Court Opinion

ID: 4571989
Source: CourtListenerOpinion
Date Created: 2020-10-01 17:02:39.5263+00
Date Added: 2024-06-11T13:30:22.890518
License: Public Domain

Filed 10/1/20 Kamal v. Deutsche Bank National Trust Co. CA2/6
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIX

MAJID KAMAL et al.,                                              2d Civil No. B301673
                                                               (Super. Ct. No. 56-2019-
     Plaintiffs and Appellants,                                00528212-CU-OR-VTA)
                                                                   (Ventura County)
v.
DEUTSCHE BANK NATIONAL
TRUST COMPANY etc. et al.,
     Defendants and Respondents,

             Here, a verified complaint for wrongful foreclosure
incorporates the deed of trust that authorized the loan
assignment and nonjudicial foreclosure that appellants complain
about. Majid Kamal and Sheri Kamal appeal from a dismissal
entered after the trial court sustained, without leave to amend, a
demurrer to their First Amended Complaint for wrongful
foreclosure and cancellation of instruments. Judgment was
entered for defendants, Deutsche Bank National Trust Company
as trustee for IndyMac INDX Mortgage Loan Trust 2006-AR5,
Mortgage Pass-Through Certificates Series 2006-AR5, and Ocwen
Loan Service, LLC. (herein Deutsche Bank). We affirm.
                    Facts and Procedural History
             Appellants filed this action on May 9, 2019 after their
home was sold at a nonjudicial foreclosure based on their
$600,000+ default on an IndyMac Bank F.S.B. (IndyMac) loan
secured by a deed of trust. Appellants originally purchased the
property in 2006 with a $520,000 IndyMac loan secured by a deed
of trust. The deed of trust stated that Mortgage Electronic
Registration Systems, Inc. (MERS) was the loan beneficiary and
“is acting solely as a nominee for Lender and Lender’s successors
and assigns.” It provided that MERS could exercise any right
belonging to the original lender (IndyMac) and its assigns and
successors, and that MERS could sell the promissory note or a
partial interest in the note without notice to appellants.
             In 2009, after IndyMac failed and was placed in a
Federal Deposit Insurance Corporation (FDIC) receivership,
MERS assigned the Deed of Trust to OneWest Bank, FSB
(OneWest).1 On June 25, 2012, OneWest assigned the deed of

      1 A detailed description of the FDIC takeover of IndyMac
and sale of its assets to OneWest Bank is described in Deutsche
Bank Nat. Trust Co. v. F.D.I.C. (9th Cir. 2014) 744 F.3d 1124,
1127: “On July 11, 2008, the Office of Thrift Supervision closed
IndyMac, appointed the FDIC as receiver, created a new savings
bank, IndyMac Federal, and appointed the FDIC as conservator
(FDIC–C) of IndyMac Federal. Another federal savings bank,
OneWest Bank, was formed as a thrift holding company to
purchase IndyMac Federal’s assets and liabilities. As receiver
and conservator, the FDIC ‘succeeded to all rights, titles, powers,
and privileges of IndyMac Federal, including those arising under
the Governing Agreements or otherwise related to the Trusts.’
As IndyMac Federal’s conservator, the FDIC administered the
Trusts and serviced the mortgages based on servicing rights
established by the Governing Agreements. In that capacity, the

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trust to Deutsche Bank. Appellants had already defaulted on
the loan, and a notice of default and notice of trustee’s sale were
recorded for $613,768.89 due and owing on the loan. Appellants
remained in possession until the nonjudicial foreclosure was
conducted on April 23, 2019. Deutsche Bank was the highest
bidder and the Trustee’s Deed Upon Sale was recorded April 30,
2019.
                           The Complaint
             Appellants filed a verified complaint for $2.5 million
damages nine days later and attached the deed of trust as an
exhibit to the complaint. The complaint stated that the deed of
trust named MERS “as the nominee for IndyMac and its
successors and assignees. A true and correct copy of the [deed of
trust] is attached as Exhibit 1 and is incorporated in full herein
by this reference.”2
             Thereafter, appellants filed a First Amended
Complaint without the deed of trust attached. It stated that
IndyMac assigned the note and deed of trust to IndyMac, M.B.S.
on March 30, 2006. Appellants claimed that IndyMac M.B.S. was

FDIC sold certain assets and rights of IndyMac Federal to
OneWest for approximately $13.9 billion.”

      2 If the complaint incorporates an instrument by reference,
the latter document’s contents prevail over any inconsistent
allegations contained in the pleading. (Dodd v. Citizens Bank of
Costa Mesa (1990) 222 Cal. App. 3d 1624, 1626-1627.) These
admissions are binding on the pleader without further
evidentiary proof. (Kurinij v. Hanna & Morton (1997) 55
Cal. App. 4th 853, 871; Patane v. Kiddoo (1985) 167 Cal. App. 3d
1207, 1213.)

                                 3
“a similarly named, but wholly separate and distinct entity” and
that it “could at least be reasonably inferred (based on law)
that . . . IndyMac ha[s] dispos[e]d itself of any interest in or to the
Note and/or [deed of trust].” When IndyMac failed in 2008, the
Federal Deposit Insurance Commission had MERS transfer
IndyMac’s interest in the note and deed of trust to IndyMac
Federal Bank, F.S.B., and then to OneWest. Appellants claimed
it was too late to do that. The First Amendment Complaint
alleged that the MERS assignment to OneWest in 2009 and the
OneWest assignment to Deutsche Bank in 2012 were void
because IndyMac divested itself of all interest in the note and
deed of trust in 2006. Stated another way, MERS had nothing to
assign and nothing was assigned to Deutsche Bank before the
foreclosure. The First Amended Complaint prayed for $2.5
million damages and cancellation of the deed of trust
assignments and foreclosure documents recorded after January 1,
2007.
                            The Demurrer
              Deutsche Bank filed a demurrer and requested that
the trial court take judicial notice of the recorded deed of trust
and foreclosure documents. Deutsche Bank argued that the deed
of trust named MERS as the beneficiary and the nominee of
IndyMac and its successors or assigns. Appellants did not
contest the authenticity of the recorded documents but argued
that the recitals in the deed of trust (i.e., that MERS was the loan
beneficiary and IndyMac’s nominee) was hearsay and not the
proper subject of judicial notice. The trial court overruled the
objection and sustained the demurrer without leave to amend.

                                  4
                           De Novo Review
              The function of a demurrer is to test whether, as a
matter of law, the facts alleged in the first amended complaint
state a cause of action under any legal theory. (Intengan v. BAC
Home Loans Servicing LP (2013) 214 Cal. App. 4th 1047, 1052
(Intengan).) In our de novo review of the order, we assume the
truth of all facts properly pleaded, but not contentions,
deductions, or conclusions of law. (Ibid.) We determine whether
the alleged facts are sufficient, as a matter of law, to state a
cause of action under any legal theory. (Ibid.) In making this
determination, we consider any facts of which the trial court
properly took judicial notice. (Ibid.)
                        Hearsay - a Non-Issue
              Appellants contends that the trial court erred in
treating the recitals in the deed of trust (i.e., that MERS was the
beneficiary and IndyMac’s nominee) as true. (See Poseidon
Development, Inc. v. Woodland Lane Estates, LLC (2007) 152
Cal. App. 4th 1106, 1117 [trial court may not accept as true
statements contained in documents that are subject to judicial
notice].) But “evidentiary facts found in recitals of exhibits
attached to a complaint or superseded complaint . . . can be
considered on demurrer. [Citations.]” (Frantz v. Blackwell (1987)
189 Cal. App. 3d 91, 94.) Appellants adopted, admitted, and
incorporated the terms of the deed of trust into the verified
complaint. It was a judicial admission that mooted the hearsay
objection.
              On review, we must accept as true the contents
of exhibits attached to the original complaint. (See Barnett v.
Fireman’s Fund Ins. Co. (2001) 90 Cal. App. 4th 500, 505.) “Under
the doctrine of truthful pleading, the courts ‘will not close their

                                5
eyes to situations where a complaint contains allegations of fact
inconsistent with attached documents, or allegations contrary to
facts which are judicially noticed.’ [Citation.] ‘False allegations of
fact, inconsistent with annexed documentary exhibits [citation] or
contrary to facts judicially noticed [citation], may be
disregarded . . . .’ [Citations.]” (Hoffman v. Smithwoods RV
Park, LLC (2009) 179 Cal. App. 4th 390, 400.)
                           The Deed of Trust
             The deed of trust states that MERS was the loan
beneficiary and could assign the security interest at any time
without appellants’ consent. If an assignment was made, it had
to be done by MERS. (See, e.g., Intengan, supra, 214 Cal.App.4th
at pp. 1054-1055.) The allegation that IndyMac assigned the
deed of trust in 2006 to a new entity, rendering the MERS
assignments to OneWest and Deutsche Bank void, lacks any
factual basis. Because only factual allegations are considered on
demurrer, we disregard any contentions, deductions or
conclusions of fact or law alleged in the First Amended
Complaint. (McBride v. Smith (2018) 18 Cal. App. 5th 1160,
1173.)
             Appellants claim that MERS’s agency relationship
with IndyMac terminated when IndyMac failed and was taken
over by the FDIC. But MERS was more than just an agent. It
was the deed of trust beneficiary and IndyMac’s nominee, and the
nominee of IndyMac’s successors and assigns. (See, e.g., Calvo v.
HSBC Bank USA, N.A. (2011) 199 Cal. App. 4th 118, 125.)
“California courts have held that a trustor who agreed under the
terms of the deed of trust that MERS, as the lender’s nominee,
has the authority to exercise all of the rights and interests of the
lender, including the right to foreclose, is precluded from

                                  6
maintaining a cause of action based on the allegation that MERS
has no authority to exercise those rights. [Citations.] The deed
of trust itself, attached to [appellants’ verified complaint],
establishes as a factual matter that MERS has the authority to
exercise all of the rights and interests of the lender. [Citations.]
The authority to exercise all of the rights and interests of the
lender necessarily includes the authority to assign the deed of
trust. [Citation.]” (Siliga v. Mortgage Electronic Registration
Systems, Inc. (2013) 219 Cal. App. 4th 75, 83-84, disapproved on
other grounds in Yvanova v. New Century Mortgage Corp. (2016)
62 Cal. 4th 919, 939, fn. 13.)
              The recitals in the deed of trust are incorporated into
and part of the verified complaint. Appellants cannot do an end
run around their pleading by filing the First Amendment
Complaint sans the deed of trust. “The rationale for this rule is
obvious. ‘A pleader may not attempt to breathe life into a
complaint by omitting relevant facts which made his previous
complaint defective.’ [Citation.] Moreover, any inconsistencies
with prior pleadings must be explained; if the pleader fails to do
so, the court may disregard the inconsistent allegations.
[Citation.] . . . [¶] Furthermore, as a matter of law, allegations in
a complaint must yield to contrary allegations contained in
exhibits to a complaint. [Citation.]” (Vallejo Development Co. v.
Beck Development Co. (1994) 24 Cal. App. 4th 929, 946.) Granting
appellants leave to amend the First Amended Complaint would
serve no useful purpose, given the fact that the actions of
Deutsche Bank, as set forth in the verified original complaint,
does not give rise to a cause of action. (Mercury Casualty Co. v.
Superior Court (1986) 179 Cal. App. 3d 1027, 1035.)

                                  7
                               Tender
             The demurrer was sustained on the alternate ground
that the First Amended Complaint does not allege a tender of the
loan amount, a necessary element of wrongful foreclosure. (Lona
v. Citibank, N.A. (2011) 202 Cal. App. 4th 89, 104.) Appellants
argue that no tender was required because the deed of trust
assignment was void. As discussed, appellants are estopped by
the deed of trust which is attached, incorporated into, and part of
the verified complaint. The deed of trust stated that MERS could
sell or assign the deed of trust at any time. This court cannot
torture the straightforward and ordinary provisions of the deed of
trust to fasten upon Deutsche Bank a liability it never assumed.
(Nichols v. Great American Ins. Cos. (1985) 169 Cal. App. 3d 766,
778.)
                     Statute of Limitations Bar
             An action to cancel an instrument is subject to the
four-year statute of limitations found in Code of Civil Procedure
section 343. (Moss v. Moss (1942) 20 Cal. 2d 640, 645; Salazar v.
Thomas (2015) 236 Cal. App. 4th 467, 477, fn. 8.) The First
Amended Complaint states that the 2009 and 2012 deed of trust
assignments are void and should be canceled. Appellants did not
file suit until May 9, 2019. It is an obvious time bar.
             Appellants argue that the statute of limitations was
tolled until May 2017 when they learned that the assignments
were void. No facts are alleged concerning lack of knowledge,
lack of means of obtaining knowledge in the exercise of
reasonable diligence, and how and when appellants discovered
the assignments were void. (See Fox v. Ethicon Endo-Surgery,
Inc. (2005) 35 Cal. 4th 797, 808-809 [pleading requirements for

                                 8
delayed discovery].) Conclusory allegations do not withstand
demurrer. (Id. at p. 808.)
             Delayed discovery is defeated by presumed or
constructive notice where the foreclosure documents are mailed
and recorded. (Bank of New York Mellon v. Citibank, N.A. (2017)
8 Cal. App. 5th 936, 956.) Appellants were presumptively aware of
the assignments: (1) before May 2015, when the mortgage
servicer (Ocwen Loan Servicing, LLC) contacted appellants on
behalf of Deutsche Bank to explore options to avoid foreclosure as
required by Civil Code section 2923.55; (2) in May 2015, when
Deutsche Bank recorded a substitution of trustee stating it was
the “present beneficiary” under the deed of trust and that is was
substituting Western Progressive, LLC as the new trustee; (3) in
June 2015, when Deutsche Bank recorded and served the notice
of default and election to sell under the deed of trust, and
identified itself as the beneficiary of the deed of trust; (4) and in
December 2015, when the notice of sale was recorded, published,
mailed, and posted on appellant’s door. (Civ. Code, §§ 2924, subd.
(a); 2924f, subd. (b)(1)-(4).)
             In the alternative, appellants claim that Code of Civil
Procedure section 319 provides for a five-year statute of
limitations. But that statute governs actions to determine title of
real property. (Robertson v. Superior Court (2001) 90
Cal. App. 4th 1319, 1327.) The First Amended Complaint
challenges assignments of the deed of trust and goes to the
validity of the real property lien, not title to the property.
Appellants finally argue that the statute of limitations did not
commence to run until the last overt act (see Wyatt v. Union
Mortgage Co. (1979) 24 Cal. 3d 773, 786), but that applies to civil
conspiracies. (Id. at p. 787, fn. 4.) No conspiracy is alleged here.

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                         Disposition
           The judgment (order sustaining demurrer) is
affirmed. Deutsche Bank is awarded costs on appeal.
           NOT TO BE PUBLISHED.

                                             YEGAN, J.

We concur:

             GILBERT, P. J.

             PERREN, J.

                              10
                   Jeffrey G. Bennett, Judge

               Superior Court County of Ventura

                ______________________________

             Tovar & Cohen, René Tovar and David J. Cohen, for
Plaintiffs and Appellants.

           Houser, Emilie K. Edling and Robert W. Norman, for
Defendants and Respondents.