McCabe v. Wells Fargo Bank, N.A. CA4/2

• Court: California Court of Appeal
• Decided: July 16, 2015
• Docket: E058565
• Status: Unpublished

Opinion

Filed 7/16/15 McCabe v. Wells Fargo Bank, N.A. CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION TWO

MICHAEL McCABE,

Plaintiff and Appellant, E058565

v. (Super.Ct.No. INC 1204840)

WELLS FARGO BANK, N.A., OPINION

Defendant and Respondent.

Plaintiff and Appellant, E059709

v.

GREENPOINT MORTGAGE FUNDING, INC.,

APPEAL from the Superior Court of Riverside County. John G. Evans, Judge.

Affirmed.

Michael McCabe, in pro. per., for Plaintiff and Appellant. 1 Bryan Cave, Sean D. Muntz and Aileen M. Hunter, for Defendant and Respondent

Wells Fargo Bank, N.A.

Doll Amir & Eley, Hunter R. Eley and William H. Edmonson for Defendant and

Respondent GreenPoint Mortgage Funding, Inc.

Plaintiff and appellant Michael McCabe appeals from a judgment of dismissal

entered after the trial court sustained the demurrers of defendants and respondents, Wells

Fargo Bank, N.A., and GreenPoint Mortgage Funding, Inc., without leave to amend, to

McCabe’s second amended complaint. We will affirm the judgment.

BACKGROUND

McCabe’s second amended complaint (hereafter referred to as the complaint)

alleged 10 causes of action, all arising out of his claim that defendant and respondent

Wells Fargo Bank acted unlawfully in initiating a foreclosure sale of McCabe’s

residence.1 McCabe admitted that he was in default under the promissory note he

executed to secure refinancing of the existing loan on his residence and stated that he did

“not seek to obviate his financial obligation under the underlying promissory note.” He

contended that the defendants were all “strangers to his mortgage loan” who had no

authority to foreclose on his property.

1 The foreclosure was commenced on August 1, 2008, with the recording of a notice of default. That notice was rescinded on March 9, 2010, and a new notice of default was recorded on November 23, 2010. A notice of trustee’s sale was recorded on February 24, 2011. The sale was postponed multiple times, and another notice of trustee’s sale was recorded on June 12, 2012.

2 The lender on the refinancing was GreenPoint Mortgage Funding, Inc.

(GreenPoint). The deed of trust which secured the note stated that GreenPoint was the

lender, Marin Conveyancing Corporation was the trustee, and MERS (Mortgage

Electronic Registration Systems, Inc.), acting solely as a nominee for the lender and its

successors and assigns, was the beneficiary under the deed of trust.

McCabe alleged that GreenPoint securitized and sold the note to investors by

creating a securitized trust. He identified the trust as GreenPoint Mortgage Funding Trust

2006-AR2, Mortgage Pass-Through Certificates Series 2006-AR2. He alleged that Wells

Fargo was the trustee of that trust at all times relevant to the complaint. He alleged that

the trust so created “is not the owner of the mortgage and lacks standing to foreclose.”

He alleged that Wells Fargo and defendant JPMorgan Chase Bank (Chase) engaged in a

pattern and practice of falsifying loan transactions and assignments of mortgages for the

purpose of enabling their joint venturers to foreclose illegally on property and of

collecting from borrowers, including McCabe, “mortgage proceeds they had no right to

collect.” McCabe alleged that Chase was the servicer of his loan, having assumed the

servicing obligation from defendant EMC Mortgage Corporation sometime between

April, 1, 2011 and September 30, 2011. He further alleged that defendant California

Reconveyance Corporation (Cal Recon), which claims to be the trustee under his deed of

trust pursuant to a substitution of trustee executed by MERS, is a wholly owned

subsidiary of Chase. He alleged that defendant EMC Mortgage Corporation is also a

wholly owned subsidiary of Chase. He alleged, on a number of bases, that none of the

3 defendants had the authority to foreclose and that they falsified documents in order to

appear to have that authority.

Although a trustee’s sale was scheduled for July 12, 2012 (see fn. 1, ante), it had

not taken place as of the date of filing the complaint.

In his first cause of action, McCabe sought a declaration that the note and deed of

trust were never properly assigned to the trust and that GreenPoint is the only entity that

has the right to collect payments or to foreclose. In his ninth cause of action, McCabe

sought a declaration as to the rights and interests of the parties to the property. He also

alleged negligence (2d cause of action; all defendants), quasi-contract (3d cause of

action; Wells Fargo, EMC, Chase & the Doe defendants); violations of Civil Code

sections 2924 et seq. (4th cause of action; all defendants); unfair business practices

against all defendants (5th cause of action; all defendants); quiet title (6th cause of action;

all defendants); slander of title (7th cause of action; all defendants); a cancellation of

instruments (8th cause of action; all defendants); accounting (10th cause of action; all

defendants).

Wells Fargo, Chase and California Reconveyance Corporation demurred to all

causes of action. The trial court sustained both demurrers without leave to amend and

entered judgments of dismissal.

Judgment was entered as to Chase and California Reconveyance Corporation on

March 14, 2013, and a separate judgment was entered as to Wells Fargo on April 2, 2013.

McCabe filed a notice of appeal on April 15, 2013. McCabe filed with this court a copy

of the April 2, 2013 judgment, but despite our request, he did not file a copy of the March

4 14, 2013 judgment. Consequently, we dismissed the appeal as to Chase and ordered the

appeal to proceed only as to Wells Fargo.

After entry of judgment as to Wells Fargo and Chase, GreenPoint also demurred to

all causes of action in the second amended complaint. The trial court sustained the

demurrer without leave to amend and entered a judgment of dismissal as to GreenPoint.

McCabe filed a timely notice of appeal from that judgment.2 We later granted his motion

to consolidate the two appeals for all purposes.

LEGAL ANALYSIS

1.

THE DEMURRER WAS PROPERLY SUSTAINED WITHOUT LEAVE TO AMEND

On appeal from a judgment of dismissal following an order sustaining a demurrer,

we determine independently whether the complaint states a cause of action as a matter of

law. We assume the truth of all properly pleaded factual allegations, facts that can

reasonably be inferred from those expressly pleaded, and of matters of which the trial

court took judicial notice. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074,

1081.) Even though our review is de novo, however, we need address only those

contentions which have been adequately raised and supported in the appellant’s briefing.

2 McCabe attached a copy of the order sustaining the demurrer to his notice of appeal. The notice of appeal states that it is taken from a judgment or order entered on September 9, 2013. The order sustaining the demurrer was entered on September 9, 2013; the judgment was entered on August 26, 2013. However, the notice of appeal states that it is taken from the judgment as well as from the order. Accordingly, we deem the appeal to have been taken from the judgment rather than from the nonappealable order. (Hill v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1695.)

5 (Mendoza v. Town of Ross (2005) 128 Cal.App.4th 625, 630; Reyes v. Kosha (1998) 65

Cal.App.4th 451, 466, fn. 6.) Accordingly, we limit our review to McCabe’s specific

arguments.

McCabe first asserts that California homeowners “can sue strangers to the original

loan contracts who have committed felonies [and] falsified documents so they could

claim to have the authority to foreclose.”3 He asserts no legal authority for this

contention and no reasoned analysis, however, and we could simply disregard it. (Kim v.

Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) We choose, however, to address it

briefly.

“California’s nonjudicial foreclosure scheme is set forth in Civil Code sections

2924 through 2924k, which ‘provide a comprehensive framework for the regulation of a

nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.’

[Citation.] ‘These provisions cover every aspect of exercise of the power of sale

contained in a deed of trust.’ [Citation.] ‘The purposes of this comprehensive scheme

are threefold: (1) to provide the creditor/beneficiary with a quick, inexpensive and

efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from

wrongful loss of the property; and (3) to ensure that a properly conducted sale is final

between the parties and conclusive as to a bona fide purchaser.’ [Citation.] ‘Because of

the exhaustive nature of this scheme, California appellate courts have refused to read any

3 Plaintiff asserts that some actions of the defendants constitute felonies and that documents of which the trial court took judicial notice constitute admissions of those felonies.

6 additional requirements into the non-judicial foreclosure statute.’ [Citations.] [‘It would

be inconsistent with the comprehensive and exhaustive statutory scheme regulating

nonjudicial foreclosures to incorporate another unrelated cure provision into statutory

nonjudicial foreclosure proceedings.’].)” (Gomes v. Countrywide Home Loans, Inc.

(2011) 192 Cal.App.4th 1149, 1154 (Gomes).) For these reasons, the court in Gomes

held that there is no legal authority for a preemptive lawsuit challenging the authority of a

person or entity who claims to be empowered by a deed of trust to commence foreclosure

proceedings. (Id. at pp. 1154-1157.)

Some courts have held that a suit is not preemptive within the meaning of Gomes,

supra, 192 Cal.App.4th 1149, if the plaintiff alleges a specific factual basis for alleging

that the foreclosing entity did not have the authority to initiate foreclosure proceedings.

(Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 82;

Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 512.) We believe

that this holding is based on a misreading of Gomes.

Part of the reasoning in Gomes is that the nonjudicial foreclosure statutory scheme

contains no provision which permits borrowers to file civil suits to determine whether the

proper parties are foreclosing. If borrowers could file such suits, the court reasoned, the

court system would become a part of the foreclosure process. (Gomes, supra, 192

Cal.App.4th at p. 1155.) Further, the court reasoned, the plaintiff was not seeking a

remedy for misconduct; instead, the plaintiff was seeking to create an additional

requirement and force the foreclosing entity to come into court and prove its authority to

foreclose. (Id. at p. 1154, fn 5.)

7 The court then distinguished federal cases which, the plaintiff asserted, recognized

a right to file such a suit.4 The court noted that none of the cases did recognize such a

right, and that all of the cases are from districts outside of California and did not apply

California law. (Gomes, supra, 192 Cal.App.4th at pp. 1155-1156.) The court then noted

that in each of those other cases, in contrast to Gomes, a specific factual basis was

identified to allege the foreclosure was not initiated by the correct party. (Id. at p. 1156.)

It did not, however, hold that the plaintiff in Gomes would have stated a valid cause of

action if he had pleaded a specific factual basis for believing that the foreclosing entity

lacked the authority to do so. On the contrary, the court went on to state, “Gomes

appears to acknowledge 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. He argues, however, that we should nevertheless

interpret the statute to provide for such a right because the ‘Legislature may not have

contemplated or had time to fully respond to the present situation.’ That argument should

be addressed in the first instance to the Legislature, not the courts. Because California’s

nonjudicial foreclosure statute is unambiguously silent on any right to bring the type of

action identified by Gomes, there is no basis for the courts to create such a right. We

4 The cases the court discussed are Weingartner v. Chase Home Finance, LLC (D.Nev. 2010) 702 F.Supp.2d 1276; Castro v. Executive Trustee Services, LLC (D.Ariz. 2009, Feb. 23, 2009, No. CV-08-2156-PHX-LOA) 2009 U.S.Dist. Lexis 14134; and Ohlendorf v. American Home Mortgage Servicing (E.D.Cal., Mar. 31, 2010, No. CIV. S- 09-2081 LKK/EFB) 2010 U.S.Dist. Lexis 31098. (Gomes, supra, 192 Cal.App.4th at p. 1155.)

8 therefore conclude that the trial court properly sustained Defendants’ demurrer to the first

and second causes of action in Gomes’s complaint.” (Id. at pp. 1156-1157.)

In Robinson v. Countrywide Home Loans, Inc. (2011) 199 Cal.App.4th 42, [Fourth

Dist., Div. Two] we held, based on our reading of Gomes, supra, 192 Cal.App.4th 1149,

and of the nonjudicial foreclosure statutes, that there is no legal basis for a preemptive

challenge to a foreclosing entity’s authority to initiate foreclosure. Perhaps there should

be, but that is for the Legislature to decide. In the absence of any persuasive argument by

McCabe, we see no reason to change our view.5

McCabe’s next four contentions (arguments B-E) are all based on the premise that

documents of which the trial court took judicial notice contain evidence which establishes

that the defendants committed felonies and engaged in fraudulent activities, thus

establishing that they do not have the authority to foreclose. Because McCabe has not

demonstrated that he can state a valid cause of action seeking to stop the foreclosure

because defendants lack the authority to foreclose, these arguments are irrelevant, and we

need not address them.

5 The issue is currently pending on review before the California Supreme Court in Keshtgar v. U.S. Bank, N.A. (rev. granted Oct. 1, 2014, S220012). The court ordered briefing deferred pursuant to rule 8.512(d)(2) of the California Rules of Court, pending its consideration in Yvanova v. New Century Mortgage Corp. (rev. granted Aug. 27, 2014, S218973) of the related issue of whether, in an action for wrongful foreclosure on a deed of trust securing a home loan, the borrower has standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void.

9 Because McCabe has failed to demonstrate the existence of a legal right to

challenge the authority of a foreclosing entity, the demurrer was properly sustained.

If the demurrer was sustained without leave to amend, we review the court’s order

denying leave for abuse of discretion. However, the burden is on the plaintiff to

demonstrate that an amendment would cure the defect. (Schifando v. City of Los Angeles,

supra, 31 Cal.4th at p. 1081.) Here, McCabe mentions, fleetingly, that he could amend

the complaint to state a cause of action, but he does not state explicitly how he could do

so, or on what legal theory. Accordingly, he has not met his burden on appeal.

2.

THE DEMURRER PROCEDURE IS NOT UNCONSTITUTIONAL

McCabe’s final argument (argument F) is that the demurrer procedure is

unconstitutional, primarily because it deprives a litigant of the right to a jury trial. This

argument is specious. A demurrer addresses the legal sufficiency of the pleading, based

on the assumption that the facts as pleaded are true. It constitutes a pure question of law

for the court, not an issue of fact for a jury to decide. (First Aid Services of San Diego,

Inc. v. California Employment Development Dept. (2005) 133 Cal.App.4th 1470, 1476.)

Accordingly, it does not implicate a litigant’s right to a jury trial. (Palmer v. Metro-

Goldwyn-Mayer Pictures (1953) 119 Cal.App.2d 456, 460.)

10 DISPOSITION

The judgment is affirmed. Defendants and respondents Wells Fargo Bank, N.A.

and GreenPoint Mortgage Funding, Inc. are awarded costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

McKINSTER Acting P. J. We concur:

KING J.

CODRINGTON J.