Filed 4/29/16 Millsap v. Deutsche Bank Nat. Trust Co. 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                        NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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



BRENDA K. MILLSAP,                                                   B259456

                            Plaintiff and Appellant,                 (Los Angeles County
                                                                      Super. Ct. No. LC100932)
                   v.

DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee, etc., et al.,

                   Defendants and Respondents.



         APPEAL from the judgment of the Superior Court of Los Angeles County.
Huey P. Cotton, Judge. Affirmed.

         Stephen R. Golden & Associates, Stephen R. Golden and Elaine D. Etingoff for
Plaintiff and Appellant.

         Houser & Allison, Emilie K. Edling and Robert W. Norman for Defendants and
Respondents.


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       Plaintiff Barbara K. Millsap sued defendants Ocwen Loan Servicing, LLC
(Ocwen) and Deutsche Bank National Trust Company (Deutsche Bank), as trustee,
seeking to preempt a threatened foreclosure of her home based on the theory that
defendants lacked authority to foreclose because they have no interest in the deed of trust
as it was not transferred to the investment trust prior to its closing date. Plaintiff also
alleges that defendants wrongfully scheduled trustee sales of the property while she was
pursuing a loan modification. Her first amended complaint alleges causes of action for
violation of the Homeowners Bill of Rights (HOBR; Civ. Code, § 2924, subd. (a)(3), (6);
count 1); Civil Code section 2923.6 (count 2); Civil Code section 2923.5 (count 3); quiet
title (count 4); breach of the implied covenant of good faith and fair dealing (count 5);
and violation of Business and Professions Code section 17200 (count 6).
       Plainly, plaintiff was trying to fit the allegations of her complaint into the theories
that were then pending before the Supreme Court, and that were decided during the
pendency of this appeal in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th
919 (Yvanova). The trial court sustained defendants’ demurrer to the first amended
complaint without leave to amend before Yvanova was decided. We requested and have
considered supplemental briefing from the parties concerning the effect of Yvanova on
this appeal. However, we find it is not necessary to construe the reach of Yvanova in
resolving this appeal. Finding no abuse of discretion, we affirm the judgment.
                                      BACKGROUND
1.     The First Amended Complaint and Judicially Noticed Facts
       The following facts are taken from the first amended complaint and defendants’
request for judicial notice. In 1995, plaintiff purchased a home located on Grimes Place
in Encino. Ten years later, in 2005, she refinanced the property and obtained a $780,000
loan from Downey Savings and Loan Association (Downey) secured by a deed of trust.
The deed of trust identified Downey as the beneficiary and lender, and DSL Service
Company as trustee.
       Downey assigned its interest under the deed of trust to Deutsche Bank in July
2005. On July 10, 2009, defendants recorded a notice of default and election to sell


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under the 2005 deed of trust. The notice of default stated that plaintiff had defaulted on
her loan on September 1, 2008, and owed delinquent payments totaling $45,450.81.
       The assignment of the deed of trust and substitution of trustee were recorded on
January 7, 2010. Western Progressive, LLC was substituted as trustee for DSL Service
Company. The substitution was executed by Ocwen, acting as Deutsche Bank’s
“attorney-in-fact.” Western Progressive also recorded a notice of trustee sale on
January 7, 2010, setting a sale date of January 27, 2010. However, no trustee sale was
ever conducted.
       Between 2010 and 2012, plaintiff sought bankruptcy protection and also filed a
superior court action against these same defendants alleging wrongful conduct in the
origination of her loan. That lawsuit was dismissed, but the bankruptcy and earlier
lawsuit apparently delayed defendants’ efforts to foreclose on plaintiff’s home.
       Between January 2013 and October 2013, defendants scheduled several trustee
sales of the property while plaintiff “was working with defendant to modify her loan.”
Ocwen approved a loan modification on August 8, 2013. But plaintiff could not afford
this modification. In September 2013, plaintiff “consistently reached out to Ocwen
representatives in order to receive mortgage assistance.”
       Sometime before October 14, 2013, defendants scheduled a trustee sale of the
property for later that month. According to plaintiff, the parties were still negotiating a
loan modification at the time. Plaintiff continued to communicate with Ocwen
representatives in an effort to avoid foreclosure.
       Plaintiff received an email from Ocwen’s Office of the Consumer Ombudsman in
mid-October 2013, acknowledging that Ocwen had “communicated . . . offers” to
plaintiff, and stating that “Ocwen will not continue to postpone the foreclosure sale. . . .”
However, the trustee sale did not take place as scheduled.
       On November 19, 2013, plaintiff again asked Ocwen for a loan modification. She
was offered another loan modification in December 2013 but could not afford this
modification either. On December 11, 2013, Ocwen informed plaintiff that this was its
final modification offer, and that the offer would only be reviewed if there was a material


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change in plaintiff’s income. Plaintiff informed defendant that her estranged husband
agreed to provide her with $1,000 per month, and that she wished to have her request for
a modification reconsidered based on this change in her income.
       In early January 2014, plaintiff rejected Ocwen’s December 2013 “final” loan
modification offer and submitted a “formal settlement demand and a complete first lien
loan modification application” to Ocwen. On January 13, 2014, plaintiff submitted “a
contributor form” in addition to proof of deposit of the funds (presumably from her
husband). On February 4, Ocwen requested two consecutive paystubs, from the last
90 days. Plaintiff provided them that same day. On February 20, Ocwen requested an
additional paystub, which plaintiff submitted five days later.
       During this time, Ocwen scheduled weekly trustee sales which were postponed on
a weekly basis. On February 26, 2014, plaintiff contacted defendant and learned that the
trustee sale scheduled for the next day had been postponed until March 6, 2014. On
March 5, 2014, defendants informed plaintiff that the March 6 sale had been cancelled,
that her account was put on “hold,” and there were no future sale dates scheduled.
2.     The Demurrer
       Defendants demurred to the complaint, reasoning that plaintiff lacked standing to
challenge the securitization of the deed of trust, that plaintiff had been offered loan
modifications in compliance with HOBR which she rejected, and that plaintiff failed to
allege tender to support a quiet title action.
       In opposition, plaintiff argued that HOBR confers standing on borrowers to
challenge the securitization process, and that it is the foreclosing entity’s burden to
demonstrate its authority to foreclose. Plaintiff also contended that the first amended
complaint could be amended to allege that defendants recorded a notice of trustee’s sale
in February 2013 while they were considering her request for a loan modification, in
violation of Civil Code section 2923.6. Plaintiff also argued that tender was not required.
       The trial court sustained the demurrer in its entirety, and this action was dismissed
on July 16, 2014. This timely appeal followed.



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                                        DISCUSSION
       A demurrer tests the legal sufficiency of the complaint. We review the complaint
de novo to determine whether it alleges facts sufficient to state a cause of action. For
purposes of review, we accept as true all material facts alleged in the complaint, but not
contentions, deductions or conclusions of fact or law. We also consider matters that may
be judicially noticed.1 (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) When a demurrer is
sustained without leave to amend, as it was here, “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.” (Ibid.)
       “The plaintiff bears the burden of proving there is a reasonable possibility of
amendment. . . . [¶] To satisfy that burden on appeal, a plaintiff ‘must show in what
manner he can amend his complaint and how that amendment will change the legal effect
of his pleading.’ . . . The plaintiff must clearly and specifically set forth the ‘applicable
substantive law’ . . . and the legal basis for amendment, i.e., the elements of the cause of
action and authority for it. Further, the plaintiff must set forth factual allegations that
sufficiently state all required elements of that cause of action. . . . Allegations must be
factual and specific, not vague or conclusionary. . . . [¶] The burden of showing that a
reasonable possibility exists that amendment can cure the defects remains with the
plaintiff; neither the trial court nor this court will rewrite a complaint. . . . Where the
appellant offers no allegations to support the possibility of amendment and no legal
authority showing the viability of new causes of action, there is no basis for finding the
trial court abused its discretion when it sustained the demurrer without leave to
amend. . . .” (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43-
44, citations omitted.)



1      Plaintiff takes no issue with defendants’ request for judicial notice on appeal.



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       A.      Causes of action related to securitization of the deed of trust
       Plaintiff’s first cause of action for violation of Civil Code section 2924,
subdivision (a)(3) and (6),2 and fourth cause of action for quiet title, are based on the
premise that defendants lacked authority to initiate a foreclosure sale on the theory that
they do not have a beneficial interest in the deed of trust. Plaintiff posits that she may
bring a preemptive lawsuit to challenge defendants’ authority to initiate a nonjudicial
foreclosure. The operative complaint alleges that plaintiff’s note was assigned to a
mortgage loan trust but the deed of trust securing her loan was not transferred into the
trust until after the trust’s closing date. The complaint also alleges “defendants have not
provided any documentation that establishes the trust was properly formed and is still in
existence.” Plaintiff has not alleged any details about the securitized trust; she has not
alleged what laws control the trust, when it was purportedly created or closed, or any
other salient facts.
       In Yvanova, the California Supreme Court found that a borrower has standing to
bring a postforeclosure action for wrongful foreclosure where an alleged defect in the
assignment renders the assignment void rather than merely voidable. (Yvanova, supra, 62
Cal.4th at pp. 934-935, 942-943.) We express no view about whether Yvanova applies to
plaintiff’s preforeclosure claims, because regardless of the reach of Yvanova, plaintiff has
not stated a viable cause of action. Plaintiff has alleged the legal conclusion that the
assignment of her deed of trust was “void,” but has provided absolutely no facts
supporting her conclusion that the assignment is void. Allegations that are legal

2      Civil Code section 2924, subdivision (a)(3) provides that: “the mortgagee, trustee,
or other person authorized to take the sale shall give notice of sale . . . .”
Subdivision (a)(6) provides that: “No entity shall record or cause a notice of default to be
recorded or otherwise initiate the foreclosure process unless it is the holder of the
beneficial interest under the mortgage or deed of trust, the original trustee or the
substituted trustee under the deed of trust, or the designated agent of the holder of the
beneficial interest.” These provisions took effect on January 1, 2013. (See Stats. 2012,
ch. 86, § 10.) Plaintiff’s claims are based on trustee sales which were scheduled to occur
in 2013 and 2014.



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conclusions must be disregarded and are insufficient to state a claim. (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal.4th 962, 967.)
       The sole basis for plaintiff’s claim that the assignment of her deed of trust is void
is the legally untenable allegation that her note was transferred on a timely basis into the
investment trust, but the deed of trust was not transferred before the closing date for
formation of the investment trust. Under California law, a note secured by a deed of trust
cannot be assigned separately from the deed of trust. “The deed of trust . . . is inseparable
from the note it secures, and follows it even without a separate assignment.” (Yvanova,
supra, 62 Cal.4th at p. 927, citing Civ. Code, § 2936 and Cockerell v. Title Ins. & Trust
Co. (1954) 42 Cal.2d 284, 291; see also Domarad v. Fisher & Burke, Inc. (1969) 270
Cal.App.2d 543, 553 [“a deed of trust is a mere incident of the debt it secures and that an
assignment of the debt ‘carries with it the security.’ ”].)
       Plaintiff does not contend she can allege any other facts to support a theory that
the assignment of her note and deed of trust was void. In the absence of any salient facts
pointing to a void assignment, plaintiff’s causes of action necessarily fail. We need not
consider plaintiff’s remaining arguments that she has standing to bring this action under
the HOBR, under the terms of the deed of trust, or under the Constitution, as all of these
theories of standing rely on plaintiff’s inadequately alleged securitization theory.
       B.     Dual tracking claim
       Plaintiff’s second cause of action contends that defendants violated Civil Code
section 2923.6, subdivision (c) by pursuing a trustee sale while the parties were
negotiating a modification of plaintiff’s loan. Section 2923.6, subdivision (c) provides
that “[i]f 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” certain conditions are satisfied.


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       This cause of action fails because plaintiff has not alleged, and does not seek leave
to amend to allege that at any time after she submitted a complete application for a first
lien loan modification, defendants recorded a notice of default or notice of sale (and there
has never been a trustee’s sale). Civil Code section 2923.6, subdivision (c) only forbids
the recording of a notice of default or notice of sale, or conducting a trustee’s sale, while
a borrower’s “complete application for a first lien loan modification” is pending.
However, nowhere in her first amended complaint, opposition to the demurrer, or her
appellate brief does plaintiff offer any facts specifying if and when she submitted “a
complete application for a first lien loan modification,” except only her allegation that
she submitted such an application in January 2014. The complaint does not allege that
defendants recorded a notice of default or notice of sale any time after January 2014.
       The complaint alleges that plaintiff was offered a modification in August 2013 that
she did not accept, and other modifications in October and December 2013 that she also
did not accept. The only time plaintiff alleged she submitted a complete application for a
loan modification is on January 3, 2014, when she submitted a “formal settlement
demand and a complete first lien loan modification application” to Ocwen. While the
modification was being considered, Ocwen scheduled weekly trustee sales which it
postponed on a weekly basis. Ultimately, the scheduled sale was cancelled, plaintiff’s
account was put on “hold,” and no future sale dates were scheduled.
       Plaintiff seeks leave to amend to add allegations that defendants recorded a notice
of trustee sale in February 2013, and that same month, she was under review by
defendants for a loan modification. Plaintiff does not seek leave to amend that she had
submitted a complete loan application to defendants in or before February 2013. Plaintiff
does not seek leave to amend that defendant ever recorded any notice of trustee sale after
February 2013. Plaintiff only generally alleges that trustee sales were scheduled in
February and March 2014, and then cancelled. Civil Code section 2923.6,
subdivision (c) does not forbid the scheduling of trustee sales following the recording of a
notice of trustee sale. Following the recording of a notice of sale, the actual sale date can
be postponed a number of times without recording a new notice. (See, e.g., §§ 2924,


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2924f, 2924g.) Therefore, plaintiff has failed to state a claim for violation of
section 2923.6.
       C.     Remaining claims
       Plaintiff has provided no discussion of her claims for violation of Civil Code
section 2923.5 or breach of the implied covenant of good faith and fair dealing in her
appellate brief. Therefore, we conclude that she has abandoned these causes of action on
appeal, and that any claim of error has been waived. (Jones v. Superior Court (1994) 26
Cal.App.4th 92, 99; see Yee v. Cheung (2013) 220 Cal.App.4th 184, 193, fn. 6 [failure to
address all causes of action subject to demurrer forfeits any claim of error concerning
causes of action not raised on appeal].)
       Lastly, to the extent that plaintiff’s sixth cause of action for violation of Business
and Professions Code section 17200 is based on plaintiff’s deficiently alleged claims,
such Civil Code section 2923.6, subdivision (c), it also fails. (See Price v. Starbucks
Corp. (2011) 192 Cal.App.4th 1136, 1147.)

                                      DISPOSITION
       The judgment is affirmed. Respondents are to recover their costs on appeal.


                                                          GRIMES, J.


       WE CONCUR:
                     BIGELOW, P. J.




                     FLIER, J.




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