Harjo v. Deutsche Bank Nat. Trust CA4/1 (2015) · DecisionDepot
Harjo v. Deutsche Bank Nat. Trust CA4/1
California Court of Appeal May 20, 2015 No. D065866Unpublished
Filed 5/20/15 Harjo v. Deutsche Bank Nat. Trust CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
BEN R. HARJO et al., D065866
Plaintiffs and Appellants,
v. (Super. Ct. No. 37-2013-00045060- CU-OR-NC) DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee, etc., et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County, Robert P.
Dahlquist, Judge. Affirmed.
Ben R. Harjo and Jennifer E. Harjo, in pro. per., for Plaintiffs and Appellants.
Severson & Werson, Jan T. Chilton, Michael G. Cross and Kerry W. Franich for
Defendants and Respondents.
Plaintiffs and appellants Ben R. Harjo and Jennifer E. Harjo filed a complaint
against an assignee of a deed of trust on their home, defendant and respondent Nationstar
Mortgage LLC (Nationstar), among others. The Harjos' complaint alleges the assignment
of the deed of trust was improper and they seek to prevent Nationstar from foreclosing on
it, notwithstanding the fact the Harjos are in arrears on payments due on the promissory
note, which is secured by the deed of trust.
The trial court sustained a demurrer filed by Nationstar and the other defendants
without leave to amend and dismissed the Harjos' complaint. The Harjos filed a timely
In addition to allegations in the complaint, the reviewing court must properly consider
evidentiary facts that appear in exhibits attached to the complaint. (Satten v. Webb
(2002) 99 Cal.App.4th 365, 375). Furthermore, "[a]ny allegations in the complaint which
are inconsistent with facts set out in an unambiguous written instrument, incorporated by
reference, may be stricken." (Fundin v. Chicago Pneumatic Tool Co. (1984) 152
Cal.App.3d 951, 955.)
II
In the first cause of action, the SAC alleges that the defendants violated four
provisions of the HBR—sections 2923.6, 2923.7, 2924.10 and 2924.11— and that the
violations give rise to the right to injunctive relief. As the defendants point out, the
record shows that no violation of the statutes occurred.
A. Section 2923.6
As of January 1, 2013, section 2923.6 requires that before recording a notice of
default or notice of sale or conducting a trustee's sale, loan servicers, such as MERS or
Nationstar, must offer borrowers any workout plan or loan modification that is consistent
with the servicer's contractual or other authority. (§ 2923.6, subd. (c).) The statute
further prevents loan servicers from recording a notice of default or notice of sale or
conducting a trustee's sale while a borrower's application for a workout plan or loan
modification is pending or on appeal from a servicer's denial of the application. (Ibid.)
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More particularly, if a loan servicer denies an application for a workout plan or
loan modification, the loan servicer must advise the borrower of the reasons for the
denial. (§ 2923.6, subd. (f).) Nationstar's July 25, 2013 letter denying their application
for a loan modification stated: "We . . . regret to inform you that you do not meet the
program guidelines because we are unable to create an affordable payment within the
program terms." The denial letter sets forth the Harjos' right to appeal within 30 days, the
procedure for appeal and other alternatives by which the Harjos might avoid foreclosure.
Contrary to the Harjos' contention, Nationstar's July 25, 2013 letter meets the
requirements of section 2923.6, subdivision (f). If a denial was based on disallowance by
an investor, a net present value calculation, or the debtor's failure to meet requirements of
a previous loan modification, the denial must give the debtor notice of those reasons.
(See § 2923.6, subd. (f)(2), (3) & (4).) Here, Nationstar's denial was based solely on the
affordability of a modification, and, thus, the disclosure requirements of section 2923.6,
subdivision (f)(2), (3) and (4) were not applicable. Because the letter provided the Harjos
with notice of the time and manner in which to appeal the denial and other alternatives to
foreclosure, it also met the other requirements of section 2923.6, subdivision (f). (See
§ 2923.6, subd. (f)(1) & (5).)
In sum, the record, by way of Nationstar's July 25, 2013 letter, demonstrates that
Nationstar met the requirements of section 2923.6 and, in particular, all the requirements
of section 2923.6, subdivision (f).
B. Section 2923.7
Section 2923.7 requires that when a borrower requests some form of foreclosure
avoidance, the loan servicer must promptly provide the borrower with a "single point of
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contact," which the statute defines as an individual or team of personnel, each of whom
has access to information about the borrower, his or her loan, the programs available to
the borrower, and access to individuals with the ability and authority to stop foreclosure
proceedings when necessary. (§ 2923.7, subds. (b), (c) & (e).)
Nationstar sent the Harjos its first notice denying their application for a loan
modification on May 23, 2013. The notice did not include information about the Harjos'
appeal rights, but it did contain the following statement: "If you have any questions
regarding this notice, think the reason(s) stated herewith no longer apply or if you
experience additional changes, which you feel warrant consideration, your Foreclosure
Prevention Specialist is Stephen Ellis and can be reached at 8774485023 or via mail at
350 Highland Drive, Lewisville, TX 75067." As defendants contend, on its face this
notice satisfied the requirement that the Harjos be given a single point of contact;
moreover, the SAC does not allege that Mr. Ellis did not perform any of the duties
required of a "single point of contact" under section 2923.7.
In sum then, again the record shows on its face that Nationstar in fact met the
requirements of the provisions of the HBR the Harjos assert.
C. Section 2924.10
Section 2924.10 requires that within five business days after a borrower submits a
complete loan modification to a loan servicer, the loan servicer must send the borrower
acknowledgement that it has received the application and information about the loan
modification process. (See § 2924.10, subd. (a)(1)–(4).) Section 2924.10 became
effective on January 1, 2013. (See Stats. 2012, ch. 86, § 13.)
The Harjos' loan modification application was made on July 29, 2012. There is
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nothing on the face of the statute, or in its history, that suggests the acknowledgement
requirement of section 2924.10 applies to loan modification applications made before
January 1, 2013. Thus, section 2924.10 will not support a claim based on Nationstar's
failure to promptly acknowledge the Harjos' 2012 modification application.
D. Section 2924.11
Section 2924.11 prevents a loan servicer from recording a notice of default or
notice of sale, or conducting a sale, if it has agreed in writing to a work out, loan
modification or other foreclosure alternative and the borrower is in compliance with the
agreement. (See § 2924.11, subd. (a).) Although not specific, the SAC alleges the
defendants also violated section 2924.11. Apparently, the Harjos rely on the forbearance
agreement they made with Aurora in November 2011. As we have noted, the forbearance
agreement by its terms required the Harjos make a payment of $98,449 on or before May
1, 2012 and further provided that the forbearance agreement expired on that date. There
is nothing in the record that alleges or shows that any of the defendants recorded a notice
of default or sale or conducted a sale during the term of the forbearance agreement.
Thus, the record will not support any allegation the defendants violated section 2924.11.
In sum then, on this record, the SAC does not set forth any actionable violation of
the HBR.
III
The Harjos contend that in addition to claims for relief under the HBR, they are
entitled to quiet title, cancellation of instruments, and an accounting. None of the legal
theories the Harjos advance support these claims.
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A. Quiet Title and Cancellation of Instruments
By way of their first and second causes of action, the Harjos allege the defendants
have "no right, title or interest" in their home, that MERS's 2011 assignment of the deed
of trust to Aurora was invalid and that Aurora's later assignment to Nationstar was
similarly invalid.
In the trial court and on appeal, the Harjos have argued the defendants have no
interest in their property because, following Magnus's dissolution, MERS had no power
to transfer the deed of trust to Aurora and, alternatively, because the Harjos are informed
and believe the notary's signature on the assignment was forged. The Harjos allege that
the forged assignment also gives them the right to cancel both assignments of the deed of
trust.
In short, by way of their quiet title and cancellation of instrument causes of action,
the Harjos have directly challenged the defendants' right to foreclose on the deed of trust.
As the defendants point out, the trustor under a deed of trust does not have standing to
bring an action challenging the authority of the person or entity commencing foreclosure
proceedings. (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 511-
512; Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440-
442; Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154.)
"California courts have refused to delay the nonjudicial foreclosure process by allowing
trustor-debtors to pursue preemptive judicial actions to challenge the right, power, and
authority of a foreclosing 'beneficiary' or beneficiary's 'agent' to initiate and pursue
foreclosure. [Citations.]" (Jenkins v. JPMorgan Chase Bank, N.A., supra, at pp. 511-
512.) "The recognition of the right to bring a lawsuit to determine a nominee's
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authorization to proceed with foreclosure on behalf of the noteholder would
fundamentally undermine the nonjudicial nature of the process and introduce the
possibility of lawsuits filed solely for the purpose of delaying valid foreclosures."
(Gomes v. Countrywide Home Loans, Inc., supra, at p. 1155.)
There are other defects in the Harjos' theories. Under any fair reading of the SAC,
Magnus assigned its interest in the note to Deutsche Bank before Magnus was dissolved;
as the Harjos themselves acknowledge, unless otherwise agreed, assignment of the
underlying debt to Deutsche Bank accomplished assignment of any security for the debt,
in particular the deed of trust. (See § 2936.) By the express terms of the deed of trust,
MERS was the nominee of both Magnus and any of its assigns. Thus, by the time
Magnus was dissolved, both the note and deed of trust had been effectively assigned to
Deutsche Bank, and MERS, under the express terms of the deed of trust, was then acting
as Deutsche Bank's nominee. Given these circumstances, Magnus's dissolution did not
affect the validity of MERS's assignment of its interest in the deed of trust to Aurora or
Aurora's later assignment to Nationstar.
In this regard, the Harjos' reliance on the prospectus that was issued with respect
to the securitization of their note is unavailing. Nothing in the prospectus supports their
contention that, by referring to MERS as the nominee on mortgages and deeds of trust,
any of the defendants agreed or intended that the Harjos' note would be "split" from the
deed of trust so that the note would become an unsecured debt.
Moreover, any alleged forgery2 by a notary of the assignment of the deed of trust
2 Evidently, the Harjos' forgery allegation is based on their belief the notary who verified the assignment was a so-called "robo-signer," who did not fully perform her 11
from MERS to Aurora will not give the Harjos any right to relief by way of a quiet title
or cancellation of instruments. Any forged or defective assignment of the deed of trust
did not have any impact on the Harjos' interests. As the court in Fontenot v. Wells Fargo,
supra, 198 Cal.App.4th at page 272 stated in rejecting a similar challenge to the validity
of a MERS assignment: "Even if MERS lacked authority to transfer the note, it is
difficult to conceive how plaintiff was prejudiced by MERS's purported assignment, and
there is no allegation to this effect. Because a promissory note is a negotiable instrument,
a borrower must anticipate it can and might be transferred to another creditor. As to
plaintiff, an assignment merely substituted one creditor for another, without changing her
obligations under the note. Plaintiff effectively concedes she was in default, and she does
not allege that the transfer to HSBC interfered in any manner with her payment of the
note (see, e.g., Munger v. Moore (1970) 11 Cal.App.3d 1, 7-8 [failure by lender to accept
timely tender]), nor that the original lender would have refrained from foreclosure under
the circumstances presented. If MERS indeed lacked authority to make the assignment,
the true victim was not plaintiff but the original lender, which would have suffered the
unauthorized loss of a $1 million promissory note."
B. Accounting
As the defendants point out, the Harjos' accounting claim must fail because they
do not claim and likely cannot claim that they are owed any money with respect to the
note and deed of trust. (See Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)
Indeed they do not dispute that, as set forth in the notices of default attached as exhibits
duties as a notary. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) 12
to the SAC, they failed to make payments on the note they executed at the time they
purchased their home.
IV
The Harjos contend they are also entitled to relief under theories adopted by the
court in Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1094-1098 (Glaski). In
Glaski, following the sale of his home at a trustee's sale, the plaintiff brought a wrongful
foreclosure action against the bank that conducted the sale. The plaintiff alleged the
defendant bank did not have the power to conduct the sale because the assignment of the
note and deed of trust to the bank's predecessor, a securitized trust, had occurred after the
closing date of the trust and, under governing New York law, was therefore void, rather
than voidable. The court in Glaski held that a borrower could challenge a void transfer of
a note and deed of trust, but not a voidable transfer. (Id. at p. 1095.) Glaski is not
controlling here for two reasons.
First, the predicate for relief under Glaski—that there was a transfer to a trust
governed by New York law after the trust had closed—is no where alleged in the SAC.
Second, considerable doubt as to the validity of Glaski has been expressed by a number
of other courts. (See Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219
Cal.App.4th 75 [rejecting Glaski and finding borrower has no standing to challenge
assignment of deed of trust]; Sandri v. Capital One, N.A. (In re Sandri) (Bankr. N.D.Cal.
2013) 501 B.R. 369, 374-375 [explaining how Glaski unpersuasively departs from
California jurisprudence]; Rajamin v. Deutsch Bank Nat'l Trust Co. (2d Cir. 2014) 757
F.3d 79, 90 [rejecting Glaski as inconsistent with New York and other court's
interpretations of New York law].) In particular, we question whether, as here, borrowers
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who cannot show that they have been in any manner prejudiced by a procedural defect in
the assignment of their notes and deeds of trusts may make a claim challenging those
assignments. (See Jenkins v. JPMorgan Chase Bank, N.A., supra, 216 Cal.App.4th at pp.
511-512; Debrunner v. Deutsche Bank National Trust Co., supra, 204 Cal.App.4th at pp.
440-442; Gomes v. Countrywide Home Loans, Inc., supra, 192 Cal.App.4th at p. 1154.)
V
The Harjos amended their complaint twice. Moreover, none of the facts alleged
show that any conduct on the part of the defendants harmed their legitimate interests.
Under these circumstances, the trial court did not abuse its discretion in sustaining the
defendants' demurrer without leave to amend.
DISPOSITION
The judgment is affirmed. Defendants to recover their costs of appeal.
BENKE, Acting P. J.
WE CONCUR:
HUFFMAN, J.
HALLER, J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the plaintiffs failed to state a claim for violations of the Homeowner Bill of Rights and lacked standing to challenge the validity of the assignment of their deed of trust, affirming the dismissal of their complaint without leave to amend.
Issues
Whether the defendants violated the Homeowner Bill of Rights (Civ. Code, § 2920.5 et seq.).
Whether the plaintiffs have standing to challenge the validity of the assignment of their deed of trust.
Whether the trial court abused its discretion in sustaining the demurrer without leave to amend.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“California courts have refused to delay the nonjudicial foreclosure process by allowing trustor-debtors to pursue preemptive judicial actions to challenge the right, power, and authority of a foreclosing 'beneficiary' or beneficiary's 'agent'”