Filed 12/15/17 Ratterree v. Federal Nat. Mortgage Assn. CA3
NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
THIRD APPELLATE DISTRICT
(Glenn)
----




TERRY M. RATTERREE,

Plaintiff and Appellant,

v.

FEDERAL NATIONAL MORTGAGE ASSOCIATION et al.,

Defendants and Respondents.


C076727

(Super. Ct. No. 13CV01174)


In October 2012, appellant Terry M. Ratterree lost his residence through nonjudicial foreclosure by respondents Federal National Mortgage Association and Seterus, Incorporated. After the foreclosure, Ratterree sued the respondents for violating the Homeowner’s Bill of Rights (HBOR) and for wrongful foreclosure. Respondents demurred to Ratterree’s second amended complaint, and the trial court sustained the demurrer without leave to amend. Ratterree appeals from the subsequently entered judgment of dismissal.
On appeal, Ratterree contends (1) the trial court erroneously ruled Ratterree could not state a cause of action under Civil Code section 2924.17 because it is preempted by federal law, and (2) the trial court erred in dismissing his cause of action for wrongful foreclosure on grounds Ratterree had not alleged compliance with the “tender rule.” Ratterree further argues that, even if his two existing causes of action were properly dismissed, he should be allowed to amend his complaint to state a new cause of action for dual-tracking under section 2923.6.
We conclude the trial court properly dismissed Ratterree’s operative complaint. His first cause of action is based entirely on allegations of robo-signing. Section 2924.17 does not prohibit robo-signing but only non-judicial foreclosure without a review for competent and reliable evidence of default and the right to foreclose. Ratterree has neither alleged this omission of review nor does he state he can allege this fact. Ratterree’s second cause of action was properly dismissed because it is entirely derivative of his first cause of action. We reject Ratterree’s assertion he can amend his operative complaint to state a new cause of action for dual-tracking. This proposed cause of action does not apply to a situation such as this where the foreclosure proceeds after the borrower rejects a loan modification offer. We are presented with no basis on which Ratterree can amend his operative complaint to state a cause of action against respondents.
Accordingly, we affirm the judgment of dismissal.
STANDARD OF REVIEW
In reviewing a trial court’s sustaining of a demurrer without leave to amend, we apply the de novo standard of review to exercise our independent judgment regarding whether the operative complaint states valid causes of action as a matter of law. (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300.) For purposes of review, we assume the truth of properly pleaded factual allegations in the operative complaint and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their context. (Ibid.) “We do not assume the truth of contentions, deductions, or conclusions of fact or law, and may disregard allegations that are contrary to the law or to a fact that may be judicially noticed.” (Fischer v. Time Warner Cable Inc. (2015) 234 Cal.App.4th 784, 790.)
If the reviewing court concludes the demurrer was properly sustained, a plaintiff may nevertheless secure a reversal by demonstrating a reasonable probability he or she can amend the complaint to cure any fatal defect. (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43.) “To satisfy that burden on appeal, a plaintiff ‘must show in what manner he [or she] can amend his [or her] complaint and how that amendment will change the legal effect of his [or her] pleading.’ (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The assertion of an abstract right to amend does not satisfy this burden. (McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 161.) The plaintiff must clearly and specifically set forth the ‘applicable substantive law’ (Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 897) and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action.” (Rakestraw, supra, at p. 43.)
BACKGROUND
Consistent with the applicable standard of review, we recount the background based on Ratterree’s second amended complaint that is the operative complaint in this case.
In 2008, Ratterree bought a residential property in Orland with a purchase money loan in the amount of $343,500 that was secured by a deed of trust in favor of Indy Mac. Indy Mac later went into receivership by the Federal Deposit Insurance Corporation (FDIC). As a result, Ratterree no longer knew who held title to the deed of trust. In 2012, Ratterree’s household income “was drastically reduced.” He contacted his loan servicer and requested a loan modification. Ratterree submitted a complete loan application and supporting documents several times.
In January 2013, Ratterree “was finally offered a loan modification. However, the terms of the loan / proposed monthly payments would leave [Ratterree] with a substantial deficiency each month. Accordingly, [Ratterree] rejected the modification, pointing out that the proposed payments were entirely unaffordable. [Ratterree] requested the application and supporting documents be re-reviewed because he figured there must have been an error on the part of the servicer. To that end, [Ratterree] formally appealed the decision.” While the loan modification review continued, a trustee sale was scheduled in May 2013. Ratterree alleges respondents “procured the foreclosure of [his] home by fraudulent means and in violation of the California [HBOR].”
After the foreclosure, Ratterree requested a copy of the trustee’s deed upon sale. Ratterree discovered the trustee’s deed upon sale was signed by Robert Bourne – a person who Ratterree alleges to be “a known ‘robo-signer.’” Ratterree also discovered the assignment of deed of trust was robo-signed by Krystal Hall.
In September 2013, Ratterree filed his second amended complaint to assert two causes of action: for a violation of section 2924.17, subdivision (a), and for wrongful foreclosure. Both causes of action are based on allegations the assignment of deed of trust and trustee’s deed upon sale were robo-signed. Respondents demurred to the second amended complaint. Respondents argued Ratterree had not complied with the tender rule and Ratterree’s claims were preempted by federal law.
The trial court sustained the demurrer without leave to amend. The trial court reasoned Ratterree’s state-law claims were preempted by federal law. The trial court further reasoned Ratterree had not alleged compliance with the tender rule. A judgment of dismissal followed. Ratterree timely filed a notice of appeal.
DISCUSSION
I
Ratterree’s Cause of Action for Violation of Section 2924.17
Ratterree argues the trial court erred in concluding his cause of action under section 2924.17 is preempted by federal law.
Respondents devote relatively little of their briefing to a defense of the trial court’s conclusion that the cause of action under section 2924.17 was preempted by federal law. Instead, respondents seek to avail themselves of the rule that a judgment will be affirmed on any lawful basis even if not relied upon by the trial court. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 880, fn. 10 [“If another proper ground for sustaining the demurrer exists, this court will still affirm the demurrers even if the trial court relied on an improper ground, whether or not the defendants asserted the proper ground in the trial court”].) To this end, respondents contend the first cause of action cannot accrue under the HBOR because the deed of trust predates the enactment of the section 2924.17; a trustee’s deed upon sale is not one of documents covered by the HBOR; Ratterree did not allege respondents failed to conduct a review for competent and reliable evidence of default as required by section 2924.17; Ratterree did not allege the robo-signing of his foreclosure documents was “material” under the HBOR; Ratterree did not allege actual harm from robo-signing; and the deed of trust applied the federal Home Owners Loan Act (12 U.S.C. § 1461, et seq.) to the exclusion of the state HBOR.
We conclude the trial court properly dismissed Ratterree’s first cause of action.
A.
Ratterree’s Factual Allegations
Ratterree’s first cause of action under section 2924.17 is entirely based on allegations Robert Bourne and Krystal Hall robo-signed the trustee’s deed upon sale and the assignment of deed of trust. Ratterree relies upon his definition of “robo signing” as “a term of art used to describe those individuals who signed pertinent documents within the meaning of California’s Foreclosure statutes without verifying the contents of the documents.” The first cause of action does not allege respondents failed to conduct a proper review to substantiate Ratterree’s default on the foreclosed mortgage. Ratterree’s operative complaint does not deny he defaulted on his loan or respondents had the right to foreclosure.
B.
Section 2924.17
Determining whether Ratterree’s claim of robo-signing states a cause of action requires us to construe section 2914.17. “In construing a statute, a court’s objective is to ascertain and effectuate legislative intent. (Kimmel v. Goland (1990) 51 Cal.3d 202, 208.) To determine legislative intent, a court begins with the words of the statute, because they generally provide the most reliable indicator of legislative intent.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.) “If the statutory language is clear and unambiguous our inquiry ends. ‘If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.’ (People v. Snook (1997) 16 Cal.4th 1210, 1215; see Diamond Multimedia Systems, Inc. v. Superior Court (1999) 19 Cal.4th 1036, 1047.) In reading statutes, we are mindful that words are to be given their plain and commonsense meaning. (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735.) . . . Only when the statute’s language is ambiguous or susceptible of more than one reasonable interpretation, may the court turn to extrinsic aids to assist in interpretation. (People v. Jefferson (1999) 21 Cal.4th 86, 94.)” (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103.)
Section 2924.17 provides in pertinent part: “(a) A declaration recorded pursuant to Section 2923.5 or, until January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924, or a declaration or affidavit filed in any court relative to a foreclosure proceeding shall be accurate and complete and supported by competent and reliable evidence. [¶] (b) Before recording or filing any of the documents described in subdivision (a), a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose, including the borrower’s loan status and loan information.” (Italics added.)
Section 2924.17 does not mention robo-signing. Indeed, section 2924.17 does not mention the signing of mortgage-related documents at all. To the contrary, section 2924.17 refers instead to the process of “recording or filing” certain enumerated mortgage-related documents. Robo-signing itself is not prohibited by section 2924.17. The gravamen of the statutory violation is a mortgage servicer’s failure to verify, based on competent and reliable evidence, that the borrower has actually defaulted on the loan and the lender has a right to foreclose on the defaulted loan.
Section 2924.17’s focus on the borrower’s default and the lender’s right of foreclosure to the exclusion of robo-signing comports with the nature of the harm of robo-signing. The victim of a robo-signed assignment of a deed of trust is the lender, not the borrower. As this court recently explained, “ ‘To the extent that an assignment was in fact robo-signed, [the foreclosure] would be voidable, not void, at the injured party’s option.’ (Pratap v. Wells Fargo Bank, N.A. (N.D. Cal. 2014) 63 F.Supp.3d 1101, 1109.) The bank, not the borrower would be the injured party. (Ibid.)” (Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 819, italics added.) Thus, as the California Supreme Court has noted, “a borrower can generally raise no objection to assignment of the note and deed of trust.” (Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 927.)
As to the trustee’s deed upon sale for which Ratterree alleges robo-signing, we note section 2924.17 does not mention trustees’ deeds upon sale. The Legislature’s exclusion of trustees’ deeds upon sale from the list of documents upon which a claim may be stated indicates no cause of action may be stated as to a trustee’s deed upon sale. As this court has previously noted, “By longstanding rule of statutory construction, the Legislature’s omission of a term in a list of terms indicates the Legislature did not intend to include the omitted term, and we cannot add the term to the statute by judicial fiat.” (Blankenship v. Allstate Ins. Co. (2010) 186 Cal.App.4th 87, 94.)
Ratterree’s operative complaint does not allege respondents failed to verify with competent and reliable evidence that his loan was in default or their right to foreclose. Instead, Ratterree’s operative complaint bases its entire claim under section 2924.17 on the assertion the trustee’s deed upon sale and assignment of deed of trust were robo-signed. This is insufficient. (§ 2924.17, subdivision (b) [requiring that the mortgage servicer ensure “that it has reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose”].) In short, Ratterree’s operative complaint focuses on the act of signing the loan-related documents to the exclusion of any facts that constitute a violation of section 2924.17.
C.
Amendment
1. Proposed Addition of Another Robo-signed Document
Ratterree contends he can amend his complaint to state a cause of action under section 2924.17. Specifically, he asserts that had he “been granted leave to amend, he would have amended his complaint to include evidence of another document, specifically covered by HBOR, that was also robo-signed but inadvertently missing from allegations in the complaint.” (Italics added.) We reject this proposed amendment because it suffers the same problem as the rest of the allegations in his first cause of action – i.e., they all focus exclusively on robo-signing even though robo-signing itself is not actionable under section 2924.17. For lack of any stated ability to allege facts that would support a cause of action under section 2924.17, we conclude the trial court properly sustained respondents’ demurrer without leave to amend.
2. Addition of Common Law Cause of Action for Fraud
For the first time at oral argument, Ratterree asserted he should be allowed to amend his complaint to state a cause of action for common law fraud. The assertion is deemed forfeited because neither Ratterree’s opening nor reply brief argues he should be allowed to amend to claim common law fraud. (New Plumbing Contractors, Inc. v. Nationwide Mutual Ins. Co. (1992) 7 Cal.App.4th 1088, 1098 [“New issues cannot generally be raised for the first time in oral argument”].)
We also note Ratterree previously pled theories for fraud in his first amended complaint as follows: (1) an unlawful business practices claim under Business and Professions Code section 17200 [“Defendants’ practice/policy of foreclosures and evictions is likely to mislead the general public and, consequently constitutes a fraudulent business act”], (2) a quiet title claim [“Defendants . . . obtained the Subject Property through fraud and wrongful conduct”], and (3) a claim for cancellation of instruments [alleging the “acts by Defendants constitute fraud, oppression and malice under . . . § 3294”]. (Italics added.) Ratterree’s second amended complaint jettisoned these fraud theories to focus exclusively on section 2924.17 and wrongful foreclosure. In other words, Ratterree has already abandoned a theory he now seeks to revive. His attempt at revival during oral argument comes too late.
We would reject this assertion even if it were not forfeited. As we have already noted, the victim of robo-signing mortgage-related documents is the lender, not the borrower. (Maynard v. Wells Fargo Bank, N.A. (S.D. Cal. 2013) [2013 U.S. Dist. Lexis 130800, at *28].) For this reason, some courts have held borrowers lack standing even to assert a cause of action for common law fraud based on robo-signing. (Pratap v. Wells Fargo Bank, N.A. (N.D. Cal. 2014) 63 F.Supp.3d 1101, 1109 [noting that “numerous courts have found that where a plaintiff alleges that a document is void due to robo-signing, yet does not contest the validity of the underlying debt, and is not a party to the assignment, the plaintiff does not have standing to contest the alleged fraudulent transfer”].)
II
Wrongful Foreclosure
Ratterree next argues the trial court erred in dismissing his cause of action for wrongful foreclosure on grounds Ratterree had not alleged compliance with the tender rule. Respondents counter Ratterree failed to allege any facts demonstrating prejudice from the sale; Ratterree did not allege compliance with the tender rule or any valid exception to the tender rule. Respondents contend the operative complaint was properly dismissed without leave to amend because Ratterree never submitted a proposed amended complaint or identified facts that would cure the defects of his operative complaint. We conclude the trial court did not err.
A.
The Wrongful Foreclosure Claim
Ratterree’s second cause of action for wrongful foreclosure is entirely derivative of his first cause of action in that both focus exclusively on the alleged acts of robo-signing. At the heart of Ratterree’s second cause of action is his allegation that “the foreclosure was void on its face since it was procured by fraud in that the pertinent documents were signed by ‘robo-signers.’ ” (Italics added.) The second cause of action reiterates respondents “caused an illegal, fraudulent sale of real property pursuant to a power of sale in [Ratterree’s] mortgage or deed of trust when [respondents] violated California [HBOR] by enlisting robo-signers to verify pertinent documents required under the [Civil] Code.”
We have already rejected the argument that robo-signing violates the HBOR. Consequently, the derivative claim for wrongful foreclosure also must be rejected. Ratterree alleges he can amend his claim to provide additional facts. However, the only additional fact he identifies is an allegation the notice of trustee’s sale was a third document in the foreclosure process that was robo-signed. Robo-signing, by itself, does not support a cause of action under the HBOR. Because Ratterree has expressly made his wrongful foreclosure cause of action depend on his HBOR claim, the failure of his HBOR claim also dooms his wrongful foreclosure cause of action.
B.
Claim for Dual-tracking
Ratterree argues that, even if his two causes of action were properly dismissed, he should be allowed to amend his complaint to state a new cause of action for dual-tracking under section 2923.6. We conclude Ratterree cannot state a claim under section 2923.6 based on the allegations in his operative complaint and in his briefs on appeal.
Section 2923.6 prohibits the procedure known as dual-tracking in which a lender at the same time evaluates a borrower’s application for loan modification and moves forward with foreclosure proceedings. In pertinent part, section 2923.6 provides:
“(c) If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: [¶] (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired. [¶] (2) The borrower does not accept an offered first lien loan modification within 14 days of the offer. [¶] (3) The borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first lien loan modification.
“(d) If the borrower’s application for a first lien loan modification is denied, the borrower shall have at least 30 days from the date of the written denial to appeal the denial and to provide evidence that the mortgage servicer's determination was in error.”
As the Second District Court of Appeal recently confirmed, “Section 2923.6, subdivision (c)(2) permits a beneficiary or trustee to resume the foreclosure process if a borrower does not accept a loan modification within 14 days of the offer.” (Gillies v. JPMorgan Chase Bank, N.A. (2017) 7 Cal.App.5th 907, 912.) Here, Ratterree pled that he was offered a loan modification on January 7, 2013. Ratterree rejected the modification. As a consequence, Ratterree cannot state a cause of action under section 2923.6. Once respondents offered Ratterree a loan modification and he rejected it, respondents were allowed to proceed with foreclosure under section 2923.6, subdivision (c)(2). (Gillies, supra, at p. 912.)
Ratterree contends his rejection of the offered loan modification should not cancel his dual-tracking cause of action because he “requested to be re-reviewed.” Essentially, Ratterree argues that while he appealed the terms of the offered loan modification, respondents were barred from moving forward with foreclosure. We disagree. Subdivision (d) of section 2923.6 extends the prohibition on dual-tracking to the time encompassed for appeal from the denial of a loan modification request. Here, however, Ratterree was approved for a loan modification.
Ratterree contends he can allege the additional facts that he “completed a complete loan modification in late 2012,” that “he was offered a loan modification that appeared to [him] to be erroneous and therefore he requested to be re-reviewed,” and “[w]hile under this loan modification review” the trustee’s sale was scheduled and completed. These additional allegations do not resuscitate Ratterree’s claim. Ratterree’s rejection of the offered loan modification removed the section 2923.6 prohibition on dual-tracking. Consequently, Ratterree is not entitled to leave to amend to state a cause of action for dual-tracking under section 2923.6.
DISPOSITION
The judgment is affirmed. Respondents Federal National Mortgage Association and Seterus, Incorporated, shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)



/s/
HOCH, J.



We concur:



/s/
MAURO, Acting P. J.



/s/
MURRAY, J.