Tidwell v. EMC Mortgage Corp.

Filed 10/9/07 Tidwell v. EMC Mortgage Corp. CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIX

Cynthia Tidwell's home was sold in a nonjudicial foreclosure sale. She appeals a summary judgment entered in favor of EMC Mortgage Corporation (EMC) and Quality Loan Service Corporation (Quality) on her causes of action for fraud, negligent misrepresentation, and violation of statute. (Civ. Code, 2934 & 2924c, subd. (a)(2).) Tidwell contends that triable issues of fact exist whether EMC and Quality fraudulently induced her to pay $4,900 under duress to stop the sale. She also contends emc and Quality violated statutory notice and recordation requirements for the foreclosure sale. Finally, she contends the trial court did not consider her evidence before granting summary judgment. We reject her contentions and affirm.

FACTS AND PROCEDURAL HISTORY

In September of 2001, Tidwell refinanced her home. She obtained a $283,000 loan from Wells Fargo, secured by a promissory note and a deed of trust. The deed of trust named Wells Fargo as beneficiary and Fidelity National Title as trustee. In June 2002, Wells Fargo assigned its beneficial interest in the note and deed to EMC. The assignment was recorded on January 29, 2003.

Tidwell became delinquent on her mortgage payments. She did not make the September 2002 payment, and missed subsequent payments so that by January of 2003 she was in arrears by $12,647.85. On January 13, 2003, Quality recorded a notice of default on the note and deed of trust. Quality had not yet been substituted as trustee in place of EMC. The notice described Quality as "either the original trustee, the duly appointed substituted trustee, or acting as agent for the trustee or beneficiary" under the Tidwell deed of trust.

On April 21, 2003, Quality recorded a notice of substitution of trustee, naming Quality as trustee in place of EMC. On the same day, Quality recorded a notice of trustee's sale of Tidwell's home, setting the sale for May 7, 2003. Tidwell testified that she found the notice in bushes on her property at the end of April. There was a piece of tape on it. She testified she did not receive anything by certified mail and she "wasn't getting notification of anything."

On May 5, two days before the scheduled sale, Tidwell contacted EMC. Tidwell spoke with an EMC representative, Tracy Aldridge, on May 5 and May 6, 2003. On May 6 at about 3:40 p.m., Aldridge faxed to Tidwell a draft of the foreclosure forbearance agreement. The facsimile transmission cover sheet stated, "Please read the entire forbearance agreement. Should you have any questions, call me at the above number. [] Return by fax TODAY, the last page with your signatures. The required funds of $4,900 must be received with the signed agreement to stop the foreclosure process." On that same day Tidwell signed the agreement without reading it, faxed it back to EMC and transmitted $4,900 to EMC. Tidwell testified that she signed the agreement under duress with the understanding that it would stop the foreclosure process altogether.

In the evening after she signed and returned the forbearance agreement, Tidwell read it. She noticed that the written agreement did not conform with the terms she thought she had reached with the EMC representative. The agreement provided that "The foreclosure process is only placed on HOLD. If the Agreement becomes defaulted, foreclosure proceedings will continue without any additional notice to the Borrower. The foreclosure process will resume from the point prior to the execution of the Agreement. FORECLOSURE WILL NOT RESTART." It also provided that, "In the event that Borrower breaches this Agreement, Lender shall be free to proceed to or continue with the foreclosure of the mortgaged premises and credit will be given to Borrower for any payments made." The written agreement contained an integration clause. In addition to the initial payment on May 6, it required Tidwell to pay $2,332.38 on the 15th of each month beginning June 15, 2003, continuing to and including May 15, 2004.

Consistent with the terms of the forbearance agreement, the scheduled May 7 sale was put on hold. On June 16, 2003, Tidwell made the first monthly payment due under the forbearance agreement. She did not timely make the second or third monthly payments. She testified she did not make the July payment because she was waiting to get paid by a client, and she did not have the financial ability to make the July payment. She alleged in her complaint that on September 15 she wired $4,666.00 to EMC. The written forbearance agreement provided that time was of the essence, that there was no grace period, and that untimely payment would constitute default. On July 6 Tidwell wrote to EMC requesting an accounting and a payment coupon book. She testified that EMC did not respond.

When Tidwell defaulted under the forbearance agreement, Quality proceeded with the foreclosure process. On September 8, 2003, Quality conducted a trustee's sale of Tidwell's home. It conveyed the home to a third party for $361,000. The buyer evicted Tidwell. The sale generated a surplus of $102,451.69. Quality paid the surplus to Tidwell, which she accepted.

Just before and after the sale, Tidwell received correspondence from EMC that did not mention the sale. On August 26, 2003, EMC sent Tidwell a boilerplate workout letter that generally described options that "MAY HELP YOU SAVE YOUR HOME," and made no reference to the pending sale. On September 11, 2003, EMC sent similar letters. The September 11, 2003 letters included notices that stated, "[o]ur conversations" and "this correspondence" "represent[] no guarantee that relief will be granted" and that "[s]ervicing activities may continue . . . (including . . . foreclosure) . . .  until you receive normal written confirmation that relief has been granted."

DISCUSSION

Standard of Review

The trial court may grant a summary judgment only if no material factual issues exist or if the evidence establishes as a matter of law that a cause of action cannot prevail. (Code Civ. Proc., 437c, subd. (c); Yuzon v. Collins (2004) 116 Cal.App.4th 149, 159.) The reviewing court independently determines the effect of the undisputed facts. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) Section 437c, subdivision (p)(2), provides: "A defendant . . . has met his . . . burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto."

Fraud and Negligent Misrepresentation

In her causes of action for fraud and negligent misrepresentation, Tidwell alleged that an EMC representative agreed by telephone to stop the foreclosure sale completely and to reinstate the note and deed of trust in return for Tidwell's immediate payment of $4,900 and execution of the forbearance agreement. Tidwell concedes that the terms of the forbearance agreement contradict the alleged oral promise. She contends that EMC and Quality are estopped from enforcing the forbearance agreement because she signed it under duress in reliance on the oral promises of EMC's representative. We reject Tidwell's contentions because she could not, as a matter of law, have reasonably relied upon any oral representations of EMC that the forbearance agreement would stop the sale.

The forbearance agreement arrived with a cover sheet cautioning Tidwell to read it before signing it. It stated that "[i]f there is a foreclosure sale currently scheduled, the sale will not be canceled. . . . The foreclosure process is only placed on HOLD." "The Note and Mortgage held by Lender shall not be reinstated unless and until such time Borrower has timely and fully made all of the payments set forth herein. . . . In the event that Borrower breaches this Agreement, Lender shall be free to proceed to or continue with the foreclosure of the mortgaged premises . . . ."

The alleged oral promise contradicts the terms of the integrated forbearance agreement. The agreement stated, "The foregoing represents the entire agreement of the parties and any modification, amendment or extension hereof shall not be valid, unless in writing and signed by the party to be charged." The parol evidence rule generally prohibits the introduction of extrinsic evidence to contradict the terms of an integrated written instrument. (Bionghi v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358, 1364.) Extrinsic evidence is admissible to explain ambiguous contract terms (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165), but there is no ambiguity here. "Whether the parol evidence rule applies in a given set of circumstances is a question of law which we consider de novo to the extent that no evidentiary conflict exists. [Citations.] Generally, resolution of this issue involves a two-part analysis: (1) was the writing intended to be an integration; and (2) is the agreement reasonably susceptible of the meaning urged by the party offering the evidence." (EPA Real Estate Partnership v. Kang (1992) 12 Cal.App.4th 171, 176.) In this case, the agreement, by its terms, was intended to be an integration, and Tidwell offers no competent evidence to contradict this. The agreement is not reasonably susceptible to the meaning she urges. The alleged oral promise directly contradicts the written agreement. The fraud exception to the parol evidence rule does not apply if the evidence is offered to show a promise contradicting the written agreement. (Bank of America Nat. Trust & Savings Ass'n. v. Pendergrass (1935) 4 Cal.2d 258, 263; West v. Henderson (1991) 227 Cal.App.3d 1578, 1583.)

Civil Code section 2934a, Substitution of Trustees

Tidwell asserted a cause of action for statutory violation of Civil Code section 2934a. Section 2934a sets forth the requirements for signing and recording a substitution of trustees under trust deeds. Tidwell alleged in her complaint that Quality's January 13, 2003, notice of default was invalid because it was signed by Quality before EMC or Quality recorded a substitution of trustee naming Quality as trustee pursuant to section 2934a. The substitution of trustee naming EMC was filed January 29, 2003. The substitution of trustee naming Quality was filed on April 21, 2003. The notice of trustee's sale was recorded the same day.

On the date of the notice of default, EMC was the beneficiary of the deed of trust. Quality signed the notice of default as "agent for beneficiary," as permitted by section 2924a. Section 2924a provides, "If, by the terms of any trust or deed of trust a power of sale is conferred upon the trustee, the attorney for the trustee, or any duly authorized agent, may conduct the sale and act in the sale as the auctioneer for the trustee." Fidelity signed the notice of default on Quality's behalf, acting as Quality's subagent. Fidelity was also trustee of record at the time, and as such was authorized to file the notice of default. (Civ. Code,  2924, subd. (a)(1)). The assignment to EMC was not recorded until January 29, 2003.

Civil Code section 2924c, Subdivision (a)(2), Notice of Rescission

Tidwell also asserted a statutory violation based on Civil Code section 2924c, subdivision (a)(2). She contends that EMC and Quality were required to rescind the notice of default within 21 days of the May 6, 2003 forbearance agreement. She alleged they were also required to deliver notice of rescission to all interested parties no later than May 27, 2003, and record that notice no later than June 7, 2003, but failed to do so. She alleged that on April 13, 2003, defendants gave notice of the scheduled trustee's sale set for May 27, 2003, but they did not record the notice until May 21, 2003, after the forbearance agreement, and that they proceeded to sale on September 8, 2003, without further notice to Tidwell.

Section 2924c, subdivision (a)(2) provides that if the trustor "does cure the default, the beneficiary or mortgagee or the agent for the beneficiary or mortgagee shall, within 21 days following the reinstatement, execute and deliver to the trustee a notice of rescission which rescinds the declaration of default and demand for sale and advises the trustee of the date of reinstatement." The notice must be recorded within 30 days. Tidwell did not cure the default and was not entitled to notice of rescission.

Section 2924b, Service ofNotice of Default and Notice of Trustee's Sale

Tidwell now contends that the notice of default and notice of trustee's sale were not served in compliance with Civil Code section 2924b. The claim was not made in Tidwell's complaint, which pleaded only statutory violation of sections 2934a and 2924c, subdivision (a)(2). A plaintiff "may not defeat a summary judgment motion by producing evidence to support claims that are outside the issues framed by the pleadings." (Vournas v. Fidelity Nat. Title Ins. Co. (1999) 73 Cal.App.4th 668, 674, fn. 6.) "It is well settled that documentary evidence filed in opposition to a defendant's motion for summary judgment may not create issues outside the pleadings, nor is it a substitute for an amendment to the pleadings." (Robinson v. Hewlett-Packard Corp. (1986) 183 Cal.App.3d 1108, 1132.)

Consideration of Plaintiff's Evidence

Tidwell contends that the judgment should be reversed because the trial court did not specifically refer to supporting and opposing evidence in its order, and improperly excluded the declaration of her expert. We disagree.

Code of Civil Procedure section 437c, subdivision (g) provides, ". . . the court shall, by written or oral order, specify the reasons for its determination. The order shall specifically refer to the evidence proffered in support of, and if applicable in opposition to, the motion which indicates that no triable issue exists." The court's written order set forth specifically the reasons for its determination with respect to each cause of action and identified the enumerated facts that were undisputed, established and not established, but did not refer to specific items of evidence in support or opposition to the motion. Reversal for noncompliance with subdivision (g) is not required if the noncompliance is harmless, because we review the validity of the ruling, and not the reasons therefore. (Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1146.) Here, the omission was harmless. The undisputed facts entitled EMC and Quality to judgment as a matter of law.

Tidwell's contention that the trial court improperly excluded the declaration of her expert is without merit. The court did not rule on evidentiary objections and the parties did not request rulings at oral argument. We have considered the declaration as part of the record on appeal.

The judgment is affirmed. Respondents to recover their costs on appeal. Respondents' requests for sanctions are denied.

COFFEE, J.

We concur:

GILBERT, P.J.

YEGAN, J.

Steven Hintz, Judge

Superior Court County of Ventura

______________________________

Lawrence C. Noble & Associates and Lawrence C. Noble; Law Office of Joseph C. Maher and Joseph C. Maher II, for Plaintiff and Appellant.

Severson & Werson, Jan T. Chilton, John B. Sullivan and Regina J. McClendon, for Defendant and Respondent EMC Mortgage Corporation.

McCarthy & Holthus, LLP, Thomas J. Holthus, Daniel J. Golding and Matthew E. Podmenik, for Defendant and Respondent Quality Loan Service Corporation.

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