Court Opinion

ID: 3217385
Source: CourtListenerOpinion
Date Created: 2016-06-27 21:07:08.26786+00
Date Added: 2024-06-11T09:19:53.746206
License: Public Domain

Filed 6/27/16 Hernandez v. PNMAC Mortgage Opportunity Fund Investors CA2/5
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FIVE

SHERRY HERNANDEZ,                                                    B258583

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                     Super. Ct. No. YC068794)
         v.

PNMAC MORTGAGE OPPORTUNITY
FUND INVESTORS, LLC, et. al.,

         Defendants and Respondents.

         APPEAL from a judgment of the Superior Court of Los Angeles County, Ramona
G. See, Judge. Affirmed in part, reversed in part, and remanded.
         Sherry Hernandez, in pro. per.; Law Office of David W. Seal and David W. Seal
for Plaintiff and Appellant.
         Blank Rome, Todd A. Boock, Shawnda M. Grady, Jessica A. McElroy, and
Cheryl S. Chang, for Defendant and Respondent PNMAC Mortgage Opportunity Fund
Investors, LLC.
         Burke, Williams & Sorensen, Richard J. Reynolds and Joseph P. Buchman, for
Defendant and Respondent MTC Financial, Inc. dba Trustee Corps.
       Plaintiff Sherry Hernandez (plaintiff) sued the parties responsible for foreclosing
on her residence. She alleged there were defects in the assignment of the deed of trust on
the property such that the entity that initiated the foreclosure sale did so without proper
authority. The trial court sustained demurrers to plaintiff’s complaint and entered a
judgment of dismissal. We issued an opinion affirming the judgment, which noted that
our resolution of the appeal involved an issue that was then pending before our Supreme
Court: whether a borrower has standing to challenge an allegedly defective assignment of
a trust deed by way of a cause of action for wrongful foreclosure.
       Several months later, the Supreme Court issued its decision in Yvanova v. New
Century Mortgage Corporation (2016) 62 Cal.4th 919 (Yvanova) and held—contrary to
our earlier resolution of the issue, and disapproving three Court of Appeal decisions on
which we relied—a borrower does have standing to challenge assignments that are
allegedly void (but not merely voidable). The Supreme Court granted review of our prior
decision and remanded the case to us with directions to vacate our opinion and reconsider
the matter in light of Yvanova. We do so now, concluding plaintiff should have an
additional opportunity to amend her complaint to state a valid wrongful foreclosure
claim, having never had the chance to do so consistent with the principles our Supreme
Court has now identified in Yvanova.

                                    I. BACKGROUND
       Plaintiff’s husband, Alfredo Hernandez, borrowed $752,500 from Your-Best-Rate
Financial, LLC, evidenced by his promissory note in that amount (the Note). The Note
was secured by a deed of trust on the family’s Rancho Palos Verdes home (the Property).
The express terms of the trust deed defined the “borrower” to be “Alfredo Hernandez and
[plaintiff], husband and wife and Elizabeth Hernandez, a single woman.” The deed of
trust defined the term “Note” to mean “the promissory note signed by Borrower,” i.e., the
$752,500 note signed on January 18, 2008. Plaintiff, her husband, and her daughter

                                              2
Elizabeth all signed the deed of trust, which included a provision authorizing sale of the
Property in the event of a default on the payments due under the Note.
       The original lender, Your-Best-Rate Financial, LLC, assigned the Note to
CitiMortgage, Inc. on the same day it was executed via a first allonge to the Note. A
copy of the Note included in the appellate record, which we will later describe in more
detail, also includes a second attached allonge that indicates “CitiMortgage, Inc. [b]y and
through its Attorney in Fact PNMAC Capital Management LLC” endorsed the note in
blank, which would operate to assign its interest to whoever holds the Note.
       On January 18, 2012, PennyMac Loan Services recorded an assignment of the
deed of trust on the Property (the Assignment). By its terms, the Assignment indicates
Mortgage Electronic Registration Systems, Inc. (MERS),1 the nominee “for Lender and
Lender’s successors and assigns” under the deed of trust, assigned “all beneficial
interest” under the trust deed to PNMAC Opportunity Fund Investors, LLC (PNMAC).
On its face, the Assignment indicates it was executed on January 5, 2012, by Todd
Graves (Graves), acting in his capacity as an assistant secretary of MERS. The
Assignment also bears an attestation by Corina Castillo, a Los Angeles County Notary
Public, that Graves personally appeared before her and proved by satisfactory evidence
that he executed the Assignment.
       The same day the Assignment was recorded, MTC Financial, Inc. dba Trustee
Corps (Trustee Corps)2 recorded a Notice of Default and Election to Sell, stating the Note

1
        “MERS was formed by a consortium of residential mortgage lenders and investors
to streamline the transfer of mortgage loans and thereby facilitate their securitization. A
member lender may name MERS as mortgagee on a loan the member originates or owns;
MERS acts solely as the lender’s ‘nominee,’ having legal title but no beneficial interest in
the loan. When a loan is assigned to another MERS member, MERS can execute the
transfer by amending its electronic database. When the loan is assigned to a nonmember,
MERS executes the assignment and ends its involvement.” (Yvanova, supra, 62 Cal.4th
at p. 931, fn. 7.)
2
       Trustee Corps was named the substitute trustee on February 14, 2012, and the
Substitution of Trustee was recorded on July 10, 2012.
                                            3
was in default in the amount of $55,059.76. Trustee Corps served and recorded a notice
of trustee’s sale on July 10, 2012, which scheduled the foreclosure sale to take place on
August 6, 2012.
        The sale was postponed when an automatic stay took effect upon the filing of a
bankruptcy petition by Elizabeth Hernandez, plaintiff’s co-trustor under the deed of trust.
During the trial court proceedings in this case, both PNMAC and Trustee Corps asked the
court to take judicial notice of certain documents filed during the bankruptcy
proceedings. Among the documents was the bankruptcy court’s tentative ruling on
PNMAC’s motion for relief from the automatic bankruptcy stay. In its tentative ruling,
the bankruptcy court questioned PNMAC’s interest in the Note and gave the parties
additional time to provide evidence that PNMAC was entitled to enforce the terms of the
Note. Also among the documents was a March 13, 2013, supplemental declaration from
Rita Garcia, a Bankruptcy Manager for PNMAC’s authorized agent. The declaration
attached a copy of the Note with the second allonge purporting to show the Note had
been endorsed in blank by CitiMortgage. (See, ante, at p. 3.) The Garcia declaration
asserted “[PNMAC] has possession and control of the original Note with attached
Allonges. As a result, [PNMAC] is the real party in interest.”
        Once PNMAC submitted the Garcia declaration with the Note and two attached
allonges, the bankruptcy court ruled PNMAC had standing to seek relief from the
automatic stay. Specifically, the bankruptcy court held PNMAC’s submission of the
Note, trust deed, and the Assignment was sufficient to establish it had “a colorable claim”
in the Property.3 The Bankruptcy Court accordingly lifted the automatic stay on April 15,
2013.

3
       The bankruptcy court explained: “Movant also attache[d] a copy of the Note with
allonges to the Supplemental Declaration. One of the allonges . . . was not [previously]
submitted with the Motion, and appears to be an endorsement in blank by CitiMortgage,
Inc. (‘Citimortgage’).”
                                             4
       On April 16, 2013, Trustee Corps conducted the foreclosure sale of the Property.
PNMAC purchased the Property for $695,000, and a Trustee’s Deed Upon Sale to that
effect was subsequently recorded in the County Recorder’s Office.
       In the meantime, plaintiff had filed a lawsuit against defendants PNMAC and
Trustee Corps in Los Angeles Superior Court. She filed a first amended complaint after
the foreclosure sale, and later a second amended complaint (the operative complaint) on
December 2, 2013. The operative complaint asserts four causes of action: (1) “Violation
of California Commercial Code–Fraudulent Assignment,” (2) Quiet Title, (3) Wrongful
Foreclosure, and (4) “cancellation of instrument,” specifically, the deed of trust, notice of
default, and notice of trustee’s sale.
       The overall gist of the operative complaint is fairly summed up by a sentence in
one of its general allegations: “This action arises out of the wrongful conduct of the
defendants as concerns a fraudulent assignment of deed of trust and a wrongful
foreclosure on the . . . Property.” (Operative Complaint ¶ 7.) The theory of the operative
complaint, as taken from the general allegations and portions of the allegations set forth
in connection with the designated causes of action, is that PNMAC had no interest in the
trust deed, and thus no right to foreclose on the Property, because MERS never in fact
assigned the trust deed to PNMAC. Instead, plaintiff alleges Graves (whose signature
ostensibly appears on the Assignment) “is not, nor has he ever been” a representative of
MERS. (Operative Complaint ¶ 25.) In the same vein, plaintiff further alleges the notary
that verified Graves signed the Assignment “is or was an employee of one or more of
[defendants]” and that she “has been indicted and is currently being prosecuted in Los
Angeles California for criminal misuse of her notary seal.” (Operative Complaint ¶¶ 25,
39.) Plaintiff further alleges, on information and belief, that defendants have no
beneficial interest in the Note, and that the “Note was never assigned, sold, transferred or
otherwise conveyed to Defendants.” (Operative Complaint ¶¶ 13, 15.)
       Significantly, the Operative Complaint contains somewhat contradictory
allegations concerning the validity of the trust deed and the notice documents associated

                                              5
with the foreclosure process. In the portion of her complaint pertaining to the cause of
action for cancellation of instruments, plaintiff requests entry of judgment “declaring the
Assignment of Deed of Trust, Notice of Default and Election to Sell and Notice of
Trustee Sale, to be void ab initio.” (Operative Complaint ¶ 55.) Just six paragraphs later,
however, plaintiff states she “is the person against whom the instruments are void or
voidable,” and she is therefore entitled to relief. (Operative Complaint ¶ 61 [emphasis
added].) As to her cause of action for wrongful foreclosure, plaintiff does allege “[t]here
has been no valid assignment of any deed of trust” (Operative Complaint ¶ 39), but she
makes no assertion as to whether the Assignment was void, or merely voidable. Rather,
she states only that she seeks money damages and an order declaring the deed recorded
upon completion of the foreclosure sale void. (Operative Complaint ¶¶ 47, 48.)
       As they had in response to each of her two prior complaints, PNMAC and Trustee
Corps demurred to the operative complaint. They contended all of plaintiff’s causes of
action failed because she had not unconditionally tendered the amounts due under the
Note, and because the comprehensive statutory framework for nonjudicial foreclosures
precluded her from stating a valid cause of action. As to the wrongful foreclosure and
Commercial Code causes of action in particular, PNMAC asserted plaintiff could not
“seek judicial review as to whether the entity that initiated the non-judicial foreclosure
proceedings was authorized to do so.”
       In a written ruling issued after the trial court took the matter under submission, the
court granted defendants’ request for judicial notice of the trust deed, Assignment, and
other documents recorded in the Los Angeles County Recorder’s Office, as well as the
documents concerning Elizabeth Hernandez’s bankruptcy proceeding. The court
sustained the demurrers filed by defendants as to all four causes of action without leave
to amend. The trial court reasoned the complaint failed to allege that plaintiff
unconditionally tendered the amount of indebtedness, or facts to establish that tender was
not required; the complaint failed to sufficiently allege that plaintiff suffered prejudice by
reason of the foreclosure; and the allegation that the document assigning the trust deed

                                              6
contained an improper signature was insufficient, absent prejudice, to state a cause of
action. The court elaborated on the concept of prejudice, explaining plaintiff had not
asserted she or her husband attempted to pay the outstanding debt and thus, in the court’s
view, “the victim of the alleged improper execution of the Deed of Trust and improper
notarization would be the lender which would have been entitled to foreclose, not the
Plaintiff.”
       The trial court entered a judgment of dismissal, and plaintiff timely appealed. In
an opinion filed on December 18, 2015, we affirmed the judgment. We rested our
holding largely on our conclusion that a foreclosure plaintiff does not have standing to
challenge an entity’s authority to initiate foreclosure proceedings based on an allegedly
defective assignment. We noted, however, that the standing issue we resolved against
plaintiff was pending before our Supreme Court in Yvanova. Plaintiff sought review in
the Supreme Court on that basis, and the Supreme Court issued an order remanding the
matter to us for reconsideration in light of its newly issued Yvanova opinion.

                                     II. DISCUSSION
       Plaintiff filed the operative complaint in December 2013, long before our Supreme
Court decided Yvanova. As it is now pled, the complaint does not adequately state a
valid cause of action, and plaintiff in her supplemental briefing after remand does not
seriously contend otherwise. Rather, the focus of the parties’ dispute is now whether
there is a reasonable possibility plaintiff could state a valid cause of action for wrongful
foreclosure post-Yvanova. In particular, plaintiff contends that although the operative
complaint “contained an erroneously labeled, and perhaps inartfully[ ] drafted first cause
of action,” the gist of the complaint was that plaintiff “was arguing she had the right to
question the foreclosure due to a void assignment of the Deed of Trust.” Plaintiff argues
there is a reasonable probability she can plead facts stating a valid claim for wrongful
foreclosure consistent with the parameters established in Yvanova and urges us to remand
the case to the trial court so she may have an opportunity to do so. Owing to the

                                              7
significant change in controlling authority, and seeing no basis to conclude at this stage
that a wrongful foreclosure claim against PNMAC would be doomed, we agree she
should have that opportunity. As to Trustee Corps, however, a wrongful foreclosure
claim is doomed, as we shall explain. We therefore affirm the judgment of dismissal
solely as to that party.

       A.      Standard of Review
       We review de novo the trial court’s order sustaining the demurrers and we
determine whether the operative complaint states a valid cause of action. (Brown v.
Deutsche Bank National Trust Company 204 Cal.App.4th 433.) “[W]e accept the truth of
material facts properly pleaded in the operative complaint, but not contentions,
deductions, or conclusions of fact or law. We may also consider matters subject to
judicial notice. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.) To determine whether
the trial court should, in sustaining the demurrer, have granted the plaintiff leave to
amend, we consider whether on the pleaded and noticeable facts there is a reasonable
possibility of an amendment that would cure the complaint’s legal defect or defects.
(Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)” (Yvanova, supra, 62
Cal.4th at p. 924 [footnote omitted].)

       B.      The Operative Complaint Does Not Now State a Valid Cause of Action
               1.     Claims other than wrongful foreclosure
       We adhere to our prior opinion’s resolution of plaintiff’s appeal as to the first,
second, and fourth causes of action in the operative complaint, for violation of the
Commercial Code, quiet title, and cancellation of instruments, respectively. As the trial
court concluded, the Commercial Code has no application in the realm of nonjudicial
foreclosure. (Debrunner v. Deutsche Bank Nat. Trust Co (2012) 204 Cal.App.4th 433,
441.) In addition, “[i]t is settled in California that a mortgagor cannot quiet his title
against the mortgagee without paying the debt secured,” which plaintiff has not done.

                                               8
(Shimpones v. Stickney (1934) 219 Cal. 637, 649; accord, Lueras v. BAC Home Loans
Servicing, LP (2013) 221 Cal.App.4th 49, 86 [citing additional cases].) And as to the
cause of action for cancellation of instruments, plaintiff has alleged no facts which would
support cancellation of the Note or deed of trust because she does not dispute the validity
of those documents; she challenges only the validity of the trust deed’s transfer by way of
the Assignment.

              2.     The wrongful foreclosure cause of action
       The elements of a claim for wrongful foreclosure are “(1) the trustee or mortgagee
caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a
power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but
not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where
the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount
of the secured indebtedness or was excused from tendering.” (Lona v. Citibank, N.A.
(2011) 202 Cal.App.4th 89, 104.)
       In our prior opinion, we relied on three Court of Appeal decisions that held a
plaintiff who does not dispute obligations owed under a promissory note or deed of trust
cannot demonstrate prejudice from an allegedly defective assignment because the
assignment merely substitutes one party for another without changing the underlying
obligations; the true victim of the defective assignment in such circumstances, so the
argument goes, is the lender not the plaintiff. (Hernandez v. PNMAC Mortgage
Opportunity Fund Investors, LLC, et al. (Dec. 18, 2015, B258583 [nonpub. opinion,
citing Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th
75; Herrera v. Federal Nat. Mortg. Assn. (2012) 205 Cal.App.4th 1495; Fontenot v.
Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256].) There was another Court of
Appeal decision holding to the contrary, Glaski v. Bank of America (2013) 218
Cal.App.4th 1079, but at the time it occupied, as one court has described it, “a lonely

                                              9
minority position on one side of a split in the California courts.” (Lundy v. Selene
Finance, LP (N.D. Cal. Mar. 17, 2016, No. 15CV05676JST) 2016 WL 1059423.)
       The Yvanova decision changed that, siding with Glaski and marking a sharp shift
in the pre-existing legal landscape. In Yvanova, our Supreme Court resolved what it
described as the narrow question on which it granted review: “whether the borrower on a
home loan secured by a deed of trust may base an action for wrongful foreclosure on
allegations a purported assignment of the note and deed of trust to the foreclosing party
bore defects rendering the assignment void.” (Yvanova, supra, 62 Cal.4th at p. 923.) The
court held “an allegation that the assignment was void, and not merely voidable at the
behest of the parties to the assignment, will support an action for wrongful foreclosure.”
(Id. at p. 924.) Although the court rejected the financial institution defendants’ argument
that the plaintiff had no standing to bring a wrongful foreclosure claim based on an
allegedly defective assignment, the court’s opinion did include language disclaiming any
intent to resolve questions concerning the substantive elements of the wrongful
foreclosure tort or the factual showing needed to meet those elements. (Ibid.)
       In her supplemental briefing, plaintiff essentially concedes the complaint,
including the wrongful foreclosure cause of action, does not now state a valid claim. She
acknowledges portions of the complaint are “perhaps inartfully[ ] drafted” and she
recognizes “[a] favorable ruling at this stage will still mean the borrower must file a
complaint that makes sufficient allegations.” We agree, for her alternative usage of void
or voidable, and the allegations made specifically in connection with her wrongful
foreclosure claim, leaves her theory of liability unclear, and unclear in a manner that
makes all the difference under Yvanova. But the conclusion the complaint is not
sufficient as it stands does not end our inquiry; rather, plaintiff devotes nearly the entirety
of her supplemental briefing to making the case that she deserves an opportunity to
amend the complaint to state a wrongful foreclosure claim with the benefit of our
Supreme Court’s guidance in Yvanova.

                                              10
       C.     Plaintiff Is Entitled to An Additional Opportunity to Allege a Valid Cause of
              Action for Wrongful Foreclosure against PNMAC
       When addressing whether leave to amend a complaint was erroneously denied, a
plaintiff “must show in what manner he can amend [the] complaint and how that
amendment will change the legal effect of [the] pleading.” (Goodman v. Kennedy (1976)
18 Cal.3d 335, 349, internal citations omitted.) We decide whether there is a reasonable
possibility the defect or defects in the complaint can be cured by an amendment; if so, the
court has abused its discretion and we reverse. (City of Dinuba v. County of Tulare
(2007) 41 Cal.4th 859, 865.)
       As we have said, the Yvanova decision represented a significant shift from pre-
existing case law, and in light of Yvanova, we hold there is a reasonable possibility
plaintiff can amend to state a valid cause of action for wrongful foreclosure.4 Taken
together, portions of the existing operative complaint and plaintiff’s supplemental
briefing in this court are sufficient indication she intends to allege PNMAC was not the
true beneficiary because the Assignment was absolutely void—not simply voidable.5
(Yvanova, supra, 62 Cal.4th at p. 935 [“If a purported assignment necessary to the chain
by which the foreclosing entity claims that power [to complete a nonjudicial foreclosure]
is absolutely void, meaning of no legal force or effect whatsoever [citations], the
foreclosing entity has acted without legal authority by pursuing a trustee’s sale, and such
an unauthorized sale constitutes a wrongful foreclosure”].) PNMAC, however, counters
that mere allegations an Assignment is defective and thereby void are insufficient; to
plead wrongful foreclosure a plaintiff must identify facts establishing how the
Assignment is void. We agree that a plaintiff does not state a valid cause of action solely

4
        This shift is also why we do not fault plaintiff for articulating only now how she
would amend the complaint in an effort to state a valid wrongful foreclosure cause of
action.
5
        While a void contract is one without legal effect that binds no one and is a mere
nullity, a voidable contract is one that the parties thereto may declare void but is not void
in itself. (Yvanova, supra, 62 Cal.4th at pp. 929-930.)
                                              11
by including boilerplate language in a complaint asserting an assignment is void. (Glaski
v. Bank of America, supra, 218 Cal.App.4th at p. 1094.) But our reading of the operative
complaint along with the additional facts plaintiff now represents she can plead
establishes a reasonable possibility plaintiff can go beyond mere allegations and present a
specific wrongful foreclosure theory on which she intends to rely, namely, that the person
who ostensibly executed the Assignment, Graves, in fact had no authority to act on
MERS’s behalf; or if he did, he did not in fact execute the Assignment because the
notary, Castillo, who has since apparently been convicted (not just indicted) for misuse of
her notary seal falsely verified his signature; and that just months before the Assignment
was ostensibly executed there were competing claimants on the beneficial interest in the
Note.
        PNMAC, however, has what appears at first blush to be a forceful
counterargument. PNMAC claims, relying on the Garcia declaration that was among the
bankruptcy documents the trial court judicially noticed, that it was the holder of the Note
at the time foreclosure proceedings were instituted. If PNMAC could properly and
conclusively establish at this stage of the proceedings that it did hold the Note at the
relevant time, that would be dispositive and preclude a wrongful foreclosure cause of
action because a deed of trust automatically transfers with the Note it secures—even
without a separate assignment. (Civ. Code, § 2936; Yvanova, supra, 62 Cal.4th at p. 927
[“The deed of trust, moreover, is inseparable from the note it secures, and follows it even
without a separate assignment”].)
        On appeal from the trial court’s demurrer ruling, however, we are not in a position
to accept PNMAC’s counterargument for two reasons. First, the operative complaint
alleges (and it appears plaintiff would persist in the allegation) that PNMAC was not the
holder of the Note. In many situations courts may take judicial notice of the existence
and facial contents of publicly recorded documents and certain documents filed in other
judicial proceedings notwithstanding contrary allegations leveled in a complaint.
(Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th at pp. 264-265 [court may

                                             12
take judicial notice of facts that cannot reasonably be controverted].) The question of
who the holder of a note is, however, is disputable (at least in this case), and we will not
assume the truth of facts asserted in the Garcia declaration to disregard the complaint’s
contrary allegations. (Yvanova, supra, 62 Cal.4th at p. 924, fn. 1 [taking judicial notice
of a recorded deed of trust and other documents but “not of disputed or disputable facts
stated therein”].) Further, even if it were proper to take judicial notice of the truth of the
facts to which Garcia attested in her declaration, there is nothing in the declaration or on
the second allonge to the Note itself—which is undated—that establishes when PNMAC
came to be its holder.6 Without a basis to conclude PNMAC was the holder at the time it
instituted foreclosure proceedings, we are convinced there remains a reasonable
possibility plaintiff can state a proper wrongful foreclosure claim.
       In our prior opinion, we also held the operative complaint failed for insufficient
allegations concerning the prejudice element of a wrongful foreclosure claim because she
did not dispute that her husband had ceased making payments on the Note and there was
no allegation, nor reason to believe, that CitiMortgage (the holder of the Note prior to the
asserted fraudulent Assignment) would not have proceeded with foreclosure. To support
our conclusion on that point, we relied on Siliga v. Mortgage Electronic Registration
Systems, supra, 219 Cal.App.4th 75. PNMAC contends there is no reasonable
probability plaintiff could amend her complaint to state a wrongful foreclosure claim for
this same reason.
       We believe our prior prejudice rationale no longer holds. Siliga is one of the cases
Yvanova has now expressly disapproved to the extent it held borrowers lack standing to
challenge an assignment of the deed of trust as void. (Yvanova, supra, 62 Cal.4th at

6
      Not only is the second allonge to the Note undated, it is executed on
CitiMortgage’s behalf “[b]y and through its Attorney in Fact PNMAC Capital
Management LLC.” The parties have not pointed to a document in the record before us
memorializing an agreement by CitiMortgage to have PNMAC Capital Management
LLC act as its attorney in fact.
                                              13
p. 939, fn. 13.) Moreover, more than once in its opinion, our Supreme Court casts doubt
on the rationale on which we relied to conclude there was an insufficient allegation of
prejudice. (Id. at p. 941 [“Without discussing Glaski, the Siliga court also held the
borrower plaintiffs failed to show any prejudice from, and therefore lacked standing to
challenge, the assignment of their deed of trust to the foreclosing entity. . . . As already
explained, this prejudice analysis misses the mark in the wrongful foreclosure context.
When a property has been sold at a trustee’s sale at the direction of an entity with no legal
authority to do so, the borrower has suffered a cognizable injury”]; see also, e.g., id. at
p. 938 [“The logic of defendants’ no-prejudice argument implies that anyone, even a
stranger to the debt, could declare a default and order a trustee’s sale—and the borrower
would be left with no recourse because, after all, he or she owed the debt to someone,
though not to the foreclosing entity. This would be an ‘odd result’ indeed”] (emphasis
omitted).) To be sure, Yvanova does state its holding is narrow, and it does disclaim any
intent to address the substantive elements of the wrongful foreclosure tort. But we cannot
reconcile our prior lack-of-prejudice holding—that plaintiff failed to allege another entity
would not have foreclosed—with Yvanova’s statements indicating no such allegation is
necessary to state a wrongful foreclosure claim. (See Sciarratta v. U.S. Bank National
Association 247 Cal.App.4th 552 [202 Cal.Rptr.3d 219, 221-222] [“[W]e conclude that a
homeowner who has been foreclosed on by one with no right to do so—by those facts
alone—sustains prejudice or harm sufficient to constitute a cause of action for wrongful
foreclosure”].) In addition, and in any event, “[w]hatever merit [a] rule [requiring proof
the true beneficiary would not have foreclosed] would have” on the ultimate question of
liability (Yvanova, supra, 62 Cal.4th at pp. 938-939), a plaintiff who states a cause of
action consistent with Yvanova is entitled to an opportunity to show through discovery
that the proper party to foreclose would not have foreclosed, or at least would not have
instituted foreclosure proceedings as quickly as the actual foreclosing party in fact did.
       PNMAC additionally argues plaintiff cannot carry her burden to show a
reasonable possibility of amending to state a valid wrongful foreclosure claim because

                                              14
she cannot plead tender, i.e., that she paid or offered to pay the amount due under the
Note. Yvanova, while expressly reserving decision on the question of whether tender is
required to set aside a foreclosure sale based on a claim of wrongful foreclosure, did cite
cases holding there are exceptions to the tender rule. (Yvanova, supra, 62 Cal.4th at
p. 929, fn. 4 [citing cases and explaining “[t]ender has been excused when, among other
circumstances, the plaintiff alleges the foreclosure deed is facially void, as arguably is the
case when the entity that initiated the sale lacked authority to do so”]; see also, e.g.,
Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, 1280-1281
[citing cases]; Barrionuevo v. Chase Bank, N.A. (N.D. Cal. 2012) 885 F.Supp.2d 964,
969.) We believe there is a reasonable possibility plaintiff can plead sufficient facts in a
Third Amended Complaint to state a cause of action that would come within one of the
recognized exceptions—particularly if, as plaintiff now contends, the complaint “would
be nothing more than an action for money damages,” rather than an attempt to unwind the
completed foreclosure sale.
       Next, PNMAC asserts plaintiff cannot state a valid wrongful foreclosure claim
because she did not sign the Note and Yvanova is framed only in terms of what a
“borrower” may allege. This argument fails because plaintiff is named in the trust deed,
which she signed, as a “borrower” on the Note. We are convinced Yvanova did not use
the term borrower in any more technical or restrictive sense than that.
       Finally, we emphasize we do not hold plaintiff necessarily has a valid cause of
action for wrongful foreclosure against PNMAC. Rather, consistent with the well-
established standard we apply at this stage of the proceedings, we hold only that there is
reasonable possibility that she will be able to plead such a claim. We therefore remand
the matter to the trial court to give her that opportunity, which if again contested via
demurrer by PNMAC, the trial court will decide on the record before it.

                                              15
       D.      Even in Light of Yvanova, the Trial Court Correctly Sustained Trustee
               Corps’ Demurrer Without Leave to Amend
       “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.’ (Biancalana v. T.D. Service Co.
(2013) 56 Cal.4th 807, 813.) . . . . [¶] . . . [¶] 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. (Biancalana v. T.D. Service Co., supra, 56 Cal.4th at p. 819; Vournas
v. Fidelity Nat. Tit. Ins. Co. (1999) 73 Cal.App.4th 668, 677.) 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 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. (Civ. Code, § 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 pp. 926-927.)
       We have held it is reasonably possible plaintiff can state a valid wrongful
foreclosure cause of action against PNMAC, and we remand to give her that opportunity.
She is not entitled, however, to leave to amend as to Trustee Corps because we are
convinced there is no reasonable possibility she could state a valid wrongful foreclosure
cause of action against that entity.
       It is undisputed that Trustee Corps instituted foreclosure proceedings by recording
a notice of default and a notice of sale. But given the circumscribed role of a trustee in
foreclosure proceedings, merely alleging that Trustee Corps took these actions at

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PNMAC’s behest is not a sufficient basis on which wrongful foreclosure liability can be
predicated. The apparent basis for the operative complaint’s assertion of a wrongful
foreclosure cause of action against Trustee Corps were allegations that PNMAC and
Trustee Corps, labeled by plaintiff the “conspiring defendants,” joined together in some
unspecified manner to form a “conspiracy” and perpetrate “actual fraud” in the
assignment of the trust deed. (Operative Complaint ¶¶ 8, 25, 26, 40.) These, however,
are mere conclusory allegations insufficient to allege conspiracy. (State of California ex
rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal.App.4th 402, 419; Nicholson
v. McClatchy Newspapers (1986) 177 Cal.App.3d 509, 521; see also Kachlon v.
Markowitz, supra, 168 Cal.App.4th at pp. 333, 343 [actions taken by a foreclosure trustee
privileged under Civil Code, §§ 47 & 2924, subd. (d) unless malicious].) Plaintiff’s
supplemental briefing offers nothing as to how she could plead facts sufficient to state a
claim against Trustee Corps specifically, and no viable path for a wrongful foreclosure
cause of action against that entity is otherwise apparent. We therefore uphold the trial
court’s decision to sustain the demurrer without leave to amend as to Trustee Corps.

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                                     DISPOSITION
      The judgment of dismissal is affirmed as to defendant Trustee Corps. The
judgment of dismissal is reversed as to defendant PNMAC and the matter remanded for
further proceedings consistent with this opinion. Defendant Trustee Corps shall recover
its costs on appeal. Plaintiff and defendant PNMAC shall bear their own costs on appeal.

               NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                       BAKER, J.
We concur:

      KRIEGLER, Acting P.J.

      RAPHAEL, 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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