Court Opinion

ID: 4690723
Source: CourtListenerOpinion
Date Created: 2021-05-27 18:03:16.598125+00
Date Added: 2024-06-11T08:05:02.092973
License: Public Domain

Filed 5/27/21 Adem v. America’s Wholesale Lender 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     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

ERIC ADEM,                                                      2d Civ. No. B304896
                                                              (Super. Ct. No. 56-2019-
     Plaintiff and Appellant,                                 00523697-CU-OR-VTA)
                                                                 (Ventura County)
v.

AMERICA’S WHOLESALE
LENDER, et al.,

     Defendants and Respondents.

     Eric Adem brought this wrongful foreclosure action against
defendants Countrywide Home Loans, Inc. (Countrywide),
formerly doing business as America’s Wholesale Lender;
Community Loan Servicing, LLC, formerly known as Bayview
Loan Servicing, LLC (Bayview); Mortgage Electronic Registration
Systems, Inc. (MERS); and The Bank of New York Mellon (Bank
of New York), formerly known as The Bank of New York as
Trustee for the Certificate Holders of CWMBS Inc., CHL
Mortgage Pass-Through Trust 2007-7 Mortgage Pass-Through
Certificates, Series 2007-07. The trial court sustained
defendants’ demurrers to the original complaint and first
amended complaint (FAC) with leave to amend most causes of
action.
       Adem filed a second amended complaint (SAC), to which
Bayview and Bank of New York demurred. The trial court again
sustained their demurrer with leave to amend. When Adem
chose not to amend, the court dismissed the action with prejudice
pursuant to Code of Civil Procedure section 581, subdivision
(f)(2). Adem appeals portions of the dismissal. We affirm.
         PROCEDURAL AND FACTUAL BACKGROUND
        In 2007, Adem obtained a $800,000 home loan from
Countrywide, secured by a deed of trust on real property located
at 5209 Via Jacinto in Thousand Oaks. MERS, as beneficiary,
later assigned the deed of trust to the Bank of New York.
       On August 3, 2018, Bayview, as the loan servicer, recorded
a notice of default and election to sell under the deed of trust. No
notice of trustee’s sale has been recorded.
       The SAC alleges causes of action for (1) violation of Civil
Code section 2924.11, (2) breach of the covenant of good faith and
fair dealing, (3) violation of the unfair competition law (UCL),
Business and Professions Code section 17200 et seq. and (4)
declaratory relief. Countrywide and MERS answered the SAC,
generally denying the allegations. The trial court sustained
Bayview and Bank of New York’s demurrer to the SAC with leave
to amend, but noted the allegations had not significantly changed
from the earlier complaints.
       When no amended pleading was filed, Countrywide and
MERS filed an ex parte application for involuntary dismissal of
the action pursuant to Code of Civil Procedure section 581,

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subdivision (f)(2).1 The trial court granted the application and
dismissed the action with prejudice as to all defendants.
                           DISCUSSION
       Adem contends the trial court erred by sustaining, with
leave to amend, his causes of action for violation of Civil Code
section 2924.11, breach of the covenant of good faith and fair
dealing and violation of the UCL (Bus. & Prof. Code, § 17200 et
seq.). He also challenges the dismissal of his cause of action for
violation of TILA, 15 United States Code section 1641(g). The
court had previously sustained the demurrers to that cause of
action without leave to amend. (See Hudis v. Crawford (2005)
125 Cal.App.4th 1586, 1590, fn. 4 [order sustaining a demurrer
without leave to amend is appealable upon dismissal of case].)
                         Standard of Review
       Where, as here, “a demurrer is sustained with leave to
amend but [the] plaintiff elects not to amend, it is presumed on
appeal that the complaint states as strong a case as is possible.”
(Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs
(The Rutter Group 2018) ¶ 8:136.3e, p. 8-109.) “The judgment of
dismissal must be affirmed if the unamended complaint is
objectionable on any ground raised by the demurrer.” (Ibid.;
Holcomb v. Wells Fargo Bank, N.A. (2007) 155 Cal.App.4th 490,
495-496; Otworth v. Southern Pac. Transportation Co. (1985) 166
Cal.App.3d 452, 457.) “‘[W]e do not consider the possibility that
any defects in [the claims] could be cured by amendment . . . .’”

      1  Code of Civil Procedure section 581, subdivision (f)(2)
allows the court to dismiss the complaint “after a demurrer to the
complaint is sustained with leave to amend, [and] the plaintiff
fails to amend it within the time allowed by the court and either
party moves for dismissal.”

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(Ibarra v. California Coastal Com. (1986) 182 Cal.App.3d 687,
692; Holcomb, at p. 496.)
       When a demurrer is sustained without leave to amend, we
“‘determine de novo whether the complaint alleges facts sufficient
to state a cause of action or discloses a complete defense.’”
(McBride v. Smith (2018) 18 Cal.App.5th 1160, 1172-1173.) If
“there is a reasonable possibility that the defect can be cured by
amendment . . . the trial court has abused its discretion and we
reverse; if not, there has been no abuse of discretion and we
affirm. [Citations.] The burden of proving such reasonable
possibility is squarely on the plaintiff.” (Blank v. Kirwan (1985)
39 Cal.3d 311, 318.)
               Violation of Civil Code Section 2924.11
       Civil Code section 2924.11, subdivision (a) formerly
provided: “If a borrower submits a complete application for a
foreclosure prevention alternative offered by, or through, the
borrower’s mortgage servicer, a mortgage servicer, trustee,
mortgagee, beneficiary, or authorized agent shall not record a
notice of sale or conduct a trustee’s sale while the complete
foreclosure prevention alternative application is pending.”
       This section was repealed effective January 1, 2019, and
now states: “(a) If a foreclosure prevention alternative is
approved in writing prior to the recordation of a notice of default,
a mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not record a notice of default under either
of the following circumstances: [¶] (1) The borrower is in
compliance with the terms of a written trial or permanent loan
modification, forbearance, or repayment plan. [¶] (2) A
foreclosure prevention alternative has been approved in writing
by all parties, including, for example, the first lien investor,
junior lienholder, and mortgage insurer, as applicable, and proof

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of funds or financing has been provided to the servicer.” (Civ.
Code, § 2924.11, subd. (a)(1), (2).)
       The SAC alleges that Adem submitted a complete loan
modification application on December 10, 2018. Although it is
unclear which version of Civil Code section 2924.11 would apply
in this case, we need not reach this issue because Adem is
ineligible for relief under either version. The current version
requires the actual approval of a foreclosure prevention
alternative and there is no allegation that occurred.
       As for the pre-January 1, 2019 version, Adem does not
allege that a notice of sale was recorded or that a trustee’s sale
was conducted while his loan modification application was
pending. To the contrary, the SAC acknowledges that “no Notice
of Trustee sale has been recorded in this matter.”2 In addition,
Adem cites no authority suggesting that his allegation that
“Bayview informed him that they were moving forward with a
trustee sale despite his pending loan modification” is sufficient to
invoke the statute’s protections in the absence of either a
recorded notice of sale or an actual trustee’s sale.
               Breach of the Implied Covenant of Good
                        Faith and Fair Dealing
       The covenant of good faith and fair dealing, which is
implied in every contract, “not only imposes upon each
contracting party the duty to refrain from doing anything which
would render performance of the contract impossible by any act of
his own, but also the duty to do everything that the contract
presupposes that he will do to accomplish its purpose.” (Harm v.
Frasher (1960) 181 Cal. App. 2d 405, 417.) “It is universally
recognized the scope of conduct prohibited by the covenant of

      2 At oral argument, respondents’ counsel confirmed that no
notice of sale has been recorded to date.

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good faith is circumscribed by the purposes and express terms of
the contract.” (Carma Developers (Cal.), Inc. v. Marathon
Development California, Inc. (1992) 2 Cal.4th 342, 373.) The
covenant “cannot impose substantive duties or limits on the
contracting parties beyond those incorporated in the specific
terms of their agreement.” (Guz v. Bechtel National Inc. (2000)
24 Cal.4th 317, 349-50.)
       The SAC fails to allege conduct by defendants that violated
the terms of the parties’ agreement or prohibited the performance
of the contract. As one court explained, “[t]he purpose of the note
and deed of trust is that [the borrower] shall have the use of the
funds loaned on the terms and at the interest rate specified in the
note, and that [the lender] shall have the security provided by the
deed of trust.” (Milstein v. Security Pac. Nat. Bank (1972) 27
Cal.App.3d 482, 487.)
       The SAC does not allege that Adem failed to receive the
benefits of the loan proceeds or that the lender was not entitled to
the security interest authorized by the deed of trust. These
obligations were contemplated by the loan agreement and, as
Bayview and the Bank of New York point out, no foreclosure
instruments have been recorded since Adem submitted his loan
modification application in December 2018. Given these facts,
the demurrer to this claim was properly sustained.
                            UCL Violation
       The UCL “does not proscribe specific activities, but in
relevant part broadly prohibits ‘any unlawful, unfair or
fraudulent business act or practice.’ [Citation.]” (Aleksick v. 7-
Eleven, Inc. (2012) 205 Cal.App.4th 1176, 1184 (Aleksick).) It
identifies three varieties of unfair competition -- acts or practices
which are unlawful, or unfair or fraudulent. (Ibid.) “‘“By
proscribing ‘any unlawful’ business practice, ‘section 17200

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“borrows” violations of other laws and treats them as unlawful
practices’ that the unfair competition law makes independently
actionable.”’ [Citation.] ‘Virtually any law -- federal, state or
local -- can serve as a predicate for a [UCL] action.’ [Citation.]
When a statutory claim fails, a derivative UCL claim also fails.”
(Id. at p. 1185.)
         The UCL claim is based upon the allegations in the causes
of action for violation of Civil Code section 2924.11 and breach of
the covenant of good faith and fair dealing. The SAC also
“asserts the unsupported conclusion that defendants . . . violated
numerous other statutes.”
         As we have explained, Adem’s claims for violation of Civil
Code section 2924.11 and breach of the covenant of good faith and
fair dealing fail as a matter of law. Consequently, the derivative
UCL cause of action arising from those claims also fails.
(Aleksick, supra, 205 Cal.App.4th at p. 1185; Plan Check
Downtown III, LLC v. AmGuard Ins. Co. (C.D.Cal. 2020) 485
F.Supp.3d 1225, 1233 [Because plaintiff “fails to state a claim for
a breach of contract or the covenant of good faith and fair dealing
. . . [i]ts derivative claim for unfair business practices therefore
also fails”].)
         Even if Adem did allege an actionable UCL violation, he
has not established standing to pursue that claim. To
demonstrate standing, a private plaintiff must allege a financial
or property loss as a result of the unlawful acts. (Bus. & Prof.
Code, § 17204.) In other words, the plaintiff must show a “causal
connection” between the economic injury and the defendant’s
allegedly unfair or unlawful conduct. (Jenkins v. JPMorgan
Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 522, disapproved
on another ground in Yvanova v. New Century Mortgage Corp.
(2016) 62 Cal.4th 919, 939 & fn. 13.) “A plaintiff fails to satisfy

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[this requirement] if he or she would have suffered ‘the same
harm whether or not a defendant complied with the law.’
[Citation.]” (Ibid.)
       Adem contends he was willfully induced to change his
financial position and, as a result, suffered the loss of his credit,
equity in his home and the potential loss of monies spent on home
improvement. But these bare allegations of economic loss are not
sufficiently precise to meet the standing requirement. (Saldate v.
Wilshire Credit Corp. (E.D.Cal. 2010) 686 F.Supp.2d 1051, 1066;
Hosseini v. Wells Fargo Bank, N.A. (N.D.Cal. Aug. 9, 2013, No.
13-cv-02066) 2013 US Dist. Lexis 113583, *8 [plaintiff lacked
standing under the UCL where no foreclosure sale had taken
place and plaintiff only included conclusory allegations of
economic injury].)
                           TILA Violation
       A TILA claim for damages under 15 United States Code
section 1641(g) is subject to a one-year statute of limitations.
(Id., § 1640(e).) The period begins to run “at the time the loan
documents were signed.” (Meyer v. Ameriquest Mortgage Co. (9th
Cir. 2003) 342 F.3d 899, 902.)
       TILA states that “not later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred or
assigned to a third party, the creditor that is the new owner or
assignee of the debt shall notify the borrower in writing of such
transfer.” (15 U.S.C. § 1641(g)(1).) The FAC alleged that Bank of
New York violated this section by failing to disclose in writing the
2015 assignment of the deed of trust from Countrywide.
       Adem acknowledges that more than one year had passed
since his loan documents were signed but contends the
limitations period was tolled because the Bank of New York did
not provide the requisite written notice of the assignment. (See

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15 U.S.C. § 1641(g)(1).) TILA claims may be subject to equitable
tolling, but only “in situations where, despite all due diligence,
the party invoking equitable tolling is unable to obtain vital
information bearing on the existence of the claim.” (Cervantes v.
Countrywide Home Loans, Inc. (9th Cir. 2011) 656 F.3d 1034,
1045.) Adem contends he could not have discovered the transfer
because he did not receive notice of the assignment as required
by law and was not required to check the recorder’s office for such
notice.
       Courts have held, however, that a defendant’s failure to
make the necessary TILA disclosures is not a sufficient basis for
equitable tolling. Equitable tolling is the “exception – not the
general rule,” and “[t]o allow tolling whenever a plaintiff alleges
an improper disclosure would render the TILA limitations period
completely meaningless.” (Vargas v. JP Morgan Chase Bank,
N.A. (C.D.Cal. 2014) 30 F.Supp.3d 945, 949; Garcia v. Wachovia
Mortgage Corp. (C.D.Cal. 2009) 676 F.Supp.2d 895, 906 [“[T]he
mere existence of TILA violations and lack of disclosure does not
itself equitably toll the statute of limitations”].) As Vargas
observed, “[i]t is rather unclear how [the plaintiff] can
characterize his conduct as reasonably diligent when he did not
check the recorder's office.” (Vargas, at p. 949; see Dela Cruz v.
HSBC Bank USA, N.A., (D.Nev. Feb. 6, 2013, No. 2:12-cv-01283-
MMD-PAL, 2013 US Dist. Lexis 15985, *13 [“[T]here is no basis
to equitably toll the statute of limitations, as Plaintiffs request,
since the recording of the Assignment provided Plaintiffs with
constructive notice of the Assignment”].)
       We agree with the trial court that the TILA cause of action
is barred by the one-year statute of limitations (15 U.S.C.

                                 9
§ 1640(e)) and that allowing further leave to amend would have
been futile.3
                          DISPOSITION
      The judgment is affirmed in its entirety. Respondents shall
recover their costs on appeal.
      NOT TO BE PUBLISHED.

                                    PERREN, J.

We concur:

     GILBERT, P. J.

     TANGEMAN, J.

     3  Countrywide and MERS contend that Adem has waived
or forfeited any claims of error in the judgment of dismissal
which they sought and obtained pursuant to Code of Civil
Procedure section 581, subdivision (f)(2). Although Countrywide
and MERS answered the SAC, they maintain they are entitled to
the benefit of that judgment. Adem’s briefs do not raise or
respond to this issue and we therefore deem it waived. (Swain v.
LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 72-73;
Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th
1250, 1282.)

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                   Mark S. Borrell, Judge
              Superior Court County of Ventura
               ______________________________

      Rodriguez Law Group, Patricia Rodriguez and Eric
Rasmussen, for Plaintiff and Appellant.
      McGuireWoods, Tanya L. Greene and E. Christine Hehr,
for Defendants and Respondents Countrywide and MERS.
      Akerman, Preston K. Ascherin, Parisa Jassim and Joseph
Yoon, for Defendants and Respondents Community Loan
Servicing, LLC, FKA Bayview Loan Servicing, LLC, and The
Bank of New York Mellon, FKA The Bank of New York as
Trustee for the Certificate Holders of CWMBS Inc., CHL
Mortgage Pass-Through Trust 2007-7 Mortgage Pass-Through
Certificates, Series 2007-07.

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