Keshtgar v. U.S. Bank CA2/6 ( 2016 )

Filed 8/8/16 Keshtgar v. U.S. Bank CA2/6
Opinion on remand from Supreme Court
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
SAEED KESHTGAR, 2d Civil No. B246193
(Super. Ct. No. CV120282A)
Plaintiff and Appellant, (San Luis Obispo County)
v. OPINION ON REMAND
FROM SUPREME COURT
U.S. BANK, N.A., as Trustee, etc.,
Defendant and Respondent.
Plaintiff obtained a loan secured by a deed of trust on real property. The
loan is in default. He brought an action to prevent the bank from initiating foreclosure
proceedings. He claimed that the bank had no authority to initiate foreclosure because an
assignment to the bank was either void or did not take place. The trial court sustained the
bank's demurrer without leave to amend. We affirmed the ensuing judgment. (Keshtgar
v. U.S. Bank, N.A. (2014) 226 Cal. App. 4th 1201.) Our Supreme Court granted review
(Oct. 1, 2014, S220012). Our Supreme Court thereafter remanded the matter to us with
instructions to vacate our decision and reconsider the matter in light of Yvanova v. New
Century Mortgage Corp. (2016) 62 Cal. 4th 919 (Yvanova). We have reconsidered the
matter in light of Yvanova and have determined Yvanova has no bearing on this case.
Yvanova applies only to actions alleging wrongful foreclosure, not actions to preempt
foreclosure. We again affirm.
FACTS
In May 2005, plaintiff Saeed Keshtgar executed a note for $910,000
secured by a deed of trust on real property, recorded on June 10, 2005. The deed of trust
named Resource Lenders, Inc., as the lender; Cuesta Title, as the trustee; and Mortgage
Electronic Registration Systems, Inc. (MERS), as the beneficiary acting as nominee for
the lender, its successors and assigns.
On October 19, 2011, the deed of trust was assigned to U.S. Bank N.A., as
trustee for the certificate holders of Harborview Mortgage Loan Trust (U.S. Bank). The
assignment was executed by Alice Rowe, a MERS assistant secretary, and recorded on
November 4, 2011.
Keshtgar's first amended complaint alleges on information and belief that
Rowe is not an assistant secretary, employee or agent of MERS; not an employee or
agent of Resource Lenders; has no written authority to convey any real property that
MERS or Resource Lenders may have; and that neither the board of directors of MERS
or Resource Lenders approved the conveyance.
The complaint also alleges U.S. Bank did not receive an assignment of the
note, was never in possession of the note, never acquired the rights of nor is a successor
to MERS or Resource Lenders.
The complaint further alleges on information and belief that the mortgage
assets held in trust by U.S. Bank are governed by a pooling and service agreement (PSA);
that the PSA requires the trust assets be treated as a Real Estate Mortgage Investment
Conduit (REMIC); that any mortgage transferred to a REMIC more than three months
after its closing date would not be a qualified transaction, would be taxed at 100 percent
and would violate the PSA; and that the note and deed of trust at issue here were
transferred to the REMIC more than six years after its closing date.
The complaint requests that the assignment of the deed of trust be declared
void ab initio and cancelled; that the trial court declare that U.S. Bank may not exercise
2
any rights under the deed of trust, including the power of sale; and that the court quiet
title in Keshtgar and declare U.S. Bank has no right, title or interest in the property.
DISCUSSION
I.
The function of a demurrer is to test whether, as a matter of law, the facts
alleged in the complaint state a cause of action under any legal theory. (Intengan v. BAC
Home Loans Servicing, LP (2013) 214 Cal. App. 4th 1047, 1052.) We assume the truth of
all facts properly pleaded, as well as facts of which the trial court properly took judicial
notice. (Ibid.) But we do not assume the truth of contentions, deductions or conclusions
of law. (Ibid.) Our review of the court's decision is de novo. (Ibid.) Where there is no
reasonable possibility that plaintiff can cure a defect in a complaint with an amendment,
an order sustaining a demurrer without leave to amend is not an abuse of discretion.
(Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App. 4th 256, 273, 274.)
II.
Stripped to its essence, Keshtgar's complaint alleges nothing more than the
assignment between MERS and U.S. Bank did not occur or is void. Significantly, neither
MERS nor U.S. Bank, the parties to the assignment, are contesting its validity. Keshtgar
admits in his opening brief that the loan has been "non-performing" since at least October
2011.
In Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal. App. 4th 1149,
borrower brought a preemptive action to forestall foreclosure. The borrower's complaint
alleged that MERS had no authority to initiate foreclosure proceedings because the owner
of the note did not authorize MERS to proceed. The loan servicer demurred to the
complaint. The trial court sustained the demurrer without leave to amend and entered
judgment for defendants.
The Court of Appeal affirmed. The court noted that California's nonjudicial
foreclosure statutes (Civ. Code, §§ 2924-2924k) provide a comprehensive framework for
the regulation of nonjudicial foreclosures. (Gomes v. Countrywide Home Loans, Inc.,
supra, 192 Cal.App.4th at p. 1154.) One purpose of this comprehensive scheme is to
3
provide a beneficiary with a quick, inexpensive and efficient remedy against a defaulting
borrower. (Ibid.) Nowhere does the scheme provide for a judicial action to determine
whether the person initiating the foreclosure process is authorized. (Id. at p. 1155.)
There is no ground for implying such an action. (Ibid.) Recognition of such a right
would "fundamentally undermine the nonjudicial nature of the process and introduce the
possibility of lawsuits filed solely for the purpose of delaying valid foreclosures." (Ibid.)
Given that Keshtgar acknowledges he has been in default since 2011, there
appears to be no other purpose to the instant action than to delay a valid foreclosure.
Keshtgar argues that in Gomes the plaintiff had no factual basis to allege
MERS lacked authority to initiate foreclosure. Keshtgar claims his complaint avoids this
defect by alleging "a factual basis" on information and belief. It is true that in
distinguishing federal trial court cases Gomes states: "It is also significant that in each of
these cases, the plaintiff's complaint identified a specific factual basis for alleging that
the foreclosure was not initiated by the correct party. Gomes has not asserted any factual
basis to suspect that MERS lacks authority to proceed with the foreclosure." (Gomes v.
Countrywide Home Loans, Inc., supra, 192 Cal.App.4th at p. 1156.) Gomes holds that
the California statutory scheme allows no preemptive action to challenge the authority of
the person initiating foreclosure. No allegation of fact, no matter how specific, is
sufficient to overcome the absence of a cause of action.
The facts alleged in Jenkins v. JP Morgan Chase Bank, N.A. (2013)
216 Cal. App. 4th 497 are similar to those alleged here. Plaintiff alleged the trustee of a
securitized investment trust had no authority to initiate foreclosure on a trust deed
because "the promissory note was not transferred into the investment trust with a
complete and unbroken chain of endorsements and transfers . . . ." (Id. at p. 510.) The
trial court sustained the defendant's demurrer without leave to amend. The Court of
Appeal affirmed, citing Gomes for the proposition that California's comprehensive
nonjudicial foreclosure scheme does not provide for a preemptive action to challenge the
authority of the party initiating foreclosure. (Jenkins at p. 513.)
4
In Yvanova v. New Century Mortgage Corp., supra, 62 Cal. 4th 919, our
Supreme Court held that in an action for wrongful foreclosure, the borrower has standing
to challenge the assignment of the note and trust deed on the basis that the assignment is
void. (Id. at pp. 942-943.) The court expressly limited its holding to a post-foreclosure
action for wrongful foreclosure. The court stated, "We do not hold or suggest that a
borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit
questioning a foreclosing party's right to proceed." (Id. at p. 924.) The court disapproved
of Jenkins, but only insofar as it can be interpreted to apply to wrongful foreclosure
actions. The court stated, "This aspect of Jenkins, disallowing the use of a lawsuit to
preempt a nonjudicial foreclosure, is not within the scope of our review, which is limited
to a borrower's standing to challenge an assignment in an action seeking remedies for
wrongful foreclosure. . . . We do not address the distinct question of whether, or under
what circumstances, a borrower may bring an action for injunctive or declaratory relief to
prevent a foreclosure sale from going forward." (Yvanova. at p. 934.)
In the instant case Keshtgar's complaint does not allege wrongful
foreclosure. Instead, it is an action to preempt foreclosure by alleging the party initiating
foreclosure lacks the authority to do so. Gomes and Jenkins state valid reasons why such
a preemptive action is not allowed. Nothing in Yvanova affects the holding in those
cases. In fact, Yvanova is quite careful to limit its holding to actions for wrongful
foreclosure.
Keshtgar's reliance on Barroso v. Owen Loan Servicing, LLC (2012)
208 Cal. App. 4th 1001, 1016, is misplaced. The complaint in Barroso was filed after
foreclosure and did not challenge the authority of the loan servicer to initiate foreclosure
proceedings. Moreover, it alleged full performance.
Keshtgar offers to amend his complaint to allege that noncompliance with
the PSA is evidence that his loan was not transferred into the trust. That is a departure
from his allegation that noncompliance with the PSA rendered the transfer void as a
matter of law. Whether the transfer is alleged to be void or never made, there is no
5
preforeclosure cause of action to challenge the authority of the person initiating
foreclosure.
The judgment is affirmed. Costs are awarded to respondent.
NOT TO BE PUBLISHED.
GILBERT, P. J.
We concur:
YEGAN, J.
PERREN, J.
6
Charles S. Crandall, Judge
Superior Court County of San Luis Obispo
______________________________
Dennis Howard Moore for Plaintiff and Appellant.
Reed Smith LLP, David S. Reidy, Matthew J. Brady for Defendant and
Respondent.