Brown v. CitiMortgage CA2/4 ( 2016 )

Filed 1/21/16 Brown v. CitiMortgage CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
RICHARD W. BROWN et al., B260702
Cross-Complainants and (Los Angeles County
Appellants, Super. Ct. No. PC055028)
v.
CITIMORTGAGE, INC.,
Cross-Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County,
Melvin Sandvig, Judge. Affirmed.
Randall A. Spencer for Cross-Complainants and Appellants.
Wolfe & Wyman, Stuart B. Wolfe and David M. Chute for Cross-Defendant
and Respondent.
Cross-complainants Richard W. and Diane Y. Brown (Browns) appeal from
a judgment dismissing with prejudice the operative first amended cross-complaint
(FACC) against cross-defendant and respondent CitiMortgage, Inc. (respondent or
CitiMortgage), after the trial court sustained respondent’s demurrer to the FACC
without leave to amend. We affirm the judgment of dismissal.
BACKGROUND
As explained more fully below, the trial court sustained respondent’s
demurrer to the Browns’ FACC without leave to amend on the grounds, inter alia
that the FACC was barred by the doctrine of res judicata and by the Statute of
Frauds. To put the court’s ruling in context, we begin with the allegations of the
FACC, and then summarize relevant procedural events in this and prior actions.
1
I. The FACC
The Browns owned a home in Valencia, California (the Property). On
November 2, 2002, they obtained a mortgage loan for $250,090 (the loan) from
respondent’s predecessor in interest. The loan was secured by a deed of trust. The
loan had a maturity date of December 1, 2009, but included a balloon rider which,
subject to certain conditions would, upon maturity, permit the Browns to obtain a
new loan with a maturity date of December 1, 2032. The Browns made all
monthly payments on the loan up to and including December 1, 2009.
1 On review from an order sustaining a demurrer we accept as true the factual
allegations of the operative pleading. (Lucras v. BAC Home Loans Servicing, LP (2013)
221 Cal.App.4th 49, 55.)
2
In mid-October 2008, the Browns received a letter from respondent
notifying them the loan would mature on December 1, 2009, and that their options
included making a lump sum payment of the loan balance, or resetting the
mortgage loan according to the terms of balloon rider, provided they satisfied
certain conditions. The Browns chose to obtain a new loan under the balloon rider,
and satisfied the conditions contained in respondent’s October 15, 2008 letter. On
September 9, 2009, they mailed a completed form entitled “Borrower’s
Intention/Request Statement, Borrower’s Notice to Servicer as Requested by the
Balloon Note Addendum and Balloon Rider” (Borrower’s Intention Form)
notifying CitiMortgage that they had satisfied all prerequisites and were electing to
exercise the reset option of the balloon rider. Later that month, the Browns
contacted respondent to confirm that it had received the completed Borrower’s
Intention Form. CitiMortgage confirmed its receipt of the Borrower’s Intention
Form, but said the form was ineffective. CitiMortgage also told the Browns they
were not eligible for a traditional loan, but could apply for a loan modification as
part of a new government program in which CitiMortgage was participating to
receive a longer new loan at a lower interest rate.
In early November 2009, the Browns received a letter from respondent,
dated October 21, 2009, stating they had failed to notify CitiMortgage of their
intention with respect to the loan. Accordingly, the entire loan balance was due
December 1, 2009. On November 5, 2009, the Browns called respondent
regarding its October 21, 2009 letter, in light of the fact that they had returned the
Borrower’s Intention Form in September. The Browns were unable to contact any
representative of CitiMortgage until November 23, 2009, when David (last name
3
2
unknown ) told them their request to reset under the terms of the balloon rider was
untimely, and instructed the Browns to apply for a new loan.
On December 1, 2009, the Browns’ regular monthly mortgage payment was
deducted from their account. On December 3, 2009, the Browns received a letter
from respondent––dated December 3, 2009––stating that they were in default on
the loan and requesting that they pay the full balance of $221,045.57 by January 2,
2010.
Between December 23, 2009 and March 1, 2010, the Browns contacted
respondent numerous times to discuss their confusion regarding the October 21 and
December 3, 2009 letters and to investigate the status of their effort to reset the
loan and their application for a loan modification. Throughout that period, the
Browns informed several of respondent’s representatives that they could pay off,
or actually offered to pay off, the balance of the loan. Respondent either refused to
accept a payoff or its representatives encouraged the Browns to continue seeking a
loan modification stating it was in their financial interest to do so, and that the
Browns were already being processed in a loan modification program for which
they were prequalified.
However, in early March 2010, respondent sent the Browns a letter stating
they had been denied a loan modification because they were current on their loan
payments and not facing imminent default. From early March through mid-April
2010, the Browns contacted respondent on numerous occasions offering to pay off
the loan. At various times, representatives of CitiMortgage continued to refuse to
2 Most of the CitiMortgage representatives with whom the Browns spoke from
November 2009 through April 2011 refused to provide a last name or employee
identification number.
4
accept a payoff, told the Browns to remain in the loan modification process for
which they were prequalified, or instructed them to submit a new application for a
loan modification. In April 2010, the Browns made the equivalent of four monthly
mortgage payments (for January through April 2010). In May 2010, respondent
returned the equivalent of two monthly payments to the Browns stating that their
loan had matured in December 2009, and CitiMortgage was unable to accept a
payment of less than the full balance.
From June to October 2010, the Browns continued to contact respondent
regarding the status of their loan modification application. They were told,
variously, that the application remained under review, or that additional
documentation or a new application was required (all of which the Browns
provided).
On November 17, 2010, respondent’s trustee recorded a Notice of Default
and Election to Sell under Deed of Trust on the Property, and recorded a Notice of
Trustee’s Sale.
On November 24, 2010, the Browns spoke with a representative of
CitiMortgage who informed them that, although she could not ascertain why, their
application for a loan modification had been closed and CitiMortgage was
proceeding with foreclosure. The representative reopened review of the Browns’
loan modification application, and the Browns offered to tender the balance of the
loan. The representative instructed the Browns to continue pursuing a loan
modification, which they were on track to receive. From that point through
February 17, 2011, the Browns had numerous contacts with various CitiMortgage
representatives regarding the status of their loan modification application. Those
representatives assured the Browns that their application remained under review
5
and that CitiMortgage would not proceed with a foreclosure sale while their
application for a loan modification was under review.
On February 18, 2011, respondent’s trustee recorded a Notice of Trustee’s
Sale on the Property.
On March 20, 2011, the Browns tendered, and CitiMortgage rejected,
payment of the balance of the loan ($221,045.57).
Between April 7 and April 13, 2011, the Browns requested that
CitiMortgage postpone the trustee’s sale while their loan modification application
remained under review. CitiMortgage did not respond to these requests. The
Property was sold to cross-defendant JT Homes (which is not a party to this
appeal) at a trustee’s sale on April 13, 2011.
On April 13, 2011, respondent’s representative Derrick McLaughlin, told the
Browns the Property had been sold by mistake because CitiMortgage was still
reviewing their loan modification application, and the sale would be rescinded.
On April 18, 2011, CitiMortgage repurchased the loan from Freddie Mac,
informed the Browns that CitiMortgage was the first lien holder on the Property
and reset the Browns’ loan (“New Loan”).
On April 22, 2011, in reliance on CitiMortgage’s representation that it was
rescinding the trustee’s sale, the Browns paid taxes, insurance and maintenance
fees for the Property. On April 22, 25 and May 27, 2011, respondent and/or the
Browns contacted JT Homes to inform JT Homes that CitiMortgage was
rescinding the trustee’s sale, and to cease any eviction action.
6
On September 7, 2011, the Browns made a third payment of $1,327.78 to
3
respondent on the New Loan.
In mid October 2012, the Browns received a letter from respondent stating
their loan had been paid in full.
II. Relevant Procedural Events
A. Prior Unlawful Detainer Action
After acquiring the Property at the foreclosure sale and perfecting its title, JT
Homes filed an unlawful detainer action against the Browns, who refused to vacate
the Property. On June 9, 2011, JT Homes obtained a judgment of possession and a
money judgment for $4,000 (representing a rental value of $100 per day for 40
days from April 30 to June 9, 2011). On June 27, 2011, the court issued an order
staying execution of the unlawful detainer judgment to July 13, 2011, subject to the
Browns’ payment to JT Homes of holdover damages of $7,500, which the Browns
paid. However, the Browns refused to vacate the Property after July 13, 2011, and
remained in possession until November 15, 2012, without JT Homes’ consent and
notwithstanding its best efforts to enforce its judgment of possession.
3 The Browns’ first two payments were made by applying unused funds they had
paid CitiMortgage in May 2010 to payments on the loan.
7
4
B. The Browns’ First Los Angeles Superior Court (LASC) Case
On November 2, 2012, the Browns sued CitiMortgage, among others, in
LASC case No. BC494588. In that action, the Browns sought to rescind the
foreclosure sale, and sought damages and injunctive relief based on causes of
action for breach of contract, specific performance, wrongful foreclosure,
fraudulent and negligent misrepresentations, violation of Business and Professions
Code section 17200, trustee’s breach of statutory duties, declaratory relief and
tortious interference with contractual relations. CitiMortgage demurred to the
complaint on grounds of uncertainty and the Browns’ failure to allege facts
sufficient to state a viable claim. (Code Civ. Proc., § 430.10, subds. (e), (f).)
Specifically, CitiMortgage asserted that the complaint was barred by the statute of
frauds, the tender rule and the conclusive presumption of the validity of the
trustee’s sale because JT Homes was a bona fide purchaser.
The Browns neither opposed the demurrer, nor filed an amended complaint.
Nevertheless, after undertaking its own “careful[] review[],” the trial court “found
[CitiMortgage’s demurrer] to be well-taken as to its substantive arguments” and on
March 4, 2013, “sustained the demurrer without leave to amend.”
On March 12, 2013, the Browns filed a motion to vacate the court’s March
4, 2013 order pursuant to Code of Civil Procedure section 473, subdivision (b)
(section 473). The court denied that motion after the Browns’ counsel failed to
satisfy either the substantive requirements of section 473 (having submitted only
4 Respondent refers to other litigation, including at least one adversarial bankruptcy
action involving CitiMortgage and one or more of the Browns, and an LASC case (No.
PC051080), filed in July 2011 by the Browns for “wrongful foreclosure,” among
other things, which they dismissed in January 2012 after CitiMortgage filed a
demurrer. None of that litigation is relevant here.
8
the declaration of his “legal assistant”) or the procedural requirements of Code of
Civil Procedure section 1005 (providing insufficient notice).
On April 17, 2013, the Browns’ counsel filed a second motion to vacate,
predicated again on section 473, subdivision (b). Unlike the prior motion, the
second motion to vacate was accompanied by a declaration from the Browns’
attorney. The court denied the motion for several reasons: (1) the attorney had
failed to effect proper service (Code Civ. Proc., § 2015.5); (2) the second purported
motion to vacate was simply an untimely motion for reconsideration of the March
29, 2013 order denying the first motion to vacate (Code Civ. Proc., § 1008), and
presented no “new or different facts, circumstances, or law”; and (3) the motion
failed to demonstrate “mistake, inadvertence, surprise, or excusable neglect,” or
anything other than repetitive “sloppy lawyering” on the part of the Browns’
counsel.
On June 19, 2013, a judgment dismissing the entire action with prejudice
was entered in case No. BC494588. The Browns filed a Notice of Appeal from
that Judgment on August 14, 2013, Brown, et al. v. CitiMortgage, Inc. et al.
5
(B250796).
5 Pursuant to Evidence Code sections 459, subdivision (a) and 452, subdivision (d),
on our own motion, we take judicial notice of: (1) the filing of a notice of appeal in case
No. B250796; (2) Division Two’s grant, on November 24, 2014, of the Browns’ request
to dismiss CitiMortgage from that appeal; and (3) Division Two’s May 7, 2015 grant of
the Browns’ request to dismiss the appeal in case No. B250796 in its entirety.
9
C. The Present Action: JT Homes’ Action for Trespass and Holdover Damages
and the Browns’ Cross-Complaint
On June 26, 2013, JT Homes sued the Browns in the instant action seeking
at least $49,100 for at least 17 months’ worth of holdover and trespass damages, in
addition to attorney fees, costs and punitive damages, after the Browns refused to
vacate the Property after July 13, 2011.
On September 19, 2013, the Browns filed a cross-complaint against
CitiMortgage and JT Homes. CitiMortgage’s demurrer to the Cross-Complaint
was taken off calendar after the Browns filed an FACC on March 14, 2014,
alleging causes of actions against CitiMortgage for indemnification, conversion
6
and unjust enrichment.
CitiMortgage demurred to the FACC on grounds of uncertainty and failure
to state facts sufficient to constitute a viable cause of action. It argued the FACC
was barred by res judicata, the tender rule, the conclusive presumption of the
trustee’s sale and the statute of frauds.
On September 18, 2014, the court sustained CitiMortgage’s demurrer to the
FACC without leave to amend. It found the cross-action was barred by the
doctrine of res judicata in light of the Browns’ admission that their “claims in this
action ‘were also asserted in the Previous Action [LASC case No. BC494588],
which [had been] dismissed by the Court with prejudice.’ As such, [the Browns
were] precluded from re-litigating those claims . . . .” The court also sustained the
demurrer without leave to amend on the alternative bases that the Browns had
failed to establish their claims were not barred by their failure to tender the amount
6 A fourth cause of action for tortious interference with contract alleged against JT
Homes is not at issue here.
10
due on the loan, and had failed to overcome the presumption of the validity of the
trustee’s sale or the Statute of Frauds. Finally, the court noted that the Browns
“admit[ted] that a challenge to the foreclosure underlies their claim for
indemnification, but [had] fail[ed] to show why the defenses to such a claim would
not apply to this case.”
An order sustaining CitiMortgage’s demurrer to the FACC on grounds of
uncertainty and failure to state a cause of action was entered on October 6, 2014,
and judgment dismissing the cross-action was entered November 5, 2014. This
timely appeal followed.
DISCUSSION
The Browns argue the trial court erred in sustaining the demurrer to the
FACC without leave to amend because their post-foreclosure claims for
indemnification and conversion involve different primary rights, they claim are not
barred by res judicata, and the judgment in the prior action was not on the merits.
They also argue that they should be permitted to amend the FACC to allege claims
for fraud and negligent misrepresentation. None of their arguments is persuasive.
Of course, “[o]n appeal from a judgment after a demurrer is sustained
without leave to amend, we assume the truth of the facts alleged in the complaint,
as well as those facts that reasonably can be inferred from those expressly pleaded,
and the facts of which judicial notice can be taken. We determine de novo whether
the complaint states facts sufficient to state a cause of action and does not disclose
a complete defense. [Citations.]” (Wolkowitz v. Redland Ins. Co. (2003) 112
Cal.App.4th 154, 161–162 (Wolkowitz).) We may affirm a judgment sustaining a
demurrer on any of multiple grounds asserted whether or not that ground was the
one upon which the trial court relied. (Casey v. U.S. Bank Nat. Assn. (2005) 127
11
Cal.App.4th 1138, 1144 (Casey).) It is an abuse of judicial discretion to sustain a
demurrer if there is a reasonable possibility the defect can be cured by amendment.
(Wolkowitz, supra, 112 Cal.App.4th at pp. 161–162.) The burden to demonstrate
such a reasonable possibility, however, lies squarely with the plaintiff. (Zelig v.
County of Los Angeles (2002) 27 Cal.4th 1112, 1120.) “‘[S]uch a showing can be
made for the first time to the reviewing court . . . .’ [Citation.]” (Gomes v.
Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1153–1154.)
1. Res Judicata
“Res judicata, or claim preclusion, prevents relitigation of the same cause of
action in a second suit between the same parties or parties in privity with them.”
(Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) “Under this
doctrine, all claims based on the same cause of action must be decided in a single
suit; if not brought initially, they may not be raised at a later date. ‘“Res judicata
precludes piecemeal litigation by splitting a single cause of action or relitigation of
the same cause of action on a different legal theory or for different relief.”’” (Id. at
p. 897.) Whether a new cause of action is the same as one in a prior action is not
determined on the basis of the legal theory or relief sought, but by whether both are
premised on a violation of the same primary right, i.e., “‘the plaintiff’s right to be
free from the particular injury suffered.’” (Id. at p. 904.)
Res judicata bars a cause of action that was or could have been litigated in a
prior proceeding if: “(1) the present action is on the same cause of action as the
prior proceeding; (2) the prior proceeding resulted in a final judgment on the
merits; and (3) the parties in the present action or parties in privity with them were
parties to the prior proceeding. [Citation.]” (Bullock v. Philip Morris USA, Inc.
(2011) 198 Cal.App.4th 543, 557.) CitiMortgage has the burden of establishing
12
each element of res judicata. (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th
509, 529.)
The threshold question here is whether the trial court’s dismissal of the
Browns’ first action following its sustaining of respondent’s demurrer to the
complaint without leave to amend was a final judgment on the merits. The answer
is yes. A demurrer is a way to decide the merits of a claim based on assumed facts
without a trial. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 437, fn. 4.) “A
judgment given after the sustaining of a general demurrer on a ground of substance
. . . may be deemed a judgment on the merits, and conclusive in a subsequent
suit . . . .” (Goddard v. Security Title Ins. & Guar. Co. (1939) 14 Cal.2d 47, 52.)
The doctrine of res judicata applies to all types of final judgments rendered on the
merits and “may apply to a . . . dismissal, even though entered after sustaining a
demurrer, if the demurrer was sustained on substantive grounds.” (Shuffer v.
Board of Trustees (1977) 67 Cal.App.3d 208, 216, italics added; see also, Pollock
v. University of Southern California (2003) 112 Cal.App.4th 1416, 1428.)
Even though the Browns did not oppose respondent’s demurrer, the trial
court undertook its own “careful[] review[]” of that motion, concluded that
CitiMortgage’s “substantive arguments” were “well-taken,” and dismissed the
amended complaint with prejudice. A dismissal with prejudice is determinative of
the issues in the action and precludes a party from relitigating those issues. (Estate
of Redfield (2011) 193 Cal.App.4th 1526, 1533.) Although they appealed, the
Browns do not dispute that they subsequently dismissed their appeal from that
13
judgment, which is now final. Nor do they dispute that, as spouses, they are and
7
were in privity with one another in connection with the prior suit.
The Browns assert that res judicata does not apply because their allegations
of conversion in the FACC relate to a primary right––the making of three loan
payments, and their post-foreclosure payment of property taxes, insurance and
maintenance fees––different from the purportedly wrongful foreclosure and loss of
their residence alleged in the initial action. They are mistaken. As the California
Supreme Court has said with regard to res judicata, the term “cause of action” has
a precise meaning. A “cause of action is the right to obtain redress for a harm
suffered, regardless of the specific remedy sought or the legal theory . . . advanced.
[Citation.] . . . ‘[T]he “cause of action” is based upon the harm suffered, as
opposed to the particular theory asserted by the litigant. [Citation.] Even where
there are multiple legal theories upon which recovery might be predicated, one
injury gives rise to only one claim for relief. “Hence a judgment for the defendant
is a bar to a subsequent action by the plaintiff based on the same injury to the same
right, even though he presents a different legal ground for relief.” [Citations.]’
Thus, under the primary rights theory, the determinative factor is the harm
suffered. When two actions involving the same parties seek compensation for the
same harm, they generally involve the same primary right. [Citation.]” (Boeken v.
Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 798.)
7 “Under California law, spouses are in privity with each other where the cause of
action in the prior litigation was ‘community in nature’ and the ‘proceeds of any
judgment that might have been recovered . . . would have belonged to both husband and
wife, as community property.’ [Citation.]” (Mueller v. J.C. Penney Co. (1985) 173
Cal.App.3d 713, 723.) The Browns held title to the note and deed of trust as “husband
and wife.” There is a rebuttable presumption that “property acquired during marriage . . .
other than by gift or inheritance, is community property.” (In re Marriage of Weaver
(2005) 127 Cal.App.4th 858, 864.)
14
Here, the Browns’ allegations in both their first action and the FACC were
premised, in substance, on the same essential claims: first, wrongful foreclosure by
CitiMortgage, based on its representatives’ false promises or negligent
representations, upon which the Browns reasonably relied, that CitiMortgage was
reviewing their application for a loan modification and that so long as that process
remained ongoing the Property would not be sold at foreclosure; and, second
CitiMortgage’s wrongful failure to rescind the foreclosure sale, after the Property
was mistakenly sold at foreclosure, and the Browns relied on CitiMortgage’s false
promise that it would rescind the sale and provide them a loan modification.
Thus, in the first LASC case, the Browns pled that CitiMortgage breached
its promises by refusing to provide the Browns a loan modification, proceeding
with the foreclosure, not rescinding the trustee’s sale and not timely providing
them with the New Loan. They also alleged that, in justifiable reliance on
CitiMortgage’s false promises, they made payments on the new loan as well as
payments for property taxes, insurance and maintenance fees. Virtually the same
allegations were in the FACC.
Although they asserted multiple theories of recovery, and still seek to allege
more, the question whether a cause of action is identical for purposes of res
judicata does not depend on the legal theory or label attached, but on the primary
right sought to be protected in each action, and the corresponding duties. All the
harms the Browns allegedly suffered resulted from the invasion of the overriding
right not to be deprived of ownership or possession of their home through wrongful
foreclosure or false or misleading promises of a loan modification that would result
in a new loan. Even where there are multiple legal theories on which recovery
might be predicated, a single injury gives rise to one claim for relief. (Weikel v.
TCW Realty Fund II Holding Co. (1997) 55 Cal.App.4th 1234, 1246-1247.)
15
In the trial court, the Browns chose not to oppose CitiMortgage’s res
judicata argument in the demurrer to the FACC on the merits. Rather, they
conceded that the claims alleged in the FACC were the same as those asserted in
their prior case, which the court had dismissed with prejudice and which was then
pending on appeal. They argued that, if they succeeded on appeal, they could re-
assert those claims against CitiMortgage. Accordingly, they requested that the
hearing on CitiMortgage’s demurrer to the FACC be stayed pending the outcome
on appeal (which the Browns then dismissed against CitiMortgage a few weeks
later).
The trial court denied the request and found the Browns barred by the
doctrine of res judicata from relitigating their claims. It noted their admission “that
the claims in this action ‘were also asserted in the Previous Action, which was
dismissed by the court with prejudice.’” The trial court found, and we agree, that
the claims alleged by the Browns in the FACC arose from the same primary rights
as those in the earlier action—their claim of a right to remain in their home, and
avoid wrongful foreclosure and financial hardship. Although different labels are
attached to the claims, the relief sought from CitiMortgage arises from the same
primary rights.
Even though the Browns did not specifically raise the theory of conversion
for recovery of their loan payments, property taxes, insurance and maintenance
fees prior to filing their cross-complaint or FACC, the claim is nevertheless barred
by res judicata. The issue is not whether the Browns actually raised a claim of
conversion in their prior action, but whether they could have raised such a claim.
The law is settled that a “prior final judgment on the merits not only settles issues
that were not actually litigated but also every issue that might have been raised and
litigated in the first action.” (Mattson v. City of Costa Mesa (1980) 106
16
Cal.App.3d 441, 446.) When a matter is within the “‘“scope of the [prior] action,
related to the subject matter and relevant to the issues, so that it could have been
raised, the judgment is conclusive on it . . . . Hence the rule is that the prior
judgment is res judicata on matters which were raised or could have been raised,
on matters litigated or litigable . . . .”’” (Villacres v. ABM Industries Inc. (2010)
189 Cal.App.4th 562, 576.)
The Browns do not argue they were unable to raise a claim regarding
CitiMortgage’s alleged conversion of their funds in the action filed in November
2012 and not dismissed until June 2013, both dates well after any alleged
conversion took place. (See 7 Witkin, Cal. Procedure (5th ed. 2008) Judgment,
§ 406, p. 1041 [no bar where plaintiff “was unable to rely on a certain theory or to
seek a certain remedy or form of relief in the first action”].)
2. The Statute of Frauds, Failure to Address Remaining Bases for Dismissal
and Request for Leave to Amend
a. Statute of Frauds and Failure to Address Other Bases for Dismissal
The Browns’ cross-action against CitiMortgage is premised on allegations
that CitiMortgage verbally assured them they qualified to obtain a loan
modification, agreed to review their application to modify their note and deed of
trust, promised not to proceed with foreclosure so long as that review process was
ongoing and that, after the Property was mistakenly sold, the sale would be
rescinded. The claims of fraud and negligent misrepresentation the Browns seek to
add to the FACC arise from verbal promises to modify their mortgage loan.
The statue of frauds renders any agreement pertaining to “the sale of real
property, or of an interest therein” invalid unless it is memorialized in writing and
signed by the party to be charged. (Civ. Code, § 1624, subd. (a)(3).) “A mortgage
17
can be created, renewed, or extended, only by writing, executed with the
formalities required in the case of a grant of real property.” (Civ. Code, § 2922.)
An agreement to modify a contract subject to the statute of frauds is itself
subject to the statute of frauds. (Civ. Code, § 1698, subd. (c); Secrest v. Security
National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 553-554.) It
would thus be pointless to permit the Browns to amend the FACC to allege claims
for fraud or negligent misrepresentation arising from CitiMortgage’s
representatives’ verbal promises that their loan was being reviewed for
modification, that no foreclosure would occur during that process or that
CitiMortgage would rescind the sale. (See, e.g., Nguyen v. Calhoun (2003) 105
Cal.App.4th 428, 445 [“we conclude that the foreclosure sale may not be set aside
based on the lender’s alleged breach of an oral agreement to postpone the trustee’s
sale”] (Nguyen).)
The grounds discussed above constitute sufficient bases upon which to
affirm the trial court’s ruling. A judgment based on an order sustaining a demurrer
may be affirmed on appeal if any ground on which the demurrer was based is well
taken regardless of whether it was the one on which the court relied. (Casey,
supra, 127 Cal.App.4th at p. 1144.) Moreover, the Browns’ opening and reply
briefs fail to address the tender rule or the conclusive presumption that a trustee’s
sale in favor of a bona fide purchaser is valid, each of which was an independent
basis upon which the trial court sustained CitiMortgage’s demurrer without leave
to amend and dismissed the action. The Browns have forfeited any arguments as
to these defenses, each of which constitutes a complete defense and independent
basis for sustaining the demurrer without leave to amend. (See Nguyen, supra, 105
Cal.App.4th at p. 439 [absent unambiguous proof of tender, complaint for
wrongful foreclosure fails to state a cause of action]; Moeller v. Lien (1994) 25
18
Cal.App.4th 822, 834 [trustor lacks legal or equitable right, title or interest in
property and may not set aside trustee’s deed against bona fide purchaser for sale].)
An issue or argument not addressed in a party’s appellate briefs is deemed
forfeited. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 19, fn. 12.)
b. The Browns Have Failed to Demonstrate How They Can Amend to
Cure Fatal Pleading Deficiencies
The Browns also argue that, if granted an opportunity to amend the FACC,
they can allege claims for fraud and negligent misrepresentation on remand. It is
insufficient, however, for them to assert an abstract right to amend. (Rakestraw v.
California Physicians’ Service (2000) 81 Cal.App.4th 39, 43.) Rather, they must
“clearly and specifically” set forth the legal authority for the claims they contends
they can allege, the elements of each claim, and the specific factual allegations that
would establish each of those elements. (Ibid.) As appellants, the burden is on the
Browns to demonstrate “‘in what manner’” they can amend the FACC “‘and how
that amendment will change the legal effect’” of their pleading. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349 (Goodman).) Leave to amend will not be
granted if, as here, amendment would be futile. (Vaillette v. Fireman’s Fund Ins.
Co. (1993) 18 Cal.App.4th 680, 685.)
The Browns claim that if given the opportunity, they can allege claims for
promissory fraud or negligent misrepresentation based on representations made by
CitiMortgage’s representatives that CitiMortgage never planned to perform,
promising to rescind the sale, which were made negligently or with the intent to
deceive and to induce their reliance and on which the Browns did in fact rely by
paying taxes and insurance on the Property, to their damage.
19
None of this is new. The FACC’s claims for indemnification, conversion
and unjust enrichment are replete with allegations that the Browns actually and
justifiably relied to their detriment on the intentional or negligent
misrepresentations by CitiMortgage representatives––including allegations that
CitiMortgage told the Browns the Property should not have been sold because their
loan modification was still being reviewed and that the sale would be rescinded––
and suffered damages as a result, including loan, tax, insurance and maintenance
payments they would not otherwise have paid. The Browns have the burden of
showing how they can amend the pleading and how those amendments will change
the legal effect of the pleading. (Goodman, supra, 18 Cal.3d at p. 349.) Leave to
amend should be denied if, as shown here, the undisputed facts give rise to no
liability as a matter of law. (Routh v. Quinn (1942) 20 Cal.2d 488, 493.) Neither
in their opposition to the demurrer, nor in their briefs on appeal, did the Browns
point to any facts that would illustrate how they could amend the FACC or how a
proposed amendment would change the legal effect of that pleading. (See Blank v.
Kirwan (1985) 39 Cal.3d 311, 318 [to be afforded opportunity to amend, party
must demonstrate manner in which complaint can be amended and how
amendment will change legal effect of the pleading]; Cooper v. Equity Gen.
Insurance (1990) 219 Cal.App.3d 1252, 1264.)
//
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//
//
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DISPOSITION
The judgment is affirmed. Respondent CitiMortgage is entitled to costs on
appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, Acting P. J.
We concur:
MANELLA, J.
COLLINS, J.
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