Filed 5/20/15 Harjo v. Deutsche Bank Nat. Trust CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA



BEN R. HARJO et al.,                                                 D065866

         Plaintiffs and Appellants,

         v.                                                          (Super. Ct. No. 37-2013-00045060-
                                                                     CU-OR-NC)
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee, etc., et al.,

         Defendants and Respondents.



         APPEAL from a judgment of the Superior Court of San Diego County, Robert P.

Dahlquist, Judge. Affirmed.



         Ben R. Harjo and Jennifer E. Harjo, in pro. per., for Plaintiffs and Appellants.

         Severson & Werson, Jan T. Chilton, Michael G. Cross and Kerry W. Franich for

Defendants and Respondents.

         Plaintiffs and appellants Ben R. Harjo and Jennifer E. Harjo filed a complaint

against an assignee of a deed of trust on their home, defendant and respondent Nationstar

Mortgage LLC (Nationstar), among others. The Harjos' complaint alleges the assignment
of the deed of trust was improper and they seek to prevent Nationstar from foreclosing on

it, notwithstanding the fact the Harjos are in arrears on payments due on the promissory

note, which is secured by the deed of trust.

       The trial court sustained a demurrer filed by Nationstar and the other defendants

without leave to amend and dismissed the Harjos' complaint. The Harjos filed a timely

notice of appeal.

       We affirm. As we explain, the Harjos' claims for relief under the terms of the

Homeowner Bill of Rights (HBR) (See Civ. Code, § 2920.5 et seq.)1 largely fail because

the allegations of their complaint show that they were given the opportunity to apply for a

loan modification, their application was denied, and, on appeal to the entity servicing the

loan, the denial was upheld. The Harjos make additional claims based on two alleged

circumstances: (1) at some point shortly after the Harjos executed the note secured by the

deed of trust, their original lender, defendant First Magnus Financial Corporation (First

Magnus) assigned the note to defendant and respondent Deutsche Bank National Trust

Company (Deutsche Bank), and, thereafter, First Magnus was the subject of a bankruptcy

proceeding; and (2) after the Magnus bankruptcy proceeding commenced, the corporation

identified in the deed of trust as Magnus's nominee recorded an assignment of its interest

in the deed of trust to another corporation. As we explain in greater detail below, these

circumstances had no material impact on the Harjos' interests or obligations and do not in

any manner prevent Nationstar, as trustee, from foreclosing on the deed of trust.




1      All further statutory references are to the Civil Code.
                                               2
       A. Factual Allegations

       The Harjos' second amended complaint (SAC) makes the following factual

allegations:

       1. 2006 Purchase

       In 2006, the Harjos purchased a home in Encinitas and obtained purchase money

financing in the amount of $956,250 from Magnus. As is common, the financing was

memorialized in a promissory note and deed of trust the Harjos provided Magnus.

       Under the terms of the deed of trust, the Harjos assigned their interest in the home

to Fidelity National Title as trustee for defendant and respondent Mortgage Electronic

Register System (MERS), which was the named beneficiary of the deed of trust. With

respect to MERS, the deed of trust stated: "The 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."

       The Harjos are informed and believe that "shortly after executing the Note,

Defendant First Magnus granted, assigned and transferred the Note to Defendant

Deutsche where it was pooled with thousands of other promissory notes, then transferred

into a pre-designed trenched classifications [sic] to become securitized as shares for sale

in the open market."

       On May 30, 2008, Magnus "was dissolved and ceased to exist as a legal entity."

       2. Notice of Default

       On August 21, 2009, MERS and defendant Cal-Western Reconveyance

Corporation (Cal-Western) recorded a notice of default on the Harjos' property; the notice

stated that the Harjos had failed to make payments of principal and interest due on the

                                             3
note and that MERS had elected to sell the Harjos' home to satisfy the obligation.

       On February 22, 2011, MERS recorded an assignment of its interest in the deed of

trust and role as the lender's nominee to defendant and respondent Aurora Loan Services,

LLC (Aurora). The Harjos are informed and believe the assignment bears the forged

signature of the person who signed on behalf of MERS.

       3. Notice of Trustee's Sale/Forbearance

       On February 28, 2011, MERS and Cal-Western recorded a notice of trustee's sale,

which alleged the Harjos were in default under the terms of the note and set a date for

sale of the home. On November 26, 2011, the Harjos and Aurora entered into an

agreement under which Aurora agreed to forebear foreclosure and the Harjos agreed to

repay the arrearages due on the note. By its terms, the forbearance agreement required

that the Harjos make a final payment of $98,449 on May 1, 2012 and further provided

that the forbearance agreement itself would expire on May 1, 2012.

       On July 1, 2012, Aurora assigned its interest in the deed of trust to defendant

Nationstar Mortgage LLC (Nationstar). On July 29, 2012, the Harjos applied to

Nationstar for a mortgage modification.

       On April 9, 2013, Nationstar recorded a second notice of trustee's sale.

       4. These Proceedings

       The Harjos commenced this action shortly before Nationstar recorded the second

notice of trustee's sale, and, on May 30, 2013, the Harjos obtained a temporary

restraining order preventing the trustee's sale. Also on May 30, 2013, Nationstar notified

the Harjos it would not enter into a mortgage modification agreement with them.

       On July 22, 2013, Nationstar rescinded the notice of default and election to sell

                                             4
under the deed of trust. On July 25, 2013, Nationstar sent the Harjos a revised notice that

it would not enter into a mortgage modification agreement; unlike the May 30, 2013

notice, the July 25, 2013 notice included information about the Harjos' appeal rights.

       In August 2013, the Harjos sent Nationstar an appeal of Nationstar's decision not

to modify the Harjos' note and deed of trust, and, in October 2013, Nationstar denied the

Harjos' appeal.

       B. The Harjos' Claims

       The Harjos' SAC set forth a total of 12 causes of action. Nationstar filed a

demurrer to the SAC, and the trial court sustained the demurrer without leave to amend

and dismissed the complaint. The Harjos filed a timely notice of appeal.

       As the defendants point out, on appeal the Harjos only assert the validity of four of

the causes of action in the SAC: injunctive relief for violations of the HBR, quiet title,

cancellation of instruments and an accounting.

                                       DISCUSSION

                                              I

       We review orders sustaining demurrers without leave to amend under two distinct

standards of review on appeal. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th

857, 879). We first review the SAC de novo to determine if the complaint alleges facts

sufficient to state a cause of action under any legal theory. (McCall v. PacificCare of

Cal., Inc. (2001) 25 Cal.4th 412, 415). We then review the denial of leave to amend for

abuse of discretion. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 ["If

the court sustained the demurrer without leave to amend . . . we must decide whether

there is a reasonable possibility the plaintiff could cure the defect with an amendment. . . .

                                              5
The plaintiff has the burden of proving that an amendment would cure the defect."].)

       On appeal, the reviewing court must treat the demurrer as admitting all properly

pleaded material facts; however, this does not include contentions, deductions or

conclusions. (Aubry v. Tri–City Hospital Dist. (1992) 2 Cal.4th 962, 966–967).

In addition to allegations in the complaint, the reviewing court must properly consider

evidentiary facts that appear in exhibits attached to the complaint. (Satten v. Webb

(2002) 99 Cal.App.4th 365, 375). Furthermore, "[a]ny allegations in the complaint which

are inconsistent with facts set out in an unambiguous written instrument, incorporated by

reference, may be stricken." (Fundin v. Chicago Pneumatic Tool Co. (1984) 152

Cal.App.3d 951, 955.)

                                              II

       In the first cause of action, the SAC alleges that the defendants violated four

provisions of the HBR—sections 2923.6, 2923.7, 2924.10 and 2924.11— and that the

violations give rise to the right to injunctive relief. As the defendants point out, the

record shows that no violation of the statutes occurred.

       A. Section 2923.6

       As of January 1, 2013, section 2923.6 requires that before recording a notice of

default or notice of sale or conducting a trustee's sale, loan servicers, such as MERS or

Nationstar, must offer borrowers any workout plan or loan modification that is consistent

with the servicer's contractual or other authority. (§ 2923.6, subd. (c).) The statute

further prevents loan servicers from recording a notice of default or notice of sale or

conducting a trustee's sale while a borrower's application for a workout plan or loan

modification is pending or on appeal from a servicer's denial of the application. (Ibid.)

                                              6
       More particularly, if a loan servicer denies an application for a workout plan or

loan modification, the loan servicer must advise the borrower of the reasons for the

denial. (§ 2923.6, subd. (f).) Nationstar's July 25, 2013 letter denying their application

for a loan modification stated: "We . . . regret to inform you that you do not meet the

program guidelines because we are unable to create an affordable payment within the

program terms." The denial letter sets forth the Harjos' right to appeal within 30 days, the

procedure for appeal and other alternatives by which the Harjos might avoid foreclosure.

       Contrary to the Harjos' contention, Nationstar's July 25, 2013 letter meets the

requirements of section 2923.6, subdivision (f). If a denial was based on disallowance by

an investor, a net present value calculation, or the debtor's failure to meet requirements of

a previous loan modification, the denial must give the debtor notice of those reasons.

(See § 2923.6, subd. (f)(2), (3) & (4).) Here, Nationstar's denial was based solely on the

affordability of a modification, and, thus, the disclosure requirements of section 2923.6,

subdivision (f)(2), (3) and (4) were not applicable. Because the letter provided the Harjos

with notice of the time and manner in which to appeal the denial and other alternatives to

foreclosure, it also met the other requirements of section 2923.6, subdivision (f). (See

§ 2923.6, subd. (f)(1) & (5).)

       In sum, the record, by way of Nationstar's July 25, 2013 letter, demonstrates that

Nationstar met the requirements of section 2923.6 and, in particular, all the requirements

of section 2923.6, subdivision (f).

       B. Section 2923.7

       Section 2923.7 requires that when a borrower requests some form of foreclosure

avoidance, the loan servicer must promptly provide the borrower with a "single point of

                                              7
contact," which the statute defines as an individual or team of personnel, each of whom

has access to information about the borrower, his or her loan, the programs available to

the borrower, and access to individuals with the ability and authority to stop foreclosure

proceedings when necessary. (§ 2923.7, subds. (b), (c) & (e).)

       Nationstar sent the Harjos its first notice denying their application for a loan

modification on May 23, 2013. The notice did not include information about the Harjos'

appeal rights, but it did contain the following statement: "If you have any questions

regarding this notice, think the reason(s) stated herewith no longer apply or if you

experience additional changes, which you feel warrant consideration, your Foreclosure

Prevention Specialist is Stephen Ellis and can be reached at 8774485023 or via mail at

350 Highland Drive, Lewisville, TX 75067." As defendants contend, on its face this

notice satisfied the requirement that the Harjos be given a single point of contact;

moreover, the SAC does not allege that Mr. Ellis did not perform any of the duties

required of a "single point of contact" under section 2923.7.

       In sum then, again the record shows on its face that Nationstar in fact met the

requirements of the provisions of the HBR the Harjos assert.

       C. Section 2924.10

       Section 2924.10 requires that within five business days after a borrower submits a

complete loan modification to a loan servicer, the loan servicer must send the borrower

acknowledgement that it has received the application and information about the loan

modification process. (See § 2924.10, subd. (a)(1)–(4).) Section 2924.10 became

effective on January 1, 2013. (See Stats. 2012, ch. 86, § 13.)

       The Harjos' loan modification application was made on July 29, 2012. There is

                                              8
nothing on the face of the statute, or in its history, that suggests the acknowledgement

requirement of section 2924.10 applies to loan modification applications made before

January 1, 2013. Thus, section 2924.10 will not support a claim based on Nationstar's

failure to promptly acknowledge the Harjos' 2012 modification application.

       D. Section 2924.11

       Section 2924.11 prevents a loan servicer from recording a notice of default or

notice of sale, or conducting a sale, if it has agreed in writing to a work out, loan

modification or other foreclosure alternative and the borrower is in compliance with the

agreement. (See § 2924.11, subd. (a).) Although not specific, the SAC alleges the

defendants also violated section 2924.11. Apparently, the Harjos rely on the forbearance

agreement they made with Aurora in November 2011. As we have noted, the forbearance

agreement by its terms required the Harjos make a payment of $98,449 on or before May

1, 2012 and further provided that the forbearance agreement expired on that date. There

is nothing in the record that alleges or shows that any of the defendants recorded a notice

of default or sale or conducted a sale during the term of the forbearance agreement.

Thus, the record will not support any allegation the defendants violated section 2924.11.

       In sum then, on this record, the SAC does not set forth any actionable violation of

the HBR.

                                              III

       The Harjos contend that in addition to claims for relief under the HBR, they are

entitled to quiet title, cancellation of instruments, and an accounting. None of the legal

theories the Harjos advance support these claims.



                                              9
         A. Quiet Title and Cancellation of Instruments

         By way of their first and second causes of action, the Harjos allege the defendants

have "no right, title or interest" in their home, that MERS's 2011 assignment of the deed

of trust to Aurora was invalid and that Aurora's later assignment to Nationstar was

similarly invalid.

         In the trial court and on appeal, the Harjos have argued the defendants have no

interest in their property because, following Magnus's dissolution, MERS had no power

to transfer the deed of trust to Aurora and, alternatively, because the Harjos are informed

and believe the notary's signature on the assignment was forged. The Harjos allege that

the forged assignment also gives them the right to cancel both assignments of the deed of

trust.

         In short, by way of their quiet title and cancellation of instrument causes of action,

the Harjos have directly challenged the defendants' right to foreclose on the deed of trust.

As the defendants point out, the trustor under a deed of trust does not have standing to

bring an action challenging the authority of the person or entity commencing foreclosure

proceedings. (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 511-

512; Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440-

442; Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154.)

"California courts have refused to delay the nonjudicial foreclosure process by allowing

trustor-debtors to pursue preemptive judicial actions to challenge the right, power, and

authority of a foreclosing 'beneficiary' or beneficiary's 'agent' to initiate and pursue

foreclosure. [Citations.]" (Jenkins v. JPMorgan Chase Bank, N.A., supra, at pp. 511-

512.) "The recognition of the right to bring a lawsuit to determine a nominee's

                                               10
authorization to proceed with foreclosure on behalf of the noteholder would

fundamentally undermine the nonjudicial nature of the process and introduce the

possibility of lawsuits filed solely for the purpose of delaying valid foreclosures."

(Gomes v. Countrywide Home Loans, Inc., supra, at p. 1155.)

       There are other defects in the Harjos' theories. Under any fair reading of the SAC,

Magnus assigned its interest in the note to Deutsche Bank before Magnus was dissolved;

as the Harjos themselves acknowledge, unless otherwise agreed, assignment of the

underlying debt to Deutsche Bank accomplished assignment of any security for the debt,

in particular the deed of trust. (See § 2936.) By the express terms of the deed of trust,

MERS was the nominee of both Magnus and any of its assigns. Thus, by the time

Magnus was dissolved, both the note and deed of trust had been effectively assigned to

Deutsche Bank, and MERS, under the express terms of the deed of trust, was then acting

as Deutsche Bank's nominee. Given these circumstances, Magnus's dissolution did not

affect the validity of MERS's assignment of its interest in the deed of trust to Aurora or

Aurora's later assignment to Nationstar.

       In this regard, the Harjos' reliance on the prospectus that was issued with respect

to the securitization of their note is unavailing. Nothing in the prospectus supports their

contention that, by referring to MERS as the nominee on mortgages and deeds of trust,

any of the defendants agreed or intended that the Harjos' note would be "split" from the

deed of trust so that the note would become an unsecured debt.

       Moreover, any alleged forgery2 by a notary of the assignment of the deed of trust


2      Evidently, the Harjos' forgery allegation is based on their belief the notary who
verified the assignment was a so-called "robo-signer," who did not fully perform her
                                             11
from MERS to Aurora will not give the Harjos any right to relief by way of a quiet title

or cancellation of instruments. Any forged or defective assignment of the deed of trust

did not have any impact on the Harjos' interests. As the court in Fontenot v. Wells Fargo,

supra, 198 Cal.App.4th at page 272 stated in rejecting a similar challenge to the validity

of a MERS assignment: "Even if MERS lacked authority to transfer the note, it is

difficult to conceive how plaintiff was prejudiced by MERS's purported assignment, and

there is no allegation to this effect. Because a promissory note is a negotiable instrument,

a borrower must anticipate it can and might be transferred to another creditor. As to

plaintiff, an assignment merely substituted one creditor for another, without changing her

obligations under the note. Plaintiff effectively concedes she was in default, and she does

not allege that the transfer to HSBC interfered in any manner with her payment of the

note (see, e.g., Munger v. Moore (1970) 11 Cal.App.3d 1, 7-8 [failure by lender to accept

timely tender]), nor that the original lender would have refrained from foreclosure under

the circumstances presented. If MERS indeed lacked authority to make the assignment,

the true victim was not plaintiff but the original lender, which would have suffered the

unauthorized loss of a $1 million promissory note."

       B. Accounting

       As the defendants point out, the Harjos' accounting claim must fail because they

do not claim and likely cannot claim that they are owed any money with respect to the

note and deed of trust. (See Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)

Indeed they do not dispute that, as set forth in the notices of default attached as exhibits


duties as a notary. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256,
272.)
                                             12
to the SAC, they failed to make payments on the note they executed at the time they

purchased their home.

                                             IV

       The Harjos contend they are also entitled to relief under theories adopted by the

court in Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1094-1098 (Glaski). In

Glaski, following the sale of his home at a trustee's sale, the plaintiff brought a wrongful

foreclosure action against the bank that conducted the sale. The plaintiff alleged the

defendant bank did not have the power to conduct the sale because the assignment of the

note and deed of trust to the bank's predecessor, a securitized trust, had occurred after the

closing date of the trust and, under governing New York law, was therefore void, rather

than voidable. The court in Glaski held that a borrower could challenge a void transfer of

a note and deed of trust, but not a voidable transfer. (Id. at p. 1095.) Glaski is not

controlling here for two reasons.

       First, the predicate for relief under Glaski—that there was a transfer to a trust

governed by New York law after the trust had closed—is no where alleged in the SAC.

Second, considerable doubt as to the validity of Glaski has been expressed by a number

of other courts. (See Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219

Cal.App.4th 75 [rejecting Glaski and finding borrower has no standing to challenge

assignment of deed of trust]; Sandri v. Capital One, N.A. (In re Sandri) (Bankr. N.D.Cal.

2013) 501 B.R. 369, 374-375 [explaining how Glaski unpersuasively departs from

California jurisprudence]; Rajamin v. Deutsch Bank Nat'l Trust Co. (2d Cir. 2014) 757

F.3d 79, 90 [rejecting Glaski as inconsistent with New York and other court's

interpretations of New York law].) In particular, we question whether, as here, borrowers

                                             13
who cannot show that they have been in any manner prejudiced by a procedural defect in

the assignment of their notes and deeds of trusts may make a claim challenging those

assignments. (See Jenkins v. JPMorgan Chase Bank, N.A., supra, 216 Cal.App.4th at pp.

511-512; Debrunner v. Deutsche Bank National Trust Co., supra, 204 Cal.App.4th at pp.

440-442; Gomes v. Countrywide Home Loans, Inc., supra, 192 Cal.App.4th at p. 1154.)

                                             V

       The Harjos amended their complaint twice. Moreover, none of the facts alleged

show that any conduct on the part of the defendants harmed their legitimate interests.

Under these circumstances, the trial court did not abuse its discretion in sustaining the

defendants' demurrer without leave to amend.

                                      DISPOSITION

       The judgment is affirmed. Defendants to recover their costs of appeal.




                                                                       BENKE, Acting P. J.

WE CONCUR:



                    HUFFMAN, J.



                      HALLER, J.




                                             14
