Court Opinion

ID: 5126830
Source: CourtListenerOpinion
Date Created: 2021-11-17 20:03:30.472078+00
Date Added: 2024-06-11T08:21:19.601494
License: Public Domain

Filed 11/17/21 Opperwall v. Quality Loan Service Corp. CA1/3
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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

                                     FIRST APPELLATE DISTRICT

                                                DIVISION THREE

 STEPHEN G. OPPERWALL,
           Plaintiff and Appellant,
                                                                        A159461
 v.
 QUALITY LOAN SERVICE                                                   (Alameda County
 CORPORATION, et al.,                                                   Super. Ct. No. HG19033652)
           Defendants and Respondents.

         Plaintiff Stephen G. Opperwall appeals from a judgment after the trial
court sustained without leave to amend the demurrers of defendants Bank of
America, N.A. (BANA) and Quality Loan Service Corporation (QLS)
(collectively defendants) to Opperwall’s complaint. Opperwall contends the
trial court erred by failing to construe ambiguous language in an exhibit to
the complaint in his favor and dismissing the case in violation of the
applicable law on demurrers requiring inferences to be drawn in favor of the
complaint’s sufficiency. We affirm.
                           FACTUAL AND PROCEDURAL BACKGROUND
          In September 2019, Opperwall filed a complaint alleging seven causes
of action against defendants relating to real property located on Via Del Cielo
in Pleasanton (the Pleasanton property). The complaint alleges that the
Pleasanton property is not subject to any claims or liens of defendants, but
that in June 2019 defendants recorded a notice of default against Opperwall
“allegedly pursuant to the Promissory Note and Deed of Trust that was
satisfied as established by Exhibit 1.”
      Exhibit 1 to the complaint contains a copy of a document recorded with
the Alameda County Recorder’s Office in July 2019 entitled “Satisfaction of
Mortgage” (hereafter satisfaction of mortgage). This document, signed by
Opperwall, identifies the Pleasanton property by parcel number and states
that a $900,000 mortgage dated January 29, 2007, made by Opperwall to
BANA “is paid.” Attached to the satisfaction of mortgage is a “Notice of
Satisfaction of Claim 13-2” (hereafter notice of satisfaction) filed on
September 30, 2016, in the United States Bankruptcy Court for the Northern
District of California (hereafter bankruptcy court) in case number 12-41283-
WJL13. The notice of satisfaction is signed by BANA and states in relevant
part: “Please take notice that the Claim of Bank of America, N.A. filed on
06/20/2012 as Claim Number 13-1 has been satisfied. No further payments
from the Trustee are necessary.”
      Exhibit 1 of the complaint also includes a “proof of claim” form filed by
BANA in the bankruptcy court showing BANA’s claim of approximately
$952,000, including prepetition arrears over $55,000. Also included in
exhibit 1 are copies of the deed of trust and promissory note for the $900,000
mortgage on the Pleasanton property.
      The complaint further alleges that “[t]he Satisfaction of Claim by Bank
is of all claims relating to its Promissory Note and Deed of Trust that relate
to the [Pleasanton] Property[.]” According to Opperwall, the satisfaction of
mortgage and notice of satisfaction “conclusively establish that the claims by
[BANA] against [Opperwall] relating [to] the [Pleasanton] Property were
satisfied, waived, and released, and that determination is conclusive based on

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res judicata, collateral estoppel, and claim preclusion.” All seven causes of
action in the complaint arise from the allegation that the mortgage debt has
been acknowledged as satisfied.1
      Defendants each generally demurred to the complaint. As relevant
here, BANA argued that Opperwall could not escape his mortgage debt by
unilaterally recording the satisfaction of mortgage. BANA further argued
that the notice of satisfaction filed in the bankruptcy court did not indicate
that the entire mortgage debt had been satisfied; rather, it provided that
Opperwall had satisfied his obligations under the bankruptcy plan, which
required Opperwall to cure the prepetition mortgage arrears balance.
      In sustaining the demurrers, the trial court found that the notice of
satisfaction applied only to the prepetition arrears–not to the secured debt
reflected in the promissory note and deed of trust. The court based its
decision on judicially noticed records from the bankruptcy and federal courts,
as well as legal authorities holding that Chapter 13 bankruptcy plans

1     In the first cause of action, Opperwall seeks a declaratory judgment
that he has sole and exclusive rights in all respects to the Pleasanton
property and that defendants have “no rights regarding any amounts owed by
[Opperwall] to either of said Defendants.” In the second cause of action,
Opperwall seeks temporary, preliminary, and permanent injunctive relief
against defendants “restraining them and enjoining them from taking any
actions relating to the [Pleasanton] property[.]” In the third cause of action
for quiet title, Opperwall seeks a determination that he has sole and
exclusive ownership and right to possession of the Pleasanton property
requesting the elimination of all claims asserted by defendants. In the fourth
cause of action to remove cloud on title, Opperwall seeks cancellation of “any
and all instruments and documents that Defendants claim support the cloud
on [Opperwall’s] title[.]” In the fifth cause of action, plaintiff seeks a
determination that defendants’ claims are barred by the res judicata effect of
the determinations made in the bankruptcy case. In the sixth and seventh
causes of action, Opperwall seeks elimination of the deed of trust and
promissory note.

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generally cannot modify claims secured by a debtor’s principal residence, but
may be used to cure a default on claims due after the Chapter 13 proceeding.
The court observed that “[w]hile [BANA’s] Notice of the Satisfaction could
have been more clearly drafted, it explicitly states, ‘No further payments
from the Trustee are necessary.’ ” Thus, the court concluded that “the only
reasonable and lawful interpretation of the Notice of Satisfaction” was that it
applied to the approximately $50,000 arrearage and not to the mortgage debt
secured by the deed of trust, “which as a matter of law could not be
discharged in Plaintiff’s Chapter 13 bankruptcy plan.” Because all of
Opperwall’s claims were premised on the allegation that the notice of
satisfaction extinguished the entire mortgage debt, the court sustained the
demurrers to the entire complaint and did not grant Opperwall leave to
amend.
      Opperwall appealed from the ensuing judgment.
                                   DISCUSSION
      On appeal from an order sustaining a general demurrer, we review the
complaint de novo to determine whether it alleges facts sufficient to state a
cause of action under any legal theory. (Cantu v. Resolution Trust Corp.
(1992) 4 Cal.App.4th 857, 879 (Cantu).) “ ‘ “We treat the demurrer as
admitting all material facts properly pleaded, but not contentions, deductions
or conclusions of fact or law[,] [Citation] . . .” ’ ” and “ ‘[we] give the complaint
a reasonable interpretation, reading it as a whole and its parts in their
context.’ ” (Sanchez v. Truck Ins. Exchange (1994) 21 Cal.App.4th 1778, 1781
(Sanchez).)
      We also accept as true facts appearing in exhibits attached to the
complaint, but “[i]f the facts appearing in the attached exhibit contradict
those expressly pleaded, those in the exhibit are given precedence.” (Mead v.

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Sanwa Bank California (1998) 61 Cal.App.4th 561, 567–568.) We will accept
the plaintiff’s construction of ambiguous exhibits so long as the pleading does
not advance “ ‘a clearly erroneous construction[.]’ ” (Requa v. Regents of
University of California (2012) 213 Cal.App.4th 213, 224–225 (Requa).)
      We may also consider matters that are properly the subject of judicial
notice. (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736,
742.) While a demurrer cannot be turned into an evidentiary hearing
through the guise of having the court take judicial notice of factual matters in
dispute (Richtek USA, Inc. v. uPI Semiconductor Corp. (2015) 242
Cal.App.4th 651, 660), courts “may properly take judicial notice of a party’s
earlier pleadings and positions as well as established facts from both the
same case and other cases. [Citations.] The complaint should be read as
containing the judicially noticeable facts, ‘even when the pleading contains an
express allegation to the contrary.’ [Citation.] A plaintiff may not avoid a
demurrer . . . by suppressing facts which prove the pleaded facts false.”
(Cantu, supra, 4 Cal.App.4th at p. 877).
      In the proceedings below, the trial court granted defendants’ requests
for judicial notice of various records from the bankruptcy and federal courts.
Defendants have not moved for judicial notice of these records on appeal. We
are, however, required to take judicial notice of matters properly noticed by
the court below, including the bankruptcy court’s docket of the bankruptcy
proceeding, case number 12-41283-WLJ13; the second amended Chapter 13
plan filed on April 25, 2012; and the bankruptcy court’s June 27, 2012, order
confirming the Chapter 13 plan. (Evid. Code, §§ 452, subd. (d) [judicial notice
of court records], 459, subd. (a) [reviewing court shall take judicial notice of
matters properly noticed by trial court].) Additionally, we, like the trial

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court, take judicial notice of a November 2018 memorandum decision by the
bankruptcy court in adversary proceeding case number 18-04090.
      Opperwall disputes the relevance of these records, claiming they had
“nothing to do with” the notice of satisfaction and made no reference to it, and
therefore the notice cannot be used to interpret factual disputes. We
disagree. Opperwall’s complaint references the bankruptcy proceeding by
case number (12-41283-WLJ13) and identifies the notice of satisfaction and
proof of claim as having been filed by BANA in that matter. Accordingly, the
terms of the Chapter 13 plan are relevant to the complaint’s allegations
regarding the effect of the notice of satisfaction. As we shall also explain, the
bankruptcy court’s memorandum decision in adversary proceeding case
number 18-04090 is relevant to Opperwall’s contention on appeal that the
notice of satisfaction may be interpreted as resolving prior litigation between
the parties.
      We briefly summarize the relevant terms of the confirmed second
amended Chapter 13 plan. The plan identifies BANA’s claim of
approximately $950,000, with $50,610.07 in “Estimated Mortgage Arrears.”
Opperwall agreed to pay the bankruptcy trustee $500 a month for 60 months
and to “pay [BANA] directly” a monthly payment of $2,724.66. The plan
notes that Opperwall’s payments on the first mortgage—“except for the pre-
petition arrearage portion”—are made “outside the plan,” and the plan
“assumes that [Opperwall] will obtain, prior to confirmation of this plan, a
loan modification agreement on the first mortgage on [Opperwall’s] principal
residence” which would allow him to make the monthly payments for the
duration of the 60-month plan. The plan further states that “[p]ayments the
creditor receives from the bankruptcy trustee are to be used solely to pay
down the prepetition arrearage[.]”

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      Turning back to the complaint, Opperwall alleges that BANA’s notice of
satisfaction pertained to “all claims relating to its Promissory Note and Deed
of Trust that relate to the Property” (italics added), and that the satisfaction
of mortgage and notice of satisfaction “conclusively establish” that BANA’s
claims against Opperwall regarding the property “were satisfied, waived, and
released[.]” However, we need not accept these allegations as true because
they are contrary to federal bankruptcy law and the judicially noticed
records. (Requa, supra, 213 Cal.App.4th at pp. 224–225; Cantu, supra, 4
Cal.App.4th at p. 877.)
      As the trial court observed, “[m]ortgage-related debts are generally
non-dischargeable under Chapter 13 because Chapter 13 bankruptcy plans
cannot modify any claims secured by a debtor’s principal residence.
[Citations.] Although [11 U.S.C.] § 1322(b)(5) provides an exception for the
‘curing of any default’ and ‘maint[aining] of payments’ on claims due after the
Chapter 13 proceeding, the scope of [11 U.S.C.] § 1322(b)(5) is still narrow.
[Citations.] In light of this statutory framework, numerous courts have
concluded that debts secured by a principal residence survive a Chapter 13
discharge.” (Demay v. Wells Fargo Home Mortgage, Inc. (N.D.Cal. 2017) 279
F.Supp.3d 1005, 1009 (Demay).) Here, the complaint, its exhibits, and the
judicially noticed records establish that BANA filed the notice of satisfaction
in Chapter 13 bankruptcy proceedings, and that the mortgage debt was
secured by Opperwall’s principal residence. Accordingly, the trial court was
correct that the notice of satisfaction could not properly be interpreted to
reflect satisfaction of the entire mortgage debt.2

2     Opperwall argues, for the first time in his reply brief, that mortgages
can be discharged in Chapter 13 proceedings in a practice known as
“lienstripping.” This argument is “ ‘doubly waived’ ” due to Opperwall’s
failure to raise it with the trial court and in his opening brief. (Lambert v.

                                        7
      The terms of the Chapter 13 plan provide further support for the trial
court’s decision. As explained, the Chapter 13 plan reflects Opperwall’s
agreement to make mortgage payments directly to BANA, while his
payments to the bankruptcy trustee were to be used “solely” to pay down the
prepetition arrearage. Accordingly, the third sentence of the notice of
satisfaction—“No further payments from the Trustee are necessary” (italics
added)—plainly refers to the trustee’s payments on the prepetition arrears
under the plan, not Opperwall’s obligation to make monthly mortgage
payments to BANA “outside the plan.” Opperwall cannot avoid a demurrer
by suppressing these facts with his contrary allegations. (Cantu, supra, 4
Cal.App.4th at p. 877.)
      We also do not accept as true the allegation that the recorded
satisfaction of mortgage “conclusively establish[ed]” BANA’s claim was
satisfied, as this allegation is also erroneous as a matter of law. (Requa,
supra, 213 Cal.App.4th at pp. 224–225.) Civil Code section 2941 allows only
the beneficiary, trustee, or a title insurance company to reconvey a deed of
trust. (See Prudential Home Mortgage Co. v. Superior Court (1998) 66

Carneghi (2008) 158 Cal.App.4th 1120, 1135.) In any event, the trial court
did not err in relying on Demay for the proposition that, in general, Chapter
13 plans cannot modify claims secured by the debtor’s principal residence.
While Chapter 13 debtors may obtain modification of a short-term secured
loan through “lienstripping”—e.g., the bifurcation of the loan into secured
and unsecured components based on the value of the home, with the
unsecured component subject to a “cramdown” (Aceves v. U.S. Bank N.A.
(2011) 192 Cal.App.4th 218, 228, citing Am. Gen. Fin., Inc. v. Paschen (11th
Cir. 2002) 296 F.3d 1203, 1205–1209), Opperwall did not allege, nor does he
contend he can allege, that he obtained such modification of BANA’s first
mortgage in the Chapter 13 proceedings. Furthermore, the judicially noticed
records belie such a claim, and the exhibits to the complaint show that the
mortgage in question was not a short-term loan subject to modification under
11 U.S.C. section 1322(c)(2).

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Cal.App.4th 1236, 1241, citing Civil Code section 2941, subdivision (b)(1), (2)
& (3).) Thus, Opperwall, as the borrower, could not reconvey his own deed of
trust by unilaterally recording the satisfaction of mortgage document.
      Opperwall’s remaining contentions are likewise meritless. He contends
the trial court found the notice of satisfaction to be ambiguous but failed to
construe the ambiguity against the document’s drafter, BANA. We disagree.
An ambiguity arises when language is reasonably susceptible of more than
one possible meaning. (Dore v. Arnold Worldwide (2006) 39 Cal.4th 384,
391.) Although the trial court remarked that the notice of satisfaction “could
have been more clearly drafted,” the court did not find it reasonably
susceptible to more than one meaning; rather, it found “[t]he only reasonable
and lawful interpretation” was that the notice applied to the prepetition
arrearage, not the entire mortgage debt. (Italics added.) We agree there is
no ambiguity, and hence, no occasion to construe any ambiguity in
Opperwall’s favor. (Central Bank v. Kaiperm Santa Clara Fed. Credit Union
(1987) 191 Cal.App.3d 186, 206 [rule of construction against drafter
inapplicable where it is determined there is no ambiguity].)
      Opperwall also argues that BANA’s notice of satisfaction was
analogous to an acknowledgment of satisfaction of judgment filed in state
court or a withdrawal of a claim filed by a creditor in bankruptcy court, both
of which act as legal bars to a creditor later asserting the claim. He cites no
authority, however, for the proposition that these types of documents should
be treated equivalently as a legal matter. In any event, the issue is not
whether BANA is bound by its notice of satisfaction, but whether the notice is
properly construed as referring only to the trustee’s satisfaction of the
prepetition arrearages portion of the claim that went through the
bankruptcy, or whether it should be construed to also reach the mortgage

                                        9
debt portion of the claim that remains outside the bankruptcy. Opperwall
has not shown that California trial and appellate courts are precluded from
interpreting a notice of satisfaction based on its plain meaning and in proper
context, and the only reasonable and lawful interpretation of the notice here
is that it pertained to Opperwall’s satisfaction of prepetition arrearages
under the Chapter 13 plan.
      Nor are there any allegations in the complaint that Opperwall repaid
the mortgage. Opperwall contends it “makes sense” to interpret the notice of
satisfaction as an acknowledgment of satisfaction of the entire mortgage debt
“because [Opperwall] had a multi-million dollar potential claim against
[BANA], and the Acknowledgment of Satisfaction of Claim purported to
resolve that claim,” as the notice of satisfaction was filed “[a]gainst that
backdrop[.]” The complaint, however, is devoid of any allegations—factual or
otherwise—indicating the notice of satisfaction reflected a litigation
settlement between the parties.3
      For these reasons, we conclude the demurrers were properly
sustained.4 When a demurrer is sustained without leave to amend, “we

3     The judicially noticed memorandum decision in adversary proceeding
case number 18-04090 reflects that in 2014 and 2018, Opperwall filed civil
complaints against BANA in state court alleging BANA’s failure to comply
with an alleged loan modification agreement. Both cases were removed to
the bankruptcy court as adversary proceedings and eventually dismissed, and
both dismissals were affirmed by the United States District Court for the
Northern District of California (Opperwall v. Bank of Am., N.A. (N.D.Cal.,
Mar. 2, 2020, No. 18-cv-007711-JST) 2020 U.S. Dist. Lexis 45522; Opperwall
v. Bank of Am., N.A. (Bankr. N.D.Cal. 2016) 561 B.R. 775) and the United
States Court of Appeals for the Ninth Circuit (Opperwall v. Bank of Am., N.A.
(9th Cir. 2021) 847 Fed.Appx. 490; Opperwall v. Bank of Am., N.A. (9th Cir.
2018) 727 Fed.Appx. 329).
4    In light of our conclusion, we need not address BANA’s further
contention that the instant suit is barred by the res judicata effect of the

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decide whether there is a reasonable possibility that the defect can be cured
by amendment: if it can be, 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.” (Sanchez, supra, 21 Cal.App.4th at p. 1781.) “This showing
may be made for the first time in the appellate court, but it must be made.”
(Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035,
1039.) Opperwall fails to do so here. Nowhere in his appellate briefing does
he explain how the complaint might be amended to avoid the deficiencies
identified above. Thus, he fails to show that the trial court abused its
discretion in denying leave to amend.5
                                 DISPOSITION
      The judgment is affirmed. Defendants are entitled to their costs on
appeal.

judgment in the 2018 adversary proceeding or QLS’s argument that its
actions in conducting foreclosure proceedings were privileged under Civil
Code section 2924, subdivision (b).
5    At oral argument, Opperwall requested the opportunity to provide
supplemental briefing. The request is denied.

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                                                     _________________________
                                                     Fujisaki, J.

WE CONCUR:

_________________________
Tucher, P. J.

_________________________
Rodriguez, J.

A159461/Opperwall v. Quality Loan Service Corporation, et al.

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