I. BACKGROUND

In 2005, Citrus purchased a 9.25-acre parcel in La Quinta, California to develop a

residential housing tract. In 2007, Citrus entered into a “Construction Loan Agreement”

with First Heritage Bank, N.A. (First Heritage) to fund the construction’s first phase,

which consisted of ten completed houses, including three models, and 19 finished lots.

First Heritage was to disburse to Citrus a total of $13,394,000, including $6,450,000 at

closing to refinance Citrus’s preexisting debt secured by the property, and the remainder

1 Stearns and Rescon are related entities. As noted in a federal appellate opinion arising from related litigation, the Federal Deposit Insurance Corporation (FDIC) “created Rescon, and assigned its interest [in Citrus’s loan] to it.” (FNBN RESCON I, LLC v. Citrus El Dorado, LLC (9th Cir. 2018) 725 Fed. Appx. 448, 450.) In a separate, contemporaneous transaction, a subsidiary of Stearns “purchased the FDIC’s sole membership interest in Rescon . . . .” (Ibid.) Stearns also “agreed to service the loan on Rescon’s behalf.” (Ibid.)

2 in a series of incremental draws during construction. The loan was secured by a deed of

trust on the property.

After Citrus received some of the loan funds, First Heritage failed and the FDIC

was appointed as its receiver in July 2008. First National Bank of Nevada, which

participated in the loan with First Heritage, also failed and was placed into FDIC 2 receivership. The FDIC, as receiver for First Heritage, funded several more draw

requests by Citrus. The terms of Citrus’s loan provided for a maturity date of October 16,

2008, when the loan had to be fully repaid, with interest. The FDIC and Citrus agreed,

however, to extend the maturity date to April 16, 2009.

In February 2009, the FDIC notified Citrus that its loan had been assigned to “a

new lender” and that payments on the loan should be made to Stearns. When Stearns

began servicing the loan, there was a balance of undisbursed loan funds of over 3 $609,000. But when Citrus submitted a draw request for $169,856.01 in March 2009,

Sterns declined to fund it.

2 In this context, to participate in a loan means to purchase an interest in the loan. (See, e.g., Southern Pacific Thrift & Loan Assn. v. Savings Assn. Mortgage Co. (1999) 70 Cal.App.4th 634, 637 [describing loan participation agreement].) Here, First Heritage was the originator of the loan and lead lender. Initially, First National Bank of Arizona was the participant lender. First National Bank of Nevada acquired that participating interest by merger with First National Bank of Arizona, before First National Bank of Nevada in turn failed and was placed into FDIC receivership. 3 Invoices sent by Stearns show over $12.7 million was disbursed, yielding a remainder of about $609,000. Citrus has disputed those invoices. The trial court, however, found in favor of Stearns and Rescon as to how much Citrus owed, as well as on the adequacy of Stearns’ accounting showing how those amounts were calculated.

3 On April 27, 2009, Stearns sent Citrus a “Notice of Event of Default and Demand

for Immediate Payment.” The notice stated that the loan had “matured on April 16,

2009” and that required payments had not been made, constituting an “immediate Event

of Default with no rights to cure . . . .” The notice gave Citrus several weeks to remit the

“total payoff balance” of over $13 million, including a principal balance of over $12.7

million. Citrus made no payment in response.

In July 2009, defendant Chicago Title Company (Chicago Title) recorded a

“Substitution of Trustee,” substituting Chicago Title as the new trustee under the deed of 4 trust. The document identified Rescon as the “present Beneficiary” of the deed of trust,

and showed that it was executed by Stearns as Rescon’s “exclusive servicing agent.” On

the same date, Chicago Title recorded a “Notice of Default and Election to Sell,” also

executed by Stearns as Rescon’s “exclusive servicing agent.” Nevertheless, no

foreclosure was completed then. Instead, the parties engaged in years of litigation, 5 mostly in federal court.

With that litigation ongoing, in November 2014, Chicago Title recorded a new

“Notice of Default and Election to Sell.” According to this document, there was a total

balance due of over $20 million as of October 23, 2014. In February 2015, Chicago Title

4 The trial court sustained Chicago Title’s demurrer to the claims Citrus asserted against it in this action, and we affirmed that ruling. (See Citrus El Dorado, LLC v. Chicago Title Co. (2019) 32 Cal.App.5th 943, 952.) 5 This litigation is described in more detail in our earlier opinion. (See Citrus El Dorado, LLC v. Stearns Bank, N.A., supra, E067610.)

4 issued a “Notice of Trustee’s Sale,” stating that the property would be sold at public

auction. The federal district court declined to stay the foreclosure sale. A “Trustee’s

Deed Upon Sale,” recorded March 6, 2015, indicates that the public auction took place on 6 March 5, 2015, and that Rescon was the highest bidder with a credit bid of $7.2 million.

The federal district court rejected Citrus’s efforts to add claims arising from the

foreclosure sale to its litigation. That case culminated in a jury verdict in favor of Citrus

on its breach of contract claim against Stearns (but not Rescon), awarding Citrus damages

of $1.2 million. (See FNBN Rescon I, LLC v. Citrus El Dorado, LLC, supra, 725 Fed.

Appx. at p. 450.) That award was affirmed on appeal. (Id. at p. 453.) The same jury

found against Rescon on its claims against several guarantors of Citrus’s loans, finding

Rescon had “acted in bad faith and was therefore precluded from recovering on the 7 guaranty.” (FNBN Rescon I, LLC v. Citrus El Dorado, LLC, supra, at p. 451.) That

finding, too, was affirmed on appeal. (Id. at p. 453.)

Citrus filed this lawsuit in March 2016. We held that the trial court properly

dismissed on demurrer several of Citrus’s alleged causes of action, but Citrus had

6 At a nonjudicial foreclosure sale, the lender “is entitled to make a credit bid up to the amount of the outstanding indebtedness.” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1238.) “The purpose of this entitlement is to avoid the inefficiency of requiring the lender to tender cash which would only be immediately returned to it.” (Ibid.) 7 The guarantors included Scott Shaddix, the managing member of Citrus, as well as Craftsmen Homes, LLC, and Sweetwater Holdings, Inc. (FNBN Rescon I, LLC v. Citrus El Dorado, LLC, supra, 725 Fed. Appx. at p. 450.)

5 adequately pleaded a cause of action for wrongful foreclosure. (Citrus El Dorado, LLC

v. Stearns Bank, supra, E067610.)

After Citrus presented its case in chief in a bench trial on its wrongful foreclosure

claim, Stearns and Rescon moved for judgment. (See Code Civ. Proc., § 631.8, subd.

(a).) The trial court tentatively indicated it would grant the motion, but it allowed Citrus

to file a written opposition and make an offer of proof. (Ibid.) The trial court was not

persuaded by Citrus’s opposition and offer of proof, so it granted the motion for

judgment. It explained its ruling in a statement of opinion proposed by Stearns and

Rescon and adopted over Citrus’s objections. The trial court also denied Citrus’s motion

for new trial.

II. DISCUSSION

Citrus contends that Stearns and Rescon’s motion for judgment should have been 8 denied and asks that we reverse and remand for a new trial. We are not persuaded.

A. Applicable Law

The “basic 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 a power of sale in a mortgage or deed of trust; (2) the party attacking

the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and

8 Stearns and Rescon argue that Citrus “forfeited its appeal by not fairly summarizing the evidence, and by failing to attempt to demonstrate error under the applicable standard of review.” We disagree with that sweeping claim, but, as specifically noted, however, we find some arguments forfeited.

6 (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.’”

(Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408 (Miles).)

“Recognized exceptions to the tender rule include when: (1) the underlying debt is void,

(2) the foreclosure sale or trustee’s deed is void on its face, (3) a counterclaim offsets the

amount due, (4) specific circumstances make it inequitable to enforce the debt against the

party challenging the sale, or (5) the foreclosure sale has not yet occurred.” (Chavez v.

Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062.)

Under California contract law, “hindrance of the other party’s performance

operates to excuse that party’s nonperformance.” (Erich v. Granoff (1980) 109

Cal.App.3d 920, 930; see Civ. Code, § 1511 [“The want of performance of an

obligation . . . in whole or in part, or any delay therein, is excused by the following

causes, to the extent which they operate: [¶] . . . [w]hen such performance . . . is

prevented or delayed by the act of the creditor”].) Whether a party caused the delayed

performance or nonperformance of the other is a question of fact, to be decided by the

finder of fact. (See Semas v. Bergmann (1960) 178 Cal.App.2d 758, 762 [stating that a

“promisor’s delay in performance is excused to the extent acts of the promisee caused

such delay” and reviewing causation findings for substantial evidence].)

“The standard of review of a judgment and its underlying findings entered

pursuant to [Code of Civil Procedure] section 631.8 is the same as a judgment granted

after a trial in which evidence was produced by both sides.” (San Diego Metro. Transit

7 Dev. Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 528.) “In reviewing a

judgment based upon a statement of decision following a bench trial, we review questions

of law de novo.” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) In many cases,

we review findings of fact for substantial evidence. (Ermoian v. Desert Hospital (2007)

152 Cal.App.4th 475, 501.) But when a party challenges on appeal a ruling that it failed

to carry a burden of proof, the substantial evidence standard is inappropriate, and “‘the

question . . . becomes whether the evidence compels a finding in favor of the appellant as

a matter of law.’” (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011)

196 Cal.App.4th 456, 465-466 (Sonic).) Specifically, the question becomes whether the

appellant’s evidence was (1) “‘“uncontradicted and unimpeached” and (2) “of such a

character and weight as to leave no room for a judicial determination that it was

insufficient to support a finding.”’” (Ibid.)

B. Analysis

The trial court found that Citrus had proved none of the elements of a wrongful

foreclosure cause of action. Citrus asserts that the evidence compels the opposite

conclusion. We find that Citrus is incorrect, focusing our discussion on Citrus’s

arguments on the first element, whether the foreclosure sale was “‘illegal, fraudulent, or

willfully oppressive.’” (Miles, supra, 236 Cal.App.4th at p. 408.)

1. Stated Redemption Amount

Citrus asserts that the “redemption figure” stated in the 2014 default notice—about

$20.2 million—was “wrongfully inflated.” Citrus contends that amount, based on a

8 principal balance of over $12.7 million, is wrong because “[t]he evidence only shows

approximately $8.7 million in loan proceeds, not $12.7 million.”

The evidence Citrus cites, however, accounts for only disbursements made directly

to Citrus. It does not account for disbursements made from loan funds directly to vendors

or government tax agencies that did not pass through Citrus accounts. The trial court

reasonably decided that the evidence, viewed in that context, does not compel the

conclusion Citrus would prefer.

Moreover, there is no reason why the trial court should have ignored other record

evidence that, particularly when viewed in the light most favorable to the judgment,

affirmatively supports its conclusions about principal balance and total redemption

amount. Such evidence includes contemporary account statements, audits, and other

records from Stearns and, earlier, the FDIC. It also includes numbers used and

9 9 statements made by Citrus itself, including in its final draw request, in a 2009 10 11 “Presentation of Claim” against the FDIC, and in correspondence with Stearns.

Thus, Citrus’s contention that the redemption amount stated in the default notice

was inflated is not supported by uncontradicted and unimpeached evidence, as would be 12 required to disturb the trial court’s findings. (See Sonic, supra, 196 Cal.App.4th at pp.

465-466.) Citrus has not demonstrated the default notices were “illegal” or “fraudulent,”

9 Citrus stated that the undisbursed funds “before this draw” totaled “$609,290”, applied for payment of $169,856.01, and certified that the balance remaining unfunded as a result would be $439,433.61. Given an initial total of funds available under the loan of $13,394,000, it follows that $12,784,710.38 in loan funds had been previously disbursed, exactly the amount stated in the default notice. 10 Citrus stated that when First Heritage failed, “there was $2,358,863.36 in funds available” for disbursement under the loan agreement, which correlates to a principal balance at the time of over $11 million even before later distributions by the FDIC. 11 In correspondence with Stearns in April 2009 related to Citrus’s final draw request, Citrus commented that in Stearns’s records of the loan, received from the FDIC, “[t]he total funded is correct,” though “the payees are not.” 12 Citrus asserts that its “2012 judgment against Rescon affected the amount of interest that could be included in the notices, making the notices defective.” This passing assertion is not developed with reasoned argument, let alone citation to legal authority and evidence in the record. Similarly, elsewhere in its briefing, Citrus states that the “$20+ million redemption figures in the notices also resulted from gross miscalculations of interest and fees.” Again, however, the statement is made in passing, without citation to evidence or authority, and without explanation of the reasoning underlying it. We decline to develop these arguments for Citrus and deem them forfeited. (See Cal. Rules of Court, rule 8.204(a)(1)(B) [appellate briefs must [“[s]tate each point under a separate heading or subheading summarizing the point, and support each point by argument and, if possible, by citation of authority”; Heavenly Valley v. El Dorado County Bd. of Equalization (2000) 84 Cal.App.4th 1323, 1345, fn. 17 [“[W]e need not address contentions not properly briefed”].)

10 or that the foreclosure was wrongful in any other way because of an inflated redemption

amount.

2. Itemization of Amounts Owed

Citrus argues that the foreclosure was wrongful because Citrus “received no

proper response” to its demands for an accounting. The operative word here is “proper,”

as there is no dispute that Citrus received responses to its 2009 and 2013 requests for an

accounting. Citrus just does not view the responses it received as adequate. For the

reasons below, we do.

During the nonjudicial foreclosure process, “‘the debtor/trustor is given several

opportunities to cure the default and avoid the loss of the property.’” (Turner v. Seterus,

Inc. (2018) 27 Cal.App.5th 516, 527; Civ. Code, § 2924c, subd. (a)(1).) Generally, the

debtor “may either reinstate, or cure, the loan by bringing [its] payments current no later

than five business days before the scheduled sale [citations], or [it] may redeem, or pay

off, the loan by paying off the entire amount owed before the sale occurs [citations].”

(Crossroads Investors, L.P. v. Federal National Mortgage Assn. (2017) 13 Cal.App.5th

757, 777-778.) By statute, the recorded notice of default must inform the debtor that

“[u]pon your written request, the beneficiary or mortgagee will give you a written

itemization of the entire amount you must pay,” and must include an address and phone

number to contact “[t]o find out the amount you must pay, or to arrange for payment to

stop the foreclosure . . . .” (Civ. Code, § 2924c, subd. (b)(1).)

11 Here, as of the April 16, 2009, extended maturity date of Citrus’s loan, the entire

amount owed was due, so making up late payments was not an option. Citrus twice

requested in writing an accounting, and twice received a response. These responses,

delivered within weeks after each request, stated the total payoff balance as of a

particular date, with the total broken out into principal, interest, and several categories of

fees and costs. The responses were more than adequate to inform Citrus of the total

amount needed to stop the foreclosure and provided some information about how the

amount was calculated. In our view, that is all that Civil Code section 2924c requires.

Citrus interprets “written itemization of the entire amount you must pay” (Civ.

Code, § 2924c, subd. (b)(1)) to mean something like a complete accounting of each

individual disbursement, interest charge, fee, and so on, rather than a summary consisting

of “lump sum” amounts. Citrus cites no authority in support of this reading of the

statutory language, however, and we are aware of none. The “written itemization”

provision is intended to give the borrower updated information about the amount needed

to reinstate or redeem the loan, which may properly include certain amounts beyond what

is stated in the notice of default. (See Civil Code, § 2924c, subds. (a), (b)(1); Anderson v.

Heart Fed. Sav. & Loan Assn. (1989) 208 Cal.App.3d 202, 217 (Anderson) [upon

request, the beneficiary or mortgagee must “inform [borrower] correctly about the

amounts ‘then due’ on the obligations properly noticed in the notice of default and the

foreclosure costs”].) That information allows the borrower “to project the amount

presently due and to tender that amount,” either to cure the default or redeem the loan,

12 and thus stop the foreclosure. (Anderson, supra, 208 Cal.App.3d at p. 217.) It is the total

amount due, not a breakdown and justification of every portion of the debt, that matters

for that limited purpose.

Moreover, even in the absence of any response to a written request under Civil

Code section 2924c, let alone a purportedly inadequate response, the borrower may

reinstate or redeem the loan by tendering payment based on other available information.

(See Crossroads Investors, L.P. v. Federal National Mortgage Assn., supra, 13

Cal.App.5th 757, 793 (Crossroads) [“Crossroads could have reinstated or redeemed the

loan by tendering payment based on the information Fannie Mae had provided in the

notice of default or the bankruptcy proof of claim”].) Where the parties dispute the

appropriate tender amount, the borrower may pay the higher amount “under protest . . . to

maintain possession of the property, and then seek to recover the amount it overpaid.”

(Ibid.) In the alternative, the borrower may tender a lower amount, and later satisfy the

tender requirement of a wrongful foreclosure claim by proving that the tendered amount

was equal to or exceeded the required amount. (See Anderson, supra, 208 Cal.App.3d at

p. 217 [borrower will “prevail on the merits of the issue of sufficiency of the amount of

tender” if proven at trial that tendered amount equaled or exceeded amount required to

reinstate].) And, if the beneficiary or mortgagee’s failure to provide accurate information

caused the borrower’s tender to be less than the amount needed to cure the default or

redeem the loan, the borrower’s shortfall will be excused. (Ibid.)

13 No authority supports Citrus’s suggestion that just a failure to provide an adequate

itemization of the redemption amount, without more, may render a foreclosure illegal,

fraudulent, or willfully oppressive. Citrus cites Crossroads, supra, 13 Cal.App.5th 757,

782, for the proposition that “the lender’s failure to provide the requested accounting may

result in a wrongful foreclosure.” In fact, Crossroads observes that a beneficiary’s

failure to provide requested accounts combined with other circumstances can create

wrongful foreclosure liability. (Crossroads, supra, 13 Cal.App.5th at p. 782.) In

Crossroads, those other circumstances included the beneficiary’s refusal to accept

tenders, a broken promise to give the borrower notice, and the borrower’s “many”

statements that it “was ready, willing, and able to cure the default or pay off the loan

upon being provided the amount necessary to do so.” (Id. at pp. 769 [quote], 782.)

Our facts are meaningfully different. Unlike the borrower in Crossroads, Citrus

received payoff amounts several times but never tendered payment or expressed intention 13 to do so, either at the amount stated or at another amount it believed correct.

Crossroads does not suggest that failure to provide the requested accounting alone can

demonstrate a foreclosure sale was illegal, fraudulent, or willfully oppressive.

3. Substitution of Trustee

Citrus argues that the foreclosure on the property is “void for lack of a proper

trustee.” In its view, because the recorded “Substitution of Trustee” appointing Chicago

13 Citrus has not argued that its offers to purchase the loan at discounted amounts were tender offers. Correctly so. (See Crossroads, supra, 13 Cal.App.5th at p. 789 [for a tender to be valid it “‘must be of full performance’” and “‘unconditional’”].)

14 Title as the new trustee under the deed of trust was signed by Stearns in its capacity as

“exclusive servicing agent,” rather than directly by the beneficiary of the deed of trust, it

is void. It is a close question whether this argument is simply without merit or whether it

is also frivolous. (See Kalnoki v. First American Trustee Servicing Solutions, LLC

(2017) 8 Cal.App.5th 23, 40 [an agent on behalf of beneficiary may execute substitution

of trustee]; Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 872 [same].)

Either way, it does not warrant extended discussion.

4. Rescon Authority to Foreclose

Citrus contends that the foreclosure was unlawful because Rescon lacked the

authority to foreclose, proposing several reasons it believes that to be so. We find Citrus

has not demonstrated that Rescon lacked authority to foreclose.

First, Citrus argues that, under the terms of its loan and California law, the FDIC

and Rescon “needed Citrus’s consent for an assignment.” It is undisputed that Rescon

and the FDIC did not seek or receive such consent. Citrus concludes on that basis that

“the alleged assignment to Rescon is void for lack of written consent from Citrus,” and

thus Rescon had no authority to foreclose. Citrus’s conclusion, however, does not follow

from its premises.

“Congress has granted the FDIC as receiver express statutory authority to dispose

of receivership assets, thereby reducing the losses borne by federal taxpayers when

federally insured financial institutions . . . fail.” (Sahni v. American Diversified Partners

(9th Cir. 1996) 83 F.3d 1054, 1058 (Sahni).) The FDIC’s power to dispose of

15 receivership assets includes the power to “place the insured depository institution in

liquidation and proceed to realize upon the assets of the institution . . . .” (12 U.S.C. §

1821, subd. (d)(2)(E).) It also includes the power to “transfer any asset or liability of the

institution in default . . . without any approval, assignment, or consent . . . .” (Id., § 1821,

subd. (d)(2)(G)(i)(II).) Courts may not take “any action . . . to restrain or affect the

exercise of powers or functions of the [FDIC] as . . . a receiver.” (Id., § 1821, subd. (j).)

“Because Congress specifically exempted the FDIC from having to obtain any

consent when effectuating the sale or transfer of receivership assets,” state law that would

require such consent is “preempted.” (Sahni, supra, 83 F.3d at p. 1059.) Sahni involved

a conflict with a California statute regarding “the rights, powers, and liabilities of general

partners” on the “issue of consent.” (Id. at p. 1059.) The principle also applies, however,

to other parts of state law, including contract law. (See Volges v. Resolution Trust Corp.

(2d Cir. 1994) 32 F.3d 50, 52 [receivers have broad powers to dispose of the assets of a

failed institution as they see fit, even if sale would violate state contract law].) Thus, the

FDIC’s assignment of the loan to Rescon without Citrus’s consent was “well within its

broad statutory powers as receiver” (Sahni, at p. 1059) even assuming Citrus is correct

that the loan’s terms, as interpreted under California contract law, would require Citrus’s

consent for such an assignment.

The Ninth Circuit’s holding in Bank of Manhattan, N.A. v. FDIC (9th Cir. 2015)

778 F.3d 1133 (Bank of Manhattan) does not require a different conclusion. Bank of

Manhattan and similar cases hold that the FDIC may not “breach pre-receivership

16 contracts without consequence.” (Id. at p. 1137 (italics added).) That consequence,

however, is only the possibility that the FDIC could be held liable for contract damages.

(Bank of Manhattan, 778 F.3d at p. 1136 [if “the [receiver] violate[s] pre-receivership

contracts rather than repudiate them [federal law] does not afford the [receiver] immunity

from subsequent actions for breach of contract”]; see also, e.g., Ambase Corp. v. U.S. (Ct.

Cl. 2004) 61 Fed.Cl. 794, 799 [federal law “is not directed to the pursuit of money

damages ex post as the result of FDIC actions.”].) Like any contracting party, absent

special circumstances not applicable here, the FDIC as receiver may choose “to breach a 14 contract and pay damages . . . instead of being required by law to perform.” (Huynh v.

Vu (2003) 111 Cal.App.4th 1183, 1198; see Volges, supra, 32 F.3d at p. 52; 12 U.S.C. §

1821, subd. (d)(2)(J)(ii) [as receiver, FDIC may “take any action authorized by this Act,

which the [FDIC] determines is in the best interests of the depository institution, its

depositors, or the [FDIC]”].) No authority supports Citrus’s view that an action by the

FDIC that is within the scope of its power as receiver, but in breach of a pre-receivership

contract, is void.

Citrus also raises a hodgepodge of other arguments based on purported defects in

the documents showing assignment of the loan to Rescon. The arguments Citrus raises,

however, are of the sort routinely rejected in analogous contexts. (See, e.g., Debrunner v.

14 The federal district court dismissed the FDIC from its litigation because Citrus had failed to exhaust its administrative remedies. (See Citrus El Dorado, LLC v. Stearns Bank, supra, E067610.)

17 Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 440 [“Plaintiff’s reliance

on the California Uniform Commercial Code provisions pertaining to negotiable

instruments is misplaced”]; Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6

Cal.App.5th 802, 819-820 [allegation that signature was unauthorized or constituted a

fraudulent robo-signature shows at most a voidable transaction, not void]; see also

Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 936 [“Unlike a voidable

transaction, a void one cannot be ratified or validated by the parties to it even if they so

desire”].) We already addressed at least one of the arguments Citrus asserts here, based

on the same documents, in our opinion on Citrus’s appeal of the dismissal of its claims

against Chicago Title. (See Citrus El Dorado, LLC v. Chicago Title Co., supra, 32

Cal.App.5th at p. 951 [“We are not persuaded that it was improper for Stearns, rather

than Rescon, to sign the notice of default”]; see § 2924, subd. (a)(1) [notice of default

may be recorded by trustee, mortgagee, or beneficiary, or any of their authorized

agents].) We agree with the trial court that the “evidence and arguments offered by

Citrus to support its claims that the assignments by the FDIC of the Note and [deed of

trust] to Rescon were void are either inapplicable, misstatements of the law, misstatement

of the facts, or establish, at best, only that the assignments may have been voidable but

not void,” and that in fact “[n]one of the evidence presented by Citrus established a defect

in the chain of title from First Heritage to Rescon.” We do not find that any of Citrus’s

arguments in this vein merit further discussion.

18 5. Loan Restructuring

Citrus argues that the foreclosure was “willfully oppressive” because “Stearns

stonewalled Citrus and offered no timely restructuring plan” in violation of “the public

policy favoring restructuring.” This argument conflicts with recent California Supreme

Court authority.

In Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 915 (Sheen), the court

held that a lender generally does not owe a borrower a duty to modify or even consider

modifying the borrower’s loan. (Ibid.) Sheen is an application of the economic loss rule,

which provides that there is no recovery in tort for negligently inflicted financial harm

unaccompanied by physical or property damage. (Id. at p. 922.) Sheen quotes with

approval language from Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231

Cal.App.3d 1089, 1096 (Nymark), adapting the economic loss rule to the lender-borrower

context: a “‘financial institution owes no duty of care to a borrower when the institution’s

involvement in the loan transaction does not exceed the scope of its conventional role as

a mere lender of money.’” (Sheen, at p. 927 [citing Nymark, at p. 1096]; see also Lueras

v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 67 [“[A] loan

modification is the renegotiation of loan terms, which falls squarely within the scope of a

lending institution’s conventional role as a lender of money”].) Thus, Stearns could

foreclose on Citrus’s property without offering terms for restructuring the loan.

Citrus’s reliance on Majd v. Bank of America (2015) 243 Cal.App.4th 1293 (Majd)

for a different conclusion is misplaced. Majd held that the plaintiff homeowner could

19 maintain wrongful foreclosure and unlawful business practice claims based on his loan

servicer’s alleged violation of certain applicable federal regulations and procedures (the

“Home Affordable Modification Program” (HAMP)) designed to facilitate loan

modifications for homeowners. (Id. at pp. 1296, 1300-1304.) The court also noted that

the same alleged facts would have implicated California’s then-recently adopted

Homeowner Bill of Rights (HBOR), had it been in effect before the plaintiff’s

foreclosure. (Majd, at p. 1303; see Morris v. JPMorgan Chase Bank, N.A. (2022) 78

Cal.App.5th 279, 295 (Morris) [HBOR is “a complex set of enactments . . . passed as a

legislative response to the ongoing mortgage foreclosure crisis in 2012”).) On our facts,

however, neither HAMP, nor HBOR, nor any other similar set of statutory or regulatory

provisions applies to require modification of Citrus’s loan, or that modification be

considered before foreclosure. (C.f. Majd, at p. 1301 [threshold eligibility requirements

for HAMP loan modification include that loan be secured by borrower’s primary

residence]; Morris, at p. 295 [HBOR is “focused specifically on residential mortgages”];

see also, e.g., Civ. Code, § 2920.5, subd. (c)(1) [defining “‘borrower’” to mean “any

natural person who is a mortgagor or trustor” potentially eligible for certain loan

modification programs]; id., § 2924.15, subds. (a)(1)(A), (2)(A) [limiting specified

provisions to loans secured by principal residence of either owner or tenant of owner].)

The rule applicable to Citrus’s loan is the one articulated in Sheen, not Majd.

20 6. One Action Rule

As part of the earlier litigation between the parties, in 2009, Rescon filed a cross-

complaint against Citrus asserting two causes of action: (1) for judicial foreclosure, and

(2) for specific performance, appointment of a receiver, and an injunction. Citrus argues

that this cross-complaint triggered California’s one action rule, codified in Code of Civil

Procedure section 726, subdivision (a), and “disabled Rescon from being able to

foreclose.” Citrus is incorrect.

In relevant part, Code of Civil Procedure section 726 provides “(a) There can be

but one form of action for the recovery of any debt or the enforcement of any right

secured by mortgage upon real property.” This “one action rule” generally “compels a

secured creditor to exhaust its security in a single judicial action before obtaining a

monetary deficiency judgment against the debtor.” (C.J.A. Corp. v. Trans-Action

Financial Corp. (2001) 86 Cal.App.4th 664, 668.) “The purpose of the one action rule is

to prevent a secured creditor from enforcing its rights by seeking recourse to more than

one remedy, such as by obtaining both a money judgment on the mortgage debt and by

foreclosing on the mortgage.” (Id. at pp. 668-669.) If a creditor, in violation of the one

action rule, “sues on the obligation” without pursuing foreclosure on the security, the

creditor made “an election of remedies, electing the single remedy of a personal action,

and thereby waives his right to foreclose on the security or to sell the security under a

power of sale.” (Walker v. Community Bank (1974) 10 Cal.3d 729, 733.) “[A] creditor

21 who uses his ‘one action’ is thereafter barred even from nonjudicial foreclosure.”

(Aplanalp v. Forte (1990) 225 Cal.App.3d 609, 614 (Aplanalp).)

In its 2009 cross-complaint, Rescon did exactly what the single action rule

requires by seeking a monetary judgment as part of its cause of action for judicial

foreclosure. Rescon sought “a judicial decree of foreclosure under the Deed of Trust, to

direct the sale of the Property encumbered by the deed of trust, to declare the amount of

indebtedness due [Rescon] and to determine the personal liability of Borrower . . . for any

deficiency remaining thereafter, and enter judgment accordingly.” Its prayer for damages

separated out the remedies it sought by cause of action, and included a request for a

money judgment on only the first cause of action for judicial foreclosure, specifying that

proceeds of the foreclosure sale should be applied to the amount due under the judgment.

Importantly, the mere commencement of a lawsuit, even if in violation of the one

action rule, does not waive the creditor’s right to later foreclose on the security or to sell

the security under a power of sale. (See Shin v. Superior Court (1994) 26 Cal.App.4th

542, 547 [“‘the mere commencement of an action by the creditor that does not include a

foreclosure of all the real property security is not in violation of the rule since the creditor

may dismiss the action before judgment or amend the complaint to include a foreclosure

of all of the security’”], quoting 4 Miller & Starr, Cal. Real Estate (2d ed. 1989) Deeds of

Trust and Mortgages, § 9:105, p. 348, italics in original & fns. omitted.) Rescon’s

judicial foreclosure cause of action was dismissed without prejudice before trial by

22 stipulation of the parties. Thus, the 2009 cross-complaint’s first cause of action does not

count as Rescon’s one action.

Rescon’s second cause of action in the 2009 cross-complaint, seeking specific

performance, appointment of a receiver for the property, and issuance of an injunction,

also did not trigger the one action rule. By statute, the appointment of a receiver under

Code of Civil Procedure section 564 does not constitute an action within the meaning of

section 726. (Code Civ. Proc., § 564, subd. (d) [“Any action by a secured lender to

appoint a receiver pursuant to this section shall not constitute an action within the

meaning of subdivision (a) of Section 726”].) Rescon’s second cause of action fell

squarely within Code of Civil Procedure, section 564, subdivision (b)(11), providing for

appointment of a receiver in “an action by a secured lender for specific performance of an

assignment of rents provision in a deed of trust, mortgage, or separate assigned

document.” The second cause of action expressly invoked the assignment of rents

provision of the deed of trust, and the corresponding part of the prayer for relief sought

appointment of a receiver to take possession of the property with the powers set forth in

the assignment of rents provision. On the second cause of action, the prayer for relief

also sought injunctive relief, but included no request for a monetary judgment.

In some situations, a receiver’s actions taken on behalf of a secured creditor may

run afoul of section 726. (See In re 500 Ygnacio Associates Ltd. (Bankr. N.D.Cal. 1992)

141 B.R. 191, 194-195 [receiver applied proceeds taken from rents and profits to pay an

23 indebtedness owed to a secured lender].) Here, however, no receiver ever was appointed,

since the court found for Citrus on that cause of action.

In sum, Rescon’s 2009 cross complaint complied with the one action rule by

seeking a monetary judgment only as part of a cause of action for judicial foreclosure.

That cause of action did not count as Rescon’s one action because it was dismissed

before trial. The cross complaint’s second cause of action proceeded to trial, but did not

seek a monetary judgment. It sought only specific performance of the deed of trust’s

assignment of rents provision, appointment of a receiver, and injunctive relief, none of

which triggers the one action rule. Thus, Rescon did not use its one action on the 2009

cross complaint. The 2015 nonjudicial foreclosure was not barred by the one action rule.

Citrus’s analogy to Aplanalp, supra, 225 Cal.App.3d 609, is inapt. In Aplanalp,

the plaintiff borrowers obtained a tort judgment against the defendant creditors. (Id. at p.

612.) The defendants satisfied that judgment by obtaining a court ruling setting off the

tort judgment against payments the plaintiffs owed them on a secured debt. (Ibid.)

Aplanalp held that the defendants’ exercise of their right of equitable setoff was an action

within the meaning of the one action rule, so subsequent nonjudicial foreclosure

proceedings were improper. (Id. at pp. 614-615.) This case is different. Citrus has not

argued that Stearns sought to satisfy the tort judgment Citrus obtained against it through

an equitable setoff. Indeed, the appeal of that judgment was not final until years after the

2015 trustee’s sale. (See FNBN Rescon I, LLC v. Citrus El Dorado, LLC, supra, 725

Fed. Appx. at p. 448 [filed Feb. 1, 2018].) Instead, Citrus’s arguments about the one

24 action rule focus entirely on Rescon’s 2009 cross complaint. For the reasons above,

those arguments are unpersuasive.

7. Failure to Fund Draw Request

Citrus proposes that the foreclosure was willfully oppressive because “Stearns

forced the Citrus loan into foreclosure” by refusing to fund Citrus’s final draw request,

causing the project to “grind[] to a halt.” The trial court found that the project did not in

fact run aground because of Stearns’s failure to fund a draw request, but for various other 15 reasons, for which Stearns and Rescon bore no responsibility. We cannot find that the

trial court’s findings lacked the support of substantial evidence.

Our earlier opinion found that Citrus had adequately alleged facts from which it

could be inferred that Stearns and/or Rescon prevented Citrus from completing the

development by failing to fund Citrus’s final draw request. (Citrus El Dorado, LLC v.

Stearns Bank, N.A., supra, E067610.) That failure, Citrus plausibly alleged, caused

Citrus to be unable to complete the development and receive the revenue from sales to

consumers that was needed to stave off default on the loan. (Ibid.)

The trial court found, however, that the evidence did not support Citrus’s

allegations. Instead, it found the evidence established a number of intervening causes,

not the responsibility of Stearns or Rescon, that caused Citrus’s default, including: (1)

even the entire unfunded balance of loan funds would have been insufficient to complete

15 It is irrelevant for our purposes that the trial court made these factual findings in discussing whether Citrus was excused from tendering payment of the loan, rather than whether the foreclosure was willfully oppressive.

25 construction of the first phase of the development, let alone the lesser amount requested

in the unfunded draw request; (2) even if the remaining funds had been sufficient and

promptly provided upon request, there was insufficient time remaining at that point to

complete construction of the phase one houses, obtain the permissions required before

placing them on the market, and then sell them before the loan matured; (3) even if the

phase one houses could have been completed and sold in time, their sale could not have

generated enough revenue to pay back even the principal amount borrowed, especially

but not only because of the poor housing market in the wake of the 2008 financial crisis;

and (4) Citrus “never intended to repay the note upon its maturity—intending instead to

negotiate extended financing.” Citrus has not argued that any of these findings lack the

support of substantial evidence, and our review of the record confirms that such an

argument would be unavailing. Given such evidence, the trial court had ample basis to

conclude that the failure to fund Citrus’s final draw request was not a cause, let alone the

cause of Citrus’s default.

In support of a different conclusion, Citrus asserts that the record compels the

conclusion that the failure to fund the draw request caused Citrus to suspend construction

at the project in March 2009 because it could not pay its contractors. Even if this is true,

however, it does not establish that Citrus’s default was caused by the failure to fund the

draw request. The trial court’s factual findings, grounded in substantial evidence, support

its conclusion that default on the loan payments was already inevitable by that point, even

if Citrus’s draw request had been funded. West, Inc. (1986) 186 Cal.App.3d 1413 (Jacobs) is instructive. That case involved

contracts that included a condition requiring approval by the defendant company’s board

of directors. (Id. at p. 1415.) The company failed to submit the contracts to its board for

approval or disapproval. (Id. at p. 1416.) The consequence of that breach was waiver of

the condition of board approval unless the company could “prove that the breach did not

contribute materially to the nonoccurrence of the condition by showing that the board of

directors would not have approved the contracts even had they been submitted to the

board in a timely manner.” (Id. at p. 1417.) Analogously, Citrus plausibly pleaded that

Stearns and Rescon essentially forfeited their right to foreclose on the property because

their failure to approve Citrus’s last draw request caused Citrus’s default. Stearns and

Rescon could avoid that consequence of their breach by demonstrating that, as a matter of

fact, their failure to fund Citrus’s draw request, even though wrongful, did not contribute

materially to Citrus’s default. The trial court found Stearns and Rescon carried that

burden of proof, and substantial evidence supported that conclusion.

8. Federal Jury Finding of Bad Faith

Citrus suggests that the federal jury’s finding that Rescon acted in bad faith as to

Citrus’s final draw request is “binding here,” compelling a finding that “‘Rescon’ caused

an illegal, fraudulent, or willfully oppressive foreclosure.” That separate litigation,

however, did not involve claims arising from the foreclosure on Citrus’s property. And

as discussed in the previous section, substantial evidence shows that failure to fund

27 Citrus’s final draw request, which was at issue in that litigation, did not cause the

foreclosure. Again, Jacobs is instructive. There, the defendant company’s bad faith

failure to submit the contracts to its board to approve or disapprove—more precisely, a

breach of the implied covenant of good faith and fair dealing—did not preclude it from

demonstrating that the board, “in the exercise of good faith,” would have disapproved the

contracts had they been timely submitted for consideration. (Jacobs, supra, 186

Cal.App.3d at p. 1415.) Here, the wrongful failure to fund Citrus’s draw request, even if

in bad faith, did not preclude Sterns and Rescon from showing that the foreclosure was

not caused by the earlier breach of their obligations, and that the foreclosure was

conducted in good faith.

C. Conclusion

Citrus has not demonstrated that the evidence compels the conclusion that Stearns

and Rescon caused an illegal, fraudulent, or willfully oppressive foreclosure, as would be

needed to disturb the trial court’s determination on the first element of its wrongful

foreclosure claim. On that basis alone, the judgment for Stearns and Rescon must be

affirmed. We need not and do not address the merits of the parties’ arguments on other 16 disputed issues.

16 We reserved for consideration with this appeal a request for judicial notice filed by Citrus on April 14, 2022. The request is denied, as the documents Citrus asks us to notice are either already in our record one way or another, unnecessary to our analysis, or both.

28

III. DISPOSITION

The judgment is affirmed. Stearns and Rescon are awarded costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

RAPHAEL

J.

We concur:

McKINSTER Acting P. J.

MILLER

J.

29