ARSENIO JUNIO et al.

, Plaintiffs and Appellants,

v.
FIRST FEDERAL BANK OF CALIFORNIA et al.,
Defendants and Respondents.

No. A127632.

Court of Appeals of California, First District, Division Three.

Filed September 24, 2010.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

POLLAK, J.

Arsenio and Wilhemina Junio appeal from the dismissal of their complaint
following an order sustaining a demurrer to their initial pleading without leave to
amend. Following the nonjudicial foreclosure sale of the Junios' home for
defaulting on their loan from First Federal Bank of California, the Junios filed
their complaint containing 23 causes of action against First Federal, the lender and
beneficiary under the deed of trust securing the loan, Seaside Financial
Corporation, the trustee under the deed of trust, and Barkley Funding, the loan
broker for the transaction. The verbose and repetitious complaint alleges sundry
acts of misconduct and statutory violations by the defendants, most of which are
interwoven into many of the causes of action, rendering analysis of the sufficiency
of any single cause of action exceptionally difficult. In response to the demurrer of
First Federal and Seaside, the Junios filed an opposition defending the sufficiency
of only some of their claims. The court sustained the demurrer to each of the 22
causes of action pleaded against the two demurring parties without leave to amend
and judgment was entered in favor of these two defendants.[1] Although the Junios'
single brief on appeal argues loosely that the order sustaining the demurrer and
subsequent judgment should be reversed as to the entire complaint and that, at a
minimum, they should be given leave to amend, the brief explicitly addresses the
sufficiency of only five causes of action. Moreover, in several instances the brief
fails to address the ground on which the trial court, in its tentative ruling,[2]
indicated the demurrer would be sustained. Accordingly, we deem any objection to
the trial court's ruling regarding any of the causes of action not addressed in the
brief of appellants, and any contentions concerning those causes of action not
raised in their appeal brief, to be waived. (Mansell v. Board of Administration
(1994) 30 Cal.App.4th 539, 545-546; 9 Witkin Cal. Procedure (5th ed. 2008)
Appeal, § 701, pp. 769-771.) We agree that the demurrer was properly sustained as
to each cause of action, but conclude that the Junios are entitled to an opportunity
to amend.

BACKGROUND

The complaint, including attached supporting documents and two documents of

which the trial court without objection took judicial notice, shows the following
background facts. On October 18, 2006, the Junios executed a variable rate
promissory note to First Federal in the principal amount of $999,995 secured by a
deed of trust on their home on Overture Lane in Fairfield. On January 6, 2009, a
notice of default and election to sell under deed of trust was recorded based on a
delinquency under the promissory note of $64,535.95. On March 27, 2009, the
Junios mailed a letter purporting to rescind the note and deed of trust pursuant to
the Truth in Lending Act (15 U.S.C. § 1635), but on June 9 a Notice of Trustee's
Sale was recorded and on July 9 a trustee's deed upon sale of the Overture Lane
property to First Federal was recorded. The complaint in this action was filed on
June 23, 2009.

The complaint alleges, among other things, that misrepresentations inducing the
Junios to execute the promissory note were made to them concerning the amounts
they would be required to pay under the terms of the variable note; that the Junio's
"primary language is Tagalog, and the entire transaction was negotiated in
plaintiff's primary language" but defendants failed to comply with their obligations
under Civil Code section 1632 to advise the Junios of their right to translations of
the note and other documents; that the promissory note was assigned in violation
of Civil Code section 2932.5 et seq., rendering the note nonnegotiable and
invalidating the power of sale in the deed of trust; and that the nonjudicial
foreclosure sale was conducted in violation of certain provisions of law, voiding
the trustee's deed to First Federal.

ANALYSIS
1. FIRST CAUSE OF ACTION — QUIET TITLE

The Junios first challenge the trial court's order sustaining the demurrer to the first
cause of action, which seeks to quiet title to the Overture Lane property in
themselves. However, while the complaint alleges that the Junios are the owners
of the property, other portions of the complaint and the documents judicially
noticed show that the property has been sold to First Federal at a nonjudicial
foreclosure sale and the trustee's deed to the property has been duly recorded.
Hence, absent a viable basis for setting aside the trustee's deed, the Junios no
longer own the property and are not entitled to prevail on their quiet title cause of
action.

In their appellate brief the Junios argue that the allegations in the complaint of
fraud and breach of fiduciary duty support the sufficiency of the quiet title cause
of action. However, the only allegations of fraud relate to misrepresentations
allegedly made to the Junios when they entered the loan transaction. The
complaint alleges no fraud surrounding the foreclosure sale that could justify
setting aside the trustee's deed to First Federal. (E.g., Nguyen v. Calhoun (2003)
105 Cal.App.4th 428, 445 ["To justify setting aside a presumptively valid
foreclosure sale, the claimed irregularity must arise from the foreclosure
proceeding itself"].) Warren v. Merrill (2006) 143 Cal.App.4th 96, upon which the
Junios rely, is completely inapposite. That case involved no trustee's sale, but a
complicated scheme in which a real estate broker breached her fiduciary
obligations to the buyer of property and committed fraud "by deliberately and
falsely promising him she would place his name on title" to the property, and
failed to do so. (Id. at pp. 110-111; Newport v. Hatton (1924) 195 Cal. 132, also
cited by the Junios, is equally distinguishable, involving an elaborate scheme
under which property was purchased at a fraction of its value at a tax sale by a
party who had conspired to cause the tax delinquency, unknown to the minor
children who held a remainder interest in the property.

The Junios also argue that their purported rescission of the loan, on March 27,
2009, nullified the subsequent foreclosure sale. However, the complaint does not
allege that the Junios accompanied their demand for rescission with a tender of
any amount. On appeal they do not suggest that they could amend their complaint
to allege a tender, but contend that a tender was unnecessary. Their contention is
mistaken. (E.g., Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101,
1109 ["appellants are required to allege tender of the amount of United's secured
indebtedness in order to maintain any cause of action for irregularity in the sale
procedure"]; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112,
119.) With respect to the Junios' asserted right to rescind under the federal Truth in
Lending Act, see footnote 4, post.

Allegations included in the first cause of action also assert that First Federal
improperly assigned the Junios' note and deed of trust and thereby forfeited its
right to sell the property under the power of sale in the deed of trust. The Junios
make no argument in their brief on appeal that these allegations preserve the quiet
title cause of action, and there is therefore no need to consider the issue. We note,
however, that the complaint also alleges that no such purported assignment was
ever recorded and none of the documents relating to the foreclosure sale make any
reference to any beneficiary under the deed of trust other than First Federal.

The Junios point out that a defect in their first cause of action also raised by the
defendants' demurrer, that there was no verification to support the quiet title claim
(Code Civ. Proc., § 761.020), could be corrected by an amended complaint. While
that undoubtedly is true, what is more troublesome is that the Junios fail to suggest
what additional allegations they might make to correct the more basic deficiencies
in the quiet title cause of action. Although we entertain serious doubts about their
ability to plead a proper cause of action to quiet title, leave to amend other claims,
discussed below, unquestionably is required, and we therefore conclude that they
should be granted at least one opportunity to amend this cause of action as well.
(See, e.g., Heckendorn v. City of San Marino (1986) 42 Cal.3d 481, 486; Black v.
Browne (1940) 39 Cal.App.2d 606, 608; 5 Witkin, Cal. Procedure (5th ed. 2008)
Pleading, § 995, p. 407.)

2. THIRD CAUSE OF ACTION — FRAUD

The third cause of action, for fraud pled against all three defendants, contains a
hodgepodge of alleged misrepresentations made at different times and in different
contexts, in addition to allegations having no bearing on a claim of fraud. Besides
incorporating all of the allegations contained in the introductory portions of the
complaint, the pleading alleges that the defendants "were engaged in an illegal
scheme the purpose of which was to execute loans secured by real property in
order to make commissions, kick-backs, illegal undisclosed yield spread
premiums, and undisclosed profits by the sale of any instruments arising out of the
transaction," and in the same paragraph that defendants "represented to plaintiff[s]
and to third parties that they were the owner of the trust deed and note as either the
trustee or the beneficiary."[3] The cause of action goes on to allege, among other
things, that the promissory note was assigned in violation of Civil Code section
2932.5 et seq., that defendants misrepresented to plaintiffs that they "did qualify
for underwriting, and that the loan was within plaintiffs' personal financial needs
and limitations given the confidential financial information that plaintiff[s] shared
with defendants," that defendants "verbally promised a modification and
subsequently rejected said offer after plaintiff[s] fully complied with [First
Federal's] requests for financial information," that defendants "had a duty to
disclose the true cost of the loan which was made to plaintiff[s], and the fact that
plaintiff[s] could not afford the loan in the first instance," that defendants
misrepresented that they "were working for the benefit of plaintiff[s] and in
plaintiff[s'] best interest to obtain for them the best loan and at the best rates
available," that the promissory note is a contract of adhesion and the terms of the
loan are unconscionable, for which reason defendants cannot enforce the loan "and
any non-judicial foreclosure arising therefrom is void," that the Junios' default
"was occasioned by the rejection of proper tender. However, plaintiff[s were] not
in default because defendants breached the terms of the Note prior to any alleged
breach of plaintiff[s], and therefore, any breach by plaintiff[s] should be excused,"
that (on information and belief) the note was "sold and repackaged on multiple
occasions" so that defendants lost the right to declare a default, that the foreclosure
sale was not conducted in accordance with the requirements of several provisions
of the Civil Code and Commercial Code, and that "the employees and/or agents of
[First Federal] and/or Barkley Funding represented that said employees and/or
agents could work around the fact that plaintiffs' credit was not in good standing
and could get plaintiff[s] approved for the loan. Said defendants did not disclose at
any time to plaintiff[s] that plaintiff[s'] eventual mortgage payment(s) would
exceed 60% of their plaintiff[s'] monthly income."
In sustaining the demurrer to this cause of action, the trial court cited Stansfield v.
Starkey (1990) 220 Cal.App.3d 59 and Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal.App.4th 153, both of which cases stress the well-recognized rule that
allegations of fraud must be made with specificity. "This particularity requirement
necessitates pleading facts which `show how, when, where, to whom, and by what
means the representations were tendered.'" (Stansfield v. Starkey, supra, 220
Cal.App.3d at p. 73.) The trial court also pointed out that documents attached to
the complaint and judicially noticed "contradict and disprove plaintiffs' fraud
allegations."

There is no doubt that plaintiffs have failed to allege with the requisite
particularity the facts concerning any alleged misrepresentations that induced them
to enter the loan transaction. Among other impermissible generalities, the constant
reference to statements by the "defendants" fails to identify who made the asserted
misrepresentations, or even whether these statements were made by agents of the
Junios' broker, Barkley Funding, or by agents of the demurring parties. Moreover,
the loan documents do negate some of the allegations that are contained in the
purported cause of action, although those allegations are generally misplaced in
the cause of action for fraud. The trial court undoubtedly was correct to sustain a
demurrer to this cause of action, but we reluctantly conclude that the court erred in
denying leave to amend this cause of action. Although the blunderbuss nature of
the pleading creates some doubt as to the Junios' ability to allege a proper cause of
action for fraud, we cannot say that the deficiencies are beyond correction.
Nothing in the complaint precludes the possibility that the Junios can allege
actionable misrepresentations that induced them to enter the loan transaction to
their detriment. They are entitled to at least one opportunity to make those
corrections. (See, e.g., M. G. Chamberlain & Co. v. Simpson (1959) 173
Cal.App.2d 263, 267 ["The complaint is prolix and discursive. It abounds in
evidence, conclusions of fact, conclusions of law, argument, and immaterial
matter. The rule that the complaint must contain a statement of the facts in
ordinary and concise language is completely ignored. [Citation.] Nevertheless, if,
intermingled with such matters, there are averments of ultimate facts sufficient to
constitute a cause of action, it was error to sustain the demurrer without leave."].)

3. EIGHTH CAUSE OF ACTION — CIVIL CODE SECTION 1632

The eighth cause of action alleges that the defendants violated Civil Code section
1632, in that the loan was negotiated in the Junios' primary language, Tagalog, and
the defendants failed to provide the Junios with translations of the loan documents
into Tagalog as required by the statute. In challenging the trial court's ruling
sustaining the demurrer to this cause of action, the Junios mischaracterize the
court's ruling. The Junios assert that the court sustained the demurrer "on the basis
that Civil Code § 1632 does not apply to loan or extension of credit secured by
real property," whereas the statute applies to any "loan or extension of credit for
use primarily for personal, family or household purposes" if the loan is subject to
the provisions of Business and Professions Code section 10240, which it is. (Civ.
Code, § 1632, subd. (b)(4).) The court's ruling was in fact as follows: "Violation of
Civil Code 1632 does not pertain to real estate loans other than those negotiated by
real estate brokers. Civil Code Sec. 1632 (b)(2). Plaintiff have alleged no facts that
demonstrate co-defendant Barkley Funding was acting as agent of First Federal
and/or Seaside." Thus, the court did not rule that the statute is inapplicable to the
loan transaction, but that the statute places obligations only upon the loan broker
and the complaint does not allege that the loan broker in this case was the agent of
the demurring parties.

Civil Code section 1632, subdivision (b) applies to "[a]ny person engaged in a
trade or business who negotiates primarily in . . . Tagalog . . . orally or in writing,
in the course of entering into" various transactions, including those within
subdivision (b)(4) of the statute. The complaint alleges that "[o]n or about
10/1/2006 defendant broker [i.e., Barkley Funding] engaged with plaintiff[s] in the
application and negotiation process for a mortgage loan to be taken against the
subject property," that the Junios' "primary language is Tagalog, and the entire
transaction was negotiated in plaintiff[s'] primary language," and that the
"defendants" failed to comply with the requirements of section 1632. Although no
party addresses the issue, we shall assume that if the only negotiations that were
conducted in Tagalog were between the Junios and agents of Barkley Funding,
that all discussions with agents of First Federal and Seaside were in English, and
that there was no agency relationship between First Federal or Seaside and
Barkley Funding (see Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 782),
that neither First Federal nor Seaside would have any responsibility for
compliance with section 1632. The trial court was correct that the complaint does
not allege any facts that bring the statute into play under these assumptions, but
there are also no allegations negating the possibility that representatives of First
Federal were directly or indirectly involved in the discussions with the Junios to
such an extent that it was bound to ensure compliance with the statute. Not
knowing the facts, we are in no position to express an opinion as to the application
of the statute in this case, but we see no reason why the Junios should not be
granted leave to amend to allege facts, if they can, that may invoke the statute as to
one or both of the demurring parties.

4. TENTH CAUSE OF ACTION — VIOLATION OF TRUTH IN

LENDING ACT

The Junios contend that the trial court erred in sustaining the demurrer to their
tenth cause of action for violation of the Truth in Lending Act (15 U.S.C. § 1638)
(TILA). They argue at length that unlike the right to rescind under California law,
the right to rescind for noncompliance with the TILA disclosure requirements
which they have alleged does not require that a tender accompany the demand for
rescission. While there appears to be some differences among the federal courts
relating to this issue (compare Yamamoto v. Bank of New York (9th Cir. 2003) 329
F.3d 1167 with Williams v. Homestake Mortg. Co. (11th Cir. 1992) 968 F.2d
1137), it is unnecessary to address that issue here. The trial court sustained the
demurrer to the tenth cause of action on the ground that it is barred by the one year
statute of limitations. The Junios do not address the limitations issue in their single
appellate brief, and the trial court's ruling appears correct. (15 U.S.C. § 1640(e).)
The demurrer to this cause of action was properly sustained.[4]

5. TWELFTH CAUSE OF ACTION — BUSINESS AND

PROFESSIONS CODE SECTION 17200

The Junios next challenge the ruling sustaining the demurrer to the twelfth cause
of action, for violation of the unfair competition law (Bus. & Prof. Code, § 17200)
(UCL). Although the complaint incorporates all of the prior allegations into this
cause of action without specifying the specific unfair or unlawful practices on
which the cause of action is based, in their appellate brief the Junios contend that
the unlawful practices supporting this claim include "timely violation of RESPA
[the Real Estate Settlement Procedures Act, 12 U.S.C. § 2607], unlawful denial of
rescission right under TILA, violation of Civil Code section 1632, and wrongful
foreclosure" as well as "their broker's intentional deception about the
attractiveness of their loan terms and their lender's providing materially misleading
disclosure information."

In explanation of its ruling, the trial court simply cited Ingels v. Westwood One
Broadcasting Services, Inc. (2005) 129 Cal.App.4th 1050, presumably for the
proposition that "`[a] defendant cannot be liable under § 17200 for committing
"unlawful business practices" without having violated another law'" (id. at p.
1060), and Business and Professions Code section 17204, presumably for the
limitation on private actions to "a person who has suffered injury in fact and has
lost money or property as a result of the unfair competition."

While we do not dispute the insufficiency of the cause of action as presently

pleaded, we believe the trial court too quickly concluded that the Junios cannot
properly allege a cause of action under the UCL. Having rejected the Junio's
ability to state a claim for the denial of a right to rescind under TILA or for
wrongful foreclosure, we agree with the defendants that these allegations cannot
support a UCL claim. However, as to the allegation that defendants violated
RESPA (the federal statute prohibiting kickbacks and the payment of other
proscribed fees), defendants argue that because the trial court also sustained a
demurrer to another cause of action based directly on alleged RESPA violations on
the ground that the claim is barred by a one year statute of limitations, that claim
cannot support the UCL cause of action. Defendants are mistaken. "The UCL has
a four-year statute of limitations, which applies even if the borrowed statute has a
shorter limitations statute." (Blanks v. Seyfarth Shaw LLP (2009) 171 Cal.App.4th
336, 364.) Certainly greater specificity in the pleadings will be required to state a
proper claim under the UCL for the violation of RESPA, but at this point there is
no basis for assuming that such specificity cannot be provided. Moreover, as to
other claims made by the Junios, such as the violation of Civil Code section 1632
discussed above, the Junios' inability to properly plead and prove such a violation
has not yet been conclusively established. However skeptical the court may be as
to the Junios' ability to properly plead such a cause of action, they are entitled to at
least one opportunity to amend in an attempt to do so.

CONCLUSION

Although the appellants' brief on appeal suggests more general disagreement with
the trial court's ruling on a variety of grounds, we have addressed the only causes
of action to which the brief specifically directs our attention. For the reasons stated
above, we conclude that the trial court correctly sustained the demurrer to each of
these causes of action, but that it abused its discretion in denying leave to amend.
In repleading, the Junios should take care to provide the specificity necessary to
meaningfully evaluate the sufficiency of their claims, and to avoid redundancy and
the inclusion in each cause of action of alleged facts having no bearing on the
particular claim asserted therein. The court will not look with favor on another
complaint as poorly drafted as the one we now review.

DISPOSITION

The judgment is reversed and the matter is remanded to the trial court with
directions to grant the Junios leave to amend. The parties shall bear their
respective costs on appeal.

We concur:

McGuiness, P. J.

Jenkins, J.

[1] On appeal, the Junios argue that the trial court erred in also dismissing Barkley Funding, who
had not yet appeared in the action. However, the court stated explicitly at the hearing on the
demurrer that it was not ruling on the sufficiency of claims against the nonappearing party and the
judgment entered in favor of First Federal and Seaside says nothing about Barkley Funding.
Neither the rulings of the trial court nor the disposition of this appeal address the Junios' claims
against Barkley Funding.

[2] The trial court issued a lengthy tentative ruling, stating separately the ground and/or authority
on which it sustained the demurrer to each of the 22 challenged causes of action. The tentative
ruling was marked "CONFIDENTIAL—DO NOT FILE" and "(for faxing)—DO NOT POST)."
Although at the conclusion of the hearing on the demurrer the court ruled that "[t]he tentative
ruling is the ruling of the court," the tentative ruling was not included in the clerk's transcript on
appeal. The tentative ruling has been added to the record on appeal by an order granting an
unopposed motion to augment the record. In the future, the necessity for such a motion will be
avoided if a tentative ruling adopted as the court's order is appended to the order and thus made
part of the record.

[3] This paragraph of the complaint continues: "Based on this representation they caused a notice
of default to be issued and recorded without disclosing their true role, and thereafter a notice of
intent to foreclose and finally defendants executed a foreclosure, which was completed,
permanently affecting plaintiff right, title and interest in the subject property."

[4] On this record we do not address the Junios's contention that their March 27, 2009 notice of
rescission was effective because no tender was necessary to support a demand for rescission under
TILA, nor do we consider the defendants' contention that a federal regulation precludes any right to
rescind a residential mortgage transaction under TILA. (12 C.F.R. § 226.23 (f)(1); Derakhshan v.
Mortgage Electronic Registrations Systems, Inc. (June 29, 2009) 2009 U.S. Dist. LEXIS 63176,
p.3.) On remand, we do not preclude plaintiffs from attempting to plead a proper cause of action
predicated on this contention, nor do we rule on the sufficiency of any such purported cause of
action.