Butler v. Nationstar Mortgage CA4/1 ( 2024 )

Filed 6/13/24 Butler v. Nationstar Mortgage 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
NADINE M. BUTLER, D081821
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2018-
00045424-CU-OR-CTL)
NATIONSTAR MORTGAGE LLC et al.,
Defendants and Respondents.
U.S. BANK NATIONAL (San Diego County
ASSOCIATION, as Trustee, etc., Super. Ct. No. 37-2018-
00062247-CU-OR-CTL)
Plaintiff,
v.
NADINE M. BUTLER et al.,
Defendants.
[Caption continues on next page]
NADINE M. BUTLER, (San Diego County
Super. Ct. No. 37-2018-
Petitioner, 00045424-CU-OR-CTL)
v.
THE SUPERIOR COURT OF SAN
DIEGO COUNTY,
Respondent;
U.S. BANK NATIONAL
ASSOCIATION, as Trustee, etc.,
Real Party in Interest.
APPEAL from a judgment of the Superior Court of San Diego County,
James A. Mangione, Judge. Affirmed in part. Appeal treated in part as
petition for writ of mandate; petition denied.
Nadine M. Butler, in pro. per., for Plaintiff, Appellant, and Petitioner.
Troutman Pepper Hamilton Sanders LLP and Jared D. Bissell for
Defendants, Respondents, and Real Party in Interest.
Nadine M. Butler challenges the judgment on the pleadings against her
on wrongful foreclosure and related claims against Nationstar Mortgage LLC
(Nationstar) and U.S. Bank National Association, as Trustee for HarborView
Mortgage Loan Trust 2005-10, Mortgage Loan Pass-Through Certificates,
Series 2005-10 (U.S. Bank). She contends the trial court should have denied
Nationstar and U.S. Banks’s motion for judgment on the pleadings because it
was procedurally improper and each claim alleged in the operative complaint
stated facts sufficient to constitute a cause of action. Because an unlawful
detainer action that had been consolidated with the wrongful foreclosure
action remains pending between Butler and U.S. Bank, the judgment is not
appealable as to U.S. Bank. To expedite resolution of the litigation, we
exercise our discretion to treat the purported appeal as to U.S. Bank as a
petition for writ of mandate. We reject Butler’s claims of error, affirm the
judgment as to Nationstar, and deny writ relief as to U.S. Bank.
I.
BACKGROUND
A. Mortgage Loan, Default, and Foreclosure Sale1
In May 2005, Butler executed a promissory note for $612,000 in favor of
SCME Mortgage Bankers, Inc. (SCME), and agreed to repay that amount
plus interest in regular periodic payments within 30 years. As security for
repayment of the loan, Butler executed a deed of trust for a condominium in
San Diego, which was recorded with the county recorder. The deed of trust
identified Butler as the borrower; SCME as the lender; Stewart Title
Company of San Diego (Stewart) as the trustee; and Mortgage Electronic
Registration Systems, Inc. (MERS), acting solely as a nominee for lender and
its successors and assigns, as the beneficiary. The deed of trust stated the
promissory note could be sold and the trustee substituted. It also stated that
upon default by the borrower, the lender, after notice to the borrower and
1 Butler’s opening brief does not contain the required “summary of the
significant facts.” (Cal. Rules of Court, rule 8.204(a)(2)(C).) Under the
mislabeled headings of “Summary of Significant Facts Within the Record”
and “Summary of Additional Significant Facts Within the Record,” Butler
made various arguments. We summarize the facts pertinent to the issues on
appeal from her pleadings, attached exhibits, and record documents subject
to judicial notice. (See, e.g., Mendoza v. Continental Sales Co. (2006)
140 Cal.App.4th 1395, 1401–1402.) We grant Butler’s two unopposed
motions to augment the record with documents filed in the superior court.
(Cal. Rules of Court, rule 8.155(a)(1)(A).)
3
time to cure, could require immediate payment of the outstanding balance of
the loan and cause the trustee, after notice, to sell the property to the highest
bidder at a public auction.
By a series of assignments recorded between 2009 and 2015, the
beneficial interest in the deed of trust passed to several entities, including
Nationstar, and ultimately ended up with U.S. Bank. By a series of
substitutions of trustee recorded between 2009 and 2017, the trustee was
changed from Stewart to Aztec Foreclosure Corporation (Aztec).
Butler made monthly payments on the loan until she defaulted in late
2016. On January 31, 2017, Aztec recorded a notice of default and election to
sell under deed of trust. The notice stated the amount of default was
$16,575.75 as of January 27, 2017.
Butler filed a petition for relief in a bankruptcy court in April 2017.
The court granted relief from the automatic stay in January 2018, so that
U.S. Bank could proceed with a foreclosure sale.
In February 2018, Aztec recorded a notice of trustee’s sale. The sale
occurred in August of that year, when U.S. Bank made the highest bid. A
trustee’s deed upon sale in favor of U.S. Bank was recorded in September
2018.
B. Litigation
Four days after recordation of the trustee’s deed upon sale, Butler sued
U.S. Bank, Nationstar, and others in the superior court. She sought to cancel
the deed, quiet title, and recover damages for breach of contract, negligence,
and statutory violations in connection with the foreclosure sale.
In December 2018, U.S. Bank sued Butler for unlawful detainer. It
sought possession of the property and holdover damages.
On Butler’s motion, the superior court consolidated the two actions.
4
Butler twice amended her complaint. The second amended complaint
is 62 pages long; contains many irrelevant, inconsistent, repetitive, and
argumentative assertions; and is difficult to follow. As best we can tell, the
pleading is based on theories that: (1) by signing the promissory note, Butler
incurred no debt and instead created the equivalent of cash, which she
exchanged for the condominium; (2) the defendants never loaned her any
money and misrepresented that she owed them a debt by using deceptive
legal expressions in various documents; (3) Aztec negligently hired,
supervised, and retained an employee (Elaine Malone) who conspired with
other defendants fraudulently to transfer the condominium by signing the
trustee’s deed upon sale; (4) the condominium was wrongfully sold at the
foreclosure sale because only a lien was advertised for sale and there was no
compliance with statutory notice requirements governing nonjudicial
foreclosure sales; (5) the trustee’s deed upon sale, assignments, and related
documents in the chain of title contained or were obtained by intentional
misrepresentations, or were executed by persons without authority to execute
them, and thus were void and subject to cancellation; and (6) defendants
substantially interfered with both Butler’s ownership of the condominium by
selling it at the foreclosure sale without her consent and her ownership of the
promissory note by intentionally and secretly taking possession of the note
without paying her for it and refusing to return it to her.
Butler asserted counts for breach of contract, intentional
misrepresentation (two counts), negligence, wrongful foreclosure, cancellation
of instruments, quiet title, and conversion (two counts). She prayed for the
following relief: (1) compensatory and punitive damages on the counts for
breach of contract, intentional misrepresentation, wrongful foreclosure,
cancellation of instruments, and conversion; (2) a decree that there was a sale
5
of a lien but not of the condominium on the count for wrongful foreclosure;
(3) a decree voiding the trustee’s deed upon sale and the assignments and
other documents in the chain of title on the count for cancellation of
instruments; (4) a judgment declaring Butler to be the sole owner of the
condominium with exclusive right to possession on the count for quiet title;
(5) a permanent injunction prohibiting defendants from claiming any interest
in the condominium on the counts for cancellation of instruments and quiet
title; and (6) orders directing defendants to record a quitclaim deed to the
condominium and deliver the deed and the promissory note to Butler on the
conversion counts. She also sought interest, attorney fees, and a judgment
dismissing the unlawful detainer action. Butler attached as exhibits to the
second amended complaint copies of the deed of trust, assignments of the
deed of trust, substitutions of trustee, notice of default and election to sell
under deed of trust, notice of trustee’s sale, trustee’s deed upon sale, and
other documents.
Nationstar and U.S. Bank answered the second amended complaint
and later filed a motion for judgment on the pleadings. They argued none of
Butler’s claims stated facts sufficient to constitute a cause of action and the
second amended complaint should be dismissed with prejudice because the
defects could not be cured. Specifically, Nationstar and U.S. Bank contended
Butler’s failure to tender the full amount due on the loan and lack of standing
to challenge the assignments of the deed of trust barred her claims for breach
of contract, wrongful foreclosure, cancellation of instruments, and quiet title;
the fraud and related negligence counts failed for lack of specificity and were
time-barred; and the conversion counts failed because the condominium, as
real property, could not be converted, and Butler had no ownership interest
in the promissory note. In support of the motion, they requested judicial
6
notice of several documents, including copies of assignments of the deed of
trust, substitutions of trustee, notice of default and election to sell property,
notice of trustee’s sale, and trustee’s deed upon sale, which were recorded in
the county recorder’s office; and dockets and orders from bankruptcy cases
Butler had initiated.
Butler opposed the motion for judgment on the pleadings. She
contended the allegations of the second amended complaint had to be
liberally construed in her favor and accepted as true. Butler argued the
motion was hearsay, unsupported by any testimony under oath, included
citations to “bad case law,” and contained false factual statements and
conclusions of law. She asserted the facts that were alleged in her complaint
and that “also appear on the face of recorded documents in this case and
other judicially noticeable sources” were sufficient to defeat the motion.
Butler complained the motion was “uncertain” because Nationstar and U.S.
Bank did not identify the allegations of the second amended complaint they
deemed deficient specifically enough to allow her to respond. She then went
on to argue that: (1) she satisfied any tender requirement by signing the
promissory note; (2) she had standing to challenge void assignments; (3) the
fraud counts were alleged with sufficient particularity and were not time-
barred: (4) all recorded instruments that were void on their face were subject
to cancellation; and (5) the promissory note was converted because it was not
returned to her when the condominium was sold by foreclosure. Butler
attached to her opposition copies of one of the recorded assignments of deed of
trust; a Securities and Exchange Commission (SEC) form regarding
eligibility to act as a trustee; an SEC form regarding HarborView Mortgage
Loan Trust 2005-10, Mortgage Loan Pass-Through Certificates, Series 2005-
7
10; and a Westlaw report on cases cited in the motion for judgment on the
pleadings.
The superior court held a hearing and granted the motion. The court
ruled the breach of contract claim failed because the allegations of the second
amended complaint were contradicted by attached documents. It ruled the
counts for wrongful foreclosure, cancellation of instruments, and quiet title
failed because Butler had not alleged that she tendered the amount due on
the loan or facts showing that such tender was excused. The court ruled the
fraud claims failed because they were not pleaded with the required degree of
particularity. It ruled the conversion claims failed because the condominium,
as real property, could not be converted, and Butler had neither title to nor
right of possession of the promissory note. The court denied leave to amend
as to all claims.
Based on its order granting the motion for judgment on the pleadings,
the superior court entered a judgment that Butler take nothing from
Nationstar or U.S. Bank and dismissed the action as to them with prejudice.
II.
DISCUSSION
A. Butler’s Contentions
Butler argues the superior court erroneously entered a judgment
dismissing her action because Nationstar and U.S. Bank did not challenge
her fourth cause of action (negligent hiring, supervision, or retention of
employee) and the five other defendants did not join in the motion. She
contends the motion was defective because it was hearsay from attorneys and
provided no admissible testimony to attack her verified pleading, and because
Nationstar and U.S. Bank failed to identify specific allegations that were
deficient before filing the motion. Butler complains Nationstar, U.S. Bank,
8
and the superior court cited “overturned cases,” and the motion contained
admissions of fraud and false conclusions of law. She argues the judgment is
“void” because her second amended complaint did not omit any essential
element of any of the claims, and she goes on to explain why, in her view,
each claim was sufficiently alleged. Butler also argues the foreclosure sale
was not valid, because U.S. Bank made a credit bid, which she asserts is only
permissible in a bankruptcy proceeding. She faults the superior court clerk
for refusing to enter a default against Aztec and the court for not
acknowledging three requests for judicial notice she made. Butler asks us to
reverse the judgment and remand the matter for further proceedings.
B. Jurisdiction
Before reaching the merits of Butler’s claims of error, we must address
a jurisdictional issue. An appeal may be taken “[f]rom a judgment, except an
interlocutory judgment . . . .” (Code Civ. Proc., § 904.1, subd. (a)(1).) Under
the one final judgment rule, “an appeal cannot be taken from a judgment that
fails to complete the disposition of all the causes of action between the parties
even if the causes of action disposed of by the judgment have been ordered to
be tried separately, or may be characterized as ‘separate and independent’
from those remaining.” (Morehart v. County of Santa Barbara (1994)
7 Cal.4th 725, 743 (Morehart.) An exception to the rule “permits appeal from
a judgment in a multiparty case determining all issues between certain
parties even though issues remain to be resolved between other parties.”
(Stonewall Ins. Co. v. City of Palos Verdes Estates (1996) 46 Cal.App.4th
1810, 1830 (Stonewall).) The judgment from which Butler appealed did not
resolve all issues among all parties to the judgment. It resolved all issues
among Butler, Nationstar, and U.S. Bank in the wrongful foreclosure action,
but it resolved no issues in the unlawful detainer action between U.S. Bank
9
and Butler, which was consolidated with the wrongful foreclosure action.
Since the unlawful detainer action remains pending, we solicited letter briefs
from the parties on whether we should dismiss the appeal or exercise our
discretion to treat it as a petition for writ of mandate.
Butler contends the judgment in the wrongful foreclosure action is final
and appealable and asks us to allow the appeal to proceed. U.S. Bank and
Nationstar contend the judgment is appealable as to Nationstar but not as to
U.S. Bank and ask us to treat the appeal as to U.S. Bank as a petition for
writ of mandate.
Butler can appeal the judgment as to Nationstar because it resolved all
issues between them. (Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 437;
Stonewall, supra, 46 Cal.App.4th at p. 1830.) But she cannot appeal the
judgment as to U.S. Bank because issues between them remain to be resolved
in the consolidated unlawful detainer action. (Morehart, supra, 7 Cal.4th at
p. 743.) “A petition for a writ, not an appeal, is the authorized means for
obtaining review of judgments and orders that lack the finality required by
Code of Civil Procedure section 904.1, subdivision (a).” (Id. at pp. 743–744.)
We may treat an appeal from a nonappealable judgment or order as an
original writ proceeding if the briefs and record supply what is needed for
such a proceeding and there is no indication the superior court would elect to
appear in the proceeding. (Olson v. Cory (1983) 35 Cal.3d 390, 400–401;
Curtis v. Superior Court (2021) 62 Cal.App.5th 453, 467.) Those conditions
are met here. Since the parties ask us to decide the matter on the merits and
it would “be ‘ “unnecessarily dilatory and circuitous” ’ ” to dismiss the appeal
rather than to treat it as a writ proceeding, “we treat the appeal as a petition
for writ of mandate” as to U.S. Bank. (Olson, at p. 401.)
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C. Merits
We now turn to the merits. We divide Butler’s claims of error into
three categories—(1) procedural and other objections to the motion for
judgment on the pleadings, (2) claims concerning the sufficiency of her
pleadings, and (3) a miscellaneous claim—and consider each in turn.
1. Procedural and other objections
Butler asserts multiple procedural and other objections. She contends
judgment on the pleadings could not be granted on the fourth count
(negligent hiring, supervision, or retention of employee), because it was not
mentioned in the motion, and could not be granted in favor of the five
defendants who did not join in the motion. We reject these contentions as
based on a misreading of the record. In their motion for judgment on the
pleadings, Nationstar and U.S. Bank attacked the entire second amended
complaint. They grouped the fourth count, which accused Aztec’s employee
(Malone) of fraud and all defendants of conspiring with her to defraud Butler
of the condominium by recording a fraudulent trustee’s deed upon sale, with
the two counts for intentional misrepresentation and argued all three failed
for the same reasons. The superior court also considered the three claims
together and granted the motion as to all of them. The judgment the court
later entered dismissed only Nationstar and U.S. Bank from the wrongful
foreclosure action; it did not dismiss any other defendants.
Butler next objects there was “NO Admissible Testimony to Attack
[Her] Verified Complaint,” the motion for judgment on the pleadings “was
hearsay written by the attorneys,” and Nationstar and U.S. Bank did not
properly verify their answer. These objections are based on a
misunderstanding of the nature of the motion, which challenged the second
amended complaint for failure to state facts sufficient to constitute a cause of
11
action. (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).) Such a motion is limited to
the face of the challenged pleading and matters subject to judicial notice.
(Id., subd. (d); see Hunt v. County of Shasta (1990) 225 Cal.App.3d 432, 440.)
Since the motion challenged the second amended complaint, the answer
thereto was irrelevant. Furthermore, since “[p]resentation of extrinsic
evidence is . . . not proper on a motion for judgment on the pleadings” (Cloud
v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999) and “[j]udgment
on the pleadings does not depend upon a resolution of questions of witness
credibility or evidentiary conflicts” (Schabarum v. California Legislature
(1998) 60 Cal.App.4th 1205, 1216), Nationstar and U.S. Bank had no
obligation to present admissible evidence to refute the allegations of Butler’s
pleading.
Butler accuses Nationstar and U.S. Bank of having cited “overturned
cases” in their motion for judgment on the pleading and the superior court of
having done the same in its order granting the motion. We have reviewed
the six cases listed by Butler and, based on our own research, determined
they remain good law.
Butler contends the motion for judgment on the pleadings “claimed
false conclusions of law that ha[ve] not been proven,” and the motion for
judgment on the pleadings and “alleged title documents” contained “several
fatal flaws” that “show[ed] signs of fraud on [their] face.” She does not
elaborate on these contentions in her opening brief and instead directs us to
“[s]ee” the opposition she filed to the motion in the superior court. “An
appellant cannot rely on incorporation of trial court papers, but must tender
arguments in the appellate briefs.” (Paterno v. State of California (1999) 74
Cal.App.4th 68, 109 (Paterno), italics omitted.) We pass Butler’s undeveloped
12
contentions without further consideration. (Aton Center, Inc. v. United
Healthcare Ins. Co. (2023) 93 Cal.App.5th 1214, 1241.)
Butler objects to the superior court’s consideration of the motion for
judgment on the pleadings on the ground Nationstar and U.S. Bank failed to
identify specific allegations they believed were deficient and the legal basis
for that belief as part of the meet and confer process they were required to
complete before filing the motion. (See Code Civ. Proc., § 439, subd. (a)(1).)
The record contains a declaration from Nationstar and U.S. Bank’s counsel,
who stated that more than five days before the motion was filed he had
conferred with Butler about the deficiencies in the second amended complaint
and the anticipated content of the motion and that they did not reach an
agreement on the merits of the arguments to be made in the motion. No
more was required to proceed with the motion. (See id., subd. (a)(1), (2),
(3)(A).) In any event, “[a] determination by the court that the meet and
confer process was insufficient shall not be grounds to grant or deny the
motion for judgment on the pleadings.” (Id., subd. (a)(4).) Butler’s objection
based on the alleged insufficiency of the meet and confer process has no
merit.
Butler’s final objection is that the superior court never acknowledged
any of her three requests for judicial notice. Only one of the requests she
listed in her briefs was mentioned in her opposition to the motion for
judgment on the pleadings. In its order granting the motion, the court wrote:
“All requests for judicial notice are granted.” The record thus shows the court
took judicial notice of the documents of which Butler had requested it take
notice in her opposition. She has identified no specific document in the other
two requests that were not also included in the request the court granted, nor
has she explained how any such document was relevant to the motion and
13
how judicial notice of it likely would have led to a ruling on the motion more
favorable to her. Butler thus has not established the prejudice required to
obtain reversal of the judgment. (See Cal. Const., art. VI, § 13 [no reversal
unless alleged error “resulted in a miscarriage of justice”]; Christ v. Schwartz
(2016) 2 Cal.App.5th 440, 455 [no reversal unless appellant shows reasonable
probability of more favorable result absent alleged error].)
2. Claims regarding sufficiency of pleadings
Having disposed of Butler’s procedural objections, we turn to her
contentions that the claims pleaded in her second amended complaint
adequately stated causes of action and the superior court therefore erred by
granting the motion for judgment on the pleadings. After setting forth the
standard of review, we shall explain why her contentions lack merit.
a. standard of review
A defendant who has answered the complaint may move for judgment
on the pleadings on the ground that “[t]he complaint does not state facts
sufficient to constitute a cause of action against the defendant.” (Code Civ.
Proc., § 438, subds. (c)(1)(B)(ii), (f)(2).) “The standard of review for a motion
for judgment on the pleadings is the same as that for a general demurrer:
We treat the pleadings as admitting all of the material facts properly
pleaded, but not any contentions, deductions or conclusions of fact or law
contained therein. We may also consider matters subject to judicial notice.
We review the complaint de novo to determine whether it alleges facts
sufficient to state a cause of action under any theory.” (Dunn v. County of
Santa Barbara (2006) 135 Cal.App.4th 1281, 1298; accord, Shuster v. BAC
Home Loans Servicing, LP (2012) 211 Cal.App.4th 505, 509 (Shuster).) “ ‘The
burden is on [appellant] to demonstrate the manner in which the complaint
14
might be amended, and the appellate court must affirm the judgment if it is
correct on any theory.’ ” (Shuster, at p. 509.)
b. breach of contract
We begin with Butler’s count alleging breach of contract. She
complains the superior court deprived her of due process of law by not
adequately explaining in its order granting the motion for judgment on the
pleadings how her allegations contradicted the loan documents. This is not
enough to establish reversible error. We presume the court’s order is correct,
and to overcome the presumption Butler must present an argument with
citations to the record and legal authorities that explains how the court
erred. (WFG National Title Ins. Co. v. Wells Fargo Bank, N.A. (2020)
51 Cal.App.5th 881, 894–895; Hearn v. Howard (2009) 177 Cal.App.4th 1193,
1207.) Butler’s failure to do so forfeits this claim of error. (WFG, at pp. 894–
895.)
Even were the claim of error not forfeited, it would fail because Butler
cannot establish the essential element of breach to support the count for
breach of contract. (See Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830
[defendant’s breach is essential element of claim]; Richman v. Hartley (2014)
224 Cal.App.4th 1182, 1186 [same].) Butler alleged SCME, the original
lender, “breached the [deed of trust] contract” because it “fail[ed] to loan
612,000 dollars to [her] and failed to provide any consideration to the [deed of
trust] contract.” This allegation contradicted an earlier allegation that she
signed a note promising to repay $612,000 for a loan she had received. The
allegation also contradicted the terms of the deed of trust, which Butler
alleged she executed and a copy of which she attached to the second amended
complaint. The deed of trust states that Butler promised to repay with
interest a $612,000 loan from SCME and that the deed of trust was given to
15
secure repayment. “[F]acts appearing in exhibits attached to the complaint
will . . . be accepted as true and, if contrary to the allegations in the pleading,
will be given precedence.” (Dodd v. Citizens Bank of Costa Mesa (1990)
222 Cal.App.3d 1624, 1627 (Dodd).) Since the deed of trust refutes the
breach alleged by Butler, the superior court correctly granted the motion on
the count for breach of contract.
c. wrongful foreclosure, cancellation of instruments, and quiet
title
We next consider the counts for wrongful foreclosure, cancellation of
instruments, and quiet title. Butler argues the superior court erroneously
ruled these claims failed because she had not alleged tender of the unpaid
amount of the secured debt or an excuse for not tendering that amount. Such
allegations are essential to a claim for wrongful foreclosure, cancellation of
instruments, or quiet title by a mortgagor of real property seeking to set
aside a nonjudicial foreclosure sale for irregularity in the sale procedure.
(See, e.g., Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th
808, 819 [cancellation of instruments]; Lueras v. BAC Home Loans Servicing,
LP (2013) 221 Cal.App.4th 49, 86 (Lueras) [quiet title]; Shuster, supra,211 Cal.App.4th at pp. 508, 511 [wrongful foreclosure and quiet title];
Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117
(Karlsen) [cancellation of trustee’s sale].)2 “The rationale behind the [tender]
2 One irregularity Butler alleged was that in the notice of trustee’s sale,
the trustee invoked the power to sell only a lien on the condominium, not the
condominium itself. She cited the statutorily required provision in the notice
that potential bidders would “be bidding on a lien, not on the property itself,”
and making the highest bid at the auction would “not automatically entitle
[the bidder] to free and clear ownership of the property” because there could
be senior liens that would have to be paid off before the bidder could get clear
title. (Civ. Code, § 2924f, subd. (b)(8)(A).) Another alleged irregularity,
16
rule is that if [the borrower] could not have redeemed the property had the
sale procedures been proper, any irregularities in the sale did not result in
damages to the [borrower].” (FPCI RE-HAB 01 v. E & G Investments, Ltd.
(1989) 207 Cal.App.3d 1018, 1022.) As we shall explain, Butler sufficiently
alleged neither tender nor excuse.
Butler repeatedly alleged her execution of the promissory note was a
valid tender. Her theory was that “the promissory [note], negotiable in
form, . . . is the equivalent of cash”; her execution of the note “created new
money that did not exist before”; a loan from SCME “was never needed, as all
the credit [she] used was created from [her] own deposit of her [note]”; and
“[t]he funds created by the [note] were sufficient to satisfy the seller of the
[condominium] when the seller granted [her] possession.” Thus, according to
Butler “the underlying, secured debt, if valid, had been fully satisfied the
moment that [she] tendered 612,000 dollars on May 12, 2005 by issuing her
[promissory note].” We are not persuaded.
Butler’s theory is contrary to the deed of trust attached to her pleading,
which states that under the terms of the promissory note, Butler “owes” and
“promises to pay” SCME $612,000 with interest in regular periodic payments
by June 1, 2035, and defines the debt evidenced by the note as the “ ‘Loan.’ ”
We disregard Butler’s contrary allegations. (Lueras, supra, 221 Cal.App.4th
at p. 56; Dodd, supra, 222 Cal.App.3d at p. 1627.)
vaguely suggested in Butler’s second amended complaint and more clearly
articulated in her appellate briefs, was that U.S. Bank was not a bona fide
purchaser of the condominium because it made an illegal credit bid at the
foreclosure auction. Claims based on such alleged irregularities are subject
to the tender requirement. (Chavez v. Indymac Mortgage Services (2013)
219 Cal.App.4th 1052, 1063 [defective notice]; Lo v. Jensen (2001)
88 Cal.App.4th 1093, 1095, 1097–1099 [illegal bid]; Abdallah v. United
Savings Bank (1996) 43 Cal.App.4th 1101, 1109 [defective notice].)
17
Butler’s theory is also contrary to law. A promissory note is not new
money created by and belonging to the maker. It is a written undertaking by
the maker to pay a fixed amount of money, with or without interest, on
demand or at a specified time. (Cal. U. Com. Code, §§ 3103, subd. (a)(9)
[defining “ ‘[p]romise’ ”], 3104, subds. (a), (e) [defining “ ‘negotiable
instrument’ ” and “ ‘note’ ”]; see Yvanova v. New Century Mortgage Corp.
(2016) 62 Cal.4th 919, 927 (Yvanova) [promissory note secured by deed of
trust is negotiable instrument].) Making a promissory note evidences a debt;
it does not pay off a debt. (Ellison v. Henion (1920) 183 Cal. 171, 174.)
Butler thus did not tender the amount of indebtedness simply by signing the
promissory note.
Butler also repeatedly alleged she was excused from tendering the full
amount due on the mortgage loan because the trustee’s deed upon sale and
all prior recorded assignments, substitutions, and notices were “void, not
merely voidable,” on the ground those who executed the documents had no
authority to do so.3 No tender is required when the trustee’s deed or some
document in the chain of title by which the foreclosing party purportedly took
a beneficial interest in the deed of trust is void on its face. (Yvanova, supra,62 Cal.4th at p. 929, fn. 4; Sciarratta v. U.S. Bank National Assn. (2016)
3 Butler also alleged the deed of trust was “void, not merely voidable,
because it was proffered and procured by fraud and misrepresentation by
SCME.” She alleged the assignments of the deed of trust, substitutions of
trustee, notice of default, notice of trustee’s sale, and trustee’s deed upon sale
“consist[ed] of intentional misrepresentations and deceit.” “A deed obtained
by fraud, though voidable, is generally not void.” (Fallon v. Triangle
Management Services, Inc. (1985) 169 Cal.App.3d 1103, 1106.) A valid tender
of payment of the indebtedness is essential to an action to cancel a voidable
sale under a deed of trust. (Karlsen, supra, 15 Cal.App.3d at p. 117.) The
alleged voidability of the deed of trust and other documents thus did not
excuse Butler from tendering the balance due on the loan.
18
247 Cal.App.4th 552, 563–565 & fn. 10; Dimock v. Emerald Properties LLC
(2000) 81 Cal.App.4th 868, 877–878.) The deed of trust and other recorded
documents attached to the second amended complaint show an orderly
transfer of the beneficial interest in the deed from SCME to U.S. Bank and
an orderly substitution of trustee from Stewart to Aztec. Aztec, which was
the trustee at the time and acted on behalf of U.S. Bank, executed the notice
of default, notice of trustee’s sale, and trustee’s deed upon sale. None of those
documents is void on its face, and Butler has provided no factual explanation
as to why they are void. (See Kalnoki v. First American Trustee Servicing
Solutions, LLC (2017) 8 Cal.App.5th 23, 47–48 (Kalnoki) [rejecting borrower’s
conclusory assertion that trustee’s deed was void on its face when recorded
documents attached to pleading and documents subject to judicial notice
showed unbroken chain of ownership between original and foreclosing
lenders].)
Butler also mentioned in the second amended complaint other grounds
to excuse tender, including the alleged invalidity of the underlying debt
(Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424) and the alleged lack of
default on the mortgage loan (Barroso v. Ocwen Loan Servicing, LLC (2012)
208 Cal.App.4th 1001, 1017). To the extent she invokes these grounds on the
theory that she owed no debt because she created money merely by signing
the promissory note, we reject them for the same reasons we rejected her
contention that she made a valid tender by signing the note. (See pp. 17–18,
ante.) We also reject these grounds for excuse from tender to the extent
Butler relies on the theory that the repayment obligation she assumed by
signing the promissory note became unenforceable and the deed of trust
became worthless as a remedy for default when her loan was pooled with
others into the mortgage loan trust for which U.S. Bank served as trustee.
19
Butler contends the loan was “converted,” “repurposed,” or “turned” into a
security with no recourse against her or the condominium in the event of a
default. We disagree. “The mortgage securitization process has been
concisely described as follows: ‘To raise funds for new mortgages, a mortgage
lender sells pools of mortgages into trusts created to receive the stream of
interest and principal payments from the mortgage borrowers. The right to
receive trust income is parceled into certificates and sold to investors, called
certificateholders. The trustee hires a mortgage servicer to administer the
mortgages by enforcing the mortgage terms and administering the
payments.’ ” (Yvanova, supra, 62 Cal.4th at p. 930, fn. 5.) Butler’s loan thus
became an asset of the mortgage loan trust and its terms remained
enforceable against her when the loan was sold into the trust. The loan was
not transformed into a security that relieved her of the repayment obligation.
The legal authorities Butler relies on for the argument she sufficiently
alleged excuse from tender do not support her argument. The only case she
cites is Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516. The Turner court
held a borrower who defaulted need not tender the full amount of a mortgage
loan to proceed with a wrongful foreclosure claim based on the lender’s
refusal to accept tender of the amount needed to cure the default and to
reinstate the loan. (Id. at pp. 530–531; see Civ. Code, § 2924c, subds. (a)(1),
(e) [borrower may stop foreclosure sale by tendering amount in default within
prescribed period].) Turner is not on point, because Butler has not alleged
she ever tendered the amount needed to cure her default.
Butler also cites Civil Code sections 2888 and 2889 as purported
support for her contention that tender was excused because the trustee’s deed
20
upon sale was void.4 She argues Aztec violated these statutes by recording a
deed that transferred title to the condominium itself rather than just a lien
on the condominium. This argument is based on a misunderstanding of the
nature of the deed of trust Butler executed and the nonjudicial foreclosure
process.
A deed of trust given as security for repayment of a loan does not
transfer title to the property; it creates only a mortgage lien on the property
with a power of sale. (Civ. Code, §§ 2888, 2924, subd. (a); Monterey S.P.
Partnership v. W. L. Bangham, Inc. (1989) 49 Cal.3d 454, 460.) Under a deed
of trust, “the borrower, or ‘trustor,’ conveys nominal title to property to an
intermediary, the ‘trustee,’ who holds that title as security for repayment of
the loan to the lender, or ‘beneficiary.’ ” (Kachlon v. Markowitz (2008)
168 Cal.App.4th 316, 334.) The trustee must either reconvey the deed of
trust to the borrower upon repayment of the loan, resulting in a release of the
lien created by the deed of trust, or foreclose on the property upon the
borrower’s default and the lender’s request, resulting in a sale of the
property. (Monterey S.P. Partnership, at p. 460; Kachlon, at p. 334.) If the
borrower defaults, any agreement by the borrower made in advance of the
default that purports to forfeit the property or to restrain the right of
redemption is “void.” (Civ. Code, § 2889; see Hamud v. Hawthorne (1959)
52 Cal.2d 78, 84.) Nothing in the deed of trust forfeited or restrained Butler’s
redemption rights in advance of her default. “ ‘[T]he right to redeem will
continue until the debt is paid or until the equity of redemption is foreclosed
4 Civil Code sections 2888 and 2889 concern liens in general. Section
2888 states: “Notwithstanding an agreement to the contrary, a lien, or a
contract for a lien, transfers no title to the property subject to the lien.”
Section 2889 states: “All contracts for the forfeiture of property subject to a
lien, in satisfaction of the obligation secured thereby, and all contracts in
restraint of the right of redemption from a lien, are void.”
21
or barred, or duly and sufficiently released.’ ” (Winkleman v. Sides (1939)
31 Cal.App.2d 387, 405, italics added.) Where, as here, the borrower defaults
and the lender exercises the power of sale under the deed of trust, the
borrower’s right of redemption is cut off and the lien extinguished on
completion of the trustee’s sale. (Moeller v. Lien (1994) 25 Cal.App.4th 822,
831 (Moeller); Ballengee v. Sadlier (1986) 179 Cal.App.3d 1, 4–5.) The
purchaser “receives title under a trustee’s deed free and clear of any right,
title or interest of the [borrower].” (Moeller, at p. 831.)5 The trustee’s deed
upon sale that Aztec recorded thus was not void based on any violation of
Civil Code section 2888 or 2889.
We conclude Butler alleged neither a valid tender of the amount due on
the mortgage loan nor a valid excuse from such tender. The superior court
correctly granted judgment on the pleadings on the counts for wrongful
foreclosure, cancellation of instruments, and quiet title.
5 We reject Butler’s contention that the trustee’s sale was illegal and
U.S. Bank acquired no title to the condominium at the sale because it made a
credit bid, which she says can be made only in a bankruptcy proceeding by “a
true creditor” that has filed a valid proof of claim. The beneficiary under a
deed of trust (here, U.S. Bank) may become the purchaser at a trustee’s sale
by making a credit bid against the total amount due from the trustor (here,
Butler) plus trustee’s fees and expenses. (Civ. Code, § 2924h, subd. (b);
Biancalana v. T.D. Service Co. (2013) 56 Cal.4th 807, 815–816; Kalnoki,
supra, 8 Cal.App.5th at p. 45.) The beneficiary may bid less than the full
indebtedness (Cornelison v. Kornbluth (1975) 15 Cal.3d 590, 607) and acquire
the property if that is the highest bid (Civ. Code, § 2924g, subd. (a)(1);
Moeller, supra, 25 Cal.App.4th at p. 830). That is what happened in this
case.
22
d. fraud
We now turn to Butler’s fraud claims.6 In arguing these claims were
sufficiently alleged, Butler lists the elements of fraud, states the allegations
of the second amended complaint must be liberally construed in her favor and
accepted as true, and asserts “all elements were fully alleged” by citing
several paragraph numbers of the second amended complaint. “To withstand
a demurrer, the facts constituting every element of the fraud must be alleged
with particularity, and the claim cannot be salvaged by references to the
general policy favoring the liberal construction of pleadings.” (Goldrich v.
Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) Butler
neither quotes nor paraphrases any specific allegations, cites no legal
authorities, and presents nothing recognizable as a legal argument that her
allegations satisfied the heightened pleading standard applicable to fraud
claims. “It is the appellant’s responsibility to support claims of error with
citation and authority; this court is not obligated to perform that function on
the appellant’s behalf.” (Keyes v. Bowen (2010) 189 Cal.App.4th 647, 656.)
We decline Butler’s invitation to “[s]ee [her] [o]pposition that addressed
additional errors in [the motion for judgment on the pleadings] in more
detail.” “An appellant cannot rely on incorporation of trial court papers, but
must tender arguments in the appellate briefs.” (Paterno, supra,6 As we noted earlier, the superior court considered as one of Butler’s
fraud claims her count asserting negligent hiring, supervision, and retention
of the Aztec employee (Malone) who purportedly conspired with all
defendants to defraud Butler of her condominium by recording an allegedly
fraudulent trustee’s deed upon sale. (See p. 11, ante.) Butler does not discuss
in her opening brief the adequacy of her pleading of that count. We thus
deem the count abandoned. (Title G. & T. Co. v. Fraternal Finance Co. (1934)
220 Cal. 362, 363; Rufini v. CitiMortgage, Inc. (2014) 227 Cal.App.4th 299,
312 (Rufini); Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231
Cal.App.3d 232, 241 (Aragon-Haas).)
23
74 Cal.App.4th at p. 109, italics omitted.) The challenge to the ruling on
these causes of action is forfeited. (Guarino v. County of Siskiyou (2018)
21 Cal.App.5th 1170, 1179.)
e. conversion
We next consider the adequacy of Butler’s pleading of the claims for
conversion. Butler does not argue the count for conversion of the
condominium sufficiently stated a cause of action. We therefore deem that
claim abandoned and do not address it. (Rufini, supra, 227 Cal.App.4th at
p. 312; Aragon-Haas, supra, 231 Cal.App.3d at p. 241.) She does argue the
count for conversion of the promissory note was sufficiently stated because, in
her view, a note is a negotiable instrument that still has value after a
foreclosure sale and must be returned to the borrower when the debt is paid.
We reject this argument.
“ ‘To establish a conversion, [Butler] must establish an actual
interference with [her] ownership or right of possession. . . . Where [Butler]
neither has title to the property alleged to have been converted, nor
possession thereof, [she] cannot maintain an action for conversion.’ ” (Moore
v. Regents of University of California (1990) 51 Cal.3d 120, 136.) Butler
cannot establish any such interference. Under the terms of the deed of trust,
she was entitled to receive a copy of the promissory note upon execution of
the deed of trust, and SCME was entitled to sell the note without prior notice
to her. Under both the terms of the deed of trust and a statute governing
deeds of trust, Butler was entitled to receive the original note when she paid
off the loan secured by the deed of trust. (Civ. Code, § 2941, subd. (b);
Huckell v. Matranga (1979) 99 Cal.App.3d 471, 476.) Where, as here, the
borrower defaults and the lender exercises the power of sale under the deed
of trust, the trustee has a duty to cancel the note on completion of the sale.
24
(Kerivan v. Title Ins. & Trust Co. (1983) 147 Cal.App.3d 225, 231.) Hence,
because Butler never had ownership or possession of the original note and did
not pay off the loan so as to be entitled to receive the note, she has no claim
for conversion of the note.
f. leave to amend
Finally, we note that Butler has shown no error in the superior court’s
denial of leave to amend. It is her burden to identify specific factual
allegations she could add to cure the defects in the second amended
complaint. (York v. City of Los Angeles (2019) 33 Cal.App.5th 1178, 1197;
Shuster, supra, 211 Cal.App.4th at p. 509; Shimmon v. Franchise Tax Bd.
(2010) 189 Cal.App.4th 688, 692–693). In her reply brief, Butler asserted in a
heading that “Leave to Amend Should be Granted,” but under that heading
she did not specify any facts she would add to overcome the defects in her
pleading. She has not sustained her burden on appeal.
3. Miscellaneous claim
Butler’s last claim is that the superior court clerk erroneously refused
to grant her request for entry of default against Aztec. That claim is beyond
the scope of our review, which is limited to the judgment on appeal and any
intermediate ruling that led up to or directly relates to the judgment. (Code
Civ. Proc., § 906; Faunce v. Cate (2013) 222 Cal.App.4th 166, 170; Cahill v.
San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 948.) Aztec is not
a party to the judgment before us, and the clerk’s refusal to enter default
against Aztec has nothing to do with the judgment. Any review of that
refusal must await an appellate proceeding to which Aztec is a party and
which challenges a judgment or order to which the refusal led or relates.
25
III.
DISPOSITION
The judgment is affirmed as to Nationstar. The appeal is treated as a
petition for writ of mandate as to U.S. Bank, and the petition is denied.
Nationstar and U.S. Bank shall recover their costs incurred in this court.
IRION, J.
WE CONCUR:
MCCONNELL, P. J.
BUCHANAN, J.
26