Opinion
G052857
06-28-2017
JUAN LOPEZ, Plaintiff and Appellant, v. THE BANK OF NEW YORK MELLON, Defendant and Respondent.
Stephen F. Lopez for Plaintiff and Appellant. The Ryan Firm, Timothy M. Ryan and Michael W. Stoltzman, Jr., 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2015-00786188) OPINION Appeal from a judgment of the Superior Court of Orange County, Craig L. Griffin, Judge. Affirmed. Stephen F. Lopez for Plaintiff and Appellant. The Ryan Firm, Timothy M. Ryan and Michael W. Stoltzman, Jr., for Defendant and Respondent.
* * *
INTRODUCTION
This is an appeal after the sustaining of a demurrer to a wrongful foreclosure action. In his opening brief, plaintiff Juan Lopez heavily stressed the theory that violations of the pooling and servicing agreements governing the relevant securitization trust meant that the foreclosing entity did not own the right to foreclose on his mortgage. Thus he argued the spring 2015 foreclosure of his house was invalid. (See Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, 937-938.)
At oral argument, however, Lopez formally abandoned the argument, which is not surprising given recent California appellate case law undermining his void securitization theory. (See Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23; Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802; Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252; Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808.)
That leaves but one issue which Lopez still presses on appeal. He asserts that the entity from which he received $464,000 to buy his home back in 2006, America's Wholesale Lender (AWL), did not, in fact, actually exist, so there was no valid contract on which to foreclose. As we show below, AWL was nothing more than a dba (doing business as) for Countrywide Home Loans, Inc. (Countrywide)—a fact admitted by Lopez in his pleadings despite his attempts on appeal to repudiate that admission. Accordingly we affirm the trial court's judgment.
FACTS
Lopez borrowed $464,000 from AWL to buy his home, as evidenced by a note dated June 8, 2006. The note itself makes no reference to Countrywide. However, attached to the complaint as its exhibit C was an undated allonge reciting that the note requires Lopez to "pay to the order of [¶] Countrywide Home Loans, Inc. dba [AWL]." (Capitalization omitted.)
There was a reason Lopez's complaint attached the allonge. The complaint's third cause of action asserted that The Bank of New York Mellon's "alleged predecessor in interest," which the complaint specifically identified as Countrywide, violated the Truth in Lending Act (TILA) (15 U.S.C. § 1601 et seq.). In that regard the complaint stated: "As of June 8, 2006 there was no Corporation organized and existing under the laws of New York known as [AWL]. [Lopez] is informed and believes and thereon alleges that the true lender was an entity known as Countrywide . . . and Countrywide . . . had a practice of misrepresenting to borrowers, such as [Lopez], that they were dealing with and taking a loan from a New York corporation called AWL when in fact no such entity existed." The allonge was attached to the complaint to show that the "true lender" was in fact Countrywide, and further admitted that the allonge was prepared "simultaneously" with the actual funding of the loan. Paragraph eight of the complaint further stated: "The falsity of the identity of AWL as the lender is exhibited by an allonge that was drafted contemporaneously with the Subject Note, which indicates the intention to endorse the Subject Note over to Countrywide . . . simultaneously with the funding of the Subject Loan. A true and correct copy of the allonge is attached hereto as Exhibit 'C.'"
The complaint then alleged that Lopez's debt was transferred to a securitization trust, as shown by language in the accompanying deed of trust attached to the complaint, recorded on June 21, 2006, stating that the Mortgage Electronic Registration Systems, Inc. (MERS) was the "nominee for Lender and Lender's successors and assigns." Twelve years later, in February 2014 MERS assigned all ownership in the deed of trust to Mellon, which had been the trustee for a particular New York securitization trust.
Given Lopez's abandonment of the securitization theory, there is no need to recite the facts tracing the right to collect on the original loan.
As Lopez acknowledged at oral argument, he hadn't made any payments on his loan for about eight years, so Mellon foreclosed in mid-April 2015. Within the month Lopez had filed this action for wrongful foreclosure and related causes of action, including, as noted, violation of the TILA.
The trial court sustained Mellon's demurrer in July 2015, albeit with leave to amend. Lopez chose not to amend. Mellon then requested dismissal of the action. Lopez's appeal timely followed.
DISCUSSION
Lopez has retreated to the proposition that, somehow, the note and deed of trust by which he acquired his Garden Grove home are unenforceable because, "as of the date of the Subject Deed of Trust the supposed beneficiary and lender, AWL, did not exist." The argument is repeated in his reply brief this way: "AWL did not exist at the time of the loan, and therefore could not contract with [Lopez]."
Lopez's core theory appears to allude to basic corporation law and the issue of whether an entity claiming to be a corporation can enforce a contract made in its corporate name when it does not have corporate status.
Lopez cites 442 Decatur Street v. Spheres Realty, Inc. (2005) 14 A.D.3d 535 (since a limited liability company, did not come into existence until after real estate contract was made, it lacked capacity to contract); Farrell v. Housekeeper (2002) 298 A.D.2d 488 (owners' release of dba was ineffective to bar action against contractor using dba); and Animazing Entertainment, Inc. v. Louis Lofredo Associates, Inc. (S.D.N.Y. 2000) 88 F.Supp.2d 265 (long defunct corporation could not make agreement).
But the argument fails when the entity which supposedly is without capacity to contract is legally identical with an entity that does have such a capacity, as is the case when the entity that does have the capacity is using a fictitious business name. California law allows entities to do business under fictitious names and even allows entities to sue under their fictitious names. The Sixth District recently opined: "We also reject the notion that either [Code of Civil Procedure] section 367 or the concept of standing prohibited Miami Legal from pursuing its case under a fictitious name. As our Supreme Court noted over a century ago, 'a person may adopt any name in which to prosecute business, and may sue or be sued in such a name.' [Citation.]" (The Rossdale Group, LLC v. Walton (June 15, 2017, H043476) ___ Cal.App.4th ___ .) Thus, if AWL was the fictitious name or "dba" of the "true lender," then there were two parties capable of contracting, Lopez and the entity using AWL as its dba.
Under California law, there is no distinction between a "dba" and the entity doing business under the dba. This point is well illustrated by a case Justice Wallin wrote for this court in the early 1990's, Pinkerton's, Inc. v. Superior Court (1993) 49 Cal.App.4th 1342 (Pinkerton). There, two plaintiffs took defaults against a dba of the well-known security company. In the face of an impending prove-up hearing against that dba, the trial court made known its position that the plaintiffs could indeed proceed against the dba because "most people would reasonably believe they were different entities." (Id. at p. 1347.) This court granted a petition for writ of mandate seeking to set aside the original default, explicitly rejecting the trial court's position the dba and the entity using the dba were different entities. We said: "The designation of 'DBA' or 'doing business as' simply indicates Pinkerton's, Inc., operates under a fictitious business name. (See Bus. & Prof. Code, § 17900 et seq. [regulating fictitious business names].) Use of a fictitious business name does not create a separate legal entity. As the First District Court of Appeal recently noted, '"[t]he designation [DBA] means 'doing business as' but is merely descriptive of the person or corporation who does business under some other name. Doing business under another name does not create an entity distinct from the person operating the business." [Citation.] The business name is a fiction, and so too is any implication that the business is a legal entity separate from its owner." (Id. at p. 1348, italics added; original italics omitted; see Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1330 ["doing business under a fictitious business name does not create a separate legal entity"].)
Put another way, if AWL is the dba of Countrywide, then a contract made by AWL is a contract to which Countrywide was a party, and Lopez's non-existent contract theory is invalid.
Perhaps recognizing this weakness in his argument, Lopez essentially tries to disavow the admission that AWL was a dba of Countrywide inherent in his complaint. He theorizes AWL was a Countrywide "dba."
There is no getting around the obvious reference in the allonge to AWL being the dba of Countrywide. (See Jibilian v. Franchise Tax Bd. (2006) 136 Cal.App.4th 862, 864, fn. 1 ["The allegations that we accept as true necessarily include the contents of any exhibits attached to the complaint, and in the event of a conflict between the pleading and an exhibit, the facts contained in the exhibit take precedence over and supersede any inconsistent or contrary allegations in the pleading"].) Nor is there any evasion of the text of the complaint explicitly alleging Countrywide was the "true lender." That $464,000 had to come from somewhere, and it is pettifoggery to contend, in the face of the allonge and the "true lender" admission, that it didn't come from Countrywide. We may further note it is irrelevant that Lopez has, rather conveniently, dropped on appeal the TILA claims that forced those factual admissions. On demurrer the sufficiency of a complaint is tested by all facts set forth therein, "[r]egardless of the label attached to the cause of action." (Cochran v. Cochran (1998) 65 Cal.App.4th 488, 493.)
Lopez's final argument against the equal identities of AWL and Countrywide is to say if Countrywide and AWL were really the same entities, there would have been no need for the allonge in the first place. But there is at least one other reason for the allonge: To make absolutely clear that AWL really was the dba of Countrywide. (See Civil Code, section 3537 ["Superfluity does not vitiate"].) Sometimes it is important to nail down a point, even if it entails some redundancy.
Finally, we should recognize the fundamental inequity inherent in Lopez's argument. If we follow his theory to its logical conclusion, it means he got a loan to buy a house that was unsecured, from a nonexistent lender, and has therefore luckily circumvented the entire edifice of foreclosure law.
Though his is a highly inequitable argument, it is not one that is being made for the first time in this litigation. A number of other homeowners who received loans in which the money came from Countrywide have also asserted that because AWL was listed as their lender they too had no need to repay their loans. These assertions have to date uniformly been rejected. (See Dawson v. Bank of New York Mellon (D.Or. 2016) ["other courts have considered the same question and concluded that the fact that AWL is Countrywide's assumed business name cannot be disputed"]; Tyshkevich v. Wells Fargo Bank, N.A (E.D.Cal. 2016) [rejecting theory that use of AWL as lender meant the "'true' lender" was never identified because previous action showed plaintiff was actually "aware" AWL was "a fictitious business name for Countrywide"]; Bashore v. Bank of Am (E.D.Tex. 2012) [Countrywide had already filed a fictitious name statement under Texas law prior to the loan]; Roberts v. Am.'s Wholesale Lender (D.Utah 2012) [taking judicial notice of New York State document showing "AWL simply is a trade name for Countrywide Home Loans"].) Not unsurprisingly, Lopez does not cite to a single decision anywhere, including New York, that has adopted his theory.
Often in cases involving foreclosures on property obtained from loans made by AWL, the plaintiffs simply admit AWL was the dba of Countrywide, and then go on to make their arguments without trying to convince a court that AWL and Countrywide were two separate entities. (E.g., Capistrano v. Bank of New York Mellon (E.D.Tex., Apr. 3, 2017, No. 4:16-CV-871-ALM-KPJ) 2017 WL 1758052; Gosha v. Bank of New York Mellon Corporation (D.Or., Dec. 13, 2016, No. 3:16-CV-00073-BR) 2016 WL 7238927]; Hackbart v. BAC Home Loans Servicing, L.P. (N.D.Ohio, June 8, 2015, No. 1: 15 CV 571) 2015 WL 3619661.)
DISPOSITION
The demurrer was properly sustained, Lopez's wrongful foreclosure action properly dismissed. The judgment is affirmed. Respondent is awarded costs on appeal.
THOMPSON, J. WE CONCUR: O'LEARY, P. J. ARONSON, J.