Valbuena v. Ocwen Loan Servicing CA4/2

Filed 5/12/21 Valbuena v. Ocwen Loan Servicing CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
GARY VALBUENA,
Plaintiff and Appellant, E073534
v. (Super.Ct.No. RIC1812204)
OCWEN LOAN SERVICING, LLC et OPINION
al.,
Defendants and Respondents.
APPEAL from the Superior Court of Riverside County. Chad W. Firetag, Judge.
Affirmed.
Gary Valbuena, in pro. per., for Plaintiff and Appellant.
Severson & Werson, Jan T. Chilton, and Kerry W. Franich, for Defendant and
Respondent Ocwen Loan Servicing, LLC.
ZBS Law and Bradford E. Klein for Defendants and Respondents Law Offices of
Les Zieve, Christine O’Brien and Geoffrey Neal.
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Plaintiff and appellant Gary Valbuena (Plaintiff) sued Ocwen Loan Servicing,
LLC (Ocwen); Homeward Residential, Inc. (Homeward); the Federal Home Loan
Mortgage Corporation (Freddie Mac); JPMorgan Chase Bank, NA (Chase); Karen
Smith (Smith); Vicki Pospisil (Pospisil); the Law Offices of Les Zieve; Christine
O’Brien; and Geoffrey Neal for alleged issues related to a home foreclosure. The
defendants demurred. The trial court sustained the demurrer without leave to amend.
Plaintiff contends the trial court erred by sustaining the demurrer. We affirm the
judgment.
FACTUAL AND PROCEDURAL HISTORY1
In 2002, Plaintiff’s mother (Mother) and father (Father) purchased property in
Banning (the property). Mother and Father obtained a loan secured by a deed of trust
on the property. Father died in January 2005. In June 2005, Mother transferred the
property from herself to her trust (the Trust). In 2006, Mother refinanced the property
through Washington Mutual and transferred the property back to herself as an
individual.
Thereafter, in September 2006, the promissory note for the property was
transferred into a securitized pool of loans. In 2008, Washington Mutual declared
bankruptcy, and Chase purchased Washington Mutual’s assets. When Chase purchased
1 Because this an appeal following the sustaining of a demurrer, we present the
version of the facts alleged by plaintiff along with matters that were judicially noticed
by the trial court. (See generally Debrunner v. Deutsche Bank National Trust Co.
(2012) 204 Cal.App.4th 433, 438-439 [“We do not . . . assume the truth of ‘mere
contentions or assertions contradicted by judicially noticeable facts’ ”].)
2
Washington Mutual’s assets, Chase did not “buy any individual Originated Mortgage
Loan by [Washington Mutual] prior to September 25, 2008,” which includes the loan
for the property. Nevertheless, Chase became trustee of the deed of trust for Mother’s
loan.
In February and March 2012, Mother failed to make her loan payments. A notice
of default in the amount of $9,867.90 was recorded in June 2012. The notice of default
informed Mother that she should direct any payments to “JPMorgan Chase Bank,
National Association successor in interest by purchase from the FDIC as Receiver of
Washington Mutual Bank f/k/a Washington Mutual Bank, FA C/O Northwest Trustee
Services, Inc.” On November 8, 2012, Chase assigned its beneficial interest in the deed
of trust to Homeward.
On November 14, 2012, Mother modified the loan with Homeward. In the
modification agreement, Homeward was identified as the lender. The new principal
balance of the promissory note was $303,761.83. The maturity date for the loan was
November 1, 2052. Mother agreed to an interest rate of two percent for the first five
years of the loan; three percent for the sixth year of the loan; and 3.375 percent for the
remaining 34 years of the loan. The payment schedule would not result in the loan
being paid in full by November 2052, so Mother would have to make a balloon payment
at the end of the loan period. On April 2, 2014, Mother executed a grant deed
transferring the property from her ownership as an individual into the Trust. Mother
died in August 2014.
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After Mother died, plaintiff (from what we gather in the allegations) made the
monthly payments on Mother’s loan. However, in September, October, and November
2015, plaintiff failed to make the loan payments. In November 2015, Homeward
assigned its beneficial interest in the deed of trust to Ocwen. In November 2015,
Ocwen substituted the Law Offices of Les Zieve as trustee for the deed of trust. In
November 2015, plaintiff contacted Ocwen. Plaintiff offered to bring the mortgage
payments current in December because he was expecting to receive money in
December. Ocwen informed plaintiff that any payment would have to bring the loan
current—no partial payments would be accepted. On December 9, 2015, a notice of
default in the amount of $10,124.46 was recorded.
In January 2016, Ocwen assigned its beneficial interest in the deed of trust to
Freddie Mac. A notice of trustee’s sale was recorded on March 16, 2016. The sale was
scheduled for April 20, 2016. On April 18, 2016, Mother’s 2014 grant deed from
herself to the Trust was recorded. That same day, plaintiff filed a lawsuit seeking to
prevent the foreclosure. The defendants in that lawsuit filed separate demurrers.
Between November 2016 and February 2017, at separate hearings, the trial court
sustained the defendants’ demurrers without leave to amend. This court affirmed the
trial court. (Valbuena v. Law Offices of Les Zieve (Sept. 13, 2018, E067927 [nonpub.
opn.]) [2018 LEXIS 6273].)
In March 2017, plaintiff as trustee of the Trust executed a quit claim deed
granting the property to the Trust and plaintiff as joint tenants. On September 12, 2017,
the Law Offices of Les Zieve recorded a new notice of trustee’s sale. On October 26,
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2017, the trustee’s deed upon sale was recorded. In the deed upon sale, the Law Offices
of Les Zieve was listed as the trustee; Mother was listed as the trustor; and Freddie Mac
was listed as the beneficiary and grantee.
Plaintiff filed the instant lawsuit on June 15, 2018. At that time, plaintiff was
being threatened with eviction. The instant lawsuit is based upon plaintiff’s “new
discovery” that the promissory note and deed of trust were not part of Chase’s purchase
of Washington Mutual’s assets, which means Chase could not transfer the deed of trust
to Homeward, which means the parties who foreclosed on the property did not have the
authority to foreclose. Plaintiff included eight causes of action in his first amended
complaint (FAC).
On June 19, 2018, plaintiff filed for Chapter 7 bankruptcy in the U.S. Bankruptcy
Court for the Central District of California. On September 25, 2018, the Bankruptcy
Court granted Freddie Mac’s motion for relief from the stay of an unlawful detainer
case against plaintiff (11 U.S.C.A. § 362(a)), which permitted Freddie Mac to “enforce
its remedies to obtain possession of the Property, including lockout.”
In the instant case, Ocwen, Homeward, Freddie Mac, Smith, and Pospisil
demurred to the FAC. The remaining defendants—Chase, the Law Offices of Les
Zieve, Christine O’Brien, and Geoffrey Neal—joined in the demurrer. One of
defendants’ arguments was that “[b]ecause [Mother] benefitted from Homeward’s loan
modification agreement, [Mother] and her successors like Plaintiff are estopped from
challenging Homeward’s authority to enforce the Loan.” Plaintiff opposed the
demurrer. Plaintiff asserted he had standing to sue defendants because he is the owner
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of the property. The trial court sustained the demurrer without leave to amend and
dismissed the case in its entirety.
DISCUSSION
A. STANDARD OF REVIEW
“When a demurrer is sustained by the trial court, we review the complaint de
novo to determine whether, as a matter of law, the complaint states facts sufficient to
constitute a cause of action. [Citation.] Reading the complaint as a whole and giving it
a reasonable interpretation, we treat all material facts properly pleaded as true.
[Citation.] The plaintiff has the burden of showing that the facts pleaded are sufficient
to establish every element of the cause of action and overcoming all of the legal grounds
on which the trial court sustained the demurrer, and if the defendant negates any
essential element, we will affirm the order sustaining the demurrer as to the cause of
action. [Citation.] We will affirm if there is any ground on which the demurrer can
properly be sustained, whether or not the trial court relied on proper grounds or the
defendant asserted a proper ground in the trial court proceedings.” (Martin v.
Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.)
B. STANDING
Plaintiff’s first cause of action alleged Ocwen and Law Offices of Les Zieve
violated the Homeowners’ Bill of Rights (Civ. Code, § 2920.5 et seq.), specifically Civil
Code section 2924.17, by recording void documents pertaining to the property. On
appeal, plaintiff contends the trial court erred by concluding plaintiff lacked standing to
allege a violation of the Homeowners’ Bill of Rights.
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“Standing is the threshold element required to state a cause of action and, thus,
lack of standing may be raised by demurrer.” (Martin v. Bridgeport Community Assn.,
Inc., supra, 173 Cal.App.4th at p. 1031.) Civil Code section 2924.17, subdivision (a),
provides that foreclosure documents, such as notices of default and notices of sale, must
“be accurate and complete and supported by competent and reliable evidence.” In his
FAC, plaintiff cites Civil Code section 2924.12, which provides a borrower has standing
to sue for a violation of Civil Code section 2924.17. (Civ. Code, § 2924.12, subd. (a).)
A “ ‘borrower’ means any natural person who is a mortgagor or trustor.” (Civ. Code, §
2920.5, subd. (c)(1).)
In the FAC, plaintiff alleged that Mother and Father obtained a loan for the
property in 2002, Mother refinanced the property in 2006, and Mother modified the loan
in 2012. Plaintiff does not allege that he obtained a loan for the property. The 2016
notice of trustee’s sale lists Mother as the trustor. The 2017 trustee’s deed upon sale
lists Mother as the trustor. It appears from plaintiff’s allegations that plaintiff continued
to pay Mother’s loan after Mother died. Thus, Mother is the borrower not plaintiff.
In the FAC, plaintiff alleges that he is Mother’s successor-in-interest for the loan.
To support his assertion, plaintiff cites to “section (Q)” of the deed of trust for Mother’s
2006 loan with Washington Mutual. Section Q is in the “definition” section of the deed
of trust. It provides that “ ‘Successor in Interest of Borrower’ means any party that has
taken title to the Property, whether or not that party has assumed Borrower’s obligations
under the Note and/or this Security Instrument.”
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Thus, a successor in interest under the deed of trust need not have “assumed
Borrower’s obligations under the Note,” but to meet the statutory definition of
“borrower,” one must be a mortgagor or trustor. (Civ. Code, § 2920.5, subd. (c)(1).)
Plaintiff failed to allege how the definition of “successor in interest of borrower” within
the deed of trust would expand the statutory definition of “borrower.” If one is not a
mortgagor or trustor, then one is not a borrower under the statute. (Civ. Code, § 2920.5,
subd. (c)(1).) If one is not a borrower under the statute, then one does not have
standing.
A different section of the deed of trust addresses any transfer in ownership of the
property. It provides, “If all or any part of the Property or any Interest in the Property is
sold or transferred . . . without Lender’s prior written consent, Lender may require
immediate payment in full of all sums secured by this Security Instrument.” Plaintiff
fails to allege that Mother contacted the lender prior to transferring the property into the
Trust and/or that he contacted the lender prior to transferring the property in joint
tenancy to himself. As a result, plaintiff does not provide sufficient allegations to
support his conclusion that he is a “borrower” as defined in Civil Code section 2920.5,
subdivision (c)(1). Because plaintiff is not a borrower, plaintiff lacks standing to sue for
an alleged violation of Civil Code section 2924.17. Therefore, the trial court properly
sustained the demurrer to the first cause of action.
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Plaintiff asserts that he “is being denied the opportunity to exercise his rights
under [the Homeowners’ Bill of Rights] because the named borrower has died. . . . The
California [L]egislature could not have intended such a result.” If the Legislature
wanted people other than trustors and mortgagors to have standing, then it would have
included other people. Because the Legislature did not include people other than
trustors and mortgagors (Civ. Code, § 2920.5, subd. (c)(1)), we are not persuaded that
the Legislature intended for others to be included. (People v. Whitmer (2014) 230
Cal.App.4th 906, 917 [“ ‘ “the expression of certain things in a statute necessarily
involves exclusion of other things not expressed” ’ ”].)
Plaintiff contends that “[p]ublic policy requires that [plaintiff] has standing to sue
under [the Homeowners’ Bill of Rights] because there is no one else to do so.”
Plaintiff’s position appears to be that he avoided personal liability for the loan by not
contacting the lender prior to putting the property into his name and now should be able
to sue pursuant to public policy. We find plaintiff’s contention to be unpersuasive.
C. CAUSES OF ACTION ONE THROUGH FIVE AND SEVEN
Plaintiff contends the trial court erred by finding he did not plead sufficient facts
for causes of action one through five and seven. We have explained ante that the first
cause of action fails because plaintiff failed to sufficiently allege that he has standing to
bring a cause of action for an alleged violation of the Homeowners’ Bill of Rights.
Plaintiff’s second through fifth causes of action and seventh cause of action
pertain to common law wrongful foreclosure. The second cause of action alleges
conspiracy to wrongfully foreclose. The third cause of action alleges unfair business
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practices related to the allegedly wrongful foreclosure. (Bus. & Prof. Code, § 17200.)
The fourth cause of action is for aiding and abetting the allegedly wrongful foreclosure.
The fifth cause of action is for wrongful foreclosure. The seventh cause of action seeks
to quiet title.
“Wrongful foreclosure is a common law tort claim. ‘The elements of a wrongful
foreclosure cause of action are: “ ‘(1) [T]he trustee or mortgagee caused an illegal,
fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a
mortgage or deed of trust; (2) the party attacking the sale (usually but not always the
trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or
mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the
secured indebtedness or was excused from tendering.’ ” ’ ” (Turner v. Seterus, Inc.
(2018) 27 Cal.App.5th 516, 525.)
We briefly address the different standing requirement under the common law. In
common law, a party “ ‘with an interest . . . in the real property security itself ha[s]
standing to challenge or attempt to set aside a nonjudicial foreclosure sale.” ’ ” (Banc of
America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180
Cal.App.4th 1090, 1103.) Plaintiff obtained an interest in the property in March 2017,
and the trustee’s sale took place in October 2017. Plaintiff had an ownership interest in
the property at the time of the foreclosure, so plaintiff has standing to bring the common
law wrongful foreclosure claims.
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We now turn to the sufficiency of plaintiff’s allegations. Plaintiff’s theory is that
there is not a 2008 assignment of deed of trust from Washington Mutual to Chase
because Mother’s loan was not part of Chase’s purchase of Washington Mutual’s assets,
so the assignment from Chase to Homeward and all the assignments thereafter lack
validity, which means Ocwen and the Law Offices of Les Zieve lacked authority to
foreclose on the property in 2017. The flaw in plaintiff’s allegations is that plaintiff
fails to take into account the intervening event of the 2012 loan modification.
In Mother’s 2012 loan modification, Mother agreed that Homeward was her
lender. Mother agreed to a new principal balance, new interest rates, and new mortgage
maturity date. Mother agreed to work with Homeward. Thus, if there were any error in
the 2008 documents, that error was cured by the 2012 loan modification because Mother
signed a contract recognizing Homeward as her lender and agreeing to loan terms with
Homeward. The 2012 loan modification effectively fixed any issues as to the identity
of Mother’s lender. Because plaintiff’s allegations fail to address the intervening event
of the 2012 loan modification, he has not sufficiently pled how an error in the lender’s
identity in 2008 could have caused a wrongful foreclosure in 2017, which means
plaintiff failed to sufficiently allege the trustee caused a fraudulent sale of real property
pursuant to a power of sale in a deed of trust.
Another issue plaintiff raises in the FAC is that, at the time of the December
2015 default, he should not have owed more than $5,000, but Ocwen demanded
$10,124.46 to reinstate the loan. Plaintiff asserts Ocwen provided “no explanation or
break down of what this amount consisted of.” Plaintiff does not allege that, if the
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reinstatement amount had been less than $5,000 then he would have made the payment.
For example, plaintiff alleged that he called Ocwen and asked if he could send them a
payment in December 2015 when he expected to receive some money. Plaintiff fails to
allege that he received the expected money, that he had $5,000 to send to Ocwen, and
that he would have sent the $5,000 to Ocwen. Plaintiff also does not sufficiently allege
that he was the borrower, such that the lender would have permitted plaintiff to reinstate
the loan. Thus, if we accept as true the allegation that the $10,124.46 amount was
inaccurate, it is unclear how that inaccuracy caused plaintiff harm.
Another issue plaintiff raises is that, when Chase transferred the deed of trust to
Homeward, Homeward did not provide any consideration for the transfer. Plaintiff
makes the same complaint regarding the transfer from Homeward to Ocwen. Plaintiff
asserts that the lack of consideration means the transfers were invalid. The assignment
from Chase to Homeward reads, “FOR VALUE RECEIVED, the undersigned hereby
grants . . . .” The assignment from Homeward to Ocwen reads, “For Value Received,
Homeward Residential, Inc. hereby grants . . . .” If we assume that plaintiff’s
allegations are true, i.e., that no consideration was given, plaintiff has failed to provide
authority reflecting such a transfer would be invalid. For example, plaintiff has not
cited authority indicating that gifts are not allowed.
In sum, we conclude the trial court properly sustained the demurrer to the second
through fifth and the seventh causes of action.
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D. SIXTH AND EIGHTH CAUSES OF ACTION
At the end of plaintiff’s appellant’s opening brief, he asserts the trial court erred
by sustaining the demurrer to all eight causes of action. Plaintiff offers no substantive
argument as to the sixth and eighth causes of action. Accordingly, the issue is forfeited
as to the sixth and eighth causes of action. (Brown v. Deutsche Bank National Trust Co.
(2016) 247 Cal.App.4th 275, 281-282.)
E. AMENDMENT
Plaintiff requests this court “give [Plaintiff] another opportunity to correct what
this what this [sic] court think [sic] is lacking as evidenced by all stated above.”
“The law on this point is well settled. ‘If there is a reasonable possibility that the
defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain
a demurrer without leave to amend. [Citation.] The burden is on the plaintiff, however,
to demonstrate the manner in which the complaint might be amended.’ ” (Association
of Community Organizations for Reform Now v. Department of Industrial Relations
(1995) 41 Cal.App.4th 298, 302.) The plaintiff must also explain how the proposed
“ ‘ “amendment will change the legal effect of his pleading.” ’ ” (Hedwall v. PCMV,
LLC (2018) 22 Cal.App.5th 564, 579.)
Plaintiff has not explained how he would amend the FAC to cure the defects.
Rather, plaintiff is relying on this court to inform him of the FAC’s defects. Because
plaintiff has not met his burden of demonstrating how the FAC might be amended, we
conclude the trial court did not err by denying plaintiff leave to amend.
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DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1).)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER
J.
We concur:
McKINSTER
Acting P. J.
FIELDS
J.
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