Zulli v. Mortgage Electronic Registration Systems
Filed 2/5/13 Zulli v. Mortgage Electronic Registration
Systems 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
BRIAN ZULLI,
Plaintiff and
Appellant,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
Defendant and
Respondent.
2d Civil No.
B237041
(Super. Ct. No.
56-2010-00383828-CU-OR-SIM)
(Ventura
County)
Brian Zulli appeals the
order dismissing his complaint against Mortgage Electronic Registration
Systems, Inc. (MERS), following the sustaining of a demurrer without leave to
amend. Appellant contends he
sufficiently pled causes of action against MERS arising from the nonjudicial
foreclosure on his now-deceased mother’s residence. We affirm.
FACTS AND PROCEDURAL HISTORY
In February 2006, Sylvia
Zulli obtained a $1,250,000 loan from Quick Loan Funding, Inc. (Quick Loan) for
the purchase of a residential property in Moorpark (the property). In exchange for the loan, Sylvia
deed of trust naming MERS as the beneficiary.
The deed of trust provides the MERS, "acting solely as a nominee
for" Quick Loan and any of Quick Loan’s successors in interest, had the
right to foreclose and sell the property in the event of Sylvia's breach of her
obligation to repay the loan.
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Under an assignment of
the deed of trust was conveyed to Wells Fargo Bank (Wells Fargo).
assigned interest under the deed of trust included "the Promissory Notes
secured by said Deed of Trust and also all rights accrued or to accrue under
said Deed of Trust." That same
date, Wells Fargo, through its attorney in fact Litton Loan Servicing (Litton),
substituted the Wolf Law Firm as trustee under the deed of trust.
After Sylvia failed to
make several monthly payments on the loan, the Wolf Law Firm caused a notice of
default to be recorded. A notice of
trustee's sale was recorded on July
28, 2009. Prior to the
trustee's sale, Sylvia filed a complaint against MERS, Quick Loan, Wells Fargo,
the Wolf Law Firm and others alleging, among other things, that the assignment of deed of trust
and substitution of trustee executed prior to the foreclosure were
invalid. After Sylvia died in May 2010,
the court granted appellant's motion under Code of Civil Procedure section
377.31 to continue the action as Sylvia's personal representative and successor
in interest. In the meantime, the court
sustained MERS' demurrer to the second amended complaint without leave to
amend.
After judgment in
Sylvia's case was entered in favor MERS, appellant filed the instant
action. The original three and one-half
page complaint filed against MERS, Wells Fargo, and Litton, which was entitled
as an action for "quiet title," was dismissed with leave to amend
following the sustaining of a demurrer based on uncertainty and failure to
state a cause of action. Appellant then
filed a 90-page first amended complaint alleging a total of 24 causes of action
against 20 different defendants. The 17
causes of action against MERS include claims for wrongful foreclosure, fraud,
unjust enrichment, unfair business practices, and slander of title.
MERS demurred to the
first amended complaint. In addition to
challenging the individual causes of action on various grounds, MERS generally
demurred on the ground that its authority to serve and act as beneficiary under
the deed of trust was authorized as a matter of law. The court sustained the demurrer in its
entirety without leave to amend and dismissed the
prejudice.
DISCUSSION
Appellant contends the
court erred in sustaining MERS' demurrer to his first amended complaint without
leave to amend and entering a judgment of dismissal in its favor. He asserts that he should have been allowed
to proceed against MERS based on his allegations that the assignment of deed of
trust and substitution of trustee executed prior to the foreclosure were ineffective
and/or fraudulent. We disagree.
"We review an order
sustaining a demurrer de novo, exercising our independent judgment to determine
whether a cause of action has been stated under any legal theory. [Citation.]
We accept as true properly pleaded allegations of fact, but not
contentions, deductions or conclusions of fact or law. [Citation.]
We also consider matters subject to judicial notice. [Citation.]
'The burden is on appellant to demonstrate the manner in which the
complaint might be amended, and the appellate court must affirm the judgment if
it is correct on any legal theory.'
[Citation.]" (
211 Cal.App.4th 505, 509 (Shuster).)
We agree with the trial
court's conclusion that appellant's first amended complaint failed to include
facts sufficient to state a cause of action against MERS, and that the defect
could not be cured by granting leave to amend.
In arguing to the contrary, appellant merely offers his allegations that
(1) the individual who executed the assignment of deed of trust in favor of
Wells Fargo was not a MERS employee or authorized to act on its behalf; and (2)
the individual who executed the substitution of trustee in favor of the Wolf
Law Firm on behalf of Wells Fargo was not a Wells Fargo employee.
Appellant, however,
fails to challenge or even cite two recent cases that are essentially fatal to
his claim. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256,
269-271; Herrera v. Federal National
Mortgage Assn. (2012) 205 Cal.App.4th 1495, 1507.) In both cases, the court held that
allegations MERS had invalidly assigned a deed of trust and note were
insufficient to overcome the sustaining of a demurrer absent a showing of
prejudice. Both courts reasoned: "[I]f MERS lacked authority to transfer
the note, it is difficult to conceive how plaintiff was prejudiced by MERS's
purported assignment, and there is no allegation to this effect. Because a promissory note is a negotiable
instrument, a borrower must anticipate it can and might be transferred to
another creditor. As to plaintiff, an
assignment merely substituted one creditor for another, without changing her
obligations under the note. Plaintiff
effectively concedes she was in default, and she does not allege that the
transfer to HSBC interfered in any manner with her payment of the note
[citation], nor that the original lender would have refrained from foreclosure
under the circumstances presented. If
MERS indeed lacked authority to make the assignment, the true victim was not
plaintiff but the original lender, which would have suffered the unauthorized
loss of a $1 million promissory note."
(Fontenot, supra, at p. 272;
quoting Fontenot.) In Herrera,
the court employed the same reasoning with regard to an allegedly invalid
substitution of trustee. (
Here, appellant fails to
show how he has suffered any prejudice as the result of the purported errors of
which he complains. It is undisputed that
Sylvia was in default when the foreclosure took place, and there is no
allegation that the assignment of deed of trust or substitution of trustee
prevented her from making payments on the loan.
As we recently recognized, the sustaining of a demurrer is also proper
(subject to certain exceptions inapplicable here) against a plaintiff seeking
to set aside a foreclosure who fails to allege tender of the amounts due and
owing under the loan upon which he or she defaulted. (Shuster,
supra, 211 Cal.App.4th at p. 512.)
Because no such allegation was made here, judgment in favor of MERS was
proper.
The judgment is
affirmed. MERS shall recover its
NOT TO BE PUBLISHED.
PERREN,
J.
We concur:
GILBERT, P. J.
YEGAN, J.
Barbara
A. Lane, Judge
Superior
Court County of Ventura
______________________________
Brian Zulli, in pro.
per., for Plaintiff and Appellant.
Houser & Allison,
Eric. D. Houser, Brian J. Wagner, for Defendant and Respondent.
members with the same last name, we refer to appellant's mother by her first
name. We do so merely for ease of
reference and intend no disrespect.
in the amount of $489,700 and executed another promissory note secured by a
deed of trust naming MERS as the beneficiary.
