Court Opinion

ID: 4042287
Source: CourtListenerOpinion
Date Created: 2016-09-28 23:02:47.232038+00
Date Added: 2024-06-11T14:29:16.243757
License: Public Domain

Filed 9/28/16 Rosenblum v. Mortgage Electronic Registration Systems CA1/5
                         NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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 FIVE

JENNIFER MAE ROSENBLUM,
          Plaintiff and Appellant,
                                                                             A146526
v.
MORTGAGE ELECTRONIC                                                          (San Mateo County
REGISTRATION SYSTEMS, INC.,                                                  Super. Ct. No. CIV 463382)
          Defendant and Respondent.

          Jennifer Rosenblum had a domestic relationship with Richard Hatfield. When the
relationship ended, Rosenblum initiated a Marvin1 action seeking a determination that all
property the couple acquired during their relationship was jointly owned, including
certain real property in Woodside, California (the Property). She recorded a lis pendens,
later expunged, against the Property. While the Marvin action was pending, Hatfield
obtained a loan, secured by a deed of trust on the Property (Deed of Trust). Respondent
Mortgage Electronic Registration Systems (MERS), as nominee for the original lender,
subsequently assigned all beneficial interest in the Deed of Trust to U.S. Bank National
Association (U.S. Bank), as trustee for a securitized loan trust.
          The court in the Marvin action determined that Rosenblum and Hatfield jointly
owned the Property, and Rosenblum filed an action seeking partition and sale of the
Property. Hatfield filed a bankruptcy petition. In adversary proceedings, the bankruptcy
court determined that U.S. Bank’s Deed of Trust encumbered only Hatfield’s one-half
          1
              Marvin v. Marvin (1976) 18 Cal. 3d 660.

                                                                    1
interest in the Property. In settlement of other claims by Rosenblum, the bankruptcy
trustee conveyed its interest in the Property to Rosenblum by grant deed.
       Rosenblum, by amended complaint, sought to quiet title to the Property against
U.S. Bank, MERS, and others, asserting that she held title free of the encumbrance of the
Deed of Trust. The trial court separately sustained demurrers, without leave to amend, in
favor of both U.S. Bank and MERS. We affirmed the decision in favor of U.S. Bank,
finding that MERS assigned the Deed of Trust to U.S. Bank, and that the Deed of Trust
encumbered a 50 percent interest in the Property. (Rosenblum v. U.S. Bank (Apr. 1,
2016, A143027) (Rosenblum I) [nonpub. opn.].) Our opinion in Rosenblum I, now final,
is fatal to Rosenblum’s appeal of the decision in favor of MERS.
                                  I.     BACKGROUND2
       “In 1993, Richard Hatfield purchased [the Property]. Title to the Property was in
Hatfield’s name. At the time, [Rosenblum] and Hatfield were living together and had
two children, but were not married. [Rosenblum] and Hatfield subsequently separated.
[¶] In 2001, [Rosenblum] sued Hatfield seeking joint ownership of their property,
including the Property. [Rosenblum] filed a dissolution action, a Marvin action, and
apparently others. The cases were consolidated in the trial court. [¶] In 2002,
[Rosenblum] recorded a lis pendens providing notice of the pending dissolution action in
which she asserted an interest in the Property. In 2003, an order expunging the lis
pendens issued but was never recorded. In 2004, Hatfield executed [the Deed of Trust]
against the Property to secure a loan . . . . The Deed of Trust was eventually assigned to
U.S. Bank. [¶] In 2007, a statement of decision issued in the Marvin action (the 2007
Marvin decision) finding [Rosenblum] and Hatfield jointly owned all their property,
including the Property, and their assets were ‘to be divided equally.’ The court bifurcated
the question of an accounting of the parties’ jointly owned property.

       2
         We recite the common facts as set forth in Rosenblum I, omitting footnotes. Our
recitation of the facts in that matter, as here, assumes the truth of the allegations of
Rosenblum’s complaint and includes matters judicially noticed by the trial court.
(Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1081.)

                                             2
       “In 2008, Hatfield filed for bankruptcy. Because of this filing, the Marvin and
related actions were stayed. Hatfield’s property became the property of his bankruptcy
estate, and the estate’s trustee (Trustee) initiated an adversary proceeding against
[Rosenblum] and U.S. Bank (or its predecessor in interest), among others. The Trustee
contended the Deed of Trust should be paid from the proceeds of both Hatfield’s and
[Rosenblum’s] interest in the Property; [Rosenblum] argued the Deed of Trust attached
only to Hatfield’s 50 percent interest. In 2009, the bankruptcy court issued an order
agreeing with [Rosenblum]. After discussing the background of the lis pendens and the
2007 Marvin decision finding [Rosenblum] and Hatfield each had a 50 percent interest in
the Property, the bankruptcy court held the lis pendens was valid, despite the
expungement, and protected [Rosenblum’s] one-half interest in the Property from the
Deed of Trust. Accordingly, the bankruptcy court concluded the Deed of Trust
‘attach[es] only to the Hatfield bankruptcy estate’s one-half interest in the Property.’
       “In March 2010, [Rosenblum] and the Trustee entered into a settlement
agreement. The settlement agreement discussed the 2007 Marvin decision, which it
referred to as the ‘Marvin Decision,’ and characterized it as finding [Rosenblum] and
Hatfield were each ‘a one-half equitable owner of all real and personal property acquired
by them’ subject to exceptions not relevant here. The settlement agreement provided that
the ‘Trustee acknowledges and agrees that the Marvin Decision accurately adjudicated
title to [the Property]’ and, ‘[a]t the request of [Rosenblum], Trustee will execute a
Stipulation for Judgment incorporating the Marvin Decision into a final judgment.’ [¶]
The settlement agreement also stated [Rosenblum] had asserted a number of claims in the
bankruptcy proceeding. The agreement provided that [Rosenblum] would subordinate
most of her claims and, ‘[i]n consideration for [Rosenblum’s] subordination of the claims
set forth above, Trustee agrees to sell to [Rosenblum] . . . any and all remaining property
of the Estate. . . . As to [the Property], the parties shall execute the Purchase Agreement
attached to this Agreement . . . .’ The bankruptcy court subsequently issued an order
authorizing this sale of the Property and authorizing the Trustee ‘to consent to final
judgment in the [Marvin action] in accordance with that certain Statement of Decision

                                              3
dated January 22, 2007 . . . .’ In July 2010, after judgment issued in the bankruptcy
adversary proceeding, the Trustee executed and recorded a grant deed transferring the
Property to [Rosenblum].
       “Subsequently, in the Marvin action, [Rosenblum] moved under Code of Civil
Procedure [section] 664.6 for final judgment pursuant to the parties’ settlement. In
February 2014, the court issued an order granting this motion. The order referred to and
attached the 2007 Marvin decision ‘determining [Rosenblum] and Hatfield equally
owned the property they had acquired’; noted Hatfield’s bankruptcy filing and resulting
litigation; referred to and attached the settlement agreement between the Trustee and
[Rosenblum] providing ‘the Trustee agreed to sell . . . the Estate’s interest in [the
Property] to [Rosenblum]’; referred to and attached the final judgment of the bankruptcy
court ‘determining the interests of [Rosenblum] and the Trustee in [the Property]’; and
referred to and attached the grant deed from the Trustee granting her interest in the
Property to [Rosenblum]. The order found the obligations of the settlement agreement
had all been satisfied ‘with the exception of the Trustee’s stipulation to a final judgment
in this action,’ and noted the Trustee’s counsel approved the form of judgment proposed
by [Rosenblum] as consistent with the settlement agreement and bankruptcy court order
approving the settlement. The judgment thereby issued by the court ordered ‘that the
entire joint interests of [Rosenblum] and of Hatfield, as succeeded to by the Estate,
including [the Property], be and hereby is distributed to [Rosenblum] as her sole and
separate property.’
       “In March 2014, [Rosenblum] filed the operative second amended complaint.
This complaint, brought against U.S. Bank and others, sought to quiet [Rosenblum’s] title
in the Property and determine that the defendants have no interest in the Property.
U.S. Bank demurred, arguing the Deed of Trust encumbers 50 percent of the Property.
The trial court sustained the demurrer and issued judgment dismissing with prejudice

                                              4
[Rosenblum’s] complaint as to U.S. Bank.”3 Rosenblum appealed (Rosenblum I). While
Rosenblum I was pending, MERS demurred to Rosenblum’s third amended complaint.4
In connection with MERS’s earlier motion for judgment on the pleadings, MERS
requested judicial notice of the Deed of Trust and MERS’s assignments of it, and the
requests were renewed in MERS’s demurrer. The court granted the request for judicial
notice, and sustained the demurrer without leave to amend, finding that Rosenblum had
not alleged facts sufficient to state a cause of action against MERS. On July 15, 2015,
the court entered judgment dismissing the matter as to MERS, with prejudice.5
Rosenblum appealed.
      On April 1, 2016, we issued our opinion in Rosenblum I.6 We affirmed the trial
court order sustaining U.S. Bank’s demurrer. In doing so, we upheld the trial court’s
finding that the Deed of Trust held by U.S. Bank encumbered a 50 percent interest in the
Property. The Supreme Court denied Rosenblum’s petition for review. Our decision
became final and a remittitur issued on June 24, 2016.
                                   II.    DISCUSSION
      In this appeal, Rosenblum contends that MERS should not have been dismissed
from the action because (1) MERS failed produce admissible evidence of its authority to
assign the Deed of Trust and underlying note, making the assignments subject to dispute;
and (2) whether or not MERS holds an interest in the Property, entry of separate

      3
        The trial court’s order was entered on May 23, 2014, and the judgment of
dismissal was entered on July 23, 2014.
      4
         MERS first appeared in this action in August 2014, by stipulation to set aside a
default taken by Rosenblum. It answered the second amended complaint on
September 4, 2014. On January 30, 2015, the court granted MERS’s motion for
judgment on the pleadings on the second amended complaint, but gave Rosenblum leave
to amend.
      5
       Rosenblum filed a motion for new trial, which was denied by operation of law
when the hearing was continued beyond the jurisdictional time limit. (Green v. Laibco,
LLC (2011) 192 Cal. App. 4th 441, 447.)
      6
       On April 26, 2016, we issued a modification of our opinion and denied
Rosenblum’s petition for rehearing.

                                            5
judgment in MERS in an in rem quiet title action violates the one final judgment rule.
We reject both arguments.
       We review an order sustaining a demurrer de novo, “assum[ing] the truth of all
facts properly pleaded in the complaint or reasonably inferred from the pleading, but not
mere 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.] . . . [¶] In order to prevail on appeal
from an order sustaining a demurrer, the appellant must affirmatively demonstrate error.
Specifically, the appellant must show that the facts pleaded are sufficient to establish
every element of a cause of action and overcome all legal grounds on which the trial
court sustained the demurrer. [Citation.] We will affirm the ruling if there is any ground
on which the demurrer could have been properly sustained.” (Intengan v. BAC Home
Loans Servicing LP (2013) 214 Cal. App. 4th 1047, 1052.)
       Rosenblum’s third amended complaint pled a single cause of action and sought a
judgment quieting her fee simple title to the Property, and determining none of the named
defendants had any “right, title, or interest in or to [the Property].”7 “The purpose of a
quiet title action is to finally settle and determine the parties’ conflicting claims to the
property and to obtain a declaration of the interest of each party. [Citation.] The quiet
title claimant has the burden of proof to show every element of the right claimed.” (City
of Santa Maria v. Adam (2012) 211 Cal. App. 4th 266, 298.) “An element of a cause of
action for quiet title is ‘[t]he adverse claims to the title of the plaintiff against which a
determination is sought.’ ” (West v. JPMorgan Chase Bank, N.A. (2013)

       7
         In addition to U.S. Bank and MERS, Rosenblum named the original lender,
Preferred Financial Group, Inc. (doing business as Preferred Mortgage Services);
Sandhill Venture Group (also known as Sand Hill Road Venture Group); and JP Morgan
Chase Bank, N.A., as successor-in-interest to Washington Mutual Bank. No information
is provided as to the litigation status of any of these entities.

                                                6
214 Cal. App. 4th 780, 802, quoting Code Civ. Proc., § 761.020, subd. (c).) MERS has no
such claim.
A.     MERS’s Authority to Assign the Deed of Trust
       The MERS System is a method devised by the mortgage banking industry to
facilitate securitization of real property debt instruments. “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, disapproved on another ground in Yvanova
v. New Century Mortgage Corp. (2016) 62 Cal. 4th 919, 939.) California courts “have
universally held that MERS, as nominee beneficiary, has the power to assign its interest
under a [deed of trust].” (Herrera v. Federal National Mortgage Assn. (2012)
205 Cal. App. 4th 1495, 1498.)
       The original Deed of Trust identified Hatfield as the “Borrower,” Preferred
Financial Group, Inc. as the “Lender,” and Ticor Title Company as the “Trustee.” The
Deed of Trust also provided that MERS “is acting solely as a nominee for Lender and
Lender’s successors and assigns. MERS is the beneficiary under this Security
Instrument.” The Deed of Trust further provided: “Borrower 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 . . . .” In 2010, MERS executed and recorded a notice providing it “hereby
grants, assigns, and transfers to U.S. Bank, National Association, as trustee, successor-in-

                                             7
interest to Wachovia Bank, N.A. as trustee for MALT 2004–1 all beneficial interest
under” the Deed of Trust. In 2011, MERS executed and recorded a notice providing it
“hereby grants, assigns, and transfers to [U.S. Bank] all beneficial interest under” the
Deed of Trust. The 2011 assignment notice stated it was “being recorded to correct” the
2010 assignment notice.
       In Rosenblum I, we rejected Rosenblum’s argument that the 2011 assignment by
MERS to U.S. Bank was a nullity. We held that MERS, as nominee for the lender, had
authority to assign, and did assign, the promissory note and Deed of Trust to U.S. Bank.
We also observed that MERS itself “had no interest in the note” since it was only a
nominee for the lender. Our holding effectively resolves all issues presented in this
appeal.
       “ ‘The doctrine of “law of the case” deals with the effect of the first appellate
decision on the subsequent retrial or appeal: The decision of an appellate court, stating a
rule of law necessary to the decision of the case, conclusively establishes that rule and
makes it determinative of the rights of the same parties in any subsequent retrial or appeal
in the same case.’ ” (Gyerman v. United States Lines Co. (1972) 7 Cal. 3d 488, 498,
italics omitted; Lucky United Properties Investments, Inc. v. Lee (2013) 213 Cal. App. 4th
635, 651.) In Rosenblum I, the trial court had sustained U.S. Bank’s demurrer on the
ground that Rosenblum failed to state a cause of action to quiet title against U.S. Bank.
In affirming, we found the trial court had not erred in concluding the Deed of Trust
encumbered 50 percent of the Property, and we specifically rejected Rosenblum’s
challenge to U.S. Bank’s ownership of the Deed of Trust. Since our decision in
Rosenblum I appeared to resolve all material issues in the present appeal adversely to
Rosenblum, we allowed the parties to submit supplemental briefing on this question.
       In her supplemental brief, Rosenblum argues her claims remain viable, that the
trial court improperly dismissed MERS from the action based on a lack of interest in the
Property, and that MERS, as nominee, continues to hold legal title to the property. We
disagree.

                                              8
       Our holding confirming U.S. Bank’s ownership of the note and Deed of Trust
necessarily forecloses Rosenblum’s contention here that MERS’s authority to assign the
note and Deed of Trust remains subject to dispute. Rosenblum asserts that the logical
implication of our holding in Rosenblum I is that MERS remains the legal owner of the
security interest in the Property, despite U.S. Bank’s adjudicated beneficial interest, and
therefore continues to be an adverse claimant to the Property. But this ignores the fact
that there is only one encumbrance on the Property, securing one note, and imposed by
one Deed of Trust. Whether or not MERS continues to hold legal title to the debt
instruments, it does so only as agent for the current beneficial owner—U.S. Bank. MERS
has no interest separate and apart from that of U.S. Bank to adjudicate.
B.     One Final Judgment Rule
       As a corollary argument, Rosenblum continues to contend that the trial court erred
in entering a separate judgment of dismissal in favor of MERS, insisting that in a quiet
title action she is entitled to a single in rem judgment against all adverse claimants.8
“ ‘Under the “one final judgment” rule, an order or judgment that fails to dispose of all
claims between the litigants is not appealable under Code of Civil Procedure section
904.1, subdivision (a).’ [Citation.] This rule does not apply, however, ‘ “when the case
involves multiple parties and a judgment is entered which leaves no issue to be
determined as to one party.” ’ ” (Ram v. OneWest Bank, FSB (2015) 234 Cal. App. 4th 1,
9.)
       We first observe that our prior decision renders the issue moot. Were we to
remand this case to the trial court, Rosenblum does not explain how she could obtain a
judgment quieting title in her favor against MERS, which serves only as a nominee for
U.S. Bank. “A case is moot when any ruling by this court can have no practical impact
or provide the parties effectual relief.” (Woodward Park Homeowners Assn. v. Garreks,
Inc. (2000) 77 Cal. App. 4th 880, 888.)

       8
        In Rosenblum I, we held that Rosenblum had forfeited a similar claim by failure
to properly present it in the trial court.

                                              9
       Rosenblum is, in any event, simply wrong on the merits. She cites what she
identifies as the “rule” of Linthicum v. Butterfield, that in a quiet title action, a defendant
who disclaims an interest in property “is not entitled to judgment in his favor. [Citation.]
Instead, the judgment should quiet title against the disclaiming defendant.” (Linthicum v.
Butterfield (2009) 175 Cal. App. 4th 259, 270, citing Bradley Co. v. Ridgeway (1936)
14 Cal. App. 2d 326, 337.) Linthicum (and Bradley) stand for no more than the
proposition that a disclaimer of interest alone is insufficient to quiet title. The trial court
did not dismiss MERS because it disclaimed an interest.9 It sustained a demurrer because
Rosenblum failed to establish through her pleadings a necessary element of her claim.
We know of no authority for the position that a defendant in a quiet title action is
somehow barred from seeking pretrial adjudication of the sufficiency of a plaintiff’s
claims. (See, e.g., Orcilla v. Big Sur, Inc. (2016) 244 Cal. App. 4th 982, 1010 [demurrer
to quiet title claim properly sustained on res judicata bar]; West v. JPMorgan Chase
Bank, N.A., supra, 214 Cal.App.4th at pp. 802–803 [demurrer to quiet title claim properly
sustained where judicially noticed documents showed that none of the named defendants
had adverse claims to title].)
       All claims presented by Rosenblum in the instant appeal have either been
foreclosed by our decision in Rosenblum I or rendered moot.
                                     III.   DISPOSITION
       The judgment is affirmed. MERS shall recover its costs.

       9
          In its earlier ruling granting judgment on the pleadings on Rosenblum’s second
amended complaint, the court made clear the it did not consider MERS’s disclaimer of
interest in the Property to be a basis on which to grant judgment.

                                               10
                                 _________________________
                                 BRUINIERS, J.

WE CONCUR:

_________________________
JONES, P. J.

_________________________
NEEDHAM, J.

A146526

                            11