Filed 6/12/14 Salcedo v. Bank of America CA4/3




                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.


              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE


HORACIO SALCEDO et al.,

     Plaintiffs and Appellants,                                        G048373

         v.                                                            (Super. Ct. No. 30-2012-00574015)

BANK OF AMERICA, N.A.,                                                 OPINION

     Defendant and Respondent.



                   Appeal from a judgment of the Superior Court of Orange County, Robert J.
Moss, Judge. Affirmed.
                   Law Offices of John Thomas Dzialo and John T. Dzialo for Plaintiffs and
Appellants.
                   Reed Smith, David S. Reidy, Matthew J. Brady, John Cooper Green and
Michael Gerst for Defendant and Respondent.


                                          *                  *                  *
              After plaintiffs and appellants, Horacio and Isabel Salcedo, defaulted on a
mortgage loan, the predecessor in interest of defendant and respondent, Bank of America,
N.A., foreclosed and then filed an unlawful detainer action. Plaintiffs sued defendant for
fraud and quiet title. By the time plaintiffs filed the second amended complaint (SAC),
the only cause of action against defendant was for quiet title. The court sustained
defendant’s demurrer to the SAC without leave to amend on the ground that, because the
property had been sold and plaintiffs had no interest in it, a quiet title action did not lie.
Judgment was entered against plaintiffs.
              Plaintiffs appeal, claiming the trust deed securing the loan was void
because the underlying note was forged. Thus the trustee’s deed is void because title
never transferred to defendant. Plaintiffs also seek leave to amend.
              We conclude the demurrer was properly sustained because plaintiffs failed
to plead tender or an adequate excuse from tender and there is no basis to grant leave to
amend. Thus, we affirm.
                        FACTS AND PROCEDURAL HISTORY
              According to the SAC, in 2007 plaintiffs were renting a residence
(Property) from Graciela Cabrera. Graciela’s husband, Ausencio, and his son Michael
were managers of Coastal Real Estate and Loan Center, owned by Joan Marie Lowrance.
Ausencio allegedly induced plaintiffs to purchase the Property from Graciela. Lowrance
brokered plaintiffs’ $532,000 loan from BSM Financial (BSM). Plaintiffs allege all of
these parties, plus Ultimate Escrow Service and Omar Cabrera, who notarized
documents, all named defendants, conspired to defraud them.
              Plaintiffs plead they signed a purchase agreement, loan application and
fixed rate note. The loan closed in June 2007. BSM sold the loan to Countrywide Bank,
FSB, predecessor in interest to defendant. In December 2007 plaintiffs received their
first payment coupon from Countrywide and, “[t]o their dismay,” it showed an adjustable
rate loan. On contacting Countrywide, plaintiffs learned it had purchased a loan

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supported by a different loan application, an adjustable rate note (Note), and a truth in
lending disclosure. These documents were allegedly forged by the coconspirator
defendants.
              In February 2008, on the advice of Ausencio and Michael, plaintiffs
decided to stop making any payments and attempt a short sale, by which plaintiffs would
be able to repurchase the Property at a substantially lower price. Plaintiffs allegedly did
not know this “was a fraud in itself.”
              After a notice of default and a notice of sale were recorded, the foreclosure
sale occurred in January 2009. In April an unlawful detainer action was filed.
              In March 2009 plaintiffs filed their original action, which was removed to
the federal court, and subsequently voluntarily dismissed without a request for remand.
In June 2012, plaintiffs filed the initial complaint in this action, for fraudulent foreclosure
and quiet title against defendant. At the same time plaintiffs filed an ex parte application
for a temporary restraining order to stay their eviction from the Property. Defendant
based its opposition on several grounds, including that the fraud claim was barred by the
statute of limitations, plaintiffs’ failure to tender payment, and that, balancing the
hardships, defendant should prevail. The court denied the preliminary injunction, at least
in part on the ground the statute of limitations barred the fraud cause of action.
              Plaintiffs filed a first amended complaint against defendant for fraud, and
the coconspirators for fraud and quiet title. Defendant demurred on several grounds,
including lack of tender and the statute of limitations. Plaintiffs filed a “non-opposition”
(capitalization omitted) to the demurrer, and requested leave to amend the complaint,
which the court granted.
              In the SAC, where plaintiffs sue defendant for quiet title only, they pleaded
defendant’s trustee’s deed was void ab initio because the Note from plaintiffs to BMS
was forged. Thus, they claimed, plaintiffs’ interest in the Property is void.



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Plaintiffs further alleged that, as a result of the signed Note, they were not required to
tender payment.
               Defendant again demurred, arguing the SAC failed to allege facts showing
how plaintiffs can set aside defendant’s interest in the Property even if the Note from
BSM to Countrywide was void, how the Note and trust deed were void ab initio, or how
defendant had knowledge of these facts. Defendant further asserted a quiet title cause of
action alone is not a sufficient basis on which to set aside a foreclosure sale; there must
be some underlying equitable claim. Finally, plaintiffs had not alleged tender of the
amount due.
               In sustaining the demurrer without leave to amend, the court ruled that
because the Property had been sold, plaintiffs had no interest in it on which to base a
quiet title claim.
                                       DISCUSSION
1. Alleged Void Trustee’s Deed
               In response to the trial court’s basis for sustaining the demurrer — that they
could not quiet title because they had no interest in the Property — plaintiffs argue they
retained title despite the foreclosure sale. They base this on their claim the underlying
trust deed (Trust Deed)1 is void because it secured the alleged forged Note. As a result,
they continue, if underlying Trust Deed is void, the trustee’s deed is also void because
valid title could not derive from a void trust deed. (Wutzke v. Bill Reid Painting Service,

       1  Plaintiffs do not specifically allege they signed a trust deed. They plead only
that they signed “loan papers.” But they impliedly admit their signature because they do
not allege the absence of a trust deed. And, in their opposition to the demurrer to the
SAC they admit signing the Trust Deed.
        Moreover, one of the documents included in defendant’s request for judicial notice
filed with its opposition to the OSC re preliminary injunction was a Trust Deed signed by
plaintiffs. Although the record does not contain a ruling on the request, presumably it
was granted because it was included in the record and plaintiffs do not object to it. This
Trust Deed states it secures a note with an adjustable rate rider. Nor do plaintiffs claim
the Trust Deed was void. The only alleged void document was the Note.

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Inc. (1984) 151 Cal.App.3d 36, 43-44 [“Since a trust deed obtained by means of forgery
is void, it follows that any claim of title flowing from such a deed is void. This
elementary legal principle makes clear the validity of the title of a subsequent purchaser
or encumbrancer depends upon the validity of his grantor’s title”].)
              Plaintiffs provide no authority to support their argument that because the
Note is allegedly forged, the Trust Deed, which they admit signing, is as well. They do
not claim there is fraud in the execution of the Trust Deed. But regardless of whether
their theory is correct, plaintiffs’ cause of action is nevertheless defective because they
did not plead tender or a valid excuse from tender.
2. Tender
              In addition to the other elements of a quiet title cause of action, a plaintiff
must allege tender of any arrearages or an excuse from tender. (Shimpones v. Stickney
(1934) 219 Cal. 637, 649; Mix v. Sodd (1981) 126 Cal.App.3d 386, 390; Monreal v.
GMAC Mortgage, LLC (S.D.Cal. 2013) 948 F.Supp.2d 1069, 1079.) Plaintiffs have not
alleged tender but have pleaded none is required because the Trust Deed and Note were
void ab initio. Plaintiffs did not discuss tender or excuse in their brief and thus cited no
authority as to why the fact the Note and Trust Deed are void eliminates the tender
requirement. We are not persuaded the alleged invalidity of the documents excuses
tender.
              Whether or not the adjustable rate Note is fraudulent, plaintiffs allege they
executed a fixed rate note, thus admitting they borrowed the principal amount of
$532,000, and they owe interest of 5.125 percent as calculated under that note. They
have not tendered even the amount they admit they borrowed. (See Rupisan v. JP
Morgan Chase Bank, NA (E.D.Cal. Aug. 29, 2012, No. 1:12-CV-0327 AWI GSA) 2012
WL 3764022, *10 [causes of action for quiet title and wrongful foreclosure must include
allegation plaintiff can “tender payment of the loan proceeds (less fees, interest, etc.)”].)



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              By their own allegation, plaintiffs intentionally defaulted. The purchase of
the Property closed in June 2007 and plaintiffs’ payments were to begin in August of that
year. The SAC does not state whether plaintiffs made any of those payments. Plaintiffs
received their first payment coupon from Countrywide in December 2007 after it had
purchased the Loan, and in February 2008, plaintiffs stopped making payments, if any
had been made. They do not allege they ceased payment because they could not afford to
pay, but rather, since the value of the Property had decreased, they would be able to buy
back their home for a much smaller amount than they owed.
              In this action plaintiffs are seeking equity. (Nwosu v. Uba (2004) 122
Cal.App.4th 1229, 1241[quiet title is an action in equity].) They have admitted defendant
was not involved in the alleged fraud. Plaintiffs have not explained how it is equitable
for them to regain title to the Property without any payment obligation. They are shifting
the loss from themselves to defendant, an innocent third party. And defendant actually
paid out money for the Property.
              From the documents attached to the SAC and the SAC itself, it is unclear
what plaintiffs might have paid. The purchase agreement attached to the SAC shows
they personally did not make a down payment. So when plaintiffs allege they will lose
their home and investment, the complaint rings hollow. Plaintiffs have not cited any
authority, and at oral argument admitted they knew of none, or alleged any facts showing
why tender should be excused. (Stebley v. Litton (2011) 202 Cal.App.4th 522, 526
[“Allowing plaintiffs to recoup the property without full tender would give them an
inequitable windfall, allowing them to evade their lawful debt”].)
3. Leave to Amend
              While at the same time arguing there is no need for them to amend,
plaintiffs also seek leave to amend. Plaintiffs cite Myvett v. Litton Loan Servicing, LP
(N.D.Cal. Mar. 3, 2010, No. CV-08-5797 MMC) 2010 WL 761317, which holds where a
foreclosure sale has already occurred a plaintiff must first set aside the sale before

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seeking to quiet title. (Id. at p. *6.) Plaintiffs dispute the necessity of doing so here
because, they repeat, title never passed.
              If it were a requirement, they claim the SAC already alleges the elements of
a cause of action to set aside the sale: 1) the mortgagee caused a fraudulent or illegal
sale under the power of sale in the trust deed; 2) plaintiffs were prejudiced; and 3)
plaintiffs tendered the amount due under the note or were excused from tendering. (Lona
v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104.) Plaintiffs claim defendant caused the
sale, which was fraudulent because of the forged Note. Further, they were prejudiced
because they lost the Property and their investment in it.
              Noticeably, as discussed above, plaintiffs do not point to any allegation of
tender. They argue in a most general way that if they were required to amend they could
do so. However they do not suggest what or how they could amend to plead tender or
excuse. And their claim of excuse of tender, as noted above, is not sufficient. Plaintiffs
have already had three opportunities to plead a viable cause of action.2 There is no basis
to allow them another chance to do so.
              Because plaintiffs have not pleaded tender or excuse from tender the SAC
is fatally flawed. On that basis we need not discuss any of defendant’s other arguments
in support of the judgment.




       2 In sustaining the demurrer without leave to amend the trial court specifically
noted plaintiffs had already been given an opportunity to amend in connection with the
previous demurrer.

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                                  DISPOSITION
            The judgment is affirmed. Defendant is entitled to costs on appeal.




                                              THOMPSON, J.

WE CONCUR:



O’LEARY, P. J.



IKOLA, J.




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