Gray v. Ocwen Loan Servicing CA4/1

Filed 9/14/21 Gray v. Ocwen Loan Servicing 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
WEDA GRAY, D078847
Plaintiff and Appellant,
v. (Super. Ct. No. 17CV305240)
OCWEN LOAN SERVICING, LLC, et
al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Santa Clara, James
Stoelker, Judge. (Retired Judge of the Santa Clara Sup. Ct. assigned by the
Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed.
Law Offices of Charles T. Marshall and Charles T. Marshall for
Plaintiff and Appellant.
Severson & Werson, Jan T. Chilton and Elizabeth C. Farrell for
Defendants and Respondents.
INTRODUCTION
Weda Gray appeals from a summary judgment in favor of defendants
and respondents Western Progressive, LLC (Western Progressive); U.S.
Bank, National Association (U.S. Bank), as Trustee for 2005 Structured Asset
Securities Corporation, Structured Asset Investment Loan Trust Mortgage
Pass-Through Certificates Series 2005-HE1 (the Structured Asset Trust); and
Ocwen Loan Servicing, LLC (Ocwen) (collectively, Defendants).
Gray defaulted on a mortgage loan, Western Progressive recorded a
notice of default and an election to sell under the associated deed of trust,
and Gray sued to stop the foreclosure. She alleged her loan, note and deed of
trust were void, primarily on the ground that the loan had been “table
funded” by an entity other than the lender named in her note and deed of
trust. The trial court concluded Gray’s claims were not supported by legal
authority or admissible evidence and granted summary judgment in favor of
Defendants.
On appeal, Gray asserts the trial court took too narrow a view of her
claims and erred by granting summary judgment. We find no error in the
trial court’s ruling and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
I.
The Loan and Subsequent Default
In February 2005, Gray executed an Adjustable Rate note (note)
payable to Finance America, LLC (Finance America) to obtain a $538,000
mortgage loan on a single family home in Milpitas, California. She also
executed a deed of trust encumbering the property, and it was recorded with
the Santa Clara County Recorder. The note and deed of trust name Finance
America as the “Lender,” and the deed of trust names Mortgage Electronic
Registration Systems, Inc. (MERS) as the beneficiary and as nominee for the
Lender and the Lender’s successors and assigns.
2
The deed of trust was later assigned to U.S. Bank “as Trustee by
Barclays Capital Real Estate, Inc. dba HomEq Servicing, attorney in fact.”
The assignment was signed by the assistant secretary of MERS, as nominee
for Finance America, and was recorded in February 2009. In March 2010, a
second assignment was recorded, assigning the deed of trust to U.S. Bank as
trustee of the Structured Asset Trust. The second assignment was signed by
the assistant secretary of U.S. Bank “as Trustee by Barclays Capital Real
Estate Inc., DBA HomEq Servicing Its Atty in Fact.” (Original in all
capitals.)
According to Ocwen, HomeEq Servicing (HomeEq) was the original
servicer of the loan and received the original loan documents from Deutsche
Bank National Trust Company, the custodian for the Structured Asset Trust.
In September 2010, Ocwen acquired HomeEq’s loan servicing business,
including the servicing of Gray’s mortgage loan. Before the acquisition,
HomeEq sent Gray a notice of service transfer letter, which included
information about the changes to the servicing of her loan.
In 2013, Gray began missing payments and, in June 2014, Ocwen
notified her of the default in a letter sent by certified mail with return receipt
requested. Ocwen sent two more letters in September and October 2014 and
attempted to call Gray on at least three separate days in October. Finally, in
November, Ocwen sent Gray another notice by certified mail with return
receipt requested, indicating Ocwen would foreclose on Gray’s property if she
did not contact them and the delinquency remained in 30 days.
In April 2015, Ocwen recorded a substitution of trustee, naming
Western Progressive as the new trustee of the deed of trust. The substitution
was signed by the contract management coordinator for U.S. Bank as trustee
under the Structured Asset Trust, by its servicer Ocwen.
3
On May 11, 2015, approximately two years after Gray’s first missed
payment, Western Progressive recorded the notice of default on behalf of
Ocwen. The notice of default informed Gray that she should contact Western
Progressive “to arrange for payment to stop the foreclosure,” and that
Western Progressive was the current trustee under the deed of trust executed
by Gray on February 18, 2005. It also included a “California Declaration of
Compliance” in accordance with Civil Code section 2923.55, subdivision (c).1
The declaration was signed by a contract manager for Ocwen, as servicer for
U.S. Bank, as trustee under the Structured Asset Trust.
As of January 2017, Ocwen had physical possession of the original note.
Several undated allonges attached to the note show assignments from
Finance America to Lehman Brothers Holdings, Inc. (Lehman); from Lehman
to U.S. Bank, as trustee; and from U.S. Bank, as trustee to U.S. Bank, as
trustee under the Structured Asset Trust.
II.
Gray’s Complaint
Gray sued Defendants to stop the foreclosure in January 2017. In a
verified complaint, Gray alleged the note and deed of trust were not valid
legal documents because Defendants concealed the true parties and nature of
the loan. Alternatively, she alleged Defendants had not perfected a legal
interest in the note and deed of trust and thus had no legal right to collect the
debt.
1 Civil Code section 2923.55 is part of the California Homeowner Bill of
Rights and sets forth certain requirements a mortgage servicer must comply
with before recording a notice of default. Subdivision (c) requires the
mortgage servicer to include a declaration with the notice of default
indicating the mortgage servicer contacted, or tried with due diligence to
contact, the borrower. (Civ. Code, § 2923.55, subd. (c).)
4
More specifically, Gray alleged that the loan was “table funded”
because Finance America was listed as the lender but Lehman actually
funded the loan, and that Finance America and Lehman materially
misrepresented the true parties to the note and deed of trust. She also
alleged the note and deed of trust were void because the note is not a
negotiable instrument and is instead payable only to Finance America, the
California Department of Business Oversight revoked Finance America’s
business license in June 2006, and MERS exited the chain of title once the
note was sold into the Structured Asset Trust.
Based on these allegations, Gray asserted the following nine causes of
action against Defendants: (1) invalidity of contracts; (2) cancellation of
instruments; (3) slander of title;2 (4) violation of California Civil Code section
2924.17; (5) intentional misrepresentation; (6) wrongful foreclosure; (7)
declaratory relief; (8) violation of Civil Code section 2923.55; and (9) violation
of the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200).
In the prayer for relief, Gray requested a declaration of the rights and
duties of the parties with respect to the note, deed of trust, and assignments,
an order cancelling these instruments, and an injunction enjoining
Defendants from taking any further action based on the note or deed of trust.
2 The trial court sustained a demurrer as to the third cause of action for
slander of title, with leave to amend, before Defendants filed their motion for
summary judgment. Gray did not amend, and she does not challenge the
order sustaining the demurrer. Accordingly, the third cause of action is not
at issue on appeal.
5
III.
Defendants’ Motion for Summary Judgment
Defendants filed a motion for summary judgment or, in the alternative,
summary adjudication of each cause of action. They asserted that numerous
courts have rejected Gray’s primary legal theory that the loan was void due to
table funding and, alternatively, that Gray had no admissible evidence to
support the theory. Defendants further asserted the undisputed evidence
established the note, deed of trust, and all associated instruments were valid,
and they had complied with all statutory requirements before commencing
the foreclosure.
Defendants submitted the following documents in support of their
motion: a separate statement of undisputed material facts; an attorney
declaration attaching verified discovery responses and transcripts from the
depositions of Gray and her daughter, Gina Gray, who also served as her
mortgage broker for the loan; and a declaration from Howard R. Handville, a
senior loan analyst with Ocwen Financial Corporation, the parent company of
Ocwen. Handville’s declaration set forth the details of the loan origination
and subsequent transfers and attached copies of the note, deed of trust,
assignments, substitution of trustee, and notice of default (collectively, the
loan documents). In a separate pleading, Defendants asked the trial court to
take judicial notice of the loan documents.
Gray opposed the motion, the separate statement of undisputed
material facts, and the request for judicial notice. Gray provided an attorney
declaration but did not include any attachments or provide any further
evidence. Instead, her opposition relied primarily on transcripts of her own
deposition testimony and the deposition testimony of her daughter, portions
of which had already been submitted by Defendants.
6
After reviewing the pleadings and hearing argument, the trial court
granted the request for judicial notice and the motion for summary judgment.
A judgment of dismissal was entered on January 22, 2019. Gray timely
appealed.
DISCUSSION
I.
Relevant Legal Principles and Standard of Review
Summary judgment is appropriate when the moving party establishes
there is no triable issue of material fact under the pleadings and the moving
party is entitled to judgment as a matter of law. (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) A triable issue of
material fact exists if the evidence would allow a reasonable trier of fact to
make a factual finding that is necessary under the pleadings in favor of the
party opposing the motion. (Id. at pp. 843, 850.)
A defendant moving for summary judgment has the initial burden of
presenting evidence sufficient to establish the plaintiff either cannot prove at
least one element of, or that there is a complete defense to, each cause of
action as alleged in the complaint. (Code Civ. Proc., § 437c, subd. (p)(2);
Aguilar, supra, 25 Cal.4th at pp. 850, 853; Hutton v. Fidelity Nat. Title Co.
(2013) 213 Cal.App.4th 486, 493 (Hutton) [“the burden of a defendant moving
for summary judgment only requires that he or she negate plaintiff's theories
of liability as alleged in the complaint; that is, a moving party need not refute
liability on some theoretical possibility not included in the pleadings.”].)
If the defendant does so, the burden shifts to the plaintiff to present
evidence demonstrating there is a triable issue of material fact. (Code Civ.
Proc., § 437c, subd. (p)(2); Aguilar, supra, 25 Cal.4th at p. 850.) The plaintiff
may not rely on the allegations in the pleadings and, instead, must “ ‘set forth
7
the specific facts showing that a triable issue of material fact exists as to that
cause of action or a defense thereto.’ ” (Aguilar, at p. 849; Code Civ. Proc., §
437c, subds. (p)(1) & (2).) At the same time, though, the court may not weigh
the evidence and must deny the motion if the evidence presented by the
opposing party, or any inferences reasonably drawn therefrom, raises a
triable issue of material fact. (Aguilar, at p. 856.)
On appeal from a summary judgment, we apply the same legal
standard used by the trial court and independently assess the correctness of
the trial court’s ruling. (Moore v. Regents of University of California (2016)
248 Cal.App.4th 216, 231; Coral Construction, Inc. v. City and County of San
Francisco (2010) 50 Cal.4th 315, 326.) “[W]e examine the record de novo,
liberally construing the evidence in support of the party opposing summary
judgment and resolving doubts concerning the evidence in favor of that
party.” (Miller v. Department of Corrections (2005) 36 Cal.4th 446, 460.)
However, “ ‘[a]s with an appeal from any judgment, it is the appellant's
responsibility to affirmatively demonstrate error and, therefore, to point out
the triable issues the appellant claims are present by citation to the record
and any supporting authority. In other words, review is limited to issues
which have been adequately raised and briefed.’ ” (Claudio v. Regents of the
University of California (2005) 134 Cal.App.4th 224, 230.)
8
II.
The Trial Court Did Not Err by Granting Summary Judgment
Gray contends the trial court erred by granting summary judgment on
the first, second, fourth, fifth, and eighth causes of action.3 We
independently review the trial court’s ruling with respect to each cause of
action, and conclude summary judgment was appropriate.
A. First Cause of Action: Invalidity of Contracts
In support of her first cause of action for invalidity of contracts, Gray
alleged “the [n]ote and [d]eed of [t]rust were formed from the unfair and
deceptive business practice of table funding,” and Finance America concealed
the fact that it was not the true lender and was, instead, acting as an
intermediary for Lehman. The transaction and Finance America, she
alleged, violated several provisions of the Business and Professions Code, the
Civil Code, and the Financial Code, and, as a result, the note and deed of
trust are void “ab initio.” Finally, she alleged there was no true meeting of
the minds and no formation of a legally enforceable contract because Finance
America and Lehman always intended to convert the note into a security,
which included third parties and terms and conditions not disclosed in the
note or deed of trust.
In the motion for summary judgment, Defendants argued there was no
legal authority to support the theory that any of the loan documents were
void as a result of table funding and, in any event, Gray presented no
admissible factual basis for her assertion that Finance America was not the
3 Gray does not contest the grant of summary judgment on the sixth
cause of action for wrongful foreclosure, the seventh cause of action for
declaratory relief, and the ninth cause of action for a UCL violation in her
briefing on appeal. (See Roberts v. Assurance Co. of America (2008) 163
Cal.App.4th 1398, 1410 [issues not raised in the opening brief are waived].)
9
true lender. The trial court ruled that, while it did not appear Gray was
currently in possession of evidence demonstrating Finance America was not
the true lender, Defendants had not met their burden to demonstrate Gray
could not reasonably obtain such evidence. However, the court agreed with
Defendants’ first point and concluded, “table-funding is not a recognized basis
upon which to challenge the [n]ote and [deed of trust],” and, therefore, Gray
could not, “as a matter of law, succeed on her first cause of action, which is
predicated on the table funding theory.”
On appeal, Gray asserts the trial court erred by taking too narrow a
view of her claims as “attacks on the practice of table funding a loan” and by
concluding that she provided no evidentiary support for her assertion that
Finance America was not the actual lender. We are not persuaded by either
argument.
1. Table Funding
We turn first to Gray’s assertion the trial court adopted an “incorrect,
cramped definition of the dispute as one primarily relating to the illegal table
funding of the loan.”
“Table funding occurs when a transaction is consummated with the
debt obligation initially payable by its terms to one person, but another
person provides the funds for the transaction at consummation and receives
an immediate assignment of the note, loan contract, or other evidence of the
debt obligation.” (Compass Bank v. Petersen (C.D. Cal. 2012) 886 F.Supp.2d
1186, 1191, fn. 5 (Petersen).) In other words, “the originator closes the loan in
its own name, but is acting as an intermediary for the true lender, which
assumes the financial risk of the transaction.” (Easter v. American West Fin.
(9th Cir. 2004) 381 F.3d 948, 955 (Easter).)
10
Here, Gray alleged in the first substantive paragraph under the first
cause of action of her complaint that “the [n]ote and [d]eed of [t]rust were
formed from the unfair and deceptive business practice of table funding.”
Gray went on in her complaint to explain her theory that Finance America
was not the true lender, and instead acted as an intermediary for Lehman,
who, in turn, intended to convert the loan into a security by transferring it to
the Structured Asset Trust. This is, by definition, a table funding theory.
Gray then asserted throughout the complaint, and in opposition to the motion
for summary judgment, that Finance America was not the true lender of the
loan. But the only basis set forth in the complaint for that assertion is the
table funding theory. Thus, framing the issues by the pleadings, as we are
required to, we agree the first cause of action is based primarily on a table
funding theory. (See Hutton, supra, 213 Cal.App.4th at p. 493; Easter, supra,381 F.3d at p. 955; Petersen, supra, 886 F.Supp.2d at p. 1191.)
As the trial court concluded, there is no authority under California law
to void a note or deed of trust based on table funding. (Grieves v. MTC
Financial Inc. (N.D. Cal., July 25, 2017, No. 17–CV–01981–LHK) 2017 WL
3142179, at p. *12, fn. 1 [addressing several California statutes and
concluding none render a table-funded loan void]; Palmer v. MTC Financial,
Inc. (E.D. Cal., May 26, 2017, No. 1:17–cv–00043–DAD–SKO) 2017 WL
2311680, at pp. *4-5 ; Yvanova v. New Century Mortgage Corp. (2016) 62
Cal.4th 919, 939 (Yvanova) [concluding that borrowers do not have standing
to challenge assignments that are merely “voidable”]; and Mendoza v.
JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 815 (Mendoza) [“Two
post-Yvanova California appellate courts, in published opinions, have
embraced the emerging consensus that assignments, which allegedly violate
[pooling and service agreements] and federal law are voidable rather than
11
void, and as a result, borrowers do not have standing to challenge late
transfers or other defects in the securitization process.”].) Gray simply
ignored Defendants’ argument that the table funding theory does not provide
a legal basis to void the note or deed of trust in her opposition to the motion
for summary judgment. On appeal, she similarly fails to provide any legal
authority to support her position that the note or deed of trust is void.
Even if we were to look beyond Gray’s table funding theory, our review
of the first cause of action reveals no basis to void any of the loan documents.
Gray alleged “the transaction violated Business and Professions Code Section
10176(a), (b), and (c); Civil Code Sections 2295 et seq. and 2923.1; and
Financial Code Sections 4979.5, 4995(c) and (d) and 4995.3(c)).” Business
and Professions Code section 10176 addresses grounds for suspending or
revoking a real estate license; Civil Code sections 2295 et seq. and 2923.1
define agency and the fiduciary duties of a mortgage broker; Financial Code
section 4979.5 provides that a person who provides brokerage services is the
fiduciary of the consumer; and Financial Code sections 4995 and 4995.3
relate to enforcement of mortgage broker licenses. None of these statutes
provide a basis to void any of the loan documents, and Gray does not provide
any legal authority suggesting they do.
Gray further alleged that the note and deed of trust are void and
unenforceable pursuant to Civil Code section 3391, subdivision (3) or,
alternatively, that a legal contract was not formed in the first instance
because there was no true meeting of the minds. Civil Code section 3391,
subdivision (3) states specific performance cannot be enforced against a party
to a contract if assent was obtained by misrepresentation, concealment, or
unfair practices. The only concealment or unfair practices alleged by Gray
are based specifically on the table funding theory and, as we have already
12
discussed, table funding does not provide a basis to void a note or deed of
trust. Similarly, as pled, the argument that there was no meeting of the
minds derives from the assertion that Lehman always intended to convert
the loan into securitization, but did not disclose that fact to Gray. But there
is no legal basis to void the note or deed of trust on that theory either. (See
Yvanova, supra, 62 Cal.4th at p. 927 [“A promissory note is a negotiable
instrument the lender may sell without notice to the borrower” and “a
borrower can generally raise no objection to assignment of the note [or] deed
of trust.”]; Kalnoki v. First American Trustee Servicing Solutions, LLC (2017)
8 Cal.App.5th 23, 43 (Kalnoki) [“any alleged irregularities in the
securitization process are merely voidable at the securitized trust
beneficiary's behest”].)
In her briefing on appeal, Gray asserts she presented evidence that the
pooling and service agreement governing the Structured Asset Trust
identified a series of intended transfers that do not match the recorded
assignments and MERS did not have an agency agreement with Finance
America at the time of the first assignment. These allegations do not appear
in the first cause of action in the complaint and Gray does not provide a copy
of the agreement. Regardless, the allegations do not provide a basis to void
any of the loan documents. Gray provides no authority that the assignments
must match any intended transfers identified in the pooling and service
agreement and, in any event, irregularities in the securitization process do
not render any of the loan documents void. (See Kalnoki, supra, 8
Cal.App.5th at p. 43 [“any alleged irregularities in the securitization process
are merely voidable at the securitized trust beneficiary's behest”].) Similarly,
Gray does not provide any factual basis for the assertion that MERS did not
13
have an agency agreement with Finance America, nor does she explain how
the lack of an agency agreement impacts the validity of the assignment.
We conclude, as did the trial court, that Gray’s first cause of action for
invalidity of contracts fails as a matter of law.
2. “No Evidence” Theory of Summary Judgment
Gray also asserts the trial court erred in concluding that she provided
no evidentiary support for her assertion that Finance America was not the
actual lender, despite finding that Defendants could not prevail on a “no
evidence” theory of summary judgment with respect to the first cause of
action. Although we have already concluded the first cause of action fails as
a matter of law, we address this additional argument because the evidentiary
issue is relevant to our analysis of the remaining causes of action and the
summary judgment as a whole.
A defendant may prevail on summary judgment by presenting evidence
establishing the plaintiff does not possess, and cannot reasonably obtain,
evidence necessary to support an asserted claim. (Gaggero v. Yura (2003) 108
Cal.App.4th 884, 889–890 (Gaggero); Aguilar, supra, 25 Cal.4th at pp. 854–
855.) However, simply pointing out that the plaintiff does not currently have
sufficient evidence to support a claim is not enough; the defendant must also
prove the plaintiff cannot reasonably obtain the necessary evidence.
(Gaggero, supra, at p. 891; Aguilar, supra, at p. 854, fn. 23.)
Here, the trial court found Defendants failed to establish that Gray
could not reasonably obtain evidence to support her assertion that Finance
America was not the true lender. We agree. As just one example, Gray
contends the pooling and service agreement supports her claim but she has
not provided a copy of the agreement and instead relies solely on her and her
daughter’s testimony to support this assertion. However, Defendants also
14
have not provided a copy of the agreement or any other evidence to refute
Gray’s assertions regarding its contents. Defendants have not offered
evidence sufficient to prove Gray cannot reasonably obtain admissible
evidence to support the allegation that Finance America is not the true
lender and, therefore, cannot prevail based solely on a “no evidence” theory of
summary judgment. (See Gaggero, supra, 108 Cal.App.4th at p. 891.)
However, Defendants have provided other evidence sufficient to
establish that Finance America was the original lender, namely a declaration
from Ocwen that provided validated copies of the executed note, deed of trust,
and subsequent allonges and assignments. The note and deed of trust—
notarized and recorded legal instruments that Gray personally signed—
identified Finance America as the lender. As a result, the burden shifted to
Gray to establish the existence of a material issue of fact as to whether
Finance America was, in fact, the true lender. (Code Civ. Proc., § 437c, subd.
(p)(2); Aguilar, supra, 25 Cal.4th at p. 850.) Gray has not met that burden.
As she did in her opposition to the summary judgment in the trial
court, Gray fails to provide citations to support many of her contentions on
appeal and, when she does, her citations are mostly to her own deposition
testimony and the deposition testimony of her daughter.4 As the trial court
noted, the deposition testimony Gray relies upon is pure speculation, which is
insufficient to establish a triable issue of material fact. (See Sangster v.
Paetkau (1998) 68 Cal.App.4th 151, 163 (Sangster) [“plaintiff must produce
4 In her opposition to Defendants’ separate statement of undisputed
facts, Gray also cites to various discovery responses submitted by Ocwen.
Those discovery responses are not in the record before us and the record we
do have suggests they were not before the trial court either. (Collin v.
CalPortland Co. (2014) 228 Cal.App.4th 582, 599 [“We do not consider
evidence that is not in the record in reviewing a motion for summary
judgment.”].)
15
substantial responsive evidence sufficient to establish a triable issue of
material fact on the merits of the defendant's showing”]; Aguilar, supra, 25
Cal.4th at p. 864 [“Speculation, however, is not evidence.”]; Shugart v.
Regents of University of California (2011) 199 Cal.App.4th 499, 508 (Shugart)
[wholly conclusory statements are insufficient to raise a triable issue].)
At her own deposition, Gray conceded she does not have facts to
support the assertion that Lehman actually funded the loan and does not
know who funded it. Her daughter, who also served as her mortgage broker
for the loan, opined that it appeared Finance America was trying to assign
the note to Lehman, but Lehman was in bankruptcy, so they assigned the
note to U.S. Bank. However, she conceded her opinion was based on her
review of the note and allonges and she, too, had no evidence, beyond the loan
documents themselves, that Finance America was not the original lender.
The conclusory, unsupported testimony Gray presented was not
sufficient to rebut the evidence presented by Defendants or to create a triable
issue of material fact as to whether Finance America was actually the
original lender. (See Sangster, supra, 68 Cal.App.4th at p. 163; Aguilar,
supra, 25 Cal.4th at p. 864; Shugart, supra, 199 Cal.App.4th at p. 508.)
Accordingly, the trial court correctly concluded both that Defendants could
not prevail on a “no evidence” argument for summary judgment, and that
Gray had not presented sufficient evidence to rebut the evidence submitted
by Defendants or to establish a triable issue of material fact.
B. Second Cause of Action: Cancellation of Instruments
In support of her second cause of action for cancellation of instruments,
Gray alleged the deed of trust, assignments, and notice of default are void for
essentially the same reasons set forth in the first cause of action, including
that Finance America “was prohibited from identifying itself as Lender; and
16
the Deed of Trust was the result of the unfair and deceptive business practice
of table funding.”
As with the first cause of action, Gray contends the trial court erred by
framing the issue too narrowly as stemming solely from a table funding
theory. To the contrary, in its ruling on the second cause of action, the trial
court identified and individually addressed several arguments regarding the
validity of the deed of trust, both assignments, and the notice of default
before concluding Gray had not established any basis to cancel any of those
instruments. We find no error in the trial court’s analysis.
In her briefing on appeal, Gray focuses on her allegations regarding
MERS. She asserts the trial court incorrectly framed the issue as whether
MERS’s role in the assignments or securitization process resulted in a broken
chain of title. In fact, the trial court identified three bases alleged under the
second cause of action for cancelling the first assignment: “(1) the [deed of
trust] is void (due to table funding)[;] (2) the assignment was signed by an
employee at Barclays (dba HomeEq, the initial servicer) rather than MERS[;]
and (3) MERS ‘exited’ the chain of title when the Loan was sold to Lehman
and [Finance America’s] business license was revoked in June 2006.”
The issues identified by the trial court are consistent with Gray’s
complaint. She specifically alleged Lehman sold the debt to the Structured
Asset Securities Corporation,5 which held no agency with MERS, and MERS
“exited the chain of title at that time.” Incorporating that allegation by
reference, Gray asserted in the second cause of action that the first
assignment is invalid because “MERS held no agency,” “Barclays was without
5 The allonges to the note and the assignments to the deed of trust state
the loan was transferred to U.S. Bank, as trustee of the Secured Asset Trust,
and not to Structured Asset Securities Corporation.
17
right or authority to execute the [assignment] as MERS,” and “MERS held no
capacity to contract.”
After reiterating that any alleged table funding does not void the deed
of trust, the trial court found there was no authority that precluded MERS
from designating an employee at the loan servicer to sign documents on its
behalf. It then rejected the theory that MERS lacked the authority to execute
the assignment, in part because “the [deed of trust] expressly appoints MERS
as nominee for [Finance America] and its successors and assigns.” We agree.
(See Ratliff v. JPMorgan Chase Bank N.A. (N.D.Cal., July 6, 2017, No. 17–
cv–02155–EMC) 2017 WL 2876141 at p. *8 [rejecting claim that MERS had
no authority to act where “[t]he [deed of trust] contemplates MERS acting as
nominee ‘for Lender and Lender's successors and assigns.’ ”].)
In her opposition to the motion for summary judgment, Gray relied on
Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 (Glaski), to assert
“that a borrower has standing to challenge a foreclosure based [on]
assignments that were allegedly rendered void for having occurred after the
securitized trust’s closing date in violation of the trust’s pooling and service
agreement.” But, as the trial court noted, Glaski is an outlier and has been
rejected by numerous courts on this particular point. (Mendoza, supra, 6
Cal.App.5th at pp. 811–819 [“In spite of this mountain of authority against
her position, plaintiff continues to insist she has standing. To adopt her
position, we would have to reject all of the New York, California, and federal
cases cited above and adopt the discredited Glaski interpretation of New
York law, an interpretation expressly rejected by the appellate courts in New
York.”]; see also Kalnoki, supra, 8 Cal.App.5th at p. 43 [“We decline to follow
Glaski and instead conclude that an assignment to a securitized trust made
after the trust's closing date is merely voidable.”].)
18
Gray now asserts she presented evidence of MERS’s role to show the
loan documents were fabricated and as evidence of “MERS’s principal’s lack
of authority.” First, as we have already discussed, Defendants provided, and
the trial court took judicial notice of, copies of all of the loan documents, each
of which was signed, notarized, and/or recorded. By contrast, Gray’s
assertion that one or more of those documents was somehow fabricated is
pure speculation, unsupported by any admissible evidence and, thus,
insufficient to raise a triable issue of material fact. (See Sangster, supra, 68
Cal.App.4th at p. 163; Aguilar, supra, 25 Cal.4th at p. 864; Shugart, supra,
199 Cal.App.4th at p. 508.) Thus, Gray presented no admissible factual basis
for her assertion that any of those documents were fabricated. Second, Gray
does not explain what she means by “MERS’s principal’s lack of authority” or
how the trial court’s framing of the issues and associated ruling fails to
address any alleged lack of authority. The trial court provided a multi-
pronged analysis with respect to the role of MERS, and we find no error in
the court’s ruling.
Finally, Gray contends she submitted evidence that went beyond the
role of MERS, including “evidence of Defendants’ misstatements regarding
the entirety of the loan and its funding, its servicing, and the transfers of
interest and authority, including forgery in the indorsements and executions
of crucial documents required by the contracts themselves, and California’s
foreclosure statute.” The only citation Gray provides to support this
assertion is to her response to Defendants’ separate statement of undisputed
facts. And in that response, Gray relies primarily on her own deposition
testimony, the deposition testimony of her daughter, and her own discovery
responses. Again, none of this is sufficient to raise a triable issue of material
fact regarding the authenticity of any of the documents submitted by
19
Defendants. (See Sangster, supra, 68 Cal.App.4th at p. 163; Aguilar, supra,25 Cal.4th at p. 864; Shugart, supra, 199 Cal.App.4th at p. 508.) Moreover,
Gray provides no legal authority indicating her allegations, even if taken as
true, would support the cancellation of any of the loan documents.
We conclude the trial court did not err in granting summary judgment
as to the second cause of action for cancellation of instruments.
C. Fourth Cause of Action: Violation of Civil Code Section 2924.17
The fourth cause of action is for violation of Civil Code section 2924.17,
which is part of the California Homeowner Bill of Rights and provides that a
notice of default, and certain other documents, recorded by a mortgage
servicer in connection with a foreclosure must be accurate and complete and
supported by competent and reliable evidence. (Civil Code § 2924.17, subd.
(a).) In addition, the mortgage servicer must ensure it has reviewed the
competent and reliable evidence and substantiated a right to foreclose. (Id.,
subd. (b).) Finally, the statute provides that any mortgage servicer that
engages in repeated violations of the statute may be subject to a civil penalty
of up to $7,500 per violation, in addition to other remedies available to
certain identified government entities. (Id., subd. (c).) Civil Code section
2924.12 permits a borrower to bring an action for injunctive relief to enjoin
violations of certain sections of the Homeowner Bill of Rights, including
section 2924.17.
In support of her fourth cause of action, Gray alleged Defendants
violated Civil Code section 2924.17 by failing to ensure the assignments and
notice of default were complete and supported by admissible, reliable
evidence, and that Gray is entitled to injunctive relief pursuant to Civil Code
section 2924.12. However, Gray provided no details as to why those
documents were not accurate or supported by competent and reliable
20
evidence, and instead appears to have relied primarily upon the same
allegations underlying the failed first and second causes of action.
Defendants asserted, and the trial court agreed, that Civil Code section
2924.17 was not applicable to the note, deed of trust, or associated
assignments because the Homeowner Bill of Rights does not apply to
documents executed before January 1, 2013. Regarding the notice of default,
which was recorded in 2015, the trial court explained the statute does not
require the foreclosing entity to demonstrate a right to foreclose and does not
create a right to litigate. Instead, Civil Code section 2924.17 requires only
that the foreclosing entity conduct its own review of evidence to verify it has a
right to foreclose, and that the declaration included with the Notice of
Default (pursuant to Civil Code section 2923.55 regarding contact with the
homeowner) must be “ ‘accurate and complete and supported by competent
and reliable evidence.’ ” (Civil Code § 2924.17, subd. (a); Lucioni v. Bank of
America N.A. (2016) 3 Cal.App.5th 150, 162–163 (Lucioni).) Here, as the
court found, Defendants submitted evidence they complied with the statutory
requirements and the notice of default contained the required declaration.
On appeal, Gray concedes the Homeowner Bill of Rights does not apply
to documents executed before January 1, 2013. But she asserts the statute
does apply to the 2015 substitution of trustee, the notice of default, and the
notice of trustee’s sale, and argues Ocwen failed to review competent and
reliable evidence before filing those documents. Again, Gray provides no
citation to the record or any legal authority supporting her assertion and,
specifically, no argument or authority disputing the trial court’s analysis
regarding the requirements of Civil Code section 2924.17. We find no error in
the court’s analysis. (See Lucioni, supra, 3 Cal.App.5th at pp. 161–163
[holding Civil Code “section 2924.17 does not impose a preforeclosure duty on
21
foreclosing entities to demonstrate that they have a right to foreclose” and
does not “create a right to litigate, preforeclosure, whether the foreclosing
party's conclusion that it had the right to foreclose was correct”].)
Moreover, for the same reasons we have already discussed, Gray has
not provided any evidence to establish a triable issue regarding the accuracy
of any of the loan documents. Gray’s assertion that Ocwen failed to review
competent and reliable evidence is, similarly, based on pure speculation
insufficient to establish a triable issue of material fact as to the fourth cause
of action. (See Sangster, supra, 68 Cal.App.4th at p. 163; Aguilar, supra, 25
Cal.4th at p. 864; Shugart, supra, 199 Cal.App.4th at p. 508.)
We find no error in the trial court’s ruling on summary judgment with
respect to the fourth cause of action for a violation of Civil Code section
2924.17.
D. Fifth Cause of Action: Intentional Misrepresentation
The fifth cause of action is for intentional misrepresentation and is
asserted only against U.S. Bank and Western Progressive. “The elements of
a cause of action for intentional misrepresentation are (1) a
misrepresentation, (2) with knowledge of its falsity, (3) with the intent to
induce another's reliance on the misrepresentation, (4) actual and justifiable
reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing,
Inc. (2016) 246 Cal.App.4th 1150, 1166.) A cause of action for intentional
misrepresentation sounds in fraud and, thus, must be pled with specificity.
(Ibid.)
Here, the alleged misrepresentations identified by Gray are based
primarily upon the alleged inaccuracies in the various loan documents.
Specifically, Gray alleged Defendants knowingly made false statements in
connection with the deed of trust, assignments, and notice of default, and
22
intended for Gray to rely on them as recorded instruments. The trial court
concluded the fifth cause of action was based on Gray’s previous contentions
regarding the funding of the loan, and failed because Defendants had
provided evidence to refute Gray’s assertions regarding the accuracy of the
loan documents.
Gray once again contends the trial court erred by narrowly defining the
dispute as related solely to table funding. As discussed, though, the trial
court adequately addressed Gray’s arguments with respect to the validity of
the loan documents throughout the summary judgment ruling and,
specifically, with respect to the second cause of action. As the fifth cause of
action was premised on the same allegations regarding the accuracy of the
loan documents, we agree with the trial court that it also fails for all the
same reasons.
In addition, the trial court also concluded Gray failed to allege the
existence of a triable issue as to damages. As she did below, Gray claims she
was harmed by the misrepresentations because she paid the wrong party
“hundreds of thousands of dollars.” However, this assertion is once again
premised on the allegation that Finance America was not the true lender. As
we have already said, table funding is not a valid theory upon which to void
any of the loan documents and Gray has not provided any evidence beyond
mere speculation to rebut Defendants’ evidence establishing the validity of
those documents. Indeed, Gray continues to rely solely upon her opposition
to Defendants’ undisputed statement of material facts which, in turn, relies
primarily on her and her daughter’s conclusory and speculative deposition
testimony.
Regardless, even if we accept the table funding theory as true, Gray
does not allege the payments she did make were not recorded against the
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loan and does not otherwise explain how she was harmed by making
payments to Ocwen, as servicer for U.S. Bank, instead of Finance America.
As a result, she has not adequately pled that she was damaged as a result of
the alleged intentional misrepresentation.
The trial court did not err by granting summary judgment with respect
to the fifth cause of action for intentional misrepresentation.
E. Eighth Cause of Action: Failure to Comply with Civil Code Section
2923.55
The eighth and final cause of action at issue in this appeal is for failure
to comply with Civil Code section 2923.55. Civil Code section 2923.55, also
part of the Homeowner Bill of Rights, sets forth a number of requirements a
mortgage servicer must comply with before recording a notice of default.
(Civ. Code, § 2923.55, subd. (a).) Of relevance here, the mortgage servicer
must provide certain information to the borrower in writing and must contact
the borrower in person or by telephone to explore options for the borrower to
avoid foreclosure. (Id., subds. (b)(1) & (2).)
In support of this cause of action, Gray alleged Defendants never sent
her any notice or statement as required under the statute. However, the
declaration from Handville, a senior loan analyst responsible for researching
and reviewing loans serviced by Ocwen, explained Ocwen’s document
retention practices and provided copies of several letters sent to Gray, the
notice of default with the requisite declaration attached, and a copy of the
servicing notes indicating Ocwen attempted to call Gray on three occasions in
October 2014. Gray asserts the “false [notice of default] is not admissible to
meet Defendants’ burden to show that such contact was in fact made,” but
she does not address or present any evidence to rebut the relevant
statements made in Handville’s declaration.
24
Gray relies on Poseidon Development, Inc. v. Woodland Lane Estates,
LLC (2007) 152 Cal.App.4th 1106, 1117 (Poseidon) and Herrera v. Deutsche
Bank Nat. Trust Co. (2011) 196 Cal.App.4th 1366, 1375 (Herrera), where the
appellate court placed limits on the trial court’s ability to take judicial notice
of factual matters stated within a judicially noticed document, such as a deed
of trust. But neither case is instructive here. There was no supporting
declaration at issue in Poseidon and, although there was a declaration in
Herrera, the court found it to be severely lacking in several respects.
(Poseidon, supra, 152 Cal.App.4th at pp. 1117–1118; Herrera, supra, 196
Cal.App.4th at pp. 1375–1378.) Gray does not contend that Handville’s
declaration is similarly lacking, nor does she present any evidence to refute
the statements contained in the declaration or to the attached records.
As with Gray’s other contentions, the bald, unsupported assertion that
Ocwen failed to contact her as required by Civil Code section 2923.55 is not
sufficient to establish a triable issue of material fact in light of the evidence
submitted by Defendants. (See Sangster, supra, 68 Cal.App.4th at p. 163;
Aguilar, supra, 25 Cal.4th at p. 864; Shugart, supra, 199 Cal.App.4th at p.
508.)
The trial court did not err by granting summary judgment as to the
eighth cause of action. And in sum, we conclude the trial court did not err by
granting summary judgment in favor of Defendants.
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DISPOSITION
The judgment is affirmed. Defendants are awarded their costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
DO, J.
WE CONCUR:
McCONNELL, P. J.
GUERRERO, J.
26