Filed 2/6/15
                           CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                     DIVISION FOUR


BHIKA RAM et al,
        Plaintiffs and Appellants,
                                                  A139055
v.
                                                  (Contra Costa County
ONEWEST BANK, FSB et al,
                                                  Super. Ct. No. MSC12-01755)
        Defendants and Respondents.


                                           I.
                                     INTRODUCTION
        Bhika Ram and his spouse, Asharfun Nisha Hafiz, purchased a home subject to a
deed of trust in 2005. After they defaulted on their home loan, nonjudicial foreclosure
proceedings were initiated, and the beneficiary of the deed of trust, OneWest Bank, FSB
(OneWest), purchased the property at the foreclosure sale. Ram and Hafiz filed this
action against OneWest and other entities, alleging that the sale was void due to
irregularities in the foreclosure proceedings. OneWest filed a demurrer, which was
sustained by the trial court with leave to amend some claims. Ram and Hafiz did not
amend their complaint, and the trial court dismissed the case against OneWest.
        On appeal, Ram and Hafiz challenge this dismissal, principally claiming that the
foreclosure sale was void because the predicate notice of default was executed and
recorded by an entity claiming to be the trustee of OneWest several weeks before
OneWest signed and recorded documents formally designating that entity as such.
        We conclude that there was no statutory defect in the manner or timing of the
trustee substitution, but even if so, the entity was otherwise authorized to act for OneWest




                                             1
in filing the notice of default because it was alleged that the entity was at all times acting
as the agent of OneWest.
         Alternatively, we conclude that any alleged defect or omission in the
representation of OneWest at the time the notice of default was filed was not substantial
within the meaning of the law of foreclosure, making the subsequent sale at most
voidable, and not void. Because the sale was, at worst, only voidable, the borrowers in
default were required to allege tender and prejudice, which they did not do.
         Accordingly, the trial court was correct in sustaining OneWest’s demurrer, and in
subsequently dismissing the action.

                                       II.
                             FACTUAL AND PROCEDURAL
                                  BACKGROUNDS
         A.    The Loan and the Foreclosure Proceedings
         In 2005, Ram and Hafiz obtained a loan for $396,200 to purchase a home in
Pleasant Hill. They executed and recorded a deed of trust listing the lender and
beneficiary as First Federal Bank of California (First Federal) and the trustee as Seaside
Financial Corporation. The loan carried a variable interest rate and had a term of 40
years.
         Thereafter, First Federal was ordered closed by the federal government, and the
Federal Deposit Insurance Corporation (FDIC) was appointed receiver. At the end of
March 2010, the FDIC assigned the loan to OneWest and a deed of trust confirming that
assignment was recorded in Contra Costa County on April 23, 2010.
         On September 7, 2010, a notice of default was executed and recorded by Aztec
Foreclosure Corporation (Aztec) “[a]s [t]rustee.”1 The notice stated that, as of that time,
Ram and Hafiz were almost $16,000 in default on their mortgage payments due under the
loan. The borrowers were told in this notice that foreclosure could be stopped by
payment of the arrearages. Also, it stated that “[u]pon your written request, the

1
   The notice of default was signed by LSI Title Company “[a]s [a]gent” of Aztec, “[a]s
[t]rustee.”


                                              2
beneficiary or mortgagee will give you a written itemization of the entire amount you
must pay. You may not have to pay the entire unpaid portion of your account, even
though full payment was demanded, but you must pay all amounts in default at the time
payment is made. However, you and your beneficiary and mortgagee may mutually
agree in writing prior to the time the notice of sale is posted . . . to, among other things,
(1) provide additional time in which to cure the default by transfer of the property or
otherwise; or (2) establish a schedule of payments in order to cure your default . . . .”
       The notice also indicated that contact should be made with OneWest in care of
Aztec. An address and two telephone numbers were provided. It also was accompanied
by the declaration of a person with INDYMAC Mortgage Servicing indicating that due
diligence had been exercised in trying to contact Ram and Hafiz to discuss their financial
situation and to explore options to avoid foreclosure and that more than 30 days had
elapsed since those efforts had been completed, in conformance with California law.
       OneWest did not formally execute a substitution naming Aztec as the trustee until
September 24, 2010, several weeks after it was identified as trustee on the notice of
default. This substitution was recorded on December 9, 2010, the same day that Aztec
recorded a notice of trustee’s sale. The foreclosure sale was postponed until April 18,
2011, and then again postponed until June 6, 2011, when the property was finally sold to
OneWest for an amount far less than what was then owed by Ram and Hafiz on the loan.
       B.     The Procedural Background
       The operative complaint is the first amended complaint (FAC) which states 13
causes of action against OneWest, Aztec, and First Federal: wrongful foreclosure,
intentional and negligent fraud, breach of the implied covenant of good faith and fair
dealing, intentional infliction of emotional distress, negligence, unfair business practices,
cancellation of deed upon sale, quiet title, declaratory relief, wrongful eviction, willful
lockout, and injunctive relief. In the FAC, Ram and Hafiz alleged that the foreclosure
sale was void because Aztec had not been substituted as trustee at the time it recorded the
notice of default and therefore it lacked the authority to initiate the foreclosure
proceedings. The FAC does not allege that Ram and Hafiz tendered, or were ready,


                                               3
willing, and able to tender, the amount owed on the loan at any time between the time of
the notice of default was recorded in early September and the foreclosure and sale that
took place nine months later on June 6, 2011.
       In sustaining One West’s demurrer, the trial court reasoned that Ram and Hafiz
failed to state a claim for wrongful foreclosure based on the timing of Aztec’s
substitution as trustee “because a notice of default can be recorded before a notice of
substitution of trustee.” The court further held that where “the alleged wrongful
foreclosure is the result of a defect in the required notice, the transaction is voidable, not
void” and that in any further amendment to the complaint Ram and Hafiz would have to
“allege sufficient facts of tender.” The court also sustained the demurrer to the causes of
action for intentional and negligent fraud, breach of the implied covenant of good faith
and fair dealing, and negligence with leave to amend. It determined that the causes of
action for unfair business practices, cancellation of deed upon sale, quiet title, and
declaratory relief were “predicated on the wrongful foreclosure and fraud causes of action
to which demurrers ha[d] been sustained with leave to amend,” and it therefore sustained
the demurrer with leave to amend as to those causes of action as well. Finally, the court
sustained the demurrer without leave to amend as to the remaining claims.
       After Ram and Hafiz failed to amend the complaint, the trial court granted
OneWest’s application for an order dismissing the action against OneWest with
prejudice.2


2
  The opening brief filed by Ram and Hafiz is limited to challenging the court’s
sustaining of OneWest’s demurrer to the causes of action based on alleged irregularities
with the notice of default and substitution of trustee. Ram and Hafiz set out these causes
of action as wrongful foreclosure, quiet title, declaratory relief, cancellation of
instrument, and unfair business practices. Accordingly, we deem the other causes of
action to be abandoned, and we will not address them further. (Bagley v. International
Harvester Co. (1949) 91 Cal.App.2d 922, 926 [where demurrer is sustained without leave
to amend, appellant’s failure to advance arguments in connection with one of several
causes of action purportedly stated in complaint deemed an abandonment of such cause
of action]; see also In re Sade C. (1996) 13 Cal.4th 952, 994 [issues not raised in an
appellant’s brief are deemed waived or abandoned].)


                                               4
                                           III.
                                       DISCUSSION
       A.     The Order of Dismissal Against OneWest Is an Appealable
              Judgment
       The order dismissing the action against OneWest did not dismiss the action against
Aztec or First Federal. Ram and Hafiz argue that this order is nevertheless an appealable
final judgment. Although OneWest does not contend otherwise, “we are duty bound to
consider” the question of appealability because it implicates our jurisdiction. (Olson v.
Cory (1983) 35 Cal.3d 390, 398.) “Under the ‘one final judgment’ rule, an order or
judgment that fails to dispose of all claims between the litigants is not appealable under
Code of Civil Procedure section 904.1, subdivision (a).” (Nguyen v. Calhoun (2003)
105 Cal.App.4th 428, 436.) This rule does not apply, however, “ ‘when the case involves
multiple parties and a judgment is entered which leaves no issue to be determined as to
one party. [Citations.]’ ” (Id. at p. 437.) Accordingly, the “one final judgment” rule
does not bar this appeal.
       B.     Standard of Review
       We review de novo a dismissal after a demurrer is sustained. (Lazar v. Hertz
Corp. (1999) 69 Cal.App.4th 1494, 1501.) Regardless of the label given to a cause of
action, “[o]ur task is to determine whether the pleaded facts state a cause of action on any
available legal theory.” (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908.) “We give
the complaint a reasonable interpretation, reading it as a whole and its parts in their
context. [Citation.] Further, we treat the demurrer as admitting all material facts
properly pleaded, but do not assume the truth of contentions, deductions[,] or conclusions
of law.” (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) “[W]e are not
bound by the trial court’s analysis” of questions of law and “independently construe
statutory law.” (City of Morgan Hill v. Bay Area Air Quality Management Dist. (2004)
118 Cal.App.4th 861, 870.)
       In addition, when a demurrer is sustained with leave to amend, but the plaintiff
elects not to amend, it is presumed on appeal that the complaint states the strongest case



                                              5
possible. (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1091.) Thus, a judgment of
dismissal following the failure to amend must be affirmed if the unamended complaint is
objectionable on any ground raised in the demurrer. (Soliz v. Williams (1999)
74 Cal.App.4th 577, 585.)
        C.      Statutory Framework Governing Nonjudicial Foreclosure Sales
        We begin with a general overview of the applicable law. A nonjudicial
foreclosure sale is a “quick, inexpensive[,] and efficient remedy against a defaulting
debtor/trustor.” (Moeller v. Lien (1994) 25 Cal.App.4th 822, 830.) To preserve this
remedy for beneficiaries while protecting the rights of borrowers, “Civil Code sections
2924 through 2924k provide a comprehensive framework for the regulation of a
nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.”
(Ibid.) Under a deed of trust, the trustee holds title and has the authority to sell the
property in the event of a default on the mortgage. (See Haynes v. EMC Mortgage Corp.
(2012) 205 Cal.App.4th 329, 333-336.) To initiate the foreclosure process, “[t]he trustee,
mortgagee, or beneficiary, or any of their authorized agents” must first record a notice of
default. (Civ. Code,3 § 2924, subd. (a)(1).) The notice of default must identify the deed
of trust “by stating the name or names of the trustor or trustors” and provide a “statement
that a breach of the obligation for which the mortgage or transfer in trust is security has
occurred” and a “statement setting forth the nature of each breach actually known to the
beneficiary and of his or her election to sell or cause to be sold the property to satisfy
[the] obligation . . . that is in default.” (§ 2924, subd. (a)(1)(A)-(C).) After three months,
a notice of sale must then be published, posted, mailed, and recorded in accordance with
the time limits prescribed by the statute. (§§ 2924, subd. (a)(3), 2924f.)
        The “traditional method” to challenge a nonjudicial foreclosure sale “is a suit in
equity . . . to have the sale set aside and to have the title restored.” (Lona v. Citibank,
N.A. (2011) 202 Cal.App.4th 89, 103 (Lona).) Three elements must be proven: “(1) the
trustee . . . caused an illegal, fraudulent, or willfully oppressive sale of real property

3
    All further statutory references are to the Civil Code, unless otherwise indicated.


                                               6
pursuant to a power of sale in a . . . deed of trust; (2) the party attacking the sale suffered
prejudice or harm; and (3) the trustor . . . tenders the amount of the secured indebtedness
or was excused from tendering.” (West v. JPMorgan Chase Bank, N.A. (2013)
214 Cal.App.4th 780, 800 (West).)
       The first element—wrongfulness—can be satisfied by a variety of procedural
defects, such as noncompliance with the requirements for notice or the trustee’s lack of
authority to foreclose. (Lona, supra, 202 Cal.App.4th at pp. 104-105.) The second
element—prejudice—is met where an irregularity in the proceeding adversely affects the
trustors’ ability to protect their interest in the property. “Prejudice,” however, “is not
presumed from ‘mere irregularities’ in the process.” (Fontenot v. Wells Fargo Bank, N.A.
(2011) 198 Cal.App.4th 256, 272 [slight defects in timing of notice of sale and in
statement of date of default were not prejudicial].) The third element—tender—requires
the trustor to make “an offer to pay the full amount of the debt for which the property was
security.” (Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 578.)
“Because the action is in equity, a defaulted borrower who seeks to set aside a trustee’s
sale is required to do equity before the court will exercise its equitable powers.” (Lona,
at p. 112.)
       But trustors attacking a void deed are “not required to meet any of the burdens
imposed when, as a matter of equity, a party wishes to set aside a voidable deed.”
(Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 878 (Dimock).) A sale is not
rendered void merely because of minor or technical defects. (See Knapp v. Doherty
(2004) 123 Cal.App.4th 76, 95-99.) A sale is rendered void, though, when the defects are
substantial, such as when there has been a failure to give notice of sale to the trustor or to
specify the correct default in the notice of default. (Anderson v. Heart Federal Sav. &
Loan Assn. (1989) 208 Cal.App.3d 202, 211-212; Little v. CFS Service Corp. (1987)
188 Cal.App.3d 1354, 1357-1359, 1362.) Similarly, a sale is rendered void when the
foreclosure sale is conducted by an entity that lacks authority to do so. (Pro Value
Properties, Inc. v. Quality Loan Service Corp. (2009) 170 Cal.App.4th 579, 581, 583;
Dimock, at pp. 874-875; but see Jones v. First American Title Ins. Co. (2003)


                                               7
107 Cal.App.4th 381, 388-390 [mutual mistake regarding status of prior trustee after
recorded substitution justified reformation of otherwise void sale].)
       Former Chief Justice Malcolm Lucas wrestled with the somewhat elusive
distinction between “void” and “voidable” nonjudicial foreclosure sales in Little v. CFS
Service Corp., supra, 188 Cal.App.3d 1354, where he explained: “ ‘The word “void,” in
its strictest sense, means that which has no force and effect, is without legal efficacy, is
incapable of being enforced by law, or has no legal or binding force, but frequently the
word is used and construed as having the more liberal meaning of “voidable.” ’ (Black’s
Law Dict. (5th ed. 1979) p. 1411, col. 2.) ‘Voidable’ is defined as ‘[t]hat which may be
avoided, or declared void; not absolutely void, or void in itself. . . .’ ” (Id. at p. 1358.)
       In the end, the importance of any distinction between a “void” or “voidable”
nonjudicial foreclosure sale is simply whether the borrower, who is in default, must
allege and prove a prerequisite tender of the amount due under the deed of trust and
otherwise to show prejudice resulting from the defect, omission, or failure, before the sale
will be set aside. In deciding whether to require a showing of tender and prejudice,
courts appear to focus on the nature and severity of the defect, omission or failure and its
practical effect on the foreclosure process.
       D.     Ram and Hafiz Have Failed To State a Claim for Wrongful
              Foreclosure
              1.      The Applicable Foreclosure Statutes Authorize the
                      Foreclosure Procedure Employed Here
       Ram and Hafiz assert that the trial court erred in sustaining the demurrer to their
wrongful foreclosure claim and in requiring them to amend their complaint to allege
tender of the amount of their secured debt because the foreclosure sale was void under
the statutes governing the nonjudicial foreclosure process. They argue the sale was void
because Aztec did not yet hold the title of “trustee” as claimed on the notice of default,
and was only formally named as trustee several weeks later, when OneWest executed a
substitution of trustee naming Aztec as the trustee. Ram and Hafiz claim the defective
notice irremediably “broke the chain of recorded title rendering all subsequent



                                               8
foreclosure proceedings, including the trustee’s sale, void and of no effect.” We
disagree.
       In the first instance, Ram and Hafiz have not made a convincing case that there
was any defect or omission in the default and foreclosure process relating to their
mortgaged property. We note that several statutory provisions contemplate that an entity
may be substituted as trustee even where substitution is not “recorded” or “effected” until
after the notice of default is recorded, so long as notice is given to the trustor/borrowers.
       First, section 2934a, subdivision (b) provides: “If the substitution is executed, but
not recorded, prior to or concurrently with the recording of the notice of default, the
beneficiary or beneficiaries or their authorized agents shall cause notice of the
substitution to be mailed prior to or concurrently with the recording thereof, in the
manner provided in Section 2924b, to all persons to whom a copy of the notice of default
would be required to be mailed by the provisions of Section 2924b. An affidavit shall be
attached to the substitution that notice has been given to those persons and in the manner
required by this subdivision.”
       Alternatively, subdivision (c) provides: “If the substitution is effected after a
notice of default has been recorded but prior to the recording of the notice of sale, the
beneficiary or beneficiaries or their authorized agents shall cause a copy of the
substitution to be mailed, prior to, or concurrently with, the recording thereof, in the
manner provided in Section 2924b, to the trustee then of record and to all persons to
whom a copy of the notice of default would be required to be mailed by the provisions of
Section 2924b. An affidavit shall be attached to the substitution that notice has been
given to those persons and in the manner required by this subdivision.” (Italics added.)
       Thus, the statutory process under which foreclosures may proceed in this state
contemplates both the circumstance where the substitution of trustee is executed but not
recorded until after the notice of default is recorded, and the circumstance here where the




                                              9
substitution is first “effected”4 after the notice of default is recorded. It is the second
circumstance contemplated by the statute that applies here. As OneWest complied with
the procedure authorized by the Legislature, the supposed defect of which Ram and Hafiz
complain cannot form the basis for rendering the ensuing trustee’s sale not just voidable,
but absolutely void.
              2.       Alternatively, Aztec Had Authority To Execute the Notice of
                       Default as OneWest’s Agent
       Ram and Hafiz ‘s argument that Aztec did not have authority to execute the notice
of default fails not only because Aztec was eventually substituted as trustee but also
because they affirmatively alleged that at all times, Aztec was acting as the agent of
OneWest. Section 2924 authorizes a notice of default to be recorded by “the trustee,
mortgagee, or beneficiary, or any of their authorized agents.” (§ 2924, subd. (a)(1),
italics added.) Section 2924 does not define what constitutes an “authorized agent,” but
elsewhere in the foreclosure statute a “person authorized to record the notice of default or
the notice of sale” is defined to include “an agent for the mortgagee or beneficiary, an
agent of the named trustee, any person designated in an executed substitution of trustee,
or an agent of that substituted trustee.” (§ 2924b, subd. (b).) In general terms, an agent
may be authorized to do any act the principal is empowered do. (§§ 2304, 2305.)
       Because it is presumed the nonjudicial foreclosure was properly conducted, Ram
and Hafiz had the burden to plead “affirmatively” facts showing Aztec lacked authority
to record the notice of default. (Fontenot, supra, 198 Cal.App.4th at p. 270.) We
paraphrase the recent holding in Rossberg v. Bank of America, N.A (2013)
219 Cal.App.4th 1481, to fit the facts of this case: “Accordingly, to state a claim based
on [Aztec’s] purported lack of authority to record the Notice of Default, [Ram and Hafiz]
had to allege not only that [Aztec] was not the trustee under the First Deed of Trust, but



       4
           The verb “effect” means: “1 : to cause to come into being [¶] 2 a : to bring
about . . . [¶] b : to put into operation.” (http://merriam-webster.com/dictionary/effect (as
of Feb. __, 2015).)


                                              10
also that [Aztec] was not the agent of the trustee or beneficiary. [Citations.]” (Id. at
pp. 1496-1497.)
         Nothing in the FAC or judicially noticed documents suggests that Aztec was not
authorized to act for OneWest, the beneficiary under the deed of trust. In fact, the FAC
specifically alleges that “at all relevant times herein mentioned, each of defendants sued
herein was the agent . . . of each of the remaining defendants and was at all times acting
within the purpose and scope of such agency and/or employment.”
         Ram and Hafiz cannot have it both ways. Their argument that Aztec was
unauthorized to issue the notice of default is undermined by their own assertion that
Aztec, at all times, was acting as the alleged agent of OneWest conferring undeniable
authority to record the notice of default. (See Rossberg v. Bank of America, N.A., supra,
219 Cal.App.4th at p. 1496 [regardless whether entity’s substitution as trustee was valid,
its recording of notice of default as “ ‘either the original trustee, the duly appointed
substituted trustee, or acting as agent for the trustee or beneficiary’ ” was valid (italics
omitted)]; Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 515-516
[entity properly executed notice of default “ ‘as agent for beneficiary,’ rather than as the
trustee” prior to its substitution as trustee]; West, supra, 214 Cal.App.4th at p. 801
[same].)
         Furthermore, the recorded documents in this case indicate that even if Aztec
lacked authority to sign the notice of default as trustee at the time it took this action,
Aztec’s authority was subsequently ratified by OneWest when it formally named Aztec
as trustee several weeks later. “ ‘Ratification is the voluntary election by a person to
adopt in some manner as his own act which was purportedly done on his behalf by
another person, the effect of which, as to some or all persons, is to treat the act as if
originally authorized by him. [Citations.]’ ” (Estate of Stephens (2002) 28 Cal.4th 665,
673.) The effect of ratification is to vest the agent with authority that relates back to the
time when the agent performed the act. (White v. Moriarty (1993) 15 Cal.App.4th 1290,
1295.)



                                              11
       Aztec’s substitution as trustee, which was executed within weeks of Aztec’s
issuing the notice of default, unmistakably evinces an intent by OneWest to ratify Aztec’s
authority to initiate the foreclosure proceedings. In order to avoid the effect of this
ratification, Ram and Hafiz, as third parties, would be required to prove they were
prejudiced by Aztec’s unauthorized actions. (§ 2313; Archdale v. American Internat.
Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 480.) Ram and Hafiz have not
alleged they suffered any prejudice.
              3.     Aztec Was Undeniably the Trustee in Authority at the Time It
                     Conducted the Foreclosure Sale
       Once OneWest executed a substitution of trustee, naming Aztec as the trustee of
the deed of trust on September 24, 2010, it had the effect of immediately transferring to
Aztec the power to act as trustee under the foreclosing deed of trust, even though the
substitution of trustee was not recorded until December 9, 2010, and the trustee’s sale did
not take place until June 6, 2011.
       Section 2934a, subdivision (d), states: “A trustee named in a recorded substitution
of trustee shall be deemed to be authorized to act as the trustee under the mortgage or
deed of trust for all purposes from the date the substitution is executed by the mortgagee,
beneficiaries, or by their authorized agents. . . . Once recorded, the substitution shall
constitute conclusive evidence of the authority of the substituted trustee or his or her
agents to act pursuant to this section.” (Italics added.) Consequently, the recorded
substitution of trustee constituted conclusive evidence that Aztec had the authority to
conduct the trustee’s sale and to convey title to Ram’s and Hafiz’s home to the highest
bidder, even if the notice of default was improperly signed and recorded by Aztec before
it became trustee.
       In an attempt to avert the legal impact of Aztec’s substitution as trustee months
before it conducted the trustee’s sale, Ram and Hafiz complain that the recorded
substitution of trustee, which is a single-page document, did not include an affidavit of
mailing showing it was mailed to the trustee of record or other persons, if any, who may
have requested notice of default and notice of sale under section 2924b. This failure to


                                             12
include an affidavit of mailing, they claim, constitutes a clear violation of section 2934a,
subdivision (c), which invalidates the substitution of trustee.
       But, as OneWest points out in response, the deed of trust entered into by the
parties gave OneWest the option of substituting a successor trustee without the need to
confirm that substitution with an affidavit. The deed of trust provides: “Lender, at its
option, may from time to time appoint a successor trustee to any Trustee appointed
hereunder by an instrument executed and acknowledged by Lender and recorded in the
office of the Recorder of the county in which the Property is located. The instrument
shall contain the name of the original Lender, Trustee and Borrower, the instrument
number and recording date where this Deed of Trust is recorded and the name and
address of the successor trustee. Without conveyance of the Property, the successor
trustee shall succeed to all the title, power and duties conferred upon the Trustee herein
and by applicable law.” OneWest followed this procedure in substituting Aztec as
trustee.
       It is well settled that parties to a deed of trust may agree to a form of substitution
of trustee other than that provided in Civil Code section 2934a. (Jones v. First American
Title Ins. Co., supra, 107 Cal.App.4th at p. 390.) In determining “whether parties to a
deed of trust may agree to a form of notice of substitution of trustee which does not
comply with the statutory form of such substitution,” the court in U.S. Hertz, Inc. v.
Niobrara Farms (1974) 41 Cal.App.3d 68 observed the “decisions leave no doubt that
parties may lawfully contract as to the form of and procedure to be employed in effecting
such substitution.” (Id. at p. 84.) Thus, “the substitution can be accomplished by
following the procedure set forth in the deed of trust, and it will be valid even though
there has not been compliance with the statutory requisites.” (4 Miller & Starr, Cal. Real
Estate (3d ed.2011) § 10:9, and cases cited therein.) Consequently, Ram and Hafiz have
failed to allege facts showing the substitution of trustee was void because OneWest was
not required to include an affidavit of mailing under section 2934a, subdivision (c).
       It bears reemphasis that once recorded, a “substitution [of trustee] shall constitute
conclusive evidence of the authority of the substituted trustee or his or her agents to act


                                              13
pursuant to this section.” (§ 2934a, subd. (d), italics added.) “[C]onclusive evidence”
cannot be contradicted by any evidence to the contrary. (Pullen v. Heyman Bros. (1945)
71 Cal.App.2d 444, 452.) It is not our role to second-guess the Legislature’s
determination that the authority of a substituted trustee should be conclusively
established by recordation of the substitution—particularly since this legislative mandate
ostensibly furthers public policy by promoting the finality of trustee sales and the
marketability of real property.
       Here, Aztec was named as the successor trustee in the recorded substitution of
trustee, constituting conclusive evidence of Aztec’s authority to exercise all the powers of
trustee. (See West, supra, 214 Cal.App.4th at p. 801.) Therefore, despite any claimed
error in the notice of default, Aztec undeniably was given conclusive authority to act as
the trustee under the deed of trust, to record the notice of sale, to conduct that sale, and to
issue the trustee’s deed to the highest bidder.
              4.      The Foreclosure Sale Was, At Worst, Voidable, Not Void
       Even if we indulge Ram’s and Hafiz’s argument that there was a procedural
irregularity created because Aztec executed the notice of default as trustee several weeks
before it actually became the trustee of record, we conclude that this defect was not so
substantial that it would render the entire foreclosure process null and void. Therefore,
we find Ram and Hafiz were not excused from alleging prejudice arising from the late
perfection of Aztec’s substitution as trustee and from alleging the tender of the unpaid
and overdue amount they owed on their mortgage.
       The primary purpose of a notice of default is to provide notice of the amount in
arrears and an opportunity to cure the default. (Knapp, supra, 123 Cal.App.4th at p. 99.)
In order for a defect in the notice of default to be material, it must cause prejudice.
(Ibid.) Ram and Hafiz do not allege that they were misled or prejudiced by the notice of
default or that the information stated in the notice of default was erroneous. Their only
claim is that the wrong entity signed it. “Courts have rejected claims of deficient notice
where no prejudice was suffered as the result of a procedural irregularity.” (Pantoja v.
Countrywide Home Loans, Inc. (N.D.Cal. 2009) 640 F.Supp.2d 1177, 1186-1187


                                              14
[rejecting claim that a notice of default signed by alleged nonbeneficiary entitled
borrower to relief from foreclosure, when borrower failed to allege prejudice].)
       In a case similar to this one, the borrower in Debrunner v. Deutsche Bank National
Trust Co. (2012) 204 Cal.App.4th 433 challenged the nonjudicial foreclosure by arguing
the trustee lacked authority to conduct the foreclosure because the trustee recorded the
notice of default several months before the substitution of trustee was recorded. (Id. at
p. 443.) Despite this purported lack of authority, the Debrunner court rejected the
borrower’s wrongful foreclosure claim because the borrower failed to show how “any
technical defect” in the notice of default prejudiced him by impairing his ability to either
prevent or to contest the foreclosure. (Id. at pp. 443-444; see also U.S. Hertz, Inc. v.
Niobrara Farms, supra, 41 Cal.App.3d at p. 85 [a notice of substitution of trustee that
was recorded a minute after a notice of default was recorded does not warrant setting
aside the foreclosure sale].)
       Ram and Hafiz argue cases like Debrunner and U.S. Hertz do not apply here
because they involve the delayed recording of documents already in existence granting
authority to the entity that signed the notice of default, where in this case the notice of
default was executed and recorded by an entity described as trustee before there were any
documents in existence granting it that authority. However, in so arguing, they
misconstrue the significance of these cases. Although we have found no case like this
one involving an entity that recorded the notice of default “as trustee” before it was
named as trustee, the cases unmistakably establish a borrower’s burden to show how the
alleged defect in the notice of default prejudiced the borrower’s interests. As was
observed in Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th at page 272, “a
plaintiff in a suit for wrongful foreclosure has generally been required to demonstrate the
alleged imperfection in the foreclosure process was prejudicial to the plaintiff’s
interests.”
       We also note that even though they were given an opportunity to amend the FAC,
Ram and Hafiz have not satisfactorily pleaded the ability to tender, which is necessary to
proceed on a claim of wrongful foreclosure. “As a general rule, a debtor cannot set aside


                                              15
the foreclosure based on irregularities in the sale without also alleging tender of the
amount of the secured debt. [Citations.]” (Shuster v. BAC Home Loans Servicing, LP
(2012) 211 Cal.App.4th 505, 512; accord, Arnolds Management Corp. v. Eischen, supra,
158 Cal.App.3d at p. 578 [“an action to set aside a trustee’s sale for irregularities in sale
notice or procedure should be accompanied by an offer to pay the full amount of the debt
for which the property was security”]; Chavez v. Indymac Mortgage Services (2013)
219 Cal.App.4th 1052, 1063 [if the sale is facially valid but there is some procedural
irregularity in notice procedures, it is voidable requiring tender].) “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
[borrower].” (FPCI Re-Hab 01 v. E & G Investments, Ltd. (1989) 207 Cal.App.3d 1018,
1022.)
         The plaintiff in West, supra, 214 Cal.App.4th 780 also sought to set aside a
foreclosure sale, claiming “only procedural irregularities in the sale notice and
procedure.” (Id. at p. 802.) Like Ram and Hafiz, the plaintiff argued that “an offer, or
tender to pay the debt, is not required[] (where it would be inequitable), such as where
plaintiffs have a legal right to avoid the sale.” (Ibid., underscoring omitted.) The
appellate court disagreed: “The trustee’s deed upon sale recites that the trustee complied
with the deed of trust and all applicable statutory requirements of the State of California.
No inconsistent recitals appear on the face of the trustee’s deed. Thus, any notice defects
are deemed voidable, not void. [Citations.] [Appellant] therefore was required to allege
tender of the indebtedness to seek to set aside the trustee’s sale.” (Ibid.)
         In this case, as in West, the trustee’s deed upon sale recites that the trustee
complied with the deed of trust and all applicable statutory requirements of the State of
California. No inconsistent recitals appear on the face of the trustee’s deed. Thus, any
notice defects are deemed voidable, not void. (West, supra, 214 Cal.App.4th at p. 802;
accord, Little, supra, 188 Cal.App.3d at p. 1359 [“[w]here there has been a notice defect
and conclusive presumption language in the deed, courts have characterized the sale as



                                                16
‘voidable’ ”].) Ram and Hafiz were therefore required to allege tender of the
indebtedness to seek to set aside the trustee’s sale.
       Finally, none of the cases cited by Ram and Hafiz grant relief from foreclosure,
without a showing of tender or prejudice, due solely to an alleged lack of authority in
signing a notice of default. For example, Dimock, supra, 81 Cal.App.4th at page 874
involved a case where the lender substituted an entity called Calmco as its trustee in place
of its former trustee, Commonwealth. Despite this substitution, Commonwealth
conducted the sale and conveyed the deed on behalf of the lender to the buyer. (Id. at
pp. 872-873.) The Dimock court held the trustee’s deed upon sale was void on its face
because the substitution of trustee transferred all of Commonwealth’s interest in the
property to the second trustee, Calmco, and therefore Commonwealth had no interest it
could convey to the purchaser through the deed. (Id. at pp. 876-878.)
       Dimock provides no basis for setting this sale aside. The issue in this case with
regard to Aztec’s legal authority to execute the notice of default has nothing to do with
the nonjudicial foreclosure sale or Aztec’s authority to conduct that sale. Unlike the facts
in Dimock, Aztec clearly was the lawful trustee for OneWest at the time it executed and
recorded the notice of trustee’s sale in December 2010, and when it executed and
recorded the trustee’s deed upon sale in June 2011. A defect in the notice of default that
has no bearing on the legal status of the parties at the time of nonjudicial foreclosure sale
cannot become an immutable obstacle, in perpetuity, to the lender’s efforts to recover that
to which the parties agreed by contract and the remedy allowed by law.
       The case of Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1100 is
equally inapposite. The portion of its holding cited by appellants references simply the
Dimock-like circumstance where the foreclosure sale is found to be void “rather than
voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose
on the property. [Citations.]” (Glaski, at p. 1100.) Thus, unsurprisingly in that case, like
in Dimock, no tender was necessary.
       Even more attenuated is appellants’ reliance on Division One’s decision in Ung v
Koehler (2005) 135 Cal.App.4th 186. That case involved the question of whether a 10-


                                              17
year or 60-year statute of limitations should apply to a lender’s power of sale. It was in
this context of determining which statute of limitation period applied that the court
indicated that a trustee’s sale based on a statutorily deficient notice of default is invalid.
(Id. at pp. 202-203.) That indication, however, is taken out of context because Ung did
not involve a borrower’s wrongful foreclosure claim and did not address the prejudice or
tender requirements.
       In short, none of these cases supports the conclusion that Aztec’s alleged defective
trustee status at the time the notice of default was recorded, but which was cured long
before the trustee’s sale of the property in question, “voids” the later foreclosure and sale.
Thus, Ram and Hafiz cannot avoid the applicable law requiring tender of the amount due
under the deed of trust and requiring facts showing prejudice from the alleged irregularity
in the notice of default. Therefore, as a matter of law, they have not alleged facts
establishing their claim for wrongful foreclosure, which is fatal to their FAC.
                                           IV.
                                       DISPOSITION
       The judgment is affirmed. Costs on appeal are awarded to OneWest.




                                              18
                                    _________________________
                                    RUVOLO, P. J.


I concur:


_________________________
REARDON, J.




A139055, Ram v. OneWest Bank


                               19
HUMES, J., Concurring
Ram v. OneWest Bank
A139055

         I agree with the majority that we must sustain the trial court’s grant of the
demurrer to Ram’s and Hafiz’s complaint because the complaint failed to allege
sufficient prejudice. The complaint was filed long after the foreclosure sale, and its
allegations do not support a reasonable inference that the sale could have been avoided if
the alleged statutory violation had never happened. But I disagree with the majority’s
conclusion that the complaint insufficiently alleged that Aztec lacked proper authority to
initiate the foreclosure. Allegations that an entity recorded a notice of default before it
had proper authority could support a claim in a case, unlike this one, in which prejudice
could be shown.
                                                I.
         In my view, Ram and Hafiz sufficiently alleged a violation of the nonjudicial
foreclosure statutes by alleging that Aztec lacked authority to initiate the foreclosure
either as OneWest’s trustee or as its agent. As to Aztec’s status as trustee, the majority
concludes, as did the trial court, that Ram’s and Hafiz’s allegations are insufficient
because Civil Code section 2934a, subdivision (c)1 authorizes the substitution of a trustee
after a notice of default is recorded. This observation about section 2934a, subdivision
(c) is true, but only as far as it goes. To be sure, the nonjudicial foreclosure statutes are
not violated simply because a trustee is substituted after the notice of default is recorded.
But, in my view, the substituted trustee must either have had actual authority to record
the notice of default at the time the notice was recorded or be substituting in for a trustee
that had such authority. Nothing in section 2934a, subdivision (c) or any other provision
gives an entity first becoming the trustee after the recording of the notice of default
retroactive authority to have recorded the notice.
         The statutes make clear that the notice of default must be recorded by “[t]he
trustee, mortgagee, or beneficiary, or any of their authorized agents.” (§ 2924,

1
    All further statutory references are to the Civil Code.

                                                1
subd. (a)(1).) Section 2934a, subdivision (d) provides that a “trustee named in a recorded
substitution of trustee shall be deemed to be authorized to act as the trustee under the . . .
deed of trust for all purposes from the date the substitution is executed.” (Italics added.)
Under this plain language, a substitution of trustee is not effective until the date it is
executed. The majority correctly points out that the substitution, once recorded, is
conclusive evidence of the trustee’s authority. But the majority fails to explain how the
conclusiveness of the trustee’s authority after the recording of the substitution somehow
confers on the substituted trustee retroactive authority to have acted as trustee before the
substitution was signed.2
       Since Ram and Hafiz adequately alleged that Aztec lacked authority as trustee
when the notice of default was recorded, I turn to whether they adequately alleged that
Aztec lacked authority to record the notice as an agent. In my view, they did. Initially, I
agree with the majority that Aztec would have been authorized to record the notice of
default under section 2924, subdivision (a)(1) if, regardless of its trustee status, it was
otherwise acting as OneWest’s authorized agent. But on the record before us we cannot
know whether Aztec was such an agent. Whether an entity is an agent is normally a
factual determination “not subject to resolution by demurrer.” (Childs v. State of
California (1983) 144 Cal.App.3d 155, 163.)
       The majority contends that Aztec’s status as an agent was conceded by Ram and
Hafiz because the complaint alleges that “[p]laintiffs are informed and believe . . . each of
[the] defendants . . . was the agent . . . of each of the remaining defendants and was at all
times acting within the purpose and scope of such agency. . . .” But this places far too
much significance on this general allegation, and the majority mistakenly asserts that

2
  It is worth mentioning that the California Homeowner Bill of Rights, which became
effective in 2013, amended section 2924 to make it perfectly clear that “[n]o 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.” (§ 2924, subd. (a)(6).) The
amendment does not apply here because it took effect after the events at issue. (See
Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 950-951.)

                                               2
“[n]othing in the [first amended complaint] or judicially noticed documents suggests that
Aztec was not authorized to act for OneWest.” In fact, Ram and Hafiz specifically
alleged in no less than nine paragraphs in the complaint that Aztec “had no authority to
record [the] Notice of Default.” These allegations effectively assert that Aztec was not
acting as OneWest’s agent under section 2924, subdivision (a)(1) when the notice of
default was recorded. These specific allegations trump the general allegation, and they
leave me unable to join the majority’s conclusion that the complaint irrefutably concedes
that Aztec had authority to record the notice of default as OneWest’s agent. 3 (See
Garton v. Title Ins. & Trust Co. (1980) 106 Cal.App.3d 365, 376 [“specific allegations of
a complaint [may] overcome [a] general allegation of agency by showing that no such
relationship existed”].)
       In short, I conclude that Ram and Hafiz sufficiently alleged that Aztec lacked
authority to initiate the foreclosure either as OneWest’s trustee or agent.
                                             II.

       Even though Ram and Hafiz sufficiently alleged a statutory violation, their
wrongful-foreclosure claim nonetheless fails because they did not allege prejudice. More
specifically, they did not allege, even after having been given an opportunity to amend
their complaint, that the foreclosure sale could have been avoided if there had been no
statutory violation.
       As the majority correctly points out, prejudice is an element of a claim for
wrongful foreclosure. (Herrera v. Federal National Mortgage Assn. (2012)
205 Cal.App.4th 1495, 1507; Fontenot v. Wells Fargo Bank, N.A. (2011)


3
 A reviewing court normally “resolve[s] all ambiguities and uncertainties raised by the
demurrer against” the plaintiffs when, as here, a demurrer is sustained with leave to
amend and the plaintiffs choose not to amend. (Hooper v. Deukmejian (1981)
122 Cal.App.3d 987, 994; see also Holiday Matinee, Inc. v. Rambus, Inc. (2004)
118 Cal.App.4th 1413, 1421.) But OneWest did not raise, and the trial court did not rely
on, Aztec’s agency as a ground for sustaining the demurrer. In such circumstances, it is
improper to “ ‘presume[] that the complaint states as strong a case as is possible’ ” on the
agency issue. (Holiday Matinee, at p. 1421.)

                                              3
198 Cal.App.4th 256, 272; see also Little v. CFS Service Corp. (1987) 188 Cal.App.3d
1354, 1361-1362.) It is required not only for small deficiencies, but for big ones as well.
For example, in Fontenot, Division One of this court required a showing of prejudice for
a claim that the entity that conducted a foreclosure sale was not properly assigned the
deed of trust: “[A] plaintiff in a suit for wrongful foreclosure has generally been required
to demonstrate the alleged imperfection in the foreclosure process was prejudicial to the
plaintiff’s interests. . . . Even if [a nominee beneficiary] lacked authority to transfer the
note [to the entity that eventually foreclosed], it is difficult to conceive how [the
borrower] was prejudiced by [the] purported assignment . . . .” (Fontenot, at p. 272.)
This holding recognized that the entity prejudiced in such a case is not the borrower, but
rather the proper beneficiary that was entitled to recourse on the loan. Similarly, relying
on Fontenot, Herrera held that an allegation of prejudice was required even if the
purported beneficiary lacked authority to foreclose or execute a substitution of trustee.
(Herrera, at pp. 1505-1507.)
       Ram and Hafiz effectively concede that they did not allege prejudice, but they
argue they were excused from doing so because Aztec’s alleged lack of authority to
record the notice of default resulted in a “void,” not just “voidable,” sale. I am not
persuaded. In my view, prejudice must be alleged regardless whether a sale is considered
void or voidable.4 (See Herrera v. Federal National Mortgage Assn., supra,
205 Cal.App.4th at pp. 1505-1507; Fontenot v. Wells Fargo Bank, N.A., supra,
198 Cal.App.4th at p. 272.) Borrowers whose property has been sold allege prejudice
when they assert, as Ram and Hafiz did not, that, but for a statutory violation, the sale
would not have happened and they would still possess the property. They do not

4
  I agree with my colleagues in the Fourth District Court of Appeal who found it
ultimately “unhelpful to analyze trust deed nonjudicial foreclosure sales issues in the
context of common law contract principles” like voidness and voidability. (Residential
Capital v. Cal-Western Reconveyance Corp. (2003) 108 Cal.App.4th 807, 820.) The
void/voidable distinction is routinely used by courts to distinguish between less and more
serious failures to adhere to the nonjudicial foreclosure requirements, but in my view it is
more helpful in most cases, and certainly this one, to focus first on whether the failure
resulted in prejudice to the party asserting the claim.

                                               4
necessarily allege prejudice merely by asserting that the sale occurred in the course of an
imperfect nonjudicial foreclosure process.
       I am aware of no published California decision directly addressing whether
prejudice is required when, as is alleged here, an entity lacked authority when it initiated
foreclosure proceedings but later was substituted as trustee. But I see no reason that this
particular defect should alter the generally applicable requirement that a borrower must
show prejudice to prevail in a wrongful-foreclosure action. The recording of a notice of
default by an unauthorized entity could conceivably result in prejudice to borrowers
under some circumstances, such as when it affects their ability to retain the property. But
Ram’s and Hafiz’s failure here to allege that the foreclosure sale could have been avoided
is fatal to their claim. I therefore concur with the majority in sustaining the trial court’s
grant of the demurrer.




                                               5
                                         ________________________________
                                         Humes, J.*




* Presiding Justice of the Court of Appeal, First Appellate District, Division One,
assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.




                                            6
Trial Court:              Contra Costa County Superior Court

Trial Judge:              Honorable Steven K. Austin

Counsel for Appellant:    William E. Gilg

Counsel for Respondent:   Michael R. Farrell; Tim C. Hsu
