Judge Upinder S. Kalra, Case Number: 24STCV25530, Date: 2025-04-22 Tentative Ruling

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MOVING PARTY: Defendants Select Portfolio Servicing, Inc. and The Bank of New York Mellon, f/k/a, the Bank of New York as Trustee, on behalf of the registered holders of Alternative Loan Trust 2005-66, Mortgage Pass-Through Certificates, Series 2005-66[1]

1. Demurrer to the Complaint for failing to state facts sufficient to constitute a cause of action.

1. Demurrers to the First and Second Causes of Action are SUSTAINED with 21 days’ leave to amend;

On October 2, 2024, Plaintiff Mina Lopez (Plaintiff) filed a Verified Complaint against Defendants Select Portfolio Servicing, Inc., Federal Home Loan Mortgage Corporation, The Bank of New York Mellon, Idea Law Group, PC, Cassandra Mendoza, and all persons claiming legal, equitable, lien, and estate in the property located at 2533, 2535 & 2537 S. Cloverdale Ave., Los Angeles, California 90016 APN 5043-003-021 (Defendants) with three causes of action for: (1) Cancellation of Trustee Sale Dated 08/22/2024 Recorded as Instrument Number 2024567225; (2) Cancellation of Trustee’s Deed Upon Sale Dated 08/23/2024 Recorded as Instrument No. 20240567225; and (3) Quiet Title.

According to the Complaint, Plaintiff was the fee owner of property located at 2533, 2535, and 2537 S. Cloverdale Avenue, Los Angeles, California 90016 (the Property). Plaintiff alleges Defendants wrongfully foreclosed on the Property on August 22, 2024. Plaintiff further alleges that Defendants engaged in deceptive lending practices and that Plaintiff attempted to retain the Property.

On December 16, 2024, Defendants Select Portfolio Servicing, Inc. (Select Portfolio) and The Bank of New York Mellon, f/k/a, the Bank of New York as Trustee, on behalf of the registered holders of Alternative Loan Trust 2005-66, Mortgage Pass-Through Certificates, Series 2005-66 (Bank of New York) filed a Declaration of Demurring Party In Support of Automatic Extension.

On December 27, 2024, Plaintiff filed a response to Declaration of Demurring Party.

On January 23, 2025, Select Portfolio and Bank of New York filed the instant demurrer.

On March 20, 2025, Plaintiff filed a Notice of Limited Scope Representation indicating Counsel James T. Imperiale has an agreement with Plaintiff.

On April 10, 2025, Plaintiff filed requests for dismissal as to Bank of New York, Idea Law Group, PC, and Cassandra Mendoza.

Replies were due on or before April 15, 2025. As of April 17, 2025, the court has not received any reply in support of the demurrer.

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. (CCP) §430.41, and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to Code of Civ. Proc. §430.41(a)(2) & (3). ¿The meet and confer requirement also applies to motions to strike. (CCP § 435.5.) Here, the parties were unable to meet and confer. (Hernandez Decl. ¶ 2(b).) However, failure to meet and confer is not a sufficient ground to overrule or sustain a demurrer. (CCP § 430.41(a)(4).)¿¿

A demurrer for sufficiency tests whether the complaint states a cause of action.¿(Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context.¿In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. …. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”¿(Hahn, supra,¿147 Cal.App.4th at 747.)¿¿

First Cause of Action - Cancellation of Trustee Sale Dated 08/22/2024 Recorded as Instrument Number 2024567225

Select Portfolio contends that this claim fails because Plaintiff did not attach or identify the alleged bankruptcy order that violated the trustee’s sale and that cancellation is an inappropriate remedy for violating Civ. Code §§ 2923.5 and 2923.6. Plaintiff argues, without support, that she did sufficiently allege that Defendants wrongfully foreclosed on the Property. Alternatively, Plaintiff requests leave to amend.

Civ. Code § 3412 provides: ““[a] written instrument, in respect to which there is a 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.” To prevail on a claim to cancel an instrument, a plaintiff must establish 1) the instrument is void or voidable, due to fraud, for example, and 2) there is a reasonable apprehension of serious injury, including pecuniary loss or the prejudicial alteration of one’s position. (U.S. Bank N.A. v. Naifeh (2016) 1 Cal.App.5th 767, 774.)

Upon reviewing the Complaint, the court agrees that Plaintiff insufficiently alleged facts supporting this claim. First, Plaintiff alleges that she “contacted the foreclosing defendants for a loan modification or other payment arrangement to avoid a foreclosure sale,” that “while Plaintiff was in negotiations with the foreclosing defendants, said defendants continued to foreclose while stringing Plaintiff along and giving Plaintiff a false sense of hope for any arrangement that would avoid a foreclosure sale.” (Compl. ¶¶ 16-17.) As alleged, this violates Civ. Code § 2923.5 which prohibits a mortgage servicer, among others, from recording a notice of default until various conditions are met. (Civ. Code § 2923.5(a)(1).) This includes contacting the borrower “to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” (Id. at subd. (a)(2)(A).) “A notice of default . . . shall include a declaration that the mortgage servicer has contacted the borrower, has tried with due diligence to contact the borrower . . . or that no contact was required because the individual did not meet the definition of ‘borrower’.” (Id. at subd. (b).) However, as Select Portfolio points out, this “does not provide for damages, or for setting aside a foreclosure sale.” (Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526.) The “sole” remedy is “more time before a foreclosure sale occurs. [citation] After the sale, the statute provides no relief.” (Ibid.) Second, Plaintiff did not allege that she submitted a loan modification application.[2] Third, Plaintiff did not allege facts that there was a pending bankruptcy matter warranting an automatic stay under 11 U.S.C.A § 362.

Accordingly, the court SUSTAINS Select Portfolio’s demurrer to the First Cause of Action.

Second Cause of Action - Cancellation of Trustee’s Deed Upon Sale Dated 08/23/2024 Recorded as Instrument No. 20240567225

For the same reasons, the court SUSTAINS Select Portfolio’s demurrer to the Second Cause of Action.

Select Portfolio contends this claim fails because Plaintiff failed to allege any facts to establish that she has superior title to the Property such that any interest held by the Trust to the Property should be quieted. Additionally, Select Portfolio contends that it has no direct interest in the Property since it was the servicer of the foreclosed upon mortgage loan. Plaintiff’s argument is the same here as for the First Cause of Action.

A plaintiff alleges a quiet title action where they allege that “[1] the plaintiff is the owner and in possession of the land and [2] that the defendant claims an interest therein [3] adverse to him.” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 740; see also Gray v Walker (1910) 157 Cal. 381, 384 [“the complaint contains a statement of all the facts necessary to constitute a cause of action. It avers that plaintiff is the owner and in possession of certain land, that defendant claims an interest therein adverse to plaintiff, and that such claim is without right.”].)¿¿

However, generally, “the holder of equitable title cannot maintain a quiet tile action against the legal owner.” (Lewis v. Superior Ct. (1994) 30 Cal.App.4th 1850, 1866; see also Staffor v. Ballinger (1962) 199 Cal.App.2d 289, 294-95 [“It has been held consistently that the owner of an equitable interest cannot maintain an action to quiet title against the owner of the legal title.”]) There is a limited exception to this rule, in the case where legal title was acquired through fraud. (See Warren v. Merrill (2006) 143 Cal.App.4th 96, 114.)¿

Legal title does not have a strict legal meaning. (Solomon v. Walton (1952) 109 Cal.App.2d 381, 386.) “The term ‘legal title’ has been defined as ‘one cognizable or enforceable in a court of law, or one which complete and perfect so far as regards the apparent right of ownership and possession, but which carries no beneficial interest in the property, another person being equitably entitled thereto. . .” (Parkmerced Co. v. City & Cnty. of San Francisco (1983) 149 Cal.App.3d 1091, 1094-95.)¿¿

Here, the court agrees that Plaintiff insufficiently stated a quiet title claim against Select Portfolio. Notably, there are no facts that Select Portfolio claims an interest in the Property. Indeed, Plaintiff alleged that Select Portfolio was the loan servicer. (Compl. ¶ 2.)

Accordingly, the court SUSTAINS Select Portfolio’s demurrer to the Third Cause of Action.

Leave to amend should be liberally granted if there is a reasonable possibility an amendment could cure the defect.¿ (County of Santa Clara v. Superior Court (2022) 77 Cal.App.5th 1018,1035.)¿ The plaintiff has the burden of demonstrating that leave to amend should be granted, and that the defects can be cured by amendment. “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349).¿¿Here, Plaintiff requested leave to amend. There is a reasonable possibility that Plaintiff can allege facts to cure the defects noted for the First and Second Causes of Action. However, Plaintiff cannot cure the defects as to the Third Cause of Action because she has already alleged that Select Portfolio was merely the loan servicer. Should Plaintiff amend to allege that Select Portfolio had a claim to the Property, it would run afoul of the sham pleading doctrine.

Accordingly, the court GRANTS Plaintiffs leave to amend as to the First and Second Causes of Action but DENIES leave to amend as to the Third Cause of Action.

1. Demurrers to the First and Second Causes of Action are SUSTAINED with 21 days’ leave to amend;

[1] Due to Plaintiff’s dismissal of The Bank of New York Mellon, the analysis for the demurrer is limited to Select Portfolio Servicing, Inc. only.

[2] Civ. Code § 2923.6 provides: “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer at least five business days before a scheduled foreclosure sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending.” (Civ. Code § 2923.6(c).)