Cherie Morgan v. Aurora Loan Services

FILED
NOT FOR PUBLICATION MAR 28 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHERIE J. MORGAN, an individual, No. 14-55203
Plaintiff - Appellant, D.C. No. 2:12-cv-04350-CAS-
MRW
v.
AURORA LOAN SERVICES, LLC, a MEMORANDUM*
Delaware Limited Liability Company and
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC., a
California Corporation,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted March 9, 2016
Pasadena, California
Before: REINHARDT, MURGUIA, and OWENS, Circuit Judges.
Plaintiff Cherie J. Morgan appeals the district court’s dismissal under
Federal Rule of Civil Procedure 12(b)(6) of her diversity action against Defendants
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Aurora Loan Services, LLC and Mortgage Electronic Registration Systems
(MERS). Morgan’s action arises from an allegedly wrongful nonjudicial
foreclosure proceeding brought against her real property. We have jurisdiction
under 28 U.S.C. § 1291, and we affirm. Because the parties are familiar with the
facts of this case, we do not repeat them here.
1. The district court properly dismissed Morgan’s contract claims. She
entered into two written agreements with Aurora—the workout agreement (WAG)
and the foreclosure alternative agreement (FAA). First, Morgan’s claim that
Aurora breached the WAG and FAA by ultimately failing to offer her a permanent
loan modification fails because neither the WAG nor the FAA guaranteed a
permanent loan modification. Cf. Corvello v. Wells Fargo Bank, NA, 728 F.3d
878, 880-81 (9th Cir. 2013) (per curiam) (holding that the plaintiff stated a breach
of contract claim where the contract provided that if he complied with a trial period
plan, the lender would provide a loan modification agreement). Both contracts
clearly provided that the aggregate plan payments would be insufficient to cure
Morgan’s arrearage, and that she would need to utilize a cure method to avoid
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foreclosure. Neither requires Aurora to provide a permanent loan modification.1
Further, Morgan has not sufficiently alleged that any Aurora representative orally
guaranteed a permanent loan modification upon successful completion of the WAG
and FAA. Morgan alleges only she was told she “needed to enter into a Workout
Agreement in order to receive a permanent loan modification.”2 Assuming without
deciding that this statement was admissible under California’s parol evidence rule,
Cal. Civ. Proc. Code § 1856(g), at most it suggests that compliance with a workout
agreement was a necessary, but not a sufficient, condition to obtain a permanent
modification.
Morgan also alleges that Aurora breached the FAA by rejecting her July 4,
1
Like the district court, we are unpersuaded by Morgan’s reliance on the
interpretation of a similar contract in Pinel v. Aurora Loan Services, LLC, 814 F.
Supp. 2d 930, 943-44 (N.D. Cal. 2011).
2
Morgan relies on an oral statement mentioned only in her opposition to
defendants’ motion to dismiss her third amended complaint, not in the complaint
itself. We may not consider this statement because “[i]n determining the propriety
of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a
plaintiff’s moving papers.” Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir.
2003) (quoting Schneider v. Cal. Dep’t. of Corr., 151 F.3d 1194, 1197 n.1 (9th Cir.
1998)). While “facts raised for the first time in plaintiff’s opposition papers should
be considered by the court in determining whether to grant leave to amend or to
dismiss the complaint with or without prejudice,” id., Morgan has now filed four
complaints without this statement and there is no reason to believe she would
include it if granted another leave to amend.
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2011 payment, but this too fails. Morgan’s own allegations establish that she had
missed one required payment by July 4, and thus was herself in breach. Even if
Aurora breached the FAA by not accepting the July 4 payment, Morgan was not
injured because Aurora still considered her for a permanent loan modification and
did not foreclose on her property until after the FAA expired and she failed to cure
the arrearage.
Finally, Morgan fails to state a claim that defendants breached the deed of
trust. As Morgan was given leave to amend her second amended complaint only
for the purpose of pleading claims similar to those in Corvello, her claim fails as an
improper amendment. See Fed. R. Civ. P. 15(a)(2); Johnson v. Riverside
Healthcare Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (explaining that this
court “may affirm based on any ground supported by the record”). Granting
further leave to amend would be futile because, as Morgan had constructive and
express notice of the trustee’s sale, she was not injured by the defendants’ alleged
failure to comply with the technical requirements of § 2924f.
2. Morgan’s intentional and negligent misrepresentation claims were
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properly dismissed because she failed to sufficiently plead damages.3 See Lazar v.
Superior Court, 909 P.2d 981, 984-85 (Cal. 1996) (stating the elements of
intentional misrepresentation); Wells Fargo Bank, N.A. v. FSI, Fin. Sols., Inc., 127
Cal. Rptr. 3d 589, 600 (Ct. App. 2011) (stating the elements of negligent
misrepresentation); see also Cal. Civ. Code § 1709. Morgan alleges that she was
injured in forbearing from pursuing other options to save her home and spending
time repeatedly contacting Aurora to ascertain the status of her loan modification
and submitting requested documents.4 To the extent that some California courts of
appeal recognize the time spent pursuing modification as a cognizable theory for
damages in this context, a plaintiff must still plead an adequate factual basis for
such damages, which Morgan has not done for either alleged injury. See
Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (stating that a
Rule 12(b)(6) dismissal is proper if there is “the absence of sufficient facts alleged
under a cognizable legal theory” (quoting Balistreri v. Pacifica Police Dep’t, 901
3
As Morgan failed to sufficiently plead damages, we need not address any
issues related to Federal Rule of Civil Procedure 9(b).
4
Morgan does not dispute that any WAG or FAA payments made in reliance
on purported misrepresentations that she would be reviewed for a permanent loan
modification were made pursuant to preexisting contractual duties, and thus do not
constitute damages. See, e.g., Lueras v. BAC Home Loans Servicing, LP, 163 Cal.
Rptr. 3d 804, 829 (Ct. App. 2013).
5
F.2d 696, 699 (9th Cir. 1988)). Compare Bushell v. JPMorgan Chase Bank, N.A.,
163 Cal. Rptr. 3d 539, 549 (Ct. App. 2013) (holding that plaintiffs had adequately
pled damages where they alleged they were injured by the time spent dealing with
the defendant throughout the loan modification process, among other things) with
Lueras, 163 Cal. Rptr. 3d at 829 (“Time and effort spent assembling materials for
an application to modify a loan is the sort of nominal damage subject to the maxim
de minimis non curat lex—i.e., the law does not concern itself with trifles.”).
4. Morgan similarly fails to state a claim for “lack of standing” under
§ 2924(a)(6). This provision of the California Homeowner’s Bill of Rights did not
go into effect until January 1, 2013—well after Morgan’s foreclosure—and does
not apply retroactively. See Cal. Civ. Code § 2924(a)(6); Myers v. Philip Morris
Cos., Inc., 50 P.3d 751, 759 (Cal. 2002) (explaining that unless a California statute
contains an express retroactivity provision, it will not be applied retroactively
unless it is clear from extrinsic sources that the legislature intended it to be applied
retroactively). To the extent that this claim can be construed as one for wrongful
foreclosure, it still fails. Morgan alleges that Aurora was not the proper beneficiary
of the deed of trust because the deed of trust was not assigned to the Lehman Trust
before its closing date. A borrower does have standing to challenge an assignment
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of her note and deed of trust on the basis of defects allegedly rendering the
assignment void. Yvanova v. New Century Mortg. Corp., 365 P.3d 845 (Cal. 2016).
But because an act in violation of a trust agreement is voidable—not void—under
New York law, which governs the Pooling and Servicing Agreement (PSA) at
issue, Morgan lacks standing here. See Rajamin v. Deutsche Bank Nat. Trust Co.,
757 F.3d 79, 87-90 (2d Cir. 2014) (finding that “any failure to comply with the
terms of the PSAs” did not render the “acquisition of plaintiffs’ loans and
mortgages void” because “[u]nder New York law, unauthorized acts by trustees are
generally subject to ratification by the trust beneficiaries”). Similarly, to the extent
Morgan alleges defects due to MERS’s role in the securitization process,
“California [courts] have universally held that MERS, as nominee beneficiary, has
the power to assign its interest under a deed of trust.” Herrera v. Fed. Nat’l Mortg.
Ass’n, 141 Cal. Rptr. 3d 326, 328 (Ct. App. 2012).
5. The district court properly dismissed Morgan’s quiet title and cancellation
of instruments claims because she failed to allege facts sufficient to show tender in
the amount of her indebtedness or a valid excuse to the tender requirement. See
Lona v. Citibank, N.A., 134 Cal. Rptr. 3d 622, 640-42 (Ct. App. 2011) (explaining
the tender requirement and excuses to tender); Miller v. Provost, 33 Cal. Rptr. 2d
7288, 289-90 (Ct. App. 1994) (quiet title); Arnolds Mgmt. Corp. v. Eischen, 205 Cal.
Rptr. 15, 17-18 (Ct. App. 1984) (equitable set-aside). First, as explained
previously, Morgan’s failure to tender is not excused by the allegedly voidable
transfer of her note and deed of trust into the Lehman Trust. See Rajamin, 757 F.3d
at 88-90. Second, no counterclaims survive to offset the amount of the debt
claimed by Aurora. Third, no specific circumstances here make it inequitable to
enforce Morgan’s debt.
6. The district court properly dismissed Morgan’s promissory estoppel claim.
Under California law, promissory estoppel applies only in the absence of an express
agreement between the parties. See Youngman v. Nevada Irr. Dist., 449 P.2d 462,
468 (Cal. 1969); Fontenot v. Wells Fargo Bank, N.A., 129 Cal. Rptr. 3d 467, 483-84
(Ct. App. 2011). As Morgan’s payments under the WAG and FAA were made as
part of a bargained-for exchange with Aurora, she fails to state a claim for
promissory estoppel.
7. Finally, the district court properly dismissed Morgan’s claim under the
Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200-17210. Morgan
alleges that defendants failed to comply with California’s nonjudicial foreclosure
scheme, but she lacked standing to bring this claim. See Kwikset Corp. v. Superior
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Court, 246 P.3d 877, 321-22 (Cal. 2011). Under the UCL, a plaintiff must show
that her injury came “‘as a result of’ the unfair competition.” Id. at 326 (quoting
Cal. Bus. & Prof. Code § 17204). As Morgan’s foreclosure resulted from her
defaulting on her loan prior to defendants’ allegedly wrongful acts, she has not
stated a claim under the UCL. See, e.g., Jenkins v. JP Morgan Chase Bank, N.A.,
156 Cal. Rptr. 3d 912, 933-34 (Ct. App. 2013) (“As [the plaintiff’s] home was
subject to nonjudicial foreclosure because of [her] default on her loan, which
occurred before Defendants’ alleged wrongful acts, [she] cannot assert the
impending foreclosure of her home . . . was caused by Defendants’ wrongful
actions.”).
8. The district court did not abuse its discretion in failing to grant Morgan’s
requests to amend her claims again. She was granted multiple opportunities to
amend her claims, and did not demonstrate how she would cure the defects if
further leave to amend were granted. See Lipton v. Pathogenesis Corp., 284 F.3d
1027, 1039 (9th Cir. 2002).
AFFIRMED.
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