Tag Archives: wells fargo

California Can Finally Say “Show Me The…..Note!”

26 Oct

Attorneys representing homeowners in all 50 states must undoubtedly feel that their states do not do enough to protect homeowners from preventable foreclosures. In non-judicial states like California, the lack of oversight in the foreclosure process at all levels has led to rampant abuse, fraud and at the very least, negligence. Our courts have done little to diffuse this trend with cases like Chilton v. Federal Nat. Mortg. Ass’n holding: “(n)on-judicial foreclosure under a deed of trust is governed by California Civil Code Section 2924 which relevant section provides that a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process.” California courts have held that the Civil Code provisions “cover every aspect” of the foreclosure process, and are “intended to be exhaustive.” There is no requirement that the party initiating foreclosure be in possession of the original note.

Chilton and many other rulings refuse to acknowledge that homeowners have any rights to challenge wrongful foreclosures including Gomes v Countrywide, Fontenot v Wells Fargo, and a long line of tender cases holding that a plaintiff seeking to set aside a foreclosure sale must first allege tender of the amount of the secured indebtedness. Complicating matters further is the conflict between state, federal and bankruptcy cases regarding Civil Code 2932.5 and the requirement of recording an assignment prior to proceeding to foreclosure.
While the specific terms are still evolving, the http://www.nationalmortgagesettlement.com/ information website has released the Servicing Standards Highlights that set forth the basic changes that the banks and servicers have agreed to as part of the settlement. When the AG Settlement is finalized, it will be reduced to a judgment that can be enforced by federal judges, the special independent monitor Joseph Smith, federal agencies and Attorneys General. This judgment can be used by attorneys to define a standard and therefore allow us to fashion a remedy that will improve our chances of obtaining relief for our clients.

Lean Forward

Many have opined about the deficiencies in the AG Settlement, from the lack of investigation to inadequacy of the dollars committed to compensate for wrongful foreclosures, principal reduction or refinancing. The reality is, as tainted as it may be, the AG Settlement leaves us better off than were were for future cases. It does not however, address past wrongs in any meaningful way. The terms make it abundantly clear that this is not the settlement for compensation; if there is any remote possibility of compensation it must be sought in the OCC Independent Foreclosure Review and the homeowner must meet the extreme burden of proving financial harm caused by the wrongful foreclosure. For California, the AG Settlement at best, improves our ability to request crucial documents to challenge wrongful foreclosures which previously were difficult if not impossible to obtain. This will allow us to negotiate better loss mitigation options for clients.

Loan Modification 2008-2011

The homeowner submits an application 10 times, pays on 3 different trial plans, speaks to 24 different representatives who give him various inconsistent versions of status. After two years, and thousands of default fees later, he is advised that the investor won’t approve a modification and foreclosure is imminent. Actually, the truth was that the homeowner was in fact qualified for the modification, the data used for the NPV analysis was incorrect and the investor had in fact approved hundreds of modifications according to guidelines that were known to the servicer from the beginning. How could the AG Settlement not improve on this common scenario?

Foreclosure Rules
14 days prior to initiating foreclosure, the servicer must provide the homeowner with notice which must include:

facts supporting the bank’s right to foreclose
payment history
a copy of the note with endorsements
the identity of the investor
amount of delinquency and terms to bring loan current
summary of loss mitigation efforts
A prompt review of the 14 Day Pre Foreclosure Notice and investigation regarding the securitization aspects of the case can result in the filing of a lawsuit and request for TRO if all terms have not been complied with or the documents provided do not establish the right to foreclose. There will be no issue of tender, prejudice or show me the note that can be raised in opposition by defendants and this is an opportunity that we have not been afforded under current case law. Additionally, a loan level review will reveal improper fees and charges that can be challenged. Deviation from the AG Settlement Servicing Standards should be aggressively pursued through the proper complaint channels.

Loan Modification Guidelines

Notify the homeowner of all loss mitigation options
Servicer shall offer a loan modification if NPV positive
HAMP trial plans shall promptly be converted to permanent modifications
Servicer must review and make determination within 30 days of receipt of complete package
Homeowner must submit package within 120 days of delinquency to receive answer prior to referral to foreclosure (could be problematic since most homeowners are more than 120 days late)
After the loan has been referred to foreclosure, the homeowner must apply for a loan modification within 15 days before sale. Servicer must expedite review.
Servicer must cease all collection efforts while a complete loan modification package is under review or homeowner is making timely trial modification payments
Other significant terms include the requirement that the servicer maintain loan portals where the homeowner can check status which must be updated every ten days, assign a single point of contact to every loan, restriction on default fees and forced placed insurance, modification denials must state reasons and provide document support and the homeowner has 30 days to appeal a negative decision.

Short Sales Will Now Really Be Short

The rules regarding short sales will greatly increase the chances that short sales will be processed in a timely manner and accordingly, will result in more short sales being closed.

Banks/servicers must make short sale requirements public
Banks/servicers must provide a short sale price evaluation upon request by the homeowner prior to listing the property
Receipt of short sale packages must be confirmed and notification of missing documents must be provided within 30 days
Knowledge of all of the new requirements for processing foreclosures, loan modifications and short sales can greatly increase our chances of obtaining successful outcomes for clients. Resolution is the goal, and now, we may have leverage that did not exist before.

17200 recent ruling unfair business practice foreclosure

26 Oct




*9 Plaintiff also fails to plead sufficient facts to support a UCL claim for “unlawful, unfair, or fraudulent business act or practice.” Cal. Bus. & Prof.Code § 17200. Because the framers of the UCL expressed the three categories of unfair competition in the disjunctive, “each prong of the UCL is a separate and distinct theory of liability,” each offering “an independent basis for relief.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir.2009). Furthermore, a claim under Section 17200 is “derivative of some other illegal conduct or fraud committed by a defendant, and [a] plaintiff must state with reasonable particularity the facts supporting the statutory elements of the violation.” See Benham v. Aurora Loan Servs., No. 09–2059, 2009 WL 2880232, at *4 (N.D.Cal. Sept.1, 2009). “A complaint based on an unfair business practice may be predicated on a single act; the statute does not require a pattern of unlawful conduct.” Brewer v. Indymac Bank, 609 F.Supp.2d 1104, 1122 (E.D.Cal.2009).

There is little question that the execution of documents in connection with a Deed of Trust constitutes a “business act or practice.” As for the nature of the conduct alleged, while the Complaint alludes to all three prongs of this statute generally, Plaintiff does not specify the theory on which she bases her claim, nor does she address the elements of any one of these theories. Compl. ¶ 41 (“[T]he instances mentioned in paragraphs 32–26[sic] above are unfair, deceptive, untrue acts, which are prohibited by California Business And Professions Code § 17200.”). Other courts have dismissed UCL claims on these grounds. See, e.g., Jensen, 702 F.Supp.2d at 1200 (dismissing plaintiff’s UCL claim because his UCL allegations “do not specify the basis for his claim, i.e., whether it is based on unlawful, unfair, or fraudulent practice”). However, in an effort to construe the factual allegations in a light most favorable to Plaintiff, this Court will consider the adequacy of the Complaint under each prong separately.

a. “Unlawful” Prong

The “unlawful” prong of the UCL requires a plaintiff to demonstrate that the defendant’s conduct violated some other law. Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir.2000). In effect, Section 17200 “borrows” violations of federal, state, or local law and makes them independently actionable. Id. To state a claim for relief under this theory, a plaintiff must “state, with reasonable particularity, the facts supporting the statutory elements of the violation.” Jensen, 702 F.Supp.2d at 1189.

Aside from the cause of action for breach of contract, Plaintiff alleges no violation of federal, state, or local law in her Complaint that could be actionable under Section 17200. Courts consistently conclude that a breach of contract is not itself an unlawful act for the purposes of the UCL. Puentes v. Wells Fargo Home Mortgage, Inc., 160 Cal.App.4th 638, 645, 72 Cal.Rptr.3d 903 (2008); Gibson v. World Sav. & Loan Ass’n, 103 Cal.App.4th 1291, 1302, 128 Cal.Rptr.2d 19 (2002) (“Contractual duties are voluntarily undertaken by the parties to the contract, not imposed by state or federal law.”). Only when the act constituting breach is unfair, unlawful, or fraudulent for some additional reason may that act also violate the UCL. Smith v. Wells Fargo Home Mortgage, Inc., 135 Cal.App.4th 1463, 1483, 38 Cal.Rptr.3d 653 (2005). Here, Plaintiff fails to demonstrate how the facts alleged to support breach are, apart from the breach, wrongful.

*10 Contractual considerations aside, to the extent that Plaintiff bases a theory of “unlawful” conduct on defendant Aurora’s lack of authority to substitute a trustee or CalWestern’s lack of authority to initiate foreclosure proceedings, her cause of action fails. California Civil Code Sections 2924 through 2924k, “[t]he comprehensive statutory framework established to govern nonjudicial foreclosure sales” are intended to be “exhaustive.” Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d 777 (1994). Section 2924(a)(1) provides that a “trustee, mortgagee, or beneficiary, or any of their authorized agents may initiate the foreclosure process.” Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149, 1155, 121 Cal.Rptr.3d 819 (2011). Thus, even a breach of contract theory invalidating Cal–Western’s appointment as trustee does not also bar Cal–Western from initiating foreclosure as an agent of the trustee. Only the alleged breach, and not a violation of California law, could potentially render the Defendants’ conduct illegal.

Furthermore, California Civil Code Section 2934a(a)(1)(A) provides that “a trustee under a trust deed … may be substituted by … all of the beneficiaries under the trust deed, or their successors in interest.” Again, while Aurora’s attempt to appoint Cal–Western as the new trustee may have breached the terms of the Deed of Trust, it did comply with California law.7

Thus, to the extent Plaintiff predicates her UCL claim on a violation of another law, this cause of action fails.

b. “Unfair” Prong

The California Supreme Court has yet to establish a definitive test that may be used in consumer cases to determine whether a particular business act or practice is “unfair” for the purposes of the UCL. Drum v. San Fernando Valley Bar Ass’n, 182 Cal.App.4th 247, 253–54, 106 Cal.Rptr.3d 46 (2010) (citing Cel–Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 187 n. 12, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999)). As a result, three tests have developed among state and federal courts. See Vogan v. Wells Fargo Bank, N.A., No. 11–02098, 2011 WL 5826016, at *6 (E.D.Cal. Nov. 17, 2011); Davis v. Ford Motor Credit Co., 179 Cal.App.4th 581, 593–97, 101 Cal.Rptr.3d 697 (2009) (detailing the split in authority in handling consumer UCL cases).

One test, which has garnered the most attention from the Ninth Circuit, limits unfair conduct to that which “offends an established public policy” and is “tethered to specific constitutional, statutory, or regulatory provisions.” Davis, 179 Cal.App.4th at 595, 101 Cal.Rptr.3d 697; Lozano v. AT & T Wireless Servs., 504 F.3d 718, 736 (9th Cir.2007) (holding that unfairness must be tied to a “legislatively declared” policy). The second test contemplates whether the alleged business practice is “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,” and requires the court to “weigh the utility of the defendant’s conduct against the gravity of the harm to the alleged victim.” Davis, 179 Cal.App.4th at 594–95, 101 Cal.Rptr.3d 697; McDonald, 543 F.3d at 506; Progressive West Ins. Co. v. Yolo County Sup.Ct., 135 Cal.App.4th 263, 285–87, 37 Cal.Rptr.3d 434 (2005). The third test, which borrows the definition of “unfair” from the Federal Trade Commission Act, requires that “(1) the consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided.” Davis, 179 Cal.App.4th at 597, 101 Cal.Rptr.3d 697.

*11 Plaintiff’s complaint does not, in any meaningful way, address the considerations presented by these tests. She fails to link her claim to a “legislatively declared” policy as required under the first test. Under the second and third tests, the Complaint fails because Plaintiff does not allege that Defendants’ conduct caused any injury, to the Plaintiff or others. Even under the second test, which a California Court of Appeal admits is “fact intensive and not conducive to resolution at the demurrer stage,” Plaintiff’s claim under this theory cannot proceed without allegations of its fundamental requirements. Progressive West, 135 Cal.App.4th at 287, 37 Cal.Rptr.3d 434.

Thus, to the extent that Plaintiff attempts to state a claim under the “unfair” prong of the UCL, this cause of action fails.

c. “Fraudulent” Prong

“Fraudulent acts are ones where members of the public are likely to be deceived.” Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1151–52 (9th Cir.2008). In response to the new eligibility requirements for private actions under Section 17200 enacted through Proposition 64, a UCL claim under the “fraudulent prong” requires a plaintiff to have “actually relied” on the alleged misrepresentation to his detriment. In re Tobacco II Cases, 46 Cal.4th at 326, 93 Cal.Rptr.3d 559, 207 P.3d 20 (2009).

Under the Federal Rules of Civil Procedure 9(b), the “circumstances constituting fraud” or any other claim that “sounds in fraud” must be stated “with particularity.” Fed.R.Civ.P. 9(b); Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1103–04 (9th Cir.2003). The Ninth Circuit has explained that this standard requires, at a minimum, that the claimant pleads evidentiary facts, such as time, place, persons, statements, and explanations of why the statements are misleading. See In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547–48 (9th Cir.1994) (en banc).

The Complaint does, with particularity, allege several instances that could plausibly constitute acts of fraud. Specifically, Plaintiff argues that MERS committed fraud under the UCL by causing Stacy Sandoz, who is neither Vice President as stated nor authorized to act on behalf of MERS in this capacity, to execute the Corporate Assignment. Compl. ¶¶ 19, 38, 43; Compl. Ex. 2. The Complaint makes identical allegations against Aurora regarding Vice President Michele Rice, as stated on the Substitution of Trustee. Compl. ¶¶ 26, 45; Compl. Ex. 6. The Plaintiff similarly maintains that First American’s use of the name “Derrick Sue” on the Notice of Default and Election to Sell was fraudulent conduct, owing to the fact that “no such person by that name exists or is employed by First American.” Compl. ¶¶ 22, 40; Compl. Ex. 5. The Complaint also claims that Cal–Western fraudulently represented Megan Cooper as having the authority to execute the Affidavit of Mailing Substitute Trustee, since no such person exists, is employed by Cal–Western, or signed said document. Compl. ¶¶ 27, 46; Compl. Ex. 6. Such detailed accounts may very well satisfy the particularity requirement under 9(b) because they appear to allege the who, what, when, and how of the alleged “deceptive business acts.” Compl. ¶ 36. But see Jensen, 702 F.Supp.2d at 1189 (granting defendant JP Morgan’s motion to dismiss plaintiff borrower’s UCL claim for failure “to specify what particular role JP Morgan played in the fraudulent scheme, when and where the scheme occurred, or details of the specific misrepresentations involved”).8

*12 Defendant argues that Plaintiff fails to state that the alleged fraudulent statements “were disseminated to the public [such that] reasonable consumers are likely to be deceived.” Mot. at 10 (quoting Sybersound, 517 F.3d at 1151–52). This argument, while accurate in pointing out Plaintiff’s failure to address the distinct features of a fraud-based UCL claim, is questionable considering the fact that all challenged documents were publicly recorded and notarized. While Plaintiff does not attempt to demonstrate that Defendants have likely deceived the public under the Sybersound test, recording documents with the county may be sufficient “dissemination to the public.”

More problematic, however, Plaintiff does not and likely cannot plead actual reliance on the Defendants’ alleged fraud. The Complaint does not indicate that Plaintiff ever believed in the alleged misrepresentations or that they caused her to take any action to her detriment. As discussed above with regard to UCL standing, Plaintiff fails to plead loss of money or property, let alone a causal correlation of a loss with the Defendants’ alleged fraud.

To the extent that Plaintiff attempts to state a claim under the “fraudulent” prong of the UCL, the cause of action fails.

For the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss Plaintiff’s UCL claim without prejudice to provide an opportunity to establish standing and more clearly articulate the basis for this cause of action.


Ford v. Lehman Bros. Bank, FSB, C 12-00842 CRB, 2012 WL 2343898 (N.D. Cal. June 20, 2012)


However, Plaintiff’s third UCL theory, Recontrust’s continual advertising of Plaintiff’s foreclosure after this Court’s preliminary injunction went into effect, is flawed because it is unclear what damage such conduct caused Plaintiff. While she alleges emotional damages, she does not allege any loss of money or property—either threatened or realized—as a result of Recontrust’s advertising. See Cal. Bus. & Prof.Code § 17204 (requiring a private litigant to have “suffered injury in fact and [ ] lost money or property as a result of the unfair competition” in order to bring a UCL claim); Cf. Sullivan v. Washington Mut. Bank, FA, C–09–2161 EMC, 2009 WL 3458300, at *4 (N.D.Cal. Oct.23, 2009) (finding standing where “foreclosure proceedings have been initiated which puts her interest in the property in jeopardy”). Accordingly, the Court will dismiss this UCL claim.

Tamburri v. Suntrust Mortg., Inc., C-11-2899 EMC, 2012 WL 2367881 (N.D. Cal. June 21, 2012)





January 2008, Debrunner and his co-investors filed a notice of default, presumably for Chiu’s inability to remain current on the second-position loan. Debrunner, supra, 204 Cal.App.4th at 436, 138 Cal.Rptr.3d 830. A trustee’s sale of the Los Altos property was scheduled for May 2008, but was delayed after Chiu’s business entity petitioned for Chapter 11 bankruptcy protection in June 2008. The bankruptcy court granted Debrunner’s and his co-investors’ motion for relief from the bankruptcy stay, allowing them to foreclose upon the property and obtain a trustee’s deed upon sale in March 2009. Id. But back in August 2008, before the sale was completed, Saxon—the servicer on the first-position loan—had also filed a notice of default, which was rescinded because of the bankruptcy proceedings. Deutsche Bank—the assignee of the first deed of trust—moved for relief from the bankruptcy stay in July 2009 in order to file a new notice of default, although its motion was taken off calendar after the bankruptcy case was closed in August 2009. Old Republic Default Management Services (Old Republic), the foreclosure trustee, then recorded a new notice of default on the Los Altos property in September 2009. In the accompanying Fair Debt Collection Practices Act Notice, Old Republic named Deutsche Bank as the creditor and Saxon as its ‘ “attorney-in-fact’ “ and informed the debtor that payment to stop the foreclosure could be made to Saxon. Id. On January 5, 2010, the same day the assignment from FV–1 to Deutsche Bank was recorded, a ‘ “Substitution of Trustee’ “ from Chicago Title Company to Old Republic was recorded. This document had been signed and notarized by Saxon on behalf of Deutsche Bank on September 2, 2008. Id. at 436–37, 138 Cal.Rptr.3d 830.

In November 2009, Debrunner brought an action against Deutsche Bank, Saxon and Old Republic to stop the foreclosure proceedings on the first deed of trust, contending the defendants had no right to foreclose because Deutsche Bank did not have physical possession of or ownership rights to the original promissory note executed by Chiu. Debrunner, supra, 204 Cal.App.4th at 437, 138 Cal.Rptr.3d 830. Deutsche Bank and Saxon demurred to the complaint, contending possession of the original note was not required under California’s non-judicial foreclosure statutes, Cal. Civ.Code §§ 2924 et seq. In opposition, Debrunner contended that “any assignment of the deed of trust was immaterial because a deed of trust ‘cannot be transferred independently’ of the promissory note, which must be ‘properly assigned’ and attached,” and that “ ‘[a] deed of trust standing alone is a nullity,’ and thus cannot provide authority for a lender to foreclose.” Id. The trial court sustained Deutsche Bank’s and Saxon’s demurrer without leave to amend, id. at 438, 138 Cal.Rptr.3d 830, and the Court of Appeal affirmed.

On appeal, Debrunner reiterated his argument that an assignment of the deed of trust was ineffective and a legal nullity unless the assignee also physically received the promissory note and endorsed it, and that the beneficiary of the deed of trust must physically possess the note to initiate foreclosure proceedings. Debrunner, supra, 204 Cal.App.4th at 439, 138 Cal.Rptr.3d 830. The court rejected this contention: “As the parties recognized, many federal courts have rejected this position, applying California law. All have noted that the procedures to be followed in a nonjudicial foreclosure are governed by sections 2924 through 2924k, which do not require that the note be in the possession of the party initiating the foreclosure. [Citations.] We likewise see nothing in the applicable statutes that precludes foreclosure when the foreclosing party does not possess the original promissory note. They set forth a ‘comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust. 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.’ [Citation.] Notably, section 2924, subdivision (a)(1), permits a notice of default to be filed by the ‘trustee, mortgagee, or beneficiary, or any of their authorized agents.’ The provision does not mandate physical possession of the underlying promissory note in order for this initiation of foreclosure to be valid.” Debrunner, supra, 204 Cal.App.4th at 440, 138 Cal.Rptr.3d 830.

*5 Plaintiffs further contend the April 29, 2009 notice of default and September 18, 2009 notice of sale recorded by NDEx were invalid because no substitution of trustee was ever recorded naming NDEx as the trustee under the deed of trust. Not so. Pursuant to Plaintiffs’ motion, the Court has consulted the official Fresno County Recorder website (http://www.co.fresno.ca.us) and notes that on June 29, 2009 (two months after the notice of default but three months before the notice of sale), a substitution of trustee naming Deutsche Bank National Trust Company as grantor and NDEx as grantee appeared to have been recorded as document # 2009–00879966–00. To the extent Plaintiffs intend to suggest a preliminary injunction should issue because the notice of default recorded by NDEx was defective in that it listed NDEx as the trustee even though there was no recorded substitution of NDEx as a trustee at the time, the claim likewise fails. An identical argument was raised and rejected in Debrunner. Debrunner had alternatively contended the notice of default in that case was defective because it listed Old Republic as the trustee even though there was no recorded substitution of Old Republic as a trustee at the time the notice of default was recorded. Debrunner, supra, 204 Cal.App.4th at 443, 138 Cal.Rptr.3d 830. The court disagreed, observing that “[California Civil Code] section 2934a provides for the situation in which a substitution of trustee is executed but is not recorded until after the notice of default is recorded.” Id. at 443–44, 138 Cal.Rptr.3d 830 (citing Cal. Civ.Code, § 2934a, subd. (b)).3 Plaintiffs have provided no argument or evidence to suggest a substitution of NDEx as trustee had not been executed at the time NDEx recorded the April 29, 2009 notice of default.

Even if there were a defect in NDEx’s commencement of the foreclosure proceedings, Plaintiffs have failed to allege prejudice. In Debrunner, the court concluded that a failure to show or assert prejudice resulting from an alleged defect in the foreclosure process was fatal to the plaintiff’s claims. Debrunner, supra, 204 Cal.App.4th at 443, 138 Cal.Rptr.3d 830. “ ‘[A] plaintiff in a suit for wrongful foreclosure has generally been required to demonstrate [that] the alleged imperfection in the foreclosure process was prejudicial to the plaintiff’s interests.’ [¶] … [¶] … [T]here was no allegation in the first amended complaint that plaintiff’s ability to contest or avert foreclosure was impaired. Even in his opposition to the demurrer and on appeal he has not identified the harm he suffered from any asserted violation of section 2934a, subdivision (b), again preferring to assume that he is entitled to judgment without any showing of prejudice.” Id. at 444, 138 Cal.Rptr.3d 830 (quoting Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 271, 129 Cal.Rptr.3d 467 (2011)). In this case, as in Debrunner, Plaintiffs have provided no argument or evidence of harm resulting from the failure to record a substitution of NDEx as trustee before NDEx filed its notice of default. Accordingly, the Court finds no basis for injunctive relief on this ground. A substitution would simply have replaced one trustee with another without modifying Plaintiffs’ obligations under the note or deed of trust. Under these circumstances, Plaintiffs would be hard pressed to show any conceivable prejudice, given Plaintiffs have offered no facts to suggest the substitution of NDEx (or the allegedly improper recording thereof) adversely affected their ability to pay their debt or cure their default.


Ghuman v. Wells Fargo Bank, N.A., 1:12-CV-00902-AWI, 2012 WL 2263276 (E.D. Cal. June 15, 2012)





Like Golden West, Defendant LSI is a citizen of California. The Wells Fargo Bank Defendants contend that LSI’s “citizenship should be ignored for purposes of diversity jurisdiction” on the grounds that LSI did nothing more than facilitate the recording of the Notice of Default on behalf of NDeX. Defs.’s Resp. to OSC at 4. The pleadings are not a model of clarity, and LSI’s precise role in connection with the claims alleged is not entirely clear. However, it appears that Plaintiffs are alleging, inter alia, that LSI, among others, failed to comply with California law in proceeding with the foreclosure in accordance with California Civil Code section 2923.5. See SAC at 2.

*5 Section 2923.5 provides a private right of action to postpone a foreclosure sale. Mabry v. Superior Court, 185 Cal.App.4th 208, 2141, 110 Cal.Rptr.3d 201 (2010). Under section 2923.5, “a mortgagee, trustee, beneficiary, or authorized agent” must follow certain procedures in the context of a foreclosure. Cal. Civ.Code § 2923.5. Plaintiffs allege that LSI acted as an agent for Wells Fargo and was involved in the preparation of forged and fraudulent foreclosure notices, including the Notice of Default, Substitution of Trustee and Notice of Trustee’s Sale. See Notice of Joinder for Inclusion of LSI Title Company, Dkt. 25. These allegations support the conclusion that Plaintiffs may have a potential claim against LSI under section 2923.5, and that LSI is not merely a nominal party as Wells Fargo Defendants now contend. See Cheng v. Wells Fargo Bank, N.A., No. SACV10–1764–JST (FFMx), 2010 WL 4923045, at *1 (C.D.Cal., Dec.2, 2010) (finding that LSI was not fraudulently joined in a mortgage fraud action removed from state court where plaintiffs alleged that LSI was acting as an agent for Wells Fargo in connection with the allegedly fraudulent foreclosure of their home). Thus, even if there was complete diversity at the time of removal, Plaintiffs’ subsequent joinder of LSI destroyed diversity jurisdiction and requires remand. See 28 U.S.C § 1447(e).


Boggs v. Wells Fargo Bank NA, C 11-2346 SBA, 2012 WL 2357428 (N.D. Cal. June 14, 2012)




Defendants cite to only one case holding that the NBA has preemptive effect over certain California laws relating to foreclosure. See Acosta v. Wells Fargo Bank, N.A., C 10–9910JF (PVT), 2010 WL 2077209 (N.D.Cal. May 21, 2010). In Acosta, Judge Fogel analogized the NBA to the Home Owners’ Loan Act (“HOLA”), which some courts have found to preempt state laws relating to federal savings banks. Id. at *8 (finding that the NBA preempted § 2923.5 because “several district courts within the Ninth Circuit have determined that the Home Owners’ Loan Act (“HOLA”), 12 U.S.C. § 1464–which contains the nearly identical language at 12 U.S.C. § 1464(b)(10)-preempts Section 2923.5”).

However, the analogy between the NBA and HOLA is flawed. Unlike the NBA, which contains only a conflict preemption clause, HOLA contains a broad field preemption clause. Specifically, 12 C.F.R. § 560.2(a) provides, in relevant part,

To enhance safety and soundness and to enable federal savings associations to conduct their operations in accordance with best practices (by efficiently delivering low-cost credit to the public free from undue regulatory duplication and burden), [the Office of Thrift Supervision (“OTS”) ] hereby occupies the entire field of lending regulation for federal savings associations. OTS intends to give federal savings associations maximum flexibility to exercise their lending powers in accordance with a uniform federal scheme of regulation. Accordingly, federal savings associations may extend credit as authorized under federal law, including this part, without regard to state laws purporting to regulate or otherwise affect their credit activities, except to the extent provided in paragraph (c) or § 560.102 of this part.


paragraph (c) is intended to be interpreted narrowly. Any doubt should be resolved in favor of preemption.

Parcray v. Shea Mortg. Inc., CV–F09–1942OWW/GSA, 2010 WL 1659369, at *7–8 (E.D.Cal. Apr.23, 2010) (quoting OTS, Final Rule, 61 Fed.Reg. 50951, 50966–50967 (Sept. 30, 1996) (emphasis added)). Thus, the savings clause comes into play only if the law at issue is not listed in the preemption section.

Such broad preemption language is absent from the NBA. In contrast to 12 C.F.R. § 502.2(b) of the OTS/HOLA regulations which broadly declares categories of state law that are preempted per se, 12 C.F.R. § 34.4(b) declares categories that are not preempted if they have an incidental effect on bank’s lending powers. Indeed, the Ninth Circuit has concluded that, while the OTS/HOLA regulations described above permit a court to consider the savings clause of § 560.2(c) only if the law at issue does not fall within the express preemption provisions of § 560.2(b), the OCC/NBA regulations “require[ ] the court to consider both the express preemption and savings clauses together” in the first instance. Aguayo v. U.S. Bank, 653 F.3d 912, 922 (9th Cir.2011) (emphasis added) (internal citations omitted).

As the Ninth Circuit held in Aguayo v. U.S. Bank, “while the OTS [HOLA] and the OCC [NBA] regulations are similar in many ways, the OCC has explicitly avoided full field preemption in its rulemaking and has not been granted full field preemption by Congress.” 653 F.3d at 921–22 (internal citations omitted). “Because of this difference in field preemption, courts have been cautious in applying OTS analysis to OCC regulations.” Id. at 922 (internal citations omitted). HOLA’s strict field preemption analysis therefore bears little relation to the NBA’s more flexible conflict preemption analysis. See also Gerber v. Wells Fargo Bank, N.A., CV 11–01083–PHX–NVW, 2012 WL 413997 (D.Ariz. Feb.9, 2012) (“[T]he [NBA] rule only preempts the types and features of state laws pertaining to making loans and taking deposits that are specifically listed in the regulation.”) (quoting OCC Interpretive Letter No. 1005, 2004 WL 3465750 (June 10, 2004) (emphasis added); citing Martinez v. Wells Fargo Home Mortg., Inc., 598 F.3d 549, 555 (9th Cir.2010) (“The [NBA] (and OCC regulations thereunder) does not ‘preempt the field’ of banking.”)).

The distinction between HOLA’s field preemption, on the one hand, and NBA’s mere conflict preemption, on the other, renders cases construing HOLA preemption inapposite to the question of whether NBA preemption applies. It is likely for this reason that almost no courts have addressed NBA preemption in the context of foreclosure litigation, despite the growing body of foreclosure cases circulating through the state and federal court systems.

*8 Aside from the one case Defendants cite which, in this Court’s view, erroneously applies the HOLA preemption analysis in the context of the NBA, Defendants provide no other authority for the proposition that Plaintiff’s state law claims, including § 2923.5, are preempted by the NBA. The few courts that have examined the NBA’s application to state foreclosure laws have concluded that “state laws regulating foreclosure are [ ] not preempted by NBA.” Gerber v. Wells Fargo Bank, N.A., CV 11–01083–PHX–NVW, 2012 WL 413997, at *8 (D.Ariz. Feb.9, 2012). Gerber reached this conclusion after an extensive analysis of the NBA’s preemption provisions, and concluded that “there has never been a federal presence [ ] sufficient to displace the various types of state statutes governing foreclosure procedures. Indeed, foreclosure practices govern ‘acquisition and transfer of property,’ an area which the Supreme Court has already confirmed lies within states’ presumed powers to regulate.” See id. at *5 (quoting Watters, 550 U.S. at 11) (addressing NBA preemption and concluding that banks remain subject to state laws regarding, e.g., “acquisition and transfer of property”). Gerber also concluded that “foreclosure” was not among the NBA’s expressly preempted state laws in 12 C.F.R. § 34.4(a). Although the regulation listed “servicing,” the court found that “foreclosure” was not sufficiently related to “servicing” because “[t]he OCC went to the trouble of specificity concerning other phases of the loan’s existence (e.g., ‘processing,’ ‘origination’) but did not list ‘foreclosure,’ and it is therefore difficult to assume that it meant to include it within a ‘servicing’ catch-all.” Id. at *8. The court noted that such a reading would create the implausible result of “bring[ing] down … probably every state’s laws regarding foreclosure.” Id. See also Loder v. World Savings Bank, N.A., No. C11–00053 TEH, 2011 WL 1884733, at *7 (N.D.Cal. May 18, 2011) (expressing concern, in the context of a HOLA preemption argument, that “a broad interpretation of what it means to ‘service’ or ‘participate in’ a mortgage could operate to preempt most all California foreclosure statutes where the foreclosing entity is a national lender”).

The Court finds Gerber persuasive and adopts its reasoning with respect to Plaintiff’s state law claims asserted here, including under § 2923.5. As the Supreme Court has explained, the NBA leaves national banks “subject to the laws of the State,” and banks “are governed in their daily course of business far more by the laws of the State than of the nation.” Atherton v. FDIC, 519 U.S. 213, 222, 117 S.Ct. 666, 136 L.Ed.2d 656 (1997) (quoting Nat’l Bank v. Commonwealth, 75 U.S. 353, 362 (1869)). The Supreme Court has also noted the states’ longstanding interest in regulating the foreclosure process, and has imposed a clear statement rule on any statutes that could potentially be construed to impinge on that interest. See BFP v. Resolution Trust Corp., 511 U.S. 531, 541–44, 114 S.Ct. 1757, 128 L.Ed.2d 556 (1994) (describing long history of state regulation of the foreclosure process and declining to read a provision of the Bankruptcy Code as disrupting “the ancient harmony that foreclosure law and fraudulent conveyance law … have heretofore enjoyed”).

*9 The OCC itself has confirmed that state foreclosure laws are not generally within the scope of NBA preemption. See Bank Activities and Operations; Real Estate Lending and Appraisals, 69 Fed.Reg.1904–01, at 1912 & n. 59 (Jan. 23, 2004) (OCC final rule describing state foreclosure laws as generally among laws that “do not attempt to regulate the manner or content of national banks’ real estate lending, but that instead form the legal infrastructure that makes it practicable to exercise a permissible Federal power”).

If there were any doubt as to whether preemption under HOLA was equivalent to preemption under the NBA, the recent Dodd–Frank legislation lays such doubt to rest. The Dodd–Frank Act changed the above-described HOLA preemption analysis and mandates that HOLA preemption would now follow the more lenient NBA conflict preemption standard. See Settle v. World Sav. Bank, F.S.B., ED CV 11–00800 MMM, 2012 WL 1026103, at *13 (C.D.Cal. Jan.11, 2012) (“The Dodd–Frank Act provides that HOLA does not occupy the field in any area of state law and that preemption is governed by the standards applicable to national banks.”) (quoting Davis v. World Savings Bank, FSB, 806 F.Supp.2d 159, 166 n. 5 (D.D.C.2011); citing Pub.L. No. 111–203, 2010 HR 4173 § 1046 (“Any determination by a court or by the Director or any successor officer or agency regarding the relation of State law to a provision of this chapter or any regulation or order prescribed under this chapter shall be made in accordance with the laws and legal standards applicable to national banks regarding the preemption of State law…. Notwithstanding the authorities granted under sections 4 and 5, this Act does not occupy the field in any area of State law.”). Thus, not only is HOLA preemption inapplicable to NBA cases, it is no longer applicable at all to any post-Dodd-Frank transactions.

ii. No Conflict Preemption

Under NBA conflict preemption, Plaintiff’s § 2923.5 claim does not impose any constraints on banks’ lending or servicing powers. Rather, it “only incidentally affect[s] the exercise of national banks’ real estate lending powers” by requiring certain procedural hurdles before a bank may foreclose on real property and transfer said property to a new owner. See 12 C.F.R. § 34.4(b) (exempting from NBA preemption any state laws that incidentally affect banks and concern, inter alia, contracts, torts, rights to collect debts, or acquisition and transfer of real property); Mabry v. Superior Court, 185 Cal.App.4th 208, 231, 110 Cal.Rptr.3d 201 (2010) (finding that § 2923.5 does not create a right to loan modification and that failure to comply with its requirements can only result in a delay in foreclosure).

Other cases are in accord and confirm that Plaintiff’s state common law claims are similarly outside the scope of NBA preemption. See, e.g., Lucia v. Wells Fargo Bank, N.A., 798 F.Supp.2d 1059, 1065–66 (N.D.Cal.2011) (White, J.) (finding that UCL, state contract, and Rosenthal Act claims arising out of failed modifications of home mortgage loans under HAMP were not preempted because the “theories upon which the claims are based do not necessarily impinge upon the bank’s obligations under the NBA” because they are “state laws of general application”); Sutclife v. Wells Fargo Bank, N.A., C–11–06595 JCS, 2012 WL 1622665, at *23 (N.D.Cal. May 9, 2012) (same); see also Gutierrez v. Wells Fargo & Co., C07–05923 WHA, 2010 WL 1233885 (N.D.Cal. Mar.26, 2010) (finding that UCL claims based on banks’ alleged deceptive business practices related to fees and other servicing conduct are not preempted when they do not challenge “a bank’s right to establish a fee,” but rather challenge, e.g., “a bank’s right to deceive or unfairly induce customers into paying them”) (citing Martinez v. Wells Fargo Home Mortg., Inc., 598 F.3d 549, 555 (9th Cir.2010) (“State laws of general application, which merely require all businesses (including national banks) to refrain from fraudulent, unfair, or illegal behavior, do not necessarily impair a bank’s ability to exercise its [federally-authorized] powers.”)).3

*10 Indeed, as noted above, if the Court accepted Defendant’s arguments, it would be questionable whether any of California’s (or other states’) foreclosure laws could avoid preemption. Yet federal law provides no legal framework for foreclosure. Mabry, 185 Cal.App.4th at 231, 110 Cal.Rptr.3d 201. Thus, Defendant essentially asks the Court to eviscerate decades of state foreclosure regulation. The Court finds no authority to do so.



Tamburri v. Suntrust Mortg., Inc., C-11-2899 EMC, 2012 WL 2367881 (N.D. Cal. June 21, 2012)




Plaintiffs allege that on January 12, 2012, the day the short sale was to close, Michael Zhao, Buyer Defendants’ real estate agent, informed SPS that defendants were attempting to defraud plaintiffs. Id. at ¶ 34. The FAC alleges that Zhao told SPS that defendants prepared two sets of purported short sale documents. Id. One set, which was given to SPS for its review, provided that no proceeds from the sale would be directed to the Attorney Defendants or would be used to satisfy any junior liens on the property. Id. at ¶ 35. The second set of documents, which reflected a higher purchase price than the documents presented to SPS, provided that some proceeds would go to the Attorney Defendants as well as other junior lien holders. Id. Plaintiffs allege that defendants intended the second set of documents to be recorded as the actual transaction. Id.

Select Portfolio Servicing v. Valentino, C 12-0334 SI, 2012 WL 2343754 (N.D. Cal. June 20, 2012)

Mrs Harris 13,000.00 settlement we are under water an average of 128,000.00 how does this punish Fraud? The California Lack of Commitment!!

10 Feb

Mrs Harris our Attorney General says we foreclosure victims will get real relief but if you divide 26 Billion into the 2 million victims that’s 13,000 how is that going to help anybody but the Banks. Short sale relief is no relief at all. California is an Anti- deficiency state. The victim only gets to move.

MARK J. DEMUCHA AND CHERYL M. DEMUCHA, a Reply Brief that worked

14 Dec

No. F059476




Wells Fargo in Laredo, Texas

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Appellants and Plaintiffs



Respondents and Defendants


Appeal from the Superior Court of the State of California, County of Kern

Case No.  S-1500-CV-267074

Honorable SIDNEY P. CHAPIN, Judge

Department 4

Tele: 661.868.7205




Michael D. Finley, Esq.

Law Offices of Michael D. Finley

25375 Orchard Village Road, Suite 106

Valencia, CA 91355-3000


Attorneys for Plaintiffs-Appellants,



TABLE OF AUTHORITIES                                                                                                        ii

INTRODUCTION                                                                                                                         1

STATEMENT OF THE FACTS                                                                                                  2

PROCEDURAL HISTORY                                                                                                          4

STANDARD OF REVIEW                                                                                                          4

ARGUMENT                                                                                                                                5

A.   THE DEMURRER WAS NOT PROPERLY SUSTAINED                                    5

A QUIET TITLE ACTION                                                                                        5

ENFORCE THE LOAN                                                                                             7

DEMUCHAS’ COMPLAINT                                                                                   8

OF THE DEMUCHAS’ COMPLAINT                                                                    9

OF THE DEMUCHAS’ COMPLAINT                                                                    9

DEMUCHAS’ COMPLAINT                                                                                  10

CONTENT OF THE DEMUCHAS’ COMPLAINT                                               10

CONCLUSION                                                                                                                            10




Caporale v. Saxon Mortgage, Bankr. North Dist. Cal., San Jose Case No. 07-54109.                  8

In re Foreclosure Cases, 2007 WL 3232430 (Bankr. N.D. Ohio 2007).                                        8

Staff Mortgage v. Wilke (1980) 625 F.2d 281                                                                               8

Starr v. Bruce Farley Corp. (9th Cir. 1980), 612 F.2d 1197.                                                           8

Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323.                              6


Commercial Code § 3301.                                                                                                     7, 8, 9,


            Defendants/Respondents continue to mischaracterize the Plaintiffs’/Appellants’ complaint very deliberately, apparently because they realize that the Plaintiff’s complaint as actually plead is beyond their ability to oppose it. Calling the Plaintiffs’ Complaint “inartfully drafted” because it does not state that it is a challenge to a non-judicial foreclosure is wishful thinking. The complaint is very artfully drafted as a Quiet Title action. The plaintiffs are not seeking to “stave off foreclosure of a mortgage,” but seeking to remove a false claim against their title to the property. No non-judicial foreclosure has taken place. No foreclosure sale has occurred, so there is no foreclosure sale to challenge or undo, but the Defendants/Respondents insist on arguing the case at the demurrer level and on this appeal as a complaint to challenge or set aside a non-judicial foreclosure and keep trying to apply those inapplicable pleading requirements to the complaint. The plaintiffs did seek a preliminary injunction against the foreclosure and obtained it because the Defendants/Respondents did not comply with the laws regarding non-judicial foreclosure. However, that does not make their complaint a “central defense” to non-judicial foreclosure as Defendants/Respondents argue throughout their brief. The mischaracterization of the case was a key element of the lower court’s error and continues to be a key element of the Defendants’/Respondents’ false arguments.

Further, Plaintiffs/Appellants never argued that producing the note was a preliminary requirement to non-judicial foreclosure, but Plaintiffs/Appellants have plead very specifically throughout the complaint that possessing the note is a requirement for the Defendants/Respondents to have any right to enforce the note whatsoever, which has been established California law (and in every state that has adopted the Uniform Commercial Code) for a very long time. The references to producing the note were merely offered as evidence demonstrating that the Defendants/Respondents do no possess the note because they repeatedly fail and refuse to produce it. In fact, it is important to note that the Defendants/Respondents have never yet argued that the note is in their possession as required by law.



The Defendants’/Respondents’ Statement of Facts has a very subtle attempt at subterfuge and misdirection in that it places a statement made about their finances during litigation after Plaintiffs/Appellants incurred legal fees in a different context as though the statement were made prior to litigation during the time that the prior (and possibly current) note holder CTX Mortgage had the loan and prior to the recording of the notice of default. Defendants/Respondents have gone to great lengths to take this statement out of context and have argued extensively that this constitutes proof that the Plaintiffs/Appellants were unable to tender payment. However, this requires the assumption that only one conclusion may be drawn from the statement rather than a range of possibilities, including the fact that the Plaintiffs/Appellants had incurred attorney’s fees by that time.


As in the underlying Demurrer, the Defendants/Respondents continue to falsely argue that there was no allegation of Tender in the Complaint. However, as demonstrated in the Appellants’ Opening Brief, there is no requirement of tender to plead Quiet Title. Even so, the Defendants/Respondents quote the allegation of tender that is in the Complaint even while arguing that there is no allegation of tender. This demonstrates the Defendants’/Respondents’ motive in deliberately mischaracterizing the complaint: they wish to apply a non-applicable standard to the complaint. Then when the non-applicable standard has been complied with anyway, they attempt to mislead the court by arguing that a plain allegation of tender is not an allegation of tender. However, as will be shown, the Defendants/Respondents have cited a case that states that tender can be offered in the complaint, and need not have been offered prior to filing the complaint.


As stated above, Plaintiffs/Appellants have already demonstrated that tendering payment is not a required element of a Quiet Title action, but that they have pleaded tender anyway. The Defendants’/Respondents’ arguments that payments must be tendered “when due” misstates the law, even for cases challenging non-judicial foreclosures, which this case is not. As will be shown below, the Defendants/Respondents cited a case that indicates very clearly that even in non-judicial foreclosure cases, a tender may be made in the complaint and need not have been made prior to filing the complaint.


The Defendants/Respondents’ focus on these extra proceedings within the case is a red herring to distract the court’s focus from the demurrer. The appeal is not about the ex-parte application for a preliminary injunction that was granted due to the fact that the Defendants/Respondents did not comply with California law requiring a specific declaration to be signed under penalty of perjury that was not. The Defendants/Respondents are going well outside the Complaint’s four corners to abuse the details of the ex-parte application that was not about the Complaint nor the Demurrer that are the subjects of this appeal. And once again, they are trying to argue the issue of the Plaintiffs’/Appellants’ financial situation as stated during the ex-parte proceedings after they had already incurred attorney’s fees for the false proposition that the Plaintiffs/Appellants were allegedly incapable of tendering payment prior to incurring the additional attorney’s fees of litigation when that is not the only conclusion that can be drawn from the separate ex-parte pleadings. Finally, they continue to shout endlessly about the issue of tender when it is not a required part of pleading the elements of Quiet Title and when pleading tender is required, an offer made in the complaint itself is deemed sufficient, as will be shown below.


The Defendants/Respondents continue to make a big deal about the fact that in a few places, the Complaint mentions that the defendants have failed to produce the original note. However, their own arguments on this point mention that the complaint further alleges their failure to hold or possess the original note, which is the more key portion of the pleadings.


            The parties’ explanations of the case’s procedural history are close enough that no further discussion is necessary.


            Some of the arguments contained in the Defendants’/Respondents’ Standard of Review section of their brief are specious, especially in the final paragraph arguing the subjects of tender and producing the note. The Defendants/Respondents have never demonstrated that California law requires an allegation of tender for a Quiet Title action, but have only cited as authority for this position cases that are focused on undoing a foreclosure sale after it has been completed. However, even those cases state that tender does not have to be made before filing the complaint, but the tender itself can be made within the complaint, and there cannot be any question that an offer of tender is made within the complaint. The Plaintiffs’/Appellants’ current attorney helped prepare pleadings for them in the trial court case and even made special, limited scope appearances for them, even though they were officially in pro per, so they incurred considerable legal fees during the litigation, which certainly had an effect on their financial situation at the time that they filed their ex parte application for a preliminary injunction, so the Defendants’/Respondents’ argument that the ex parte papers demonstrate that the Plaintiffs/Appellants could not tender payment is false. Further, the Defendants’/Respondents’ argument that “the central premise of each cause of action of the DeMuchas’ First Amendent Complaint [is] that a lender must ‘produce the note’ while conducting a non-judicial foreclosure” is a blatant misstatement of the Complaint’s content. The Complaint is not about non-judicial foreclosure, it is about quieting title. And the central premise is that a lender must possess the note in order to have a right to enforce the note, which is the law in California and every other state that has adopted the Uniform Commercial Code. No non-judicial foreclosure has yet taken place regarding the subject property.



Defendants/Respondents are demonstrating to this court the same misdirection and deliberate mischaracterization of the pleadings that misled the trial court into committing reversible error by improperly sustaining a demurrer to a valid complaint. The Defendants/Respondents have never demonstrated that tender is a requirement for a Quiet Title action. They have mischaracterized the case as a case to undo a non-judicial foreclosure when no non-judicial foreclosure has ever been completed regarding the subject property. The cases that they cited to the trial court and to this court regarding the requirements of a tender allegation were cases in which the subject property had been sold at a non-judicial foreclosure sale, which was being challenged after the fact. They have mischaracterized the Complaint’s allegations as though they state that “producing the note” is a requirement for non-judicial foreclosure, which is a blatant misstatement. The complaint states the true fact that the defendants have failed and refused to produce the note only as evidence of the fact that they do not possess the note and therefore have no right to enforce the note under California law. It is worth noting that the Defendants’/Respondents’ 34-page Appellate Brief never claims that they are the holders of the note as required by law.


Defendants/Respondents continue their same improper tactic used with the trial court of citing irrelevant cases seeking to undo a foreclosure sale after the fact. Since no foreclosure sale has yet taken place regarding the subject property and this is a Quiet Title action, those cases are all irrelevant and inapplicable to the First Amended Complaint that is the subject of the Demurrer and this appeal. However, even under the Defendants’/Respondents’ inapplicable cases, the Defendants/Respondents have swerved into something that destroys their arguments completely: Citing Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323, the Defendants/Respondents correctly stated on page 11 of their brief, “therefore as a condition precedent to any action challenging a foreclosure, a plaintiff must pay or offer to pay the secured debt before an action is commenced or in the complaint.” (Emphasis added).  This is not an action challenging a foreclosure, but even if those standards were inappropriately applied to this action, the tender or offer to pay can be made “in the complaint.” The Verified First Amended Complaint (“VFAC”) states, “Plaintiff offers to pay and mortgage payments on the property to the individual or entity that is the valid holder of the original note as required by California Commercial Code § 3301, et seq. and all property taxes to the appropriate government agency.” (VFAC page 3, line 28 through page 4, line 7). This is a very clear tender, made “in the complaint,” even though it is not required in a Quiet Title Action.

Since tender is not a statutory element of a Quiet Title action, the Defendants’/Respondents’ arguments regarding the difficult financial times mentioned in the Plaintiffs’/Appellants’ ex-parte application for a preliminary injunction are moot. However, it should be noted that by the time the Plaintiffs/Appellants filed their ex-parte application, they had the additional financial burden of paying for attorney’s fees to have the same attorney who now represents them on appeal prepare pleadings for them and make special, limited scope appearances for them on the trial court level, so the conclusion that the Defendants/Respondents are asking the court to make are inaccurate.

Even the Defendants’/Respondents’ arguments regarding “implicit integration” of foreclosure issues are irrelevant, because the cases that they cited specifically involved a non-judicial foreclosure in which the sale had been completed, but no non-judicial foreclosure sale has taken place regarding the subject property. The defendants’ argument that Plaintiffs’/Appellants’ have failed to cite any authority for the fact that no allegation of tender is required is another false statement. Plaintiffs have directly quoted Code of Civil Procedure § 761.020, which fully sets forth the elements of a Quiet Title Action, and there is no requirement of tender. However, even if the court somehow found that a tender allegation was required, the tender allegation has been made in the Complaint in accordance with the Defedants’/Appellants’ own citations as set forth above. Further, the Defendants’/Respondents’ arguments that “a court of equity will not order a useless act performed” (FPCI Re-Hab 01, etc. v. E&G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022, and “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idly and expensively futile act” (Leonard v. Bank of America Ass’n (1936) 16 Cal. App. 2d 341, 344) could and should just as easily be applied to the futile and useless acts that Defendants’/Respondents’ are requesting to be required and plead when they do not possess the original note and therefore have no right to expect payments, seek payments, nor threaten foreclosure because they did not receive payments that they had no right to receive in the first place, pursuant to Commercial Code § 3301. It can and should also be used to destroy their argument that plaintiff must be subjected to the requirements of case law regarding actions seeking to undo foreclosure irregularities before the foreclosure has even been completed, as though plaintiff should be able to foresee every foreclosure irregularity with a crystal ball before the process is even completed!


Plaintiffs/Appellants have cited a fully binding California Statute, Commercial Code § 3301, which specifically states that in order to be a “person entitled to enforce an instrument,” the Defendants/Respondents must have been the holder of the instrument, with very limited exceptions. In opposition, the Defendants/Respondents continue their same bad habit engaged in during the trial court proceedings of citing and relying upon federal trial court cases, which are not binding authority in any way, without disclosing to the court that they are citing non-binding authority. In addition, many of their citations do not even contain the full reference, so that it is difficult or impossible to locate and read the case. As for the federal trial court cases, all that they have demonstrated is that there is a need for a California appellate court to clear up the confusion that clearly exists regarding California’s law, and especially Commercial Code § 3301. Further, their statement that every court that has considered the issue has ruled that possessing the note is not necessary for a foreclosure is false. For example, in the U.S. Bankruptcy Court for the Northern District of California in San Jose, a federal trial court judge stopped a foreclosure because the bank could not produce the note in the case of Caporale v. Saxon Mortgage, Case No. 07-54109. Like the Defendants’/Respondents’ authorities, this case is only persuasive authority, not binding, but it was reported on by ABC News, and a copy of the news video is available to be viewed online at http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=6839404. If the court is going to consider the non-binding federal trial court decisions offered by the Defendants/Respondents, the court should also consider the non-binding persuasive authority of In re Foreclosure Cases, 2007 WL 3232430 (Bankr. N.D. Ohio 2007), wherein U.S. Bankruptcy Court Judge Christopher Boyko dismissed without prejudice fourteen judicial foreclosure actions filed by the trustees of securitized trusts against borrowers who had defaulted on their residential mortgages that had been sold into securitized trusts, based upon the application of Uniform Commercial Code § 3-301 to the mortgages in question.

As for their claim that the commercial code does not apply to a mortgage or a note secured by deed of trust, the Defendants/Respondents are willfully ignoring Staff Mortgage v. Wilke (1980) 625 F.2d 281, 6 Bankr.Ct.Dec. 1385, 29 UCC Rep.Serv. 639, cited in Plaintiffs’/Appellants’ Opening Brief, which clearly states that “notes secured by deeds of trust…were ‘instruments’ under the California Commercial Code.” This holding is repeated in Starr v. Bruce Farley Corp. (9th Cir. 1980), 612 F.2d 1197. The Defendants/Respondents have offered nothing other than their own opinion for the proposition that the note secured by deed of trust in question is not a “negotiable instrument” within the meaning of Commercial Code § 3301, even though they claim to have purchased the note, which by definition makes it negotiable.


As always, the Defendants/Respondents insist upon misrepresenting the nature of the First Amended Complaint. Every element of each of these causes of action was specifically plead, as has been demonstrated. Pursuant to Commercial Code § 3301, the Defendants/Respondents have no right to enforce the note unless they possess the note. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.


The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.


The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.


The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.


The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.


            The trial court erred in sustaining the demurrer without leave to amend and entering a judgment of dismissal. The rules of a non-judicial foreclosure proceeding and litigation to set aside a non-judicial foreclosure do not apply to a quiet title action that is filed prior to a foreclosure sale. The Commercial Code’s requirements that the entity enforcing a note must possess the original note (with limited exceptions) applies to a Note Secured by Deed of Trust. Even in the context of a non-judicial foreclosure, there is no “breach” unless the entity that did not receive the mortgage payments had a right to receive the mortgage payments through possession of the original note or compliance with another recognized exception under the Commercial Code. Any other result would cause an unnecessary conflict of laws and allow fraudulent “lenders” to engage in non-judicial foreclosures and sales of property so long as they complied with the technical requirements of a non-judicial foreclosure. All of the causes of action of the Verified First Amended Complaint are properly plead, with the exception that “punitive damages” is not technically a cause of action, but that can be resolved by striking the label “Sixth Cause of Action” and just allowing the heading “Punitive Damages” to stand.


            Dated: 23 December 2010                                                                                                                  

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha


Pursuant to rule 8.204(c) of the California Rules of Court, I hereby certify that this brief contains 3,914 words, including footnotes. In making this certification, I have relied on the word count of the computer program used to prepare the brief.

Dated: 23 December 2010                                                                                                                  

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha



I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is: 25375 Orchard Village Road, Suite 106, Valencia, CA 91355-3000.

On 23 December 2010 I served the foregoing document described as: Appellant’s Opening Brief on the interested parties in this action by placing a true copy thereof in sealed envelopes addressed as follows:

(Attorneys for Wells Fargo Home Mortgage, Inc. & Wells Fargo Bank, N.A.): Kutak Rock LLP, 18201 Von Karman, Suite 1100, Irvine, CA 92612

(Attorneys for First American Loanstar Trustee Services & First American Corporation): Wright, Finlay & Zak, LLP, 4665 MacArthur Court, Suite 280, Newport Beach, CA 92660

Judge Sidney P. Chapin, Kern County Superior Court, Metropolitan Division, 1415 Truxtun Ave., Bakersfield, CA 93301

BY MAIL: I deposited such envelopes in the mail at Valencia, California. The envelopes were mailed with first class postage thereon fully prepaid.

ALSO, BY ELECTRONIC FILING WITH THE SUPREME COURT: In addition, I filed an electronic copy of the Appellant’s Opening Brief with the Supreme Court of California on 23 December 2010, through the Supreme Court’s website.

Dated: 23 December 2010                                                                                                                  

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

Challenge Your Lender… Now!

13 Dec

Don’t delay – Opt in to the follow Blog and gain access to over 680 ideas and posts to hold your Lender accountable new post every day!

Do you want to hold your lender responsible for their illegal actions?

Challenge Your Lender… Now!


My name is Timothy McCandless, and I’m here to tell you what most banks and mortgage loan servicers don’t want you to know: More than 65 million homes in the US may not be subject to foreclosure after all, and your home is very likely one of the “safe” homes. The reason these homes are not technically subject to foreclosure is because the lenders, mortgage companies, mortgage servicers, and title companies broke the law throughout the process of managing your loan, both at the inception of your loan and throughout the life of the loan. Because of their fraudulent actions, they are unable to produce a title for, or show ownership of, your property. This causes what we call a “defect of title”, and legally prohibits your lender or servicer from foreclosing, regardless of whether or not your loan is current.

This situation is all over the news, and now, starting today, you can learn how to protect yourself from unlawful foreclosure.


Most Mortgage Assignments are Illegal

In a major ruling in the Massachusetts Supreme Court today, US Bank National Association and Wells Fargo lost the “Ibanez case”, meaning that they don’t have standing to foreclose due to improper mortgage assignment. The ruling is likely to send shock waves through the entire judicial system, and seriously raise the stakes on foreclosure fraud. Bank stocks plummeted after this ruling. These assignments are what people need to challenge in their own mortgages.

I am prepared to show you the most amazing information on how you can actually Challenge Your Lender. Once you opt in for our free ebook (just enter your email address above and to the right), you’ll get immediate access to our first, very informative webinar, as well as to our free ebook. You’ll learn more about the Challenge Your Lender program, and more importantly, how the US mortgage system is rigged to take advantage of you and how to can fight back. My program will show you exactly how to get a copy of your loan documents that your lender or loan servicer currently has in their possession, and then how to begin examining these documents to learn more about how your lender, as well as other parties involved, has used your name and credit to make millions of dollars. Analyzing your loan documents is a crucial first step in beginning the Challenge Your Lender process.

Save your home from foreclosure

The information that you will be receiving in my free material and webinar will further your knowledge on what most lenders are doing to homeowners, and how you can save yourself from foreclosure. You will have the opportunity to acquire a free copy of my Challenge Your Lender workbook and learn how to begin building the paper trail that you will need to defend yourself and to prove the wrongdoings of your lender and loan servicer. Once you go through the workbook and listen in on the free webinar, you will be on top of your Challenge and ready to begin the program.

The Challenge Your Lender program will help put you in a position of power and control over your loan, and will allow you to decide what you would like to do with your property. This leverage will be advantageous when you begin negotiating your foreclosure. Most importantly, your lender or loan servicer should not be able to foreclose on you once you notify them that you have identified fraudulent activity. My program is your first step in saving your property from foreclosure.

Don’t wait – opt in today. Every day counts in the battle against your lender.

Best regards,

David and Goliath as court overturns case dissmissal

29 Jul

A Bakersfield homeowner is taking on a bank, in a battle that could have sweeping implications for people facing foreclosure.

Mark Demucha wants Wells Fargo to prove it owns his home loan. And, if his lawsuit is successful, it could set a legal precedent that slows or even stops foreclosures across the state.

“Filled out the same paperwork over and over again.”

Mark Demucha says all he wanted was to keep his house. “Sent it to them over and over again. I couldn’t give you the exact time frame, but it’s ridiculous,” he said.

But, after a year of trying to get a loan modification from Wells Fargo… “I had to do something to protect my family. to protect my home.”

He felt all washed up. “Not yes, not no, not anything. They didn’t respond.”

Demucha turned to family friend Michael Finley who happens to be a lawyer.

“A company that does not have a legal right to collect mortgage payments should not have the right to foreclose,” said Finley.

Now, in a case that could have far-reaching implications, Demucha and Finley say they have one simple request. “If they are going to take my house, I should be able to see they have a legal right to take it from me,” said Demucha. “They come to me and want me to have every single piece of paper I was ever supposed to have. But, when I say ‘hey where is my promissory note?’ they look at me like I’m a thief.”

That’s because Wells Fargo didn’t loan Demucha the money to buy his house. Another company called CTX Mortgage, did.

Banks, at the time, seemed like they were almost using the housing market as a roulette wheel or a craps table. They were shoving debt around like it was a card game.

Like so many millions of homeowners, Demucha’s loan was sold to another lender, a common practice because it’s profitable to the banks.

In the old days, any time ownership of a property and its loan changed hands, it would be recorded at the Hall of Records at a cost of $18. For the mortgage industry, that took too long and on a large scale cost too much money. So they privatized it by creating the mortgage electronic registration system, a company headquartered in Reston, Virginia.

The sole purpose of MERS was to cut out the county clerk, allowing one mortgage company to quickly and electronically transfer a loan to another mortgage company.

On Tuesday, a spokeswoman told 17 News, MERS holds title to about 60% of the country’s home mortgages or about 32 million loans. MERS is basically an electronic handshake between banks, saying we have a deal.

But, MERS has turned into a headache for some lenders as homeowners across the country have successfully challenged the company’s legal standing in court. Others like Demucha are demanding their lender produce loan documents which may have been lost or even destroyed in the MERS shuffle.

“Why should the bank not still be required to possess a single piece of paper that they are the right place to home the consumer should make the payments?”

Earlier this month, a state appellate court agreed, overturning a Kern County judge’s ruling that Wells Fargo could foreclose on the home.

The case is headed back to our county where the same judge will have to decide if Wells Fargo can prove it legitimately holds title to the Demucha’s home.

“I wish I were David and they were Goliath. This would have been an easier fight. They are like an army of Goliaths and I’m like David with his hands tied behind his back,” said Demucha.

Wells Fargo spokesman Tom Goyda couldn’t comment on the specifics of this case but acknowledged the appellate court had sent the case back to the Kern County trial court to rule on several issues. Goyda noted the appeals court did not actually rule on the case and that Wells Fargo would continue to try the case in court.

A spokeswoman for MERS said her company said she couldn’t comment because they are not part of this lawsuit. Demucha and his attorney are basically asking for Wells Fargo to go away and to restore the couple’s credit.

“Wells Fargo essentially ignored them until the fifth district appellate court said Wells Fargo you can’t ignore Mark and Sherry Demucha any more,” said Finley.

The appellate court ruling has arrived back here in Kern County but a hearing has not yet been scheduled.

pending lawsuits and homeowners winnning

29 Jul

Barry Fagan v Wells Fargo Bank and The Office of the Comptroller of the Currency (OCC) FOIA COVER-UP


Ten pages are being withheld by the authority of the Privacy Act of 1974, 5 U.S.C. 552a (k)(2) and the Freedom of Information Act, 5 U.S.C. 552 (b)(8) and 12 C.F.R. 4.12(b)(8), relating to a record contained in or related to an examination,…

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