Sand Canyon Corp.
Filed 2/15/13 Madrid v. Sand Canyon
Corp. CA1/5
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opinion has not been certified for publication or ordered published for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
FIRST
APPELLATE DISTRICT
DIVISION
FIVE
and Appellants,
MORTGAGE CORPORATION et al.,
and Respondents.
A133230
(
Super.
Manuel
and Virginia Madrid appeal from a judgment entered after the trial court
sustained respondents’ demurrers to their amended complaint without leave to
amend. Essentially, appellants argue
that they alleged facts sufficient to state causes of action based on the
execution, notarization, and recordation of a purportedly forged assignment of
a deed of trust to the respondent that pursued foreclosure proceedings against
appellants’ property. We will dismiss
the appeal as to respondent DOCX, LLC, and affirm the judgment as to all other
respondents.
I. FACTS AND PROCEDURAL HISTORY
Appellants
do not deny that they signed the subject note and
property, and they make no claim that they were fraudulently induced into
undertaking the loan or signing those documents. Nor do they dispute that the deed of trust
could be assigned to another lender, or that they have failed to make payments
under the note and deed of trust.
Instead, they contend the assignment of the deed of trust to the
respondent who ultimately foreclosed on their property was forged by respondent
DOCX, LLC (DOCX), and that the assignment therefore did not convey any interest
in the property and the foreclosure could not lawfully proceed.
A. Background
In
May 2007, appellants bought property by borrowing $815,000 from Option One
Mortgage Corporation (Option One), as evidenced by a note and deed of trust
recorded against the property. The deed
of trust identified Option One as the beneficiary (lender), appellants as the
trustor (borrower), and Premier Trust Deed Services, Inc. (Premier Trust) as
the trustee, and further provided that the note or a partial interest in the
note, along with the deed of trust, could be sold one or more times without
prior notice to the borrower.
In
August 2008, an Assignment of Deed of Trust was recorded. The assignment purported that American Home
Mortgage Servicing, Inc. (AMHSI), now known as Homeward Financial, Inc.
(Homeward), was the successor-in-interest to Option One, the original
beneficiary under the deed of trust. It
further represented that AMHSI was assigning the deed of trust to “Wells Fargo
Bank, N.A., as Trustee for the Certificateholders of Soundview Home Loan Trust 2007-OPT2,
Asset-Backed Certificates, Series 2007-OPT2†(Wells Fargo). The assignment was signed on AMHSI’s behalf
by “Linda Green,†who was identified as “Vice President,†and whose signature
was notarized by “Ellis Simmons.â€
In
September 2009, a Notice of Trustee’s Sale
was recorded against the property, asserting that appellants were in default
under the May 2007 deed of trust and the property was scheduled to be sold on September 24, 2009. The property was not sold on that date,
however.
On
February 2, 2010, a Notice
of Default and Election to Sell Under Deed of Trust was recorded, asserting
that appellants were in default in the amount of $82,707.33 as of February 9, 2010.
A
Notice of Trustee’s Sale, recorded on May 3, 2010, again asserted that
appellants were in default under the May 2007 deed of trust, “the total amount
of the unpaid balance of the obligation secured by the above described Deed of
Trust and estimated costs, expenses, and advances [was] $944,172.89,†and the
property was set for sale on May 24, 2010.
B. Original
Complaint
In
December 2010, appellants filed a lawsuit challenging the nonjudicial
foreclosure. They sued Option One,
AMHSI, Wells Fargo Bank, N.A., DOCX, and Premier Trust. Essentially, they contended that Linda Green,
who purportedly signed the assignment of the deed of trust from AMHSI to Wells
Fargo on AMHSI’s behalf, was not authorized to do so. Appellants sought a judicial declaration that
DOCX, AMHSI, and Wells Fargo had no interest in the property.
Demurrers
to the complaint were filed by AMHSI (n/k/a respondent Homeward) and Wells
Fargo, as well as by Option One and Premier Trust (n/k/a respondent Sand Canyon
Corporation). Before the hearing on the
demurrers, appellants filed an amended complaint, and the demurrers were taken
off calendar.
C
First Amended Complaint
Appellants’
amended complaint added revelations they gleaned from an April 2011
episode of the television program “60 Minutes,†by which they were “informed
and believe†that DOCX signed the assignment to Wells Fargo in the name of
Linda Green, and notarized it in the name of Ellis Simmons, but that these
names (or signatures) were false.
1. Allegations
Appellants
allege that DOCX was formed in 2004 for the purpose of manufacturing fraudulent
documents to create the false impression that entities obtained valid,
recordable interests in real properties.
In particular, DOCX employees would sign someone else’s name on the
documents and did not work for the entities on whose behalf they signed. The signatures were then fraudulently
notarized by DOCX notaries.
As
alleged in the amended complaint, a former DOCX employee stated in a
60 Minutes episode that he signed the name of “Linda Green†on thousands
of assignments, made no attempt to determine the legality of the assignments,
and was told by his superiors at DOCX that his signing of the name was
lawful. Linda Green stated that she was
listed as a vice president of several companies with whom she had no
connection, and her name was used on the assignments because it was short and
easy to spell. Another former DOCX
employee said she notarized the purported signatures of Green, even though the
signatures were not Green’s, with authorization from DOCX officers.
In
May 2007, appellants allege, they signed a first deed of trust in favor of
Option One, securing a note of approximately $815,000. Option One then allegedly sold interests in
the deed of trust to other parties as a derivative security, and these parties
in turn sold their respective interests to other parties. Appellants allege there are no “lawful
records†connecting the property to any respondent other than Sand Canyon
(f/k/a Option One, the original beneficiary), whose interest was sold to
unrelated third parties.
According
to the amended complaint, respondents used DOCX’s services to manufacture a
fraudulent assignment from AMHSI to Wells Fargo, because Wells Fargo could not
find documents that would demonstrate that it owned an interest in appellants’
property. Appellants allege, on
information and belief, that Wells Fargo never had a lawful interest in the
property. Nonetheless, on or about
August 7, 2008, at the request of each respondent, DOCX “forged†the assignment
with the name “Linda Green,†which was signed by an unknown DOCX employee and
notarized by “Ellis Simmons.†DOCX then
sent the assignment to other respondents so that it would be recorded, and
respondents caused the assignment to be recorded on August 12, 2008.
Appellants
further allege that they “fully tendered all mortgage payments which were
lawfully due under the [deed of trust], and that they are not in default of
their payments, having lawfully tendered all amounts due and owing.†Although Wells Fargo made demands for
payment, appellants contend that Wells Fargo was not a lawful holder in due
course.
2. Appellants’
Purported Causes of Action
On
the basis of these allegations, appellants purported to assert six causes of
action: (1) slander of title against all
defendants; (2) “tortuous†violation of Penal Code section 470 against all
defendants except Premier Trust; (3) notary fraud against DOCX; (4)
“cancellation of instrument†against Wells Fargo (seeking cancellation of the
assignment); (5) quiet title against all defendants; and (6) declaratory relief
against all defendants. Appellants
sought monetary damages, cancellation of the assignment, quiet title, and
declaratory relief.
3. Respondents’
Demurrers
Separate
demurrers to the amended complaint were filed by: AMHSI (n/k/a Homeward) and Wells Fargo as to
all causes of action against them; Sand Canyon Corporation (f/k/a Option One
and f/k/a Premier Trust) as to all causes of action against Option One and
Premier Trust; and DOCX as to all causes of action against it except the claim
for slander of title.
4. Trial
Court’s Rulings
At
the hearing on the AMHSI/Wells Fargo demurrer on July 21, 2011, appellants did
not identify any additional facts that would support their claims. To the contrary, appellants’ counsel stated: “I do not have a specific fact that I can put
before the Court that is different than what has been pled so far.†By written order dated July 26, 2011, the
court sustained the AMHSI/Wells Fargo demurrer without leave to amend. A judgment of dismissal as to AMHSI and Wells
Fargo was filed on September 14, 2011.
The
court also sustained the demurrer of Sand Canyon (f/k/a Option One and f/k/a
Premier Trust) without leave to amend, by written order filed on August 22,
2011. A judgment of dismissal as to Sand
Canyon (f/k/a Option One and f/k/a Premier Trust) was entered on August 22,
2011.
The
court sustained DOCX’s demurrer without leave to amend as well, by written
order filed on August 24, 2011. No
judgment was entered as to DOCX, however, because the slander of title claim
was still pending against it.
In
September 2011, appellants filed a notice of appeal from the judgment “entered
on July 21, 2011, August 9, 2011, and all other matters which may be the
subject of an appeal.†The dates
referenced in the notice of appeal do not, however, refer to the date of any
judgment, but to the hearing dates of the AMHSI/Wells Fargo demurrer and the
Sand Canyon and DOCX demurrers.
Nonetheless, we will construe the notice of appeal broadly and conclude
that the intention was to appeal from the dismissals of AMHSI, Wells Fargo, and
Sand Canyon (f/k/a Option One and f/k/a Premier Trust).
As
to DOCX, however, appellants’ cause of action for slander of title remained
pending against DOCX at the time of the notice of appeal. On December 2, 2011, DOCX answered
appellants’ amended complaint and filed a motion for judgment on the pleadings
as to the slander of title claim.
Appellants then requested and obtained a voluntary dismissal of the
amended complaint as to DOCX, without prejudice, on January 31, 2012.
II. DISCUSSION
Appellants
contend the demurrers to their amended
complaint should not have been sustained.
We first consider DOCX’s assertion that the appeal should be dismissed
as to DOCX; we then consider appellants’ allegations against the remaining
respondents.
A. Appeal
as to DOCX
DOCX
argues that appellants’ appeal as to DOCX should be dismissed because the order
sustaining DOCX’s demurrer was not an appealable final judgment. Appellants’ do not address this argument in
their appellate brief.
Only
an appealable final order or judgment may be the subject of a direct
appeal. (Civ. Proc. Code,
§ 904.1.) A judgment is final “
‘ “when it terminates the litigation between the parties on the merits of
the case and leaves nothing to be done but to enforce by execution what has
been determined.†’ †(Sullivan
v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 304.)
Here,
no judgment of dismissal was entered against DOCX after DOCX’s demurrer was
sustained. Nor could such a judgment
have been validly entered, since DOCX did not demur to the slander of title
cause of action, and that cause of action remained in the case as against
DOCX. An order disposing of less than
all of the causes of action framed by the pleadings is not a final appealable
order. (Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725,
741.)
Although
appellants filed a voluntary dismissal of the amended complaint as to DOCX
without prejudice after filing their notice of appeal, a voluntary dismissal
without prejudice may not be a final judgment appealable on the merits. (Areso
v. CarMax, Inc. (2011) 195 Cal.App.4th 996, 1001; accord,
205 Cal.App.4th 650, 662-667 [voluntary dismissal without stipulation may be
appealable final judgment; voluntary dismissal pursuant to stipulation
facilitating future litigation is not].)
DOCX urges that no exception to a general rule of nonappealability
applies here, and appellants do not rebut this assertion. In any event, the dismissal occurred after
the notice of appeal was filed, and appellants did not file an amended
The
appeal as to DOCX shall be dismissed.
B. Appeal
as to All Other Respondents
In
our de novo review of an order sustaining a demurrer, we assume the truth of
all facts properly pleaded in the complaint or reasonably inferred from the
pleading, but not mere contentions, deductions, or conclusions of law. (Buller
v. Sutter Health (2008) 160 Cal.App.4th 981, 985-986 (Buller).) We then determine
if those facts are sufficient, as a matter of law, to state a cause of action
under any legal theory. (
590, 595.)
In
order to prevail on appeal, an appellant must affirmatively demonstrate
error. Specifically, the appellant must
show that the facts pleaded are sufficient to establish every element of a
cause of action and overcome all legal grounds on which the trial court
sustained the demurrer. (
Cal.App.4th 857, 879-880.) We will
affirm the ruling if there is any ground on which the demurrer could have been
properly sustained. (
Cal.App.4th 940, 946 (Debro).)
In
this case, we must also be mindful that the foreclosure proceedings with
respect to appellants’ property were conducted pursuant to California’s
nonjudicial foreclosure statutes. (Civ.
Code, §§ 2924-2924k.) These
statutes provide “a comprehensive scheme designed ‘(1) to provide the
creditor/beneficiary with a quick, inexpensive and efficient remedy against a
defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss
of the property; and (3) to ensure that a properly conducted sale is final
between the parties and conclusive as to a bona fide purchaser.’
[Citation.] As a result, a nonjudicial
foreclosure sale is presumed to have been
conducted regularly, and the burden of proof rests with the party
attempting to rebut this presumption.
[Citations.]†(
(2011) 198 Cal.App.4th 256, 270 (Fontenot),
italics added; see Melendrez v. D & I
Investment, Inc. (2005) 127 Cal.App.4th 1238, 1258; Knapp v. Doherty (2004) 123 Cal.App.4th 76, 86, fn. 4 (
Thus, the burden fell squarely on appellants to plead facts
demonstrating the impropriety of the foreclosure proceedings.
Part
of this burden is to allege facts showing that the borrowers were prejudiced
specifically by the claimed irregularity in the foreclosure proceeding. (E.g., Knapp,
supra, 123 Cal.App.4th at p. 86 fn. 4.)
Thus, even if an assignment of a note and deed of trust to the
foreclosing party is alleged to be void, a borrower cannot attack the foreclosure
without adequately alleging how that assignment caused the borrower harm. (See Herrera
v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495, 1507-1508;
(2012) 204 Cal.App.4th 433, 443; Fontenot,
supra, 198 Cal.App.4th at p. 272.)
Because an assignment of a note and deed of trust merely substitutes one
creditor for another, without changing the borrower’s obligations, the victim
of a void assignment is not the borrower, but the assignor who suffers the
unauthorized loss of a promissory note.
(Herrera, supra, 205
Cal.App.4th at p. 1508; Fontenot,
additional facts – such as the assignor (e.g. AHMSI) would have refrained from
foreclosure while the assignee (e.g. Wells Fargo) did not, or the borrower
faced liability under the note and deed of trust to the assignor or a third
party as well as to the assignee – the borrower has not alleged the requisite
prejudice. (See Herrera, supra, 205 Cal.App.4th at p. 1508; Fontenot, supra, 198 Cal.App.4th at p. 272.) As we shall see post, this principle underscores a deficiency in a number of
appellants’ attempts to allege a cause of action.
1. First
Cause of Action: Slander of Title
Slander
of title is “a tortious injury to property resulting from unprivileged, false,
malicious publication of disparaging statements regarding the title to property
owned by plaintiff, to plaintiff’s damage.â€
(Southcott v. Pioneer Title Co.
(1962) 203 Cal.App.2d 673, 676; see Manhattan
Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1051.) A disparaging statement is one intended to
“cast doubt†on the “existence or extent†of another’s property interest. (Glass
v. Gulf Oil Corp. (1970) 12 Cal.App.3d 412, 423.) To be actionable, the disparaging statement
must be relied upon by a third party and cause the property owner pecuniary
loss. (Appel v. Burman (1984) 159 Cal.App.3d 1209, 1214.)
Appellants’
amended complaint does not state a claim for slander of title because it does
not allege a disparaging statement.
Appellants argue that the recordation of the assignment disparaged their
title and falsely created a “cloud†on the title, but neither the assignment
nor its recordation did any such thing.
The encumbrance on their property was created by the original deed of
trust; the fact of the assignment of
the deed of trust – whether or not it was valid – did not create any new
encumbrance or diminish appellants’ interest in the property.
Appellants
also fail to allege pecuniary loss resulting from the assignment. Acknowledging that pecuniary loss is an
essential element of a slander of title claim, appellants suggest in their
opening brief that pecuniary loss resulted from the recordation of the
assignment, but they do not identify exactly what that loss is, and certainly
did not allege any specific facts concerning pecuniary loss in their amended
complaint. By virtue of the note and
deed of trust appellants signed at the outset, appellants were already required
to make certain payments, and the assignment did nothing to change that. Furthermore, the nonjudicial foreclosure was
precipitated not by the assignment itself, but by appellants’ failure to make
those payments. Nor do appellants allege
that the purported assignment to Wells Fargo has subjected them to multiple
liability (such as where, for example, the original assignee or other entities
claiming under other assignments were also seeking enforcement of the note).
The
court did not err in sustaining the demurrers to appellants’ purported cause of
action for slander of title.
2. Second
Cause of Action: Violation of Statute or
Fraud
Appellants’
second cause of action was for tortious violation of Penal Code section 470,
subdivisions (b) and (d). Appellants do
not contend in this appeal, however, that they have any private cause of action
under Penal Code section 470. Instead,
they argue that their allegations state a cause of action for fraud. Appellants are incorrect.
In
the first place, fraud must be alleged with particularity. (Lazar
v. Superior Court (1996) 12 Cal.4th 631, 645; Winn v. McCulloch Corp. (1976) 60 Cal.App.3d 663, 670;
(2011) 195 Cal.App.4th 1602, 1615.) The
amended complaint contains no specific allegations of fraud by AHMSI, Wells
Fargo, Option One, or Premier Trust, but merely general allegations on
information and belief that “defendants†prompted DOCX to forge the assignment
and boilerplate allegations that they authorized or ratified DOCX’s
actions. These allegations are
insufficient.
Furthermore,
a fraud cause of action requires an allegation of justifiable and reasonable
reliance on a misrepresentation, as well as an allegation of resulting
damage. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979,
990.) Appellants’ amended complaint
alleges neither: it does not assert that
the assignment (including its execution, notarization, and recordation) caused
appellants to take any action in reasonable reliance upon its representations,
or that appellants suffered any loss as a result. Nor does it allege that appellants were
harmed as a result of a third party’s reliance upon the representations of the
assignment, or that the assignment caused appellants any loss or damage that
they would not have been obligated to incur if the purported assignment to
Wells Fargo had not been made. The trial
court sustained the demurrer as to this cause of action on this ground, and
even now appellants fail to mount any substantial argument to the contrary.
The
court did not err in sustaining the demurrers to the purported cause of action
for violation of Penal Code section 470 or fraud.
3. Third
Cause of Action: Notary Fraud
Appellants
purported to allege a claim for notary fraud.
But their opening brief does not address the court’s ruling on the
demurrer as to this cause of action, and they have filed no reply brief. Appellants therefore fail to establish
error. (See Chicago Title Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188
Cal.App.4th 401, 427-428.)
4. Fourth
Cause of Action: Cancellation of
Instrument
Appellants
requested that the trial court enter an order cancelling the assignment of the
deed of trust on the ground that the assignment contains false information and
affects their title to the property.
Their allegations state no cause of action.
Civil
Code section 3412 provides: “A written
instrument in respect to which there is reasonable apprehension that if left
outstanding it may cause serious injury to a person against whom it is void or
voidable, may, upon his application, be so adjudged, and ordered to be
delivered up or canceled.†For reasons
explained ante, however, appellants
fail to allege facts to support an inference that the assignment “may cause
serious injury to a person against whom it is void or voidable,†or that they
would constitute such a “person.†(Civ.
Code, § 3412.) They therefore fail
to state a claim under Civil Code section 3412.
Furthermore,
to the extent appellants’ request for cancellation of the assignment is a
request for a particular type of relief rather than a substantive cause of
action that may stand on its own, the amended complaint does not state any
other cause of action – as discussed ante
and post – that would support such
relief.
Without
explanation, appellants liken their situation to the one in
(1992) 6 Cal.App.4th 1061 (Harris). At issue in Harris, however, was a motion to tax costs, and particularly
whether a surety that had insured a negligent notary could be required to pay
costs in excess of its bond. (
plainly have nothing to do with the cancellation of an instrument. And while it is true that the trial court in
(Harris) was entitled to quiet title to her property after someone had forged
her signature on a grant deed and a notary had negligently notarized the
signature, nothing in the Harris
opinion’s recitation of those facts has anything to do with this case. Here, no one forged appellants’ signature,
the allegedly forged instrument was an assignment of a deed of trust rather
than a grant deed, and there was already an encumbrance against appellants’
property based on the unchallenged note and deed of trust.
The
court did not err in sustaining the demurrer as to the cause of action for
cancellation of the instrument reflecting the assignment.
5. Fifth
Cause of Action: Quiet Title
The
trial court sustained the demurrer to appellants’ fifth cause of action to
quiet title on the ground that they failed to allege facts indicating that
respondents had an interest adverse to appellants’ title and failed to allege
their ability and willingness to tender the outstanding balance of their
debt. Appellants do not address the
court’s ruling, arguing instead that a trustee’s sale based on a statutorily
deficient notice of default is invalid.
(Citing Miller v. Cote (1982)
127 Cal.App.3d 888.) In our view, the
better course for an appellant is to address the basis of the trial court’s
ruling.
The
purpose of a quiet title action is to establish one’s title against adverse
claims to real property. Appellants do
not allege any facts demonstrating that respondent Sand Canyon (f/k/a Option
One and f/k/a Premier Trust) claims any interest adverse to appellants’
title. To the contrary, their amended
complaint avers that Option One assigned away the interest it had in the
property to others. On this basis,
appellants fail to state a quiet title cause of action against Sand Canyon.
Moreover,
to state a cause of action to quiet title against any of the respondents,
appellants were required to allege facts demonstrating that they are the
rightful owners of the property; that is, that they have satisfied their
obligations under the deed of trust. (
(E.D. Cal. 2010) 713 F. Supp. 2d 1092, 1103.)
Thus, a borrower cannot quiet title to secured property without alleging
that he or she paid the debt secured by the property. (E.g., Miller
v. Provost (1994) 26 Cal.App.4th 1703, 1707 [“a mortgagor of real property
cannot, without paying his debt, quiet his title against the mortgageeâ€];
475, 477.) It would be inequitable to
quiet title in a property owner’s name without requiring the owner to repay the
secured loan that he or she used to purchase the property in the first place. (See Stebley
v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526.)
Appellants
do not allege that they paid off the entire amount due under the loan; nor do
they allege a tender of that amount.
Instead, they allege that they “fully tendered all mortgage payments
which were lawfully due under the DEED,â€
and while “WELLS FARGO made demands for payment as against the DEED,†“WELLS
FARGO . . . [lacked] any lawful right, title and interest in the DEED.†(Italics added.) In short, appellants allege that they
tendered amounts they agreed they owed, but did not and will not tender other
amounts they contend are not lawfully owed.
This is patently insufficient. A
valid tender of performance must be of the full debt, in good faith,
unconditional, and with the ability to perform.
(Civ. Code, § 1486, 1493, 1494, 1495.) To hold that appellants’ allegations were
sufficient would essentially vitiate the tender requirement, since it would
mean that borrowers would not have to tender the amount due (or allege their
willingness and ability to do so) if they simply contended – as they would
always do in a complaint – that the amount was not lawfully due.
The
court did not err in sustaining the demurrer as to the purported cause of
action to quiet title.
6. Sixth
Cause of Action: Declaratory Relief
Declaratory
relief is available where there is an “actual controversy relating to the legal
rights and duties of the respective parties.â€
(Code Civ. Proc., § 1060.)
It is not an independent cause of action, but a form of equitable
relief. (Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65,
82; see also California Ins. Guarantee
Assn. v. Superior Court (1991) 231 Cal.App.3d 1617, 1623-1624 [declaratory
relief statute provides a form of relief to the plaintiff, not a second cause
of action for determination of issues that are the subject of another
claim].)
Here,
the trial court noted that the purported cause of action for declaratory relief
was wholly derivative of the other causes of action in the amended complaint,
and having concluded that the demurrer should be sustained as to the underlying
causes of action, it sustained the demurrer as to the declaratory relief claim
as well. Appellants do not dispute the
court’s analysis in this appeal, and we agree that appellants’ allegations do
not support the remedy of declaratory relief.
(Ball v. FleetBoston Financial
Corp. (2008) 164 Cal.App.4th 794, 800.)
The
court did not err in sustaining the demurrer as to the purported cause of
action for declaratory relief.
7. Failure
to Allege Tender
We
have already noted that appellants’ failure to allege that they tendered the
amount due under the deed of trust precludes them from alleging a cause of
action for quiet title. As respondents
point out, moreover, appellants’ failure to allege this tender precludes them
from mounting any challenge to the foreclosure proceedings under the
circumstances alleged in the amended complaint.
As
a general rule, a plaintiff may not challenge the propriety of a foreclosure on
his or her property without offering to repay what he or she borrowed against
the property. (Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112,
117 [judgment on the pleadings properly granted where plaintiff attempted to
set aside trustee’s sale for lack of adequate notice, because “[a] valid and
viable tender of payment of the indebtedness owing is essential to an action to
cancel a voidable sale under a deed of trustâ€] (Karlsen); see United States
Cold Storage v. Great Western Sav. & Loan Assn. (1985) 165 Cal.App.3d
1214, 1222-1223 [“the law is long-established that a trustor or his successor must tender the obligation in full as a
prerequisite to a challenge of the foreclosure saleâ€].) This rule originated from the principle that,
before asking a court to exercise its equitable powers to stop or set aside
foreclosure proceedings, a defaulting borrower must first “do equityâ€
himself. (FPCI Re-hab 01 v. E&G Investments, Ltd. (1989) 207 Cal.App.3d
1018, 1021-1022 [tender rule is based on equitable maxim that a court of equity
will not order a useless act performed . . . if plaintiffs could not have
redeemed the property had the sale procedures been proper, any irregularities
in the sale did not result in damages to the plaintiffs].)
This
tender rule is strictly enforced. (
428, 439.) Absent an alleged and actual
tender, a complaint seeking to set aside foreclosure proceedings fails to state
a viable cause of action. (
Appellants
do not contend that the tender rule does not apply to their causes of
action. For reasons stated
complaint do not establish the requisite tender, providing an additional reason
that the allegations of the second amended complaint fail to state any
cognizable cause of action.
The
trial court did not err in sustaining the demurrers of AMHSI/Wells Fargo and
Sand Canyon (f/k/a Option One and f/k/a Premier Trust) to the amended complaint
in its entirety.
C
Denial of Leave to Amend
The
trial court sustained the demurrers without leave to amend. Appellants do not argue in this appeal that
the court abused its discretion in this regard.
Nor does our examination of the record indicate any such abuse of
discretion.
III.
DISPOSITION
The
appeal as to DOCX LLC is dismissed. The
judgment as to all other respondents is affirmed. All respondents shall recover their costs on
appeal from appellants.
NEEDHAM,
J.
We concur.
JONES, P. J.
SIMONS, J.
