Case Name: Neal v. First American Title Insurance Co., et al.
Case No.: 19CV349019

This is an action for wrongful pre-foreclosure. On May 17, 2007, plaintiff Ralph Neal (“Plaintiff”) obtained a loan in the amount of $1,000,000 from Washington Mutual Bank, FA, secured by a deed of trust against real property at 1588 Calco Creek Drive in San Jose. (See complaint, exh. A.) On November 4, 2010, an assignment of the deed of trust on the subject property was recorded with the Santa Clara County Recorder, stating that the deed of trust was assigned to Bank of America, National Association, successor by merger to LaSalle Bank NA as trustee for WaMu Mortgage Pass-Through Certificates Series 2007-OA6 Trust. (See complaint, exh. B.) On April 19, 2018, a grant deed was recorded with the Santa Clara County Recorder, granting Plaintiff’s interest in the property to himself and Edward J. Perales (“Perales”) as tenants in common. (See Def.’s request for judicial notice, exh. C.) Also recorded that day is a notice of option contract for sale and purchase between himself and Perales in the amount of $300. (See Def.’s request for judicial notice, exh. D.) On May 30, 2019, a notice of default was recorded against the subject property. (See complaint, ¶ 30, exh. C.) On June 17, 2019, Plaintiff filed the complaint against defendants First American Title Insurance Co. (“FATIC”), U.S. Bank N.A., successor trustee to Bank of America, N.A., successor in interest to La Salle Bank, N.A. as trustee on behalf of the holders of WAMU Mortgage Pass-Through Certificates Series 2007-A06 (“US Bank”), JP Morgan Chase, and Select Portfolio Servicing, Inc. (“SPS”), asserting causes of action for:

1) Cancellation of notice of default;
2) Revocation of void assignments;
3) Declaratory relief; and,
4) Injunctive relief.

Defendants SPS and US Bank demur to each of the causes of action, asserting that the complaint fails to state facts sufficient to constitute a cause of action against them and Plaintiff fails to join an indispensable party, Perales.

Perales is an indispensable party.

Demurring defendants SPS and US Bank (collectively, “demurring defendants”) demur to the entire complaint on the ground that Plaintiff has failed to join indispensable party Perales. Code of Civil Procedure section 430.10, subdivision (d) states that a defect of parties is a proper ground for demurrer. Here, as Defendants assert, if Perales is not joined, his absence would subject defendants to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. (See Code Civ. Proc. § 389, subd (a); see also Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662, 667 (stating that “[a] person is an indispensable party to litigation ‘if his or her rights must necessarily be affected by the judgment’”); see also In re Marriage of Ramirez (2011) 198 Cal.App.4th 336, 344 (stating same).) Plaintiff’s confusing opposition does not address the issue or even acknowledge Perales’ interest, instead accusing demurring defendants’ counsel of lacking the authority to respond, and accusing Defendants of various crimes. The demurrer is SUSTAINED on this ground.

Plaintiff lacks standing to challenge the assignment.

Plaintiff alleges that the assignment was unlawfully made due to the alleged fact that “there are several material inconsistencies and inaccuracies.” (Complaint, ¶ 20.) For example, “[a]s a Seller, Depositor and/or Servicer, WAMU should have had possession of documents and other information concerning Plaintiff’s mortgage loan in any of the Governing Documents and or on in any corresponding Trust.” (Complaint, ¶ 21.) Plaintiff also alleges that the signature of Colleen Irby was robo-signed. (See complaint, ¶ 24.) Additionally, “alleged transfers, assignments of the subject loan were subsequently pretentiously and unlawfully made and that due to the pretentious chain of assignments, it is now unknown and doubtful who is the current lender/beneficiary/assignee with legal authority and standing regarding the mortgage on subject property.” (Complaint, ¶ 25.)

The complaint does not allege that the foreclosure sale has occurred. Here, as Defendants argue, Plaintiff lacks standing to pursue these theories regarding the assignment. (See Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814 (Plaintiff alleged that deed of trust was assigned in an untimely manner and thus void, and that the signature on the assignment document was forged or robo-signed, and court stated that “Saterbak lacks standing to pursue these theories… California courts do not allow such preemptive suits because they ‘would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature’”); see also Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 815-820 (stating “plaintiff homeowners lack standing to challenge the validity of robo-signatures… plaintiff lacks standing to challenge the assignment of her loan and deed of trust”); see also Kan v. Guild Mortgage Co. (2014) 230 Cal.App.4th 736, 743-745 (stating that “[b]ecause California’s nonjudicial foreclosure statutes provide Kan with no basis to challenge the authority of the entity initiating the foreclosure process, respondents’ demurrer was properly sustained”); see also Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1156 (stating that “California’s nonjudicial foreclosure law does not provide for the filing of a lawsuit to determine whether MERS has been authorized by the holder of the Note to initiate a foreclosure”).) In opposition, again, Plaintiff fails to articulate any basis for standing to challenge the assignment, instead accusing Defendants of crimes, including “illegal insider trading of controlled substances,” and “sex trafficking of contraband.” As Plaintiff fails to demonstrate how the complaint may be amended, the demurrer to the complaint on the ground of a lack of standing is SUSTAINED on this ground as well.

The assignment is not void for a lack of possession of the note.

Although Plaintiff’s complaint is not a paragon of clarity, it appears that he alleges that the assignment—and consequently, the notice of default—are void because Defendants did not have physical possession of the underlying promissory note. However, as demurring defendants argue, “nothing in the applicable statutes that [govern nonjudicial foreclosure] preclude[] foreclosure when the foreclosing party does not possess the original promissory note.” (Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440.) Again, Plaintiff fails to address this argument in opposition as well. To the extent that the complaint is predicated on the theory that the assignment is void due to Defendants’ failure to physically possess the note, the demurrer is SUSTAINED on this ground as well.

As stated above, Plaintiff fails to demonstrate how the complaint may be amended as against demurring defendants. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636; see also Hendy v. Losse (1991) 54 Cal.3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) In fact, Plaintiff has not requested leave to amend the complaint. Accordingly, unless Plaintiff can so demonstrate at the hearing, the demurrer to the complaint is SUSTAINED without leave to amend.

The Court will prepare the Order.