1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

FILED

JUN 02 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NC-14-1139-KiTaD

)

ROSANNA MAC TURNER, ) Bk. No. 12-44811

)

Debtor. ) Adv. No. 14-4001

 )

)

ROSANNA MAC TURNER; DAVID )

G. TURNER, )

)

Appellants, ) 

)

v. ) M E M O R A N D U M1

)

WELLS FARGO BANK, N.A.; )

CITIGROUP GLOBAL MARKETS ) 

REALTY CORP.; U.S. BANK, N.A. )

as Trustee for the Citigroup )

Mortgage Loan Trust Inc., )

Mortgage Pass-Through )

Certificates, Series 2005-4; )

CITIMORTGAGE, INC., )

)

Appellees. )

______________________________)

Argued on May 14, 2015, at San Francisco, California 

and Submitted on May 26,2 2015, 

Filed - June 2, 2015

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable Roger L. Efremsky, Chief Bankruptcy Judge, Presiding

 

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may have

(see Fed. R. App. P. 32.1), it has no precedential value. See 9th

Cir. BAP Rule 8024-1.

2 We announced at oral argument that this appeal would not be

submitted until eleven days post-oral argument to allow appellees

time to file a Notice of Supplemental Authority and appellants to

respond thereto. Because May 25, 2015, is a federal holiday, the

submission date is May 26, 2015.
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Appearances: Michael James Yesk of Yesk Law argued for

appellants Rosanna Mac Turner and David G. Turner;

Bernard Kornberg of Severson & Werson argued for

appellees Wells Fargo Bank, N.A., Citigroup Global

Markets Realty Corp., U.S. Bank, N.A., as Trustee

for the Citigroup Mortgage Loan Trust Inc.,

Mortgage Pass-Through Certificates, Series 2005-4,

and CitiMortgage, Inc.

 

Before: KIRSCHER, TAYLOR and DUNN, Bankruptcy Judges.

Chapter 133 debtor Rosanna Mac Turner ("Debtor") and her

spouse, David G. Turner (collectively, "Turners"), appeal an order

dismissing with prejudice their adversary complaint for failure to

state a claim against defendants Wells Fargo Bank, N.A. ("Wells

Fargo"), Citigroup Global Markets Realty Corp. ("Citigroup"),

U.S. Bank, N.A. ("U.S. Bank") as Trustee for the Citigroup

Mortgage Loan Trust Inc., Mortgage Pass-Through Certificates,

Series 2005-4 ("Trust" or "Trust Pool"), CitiMortgage, Inc.

("CitiMortgage") and NBS Default Services, LLC ("NBS")

(collectively, "Defendants"). We conclude, as did the bankruptcy

court, that the Turners lack standing to assert claims against

Defendants based on alleged violations of a mortgage trust’s

pooling and servicing agreement, and we AFFIRM.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 

A. Prepetition events

In 2005, the Turners obtained a $904,000 loan from Wells

Fargo related to their home located in Livermore, California

3 Unless specified otherwise, all chapter, code and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The

Federal Rules of Civil Procedure are referred to as “Civil Rules.”

-2-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

("Residence").4 The Turners signed a promissory note ("Note") and

a deed of trust ("DOT") in favor of Wells Fargo to secure

repayment of the Note. The Note allows for transfer and entitles

whomever holds it to receive payments. The Turners directed

Commonwealth Land Title to record the DOT, which named Fidelity

National Title Insurance Company as trustee and Wells Fargo as

lender and beneficiary. The DOT entitles the lender to substitute

the trustee without notice, assign the Note to third parties

without notice, and to foreclose upon the Residence in case of

default.

According to a Mortgage Securitization Audit and Analysis

Report obtained by the Turners in 2013, Wells Fargo sold the Note

and DOT on August 1, 2005, to the Trust, which acquired and pooled

residential mortgages; interests in the trust were then sold to

investors as mortgage-backed securities, subject to a Pooling and

Servicing Agreement ("PSA"). U.S. Bank acted as trustee and

Citigroup served as the sponsor/seller for the Trust. The Turners

claimed New York trust law governed the Trust.

Wells Fargo subsequently assigned its beneficial interest

under the DOT to Citigroup on May 9, 2011 (the "Assignment"). The

Assignment was recorded on May 12, 2011. 

The Turners defaulted on the Note, and on February 10, 2012,

NBS "as either the original trustee, the duly appointed

substituted trustee, or acting as agent for the trustee or

beneficiary under the [DOT]" recorded a notice of default ("NOD"). 

4 The Turners received an additional loan for $350,000 in

this same transaction and executed a second position deed of trust

in favor of Wells Fargo. The second deed of trust is not at

issue.

-3-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The NOD indicates that Wells Fargo, who has continued to service

the loan, was the contact for any payment arrangements. The

attached declaration indicates that "beneficiary" Wells Fargo

complied with the notice requirements under CAL. CIV. CODE § 2923.5. 

On May 2, 2012, a Substitution of Trustee ("SOT") was

recorded, whereby Citigroup appointed NBS to substitute in as

trustee of the DOT.5 The SOT was executed on January 23, 2012,

and issued by Wells Fargo as "servicing agent" for Citigroup.

NBS, as trustee, recorded a notice of sale ("NOS") on May 16,

2012. A trustee's sale was scheduled for June 5, 2012, but was

postponed due to Debtor's bankruptcy filing. No trustee's sale

has occurred to date. 

B. Postpetition events

1. Debtor's bankruptcy filing

 Debtor, pro se, filed a chapter 13 bankruptcy case on

June 4, 2012. She valued the Residence at $1,066,800, with

secured claims totaling $1,261,000, and identified Wells Fargo as

the secured lender. Debtor later filed amended schedules,

reflecting the Residence's value at $1 million and conceding that

$904,000 was due to Wells Fargo on the Note. 

With the assistance of counsel, Debtor filed a first amended

chapter 13 plan on September 4, 2012 ("Plan"). Debtor agreed to

pay the arrearage on the Note totaling $36,441. The Plan proposed

monthly payments of $1,226 for 60 months, with a monthly payment

of $4,049.19 to be paid directly to Wells Fargo on the Note. The

bankruptcy court confirmed Debtor's Plan on October 4, 2012. 

5 The Turners alleged this fact, but the parties provided no

document establishing such fact.

-4-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Meanwhile, on September 19, 2012, Citigroup, by Wells Fargo

as its attorney-in-fact, recorded a Corporate Assignment of Deed

of Trust, assigning its beneficial interest under the DOT to

U.S. Bank, as trustee of the Trust (the "Second Assignment").

After Debtor failed to make any of the direct Note payments

per the Plan, U.S. Bank moved for relief from stay one year later

on October 10, 2013. Debtor did not oppose the motion. The

bankruptcy court granted U.S. Bank relief from stay on November 6,

2013 ("Stay Relief Order"). 

2. The Turners' state court action against Defendants 

On November 22, 2013, the Turners filed suit against

Defendants in the Alameda Superior Court, alleging seven claims6: 

(1) Wrongful Foreclosure, asserting that none of the Defendants

was the true beneficiary under the DOT and that Defendants had no

authority to invoke the power of sale, in violation of CAL. CIV.

CODE § 2924 et seq.; (2) Breach of Express Agreement, asserting

that Defendants breached the DOT by improperly invoking the power

of sale and that they also breached the terms of the PSA;

(3) Breach of Implied Agreement based on Defendants' breach of the

Trust and PSA; (4) Slander of Title based on Defendants' wrongful

recording of the Assignment, the SOT, the NOD and the NOS;

(5) Violation of CAL. CIV. CODE § 2923.5 based on Citigroup's

inability to comply with the statute because it was not the

"beneficiary" of the DOT when the NOD was filed; (6) Violation of

18 U.S.C. § 1962 ("RICO") based on Defendants' wire and mail fraud

6 Although these seven claims for relief may constitute

causes of action under state law, as Defendants removed this state

court action to the bankruptcy court, we will for purposes of this

memorandum refer to them as “claims.”

-5-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

in purporting to be the holders of the beneficial interest under

the DOT; and (7) Violation of CAL. BUS. & PROF. CODE § 17200 et seq.

based on Defendants' unlawful and unfair business practices in

wrongfully foreclosing on the Residence.7

The Turners' claims stemmed from their general allegation

that defects occurred in the securitization process in 2005. In

short, the Turners alleged that Wells Fargo's purported transfer

of the Note and DOT to the Trust — by way of the Assignment to

Citigroup in May 2011 — was void because the purported Assignment

occurred nearly six years after the Trust Pool had closed, in

violation of the PSA. The Turners alleged that because of the

procedural defects in the securitization, the subsequent

assignments of the DOT to Citigroup and U.S. Bank, the SOT

substituting NBS as trustee, the NOD and the NOS were likewise

void. Consequently, the foreclosure process initiated by

Defendants was invalid and wrongful because none of them held any

beneficial interest in the DOT.

3. Defendants remove the Turners' action to bankruptcy

court

a. Defendants' motion to dismiss

Defendants timely removed the Turners' action to the

7 While the Turners’ statement of issues on appeal makes 

mention of all seven claims pled in their complaint, their brief

does not advance any arguments with respect to how the bankruptcy

court erred in dismissing their claims for Breach of Implied

Agreement, Slander of Title, RICO and Violation of CAL. BUS. & PROF.

CODE § 17200. Therefore, we consider these claims to be abandoned

and do not discuss them any further. See Branam v. Crowder (In re

Branam), 226 B.R. 45, 55 (9th Cir. BAP 1998), aff'd, 205 F.3d 1350

(9th Cir. 1999)(an issue not adequately addressed by appellant in

its opening brief is deemed abandoned). We consider only the

Turners’ claims for Wrongful Foreclosure, Breach of Express

Contract and Violation of CAL. CIV. CODE § 2923.5.

-6-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

bankruptcy court and moved to dismiss the complaint under Civil

Rule 12(b)(6) ("Motion to Dismiss"). As for the Turners’ wrongful

foreclosure claim, Defendants argued that the Turners, who were

not parties to the PSA or third-party beneficiaries of it, lacked

standing to challenge the validity of the DOT assignments or NBS's

recording of the NOD based on any alleged violations of the PSA. 

Defendants disputed the Turners' reliance on Glaski v. Bank of

America, 218 Cal.App.4th 1079 (2013), contending that several

California courts have declined to follow it. In Glaski, the

California Court of Appeal for the Fifth District held that the

assignment of a deed of trust to a securitized investment trust is

void under New York trust law if the assignment violated the

trust's governing PSA. Glaski further held that the borrower had

standing to challenge foreclosure on the basis of the void

assignments. Id. at 1094-1097.

Defendants relied on Jenkins v. JPMorgan Chase Bank, N.A.,

216 Cal.App.4th 497 (2013), decided three months before Glaski and

holding to the contrary. In Jenkins, the California Court of

Appeal for the Fourth District held that the borrower, as an

unrelated third party to the securitized investment trust, lacked

standing to challenge foreclosure on the basis of purported

violations of the trust's pooling and servicing agreement. Id. at

514-15. Defendants further argued that the Turners had not

alleged any prejudice or particularized injury traceable to the

challenged assignments; they did not dispute their default and had

not claimed they paid the original holder of the Note but were not

given credit for those payments by the assignee — i.e., Citigroup

or U.S. Bank. Defendants argued it was the Turners' default that

-7-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

caused the foreclosure, not any purported defect in the

assignments of the Note and/or DOT; they were in no different

position than if the Note and DOT had never been assigned.

Defendants argued that the Turners’ breach of contract claim

also failed because it was based on the erroneous belief that they

had standing to challenge alleged breaches of the PSA. Further,

the NOD was not void as the Turners had alleged; the recordation

of the SOT was conclusive evidence that NBS was the proper

foreclosure trustee and had the right to issue the NOD. 

Defendants also argued that the Turners could not sue for breach

of contract when they were in default on the Note, a default which

Debtor admitted in her petition, schedules and Plan. Finally,

argued Defendants, even if the Turners had standing as third-party

beneficiaries to the PSA, they failed to allege any other elements

of a claim for breach of contract, particularly damages.

Regarding violations of CAL. CIV. CODE § 2923.5, Defendants

argued this claim failed because the Turners failed to allege that

they were not contacted about their options to avoid foreclosure

and/or that Defendants failed to comply with the statute; rather,

they alleged that any contact was insufficient because it was not

undertaken by the “true beneficiary.” Defendants argued that

contact by an “agent” satisfied the statute. 

In support of their Motion to Dismiss, Defendants asked the

bankruptcy court to take judicial notice of the following

documents filed either in the state court action or in Debtor's

bankruptcy case: the DOT recorded in 2005; the Assignment to

Citigroup recorded on May 12, 2011, and the Second Assignment to

U.S. Bank recorded on September 19, 2012; the NOD recorded on

-8-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

February 10, 2012, and the NOS recorded on May 16, 2012; Debtor's

bankruptcy petition and initial schedules; Debtor's Plan and

confirmation order; and U.S. Bank's motion for relief from stay

and the Stay Relief Order. 

b. The Turners' opposition to the Motion to Dismiss

The Turners opposed the Motion to Dismiss and Defendants'

supporting RJN. They contended that the RJN should be denied

because Defendants were seeking judicial notice of the truth of

the statements asserted within the documents, which constituted

hearsay and were reasonably subject to dispute. 

Relying on Glaski, the Turners contended they had standing to

challenge Defendants’ wrongful foreclosure of the Residence based

on the void assignments of the DOT. The Turners further contended

they had stated sufficient facts for their breach of contract

claim. Again, basing this claim on alleged breaches of the DOT

and PSA, the Turners contended that because Wells Fargo recorded

the Assignment to Citigroup years after the Trust Pool had closed,

Wells Fargo was not the true beneficiary of the DOT and therefore

could not have appointed NBS as trustee to record the NOD in

February 2012. In addition, NBS could not have been properly

substituted as trustee because the SOT was recorded after the

break in the chain of title occurred due to improper

securitization.

As for the Turners' claim for violation of CAL. CIV. CODE

§ 2923.5, they now contended they were never contacted by anyone

at least 30 days prior to the recording of the NOD to discuss

options in lieu of foreclosure, despite the declaration attached

to the NOD stating that contact had been made. They failed to

-9-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

allege this new fact in their complaint. In any event, the

Turners argued that failure to comply with the statute rendered

the NOD and all subsequent proceedings based on it, including the

NOS, invalid and void.

4. The bankruptcy court's ruling on the Motion to Dismiss

The bankruptcy court held a hearing on Defendants' Motion to

Dismiss on February 27, 2014. After considering brief argument

from the Turners' counsel, the court first ruled on Defendants'

RJN, overruling the Turners' objection and taking judicial notice

of Debtor's bankruptcy filings and the documents relied upon by

the complaint. 

The bankruptcy court then ruled on the Motion to Dismiss, 

granting it as to all seven claims and denying leave to amend. 

The court found that the Turners' complaint failed to state a

claim for wrongful foreclosure because: (1) California's

nonjudicial foreclosure law cannot be used by borrowers to

challenge a beneficiary's authority to enforce its note; (2) the

record established Defendants' compliance with CAL. CIV. CODE § 2924

et seq. and the Turners admitted their default; (3) the Turners

lacked standing to complain about PSA issues or to challenge the

validity of the assignments because they could not show

particularized injury traceable to the challenged assignments; and

(4) the Turners had failed to alleged prejudice; it was their

default that caused the foreclosure process to begin.

The bankruptcy court found that the Turners’ complaint also

failed to state a claim for breach of express contract, because it

incorrectly alleged that the NOD was invalid because the SOT was

not issued by the correct beneficiary and, thus, the DOT was

-10-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

breached. In the court’s opinion, the recorded SOT conclusively

established that NBS had the right to issue the NOD. Further, a

party in default could not enforce the DOT. Finally, the Turners

had not alleged any damages; the PSA arguments made in support of

their wrongful foreclosure claim failed for this claim as well. 

Lastly, the bankruptcy court found that the Turners’

complaint failed to state a claim for violation of CAL. CIV. CODE

§ 2923.5, because the declaration attached to the NOD stated that

the Turners were contacted prior to the filing of the NOD in

accordance with the statute and the Turners never alleged they

were not contacted; they alleged only that they were not contacted

by the "true beneficiary." Because contact can be made by an

agent, the Turners had not alleged facts to support a violation of

CAL. CIV. CODE § 2923.5. The Turners timely appealed the dismissal

order entered on March 10, 2014.8

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158. 

III. ISSUES

1. Did the bankruptcy court err when it granted the Motion to 

Dismiss?

2. Did the bankruptcy court abuse its discretion in denying 

leave to amend the complaint? 

IV. STANDARDS OF REVIEW

We review de novo the bankruptcy court's Civil Rule 12(b)(6)

dismissal. Barnes v. Belice (In re Belice), 461 B.R. 564, 572

8 Debtor's bankruptcy case was dismissed while this appeal

was pending on May 13, 2014, for failure to make plan payments.

-11-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(9th Cir. BAP 2011). When we review a matter de novo, we consider

the matter anew as if the bankruptcy court had not previously

ruled. Sachan v. Huh (In re Huh), 506 B.R. 257, 262 (9th Cir. BAP

2014)(en banc). 

The court's decision to not grant leave to amend is reviewed

for an abuse of discretion. Zadrozny v. Bank of N.Y. Mellon,

720 F.3d 1163, 1167 (9th Cir. 2013). A bankruptcy court abuses

its discretion if it applied the wrong legal standard or

misapplied the correct legal standard or its factual findings were

illogical, implausible or without support in the record. 

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th

Cir. 2011). 

V. DISCUSSION

A. Standards for dismissal under Civil Rule 12(b)(6)

Under Civil Rule 12(b)(6), made applicable in adversary

proceedings by Rule 7012, a complaint may be dismissed for

"failure to state a claim upon which relief can be granted." To

survive a motion under Civil Rule 12(b)(6), a complaint must

present cognizable legal theories and sufficient factual

allegations to support those theories. Johnson v. Riverside

Healthcare Sys., LP, 534 F.3d 1116, 1121–22 (9th Cir. 2008). 

As the Supreme Court has explained:

a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is

plausible on its face. . . . A claim has facial

plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged

. . . . Threadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do

not suffice. 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(internal citations and

-12-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

quotation marks omitted). See also Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555-56 (2007)(court is not required to accept any

legal characterizations cast in the form of factual allegations). 

By definition, a claim cannot be plausible when it lacks any

legal basis. Cedano v. Aurora Loan Servs. (In re Cedano),

470 B.R. 522, 528 (9th Cir. BAP 2012). A dismissal under Civil

Rule 12(b)(6) may be based on either the lack of a cognizable

legal theory or on the absence of sufficient facts alleged under a

cognizable legal theory. Johnson, 534 F.3d at 1121.

We may use judicially noticed facts to establish that a

complaint does not state a claim for relief. See Skilstaf, Inc.

v. CVS Caremark Corp., 669 F.3d 1005, 1016 n.9 (9th Cir. 2012). 

We can take judicial notice of the existence, filing and content

of documents in Debtor's underlying bankruptcy case. See O'Rourke

v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955,

957-58 (9th Cir. 1989).

We also may consider the existence and content of documents

attached to and referenced in the complaint as exhibits. Lee v.

City of L.A., 250 F.3d 668, 688 (9th Cir. 2001); Durning v. First

Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). Even when a

document is not attached to the complaint, we may consider its

existence and contents when its authenticity is not contested and

when it necessarily is relied upon by the plaintiffs in their

complaint. See United States v. Ritchie, 342 F.3d 903, 907-08

(9th Cir. 2003); Lee, 250 F.3d at 688.

B. The bankruptcy court did not err when it granted the Motion

to Dismiss.

The issues the Turners state are presented on appeal do not

-13-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

align with much of the arguments in their opening brief or, for

that matter, the actual rulings of the bankruptcy court. In any

event, before we address the merits of their specific arguments,

we first address their general arguments that: (1) the bankruptcy

court made incorrect "factual findings" as to the secured status

of the Note by wrongfully taking judicial notice of the truth of

the matters asserted in Debtor's bankruptcy documents; (2) their

claims were timely filed or were equitably tolled due to

Defendants' deceitful acts; and (3) the doctrines of issue or

claim preclusion did not apply to the Plan confirmation order or

the Stay Relief Order.

The Turners contend the bankruptcy court improperly

determined the Note was a secured obligation based on Debtor's

statements made in her schedules, Plan and confirmation order,

which led to the court’s erroneous conclusion that they lacked

standing to challenge the assignments. While the bankruptcy court

questioned the Turners' counsel why Debtor should not be bound by

statements in her bankruptcy documents that the Note was a secured

obligation, the court did not make a "finding" that the Note was

in fact secured. The only observation it made respecting the Note

is that Debtor admitted the Turners' default in her confirmed

Plan. 

And, contrary to the Turners' argument, the court was free to

consider Debtor’s admission of default in her Plan under Fed. R.

Evid. 801(d)(2) as a party admission. Alternatively, because the

Plan's authenticity was not contested nor was it reasonably

subject to dispute, the court could take judicial notice of its

contents under Fed. R. Evid. 201. In re E.R. Fegert, Inc.,

-14-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

887 F.2d at 957-58. However, any alleged "finding" as to the

Note's secured status is of no moment because, as we explain more

thoroughly below, that is not the basis for the bankruptcy court’s

determination that the Turners lack standing to challenge the

assignments. 

The Turners next argue that their claims alleging

securitization irregularities were timely filed or were equitably

tolled. The issue of timeliness was never raised by Defendants or

considered by the bankruptcy court. It certainly was not a basis

for any of the court's rulings on their claims. Therefore, we

fail to see the merit of this argument. In any event, the

Turners' claims regarding defects in the securitization process

fail for reasons other than untimeliness. 

Finally, the Turners argue that issue or claim preclusion did

not apply to the Plan confirmation order or the Stay Relief Order. 

We fail to see where the bankruptcy court applied either doctrine

in its decision to dismiss. It appears that the Turners do not

want to be precluded from raising the question of U.S. Bank's

beneficial interest under the DOT based on concessions made in the

Stay Relief Order — that U.S. Bank was authorized to foreclose its

"security interest" in the Residence. Notably, the Turners'

claims do not turn on statements made in the Stay Relief Order or

the Plan confirmation order with respect to U.S. Bank's (or any

other Defendant’s) purported security interest in the Residence. 

Turning now to the merits of the Turners' claims for Wrongful

Foreclosure, Breach of Express Contract and Violation of CAL. CIV.

CODE § 2923.5, we conclude that each fails to state a claim for

relief. To maintain a wrongful foreclosure claim, a plaintiff

-15-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

must allege that: (1) defendants caused an illegal, fraudulent or

willfully oppressive sale of the property pursuant to a power of

sale in a deed of trust; (2) plaintiff suffered prejudice or harm;

and (3) plaintiff tendered the amount of the secured indebtedness

or was excused from tendering. Lona v. Citibank, N.A.,

202 Cal.App.4th 89, 104 (2011). 

To state a breach of contract claim, a plaintiff must allege: 

(1) the existence of a contract; (2) plaintiff's performance;

(3) defendant's breach; and (4) resulting damages to the

plaintiff. Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811, 821

(2011). 

Finally, CAL. CIV. CODE § 2923.5 requires that, before a notice

of default may be filed, the “mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent” contact the borrower in

person or by phone to “assess” the borrower's financial situation

and “explore” options to prevent foreclosure. CAL. CIV. CODE

§ 2923.5(a)(1) & (2).

These three claims essentially turn on whether the Turners

have standing to challenge the foreclosure based on alleged

deficiencies they claim occurred in the securitization process. 

Specifically, the Turners contend the Assignment of the DOT by

Wells Fargo to Citigroup in May 2011 was void, because it was

transferred years after the Trust Pool had closed in 2005, which

violated the terms of the PSA. As a result, they contend,

CitiGroup was not the true beneficiary under the DOT and therefore

did not have authority to cause NBS to record the NOD or the NOS. 

The Turners further contend the Second Assignment to U.S. Bank is

also void based on these same defects. 

-16-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The legal basis for the Turners' claims for relief is state

law. When we must apply state law to resolve an issue and the

state's highest court has not yet addressed the issue, our job as

a federal court applying state law is to predict how the state's

highest court would resolve the issue. Hemmings v. Tidyman's

Inc., 285 F.3d 1174, 1203 (9th Cir. 2002). Unless we are

convinced the California Supreme Court would decide the issue

differently, we are obliged to follow the decisions of

California's intermediate appellate courts. Vestar Dev. II, LLC

v. Gen. Dynamics Corp., 249 F.3d 958, 960 (9th Cir. 2001).

However, as demonstrated by Jenkins and Glaski, California's

intermediate appellate courts are divided on the issue of whether

borrowers have standing to challenge assignments of their deeds of

trust based on an alleged violation of a pooling and servicing

agreement to which they were not a party.

The California Supreme Court has recently granted review from

an intermediate appellate court decision following Jenkins and

rejecting Glaski. See Yvanova v. New Century Mortg. Corp.,

226 Cal.App.4th 495 (2014), review granted & opinion de-published,

331 P.3d 1275 (Cal. Aug. 27, 2014). Subsequent to granting review

of Yvanova, the California Supreme Court also granted hearings in

Keshtgar v. U.S. Bank, N.A., 226 Cal.App.4th 1201 (2014), review

granted & opinion de-published, 334 P.3d 686 (Cal. Oct. 1, 2014),

and Mendoza v. JPMorgan Chase Bank, N.A., 228 Cal.App.4th 1020

(2014), review granted & opinion de-published, 337 P.3d 493 (Cal.

Nov. 12, 2014), both of which rejected Glaski. Briefing in

Keshtgar and Mendoza has been deferred pending consideration and

disposition of this issue in Yvanova, which has yet to be decided.

-17-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Thus, we are tasked with deciding the case before us based on

our prediction of how the California Supreme Court will rule. See

Hemmings, 285 F.3d at 1203. The Turners rely on Glaski to

challenge the assignments of their DOT and Defendants' right to

foreclose. They do not challenge the legality of the

securitization process in general, instead, they focus on the late

transfer of the Assignment to CitiGroup in 2011, argue that this

late transfer violated the PSA, and contend that this late

transfer provides an adequate basis for their contention of

impropriety in the foreclosure process.

In Glaski, the appellate court held that under New York trust

law, which governed the securitized trust, the postclosing date

transfer of the borrowers’ note and deed of trust to the trust

violated its pooling and servicing agreement and was void, rather

than merely voidable. Therefore, based on the void assignment,

the borrower had standing to challenge foreclosure. 

218 Cal.App.4th at 1094-97. In so holding, the Glaski court

relied primarily on an unpublished New York decision, Wells Fargo

Bank, N.A. v. Erobobo, 972 N.Y.S.2d 147 (Sup. Ct. 2013). However,

a New York appellate court recently reversed Erobobo in the

published decision of Wells Fargo Bank, N.A. v. Erobobo, 127

A.D.3d 1176 (N.Y. App. Div. 2015). The appellate court held that

the mortgage borrower did not have standing to challenge the

validity of the note and mortgage assignments based on any

purported noncompliance with certain provisions of the trust’s

pooling and servicing agreement. We believe Erobobo’s reversal

directly affects the validity of Glaski.

We predict the California Supreme Court will follow Jenkins,

-18-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

so we will follow it as well and hold that the Turners lack

standing to challenge assignments of their Note and DOT based on

an alleged violation of the PSA. See Rivera v. Deutsche Bank

Nat'l Trust Co. (In re Rivera), 2014 WL 6675693, at *8 (9th Cir.

BAP Nov. 24, 2014)(reaching same conclusion on this issue). 

In Jenkins, the plaintiff-borrower alleged that

irregularities in the securitization process which violated the

trust's pooling and servicing agreement resulted in extinguishment

of any security interest in her home. 216 Cal.App.4th at 511. 

The court found that the borrower lacked standing to challenge

purported violations of the investment trust's pooling and

servicing agreement. Id. at 514-15. It reasoned that the

relevant parties to the pooling process were the holders

(transferors) of the promissory notes and third party acquirers

(transferees) of the notes, not the borrower, who was an unrelated

third party to the securitization. Id. at 515. Even if the

transfers or assignments were invalid, the borrower was not

injured because she remained obligated under the note. Id. The

only injured party would be one who incorrectly believed it held a

beneficial interest in the note. Id. Accordingly, the borrower's

complaint was properly dismissed without leave to amend. Id. at

503, 517.9 

Federal courts within the Ninth Circuit (and the Ninth

Circuit in an unpublished decision) have generally rejected the

9 The California Court of Appeal for the Second District has

adopted the holding in Jenkins and declined to follow Glaski,

stating that the "vast majority" of courts analyzing Glaski have

found it unpersuasive. Kan v. Guild Mortg. Co., 230 Cal.App.4th

736, 742-744 (2014).

-19-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

holding in Glaski, noting that it is a minority view. See Davies

v. Deutsche Bank Nat'l Trust Co. (In re Davies), 565 F. App'x.

630, 633 (9th Cir. Mar. 24, 2014)(citing Jenkins and Flores v. EMC

Mortg. Co., 997 F. Supp. 2d 1088 (E.D. Cal. 2014)(collecting

cases) and concluding that the California Supreme Court would

follow "the weight of authority" holding that borrowers, who are

not parties to pooling and servicing agreements, cannot challenge

them); Sanders v. Sutton Funding, LLC, 2014 WL 2918590, at *5

(S.D. Cal. June 26, 2014)(citing several federal cases to show

that "every other federal district court in California has also

disavowed Glaski"); Lanini v. JPMorgan Chase Bank, 2014 WL

1347365, at *5 (E.D. Cal. Apr. 4, 2014)(declining to follow

Glaski, noting that district courts in the Ninth Circuit have

sided with Jenkins); Snell v. Deutsche Bank Nat'l Trust Co.,

2014 WL 325147, at *5 (E.D. Cal. Jan. 29, 2014)(rejecting the

reasoning in Glaski and stating that "[u]ntil either the

California Supreme Court, the Ninth Circuit, or other appellate

courts follow Glaski or address the discrepancy between Glaski and

Jenkins, this Court will continue to follow the Jenkins rule.");

Apostol v. CitiMortgage, Inc., 2013 WL 6328256, *7 (N.D. Cal.

Nov. 21, 2013)("[C]ourts in this District have expressly rejected

Glaski and adhered to the majority view that individuals who are

not parties to a PSA cannot base wrongful foreclosure claims on

alleged deficiencies in the PSA/securitization process."); Dahnken

v. Wells Fargo Bank, N.A., 2013 WL 5979356, at *2 (N.D. Cal.

Nov. 8, 2013); Sandri v. Capital One, N.A. (In re Sandri),

501 B.R. 369, 374 (Bankr. N.D. Cal. 2013)(borrower lacked standing

to challenge foreclosure based on alleged violations of the

-20-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

pooling and servicing agreement and stating that Glaski "is an

outlier" and "is inconsistent with the majority line of cases and

is based on a questionable analysis of New York trust law."). But

see Cheung v. Wells Fargo Bank, N.A., 2013 WL 6017497, at *4

(N.D. Cal. Sept. 25, 2013)(issued one month after Glaski and

reaching same result as Glaski, but not citing it). 

Other federal courts in California, prior to Glaski and

Jenkins, have determined that borrowers lack standing to challenge

assignments based on alleged violations of a pooling and servicing

agreement. See Sami v. Wells Fargo Bank, 2012 WL 967051, at *6

(N.D. Cal. Mar. 21, 2012)("To the extent Plaintiff bases her

claims on the theory that Wells Fargo allegedly failed to comply

with the terms of the PSA, the court finds that she lacks standing

to do so because she is neither a party to, nor a third party

beneficiary of, that agreement."); Junger v. Bank of Am., 2012 WL

603262, at *3 (C.D. Cal. Feb. 24, 2012)(holding that plaintiff

lacked standing to challenge securitization process because he was

not a party to the pooling and servicing agreement); Bascos v.

Fed. Home Loan Mortg. Corp., 2011 WL 3157063, at *6 (C.D. Cal.

July 22, 2011)("To the extent Plaintiff challenges the

securitization of his loan because Freddie Mac failed to comply

with the terms of its securitization agreement, Plaintiff has no

standing to challenge the validity of the securitization of the

loan as he is not an investor of the loan trust.").

Courts outside of the Ninth Circuit applying other states'

nonjudicial foreclosure laws have reached similar conclusions. 

Rajamin v. Deutsche Bank Nat'l Trust Co., 757 F.3d 79, 90 (2d.

Cir. 2014)(rejecting Glaski as inconsistent with New York law and

-21-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

other courts' interpretation of New York law, including Erobobo);

Correia v. Deutsche Bank Nat'l Trust Co. (In re Correia), 452 B.R.

319, 324-25 (1st Cir. BAP 2011)(debtors lacked standing to raise

violations of a pooling and servicing agreement). 

In addition to the Turners' lack of standing, their claim for

wrongful foreclosure also fails because they did not articulate

any prejudice as a result of Defendants' purported lack of

authority to commence the foreclosure process. Siliga v. Mortg.

Elec. Registration Sys., Inc., 219 Cal.App.4th 75, 85 (2013);

Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 272

(2011)(to recover on a wrongful foreclosure claim borrower must

demonstrate that alleged imperfection in the foreclosure process

was prejudicial). No prejudice exists where the 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. Dick v.

Am. Home Mortg. Servicing, Inc., 2013 WL 5299180, at *4-5

(E.D. Cal. Sept. 18, 2013); In re Sandri, 501 B.R. at 376; Siliga,

219 Cal.App.4th at 85; Fontenot, 198 Cal.App.4th at 272. See also

Simmons v. Aurora Bank, FSB, 2013 WL 5508136, at *2 (N.D. Cal.

Sept. 30, 2013)(defects in transfers do not injure the borrower

because even if there were defects in the assignment of the deed

of trust, that assignment would not change borrower's obligation

to pay); accord Apostol, 2013 WL 6328256, at *7. 

The assignment of the Turners' Note and DOT did not change

the Turners’ obligations to pay. It is undisputed that the

Turners were in default under the Note when the NOD was recorded. 

It is also undisputed that they made no payments on the Note in

-22-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

accordance with Debtor's confirmed Plan. Although the Turners

alleged it "was unclear who the true holder of the beneficial

interest in Plaintiff's mortgage was given the void assignment of

the [DOT]," that allegation fails to support any alleged

prejudice. Further, the Turners never alleged that they did not

know who to pay or that any payments made were not credited to

their account. They have also not alleged that they cured the

arrearage or paid the debt in full. Finally, the Turners have

never alleged that any third party has come forward attempting to

enforce the debt, making their claim yet more implausible. See

Bernardi v. JPMorgan Chase Bank, N.A., 2012 WL 33894, at *2

(N.D. Cal. Jan. 6, 2012). 

Initiation of the foreclosure process was proximately caused

by the Turners' default, not the acts of Defendants. The Turners

have not shown any economic injury or loss of property as a result

of any alleged defects in the assignment and/or securitization

process, especially since they have lived in the Residence rent

free for the past three-plus years. Moreover, they failed to

allege any plausible causal link between the harm they alleged and

Defendants' alleged misconduct. To the extent they contend NBS

lacked authority to record the NOD because NBS was "not appointed"

as trustee until three months after the NOD was recorded in

February 2012, we reject that argument. The SOT substituting NBS

as trustee was executed on January 23, 2012; it was recorded on

May 2, 2012. California law does not require a substitution of

trustee to be recorded for it to be effective, only that it be

executed. In re Cedano, 470 B.R. at 532. CAL. CIV. CODE § 2934a(b)

contemplates that, as long as the borrower has notice, the

-23-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

foreclosure process may proceed where the substitution of trustee

is executed but not recorded until after the notice of default is

recorded. Ram v. OneWest Bank, FSB, 234 Cal.App.4th 1, 13 (2015). 

Therefore, NBS had the right to issue the NOD.

The Turners alleged nothing unlawful about the foreclosure

process beyond the alleged deficient assignment and securitization

they contend precluded any Defendant from having an interest in

the Residence. Accordingly, the bankruptcy court did not err in

dismissing the Turners' claim for wrongful foreclosure.

The Turners' claim for breach of express contract also fails. 

Here, the Turners alleged that Defendants breached the PSA by

assigning the DOT to Citigroup after the Trust Pool had closed. 

For the reasons stated above, the Turners lack standing to assert

such a claim. The Turners also alleged that Defendants breached

Sections 22 and 24 of the DOT, which describes the rights and

responsibilities of the lender in the event of the borrower's

default and the procedures for substitution of trustees. This

claim is based on the Turners' erroneous conclusion that U.S. Bank

had no authority to invoke the power of sale based on void

assignments and the erroneous conclusion that NBS had no authority

as trustee to issue the NOD because the SOT was not recorded until

after the fact. Because the Turners did not adequately plead that

U.S. Bank does not hold a beneficial interest in the DOT or that

NBS could not issue the NOD, they have failed to sufficiently

allege breach. Furthermore, the Turners cannot show any damages

caused by Defendants' alleged breach of the DOT; the foreclosure

process started because of their undisputed default. Accordingly,

the bankruptcy court did not err in dismissing the Turners' claim

-24-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

for breach of express contract. 

Finally, the Turners did not state a viable claim for

violation of CAL. CIV. CODE § 2923.5. They alleged that CitiGroup

failed to comply with the statute because it was never the holder

of the beneficial interest in the DOT due to the void Assignment

by Wells Fargo in May 2011, a claim which we reject for the same

reasons discussed above; the Turners lack standing to assert a

claim for defective assignments. In their opposition to the

Motion to Dismiss, however, the Turners claimed they were never

contacted by anyone to discuss options to foreclosure before the

NOD was recorded. While this allegation taken as true can

establish a claim for violation of CAL. CIV. CODE § 2923.5, a

plaintiff's memorandum in opposition to a Civil Rule 12(b)(6)

motion cannot serve to supplement or amend the complaint. See

Gomez v. Ill. State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir.

1987). Even if it could, it does not follow, as the Turners have

alleged, that all subsequent foreclosure proceedings based on the

NOD were invalid and void. 

The remedy for failure to comply with CAL. CIV. CODE § 2923.5

is limited to a one-time postponement of an impending foreclosure. 

In re Cedano, 470 B.R. at 533 (citing multiple cases);

In re Sandri, 501 B.R. at 378. Considering that no sale has

occurred despite the NOS having been filed nearly three years ago,

and because the NOD may need to be recorded again (if it has not

been already), the Turners could not be afforded any effective

remedy that they have not already received. The bankruptcy court

did not err in dismissing the Turners' claim for violation of CAL.

CIV. CODE § 2923.5.

-25-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

C. The bankruptcy court did not abuse its discretion in denying

the Turners leave to amend the complaint.

If a court dismisses a complaint for failing to state a

claim, the court may grant leave to amend. Lopez v. Smith,

203 F.3d 1122, 1130 (9th Cir. 2000). Generally, when a viable

claim may be pled, the court should freely grant leave to amend. 

Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1058 (9th

Cir. 2011). However, a court has discretion to deny leave to

amend if "amendment would be futile," such as if a plaintiff's

claims "are factually and legally implausible." Zadrozny,

720 F.3d at 1173 (citation and internal quotation marks omitted).

The Turners contend in their statement of issues on appeal

that the bankruptcy court abused its discretion in dismissing

their complaint without leave to amend. However, they did not

articulate any specific argument as to how the bankruptcy court

abused its discretion in not granting leave to amend. Thus, we

may consider this issue abandoned. In re Branam, 226 B.R. at 55. 

Nonetheless, even if we were to consider it, we perceive no

abuse of discretion by the bankruptcy court. We recognize that

the Turners had no prior opportunity to amend their complaint and

that dismissal without leave to amend can be harsh. However,

because they lack standing to assert the claims they have argued

on appeal, and could never plead facts establishing causation

and/or damages as a result of Defendants' alleged wrongful acts in

any event, any such amendment in this case would be futile; all of

their claims fail as a matter of law. Zadrozny, 720 F.3d at 1173. 

VI. CONCLUSION

For the foregoing reasons, we AFFIRM.

-26-