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Filed 4/7/15 Nole v. Bank of New York Mellon CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Placer)

----

STEVEN D. NOLE,

Plaintiff and Appellant,

v.

BANK OF NEW YORK MELLON et al.,

Defendants and Respondents.

C075104

(Super. Ct. No. SCV0032749)

This appeal is from a judgment after the trial court sustained the demurrer without 

leave to amend of defendants Bank of New York Mellon (formerly Bank of New York), 

ReconTrust Company, N.A. (ReconTrust), Bank of America N.A. (Bank of America) and 

Mortgage Electronic Registration Systems, Inc. (MERS). 

In the trial court, plaintiff Steven D. Nole sued defendants for the following five 

causes of action: (1) cancellation of instruments; (2) violation of the unfair competition 

law; (3) declaratory relief regarding ownership rights and the validity of the foreclosure 

process; (4) wrongful foreclosure; and (5) quiet title. 
2

On appeal, Nole abandons all but the wrongful foreclosure cause of action and 

proposes to add two new causes of action -- fraud and negligence -- both of which are 

based on factual loan modification activities never alleged in the complaint. As to the 

wrongful foreclosure cause of action, Nole abandons his old theory of liability and argues 

two new theories on appeal. 

We affirm the judgment. As to the wrongful foreclosure cause of action, Nole 

cannot demonstrate prejudice. As to the fraud and negligence causes of action, they are 

not proper bases for amendment because they are based on new facts which give rise to a 

wholly distinct and different legal obligation against defendants.

FACTUAL AND PROCEDURAL BACKGROUND

In 2005, Nole obtained a loan of $286,000 from Countrywide Home Loans 

secured by a deed of trust to his real property on Peridot Street in Roseville. The deed of 

trust named Nole as the borrower, Countywide as the lender, ReconTrust as the trustee, 

and MERS as the beneficiary. 

From 2005 until February 2011, Nole paid his mortgage on time. 

In April 2011, MERS executed a deed of trust reflecting the assignment of its 

beneficial interest in the trust to Bank of New York. Bank of America recorded this 

assignment in May 2011. 

In October 2011, ReconTrust issued a notice of default when the loan was more 

than $27,000 in arrears. 

In February 2012, ReconTrust issued a notice of trustee’s sale. 

In July 2012, the property was sold to a third party, and the unpaid debt at the time 

of the sale was over $313,000. 

In March 2013, Nole filed the instant complaint against Bank of New York Mellon 

ReconTrust, Bank of America, and MERS. There were five causes of action: 

(1) cancellation of instruments; (2) violation of the unfair competition law; 

(3) declaratory relief regarding ownership rights and the validity of the foreclosure 
3

process; (4) wrongful foreclosure; and (5) quiet title. These causes of action were 

premised on the theory that MERS’s assignment of its beneficial interest in the deed of 

trust was invalid for three reasons: (1) MERS did not have an ownership interest in the 

note to convey to Bank of New York Mellon; (2) MERS failed to disclose its principal 

when assigning its interest in the property to Bank of New York Mellon; and (3) the 

people who signed the assignment of deed of trust and corporation assignment of deed of

trust were “ ‘robo-signers’ ” who lacked personal knowledge of the transaction and 

corporate authority to sign. 

In May 2013, defendants filed a demurrer to the complaint. Nole opposed the 

demurrer solely based on allegations that MERS and ReconTrust were not qualified to do

business in California and that one of the people who signed loan documents on behalf of 

MERS and Bank of America was an employee only of ReconTrust. 

On August 15, 2013, following a hearing, the court sustained the demurrer without 

leave to amend and entered judgment in favor of defendants. The court sustained the 

demurrer on three independent grounds: (1) “[e]ach of [Nole]’s causes of action fails 

because [he] fails to allege tender”; (2) “[e]ach of [Nole]’s claims stems from the 

assertion that defendant MERS did not hold an ownership interest in the promissory note 

as a matter of law,” but Nole “provides no valid support for this contention, which is

contradicted by documents of which the court may take judicial notice, as well as 

applicable law”; and (3) “documents of which the court may take judicial notice 

demonstrate that [ReconTrust] was authorized to initiate foreclosure proceedings due to 

[Nole]’s default of his obligation to make mortgage payments under the applicable deed 

of trust.” 

Nole did not request reconsideration of the order sustaining the demurrer without 

leave to amend.

On October 1, 2013, Nole filed a motion requesting leave to file an amended 

complaint. The amended complaint alleged causes of action for cancellation of
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instruments, violation of the unfair competition law, wrongful foreclosure, and quiet title. 

The sole basis for the motion to amend was “to make the causes of action and claims 

more exact and straightforward and in alignment with the recently published case of 

Glaski vs. Bank of America National Association, et al (2013) California Appellate 

Court, Fifth Division, [sic] . . . .”

1

 In the declaration of Nole’s counsel supporting the 

motion, counsel stated, “The Glaski case provides new case theories and arguments that 

support [Nole]’s case herein.” “[Nole] seeks leave to amend his complaint in 

conformance with the Glaski case.” It also included an unsigned declaration of Nole that 

stated he “began seeking a loan modification with Bank of America in 2011” and “[t]he 

person [with whom he spoke] told [him] that [he] had to miss 3 months of payments 

before anything could be done.” Then, he had to submit and resubmit documents to start 

the loan modification process. In late July 2012, Nole “verified with [his] representative 

with Bank of America that all [his] documentation was in order and no foreclosure sale 

was pending.” When he returned from vacation two weeks later he “learned that Bank of 

America had proceeded to foreclose on [his] home, even though [he] had been assured 

that [his] loan modification application was being processed and that no foreclosure sale 

was pending.” 

 

1

In Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, the court held that the 

plaintiff stated a cause of action for wrongful foreclosure under the theory that the entity 

invoking the power of sale was not the holder of the deed of trust. The problem was an 

ill-fated glitch in the securitization of the loan and a violation of New York law. Simply 

put, the plaintiff’s loan was not transferred into the securitized trust before it closed, and

therefore, the transfers were ineffective. (Glaski, at p. 1082.) The court wrote, 

“Transfers that violate the terms of the trust instrument are void under New York trust 

law, and borrowers have standing to challenge void assignments of their loans even 

though they are not a party to, or a third party beneficiary of, the assignment agreement.”

(Id. at p. 1083.)
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On October 21, 2013, following a hearing, the court denied the motion requesting 

leave to file the amended complaint because the court lacked jurisdiction to entertain it, 

as it had already sustained the demurrer without leave to amend. 

Nole filed a timely notice of appeal. 

DISCUSSION

I

Standard Of Review

A demurrer may be sustained without leave to amend where the facts are not in 

dispute and the nature of the plaintiff’s claim is clear but, under substantive law, no 

liability exists. (Seidler v. Municipal Court (1993) 12 Cal.App.4th 1229, 1233.) On 

appeal from a judgment of dismissal after an order sustaining a demurrer without leave to 

amend, we examine the complaint de novo to determine whether it alleges facts sufficient 

to state a cause of action under any legal theory. (McCall v. PacifiCare of Cal., Inc.

(2001) 25 Cal.4th 412, 415.) We give the complaint a reasonable interpretation and treat 

the demurrer as admitting all material facts properly pleaded, but we do not assume the 

truth of contentions, deductions, or conclusions of law. (Aubry v. Tri-City Hospital Dist. 

(1992) 2 Cal.4th 962, 966-967.) It is the plaintiff’s burden to show either that the 

demurrer was sustained erroneously or that the trial court’s denial of leave to amend was 

an abuse of discretion. (Keyes v. Bowen (2010) 189 Cal.App.4th 647, 655.)

II

The Trial Court Did Not Abuse Its Discretion In Denying 

Nole Leave To Amend Regarding The Wrongful Foreclosure 

Cause Of Action Because Nole Was Not Prejudiced

The wrongful foreclosure cause of action in the complaint was based on three 

theories: (1) MERS lacked an ownership interest in the note to convey to Bank of New 

York Mellon; (2) MERS failed to disclose its principal when it assigned its beneficial 
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interest to Bank of New York Mellon, making the assignment void; and (3) the people 

who signed the foreclosure documents on MERS’s behalf were “ ‘robo-signers.’ ” 

On appeal, Nole changes his theories of liability for wrongful foreclosure to the 

following two theories: (1) MERS lacked the power to transfer the loan, declare the 

default, and authorize the foreclosure because there was “no plain or conspicuous 

language” in the deed of trust “telling Nole that MERS has the power to foreclose, or the 

power to transfer his loan”;

2 and (2) MERS transferred its beneficial interest to Bank of 

New York Mellon as trustee for certificate holders of a trust that may have closed before 

the transfer was made, and thus, the transfer “could well have been void,” which finds 

support in Glaski.

3 He claims the court abused its discretion in not allowing him leave to 

amend his complaint to allege these theories of liability because they are “based on 

undisputed facts” in the deed of trust. 

 

2 Under this theory, the alleged ambiguity about MERS’s role infected the entire 

chain of title, such that no entity was empowered to take any action when Nole stopped 

paying back his loan.

3 Several courts, including ours, both before and after Glaski have reached the 

opposite conclusion. (E.g., Mendoza v. JPMorgan Bank, N.A. (2014) 228 Cal.App.4th 

1020, review granted Nov. 12, 2014, S220675; Keshtgar v. U.S. Bank, N.A. (2014) 226 

Cal.App.4th 1201, review granted Oct. 1, 2014, S220012; Siliga v. Mortgage Electronic 

Registration Systems, Inc. (2013) 219 Cal.App.4th 75; Herrera v. Federal National 

Mortgage Assn. (2012) 205 Cal.App.4th 1495; Jenkins v. JPMorgan Chase Bank, N.A.

(2013) 216 Cal.App.4th 497; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 

256.) Federal courts have likewise largely rejected Glaski as unpersuasive. (See Kan v. 

Guild Mortgage Co. (2014) 230 Cal.App.4th 736, 744 [collecting cases].) In particular, 

the Second Circuit Court of Appeals has rejected Glaski’s analysis, holding that under 

New York law an improper transfer to an investment trust is voidable, not void, and thus 

a third party plaintiff has no standing to challenge such a transfer. (Rajamin v. Deutsche 

Bank National Trust Co. (2d Cir. 2014) 757 F.3d 79, 90.) Our court has rejected Glaski’s 

holding in Mendoza.
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The court did not abuse its discretion in denying Nole leave to amend his 

complaint with respect to the wrongful foreclosure cause of action because Nole could 

not have been prejudiced.

In Dick v. American Home Mortgage Servicing, Inc. (E.D.Cal., Sept. 18, 2013, 

No. 2:13-00201 WBS CKD) 2013 U.S. Dist. Lexis 133755 (Dick), the court did not 

attempt to distinguish or explain Glaski because it found the wrongful foreclosure claim 

failed for lack of prejudice. The court explained: “California courts find a lack of 

prejudice when a borrower is in default and cannot show that the allegedly improper 

assignment interfered with the borrower’s ability to pay or that the original lender would 

not have foreclosed under the circumstances. See Siliga v. Mortgage Electronic 

Registration Systems, Inc. (2013) 219 Cal.App.4th 75 . . . (‘The assignment of the deed 

of trust and the note did not change [plaintiffs’] obligations under the note, and there is 

no reason to believe that . . . the original lender would have refrained from foreclosure in 

these circumstances.’); Herrera v. Federal National Mortgage Association (2012) 

205 Cal.App.4th 1485, 1508 . . . (finding no prejudice from assignment of loan where 

borrowers defaulted on the loan and failed to tender and cure default); Fontenot [v. Wells 

Fargo Bank, N.A.(2011)] 198 Cal. App. 4th [256,] 272 (finding no prejudice where 

borrower was in default and did not allege that transfer of note interfered with borrower’s 

ability to pay).

“Plaintiffs acknowledge they were in default of their loan. [Citation.] They do not 

allege that the allegedly improper transfer interfered with their ability to pay their note, or 

that the original lender would have refrained from foreclosure under the circumstances. 

The allegedly improper ‘assignment merely substituted one creditor for another, without 

changing [plaintiffs’] obligations under the note.’ Fontenot, [supra,] 198 Cal.App.4th at 

[p.] 272. Plaintiffs do not allege they could have met these obligations, and thus any 

defects in the foreclosure were not prejudicial to plaintiffs. Accordingly, the court will 
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grant the moving defendants’ motion to dismiss plaintiffs’ claim for wrongful 

foreclosure.” (Dick, supra, 2013 U.S. Dist. Lexis 133755 at pp. *8-*9.)

We agree with Dick that whether a plaintiff homeowner’s challenge is to defects 

arising in the foreclosure proceedings or during the securitization process, he must 

demonstrate prejudice. In Fontenot, supra, 198 Cal.App.4th 256, the court explained: 

“Even if MERS lacked authority to transfer the note, it is difficult to conceive how 

plaintiff was prejudiced by MERS’s purported assignment, and there is no allegation to 

this effect. Because a promissory note is a negotiable instrument, a borrower must 

anticipate it can and might be transferred to another creditor. As to plaintiff, an 

assignment merely substituted one creditor for another, without changing her obligations 

under the note. Plaintiff effectively concedes she was in default, and she does not allege 

that the transfer to HSBC interfered in any manner with her payment of the note . . . , nor 

that the original lender would have refrained from foreclosure under the circumstances 

presented. If MERS indeed lacked authority to make the assignment, the true victim was 

not plaintiff but the original lender, which would have suffered the unauthorized loss of a 

$1 million promissory note.” (Id. at p. 272.)

Nole’s cause of action for wrongful foreclosure is akin to those in Dick. The 

undisputed evidence showed Nole had defaulted on the loan, and he asserted no factual 

allegations that the asserted improprieties alleged in this cause of action negatively 

affected his ability to pay or prevented him from curing his defaults. Nole remained 

liable for his indebtedness and we can discern nothing in the complaint demonstrating 

that the alleged wrongful foreclosure prejudiced him. 

III

Nole Is Not Permitted To Amend His Complaint To State Facts Giving 

Rise To Wholly Distinct And Different Legal Obligations Against Defendants

For the first time, Nole contends he should be allowed to amend his complaint to 

allege causes of action for fraud and negligence, “both based on the mishandling of his 
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loan modification application.” We disagree, because in this proposed amendment, Nole

is attempting “to state facts which give rise to a wholly distinct and different legal 

obligation against . . . defendant[s].” (Klopstock v. Superior Court (1941) 17 Cal.2d 13, 

20.) We explain.

“ ‘The power to permit amendments is interpreted very liberally as long as the 

plaintiff does not attempt ‘to state facts which give rise to a wholly distinct and different 

legal obligation against the defendant.’ (Klopstock v. Superior Court[,supra,] 17 Cal.2d 

[at pp.] 19-20.) ‘Great liberality is indulged in matters of amendment to the end that 

lawsuits may be determined upon their merits.’ [Citation.] ‘A change of theory as to the 

basis of recovery or as to the measure of damages is not a change of cause of action or 

the substitution of a new and different action for the original.’ ” (Herrera v. Superior 

Court (1984) 158 Cal.App.3d 255, 259.) In Herrera, the appellate court allowed the 

amendment of the complaint because “the causes of action in the amended complaint 

were different legal theories arising from the same basic facts.” (Ibid., italics added.)

Here, the facts are wholly different. Nole’s complaint never mentioned that he 

pursued loan modification or alleged facts supporting causes of action based on loan 

modification activities. His opposition to defendants’ demurrer also did not mention any 

facts relating to loan modification. Nor did the belated amended complaint allege causes 

of action for fraud or negligence. The sole basis for the motion to amend was “to make 

the causes of action and claims more exact and straightforward and in alignment with 

Glaski. It then, however, included an unsigned declaration of Nole that stated he “began 

seeking a loan modification with Bank of America in February 2011” and “[t]he person 

[with whom he spoke] told [him] that [he] had to miss 3 months of payments before 

anything could be done.” Then, he had to submit and resubmit documents to start the 

loan modification process. In late July 2012, Nole “verified with [his] representative 

with Bank of America that all [his] documentation was in order and no foreclosure sale 

was pending.” When he returned from vacation two weeks later he “learned that Bank of 
10

America had proceeded to foreclose on [his] home, even though [he] had been assured 

that [his] loan modification application was being processed and that no foreclosure sale 

was pending.” 

Using these different facts, Nole now contends for the first time that he should be 

allowed to amend his complaint to alleged causes of action for fraud and negligence. He

is barred from doing so because in this amendment, Nole is attempting to state facts 

which give rise to a wholly distinct and different legal obligation against defendants.

Notwithstanding Klopstock and Herrera, Nole contends that a case from our court, 

Connerly v. State of California (2014) 229 Cal.App.4th 457 (Connerly) compels a 

different result. We are not persuaded. In Connerly, this court held that where the 

plaintiff Connerly “ha[d] not strayed from his central factual claim,” he was allowed to 

“propose new facts or theories to show the complaint can be amended to state a cause of 

action, thereby showing the trial court ‘abused its discretion’ ([Code Civ. Proc.,]§ 472c, 

subd. (a)) in not granting leave to amend.”4 (Connerly, at p. 460.) Connerly’s change of 

legal theory on appeal was that the process of selecting commissioners for the California 

Citizens Redistricting Commission violated the federal equal protection clause. 

(Connerly, at p. 461-462) His complaint in the trial court had alleged that “the method of 

selecting members of the Commission violated Proposition 209 (Cal. Const., art. I, § 31), 

in that it gave improper preferences based on race, ethnicity, and gender.” (Connerly, at

p. 461.) His amended complaint also in the trial court had added “that the ‘Applicant 

Review Panel’ also improperly consider[ed] race, ethnicity, and gender.” (Connerly, at 

p. 462.) In allowing Connerly leave to amend his complaint to allege the violation of the 

 

4 Code of Civil Procedure 472c, subdivision (a) reads as follows: “When any court 

makes an order sustaining a demurrer without leave to amend the question as to whether 

or not such court abused its discretion in making such an order is open on appeal even 

though no request to amend such pleading was made.”
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federal equal protection clause that he proposed for the first time on appeal, this court 

explained that where “Connerly ha[d] not strayed from his central factual claim that the 

composition of the Commission was infected by invidious discrimination[,] [t]here [wa]s 

no reason to deviate from the well-established rule that section 472c allows a plaintiff to 

propose new theories on appeal from the sustaining of a demurrer without leave to 

amend.” (Connerly, at p. 464.) “[A] mere change in legal theory does not change the 

nature of the factual dispute.” (Connerly, at pp. 463-464.) Here, however, Nole is trying 

to amend his complaint for the first time on appeal to allege causes of action for fraud

and negligence based on facts related to loan modification activities. These facts were 

never alleged in the complaint and these facts were never part of his earlier central factual 

claim that was based on alleged defects in the assignment of the deed of trust. In effect, 

Nole is asking us to transform his lawsuit into something entirely new. Connerly does 

not compel us to allow him to do that. 

DISPOSITION

The judgment is affirmed. Defendants shall recover their costs on appeal. (Cal. 

Rules of Court, rule 8.278(a)(1) & (2).)

 ROBIE , J.

We concur:

 NICHOLSON , Acting P. J.

 MURRAY , J.