Filed 2/21/14 Sporn v. JP Morgan Chase Bank CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ALAN R. SPORN,
Plaintiff and Appellant, G047501
v. (Super. Ct. No. 30-2010-00420922)
JPMORGAN CHASE BANK, N.A., et al., ORDER MODIFYING OPINION
AND DENYING PETITION FOR
Defendants and Respondents. REHEARING AND REQUESTS FOR
PUBLICATION; NO CHANGE IN
JUDGMENT
It is ordered that the opinion filed on January 27, 2014 be modified as
follows:
On page 13, in the first full paragraph, in the second sentence beginning
with “But this directly contradicts,” delete the last portion of the sentence stating
“statements plaintiff’s counsel did not dispute at the time.” The new sentence will read,
“But this directly contradicts the trial court’s statements at the hearing.”
This modification does not change the judgment. The petition for rehearing
is DENIED.
Respondents JPMorgan Chase Bank, N.A. and California Reconveyance
Company, and separately Wells Fargo Bank, N.A. have requested that the opinion be
certified for publication. The opinion does not meet the standards set forth in California
Rules of Court, rule 8.1120(c). The requests are DENIED.
The clerk of this court is directed, pursuant to California Rules of Court,
rule 8.1120(b), to forward a copy of the opinion, this order, and the requests for
publication to the California Supreme Court.
THOMPSON, J.
WE CONCUR:
O’LEARY, P. J.
IKOLA, J.
2
Filed 1/27/14 Sporn v. JP Morgan Chase Bank CA4/3 (unmodfied version)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ALAN R. SPORN,
Plaintiff and Appellant, G047501
v. (Super. Ct. No. 30-2010-00420922)
JPMORGAN CHASE BANK N.A., et al., OPINION
Defendants and Respondents.
Appeal from a judgment of the Superior Court of Orange County, Andrew
P. Banks, Judge. Affirmed.
Garcia & Phan, Robert N. Phan, Juan D. Garcia; Law Offices of Richard L.
Antognini and Richard L. Antognini for Plaintiff and Appellant.
AlvaradoSmith, John M. Sorich, S. Christopher Yoo and Jenny L. Merris
for Defendants and Respondents.
* * *
Plaintiff Alan R. Sporn appeals from the sustaining of a demurrer without
leave to amend to his second amended complaint (SAC) against defendants JPMorgan
Chase Bank, N.A. (Chase) and California Reconveyance Company (CRC). He claims he
pleaded sufficient facts to state causes of action for wrongful foreclosure, violation of
Civil Code section 2923.51, unfair competition (Bus. & Prof. Code, § 17200 et seq.;
UCL), and cancellation of documents. We disagree and affirm.
FACTS AND PROCEDURAL HISTORY
In 2006 plaintiff borrowed not quite $2 million (Loan) to refinance
residential real property in Laguna Hills (Property). He executed a note (Note) secured
by a trust deed (Trust Deed) in favor of Washington Mutual Bank (WaMu) as lender and
beneficiary. CRC was the trustee. Although apparently not directly alleged, in his brief,
citing to the Note and Trust Deed, plaintiff states WaMu was also the servicing agent.
Plaintiff alleges that in 2006 WaMu sold his Note and deed as part of a pool
to the “‘WaMu Mortgage Pass-Through Certificates Series 2006-AR 18 Trust’” (Trust).2
He pleads WaMu’s Security Exchange Commission filings raised “many issues,
concerns, and violations, including lack of standing to proceed with the non-judicial
foreclosure.”
The SAC alleges that in 2008 the Federal Deposit Insurance Corporation
(FDIC) was appointed as receiver of WaMu. On the same date, pursuant to a purchase
and assumption agreement (Purchase Agreement), Chase acquired WaMu’s loan portfolio
from the FDIC. The Purchase Agreement set a settlement date for closing but gave the
receiver the authority to extend it. Subsequently, the FDIC did extend the “Final
Settlement to August 30, 2010.” (Boldface omitted.)
1 All further statutory references are to the Civil Code unless otherwise specified.
2 Plaintiff did not attach a copy of the Trust to the SAC. He did include it as part
of his motion for reconsideration of the ruling on the demurrer. The trustee for the Trust
was LaSalle Bank National Association.
2
Plaintiff alleges on information and belief that as of the date he filed the
SAC, Chase’s purchase of WaMu’s assets under the Purchase Agreement was not
complete and therefore Chase had “been servicing loans and other assets of WaMu
without any proper authority.” Plaintiff also pleads Chase failed to record its assignment
(FDIC Assignment) of plaintiff’s Trust Deed from the FDIC. Therefore, Chase was not
the beneficiary of record and had no rights or powers associated with the Note and Trust
Deed.
On May 19, 2009 Chase assigned all interest in the Note and Trust Deed
(Chase Assignment) to Bank of America National Association (BofA) as successor by
merger to LaSalle Bank National Association as trustee for the Trust. The Chase
Assignment bore the signature of Deborah Brignac as vice-president of Chase. The
Chase Assignment was allegedly void because Chase had not recorded the FDIC
Assignment of the Note and Trust Deed.
Immediately after the Chase Assignment was recorded, Brignac on behalf
of Chase, acting as agent for BofA as trustee of the Trust, recorded a substitution of
trustee naming CRC as the trustee (Substitution of Trustee). This Substitution of Trustee
was allegedly also ineffective because neither Brignac nor Chase had authority to execute
it.
On May 20, 2009, after plaintiff had defaulted on his Loan, CRC recorded a
Notice of Default and Election to Sell (NOD) showing an arrearage of approximately
$65,000. When plaintiff failed to cure the default, in April 20103 CRC recorded a Notice
of Trustee’s Sale (Notice of Sale) signed by Brignac as vice-president. Brignac’s
3 Plaintiff alleges the date was March 15.
3
signature was allegedly forged. In September 2010 CRC recorded a second Notice of
Trustee’s Sale.4
In October 2010 plaintiff filed a complaint against defendants and the
mortgage brokers who obtained plaintiff’s Loan, to which the parties filed demurrers.
Plaintiff filed a first amended complaint before the hearing on the demurrers. The
parties’ demurrers to the first amended complaint were sustained with leave to amend.
Subsequently plaintiff filed the SAC alleging causes of action for fraud, to
declare the Note and Trust Deed void, breach of fiduciary duty, intentional infliction of
emotional distress, declaratory relief, quiet title, wrongful foreclosure, violation of
section 2923.5, and unfair competition, seeking restitution, damages, civil penalties,
cancellation of documents, and to enjoin foreclosure.
The court sustained the demurrer without leave to amend and, after denying
plaintiff’s motion for reconsideration, entered judgment. We will discuss only four cause
of action: wrongful foreclosure, violation of section 2923.5, cancellation of documents,
and unfair competition, because those are the ones plaintiff pursues on appeal. The
relevant allegations of these causes of action are set out below.
DISCUSSION
1. Introduction
“When reviewing a judgment dismissing a complaint after the granting of a
demurrer without leave to amend, courts must assume the truth of the complaint’s
properly pleaded or implied factual allegations. [Citation.]” (Schifando v. City of Los
Angeles (2003) 31 Cal.4th 1074, 1081.) But we do not assume the truth of speculative
allegations (Rotolo v. San Jose Sports & Entertainment, LLC (2007) 151 Cal.App.4th
4 This document was attached to defendants’ request for judicial notice filed with
the demurrer. Plaintiff filed an opposition to the request. The record contains no ruling
but we presume the request was granted because in their briefs the parties discuss
documents included in the request.
4
307, 318) or “contentions, deductions or conclusions of law” (Aubry v. Tri-City Hospital
Dist. (1992) 2 Cal.4th 962, 967). “[W]e give the complaint a reasonable interpretation,
and read it in context. [Citation.]” (Schifando, at p. 1081.) If the demurrer can be
sustained on any ground raised, we must affirm. (Ibid.)
2. Wrongful Foreclosure
The gravamen of this cause of action is the claim defendants had no
authority to record the NOD and Notice of Sale or foreclose on the Property. This is
based on several allegations, some of which are unclear or contradictory. These include:
1) the Note and deed were sold to the Trust before WaMu went into receivership and
were not included in the assets the FDIC sold to Chase; 2) Chase did not receive a
recorded assignment of the Trust Deed and was not a beneficiary thereof and thus could
not assign its interest to the Trust, in violation of section 2932.55; 3) in the absence of the
assignment of the Trust Deed to Chase, Chase could not exercise the power of sale in the
Trust Deed; 4) Chase’s assignment of the Trust Deed to the Trust in May 2009 was
invalid because the “cut-off date” for a loan to be transferred to the pool was December
1, 2006; 5) Brignac was never authorized to execute the Substitution of Trustee; 6)
Brignac’s signature on the Notice of Sale was forged; and 7) the NOD was premature
5 Section 2932.5 states: “Where a power to sell real property is given to a
mortgagee, or other encumbrancer, in an instrument intended to secure the payment of
money, the power is part of the security and vests in any person who by assignment
becomes entitled to payment of the money secured by the instrument. The power of sale
may be exercised by the assignee if the assignment is duly acknowledged and recorded.”
(Italics added.) This section does not apply to a deed of trust. (Jenkins v. JPMorgan
Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 518 (Jenkins).)
Further, plaintiff did not raise this as an issue in the argument dealing with
wrongful foreclosure in either of his briefs. Therefore, if he intended to rely on this as a
basis for reversal, the claim is forfeited. (Benach v. County of Los Angeles (2007) 149
Cal.App.4th 836, 852.)
5
because defendants failed to meet and confer with plaintiff as required under section
2923.5.6
Based on these claims, plaintiff alleges none of the defendants can prove it
owns the Note or is a beneficiary under the Trust Deed and therefore cannot lawfully
foreclose.
None of these allegations suffices to support a cause of action for wrongful
foreclosure. Preliminarily, plaintiff has not alleged there has been a sale of the Property,
generally an element of a wrongful foreclosure cause of action. (Chavez v. Indymac
Mortgage Services (2013) 219 Cal.App.4th 1052, 1062 [elements of wrongful foreclosure
cause of action are illegal or fraudulent sale of property pursuant to deed of trust, harm to
plaintiff, and plaintiff’s tender of debt amount or excuse therefrom].)
Where there has been no sale, without specific allegations of irregularity, a
plaintiff has no standing to challenge a foreclosure based on a claim the party
commencing the process is not authorized to do so.
In Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149
(Gomes), the court considered and rejected claims similar to those plaintiff raises here.
The plaintiff, who had executed a note and deed of trust and subsequently defaulted on
the note, sued for wrongful foreclosure. He alleged the note had been sold and the
current owner was unknown and had not authorized the foreclosure. In affirming the
order sustaining the demurrer, the appellate court pointed to sections 2924 through
2924k, describing them as constituting a “‘comprehensive framework for the regulation
of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust’
[citation] . . . [that] ‘cover[s] every aspect of exercise of the power of sale contained in a
deed of trust.’ [Citation.]” (Gomes, at p. 1154.)
6 Plaintiff included a separate cause of action based specifically on an alleged
violation of section 2923.5. As set out below the cause of action is insufficient. For the
same reasons it does not support a claim for wrongful foreclosure.
6
Due to the “‘exhaustive nature of this scheme, California appellate courts
have refused to read any additional requirements into the [nonjudicial] foreclosure
statute.’ [Citations.]” (Gomes, supra, 192 Cal.App.4th at p. 1154.) Gomes held there is
no authority to “interject the courts into this comprehensive nonjudicial scheme” by
allowing a party to file a suit to determine whether the party initiating the foreclosure has
been properly authorized to do so by the owner of the note. (Ibid.)
Moreover, section 2924, subdivision (a)(1) states a notice of default may be
recorded by “a ‘trustee, mortgagee, or beneficiary, or any of their authorized agents.’”
“[N]owhere does the statute provide for a judicial action to determine whether the person
initiating the foreclosure process is indeed authorized, and we see no ground for implying
such an action. [Citation.] [T]he 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.)
For the same reason, plaintiff’s claim Chase never purchased his Loan from
WaMu fails. If Chase did not buy it, it remained in the Trust.7 Further, pursuant to the
Purchase Agreement, Chase specifically purchased “all mortgage servicing rights” of
WaMu, including the right to service plaintiff’s Loan. Under section 2924, subdivision
(a)(1) Chase, as the servicer, had the right to initiate the foreclosure.
In his reply brief, plaintiff tries to overcome this fact by claiming Chase
could not act as the servicer because neither it nor the Trust owned the loan. Plaintiff
devotes pages to the argument that only a beneficiary may initiate a foreclosure. In this
case the Trust Deed does provide the Lender is the beneficiary. But this argument
conflicts with the SAC, where, by virtue of the allegation the Trust owned the Loan at the
7 If the Loan remained in the Trust, the allegation that Chase did not validly
assign the Loan to the Trust fails.
7
time the assets were transferred to Chase, plaintiff has pleaded the Trust owns the Loan.8
And Chase is the servicer.
Plaintiff points to cases that state a party may plead a wrongful foreclosure
action if the complaint alleges specific facts showing the foreclosure was not initiated by
the correct person. (Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 (Glaski);
Jenkins, supra, 216 Cal.App.4th 497, 518; Gomes, supra, 192 Cal.App.4th 1149.)
Plaintiff has not alleged any specific facts supporting such a claim and these cases do not
save plaintiff’s cause of action. Both Jenkins and Gomes refused to allow a cause of
action to proceed on facts similar to those in the instant case.
In Glaski, the plaintiff-borrowers made the same allegation as plaintiff here,
i.e., the assignments of a loan to a trust were invalid because they were made after the
closing date set out in the securitized trust agreement. The complaint alleged the
defendants could not foreclose. The court allowed this cause of action to proceed, despite
the fact the plaintiffs were not parties to the agreement, ruling, under New York law, the
trust could not accept the transfer. (Glaski, supra, 218 Cal.App.4th at pp. 1096-1097.)
Glaski has been called “an outlier” (Sandri v. Capital One, N.A. (Bankr. N.D.Cal. 2013)
___B.R. ___, ___ [2013 WL 5925655, p. *4] (Sandri) and, as set out in Sandri, most
California federal district court cases have criticized it or declined to follow it. (Ibid.)
The majority of cases hold that borrowers have no standing to sue based on
alleged noncompliance with a pooling and service agreement if they are not parties or
third party beneficiaries of the agreement. (E.g., Jenkins, supra, 216 Cal.App.4th at p.
8 Plaintiff’s reliance on Mena v. JPMorgan Chase Bank, N.A. (N.D.Cal., Sept. 7,
2012, No. 12-1257 PSG) 2012 WL 3987475 is not well taken. There the court found
WaMu had transferred the plaintiff’s note and trust deeds to WaMu Asset Acceptance
Corporation. (Id. at p. *1.) Plaintiff suggests this could have happened to his loan
because, according to Mena, WaMu often made such transfers.
We found nothing in Mena to support this last claim and it is irrelevant to the case
before us in any event. Further, it is pure speculation and not sufficient to support a
cause of action. In addition, it is contrary to the allegations in the SAC.
8
515 [borrower has no standing to enforce pooling agreement]; Hosseini v. Wells Fargo
Bank, N.A. (N.D.Cal., Aug. 9, 2013, No. C-13-02066 DMR) 2013 WL 4279632, p. *3
[the plaintiff lacked standing to challenge the process even where securitized trust
allegedly dissolved before loan transferred thereto]; Junger v. Bank of America., N.A.,
(C.D.Cal., Feb. 24, 2012, No. CV 11–10419 CAS (VBKx)), 2012 WL 603262, pp. *1, 3
[where the plaintiff not party to pooling agreement, could not challenge alleged failure to
timely transfer the note to the trust]; Almutarreb v. Bank of New York Trust Co., N.A.
(N.D.Cal., Sept. 24, 2012, No. C 12-3061 EMC) 2012 WL 4371410, p. *2 [the plaintiff
had no standing to raise claim transfer of loan beyond closing date; argument “soundly
rejected by courts”; listing similar cases].) We believe the majority view is the better
one.
As to the alleged invalidity of the Substitution of Trustee naming CRC as
trustee, the claim is immaterial. CRC was the original trustee under the Trust Deed.
And even assuming one or more of plaintiff’s allegations was sufficient,
plaintiff still failed to allege a viable wrongful foreclosure cause of action. To recover in
a wrongful foreclosure action, a plaintiff must also plead “the alleged imperfection in the
foreclosure process was prejudicial.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198
Cal.App.4th 256, 272.) “Prejudice is not presumed from ‘mere irregularities’ in the
process. [Citation.]” (Ibid.)
Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219
Cal.App.4th 75 is instructive. There, the plaintiff made allegations similar to those here.
The court affirmed an order sustaining a demurrer without leave to amend, stating,
“Absent any prejudice, the [plaintiffs] have no standing to complain about any alleged
lack of authority or defective assignment. [Citations.]” (Id. at p. 85.)
As in Siliga plaintiff has not alleged how he was prejudiced by any defect
with the assignment or that he was harmed at all. He does not contend he is not in default
under the Note and Trust Deed. In fact, he still owes the amount due under the note and
9
has been living in the Property without making any payments since his default, which
occurred sometime prior to May 2009 when the NOD was recorded. Plaintiff does not
allege the foreclosure proceedings by defendants prevented him from paying the Note or
curing his default. He does not plead another potential owner of the Loan made demand
on him for payment or would not have foreclosed upon his default. Thus, because
plaintiff has not shown prejudice, his cause of action must fail.
In his reply brief plaintiff takes an entirely different tack, raising other
issues for the first time. Preliminarily we note we need not address new issues not argued
in the opening brief. (Mansur v. Ford Motor Co. (2011) 197 Cal.App.4th 1365, 1387-
1388.) Even if we consider them on the merits, however, plaintiff does not prevail.
Relying on the fact the Property has not been sold, plaintiff claims the
Homeowners Bill of Rights and particularly section 2924, subdivision (a)(6) applies. It
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.” (Ibid.) But this statute became
effective January 1, 2013 and does not apply because the foreclosure was already
initiated before that date. (Rockridge Trust v. Wells Fargo, N.A. (N.D.Cal. 2013) ___
F.Supp.2d ___, ___ [2013 WL 5428722, p. *28] [Homeowners Bill of Rights not
retroactive].)
In a related argument plaintiff points to the 2012 National Settlement
Agreement in which Chase allegedly promised to advise a defaulting borrower it has the
right to foreclose and ensure it has an interest giving it the right to foreclose. This was
10
not pleaded and even had it been, it has no bearing on whether this cause of action is
sufficient.
Alternatively, plaintiff states that “[i]f nothing else,” he has a declaratory
relief cause of action because neither Chase nor the Trust owns the Loan. A necessary
element of a declaratory relief cause of action is the existence of an “‘actual, present
controversy over a proper subject.’ [Citation.]” (City of Cotati v. Cashman (2002) 29
Cal.4th 69, 79.) We review whether there is an actual, present controversy de novo
(County of San Diego v. State of California (2008) 164 Cal.App.4th 580, 606) and
conclude plaintiff has no viable cause of action.
Plaintiff contends it is necessary to determine whether “the proper party is
foreclosing” and asserts he can amend his pleading to allege damages. This includes the
loss of the Property to a stranger that has no power to foreclose. But the facts already
alleged, as discussed above, undercut that claim. Likewise, that the Property is unique is
not a sufficient basis to allege damages.
Plaintiff argues that “if” he was to seek a modification of the Loan or pay
off the Loan through refinancing he must deal with the owner of the Loan. He also
suggests that “if” he sells the Property he will need to convey clear title.
All of these claims are speculative. He has not asserted he attempted to or
actually seeks in the future a modification, or payoff, refinance, or sell the Property.
“[E]ven if any subsequent transfers of the promissory note were invalid, [plaintiff] is not
the victim . . . because [his] obligations under the note remain[] unchanged. . . .
[Plaintiff] . . . may not assume the theoretical claims of hypothetical transferors and
transferees for the purposes of showing a ‘controversy of concrete actuality.’ [Citation.]”
(Jenkins, supra, 216 Cal.App.4th at p. 515.)
Moreover, plaintiff continues to ignore the fact the Loan is in default and he
has not offered to cure the default or pay off the Loan. This is a fatal defect to a cause of
action for both wrongful foreclosure and declaratory relief.
11
3. Violation of Section 2923.5
Pursuant to section 2923.5 when a trustor is in default, before recording a
notice of default the lender must contact the borrower “to assess the borrower’s financial
situation and explore options for the borrower to avoid foreclosure.” (§ 2923.5, subd.
(a)(2).) The statutory requirement is satisfied, even if the lender is unable to contact the
borrower, if the lender exercises “due diligence” as defined. (§ 2923.5, subd. (e).)
Plaintiff alleges defendants did not assess his financial situation or explore
workout options and further pleads defendants did not exercise due diligence.
Defendants counter that their notice of default, as apparently judicially noticed in the trial
court, contains a declaration that due diligence was exercised and thus the demurrer was
properly sustained. We disagree.
In Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal.App.4th
1047 a similar argument was made by the defendant. The court held that although it
could take judicial notice of the existence of the declaration of due diligence, it could not
take judicial notice of its contents. (Id. at p. 1057.) The complaint alleged the
declaration was false and facts judicially noticed may not dispose of issues unless they
are undisputed. (Ibid.) Further, the declaration of due diligence was conclusory, stating
only that it had been exercised without setting out the actual actions taken. (Ibid.)
But that does not mean this cause of action can stand. The only remedy for
violation of section 2923.5 is a postponement of the foreclosure sale to comply with the
statute. (Intengan v. BAC Home Loans Servicing LP, supra, 214 Cal.App.4th at p. 1058,
fn. 4; Skov v. U.S. Bank National Assn. (2012) 207 Cal.App.4th 690, 696; Sandri, supra,
___B.R. ___, ___ [2013 WL 5925655 at p. *6].)
Here defendants have complied. As noted by the trial court at the hearing
on the demurrer and as shown in the register of actions, the parties participated in a loan
modification settlement conference. The court pointed out the parties had represented to
the court they had been in discussions to settle the case by modifying the loan and had
12
produced documents “necessary to proceed with the loan modification review.” They
had also signed a stipulation to that effect. On that basis the court sustained the demurrer
to the cause of action for violation of section 2923.5 as moot, because plaintiff had
“obtained the only relief available.” We agree with this conclusion.
Plaintiff’s arguments to the contrary have no merit. First, he claims,
without support in the record, Chase did not attend two mandatory settlement
conferences. But this directly contradicts the trial court’s statements at the hearing,
statements plaintiff’s counsel did not dispute at the time. Plaintiff also states, “Nothing
was accomplished.” But the statute does not require results, only an attempt.
Finally, we are not persuaded that a loan modification conference during
litigation is insufficient to satisfy the statute. Intengan, Skov, and Sandri limit a
borrower’s remedy to postponement of a foreclosure sale pending compliance with the
statute. Here the parties attempted to work out a solution to avoid foreclosure. This was
done before any foreclosure sale. Thus, the demurrer to the cause of action for violation
of section 2923.5 was properly sustained without leave to amend.
4. Unfair Competition
For a private plaintiff to have standing to bring a UCL claim, he must
allege an injury in fact and damages, i.e., lost money or property resulting from
defendants’ wrongful conduct. (Bus. & Prof. Code, § 17204.) To plead standing, a party
must “(1) establish a loss or deprivation of money or property sufficient to qualify as
injury in fact, i.e., economic injury, and (2) show that that economic injury was the result
of, i.e., caused by the unfair business practice or false advertising that is the gravamen of
the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.)
A review of the SAC shows plaintiff has not pleaded any damages or injury
in fact. The closest he comes is an allegation that defendants’ alleged wrongful practices
“have caused substantial harm to California consumers.” This is not sufficient to support
a UCL cause of action. (Bower v. AT&T Mobility, LLC (2011) 196 Cal.App.4th 1545,
13
1554 [damages must be “‘“concrete and particularized”’” and “‘“‘actual or imminent, not
“conjectural” or “hypothetical”’”’”]; Hutchins v. Bank of America, N.A. (N.D.Cal., Oct.
28, 2013, No. 13-cv-03242-JCS) 2013 WL 5800606, p. *13 [in wrongful foreclosure
action, complaint dismissed because the plaintiff failed to plead he suffered economic
injury caused by the defendant’s alleged wrongful conduct]; Ellis v. Bank of America,
N.A. (C.D.Cal., Oct. 28, 2013, No. CV 13-5257-CAS-(AGRx)) 2013 WL 5935412, p. *4
[insufficient allegation of damages where no foreclosure sale].)
Even plaintiff’s briefs are devoid of any claimed damages. The court correctly sustained
the demurrer to this cause of action without leave to amend.
5. Cancellation of Written Instrument
Plaintiff pleads the Trust Deed, Chase Assignment, Substitution of Trustee
(substituting CRC for CRC), NOD, and Notice of Sale “are void, as they were not
contrived to create an interest in [d]efendants.” In his brief plaintiff argues the Notice of
Sale “is an apparent forgery” (boldface omitted) because it was not “properly notarized
[or] signed” (underscoring omitted) by Brignac on behalf of Chase. He further contends
a comparison of her signatures on the Assignment of Trust Deed and Substitution of
Trustee with her signature on the Notice of Sale shows the signature on the latter was
forged. He also relies on a press release issued by a registrar of deeds in Massachusetts
and attached to his declaration in support of his motion for reconsideration, which dubs
Brignac a robo-signer. None of these contentions or arguments suffices to support a valid
cancellation cause of action.
A similar contention was made in Cerecedes v. U.S. Bankcorp (C.D.Cal.,
July 11, 2011, No. CV 11-219 CAS (FMOx)) 2011 WL 2711071. The court found the
robo-signing allegations insufficient because “pled in a conclusory fashion without any
factual support.” (Id. at p. *5.) The court also noted a more important fact that the
plaintiffs did not challenge their loan was in default or that they had received all the
contested documents, as is the case here. (Ibid.)
14
In Sandri, supra, ___B.R. ___, [2013 WL 5925655] the original lender and
trustee pooled the plaintiff’s “mortgage” and transferred it to a trust, as was allegedly
done here. When the plaintiff defaulted on her note, MERS, the alleged beneficiary and
lender’s nominee, executed an assignment of the trust deed to the defendant. The
defendant subsequently recorded a substitution of trustee. The same person signed both
of those documents. The plaintiff alleged that person was a robo-signer who lacked
authority to sign on behalf of MERS.
The court affirmed dismissal of the fraud count based on the alleged robo-
signing, because the defendant did not dispute she was in default on her loan. Sandri,
supra, ___B.R. ___ [2013 WL 5925655 at p. *3].)9
Many other cases reach the same conclusion. (E.g., Ruiz v. SunTrust
Mortgage, Inc. (E.D.Cal., July 24, 2012, No. CV F 12-0878 LJO BAM) 2012 WL
3028001, p. *8 [complaint “fails to establish how alleged ‘robo-signing’ precludes
foreclosure of the property”]; Lee v. Mortgage Electronic Registration Systems, Inc.
(D.Haw., June 27, 2012, Civil No. 10-00687 JMS BMK) 2012 WL 2467085, p. *5 [robo-
signing allegations “wholly speculative and therefore fail to state a plausible claim”].)
Moreover, plaintiff failed to plead how he was damaged by the alleged
robo-signing, as is required. (Lee v. Mortgage Electronic Registration Systems, Inc.,
supra, 2012 WL at p. *5; Nastrom v. New Century Mortgage Corp. (E.D.Cal., June 8,
2012, No. 1:11cv01998 DLB) 2012 WL 2090145, p. *5.) The majority of cases hold a
homeowner has no standing to challenge robo-signatures because the loss of property
through foreclosure, as plaintiff here alleges, is not caused by robo-signing but instead by
plaintiff’s default. (Javaheri v. JPMorgan Chase Bank, N.A. (C.D.Cal. 2012, No. 2:10-cv
9 In dicta, the court also noted MERS had “authority to assign mortgage
instruments or to appoint successor trustees, even after the original promissory note [had]
been assigned to a trust pool. [Citations.]” (Sandri, supra, ___B.R. ___ [2013 WL
5925655 at p. *3, fn. 4].)
15
08185-ODW (FFMx)) 2012 WL 3426278, p. *6 [even assuming robo-signing allegation
true, the plaintiff had no standing to raise challenge without “a concrete and
particularized injury that is fairly traceable to” the challenged document].)
This cause of action does not challenge the validity of the Note and Trust
Deed and again plaintiff does not dispute he is in default. Therefore, foreclosure would
take place regardless of whoever gave notice of the default and trustee’s sale.
6. Leave to Amend
If the trial court sustains a demurrer without leave to amend, if a plaintiff
seeks leave to amend, he must demonstrate how the complaint could be amended to state
a valid cause of action. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
“‘To satisfy that burden on appeal, a plaintiff “must show in what manner he can amend
his complaint and how that amendment will change the legal effect of his pleading.”
[Citation.] . . . The plaintiff must clearly and specifically set forth the “applicable
substantive law” [citation] and the legal basis for amendment, i.e., the elements of the
cause of action and authority for it. Further, the plaintiff must set forth factual allegations
that sufficiently state all required elements of that cause of action. [Citations.]’”
(Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1491.)
Here plaintiff has not met his burden to show how he could amend any of
the four causes of action. In addition, he has already had three opportunities to plead a
valid cause of action. As a result, there is no basis on which to grant leave to amend.
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DISPOSITION
The judgment is affirmed. Defendants are entitled to costs on appeal.
THOMPSON, J.
WE CONCUR:
O’LEARY, P. J.
IKOLA, J.
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