Case Number: KC066630 Hearing Date: June 25, 2014 Dept: O

Flores v. Quality Loan Service Corporation, et al. (KC066630)
1. Defendants Wells Fargo Bank, N.A., Mortgage electronic Registration systems, Inc., and US Bank National Association’s DEMURRER TO PLAINTIFF’S COMPLAINT

Respondent: NO OPPOSITION

2. Defendants Wells Fargo Bank, N.A., Mortgage electronic Registration systems, Inc., and US Bank National Association’s MOTION TO STRIKE

Respondent: NO OPPOSITION

TENTATIVE RULING

1. Demurrer

Defendants Wells Fargo Bank, N.A., Mortgage electronic Registration systems, Inc., and US Bank National Association’s demurrer to plaintiff’s complaint is SUSTAINED. The court will hear from Plaintiff regarding any grounds warranting leave to amend.

JUDICIAL NOTICE is taken of Defense Exhibits 1-11. (Ev. Code 452 and 453.)

1st CAUSE OF ACTION: WRONGFUL FORECLOSURE:

BANKRUPTCY:
In completing bankruptcy schedules, a debtor should list any legal claims against a creditor whose wrongful conduct caused the bankruptcy; otherwise, an action on the claim is barred. (Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1613-14.)

Exhibit 5 is Plaintiff’s Bankruptcy schedule, which failed to list any claims against demurring Defendants. Further, Plaintiff failed to submit any arguments in opposition. As such, the instant claim is barred.

STANDING:
“Civ. Code, § 2924, subd. (a)(1), states that a trustee, mortgagee, or beneficiary, or any of their authorized agents may initiate the foreclosure process… nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and the court sees no ground for implying such an action.” (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149.) Thus, Plaintiff lacks standing to challenge authorization to initiate the foreclosure process.

Plaintiff also lacks standing to challenge the securitization process. Jenkins v. JP Morgan Chase Bank, N.A. held, “Because a promissory note is a negotiable instrument, a borrower must anticipate it can and might be transferred to another creditor. An assignment merely substitutes one creditor for another, without changing the borrower’s obligations under the note…. Because a deed of trust does not convey a power of sale directly to the beneficiary-creditor, it is immaterial whether an assignment of a promissory note was properly acknowledged and recorded when a deed of trust is used to secure a debt… The transferee of a promissory note secured by a deed of trust is not a mortgagee, or other encumbrancer to whom a power of sale is given within the meaning of Civ. Code, § 2932.5, and such a transferee need not have a duly acknowledged and recorded interest in the promissory note before exercising the power of sale. (Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 515-519.)

Plaintiff is not attacking the validity of the debt. Plaintiff admits that she defaulted on her loan. Instead, she attacks the securitization process. However, Plaintiff did not suffer any prejudice resulting from any alleged defective transfer. (See, e.g. Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85 – “Siligas fail to allege any facts showing that they suffered prejudice as a result of any lack of authority of the parties participating in the foreclosure process. The Siligas do not dispute that they are in default under the note. The assignment of the deed of trust and the note did not change the Siligas’ obligations under the note, and there is no reason to believe that Accredited as the original lender would have refrained from foreclosure in these circumstances. Absent any prejudice, the Siligas have no standing to complain about any alleged lack of authority or defective assignment.”) Borrowers must allege and show prejudice as to claims of the lack of authority to transfer a promissory note. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272 – noting that it is difficult to conceive how borrowers could show prejudice from an unauthorized transfer, because borrowers must anticipate the legal possibility of note transfers to different creditors, defaults in payments on the note cause any prejudice via foreclosure, and original lenders would be the ones prejudiced by an unauthorized loss.) EVEN IF ANY SUBSEQUENT TRANSFERS OF THE PROMISSORY NOTE WERE INVALID, THE BORROWERS ARE NOT THE VICTIMS OF SUCH INVALID TRANSFERS BECAUSE THEIR OBLIGATIONS UNDER THE NOTE REMAINED UNCHANGED. Under California law, a party must show injury in order to challenge the validity of the assignment. (Bumb v. Benett (1958) 51 Cal.2d 294, 300.) Plaintiff does not allege any prejudice here, and therefore lack standing to pursue the claim.

TENDER:
Tender applies to any cause of action that is based on allegations of wrongful foreclosure or that seeks redress from foreclosure. (Abdallah v. United Sav. Bank (1996) 43 Cal.App.4th 1101, 1109; Arnolds Mgmt. Corp., 158 Cal.App.3d 579; Karlsen v. Gibralter Sav. & Loan Assn. (1974) 15 Cal.App.3d 112, 117.)

Plaintiff failed to allege tender.

Finally, the extent of a private right of action under Civ. Code, § 2923.5, is limited to obtaining a postponement of an impending foreclosure to permit the lender to comply with § 2923.5. (Mabry v. Superior Court (2010) 185 Cal. App. 4th 208, 214.)

Plaintiff’s CC 2923.5 claim fails because the sale occurred on 11/4/13. (RJN, Ex. 11.)

Demurrer is SUSTAINED.

3rd – 4th CAUSES OF ACTION: FRAUD:
The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See CC 1709.) Fraud actions are subject to strict requirements of particularity in pleading. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 216.) A plaintiff must allege what was said, by whom, in what manner (i.e. oral or in writing), when, and, in the case of a corporate defendant, under what authority to bind the corporation. (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) Fraud claims are governed by the 3-year statute of limitations per CCP 338(d).

Plaintiff’s fraud claims are time-barred. Plaintiff obtained the loan in 2005. (RJN, Ex. 1.) Therefore, the time within which to file these claims expired in 2008. Further, the claims fail for lack of specificity. Demurrer is SUSTAINED.

5th and 7th CAUSES OF ACTION: IIED and SLANDER OF TITLE:
All of the following shall constitute privileged communications pursuant to Section 47: (1) The mailing, publication, and delivery of notices as required by this section. (2) Performance of the procedures set forth in this article. (3) Performance of the functions and procedures set forth in this article if those functions and procedures are necessary to carry out the duties described in Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure. (CC 2924(d).)

Plaintiff alleges that she suffered emotional distress when she was threatened with the loss of her property. However, the performance of foreclosure proceedings is a privileged act under CC 2924(d) and CC 47. Further, the foreclosure occurred as a result of Plaintiff’s default, not any outrageous conduct on the part of Defendants. Demurrer is SUSTAINED.

6th and 9th CAUSES OF ACTION: QUIET TITLE and RESCISSION:
The complaint shall be verified and shall include all of the following: (a) A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any; (b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession; (c) The adverse claims to the title of the plaintiff against which a determination is sought; (d) The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought; (e) A prayer for the determination of the title of the plaintiff against the adverse claims. (CCP 761.020.)

Quiet Title fails because the complaint is not verified. Further, a borrower cannot quiet title without discharging his debt. (Aguilar v. Bocci (1974) 39 Cal.App.3d 475, 477.) As such, the Rescission claim is also defective. Demurrer is SUSTAINED.

2nd and 8th CAUSES OF ACTION: DECLARATORY and INJUNCTIVE RELIEF fail because they are based on the previous defective claims. Demurrer is SU
The court will hear from Plaintiff regarding any grounds warranting leave to amend.

2. Motion to strike

Defendants Wells Fargo Bank, N.A., Mortgage electronic Registration systems, Inc., and US Bank National Association’s motion to strike is GRANTED. The court will hear from Plaintiff regarding any grounds warranting leave to amend.

Plaintiff’s claims are not based on contract, which would otherwise have allowed her to recover attorneys fees. Further, Plaintiff failed to plead facts supporting recovery of punitive damages.