Filed 10/9/13 Youkhna v. America’s Wholesale Lender CA2/4
               NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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 This opinion has not been certified for publication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

                                   SECOND APPELLATE DISTRICT

                                                DIVISION FOUR




                                                                     B244068
SARGON YOUKHNA,                                                      (Los Angeles County
                                                                     Super. Ct. No. ES056859)
                Plaintiff and Appellant,

v.

AMERICA’S WHOLESALE LENDER
et al.,

              Defendants and Respondents.



         APPEAL from an order of the Superior Court of Los Angeles, Laura A.
Matz, Judge. Affirmed.
         Sargon Youkhna, in pro. per., for Plaintiff and Appellant.
         McGuire Woods, Leslie M. Werlin and Lila Y. Al-Marhoon for Defendants
and Respondents.
        Appellant Sargon Youkhna contends the trial court abused its discretion in
sustaining a demurrer to three of the claims asserted in his complaint without leave
to amend. We find no error and therefore affirm.


                   FACTUAL AND PROCEDURAL BACKGROUND
        A. Underlying Complaint
        In October 2011, appellant, acting in pro per, filed a complaint against
America’s Wholesale Lender (AWL), ReconTrust Company, N.A. (ReconTrust),
“Countrywide Bank,” “Bank of America Home Loans,” and “MERS, Inc.”1
Respondents filed a demurrer. While it was pending, appellant substituted a first
amended complaint (FAC).
        The FAC lacked coherence and organization, making summarization of its
claims difficult. The claims apparently arose out of appellant’s February 2006
purchase of a residential property in La Canada-Flintridge financed by AWL, in
whose favor appellant executed a promissory note secured by a deed of trust.2


1
       Respondents explained that (1) AWL is or was a trade name for Countrywide
Home Loans, Inc. (Countrywide); (2) in 2009, Countrywide Bank was merged into Bank
of America, N.A. (Bank of America); (3) to their knowledge, there is no entity called
“Bank of America Home Loans,” although there is a “BAC Home Loans Servicing,
L.P.,” which merged into Bank of America in 2011; (4) the full name of the entity sued as
“MERS, Inc.” (MERS) is “Mortgage Electronic Registration Systems, Inc.”
AWL/Countrywide, Bank of America, MERS, and ReconTrust appeared in the
underlying action as defendants and filed a joint respondents’ brief herein.
2
       Attached as an exhibit to the FAC was a deed of trust describing appellant as the
“borrower” and the “owner” of the subject property, AWL as the “[l]ender,” ReconTrust
as the “[t]rustee,” and MERS as “a nominee for Lender and Lender’s successors and
assigns” and as “the beneficiary under this Security Instrument.” The deed of trust stated
that appellant owed $693,000 to AWL and that the obligation was evidenced by a
promissory note. According to the terms of the deed of trust, “Borrower [appellant]
understands and agrees that MERS holds only legal title to the interest granted by
Borrower in this Security Instrument, but if necessary to comply with law or custom,
(Fn. continued on next page.)

                                            2
Two of the three claims at issue in this appeal, which appellant called the third and
fourth counts of the first cause of action, were entitled “[d]eclaratory [r]elief” and
“[e]xistence of [a]n [o]bligation – [n]o [c]reation of [r]ights.”3 The third count
alleged that AWL had not loaned any of its own money to appellant, that it entered
into transactions with investors or holders of “[m]ortgage [p]ass-[t]hrough
[c]ertificates” in order to “maximize as much profit as it could by leveraging other
people’s money without risking or using any of [its] own capital,” that the
certificate holders’ rights “extended solely to payments from the security offering
as a whole” and “d[id] not extend to [appellant] and his property separately or
individually apart from the complete mortgage pool,” and that somehow as a result

MERS . . . has the right: to exercise any or all of those interests, including, but not
limited to, the right to foreclose and sell the Property . . . .” Also attached was a notice of
default/trustee’s sale dated May 2011 stating that ReconTrust acting on its authority as
trustee intended to sell the property in June 2011 at public auction.
3
        Appellant divided his claims into three “cause[s] of action” and subdivided the
first cause of action into four “counts.” The first “count” of the first “cause of action” --
entitled “[d]eclaratory [r]elief [and] [f]raud in the [e]xecution” -- alleged that AWL
offered “direction[] and advice as to whether or not [appellant] was qualified and could
afford to repay the purported loan,” and that appellant was induced to enter the loan
under the belief that AWL funded it with its own capital. The first count further
contended that AWL failed to inform appellant that it had or intended to “sell[] [the loan]
‘forward’” prior to funding it, “as part of a purchase and s[ale] of securities offering,” and
that appellant’s loan transaction was “subject to undisclosed agreements and stipulations
for the benefit of third parties” which appellant “did not bargain or negotiate.” The
second “count” of the first cause of action -- entitled “[d]eclaratory [r]elief [and] [f]ailure
of [c]onsideration” -- contended that appellant received no consideration in exchange for
his promissory note because defendants failed to loan their own money, causing “the trust
deed and underlying purported obligation” to become “invalid and unenforceable . . . .”
The second cause of action -- entitled injunctive relief -- contended that when ReconTrust
caused a notice of default to be recorded, there had been no breach because the
transaction was “void,” and that any breach was excusable. We do not focus on these
claims as appellant makes no reference to them in his brief on appeal and has therefore
forfeited any contention that dismissal of these counts was error. (See Doe v. California
Dept. of Justice (2009) 173 Cal.App.4th 1095, 1113.) However, some of the allegations
are necessary to understanding the claims he seeks to revive.

                                               3
of these alleged facts, an actual controversy had arisen concerning whether there
was a right to exercise a power of sale or foreclose on the subject property. The
fourth count, asserted against MERS alone, alleged that MERS had “no actual
legal or beneficial interest” in the property, and that an actual controversy had
arisen over whether MERS had the right to exercise a power of sale on the property
or to foreclose on it.4
       The third cause of action for an accounting stated, without specifically
alleging that defendants owed appellant any amount or describing the nature of any
obligation, that “[t]he amount of money defendants owe[] to [appellant] is
unknown to [appellant] and cannot be determined without an accounting.” In the
prayer for relief, the FAC sought, among other things, a declaration that the
“written instruments described above are void and of no force or effect” and an
injunction restraining ReconTrust and Bank of America from selling the subject
property under the power of sale in the deed of trust.


       B. Demurrer
       Respondents demurred to the FAC. They argued that the first count for
fraud was insufficiently pled, as it did not state the identity of the persons who
made the alleged misrepresentations or specify what was said or when it was said.
They noted, moreover, that any fraud claim would be barred by the applicable
three-year statute of limitations. Respondents contended that appellant’s claim of

4
       As explained in Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256,
267: “MERS is a private corporation that administers a national registry of real estate
debt interest transactions. Members of the MERS System assign limited interests in the
real property to MERS, which is listed as a grantee in the official records of local
governments, but the members retain the promissory notes and mortgage servicing rights.
The notes may thereafter be transferred among members without requiring recordation in
the public records.”

                                           4
failure of consideration (the second count of the first cause of action) was refuted
by the deed of trust attached as an exhibit to the FAC, which indicated that
appellant had been lent $693,000, which he used to purchase the subject property.
They further contended that any attempt at rescission of the obligation was invalid
because not accompanied by an offer of tender. Additionally, an attempt to rescind
a 2006 agreement would be barred by the four-year statute of limitations.
       With respect to the third count of the first cause of action (declaratory relief
and “[e]xistence of [a]n [o]bligation – [n]o [c]reation of [r]ights” against all
defendants), respondents argued that it was essentially a re-hash of the failure of
consideration count. To the extent appellant sought to base a claim on
“securitization” of the debt, he had not sufficiently alleged that had occurred.5
Moreover, the fact that a note has been securitized or resold does not render the
underlying obligation unenforceable under California law. Concerning the fourth
count, challenging MERS’s authority to act, respondents asserted that California
law supported MERS’s authority to foreclose, as did the express language of the
deed of trust executed by appellant.
       Turning to the second cause of action (injunctive relief), respondents
contended that appellant lacked standing to assert a claim attacking the validity of
the foreclosure or seeking injunctive relief to prevent it from occurring because he
failed to allege tender. Finally, with respect to the claim for an accounting,
respondents asserted that appellant failed to state “any plausible facts to suggest
the Defendants are indebted to him in any way.”

5
       As explained in Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1082,
“In simplified terms, ‘securitization’ is the process where (1) many loans are bundled
together and transferred to a passive entity, such as a trust, and (2) the trust holds the
loans and issues investment securities that are repaid from the mortgage payments made
on the loans.”

                                             5
      By order dated April 27, 2012, the court sustained the demurrer. The court
found that the first count of the first cause of action failed to plead fraud with the
requisite specificity. In addition, the first count appeared to be barred by the
statute of limitations, and the FAC had not asserted any basis for application of the
delayed discovery rule. The second count for failure of consideration also
appeared to be barred by the statute of limitations. It was, in addition,
substantively meritless as appellant did not allege that the loan did not fund.
Moreover, there was no allegation of an offer of tender on appellant’s part to
support a rescission. With respect to the claim for injunctive relief (the second
cause of action), the court could discern no recognized tort or wrongful act to
support such relief. In addition, there was no allegation of tender to support an
injunction halting or setting aside the foreclosure. The court granted 10 days leave
to amend the first and second counts of the first cause of action and the second
cause of action.
      The court also sustained the demurrer to the third and fourth counts of the
first cause of action (declaratory relief and “[e]xistence of [a]n [o]bligation – [n]o
[c]reation of [r]ights”) because “[n]o claim arises from the securitization or from
MERS exercising its express rights under the deed of trust.” It sustained the
demurrer to the third cause of action (for an accounting) because the claim did not
allege complicated accounts or indicate that any money was due appellant, and
because “a financial institution owes no legal duty of care to a borrower when the
institution’s involvement in the loan transaction does not exceed the scope of its
conventional role as a mere lender of money.” The demurrer to these claims was
sustained without leave to amend.




                                           6
          C. Proceedings Following Demurrer
          Rather than file an amended complaint, on May 7, 2012, appellant moved
for reconsideration of the court’s order on the ground that “new or different facts”
supported granting leave to amend with respect to the third and fourth counts of the
first cause of action and the third cause of action. However, appellant identified no
new facts. He simply argued, as he had in his original opposition, that tender was
not required as a matter of law.6
          On May 14, respondents moved to dismiss the action on the ground that
appellant had failed to timely amend the claims for which leave had been granted.
Appellant opposed the motion and filed a pleading entitled “second amended
complaint.” However, the pleading did not amend the first or second count of the
first cause of action or the second cause of action as permitted by the court.
Instead, it asserted new causes of action for breach of contract, negligence, bad
faith breach of contract, wrongful foreclosure, and negligent and intentional
infliction of emotional distress.7
          The court granted the motion to dismiss. Judgment was entered. This
appeal followed.


                                        DISCUSSION
          In his brief on appeal, appellant contends that the trial court erred in
sustaining the demurrer to the third and fourth counts of the first cause of action --
declaratory relief and “[e]xistence of [a]n [o]bligation – [n]o [c]reation of [r]ights”



6
          The court had not sustained the demurrer to those claims based on failure to allege
tender.
7
          The new pleading was essentially the original complaint with a new title.

                                               7
-- and to the third cause of action for an accounting without leave to amend.8
When a demurrer is sustained without leave to amend, an appellate court “first
review[s] the complaint de novo to determine whether the complaint alleges facts
sufficient to state a cause of action under any legal theory or to determine whether
the trial court erroneously sustained the demurrer as a matter of law.” (Aguilera v.
Heiman (2009) 174 Cal.App.4th 590, 595.) “Second, we determine whether the
trial court abused its discretion by sustaining the demurrer without leave to
amend.” (Ibid.) We will conclude that the trial court abused its discretion by
denying leave to amend if there is a reasonable probability that the complaint could
have been amended to cure its defects. (Barroso v. Ocwen Loan Servicing, LLC
(2012) 208 Cal.App.4th 1001, 1008.) “It is plaintiff’s burden to establish that the
complaint could be amended to cure any pleading defect.” (Ibid.) “To meet this
burden, a plaintiff must submit a proposed amended complaint or, on appeal,
enumerate the facts and demonstrate how those facts establish a cause of action.”
(Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 890; accord, Von
Batsch v. America Dist. Telegraph Co. (1985) 175 Cal.App.3d 1111, 1118
[plaintiff establishes abuse of discretion by “showing in what manner it can amend
its complaint and how that amendment will change the legal effect of its
pleading”].)
       In his brief, appellant contends, without elaboration, that the trial court
improperly relied on Gomes v. Countrywide Home Loans (2011) 192 Cal.App.4th
1149 in sustaining the demurrer to counts three and four. In Gomes, the defaulting

8
        Appellant does not assign error to any other ruling of the court. Appellant devotes
a significant portion of his brief to discussing whether he should have been excused from
tender. As noted, the trial court did not sustain the demurrer to the third and fourth
counts of the first cause of action or to the accounting cause of action based on a failure
to allege tender.

                                             8
borrower claimed that MERS lacked the authority to initiate a foreclosure. The
court held, among other things, that the claim was precluded by the deed of trust
executed by the borrower which recognized MERS’s authority to act. (Gomes,
supra, 192 Cal.App.4th at p. 1157.) Here, the trial court properly relied on Gomes
in sustaining the demurrer to the third and fourth counts because appellant, like the
borrower there, voluntarily signed a deed of trust naming MERS as the nominee
for the lender with the right to foreclose and sell the property if necessary to
enforce the debt. As the court stated in Gomes: “[The borrower’s] agreement that
MERS has the authority to foreclose . . . precludes him from pursuing a cause of
action premised on the allegation that MERS does not have the authority to do so.”
(Ibid.)
          Appellant cites Sacchi v. Mortgage Electronic Registration Systems, Inc.
(C.D. Cal. June 24, 2011) 2011 U.S. Dist. LEXIS 68007, suggesting that it
supports his claim that the foreclosure was not initiated by the correct party. In
that case, a party who had not been identified in the deed of trust as having any
relation to the transaction recorded a “Substitution of Trustee” purporting to
substitute a new trustee for the one identified in the deed of trust; immediately
thereafter, the new trustee executed and recorded a Notice of Trustee’s Sale. (2011
U.S. Dist. LEXIS 68007 at *15.) As in the present case, MERS was identified as
the beneficiary or lender’s nominee in the deed of trust. (Id. at *8.) However,
there was no evidence that MERS had assigned its interest to the other party prior
to that party’s attempt to name a new trustee and initiate a foreclosure. The court
recognized that the issue was not “whether MERS had the authority to transfer its
beneficial interest in the deed and to take other action on behalf of the lender,” but
whether “[a third party] could lawfully function as the beneficial interest holder by
executing a Substitution of Trustee . . . before MERS actually transferred any
interest . . . .” (Id. at *20-21.) Appellant has not alleged that any unidentified
                                            9
party attempted to step in as beneficiary or nominee. Nor has he alleged an
attempt to name a new trustee; ReconTrust, which recorded the notice of
default/trustee’s sale, was specifically named trustee in the deed of trust.
Accordingly, appellant’s reliance on Sacchi to suggest that he could amend his
complaint to assert a cognizable cause of action is misplaced.
         With respect to the accounting claim, appellant’s bare allegation that “[t]he
amount of money [respondents] owe [him] is unknown . . . and cannot be
determined without an accounting” where no allegations support that respondents
owe him any monetary obligation is patently insufficient to support the accounting
claim. (See Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179 [“A cause of
action for an accounting requires a showing that a relationship exists between the
plaintiff and defendant that requires an accounting, and that some balance is due
the plaintiff that can only be ascertained by an accounting.”].) In sum, appellant
has not met his burden of demonstrating that effective amendments to the third and
fourth counts of the first cause of action or to the third cause of action exist. We
conclude, therefore, that the trial court did not abuse its discretion in sustaining the
demurrer to the claims without leave to amend.
         Appellant contends that if given the opportunity, he could have amended his
complaint to allege facts demonstrating fraud. He ignores the fact that he alleged a
claim for fraud in the FAC -- the first count of the first cause of action. The trial
court ruled that the fraud claim was not set forth with sufficient specificity and
granted leave to amend. On appeal, appellant does not allege that the demurrer to
the fraud claim was improperly sustained. Accordingly, he has forfeited any
contention of error with respect to this count. (See Doe v. California Dept. of
Justice, supra, 173 Cal.App.4th at p. 1113.) In any event, appellant did not state
below and does not state on appeal how he could correct the defects in the fraud
claim.
                                            10
                                 DISPOSITION
     The judgment is affirmed.
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS




                                          MANELLA, J.


We concur:




EPSTEIN, P. J.




WILLHITE, J.




                                     11
