Filed 3/20/20 Bhargava v. Mortgage Electronic Registration Systems CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

SANGEETA BHARGAVA,

Plaintiff and Appellant,

v.

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,

Defendant and Respondent.

H044982

(Santa Clara County

Super. Ct. No. 16CV295113)

Sangeeta Bhargava appeals from a judgment of dismissal entered in favor of respondent Mortgage Electronic Registration Systems, Inc. (MERS), after the trial court granted MERS’s motion for judgment on the pleadings. On appeal, Bhargava argues that the trial court erred in granting the motion for judgment on the pleadings, and also seeks review of several interlocutory discovery orders made prior to MERS’s dismissal.

We find that the trial court did not err in granting judgment on the pleadings in favor of MERS and will affirm the judgment. Accordingly, we need not and do not address the discovery orders.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Facts alleged in the operative pleading relating to MERS

On July 26, 2005, Bhargava obtained a $2,730,000 loan from Countrywide Home Loans (Countrywide), secured by a deed of trust on her home located in Los Altos Hills, California. The deed of trust identifies CTC Real Estate Services (CTC) as the trustee and MERS as the beneficiary, in its capacity as nominee for Countrywide and its successors and assigns.

Paragraph 23 of the second amended complaint consists of the following allegation: “Paragraph 22 of the deed of trust grants to the Plaintiff the right to challenge the assignments of 2010 and the right of the defendants to foreclose upon her property. Paragraph 22 states in part that the plaintiff/borrower shall have ‘the right . . . to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.’ ” However, the deed of trust is attached as an exhibit to the second amended complaint and paragraph 22 of the deed of trust does not, as Bhargava alleges, grant rights to the borrower, but instead simply obliges the lender to inform the borrower of her existing rights. The pertinent full sentence from that paragraph—which Bhargava has quoted only in part—reads: “The notice [of default] shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.”

On March 24, 2010, MERS transferred the deed of trust to BAC Home Loans Servicing LP, formerly known as Countrywide and appointed ReconTrust Company (ReconTrust) as trustee in place of CTC. The substitution/assignment is signed by “Gary Nord, Assistant Secretary” (Nord). Bhargava alleges that Nord was a salaried employee of Bank of America and was never a corporate officer of MERS, Countrywide, or CTC.

On June 25, 2010, MERS again transferred the deed of trust to BAC Home Loans Servicing LP, formerly known as Countrywide. This substitution/assignment is signed by “Angelica Del Toro, Assistant Secretary” (Del Toro). Bhargava alleges that, like Nord, Del Toro was a salaried employee of Bank of America and was never a corporate officer of MERS, Countrywide, or CTC.

On April 15, 2015, Bank of America recorded a substitution of trustee, appointing Quality Loan Service Corporation (Quality) as trustee in place of ReconTrust. The substitution is signed by “Clarissa Wells, Assistant Vice President” (Wells). Bhargava alleges that Wells “is not and never was an Assistant Vice President of [Bank of America]” but was only a salaried employee. On that same date (i.e., April 15, 2015), Quality recorded a notice of default. Quality recorded a second notice of default on December 23, 2015.

On March 28, 2016, Quality recorded the notice of trustee’s sale, which indicated that the trustee’s sale would take place on May 4, 2016.

In the first cause of action for declaratory relief—the only cause of action in which MERS is named as a defendant—Bhargava seeks a judicial declaration that various instruments described in the second amended complaint are “null and void” by “reasons of fraud, lack of authority, and forgery.” These instruments are, specifically: (1) the March 24, 2010 substitution/assignment signed by Nord; (2) the June 25, 2010 substitution/assignment signed by Del Toro; (3) the April 15, 2015 substitution of trustee signed by Wells; (4) the April 15, 2015 notice of default; and (5) the December 23, 2015 notice of default. Bhargava alleges that Nord, Del Toro, and Wells were not officers of either Bank of America or MERS, but instead were “ ‘Foreclosure Specialists’ who falsely claimed to be an ‘Assistant Vice President’ of [Bank of America] or ‘Assistant Secretary’ of MERS pursuant to the verbal instructions of their managers and supervisors at [Bank of America].”

Bhargava filed her initial complaint against MERS and other named defendants on May 12, 2016. The trial court sustained a demurrer to that complaint brought by MERS and other named defendants, with leave to amend, and Bhargava filed her first amended complaint on December 23, 2016. Bhargava subsequently sought, and the trial court granted, leave to file the operative second amended complaint on March 9, 2017.

B. The motion for judgment on the pleadings

MERS moved for judgment on the pleadings, arguing that Bhargava lacked standing to challenge the instruments in question and that the claimed defects in their execution would render the assignments voidable, rather than void.

Following a hearing, the trial court granted MERS’s motion for judgment on the pleadings as to the declaratory judgment cause of action without leave to amend. In its order, the trial court found that Bhargava “lacks standing to challenge the subject mortgage documents . . . [and] fails to plead sufficient facts [to] support her allegations that the documents were robo-signed and the individual signatories lacked legal authority to execute the documents.”

Judgment was entered in favor of MERS on May 18, 2017, and Bhargava timely appealed.

II. DISCUSSION

A. Requests for judicial notice

Before turning to the substance of Bhargava’s arguments relating to the motion for judgment on the pleadings, we will address the two requests for judicial notice she filed in this court. The first, filed on February 21, 2019, requests that this court take judicial notice of the legislative history of amendments to Code of Civil Procedure section 2030.300, which pertains to motions to compel further discovery responses. The second, filed on September 16, 2019, requests that this court take judicial notice of an article published in the San Francisco Daily Journal on September 11, 2019, entitled “UCLA professor uncovers nationwide scams involving fake court orders.”

As a reviewing court, we are obligated by Evidence Code section 451 to take judicial notice of some matters and we are given discretion under Evidence Code section 452 to take judicial notice of other matters. Regardless, however, there is “a precondition to the taking of judicial notice in either its mandatory or permissive form—any matter to be judicially noticed must be relevant to a material issue.” (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.) Neither of Bhargava’s requests meet this precondition.

The legislative history of amendments to Code of Civil Procedure section 2030.300 would only be relevant were we to consider whether the trial court erred in its handling of Bhargava’s motions to compel further discovery. Because we conclude that the trial court properly granted MERS’s motion for judgment on the pleadings, the discovery claims are moot and the proffered legislative history is irrelevant.

Similarly, the September 11, 2019 San Francisco Daily Journal article addresses “forged court orders and related scams aimed at getting webpages removed from search engines, or ‘de-indexed,’ without a legitimate court proceeding.” Bhargava claims this article is relevant “as it will assist this Court of Appeal in ascertaining the pox of forgery of which the Appellant is complaining.” While Bhargava alleges that certain individuals—Nord, Del Toro, and Wells—committed “forgery” in affixing their signatures to particular instruments, their alleged forgery is in no way similar to the forgery discussed in the article and therefore not relevant to a material issue in this case.

Accordingly, we deny Bhargava’s requests for judicial notice.

B. Standard of review

“The standard of review for a motion for judgment on the pleadings is the same as that for a general demurrer: We treat the pleadings as admitting all of the material facts properly pleaded, but not any contentions, deductions or conclusions of fact or law contained therein.” (Dunn v. County of Santa Barbara (2006) 135 Cal.App.4th 1281, 1298.) We likewise will not credit the allegations in the complaint where they are contradicted by facts that either are subject to judicial notice or are evident from exhibits attached to the pleading. (Hill v. Roll Internat. Corp. (2011) 195 Cal.App.4th 1295, 1300.) We review de novo whether a cause of action has been stated as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) We do not review the validity of the trial court’s reasoning, and therefore will affirm its ruling if it was correct on any theory. (Hill, supra, at p. 1300.)

In determining whether leave to amend should have been granted where a pleading is vulnerable to a motion for judgment on the pleadings, we assess “whether the defect can reasonably be cured by amendment.” (Schonfeldt v. State of California (1998) 61 Cal.App.4th 1462, 1465.) We review a trial court’s denial of leave to amend under an abuse of discretion standard. (Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1448.)

C. Standing

Civil actions “must be prosecuted in the name of the real party in interest.” (Code Civ. Proc., § 367.) The real party in interest is generally the person or entity possessing the right sued upon. (Gantman v. United Pacific Ins. Co. (1991) 232 Cal.App.3d 1560, 1566 1567.)

In Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, disapproved on other grounds in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 939, footnote 13 (Yvanova), the Court of Appeal addressed whether a mortgagor has standing to enforce or object to a securitization or transfer of a beneficial interest under the note and deed of trust. The court stated, “ ‘[b]ecause 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.’ ” (Jenkins, supra, at p. 515.) Consequently, “[a]s an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under the promissory note, [the plaintiff] lacks standing to enforce any agreements . . . relating to such transactions. . . . [¶] Furthermore, even if any subsequent transfers of the promissory note were invalid, [the plaintiff] is not the victim of such invalid transfers because her obligations under the note remained unchanged.” (Ibid.) As a result, the borrower cannot base an action for wrongful foreclosure upon the theory that the securitization or other assignments or transfers were invalid. (Id. at pp. 513-515.)

In Yvanova, the California Supreme Court concluded that the Jenkins court “spoke too broadly in holding a borrower lacks standing to challenge an assignment of the note and deed of trust to which the borrower was neither a party nor a third party beneficiary. Jenkins’s rule may hold as to claimed defects that would make the assignment merely voidable, but not as to alleged defects rendering the assignment absolutely void.” (Yvanova, supra, 62 Cal.4th at p. 939.) However, at the outset of its decision in Yvanova, the California Supreme Court made clear that its ruling was narrow and was limited to cases—unlike this one—where a nonjudicial foreclosure has already taken place, stating “We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party’s right to proceed.” (Id. at p. 924, italics added.) To that end, the court noted that, “[t]his aspect of Jenkins, disallowing the use of a lawsuit to preempt a nonjudicial foreclosure, is not within the scope of our review.” (Id. at p. 934.)

The limits of Yvanova’s holding were applied in Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808 (Saterbak), where the plaintiff sought a (preforeclosure) declaratory judgment that the assignment of her deed of trust was void, for one or both of the following reasons: (1) the deed of trust had been assigned into a securitization trust after the trust’s closing date, and (2) the signature on the assignment was either forged or robo-signed. (Id. at p. 814.) The court held that, even in light of Yvanova, the plaintiff lacked standing to pursue her claim. “The crux of Saterbak’s argument is that she may bring a preemptive action to determine whether the . . . trust may initiate a nonjudicial foreclosure. . . . However, 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.’ ” (Ibid.)

We now examine whether, as Bhargava argues, either the language of the deed of trust or her allegation that the signatures were “forged” suffice to make her a real party in interest.

1. Paragraph 22 of the deed of trust

Bhargava argues that she has standing pursuant to paragraph 22 of the deed of trust, specifically the language providing that the borrower has “the right . . . to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.” The alleged forgery or robo-signing of the assignments and substitutions by Nord, Del Toro, and Wells amount—in her view—to “the legal ‘non existence of a default or other defense of Borrower to acceleration and sale.’ ” We disagree.

As discussed above, Bhargava misstates the purpose of paragraph 22. That paragraph does not grant any rights to the borrower; rather, it describes only what the lender must include in a notice of default. According to paragraph 22, the notice of default must “inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.” (Italics added.) Being informed of one’s (existing) rights is not equivalent to being afforded new rights, and paragraph 22 does only the former.

Bhargava cites no authority for the proposition that a defect in an assignment or substitution could amount to either a “the non-existence of a default or any defense . . . to acceleration and sale.” The validity or invalidity of any assignment of the deed of trust or substitution of the trustee is wholly independent of whether Bhargava is in default on her mortgage.

Finally, the court in Saterbak squarely rejected the argument, based on identical language in plaintiff’s deed of trust, that she “has the right to sue prior to foreclosure in order to ‘ “assert the non-existence of a default or any other defense of Borrower to acceleration and sale.” ’ ” (Saterbak, supra, 245 Cal.App.4th at p. 816.) This provision of the deed of trust “do[es] not change her standing obligations under California law; they merely give Saterbak the power to argue any defense the borrower may have to avoid foreclosure.” (Ibid.) Because the borrower, in executing the deed of trust, expressly agreed that “the [promissory] [n]ote, together with the [deed of trust], could be sold one or more times without notice to her[,] [there] is no reasonable expectation from this language that the parties intended to allow Saterbak to challenge future assignments made to unrelated third parties.” (Id. at p. 817.)

Accordingly, we conclude that paragraph 22 of the deed of trust does not confer standing on Bhargava to challenge preforeclosure assignments and substitutions.

2. Forgery versus robo-signing

Bhargava also claims that she has standing to pursue her claim against MERS, because she has alleged that the instruments were forged, as opposed to simply robo signed. The plaintiff in Saterbak also alleged that the assignment of her deed of trust was invalid because it was “forged or robo-signed.” (Saterbak, supra, 245 Cal.App.4th at p. 814.) Despite this allegation of forgery, the Saterbak court found the plaintiff lacked standing to challenge the validity of the assignment. (Ibid.)

We agree with Saterbak that it makes no difference what verbiage a plaintiff, in a preforeclosure posture, uses to allege that an assignment is invalid, because “[t]he crux of [the plaintiff]’s argument is that she may bring a preemptive action to determine whether the . . . trust may initiate a nonjudicial foreclosure.” (Saterbak, supra, 245 Cal.App.4th at p. 814.) Allowing the action to proceed would “ ‘result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature.’ ” (Ibid.)

Bhargava has not alleged sufficient facts to show that she has standing to bring a claim for declaratory relief against MERS and has failed to show how she could remedy her lack of standing. Accordingly, we conclude the trial court did not err in granting MERS’s motion for judgment on the pleadings without leave to amend.

III. DISPOSITION

The judgment is affirmed. Mortgage Electronic Registration Systems, Inc., shall recover its costs on appeal.

Premo, J.

WE CONCUR:

Greenwood, P.J.

Elia, J.

Bhargava v. Mortgage Electronic Registration Systems, Inc.

H044982