Filed 9/18/18 Martines v. Wells Fargo Bank CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

AMBER MARTINES, et al., Plaintiffs and Appellants, v. WELLS FARGO BANK, N.A., et al., Defendants and Respondents.

H042836 (Santa Clara County Super. Ct. No. 1-13-CV-253168)

Plaintiffs Amber and Thomas Martines seek reversal of an order granting a motion for judgment on the pleadings brought by defendants Wells Fargo Bank (Wells Fargo) and Fidelity National Title Company (Fidelity). Plaintiffs contend that the court abused its discretion by denying them an opportunity to amend their complaint. We disagree and therefore must affirm the judgment of dismissal.

Background

The factual history of the parties’ dispute is recounted in plaintiffs’ complaint, filed September 17, 2013.[1] On August 11, 2005, plaintiffs obtained a $616,000 loan on their San Jose property, secured by a deed of trust, from “RMR Financial dba Princeton Capital.” Old Republic Title Company (Old Republic) was the trustee; Mortgage Electronic Registration Systems (MERS) was the beneficiary. The same day, plaintiffs obtained a second 30-year mortgage for $88,000 from the same lender, with the same companies serving as trustee and beneficiary.

Plaintiffs made monthly payments of $2,887 and $214 on the two loans until August 2009. In July of that year, struggling with the economic downturn, they asked the current servicer, defendant Wells Fargo, for a loan modification. Wells Fargo “declined to talk about a loan modification because Plaintiffs were current on their payments. [Wells Fargo] specifically directed Plaintiffs to ‘skip a couple of payments’ before they [sic] would provide a loan modification application and directed Plaintiffs to contact [Wells Fargo] once Plaintiffs fell behind one payment.” Plaintiffs thereafter skipped the August and September 2009 payments, and at Wells Fargo’s additional suggestion, they rented out three rooms in their house for an income of $1,650 per month.

Having followed the advice to skip two payments, plaintiffs told Wells Fargo that they were prepared for a loan modification. They submitted the required application and accompanying documents, and on November 6, 2009, they received a “Special Forbearance Plan” (Plan). The Plan called for payments of $2,572.36 per month for three months. The reduction, plaintiffs said, was insufficient; but Wells Fargo assured them that if they made the three payments, they would eventually receive an offer for “a more permanent solution with a lower monthly payment.” Plaintiffs agreed, and they made the three payments under the Plan, until in March 2010 they asked for further direction. Wells Fargo told them to continue making those payments until directed otherwise.

In early January of 2011 Wells Fargo and defendant Fidelity, which had been substituted for Old Republic as trustee, recorded a notice of default.[2] When plaintiffs asked about the Notice of Default and the status of their loan modification, they were told that they did not qualify under their current program, but they would be enrolled in a different program; they should then resubmit their modification application along with updated supporting documents. Plaintiffs did receive a modification offer in February 2011, but the monthly payment amounts were $3,407, which they could not afford. Together with escrow fees and delinquent property taxes, the monthly amount would have been about $5,800. At Wells Fargo’s suggestion, plaintiffs submitted “numerous” additional applications for loan modification in 2011, but each one was declined. Wells Fargo also began rejecting plaintiffs’ payments under the Plan, and in May a notice of trustee’s sale was recorded.

On May 9, 2013, defendants recorded a second notice of trustee’s sale. Plaintiffs submitted their last modification application in July of that year. Again it was denied, and on September 17, 2013, they filed their complaint in this action. The next day they obtained a temporary restraining order preventing defendants from foreclosing on the property.[3] By this point plaintiffs’ total indebtedness on the property was estimated to be $988,973.14.

Procedural History

Plaintiffs’ complaint alleged three causes of action: violation of Civil Code section 2923.6[4] by recording the May 2013 notice of trustee sale while a loan modification application was under review; breach of an agreement to modify plaintiffs’ loans; and violation of section 1788.17 by making false representations in their debt collection practices.

Defendants demurred to the complaint on April 2, 2015. Plaintiffs did not file opposition; instead, having obtained new counsel the previous September, plaintiffs filed a notice of intent to file a first amended complaint (FAC). At a case management conference on May 12, counsel indicated that the FAC would be filed that day or the next. Based on that representation, defense counsel took the demurrer hearing off calendar. Three times between May 20 and June 9, defense attorney Megan E. Gruber asked plaintiffs’ counsel about the expected FAC filing. On the last occasion, she told plaintiffs’ counsel that she would be filing her answer. That pleading was filed the next day, June 10, followed a day later by defendants’ motion for judgment on the pleadings. Plaintiffs’ counsel attempted to file the FAC on June 10, but the superior court clerk rejected it, as the answer had already been filed that day.

In their motion for judgment on the pleadings defendants contested each of the three causes of action in the original complaint. There was no violation of section 2923.6, they asserted, because loan servicers were not obligated to review loan modification applications more than once; furthermore, plaintiffs’ application was not complete until July of 2013, after the notice of trustee’s sale was recorded in May. As for breach of contract, defendants could not discern what contract was being referred to, but they refuted the claim as it might pertain to the Special Forbearance Plan. The third cause of action failed, defendants argued, because it was too vague to provide notice to defendants, and section 1788.17 pertained to debt collection, which did not apply to foreclosures.

In their opposition to the motion on July 10, plaintiffs maintained that the first cause of action was adequately stated, as Wells Fargo had engaged in “dual-tracking also known as the double cross.” Plaintiffs did not attempt to defend the contract claim, but stated only that in negotiating the modification, defendants “mislead [sic] and misinformed Plaintiffs ultimately leading to the instant foreclosure.” Likewise, as to the third cause of action, plaintiffs insisted that defendants were attempting to collect a debt, and in so doing “mislead [sic] Plaintiffs by acting as a debt collector and encouraging Plaintiffs to seek a loan modification while it foreclosed on Plaintiffs’ Property.” For each cause of action, plaintiffs suggested that to the extent that any defects existed, they could be addressed by amendment.

Plaintiffs also asserted that the motion for judgment on the pleadings was “unnecessary” because they were seeking to file the FAC. In an accompanying declaration, plaintiffs’ counsel admitted that the FAC had not been timely filed, “due to issues beyond our control.” He took “full responsibility” for the failing but asked the court to permit the FAC to be filed. Defendants, however, protested that the proposed FAC stated new causes of action that should not be permitted; they also pointed out that plaintiffs had not moved to amend their complaint. In their written reply they urged the court to grant the motion and deny leave to amend, as that would amount to a new lawsuit comprising “entirely new causes of action, theories and claims . . . based on allegations of improper loan securitization and assignment.”[5] (Boldface italics omitted.)

The matter was heard on July 23, 2015.[6] At the outset the court pointed out that plaintiffs’ arguments tended to suggest other possible causes of action, “but that’s for a motion to amend,” not for a response to a motion for judgment on the pleadings. Plaintiffs urged the court to grant leave to amend the complaint, as defendants’ motion was similar to a demurrer. The court stated that even if plaintiffs amended their complaint, they could not add any new allegations.

The court filed its order the same day, granting the motion without leave to amend. From the ensuing judgment of dismissal on August 12, 2015, plaintiffs filed this timely appeal.

Discussion

On appeal, plaintiffs do not seek reversal on the ground that granting judgment on the pleadings was incorrect. Their sole contention on appeal is that the trial court abused its discretion by denying them leave to amend their original complaint. Although they acknowledge that this pleading was “not the model of clarity,” they maintain that it “had skeletal facts, which, if bolstered and properly [pleaded], could state a cause of action.”

Plaintiffs’ focus is on the second cause of action for breach of contract and the third cause of action for breach of the Rosenthal Fair Debt Collection Practices Act. (§ 1788.17.) They maintain that there was “at least a reasonable probability” that with an opportunity to amend, they could have pleaded the elements of breach of contract based on defendants’ failure to modify plaintiffs’ loan as promised; and they could have alleged “numerous conversations and representations” made outside the foreclosure process that evidenced Wells Fargo’s attempt to collect a debt.

As plaintiffs acknowledge, the trial court’s decision not to allow amendment was a matter within its discretion; as such, it may not be overturned absent abuse of that discretion. (Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1448.) “The trial court abuses its discretion if it denies leave to amend when there is a reasonable possibility the defect in the pleading could be cured by amendment.” (Bettencourt v. Hennessy Industries, Inc. (2012) 205 Cal.App.4th 1103, 1111; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 970.) Although amendment should be liberally allowed, it is a plaintiff’s burden to demonstrate how his or her complaint can be amended to state viable causes of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Newell v. State Farm General Ins. Co. (2004) 118 Cal.App.4th 1094, 1100.)

According to plaintiffs, they were “severely prejudiced” by not being granted leave to amend, because they were “denied their day in court.” They argue that “[a] plaintiff should not be denied the opportunity to present his case because his [c]omplaint is not articulate and precise.” As accurate that statement may be in theory, it does not help plaintiffs in this case, because even on appeal they have not articulated precisely how their complaint can be amended to state a viable cause of action. In their opening brief they do not attempt to renew the allegations proffered in the proposed FAC; they merely state generally that the “deficiencies could have been cured,” without specifying how they could accomplish that objective. To satisfy the plaintiff’s burden to show a reasonable possibility of amendment on appeal, a plaintiff “ ‘must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.’ [Citation.] The assertion of an abstract right to amend does not satisfy this burden. [Citation.] The plaintiff must clearly and specifically set forth the ‘applicable substantive law’ [citation] and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, the plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action. [Citations.] Allegations must be factual and specific, not vague or conclusionary.” (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43-44.) Accordingly, “[if] the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding [that] the trial court abused its discretion when it sustained the demurrer [or granted judgment on the pleadings] without leave to amend.” (Id. at p. 44.)

These precepts are tested in plaintiffs’ opening brief on appeal. By articulating no specific changes that would remedy the acknowledged defects in their complaint, they have failed to establish that the trial court abused its discretion by denying the request to amend.

In their reply brief, plaintiffs contend that they showed that they could “state a good cause of action” by drafting the FAC and “request[ing] that it be allowed to be filed.” This argument cannot succeed, however, for two reasons. First, it is untimely; as noted above, plaintiffs did not advance this argument in their opening brief and no good cause is shown for our considering it now.[7] (See, e.g., American Drug Stores Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453 [“Points raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument”]; see also Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8 [“ ‘Obvious considerations of fairness in argument demand that the appellant present all of his points in the opening brief. To withhold a point until the closing brief would deprive the respondent of his opportunity to answer it or require the effort and delay of an additional brief by permission.’ ”])

Second, plaintiffs do not explain how the FAC supports their request for amendment. As in the opening brief, they focus on procedural justifications for amendment but fail to explain how the new allegations in the FAC withstand defendants’ substantive challenges. They address none of the authority defendants cite in the respondent’s brief to refute the legal basis for the new claims, nor do they even attempt to show how those claims are legally sound. It is not this court’s role to develop plaintiffs’ arguments for them or to suggest legal strategies to resist dismissal of their claims. (See Niko v. Foreman (2006) 144 Cal.App.4th 344, 368 [“One cannot simply say the court erred, and leave it up to the appellate court to figure out why”]; see also Needelman v. DeWolf Realty Co., Inc. (2015) 239 Cal.App.4th 750, 762 [“It is not this court’s role to construct arguments that would undermine the lower court’s judgment and defeat the presumption of correctness”]; accord, Mead v. Sanwa Bank California (1998) 61 Cal.App.4th 561, 564; California Public Records Research, Inc. v. County of Yolo (2016) 4 Cal.App.5th 150, 187-188.) Having failed to meet their burden to show how they can state a tenable cause of action sufficient to withstand dismissal, we are offered no basis for finding abuse of the trial court’s discretion. (Cf. Debrunner v. Deutsche Bank Nat. Trust Co. (2012) 204 Cal.App.4th 433, 444 [no abuse of discretion in decision not to allow amendment where plaintiff fails to demonstrate how pleading could be amended to state a viable claim].) In these procedural circumstances, reversal is not warranted.

Disposition

The judgment is affirmed.