Kagen v. Countrywide Home Loans CA4/1 (2016) · DecisionDepot
Kagen v. Countrywide Home Loans CA4/1
California Court of Appeal Sep 16, 2016 No. D069579Unpublished
Filed 9/16/16 Kagen v. Countrywide Home Loans CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
MICHAEL J. KAGEN, D069579
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2014-00084221- CU-OR-CTL) COUNTRYWIDE HOME LOANS, INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Joan M.
Lewis, Judge. Affirmed.
Joseph La Costa for Plaintiff and Appellant.
McGuireWoods, Leslie M. Werlin and Adam F. Summerfield for Defendant and
Respondent.
Plaintiff and appellant Michael Kagen filed an action for cancellation of deed of
trust and quiet title, against America's Wholesale Lender, a New York corporation
(Wholesale), and others. Kagen alleged he purchased a home by entering into two
promissory notes with Wholesale, secured by corresponding deeds of trust, but that the
corporate entity of Wholesale did not exist at the time of the transactions, such that the
deeds of trust and a subsequent assignment of them must be void.
Defendant and respondent Countrywide Home Loans, Inc. (Countrywide) filed a
demurrer to Kagen's first amended complaint and a supporting request for judicial notice.
Countrywide argued the deeds of trust and assignment are valid because, among other
reasons, Wholesale was a fictitious business name under which Countrywide operated at
the time the deeds of trust were executed.
The court sustained Countrywide's demurrer without leave to amend and entered a
judgment of dismissal of the first amended complaint. On appeal, Kagen contends the
court erred in sustaining Countrywide's demurrer by considering parol evidence in
reaching its determination.1 However, he has provided no legal basis to support his
contentions, and has neglected to designate an adequate record to show error. The
judicially noticeable documents in this record do not support Kagen's key allegations.
For these reasons we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
For purposes of analyzing the rulings on demurrer, we take as true the allegations
in the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank).) In 2005, Kagen
borrowed $517,500 to purchase a home. To do so, he executed two promissory notes
1 Kagen's opening brief also appears to contend that the court erred by sustaining the demurrer of Countrywide's codefendant, Bayview Loan Servicing, LLC. Kagen was served a copy of the order granting Bayview's demurrer and judgment of dismissal and did not file a timely notice of appeal of it. (Cal. Rules of Court, rule 8.104.) Bayview has not appeared here and we need not address any contentions regarding Bayview's demurrer, confining our analysis to Countrywide. 2
secured by two corresponding deeds of trust. The deeds of trust are attached to the first
amended complaint as exhibits. The first deed of trust states: " 'Lender' is [¶]
AMERICA'S WHOLESALE LENDER [¶] Lender is a CORPORATION [¶] organized
and existing under the laws of NEW YORK." Each deed of trust identifies Mortgage
Electronic Registration Systems, Inc. (MERS) as its beneficiary and as nominee for
America's Wholesale Lender. Also attached to the first amended complaint is an
assignment of deed of trust executed by MERS and recorded in 2011 by the San Diego
County Clerk, conveying MERS's interest as beneficiary under the first deed of trust.
Generally, Kagen alleges that no corporation named America's Wholesale Lender
existed under the laws of New York at the time the promissory notes and deeds of trust
were executed, that the lending instruments are void as a result, and that he owns the
property subject only to an equitable mortgage from an unknown lender. He does not
allege that he received a notice of default or that foreclosure is yet underway.
Both the original complaint and the first amended complaint name the main
defendant as Wholesale. Bank of America, N.A. (Bank of America), doing business as
Wholesale, demurred to the original complaint as the defendant. Kagen then filed his
first amended complaint against Wholesale, alleging Bank of America was the loan
servicer. In response to the first amended complaint, Countrywide demurred,
representing it formerly did business as Wholesale. We note that Kagen's opening brief
continues to refer to Bank of America, and there is no reply brief on file.
Countrywide, as the affected defendant, filed a demurrer to Kagen's first amended
complaint based on numerous arguments, with a supporting request for judicial notice.
3
Countrywide chiefly argued that the lending instruments referring to "America's
Wholesale Lender . . . [¶] a corporation [¶] organized and existing under the laws of New
York" were valid because Wholesale was a fictitious business name used at the time by
Countrywide.
Countrywide requested judicial notice of the same deeds of trust and assignment
of trust deed that Kagen had attached to his first amended complaint. Countrywide also
requested judicial notice of other documents, including (1) Exhibit F, a corporate entity
information entry from the website of the New York Department of State, filed in March
of 1969, listing Countrywide as a New York domestic business corporation; (2) Exhibit
G, a fictitious business name statement recorded in March 2006 by the San Diego County
Clerk, registering Wholesale as a fictitious business name for Countrywide, with
February 1, 1993 stated to be its first day of business; and (3) Exhibit H, an entry from
the trademark registration website of the United States Patent and Trademark Office,
designating Countrywide and Bank of America as the owners of the word and service
mark, America's Wholesale Lender, filed in February 1993. These documents are
identified and included in the record as attachments to Countrywide's request for judicial
notice. (Evid. Code, § 452, subd. (c) [governmental websites as official acts and public
records], subd. (h) [facts confirmable from sources of reasonably indisputable accuracy].)
In Kagen's opposition to Countrywide's demurrer, he reiterated that Countrywide,
a New York corporation, doing business as America's Wholesale Lender, was not the
entity identified as lender on his deeds of trust. Instead, his deeds of trust referenced a
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nonexistent corporation similarly named America's Wholesale Lender. Kagen's
opposition did not address any of Countrywide's other arguments. 2
Countrywide's demurrer was sustained without leave to amend, as reflected in the
judgment of dismissal. For the record on appeal, Kagen designated the judgment of
dismissal, but not any minute or formal order sustaining Countrywide's demurrer, or a
ruling on Countrywide's request for judicial notice, or the reporter's transcript of the
demurrer hearing.
I
REVIEW OF JUDGMENT OF DISMISSAL AFTER DEMURRER
"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.
2 On appeal, Kagen has not addressed Countrywide's alternative demurrer arguments (e.g., statute of limitations). He has waived any opposition based on those defenses, and we need not discuss them here in light of other dispositive issues. 5
[Citations.] The burden of proving such reasonable possibility is squarely on the
plaintiff." (Blank, supra, 39 Cal.3d 311, 318.)
II
INADEQUATE RECORD AND DEFECTIVE BRIEFING
"On appeal, a judgment of the trial court is presumed to be correct. . . . All
intendments and presumptions are made to support the judgment on matters as to which
the record is silent." (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th
939, 956 (Cahill).) The plaintiff must affirmatively show error by an adequate record.
(Calhoun v. Hildebrandt (1964) 230 Cal.App.2d 70, 72.) Failure to provide an adequate
record on an issue requires that the issue be resolved against the appellant. (Maria P. v.
Riles (1987) 43 Cal.3d 1281, 1295-1296.)
" 'Appellate briefs must provide argument and legal authority for the positions
taken. "When an appellant fails to raise a point, or asserts it but fails to support it with
reasoned argument and citations to authority, we treat the point as waived." ' [Citation.]
'We are not bound to develop appellants' argument for them. [Citation.] The absence of
cogent legal argument or citation to authority allows this court to treat the contention as
waived.' " (Cahill, supra, 194 Cal.App.4th at p. 956.)
Kagen failed to designate an adequate record on appeal, and his opening brief is
devoid of relevant citation or reasoned argument. He has not discussed the specifics of
the underlying causes of action in his first amended complaint. As a result, we could
treat Kagen's contentions as waived. (Cahill, supra, 194 Cal.App.4th at p. 956.) On de
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novo review, however, we exercise discretion to examine the first amended complaint
and determine whether the dismissal was justified.
III
CANCELLATION OF INSTRUMENTS
A. Nature of Pleaded Documents
Causes of action for cancellation of instruments are maintained under Civil Code
section 3412, which states, "[a] written instrument, in respect to which there is a
reasonable apprehension that if left outstanding it may cause serious injury to a person
against whom it is void or voidable, may, upon his application, be so adjudged, and
ordered to be delivered up or canceled." Kagen alleges that he was a party to written
instruments void against him. As to the apprehension of serious injury, Kagen only
alleges the following:
"There exists in plaintiff a reasonable apprehension that if the Trust Deed and Assignment, each of which is alleged to be void, are left outstanding, they may cause serious injury to plaintiff."
As to the deeds of trust, Kagen argues they are void because the lender identified
in the deeds, Wholesale, did not exist at the time the deeds were executed. As to the
assignment of the first deed, he claims it is void under the theory MERS lacked authority
to execute the assignment. It is unclear from his briefing whether Kagen contends that
MERS lacked authority as a consequence of the alleged deficiencies in the execution of
the deed, or that MERS lacked authority under the terms of the deed. He does not
explain what entity he believes would be a proper party to defend this action.
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When reviewing an order sustaining a demurrer, " '[f]acts appearing in exhibits
attached to the first amended complaint . . . are accepted as true and are given
precedence, to the extent they contradict the allegations.' " (Nolte v. Cedars-Sinai
Medical Center (2015) 236 Cal.App.4th 1401, 1406.) To the extent Kagen rests his
causes of action on allegations MERS lacked the authority to execute an assignment of
the first deed of trust under the terms of that deed, his allegations are undermined by the
language of that deed as attached to his first amended complaint. Kagen's first deed of
trust states, "[t]he beneficiary of this Security Instrument is MERS (solely as nominee for
Lender and Lender's successors and assigns) and the successors and assigns of MERS,"
and as such appears proper on its face. (See Yvanova v. New Century Mortgage Corp.
(2016) 62 Cal.4th 919, 931, fn. 7 (Yvanova) [explaining role of MERS].)
To the extent Kagen argues that the assignment of the first deed of trust is void as
a consequence of the deed itself being void, we examine whether the deeds were shown
to be void on their face. Reviewing the judgment of dismissal de novo, it appears that the
trial court could properly rely on the exhibits attached to Countrywide's request for
judicial notice to determine that Wholesale existed as a fictitious business name, and thus
to sustain Countrywide's demurrer. "When any ground for objection to a complaint . . .
appears on the face thereof, or from any matter of which the court is required to or may
take judicial notice, the objection on that ground may be taken by a demurrer to the
"It has been held repeatedly, that it is not a violation of the parol evidence rule to
prove by extrinsic evidence the identity of the parties to an agreement." (Maulhardt v.
California Director of Public Works (1959) 168 Cal.App.2nd 723, 735.) Additionally,
"where the validity of the agreement is the fact in dispute, [the parol evidence rule] does
not exclude evidence relevant to that issue." (§ 1856, subd. (f).) Kagen's first amended
complaint challenges the validity of his deed of trust by asserting that the identity of the
parties is unknown. The sufficiency of Kagen's allegations should be considered in terms
of the deeds of trust and their transferability. (Yvanova, supra, 62 Cal.4th at p. 927 ["The
deed of trust . . . is inseparable from the note it secures, and follows it even without a
separate assignment."].)
Kagen argues that the exhibits attached to Countrywide's request for judicial
notice are parol evidence, and that the court erred by using those documents to interpret
references in the deeds of trust to Wholesale as applicable to Countrywide's fictitious
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business name. He simply claims Wholesale is a nonexistent corporation with an
identical name. Even if we assume that it would be error for the trial court to consider
parol evidence in making its determinations at this pleadings stage of the proceedings,
Kagen cannot establish that was what the court did. Without an order or transcript in the
record that explains the trial court's basis for its rulings on Countrywide's demurrer or
request for judicial notice, this record does not show how the trial court erred in relying
on the exhibits attached to Countrywide's request for judicial notice to sustain the
demurrer. Any such appellate issue can be deemed waived. (Cahill, supra, 194
Cal.App.4th at p. 956.) In any event, it is the ruling, not the reasoning, that we review.
(D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 18-19.) The record does
not show the trial court erred in resolving the case through any incorrect application of
the parol evidence rule.
IV
QUIET TITLE
In the quiet title section of the first amended complaint, Kagen incorporates the
factual allegations pleaded in his cancellation section. (§ 761.020 [quiet title elements].)
Kagen further asserted "that he is the only legitimate owner of the subject property,
subject to the legitimate lien interests established under the equitable mortgage which
runs in favor of a lender whose identity is presently unknown to plaintiff."
If we construe these allegations as predicated on the cancellation facts, then they
fail for the reasons above. If we construe these allegations as supplementing the
cancellation facts, then they are merely legal conclusions. (Blank, supra, 39 Cal.3d 311,
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318.) We must "[read the complaint] as a whole and its parts in their context." (Ibid.)
Kagen's general fictitious name theories do not support a viable quiet title theory against
these defendants.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to Respondent.
HUFFMAN, Acting P. J.
WE CONCUR:
HALLER, J.
O'ROURKE, J.
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AI Brief
AI-generated · verify before citing
Holding. The court affirmed the dismissal of the plaintiff's action for cancellation of a deed of trust and quiet title, holding that the defendant's use of a fictitious business name did not render the lending instruments void and that the plaintiff failed to state a viable cause of action.
Issues
Whether the trial court erred in sustaining a demurrer to a complaint alleging that deeds of trust were void because the lender was a non-existent corporate entity.
Whether the trial court improperly considered parol evidence by taking judicial notice of documents establishing the defendant's use of a fictitious business name.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“Use of a fictitious business name does not create a separate legal entity.”
“The business name is a fiction, and so too is any implication that the business is a legal entity separate from its owner.”
“It has been held repeatedly, that it is not a violation of the parol evidence rule to prove by extrinsic evidence the identity of the parties to an agreement.”