Court Opinion

ID: 2682451
Source: CourtListenerOpinion
Date Created: 2014-07-09 23:01:16.177673+00
Date Added: 2024-06-11T13:12:45.564908
License: Public Domain

Filed7/9/14 Irizarry v. Bank of New York Mellon CA1/2
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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 This opinion has not been certified for publication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

                                       FIRST APPELLATE DISTRICT

                                                  DIVISION TWO

MESHA MONGE-IRIZARRY,
         Plaintiff and Appellant,
                                                                     A139993
v.
THE BANK OF NEW YORK MELLON,                                         (San Francisco County
as Trustee, etc., et al.,                                            Super. Ct. No. CGC12-521821)
         Defendants and Respondents.

         Mesha Monge-Irizarry filed suit to set aside a foreclosure sale and regain title to
the property at 900 Ingerson Avenue in San Francisco (the property). In a prior suit,
Monge-Irizarry regained title to the property from Naim and Marie Harrison, who had
purchased the property, asserting breach of contract and an unrecorded life estate interest
in the property. However, the Harrisons had obtained a purchase money finance loan and
a deed of trust (later assigned to The Bank of New York Mellon1 (BONYM)) was
recorded before Monge-Irizarry sued the Harrisons. The Harrisons defaulted, the
defendants foreclosed, and the property was sold at public auction.
         The defendants demurred to Monge-Irizarry’s third amended complaint (TAC).
The trial court sustained the demurrer without leave to amend and entered judgment,
dismissing the suit. On appeal, Monge-Irizarry proposes a legal theory to the effect that
the defendants are powerless to exercise their rights under the deed of trust because of the
judgment she obtained against the Harrisons. That legal theory is contrary to basic
         1
             BONYM was formerly known as The Bank of New York.

                                                             1
property law. We sustain the judgment of the trial court because Monge-Irizarry has
failed to allege facts sufficient to sustain a cause of action under any legal theory, and we
find no reasonable possibility that she could do so if given the opportunity to amend.
                                       BACKGROUND
I. Factual Background
          Because this appeal arises from the sustaining of a demurrer, we state facts as
contained in Monge-Irizarry’s TAC, as well as other matters that have been judicially
noticed. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264.)
          On November 21, 2006, Monge-Irizarry sold the property to the Harrisons. She
retained a life estate on the property, but the grant deed to the Harrisons makes no such
reservation.
          The Harrisons obtained a purchase money finance loan, secured by a first deed of
trust against the property that was recorded on November 21, 2006. The deed of trust
designates Wilmington Finance, Inc. (Wilmington) as lender, Fidelity National Title as
trustee, and Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for
lender.
          In March 2008, Monge-Irizarry initiated a lawsuit against the Harrisons and a lis
pendens was recorded. The lawsuit was for rescission of the sales contract, among other
causes of action, and sought return of the property.
          On August 26, 2009, a notice of default and election to sell under the deed of trust
was recorded.
          On January 15, 2010, MERS assigned the note and deed of trust to BONYM as
“Trustee for the Certificateholders, CWABS, Inc. asset-backed certificates series 2007-
BC2, Series 2007-BC2” and substituted Recontrust Company, N.A. (Recontrust) as
trustee of the deed of trust. This assignment and substitution was recorded on January
29, 2010.
          On April 20, 2011, Recontrust, as trustee, recorded a notice of trustee’s sale.
          On July 15, 2011, Monge-Irizarry obtained a default judgment (the prior
judgment) against the Harrisons that rescinded the sale to the Harrisons and restored title

                                                2
of the property to her. On August 9, 2011, a copy of the prior judgment was recorded by
the county recorder.
         On August 15, 2011, Recontrust, as trustee, sold the property at a public auction.
BONYM purchased the property for $279,000. The trustee’s deed upon sale was
recorded September 1, 2011.
         Monge-Irizarry alleged, upon information and belief, that BONYM then sold the
property to Bank of America (BOA).
         Monge-Irizarry’s TAC implies that she has resided on the property from 2006 to
the present.
II. Procedural Background
         On June 22, 2012, Monge-Irizarry filed an unverified complaint, naming as
defendants BONYM, BOA, Recontrust, and all persons claiming a right or interest in the
property. The complaint asserted nine causes of action: (1) negligence; (2) fraud; (3) to
set aside the trustee’s sale; (4) to void or cancel the trustee’s deed upon sale; (5) wrongful
foreclosure; (6) breach of warranty of habitability; (7) unjust enrichment; (8) violation of
Business and Professions Code section 17200 et seq.; and (9) quiet title.
         BONYM, BOA, and Recontrust demurred to the complaint. Instead of opposing
the demurrer, Monge-Irizarry filed a first amended complaint (FAC) on September 17,
2012.2 The FAC asserted eight causes of action: (1) negligence; (2) fraud; (3) to set
aside the trustee’s sale; (4) to void or cancel the trustee’s deed upon sale; (5) wrongful
foreclosure; (6) breach of warranty of habitability; (7) unjust enrichment; and (8) quiet
title.
         BONYM, BOA, and Recontrust demurred to the FAC. Monge-Irizarry opposed
the demurrer. On December 14, 2012, the court sustained the demurrer with leave to
amend.

         2
          The record contains a September 18, 2012, order sustaining the demurrer to the
original complaint with leave to amend, although the order refers to “Plaintiff, Kimberly
Cox’s First Amended Complaint.”

                                              3
       Monge-Irizarry filed a second amended complaint (SAC) on January 15, 2013.
The SAC asserted the same eight causes of action as the FAC. BONYM, BOA, and
Recontrust demurred to the SAC. Monge-Irizarry opposed the demurrer. On April 19,
2013, the court sustained the demurrer “with leave to amend to allege tender; duty under
[Civil Code section] 2924b[, subdivision] (c)(2), breach of duty under [Civil Code
section] 2924g; fraud with particularity; all elements of breach of warranty of
habitability. Plaintiff shall also allege actionable conduct in view of Ross v. Title Guar.
& Trust Co. (1934) 136 Cal.App. 393, 399).”
       Monge-Irizarry filed the TAC on May 9, 2013. The TAC asserted six causes of
action: (1) to set aside the trustee’s sale; (2) to void or cancel the trustee’s deed upon
sale; (3) wrongful foreclosure; (4) breach of warranty of habitability; (5) unjust
enrichment; and (6) quiet title. All causes of action were asserted against “the
foreclosing defendants.” In addition, the fourth cause of action was asserted against
BOA and the sixth cause of action was asserted against BOA and all persons claiming a
right or interest in the property. The only substantive change from the SAC to the TAC
was to drop the causes of action for negligence and fraud.
       BONYM, BOA, and Recontrust demurred to the TAC. Monge-Irizarry opposed
the demurrer. On August 7, 2013, the court sustained the demurrer without leave to
amend: “Despite being given an opportunity to do so, Plaintiff failed to allege tender and
all elements of cause of action for breach of warranty of habitability. Additionally,
Plaintiff fails to cite any authority for the proposition that by virtue of assignment Deed
of Trust loses its priority. See Hohn v. Riverside County (1964) 228 Cal.App.2d 605;
[Code of Civil Procedure section] 764.045.”
       On August 7, 2013, the court entered judgment, dismissing Monge-Irizarry’s suit
with prejudice.
       On October 7, 2013, Monge-Irizarry timely filed a notice of appeal.
                                       DISCUSSION
       We review an order sustaining a demurrer de novo, assuming “the truth of all facts
properly pleaded in the complaint or reasonably inferred from the pleading, but not mere

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contentions, deductions, or conclusions of law. [Citation.] We then determine if those
facts are sufficient, as a matter of law, to state a cause of action under any legal theory.
[Citation.] [¶] In making this determination, we also consider facts of which the trial
court properly took judicial notice. [Citation.] Indeed, a demurrer may be sustained
where judicially noticeable facts render the pleading defective [citation], and allegations
in the pleading may be disregarded if they are contrary to facts judicially noticed.” (Scott
v. JP Morgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751-752.)
I. The Effect of the Lis Pendens and Prior Judgment
       Monge-Irizarry believes that because she recorded a lis pendens when she initiated
her suit against the Harrisons in 2008, the assignment of the deed of trust to BONYM and
the appointment of Recontrust as trustee in 2010 were “subject to the [j]udgment for
[p]laintiff rendered in the underlying litigation.”
       The recording of a lis pendens provides constructive notice to subsequent title
holders of a property: “From the time of recording the notice of pendency of action, a
purchaser, encumbrancer, or other transferee of the real property described in the notice
shall be deemed to have constructive notice of the pendency of the noticed action as it
relates to the real property and only of its pendency against parties not fictitiously named.
The rights and interest of the claimant in the property, as ultimately determined in the
pending noticed action, shall relate back to the date of the recording of the notice.”
(Code Civ. Proc., § 405.24.)
A. The Effect of the Prior Judgment on the 2006 Deed of Trust
       The first issue we must address is what effect the lis pendens and prior judgment,
returning title of the property to Monge-Irizarry, had on the deed of trust that was
recorded in 2006, after the transfer to the Harrisons and before the filing of the lis
pendens. Civil Code section 1214 makes clear that the judgment returning title to
Monge-Irizarry had no effect on the deed of trust, because the deed of trust was recorded
prior to the lis pendens: “Every conveyance of real property or an estate for years
therein, other than a lease for a term not exceeding one year, is void as against any
subsequent purchaser or mortgagee of the same property, or any part thereof, in good

                                              5
faith and for a valuable consideration, whose conveyance is first duly recorded, and as
against any judgment affecting the title, unless the conveyance shall have been duly
recorded prior to the record of notice of action.” Moreover, Code of Civil Procedure
section 764.045, subdivision (a), provides that the prior judgment does not affect a claim
in the property that “was of record at the time the lis pendens was filed.”
       That the deed of trust has priority over the prior judgment is also supported by
case law: “A purchaser or encumbrancer who pays valuable consideration for his interest
in real property in good faith and who records his interest, receives his interest free and
clear of all prior unrecorded claims in the property which are unknown to him.” (Reiner
v. Danial (1989) 211 Cal.App.3d 682, 689-690; see also 5 Miller & Starr, Cal. Real
Estate (3d ed. 2009) § 11:50, pp. 11-169 to 11-178.) Wilmington acquired its interest in
the deed of trust free and clear of Monge-Irizarry’s interest in enforcing the unrecorded
terms of her sale contract with the Harrisons. When Monge-Irizarry later enforced those
unwritten terms by successfully suing the Harrisons to rescind the sale, what she obtained
was not title free and clear of all encumbrances, but rather title subject to Wilmington’s
deed of trust.
B. The Effect of the Prior Judgment on the Assignment of the Deed of Trust
       Monge-Irizarry does not appear to dispute that the title returned to her in the prior
judgment remained encumbered by the deed of trust. Instead she argues that the notice,
recorded in 2010, assigning the deed of trust to BONYM and substituting Recontrust as
trustee, was “clouded by the actual and constructive notice” these entities had of the lis
pendens and that BONYM is “a subsequent purchaser [] subject to any judgment that is
recovered in the litigation.” She argues that “[t]he defendants were all successors in
interest by title, and had both actual and constructive notice.” Monge-Irizarry seems to
be arguing that while the deed of trust was still a valid encumbrance on the property, the
lis pendens and prior judgment deprived a later assignee of the deed of trust of the right
to enforce its terms. We find no support for that proposition.

                                              6
1. Res Judicata Has No Application
       Monge-Irizarry relies primarily on Code of Civil Procedure section 1908,
subdivision (a)(2): “(a) The effect of a judgment or final order in an action or special
proceeding before a court or judge of this state, or of the United States, having
jurisdiction to pronounce the judgment or order, is as follows: [¶] . . . [¶] (2) In other
cases, the judgment or order is, in respect to the matter directly adjudged, conclusive
between the parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for the same thing under
the same title and in the same capacity, provided they have notice, actual or constructive,
of the pendency of the action or proceeding.” (Italics added.) Code of Civil Procedure
section 1908, subdivision (a)(2), is “a codification of the res judicata doctrine.”
(Federation of Hillside and Canyon Associations v. City of Los Angeles (2004) 126
Cal.App.4th 1180, 1205.) Monge-Irizarry blithely asserts application of res judicata
without calling it by that name and without serious examination of its elements.3 In her
suit against the Harrisons, the “matter directly adjudged” was her sales contract with the
Harrisons and their respective rights to title of the property. The primary issue in this
case concerns the exercise of rights under the deed of trust. Monge-Irizarry sought no
relief against the beneficiary of the Harrisons’ purchase money deed of trust in her suit
against the Harrisons. The litigation here is not “for the same thing” nor do the

       3
         Monge-Irizarry examines the elements in her reply brief. However, she does so
in a manner that verges on frivolous argument. For example, she states: “ ‘And the same
capacity’ refers to both sides of this dispute. Both sides have the capacity to purchase
real property.”
        Also in her reply brief, Monge-Irizarry cites People ex rel. State of Cal. v.
Drinkhouse (1970) 4 Cal.App.3d 931, 937, regarding concepts of privity. In Drinkhouse,
the court concluded that “[c]onsiderations of public policy of the orderliness of titles, and
of the finality of litigation, impel us to the conclusion that appellants . . . are precluded
from retrying the essential issue in the case.” (Id. at p. 939.) Drinkhouse has no
application here, where the essential issues are completely different than those litigated in
Monge-Irizarry’s suit against the Harrisons.

                                              7
defendants appear “in the same capacity” as the Harrisons. Code of Civil Procedure,
section 1908, subdivision (a)(2) has no application.
       Monge-Irizarry attempts to get around the difficulty of asserting res judicata by
mischaracterizing her suit against the Harrisons as a quiet title action.4 To the contrary,
the complaint against the Harrisons does not contain the words “quiet title” and sought
only damages, rescission of the sales contract, and return of the property. The judgment
in that case did not purport to quiet title and simply ordered “return of Title No. 06-
454169-KD of the ‘home property’ at 900 Ingerson Street in San Francisco, California,
APN (Parcel No.) Lot 54, Block, 4965 from the names of Defendants Naim Harrison and
Marie Harrison to the name of Plaintiff, Mesha Monge-Irizarry.”
2. Monge-Irizarry’s Legal Theory is Contrary to Property Law
       Monge-Irizarry’s legal theory is contrary to Wilmington’s interest in the deed of
trust that was free and clear of all prior unrecorded claims in the property, including
Monge-Irizarry’s claim against the Harrisons. “The interest of a bona fide purchaser or
encumbrancer would be of little value and unmarketable if it were subject to a prior claim
that is not enforceable against the bona fide purchaser but it becomes enforceable against
his or her transferee. Therefore, a title or lien held by a bona fide purchaser or
encumbrancer can be conveyed to a grantee or assignee free and clear of a prior unknown
interest even if the grantee or assignee does not fulfill the requirements of a bona fide
purchaser or encumbrancer.” (5 Miller & Starr, supra, § 11:58, pp. 11-189 to 11-190.)
“A bona fide purchaser can convey his entire interest or title free and clear of outstanding
but undisclosed and unrecorded equities prior in point of time to the claims of such
purchaser, even . . . to a transferee or grantee with notice of such equities.” (Jones v.
Independent Title Co. (1944) 23 Cal.2d 859, 861.)

       4
          Monge-Irizarry corrected her mischaracterization of the suit against the
Harrisons as a quiet title action in her reply brief. However, she appears not to appreciate
that this means that the prior judgment had no effect on the rights provided by the deed of
trust.

                                              8
       The prior judgment had no effect on Wilmington’s deed of trust, which was held
free and clear of all prior unrecorded claims in the property, such as those Monge-Irizarry
asserted against the Harrisons. When the deed of trust was later assigned to BONYM,
BONYM received the deed of trust free and clear of Monge-Irizarry’s claims, even
though it had constructive notice of Monge-Irizarry’s action against the Harrisons.
Accordingly, the lis pendens and prior judgment had no effect on the defendants’ ability
to exercise their rights provided by the deed of trust.
II. The Causes of Action
       We examine each of Monge-Irizarry’s causes of action and conclude that the facts
alleged are insufficient to support the stated causes of action. Nor do the facts alleged
support a cause of action under any legal theory.
A. Causes of Action Related to the Foreclosure Sale and to Quiet Title
       The first three causes of action were to set aside the trustee’s sale, to void or
cancel the trustee’s deed upon sale, and for wrongful foreclosure. The sixth cause of
action was to quiet title. These causes of action are all interrelated and depend on
Monge-Irizarry’s legal theory concerning the effect of the lis pendens and prior
judgment, which we have rejected. Monge-Irizarry alleged two other legal theories
within these causes of action, which we also reject.
       The TAC contains the allegation that “[t]he Foreclosing Defendants never had the
legal authority to foreclose . . . because the Foreclosing Defendants’ interest was never
acknowledged and recorded in violation of Civil Code [section] 2932.5.”
       Civil Code section 2932.5 provides: “Where a power to sell real property is given
to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment
of money, the power is part of the security and vests in any person who by assignment
becomes entitled to payment of the money secured by the instrument. The power of sale
may be exercised by the assignee if the assignment is duly acknowledged and recorded.”
This Civil Code section is in Division 3 (“Obligations”), Part 4 (“Obligations Arising
from Particular Transactions”, Title 14 (“Lien”), Chapter 2 (“Mortgage”). It does not

                                              9
apply to deeds of trust. (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th
1481, 1497-1498.)
       The TAC also contains the allegation that “the defendant has not yet shown that it
holds all the legal documents required in order to conduct a foreclosure. Nor was
reasonable notice given to Plaintiff by Defendants.” “[T]he foreclosing beneficiary-
creditor need not produce the promissory note or otherwise prove it holds the note to
nonjudicially [foreclose] on a real property security.” (Jenkins v. JP Morgan Chase
Bank, N.A. (2013) 216 Cal.App.4th 497, 512.) Monge-Irizarry also alleges no facts that
would have entitled her to notice of the trustee’s sale, such as the recording of a request
for such notice, pursuant to Civil Code section 2924b, subdivision (a).5
       We conclude, as did the trial court, that Monge-Irizarry’s TAC fails to allege facts
supporting causes of action 1, 2, 3 and 6.
B. Fourth Cause of Action: Breach of Warranty of Habitability
       As an alternative to her other causes of action, Monge-Irizarry alleged that if
BONYM is the lawful owner of the property, then she is a tenant and BONYM has
breached the implied warranty of habitability by failing to repair “open and notorious
defects at the subject premises . . . .”
       The “implied warranty of habitability does not require that a landlord ensure that
leased premises are in perfect, aesthetically pleasing condition, but it does mean that
‘bare living requirements’ will be maintained.” (Green v. Superior Court (1974) 10
Cal.3d 616, 637.)
       Whether or not Monge-Irizarry and any of the defendants are in a landlord-tenant
relationship, the TAC fails to specifically allege any defect affecting the habitability of
the premises, making only the conclusory allegation that “[m]aterial defective conditions
affect the habitability of the premises.”

       5
          We note that Monge-Irizarry, on the facts alleged, is not among those to whom
notice is mandated by Code of Civil Procedure, section 2924b, subdivision (c).

                                             10
C. Fifth Cause of Action: Unjust Enrichment
       “ ‘[T]here is no cause of action in California for unjust enrichment.’ [Citations.]
Unjust enrichment is synonymous with restitution.” (Durell v. Sharp Healthcare (2010)
183 Cal.App.4th 1350, 1370.) Under this “cause of action,” Monge-Irizarry alleges no
new facts that would support any other cause of action. No facts tend to show that the
defendants were enriched at Monge-Irizarry’s expense. Monge-Irizarry lost her interest
in the property as a result of the Harrisons’ default on their purchase money loan and
their breach of the unwritten terms of their contract with her, not as a result of the
defendants’ actions.
D. The Facts do not Support a Cause of Action Under Any Legal Theory
       As we have noted, we must determine if the facts alleged in the TAC are
sufficient, as a matter of law, to state a cause of action under any legal theory. Monge-
Irizarry does not suggest any legal theories, other than those we have already rejected,
such that the alleged facts would support a cause of action, nor do we find any.
III. Leave to Amend
       Monge-Irizarry contends that “[l]eave to amend should not have been denied, if
there was any shortcoming.”
       We review the denial of leave to amend for abuse of discretion, which is
demonstrated “if there is a reasonable possibility that the pleading can be cured by
amendment.” (Lee v. Los Angeles County Metropolitan Transportation Authority (2003)
107 Cal.App.4th 848, 854.) It is “appellant’s duty to spell out in [her] brief the specific
proposed amendments on appeal.” (People ex rel. Brown v. Powerex Corp. (2007) 153
Cal.App.4th 93, 112.) Here, Monge-Irizarry proposes no specific amendments in her
brief. Monge-Irizarry has already amended her brief three times and we find no
reasonable possibility that a fourth amendment could cure the defects inherent in any of
her causes of action.

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                                    DISPOSITION
      The judgment of the trial court is affirmed.

                                                _________________________
                                                Brick, J.*

We concur:

_________________________
Kline, P.J.

_________________________
Richman, J.

      * Judge of the Alameda County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

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