Opinion
A138826
02-25-2015
CHANHT REATREY KEO, Plaintiff and Appellant, v. BANK OF AMERICA, N.A. et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115 . (Marin County Super. Ct. No. CIV1201779)
Plaintiff Chanht Reatrey Keo (Keo) appeals from a judgment of dismissal following the sustaining, without leave to amend, of demurrers by defendants California Land Title Company (Cal Land) and Bank of America, N.A., et al. (Bank of America). Keo contends she alleged sufficient facts in her first amended complaint to support causes of action for wrongful foreclosure, quiet title, and cancellation of instruments asserted against both these defendants. As we explain, that is not the case, and we affirm the judgment.
BACKGROUND
Keo's opening brief violates numerous rules of court, including California Rules of Court, rule 8.204(a)(2)(C) requiring "a summary of the significant facts limited to matters in the record," and rule 8.204(a)(1)(C) requiring any reference to a matter in the record be supported by a "citation to the volume and page number of the record where the matter appears." Nevertheless, we have reviewed the record to discern the procedural history and matters before the trial court.
In December 2008, Keo executed a promissory note for $417,000 with Countrywide Bank, FSB (Countrywide). The note was secured by a deed of trust that named ReconTrust Company as the trustee, and Mortgage Electronic Registration System, Inc. (MERS) as the beneficiary and sole nominee for the lender, its successors, and assigns. It also identified Cal Land as the escrow company.
Two and a half years later, in August 2011, MERS recorded an assignment, transferring all its interest under the deed of trust, to Bank of America Home Loans Servicing, LP, including but not limited to "the right to foreclose and sell the Property."
By then, Keo was behind in her payments, and on September 15, 2011, a substitution of trustee was recorded on behalf of Bank of America, N.A., as successor by merger to Countrywide and Bank of America Home Loans Servicing, LP, designating Quality Loan Service Corporation (Quality Loan) as the new trustee under the deed of trust.
Also on September 15, Quality Loan recorded an un-notarized Notice of Default for $79,511.31, the amount required as of September 13 to reinstate the loan. In December, Quality Loan recorded a notice of trustee's sale, but Bank of America represents, and Keo does not dispute, there has been no sale of the property to date.
In April 2012, Keo filed the instant case against Bank of America, Quality Loan, and Countrywide Bank asserting nine causes of action: breach of the covenant of good faith and fair dealing, "concealment," unjust enrichment, wrongful foreclosure, violation of Civil Code section 1788.17, misrepresentation/fraud, breach of contract, quiet title, and declaratory relief. Bank of America interposed a demurrer, asserting none of plaintiff's claims stated facts sufficient to constitute a cause of action. The trial court sustained the demurrer with leave to amend the claims for wrongful foreclosure, misrepresentation/fraud against Countrywide Bank only, quiet title, and declaratory relief.
Keo filed a first amended complaint (FAC), reasserting her causes of action for wrongful foreclosure, misrepresentation/fraud, quiet title, and declaratory relief, and adding a new claim for "recoupment." She also added six new defendants: BAC, MERS, Bryan Cave, Jessica T. Ehsanian (a Bryan Cave attorney), Nationstar Mortgage LLC and Cal Land. The only allegations regarding Cal Land were that it never "gave any accounting or evidence" of the loan funding, and that its agent "orchestrated this manipulation of [Keo's] need to finance."
On its own motion under Code of Civil Procedure section 436, the court struck Ehsanian as a defendant from the FAC.
Bank of America (individually and as successor to Countrywide and Bank of America Home Loans Servicing, LP), Bryan Cave, MERS and Cal Land filed demurrers. The court granted the Bank's request for judicial notice of: (a) the deed of trust, (b) the assignment of the deed of trust from MERS to Bank of America Home Loans Servicing, LP, BAC, (c) the substitution of trustee on behalf of Bank of America, N.A. (as successor by merger to Countrywide and Bank of America Home Loans Servicing, LP), designating Quality Loan as the new trustee under the deed of trust. substitution of Quality Loan as trustee by Bank of America as the successor in interest to BAC, (d) the notice of default and election to sell under the deed of trust, and (e) the notice of trustee's sale. Keo opposed the Bank's demurrer, but did not file any opposition to Cal Land's demurrer.
Given the absence of any opposition to Cal Land's demurrer, the trial court sustained it without leave to amend. The court also sustained Bank of America's demurrer without leave to amend. As to the wrongful foreclosure and quiet title claims, the court ruled the FAC failed to allege facts showing Keo suffered prejudice from any of the asserted irregularities in the foreclosure process.
DISCUSSION
Standard of Review
When the trial court dismisses a case after sustaining a demurrer without leave to amend, we ordinarily "review the complaint de novo to determine whether it contains facts sufficient to state a cause of action under any legal theory" and, if the complaint is lacking, "we then consider whether the court abused its discretion in denying leave to amend the complaint." (Estate of Dito (2011) 198 Cal.App.4th 791, 800.) "As a general rule, if there is a reasonable possibility the defect in the complaint could be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend." (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459 (Atascadero).) "The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "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." (Atascadero, at p. 459.)
On appeal, Keo addresses only her causes of action for wrongful foreclosure (first cause of action) and quiet title (third cause of action). And as to these two causes of action, she addresses the liability of only some of the named defendants. To the extent she has not briefed other causes of action, or the liability of Cal Land under the causes of actions she still pursues, we deem those claims abandoned and will affirm their dismissal on that ground. (See Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 984, fn. 1 ["failure to discuss cause of action on appeal from trial court's order sustaining demurrer constitutes abandonment of that cause of action on appeal"]; Ellenberger v. Espinosa (1994) 30 Cal.App.4th 943, 948 ["When a brief fails to contain a legal argument with citation of authorities on the points made, we may 'treat any claimed error in the decision of the court sustaining the demurrer as waived or abandoned,' " thus "our review is limited to only those causes of action briefed on appeal."].)
Wrongful Foreclosure
The purposes of California's comprehensive nonjudicial foreclosure statutory scheme are " '(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.' [Citation.]" (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154.) " 'Because of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute.' [Citations.]" (Ibid.; see also Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 510 (Jenkins).) California courts only allow plaintiffs to pursue "additional remedies for misconduct arising out of a nonjudicial foreclosure sale when not inconsistent with the policies behind the statutes." (California Golf, L.L.C. v. Cooper (2008) 163 Cal.App.4th 1053, 1070.) A plaintiff/borrower may not attempt to take advantage of "the theoretical claims of hypothetical transferors and transferees" to assert a cause of action for wrongful foreclosure. (Jenkins, supra, 216 Cal.App.4th at p. 515.)
While Keo generally complains the securitization of her loan was an "illegal, irresponsible and risky action[]," her specific complaint in connection with her wrongful foreclosure claim seems to be she "produced evidence that documents were improperly signed and recorded, along with the absence of documents creating a break in the chain of title," apparently because one Beverly Brooks "robo-signed" documents "on behalf of . . . defendants." She cites a single case in support of her assertion that she has adequately pleaded a cause of action for wrongful foreclosure, Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868 (Dimock).
Dimock does not advance Keo's case. In Dimock, a note and deed of trust were purchased by the defendant, Bankers Trust Company. (Dimock, supra, 81 Cal.App.4th at p. 871.) The trustee was Commonwealth Trust Deed Services, whose agent, T.D. Service Company, prepared and recorded a notice of default. (Id. at pp. 871-872.) Thereafter, the plaintiff entered into a forbearance agreement, under which Bankers agreed to hold off on foreclosure. After the plaintiff failed to pay in accordance with the agreement, Bankers recorded a substitution of trustee, replacing Commonwealth with Calmco Trustee Services. (Id. at p. 872.) T.D. filed another notice of default. (Ibid.) It then abandoned that notice and acted under the previously recorded notice, but it never vacated the substitution to Calmco. (Ibid.) The Court of Appeal held that under the statutory provisions governing substitution of trustees, once the substitution of Calmco was recorded, that gave it the sole power to convey the property. (Id. at pp. 875-877.) As a result, Commonwealth had no power to convey the property and its conveyance to the purchaser at the foreclosure sale was void, not merely voidable. (Id. at pp. 876-878.) The court further held that since the plaintiff was not relying on the court's equity powers to attack a voidable deed, the usual requirement of tender did not apply. (Ibid.)
Keo has made no allegations along the lines of the facts in Dimock, and she cannot invoke that case, presumably to excuse her lack of tender.
In her reply brief, in the section discussing her quiet title claim, Keo cites to Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 (Glaski). We discuss the case here, however, in light of Keo's general complaints about the securitization of her loan. To begin with, Glaski involved a post foreclosure sale claim to invalidate a trustee's sale. Accordingly, it was not a "preemptive" wrongful foreclosure case, like the instant case. Furthermore, Glaski involved a borrower whose loan had been securitized by being placed into a trust formed under New York law. The court held the borrower had standing to challenge an assignment of his note because the defendants failed to assign it before the trust's closing date, creating a defect in the chain of title. (Id. at p. 1096.) The court stated if the assignment was void, the defendant could not initiate a lawful foreclosure proceeding because it did not have a legal right to the property. (Id. at pp. 1095-1097.) Thus, Glaski turned on a specific New York statute. (Ibid.) Here, in contrast, no comparable California statute has been cited.
In Jenkins, supra, 216 Cal.App.4th 497, the court addressed similar "attempts to construct a dispute between [the plaintiff] and Defendants with regard to the alleged improper transfer of the promissory note during the securitization process." The court held "even if the asserted improper securitization (or any other invalid assignments or transfers of the promissory note subsequent to her execution of the note . . .) occurred, the relevant parties to such a transaction were the holders (transferors) of the promissory note and the third party acquirers (transferees) of the note. 'Because a promissory note is a negotiable instrument, a borrower must anticipate it can and might be transferred to another creditor. As to plaintiff, an assignment merely substituted one creditor for another, without changing her obligations under the note.' [Citation.] As an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under the promissory note, [the plaintiff] lacks standing to enforce any agreements, including the investment trust's pooling and servicing agreement, relating to such transactions." (Id. at pp. 514-515.)
While not a point she makes in the argument section of her opening brief, Keo maintains in passing elsewhere, the foreclosure process was not initiated by the correct entity because there allegedly "is . . . no evidence [Bank of America] executed a proper Substitution of Trustee to give Quality Loan Service Corporation the right to foreclose." That is not, however, the case. The judicially noticeable documents before the trial court show an executed and recorded substitution. Thus, regardless of whether Jenkins "standing" analysis is sound, the record evidence here does not raise any issue here as to Quality Loan's authority to foreclose.
In ruling on a demurrer, it is permissible to consider matters that have been judicially noticed. Judicially noticeable facts may undermine a pleading or render it defective. (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751-752 [contradicted allegations in pleading may be disregarded].)
Keo also maintains "claims of wrongful foreclosure . . . may be fully supported by allegations of robosigning," relying on Civil Code section 2924.17. However, section 2924.17 was enacted in January 2013—two years after the documents at issue were signed. At oral argument, Keo's attorney correctly acknowledged Keo could not state a claim under that statute. In addition, the prevailing view in federal district court cases considering California law is that plaintiff homeowners lack standing to challenge the validity of robo-signatures. (See Bennett v. Wells Fargo Bank, N.A. (N.D.Cal. Aug. 9, 2013, No. CV 13-01693-KAW) 2013 WL 4104076; Maynard v. Wells Fargo Bank, N.A. (S.D.Cal. Sept. 11, 2013, No. 12cv1435 AJB (JMA)) 2013 WL 4883202 ["Countless courts have concurred in this result, finding that where a plaintiff alleges that a document is void due to robo-signing, yet does not contest the validity of the underlying debt, and is not a party to the assignment, the plaintiff does not have standing to contest the alleged fraudulent transfer."].) But, again, this is not an issue we need to reach given the state of the record.
Quiet Title
"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." (Leeper v. Beltrami (1959) 53 Cal.2d 195, 216.) Keo's quiet title claim is therefore dependent on her wrongful foreclosure claim. Since she has failed to plead a wrongful foreclosure claim, her quiet title claim necessarily fails.
Further, 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.) "Allowing plaintiffs to recoup the property without full tender would give them an inequitable windfall, allowing them to evade their lawful debt." (Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526; see also Gavina v. Smith (1944) 25 Cal.2d 501, 506 ["One who violates his contract cannot have recourse to equity to support that very violation."].) Keo has not alleged she tendered or paid the debt, and therefore her quiet title action fails for that reason, as well.
Finally, to the extent Keo claims her quiet title cause of action was based on defendants' alleged fraud in obtaining record title, she was required to plead the factual basis for the claim with specificity. (Moss Estate Co. v. Adler (1953) 41 Cal.2d 581, 583-584; Strong v. Strong (1943) 22 Cal.2d 540, 545-546 ["[T]he general rule that fraud must be specifically pleaded . . . applies particularly to quiet title actions."].) However, Keo made only vague allegations of fraud, contending "Countrywide made fraudulent misrepresentation, during the origination of the alleged 'loan,' " and Bank of America and Quality Loan "have engaged in fraudulent activities in an attempt to establish their standing" to initiate foreclosure. These conclusory allegations are insufficient.
Cancellation of Instruments
Keo contends she also sufficiently alleged a cause of action for cancellation of instruments. She never, however, pled such a cause of action in her FAC. In any case, her cancellation claim is entirely derivative of her claim for wrongful foreclosure. Since she has failed to state a cause of action for wrongful foreclosure, she also fails to state a claim for cancellation.
In sum, the trial court properly sustained the demurrers. It also did not abuse its discretion in denying leave to amend since Keo has not articulated facts she could allege that would overcome the deficiencies in her FAC. (See Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
DISPOSITION
The judgment of dismissal is affirmed. Respondents to recover their costs on appeal.
/s/_________
Banke, J.
We concur: /s/_________
Humes, P. J.
/s/_________
Margulies, J.