Court Opinion

ID: 4661996
Source: CourtListenerOpinion
Date Created: 2021-02-22 21:02:37.13183+00
Date Added: 2024-06-11T08:02:17.945205
License: Public Domain

Filed 2/22/21 Park v. Wells Fargo Bank CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SEVEN

 SEAN PARK et al.,                                               B304469

         Plaintiffs and Appellants,                              (Los Angeles County
                                                                 Super. Ct. No. SC121710)
           v.

 WELLS FARGO BANK, N.A. et al.,

         Defendants and Respondents.

     APPEAL from a judgment of the Superior Court of
Los Angeles County, Mark A. Young, Judge. Affirmed.
     Stephen F. Lopez for Plaintiffs and Appellants.
     Sheppard, Mullin, Richter & Hampton, Mark G. Rackers,
and Karin Dougan Vogel for Defendants and Respondents.

                            _____________________________
                       INTRODUCTION

     In this wrongful foreclosure action by Sean and Michelle
Park against Wells Fargo Bank, N.A. and others, the Parks
appeal from the judgment of dismissal entered after the trial
court—on remand following the Parks’ previous, semi-successful
appeal—sustained Wells Fargo’s demurrer to the Parks’ second
amended complaint without leave to amend. We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

      A.     Wells Fargo Initiates Foreclosure Proceedings on the
             Parks’ Property
       In October 2007 the Parks refinanced the property at issue
in this case with a $887,520 loan from World Savings Bank,
evidenced by a promissory note secured by a deed of trust
encumbering the property. The deed of trust identified World
Savings Bank and “its successors and/or assignees” as the lender
and beneficiary and Golden West Savings Association Service Co.
(Golden West) as trustee. Under the deed of trust, the Parks
conveyed the property to the trustee, in trust for the lender, with
a power of sale in the event of default and agreed the lender could
appoint a successor trustee. According to the operative
complaint, “[a]s of December 31, 2007” World Savings Bank
“became known as Wachovia Mortgage, FSB,” and on
December 31, 2008 that entity “merged with” Wells Fargo.
       In 2010 Wells Fargo, through its attorney-in-fact Cal-
Western Reconveyance Corporation, executed a substitution of
trustee with an “[e]ffective [d]ate” of July 22, 2010, which
purported to substitute Cal-Western for Golden West as trustee

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under the Parks’ deed of trust. On July 23, 2010 Cal-Western
issued a notice of default stating the Parks owed payments since
July 2009 and attaching a declaration from Wells Fargo
authorizing the notice of default. In October 2010 and again in
April 2012 Cal-Western issued a notice of trustee’s sale that was,
in both instances, postponed. In November 2013 Cal-Western
issued a third notice of trustee’s sale.

      B.     The Parks File This Action, and the Trial Court
             Sustains a Demurrer by Wells Fargo and Others
             Without Leave To Amend
       In November 2013, following the third notice of trustee’s
sale, the Parks filed this action against, among others, Wells
Fargo, Golden West, and Bank of New York Mellon (BNYM) as
trustee of World Savings Mortgage Pass-Through Certificates
Series 31 Trust (Trust), an entity the Parks alleged was involved
at some point in “an [unsuccessful] attempt to securitize their
loan.” The Parks asserted causes of action for, among other
things, wrongful initiation of foreclosure, breach of contract, and
fraud. They also filed an ex parte application for a temporary
restraining order to stay the foreclosure sale, which the trial
court granted, setting a hearing on the Parks’ request for a
preliminary injunction. On numerous grounds the defendants
demurred to all causes of action and opposed the request for a
preliminary injunction.
       In February 2014 the trial court denied the Parks’ request
for a preliminary injunction and dissolved the temporary
restraining order. The court ruled a money judgment would give
the Parks adequate relief in the event the foreclosure was
wrongful because “[t]he documents submitted to the Court

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indicate that the 4 unit rental property is an investment for the
Plaintiffs.” In March 2014, rather than oppose the demurrer still
pending, the Parks filed a first amended complaint, adding a
cause of action for quiet title. A week later, at the foreclosure
sale, Wells Fargo purchased the property from the trustee,
Cal-Western.
       In April 2014 Wells Fargo, Golden West, and BNYM
demurred to the first amended complaint, after which the Parks
filed an ex parte application for permission to file a second
amended complaint. The trial court denied the Parks’ application
and, in January 2015, sustained the demurrer by Wells Fargo,
Golden West, and BNYM to the first amended complaint without
leave to amend. The Parks appealed.

     C.      On Appeal the Parks Obtain Another Chance To Seek
             Leave To Amend Their Causes of Action Against Wells
             Fargo
      In the Parks’ first appeal, we affirmed the trial court’s
order sustaining the demurrer to the first amended complaint
without leave to amend regarding Golden West and BNYM.
(Park et al. v. Wells Fargo Bank, N.A. et al. (Sept. 13, 2017,
B264026) [nonpub. opn.] (Park I).) We also agreed with the trial
court that, based on the allegations of the first amended
complaint, the Parks lacked standing to assert their wrongful
foreclosure and related causes of action against Wells Fargo.
      In their first amended complaint the Parks had alleged
that, at some point, one of the entities that owned their loan
attempted to securitize it by assigning it to BNYM as trustee of
the Trust and that Wells Fargo, in initiating foreclosure, was
“acting as purported agent for BNYM.” The Parks alleged the

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attempt to assign their loan to BNYM failed, however, because
the loan was not conveyed to the Trust prior to the closing date
prescribed by the Trust’s pooling and service agreement. As a
result, the Parks alleged, Wells Fargo had no authority to
foreclose.
       Addressing these allegations, we observed that in Yvanova
v. New Century Mortgage Corp. (2016) 62 Cal.4th 919 (Yvanova)
the Supreme Court held “‘a wrongful foreclosure plaintiff has
standing to claim the foreclosing entity’s purported authority to
order a trustee’s sale was based on a void assignment of the note
and deed of trust,’” but lacks standing to challenge an assignment
that was merely “‘voidable.’” (Park I, supra, B264026, quoting
Yvanova, at pp. 939-940 and citing Saterbak v. JPMorgan Chase
Bank, N.A. (2016) 245 Cal.App.4th 808, 815 [“Yvanova recognizes
borrower standing only where the defect in the assignment
renders the assignment void, rather than voidable”].) Following
several then-recent decisions by other courts, we held that, under
New York law (which the Parks alleged applied), such “a post-
closing assignment, even in contravention of a trust’s [pooling
and service agreement], is not void, but merely voidable” at the
election of the parties to the assignment. Therefore, we
concluded that the Parks lacked standing to challenge the
assignment of their loan to BNYM on the ground alleged and that
therefore they lacked standing to assert their causes of action
against Wells Fargo.
       On appeal, however, the Parks stated they could allege new
facts to support causes of action against Wells Fargo for wrongful
foreclosure, cancellation, and quiet title. As we summarized it:
“The Parks argue they can allege that, rather than failing to
properly assign their loan into the Trust, Wachovia or World

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Savings in fact successfully assigned the loan, but did so prior to
the merger with Wells Fargo, which the Parks allege was
‘completed’ on or about December 31, 2008. Thus, the theory
goes, the Trust, as the current beneficiary, not Wells Fargo, had
authority to substitute a new trustee and initiate foreclosure.
Accordingly, in July 2010 Wells Fargo did not have authority to
substitute Cal-Western as trustee because World Savings or
Wachovia had already assigned away that right. The Parks
contend the original trustee named in their deed of trust, Golden
West, remains the ‘true’ trustee, and in March 2014 Wells Fargo
lacked authority to foreclose through Cal-Western.” (Park I,
supra, B264026.)
       We concluded the Parks had shown a reasonable possibility
they could amend to state causes of action against Wells Fargo
based on an unauthorized foreclosure sale. We therefore reversed
the judgment in favor of Wells Fargo and directed the trial court
to allow the Parks to file a motion for leave to amend to assert
causes of action against Wells Fargo for wrongful foreclosure,
cancellation, and quiet title based on the Parks’ proposed new
allegations. (Park I, supra, B264026.)

      D.     The Trial Court Sustains Another Demurrer by Wells
             Fargo Without Leave To Amend, and the Parks
             Appeal Again
       After the trial court granted the Parks’ motion for leave to
amend, the Parks filed a second amended complaint asserting
causes of action against Wells Fargo for wrongful foreclosure,
cancellation, and quiet title based on allegations the foreclosure
sale was unauthorized. The Parks alleged Wells Fargo, which
initiated and held the foreclosure sale through Cal-Western,

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lacked authority to do so because “only the beneficiary of a deed
of trust may hold a foreclosure sale” and Wells Fargo was not the
beneficiary of the deed of trust securing their loan, but merely the
servicer of their loan. The Parks alleged that, after originating
their loan, World Savings Bank (before it became known as
Wachovia and later merged with Wells Fargo) sold the loan to
World Savings Real Estate Mortgage Investment Conduit 2007
Trust Series 31, “which became the holder of the promissory note
and beneficiary of [the Parks’] deed of trust.” The Parks alleged
BNYM was and is the trustee of that investment trust. Thus,
according to the Parks, at all relevant times BNYM, not Wells
Fargo, was the beneficiary of the deed of trust with authority to
foreclose.
       Wells Fargo demurred to the second amended complaint,
arguing the Parks still had not stated facts sufficient to
constitute a cause of action against it. The trial court agreed and
sustained the demurrer without leave to amend. The Parks
timely appealed from the ensuing judgment of dismissal.

                          DISCUSSION

       A.     Standard of Review
       “‘In reviewing an order sustaining a demurrer, we examine
the operative complaint de novo to determine whether it alleges
facts sufficient to state a cause of action under any legal theory.
[Citation.] Where the demurrer was sustained without leave to
amend, we consider whether the plaintiff could cure the defect by
an amendment.’ [Citations.] When evaluating the complaint, ‘we
assume the truth of the allegations.’ [Citations.] ‘A judgment of
dismissal after a demurrer has been sustained without leave to

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amend will be affirmed if proper on any grounds stated in the
demurrer, whether or not the court acted on that ground.’”
(Heshejin v. Rostami (2020) 54 Cal.App.5th 984, 992.) “A trial
court abuses its discretion by sustaining a demurrer without
leave to amend where ‘“there is a reasonable possibility that the
defect can be cured by amendment.”’ [Citations.] ‘“The plaintiff
has the burden of proving that [an] amendment would cure the
legal defect, and may [even] meet this burden [for the first time]
on appeal.”’” (Ibid.)

      B.     The Trial Court Did Not Err in Sustaining the
             Demurrer Without Leave To Amend
      The Parks contend they stated facts sufficient to constitute
a cause of action against Wells Fargo for wrongful foreclosure
“because the [foreclosure] sale held by [Wells Fargo] and Cal-
Western was void because as of the date of the sale [Wells Fargo]
was not the beneficiary of the deed of trust.” They further
contend that, “[a]s a result of the void sale, [the Parks] also state
a cause of action for quiet title, which was later transferred by
[Wells Fargo] as the purchaser at the sale to [another entity] and
for cancellation of the do[cuments] that gave rise to the sale.” In
other words, all three of the Parks’ causes of action rest on their
assertion Wells Fargo lacked authority to initiate and conduct the
foreclosure because it was not the beneficiary under the deed of
trust. To support that assertion, the Parks cite Yvanova, supra,
62 Cal.4th 919, which they argue “made . . . clear that only a non-
judicial foreclosure sale by the beneficiary of the deed of trust is
valid and a sale by someone other than the beneficiary is void.”
      As Wells Fargo points out, however, the Parks misread
Yvanova. What the Supreme Court said there was this: “A

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foreclosure initiated by one with no authority to do so is wrongful
for purposes of [a wrongful foreclosure] action. [Citations.] . . .
[O]nly the original beneficiary, its assignee or an agent of one of
these has the authority to instruct the trustee to initiate and
complete a nonjudicial foreclosure sale.” (Yvanova, supra,
62 Cal.4th at p. 929, italics added.) Indeed, contrary to the
Parks’ central legal premise, “California’s statutory nonjudicial
foreclosure scheme [citations] does not require that the
foreclosing party have a beneficial interest in or physical
possession of the note. [Citations.] [Civil Code section 2924,
subdivision (a)(1),] specifically permits the ‘trustee, mortgagee, or
beneficiary, or any of their authorized agents’ to institute
foreclosure . . . .” (Shuster v. BAC Home Loans Servicing, LP
(2012) 211 Cal.App.4th 505, 511; accord, Orcilla v. Big Sur, Inc.
(2016) 244 Cal.App.4th 982, 1004; see Civ. Code, §§ 2924,
subd. (a)(1), 2304 [agent has authority to do any act the principal
may do].)
       Thus, even assuming Wells Fargo was not the beneficiary
of the Parks’ deed of trust at the time of foreclosure, as the Parks
allege (and Wells Fargo vehemently disputes), the Parks have not
alleged facts sufficient to establish Wells Fargo had no authority
to initiate and conduct foreclosure. In fact, the Parks alleged in
their second amended complaint that, when World Savings Bank
sold the Parks’ loan to the investment trust for which BNYM
acted as trustee, World Savings Bank “retained only the servicing
rights” and that, at the time of foreclosure, Wells Fargo was “the
servicer for the true owner,” BNYM. In their opening brief, the
Parks continue to concede Wells Fargo was the rightful servicer
of their loan. But the servicer of a loan may act as “the
beneficiary’s agent” with statutory authority “to proceed with

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foreclosure on the beneficiary’s behalf . . . .” (Kalnoki v. First
American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th
23, 46; see Civ. Code, §§ 2924, subd. (a)(1), 2304.) As the court in
Kalnoki stated, “even assuming for sake of argument that Wells
Fargo was not the beneficiary at the time it initiated the
foreclosure proceedings as the [plaintiffs] allege, they nonetheless
concede Wells Fargo was the loan servicer. As the loan servicer—
the beneficiary’s agent—Wells Fargo was empowered to proceed
with foreclosure on the beneficiary’s behalf . . . .” (Kalnoki, at
p. 46.)
       Moreover, in their first amended complaint the Parks
alleged that Wells Fargo, in initiating foreclosure, was “acting as
purported agent for BNYM.” And although they omitted this
allegation from the second amended complaint, the Parks have
neither disavowed it nor explained the omission. (See Nealy v.
County of Orange (2020) 54 Cal.App.5th 594, 597, fn. 2 [“under
the sham pleadings doctrine, a plaintiff cannot avoid the original
complaint’s harmful allegations by merely filing an amended
complaint omitting or changing them”].)
       The Parks have not shown, or even argued, they can amend
to cure this legal defect in the second amended complaint. In
fact, not having filed a reply brief, they do not address the issue
at all. Therefore, they have failed to demonstrate the trial court
abused its discretion in sustaining Wells Fargo’s demurrer
without leave to amend.

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                        DISPOSITION

      The judgment is affirmed. Wells Fargo is to recover its
costs on appeal.

                  SEGAL, J.

     We concur:

                  PERLUSS, P. J.

                  FEUER, J.

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