Case Name: Lawrence J. Hoffart, et al. v. U.S. Bank, N.A., et al.
Case No.: 2014-1-CV-264279

Currently before the Court is defendants U.S. Bank, N.A. (“US Bank”) and JPMorgan Chase Bank, N.A.’s (“Chase”) (collectively, “Defendants”) motion for summary judgment or, in the alternative, summary adjudication of each cause of action in the first amended complaint (“FAC”) of plaintiffs Lawrence J. Hoffart and Sandra M. Hoffart (collectively, “Plaintiffs”).

I. Factual and Procedural Background

On April 24, 2014, Plaintiffs filed this action, asserting claims against Defendants for: (1) cancellation of instruments pursuant to Civil Code section 3412; (2) violation of Business and Professions Code section 17200, et seq. (the “UCL”); (3) violation of Civil Code section 2924, subdivisions (a)(6) and (f)(3); (4) declaratory relief; (5) negligence; (6) violation of Civil Code sections 2924.17; and (7) violation of Civil Code sections 2923.5 and 2923.55.

On June 17, 2014, Defendants demurred to each cause of action in the complaint on the ground of failure to state sufficient facts to constitute a cause of action. The demurrer was overruled as to the first through fourth and seventh causes of action and otherwise sustained.

On September 8, 2014, Plaintiffs filed the operative FAC against Defendants, asserting five causes of action for: (1) cancellation of instruments; (2) violation of the UCL; (3) violation of Civil Code sections 2923, subdivisions (a)(6) and (f)(3); (4) declaratory relief; and (5) violation of Civil Code sections 2923.5 and 2923.55.

In the FAC, Plaintiffs allege the following: Plaintiffs are the owners of certain real property located at 15318 Elm Park, Monte Sereno, CA 95030 (the “Property”). (FAC, ¶ 2.) In August 2005, Plaintiffs refinanced a residential loan with non-party Washington Mutual (“WaMu”). (FAC, ¶ 12.) In connection with the refinance, Plaintiffs executed a note and deed of trust (“DOT”), identifying WAMU as the lender and beneficiary of the agreements. (FAC, ¶¶ 15-16.) Sometime thereafter, the note was sold to an investment trust subject to a pooling and servicing agreement. (FAC, ¶ 17.) As a result, WaMu relinquished its interest in the note. (FAC, ¶ 17.) Though Chase purchased many of WaMu’s assets after they were seized by the Federal Deposit Insurance Corporation (“FDIC”), the instant loan was not transferred because WaMu no longer had an interest in the note. (FAC, ¶ 30.)

In May 2012, Chase recorded a corporate assignment of deed of trust executed by its Vice-President, Melissa Riley (“Riley”), which transferred the DOT to US Bank. (FAC, ¶ 43.) The assignment is invalid because: (1) Chase had no interest in the underlying note; (2) Riley is not an officer of Chase and her signature is forged; and (3) the FDIC did not record an assignment of the note to Chase. (FAC, ¶ 44.) On June 15, 2012, Chase caused a notice of default (“NOD”) to be recorded. (FAC, ¶ 20.) The NOD is void because Chase never contacted Plaintiffs to explore options to avoid foreclosure. (FAC, ¶ 21.)

On February 18, 2016, Defendants filed the instant motion for summary judgment or, in the alternative, summary adjudication of each cause of action in the FAC, but inadvertently failed to file certain exhibits attached thereto. Plaintiffs filed their opposition on April 21, 2016. On April 28, 2016, Defendants filed their reply.

On May 5, 2016, the Court continued the motion to provide Plaintiffs with the opportunity to file supplemental briefing, evidence, and/or objections to address Defendants’ evidence. Plaintiffs filed supplemental objections on May 13, 2016.

On May 18, 2016, the parties reached a settlement-in-principle and, therefore, Defendants took the motion off calendar. Plaintiffs subsequently withdrew from the settlement. On June 17, 2016, the Court granted Defendants’ request to place the motion back on calendar and the motion was scheduled to be heard on July 12, 2016. On June 28, 2016, the parties entered a stipulation to continue the hearing on the motion to July 19, 2016.

II. Motion for Summary Judgment or, in the Alternative, Summary Adjudication

Defendants move for summary judgment or, in the alternative, summary adjudication of the first through fifth causes of action for cancellation of instruments, violation of the UCL, violation of Civil Code sections 2923, subdivisions (a)(6) and (f)(3), declaratory relief, and violation of Civil Code sections 2923.5 and 2923.55 on the ground that the action has no merit. (Code Civ. Proc., § 437c, subds. (a)(1), (f)(1).)

A. Summary of Evidence Presented

1. Defendants’ Evidence

In support of their motion, Defendants principally rely on the declaration of Chase employee, Joseph G. Devine, Jr. (“Devine”) as well as the attachments thereto.

In his declaration, Devine states the following: (1) he is familiar with the manner in which Chase maintains its records in the ordinary course of business; (2) Chase possesses the underlying note memorializing the subject loan as well as the DOT; (3) the note bears a blank endorsement; (4) WaMu entered into a pooling and servicing agreement (“PSA”) whereby WaMu retained the servicing rights of the subject loan; (4) on September 25, 2008, Chase acquired certain assets and loan servicing rights from WaMu, including the servicing rights of the subject loan, via the FDIC; (5) on April 20, 2012, a corporate assignment of deed of trust was executed, evidencing the assignment of the DOT to US Bank; (6) based on his review of Chase’s records, Riley was a Vice-President with Chase and had the authority to sign the Corporate Assignment of Deed of Trust; (7) U.S. Bank is the current beneficiary of the Deed of Trust and Chase is the loan servicer; (8) the NOD was recorded on June 15, 2012, which included a declaration of compliance with Civil Code section 2923.5; (9) prior to recording the NOD, Chase contacted Plaintiffs regarding the failure to make payments as required by the Note and provided resources and options for Plaintiffs to explore in order to avoid foreclosure; (10) Chase has records indicating that it made numerous telephone calls to Plaintiffs prior to the recordation of the NOD, including an in-person interaction with plaintiff Lawrence Hoffart on January 9, 2012; and (11) Plaintiffs’ payment history indicates that Plaintiffs continued making payments until October 2011.

Attached to Devine’s declaration are the following nine exhibits: (A) the adjustable rate note memorializing the loan; (B) the DOT; (C) the PSA; (D) the purchase and assumption agreement between Chase and the FDIC; (E) a default document and exception report for the loan; (F) the corporate assignment of deed of trust; (G) the NOD; (H) correspondence between Chase and Plaintiffs; and (I) Chase’s notes relating to the subject loan.

In connection with their reply, Defendants submit requests for admissions (“RFA”) served on Plaintiffs and an order deeming Plaintiffs’ RFA admitted.

2. Plaintiffs’ Evidence

In opposition to the motion, Plaintiffs submit the information provided by non-party Select Portfolio Servicing, Inc. (“SPS”) in response to a qualified written request. In particular, SPS’s response states that it is Plaintiffs’ current loan servicer and provides a copy of the promissory note. (Estavillo Decl., ¶¶ 4-5.)

B. Evidentiary Objections

Plaintiffs filed objections and supplemental objections to the evidence submitted in support of Defendants’ motion. These objections do not comply with the California Rules of Court because Plaintiffs did not submit a proposed order. (See Cal. Rules of Court, rule 3.1354 (c).) Accordingly, Plaintiffs are not entitled to a ruling on their objections. (See Hodjat v. State Farm Mut. Auto. Ins. Co. (2012) 211 Cal.App.4th 1, 8 [finding that a court has no obligation to rule on written objections that do not comply with California Rules of Court, rule 3.1354].)

C. Discussion

1. First Cause of Action

The first cause of action is for cancellation of instruments. The FAC alleges that the assignment of the DOT, notice of default, substitution of trustee, and notice of trustee’s sale are void because WaMu never sold the underlying note to Chase; (2) there is no recorded assignment of the DOT from WaMu to Chase; and (3) Riley never had the authority to execute the assignment and/or her signature was forged. (FAC, ¶¶ 44, 47.)

Defendants asserts that this cause of action fails on the following bases: (1) the instruments at issue are not void because Chase received the servicing rights to the loan from WaMu, Riley had the authority to execute the assignment of the DOT, and no recorded assignment from WaMu to Chase is necessary; and (2) Chase possesses the blank-endorsed note and original DOT.

a. Instruments Not Void

Defendants argue that the assignment of the DOT, notice of default, substitution of trustee, and notice of trustee’s sale are not void because Riley had the authority to execute the assignment of the DOT, no recorded assignment of the note from WaMu to Chase is necessary, and Chase received the servicing rights to the note from WaMu. (See Civ. Code, § 3412 [stating that an element of a cause of action for cancellation of an instrument is that the instruments are void or voidable].)

With respect to Riley’s authority to execute the assignment of the DOT and the validity of her signature, Defendants submit evidence that Riley was a Chase Vice-President and, therefore, was authorized to execute the assignment on Chase’s behalf. (Devine Decl., ¶ 9.) In addition, Defendant provide Plaintiffs’ responses to RFA Nos. 6-7, which asked Plaintiffs to admit that they have no evidence to support their allegation that Melissa Riley did not have the authority to sign the assignment or that her signature was forged. (Jaskowiak Decl. in Reply, Ex. B.) These responses were deemed admitted on March 29, 2016. (Jaskowiak Decl. in Reply, Ex. A; see Barnett v. American-Cal Medical Services (1984) 156 Cal.App.3d 260, 266 [stating that deemed admissions may be considered in granting a motion for summary judgment].) Taken together, this evidence is sufficient for Defendants to meet their initial burden of demonstrating that the assignment was not void on this basis.

With regard to the absence of a recorded assignment of the note from WaMu to Chase, there is no requirement that an assignment of the beneficial interest in a debt secured by real property must be recorded for the assignee to institute a non-judicial foreclosure pursuant to a deed of trust. (Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 122.) Accordingly, Defendants meet their initial burden of demonstrating that the assignment was not void on this basis.

With respect to Defendants’ final argument, that Chase received the servicing rights to the loan from WaMu, Defendants submit the PSA and the purchase and assumption agreement between Chase and the FDIC. The PSA provides that WAMU shall act as the servicer and administrator of all of the loans on behalf of the trust and is authorized and empowered by the trust to execute and deliver or cause to be executed and delivered such instruments of assignment or other comparable instruments. (Devine Decl., Ex. C, § 3.01.) In turn the purchase and assumption agreement between Chase and the FDIC provides that Chase purchased all of WAMU’s assets, “including all subsidiaries, joint ventures, partnerships, and any and all other business combinations or arrangements, whether active, inactive, dissolved, or terminated” and “all mortgage servicing rights and obligations of [WAMU].” (Devine Decl., Ex. D, § 3.1, p. 9.) Therefore, Defendants establish that they received the servicing rights to Plaintiffs’ loan, including the right to execute assignments. (See Brown v. Deutsche Bank National Trust Company (May 9, 2016, A144339) _ Cal.4th _