Didak v.
Merrill Lynch Mortgage Investors

 

 

 

 

 

 

 

Filed
6/12/13  Didak v. Merrill Lynch Mortgage Investors
CA2/7

 

 

 

 

 

NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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.

 

 

IN THE COURT
OF APPEAL OF THE STATE OF CALIFORNIA

 

SECOND
APPELLATE DISTRICT

 

DIVISION
SEVEN

 

 
>

MARK F. DIDAK et al.,               Plaintiffs and Appellants,               v.   MERRILL LYNCH MORTGAGE INVESTORS, INC. et al.,               Defendants and Respondents.

B240704         (Los Angeles County       Super. Ct. No. SC114327)

 

            APPEAL from
a judgment of the Superior Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County, Cesar C. Sarmiento, Judge.  Affirmed.

            Law Office
of Mark F. Didak and Mark F. Didak for Plaintiffs and Appellants.

            Wolfe &
Wyman, Stuart B. Wolfe and Cathy L. Granger for Defendants and Respondents
Merrill Lynch Mortgage Investors, Inc., HSBC Bank, USA, as Trustee of the
Merrill Lynch Mortgage Investors Series 2006-AF2, Merrill Lynch Mortgage
Lending, Inc., Citimortgage, Inc., individually and as successor by merger to
ABN Amro Mortgage Group, Inc. and Wells Fargo Bank.

            Wright,
Finlay & Zak, Charles C. McKenna and Peter Watson for Defendant and
Respondent Cal-Western Reconveyance Corporation.

            Arbogast
Bowen and David M. Arbogast; Howard Law and Vincent Howard for Amicus Curiae
Consumer Attorneys of California in support of Plaintiffs and Appellants.

Appellants Mark and Anna Didak appeal
from the judgment entered upon the trial court’s order sustaining respondents’
demurrer without leave to amend.  On
October 13, 2011, appellants filed a First Amended Complaint (“FAC”) against
Merrill Lynch Mortgage Investors, Inc. (“MLMI”), HSBC Bank, USA, N.A. (“HSBC”),
Merrill Lynch Investors Trust, purportedly a real estate mortgage investment
conduit (“REMIC”), Merrill Lynch Mortgage Lending, Inc. (“MLML”), Citimortgage,
Inc. (“Citi”), Wells Fargo Bank, N.A., Stewart Title of California, Inc., and
Cal-Western Reconveyance Corporation (collectively, “respondents”).  Appellants’ FAC alleged claims for fraud,
quiet title, cancellation of deed of trust, declaratory relief, and wrongful
credit reporting. Appellants also sought a temporary restraining order, a
temporary injunction, and a permanent injunction against respondents.

Here appellants argue that
respondents lack authority to service their mortgage.href="#_ftn1" name="_ftnref1" title="">^[1] Primarily, appellants allege respondents never
received legal title to their mortgage due to a failed securitization of the
mortgage under the governing pooling and servicing agreement (“PSA”).  For the reasons set forth below, the trial
court’s order sustaining respondents’ demurrer without leave to amend is
affirmed.

>FACTUAL AND PROCEDURAL BACKGROUNDhref="#_ftn2" name="_ftnref2" title="">^[2]

On April 19,
2006,
appellants executed a mortgage in favor of First Capital Mortgage on their
condominium in Culver City, California. 
On June 1, 2006, First Capital sold appellants’
mortgage to ABN Amro Mortgage Group, Inc. (“ABN”) .  According to appellants, ABN later sold the
mortgage to an unidentified entity. 
Following ABN’s assignment of appellants’ mortgage to the unidentified
entity, Citi acquired ABN through a merger.  


Appellants’ challenge primarily
relies, however, on another purported transfer of appellants’ mortgage in
2006.  During that year, MLMI, MLML, and
HSBC purportedly created a real estate mortgage investment conduit (“REMIC”)
pursuant to a pooling and servicing agreement (“PSA”).  Respondents have claimed legal title to
appellants’ mortgage since 2006, citing transfer of the mortgage to the REMIC
pursuant to the terms of the PSA.  Since
that time, Citi has represented itself as the authorized servicer for
appellants’ loan.  Since the purported
creation of the REMIC in 2006, Citi has collected more than $147,000 in monthly
mortgage payments from appellants.

In March, 2011, appellants stopped
making their monthly mortgage payments to Citi.href="#_ftn3" name="_ftnref3" title="">^[3]  Soon after, Citi engaged in numerous written
and oral communications with appellants, in which Citi sought to collect
further mortgage payments from appellants. 
Appellants refused to make further payments until Citi proved ownership
of their mortgage.  As a result, Citi
retained Cal-Western to serve as its agent for the potential foreclosure on
appellants’ condominium.  Around July
12, 2011,
Cal-Western recorded a notice of default on appellants’ mortgage and initiated href="http://www.mcmillanlaw.com/">foreclosure proceedings.

According to appellants, respondents
never obtained authority to service their mortgage due to a failed
securitization of the mortgage under the terms of the PSA.  Alternatively, appellants allege respondents
never obtained authority to service their mortgage because ABN aliened its
interest in appellants’ mortgage prior to ABN’s merger with Citi, when it
assigned the mortgage to an unidentified entity.  Therefore, appellants allege that Citi never
obtained authority to collect payments on their mortgage or foreclose on their
home. 

Based on these allegations,
appellants filed a complaint alleging the following causes of action: (1) fraud,
(2) quiet title, (3) cancellation of deed of trust, (4) declaratory relief, (5)
wrongful credit reporting, and (6) injunctive relief.

Respondents filed a demurrer to
appellants’ FAC.  In support of their
demurrer, respondents argued that appellants: (1) lacked standing to challenge
the validity of the assignment of their mortgage under the PSA; (2) failed to
plead sufficient facts to support a fraud cause of action; and (3) failed to
tender the remainder of their loan obligation, thereby barring a claim for
quiet title.  In regard to appellants’
other claims, respondents argued that appellants failed to plead sufficient
facts to show that respondents never received legal title to appellants’
mortgage.  The trial court sustained the
demurrer without leave to amend.  This
appeal followed.

> 

>DISCUSSION

>I.               
Standard
of Review

This court applies a >de novo standard of review to a trial
court’s order of dismissal following an order sustaining a demurrer.  (>Los Altos El Granada Investors
v. City of Capitola (2006) 139 Cal.App.4th 629,
650.)  In other words, this court
exercises its “independent judgment about whether the complaint states a cause
of action as a matter of law.”  (>Ibid.) 
“In reviewing a judgment of dismissal after a demurrer is sustained
without leave to amend, we must assume the truth of all facts properly pleaded
by the plaintiffs, as well as those that are judicially noticeable.”  (Howard
Jarvis Taxpayers Assn. v. City of La Habra, supra, 25 Cal.4th at p. 814.) 
“A judgment of dismissal after a demurrer has been sustained without
leave to amend will be affirmed if proper on any grounds stated in the
demurrer, whether or not the court acted on that ground.”  (Carman
v. Alvord (1982) 31 Cal.3d 318, 324.)

When a demurrer “is sustained without
leave to amend, we decide whether there is a reasonable possibility that the
defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we
affirm.”  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  Such a showing can be made for the first time
before the reviewing court.  (>Smith v. State Farm Mutual Automobile Ins.
Co. (2001) 93 Cal.App.4th 700, 711.) 
“The burden of proving such reasonable possibility is squarely on the
plaintiff.”  (Blank v. Kirwan, supra,
39 Cal.3d at p. 318.) 

>II.               
Applicable
Law

            The
California Supreme Court has not addressed the issue of whether a borrower has
standing to challenge the securitization of his or her mortgage under a PSA in
a published opinion.  Recently Division
Three of the Fourth District Court of Appeal, in dicta noted that: “As an unrelated third party to the alleged
securitization, and any other subsequent transfers of the beneficial interest
under the promissory note, [the plaintiff homeowner] lacks standing to enforce
any agreements, including the investment trust’s pooling and servicing
agreement, relating to such transactions. 
(See In re Correia (Bankr.1st
Cir.2011) 452 B.R. 319, 324-325 [debtors lacked standing to raise violations of
pooling and service agreement].)”  (>Jenkins v. JP Morgan Chase Bank, N.A.
(2013) 216 Cal.App.4th 497, ___, 2013 WL 2145098, at *9.)  The court in Jenkins also cited the appellant’s lack of standing as a reason for
affirming the trial court’s decision to deny her an opportunity to amend her
complaint.  (>Id. at *10.) 

Notwithstanding a dearth of case law
from California state courts on the matter, there are a number of federal
opinions addressing this issue under California law. 
The overwhelming majority of these cases hold that borrowers lack
standing to challenge whether their mortgages were properly securitized under
the terms of the applicable PSAs when those borrowers were neither parties to,
nor third-party beneficiaries of, the PSAs. 
(See Sami v. Wells Fargo Bank
(N.D. Cal., Mar. 21, 2012, C 12-00108 DMR) 2012 WL 967051, at *6 [“To the
extent Plaintiff bases her claims on the theory that Wells Fargo allegedly
failed to comply with the terms of the PSA, the court finds that she lacks
standing to do so because she is neither a party to, nor a third party
beneficiary of, that agreement”]; Junger
v. Bank of America, N.A. (C.D. Cal., Feb. 24, 2012, CV 11-10419 CAS VBKX)
2012 WL 603262, at *3 [“The Court finds that plaintiff lacks standing to
challenge the process by which his mortgage was (or was not) securitized
because he is not a party to the PSA”]; Almutarreb
v. Bank of New York Trust Co., N.A. (N.D. Cal., Sept. 24, 2012, C-12-3061
EMC) 2012 WL 4371410, at *2; Deerinck v.
Heritage Plaza Mortg. Inc. (E.D. Cal., Mar. 30, 2012, 2:11-CV-01735-MCE) 2012 WL 1085520, at
*5; Ramirez v. Kings Mortg. Services,
Inc. (E.D. Cal., Nov. 8, 2012, 1:12-CV-01109-AWI) 2012 WL 5464359, at *5.)href="#_ftn4" name="_ftnref4" title="">^[4] 

Additionally, federal courts
throughout the country have reached similar conclusions when applying other
states’ nonjudicial foreclosure laws.  (>In re Correia (B.A.P. 1st Cir. 2011) 452
B.R. 319; In re Smoak (Bankr. S.D.
Ohio 2011) 461 B.R. 510; In re Veal
(B.A.P. 9th Cir. 2011) 450 B.R. 897; In
re Walker (Bankr. E.D. Pa. 2012) 466 B.R. 271; In re Washington (Bankr. W.D. Pa. 2012) 469 B.R. 587.)  Although one federal case applying California
law held that a borrower was entitled to challenge defendants’ authority to
foreclose on their property based on an alleged violation of the governing PSA,
that case involved a “unique set of facts” that are not present here.  (See Wise
v. Wells Fargo Bank, N.A. (C.D. Cal. 2012) 850 F.Supp.2d 1047, 1052; see
also McGough v. Wells Fargo Bank, N.A.
(N.D. Cal., June 18, 2012, C12-0050 TEH) 2012 WL 2277931 [distinguishing >Wise from the typical securitization
challenges because the FAC in that case alleged a “fairly unique set of facts,”
involving timely loan payments, a denial of a loan modification request, and
fabricated loan documents].)

 

 

 

 

>A.  Appellants Failed To Establish
that Respondents Lack Authority to Service Their Mortgagehref="#_ftn5" name="_ftnref5" title="">^[5]

In their FAC, appellants allege “[a]
recent investigation into the chain of title to [appellants’] loan establishes
that legal ownership of the loan was never transferred to HSBC in its capacity
as trustee for MLMI REMIC, or in any other capacity, as required by (a) >the Pooling and Service Agreement . . .
and/or (b) New York law, which governs
the PSA . . . .”  (Emphasis
added.)  Thus, appellants primarily rely
on an alleged violation of the PSA to argue that respondents lack authority to
collect payments on appellants’ mortgage. 
As discussed above, this argument has been consistently rejected by
federal courts interpreting California’s nonjudicial foreclosure statutory scheme.  (See Sami,
supra, 2012 WL 967051, at *6.) 

In their briefs on appeal, appellants
attempt to sidestep the standing issue by asserting that they “are not suing to
attack or enforce the PSA, or to attack the securitization of their
mortgage.”  Rather, appellants claim that
the failed securitization is simply “evidence” that respondents never received
legal title to their mortgage.  This is
essentially the same argument.  Regardless
of how framed or labeled all of their claims depend on the same contention –
the mortgage was improperly securitized under the PSA.  As nearly every court addressing this issue
in a published opinion has recognized, borrowers who are not a party to, or a
third party beneficiary of, the PSA lack standing to allege a failed transfer
due to improper securitization.  (>Junger v. Bank of America >N.A., supra, 2012 WL 603262, at *3; see also Rodenhurst v. Bank of America (D. Hawaii 2011) 773 F.Supp.2d 866,
899 [“The overwhelming authority does not support a cause of action based upon
improper securitization”].)  As far as
appellants’ causes of action rely on the allegation that respondents violated
the terms of the PSA, the trial court properly sustained respondents’ demurrer
on the ground that appellants lack standing to challenge the securitization of
their mortgage.

Appellants make a second attempt to
sidestep the standing hurdle by alleging that ABN aliened its interest in
appellants’ mortgage prior to ABN’s merger with Citi.  Appellants are allowed to show for the first
time before this Court that there is a reasonable possibility any defect in
their pleadings can be cured by amendment. 
(See Smith v. State Farm Mutual
Automobile Ins. Co., supra, 93
Cal.App.4th at p. 711.) 

However, they have failed to do
so.  When the matter was addressed at
oral argument, appellants did not articulate a plausible theory of liability
independent of any purported breach of the PSA. 
Likewise the appellate briefs do not offer a plausible alternative basis
of liability.  Appellants copied
Paragraph 11 of their FAC and pasted it into their opening and reply briefs on
appeal.  Paragraph 11 alleges that “ABN
Amro aliened any right, title or interest in plaintiffs’ loan by selling it in
2006 . . . to an entity whose identity is currently unknown.”  Notwithstanding the allegation that some
other entity owns the loan,href="#_ftn6"
name="_ftnref6" title="">^[6] appellants have not alleged that any entity,
other than Citi, has made any attempts to collect mortgage payments from them
since the purported transaction in 2006. 
(See Bernardi v. JPMorgan Chase
Bank, N.A. (N.D. Cal., Jan. 6, 2012, C-11-04543 RMW) 2012 WL 33894, at *2
[“Nor do plaintiffs allege that any third party has ever come forward
attempting to enforce the debt, making plaintiffs’ claim yet more
implausible”].)  The failure to allege
that any other entity has made efforts to collect on the note undermines any
claim that the note was transferred prior to the time that Citi acquired ABN or
that another entity other than REMIC owns appellants’ mortgage. 

Appellants’ allegations are insufficient
to support appellants’ claims that respondents lack authority to service their
loan.  In Javaheri v. JPMorgan Chase Bank, N.A. (C.D. Cal., Mar. 24, 2011, CV
10-08185 ODW FFMX) 2011 WL 1131518, an unpublished district court case cited by
appellants, the court recognized that an allegation very similar to the one in
the instant case was insufficiently pled because it could “only be
characterized as a ‘legal conclusion couched as a factual allegation’ which the
Court is not bound to accept.”  (>Id. at *2, quoting Bell Atlantic Corp. v. Twombly (2007) 550 U.S. 544, 546 [127 S.Ct.
1955, 1959-60, 167 L.Ed.sd 929].)  So too
here, appellants attempt to couch a legal conclusion – that respondents never
obtained legal title to their loan – as a factual allegation – that ABN
transferred appellants’ mortgage to an unidentified entity.  Thus, appellants have failed to plead facts
sufficient to show respondents are not authorized to service their loan and
have failed to demonstrate a reasonable possibility they could cure the defects
in their pleading if afforded the opportunity to amend.

B.  Appellants Failed to Plead Sufficient Facts
to Support Their Causes of Action Against Respondents

As discussed above, appellants’
primary contention relies on the allegation that respondents never received
legal title to appellants’ mortgage due to a purported violation of the
PSA.  Appellants argue their mortgage was
improperly securitized as required by the PSA, and as a result, Citi lacks authority
to service appellants’ mortgage. 
Alternatively, appellants allege that notwithstanding the purported
violation of the PSA, respondents never received legal title to appellants’
mortgage due to a sale of the mortgage to an unidentified entity in 2006, prior
to the creation the REMIC.

Relying on these allegations,
appellants seek to quiet title to their home, cancel the first deed of trust on
their home, collect monetary damages for fraud and wrongful credit reporting,
obtain a temporary restraining order against respondents, and obtain preliminary
and permanent injunctions against respondents. 
For the reasons set forth below, appellants have failed to set forth
facts sufficient to support their claims against respondents.

 

>1.      >Fraud Cause of Action

Appellants base their fraud cause of
action on respondents’ “express and oral representations that it is the
authorized servicer on plaintiffs’ loan.” 
As discussed above, appellants rely on the purported violation of the
PSA to contend that respondents lack authority to service their loan.  As far as appellants’ fraud claim is based on
the purported violation of the PSA, the claim fails because appellants lack
standing to challenge the securitization of their mortgage under the PSA.  (See Sami,
supra, 2012 WL 967051, at *6.)  Therefore, because appellants lack standing
to challenge the securitization of their mortgage under the PSA, the court
properly sustained the demurrer to the fraud claim without leave to amend.  (See Tarmann,
supra, 2 Cal.App.4th at pp. 157-158.)

>2.      >Quiet Title Cause of Action

In their second cause of action,
appellants seek to quiet title to their property securing the mortgage at
issue.  To state a cause of action for
quiet title, a plaintiff must plead: (1) a legal description of the property
that is the subject of the action; (2) the title of the plaintiff and the basis
upon which such title is asserted; (3) the adverse claims to the title of the
plaintiff against which a determination is sought; (4) the date as of which the
determination is sought; and (5) a prayer for the determination of the
plaintiff against the adverse claims. 
(Code Civ. Proc., § 761.020.) 

Aside from adequately pleading the
statutory elements, “[i]t is settled in California that a mortgagor cannot
quiet his title against the mortgagee without paying the debt secured.”  (Shimpones
v. Stickney (1934) 219 Cal. 637, 649; see also Horton v. Cal. Credit Corp. Ret. Plan (S.D. Cal. 2011) 835
F.Supp.2d 879, 893 [“even if [Code Civ. Proc., § 761.020] requirements are met,
California courts have pronounced that in order to maintain a cause of action
to quiet title, the mortgagor must allege tender or ability to tender the
amounts admittedly borrowed”].)  “This
rule is based upon the equitable principle that he who seeks equity must do
equity . . . a court of equity will not aid a person in avoiding the payment of
his or her debts.”  (Mix v. Sodd (1981) 126 Cal.App.3d 386, 390.)

 

Here, appellants admit they have paid
only $147,000 on their mortgage.  They
have not alleged that they have paid off the remainder of their debt, and they
have made no offer to tender the remainder of their debt.  Therefore, appellants cannot maintain a quiet
title action.  (See Shimpones, supra, 219
Cal. at p. 649 [“[A] mortgager cannot quiet his title against the mortgagee
without paying the debt secured”]; see also Lane
v. Vitek Real Estate Industries Group (E.D. Cal. 2010) 713 F.Supp.2d 1092,
1103 [“As plaintiffs concede they have not paid the debt secured by the
mortgage, they cannot sustain a quiet title action against defendants”].)

For the reasons stated above, the
trial court properly sustained the demurrer to the quiet title action without
leave to amend.

>3.      >Cancellation of Deed of Trust Cause of
Action

In their third cause of action,
appellants seek to cancel the deed of
trust securing their mortgage.  Civil
Code section 3412 states, “[a] written instrument, in respect to which there is
a reasonable apprehension that if left outstanding it may cause serious injury
to a person against whom it is void or voidable, may, upon his application, be
so adjudged, and ordered to be delivered up or canceled.” 

In their FAC, appellants allege that
their deed of trust was transferred to respondents without the accompanying
note, and “[b]ecause plaintiff’s [deed of trust] was transferred without the
note, the [deed of trust] must be canceled and declared void, with full
reconveyance to plaintiffs.”  They have
failed, however, to allege how this purported transaction (i.e., the transfer
of the deed without the note) will result in serious injury if the deed of
trust is not cancelled.  (See Civ. Code §
3412; see also Malfatti v. Mortgage
Electronic Registration Systems, Inc. (N.D. Cal., Nov. 29, 2011,     C 11-03142 WHA) 2011 WL 5975055 [granting
dismissal on cancellation action when plaintiffs alleged only an improper
recording of their mortgage and set forth no explanation for how such improper
recording would result in serious injury].) 


In addition, appellants have not
alleged that they have paid the outstanding balance owed on the note; they
acknowledge that they have paid only a fraction of their obligation on their
mortgage.  As a result, some entity has
an interest in receiving the remainder of the obligation on appellants’
mortgage.  Therefore, even if appellants’
note was never properly assigned to respondents as they allege, there are other
parties who have an interest in receiving the remainder of the obligation.  (See Mata
v. Citimortgage, Inc. (C.D. Cal., Sept. 26, 2011, CV 10-9167 DSF PLAX) 2011
WL 4542723, at *3 [“Plaintiffs also ask for a declaration that the improper
assignment extinguished various rights held under the note or deed of trust or
that Plaintiffs . . . otherwise do not owe money on their note(s) . . . .  If Plaintiffs’ note was never assigned to
Citimortgage or BofA, then there are other parties . . . who have an interest
in those issues”].)  Thus, any improper
assignment to Citi would not serve to extinguish the rights and interests that
others may have in the property. 
Consequently, the remedy appellants’ seek—“full reconveyance” would not
be viable. 

For the reasons stated above, the
trial court properly sustained the demurrer to the cancellation action without
leave to amend.

>4.      >Declaratory Relief Cause of Action

In their fourth cause of action,
appellants seek a judicial declaration that no party other than appellants has
any right, title or interest in appellants’ loan, property, and deed of
trust.  Under Code of Civil Procedure
section 1060, “[a]ny person . . . who desires a declaration of his or her
rights or duties with respect to another, or in respect to, in, over or upon
property . . . may, in cases of actual controversy relating the legal rights
and duties of the respective parties, bring an original action . . . for a declaration
of his or her rights . . . .” 

Appellants base their declaratory
relief claim on allegations that respondents never received legal title to
their mortgage.  Because appellants have
failed to adequately plead that respondents never received legal title to their
mortgage, their declaratory relief claim fails for the reasons set forth
above.  (See Sami, supra, 2012 WL
967051, *8.)

Appellants’ declaratory relief claim
fails for another reason as well. 
Appellants seek a declaration that respondents have no right to initiate
or maintain foreclosure proceedings against appellants’ property and that such
proceedings must immediately be terminated. 
As the Fourth District recognized in
Gomes, “‘California appellate courts have refused to read any additional requirements
into the non-judicial foreclosure statute.’” 
(Gomes v. Countrywide Home Loans,
Inc., supra, 192 Cal.App.4th at p. 1154.) 
This is so because California’s nonjudicial foreclosure scheme provides
“a comprehensive framework for the regulation of a nonjudicial foreclosure sale
pursuant to a power of sale contained in a deed of trust.”  (Ibid.)   “‘These provisions cover every aspect of
exercise of the power of sale contained in a deed of trust.’”  (Ibid.) 

Here, appellants essentially seek a
declaration that respondents lack the authority to foreclose on their
property.  Prior to the enactment of the
Homeowner Bill of Rights (HBR) and the accompanying amendments to California’s
statutory nonjudicial foreclosure scheme there was nothing in the scheme that
authorized a plaintiff to seek declaratory relief establishing whether a
defendant has the right to foreclose. 
(See Gomes v. Countrywide Home
Loans, Inc., supra, 192
Cal.App.4th at p. 1154; see also Ramirez,
supra, 2012 WL 5464359, at *10.)  Therefore, because California’s nonjudicial
foreclosure scheme must be applied as it existed at the time respondents
recorded the notice of default in 2011, appellants cannot seek a declaration
that respondents lack authority to service their mortgage.  (See Myers
v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828, 841; see also >McGough v. Wells Fargo Bank, N.A. (N.D. Cal., Oct. 22, 2012, C12-0050 TEH) 2012 WL
5199411, at *5 (fn.4) [“[The HBR] amendments do not go into effect until Jan.
1, 2013 and there is no indication that the law is intended to be, or will be,
applied retroactively”].)  Therefore, the
trial court properly sustained the demurrer to the declaratory relief claim.

>5.      >Wrongful Credit Reporting Cause of Action

In their fifth cause of action, appellants
allege that respondents breached Civil Code section 1785.25, subdivision (a),
when they reported to consumer credit reporting agencies that appellants “were
delinquent on their mortgage payments . . . when they knew or reasonably should
have known that [appellants] were not delinquent . . . .”  Civil Code section 1785.25, subdivision (a),
provides: “A person shall not furnish information on a specific transaction or
experience to any consumer credit reporting agency if the person knows or
should know the information is incomplete or inaccurate.”  In alleging a violation of Civil Code section
1785.25, subdivision (a), appellants contend respondents “knew or reasonably
should have known that plaintiffs were not delinquent because plaintiffs had
and have no obligation to make payments on their loan to these [respondents] .
. . .” 

As discussed above, appellants have
failed to adequately allege respondents never received legal title to their
mortgage.  Further, appellants have
failed to show that they have continued making regular mortgage payments to >any entity.  As a result, appellants have caused their own
delinquency in the mortgage payment process. 
(See Javaheri v. JPMorgan Chase
Bank, N.A. (C.D. Cal., Aug. 13, 2012, 2:10-CV-08185-ODW) 2012 WL 3426278,
at *6 [court recognizes that any injury suffered by the plaintiff was the
result of his default on the mortgage].) 
Therefore, appellants have failed to show that respondents furnished any
information that they knew or reasonably should have known was incomplete or
inaccurate.  (See Civ. Code, § 1785.25,
subd. (a).)

>6.      >Preliminary Restraining Order and
Injunctive Claims For Relief

In their sixth cause of action,
appellants assert claims for a preliminary restraining order, a temporary
injunction, and a permanent injunction. 
“Injunctive relief is a remedy and not, in itself, a cause of action,
and a cause of action must exist before injunctive relief may be granted.”  (Shell
Oil Co. v. Richter (1942) 52 Cal.App.2d 164, 168.)  Therefore, injunctive relief cannot be issued
“if the underlying cause of action is not established.”  (City
of South Pasadena v. Department of Transportation (1994) 29 Cal.App.4th
1280, 1293.) 

As discussed above, appellants have
failed to state a cause of action based on their allegations that respondents
never received legal title to their mortgage. 
Therefore, appellants have failed to state grounds upon which injunctive
relief may be granted.  (See >Shell Oil Co., supra, 52 Cal.App.2d at p. 168; City
of South Pasadena, supra, 29
Cal.App.4th at p. 1293.) 

For the reasons stated above, the
trial court properly sustained the demurrer to the wrongful credit reporting
cause of action.

>III.            
The
Homeowner Bill of Rights Does Not Assist Appellants’ Cause

Finally, in their opening brief,
appellants contend that regardless of whether they lack standing to challenge
the securitization of their mortgage under the terms of the PSA, they
nevertheless have the right to demand respondents prove ownership of their
mortgage under the newly enacted HBR. 
HBR went into effect January 1, 2013. 
(See Civ. Code, § 2923.4.) 
According to appellants, respondents recorded a notice of default on
July 12, 2011.  As discussed below, the
newly enacted HBR does not grant appellants any additional rights than those
that existed under California’s statutory nonjudicial foreclosure scheme at the
time respondents filed the notice of default in 2011.

“California courts comply with the href="http://www.fearnotlaw.com/">legal principle that unless there is an
express retroactivity provision, a statute will not be applied retroactively unless it is very clear from extrinsic sources that the Legislature . . . must
have intended a retroactive application.” 
(Myers v. Philip Morris Companies,
Inc., supra, 28 Cal.4th at p. 841.) 
Nowhere in its text does HBR state that it applies retroactively.  Further, appellants do not point to any
portion of the statutory scheme’s text or its legislative history that suggests
that the California Legislature intended HBR to apply retroactively.  Because HBR went into effect after
respondents filed the notice of default in 2011, it does not grant appellants
new rights upon appeal.  Therefore,
California’s nonjudicial foreclosure statutory scheme as it existed at the time
respondents recorded the notice of default in 2011 applies to this matter.

>DISPOSITION

The judgment is affirmed.  Respondents are entitled to costs on appeal.

 

                                                                                                            WOODS,
Acting P. J.

We concur:

 

>                        ZELON, J.                                                                 SEGAL,
J.*

*Judge of the Los Angeles
County Superior Court assigned by the Chief Justice pursuant to article VI,
section 6 of the California Constitution.