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March 4, 2026 Get Citation Alerts Download PDF Add Note

Aquat 009 v. Fine CA2/7

California Court of Appeal

• Citations: None known
• Docket Number: B330958

• Precedential Status: Non-Precedential

• Opinion

• Authorities (22)

• Cited By (0)

• Summaries (0)

• Similar Cases (20.6K)

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Combined Opinion

Filed 3/4/26 Aquat 009 v. Fine CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

AQUAT 009, LLC, B330958

Plaintiff and Appellant, (Los Angeles County
Super. Ct. No.
v. 21STCV18586)

SCOT R. FINE et al.,

Defendants and
Respondents.

APPEAL from judgments of the Superior Court of Los
Angeles County, Michael L. Stern, Judge. Affirmed in part,
reversed in part, and remanded.
NT Law and Julie N. Nong for Plaintiff and Appellant.
Ross, Wolcott, Teinert & Prout, Andrew G. Prout and Wei
Liu for Defendants and Respondents Equity Trust Company
Custodian FBO Bradley C. Stone SEO IRA, Chester Karrass,
Michael Green, Nancy Jennifer Smith, Gary Karrass, Richard
Brockway, Lynn Brockway and Tory Lynn Comfort.
Lewis R. Landau for Defendants and Respondents Scot R.
Fine, Marquee Funding Group, Inc., and Platinum Loan
Servicing, Inc.

---

In 2019 Aquat 009, LLC, defaulted on a loan secured by a
deed of trust on its property. Following a notice of foreclosure,
Aquat and its lenders agreed to a loan modification pursuant to
which the maturity date of the loan was extended by a year, and
Aquat retained ownership of the property. One year later, Aquat
again defaulted on the loan, and the property was sold at a
trustee’s sale.
Aquat sued its loan brokers (Scot Fine and Marquee
Funding Group, Inc.), the loan servicer, the lenders, and the
trustee, alleging wrongful foreclosure and related claims and
seeking damages and/or cancellation of the deed of trust and
notices of default and sale. Aquat also asserted causes of action
for breach of fiduciary duty and related claims against the loan
brokers, seeking statutory and tort damages. Aquat alleged its
loan brokers altered the deed of trust after Aquat had signed it,
but before it was recorded, to change the name of two of the
lenders, Richard and Lynn Brockway. The initial deed of trust
named the Brockways as “husband and wife as joint tenants”; the
recorded deed of trust named them as trustees of the Lynn
Brockway Living Trust.
The trial court sustained without leave to amend the
demurrer filed by the lenders and the demurrer filed by the loan
brokers and the loan servicer, and the court entered judgments of
dismissal with respect to those defendants. Aquat appealed from
the judgments.

2
The trial court did not err in sustaining the demurrers
without leave to amend with respect to the lenders and the loan
servicer. However, the court erred in sustaining the loan brokers’
demurrer with respect to Aquat’s causes of action against Fine
and Marquee for breach of fiduciary duty and violation of
Business and Professions Code section 17200. We therefore
affirm the judgment of dismissal in favor of the lenders. We
reverse the judgment of dismissal in favor of the loan brokers and
loan servicer and remand for the trial court to enter a new
judgment of dismissal with respect to only the loan servicer. We
also direct the court to overrule the loan brokers’ demurrer to the
causes of action for breach of fiduciary duty and violation of
Business and Professions Code section 17200 and to sustain the
demurrer without leave to amend with respect to all other causes
of action alleged against the loan brokers.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Loan and First Notice of Default
In July 2018 Aquat procured a business loan through Fine
and Fine’s brokerage firm, Marquee. Fine and Marquee arranged
for a group of private investors to loan $500,000 to Aquat to be
secured by Aquat’s real property. Aquat executed a promissory
note and a deed of trust encumbering real property located at
1715 Selby Avenue, Los Angeles. The note, dated July 25, 2018,
listed the lenders as Equity Trust Company Custodian FBO
Bradley C. Stone SEP IRA; Chester Karrass, Trustee of the
Karrass Living Trust; Michael Green and Nancy Jennifer Smith,
as husband and wife as joint tenants; Gary Karrass, Trustee of
the Gary Karrass Trust; Richard Brockway and Lynn Brockway,

3
as husband and wife as joint tenants; and Tory Lynn Comfort
(collectively, the lender defendants). The note provided that
Aquat would make monthly 10 percent interest-only payments
for 11 months beginning in October 2018, with a balloon payment
of the principal and last month’s interest in September 2019.
Payments were to be made to Platinum Loan Servicing, Inc., a
loan servicer affiliated with Fine.
The deed of trust was dated July 25, 2018 and recorded
with the Los Angeles County Recorder’s Office on August 6, 2018.
The recorded deed of trust named as beneficiaries the same
entities identified as lenders in the note, with one exception: the
note named “Richard Brockway and Lynn Brockway, as husband
and wife as joint tenants,” but the recorded deed of trust
identified the Brockways as “Lynn Brockway and Richard
Brockway, as Trustees, of the Lynn Brockway Living Trust Dated
April 16, 2015.” The recorded deed of trust named Platinum as
the trustee.
On October 30, 2019, S.B.S. Trust Deed Network1 initiated
nonjudicial foreclosure proceedings pursuant to Civil Code
section 2923.5 et seq.2 and issued and recorded a notice of
default. The notice of default listed the beneficiaries of the deed
of trust on the recorded deed of trust, identifying the Brockways
as trustees of the Lynn Brockway Living Trust. On February 13,
2020, S.B.S. recorded a notice of trustee’s sale.

1 The notice of default states S.B.S. “is either the original
trustee, the duly appointed substituted trustee, or acting as agent
for the trustee or beneficiary.”
2 Further undesignated statutory references are to the Civil
Code.

4
B. The Loan Modification
In early March 2020, prior to the scheduled trustee’s sale,
Aquat and Marquee, acting as the agent for the beneficiaries,
agreed to a loan modification that extended the maturity date of
the loan to September 2020. The agreement, titled “Modification
of Note and Deed of Trust Agreement” (the modification
agreement), identified the subject of the agreement as the note
dated July 25, 2018 and the deed of trust dated July 25, 2018 and
recorded on August 6, 2018. The modification agreement also
identified the deed of trust by the instrument number assigned
by the recorder’s office. Aquat’s manager signed the modification
agreement and initialed each page.
In section 1, titled “Reaffirmation of Obligations,” the
modification agreement stated, “Borrower further represents and
warrants that it has no defenses or claims against Lender that
would or might affect the enforceability of the Loan, including
this Agreement, and that the Loan and documents that were
executed in connection therewith remains in full force and effect,
unless specifically modified herein.”3 “Lender” was not
specifically defined in the modification agreement, but is
referenced as the entity that made the $500,000 loan to Aquat.
The “Loan” was defined to include the note and deed of trust.
In section 7, titled “Confirmation of Property and Deed of
Trust,” the modification agreement stated, “Borrower further
acknowledges, agrees and confirms that Borrower’s obligations to
Lender under the Note are secured by the Deed of Trust.” This
section was separately initialed by Aquat’s manager.

3 Boldface and underlining in the agreement are omitted.

5
Section 9 of the modification agreement contained a general
release, titled “Release of Lender,” which stated, “As additional
consideration for Lender’s extension of the term of the Loan as
set forth above, Borrower . . . does hereby relieve, release,
discharge and forever hold harmless Lender and its
respective . . . transferees, predecessors in interest, successors,
assigns . . . and all persons acting by, through, under or in
concert with any of them from any and all liability, demands,
causes of action, accountings or claims of any nature arising out
of the advertising, negotiation, disclosure, underwriting
processing, making, settlement, servicing or any other aspects of
the relationship between the parties concerning the Loan, known
or unknown, suspected or unsuspected, arising since the Loan
was applied for to the present. . . . Borrower acknowledges such
release includes a waiver of the right to make claims based upon
the discovery of new facts and circumstances, and waives the
application of any state or federal laws providing for relief from
general releases.”
The Release of Lender section continued, “Borrower hereby
waives any provisions of state or federal law which explicitly or
implicitly would prevent the application of this Modification
Agreement to claims which Borrower does not know or suspect to
exist in its favor any time on or prior to the date of executing this
Modification Agreement which, if known by Borrower, would
have materially affected Borrower’s decision to execute this
Modification Agreement. Borrower expressly waives all rights
afforded by any statute with respect to unknown claims,
including, but not limited to, Section 1542 of the California Civil
Code which limits the effect of a release with respect to unknown
claims. Borrower understands the significance of the release of

6
unknown claims and the waiver of statutory protection against a
release of unknown claims (such as under Section 1542).”
The release then recited the text of section 1542 and
continued, “Notwithstanding the above-stated provisions of
section 1542 and for purposes of implementing a full and
complete release and discharge, Borrower expressly
acknowledges that this Modification Agreement is specifically
intended to include in its effect, without limitation, all claims
which Borrower has but does not or may not know or suspect to
exist in its favor at any time on or prior to the date of execution of
this Modification Agreement, and that this Modification
Agreement extinguishes any and all such claim(s) and Borrower
indicates that fact by signing its initials here.” Aquat’s manager
signed her initials in the designated space.

C. The Second Notice of Default and Trustee’s Sale
On January 11, 2021 S.B.S again initiated nonjudicial
foreclosure proceedings by issuing and recording a notice of
default. On April 21 S.B.S. recorded a notice of trustee’s sale.
The property was sold in May 2021 to a third party at the
trustee’s sale.4

D. Aquat’s Complaint and Second Amended Complaint
On May 18, 2021 Aquat sued Fine, Marquee, and Platinum
(collectively, the broker defendants), as well as the lender

4 The trial court granted the lender defendants’ unopposed
request for judicial notice of the trustee’s deed upon sale recorded
on June 1, 2021.

7
defendants.5 On October 21, 2022 Aquat filed the operative
second amended complaint (complaint) alleging 11 causes of
action: (1) cancellation of a void deed of trust; (2) wrongful
foreclosure; (3) declaratory relief; (4) violation of usury laws;
(5) rescission of the “mortgage contract” (presumably the note);
(6) breach of fiduciary duty; (7) violation of Business and
Professions Code section 17200 et seq.; (8) negligence per se;
(9) slander of title; (10) breach of contract; and (11) breach of the
covenant of good faith and fair dealing. The complaint alleged
each of the causes of action against all defendants, except for the
claim of breach of fiduciary duty, which was alleged against only
Fine and Marquee.
Aquat alleged the deed of trust that its manager had signed
in July 2018 listed the lenders as they were identified in the note,
including the Brockways as husband and wife and joint tenants.
Aquat attached to the complaint an unsigned copy of the deed of
trust identifying the Brockways as husband and wife and joint
tenants, which Aquat alleges was the copy that Aquat’s manager
signed and was notarized.6

5 The complaint also named S.B.S as a defendant. On
February 4, 2022 S.B.S. filed a declaration of nonmonetary status
pursuant to section 2924l stating it had been named solely in its
capacity as trustee and not due to any acts or omissions on its
part. Aquat did not object to the declaration, and S.B.S. has not
participated in the litigation.
6 The second amended complaint attached several additional
documents, including the 2018 recorded deed of trust; 2018 note;
2019 notice of default; 2020 notice of trustee’s sale; 2020
modification agreement; 2021 notice of default; and 2021 notice of
trustee’s sale.

8
According to the complaint, Marquee altered the deed of
trust after it was signed but before it was recorded to change the
Brockways’ designation to the Brockways as trustees of the Lynn
Brockway Living Trust. Aquat alleged the alteration was
material and was done without its knowledge or consent,
rendering the deed of trust void. Aquat further alleged that
when the loan was originated, Fine and Marquee failed to make
required statutory disclosures and failed to disclose the alteration
of the deed of trust. The complaint sought rescission and/or
cancellation of the deed of trust and the trustee’s notices of
default and sale, a declaration that the note could not be
enforced, and statutory and tort damages.

E. The Demurrers
The lender defendants demurred to the complaint, arguing
the modification agreement barred Aquat from asserting causes
of action regarding the enforceability of the deed of trust and that
Aquat had released the lender defendants from any liability
regarding the loan. They further argued the alleged alteration of
the deed of trust was not material and therefore had no effect on
the validity of the deed of trust.
The broker defendants also demurred to the complaint.
They joined in the arguments of the lender defendants regarding
the alleged alteration of the deed of trust. In addition, the broker
defendants asserted as to the cause of action for breach of
fiduciary duty and three other causes of action based on alleged
failure to disclose that Fine and Marquee made all required
disclosures to Aquat at the time the loan was originated.7

7 The broker defendants requested judicial notice of several
documents containing disclosures that they argued were given to

9
The trial court sustained both demurrers without leave to
amend. The court found the releases in the modification
agreement barred Aquat’s claims regarding the invalidity of the
deed of trust. The court also found the alleged alteration of the
deed of trust with respect to the Brockways was not material
because there was no “legal distinction in between property
owned by a revocable trust and property owned by the settlor of
such revocable trust during the lifetime of the settlor.”8
Accordingly, the alleged alteration did not affect the validity of
the deed of trust.
The trial court also sustained the demurrer by the broker
defendants to the causes of action for breach of fiduciary,
declaratory relief, violation of usury laws, and cancellation of the
mortgage contract for failure to make required disclosures,
explaining, “There are the loan disclosures given to and

Aquat when the loan was originated. The documents included
the agreement to procure a loan, the mortgage loan disclosure
statement, and the loan estimate. The broker defendants argued
the trial court could take judicial notice of the existence and legal
effect of the documents pursuant to Evidence Code section 452,
subdivision (h).
8 In making this finding, the trial court cited Carolina
Casualty Ins. Co. v. L.M. Ross L. Group, LLC (2010)
184 Cal.App.4th 196, 208 for the proposition there is no legal
distinction between property owned by an individual and by the
settlor of a revocable trust. Because we agree that Aquat’s claims
were barred by the release in the modification agreement, we do
not reach whether the alleged alteration to the deed of trust was
material under Carolina Casualty. However, we note there is
nothing in the record to support the court’s implied finding that
the Lynn Brockway Living Trust was a revocable trust.

10
acknowledged by the borrower.” Although the record does not
reflect a ruling on the broker defendants’ request for judicial
notice, it appears from this statement that the court took judicial
notice of the loan disclosure documents submitted by the broker
defendants and found the disclosures were given, thus precluding
Aquat’s claims.
The trial court entered judgments in favor of the lender
defendants and broker defendants. Aquat timely appealed.9

DISCUSSION

A. Standard of Review
“‘In reviewing an order sustaining a demurrer, we examine
the operative complaint de novo to determine whether it alleges
facts sufficient to state a cause of action under any legal theory.’”
(Matthews v. Becerra (2019) 8 Cal.5th 756, 768; accord, T.H. v.
Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162.)
When evaluating the complaint, “we assume the truth of the
allegations.” (Brown v. USA Taekwondo (2021) 11 Cal.5th 204,
209; accord, Lee v. Hanley (2015) 61 Cal.4th 1225, 1230.) “‘“‘We
treat the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or
law.’”’” (Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc. (2016) 1 Cal.5th 994, 1010.)

9 In their brief on appeal, the broker defendants join the
arguments raised by the lender defendants without presenting
any additional argument. (See Cal. Rules of Court,
rule 8.200(a)(5).)

11
B. The Modification Agreement Bars Aquat’s Causes of Action
Based on the Validity of the Deed of Trust
Seven of the causes of action in the complaint are based on
the theory that the deed of trust was void because the alteration
of the deed of trust was material and made without Aquat’s
knowledge and permission. Thus, Aquat argues, the lender
defendants lacked authority to initiate the foreclosure because
they did not hold a beneficial interest in the deed of trust. These
seven causes of action fail because Aquat released any claim that
the recorded deed of trust was invalid.10
Aquat is correct that if the Brockways were not the
beneficial holders of the recorded deed of trust, they would have
lacked authority to direct the foreclosure on the property. As the
Supreme Court explained in Yvanova v. New Century Mortgage
Corp. (2016) 62 Cal.4th 919, 927, the trustee named in the deed
of trust may initiate a foreclosure proceeding “only at the
direction of the person or entity that currently holds the note and
the beneficial interest under the deed of trust—the original
beneficiary or its assignee—or that entity’s agent.”11 Thus, “if the

10 The seven causes of action are for cancellation of the deed
of trust, wrongful foreclosure, violation of Business and
Professions Code section 17200, negligence, slander of title,
breach of contract, and breach of the duty of good faith and fair
dealing. These causes of action fail as to all defendants with one
exception—as we will discuss, the section 17200 cause of action
states a valid cause of action as to Fine and Marquis based on
allegations unrelated to the validity of the deed.
11 The court in Yvanova v. New Century Mortgage Corp.,
supra, 62 Cal.4th at page 926 explained that a deed of trust on
property securing a loan has three parties: “the trustor
(borrower), the beneficiary (lender), and the trustee.” Further,

12
borrower defaults on the loan, . . . ‘[o]nly the “true owner” or
“beneficial holder” of a Deed of Trust can bring to completion a
nonjudicial foreclosure under California law.’” (Id. at pp. 927-
928.) Accordingly, if the deed of trust were void, the lender
defendants would not have had the authority to direct the trustee
to commence nonjudicial foreclosure proceedings. (See id. at
p. 929 [“[a] foreclosure initiated by one with no authority to do so
is wrongful”].)
The flaw in Aquat’s argument is that Aquat is bound by the
modification agreement, in which it released its claims relating to
the validity of the deed of trust. Aquat entered into the
agreement as “good and valuable consideration” for a one-year
extension of the maturity date of the note. As discussed, Aquat
unambiguously agreed in section 1 “that it has no defenses or
claims against the Lender that would or might affect the
enforceability of the Loan” and that the “Loan” (defined as the
note and recorded deed of trust) remained in full force and effect.
And in section 7 Aquat agreed and confirmed that its obligations
under the note were “secured by the Deed of Trust.” Further,
section 9 contained a general release in which Aquat agreed to
release the lenders and their agents from any liability, causes of
action, or “claims of any nature” arising out of the loan, known or
unknown, with a specific waiver of section 1542.12 Aquat’s

“‘[t]he trustee holds a power of sale. If the debtor defaults on the
loan, the beneficiary may demand that the trustee conduct a
nonjudicial foreclosure sale.’” (Ibid.)
12 Fine signed the modification agreement on behalf of
Marquee as the “agent” for the lender defendants. Therefore, the
release covered Marquee and Fine as agents of the lender

13
theories of liability based on the enforceability and validity of the
deed of trust fall squarely within these releases and confirmation
that the recorded deed of trust secured the note.
Aquat asserts multiple arguments for why the release
language in the modification agreement is unenforceable. Its
arguments are unavailing. First, Aquat argues the modification
agreement was misleading because it did not disclose that the
deed of trust had been altered to change the identity of the
lenders (the Brockways). But Aquat fails to cite any authority for
its contention the failure of the modification agreement to
disclose this fact made it unenforceable. Aquat has therefore
forfeited this contention. (See Lee v. Kim (2019) 41 Cal.App.5th
705, 721 [“‘“When an appellant fails to raise a point, or asserts it
but fails to support it with reasoned argument and citations to
authority, we treat the point as [forfeited].”’”].)
Even if Aquat had not forfeited this argument, it lacks
merit because the modification agreement did not, as argued by
Aquat, “misrepresent[]” the identity of the lenders. To the
contrary, the modification agreement defined the deed of trust as
the document recorded on August 6, 2018, that is, the one that
identified the Brockways as the trustees of the Lynn Brockway
Living Trust.
Second, Aquat argues the releases in the modification
agreement violate section 2953’s prohibition on waiver of certain
statutory rights. Section 2953 states: “Any express agreement
made or entered into by a borrower at the time of or in connection
with the making of or renewing of any loan secured by a deed of

defendants, at least with respect to allegations concerning the
validity of the loan and deed of trust.

14
trust, mortgage or other instrument creating a lien on real
property, whereby the borrower agrees to waive the rights, or
privileges conferred upon the borrower by Sections 2924, 2924b,
or 2924c of the Civil Code or by Sections 580a or 726 of the Code
of Civil Procedure, shall be void and of no effect.” We agree that
section 2953 applies to the modification agreement because the
agreement was entered into with respect to renewal of the note
secured by the deed of trust. But Aquat has not explained how a
release of liability for claims relating to the enforceability or
validity of the deed of trust runs afoul of section 2953. The only
section cited by Aquat as a waived statutory protection is
section 2924, but Aquat provides no explanation for how that
provision applies here, thereby forfeiting this contention as well.
Even if Aquat had not forfeited this contention, it lacks
merit. Section 2924 provides that an “entity shall not record or
cause a notice of default to be recorded or otherwise initiate the
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.” (§ 2924,
subd. (a)(6).) This section does not apply to the modification
agreement because the agreement does not release Aquat’s right
to have the foreclosure proceedings initiated by the holder of the
beneficial interest under the deed of trust. And Aquat does not
allege the Brockways as trustees were not identified in the
recorded deed of trust as the holders of a beneficial interest (they
were). Rather, Aquat’s contention is that the recorded deed of
trust is void because it was materially altered from the initial
signed deed of trust. This is precisely what the modification
agreement released—any challenge to the validity of the deed of

15
trust—not, as barred by section 2924, whether the holders of the
beneficial interest identified in the recorded deed of trust
initiated the foreclosure process.
Finally, Aquat argues the modification agreement’s waiver
of section 1542 (stating a general release does not release
unknown claims) is unenforceable because the agreement quotes
an older version of section 1542, which did not place Aquat on
notice that it was releasing its claims. The protections of
section 1542 can be waived as long as the waiver is “‘“‘clear,
explicit and comprehensible in each [of its] essential details.’”’”
(Perez v. Uline, Inc. (2007) 157 Cal.App.4th 953, 959.) The
releases in the modification agreement clearly and explicitly
stated the release of unknown claims applied to the borrowers.
The modification agreement recited the text of former
section 1542, which was in effect through 2018. Section 1542
now reads, “A general release does not extend to claims that the
creditor or releasing party does not know or suspect to exist in his
or her favor at the time of executing the release and that, if
known by him or her, would have materially affected his or her
settlement with the debtor or released party.” (§ 1542; see
Stats. 2018, ch. 157, § 2.) (Italics added.) The quoted language in
the modification agreement did not include the language “or
releasing party” and “or released party.”
Aquat contends the release language, by citing the earlier
version of section 1542 that only refers to claims of creditors, was
misleading because it “create[d] the impression that only the
lender was releasing claims, while obscuring the fact that Aquat
itself was also releasing potential claims.” We are not persuaded.
The preamble to Senate Bill No. 1431 explained that the statute
was amended to “clarify that the terms ‘creditor’ and ‘debtor’ as

16
used in the above provisions include ‘releasing party’ and
‘released party,’ respectively.” (Sen. Bill No. 1431 (2017-2018
Reg. Sess.) § 2.) But the preamble further stated the
amendments “are declaratory of existing law.” (Id. at § 3.) Aquat
has cited no authority for the proposition that the prior version of
section 1542 was limited to a release of only creditors’ claims.
In addition, as discussed, the modification agreement
explicitly stated the “Borrower” was releasing “claims which
Borrower has but does not or may not know or suspect to exist in
its favor” at the time it executed the agreement. There is simply
no reasonable interpretation of this language other than that the
borrower was waiving unknown claims. Moreover, “[n]othing in
[section 1542] requires that it be designated in the release or that
a party specifically waive its provisions.” (Perez v. Uline, Inc.,
supra, 157 Cal.App.4th at p. 959.)

C. The Complaint Did Not Allege Facts Sufficient To State a
Claim for Declaratory Relief or Rescission
Aquat’s third cause of action for declaratory relief and fifth
cause of action for rescission rely on the alleged failure of all the
defendants to disclose the alteration of the deed of trust and, with
respect to Marquee and Fine, their failure to make required
statutory disclosures in arranging the loan. Aquat seeks a
declaration that the “mortgage contract” (which appears to be the
note) cannot be enforced and that the “loan agreement is illegal,
void, or voidable, and without legal consequence.” In the
rescission cause of action, Aquat seeks to rescind the “mortgage
contract due to violation of broker license law.” (Capitalization
omitted.) Neither cause of action alleges sufficient facts to state a
claim.

17
Declaratory relief is available to “[a]ny person interested
under a written instrument . . . who desires a declaration of his
or her rights or duties with respect to another, or in respect to, in,
over or upon property . . . in cases of actual controversy relating
to the legal rights and duties of the respective parties. . . . ”
(Code Civ. Proc., § 1060; see Maguire v. Hibernia S. & L. Soc.
(1944) 23 Cal.2d 719, 728; Graham v. Bank of America, N.A.
(2014) 226 Cal.App.4th 594, 615.)
Section 1689, subdivision (b), provides that a party may
rescind a contract “[i]f the consent of the party rescinding, or of
any party jointly contracting with him, was given by mistake, or
obtained through duress, menace, fraud, or undue influence,
exercised by or with the connivance of the party as to whom he
rescinds, or of any other party to the contract jointly interested
with such party.”
To the extent Aquat seeks declaratory relief and rescission
with respect to the lender defendants, the claims are barred by
the release in the modification agreement of all claims regarding
the enforceability of the note and deed of trust and the release of
all liability arising from the “disclosure, underwriting,
processing, making, settlement, servicing or any other aspects of
the relationship between the parties concerning the Loan, known
or unknown . . . .” Aquat does not dispute that the releases bar
these claims against the lender defendants, instead asserting (as
discussed) only that the modification agreement is not
enforceable.
With respect to Marquee and Fine, the releases in the
modification agreement bar Aquat’s claims premised on the
enforceability of the loan and deed of trust. But the releases do
not bar Aquat’s claims based on Marquee and Fine’s failure to

18
make required disclosures or other unfair business practices.
However, declaratory relief and rescission of the note and deed of
trust are not appropriate remedies for the alleged omissions and
breaches by the broker defendants (including Platinum).13 The
note and deed of trust establish legal rights and duties between
Aquat and the lender defendants. There is no actual controversy
regarding the legal rights and duties of the broker defendants
under the note and deed of trust that would be the proper subject
of declaratory relief. (See Code Civ. Proc., § 1060.) Further,
because the broker defendants are not parties to the documents,
Aquat cannot seek rescission based on the broker defendants’
alleged wrongdoing. (See Schauer v. Mandarin Gems of
California, Inc. (2005) 125 Cal.App.4th 949, 959-960 [“Civil Code
section 1689 limits grant of rescission rights to the contracting
parties.”].)

D. The Complaint Did Not Allege Facts Sufficient To State a
Claim for Violation of the Usury Laws
In the fourth cause of action for violation of the usury laws,
Aquat alleges the broker defendants violated the usury laws by
failing to return the commissions and fees they charged for
arranging the loan, and the lender defendants owed Aquat a
refund of the interest paid under the note. Aquat has not alleged
sufficient facts to support a cause of action for violation of the
usury laws.

13 The complaint does not make specific allegations about
Platinum in the causes of action for declaratory relief and
rescission, but in any event, declaratory relief and rescission are
not appropriate remedies with respect to any of the broker
defendants.

19
As the Supreme Court explained in Ghirardo v. Antonioli
(1994) 8 Cal.4th 791, 798, “The California Constitution,
article XV, section 1, states ‘No person, association, copartnership
or corporation shall by charging any fee, bonus, commission,
discount or other compensation receive from a borrower more
than the interest authorized by this section upon any loan or
forbearance of any money, goods or things in action.’ The
essential elements of usury are: (1) The transaction must be a
loan or forbearance; (2) the interest to be paid must exceed the
statutory maximum; (3) the loan and interest must be absolutely
repayable by the borrower; and (4) the lender must have a willful
intent to enter into a usurious transaction.” (Accord, WRI
Opportunity Loans II, LLC v. Cooper (2007) 154 Cal.App.4th 525,
533.)
The complaint alleges that the defendants’ conduct violated
the usury laws, but it does not allege in what manner the
defendants charged interest that exceeded the statutory
maximum or otherwise violated the usury laws. Moreover, Aquat
fails in its opening brief to make any argument as to the
sufficiency of this cause of action, forfeiting this argument. (See
Broad Beach Geologic Hazard Abatement Dist. v. 31506 Victoria
Point LLC (2022) 81 Cal.App.5th 1068, 1093 [“failure to raise
contention in opening brief constitutes forfeiture”]; In re Marriage
of Ankola (2020) 53 Cal.App.5th 369, 372, fn. 3 [same].)

20
E. The Complaint Adequately Pleaded Causes of Action for
Breach of Fiduciary Duty and Violation of Business and
Professions Code Section 17200 Against Fine and Marquee
Aquat’s sixth cause of action for breach of fiduciary duty is
asserted only against Fine and Marquee.14 The complaint alleged
facts sufficient to support a claim. “A mortgage broker providing
mortgage brokerage services to a borrower is the fiduciary of the
borrower, and any violation of the broker’s fiduciary duties shall
be a violation of the mortgage broker’s license law.” (§ 2923.1,
subd. (a); see Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773,
782 [the law “impose[s] upon mortgage loan brokers an obligation
to make a full and accurate disclosure of the terms of a loan to
borrowers and to act always in the utmost good faith toward their
principals”]; Smith v. Home Loan Funding, Inc. (2011)
192 Cal.App.4th 1331, 1332.) The Business and Professions Code
also imposes several statutory obligations on a real estate broker
who negotiates a loan to be secured by real property, including a
duty to the borrower to disclose the amount of all fees and
commissions. (Bus. & Prof. Code §§ 10240, 10241.) The elements
of a cause of action for breach of fiduciary duty are the existence
of a fiduciary relationship, breach of the fiduciary duty, and

14 The lender defendants point out in their respondents’ brief
that the breach of fiduciary duty cause of action was alleged only
against Fine and Marquis, and they present no argument on this
cause of action. Similarly, the lender defendants only address
their alleged violation of Business and Professions Code section
17200, without any mention of the broker defendants. As
discussed, the broker defendants join in the lender defendants’
brief and present no separate arguments.

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resulting damage. (Oasis West Realty, LLC v. Goldman (2011)
51 Cal.4th 811, 820.)
Aquat alleged Fine and Marquee were mortgage brokers
involved in negotiating a loan on behalf of Aquat. Aquat further
alleged Fine and Marquee breached their fiduciary duties by
failing to make required disclosures and by failing to inform
Aquat that the deed of trust had been altered before it was
recorded. Aquat also alleged it was harmed by the alleged
breach, in part because Fine and Marquee failed to refund their
commissions as required by statute. These allegations are
sufficient to state a cause of action for breach of fiduciary duty.15
Aquat has likewise in the seventh cause of action alleged
with respect to Fine and Marquee a cause of action for violation
of the Unfair Competition Law (UCL) under Business and
Professions Code section 17200. “The UCL prohibits unfair
competition, defined as ‘any unlawful, unfair or fraudulent
business act or practice.’ (§ 17200.) The statute’s ‘purpose is to
protect both consumers and competitors by promoting fair
competition in commercial markets for goods and services.’”
(Abbott Laboratories v. Superior Court (2020) 9 Cal.5th 642, 651.)
Business and Professions Code section 17200 “‘borrows’ violations
from other laws by making them independently actionable as
unfair competitive practices.” (Korea Supply Co. v. Lockheed

15 As discussed, we do not reach whether the alleged
alteration of the deed of trust was material. Fine and Marquee
do not argue on appeal that they did not breach their fiduciary
duties because the alleged alteration of the deed of trust was not
material, thereby forfeiting any argument on this basis. In any
event, the alleged failure to disclose alteration of the deed of trust
is only one of the alleged failures to disclose.

22
Martin Corp. (2003) 29 Cal.4th 1134, 1143; accord, Cel-Tech
Communications, Inc v. Los Angeles Cellular Telephone Co.
(1999) 20 Cal.4th 163, 180.) A practice that is unfair or
fraudulent “may also be the basis for a UCL action even if the
conduct is ‘not specifically proscribed by some other law.’”
(Loeffler v. Target Corp. (2014) 58 Cal.4th 1081, 1125; accord,
Zhang v. Superior Court (2013) 57 Cal.4th 364, 370.)
Aquat incorporated the alleged statutory violations by Fine
and Marquis into its cause of action under Business and
Professions Code section 17200, including the failure to disclose
the altered deed and other required disclosures, thereby
sufficiently alleging a cause of action for violation of
section 17200.

F. The Trial Court Did Not Abuse Its Discretion in Denying
Leave To Amend
A trial court abuses its discretion by sustaining a demurrer
without leave to amend where “‘there is a reasonable possibility
that the defect can be cured by amendment.’” (Loeffler v. Target
Corp. (2014) 58 Cal.4th 1081, 1100; accord, City of Dinuba v.
County of Tulare (2007) 41 Cal.4th 859, 865.) “‘The plaintiff has
the burden of proving that [an] amendment would cure the legal
defect, and may [even] meet this burden [for the first time] on
appeal.’” (Sierra Palms Homeowners Assn. v. Metro Gold Line
Foothill Extension Construction Authority (2018) 19 Cal.App.5th
1127, 1132; see Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th
962, 971.)
Aquat has failed to explain how it could amend its
complaint to allege legally sufficient causes of action against the
lender defendants and Platinum or causes of action for

23
declaratory relief and rescission against the broker defendants.
Aquat makes only conclusory statements regarding potential
amendments, for example, arguing that it could allege “violations
of California’s COVID-19-related legislation,” but it fails to
describe what COVID-19 violations it could allege or how those
violations would support specific causes of action. With respect to
violation of the usury laws, Aquat argues only that a loan is
usurious “when excessive fees are charged,” but it fails to state
what it could allege as to why the commissions or fees charged
were excessive. Aquat also contends it could make additional
allegations about the fraudulent alteration of the deed of trust,
but, as discussed, the releases in the modification agreement bar
the seven causes of action based on alteration of the deed of trust.
Accordingly, there is no basis to reverse the trial court’s denial of
leave to amend.

DISPOSITION

The judgment against the lender defendants is affirmed.
The judgment against the broker defendants is reversed. The
matter is remanded with directions for the trial court to vacate
its order sustaining the broker defendants’ demurrer as to all
causes of action and to enter a new order overruling the demurrer
with respect to the causes of action against Fine and Marquee for
breach of fiduciary duty and violation of Business and Professions
Code section 17200; sustaining the demurrer without leave to
amend as to the remaining causes of action alleged against Fine
and Marquee; and sustaining the demurrer without leave to
amend as to all causes of action alleged against Platinum. The
court is also to enter a new judgment in favor of Platinum. The

24
lender defendants are to recover their costs on appeal. Aquat,
Fine, Marquee, and Platinum are to bear their own costs.

FEUER, J.
We concur:

MARTINEZ, P. J.

STONE, J.

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