Torres v. Flagstone Bank
Filed 7/23/13 Torres v. Flagstone Bank CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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 SIX
JOHN HENRY TORRES,
Plaintiff and
Appellant,
v.
FLAGSTONE BANK FSB, FEDERAL NATIONAL MORTGAGE ASSOCIATION,
et al.,
Defendants and
Respondents.
2d Civil No.
B240936
(Super. Ct. No.
56-2011-00390821-CU-OR-SIM)
(Ventura
County)
John Henry Torres' house
was sold at a foreclosure sale after he defaulted on a loan secured by a
filed this lawsuit against the lender, Flagstar Bank, FSB (Flagstar), its
nominee, Mortgage Electronic Registration Systems, Inc. (MERS), and other
entities involved in the foreclosure process.
The trial court sustained without leave to amend respondents' demurrer
to appellant's third amended complaint.
He appeals from the resulting order dismissing the action, contending he
alleged facts sufficient to state causes of action for negligence, fraud and
wrongful foreclosure because the foreclosure occurred without a notice of
default and because the lender concealed the participation of MERS and the
Federal National Mortgage Association (Fannie Mae) in the loan and deed of
trust. We affirm.
In March 2007, appellant
and his wife executed a deed of trust in favor of Mortgage Electronic Registration
Systems, Inc. (MERS) as beneficiary and nominee for the lender, Flagstar Bank,
FSB (Flagstar). The deed of trust
secures a promissory note for $385,000 and covers a single family home in Simi
Valley (the Property). In June 2012, MERS assigned its beneficial
interest under the deed of trust to Flagstar, and Flagstar assigned its
interest to Fannie Mae. At the same
time, PLM Lender Services, Inc. (PLM) was substituted as the trustee under the
deed of trust. The assignments were
recorded in June 2010 and March 2011, respectively. The substitution of trustee was recorded in
January 2011.
A notice of default was
recorded with respect to the property on June 22, 2010. A
notice of trustee's sale was recorded on January
4, 2011. The property was
sold to Fannie Mae at the trustee's sale on March 2, 2011. The trustee's deed upon sale was recorded on
March 4, 2011.
Appellant filed his
original complaint in February 2011.
After demurrers were sustained with leave to amend, appellant filed a
second amended complaint in May 2011.
The pleading alleges 16 causes of action related to what appellant
believes was a wrongful foreclosure. He
contends among other things that Fannie Mae's participation in the loan was
concealed from him, that Flagstar Bank was a servicing agent and not the
lender, that MERS lacked authority to transact business in the state of
California, and that the foreclosure sale occurred without a valid notice of
default, and that the substitutions of trustee were invalid. These factual allegations are contradicted by
the documents attached as exhibits to the complaint which include the
substitutions of trustee. The trial
court sustained respondents' demurrers with leave to amend. Its lengthy minute order gave a detailed
description of the defects in appellant's pleading and the allegations he would
need to make to withstand a subsequent demurrer.
Appellant filed his
third amended complaint in November 2011, alleging causes of action for
negligence, fraud and wrongful foreclosure based on the same facts alleged in
his previous pleadings. Respondents once
again demurred, on the ground that the facts failed to state a cause of action
on any theory. The trial court agreed
and sustained the demurrer without leave to amend.
Standard
of Review
A demurrer tests the
legal sufficiency of the complaint and should be sustained if the facts alleged
in the complaint fail to state a cause of action as a matter of law. (Balikov
v. Southern California Gas Co. (2001) 94 Cal.App.4th 816, 819.) On appeal, we review de novo the trial
court's order sustaining the demurrer.
We assume the truth of all material facts properly pleaded, as well as
facts that may reasonably be inferred or implied from those expressly
alleged. We also consider any facts that
have properly been the subject of judicial notice. (Evans
v. City of Berkeley (2006) 38 Cal.4th 1, 5; Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494,
1500-1501.) We disregard any
contentions, deduction or conclusion of fact or law that may have been alleged
in the complaint. (People ex rel. Gallegos v.
Pacific Lumber Co. (2008) 158 Cal.App.4th 950, 957.) In addition, " 'we give the complaint a
reasonable interpretation, reading it as a whole and its parts in their
context.' " (Evans v. City of
Berkeley, supra, 38 Cal.4th at p. 5, quoting Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
We review the trial
court's decision to deny leave to amend for abuse of discretion. If appellant shows a reasonable possibility
that the defects in the pleading could be cured by amendment, we must reverse
the trial court's order. (
318.)
Discussion
Appellant's third
amended complaint attempts to allege a cause of action for negligence by
pleading that respondents owed him a duty to maintain accurate loan records
including a record of payments made on the loan. The loan records are not accurate because they
did not disclose that "the moneys came from Fannie Mae without being
disclosed and/or a ghost brokerage house on Wall St., which is not licensed to
lend." The "real
lender" never contacted appellant to work out a payment arrangement. "Therefore the loan was never in
default[.] I was never contacted by True
lender." Appellant further
alleges that discovery will show respondents foreclosed on his property
"without having the legal authority and/or proper documentation to do
so."
The trial court
correctly sustained respondents' demurrer to this cause of action without leave
to amend. Appellant has not pled any
facts establishing that respondents owed him a duty of care, an essential
element of a cause of action for negligence.
Nor has he alleged any facts establishing that he made payments on the
loan which were not properly credited.
"[A]s a general rule, a financial institution owes no 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." (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231
Cal.App.3d 1089, 1096.)
Appellant next attempts
to allege a cause of action for fraud.
The trial court correctly sustained respondents' demurrer to the fraud
claim because appellant has not pleaded this cause of action with
specificity. (Murphy v. BDO Seidman, LLP (2003) 113 Cal.App.4th 687,
692.) Appellant has not identified the
person who made the alleged misrepresentations to him, nor has he alleged when,
where or how those misrepresentations were made. (Tarmann
v. State Farm Mutual Auto Ins. Co. (1991) 2 Cal.App.4th 153,
157.) Appellant has not alleged facts
showing he justifiably relied on any misrepresentation or failure to
disclose. (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513,
519.) For example, the third amended
complaint contains no factual allegation explaining how the alleged failure to
disclose Fannie Mae's involvement in the loan caused appellant to change his
position or to do anything he otherwise would not have done. (Alliance
Mortgage Co. v. Rothwell (1995) 10 Cal.App.4th 1226, 1239.)
Finally, appellant has
not alleged any facts explaining how he was damaged by any of the conduct
described in the complaint. He alleges
that the "true" lender never sent him a notice of default and that
substitutions of trustee were improperly recorded, but he does not allege that
he repaid the loan or that his payments were not properly credited to his
account. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256,
272.) The third amended complaint thus
fails to allege that appellant suffered any damage as a result of respondents'
representations or conduct.
Appellant attempts, in
his third cause of action, to allege a claim for "wrongful
foreclosure." The trial court
properly sustained respondents' demurrer to this cause of action because
appellant has not alleged that he has tendered, or can tender payment of the
full amount due on the loan. Tender of
full payment is an essential element of any cause of action challenging the
propriety of a foreclosure. (
(2011) 202 Cal.App.4th 522, 526; Abdallah
v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109.) Because appellant has not, and apparently
cannot allege that he tendered full payment of the loan, he cannot as a matter
of law state a cause of action for wrongful foreclosure.
Disposition
The judgment of
dismissal is affirmed. Respondents shall
recover their costs on appeal.
NOT TO BE PUBLISHED.
YEGAN,
J.
We concur:
GILBERT, P.J.
PERREN, J.
Barbara
Lane, Judge
Superior
Court County of Ventura
John Henry Torres, in
pro per, Appellant.
Palmer, Lombardi &
Donohue; Roland P. Reynods and Alison R. Kalinski, for Respondents.
