Madden v. Bank of
Filed 1/24/13 Madden v. Bank of America 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
HEATHER MADDEN,
Plaintiff and
Appellant,
v.
BANK OF AMERICA, N.A.,
Defendant and
Respondent.
2d Civil No.
B241849
(Super. Ct. No.
1379802)
(Santa Barbara
County)
Heather Madden appeals
from the judgment entered after the trial court sustained without leave to
amend the demurrer of respondent Bank of America to her first amended complaint
for fraud, "lack of standing" to bring a foreclosure action and
several other legal theories. Appellant
obtained a loan, secured by a deed of trust on her house, from respondent's
predecessor. Respondent initiated a
nonjudicial foreclosure on the deed of trust after appellant defaulted on the
loan. Appellant alleges, among other
claims, that respondent refused to modify the loan unless she was in
default. When she defaulted, respondent
foreclosed without first offering to modify the loan. Appellant also alleges that respondent lacks
standing to foreclose because there is no recorded document assigning the
original promissory note and deed of trust
to respondent. The trial court sustained
respondent's demurrer without leave to amend after it concluded appellant
failed to state a claim for relief on any of the theories alleged in her
complaint. Appellant contends the trial
court erred because she properly alleged causes of action for fraud and
"lack of standing" to bring a foreclosure action. We affirm.
Facts
In 2005, appellant
obtained a loan for $738,000 from respondent's predecessor, Countrywide
Bank. The loan was evidenced by a
promissory note and secured by a deed of trust on appellant's Carpinteria
home. Appellant alleges that, after the
interest rate on the loan adjusted upward, she requested a loan modification
from respondent. Respondent refused to
consider the modification request because her loan payments were current. Employees of respondent instructed appellant
to default on the loan and represented that respondent would negotiate a loan
modification after she did so. Appellant
stopped making payments on the loan.
Respondent did not, however, offer to modify the terms of the loan. Instead, it began nonjudicial foreclosure
proceedings.
The beneficiary named in
the deed of trust is Mortgage Electronic Registration Systems, Inc. (MERS), as
nominee for the lender, respondent's predecessor, Countrywide Bank. After appellant defaulted, MERS substituted
Recontrust Company, N.A. (Recontrust), as the trustee of the deed of trust. Recontrust issued the notice of default and
notice of trustee's sale for respondent, as beneficiary of the trust deed. Appellant alleges none of these entities have
"standing" to initiate the foreclosure because there are no recorded
documents assigning Countrywide's beneficial interest to respondent, Bank of
America. Assignments by MERS have no
effect, appellant contends, because MERS never owned a beneficial interest in
the note or the deed of trust.
Appellant's first
amended complaint attempts to allege causes of action for
contract, breach of the covenant of good faith and fair dealing, violation
of Civil Code section 2923.6, quiet title, declaratory relief and lack of
standing. Respondent's demurrer
contended that the complaint failed to a state a cause of action on any of the
theories alleged. When it sustained
respondent's demurrer without leave to amend, the trial court agreed with
respondent's analysis. In particular, it
concluded that appellant failed to allege with specificity the factual
misrepresentation required to state a claim for fraud. It further concluded that no cause of action
exists to test the "standing" or authority of an entity to commence a
nonjudicial foreclosure. (
1154-1155.)
Appellant's brief on
appeal addresses only the claims for fraud and lack of standing. As a consequence, she has waived appellate
review of the trial court's decision to sustain the demurrer to the remaining
claims alleged in her first amended complaint.
(State Water Resources Control Bd.
Cases (2006) 136 Cal.App.4th 674, 835-836; Jones v. Superior Court (1994) 26 Cal.App.4th 92, 99.) Appellant has also abandoned that portion of
her fraud claim in which she alleges that Countrywide defrauded her by failing to offer her a loan on more
favorable terms and by failing to disclose to her all of the terms of the
original loan (e.g., the adjustable interest rate, high fees and high
prepayment penalty). The trial court
concluded these allegations also failed to state a cause of action for
fraud. Appellant's opening brief on
appeal does not mention this aspect of her fraud claim and presents no argument
that the trial court erred in sustaining respondent's demurrer to it. As a result, appellant has abandoned any
claim based on these allegations. (
Schroeder (2009) 179 Cal.App.4th 834, 847, fn. 11;
139 Cal.App.4th 659, 685.)
Standard
of Review
We independently review
the trial court's order sustaining the demurrer to determine whether the facts
alleged in appellant's first amended complaint state a cause of action under
any legal theory. (Berger v. California Ins. Guarantee Assn. (2005) 128
Cal.App.4th 989, 998;
Monclair (1999) 76 Cal.App.4th 784, 790.) In doing so, we give the complaint a
reasonable interpretation, assuming the truth of all facts properly pleaded and
of any facts that may reasonably be implied or of which judicial notice may be
taken. (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th
809, 814; Aubry v. Tri-City Hostpial
Dist. (1992) 2 Cal.4th 962, 967.) We
will affirm the order sustaining the demurrer if it is correct on any legal
theory. (Curcini v. County of Alameda (2008) 164 Cal.App.4th 629,
637.)
We review the trial
court's decision to deny leave to amend for abuse of discretion. "[W]e 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 and we affirm.
[Citations.] The burden of
proving such reasonable possibility is squarely on the plaintiff." (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318.)
Discussion
To state a cause of
action for fraud, a pleading must allege:
(1) a misrepresentation; (2) knowledge that the statement is false; (3)
intent to defraud (e.g., to induce reliance on the misrepresentation); (4)
justifiable reliance; and (5) resulting damage.
(Lazar v. Superior Court
(1996) 12 Cal.4th 631, 638.) Fraud must
be pled with specificity. " '
"This particularity requirement necessitates pleading facts which show
how, when, where, to whom and by what means the representations were
tendered." ' " (Id. at p.
645.)
Appellant contends she
properly alleged a cause of action for fraud because her first amended
complaint alleges that respondent's employees induced her to default on her
loan by representing that respondent would not consider modifying the loan
until she was at least two months behind on her payments. The representation was false, she alleges,
because respondent never offered to modify the loan and instead began
foreclosure proceedings.
The trial court
correctly concluded these allegations fail to state a cause of action for
fraud. First, the allegations lack the
requisite specificity. "The
requirement of specificity in a fraud action against a corporation requires the
plaintiff to 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." (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153,157.) The first amended complaint contains none of
these specific facts. Second, the
complaint fails to allege that respondent knowingly made a false statement of
fact to appellant. She alleges that
employees of respondent told her the bank would not consider modifying her loan
unless she was at least two months behind in her payments. She does not allege that the unnamed employee
who made the statement knew or believed it to be false at the time it was made. Nor does appellant allege that, when the representation
was made, respondent actually permitted loan modifications for borrowers who
were not in default or at risk of default.
Without an allegation that respondent knowingly made a misrepresentation
of fact to her, appellant cannot state a cause of action for fraud.
Appellant next contends
the trial court erred in sustaining the demurrer on her claim for "lack of
standing." There was no error. This purported cause of action alleges that
respondent lacked standing to initiate the foreclosure proceedings because
there is no recorded document demonstrating its beneficial interest in the
promissory note and deed of trust. But
these allegations do not state a claim for relief. California's nonjudicial foreclosure law
contains no provision allowing a borrower to pursue "a judicial action to
determine whether the person initiating the foreclosure process is indeed
authorized" to do so. (
(2011) 192 Cal.App.4th 1149, 1155; see also, Civ. Code,
§§ 2924-2924k; Herrera v. Fed. Nat'l
Mortg. Assn. (2012) 205 Cal.App.4th 1495, 1503-1505;
(2012) 204 Cal.App.4th 433, 441.)
Nor does the Civil Code require that an assignment of a promissory note
or a deed of trust be recorded. (See Civ.
Code, § 2934; Herrera, supra,
205 Cal.App.4th at p. 1509-1510 [Civil Code section 2932.5, requiring that
assignment of a mortgage be recorded, does not apply to a deed of trust].)
Finally, the trial court
did not abuse its discretion when it denied leave to amend. The party seeking leave to amend has to
burden to demonstrate how deficiencies can be cured by amendment. (Fontenot
v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 274-275.) Although she requested leave to amend,
appellant did not explain how she would add greater specificity to her
allegations or whether she would be able to cure the other defects in her fraud
claim. Under these circumstances, the
trial court properly sustained the demurrer without leave to amend.
Conclusion
The judgment is
affirmed. Costs on appeal to respondent.
NOT TO BE PUBLISHED.
YEGAN,
J.
We concur:
GILBERT, P.J.
PERREN, J.
Thomas
P. Anderle, Judge
Superior
Court County of Santa Barbara
______________________________
Dough Michie, for Appellant.
McCarthy & Holthus,
Matthew Podmenik and Melissa Robbins Coutts, for Respondent.
name="_ftn1" title="">[1] Appellant's eleventh hour request for dismissal of the appeal is
denied.
