The demurrer of defendants Mac1 Investments, LLC and ABM Investments to the second, third, fourth, and seventh causes of action in the first amended complaint of plaintiffs Richard Hagan and the Trustee of the 2013-01 Puffin Trust is SUSTAINED with 15 days leave to amend.

•Bona Fide Purchaser Status

A bona fide purchaser is one who purchases the property for value without notice of another’s asserted rights to the property. Civ. Code Section 1107, 1214; Melendrez v. D & I Investment, Inc. (2005) 127 Cal. App. 4th 1238, 1251. Civil Code Section 2924 provides that there is a conclusive presumption created in favor of a BFP who receives a trustee’s deed that contains a recital that the trustee has fulfilled its statutory notice requirements. Civ. Code Section 2924(c); Melendrez v. D & I Investment, Inc., 127 Cal. App. 4th at 1250-51, 1254.

Plaintiffs have alleged a foreclosure sale on 8/28/13. And the court may take judicial notice that a lis pendens was recorded on 8/26/13. The notice of lis pendens was filed with the court, in this action, on that date. A lis pendens provides constructive notice when it is recorded and indexed properly. First Bank v. East West Bank (2011) 199 Cal. App. 4th 1309, 1314; Lewis v. Superior Court (1994) 30 Cal. App. 4th 1850, 1867.

Here, there is no allegation regarding the recording and indexing of the lis pendens and the court cannot take judicial notice of proper indexing as that is not apparent from the recorded document. Nor are there any other factual allegations showing that Moving Defendants were not bona fide purchasers.

•Tender

A plaintiff may not challenge the propriety of a foreclosure on his or her property without offering to repay what he or she borrowed against the property. The tender requirement applies to “any cause of action for irregularity in the sale procedure,” including quiet title, wrongful foreclosure, rescission, and declaratory relief. Abdallah v. United Savings Bank (1996) 43 Cal. App. 4th 1101, 1109; Aguilar v. Bocci (1974) 39 Cal. App. 3d 475, 477; Lona v. Citibank, N.A. (2011) 202 Cal. App. 4th 89, 112 (“as a condition precedent to an action by the borrower to set aside the trustee’s sale on the ground that the sale is voidable because of irregularities in the sale notice or procedure, the borrower must offer to pay the full amount of the debt for which the property was security”); Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, 579-80 (Arnolds) (plaintiff must offer to pay full amount of outstanding debt when raising an action to set aside trustee’s sale for irregularities in notice or procedure of the sale); Karlsen v. American Sav. Loan Assn. (1971) 15 Cal. App. 3d 112, 117 (judgment on the pleadings properly granted where plaintiff attempted to set aside trustee’s sale for lack of adequate notice, because a valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust).

“A full tender must be made to set aside a foreclosure sale, based on equitable principles. [Citations.] … Allowing plaintiffs to recoup the property without full tender would give them an inequitable windfall, allowing them to evade their lawful debt.” Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal. App. 4th 522, 526. This rule originated from the principle that, before asking a court to exercise its equitable powers to stop or set aside foreclosure proceedings, a defaulting borrower must first do equity himself. FPCI REHAB 01 v. E G Investments, Ltd. (1989) 207 Cal. App. 3d 1018, 1021 (tender rule is based on equitable maxim that a court of equity will not order a useless act performed if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs). The tender rule is strictly enforced. Nguyen v. Calhoun (2003) 105 Cal. App. 4th 428, 439.

A tender is an offer of performance made with the intent to extinguish the obligation; a valid tender of performance must be of the full debt, in good faith, unconditional, and with the ability to perform. Civ. Code, Section 1486, 1493, 1494, 1495; Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal. App. 4th 1047, 1053; Arnolds, supra, 158 Cal. App. 3d at p. 580.

Lona v. Citibank, N.A. (2011) 202 Cal. App. 4th 89, describes the four exceptions to the tender rule: (1) tender is not required if the action attacks the validity of the underlying debt; (2) tender is not required if there is a counterclaim or setoff against the beneficiary; (3) tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale; and (4) no tender will be required when the trustor is not required to rely on equity to attack the sale because the trustee’s deed is void on its face.

Here, Plaintiffs do not allege any recognized exception to the tender rule. While Plaintiffs attack the foreclosure process and, thus, the resulting trustee’s deed, the deed is not void on its face.

Nor do Plaintiffs attack the validity of the underlying debt. They admit the loan, but assert they do not need to repay it to the named defendants. Hagen also alleges that the loan does not need to be repaid because his obligation to pay was discharged in his bankruptcy. No specifics are alleged, however, so it is not shown how the alleged discharge affects Plaintiffs’ repayment obligations. To the extent Plaintiffs are alleging that the bankruptcy court ordered they need not repay the mortgage loan at all but may retain possession of the property, such allegation is inherently incredible. This is not how bankruptcy works. In the absence of specific, factual allegations establishing such a scenario, the court finds Plaintiffs’ broad and conclusory allegation of a “discharge” insufficient to attack the validity of the underlying debt.

Finally, Plaintiffs do not allege any other basis for finding that equity does not require them to tender the amounts due.

•Challenge to Foreclosing Entities’ Standing/Void Assignment

Plaintiff attacks the foreclosing defendants standing to enforce the deed of trust on the allegations that the assignments of the deed of trust were not effective – first because those signing the assignments did not have standing and second because the recorded assignments are after the trust pool closed.

Plaintiff also attacks the foreclosing defendants standing to foreclose on the grounds that the underlying debt was discharged in bankruptcy. For the reasons discussed above, this allegation is insufficient to allege that the foreclosing defendant lacked the power to enforce the deed of trust.

As for Plaintiffs’ attack on the assignments, their allegations that persons without authority signed the assignments are not sufficient to support their claims. Plaintiffs allege that the individuals who signed the assignments were not authorized to sign for the FDIC. But, on the face of the deed of trust and assignments, such authorization was not required. The first assignment, recorded on 6/30/10, which assigned beneficial interest under the deed of trust to U.S. Bank as trustee, was signed by Suchan Murray on behalf of MERS. [FAC, Ex. 2] Under the deed of trust, MERS was a beneficiary as the nominee for the Lender and its successors and assigns. [FAC, Ex. 1.] MERS thus has the authority to assign the deed of trust to U.S. Bank. There is no allegation that the individual who executed the assignment did not have the indicated authority to execute the assignment on behalf of MERS. Under very similar circumstances, the court in Herrera v. Federal National Mortgage Association (2012) 205 Cal. App. 4th 1495, found that a borrower did not allege any defect in MERS’ assignment of a deed of trust to Onewest where IndyMac was the original lender and the loan was taken over by the FDIC and then sold to Onewest. Id., 205 Cal. App. 4th at 1503-05.

Thereafter, U.S. Bank assigned its beneficial interest to Onewest as servicer. The individual who executed this assignment is noted to be an authorized signatory for U.S. Bank. There are no allegations that the signatory was not authorized as indicated.

Plaintiffs also allege the assignments were ineffective and invalid because they came after the closing date for the trust pool for which U.S. Bank was trustee. These allegations, too, fail to support Plaintiffs’ claims. First, the dates on the recorded assignments do not establish when all the relevant assignments occurred. As a result, Plaintiffs’ allegations of the pool closing dates and the dates of the recorded assignments do not establish no assignment occurred prior to the pool closing date. Second, the better, majority view is that borrowers may not challenge the validity of assignments and transfer agreements to which they are not parties.

Courts have found that borrowers in the position of Plaintiffs do not have standing to attack the validity of the assignment of the deed of trust. Plaintiffs are not parties to the document and allege no injury resulting from the manner in which it was executed. In the robo-signing context, courts have reasoned that a borrower lacks standing to allege that a substitution or assignment is invalid because it would not be prejudicial to the borrower. Javaheri v. JPMorgan Chase Bank, N.A. (C.D. Cal. 2012) 2012 WL 3426278, *6:

“Only someone who suffered a concrete and particularized injury that is fairly traceable to the substitution can bring an action to declare the assignment … as void.”

First, “[a]s case law explains, “MERS is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members’ interests to MERS. MERS is listed as the grantee in the official records maintained at county register of deeds offices. The lenders retain the promissory notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to investors without having to record the transaction in the public record. MERS is compensated for its services through fees charged to participating MERS members.” Mortgage Elec. Registration Sys. v. Nebraska Dept. of Banking and Fin. (2005) 270 Neb. 529, 530, 704 N.W.2d 784, 785. “A side effect of the MERS system is that a transfer of an interest in a mortgage loan between two MERS members is unknown to those outside the MERS system.” Jackson v. Mortgage Elec. Registration Sys., Inc. (Minn.2009) 770 N.W.2d 487, 491.” Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal. App. 4th 1149, 1151. The timing of the recording of an assignment of deed of trust does necessarily reflect with the assignment in fact occurred. Herrera v. Federal National Mortgage Association, 205 Cal. App. 4th at 1506.

Second, Plaintiff may not challenge the foreclosure based on the terms of the trust pool agreement. While the Fifth Appellate District has held that “a borrower can challenge an assignment of his or her note and deed of trust if the defect asserted would void the assignment,” Glaski v. Bank of America, National Association (2013) 218 Cal.App.4th 1079, 1095-1096, our Fourth Appellate District, Division Three has held otherwise:

[Plaintiff’s] first cause of action attempts to construct a dispute between herself and [d]efendants with regard to the alleged improper transfer of the promissory note during the securitization process. However, even if the asserted improper securitization (or any other invalid assignments or transfers of the promissory note subsequent to her execution of the note on March 23, 2007) 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, supra, 205 Cal.App.4th at p. 1507, 141 Cal.Rptr.3d 326.) As an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under the promissory note, [plaintiff] lacks standing to enforce any agreements, including the investment trust’s pooling and servicing agreement, relating to such transactions. (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 entity or individual who believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of their interest in the note.

Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal. App. 4th 497, 514-515 (Jenkins).

Moreover, the weight of authority is against Glaski. Newman v. Bank of New York Mellon (E.D. Cal. 2013) 2013 WL 5603316 *3 fn. 2. Finally, Plaintiffs have not alleged any prejudice resulting from any alleged irregularity in the assignments. Prejudice must be shown to sustain a cause of action based on a violation of foreclosure requirements. Siliga v. Mortgage Electronic Registrations Systems, Inc. (2013) 219 Cal.App.4th 75, 85; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272; in accord, Simmons v. Aurora Bank, FSB, WL5508136 at *2 (N.D. Cal. 2013) (“Even if there were some defect in the assignment of the deed of trust, that assignment would not have changed plaintiff’s payment obligations.”).

Second Cause of Action To Cancel Instruments under Civ. Code Section 3412

Under this cause of action, Plaintiffs seek to cancel the assignments of deed of trust discussed above, the notice of default, substitution of trustee, notice of trustee sale, and, finally, the trustee’s deed upon sale.

Since the basis of this claim is an alleged wrongful foreclosure, lack of tender bars Plaintiff’s assertion of this cause of action. Similarly, Moving Defendants’ status of bona fide purchasers bars this action as to them.

In addition, as a strict legal matter, there is no action or remedy to cancel an assignment of deed of trust, notice of default, or notice of trustee’s sale as these are not “instruments” since they do not affect title. Pursuant to Civil Code Section 3412, “a written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.” This is an equitable claim similar in kind to a quiet title action. Hunter v. Hunter (1942) 21 Cal. 2d 228, 231-32; Corrigan v. Stiltz (1965) 233 Cal. App. 2d 381, 386. Civil Code Section 3412 falls under the heading ‘Cancellation of Contracts’ and relates to the canceling of an instrument. Robertson v. Superior Court (2001) 90 Cal. App. 4th 1319, 1323. An “instrument” is “a written paper signed by a person or persons transferring the title to, or giving a lien on real property, or giving a right to a debt or duty.” Government Code Section 27279. Recordings not affecting title are not instruments. Sisemore v. Master Financial, Inc. (2007) 151 Cal. App. 4th 138 8, 1399-1400; Ward v. Superior Court (1997) 55 Cal. App. 4th 60, 64-65 (HOA deficiency was not “instrument” subject to recording against property, though plaintiff could use CC Section 3412 to have document expunged because HOA deficiency was not authorized by law to be recorded under Gov. Code Section 27201(a)).

Third Cause of Action for Slander/Disparagement of Title

Slander 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. The elements of the tort are (1) publication, (2) absence of justification, (3) falsity and (4) direct pecuniary loss. Truck Ins. Exch. v. Bennett (1997) 53 Cal. App. 4th 75, 84.

Here, the only basis for falsity is Plaintiffs’ allegations that recorded documents were unlawful or false because the assignments were not effective or valid and therefore defendants did not have authority to enforce the note or deed of trust. For the reasons discussed above, these allegations are not sufficient to support a cause of action attacking the foreclosure sale.

Fourth Cause of Action for Declaration re Rights to Possession under CCP Section 1060

Plaintiffs seek a declaration regarding their right to possession of the property. Again, they rely on their allegations of the foreclosing defendants’ lack of authority to foreclose and the resulting invalidity of the sale to Moving Defendants and their title to the property under the trustee’s deed upon sale.

Seventh Cause of Action for Violation of B&P Code Section 17200

Plaintiffs’ Section 17200 cause of action is premised on their allegations that the foreclosing defendants did not have the authority to collect payments under the mortgage, enforce the deed of trust, or foreclose on the property yet nevertheless collected payments and commenced foreclosure proceedings.

As discussed above, these predicate wrongful acts alleged by Plaintiffs fail to state any cause of action. Accordingly, Plaintiffs’ action for violation of B&P Code Section 17200 fails as well. Krantz v. BT Visual Images, L.L.C. (2001) 89 Cal. App. 4th 164, 178 (finding 17200 claim falls with its antecedent substantive causes of action). Moreover, Moving Defendants did not play any role but that of purchaser at the foreclosure sale, so the allegations do not pertain to them. No other wrongful acts by Moving Defendants are alleged.