Supporting, Informing & Connecting People in Foreclosure
* TENTATIVE DECISION *
Plaintiff VS. JP MORGAN CHASE BANK
HEARING ON DEMURRER TO 1st Amended COMPLAINT of Plaintiff
FILED BY QUALITY LOAN SERVICE CORP.
The Court rules as follows on the general demurrer brought by defendant Quality Loan Service Corporation. (Cal. Code Civ. Proc., section 430.10, subd. (e).) The demurrer is directed to plaintiff's First Amended Complaint, filed on July 29, 2011.
Defendant's request for judicial notice is granted. Defendant's demurrer is overruled, as to all three causes of action stated against defendant: the First, Second, and Third Causes of Action. Defendant shall file an answer on or before March 16, 2012. The basis for this ruling is as follows.
1st C/A (Declaratory Relief). The Court disagrees with defendant's argument that plaintiff is improperly seeking relief for past wrongs in this cause of action; plaintiff is seeking a determination of the present state of the note and deed of trust. (See, e.g., Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947-948.) Further, a defendant cannot attack a declaratory relief claim on the merits; so long as an actual controversy is alleged, the pleader need not establish the right to a favorable judgment. (Id. See also, Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, 221 ["a demurrer is a procedurally inappropriate method for disposing of a complaint for declaratory relief"].)
2nd C/A (Slander of Title). The Court agrees that defendant’s alleged conduct in recording documents is subject to the privilege of Civil Code section 47. However, it is the qualified common interest privilege that applies here, and the qualified privilege leaves trustees open to liability if they act with malice. (Kachlon v. Markowitz(2008) 168 Cal.App.4th 316, 333,
339-340.) Malice is defined as actual malice, meaning “that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights.” (Id., at 336 [italics in original].) Plaintiff has alleged sufficient facts in his Second Cause of Action to show that defendants acted with malice.
3rd C/A (Quiet Title). The Court overrules defendant's demurrer to the Third Cause of Action on the same grounds set forth in the Court's ruling on the demurrer brought by the JP Morgan defendants. (Please see Line 8 below.)
HEARING ON DEMURRER TO 1st Amended COMPLAINT of Plaintiff FILED BY JP MORGAN CHASE BANK N.A
The Court rules as follows on the general demurrer brought by defendant JP Morgan Chase Bank, N.A., and by defendant Federal National Mortgage Association. (Cal. Code Civ. Proc., section 430.10, subd. (e).) The general demurrer is directed to plaintiff's First Amended Complaint, filed on July 29, 2011.
Defendants' request for judicial notice is granted. Defendants' demurrer is overruled as to both of the two causes of action that are the subject of the demurrer: the Third and the Fourth Causes of Action. Defendants shall file an answer on or before March 16, 2012. The basis for this ruling is as follows.
3rd C/A (Quiet Title). Plaintiff adequately alleges two grounds for bringing a quiet title action.
First, plaintiff alleges that defendants never obtained a valid assignment of the subject note and deed of trust from the original lender. Defendants have not persuasively argued why, if these allegations are proved to be true, plaintiff should not be able to dispute the defendants' claim to a security interest in plaintiff's real property.
Second, plaintiff alleges anomalies in the chronology of the foreclosure process that would appear to render the notice of default "void," and not merely voidable:
6-15-10 JP Morgan and QLS recorded a notice of default.
(FAC, paragraph 26.)
8-30-10 JP Morgan recorded an assignment of deed of trust from
Fannie Mae to JP Morgan. (FAC, paragraphs 28 and 29.)
9-23-10 QLS recorded a substitution of trustee.
(FAC, paragraph 31.)
These allegations have been confirmed by defendants' own request for judicial notice of the same
recorded documents referred to by plaintiff. (See defendants' Request for Judicial Notice, Exhibits 3, 4, and 5.) In addition, defendants' request for judicial notice demonstrates that the assignment of the subject deed of trust from Fannie Mae to JP Morgan was not executed until August 25, 2010, and that the substitution of trustee was not executed until September 16, 2010 (RJN, Exhibits 4 and 5 [notarized signatures dated August 25 and September 16, 2010].)
Thus it is undisputed that the notice of default was recorded by JP Morgan and QLS more than two months before an assignment to JP Morgan was effected (August 25, 2010), and more than three months before QLS was appointed as the foreclosure trustee (September 16, 2010). Defendants have failed to make a persuasive argument why a deed of trust recorded by persons with no interest in the subject property should not be deemed void. (See, Cal. Civil Code, sections 2924(a)(1) and 2924b, subd. (b)(4); Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 876‑877.)
The Court finds the Gomes decision to be easily distinguishable. (See, Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149.) That decision dealt with the question of whether a borrower could bring a cause of action to challenge the authority of Mortgage Electronic Registration Systems, Inc. ("MERS") to initiate foreclosure proceedings. MERS had been named as the beneficiary in the recorded deed of trust, and as the Court of Appeal noted: "[t]he role of MERS is central to the issues in this appeal." (Gomes, supra, 192 Cal.App.4th at 1151.) The Gomes case is distinguishable from the case at bar because here defendants' own request for judicial notice confirms that the parties who initiated foreclosure proceedings (JP Morgan and QLS) did so at a time when neither had an interest of any kind in the subject real property.
The tender rule is not a defense, for two reasons. First, plaintiff is contesting the validity of the underlying debt; to require plaintiff to tender the full amount of the underlying debt to the JP Morgan defendants would be to require that plaintiff affirm the validity of the JP Morgan defendants' right to collect that underlying debt. (See, Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112-113.) Second, plaintiff alleges that the subject notice of default is void, and not merely voidable, and plaintiff thereby invokes a second recognized exception to the tender rule. (See, Lona, supra, 202 Cal.App.4th at 112; Dimock, supra, 81 Cal.App.4th at 878.
The Court's ruling on the demurrer to the Third Cause of Action is not based on section 2932.5 of the California Civil Code. The Court agrees with defendants' position that section 2932.5, which requires that assignments be recorded before foreclosure proceedings are commenced, applies only to mortgages, and not to deeds of trust.
4th C/A (Civil Code section 2943). While the Fourth Cause of Action is not a model of clarity, the gist of plaintiff's legal theory is clear; and the question of whether defendants' alleged misconduct was "willful" is a fact-intensive question that is not appropriately resolved by demurrer.
* TENTATIVE RULING: *
Plaintiff VS. QUALITY LOAN SERVICE CORPORATION, ET AL.
PRO/PER v QUALITY LOAN SERVICE CORPORATION
DEMURRER TO 1st Amended COMPLAINT of Plaintiff BY EMC MORTGAGE CORPORATION
AND THE NEXT DAY -
Plaintiff vs. JPMORGAN CHASE BANK, N.A.
Plaintiff / JONATHAN FRIED
JPMORGAN CHASE BANK, N.A. / S. CHRISTOPHER YOO
MOTION FOR SANCTIONS AGAINST PLAINTIFF AND ATTORNEY FILED BY JPMORGAN CHASE BANK, N.A.
MOTION FOR SUMMARY JUDGMENT AS TO 1st Amended COMPLAINT of Plaintiff FILED BY JP MORGAN CHASE BANK, N.A.
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