Court Opinion

ID: 3199053
Source: CourtListenerOpinion
Date Created: 2016-04-29 00:03:00.090318+00
Date Added: 2024-06-11T14:28:58.086011
License: Public Domain

Filed 4/28/16 Mendoza v. HSBC Bank USA, Nat. Assn. CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE

FIDEL MENDOZA,

     Plaintiff and Appellant,                                          G050953

         v.                                                            (Super. Ct. No. 30-2014-00714317)

HSBC BANK USA, NATIONAL                                                OPINION
ASSOCIATION, as Trustee, etc.

     Defendant and Respondent.

                   Appeal from a judgment of the Superior Court of Orange County, Robert
D. Monarch, Judge. Affirmed.
                   Law Office of Joseph De Clue, Joseph De Clue and Stephen F. Lopez for
Plaintiff and Appellant.
                   Green & Hall, Howard D. Hall and Kevin S. Kim for Defendant and
Respondent.

                                             *               *               *
              Plaintiff Fidel Mendoza defaulted on a loan secured by a promissory note
and deed of trust (DOT) on residential property (property). Following several
assignments of the DOT, the last one being to defendant HSBC Bank USA, National
Association, as Trustee for Holders of BCAP LLC Trust 2006-AA2 (subject trust), the
property was foreclosed on and sold at a trustee’s sale to defendant. Plaintiff filed a
complaint for declaratory relief, wrongful foreclosure, quiet title, and cancellation of
instruments, alleging the foreclosure sale was void because the assignment of the DOT to
defendant was illegal.
              The trial court sustained defendant’s demurrer to the complaint without
leave to amend. Relying on this court’s opinion in Jenkins v. JP Morgan Chase Bank,
N.A. (2013) 216 Cal. App. 4th 497, 515 (Jenkins), subsequently disapproved by Yvanova v.
New Century Mortgage Corp. (2016) 62 Cal. 4th 919, 924 (Yvanova), the court found
plaintiff did not have standing to challenge the foreclosure based on transactions to which
he was not a party and had failed to allege how he was prejudiced by the claimed defect
in the loan transfer.
              Plaintiff contends this was error because under the laws governing Real
Estate Mortgage Investment Conduit (REMIC) trusts, the loan here was untimely placed
into the subject trust (based on the dates set forth in the trust’s Pooling and Servicing
Agreement (PSA)), making the loan’s assignment to defendant invalid and the
foreclosure sale void. He also argues he was not required to tender to defendant the
amounts claimed due under the promissory note, as required in order to bring a wrongful
foreclosure claim, because “as illustrated by the decision in Glaski v. Bank of America[
(2013) 218 Cal. App. 4th 1079, 1100 (Glaski)], “‘[t]ender is not required where the
foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the
entity lacked the authority to foreclose on the property.’” Lastly, plaintiff asserts the
court erroneously relied on Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App. 4th
2
256 (Fontenot), subsequently disapproved by Yvanova, supra, 62 Cal.4th at p. 924.
According to plaintiff, Fontenot “only restate[s] the rule that requires a showing of
prejudice when a sale is voidable . . . not void as a matter of law.”
              On February 18, 2016, the California Supreme Court in Yvanova, supra, 62
Cal.4th at p. 924 held “that a borrower who has suffered a nonjudicial foreclosure does
not lack standing to sue for wrongful foreclosure based on an allegedly void assignment
merely because he or she was in default on the loan and was not a party to the challenged
assignment.” It disapproved Jenkins and Fontenot, as well as other similar cases “to the
extent they held borrowers lack standing to challenge an assignment of the deed of trust
as void.” (Yvanova, at p. 939, fn. 13.) According to Yvanova, “Jenkins’s rule may hold
as to claimed defects that would make the assignment merely voidable, but not as to
alleged defects rendering the assignment absolutely void.” (Id. at p. 939, fn. omitted.)
As for prejudice, Yvanova stated it was “concerned only with prejudice in the sense of an
injury sufficiently concrete and personal to provide standing, not with prejudice as a
possible element of the wrongful foreclosure tort.” (Id. at p. 937.)
              On March 18, 2016, plaintiff’s counsel filed a letter brief bringing Yvanova
to our attention. On March 22, we filed an order directing the parties to be prepared to
discuss Yvanova and the recent case of Saterbak v. JPMorgan Chase Bank, N.A. (2016)
245 Cal. App. 4th 808 (Saterbak) during oral argument.
              We conclude that as a matter of law plaintiff did not have standing to
challenge or to bring this action because the assignment was merely voidable, not void.
Given that, we need not address plaintiff’s remaining claims regarding his failures to
tender or allege prejudice. The judge is affirmed.

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                      FACTS AND PROCEDURAL BACKGROUND

                In October 2006, plaintiff obtained from Countrywide Bank N.A.
(Countrywide) a $624,000 loan (loan), secured by a promissory note and a DOT on
residential property owned by plaintiff. The DOT was executed by plaintiff, recorded in
the county clerk-recorder’s office, and named Countrywide as the lender, ReconTrust
Company, N.A. (ReconTrust) as its trustee, and Mortgage Electronic Registration
Systems, Inc. (MERS) as its beneficiary, acting solely as the nominee for Countrywide.
                In the DOT, plaintiff “irrevocably grant[ed] and convey[ed]” to the trustee
the “power of sale” of the property and agreed MERS “has the right: to exercise any or
all of [Countrywide’s] interests, including, but not limited to, the right to foreclose and
sell the [p]roperty.” Plaintiff also agreed “[t]he [n]ote or a partial interest in the [n]ote
(together with this [DOT]) can be sold one or more times without prior notice to
[plaintiff].”
                After plaintiff defaulted on the loan, MERS assigned the DOT to defendant.
The assignment was recorded in late December 2009, as was a Notice of Default and
Election to Sell.
                In February 2012, defendant assigned the DOT to Bank of America, N.A.
Successor by Merger to BAC Home Loan Servicing LP, FKA Countrywide Home Loans
Servicing LP. (BANA); the assignment was recorded. BANA then assigned the DOT
back to defendant on June 14, 2013, and the assignment was recorded on June 25. This is
the assignment plaintiff claims is void.
                The following month, ReconTrust recorded a Notice of Trustee’s Sale of
the property to defendant. Plaintiff refused to surrender the premises, requiring defendant
to file an unlawful detainer action.

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                                       DISCUSSION

1. Standard of Review
              “‘On appeal from a judgment of dismissal entered after a demurrer has been
sustained, this court reviews the complaint de novo to determine whether it states a cause
of action. [Citation.] We assume the truth of all material facts properly pleaded, but not
contentions, deductions or conclusions of fact or law.’ [Citation.] We may consider
matters that are properly judicially noticed. [Citation.] [¶] ‘If the trial court has sustained
the demurrer, 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. [Citation.] 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. [Citation.] The plaintiff has the burden of proving that an amendment would
cure the defect.’” (Saterbak, supra, 245 Cal.App.4th at p. 813.)

2. Plaintiff’s Lack of Standing
              Standing must be established in order for there to be a justiciable
controversy. (Saterbak, supra, 245 Cal.App.4th at p. 813.) Plaintiff, “[a]s the party
seeking to cancel the assignment through this action,” bears the burden of establishing he
has standing to bring the action, i.e, he “‘must be able to demonstrate that . . . [he] has
some such beneficial interest that is concrete and actual, and not conjectural or
hypothetical.’” (Id. at pp. 813-814.) He failed to do so.
              In Saterbak, as here, the central issue was whether a borrower “has standing
to challenge the assignment of the DOT on grounds that it does not comply with the PSA
[between the trustee and the holders of the 2007-AR Trust] for the securitized

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instrument.” (Saterbak, supra, 245 Cal.App.4th at p. 813.) Saterbak affirmed the trial
court’s order sustaining the defendant’s demurrer to the plaintiff’s first amended
complaint without leave to amend. It did so on the ground the plaintiff there “lack[ed]
standing to pursue [the] theory” that “the DOT was assigned to the 2007-AR7 trust in an
untimely manner under the PSA.” (Id. at p. 814.) This is the same argument plaintiff
makes in this case.
              Although Saterbak acknowledged Yvanova’s recent holding “that a
borrower has standing to sue for wrongful foreclosure where an alleged defect in the
assignment renders the assignment void,” part of Saterbak’s rationale was that “Yvanova
recognize[d] borrower standing only where the defect in the assignment renders the
assignment void, rather than voidable. [Citation.] ‘Unlike a voidable transaction, a void
one cannot be ratified or validated by the parties to it even if they so desire.’ [Citation.]
Yvanova expressly offers no opinion as to whether, under New York law, an untimely
assignment to a securitized trust made after the trust’s closing date is void or merely
voidable. [Citation.] We conclude such an assignment is merely voidable. See Rajamin
v. Deutsche Bank Nat'l Trust Co. (2d Cir. 2014) 757 F.3d 79, 88-89 [‘the weight of New
York authority is contrary to plaintiffs’ contention that any failure to comply with the
terms of the PSAs rendered defendants’ acquisition of plaintiffs’ loans and mortgages
void as a matter of trust law’; ‘an unauthorized act by the trustee is not void but merely
voidable by the beneficiary’].) Consequently, Saterbak lacks standing to challenge
alleged defects in the MERS assignment of the DOT to the 2007-AR7 trust.” (Saterbak,
supra, 246 Cal.App.4th at p. 815.)
              In so holding, Saterbak distinguished Glaski, supra, 218 Cal. App. 4th 1079,
on which plaintiff here relies, noting “the New York case upon which Glaski relied has
been overturned. (Wells Fargo Bank, N.A. v. Erobobo (N.Y.App.Div. 2015) 127 A.D.3d
1176, 1178, [9 N.Y.S.3d 312]; see Rajamin, supra, 757 F.3d at p. 90 [rejecting Glaski’s

                                               6
interpretation of New York law].) We decline to follow Glaski and conclude the alleged
defects here merely render the assignment voidable.” (Saterbak, supra, 246 Cal.App.4th
at p. 815, fn. 5.)
               Saterbak is persuasive and we adopt its reasoning. The assignment of the
DOT to defendant, as trustee of the BCAP LLC Trust 2006-AA2, was voidable, not void.
As plaintiff acknowledges, “where the act is voidable, the trustee and beneficiary must
make a choice to enforce the trust agreement and may choose not to do so [or to do so]
and for this reason the plaintiff in a case challenging the right to foreclose based upon a
voidable assignment cannot step in an[d] enforce the agreement,” or as in this case,
invalidate it. Because any defects in the assignment were voidable rather than void,
plaintiff does not have standing as a matter of law to challenge the assignment of the
DOT to defendant.

3. Leave to Amend
               Plaintiff claims he “has and can plead the elements of an action . . . for
wrongful foreclosure[, to] quiet title[,] and [for] cancellation of instruments.” But the
question here is his lack of standing. On this issue, plaintiff has not “demonstrated a
reasonable probability that [he] could cure [this] defect[].” (Saterbak, supra, 246
Cal.App.4th at p. 820.)
               Nor can plaintiff demonstrate he could cure the defect in the assignment of
the DOT to defendant being voidable, rather than void, because that is a question of law
for the court to decide. Thus, the fact plaintiff alleged the assignment was void is of no
moment, as we do not “‘assume the truth of . . . conclusions of . . . law.’” (Saterbak,
supra, 246 Cal.App.4th at p. 813.)

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                                   DISPOSITION

            The judgment is affirmed. Defendant shall recover its costs on appeal.

                                              RYLAARSDAM, ACTING P. J.

WE CONCUR:

MOORE, J.

THOMPSON, J.

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