Orozco v. JP Morgan Chase Bank
Filed 6/11/13 Orozco v. JP Morgan Chase Bank CA4/1
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
LEONARDO OROZCO,
Plaintiff and Appellant,
v.
JPMORGAN CHASE BANK, N.A. et
al.,
Defendants and Respondents.
D059878
(Super. Ct. No. 37-2008-00057744- CU-OR-NC)
APPEAL from
a judgment of the Superior Court
of
County, Thomas P. Nugent, Judge. Affirmed.
Hallstrom
Klein & Ward, Grant J. Hallstrom; and Oscar Ruiz de Chavez, for Plaintiff
and Appellant.
AlvaradoSmith,
Sung-Min Christopher Yoo, John M. Sorich, and Katherine S. Agbayani, for
Defendants and Respondents.
INTRODUCTION
In this
appeal, plaintiff Leonardo Orozco seeks reversal of trial court orders granting
the defendants' motion for nonsuit, denying his motion for leave to amend his
prayer for relief to seek an equitable remedy, denying his motion for a new
trial, and sustaining defendants' demurrer to one of the causes of action
alleged in his original complaint. We
discern no prejudicial errors in these orders and affirm the judgment.
BACKGROUND
name="_ftnref1" title="">[1]
In June
2005 Orozco obtained a $1 million loan secured by a
Mortgage LLC doing business as No Red Tape Mortgage as the lender, Fidelity
National Loan Portfolio Solutions as the trustee, Mortgage Electronic
Registration Systems, Inc. (MERS) the nominee beneficiary, and Orozco as the
borrower.
In July
2007 a default notice was recorded indicating Orozco's loan payments were
almost $27,000 in arrears. The notice
also indicated Orozco had to contact defendant Chase Home Finance, LLC (Chase)
to arrange for payment to stop the foreclosure.
In August
2007 an assignment of deed of trust was recorded indicating MERS transferred
all beneficial interest in the trust deed to defendant Deutsche Bank National
Trust Company (Deutsche). In October
2007 a substitution of trustee was recorded stating Deutsche substituted NDEx
West, LLC (NDEx) as the new trustee of the trust deed.
In November
2007 a notice of trustee's sale was recorded indicating NDEx was going to sell
Orozco's home at a public auction. In
June 2008 a trustee's deed upon sale was recorded indicating NDEx sold Orozco's
home to Deutsche at a public auction on May
16, 2008, for $796,000. The
deed upon sale also indicated the amount of unpaid debt and costs at the time
of the sale was $1,088,222.52.
In August
2008 Orozco filed a complaint against JPMorgan Chase Bank, N.A., Chase, and
Deutsche (collectively defendants) "to set aside foreclosure sale and
trustee's deed upon sale and for damages."
(Capitalization omitted.) The
complaint alleged causes of action for wrongful foreclosure, fraud, and
improper foreclosure.
Defendants
demurred to the complaint, arguing Orozco had not stated any viable causes of
action. The trial court overruled the
demurrer as to the fraud cause of action and sustained the demurrer to the
wrongful foreclosure and improper foreclosure causes of action with leave to
amend. Orozco subsequently filed a first
amended complaint alleging causes of action for wrongful foreclosure and fraud,
but not for improper foreclosure.
Defendants
demurred to the first amended complaint, arguing Orozco had not stated a viable
wrongful foreclosure cause of action.
The trial court sustained the demurrer without leave to amend, leaving
Orozco with just the fraud claim for which the only relief he sought was
punitive damages.
Trial
commenced in January 2011. After
Orozco's opening statement, but before he concluded his presentation of
evidence, the trial court granted defendants' motion for nonsuit based on
Orozco's inability to establish monetary damages. The trial court additionally denied Orozco's
request for leave to amend his prayer for relief to seek the equitable remedy
of vacating the foreclosure sale.
name="_ftnref2" title="">[2] Orozco subsequently moved for a new trial,
which the trial court also denied.
DISCUSSION
I
Granting of
Nonsuit
A
Before
trial, the parties submitted a "Joint Trial Readiness Conference
Statement" and proposed jury instructions to the trial court. Defendants also submitted a trial brief.
disputed by the parties related to whether Orozco's economic damages were
limited to the value of the property at the time of the foreclosure sale. At a conference before jury selection
commenced, the trial court deferred ruling on the instruction and requested
additional briefing from the parties.
After jury selection and just before opening statements, both parties
submitted the additional briefing.
name="_ftnref4" title="">[4] Although defendants requested the trial court
immediately rule on the matter, the trial court declined to do so indicating it
would revisit the matter later in the day.
The trial
court initially revisited the matter after releasing the jury for lunch, which
was after Orozco's first two witnesses had testified and before he concluded
his presentation of evidence with his own testimony. The trial court explained to the parties that
in reviewing the proposed jury instructions on damages it began to question
whether Orozco could obtain noneconomic damages for a fraud claim where he
suffered no economic damages because he had no equity in his property. The trial court asked the parties to research
the issue over the lunch break and to return from the break early to discuss
the matter further.
When the
trial court and the parties revisited the issue again, Orozco's counsel
clarified Orozco was not seeking emotional
distress damages. Orozco was,
however, seeking damages for the loss of his home and potential future profits
he would have made from it. Essentially,
he was seeking to vacate the foreclosure sale.
The trial
court noted this relief was available for wrongful foreclosure. However, because defendants had successfully
demurred to the wrongful foreclosure causes of action in Orozco's original and
first amended complaints, the trial court determined this relief was not
available to Orozco.
Given this
determination, the trial court pointed out Orozco could not prove the damages
element of his fraud claim. The trial
court further stated it was inclined under the circumstances "to conclude
the litigation." The trial court
did not invite a motion for nonsuit or otherwise elaborate on how it might
reach such a conclusion. The trial court
also did not end further discussion of the matter.
Instead,
Orozco's counsel immediately launched into a lengthy argument asserting the
trial court was required to allow him to continue with his punitive damages
claim notwithstanding his lack of monetary damages and to amend his complaint
to request the equitable remedy of vacating the foreclosure sale. The argument culminated in Orozco's specific
request for such leave to amend.
Defendants
opposed the request, arguing equitable
remedies are not available for fraud claims. Before the trial court could respond to these
arguments, defendants moved for nonsuit.
The trial court granted the motion, finding Orozco was not entitled to
seek equitable relief for his fraud claims, was not entitled to amend his
complaint at that late juncture, and was not entitled to pursue punitive
damages when he admittedly had no economic or noneconomic damages.
B
Procedural
Propriety of Nonsuit Motion
Orozco
preliminarily contends the trial court's order granting nonsuit was
procedurally improper. Specifically,
Orozco contends the trial court improperly (1) granted nonsuit sua sponte, (2)
weighed the evidence in deciding whether to grant nonsuit, and (3) granted
nonsuit before the close of Orozco's evidence.
Regarding
the first identified impropriety, a trial court may not grant nonsuit on its
own motion. (Gullick v. Interstate Drilling Co. (1931) 111 Cal.App. 263,
267.) However, the record does not show
the trial court did so in this case.
Rather, the record shows defendants moved for nonsuit after the trial
court implicitly decided a jury instruction issue in their favor. Additionally and contrary to Orozco's
assertions, the trial court did not initiate the discussion leading to the
nonsuit. Defendants initiated the
discussion by raising the damages issue in their trial brief and during the
pretrial conference. Although the
defendants specifically requested a ruling on the issue before opening
statements, the trial court postponed its decision so it could receive and
consider additional briefing. When the
trial court revisited the matter at the first reasonably available opportunity,
the trial court indicated its leanings and heard extensive arguments from
Orozco's counsel. The trial court then
gave defendants their turn to speak.
After defendants made their points, they immediately moved for nonsuit
without any prompting from the trial court.
Accordingly, we cannot conclude from this record the trial court granted
nonsuit sua sponte.
Regarding
the second identified impropriety, a trial court may not weigh evidence in
deciding whether to grant nonsuit. (
(1984) 36 Cal.3d 830, 838-839.) However,
the record does not show the trial court did this either. While the arguments of Orozco's counsel to
the trial court on the damages issue included tangential evidentiary points,
the trial court did not base its decision on these points. Instead, the trial court based its decision
on Orozcos counsel's acknowledgments Orozco had no equity in his home and was
not seeking emotional distress damages.
The trial court also based its decision on its legal determination
Orozco could not obtain the equitable remedy of vacating the foreclosure sale
for his fraud claim. Thus, Orozco has
not established the trial court's decision rested on an improper assessment of
the evidence.
Regarding
the last identified impropriety, Code of Civil Procedure section 581c,
subdivision (a), provides: "Only
after, and not before, the plaintiff has completed his or her opening
statement, or after the presentation of his or her evidence in a trial by jury,
the defendant, without waiving his or her right to offer evidence in the event
the motion is not granted, may move for a judgment of nonsuit." Orozco interprets this section as limiting
the timing of a motion for nonsuit to either directly after the plaintiff's
opening statement or directly after the close of the plaintiff's evidence. In other words, a defendant cannot, as
defendants did here, make a motion for nonsuit between these two points in
time.
We note the
plain language of the statute is not qualified in this manner. In addition, Orozco has not cited nor have we
located any authority supporting Orozco's interpretation of the statute. Ultimately, we need not decide the matter
because, even assuming the timing of defendants' motion violated the statute,
neither this procedural irregularity nor any of the other claimed procedural
irregularities requires reversal of the judgment if the motion was otherwise
well taken. (Michel v. Moore & Associates, Inc. (2007) 156 Cal.App.4th 756,
760, fn. 4; see also Vincent v. Pacific
Grove (1894) 102 Cal. 405, 410; Atkinson
v. Elk Corp. (2003) 109 Cal.App.4th 739, 749.) As we explain below, defendants' motion was
well taken because Orozco could not prove he was damaged by defendants' alleged
fraud.
II
Available Damages
for Fraud Claim
A
"To
recover for fraud, the plaintiff must prove ' "detriment proximately
caused" by the defendant's tortious conduct. [Citation.]
Deception without resulting loss is not actionable fraud.' " (Goehring
v. Chapman University (2004) 121 Cal.App.4th 353, 364; Civ. Code, §
1709.)
"Under
California law, a defrauded party is ordinarily limited to recovering
out-of-pocket damages. [Citation.] The out-of-pocket measure of damages ' ''is
directed to restoring the plaintiff to the financial position enjoyed by him
prior to the fraudulent transaction, and thus awards the difference in actual
value at the time of the transaction between what the plaintiff gave and what
he received." ' " (
(2007) 150 Cal.App.4th 42, 66.)
In this
case, the out-of-pocket measure of damages equated to the value of Orozco's
equity in his property at the time of the foreclosure sale. (See Munger
v. Moore (1970) 11 Cal.App.3d 1, 11; Howe
v. City Title Ins. Co. (1967) 255 Cal.App.2d 85, 87; Stephans v. Herman, 225 Cal. App. 2d 671, 673-674.) Orozco's trial counsel, however, acknowledged
Orozco did not have any equity in his home at that time. On appeal, Orozco attempts to distance himself
from this acknowledgment by pointing to evidence one of his friends and
business associates was willing to invest up to $1 million in the
property. We accept this evidence as
true. (Michel v. Moore & Associates, Inc., supra, 156 Cal.App.4th at p. 761 [In reviewing a judgment of
nonsuit, we view the evidence in the light most favorable to appellant and
affirm only if appellant could not have prevailed at trial even if the jury
accepted all appellant's evidence as true and resolved all factual conflicts in
appellant's favor.]) Nonetheless, Orozco
has not established how a third party's willingness to purchase or give Orozco
the money to repurchase the property results in an out-of-pocket loss to Orozco
greater than the value of the property itself.
Essentially, Orozco seeks to recover monetary damages for his own or a
third party's lost opportunity to overspend, and he has not cited nor have we
located any authority providing for such recovery.
Orozco
additionally asserts he would have testified to having suffered severe
emotional distress because of defendants' fraud. Assuming a plaintiff may recover emotional
distress damages for the type of fraud Orozco alleges, Orozco's trial counsel
specifically informed the trial court Orozco was not seeking such damages. Orozco maintains the record is actually
confusing on this point, but we find no confusion or ambiguity in it. To the contrary, the record shows the trial
court explicitly inquired whether Orozco sought emotional distress damages and
Orozco's trial counsel informed the trial court Orozco had conceded during his
deposition "there was not a claim for emotional distress, you know, I'm
feeling bad because of all this terrible stuff.
That is absolutely not part of one of our claims."
Orozco also
suggests he could have established damages for the loss of potential future
profits from the eventual appreciation and development of his property, but
such damages are " ' "too remote, speculative, or uncertain" '
" for a viable fraud claim. (
1039, 1064.) Moreover, one of
defendants' motions in limine during the pretrial conference was to exclude
evidence the property was worth more than the loan balance. Orozco did not oppose this motion and the
trial court granted it. Consequently,
Orozco would not have been able to introduce any evidence of lost potential
future profits at trial.
III
Denial of Leave
to Amend Prayer for Relief
Orozco
further contends that, in lieu of granting nonsuit, the trial court should have
allowed him leave to amend his prayer for relief to include the equitable
remedy of vacating the foreclosure sale.
We disagree.
The
traditional method of challenging the validity of a foreclosure sale is a suit
in equity to set aside the sale. (
Cal.App.4th 89, 103; Munger v. Moore
(1970) 11 Cal.App.3d 1, 6 (Munger).) Such a suit typically lies
" ' "where there has been fraud in the procurement of the
foreclosure decree or where the sale has been improperly, unfairly or
unlawfully conducted, or is tainted by fraud, or where there has been such a
mistake that to allow it to stand would be inequitable to purchaser and
parties." ' " (
Although Orozco attempted to allege such a claim in both his original
and first amended complaints, defendants twice successfully demurred to the
claim and Orozco had not challenged the trial court's rulings on these
demurrers in this appeal.
While there
is some authority suggesting the breach of a valid oral agreement to postpone a
foreclosure sale might provide a ground for vacating the sale, this ground does
not apply where, as here, the plaintiff has not sued for breach of the oral
promise. (See Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 444-445.) Despite his suggestions to the contrary,
Orozco's fraud claim is not functionally equivalent to a breach of contract
claim. To state a
must allege the existence of a contract, plaintiff's performance or excuse for
nonperformance, defendants' breach, and plaintiff's resulting damages. (Hamilton
v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1614.) Orozco's fraud claim alleges Chase, as part
of a conspiracy with defendants, intentionally misrepresented to him the
foreclosure sale would be postponed so he would not take any action to stop the
sale and they could obtain his property at substantially less than its fair
market value. As Orozco's fraud claim
does not allege the existence of a contract, or any of the other elements of a
breach of contract claim, it does not state nor is it the functional equivalent
of a contract claim.
We need not
decide whether Orozco could have amended his complaint to state a viable
contract cause of action because Orozco has forfeited this issue on
appeal. (See fn. 2,
Moreover, Orozco's counsel specifically told the trial court when he
requested leave to amend that Orozco was not seeking to change his cause of
action, he was only seeking to change his desired remedy. He essentially wanted to obtain through the
back door a remedy he could not obtain through the front door. As the law does not support his entitlement
to the remedy of vacating a foreclosure sale for his fraud claim, Orozco has
not established the trial court abused its discretion by denying him leave to
amend his prayer for relief.
Cal.App.4th 218 (Aceves), upon which
Orozco relies, is inapposite. The main
questions presented in Aceves were
whether the plaintiff had properly pleaded promissory estoppel and fraud claims
based on an alleged breach or false promise by the defendant to work with
plaintiff to reinstate and modify her loan if she did not pursue foreclosure
relief through bankruptcy proceedings. (
pleaded a fraud claim, the Aceves court
did not discuss the appropriate measure of damages for fraud or whether the
plaintiff could obtain equitable relief in addition to or in lieu of such
damages. (Id. at p. 231.)
An appellate opinion is not authority for propositions not
considered. (People v. Knoller (2007) 41 Cal.4th 139, 154-155.) Sohal
v. Fed. Home Loan Mortg. Corp. (N.D. Cal. Aug. 30, 2011, No. C 11-01941
JSW) [2011 WL 3842195] is inapposite for the same reason.
(1906) 149 Cal. 556 (Estudillo);
(Lo); and Melendrez v. D & I
Investment, Inc. (2005) 127 Cal.App.4th 1238 (Melendrez) are similarly unhelpful.
Estudillo and
may be vacated where there was collusive bidding or where intrinsic fraud
otherwise tainted the sale. (
addressed whether a foreclosure sale may be vacated where the sale violated
a statute requiring its postponement upon the mutual agreement of the borrower
and the lender. (Melendrez, supra, at pp.
1255-1256.) As Orozco's operative
complaint does not allege either circumstance, these cases have no application
here.
Also
of no assistance to Orozco are Crofoot v.
Tarman (1957) 147 Cal.App.2d 443 (Crofoot)
and Strutt v. Ontario Savings and Loan
Assn. (1970) 11 Cal.App.3d 547 (Strutt),
which he cites for the first time in his reply
brief. The Crofoot court held a foreclosure sale may not be vacated where
there is no evidence of extrinsic fraud.
(Crofoot, supra, at pp. 448-449.) The
not be vacated for extrinsic fraud where the subject property was sold to a
bona fide purchaser. (
courts suggested or assumed in dicta a foreclosure sale may be set aside for
extrinsic fraud where the purchaser is the lender or a successor, but neither
court specifically discussed the point.
(Crofoot, at p. 448;
decisions.
IV
Denial of Motion
for New Trial
Orozco
alternatively contends the trial court erred in denying his motion for new
trial because the trial court incorrectly determined tort actions based on a
promise subject to the statute of frauds are categorically barred. Orozco rests this contention on references in
defendants' opposition papers and at oral argument to Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167
Cal.App.4th 544 (Secrest), which held
an agreement to forebear foreclosing on a deed of trust was subject to the
statute of frauds. (Id. at pp. 552-554.)
We note the
trial court's order denying the motion for new trial does not cite to the
Cal.App.4th 544) or otherwise explain the basis for the trial court's
ruling. In addition, while the
discussed during oral argument, it was not the main topic. The main topics were the issues discussed
whether Orozco could have established he suffered monetary damages from
defendants' alleged fraud and whether the trial court should have allowed him
to amend his complaint to seek vacating the foreclosure sale as a remedy
Further,
the appellate record for this issue is incomplete. In particular, the record does not include
Orozco's memorandum of points and authorities in support of his motion, his
reply, or any other documents he may have submitted to the trial court in
connection with the motion. It also does
not include his trial brief, which his trial counsel requested the trial court
to review before ruling on the motion for new trial.
"Appealed
judgments and orders are presumed correct, and error must be affirmatively
shown. [Citation.] Consequently, plaintiff has the burden of
providing an adequate record.
[Citation.] Failure to provide an
adequate record on an issue requires that the issue be resolved against
plaintiff." (Hernandez v. California Hospital Medical Center (2000) 78
Cal.App.4th 498, 502.) Without all of
papers that were before the trial court when it ruled on Orozco's new trial
motion, we cannot properly review the basis for the trial court's ruling. Orozco has, therefore, failed to carry his
burden of establishing prejudicial error in the ruling. (Ibid.)
V
Sustaining
Demurrer to Improper Foreclosure Action in Original Complaint
A
Orozco's
original complaint contained three causes of action: one for wrongful foreclosure, one for fraud
and deceit, and one for improper foreclosure.
As to the improper foreclosure cause of action, the complaint alleged
NDEx conducted the foreclosure sale and sold the property to Deutsche. The complaint further alleged NDEx was not
the valid successor trustee and Deutsche was not the owner of the note.
The trial
court sustained defendant's demurrer to this cause of action finding the cause
of action "alleges that at the time of the 5/16/07 sale, NDE[x] was not
the successor trustee under the [trust deed] and Deutsche was not the owner of
the note. Defendants have made a
sufficient showing by their request for judicial notice that Deutsche did, in
fact, have the legal right to initiate foreclosure. Plaintiff raises a new allegation in his
opposition that there was also a defect in the notice of the trustee's
sale. Plaintiff is granted leave to
amend to plead such an allegation if viable." When Orozco filed his first amended
complaint, he did not include an improper foreclosure cause of action in
it.
B
On appeal,
he contends the trial court erred when it sustained defendants' demurrer to
this cause of action because the cause of action sufficiently stated a fraud
claim under the theory Deutsche intentionally misrepresented it had the
authority to foreclose under the deed of trust.
When reviewing a trial court's ruling sustaining a demurrer, "we
examine the complaint's factual allegations to determine whether they state a
cause of action on any available legal theory.
[Citation.] We treat the demurrer
as admitting all material facts which were properly pleaded. [Citation.]
However, we will not assume the truth of contentions, deductions, or
conclusions of fact or law [citation], and we may disregard any allegations
that are contrary to the law or to a fact of which judicial notice may be
taken." (Ellenberger v. Espinosa (1994) 30 Cal.App.4th 943, 947.) The "[p]laintiff bears the burden of
proving the trial court erred in sustaining the demurrer." (Vaughn
v. LJ Internat., Inc. (2009) 174 Cal.App.4th 213, 219.)
1
Preliminarily,
we must reject defendants' assertion Orozco's appeal of this issue is untimely
and procedurally infirm because Orozco had an opportunity to amend his improper
foreclosure cause of action and elected not to do so. As Orozco points out, "[w]hen a demurrer
to a cause of action is sustained with leave to amend, the plaintiff may elect
not to amend the cause of action. The
order sustaining the demurrer is treated as an intermediate order with respect
to that cause of action, appealable at the time of a final judgment, and the
plaintiff is deemed to have elected to stand on the validity of the cause of
action as originally pleaded.
[Citations.] 'The rule that a
choice to amend waives any error can reasonably be applied only on a
of action but files an amended complaint containing the remaining causes of
action or amended versions of the remaining causes of action, no waiver occurs
and the plaintiff may challenge the intermediate ruling on the demurrer on an
appeal from a subsequent judgment. It is
only where the plaintiff amends the cause of action to which the demurrer was
sustained that any error is waived.' "
(National Union Fire Ins. Co. of
Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171
Cal.App.4th 35, 44.)
2
We,
nonetheless, conclude Orozco's contention lacks merit because the trial court's
ruling on the demurrer specifically found, based on documents it judicially
noticed, that Deutsche was authorized to initiate the foreclosure sale. Orozco's briefs do not address this aspect of
the trial court's ruling. Orozco also
did not include a copy of the judicially noticed documents in the record. He, therefore, has not carried his burden of
establishing prejudicial error.
DISPOSITION
The
judgment is affirmed. Respondents are
awarded their appeal costs.
McCONNELL,
P. J.
WE CONCUR:
HALLER, J.
IRION, J.
name="_ftn1" title="">[1] Defendants have requested we take judicial notice of 11
documents providing background information.
Orozco did not oppose the request.
The first 10 documents were either issued by, filed with and considered
by, or otherwise before the trial court.
We grant the request as to these documents. (Evid. Code, § 459, subd. (a).) The last document does not appear to have
been before the trial court in any manner and we do not need to consider it to
resolve the issues presented on appeal.
We, therefore, deny the request as to this document. (Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.)
name="_ftn2" title="">[2] Besides requesting leave to amend his prayer for relief,
Orozco apparently moved in limine for leave to amend his complaint to add new
causes of action and remedies. The trial
court denied the motion both because it was in improper form and because it was
untimely. Orozco has not appealed this
decision and did not include a copy of the motion in the appellate record.
