Jamali v. Select Portfolio Servicing, Inc.

PARVIN JAMALI et al., Plaintiffs and Appellants, v. SELECT PORTFOLIO SERVICING, INC. et al., Defendants and Respondents.

B290145

California Court of Appeals, Second District, Fifth Division

July 14, 2021

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC593550 Monica Bachner, Judge. Affirmed, with directions.

Michael Shemtoub; Lorden & Reed, Zshonette L. Reed Payman Taheri; and Michael Yesk for Plaintiffs and Appellants.

Wright, Finlay & Zak, Gwen H. Ribar, Oliver J. Labarre for Defendants and Respondents Select Portfolio Servicing Inc. and U.S. Bank, N.A., as Trustee, etc.

Fidelity National Law Group, Kevin R. Broersma, for Defendants and Respondents U.S. Bank, N.A., as Trustee, etc.

MOOR ACTING P. J.

Plaintiffs, cross-defendants, and appellants Parvin Jamali and Mohsen Lotfimoghaddas appeal from a judgment following an order sustaining demurrers without leave to amend in favor of defendant and respondent Select Portfolio Servicing, Inc. (SPS), and defendant, cross-complainant, and respondent U.S. Bank, N.A., as trustee, successor in interest to Bank of America, N.A., as trustee as successor by merger to La Salle, N.A., as trustee for WAMU Mortgage Pass-Through Certificates Series 2007-HY7 Trust (the Trustee). In their sixth amended complaint, Jamali and Lotfimoghaddas sought to allege declaratory relief based on rescission of a loan from Washington Mutual Bank under the Truth in Lending Act (TILA) (15 U.S.C. § 1601 et seq.), ^[1] quiet title, and elder abuse. On appeal, Jamali and Lotfimoghaddas contend: (1) the complaint is not barred on its face by any statute of limitations; (2) the trial court improperly took judicial notice of the fact that the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver for Washington Mutual in September 2008; (3) Jamali and Lotfimoghaddas were not required to exhaust remedies provided under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. § 1811 et seq.); (4) the deed of trust recorded by Washington Mutual is void, because it does not include the legal description of the property; (5) conduct by SPS and the Trustee to foreclose on the property constituted elder abuse; and (6) leave to amend should have been granted.

We conclude the trial court properly sustained the demurrers, because: (1) the alleged relief based on rescission under the TILA is barred by the statute of limitations; (2) the description of the property contained in the deed of trust was sufficient; and (3) no conduct was alleged that supported a claim for elder abuse. Jamali and Lotfimoghaddas have not shown on appeal that the complaint can be amended to state a cause of action. We modify the judgment to dispose of the first amended cross-complaint, and as modified, we affirm.

FACTS^[2]

Jamali, who is an elderly person, and her son Lotfimoghaddas purchased a home on Robin Drive in Los Angeles. The legal description of the property attached as exhibit A to the grant deed recorded in August 2006, was: “Lot 86 of Tract No 23753, in the City of Los Angeles, County of Los Angeles, State of California, as per map recorded in book 630, page(s) 57 to 63 inclusive of maps, in the office of the Country Recorder of said county. [¶] Except therefrom all oil, gas, minerals and other hydrocarbon substances in and under said land lying below a depth of 500 feet from the surface, without however, the right of surface entry, as reserved in a deed recorded in book D217 page 635 official records.” The grant deed stated that the property was also known as 9219 Robin Drive, Los Angeles, California, and the assessor's parcel ID number was 5561-007-032.

Jamali and Lotfimoghaddas financed their purchase with a loan of $3 million from Washington Mutual. A deed of trust securing the loan was recorded in August 2006 on the following property interest in the county of Los Angeles: “Legal description exhibit ‘A' attached hereto and made a part hereof. Also: legal description exhibit ‘B' attached hereto and made a part hereof. Requirements for reconveyance: partial reconveyance of the property known as exhibit ‘B', may be obtained upon payment to the bank of $608, 000.00. However, in no event shall the bank be required to release the property if the borrower is in default under the terms of this deed of trust, the note or other loan documents.” The deed of trust gave the parcel ID number 5561-007-032, which currently has the address of 9219 Robin Drive, Los Angeles, California.

Exhibit A provided the same legal description as exhibit A of the grant deed for the Robin Drive home, but added the assessor's parcel number: “Lot 86 of Tract No 23753, in the City of Los Angeles, County of Los Angeles, State of California, as per map recorded in book 630, page(s) 57 to 63 inclusive of maps, in the office of the Country Recorder of said county. [¶] Except therefrom all oil, gas, minerals and other hydrocarbon substances in and under said land lying below a depth of 500 feet from the surface, without however, the right of surface entry, as reserved in a deed recorded in book D217 page 635 official records. [¶] APN: 5561-007-032.”

Exhibit B stated, “All that certain real property situated in the County of Los Angeles, State of California, described as follows: [¶] Lot 5 of Tract No. 7737, partly in the City of Los Angeles, and partly in the County of Los Angeles, State of California, as per map recorded in Book 88, page(s) 85 through 87, inclusive, of Maps, in the office of the County Recorder of said County.”

In May 2007, Jamali and Lotfimoghaddas obtained a new loan of $2.5 million from Washington Mutual. The earlier loan was repaid, and the 2006 deed of trust was reconveyed. A deed of trust dated May 16, 2007, with a recording date of May 24, 2007, secured the loan through property located in the County of Los Angeles having the assessor's parcel ID number 5561-007-032 and the address of 9219 Robin Drive, Los Angeles, California 90069. The space on the trust deed for the legal description was blank; stray marks in the space suggest text was covered and copied over to remove it, leaving the legal description blank.

Within three days, Jamali and Lotfimoghaddas rescinded the loan in writing. Washington Mutual ignored the written request to cancel the loan, declared bankruptcy, and was liquidated. J.P. Morgan Chase Co. and J.P. Morgan Chase Bank, N.A. (collectively Chase Bank) purchased all of Washington Mutual's assets in September 2008.

In early 2012, Jamali and Lotfimoghaddas fell behind on their mortgage payments. Chase Bank initiated foreclosure proceedings, which were later rescinded. In an assignment recorded on April 25, 2012, the beneficial interest under the deed of trust was assigned to the Trustee. In July 2013, Chase Bank notified Jamali and Lotfimoghaddas that SPS would be servicing the loan. In September 2014, a third party offered to purchase the property for $2.5 million.

On March 23, 2015, SPS, recorded a notice of default and election to sell the property at a non-judicial foreclosure sale. The notice stated that the amount due was $590, 116.69. A notice was recorded on June 24, 2015, purportedly on behalf of SPS, which rescinded the notice of default and demand for sale. On August 26, 2015, SPS sent a notice to Jamali and Lotfimoghaddas that the Robin Drive property would be sold at a foreclosure sale scheduled for September 23, 2015.

PROCEDURAL BACKGROUND

Procedural History Prior to Operative Complaint

On September 9, 2015, Jamali filed a verified complaint against Chase Bank, SPS, and debt collector Nationwide Credit, Inc. for declaratory relief, violation of debt collection and homeowner protection laws, and elder abuse, among other claims. The original complaint did not allege that Jamali and Lotfimoghaddas sent a notice to Washington Mutual in 2007 rescinding the transaction. The complaint stated the principal balance of $2.5 million was secured by a deed of trust on the property. The 2007 deed of trust was attached to the complaint and incorporated by reference.

After demurrers were sustained with leave to amend to the first two versions of the complaint, Jamali and Lotfimoghaddas filed a second amended complaint in June 2016 adding a cause of action for rescission against Chase Bank based on allegations that they had requested in writing to rescind the loan, but Washington Mutual ignored their written request.

SPS filed a demurrer to the second amended complaint on several grounds, including that no conduct was alleged to have been taken by SPS, and the plaintiffs had tendered the amount of the principal only, rather than the full amount owed. Jamali and Lotfimoghaddas opposed the demurrer on several grounds including the effect of their rescission under the TILA. The trial court sustained the demurrer with leave to amend.

The plaintiffs' third amended complaint was substantively similar. SPS filed a demurrer on several grounds, including that the TILA did not apply to residential purchase money mortgages, there is no liability for servicers under the TILA, the statute of limitations for rescission under the TILA barred the claim, and the complaint failed to allege SPS took any property from Jamali by wrongful act or with the intent to defraud her. The trial court sustained SPS's demurrer with leave to amend. In December 2016, Jamali and Lotfimoghaddas entered into a settlement with Chase Bank and Nationwide.

In January 2017, Jamali and Lotfimoghaddas filed a fourth amended complaint against SPS only. They alleged causes of action for cancellation of instrument, declaratory relief, quiet title, and elder abuse based solely on rescission under the TILA.

SPS filed a demurrer. In addition to the prior...