Aniel v. Am. Home Mortg. Servicing, Inc.

• Court: California Court of Appeals
• Writing for the Court: REARDON, J.
• Decision Date: 21 July 2017
• Docket Number: A141462,A142729
• Citation: Aniel v. Am. Home Mortg. Servicing, Inc., A141462, A142729 (Cal. App. Jul 21, 2017)
• Parties: ERLINDA ABIBAS ANIEL ET AL., Plaintiffs and Appellants, v. AMERICAN HOME MORTGAGE SERVICING, INC. ET AL., Defendants and Respondents.

ERLINDA ABIBAS ANIEL ET AL., Plaintiffs and Appellants, v. AMERICAN HOME MORTGAGE SERVICING, INC. ET AL., Defendants and Respondents.

A141462

A142729

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR

July 21, 2017

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(City and County of San Francisco Super. Ct. No. CGC-10-505131)

In this action challenging a nonjudicial foreclosure of rental property, Erlinda Aniel and her son, Marc Aniel, (the Aniels)¹ appeal from a stipulated judgment after the trial court granted certain defense motions in limine regarding the evidence that could not be presented at trial on the Aniels' cause of action fraud. Previously, the trial court had sustained demurrers dismissing, among other things, the Aniels' claim for wrongful foreclosure. We conclude the Aniels' first amended complaint failed to allege a viable cause of action for wrongful foreclosure and that the trial did not abuse its discretion in preventing evidence related to this claim at trial. Additionally, the trial court did not err in dismissing Erlinda as party for lack of standing. Finally, the Aniels challenge the trial court order awarding attorney fees to defendants and respondents American Home Mortgage Servicing, Inc. (AHMSI) and Deutsche Bank National Trust Company, asTrustee for Harborview Mortgage Loan Trust, Mortgage Loan Pass-Through Certificates, Series 2007-5 (Deutsche Bank).² We reverse the attorney fee award and affirm the judgment in all other respects.

I. BACKGROUND

A. The Property, Loan, and Initial Default Notice

In April 2007, Marc Aniel borrowed $676,000 from Bayporte Enterprises, Inc. (Bayporte) to refinance the Aniels' rental property on Persia Avenue in San Francisco. The promissory note to repay this loan was secured by a deed of trust that was signed by Marc, as well has parents Erlinda and Fermin Aniel.³ The deed of trust specified that Bayporte was the trustee and Mortgage Electronic Registration Systems, Inc. (MERS) was the beneficiary. It also provided that the underlying note could be sold without notice and that if the Aniels defaulted on their loan, the lender had the right to sell the underlying property.

By October 2008, the Aniels stopped making payments on the loan acquired by Marc. Later, they admitted that their rental income was insufficient to pay increased mortgage payments and their family's income had fallen because of the decline of the housing market.

On May 11, 2009, T.D. Service Company (T.D. Service) recorded a notice of default against the Persia Avenue Rental Property, in an attempt to institute foreclosure proceedings. The notice identified Deutsche Bank as the beneficiary of the deed of trust, named AHMSI as trustee, and named T.D. Service as the trustee's agent. However, as we shall see, Deutsche Bank had not yet become the beneficiary of the deed at the time of the May 2009 notice of default. Fermin and Erlinda Aniel were soon in bankruptcy and by December 2009, this initial foreclosure attempt was rescinded.

B. Assignments of the Deed of Trust and Foreclosure

On February 15, 2010, MERS executed an assignment of its beneficial interest in the deed of trust to AHMSI. T.D. Service recorded the assignment on April 14, 2010. On February 22, 2010, a second assignment on the same property was executed, conveying AHMSI's new beneficial interest to Deutsche Bank. T.D. Service also recorded this second assignment on April 14, 2010, a few seconds after recording the MERS-AHMSI assignment.

On March 1, 2010, T.D. Service filed a second notice of default against the Aniels' Persia Avenue rental property. This notice again identified Deutsche Bank as the beneficiary, AHMSI as trustee, and T.D. Service as the authorized agent for Deutsche Bank.

On June 2, 2010, T.D. Service recorded a notice of trustee's sale pursuant to the terms of the deed of trust. The notice also stated Power Default Services, Inc. (Power Default)—the entity formerly known as AHMSI—was the trustee and T.D. Service was the trustee's agent.⁴ It appears that Power Default sold the property at a trustee's sale on October 2, 2012.⁵

C. Legal Proceedings

In May 2011, the Aniels filed a first amended complaint⁶ against AHMSI, Deutsche Bank, Power Default, and MERS (collectively defendants), challenging the wrongful foreclosure of the Persia Avenue rental property. The complaint alleged five causes of action against defendants—fraud, wrongful foreclosure, negligence, request for injunctive relief, and quiet title. The gist of the Aniels' first amended complaint was thatthe attempted foreclosure was fraudulent, because AHMSI tricked them into falsely promising to modify the loan if and only if, they defaulted. The Aniels also claimed that the recorded documents misrepresented the respective interests of AHMSI, Deutchse Bank, MERS and Power Default in the property, so they had no legal right to foreclose.

The Aniels alleged that Erlinda contacted AHMSI to request a loan modification. According to the first amended complaint, an AHMSI customer representative in India told Erlinda that they did not qualify for a loan modification because they were current on their payments. The Aniels alleged that "AHMSI told the Plaintiffs that they had to be in default of their mortgage to establish a hardship in order to qualify for a loan modification." Because of the Aniels' reliance on AHMSI's promise to modify the loan, they stopped making payments on the loan. The Aniels renewed their request for a loan modification, but were turned down. Instead, the first amended complaint alleged, "In reality, AHMSI was acting in its own self-interest in attempting to foreclose the property and gain a profit windfall in any proceeds from a foreclosure. AHMSI never had any authority to modify the loan."

The first amended complaint alleged that defendants had no interest in the loan or standing to foreclose, but acted "in concert" in defrauding the Plaintiffs in order to steal and foreclose Plaintiffs' property. It also alleged that AHMSI never had authority to modify the loan, that Deutsche Bank could not validly substitute Power Default as the trustee because Deutsche Bank was not a beneficiary of the deed at the time of the substitution, that MERS had no authority to assign its beneficial interest in the deed to AHMSI because Bayporte had dissolved prior to MERS transferring its beneficial interest to AHMSI, that the assignment to AHMSI was executed by a "robo-signer," and that the transfer of the deed from AHMSI to Deutsche Bank was invalid for various reasons, including that the "chain of title . . . was defective from the beginning" of the assignment of the deed from MERS to AHMSI and from AHMSI to Deutsche Bank, to the recording the instruments "four seconds apart."

The court sustained the demurrer of Power Default and MERS as to five causes of action in the first amended complaint without leave to amend. As to AHMSI andDeutsche Bank, the court sustained the demurrer to the first amended complaint without leave to amend to all causes of action except for the fraud cause of action, which was sustained with leave to amend if the Aniels could "plead in good faith and with the required specificity fraud based on a promise to modify Plaintiffs' loan."

In September 2011, the Aniels filed their second amended complaint asserting a single cause of action for fraud against AHMSI and Deutsche Bank.⁷ The second amended complaint alleged that Erlinda contacted AHMSI in September 2008 to request a loan modification. According to the second amended complaint, an AHMSI customer service representative "from a call center in Pune, India," verbally told Erlinda that "Plaintiffs must stop making timely monthly mortgage payments in order to constitute a hardship," and once they stopped making these payments, "AHMSI would accept a loan modification application from the Plaintiffs." The customer service representative told the Aniels that they "must call AHMSI after 90 days of non-payment in order to receive a loan modification application." In reliance on those representations, the Aniels stopped making the minimal monthly payments on the loan. In January 2009, Erlinda "informed a different representative of AHMSI through [its] customer service center in Pune, India, that Plaintiffs were already in default and requested to modify their loan." AHMSI promised to send the Aniels a loan modification application; AHMSI never sent the Aniels an application, despite their repeated requests for an opportunity to modify their loan. Instead, the second amended complaint alleges, "In reality, each and every representation AHMSI made to the Plaintiffs was in fact FALSE[,]" and "AHMSI wanted Plaintiffs to default on their loan in order to foreclose the property." It was further alleged that AHMSI wanted to "foreclose the defaulted property so they could add on their own fees and costs on the debt." AHMSI demanded that the Aniels "cure the default and refused to discuss any modification requests."

The Aniels further alleged that "Defendants made false representations and promises to the Plaintiffs regarding material facts, including but not limited to, AHMSI's authority and ability to modify the loan, Deutsche Bank's standing as the Lender of the loan, [that] Plaintiffs would be considered and be approved for a loan modification, and that Plaintiffs must stop making payments on the loan." According to the second amended complaint, AHMSI knowingly made the false representations to "entice[ ] Plaintiffs to default in order to foreclose the property and collect on proceeds received from [the] subsequent sale of the property." Deutsche Bank, "as a Lender," was...