IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO A146555

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1 Filed 2/28/17 Erchinger v. HSBC Bank Nat. Assn. CA1/2 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule (a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule (b). This opinion has not been certified for publication or ordered published for purposes of rule IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO RICHARD ERCHINGER et al., Plaintiffs and Appellants, v. HSBC BANK NATIONAL ASSOCIATION, Defendant and Respondent. A (Alameda County Super. Ct. No. HG ) In 2006, Richard Erchinger borrowed $608,000 to purchase a home. He signed a promissory note secured by a deed of trust. Richard went into default by 2008, a default that reached over $100,000. Notices of trustee s sale were recorded, but no sale occurred. In 2015, Richard, joined by his wife Carolyn (when referred to collectively, the Erchingers), filed a complaint naming 10 defendants, eight entities and institutions and two individuals. The complaint alleged six causes of action: (1) fraud; (2) violation of Business and Professions Code section 17200; (3) conspiracy; (4) quasi-contract; (5) negligence; and (6) cancellation of void instruments. Defendants demurred to all causes of action, and the trial court sustained them all, three with leave to amend, three without. The Erchingers did not amend, and on motion of defendants, the trial court dismissed the remaining three claims, and thereafter entered judgment dismissing the complaint. 1

2 We affirm, concluding that the Erchingers have not adequately alleged any of the causes of action and, most fundamentally, have not alleged, and cannot allege, their claim for cancellation, the claim, as they describe it, that is the linchpin of their complaint. BACKGROUND The Facts The hundreds of pages in the six briefs filed in this appeal two briefs on behalf of the Erchingers, and four separate briefs, filed by four separate firms, on behalf of defendants describe in detail the activity that occurred vis-à-vis the Erchingers note and deed of trust. Most of that detail is not necessary to our discussion here. We thus discuss the general background, much of which is taken from the Erchingers complaint, the numerous exhibits attached to it, and documents of which the trial court was requested to take judicial notice. In November 2006, Richard obtained a loan in the amount of $608,000; the lender was X Bancorp. The loan was secured by a deed of trust on the property at 5124 Keystone Drive, Fremont (the property). The deed of trust identified Richard as borrower, X Bancorp as lender, Fidelity National Title Company as trustee, and Mortgage Electronic Registration Systems, Inc. (MERS) as beneficiary. MERS was identified as beneficiary acting solely as a nominee for [l]ender and [l]ender s successors and assigns. Under the heading Transfer of Rights in the Property, the deed of trust provided that [t]he beneficiary of this [s]ecurity [i]nstrument is MERS... and the successors and assigns of MERS. 1 By 2008, Richard had fallen behind on his payments, and by December 2010, the principal balance on the loan was $618,626, in addition to almost $100,000 in interest and fees. That arrearage continued to increase. 1 As explained, for example, by the Court of Appeals in Rajamin v. Deutsche Bank Nat l Trust Co. (2d Cir. 2014) 757 F.3d 79, (Rajamin), the originating lenders frequently pool residential loans and sell them to a securitization trust, and the trustee, typically a bank, owns and holds the loans for the benefit of investors in the securitization trust. It parcels the right to receive the borrowers payments into interests represented by certificates, and sells these residential mortgage-backed securities to investors. 2

3 In August 2011, MERS executed and recorded an assignment of the deed of trust, transferring the interest to Bank of America. The assignment was signed by Swarupa Slee on behalf of MERS. In August 2012, Bank of America substituted ReconTrust for Fidelity, as trustee under the deed of trust, and concurrently executed and recorded a corporate assignment of the deed of trust, reflecting the transfer of its interest in the deed of trust to HSBC. In August 2012, ReconTrust, as agent for the beneficiary, recorded a notice of default reflecting an arrearage of $117, Richard did nothing to cure the default, and in November 2012, ReconTrust recorded a notice of trustee s sale. Additional notices were recorded in May, September, and November In December 2014, HSBC executed and recorded a corporate assignment of the deed of trust reflecting transfer of the beneficial interest to Nationstar Mortgage LLC. In January 2015, a substitution of trustee was recorded identifying Barrett, Daffin, Frappier, Treder & Weiss, LLP, as trustee under the deed of trust. No foreclosure sale has occurred. The Proceeding Below On January 21, 2015, the Erchingers filed a complaint, followed five days later by a verified first amended complaint (FAC), the operative pleading here. 2 The FAC named 10 defendants: HSBC Bank USA, NA, as trustee; BAC Home Loans Servicing LP, formerly known as Countrywide Home Loans Servicing LP; Bank of America, NA; MERS; ReconTrust Company NA; Nationstar Mortgage LLC; Parkash Mann; Swarupa Slee; Texas Capital Bank NA; and Barrett, Daffin, Frappier, Treder and Weiss LLP. It alleged six causes of action: (1) fraud; (2) violation of Business and Professions Code 2 This is the third lawsuit of which we are aware the Erchingers have filed arising out of their situation. The first was Alameda County Superior Court action no. HG , apparently filed on their own behalf on January 27, It was dismissed by the Erchingers in March The second was United States District Court case no. C WHA, apparently filed by an attorney representing them sometime in The case was dismissed on November 26, 2014, prior to the filing of an Answer or Motion for Summary Judgment. 3

4 section 17200; (3) civil conspiracy; (4) quasi-contract; (5) negligence; and (6) cancellation of void instruments. All claims were alleged against all defendants. The FAC was 63 pages long, and had attached 24 exhibits. All told, with the exhibits, the Erchingers pleading was 180 pages. We will not attempt to describe all that the Erchingers alleged. Suffice to say that among the essential allegations was that the loan was assigned to the securitized trust after the closing date listed in the pooling and servicing agreement, and therefore none of the defendants had authority to initiate foreclosure. The FAC also alleged that the assignments, substitutions, and notice of default were invalid and robo-signed because MERS and the signatories were without authority to execute the documents after X Bancorp was no longer in business. Demurrers were filed on behalf of all defendants, specifically three separate demurrers filed by three different law firms, each representing some of the defendants. All demurrers were set for hearing on April 30, The Erchingers filed oppositions, and defendants replies. The demurrers came on for hearing as scheduled before the Honorable Ioana Petrou, who had issued tentative rulings. The Erchingers contested those rulings, and the matter came on for hearing. Judge Petrou thereafter filed separate orders on the demurrers, orders that included specific reference to any specific fact(s) that distinguished one defendant s position from another s. And, of course, certain of the rulings were applicable to all of the demurrers. Judge Petrou s orders sustained the demurrers to all six causes of action, three with leave to amend, three without. Specifically, Judge Petrou sustained with leave to amend the demurrers to the first (fraud), second (Business and Professions Code section 17200), and fourth (quasi-contract) causes of action. She sustained without leave to amend the third (conspiracy), fifth (negligence), and sixth (cancellation of void instruments). As to the latter rulings, Judge Petrou explained in detail the reasons for her conclusions, explanations that included the following: 4

5 The Demurrer to the Third Cause of Action for Conspiracy is SUSTAINED. Conspiracy is not a cause of action, but rather a legal doctrine imposing liability on persons who do not actually commit a tort themselves, but instead share with the actual tortfeasor a common plan or design in its preparation. (See Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, ) Plaintiffs may include conspiracy allegations in their fraud cause of action, if they can plead facts demonstrating that each of the alleged conspirators agreed to form a conspiracy with the alleged tortfeasor(s) to defraud Plaintiffs, and that Plaintiffs were actually defrauded. [ ]... [ ] The Demurrer to the Fifth Cause of Action for Negligence is SUSTAINED, WITHOUT LEAVE TO AMEND. As a general rule, a financial institution does not owe any duty of care to a borrower where the institution s involvement in the loan transaction doesn t exceed the scope of its conventional role as a lender or loan servicer. (See Nymark v. Heart Federal Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, ) Plaintiffs fail to allege any facts taking their claim outside this general rule. Rather, Plaintiffs (vaguely) allege that Defendants acted fraudulently, which is at most duplicative of their First Cause of Action. The Demurrer to the Sixth Cause of Action for Cancellation of Void Instruments is SUSTAINED, WITHOUT LEAVE TO AMEND. Plaintiffs seek to cancel one or more assignments of the deed of trust that is the subject of this action, and of the adjustable rate note that was secured by that deed of trust. Plaintiffs contend MERS lacked authority to assign any interest in the subject deed of trust in 2011, because of the demise of original lender X Bancorp in 2009 and under the operation of NY Trust Law. Plaintiffs claims are not supported by California law, or by the terms of the subject deed of trust. The deed of trust provided (on pages 1-3) that MERS was the beneficiary and nominee of the lender and the lenders successors and assigns, with the power to exercise any right on behalf of the lender or its successors or assigns. Therefore, under the terms of the subject deed of trust to which Plaintiff Richard Erchinger agreed, MERS did have the authority to assign the deed of trust to BAC Home 5

6 Loans Servicing LP. (See Gomes v. Countrywide Home Loans Inc. (2011) 192 Cal.App.4th 1149, ) To the extent that the Sixth Cause of Action is based on any alleged failure by any Defendants to comply with the terms of the Pooling and Servicing Agreement for the securitized loan, Plaintiffs do not allege that they were parties to that Agreement and lack standing to allege any such claim. (See Jenkins v. JPMorgan Chase Bank NA (2013) 216 Cal.App.4th 497, 515.) California law does not recognize a lawsuit to determine whether the entity initiating a nonjudicial foreclosure proceeding is authorized to do so by the owner of the loan. (See Gomes, supra, 192 Cal.App.4th at ) Furthermore, even assuming arguendo that there was some irregularity in the execution of the assignment of the subject deed of trust or note, a borrower challenging such assignment must demonstrate that the alleged irregularity was prejudicial to his interests. (See Fontenot v. Wells Fargo Bank NA (2011) 198 Cal.App.4th 256, 272.) Here, the assignment merely substituted one creditor for another. Plaintiffs do not allege that they were current in their loan payments, thereby implicitly conceding their default, and they do not allege that the assignment interfered in any manner with their ability to repay the loan. If MERS or any other Defendants indeed lacked authority to assign the subject deed of trust or note, the true victim was not Plaintiffs, but the purported actual (but unidentified) owner of the subject deed of trust or note. (Id.; see also Jenkins, supra, 216 Cal.App.4th at ) Finally, in light of her rulings, Judge Petrou provided this guidance to the Erchingers in connection with their possible amendment: In amending, Plaintiffs may allege three, and only three, causes of action, for (l) Fraud, (2) Violation of Business & Professions Code 17200, and (3) Quasi Contract, further limited as set forth above. Any other causes of action will be stricken, upon a noticed motion by Defendants. Plaintiffs may not allege any claims based on a contention that Defendants have no legal right to initiate or pursue nonjudicial foreclosure proceedings because of any alleged irregularity in the assignment of the subject deed of trust or note. This Order does not preclude Plaintiffs from later filing a noticed motion seeking leave to further amend their pleading to assert any additional meritorious claims they may have. 6

7 Judge Petrou s orders were filed on May 1, and notice of entry was served on the Erchingers as early as May 6. On May 8, the Erchingers filed an appeal from that order. On June 2, we dismissed the appeal. At a case management conference on June 15, the trial court ordered the Erchingers to file an amended complaint by July 9. The next day, June 16, the Erchingers filed another appeal. On July 7, we issued a second order dismissing the appeal as improper. The Erchingers did not submit an amended complaint in compliance with Judge Petrou s orders, and defendants filed motions to dismiss pursuant to Code of Civil Procedure section 581. Judge Petrou granted them, dismissed the action, and entered judgment for defendants. The Erchingers filed a timely appeal. DISCUSSION Standard of Review On appeal from a judgment after the court sustains a general demurrer without leave to amend, we determine whether the complaint states facts sufficient to constitute a cause of action. We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions. We also consider matters that can be judicially noticed. And we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. When the demurrer is sustained without leave to amend, we reverse if there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We also consider documents attached to the complaint, as well as matters subject to judicial notice. (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400.) And when the allegations of the complaint contradict or are inconsistent with [the judicially noticeable facts], we accept the latter and reject the former. (Blatty v. New York Times Co. (1986) 42 Cal.3d 1033, 1040.) As we have summed it up, allegations in a complaint must yield to contrary allegations contained in exhibits to a complaint. (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946.) 7

8 Introduction to the Analysis The Erchingers have filed a 67-page opening brief and a 37-page reply brief. After some introductory references to the law on demurrers, the opening brief has an early section (on page 5) called Elements of the Action. That section begins as follows: A. The FAC s Sixth Cause of Action, for Cancellation of Instruments. Then, after several pages of discussion, the brief refers to the MERS purported assignment to BAC Home Loans in 2011 as one of the issues pleaded. The brief then goes on about the status of MERS and their legal ability to act, and concludes the section by stating this: even though the Court did grant leave to amend on three causes of actions [sic] Fraud, Quasi Contract and Violation of Business & Professions Code the court restricted what Appellants could plead, going on to quote Judge Petrou s guidance set out above. The Erchingers then contend this was highly prejudicial to Appellants [sic] ability to amend the complaint in any form, as the legality of these assignments is the linchpin to Appellants [sic] causes of action. Or, as the Erchingers put it at a later point, Judge Petrou improperly prohibited them from alleging claims based on any alleged irregularity in the assignment of the subject deed of trust or note, [w]hich was clearly the basis for the Appellants [sic] complaint. So, the linchpin, the basis, of the Erchingers position is the claimed invalidity of the assignments. And at the heart of that claim, repeated in one way or another throughout the briefs, are arguments attacking the assignments, arguments that fundamentally rely on Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919 (Yvanova), a case the Erchingers cite five times in their opening brief and nine times in their reply. And scattered throughout the Erchingers brief are these arguments: The language of the deed of trust gives the Erchingers the power to challenge the power of a party to foreclose. Judge Petrou committed reversible error in determining that California law does not recognize a lawsuit to determine whether the entity initiating a nonjudicial foreclosure is authorized to do so by the owner of the loan when clearly the Home 8

9 Owners Bill of rights [sic] and Appellants [sic] deed of trust gives the Appellants those very rights. Yvanova allows the Erchingers to make a pre-foreclosure challenge to what they allege are void assignments and the securitization of their loan, because it could not be the Legislature s intent to allow parties with no beneficial interest to foreclose on a homeowner, and common sense requires that before an entity or person can enforce a contract to collect a debt they must first show they are entitled to enforce the contract. The Erchingers reply brief asserts that Appellants Have the Right to Bring Preemptive Action, and indeed goes so far as to assert that Appellees[ ] contention that the Supreme Courts [sic] findings in Yvanova does not apply to pre foreclosure cases is absurd. The Erchingers are wrong and Yvanova does not support them. In fact, and as the Supreme Court expressly noted, that case did not involve the Erchingers situation. The Erchingers Do Not State, and Cannot State, a Claim Under Yvanova Yvanova borrowed $483,000 in 2006, in connection with which she executed a deed of trust securing the loan on a residential property in Woodland Hills. (Yvanova, supra, 62 Cal.4th at p. 924.) Various assignments of the deed of trust occurred, the last substituting Western Progressive, LLC as trustee. (Id. at p. 925.) Then, as the Supreme Court described it, A recorded trustee s deed upon sale dated December 24, 2012, states that plaintiff s Woodland Hills property was sold at public auction on September 14, The deed conveys the property from Western Progressive, LLC, as trustee, to the purchaser at auction. (Ibid.) Yvanova sued, her operative second amended complaint alleging just one cause of action, for quiet title. Defendants demurred, and the trial court sustained the demurrer without leave to amend. Again in the words of the Supreme Court, The Court of Appeal affirmed the judgment for defendants on their demurrer. The pleaded cause of action for quiet title failed fatally, the court held, because plaintiff did not allege she had tendered payment of her debt. The court went on to discuss the question, on which it had sought and received briefing, of whether plaintiff could, on the facts alleged, amend her 9

10 complaint to plead a cause of action for wrongful foreclosure. (Yvanova, supra, 62 Cal.4th at p. 926.) The Supreme Court went on to observe that the Court of Appeal concluded leave to amend was not warranted, relying on Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497 (Jenkins). (Yvanova, supra, 62 Cal.4th at p. 926.) The Court of Appeal also acknowledged that plaintiff s authority, Glaski v. Bank of America, [(2013)] 218 Cal.App.4th 1079 (Glaski), conflicted with Jenkins on the standing issue, but the court agreed with the reasoning of Jenkins and declined to follow Glaski. (Yvanova, supra, 62 Cal.4th at p. 926.) The Supreme Court granted plaintiff s petition for review, limiting the issue to be briefed and argued to the following: In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void? (Ibid.) The Supreme Court went on to answer that question in the affirmative, but not in any way applicable here. To the contrary, in the very introduction of the opinion, the Supreme Court observed as follows: Our ruling in this case is a narrow one. We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment. We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party s right to proceed. Nor do we hold or suggest that plaintiff in this case has alleged facts showing the assignment is void or that, to the extent she has, she will be able to prove those facts. Nor, finally, in rejecting defendants arguments on standing do we address any of the substantive elements of the wrongful foreclosure tort or the factual showing necessary to meet those elements. (Yvanova, supra, 62 Cal.4th at p. 924.) While the Supreme Court went on to disapprove four opinions, including Jenkins, it did so only to the extent they held borrowers lack standing to challenge an assignment of the deed of trust as void. (Yvanova, supra, 62 Cal.4th at p. 934, fn. 13.) As its 10

11 invocation of Jenkins holding on preemptive challenges to foreclosure authority confirms, the Supreme Court made it clear that these decisions otherwise remain valid: This aspect of Jenkins, disallowing the use of a lawsuit to preempt a nonjudicial foreclosure, is not within the scope of our review.... (Yvanova, supra, 62 Cal.4th at p. 934.) Or, as the court said at an earlier point, We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party s right to proceed. (Yvanova, supra, 62 Cal.4th at p. 924.) That, of course, is the Erchingers position here. A month after Yvanova, the Fourth District Court of Appeal filed Saterbak v. JPMorgan Chase Bank (2016) 245 Cal.App.4th 808 (Saterbak). It is dispositive of the Erchingers position, holding as follows: The California Supreme Court recently held that a borrower has standing to sue for wrongful foreclosure where an alleged defect in the assignment renders the assignment void. (Yvanova, supra, 62 Cal.4th at pp ) However, Yvanova s ruling is expressly limited to the post-foreclosure context. (Id. at pp [ narrow question under review was whether a borrower seeking remedies for wrongful foreclosure has standing, not whether a borrower could preempt a nonjudicial foreclosure].) Because Saterbak brings a preforeclosure suit challenging Defendant s ability to foreclose, Yvanova does not alter her standing obligations. Moreover, Yvanova recognizes borrower standing only where the defect in the assignment renders the assignment void, rather than voidable. (Yvanova, supra, 62 Cal.4th at pp ) Unlike a voidable transaction, a void one cannot be ratified or validated by the parties to it even if they so desire. (Id. at p. 936.) Yvanova expressly offers no opinion as to whether, under New York law, an untimely assignment to a securitized trust made after the trust s closing date is void or merely voidable. (Id. at pp ) We conclude such an assignment is merely voidable. (See Rajamin, supra, 757 F.3d 79, at p. 89 [ the weight of New York authority is contrary to plaintiffs contention that any failure to comply with the terms of the [PSAs] rendered defendants 11

12 acquisition of plaintiffs loans and mortgages void as a matter of trust law ; an unauthorized act by the trustee is not void but merely voidable by the beneficiary ].) Consequently, Saterbak lacks standing to challenge alleged defects in the MERS assignment of the DOT to the 2007-AR7 trust. (Saterbak, supra, 245 Cal.App.4th at p. 815, fns. omitted.) The Supreme Court denied review in Saterbak. Since Saterbak an additional Court of Appeal has issued an opinion reaching essentially the same conclusion, a conclusion devastating to the Erchingers: Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802. In sum, Judge Petrou s ruling on the linchpin claim was correct: the Erchingers did not, and cannot, state a claim for cancellation. Likewise her rulings on the two other causes of action sustained without leave to amend conspiracy and negligence. As quoted above, Judge Petrou held that conspiracy is not a cause of action, citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd., supra, 7 Cal.4th at p The Erchingers claim to disagree with Judge Petrou s ruling, citing Penal Code section 182. But they nevertheless concede that [a]bsent commission of the underlying tort, civil conspiracy is not a cause of action. They go on to assert that the FAC sufficiently pleads the elements of civil conspiracy, in particular that the defendants conspired to defraud the plaintiffs, and... that the defendants carried out the object of the conspiracy thereby damaging the plaintiffs. This argument has no merit, especially as demonstrated later in this opinion, the Erchingers fraud claim is insufficient. As to the Erchingers claim for negligence, Judge Petrou accurately quoted the rule that a prerequisite to establishing a claim for negligence is a duty owed by defendant, and that as a general rule, a financial institution owes no duty of care to a borrower when the institution s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money. (Nymark v. Heart Fed. Savings & Loan Assn., supra, 231 Cal.App.3d at p ) The Erchingers do nothing to bring themselves without this general rule. 12

13 The Erchingers assert, in a brief four lines, that MERS owed a duty to not allow fraudulent assignments without authorization of the lender. Whatever that argument is supposed to mean, it is made without any analysis or supporting authority. It thus cannot succeed, as we recently held in Needelman v. DeWolf Realty Co., Inc. (2015) 239 Cal.App.4th 750, 762. There, rejecting a plaintiff s appeal from a demurrer sustained against him, we noted that It is not this court s role to construct arguments that would undermine the lower court s judgment and defeat the presumption of correctness. Rather, an appellant is required to present a cognizable legal argument in support of reversal of the judgment and when the appellant fails to support an issue with pertinent or cognizable argument, it may be deemed abandoned and discussion by the reviewing court is unnecessary. (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, ) Issues not supported by argument or citation to authority are forfeited. (See, e.g., People ex rel. Reisig v. Acuna (2010) 182 Cal.App.4th 866, 873; Jones v. Superior Court (1994) 26 Cal.App.4th 92, 99.) (Needelman v. DeWolf Realty Co., Inc., supra, 239 Cal.App.4th at p. 762.) The Erchingers also assert they have stated a claim for negligence because they alleged aiding and abetting. They cite only Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, which recognized potential liability for an intentional tort, not negligence. We turn to the three causes of action as to which Judge Petrou sustained the demurrers with leave to amend: fraud, Business and Professions Code section 17200, and quasi-contract. To begin with, and as noted, the Erchingers did not attempt to amend. So, as we said in Giraldo v. Department of Corrections & Rehabilitation (2008) 168 Cal.App.4th 231, 252, when a demurrer is sustained with leave to amend but the plaintiff declines to amend, the appellate court will presume the plaintiff has stated the strongest case possible, and all ambiguities and uncertainties will be resolved against him or her. And the Erchingers strongest case falls short. Indeed, the Erchingers briefs do little more than mention their causes of action. They do not set forth the elements of any of them. 13

14 A cause of action for fraud must allege: (1) misrepresentation of a material fact; (2) knowledge of falsity (or scienter); (3) intent to defraud; (4) justifiable reliance on the misrepresentation; and (5) damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) When pleading fraud against a corporate defendant, as here, the requirements include that plaintiffs must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) Specific allegations of justifiable reliance are also required. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 976.) And that reliance must be reasonable. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 393.) The Erchingers pleading does not measure up. There are no allegations of any specific representations made to the Erchingers by the defendants, no allegation of the names [of the speakers], their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co., supra, 2 Cal.App.4th at p. 157.) Simply, the Erchingers also do not identify any actionable fraudulent conduct. The deed of trust authorized MERS to assign it, so no actionable conduct can stem from the assignment. The foreclosure was initiated after the Erchingers defaulted on their loan obligations under the terms of the Erchingers note and deed of trust. Lastly, and fundamentally, there are no specific allegations of identifiable out-of-pocket loss. The fraud claim was not, as the Erchingers describe it, appropriately pled. Nor were the other two claims. The Erchingers second cause of action was for Business and Professions Code section Once again, without citation to authority or reasoned argument, the Erchingers assert they have properly pled a section claim against all defendants based on fraudulent conduct and unlawful conduct. Their argument is insufficient. (Needelman v. DeWolf Realty Co., Inc., supra, 239 Cal.App.4th at p. 762.) So is their pleading. Only a person who has suffered injury in fact and has lost money or property as a result of the unfair competition can bring such claim. (Bus. & Prof. Code, ) 14

15 The phrase as a result of in its plain and ordinary sense means caused by and requires a showing of a causal connection or reliance.... (Animal Legal Defense Fund v. LT Napa Partners LLC (2015) 234 Cal.App.4th 1270, 1279.) Moreover, A plaintiff alleging unfair business practices [under the UCL] must state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly s of California, Inc. (1993) 14 Cal.App.4th 612, 619.) The Erchingers pleading here does not measure up. MERS s authority to assign the deed of trust is specifically provided for in the deed. Any subsequent assignment or foreclosure action is proper and supported by the chain of title. There are no reasonably particular facts pled that would demonstrate fraudulent business practices likely to deceive the public, nor any unfair conduct violating any public policy. The Erchingers defaulted on their loan and proceeded to file a preemptive action. Judge Petrou correctly found that the Erchingers FAC was overly vague and conclusory and therefore insufficient. Finally, the cause of action for quasi-contract was properly sustained. [A] quasi-contract action for unjust enrichment does not lie where, as here, express binding agreements exist and define the parties rights. [Citations.] When parties have an actual contract covering a subject, a court cannot not even under the guise of equity jurisprudence substitute the court s own concepts of fairness regarding that subject in place of the parties own contract. [Citation.] (California Medical Assn. v. Aetna U.S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151, 172; accord, Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 203 [ it is well settled that an action based on an implied-in-fact or quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter ].) Some Closing Observations The Erchingers also argue that they Have Standing to Bring This Action. The argument is fundamentally premised on Garfinkle v. Superior Court (1978) 21 Cal.3d 268; and, the Erchingers add, this was recently reaffirmed in the Homeowner s Bill of 15

16 Rights. The reference to the Homeowner s Bill of Rights has never been asserted before. It has no place here. (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 767.) It also has no merit, as recently held in Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, where the borrower made an argument based on the Homeowner s Bill of Rights. The Court of Appeal rejected it, holding that the borrower could not seek to enjoin a foreclosure based on a claim that the foreclosing party lacked authority to foreclose. (Lucioni v. Bank of America, N.A., supra, 3 Cal.App.5th at p. 155.) 3 The Erchingers assert that MERS has no authority to transfer or assign the deed of trust [f]irst and foremost, the deed of trust contains no specific language that it can do so. This is simply wrong. Under the heading, TRANSFER OF RIGHTS IN THE PROPERTY, the deed of trust states in pertinent part that The beneficiary of this Security Instrument is MERS... and the successors and assigns of MERS. It further states, MERS (as nominee for Lender and Lender s successors and assigns) has the right: to exercise any or all of those interests.... California appellate courts have repeatedly held that this language necessarily includes the authority to assign the deed of trust. (Saterbak, supra, 245 Cal.App.4th at p. 816.) As Justice Croskey put it in dealing with MERS itself, California courts have held that a trustor who agreed under the terms of the deed of trust that MERS, as the lender s nominee, has the authority to exercise all of the rights and interests of the lender, including the right to foreclose, is precluded from maintaining a cause of action based on the allegation that MERS has no authority to exercise those rights. (Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 83, disapproved on other grounds in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.) DISPOSITION The judgment is affirmed. Defendants shall recover their costs on appeal. 3 We deny the Erchingers request for judicial notice of two State of California real estate documents. 16

17 Richman, J. We concur: Kline, P.J. Stewart, J. 17