Filed 11/4/15 Juntz v. Wells Fargo Bank CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
FIRST APPELLATE DISTRICT
DIVISION ONE
VERNON JUNTZ et al.,
Plaintiffs and Appellants,
A140207
v.
WELLS FARGO BANK N.A., as Trustee, (Mendocino County
etc., et al., Super. Ct. No. SCTMCVG 1361897)
Defendants and Respondents.
Plaintiffs Vernon Juntz and Jeannette Figueiredo, after defaulting on their
mortgage loan, brought this action to preemptively stop the foreclosure sale, alleging
irregularities in the handling of their loan and in the foreclosure process. We agree with
the trial court that plaintiffs have not stated, and cannot state, any claim for relief. We
therefore affirm the trial court’s judgment of dismissal following defendants’ demurrers.
BACKGROUND
Countrywide Home Loans Inc. (Countrywide), acting under that name and one of
its fictitious names, America’s Wholesale Lender (Wholesale), made a $1,299,000
mortgage loan to plaintiffs secured by plaintiffs’ Mendocino County home.
The November 2006 deed of trust names as beneficiary Mortgage Electronic
Registration Systems, Inc. (MERS), which is to act solely as the nominee of the lender
and its successors. The loan was purportedly transferred into the Harborview Mortgage
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Loan Trust 2006-12 (Harborview Trust), the trustee of which is Wells Fargo Bank, N.A.
(Wells Fargo).
Approximately five years later, in April 2011, plaintiffs apparently stopped
making loan payments. A year and a half after that, in December 2012, National Default
Servicing Corporation, acting for Select Portfolio Servicing (Portfolio), recorded a notice
of default.
To stave off foreclosure, plaintiffs sued Wholesale, Wells Fargo, Harborview
Trust, Countrywide, Portfolio, and MERS. Plaintiffs asserted Countrywide’s loan terms
were vague, inconspicuous, and illegal, and that Countrywide shirked its duty to fully
check on plaintiffs’ finances and thereby learn plaintiffs would be unable to shoulder the
debt. Plaintiffs also asserted defects in the “securitization” process that purportedly
transferred their loan to the other defendants.
Plaintiffs asserted numerous causes of action: (1) lack of standing to foreclose;
(2) fraud in the concealment; (3) fraud in the inducement; (4) intentional infliction of
emotional distress; (5) slander of title; (6) quiet title; (7) breach of contract;
(8) declaratory relief; (9) violation of the federal Truth in Lending Act (TILA);1
(10) violation of the federal Real Estate Settlement Procedures Act (RESPA);2
(11) rescission; (12) violation of California Foreclosure Reduction Act3; and
(13) violation of Consumer financial protection bureau regulations.
Defendants demurred. The trial court sustained the demurrers as to all causes of
action without leave to amend and entered a judgment of dismissal. Plaintiffs timely
appealed, challenging the trial court’s ruling on all causes of action except the seventh,
for breach of contract.
1
Title 15 United States Code section 1601 et seq. and title 12 Code of Federal
Regulations part 226 (2015).
2
Title 12 United States Code section 2601 et seq.
3
Code of Civil Procedure section 2924.18.
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DISCUSSION
Standard of Review
“We review de novo the trial court’s order sustaining a demurrer.” (Cansino v.
Bank of America (2014) 224 Cal.App.4th 1462, 1468 (Cansino).) Our only task is to
determine whether plaintiffs’ complaint states a cause of action. (Gentry v. eBay, Inc.
(2002) 99 Cal.App.4th 816, 824.) We accept as true all well-pleaded allegations, and we
will reverse the trial court’s order of dismissal if the factual allegations state a cause of
action on any available legal theory. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6
(Evans); Cansino, at p. 825.) We treat respondents’ demurrer as admitting all properly
pleaded material facts, but not contentions, deductions, or conclusions of fact or law.
(Evans, at p. 6.) We also consider matters that may be judicially noticed, and a
“ ‘ “complaint otherwise good on its face is subject to demurrer when facts judicially
noticed render it defective.” ’ ” (Ibid.)
Where, as here, “the trial court sustains a demurrer without leave to amend, we
review the determination that no amendment could cure the defect in the complaint for an
abuse of discretion. [Citation.] The trial court abuses its discretion if there is a
reasonable possibility that the plaintiff could cure the defect by amendment. [Citation.]
The plaintiff has the burden of proving that amendment would cure the legal defect, and
may meet this burden on appeal. [Citations.]” (Cansino, supra, 224 Cal.App.4th at
p. 1468.)
We evaluate each of plaintiffs’ causes of action, except the seventh, which
plaintiffs no longer pursue. We conclude plaintiffs have not stated, and cannot state, any
claim for relief.
First and Eighth Causes of Action: Declaratory Relief to Stop Foreclosure
Plaintiffs seek a declaratory judgment prohibiting foreclosure because of alleged
irregularities in the foreclosure process. Plaintiffs alleged there is no documentary
evidence showing their note and deed of trust were properly transferred to the
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Harborview Trust, and so, plaintiffs claim, none of defendants has rights in the note or
deed of trust, and none has the right to foreclose.
It is now well established that a defaulting borrower has no right, on a mere hope
or hunch, to preemptively test in court whether an entity conducting a nonjudicial
foreclosure in fact has authority to foreclose. (Gomes v. Countrywide Home Loans, Inc.
(2011) 192 Cal.App.4th 1149, 1154 (Gomes) [“Nothing in the statutory provisions
establishing the nonjudicial foreclosure process suggests that such a judicial proceeding
is permitted or contemplated.”]; Jenkins v. JPMorgan Chase Bank, N.A. (2013)
216 Cal.App.4th 497, 513 (Jenkins ) [allowing a “preemptive” action “would result in the
impermissible interjection of the courts into a nonjudicial scheme enacted by the
California Legislature”].)
When loan and default are evident, hypothetical disputes between those
transferring or securitizing the loan do not create an actual controversy between the
defaulting borrower and the foreclosing entity. Thus, a borrower cannot halt the
nonjudicial foreclosure process with boilerplate allegations and condemnatory rhetoric
about the evils of the banks’ creation of securitized loan investment vehicles and thereby
put the burden on the foreclosing entity to establish in court its right to proceed with a
nonjudicial foreclosure. (Jenkins, supra, 216 Cal.App.4th at pp. 512, 515.) A
“preemptive” cause of action “ ‘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 p. 513, quoting Gomes, supra, 192 Cal.App.4th at
p. 1155.) Indeed, here, plaintiffs have remained in their home since mid-2011—over four
years—without making any loan payments.
Some courts have hinted a borrower may pursue preemptive declaratory relief if
the borrower can “identif[y] a specific factual basis for alleging that the foreclosure was
not initiated by the correct party.” (Gomes, supra, 192 Cal.App.4th at pp. 1155–1156
[distinguishing three federal trial court cases and finding instant suit speculative], italics
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omitted; but see Jenkins, supra, 216 Cal.App.4th at pp. 512–513 [indicating preemptive
wrongful foreclosure cases are categorically banned and, thus, suggesting doubt as to
whether there is any viable “Gomes exception”].) In this case, however, plaintiffs have
neither made nor proposed allegations identifying a specific factual basis for believing
the foreclosure was initiated by the wrong party. All plaintiffs have proffered is a generic
assertion of missing recorded documentation. Yet, it is established under California law
that a debt secured by a deed of trust can be assigned without recordation of any
document (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272
(Fontenot)) and that recordation is not required for the assignment of a beneficial interest
in a deed of trust to be effective (Haynes v. EMC Mortgage Corp. (2012)
205 Cal.App.4th 329, 332–336).
Second Cause of Action: Fraud in Concealment
Plaintiffs allege defendants concealed that the mortgage loan would be securitized.
But paragraph 20 of the deed of trust, of which the trial court took judicial notice,
actually informed plaintiffs that the “Note or a partial interest in the Note (together with
this Security Instrument) [could] be sold one or more times without prior notice . . . .”
(See Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751–752
[contradicted allegations in pleading may be disregarded].)
Also, plaintiffs did not allege, or suggest how they could allege, any plausible
harm from being unaware of possible future plans to securitize the loan. It is undisputed
plaintiffs owe payments on the loan to whoever owns the loan. (See Fontenot, supra,
198 Cal.App.4th at p. 272 [“As to plaintiff, an assignment merely substituted one creditor
for another, without changing her obligations under the note.”].) Further, the omission of
a warning of possible securitization is not a misstatement of current fact, but at best an
omission of a prediction of future fact. Opinions about the future are not actionable
fraud. (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606.) Finally,
plaintiffs do not allege any defendant owed them a duty to explain the possible
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securitization. Plaintiffs claim they could so allege if given the chance, but do not
explain why any such duty should exist under California law.
Third Cause of Action: Fraud in the Inducement
In plaintiffs’ fraudulent inducement cause of action, they allege defendants
misrepresented their authority to foreclose and their status as owners of the note.
Detrimental reliance, however, is an element of a fraud claim (Small v. Fritz Companies,
Inc. (2003) 30 Cal.4th 167, 173), and plaintiffs have not alleged it with the particularly
required (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 234
[“ ‘ “Every element of the cause of action for fraud must be alleged in the proper manner
(i.e., factually and specifically), and the policy of liberal construction of the pleadings . . .
will not ordinarily be invoked to sustain a pleading defective in any material
respect.” ’ ”].) The reliance alleged in the complaint—that plaintiffs chose to enter the
loan—is nonsensical, as the alleged misrepresentations concern post-loan activities. Nor
have plaintiffs offered any alternative allegations of detrimental reliance sufficiently
specific to survive a demurrer.
Fourth Cause of Action: Intentional Infliction of Emotional Distress
Plaintiffs allege defendants intentionally inflicted emotional harm by attempting to
wrongfully foreclose on their home. As discussed in connection with other causes of
action, plaintiffs have not, and cannot, allege any predicate cause of action for wrongful
foreclosure. Nor have they alleged any specific conduct during the ongoing “loan
agreement” dispute “that could be considered ‘outrageous.’ ” (Wilson v. Hynek (2012)
207 Cal.App.4th 999, 1009.) For instance, “[t]here are no allegations that in conducting
the foreclosure proceedings any of the defendants threatened, insulted, abused or
humiliated [her].” (Ibid.) Moreover, a corporation’s pursuit of economic advantage does
not generally subject it to intentional infliction claims. (See Trerice v. Blue Cross of
California (1989) 209 Cal.App.3d 878, 885.) Given that no further allegations have been
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proffered on appeal, the intentional infliction claim was also properly dismissed with
prejudice.
Fifth Cause of Action: Slander of Title
Plaintiffs base their slander of title cause of action on publication of the notices
that must precede a foreclosure under Civil Code section 2924. Civil Code section 2924,
however, provides that the “mailing, publication, and delivery of notices as required by
this section” “constitute privileged communications pursuant to Section 47.” (Civ. Code,
§ 2924, subd. (d).)
Most recently, Civil Code section 2924, subdivision (d), has been held to extend
only the qualified privilege of section 47, subdivision (c) applicable to “a communication,
without malice, to a person interested therein,” not the absolute litigation privilege of
subdivision (b), which would apply regardless of malice. (Kachlon v. Markowitz (2008)
168 Cal.App.4th 316, 335–341 (Kachlon); but see Garretson v. Post (2007)
156 Cal.App.4th 1508, 1517 [nonjudicial foreclosure activity constituted privileged
communications under the litigation privilege].)
Assuming plaintiffs had to allege malice, their effort was inadequate. “For this
purpose, malice is defined as actual malice, meaning ‘ “that the publication was
motivated by hatred or ill will towards the plaintiff or . . . that the defendant lacked
reasonable grounds for belief in the truth of the publication and therefore acted in
reckless disregard of the plaintiff’s rights.” ’ ” (Kachlon, supra, 168 Cal.App.4th at
p. 336, italics omitted.) All plaintiffs alleged was “malice” and, in a blanket fashion with
no specific facts, that defendants had pre-publication knowledge of falsity. Such
conclusory allegations are not sufficient to bring a nonjudicial foreclosure to a halt.
Even if we were to assume plaintiffs’ generic “malice” allegations were sufficient,
plaintiffs also failed to allege any “proximately caused pecuniary loss, an essential
element of the cause of action” (M.F. Farming, Co. v. Couch Distributing Co., Inc.
(2012) 207 Cal.App.4th 180, 199), nor did they allege reliance by a third party to
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plaintiffs’ detriment (see Smith v. Commonwealth Land Title Ins. Co. (1986)
177 Cal.App.3d 625, 630). The reliance and harm plaintiffs allege and stick to in their
appellate briefing—reliance by credit agencies and harm to their credit scores—arise
from their default on the loan, which is undisputed and also unrelated to any claimed
falsity. (See Jenkins, supra, 216 Cal.App.4th at p. 532.) Any falsity about who owns the
loan would have no impact whatsoever on plaintiffs’ delinquency or credit ratings.
Sixth Cause of Action: Quiet Title
“Quieting title is the relief granted once a court determines that title belongs in
plaintiff. . . . In other words, in such a case, the plaintiff must show he has a substantive
right to relief before he can be granted any relief at all.” (Leeper v. Beltrami (1959)
53 Cal.2d 195, 216.) Plaintiffs’ quiet title claim is therefore dependent on their other
claims. Since these fail, the quiet title claim also necessarily fails.
Additionally, a borrower may not “quiet title against a secured lender without first
paying the outstanding debt on which the mortgage or deed of trust is based.” (Lueras v.
BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86 (Lueras).) “Allowing
plaintiffs to recoup the property without full tender would give them an inequitable
windfall, allowing them to evade their lawful debt.” (Stebley v. Litton Loan Servicing,
LLP (2011) 202 Cal.App.4th 522, 526; see also Gavina v. Smith (1944) 25 Cal.2d 501,
506 [“One who violates his contract cannot have recourse to equity to support that very
violation.”].) Plaintiffs have not alleged they have tendered or paid the debt, and have
not asserted they could so allege, so the quiet title action fails for that reason, as well.
Plaintiffs’ citation to a TILA case, Botelho v. U.S. Bank, N.A. (N.D. Cal. 2010)
692 F.Supp.2d 1174, 1181, is inapposite. Tender is not an “extra” or extraneous element
of a quiet title claim. (Ibid.)
Finally, a quiet title claim must generally be verified (Code Civ. Proc., § 761.020),
something plaintiffs have not done or offered to do.
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Ninth through Eleventh Causes of Action: TILA, RESPA, Rescission
All agree the TILA, RESPA, and rescission causes of action, premised on
nondisclosures near the time of selling the loan, are time-barred unless plaintiffs can
invoke equitable tolling. (See 15 U.S.C. §§ 1640(e), 1635(f); 12 U.S.C. § 2614; Code
Civ. Proc., § 337.)
“Equitable tolling ‘halts the running of the limitations period so long as the
plaintiff uses reasonable care and diligence in attempting to learn the facts that would
disclose the defendant’s fraud or other misconduct.’ [Citation.]” (Sagehorn v. Engle
(2006) 141 Cal.App.4th 452, 460; see also Cervantes v. Countrywide Home Loans, Inc.
(9th Cir. 2011) 656 F.3d 1034, 1045 [equitable tolling applies “ ‘in situations where,
despite all due diligence, the party invoking equitable tolling is unable to obtain vital
information bearing on the existence of the claim’ ”].) “ ‘To establish that equitable
tolling applies, a plaintiff must prove the following elements: fraudulent conduct by the
defendant resulting in concealment of the operative facts, failure of the plaintiff to
discover the operative facts that are the basis of its cause of action within the limitations
period, and due diligence by the plaintiff until discovery of those facts. [Citations.]’
[Citation.]” (Sagehorn v. Engle, supra, 141 Cal.App.4th at pp. 460–461.)
As to tolling, plaintiffs offer only the conclusory allegation that defendants failed
“to effectively provide the required disclosures.” This is wholly inadequate, not even
coming close to identifying defendants’ fraud or plaintiffs’ diligence. (See Hubbard v.
Fidelity Federal Bank (9th Cir. 1996) 91 F.3d 75, 79 [declining to toll TILA statute of
limitations when “nothing prevented [the mortgagor] from comparing the loan contract,
[the lender’s] initial disclosures, and TILA’s statutory and regulatory requirements”].)
As to the RESPA claim, in particular, plaintiffs have failed to allege sufficient
damages as a result of defendants failing to properly provide any information. Plaintiffs
claim harm to their credit, but it was the loan default, not any RESPA violation, that
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harmed their credit. (See Jenkins, supra, 216 Cal.App.4th at pp. 532–533 [affirming
dismissal of RESPA claim on this ground].)
Finally, as to the purported rescission claim, “[r]escission is not a cause of action;
it is a remedy” (Nakash v. Superior Court (1987) 196 Cal.App.3d 59, 70), imposed, for
example, to avoid a contract procured by fraud (Filet Menu, Inc. v. C.C.L. & G., Inc.
(2000) 79 Cal.App.4th 852, 861–862) or when a party has materially breached a contract
(Crofoot Lumber, Inc. v. Thompson (1958) 163 Cal.App.2d 324, 334–335). (See Civ.
Code, § 1689.) Because rescission is not a cause of action, and because plaintiffs have
not stated causes of action for fraud or breach of contract, plaintiffs demand for a
rescission remedy is also unavailing.
Twelfth Cause of Action: Foreclosure Reduction Act
The Foreclosure Reduction Act, also known as the Homeowners’ Bill of Rights
(HBOR), became effective on January 1, 2013 (Sen. Bill No. 900 (2011–2012 Reg.
Sess.); Assem. Bill No. 278 (2011–2012 Reg. Sess.); Cal. Const., art. IV, § 8, subd.
(c)(1); see Lueras, supra, 221 Cal.App.4th at p. 86, fn. 14), after the default under
plaintiffs’ deed of trust was recorded in December 2012. “[U]nless there is an ‘express
retroactivity provision, a statute will not be applied retroactively unless it is very clear
from extrinsic sources that the Legislature . . . must have intended a retroactive
application’ [citation].” (Myers v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828,
841, italics omitted.) The HBOR does not state that it has retroactive effect (Rockridge
Trust v. Wells Fargo, N.A. (N.D. Cal. 2013) 985 F.Supp.2d 1110, 1152), and plaintiff s
have not identified any extrinsic sources indicating the Legislature intended that it have
one.
Plaintiffs, on appeal, argue they seek prospective application of the law. They
assert they “still have rights under the HBOR should [any defendant] attempt to move
forward with the foreclosure while their application for a loan modification is pending.”
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Plaintiffs are not claiming a current violation, but hypothesizing a future one that is not
proper for adjudication at this time. (People v. Slayton (2001) 26 Cal.4th 1076, 1084.)
Thirteenth Cause of Action: Federal Regulations
The federal regulation cited, title 12 Code of Federal Regulations part 1024 et seq.,
simply fleshes out the requirements to be imposed under RESPA. Plaintiffs purported
cause of action for violation of these regulations is nothing more than a recast RESPA
claim, and we reject it for the reasons we rejected that claim.
DISPOSITION
The judgment is affirmed. Respondents to recover costs on appeal.
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_________________________
Banke, J.
We concur:
_________________________
Humes, P. J.
_________________________
Margulies, J.
A140207, Juntz v. Wells Fargo Bank N.A.
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