Court Opinion

ID: 3191874
Source: CourtListenerOpinion
Date Created: 2016-04-06 19:02:02.640266+00
Date Added: 2024-06-11T14:46:58.563353
License: Public Domain

Filed 4/6/16 Jackson v. America’s Servicing Co. CA2/3
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.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

                                     SECOND APPELLATE DISTRICT

                                                 DIVISION THREE

GWENDOLYN JACKSON,                                                         B261409

         Plaintiff and Appellant,                                          (Los Angeles County
                                                                           Super. Ct. No. BC547723)
         v.

AMERICA’S SERVICING
COMPANY et al.,

         Defendants and Respondents.

         APPEAL from judgments of the Superior Court of Los Angeles County,
Mel Red Recana, Judge. Affirmed in part, reversed in part, and remanded.
         Gwendolyn Jackson, in pro. per., for Plaintiff and Appellant.
         Severson & Werson, Jan T. Chilton, Bernard J. Kornberg and Kerry W. Franich
for Defendants and Respondents, America’s Servicing Company, a division of
Wells Fargo Bank, N.A., and Mortgage Electronic Registrations Systems, Inc.;
Peter L. Weinberger & Associates and Peter Weinberger for Defendant and Respondent,
Lian Feng Investment LLC.

                            _______________________________________
                                    INTRODUCTION
       Plaintiff Gwendolyn Jackson lost her home in a nonjudicial foreclosure sale. She
subsequently filed this action against parties involved in the foreclosure including, as is
pertinent here, America’s Servicing Company, a division of Wells Fargo Bank, N.A.
(ASC), Mortgage Electronic Registrations Systems, Inc. (MERS) and the purchaser of
the property, Lian Feng Investment LLC (Lian Feng). Plaintiff, who represented herself
below and does so in this appeal, asserted ten causes of action in her complaint, all
effectively seeking to set aside the foreclosure sale and return title of the property to her.
       Lian Feng, ASC and MERS demurred to plaintiff’s original complaint and the
trial court sustained their demurrers without leave to amend as to all causes of action.
On appeal, plaintiff challenges the court’s ruling with respect to her claims for fraud,
negligence and wrongful foreclosure. We conclude the court properly sustained the
demurrers without leave to amend as to the fraud and wrongful foreclosure claims, but
should have allowed plaintiff the opportunity to amend her negligence claim.
Accordingly, we reverse the judgment in favor of ASC as to plaintiff’s cause of action
for negligence. In all other respects, we affirm.
                   FACTS AND PROCEDURAL BACKGROUND
       In January 2006, plaintiff obtained a home loan in the amount of $382,000.
Plaintiff executed a promissory note and a deed of trust in favor of the lender, BNC
Mortgage. The deed of trust named MERS as a beneficiary under the deed of trust and
stated MERS would act “solely as a nominee for Lender and Lender’s successors and
assigns.”1
       Plaintiff defaulted on the loan. In early February 2008, she received a notice of
default from NDEX West, LLC, as an agent for MERS. Jackson contacted the
mortgage loan servicer, ASC, repeatedly to ask for a loan modification. ASC offered

1
       On our own motion, and in the absence of any objection by the respondents, we
take judicial notice of the deed of trust attached as an exhibit to the appellant’s opening
brief. (Evid. Code, §§ 452, subd. (h), 459, subd. (a).)

                                              2
plaintiff one loan modification, but she rejected it as “unreasonable.” ASC rejected
approximately ten other modification requests over the course of the next six years.
       In January 2014, Lian Feng purchased the property at a nonjudicial foreclosure
sale. At that time, ASC had not yet responded to plaintiff’s final request for a loan
modification. Plaintiff received ASC’s letter denying her loan modification request
a few days after the foreclosure sale.
       In February 2014, plaintiff filed a petition in federal court seeking bankruptcy
                                                                 2
protection under chapter 7 of United States Bankruptcy Code. She listed the property
on Schedule A (real property) and an unspecified secured claim in favor of ASC on
Schedule D (creditors holding secured claims). Otherwise, plaintiff listed no significant
assets and, in particular, she did not list her claims against Lian Feng, MERS or ASC as
assets on the bankruptcy schedules. In March 2014, plaintiff initiated an adversary
proceeding in the bankruptcy court naming ASC and MERS, among others. The
complaint stated the same ten causes of action asserted in the present case and similarly
sought to set aside the foreclosure sale. The bankruptcy court dismissed the adversary
proceeding because plaintiff lacked standing to assert the claims. The court explained
that all of plaintiff’s assets, including her litigation claims, belonged to the bankruptcy
estate and therefore could only be prosecuted by the trustee on behalf of the estate. The
court discharged plaintiff from bankruptcy on June 16, 2014.
       On June 5, 2014, plaintiff filed the complaint in the present case, naming as
defendants ASC, MERS and Lian Feng, among others. Her complaint identifies the
following ten causes of action: fraud; cancellation of a voidable contract; negligence;
violation of Business and Professions Code section 17200; action to set aside trustee’s
sale; action to void or cancel trustee’s deed upon sale; wrongful foreclosure; breach of
the implied covenant of good faith and fair dealing; action to quite title; and injunctive
2
       The trial court properly took judicial notice of plaintiff’s bankruptcy petition, the
PACER docket relating to the bankruptcy proceeding, and the complaint filed in the
adversary proceeding in bankruptcy court. We do so as well. (Evid. Code, § 459,
subd. (a).)

                                              3
relief. In substance, plaintiff’s causes of action rest on two primary theories of liability.
First, plaintiff contends the foreclosure sale is void due to the defendants’ purported
lack of authority to foreclose. Second, plaintiff contends the loan servicer, ASC, should
have modified her loan and suspended the foreclosure.
       ASC and MERS demurred to all causes of action on three alternative grounds.
First, they contended plaintiff was barred from asserting all claims stated in the
complaint because those claims still belonged to the bankruptcy estate and only the
trustee could assert the claims. Second, ASC and MERS argued plaintiff should be
barred by principles of judicial estoppel from asserting her claims against them because
plaintiff did not list those claims as assets in the schedules attached to her bankruptcy
petition. Third, ASC and MERS asserted each of plaintiff’s causes of action failed to
state a claim. Lian Feng demurred separately, joining in the arguments asserted by
MERS and ASC, and also asserting plaintiff’s stipulation to judgment in favor of
Lian Feng in a prior unlawful detainer action conclusively established title to the
property in favor of Lian Feng.
       The trial court sustained the demurrers without leave to amend and plaintiff
appealed from the resulting order. The court subsequently entered judgments of
dismissal. We construe plaintiff’s notice of appeal as a premature appeal from the
judgments of dismissal. (See Cal. Rules of Court, rule 8.104(d)(2); Los Altos
Golf & Country Club v. County of Santa Clara (2008) 165 Cal.App.4th 198, 202-203
[construing appeal from order sustaining demurrer as appeal from subsequently entered
judgment of dismissal].)
                                     CONTENTIONS
       Plaintiff asserts the trial court erred by sustaining demurrers without leave to
amend as to her causes of action for wrongful foreclosure, fraud and negligence.
                                      DISCUSSION
       A.     Standard of Review
       “When reviewing a judgment dismissing a complaint after the granting of
a demurrer without leave to amend, courts must assume the truth of the complaint’s

                                              4
properly pleaded or implied factual allegations. (Blank v. Kirwan (1985) 39 Cal.3d 311,
318.) Courts must also consider judicially noticed matters. (Ibid.) In addition, we give
the complaint a reasonable interpretation, and read it in context. (Ibid.) If the trial court
has sustained the demurer, we determine whether the complaint states facts sufficient to
state a cause of action. If the court sustained the demurrer without leave to amend, as
here, we must decide whether there is a reasonable possibility the plaintiff could cure
the defect with an amendment. (Ibid.) If we find that an amendment could cure the
defect, we conclude that the trial court abused its discretion and we reverse; if not, no
abuse of discretion has occurred. (Ibid.) The plaintiff has the burden of proving that an
amendment would cure the defect. (Ibid.)” (Schifando v. City of Los Angeles (2003)
31 Cal.4th 1074, 1081 (Schifando); Siliga v. Mortgage Electronic Registration Systems,
Inc. (2013) 219 Cal.App.4th 75, 81 (Siliga), disapproved on another point by Yvanova v.
New Century Mortgage Corp. (2016) 62 Cal.4th 919, 939-941 (Yvanova).)
       In general, leave to amend an original complaint should be liberally granted.
However, “[w]here there is a request for leave to amend but it is ‘wholly insufficient to
suggest whether or how the plaintiff could amend[ ] “the question as to whether or not
[the trial] court abused its discretion” in denying leave to amend remains open on
appeal. (Code Civ. Proc., § 472c.) But it is the trial court’s discretion that is at issue;
the reviewing court may only determine, as a matter of law, whether the trial court’s
discretion was abused. In our view an abuse of discretion could be found, absent an
effective request for leave to amend in specified ways, only if a potentially effective
amendment were both apparent and consistent with the plaintiff’s theory of the case.’
[Citation.]” (Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th
1495, 1501 (Herrera), disapproved on another point by Yvanova, supra, 62 Cal.4th at
pp. 939-941.) Accordingly, we will affirm an order sustaining a demurrer without leave
to amend where the plaintiff does “not state in the trial court new facts demonstrating
[she] could successfully amend the complaint and a potentially effective amendment is
not apparent on appeal.” (Herrera, supra, at p. 1501.)

                                              5
       B.     Effect of Plaintiff’s Bankruptcy
              1.     Standing
       The court concluded plaintiff lacks standing to assert the claims stated in her
complaint. Although it is unclear to what extent the court premised its decision on lack
of standing, we address the issue because our analysis will impact any future
proceedings in this case.
       As the court correctly noted, “after a person files for bankruptcy protection, any
causes of action previously possessed by that person become the property of the
bankrupt estate. [Citations.]” (Cloud v. Northrop Grumman Corp. (1998)
67 Cal.App.4th 995, 1001 (Cloud).) As a result, the right to prosecute those causes of
action rests with the bankruptcy trustee; the debtor loses the right to sue on and settle
those litigation claims. (Ibid.) Here, all of the causes of action included in plaintiff’s
complaint are predicated on events which occurred before she filed her bankruptcy
petition. Accordingly, all the causes of action became part of the bankruptcy estate
when plaintiff filed for bankruptcy protection.
       However, “[p]roperty that is neither abandoned nor administered by the
bankruptcy trustee remains property of the bankruptcy estate.” (Cloud, supra,
67 Cal.App.4th at p. 1003.) Where a debtor fails to list a cause of action on the asset
schedules filed with the bankruptcy petition, that cause of action remains part of the
bankruptcy estate even after the debtor is discharged. (Ibid.) Here, plaintiff failed to
disclose the causes of action asserted in her present complaint on the schedules she filed
with her bankruptcy petition. Accordingly, the court correctly concluded that all
plaintiff’s present causes of action remain a part of her bankruptcy estate and she does
not have standing to assert them in the present action. We disagree, however, with the
court’s apparent conclusion that plaintiff’s current lack of standing is fatal to her
complaint. “The California Supreme Court has held that if the facts of the cause of
action against the defendant would not be ‘wholly different’ after amendment,
a complaint filed by a party without standing may be amended to substitute in the real
party in interest.” (Cloud, supra, 67 Cal.App.4th at p. 1005.) Accordingly, our courts

                                              6
have held where, as here, a cause of action asserted by a plaintiff remains in
a bankruptcy estate, the complaint may be amended to substitute the bankruptcy trustee
as plaintiff. (See id. at pp. 1004-1005 [“Although the original complaint does not state
a cause of action in the plaintiff, the amended complaint by the right party restates the
identical cause of action, and amendment is freely allowed”]; Bostanian v. Liberty
Savings Bank (1997) 52 Cal.App.4th 1075, 1081 (Bostanian) [“The trustee controls the
bankruptcy estate, therefore, she or he is the real party in interest with standing to
sue”].) It is therefore possible for plaintiff to amend her complaint to substitute the
bankruptcy trustee as plaintiff and cure the standing defect.
       Alternatively, the trustee could abandon the claims which would also cure the
standing defect. “[A] Chapter 7 debtor may not prosecute on his or her own a cause of
action belonging to the bankruptcy estate unless the claim has been abandoned by the
trustee.” (See Bostanian, supra, 52 Cal.App.4th at p. 1081.) “Property of a bankruptcy
estate can be abandoned by three methods: (1) after notice and hearing, the trustee may
unilaterally abandon property that is ‘burdensome . . . or . . . of inconsequential value’
(11 U.S.C. § 554(a)); (2) after notice and hearing, the court may order the trustee to
abandon such property (11 U.S.C. § 554(b)); (3) any property which has been
scheduled, but which has not been administered by the trustee at the time of closing of
a case, is abandoned by operation of law. (11 U.S.C. § 554(c).)” (Cloud, supra,
67 Cal.App.4th at p. 1003.)
       In short, the court erred to the extent it concluded plaintiff’s current lack of
standing is fatal to her complaint. “[L]leave to amend should have been granted either
to substitute in the real party in interest (the bankruptcy trustee) or to obtain the trustee’s
abandonment of the claim.” (Cloud, supra, 67 Cal.App.4th at p. 1000.)
              2.       Judicial Estoppel
       The court also concluded the doctrine of judicial estoppel bars plaintiff’s lawsuit
because she failed to disclose her causes of action on her bankruptcy schedules. The
court was incorrect.

                                              7
       Judicial estoppel protects the judicial process, promote fairness in litigation, and
shield parties from improper strategies adopted by opponents. (Gottlieb v. Kest (2006)
141 Cal.App.4th 110, 131-132 (Gottlieb).) The doctrine prevents a party from asserting
a position in litigation that is inconsistent with a prior position the party advocated with
success. (Id. at pp. 130–131.) “The doctrine applies when ‘(1) the same party has taken
two positions; (2) the positions were taken in judicial or quasi-judicial administrative
proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal
adopted the position or accepted it as true); (4) the two positions are totally inconsistent;
and (5) the first position was not taken as a result of ignorance, fraud, or mistake.’
[Citations.]” (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986-987.) “Because of its harsh
consequences, the doctrine should be applied with caution and limited to egregious
circumstances.” (Gottlieb, supra, 141 Cal.App.4th at p. 132.)
       Judicial estoppel is commonly applied following bankruptcy. Where a debtor in
bankruptcy seeks to reorganize and fails to disclose a potential lawsuit in the
bankruptcy proceeding, principles of equity will bar the debtor from bringing the
lawsuit after the debtor is discharged from bankruptcy. In the seminal federal case on
point, the Third Circuit Court of Appeals observed that a party seeking benefits in
a Chapter 11 bankruptcy proceeding must “satisfy a companion duty to schedule, for the
benefit of creditors, all his interests and property rights.” (Oneida Motor Freight, Inc. v.
United Jersey Bank (3d. Cir. 1988) 848 F.2d 414, 416.) California courts applying the
Oneida Freight rule have held that principles of judicial estoppel will bar the assertion
of a litigation claim in existence at the time of bankruptcy but which was undisclosed
during bankruptcy reorganization proceedings. (See, e.g., Conrad v. Bank of America
(1996) 45 Cal.App.4th 133, 160 (Conrad) [“[W]e find the rule expressed in Oneida
Motor Freight and its progeny to be a bar to plaintiffs’ claim for fraud since they failed
to list or otherwise identify the claim in their bankruptcy proceedings up to and through
the time the bankruptcy court issued orders confirming their reorganization plans”];
Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1610
[plaintiff barred from asserting lender liability claim not disclosed during Chapter 13

                                              8
bankruptcy reorganization proceedings].) Consistent with these principles, our courts
have recognized the importance of protecting the rights of creditors in bankruptcy and
have applied judicial estoppel with that goal in mind. The application of judicial
estoppel in the context of bankruptcy reorganization not only preserves the integrity of
the bankruptcy process, but also protects the rights of creditors, who may rely on the
value of assets listed in the debtor’s schedules during the reorganization process. (See,
e.g., Conrad, supra, at p. 152 [emphasizing debtor should be estopped to assert claims
undisclosed in reorganization because “reliance by creditors is the whole point of the
disclosures required in a reorganization proceeding, and disclosure has been described
as the central concept in a reorganization procedure. [fn. omitted] ‘The importance of
full disclosure is underlaid by the reliance placed upon the disclosure statement by the
creditors and the court. . . . ’ [Citation.]”]
       By contrast, California courts generally have not applied the principles of judicial
estoppel following Chapter 7 bankruptcy proceedings. As discussed ante, any legal
claim that is not scheduled in a Chapter 7 proceeding will not revert to the debtor on
discharge; it remains the property of the bankruptcy estate. Thus, our courts have held
“in the Chapter 7 context, there is generally little need to ponder the possible application
of judicial estoppel in a case in which the debtor has failed to schedule a claim. Such
a debtor will lack standing to sue on that claim, and a circumstance in which such
a party without standing needs to be judicially estopped is difficult to conceive.”
(Cloud, supra, 67 Cal.App.4th at p. 1020-1021.) Further, because a debtor is entitled to
leave to amend to attempt to cure her lack of standing to sue on claims undisclosed
during the bankruptcy, the bankruptcy trustee will have the opportunity to substitute in
or abandon the claim in any event. (Ibid.) Stated differently, our courts recognize that
a debtor in a Chapter 7 bankruptcy gains no unfair advantage by failing to disclose
a litigation claim because the undisclosed claim remains part of the bankruptcy estate.
California courts further acknowledge that when the debtor attempts to address the issue
of standing, “the bankruptcy court can take appropriate action to promote bankruptcy
goals and protect the bankruptcy court’s process.” (Ibid.)

                                                 9
       It appears the court was unaware of California law regarding judicial estoppel in
the Chapter 7 bankruptcy context, relying instead on Hamilton v. State Farm Fire &
Cas. Co. (9th Cir. 2001) 270 F.3d 778, a federal case which applied principles of
judicial estoppel in the Chapter 7 context. We follow governing state law and conclude
the court abused its discretion by finding plaintiff is barred from asserting her claims on
the basis of judicial estoppel.
       C.     Background Legal Principles Regarding Nonjudicial Foreclosure
       Our Supreme Court recently summarized the law that informs our decision in this
case. “A deed of trust to real property acting as security for a loan typically has three
parties: the trustor (borrower), the beneficiary (lender), and the trustee. ‘The trustee
holds a power of sale. If the debtor defaults on the loan, the beneficiary may demand
that the trustee conduct a nonjudicial foreclosure sale.’ [Citation.] The nonjudicial
foreclosure system is designed to provide the lender-beneficiary with an inexpensive
and efficient remedy against a defaulting borrower, while protecting the borrower from
wrongful loss of the property and ensuring that a properly conducted sale is final
between the parties and conclusive as to a bona fide purchaser. [Citation.]” (Yvanova,
supra, 62 Cal.4th at p. 926.)
       “The trustee starts the nonjudicial foreclosure process by recording a notice of
default and election to sell. (Civ. Code, § 2924, subd. (a)(1).) After a three-month
waiting period, and at least 20 days before the scheduled sale, the trustee may publish,
post, and record a notice of sale. ([Civ. Code,] §§ 2924, subd. (a)(2), 2924f, subd. (b).)
If the sale is not postponed and the borrower does not exercise his or her rights of
reinstatement or redemption, the property is sold at auction to the highest bidder.
([Civ. Code,] § 2924g, subd. (a); [Citations.].)” (Yvanova, supra, 92 Cal.4th at p. 927,
fn. 2 omitted.)
       “The trustee of a deed of trust is not a true trustee with fiduciary obligations, but
acts merely as an agent for the borrower-trustor and lender-beneficiary. [Citations.]
While it is the trustee who formally initiates the nonjudicial foreclosure, by recording
first a notice of default and then a notice of sale, the trustee may take these steps only at

                                             10
the direction of the person or entity that currently holds the note and the beneficial
interest under the deed of trust—the original beneficiary or its assignee—or that entity’s
agent. (§ 2924, subd. (a)(1) [notice of default may be filed for record only by ‘[t]he
trustee, mortgagee, or beneficiary’]; Kachlon v. Markowitz (2008) 168 Cal.App.4th 316,
334 [when borrower defaults on the debt, ‘the beneficiary may declare a default and
make a demand on the trustee to commence foreclosure’]; Santens v. Los Angeles
Finance Co. (1949) 91 Cal.App.2d 197, 202 [only a person entitled to enforce the note
can foreclose on the deed of trust].)” (Yvanova, supra, 62 Cal.4th at p. 927.)
       D.      Wrongful Foreclosure
               1.     Plaintiff’s claims
       Plaintiff’s primary goal in this suit is to set aside the foreclosure sale and recover
title to her home. “After a nonjudicial foreclosure sale has been completed, the
traditional method by which the sale is challenged is a suit in equity to set aside the
trustee’s sale. [Citation.] Generally, a challenge to the validity of a trustee’s sale is an
attempt to have the sale set aside and to have the title restored. [Citation.]” (Lona v.
Citibank, N.A. (2011) 202 Cal.App.4th 89, 103 (Lona).) In addition to the cause of
action entitled “wrongful foreclosure,” plaintiff also asserts causes of action entitled
“cancellation of a voidable contract,” “set aside trustee’s sale,” and “void or cancel
trustee’s deed upon sale.” As each of these causes of action effectively asserts a claim
for wrongful foreclosure, our analysis applies to all four causes of action.
       “[T]he elements of an equitable cause of action to set aside a foreclosure sale are:
(1) the trustee . . . caused an illegal, fraudulent, or willfully oppressive sale of real
property pursuant to a power of sale in a . . . deed of trust; (2) the party attacking the
sale . . . was prejudiced or harmed; and (3) in cases where the trustor . . . challenges the
sale, the trustor . . . tendered the amount of the secured indebtedness or was excused
from tendering.” (Lona, supra, 202 Cal.App.4th at p. 104.) As is pertinent here,
a trustee’s sale may be set aside where the trustee did not have the power to foreclose,
or where the deed of trust is void.

                                              11
       Plaintiff contends the foreclosure sale is void because (1) MERS lacked the
authority to transfer the deed of trust to Lian Feng, (2) MERS could not transfer title of
the property to Lian Feng because it did not own the promissory note, (3) MERS lacked
the authority to appoint NDEX West as trustee to conduct the sale, (4) NDEX West was
unauthorized to record the notice of default because it was not an appointed trustee at
that time, and (5) MERS failed to record the deed of trust. We address these arguments
in turn.
              2.     As nominee for the lender, MERS had the authority to
                     transfer the deed of trust

       Plaintiff contends the foreclosure sale is void because MERS lacked the authority
to transfer the deed of trust to Lian Feng. Specifically, plaintiff argues “[t]he
assignment was improper because MERS had no beneficial interest it could transfer.
MERS is not and has never been a beneficiary on any loan.” This theory is fatally
flawed.
       The role MERS plays in the lending marketplace has been explained as follows:
“MERS is a private corporation that administers a national registry of real estate debt
interest transactions. Members of the MERS System assign limited interests in the real
property to MERS, which is listed as a grantee in the official records of local
governments, but the members retain the promissory notes and mortgage servicing
rights. The notes may thereafter be transferred among members without requiring
recordation in the public records. [Citation.] [¶] Ordinarily, the owner of a promissory
note secured by a deed of trust is designated as the beneficiary of the deed of trust.
[Citation.] Under the MERS System, however, MERS is designated as the beneficiary
in deeds of trust, acting as ‘nominee’ for the lender, and granted the authority to
exercise legal rights of the lender.” (Fontenot v. Wells Fargo Bank, N.A. (2011)
198 Cal.App.4th 256, 267 (Fontenot), disapproved on another point by Yvanova, supra,
62 Cal.4th at pp. 939-941.) MERS acted in this capacity in the present case: The
2006 deed of trust states MERS is “a separate corporation that is acting solely as

                                             12
nominee for Lender and Lender’s successors and assigns. MERS is the beneficiary
under this Security Instrument.”
       The practical effect of the MERS system is significant. “California courts have
held that a trustor who agreed under the terms of the deed of trust that MERS, as the
lender’s nominee, has the authority to exercise all of the rights and interests of the
lender, including the right to foreclose, is precluded from maintaining a cause of action
based on the allegation that MERS has no authority to exercise those rights.” (Siliga,
supra, 219 Cal.App.4th at p. 83.) As is pertinent here, our courts have held MERS has
the authority to assign a deed of trust in connection with a nonjudicial foreclosure. In
Herrera, supra, 205 Cal.App.4th 1495, the deed of trust at issue contained the following
language: “ ‘Borrower [(plaintiffs)] understands and agrees that MERS holds only legal
title to the interests granted by Borrower in this Security Instrument, but, if necessary to
comply with law or custom, MERS (as nominee for Lender and Lender’s successors and
assigns) has the right: to exercise any or all of those interests, including, but not limited
to, the right to foreclose and sell the Property; and to take any action required of Lender
including, but not limited to, releasing and canceling this Security Instrument.” (Id. at
p. 1504.) The court held that contractual language authorized MERS to assign the deed
of trust and foreclose on the plaintiffs’ property. (Ibid. [“MERS had the right to
exercise all interests and rights held by the lender and its successors and assigns,
including the right to assign the [deed of trust] and to foreclose on plaintiffs’
property”].) The deed of trust at issue in this case contains identical language and
therefore requires the same result. (See also Fontenot, supra, 198 Cal.App.4th at p. 271
[“the allegation that MERS was merely a nominee is insufficient to demonstrate that
MERS lacked authority to make a valid assignment of the note on behalf of the original
lender”].)
              3.     MERS, as nominee for the lender, had the authority to
                     transfer the promissory note

       Plaintiff also asserts “none of the Foreclosing Defendants had the standing to sell
Plaintiff’s property because none of the defendants were holders of both the Deed of

                                             13
Trust and the Promissory Note.” Further, plaintiff contends “[a]ny attempt to transfer
the trust deed without ownership of the note is void under California law.” In other
words, plaintiff argues that in order for MERS to validly assign the deed of trust, MERS
had to own the promissory note as well. Again, plaintiff’s theory is fatally flawed.
       “Ordinarily, the owner of a promissory note secured by a deed of trust is
designated as the beneficiary of the deed of trust. [Citation.] Under the MERS System,
however, MERS is designated as the beneficiary in deeds of trust, acting as ‘nominee’
for the lender, and granted the authority to exercise legal rights of the lender.”
(Fontenot, supra, 198 Cal.App.4th at p. 267.) In Fontenot, as here, plaintiff contended
MERS lacked the authority to foreclose on the property because, as the mere nominee
of the lender, MERS had no interest in the promissory note. Sustaining the demurrer,
the court of appeal reasoned that “[c]ontrary to plaintiff’s claim, the lack of a possessory
interest in the note did not necessarily prevent MERS from having the authority to
assign the note. While it is true MERS had no power in its own right to assign the note,
since it had no interest in the note to assign, MERS did not purport to act for its own
interests in assigning the note. Rather, the assignment of deed of trust states that MERS
was acting as nominee for the lender, which did possess an assignable interest.” (Id. at
p. 270.) In other words, “the allegation that MERS was merely a nominee is insufficient
to demonstrate that MERS lacked authority to make a valid assignment of the note on
behalf of the original lender.” (Id. at p. 271, footnote omitted.)
              4.     MERS, as nominee for the lender, had the authority to
                     appoint a successor trustee

       Plaintiff also argues the foreclosure sale is void because it was conducted by an
invalidly appointed trustee, NDEX West. Plaintiff asserts that “[s]ince only
a beneficiary can appoint a trustee, and MERS was never the actual beneficiary or
lender, the substitution of trustee is null and void.” This theory is also fatally flawed.
       As explained, ante, MERS acts as a nominee for the lender and as such has the
authority to exercise all rights held by the lender. Here, the 2006 deed of trust provides:
“Lender, at its option, may from time to time appoint a successor trustee to any Trustee

                                             14
appointed hereunder by an instrument executed and acknowledged by Lender and
recorded in the office of the Recorder of the county in which the Property is located.”
Accordingly, under the express terms of the deed of trust, MERS (as nominee for the
lender) had authority to appoint NDEX West as a trustee.
              5.     NDEX West, as an agent of MERS, had the authority to
                     record the notice of default

       Plaintiff also alleges the notice of default was ineffective—and the entire
foreclosure void—because NDEX West recorded the notice of default and election to
sell on February 20, 2008 but was not appointed as trustee until July 23, 2008.
Plaintiff’s argument is without merit. A notice of default may be recorded by a “trustee,
mortgagee, or beneficiary, or any of their authorized agents.” (Civ. Code, § 2924,
subd. (a)(1); Siliga, supra, 219 Cal.App.4th at p. 85.) Here, the notice of default states
NDEX West was acting as an agent for the beneficiary, not as a trustee. Our courts
have approved the precise sequences of events, i.e., where an eventual trustee initiates
a foreclosure as an agent of the lender, prior to appointment as the trustee. (Ibid.,
[holding trustee authorized to record notice of default as beneficiary’s agent before
recording substitution of trustee].)
              6.     MERS was not required to record the deed of trust
       In her fifth cause of action, plaintiff alleges “the Foreclosing Defendants never
had the legal authority to foreclose ie, [sic] the authority to exercise the power of sale as
an assignee of the note and Deed of Trust, because the foreclosing Defendants interest
[sic] was never acknowledged or properly recorded in violation of Civil Code 2932.5
resulting in the non-judicial foreclosure sale being void ab initio.”
       On its face, Civil Code section 2932.5 does require an assignment to be validly
recorded: “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.” However,

                                             15
section 2932.5 has no application where, as here, the power of sale is conferred in
a deed of trust. “ ‘[S]ection 2932.5 is inapplicable to deeds of trust. [Citation.]
‘Section 2932.5 requires the recorded assignment of a mortgage so that a prospective
purchaser knows that the mortgagee has the authority to exercise the power of sale.
This is not necessary when a deed of trust is involved, as the trustee conducts the sale
and transfers title.’ [Citation.] In other words, ‘because a deed of trust does not convey
a power of sale directly to the beneficiary-creditor, it is immaterial whether an
assignment of a promissory note was properly acknowledged and recorded when a deed
of trust is used to secure a debt.’ [Citation.]” (Orcilla v. Big Sur (2016)
244 Cal.App.4th 982, 1003.)
       Because all of plaintiff’s theories of wrongful foreclosure fail as a matter of law,
and we see no reasonable possibility plaintiff could amend her complaint to state
a viable wrongful foreclosure claim, we conclude the trial court did not err in sustaining
the demurrer without leave to amend as to causes of action 2 (cancellation of voidable
contract), 5 (set aside trustee’s sale), 6 (cancel trustee’s deed upon sale) and 7 (wrongful
foreclosure).
       E.       Fraud
       Plaintiff’s complaint includes a fraud claim against ASC. The elements of fraud
are: (1) a misrepresentation (false representation, concealment, or nondisclosure);
(2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance;
(4) justifiable reliance; and (5) resulting damage. (Lazar v. Superior Court (1996)
12 Cal.4th 631, 638.) “[F]raud must be pled specifically; general and conclusory
allegations do not suffice.” (Id. at p. 645.) “The particularity requirement
‘ “necessitates pleading facts which ‘show how, when, where, to whom, and by what
means the representations were tendered.’ ” ’ ” (Hamilton v. Greenwich Investors
XXVI, LLC, supra, 195 Cal.App.4th at p. 1614.)
       Plaintiff alleges “ASC mislead [sic] her to believe they were ‘really’ reviewing
her request for a loan modification days before the [foreclosure] sale. Their intent at all
times was to foreclose on the property.” Further, plaintiff alleges she “reasonably relied

                                              16
on Defendant ASC’s promise to evaluate her information for a loan modification. She
thought they would be fair.” As a result, plaintiff claims, she “did not seek alternative
                                                               3
financial or legal remedies to rescue the property . . . . ”
       These conclusory allegations are plainly insufficient to state a claim for fraud. In
a case against a corporation, a plaintiff asserting a fraud claim must allege the names of
the persons who made the allegedly fraudulent representations, their authority to speak,
to whom they spoke, what they said or wrote, and when it was said or written. (See
Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 764.) Plaintiff’s
complaint does not include any allegations to that effect. Further, the complaint does
not reveal how plaintiff was deceived. She does not allege, for example, that anyone at
ASC promised to modify her loan before the foreclosure sale but then denied her
request after the sale. Nor does plaintiff allege anyone at ASC told her the sale would
be delayed pending their decision on her loan modification request.
       The next question is whether the trial court abused its discretion in sustaining the
demurrer to the fraud cause of action without leave to amend. Plaintiff did not explain
below, or in her opening brief, how she could amend her fraud claim to state a valid
claim. Further, based upon the allegations in the complaint, we see no reasonable
possibility plaintiff could state a viable fraud claim in this case.
       A plaintiff establishes reliance in a fraud case “when the misrepresentation or
nondisclosure was an immediate cause of the plaintiff’s conduct which altered his or her
legal relations, and when without such misrepresentation or nondisclosure he or she
would not, in all reasonable probability, have entered into the contract or other
transaction. [Citations.]” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226,
1239 (Alliance); see also CACI No. 1907 (2016 ed.) [reliance shown if
misrepresentation, concealment or false promise “substantially influenced” plaintiff and

3
       The bulk of the fraud allegations relate to the actions of plaintiff’s mortgage loan
originator, BNC Mortgage. Because BNC is not a party to this appeal, we do not
concern ourselves with those aspects of the fraud claim.

                                              17
he or she “would probably not have” acted absent it].) Here, plaintiff seems to allege
she did not pursue other legal remedies to save her home from foreclosure because she
was waiting for ASC’s decision on her loan modification request. She alleges, for
example, “[h]ad [p]laintiff known the true facts, she would have taken ‘legal’ action
immediately to save her home. Defendant, ASC led [p]laintiff on regarding a possible
loan modification just days before the sale.” Though it is unclear from the complaint
what “true facts” were unknown to plaintiff, all the allegations indicate she actually
relied on some statement by ASC indicating it would review her final request for a loan
modification.
       But it is not enough to allege actual reliance. A plaintiff must also allege, and
ultimately prove, justifiable reliance, “ ‘ “i.e., circumstances were such to make it
reasonable for [the] plaintiff to accept [the] defendant’s statements without an
independent inquiry or investigation.” [Citation.] The reasonableness of the plaintiff’s
reliance is judged by reference to the plaintiff's knowledge and experience.
[Citation.]’ ” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 794.)
Although the question of whether reliance is reasonable is generally one of fact, the
issue “ ‘may be decided as a matter of law if reasonable minds can come to only one
conclusion based on the facts.’ ” (Alliance, supra, 10 Cal.4th at p. 1239.) Such is the
case here.
       Plaintiff alleges she did not take steps to avoid foreclosure in the days before the
scheduled foreclosure sale because she was waiting for an answer from ASC in
response to her loan modification request. Evidently, plaintiff expected ASC would
offer her a loan modification and suspend foreclosure proceedings—otherwise, she
would have had no reason to suspend her efforts to avoid foreclosure. However, in light
of the other allegations of the complaint, it is apparent plaintiff had no reasonable basis
to believe ASC would approve her request. Specifically, plaintiff alleges ASC rejected
at least ten prior loan modification requests. In the absence of some material change in
circumstance (which plaintiff has not alleged), plaintiff could not reasonably have
believed ASC would approve her final application for a loan modification after it had

                                            18
rejected ten prior, similar requests. In short, the allegations of the complaint
demonstrate plaintiff’s claim of reasonable reliance fails as a matter of law.
       Accordingly, the trial court did not err in sustaining the demurrer without leave
to amend as to the fraud claim.
       F.     Negligence
       Plaintiff’s third cause of action is a negligence claim against ASC. “To state
a cause of action for negligence, a plaintiff must allege (1) the defendant owed the
plaintiff a duty of care, (2) the defendant breached that duty, and (3) the breach
proximately caused the plaintiff’s damages or injuries. [Citation.] Whether a duty of
care exists is a question of law to be determined on a case-by-case basis. [Citation.]
[¶] We start by identifying the allegedly negligent conduct by [defendants] because our
analysis is limited to ‘the specific action the plaintiff claims the particular [defendant]
had a duty to undertake in the particular case.’ ” (Lueras v. BAC Home Loans
Servicing, LP (2013) 221 Cal.App.4th 49, 62 (Lueras); see also Alvarez v. BAC Home
Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 944 (Alvarez).)
       Plaintiff alleges ASC “had the duty to try and modify loans.” In the same vein,
plaintiff alleges “ASC was negligent because they refused to modify a predatory loan
which the Plaintiff never qualified.” [sic] As currently drafted, plaintiff’s complaint
fails to allege a valid negligence claim because, as a matter of law, ASC did not have
a duty to modify plaintiff’s loan: “Lenders and borrowers operate at arm’s length.
[Citations.] ‘[A]s a general rule, a financial institution owes no duty of care to
a borrower when the institution’s involvement in the loan transaction does not exceed
the scope of its conventional role as a mere lender of money.’ [Citation.]” (Lueras,
supra, 221 Cal.App.4th at p. 63.) More particularly, and as relevant here, “a lender does
not owe a borrower a common law duty ‘to offer, consider or approve’ a loan
modification.” (Alvarez, supra, 228 Cal.App.4th at p. 946.)
       However, based upon our review of the complaint and the opening brief, we
conclude there is a reasonable possibility plaintiff could amend her complaint to state
a valid negligence claim. Notwithstanding the general rule that a lender does not have

                                             19
a duty to offer or approve a loan modification, some courts have held a lender owes
a borrower a duty to use reasonable care in negotiating or processing a loan
modification agreement. (See, e.g., Alvarez, supra, 228 Cal.App.4th at pp. 947-949,
and cited cases.) Thus, a plaintiff may state a claim for negligence by alleging the
lender or, as here, the loan servicer as the agent of the lender, failed to timely process
the loan modification application, resulting in damage to the plaintiff. (Id. at p. 948
[agreeing that where “defendants allegedly agreed to consider modification of the
plaintiffs’ loans . . . it was entirely foreseeable that failing to timely and carefully
process the loan modification applications could result in significant harm to
applicants”].) Here, plaintiff’s complaint generally alleges ASC failed to process her
loan modification request in a timely manner and plaintiff was prejudiced by the
untimely response because she failed to pursue other means to avoid foreclosure.
Although for the reasons we stated with regarding to the fraud claim, we have some
doubt plaintiff will be able to prove an untimely response from ASC caused her to
suffer any damage, that is not the question before us at the pleading stage. It seems
reasonably probably that plaintiff may be able to amend her complaint to state a viable
claim of negligence and she should have at least one opportunity to do so.
       Accordingly, we conclude the court abused its discretion by sustaining ASC’s
demurrer to the negligence cause of action without leave to amend.
       G.      Plaintiff’s Remaining Causes of Action
       Plaintiff failed to challenge the court’s ruling with respect to causes of action 4
(unfair competition), 8 (implied covenant of good faith and fair dealing), 9 (quiet title)
and 10 (injunctive relief). She has therefore waived any error as to those claims. (See
Title G. & T. Co. v. Fraternal Finance Co. (1934) 220 Cal. 362, 363 [“Appellate courts
will notice only those assignments pointed out in the brief of an appellant, all others are
deemed to have been waived or abandoned”].)
       H.      Due Process
       In her opening brief, plaintiff contends the court violated the due process clause
contained in the 14th amendment to the United States Constitution. Though stated

                                              20
inartfully, the thrust of plaintiff’s argument appears to be that the court erroneously
denied her the opportunity to amend her complaint and we construe it as such. As
explained ante, we agree plaintiff is entitled to the opportunity to amend her cause of
action for negligence against ASC. (See City of Stockton v. Superior Court (2007)
42 Cal.4th 730, 747 [“If the plaintiff has not had an opportunity to amend the complaint
in response to the demurrer, leave to amend is liberally allowed as a matter of fairness,
unless the complaint shows on its face that it is incapable of amendment”].)
       Plaintiff makes some generalized assertions that the proceeding below was unfair
and the judge was not impartial, from which she concludes she was denied due process
of law. We disregard those arguments because they are unsupported by citations to the
record or relevant legal authority and argument. (See, e.g., Cal. Rules of Court,
rule 8.204(a); Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1003-1004, fn. 2,
[appellant must provide sufficient citations to record; contentions waived when there is
a lack of reasoned argument and citation to authority]; Badie v. Bank of America (1998)
67 Cal.App.4th 779, 784-785 [“When an appellant fails to raise a point, or asserts it but
fails to support it with reasoned argument and citations to authority, we treat the point as
waived”]; Kunec v. Brea Redevelopment Agency (1997) 55 Cal.App.4th 511, 526, fn. 9
[passing reference to subject does not constitute legal argument].)

                                            21
                                    DISPOSITION
       The judgment in favor of ASC is reversed in part. On remand, plaintiff should
be allowed the opportunity correct the standing issue by either substituting the
bankruptcy trustee as the plaintiff or securing the trustee’s abandonment of her pending
litigation claims. Plaintiff should then be allowed at least one opportunity to amend her
complaint with respect to the negligence claim against ASC. In all other respects, the
judgment in favor of ASC, as well as the judgments in favor of MERS and Lian Feng,
are affirmed. Respondent Lian Feng is entitled to costs on appeal. No costs are
awarded to ASC and MERS.

       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                                      LAVIN, J.

WE CONCUR:

       ALDRICH, Acting P. J.

                   *
       HOGUE, J.

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

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