Filed 1/12/15 Tumbaga v. Bank of America CA3
                                          NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.




           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                     THIRD APPELLATE DISTRICT
                                                     (El Dorado)
                                                            ----




NORALYN B. TUMBAGA et al.,                                                              C075532

                   Plaintiffs and Appellants,                            (Super. Ct. No. SC 2012-0186)

         v.

BANK OF AMERICA, N.A., et al.,

                   Defendants and Respondents.




         In a fourth attempt to plead a viable cause of action, plaintiffs Noralyn B.
Tumbaga and Wilma V. Carnay sought to set aside the August 2012 trustee’s sale of their
South Lake Tahoe residence to defendant Bank of America, N.A. (Bank), which
defendant ReconTrust Company, N.A. (ReconTrust), conducted as a successor trustee
(under a deed of trust securing a 2009 refinancing loan for the property) because
plaintiffs defaulted on their financial obligation to the lender. In essence, plaintiffs

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contended the sale was void because neither defendant had legal capacity as lender or
trustee through a valid assignment; a representative of the lender induced their default;
and the process failed to comply with federal loan regulations. Plaintiffs asserted that
the status of the sale as void excused them from tendering their outstanding obligation
as a condition of their challenge to the sale. In a lengthy minute order, the trial court
sustained this latest demurrer of defendants without leave to amend, concluding that the
failure to allege a tender of the outstanding indebtedness was not excused and the
elements of promissory estoppel otherwise were not established. Plaintiffs filed a
premature notice of appeal 59 days later. We will deem it to be filed immediately after
the subsequently entered judgment of dismissal with prejudice in favor of defendants.
(Cal. Rules of Court, rule 8.308(c); Fuller v. First Franklin Financial Corp. (2013)
216 Cal.App.4th 955, 959 (Fuller).)

       In this court, plaintiffs yet again assert that the failure of defendants to conduct a
face-to-face interview with them to discuss their default before proceeding with the
trustee’s sale rendered the sale void and thus did not require their need to tender their
outstanding obligation under the loan in order to invoke the trial court’s equitable power.
They alternately suggest that, given the public policy reflected in legislation effective in
2013 that would eliminate (over time) the lender/trustee conduct they have alleged (see
Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 903-905 (Jolley), citing
Assem. Bill No. 278 & Sen. Bill No. 900 (2011-2012 Reg. Sess.)), enforcement of a
tender requirement would be inequitable. Finally, they renew only in the most shallow
sense their argument that defendants are estopped from demanding tender.1 We shall
affirm the judgment.



1 Plaintiffs raise the equitable defense of “unclean hands” for the first time in their reply
brief in a superficial manner. This forfeits our consideration of it. (Sourcecorp, Inc. v.
Shill (2012) 206 Cal.App.4th 1054, 1061 & fn. 7.) They also discuss throughout their

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        FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

       Defendants successfully demurred to three successive pleadings. Each time the
trial court agreed the failure to allege adequately either tender of the outstanding loan
obligation or an adequate excuse for failing to tender was fatal. Plaintiffs persuaded the
trial court to give them one more opportunity to amend.

       We assume the truth of proper factual allegations in the subject pleading, shorn of
any legal conclusions. (Fuller, supra, 216 Cal.App.4th at p. 959.) There are not many.

       Plaintiffs initially purchased their home in 1999. In August 2009, they refinanced
the outstanding purchase loan for $265,000 (rounded) with a different lender. In October
2011, an entity known as Mortgage Electronic Registration Systems, Inc. (MERS),
executed in South Carolina an assignment (notarized in California) of the 2009 deed of
trust,2 by which defendant Bank became the successor trustee. The person executing this
document was unauthorized (a legal conclusion alleged without particulars). Defendant
Bank never provided plaintiffs with any documentation of this assignment or any
accounting of the debits and credits on the account as of the time of the assignment.

       In late summer 2011, plaintiffs had contacted Abraham Thomas, a representative
of defendant Bank at its South Lake Tahoe branch office, to seek a modification of the
loan. Thomas informed them that a program offering loan modifications was limited to
homeowners who were in default on their loans. He advised them accordingly to default
on their loan in order to seek the benefit of the program, and they followed his advice. (A




briefing a proceeding that occurred subsequent to the entry of judgment in which the trial
court expunged their lis pendens. We disregard factual references or arguments relating
to this proceeding, which is entirely outside the scope of this appeal. (Woodridge
Escondido Property Owners Assn. v. Nielsen (2005) 130 Cal.App.4th 559, 562, 577.)
2 Neither the original deed of trust nor any other document to which the subject pleading
refers is either incorporated by reference or attached as an exhibit.


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hearsay allegation in the April 2012 notice of default indicates that plaintiffs apparently
ceased making payments on their loan in November 2011.)

       With the assistance of Thomas, plaintiffs entered into the process of applying for a
loan modification with a home loans office of defendant Bank in Texas. All the written
communications from the Texas office were unsigned, and employees of defendant Bank
did not identify themselves during phone calls with plaintiffs. No single person was in
charge of the loan negotiations. When plaintiffs expressed concern about the defaulted
status of their loan, Thomas assured them that defendant Bank would not initiate
foreclosure proceedings during the course of loan negotiations.

       Defendant Bank designated defendant ReconTrust as its successor trustee in April
2012. The document’s execution and notarization are invalid (a legal conclusion again
alleged without particulars). On the same April 2012 date, defendant ReconTrust filed a
notice of default and election to sell the property pursuant to the deed of trust. The
amount in default was $14,000 (rounded).

       Thomas assured plaintiffs that this notice of default was routine and did not have
any effect, as long as negotiations were in process. The multiple anonymous contacts at
the Texas office gave the same assurances.

       In July 2012, defendant ReconTrust filed a notice of trustee’s sale, in which it
alleged that the outstanding obligation on the loan was $274,000 (rounded). The notice
purportedly did not include certifications required under the Civil Code.

       Plaintiffs again contacted Thomas and the Texas office. Thomas again assured
them the notice of sale was not of any moment in the course of negotiations, and
plaintiffs did not need to take any action in response. He thereafter was not available any
longer when they attempted to contact him. The Texas office told plaintiffs that it was
obtaining information to respond to their concerns. Meanwhile, defendant ReconTrust



                                              4
ignored the efforts of plaintiffs to apprise it of the status of the loan negotiations. Four
days before the date of the trustee sale, the Texas office finally sent a letter to plaintiffs
stating that their loan negotiations were not sufficiently advanced to forestall the trustee
sale, which would proceed as scheduled.

       Although the deed of trust did not state that time was of the essence, defendant
ReconTrust then transferred title to the property to defendant Bank. Pursuant to the
agreement of the parties, plaintiffs remained in the residence as tenants and are current
on their rent.

       The loan was federally insured. Both the note and the deed of trust incorporated
federal regulations for servicing the loan. The foreclosure process did not follow these
regulations, because defendant Bank did not have any face-to-face interview with
plaintiffs about their default before commencing it.

       In connection with their demurrer, defendants requested judicial notice of the
original deed of trust (which named MERS as the lender’s nominee as beneficiary),
defendant ReconTrust’s April 2012 notice (of default and election to sell) as agent of
beneficiary MERS, defendant ReconTrust’s July 2012 notice of trustee’s sale, and
defendant ReconTrust’s August 2012 trustee’s deed granting title to defendant Bank.
The trial court granted the request, expressly noting that it would not take judicial notice
of the truth of hearsay contents in the documents. (Scott v. JPMorgan Chase Bank, N.A.
(2013) 214 Cal.App.4th 743, 754-760.)

       The court, as noted above, sustained this fourth demurrer without leave to amend.
(Given that we affirm the judgment, we do not need to reiterate its ruling on the issue of
tender; we will make reference to its ruling on the barely briefed issue of promissory
estoppel in the Discussion.)




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                                        DISCUSSION

       We review a ruling on a demurrer de novo. (Fuller, supra, 216 Cal.App.4th at
p. 962.) We may consider any ground raised in the demurrer, or even new theories on
appeal to affirm or reverse. (Id. at pp. 966-967.) Even in the absence of a request to file
an amended complaint, we must consider whether the trial court properly exercised its
discretion in sustaining a demurrer without leave to amend. (Code Civ. Proc., § 472a,
subd. (c).) It is nonetheless a plaintiff’s burden on appeal to demonstrate the possibility
of amending a complaint to state a cause of action; we will otherwise assume the
pleading has stated its allegations as favorably as possible. (Fuller, at p. 962.)3

       There have been a plethora of foreclosure cases in recent years premised on facts
similar to those that plaintiffs allege. In one vein, there are decisions that find plaintiffs
lack standing to assert irregularities in documentary transfers of rights and obligations
underlying a foreclosure as a basis to challenge the authority of an initiator of foreclosure
proceedings (absent allegations of specific misconduct) because California’s procedure
for nonjudicial foreclosure does not embrace such a cause of action, the identity of a
holder in due course or the holder’s agent not being of any moment to the defaulting
debtor under a negotiable note. (Siliga v. Mortgage Electronic Registration Systems, Inc.
(2013) 219 Cal.App.4th 75, 82-85; Jenkins v. JPMorgan Chase Bank, N.A. (2013)
216 Cal.App.4th 497, 511-512, 515; Herrera v. Federal National Mortgage Assn. (2012)
205 Cal.App.4th 1495, 1507; Gomes v. Countrywide Home Loans, Inc. (2011)
192 Cal.App.4th 1149, 1154-1156 & fn. 5; contra, Glaski v. Bank of America (2013)




3 While plaintiffs assert the possibility of amendment is an issue on appeal, they do
not present any argument in favor of amendment, so we will not consider it any further.
(Imagistics Internat., Inc. v. Department of General Services (2007) 150 Cal.App.4th
581, 591, fn. 8, 593 (Imagistics).)


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218 Cal.App.4th 1079, 1083.)4 This is not the path down which plaintiffs have pursued
their appeal, however. Rather, they take issue with a different vein of decisions focusing
on the requirement that, to have standing to invoke a trial court’s equitable jurisdiction to
set aside a completed trustee’s sale, a plaintiff must include allegations of a tender of the
outstanding amount due on the underlying obligation. (Lona v. Citibank, N.A. (2011)
202 Cal.App.4th 89, 112 (Lona).) Only if the trustee’s sale is void is this prerequisite
excused (id. at p. 113), or where it would be “inequitable” to impose the prerequisite
(ibid., citing Humboldt Sav. Bank v. McCleverty (1911) 161 Cal. 285, 291 (Humboldt)
[widow not required to tender debt she did not in fact owe on separate piece of property]).

       Under both federal regulations and state law, a lender cannot file the notice of
default until after it has had a discussion in person with a borrower to discuss options for
the avoidance of foreclosure; as a result, a borrower may forestall the foreclosure process
before the sale until this meeting in person has taken place. (Pfeifer v. Countrywide Home
Loans, Inc. (2012) 211 Cal.App.4th 1250, 1264, 1267-1268 (Pfeifer) [federal regulations
create condition precedent of a meeting in person to discuss default before initiation of
foreclosure proceedings on federally insured loans]; Mabry v. Superior Court (2010)
185 Cal.App.4th 208, 217, 223, 225 (Mabry) [issuing writ six days before trustee sale for
failure to comply with similar state law]; see Stebley v. Litton Loan Servicing, LLP (2011)
202 Cal.App.4th 522, 526.) However, Mabry specifically held that failure to comply with
the enforceable presale prerequisite to a default notice under state law does not raise “any
cloud on title” after a trustee’s sale, because it otherwise would run afoul of federal
preemption. (Mabry, at pp. 214, 235; accord, Stebley, at p. 526 [“[a]fter the sale,” state
law does not provide any relief and does not excuse tender requirement].) Pfeifer
reached the same conclusion in connection with the federal regulations, holding that a


4 The Supreme Court has decided to wade into these waters. (Yvanova v. New Century
Mortgage Corp. (2014) 226 Cal.App.4th 495, review granted Aug. 27, 2014, S218973.)


                                              7
borrower may invoke them to enjoin foreclosure (because they were intended to prevent
foreclosure), but they do not provide any right to affirmative relief against lenders
because they do not directly regulate the relationship of the borrower and lender: They
“may not be invoked by the [borrower] as a sword in an offensive cause of action against
the [lender].” (Pfeifer, supra, 211 Cal.App.4th at pp. 1268-1270.)

       The repeated characterization in the briefing of plaintiffs of the notice of default as
being “premature” without a meeting in person to discuss their default—and therefore
rendering the trustee sale “void”—utterly fails. No matter how they may seek to phrase
it, they are seeking to make affirmative use of defendants’ procedural default to establish
a right in an independent cause of action, rather than raising the default as a defense. As
a result, defendants’ failure to meet with plaintiffs in person to discuss their default does
not excuse the absence of any allegations of tender.

       As for plaintiffs’ offhand invocation of the principle that tender is not required
where it would be “inequitable,” the one previous case squarely applying this abstract
proposition is factually inapposite, involving the rejection of a bank’s claim that a widow
should have offered tender to prevent foreclosure on a property in which she had a
homestead interest when the debt for which she was not liable could have been satisfied
through the sale of her late spouse’s separate encumbered property. (Humboldt, supra,
161 Cal. at pp. 287-288, 290-291.) Plaintiffs do not supply any argument or authority for
applying Humboldt in the context of lender/trustee conduct that was subsequently
identified as a violation of California public policy (see Jolley, supra, 213 Cal.App.4th at
pp. 903-905) in order to set aside a trustee’s sale. We will not embellish their arguments
further. (Imagistics, supra, 150 Cal.App.4th at pp. 591, fn. 8, 593.)

       At oral argument, defendants drew this court’s attention to a recent case that
allowed the borrowers to bring an action to set aside a trustee’s sale premised on
noncompliance with the federal regulations incorporated into the deed of trust. (Fonteno


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v. Wells Fargo Bank, N.A. (2014) 228 Cal.App.4th 1358 (Fonteno), request for
depublication denied and declining to order review on its own motion, Dec. 10, 2014,
S221788.) Fonteno waved away the distinction discussed above between defensive and
affirmative assertion of procedural noncompliance in the context of equitable relief,
concluding in the context of post-sale litigation that “it was essentially defensive in
nature.” (Fonteno, at p. 1371, italics added.) It declined to decide whether a trustee’s
sale was void or voidable as a result of the noncompliance (id. at p. 1372), applying the
“inequitable” exception to the tender requirement. Although this exception was not at
issue in Pfeifer (which did not require tender because it was a pre-sale case), Fonteno
drew from its earlier decision the principle that prevention of foreclosures was a “salient
purpose” of the federal regulations. (Fonteno, at p. 1373, citing Pfeifer, supra,
211 Cal.App.4th at p. 1280.) Relying on Pfeifer and Mabry (another pre-sale case),
Fonteno declared, “To require plaintiffs now to make such a tender in order to obtain
cancellation of a sale allegedly conducted in disregard of [the regulations incorporated
into the deed of trust as a] condition precedent[—]and [thus] without any legal
authority[—]is inequitable under the circumstances.” (Fonteno, supra, at p. 1374, citing
Lona, supra, 202 Cal.App.4th at p. 113.)

       We do not find this breathtaking leap into the dangerously malleable waters of a
judicial determination of inequitability to be persuasive. Like the plaintiffs, Fonteno does
not explain how a procedurally flawed foreclosure and trustee’s sale against a defaulting
borrower is as inequitable as a foreclosure on a debt that the Humboldt widow did not
even owe. We also believe that Fonteno’s insouciant dismissal of the effects its holding
would have on the stability of title (Fonteno, supra, 228 Cal.App.4th at p. 1371
[inexplicably declaring that to be a concern of the Legislature rather than part of a court’s
weighing of the equities]), which is the “primary reason for California’s comprehensive
regulation of foreclosure” (Mabry, supra, 185 Cal.App.4th at p. 235 [for which reason



                                              9
state law cannot be construed as providing post-sale remedy]), undermines the power of
its reasoning. Thus, we decline to follow Fonteno regardless of its allure as a response to
the banking industry’s poor performance in these cases.

       Plaintiffs make an equally offhand assertion that they have adequately alleged
specific facts that the conduct of defendants resulted in any promissory estoppel
preventing foreclosure. (Smith v. City and County of San Francisco (1990)
225 Cal.App.3d 38, 48.) The trial court concluded the allegations did not demonstrate
the breach of any promise, because defendant Bank did take a loan modification under
consideration upon plaintiffs’ default and did not conduct a trustee’s sale until after
informing them (albeit at the last minute) that it would not modify the loan. The court
also found the absence of detriment because plaintiffs did not allege any facts
demonstrating that defendants caused them to forego any means of satisfying their
default.

       As plaintiffs have not provided developed argument to the contrary, we agree on
both points. Plaintiffs do not allege defendant Bank promised that they would in fact
receive a modification if they defaulted; they merely allege being told (or advised) that
it was a prerequisite to consideration for modification. Although it is arguable whether
defendant Bank fulfilled its promise not to foreclose while processing the modification
application (given the allegations that defendant Bank simply abandoned the modification
process in favor of foreclosure), plaintiffs failed to establish that they had any means at
that point to satisfy their default (such as having deposited their missed payments during
the modification process in an account with accrued interest), which defendant Bank may
have induced them to forego after the April 2012 notice to their detriment.




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                                     DISPOSITION

       The judgment of dismissal is affirmed. Respondents are awarded their costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)




                                                        BUTZ              , J.



We concur:



      NICHOLSON             , Acting P. J.



      DUARTE                , J.




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