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concluding the trial court appropriately dismissed the plaintiff's claim under section 2924.17 based on her allegations challenging the defendant's "authority to file the Notice of Default"
Summary of this case from Toye v. Newrez LLCOpinion
F075930
01-29-2020
YVETTE M. TANGUMA, Plaintiff and Appellant, v. LAW OFFICES OF LES ZIEVE et al., Defendants and Respondents.
Law Office of William A. Romaine, Romaine Lokhandwala Law Group and William A. Romaine for Plaintiff and Appellant. Zieve, Brodnax & Steele, John C. Steele, Namson N. Pham and Bradford E. Klein for Defendant Respondent Law Offices of Les Zieve. Yu/Mohandesi, Jordan S. Yu, Pavel Ekmekchyan and Neeru Jindal for Defendant and Respondent The Bank of New York Mellon.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. VCU267900)
OPINION
APPEAL from a judgment of the Superior Court of Tulare County. Melinda M. Reed, Judge. Law Office of William A. Romaine, Romaine Lokhandwala Law Group and William A. Romaine for Plaintiff and Appellant. Zieve, Brodnax & Steele, John C. Steele, Namson N. Pham and Bradford E. Klein for Defendant Respondent Law Offices of Les Zieve. Yu/Mohandesi, Jordan S. Yu, Pavel Ekmekchyan and Neeru Jindal for Defendant and Respondent The Bank of New York Mellon.
-ooOoo-
Plaintiff Yvette M. Tanguma filed this action in the trial court to prevent the foreclosure of a deed of trust (the deed of trust) she executed as security for a $247,000 loan (the promissory note) by Quality Home Loans, Inc. (Quality). As is frequently the case, the original promissory note and deed of trust were assigned. Plaintiff does not deny that she materially defaulted on her loan, but claims the persons initiating the nonjudicial foreclosure process against her had no right or authority to do so because the assignments of the promissory note and deed of trust were allegedly void. The purported assignee was defendant The Bank of New York Mellon (BNY), who caused defendant Law Offices of Les Zieve (Zieve) to be substituted as the trustee under the deed of trust. After Zieve recorded a "Notice of Default and Election to Sell under Deed of Trust" (the Notice of Default), plaintiff commenced this action against defendants BNY and Zieve (together defendants), with the operative pleading being the first amended complaint (the FAC). Defendants separately demurred to the FAC, asserting among other things that plaintiff was not entitled to preempt the nonjudicial foreclosure process by attacking the validity of third-party assignments of the promissory note and deed of trust, particularly where she does not dispute her actual default. The trial court agreed with defendants' position, and the demurrers were sustained without leave to amend. Plaintiff appeals from the resulting judgment of dismissal. Having considered the allegations set forth in the FAC in light of relevant law, we conclude the trial court correctly sustained the demurrers without leave to amend. Accordingly, the judgment in favor of defendants is hereby affirmed.
According to the pleadings, BNY was referred to in the transactional documents as "Bank of New York, Mellon, fka the Bank of New York as Trustee for the Certificate Holder CWABS, Inc., Asset-Backed Certificates, Series 2006-QH1."
Based on the parties' briefing herein and the record on appeal, this appeal relates solely to the legal sufficiency on demurrer of plaintiff's preforeclosure lawsuit seeking to preempt the nonjudicial foreclosure process. That is the question before us in this appeal and the vantage point from which we shall analyze and discuss this case, notwithstanding the unexpected statement at oral argument by plaintiff's counsel. At the oral argument of this appeal, plaintiff's counsel made a surprise assertion to this court that the trustee's sale may have occurred in July of last year, more than six months prior to oral argument, but plaintiff's counsel admittedly chose not to inform this court thereof until his eventual appearance at oral argument. An appellant who believes a new development has potentially affected the merits or status of his or her appeal, and who intends to rely on the same in some fashion, should promptly notify this court. This preserves an orderly and fair review process and allows time to potentially consider new issues if appropriate. Here, it appears plaintiff's counsel waited until the last moment, i.e., oral argument, to divulge the supposedly important new information. Accordingly, we disregard the new matter asserted by plaintiff's counsel at oral argument as untimely and inadequately raised. In any event, as we explain in the paragraph preceding our disposition at the end of this opinion, even if we were to consider the new matter, it would not assist plaintiff since plaintiff is also unable to state a cause of action for postforeclosure relief.
FACTS AND PROCEDURAL HISTORY
The Original Loan Transaction and Deed of Trust
On August 7, 2006, plaintiff, as borrower, obtained a $247,000 loan from Quality, the lender, which loan was evidenced by a promissory note and secured by a deed of trust on certain real property located on West Seeger Court in Visalia, California. The original trustee named in the deed of trust was T.D. Service Company. The deed of trust appointed or designated Mortgage Electronic Registration Systems, Inc. (MERS) to act as "nominee for Lender and Lender's successors and assigns" and stated that "MERS is the beneficiary under this Security Instrument." The deed of trust further stated as follows concerning MERS: "Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in 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 First Amended Complaint
Plaintiff filed the FAC against the two defendants, BNY and Zieve, on February 28, 2017. The FAC alleged that BNY was "the purported assignee" of the promissory note by reason of a document referred to as the "Allonge." Allegedly, the Allonge purports to be signed by Quality's assistant vice president, David Burroughs, but according to the FAC, it was not actually signed by Burroughs, or if it was, he did not have authority to assign or indorse the promissory note on behalf of Quality. Further, the Allonge was allegedly "a fraudulent 'robo-signed' document that was created by [a] person or persons unauthorized" for the purpose of enabling BNY or its agent "to fraudulently claim the right to foreclose on the Property and thereby deprive [plaintiff] of her interest therein."
The FAC states the Allonge is attached as an exhibit, but no such document was ever attached to the FAC. Nor is the Allonge provided in the record on appeal.
The FAC further alleges that on October 16, 2009, MERS recorded a document that purported to "assign all of its [i.e., MERS's] beneficial interest in the [deed of trust]" to BNY. MERS's assignment to BNY of the beneficial interest in the deed of trust also stated that the assignment included any corresponding rights to the promissory note referred to in the deed of trust. Additionally, the same document recorded by MERS purported to substitute Recontrust Company, N.A. for T.D. Service Company as the trustee under the deed of trust. Allegedly, the assignment by MERS was void or invalid, including the purported assignment of the beneficial interest in the deed of trust, on the theory that MERS had no such rights to assign and/or only the lender (or the lender's assignee)—i.e., those with an actual beneficial interest in the promissory note—could exercise or assign the rights pertaining to the beneficial interest in the deed of trust.
Under the gist of the allegations in the FAC, the assignment by Quality of the promissory note to BNY pursuant to the Allonge, and the assignment by MERS of its beneficial interest in the deed of trust to BNY, as well as the substitution of trustee by MERS were all allegedly void unauthorized actions. Allegedly, since these foundational assignments or actions were void ab initio, everything that flowed from them was void as well.
Plaintiff, in her appellant's reply brief, has expressly withdrawn on appeal any claim that the substitution of trustee was rendered void as a result of Quality's filing of bankruptcy.
On October 12, 2016, BNY caused a new substitution of trustee to be recorded whereby Zieve was substituted as trustee under the deed of trust. As alleged in the FAC, since BNY had no authority to act because the assignments to it of the promissory note and deed of trust were allegedly void, BNY's action to substitute Zieve as a trustee was also void. Nevertheless, on October 12, 2016, Zieve recorded the Notice of Default which indicated the nature of the default and the election to sell the property under the deed of trust. The Notice of Default stated that plaintiff owed the sum of $341,905.69 under the deed of trust. In a summary of key information attached to the Notice of Default, plaintiff was informed that "to find out the amount you must pay, or to arrange for payment to stop the foreclosure," she should contact Shellpoint Mortgage Servicing, which was a company acting as servicer for BNY, or alternatively she should contact Zieve, at the phone numbers and addresses specified.
Premised on the above allegations, the FAC purported to state three causes of action against defendants BNY and Zieve: (1) a first cause of action for injunctive relief; (2) a second cause of action to vacate the Notice of Default; and (3) a third cause of action for declaratory relief. In the first cause of action, plaintiff requested that Zieve be enjoined from taking any further action pursuant to the Notice of Default or other steps toward completion of the nonjudicial foreclosure process because Zieve allegedly had no power or authority to act since Zieve's principal, BNY, had no power or authority to initiate foreclosure or to substitute a trustee. Again, the alleged reason BNY lacked power or authority was that the prior assignments to BNY of the beneficial interests in the promissory note and deed of trust were allegedly void. This defect allegedly violated statute and triggered a right to seek injunctive relief under the nonjudicial foreclosure statutes. In the second cause of action, plaintiff sought to set aside as void the Notice of Default based upon the same underlying facts. In the third cause of action for declaratory relief, plaintiff sought determinations by the trial court that BNY did not have a beneficial interest in the promissory note, that the Allonge is "void in that it contains [a] forged or otherwise unauthorized signature," and that "the foreclosure action initiated upon the [promissory note] is void and of no effect."
Demurrers to the First Amended Complaint
On May 3, 2017, BNY filed a demurrer to the FAC. The demurrer included a request for judicial notice of two recorded documents: (i) the substitution of Zieve as trustee under the deed of trust, recorded on October 12, 2016, and (ii) the Notice of Default, also recorded on October 12, 2016. Zieve separately filed a similar demurrer to the FAC, and also requested judicial notice of the above two documents. Both demurrers asserted the FAC failed to state a valid cause of action because, among other things, the assignments were not void, no grounds for injunctive relief were presented and, moreover, no basis or standing existed to prevent the nonjudicial foreclosure process from being carried out. In other words, the allegations in the FAC, which merely attacked third-party assignments of the promissory note and deed of trust, were insufficient to preemptively stop the foreclosure process. Zieve also raised some additional grounds for demurrer, such as privilege.
Trial Court's Order Sustaining Demurrers
The hearing on the demurrers was held on June 5, 2017. The trial court's tentative ruling was to sustain the demurrers without leave to amend. Following oral argument, the trial court adopted the tentative ruling as the order of the court. Judgment was entered in favor of defendants on June 19, 2017.
Plaintiff's notice of appeal was filed on June 29, 2017.
DISCUSSION
I. Standard of Review
On appeal from a judgment dismissing an action after sustaining a demurrer, we review de novo whether the complaint states facts sufficient to constitute a cause of action under any legal theory. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415; Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) "We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law." (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) We also consider matters which may be judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "The judgment must be affirmed 'if any one of the several grounds of demurrer is well taken.' " (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Id. at p. 967.) And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. (Ibid.) "The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)
II. No Cause of Action Stated by Plaintiff to Preempt the Nonjudicial Foreclosure Process
In reliance on her allegations that the assignments to BNY of the beneficial interests in the promissory note and deed of trust were void, the crux of plaintiff's lawsuit is that BNY and Zieve lacked any authority to either initiate or move forward with the nonjudicial foreclosure process and, therefore, the nonjudicial foreclosure process must not be allowed to proceed. For the reasons explained below, plaintiff has failed to state a cause of action.
We begin with a brief overview of the main points of our analysis. As will be seen, under California law a defaulting borrower's preemptive lawsuit seeking to prevent the nonjudicial foreclosure process from being carried out based on a bare claim the foreclosing party, due to an allegedly defective assignment of the note or deed of trust, lacked authority to initiate foreclosure generally does not state a viable claim for preforeclosure relief. This type of lawsuit is referred to in this opinion and in other appellate decisions as a preemptive lawsuit. Moreover, if the challenged assignment was between third parties, the borrower may also lack standing to challenge it, unless it was altogether void and not merely voidable. Plaintiff's lawsuit here falls under the above principles.
In a proper case, a postforeclosure action for a wrongful foreclosure claim may be available if the plaintiff can allege, among other things, that the defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a deed of trust, and the plaintiff suffered prejudice or harm. (Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062.) A foreclosure initiated by one with no authority to do so is wrongful for purposes of such an action. (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 929.)
Moreover, the Supreme Court decision in Yvanova v. New Century Mortgage Corp., supra, 62 Cal.4th 919 (Yvanova) does not assist plaintiff because that decision was limited to the narrow question of whether standing existed to pursue a postforeclosure claim of wrongful foreclosure premised on a void assignment of the note and deed of trust. (Id. at pp. 923-924.) Here, plaintiff's challenge is made in the preforeclosure context and, in any event, she has failed to allege facts reflecting that the foundational assignments were void ab initio, rather than merely voidable. For these reasons, this case comes squarely within the general rule prohibiting the use of a preemptive lawsuit to prevent or delay the nonjudicial foreclosure process, and plaintiff also lacked standing to challenge the third party assignments.
Finally, although additions to California's nonjudicial foreclosure statutes allow injunctive relief for certain statutory violations occurring before the trustee's deed upon sale has been recorded (see Civ. Code, §§ 2924.12, subd. (a)(1), 2924.19, subd. (a)(1)), as we explain in part III of this opinion, plaintiff's claims do not fall within the limited statutory grounds for such injunctive relief. Thus, the trial court correctly sustained the demurrers without leave to amend. With this basic overview in mind, we proceed to our fuller discussion of these points. A. No Basis Stated for Plaintiff's Cause of Action to Preempt or Interfere with the Statutory Nonjudicial Foreclosure Process
Unless otherwise indicated, all further statutory references are to the Civil Code. All of the citations in this opinion to Civil Code sections 2924 and 2934a are to the version of the statutes in effect at the time of the relevant events in this case. Both sections have been reenacted by the Legislature without substantive change, effective January 1, 2020.
As aptly summarized in Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149 (Gomes): "California's nonjudicial foreclosure scheme is set forth in Civil Code sections 2924 through 2924k, which 'provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.' (Moeller v. Lien (1994) 25 Cal.App.4th 822, 830 (Moeller).) 'These provisions cover every aspect of exercise of the power of sale contained in a deed of trust.' (I. E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281, 285.) 'The purposes of this comprehensive scheme are threefold: (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 the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.' (Moeller, at p. 830.) '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.]" (Gomes, supra, 192 Cal.App.4th at p. 1154.)
The comprehensive, exhaustive nature of the statutory scheme relating to the nonjudicial foreclosure process is presented in detail by the Court of Appeal in Moeller, supra, 25 Cal.App.4th at pp. 830-832, as well as in Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 507-510. We fully agree with the cases' assessment of the comprehensive nature of the statutory scheme, but find it unnecessary to repeat their summation of all the aspects of the nonjudicial foreclosure scheme here.
In Gomes, the complaint alleged that MERS had no authority to initiate the foreclosure process since the current owner of the promissory note did not authorize MERS to proceed with the foreclosure. (Gomes, supra, 192 Cal.App.4th at p. 1152.) In light of the comprehensive statutory framework and purpose to provide a quick and inexpensive nonjudicial remedy against defaulting borrowers/trustors, the appellate court in Gomes found that no cause of action had been stated: "Gomes is attempting to interject the courts into this comprehensive nonjudicial scheme ... [and] has identified no legal authority for such a lawsuit. Nothing in the statutory provisions establishing the nonjudicial foreclosure process suggests that such a judicial proceeding is permitted or contemplated. [¶] ... The recognition of the right to bring a lawsuit to determine the nominee's authorization to proceed with foreclosure on behalf of the noteholder would fundamentally undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely for the purpose of delaying valid foreclosures." (Id. at pp. 1154-1155.)
In so holding, Gomes recognized that a defaulting debtor is free to pursue a postforeclosure judicial action for " 'misconduct arising out of a nonjudicial foreclosure sale when [such a claim is] not inconsistent with the policies behind the statutes' (California Golf, L.L.C. v. Cooper (2008) 163 Cal.App.4th 1053, 1070)." (Gomes, supra, 192 Cal.App.4th at p. 1154, fn. 5.) However, the Gomes court noted the plaintiff's case before it was not about remedying misconduct during a foreclosure sale, but was "seeking to impose the additional requirement that MERS demonstrate in court that it is authorized to initiate a foreclosure.... [S]uch a requirement would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy." (Ibid.)
In Jenkins v. JPMorgan Chase Bank, N.A., supra, 216 Cal.App.4th 497 (Jenkins), the plaintiff sought to prevent a nonjudicial foreclosure from being carried out based on the foreclosing party's alleged lack of authority to foreclose stemming from a defective securitization of her loan when it was improperly assigned to an investment trust and pooled with other loans without complying with the terms of the investment trust's pooling and servicing agreement. (Id. at pp. 505, 510.) After a consideration of the comprehensive legislative scheme covering nonjudicial foreclosure, and in reliance on Gomes's statutory analysis, the court in Jenkins found there was no statutory or other legal basis for the plaintiff's purported cause of action. (Jenkins, supra, 216 Cal.App.4th at pp. 511-515.)
Jenkins carefully explained the statutory rationale of its ruling, which we quote here at length:
"California courts have refused to delay the nonjudicial foreclosure process by allowing trustor-debtors to pursue preemptive judicial actions to challenge the right, power, and authority of a foreclosing 'beneficiary' or beneficiary's 'agent' to initiate and pursue foreclosure. (See Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440-442 (Debrunner); Gomes, supra, 192 Cal.App.4th at pp. 1154-1157.) In Gomes, our colleagues in Division One considered whether California's nonjudicial foreclosure statutes allow a defaulting trustor-debtor, before his or her property is sold, to bring a preemptive judicial action to challenge whether the person initiating the foreclosure is, or is duly authorized to do so by, the person who possesses a secured interest in the property. (Gomes, supra, 192 Cal.App.4th at p. 1152.) Much like Jenkins's first cause of action, the appellant in Gomes alleged, 'on information and belief,' the entity that initiated the nonjudicial foreclosure process did not have the authority to do so because (1) the entity was not the owner of the promissory note that was secured by the deed of trust and (2) the entity was not an authorized agent of the owner of the promissory note. (Ibid.)
"In the Gomes court's analysis of the validity of the appellant's claim, it made the important point that such a preemptive action does not seek a remedy for
a foreclosing party's misconduct with regards to the initiation and processing of the nonjudicial foreclosure, which, as we have noted above, may serve as the basis for a valid cause of action. (Gomes, supra, 192 Cal.App.4th at p. 1154, fn. 5.) Instead, the Gomes court found that such a preemptive action seeks to create 'the additional requirement' that the foreclosing entity must 'demonstrate in court that it is authorized to initiate a foreclosure' before the foreclosure can proceed. (Ibid., italics added.) After examining the nonjudicial foreclosure statutes and considering the well-established purposes of nonjudicial foreclosure, the Gomes court found no express or implied grounds for allowing such a preemptive action. (Id. at p. 1156.) Consequently, the Gomes court concluded that allowing a trustor-debtor to pursue such an action, absent a 'specific factual basis for alleging that the foreclosure was not initiated by the correct party' would unnecessarily 'interject the courts into [the] comprehensive nonjudicial scheme' created by the Legislature, and 'would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy. [Citation.]' (Id. at pp. 1154-1156 & fn. 5.)
"[¶] ... [¶]
"Jenkins's first cause of action, like the claim brought by the appellant in Gomes, asserts she has a right to bring a preemptive judicial action to determine whether Defendants have the authority to initiate nonjudicial foreclosure on her home; however, like the appellant in Gomes, she fails to identify legal authority for such a preemptive action in the statutory provisions setting forth the nonjudicial foreclosure scheme. After our own examination of the nonjudicial foreclosure statutes, we agree with the Gomes court that the provisions do not contain express authority for such a preemptive action. Also, even if the statutes are interpreted broadly, it cannot be said the provisions imply the authority for such a preemptive action exists, because doing so would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature. [Citations.] 'The recognition of the right to bring a lawsuit to determine a nominee's authorization to proceed with foreclosure on behalf of the noteholder would fundamentally undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely for the purpose of delaying valid foreclosures.' (Gomes, supra, 192 Cal.App.4th at p. 1155.)
"[W]e conclude the court properly sustained Defendants' demurrers to the first cause of action in Jenkins's SAC." (Jenkins, supra, 216 Cal.App.4th at pp. 511-513.)
Thus, Jenkins followed Gomes's statutory analysis and concluded the borrower had failed to state a cause of action because such preemptive lawsuits were not a remedy provided for in the nonjudicial foreclosure statutes and, moreover, such preemptive lawsuits would result in the impermissible interjection of the courts into a comprehensive nonjudicial scheme enacted by the Legislature and would undermine the important statutory policy of providing a quick, inexpensive and efficient nonjudicial remedy. (Jenkins, supra, 216 Cal.App.4th at pp. 511-513.)
We note that Jenkins was disapproved on another ground in Yvanova, supra, 62 Cal.4th at p. 939, footnote 13, relating to Jenkins's overbroad conclusions on standing. However, Jenkins's statutory rationale for disallowing preemptive lawsuits, as recited above, was not addressed in Yvanova: "This aspect of Jenkins, disallowing the use of a lawsuit to preempt a nonjudicial foreclosure, is not within the scope of our review, which is limited to a borrower's standing to challenge an assignment in an action seeking remedies for wrongful foreclosure. As framed by the proceedings below, the concrete question in the present case is whether plaintiff should be permitted to amend her complaint to seek redress, in a wrongful foreclosure count, for the trustee's sale that has already taken place. We do not address the distinct question of whether, or under what circumstances, a borrower may bring an action for injunctive or declaratory relief to prevent a foreclosure sale from going forward." (Yvanova, supra, 62 Cal.4th at p. 934.)
As an additional ground for its conclusion that the plaintiff had failed to state a viable cause of action, Jenkins further held that the plaintiff lacked standing to challenge the alleged improper transfer of the note or deed of trust on the part of third parties during the securitization process. (Jenkins, supra, 216 Cal.App.4th at pp. 514-515.) On the issue of standing, Jenkins explained as follows: " '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, Jenkins lacks standing to enforce any agreements ... relating to such transactions. [Citation.] [¶] Furthermore, even if any subsequent transfers of the promissory note were invalid, Jenkins is not the victim of such invalid transfers because her obligations under the note remained unchanged. Instead, the true victim may be an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note." (Jenkins, supra, 216 Cal.App.4th at p. 515.) Yvanova, which will be discussed in greater detail below, disapproved Jenkins's conclusion that a borrower would lack standing to challenge an assignment of the deed of trust as void, but the Supreme Court noted the Jenkins's rule [on standing] may still hold as to claimed defects that would make the assignment merely voidable. (Yvanova, supra, 62 Cal.4th at p. 939 & fn. 13.)
As we have outlined above, Gomes and Jenkins stand for the proposition that preemptive lawsuits, such as the one asserted here by plaintiff, are disallowed or do not state a cause of action. We note that other Courts of Appeal considering such preemptive lawsuits in the nonjudicial foreclosure context have followed the Gomes and Jenkins decisions. (See, e.g., Kan v. Guild Mortgage Co. (2014) 230 Cal.App.4th 736, 743-744 [based on Gomes and Jenkins, a preforeclosure claim to quiet title due to alleged defective assignment of the deed of trust to an investment trust did not give rise to a viable preemptive action that overrides California's nonjudicial foreclosure rules]; Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814-815 (Saterbak) [following Gomes and Jenkins on both the statutory and lack of standing rationales, holding that the plaintiff could not maintain a preforeclosure preemptive suit based on an allegedly void, but actually voidable, assignment of deed of trust]; Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 82 (Siliga) [affirming rule against preemptive lawsuits; disapproved on another ground in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.)
In Saterbak, supra, 245 Cal.App.4th 808, as here, the plaintiff had alleged the defendant did not have authority to foreclose because the underlying assignment of the deed of trust was purportedly "void." (Saterbak, supra, 245 Cal.App.4th at p. 814.) The plaintiff's theory in that case was that the party initiating the foreclosure sale had no right to do so, and thus a preemptive lawsuit was necessary to decide the question. (Ibid.) In rejecting the plaintiff's theory, the Court of Appeal reasoned, based on the Jenkins and Gomes cases, that California courts do not allow such preemptive suits because they would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature. (Saterbak, at p. 814.) Further, the court in Saterbak held that the plaintiff "lacks standing" to pursue her theories. (Ibid.)
Saterbak was decided after the Supreme Court's decision in Yvanova. In discussing the impact of the Yvanova decision, Saterbak explained that because Yvanova was limited to the postforeclosure context, it was distinguishable and did not alter the plaintiff's standing obligations. (Saterbak, supra, 245 Cal.App.4th at p. 815.) Moreover, the court pointed out that Yvanova recognized borrower standing "only where the defect in the assignment renders the assignment void, rather than voidable." (Saterbak, at p. 815.) Since the alleged assignment in Saterbak was deemed by the Court of Appeal to be merely voidable, not void, the plaintiff clearly had no standing to maintain the lawsuit. (Ibid.)
In summary, California courts have broadly rejected efforts by defaulting borrowers to use preemptive lawsuits to obstruct, hinder or delay the nonjudicial foreclosure process. Such preemptive lawsuits have been disallowed on at least two grounds, one statutory and the other a lack of standing—although as to the latter ground it is now clear that a borrower does have standing to challenge a void, rather than merely voidable, assignment of the beneficial interest in the deed of trust or promissory note.
Based on the authorities and holdings discussed above, it is clear to us that unless some exception has been shown to exist under the relevant law (it has not), plaintiff's FAC fails to state a cause of action in light of the statutory grounds articulated in the Gomes and Jenkins cases. That is, because the comprehensive statutory scheme covering nonjudicial foreclosure does not provide for such a preemptive lawsuit, and it would undermine the basic legislative policy of ensuring an efficient and inexpensive nonjudicial process, as a matter of statutory application the FAC does not state a viable claim for relief. (Gomes, supra, 192 Cal.App.4th at pp. 1154-1157; Jenkins, supra, 216 Cal.App.4th at pp. 510-513; Saterbak, supra, 245 Cal.App.4th at pp. 814-815.) Furthermore, if the alleged defects in the assignments render them at most merely voidable, not void, plaintiff would also be precluded from maintaining her lawsuit based on a lack of standing as was held in Saterbak. As will be seen, that is the case here.
Before expressing our final disposition on these matters, we shall evaluate the impact of the Supreme Court's Yvanova decision, which we address next. After that, we will articulate why plaintiff has failed to allege facts showing the challenged assignments were void ab initio. B. Supreme Court's Narrow Holding in Yvanova Does Not Allow for Plaintiff's Preemptive Lawsuit
Relying on Yvanova, supra, 62 Cal.4th 919, plaintiff argues she is entitled to maintain her lawsuit seeking to halt the nonjudicial foreclosure process initiated by defendants—apparently because her FAC alleges as conclusions that the underlying assignments of the promissory note and deed of trust were void. We disagree with plaintiff's position, but in explaining why she is incorrect we believe it is helpful at this point to clarify what Yvanova did and did not hold.
In Yvanova, the Supreme Court considered the question of "[w]hether the borrower on a home loan secured by a deed of trust may base an action for wrongful foreclosure on allegations a purported assignment of the note and deed of trust to the foreclosing party bore defects rendering the assignment void." (Yvanova, supra, 62 Cal.4th at p. 923, italics added.) Rejecting arguments based on Jenkins that the borrower would lack standing to assert defects in an assignment to which she was not a party, Yvanova concluded that "because in a nonjudicial foreclosure only the original beneficiary of a deed of trust or its assignee or agent may direct the trustee to sell the property, an allegation that the assignment was void, and not merely voidable at the behest of the parties to the assignment, will support an action for wrongful foreclosure." (Yvanova, supra, 62 Cal.4th at p. 923; id. at pp. 933-935.) The Supreme Court emphasized the ruling was "a narrow one," holding "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.) Further, as we noted above, Yvanova's holding was limited to wrongful foreclosure claims pursued after foreclosure had taken place and was expressly not addressing preforeclosure lawsuits. (Id. at pp. 924, 934.)
Yvanova resolved a conflict between two Court of Appeal decisions on the issue of standing—namely, Jenkins, supra, 216 Cal.App.4th 497, and Glaski v. Bank of America (2013) 218 Cal.App.4th 1079. On the "narrow question" before it of "whether a wrongful foreclosure plaintiff may challenge an assignment to the foreclosing entity as void," the Supreme Court concluded that our decision in Glaski "provid[ed] a more logical answer than Jenkins." (Yvanova, supra, 62 Cal.4th at p. 935.) The Supreme Court decided that Jenkins "spoke too broadly" in holding that a borrower would necessarily lack standing to challenge an assignment of the note and deed of trust to which the borrower was not a party or a third party beneficiary. (Yvanova, supra, 62 Cal.4th at p. 939.) However, the Supreme Court noted that "Jenkins's rule [on standing] may hold as to claimed defects that would make the assignment merely voidable, but not as to alleged defects rendering the assignment absolutely void." (Ibid.)
In Glaski v. Bank of America, supra, 218 Cal.App.4th at pp. 1094-1095, we held a borrower may base a claim for wrongful foreclosure on allegations that the foreclosing party acted without authority because the assignment by which it purportedly acquired the beneficial interest under the deed of trust was not merely voidable but void. Since Glaski was a wrongful foreclosure case, it is not directly applicable here. The analysis in Glaski of the void versus voidable distinction is covered in our discussion of Yvanova, which followed Glaski on that point.
In resolving the question of whether a borrower has standing in a wrongful foreclosure action to challenge an assignment to which he or she was not a party, the answer given by the Supreme Court was that the borrower has standing if the alleged assignment is void, but not if the assignment is merely voidable. (Yvanova, supra, 62 Cal.4th at pp. 923, 939, 943.) The Supreme Court explained: "[O]nly the entity holding the beneficial interest under the deed of trust—the original lender, its assignee, or an agent of one of these—may instruct the trustee to commence and complete a nonjudicial foreclosure. [Citations.] If a purported assignment necessary to the chain by which the foreclosing entity claims that power is absolutely void, meaning of no legal force or effect whatsoever [citations], the foreclosing entity has acted without legal authority by pursuing a trustee's sale, and such an unauthorized sale constitutes a wrongful foreclosure." (Yvanova, supra, 62 Cal.4th at p. 935.) Because a void assignment is without any effect, it can never be ratified or validated by the parties to it, even if they wished to do so. (Id. at p. 936; see also pp. 929-930.) "[N]o ratification is possible if the assignment is void ab initio." (Id. at p. 936.) Accordingly, a borrower asserting that an assignment is void ab initio is not asserting interests properly belonging to the parties to the assignment—no such third-party interests would exist—but is asserting solely her own interest in limiting foreclosure on her property to those with legal authority to order a foreclosure sale. (Id. at pp. 936-937.)
On the other hand, when an assignment is merely voidable, "the power to ratify or avoid the transaction lies solely with the parties to the assignment; the transaction is not void unless and until one of the parties takes steps to make it so. A borrower who challenges a foreclosure on the ground that an assignment to the foreclosing party bore defects rendering it voidable could thus be said to assert an interest belonging solely to the parties to the assignment rather than to herself." (Yvanova, supra, 62 Cal.4th at p. 936.) As one Court of Appeal expressed this aspect of Yvanova's holding: "Only the parties to the agreement have the power to ratify or extinguish; consequently, allowing a borrower to challenge an assignment based on a defect that only renders it voidable would allow the borrower to exercise rights belonging exclusively to the parties to the assignment." (Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 810-811 (Mendoza).)
We conclude the Supreme Court's holding in Yvanova, as summarized above, does not assist plaintiff in this case or indicate a possible basis for plaintiff to state a valid cause of action. First, Yvanova dealt with actions for wrongful foreclosure brought after the trustee's sale had occurred, and in that limited context found only that standing would exist for a borrower to assert a claim that the assignment to the foreclosing party was void ab initio and not merely voidable at the behest of the parties to the assignment. Here, plaintiff has brought a preforeclosure lawsuit seeking to prevent defendants from moving forward with the nonjudicial foreclosure process. Thus, the statutory rationale and holdings set forth in Jenkins and Gomes that such preemptive lawsuits may not be maintained are fully applicable to plaintiff's FAC.
Second, as we explain more fully in our discussion below, plaintiff's conclusory allegations that the subject assignments were void and defeat the authority to foreclose plainly fall short, and as such, plaintiff did not have standing to pursue her challenge to the third-party assignments. C. Plaintiff Lacks Standing Because the Challenged Assignments Here Were Not Void Ab Initio
Although plaintiff alleged the underlying assignments of the promissory note and deed of trust to BNY were "void," we are not required on demurrer to assume the truth of such legal conclusions. (Mendoza, supra, 6 Cal.App.5th at pp. 809-810.) Reviewing the allegations, we conclude plaintiff has failed to allege facts showing a void ab initio assignment of the rights and interests under the promissory note and deed of trust.
First, we consider the alleged assignment by Quality of the promissory note to BNY. The FAC alleged that BNY was "the purported assignee" of the promissory note by reason of a document referred to as the "Allonge." Allegedly, the Allonge purports to be signed by Quality's assistant vice president, David Burroughs, but according to the FAC, it was not actually signed by Burroughs, or if it was, he did not have authority to assign or indorse the promissory note on behalf of Quality. Further, the Allonge was allegedly "a fraudulent 'robo-signed' document that was created by [a] person or persons unauthorized" for the purpose of enabling BNY or its agent "to fraudulently claim the right to foreclose on the Property and thereby deprive [plaintiff] of her interest therein." No factual basis is stated in the FAC to support the allegation that the signature was unauthorized or constituted a fraudulent robo-signature, which assertions were presented as bare conclusions. But even if more specific allegations had been made, they would only show at most a voidable transaction. In Mendoza, supra, 6 Cal.App.5th 802, the plaintiff had similarly alleged that a purported assignment of the deed of trust was void due to a fraudulent and unauthorized robo-signature. (Id. at pp. 805-806.) The Court of Appeal in Mendoza concluded, based on persuasive federal cases, that a robo-signed assignment is merely voidable, not void. (Id. at pp. 819-820; accord, Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 46 [robo-signed document voidable, not void]; Pratap v. Wells Fargo Bank, N.A. (N.D. Cal. 2014) 63 F.Supp.3d 1101, 1109 ["to the extent that an assignment was in fact robo-signed, it would be voidable, not void," at the injured party's (i.e., the bank's) option]; see also Cal. U. Com. Code, § 3403, subd. (a) [unauthorized signature is subject to ratification].) We agree with that conclusion. Consequently, since the alleged defect—even if true—would only make the assignment voidable, and not void, plaintiff here lacked standing to attack the validity of the signature on the Allonge which purportedly transferred Quality's interest in the promissory note to BNY.
The term "robo-signer" has been used to describe an individual who simply signs multiple property record documents without any legal or corporate authority. (Mendoza, supra, 6 Cal.App.5th at pp. 805-806.)
We next consider the other assignment challenged in the FAC; namely, MERS's assignment of the beneficial interest in the deed of trust to BNY. Plaintiff alleged that on October 16, 2009, MERS recorded a document that purported to "assign all of its [i.e., MERS's] beneficial interest in the [deed of trust]" to BNY. The document recorded by MERS also stated the assignment of the beneficial interest under the deed of trust included any corresponding rights to the promissory note referred to in the deed of trust. In the FAC, plaintiff alleged the assignment by MERS was void or invalid, including the purported assignment of the beneficial interest in the deed of trust, on the theory that MERS had no power to assign rights it did not itself possess. Among other things, plaintiff appears to allege the purported assignment by MERS could not transfer to BNY any right or authority under the deed of trust to initiate foreclosure or substitute a trustee, since allegedly only the lender or lender's assignee (i.e., one who would unlike MERS possess a beneficial interest in the repayment of the note) could hold or exercise such rights. MERS allegedly was not in that position and was merely a nominee, and therefore the purported assignment was allegedly ineffectual.
We have addressed above the assignment by Quality of the promissory note to BNY. For reasons that are not before us, it appears MERS also purported to assign the interest in the promissory note to BNY, in conjunction with its assignment to BNY of the beneficial interest in the deed of trust.
We conclude plaintiff's challenge of MERS's assignment of the beneficial interests under the deed of trust is defeated by the clear terms of the deed of trust, which was executed by plaintiff and attached as an exhibit to the FAC. In the deed of trust, plaintiff expressly agreed that MERS was both the "nominee for Lender and Lender's successors and assigns" as well as "the beneficiary under this Security Instrument." The security instrument was "this document," i.e., the subject deed of trust under which the borrower granted a power of sale to the trustee to secure the underlying loan. Further, the deed of trust reflected that MERS may assign its interest under the deed of trust, stating as follows: "The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS. This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note." Finally, the deed of trust provided that, if necessary, MERS could in accordance with its interests in the deed of trust, take any action required of the lender including to foreclose on the property: "Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in 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."
To reiterate, plaintiff agreed in the deed of trust that MERS was both the "beneficiary" and the "nominee" of the lender and of the lender's successors and assigns for purposes of the deed of trust. A nominee acts as an agent for another. (See Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 125; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 270-271 (Fontenot) [reversed on another ground in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13].) Our courts have repeatedly recognized that the inclusion of such language in a deed of trust is sufficient to allow MERS to exercise rights under the deed of trust as the lender's agent. (Calvo v. HSBC Bank USA, N.A., supra, 199 Cal.App.4th at p. 125; Fontenot, supra, 198 Cal.App.4th at pp. 270-271; Gomes, supra, 192 Cal.App.4th at p. 1157 & fn. 9.) Under nonjudicial foreclosure law, the "trustee, mortgagee, or beneficiary, or any of their authorized agents" may initiate foreclosure on a deed of trust. (§ 2924, subd. (a)(1), italics added; see also subd. (a)(6).) Moreover, plaintiff also agreed in the deed of trust that MERS was "beneficiary" thereof, and if necessary, could exercise as nominee the rights and interests of the lender with respect to the deed of trust as security for the loan. For all these reasons, the claimed lack of power or authority to assign the deed of trust to BNY is plainly without merit. MERS was clearly entitled to do so under the deed of trust—both as beneficiary and the lender's nominee, which would be true whether or not MERS itself held or possessed an interest in the repayment of the promissory note. " 'The authority to exercise all of the rights and interests of the lender necessarily includes the authority to assign the deed of trust.' [Citations.]" (Saterbak, supra, 245 Cal.App.4th at p. 816.)
As was summarized in the appellate court decision in Siliga, supra, 219 Cal.App.4th 75: "California courts have held that a trustor who agreed under the terms of the deed of trust that MERS, as the lender's nominee, has the authority to exercise all of the rights and interests of the lender, including the right to foreclose, is precluded from maintaining a cause of action based on the allegation that MERS has no authority to exercise those rights. [Citations.] The deed of trust itself, attached to the Siligas' complaint, establishes as a factual matter that MERS has the authority to exercise all of the rights and interests of the lender. [Citations.] The authority to exercise all of the rights and interests of the lender necessarily includes the authority to assign the deed of trust. [Citation.]" (Siliga, supra, at pp. 83-84, fn. omitted; disapproved on another ground in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.) The same is plainly true in the case before us: the assignment of the beneficial interest in the deed of trust was manifestly within MERS's authority under the deed of trust attached to the FAC.
Moreover, to the extent plaintiff is relying on a claim of invalidity in the purported assignment by MERS of the promissory note at the time the deed of trust was assigned, we believe that such a theory was correctly disposed of in Fontenot, supra, 198 Cal.App.4th 256. In that case, the Court of Appeal explained that MERS need not have held an actual possessory interest in the note to accomplish a valid assignment thereof, but could have assigned the note in its capacity as a nominee for the lender "which did possess an assignable interest." (Id. at pp. 270-271.) As a later case observed, "under Fontenot, MERS could assign both the [deed of trust] and note because it was presumed MERS had authority to do so on behalf of the lender, which had an interest in the note. [Citation.]" (Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495, 1505, italics added; reversed on another ground in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.) Thus, absent allegation of a specific factual basis showing that MERS's assignment of the promissory note was invalid (i.e., void) and the invalidity would defeat BNY's authority to initiate foreclosure under the deed of trust, none of which was alleged here, plaintiff's theory necessarily fails. (See Yvanova, supra, 62 Cal.4th at p. 939 [for standing to challenge foreclosure due to an allegedly defective assignment of promissory note or deed of trust, the challenged assignment must be void, not merely voidable]; see also Siliga, supra, 219 Cal.App.4th at p. 84 [specific factual basis required since MERS could have properly assigned the note as lender's nominee]; Herrera v. Federal National Mortgage Assn., supra, 205 Cal.App.4th at pp. 1505-1506 [ability to assign note presumed]; Fontenot, supra, 198 Cal.App.4th at pp. 270-271.)
The issue arguably involves a question of whether MERS as nominee had sufficiently broad authority from the lender to also assign the promissory note at the time the deed of trust was being properly assigned by MERS (see Fontenot, supra, 198 Cal.App.4th at pp. 270-271 [noting the extent of MERS's authority as a nominee may be defined by an agency agreement with the lender]).
Nor is there any basis to state a cause of action through more specific allegations, since it is apparent plaintiff is relying on a version of the possession of the note theory, which has been soundly rejected by relevant California case authority. "California's statutory nonjudicial foreclosure scheme ... does not require that the foreclosing party have a beneficial interest in or physical possession of the note." (Shuster v. BAC Home Loans Servicing, LP (2012) 211 Cal.App.4th 505, 511.) As stated in Jenkins, because the statutory provisions "broadly authorize" a trustee, mortgagee, beneficiary, or any of their authorized agents to initiate a nonjudicial foreclosure, those provisions "do not require that the foreclosing party have an actual beneficial interest in both the promissory note and deed of trust to commence and execute a nonjudicial foreclosure sale." (Jenkins, supra, 216 Cal.App.4th at p. 513; accord, Debrunner, supra, 204 Cal.App.4th at pp. 440-441 [statutory scheme governing nonjudicial foreclosure does not require that the note be in the possession of the party initiating foreclosure]; see also Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 1004 [note and deed of trust need not be held by same party; their separation did not prevent trustee from foreclosing].) Accordingly, plaintiff's attack on MERS's assignment of the promissory note—considered as distinct from MERS's authorized assignment of the deed of trust (see our discussion above)—fails to allege the existence of a defect that could support a conclusion that BNY lacked authority to initiate foreclosure. Moreover, because the attack on MERS's assignment of the promissory note would not demonstrate a lack of authority on the part of BNY (or Zieve) to foreclose in this case, it is analogous to a claim of a merely voidable defect in a transaction between third parties that plaintiff would lack standing to raise. We hold that is the case here.
To conclude, contrary to the allegations in the FAC, MERS had authority from the language of the deed of trust to assign the beneficial interest in the deed of trust to BNY. On the record before us, that assignment was not void, but was valid and effective. Further, to the extent that plaintiff's challenge is based on the purported concurrent assignment by MERS of the promissory note, plaintiff has failed to state any basis upon which BNY (or Zieve) would lack authority to initiate the nonjudicial foreclosure process, and in the present context plaintiff lacked standing to raise it.
As we have discussed hereinabove, plaintiff's preemptive lawsuit challenging BNY's (and Zieve's) authority to move forward with the nonjudicial foreclosure process is not a recognized or available procedure under the nonjudicial foreclosure statutory scheme. In addition to that, because the FAC failed to set forth any assignments that were both void ab initio and would cause BNY to lack authority to foreclose or substitute a trustee, we conclude that plaintiff also lacked standing to maintain her claims attacking the alleged third-party assignments of the beneficial interests under the promissory note and deed of trust. For these reasons, it is clear the trial court correctly sustained the demurrers without leave to amend. D. Plaintiff's Novel Deed of Trust Theory Fails
In an effort to circumvent her lack of standing, plaintiff alleges a novel theory that because she has a form of "reversionary" right under the deed of trust (i.e., if she paid off her loan, the deed of trust would have to be reconveyed), she is a "beneficiary" of a "trust" and thus is entitled to commence an action to enjoin or challenge the trustee's actions under provisions of the Probate Code relating to express trusts. We reject plaintiff's theory. First, plaintiff has failed to provide adequate legal discussion and reference to any supporting legal authority for her proposition. Where, as here, points are perfunctorily raised, without adequate analysis and authority, we pass over them and treat them as forfeited. (Nelson v. Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862; Tilbury Constructors, Inc. v. State Comp. Ins. Fund (2006) 137 Cal.App.4th 466, 482; Placer County Local Agency Formation Com. v. Nevada County Local Agency Formation Com. (2006) 135 Cal.App.4th 793, 814; People v. Harper (2000) 82 Cal.App.4th 1413, 1419, fn. 4; People v. Turner (1994) 8 Cal.4th 137, 214, fn. 19.) Second, despite plaintiff's argument to the contrary, a deed of trust is a security arrangement, not a true express trust under the Probate Code. (See Prob. Code, § 82, subd. (b)(10) ["trust" excludes a "security arrangement"].) As stated by our Supreme Court, "[t]he similarities between a trustee of an express trust and a trustee under a deed of trust end with the name." (Monterey S.P. Partnership v. W.L. Bangham, Inc. (1989) 49 Cal.3d 454, 462.) For these reasons, it appears plaintiff is merely attempting to artificially devise a theoretical basis upon which to impermissibly interject the courts into the nonjudicial foreclosure process through a preemptive lawsuit. We conclude that Plaintiff's novel theory fails to state a cause of action.
III. Plaintiff Not Entitled to Statutory Injunctive Relief
Plaintiff's first cause of action in the FAC for injunctive relief seeks an order that the Notice of Default recorded by Zieve be withdrawn and not acted on by defendants. Plaintiff alleges that BNY's substitution of Zieve as trustee was improper, and therefore Zieve had no authority to record the Notice of Default. Zieve was allegedly without authority to record the Notice of Default based on the assumptions of plaintiff's theory that the beneficial interests under the promissory note and deed of trust were never validly assigned to BNY, and therefore BNY had no authority to initiate foreclosure or appoint Zieve as a substitute trustee. After challenging Zieve's authority to act as trustee, the first cause of action goes on to assert that injunctive relief was available and proper in this case as a result of Zieve's alleged violation of certain statutory provisions that permit injunctive relief prior to the trustee's sale.
We first address the issue of Zieve's authority, and then we shall consider whether plaintiff stated any basis for injunctive relief under the relevant statutes. As will be seen, on both counts, the allegations were insufficient to state a cause of action.
A. Zieve Had Authority to Act as Trustee
In our discussion in part II, above, we have already addressed the issue of the assignments of the promissory note and deed of trust to BNY. Under the allegations of the FAC and the language of the deed of trust, the beneficial interests in the promissory note and deed of trust were assigned to BNY and, aside from plaintiff's bare conclusions, no adequate factual basis is alleged to show such assignments were not valid. But even assuming for the sake of argument that some aspects of the assignments were potentially defective, the alleged defects would not render the assignments void ab initio, and therefore plaintiff lacked standing to challenge them. In short, plaintiff had no factual or legal basis in the present context to challenge the authority of BNY to initiate foreclosure or substitute a trustee. Beyond that, as discussed below, Zieve was properly substituted as trustee.
The proper appointment of Zieve as trustee was established by the recorded document under which BNY substituted Zieve as trustee, which was submitted for judicial notice to the trial court. As we explained in part II, above, MERS clearly acted within its authority under the deed of trust when it assigned the beneficial interest in the deed of trust to BNY. Thus, BNY had authority to initiate nonjudicial foreclosure. (§ 2924, subd. (a)(1).) Additionally, as holder of the beneficial interest in the deed of trust, BNY also had the statutory right to substitute a trustee. Section 2934a, subdivision (a)(1), unequivocally provides that the trustee under a deed of trust "may be substituted by the recording ... of a substitution executed and acknowledged by: (A) all of the beneficiaries under the trust deed, or their successors in interest, and the substitution shall be effective notwithstanding any contrary provision in any trust deed ...." (§ 2934a, subd. (a)(1).) When this is done, the trustee named in the recorded substitution of trustee "shall be deemed to be authorized to act as the trustee under the mortgage or deed of trust for all purposes from the date the substitution is executed by the mortgagee, beneficiaries, or by their authorized agents." (§ 2934a, subd. (d).) Once so recorded, the substitution constitutes "conclusive evidence" of the authority of the substituted trustee. (Ibid.) Thus, Zieve had authority to act as trustee here.
This conclusion is consistent with the language of the deed of trust. Paragraph 24 of the deed of trust allows the "Lender" to substitute a trustee by recording a substitution of trustee in a manner like section 2934a. Although Paragraph 24 refers only to the "Lender" making the substitution, nonetheless, because the deed of trust elsewhere provides that the promissory note and deed of trust may be sold or assigned one or more times, the language referring to the original lender's right to substitute a trustee would necessarily be understood to extend to successors and assigns of the promissory note and/or deed of trust. Plaintiff's argument that, under the deed of trust, BNY could not substitute a trustee is plainly without merit. In any event, even if there were arguably contrary wording in the deed of trust, the recording of the substitution by BNY under section 2934a, subdivision (a)(1), would still be effective by statute. (§ 2934a, subd. (a)(1).)
The same would be true where the deed of trust elsewhere refers only to the lender's ability to initiate nonjudicial foreclosure.
For all of these reasons, we conclude it was established Zieve had authority to act as the trustee under the deed of trust. Because Zieve was the authorized trustee, by law Zieve had the right and power to record the Notice of Default. (§ 2924, subd. (a)(1), (a)(6).) B. Injunctive Relief Not Available Here
In the FAC, plaintiff alleged she is entitled to injunctive relief under section 2924.12 based on defendants' alleged violations of sections 2924, subdivision (a)(6) (§ 2924(a)(6)) and section 2924.17. The trial court held plaintiff failed to state a cause of action for injunctive relief, and in so holding specifically relied on Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150 (Lucioni). We agree with the trial court's conclusion.
As acknowledged in Lucioni, the 2013 Homeowner's Bill of Rights (HBOR) included two provisions allowing for injunctive relief in the context of the nonjudicial foreclosure process—sections 2924.12, subdivision (a)(1), and 2924.19, subdivision (a)(1) (§§ 2924.12(a)(1), 2924.19(a)(1)). (Lucioni, supra, 3 Cal.App.5th at p. 155.) The two provisions "allow a borrower to enjoin a foreclosure when a lender violates other specified HBOR sections." (Lucioni, at p. 157.) Based on its analysis of the nonjudicial foreclosure scheme as a whole, and of the language of sections 2924.12(a)(1) and 2924.19(a)(1) in particular, Lucioni concluded: (i) these two sections "provide the exclusive means for a borrower to obtain injunctive relief under the HBOR[,]" and (ii) "[t]o enjoin a foreclosure under the HBOR, the borrower must state a cause of action for a material violation of one of the nine statutory sections that are specified in those two provisions." (Lucioni, at p. 157; see pp. 157-161.) In that case, as here, the borrower had sought injunctive relief based on a violation of section 2924(a)(6). Lucioni held that because section 2924(a)(6) was not among the nine listed sections of which a violation would permit injunctive relief under sections 2924.12 or 2924.19, the borrower had failed to state a cause of action for injunctive relief. (Lucioni, at p. 157.)
As noted by Lucioni, section 2924(a)(6) "requires an entity initiating a foreclosure be legally entitled to do so." (Lucioni, supra, 3 Cal.App.5th at p. 155.) Section 2924(a)(6) states: "No entity shall record or cause a notice of default to be recorded or otherwise initiate the foreclosure process unless it is the holder of the beneficial interest under the mortgage or deed of trust, the original trustee or the substituted trustee under the deed of trust, or the designated agent of the holder of the beneficial interest. No agent of the holder of the beneficial interest under the mortgage or deed of trust, original trustee or substituted trustee under the deed of trust may record a notice of default or otherwise commence the foreclosure process except when acting within the scope of authority designated by the holder of the beneficial interest."
As more fully explained in Lucioni: "In the HBOR, the Legislature authorized a private right of action to enjoin a nonjudicial trustee's sale when a lender violates any one of nine statutory provisions. Under section 2924.12(a)(1), a homeowner may bring an action for injunctive relief due to a material violation of section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17. Under section 2924.19(a)(1), a homeowner also may bring an action for injunctive relief for a material violation of section 2923.5 or 2924.18. [¶] ... [¶] The Legislature, however, did not provide for injunctive relief for a violation of section 2924(a)(6), the provision that the complaint relies upon in seeking injunctive relief. That is, section 2924(a)(6) is not one of the nine sections identified in sections 2924.12(a)(1) and 2924.19(a)(1). In our view, under the text of the HBOR, a foreclosure may be enjoined due to a material violation of the statutory provisions that the Legislature has chosen to list, but not due to a violation of unlisted provisions. 'Generally, the expression of some things in a statute implies the exclusion of others not expressed.' [Citations.] As the Legislature chose to provide for injunctive relief for some HBOR violations, but not for a violation of section 2924(a)(6), we do not find such relief impliedly available. Under the HBOR, then, a plaintiff may not seek to enjoin a foreclosure based on a claim that the foreclosing party lacked the necessary authority to foreclose." (Lucioni, supra, 3 Cal.App.5th at pp. 158-159.)
As observed in Lucioni, the legislative history and committee reports confirmed that "the Legislature intended to preclude borrowers from seeking to enjoin a foreclosure for reasons other than those expressly authorized." (Lucioni, supra, 3 Cal.App.5th at p. 160.)
Again, the gist of section 2924(a)(6) is to allow only an authorized person (i.e., the holder of the beneficial interest under the deed of trust, the original or substituted trustee, or an authorized agent) to record a notice of default or otherwise initiate the nonjudicial foreclosure process. (Ante, fn. 13.)
Finally, Lucioni explained how this represents a legislative policy choice in balancing competing interests, which must be honored by the courts. "In the HBOR, the Legislature addressed when courts may intercede in the nonjudicial foreclosure scheme. The Legislature itself created the nonjudicial foreclosure process, which uses a trustee not beholden to either the lender or borrower 'to provide the lender-beneficiary with an inexpensive and efficient remedy against a defaulting borrower, while protecting the borrower from wrongful loss of the property ....' [Citation.] Where the HBOR applies, actions that disrupt that expeditious process by threatening to enjoin the sale should be limited to the particular violations for which the Legislature has authorized such preforeclosure lawsuits. When a lender without a valid interest in the property initiates a foreclosure, a borrower has a postforeclosure cause of action for damages under Yvanova, and the decision on whether to allow preforeclosure relief is essentially a policy one, pitting the interest in allowing borrowers injunctive protection against the delays that may occur in nonjudicial foreclosures due to litigation, even where the lenders are ultimately vindicated. By not authorizing injunctive relief for violations of section 2924(a)(6) in the HBOR, as it did for the nine other provisions for which relief is permitted, the Legislature appears to have made that choice. Consequently, the trial court properly sustained the demurrer to Lucioni's cause of action for a violation of section 2924(a)(6)." (Lucioni, supra, 3 Cal.App.5th at p. 161.)
We agree with Lucioni's thorough analysis and conclusions, and we follow it here. In plaintiff's FAC, she has attempted to use an alleged violation of section 2924(a)(6) as a basis for injunctive relief. The alleged violation of that section was premised on an assertion that the trustee, Zieve, was without authority to act as trustee or to record the notice of default. We have already addressed the lack of authority claim (see above), and found it wanting. At this point, we also separately conclude that plaintiff's allegations of violation of section 2924(a)(6) fail to state a basis for injunctive relief under the statutory scheme. Section 2924(a)(6) is not among the listed statutes the violation of which would permit preforeclosure injunctive relief. (See §§ 2924.12(a)(1), 2924.19(a)(1).) As Lucioni correctly held, the Legislature did not intend to create an injunctive relief cause of action premised on violation of section 2924(a)(6) or to allow borrowers to enjoin a foreclosure "based on a claim that the foreclosing party lacked the necessary authority to foreclose." (Lucioni, supra, 3 Cal.App.5th at p. 159.) The demurrer was properly sustained on this ground.
As an additional statutory basis for seeking injunctive relief, plaintiff alleged that defendants violated subdivision (a) of section 2924.17. Section 2924.17 is among the listed sections whose violation will permit injunctive relief. (§ 2924.12(a)(1).) Therefore, if plaintiff sufficiently alleged a violation of that section, an injunctive relief cause of action would be available. As explained below, plaintiff has not done so, but is attempting to shoehorn theories into section 2924.17 that are not there.
Section 2924.17, subdivision (a), requires that a declaration recorded pursuant to sections 2923.5 or 2923.55, a notice of default, an assignment of a deed of trust, a substitution of trustee and other foreclosure documents "shall be accurate and complete and supported by competent and reliable evidence." (§ 2924.17, subd. (a).) Here, plaintiff does not allege a basis for concluding defendants lacked competent and reliable evidence when the Notice of Default was recorded, or that the information provided to plaintiff as the borrower was not accurate. Instead, plaintiff is essentially claiming that since Zieve allegedly lacked authority to act as trustee due to assignments that were purportedly void (see discussion hereinabove), the Notice of Default could not have been recorded based on competent and reliable evidence. However, as explained in Lucioni, supra, 3 Cal.App.5th 150, where a similar theory was presented, section 2924.17 relates to the declaration and other requirements where documents such as a notice of default are recorded but "does not impose a preforeclosure duty on foreclosing entities to demonstrate they have a right to foreclose." (Lucioni, at p. 162; see id. at pp. 161-163.) Subdivision (b) of section 2924.17 states that before filing or recording the documents referred to 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." As Lucioni correctly holds: "The statute, however, does not require a statement in the declaration about ... the right to foreclose. Subdivision (b) of section 2924.17 is directed at ensuring the foreclosing entity's 'review[]' of its right to foreclose." (Lucioni, at p. 163, italics added.) That is, section 2924.17 "do[es] not create a right to litigate, preforeclosure, whether the foreclosing party's conclusion that it had the right to foreclose was correct. If the Legislature wished to authorize as much, it could have authorized injunctive relief for a violation of section 2924(a)(6), but it did not." (Lucioni, at p. 163.)
We agree with Lucioni, and accordingly hold that plaintiff was not entitled to seek preforeclosure injunctive relief under section 2924.17 based on her allegations in the FAC challenging Zieve's authority to file the Notice of Default. Moreover, we note the Notice of Default included a declaration by the mortgage servicer that it exercised due diligence under section 2923.55, as required, and further certified and represented that "this mortgage servicer's declaration is accurate, complete and based upon competent and reliable evidence, which the mortgage servicer has reviewed including ... review of the mortgage servicer's business records, to substantiate the borrower's default and the right to foreclose, including the borrower's loan status and loan information."
For the reasons discussed above, on this record we conclude the trial court correctly sustained without leave to amend plaintiff's attempt to plead a statutory basis for preforeclosure injunctive relief.
IV. Other Claims and Issues
Plaintiff's second and third causes of action in the FAC were simply variations on the same theme, which merely sought somewhat different relief such as cancellation of the Notice of Default or declaratory relief relating to the assignments or to the foreclosure process. For the same reasons as explained hereinabove, including plaintiff's lack of standing and the nonviability of preemptive lawsuits of this sort, plaintiff has failed to state any basis upon which preforeclosure relief may be granted, and the demurrer was properly sustained without leave to amend, including as to the relief sought within the second and third causes of action.
In light of our conclusions, we find it unnecessary to consider or reach Zieve's additional grounds for demurrer relating to the filing of a declaration of nonmonetary status and/or the applicability of qualified privilege.
Finally, we briefly address plaintiff's counsel's surprise statement at oral argument. As we observed in footnote 2, ante, at the oral argument for this appeal, plaintiff's counsel made an assertion to the effect that the trustee's sale had apparently occurred in July of last year, more than six months prior to oral argument, but plaintiff's counsel refrained from informing this court thereof until his appearance before us at oral argument. As noted previously herein, we have disregarded this barren last minute oral claim by counsel as untimely raised. (See fn. 2, ante.) Nonetheless, even if we were to consider the matter, and even assuming the purported information is accurate, it would not salvage plaintiff's case. As our discussion herein has made clear, the challenged third-party assignments referred to in the FAC were at most voidable, not void, and therefore plaintiff would lack standing to bring even a postforeclosure challenge. (See, e.g., Mendoza v. JPMorgan Chase Bank, N.A., supra, 6 Cal.App.5th at pp. 804-805, 810-811, 819-820 [no standing to assert a postforeclosure wrongful foreclosure claim based on third-party assignments that were merely voidable, not void]; Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252, 1256 ["An assignment that is merely voidable ... does not support a wrongful foreclosure action"].) Because plaintiff has failed to meet her burden of presenting any factual and legal basis for concluding the third-party assignment(s) were void, rather than merely voidable, no possible basis for leave to amend has been shown.
DISPOSITION
The judgment of the trial court in favor of defendants BNY and Zieve is affirmed. Costs on appeal are awarded to said defendants.
/s/_________
LEVY, J. WE CONCUR: /s/_________
HILL, P.J. /s/_________
PEÑA, J.