Filed 2/18/14 Savoy v. Citimortgage CA2/8
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                 DIVISION EIGHT


JAMES SAVOY,                                                         B242460

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                     Super. Ct. No. BC462587)
         v.

CITIMORTGAGE INC. et al.,

         Defendants and Respondents.




         APPEAL from a judgment of the Superior Court of Los Angeles County.
Kenneth R. Freeman, Judge. Affirmed.


         James Savoy, in pro. per.


         Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Daniel G. Bath and Allison
A. Arabian for Defendant and Respondent Citimortgage, Inc.


                             ______________________________________
       In this action, James Savoy alleges that Phyllis Scott, his childhood friend,
fraudulently induced him to help her pay the mortgage on and manage an apartment
building she owned. Savoy brought a fraud and wrongful foreclosure action against Scott
and Citimortgage, Inc. after Citimortgage foreclosed on the property. The trial court
sustained Citimortgage’s demurrer to Savoy’s first amended complaint without leave to
amend. We affirm.
                                           FACTS
       Scott and Savoy were childhood friends. Scott purchased an apartment building
located in Los Angeles on June 9, 1999, with Wilson Twain. In or about May 2000,
Scott began having financial difficulties and borrowed $4,000 from Savoy’s wife to pay
the mortgage. She then arranged for Savoy to take over the mortgage payments for the
property and manage it. On June 5, 2001, Scott notified Citimortgage that Savoy was
“the Operations Manager and business partner of Phyllis Scott and Twain Wilson. He is
to have full access to all information and full authority to initiate, implement, or terminate
agreements, payments, contracts, etc.” She also advised Citimortgate that Savoy had full
authority concerning the property and the related mortgage, deed, and trust on February
13, 2002.
       Scott promised to repay Savoy for the money and time he put into the property.
On January 5, 2005, Scott signed a grant deed granting to Savoy an undivided one-half
interest of her share of the property to him. A grant deed reflecting this transfer was
recorded on February 25, 2005. In 2006, Savoy stopped managing the property. Scott
collected rent from the property and was tasked with distributing Savoy’s share to him.
A trustee’s sale of the property took place on October 15, 2009.
       Savoy brought suit against Citimortgage and Scott on May 31, 2011, for fraud and
wrongful foreclosure. He sought an accounting, an equitable lien, an order vacating and
setting aside the trustee’s sale, equitable estoppel, the cancellation of the void trustee’s
deed upon sale, and quiet title. In addition to alleging the facts above, Savoy alleged that
Scott never intended to fulfill her promise to repay him. Savoy alleged that from October
1999 to October 2008, Scott owed Savoy over $500,000, for which the property was

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security for the debt. He also alleged various irregularities relating to Citimortgage’s
foreclosure of the property.
       Citimortgage demurred to the complaint on the grounds that it was time-barred
and that Savoy had failed to allege sufficient facts to state a cause of action against it.
The trial court sustained the demurrer but granted Savoy 20 days to file an amended
complaint. Savoy filed a first amended complaint on November 30, 2011, repeating
many of the allegations in the initial complaint.
       Savoy made additional specific allegations and included exhibits showing the
various mortgage payments he made to Citimortgage as well as his correspondence with
Citimortgage agents regarding the property. For example, Savoy attached an October 18,
2007 letter from his attorney alerting the servicing company that Savoy was interested in
bringing the mortgage current and that he was currently engaged in litigation with the
owners over the property. Savoy alleged that his communications with Citimortgage
alerted Citimortgage to his equitable interest or lien on the property.
       In a separate action, Savoy sued Scott over the property. They entered into a
settlement agreement on February 23, 2010. In it, Scott agreed to sign a quitclaim deed
transferring her interest in the property to Savoy. Savoy promised to pursue a legal
action to obtain title to the property and if he was successful, he agreed to pay Scott
$50,000 within one year of obtaining title. Savoy alleged in the first amended complaint
that he believed the equitable lien was still in place at the time of the settlement because
Scott assured him that the property was still in their names. However, the property had
been foreclosed upon in 2009.
       Citimortgage’s demurrer to the first amended complaint was granted without leave
to amend by the trial court on January 31, 2012. Scott filed an answer on July 13, 2012.
Judgment was entered in favor of Citimortgage on May 9, 2012. Savoy filed his notice of
appeal on July 9, 2012.




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                                       DISCUSSION
I.     Standard of Review
       A demurrer tests whether the complaint states facts sufficient to constitute a cause
of action. (Code Civ. Proc., § 430.10, subd. (e); Friedland v. City of Long Beach (1998)
62 Cal.App.4th 835, 841-842.) To make this determination, the trial court may consider
all material facts pleaded in the complaint and matters of which it may take judicial
notice, but not contentions, deductions or conclusions of fact or law. (Code Civ. Proc.,
§ 430.30, subd. (a); Moore v. Conliffe (1994) 7 Cal.4th 634, 638.) “Where the
complaint’s allegations or judicially noticeable facts reveal the existence of an
affirmative defense, the ‘plaintiff must “plead around” the defense, by alleging specific
facts that would avoid the apparent defense. Absent such allegations, the complaint is
subject to demurrer for failure to state a cause of action . . . .’ [Citations.]” (Gentry v.
eBay, Inc. (2002) 99 Cal.App.4th 816, 824.) Our review of a dismissal resulting from a
demurrer is de novo. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002)
108 Cal.App.4th 1028, 1038.) We review a trial court’s decision to deny leave to amend
for abuse of discretion. (Ibid.)
II.    The Demurrer was Properly Sustained
       The first cause of action for fraud is asserted only against Scott. The remaining
six causes of action alleged in the first amended complaint are against Citimortgage.
However, it is telling that the bulk of the factual allegations relate to Scott’s conduct, not
Citimortgage’s. We evaluate the allegations against Citimortgage for each of the causes
of action below and conclude that there are insufficient facts alleged to constitute a claim
against Citimortgage.
       A. Accounting
       In the second cause of action for an accounting, Savoy alleged that Scott collected
the rents from the property and was obligated to distribute a portion of the rents to Savoy.
Despite his requests, Scott refused to provide Savoy with an accounting of the rents
received and the amounts expended for maintenance and repair to the property. Thus,
Savoy alleged he was entitled to an accounting from Scott for these amounts. None of

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these allegations relate to Citimortgage. Savoy has failed to state a cause of action for
accounting against Citimortgage.
       On appeal, Savoy contends that he alleged there were accounting irregularities in
the notice of default and therefore, an accounting was appropriate. We see no such
allegation in the first amended complaint (or the initial complaint). To the extent Savoy
argues that an amendment alleging accounting irregularities by Citimortgage would cure
the deficiencies in the first amended complaint, we disagree. Beyond the bare statement
that there were accounting irregularities, Savoy has presented no facts suggesting what
those irregularities were or why they would justify an accounting. Savoy does not
contend, for example, that Citimortgage miscalculated the interest or fees or principal
amounts due. Further, an accounting cause of action requires that the plaintiff allege a
balance due from the defendant to him. (Teselle v. McLoughlin (2009) 173 Cal.App.4th
156, 179-180; 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 819, p. 236.) It is
certainly not the case here that Citimortgage owes Savoy any sum.
       B. Equitable Lien
       In the third cause of action, Savoy sought to impose an equitable lien on the
property, primarily as a result of Scott’s fraudulent promises to him. As to Citimortgage,
he alleged that he was entitled to an equitable lien because, “[e]ven though Citimortgage
was placed on notice that Plaintiff was to be notified concerning anything related to the
Subject Property, he was no[t] notified of the Trustee’s sale of the Subject Property
which took place on or about October 13, 2009.”
       In general, equity will create a lien on property where this is necessary to
accomplish substantial justice and protect creditors. Thus, courts will construe the
existence of equitable liens where the parties have clearly attempted or intended to make
real property security for an obligation (Grappo v. Coventry Financial Corp. (1991) 235
Cal.App.3d 496, 510; 4 Witkin, Summary of Cal. Law (10th ed. 2005) Security
Transactions in Real Property, § 18, pp. 808-809); or, even in the absence of any
agreement, where it is necessary to prevent unjust enrichment (Smith v. Anglo-California



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Trust Co. (1928) 205 Cal. 496, 504, overruled on other grounds in Lucas v. Hamm (1961)
56 Cal.2d 583, 590-591).
       Even if Savoy were entitled to an equitable lien on the property based on Scott’s
fraud or on Citimortgage’s failure to notify him of the trustee’s sale, that lien was
extinguished by the foreclosure sale. This is because Savoy’s lien was subordinate to
Citimortgage’s trust deed. “Other things being equal, different liens upon the same
property have priority according to the time of their creation, except in cases of bottomry
and respondentia.”1 (Civil Code, § 2897; 4 Witkin, Summary of Cal. Law (10th ed.
2005) Security Transaction in Real Property, § 48, p. 842.) A junior lien will be
extinguished at the foreclosure sale unless the successful bidder purchases at a price
sufficient to pay off both the senior lien and the junior lien. (South Bay Building
Enterprises, Inc. v. Riviera Lend-Lease, Inc. (1999) 72 Cal.App.4th 1111, 1121.) There
is no allegation that Citimortgage’s trust deed was subordinate to any equitable lien
possessed by Savoy. Nor does Savoy allege that Citimortgage purchased the property at
a price sufficient to pay off both its loan and Savoy’s equitable lien. In fact, Savoy
admitted in the first amended complaint that his equitable lien in the property no longer
existed after the foreclosure.
       C. Order Vacating and Setting Aside Trustee’s Sale
       Although Savoy’s allegation regarding defective notice of the trustee sale was not
sufficient to state a cause of action for an equitable lien, it appears to be part and parcel of
his attempt to set aside the trustee’s sale and acquire title to the property. In particular,
the fourth and fifth causes of action for an order vacating and setting aside the trustee’s
sale provide no factual allegations except to incorporate his previous allegations. In the



1
       Neither bottomry or respondentia apply in this case. “Bottomry is a contract by
which a vessel or its freightage is hypothecated as security for a loan, which is to be
repaid only if the vessel survives a particular risk, voyage, or period.” (Harbors and
Navigation Code, § 450.) “Respondentia is a contract by which all or part of a cargo is
hypothecated as security for a loan, the repayment of which is dependent on maritime
risks.” (Harbors and Navigation Code, § 470.)

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fourth cause of action, for example, Savoy merely alleged that Citimortgage violated
California law “as outlined hereinabove.”
        Even if we accept that Citimortgage improperly failed to provide notice to Savoy,
he has failed to allege any of the elements necessary to set aside the foreclosure. In
particular, Savoy did not allege he tendered or could tender the full amount of the debt,
which was $329,477.09. “An allegation of tender of the indebtedness is necessary when
the person seeking to set aside the foreclosure sale asserts the sale is voidable due to
irregularities in the sale notice or procedure.” (West v. JPMorgan Chase Bank, N.A.
(2013) 214 Cal.App.4th 780, 801; Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89,
112; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109.) “ ‘The
rationale behind the rule is that if [the borrower] could not have redeemed the property
had the sale procedures been proper, any irregularities in the sale did not result in
damages to the [plaintiff].’ ” (Lona v. Citibank, N.A., supra, at p. 112.) Although this
defect was identified by Citimortgage in its initial demurrer, Savoy made no attempt to
cure the deficiency in the first amended complaint. Nor does he contend on appeal that
he was able to tender the full amount even if he had been provided notice of the trustee’s
sale.
        D. Cancellation of Void Trustee’s Deed Upon Sale
        The sixth cause of action was to cancel the void trustee’s deed upon sale pursuant
to Civil Code section 2924a. Savoy alleged that “the conduct of the Defendants in
procuring the Trustee’s Deed Upon Sale and dispossessing Plaintiff of the Subject
Property constituted fraudulent misrepresentation, fraud based on promises made without
intention to perform, and violations of Civil Code sections 2923.5, 2923.6, 2924 et seq.
and 2934a.” While the first amended complaint was replete with allegations of Scott’s
fraudulent promises, it failed to describe any fraud committed by Citimortgage. There
were no allegations that any Citimortgage agent made any misrepresentations to Savoy or
made any promises to him, much less promises it did not intend to keep.




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       Nor were there any factual allegations regarding how Citimortgage violated the
various Civil Code sections identified. Indeed, these Civil Code sections relate to a
mortgagee’s obligations to its borrower or provide the general requirements involved in a
nonjudicial foreclosure. They do not provide Savoy with a cause of action. (Civil Code
section 2923.5 [requiring contact with the borrower to assess his financial situation and
explore options to avoid foreclosure prior to recording a notice of default]; section 2923.6
[requiring offer of a loan modification to the borrower]; section 2924 [setting forth
statutory scheme for nonjudicial foreclosure]; section 2934a [substitution of trustee].)
       E. Quiet Title
       In the seventh cause of action, Savoy alleged that he was the “owner in fee
simple” of the subject property and that he sought to quiet title in his favor due to the
fraudulent and illegal trustee’s sale. On appeal, Savoy asserts that he alleged “a prima
facie case in order to quiet title to the property, because [he] challenged the legality of the
sale.” As discussed above, Savoy has failed to allege any facts describing how the
trustee’s sale was fraudulent or illegal. For this reason, and because he failed to allege
tender, Savoy’s quiet title claim is defective.
III.   The Trial Court Did Not Abuse its Discretion in Denying Leave to Amend
       On appeal, Savoy fails to demonstrate how he would amend to cure the defects in
the first amended complaint. To the extent Savoy has presented any new theories of
liability in his brief, we have treated these as proposed allegations (e.g., irregularities in
accounting). As addressed above, we have concluded they are insufficient to cure the
pleading defects in the operative complaint.
       In a final attempt to salvage his case against Citimortgage, Savoy complains of an
error made by the trial court in sustaining the demurrer as to the second and seventh
causes of action. At the hearing on the demurrer to the initial complaint, the Honorable
Kenneth R. Freeman presided. Judge Freeman noted that his tentative was to sustain the
demurrer as to the third through sixth causes of action and leave the first, second and
seventh causes of action in place. Judge Freeman then granted Savoy 20 days to amend.
At the hearing on the demurrer to the first amended complaint, the Honorable Joseph

                                               8
Kalin presided. Judge Kalin sustained Citimortgage’s demurrer as to the second through
seventh causes of action without leave to amend. Savoy complains on appeal that Judge
Kalin should not have sustained the demurrer to the second and seventh causes of action,
for an accounting and quiet title, respectively, because they survived demurrer following
Judge Freeman’s ruling.
       As to the second cause of action for an accounting, Savoy’s contention lacks
merit. In the initial complaint, the second cause of action was solely against Scott. In the
first amended complaint, Savoy added Citimortgage to that cause of action. Having
materially changed the cause of action, Savoy cannot complain that Judge Kalin made a
new ruling as to whether a claim for accounting had been alleged against Citimortgage.
As to the seventh cause of action for quiet title, Savoy failed to object at the time Judge
Kalin issued his ruling. Savoy has waived his right to complain on appeal. (Hepner v.
Franchise Tax Bd. (1997) 52 Cal.App.4th 1475, 1486.)
                                      DISPOSITION
       The judgment is affirmed. Respondents are awarded costs on appeal.




                                                         BIGELOW, P. J.
We concur:


              RUBIN, J.




              FLIER, J.




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