Filed 7/16/15 McCabe v. Wells Fargo Bank, N.A. CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
MICHAEL McCABE,
Plaintiff and Appellant, E058565
v. (Super.Ct.No. INC 1204840)
WELLS FARGO BANK, N.A., OPINION
Defendant and Respondent.
MICHAEL McCABE,
Plaintiff and Appellant, E059709
v.
GREENPOINT MORTGAGE FUNDING,
INC.,
Defendant and Respondent.
APPEAL from the Superior Court of Riverside County. John G. Evans, Judge.
Affirmed.
Michael McCabe, in pro. per., for Plaintiff and Appellant.
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Bryan Cave, Sean D. Muntz and Aileen M. Hunter, for Defendant and Respondent
Wells Fargo Bank, N.A.
Doll Amir & Eley, Hunter R. Eley and William H. Edmonson for Defendant and
Respondent GreenPoint Mortgage Funding, Inc.
Plaintiff and appellant Michael McCabe appeals from a judgment of dismissal
entered after the trial court sustained the demurrers of defendants and respondents, Wells
Fargo Bank, N.A., and GreenPoint Mortgage Funding, Inc., without leave to amend, to
McCabe’s second amended complaint. We will affirm the judgment.
BACKGROUND
McCabe’s second amended complaint (hereafter referred to as the complaint)
alleged 10 causes of action, all arising out of his claim that defendant and respondent
Wells Fargo Bank acted unlawfully in initiating a foreclosure sale of McCabe’s
residence.1 McCabe admitted that he was in default under the promissory note he
executed to secure refinancing of the existing loan on his residence and stated that he did
“not seek to obviate his financial obligation under the underlying promissory note.” He
contended that the defendants were all “strangers to his mortgage loan” who had no
authority to foreclose on his property.
1 The foreclosure was commenced on August 1, 2008, with the recording of a
notice of default. That notice was rescinded on March 9, 2010, and a new notice of
default was recorded on November 23, 2010. A notice of trustee’s sale was recorded on
February 24, 2011. The sale was postponed multiple times, and another notice of
trustee’s sale was recorded on June 12, 2012.
2
The lender on the refinancing was GreenPoint Mortgage Funding, Inc.
(GreenPoint). The deed of trust which secured the note stated that GreenPoint was the
lender, Marin Conveyancing Corporation was the trustee, and MERS (Mortgage
Electronic Registration Systems, Inc.), acting solely as a nominee for the lender and its
successors and assigns, was the beneficiary under the deed of trust.
McCabe alleged that GreenPoint securitized and sold the note to investors by
creating a securitized trust. He identified the trust as GreenPoint Mortgage Funding Trust
2006-AR2, Mortgage Pass-Through Certificates Series 2006-AR2. He alleged that Wells
Fargo was the trustee of that trust at all times relevant to the complaint. He alleged that
the trust so created “is not the owner of the mortgage and lacks standing to foreclose.”
He alleged that Wells Fargo and defendant JPMorgan Chase Bank (Chase) engaged in a
pattern and practice of falsifying loan transactions and assignments of mortgages for the
purpose of enabling their joint venturers to foreclose illegally on property and of
collecting from borrowers, including McCabe, “mortgage proceeds they had no right to
collect.” McCabe alleged that Chase was the servicer of his loan, having assumed the
servicing obligation from defendant EMC Mortgage Corporation sometime between
April, 1, 2011 and September 30, 2011. He further alleged that defendant California
Reconveyance Corporation (Cal Recon), which claims to be the trustee under his deed of
trust pursuant to a substitution of trustee executed by MERS, is a wholly owned
subsidiary of Chase. He alleged that defendant EMC Mortgage Corporation is also a
wholly owned subsidiary of Chase. He alleged, on a number of bases, that none of the
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defendants had the authority to foreclose and that they falsified documents in order to
appear to have that authority.
Although a trustee’s sale was scheduled for July 12, 2012 (see fn. 1, ante), it had
not taken place as of the date of filing the complaint.
In his first cause of action, McCabe sought a declaration that the note and deed of
trust were never properly assigned to the trust and that GreenPoint is the only entity that
has the right to collect payments or to foreclose. In his ninth cause of action, McCabe
sought a declaration as to the rights and interests of the parties to the property. He also
alleged negligence (2d cause of action; all defendants), quasi-contract (3d cause of
action; Wells Fargo, EMC, Chase & the Doe defendants); violations of Civil Code
sections 2924 et seq. (4th cause of action; all defendants); unfair business practices
against all defendants (5th cause of action; all defendants); quiet title (6th cause of action;
all defendants); slander of title (7th cause of action; all defendants); a cancellation of
instruments (8th cause of action; all defendants); accounting (10th cause of action; all
defendants).
Wells Fargo, Chase and California Reconveyance Corporation demurred to all
causes of action. The trial court sustained both demurrers without leave to amend and
entered judgments of dismissal.
Judgment was entered as to Chase and California Reconveyance Corporation on
March 14, 2013, and a separate judgment was entered as to Wells Fargo on April 2, 2013.
McCabe filed a notice of appeal on April 15, 2013. McCabe filed with this court a copy
of the April 2, 2013 judgment, but despite our request, he did not file a copy of the March
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14, 2013 judgment. Consequently, we dismissed the appeal as to Chase and ordered the
appeal to proceed only as to Wells Fargo.
After entry of judgment as to Wells Fargo and Chase, GreenPoint also demurred to
all causes of action in the second amended complaint. The trial court sustained the
demurrer without leave to amend and entered a judgment of dismissal as to GreenPoint.
McCabe filed a timely notice of appeal from that judgment.2 We later granted his motion
to consolidate the two appeals for all purposes.
LEGAL ANALYSIS
1.
THE DEMURRER WAS PROPERLY SUSTAINED WITHOUT LEAVE TO AMEND
On appeal from a judgment of dismissal following an order sustaining a demurrer,
we determine independently whether the complaint states a cause of action as a matter of
law. We assume the truth of all properly pleaded factual allegations, facts that can
reasonably be inferred from those expressly pleaded, and of matters of which the trial
court took judicial notice. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074,
1081.) Even though our review is de novo, however, we need address only those
contentions which have been adequately raised and supported in the appellant’s briefing.
2 McCabe attached a copy of the order sustaining the demurrer to his notice of
appeal. The notice of appeal states that it is taken from a judgment or order entered on
September 9, 2013. The order sustaining the demurrer was entered on September 9,
2013; the judgment was entered on August 26, 2013. However, the notice of appeal
states that it is taken from the judgment as well as from the order. Accordingly, we deem
the appeal to have been taken from the judgment rather than from the nonappealable
order. (Hill v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1695.)
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(Mendoza v. Town of Ross (2005) 128 Cal.App.4th 625, 630; Reyes v. Kosha (1998) 65
Cal.App.4th 451, 466, fn. 6.) Accordingly, we limit our review to McCabe’s specific
arguments.
McCabe first asserts that California homeowners “can sue strangers to the original
loan contracts who have committed felonies [and] falsified documents so they could
claim to have the authority to foreclose.”3 He asserts no legal authority for this
contention and no reasoned analysis, however, and we could simply disregard it. (Kim v.
Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) We choose, however, to address it
briefly.
“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.’
[Citation.] ‘These provisions cover every aspect of exercise of the power of sale
contained in a deed of trust.’ [Citation.] ‘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.’ [Citation.] ‘Because of
the exhaustive nature of this scheme, California appellate courts have refused to read any
3 Plaintiff asserts that some actions of the defendants constitute felonies and that
documents of which the trial court took judicial notice constitute admissions of those
felonies.
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additional requirements into the non-judicial foreclosure statute.’ [Citations.] [‘It would
be inconsistent with the comprehensive and exhaustive statutory scheme regulating
nonjudicial foreclosures to incorporate another unrelated cure provision into statutory
nonjudicial foreclosure proceedings.’].)” (Gomes v. Countrywide Home Loans, Inc.
(2011) 192 Cal.App.4th 1149, 1154 (Gomes).) For these reasons, the court in Gomes
held that there is no legal authority for a preemptive lawsuit challenging the authority of a
person or entity who claims to be empowered by a deed of trust to commence foreclosure
proceedings. (Id. at pp. 1154-1157.)
Some courts have held that a suit is not preemptive within the meaning of Gomes,
supra, 192 Cal.App.4th 1149, if the plaintiff alleges a specific factual basis for alleging
that the foreclosing entity did not have the authority to initiate foreclosure proceedings.
(Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 82;
Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 512.) We believe
that this holding is based on a misreading of Gomes.
Part of the reasoning in Gomes is that the nonjudicial foreclosure statutory scheme
contains no provision which permits borrowers to file civil suits to determine whether the
proper parties are foreclosing. If borrowers could file such suits, the court reasoned, the
court system would become a part of the foreclosure process. (Gomes, supra, 192
Cal.App.4th at p. 1155.) Further, the court reasoned, the plaintiff was not seeking a
remedy for misconduct; instead, the plaintiff was seeking to create an additional
requirement and force the foreclosing entity to come into court and prove its authority to
foreclose. (Id. at p. 1154, fn 5.)
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The court then distinguished federal cases which, the plaintiff asserted, recognized
a right to file such a suit.4 The court noted that none of the cases did recognize such a
right, and that all of the cases are from districts outside of California and did not apply
California law. (Gomes, supra, 192 Cal.App.4th at pp. 1155-1156.) The court then noted
that in each of those other cases, in contrast to Gomes, a specific factual basis was
identified to allege the foreclosure was not initiated by the correct party. (Id. at p. 1156.)
It did not, however, hold that the plaintiff in Gomes would have stated a valid cause of
action if he had pleaded a specific factual basis for believing that the foreclosing entity
lacked the authority to do so. On the contrary, the court went on to state, “Gomes
appears to acknowledge that California’s nonjudicial foreclosure law does not provide for
the filing of a lawsuit to determine whether MERS has been authorized by the holder of
the Note to initiate a foreclosure. He argues, however, that we should nevertheless
interpret the statute to provide for such a right because the ‘Legislature may not have
contemplated or had time to fully respond to the present situation.’ That argument should
be addressed in the first instance to the Legislature, not the courts. Because California’s
nonjudicial foreclosure statute is unambiguously silent on any right to bring the type of
action identified by Gomes, there is no basis for the courts to create such a right. We
4 The cases the court discussed are Weingartner v. Chase Home Finance, LLC
(D.Nev. 2010) 702 F.Supp.2d 1276; Castro v. Executive Trustee Services, LLC (D.Ariz.
2009, Feb. 23, 2009, No. CV-08-2156-PHX-LOA) 2009 U.S.Dist. Lexis 14134; and
Ohlendorf v. American Home Mortgage Servicing (E.D.Cal., Mar. 31, 2010, No. CIV. S-
09-2081 LKK/EFB) 2010 U.S.Dist. Lexis 31098. (Gomes, supra, 192 Cal.App.4th at
p. 1155.)
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therefore conclude that the trial court properly sustained Defendants’ demurrer to the first
and second causes of action in Gomes’s complaint.” (Id. at pp. 1156-1157.)
In Robinson v. Countrywide Home Loans, Inc. (2011) 199 Cal.App.4th 42, [Fourth
Dist., Div. Two] we held, based on our reading of Gomes, supra, 192 Cal.App.4th 1149,
and of the nonjudicial foreclosure statutes, that there is no legal basis for a preemptive
challenge to a foreclosing entity’s authority to initiate foreclosure. Perhaps there should
be, but that is for the Legislature to decide. In the absence of any persuasive argument by
McCabe, we see no reason to change our view.5
McCabe’s next four contentions (arguments B-E) are all based on the premise that
documents of which the trial court took judicial notice contain evidence which establishes
that the defendants committed felonies and engaged in fraudulent activities, thus
establishing that they do not have the authority to foreclose. Because McCabe has not
demonstrated that he can state a valid cause of action seeking to stop the foreclosure
because defendants lack the authority to foreclose, these arguments are irrelevant, and we
need not address them.
5 The issue is currently pending on review before the California Supreme Court in
Keshtgar v. U.S. Bank, N.A. (rev. granted Oct. 1, 2014, S220012). The court ordered
briefing deferred pursuant to rule 8.512(d)(2) of the California Rules of Court, pending
its consideration in Yvanova v. New Century Mortgage Corp. (rev. granted Aug. 27,
2014, S218973) of the related issue of whether, in an action for wrongful foreclosure on a
deed of trust securing a home loan, the borrower has standing to challenge an assignment
of the note and deed of trust on the basis of defects allegedly rendering the assignment
void.
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Because McCabe has failed to demonstrate the existence of a legal right to
challenge the authority of a foreclosing entity, the demurrer was properly sustained.
If the demurrer was sustained without leave to amend, we review the court’s order
denying leave for abuse of discretion. However, the burden is on the plaintiff to
demonstrate that an amendment would cure the defect. (Schifando v. City of Los Angeles,
supra, 31 Cal.4th at p. 1081.) Here, McCabe mentions, fleetingly, that he could amend
the complaint to state a cause of action, but he does not state explicitly how he could do
so, or on what legal theory. Accordingly, he has not met his burden on appeal.
2.
THE DEMURRER PROCEDURE IS NOT UNCONSTITUTIONAL
McCabe’s final argument (argument F) is that the demurrer procedure is
unconstitutional, primarily because it deprives a litigant of the right to a jury trial. This
argument is specious. A demurrer addresses the legal sufficiency of the pleading, based
on the assumption that the facts as pleaded are true. It constitutes a pure question of law
for the court, not an issue of fact for a jury to decide. (First Aid Services of San Diego,
Inc. v. California Employment Development Dept. (2005) 133 Cal.App.4th 1470, 1476.)
Accordingly, it does not implicate a litigant’s right to a jury trial. (Palmer v. Metro-
Goldwyn-Mayer Pictures (1953) 119 Cal.App.2d 456, 460.)
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DISPOSITION
The judgment is affirmed. Defendants and respondents Wells Fargo Bank, N.A.
and GreenPoint Mortgage Funding, Inc. are awarded costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
McKINSTER
Acting P. J.
We concur:
KING
J.
CODRINGTON
J.
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