Elwin v. Bank of Am., N.A.

RONELL D. ELWIN, Plaintiff and Appellant, v. BANK OF AMERICA, N.A. et al., Defendants and Respondents.

H044007

COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT

September 10, 2019

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Santa Clara County Super. Ct. No. 1-15-CV-282776)

Plaintiff Ronell D. Elwin filed an action against financial institution defendants alleging improprieties in the execution of her mortgage, subsequent assignments, and the nonjudicial foreclosure process involving a residence co-owned with her husband. She sought declaratory and injunctive relief, as well as monetary damages. The trial court sustained defendants' demurrer to the amended complaint without leave to amend and dismissed the action.

On appeal, plaintiff contends that the amended complaint sufficiently pleaded her causes of action, and, to the extent necessary, she should be allowed to amend her complaint to include new facts and allegations. As to eight of plaintiff's causes of action, we conclude the demurrer was properly sustained without leave to amend. As to her remaining claim, we determine the amended complaint stated facts sufficient to constitute a cause of action. We reverse.

I. Background

In January 2007, plaintiff and her husband, James Elwin, obtained a loan of $650,000 to refinance a mortgage secured by property located in San Jose, California. The promissory note for that loan reflects three indorsements, one that appears on a blank page attached to the note and two that appear on the note's signature page. The indorsement on the blank page shows the note was indorsed to Countrywide Bank, N.A., by an employee of Alternative Financing Corporation (AFC). As to the two indorsements on the signature page, one indicates that the note was indorsed to Countrywide Home Loans, Inc., by an employee of Countrywide Bank, N.A. The other is a blank indorsement by an employee of Countrywide Home Loans, Inc.

The note was secured by a deed of trust, which identified plaintiff and her husband as "Borrower," AFC as the "Lender," Chicago Title Company as the "Trustee," and Mortgage Electronic Registration System, Inc. (MERS) "as a nominee for Lender and Lender's successors and assigns." MERS was also identified as "the beneficiary under this Security Instrument." The deed of trust further stated that "Borrower understands and agrees that MERS holds only legal title to the interests granted by the Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property." Finally, the deed of trust stated that "[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower."

In July 2010, MERS assigned the deed of trust to U.S. Bank National Association, as Trustee of MASTR Adjustable Rate Mortgages Trust 2007-3 (US Bank). In September 2012, Bank of America, N.A. (Bank of America), acting as attorney in fact for US Bank, executed a substitution of trustee, replacing Chicago Title Company with ReconTrust Company, N.A. (ReconTrust). In October 2012, ReconTrust recorded a notice of default.

In August 2013, Bank of America assigned the deed of trust to Nationstar Mortgage LLC (Nationstar). The assignment did not state in what capacity Bank of America was acting in executing the assignment.

In January 2015, Nationstar executed a substitution of trustee, replacing ReconTrust with Clear Recon Corp. In April 2015, Clear Recon recorded a second notice of default.

In July 2015, plaintiff filed her original complaint against Bank of America, US Bank, ReconTrust, MERS, Clear Recon, and Nationstar. Defendants filed a motion for judgment on the pleadings, which the trial court granted with leave to amend.

Plaintiff filed an amended complaint alleging 10 causes of action: (1) slander of title; (2) violation of the California Homeowner Bill of Rights (HBOR); (3) cancellation of instruments; (4) tortious interference with contract; (5) declaratory relief and injunctive relief; (6) fraud and deceit; (7) violations of Business and Professions Code section 17200 (unfair competition law (UCL)); (8) accounting; (9) quiet title; and (10) breach of contract. Defendants demurred to the first nine causes of action and filed an answer to the breach of contract claim. After taking judicial notice of the note- and deed-related documents involved in the transaction, the trial court sustained the demurrer without leave to amend. Plaintiff voluntarily dismissed without prejudice the breach of contract cause of action. The trial court entered a judgment of dismissal with prejudice, except as to the cause of action plaintiff voluntarily dismissed.

II. Discussion

A. Standard of Review

"On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]" (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865 (Dinuba).) When the trial court has sustained the demurrer without leave to amend, this court must determine "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. [Citation.]" (Ibid.) The burden is on the plaintiff to show a reasonable possibility of curing a defect. (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4th 1001, 1008 (Barroso).)

B. Slander of Title

In her amended complaint, plaintiff alleged that the deed of trust and subsequent assignments of the deed of trust slandered plaintiff's title "by causing a cloud on Plaintiff's Title to Plaintiff's Property." Citing Civil Code sections 1550, 1558, and 1598,¹ plaintiff alleged that the original deed of trust was void. Additionally, plaintiff alleged that the subsequent assignments were invalid because MERS's authority to assign the deed ended in 2007 when AFC dissolved. Plaintiff also alleged that the debt had been securitized without her consent.

"Slander or disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof ' "some special pecuniary loss or damage." ' [Citation.] The elements of the tort are (1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss. [Citations.]" (Sumner Hill Homeowners' Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1030 (Sumner Hill).) The statute of limitations for slander of title is three years. (Code Civ. Proc., § 338, subd. (g).)

Plaintiff's amended complaint alleged that the original deed, the first 2010 assignment, and the subsequent 2013 assignment slandered her title because each document contained false or misleading information. Plaintiff filed suit in 2015. Because the original deed of trust was recorded in 2007 and the first assignment was recorded in 2010, her slander of title action based on the deed of trust and the 2010 assignment was untimely. (Code Civ. Proc., § 338, subd. (g).)

On appeal, plaintiff argues for application of the discovery rule, apparently alleging that she did not discover the factual basis for her slander of title claim until sometime in 2015, either when the May 2015 substitution of trustee was filed or when the April 2015 notice of default was recorded. When, as here, a cause of action would be barred by the statute of limitations without the discovery rule, a plaintiff " 'must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.' " (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 (Fox).) Thus, a plaintiff bears the burden to show diligence; conclusory allegations will not survive a demurrer. (Ibid.)

In terms of this burden, plaintiff's amended complaint is silent on the issue of delayed discovery and why plaintiff was unable, despite reasonable diligence, to discover the alleged issues with the 2007 deed of trust and 2010 assignment. (Fox, supra, 35 Cal.4th at p. 808.) On appeal, plaintiff notes that the substitution of trustee was executed in May 2015 and that the notice of default was recorded in April 2015. Then, without any further explanation as to "the time and manner of discovery," she states she "filed her complaint on July 7, 2015 when she was injured by Respondents' acts; well within any statute of limitations period." Plaintiff's explanation as to the time and manner of discovery is inadequate. (Ibid.) Further, she fails to allege her " 'inability to have made earlier discovery despite reasonable diligence.' " (Ibid.) Plaintiff cannot overcome the untimeliness of her slander of title cause of action, as it relates to the 2007 deed of trust and 2010 assignment.

As to the 2013 assignment, which is within the limitations period, plaintiff's amended complaint also fails to state a claim because it does not allege a direct pecuniary loss resulting from the assignment. (Sumner Hill, supra, 205 Cal.App.4th at p. 1030.) Nor could she. The 2013 assignment did...