No.

B287048

IN THE CALIFORNIA COURT OF APPEAL

SECOND APPELLATE DISTRICT, DIVISION 5
_____________________________________________________
SHERRY HERNANDEZ,

Plaintiff and Appellant,

v.

PNMAC MORTGAGE OPPORTUNITY FUND INVESTORS, LLC,

aka PNMAC MORTGAGE OPPORTUNITY FUND INVESTORS,
LP; PENNYMAC LOAN SERVICES, LLC; and DOES 1-20,
inclusive,

Defendants and Respondents

_____________________________________________
Appeal from the Los Angeles County Superior Court

Case No. YC068794

Honorable Ramona G. See, Department M

______________________________________________________

APPELLANT’S OPENING BRIEF

___________________________________________________

IMPERIALE LAW GROUP

Attorneys for Plaintiff-Appellant


 CERTIFICATE OF INTERESTED ENTITIES OR PERSONS

Pursuant to Rule of Court 8.208, the following entities or

persons have an ownership interest of 10% or more in the
parties filing this certificate: None.

DATED: December 5, 2018 Respectfully submitted,

IMPERIALE LAW GROUP

_________________________

HERNANDEZ LAW OFFICE

_________________________

Attorneys for Appellant

SHERRY HERNANDEZ


2
 TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................5

GLOSSARY .......................................................................................... 10

I. INTRODUCTION AND SUMMARY OF ARGUMENT ...................12

II. STATEMENT OF APPEALABILITY ................................................14

III. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND ......14

A. The cornerstone of this case is the 2008 refinancing of

Plaintiff’s original purchase money loan. ........................14

B. PennyMac becomes the loan servicer and the

foreclosure process begins immediately, although the
loan was not in default ................................................... 15

C. After the wrongful foreclosure PNMAC sues Plaintiff in

Unlawful Detainer Court and fraudulently claims the
$20,000 in the court registry ..........................................16

D. The first appeal resolves the issue of standing, and that

Plaintiff should be, and was given leave to amend her
complaint .......................................................................17

E. The Third Amended Complaint includes 51 exhibits in

support of the allegations and facts contained therein,
including additional facts that came to light since this
Court ruled on the first appeal .......................................17

IV. STANDARD OF REVIEW ..............................................................18

V. LAW AND ARGUMENT ................................................................19

A. The case for wrongful foreclosure: The Third Amended

Complaint pleads sufficient facts to support an allegation
of void assignment of the deed of trust ......................... 19

B. Where the tender rule is an element of an action for

wrongful foreclosure, a void assignment is a recognized
exception to the requirement of tender; Plaintiff is
excused from tender for this and other exceptions ....... 27

VI. THE ABUSE OF DISCRETION .....................................................32

3
 A. The trial court narrowed the scope of the 2016 Opinion
when it limited the TAC to one cause of action and one
line of argument .............................................................32

B. The trial court did not address Plaintiff’s allegation that

when PennyMac acquired the loan servicing rights the
Note was not in default and a Trial Payment Loan
Modification Plan with CMI was almost completed ....... 35

C. The Ruling did not address issues raised in the TAC that
are germane to the complaint, such as the multiple
claimants to the Note; that PNMAC’s ownership interest
was in question; and that PNMAC has offered no
credible proof of ownership interest. .............................37

VII. THE THIRD AMENDED COMPLAINT PLEADS FACTS

SUFFICIENT TO ALLEGE ADDITIONAL CAUSES OF ACTION
AND THOSE FACTS IDENTIFY DEFENDANTS NOW SUED AS
DOES .......................................................................................... 39

A. The TAC pleads sufficient facts for a wrongful foreclosure

and additional causes of action .....................................39

B. Plaintiff is no longer ignorant within the meaning of

C.C.P. § 474 of the identity of the fictitiously named
defendants and needs to amend the complaint to identify
Doe 1 and Doe 2 by their proper names ........................46

VIII. CONCLUSION ............................................................................49

CERTIFICATE OF COMPLIANCE .........................................................50

4
 TABLE OF AUTHORITIES
Cases Page

Alimena v. Vericrest Fin., Inc., 964 F. Supp. 2d 1200 (S.D. Cal.

2013) .....................................................................................41, 42
Anderson v. Aronsohn, (1919) 181 Cal. 294, 184 P. 12 .............27
Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal. 3d 493 ..............39
The Bank of New York Mellon v. Preciado (2013) 224 Cal. App.
4th Supp. 1 .................................................................31, 32
Barnes v. Wilson, (1974) 40 Cal. App. 3d 19 ...............................47
Baypoint Mortgage Corp. v. Cre st Premium Real Estate etc..
Trust (1985) 168 Cal. App. 3d 818 .................................... 31
Blank v. Kirwan (1985) 39 Cal. 3d 311 ...................................20, 43
Buckaloo v. Johnson (1975) 14 Cal.3d 815 .................................43
Culhane v. Aurora Loan Servs., (2011) 826 F. Supp. 2d 352 .......24
Del E. Webb Corp. v. Structural Materials Co., (1981) 123
Cal. App. 3d 593 ...............................................................39
Dimock v. Emerald Properties LLC, (2000)81 Cal. App. 4th 868,
97 Cal. Rptr. 2d 255 ....................................................................30
Douglass v. Guardian Holding Corp. (1933) 132 Cal. App.
585, 23 P.2d 80 ..................................................................29
Dover v. Sadowinski (1983) 147 Cal. App. 3d 113, 194 Cal.
Rptr. 866 ............................................................................48
Garton v. Title Ins. & Trust Co. (1980) 106 Cal. App. 3d
365, 165 Cal. Rptr. 374 ....................................................27
General Motors Corp. v. Superior Court (1996) 48 Cal. App. 4th
580, 55 Cal. Rptr. 2d 871 ............................................................48
Hacker v. Homeward Residential, Inc., (2018) 26 Cal. App. 5th
270 .............................................................................20-22, 39, 41

5
Hernandez v. City of Pomona, (1996) 49 Cal. App. 4th 1492…..19
Herschfelt v. Knowles-Raymond Granite Co., (1955) 130
Cal. App. 2d 347, 279 P.2d 104 .........................................48
Hill v. Miller, (1996) 64 Cal. 2d 757 ..............................................19
Hocking v. Title Ins. & Trust Co., (1951) 37 Cal. 2d 644, 234 P. 2d
625) ............................................................................................. 32
Hungate v. Wells, (1933) 129 Cal. App. 133, 18 P.2d 64 .............28
Joost v. Craig, (1901) 31 Cal. 504, 63 P. 840, 82 Am. St. Rep.
374…………… ............................................................................27
Kajima/Ray Wilson v. Los Angeles Metro. Transp. Auth., 23
Cal. 4th 305 .........................................................................41
Kessler v. Bridge (1958) 161 Cal. App. 2d Supp. 837 .................31
Kulshrestha v. First Union Commercial Corp., (2004) 33 Cal.
4th 601, 15 Cal. Rptr. 3d 793, 93 P. 3d 386 .........................32
Laks v. Coast Fed. Sav. & Loan Assn., (1976) 60 Cal.App. 3d
885, 131 Cal.Rptr 836 .......................................................41
Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 [49 Cal. Rptr.
2d 377, 909 P.2d 981] .................................................................45
Lester v. J.P. Morgan Chase Bank, N.A., 926 F. Supp. 2d 1081,
1092(N.D. Cal. 2013 ...........................................................30
Lona v. Citibank, NA (2011) 202 Cal.App.4th 89,104.) ................20
Lovejoy v. AT&T Corp. (2001) 92 Cal. App. 4th 85, 111
Cal. Rptr. 2d 711 ................................................................45
Mary M. v. City of Los Angeles, (1991) 54 Cal.3d 202, 209. .......46
Miller v. Homecomings Financial, LLC (S.D.Tex. 2012) 881
F. Supp. 2d 825 ................................................................... 40
Onofrio v. Rice, (1997) 55 Cal. App. 4th 413, 64 Cal. Rptr. 2d
74 ................................................................................29, 30

6
Orcilla v. Big Sur, Inc., (2016) 244 Cal. App. 4th 982, 198 Cal.
Rptr. 3d 715 ......................................................................41
Oskoui v. J.P. Morgan Chase Bank, N.A., F.3d, 851 F. 3d 851
(9th Cir. 2017) ....................................................................37
Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal. 4th 965 .......42
Ragland v. U.S. Bank National Assn., (2012) 209 Cal. App. 4th
182 ............................................................................................. 44
Reinagel v. Deutsche Bank National Trust Co., (5th Cir. 2013) 735
F. 3d 220 .....................................................................................40
Sanabria v. Pennymac Mortg. Inv. Tr. Holdings I, LLC, 197 So.
3d 94 (Fla. Dist. Ct. App. 2016 .........................................27
Schifando v. City of Los Angeles
(2003) 31 Cal. 4th 1074, 1081 .......................................….19
Seidell v. Anglo-California Trust Co., (1942) 55 Cal. App. 2d
913, 912 [132 P.2d 12] .....................................................32
Stockton v. Newman (1957) 148 Cai.App.2d 558, 564 ...............29
Strutt v. Ontario Sav. & Loan Assn. (1972) 28 Cal. App. 3d
866, 105 Cal. Rptr. 395 Smith v. Allen (1968) ...................21
Sundquist v. Bank of Am., N.A., 566 B.R. 563 (Bankr. E.D. Cal.
2017) ...........................................................................................37
Susilo v. Wells Fargo Bank, N.A., (2011) 796 F. upp.2d 1177 ......22
Tamburri v. Suntrust Mortg., No. C-11-2899 EMC, 2011 U.S. Dist.
LEXIS 144442 (N.D. Cal. Dec. 15, 2011) ..........................30
Turner v. Seterus, Inc., (2018) 27 Cal. App. 5th 516, 525-526,
529…… ............................................................................28
Tutelman v. Agricultural Ins. Co., (1972) 25 Cal.App.3d 914 .......26
Wooden v. Raveling (1998) 61 Cal.App. 4th 1035, 1038 ..............44
Yvanova v. New Century Mortgage Corporation

7
 (2016) 62 Cal.4th 919 ....................................……….passim
Zelig v. County of Los Angeles (2002) 27 Cal. 4th 1112 .............19

Statutes

Cal. B & PC § 17200 ....................................................... 32, 36, 41

Cal. B & PC § 17910 ................................................................... 32
Cal. Civil Code § 1161a ...............................................................31
Cal. Civil Code § 1185 ..........................................................25, 26
Cal. Civil Code § 1511 ..........................................................28, 35
Cal. Civil Code § 1515 ................................................................35
Cal. Civil Code § 1709 ................................................................44
Cal. Civil Code § 1812.6 .............................................................32
Cal. Civ. Code § 2624(a)(6) ..........................................................30
Cal. Civil Code § 2924 et seq ..............................................passim
Cal. Civ. Code, § 2936 ................................................................29
Cal. Code of Civil Procedure § 474 .......................................46, 47
Cal. Code Civil of Procedure § 904.1(a)(1) ..................................14
Cal. Code of Civil Procedure § 2015.5 ............................31, 45, 46

Other
Levitin, The Paper Chase: Securitization, Foreclosure, and the
Uncertainty of Mortgage Title, (2013)
63 Duke L.J. 637, 650 .......................................................21

MERS Rules July 2011, Rule 1 § 8, p.7. .....................................24

In re: MERSCORP, Inc., and the Mortgage Electronic Registration

Systems, Inc., Reston, Virginia (April 13, 2011), OCC No.
AA-EC-11-20; Board of Governors Docket Nos.
11-051-B-SC-1 .................................................................23

8
The MERS Consent Order can be found at https://www.occ.gov/
news-issuances/news-releases/2011/nr-occ-2011-47h.pdf

5 Miller & Starr, Cal. Real Estate (4th ed. 2017) § 13:256, pp.
13-1101 to 13-1102 ..........................................................27

National Mortgage Settlement Consent Orders

https://www.justice.gov/sites/default/files/opa/legacy/
2012/03/12/citi-consent-judgement.pdf .........................34, 38, 48

SIGTARP Report of January 27, 2016, titled: Mortgage Servicers

Have Wrongfully Terminated Homeowners Out of the HAMP
Program. ...............................................................................37, 38

9
 GLOSSARY
2016 Opinion — second decision of the first appeal in this case,
entered June 27, 2016

AA — Appellant’s Appendix, consisting of one volume, and will

be cited, for example, pages 15 through 17 as “(AA15-17)”

Assignment — the assignment of deed of trust executed by Todd

Graves and recorded January 30, 2012

Best-Rate — Best-Rate Financial, LLC, first lender of the 2008

refinancing from the Countrywide mortgage

Castillo — Corina Castillo, PennyMac employee; acknowledged

the Assignment.

CHL — Countrywide Home Loans, Inc., lender before Best-Rate

CMI — CitiMortgage, Inc., 2008 transferee of the first allonge

from the original lender Best-Rate Financial, LLC

CT - Clerk’s Transcript, consisting of six volumes, and will be

cited, for example, pages 15 through 17 of Volume 2, as
“(2CT15-17).”

DOT — Second Deed of Trust, issued 2008 by Best-Rate

10
Graves — Todd Graves, PennyMac employee; executed the
Assignment

MERS — Mortgage Electronic Recording Systems, Inc., a

database system for recording transactions in real estate
ownership interests

QWR — Qualified Written Request, found in 12 U.S.C. 2065 § 6

RESPA. Borrowers with concerns of possible errors in their loans
make requests to the lenders; lenders must respond timely.

Ramos — Diana V. Ramos, notary and PennyMac employee;

acknowledged the signature in the Substitution of Trustee and
other instruments.

RT — Reporter’s Transcript, consisting of one volume, and will be

cited, for example, pages 15 through 17 as, “(RT15-17).”

SCT — Supplemental Clerk Transcript, consisting of Appellant’s

Exhibit 51, one volume, and will be cited, for example, pages 1
through 3 as, “(SCT1-3).”

TAC — Third Amended Complaint and the Operative Complaint

in this appeal


11
PLEASE reference "Table of Exhibits" for all named exhibits.

I. INTRODUCTION AND SUMMARY OF ARGUMENT

Plaintiff and Appellant, Sherry Hernandez (Plaintiff), hereby

appeals the judgment of December 4, 2017 of the Superior Court
for the County of Los Angeles, Honorable Ramona See,
presiding, granting the Defendants’ demurrer to the Third
Amended Complaint (TAC) without leave to amend.

The Defendants and Respondents are PNMAC Mortgage

Opportunity Fund Investors, LLC (PNMAC), PennyMac Loan
Services, LLC (PennyMac) (collectively, the Defendants); and
Does 1 through 20.

Plaintiff appeals the trial court ruling that the TAC fails to
allege sufficient facts to address the two areas identified by this
Court on the first appeal: first, that Graves had no authority to
execute the Assignment of Deed of Trust, or did not execute it
and the notary falsely verified his signature; and second, that the
facts do not come within a recognized exception to the tender
rule. Plaintiff further appeals the denial of leave to amend to add
causes of action and to identify the Does by their proper names.

First, the trial court holds Plaintiff’s complaint to a higher

standard than the scrutiny to be given a demurrer. The parts were
considered in isolation instead of in context with the whole. The
complaint alleges Graves was not authorized to execute the
Assignment. When the bankruptcy court ordered PNMAC to
prove its ownership interest in the Note, PNMAC needed four
months to respond. That court lifted the stay by relying on an
unpublished opinion rather than on PNMAC’s documents.
PNMAC presented those same documents to this Court through
an RJN. The request was denied; they did not prove PNMAC

12
held an ownership interest on the date of the foreclosure. The
trial court granted the RJN over Plaintiff’s objections.

The TAC’s references to the numerous documents Graves

executed on behalf of entities other than his employer show he
could not have executed those instruments on the authority of
each entity, as with the Best-Rate Assignment. Also, the plain
reading of the acknowledgement shows Castillo’s malfeasance.
She was familiar with Graves and knew Graves did not sign it on
behalf of the assignor.

Second, the TAC pleads wrongful foreclosure based on

void assignment, an exception to tender. PNMAC did not have
an ownership interest in the Note, therefore Plaintiff did not
tender, as doing so would be an affirmation of the debt.

Third, the TDUS is void because title was not duly

perfected before the sale. This case was pending, with title the
primary issue, and a lis pendens was recorded against the
property. Also, the TDUS was recorded as a disclaimer as to
effect on title.

Fourth, we appeal the abuse of discretion by the trial court.

Substantive issues were not addressed, such as the contract
with CMI that was in effect when PennyMac acquired the loan
servicing rights; that the Note was not in default at the time
PennyMac acquired those rights; that the TDUS was void; that
other lenders appeared to claim a beneficial interest in the Note;
and, that the first loan was not paid and a release of lien was not
recorded.

Lastly, Plaintiff will set forth facts in support of additional

causes of action to show that amending the complaint is just and

13
proper. This Court’s 2016 Opinion does not preclude Plaintiff
from doing so.

In sum, the TAC may not track the dicta of the 2016
Opinion verbatim, as the trial court seems to think it must, but
the result is the same: wrongful foreclosure based on a void
assignment is shown, and Plaintiff is excused from tender.

II. STATEMENT OF APPEALABILITY

This appeal is authorized by California Code of Civil

Procedure § 904.1(a)(1) and is from a final judgment where the
Los Angeles County Superior Court sustained the Defendants’
demurrer without leave to amend.

III. RELEVANT FACTUAL AND PROCEDURAL

BACKGROUND
A. The cornerstone of this case is the 2008 refinancing
of Plaintiff’s original purchase money loan.
Plaintiff, her husband Alfredo Hernandez, and their
daughter Elizabeth Hernandez were borrowers on a loan with
CHL. In 2008 they refinanced it through Best-Rate. CMI was the
loan servicer; later Plaintiff learned Best-Rate had immediately
executed an allonge to Note in favor of CMI. Then a subsidiary of
BANA recorded a “Substitution of Trustee and Full
Reconveyance” in Los Angeles County. It was executed in the
State of Arizona through MERS, who was not licensed to do
business in California (1CT144) at that time, and which wholly
failed to meet the statutory requirements of this State.

14
 Plaintiff remitted regular payments to CMI for three years
with additional amounts paid to principal. In the third year, after
considerable time spent resubmitting paperwork, a trial payment
loan modification began in January 2012. Plaintiff made two
payments timely. Shortly before the third and final payment was
due, the loan servicing transferred to PennyMac. (1CT236).

B. PennyMac becomes the loan servicer and the

foreclosure process begins immediately, although
the loan was not in default
The first correspondence from PennyMac stated the
loan was $24,000 in arrears. Plaintiff disagreed. She also began
receiving letters from BANA and CMI stating other lenders held
the Note; the MERS website named BANA. And PennyMac could
not decide on the date PNMAC acquired the Note.

Next, Elizabeth sought bankruptcy protection. PNMAC

moved for lift of the automatic stay and was ordered to show its
ownership interest in the Note. Four months later PNMAC
produced the second allonge. During the continuances Plaintiff
filed the instant suit and recorded a lis pendens, which remains
active. (3CT580-585).

The second allonge was endorsed in blank from CMI to

PNMAC. A PennyMac employee executed it as attorney-in-fact
for an affiliate of the Defendants, but on behalf of CMI. (2CT446).
The bankruptcy court did not rule on the validity of those
documents; the stay was lifted upon analysis of an unpublished
opinion. (3CT544-546). The foreclosure trustee held the sale the
next day without notice to the Trustors, though it was publicly

15
noticed for 30 days later. PennyMac also issued each Trustor IRS
Form 1099 (1CT62) for the purported deficiency of the sale.

After the sale, Plaintiff amended her complaint to

incorporate the cause of action for wrongful foreclosure and the
conduct of the Defendants on the road to foreclosure. They
demurred; it was sustained without leave to amend and Plaintiff
appealed.
C. After the wrongful foreclosure PNMAC sues Plaintiff
in Unlawful Detainer Court and fraudulently claims
the $20,000 in the court registry
After the foreclosure PNMAC sued Plaintiff in UD Court.
Plaintiff was ordered to pay over $2,800 per month into the
court’s registry. A few days before an appellate brief was due,
Plaintiff’s counsel withdrew from the case without leave of court,
so Plaintiff sought to stay the proceedings to seek new counsel.
PNMAC made an appearance and falsely represented to the
court that the case at bar had settled and a release of lien
recorded. Counsel waved two documents as she spoke; they
were not offered into evidence. Both documents were recorded
copies of the recent final judgment in this case. Each had a
different cover sheet, “Release of Lis Pendens,” (SCT:1-9), and
“Judgment of Dismissal”. (1CT65:6-22, 1CT66:3-4). PNMAC
prevailed and promptly claimed the $20,000 in the registry.
Plaintiff’s counsel for the case at bar denied PNMAC’s
statements, so Plaintiff telephoned opposing counsel to protest
the fraud on the court. PNMAC’s counsel told Plaintiff to get a
lawyer and hung up. (1CT66:5-6).

16
 PNMAC made the aforementioned representations to
the UD Court after it was properly served with Plaintiff’s Notice of
Appeal.

D. The first appeal resolves the issue of standing, and

that Plaintiff should be, and was given leave to
amend her complaint
The first appeal decided two issues with the Second
Amended Complaint: whether Plaintiff had standing to sue for
wrongful foreclosure; and if she did, whether she should be
allowed leave to amend the complaint.

Under then current law, Plaintiff did not have standing

so the judgment was sustained. Plaintiff petitioned the California
Supreme Court for review; the case was remanded to this Court
for reconsideration in light of Yvanova. Plaintiff had standing.

After supplemental pleadings and oral arguments,

Plaintiff was granted leave to amend the complaint. The
judgment was sustained in part; three of four causes of action
were dismissed; and one defendant was dismissed.

E. The Third Amended Complaint includes 51 exhibits in

support of the allegations and facts contained
therein, including additional facts that came to light
since this Court ruled on the first appeal
The Defendants’ sole intent was foreclosure. Plaintiff
denies the loan was in default at the time PennyMac acquired the
loan servicing rights. PennyMac refused to recognize the loan
modification plan in progress with CMI. Soon confusion arose as
to who held the Note, detailed infra.

17
 The TAC has 51 exhibits; the Defendants have received
about 1,000 pages of discovery in the past year and several
witnesses have been deposed. The demurrer was erroneously
sustained without leave to amend. Plaintiff timely brings this
appeal.

IV. STANDARD OF REVIEW

An appellate court employs two separate standards of
review when analyzing a lower court’s refusal to grant leave to
amend on a demurrer.

First, a complaint is reviewed de novo to determine whether

it contains sufficient facts to state a cause of action. Hill v. Miller,
(1996) 64 Cal. 2d 757, 759. In so reviewing, the appellate court
assumes the truth of the properly pleaded factual allegations,
facts that reasonably can be inferred from those expressly
pleaded, and matters of which judicial notice has been taken.
Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1081.
While the reviewing court treats a demurrer as admitting all
material facts properly pleaded, a demurrer does not admit
contentions, deductions or conclusions of fact or law. Zelig v.
County of Los Angeles (2002) 27 Cal. 4th 1112, 1126.

Second, where the demurrer is sustained without leave to

amend, the reviewing court determines whether the trial court
abused its discretion. Hernandez v. City of Pomona, (1996) 49
Cal. App. 4th 1492, 1497. A reviewing court will only reverse for
abuse of discretion if it determines that there is a reasonable
possibility the pleading can be cured by amendment. Otherwise,
a trial court’s decision will be affirmed for lack of abuse. Id. 1498.

18
The burden of proving such reasonable possibility rests squarely
on the appellant. Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.

V. LAW AND ARGUMENT

A. The case for wrongful foreclosure: The Third
Amended Complaint pleads sufficient facts to
support an allegation of void assignment of the deed
of trust
The Ruling found the TAC did not plead sufficient facts
to establish the Assignment was void. (6CT1265). Plaintiff
disagrees. The elements of a wrongful foreclosure cause of
action are: 1) “the Trustee or mortgagee caused an illegal,
fraudulent or willfully oppressive sale of real property pursuant to
power of sale in a mortgage or deed of trust; 2) the party
attacking the sale (usually, but not always, the mortgage or
Trustor) was prejudiced or harmed; and, 3) in cases where the
trustor or mortgagor challenges the sale, the trustor or mortgagor
tendered the amount of the secured indebtedness or was
excused from tendering.” (1CT24, citing Lona v. Citibank, NA
(2011) 202 Cal.App.4th 89,104.)

“In considering the merits of a demurrer, the facts

alleged in the pleading are deemed to be true, however
improbable they may be.” Hacker v. Homeward Residential, Inc.,
(2018) 26 Cal. App. 5th 270, 280 (assignment void where plaintiff
possessed deed while deed of trust passed between various
loan servicers before foreclosure.)

19
 Hacker is a wrongful foreclosure case based on void
assignment. The trial court found the complaint was deficient, in
part, because plaintiff offered no proof of his ownership interest.
The demurrer was sustained without leave to amend. On appeal,
plaintiff’s deed was found attached to an RJN. The remand also
allowed plaintiff to add a new cause of action, raised for the first
time on appeal, but supported by the facts in the complaint.

The TAC alleges the Defendants caused an illegal,

fraudulent and willfully oppressive sale pursuant to a purported
power of sale based on the void Assignment. (1CT52:2-21). The
illegal, fraudulent and willfully oppressive acts began when
PennyMac employee, Graves, executed an assignment of deed
of trust to PNMAC and PennyMac recorded it. (TAC Ex30 ADOT,
2CT266). They have an agency relationship; PNMAC is the
principal and PennyMac the agent. (TAC Ex42, PNMAC “Motion”
and “second Declaration,” 2CT435).

The Defendants violated Cal. Civ. Code § 2924. The

foreclosing party had no ownership interest, therefore no
authority to foreclose. Section 2924 is not an enabling statute,
but a statute to restrain and limit the exercise of private powers
of sale for the benefit of the debtors. Strutt v. Ontario Sav. & Loan
Assn. (1972) 28 Cal. App. 3d 866, 105 Cal. Rptr. 395 (citing Smith
v. Allen (1968) 68 Cal. 2d 93, 96). As such, strict adherence on
the part of the foreclosing entity is required. Only the entity
holding the beneficial interest under a deed of trust—the original
lender, its assignee, or an agent of one of these—may instruct
the trustee to commence and complete a nonjudicial foreclosure,
including the recording of a notice of default. Cal. Civ. Code §

20
2924(a)(6); Yvanova at 920. The mortgage contract is not simply
an agreement that the home may be sold upon a default on the
loan. Instead, it is an agreement that if the homeowner defaults
on the loan, the mortgagee may sell the property pursuant to the
requisite legal procedure.” (Ibid. citing Levitin, The Paper Chase:
Securitization, Foreclosure, and the Uncertainty of Mortgage
Title, (2013) 63 Duke L.J. 637, 650). That requisite legal
procedure is Civil Code § 2924. Susilo v. Wells Fargo Bank, N.A.,
(2011) 796 F. Supp. 2d 1177 (Lender not entitled to dismissal of
borrower’s claim for wrongful foreclosure where complaint
sufficiently alleged foreclosure conducted in violation of CC §§
2924 et seq.).

The Assignment was void. (1CT45:11-47:20). “[In a

nonjudicial foreclosure only the original beneficiary of a deed of
trust or its assignee or agent may direct the trustee to sell the
property[;] an allegation that the assignment was void, and not
merely voidable at the behest of the parties to the assignment,
will support an action for wrongful foreclosure.” Yvanova at 923
(borrower has standing to challenge wrongful foreclosure based
on void assignment); Hacker 26 Cal. App. 5th at 280 (Assignment
by a party that never possessed legal title to the property is void).

The Ruling found the TAC “fails to allege how the

aforementioned facts establish that Graves had no authority to
act on MERS’s behalf.” (6CT1363). Plaintiff disagrees; the TAC
states, “Plaintiff challenges the capacity and authority in which
Todd Graves executed the Assignment. Todd Graves has
executed voluminous documents with different titles on behalf of
multiple entities, . . .” (1CT52:1-12). Implicit in the two sentences

21
is that Graves, a PennyMac employee, could not swear to act on
behalf of Best-Rate while also swearing to act on behalf of
multitudes of other lenders. One sentence in between those two
sentences can cure this perceived defect: “Graves was not
authorized to execute the Assignment, PennyMac’s permission
notwithstanding; PennyMac did not have authority to so direct.”
Graves’s conduct, in general, is the type MERS agreed to
prohibit pursuant to the Consent Order and changed its Rules of
Membership accordingly.

When Graves executed the Assignment and Castillo

falsely acknowledged it, it was done for the benefit of PNMAC,
the assignee, not the assignor(s). This, they cannot do, and their
employer’s authorization to do it is a nullity. Yvanova at 920.

Since 2011, PNMAC has been unable to show that it

holds a beneficial interest in the Note. The Bankruptcy court
declined to rule on PNMAC’s documents (1CT27; 3CT546:13-14;
5CT1095-1096). The “colorable interest” standard of bankruptcy
law is lower than CC § 2924. An unpublished case explaining the
conflict between two cases on the standard of proof was the
deciding factor for lifting the stay. Yvanova overruled that
standard.

The Defendants offered those same documents to this

Court in the first appeal through an RJN; the TAC quotes the
Court’s detailed reasoning for denying the request. Yet, the trial
court summarily granted the Defendants’ same RJN. Plaintiff’s
objection is captured in the September 26, 2017 hearing on the
demurrer (RT603:23-604:6), “It is beyond belief that the court of
appeals would be overruled to the extent that this request for

22
judicial notice was [granted]. The third amended complaint
shows numerous, numerous examples, and restates the [2016]
opinion and as far as the tentative ruling in the bankruptcy court
for trustor, Elizabeth Hernandez, that tentative ruling rejected the
Rita Garcia declaration for the same reasons that the court of
appeals rejected it.” The 2016 Appeal rejected the RJN. (1CT28,
5CT1008:5-18. The trial court granted it (6CT1365).

The Defendants are members of MERS, thereby bound

by the MERS Rules of membership, as well as the MERS
Consent Order (infra). First, “MERS is a national electronic
registry that tracks beneficial ownership interests and servicing
rights associated with residential mortgage loans and any
changes in those interests or rights.” In re: MERSCORP, Inc., and
the Mortgage Electronic Registration Systems, Inc., Reston,
Virginia (April 13, 2011), OCC No. AA-EC-11-20; Board of
Governors Docket Nos. 11-051-B-SC-1, 11-051-B-SC-2;
FDIC-11-194b; OTS No. 11-040; FHFA No. EAP-11-01. 1

MERS revised its Rules for Membership pursuant to the

Consent Order of 2011. 2 (6CT1240:3-9). “[I]n its Rules [for
Members], MERS agrees to assign a mortgage that it holds as
mortgagee of record ‘[u]pon request from the Member . . . where
the Member is also the current promissory note-holder.’ MERS
Rule 3, § 3.” Culhane v. Aurora Loan Servs., (2011) 826 F. Supp
2d 352, 371. The second declaration is not evidence of PNMAC’s

1MERS Consent Order https://www.occ.gov/news-issuances/

news-releases/2011/nr-occ-2011-47h.pdf
2https://www.consumerdefenseprograms.com/wp-content/
uploads/2011/02/MERS-Announcement-2011-01.pdf

23
ownership interest, nor is the second allonge, for the reason that
they are undated, therefore cannot prove ownership interest at
the time of foreclosure.

The Rules also require each member to designate a

member’s employee as a signing officer of MERS. (MERS Rules
July 2011, Rule 1 § 8, p.7). The Defendants admit Graves is their
employee (4CT733:12-19); that he is their designated MERS
signing officer; and that they authorized him to execute the
Assignment. The MERS Rules authorize only the note owner or
the note owner’s servicer to execute an assignment. (MERS Rule
8 § 1(a)). In our case, PNMAC’s agent PennyMac, ordered Graves
to assign a deed of trust to itself. The transaction being void, not
merely voidable, it cannot be ratified. Yvanova at 845.
Graves, by his signature, states he was acting at the
request of the lender, Best-Rate, or its successors and/or
assigns. Best-Rate had been out of business for two years.
(1CT52, ¶2; 1CT177). If Best-Rate had successors and/or
assignees to the DOT, and they held MERS membership, they
would be required to have their own MERS designated signers
with the authority to execute the transfer, not the Defendants. (Id.
Rule 8 § 1(a), p.25, “the note owner or the note owner’s servicer
shall cause a MERS Certifying Officer [ ] to execute an
assignment of the Security Instrument from MERS to the note
owner’s servicer, or to such other party expressly and specifically
designated by the note owners.”). MERS requires both parties to
the transaction to be MERS members, but if one is not, then the
MERS member conducts the transaction on its side and closes
the account. (Yvanova, supra).

24
 The Assignment was acknowledged by a notary public
who knew or should have known it was false; they had been co-
workers for some time. Castillo was acting within the scope of
authority of her employment with PennyMac. The Defendants
were aware of her conduct and knew or should have known the
conduct was fraudulent. Inasmuch as the Assignment was void
when Graves executed it, Castillo’s notarial malfeasance had no
effect upstream, but it was necessary downstream.
The Ruling found Castillo’s conduct was not within the
purview of a demurrer. To the contrary, it was Castillo’s certificate
of acknowledgment that allowed the void Assignment to be
recorded. The recordation, in turn, provided PNMAC its
ostensible authority to foreclose on the Note. Castillo certified
that Graves “acknowledged to me that he executed the same in
his authorized capacity.” (2CT268). It is illogical that Graves
would have told Castillo he executed the assignment on behalf of
a defunct lender or its successor or assigns. Castillo was part of
a fraudulent scheme and plan for the benefit of her employer,
bringing it within the purview of a demurrer. Tutelman v.
Agricultural Ins. Co., (1972) 25 Cal. App. 3d 914, 915 (overruling
demurrer that had been sustained on grounds notary public
could not have been proximate cause of damage alleged).

The Ruling dismissed the Graves and Castillo signings

described in the TAC as having no connection to the void
Assignment. Civil Code § 1185 governs acknowledgements and
the role of a notary public. “The acknowledgment of an
instrument shall not be taken unless the officer taking it has
satisfactory evidence that the person making the

25
acknowledgment is the individual who is described in and who
executed the instrument.” Cal.Civ.Code § 1185(a). The taking of
a false acknowledgment and recording it is sufficient to survive a
demurrer. Garton v. Title Ins. & Trust Co. (Cal. App. 3d Dist.
1980), 106 Cal. App. 3d 365, 165 Cal. Rptr. 449. More recently,
another court also took the matter seriously.

In Sanabria v. PennyMac a judicial foreclosure was

overturned due to the underlying fraud. Key to that fraud were
Graves, Castillo and Ramos. In 2011 Graves executed an
assignment for CMI as its attorney-in-fact in favor of PennyMac
Corporation. Ramos witnessed it and Castillo notarized it.
(Sanabria v. Pennymac Mortg. Inv. Tr. Holdings I, LLC, 197 So. 3d
94 (Fla. Dist. Ct. App. 2016); the instrument is recorded in Book
2387 Page 4870 Dkt# 2940485, Manatee County, Florida)

During that same time period Ramos, a PennyMac

employee, was under investigation by the California Secretary of
State for notarial malfeasance. (TAC Ex39, 2CT382). Her license
was revoked; she failed to surrender her notary books (TAC
Ex40, 2CT389), rendering any evidence from her books a wish.

Plaintiff brought a claim against the surety for Castillo’s

notary license, complaining of Castillo’s role in the Assignment.
The surety settled for the maximum amount of the bond.
(1CT53:22). “The notary and his surety are liable for the
negligence of the notary in taking an acknowledgment or for
making a false certificate of acknowledgment.” (Joost v. Craig,
(1901) 31 Cal. 504 [63 P. 840, 82 Am. St. Rep. 374]; Anderson v.
Aronsohn, (1919) 181 Cal. 294 [184 P. 12, 10 A. L. R. 866]);

26
Hungate v. Wells, 129 Cal. App. 133, 135, 18 P.2d 64, 65 (Dist.
Ct. App. 1933).
B. Where the tender rule is an element of an action for
wrongful foreclosure, a void assignment is a
recognized exception to the requirement of tender;
Plaintiff is excused from tender for this and other
exceptions
Plaintiff pleads wrongful foreclosure based on void
assignment. Courts have applied equitable exceptions to the
tender rule; three exceptions are applicable here: “. . .(1) where
the borrower's action attacks the validity of the underlying debt,
tender is not required since it would constitute affirmation of the
debt; . . .(4) tender is not required where the trustor's attack is
based not on principles of equity but on the basis that the
trustee's deed is void on its face . . . [;] [and (6)] when the
borrower is not in default and there is no basis for the
foreclosure...” Turner v. Seterus, Inc., (2018) 27 Cal. App. 5th 516,
525-526, 529 (citing 5 Miller & Starr, Cal. Real Estate (4th ed.
2017) § 13:256, pp. 13-1101 to 1102, fns. omitted.) (foreclosure
while borrower performing under loan modification agreement
deemed wrongful).

Turner excuses Plaintiff from tendering. Plaintiff has

consistently attacked the debt. (1CT68:17-69:9). This is an action
for wrongful foreclosure, as the Assignment is void on its face
(1CT35:25-35:5, 1CT42:27-43:5, 1CT51:21-53:24). Plaintiff
denied the loan was in default when PennyMac acquired the loan
servicing rights (1CT48:16-51:11, 2CT257-258, 5CT1020:8-11).
When the trustee recorded the Notice of Default, Plaintiff had the

27
financial ability to cure the default but chose not to do so. "Any [ ]
act indicating an intent to abide by the contract is evidence of an
affirmance thereof and of a waiver of the right to rescind."
Stockton v. Newman (1957) 148 Cal.App. 2d 558, 564; Onofrio v
Rice (1997) 55 Cal.App. 4th 413, 424.

PennyMac acquired the loan servicing rights with a

clear intent to foreclose. Initially, Plaintiff tried to resume CMI’s
modification plan; PennyMac refused. Civil Code § 1511 excuses
performance on an obligation where creditor induces debtor not
to perform, by any act of the creditor intended to have that
effect, done at or before the time performance may be made,
and not rescinded before that time. Cal. Civ. Code § 1511
subsec. 3. “The party who voluntarily and wrongfully puts an end
to a contract and prevents another from performing it is
estopped from denying that the injured party has been damaged
to the extent of his actual loss and his outlay fairly
incurred.” (Douglass v. Guardian Holding Corp. (1933) 132
Cal.App. 585, 587 [23 P.2d 80].) PennyMac could not cooperate
with Plaintiff; to do so would end the foreclosure process and
PNMAC’s profit. Plaintiff’s letter to PennyMac (1CT261) includes
an article describing PennyMac Corporation’s business model:
buy distressed loans for pennies and turn them over quickly.
Plaintiff’s loan was not in distress.

Plaintiff has consistently attacked PNMAC’s claim of

ownership interest in the note. (6CT1070:8-1071:4). PNMAC
cannot establish the date it acquired its ownership interest, and
this Court agreed, “If PNMAC could properly and conclusively
establish at this stage of the proceedings that it did hold the

28
Note at the relevant time, that would be dispositive and preclude
a wrongful cause of action because a deed of trust automatically
transfers with the Note it secures—even without a separate
assignment. (Civ. Code, § 2936; Yvanova at 927; 1CT58:3-13). So
far, PNMAC has not taken that step to end this litigation.

Generally, the tender rule applies to claims to set aside a

trustee's sale for procedural irregularities or alleged deficiencies
in the sale notice. Lester v. J.P. Morgan Chase Bank, N.A., 926 F.
Supp. 2d 1081, 1092 (N.D. Cal. 2013). "[T]he rationale behind the
rule is that if plaintiffs could not have redeemed the property had
the sale procedures been proper, any irregularities in the sale did
not result in damages to the plaintiffs." Id. (internal cits., quots.
omitted). But, tender may not be required where doing so would
be inequitable. Onofrio at 424. Courts have found exceptions to
the tender rule if "a sale is void, rather than simply voidable," as
when an incorrect trustee forecloses on a property. Tamburri v.
Suntrust Mortg., No. C-11-2899 EMC, 2011 U.S. Dist. LEXIS
144442, 2011 WL 6294472, at 4 (N.D. Cal. 2011) (citing Dimock
v. Emerald Properties LLC, (2000) 81 Cal. App. 4th 868, 876, 97
Cal. Rptr. 2d 255) (failure to allege tender not fatal where
complaint sufficiently alleged foreclosure sale void).

Plaintiff’s allegations and facts support a void, not

voidable, Assignment.
C. The Trustee’s Deed Upon Sale is void, where the sale
was held in violation of Section 2924

Civil Code § 2924 et seq. controls the nonjudicial

foreclosure process and states, in part, “No entity shall record or
cause a notice of default to be recorded or otherwise initiate the

29
foreclosure process unless it is the holder of the beneficial
interest under the mortgage or deed of trust, the original trustee
or the substituted trustee under the deed of trust, or the
designated agent of the holder of the beneficial interest. No
agent of the holder of the beneficial interest under the mortgage
or deed of trust, original trustee or substituted trustee under the
deed of trust may record a notice of default or otherwise
commence the foreclosure process except when acting within
the scope of authority designated by the holder of the beneficial
interest.” Cal. Civ. Code § 2624(a)(6). To date, PNMAC has not
shown it was the holder of the beneficial interest of the deed of
trust at the time the Notice of Default was recorded.

The Defendants did not have a duly perfected title at the

time of the foreclosure sale. “Title is perfected when all steps
have been taken to make it perfect, i.e., to convey to the
purchaser that which he has purchased, valid and good beyond
all reasonable doubt..., which includes good record title..., but is
not limited to good record title, as between the parties to the
transaction. The term ‘duly’ implies that all of those elements
necessary to a valid sale exist, else there would not be a sale at
all.” The Bank of New York Mellon v. Preciado (2013) 224 Cal.
App. 4th Supp. 1, 13, citing Kessler v. Bridge (1958) 161 Cal.App.
2d Supp. 837, 841 (citations omitted). Moreover, ”Because
nonjudicial foreclosure is a "drastic sanction" and a "draconian
remedy" (Baypoint Mortgage Corp. v. Crest Premium Real Estate
etc. Trust (1985) 168 Cal.App. 3d 818, 827, 830), '[t]he statutory
requirements must be strictly complied with,” and a trustee's
sale based on statutorily deficient notice of default is invalid. “In

30
order to prove compliance with Civ. Code § 2924, the [bank]
must necessarily prove the sale was conducted by the trustee.
Preciado at 10.

Preciado was an unlawful detainer case where the bank

acquired the property at a regularly conducted sale but failed to
duly perfect its title: its trustee was not authorized to conduct the
sale. Preciado also noted that whereas C.C.C. §1161a is
available for defendants in an unlawful detainer case, a post
foreclosure plaintiff must prove the defendant’s noncompliance
with Civil Code section 2924. Id. at 12 (citing Seidell v. Anglo-
California Trust Co., (1942) 55 Cal. App. 2d 913, 912).

The TAC attacks the chain of title. First, the instrument

purporting to reflect a payoff of the CHL loan was worthless
when recorded. (1CT42:4-47:20). It is void on its face. It was
executed by ReconTrust, a subsidiary of BANA, and contains an
oath making it subject to Cal. Civ. Proc. § 2015.5. Kulshrestha v.
First Union Commercial Corp., (2004) 33 Cal. 4th 601, 602, 15
Cal. Rptr. 3d 793, 794, 93 P.3d 386, 387 (out-of-state
declarations offend § 2015.5 and not deemed sufficiently reliable
unless they follow its terms literally). Without a proper
reconveyance, there is an irreparable break in the property chain
of title and a legitimate question of ownership. None of the
players in the Best-Rate refinancing took steps to secure a
proper, valid release of lien of the CHL loan.

“If there is want of performance or want of true consent

the title cannot be said to be perfected.” Hocking v. Title Ins. &
Trust Co. (1951), 37 Cal. 2d 644, 649, 234 P.2d 625). It cannot be
doubted PNMAC did not have Plaintiff’s consent to the title to

31
her property. It is also undisputed PNMAC still has not produced
evidence sufficient to prove the foreclosure sale was conducted
in strict compliance with Civil Code § 2924, and that title was
duly perfected.

The illegal auction was held one day after the lift of stay,
though noticed for 30 days later. The auction date and time was
not publicly noticed to allow interested bidders to participate,
violating Cal. Civ. Code § 2924g. The sole bidder was PNMAC,
violating the Unfair Competition Law, § 17200 of the
Homeowners Bill of Rights Act. The sale also violated Cal. Civ.
Code § 1812.6 which requires the auctioneer to secure a surety
bond before the sale; the State has no record of a bond issued to
the trustee. Even more telling, there is no record the trustee was
registered to do business in California. The trustee and
auctioneer also failed to register with the county where the
auction was held, in direct violation of Cal. Bus. & Prof. Code §
17910.

Finally, title was not duly perfected with the recordation

of the Trustee’s Deed Upon Sale. The TDUS has a stamp on its
face, “Accommodation Only. This instrument is being filed as an
ACCOMMODATION ONLY with no representation as to effect
upon title.” (4CT734). This is an admission by the Defendants
that they were aware title was not perfected and still transferred
the worthless ownership interest to a subsequent lender.

VI. THE ABUSE OF DISCRETION

A. The trial court narrowed the scope of the 2016
Opinion when it limited the TAC to one cause of

32
 action and one line of argument
The trial court narrowed the scope of the 2016 Opinion.
The minute ruling on plaintiff’s motion for leave to amend states,
“The Court also notes that this request for amendment is not
within the scope of the Court of Appeals’ ruling which allowed for
amendment solely as to the cause of action for Wrongful
Foreclosure and solely against defendant Penny Mac.” (4CT819).
The Defendants echoed the point; plaintiff disagreed, noting, “. . .
nowhere does the word ‘only’ appear.” (4CT830:1-6). Disallowing
three of the SAC’s four causes of action is not a bar to additional
causes of action.

The first appeal was not whether plaintiff should be

allowed to amend her complaint to plead only a wrongful
foreclosure in light of Yvanova; and the discovery process had
not yet begun. This Court recognized as much, stating,

“[C]onsistent with the well-established standard we apply

at this stage of the proceedings, we hold only that there is
reasonable possibility that she will be able to plead such a
claim. We therefore remand the matter to the trial court to
give her that opportunity, which if again contested via
demurrer by PNMAC, the trial court will decide on the
record before it.” (1CT30) [emphasis added].

The remand did not order the trial court to permit only a
Third Amended Complaint, but expected the trial court to decide
on the record before it, especially since the suit was filed well
before Rule 430.41 was enacted. (Cal.Civ.Proc. § 430.41(3)(B(e)
(1), only three amendments allowed, with exceptions; eff 1/1/16).

33
 In addition, Plaintiff discovered new facts, just as this
Court anticipated during oral arguments; i.e., the National
Settlement Agreement executed by CMI (infra); the MERS
Consent Order; the bailee letter to CMI instructing CMI to send
the cash or an allonge with the Note. Some documents CMI
produced in response to a QWR contradict documents from
PennyMac’s QWR response.

Similarly, the 2016 Opinion did not limit Plaintiff to a

one-dimensional argument. Two issues concerned this Court
about the SAC after Yvanova: whether the Assignment was void
or voidable, and the basis therefore. Plaintiff’s good-faith
allegation at the time was that Graves had no authority to act on
MERS’s behalf; or if he did, he did not in fact execute the
Assignment and Castillo falsely verified his signature. (1CT27). To
limit Plaintiff’s complaint to a recitation of the 2016 Opinion, in
light of what Plaintiff can now prove, is an abuse of discretion.

Plaintiff used facts discovered since the first appeal to

expand on, not alter, the theory that Graves had no authority to
act on MERS’s behalf. Graves was a designated signer with
MERS but when he executed the Assignment, he was acting for
the benefit of his employer, PennyMac. PennyMac had no
authority to order Graves to execute the Assignment for the
reason that its principal, PNMAC, had no ownership interest to
assign to itself. The MERS Rules prohibit self-to-self assignment;
consequently, Graves had no authority to execute the
Assignment on anyone’s behalf, including MERS. Likewise, the
notary committed notarial malfeasance, not because she was
later convicted for notarial fraud in a different scam, but because

34
she acknowledged under penalty of perjury that Graves executed
the instrument in the capacity designated in the instrument.
Whether Graves actually signed the instrument and the notary
was present when he signed it may not be determinable,
particularly without discovery, but that would not change the
original allegations.

B. The trial court did not address Plaintiff’s allegation

that when PennyMac acquired the loan servicing
rights the Note was not in default and a Trial
Payment Loan Modification Plan with CMI was
almost completed
The trial payment loan modification plan (TPP) was a
contract; it is evidenced by the letter from CMI outlining the
terms (1CT227); Plaintiff accepted the offer by performing
according to its terms and CMI accepted the payments. When
PNMAC purportedly acquired the loan it was bound by the
contract in effect at that time. Plaintiff informed PennyMac of the
TPP and tried to make the final payment. PennyMac refused to
honor the agreement and moved aggressively toward
foreclosure. (2CT244, 247, 250, 254).

PennyMac prevented Plaintiff from performing at the

time the final TPP payment was due, triggering Civ. Code §§
1511 and 1515, Prevention of Performance or Offer. This conduct
has not escaped the courts. A recent Ninth Circuit case aptly
describes a fact pattern that fits here, between PennyMac and
CMI, where the loan servicing rights transferred mere days
before the last payment was due under the TPP. “In the absence
of a valid reason for refusing to modify, it can logically be

35
inferred, through Defendant's breach of the TPP contract, that it
was simply extracting additional payments under the guise of a
loan modification offer while still intending to foreclose.” Oskoui
v. J.P. Morgan Chase Bank, Nat'l Ass'n, 851 F. 3d 851, 858 (9th
Cir. 2017). “[T]he Ninth Circuit has likewise held that a loan
modification charade can yield a viable cause of action under
California's unfair competition statute.” Id.; Cal. Bus. & Prof.
Code § 17200; Sundquist v. Bank of Am., N.A., 566 B.R. 563,
583 n.49 (Bankr. E.D. Cal. 2017).

The TAC states the note was not in default; the TPP was
in progress; Plaintiff attempted to make the last payment under
the plan; PennyMac refused to honor the TPP. None of these
facts merited even a cursory reference in the Ruling.

CMI, like MERS, was subject to a consent order at the

time the servicing rights transferred from CMI to PennyMac.3 The
CMI Consent Order ascribes to CMI the conduct that mirrors the
wrongful foreclosure alleged here. CMI solicited Plaintiff to apply
for a loan modification plan; Plaintiff accepted the offer and
performed. When the final TPP payment was due, the loan
servicing rights transferred and PennyMac began the foreclosure
process. The consent order was in effect at the time the loan
servicing rights transferred and the foreclosure commenced.

PNMAC, if it had in fact acquired the Note, was subject

to the terms of the TPP, a written contract between CMI and the
trustors, and subject to Cal. Civ. Code 1698(a) “A contract in
writing may be modified by a contract in writing.” The Holder in

3 https://www.justice.gov/sites/default/files/opa/legacy/
2012/03/12/citi-consent-judgement.pdf

36
Due Course Rule also applies, which preserves the consumer’s
right to assert the same legal claims and defenses against
anyone who purchases the credit contract. 16 C.F.R. Part 433.

C. The Ruling did not address issues raised in the TAC

that are germane to the complaint, such as the
multiple claimants to the Note; that PNMAC’s
ownership interest was in question; and that PNMAC
has offered no credible proof of ownership interest.
The Ruling did not address pertinent issues raised in the
TAC other than the Graves and Castillo matter. The TAC alleges
PNMAC was not the holder in due course. Multiple claimants to
the Note were noted: CHL said Washington Mutual held the Note
(TAC Ex49, 3CT552); BANA said the Note was with Real Time
Mortgage (TAC Ex47, 3CT548); the MERS website named BANA
as the lender of record (TAC Ex48, 3CT550); CMI, after the
PennyMac transfer, sent a letter regarding eligibility for the TPP
(TAC Ex 29, 2CT264).

Another unaddressed issue is that the TAC describes

the systematic progress toward the wrongful foreclosure that
began with CMI. This practice is precisely described in the
government’s SIGTARP4 Report of January 27, 2016, titled:
Mortgage Servicers Have Wrongfully Terminated Homeowners
Out of the HAMP Program. CMI was one of five major lenders
found to be defaulting borrowers who were not in default.
“SIGTARP’s concerns over servicer misconduct contributing to

4 Special Inspectors General of the Troubled Asset Relief

Program; go to https://www.sigtarp.gov/Audit%20Reports/
Homeowners_Wrongfully_Terminated_Out_of_HAMP.pdf

37
homeowner defaults in HAMP have been borne out. Treasury’s
findings . . . show disturbing and what should be unacceptable
results, as 6 of 7 of the mortgage servicers had wrongfully
terminated homeowners who were in “good standing” out of
HAMP.” (SIGTARP report pp. 1-2) As noted already, CMI was
subject to the National Mortgage Settlement Agreement of 2011
prohibiting it from doing exactly what was done here in 2011.

PNMAC’s ownership interest is the issue in this case.

The complaint’s allegations are to be taken as true. Hacker at
280 (citing Del E. Webb Corp. v. Structural Materials Co., (1981)
123 Cal. App. 3d 593, 604; see Alcorn v. Anbro Engineering, Inc.
(1970) 2 Cal. 3d 493, 496). Yet, the Ruling is silent on the TAC’s
allegations that PNMAC had no ownership interest in the Note
and had not shown proof of its ownership, a fact noted in the
2016 Opinion and quoted in the TAC.

The Ruling went even further than silence on PNMAC’s

unproven right to foreclose; the Defendants’ RJN was granted.
The RJN included the Garcia declaration and its second allonge,
the very documents this Court rejected as proof of PNMAC’s
ownership interest. The Bankruptcy court’s ruling was another
exhibit of the RJN; this ruling specifically declined to rule on
whether PNMAC was the real party in interest, choosing instead
to follow the conventional wisdom that a copy of the Note, the
deed of trust and the assignment of the deed of trust were
sufficient to find PNMAC had a “colorable claim” and thus
standing to seek relief from the automatic stay. (4CT726). The
ruling was based on an unpublished opinion (In re Marks, BAP
No. CC-12-1140-KiDH (9th Cir. 2012), 2012 WL 6554705) (motion

38
for lift from stay is not for adjudicating merits of claims or
defenses; merely whether movant has a colorable claim to the
property). Yvanova denounced and overruled this conventional
wisdom.
Yvanova, discussing the element of prejudice, reasoned,
“The logic of defendants' no-prejudice argument implies that
anyone, even a stranger to the debt, could declare a default and
order a trustee's sale—and the borrower would be left with no
recourse because, after all, he or she owed the debt to someone,
though not to the foreclosing entity. This would be an ‘odd result’
indeed.” Yvanova at 938 (citing Reinagel v. Deutsche Bank
National Trust Co., (5th Cir. 2013) 735 F.3d 220, 225). Continuing,
“As a district court observed in rejecting the no-prejudice
argument, ‘[b]anks are neither private attorneys general nor
bounty hunters, armed with a roving commission to seek out
defaulting homeowners and take away their homes in
satisfaction of some other bank's deed of trust.’” Id. (citing Miller
v. Homecomings Financial, LLC (S.D.Tex. 2012) 881 F. Supp. 2d
825, 832.) This line of reasoning is logically extended to a
foreclosure by an entity without an ownership interest in the
Note. PNMAC has never demonstrated its ownership interest,
even with infinite opportunities to do so.

VII. THE THIRD AMENDED COMPLAINT PLEADS FACTS

SUFFICIENT TO ALLEGE ADDITIONAL CAUSES OF
ACTION AND THOSE FACTS IDENTIFY DEFENDANTS
NOW SUED AS DOES
A. The TAC pleads sufficient facts for a wrongful

39
 foreclosure and additional causes of action
Nothing in the 2016 Opinion precludes Plaintiff from
alleging additional causes of action; discovery had not even
begun. The Hacker court found abuse of discretion in denying
leave to amend and remanded the case. Mr. Hacker’s complaint
alleged various causes of action, but not wrongful foreclosure.
The court found he pleaded sufficient facts to establish a cause
of action for wrongful foreclosure and that his other stated claims
would flow from there. Hacker, 279-280.

Plaintiff would show the facts alleged in the TAC support

causes of action that flow from the wrongful foreclosure claim.

1. Promissory estoppel

The elements of a promissory estoppel claim are (1) a

promise clear and unambiguous in its terms; (2) reliance by the
party to whom the promise is made; (3) the reliance must be both
reasonable and foreseeable; and (4) the party asserting the
estoppel must be injured by his or her reliance. Orcilla v. Big
Sur, Inc., 244 Cal. App. 4th 982, 984, 198 Cal. Rptr. 3d 715, 721
(2016) ; Laks v. Coast Fed. Sav. & Loan Assn., (1976) 60 Cal.App.
3d 885, 890-91 (Promissory estoppel is doctrine of equitable
principles to satisfy requirement consideration must be given in
exchange for promise sought to be enforced. Citing Kajima/Ray
Wilson v. Los Angeles Metro. Transp. Auth., 23, Cal. 4th 305, 310;
Alimena v. Vericrest Fin., Inc., 964 F. Supp. 2d 1200, 1222 (S.D.
Cal. 2013).

Promissory estoppel applies in this case: 1) CMI offered a

trial payment plan in writing where, if three payments were made
timely, the loan would be modified to better terms for Plaintiff and

40
the TPP payments were less than the regular payments; 2)
Plaintiff made the first two payments timely; 3) Plaintiff was in
constant communication with employees from CMI who
reassured Plaintiff of the forthcoming permanent loan
modification package; and 4) PennyMac acquired the loan
servicing rights just before the final payment was due.
Foreclosure commenced and Plaintiff lost the funds made with
the first two payments to CMI as well as the investment in the
property.

2. B & PC 17200 Unfair Competition Law

"Unlawful business activity,” under Bus. & Prof. Code §

17200, includes anything properly called a business practice and
is forbidden by law. An action based on § 17200 to redress an
unlawful business practice "borrows" violations of other laws and
treats these violations, when committed pursuant to business
activity, as unlawful practices independently actionable under §
17200 et seq. and subject to the distinct remedies provided
thereunder. Turner at 536 (citing Farmers Ins. Exchange v.
Superior Court (1992) 2 Cal.4th 377, 383). California’s Unfair
Competition Law proscribes “unlawful, unfair, or fraudulent
business acts and practices.” Alimena at 1222 (plaintiffs pled
cognizable claim for deceit against CMI, allowed to proceed with
UCL claim).

Plaintiff alleges CMI was instrumental in the timing of the

transfer of loan servicing rights from CMI to PennyMac,
PennyMac refused to continue the TPP and declared the loan in
default, thereby denying Plaintiff the benefit of a better loan. This
is conduct identified in the CMI Consent Judgment of March

41
2012 as being violative of federal laws and California’s Unfair
Competition Law, among others. (Consent Judgment, Exhibit F-2
¶C.(1),(2), (3)(d)).

3. Intentional Interference with Prospective Economic

Advantage

The elements of the tort of intentional interference with

prospective economic advantage are: (1) an economic
relationship between the plaintiff and some third person
containing the probability of future economic benefit to the
plaintiff; (2) knowledge by the defendant of the existence of the
relationship; (3) intentional acts on the part of the defendant
designed to disrupt the relationship; (4) actual disruption of the
relationship; and (5) damages to the plaintiff proximately caused
by the acts of the defendant. Blank v. Kirwan, 39 Cal. 3d 311,
330, 216 Cal. Rptr. 718, 730, 703 P.2d 58, 70 (1985) [citing
Buckaloo v. Johnson (1975) 14 Cal.3d 815, 827].

Plaintiff was in an economic relationship with CMI and the

TPP was a future economic benefit to Plaintiff; as soon as the
loan servicing rights transferred, Plaintiff made PennyMac aware
of the existence of the TPP with CMI; PennyMac intentionally
disrupted the TPP by proceeding to foreclosure; PNMAC did
foreclose on the property; Plaintiff was damaged by the
foreclosure sale conducted at the direction of PNMAC.

4. Negligent and/or Intentional Infliction of Emotional

Distress - Direct Victim Case
Plaintiff alleged a violation of § 2924(a)(6) against the
Defendants. “[T]o the extent a negligence cause of action arises
from a statutory duty under the nonjudicial foreclosure statutes,

42
Civ. Code, § 2924 et seq., the duty is sufficient to support a
negligence cause of action.” Turner at 535.

The elements of a cause of action for intentional infliction

of emotional distress are (1) the defendant engages in extreme
and outrageous conduct with the intent to cause, or with
reckless disregard for the probability of causing, emotional
distress; (2) the plaintiff suffers extreme or severe emotional
distress; and (3) the defendant's extreme and outrageous
conduct was the actual and proximate cause of the plaintiff's
extreme or severe emotional distress. (Potter v. Firestone Tire &
Rubber Co. (1993) 6 Cal.4th 965, 1001.)

Plaintiff has alleged facts to support this cause of action: 1)

The Note was not in default when PennyMac acquired the loan
servicing rights; Plaintiff worked desperately for months to
resolve the matter with PennyMac; 2) Plaintiff lost her home due
to the wrongful conduct of the named Defendants, her
grandchildren were displaced, funds depleted due to investing in
the home (significant down payment, repairs and upgrades);
Plaintiff also required the assistance and protection of an ADA
advocate, whose MC-410 application was approved by the trial
court in 2016; and 3) Plaintiff was unable to seek employment for
pursuing this matter, a full-time occupation, and the Defendants
continued toward foreclosure while simultaneously offering
Plaintiff a loan modification plan.

Plaintiff further asserts a “direct victim” claim for this cause

of action. Direct victim cases are cases in which damages for
serious emotional distress are sought based on a breach of duty
owed directly to the plaintiff. Ragland v. U.S. Bank National

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Assn., (2012) 209 Cal.App. 4th 182, 205-206 (citing Wooden v.
Raveling (1998) 61 Cal.App. 4th 1035, 1038. Plaintiff alleges a
relationship with the Defendants arose by virtue of the transfer of
loan servicing rights in 2011, and by the statutory duty imposed
by § 2924 et. seq.

5. Fraudulent Deceit

Fraudulent deceit is actionable when, “One who willfully

deceives another with intent to induce him to alter his position to
his injury or risk, is liable for any damage which he thereby
suffers.” Cal. Civ. Code 1709. The elements of fraud which give
rise to the tort action for deceit, are (a) misrepresentation; (b)
knowledge of its falsity; (c) intent to defraud, i.e., induce reliance;
(d) justifiable reliance; and (e) damage. (Lovejoy v. AT&T Corp.
(2001) 92 Cal.App.4th 85, 93 [111 Cal. Rptr. 2d 711]; see Lazar v.
Superior Court (1996) 12 Cal.4th 631, 638 [49 Cal. Rptr. 2d 377,
909 P.2d 981].)

Plaintiff has an actionable claim for fraudulent deceit

against CMI. Plaintiff was making timely payments to CMI under
the refinancing loan of 2008. a) CMI offered Plaintiff an
opportunity to modify the loan for terms more favorable to
Plaintiff; b) CMI knew the loan would not be modified, as it had a
pattern of practice in this form of deceit; c) CMI intended to
defraud Plaintiff by inducing Plaintiff into changing her position,
e.g., enter into the loan modification plan; d) as the lender, CMI
was in a position of power to offer the loan modification and
Plaintiff’s reliance was justifiable; and e) Plaintiff lost her home as
a result of her reliance on CMI’s deceit.

6. Respondeat Superior - Willful Torts - Fraud

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 Plaintiff has an actionable claim against PennyMac and
PNMAC for vicarious responsibility of the willful torts committed
by Graves and Castillo. Civil Code § 2338 assigns responsibility
to the principal for the wrongful acts committed by its agent as
part of the transaction of the business of the principal. Cal. Civ.
Code § 2338. “The Supreme Court has articulated three reasons
for applying the doctrine of respondent superior: (1) to prevent
recurrence of the tortious conduct; (2) to give greater assurance
of compensation for the victim; and (3) to ensure that the victim’s
losses will be equitably borne by those who benefit from the
enterprise that gave rise to the injury.” Mary M. v. City of Los
Angeles, (1991) 54 Cal. 3d 202, 209.

Plaintiff asserts liability against the Defendants. Plaintiff

was harmed by Graves and Castillo’s intentional fraud with
respect to the Assignment: Graves intentionally executed it and
Castillo falsely acknowledged it; this brief and the TAC detail their
conduct that led to the wrongful foreclosure. Plaintiff further
claims PennyMac and PNMAC are responsible for the harm
because Graves and Castillo committed their fraud while acting
within the scope of authority of their employment with
PennyMac, which creates the agency relationship described in
Cal. Civ. Code § 2295. PennyMac, in turn, has an established
agency relationship with PNMAC; PennyMac services the loans
that PNMAC owns.

7. Violation of § 2015.5 Out of State Affidavits

Plaintiff has an actionable claim against MERS for violating
the statute governing out of state affidavits. Cal. Civ. Proc. Code
§ 2015.5 governs affidavits executed out of state and requires

45
specific compliance, else the document is deemed unsworn. The
TAC alleges the “Substitution of Trustee and Full Reconveyance”
was executed in Arizona by ReconTrust, a subsidiary of BANA,
and contains an oath making it subject to Cal. Civ. Proc. Code §
2015.5(b) which requires the oath to be subject to penalty of
perjury under the laws of the State of California. The Arizona
instrument is not so sworn, rendering it an unsworn statement,
therefore not valid for recordation in California. MERS, through its
agents, did record the void instrument in Los Angeles County.

B. Plaintiff is no longer ignorant within the meaning of

C.C.P. § 474 of the identity of the fictitiously named
defendants and needs to amend the complaint to
identify Doe 1 and Doe 2 by their proper names
Pursuant to Rule 474 Plaintiff must amend the
complaint to identify two defendant presently sued as a DOEs 1
and 2, CitiMortgage, Inc. and MERS, Inc. Plaintiff was not aware
of each and every detail concerning the involvement of CMI and
MERS in connection with the case or with Plaintiff’s injuries. The
TAC complies with Rule 474 Fictitious names, designating
unknown defendants as DOES 1 through 20. (1CT36). Cal. Code
Civ. Proc. § 474.

At the time of the events giving rise to the wrongful

foreclosure, Plaintiff was not aware of facts giving rise to a cause
of action against the fictitiously named defendants, and
discovered that right by reason of decisions rendered after
commencement of the action. Barnes v. Wilson, (1974) 40 Cal.
App. 3d 199. 114 Cal. Rptr. 839 [“ignorant of the identity of the

46
defendant” has not been interpreted literally]; Dover v.
Sadowinski (1983) 147 Cal. App. 3d 113, 194 Cal. Rptr. 866;
General Motors Corp. v. Superior Court (1996) 48 Cal. App. 4th
580, 55 Cal. Rptr. 2d 871 [plaintiff does not relinquish rights
under § 474 simply because of suspicion of wrongdoing arising
from one or more facts known]; Herschfelt v. Knowles-Raymond
Granite Co., (1955) 130 Cal. App. 2d 347, 279 P.2d 104 [it must
not be willful ignorance such as might be removed by some
inquiry or resort to information easily accessible].

At the time of the refinancing with Best-Rate in 2008

Plaintiff relied on the lender’s statement that CMI was only the
loan servicer. Plaintiff learned CMI was also the lender during the
bankruptcy proceedings in 2012 via the first allonge to Note from
Best-Rate to CMI. Also, CMI solicited Plaintiff to apply for a loan
modification that was promised to substantially benefit Plaintiff
after three payments under a temporary plan. Well over a year
later the TPP was initiated; the three requisite payments were
lower than the regular payments under the loan. A few days
before the last payment was due, the loan servicing rights
transferred to PennyMac and the wrongful foreclosure began.

CMI was subject to a consent order similar to the MERS

Consent Order. CMI agreed not to engage, in part, in the
practices Plaintiff describes here with the TPP.5 The findings of
the Comptroller, in the Consent Order, include conduct such as,
that CMI filed or caused to be filed in state and federal courts,
affidavits not based on personal knowledge or review of the

5See https://www.occ.gov/news-issuances/news-releases/2011/
nr-occ-2011-47c.pdf).

47
relevant books and records; in courts and/or local land records
offices, numerous affidavits or other mortgage-related
documents were not properly notarized but recorded anyway;
initiating foreclosure proceedings, including non-judicial
foreclosure, without ensuring the ownership interest documents
were properly endorsed or assigned, or in possession of the
appropriate party at the appropriate time.

The acts described in the MERS Consent Order and the

National Mortgage Settlement Agreement are precisely what
Plaintiff endured with CMI, PennyMac, and PNMAC.

The MERS Consent Order found, in connection with

services provided to Examined Members related to tracking, and
registering residential mortgage loans and initiating foreclosures
(“residential mortgage and foreclosure-related services”), MERS
and MERSCORP: failed to exercise appropriate oversight,
management supervision and corporate governance, and have
failed to devote adequate financial, staffing, training, and legal
resources to ensure proper administration and delivery of
services to Examined Members; and have failed to establish and
maintain adequate internal controls, policies, and procedures,
compliance risk management, and internal audit and reporting
requirements with respect to the administration and delivery of
services to Examined Members. By reason of the conduct set
forth above, MERS and MERSCORP engaged in unsafe or
unsound practices that expose them and Examined Members to
unacceptable operational, compliance, legal, and reputational
risks.

The conduct described in the MERS Consent Order is

48
the same conduct Plaintiff experienced with CMI, MERS,
PennyMac, and PNMAC.

VIII. CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests
this Court reverse the trial court’s judgment of 2017, allow
Plaintiff to amend her complaint for any deficiencies in the TAC,
and to include additional causes of action as are warranted by
the facts presented herein, and to identify CMI and MERS
currently sued as Does 1 and 2.

DATED: December 5, 2018 Respectfully submitted,

IMPERIALE LAW GROUP

___________________________

le

HERNANDEZ LAW OFFICE

___________________________

Attorneys for Appellant

SHERRY HERNANDEZ


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 CERTIFICATE OF COMPLIANCE
Pursuant to Rule 8.204(c) of the California Rules of Court, I
hereby certify that this brief of Appellant is produced in 13-point
Helvetica Neue font, including footnotes, and contains 11,351
words, which is less than the 14,000 words permitted by the
rules of court. In making this certification, I have relied on the
word count of the computer program used to prepare the brief.

DATED: December 5, 2018

Respectfully submitted,

___________________________

Of Counsel for Appellant

SHERRY HERNANDEZ

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