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Siliga v. Mortgage Electronic Registration Systems, Inc.

California Court of Appeals, Second District, Third Division

August 27, 2013

JOHNNY SILIGA et al., Plaintiffs and Appellants,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., et al., Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC454905, Gregory W. Alarcon, Judge.

Law Offices of Nick A. Alden and Nick A. Alden for Plaintiffs and Appellants.

Locke Lord, Conrad V. Sison and Daniel A. Solitro for Defendants and Respondents.

CROSKEY, J.

Johnny Siliga and Fa’alagilagi Siliga appeal a judgment dismissing their complaint against Mortgage Electronic Registration Systems, Inc. (MERS), Quality Loan Services Company (QLS) and Deutsche Bank National Trust Company (Deutsche Bank) after the sustaining of a demurrer without leave to amend. The Siligas allege four counts arising from a nonjudicial foreclosure. They challenge MERS’s authority to assign the deed of trust and the note to Deutsche Bank and QLS’s authority to record a notice of default. They also contend they are entitled to leave to amend their complaint to correct particular defects. We conclude that they have shown no error and will affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background

The Siligas executed a deed of trust in June 2004 against real property, their primary residence, located in Carson, California. The deed of trust secured a $280, 000 promissory note in favor Accredited Home Lenders, Inc (Accredited). The deed of trust identified the Siligas as “Borrower” and Accredited as “Lender.”

The deed of trust stated, “MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is the beneficiary under this Security Instrument.” It stated further, “The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender’s successors and assigns) and the successors and assigns of MERS, ” and “Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property, and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.”

QLS recorded a notice of default and election to sell under deed of trust on March 24, 2010. The notice of default stated that QLS was acting as agent for the beneficiary. A Corporate Assignment of Deed of Trust was recorded on April 28, 2010, stating that MERS was assigning to Deutsche Bank the deed of trust “[t]ogether with the note or notes therein described or referred to.... ” Deutsche Bank executed a substitution of trustee in May 2010 naming QLS as the new trustee, and the document was recorded on May 19, 2010. QLS recorded a notice of trustee’s sale on August 19, 2010.

The trustee’s sale was postponed and apparently has not occurred to this date.

2. Trial Court Proceedings

The Siligas filed a complaint in February 2011 and filed a first amended complaint against MERS, QLS and Deutsche Bank in May 2011. They allege in pertinent part that (1) MERS as nominee for the lender had no authority to assign the deed of trust and the note to Deutsche Bank; (2) Deutsche Bank had no authority to commence a nonjudicial foreclosure because it was never validly assigned and did not possess the promissory note; (3) the defendants failed to comply with the statutory requirement of attempting to contact the borrower in person or by telephone to assess the borrower’s financial situation and explore options to avoid foreclosure before recording a notice of default (Civ. Code, § 2923.5, subd. (a)(2)); (4) the notice of trustee’s sale was recorded before the expiration of the 90-day waiting period required under former Civil Code section 2923.52, subdivision (a); and (5) QLS failed to timely post a notice of trustee’s sale on the property and failed to timely notify them of the sale.

The Siligas plead counts for (1) breach of contract, alleging that QLS breached the deed of trust by recording a notice of default before it was appointed as trustee; (2) violation of statutory duties, alleging that the defendants’ acts and omissions set forth above violated numerous statutory requirements; (3) unfair business practices, alleging that the same acts and omissions constituted unlawful or unfair business practices under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.); and (4) quiet title, seeking to invalidate all adverse claims of interest in the property. They filed ...


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