Opinion
H044007
09-10-2019
RONELL D. ELWIN, Plaintiff and Appellant, v. BANK OF AMERICA, N.A. et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 1-15-CV-282776)
Plaintiff Ronell D. Elwin filed an action against financial institution defendants alleging improprieties in the execution of her mortgage, subsequent assignments, and the nonjudicial foreclosure process involving a residence co-owned with her husband. She sought declaratory and injunctive relief, as well as monetary damages. The trial court sustained defendants' demurrer to the amended complaint without leave to amend and dismissed the action.
On appeal, plaintiff contends that the amended complaint sufficiently pleaded her causes of action, and, to the extent necessary, she should be allowed to amend her complaint to include new facts and allegations. As to eight of plaintiff's causes of action, we conclude the demurrer was properly sustained without leave to amend. As to her remaining claim, we determine the amended complaint stated facts sufficient to constitute a cause of action. We reverse.
I. Background
In January 2007, plaintiff and her husband, James Elwin, obtained a loan of $650,000 to refinance a mortgage secured by property located in San Jose, California. The promissory note for that loan reflects three indorsements, one that appears on a blank page attached to the note and two that appear on the note's signature page. The indorsement on the blank page shows the note was indorsed to Countrywide Bank, N.A., by an employee of Alternative Financing Corporation (AFC). As to the two indorsements on the signature page, one indicates that the note was indorsed to Countrywide Home Loans, Inc., by an employee of Countrywide Bank, N.A. The other is a blank indorsement by an employee of Countrywide Home Loans, Inc.
The note was secured by a deed of trust, which identified plaintiff and her husband as "Borrower," AFC as the "Lender," Chicago Title Company as the "Trustee," and Mortgage Electronic Registration System, Inc. (MERS) "as a nominee for Lender and Lender's successors and assigns." MERS was also identified as "the beneficiary under this Security Instrument." The deed of trust further stated that "Borrower understands and agrees that MERS holds only legal title to the interests granted by the Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property." Finally, the deed of trust stated that "[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower."
In July 2010, MERS assigned the deed of trust to U.S. Bank National Association, as Trustee of MASTR Adjustable Rate Mortgages Trust 2007-3 (US Bank). In September 2012, Bank of America, N.A. (Bank of America), acting as attorney in fact for US Bank, executed a substitution of trustee, replacing Chicago Title Company with ReconTrust Company, N.A. (ReconTrust). In October 2012, ReconTrust recorded a notice of default.
In August 2013, Bank of America assigned the deed of trust to Nationstar Mortgage LLC (Nationstar). The assignment did not state in what capacity Bank of America was acting in executing the assignment.
In January 2015, Nationstar executed a substitution of trustee, replacing ReconTrust with Clear Recon Corp. In April 2015, Clear Recon recorded a second notice of default.
In July 2015, plaintiff filed her original complaint against Bank of America, US Bank, ReconTrust, MERS, Clear Recon, and Nationstar. Defendants filed a motion for judgment on the pleadings, which the trial court granted with leave to amend.
Plaintiff filed an amended complaint alleging 10 causes of action: (1) slander of title; (2) violation of the California Homeowner Bill of Rights (HBOR); (3) cancellation of instruments; (4) tortious interference with contract; (5) declaratory relief and injunctive relief; (6) fraud and deceit; (7) violations of Business and Professions Code section 17200 (unfair competition law (UCL)); (8) accounting; (9) quiet title; and (10) breach of contract. Defendants demurred to the first nine causes of action and filed an answer to the breach of contract claim. After taking judicial notice of the note- and deed-related documents involved in the transaction, the trial court sustained the demurrer without leave to amend. Plaintiff voluntarily dismissed without prejudice the breach of contract cause of action. The trial court entered a judgment of dismissal with prejudice, except as to the cause of action plaintiff voluntarily dismissed.
II. Discussion
A. Standard of Review
"On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]" (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865 (Dinuba).) When the trial court has sustained the demurrer without leave to amend, this court must determine "whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse. [Citation.]" (Ibid.) The burden is on the plaintiff to show a reasonable possibility of curing a defect. (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4th 1001, 1008 (Barroso).)
B. Slander of Title
In her amended complaint, plaintiff alleged that the deed of trust and subsequent assignments of the deed of trust slandered plaintiff's title "by causing a cloud on Plaintiff's Title to Plaintiff's Property." Citing Civil Code sections 1550, 1558, and 1598, plaintiff alleged that the original deed of trust was void. Additionally, plaintiff alleged that the subsequent assignments were invalid because MERS's authority to assign the deed ended in 2007 when AFC dissolved. Plaintiff also alleged that the debt had been securitized without her consent.
Further statutory references are to the Civil Code unless otherwise specified.
"Slander or disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof ' "some special pecuniary loss or damage." ' [Citation.] The elements of the tort are (1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss. [Citations.]" (Sumner Hill Homeowners' Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1030 (Sumner Hill).) The statute of limitations for slander of title is three years. (Code Civ. Proc., § 338, subd. (g).)
Plaintiff's amended complaint alleged that the original deed, the first 2010 assignment, and the subsequent 2013 assignment slandered her title because each document contained false or misleading information. Plaintiff filed suit in 2015. Because the original deed of trust was recorded in 2007 and the first assignment was recorded in 2010, her slander of title action based on the deed of trust and the 2010 assignment was untimely. (Code Civ. Proc., § 338, subd. (g).)
On appeal, plaintiff argues for application of the discovery rule, apparently alleging that she did not discover the factual basis for her slander of title claim until sometime in 2015, either when the May 2015 substitution of trustee was filed or when the April 2015 notice of default was recorded. When, as here, a cause of action would be barred by the statute of limitations without the discovery rule, a plaintiff " 'must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.' " (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 (Fox).) Thus, a plaintiff bears the burden to show diligence; conclusory allegations will not survive a demurrer. (Ibid.)
In terms of this burden, plaintiff's amended complaint is silent on the issue of delayed discovery and why plaintiff was unable, despite reasonable diligence, to discover the alleged issues with the 2007 deed of trust and 2010 assignment. (Fox, supra, 35 Cal.4th at p. 808.) On appeal, plaintiff notes that the substitution of trustee was executed in May 2015 and that the notice of default was recorded in April 2015. Then, without any further explanation as to "the time and manner of discovery," she states she "filed her complaint on July 7, 2015 when she was injured by Respondents' acts; well within any statute of limitations period." Plaintiff's explanation as to the time and manner of discovery is inadequate. (Ibid.) Further, she fails to allege her " 'inability to have made earlier discovery despite reasonable diligence.' " (Ibid.) Plaintiff cannot overcome the untimeliness of her slander of title cause of action, as it relates to the 2007 deed of trust and 2010 assignment.
As to the 2013 assignment, which is within the limitations period, plaintiff's amended complaint also fails to state a claim because it does not allege a direct pecuniary loss resulting from the assignment. (Sumner Hill, supra, 205 Cal.App.4th at p. 1030.) Nor could she. The 2013 assignment did not alter plaintiff's obligations with respect to monthly payments or impact her title—her obligations were established by the original loan and deed of trust. "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." (Fontenot v. Wells Fargo Bank (2011) 198 Cal.App.4th 256, 272 (Fontenot), disapproved on other grounds in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919.) What is more, the nonjudicial foreclosure process was precipitated not by the assignment itself, but by the failure to make payments on the note. Except for alleging generally that the assignment put a "cloud" over plaintiff's title, plaintiff fails to articulate a direct pecuniary loss. Finally, plaintiff does not allege that the 2013 assignment resulted in multiple or increased obligations; for instance, that there are multiple parties claiming the right to enforce or collect payment under the note. (Fontenot, at p. 272.)
We conclude that the trial court did not err in sustaining defendants' demurrer to the slander of title cause of action. (Dinuba, supra, 41 Cal.4th at p. 865.)
C. The HBOR Violations
Plaintiff alleged that the 2013 assignment of the deed of trust, the 2015 substitution of trustee, and the 2015 notice of default violated section 2924.17, subdivisions (a) and (b), because the documents were not accurate, and were not based on competent and reliable evidence. With respect to the 2013 assignment, plaintiff alleged that Bank of America "held no interest to transfer." Regarding the 2015 notice of default, plaintiff alleged that "US Bank as Trustee" was "not the legal, valid beneficiary entitled to Plaintiff's payments." Finally, plaintiff averred that the 2015 substitution of trustee was ineffective because it was executed by a party with no right to do so.
The HBOR requires a mortgage servicer, before filing a notice of default or notice of sale, to comply with specified procedural requirements. Section 2924.17, subdivision (a) mandates that certain documents related to the foreclosure process, including "a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure . . . shall be accurate and complete and supported by competent and reliable evidence." Section 2924.17, subdivision (b) states that "[b]efore recording or filing any of the documents described in subdivision (a), a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower's default and the right to foreclose, including the borrower's loan status and loan information."
The HBOR, including section 2924.17, "was enacted 'to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower's mortgage servicer, such as loan modifications or other alternatives to foreclosure.' [Citation.]" (Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal.App.4th 1267, 1272.) It applies only to documents recorded and actions taken after its effective date, January 1, 2013. (Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 158 (Lucioni).) "To enforce the new requirements, the HBOR creates a private right of action allowing a borrower to seek injunctive relief to enjoin a material violation of the act prior to foreclosure and to assert a claim for damages for a violation of the act following foreclosure." (Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 951 (Alvarez); § 2924.12, subds. (a), (b).)
We conclude that plaintiff sufficiently alleged a violation of the HBOR. Plaintiff alleged that the 2013 assignment was not accurate because Bank of America "held no interest to transfer." The 2013 assignment stated, in part, that Bank of America, "the undersigned holder of [the] Deed of Trust . . . does hereby grant, sell, assign, transfer and convey unto [Nationstar] . . . all beneficial interest under" the deed of trust. Consistent with plaintiff's allegations, judicially noticed documents reflect that the deed of trust had last been assigned to US Bank in 2010. The 2012 substitution of trustee stated that Bank of America was executing the substitution as attorney in fact on behalf of US Bank. Unlike the 2012 substitution, the 2013 assignment did not state Bank of America was acting on any entity's behalf; it identified Bank of America as the "holder of [the] Deed of Trust" with the authority to "grant, sell, assign, transfer, and convey" the deed of trust to Nationstar.
Plaintiff's allegations, then, amount to a contention that the 2013 assignment was inaccurate. Based on section 2924.17's requirement that an assignment of the deed of trust recorded in connection with a foreclosure "shall be accurate and complete and supported by competent and reliable evidence," plaintiff's allegations are sufficient to state a material violation, which entitles her to seek preforeclosure injunctive relief. (§ 2924.12, subds. (a), (b).)
Based on the allegedly improper 2013 assignment, plaintiff's allegations as to the 2015 substitution of trustee and 2015 notice of default are also sufficient to state a cause of action under the HBOR. As with assignments, section 2924.17, subdivision (a) also applies to "a notice of default" and a "substitution of trustee," when either is "recorded by or on behalf of a mortgage servicer in connection with a foreclosure . . . ." The 2015 substitution of trustee stated that Nationstar, as "the present Beneficiary under said Deed of Trust," exercised its authority to substitute Clear Recon as the trustee. In turn, Clear Recon recorded the 2015 notice of default. Nationstar's interest in plaintiff's deed of trust was predicated on the allegedly improper 2013 assignment. Thus, plaintiff's allegations as to the 2013 assignment also implicate the requirement that the 2015 substitution of trustee and 2015 notice of default, when "recorded by or on behalf of a mortgage servicer in connection with a foreclosure . . . [,] shall be accurate and complete and supported by competent and reliable evidence." (§ 2924.17, subd. (a).)
On appeal, defendants argue that plaintiff's HBOR claims fail because: (1) the HBOR does not apply to documents recorded before 2013; (2) section 2924.17 is "despite its language . . . effectively limited to declarations filed with notices of default and does not deal with assignments of deeds or substitutions of trustee because those instruments typically contain no declarations[;]" and (3) plaintiff has "no potential remedy under section 2924.17."
We find defendants' arguments unpersuasive. First, plaintiff's HBOR claims are limited to documents recorded after January 1, 2013. As noted, plaintiff does not allege that any pre-2013 documents are subject to the HBOR. Second, defendants' claim that section 2924.17 is "limited to declarations filed with notices of default" is contradicted by the section's plain language. Section 2924.17, subdivision (a) lists numerous documents that "shall be accurate and complete and supported by competent and reliable evidence." In listing the documents, section 2924.17, subdivision (a) effectively contains subcategories: (1) "[a] declaration recorded pursuant to Section 2923.5 or pursuant to Section 2923.55[;]" (2) "a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee" when these documents are "recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924[;]" and (3) "a declaration or affidavit filed in any court relative to a foreclosure proceeding . . . ." Although section 2924.17 undoubtedly applies to declarations, as reflected in subcategories (1) and (3) above, the documents described in subcategory (2) contain no such references to declarations.
We quote from the current version of the statute. The prior version of the statute, which was operative when plaintiff's amended complaint was filed, included language that stated parts of the statute would sunset on January 1, 2018. The sunset provision was later removed. In all substantive respects, the statute remains the same. (Stats. 2014, ch. 401, §§ 8, 9; Stats. 2018, ch. 404, §§ 21, 22, 25.)
Finally, defendants' argument that plaintiff has "no potential remedy" is also contradicted by section 2924.12, which permits borrowers to bring an action for injunctive relief for "a material violation" of section 2924.17. (§ 2924.12, subd. (a); Alvarez, supra, 228 Cal.App.4th at p. 951 ["[T]he HBOR creates a private right of action allowing a borrower to seek injunctive relief to enjoin a material violation of the act prior to foreclosure"].)
Defendants' reliance on Lucioni is unpersuasive. In Lucioni, the plaintiff alleged that the defendants "lacked the authority to foreclose on the property because they were not properly assigned an interest in the deed of trust." (Lucioni, supra, 3 Cal.App.5th at p. 158.) The plaintiff alleged a violation of section 2924, subdivision (a)(6), which "provides that only the holder of the beneficial interest under a mortgage or deed of trust may foreclose." (Lucioni, at p. 158.) The appellate court held that the HBOR "did not provide for injunctive relief as available for a violation of section 2924(a)(6)." (Ibid.) The court noted that section 2924.12, subdivision (a) did not list injunctive relief as a remedy for a violation of section 2924, subdivision (a)(6). (Lucioni, at p. 158.) In the instant case, plaintiff does not rely on section 2924, subdivision (a)(6), but rather on section 2924.17, which is specifically identified as a section under which injunctive relief is permitted. (§ 2924.12, subd. (a).) Lucioni's central holding is therefore inapposite.
The Lucioni court also determined that the plaintiff could not amend his complaint to state a claim under section 2924.17, concluding "that section 2924.17 does not impose a preforeclosure duty on foreclosing entities to demonstrate that they have a right to foreclose." (Lucioni, supra, 3 Cal.App.5th at pp. 162-163.) Although the language appears sweeping, the court's analysis reveals a narrower holding. In looking at the record, the appellate court noted that the trial court had taken judicial notice of the declaration required by section 2923.55, "as well as the deed and its assignments that defendants rely upon to substantiate [their] right to foreclose." (Lucioni, at p. 163.) Thus, the court concluded that "[t]he filing of the declaration and review of the assignments . . . preclude[d] injunctive relief for a violation of the requirements of section 2924.17 and section 2923.55." (Ibid.) Here, as previously noted, plaintiff's HBOR cause of action is not directed at the parts of section 2924.17 concerned with declarations; thus, Lucioni's analysis of section 2924.17 is not pertinent.
With respect to the 2013 assignment, the 2015 substitution of trustee, and the 2015 notice of default, plaintiff stated facts sufficient to constitute a cause of action under the HBOR. Accordingly, the trial court erred in sustaining the demurrer as to the HBOR cause of action. (Dinuba, supra, 41 Cal.4th at p. 865.)
D. Cancellation of Instruments
In her amended complaint, plaintiff sought cancellation of the deed of trust, the assignments of the deed of trust, the substitutions of trustee, and the notices of default. Plaintiff alleged that the deed of trust was void because it was based on a "table funded" loan. Plaintiff further alleged that MERS had no authority to assign the deed of trust in 2010 because MERS's ability to act as AFC's agent terminated in 2007 when AFC dissolved. As to the 2013 assignment, plaintiff averred that Bank of America "held no interest in the [deed of trust] to transfer . . . ." Plaintiff further averred that the parties responsible for the notices of default and substitutions of trustee were not valid, legal beneficiaries or owners of the debt.
"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." (§ 3412.) "To prevail on a claim to cancel an instrument, a plaintiff must prove the instrument is void or voidable . . . ." (U.S. Bank National Assn. v. Naifeh (2016) 1 Cal.App.5th 767, 778.)
" 'Table-funding' is defined as a 'settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds.' [Citation.] In a table-funded loan, the originator closes the loan in its own name, but is acting as an intermediary for the true lender, which assumes the financial risk of the transaction." (Easter v. Am. West Fin. (9th Cir. 2004) 381 F.3d 948, 955, fn. omitted; see also Akopyan v. Wells Fargo Home Mortgage, Inc. (2013) 215 Cal.App.4th 120, 152 [describing " 'table funding' arrangements" as the situation "where the bank funds the loan at settlement when it takes assignment of the loan"].)
Plaintiff has failed to provide a legal basis for voiding the deed of trust based on table funding allegations. In her amended complaint, plaintiff asserted that the alleged table funding voided the deed of trust pursuant to California law. However, plaintiff provided no competent authority for this contention. In her brief, plaintiff cites the California Department of Real Estate's Reference Book; Financial Code sections 22161, 22780, and 50003; California Code of Regulations, title 10, sections 1460 and 2841.5; and Business and Professions Code sections 10131.1, 10233.2, 10234, and 10234.5. However, none of the statutes cited by the Reference Book or by plaintiff stand for the principal that table loans provide a ground to void a deed of trust or enjoin a foreclosure sale. Regardless of what the cited Financial Code sections and regulations prohibit, they are enforced only by the California Commissioner of Corporations or the Attorney General. (Fin. Code, §§ 22712, 22713; see also De La Torre v. CashCall, Inc. (9th Cir. 2017) 854 F.3d 1082, 1085 ["The [Finance Lenders' Law] does not create a private right of action."].) Likewise, Business and Professions Code section 10234, which governs when a trust deed may be recorded in the name of a real estate broker, provides no remedies for a borrower. (Bus. & Prof. Code, § 10234.)
Plaintiff also alleged that the table funding concealed the real parties to the transaction, and as a result the note is unenforceable. Since AFC did not provide consideration, plaintiff alleged that the underlying note was void because it failed to identify the true parties to the contract, in violation of sections 1550, 1558, and 1598. Section 1550 sets forth the essential elements of a contract: parties capable of contracting; consent; a lawful object; and sufficient cause or consideration. Section 1558 provides that "[i]t is essential to the validity of the contract, not only that the parties should exist, but that it should be possible to identify them." And section 1598 states that when the object of a contract is "unlawful, whether in whole or in part, or wholly impossible of performance, or so vaguely expressed as to be wholly unascertainable, the entire contract is void."
Plaintiff failed to state a valid claim that the underlying note was void. Regarding section 1550, plaintiff did not allege that she did not receive consideration for executing the note. As to section 1558, the requirement that it be "possible to identify" the parties to a contract appears satisfied based on plaintiff's allegations. Finally, section 1598 is inapplicable, as plaintiff has not established that performance of the contract is impossible or unlawful.
Next, plaintiff alleged that MERS lacked authority to assign the deed of trust in 2010 because its powers as the nominee or agent terminated when AFC dissolved in 2007. This allegation, however, is contradicted by the deed of trust. The deed of trust authorized MERS to act as nominee not only for the original lender but "for Lender and Lender's successors and assigns." (Italics added.) Thus, MERS's authority to act as nominee did not terminate with AFC's dissolution. Further, "MERS (as nominee for Lender and Lender's successors and assigns) ha[d] the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property." Plaintiff expressly agreed to these provisions. Consequently, MERS was authorized to assign the note and deed of trust in 2010, even after AFC dissolved. (See Ghuman v. Wells Fargo Bank, N.A. (E.D. Cal. 2013) 989 F.Supp.2d 994, 1001 ["[T]he fact Lender became defunct did not strip MERS'[s] authority to act under the Deed of Trust."].)
Plaintiff further alleged that the 2010 and 2013 assignments of the deed of trust both failed to transfer or assign interest in the debt or note, and on that basis the assignments, the substitutions of trustee, and the notices of default must be cancelled. Plaintiff, however, has no standing to preemptively challenge the underlying documents supporting foreclosure under section 3412. "California courts do not allow such preemptive suits because they 'would result in the impermissible interjection of the courts into the nonjudicial scheme enacted by the California legislature.' " (Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814 (Saterbak).)
As to cancellation of instruments, plaintiff's allegations were insufficient to state a cause of action under the applicable law. Therefore, the trial court did not err in sustaining the demurrer to this cause of action. (Dinuba, supra, 41 Cal.4th at p. 865.)
E. Tortious Interference with Contract
Plaintiff alleged that Bank of America and Nationstar, acting as servicers, tortiously interfered with plaintiff's loan by concealing the "real creditor" and foreclosing "based on their own personal financial gain . . . ." By doing so, plaintiff alleged that she was prevented from "pursuing modification solutions," her credit was harmed, loan costs increased, and she was threatened with the loss of her property.
On appeal, plaintiff argues that "an agent of a principal may also be found liable for Tortious Interference when the agent acts in the name of the principal but is really seeking to terminate the contract for its own financial benefit."
The elements of this cause of action are: " '(1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.' " (Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1603 (Mintz).)
Plaintiff's allegations do not support an intentional interference claim. Plaintiff claimed that Bank of America and Nationstar prevented her from pursuing a modification, but plaintiff failed to identify what defendants did to interfere with a purported loan modification. Further, plaintiff failed to allege facts showing that defendants acted intentionally to induce a breach or disruption of plaintiff's contractual relationship. Plaintiff alleged that defendants "tortiously interfered with Plaintiff's Loan Contracts," which resulted in a litany of damages. This allegation is a legal conclusion; it did not allege "intentional acts designed to induce a breach or disruption of the contractual relationship." (Mintz, supra, 172 Cal.App.4th at p. 1603.) Accordingly, plaintiff's allegations did not adequately state a cause of action for tortious interference with contract.
Additionally, even if plaintiff had properly alleged an act of intentional interference, an agent cannot be liable for interfering with its principal's contracts. (Mintz, supra, 172 Cal.App.4th at pp. 1603-1607.) Although "a stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract," plaintiff's allegations establish that Bank of America and Nationstar were acting as servicers (i.e., agents). (Pacific Gas & Electric Co. v. Bear Stearns Co. (1990) 50 Cal.3d 1118, 1126.) Plaintiff attempts to argue on appeal that "an agent of a principal" may be found liable if the agent acted "for its own financial benefit." Contrary to plaintiff's argument, however, "there is no 'financial advantage' exception to the rule that a corporate agent cannot be liable for interfering with its principal's contract . . . ." (Mintz, at p. 1606.)
Plaintiff failed to allege a cause of action for tortious interference with contract. Therefore, the trial court did not err in sustaining the demurrer to this cause of action. (Dinuba, supra, 41 Cal.4th at p. 865.)
F. Declaratory and Injunctive Relief
Plaintiff's cause of action for declaratory and injunctive relief alleged that defendants have no enforceable interest in plaintiff's loan or the deed of trust. Plaintiff sought a judicial determination as to the parties' rights and interests in the loan and deed of trust, and asked the court to "restrain[] and enjoin[] Defendants" with respect to the judicial foreclosure process.
"Injunctive relief is a remedy, not a cause of action. [Citations.] A cause of action must exist before a court may grant a request for injunctive relief." (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 65 (Allen).) Similarly, " 'a request for declaratory relief will not create a cause of action that otherwise does not exist.' " (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80 (Cotati).)
Plaintiff's allegations failed to state a cause of action for two reasons. First, the allegations here depend on theories that we have otherwise rejected in this opinion. Plaintiff notably does not rely on or allege facts implicating the HBOR in this cause of action. In the absence of a viable theory for relief, plaintiff cannot maintain an independent action for declaratory and injunctive relief. (Cotati, supra, 29 Cal.4th at p. 80; Allen, supra, 234 Cal.App.4th at p. 65.) Second, the claims made in the cause of action amount to an attempt to challenge the lender's " 'right to order a foreclosure sale,' " which " 'would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature.' [Citations.]" (Saterbak, supra, 245 Cal.App.4th at p. 814.) To the extent the HBOR is an exception to this general rule, plaintiff may pursue relief in the context of her HBOR cause of action.
Plaintiff failed to allege facts in this cause of action to support a claim that would entitle her to seek declaratory and injunctive relief. Therefore, the trial court did not err in sustaining defendants' demurrer to this cause of action.
G. Fraud and Deceit
Plaintiff alleged that defendants "caused to be recorded . . . instruments which contained materially false representations" as to the loan contract and "status of the debt." In particular, plaintiff alleged that employees of Countrywide Bank, N.A. and Countrywide Home Loans, Inc. made false representations by signing indorsements on the promissory note, which amounted to "represent[ing]" the right to indorse the note. Plaintiff further alleged that a ReconTrust employee "committed fraud and deceit . . . when she signed the [2010 assignment]" on behalf of MERS. Lastly, plaintiff also alleged that a Bank of America employee "committed fraud and deceit . . . when she signed the [2013 assignment] containing the deliberately false statement[]" that the employee "was acting as Assistant Vice President of Bank of America, 'the undersigned holder of a Deed of Trust.' " Plaintiff stated that she "relied on these false representations by engaging with Defendants through making mortgage payments and seeking loan modifications with parties" who had no authority to modify plaintiff's loan payments.
" 'The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or "scienter"); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.' [Citations.]" (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar).) "In California, fraud must be [pleaded] specifically; general and conclusory allegations do not suffice. [Citations.]" (Id. at p. 645.) " ' " '[T]he policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.' " [Citation.] [¶] This particularity requirement necessitates pleading facts which "show how, when, where, to whom, and by what means the representations were tendered." ' [Citation.]" (Ibid.)
Plaintiff's allegations were insufficient to state a cause of action for fraud and deceit. Her characterization of the assignments as "fraudulent" amounted to a mere contention, deduction, or conclusion of law or fact that is not sufficient to overcome a demurrer. (Dinuba, supra, 41 Cal.4th at p. 865.) Further, plaintiff's allegations with respect to the indorsements on the promissory note and the signatures on the assignments are also insufficient. Specifically, plaintiff failed to allege facts showing that the representations were intentionally made to induce her reliance upon the false representations. (Lazar, supra, 12 Cal.4th at p. 645.) Nor did plaintiff specifically allege facts showing that she justifiably relied on the indorsements.
On appeal, plaintiff suggests that we not adhere to the rule of specificity in pleading an action for fraud "when it appears from the nature of the allegation the defendants possess full information on the facts." This argument, however, is inconsistent with the shortcomings identified above. How and when the material representations were communicated to plaintiff and plaintiff's justifiable reliance—the " ' "how, when, where, to whom, and by what means the representations were tendered" ' "—are facts that plaintiff possesses and can therefore plead. (Lazar, supra, 12 Cal.4th at p. 645.)
We conclude that the trial court did not err in sustaining the demurrer to the fraud and deceit cause of action.
H. UCL Claims
In her amended complaint, plaintiff alleged as a list the following unfair competition claims: (1) "Converting table funded loans into security transactions without notice to borrowers"; (2) "Executing false and misleading documents"; (3) "Executing documents without legal authority to do so"; (4) "Acting as beneficiaries and trustees without the legal authority to do so"; (5) "Acting as they are MERS without legal authority to do so"; (6) "Failing to comply with California Civil Code §§ 1709 and 1710"; (7) "Violating . . . Civil Code §§ 2924(a)(1); 2924(a)(6); 2924(a)(1)(c) . . . ; 2924.17 . . . ; 2934a"; (8) "Committing a felony under Cal. Penal Code §115, 115.5"; (9) "Committing mortgage fraud under Cal. Penal Code section 532(f)(a)"; (10) "Committing common law fraud and fraud as defined in Cal. Civil Code section 1572"; (11) "Failing to notify Borrowers of their contractual right to bring forth a civil action"; and (12) "Engaging in other deceptive practices, including those, which may be uncovered during the course of discovery." Plaintiff also generally alleged violations related to "Causes of Action 1, 2, 4, and 6 with General Facts and Allegations," stating that these other causes of action "constitut[ed] a fraudulent business act or business practice."
California's UCL prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . . ." (Bus. & Prof. Code, § 17200.) " ' "Because . . . section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. 'In other words, a practice is prohibited as "unfair" or "deceptive" even if not "unlawful" and vice versa.' " ' " (Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 644.) A claim made under Business and Professions Code section 17200 " 'is not confined to anticompetitive business practices, but is also directed toward the public's right to protection from fraud, deceit, and unlawful conduct. [Citation.] Thus, California courts have consistently interpreted the language of section 17200 broadly.' " (South Bay Chevrolet v. General Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 877.) Although unfair competition claims are " 'broadly' " construed (ibid.), "[a] plaintiff alleging unfair business practices . . . must state with reasonable particularity the facts supporting the statutory elements of the violation." (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619 (Khoury).)
Plaintiff's UCL allegations were insufficient to state a cause of action. Specifically, the amended complaint "fail[ed] to describe with any reasonable particularity the facts supporting [a] violation." (Khoury, supra, 14 Cal.App.4th at p. 619; see also Gregory v. Albertson's, Inc. (2002) 104 Cal.App.4th 845, 857 [demurrer to unfair competition claim properly sustained where complaint identified no particular section of pertinent statutory scheme and failed to describe with reasonable particularity facts supporting a violation].) To the extent plaintiff identified alleged violations of statutes, plaintiff did so in conclusory fashion. Plaintiff listed at least 11 purported unfair or deceptive practices, but failed in many instances to identify any pertinent statutory scheme. When plaintiff did identify purported statutory violations, plaintiff simply alleged legal conclusions: "[f]ailing to comply," "[c]omitting a felony," "[a]cting . . . without legal authority," or "[c]omitting common law fraud . . . ." Finally, plaintiff's broad references to other causes of action failed to identify which defendants were implicated in the unfair competition claim, which allegations from the other causes of action were relevant, or which statutes were violated.
In light of the foregoing, we conclude that the trial court properly sustained defendants' demurrer to plaintiff's UCL cause of action.
I. Accounting Claim
Plaintiff alleged that Bank of America, Nationstar, and US Bank, as servicers and lenders, have a "fiduciary duty . . . to account for all monies paid by Plaintiff and any other 3rd party payments on Plaintiff's loan." Plaintiff challenged the claimed unpaid balances on her loan ($35,254.26 as of July 27, 2010; $211,307.18 as of April 3, 2015). Plaintiff alleged that she made payments on the mortgage for which defendants never accounted, that payments were misdirected to "the wrong beneficiary," and that a third party paid off the loan entirely resulting in the default being "extinguished." Plaintiff therefore requested an accounting.
"A cause of action for accounting requires a showing of a relationship between the plaintiff and the defendant, such [as a] fiduciary relationship, that requires an accounting or a showing that the accounts are so complicated they cannot be determined through an ordinary action at law. [Citations.] 'An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.' " (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413 (Fleet).)
We conclude that plaintiff's allegations are insufficient to support an accounting cause of action. First, plaintiff is not alleging the right to recover any particular amount from defendants; rather, she is alleging that the amount she owes is not accurately reflected in existing documents. Second, although determining the amount owed on plaintiff's mortgage may not be a simple calculation, plaintiff alleged no facts to establish that the calculation of the amount owed is "so complicated [it] cannot be determined through an ordinary action at law." (Fleet, supra, 229 Cal.App.4th at p. 1413.) Because the amount owed " 'can be made certain by calculation,' " with reference to documents held by the parties, plaintiff's allegations do not state a cause of action for accounting. (Ibid.) Accordingly, the trial court properly sustained defendant's demurrer to this cause of action.
J. Quiet Title Claim
Plaintiff sought to quiet title to her San Jose property. She alleged that defendants have "no right, title, estate, lien, or interest whatever in the above-described property." She further alleged that "no tender is required" as defendants are "strangers"—"every one of them, have no legal, valid or equitable interest in the title to Plaintiff's property."
"It is settled in California that a mortgagor cannot quiet his title against the mortgagee without paying the debt secured." (Shimpones v. Stickney (1934) 219 Cal. 637, 649; Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86 [borrower cannot quiet title to secured property without alleging payment of the debt secured by the property].) The tender requirement is "based upon the equitable principle that he who seeks equity must do equity. . . . [A] court of equity will not aid a person in avoiding the payment of his or her debts." (Mix v. Sodd (1981) 126 Cal.App.3d 386, 390.)
We find no merit in plaintiff's contention that she was excused from alleging tender. The tender requirement is excused only where: (1) the underlying debt is invalid; (2) the trustee's deed is void on its face; (3) there exists a counterclaim that is equal to or greater than the amount due; or (4) it would be inequitable to impose the condition on the particular party challenging the sale. (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112-113.) First, as we have explained in connection with plaintiff's other causes of action, she has not adequately alleged that the underlying debt is invalid. Second, plaintiff's amended complaint stated no valid theory under which the trustee's deed is void on its face. Third, plaintiff's amended complaint alleged no facts showing that she has a valid counterclaim that is equal to or greater than the amount due. Finally, plaintiff's allegations did not establish it would be inequitable to require tender. (See e.g., Humboldt Sav. Bank v. McCleverty (1911) 161 Cal. 285, 291 [holding that it would be inequitable to require defendant to pay, or offer to pay, a debt of $57,000 to attack the sale of her $5,000 homestead].) Plaintiff's amended complaint and judicially noticed documents establish that a loan of $650,000 was obtained to refinance her mortgage. To allow plaintiff to quiet title without tender "would give [her] an inequitable windfall" under the circumstances. (Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526.)
Accordingly, the trial court properly sustained defendants' demurrer to plaintiff's quiet title cause of action.
K. Leave to Amend
In her appellate brief, plaintiff acknowledges she "has the burden of showing how the pleading can be amended to state a cause of action." The only identifiable proposed amendment we can discern is a footnote where plaintiff states she "did not submit a copy of the MERS Membership Terms and Conditions or Rules of Membership, but can . . . amend the complaint . . . to show MERS['s] own claim that it administers deeds and holds no interest in the underlying debt." Amending the amended complaint to state these allegations would not cure any of the defects identified with plaintiff's MERS-related claims. Plaintiff otherwise fails to show a reasonable possibility that the defects in the amended complaint can be cured by amendment. (Barroso, supra, 208 Cal.App.4th at p. 1008.) The trial court did not abuse its discretion in sustaining the demurrer to plaintiff's amended complaint without leave to amend. (Dinuba, supra, 41 Cal.4th at p. 865.)
III. Disposition
We reverse the judgment. The superior court is directed to vacate its order sustaining the demurrer without leave to amend. The court shall enter a new order overruling the demurrer to the HBOR cause of action only and sustaining the demurrer without leave to amend as to the other eight causes of action that were the subject of the demurrer. The parties shall bear their own costs on appeal.
/s/_________
Mihara, J. WE CONCUR: /s/_________
Elia, Acting P. J. /s/_________
Bamattre-Manoukian, J.