Solis v. EMC Mortgage
Filed 7/20/12 Solis v. EMC
Mortgage CA2/8
NOT TO BE PUBLISHED IN THE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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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 EIGHT
LAURA M. SOLIS,
Plaintiff
and Appellant,
v.
EMC MORTGAGE et al.,
Defendants
and Respondents.
B234772
(Los Angeles
County
Super. Ct.
No. KC060076)
APPEAL
from a judgment of the Superior Court
of
County. Steven Blades,
Judge. Affirmed.
Laura
M. Solis, in pro. per., for Plaintiff and Appellant.
AlvaradoSmith,
John M. Sorich, S. Christopher Yoo, Lauren M. Takos, for Defendants and
Respondents EMC Mortgage LLC and Wells Fargo Bank.
____________________________
Plaintiff Laura M. Solis sued EMC
Mortgage LLC (EMC), Wells Fargo Bank, National Association as Trustee for the
Certifcateholders of Structured Asset Mortgage Investments II Inc., Bear
Stearns Mortgage Funding Trust 2007-AR3 Mortgage Pass Through Certificates,
Series 2007-AR3 (Wells Fargo), and Quality Loan Service Corporation (Quality),
after she defaulted on a secured real estate loan and lost her property to foreclosure. In her complaint, Solis asserted claims for
intentional infliction of emotional distress, “promissory note,” and rescission. EMC and Wells Fargo demurred to the complaint. The trial court sustained the demurrer
without leave to amend. We affirm the
judgment.
FACTUAL
AND PROCEDURAL BACKGROUND
In November 2010, Solis filed a complaint against EMC, Wells
Fargo, and Quality. The complaint
attached and incorporated by reference a number of exhibits, including copies
of recorded documents. We begin our
discussion of the background with the facts set forth in these documents. (Boschma
v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 235 (
Lending 1st Mortgage, LLC (Lending 1st), the trustee as Fidelity National Title
Company (Fidelity), and Mortgage Electronic Registration Systems, Inc. (MERS)
as the nominee of the beneficiary.
Lending 1st loaned Solis $348,000.
On November 17, 2009,
Fidelity and MERS as nominee for Lending 1st, substituted EMC as trustee in
place of Fidelity. On April 27, 2010, Quality, acting as
agent for the beneficiary, recorded a notice of default. The notice of default indicated that to find
out the amount owing, or to arrange for payment to stop the foreclosure, the
borrower was to contact EMC, care of Quality, and provided an address. On May
14, 2010, MERS assigned all beneficial interest under the deed of
trust to Wells Fargo. On June 8, 2010, Wells Fargo, acting
through EMC, its “attorney in fact,” substituted Quality as trustee. On July
28, 2010, Quality recorded a notice of trustee’s sale. On October
26, 2010, a trustee’s deed upon sale was recorded. Wells Fargo was identified as the foreclosing
beneficiary and grantee under the deed.
The
complaint alleged that in January 2007, Solis acquired a loan with Lending 1st
Mortgage, LLC, for $348,000. Solis was
unable to make regular payments and defaulted on the loan. Solis applied for several loan modifications
but was denied. Solis then studied her
loan documents and “found many irregularities.”
She sent various entities requests for certified copies of the original
loan documents, and notices to “cease and desist” actions relating to the
loan. The complaint attached and
referenced exhibits that appeared to be these letters or notices. In one exhibit, Solis alleged Lending 1st and
EMC “had not put any lawful consideration into” the promissory note, and “never
put up, nor used, any money of its own to fund the note/mortgage
instrument.” Solis further alleged that
she was “never provided full, complete, and truthful disclosure regarding all
financial instruments [she] was compelled to sign, nor fully apprise [
particulars of the bank’s entire loan process.”
[her] note/mortgage/Loan/Trust Deed,” and she purported to “cancel” her
mortgage. In one letter, Solis demanded,
among other things, that the defendants: “Show me what do I owe this money for;
and what purchases did I make or what Services did I receive”; “Provide me with
letters or proof that I agreed to pay what you say I owe”; “Provide me with
verification or judgment of any debts owed” ; “Prove that the Statute of
Limitations has not expired on this debt”; “Show me that you are authorized to
collect this debt on behalf of the Original Creditor”; and “Give me a copy of
the original signed loan or credit card application with the Original
Creditor.”
The complaint alleged EMC “forwarded copies of certified
copies from escrow of the note & deed of trust,” but “EMC didn’t certify
those copies therefore the copies are not valid.” The complaint further alleged EMC “failed to
validate the loan,” “failed to show consideration was given to [Solis],” and
“failed to show the Sale contract
which shows they bought the loan.” The
complaint alleged Quality had no authority to pursue foreclosure, the defendants
did not own her loan, and they were unable to prove any ownership or interest
in her property. Solis was forced to
miss work to “prepare documents to be able to commence an action against
[defendants],” and she suffered “emotional distress.” The complaint asserted the defendants had no
authority to “cloud the title of the property”; they had not “proven
ownership”; and they had injured Solis by “using agents and other companies to
foreclose in her.”
Defendants EMC and Wells Fargo (collectively
defendants) demurred to the complaint.
They sought judicial notice of several documents in support of the
demurrer, including many of the same recorded documents that Solis attached to
the complaint as exhibits. Defendants’
demurrer challenged the entire complaint as failing to state a claim. The trial court’s tentative order was to
sustain the demurrer, but the court indicated it would hear from Solis why
leave to amend should be granted and as to what causes of action.
At the February 17,
2011 hearing on the demurrer, the court asked Solis if she wished
to file an amended complaint. Solis
responded: “As you can see, all the evidence that supports all the fraud and
all the things that they’ve been doing.
They foreclosed my house behind lies and misleading information. Quality Loan Service was only pursuing to
collect a debt, and they were –foreclosed my house.” The court explained that it could sustain the
demurrer with or without leave to amend, and that if Solis did not think she
could allege any different facts, the order would be to sustain without
leave. The court asked Solis if she
understood. Solis replied: “Kind
of. But I would like for you to revise
my case again because there is enough evidence for everything.” The court indicated it would not “revise” her
case, and that she would have to do so.
The court asked if Solis wanted an opportunity to add facts the court
had indicated were missing. Solis
answered she wanted the opportunity if she had no other choice. The court told Solis she did have a choice,
and she could tell the court she could not add any additional facts. This exchange followed:
“[Solis]: There is enough facts in here.
[Court]: I don’t think
so. I disagree with you.
[Solis]: I object to
your decision.
[Court]: Do you have
any additional facts you can add
[Solis]: They’re all here.”
The
court sustained the demurrer without leave to amend. On March
21, 2011, the trial court entered a judgment in favor of
defendants. This appeal followed.
DISCUSSION
Demurrer
demurrer tests the legal
sufficiency of the complaint. We review
the complaint de novo to determine whether it alleges facts sufficient to state
a cause of action. For purposes of review,
we accept as true all material facts alleged in the complaint, but not
contentions, deductions or conclusions of fact or law. We also consider matters that may be
judicially noticed. (Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.)” (
(2011) 195 Cal.App.4th 1602, 1608-1609, fn. omitted (Hamilton).) Exhibits
attached to a complaint and incorporated by reference may also be considered as
supplying the complaint’s allegations.
(See Del Mar Beach Club Owners
Assn. v. Imperial Contracting Co. (1981) 123 Cal.App.3d 898, 908.) However, “to the extent the factual
allegations conflict with the content of the exhibits to the complaint, we rely
on and accept as true the contents of the exhibits and treat as surplusage the
pleader’s allegations as to the legal effect of the exhibits. [Citations.]”
(Barnett v. Fireman’s Fund Ins.
Co. (2001) 90 Cal.App.4th 500, 505; Boschma,
supra, 198 Cal.App.4th at p. 235.)
her opening brief on appeal, Solis argues the court exceeded its jurisdiction
by “bypass[ing] all procedure,” ruling without considering Solis’s filings, and
failing to conduct proceedings in accordance with the rules of court. Although Solis’s statements are accompanied
by citations to the record, the citations do not support her claims. We have reviewed the record in this case
and find no support for Solis’s contentions that the court failed to consider
her complaint or opposition to the demurrer, or that the court did not comply
with the applicable rules of civil procedure or rules of court. Solis references “contempt,” but there
appears to have been no issue of contempt in this case.
the authority to act as a “tribunal in a court of record.” The record offers no support for the
assertion that the trial court did not have the authority to rule on
defendants’ demurrer or to dismiss Solis’s complaint.
B. Defendants Were Not Required
to Have Possession of the Original Promissory Note or a Beneficial Interest in
the Note and Deed of Trust to Initiate Non-Judicial Foreclosure Proceedings
Solis’s complaint is based almost entirely on allegations
that defendants did not “prove ownership,” they could not show they possessed
the note, and they therefore had no authority to initiate foreclosure
proceedings.
title="">[4] On appeal, Solis has further asserted the
complaint details her efforts “to find the actual owner of the alleged loan,”
and suggests defendants are not “the actual owners of said loan.” Solis asserts defendants’ “inability to
provide the appellant with that actual ownership of the loan is negligence the
law to show [sic] that the lenders [
promissory note and the Deed of Trust are inseparable.” In connection with the fraud claim, Solis
asserts on appeal: “The respondents were sent several documentations to
inquire if there were actual lenders of loan if they were unable to present any
type of evidence they’ve have [sic]
to cease and desist any and all activities.”
Solis makes similar claims on appeal to support her cause of action for
“promissory note.” Thus, Solis’s
complaint appears based in large part on the argument defendants had no right
to foreclose because they did not have physical possession of, or an ownership
interest in, the original promissory note.
A recent case, Debrunner
v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433 (
argument. In Debrunner, the appellant, a private investor, extended a loan to
the debtor, secured by a deed of trust on a home. (Id.
at p. 436.) The debtor was already a
trustor on a first deed of trust on the property and had borrowed money from
Quick Loan Funding, Inc (Quick Loan).
The trustee was Chicago Title Company. Quick Loan assigned the deed of trust and
promissory note to Option One Mortgage Corporation, which assigned both
interests to FV-1, Inc. FV-1, Inc.
assigned the deed of trust to Deutsche Bank, with Saxon Mortgage Services, Inc.
(Saxon) acting as “attorney in fact.” (
Appellant filed a notice of default and foreclosed. But before the foreclosure sale was
completed, the servicer of the first-position loan filed a notice of default. Following a delay because of bankruptcy
proceedings, the foreclosure trustee with respect to the first deed of trust,
Old Republic Default Management Services (Old Republic), recorded a new notice
of default on the property and named Deutsche Bank as the creditor and Saxon as
the “attorney in fact.” The same day the
assignment from FV-1 from Deutsche Bank was recorded, the county also recorded
a substitution of trustee from Chicago Title Company to Old Republic, which was
signed and notarized by Saxon on behalf of Deutsche Bank. (Id.
at pp. 436-437.)
The appellant attempted to stop the
foreclosure and claimed that Deutsche Bank, Saxon, and Old Republic did not
have the right to foreclose because Deutsche Bank did not have physical
possession of or ownership rights to the original promissory note. (Debrunner,
supra, at p. 437.) The trial court
sustained a demurrer to the complaint without leave to amend. (Id.
at p. 438.) On appeal, the appellant
claimed the assignment to Deutsche Bank was invalid and a promissory note had
to be produced to effectuate a foreclosure.
(Id. at p. 439.) He argued “no foreclosure of a deed of trust
is valid unless the beneficiary is in possession of the underlying promissory
note. Without such possession, the deed
of trust is ‘severed’ from the promissory note and consequently is of no
effect.” (Id. at p. 440.)
The appellate court rejected this argument. The court explained that “nonjudicial
foreclosure[s] are governed by [Civil Code] sections 2924 through 2924k, which
do not require that the note be in possession of the party initiating the
foreclosure” and the court saw “nothing in the applicable statutes that
precludes foreclosure when the foreclosing party does not possess the original
promissory note.” (Debrunner, supra, at p. 440.) The court further noted that Civil Code
section 2924, subdivision (a)(1) “permits a notice of default to be filed by
the ‘trustee, mortgagee, or beneficiary, or any of their authorized
agents.’ The provision does not mandate
physical possession of the underlying promissory note in order for this
initiation of the foreclosure to be valid.”
(Debrunner, supra, at p 440
Moreover, quoting a federal case, the Debrunner court noted: “ ‘There is no stated requirement in
California’s non-judicial foreclosure scheme that requires a beneficial
interest in the Note to foreclose. Rather, the statute broadly allows a trustee,
mortgagee, beneficiary, or any of their agents to initiate non-judicial
foreclosure. Accordingly, the statute
does not require a beneficial interest in both the Note and the Deed of Trust
to commence a non-judicial foreclosure sale.’
[Citation.]” (
Solis’s complaint and her additional arguments on appeal
depend on the claim that defendants have not proven “ownership,” or possession
of the promissory note, and they therefore had no authority to initiate
foreclosure on the deed of trust. We
agree with the court in Debrunner that
this argument fails. (See also
Cal. 2010) 692 F.Supp.2d 1240, 1250-1251 [rejecting negligence claim based on
alleged non-possession or maintenance of the original promissory note];
(E.D.Cal. 2010) 702 F.Supp.2d 1183, 1189 [dismissing declaratory relief claim
based on allegation that defendant did not possess promissory note].) We also note that while in her complaint and
on appeal Solis frequently focuses on defendants’ alleged failure to “prove”
the validity of their actions, “a nonjudicial foreclosure is presumed to have
been conducted regularly, and the burden of proof rests with the party
attempting to rebut this presumption.” (
(2011) 198 Cal.App.4th 256, 270 (Fontenot).) If Solis contended the foreclosure was
invalid because defendants did not have legal
authority to conduct the sale, the burden rested with her “affirmatively to
plead facts demonstrating the impropriety.”
(Id. at p. 270.) With these principles in mind, we briefly
turn to each of Solis’s asserted causes of action.
C. Negligence
In support of the negligence cause of action, the complaint
alleged defendants breached a duty of care they owed to Solis by “acting under
the color of law to foreclose on [Solis’s] property” and by failing to prove
their ownership or interest in the loan.
The complaint further alleged that the defendants “acted
negligently by continuing to pursue [an] unlawful foreclosure even after being
noticed several times to cease all actions.”
Aside from the conclusory statement that the foreclosure was unlawful,
there are no allegations asserted to establish the foreclosure was
invalid. The complaint did not
state a claim for negligence.
D. Fraud
Similarly, the complaint alleged defendants were liable for
fraud because “EMC was collecting and
has been trying to collect further payments for a loan they can’t prove is
valid”; defendants “[have] not legally proven ownership of interest there for
trying to collect on a loan that is invalid and fraudulent”; defendants “are
fraudulently trying to collect on a loan where they have not proven that they
gave consideration for that loan”; “It is illegal for a Bank to lend, borrow,
or give credit or consideration for a loan”; “MERS is not authorized to conduct
business in the state of California”; defendants knew “MERS could not be a
nominee for Mortgage 1st Lending”; defendants proceeded “with a loan that is
fraudulent and void since its inception”; defendants “have not shown any
contract where [Solis] owes consideration that they gave to her”; and
defendants “proximately committed fraud by trying to act above the law and
under the color of law while injuring [Solis].”
“The essential allegations of a
cause of action for deceit are representation, falsity, knowledge of falsity,
intent to deceive, and reliance and resulting damage (causation). (5 Witkin, Cal. Procedure (5th ed. 2008)
Pleading, § 710, p. 125.) ‘[
general and conclusory allegations do not suffice.’ [Citation.]
The particularity requirement ‘ “necessitates pleading facts
which ‘show how, when, where, to whom, and by what means the representations
were tendered.’ ” [Citation.] A plaintiff’s burden in asserting a
against a corporate employer is even greater.
In such a case, the plaintiff must “allege the names of the persons who
made the allegedly fraudulent representations, their authority to speak, to
whom they spoke, what they said or wrote, and when it was said or written.”
’ [Citation.]” (Hamilton,
supra, 195 Cal.App.4th at p. 1614.)
Solis’s complaint did not allege defendants made false
representations to her, an intent to deceive, or that Solis relied on any false
representations. The complaint also
failed to plead any specific facts alleging particular individuals made false
representations to Solis. The complaint
failed to state a claim for fraud.
E. Intentional Infliction of Emotional Distress
The claim for intentional infliction
of emotional distress suffers from similar deficiencies. The elements of a claim for intentional
infliction of emotional distress are: “ ‘(1) extreme and outrageous conduct by
the defendant with the intention of causing, or reckless disregard of the
probability of causing, emotional distress; (2) the plaintiff’s suffering
severe or extreme emotional distress; and (3) actual and proximate causation of
the emotional distress by the defendant’s outrageous conduct.’ [Citation.]”
(Ess v. Eskaton Properties, Inc.
(2002) 97 Cal.App.4th 120, 129.) Solis’s
complaint did not allege facts sufficient to state this claim. The complaint alleged defendants did not show
they had an interest in her loan, they did not have such interest, they tried
to collect an invalid loan, and they did not have authority to initiate
foreclosure proceedings. However, the
complaint admits Solis sought and received a real estate loan. There are no allegations explaining how this
loan was invalid. The complaint alleged
no facts showing defendants did not have an interest in the loan, and instead
attached and referenced exhibits that, on their face, purport to show the
opposite. None of the complaint’s
allegations described extreme or outrageous conduct; a lawful foreclosure
cannot be considered extreme or outrageous.
The complaint alleged Solis was “emotionally distressed by EMC &
Quality’s constant Harassment by mail and Phone.” However, there are no other allegations
explaining this statement. Outrageous
conduct for purposes of an intentional infliction of emotional distress claim
is conduct “ ‘so extreme as to exceed all bounds of that usually tolerated in a
civilized community.’ [Citation.] An assertion of legal rights in pursuit
of one’s own economic interests does not qualify as ‘outrageous’ under this
standard. [Citations.]” (Yu v.
Signet Bank/Virginia (1999) 69 Cal.App.4th 1377, 1398.)
F. “Promissory Note”
The complaint asserted a cause of
action entitled “promissory note.” It is
unclear what claim this was intended to be.
However, the allegations accompanying the “promissory note” heading were
focused on defendants’ lack of possession of, or ownership interest in, the
original promissory note. As explained
above, this is not a valid legal theory of liability. In her reply brief, Solis asserts a number of
arguments related to MERS. As we understand her argument, Solis contends MERS,
as a nominee of the beneficiary, did not have the authority to assign the
promissory note underlying the deed of trust.
This argument was rejected in Fontenot,
supra, 198 Cal.App.4th 256.
In Fontenot, the
plaintiff gave Alliance Bancorp a promissory note secured by a deed of trust in
real property. MERS was identified as
the nominee of the lender in the deed of trust.
(Fontenot, supra, at p.
260.) Another entity served the
plaintiff with a notice of default.
Subsequently, MERS assigned the deed of trust to HSBC Bank USA,
N.A. (Ibid.) Wells Fargo later
foreclosed on the property and sold it.
(Id. at pp. 260-261.) The plaintiff’s complaint alleged “MERS was
not the ‘true’ beneficiary under the deed of trust, never had ownership of the
promissory note, and never held an assignable interest in the note or deed of
trust. As a result, any assignment of
the note by MERS to HSBC was invalid. In
addition, plaintiff alleged the ‘trustee substitution’ was ‘invalid due to the
fact that the transmission of any interest in Plaintiff’s note from MERS is
void.’”
at p. 262.) The trial court sustained
MERS’s demurrer to the complaint without leave to amend. (Id.
at p. 263.)
The court of appeal rejected the plaintiff’s arguments
relating to MERS. The court explained
that “the lack of a possessory interest in the note did not necessarily prevent
MERS from having the authority to assign the note. While it is true MERS had no power in its
own right to assign the note, since it had no interest in the note to assign,
MERS did not purport to act for its own interests in assigning the note. Rather, the assignment of deed of trust
states that MERS was acting as nominee for the lender, which did possess
an assignable interest. A ‘nominee’ is a
person or entity designated to act for another in a limited role—in effect, an
agent. [Citations.] The extent of MERS’s authority as a nominee
was defined by its agency agreement with the lender, and whether MERS had the
authority to assign the lender’s interest in the note must be determined by
reference to that agreement.
[Citations.] Accordingly, the
allegation that MERS was merely a nominee is insufficient to demonstrate that
MERS lacked authority to make a valid assignment of the note on behalf of the
original lender.” (Fontenot,
supra, at pp. 270-271, fn. omitted.)
This reasoning is equally applicable here.
The Fontenot court
also rejected an argument Solis makes here, namely that MERS could not act both
as a nominee for the beneficiary and as the beneficiary. As the court explained: “Contrary to
plaintiff’s assertion, the deed of trust did not designate MERS as both beneficiary of the deed of trust and
nominee for the beneficiary; rather, it states that MERS is the beneficiary,
acting as a nominee for the lender. There
is nothing inconsistent in MERS’s being designated both as the beneficiary and
as a nominee, i.e., agent, for the lender.
The legal implication of the designation is that MERS may exercise the
rights and obligations of a beneficiary of the deed of trust, a role ordinarily
afforded the lender, but it will exercise those rights and obligations only as
an agent for the lender, not for its own interests. Other statements in the deed of trust
regarding the role of MERS are consistent with this interpretation, and there
is nothing ambiguous or unusual about the legal arrangement.” (Fontenot,
supra, at p. 273.)
As in Fontenot,
Solis has not alleged any facts to support a claim that the foreclosure was
invalid because MERS did not have the authority to assign the lender’s interest
in the original promissory note.
G. Rescission and Declaratory Relief
support of the rescission cause of action, the complaint alleged defendants had
no authority to act if they could not prove legal ownership of “the loan,” and “[t]he
existence of fraud, false representation, negligence, impossibility of
performance, and non-production of the original Documents by [defendants] are
grounds for rescission or cancellation of the alleged loan.” The complaint demanded that “all documents
clouding the title of [her] property to be
rescinded . . . .”
But the complaint offered no additional allegations to support this
claim. Solis has not alleged facts
sufficient to state a claim for fraud, thus she has no legal basis to seek
rescission as a remedy. Similarly, the
complaint sought declaratory relief based on defendants’ alleged inability to
“prove any ownership and/or interest” in the property. For the reasons explained above, this
allegation does not state a claim. The
complaint did not set forth a viable basis for declaratory relief.
II. The
Trial Court Did Not Abuse its Discretion in Sustaining the Demurrer Without
Leave to Amend
Solis asserts the trial court
should have granted her leave to amend her complaint. “When a demurrer is sustained without leave to amend, ‘we decide whether
there is a reasonable possibility that the defect can be cured by amendment: if
it can be, the trial court has abused its discretion and we reverse; if not,
there has been no abuse of discretion and we affirm.’ [Citation.]
Plaintiff has the burden to show a reasonable possibility the complaint
can be amended to state a cause of action.
[Citation.]” (
1609.)
At the hearing on the demurrer,
Solis indicated she had no additional facts to add to the complaint, stating
everything was already pled. On appeal,
Solis does not assert she has any additional facts to support a valid
claim. Solis continues to argue
defendants did not prove up their ownership of the promissory note or a valid
interest that would permit them to initiate foreclosure proceedings. She has not demonstrated how her pleading can
be amended to state a viable claim. The
trial court did not abuse its discretion in sustaining the demurrer without
leave to amend.
DISPOSITION
The
judgment is affirmed. Each party to bear its own
costs on appeal.
BIGELOW,
P. J.
We concur:
FLIER, J. YEGAN, J.
did not join the Wells Fargo and EMC demurrer.
The trial court order sustaining the demurrer without leave to amend
applied only to the Wells Fargo and EMC demurrer, and the subsequent judgment
was entered in favor of Wells Fargo and EMC.
Quality is not a party to this appeal.
exhibits also include a full reconveyance recorded by EMC as trustee in
November 2009, and subsequent correspondence from EMC’s attorneys indicating
the reconveyance was erroneously recorded.
Although these documents were attached to the complaint as exhibits, it
does not appear that any of Solis’s claims are based on the reconveyance or its
cancellation.
