Case Number: BC536544    Hearing Date: August 12, 2014    Dept: 46

Case Number: BC536544
MAURO CRUZ ET AL VS THE BANK OF NEW YORK MELLON ET AL
Filing Date: 02/18/2014
Case Type: Mortgage Foreclosure (General Jurisdiction)

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This tentative ruling is posted at 12:40 p.m. on 8-11-2014 and the matter is set for hearing on 8-12-2014 at 8:30 a.m. Calendar #7.

If there are no parties other than Plaintiff/Petitioner, then Plaintiff/Petitioner may submit to the tentative without appearance by telephonic notification to the clerk of Dept. 46 between 8:00 a.m. and 4:30 p.m. on a date prior to the hearing or morning prior to the hearing by calling (213) 974-5665, and the court will issue the tentative ruling as the final ruling. If the other parties have appeared in the action, then the parties must first confer and all agree that the tentative ruling will be the final ruling on the matter. If the parties to the matter before the court all agree, a representative of the parties may call the clerk and submit without an appearance, and the court will issue the tentative ruling as the final ruling. If an order is required, it should be lodged directly in Dept. 46 with a copy to adverse/other parties, if any.

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08/12/2014
Conference-Case Management
DEMURRER TO COMPLAINT

DEMURRER by: The Bank of New York Mellon fka The Bank of New York, as TE for the Certificate holders of the CWABS, Inc., Asset-Backed Certificates, Series 2006-8; Bank of America, N.A.; Mortgage Electronic Registration Systems, Inc. (erroneously sued as Mortgage Electronic Registration System, Inc.) and Green Tree Servicing (erroneously sued as Green Tree Lending Services, Inc.)

TENTATIVE RULING: Unopposed demurrer is sustained with 20 days leave to amend per CCP 430.10(e) & (f). Case management conference is continued to 1/10/2015 at 8:30 a.m. in Dept. 46.

This is a wrongful foreclosure action involving Plaintiffs’ residential property located at 519 East 224 St. in Carson (hereinafter, the “subject property”).

Moving parties’ Request for Judicial Notice:

1. GRANTED as to Exhibit “1” (i.e., grant deed recorded 7/13/01);
2. GRANTED as to Exhibit “2” (i.e., deed of trust recorded 5/18/06);
3. GRANTED as to Exhibit “3” (i.e., Assignment of deed of trust [“DOT”] recorded 12/5/11);
4. GRANTED as to Exhibit “4” (i.e., Notice of Default [“NOD”] and Election to Sell Under DOT recorded 6/29/12);
5. GRANTED as to Exhibit “5” (i.e., Notice of Trustee’s [“TE’s”] Sale recorded 1/28/14).

See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 C.A.4th 256, 265.

The judicially noticeable documents reflect the following: On 7/13/01, a grant deed was recorded, in which the subject property was conveyed to Plaintiffs. (RJN, Exhibit “1”). On 5/18/06, a deed of trust was recorded on the subject property, which identified America’s Wholesale Lender as the lender, ReconTrust Company, N.A. as the trustee and MERS as the beneficiary. (Id., Exhibit “2”). On 12/5/11, an Assignment of DOT was recorded, in which MERS transferred its beneficial interest to defendant Bank of New York. (Id., Exhibit “3”). On 6/29/12, a Notice of Default and Election to Sell Under DOT was recorded by the “Law Offices of Les Zieve” (hereinafter, “Zieve Law”), as agent for the beneficiary. (Id., Exhibit “4”). On 1/28/14, a TE’s Sale was recorded by Zieve Law. (Id., Exhibit “5”).

Discussion:
Plaintiffs’ first contention is that defendants lacked authority to foreclose because the DOT assignment was recorded after the closing date identified in the PSA that governs the securitized trust into which their loan was transferred. (Complaint, ¶¶ 62-68). However, the date the assignment was recorded has no bearing on when the loan was transferred into the securitized trust. There is no requirement that an assignment of a DOT must be recorded prior to foreclosure. (See Calvo v. HSBC Bank USA, N.A. (2011) 199 C.A.4th 118, 122 [i.e., “this statutory requirement that an assignment of the beneficial interest in a debt secured by real property must be recorded in order for the assignee to exercise the power of sale applies only to a mortgage and not to a deed of trust”]).

In any event, Plaintiffs lack standing to enforce the PSA. Additionally, they have failed to allege prejudice. As the 4th District, Division 3 Court of Appeal in Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 C.A.4th 497 recognized, “even if the asserted improper securitization…occurred, the relevant parties to such a transaction were the holders (transferors) of the promissory note and the third party acquirers (transferees) of the note. ‘Because a promissory note is a negotiable instrument, a borrower must anticipate it can and might be transferred to another creditor. As to plaintiff, an assignment merely substituted one creditor for another, without changing her obligations under the note.’ (Herrera [v. Federal National Mortgage Assn. (2012)] 205 C.A.4th [1495,] at p. 1507). As an unrelated third party to the alleged securitization,…[plaintiff] lacks standing to enforce any agreements, including the investment trust’s pooling and servicing agreement, relating to such transactions. (See In re Correia (1st Cir. BAP 2011) 452 B.R. 319, 324-325 [debtors lacked standing to raise violations of pooling and service agreement].). Furthermore, even if any subsequent transfers of the promissory note were invalid, [plaintiff] is not the victim of such invalid transfers because her obligations under the note remained unchanged. Instead, the true victim may be an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note. It is also possible to imagine one or many invalid transfers of the promissory note may cause a string of civil lawsuits between transferors and transferees. [Plaintiff], however, may not assume the theoretical claims of hypothetical transferors and transferees for the purposes of showing a ‘controversy of concrete actuality.’ (See Jessin [v. County of Shasta (1969)] 274 C.A.2d [737,] at p. 742).”

Also, nothing in the comprehensive scheme set forth in Civil Code section 2924, et seq., allows a judicial action to determine whether the person initiating the foreclosure process is indeed authorized. (See Gomes v. Countrywide Home Loans. Inc.. et al. (2011) 192 C.A.4th 1149). The Fourth District, Division One Court of Appeal in Gomes confirmed that the statutory scheme does not provide for a preemptive suit challenging standing. Civil Code section 2924(a)(1) allows a trustee, mortgagee, beneficiary, or any of their agents to initiate non-judicial foreclosure. Securitization of the note does not deprive the defendants from enforcing their interest in the deed of trust. (Gomes, supra, 192 Cal.App.4th at 1154.). The Gomes Court also stated, “The recognition of the right to bring a lawsuit to determine a nominee’s authorization to proceed with foreclosure on behalf of the noteholder 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 1155).

1st COA: Declaratory Relief

Plaintiffs’ declaratory relief cause of actionis based upon the assertion that “the Deed of Trust securing their Promissory Note was not properly transferred and assigned to the securitized Trust before the closing date as required under the PSA” (Complaint, ¶ 95). This argument fails, for the reasons set forth above. It is also not available to Plaintiffs, for the reasons articulated by the Gomes court, above.

2nd COA: Violation of CA CC § 2923.5

Plaintiffs concede that they had discussions with Ds regarding their financial condition before the recording of the notice of default. (Complaint, ¶¶ 2 and 21-24). Section 2923.5 does not prohibit the recording of a notice of default while a borrower was being reviewed for a loan modification.

3rd COA: Violation of CA CC § 2923.6

Plaintiffs allege that Ds BONY and Green Tree violated CC § 2923.6(c) by recording a Notice of Trustee’s sale on 1/28/14, even though Ps had submitted a complete loan modification application to SLS. (Complaint, ¶¶ 94 and 96). This provision states, in relevant part, as follows:

“(c) If a borrower submits a complete application for a first lien loan
modification offered by, or through, the borrower’s mortgage servicer,
a mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default or notice of sale, or conduct
a trustee’s sale, while the complete first lien loan modification
application is pending….” (emphasis added).

A first lien application loan is deemed “complete” “when a borrower has supplied the mortgage services with all documents required by the mortgage servicer within the timeframes specified by the mortgage servicer.” (See CC § 2923.6(h)).

Plaintiffs concede that they did not have a complete application pending at the time of the 1/28/14 recording, as they were “told they would have to resubmit their application again.” (Complaint, ¶ 29). As such Plaintiff has not stated a cause of action under CC § 2923.6.

4th COA: Fraud

“The elements of actual fraud, whether as the basis of the remedy in contract or tort, have been stated as follows: There must be (1) a false representation or concealment of a material fact (or, in some cases, an opinion) susceptible of knowledge, (2) made with knowledge of its falsity or without sufficient knowledge on the subject to warrant a representation, (3) with the intent to induce the person to whom it is made to act upon it; and this person must (4) act in reliance upon the representation (5) to his or her damage.” 1 Witkin, Summary 10th (2005) Contracts, § 286, p. 315 (emphasis theirs).

“’”Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.”’ (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 C.A.3d 104, 109; Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 C.3d 197, 216-217; Stansfield v. Starkey (1990) 220 C.A.3d 59, 73).” Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 C.A.4th 153, 157.

“The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Archuleta v. Grand Lodge etc. of Machinists (1968) 262 C.A.2d 202, 208–209; Gautier v. General Telephone Co. (1965) 234 C.A.2d 302, 308; Mason v. Drug, Inc. (1939) 31 C.A.2d 697, 703; Sanders v. Ford Motor Co. (1979) 96 C.A.3d Supp. 43, 46; see Grossman & Van Alstyne, California Practice (2d ed. 1976) § 984, pp. 111–114.).” Id.

These Causes of Action have not been pled with the required specificity. Further the allegations do not include necessary elements of the cause of action as there is no pleading of alleged reasonable reliance or resulting damages.

5th COA: Violation of B&P Code § 17200

Plaintiffs have not set forth any facts identifying any unlawful, fraudulent, or unfair business practice committed by Defendants. Plaintiffs also appear to lack standing, as they have not alleged that they “suffered injury in fact and…lost money or property as a result of the unfair competition.” B&P Code § 17204.

6th COA: Slander of Title

“Disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes pecuniary loss. (Stalberg v. Western Title Ins. Co. (1994) 27 C.A.4th 925, 929). ‘The elements of the tort are (1) publication, (2) absence of justification, (3) falsity and (4) direct pecuniary loss.’ (Seeley v. Seymour (1987) 190 C.A.3d 844, 858). What makes conduct actionable is not whether a defendant succeeds in casting a legal cloud on plaintiff’s title, but whether the defendant could reasonably foresee that the false publication might determine the conduct of a third person buyer or lessee. (Ibid.; Wilton v. Mountain Wood Homeowners Assn. (1993) 18 C.A.4th 565, 568). The thrust of the tort of disparagement or slander of title is protection from injury to the salability of property.” Truck Ins. Exchange v. Bennett (1997) 53 C.A.4th 75, 84. The recording of the referenced documents was privileged, as per CC § 2924(d), which states as follows:

“(d) 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…”

Plaintiffs have failed to allege necessary elements of falsity or pecuniary damage. Plaintiffs have failed to allege any unprivileged activities. Thus no cause of action for slander of title has been shown.

Therefore the demurrer is sustained. Plaintiff shall be granted 20 days leave to file an amended complaint.

IT IS SO ORDERED:

Frederick C. Shaller, Judge