Court Opinion

ID: 3193414
Source: CourtListenerOpinion
Date Created: 2016-04-12 22:02:40.723177+00
Date Added: 2024-06-11T12:24:14.114857
License: Public Domain

Filed 4/12/16 MacRitchie v. Wells Fargo Bank CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                        (Placer)
                                                            ----

ANDREW D. MACRITCHIE et al.,                                                                 C071645

                   Plaintiffs and Appellants,                                  (Super. Ct. No. SCV0028732)

         v.

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

                   Defendants and Respondents.

         Plaintiffs Andrew D. and Cynthia L. MacRitchie appeal from a judgment
dismissing their first amended complaint after the trial court sustained a demurrer by
defendants Wells Fargo Bank, N.A., (Wells Fargo), and Federal Home Loan Mortgage
Corporation (FHLMC). Plaintiffs brought suit after the foreclosure sale of their home,
alleging causes of action for breach of contract, breach of security instrument, declaratory
relief, negligent misrepresentation, and quiet title. Wells Fargo was the loan servicer, and
FHLMC was the purchaser at the foreclosure sale. A third defendant, Cal-Western

                                                             1
Reconveyance Corporation (Cal-Western) was the trustee under the deed of trust. Cal-
Western had filed a petition in bankruptcy, and the appeal is stayed as to it.
       Plaintiffs have alleged a number of sharp practices against Wells Fargo and
FHLMC in the handling of their loan default and attempts to modify the loan. We must
assume the truth of these allegations. Unfortunately, since it appears plaintiffs’ home
was worth significantly less than the loan for which the property was security, they are
unable to allege that the foreclosure sale resulted in damages to them.
       The trial court sustained the demurrer. We shall affirm.
                   FACTUAL AND PROCEDURAL BACKGROUND
       In 2003 plaintiff Cynthia MacRitchie purchased a home in Auburn, California. In
2006, after she and Andrew MacRitchie married, the couple obtained a $308,250
adjustable rate loan from MortgageIT, Inc. (MortgageIT), secured by a deed of trust
recorded against the Auburn property. Pursuant to the deed of trust, Mortgage Electronic
Registration Systems, Inc. (MERS) acted as the nominee for the lender, MortgageIT, and
was the beneficiary of the deed of trust. First American Title was the trustee of the deed
of trust. At some point, Wells Fargo became the beneficiary of the trust deed.1
       The first amended complaint alleged that plaintiffs contacted defendant Wells
Fargo Bank, their loan servicer, in October 2008 about refinancing their mortgage. They
were current on their mortgage payments at that time. Wells Fargo informed them that
because of the decrease in their home’s value, refinancing was impossible. Wells Fargo
informed plaintiffs that it would consider them for a loan modification only if their

1   Exhibit I to the first amended complaint is an assignment of trust in which Wells
Fargo granted its beneficial interest to FHLMC. The document assigning the note and
deed of trust to Wells Fargo was not attached to the first amended complaint, but was
attached to the initial complaint. In that recorded assignment, MERS assigned the deed
of trust to Wells Fargo. Exhibits attached to a superseded complaint are properly
considered on demurrer. (Frantz v. Blackwell (1987) 189 Cal. App. 3d 91, 94.)

                                              2
mortgage payments were at least three months late, at which time it would send them a
modification application. In November 2008, plaintiffs stopped making payments.
       By January 12, 2009, Cal-Western, the substitute trustee, recorded a notice of
default indicating the arrearage was $11,432.57.2 On March 2, 2009, Wells Fargo sent
plaintiffs a letter stating that they were being considered for a loan modification, and that
if they qualified, Wells Fargo would suspend the foreclosure activity for 30 days. 3 Also
if they qualified, Wells Fargo would create a new payment plan, and after plaintiffs made
three payments in the new amount, Wells Fargo would finalize the loan modification.
       On April 14, 2009, plaintiffs received a notice of trustee’s sale. The notice
indicated the sale would take place on May 4, 2009. Upon receipt of the notice, plaintiffs
called Wells Fargo, whose agent stated the sale would be “pushed back” until Wells
Fargo had time to review plaintiffs’ case and make a determination regarding
modification. Plaintiffs repeatedly submitted documents requested by Wells Fargo.
       Finally, in September 2009, Wells Fargo sent plaintiffs a letter enclosing a “Trial
Period Plan” (TPP). It stated: “If you qualify under the program requirements and
comply with the terms of the Trial Period Plan, we will modify your mortgage loan and
you can avoid foreclosure.” The letter went on to explain that plaintiffs would be
required to explain their financial hardship, submit income documentation, and make
timely monthly payments during the trial period. Three payments were required in the
TPP, due October 1, 2009, November 1, 2009, and December 1, 2009. The TPP provided
that there was “no ‘grace period’ allowance in [the] Agreement.” All installments were

2   The trial court’s order sustaining demurrer stated that exhibit E to plaintiffs’ original
complaint, neither of which is in the record before us, was a recorded substitution of
trustee in which MERS, the original beneficiary, substituted Cal-Western as trustee in
place of First American Title.
3   The letter was actually sent under the letterhead of America’s Servicing Company, an
internal division of Wells Fargo. We will refer to both entities as Wells Fargo.

                                              3
required to be “received on or before the due date and made strictly in accordance with”
the terms of the agreement.
       Plaintiffs alleged they immediately sent the requested documentation, sent their
first payment under the TPP on September 30, 2009, their second payment on November
4, 2009, and their third payment on December 2, 2009. When on January 11, 2010,
plaintiffs had yet to receive a modification of their loan, they telephoned Wells Fargo to
inquire about the modification. They were told Wells Fargo would send the documents
for the modification around the middle of February 2010, and that they should continue
to make payments until they received word the loan modification had been approved.
Plaintiffs made a payment of $2,160.61 on January 11, 2010, and another payment of
$2,160.61 on February 12, 2010.
       On February 15, 2010, Wells Fargo assigned the note and deed of trust to
FHLMC. The assignment was recorded on March 30, 2010.
       On March 5, 2010, plaintiffs learned from a potential bidder that a trustee’s sale
would be taking place that morning. Plaintiffs were on the telephone with Wells Fargo
from 9:30 to 10:15 a.m. that morning. The Wells Fargo representative told plaintiffs their
house was not up for sale, then put plaintiffs on hold. When the representative came back
on the line, he again told them no sale was taking place, and asked them to fax updated
financial information. Plaintiffs then called the “Trustee Sales Line” and were informed
the sale did not go through.
       While plaintiffs were on the telephone with Wells Fargo, their home was sold to
defendant FHLMC. FHLMC purchased the property for $155,323.80. Plaintiffs
represent that FHLMC filed an unlawful detainer case against them, pursuant to which
they lost possession of the property in April 2012.

                                             4
       Plaintiffs filed suit against Wells Fargo, FHLMC, and Cal-Western. Cal-Western
has since filed a petition in bankruptcy, and this case is stayed as to Cal-Western.4 The
first amended complaint, the complaint at issue here, alleged causes of action for breach
of contract and negligent misrepresentation against Wells Fargo, breach of security
instrument, declaratory relief, and quiet title. Defendants demurred to the complaint, and
the trial court sustained the demurrer without leave to amend.
       The trial court found that plaintiffs’ first cause of action for breach of contract
failed to state a cause of action. The trial court relied on language in the terms and
conditions of the TPP stating that the lender was under no obligation to enter into any
further agreement and the statement that the lender could terminate the TPP without
notice to the borrower, and institute foreclosure proceedings according to the terms of the
note and deed of trust. The trial court concluded that since nothing in the TPP required
Wells Fargo to modify plaintiffs’ loan, there was no legally valid contract.
       Plaintiffs’ second cause of action for breach of security instrument alleged that
MortgageIT never recorded a substitution of trustee or assigned its interest in the note and
deed of trust. Thus, when Cal-Western recorded the notice of default, when it recorded
the notice of trustee’s sale, and when it sold the property, it acted without authority
because it was not the trustee of record. The trial court took judicial notice of an exhibit
to plaintiffs’ superseded complaint, which was a recorded substitution of trustee naming
Cal-Western as the trustee. The exhibit had been omitted from the first amended
complaint. The document had been recorded prior to the notice of trustee’s sale. The
trial court further found that plaintiffs could not assert a cause of action claiming
irregularity in the foreclosure process without alleging tender, and plaintiffs had not
alleged tender.

4   Cal-Western’s counsel in this action has advised the court that its understanding is
that the bankruptcy stay is still in effect. Cal-Western has not filed a respondent’s brief.

                                              5
       The trial court found that the third cause of action for declaratory relief was based
on the other claims, and that it failed because they failed. The fourth cause of action was
for negligent misrepresentation. The trial court found that because negligent
misrepresentation is a species of fraud, the cause of action must be pleaded with
particularity. The allegation was that Wells Fargo represented that if plaintiffs complied
with the terms of the TPP, they would be offered a permanent modification. The trial
court found that this allegation directly contradicted the language of the TPP, and that the
alleged misrepresentation was as to future events, thus not actionable fraud. The trial
court denied leave to amend.
       The trial court found the fifth cause of action for quiet title failed because
plaintiffs did not allege that they tendered full payment of their debt.
                                       DISCUSSION
                                             I
                                    Standard of Review
       Our review is de novo, and we assume the truth of all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or law. (Rossberg v. Bank
of America, N.A. (2013) 219 Cal. App. 4th 1481, 1490.) We also consider matters shown
in exhibits attached to the complaint and incorporated by reference, as well as matters
that cannot reasonably be controverted and that were judicially noticed. (Performance
Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal. App. 4th 659,
665; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App. 4th 256, 264, disapproved
on another ground in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal. 4th 919.)
To the extent the factual allegations in the complaint conflict with the complaint’s
exhibits, we rely on the contents of the exhibits. (Performance Plastering, at p. 665.)

                                              6
                                           II
                                         Damages
       Although we discuss the causes of action separately, the overarching problem with
plaintiffs’ causes of action for breach of contract, breach of security instrument, and
negligent misrepresentation is that plaintiffs cannot allege damages.
       A cause of action for breach of contract requires the plaintiff plead: (1) the
contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s
breach, and (4) resulting damages to plaintiff. (Careau & Co. v. Security Pacific
Business Credit, Inc. (1990) 222 Cal. App. 3d 1371, 1388 (Careau & Co.).) Plaintiffs’
cause of action for breach of a security instrument is also a breach of contract action.
Likewise, a cause of action for negligent misrepresentation requires a plaintiff to plead
damages. (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal. App. 4th 513, 519.) Because
negligent misrepresentation is a species of fraud, and damages are an element of the
cause of action, damages must be factually and specifically alleged. (Ibid.)
       Plaintiffs’ causes of action for breach of contract and breach of the security
agreement allege merely that plaintiffs “have been damaged in an amount to be proven at
time of trial.” Plaintiffs’ cause of action for negligent misrepresentation alleged “actual
and consequential damages all in amounts subject to proof at trial.” Plaintiffs also
alleged they were entitled to punitive and exemplary damages.
       Under the circumstances presented, plaintiffs lost the property, but gained the
extinguishment of a $308,250 debt. Plaintiffs had no equity in the property. The
property was not worth the amount of the debt, a fact we may infer from plaintiffs’
allegation that they could not refinance the $308,250 loan due to the home’s decrease in
value and from the significantly lower sales price at the foreclosure sale.
       Nor did plaintiffs lose anything by making payments under the TPP. Plaintiffs
alleged they stopped making payments on their mortgage in November 2008. They
began making payments under the TPP in October 2009. Thus, when they began making

                                              7
payments under the TPP, the mortgage was 11 months in arrears. Plaintiffs made only
five payments under the TPP in the total amount of $10,803.05. The notice of default
stated that as of January 7, 2009, some eight months before they began making payments
under the TPP and less than three months into the 11-month period of nonpayment, they
were in arrears on the loan in the amount of $11,432.57, an amount which consisted of
past due payments, costs, and expenses.
       Plaintiffs have not alleged that defendants’ actions prevented them from seeking
other financing, or prevented them from purchasing another property. (See Bushell v.
JPMorgan Chase Bank, N.A. (2013) 220 Cal. App. 4th 915, 928.) Plaintiffs argue they
have suffered injury because every parcel of real property is considered unique under
California law. The long-established maxim that every real property is unique addresses
the nature of the remedy where a plaintiff suffers damages because a contract for the sale
of property has been breached. In such case, the plaintiff may seek specific performance
because money damages are inadequate. (Glynn v. Marquette (1984) 152 Cal. App. 3d
277, 280.) The rule is inapplicable here because we are not dealing with a contract for
the sale of property, and plaintiffs have not suffered any damage, since the home was
taken in satisfaction of their debt.
       Plaintiffs have alleged that had they known of the foreclosure sale “they could
have cured the default.” However, their right to “cure the default” by paying the amount
of the default and reinstating the loan, expired five business days prior to the sale date.
(Civ. Code, § 2924c, subds. (a)(1), (e).) Plaintiffs do not allege that they could have
redeemed the property prior to sale by tendering the entire amount owing, together with
interest, costs, and fees. Plus, the plaintiffs would have to have alleged some lost equity
in the property to have suffered damages as a result of the foreclosure, something the
facts indicate they cannot do.
       Plaintiffs have also asserted “punitive and exemplary damages in an amount
sufficient to punish Wells Fargo for its conduct towards Plaintiffs.” There must be a

                                              8
recovery of actual damages to support an award of exemplary damages, and exemplary
damages are not available for a breach of contract. (Berkley v. Dowds (2007) 152
Cal. App. 4th 518, 530; Civ. Code, § 3294, subd. (a).)
                                           III
                                    Breach of Contract
       A. No Agreement to Modify Loan
       Plaintiffs’ breach of contract cause of action alleged that Wells Fargo agreed to
send them a final modification agreement if they made three forbearance payments under
the TPP. In fact, the TPP provided that Wells Fargo would modify the mortgage if
plaintiffs qualified and complied with the terms of the TPP. The TPP made clear that
plaintiffs would be sent a loan modification agreement only if they were approved for a
loan modification. The TPP also provided that Wells Fargo could, in its sole discretion
and without further notice, terminate the TPP and institute foreclosure proceedings.
Plaintiffs alleged they complied with the terms of the TPP, but did not allege that Wells
Fargo approved them for a loan modification or that they qualified for a loan
modification.
       The TPP made clear that approval for a loan modification was a condition to
defendants’ obligation to modify the loan. Plaintiffs were required to specifically plead
the happening of the condition. (Careau & Co., supra, 222 Cal.App.3d at p. 1389.) In
Careau & Co. one of the conditions precedent to the defendant lender’s obligation to loan
money to the plaintiff borrowers was the approval of the lender’s senior credit committee.
(Id. at p. 1383, fn. 7.) The plaintiffs alleged that an employee of the lender informed
them they had been approved by the credit committee, but not that they had in fact been
approved by the committee. (Id. at pp. 1383, 1390-1391.) Although the complaint made
conclusory allegations that conditions had been satisfied, such general allegations were
not adequate. “[W]here the condition is an event, as distinguished from an act to be

                                             9
performed by the plaintiff, a specific allegation of the happening of the condition is a
necessary part of pleading the defendant’s breach.” (Id. at p. 1389.)
        Plaintiffs did not plead that they were approved for a loan modification, thus did
not adequately allege breach of an agreement to enter into a loan modification.
        Plaintiffs argue defendants’ breach was not in failing to modify the loan, but in
foreclosing on the property without evaluating them for a modification and without
notice. However, plaintiffs did not allege that defendants’ breach lay in failing to
consider them for modification. Rather, the complaint alleged the breach was
defendants’ action of not sending a modification agreement and foreclosing on the
property. The TPP terms directly contradict any unqualified agreement not to foreclose
on the property. The TPP indicated only that Wells Fargo would extend forbearance for
“a period of time.” Wells Fargo did not agree to forego foreclosure for a certain length of
time, nor did it agree to further notify plaintiffs of a sale of the property. Instead, the TPP
provided Wells Fargo could terminate the agreement in its sole discretion without further
notice, and institute foreclosure proceedings according to the terms of the note and deed
of trust.
        Plaintiffs argue it was reasonable for them to rely on the letter Wells Fargo sent
with the TPP which stated: “If you do not qualify for a loan modification, we will work
with you to explore other options available to help you keep your home or ease your
transition to a new home.” To the extent they argue this was an agreement to give them
notice before foreclosing on the property, this is not what the statement purports to say.
In fact, plaintiffs alleged FHLMC did attempt to work with them to keep them in the
home when FHLMC offered to lease the home to them. Furthermore, any reliance on
this statement was not reasonable in light of the written term of the TPP stating the lender
could terminate the TPP without notice and institute foreclosure proceedings.

                                              10
       Plaintiffs also state, without explanation, that Wells Fargo violated former Civil
Code section 2923.6.5 However, there is no private cause of action under section 2923.6.
(Quinteros v. Aurora Loan Servs. (E.D. Cal. 2010) 740 F. Supp. 2d 1163, 1174.)
Moreover, former Civil Code section 2923.6 did not require lenders to implement
modifications, thus Wells Fargo had no duty to agree to a loan modification. (Intengan v.
BAC Home Loans Servicing LP (2013) 214 Cal. App. 4th 1047, 1056.)
       B. Notice
       The deed of trust provided that the trustee, “shall give public notice of sale to the
persons and in the manner prescribed by Applicable Law. After the time required by
Applicable Law, Trustee, without demand on Borrower, shall sell the Property at public
auction to the highest bidder at the time and place and under the terms designated in the
notice of sale . . . .” The deed of trust also provided that the trustee “may postpone sale
of all or any parcel of the Property by public announcement at the time and place of any

5   As of the date of the sale, former Civil Code section 2923.6 provided in pertinent part:

    “(a) The Legislature finds and declares that any duty servicers may have to maximize
net present value under their pooling and servicing agreements is owed to all parties in a
loan pool, or to all investors under a pooling and servicing agreement, not to any
particular party in the loan pool or investor under a pooling and servicing agreement, and
that a servicer acts in the best interests of all parties to the loan pool or investors in the
pooling and servicing agreement if it agrees to or implements a loan modification or
workout plan for which both of the following apply:

    “(1) The loan is in payment default, or payment default is reasonably foreseeable.

    “(2) Anticipated recovery under the loan modification or workout plan exceeds the
anticipated recovery through foreclosure on a net present value basis.

   “(b) It is the intent of the Legislature that the mortgagee, beneficiary, or authorized
agent offer the borrower a loan modification or workout plan if such a modification or
plan is consistent with its contractual or other authority.”

                                             11
previously scheduled sale.” The deed of trust provided the borrower could reinstate the
note up to five days before the sale of the property by paying the lender all sums due.
       Pursuant to the deed of trust and the applicable law, notice was given to plaintiffs,
on April 14, 2009, of a sale to occur on May 4, 2009. A Wells Fargo representative told
plaintiffs the sale would be postponed until Wells Fargo had a chance to review their
modification application. The trustee’s sale was in fact postponed, and occurred on
March 5, 2010.
       To the extent plaintiffs now argue that the contract breach consisted of defendants’
sale of the property on March 5, 2010, without notice to them, such notice was not
required under the TPP, the trust deed, or the applicable law. “[W]here deeds of trust
provide that the trustee may from time to time postpone a sale by proclamation made at
the time of postponement, no further notice need be given by posting or publication.”
(First Nat’l. Bank v. Coast Consol. Oil Co. (1948) 84 Cal. App. 2d 250, 256.) A lender is
under no obligation to inform borrowers of the postponed date or dates of the trustee’s
sale. (Melendrez v. D & I Investment, Inc. (2005) 127 Cal. App. 4th 1238, 1261, fn. 30.)
A debtor bears the responsibility of remaining informed about the status of property that
had been put into foreclosure, and if the trustee follows the procedure for oral
postponements, no further notice is required. (Tully v. World Savings & Loan Assn.
(1997) 56 Cal. App. 4th 654, 664.)
       Plaintiffs argue defendants failed to comply with statutory notice provisions with
respect to the sale of the property. To the extent they refer to notice of the continued sale
date after notice was properly given of the initial sale date, we explained above that at the
time of the sale in this case, the applicable law did not require such notice. If plaintiffs
mean to argue that defendants failed to give statutory notice of the original sale date, that
was not alleged in the complaint. In fact, plaintiffs alleged receipt of a notice of trustee’s
sale, and attached a duly recorded notice to the complaint.

                                              12
       C. Promissory Estoppel
       Plaintiffs expend one sentence arguing they should have been granted leave to
amend to plead promissory estoppel: “MacRitchies’s counsel argued at the January 17,
2012, hearing on demurrer that MacRitchies have also sufficiently plead [sic] the
elements for promissory estoppel and requested the court to grant leave to amend the
[first amended complaint] to include this cause of action.” We treat this point as waived
because it is unsupported with reasoned argument and citations to authority. (Mansell v.
Board of Administration (1994) 30 Cal. App. 4th 539, 545-546.) In any event, plaintiffs
were required to show how they would amend the complaint and how the amendment
would change the legal effect of the pleading. (Connerly v. State of California (2014)
229 Cal. App. 4th 457, 460.) They have not done this.
       D. Good Faith and Fair Dealing
       Plaintiffs did not allege a cause of action for breach of the covenant of good faith
and fair dealing. Nevertheless, they now argue that defendants breached their duty of
good faith and fair dealing when they sold plaintiffs’ home without notice. As the
argument is part of their breach of contract argument, they apparently claim the breach of
the implied covenant of good faith and fair dealing resulted in a breach of contract.
       “It has long been recognized, of course, that every contract imposes upon each
party a duty of good faith and fair dealing in the performance of the contract such that
neither party shall do anything which will have the effect of destroying or injuring the
right of the other party to receive the fruits of the contract.” (Storek & Storek, Inc. v.
Citicorp Real Estate, Inc. (2002) 100 Cal. App. 4th 44, 55.) Plaintiffs argue that where a
contract gives one party a discretionary power affecting the rights of the other party, there
is a duty to exercise the discretion in good faith. (Carma Developers (Cal.), Inc. v.
Marathon Development California, Inc. (1992) 2 Cal. 4th 342, 372.)
       The TPP provided that plaintiffs’ eligibility for a loan modification depended on
their qualification “under the program requirements” “based on investor guidelines.”

                                              13
Assuming that the program requirements and investor guidelines resulted in a
discretionary power that compelled Wells Fargo to exercise such discretion in good faith,
plaintiffs have asserted no allegation that Wells Fargo did not exercise good faith in
determining whether they qualified for a loan modification. In fact, there is no allegation
that Wells Fargo ever informed them they did not qualify. Moreover, the implied
covenant of good faith and fair dealing did not prohibit Wells Fargo from doing that
which was expressly permitted by the agreement. (Third Story Music, Inc. v. Waits
(1995) 41 Cal. App. 4th 798, 803.) The TPP expressly provided that Wells Fargo was
“under no obligation to enter into any further agreement.” The discretionary power of
Wells Fargo under the contract was directed to its determination that plaintiffs qualified
for a loan modification.
       This case is unlike Fleet v. Bank of America N.A. (2014) 229 Cal. App. 4th 1403,
1409-1410, which held that foreclosing and selling the house before the borrower had
finished making the three required payments under the TPP injured the right of the
borrower to receive the benefits of a TPP that guaranteed a modification of the mortgage
as long as timely payments were made and financial hardship was verified. The sale of
the house prevented the loan modification, thus the borrowers stated a cause of action for
breach of the covenant of good faith and fair dealing. By contrast, the MacRitchies’ TPP
did not guarantee a loan modification would be granted, and the TPP had been fully
performed at the time of the foreclosure.
       Plaintiffs argue the breach of good faith and fair dealing consisted of the sale of
the home without notice. However, the TPP expressly provided that Wells Fargo could,
“without further notice to you, . . . terminate this Agreement.” If the TPP was terminated,
the terms of the agreement provided that Wells Fargo could “institute foreclosure
proceedings according to the terms of the Note and Security Instrument.” Clearly, Wells
Fargo was entitled to terminate the TPP without notice and to foreclose on the property.

                                             14
       The trial court did not err in sustaining defendants’ demurrer to the breach of
contract cause of action.6
                                            IV
                             Home Affordable Mortgage Program
       In support of their complaint, plaintiffs cite to a Seventh Circuit opinion, Wigod v.
Wells Fargo Bank, N.A. (2012) 673 F.3d 547 (Wigod), and to California cases that have
followed its holding. Wigod held that where a borrower applied to the lender for a Home
Affordable Modification Program (HAMP) modification pursuant to which the parties
entered into a TPP, the borrower could recover for breach of contract and promissory
estoppel under Illinois law when the lender refused to agree to a permanent loan
modification.7
       In Wigod the heart of the borrower’s complaint was a claim that Wells Fargo
breached its agreement to modify her loan pursuant to HAMP. (Wigod, supra, 673 F.3d
at p. 560.) Wells Fargo claimed the TPP contained no valid offer to modify the
mortgage, and lacked clear and definite terms. (Id. at p. 561.) Unlike this case, Wigod’s
TPP promised her that she would be offered a permanent loan modification if she
complied with the terms of the TPP by making payments and disclosures, and if her

6   The basis of defendants’ argument against the breach of contract and negligent
misrepresentation causes of action was that plaintiffs breached the TPP by not making
their payments on time. We need not consider this argument because we have resolved
the issues in defendants’ favor on other grounds.
7   HAMP is a program started by the federal government in early 2009, to provide relief
during the foreclosure crisis. (United States v. Godfrey (1st Cir. 2015) 787 F.3d 72, 74.)
It provided incentives for lenders to modify existing loans for borrowers who were
eligible under the program. (Ibid; West v. JPMorgan Chase Bank, N.A. (2013) 214
Cal. App. 4th 780, 787.) The program guidelines provided that if the borrower met certain
requirements and it was determined that it was more profitable to the loan servicer to
modify the loan than to allow it to go into foreclosure, the servicer must offer a loan
modification. (West v. JPMorgan Chase Bank, N.A., at pp. 787-788.)

                                             15
representations remained true and accurate. (Id. at p. 560.) The TPP provided: “ ‘I
understand that after I sign and return two copies of this Plan to the Lender, the Lender
will send me a signed copy of this Plan if I qualify for the Offer or will send me written
notice that I do not qualify for the offer.’ ” (Id. at p. 562.) The court reasoned that when
Wells Fargo sent Wigod a signed copy of the TPP, it determined she was qualified for a
modification. (Ibid.) The court held that Wells Fargo’s obligation to offer a permanent
modification was not contingent on its determination during the trial period that the
borrower qualified under HAMP guidelines, because the TPP was itself an offer for
permanent modification. (Ibid.)
       Following Wigod, West v. JPMorgan Chase Bank, N.A., supra, 214 Cal. App. 4th
780, held that the borrower stated causes of action for, inter alia, breach of contract and
negligent misrepresentation. In finding the TPP was a binding contract, the court stated:
“When Chase Bank received public tax dollars under the Troubled Asset Relief Program,
it agreed to offer TPP’s and loan modifications under HAMP according to guidelines,
procedures, instructions, and directives issued by the Department of the Treasury.” (Id.
at pp. 796-797, fn. omitted.) West v. JPMorgan Chase Bank, N.A., held that even though
the TPP did not expressly provide that the lender would offer a permanent loan
modification, such a provision is imposed by the HAMP directives, and the HAMP
guidelines inform the reasonable expectations of the parties. (Id. at p. 797.)
       More recently in Rufini v. CitiMortgage, Inc. (2014) 227 Cal. App. 4th 299, the
court held that the borrower had stated causes of action for, inter alia, breach of contract
and negligent misrepresentation. (Id. at pp. 301-302.) There, the lender agreed to
permanently modify the debtor’s mortgage, then later denied the loan modification. (Id.
at p. 302.) The borrower did not allege the loan modification was pursuant to HAMP, but
there was an allegation that the lender refused to qualify the borrower under HAMP, thus
the Court of Appeal ordered the borrower be allowed leave to amend the complaint in

                                             16
light of the recent decisions under HAMP and the allegation in the complaint referring to
HAMP. (Id. at pp. 305-306.)
       Plaintiffs argue, without citation to authority, that “the HAMP Directives in place
prohibited Wells Fargo and [FHLMC] from foreclosing or selling MacRitchies’ home
while MacRitchies were making Forbearance Payments and under consideration for a
loan modification.” They also point to a U.S. Treasury Department Supplemental
Directive regarding the HAMP program, which stated that loan servicers are prohibited
from initiating a foreclosure action while a borrower is in a trial period plan. They
further point to a FHLMC bulletin regarding borrowers under consideration for a
FHLMC foreclosure alternative which provided foreclosure sales could not be completed
until the loan servicer had tried to contact the borrower and determined whether the
borrower could participate in a loan modification or workout.
       The problem is that plaintiffs have not alleged, and the documents attached to the
complaint do not indicate, that the TPP with Wells Fargo was pursuant to a HAMP
program, nor is there any indication the plan was a FHLMC program. There are no
allegations the plaintiffs were eligible for a HAMP loan modification. Unless the
payment plan was part of a federal loss mitigation program, Wells Fargo had no duty to
comply with HAMP directives. (Vu Nguyen v. Aurora Loan Services, LLC (9th Cir.
2015) 614 Fed.Appx. 881.)
       Plaintiffs also broadly reference California’s public policy to provide consumer
protection, and point specifically to Civil Code, section 2924.18, subdivision (a)(3),
(prohibiting a foreclosure sale while the borrower is in compliance with a forbearance
agreement) and its enforcement provision, section 2924.19, subdivision (b). However,
those statutes were not enacted until 2012, and are not applicable to the events here, the
latest of which occurred in 2010.

                                             17
                                           V
                              Breach of Security Agreement
       The deed of trust on the property listed plaintiffs as the borrowers, MortgageIT as
the lender, and MERS as the beneficiary, acting solely as a nominee for the lender and
the lender’s successors. The deed of trust also provided that the lender could appoint a
successor trustee.
       Quoting from a document that is not in the record and was not attached to the
complaint, plaintiffs state that MERS purported to assign the note to Wells Fargo, but that
MERS did not have the authority to assign the note, rendering the assignment void. This
statement is belied by the deed of trust, which provided that MERS was a “nominee for
Lender and Lender’s successors and assigns.” The note provided that the lender “may
transfer this Note.”
       Plaintiffs also argue there was a break in the chain of title when the note was
assigned to one party while the deed of trust named another party. Apparently, plaintiffs’
argument is that this rendered the assignment invalid and the foreclosure sale void.
Plaintiffs cite an 1873 case which stated that a “note and mortgage are inseparable; the
former as essential, the latter as an incident. An assignment of the note carries the
mortgage with it, while an assignment of the latter alone is a nullity.” (Carpenter v.
Longan (1873) 83 U.S. 271, 274 [21 L. Ed. 313], fn. omitted.)
       More recent authority has rejected the theory that a note and deed of trust are
inseparable. Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal. App. 4th
433, 440, held that the procedures governing nonjudicial foreclosures are set forth in
Civil Code sections 2924 through 2924k, and they do not require that the note be in the
possession of the party initiating foreclosure. The nonjudicial foreclosure statutory
scheme is exhaustive and courts do no read any additional requirements into the statute.
(Debrunner, at p. 441.) Accordingly, there is no requirement that the party commencing
a nonjudicial foreclosure sale have a beneficial interest in both the note and the deed of

                                             18
trust. (Ibid.) Likewise, Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal. App. 4th
497, 513, disapproved on another point in Yvanova v. New Century Mortgage Corp.,
supra, 62 Cal. 4th 919, held that because the statutory provisions, “broadly authorize a
‘trustee, mortgagee, or beneficiary, or any of their authorized agents’ to initiate a
nonjudicial foreclosure ([Civ. Code,] § 2924, subd. (a)(1), italics added), [they] do not
require that the foreclosing party have an actual beneficial interest in both the promissory
note and deed of trust to commence and execute a nonjudicial foreclosure sale.”
       Under their cause of action labeled breach of security agreement, plaintiffs also
alleged that Cal-Western executed and recorded the notice of default and notice of
trustee’s sale, and that their lender, MortgageIT, never recorded a substitution of trustee
appointing Cal-Western in lieu of First American as trustee. They alleged Cal-Western
therefore acted without authority, since First American was actually the trustee of record.
       The trial court found that exhibit E to plaintiffs’ original complaint was a recorded
substitution of trustee, substituting Cal-Western as the trustee in place of First American,
and that the substitution of trustee was signed and recorded prior to the notice of trustee’s
sale. The substitution of trustee was omitted from the first amended complaint.
       Plaintiffs argue the trial court erred when it judicially noticed the facts stated in the
substitution of trustee rather than merely the fact that the document had been recorded.
The trial court took judicial notice of the recorded substitution of trustee. As noted
earlier, exhibits attached to a superseded complaint are property considered on demurrer.
(Frantz v. Blackwell, supra, 189 Cal.App.3d at p. 94.) The only fact in the recorded
substitution of trustee that was relied on by the trial court was the fact that “MERS, the
original beneficiary, substituted Cal-Western Reconveyance Corporation as trustee in
place of First American Title.” It was permissible for the trial court to take notice of this
fact. “When a court is asked to take judicial notice of a document, the propriety of the
court’s action depends upon the nature of the facts of which the court takes notice from
the document. . . . [F]or example, it was proper for the trial court to take judicial notice of

                                              19
the dates, parties, and legally operative language of a series of recorded documents, but it
would have been improper to take judicial notice of the truth of various factual
representations made in the documents.” (Fontenot v. Wells Fargo Bank, N.A., supra,
198 Cal.App.4th at p. 265.)
       In this case, the trial court took notice only of the dates, parties, and legally
operative language of the documents to find that Cal-Western as been substituted as the
trustee in place of First American Title.
       Plaintiffs also argue that the trial court should not have taken judicial notice of the
facts stated in the documents that they themselves attached as exhibits to the first
amended complaint at issue in the demurrer proceeding. These documents were attached
to the first amended complaint and were incorporated into the complaint. “ ‘The general
rule is that when a written instrument which is the foundation of a cause of action or
defense is attached to a pleading as an exhibit and incorporated into it by proper
reference, the court may, upon demurrer, examine the exhibit and treat the pleader’s
allegations of its legal effect as surplusage.’ [Citation.]” (Weitzenkorn v. Lesser (1953)
40 Cal. 2d 778, 785-786.) Plaintiffs’ argument that defendants may not point to the
exhibits to disprove the allegations of the complaint is not well taken. If the factual
allegations of the complaint conflict with the exhibits, we rely on the contents of the
exhibits. (Performance Plastering v. Richmond American Homes of California, Inc.,
supra, 153 Cal.App.4th at p. 665.)
                                           VI
                                Negligent Misrepresentation
       The trial court found that because negligent representation is a species of fraud, a
heightened degree of specificity is required for its pleading, and that the only
representation alleged was that defendants would offer a permanent modification if
plaintiffs complied with the terms of the TPP. Plaintiffs argue the trial court should have
relaxed the rule of pleading because the defendants possess full information regarding the

                                              20
facts of the controversy. “Less specificity is required when ‘it appears from the nature of
the allegations that the defendant must necessarily possess full information concerning
the facts of the controversy.’ ” (Committee on Children’s Television, Inc. v. General
Foods Corp. (1983) 35 Cal. 3d 197, 217 (Committee on Children’s Television, Inc.),
superseded on other grounds as stated in Californians for Disability Rights v. Mervyn’s,
LLC (2006) 39 Cal. 4th 223, 228.)
          The heightened pleading standard requires the plaintiffs to plead “facts which
‘show how, when, where, to whom, and by what means the representations were
tendered.’ ” (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 645.) The strict pleading
standards may be relaxed where a plaintiff alleges many affirmative misrepresentations
occurring over a period of several years in methods whose time and place are fully
known to the defendant. (See Committee On Children’s Television, Inc., supra, 35
Cal.3d at p. 217.) However, that is not the case here. Plaintiffs attempt to make every
statement they allege was made by a defendant the subject of their negligent
misrepresentation cause of action, no matter where the allegation appears in the
complaint. This is insufficient under the heightened pleading standard. It does not serve
the purpose of furnishing defendant “ ‘with certain definite charges which can be
intelligently met.’ ” (Id. at p. 216.) We therefore look only at the single
misrepresentation plaintiffs have set forth in their negligent misrepresentation cause of
action.
          The trial court correctly found that the representation that Wells Fargo would offer
a permanent modification if plaintiffs complied with the TPP was explicitly contradicted
by the terms of the written agreement. The trial court also found that the representation
was as to a future event, and that a negligent misrepresentation must be to past or existing
facts to be actionable. “A representation generally is not actionable unless it is about
‘past or existing facts.’ [Citation.] Although a false promise to perform in the future can

                                               21
support an intentional misrepresentation claim, it does not support a claim for negligent
misrepresentation.” (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal. App. 4th 437, 458.)
       Here, Wells Fargo’s alleged representation that it would offer a permanent
modification was a promise of future performance, and cannot be the basis for a negligent
misrepresentation cause of action.
                                             VII
                                      Declaratory Relief
       Plaintiffs’ third cause of action is for declaratory relief. Plaintiffs alleged a
controversy regarding the ownership of the property arose because of defendants’ breach
of the security instrument, breach of the forbearance agreement, and refusal of defendants
to cure the breaches.
       They argue they have sufficiently alleged a cause of action for declaratory relief
because an actual controversy exists in that they claim their deed of trust was paid off by
default insurance.
       Code of Civil Procedure section 1060 authorizes “[a]ny person . . . who desires a
declaration of his or her rights or duties with respect to another . . . in cases of actual
controversy relating to the legal rights and duties of the respective parties, [to] bring an
original action . . . for a declaration of his or her rights and duties . . . .” (Code Civ. Proc.,
§ 1060.) However, “[t]he purpose of a judicial declaration of rights in advance of an
actual tortious incident is to enable the parties to shape their conduct so as to avoid a
breach. ‘[Declaratory] procedure operates prospectively, and not merely for the redress
of past wrongs. It serves to set controversies at rest before they lead to repudiation of
obligations, invasion of rights or commission of wrongs; in short, the remedy is to be
used in the interests of preventive justice, to declare rights rather than execute them.’
[Citations.]” (Babb v. Superior Court (1971) 3 Cal. 3d 841, 848.)
       In this case, plaintiffs seek a remedy for a past wrong, the sale of their home by
foreclosure. Declaratory relief is inappropriate where a party claims a fully matured

                                               22
cause of action for money. (Canova v. Trustees of Imperial Irrigation Dist. Employee
Pension Plan (2007) 150 Cal. App. 4th 1487, 1497.) In the absence of factual allegations
indicating an actual present controversy, as opposed to the redress of a past wrong,
plaintiffs have failed to state a cause of action for declaratory relief.
                                            VIII
                                          Quiet Title
        The trial court found that plaintiffs’ quiet title cause of action failed because
plaintiffs did not tender full payment of their debt. A borrower cannot quiet title to
secured property without alleging payment of the debt secured by the property. (Lueras
v. BAC Home Loans Servicing, LP (2013) 221 Cal. App. 4th 49, 86.)
        Plaintiffs argue they were excused from alleging tender because the trustee’s sale
was void. They argue the sale was void because they were not provided notice of the
sale.
        Plaintiffs’ argument is based on alleged irregularities in the foreclosure process.
The tender requirement is excused only where: (1) the underlying debt is invalid; (2) the
deed of trust is invalid; (3) there exists a counter claim that is equal to or greater than the
amount due; or (4) it would be inequitable to impose the condition on the particular party
challenging the sale. (Lona v. Citibank, N.A. (2011) 202 Cal. App. 4th 89, 112-113.)
Where, as here, the plaintiffs are attempting to set aside the foreclosure sale based on
irregularities in the sale, they must allege tender of the amount of the secured debt.8
(Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, 578-579.)
        As part of their argument that they were not required to tender payment of the debt
for a quiet title action, plaintiffs argue the debt was paid by securitization or by default
insurance. Apparently, they believe this constituted tender. However, assuming

8  Plaintiffs assert they have damage claims that would offset the amount they owe. As
discussed, ante, plaintiffs have no damages.

                                               23
plaintiffs’ debt was paid through securitization or insurance, plaintiffs’ obligation to
perform under the note was not extinguished, and they cannot maintain a quiet title action
absent an allegation of tender of the debt.
                                       DISPOSITION
       The judgment is affirmed except as to Cal-Western. The parties shall bear their
own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

                                                /s/
                                              Blease, Acting P. J.

We concur:

         /s/
       Robie, J.

        /s/
       Mauro, J.

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