Valbuena v. Ocwen Loan Servicing CA4/2

• Court: California Court of Appeal
• Decided: May 12, 2021
• Docket: E073534
• Status: Unpublished

Opinion

Filed 5/12/21 Valbuena v. Ocwen Loan Servicing 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

GARY VALBUENA,

Plaintiff and Appellant, E073534

v. (Super.Ct.No. RIC1812204)

OCWEN LOAN SERVICING, LLC et OPINION al.,

Defendants and Respondents.

APPEAL from the Superior Court of Riverside County. Chad W. Firetag, Judge.

Affirmed.

Gary Valbuena, in pro. per., for Plaintiff and Appellant.

Severson & Werson, Jan T. Chilton, and Kerry W. Franich, for Defendant and

Respondent Ocwen Loan Servicing, LLC.

ZBS Law and Bradford E. Klein for Defendants and Respondents Law Offices of

Les Zieve, Christine O’Brien and Geoffrey Neal.

1 Plaintiff and appellant Gary Valbuena (Plaintiff) sued Ocwen Loan Servicing,

LLC (Ocwen); Homeward Residential, Inc. (Homeward); the Federal Home Loan

Mortgage Corporation (Freddie Mac); JPMorgan Chase Bank, NA (Chase); Karen

Smith (Smith); Vicki Pospisil (Pospisil); the Law Offices of Les Zieve; Christine

O’Brien; and Geoffrey Neal for alleged issues related to a home foreclosure. The

defendants demurred. The trial court sustained the demurrer without leave to amend.

Plaintiff contends the trial court erred by sustaining the demurrer. We affirm the

judgment.

FACTUAL AND PROCEDURAL HISTORY1

In 2002, Plaintiff’s mother (Mother) and father (Father) purchased property in

Banning (the property). Mother and Father obtained a loan secured by a deed of trust

on the property. Father died in January 2005. In June 2005, Mother transferred the

property from herself to her trust (the Trust). In 2006, Mother refinanced the property

through Washington Mutual and transferred the property back to herself as an

individual.

Thereafter, in September 2006, the promissory note for the property was

transferred into a securitized pool of loans. In 2008, Washington Mutual declared

bankruptcy, and Chase purchased Washington Mutual’s assets. When Chase purchased

1 Because this an appeal following the sustaining of a demurrer, we present the version of the facts alleged by plaintiff along with matters that were judicially noticed by the trial court. (See generally Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 438-439 [“We do not . . . assume the truth of ‘mere contentions or assertions contradicted by judicially noticeable facts’ ”].)

2 Washington Mutual’s assets, Chase did not “buy any individual Originated Mortgage

Loan by [Washington Mutual] prior to September 25, 2008,” which includes the loan

for the property. Nevertheless, Chase became trustee of the deed of trust for Mother’s

loan.

In February and March 2012, Mother failed to make her loan payments. A notice

of default in the amount of $9,867.90 was recorded in June 2012. The notice of default

informed Mother that she should direct any payments to “JPMorgan Chase Bank,

National Association successor in interest by purchase from the FDIC as Receiver of

Washington Mutual Bank f/k/a Washington Mutual Bank, FA C/O Northwest Trustee

Services, Inc.” On November 8, 2012, Chase assigned its beneficial interest in the deed

of trust to Homeward.

On November 14, 2012, Mother modified the loan with Homeward. In the

modification agreement, Homeward was identified as the lender. The new principal

balance of the promissory note was $303,761.83. The maturity date for the loan was

November 1, 2052. Mother agreed to an interest rate of two percent for the first five

years of the loan; three percent for the sixth year of the loan; and 3.375 percent for the

remaining 34 years of the loan. The payment schedule would not result in the loan

being paid in full by November 2052, so Mother would have to make a balloon payment

at the end of the loan period. On April 2, 2014, Mother executed a grant deed

transferring the property from her ownership as an individual into the Trust. Mother

died in August 2014.

3 After Mother died, plaintiff (from what we gather in the allegations) made the

monthly payments on Mother’s loan. However, in September, October, and November

2015, plaintiff failed to make the loan payments. In November 2015, Homeward

assigned its beneficial interest in the deed of trust to Ocwen. In November 2015,

Ocwen substituted the Law Offices of Les Zieve as trustee for the deed of trust. In

November 2015, plaintiff contacted Ocwen. Plaintiff offered to bring the mortgage

payments current in December because he was expecting to receive money in

December. Ocwen informed plaintiff that any payment would have to bring the loan

current—no partial payments would be accepted. On December 9, 2015, a notice of

default in the amount of $10,124.46 was recorded.

In January 2016, Ocwen assigned its beneficial interest in the deed of trust to

Freddie Mac. A notice of trustee’s sale was recorded on March 16, 2016. The sale was

scheduled for April 20, 2016. On April 18, 2016, Mother’s 2014 grant deed from

herself to the Trust was recorded. That same day, plaintiff filed a lawsuit seeking to

prevent the foreclosure. The defendants in that lawsuit filed separate demurrers.

Between November 2016 and February 2017, at separate hearings, the trial court

sustained the defendants’ demurrers without leave to amend. This court affirmed the

trial court. (Valbuena v. Law Offices of Les Zieve (Sept. 13, 2018, E067927 [nonpub.

opn.]) [2018 LEXIS 6273].)

In March 2017, plaintiff as trustee of the Trust executed a quit claim deed

granting the property to the Trust and plaintiff as joint tenants. On September 12, 2017,

the Law Offices of Les Zieve recorded a new notice of trustee’s sale. On October 26,

4 2017, the trustee’s deed upon sale was recorded. In the deed upon sale, the Law Offices

of Les Zieve was listed as the trustee; Mother was listed as the trustor; and Freddie Mac

was listed as the beneficiary and grantee.

Plaintiff filed the instant lawsuit on June 15, 2018. At that time, plaintiff was

being threatened with eviction. The instant lawsuit is based upon plaintiff’s “new

discovery” that the promissory note and deed of trust were not part of Chase’s purchase

of Washington Mutual’s assets, which means Chase could not transfer the deed of trust

to Homeward, which means the parties who foreclosed on the property did not have the

authority to foreclose. Plaintiff included eight causes of action in his first amended

complaint (FAC).

On June 19, 2018, plaintiff filed for Chapter 7 bankruptcy in the U.S. Bankruptcy

Court for the Central District of California. On September 25, 2018, the Bankruptcy

Court granted Freddie Mac’s motion for relief from the stay of an unlawful detainer

case against plaintiff (11 U.S.C.A. § 362(a)), which permitted Freddie Mac to “enforce

its remedies to obtain possession of the Property, including lockout.”

In the instant case, Ocwen, Homeward, Freddie Mac, Smith, and Pospisil

demurred to the FAC. The remaining defendants—Chase, the Law Offices of Les

Zieve, Christine O’Brien, and Geoffrey Neal—joined in the demurrer. One of

defendants’ arguments was that “[b]ecause [Mother] benefitted from Homeward’s loan

modification agreement, [Mother] and her successors like Plaintiff are estopped from

challenging Homeward’s authority to enforce the Loan.” Plaintiff opposed the

demurrer. Plaintiff asserted he had standing to sue defendants because he is the owner

5 of the property. The trial court sustained the demurrer without leave to amend and

dismissed the case in its entirety.

DISCUSSION

A. STANDARD OF REVIEW

“When a demurrer is sustained by the trial court, we review the complaint de

novo to determine whether, as a matter of law, the complaint states facts sufficient to

constitute a cause of action. [Citation.] Reading the complaint as a whole and giving it

a reasonable interpretation, we treat all material facts properly pleaded as true.

[Citation.] The plaintiff has the burden of showing that the facts pleaded are sufficient

to establish every element of the cause of action and overcoming all of the legal grounds

on which the trial court sustained the demurrer, and if the defendant negates any

essential element, we will affirm the order sustaining the demurrer as to the cause of

action. [Citation.] We will affirm if there is any ground on which the demurrer can

properly be sustained, whether or not the trial court relied on proper grounds or the

defendant asserted a proper ground in the trial court proceedings.” (Martin v.

Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.)

B. STANDING

Plaintiff’s first cause of action alleged Ocwen and Law Offices of Les Zieve

violated the Homeowners’ Bill of Rights (Civ. Code, § 2920.5 et seq.), specifically Civil

Code section 2924.17, by recording void documents pertaining to the property. On

appeal, plaintiff contends the trial court erred by concluding plaintiff lacked standing to

allege a violation of the Homeowners’ Bill of Rights.

6 “Standing is the threshold element required to state a cause of action and, thus,

lack of standing may be raised by demurrer.” (Martin v. Bridgeport Community Assn.,

Inc., supra, 173 Cal.App.4th at p. 1031.) Civil Code section 2924.17, subdivision (a),

provides that foreclosure documents, such as notices of default and notices of sale, must

“be accurate and complete and supported by competent and reliable evidence.” In his

FAC, plaintiff cites Civil Code section 2924.12, which provides a borrower has standing

to sue for a violation of Civil Code section 2924.17. (Civ. Code, § 2924.12, subd. (a).)

A “ ‘borrower’ means any natural person who is a mortgagor or trustor.” (Civ. Code, §

2920.5, subd. (c)(1).)

In the FAC, plaintiff alleged that Mother and Father obtained a loan for the

property in 2002, Mother refinanced the property in 2006, and Mother modified the loan

in 2012. Plaintiff does not allege that he obtained a loan for the property. The 2016

notice of trustee’s sale lists Mother as the trustor. The 2017 trustee’s deed upon sale

lists Mother as the trustor. It appears from plaintiff’s allegations that plaintiff continued

to pay Mother’s loan after Mother died. Thus, Mother is the borrower not plaintiff.

In the FAC, plaintiff alleges that he is Mother’s successor-in-interest for the loan.

To support his assertion, plaintiff cites to “section (Q)” of the deed of trust for Mother’s

2006 loan with Washington Mutual. Section Q is in the “definition” section of the deed

of trust. It provides that “ ‘Successor in Interest of Borrower’ means any party that has

taken title to the Property, whether or not that party has assumed Borrower’s obligations

under the Note and/or this Security Instrument.”

7 Thus, a successor in interest under the deed of trust need not have “assumed

Borrower’s obligations under the Note,” but to meet the statutory definition of

“borrower,” one must be a mortgagor or trustor. (Civ. Code, § 2920.5, subd. (c)(1).)

Plaintiff failed to allege how the definition of “successor in interest of borrower” within

the deed of trust would expand the statutory definition of “borrower.” If one is not a

mortgagor or trustor, then one is not a borrower under the statute. (Civ. Code, § 2920.5,

subd. (c)(1).) If one is not a borrower under the statute, then one does not have

standing.

A different section of the deed of trust addresses any transfer in ownership of the

property. It provides, “If all or any part of the Property or any Interest in the Property is

sold or transferred . . . without Lender’s prior written consent, Lender may require

immediate payment in full of all sums secured by this Security Instrument.” Plaintiff

fails to allege that Mother contacted the lender prior to transferring the property into the

Trust and/or that he contacted the lender prior to transferring the property in joint

tenancy to himself. As a result, plaintiff does not provide sufficient allegations to

support his conclusion that he is a “borrower” as defined in Civil Code section 2920.5,

subdivision (c)(1). Because plaintiff is not a borrower, plaintiff lacks standing to sue for

an alleged violation of Civil Code section 2924.17. Therefore, the trial court properly

sustained the demurrer to the first cause of action.

8 Plaintiff asserts that he “is being denied the opportunity to exercise his rights

under [the Homeowners’ Bill of Rights] because the named borrower has died. . . . The

California [L]egislature could not have intended such a result.” If the Legislature

wanted people other than trustors and mortgagors to have standing, then it would have

included other people. Because the Legislature did not include people other than

trustors and mortgagors (Civ. Code, § 2920.5, subd. (c)(1)), we are not persuaded that

the Legislature intended for others to be included. (People v. Whitmer (2014) 230

Cal.App.4th 906, 917 [“ ‘ “the expression of certain things in a statute necessarily

involves exclusion of other things not expressed” ’ ”].)

Plaintiff contends that “[p]ublic policy requires that [plaintiff] has standing to sue

under [the Homeowners’ Bill of Rights] because there is no one else to do so.”

Plaintiff’s position appears to be that he avoided personal liability for the loan by not

contacting the lender prior to putting the property into his name and now should be able

to sue pursuant to public policy. We find plaintiff’s contention to be unpersuasive.

C. CAUSES OF ACTION ONE THROUGH FIVE AND SEVEN

Plaintiff contends the trial court erred by finding he did not plead sufficient facts

for causes of action one through five and seven. We have explained ante that the first

cause of action fails because plaintiff failed to sufficiently allege that he has standing to

bring a cause of action for an alleged violation of the Homeowners’ Bill of Rights.

Plaintiff’s second through fifth causes of action and seventh cause of action

pertain to common law wrongful foreclosure. The second cause of action alleges

conspiracy to wrongfully foreclose. The third cause of action alleges unfair business

9 practices related to the allegedly wrongful foreclosure. (Bus. & Prof. Code, § 17200.)

The fourth cause of action is for aiding and abetting the allegedly wrongful foreclosure.

The fifth cause of action is for wrongful foreclosure. The seventh cause of action seeks

to quiet title.

“Wrongful foreclosure is a common law tort claim. ‘The elements of a wrongful

foreclosure cause of action are: “ ‘(1) [T]he trustee or mortgagee caused an illegal,

fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a

mortgage or deed of trust; (2) the party attacking the sale (usually but not always the

trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or

mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the

secured indebtedness or was excused from tendering.’ ” ’ ” (Turner v. Seterus, Inc.

(2018) 27 Cal.App.5th 516, 525.)

We briefly address the different standing requirement under the common law. In

common law, a party “ ‘with an interest . . . in the real property security itself ha[s]

standing to challenge or attempt to set aside a nonjudicial foreclosure sale.” ’ ” (Banc of

America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180

Cal.App.4th 1090, 1103.) Plaintiff obtained an interest in the property in March 2017,

and the trustee’s sale took place in October 2017. Plaintiff had an ownership interest in

the property at the time of the foreclosure, so plaintiff has standing to bring the common

law wrongful foreclosure claims.

10 We now turn to the sufficiency of plaintiff’s allegations. Plaintiff’s theory is that

there is not a 2008 assignment of deed of trust from Washington Mutual to Chase

because Mother’s loan was not part of Chase’s purchase of Washington Mutual’s assets,

so the assignment from Chase to Homeward and all the assignments thereafter lack

validity, which means Ocwen and the Law Offices of Les Zieve lacked authority to

foreclose on the property in 2017. The flaw in plaintiff’s allegations is that plaintiff

fails to take into account the intervening event of the 2012 loan modification.

In Mother’s 2012 loan modification, Mother agreed that Homeward was her

lender. Mother agreed to a new principal balance, new interest rates, and new mortgage

maturity date. Mother agreed to work with Homeward. Thus, if there were any error in

the 2008 documents, that error was cured by the 2012 loan modification because Mother

signed a contract recognizing Homeward as her lender and agreeing to loan terms with

Homeward. The 2012 loan modification effectively fixed any issues as to the identity

of Mother’s lender. Because plaintiff’s allegations fail to address the intervening event

of the 2012 loan modification, he has not sufficiently pled how an error in the lender’s

identity in 2008 could have caused a wrongful foreclosure in 2017, which means

plaintiff failed to sufficiently allege the trustee caused a fraudulent sale of real property

pursuant to a power of sale in a deed of trust.

Another issue plaintiff raises in the FAC is that, at the time of the December

2015 default, he should not have owed more than $5,000, but Ocwen demanded

$10,124.46 to reinstate the loan. Plaintiff asserts Ocwen provided “no explanation or

break down of what this amount consisted of.” Plaintiff does not allege that, if the

11 reinstatement amount had been less than $5,000 then he would have made the payment.

For example, plaintiff alleged that he called Ocwen and asked if he could send them a

payment in December 2015 when he expected to receive some money. Plaintiff fails to

allege that he received the expected money, that he had $5,000 to send to Ocwen, and

that he would have sent the $5,000 to Ocwen. Plaintiff also does not sufficiently allege

that he was the borrower, such that the lender would have permitted plaintiff to reinstate

the loan. Thus, if we accept as true the allegation that the $10,124.46 amount was

inaccurate, it is unclear how that inaccuracy caused plaintiff harm.

Another issue plaintiff raises is that, when Chase transferred the deed of trust to

Homeward, Homeward did not provide any consideration for the transfer. Plaintiff

makes the same complaint regarding the transfer from Homeward to Ocwen. Plaintiff

asserts that the lack of consideration means the transfers were invalid. The assignment

from Chase to Homeward reads, “FOR VALUE RECEIVED, the undersigned hereby

grants . . . .” The assignment from Homeward to Ocwen reads, “For Value Received,

Homeward Residential, Inc. hereby grants . . . .” If we assume that plaintiff’s

allegations are true, i.e., that no consideration was given, plaintiff has failed to provide

authority reflecting such a transfer would be invalid. For example, plaintiff has not

cited authority indicating that gifts are not allowed.

In sum, we conclude the trial court properly sustained the demurrer to the second

through fifth and the seventh causes of action.

12 D. SIXTH AND EIGHTH CAUSES OF ACTION

At the end of plaintiff’s appellant’s opening brief, he asserts the trial court erred

by sustaining the demurrer to all eight causes of action. Plaintiff offers no substantive

argument as to the sixth and eighth causes of action. Accordingly, the issue is forfeited

as to the sixth and eighth causes of action. (Brown v. Deutsche Bank National Trust Co.

(2016) 247 Cal.App.4th 275, 281-282.)

E. AMENDMENT

Plaintiff requests this court “give [Plaintiff] another opportunity to correct what

this what this [sic] court think [sic] is lacking as evidenced by all stated above.”

“The law on this point is well settled. ‘If there is a reasonable possibility that the

defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain

a demurrer without leave to amend. [Citation.] The burden is on the plaintiff, however,

to demonstrate the manner in which the complaint might be amended.’ ” (Association

of Community Organizations for Reform Now v. Department of Industrial Relations

(1995) 41 Cal.App.4th 298, 302.) The plaintiff must also explain how the proposed

“ ‘ “amendment will change the legal effect of his pleading.” ’ ” (Hedwall v. PCMV,

LLC (2018) 22 Cal.App.5th 564, 579.)

Plaintiff has not explained how he would amend the FAC to cure the defects.

Rather, plaintiff is relying on this court to inform him of the FAC’s defects. Because

plaintiff has not met his burden of demonstrating how the FAC might be amended, we

conclude the trial court did not err by denying plaintiff leave to amend.

13 DISPOSITION

The judgment is affirmed. Respondents are awarded their costs on appeal. (Cal.

Rules of Court, rule 8.278(a)(1).)

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

MILLER J.

We concur:

McKINSTER Acting P. J.

FIELDS J.