Yazdani v. Bank of America CA4/1

• Court: California Court of Appeal
• Decided: May 26, 2015
• Docket: D066141
• Status: Unpublished

Opinion

Filed 5/26/15 Yazdani v. Bank of America CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

KAVEH YAZDANI, D066141

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2013-00045361- CU-OR-NC) BANK OF AMERICA, N.A. et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of San Diego County, Robert P.

Dahlquist, Judge. Affirmed.

Leon E. Campbell, for Plaintiff and Appellant.

Akerman, Karen P. Ciccone and Evan F. Anderson, for Defendants and

Respondents. INTRODUCTION

Kaveh Yazdani appeals from the judgment entered in favor of Bank of America,

N.A. (BofA) and ReconTrust Company, N.A.1 (ReconTrust, together with BofA,

defendants) after the trial court sustained the demurrer to Yazdani's third amended

complaint (TAC) without leave to amend. Yazdani contends the court erred in sustaining

the demurrer without leave to amend because his TAC stated sufficient facts to constitute

a cause of action for breach of the implied duty to act in good faith and fair dealing. We

disagree and affirm the judgment.

BACKGROUND

Because this appeal arises from the sustaining of a demurrer, we summarize the

underlying facts stated in the TAC, accepting as true the TAC's properly pleaded material

factual allegations and facts properly judicially noticed. (Debrunner v. Deutsche Bank

National Trust Co. (2012) 204 Cal.App.4th 433, 435-436.)

A

In 2006, Yazdani obtained a loan from Home Loan Corporation dba Expanded

Mortgage Credit, for $656,250 to purchase property in San Marcos, California. The loan

was secured by a deed of trust on real property. The trust deed was recorded evidencing

the secured loan. The trust deed identified Home Loan Corporation dba Expanded

Mortgage Credit as the trustee and Mortgage Electronic Registration Systems, Inc.

(MERS) as the beneficiary.

1 Erroneously sued as "Reconstruct Company." 2 In April 2008 ReconTrust as agent for the beneficiary, recorded a notice of default

stating Yazdani owed $12,279.49. Subsequently, MERS substituted ReconTrust as the

new trustee. MERS also assigned all beneficial interest under the deed of trust to the

"Bank of New York Mellon fka the Bank of New York as trustee for the

certificateholders of the CWALT, Inc., Alternative Loan Trust 2007-OA3 Mortgage

Pass-Through Certificates, Series 2007-OA3." (Some capitalization omitted.) BofA was

the loan servicer.

Thereafter, ReconTrust recorded three notices of trustee's sale, with each notice

further postponing the public auction sale date. ReconTrust issued a trustee's deed upon

sale indicating ReconTrust sold the secured property to Alegria Real Estate Fund II, LLC

at a public auction on April 3, 2013. The trustee's deed was recorded on April 15, 2013.

B

Yazdani filed this action challenging the foreclosure sale. Before defendants

could file their demurrer to the original complaint, Yazdani amended the complaint.

Alegria Real Estate Fund II, LLC2 filed a demurrer to Yazdani's first amended complaint

(FAC), which the court sustained with leave to amend.

Yazdani filed a second amended complaint (SAC). Defendants demurred to

Yazdani's SAC, which the court sustained with leave to amend. The problems with the

SAC were: "(1) plaintiff failed to comply with the pleading format set forth in the

California Rules of Court[, rule 2.112] in that each cause of action was not separately

2 Yazdani dismissed Algeria Real Estate Fund II, LLC from this action. 3 stated, separately numbered, and did not identify the parties asserting the claim and

against whom it is asserted and (2) it was not clear whether [Yazdani] was asserting a

sole cause of action for breach of the implied covenant of good faith and fair dealing or if

he intended to assert additional claims." The court granted Yazdani leave to amend.

In his TAC, Yazdani alleged "[i]n breach of said duty of good faith and fair

dealing, and as a single cause of action," BofA caused a variety of statutory violations

related to nonjudicial foreclosure procedure to occur. Without specific factual

allegations, Yazdani generally alleges BofA breached its duty of good faith and fair

dealing by causing a trustee's sale "in violation of one or more of [BofA's] duties" as set

forth in Civil Code sections 2923.5, 2923.6, 2923.7, 2923.55, 2924.9, 2924.10, 2924.17,

2924.18, and the federal Home Affordable Modification Program as authorized by the

Emergency Economic Stabilization Act of 2009, and as amended by the American

Recovery and Reinvestment Act of 2009.

The court sustained defendants' demurrer to Yazdani's TAC without leave to

amend. The court explained Yazdani's TAC still suffered from the same defects as the

SAC. Additionally, the court stated Yazdani's TAC "fails to allege facts constituting any

cognizable cause of action" and "consists almost entirely of conclusory allegations of

alleged wrongdoing, with no facts pled to support the conclusions." The court entered

judgment in favor of defendants and dismissed Yazdani's action with prejudice.

4 DISCUSSION

I

Standard of Review

On appeal from a judgment of dismissal following the sustaining of a demurrer

without leave to amend, we initially review the allegations of the complaint de novo to

determine if it alleges facts sufficient to state a claim for relief under any legal theory.

(Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 506 (Jenkins).)

"[W]e give the complaint a reasonable interpretation, reading it as a whole and its parts in

their context." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) However, we do not

assume the truth of contentions, deductions or conclusions of fact or law. (Evans v. City

of Berkeley (2006) 38 Cal.4th 1, 6.)

"In order to prevail on appeal from an order sustaining a demurrer, the appellant

must affirmatively demonstrate error. Specifically, the appellant must show that the facts

pleaded are sufficient to establish every element of a cause of action and overcome all

legal grounds on which the trial court sustained the demurrer." (Intengan v. BAC Home

Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1052.) "A judgment of dismissal after

a demurrer has been sustained without leave to amend will be affirmed if proper on any

grounds stated in the demurrer, whether or not the court acted on that ground." (Carman

v. Alvord (1982) 31 Cal.3d 318, 324.) "However, it is error for a trial court to sustain a

demurrer when the plaintiff has stated a cause of action under any possible legal theory."

(Genesis Environmental Services v. San Joaquin Valley Unified Air Pollution Control

Dist. (2003) 113 Cal.App.4th 597, 603.)

5 If we conclude the complaint fails on any grounds stated in the demurrer, and if

the trial court sustained the demurrer without leave to amend, we must then review

whether the trial court's failure to grant leave to amend was an abuse of discretion.

(Jenkins, supra, 216 Cal.App.4th at pp. 506-507.) Specifically, "we decide 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; if not, there has been no abuse of

discretion and we affirm." (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) The plaintiff

has the burden of demonstrating abuse of discretion by showing how the complaint can

be amended to state a cause of action. (Schifando v. City of Los Angeles (2003) 31

Cal.4th 1074, 1081.)

II

Inadequacy of the Complaint

Rule 2.112 of the California Rules of Court requires each cause of action to be

numbered separately and its nature stated. In addition, where there is more than one

plaintiff or defendant, the names of the plaintiffs asserting the particular cause of action

and the names of the defendants against whom the cause of action is asserted must

appear. (Cal. Rules of Court, rule 2.112.)

In sustaining defendants' demurrer to Yazdani's SAC with leave to amend, the trial

court expressly pointed out Yazdani's failure to comply with the pleading format set forth

in California Rules of Court, rule 2.112. Yazdani failed to cure these formatting defects

in his TAC. The cause of action was not numbered, although Yazdani alleges he is

asserting a single cause of action for breach of the implied covenant of good faith and fair

6 dealing, which he alleges caused various statutory violations. There are no allegations

alleging the basis of a cause of action against ReconTrust.

Additionally, the complaint does not comply with Code of Civil Procedure section

425.10, subdivision (a)(1), which requires "[a] statement of the facts constituting the

cause of action, in ordinary and concise language." "Conclusions or deductions from the

facts alleged do not constitute a cause of action." (Whaley v. Jansen (1962) 208

Cal.App.2d 222, 229.)

Here, Yazdani has repeatedly failed to sustain his burden of setting forth factual

allegations constituting a cause of action. Yazdani's TAC consists almost entirely of

conclusory allegations of wrongdoing, i.e., broad allegations of various statutory

violations, with no facts pled to support the conclusions.

III

Tender Rule

Even if we overlook these pleading violations, defendants contend Yazdani's claim

fails because he did not allege a valid tender of the entire amount owed. We agree.

"It is settled that an action to set aside a trustee's sale for irregularities in sale

notice or procedure should be accompanied by an offer to pay the full amount of the debt

for which the property was security. [Citations.] This rule is premised upon the

equitable maxim that a court of equity will not order that a useless act be performed.

'Equity will not interpose its remedial power in the accomplishment of what seemingly

would be nothing but an idly and expensively futile act, nor will it purposely speculate in

a field where there has been no proof as to what beneficial purpose may be subserved

7 through its intervention.' " (Arnolds Management Corp. v. Eischen (1984) 158

Cal.App.3d 575, 578-579.) "To hold otherwise would permit plaintiffs to state a cause of

action without the necessary element of damage to themselves." (Id. at p. 580.)

Moreover, as the court in Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th

522, 526, explained, "Allowing plaintiffs to recoup the property without full tender would

give them an inequitable windfall, allowing them to evade their lawful debt." This tender

rule is strictly enforced. (Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 439.)

There are many exceptions to the tender rule. These exceptions include: (1) when

the borrower is attacking the validity of the underlying debt; (2) when the party attacking

the foreclosure sale has a counterclaim against the beneficiary equal to or greater than the

amount of the tender; (3) when the party attacking the foreclosure sale is not liable for the

debt; and (4) when the party attacking the foreclosure sale is not relying on equity

because the trustee's deed upon sale is void on its face. (Shuster v. BAC Home Loans

Servicing, LP (2012) 211 Cal.App.4th 505, 512.) However, Yazdani's TAC does not

allege facts implicating these exceptions.

Here, the notice of default notified Yazdani that he owed $12,279.49 on his home

loan. Yazdani did not plead, or provide any judicially noticeable evidence establishing,

he tendered his outstanding debt to defendants. Yazdani also did not propose any facts

showing it would be inequitable to require a full tender.

Yazdani contends, with no citation to authority, the tender rule only applies before

the sale and is therefore inapplicable to the present case. Yazdani's argument fails to

comply with California Rules of Court, rule 8.204(a)(1)(B), which requires briefs to

8 "support each point by argument and, if possible, by citation of authority." We may treat

as waived any points not supported by reasoned argument or citation to authority.

(Nelson v. Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862.)

Nevertheless, we note, "[a] cause of action 'implicitly integrated' with the irregular

sale fails unless the trustor can allege and establish a valid tender." (Arnolds

Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 579; see Karlsen v. American

Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 121 ["Appellant's alleged cause of action

for breach of an oral agreement is implicitly integrated with the voidable sale. However,

absent an effective and valid tender, the sale became valid and proper. The hurdle which

appellant has not been able to clear either legally or financially is that he never made a

valid tender."].) Yazdani's alleged cause of action for breach of the implied covenant of

good faith and fair dealing is implicitly integrated with the foreclosure sale. Therefore,

the tender rule is applicable to the present case. Accordingly, Yazdani cannot state a

valid cause of action because he failed to allege tender or to allege circumstances to

indicate an exception to the tender rule applies.

IV

Implied Covenant of Good Faith and Fair Dealing

Finally, even if the tender rule did not apply, Yazdani's TAC fails to state

sufficient facts to constitute a cause of action for breach of the implied duty to act in good

faith and fair dealing.

"There is implied in every contract a covenant by each party not to do anything

which will deprive the other parties thereto of the benefits of the contract. [Citations.]

9 This covenant not only imposes upon each contracting party the duty to refrain from

doing anything which would render performance of the contract impossible by any act of

his own, but also the duty to do everything that the contract presupposes that he will do to

accomplish its purpose." (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417.) "The

covenant of good faith finds particular application in situations where one party is

invested with a discretionary power affecting the rights of another. Such power must be

exercised in good faith." (Carma Developers (Cal.), Inc. v. Marathon Development

California, Inc. (1992) 2 Cal.4th 342, 372.) However, "it is well settled the implied

covenant does not extend so far as to impose enforceable duties that are beyond the scope

of the contract, nor does the covenant prohibit actions that are expressly authorized by the

contract's terms." (Jenkins, supra, 216 Cal.App.4th at p. 525; Carma Developers (Cal.),

Inc. v. Marathon Development California, Inc., supra, at p. 373 ["[i]t is universally

recognized the scope of conduct prohibited by the covenant of good faith is

circumscribed by the purposes and express terms of the contract."].)

Here, Yazdani generally alleges BofA breached the covenant of good faith and fair

dealing by making conclusory and vague allegations of various statutory violations in

connection with the nonjudicial foreclosure. However nowhere in his complaint does

Yazdani identify an express term or underlying purpose of the deed of trust or any other

contract to which the alleged breach of the implied covenant of good faith and fair

dealing relates. Moreover, Yazdani sets forth no facts to support the alleged statutory

violations or how the alleged statutory violations deprived him of the benefit of the loan

agreement. (Jenkins, supra, 216 Cal.App.4th at p. 528; see Pasadena Live v. City of

10 Pasadena (2004) 114 Cal.App.4th 1089, 1094 [" 'implied covenant of good faith and fair

dealing is limited to assuring compliance with the express terms of the contract, and

cannot be extended to create obligations not contemplated by the contract.' "].) As such,

Yazdani failed to state a valid cause of action for breach of the implied covenant of good

V

Denial of Leave to Amend

Finally, we must also consider whether Yazdani has shown there is a reasonable

probability he could cure the defects we have identified in the cause of action.

(Schifando, supra, 31 Cal.4th at p. 1081.) We conclude he has not done so.

Yazdani has not described new or more specific facts, or how those allegations

would state a cause of action. Significantly, Yazdani does not assert he should have been

granted leave to amend to cure any defects in his complaint. Rather, Yazdani states

"[t]he alleged violations are ultimate facts. Probative facts would take up many pages if

known. [Yazdani] alleges that full information is not available to [Yazdani], and that

such probative facts are yet to be discovered." Furthermore, in his opposition to

demurrer to the TAC, Yazdani asserts, "[BofA] has full information concerning such

violations; and that such information is unknown to [Yazdani] who is dependent on

discovery to obtain such information." However, Yazdani fails to articulate what

discoverable evidence he believes BofA possesses and how it relates to the elements of a

cause of action.

11 Yazdani contends Committee on Children's Television, Inc. v. General Foods

Corp. (1983) 35 Cal.3d 197 provides an exception to the usual rules of pleading.

However, there, the Supreme Court discussed an exception to the strict pleading standard

for allegations of fraud. (Id. at p. 217.) Furthermore, the strict pleading standard is only

relaxed if it is apparent the defendant possesses full information concerning the facts of

the controversy. (Ibid.)

Yazdani does not allege a cause of action for fraud. Moreover, Yazdani vaguely

asserts BofA possesses full information, but this is far from apparent because Yazdani

fails to state with any specificity what facts defendants possess, how those facts are

legally significant, or why Yazdani is not privy to any factual basis for his claim.

Therefore, the exception is inapplicable to the present case.

Yazdani bears the burden of demonstrating abuse of discretion by showing how

the complaint can be amended to state a cause of action. He has not met this burden.

(Schifando v. City of Los Angeles, supra, 31 Cal.4th at p.1081.) As a result, there is no

basis on which to grant leave to amend and the trial court did not abuse its discretion.

(Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1158–1159.)

VI

Conclusion

Yazdani has failed to state a viable cause of action for breach of the implied

covenant of good faith and fair dealing. Yazdani was granted ample opportunity and

instruction from the trial court to cure the defects in his pleading, but failed to do so. The

12 TAC is unsuccessful because neither the very limited properly asserted facts nor the

remaining conclusory allegations state the requisite elements of his cause of action.

Yazdani has not provided adequate legal authority or factual allegations to satisfy his

burden of showing there is a reasonable possibility he can amend the legal effect of his

complaint. (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1491.)

DISPOSITION

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

MCCONNELL, P. J.

WE CONCUR:

NARES, J.

MCINTYRE, J.