PREMO, J. —
Plaintiffs Virgilio and Teodora Orcilla lost their San Jose home (the Property) through a nonjudicial foreclosure sale in May 2010. The Property was purchased by a third party, defendant Big Sur, Inc. (Big Sur). The Orcillas vacated the Property after Big Sur obtained a judgment against them in an unlawful detainer action. Thereafter, the Orcillas sued Big Sur and the parties involved in the nonjudicial foreclosure sale, Bank of America, N.A. (BofA); ReconTrust Company, N.A. (ReconTrust); and Mortgage Electronic Registration Systems, Inc. (MERS) (collectively, the Bank Defendants), to set aside the trustee's sale.
Big Sur and the Bank Defendants successfully demurred to the operative second amended complaint. The Orcillas, proceeding in propria persona, appeal from a judgment entered in favor of defendants. We reverse and remand with instructions.
The Orcillas are Filipino and English is their second language. Virgilio is unable to work due to a 2004 medical diagnosis.
On May 9, 2006, Teodora obtained a $525,000 real property loan from Quick Loan. She alone executed an adjustable rate note (the Note), in which she promised to repay the loan at an initial interest rate of 8.99 percent. The Note provided that the interest rate would be variable after two years and would never exceed 14.99 percent. The Note further provided that Teodora's initial monthly payments would be in the amount of $4,220.49. (In 2005 and 2006, Teodora's monthly income was less than $3,000 and Virgilio did not work.)
ReconTrust, as trustee of the Deed of Trust, recorded a notice of default and election to sell under deed of trust (First Notice of Default) on February 2, 2007. The First Notice of Default reflected an arrearage of $16,668. ReconTrust rescinded the Notice of Default on May 15, 2007.
On April 18, 2008, ReconTrust recorded a second notice of default (Second Notice of Default), which reflected an arrearage of $32,048. The Second Notice of Default was signed by Anselmo Pagkaliwangan. On March 28, 2013, Teodora contacted ReconTrust. The representatives with whom Teodora spoke could not confirm whether Anselmo Pagkaliwangan had ever worked for ReconTrust. The Orcillas allege that forensic loan audits and lawsuits indicate Anselmo Pagkaliwangan also signed documents for various other entities, including LSI Title Company and Washington Mutual, N.A. Based on the foregoing, the Orcillas allege the Second Notice of Default was "stamped/robo-signed."
By letter dated August 15, 2008, Countrywide Home Loans (Countrywide) advised Teodora that her loan modification had been approved. The letter advised that Teodora's modified principal loan balance was $570,992.60 and that, effective September 1, 2008, her monthly loan payment would be $4,627.47. The letter stated "[t]his [a]greement will bring your loan current" and requested that Teodora sign, date, and return one copy of the enclosed loan modification agreement to Countrywide by September 14, 2008. The letter further provided "[t]his Letter does not stop, waive or postpone the collection actions, or credit reporting actions we have taken or contemplate taking against you and the property. In the event that you do not or cannot fulfill ALL of the terms and conditions of this letter no later than September 14, 2008, we will continue our collections actions without giving you additional notices or response periods." Teodora signed the enclosed loan modification agreement on September 11, 2008. The loan modification agreement provided for a five-year fixed interest rate of 8.99 percent followed by a variable interest rate. The Orcillas allege that BofA employees represented in August 2008 that the loan modification would result in a "new loan." They further allege that defendants admitted in a separate legal action in federal court that the loan modification "added Plaintiffs' previously unpaid balances to a new loan."
On April 23, 2010, ReconTrust sent a notice of trustee's sale to the Orcillas that listed the sale date as May 18, 2010. Also on April 23, 2010, a substitution of trustee, in which MERS substituted ReconTrust as trustee
On May 12, 2010, the Orcillas submitted a HAMP
However, the trustee's sale did proceed. On May 24, 2010, the Bank Defendants sold the Property to Big Sur at a public auction for $495,500. ReconTrust recorded a trustee's deed upon sale stating that the amount of unpaid debt was $688,871.94. The trustee's deed further stated that "[a]ll requirements of law regarding the recording and mailing of copies of the Notice of Default and Election to Sell, and the recording, mailing, posting, and publication of the Notice of Trustee's Sale have been complied with."
Following the trustee's sale, BofA informed Agbabiaka that it never received the Orcillas' HAMP loan modification application. That application was never granted nor denied.
The Division of Corporations revoked Quick Loan's lending license on May 27, 2008, having found Quick Loan had pledged trust funds to obtain gambling markers from Las Vegas casinos and was charging borrowers unauthorized fees. The Orcillas allege Quick Loan never sold or assigned the Note or its interest in the Deed of Trust.
The Orcillas filed suit against Big Sur and the Bank Defendants on May 24, 2012. Defendants successfully demurred to the Orcillas' initial complaint and first amended complaint, but the Orcillas were granted leave to amend those pleadings. The operative second amended complaint, filed on April 2, 2013, asserts 13 causes of action: wrongful foreclosure; violation of Civil Code section 2924;
Each cause of action is largely based on the following allegations: the original loan and the loan modification were unconscionable and unenforceable; no valid notice of default was issued prior to the trustee's sale because the loan modification cured the Second Notice of Default; the trustee's sale was fraudulent because the notice of trustee's sale set forth an incorrect date of sale; the Bank Defendants lacked the authority to foreclose on the Property because the Deed of Trust never was assigned to them; the Bank Defendants lacked the authority to foreclose on the Property because the Deed of Trust was invalid, having been bifurcated from the Note; and the Bank Defendants improperly proceeded with the trustee's sale after promising to postpone it. Big Sur and the Bank Defendants successfully demurred. The trial court sustained defendants' demurrers without leave to amend as to all causes of action except the promissory estoppel claim against the Bank Defendants, for which leave to amend was granted.
After the Orcillas failed to file a third amended complaint within the leave period, the Bank Defendants moved to dismiss the action. The court granted that motion and entered judgment in favor of defendants. The Orcillas timely appealed.
We review an order sustaining a demurrer de novo, exercising our independent judgment as to whether a cause of action has been stated as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125 [271 Cal.Rptr. 146, 793 P.2d 479].) The facts alleged in the pleading are deemed to be true, but contentions, deductions, and conclusions of law are not. (Hill v. Roll Internat. Corp. (2011) 195 Cal.App.4th 1295, 1300 [128 Cal.Rptr.3d 109].) In addition to the complaint, we also may consider matters subject to judicial notice. (Ibid.) Facts that are subject to judicial notice trump contrary allegations in the pleadings. (Ibid.) Facts appearing in exhibits attached to the complaint also are accepted as true and are given precedence, to the extent they contradict the allegations. (Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627 [272 Cal.Rptr. 623].) We do not review the validity of the trial court's reasoning. (B & P Development Corp. v. City of Saratoga (1986) 185 Cal.App.3d 949, 959 [230 Cal.Rptr. 192].) For that reason, and because demurrers raise only questions of law, we may also consider new theories on appeal to challenge or justify the trial court's rulings. (Ibid.)
"Where a demurrer is sustained without leave to amend, [we] must determine whether there is a reasonable probability that the complaint could have been amended to cure the defect; if so, [we] will conclude that the trial court abused its discretion by denying the plaintiff leave to amend. [Citation.] The plaintiff bears the burden of establishing that it could have amended the complaint to cure the defect." (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1035 [100 Cal.Rptr.3d 875].)
The California Legislature has established a comprehensive set of legislative procedures governing nonjudicial foreclosures. (See Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440 [138 Cal.Rptr.3d 830] (Debrunner); §§ 2924-2924k.) "`The purposes of this comprehensive scheme are threefold: (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.'" (Debrunner, supra, at p. 440.)
"`The statutes provide the trustor with opportunities to prevent foreclosure by curing the default. The trustor may make back payments to reinstate the loan up until five business days prior to the date of the sale.... [Citations.] Additionally, the trustor has an equity of redemption under which the trustor may pay all amounts due at any time prior to the sale to avoid loss of the property. (§§ 2903, 2905.)'" (Lona v. Citibank, N. A. (2011) 202 Cal.App.4th 89, 101-102 [134 Cal.Rptr.3d 622] (Lona).)
The Orcillas allege the trustee's sale was illegal for two reasons: (1) the original loan from Quick Loan and the 2008 loan modification were unconscionable and (2) the Deed of Trust is invalid because it was "bifurcated" from the Note. On appeal, they include an additional argument — ReconTrust lacked the power to foreclose on BofA's behalf because BofA did not own the Note.
The Orcillas allege the loan from Quick Loan was unconscionable because the loan payments exceeded their income; they have limited education and English proficiency; they did not understand the details of the transaction; and the loan documents were on standard, preprinted forms in English. They allege the 2008 loan modification agreement also was unconscionable because the loan payments exceeded their income; they have limited education and English proficiency; and the loan documents were on standard, preprinted forms in English.
As to both the original loan and the 2008 modification, the Orcillas allege they have limited English fluency and education and that the loan documents were on standard, preprinted forms in English. These allegations are sufficient to allege at least some measure of procedural unconscionability. (See Lona, supra, 202 Cal.App.4th at p. 111 [holding at the summary judgment stage that evidence that plaintiff "had only an eighth grade education, his English was limited, no one explained the [loan] documents to him, and he did not understand what he was signing" and that the "loan documents appear to be on standard, preprinted forms in English" "was sufficient evidence of unequal bargaining power, oppression or surprise to raise a triable issue regarding procedural unconscionability"].)
The Orcillas maintain that the disparity between the monthly loan payments and their income indicates that the loan and loan modification were overly harsh and one sided. We agree that the allegation that the monthly loan payments exceeded the couple's income by more than $1,000 is sufficient to allege substantive unconscionability. (Lona, supra, 202 Cal.App.4th at p. 111 [evidence of an "extreme disparity between the amount of the monthly loan payments and [plaintiff's] income ... was sufficient to create a triable issue on the question of whether the loans were overly harsh and one sided and thus substantively unconscionable"].)
In sum, we conclude the Orcillas have alleged that the original loan and the loan modification were unconscionable and unenforceable, such that the trustee's sale of the Property enforcing them was illegal. Accordingly, the Orcillas adequately allege the first element of their cause of action to set aside the trustee's sale. We need not address their bifurcation or power of sale theories.
On appeal, the Orcillas argue that they alleged harm, as required by the second element of an equitable cause of action to set aside a foreclosure sale, by pleading that "they were harmed by the sale of their home of 18 years." For that argument, they cite to allegations in their fraud cause of action regarding harm caused by their reliance on the misrepresentations of an alleged "robo-signer." Their first cause of action did not incorporate by reference the allegations of the fraud cause of action or allegations set forth
The Orcillas do not allege tender or any exceptions to the tender rule in the first cause of action. However, elsewhere in their complaint (in paragraphs not incorporated into the first cause of action), they allege that all four exceptions to the tender rule apply. As to the first exception, they allege the debt is invalid because the original loan and loan modification were unconscionable. As discussed above, the allegations in the second amended complaint are sufficient to allege those agreements were unconscionable and thus unenforceable. Construing the complaint liberally, as we must, we elect to overlook the Orcillas' failure to incorporate their tender-related allegations into the first cause of action. Thus, we conclude they adequately allege the third element of their cause of action to set aside the trustee's sale.
The Bank Defendants assert that "[t]he statutory presumption of validity upon sale to a bona fide purchaser ... defeats [each of] the Orcillas' claims seeking to set aside the foreclosure sale." We disagree with respect to the Orcillas' equitable cause of action to set aside the trustee's sale.
Even assuming Big Sur is a bona fide purchaser, its status as such does not bar the Orcillas' first cause of action. "Section 2924's conclusive presumption language for [bona fide purchasers] applies only to challenges to statutory compliance with respect to default and sales notices." (Melendrez, supra, 127 Cal.App.4th at p. 1256, fn. 26.) The challenge to the trustee's sale asserted in the first cause of action "does not involve a claim concerning whether [ReconTrust, the trustee,] followed all statutory procedures with respect to the default and sales notices...." (Id. at p. 1256.) Instead, it is based on the alleged unconscionability, and consequent unenforceability, of the loan agreements. We therefore hold that the conclusive presumption for bona fide purchasers under section 2924 does not apply to bar the Orcillas' first cause of action. (Melendrez, supra, at p. 1256.)
Counts 2 and 4 largely rely on the theory that the loan modification agreement cured the Orcillas' default, such that the Second Notice of Default should have been rescinded under section 2924c
The Bank Defendants respond that the letter also required Teodora to make monthly payments of $4,627.47 beginning September 1, 2008, and provided "[t]his Letter does not stop, waive or postpone the collection actions, or credit reporting actions we have taken or contemplate taking against you and the property. In the event that you do not or cannot fulfill ALL of the terms and conditions of this letter no later than September 14, 2008, we will continue our collections actions without giving you additional notices or response periods." The Orcillas do not allege they made their September 2008 monthly payment. Thus, according to the Bank Defendants, the Orcillas do not allege that they fulfilled the terms and conditions of the letter, such that another notice of default was required under the terms of the loan agreement letter.
Section 2924c does not define "cure." Black's Law Dictionary defines "cure of default" as "A debtor's act to correct its failure to perform, or to refrain from performing, according to the terms of an agreement." (Black's Law Dict. (10th ed. 2014).) At issue here is whether Teodora cured her failure to make loan payments by signing the loan modification agreement. In isolation, the language on which the Orcillas rely — "[t]his agreement will bring your loan current" — might reasonably be interpreted to mean that merely entering into the loan modification agreement cured the past default. However, the more specific language on which the Bank Defendants rely forecloses that interpretation by making clear that ongoing foreclosure proceedings would continue without additional notice if the terms and conditions of the letter were not satisfied. One of those terms required Teodora to make monthly payments of $4,627.47 beginning September 1, 2008. Because the Orcillas do not allege they did so, we conclude they do not adequately allege violations of section 2924c, subdivision (a)(2) and section 2924, subdivision (a)(1).
In count 2, the Orcillas also complain that the trustee's sale was conducted without the requisite 20 days' advance notice required by section 2924, subdivision (a)(4). But, in that very same count, they alleged the notice of trustee's sale was mailed to them on April 23, 2010, 31 days before the sale. Accordingly, they do not allege a violation of section 2924, subdivision (a)(4).
The Orcillas have not carried their burden on appeal of proving there is a reasonable possibility they can cure the defects in the pleading by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58].) Indeed, they do not even address potential amendments. Accordingly, they have not shown the trial court abused its discretion in denying them leave to amend counts 3 and 5. (Total Call Internat., Inc. v. Peerless Ins. Co. (2010) 181 Cal.App.4th 161, 173 [104 Cal.Rptr.3d 319] ["`Where the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend.'"].)
Section 2932.5 states: "Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded."
In count 6, the Orcillas allege the Bank Defendants violated section 2932.5 because BofA exercised the Deed of Trust's power of sale when no assignment of the Deed of Trust to BofA ever was recorded. That claim fails because section 2932.5 has no application where, as here, the power of sale is conferred in a deed of trust.
The Orcillas acknowledge that the Note was secured by a deed of trust, not a mortgage. However, they contend the foregoing rule does not bar their claim for two reasons: (1) the Deed of Trust was void and unenforceable because the Note and Deed of Trust were "bifurcated," and (2) Quick Loan never transferred its interest in the Note to the Bank Defendants so they lacked power of sale. As an initial matter, it is unclear how either of those contentions, if true, would render a statute that applies only to mortgages applicable here. Moreover, the arguments are meritless.
The Orcillas' first contention is that the Deed of Trust is void because MERS was the beneficiary while Quick Loan held the Note. The Orcillas are correct that, "[o]rdinarily, the owner of a promissory note secured by a deed of trust is designated as the beneficiary of the deed of trust." (Fontenot v. Wells Fargo Bank, N. A. (2011) 198 Cal.App.4th 256, 267 [129 Cal.Rptr.3d 467].) "Under the MERS System, however, MERS is designated as the beneficiary in deeds of trust, acting as `nominee' for the lender, and granted the authority to exercise legal rights of the lender." (Ibid.) The Orcillas agreed to the terms of their Deed of Trust, which expressly identified MERS as beneficiary and
Moreover, this court rejected an argument similar to the Orcillas' "bifurcation" argument in Debrunner. There, the plaintiff argued that where the beneficiary of the deed of trust is not in possession of the underlying promissory note, "the deed of trust is `severed' from the promissory note and consequently is of no effect." (Debrunner, supra, 204 Cal.App.4th at p. 440.) We noted that "`[t]here is no stated requirement in California's non-judicial foreclosure scheme that requires a beneficial interest in the Note to foreclose. Rather, the statute broadly allows a trustee, mortgagee, beneficiary, or any of their agents to initiate non-judicial foreclosure. Accordingly, the statute does not require a beneficial interest in both the Note and the Deed of Trust to commence a non-judicial foreclosure sale.'" (Id. at p. 441.) Given the exhaustive nature of the non-judicial foreclosure scheme, we decline to read additional requirements into the non-judicial foreclosure statute requiring the note and the deed of trust to be held by the same party. (See Jenkins, supra, 216 Cal.App.4th at p. 510.) Accordingly, there is no legal basis for the Orcillas' contention that the separation of the Note and Deed of Trust prevented ReconTrust from foreclosing on their property.
The Orcillas' second contention fails for similar reasons. The trustee, ReconTrust, initiated the non-judicial foreclosure sale, as permitted by section 2924, subdivision (a)(1). For the reasons discussed above, it was not required to hold a beneficial interest in the Note to do so.
We conclude count 6 fails because the Orcillas's Note was secured by a deed of trust, such that section 2932.5 does not apply. For the same reason, "it would be impossible for [the Orcillas] to cure the fundamental defects in [their sixth] cause of action by way of an amendment. Accordingly, the court's sustainment of [the Bank] Defendants' demurrer without leave to amend to [the Orcillas' sixth] cause of action was proper." (Jenkins, supra, 216 Cal.App.4th at p. 519.)
The Orcillas allege the Bank Defendants breached the Deed of Trust by failing to provide notice of default and by sending them a notice of trustee's sale that did not correctly identify the date of the trustee's sale. On appeal, they contend the Bank Defendants also breached the Deed of Trust by selling the Property "without authority/power of sale." However, lack of power of sale was not alleged as a breach of the Deed of Trust in the second amended complaint. Even considering that argument, we conclude count 7 fails because the Orcillas do not allege how the Bank Defendants' breaches caused their alleged damage.
The Orcillas allege they were damaged "because they suffered the loss of their home," which in turn led to "a loss of employment and loss of health." They do not allege how they would have avoided foreclosure and the loss of the Property absent the alleged breaches. The Orcillas do not dispute that they are in default under the Note. They do not allege that they were willing and able to cure the default before the sale, but were prevented from doing so by the lack of any notice of default or by the inaccurate notice of trustee's sale. Nor do they allege that the party with the power of sale would have refrained from foreclosing under the circumstances.
Because the Orcillas have failed to allege damages caused by the Bank Defendants' alleged contractual breaches, we conclude the trial court properly sustained the demurrer to count 7. We cannot conclude that the trial court abused its discretion when it denied the Orcillas leave to amend count 7, as the Orcillas do not contend on appeal that they can cure the defect discussed above by amendment.
The Orcillas allege BofA entered into an oral agreement with them, through Nicholas Agbabiaka at California Community Transitional Housing, Inc., to postpone the trustee's sale "in lieu of the Orcillas' application for a loan modification under HAMP." The Orcillas further allege their HAMP loan modification application constituted consideration for BofA's promise to halt the sale.
Agbabiaka's declaration "clearly indicates that [BofA's] promise was gratuitous in the sense of being offered without expectation of any exchanged promise or performance." (Jara, supra, 121 Cal.App.4th at p. 1251.) Accordingly, the breach of oral contract claim fails because the Orcillas do not allege consideration sufficient to establish the existence of a contract. (Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1039 [107 Cal.Rptr.3d 683] [oral promise to postpone a foreclosure sale held to be unenforceable because there was no exchange of true consideration].)
We are unpersuaded by the Orcillas' contention on appeal that the money BofA would have received under TARP (Troubled Asset Relief Program) in exchange for considering their HAMP application constituted consideration for the promise to postpone. That benefit would not have been conferred upon BofA by the Orcillas. And, again, the Orcillas had already submitted their HAMP loan modification application when BofA made its promise, making the promise gratuitous.
In sum, the trial court properly sustained the Bank Defendants' demurrer to count 9. Because the Orcillas do not suggest how they might cure the defect in their breach of oral contract claim by amendment, they have not shown the trial court abused its discretion in denying them leave to amend that cause of action.
The Orcillas' promissory estoppel claim fails because they fail to allege reliance. While they allege, in conclusory fashion, that they "relied on the promise" to postpone the trustee's sale, they do not allege any facts showing how they relied. For example, they do not allege that they abandoned plans to cure their default before the sale in reliance on the promise that the sale would not proceed. The Orcillas also fail to allege injury caused by any reliance on the promise. For instance, they do not allege that they could and would have cured their default before the sale had they known it was going to proceed. Accordingly, the trial court did not err in sustaining defendants' demurrer to the Orcillas' promissory estoppel claim.
The Orcillas' fraud cause of action is based on three distinct misrepresentations. We address each in turn and conclude that the Orcillas have failed to state a fraud claim based on any of the alleged misrepresentations.
First, the Orcillas allege the Bank Defendants misrepresented the date of sale in the notice of sale. But they fail to allege either reliance on that misrepresentation or any resulting damages. Aside from the conclusory allegation that the Orcillas relied on the Bank Defendants' representation regarding the date of sale, the complaint does not allege what, if anything, the Orcillas did in reliance on the representation. Nor does it allege a causal relationship between the alleged misrepresentation and their alleged damages (the loss of their home and associated costs). And we cannot reasonably infer that the Orcillas could have avoided foreclosure but for the error in the notice of sale, given that the Orcillas do not deny defaulting on their loan and do not allege that they cured, attempted to cure, or could have cured the default.
Third, the Orcillas allege BofA misrepresented that the trustee's sale would not go forward in light of their HAMP loan modification application. They allege neither facts showing they relied on that misrepresentation, nor facts demonstrating that misrepresentation in any way prevented them from avoiding foreclosure. They also fail to allege "the name[] of the person[] who made the representation[ and] their authority to speak on behalf of [BofA]," as required by the specificity requirement. (West, supra, 214 Cal.App.4th at p. 793.)
In their opening brief, the Orcillas discuss a fourth misrepresentation — that the Bank Defendants owned the Orcillas' loan. The Orcillas did not adequately allege an actionable misrepresentation based on the Bank Defendants' claimed ownership of the Orcillas' loan for two reasons. First, that misrepresentation is not alleged in the operative complaint. Second, the Orcillas "fail to allege any facts showing that they suffered prejudice as a result of any lack of authority of the parties participating in the foreclosure process. The [Orcillas] do not dispute that they are in default under the [N]ote. The assignment of the [D]eed of [T]rust and the [N]ote did not change the [Orcillas'] obligations under the [N]ote, and there is no reason to believe that [Quick Loan] as the original lender would have refrained from foreclose in these circumstances. Absent any prejudice, the [Orcillas] have no standing to complain about any alleged lack of authority [to foreclose] or defective assignment" of either the Deed of Trust or the Note. (Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85 [161 Cal.Rptr.3d 500].)
For the foregoing reasons, we conclude the fraud claim fails. The trial court's refusal to grant the Orcillas leave to amend that cause of action was not an abuse of discretion, as the Orcillas have not demonstrated a reasonable possibility they could cure the defects discussed above by amendment.
In count 11, the Orcillas sought quiet title against all defendants.
The Bank Defendants contend the quiet title action is defective as to them because they do not have an adverse claim to title. We agree.
The quiet title action also was directed against Big Sur, which failed to file a respondent's brief in this appeal.
Here, the Orcillas' quiet title action against Big Sur is premised on allegations that the trustee's sale "was a sham" because of defects in the Notice of Default and Notice of Trustee's Sale. Because the claim is "founded upon allegations of irregularity in [the] trustee's sale," it is "barred by [Big Sur's] prior unlawful detainer judgment." (Vella, supra, 20 Cal.3d at p. 256.)
The Orcillas contend that because Big Sur brought its unlawful detainer action as a limited civil case, the superior court lacked jurisdiction to adjudicate title to the Property, which is worth more than $25,000. For that argument, they rely on Vella, in which the Supreme Court concluded that an unlawful detainer action brought in municipal court, which "had no jurisdiction... to adjudicate title to property worth considerably more than its $5,000 jurisdictional limit," did not bar a subsequent fraud action. (Vella, supra, 20 Cal.3d at p. 257.) We disagree with the Orcillas' contention.
In sum, the Orcillas failed to state a quiet title claim against any of the defendants. They do not contend they could amend that cause of action and thus do not carry their burden to show the trial court erred in denying them leave to amend.
The Orcillas' 12th cause of action alleges the Bank Defendants violated all three prongs of the UCL by (1) failing to rescind the Second Notice of Default, (2) failing to issue a valid notice of default in advance of the trustee's sale, and (3) foreclosing on the Property "absent chain of title." The Orcillas further allege that "[a]ll of the other violations and causes of action alleged
The Bank Defendants maintain the Orcillas lack standing because they fail to satisfy the causation prong. Specifically, the Bank Defendants argue that the Orcillas fail to allege their economic injury — loss of the Property — was caused by the Bank Defendants' conduct as opposed to by the Orcillas' default. The Orcillas respond that the Bank Defendants caused their loss by (1) enforcing an unconscionable loan and (2) foreclosing on a loan they did not own.
Liberally construed, count 12 and the allegations it incorporates allege that the Bank Defendants engaged in an unlawful or unfair business practice by enforcing the underlying loan and the loan modification agreement, both of which were unconscionable. (Shadoan v. World Savings & Loan Assn. (1990) 219 Cal.App.3d 97, 101-102 [268 Cal.Rptr. 207] ["that a contractual provision is unconscionable may be relevant to the question of whether a party who drafted — and seeks to enforce — the provision, has committed an unfair business practice"].) We have already concluded that the complaint adequately alleges that both agreements were unconscionable. With respect to causation, we can reasonably infer from the allegations that the Orcillas would not have lost the Property if the Bank Defendants had not enforced the unconscionable agreements by way of foreclosure proceedings.
We have some doubts as to whether the Orcillas have alleged facts entitling them to restitution or injunctive relief, the only remedies the UCL affords private plaintiffs. (See Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 452 [30 Cal.Rptr.3d 210].) However, the Bank Defendants do not raise that issue and, accordingly, we consider it to have been forfeited.
For the foregoing reasons, we conclude the Orcillas have alleged an actionable unlawful or unfair business practice by the Bank Defendants as well as standing to assert a UCL claim. Therefore, the trial court erred in sustaining the Bank Defendants' demurrer to count 12.
The Orcillas' final cause of action requests declaratory relief on the issue of the parties' rights to and interests in the Property. It alleges the "Bank Defendants have taken actions in violation of their statutory, legal and contractual duties ... [, which] have resulted in the wrongful foreclosure of the Subject Property" and that "[a]n actual dispute exists between the Orcillas and all Defendants as to the ownership of the Subject Property, and the validity ... and amount ... of the liens that were on the Subject Property prior to foreclosure."
Here, the Orcillas seek a remedy for a past wrong: the 2010 foreclosure sale. The complaint lacks any factual allegations indicating that an actual, present controversy exists between the parties. We therefore conclude that the Orcillas have failed to state a cause of action for declaratory relief and defendants' demurrer was properly sustained. (See Jenkins, supra, 216 Cal.App.4th at pp. 513-514.)
The judgment is reversed and the matter is remanded to the superior court with directions to vacate its order sustaining the Bank Defendants' demurrer to the second amended complaint without leave to amend. The superior court is further directed to enter a new order (1) sustaining the demurrer as to counts 2 through 11 and 13 without leave to amend and (2) overruling the
Rushing, P.J., and Elia, J., concurred.