Orozco v. JP Morgan Chase Bank CA4/1 (2013) · DecisionDepot
Orozco v. JP Morgan Chase Bank CA4/1
California Court of Appeal Jun 11, 2013 No. D059878Unpublished
Filed 6/11/13 Orozco v. JP Morgan Chase Bank CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
LEONARDO OROZCO, D059878
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2008-00057744- CU-OR-NC) JPMORGAN CHASE BANK, N.A. et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County, Thomas P.
Nugent, Judge. Affirmed.
Hallstrom Klein & Ward, Grant J. Hallstrom; and Oscar Ruiz de Chavez, for
Plaintiff and Appellant.
AlvaradoSmith, Sung-Min Christopher Yoo, John M. Sorich, and Katherine S.
Agbayani, for Defendants and Respondents.
INTRODUCTION
In this appeal, plaintiff Leonardo Orozco seeks reversal of trial court orders
granting the defendants' motion for nonsuit, denying his motion for leave to amend his
prayer for relief to seek an equitable remedy, denying his motion for a new trial, and
sustaining defendants' demurrer to one of the causes of action alleged in his original
complaint. We discern no prejudicial errors in these orders and affirm the judgment.
In June 2005 Orozco obtained a $1 million loan secured by a trust deed
encumbering his home in Carlsbad. The trust deed identified Metrocities Mortgage LLC
doing business as No Red Tape Mortgage as the lender, Fidelity National Loan Portfolio
Solutions as the trustee, Mortgage Electronic Registration Systems, Inc. (MERS) the
nominee beneficiary, and Orozco as the borrower.
In July 2007 a default notice was recorded indicating Orozco's loan payments were
almost $27,000 in arrears. The notice also indicated Orozco had to contact defendant
Chase Home Finance, LLC (Chase) to arrange for payment to stop the foreclosure.
1 Defendants have requested we take judicial notice of 11 documents providing background information. Orozco did not oppose the request. The first 10 documents were either issued by, filed with and considered by, or otherwise before the trial court. We grant the request as to these documents. (Evid. Code, § 459, subd. (a).) The last document does not appear to have been before the trial court in any manner and we do not need to consider it to resolve the issues presented on appeal. We, therefore, deny the request as to this document. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.)
2
In August 2007 an assignment of deed of trust was recorded indicating MERS
transferred all beneficial interest in the trust deed to defendant Deutsche Bank National
Trust Company (Deutsche). In October 2007 a substitution of trustee was recorded
stating Deutsche substituted NDEx West, LLC (NDEx) as the new trustee of the trust
deed.
In November 2007 a notice of trustee's sale was recorded indicating NDEx was
going to sell Orozco's home at a public auction. In June 2008 a trustee's deed upon sale
was recorded indicating NDEx sold Orozco's home to Deutsche at a public auction on
May 16, 2008, for $796,000. The deed upon sale also indicated the amount of unpaid
debt and costs at the time of the sale was $1,088,222.52.
In August 2008 Orozco filed a complaint against JPMorgan Chase Bank, N.A.,
Chase, and Deutsche (collectively defendants) "to set aside foreclosure sale and trustee's
deed upon sale and for damages." (Capitalization omitted.) The complaint alleged
causes of action for wrongful foreclosure, fraud, and improper foreclosure.
Defendants demurred to the complaint, arguing Orozco had not stated any viable
causes of action. The trial court overruled the demurrer as to the fraud cause of action
and sustained the demurrer to the wrongful foreclosure and improper foreclosure causes
of action with leave to amend. Orozco subsequently filed a first amended complaint
alleging causes of action for wrongful foreclosure and fraud, but not for improper
foreclosure.
Defendants demurred to the first amended complaint, arguing Orozco had not
stated a viable wrongful foreclosure cause of action. The trial court sustained the
3
demurrer without leave to amend, leaving Orozco with just the fraud claim for which the
only relief he sought was punitive damages.
Trial commenced in January 2011. After Orozco's opening statement, but before
he concluded his presentation of evidence, the trial court granted defendants' motion for
nonsuit based on Orozco's inability to establish monetary damages. The trial court
additionally denied Orozco's request for leave to amend his prayer for relief to seek the
equitable remedy of vacating the foreclosure sale.2 Orozco subsequently moved for a
new trial, which the trial court also denied.
DISCUSSION
I
Granting of Nonsuit
A
Before trial, the parties submitted a "Joint Trial Readiness Conference Statement"
and proposed jury instructions to the trial court. Defendants also submitted a trial brief.3
One of the proposed jury instructions disputed by the parties related to whether Orozco's
economic damages were limited to the value of the property at the time of the foreclosure
sale. At a conference before jury selection commenced, the trial court deferred ruling on
2 Besides requesting leave to amend his prayer for relief, Orozco apparently moved in limine for leave to amend his complaint to add new causes of action and remedies. The trial court denied the motion both because it was in improper form and because it was untimely. Orozco has not appealed this decision and did not include a copy of the motion in the appellate record.
3 These documents are not included in the appellate record.
4
the instruction and requested additional briefing from the parties. After jury selection and
just before opening statements, both parties submitted the additional briefing.4 Although
defendants requested the trial court immediately rule on the matter, the trial court
declined to do so indicating it would revisit the matter later in the day.
The trial court initially revisited the matter after releasing the jury for lunch, which
was after Orozco's first two witnesses had testified and before he concluded his
presentation of evidence with his own testimony. The trial court explained to the parties
that in reviewing the proposed jury instructions on damages it began to question whether
Orozco could obtain noneconomic damages for a fraud claim where he suffered no
economic damages because he had no equity in his property. The trial court asked the
parties to research the issue over the lunch break and to return from the break early to
discuss the matter further.
When the trial court and the parties revisited the issue again, Orozco's counsel
clarified Orozco was not seeking emotional distress damages. Orozco was, however,
seeking damages for the loss of his home and potential future profits he would have made
from it. Essentially, he was seeking to vacate the foreclosure sale.
The trial court noted this relief was available for wrongful foreclosure. However,
because defendants had successfully demurred to the wrongful foreclosure causes of
action in Orozco's original and first amended complaints, the trial court determined this
relief was not available to Orozco.
4 The additional briefing is not included in the appellate record.
5
Given this determination, the trial court pointed out Orozco could not prove the
damages element of his fraud claim. The trial court further stated it was inclined under
the circumstances "to conclude the litigation." The trial court did not invite a motion for
nonsuit or otherwise elaborate on how it might reach such a conclusion. The trial court
also did not end further discussion of the matter.
Instead, Orozco's counsel immediately launched into a lengthy argument asserting
the trial court was required to allow him to continue with his punitive damages claim
notwithstanding his lack of monetary damages and to amend his complaint to request the
equitable remedy of vacating the foreclosure sale. The argument culminated in Orozco's
specific request for such leave to amend.
Defendants opposed the request, arguing equitable remedies are not available for
fraud claims. Before the trial court could respond to these arguments, defendants moved
for nonsuit. The trial court granted the motion, finding Orozco was not entitled to seek
equitable relief for his fraud claims, was not entitled to amend his complaint at that late
juncture, and was not entitled to pursue punitive damages when he admittedly had no
economic or noneconomic damages.
B
Procedural Propriety of Nonsuit Motion
Orozco preliminarily contends the trial court's order granting nonsuit was
procedurally improper. Specifically, Orozco contends the trial court improperly (1)
granted nonsuit sua sponte, (2) weighed the evidence in deciding whether to grant
nonsuit, and (3) granted nonsuit before the close of Orozco's evidence.
6
Regarding the first identified impropriety, a trial court may not grant nonsuit on its
own motion. (Gullick v. Interstate Drilling Co. (1931) 111 Cal.App. 263, 267.)
However, the record does not show the trial court did so in this case. Rather, the record
shows defendants moved for nonsuit after the trial court implicitly decided a jury
instruction issue in their favor. Additionally and contrary to Orozco's assertions, the trial
court did not initiate the discussion leading to the nonsuit. Defendants initiated the
discussion by raising the damages issue in their trial brief and during the pretrial
conference. Although the defendants specifically requested a ruling on the issue before
opening statements, the trial court postponed its decision so it could receive and consider
additional briefing. When the trial court revisited the matter at the first reasonably
available opportunity, the trial court indicated its leanings and heard extensive arguments
from Orozco's counsel. The trial court then gave defendants their turn to speak. After
defendants made their points, they immediately moved for nonsuit without any prompting
from the trial court. Accordingly, we cannot conclude from this record the trial court
granted nonsuit sua sponte.
Regarding the second identified impropriety, a trial court may not weigh evidence
in deciding whether to grant nonsuit. (Carson v. Facilities Development Co. (1984) 36
Cal.3d 830, 838-839.) However, the record does not show the trial court did this either.
While the arguments of Orozco's counsel to the trial court on the damages issue included
tangential evidentiary points, the trial court did not base its decision on these points.
Instead, the trial court based its decision on Orozcos counsel's acknowledgments Orozco
had no equity in his home and was not seeking emotional distress damages. The trial
7
court also based its decision on its legal determination Orozco could not obtain the
equitable remedy of vacating the foreclosure sale for his fraud claim. Thus, Orozco has
not established the trial court's decision rested on an improper assessment of the
evidence.
Regarding the last identified impropriety, Code of Civil Procedure section 581c,
subdivision (a), provides: "Only after, and not before, the plaintiff has completed his or
her opening statement, or after the presentation of his or her evidence in a trial by jury,
the defendant, without waiving his or her right to offer evidence in the event the motion
is not granted, may move for a judgment of nonsuit." Orozco interprets this section as
limiting the timing of a motion for nonsuit to either directly after the plaintiff's opening
statement or directly after the close of the plaintiff's evidence. In other words, a
defendant cannot, as defendants did here, make a motion for nonsuit between these two
points in time.
We note the plain language of the statute is not qualified in this manner. In
addition, Orozco has not cited nor have we located any authority supporting Orozco's
interpretation of the statute. Ultimately, we need not decide the matter because, even
assuming the timing of defendants' motion violated the statute, neither this procedural
irregularity nor any of the other claimed procedural irregularities requires reversal of the
judgment if the motion was otherwise well taken. (Michel v. Moore & Associates, Inc.
(2007) 156 Cal.App.4th 756, 760, fn. 4; see also Vincent v. Pacific Grove (1894) 102 Cal.
405, 410; Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 749.) As we explain below,
8
defendants' motion was well taken because Orozco could not prove he was damaged by
defendants' alleged fraud.
II
Available Damages for Fraud Claim
A
"To recover for fraud, the plaintiff must prove ' "detriment proximately caused" by
the defendant's tortious conduct. [Citation.] Deception without resulting loss is not
actionable fraud.' " (Goehring v. Chapman University (2004) 121 Cal.App.4th 353, 364;
Civ. Code, § 1709.)
"Under California law, a defrauded party is ordinarily limited to recovering out-of-
pocket damages. [Citation.] The out-of-pocket measure of damages ' ''is directed to
restoring the plaintiff to the financial position enjoyed by him prior to the fraudulent
transaction, and thus awards the difference in actual value at the time of the transaction
between what the plaintiff gave and what he received." ' " (Fladeboe v. American Isuzu
Motors Inc. (2007) 150 Cal.App.4th 42, 66.)
In this case, the out-of-pocket measure of damages equated to the value of
Orozco's equity in his property at the time of the foreclosure sale. (See Munger v. Moore
(1970) 11 Cal.App.3d 1, 11; Howe v. City Title Ins. Co. (1967) 255 Cal.App.2d 85, 87;
Stephans v. Herman, 225 Cal. App. 2d 671, 673-674.) Orozco's trial counsel, however,
acknowledged Orozco did not have any equity in his home at that time. On appeal,
Orozco attempts to distance himself from this acknowledgment by pointing to evidence
one of his friends and business associates was willing to invest up to $1 million in the
9
property. We accept this evidence as true. (Michel v. Moore & Associates, Inc., supra,
156 Cal.App.4th at p. 761 [In reviewing a judgment of nonsuit, we view the evidence in
the light most favorable to appellant and affirm only if appellant could not have prevailed
at trial even if the jury accepted all appellant's evidence as true and resolved all factual
conflicts in appellant's favor.]) Nonetheless, Orozco has not established how a third
party's willingness to purchase or give Orozco the money to repurchase the property
results in an out-of-pocket loss to Orozco greater than the value of the property itself.
Essentially, Orozco seeks to recover monetary damages for his own or a third party's lost
opportunity to overspend, and he has not cited nor have we located any authority
providing for such recovery.
Orozco additionally asserts he would have testified to having suffered severe
emotional distress because of defendants' fraud. Assuming a plaintiff may recover
emotional distress damages for the type of fraud Orozco alleges, Orozco's trial counsel
specifically informed the trial court Orozco was not seeking such damages. Orozco
maintains the record is actually confusing on this point, but we find no confusion or
ambiguity in it. To the contrary, the record shows the trial court explicitly inquired
Cal.App.4th 1602, 1614.) Orozco's fraud claim alleges Chase, as part of a conspiracy
with defendants, intentionally misrepresented to him the foreclosure sale would be
postponed so he would not take any action to stop the sale and they could obtain his
property at substantially less than its fair market value. As Orozco's fraud claim does not
allege the existence of a contract, or any of the other elements of a breach of contract
claim, it does not state nor is it the functional equivalent of a contract claim.
We need not decide whether Orozco could have amended his complaint to state a
viable contract cause of action because Orozco has forfeited this issue on appeal. (See
fn. 2, ante.) Moreover, Orozco's counsel specifically told the trial court when he
requested leave to amend that Orozco was not seeking to change his cause of action, he
was only seeking to change his desired remedy. He essentially wanted to obtain through
the back door a remedy he could not obtain through the front door. As the law does not
support his entitlement to the remedy of vacating a foreclosure sale for his fraud claim,
12
Orozco has not established the trial court abused its discretion by denying him leave to
amend his prayer for relief.
Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218 (Aceves), upon which
Orozco relies, is inapposite. The main questions presented in Aceves were whether the
plaintiff had properly pleaded promissory estoppel and fraud claims based on an alleged
breach or false promise by the defendant to work with plaintiff to reinstate and modify
her loan if she did not pursue foreclosure relief through bankruptcy proceedings.
(Id. at pp. 225-231.) In concluding the plaintiff had properly pleaded a fraud claim, the
Aceves court did not discuss the appropriate measure of damages for fraud or whether the
plaintiff could obtain equitable relief in addition to or in lieu of such damages.
(Id. at p. 231.) An appellate opinion is not authority for propositions not considered.
(People v. Knoller (2007) 41 Cal.4th 139, 154-155.) Sohal v. Fed. Home Loan Mortg.
Corp. (N.D. Cal. Aug. 30, 2011, No. C 11-01941 JSW) [2011 WL 3842195] is inapposite
for the same reason.
Estudillo v. Security Loan & Trust Co. (1906) 149 Cal. 556 (Estudillo); Lo v.
Jensen (2001) 88 Cal.App.4th 1093 (Lo); and Melendrez v. D & I Investment, Inc. (2005)
127 Cal.App.4th 1238 (Melendrez) are similarly unhelpful. Estudillo and Lo addressed
whether a foreclosure sale may be vacated where there was collusive bidding or where
intrinsic fraud otherwise tainted the sale. (Estudillo, supra, at p. 566; Lo, supra, at
pp. 1095-1096.). Melendrez addressed whether a foreclosure sale may be vacated where
the sale violated a statute requiring its postponement upon the mutual agreement of the
13
borrower and the lender. (Melendrez, supra, at pp. 1255-1256.) As Orozco's operative
complaint does not allege either circumstance, these cases have no application here.
Also of no assistance to Orozco are Crofoot v. Tarman (1957) 147 Cal.App.2d 443
(Crofoot) and Strutt v. Ontario Savings and Loan Assn. (1970) 11 Cal.App.3d 547
(Strutt), which he cites for the first time in his reply brief. The Crofoot court held a
foreclosure sale may not be vacated where there is no evidence of extrinsic fraud.
(Crofoot, supra, at pp. 448-449.) The Strutt court held a foreclosure sale may not be
vacated for extrinsic fraud where the subject property was sold to a bona fide purchaser.
(Strutt, supra, at p. 553.) Both courts suggested or assumed in dicta a foreclosure sale
may be set aside for extrinsic fraud where the purchaser is the lender or a successor, but
neither court specifically discussed the point. (Crofoot, at p. 448; Strutt, at p. 554.)
Thus, we can derive no guidance from these decisions.
IV
Denial of Motion for New Trial
Orozco alternatively contends the trial court erred in denying his motion for new
trial because the trial court incorrectly determined tort actions based on a promise subject
to the statute of frauds are categorically barred. Orozco rests this contention on
references in defendants' opposition papers and at oral argument to Secrest v. Security
National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544 (Secrest), which held
an agreement to forebear foreclosing on a deed of trust was subject to the statute of
frauds. (Id. at pp. 552-554.)
14
We note the trial court's order denying the motion for new trial does not cite to the
Secrest case (Secrest, supra, 167 Cal.App.4th 544) or otherwise explain the basis for the
trial court's ruling. In addition, while the Secrest case and its implications were discussed
during oral argument, it was not the main topic. The main topics were the issues
discussed ante: whether Orozco could have established he suffered monetary damages
from defendants' alleged fraud and whether the trial court should have allowed him to
amend his complaint to seek vacating the foreclosure sale as a remedy
Further, the appellate record for this issue is incomplete. In particular, the record
does not include Orozco's memorandum of points and authorities in support of his
motion, his reply, or any other documents he may have submitted to the trial court in
connection with the motion. It also does not include his trial brief, which his trial counsel
requested the trial court to review before ruling on the motion for new trial.5
"Appealed judgments and orders are presumed correct, and error must be
affirmatively shown. [Citation.] Consequently, plaintiff has the burden of providing an
adequate record. [Citation.] Failure to provide an adequate record on an issue requires
that the issue be resolved against plaintiff." (Hernandez v. California Hospital Medical
Center (2000) 78 Cal.App.4th 498, 502.) Without all of papers that were before the trial
court when it ruled on Orozco's new trial motion, we cannot properly review the basis for
the trial court's ruling. Orozco has, therefore, failed to carry his burden of establishing
prejudicial error in the ruling. (Ibid.)
5 Orozco's notice designating the record on appeal does not show Orozco identified these documents for inclusion in the clerk's transcript. 15
V
Sustaining Demurrer to Improper Foreclosure Action in Original Complaint
A
Orozco's original complaint contained three causes of action: one for wrongful
foreclosure, one for fraud and deceit, and one for improper foreclosure. As to the
improper foreclosure cause of action, the complaint alleged NDEx conducted the
foreclosure sale and sold the property to Deutsche. The complaint further alleged NDEx
was not the valid successor trustee and Deutsche was not the owner of the note.
The trial court sustained defendant's demurrer to this cause of action finding the
cause of action "alleges that at the time of the 5/16/07 sale, NDE[x] was not the successor
trustee under the [trust deed] and Deutsche was not the owner of the note. Defendants
have made a sufficient showing by their request for judicial notice that Deutsche did, in
fact, have the legal right to initiate foreclosure. Plaintiff raises a new allegation in his
opposition that there was also a defect in the notice of the trustee's sale. Plaintiff is
granted leave to amend to plead such an allegation if viable." When Orozco filed his first
amended complaint, he did not include an improper foreclosure cause of action in it.
B
On appeal, he contends the trial court erred when it sustained defendants' demurrer
to this cause of action because the cause of action sufficiently stated a fraud claim under
the theory Deutsche intentionally misrepresented it had the authority to foreclose under
the deed of trust. When reviewing a trial court's ruling sustaining a demurrer, "we
examine the complaint's factual allegations to determine whether they state a cause of
16
action on any available legal theory. [Citation.] We treat the demurrer as admitting all
material facts which were properly pleaded. [Citation.] However, we will not assume
the truth of contentions, deductions, or conclusions of fact or law [citation], and we may
disregard any allegations that are contrary to the law or to a fact of which judicial notice
may be taken." (Ellenberger v. Espinosa (1994) 30 Cal.App.4th 943, 947.) The
"[p]laintiff bears the burden of proving the trial court erred in sustaining the demurrer."
(Vaughn v. LJ Internat., Inc. (2009) 174 Cal.App.4th 213, 219.)
1
Preliminarily, we must reject defendants' assertion Orozco's appeal of this issue is
untimely and procedurally infirm because Orozco had an opportunity to amend his
improper foreclosure cause of action and elected not to do so. As Orozco points out,
"[w]hen a demurrer to a cause of action is sustained with leave to amend, the plaintiff
may elect not to amend the cause of action. The order sustaining the demurrer is treated
as an intermediate order with respect to that cause of action, appealable at the time of a
final judgment, and the plaintiff is deemed to have elected to stand on the validity of the
cause of action as originally pleaded. [Citations.] 'The rule that a choice to amend
waives any error can reasonably be applied only on a cause-of-action-by-cause-of-action
basis. If a plaintiff chooses not to amend one cause of action but files an amended
complaint containing the remaining causes of action or amended versions of the
remaining causes of action, no waiver occurs and the plaintiff may challenge the
intermediate ruling on the demurrer on an appeal from a subsequent judgment. It is only
where the plaintiff amends the cause of action to which the demurrer was sustained that
17
any error is waived.' " (National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge
Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 44.)
2
We, nonetheless, conclude Orozco's contention lacks merit because the trial court's
ruling on the demurrer specifically found, based on documents it judicially noticed, that
Deutsche was authorized to initiate the foreclosure sale. Orozco's briefs do not address
this aspect of the trial court's ruling. Orozco also did not include a copy of the judicially
noticed documents in the record. He, therefore, has not carried his burden of establishing
prejudicial error.
DISPOSITION
The judgment is affirmed. Respondents are awarded their appeal costs.
MCCONNELL, P. J.
WE CONCUR:
HALLER, J.
IRION, J.
18
AI Brief
AI-generated · verify before citing
Holding. The court affirmed the judgment, holding that the trial court properly granted nonsuit because the plaintiff failed to establish damages for his fraud claim and was not entitled to amend his prayer for relief to seek equitable remedies after his wrongful foreclosure claims had been dismissed.
Issues
Whether the trial court erred in granting a motion for nonsuit on the plaintiff's fraud claim.
Whether the trial court abused its discretion in denying the plaintiff leave to amend his prayer for relief to seek equitable remedies.
Whether the trial court erred in sustaining a demurrer to the plaintiff's improper foreclosure cause of action.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“The trial court granted the motion, finding Orozco was not entitled to seek equitable relief for his fraud claims, was not entitled to amend his complaint at that late juncture, and was not entitled to pursue punitive damages”
“Deception without resulting loss is not actionable fraud.”