Source: https://casetext.com/case/thomas-v-bank-of-am-2
Timestamp: 2019-04-21 20:46:06+00:00

Document:
Thomas v. Bank of Am., N.A.
RUDIE THOMAS, Plaintiff and Appellant, v. BANK OF AMERICA, N.A., Defendant and Respondent.
David A. Kay for the Plaintiff and Appellant. The Ryan Firm, Timothy M. Ryan and Michael W. Stoltzman, Jr., for Defendant and Respondent.
David A. Kay for the Plaintiff and Appellant.
The Ryan Firm, Timothy M. Ryan and Michael W. Stoltzman, Jr., for Defendant and Respondent.
Rudie Thomas appeals from a judgment dismissing his second amended complaint (SAC) for wrongful foreclosure related causes of action after the trial court sustained a demurrer to it without leave to amend. Thomas asserts numerous grounds of error. We conclude none of them has merit and affirm the judgment.
In March 2006 Thomas borrowed over $600,000 from Resmae Mortgage Corporation (Resmae). The loan was secured by a trust deed on real property. The trust deed was recorded evidencing the secured loan. The trust deed identified Chicago Title Company as the trustee and Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee beneficiary for Resmae.
On August 24, 2007, MERS assigned the trust deed and promissory note to LaSalle Bank, N.A. as Trustee for the MLMI Trust Series 2006-RM2 (LaSalle). The assignment was recorded on October 1, 2007.
On August 15, 2007, LaSalle recorded a default notice alleging the obligations secured by the trust deed had been breached. The same day, Wilshire Credit Corporation, on LaSalle's behalf, executed a substitution of trustee substituting Quality Loan Service Corporation (Quality) as trustee under the trust deed. The substitution of trustee was recorded on November 21, 2007.
A notice of trustee's sale was issued on November 16, 2007. On April 29, 2008, Quality issued a trustee's deed upon sale indicating Quality sold the secured property to LaSalle at a public auction on April 28, 2008. The trustee's deed was recorded on May 5, 2008.
In January 2009 Thomas filed a complaint to quiet title to the real property and for injunctive relief. In April 2009 he filed an amended complaint alleging the same causes of action. Bank of America demurred to the amended complaint, arguing in part that the amended complaint failed to state a claim because Thomas had not alleged he had tendered or attempted to tender the amount he owed on the promissory note. The trial court overruled the demurrer and Bank of America answered the complaint.
The complaint named LaSalle as the defendant. The parties stipulated LaSalle merged into and with Bank of America, N.A. (Bank of America) effective October 17, 2008. They also stipulated Bank of America is the proper defendant in this matter. The trial court accepted the stipulation and amended the defendant's name accordingly. We refer to LaSalle in our summary and discussion because its name appears on the key documents.
1. The assignment of the trust deed and promissory note to LaSalle was void because it contained a forged notary acknowledgment.
2. The assignment of the trust deed and promissory note was void because MERS was not authorized to do business in California at the time.
3. The assignment of trust deed and promissory note was void because the person who executed the assignment for assignor MERS was actually an employee of assignee LaSalle's loan servicer.
4. The assignment of the promissory note was void because MERS had no beneficial interest in the promissory note to assign. Its only beneficial interest was in the trust deed.
5. The substitution of Quality as trustee was void because MERS had not yet assigned the trust deed and promissory note to LaSalle at the time the substitution of trustee was executed.
6. The substitution of trustee was void because it contained a forged notary acknowledgment.
Bank of America demurred to the SAC, arguing Thomas's allegations were not sufficient to state a cause of action. Bank of America also reiterated its argument Thomas was obliged and failed to allege he had tendered or attempted to tender the amount he owed on the promissory note. The trial court agreed with Bank of America's arguments, including its tender argument, and sustained the demurrer without leave to amend.
To the extent Thomas raises this point on appeal to demonstrate his SAC stated a claim or could have been successfully amended to do so, his efforts fail because he has not alleged any facts or suggested he could allege any facts showing the delayed assignment prejudiced him. " '[A] plaintiff in a suit for wrongful foreclosure has generally been required to demonstrate [that] the alleged imperfection in the foreclosure process was prejudicial to the plaintiff's interests.' (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272 [Fontenot],citing Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1258, [presumption that nonjudicial foreclosure sale was conducted regularly and fairly may be rebutted only by substantial evidence of 'prejudicial procedural irregularity'].)" (Debrunner, supra, 204 Cal.App.4th at p. 443.) More particularly, he has not shown the delayed assignment impaired his ability to contest or avert the foreclosure sale. (Id. at pp. 443-444.) Although he argues the delayed assignment precluded him from being assured his payment of the arrearage amount would have resulted in the reinstatement of his loan or the redemption of the real property, he did not allege nor does he suggest he could allege he ever attempted to pay the arrearage amount or otherwise avert the foreclosure sale. Accordingly, he has not established his SAC stated or could be amended to state a claim based on the delayed assignment.
Miller v. Cote (1982) 127 Cal.App.3d 888 (Miller), upon which Thomas relies, does not alter our conclusion. The court in Miller held a notice of default was fatally defective in part because, at the time the notice was filed and recorded, no default had actually occurred and permitting premature filing of the notice would effectively shorten the statutory reinstatement period. (Id. at pp. 894-895.) Thomas does not claim he was not in default at the time the notice of default in this case was filed. He also does not claim the delayed assignment shortened the time for him to exercise his statutory reinstatement rights. Miller, therefore, has no application here.
Moreover, even if MERS was required to have a certificate of qualification at the time of the assignment, its subsequent attainment of one in July 2010 retroactively validated its past activities. (See United Medical Management Ltd. v. Gatto (1996) 49 Cal.App.4th 1732, 1741 [upon qualifying, a foreign corporation has full legal competency and its prior transactions have full legal effect]; Hill v. Mortgage Elect. Registration Systems, Inc. (C.D. Cal. Jan. 6, 2012, No. CV 11-8036-ODW (FFMx)) [2012 WL 94476, at *4]; Adam v. Mortgage Electronic Registration Systems, Inc. (C.D. Cal. Jan. 4, 2011, No. CV 10-7886 PSG (PLAx)) [2011 WL 63651, at *3]; Perlas v. Mortgage Elec. Registration Systems, Inc. (N.D. Cal. Aug. 6, 2010, No. C 09-4500 CRB) [2010 WL 3079262, at *7].) Although Thomas contends, "there are still factual issues as to whether MERS paid taxes and penalties necessary to maintain the action," he did not raise this contention below and he has not offered any facts demonstrating he could successfully amend his SAC to allege such issues actually exist. Therefore, he has not established his SAC stated or could be amended to state a claim based on MERS's corporate status at the time of the assignment.
Thomas further asserts the equal dignities rule in Civil Code section 2309 required the person to have written authority to act on behalf of both parties and she did not. This argument is not cognizable on appeal because it was not raised below. (Greenwich S.F., LLC v. Wong, supra, 190 Cal.App.4th at p. 767; People ex rel. Dept. of Transportation v. Superior Court, supra, 105 Cal.App.4th at p. 46.) This point also does not persuade us Thomas could successfully amend his SAC to state a cause of action because, even if the equal dignities rule applied to the assignment, Thomas offers no factual allegations showing the person executing the assignment did not have the requisite written authority or that compliance with the equal dignities rule was not waived or ratified by the parties to the assignment.
Even if Thomas had or could allege specific facts showing the assignment of the trust deed and promissory note was void, he cannot state a cause of action unless he can also allege specific facts showing he was prejudiced by the assignment. (Herrera v. Federal National Mortgage Assn., supra, 205 Cal.App.4th at pp. 1508-1509; Fontenot, supra, 198 Cal.App.4th at p. 272.) As the Fontenot court noted, "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 [plaintiff's] obligations under the note." (Fontenot, at p. 272.) Thus, in order to state a viable claim, Thomas must allege facts showing the assignment changed his contractual obligations, interfered with his ability to pay his debt, or caused him to face foreclosure where, under the same circumstances, he otherwise would not have.(Ibid.)As Thomas has not alleged such facts or shown he could allege such facts, he has not demonstrated his SAC did or could be amended to state a viable cause of action.
Moreover, the substitution of trustee did not become effective until it was recorded on November 21, 2007. (Civ. Code, § 2934a, subd. (a)(1) [trust deed beneficiary or successor may substitute trustee by recording the substitution in the county where the secured property is located].) As MERS assigned the trust deed and promissory note to LaSalle on August 24, 2007, and the assignment was recorded October 1, 2007, LaSalle had the authority to substitute the trustee well before the substitution became effective.
As previously discussed, "a plaintiff in a suit for wrongful foreclosure has generally been required to demonstrate the alleged imperfection in the foreclosure process was prejudicial to the plaintiff's interests." (Fontenot, supra, 198 Cal.App.4th at p. 272.) As to Thomas, the substitution merely substituted one trustee for another without changing his contractual obligations. He does not allege that he was not in default, that the substitution of Quality as trustee interfered with his ability to pay his debt, or that LaSalle would have refrained from foreclosure under the circumstances. (Ibid.)Absent such allegations, he has not shown his SAC stated or could be amended to state a claim based on any improprieties in the substitution of trustee.
Thomas's reliance on this court's decision in Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868 (Dimock)is misplaced. In Dimock, we concluded a foreclosure sale conducted by the original trustee after another trustee had been substituted in was void because the substitution gave the second trustee the exclusive power under Civil Code section 2934a to conduct the sale. (Dimock, supra, at pp. 874-875.) In this case, Thomas has not alleged or indicated he could allege that Quality conducted the foreclosure sale after another trustee was substituted in. Accordingly, Dimock has no application here.
For the same reason, we also need not address Thomas's related claim that the trial court's application of the tender rule to the SAC violated the requirements in Code of Civil Procedure section 1008 for reconsidering prior decisions. We note, nonetheless, the improper reconsideration argument is not cognizable on appeal because Thomas did not raise it below. (Greenwich S.F., LLC v. Wong, supra, 190 Cal.App.4th at p. 767; People ex rel. Dept. of Transportation v. Superior Court, supra, 105 Cal.App.4th at p. 46.) We also note Thomas's SAC is far more factually detailed than his prior amended complaint and he filed the SAC almost two and a half years after he filed the amended complaint. In the interim, state and federal courts issued several new decisions in wrongful foreclosure cases. Thus, had Thomas asserted his improper reconsideration argument below, the trial court would have had little difficulty finding the requirements for reconsideration under Code of Civil Procedure section 1008 had been met.
The judgment is affirmed. Respondent is awarded its appeal costs.
MCCONNELL, P. J. WE CONCUR: HUFFMAN, J. IRION, J.

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