Peters v. Wells Fargo Bank CA4/2 (2015) · DecisionDepot
Peters v. Wells Fargo Bank CA4/2
California Court of Appeal Aug 13, 2015 No. E056413Unpublished
Filed 8/13/15 Peters v. Wells Fargo Bank CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
FOURTH APPELLATE DISTRICT
DIVISION TWO
MARTHA JO PETERS,
Plaintiff and Appellant, E056413
v. (Super.Ct.No. RIC1100708)
WELLS FARGO BANK, OPINION
Defendant and Respondent.
APPEAL from the Superior Court of Riverside County. Daniel A. Ottolia, Judge.
Affirmed.
Martha Jo Peters, in pro. per., for Plaintiff and Appellant.
Anglin Flewelling Rasmussen Campbell & Trytten, Robert Collings Little, Robin
C. Campbell, and Robert A. Bailey for Defendant and Respondent.
I. INTRODUCTION
In 2007, plaintiff and appellant Martha Jo Peters borrowed money from World
Savings Bank, FSB (World Savings). The loan was secured by a deed of trust against
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Peters’s home. Peters defaulted on the loan and, after World Savings changed its name to
Wachovia Mortgage, FSB (Wachovia), Wachovia began foreclosure proceedings. Peters
stopped the foreclosure when she filed a bankruptcy petition. Defendant and respondent
Wells Fargo Bank, N.A. (Wells Fargo) or Wachovia filed a motion for relief from the
automatic stay to proceed with the foreclosure. Wachovia, or perhaps Wells Fargo, was
granted relief from the stay to proceed with foreclosure. The property was eventually
sold at a trustee’s sale to Wachovia. After Wachovia merged into Wells Fargo, Wells
Fargo sold the property to a third party in November 2009.
In January 2011, Peters commenced this action against Wells Fargo, seeking
damages related to the foreclosure sale of her home. In amended pleadings, she alleged
violations of the federal Real Estate Settlement Procedures Act (RESPA) (12 U.S.C.A.
§ 2601 et seq.), the Truth in Lending Act (TILA) (15 U.S.C.A. § 1601 et seq.), and the
automatic bankruptcy stay (11 U.S.C.A. § 362(k)). After each of three successful
demurrers, Peters was granted leave to amend. After Peters filed her third amended
complaint (the TAC), Wells Fargo again demurred. The trial court sustained the
demurrer and denied Peters leave to amend. After the entry of judgment, Peters
appealed.
For the reasons given below, we affirm the judgment.
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II. FACTUAL AND PROCEDURAL SUMMARY
A. First Three Pleadings and Demurrers
In January 2011, Peters filed her original complaint, in propria persona, for
“fraud” and “unfair/deceptive business practice.” She alleged that after experiencing
devastating losses in the stock market, she refinanced her home with the help of a loan
agent who overstated her income. She could not make the payments on her loan and filed
for bankruptcy protection. The original lender was taken over by one bank, which was
later taken over by Wells Fargo. Wells Fargo foreclosed on her home. Although her
original loan was for $176,000, Wells Fargo reported an uncollected debt of $250,000 to
credit reporting agencies. She stated she was “challenging Wells Fargo’s ownership of
the loan.”
Wells Fargo successfully demurred to the original complaint, and Peters was given
leave to amend.
In her first amended complaint (FAC), Peters added a claim for violation of
RESPA and TILA. She reasserted her “fraud & unfair business practices” claim and
alleged that Wells Fargo failed to notify her of a class action lawsuit.
Wells Fargo demurred to each cause of action in the FAC. The demurrer was
sustained. As to the RESPA and TILA claims, the demurrer was sustained without leave
to amend based on statutes of limitations. Peters was granted leave to amend her other
claims.
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In her second amended complaint (SAC), Peters alleged claims for fraud, violation
of the automatic stay in her bankruptcy proceeding, and lack of standing to foreclose.
The primary basis for each claim was that Wells Fargo “intervened” in her bankruptcy
case by claiming to be a creditor when it “had no standing to claim itself as a creditor”
and by filing a motion for relief from the automatic stay. Finally, she alleges that Wells
Fargo’s “wrongful lifting of the automatic stay” and the foreclosure sale of her home had
the effect of excluding her as a class member in a class action lawsuit against Wells
Fargo.
Wells Fargo again demurred. The demurrer was supported with a request for
judicial notice of documents that included a copy of the docket sheet in Peters’s
bankruptcy case, a motion for relief from the automatic stay filed by Wachovia in
Peters’s bankruptcy case on August 22, 2008, and an order by the bankruptcy court dated
October 1, 2008, granting Wachovia’s motion for relief from stay. The court granted
Wells Fargo’s request for judicial notice and sustained the demurrer; Peters was granted
leave to amend to allege claims “against Wells Fargo Bank that are not based on any
allegation that Wells Fargo improperly intervened in [Peters’s] bankruptcy case,
improperly foreclosed on her property or violated any automatic stay.”
B. The TAC
Peters filed her TAC in December 2011. In the TAC, Peters alleged claims for:
(1) fraud; (2) failure to accept or offer loan modifications under Civil Code section
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2923.6;1 (3) failure to record assignments of the deed of trust in violation of section
2932.5; (4) violation of the automatic stay in her bankruptcy case;2 and (5) “fraud upon
the court: false interpretation of judicial notice.” (Capitalization, bolding & underlining
omitted.) The fraud cause of action is based upon allegedly false statements by Wells
Fargo “related to its alleged interest in [Peters’s] property and to its intervention into
[Peters’s] bankruptcy.”
Peters alleges the following background facts. Peters applied for a loan from Indy
Mac Bank. The loan agent told Peters he would report her income as $200,000, even
though the agent knew plaintiff did not have such income. The loan was to be secured by
her residence. An appraiser indicated to Peters that he would appraise her home for an
amount considerably higher than its actual value to ensure that Peters’s loan would be
approved for the amount she wanted.
The loan she obtained was made by World Savings in October 2007. Peters
alleged she was not aware that the loan provided for negative amortization, allowing the
1 All further statutory references are to the Civil Code unless otherwise indicated.
2 This fourth claim is titled: “THE COURT’S IMPROPER GRANTING OF DEFENDANT’S JUDICIAL NOTICE MUST BE CHALLENGED AND REMOVED; WELLS FARGO’S CONTENTION THAT IT DID NOT VIOLATE FEDERAL BANKRUPTCY STATUTE 11 USC 362(A) IS FALSE, AS THE BANKRUPTCY DOCKET NOTES THEIR INTERVENTION.” (Bolding and underlining omitted.) Under this heading, Peters asserts that the court should not have granted Wells Fargo’s request for judicial notice that supported the demurrer to the SAC. Ultimately, however, it appears to be an attempt to reassert her claim that Wells Fargo violated the automatic stay.
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balance to increase even as payments were made, and was thus “of a predatory nature.”
The interest rate was also higher than she had been originally told.
Her loan was subsequently transferred “from bank to bank” without
documentation. Six to nine months after obtaining the loan, Peters was in default. She
made efforts to seek a modification with World Savings and Wachovia, but each “refused
any assistance at all [and] demanded payment in full of the in arrears amount.” “In
distress,” Peters filed for bankruptcy. Wells Fargo “intervened” in her bankruptcy case
and obtained relief from the automatic stay to sell, and did sell, her residence at a
foreclosure sale. Her indebtedness at the time was $176,000, and the house was sold for
$66,000.
Additional allegations will be discussed below where relevant.
Wells Fargo demurred to each cause of action on various grounds, including the
failure to state a claim upon which relief can be granted, and filed a motion to strike
certain portions of, and attachments to, the TAC. It supported the demurrer with a
request for judicial notice of various documents, which we discuss below.
Following a hearing, the court sustained the demurrers without leave to amend,
and ruled that the motion to strike was moot. It did not explicitly rule on the request for
judicial notice.
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III. DISCUSSION
A. Requests for Judicial Notice
As a threshold matter, we address (1) Peters’s request for judicial notice filed in
this court and (2) her challenge to Wells Fargo’s requests for judicial notice below.
Under section 459 of the Evidence Code, reviewing courts have both a mandatory
duty and a discretionary power to take judicial notice. (Evid. Code, § 459.) We are
required to take judicial notice of any matter the trial court has properly judicially noticed
or should have judicially noticed. (Evid. Code, § 459, subd. (a).) Among the matters that
may be judicially noticed are: “Official acts of the legislative, executive, and judicial
departments of the United States and of any state of the United States”; “Records of (1)
any court of this state or (2) any court of record of the United States”; and “Facts and
propositions that are not reasonably subject to dispute and are capable of immediate and
accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid.
Code, § 452, subds. (c), (d), (h).)
1. Peters’s Request for Judicial Notice on Appeal
Peters requests we take judicial notice of certain matters on appeal that had not
been presented to the court below.3 Wells Fargo opposes the request. The items
specified by Peters appear to consist of someone’s excerpts or summaries of articles or
3 Peters titled her request: “Judicial notice: Predatory loan and securitization of loan by World Savings Bank prior to the loan being assumed by Wachovia or Wells Fargo, thus no ownership of the loan by either Wachovia or Wells Fargo and no right to foreclosure action.” (Capitalization omitted.) It does not appear from our record that Peters filed any request in the trial court for judicial notice.
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other matter obtained from Internet Web sites. Copies of the material itself are not
provided as required. (See Cal. Rules of Court, rule 8.252(a)(3).) More importantly,
none of the items appear to come within any of the categories of judicially noticeable
matter set forth in Evidence Code section 451 or 452. Indeed, Peters does not specify
which provision she is relying upon for her request. We therefore deny the request and
decline to take judicial notice of the requested matter.
2. Wells Fargo’s Requests for Judicial Notice
Wells Fargo requested judicial notice of certain documents in support of its
demurrers. Relevant here are its requests for judicial notice of the following: (1) an
adjustable rate mortgage note dated October 18, 2007, ostensibly signed by Peters; (2) a
copy of a certain deed of trust dated October 18, 2007 (the Deed of Trust), recorded in
the official records of Riverside County, signed by Peters as borrower and identifying
World Savings as the lender and beneficiary, and Golden West Savings Association
Service Co., as trustee; (3) documents obtained from the Office of Thrift Supervision
(OTS), Federal Deposit Insurance Corporation (FDIC), and Comptroller of the Currency
Administrator of National Banks, evidencing the change of World Savings’s name to
Wachovia on December 31, 2007, and the merger of Wachovia into Wells Fargo on
November 1, 2009; (4) a notice of default and election to sell under the Deed of Trust,
recorded in the official records of Riverside County on May 2, 2008; (5) a substitution of
trustee of the Deed of Trust, recorded in the official records of Riverside County; (6) a
notice of trustee’s sale pertaining to the Deed of Trust, recorded in the official records of
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Riverside County; (7) a trustee’s deed upon sale, dated September 17, 2009, recorded in
the official records of Riverside County, by which the substituted trustee under the Deed
of Trust granted Peters’s property to Wachovia; (8) a grant deed from “Wells Fargo
Bank, N.A., Successor by Merger with Wachovia Mortgage, FSB,” to Summerhomes,
LLC, on November 23, 2009, recorded in the official records of Riverside County; (9) a
copy of the docket sheet in Peters’s bankruptcy case; (10) a motion for relief from the
automatic stay filed by Wachovia in Peters’s bankruptcy case on August 22, 2008; and
(11) an order by the bankruptcy court dated October 1, 2008, granting Wachovia’s
motion for relief from stay.
Initially, we observe that Peters’s arguments concerning Wells Fargo’s request for
judicial notice are directed at the trial court’s reliance on the bankruptcy court filings and
docket sheet. She does not appear to challenge the taking of judicial notice of any other
particular document or fact. Moreover, regarding the bankruptcy court docket sheet,
Peters appears to be concerned with the court’s interpretation of entries in the docket, not
the accuracy of the entries. Indeed, she attached the docket sheet to her TAC and relies
heavily on the docket sheet for her argument that Wells Fargo wrongfully intervened in
her bankruptcy case.
Regarding the propriety of judicial notice of the matters requested by Wells Fargo,
we begin with the case Peters cites: Herrera v. Deutsche Bank National Trust Co. (2011)
196 Cal.App.4th 1366. In that case, the court stated: “‘Taking judicial notice of a
document is not the same as accepting the truth of its contents or accepting a particular
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interpretation of its meaning.’ [Citation.] While courts take judicial notice of public
records, they do not take notice of the truth of matters stated therein. [Citation.] ‘When
judicial notice is taken of a document, . . . the truthfulness and proper interpretation of the
document are disputable.’ [Citation.] [¶] . . . ‘[T]he fact a court may take judicial notice
of a recorded deed, or similar document, does not mean it may take judicial notice of
factual matters stated therein. [Citation.] . . .’ [Citation.]” (Id. at p. 1375.)
In Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256 (Fontenot),
the court considered Herrera and other decisions and concluded that “a court may take
judicial notice of the fact of a document’s recordation, the date the document was
recorded and executed, the parties to the transaction reflected in a recorded document,
and the document’s legally operative language, assuming there is no genuine dispute
regarding the document’s authenticity. From this, the court may deduce and rely upon
the legal effect of the recorded document, when that effect is clear from its face.”
(Fontenot, supra, at p. 265.) In Fontenot, the court held that it could take judicial notice
of the fact that a particular party was the beneficiary under a deed of trust “because, as a
legally operative document, the deed of trust designated [the party] as the beneficiary.
Given this designation, [the party’s] status was not reasonably subject to dispute.” (Id. at
p. 266.)
Fontenot was followed in Scott v. JPMorgan Chase Bank, N.A. (2013) 214
Cal.App.4th 743. In that case, the plaintiff sued JPMorgan Chase Bank, N.A.
(JPMorgan), among others, arising from an allegedly fraudulent loan and wrongful
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foreclosure. As to JPMorgan, the plaintiff alleged the bank did not have standing to
foreclose the deed of trust on his property. (Id. at p. 746.) In support of its demurrer,
JPMorgan submitted a copy of the plaintiff’s deed of trust on the subject property, a copy
of an assignment of the deed of trust to Washington Mutual Bank (WaMu), an order by
the OTS appointing the FDIC as the receiver of WaMu, the terms of a purchase and
assumption (P&A) agreement between the FDIC and JPMorgan that was available on the
FDIC’s Web site, and other documents evidencing the nonjudicial foreclosure sale of the
subject property. (Id. at p. 747.) Under the P&A agreement, the assets, but not the
liabilities, of WaMu were transferred to JPMorgan. (Id. at p. 752.) On appeal, the
plaintiff argued that the court should not have taken judicial notice of the P&A agreement
or the facts therein. (Ibid.) The Court of Appeal rejected the argument, explaining that
the facts regarding the transfer of assets, but not the liabilities, of WaMu to JPMorgan
“derive from the legal effect of the [P&A agreement and the OTS order] themselves,
rather than any disputed hearsay statement of fact within them.” (Id. at p. 755.) The
grant of judicial notice, therefore, was not an abuse of discretion. (Ibid.)
Applying these principles here, we conclude that we may, and do, take judicial
notice of legally operative facts in the documents recorded in the official records of
Riverside County: the Deed of Trust and documents pertaining to the trustee’s sale, the
dates of the recording of those documents, and the legally operative designations of the
parties, such as the trustee, beneficiary, and borrower. (See Fontenot, supra, 198
Cal.App.4th at pp. 265-266; Evid. Code, § 452, subds. (c), (h).)
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We also take judicial notice of the bankruptcy court docket sheet in Peters’s
bankruptcy case, the motion filed by Wachovia for relief from the automatic stay, and the
bankruptcy court’s order granting that motion. (Evid. Code, § 452, subds. (d), (h).)
Regarding the docket sheet, we note that Peters attached that document to her TAC and
relies on it to support her arguments that Wells Fargo violated the automatic stay.
Regarding the documents submitted from the OTS, the FDIC, and the Comptroller
of the Currency, key portions of these documents appear to have been marked or redacted
in the copies included within the clerk’s transcript on appeal. Such portions are
unreadable. We do, however, take judicial notice of the dates on which World Savings
changed its name to Wachovia, and Wachovia subsequently merged into Wells Fargo by
reference to the Web site for the FDIC. (See Evid. Code, § 452, subd. (h); Scott v.
JPMorgan Chase Bank, N.A., supra, 214 Cal.App.4th at p. 761 [court may take judicial
notice of matter published to the public on the official FDIC Web site and not reasonably
subject to dispute].) These dates are, respectively, December 31, 2007, and November 1,
2009.
Finally, we agree with Peters that we cannot take judicial notice of the adjustable
rate mortgage note proffered by Wells Fargo. It is not recorded in the official records of
any government entity and its authenticity is disputed by Peters. Rejecting judicial notice
of this document, however, has little bearing on our analysis. Peters alleges, and does not
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dispute on appeal, that she took out a loan from World Savings in October 2007;4 she
merely disputes that the loan document Wells Fargo has presented is the one she signed.
B. Standard of Review on Demurrer
A demurrer is used to test the sufficiency of the factual allegations of the
complaint to state a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) The facts
pled are assumed to be true and the only issue is whether they are legally sufficient to
state a cause of action. “In reviewing the sufficiency of a complaint against a general
demurrer, we are guided by long-settled rules. ‘We treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions or conclusions of fact or
law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.]
Further, we give the complaint a reasonable interpretation, reading it as a whole and its
parts in their context. [Citation.] When a demurrer is sustained, we determine whether
the complaint states facts sufficient to constitute a cause of action. [Citation.] And when
it is sustained without leave to amend, we 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. [Citation.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
4 In her opening brief on appeal, Peters states that although the loan was arranged by an Indy Mac Bank loan agent, it was “apparently financed . . . through World Savings Bank. World Savings Bank then changed its name to Wachovia Mortgage.” She further states that the loan was made, and her funds received, in October 2007.
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C. RESPA and TILA
In her FAC, Peters alleged that Wells Fargo (or its predecessors) violated RESPA
and TILA. Wells Fargo demurred to these claims based on statutes of limitations. The
trial court sustained the demurrer without leave to amend. Because we conclude that any
claim Peters might have for a violation of RESPA or TILA is barred by statutes of
limitations, we affirm the court’s ruling.
RESPA is a federal law enacted “to insure that consumers . . . are provided with
greater and more timely information on the nature and costs of the [real estate] settlement
process and are protected from unnecessarily high settlement charges caused by certain
abusive practices . . . .” (12 U.S.C.A. § 2601(a).) The law requires, regulates, or
prohibits a variety of conduct by lenders and loan servicers. Among other requirements,
lenders must provide to loan applicants certain information and a good faith estimate of
charges of real estate settlement services (id., § 2604(c), (d)), and disclose whether the
servicing of the loan may be assigned, sold, or transferred to another (id., § 2605(a)).
Loan servicers must notify the borrower in writing of any assignment, sale, or transfer of
the servicing of the loan (id., § 2605(b)), and respond to certain requests from a borrower
within 30 days (id., § 2605(c)). RESPA also prohibits some referral fees and kickbacks.
(Id., § 2607.)
RESPA provides for a private right of action for actual damages caused by
violations of its provisions, plus additional damages “in the case of a pattern or practice
of noncompliance . . . .” (12 U.S.C.A. § 2605(f)(1)(B).) To state a claim under RESPA,
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courts have required plaintiffs to allege specific facts to show causation of actual,
pecuniary damages as a result of the failure to comply with the statute. (See, e.g., Jenkins
v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 531-532; Tamburri v.
Suntrust Mortg., Inc. (N.D.Cal. 2012) 875 F.Supp.2d 1009, 1014-1015; Allen v. United
A cause of action for violation of RESPA’s notice and disclosure requirements
must be brought within three years “from the date of the occurrence of the violation.”5
(12 U.S.C.A. § 2614.) The date of the occurrence is ordinarily the date the transaction
closed (Snow v. First American Title Ins. Co. (5th Cir. 2003) 332 F.3d 356, 359; Jensen
v. Quality Loan Serv. Corp. (E.D.Cal. 2010) 702 F.Supp.2d 1183, 1195), or the date the
disclosures should have been made (Moore v. Mortgage Elec. Registration Systems
(D.N.H. 2012) 848 F.Supp.2d 107, 120). It is not, as Peters contends, the date of the
foreclosure sale.
TILA was enacted “‘to assure a meaningful disclosure of credit terms so that the
consumer will be able to compare more readily the various credit terms available to him
and avoid the uninformed use of credit, and to protect the consumer against inaccurate
and unfair credit billing and credit card practices.’” (Beach v. Ocwen Federal Bank
(1998) 523 U.S. 410, 412, quoting 15 U.S.C.A. § 1601(a).) Among other requirements,
TILA requires that, in the case of a loan secured by the borrower’s principal residence,
5A one-year statute of limitations applies to claims based on the violation of RESPA’s prohibition of kickbacks and restrictions on deposits in escrow accounts. (12 U.S.C.A. §§ 2607, 2614.)
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the lender shall provide the borrower with notice that the borrower may rescind the loan
transaction within three business days after the closing of the transaction. (15 U.S.C.A.
§ 1635(a).) If the lender does not provide the required notice, the borrower has up to
three years to rescind the transaction. (Id., § 1635(f).) If the borrower does not notify the
lender of his or her intent to rescind within that time, the right of rescission expires.
(Ibid.; see Jesinoski v. Countrywide Home Loans, Inc. (2015) __ U.S. __ [135 S.Ct. 790,
2015 U.S. LEXIS 607, at p. [4]].)
TILA expressly provides for a private right of action to recover damages for
violating its provisions. (15 U.S.C.A. § 1640(a).) The statute of limitations for such
actions is one year from the date of the occurrence of the violation. (Id., § 1640(e).) This
is usually the date the loan documents are signed. (Meyer v. Ameriquest Mortg. Co. (9th
Regarding her RESPA and TILA claims, Peters alleged that although she “signed
some papers,” “none of them revealed the real terms,” and she did not “see what the
payments would actually be.” She further alleged that documents Wells Fargo
subsequently provided had not been previously seen by her and a signature on one
document “looks different from [her] usual signature” and states “it is questionable
whether that signature page was connected to the pages it is made to appear it was
confirming.” In an attachment to the FAC, Peters provides a “personal history” in which
she states that she “first saw the terms of the loan” when escrow for the loan closed, and
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was surprised at that time to see that the loan provided for “varied payments, what now
has been called ‘pick a payment’ provisions, and that the interest rate was quite high.” In
her opening brief on appeal, she asserts that she did not receive copies of the right to
rescind required by TILA. She concedes, however, that she had not sought to rescind the
transaction.6
It is clear from Peters’s allegations that any violations of RESPA or TILA
occurred when her loan transaction closed before the end of 2007. Her right to rescind
the transaction under TILA thus expired, at the latest, by the end of 2010, before she filed
her original complaint. (See Lane v. Vitek Real Estate Indus. Group (E.D.Cal. 2010) 713
F.Supp.2d 1092, 1100 [TILA rescission action barred when complaint filed more than
three years after loan closed].) For the same reason, her claims for damages arising under
RESPA or TILA were not made within the applicable one-year or three-year statutes of
limitations.
Peters argues that the limitations periods are equitably tolled because she did not
discover the alleged violations until she learned of news reports about state and federal
actions against Wells Fargo and other lenders.
“Equitable tolling ‘halts the running of the limitations period so long as the
plaintiff uses reasonable care and diligence in attempting to learn the facts that would
6 In her reply brief on appeal, Peters states that she “does not see how [rescission] can be done without causing harm to those who have already taken the property and put money and effort into it. Therefore she seeks damages in another form, presumably a monetary recovery . . . .”
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disclose the defendant’s fraud or other misconduct.’ [Citation.]” (Sagehorn v. Engle
(2006) 141 Cal.App.4th 452, 460; see also Cervantes v. Countrywide Home Loans, Inc.
for malicious prosecution against creditors based upon defendants’ adversary proceeding
in plaintiff’s bankruptcy case preempted by federal bankruptcy law]; Idell v. Goodman
(1990) 224 Cal.App.3d 262, 271 [same]; MSR Exploration, Ltd. v. Meridian Oil, Inc. (9th
7 Title 11 United States Code Annotated section 362(k)(1) provides, in general, that “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”
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Cir. 1996) 74 F.3d 910, 915 [state law malicious prosecution action based upon creditor’s
claim in plaintiff’s bankruptcy proceeding preempted by Bankruptcy Code]).
In light of these authorities, any claim Peters has arising out of Wells Fargo’s
involvement in obtaining relief from the automatic stay must be pursued, if at all, in
bankruptcy court. Wells Fargo’s demurrer to Peters’s claims arising from alleged
wrongful conduct in her bankruptcy case was correctly sustained.
E. Fraud
On appeal, Peters does not present any substantive argument in support of her
fraud claim beyond stating that she set forth the elements of fraud in the TAC and
“described the acts which constituted fraud by the Defendant.” There are at least two
problems with Peters’s fraud allegations. First, they appear to be based primarily upon
allegedly false statements and falsified documents pertaining to Wells Fargo’s alleged
“intervention into the Plaintiff’s bankruptcy.” She points to “Wells Fargo’s declaration
to her bankruptcy trustee that it was a ‘creditor of the Plaintiff’ . . . .” As discussed
above, such claims are preempted by federal bankruptcy law. (See Saks v. Parilla,
Hubbard & Militzok, supra, 67 Cal.App.4th at pp. 573-574 [“Parties may not avail
themselves of state court tort remedies to circumvent federal remedies for their
opponents’ alleged misuse of the bankruptcy process”].)
Second, to the extent Peters alleged false statements made outside her bankruptcy
case, she has failed to allege any facts showing that she relied on the false statements or
how they resulted in damage—each an essential element of fraud. (See Small v. Fritz
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Companies, Inc. (2003) 30 Cal.4th 167, 173-174.) She asserts, for example, that Wells
Fargo’s attorney, at an unspecified time, showed her two different loan documents, each
ostensibly signed by her, when, in fact, she signed only one. Even if one of the
documents is false, Peters does not explain how she relied on the false document to her
detriment. Accordingly, the demurrer to her fraud claim was properly sustained.
F. Failure to Agree to Modify Loan Under Section 2923.6
Peters alleges that Wells Fargo or its predecessor failed to comply with section
2923.6 by refusing her requests to modify her loan and, instead, demanding she pay the
entire amount in arrears. Based on the terms of section 2923.6 as it existed during the
relevant time, Peters has failed to state a cause of action under that statute.
Because section 2923.6 has been amended more than once since Peters obtained
her loan, we must first determine the terms of the statute during the relevant time. Peters
obtained her loan before the end of 2007. She defaulted soon afterward and, in August or
September 2009, the loan was foreclosed. The relevant time period as to any alleged
requests to modify her loan, therefore, was from 2007 through September 2009.
In 2008, the Legislature added section 2923.6, which provided, in relevant 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, not to any particular parties, and that a servicer acts in the best
interests of all parties if it agrees to or implements a loan modification or workout plan
for which both of the following apply:
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“(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.” (2008 Stats. ch.
69, § 3, pp. 227-228.) The statute became effective on July 8, 2008. (Id., ch. 69, p. 223.)
In Mabry v. Superior Court (2010) 185 Cal.App.4th 208, the court explained that
the version of section 2923.6 in effect during the relevant time “does not operate
substantively. Section 2923.6 merely expresses the hope that lenders will offer loan
modifications on certain terms.” (Id. at p. 222, fn. omitted; see also Hamilton v.
Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1617 [“There is no ‘duty’
under Civil Code [former] section 2923.6 to agree to a loan modification.”].) The Mabry
court noted “the conspicuous[] absence of any actual duties imposed on anybody in this
statute. At the most, the statute seems to offer a defense to servicers of loan pools if the
servicer tries—say, over the objection of an owner of a share in the pool—to implement a
loan modification rather than going straight to foreclosure.” (Mabry v. Superior Court,
supra, at pp. 222-223, fn. 9.) Because the statute created no duty on the part of a lender
or loan servicer to the borrower, Peters cannot state a cause of action based upon its
alleged violation.
24
Section 2923.6 was subsequently amended in 2009, the amendment taking effect
on January 1, 2010. (2009 Stats., 1st Reg. Sess. 2009-2010, ch. 43, § 2, p. 248.) This
amendment added language regarding “investors under a pooling and servicing
agreement,” but, for our purposes, made no substantive change to the statute. (Ibid.) It
was amended again in 2012, this time to provide certain substantive rights in favor of
borrowers, and impose corresponding duties on loan servicers, if and when a borrower
applies for a loan modification.8 (2012 Stats., 1st Reg. Sess. 2011-2012, ch 86, § 7, pp.
2303-2304.) These statutory rights and duties, however, did not arise until long after
Peters could have made any request for a loan modification. The 2012 amendment does
not help her.9
8 Among the provisions added in the 2012 amendment is a new subdivision (c), which provides: “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: [¶] (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired. [¶] (2) The borrower does not accept an offered first lien loan modification within 14 days of the offer. [¶] (3) The borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first lien loan modification.”
9 In her reply brief, Peters includes a discussion of the Home Affordable Modification Program, a program launched by the United States Department of the Treasury in 2009 to help distressed homeowners with delinquent mortgages. (See Corvello v. Wells Fargo Bank, N.A. (9th Cir. 2013) 728 F.3d 878, 880.) To be eligible for the program, a borrower must submit to his or her loan servicer a “Home Affordable Modification Program Hardship Affidavit” and provide income documentation. [footnote continued on next page]
25
G. Peters’s Question Regarding the Authority of the Commissioner of Corporations to
Exempt Loan Servicers from Certain Statutory Requirements
In her SAC, under the heading “LACK OF STANDING TO FORECLOSE,”
Peters pointed out that in a declaration attached to the notice of trustee’s sale regarding
her property a vice-president of Wachovia stated that Wachovia had obtained from the
Commissioner of Corporations a temporary order of exemption pursuant to section
2923.53 and that the time frame for giving notice of sale specified in subdivision (a) of
section 2923.52 does not apply.10 Peters then alleges: “The meaning of this is not clear
but should be questioned as to why or how such an exemption was necessary.” Peters did
not raise this issue in her TAC.
[footnote continued from previous page] (Treasury Supplemental Directive 09-01, available at https://www.hmpadmin.com/ portal/programs/docs/hamp_servicer/sd0901.pdf [as of August 13, 2015].) Peters does not indicate that she submitted this affidavit or was otherwise eligible for the program.
10 The declaration mirrors the language set forth in former section 2923.54 as it existed in 2009, which provided: “(a) A notice of sale filed pursuant to Section 2924f shall include a declaration from the mortgage loan servicer stating both of the following: [¶] (1) Whether or not the mortgage loan servicer has obtained from the commissioner a final or temporary order of exemption pursuant to Section 2923.53 that is current and valid on the date the notice of sale is filed. [¶] (2) Whether the timeframe for giving notice of sale specified in subdivision (a) of Section 2923.52 does not apply pursuant to Section 2923.52 or 2923.55.” The section was repealed by its terms on January 1, 2011. (Former § 2923.54, subd. (c); Stats. 2009, 2d Ex. Sess. 2009-2010, ch. 4, § 5, p. 3371.) Former section 2923.52, subdivision (b), provided for a delay in giving notice of sale under certain circumstances, and states that it does not apply if the loan servicer has obtained a temporary or final order of exemption. (Stats. 2009, 2d Ex. Sess. 2009-2010, ch. 4, § 3, p. 3369.)
26
In her opening brief on appeal, Peters directs our attention to the Wachovia vice-
president’s declaration. According to Peters, the Wachovia vice-president declared that
an exemption from section 2923.5 had been obtained from the Commissioner of
Corporations. She then states: “It is questionable whether the Commissioner of
Corporations can effect [sic] any exemption from a state statute mandating that contact be
made with a defaulting borrower prior to initiating a foreclosure.”
The problem with Peters’s argument is that the Wachovia vice-president’s
declaration does not refer to an exemption from the requirements of section 2923.5 (as
Peters contends), but to an exemption authorized by section 2923.53 concerning the
requirements of former section 2923.52.
At the time the declaration was made, section 2923.52 required a 90-day delay in
giving a notice of trustee’s sale “in order to allow the parties to pursue a loan
modification to prevent foreclosure” under specified conditions. (Former § 2923.52,
subd. (a); Stats. 2009, 2d Ex. Sess. 2009-2010, ch. 4, § 3, pp. 3368-3369.) However, that
requirement does not apply if the loan servicer has obtained an order of exemption from
the Commissioner of Corporations. (Former §§ 2923.52, subd. (b), 2923.53, subd. (a).)
Former section 2923.53, subdivision (b), expressly authorizes the Commissioner of
Corporations to issue a temporary and final order exempting loan servicers from the
requirements of former section 2923.52. Thus, contrary to the suggestion raised by
Peters’s question, the Legislature has authorized the Commissioner of Corporations to
grant the exemption referenced by the Wachovia vice-president.
27
H. Alleged Violation of Section 2932.5
In the TAC, Peters alleged that Wells Fargo failed to comply with section 2932.5.
This section provides: “Where a power to sell real property is given to a mortgagee, or
other encumbrancer, in an instrument intended to secure the payment of money, the
power is part of the security and vests in any person who by assignment becomes entitled
to payment of the money secured by the instrument. The power of sale may be exercised
by the assignee if the assignment is duly acknowledged and recorded.” (Italics added.)
On appeal, Peters argues that Wachovia could not exercise the power of sale in the
Deed of Trust because there were no recorded assignments of the Deed of Trust from
World Savings to Wachovia or from Wachovia to Wells Fargo. Therefore, she
concludes, neither had the right to obtain relief from the automatic stay or to foreclose.
California courts have recently addressed and rejected similar arguments, holding
that section 2932.5 applies to mortgages, not deeds of trust. (See Rossberg v. Bank of
America, N.A. (2013) 219 Cal.App.4th 1481, 1497; Jenkins v. JPMorgan Chase Bank,
N.A., supra, 216 Cal.App.4th at p. 518; Herrera v. Federal National Mortgage Assn.
(2012) 205 Cal.App.4th 1495, 1509 [Fourth Dist., Div. Two]; Calvo v. HSBC Bank USA,
N.A. (2011) 199 Cal.App.4th 118, 122-123; see also Stockwell v. Barnum (1908) 7
Cal.App. 413, 416-417 [applying former § 858, predecessor to § 2932.5].) As the court
in Haynes v. EMC Mortgage Corp. (2012) 205 Cal.App.4th 329, 336 stated: “[W]here a
deed of trust is involved, the trustee may initiate foreclosure irrespective of whether an
assignment of the beneficial interest is recorded.” Because the power of sale in this case
28
was in a deed of trust, section 2932.5 has no application to the foreclosure sale in this
case.
Peters relies on two decisions by the same federal bankruptcy court, which held
that section 2932.5 applies to deeds of trusts: U.S. Bank, N.A. v. Skelton (In re Salazar)
(Bankr. S.D.Cal. 2011) 448 B.R. 814, 820, reversed in U.S. Bank, N.A. v. Salazar (In re
Salazar) (Bankr. S.D.Cal. 2012) 470 B.R. 557, and Cruz v. Aurora Loan Servs., LLC (In
re Cruz) (Bankr. S.D.Cal. 2011) 457 B.R. 806. However, Salazar was not only reversed
on direct appeal by the federal district court because it was contrary to California law, but
rejected as “unpersuasive” in Calvo v. HSBC Bank USA, N.A., supra, 199 Cal.App.4th at
page 123, footnote 2. Other recent California cases have expressly declined to follow
Cruz. (See, e.g., Rossberg v. Bank of America, N.A., supra, 219 Cal.App.4th at pp. 1497-
1498; Haynes v. EMC Mortgage Corp., supra, 205 Cal.App.4th at p. 335.) We have
found no California case that has agreed with Salazar or Cruz.
Peters also relies on a third case, Tamburri v. Suntrust Mortg., Inc. (N.D.Cal. July
6, 2011, No. C-11-2899 EMC) 2011 U.S. Dist. Lexis 72202, which granted the debtor a
preliminary injunction against the lender’s foreclosure based, in part, on “the ambiguity
in the law” regarding the interpretation of section 2932.5. (Tamburri v. Suntrust Mortg.,
Inc., supra, at p. [13].) The primary basis for the ambiguity was the existence of the
bankruptcy court’s Salazar decision. (Tamburri v. Suntrust Mortg., Inc., supra, at p.
[13].) Tamburri, however, was decided before Salazar was reversed and before the more
recent California decisions cited above. Tamburri, in short, is not persuasive authority on
29
this point. (See Haynes v. EMC Mortgage Corp., supra, 205 Cal.App.4th at pp. 335-336
[declining to follow Tamburri].)
In light of the overwhelming weight of authority and the reasons expressed in the
California cases, the court correctly sustained the demurrer to Peters’s claim based on
section 2932.5.
I. Claims Regarding Class Action
In Peters’s SAC, she alleged that Wells Fargo’s violation of the automatic stay and
the foreclosure sale of her home resulted in her being excluded from a pending class
action lawsuit against Wachovia. On appeal, she explains that the particular class action
lawsuit identified three distinct classes: Class A borrowers, who no longer held their
loan; Class B borrowers, who held their loan and were not in default; and Class C
borrowers, who still held their loans and were in default. Because of Wells Fargo’s
wrongful action in her bankruptcy case, she is a member of Class A, not Class C. She
explains further that the class action has settled and although members of each class will
receive some cash as part of the settlement (including Peters), Wells Fargo is required to
implement a loan modification program for Class B and Class C members.
If this claim involves any wrongful activity by Wells Fargo, it is Wells Fargo’s
alleged violation of the automatic stay. That violation allegedly led to the relief from the
automatic stay, the foreclosure sale of her home and extinguishment of her loan, and,
consequently, her relegation to Class A membership in the class action. Therefore, if
30
there is any cognizable claim arising from these facts, it is preempted by federal
bankruptcy law based on the authorities discussed above.11
J. Conclusion
Peters’s claims arising out of an alleged violation of the automatic stay under the
Bankruptcy Code or other misuse of the bankruptcy process are preempted by federal
bankruptcy law. Her fraud allegations are insufficient to state a claim for relief; even if
the element of a false representation is met, she has failed to allege her justifiable reliance
on any false statement or causation of damages. Nor has she indicated she could do so if
given a fourth opportunity to amend. The RESPA and TILA claims are barred by statutes
of limitations. Finally, Peters’s allegations that Wells Fargo or its predecessors violated
statutory duties or caused her to have a certain status in a class action are insufficient to
state a claim upon which relief can be granted for the reasons stated above. Accordingly,
we affirm the judgment.
IV. DISPOSITION
The judgment is affirmed. Wells Fargo shall recover its costs on appeal.
11 In another part of her opening brief, Peters refers to actions against Wells Fargo taken by the State of California and other states. She also describes a “Foreclosure Review Program being conducted by the Comptroller of the Currency and the federal government.” She states she has submitted an application form regarding this program, “yet nothing ever came of it.” She concludes by stating that “[s]he wonders why the court would not take note of this ongoing governmental action to provide relief to her and other predatory loan victims who have lost their homes to foreclosure. . . . How can this lender prevail in this court yet be held to account by the state and federal governments?” The information Peters provides and the questions she poses do not appear to be pertinent to the issues raised on appeal.
31
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
KING J.
We concur:
RAMIREZ P. J.
MILLER J.
32
AI Brief
AI-generated · verify before citing
Holding. The court affirmed the judgment sustaining the defendant's demurrer without leave to amend, concluding that the plaintiff's claims under RESPA and TILA were barred by the applicable statutes of limitations and that the plaintiff failed to state a viable cause of action.
Issues
Whether the trial court properly sustained the defendant's demurrer without leave to amend regarding RESPA and TILA claims.
Whether the trial court properly took judicial notice of bankruptcy court records and other documents in support of the demurrer.
Whether the plaintiff's claims were barred by the applicable statutes of limitations.
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“For the reasons given below, we affirm the judgment.”
“Because we conclude that any claim Peters might have for a violation of RESPA or TILA is barred by statutes of limitations, we affirm the court’s ruling.”
“It is clear from Peters’s allegations that any violations of RESPA or TILA occurred when her loan transaction closed before the end of 2007.”