trustee’s Sale, and to Void and Cancel the Trustee’s Deed Upon Sale
Plaintiff argues that her causes of action to quiet title, set aside the trustee’s sale and to void or cancel the trustee’s deed upon sale were well pled because foreclosures conducted by non-trustees are void. The deed of trust, attached to plaintiff’s first amended complaint, establishes that MERS, as WMC’s nominee, was authorized to make the substitution of trustee, and that MERS appointed Cal-Western as the duly appointed trustee under the deed of trust.
As the duly appointed trustee under the deed of trust, Cal-Western had the power of sale of the property to be exercised after a breach of the mortgage obligation. (Civ. Code, § 2924, subd. (a).) Cal-Western also had authority to record the notice of default when plaintiff stopped making payments on her loan. (Civ. Code, § 2924, subd. (a)(3).) Likewise, Cal-Western was authorized to file a notice of sale. (Civ. Code, § 2924, subd. (a)(4).) The causes of action to quiet title, set aside the trustee’s sale, and cancel the trustee’s deed upon sale cannot be cured by amendment.
Because plaintiff cannot cure the defects of her complaint, the trial court properly exercised its judicial discretion to sustain the demurrer without leave to amend.
DISPOSITION
The judgment is affirmed. Costs are awarded to defendants.
We concur: Hollenhorst J., King J.