Department 58

Hearing Date: April 18, 2023

Case Name: Aposta, Inc. v. New-Rez LLC, et al.

Case No.: 22STCV25801

Matter: Demurrer

Moving Party: Defendants Countrywide Financial Corp., Countrywide Home Loans Inc., and Bank of America, N.A.

Opposing Party: Plaintiff Aposta, Inc.

Tentative Rulings: Defendants Countrywide Financial Corp., Countrywide Home Loans Inc., and Bank of America, N.A.’s demurrer is sustained, without leave to amend.

BACKGROUND:

This is a real property case in which Aposta, Inc. (Plaintiff) sues NewRez, LLC, Shellpoint Mortgage Servicing, the Bank of New York Mellon N.A., Countrywide Financial Corp., Woodside Point, LLC, Foreclosure Consultants, Inc., Mortgage Electronic Registration Systems, Inc., Countrywide Home Loans, Inc., ZBS Law LLP, Bank of America N.A., A2Z Homes, Inc., Garnet Investment Consulting, Inc., Ahmad Azad, Travis Azevedo, and Dennis Majors.

Plaintiff’s original Complaint asserted four causes of action: Breach of contract against Dennis Majors; wrongful foreclosure and rescission/cancellation of trustee's deed against New Rez LLC, Shellpoint Mortgage Servicing, the Bank of New York Mellon N.A., ZBS Law LLP, Bank of America, Inc.; and a request for declaratory relief. The Complaint alleged that Plaintiff had received fee simple ownership of the property at 10031 La Salle Avenue, Los Angeles, CA 90047 (the Property) from Defendant Dennis Majors and that all encumbrances were eliminated. Defendant Bank of New York Mellon nonetheless issued a Notice of Default and Notice of Trustee's Sale on the Property for August 11, 2022.

In September and October 2022, two sets of Defendants demurred to the Complaint: (1) Countrywide Financial Corp., Countrywide Home Loans Inc., and Bank of America, N.A.; and (2) New Rez, LLC, Bank of New York Mellon, and Mortgage Electronic Registrations, Inc. On November 9, 2022, the Court sustained both demurrers with leave to amend.

On January 4, 2023, Plaintiff filed a First Amended Complaint (FAC). The FAC asserts the same four causes of action as the Complaint but adds a cause of action for violation of Civil Code Section 2943 against New Rez LLC, Shellpoint Mortgage Servicing, the Bank of New York Mellon N.A., ZBS Law LLP, Bank of America, Inc., Trustee National Default Servicing Corporation, and HSBC Bank USA National Association. The FAC also contains more factual allegations about chain of title for the Property—including an allegation that a 2007 trustee’s sale extinguished the Deed of Trust on which the foreclosure in dispute was based. Sixteen exhibits are included in support of the additional allegations.

Again, two sets of Defendants have demurred to the FAC: (1) Countrywide Financial Corp., Countrywide Home Loans Inc. (together, Countrywide), and Bank of America, N.A. (Bank of America); and (2) New Rez, LLC, Bank of New York Mellon, Mortgage Electronic Registrations, Inc., A2Z Homes, and Travis Azevedo.

Before the Court now is Countrywide and Bank of America’s demurrer.

DISCUSSION:

Countrywide and Bank of America request judicial notice of various deeds of trust, assignments, quit claim deeds, substitution of trustee, notice of default, and notice of trustee's sale. The request is granted. (Evid. Code, §§ 452, subds. (c) and (h), 453; San Francisco CDC LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266,281, n.5 ["Judicial notice may be taken of the existence and facial contents of recorded real property records where, as here, the authenticity of the document is not challenged"].)

Countrywide and Bank of America demur to the second, third, fourth, and fifth causes of action in Plaintiff’s FAC on grounds that each fails to state facts sufficient to state a cause of action. Countrywide and Bank of America first argue that all of Plaintiff’s claims fail because Plaintiff took title subject to a valid Deed of Trust. Next, Countrywide and Bank of America make the following arguments for why each individual cause of action fails: Regarding the second cause of action for wrongful foreclosure, the cause of action is not asserted against Countrywide, and Bank of America was not involved in the foreclosure. Regarding the third cause of action for recission, it is also not asserted against Countrywide, and Bank of America has no interest in the Trustee’s Deed Upon Sale. Regarding the fourth cause of action for violation of Civil Code section 2943, it is not asserted against Countrywide, and the FAC does not allege Bank of America had any obligation under section 2943. Finally, regarding the fifth cause of action for declaratory relief, the claim is duplicative and neither Countrywide nor Bank of America were involved in the foreclosure or trustee’s sale that is the subject of this lawsuit.

In opposition, Plaintiff argues Countrywide and Bank of America are indispensable parties because they were involved in the 2007 foreclosure that extinguished the Deed of Trust in dispute—Countrywide as servicer of the pre-2007 mortgage and Bank of America as the parent company to Reconstruct Company, N.A., which served as trustee.

Legal standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law…”(Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525, quotations omitted.)

The wrongful foreclosure claim is not asserted against Countrywide and fails to allege Bank of America was involved.

The second cause of action in the FAC is not asserted against Countrywide. The question is whether Plaintiff’s FAC states a claim against Bank of America.

“The basic elements of a tort cause of action for wrongful foreclosure track the elements of an equitable cause of action to set aside a foreclosure sale. They are: ‘(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.’ ” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408.)

Here, Plaintiff does not allege Bank of America caused the foreclosure in question. Instead, Plaintiff alleges Defendants New Rez LLC, Shellpoint Mortgage Servicing, and The Bank of New York Mellon initiated foreclosure proceedings. (FAC, ¶ 49.) In fact, Bank of America is not listed anywhere with respect to this cause of action. The FAC therefore fails to establish the first element of wrongful foreclosure against Bank of America.

Accordingly, Countrywide and Bank of America’s demurrer to the wrongful foreclosure cause of action is sustained.

The rescission claim is not asserted against Countrywide and fails to allege Bank of America was involved or had any interest

The third cause of action in the FAC is not asserted against Countrywide. The question is whether Plaintiff’s FAC states a claim against Bank of America.

"'To prevail on a claim to cancel an instrument, a plaintiff must prove (1) the instrument is void or voidable due to, for example, fraud, and (2) there is a reasonable apprehension of serious injury including pecuniary loss or the prejudicial alteration of one's position.'" (Thompson v. Joane (2017) 11 Cal.App.5th 1180, 1193-1194.)

Here, Plaintiff alleges Bank of America, among other Defendants, caused a Notice of Default and Election to Sell, a Notice of Trustee’s Sale, and a Trustee’s Deed Upon Sale to be recorded against the Property. (FAC, ¶ 58.) Based on this, the FAC demands that the April 4, 2022 Notice of Default and Election to Sell, the July 8, 2022 Notice of Trustee’s Sale, and the September 29, 2022 Trustee’s Deed Upon Sale be vacated and set aside. (Id., ¶ 59.) However, Plaintiff’s allegations—as well as the various chain of title documents attached as exhibits to the FAC—confirm that Bank of America played no role and had no interest in the April 4, 2022 Notice of Default and Election to Sell, the July 8, 2022 Notice of Trustee’s Sale, or the September 29, 2022 Trustee’s Deed Upon Sale. (Id., Exhs. 13-15.) Thus, there is no basis to assert this claim against Bank of America.

The FAC also alleges that Plaintiff “is entitled to equitable relief by a judicial decree and order declaring any deeds causing clouds to the subject property caused to be rescinded, cancelled, and void.” (Id., ¶ 62.) But there are no further allegations establishing that the deeds related to the 2007 foreclosure—for which Bank of America’s subsidiary may have played a role—are void or voidable. Plaintiff therefore fails to establish the first element for this cause of action.

Accordingly, Countrywide and Bank of America’s demurrer to the rescission/cancellation of Trustee’s Deed Upon Sale cause of action is sustained.

The violation of Civil Code Section 2943 claim is not asserted against Countrywide and fails to allege Bank of America was obligated to Plaintiff.

The fourth cause of action in the FAC is not asserted against Countrywide. The question is whether Plaintiff’s FAC states a claim against Bank of America.

Civil Code Section 2943, subdivision (b), requires the beneficiary of a mortgage, on written demand, to “prepare and deliver to the person demanding it a true, correct, and complete copy of the note or other evidence of indebtedness with any modification thereto, and a beneficiary statement.”

Similarly, Civil Code Section 2943, subdivision (c), requires the beneficiary of a mortgage, on written demand, to “prepare and deliver a payoff demand statement to the person demanding it within 21 days of the receipt of the demand.”

Here, there are no allegations that Bank of America was the beneficiary of the mortgage in dispute. The exhibits offered by Plaintiff confirm this. (FAC, Exs. 13-15.) Indeed, the FAC does not allege that Bank of America was obligated to send Plaintiff evidence of indebtedness, payoff statements, or beneficiary statements. Although the FAC alleges Bank of America failed to provide any responses to Plaintiff’s requests (Id., ¶ 65), the FAC specifically alleges that New Rez LLC, Shellpoint Mortgage Servicing, and/or The Bank of New York Mellon were the Defendants required to provide such statements. (Id. ¶ 64.) This claim against Bank of America fails because there are no allegations that Bank of America owed Plaintiff a responsibility under Section 2943.

Accordingly, Countrywide and Bank of America’s demurrer to the cause of action for violation of Civil Code Section 2943 is sustained.

The claim for declaratory relief fails because there are no allegations of a controversy between Countrywide or Bank of America and Plaintiff

"Where a trial court has concluded the plaintiff did not state sufficient facts to support a statutory claim and therefore sustained a demurrer as to that claim, a demurrer is also properly sustained as to a claim for declaratory relief which is 'wholly derivative' of the statutory claim." (Ball v. FleetBoston Financial Corp. (2008) 164 Cal.App.4th 794, 800.)

Because Plaintiffs wrongful foreclosure, rescission, and violations of Civil Code Section 2943 claims against Countrywide and Bank of America are insufficient, the declaratory relief claim also fails. There are simply no allegations that Countrywide or Bank of America have an interest in the Property, or had an interest in the Property after Plaintiff acquired it. Thus, there is no controversy between Countrywide or Bank of America and Plaintiff for the Court to resolve.

Accordingly, Countrywide and Bank of America’s demurrer to the cause of action for declaratory relief is sustained.

The demurrer is sustained without leave to amend

To obtain leave to amend, complainants must state how the allegations would be amended to state a cause of action. (Drum v. San Fernando Valley Bar Ass'n (2010) 182 Cal.App.4th 247, 253.) “[W]here the nature of the plaintiff's claim is clear, and under substantive law no liability exists, a court should deny leave to amend because no amendment could change the result.” (San Mateo Union High Sch. Dist. v. County of San Mateo (2013) 213 Cal.App.4th 418, 441.)

Here, Plaintiff does not explain how its FAC could be amended to state a claim against Countrywide or Bank of America. The nature of Plaintiff’s claim is clear—the Property should not have been foreclosed on in 2022. But Plaintiff’s allegations, as well as the publicly available documents, make clear that neither Countrywide nor Bank of America played a role in the 2022 foreclosure.

Plaintiff states it has discovery due from the demurring parties and argues that information and documentation obtained from the discovery process will provide facts that will bolster its wrongful foreclosure and related causes of action. But evidence obtained through discovery is not considered at the demurrer state. At the demurrer stage, the Court accepts factual allegations as true and looks for whether a cause of action is stated.

Plaintiff alleges that Countrywide and Bank of America facilitated a 2007 trustee’s sale of the Property to Bag Fund, LLC that extinguished the Deed of Trust in dispute. If true, Countrywide and Bank of America are not adverse to Plaintiff’s interests. Regardless, there is nothing to indicate that Countrywide or Bank of America have an interest in the Property and therefore nothing to indicate Countrywide or Bank of America should be Defendants in this action.

Accordingly, Countrywide and Bank of America’s demurrer is sustained in its entirety, without leave to amend.

Summary

The demurrer filed by Countrywide and Bank of America is sustained without leave to amend.