JUDGE ROLF M. TREU
DEPARTMENT 58
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Hearing Date: Tuesday, March 25, 2014
Calendar No: 9
Case Name: The Oganes Dzhivalegyan Revocable Trust v. Quality Loan Service Corporation, et al.
Case No.: BC517020
Motion: Demurrer
Moving Party: Defendants Bank of America, N.A. and Federal Home Loan Mortgage Corporation
Responding Party: Plaintiff The Oganes Dzhivalegyan Revocable Trust
Notice: Improperly served opposition; untimely reply

Tentative Ruling: Demurrer is sustained as to the 3rd COA without leave to amend, and is otherwise sustained with 15 days leave to amend.
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Background –
On 8/2/13, Plaintiff The Oganes Dzhivalegyan Revocable Trust by and through co-trustee Oganes Dzhivalegyan filed this action against Defendants Quality Loan Service Corporation; BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing LP; and Federal Home Loan Mortgage Corporation arising out of the non-judicial foreclosure of real property.

On 1/6/14, in response to but prior to the hearing on a demurrer, Plaintiff filed a First Amended Complaint which asserts causes of action for (1) wrongful foreclosure, (2) declaratory relief, (3) slander of title, (4) injunctive relief, and (5) compensatory and punitive damages. Each COA is based on allegations that that the assignment of deed of trust and substitution of trustee is forged (FAC ¶¶ 9-10) and that none of the Defendants or foreclosing entities were ever holders of the promissory note (id. ¶ 12).

Demurrer –
Bank of America, N.A. (successor by merger to BAC Home Loans) and Federal Home Loan Mortgage Corporation (collectively “Demurring Defendants”) demur to the FAC.

1. Procedural Deficiencies
Demurring Defendants’ correctly note that Plaintiff’s opposition was improperly served on 3/11/13 by mail which does not comply with CCP § 1005(c). Reply p. 1 n.1. Although the Court notes that Demurring Defendants’ reply is late because it was filed on 3/19/14 (CCP § 1005(b)), the Court finds no prejudice in considering the improperly served opposition if Demurring Defendants’ substantive reply is also considered. Nevertheless, the Court admonishes Plaintiff’s counsel, and in the future, the Court may decline to consider noncompliant papers.

2. Request for Judicial Notice
Demurring Defendants request judicial notice of various recorded documents as to the subject property: grant deeds, deed of trust, notice of default, assignments of deed of trust, substitution of trustee, notices of trustee’s sale, and the trustee’s deed upon sale. The RJN is granted.

3. Standing
Demurring Defendants argue that the Plaintiff does not have standing because it only has a 1/3 interest in the property (RJN Ex. I) that is subject to the loan and deed of trust (RJN Exs. A-B). However, standing only requires a real party in interest. Gantman v. United Pac. Ins. Co. (1991) 232 Cal.App.3d 1560, 566. Plaintiff does not assert any breach of contract claim on either the loan or deed of trust; and Demurring Defendants’ RJN shows that Plaintiff has acquired an interest in the property. Even though this interest was conveyed through a grant deed, that Plaintiff’s interest is subject to the loan and deed of trust (see Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 122-23) does not mean that Plaintiff has no standing to bring claims pertaining to the property.

4. Indispensable Parties
Demurring Defendants correctly note that Plaintiff has only a one-third interest in the property, and that Elza Dzhivalegyan and Mari Erkatpashyan have not been joined (see CCP § 389) which results in a defect of parties (see CCP § 430.10(d)). An indispensable party is one whose rights must necessarily be affected by the judgment in the action. See CCP § 389(a); Washington Mut. Bank v. Blechman (2007) 157 Cal.App.4th 662, 667-69. Plaintiff asserts claims directed at the foreclosure of the property. These claims would affect the interests of Elza and Mari with respect to the property. Therefore, Elza and Mari are indispensable parties that have not been joined. The demurrer is sustained for failure to join indispensable parties.

5. Tender
Demurring Defendants correctly note that Plaintiff ails to allege credible tender to challenge the foreclosure process. Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526. Plaintiff asserts that tender is not required because the California Homeowner Bill of Rights (“HBOR”) does not require tender and because Plaintiff attacks the validity of the debt. FAC p. 8:21-9:11.

However, simply because HBOR does not include a tender requirement fails to establish that HBOR intended to override the long-standing equitable requirement of tender. Additionally, although an attack on the validity of the debt is one of the exceptions to the tender rule (see, e.g., Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112-13), Plaintiff alleges no facts that attack the validity of the debt. The demurrer is sustained for failure to allege tender or facts supporting an exception to the tender requirement.

6. Wrongful Foreclosure
Demurring Defendants correctly note that Plaintiff’s theory requiring holding the promissory note has been rejected. Debrunner v. Deutsche Bank Nat’l Trust Co. (2012) 204 Cal.App.4th 433, 440. Additionally, Demurring Defendants correctly note that Plaintiff fails to allege any facts that the assignment of deed of trust and substitution of trustee are fraudulent: at most, Plaintiff only alleges that they were “robo-signed” (FAC p. 4:8-5:8). However, Plaintiff fails to allege any resulting prejudice. Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272. Notably, Plaintiff cannot sue to challenge Defendants’ authority to foreclose. Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1155. Therefore, the demurrer is sustained as to the 1st COA for failure to allege sufficient facts.

7. Slander of Title
Demurring Defendants correctly note that conduct taken in connection with non-judicial foreclosure is privileged. Civil Code § 2924(d)(1)-(2); Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 333-34 Therefore, the demurrer is sustained as to the 3rd COA.

8. HBOR
Plaintiff’s FAC and opposition cite and rely on HBOR. However, Demurring Defendants correctly note that HBOR became effective on 1/1/13. A statute will not apply retroactively in the absence of express language indicating so. Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1209.

The FAC is based on conduct taken in 2010 (FAC ¶¶ 9-10) and the RJN establishes that the notice of default and notices of trustee sale were recorded prior to that date (RJN Exs. C, F-H). Although Plaintiff alleges that the trustee sale occurred on 3/18/13 (FAC p. 4:1-7; see also RJN Ex. N), Plaintiff fails to allege any facts that it submitted a first lien loan modification after HBOR came into effect (Civil Code § 2923.6(c)). Therefore, Plaintiff fails to establish that HBOR applies.

9. Other Claims
Plaintiff’s declaratory relief claim is dependent on the other COAs and is deficient for the same reasons as stated above. The demurrer is sustained as to the 2nd COA.

Demurring Defendants correctly note that injunctive relief is a remedy and not a cause of action. Shamsian v. Atlantic Richfield Co. (2003) 107 Cal.App.4th 967, 984-85. Additionally, Plaintiff’s 5th COA for damages is also a remedy and not a cause of action. Therefore, the demurrer is sustained as to the 4th and 5th COAs with leave to amend to assert these remedies as appropriate.

10. Leave to Amend
Plaintiff requests leave to amend. With the exception of the 3rd COA for Slander of Title, the Court will grant leave to amend because this is the first challenge to the pleadings addressed by the Court.