HOBR-rulings

29 Oct

hobr

Superior Court of California.

Sacramento County

SESE,

v.

WELLS FARGO BANK NA.

No. 34-2013-00144287.

July 1, 2013.

*1 Time: 02:00:00 PM

Dept: 53

Clerk: K. Pratchen

Reporter/Erm: S. Adams CSR# 12554

Bailiff/Court Attendant: C. Chambers

Case Init. Date: 05/28/2013

Case Category: Civil – Unlimited

Event ID/Document ID:, 10012106

Event Type: Motion – Other – Civil Law and Motion

Moving Party: Danilo Sese

Causal Document/Date Filed: Motion for Preliminary Injunction, 06/03/2013

Minute Order

Appearances

Aldon L Bolanos, Counsel, Present for Plaintiff(s).

Danilo Sese, Plaintiff is Present.

Dennis LA, Counsel, Present for Defendant(s) Telephonically.

Walter Dauterman, Counsel, Present for the Plaintiff.

Rudolph Loncke, Judge.

Nature of Proceeding: Motion for Preliminary Injunctionhobr

TENTATIVE RULING

Plaintiff Danilo Sese’s Motion for Preliminary Injunction is ruled upon as follows.

Plaintiff seeks a preliminary injunction enjoining the foreclosure sale of his home. Plaintiff contends that Defendant Wells Fargo Bank, NA engaged in improper “dual tracking” of his loan modification application and the concurrent foreclosure proceeding in violation of the Homeowner Bill of Rights.

In deciding whether to enter a preliminary injunction, the court must evaluate two interrelated factors: (1) the likelihood that the applicant will prevail on the merits at trial, and (2) the interim harm that the applicant will likely suffer if preliminary relief is not granted, as compared to the likely harm that the opposing party will suffer if the preliminary injunction issues. (See, e.g., Langford v. Superior Court (Gates) (1987) 43 Cal.3d 21, 28.) One of these two factors may be accorded greater weight than the other depending on the applicant’s showing. (See Commons Cause v. Bd. of Supervisors (1989) 49 Cal.3d 432, 447.)

“[T]he party seeking the injunction must present sufficient evidentiary facts to establish a likelihood that it will prevail.” (Tahoe Keys Property Owners’ Assn. v. State Water Resources Control Board (1994) 23 Cal.App.4th 1459, 1478.) In support of his motion, Plaintiff presents evidence that after a Notice of Default was recorded against the property on January 28, 2013, he applied for mortgage assistance from Wells Fargo. (Sese Decl. ¶¶ 4-6.) Plaintiff presents evidence that he responded to Wells Fargo’s repeated requests for information, and provided all of the documents requested. (Sese Decl. ¶¶6-8.) Plaintiff states in his declaration that on May 9, 2013, he received a letter from Wells Fargo stating that it had received his documents and was considering his loan modification application. (Sese Decl. ¶9, Ex. 6.) However, on May 11, 2013, Plaintiff received a Notice of Trustee’s Sale indicating his home was scheduled to be sold on June 4, 2013. (Sese Decl. ¶10, Ex. 7.) On May 18, 2013, Plaintiff received a letter from Wells Fargo stating that it needed additional information, which Plaintiff states he already provided, in order to assess his loan modification application. (Sese Decl. ¶11, Ex. 8.) Plaintiff presents evidence that Wells Fargo never provided a written determination of that his application was incomplete or rejected in any way. (Sese Decl. ¶9.)

Plaintiff argues that Wells Fargo’s conduct violated various provisions of the recently-enacted Homeowner Bill of Rights. Plaintiff contends that the Civil Code § 2923.6(c) prohibits a lender from recording a notice of default or notice of sale, or conducting a trustee’s sale while a loan modification application is pending. A lender must make a written determination that the borrower is not eligible for a loan modification before it may proceed with the foreclosure process. (Civil Code § 2923.6(c)(1).) Plaintiff’s evidence indicates that Wells Fargo issued the Notice of Trustee’s Sale before it issued any determination of his eligibility for a loan modification. This is sufficient to demonstrate Wells Fargo’s failure to comply with Civil Code § 2923.6 and shift the burden to Wells Fargo to refute Plaintiff’s showing.

*2 In opposition, Wells Fargo presents evidence that Plaintiff had received a prior modification of the loan at issue here in May of 2012. (Dolan Decl. ¶10, Ex. D.) Wells Fargo’s evidence indicates that Plaintiff defaulted on this modified loan, resulting in the January 28, 2013 recordation of the Notice of Default. (Dolan Decl. ¶11.)

Wells Fargo contends under Civil Code § 2924.12(g), it is not liable for any violation of Civil Code § 2923.6. Civil Code § 2924.12(g) provides:

“A signatory to a consent judgment entered in the case entitled United States of America, et al v. Bank of America, et al., filed in the District Court for the District of Columbia, case number 1:12-cv-00361 RMC, that is in compliance with the relevant terms of the Settlement Term Sheet of that consent judgment with respect to the borrower who brought an action pursuant to this section while the consent judgment is in effect shall have no liability for a violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.”

Wells Fargo presents evidence that it is a signatory to the consent judgment described in Civil Code § 2924.12(g), and thus that it is immune from liability under § 2923.6. However, § 2924.12(g) requires that the signatory be “in compliance with the relevant terms of the Settlement Term Sheet of that consent judgment”. Wells Fargo did not provide the Settlement Term Sheet or any other persuasive evidence to establish that it is in fact in compliance with the consent judgment. Wells Fargo’s contention that its compliance is shown by the fact that it previously offered Plaintiff a loan modification is not sufficient. Further, Plaintiff, on reply, provides a copy of relevant portions of the Settlement Term Sheet that prohibit signatories from engaging in “dual tracking”. (Bolanos Reply Decl. Ex. 2, p. A-17.) As Plaintiff argues, he has presented evidence that Defendant did engage in “dual tracking” when processing his modification application, which Plaintiff contends indicates Wells Fargo’s failure to comply with the consent judgment.

Wells Fargo also argues that it may proceed with foreclosure because Plaintiff defaulted on his first loan modification. Civil Code § 2923.6(c)(3), a provision of the Homeowner Bill of Rights, permits foreclosure proceedings where “[t]he borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first lien loan modification.” However, as Plaintiff argues on reply, the Homeowner Bill of Rights became effective on January 1, 2013, after Plaintiff received the first loan modification. Wells Fargo cites no authority for retroactive application of the provisions of the Homeowner Bill of Rights.

Next, Wells Fargo presents evidence that Plaintiff failed to provide a “complete” application for a loan modification, and therefore cannot invoke the protections of Civil Code § 2923.6. Wells Fargo presents notes of calls and copies of letters sent to Plaintiff requesting additional information. (Dolan Decl. ¶¶12, 13.) However, this evidence does not refute Plaintiff’s testimony that Wells Fargo repeatedly requested information from Plaintiff that he had previously submitted. (Sese Decl. ¶10; Sese Reply Decl. ¶¶2-4, Ex. 2.)

Finally, Wells Fargo argues that the Homeowner Bill of Rights is preempted by the federal Home Owners’ Loan Act (“HOLA”). Wells Fargo cites no authority holding that the HOLA preempts any provisions of the Homeowner Bill of Rights, let alone the specific provisions Plaintiff alleges were violated here. The Mabry case (Mabry v. Superior Court (2010) 185 Cal.App.4th 208) did not address the Homeowner Bill of Rights and does not establish preemption.

*3 Based on the foregoing, the Court concludes that Plaintiff has met his burden to demonstrate a likelihood of prevailing on the merits of his claims.

Further, the Court agrees that Plaintiff will undoubtedly suffer great injury if his residence is sold. Accordingly, the relevant factors favor Plaintiff, and the court will grant the motion for preliminary injunction.

Bond is set in the amount of $10,000.

The prevailing party shall prepare a formal order for the Court’s signature pursuant to C.R.C. 3.1312.

COURT RULING

The matter was argued and submitted. The Court affirmed the tentative ruling.

2016 WL 1237991 (Cal.Super.) (Trial Order)

Superior Court of California.

Ventura County

HARRAH,

v.

SELECT PORTFOLIO SERVICING INC.

No. 56-2015-00471752-CU-OR-VTA.

February 10, 2016.

ca-homewoner-bill-of-rights2Minute Order

John Reid, Judge.

*1 CLERK: Laurie Simons

REPORTER/ERM: None

CASE CATEGORY: Civil – Unlimited

CASE TYPE: Other Real Property

EVENT TYPE: Demurrer (CLM)

MOVING PARTY: Select Porfolio Servicing Inc

CAUSAL DOCUMENT/DATE FILED: Demurrer to First Amended complaint memorandum of points and authorities, 12/10/2015

Prior to court convening a message is received from the secretary that plaintiff’s counsel Armine Singh and defendant counsel Aileen Ocon both submit on the tentative ruling and will not appear.

There are no appearances by any party.

The Court finds/orders:

Court’s tentative is adopted as follows:

Motion: Demurrer to First Amended Complaint

Ruling:

GRANT defendant’s Request for Judicial Notice of recorded Deed of Trust, Notice of Default and Election to Sell Under Deed of Trust; Substitution of Trustee; and Notice of Trustee’s Sale (Ex. 1-4). (Ev. Code §§ 451-453).

Sustain demurrer, with leave to amend. Plaintiffs have failed to state facts sufficient to constitute the causes of action claimed in the First Amended Complaint. (CCP § 430.10(e)).

Second amended complaint, if any, to be filed and served no later than 2/24/16.

1st cause of action for Violation of CC 2923.5.

This cause of action is premised on a violation of the Homeowner’s Bill of Rights (“HBOR”), CC § 2923.55. CC § 2923.55 does not apply to this case. When the notice of default was recorded on 9/21/10, the HBOR, including the current version of CC §§ 2923.55, 2923.6, and 2923.7, was not yet in effect. The HBOR is not retroactive. (See McGough v. Wells Fargo Bank, N.S., No. 12-0050, 2012 WL 5199411, *5 n.4 (N.D. Cal. Oct. 22, 2012) – “The amendments [in the HBOR] do not go into effect until Jan. 1, 2013 and there is no indication that the law is intended to be, or will be, applied retroactively.”). Accordingly, Select Portfolio cannot be held liable for any purported violation of the HBOR, including alleged violations of Sections 2923.55, 2923.6(c), and 2923.7 for actions which took place prior to the enactment of HBOR. Any purported violation of CC 2923.55 predicated on the recordation of the notice of default fails.

As to any intended claim for a violation of CC § 2923.5, there is no indication that Defendant failed to comply with the statute. Plaintiffs alleged that that attached notice of default was a notice of default declaration pursuant to CC 2923.5 dated 9/17/10. (FAC, ¶17.) Per the FAC, the declaration was a boilerplate form which stated that the mortgagee, beneficiary, or authorized agent has contacted the borrower to discuss the borrower’s financial situation and to explore options for the borrower to avoid foreclosure as required by CC 2923.5. (FAC, ¶17.) Plaintiff alleges that this declaration was false. (Id.)

In paragraph 27, Plaintiffs allege that none of defendants have contacted Plaintiffs. CC 2923.5 provides that before it may record a notice of default to commence the non-judicial foreclosure process, a lender must do one of two things unless a specific exemption applies. (CC 2923.5(a)(1), (a)(2), (g)). Either (1) the lender must contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure, or (2) the lender shall satisfy specified due diligence requirements in an attempt to make such contact. (CC 2923.5(a)(1)). Actual borrower contact is not required – the lender only needs to attempt to contact the borrower. (CC 2923.5(g)). Also, section 2923.5 requires a declaration stating that contact had been made, or a good-faith attempt had been made where contact was not successful. It does not require anything more. (CC 2923.5(b).)

*2 The documents attached to the FAC seem to show that defendant complied with the statute. The notice of default contains the requisite California declaration executed by the subject loan’s prior servicer, JP Morgan Chase Bank, National Association. (FAC, Ex. B.) The declaration confirms compliance with the statute. (See Ortiz v. Accredited Home Lenders, Inc. 639 F.Supp.2d 1159, 1166 (S.D. Cal. 2009) [claim under section 2923.5 dismissed where declaration of compliance accompanied the Notice of Trustee’s Sale attached to the complaint.] There is no statute or case law (and Plaintiff has provided none) that requires more than the attached declaration. (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 2143-215 – there is no indication that the Legislature wanted to saddle lenders with the need to ‘custom draft’ the statement required by the statute in notices of default.). Also, the existence of a declaration attesting to compliance with Section 2923.5 appears to dispose of Plaintiffs’ claim unless there are specific factual allegations to the contrary. (See Maguca v. Aurora Loan Services (CD. Cal. Oct. 28, 2009) No. SACV 09=1086 JVS (ANx), 2009 WL 3467750, *2 [taking judicial notice of a recorded copy of the notice of default and dismissing a section 2923.5 claim with prejudice “because the allegations in the FAC which the court notes are conclusory, are contradicted by the notice of default”).

In addition, Plaintiffs must also allege that they suffered prejudice as a result of the defendant’s action in order to make a claim under Section 2923.5. (See Pantojoa v. Countrywide Home Loans, Inc., 640 F. Supp.2d 1177, 1186-87 (N.D. Cal. 2009 – courts have rejected claims of deficient notice where no prejudice was suffered.)

Here, the FAC does not allege facts showing Plaintiffs suffered from prejudice as a result from any purported non-compliance with Section 2923.5. The opposition to this demurrer is silent on this issue. There is no prejudice alleged from any irregularity in this foreclosure proceeding – and Plaintiffs cannot alleged prejudice when they concede default. (See Fontenot v. Wells Fargo Bank N.A. (2011) 198 Cal.App.4th 256, 272.)

2nd cause of action for violation of CC § 2923.6.

HBOR is not controlling. Even if it is, Plaintiffs never specify when they submitted their allegedly complete loan modification application to Select Portfolio. Under Section 2923.6(c), if a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. (CC 2923.6(c).) [emphasis added.]

An application shall be deemed complete when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable time frames specified by the mortgage servicer. (CC 2923.6(h).)

Section 2923.6(c) provides that a “completed” loan modification application prohibits further steps toward foreclosure only if certain other haves have not occurred. (CC 2923.6(c)(1)-(3).)

Here, Plaintiffs conclude that they submitted a complete loan modification application via Facsimile to the loss mitigation department. (FAC, ¶31.) Plaintiffs fail to allege when they purportedly submitted the complete loan modification application, as that term is defined by CC 2923.6(h) (see above.)

Even if Plaintiffs had alleged facts showing that they submitted a complete loan modification application, they fail to plead that none of the conditions set forth in CC 2923.6(c)(1)-(3) have taken place. (See CC 2923.6(c)(1)-(3).)

3rd_ cause of action for violation of CC 2923.7. Again, even if HBOR was controlling (see above), Section 2923.7 requires that “upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact ….” (CC 2923.7(a).). Section 2923.7 applies only to servicers, not lenders. (See Rockridge Trust v. Wells Fargo, N.A., 2013 WL 5428722, at *27.) Also, the requirement to appoint a contact is triggered only when the borrower makes a specific request for a single point of contact. (See Williams v. Wells Fargo Bank, NA, , *8 (CD. Cal., Jan. 27, 2014) – [“[T]the text of section 2923.7 requires that the borrower make a specific request for a single point of contact.”]

*3 Note also that in their opposition, Plaintiffs argue that in Paragraph 35 of their FAC they allege that “when Plaintiffs would call to ask about their loan status, Plaintiffs were transferred from one person to another and would never receive a response.” (Opposition, page 8.) However, this particular allegation is not included in Paragraph 35 of Plaintiffs’ FAC, and the court will disregard this allegation in considering Pls’ CC 2923.7 claims.

Plaintiffs do not allege that they made a specific request that would trigger the statute. Select Portfolio never had any obligation pursuant to CC 2923.7. (Williams v. Wells Fargo Bank, N.A., , *8 (CD. Cal. Jan 27, 2014.) [Note that in the opposition, Pls argue that their request for a foreclosure prevention alternative automatically triggered Select Portfolio’s obligation to provide a single point of contact, citing Federal cases holding so, but as noted in the reply, other courts have held that the requirement to appoint the contact is triggered only when the borrower makes a specific request for a single point of contact. (See Reply, page 5, line 13, through page 6, line 11 for discussion of cases.)

5th cause of action for declaratory relief.

Under CC 2924.12(a)(1), “[i]f a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.”

CC 2924.12, which was recently enacted under the Homeowner’s Bill of Rights (the “HBOR”), permits a borrower to bring an action for injunctive relief to enjoin a material violation of certain enumerated sections. (Rockridge Trust, 2013 WL 5428722, at *25 (N.D. Cal. September 25, 2013) (slip op.) To state a claim under CC 2924.12, a plaintiff must plead “(1) a material violation of one of the enumerated code sections; (2) by a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent; (3) that causes actual economic damages.” (Id.)

The HBOR did not become effective until January 1, 2013, and does not operated retroactively. (See McGough v. Wells Fargo Bank, N.A., No. 12-0050, 2012 WL 5199411, *5 n.4 (N.D. Cal. Oct. 22, 2012.) Here, Plaintiffs fail to plead facts showing that the conduct allegedly constituting violations of the HBOR took place on or after January 1, 2013.

Finally, under CC 2924.12(c)

“(c) A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not be liable for any violation that it has corrected and remedied prior to the recordation of a trustee’s deed upon sale, or that has been corrected and remedied by third parties working on its behalf prior to the recordation of a trustee’s deed upon sale.”

There are no allegations that a trustee’s sale ever took place. So any claim for a violation of the HBOR fails. (See Ellis v. Bank of Am., N.A., No. 13-5257, 2013 WL 5935412, *4 (CD. Cal. Oct. 28, 2013.)

5th cause of action for unfair business practices under Bus. & Prof. Code 17200

Plaintiffs do not allege any conduct which could form the basis of a claim. To allege a claim under Section 17200, Plaintiffs must alleged that Select Portfolio engaged in an “unlawful, unfair, or fraudulent business act or practice” as a result of which Plaintiffs suffered an “injury in fact” or “lost money or property.” (Bus. & Prof. Code 17200; see Bernardo v. Planned Parenthood Fed. of Am (@004) 115 Cal.App.4th 322, 351.) A violation of the unlawful prong requires an underlying violation of law. (See Krantz v. BT Visual Images, LLC (2001) 89 Cal.App.4th 164, 178.) An alleged unfair business practice must be tethered to specific “constitutional, statutory, or regulatory provisions.” (See Scripps Clinic v. Super. Ct. (2003) 108 Cal.App.4th 917, 940.) A claim under the fraudulent prong must established that reasonable members of the public are likely to be deceived. (See Rubio v. Capital One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010).) Plaintiffs must also “state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 619.)

*4 Here, there are no allegations that Plaintiffs “lost money or property” or suffered an “injury in fact” as a result of Select Portfolio’s alleged violations. Plaintiffs have not identified any lost money or property or injury that they have suffered at the hands of Select Portfolio. The subject property has apparently not been foreclosed. Plaintiffs’ allegations appear to indicate a belief that a foreclosure sale may occur. This is not enough. Plaintiffs have not alleged standing to pursue this claim.

Even if they had alleged standing (see above), Plaintiffs have not alleged conduct to support a 17200 claim. Plaintiffs’ claim for a violation of Section 17200 is derivative of their foundational claims on their other causes of action, which fail. (See above discussions on other causes of action.) (Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1190-91 (N.D. Cal. 2009) – UCL claim predicated on toehr failed claims also fails.)

Plaintiffs have not allege “unfair” or “fraudulent” conduct. An “unfair” practice must be tethered to specific “constitutional, statutory, or regulatory provisions.” (Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 940.) Plaintiffs fail to alleged facts showing that Select Portfolio engaged in any “unfair” practices. Also, the FAC fails to alleged with particularity, who, where, and when any employee or agent of Select Portfolio engaged in any conduction in violation of the unfair competition law. (Khoury, 15 Cal.App.4th at 619.)

Finally, Plaintiffs have failed to allege conduct that could reasonably deceive members of the public.

Notice to be given by the clerk.

boa-billboard1

Superior Court of California.

Sacramento County

SESE,

v.

WELLS FARGO BANK NA.

No. 34-2013-00144287-CU-WE-GDS.

March 17, 2014.

*1 Date: 03/17/2014

Time: 02:00:00 pm

Dept: 53

Clerk: E. Brown

Reporter/Erm:

Bailiff/Court Attendant: C. Chambers

Case Init.Date: 05/28/2013

Case Category: Civil – Unlimited

Event Id/Document Id: 10683932

Event Type: Hearing on Demurrer – Civil Law and Motion – Demurrer/Jop

Moving Party: Wells Fargo Bank NA Successor by Merger with Wells Fargo Bank Southwest NA

Causal Document/Date Filed: Demurrer to 1st Amended Complaint, 12/02/2013

Minute Order

Appearances

David Brown, Judge.

Nature of Proceeding: Hearing on Demurrer

TENTATIVE RULING

Defendant Wells Fargo Bank, N.A.’s demurrer to Plaintiff Danilo Sese’s First Amended Complaint (“FAC”) is overruled.

The Court declines Defendant’s request in reply to disregard Plaintiff’s opposition because it was served by regular mail. Defendant was able to file a reply fully responding to the opposition. (See, e.g. Carlton v. Quint (2000) 77 Cal.App.4th 690.) There appears no prejudice to defendant. (See, e.g. Israni v. Superior Court (2001) 88 Cal.App.4th 621.)

Defendant’s request for judicial notice is granted. (See Poseidon Devel., Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117-18; see also Startford Irrig. Dist. v. Empire Water Co. (1941) 44 Cal.App.2d 61, 68 [recorded land documents, not contracts, are the subject of judicial notice on demurrer].) The court, however, does not accept the truth of any facts within the judicially noticed documents except to the extent such facts are beyond reasonable dispute. (See Poseidon Devel., 152 Cal.App.4th at 1117-18.) see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265 (“[A] court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in the recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity.”)

In this action, Plaintiff alleges a single cause of action for Violations of the Homeowner’s Bill of Rights (“HOBR”). Defendant demurs on the basis that the HOBR is preempted by the Federal Homeowner’s Loan Act (“HOLA”) and that Plaintiff failed to allege damages. The HOLA authorizes federal savings associations to “invest in, sell, or otherwise deal in” residential property loans. (12 U.S.C. § 1464(c)(1)(B).) These “lending and investment powers … are intended to encourage such institutions to provide credit for housing safely and soundly.” (12 U.S.C. § 1464(a).)

The Court first rejects Defendant’s argument that the HOBR is preempted by HOLA. Indeed, the Court already rejected that argument when it granted Plaintiff’s motion for preliminary injunction and when it ruled on Defendant’s demurrer to the original complaint. Indeed, while the Court sustained the demurrer on the basis that it was overly conclusory, it specifically rejected Defendant’s argument “that a claim for violation of Civil Code § 2923.6 is preempted by HOLA.” (See minute order dated October 18, 2013.) Defendant is essentially requesting the Court reconsider its ruling on this issue yet there is no stated basis to do. There is no reason to revisit that ruling on the instant demurrer. Indeed, the same case law cited by Defendant in the instant demurrer to make this argument, specifically, Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522 (which does not address the HOBR) and the unpublished federal decisions were cited in the previous moving papers and reply brief in support of the demurrer to the original complaint. The Court will not revisit its ruling, once again, on the instant demurrer. In any event, the HOBR cause of action arises out of Defendant’s allegedly wrongful nonjudicial foreclosure conduct, which HOLA does not preempt. Indeed, “[g]iven the traditional state control over mortgage foreclosure laws, it is logical to conclude that it the Office of Thrift Supervision wanted to include foreclosure as within the preempted category of loan servicing, it would have been explicit. Nothing prevented the office from simply adding the words ‘foreclosure of’ to Regs. section 560.2(b)(10).” (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 231 [emphasis in original].) The Court is not bound by the unpublished federal decisions which were also previously cited in the previous demurrer in which the Court rejected the identical argument.

*2 Defendant next argues that Plaintiff fails to allege actionable damages or injury in fact. The demurrer on this basis is overruled. First, Plaintiff is not, as Defendant incorrectly argues, alleging that he is entitled to a loan modification. Second, there is no specific pleading requirement for damages as it relates to a cause of action for violation of the HOBR. Further, even if Plaintiff did not specifically identify the “damages” sought, he clearly seeks injunctive relief which is available pursuant to Civil Code § 2924.12. “If a trustee’s deed of sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.” (Civ. Code § 2924.12(a)(1).) Here, Plaintiff alleged that Defendant violated the dual-tracking prohibitions in Civil Code § 2923.6 and the single point of contact requirement in Civil Code § 2923.7. Thus, he necessarily alleged that he has been injured by Defendant’s conduct because he is allegedly subject to foreclosure proceedings while loan modification negotiations are ongoing,. Defendant makes no argument in its moving papers (other than its HOLA argument which was rejected above) that Plaintiff has not adequately pled a violation of either Civil Code § 2923.6 or 2923.7.

The demurrer is overruled. No later than March 24, 2014, Defendant shall file and serve its answer to the FAC.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or other notice is required.

COURT RULING

There being no request for oral argument, the Court affirmed the tentative ruling.

california-homeowner-bill-of-rights

Superior Court of California.

Central Justice Center

Orange County

Toya ACEVES,

v.

SPECIALIZED LOAN SERVICING, LLC et al.

No. 30-2014-00757105-CU-FR-CJC.

August 7, 2015.

Minute Order

Ashishkumar Patel, from Law Office of Ashishkumar Patel, APC, present for Plaintiff(s).

Carrie A. Stringham, from Wolfe & Wyman LLP, present for Defendant(s).

Deborah Servino, Judge.

*1 CASE CATEGORY: Civil – Unlimited

CASE TYPE: Fraud

EVENT ID/DOCUMENT ID: 72202687

EVENT TYPE: Case Management Conference

EVENT ID/DOCUMENT ID: 72169192

EVENT TYPE: Demurrer to Amended Complaint

MOVING PARTY: Specialized Loan Servicing, LLC

CAUSAL DOCUMENT/DATE FILED: Demurrer to Amended Complaint, 05/22/2015

EVENT ID/DOCUMENT ID: 72169199

EVENT TYPE: Motion to Strike Portions Of Complaint

MOVING PARTY: Specialized Loan Servicing, LLC

CAUSAL DOCUMENT/DATE FILED: Motion to Strike Portions, 05/22/2015

Tentative Ruling posted on the Internet and outside the courtroom doors.

Plaintiff submits on the Courts tentative ruling.

The Court hears oral argument and confirms the tentative ruling as follows:

The court sustains Defendant Specialized Loan Servicing, LLC’s (“SLS”) demurrer to the First Amended Complaint (“FAC”). The demurrer as to the first, second, and third causes of action are sustained with leave to amend. The demurrer as to the fourth and fifth causes of action are sustained without leave to amend. Plaintiff has 15 days leave to amend, as set forth below. The court grants Defendant’s Motion to Strike portions of the FAC with leave to amend.

Defendant’s unopposed request for judicial notice is granted.

DEMURRER

First Cause of Action – Intentional “Misrepresentment”

Plaintiff alleges that Mylor Financial made an intentional misrepresentation by tricking her into accepting unfair loan terms through aggressive sales tactics. (FAC, ¶ 22.) “Defendants falsely represented that Plaintiff qualified for a loan modification which she could afford.” (FAC, ¶ 26.) Plaintiff seeks to hold Defendant SLS responsible for alleged misrepresentations made by the loan originator, Mylor.

Plaintiff has not pled facts to show that SLS is liable for the conduct of the original lender. Under governing California law, there is a general rule of non-liability of successor corporations, with exceptions where there was a de facto merger, a mere continuation of the corporation, an agreement to assume liability, or a fraudulent attempt to avoid liability. (CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 1120; Franklin v. USX Corp. (2001) 87 Cal.App.4th 615, 627 [concluding that there was no merger, continuance, or agreement to assume liabilities, for imposing any successor liability, in asbestos case]); McClellan v. Northridge Park Townhome Owners Assn. (2001) 89 Cal.App.4th 746, 753-754; see Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 526 [borrower could not pursue a successor for a predecessor’s predatory lending, where terms of the Purchase and Assumption Agreement executed by the successor and the Federal Deposit Insurance Corporation provide that assumption of the assets did not include the assumption of liability].)

Besides misrepresentations made by the original lender, Plaintiff alleges bad acts by SLS. Specifically, Plaintiff alleges that “SLS treated Plaintiff unfairly by taking over the loan and not rectifying the absurd terms through modification.” (FAC, ¶ 22.) This alleged conduct, however, is not an intentional misrepresentation.

*2 Plaintiff’s fraud claim is not pled with specificity and Plaintiff has not shown justifiable reliance. Plaintiff alleges she wasted her time providing SLS with documents and was pushed deeper into foreclosure (FAC, ¶¶ 23, 29.) However, Plaintiff alleges that she already could not pay her mortgage. (FAC, ¶ 11.) Thus, SLS did not cause that harm. Plaintiff has not alleged justifiable reliance on any alleged representation that the loan modification package was incomplete. Therefore, Plaintiff has not stated a claim for intentional misrepresentation. (See Cicone v. URS Corp. (1986) 183 Cal.App.3d 194, 200.) The court sustains with leave to amend the first cause of action.

Second Cause of Action – Wrongful Foreclosure

In this cause of action entitled “wrongful foreclosure,” Plaintiff also alleges various statutory violations from the Homeowners Bill of Rights (“HBOR”). Defendant’s demurrer based on uncertainty is sustained. Plaintiff is ordered to separately plead each HBOR claim as a distinct cause of action. (See Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2015) ¶ 6:104 et seq., p. 6-30 et seq.)

Plaintiff’s dual-tracking claim (Civ. Code, § 2923.6, subd. (c)) fails because Plaintiff alleges that the notice of default was filed before she submitted a complete loan modification application. (FAC, ¶ 14.) Based on the FAC, Defendant did not record any documents after a complete loan modification application was pending.

There has been no trustee’s sale and Plaintiff does not allege that a deed of sale has been recorded. If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Civil Code sections 2923.55, 2923.6, 2923.7, 2924.9, 2923.10, 2924.11, or 2924.17. Accordingly, Plaintiff improperly alleges damages for each of the HBOR violations.

Because foreclosure has not yet occurred, tender is not required. (Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1054; Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, 1279-1281; Mabry v. Superior Court, (2010) 185 Cal.App.4th 208, 225-226.) The court sustains with leave to amend the second cause of action.

Third Cause of Action – Violation of Business & Professions Code Section 17200

By proscribing “any unlawful business practice,” the Unfair Competition Law (“UCL”) borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable – i.e., a violation of another law is a predicate for stating a claim. (Puentes v. Wells Fargo, Inc. (2008) 160 Cal.App.4th 638, 643-644.) Since Plaintiff has not stated a viable cause of action elsewhere in the FAC, her dependent UCL claim fails as well.

Furthermore, Plaintiff has not alleged the “caused by” prong of a UCL claim. Jenkins v. JP Morgan Chase Bank, N.A., supra, 216 Cal.App.4th at pages 519–521 held that the plaintiff failed to satisfy the “caused by” prong because she admitted in her complaint that she defaulted on her loan, thereby triggering the power of sale clause in the deed of trust that made her home subject to foreclosure. (Id. at pp. 522–523.) The court explained:

As [the plaintiff]’s home was subject to nonjudicial foreclosure because of [the plaintiff]’s default on her loan, which occurred before Defendants’ alleged wrongful acts, [the plaintiff] cannot assert the impending foreclosure of her home (i.e., her alleged economic injury) was caused by Defendants’ wrongful actions. Thus, even if we assume [the plaintiff]’s third cause of action alleges facts indicating Defendants’ actions violated at least one of the UCL’s three unfair competition prongs (unlawful, unfair, or fraudulent), [the plaintiff’s complaint] cannot show any of the alleged violations have a causal link to her economic injury.

*3 (Id. at p. 523.)

Here, Plaintiff acknowledges that she could not afford her monthly payments. “Plaintiff borrowed money and struggled along, and was able to fulfill her obligations under the loans and make all loan payments on the Loan. However, Plaintiff recognized she could not sustain the full monthly payments on the loans and was in danger of default.” (FAC, ¶ 11.) Like the plaintiff in Jenkins, Plaintiff also fails to allege causation. The court sustains the demurrer with leave to amend as to the third cause of action.

Fourth Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

Plaintiff alleges that Defendant breached its duty “(a) By demanding piecemeal and duplicative paperwork from Plaintiff in processing Plaintiff modification requests; (b) By systematically ignoring Plaintiffs written and verbal inquiries regarding the status of her modification requests.” (FAC, ¶ 54.)

Plaintiff has not alleged a specific contact term that requires a loan modification. Liability cannot be extended to create obligations not contemplated by the contract. (See Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1034.) The purpose of the implied covenant of good faith and fair dealing is limited to assuring the parties’ compliance with the contract at issue. The scope of conduct prohibited by the implied covenant is confined by the “purposes and express terms” of the agreement. (Jenkins v. JP Morgan Chase Bank, N.A., supra, 216 Cal.App.4th at pp. 527-528.) A plaintiff raising a claim for the breach of the implied covenant must allege a reasonable relationship between the defendant’s allegedly wrongful conduct and the express terms or underlying purposes of the contract. (Ibid.)

Plaintiff does not allege an express term of the Deed of Trust or any other contract that requires consideration of a loan modification. Therefore, the court sustains the demurrer. (Id. at p. 527 [action alleging breach of implied covenant cannot be used to extend existing, or create new, obligations; plaintiff raising claim must allege reasonable relationship between defendant’s allegedly wrongful conduct and express terms or underlying purposes of contract].) Credit Managers Assn. v. Superior Court (1975) 51 Cal.App.3d 352, 359, relied upon by Plaintiff, is inapposite. The court sustains without leave to amend the fourth cause of action.

Fifth Cause of Action – Promissory Estoppel

Plaintiff alleges that Defendant promised her a loan modification. (FAC, ¶61.) Plaintiff alleges that she “relied on the Defendant’s promise of obtaining an equitable loan modification. To show reliance, the Plaintiff committed to the laborious process of negotiating a loan modification with the Defendant.” (FAC, ¶64.)

For plaintiff to invoke the doctrine of promissory estoppel to avoid the statute of frauds, he must demonstrate a material change in position resulting in substantial hardship amounting to unconscionable injury. (Monarco v. Greco (1950) 35 Cal.2d 621, 623.) There must be extraordinary or unusual conduct by the promisee or circumstances that would result in gross injustice. (Parker v. Solomon (1959) 171 Cal.App.2d 125, 133.) The sort of material change in position that results in unconscionable injury is beyond the loss of the benefit of the bargain and requires more than the sort of actions ordinarily undertaken in anticipation of entry into contract. (Irving Tier Co. v. Griffin (1966) 244 Cal.App.2d 852, 865.)

*4 “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” (See Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310.) Promissory estoppel is an equitable doctrine whose remedy may be limited “as justice so requires.” (Ibid.) The elements of promissory estoppel are: “(1) a clear promise; (2) reasonable reliance; (3) substantial detriment; and (4) damages ‘measured by the extent of the obligation assumed and not performed. (Poway Royal Mobilehome Owners Assn. v. City of Poway (2007) 149 Cal.App.4th 1460, 1471.)

Only a handful of cases have found sufficient justification to forgive the absence of a writing under similar circumstances. (See, e.g., Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, 223 [borrower, in reliance on oral promise to modify loan, abandoned pending bankruptcy petition and ultimately lost home]; Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1044 [borrower, in reliance on oral promise to delay foreclosure, obtained new loan on unaffected property in order to cure default]; Carlson v. Richardson (1968) 267 Cal.App.2d 204, 208–209 [borrower, in reliance on oral promise to consummate sale, purchased adjacent property for use as temporary residence].)

Here, Plaintiff argues that in reliance on the alleged promise to provide her with a loan modification, she spent time submitting documentation. This allegation is insufficient to state a claim and does not show any material change in position. The court sustains the demurrer to the fifth cause of action. Plaintiff has not shown how she can sufficiently amend this claim. Therefore, leave to amend is denied.

MOTION TO STRIKE

The court grants Defendant’s Motion to Strike. Plaintiff does not delineate which damages are tied to which causes of action. Plaintiff is ordered to specify in the second amended complaint.

Punitive Damages

Plaintiff has not alleged a cause of action that warrants punitive damages. Plaintiff has not properly alleged a fraud claim. Punitive damages/penalties are unavailable for HBOR claims where there has been no foreclosure sale. Moreover, punitive damages are not recoverable under Business and Professions Code section 17200 or a promissory estoppel claim.

Attorney’s Fees

Plaintiff pleads attorney’s fees under her section 17200 claim pursuant to Code of Civil Procedure section 1021.5, the private attorney general doctrine.

The “private attorney general” doctrine is one of several exceptions to the general rule that each party must pay his or her own attorney fees. (See Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 505; Code Civ. Proc., § 1021.5.) It is also one of the most commonly-used doctrines by which attorney fees have been recovered in section 17200 cases.

The “private attorney general” doctrine rests upon the recognition that privately initiated lawsuits are often essential to the effectuation of fundamental public policies embodied in constitutional or statutory provisions, and that without some mechanism authorizing the award of fees, private actions to enforce such important policies will frequently be infeasible. (Woodland Hills Residents Assn., Inc. v. City Council of Los Angeles (1979) 23 Cal.3d 917, 933.)

Here, Plaintiff asks for damages for herself. She does not even ask for an injunction. One of the requirements according to the statute is that the party seeking fees enforced “an important right affecting the public interest.” (Code Civ. Proc., § 1021.5.) Here, the only interest being vindicated is Plaintiff’s, which is insufficient under the private attorney general doctrine. (See Roybal v. Governing Bd. of Salinas City Elementary School Dist. (2008) 159 Cal.App.4th 1143, 1149.) Therefore, the court strikes attorney fees under Code of Civil Procedure section 1021.5.hobr

Actual Economic and Non-Economic Damages

*5 Civil Code section 2924.12, subdivision (a)(1), makes clear that no monetary damages are available for any violation of HBOR when, as here, there has been no recorded trustee’s deed upon sale. Plaintiff cannot seek damages for the alleged HBOR violations.

Accounting

There are no allegations that SLS owed Plaintiff any money. Therefore, Plaintiff’s request for an accounting in the Prayer for Relief appears to be inappropriate.

Declaratory Relief

Plaintiff asks for a “permanent injunction prohibiting Defendant and its agents or anyone acting on its behalf from foreclosing, evicting, instituting, prosecuting, or maintaining sale proceedings on the Home, from recording any deeds or mortgages regarding the Home or from otherwise taking any steps whatsoever to deprive Plaintiff of ownership in the Home, such as forcible removal from the Home.” Plaintiff could be entitled to injunctive relief if she properly pleads HBOR violations, but such relief would not be a “permanent injunction” that would never permit Defendant from foreclosing on the property.

Plaintiff seeks a declaration of rights as to the Property, but she has not pled a cause of action to quiet title.

Defendant shall give notice of the rulings.

CASE MANAGEMENT CONFERENCE

Case Management Conference continued to 10/09/2015 at 09:00 AM in this department.

Court orders Defendant to give notice.

2016 WL 2344176 (Cal.Super.) (Trial Order)

Superior Court of California.

El Dorado County

POHL,

v.

BANK OF AMERICA.

No. PC-20140076.

April 8, 2016.

Defendants Bank of America’s, Recontrust’s and Federal National Mortgage Association’s Motion for Judgment on Pleadings.

*1 On April 24, 2015 the court sustained defendants Bank of America’s and Recontrust Co., Inc.’s demurrer to the wrongful foreclosure/HBOR violation cause of action of the 1st amended complaint with ten days leave to amend and sustained their demurrer to the wrongful foreclosure/violation of automatic bankruptcy stay cause of action of the 1st amended complaint without leave to amend. Plaintiff filed a 2nd amended complaint asserting a single cause of action for wrongful foreclosure/HBOR violation. Defendants answered the 2nd amended complaint on May 26, 2015 generally denying the allegations and asserting 15 affirmative defenses, including the affirmative defense that the 2nd amended complaint fails to state a cause of action. (See Answer – 10th Affirmative Defense.)

On December 3, 2015 defendants Bank of America, Recontrust Co., and Federal National Mortgage Association filed a motion for judgment on the pleadings. Defendants contend the single cause of action of the 2nd amended complaint is fatally defective for the following reasons: plaintiffs were not “borrowers” on the date of sale, because they had an active bankruptcy proceeding pending; plaintiffs have not alleged the defendants ever notified plaintiffs that they had submitted a complete loan modification application prior to the recording of the notice of trustee’s sale; plaintiffs were engaged in an open bankruptcy when the notice of trustee’s sale was recorded; the 2nd amended complaint fails to demonstrate that the recording of the notice was a material violation of the Homeowner’s Bill of Rights Act (HBOR), because plaintiffs were not prejudiced by the recording of the notice of trustee’s sale resulting in injury, the notice was immaterial to the trustee’s sale that occurred on July 22, 2013, and the September 2012 notice was still valid rendering the notice recorded on May 29, 2013 unnecessary to proceed with the sale and immaterial; and plaintiffs can not point to any actual damages stemming from the recording of the subsequent notice of trustee’s sale.

Plaintiffs oppose the motion on the following grounds: paragraphs 12, 13, and 26 of the 2nd amended complaint adequately allege that their loan modification application was complete as of the date of the trustee’s sale, which required the mortgage servicer to render a decision on the loan modification application and the applicable appeals period must expire prior to the servicer recording a notice of trustee’s sale; the bad faith violation of HBOR necessitated the bankruptcy filings, therefore defendants can not claim that plaintiffs were not borrowers protected by HBOR at the time the sale occurred; the recording of the May 2013 notice of trustee’s sale was a material violation of HBOR, because the September 2012 notice was void due to the fact that HBOR came into effect on January 1, 2013 and the loan modification application was still pending; and plaintiffs were prejudiced by the material HBOR violations in that the violations caused plaintiffs to suffer severe physical and emotional distress and required them to incur costs to protect their home.

*2 Defendants replied to the opposition.

“A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. (Citations omitted.)” (Cloud v. Northrup Grumman Corp. (1998) 67 Cal.App. 4th 995, 999.)

“The standard for granting a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law. (Code Civ. Proa, § 438, subd. (d); Smiley v. Citibank (1995) 11 Cal.4th 138, 146 [44 Cal.Rptr.2d 441, 900 P.2d 690].) [Footnote omitted.] ¶ Judgment on the pleadings does not depend upon a resolution of questions of witness credibility or evidentiary conflicts. In fact, judgment on the pleadings must be denied where there are material factual issues that require evidentiary resolution. (Bach v. McNelis (1989) 207 Cal.App.3d 852, 865-866 [255 Cal.Rptr. 232].)” (Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216.)

“Because a motion for judgment on the pleadings is the functional equivalent of a general demurrer, the same rules apply. (People v. $20,000 U.S. Currency (1991) 235 Cal.App.3d 682, 691 [286 Cal.Rptr. 746].) ¶ The motion is confined to the face of the pleading under attack, and all facts alleged in the complaint must be accepted as true. (Rangel v. Interinsurance Exchange (1992) 4 Cal.4th 1, 7 [842 P.2d 82, 14 Cal.Rptr.2d 783].)” (Hightower v. Farmers Ins. Exchange (1995) 38 Cal.App.4th 353, 858.)

With the above-cited principles in mind, the court will rule on the motion for judgment on the pleadings.

ca-homewoner-bill-of-rights2Bankruptcy and Alleged HBOR Violation by Sale of Property

The plaintiffs allege: at 2:29 p.m. on July 22, 2013 plaintiffs filed a Chapter 13 bankruptcy petition and one minute later, at 2:30 p.m. on that same date the subject home was sold at a foreclosure sale in violation of the automatic bankruptcy stay. (2nd Amended Complaint, paragraphs 20 and 21.) These allegations remain unchanged from those set forth in the 1st amended complaint and, as stated below, the court finds that one of the plaintiffs can not set forth a cause of action for violation of HBOR for sale of the property and the other plaintiff can not set forth a cause of action for violation of HBOR for the recording of the May 2013 notice of trustee’s sale, because on the respective dates of the recording of the notice of sale and the sale those plaintiffs were not a “borrowers” as that term is defined in the HBOR statutes.

“For purposes of this article, the following definitions apply: ¶ *** (c)(1) Unless otherwise provided and for purposes of Sections 2923.4, 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, 2924.18, and 2924.19, “borrower” means any natural person who is a mortgagor or trustor and who is potentially eligible for any federal, state, or proprietary foreclosure prevention alternative program offered by, or through, his or her mortgage servicer. ¶ (2) For purposes of the sections listed in paragraph (1), “borrower” shall not include any of the following: ¶ *** (C) An individual who has filed a case under Chapter 7, 11, 12, or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case, or granting relief from a stay of foreclosure.” (Emphasis added.) (Civil Code, §§ 2920.5(c)(1) and 2920.5(c)(2)(C).)

*3 “(c) If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: ¶ (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired. ¶ (2) The borrower does not accept an offered first lien loan modification within 14 days of the offer. ¶ (3) The borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first lien loan modification.” (Emphasis added.) (Civil Code, § 2923.6(c).)

A critical element of any cause of action for violation of Section 2923.6(c) is that the plaintiffs fall within the statutory definition of “borrowers” at the time of the alleged violations.

Another critical element of a violation of Section 2923.6(c) is that a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent recorded a notice of default or notice of sale or conducted a trustee’s sale while a complete loan modification application remained pending. Plaintiffs admit that the foreclosure sale occurred after one petition for Chapter 13 bankruptcy protection was filed. The court takes judicial notice that the July 2013 bankruptcy case was only filed by plaintiff Pohl. At the very moment of the alleged violation by foreclosure sale, plaintiff Pohl was not “borrower” and, therefore, the foreclosure sale can never form the basis for an action by plaintiff Pohl for violation of Section 2923.6(c).

As for the recording of the notice of trustee’s sale on May 29, 2013, the court takes judicial notice that plaintiff James commenced a bankruptcy case by filing a Chapter 13 petition on April 3, 2013 and the case was not dismissed until July 2, 2013, which was after the recording of the May 2013 notice of trustee’s sale. Therefore, matters of which the court may take judicial notice establishes that plaintiff James was not a “borrower” as of the date of recording the notice of trustee’s sale and she can not maintain an action for violation of Section 2923.6(c) for the recording of that notice.

Alleged HBOR Violation – Completed Loan Modification Application

The court sustained the demurrer to the HBOR violation cause of action of the 1st amended complaint with leave to amend after finding a reasonable possibility a defect in the cause of action could be cured. The court stated in its ruling: “…the court finds that there may exist a reasonable possibility that the defects relating to a cause of action for violation of Section 2923.6(c) by recording the notice of default and notice of sale after HBOR became effective may be cured by amendment, provided plaintiffs can truthfully allege facts establishing the recording happened after January 1, 2013 while the loan modification application remained pending.”

The critical elements to establish a cause of action for violation of Section 2923.6(c) are: the application was complete prior to the recording of a notice of trustee’s sale and/or prior to the sale; and the notice of sale was thereafter recorded and/or the property sold at a trustee’s sale while the complete application remained pending and/or the period to appeal a denial of the application had expired.

Section 2924.12(b) sets forth the remedies available for material violations of HBOR statutes where the property was sold and trustee’s deed recorded, “(b) After a trustee’s deed upon sale has been recorded, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable to a borrower for actual economic damages pursuant to Section 3281, resulting from a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent where the violation was not corrected and remedied prior to the recordation of the trustee’s deed upon sale. If the court finds that the material violation was intentional or reckless, or resulted from willful misconduct by a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent, the court may award the borrower the greater of treble actual damages or statutory damages of fifty thousand dollars ($50,000).” (Emphasis added.) (Civil Code, § 2924.12(b).)

*4 A material violation would clearly include any conduct that violates the express terms of Section 2923.6(c), such as the recording of the notice of sale or sale of the property while a complete application remained pending or the time to appeal a denial of the application had not yet expired. In other words, conduct that violates those express provisions could not be called immaterial. The cases cited by defendants for the proposition that use of the term “material” requires specific allegations of prejudice are not on point. Bianacalan v. T.D. Service Co. (2013) 56 Cal.4th 807 and Ram v. One West Bank FSB (2015) 234 Cal.App.4th 1 do not involve claims of violations of HBOR and only concern claims of irregularities in the trustee’s sale. Neither of those cases discuss HBOR and material violations of HBOR provisions. “Cases are not authority for propositions not considered therein. (McKeon v. Mercy Healthcare Sacramento (1998) 19 Cal.4th 321, 328, 79 Cal.Rptr.2d 319, 965 P.2d 1189.)” (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 614.)

The 2nd amended complaint alleges: plaintiffs provided a completed loan modification application within the specified timeframe; plaintiffs received no communications regarding the status of the application, except that plaintiffs needed to resubmit the information because it had become stale; the information was dutifully resubmitted on numerous occasions; as of the effective date of HBOR, plaintiffs’ loan modification application was pending with defendants; a notice of trustee’s sale was recorded on May 29, 2013; and the foreclosure sale was conducted while plaintiff’s complete application was pending. (2nd Amended Complaint, paragraphs 11,12, 23 and 26.)

Section 2923.6(c) prohibits mortgage servicers, mortgagees, trustees, beneficiaries, or their authorized agents from recording a notice of trustee’s sale or proceeding with the sale while the complete first lien loan modification application is pending. That statute does not distinguish between multiple recordings of notices of sale. It is the recording of the notice of trustee’s sale after the effective date of HBOR that violates the statute, not whether or not there is a pre-HBOR recording of a notice of sale that arguably remains valid for the purposes of moving forward with the trustee’s sale. That argument would go to the issue of the amount of damages recoverable for the filing of a post-HBOR notice of trustee’s sale while a complete application remains pending and not the existence of a cause of action for such damages after the trustee’s deed after sale has been recorded. It is the material violation of the express provisions of that section after the effective date of HBOR that forms the basis for the claim for damages and, provided damages are alleged, for the trier of fact to determine the amount of damages arising from that violation.

The court is required to construe the 2nd amended complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732-733.) Although not a model pleading, liberally construing the allegations, plaintiffs have adequately alleged that they provided a complete application, they repeatedly resubmitted the required information, the loan modification application remained pending as of the effective date of HBOR on January 1, 2013, and the complete loan application was pending as of the date of the trustee’s sale. These are sufficient to plead that as of the recording of a notice of trustee’s sale on May 29, 2013 and as of the date of the trustee’s nonjudicial foreclosure sale a complete application remained pending review and decision by defendants, which constitutes violations of Section 2923.6(c). Plaintiff James has sufficiently alleged facts that establish she can proceed with the foreclosure sale violation claim and plaintiff Pohl has sufficiently alleged facts that establish he can proceed with the notice of trustee’s sale recording claim

*5 Plaintiffs also alleged they sustained damages according to proof without specifying the type of damages sustained. (2nd Amended Complaint, paragraph 29.) To the extent that defendants claim plaintiffs have failed to specify the damages sustained, the defendants appear to contend that particularity of pleading of damages is required without citation to any applicable legal authority for that proposition.

In addition, defendants did not file a special demurrer to the 2nd amended complaint for uncertainty related to damages and instead answered the 2nd amended complaint. The motion for judgment on the pleadings is in the nature of a general demurrer and not a special demurrer. The allegation of damage according to proof is taken as true for the purposes of a general demurrer and is sufficient.

Even assuming for the sake of argument that uncertainty can be raised in a motion for judgment on the pleadings, the court finds that the 2nd amended complaint is sufficiently certain concerning the allegation of damages.

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. (5 Witkin, Cal.Procedure (3d ed. 1985) Pleading, § 927, p. 364; 1 Weil & Brown, Civil Procedure Before Trial (1990) § 7:85, p. 7-23.)” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

“A special demurrer should be overruled where the allegations of the complaint are sufficiently clear to apprise the defendant of the issues which he is to meet. People v. Lim, 18 Cal.2d 872, 882, 118 P.2d 472. All that is required of a complaint, even as against a special demurrer, is that it set forth the essential facts of plaintiff’s case with reasonable precision and with particularity sufficiently specific to acquaint defendant of the nature, source, and extent of the cause of action. Smith v. Kern County Land Co., 51 Cal.2d 205, 209, 331 P.2d 645.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.)

The allegations are sufficiently clear to apprise defendants that the issues they are to meet relate to the recording of the May 29, 2013 notice of trustee’s sale and the July 2013 trustee’s sale of the property allegedly in violation of HBOR and that they are allegedly liable for actual economic damages arising from those violations according to proof.

The motion for judgment on the pleadings is denied.

TENTATIVE RULING #1: DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS IS DENIED. NO HEARING ON THIS MATTER WILL BE HELD (LEWIS V. SUPERIOR COURT (1999) 19 CAL.4TH 1232, 1247.), UNLESS A NOTICE OF INTENT TO APPEAR AND REQUEST FOR ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 621-6551 BY 4:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. NOTICE TO ALL PARTIES OF AN INTENT TO APPEAR MUST BE MADE BY TELEPHONE OR IN PERSON. PROOF OF SERVICE OF SAID NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING. MATTERS IN WHICH THE PARTIES’ TOTAL TIME ESTIMATE FOR ARGUMENT IS 15 MINUTES OR LESS WILL BE HEARD ON THE LAW AND MOTION CALENDAR AT 10:00 A.M. ON FRIDAY, APRIL 8, 2016 IN DEPARTMENT NINE UNLESS OTHERWISE NOTIFIED BY THE COURT. ALL OTHER LONG CAUSE ORAL ARGUMENT REQUESTS WILL BE SET FOR HEARING WITHIN TEN COURT DAYS OF THE ISSUANCE OF THE TENTATIVE RULING. (EL DORADO COUNTY SUPERIOR COURT LOCAL RULES, RULE 7.10.05, et seq.)

 

Superior Court of California.

Sonoma County

David J. ROH and Julia M. Roh, Plaintiffs,

v.

CITIBANK, N.A., JP Morgan Chase Bank, N.A., and Does 1-100, Inclusive., Defendants.

No. SCV-253446.

January 21, 2014.

Ruling After Law and Motion Hearing

Shofner, Robin D., Molsby & Bordner, LLP, 1830 15th St Ste 100, Sacramento, CA 95811.

Vatanparast, Roxana, Bryan Cave LLP, 580 Mission St 25th FL, San Francisco, CA 94105.

Arthur A. Wick, Judge.

*1 This matter came on the Law and Motion calendar on January 14, 2014 before The Honorable Arthur A. Wick. Counsel Robin D. Shofner was present, via Court Call, on behalf of Plaintiffs David and Julia Roh. Counsel Roxana Vatanparast was present, via CourtCall, on behalf of Defendants JP Morgan Chase Bank and Wilmington Trust, Upon hearing oral argument from the parties on the Plaintiff’s Motion for Attorney Fees, the court rules as follows:

On October 15, 2013, this court found that CC § 2924.12 supported the Plaintiffs’ request for interim attorney fees, However, the court also found that the application for interim fees was not supported by adequate evidence and denied it without prejudice,

The Plaintiff’s have now filed another application seeking interim attorney fees based on their obtaining a preliminary injunction. The motion is based on the same authorities as the previous motion, however, includes a more detailed declaration from Ms, Shofner with respect to billable rates and hours spent on (he case, The Defendants have once again opposed the motion. The court will grant the request for judicial notice as to the order denying without prejudice the earlier motion for attorney fees, and the consent judgment.

As discussed on October 15, 2013, the court finds that the Plaintiffs are entitled to interim fees under CC § 2924.12(i). The Defendants have raised one issue that needs to be addressed. The Defendants argue that CC § 2924.12(g) provides a “safe harbor” from liability. CC § 2924.12(g) provides;

A signatory to a consent judgment entered in the case entitled United States of America et al. v. Bank of America Corporation et al, filed in the United States District Court for the District of Columbia, case number l:12-cv-0036l RMC, that is in compliance with the relevant terms of the Settlement Term Sheet of that consent judgment with respect to the borrower who brought an action pursuant to this section while the consent judgment is in effect shall have no liability For a violation of Section 2923.55,2923.6, 2923.7: 2924.9, 2924.10, 2924.11, or 2924.17.

The Defendants contend that as signatories to the consent judgment, they are immune from an award of attorney fees. The Defendants read CC § 2924.12 too broadly. CC § 2924.12(g) provides protection only “if it is incompliance with the relevant terms of the Settlement Term Sheet of that consent judgment with respect to the borrower who brought an action ….” If the Defendants had been in compliance with the terms of the consent judgment with respect to these Plaintiffs, no preliminary injunction could have issued.

That being said, the declaration filed in support of the motion does not provide adequate foundation for all of the hours claimed. First, the declaration purports to support hours spent by another attorney and paralegal at Ms. Shofner’s previous firm. Ms. Shofner provides inadequate foundation for those hours. Further, the declaration provides that her previous firm billed on a “flat monthly fee basis.” The Plaintiff’s obtained a preliminary injunction within a month of filing their first amended complaint (although the order itself was not signed until June 5, 2013.) Taking that into consideration, die court has reviewed the documents presented by the Plaintiffs’ attorney, and will allow 9.5 hours of Ms. Shofher’s time at a rate of $295 per hour. This time reflects Ms. Shofner’s time from the date of intake to the date the preliminary injunction hearing.

*2 At the oral hearing, the Defendants’ attorney suggested that the court order that if the Plaintiffs are not the prevailing party at the end of the case, that this interim fee is refundable back to the Defendants. The Defendants offer no controlling legal authority for their suggestion, nor can the court fathom that Legislature intended that interim attorney fees under CC § 2924.12 are refundable. As such the court will decline to make such a ruling,

Accordingly, the court will not award any paralegal time or time from Mr. Ruehmann, for a total award of interim attorney fees of $2,802.50.

IT IS SO ORDERED.

Date: January 21, 2014

<<signature>>

Honorable Arthur A. Wick

Judge of the Superior Court for the Stale of California

End of Document

 

Superior Court of California.

Sacramento County

CARLSON,

v.

BANK OF AMERICA NA.

No. 34-2013-00146669-CU-OR-GDS.

March 25, 2014.

*1 Time: 02:00:00 PM

Dept: 53

Clerk: E. Brown, K. Pratchen

Reporter/Erm:

Bailiff/Court Attendant:

Case Init.Date: 06/12/2013

Case Category: Civil – Unlimited

Minute Order

David Brown, Judge.

EVENT ID/DOCUMENT ID:, 10772895

EVENT TYPE: Hearing on Demurrer – Civil Law and Motion – Demurrer/JOP

MOVING PARTY: Bank of America NA

CAUSAL DOCUMENT/DATE FILED: Demurrer to 1st Amended Complaint, 12/30/2013

APPEARANCES

Nature of Proceeding: Hearing on Demurrer

TENTATIVE RULING

Defendant Bank of America, N.A.’s (“BANA”) demurrer to Plaintiffs Lisa and Kevin Carlson’s First Amended Complaint is ruled upon as follows.

The Court considered Plaintiffs’ opposition served one day late, though the Court must note that it fails to meaningfully address many of the points raised in BANA’s demurrer.

Defendant’s request for judicial notice is granted.

In this foreclosure action, Plaintiffs allege causes of action for violations of the Home Owners’ Bill of Rights (“HBOR”) and causes of action for fraud and negligent misrepresentation.

First, Second, and Third Causes of Action (HBOR causes of action)

BANA’s demurrer to these causes of action on the basis that they are premature because there are no current foreclosure proceedings is overruled. BANA argues that the HOBR was enacted to ensure that as part of the nonjudicial foreclosure process, borrowers are considered for foreclosure alternatives and that the process only commences once a notice of default has been recorded. It reasons that since Plaintiffs failed to allege the a NOD was recorded or attach a copy to the FAC that these HBOR causes of action are premature.

The Court disagrees. Liberally construing the FAC, as it must on a demurrer [Code Civ. Proc., § 452], the Court finds that Plaintiffs, while they may not have specifically alleged that a NOD was recorded on a specific date, have alleged facts showing that the foreclosure process has commenced. Indeed, the FAC is replete with such facts. Plaintiffs allege, for example, that BANA representatives advised them that “the foreclosure process would continue.” (FAC ¶ 11.) They allege that they received a Notice of Default. (FAC ¶ 13.) They allege that their “home is currently in foreclosure.” (FAC ¶¶ 41, 49.) Plaintiffs have alleged facts from which it can easily be inferred that a NOD has been recorded, despite an express allegation that it was recorded, and that the foreclosure process has commenced such that their HBOR causes of action are not premature. The demurrer to the first, second and third causes of action on this basis is overruled.

First Cause of Action (Violation of Civil Code § 2923.7)

The demurrer is overruled despite the fact that Plaintiffs failed to address BANA’a arguments as to this cause of action. Civil Code § 2923.7 requires that a servicer establish a single point of contact in the foreclosure prevention alternative process. A single point of contact is defined as “an individual or team of personnel each of whom has the ability and authority to perform the responsibilities” required by Section 2923.7. (Civ. Code § 2923.7(e).)

*2 Plaintiffs’ allegation that BANA “advised” them that “April Walker” was their single point of contact is not an admission that BANA complied with Section 2923.7 as BANA argues. Indeed, Plaintiff alleged that they tried to contact Ms. Walker on numerous occasions to confirm that the foreclosure would be paused during the loan modification application process but were unable to do so. (FAC ¶¶ 11, 13) Plaintiffs were instead transferred to different individuals, specifically, Jonathan Weiss and Carlos Lopez, each of whom provided Plaintiffs differing information regarding the status of the foreclosure process (inconsistently, Weiss indicated that Plaintiffs could ignore the Notice of Default they received while Lopez indicated that the foreclosure would proceed). Plaintiffs alleged that they requested a single point of contact but instead “were given several different contact people with differing information in violation of California Civil Code, Section 2923.7.” (FAC ¶ 19.) Liberally construing the allegations as it must, the Court finds that Plaintiffs sufficiently alleged that they were not given a single individual or even a team with the ability/authority to perform the responsibilities” required by Section 2923.7. While BANA argues Plaintiffs failed to allege how they were damaged, the damage is the fact that they were not provided the requisite single point of contact as required by the statute. The demurrer to this cause of action is therefore overruled.

Second Cause of Action (Violation of Civil Code § 2924.18)

The demurrer to this cause of action is overruled, again despite Plaintiffs’ failure to address BANA’s arguments directed to this cause of action. Civil Code § 2924.18(a)(1) prohibits a “mortgage servicer, trustee, mortgagee, beneficiary, or authorized agent” from recording a NOD where a borrower has submitted a completed loan modification application. Here, Plaintiffs alleged that they received a NOD while the loan modification process was pending and that BANA proceeded with foreclosure in violation of Section 2924.18. (FAC ¶ 25.)

As already discussed above, the Court has rejected BANA’a argument that Plaintiffs failed to allege facts demonstrating that an NOD has been recorded and that foreclosure proceedings have been commenced. Further, the Court recognizes BANA’s point that this section only applies to a “depository institution chartered under state or federal law … that, during its immediately preceding annual reporting period … foreclosed on 175 or fewer residential real properties, containing no more than four dwelling units that are located in California.” (Civ. Code § 2924.18(b).) However, there is no authority cited for the proposition that Plaintiffs failure to specifically allege that BANA is such an institution renders their cause of action deficient for pleading purposes. The demurrer is overruled.

Third Cause of Action (Violation of Civil Code § 2924.10)

The demurrer is overruled again despite Plaintiffs’ failure to specifically address the arguments directed to this cause of action. Section 2924.10 requires a servicer to provide written acknowledgement of receipt of documentation within five business days of receipt of the loan modification application and in that acknowledgment must describe the loan modification process, include any applicable deadlines, expiration dates, and describe any deficiency in the application.

Plaintiffs allege that they provided BANA with a complete loan modification application but did not receive any “correspondence describing the loan modification process.” (FAC ¶ 29.) This is sufficiently pleaded as Section 2924.10 required BANA to describe the process in its written acknowledgment of Plaintiffs’ completed application. The Court is aware that a servicer is not liable for a violation of Section 2924.10 if it remedies any violation prior to recordation of trustee’s deed upon sale. (Civil Code § 2924.12(c).) However, BANA is incorrect that the allegations show the violation was remedied. Indeed, BANA’s argument that it informed Plaintiffs it had received all documents after initially sending a denial letter for “missing documents” does not demonstrate that it remedied the alleged violation at issue here, specifically, BANA’s alleged failure to describe the loan modification process as required by Section 2924.10(a)(1). These allegations sufficiently allege conduct by BANA which violated Section 2924.10.

*3 Further, BANA’s argument that Plaintiffs are not entitled to injunctive relief hinges upon its already rejected contention that Plaintiffs failed to allege foreclosure proceeding have commenced.

The demurrer is overruled.

Fourth Cause of Action (Fraud)

The demurrer is overruled. The Court first rejects the argument that the cause of action, as pled, is barred by the statute of limitations. BANA’s argument in this regard relies upon its attempt to re-write the FAC to argue that the fraud cause of action is based upon conduct that occurred in September 2009 when BANA purchased the subject loan from Taylor Bean Whitaker. Not so, despite the fact that Plaintiffs’ opposition almost entirely fails to address this point, instead arguing that the cause of action did not accrue until they could no longer afford the increased mortgage payments caused by BANA’s representation that they owed back taxes and insurance. Indeed, the fourth cause of action is based on the allegation that in “October 2010, Defendant BANA mortgage loan representative, Lorna Humphreys, with authority to speak on BANA’s behalf, represented to Plaintiffs that they owed back property taxes and insurance amount [sic] to $10,583.” (FAC ¶ 36.) Plaintiffs allege that the representations were false as they were not behind on their taxes and insurance. (Id. ¶ 37.) The complaint was filed on June 12, 2013, less than three years after the alleged misrepresentation by Humphreys and thus within CCP § 338(d). Thus the demurrer on the basis that the fraud cause of action is barred by the statute of limitations is overruled.

Further, the Court finds that the fraud cause of action is pled with the requisite specificity. When fraud is alleged against a corporate defendant, the plaintiff must specifically allege their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mutual Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.) BANA simply argues that Plaintiffs failed to sufficiently allege facts showing the authority for Lorna Humprheys to speak on its behalf. The Court disagrees, in that Plaintiffs allege that she was BANA’s “mortgage loan representative, with authority to speak on BANA’s behalf …” (FAC ¶ 36.) These allegations are sufficient for pleading purposes as Ms. Humprheys title, “mortgage loan representative” supports the allegation that she had authority to speak on BAN’s behalf regarding Plaintiffs’ mortgage with BANA.

The Court also rejects BANA’s argument that the cause of action is deficient because it is premised on Taylor Bean Whitaker’s failure to properly account for tax payments and it is not liable for such conduct. Again, however, BANA is attempting to re-write the FAC. The fraud causes of action are premised on BANA’s conduct, specifically, its alleged affirmative representation that Plaintiffs’ owed $10,583 in back taxes and that BANA knew this was false because it had, or should have had, the documents from Taylor Bean Whitaker showing that they did not owe such money. Thus Plaintiffs adequately pled BANA’s knowledge or the representation’s falsity. They do not, however, seek to hold BANA liable for any conduct of Taylor Bean Whitaker.

*4 The Court further rejects the argument that Plaintiffs failed to allege justifiable reliance. Plaintiffs alleged that they reasonably relied on Ms. Humphreys’ representation that they owed back taxes and insurance and that BANA would foreclose if such sums were not paid. They alleged that they were thus required to increase their monthly mortgage payments “by nearly $1,000 toward paying $10,583 in alleged delinquent property taxes.” (FAC ¶ 41.) This is sufficient.

Finally, the Court rejects the argument that Plaintiffs failed to adequately allege damages. Indeed, they alleged that they had to increase their monthly mortgage payments by nearly $1,000 and that the increase resulted in them not being able to keep up with their mortgage payments and as a result their home is in foreclosure. (FAC ¶ 41.) The fact that Plaintiffs also alleged that BANA offered to “break up the $10,583 for sixty months” does not render Plaintiffs’ damages allegations insufficient.

The demurrer to the Fourth Cause of action is overruled.

Fifth Cause of Action (Negligent Misrepresentation)

The demurrer is overruled. The demurrer on the basis that the cause of action is barred by the statute of limitations and that the cause of action is not sufficiently specific is identical to the demurrer directed to the fourth cause of action and is overruled for the same reasons.

The demurrer on the basis that BANA owed no duty to Plaintiffs is overruled, despite Plaintiffs’ failure to address this argument. BANA cites to the general rule that a financial institution generally owes no duty of care to a borrower where the institution’s involvement does not exceed the scope of a conventional lender of money. (Nymark v. Heart Federal Sav. & Loan Assoc. (1991) 231 Cal.App.3d 1089, 1096.) However, this rule does not prevent Plaintiffs from alleging a negligent misrepresentation cause of action based on representations made in the context of a loan modification situation. Indeed, it is true that “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. A lender’s obligation to offer, consider, or approve loan modifications and to explore foreclosure alternatives are created solely by the loan documents, statutes, regulations, and relevant directives and announcements from the United States Department of th the Treasury.” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4 49, 67.) Even when the lender is acting as a conventional lender, the no-duty rule is only a general rule. (Osei v. Countrywide Home Loans (E.D.Cal. 2010) 692 F.Supp.2d 1240, 1249.) Nymark does not support the sweeping conclusion that a lender never owes a duty of care to a borrower. A duty may be alleged based on the loan modification relationship and representations made to the borrower. Clearly, a lender has a duty not to make material misrepresentations of fact, for example, regarding the statute of a loan modification application or the status of a foreclosure. (Lueras, supra, at pp. 68-69 [granting leave to amend a negligence cause of action against a financial institution as it “is foreseeable that a borrower might be harmed by an inaccurate or untimely communication about a foreclosure sale or about the status of a loan modification, and the connection between the misrepresentation and the injury suffered could be very close”].) Here, the allegations that BANA’s representative misrepresented that Plaintiffs owed back taxes and insurance and that they would be subject to foreclosure if they did not pay such amounts fits within that scenario. The demurrer on the basis that Plaintiffs failed to allege facts showing BANA owed a duty is overruled.

*5 BANA’s demurrer is overruled. No later than April 4, 2014, BANA shall file and serve its answer to the FAC.

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.

COURT RULING

There being no request for oral argument, the Court affirmed the tentative ruling.

 

Superior Court of California.

Gordon D Schaber Courthouse

Sacramento County

LEONARD,

v.

JPMORGAN CHASE BANK NA.

No. 34-2014-00159785-CU-OR-GDS.

March 27, 2014.

*1 Time: 02:00:00 PM

Dept: 53

Clerk: K. Pratchen

Reporter/ERM:

Bailiff/Court Attendant: C. Carrillo

Case Init. Date: 03/06/2014

Case Category: Civil – Unlimited

Event Type: Motion for Preliminary Injunction

Minute Order

Appearances, Ted a Greene, counsel, present for Plaintiff(s).

Jennifer M Porter, counsel, present for Defendant(s) telephonically.

David Brow, Judge.

Nature of Proceeding: Motion for Preliminary Injunction TENTATIVE RULING

The Preliminary Injunction is GRANTED.

On March 7, 2013, counsel for the plaintiff Perry Leonard appeared on an ex parte application and request for TRO and Order to Show Cause to prevent the foreclosure sale of his home. The TRO and Order to Show Cause re Preliminary Injunction were granted.

Plaintiff’s Complaint alleges four causes of action: the 1 for violation of California Civil Code, sec. 2923.6, et seq.; the 2nd for Violation of California Civil Code, sec. 2924.11, et seq.; the 3rd for negligence per se; and, the 4th for Violation of California Business and Professions Code Section 17200, et seq.

Plaintiff has alleged that he and his wife have lived in their home since 1995. After their daughter fell ill, and was being cared for by her mother, they fell behind in their mortgage payments. They applied for a loan modification from JP Morgan Chase, and while that application was pending, but still in underwriting, they received a Notice of Trustee’s Sale scheduling their home to be sold on March 10, 2014.

Plaintiffs have alleged that they are the victims of “dual tracking” by JPMorgan, in violation of the Homeowner Bill of Rights (“HOBR”) Civil Code, sec. 2923.6.

Plaintiffs request injunctive relief, pursuant to Civil Code § 2924.12(2) which provides: “Any injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise to the action for injunctive relief. An enjoined entity may move to dissolve an injunction based on a showing that the material violation has been corrected and remedied.”

In deciding whether to issue a preliminary injunction, a court must weigh two “interrelated” factors: (1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance of the injunction. The greater the plaintiff’s showing on one, the less must th be shown on the other to support an injunction. Butt v. State of California (1992) 4 Cal.4 668, 677-678. A preliminary injunction may not be granted, regardless of the balance of interim harm, unless it is reasonably probable that the moving party will prevail on the merits. San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal. App. 3d 438, 442.

Here, the relative interim harm to the defendants from the issuance of a preliminary injunction until JP Morgan Chase and National Default Servicing Corporation is far less than the harm which plaintiffs would incur should their home of almost 20 years be sold in violation of the HOBR.

Although JPMorgan opposes the PI on the grounds that there is currently no pending sale, and the Notice of Trustee’s Sale is in the process of being rescinded; the sale was stopped by the issuance of the TRO by the Court and the defendants have submitted no evidence at all in support of their opposition.

*2 In reply, plaintiffs provide admissible evidence that the sale was not “cancelled” by Chase, but merely postponed to May 12, 2014. (Greene Dec., Exh. A) The threat posed by double-tracking is still extant here.

On the record before it, the Court finds that the plaintiffs are reasonably likely to prevail on any of the causes of action in their complaint. Plaintiffs have alleged negligence per se and unfair business practices based upon JP Morgan Chase’s violation of the HOBR’s prohibition against dual tracking. Plaintiffs have alleged entitlement to damages as well as injunctive relief for violation of those statutory schemes.

The Preliminary Injunction is granted.

Plaintiffs shall submit an undertaking in the amount of $4,000. CCP, sec. 529.

The prevailing party shall prepare a formal order for the Court’s signature pursuant to C.R.C. 3.1312.

COURT RULING

The matter was argued and submitted. The Court affirmed the tentative ruling.

End of Document

 

Superior Court of California.

Civil Department – Non-Limited

Fresno County

Eric WOODS,

v.

GREEN TREE SERVICING.

No. 15CECG00638.

December 15, 2015.

Law and Motion Minute Order

Eugene S. Lee, Reed Smith LLP, 101 Second Street, Suite 1800, San Francisco, CA 94105-3659.

Mary Kate Sullivan, Severson & Werson, One Embarcadero Center Suite 2600, San Francisco, CA 94111.

Donald S. Black, Judge.

*1 Hearing Date: December 15, 2015 (Dept. 502)

Motion: 1) Demurrer of Defendant Bank of America, N.A., to the Second Amended Complaint (“SAC”)

2) Demurrer of Defendant MTC Financial, Inc., dba Trustee Corps, to the SAC

3) Demurrer of Defendants Green Tree Servicing, LLC (“Green Tree”) and Mortgage Electronic Registration Systems, Inc. (“MERS”) to the SAC

4) Motion to Strike by Defendants Green Tree and MERS

Tentative Ruling:

To sustain the demurrers to the First, Second, Third, and Sixth causes of action, without leave to amend. To sustain the demurrers to the Fourth and Fifth causes of action, with leave to amend as directed below. To grant the motion to strike, without leave to amend. To strike, sua sponte, the Seventh and Eighth causes of action. Plaintiff is granted 10 days’ leave to file the Third Amended Complaint. The time in which the complaint can be amended will run from service by the clerk of the minute order. New allegations/language must be set in boldface type.

Explanation:

All Request for Judicial Notice are granted.

First Cause of Action (Slander of Title):

To plead this cause of action a plaintiff must allege: 1) a publication; 2) without privilege or justification, and thus with either express or implied malice; 3) which is false, either knowingly so or without regard to its truthfulness, and 4) which causes a direct pecuniary loss. (Howard v. Schaniel (1980) 113 Cal.App.3d 256, 263-264. See also (Contra Costa County Title Co. v. Waloff (1960) 184 Cal.App.2d 59, 66.)

Plaintiff still fails to adequately allege an unprivileged publication. Nonjudicial foreclosure documents are subject to privilege. (Civ. Code § 2924, Subd. (d)—“All of the following shall constitute privileged communications pursuant to [Civil Code] Section 47: (1) The mailing, publication, and delivery of notices as required by this section. (2) Performance of the procedures set forth in this article….”) Nor does plaintiff allege any facts supporting malice (i.e., to allege the loss of privilege), which requires plaintiff to allege an act “motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff’s rights. [Citations.]” (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 336, internal quotes omitted.) All demurrers to this cause of action are sustained, without leave to amend.

Second Cause of Action (Quiet Title):

This cause of action is now stated against Green Tree, only. However, plaintiff still fails to allege a proper basis for quieting title because he has not alleged he has paid what’he owes to purchase the property. It is settled law that “a mortgagor of real property cannot, without paying his debt, quiet his title against the mortgagee.” (Shimpones v. Stickney (1934) 219 Cal. 637, 649; Miller v. Provost (1994) 26 Cal.App.4th 1703, 1707.) To properly allege this claim plaintiff must allege tender of the entire outstanding debt, not just the amount past due. The exceptions to the tender rule that exist for stating a cause of action for wrongful foreclosure do not exist as to a claim for quiet title. (See Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 87— tender rule applied to quiet title causes of action even if there might be an excuse from tender under the plaintiff’s wrongful foreclosure causes of action.) Green Tree’s demurrer to this cause of action is sustained, without leave to amend.

Third Cause of Action (Violation of Civil Code Section 2934(A)):

*2 Plaintiff premises this cause of action on an allegation that MERS was only able to assign the Deed of Trust once, and thus all subsequent assignments were invalid. However, this is not a fact but a conclusion of law which is not regarded as true on demurrer. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966.) The court is unaware of any law so limiting MERS, and plaintiff did not file opposition to any of the demurrers and supply this authority. All demurrers to this cause of action are sustained, without leave to amend.

Fourth Cause of Action (Wrongful Foreclosure):

This cause of action is stated only against Green Tree. To maintain a wrongful foreclosure claim, a plaintiff must allege that (1) defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a mortgage or deed of trust; (2) plaintiff suffered prejudice or harm; and (3) plaintiff tendered the amount of the secured indebtedness or was excused from tendering. (Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062; Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112.) Plaintiff need not allege and proffer tender on a wrongful foreclosure action, since it appears that the sale has not yet taken place and one of the recognized exceptions to the tender rule applies. (See Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, 1280-1281—recognizing exception to tender rule where foreclosure sale had not yet occurred. See also Chavez v. Indymac Mortgage Services, supra, 219 Cal.App.4th at p. 1062.)

Plaintiff alleges that the recording of the Notice of Default and Notice of Trustee’s Sale was wrongful because all recorded assignments were invalid, and that there was no legal substitution of trustee executed on the original Trust Deed, which was recorded by MERS as beneficiary. However, a substitution of trustee was recorded on November 14, 2014 naming MTC as trustee, which complies with Civil Code Section 2934a, subdivision (a)(4) since it contains the date of recordation of the Deed of Trust, the name of the trustee, the instrument number, and the name of MTC as new trustee. Under Civil Code Section 2934a, subdivision (d), this is conclusive evidence of the authority of MTC to record the Notice of Default and Notice of Trustee’s Sale. Thus, there is no basis to allege that assignments were invalid such that Green Tree had no right to initiate foreclosure.

The demurrer is sustained, with leave to amend, only if plaintiff can sufficiently allege a claim for violation of the HBOR, as discussed immediately below. In that event, there would be a sufficient basis to allege wrongful foreclosure.

Fifth Cause of Action (Violation of HBOR Enacted January 2013):

This cause of action alleges violation of the Homeowner’s Bill of Rights (“HBOR”) enacted in 2013, and is stated only against Green Tree. Plaintiff claims this defendant violated HBOR’s restriction on “dual-tracking” found in Civil Code Section 2923.6 (instituting foreclosure while the borrower is working on securing a loan modification) and by failing to provide the required “single point of contact” during the modification process, as required by Civil Code Section 2923.7.

Civil Code section 2923.6 provides that if the homeowner “submits a complete application” for a modification, the lender or servicer shall not record a notice of default, a notice of sale, or conduct a trustee’s sale while the application is pending. (Id., subd. (c).) An application is “complete” when the borrower has supplied all documents required by the lender “within the reasonable timeframes specified by the mortgage servicer.” (Id., subd. (h).) A lender or servicer shall not record a notice of default or notice of sale or conduct a trustee’s sale until, among other things, “[t]he mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period … has expired” or “[t]he borrower does not accept an offered first lien loan modification within 14 days of the offer.” (Id., subd. (c)(1), (2).)

*3 Civil Code Section 2924.12 provides for a private right of action in the event the lender violates the provisions of the various HBOR statutes, including Section 2923.6, with remedies being either injunction if the foreclosure sale has not yet occurred, or recovery of actual damages if it has already taken place. However, this statute only provides such relief where plaintiff shows the violation was material. Furthermore, subdivision (c) of Section 2924.12 provides a “safe harbor,” precluding liability “for any violation…corrected and remedied prior to the recordation of a trustee’s deed upon sale.”

Plaintiff now alleges that he submitted a “completed HAMP Loan Modification with all necessary financial and supportive documents” to Green Tree. However, a cause of action based on a state statute must be pleaded with particularity. (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790; Lopez v. Southern Cal. Rapid Trans. Dist. (1985) 40 Cal.3d 780, 795.) Plaintiffs claim is subject to demurrer because rather than pleading with particularity, plaintiff pleads with conclusory language and invective. He alleges at Paragraph 5 that he qualifies for a loan restructure and modification “according to all guidelines that exist” and that he has been “trying to get a loan modification for almost 4 years now.” He states Green Tree is “guilty of flagrant violations” under the HBOR by dual tracking and not giving plaintiff the right of appeal (while he never alleges he was turned down for modification such that the right to appeal even occurred). In the cause of action itself he alleges that Green Tree is “clearly guilty” of violating the dual-tracking prohibition because they have “repeatedly scheduled and rescheduled the trustee sale date and had not even approved or denied” the requested modification. As for allegations of failure to provide a single point of contact, he alleges only that this was violated because he was asked to “repeatedly re-submit” all the documents.

In sum, plaintiff’s claim is too short on details to adequately state a claim either for dual tracking or failure to provide a single point of contact. As for the dual tracking claim, he does not give details on dates when he submitted his modification package (or the various resubmissions he vaguely alleges occurred). He does not allege defendant told him the application was “complete” (and if so when) in order to clearly allege he came under the protection afforded by Civil Code Section 2923.6. In fact, his allegation that he was repeatedly asked to resubmit documentation at least suggests the application was not yet at the complete status. Because of the lack of detail it is also not clearly alleged that the Notice of Default and Notice of Sale were recorded after his application was deemed “complete” (which is what would make those recordings violative of the statute). Given this lack of detail it is also impossible to tell whether any violations were “material.”

The demurrer to this cause of action is sustained. Leave to amend will be granted but if plaintiff chooses to amend he must allege this cause of action with particularity, alleging facts and not conclusions of law or invective. (Green v. Palmer (1860) 15 Cal. 411, 411.)

Sixth Cause of action (Violation of Right to Privacy):

Plaintiff’s amendment adds the allegation that “all defendants” ran unauthorized credit reports and disclosed “private and confidential information to third parties without the knowledge or consent of Plaintiff,” and that they “tarnished and slandered title to Plaintiff’s home” by recording “negative public information,” e.g., the Notice of Default and Notice of Sale.

*4 This is still deficient. “The party claiming a violation of the constitutional right of privacy established in article I, section 1 of the California Constitution must establish (1) a legally protected privacy interest, (2) a reasonable expectation of privacy under the circumstances, and (3) a serious invasion of the privacy interest.” (International Federation of Professional and Technical Engineers, Local 21, AFL-CIO v. Superior Court (2007) 42 Cal.4th 319, 338.)

As with the First Amended Complaint, plaintiff’s use of the unspecific “defendants” fails to adequately identify who did what. Second, plaintiff fails to allege what private information was allegedly disclosed, and to whom. At best, it appears he alleges the “defendants” (some or all of them) ran a credit check on him, using the confidential and private information he had supplied to them, and the unspecified “third parties” might still refer to the people to whom defendants outsourced various aspects of their businesses (as alleged in the First Amended Complaint). The allegation of “tarnishing and slandering” by virtue of recording the foreclosure documents is defective, as these are subject to privilege. (Civ. Code § 2924, Subd. (d)

In California courts generally require plaintiff to allege an egregious breach of social norms in order to maintain a claim for violation of privacy. (See Folgelstrom v. Lamps Plus, Inc. (2011) 195 Cal.App.4th 986, 992, as modified (June 7, 2011)— plaintiff’s claim that invasion consisted of defendant obtaining his address without his knowledge or consent in order to mail him coupons was not egregious, but “routine commercial behavior.”) The Ninth Circuit has held that simply running a credit check without consent is not an invasion of privacy because it is not “unreasonably intrusive.” (Comeaux v. Brown & Williamson Tobacco Co. (9th Cir. 1990) 915 F.2d 1264, 1275

Plaintiff was clearly directed in the ruling on the prior to demurrer that if he amended this cause of action he must “allege an egregious invasion of a privacy interest, and he must clearly identify who disclosed what, and to whom.” He has not done so. All demurrers to this cause of action are sustained without leave to amend.

Seventh and Eighth Causes of Action:

When a demurrer is sustained with leave to amend, this is construed as permission to amend the causes of action to which the demurrer has been sustained, and not to add entirely new causes of action. (Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995, 1015.) Plaintiff did not request, nor was he granted, leave to add these causes of action. Even if he was attempting to “replace” his former Sixth cause of action for “Cancellation of Trustee’s Deed” with the new Seventh cause of action for “Cancellation of Instruments,” as is suggested by Bank of America, this is improper. The demurrers to that cause of action were sustained without leave to amend, and plaintiff was required to file a motion for leave to amend to “replace” it.

Rather than sustain the demurrers to these causes of action, the court will strike these causes of action, sua sponte, as improper matter inserted in the pleading. This is consistent with the court’s inherent authority to manage and control its docket. (Sole Energy Co. v. Petrominerals Corp. (2005) 128 CA4th 187, 192-193.)

Motion to Strike:

*5 Plaintiff does not allege any facts supporting the imposition of punitive damages, nor has he identified any statute allowing for recovery of attorney fees, nor any contract in dispute that allows for the recovery of attorney fees. The motion is granted without leave to amend.

Pursuant to California Rules of Court, rule 3.1312 and Code of Civil Procedure section 1019.5(a), no further written order is necessary. The minute order adopting this ruling will serve as the order of the court, and service by the clerk of the minute order will constitute notice of the order.

Tentative Ruling

Issued By: <<signature>> on 12-14-15.

2016 WL 3212032 (Cal.Super.) (Trial Order)

Superior Court of California.

Dept. 37

Los Angeles County

June MILLER,

v.

WELLS FARGO BANK N A et al.

No. BC523707.

March 30, 2016.

Trial Order

Giandominic Vitiello, Plaintiff Counsel.

Artin Betpera, Defendant Counsel.

Marc Marmaro, Judge.

NATURE OF PROCEEDINGS:

*1 MOTION OF DEFENDANTS, WELLS FARGO BANK, N.A., ET AL. FOR SUMMARY JUDGMENT OR, ALTERNATIVELY, SUMMARY ADJUDICATION

Defendant’s motion for Summary Judgment is called for hearing and argued before the court.

The request for judicial notice is granted. The evidentiary objections are sustained as to objections 1 and 2 and overruled as to objection 3. The motion for summary judgment is granted.

The court’s tentative ruling, filed this date, is adopted as the final ruling of the court and incorporated herein by reference to the case file.

Counsel for defendants to prepare a proposed judgment and give notice.

COURTS TENTATIVE RULING

The request for judicial notice is granted. The evidentiary objections are sustained as to objections 1 and 2 and overruled as to objection 3. The motion for summary judgment is granted. Counsel for Defendants to prepare a proposed judgment and give notice.

STATEMENT OF THE CASE

This action arises from Plaintiff’s default on a real estate secured loan and the dealings between the parties over a period of years to potentially modify the loan. As set forth in the First Amended Complaint (FAC),1 the factual background is as follows. In 2003, Plaintiff June Miller obtained a mortgage loan on real property located at 1506 South Bentley Avenue # 1, Los Angeles, California. Defendant U.S. Bank National Association (U.S. Bank) is the current beneficiary under the deed of trust securing Plaintiff’s mortgage loan, and Defendant Wells Fargo Bank, N.A. (Wells Fargo) services the loan on U.S. Bank’s behalf. Following Plaintiff’s default on her mortgage obligations, in 2007 Wells Fargo initiated foreclosure proceedings by recording a notice of default. Plaintiff has since been in contact with Wells Fargo to pursue alternatives to foreclosure. She filed suit in 2013, and in the operative complaint alleges violations of Civil Code sections 2923.5 and 2923.6 and the Unfair Competition Law, declaratory relief, breach of contract, promissory estoppel, and negligence. Defendants Wells Fargo and U.S. Bank move for summary judgment or alternatively summary adjudication of each cause of action.

SUMMARY

The primary allegations against Defendants are that they did not comply with their obligations in connection with reviewing Plaintiff’s loan for a modification. Defendants maintain that over the ten years that have elapsed since Plaintiff’s default, they have consistently attempted to work with Plaintiff to avoid foreclosure. To support their position, Defendants present substantial documentation and correspondence evidencing their efforts to review Plaintiff’s financial situation in order to determine what foreclosure alternatives might have been available to her. These documents are authenticated by Well Fargo’s representative, Shae Smith. Defendants also rely on Plaintiff’s deposition testimony. In opposition to this motion, Plaintiff contends that she fully complied with Defendants’ requests during this process. She maintains that she timely made all trial payments and provided all requested documentation. To support her position, she relies primarily on her responses to Wells Fargo’s special interrogatories and her own deposition testimony. After reviewing the evidence submitted by the parties, and for the reasons set forth below, the court determines that no triable issue of material fact exists and summary judgment in Defendants’ favor is warranted as a matter of law.

DISCUSSION

  1. Legal Standard

*2 The law of summary judgment provides courts “a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) In reviewing a motion for summary judgment, courts employ a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) The moving party bears the initial burden of production to make a prima facie showing of the nonexistence of any triable issue, in which case the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue. (Code Civ. Proc., § 437c, subd. (p)(2).) To show a triable issue of material fact exists, the opposing party may not rely on the mere allegations or denials of the pleadings, but instead must set forth the specific facts showing that a triable issue exists as to that cause of action or a defense thereto. (Aguilar, at p. 849.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

  1. Request for Judicial Notice

Defendants request that the court judicially notice (A) the deed of trust securing Plaintiff’s mortgage loan; (B) an assignment of the deed of trust from the original lender (Steward Financial, Inc.) to U.S. Bank; (C) the notice of default recorded in 2007; (D) a substitution of trustee executed by U.S. Bank, designating NDEx West, LLC, as the trustee under the deed of trust; (E) a loan modification agreement dated May 13, 2008; (F) a notice of rescission of the 2007 notice of default; (G) a second notice of default recorded in 2008; and (H) a notice of trustee’s sale recorded in 2013. These documents are recorded against the real property at issue, and Plaintiff does not dispute the documents’ authenticity. Accordingly, the request is granted. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265.)

III. Evidentiary Objections

Defendants object to certain discovery responses and exhibits attached to the declaration of Giandominic Vitiello. Objections 1 and 2 are sustained, but objection 3 is overruled.

  1. Plaintiff Does Not Raise a Factual Dispute as to the Evidence Submitted by Defendants

In their separate statement, Defendants consolidate their evidence into 37 facts to support seven issues, one for each cause of action in Plaintiff’s operative first amended complaint. Plaintiff does not dispute the majority of the factual account presented by Defendants. On the facts Plaintiff does dispute, Plaintiff fails to raise a triable issue. In particular, and for the reasons discussed below, the evidence Plaintiff cites to dispute Defendants’ facts either is not admissible against Defendants or does not actually dispute Defendants’ characterization of the evidence.

  1. Defendants’ Evidence

Defendants establish that after Plaintiff initially defaulted on her loan in 2006, Wells Fargo sent correspondence informing her that her loan was in default. (Defendants’ Separate Statement (DSS) 4.) When Plaintiff failed to cure her default, Wells Fargo initiated foreclosure proceedings pursuant to the deed of trust by recording a notice of default on December 14, 2007. (DSS 5.) In January 2008, Wells Fargo began a review of the loan to determine whether Plaintiff qualified for any foreclosure alternatives, and on May 13, 2008, it approved Plaintiff for a permanent modification. (DSS 6.) Consequently, Wells Fargo caused a notice of rescission of the notice of default to be recorded on July 14, 2008. (DSS 8.)

The modification obligated Plaintiff to make monthly payments of $4,053.47 beginning on August 1, 2008. (DSS 7.) Defendants present evidence that Plaintiff failed to make the required payments under the modification. (DSS 9.) On September 7, 2008, Wells Fargo sent Plaintiff a letter informing her that her loan was again in default. The letter also advised Plaintiff of various loss mitigation programs. (DSS 10.) On September 21, 2008, and on October 21, 2008, Wells Fargo sent Plaintiff additional correspondence informing her that her loan was in default and providing the amount necessary to cure the default. (DSS 11.) Plaintiff failed to cure the default, and Wells Fargo reinitiated foreclosure proceedings by recording a second notice of default on December 12, 2008. (DSS 12.)

*3 Following her default on the modification, Plaintiff submitted another application for foreclosure alternatives, and on March 18, 2011, Wells Fargo approved her for a Special Forbearance Agreement. (DSS 14.) The agreement required Plaintiff to make three payments in the amount of $3,276.44 on March 15, 2011, April 15, 2011, and May 5, 2011, and Plaintiff made all required payments under the agreement. (DSS 15-16.) Defendants contend that Plaintiff also agreed that her loan would not be current upon completion of the payments, but that Wells Fargo would review her account for a modification at that time. (DSS 15.) Defendants also contend that Plaintiff’s payments under the agreement were made towards the debt she owed to Wells Fargo. (DSS 17.)

Following her trial payments, on October 26, 2011, Plaintiff submitted an application to Wells Fargo to review Plaintiff’s account for a second modification. (DSS 18.) In November 2011, Wells Fargo had three different phone conversations with Plaintiff about additional documentation required to complete the review. (DSS 19.) Wells Fargo subsequently received a letter from Plaintiff’s attorney (Larry W. Smith) dated December 8, 2011, advising that Plaintiff had filed for bankruptcy and that he was representing her in the bankruptcy proceedings. The letter also authorized Wells Fargo to contact Plaintiff directly in regard to her modification application. (DSS 20.)

As of March 30, 2012, Wells Fargo had not received the additional documentation needed to complete the review. On that date, Wells Fargo sent Plaintiff a letter requesting that she submit the information by April 29, 2012. Among other things, Wells Fargo requested recent tax returns, social security and pension benefits letters, recent bank statements, and a homeowner’s association fee statement. (DSS 21.) Wells Fargo subsequently received documentation from Plaintiff, but the information was not sufficient to complete the review. Accordingly, on May 1, 2012, and on May 17, 2012, Wells Fargo sent additional correspondence to Plaintiff requesting the needed information. Among other things, Wells Fargo requested recent paystubs from the non-borrower family members that contributed to Plaintiff’s household income in order to verify the $4,800 in contributions Plaintiff had listed in her October 2011 application. The May 17, 2012 letter provided a deadline of June 1, 2012. (DSS 22.)

Wells Fargo did not receive the requested information, and on June 15, 2012, Wells Fargo removed Plaintiff’s loan from loss mitigation review. (DSS 23.) On June 14, 2012, and on June 15, 2012, Wells Fargo sent letters to Plaintiff informing her that she did not qualify for a workout option under the Home Affordable Modification Program (HAMP) or a proprietary, non-HAMP workout option because she had failed to provide the requested documentation within the required time frame. (DSS 24.) Due to Plaintiff’s default on the modification and failure to provide the information needed for Wells Fargo to complete a review of foreclosure alternatives, Wells Fargo continued the foreclosure process by recording a notice of trustee’s sale on September 13, 2013. (DSS 25.)

Plaintiff filed this lawsuit on October 7, 2013. Wells Fargo attempted to review Plaintiff for foreclosure alternatives after she filed suit, and on May 14, 2015, Wells Fargo received from Plaintiff a Making Home Affordable Request for Mortgage Assistance form (RMA). (DSS 26.) On the RMA, Plaintiff represented that her gross income included $5,700 in boarder income. (DSS 27.) To support the RMA, Plaintiff later submitted a copy of a January 1, 2015 lease agreement between herself and Vonne Feingold, a copy of a January 1, 2015 lease agreement between herself and Roberta Arcadu, and copies of receipts for rent payments purportedly received by Plaintiff on July 1, 2015, and August 1, 2015. (DSS 28.) To verify Plaintiff’s rental income, Wells Fargo required Plaintiff to provide recent bank statements showing rental proceeds in the amounts set forth in the lease agreements. Wells Fargo also determined that it needed several other categories of information to proceed with a review, and on August 27, 2015, it sent Plaintiff a letter requesting these documents. The letter required Plaintiff to submit the documents by September 26, 2015. (DSS 29.)

*4 Plaintiff did not provide the documents requested by Wells Fargo in the August 2015 letter, including the requested bank statements showing deposits of rental proceeds. Consequently, Wells Fargo removed Plaintiff’s loan from loss mitigation review on November 2, 2015. (DSS 30.) On that date, Wells Fargo sent Plaintiff a letter informing her that her loan had been removed from loss mitigation review because she had failed to provide the required documentation. (DSS 31.)

Defendants present evidence that Plaintiff does not have any boarders living with her at the property or receive $5,700 in boarder income. (DSS 32.) Similarly, Defendants contend that Plaintiff did not enter into the January 1, 2015 lease agreements with Vonne Feingold or Robert Arcadu that were submitted to Wells Fargo in support of Plaintiff’s RMA, and that Plaintiff does not receive rental or border income from Ms. Feingold or Mr. Arcadu. (DSS 33-34.) Defendants also present evidence that Plaintiff did not receive any of the rents purportedly evidenced by the receipts Plaintiff submitted in support of her RMA. (DSS 35.)

  1. Plaintiff’s Evidence

Plaintiff does not dispute the majority of this factual account. (Plaintiff’s Separate Statement (PSS) PSS 4-8, 10-14, 16, 18-20, 26-31.) Of the 37 facts comprising Defendants’ separate statement, Plaintiff only disputes facts 9, 15, 17, 21-25, and 32-36. Plaintiff disputes fact 9 on the ground that she made all payments under the modification agreement, citing her responses to Wells Fargo’s special interrogatories. (PSS 9.) In response to the question of whether Plaintiff “ma[d]e all payments pursuant to the LOAN MODIFICATION,” Plaintiff responded, “Yes.” (Ibid.) This singular interrogatory response, however, is insufficient to create a triable issue of fact as to whether Plaintiff in fact complied with her payment obligations under the modification agreement. First, the court has sustained the objection to this statement as a conclusion.2 Even if that were not the case, however, a party may not use his or her own interrogatory responses as evidence against the propounding party. Interrogatory responses are admissible only against the responding party. (Code Civ. Proc., § 2030.410;3 Great American Ins. Companies v. Gordon Trucking, Inc. (2008) 165 Cal.App.4th 445, 450 [on motion for summary judgment, “the responding party may not use its own interrogatory responses in its own favor”].) Finally, Wells Fargo generated the correspondence in the regular course of its business (Declaration of Shae Smith ¶ 1), and Plaintiff offers no reason to disregard the evidence. Instead, Plaintiff acknowledges that Wells Fargo sent her correspondence advising that she had defaulted on her modification payments, and that she failed to cure her default on the agreement. (PSS 10-12.)

*5 Plaintiff also relies on her own interrogatory responses to dispute facts 21-25. Specifically, in response to the special interrogatory asking Plaintiff to “[s]tate all facts to support YOUR contention that YOU have submitted a complete loan modification to WELLS FARGO,” Plaintiff stated that she “has provided all of the paperwork required by WELLS FARGO over and over again.” (See PSS 21-26.) Plaintiff concludes that this interrogatory response is sufficient to show that she provided all documentation requested by Defendants to complete the modification review. The court has sustained Defendants’ evidentiary objection to this response on the ground that it is a conclusion.4 In addition, as discussed, Plaintiff cannot carry her burden on this motion by relying on her own interrogatory responses. (Code Civ. Proc., § 2030.410; Great American Ins. Companies, supra, 165 Cal.App.4th at p. 450.)

Plaintiff relies on her own deposition testimony to dispute facts 15 and 36. She cites excerpts of her deposition testimony to support her position that she would be entitled to a modification upon completing the three payments required by the Special Forbearance Agreement. (See PSS 15, 36.) The testimony demonstrates, however, that Plaintiff understood Wells Fargo would only consider her for a modification upon completion of her trial payments. (Declaration of Giandominic Vitiello, Exh. E, pp. 43:19-24 [Q: “Do you mean that they would give you another loan modification?” A: “They would consider us.”], 45:15-20 [Q: “And it was your understanding that under this agreement, if you made those payments, the bank would take a look at you for another loan modification?” A: “Yes.”].)5

Plaintiff relies on the same excerpts of her deposition testimony to dispute fact 17. According to Plaintiff, the testimony supports her contention that her trial payments were consideration for the new modification, not directed to the outstanding debt that she owed Wells Fargo. (PSS 17.) The cited testimony does not support Plaintiff’s position. Instead, when asked directly about the purpose of the payments, Plaintiff confirmed that it was her understanding “that these were payments that [she was] essentially making towards the debt that [she] owed to the bank.” (DSS 17.)

Finally, Plaintiff again cites her own deposition testimony to dispute facts 32-35. She cites these excerpts of her testimony to support her position that she did receive boarder income from Ms. Feingold and Mr. Arcadu as she represented in the documentation supporting her RMA request, and that Defendants essentially mischaracterize her testimony. (PSS 32-35.) However, the deposition testimony cited by Defendants on these issues is directly on point, and Plaintiff’s responses to the questions demonstrate that she did not receive boarder income as she represented to Defendants. Plaintiff testified that she did not have a lease agreement with either Ms. Feingold or Mr. Arcadu as of January 1, 2015, that she did not receive rental payments from either individual in July and August 2015, and that she does not have any bank statements showing that she deposited rental income from either individual. (Betpera Decl., Exh. A, pp. 82:8-87:1.) In addition, at her deposition Plaintiff reviewed the document she submitted to the bank representing that she received $5,700 in boarder income and testified that she does not actually receive that amount in boarder income. (Vitiello Decl., Exh. E, p. 81:10-16.)

  1. Issue 1: Civil Code section 2923.5

*6 In her first cause of action, Plaintiff alleges that Defendants violated Civil Code section 2923.5. (FAC ¶¶ 46-56.) Section 2923.5 imposes obligations on lenders and loan servicers when a borrower defaults on a mortgage loan. In pertinent part, the statute provides, “A mortgage servicer shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” (Civ. Code, § 2923.5, subd. (a)(2).) Courts interpret the statute narrowly to avoid “crossing the line from state foreclosure law into federally preempted loan servicing.” (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 232.) Accordingly, the statute does not provide borrowers a right to a loan modification or impose substantial obligations on lenders and servicers. For example, the statute does not require loan servicers to consider new loan applications, take detailed information over the phone, or counsel borrowers about their loans. (Id. at pp. 231-232.) Instead, the statute imposes narrower obligations. To comply with the statute, loan servicers must inquire about the reasons why a borrower cannot make his or her payments, and must advise the borrower of the traditional ways foreclosure might be avoided, including deeds “in lieu,” workouts, and short sales. To interpret the words “assess” and “explore” more broadly would risk running afoul of federal preemption principles. (Id. at p. 231.)

Defendants have carried their burden to show compliance with the obligations imposed by section 2923.5 in the servicing of Plaintiff’s mortgage loan. The statute required Defendants to contact Plaintiff in person or by telephone in order to assess her financial situation and explore options for her to avoid foreclosure. The factual record presented by Defendants establishes that they complied with section 2923.5 in connection with recording the notices of default. (DSS 4-12.) Plaintiff does not dispute that following her initial default, Wells Fargo sent her correspondence regarding her account and actually approved her for a modification in 2008. (PSS 4-6.)6 For the reasons discussed, Plaintiff does not raise a triable issue as to whether she made all payments under the modification. (See PSS 9.) Plaintiff also does not dispute that Wells Fargo contacted her when she failed to comply with the modification agreement and subsequently recorded the second notice of default. (PSS 10-12.) Defendants’ evidence shows that Wells Fargo assessed Plaintiff’s financial situation and explored options with her to avoid foreclosure.

Plaintiff also does not demonstrate that she was prejudiced by any alleged violation of section 2923.5. Generally, a violation of the statute must cause the borrower a degree of prejudice to be actionable. (See Dooms v. Federal Home Loan Mortg. Corp. (E.D.Cal., Mar. 31, 2011, No. CV F 11-0352 LJO DLB) 2011 WL 1232989, at p. *17; Shaterian v. Wells Fargo Bank, N.A. (N.D.Cal., June 10, 2011, No. C-11-920 SC) 2011 WL 2314151, at p. * 5.)7 Here, Plaintiff acknowledges her own default (FAC ¶ 18) and does not, in opposition to this motion, establish how any alleged failure by Wells Fargo to contact her and assess her options might have resulted in meaningful injury.8

For these reasons, the motion is granted as to Issue 1.

  1. Issue 2: Civil Code section 2923.6

Plaintiff alleges in the second cause of action that Defendants violated Civil Code section 2923.6, which prohibits the practice of dual tracking in the process of reviewing a borrower for a loan modification. (FAC ¶¶ 57-66.) In pertinent part, the statute provides, “If a borrower submits a complete application for a first lien loan modification offered by, or through, a borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending.” (Civ. Code, § 2923.6, subd. (c).) Under the statute, the mortgage servicer may not initiate or pursue foreclosure proceedings once the borrower submits a “complete” application—i.e., when the borrower “has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” (Id. § 2923.6, subd. (h).)

*7 As discussed, the factual record demonstrates that Wells Fargo offered Plaintiff a modification in 2008 but that Plaintiff defaulted under the modification agreement. Plaintiff then successfully completed her trial period payments under the Special Forbearance Agreement and in October 2011 submitted a modification application to Wells Fargo. (DSS 18.) Wells Fargo required additional documentation to complete the review, and from October 2011 to June 2012, it corresponded with Plaintiff in efforts to obtain additional documentation to complete her application. (DSS 19-22.) Plaintiff did not supply the requested information, and in June 2012, Wells Fargo removed Plaintiff’s loan from loss mitigation review, informed Plaintiff that she did not qualify for a modification because she had failed to provide the requested documentation within the required time frame. (DSS 23-24.) In September 2013, Wells Fargo then recorded the notice of trustee’s sale. (DSS 25.) For the reasons discussed, Plaintiff does not raise a triable issue as to whether she provided all requested documentation by June 2012. (See PSS 21-25.) Nor does Plaintiff contend that the time frames provided by Wells Fargo with respect to the information were unreasonable. Instead, the factual record establishes that the review of Plaintiffs application ended in June 2012, and that there was no review pending at the time the notice of trustee’s sale was recorded in September 2013.

The court notes that in opposition to the motion, Plaintiff cites to an exhibit attached to the declaration of Alissa Doepp, a Wells Fargo employee. However, the declaration of Ms. Doepp was presented in connection with Defendants’ prior motion for summary judgment to the initial complaint, before the court granted Plaintiff leave to file the operative First Amended Complaint. The declaration is not presented in connection with this motion. (See Reply 3:15-19.) The exhibit at issue is a letter dated June 14, 2012 from Wells Fargo informing Plaintiff that her loan is being removed from review because of insufficient documentation. Attached to the letter are notes from a Wells Fargo representative processing Plaintiff’s loan, which are dated September 24, 2013 through September 30, 2013—i.e., shortly after Wells Fargo recorded the notice of trustee’s sale on September 13, 2013. However, the notes indicate that on September 24, 2013, Plaintiff’s representative contacted Wells Fargo to discuss a short sale of the property. In other words, the notes indicate that Wells Fargo re-opened review of Plaintiff’s loan after it had recorded the notice of trustee’s sale and only because Plaintiff re-opened discussions. The notes do not create a triable issue as to whether Wells Fargo engaged in the practice of dual tracking. (See Reply 3:20-27.)

Even if Plaintiff had raised a triable issue with respect to the recording of the notice of trustee’s sale, Wells Fargo’s subsequent review of Plaintiff’s loan remedied any alleged violation. (Civ. Code, § 2924.12, subd. (c).) The factual record establishes that after Plaintiff filed this lawsuit, from May 2015 through September 2015, Wells Fargo reviewed Plaintiff’s RMA request. (DSS 26-29.) Plaintiff again failed to provide all requested documentation, and in November 2015, Wells Fargo again removed Plaintiff’s loan from mitigation review. (DSS 30-31.) For the reasons discussed, Plaintiff does not raise a triable issue as to whether she provided all requested documentation in connection with the RMA request.

For these reasons, the motion is granted as to Issue 2.

VII. Issue 5: Breach of Contract

In her fifth cause of action, Plaintiff avers that Defendants breached the Special Forbearance Agreement by failing to review in good faith Plaintiff’s application for a loan modification. (FAC ¶ 96.) However, as discussed, the record demonstrates that after Plaintiff completed her trial period payments in 2011, Wells Fargo undertook to review her modification application. Contrary to Plaintiff’s position on this motion, she testified she understood that by completing the trial payments she would become entitled only to consideration for a modification. Wells Fargo did review her application but did not complete the review because Plaintiff did not provide all requested documentation.

In addition, the evidence demonstrates that Plaintiff cannot establish damages because she entered into the Special Forbearance Agreement. Plaintiff testified that she understood the trial payments were directed to her outstanding debt, and were not independent consideration for the modification. (DSS 17.) Her testimony also shows she did not detrimentally rely on any of the promises set forth in the Special Forbearance Agreement. (DSS 36.) Specifically, Plaintiff testified that when she entered into the agreement, she was not considering other foreclosure alternatives, such as a short sale or a refinancing loan. She stated that she did not forego other options because of the forbearance agreement. In fact, she ultimately did file for bankruptcy. (Betpera Decl., Exh. A, p. 98:7-20.) Accordingly, her testimony demonstrates that Plaintiff did not suffer damages because she entered into the agreement, and Plaintiff does not raise a triable issue as to this issue.

*8 Finally, Wells Fargo undertook to review Plaintiff a second time in 2015. Again, Plaintiff did not provide all requested documentation, and Wells Fargo removed her application from review. Plaintiff does not raise a triable issue as to whether she provided all requested documentation. In regard to the 2015 review, the evidence shows that Plaintiff may have attempted to show a change in financial circumstances by indicating she received boarder income. Plaintiff later testified that she did not receive this income or enter into the lease agreements serving as the basis for the purported rental income.

For these reasons, the motion as to Issue 5 is granted.

VIII. Issue 6: Promissory Estoppel

Plaintiff’s sixth cause of action for promissory estoppel also is premised on the allegations that Defendants did not provide a loan modification following Plaintiff’s performance under the forbearance agreement. (FAC ¶¶ 102-103.) While Plaintiff may plead this cause of action in the alternative to breach of contract (see Adams v. Paul (1995) 11 Cal.4th 583, 593), summary adjudication of this cause of action is warranted for the same reasons discussed. The evidence shows that Defendants promised only to review Plaintiff for a modification upon completion of her trial payments. Wells Fargo undertook such a review and only ceased the review when Plaintiff failed to provide all required documentation. In addition, Plaintiff testified that she did not rely on the promise for such a review by foregoing alternatives to a modification review.

Finally, to the extent Plaintiff asserts in opposition to this motion that Defendants made an oral promise to modify her mortgage loan, Plaintiff provides no evidence of such a promise. Generally, such promises are unenforceable under the statute of frauds. (See Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 673 [“a gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust deed would be unenforceable under section 1698”].) For these reasons, the motion as to Issue 6 is granted.

  1. Issue 7: Negligence

In her seventh cause of action, Plaintiff avers that Defendants negligently reviewed her loan modification applications. (FAC ¶ 112.) To prevail on a negligence action, a plaintiff must demonstrate that (1) the defendant owed the plaintiff a duty of care, (2) the defendant breached that duty, and (3) the breach proximately caused the plaintiff’s damages or injuries. (Lueras v. BAS Home Loan Servicing, LP (2013) 221 Cal.App.4th 49, 62.) The general rule is that financial institutions do not owe borrowers a duty of care when their involvement in the loan transaction does not exceed the scope of their conventional role as a mere lender of money. (Id. at p. 63.) Financial institutions may, however, owe borrowers a duty of care once they agree to consider the borrower for a loan modification. (Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 948.) In certain contexts, financial institutions may be liable if they fail to exercise reasonable care in the handling of the documents and information provided by borrowers in connection with their application for a loan modification. (Id. at pp. 948-949.) The rationale for such a duty is that borrowers might have foregone other alternatives in pursuit of a modification. The mishandling of an application in such a scenario might cause borrowers to lose title to their home, damage their credit, and incur income tax liability, costs and expenses to prevent foreclosure, among other things. (Ibid.)

Here, Plaintiff testified that she did not forego alternatives to foreclosure when she pursued a loan modification. It therefore is not clear that the law would impose on Wells Fargo a duty of care in handling Plaintiffs applications. (See Reply 8:21-9:3.) Even assuming Defendants may have owed Plaintiff a duty to exercise reasonable care in handling her modification applications, Plaintiff does not raise a triable issue as to whether Defendants breached the duty of care. As discussed, the evidence shows that Wells Fargo consistently corresponded with Plaintiff in efforts to review her application, and that Plaintiff did not provide all requested documentation within the required time frames. As a result, the factual record also demonstrates that any damages Plaintiff might have incurred resulted from her own failures to complete her modification applications. Accordingly, the motion as to Issue 7 is granted.

  1. Issue 3: Unfair Competition Law

*9 Plaintiff’s third cause of action for violations of the Unfair Competition Law (UCL) is predicated on the alleged violations of the Civil Code. (FAC ¶¶ 69-71.) The purpose of the Unfair Competition Law is to preserve fair business competition. It embraces anything that may be considered a business practice that is forbidden by law, and it governs anti-competitive business practices as well as injuries to consumers. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) To that end, the law defines “unfair competition” as “any unlawful, unfair or fraudulent business act or practice ….” (Bus. & Prof. Code, § 17200.) Plaintiff alleges that Defendants engaged in unlawful business practices by violating Civil Code sections 2923.5 and 2923.6; that Defendants engaged in fraudulent business practices by misrepresenting the modification opportunities that were available to Plaintiff; and that Defendants engaged in unfair conduct by failing to comply with their statutory obligations to provide defaulted borrowers with options to avoid foreclosure. (FAC ¶¶ 69-71.) Accordingly, this cause of action is entirely derivative of the other causes of action. For this reason, the motion is granted as to Issue 3.

  1. Issue 4: Declaratory Relief

Finally, Plaintiff brings the fourth cause of action for declaratory relief against NDEx West, LLC (NDEX), the trustee under the deed of trust. She seeks a judicial declaration as to whether NDEX has the right to foreclose on the subject property. (FAC ¶ 79.) In opposition to this motion, Plaintiff does not dispute that NDEX was substituted as the trustee under the deed of trust at the time the 2008 notice of default was recorded. (PSS 13.) Therefore, while the court notes that this motion is not brought on behalf of NDEX, Plaintiff does not raise a triable issue as to whether Defendants may properly foreclose on the property. The motion as to Issue 4 is granted.

Footnotes

1

“The complaint limits the issues to be addressed at the motion for summary judgment. The rationale is clear: It is the allegations in the complaint to which the summary judgment motion must respond.” (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258.)

2

Plaintiff cannot carry her burden on this motion by relying on conclusory statements. “To defeat a motion for summary judgment, a party cannot rely on legal conclusions or assertions of ultimate facts. [Citation.] Rather, the party must provide admissible evidence, for example, in the form of declarations that cite evidentiary facts.” (Knox v. Dean (2012) 205 Cal.App.4th 417, 432; see also Collin v. Calportland Company (2014) 228 Cal.App.4th 582, 587-588 [“the defendant may show through factually devoid discovery responses that the plaintiff does not possess and cannot reasonably obtain needed evidence”].)

3

The statute provides, “At the trial or any other hearing in the action, so far as admissible under the rules of evidence, the propounding party or any party other than the responding party may use any answer or part of an answer to an interrogatory only against the responding party.” (emphasis added)

4

See footnote 2, supra.

5

The cover letter explaining the Special Forbearance Agreement also advised Plaintiff that “[u]pon successful completion of the Agreement, your loan will not be contractually current. Since the installments may be less than the total amount due, you may still have outstanding payments and fees. Any outstanding payments and fees will be reviewed for a loan modification.” (Declaration of Artin Betpera, Exh. A, Exh. 8, p. 1.)

6

The court notes that although Plaintiff disputes certain material facts as to Issue 1 in Defendants’ motion, Plaintiff does not present any argument in her memorandum of points and authorities on the issue. (See Reply 4:7-8.)

7

Although California courts may not rely on unpublished California cases, “the California Rules of Court do not prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not binding, authority.” (Landmark Screens, LLC v. Morgan, Lewis Bockius, LLP (2010) 183 Cal.App.4th 238, 251, fn. 6, citing Cal. Rules of Court, rule 8.1115.)

8

The court also notes that the only remedy provided by section 2923.5 is a postponement of the foreclosure sale before it happens. (Mabry, supra, 185 Cal.App.4th at pp. 214, 235.) Plaintiff does not dispute that as of the present date, there is no foreclosure sale date set with respect to Plaintiff’s loan. (PSS 37.)

2016 WL 3212004 (Cal.Super.) (Trial Order)

Superior Court of California.

Ventura County

HARRAH,

v.

SELECT PORTFOLIO SERVICING INC.

No. 56-2015-00471752-CU-OR-VTA.

May 4, 2016.

Minute Order

John Nguyen, Judge.

*1 CASE CATEGORY: Civil – Unlimited CASE TYPE: Other Real Property

EVENT TYPE: Ruling on Submitted Matter

The Court, having previously taken the Demurrer to Plaintiffs Second Amended Complaint (4/29/16) under submission, now rules as follows:

Defendant Select Portfolio Servicing, Inc.’s (“Select”) Demurrer to Plaintiffs Second Amended Complaint came up for hearing in department 40 on April 29, 2016 at 8:30 a.m., Judge John Nho Trong Nguyen presiding.

After having carefully reviewed all of the pleadings and supporting documents thereto, and considered the oral arguments of counsel, the Court now issues its final ruling as follows:

The Court adopts its tentative ruling (included below) to sustain the Defendants’ demurrer to all causes of action without leave to amend.

The Clerk is directed to give notice.

Tentative Ruling issued on 4/29/16:

Motion: Select Portfolio Servicing Inc.’s Demurrer to Second Amended Complaint. (Opposed).

Background: Plaintiff filed the original complaint on 9/1/15 alleging causes of action for: 1) violation of Civil Code § 2923.55; 2) violation of Civil Code § 2923.6; 3) violation of Civil Code § 2923.7; 4) declaratory relief pursuant to Civil Code § 2924.12; and 5) unfair business practices. The court granted Plaintiff’s ex parte request for a Temporary Restraining Order on 9/10/15. The court granted Plaintiff’s application for a preliminary injunction on 10/5/15 conditioned on the posting of a $10,000 bond.

Select Portfolio Servicing Inc. (“Select”) filed a demurrer to the original complaint on 10/15/15. The demurrer was taken off calendar on 11/5/15 when Plaintiff filed a first amended complaint. It again asserted causes of action for: 1) violation of Civil Code § 2923.55; 2) violation of Civil Code § 2923.6; 3) violation of Civil Code § 2923.7; 4) declaratory relief pursuant to Civil Code § 2924.12; and 5) unfair business practices. The only changes between the original complaint and the first amended complaint appear to be the addition of 2 sentences to ¶39 of the First Amended Complaint (FAC).

On 2/10/16, Judge Reid sustained Select’s demurrer to the FAC with leave to amend. Plaintiff filed a Second Amended Complaint (SAC) on 2/24/16. It again asserted causes of action for: 1) violation of Civil Code § 2923.5; 2) violation of Civil Code § 2923.6; 3) violation of Civil Code § 2923.7; 4) declaratory relief pursuant to Civil Code § 2924.12; and 5) unfair business practices. It appears to differ from the FAC in 4 ways. A sentence is added to ¶22 of the SAC. ¶¶ 23, 24 and 38 also appear to be new additions to the SAC.

The current demurrer was filed on 3/28/16. A trial call is scheduled for 2/6/17.

ANALYSIS AND RULINGS:

In the Second Amended Complaint (“SAC”), Plaintiff added a sentence to the end of ¶22, alleging, “Plaintiff was required to pay court costs and attorney’s fees to bring this action”.

The new ¶23 alleges that defendant Select indicated his modification application was complete on 6/5/14, but then on 6/19/15 informed them that the account was not eligible for review because a foreclosure had been set within the next 30 days.

*2 The new ¶24 of the SAC alleges that Plaintiffs suffered emotional trauma, stress, strain etc.

The specific allegations contained in the current version of the first cause of action are identical to the allegations asserted in the first cause of action in the First Amended Complaint (“FAC”). The additions of ¶¶22-24 specific in the SAC do not cure the defects in the first cause of action previously identified in Judge Reid’s ruling on the demurrer to the FAC. As such, the Court sustains the demurrer to the first cause of action.

The allegations contained in the current version of the second cause of action are identical to the allegations asserted in the second cause of action in the FAC. The additions of ¶22-24 in the SAC do not cure all of the defects in the second cause of action previously identified in Judge Reid’s ruling on the demurrer to the FAC. Therefore, the Court sustains the demurrer to the second cause of action.

The specific allegations contained in the current version of the third cause of action differ only to the allegations asserted in the third cause of action in the FAC by the addition of ¶38. In ¶38, plaintiffs allege they were given a “point of contact,” but the point of contact was constantly changed and of no assistance. They allege 4 different individuals were assigned to them as “relationship managers” for dates ranging from 8/14/13 to 2/14/14. The allegations contained in the additions to the SAC do not cure the defects in the third cause of action identified in Judge Reid’s ruling on the demurrer to the FAC.

Therefore, the Court sustains the demurrer to the third cause of action.

The specific allegations contained in the current version of the fourth cause of action are identical to the allegations asserted in the fourth cause of action in the FAC. The new allegations contained in the SAC as discussed above do not cure the defects in the fourth cause of action identified in Judge Reid’s ruling on the demurrer to the FAC. Therefore, the Court sustains the demurrer to the fourth cause of action.

The specific allegations contained in the current version of the fifth cause of action are identical to the allegations asserted in the fifth cause of action in the FAC. The new allegations contained in the SAC as discussed above do not cure the defects in the fifth cause of action identified in Judge Reid’s ruling on the demurrer to the FAC. Therefore, the Court sustains the demurrer to the fifth cause of action.

Select has filed three different demurrers in this case. Nonetheless the Second Amended Complaint differs very little from the original complaint filed on 9/1/15. It does not appear that Plaintiffs are capable of amending their complaint to cure the identified defects. Consequently, the Court sustains the current demurrer without leave to amend.

 

Superior Court of California.

Central

San Diego County

BEHDIN,

v.

WELLS FARGO BANK NA.

No. 37-2013-00068936-CU-MC-CTL.

September 19, 2014.

Minute Order

Laurel Carnes, counsel, present for Plaintiff(s).

William Idleman (telephonically), specially appearing for counsel Andrew L Minegar, present for Defendant(s).

Katherine Bacal, Judge.

*1 CLERK: Jay Browder

REPORTER/ERM: Jeannette Kinikin CSR# 11272

BAILIFF/COURT ATTENDANT: Crystal Rice

CASE CATEGORY: Civil – Unlimited

CASE TYPE: Misc Complaints – Other

EVENT TYPE: Demurrer / Motion to Strike

MOVING PARTY: Wells Fargo Bank NA, HSBC Bank USA NA as trustee for Wells Fargo Asset Securities Corporation Mortgage Asset-Backed Pass-Through Certificates Series 2007-AR6

CAUSAL DOCUMENT/DATE FILED: Demurrer, 12/20/2013

EVENT TYPE: Demurrer / Motion to Strike

MOVING PARTY: Wells Fargo Bank NA, HSBC Bank USA NA as trustee for Wells Fargo Asset Securities Corporation Mortgage Asset-Backed Pass-Through Certificates Series 2007-AR6

CAUSAL DOCUMENT/DATE FILED: Motion to Strike Portions of First Amended Complaint, 12/20/2013

Now being the time previously set for hearing Defendants’ Demurrer and Motion to Strike, counsel appear as noted above and the hearing commences.

Appointment of Official Reporter Pro Tempore is signed and filed.

The Court hears from counsel.

The Court confirms as modified the tentative ruling as follows:

The demurer to first amended complaint (FAC), filed by defendants Wells Fargo Bank, N.A. and HSBC Bank USA, N.A. is sustained as to the 6th cause of action without leave to amend. The demurrer to the remaining causes of action is overruled. Defendants’ motion to strike the prayer for attorneys’ fees is denied. Defendants have 30 days to file an answer.

Preliminary Matters

Defendants’ request for judicial notice is granted.

Factual and Procedural Background

This action arises out of Wells Fargo’s attempt to foreclose on plaintiffs’ property.

According to the FAC, plaintiffs obtained an adjustable home loan in 2007. ¶ 13. The loan was secured by a deed of trust and required interest-only payments of 6 percent for the first five years. Ibid. HBSC is the current beneficiary under the deed of trust and Wells Fargo is the loan servicer. ¶¶ 7, 13 & RJN Ex. 2.

Plaintiffs encountered financial hardship in 2009 and obtained a loan modification from Wells Fargo in February 2010. ¶¶ 14, 15 and Ex. D. The modified loan provided for interest-only payments of 2.875 percent from 3/1/10 to 4/1/12, interest-only payments of 6 percent from 5/1/12 to 8/1/12, followed by payments pursuant to the terms of the original note. ¶ 15 and Ex. D. Under the original note, as of 8/1/12 the loan called for principal and interest payments based on 2.25 percent over the one-year London Interbank Offered Rate (LIBOR). ¶ 16. Between April 2012 and July 2012, plaintiffs were charged 2.875 percent when they should have been charged 6 percent. ¶ 18. From August 2012 to August 2013 they were charged 6 percent when they should have been charged 3.32 percent. Ibid. ¶ 18. Because plaintiffs were charged incorrect interest, they were unable to make the payments. ¶ 21.

Plaintiffs applied for a HAMP loan modification in May 2013 and explained their change in circumstances. ¶¶ 23, 24. Wells Fargo recorded a notice of default (NOD) on 6/4/13, but told plaintiffs several days later that the NOD had been suspended. ¶¶ 26, 27; RJN Ex. 5 [NOD]. Plaintiffs were subsequently notified they were not eligible for a modification because Wells Fargo could not create an affordable payment based on plaintiffs’ income. ¶ 28. Plaintiffs submitted an appeal in July 2013, but it was denied on 7/19/13 because they still did not meet the requirements of a loan modification. ¶¶ 29, 32. Wells Fargo also told plaintiffs by phone that the modification had been denied because there was a previous modification, and that the NOD was being activated. ¶ 33; see also plaintiffs’ declarations in support of TRO, ¶ 10.

*2 Plaintiffs never received a written denial setting out the “real reason” that their request was denied. ¶ 34. Defendants recorded a notice of trustee sale (NOTS) in September 2013. ¶ 37, RJN Ex. 6 [NOTS]. Around the same time, Wells Fargo told plaintiffs’ counsel that the modification was denied because the investor guidelines only allowed one modification for the life of the loan. ¶ 38.

Based on these allegations, plaintiffs assert claims for (1) violation of Civil Code section 2923.6 (Homeowner’s Bill of Rights or HBOR); (2) breach of written contract; (3) violation of 12 U.S.C. § 2601 (RESPA); (4) violation of Civil Code section 1788 (Rosenthal Fair Debt Collection Practices Act; (5) negligence; (6) breach of covenant of good faith and fair dealing; and (7) violation of Business and Professions Code section 17200.

Defendants demur on the grounds that the FAC fails to allege facts sufficient to constitute a cause of action. They also move to strike the prayer for attorneys’ fees

Discussion

1st cause of action – violation of the HBOR

Plaintiffs allege the 7/19/13 denial letter violated the HBOR because it did not identify the reason for the denial and the specific reasons for the investor disallowance. ¶ 50. As a result, plaintiffs were not able to challenge investor disallowance as a basis for the denial. ¶ 51. Defendants also allegedly violated the dual tracking provisions by recording a NOTS less than 30 days after plaintiffs were provided the specific basis of their denial. ¶ 54.

Defendants contend the HBOR does not apply to plaintiffs’ claims because the loan was made prior to the HBOR’s enactment on January 1, 2013. Defendants argue the State cannot alter the means of enforcing the obligation in way that materially impairs the obligations of the contract. Brown v. Ferdon (1936) 5 Cal.2d 226, 230. They maintain the HBOR interfers with the their contractual rights by imposing requirements that delay the right to non-judicially foreclose and requiring them to conduct a modification review when no such obligation is required under the loan agreement.

The federal Contract Clause prohibits States from impairing the obligations of contracts. U.S. Const., Art. I, § 10, cl. 1. However, the Commerce Clause is not absolute and must accommodate the inherent police power of the State to “safeguard the vital interests of its people.” Home Bldg. & Loan Ass’n v. Blaisdell (1934) 290 U.S. 398, 434. Whether a regulation violates the Contract Clause is governed by a three-step inquiry: (1) whether the state law has operated as a substantial impairment of a contractual relationship; (2) whether the State has a significant and legitimate public purpose behind the regulation, such as the remedying of a broad and general social or economic problem; and (3) whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption. RUI One Corp. v. City of Berkeley (9th Cir. 2004) 371 F.3d 1137, 1147.

The HBOR does not substantially impair the contractual relationship because it only requires lenders and servicers to consider applications for loan modifications, not to substantively modify the terms of the loan. It interposes a relatively minor delay in the foreclosure process while the modification application is pending and after an appeal has been denied. Moreover, the lender may avoid the requirements of HBOR altogether by proceeding with a judicial foreclosure. California had a significant and legitimate public purpose in implementing the HBOR. It wanted to avoid foreclosures where possible by ensuring that borrowers have a meaningful opportunity to pursue loss mitigation options. AB 278, § 1. Finally, the HBOR is narrowly tailored to address the negative effects of the wave of residential property foreclosures. Ibid. Consequently, the HBOR does apply to plaintiffs’ loan. See also, Mann v. Bank of America, N.A. (C.D. Cal., Feb. 3, 2014,)  at *9, fn. 2 (rejecting contention that retroactive application of the HBOR would unconstitutionally impair the mortgage contracts). The HBOR does not violate the Contract Clause.

*3 On the merits, defendants argue plaintiffs’ own allegations refute the claim that defendants violated the prohibition against dual tracking by recording a NOTS less than 30 days after plaintiffs were provided with the specific basis of their denial. ¶ 54. Plaintiffs allege they were notified in writing on July 19, 2013 that the appeal was denied, and the NOTS was recorded September 16, 2013, more than 30 days later. However, the allegations indicate defendants violated section 2923.6(d) by recording the NOTS without giving 15 days written notice of the reason for denial of the appeal. Where, as here, the modification is denied “based on investor disallowance,” the mortgage servicer must send a written notice to the borrower identifying “the specific reasons for the investor disallowance.” Civ. Code, § 2923.6, subd. (f)(2). Plaintiffs allege they were never informed in writing that the appeal was denied due to investor disallowance. ¶ 32, 34, 38. Plaintiffs only learned that their application was denied based on investor disallowance when Wells Fargo informed their counsel on September 17, 2013, the day after the NOTS was recorded. ¶ 38. Because plaintiffs have adequately alleged a violation of the HBOR, the demurrer to the 1st cause of action is overruled.

2nd cause of action – breach of written contract

Plaintiffs allege defendant breached the loan agreement beginning in April 2012 by charging interest rates not authorized by the agreement. ¶ 21. Defendants argue plaintiffs cannot establish damages because they were not able to make the payments when defendants did not charge enough interest, and plaintiffs were four months in arrears when defendants charged more than the agreed-upon amount. In response, plaintiffs say they did not default until after August 2012 when defendants began charging excessive interest. In reply, defendants point to the 8/24/09 NOD that states plaintiffs were over $13,000 in arrears as of 8/20/09. RJN, Ex. 3. However, the loan was modified in February 2010 and plaintiffs presumably brought the loan current at that time. The second NOD was recorded in June 2013 and states plaintiffs are over $51,000 in arrears as of May 31, 2013. RJN, Ex. 5. Plaintiffs have not conceded that they were in default when defendants began charging incorrect interest. The demurrer to the 2nd cause of action is overruled.

3rd cause of action – violation of RESPA

Plaintiffs allege defendants violated RESPA by failing to respond to their Qualified Written Request (QWR) that disputed the amount owed and interest rates charged and requested information about the servicing of their loan. ¶ 66. If defendants had investigated the QWR, they would not have denied the modification. ¶ 69. Defendants argue plaintiffs have not alleged actual damages caused by the violation because they admittedly breached the terms of the loan by defaulting.

Under RESPA, mortgage loan servicers must respond in writing to a QWR. Mashiri v. Ocwen Loan Servicing, LLC (S.D. Cal.) 2013 WL 5797584 at *6. Plaintiffs must allege the “actual damages” they suffered as a result of loan servicer’s failure to respond to a QWR. Id. at *6; 12 U.S.C. section 2605(f)(1). Plaintiffs argue they suffered monetary damages due to the improper increase in the interest rate. Plaintiffs have adequately alleged they suffered actual damages as a result of the RESPA violation. As explained above, plaintiffs do not concede they were in default when defendants began charging incorrect interest. The demurrer to the 3rd cause of action is overruled.

4th cause of action – violation of the Rosenthal Act

Plaintiffs allege defendants violated the Rosenthal Act by trying to collect a debt they are not entitled to and communicating with plaintiffs when defendants knew they were represented by an attorney. Defendants contend the allegations lack specificity and a home mortgage is not a “debt” under the Rosenthal Act.

The definition of a “debt” under the Rosenthal Act is “money, property or their equivalent which is due or owing or alleged to be due or owing from a natural person to another person.” Civ. Code, § 1788.2, subd. (d). “Nothing in the plain meaning of this statutory definition suggests that a mortgage, which is money owing to a person (defined as ‘a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association or other similar entity’), is outside the purview of the [Rosenthal Act].” Roche v. Bank of America, Nat. Ass’n (S.D. Cal.) 2013 WL 3450016 at *6. Defendant cites federal district court cases that have concluded residential mortgage loans do not qualify as a “debt” under the Rosenthal Act. See, e.g., Pittman v. Barclays Capital Real Estate, Inc. (S.D. Cal.) 2009 WL 1108889 at *3. However, defendants have not cited any cases later than 2010, and the prevailing view appears to be that residential mortgages are debts under the Rosenthal Act. Courts that have concluded that residential mortgages are not debts under the Rosenthal Act have generally done so as an extension of the general view that foreclosure is not a “debt collection activity” under the Rosenthal Act. “District courts have occasionally gone farther, stating that residential mortgage loans themselves are not ‘debts’ under the RFDCPA. However, these cases are much rarer, and their reasoning is not persuasive.” Moriarity v. Nationstar Mortg., LLC (E.D. Cal.) 2013 WL 3354448 at * 5, 6. This Court agrees that residential mortgages are debts under the Rosenthal Act.

*4 Plaintiffs allege defendants violated the Rosenthal Act by communicating with them when defendants knew they were represented by an attorney. More detailed allegations are not required. The demurrer to the 4th cause of action is overruled.

5th cause of action – negligence

Plaintiffs allege Wells Fargo breached its duty as the loan servicer by, among other things, failing to charge plaintiffs interest rates in accordance with the loan documents, not communicating with plaintiffs about the status of their modification request, denying the modification without a factual basis, and denying plaintiffs a meaningful opportunity to challenge the denial.

Generally, “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.” Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096 (lender did not owe borrower a duty in appraising the borrower’s collateral). Defendant argues it does not owe a duty of care because the alleged conduct – servicing the loan and a potential loan modification – falls within the conventional role of a money lender. Ragland v. U.S. Bank National Association (2012) 209 Cal.App.4th 182, 207 (upholding order granting summary adjudication of NIED claim because lender’s advice to miss a loan payment in order to be considered for a loan modification was directly related to the issue of loan modification).

Plaintiffs rely on Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941. In that case the plaintiffs alleged, among other things, the lender failed to review their modification applications in a timely manner and relied on incorrect information. In reversing an order sustaining a demurrer to the negligence claim, Alvarez held that a lender owes a duty to a borrower to use reasonable care in processing a loan modification. The court reached its conclusion after balancing the Biakanja factors: (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm.

In reply, defendant argues Alvarez wrongly applied the Biakanja factors. Based on the facts alleged in the FAC, the Court finds Alvarez persuasive. Notwithstanding defendants’ argument to the contrary, the transaction was primarily intended to affect the plaintiffs. Defendants have a secured interest in the property and have little to lose if the modification is granted. The modification was requested by the plaintiffs, and they are the ones who would have benefitted if the modification was granted. The potential harm to plaintiffs from mishandling the application was foreseeable due to plaintiffs’ lost opportunity to keep their home. There is a close connection between defendant’s conduct and the alleged injury because, to the extent plaintiffs qualified and would have been granted a modification, defendants’ conduct precluded the loan modification application from being properly considered. The alleged dual tracking “increases the blame that may properly be assigned to the conduct alleged in the complaint.” Alvarez, supra.

*5 For pleading purposes, plaintiffs have stated a negligence claim. The demurrer to the 5th cause of action is overruled

6th cause of action – breach of covenant of good faith and fair dealing

The court may sustain a demurrer to a cause of action that is “merely duplicative” and “adds nothing to the complaint by way of fact or theory”. Award Metals, Inc. v. Superior Court (1991) 228 Cal.App 3d 1128, 1135; see also Careau & Co. v Security Pac. Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1392 (allegations that do not go beyond a statement of a mere contract breach, rely on the same alleged acts, and seek the same damages already claimed in a contract cause of action may be disregarded as superfluous.) Plaintiffs concede they are only seeking contract damages for breach of the implied covenant. Because the claim sounds in contract, it is coextensive with plaintiffs’ breach of contract claim. Hecimovich v. Encinal School Parent Teacher Organization (2012) 203 Cal.App.4th 450, 475. The demurrer to the 6th cause of action is sustained without leave to amend.

7th cause of action – violation of Business and Professions Code section 17200 (Unfair Competition Law)

The UCL broadly proscribes “anything that can properly be called a business practice and that at the same time is forbidden by law” Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 113. In addition, the UCL prohibits business conduct that, while not unlawful, may be properly considered “unfair” or “fraudulent.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180-181.

A UCL action may be brought “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” Bus. & Prof. C. § 17204. Defendants argue plaintiffs cannot establish a causal link between the impending foreclosure and defendants’ conduct because plaintiffs have defaulted on the loan. Jenkins v JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 523. In Jenkins, the default occurred before the allegedly unlawful or unfair acts. Ibid. Plaintiffs argue defendants’ breach of the 2010 modification agreement preceded and caused the default. Oppo. at p. 14. As already explained, plaintiffs have alleged they did not go into default until after they were allegedly charged incorrect interest. Since defendants’ conduct allegedly caused the default and impending foreclosure, the demurrer to the 7th cause of action is overruled.

The Prayer for Attorneys’ Fees

Defendants contend there is no contractual or statutory basis for attorneys’ fees. However, plaintiffs may recover attorneys’ fees if they prevail on their HBOR or Rosenthal Act claims. Civ. Code, § 2924.12, subd. (i); Civ Code, § 1788 30, subd. (c). The motion to strike is denied.

Parties waive notice of this ruling.

<<signature>>

Judge Katherine Bacal

 

Superior Court of California.

Gordon D Schaber Courthouse

Sacramento County

Monterrosa,

v.

PNC BANK A DIVISION OF PNC BANK NATIONAL ASSOCIATION.

No. 34-2014-00162063-CU-OR-GDS.

September 3, 2014.

*1 Clerk: E. Brown

Reporter/Erm:

Bailiff/court Attendant: C. Chambers, J. Green

Case Init.date: 04/15/2014

Case Category: Civil – Unlimited

Event Id/document Id:, 11607809

Event Type: Motion For Attorney Fees – Civil Law And Motion

Moving Party: Michael Monterrosa, Cheranne Nobis

Causal Document/date Filed: Motion for Attorney Fees, 07/28/2014

Time: 02:00:00 Pm

Dept: 53

Minute Order

Appearances: W Christopher Sims, Counsel, Present for Plaintiff(s).

Peter J Van Zandt, Counsel, Present for Defendant(s) Telephonically.

Claire Calvert, Counsel Present for Plaintiff

Steven H. Rodda, Judge.

Nature of Proceeding: Motion for Attorney Fees

TENTATIVE RULING

Plaintiff’s Motion for Attorneys Fees pursuant to Civil Code section 2924.12(i) is denied.

Plaintiffs’ Request for Judicial Notice of the Court’s May 8, 2014 minute order is granted.

On April 17, 2014, plaintiffs moved for an ex parte application for a temporary restraining order to enjoin a foreclosure sale scheduled for April 21, 2014. On May 8, 2014, the Court granted a preliminary injunction which enjoins defendants from conducting a sale of the property pending the resolution of the case. (See RJN Ex. A)

Plaintiff moves for attorneys’ fee pursuant to the recently enacted Homeowners’ Bill of Rights, which provides for an award of attorneys’ fees to a “prevailing borrower” who obtained injunctive relief or was awarded damages in “an action.” (Civ. Code § 2924.12(i).)

Code of Civil Procedure § 1021 provides: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties;…” (Italics added.) The reference to “injunctive relief in Civil Code § 2924.12(1) is does not refer to preliminary injunctive relief. Moreover, a “prevailing borrower in an action” is consistent with the awarding of fees at the conclusion of the action. Thus, Civil Code section 2924.12 does not specifically provide for an interim award of fees.

Statutory fees to a “prevailing borrower” are awardable only at the end of the case. No matter how meritorious the claim, courts cannot make interim fee awards. (Wegner. Fairbank & Epstein, California Practice Guide: Civil Trials and Evidence (TRG 2013) § 17:152.5, citing Bell v. Farmers Ins. Exch. (2001) 87 Cal.App.4”’ 805. 831.) Plaintiffs obtained preliminary injunctive relief to enjoin a trustee’s sale and now move pursuant to Civil Code § 2924.12(i) which provides for reasonable attorney’s fees and costs in an “action for injunctive relief,..” (See Civil Code § 2924.12(a).) Thus, the propriety of an interim award of attorney fees in this case depends on whether it is “specifically provided for” by Civil Code § 2924.12(i).

The rules governing statutory construction are well settled. The Court begins with the fundamental premise that the objective of statutory interpretation is to ascertain and effectuate legislative intent. (People v. Trevino (2001) 26 Cal.4th 237, 240; People v. Gardeley (1996) 14 Cal.4th 605, 621.) To determine legislative intent, the Court turns first to the words of the statute, giving them their usual and ordinary meaning. (Trevino, at p. 241; Trope v. Katz (1995) 11 Cal.4th 274, 280.) When the language of a statute is clear, the Court need go no further.” (Nolan v. City of Anaheim (2004) 33 Cal. 4th 335, 340; People v. Beaver (2010) 186 Cal.App.4th 107, 117.) If the words of the statute are ambiguous, a court may resort to “extrinsic sources, including the ostensible objects to be achieved and the legislative history.” (People v. Coronado (1995) 12 Cal.4th 145, 151.) Applying these rules of statutory interpretation, a court must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and to avoid an interpretation that would lead to absurd consequences. Townzen v. County of El Dorado (1998) 64 Cal.App.4th 1350, 1356.

*2 Provisional relief includes temporary restraining orders and preliminary injunctions [see Code Civ. Proc. § 527(a)-(f)]. Thus, a preliminary injunction is a provisional remedy and temporary in character. It assumes a pending litigation in which all questions are to be settled by a judgment and, therefore, operates only until the judgment is rendered. The preliminary injunction automatically terminates at the time the court renders a judgment either granting or denying a permanent injunction. Shahen v. Superior Court (1941) 46 Cal. App. 2d 187, 188. A preliminary injunction is the mere maintenance of the status quo, until a final determination on the merits can be had. The court, balancing the respective equities of the parties, has reached an interim conclusion that, pending a trial on the merits, the defendant should be restrained from exercising the right claimed by him. SB Liberty, LLC v. Isla Verde Assn., Inc. (2013) 217 Cal. App. 4th 272, 280.

At the preliminary stage, the burden under the statute remains on the plaintiff to show that there is a “material” violation that must be cured, not a mere likelihood of prevailing on the merits. The “enjoined entity may move to dissolve an injunction based on a showing that the material violation has been corrected and remedied.” Civ. Code, sec. 2924.12 (a)(2)

Thus, as noted, a preliminary injunction is merely a provisional or auxiliary remedy to preserve the status quo until final judgment. (See Kendall v. Foulks (1919) 180 Cal. 171, 173.) The order granting preliminary injunction is not a determination of the ultimate right to a permanent injunction; it is, as noted, based on a showing that it is desirable to maintain the status quo pending a determination of the merits. (See Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528; State Bd. of Barber Examiners v. Star (1970) 8 Cal. App.3d 736, 739, 740, [trial judge’s purported ruling on constitutional question at hearing on preliminary injunction was not binding on court at trial] ).

Because plaintiffs obtained only preliminary injunctive relief here, they have no legal basis to be awarded interim fees as they are not “specifically provided for” by Civil Code § 2924.12(i). At the end of the case it will be determined whether the plaintiffs are “prevailing borrowers” in this action.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.

COURT RULING

The matter was argued and submitted. The Court affirmed the tentative ruling.

 

Superior Court of California.

Marin County

Rosario INGARGIOLA and Jenna Ingargiola, Plaintiffs,

v.

INDYMAC MORTGAGE SERVICES, a Division of Onewest Bank, FSB; Ocwen Loan Servicing, LLC, Meridian Foreclosure Services, and Does 1 through 20, inclusive, Defendants.

No. CV1303617.

May 21, 2014.

*1 Complaint Filed: November 18, 2013

Order Granting Plaintiffs’ Motion for Interim Attorney’s Fees and Costs against Defendants Indymac Mortgage Services, FSB and Onewest Bank, FSB

Nelson W. Goodell (SBN 264734), 5 Third Street, Suite 1100, San Francisco, California 94103, Telephone: (415) 495-3950, Facsimile: (415) 495-6900, Attorney for Plaintiffs, Rosario and Jennaingargiola

Mark A. Talamantes, Judge.

  1. RULING

Plaintiffs’ Motion for interim attorney’s fees and costs is granted, in part, in the amount of $15,758.33 limited to attorney fees incurred in obtaining preliminary injunctive relief calculated as follows: $1,508.33 for drafting the initial Complaint including the cause of action for violation of Civil Code § 2923.6 (reduced by two-thirds for claims unrelated to the TRO and preliminary injunction), $6,350 for the successful TRO and Preliminary Injunction pursuant to Civil Code § 2924.12, and $7,900 for this motion for attorney fees. Plaintiffs also seek $979.50 in costs However, those costs are not itemized sufficiently to allow the court to make an award of costs relating to the preliminary injunctive relief.

This Court recognizes that, generally, statutory fees are awardable only at the end of the case. No matter how meritorious the claim, courts ordinarily cannot make interim fee awards. (Wegner, Fairbank & Epstein, California Practice Guide: Civil Trials and Evidence (TRG 2013) § 17:152.5, citing Bell v. Farmers Ins. Exch. (2001) 87 Cal.App.4th 805, 831.)

Plaintiffs now seek to recover all of their attorney’s fees incurred in this action to date pursuant to Civil Code § 2924.12(i) which provides:

A court may award a prevailing borrower reasonable attorney’s fees and costs in an action brought pursuant to this section. A borrower shall be deemed to have prevailed for purposes of this subdivision if the borrower obtained injunctive relief or was awarded damages pursuant to this section.

Code of Civil Procedure § 1021 provides: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties;…” (Italics added.) Thus, the propriety of an interim award of attorney fees in this case depends on whether it is “specifically provided for” by Civil Code 2924.12(i).

The axioms of statutory construction require us first to look at the words used by the Legislature. If the language is unambiguous, our task is finished. (Construction Industry Force Account Council v. Amador Water Agency (1999) 71 Cal.App.4th 810. 815.) “We begin with the fundamental rule that a court ‘should ascertain the intent of the Legislature so as to effectuate the purpose of the law.’ [Citation.] In determining such intent, ‘[t]he court turns first to the words themselves for the answer.’ [Citation.] We are required to give effect to statutes ‘according to the usual, ordinary import of the language employed in framing them.’ [Citations.]” (Bell, supra, 87 Cal.App.4th at 831.) If the language is ambiguous, we then examine the context of the statute, striving to harmonize the provision internally and with related statutes, and we may also consult extrinsic indicia of intent as contained in the legislative history of the statute. (Construction Industry Force Account Council, supra, 71 Cal.App.4th at 815.)

*2 This Court finds the reference to “injunctive relief in Civil Code § 2923.12(i) ambiguous as to whether it was meant to include preliminary injunctive relief. Viewing § 2923.12(i) in the context of the Homeowner Bill of Rights, the Court finds plaintiffs’ proffered construction more persuasive. The purpose of the new statutory provisions prohibiting dual tracking is to suspend foreclosure proceedings while lenders deal with borrowers in default to try to effectuate a workable loan modification. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 904-905.) If a lender engages in dual tracking and the borrower brings an action for injunctive relief alleging a violation of Civil Code § 2923.6, in most cases the primary and immediate purpose of the lawsuit will be to obtain a TRO or preliminary injunction because the foreclosure process is swift and ongoing and time is of the essence. If a borrower waits until trial to seek a permanent injunction, the need for an injunction will likely no longer exist because the foreclosure will have concluded; or as in this case, the statutory violation may become moot because the Notice of Trustee Sale will have expired by its own terms, but not after the borrower is made to suffer months of dealing with the dual tracks of foreclosure and modification. It would defeat the purpose of the statute to require borrowers to carry the financial burden of obtaining the primary relief sought by the action, a preliminary injunction, the need for which would likely be moot by the time of trial.

As a result of the foregoing, the Plaintiffs’ Motion for Attorney’s Fees and Costs is GRANTED IN PART. Plaintiffs are awarded attorney’s fees in the amount of $15,785.33 against Defendants INDYMAC MORTGAGE SERVICES, FSB and ONEWEST BANK, FSB.

Dated: May 21, 2014

Honorable Mark A. Talamantes

Judge of the Superior Court Marin County

 

Superior Court of California.

Gordon D Schaber Courthouse

Sacramento County

Lucille Miller BARNETT individually and as Trustee,

v.

OCWEN LOAN SERVICING LLC.

No. 34-2013-00155929-CU-BC-GDS.

July 22, 2014.

*1 Time: 02:00:00 PM

Dept: 53

Clerk: E. Brown

Reporter/Erm:

Bailiff/Court Attendant: C. Chambers, J. Green

Case Init. Date: 12/11/2013

Case Category: Civil – Unlimited

Event Type: Hearing on Demurrer – Civil Law and Motion – Demurrer/Jop

Minute Order

David Brown, Judge.

APPEARANCES

Nature of Proceeding: Hearing on Demurrer (Ocwen Loan Servicing LLC)

TENTATIVE RULING

Defendant Ocwen Loan Servicing, LLC’s demurrer to Plaintiff Lucille Miller Barnett’s complaint was continued from April 24, 2014, to today’s date. The Court now issues the following ruling.

The demurrer was continued at Plaintiff’s request as she indicated in her original opposition that she was in the process of resolving loan modification issues with Ocwen and hoped to have the matter resolved within 90 days and if the modification was completed, she would dismiss the case. The Court indicated that new opposition and reply papers could be submitted based on the continued hearing date. Plaintiff has yet to dismiss the case. Plaintiff did, as allowed by the Court, file a new opposition.

This is a foreclosure lawsuit in which Plaintiff alleges, among other things, that defendants have not complied with a loan modification agreement Plaintiff alleges causes of action for specific performance, breach of contract, breach of the covenant of good faith and fair dealing, violations of the Homeowner’s Bill of Rights (“HOBR”) and for injunctive relief.

First and Third Causes of Action (Specific Performance and Breach of Contract)

Ocwen’s demurrer to the first and third causes of action on the basis that there is no contract between the parties is overruled.

Plaintiff alleges that Ocwen sent her a letter stating that “[a]fter all trial period payments are timely made and you have submitted all the required documents, your mortgage will be permanently modified. (Comp. ¶ 16.) Ocwen thereafter sent a letter re-stating the terms of the offer and including a Modification Agreement setting forth the terms on which her loan would be modified. (Id. ¶ 17.) Plaintiff further alleges that she fully performed all obligations set forth in Ocwen’s offer, including executing the Modification Agreement, submitting every document required and making all trial payments in a timely manner, thereby accepting Ocwen’s offer. (Id. ¶¶ 17, 18.) Plaintiff alleges that Ocwen breached the Modification Agreement when it later stated she was not eligible for a loan modification because there was “an issue with your mortgage title.” (Id. ¶ 19.)

Ocwen argues that the contract causes of action fail because there was no contract. Ocwen maintains that any modification was contingent on Plaintiff satisfying all conditions in the Modification Agreement because it was conditioned on her having clear title to the property. It reasons that her allegations show that the modification was denied because of a title issue and therefore there no contract could have been formed because all conditions precedent to formation were not satisfied. Ocwen’s argument is a factual one that is not appropriately resolved on demurrer. A hearing on a demurrer cannot be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whose truthfulness or proper interpretation are disputable. (Unruh-Haxton v. Regents of Univ. of Cal. (2008) 162 Cal.App.4th 343, 365.) Indeed, as set forth above, Plaintiff alleged that she performed all obligations contained in Ocwen’s offer that were required to obtain the Modification Agreement. That she alleged that Ocwen indicated that she did not qualify because there was a title issue does not show that there was no contract. It merely shows that Ocwen asserted that Plaintiff had not complied with the requisite conditions for a modification. Plaintiff, however, has alleged that she did. (Comp. ¶¶ 18, 19.) Allegations that she fully performed all conditions necessary to enter a Modification Agreement with Ocwen must be accepted as true for purposes of the instant demurrer. “Many federal courts have concluded a trial loan modification under HAMP constitutes a valid, enforceable contract under state law, at least at the pleading stage of litigation…if the borrower has complied with all the terms of the TPP–including making all required payments and providing all required documentation–and if the borrower’s representations on which modification is based remain true and correct the lender must offer the borrower a goof faith permanent loan modification, because the borrower has qualified under HAMP and has complied with the TPP.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 796 [citations omitted].)

*2 As a result, the demurrer to the first and third causes of action on the basis that there was no contract because Plaintiff did not satisfy all conditions precedent is overruled.

Second Cause of Action (HOBR)

As of January 1, 2013, “The California Homeowner Bill of Rights went into effect and it offers homeowners greater protection during the foreclosure process. Cal. Civ. Code § 2923.6(b) (2013). Section 2923.6(b) states “it is the intent of the legislature that the mortgage servicer offer the borrower a loan modification or work out a plan if such a modification or plan is consistent with its contractual or other authority.” The statute further provides that “if a borrower submits a complete application for a first lien loan modification … the mortgage servicer … shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending.” Cal. Civ. Code § 2923.6(c) (2013).

Ocwen’s demurrer to the second cause of action on the basis that the HOBR does not apply is overruled.

Ocwen argues that the HOBR does not apply because it did not go into effect until 2013 and Plaintiff failed to identify any conduct that took place after the HOBR was enacted. The Court disagrees. The Complaint is clear that Plaintiff did not apply for a loan modification until January 2013 and all of the conduct alleged to violate the HOBR took place after the loan application. (Compl. ¶¶ 16-24, 30-35.)

Ocwen also argues that relief under the HOBR is limited to injunctive relief where no foreclosure has yet to take place and here Plaintiff has failed to show the need for such relief. The Court rejects this argument. The HOBR itself clearly establishes that injunctive relief is available as a remedy for violations of its various provisions. (Civ. Code § 2924.12(a)(1).) Given that Plaintiff has alleged violations of the HOBR, she has necessarily shown that injunctive relief is appropriate.

Fourth Cause of Action (Breach of Implied Covenant of Good Faith and Fair Dealing)

“There is implied in every contract a covenant by each party not to do anything which will deprive the other parties thereto of the benefits of the contract.” Harm v. Frasher, (1960)181 Cal. App. 2d 405. Ocwen’s demurrer to the fourth cause of action is overruled. Ocwen argues that Plaintiff failed to allege what contract she entered into with it and what specific contractual provision was frustrated. “To establish a breach of an implied covenant of good faith and fair dealing, a plaintiff must establish the existence of a contractual obligation, along with conduct that frustrates the other party’s rights o benefit from that contract.” (McClain v. Octagon Plaza, LLC (2008) 159 Cal.App.4th 784, 798.) Here Plaintiff alleged that she entered into a Modification Agreement and that Ocwen failed to exercise good faith/fair dealing in honoring the Modification, refusing to respond to her counsel’s communications regarding the Modification. Thus, she identified the specific contract (which the Court found above was adequately pled) and alleged that conduct that frustrated her rights to receive the benefit from the contract. The Court again notes that under well recognized law, for the purpose of testing the demurrer all material and issuable facts properly pleaded must be regarded as true (Flores v. Arroyo (1961) 56 Cal.2d 492, 497; Pettitt v. Levy (1972) 28 Cal.App.3d 484, 487.)

Fifth Cause of Action (Injunctive Relief)

*3 Ocwen’s demurrer is overruled. While Ocwen points out that an injunction is a remedy and not a separate cause of action, its main attack is that “no injunction may issue to the extent the Complaint fails to state a cause of action. Here, the Complaint is devoid of facts establishing a claim for relief.” (Dem. 4:14-15.) As seen above, the Court disagrees as Plaintiff has adequately alleged causes of action for specific performance, breach of contract, breach of the implied covenant of good faith and fair dealing and violation of the HOBR.

The demurrer is overruled.

Ocwen shall file and serve its answer no later than August 1, 2014.

The notice of demurrer does not provide notice of the Court’s tentative ruling system as required by Local Rule 1.06(D). Defendant’s counsel is ordered to notify Plaintiff’s counsel immediately of the tentative ruling system and to be available at the hearing, in person or by telephone, in the event Plaintiff’s counsel appears without following the procedures set forth in Local Rule 1.06(B).

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.

COURT RULING

There being no request for oral argument, the Court affirmed the tentative ruling.

2013 WL 5202359 (Cal.Super.) (Trial Order)

Superior Court of California.

Orange County

ROBINSONN,

v.

SELECT PORTFOLIO SERVICING, INC.

No. 30-2013-00628445-CU-OR-CJC.

September 9, 2013.

*1 Time: 10:30:00 AM

Dept: C26

Case Init.Date: 02/04/2013

Case Category: Civil – Unlimited

Case Type: Other Real Property

Event Id/Document Id: 71758639

Event Type: Demurrer to Amended Complaint

Moving Party: Deutsche Bank National Trust Company, as Trustee, in Trust for Registered Holders of Long Beach Mortgage Loan Trust 2003-1, Asset-Backed Certificates, Series 2003-1, Select Portfolio Servicing, Inc.

Causal Document/Date Filed: Demurrer to Amended Complaint, 07/22/2013

Minute Order

Brian P. Ballo, from Law Office of Brian Ballo, Present for Plaintiff(s).

Eric A. Forstrom, from Albertson Law, Present for Defendant(s).

Gregory H. Lewis, Judge.

Tentative Ruling posted on the Internet.

The Court hears oral argument and confirms the tentative ruling as follows:

Motion: Demurrer to First Amended Complaint. Moving Party Defendants Select Portfolio Servicing, Inc. and Deutsche bank National Trust Company, as Trustee for Long beach Mortgage Loan trust 2003-1. Respondent Party Plaintiffs Benjamin B. Robinson, II, Margaret E. Robinson, and the Robinson Family Trust established 9-20-04.

RULING: The demurrer by defendants Select Portfolio and Deutsche Bank to the Robinson plaintiffs’ first amended complaint is overruled in part and sustained in part. OVERRULED as to plaintiffs’ third cause of action for violation of Civil Code §§ 2923.6 and 2924.12. The court cannot take judicial notice of the evidentiary exhibits submitted by defendants as Exhibits H and I. A demurrer challenges the defects appearing on the face of the pleading or from other matters properly subject to judicial notice. Blank v.(1985) 39 Cal.3d 311, 318. Based on the face of the complaint, and items subject to judicial notice, the Robinson plaintiffs have alleged sufficient facts as to a change in financial circumstances and that they submitted a new application for a loan modification to defendant Select Portfolio on or about 4-15-13, and that defendants have not denied or otherwise responded to this application for a loan modification. With an allegedly complete application, defendants have an obligation to process and either grant or deny the request for a loan modification, and if denied, to comply with Civil Code § 2923.6(f). Whether defendants Select Portfolio and Deutsche Bank will be able to pierce the pleadings by way of a motion for summary judgment and establish that plaintiffs’ April 2013 application for loan modification was not complete is not before the court at this time. SUSTAINED as to the Robinson plaintiffs first cause of action for negligent misrepresentation, second cause of action for breach of the implied covenant of good faith and fair dealing, and fifth cause of action for declaratory relief. As to plaintiffs’ first cause of action for negligent misrepresentation, plaintiffs have not alleged facts as to any negligent misrepresentation by representatives of defendant Select Portfolio and/or defendant Deutsche Bank, or facts as to any successor liability by these moving defendants for alleged misrepresentations by representatives of JP Morgan Chase Bank. See, Winner Chevrolet, Inc. 2008 WL 2693741 (E.D. Cal. 2008), and the California cases cited therein. Plaintiff is granted leave to amend to allege representations made by representatives of defendant Select Portfolio and/or defendant Deutsche Bank, or to allege facts with sufficient specificity to state a claim for successor liability by these defendants for conduct by representatives of defendant JP Morgan Chase Bank. As to plaintiffs’ second cause of action for breach of the implied covenant of good faith and fair dealing, plaintiffs have not alleged sufficient facts as to any contact that would give rise to an implied covenant at this time. McClain th v. Octagon Plaza, LLC (2008) 159 Cal.App.4 784, 799. Paragraphs 21 to 24 of plaintiffs’ first amended complaint does not state sufficient facts as to any contract between the Robinson plaintiffs and JP Morgan Chase Bank in regard to an agreement for any loan modification. Also, even assuming facts as to some contract between the Robinson plaintiffs and JP Morgan Chase for a loan modification can eventually be stated, plaintiffs have not alleged facts with sufficient specificity as to any successor liability by these defendants for any contract entered into between the Robinson plaintiffs and JP Morgan Chase Bank. Plaintiff is granted leave to amend to allege a contract entered into with defendant Select Portfolio and/or defendant Deutsche Bank, or to allege facts with sufficient specificity to state a claim for successor liability by these defendants for some contract entered into between the Robinson plaintiffs and JP Morgan Chase Bank. As to plaintiffs’ fifth cause of action for declaratory relief, plaintiff’s claims for declaratory relief are encompassed in plaintiffs’ main action so no action for declaratory relief is stated. See, California Ins. Guarantee Ass’n v. Superior Court (1991) 231 Cal.App.3d 1617, 1623 to 1624. The Robinson plaintiffs are granted conditional leave to amend their fifth cause of action for declaratory relief if they can set forth some actual controversy not already encompassed in their other causes of action.

 

Superior Court of California.

Ventura County

Robert D. BOGARTZ, et al,

v.

BANK OF AMERICA, N.A., et al.

No. 56201300445969.

May 14, 2014.

Minute Order

Armine Singh, counsel, present for Plaintiff(s) telephonically.

Sara Quinto, counsel, present for Defendant(s) telephonically.

Tari Cody, Judge.

*1 CLERK: Martha Lagana

REPORTER/ERM: None

CASE CATEGORY: Civil – Unlimited

CASE TYPE: Other Real Property

EVENT TYPE: Demurrer (CLM) to Plaintiffs’ First Amended Complaint; Memo of p&a’s in support thereof MOVING PARTY: Recontrust Company NA, Bank of America NA

CAUSAL DOCUMENT/DATE FILED: Demurrer to Plaintiffs’ First Amended Complaint; Memo of p&a’s in support thereof, 04/02/2014

Counsel have received and read the court’s written tentative ruling.

Matter submitted to the Court with argument.

The Court finds/orders:

The Court’s tentative is adopted as the Court’s ruling.

The court’s ruling is as follows:

Defendant Bank of America’s demurrer to the first amended complaint is:

– sustained without leave to amend as to breach of covenant of good faith and fair dealing (1st COA) and anticipatory breach (3rd COA): no contract was formed between the parties.

– sustained with leave to amend as to promissory estoppel (2nd COA): there are insufficient allegations of any promise made by Defendants that the loan would be modified.

– sustained with leave to amend as to Civil Code § 2937: insufficient allegations that there was any transfer of the deed of trust.

– sustained with leave to amend as to B&P § 17200 (8th COA): insufficient allegations of injury in fact suffered by Plaintiffs.

– overruled as to Civil Code § 2923.55 (5th COA): Plaintiffs plead that Defendants requested documents covered by the statute, but that they have yet to receive them.

– overruled as to Civil Code § 2923.6 (6th COA): Defendants allegedly did not provide Plaintiffs with a written determination of the loan modification application prior to recording the Notice of Trustee’s Sale in August 2013.

– Overrule as to Civil Code § 2924.12 (7th COA), based upon alleged conduct stated in the 5th and 6th causes of action.

Leave to file a second amended complaint is granted until on or before May 27, 2014.

Parties waive notice.

2013 WL 12091738 (Cal.Super.) (Trial Order)

Superior Court of California.

Central Justice Center

Orange County

Andrea E. LUCAS, et al.,

v.

MERIDIAN FORECLOSURE SERVICE, et al.

No. 30-2013-00651662-CU-OR-CJC.

December 9, 2013.

Minute Order

Thierry Patrick Colaw, Judge.

*1 CASE CATEGORY: Civil – Unlimited

CASE TYPE: Other Real Property

EVENT ID/DOCUMENT ID: 71856341

EVENT TYPE: Under Submission Ruling

DEMURRER BY DEFENDANTS DEUTSCHE BANK NATIONAL TRUST COMPANY. AS TRUSTEE OF THE INDYMAC INDX MORTGAGE LOAN TRUST 2007-AR11, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-AR11 UNDER THE POOLING AND SERVICING AGREEMENT DATED APRIL 1, 2007; ONEWEST BANK, FSB; AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC,

There are no appearances by any party.

The court, having taken the above-entitled matter under submission on 12/06/2013 and having fully considered the arguments of all parties, both written and oral, as well as the evidence presented, now rules as follows:

NOTICE OF RULING

Defendants Deutsche Bank National Trust Company, as Trustee, OneWest Bank, FSB, and Mortgage Electronic Registration Systems Inc.’s Demurrer to the First Amended Complaint is SUSTAINED in part and is OVERRULED in part, with 21 days leave to amend.

The Demurrer to the 1st cause of action (Declaratory Relief) as to all Defendants is OVERRULED.

Plaintiffs are not merely challenging the foreclosure process under Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149 and/or based on issues with the securitization of the loan and violation of the PSA. Rather, Plaintiffs allege that the loan never made it into the trust pursuant to Glaski v. Bank of America, National Association (2013) 218 Cal.App.4th 1079. (See, First Amended Complaint, at ¶¶ 41-47.) Defendants have failed to sufficiently establish that the factual allegation is insufficient as a matter of law. In addition, federal district court cases are not binding on this court. The parties should move forward with discovery to determine whether the loan was transferred to a securitized trust, when it was transferred, and which state’s trust laws apply.

Further, Defendants contend that Plaintiffs are improperly seeking to adjudicate past wrongs and not future rights. Here, the foreclosure sale has not yet occurred. Rather, the parties are in the foreclosure process. Thus, it appears that Plaintiffs are seeking to adjudicate future rights (i.e., whether Defendants can proceed with the foreclosure sale).

The Demurrer to the 2nd cause of action (Violation of Civil Code § 2924.12) as to all Defendants is OVERRULED.

Defendants contend that the wrongdoing alleged in the First Amended Complaint occurred in 2012, and therefore the Homeowner’s Bill of Rights (effective January 1, 2013) does not apply. Here, the Notice of Default attached to the First Amended Complaint reflects that the document was executed on 3/28/13 and recorded on 3/29/13. Thus, Defendants have failed to sufficiently establish as a matter of law that the revised Homeowner’s Bill of Rights does not apply.

The Demurrer to the 3rd cause of action (Negligent Misrepresentation) as against OneWest is SUSTAINED with 21-days leave to amend.

Plaintiffs have failed to plead fraud with sufficient specificity. Plaintiffs are required to plead specific facts showing how, when, where, to whom, and by what means the representations were tendered. In addition, Plaintiffs are required to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.

The Demurrer to the 4th cause of action (Fraudulent Inducement) as against OneWest is SUSTAINED with 21-days leave to amend.

*2 Plaintiffs have failed to plead fraud with the requisite specificity. Specific pleading requires facts that clearly allege every element of fraud. (Starfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) The facts alleged do not plead justifiable reliance and resulting damages with sufficient specificity.

The Demurrer to the 5th cause of action (Violation of Bus, & Prof, Code § 172001 as against OneWest and MERS is OVERRULED.

First, Plaintiffs have alleged sufficient facts showing that they have suffered an injury in fact, and therefore have standing to sue. In addition, Plaintiffs have alleged an “unlawful” business act with sufficient particularity (i.e.. the facts alleged in support of the declaratory relief and violation of Civil Code § 2924.12 causes of action are all incorporated into this cause of action).

The Demurrer to the 6th cause of action (Intentional Infliction of Emotional Distress) as against all Defendants is SUSTAINED, with 21-days leave to amend.

Plaintiffs have failed to sufficiently allege an “outrageous” conduct by Defendants that is so extreme as to exceed all bounds of that usually tolerated in a civilized community.

The Demurrer to the 7th cause of action (Quiet Title) as against Defendants is OVERRULED.

Defendants contend that Plaintiffs have failed to allege their ability and willingness to tender. Although the moving papers alleges that the property has been foreclosed on, there is no judicially noticeable document (i.e., the Trustee’s Deed Upon Sale) reflecting the same. In addition, the four-corners of the First Amended Complaint do not reflect that the trustee’s sale has taken place. Rather, Plaintiffs allege that their home is in the foreclosure process,

It is questionable whether tender is required in this case. First, this is a pre-foreclosure sale case. Second, the cases cited to by Defendants are factually distinguishable in that they are not pre non-judicial foreclosure sale cases. Third, Plaintiffs are challenging the validity of Defendants’ authority to foreclose under Glaski. The Court of Appeal in Glaski stated: “Tender is not required where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the property.” (Glaski v. Bank of America. National Association (2013) 218 Cal.App.4th 1079, 1100; see also, Lona v. Citibank, N.A, (2011) 202 Cal.App.4th 89, 112 and Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, 579.) Thus, Plaintiffs are alleging that the foreclosure sale in this case is void as a matter of law pursuant to Glaski, and that tender is therefore not required.

Defendants’ Request for Judicial Notice:

The court GRANTS judicial notice of: (1) the Master Purchasing Agreement (Exhibit 1); (2) the fact that the Office of Thrift Supervision closed Indymac Bank, F.S.B. as published on the FDIC’s website; and (3) an uncertified copy of the recorded Substitution of Trustee (Exhibit 2).

The court may take judicial notice of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Ev.C. § 452(h).) However, the court will not take judicial notice of hearsay allegations stated therein. (Herrera v. Deutsche Bank Nat. Trust Co. (2011) 196 Cal.App.4th 1366; Poseidon Development Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.)

*3 With respect to the Office of Thrift Supervision Order and Purchase and Assumption Agreement, Judicial notice of both documents may be taken pursuant to Evidence Code § 452(h), as both are matters of public record, not reasonably subject to dispute, and are capable of immediate and accurate determination. (Khast v. Washington Mutual Bank, 2010 WL 5115094 at *2 fn. 1 (S.D Cal. 2010) [“The Court takes judicial notice of the P & A Agreement between JPMorgan Chase and the FDIC, attached as Exhibit 5 to Defendants’ opposition, because this agreement is a matter of public record whose accuracy cannot reasonably be questioned.”]; Javaheri v. JPMorgan Chase Bank, N.A., 2011 WL 97684 at *2 (N.D. Cal. 2011) [“Government reports and publications, including information on the Department of the Treasury and the FDIC’s official websites are judicially noticeable”].)

The clerk shall give notice.

 

Superior Court of California.

Department: 09

Contra Costa County

Sukhdev SINGH,

v.

OCWEN LOAN SERVICING INC., et al.

No. MSC14-01771.

October 20, 2015.

Hearing On OSC Re Preliminary Injunction ( Per TRO Filed 10-02-14 by Sukhdev Singh)

5C TENTATIVE RULING: 5C

*1 Plaintiff’s Application for Preliminary Injunction is denied. (Cal. Code Civ. Proc., section 526.) The TRO is hereby dissolved.

The decision to grant or deny a preliminary injunction is committed to the discretion of the trial court after the court determines two interrelated factors: (1) the likelihood that the plaintiff will prevail on the merits at trial, and (2) the relative harms suffered by the parties, i.e., the comparative consequences of the issuance and nonissuance of the injunction. (Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286; King v. Meese (1987) 43 Cal.3d 1217, 1227.) Regardless of the relative interim harm, the moving party must show “some possibility” of prevailing on the merits. (Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454, 459.) The burden is on Plaintiff as moving party to show all elements necessary to support issuance of a preliminary injunction. (See, O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) Plaintiff has not met this burden.

HBOR

Plaintiff has failed to show a material violation of HBOR. (See, Civ Code § 2924.12(a)(1)[If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.] ) Plaintiff premises his request for the issuance of Preliminary Injunction on the allegation that the defendants purportedly violated Civil Code, Section 2923.6 by “dual tracking.” [Application, pp. 2, 5, 8; VC pars. 35 and 44.] Civil Code, Section 2923.6 bars mortgage servicers, mortgage beneficiaries and their agents from recording a notice of default, or a notice of sale while a borrower’s “complete” loan modification application is pending. (See Cal. Civ. Code § 2923.6(c).) It further provides that “an application shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” (See Id. § 2923.6(h).) In other words, the statute contemplates that the mortgage servicer may require documents from the applicant, and the application is only complete once the applicant has provided those documents. Given this legal standard, Plaintiff’s complete application was not pending when either the Notice of Default, or the Notice of Sale was recorded. The Plaintiff alleges that he resubmitted a modification packet in January 2014. Subsequently, Plaintiff received two letters asking for more documentation; one in March 2014, and one in June 2014. In July 2014, Plaintiff received a phone call from Ocwen requesting more documents. [VC ¶¶ 32, 33, 36 and 37.] Thus, the loan modification packet was not complete on May 2, 2014, the date that the Notice of Default was recorded. [RJN, Ex 4.] In August 2014, Plaintiff received another loan modification denial letter from Ocwen. [VC par. 38.]

On September 5, 2014, the Notice of Trustee’s Sale was recorded, setting a sale date of October 8, 2014. [RJN, Ex 5.] On September 15, 2014, Plaintiff submitted his third loan modification packet. [VC par 40.] Thus, no loan modification was pending on the date that the Notice of Trustee’s Sale was recorded.

*2 Defendants’ unopposed request for judicial notice is granted.

Defendants to prepare the Order.

 

Superior Court of California.

Ventura County

LEFLER,

v.

HSBC BANK USA.

No. 56-2015-00463393-CU-OR-VTA.

June 9, 2015.

Minute Order

Airene Williamson, counsel, present for Plaintiff(s) telephonically.

Counsel Stephen Britt, counsel, present for Defendant(s) telephonically.

Rebecca Susan Riley, Judge.

*1 CLERK: Ginger White

REPORTER/ERM: [none]

CASE CATEGORY: Civil – Unlimited

CASE TYPE: Other Real Property

EVENT TYPE: Demurrer (CLM)

MOVING PARTY: HSBC Bank USA National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage pass Through Certificates Series 2006 18, Wells Fargo Bank NA, Mortgage Electronic Registration Systems Inc.

CAUSAL DOCUMENT/DATE FILED: Demurrer, 04/20/2015

EVENT TYPE: Motion to Strike Complaint

MOVING PARTY: HSBC Bank USA National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage pass Through Certificates Series 2006 18, Wells Fargo Bank NA, Mortgage Electronic Registration Systems Inc.

CAUSAL DOCUMENT/DATE FILED: Motion to Strike, 04/20/2015

At At 8:56AM, court convenes in this matter with all parties present as previously indicated.

All parties submit on the Court’s tentative ruling.

The Court received, read and considered all briefs and declarations filed in this cause. The matter is submitted to the Court with argument.

The Court’s tentative is adopted as the Court’s ruling.

As to the Demurrer filed by defendant:

[start of tentative ruling]

Grant defendants’ request for judicial notice.

Sustain demurrer to first and second causes of action for fraud/negligent misrepresentation and UCL violations. Plaintiffs have not adequately alleged a misrepresentation upon which they relied to their detriment. The Court grants one final chance to amend.

Sustain demurrer to third and fourth causes of action without leave to amend. Plaintiffs’ own exhibits show that Wells Fargo complied with Civ.Code § 2923.6(f)(2) and/or any violation was not material. Plaintiffs offer no allegations that would support rescission of the loan documents. Plaintiffs failed to address these causes of actions in their opposition and the court assumes they have abandoned them.

Discussion

Demurrer is only appropriate where the grounds for objection appear on the face of the complaint or from any matter of which the court is required to or may take judicial notice. CCP § 430.30(a). For the purpose of a demurrer, the court must treat all properly pleaded facts as admitted. Blank v Kirwan (1985) 39 Cal.3d 311, 318.

The elements of fraud are: 1) a false representation, usually of fact; 2) knowledge of its falsity; 3) intent to defraud; 4) justifiable reliance upon the misrepresentation; and 5) damage resulting from that justifiable reliance. Stansfield v Starkey (1990) 220 Cal.App.3d 59, 72-73. Defendants argue that plaintiffs haven’t alleged a misrepresentation, reliance or damages.

1st Cause of Action (fraud/negligent misrepresentation)

The elements of fraud are: 1) a false representation, usually of fact; 2) knowledge of its falsity; 3) intent to defraud; 4) justifiable reliance upon the misrepresentation; and 5) damage resulting from that justifiable reliance. Stansfield v Starkey (1990) 220 Cal.App.3d 59, 72-73. Defendants argue that plaintiffs haven’t alleged a misrepresentation, reliance or damages.

Plaintiffs argue that the gist of this cause of action is that Wells Fargo “is not following HAMP guidelines and Treasury Directives which are binding upon them.” (Opp., page 5:12-13). That doesn’t constitute a fraud cause of action. Also, to the extent plaintiffs are attempting to enforce HAMP, there is no private right of action for this Gallardo v. Wells Fargo Bank NA (C.D. Cal.2010) 2010 WL 4345736.

*2 Plaintiffs argue that Wells Fargo misrepresented that the investor of the loan was HSBC Bank when, in fact, it is Citigroup, and Wells Fargo never asked Citigroup for a waiver. Assuming that to be a misrepresentation, plaintiffs argue that they relied to their detriment because they didn’t appeal the decision and were only allowed one HAMP request. This is not sufficient to support plaintiffs’ claim of detrimental reliance. Plaintiffs do not allege this caused them any damage because they do not, and cannot, allege their loan would have been modified absent the “misrepresentation.”

2nd Cause of Action (UCL violations)

This is based on the purported “fraud, deceit and negligence” in the first cause of action. It alleges that “defendants” obtained mortgage payment money by false pretenses. Because the fraud cause of action is not adequately plead, plaintiffs have not alleged any unfair, unlawful or fraudulent activity. Also, they lack standing because they haven’t alleged they lost money or property as a result of defendants’ conduct.

3rd Cause of Action (violation of Civ.Code § 2923.6)

Plaintiffs allege that Wells Fargo failed to provide a specific reason for the investor disallowance of the loan modification in violation of Civ.Code § 2923.6(f)(1). (¶ 69).

Following the denial of a first lien loan modification application, the mortgage servicer shall send a written notice to the borrower identifying the reasons for denial, including the following: If the denial was based on investor disallowance, the specific reasons for the investor disallowance. Civ.Code § 2923.6(f)(2), not (1).

In supporting their allegations, plaintiffs point to Ex. G to the complaint. That is a letter dated 6/25/13, in which Wells Fargo indicated that plaintiffs did not meet the requirements of HAMP because “we do not have the contractual authority to modify your loan under HAMP because of limitations in our servicing agreement. Therefore, the investor who owns your mortgage has declined the request to modify your mortgage.”

Defendants point to Ex. F to the complaint. That is a letter also dated 6/25/13, in which Wells Fargo states that plaintiffs do not meet the requirements of “the program” as “based on the documentation you provided, your current financial situation shows that you have the ability to make your mortgage payment.”

Both these documents provide a specific reason for disallowance of the loan modification. The letter that cites investor disapproval even cites the specific reason for that: Wells Fargo doesn’t have the contractual authority under the servicing agreement.

Moreover, while a borrower may seek an injunction for violation of Civ.Code § 2923.6 pursuant to Civ.Code § 2924.12, the violation must be material.The above letters do not constitute a material violation of the requirements of Civ.Code § 2923.6(f)(2). It didn’t prevent plaintiffs from appealing the decision.

Plaintiffs do not address this cause of action or defendants’ arguments in the opposition.

4th Cause of Action (rescission):

Plaintiffs haven’t alleged that anything was wrong with the loan origination. Plaintiffs’ vague references to “the securitization process” at ¶¶ 37-46, won’t support this theory. The purported separation of the note from the deed of trust is not fatal to the right of the beneficiary or its agent to initiate foreclosure. “California’s statutory nonjudicial foreclosure scheme (§§ 2924–2924k) does not require that the foreclosing party have a beneficial interest in or physical possession of the note. Section 2924, subdivision (a)(1) specifically permits the ‘trustee, mortgagee, or beneficiary, or any of their authorized agents’ to institute foreclosure by recording a notice of default.” Shuster v BAC Home Loans Servicing, LP (2012) 211 Cal.App.4th 505, 511-512 (citations omitted).

*3 As with the third cause of action, plaintiffs do not address this cause of action or defendants’ arguments in the opposition

[end of tentative ruling]

Plaintiff may file amended complaint no later than 7/23/15.

As to the Motion to Strike filed by defendants:

The court’s tentative ruling is to:

Find the motion to strike to be moot based upon the concurrentl ruling on demurrer.

[end of tentative ruling]

2016 WL 4761515 (Cal.Super.) (Trial Order)

Superior Court of California.

Riverside County

Fernando HERNANDEZ, et al,

v.

CALIBER HOME LOANS, INC., et al.

No. MCC1400872.

February 10, 2016.

Hearing Re: Motion for Summary Judgment on 2nd Amended Complaint of Fernando Hernandez by Caliber Home Loans, Inc

Angel M. Bermudez, Judge.

*1 Date                Time      Department

02/10/2016         8.30 AM               DEPT S302

HONORABLE JUDGE ANGEL M. BERMUDEZ, PRESIDING

CLERK: A. BEHRMANN

COURT REPORTER: J. FOGLEMAN

FERNANDO HERNANDEZ, ESTHER HERNANDEZ REPRESENTED BY COMMUNITY LAW CENTER – ROBERT SPELGER PRESENT.

CALIBER HOME LOANS,INC REPRESENTED BY PERKINS COIE LLP – OFUNNE N. EDOZIEM PRESENT.

AT 09:02, THE FOLLOWING PROCEEDINGS WERE HELD:

COURT HAS READ AND CONSIDERED DOCUMENTS RELATING TO THIS MATTER.

COURTS TENTATIVE HAS BEEN PUBLISHED.

THERE IS REQUEST FOR ORAL ARGUMENT.

COUNSEL ARGUE.

THE COURTS TENTATIVE BECOMES THE FINAL RULING.

THE MOTION FOR SUMMARY JUDGMENT IS DENIED.

THE MOTION FOR SUMMARY ADJUDICATION OF THE FIRST CAUSE OF ACTION IS DENIED.

THE MOTION FOR SUMMARY ADJUDICATION OF THE SECOND CAUSE OF ACTION IS GRANTED.

THIS MATTER ARISES FROM A MORTGAGE LOAN SCENARIO WITH ACTIONS BASED ON DEFAULT. CHASE WAS THE

ORIGINAL LENDER TO A HOME PURCHASE BY HERNANDEZ. IN 2010, HERNANDEZ MODIFIED THE LOAN WITH CHASE

TAKING OVER $100,000.00 FROM THE HOMES EQUITY. HERNANDEZ TRIED TO MODIFY WITH CHASE TO

NO

AVAIL. IN 2013, CALIBER BECAME THE LOAN SERVICER. CALIBER EXTENDED AN OFFER TO

HERNANDEZ TO DO A TRIAL PERIOD PLAN. ONE MONTH LATER, CALIBER WITHDREW THAT OFFER IN WRITING.

NO PAYMENTS APPEAR TO HAVE BEEN MADE DURING THIS MONTH. CALIBER THEN PROCEEDED WITH FORECLOSURE

FILING A NOD.

JUDICIAL NOTICE

THE COURT TOOK JUDICIAL NOTICE OF THE DOCUMENTS (A-H) REQUESTED BY THE MOVING PARTY FOUND ON

PAGE 2 OF THE REQUEST FOR JUDICIAL NOTICE FILED ON NOVEMBER 20, 2015.

OBJECTIONS

PURSUANT TO CCP SECTION 437C(Q), THE ONLY RELEVANT OBJECTION WHICH IS RULED ON IS PLAINTIFFS OBJECTION 16, THIS OBJECTION IS SUSTAINED, LACKING FOUNDATION. FIRST COA

HBOR PROVIDES THAT MORTGAGE SERVICERS PROVIDE CERTAIN INFORMATION THROUGH CONTACT BEFORE

RECORDING A NOD. CIV CODE SECTION 2923.55 PROVIDES FOR INJUNCTIVE RELIEF (SECTION 2924.12(A)(1)) AS WELL AS “ACTUAL ECONOMIC DAMAGES.” (SECTION 2924.12(A)(2)).

THE RELEVANT NOD WAS RECORDED ON OCTOBER 15, 2013, WHICH PROVIDES AS AN ATTACHMENT A

“DECLARATION OF COMPLIANCE. (DOC)” THE DOC DOES NOT ADD ANYTHING IN TERMS OF INFORMATION OF

WHAT WAS PROVIDED; JUST THAT THERE WAS COMPLIANCE. SO WAS THE INFORMATION PROVIDED

BEFORE OR AFTER THE NOD WAS RECORDED? HERE IS THE FACTUAL RUB FOR THE TRIER OF FACT.

FURTHER, ASSUMING THAT THE DOC DID PROVIDE INFORMATION REQUIRED UNDER HBOR, HERNANDEZ

ASSERTS THAT HE WAS NOT CONTACTED.

HOWEVER, DURING THE PENDENCY OF THE LITIGATION, ANY NOTICE DEFICIENCIES WERE CURED. HERNANDEZ

WAS GIVEN AN OPPORTUNITY TO SUBMIT A LOAN MODIFICATION (DONE ON SEPTEMBER 29, 2014)

APPLICATION WHICH WAS DENIED. ALTHOUGH INJUNCTIVE RELIEF IS NO LONGER AVAILABLE, THERE

MAY BE SOME “ACTUAL ECONOMIC DAMAGES” AVAILABLE FOR THE AFOREMENTIONED DOC. CALIBER HAS NOT

SHOWN BY THIS MOTION THAT NO ACTUAL ECONOMIC DAMAGES WHATSOEVER RESULTED FROM THE DOC.

THIS COA FAILS AT THIS JUNCTURE BASED ON THE CLEAR RECORD THAT DURING THE PENDENCY OF THIS

LITIGATION CALIBER DID CONSIDER A LOAN MODIFICATION APPLICATION SUBMITTED BY HERNANDEZ.

EVEN ASSUMING ARGUENDO THAT THERE WAS A LEGAL SHORTCOMING UNDER HBOR BY THE DOC, IT HAS BEEN

*2 REMEDIED. THEREFORE, A COA UNDER CIV. CODE SECTION 2924.19 MUST FAIL.

COURT AND COUNSEL CONFER REGARDING MEDIATION

CASE ORDERED TO MEDIATION (ADR – TITLE 3). MEDIATION TO BE COMPLETED BY 05/10/16.

STAT COUNT: MEDIATION REFERRAL.

NOTICE TO MEDIATION CLERK GENERATED. (SOUTHWEST)

NOTICE OF RULING TO BE PREPARED, SERVED AND SUBMITTED BY PREVAILING PARTY.

 

Superior Court of California.

Ventura

Ventura County

Charles W. BARTLETT, et al.,

v.

WELLS FARGO BANK, N.A., et al.

No. 56201300439566.

January 16, 2014.

Minute Order

Tari Cody, Judge.

*1 DEPT: 21

CLERK: Christine Schaffels

CASE CATEGORY: Civil – Unlimited

CASE TYPE: Other Real Property

EVENT TYPE: Ruling on Submitted Matter

The Court, having previously taken the Joinder (1/7/14) under submission, now rules as follows:

Grant NDEX West, LLC’s request of joinder in Demurrer of Defendant’s Wells Fargo, N.A.

The Court, having previously taken the Demurrer (1/7/14) under submission, now rules as follows:

RULING

Grant judicial notice of the recorded documents (Ex A-F). Ev. Code § 452(c). Grant judicial notice of file stamped court document (Ex I). (Ev. Code § 452(d).) Deny judicial notice of certificate of corporate existence, OTS letter, Comptroller of Currency letter, and “Making Home Affordable” guidelines (Ex. F, G, H, J).

Defendant Wells Fargo Bank demurrer to the complaint is:

Overruled as to first cause of action for violation of CC § 2923.6(g): Plaintiffs have alleged that they notified Defendant Wells Fargo of their changed financial conditions in 2013.

Overruled as to the second cause of action for violation of B&P § 17200: Plaintiffs have alleged excessive fees unfairly assessed to them as part of the foreclosure process. (Complaint at ¶82). (Sullivan v. Washington Mut. Bank, FA (N.D. Cal., Oct. 23, 2009) 2009 WL 3458300.)

Sustained without leave to amend as to the third cause of action for negligence: the relationship between Wells Fargo and Plaintiffs was as lender/borrower in which there was no duty of care imposed upon Wells Fargo.

Sustained without leave to the demand for accounting: considering the admitted indebtedness on the mortgage here, Plaintiffs are not owed money.

ANALYSIS

First Cause of Action for Violation of CC 2923.6

Although the CC 2923.6 never states affirmatively that a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent (hereafter referred to collectively as “lender”) has an obligation to evaluate a loan modification application, that obligation can be implied from language in the statute. For example, under CC 2923.6(c) the lender is prohibited from recording a notice of default until after a loan modification application has been denied, etc. Presumably the lender must evaluate the application before it can be denied. Also, subdivision (g) implies the obligation to evaluate exists when it states circumstances under which that the mortgage servicer shall not be obligated to evaluate applications.

Subdivision (g) requires a lender to evaluate a loan modification application even after already having done so if “there has been a material change in the borrower’s financial circumstances since the date of the borrower’s previous application and that change is documented by the borrower and submitted to the mortgage servicer.”

In this case, Plaintiffs allege after they refused a modification offered in mid-2013, in July 2013 they notified Defendant of their continued interest in a loan modification and they documented a material change in their financial circumstances in the form of a letter from their attorney. Plaintiffs allege Defendant refused to evaluate their application in violation of subdivision (g) of CC 2923.6. The statute does not indicate what is required to document the change. Plaintiffs sent a letter explaining the changes. For the purposes of pleading that is sufficient.

*2 Defendant argues that because Plaintiffs do not allege Defendant recorded the notice of default or notice of trustee’s sale in 2013 there can be no violation of CC 2923.6. However, as stated, subdivision (g) appears to create an independent obligation in Defendant to evaluate an application after a material change in the Plaintiffs’ financial circumstances, regardless whether anything has been recorded and regardless whether a prior modification was rejected by Plaintiffs.

Second Cause of Action for Violation of B&P 17200

Plaintiffs allege they were charged improper, fraudulent fees because the fees were unreasonable/unnecessary and because Defendant improperly increased the fees. Plaintiffs also allege that had they known the true nature of these fees they “would have disputed the charges, not paid them.” (¶85.) The alleged violation of CC 3923.6(g) is an unlawful practice that supports this cause of action and the allegation that the fees were paid is sufficient to allege injury.

Third Cause of Action for Negligence

No facts alleged demonstrate Defendant acted other than as a lender/mortgage servicer. A loan modification falls squarely within the scope of a lending institutions conventional role as a lender. (Lueras v. BAC Home Loans Servicing (2013) 221 Cal.App.4th 49, 67.)

Fourth Cause of Action for Accounting

Plaintiffs have not alleged they are due a balance requiring an accounting. (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) There is no relationship between Plaintiffs and Defendant that supports this claim.

HOLA

With respect to Defendant’s contention the claims are preempted by HOLA, the court finds otherwise. The first and second causes of action allege claims arising out of real property process of foreclosure, which are not preempted. (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 201-02.) There is no allegation or evidence that a trustee’s deed upon sale has been recorded. Therefore, even if the authorization of damages under CC 2924.12(b) would impede on HOLA regulations, the relief available to Plaintiff in this case –injunction under 2924.12(a) — does not.

The Clerk is directed to give notice.

 

Superior Court of California.

Orange County

PARISI,

v.

U.S. BANK NATIONAL ASSOCIATION, as Trustee for SG Mortgage Securities Asset Backed Certificates, Series 2006-FRE2.

No. 30-2013-00624147-CU-FR-CJC.

June 25, 2015.

Trial Order

James J. Di Cesare, Judge.

*1 REPORTER/ERM: None

BAILIFF/COURT ATTENDANT: Loretta Schwary

CASE CATEGORY: Civil – Unlimited

CASE TYPE: Fraud

EVENT ID/DOCUMENT ID: 72185927

EVENT TYPE: Motion for Summary Judgment and/or Adjudication

MOVING PARTY: U.S. Bank National Association, as Trustee for SG Mortgage Securities Asset Backed Certificates, Series 2006-FRE2, Wells Fargo Bank, N.A. Successor by Merger to Wells Fargo Home Mortgage, Inc.

CAUSAL DOCUMENT/DATE FILED: Motion for Summary Judgment/Adjudication, 10/17/2014

APPEARANCES

There are no appearances by any party.

Tentative Ruling posted on the Internet and in the public hallway.

The Court confirms the tentative ruling as follows:

1.MOTON FOR SUMMARY JUDGMENT/AND OR/ADJUDICATION

Regarding plaintiff’s objections to the Mulder Declaration, those objections are:

  • Sustained as to Nos. 20, 35, 37, 45, 46, 47, 48
  • Overruled as to Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36, 38, 39, 40, 41, 42, 43, 44,

Regarding plaintiff’s objections to the Chen Declaration, Objection No. 1 is Overruled but Objection No. 2 is Sustained.

Regarding plaintiff’s objections to the Wilson Declaration, Objection No. 1 is Overruled but Objection Nos. 2-3 are Sustained.

Regarding plaintiff’s objection to the Dailey Declaration, that objection is Sustained.

Regarding plaintiff’s objections to defendants’ request for Judicial Notice, those objections are Overruled. This Court will take judicial notice of the existence, and legal import, of the various county recordings as they relied upon by plaintiff and not reasonably disputable.

Regarding defendants’ objection to the Marlowe Declaration, that objection is Sustained. The expert can only opine as to what the term “residence” means in IRS § 121 (a) for purposes of capital gains taxation -which is irrelevant to the issues herein. That provision provides that “gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.” Civil Code § 2924.15 includes the key phrase “owner-occupied” which does not appear in IRS § 121. Moreover, since plaintiff has not resided in the subject property for over five years, he does not qualify for the exclusion were he to sell the property today.

Regarding defendants’ objections to the Parisi Declaration, those objections are:

  • Sustained as to Nos 6, 7, 8
  • Overruled as to Nos 1, 2, 3, 4, 5

Regarding defendants’ objections to the Lewis Declaration, those objections are Sustained.

Regarding defendants’ objection to the Supplemental Declaration of Joseph Parisi, those objections are Overruled.

Regarding defendants’ objections to the Supplemental Declaration of Attorney Brett D. Lewis, those objections are Sustained.

Regarding defendants’ objection to the late-filed, and statutorily unauthorized supplemental statement of facts, that objection is Sustained.

*2 Plaintiff does not Qualify For HOBR Safeguards?

Defendants contend that summary judgment is proper because plaintiff does not have standing to assert the various HOBR violations making up the First Cause of Action. The legal support for that contention stems from Civil Code § 2924.15(a):

“Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply only to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. For these purposes, “owner-occupied” means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes.” [Emphasis added.]

Plaintiff does not reside at the subject Laguna Beach property, and has not lived there since August of 2010. UMF 3, 27-32. Thus, if the property is not “owner-occupied” defendants have no obligation to comport with HOBR requirements. Without such a duty, the entire First Cause of Action fails.

Although no state court has yet published an opinion on what qualifies as the “principal residence” of the borrower, several federal district courts have touched upon the issue.

In Masson v. Selene Fin. LP, WL271256 (N.D. Cal. 2013), the district court dismissed plaintiff’s HOBR claim because she conceded she did not live at the subject property, and that it was a rental. The court made the following pertinent observations:

“the Property clearly would not be owner-occupied if it was rented to another. In her opposition brief, Plaintiff confirms that she does not currently live at the Property. However, she contends that it continues to serve as her ‘principal residence’ because she ‘lived in the property for a considerable amount of time and has retained it as a primary residence for mail contact and office residence, to date.’ But the Property could hardly be considered owner-occupied or a principal residence if it is used only for business and mail-forwarding purposes.” Id. at *2-3.

In Gerard v. Wells Fargo Bank, N.A., WL351926 (E.D. Cal. 2015), the district court dismissed plaintiff’s HOBR claim because she conceded she did not live at the subject property, and that it was a rental. Id. at *2.

In Kouretas v. Nationstar Mortgage Holdings, Inc., WL6839099 (E.D. Cal. 2013), the district court denied plaintiff’s application for a TRO, concluding that plaintiff had “no likelihood of success on the merits” of his dual-tracking HOBR claim because he “does utilize a different address from the subject property of this suit as his primary residence.” Id. at *3.

In Haffeman v. Wells Fargo Bank, N.A., WL827034 (S.D. Cal. 2012), the district court denied plaintiff’s application for a TRO, concluding in part that § 2923.5 did not apply since the subject property was plaintiff’s “second home” and not her “principal” residence at the time. Id. at *3.

In Heflebower v. U.S. Bank Nat. Association, WL3864214 (E.D. Cal. 2013, the district court denied plaintiff’s application for a TRO, concluding in part that § 2923.5 did not apply since there was evidence that plaintiff owed several other properties, permitting the inference he did not live at the subject property. Id. at *17-18.

*3 In Finuliar v. BAC Home Loans Servicing, L.P., WL4405659 (N.D. Cal. 2011), the district court dismissed plaintiff’s § 2923.5 claim because she did not actually live at the subject property at the time foreclosure steps were initiated. Id. at *12.

In Mulato v. Wells Fargo Bank, N.A., — F.Supp.3d — (N.D. Cal. 2014), the defendant sought to have the HOBR claims dismissed at the pleading stage due to inconsistent allegations about when the plaintiff actually resided in the subject property. Although the court found that the issue was ripe with factual issues not amenable to resolution at the pleading stage, the court observed that the issue turns on whether plaintiff resided, or at least spent an appreciable amount of time, at the subject property. See WL7243096 at *18-19).

It appears that a plaintiff must actually live in the encumbered property in order to demand compliance with the various HOBR remedial requirements.

Although not related to the HOBR, the opinion in In re Phleps (2001) 93 Cal.App.4th 451, is quite illuminating on the topic. In that case, petitioner purchased property which was already in foreclosure, and was subsequently convicted in criminal court for violating distressed homeowner protection statutes Civil Code §§ 1695.6 and 2945.4. Petitioner sought habeas corpus relief, alleging that his decision to plead guilty was the result of ineffective assistance of counsel because petitioner could not violate the aforementioned statutes since the subject property was not “owner occupied.” The Court of Appeal agreed, and granted relief from the felony convictions. Although the evidence was undisputed that the homeowner no longer lived at the property when the challenged transaction took place, the Attorney General argued the statutes were violated if the property was “owner occupied” and the “principal residence” of the homeowner at any time. The Court disagreed, providing the following illuminating observations:

“prohibitions of the chapter do not apply if the owner of the premises does not occupy it when a transaction otherwise governed by the statutes occurs … we can ascertain no reason why the Legislature would have wished to protect the nonresident landlord of a single-family residence … there would be no need for statutory protection for a property owner who had moved out years ago and was, perhaps, currently using the house to provide rental income. Thus, if we do not recognize the restriction of the statutory operation to the situation in which the owner lives in the residence when the offense occurs, it is impossible to limit it so that it does not apply in situations clearly not contemplated by the Legislature … an owner who has moved out presumably feels less stress and pressure, and is therefore less likely to enter into a disadvantageous deal in the hope of staving off foreclosure. Thus, the Legislature could rationally have chosen to extend the statutory protections only to those owners still attempting to remain in their homes.”

The concept of owner-occupied is also found in homestead exceptions, and there the Legislature made clear that an owner-occupied principal residence “does not extend to property that is rented, vacant, under construction on the lien date, or that is a vacation or secondary home of the owner or owners.” Rev. & Tax. Code § 218(b).

*4 Common sense and the policy behind § 2924.15 support defendants’ interpretation that in order to hold refuge under the HOBR protections you have to actually live in the encumbered/distressed property which is the subject of possible foreclosure. Although the purpose behind HOBR is broadly described as “to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options” (Civil Code § 2923.4), amendments to the statutory scheme suggest a shift toward full-time residency. Prior to 2013, “owner-occupied” and “principal residence” were defined by what the borrower “indicated to the lender in loan documents” (Civil Code § 2923.5(i)), and federal district courts did just that – decide the issue based on what was indicated on the DOT. However, circumstances between loan origination and actual default often change. In 2013, the definition of “owner-occupied” was removed from § 2923.5, placed in a new section (§ 2924.15), and slightly tweaked by taking out reference to the loan documents. Why was that provision carved out of § 2923.5, and re-worded? The Legislative history is of little assistance:

“the dual track and SPOC provisions apply only to first lien loan modifications. This restriction is consistent with the national mortgage settlement. Second, the dual track and SPOC provisions apply only to mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. The amendments specify that ‘owner-occupied’ means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes. This restriction to owner-occupied residences is on the whole already contained in existing law, Civil Code Section 2923.5, which was added by SB 1137.” CA Bill Analysis, Senate Floor, 06/27/12.

As a practical matter, since courts are no longer directed to look at the DOT, it must be that courts are to look at the realities of ownership. The terms “occupied” and “principal” must mean actually living in the property with some regularly, lest they mean nothing at all. This is precisely what every federal district court decision cited above did which was look to the realities. It is also what the Court in Phelps did. Here, plaintiff readily concedes he does not live there at all. The fact that plaintiff perceives the subject property as his “home” because his children were born there and it is the only property in which he holds a residual beneficial interest in is of little consequence. There is no indication that the HOBR was ever intended to assist landlords improve the profit margin of their rentals.

Plaintiff has not shown any actionable violation of Civil Code §§ 2923.7 or 2924.10.

On 01/14/13, defendant Wells Fargo designated Angela Allen as plaintiff’s single point of contract. UMF 20. That takes care of any § 2923.7 claim.

Plaintiff alleges at TAC ¶24 that defendants failed to comply with Civil Code § 2924.10 after receiving his “complete” loan modification application. Plaintiff has confused two distinct statutory requirements. Pursuant to § 2924.10(a), upon submission of “a complete first lien modification application or any document in connection with a first lien modification application, the mortgage servicer shall provide written acknowledgment of the receipt of the documentation within five business days of receipt.” [Emphasis added]. The moment a borrower submits anything in conjunction with a loan modification application, § 2924.10 kicks in and imposes upon the servicer a duty to notify the borrower in writing of applicable deadlines and deficiencies.

On 01/02/13, plaintiff sent to Wells Fargo by facsimile an unverified and unsigned financial “worksheet” with an invoice from his company and a “hardship” letter indicating that his child had medical expenses and commission sales were down for his company. UMF 14-15.

On 01/14/13, Wells Fargo provided a written response, acknowledging receipt of the materials but noting that they would need additional documents to review any loan modification application, to wit: an affidavit, completed forms, tax return, annual P&L statement, and two months of bank statements. Plaintiff was provided a fax number for quick service, and a single point of contact (Angela Allen). UMF 20.

*5 Giving defendant 1-2 days to review plaintiff’s materials, defendant had until 01/11/13 to send out a written response. Although there is an indication of a telephone call between Wells Fargo and plaintiff’s counsel on 01/11/13, the statute specifically requires a written response. Thus, a technical violation of § 2924.10(a) occurred. See Penermon v. Wells Fargo Bank, N.A., 47 F.Supp.3d 982, 1000 (N.D. Cal. 2014). However, that violation was cured within three business days, and plaintiff has shown no prejudice or harm resulting from the brief delay. See Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94; in accord, Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1153 (N.D. Cal. 2013). Moreover, plaintiff only seeks injunctive relief associated with this violation (see TAC ¶28) and injunctive relief does not lie for a previously-cured wrong absent clear evidence the same wrong is likely to recur. See Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1266; Phipps v. Saddleback Valley Unified School District (1988) 204 Cal.App.3d 1110, 1118. Lastly, the violation was not sufficiently “material” to warrant relief. Civil Code § 2924.12(a)(1).

Therefore, when plaintiff filed suit on 01/15/13 claiming a violation of § 2924.10, that claim was factually meritless as was plaintiff’s claim that Wells Fargo failed to assign a single point of contact. However, plaintiff contends that he was entitled to a hold on all foreclosure proceedings by virtue of the 01/02/13 submission because defendant’s 01/14/13 letter did not include any deadlines. This is where the parties confuse § 2924.10 with § 2923.6.

Pursuant to § 2924.10(a)(2), Wells Fargo was to have referenced in the 01/14/13 letter “any deadlines, including deadlines to submit missing documentation, that would affect the processing of a first lien loan modification application.” Everyone can agree that the letter, authored by Latasha Shaw, did not establish any deadline for plaintiff to supplement his 01/02/13 submission. Thus, the door remained open indefinitely. However, defendant’s “open door” is not the same as a “halt” on foreclosure.

Pursuant to § 2923.6, there is a hold on foreclosure proceedings the moment “a borrower submits a complete application for a first lien loan modification” (emphasis added) – and that hold lasts until the borrower rejects an offer, defaults on a modification plan, runs out of time to appeal a denial, or 15 days after an unsuccessful appeal. Civil Code § 2923.6(c). An application for a loan modification “shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” § 2923.6(h). Making this determination therefore requires evaluation of the documents required by the mortgage servicer and the documents actually provided by the mortgagor. Mendonca v. Caliber Home Loans, Inc., WL1566847 at*7 (C.D. Cal. 2015). Since defendant did not specify a time frame, the law inserts a reasonable period of time for compliance. Civil Code § 1657; in accord, In re Conservatorship and Estate of Buchenau (2011) 196 Cal.App.4th 1031, 1039. Plaintiff readily admits that he offered nothing in response to the 01/14/13 letter until 05/21/15 – which is more than two years later, and clearly unreasonable. See Valentino v. Select Portfolio Servicing, Inc., WL1906122 at *4-5 (N.D. Cal. 2015). The submission which at the time was a mere two weeks before the original hearing date on this motion smacks at something other than a genuine desire to stay in one’s home. Besides, for purposes of the present motion, only the allegations contained in the operative pleading can be considered, and based on those plaintiff was never entitled to a § 2923.6 hold because his only submission (01/02/13) was as a matter of law incomplete. See Stokes v. CitiMortgage, Inc., WL4359193 at *7 (C.D. Cal. 2014); in accord, Mackensen v. Nationstar Mortgage LLC, WL1938729 at *5 (N.D. Cal. 2015) [“completeness of a loan modification application should be considered at the time the notice of trustee sale is recorded”].

*6 Defendants have met their burden of negating essential elements necessary for plaintiff to prove a violation of any HOBR requirement because (1) the subject property was not owner-occupied, (2) defendants did assign a single point of contact, (3) defendant’s brief delay in acknowledging plaintiff’s 01/02/13 submission was immaterial and immediately cured, and (4) plaintiff never had a “complete” application on file until 05/21/15, and there are no allegations in the TAC relating to how defendants handled the 05/21/15 submission. Plaintiff has failed to show any triable issue of fact. Thus, defendants are entitled to summary judgment on the single cause of action alleged against them. However, to be clear, this does not exonerate or immunize them for any potential HOBR violations after plaintiff’s 05/21/15 submission. In other words, this Court makes no finding as to whether the 05/21/15 is a “complete” application or if it is to be treated as an original application or a subsequent application subject to the “material change” rule (Civil Code § 2923.6(g), or if plaintiff has indeed shown a “material change” after moving back into the property. This Court only concludes that on the allegations set forth in the TAC, which form the outer measure of materiality here, defendants are entitled to judgment.

Motion GRANTED.

 

Superior Court of California.

Orange County

Joseph PARISI, Plaintiff,

v.

US BANK NATIONAL ASSOCIATION, as Trustee for SG Mortgage Securities Asset Backed Certificates, Series, 2006-FRE2; Fremont Investment & Loan; Cal-Western Reconveyance Corporation; Wells Fargo Home Mortgage d/b/a/ America’s Servicing Company is a division of Wells Fargo Bank, NA; and Does 1-50, inclusive, Defendants.

No. 30-2013-00624147-CU-FR-CJC.

September 10, 2015.

Amended Judgment in Favor of Wells Fargo and US Bank as Trustee

Jeffrey S. Gerardo #146508, Steven M. Dailey #163857, Kutak Rock LLP, 5 Park Plaza, Suite 1500, Irvine, CA 92614-8595, Telephone: (949) 417-0999, Facsimile: (949) 417-5394, Email: jeffrey.gerardo@kutakrock.com, Email: steven.dailey@kutakrock.com, for defendants, US Bank National Association, as Trustee for SG Mortgage Securities Asset Backed Certificates, Series 2006-FRE2 [erroneously named as “US Bank National Association, as Trustee for SG Mortgage Securities Asset Backed Certificates, Series 2006-FRE” and Doe Defendant No. 8 “U.S. Bank National Association”] and Wells Fargo Bank, N.A. Successor by Merger to Wells Fargo Home Mortgage, Inc. dba America’s Servicing Company [erroneously named as “Wells Fargo Home Mortgage d/b/a/ America’s Servicing Company is a division of Wells Fargo Bank, N.A.”].

James J. Di Cesare, Judge.

*1 On June 25, 2015, the Court granted US BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR SG MORTGAGE SECURITIES ASSET BACKED CERTIFICATES, SERIES 2006-FRE2’s and WELLS FARGO BANK, N.A. SUCCESSOR BY MERGER TO WELLS FARGO HOME MORTGAGE, INC. DBA AMERICA’S SERVICING COMPANY’S [“Lender Defendants”’] Motion for Summary Judgment The Court ruled as follows:

MOTON FOR SUMMARY JUDGMENT/AND OR/ADJUDICATION

Regarding plaintiffs objections to the Mulder Declaration, those objections are:

  • Sustained as to Nos. 20, 35, 37, 45, 46, 47, 48
  • Overruled as to Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36, 38, 39, 40, 41, 42, 43, 44,

Regarding plaintiff’s objections to the Chen Declaration, Objection No. 1 is Overruled but Objection No. 2 is Sustained.

Regarding plaintiffs objections to the Wilson Declaration, Objection No. 1 is Overruled but Objection Nos. 2-3 are Sustained.

Regarding plaintiffs objection to the Dailey Declaration, that objection is Sustained.

Regarding plaintiffs objections to defendants’ request for Judicial Notice, those objections are Overruled. This Court will take judicial notice of the existence, and legal import, of the various county recordings as they relied upon by plaintiff and not reasonably disputable.

Regarding defendants’ objection to the Marlowe Declaration, that objection is Sustained. The expert can only opine as to what the term “residence” means in IRS § 121(a) for purposes of capital gains taxation – which is irrelevant to the issues herein. That provision provides that “gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.” Civil Code § 2924.15 includes the key phrase “owner-occupied” which does not appear in IRS § 121. Moreover, since plaintiff has not resided in the subject property for over five years, he does not qualify for the exclusion were he to sell the property today.

Regarding defendants’ objections to the Parisi Declaration, those objections are:

  • Sustained as to Nos 6, 7, 8
  • Overruled as to Nos 1, 2, 3, 4, 5

Regarding defendants’ objections to the Lewis Declaration, those objections are Sustained

Regarding defendants’ objection to the Supplemental Declaration of Joseph Parisi, those objections are Overruled.

Regarding defendants’ objections to the Supplemental Declaration of Attorney Brett D. Lewis, those objections are Sustained.

Regarding defendants’ objection to the late-filed, and statutorily unauthorized supplemental statement of facts, that objection is Sustained. Plaintiff does not Qualify For HOBR Safeguards?

Defendants contend that summary judgment is proper because plaintiff does not have standing to assert the various HOBR violations makingup the First Cause of Action. The legal support for that contention stems from Civil Code § 2924.15(a):

*2 “Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply only to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. For these purposes, “owner-occupied” means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes.” [Emphasis added.]

Plaintiff does not reside at the subject Laguna Beach property, and has not lived there since August of 2010. UMF 3, 27-32. Thus, if the property is not “owner-occupied” defendants have no obligation to comport with HOBR requirements. Without such a duty, the entire First Cause of Action fails.

Although no state court has yet published an opinion on what qualifies as the “principal residence” of the borrower, several federal district courts have touched upon the issue.

In Masson v. Selene Fin. LP, WL271256 (N.D. Cal. 2013), the district court dismissed plaintiff’s HOBR claim because she conceded she did not live at the subject property, and that it was a rental. The court made the following pertinent observations:

“the Property clearly would not be owner-occupied if it was rented to another. In her opposition brief, Plaintiff confirms that she does not currently live at the Property. However, she contends that it continues to serve as her ‘principal residence’ because she ‘lived in the property for a considerable amount of time and has retained it as a primary residence for mail contact and office residence, to date.’ But the Property could hardly be considered owner-occupied or a principal residence if it is used only for business and mail-forwarding purposes.” Id. at *2-3.

In Gerard v. Wells Fargo Bank, N.A, WL351926 (E.D. Cal. 2015), the district court dismissed plaintiff’s HOBR claim because she conceded she did not live at the subject property, and that it was a rental. Id. at *2.

In Kouretas v. Nationstar Mortgage Holdings, Inc., WL6839099 (E.D. Cal. 2013), the district court denied plaintiff’s application for a TRO, concluding that plaintiff had “no likelihood of success on the merits” of his dual-tracking HOBR claim because he “does utilize a different address from the subject property of this suit as his primary residence.” Id. at *3,

In Hqffeman v. Wells Fargo Bank, N.A., WL827034 (S.D. Cal. 2012), the district court denied plaintiff’s application for a TRO, concluding in part that § 2923.5 did not apply since the subject property was plaintiff’s “second home” and not her “principal” residence at the time. Id. at *3.

In Heflebower v. U.S. Bank Nat. Association, WL3864214 (E.D. Cal. 2013, the district court denied plaintiff’s application for a TRO, concluding in part that § 2923.5 did not apply since there was evidence that plaintiff owed several other properties, permitting the inference he did not live at the subject property. Id. at

In Finuliar v, BAC Home Loans Servicing, L.P., WL4405659 (N.D. Cal. 2011), the district court dismissed plaintiff’s § 2923.5 claim because she did not actually live at the subject property at the time foreclosure steps were initiated. Id. at *12.

In Mulato v. Wells Fargo Bank, N.A, — F.Supp.3d — (N.D. Cal. 2014), the defendant sought to have the HOBR claims dismissed at the pleading stage due to inconsistent allegations about when the plaintiff actually resided in the subject property. Although the court found that the issue was ripe with factual issues not amenable to resolution at the pleading stage, the court observed that the issue turns on whether plaintiff resided, or at least spent an appreciable amount of time, at the subject property. See WL7243096 at *18-19).

*3 It appears that a plaintiff must actually live in the encumbered property in order to demand compliance with the various HOBR remedial requirements.

Although not related to the HOBR, the opinion in In re Phleps (2001) 93 Cal.App.4 451, is quite illuminating on the topic. In that case, petitioner purchased property which was already in foreclosure, and was subsequently convicted in criminal court for violating distressed homeowner protection statutes Civil Code §§ 1695.6 and 2945.4. Petitioner sought habeas corpus relief, alleging that his decision to plead guilty was the result of ineffective assistance of counsel because petitioner could not violate the aforementioned statutes since the subject property was not “owner occupied.” The Court of Appeal agreed, and granted relief from the felony convictions. Although the evidence was undisputed that the homeowner no longer lived at the property when the challenged transaction took place, the Attorney General argued the statutes were violated if the property was “owner occupied” and the “principal residence” of the homeowner at any time. The Court disagreed, providing the following illuminating observations;

“prohibitions of the chapter do not apply if the owner of the premises does not occupy it when a transaction otherwise governed by the statutes occurs … we can ascertain no reason why the Legislature would have wished to protect the nonresident landlord of a single-femily residence … there would be no need for statutory protection for a property owner who had moved out years ago and was, perhaps, currently using the house to provide rental income. Thus, if we do not recognize the restriction of the statutory operation to the situation in which the owner lives in the residence when the offense occurs, it is impossible to limit it so that it does not apply in situations clearly not contemplated by the Legislature … an owner who has moved out presumably feels less stress and pressure, and is therefore less likely to enter into a disadvantageous deal in the hope of staving off foreclosure. Thus, the Legislature could rationally have chosen to extend the statutory protections only to those owners still attempting to remain in their homes.”

The concept of owner-occupied is also found in homestead exceptions, and there the Legislature made clear that an owner-occupied principal residence “does not extend to property that is rented, vacant, under construction on the lien date, or that is a vacation or secondary home of the owner or owners.” Rev. & Tax. Code § 218(b).

Common sense and the policy behind § 2924.15 support defendants’ interpretation that in order to hold refuge under the HOBR protections you have to actually live in the encumbered/distressed property which is the subject of possible foreclosure. Although the purpose behind HOBR is broadly described as “to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options” (Civil Code § 2923.4), amendments to the statutory scheme suggest a shift toward full-time residency. Prior to 2013, “owner-occupied” and “principal residence” were defined by what the borrower “indicated to the lender in loan documents” (Civil Code § 2923.S(i)), and federal district courts did just that – decide the issue based on what was indicated on the DOT. However, circumstances between loan origination and actual default often change. In 2013, the definition of “owner-occupied” was removed from § 2923.5, placed in a new section (§ 2924.15), and slightly tweaked by taking out reference to the loan documents. Why was that provision carved out of § 2923.5, and re-worded? The Legislative history is of little assistance:

*4 “the dual track and SPOC provisions apply only to first lien loan modifications. This restriction is consistent with the national mortgage settlement. Second, the dual track and SPOC provisions apply only to mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. The amendments specify that ‘owner-occupied’ means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes. This restriction to owner-occupied residences is on the whole already contained in existing law, Civil Code Section 2923.5, which was added by SB 1137.” CA Bill Analysis, Senate Floor, 06/27/12.

As a practical matter, since courts are no longer directed to look at the DOT, it must be that courts are to look at the realities of ownership. The terms “occupied” and “principal” must mean actually living in the property with some regularly, lest they mean nothing at all. This is precisely what every federal district court decision cited above did which was look to the realities. It is also what the Court in Phelps did. Here, plaintiff readily concedes he does not live there at all. The fact that plaintiff perceives the subject property as bis “home” because his children were born there and it is the only property in which he holds a residual beneficial interest in is of little consequence. There is no indication that the HOBR was ever intended to assist landlords improve the profit margin of their rentals.

Plaintiff has not shown any actionable violation of Civil Code §§ 2923.7 or 2924.10.

On 01/14/13, defendant Wells Fargo designated Angela Allen as plaintiff’s single point of contract. UMF 20. That takes care of any § 2923.7 claim.

Plaintiff alleges at TAC ¶24 that defendants failed to comply with Civil Code § 2924.10 after receiving his “complete” loan modification application. Plaintiff has confused two distinct statutory requirements.

Pursuant to § 2924.10(a), upon submission of “a complete first lien modification application or any document in connection with a first lien modification application, the mortgage servicer shall provide written acknowledgment of the receipt of the documentation within five business days of receipt” [Emphasis added]. The moment a borrower submits anything in conjunction with a loan modification application, § 2924.10 kicks in and imposes upon the servicer a duty to notify the borrower in writing of applicable deadlines and deficiencies.

On 01/02/13, plaintiff sent to Wells Fargo by facsimile an unverified and unsigned financial “worksheet” with an invoice from his company and a “hardship” letter indicating that his child had medical expenses and commission sales were down for his company. UMF 14-15.

On 01/14/13, Wells Fargo provided a written response, acknowledging receipt of the materials but noting that they would need additional documents to review any loan modification application, to wit: an affidavit, completed forms, tax return, annual P&L statement, and two months of bank statements. Plaintiff was provided a fax number for quick service, and a single point of contact (Angela Allen). UMF 20.

Giving defendant 1-2 days to review plaintiff’s materials, defendant had until 01/11/13 to send out a written response. Although mere is an indication of a telephone call between Wells Fargo and plaintiff’s counsel on 01/11/13, the statute specifically requires a written response. Thus, a technical violation of § 2924.10(a) occurred. See Penermon v. Wells Fargo Bank, N.A., 47 F.Supp.3d 982, 1000 (N.D. Cal. 2014). However, that violation was cured within three business days, and plaintiff has shown no prejudice or harm resulting from the brief delay. See Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94; in accord, Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1153 (N.D. Cal. 2013). Moreover, plaintiff only seeks injunctive relief associated with this violation (see TAG 1(28) and injunctive relief does not lie for a previously-cured wrong absent clear evidence the same wrong is likely to recur. See Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1266; Phipps v. Saddleback Valley Unified School District (1988) 204 Cal.App.3d 1110, 1118. Lastly, the violation was not sufficiently “material” to warrant relief. Civil Code § 2924.12(a)(1).

*5 Therefore, when plaintiff filed suit on 01/15/13 claiming a violation of § 2924.10, that claim was factually meritless as was plaintiff’s claim that Wells Fargo Med to assign a single point of contact. However, plaintiff contends that he was entitled to a hold on all foreclosure proceedings by virtue of the 01/02/13 submission because defendant’s 01/14/13 letter did not include any deadlines. This is where the parties confuse § 2924.10 with § 2923.6.

Pursuant to § 2924.10(a)(2), Wells Fargo was to have referenced in the 01/14/13 letter “any deadlines, including deadlines to submit missing documentation, that would affect the processing of a first lien loan modification application.” Everyone can agree that the letter, authored by Latasha Shaw, did not establish any deadline for plaintiff to supplement his 01/02/13 submission. Thus, the door remained open indefinitely. However, defendant’s “open door” is not the same as a “half on foreclosure.

Pursuant to § 2923.6, there is a hold on foreclosure proceedings the moment “a borrower submits a complete application for a first lien loan modification” (emphasis added) – and that hold lasts until the borrower rejects an offer, defaults on a modification plan, runs out of time to appeal a denial, or 15 days after an unsuccessful appeal. Civil Code § 2923.6(c). An application for a loan modification “shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” § 2923.6(h). Making this determination therefore requires evaluation of the documents required by the mortgage servicer and the documents actually provided by the mortgagor. Mendonca v. Caliber Home Loans, Inc., WL1566847 at*7 (C.D. Cal. 2015). Since defendant did not specify a time frame, the law inserts a reasonable period of time for compliance. Civil Code § 1657; in accord, In re Conservatorship and Estate of Buchenau (2011) 196 Cal.App.4th 1031, 1039. Plaintiff readily admits that he offered nothing in response to the 01/14/13 letter until 05/21/15 – which is more than two years later, and clearly unreasonable. See Valentino v. Select Portfolio Servicing, Inc., WL1906122 at *4-5 (N.D. Cal. 2015). The submission which at the time was a mere two weeks before the original hearing date on this motion smacks at something other than a genuine desire to stay in one’s home. Besides for purposes of the present motion, only the allegations contained in the operative pleading can be considered, and based on those plaintiff was never entitled to a § 2923.6 hold because his only submission (01/02/13) was as a matter of law incomplete. See Stokes v. CitiMortgage, Inc., WL4359193 at *7 (C.D. Cal. 2014); in accord, Mackensen v. Nationstar Mortgage LLC, WL1938729 at *5 (N.D. Cal. 2015) [ completeness of a loan modification application should be considered at the tune the notice of trustee sale is recorded.”].

Defendants have met their burden of negating essential elements necessary for plaintiff to prove a violation of any HOBR requirement because (1) the subject property was not owner-occupied, (2) defendants did assign a single point of contact, (3) defendant’s brief delay in acknowledging plaintiffs 01/02/13 submission was immaterial and immediately cured, and (4) plaintiff never had a “complete” application on file until 05/21/15, and there are no allegations in the TAC relating to how defendants handled the 05/21/15 submission. Plaintiff has failed to show any triable issue of met. Thus, defendants are entitled to summary judgment on the single cause of action alleged against them. However, to be clear, this does not exonerate or immunize mem for any potential HOBR violations after plaintiff’s 05/21/15 submission. In other words, this Court makes no finding as to whether the 05/21/15 is a “complete” application or if it is to be treated as an original application or a subsequent application subject to the “material change” rule (Civil Code § 2923.6(g), or if plaintiff has indeed shown a “material change” after moving back into the property. This Court only concludes that on the allegations set forth in the TAC, which form the outer measure of materiality here, defendants are entitled to judgment

*6 Motion GRANTED.

Therefore, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that judgment is granted in favor of Lender Defendants and against Plaintiff JOSEPH PARISI. Based on said Judgment, Plaintiff shall be awarded nothing and Lender Defendants shall be entitled to recover costs to be determined by seperate motion.

IT IS SO ORDERED:

Dated: SEP 10 2015

JUDGE OF THE SUPERIOR COURT

 

Superior Court of California.

Los Angeles County

Teodulo CASTILLO,

v.

OCWEN LOAN SERVICING LLC et al.

No. BC527805.

October 21, 2014.

Trial Order

Brian Stuart, Plaintiff Counsel.

Fabio R. Cabezas, Defendant Counsel.

Ruth Ann Kwan, Judge.

*1 NATURE OF PROCEEDINGS:

MTC FINANCIAL INC., dba TRUSTEE CORPS’ DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT AND ALL CAUSES OF ACTION CONTAINED THEREIN NAMING MTC FINANCIAL INC., dba TRUSTEE CORPS [RULE 3.1320 OF THE CALIFORNIA RULES OF COURT]

MTC FINALCIAL INC. dba TRUSTEE CORPS’ MOTION TO STRIKE AMENDED COMPLAINT THAT INCLUDE DAMAGES, PUNITIVE DAMAGES, TREBLE DAMAGES, STATUTORY DAMAGES, RESTITUTION STYLE RELIEF AND ATTORNEYS’ FEES

The matters are called for hearing and are argued.

Defendant MTC Financial Inc. dba Trustee Corp’s demurrer to the first amended complaint is OVERRULED as to the 1st Cause of Action and SUSTAINED as to the 3rd Cause of Action. Defendant’s Demurrer to the 4th Cause of Action is MOOT. The Court, on its own motion, previously struck the 4th Cause of Action from the first amended complaint.

Defendant’s motion to strike is DENIED.

The court’s tentative ruling, filed this date, is adopted as the final ruling of the court and incorporated herein by reference to the case file.

Plaintiff to give notice.

TENTATIVE RULING

Defendant MTC Financial Inc. dba Trustee Corps’ demurrer to the first amended complaint is overruled as to the 1st COA and sustained as to the 3rd COA. Defendant’s demurrer to the 4th COA is moot. The Court, on its own motion, previously struck the 4th COA from the first amended complaint.

Defendant’s motion to strike is denied.

  1. Demurrer

Defendant MTC Financial Inc. dba Trustee Corps (“Defendant”) demurs to the 1st (violation of Civil Code § 2923.6), 3rd (unfair business practices), and 4th (violation of Civil Code § 2924g) causes of action in the first amended complaint of Plaintiff Teodulo Castillo (“Plaintiff”). Defendant argues Plaintiff failed to allege sufficient facts to constitute the causes of action.

Defendant’s request for judicial notice is granted. However, the Court will not take judicial notice of the truth of the matters asserted within the documents.

Violation of Civil Code § 2923.6 (1st COA)

Civil Code § 2923.6(c) provides, as follows:

If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs:

(1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired.

(2) The borrower does not accept an offered first lien loan modification within 14 days of the offer.

(3) The borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first lien loan modification.

*2 Plaintiff alleged sufficient facts, for purposes of a demurrer, to constitute a cause of action for violation of Civil Code § 2923.6. Plaintiff alleged he filed legal action against “One West” (the successor by merger to the originating lender, IndyMac Bank, F.S.B.), IndyMac Mortgage Servicing, a division of One West, and Defendant on February 11, 2013. (FAC ¶18). Plaintiff alleged that, during this time, he had an incomplete application for a loan modification pending with One West. (FAC ¶18). Plaintiff alleged he filed a request for dismissal of the action on or before March 29, 2013, pursuant to an agreement for settlement based on a loan modification offer through counsel for One West. (FAC ¶19). Plaintiff alleged counsel for One West provided him with a new loan modification application on April 11, 2013, as requested in the email communications regarding the settlement. (FAC ¶20). Plaintiff alleged he submitted the completed new loan modification application package to counsel for One West (the loan servicer at the time) on May 15, 2013, in accordance with Civil Code § 2923.6. (FAC ¶¶21, 47). Plaintiff alleged One West provided acknowledgment of the submission of the completed new loan modification application package in accordance with Civil Code § 2924.10. (FAC ¶¶21). Plaintiff alleged that, after submission of the completed new modification application package on May 15, 2013, in accordance with Civil Code § 2923.6, Plaintiff provided updates of his financial information to counsel for OneWest in accordance with Civil Code § 2924.10. (FAC ¶¶22, 48).

Plaintiff alleged that on August 5, 2013, when Plaintiff’s loan servicing was transferred to Defendant Ocwen Loan Servicing, LLC (“Ocwen”), as the subsequent loan servicer, Ocwen was subject to honor the completed new modification application package that Plaintiff submitted on May 15, 2013. (FAC ¶¶23, 49). Plaintiff alleged he maintained contact with Ocwen regarding the loan modification application from the time of submission through when the property was sold. (FAC ¶¶24-44, 50). Plaintiff alleged Ocwen did not request any further additional information or documentation from Plaintiff, nor did Ocwen provide Plaintiff with a written denial of his request for a loan modification. (FAC ¶¶48, 50). Plaintiff alleged Ocwen’s representatives assured him the foreclosure sale on the property was either postponed or going to be cancelled due to his submission of the completed new modification package (complete in accordance with the guidelines provided by counsel for OneWest), which was acknowledged as complete by the lender. (FAC ¶¶51-53). Plaintiff also alleged an employee from Ocwen (Alistar Andrews) advised Plaintiff (on October 24, 2013) the sale date (of October 31, 2013) would be postponed as she was looking at a confirmation she received from Defendant. (FAC ¶35). Plaintiff also alleged he contacted Defendant, on October 24 2013, and talked to Omar Reynosa. Plaintiff alleged Reynosa confirmed he received notice from Ocwen that the sale date would be postponed for 60 days from October 31, 2013, and stated it would possibly be cancelled altogether. (FAC ¶36). Plaintiff alleged Defendant proceeded with the foreclosure sale (on November 13, 2013) despite the fact that his completed application was pending and Defendant had been advised of the California statute prohibiting it from conducting the foreclosure sale. (FAC ¶¶36, 54-57).

Defendant argues its conduct was privileged under Civil Code §§ 47 and 2924(d). See Civil Code § 2924(d)(“All of the following shall constitute privileged communications pursuant to Section 47: (1) The mailing, publication, and delivery of notices as required by this section. (2) Performance of the procedures set forth in this article. (3) Performance of the functions and procedures set forth in this article if those functions and procedures are necessary to carry out the duties described in Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure.”). See also Kachlon v. Markowitz (2008) 168 CaLApp.4th 316, 333 (We hold that section 2924 deems the statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, to be privileged communications under the qualified common interest privilege of section 47, subdivision (c)(1). We conclude that Best Alliance’s recording of the notice of default was privileged, that the evidence failed to demonstrate Best Alliance acted with malice, and that therefore Best Alliance was immune from the Markowitzes’ slander of title and negligence claims.”). However, the Court will not decide, on demurrer, whether the privilege applies under the alleged facts of this case.

*3 Defendant argues its “duties are defined and limited by the non-judicial foreclosure statute scheme” and, therefore, “no claim based on common law duties may be asserted.” (Demurrer, pgs. 5-6). However, Plaintiff’s claim against Defendant is based on an alleged violation of a statute (i.e. Civil Code § 2923.6). Defendant also argues there is a presumption that the sale was conducted properly. (Demurrer, pgs. 6-7). See Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1258 (“A nonjudicial foreclosure sale is accompanied by a common law presumption that it ‘was conducted regularly and fairly.’ This presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity. The ‘mere inadequacy of price, absent some procedural irregularity that contributed to the inadequacy of price or otherwise injured the trustor, is insufficient to set aside a nonjudicial foreclosure sale.’ It is the burden of the party challenging the trustee’s sale to prove such irregularity and thereby overcome the presumption of the sale’s regularity.”)(Citations Omitted). However, as set forth above, Plaintiff alleged sufficient facts to constitute a cause of action for violation of Civil Code § 2923.6, effectively rebutting the presumption.

In addition, Defendant argues Plaintiff failed to make an offer of tender and, therefore, cannot make a “foreclosure styled claim.” (Demurrer, pg. 6). However, the “tender rule is not absolute. Courts have discretion to excuse the tender requirement where its application would be inequitable.” Rockridge Trust v. Wells Fargo, N.A. 2013 U.S. Dist. Lexis 139606, *81-82.1 In light of the facts alleged in the first amended complaint, application of the tender rule would be inequitable.

Finally, Defendant argues Plaintiff failed to state a claim for violation of Civil Code § 2923.6. Specifically, Defendant argues Plaintiff has a history of submitting applications for first lien loan modifications and failed to allege there was a material change in his financial circumstances since the earlier loan modification applications. See Civil Code § 2923.6(g)(“In order to minimize the risk of borrowers submitting multiple applications for first lien loan modifications for the purpose of delay, the mortgage servicer shall not be obligated to evaluate applications from borrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification prior to January 1, 2013, or who have been evaluated or afforded a fair opportunity to be evaluated consistent with the requirements of this section, unless there has been a material change in the borrower’s financial circumstances since the date of the borrower’s previous application and that change is documented by the borrower and submitted to the mortgage servicer.”). However, Civil Code § 2923.6(g) does not appear to apply to the facts of this case in light of the allegations suggesting the new loan modification package was submitted by Plaintiff pursuant to a settlement agreement. As set forth above, Plaintiff alleged counsel for One West provided him with a new loan application package pursuant to “an agreement for settlement based on an offer of loan modification.” (FAC ¶¶18-20)(Emphasis Added). Plaintiff alleged he submitted the completed new loan modification application to counsel for One West on May 15, 2013, in accordance with Civil Code § 2923.6, (FAC ¶21). Plaintiff also alleged Ocwen, as the subsequent loan servicer, was obligated to honor the completed new modification package submitted on May 15, 2013. (FAC ¶49). Plaintiff alleged Defendant had been advised of the California statute prohibiting it from conducting the foreclosure sale and “willfully chose to ignore the warning…and proceeded to conduct the trustee’s sale.” (FAC ¶54).

*4 Based on the foregoing, Defendant’s demurrer to the 1st COA is overruled.

Unfair Business Practices (3rd COA)

Business & Professions Code § 17200 provides, as follows: “As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.”

Plaintiff failed to allege sufficient facts, for purposes of a demurer, to constitute a cause of action for unfair business practices. Plaintiff alleged Defendant violated Civil Code § 2923.6. (FAC ¶¶21 -44, 45-57, 71 -79). Plaintiff also alleged he lost title to his home as a result of Defendant’s unlawful actions and faces eviction by the third-party purchaser. (FAC ¶78). However, Plaintiff failed to allege facts showing Defendant’s alleged unfair business practices caused her damages. This is especially true considering the allegations in the first amended complaint and judicially noticed documents suggest Plaintiff was in default on the loan before Defendant committed the alleged unlawful conduct. (FAC ¶¶14-18)(RJN, Exhibits 1-9). See Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 520-524.

Based on the foregoing, Defendant’s demurrer to the 3rd COA is sustained.

Violation of Civil Code § 2924g (4th COA)

On 7/22/14, the Court, on its motion, struck the 4th COA. See Court’s 7/22/14 Minute Order & Ruling. Consequently, Defendant’s demurrer to the 4th COA is moot.

  1. Motion to Strike

Defendant’s motion to strike Plaintiff’s claim for damages in connection with the 1st COA is denied. Defendant argues it could not have “materially” violated Civil Code § 2923.6. Specifically, Defendant argues it “would not be involved in loan servicing, offering loan modifications, evaluating loan modifications, deciding loan modifications, and making loan modifications.” (Motion, pg. 3). However, a “mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent” can be held liable for a violation of Civil Code § 2923.6. See Civil Code § 2924.12(b)(“After a trustee’s deed upon sale has been recorded, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable to a borrower for actual economic damages pursuant to Section 3281, resulting from a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent where the violation was not corrected and remedied prior to the recordation of the trustee’s deed upon sale. If the court finds that the material violation was intentional or reckless, or resulted from willful misconduct by a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent, the court may award the borrower the greater of treble actual damages or statutory damages of fifty thousand dollars ($50,000).”). Plaintiff alleged Defendant acted as “agent for beneficiaries in the capacity of Trustee Deeds of Trust” and the Notice of Trustee’s Sale and Trustee’s Deed Upon Sale identify Defendant as “Trustee” or “Successor Trustee” of the Deed of Trust. (FAC ¶8)(RJN, Exhibits I and K). In addition, as discussed above in detail, Plaintiff alleged sufficient facts to constitute a cause of action for violation of Civil Code § 2923.6 against Defendant. Defendant also argues Plaintiff did not allege facts showing a material violation. However, in addition to the allegations set forth above, Plaintiff alleged Reynosa, one of Defendant’s employees, confirmed he received notice from Ocwen the sale date would be postponed for 60 days from October 31, 2013, and stated the sale date would possibly be cancelled altogether. (FAC ¶36). Plaintiff also alleged he faxed a warning regarding “violation of state statute if sold” and Defendant willfully chose to ignore the warning. (FAC ¶¶36, 54). These allegations are sufficient to show a material violation of the statute.2

*5 Defendant’s motion to strike the claim for damages in connection with the cause of action for unfair business practices is denied as moot in light of the ruling on the demurrer.

Defendant’s motion to strike the claims for treble damages and statutory penalty damages under Civil Code § 2924.12(b) is denied. Plaintiff alleged sufficient facts to support the requests for treble and statutory penalty damages.

Defendant’s motion to strike the allegations pertaining to and prayer for attorney’s fees is denied. Civil Code § 2924.12(1) provides authority for an award of attorney’s fees. See Civil Code § 2914.12(i)(“A court may award a prevailing borrower reasonable attorney’s fees and costs in an action brought pursuant to this section. A borrower shall be deemed to have prevailed for purposes of this subdivision if the borrower obtained injunctive relief or was awarded damages pursuant to this section.”).

Dated: October 21, 2014

<<signature>>

Hon. Ruth A. Kwan

Judge of the Superior Court

Footnotes

1

See Id. at 82-83 (“Several courts have refused to apply the tender requirement where plaintiff alleges that the defendant lacks authority to foreclose on the property and, thus, that any foreclosure sale would be void rather than merely voidable. The rationale for this distinction is the equitable policies supporting the tender rule. That is, ‘tender is required ‘based on the theory that one who is relying upon equity in overcoming a voidable sale must show that he is able to perform his obligations under the contract so that equity will not have been employed for an idle purpose.’’ However, where a sale is void at the outset, rather than voidable, the transaction is a ‘nullity with no force or effect as opposed to one which may be set aside’ in equity.”)(Citations Omitted).

2

Defendant also argues Plaintiff’s claims for damages should be stricken on the basis of “privilege.” However, the Court will not decide, on a motion to strike, whether the privilege applies under the alleged facts of this case.

 

Superior Court of California.

Department 31

Los Angeles County

Gideon FRIDMAN, Plaintiff,

v.

WELLS FARGO BANK, N.A., et al., Defendant(s).

No. BC478019.

February 24, 2015.

Order re: Defendant Wells Fargo Bank, N.A.’s Motion for Summary Judgment, or in the Alternative, Summary Adjudication

Samantha P. Jessner, Judge.

*1 Hearing Date: February 24, 2015

Defendant Wells Fargo Bank, N.A.’s (“Wells Fargo”) Motion for Summary Judgment is DENIED as Plaintiff has raised a triable issue of material fact regarding whether Plaintiff’s property taxes were delinquent. Defendant Wells Fargo’s Motion for Summary Adjudication is DENIED as to Issue Nos. 1, 3-9, 11, and GRANTED as to Issue Nos. 2 and 10.

Failure to Comply with CRC

It is always important to follow procedural rules, especially those promulgated in part to make it easier for judicial officers to read and absorb copious amounts of information in a short period of time. CRC 3.1110(f) is one such rule. It requires that each exhibit be separated by a tab extending below the bottom of the page bearing the exhibit designation. It also requires an index to exhibits be provided. Defendant failed to follow this rule. Wells Fargo’s voluminous exhibits are not tabbed or indexed. With approximately 400 cases on the court’s docket, the importance of following these rules to the letter cannot be overemphasized. In addition, if a party wants to ensure that a court reviews the evidence it submits, the party should follow the applicable procedural rules.

Requests for Judicial Notice

Wells Fargo’s Motion references a concurrent request for judicial notice. However, the Court record does not show that any such request was ever filed. Therefore, Wells Fargo’s request for judicial notice is not before the Court.

In Opposition, Plaintiff requests the Court take judicial notice of two exhibits, the first being a Consent Order issued by the New York State Department of Financial Services Financial Frauds and Consumer Protection Division, and the second is Federal Housing Finance Agency’s Oversight of the Enterprises’ Lender-Placed Insurance Costs. The Court overrules Wells Fargo’s objections to these requests, and grants Plaintiff’s requests. The Court may take judicial notice of “[o]fficial acts of the legislative, executive, and judicial departments … of any state of the United States.” Evid. Code § 452(c). “Official acts include records, reports and orders of administrative agencies.” Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 518, as modified (Feb. 28, 2001); see also Sentell v. Jacobsen (1958) 163 Cal.App.2d 748, 753 (taking judicial notice of agency orders).

Rulings on Objections

Declaration of Richard Coberly

Objection Nos. 1, 4-5, 7-9, 11, 13-14, 20-21: SUSTAINED, lacks authentication, personal knowledge, and foundation.

Objection Nos. 2, 6, 10, 12, 15-16, 18: SUSTAINED, lacks personal knowledge and foundation

Objection No. 3, 17, 19: OVERRULED

Declaration of Stephen M. Reiss

Objection Nos. 1-9 & 15: SUSTAINED, lacks authentication and personal knowledge. The objections to the declaration of Mr. Reiss omit pages 5-7, thereby omitting objections 10-14. Based on the pages defendant managed to file and the similar nature of the objections, the court assumes that the missing pages sets forth the same objections.

Motion for Summary Judgment/Adjudication

First Cause of Action – Breach of Contract (Mortgage Note)

*2 Plaintiff alleges a breach of contract cause of action against Wells Fargo based on the May 6, 1996 Mortgage Note, where Wells Fargo caused a default upon the mortgage note claiming Plaintiff was in arrears in the amount of $49,631.71. TAC ¶¶56-60. “The standard elements of a claim for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom.”’ Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178. Wells Fargo argues that Plaintiff failed to perform under the Mortgage Note because Plaintiff did not make the full monthly payment which had been increased (by less than $100) as a result of Plaintiff’s failure to pay property taxes.

Plaintiff’s obligations under the Loan are secured by a Deed of Trust recorded against the real property at issue. Wells Fargo’s Undisputed Material Fact (“WF UMF”) No. 2.1 The Deed of Trust states in part under Section 4 that “Borrower shall pay all taxes, assessments, charges, fines and impositions attributable to the Property…” Curran Decl., ¶ 5, Ex.D, Ex.3, p.3. Section 7 of the Deed of Trust states, in pertinent part, that “[i]f Borrower fails to perform the covenants and agreements contained in this Security Instrument… then Lender may do and pay for whatever is necessary to protect the value of the Property and Lender’s rights in the Property.” Id. at p.4. Plaintiff acknowledges that, under the terms of the Deed of Trust, he is required to maintain the property tax payments. WF UMF No. 14. Plaintiff further acknowledges that if he fails to maintain the property tax payments, Wells Fargo can advance the property tax payments and require Plaintiff to reimburse Wells Fargo for advances made on his behalf. Ibid.

Wells Fargo claims that Plaintiff was delinquent on his property taxes in October 2009. Doepp Decl., ¶11. On October 28, 2009, Wells Fargo sent Plaintiff a letter advising Plaintiff that Wells Fargo discovered the delinquency, and requested that Plaintiff provide proof that he paid the taxes by December 7, 2009. Id., Ex.9. When Wells Fargo did not receive a response to this letter, on December 16, 2009, Wells Fargo claims it advanced $12,130.84 on Plaintiff’s behalf to pay the delinquent property taxes due for November 2008, November 2009 and March 2009, and established an escrow account so that Plaintiff could reimburse Wells Fargo over the following 12 months. Doepp Decl., ¶12.

However, Plaintiff disputes that he was ever delinquent on his property taxes, and he testified in his deposition that he has consistently maintained his property taxes from the beginning. Curran Decl., ¶5, Ex.C, 59:1-8, 65:8-10. Additionally, Plaintiff testified that he sent Wells Fargo proof of payment in December 2009. Curran Decl., ¶5, Ex.C, 64:2-65:7. In reply, Wells Fargo argues that Plaintiff has not “produced evidence” to back up his statements in deposition. Reply, pp.3-5. It is true that “in order to avert summary judgment the plaintiff must produce substantial responsive evidence sufficient to establish a triable issue of material fact on the merits of the defendant’s showing.” Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-63 (emphasis added). However, to show that plaintiff was behind on his property taxes, Wells Fargo has produced nothing but a self-serving declaration from its own employee that asserts he was behind on his taxes with no supporting document or information explaining the source of plaintiffs delinquent tax status and letters to Plaintiff from Wells Fargo which suffer from the same problems. Also, the court must “view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.

*3 In sum, Wells Fargo has failed to show that a reasonable trier of fact could conclude that Plaintiff did not pay his property taxes: both sides present bare assertions with no supporting documentation. Accordingly, Plaintiff has shown that there is a triable issue of material fact as to whether he was ever delinquent on his property taxes. If Plaintiff was not delinquent on his taxes, then he could prove that Wells Fargo breached the Deed of Trust by unnecessarily paying property taxes for him. For these reasons, Wells Fargo’s Motion for Summary Judgment is DENIED, and Wells Fargo’s Motion for Summary Adjudication of Issue No. 1 is DENIED.

Second Cause of Action – Breach of Contract (Insurance Binder)

Plaintiff alleges a breach of contract cause of action based on an alleged breach of the insurance binder contract. TAC ¶¶61-77. Wells Fargo argues that it was authorized to obtain homeowners insurance coverage for Plaintiff under the Deed of Trust when Plaintiff’s homeowners insurance expired, therefore, Wells Fargo did not breach the Deed of Trust. Motion, pp.9-10.

Pursuant to the pertinent part of Section 5 of the Deed of Trust, “Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term ‘extended coverage’ and any other hazard, including floods or flooding, for which Lender requires insurance.” Curran Decl., ¶5, Ex.D, Ex.3, p.3. In addition, “[i]f Borrower fails to maintain coverage described above, Lender may, at Lender’s option, obtain coverage to protect Lender’s rights in the Property in accordance with paragraph 7.” As explained above, paragraph 7 allows Wells Fargo to seek reimbursement from Plaintiff. Plaintiff acknowledges that, under the terms of the Deed of Trust, he is required to maintain homeowners insurance. WF UMF No. 7. Plaintiff further acknowledges that if he fails to maintain homeowners insurance, Wells Fargo can obtain its own homeowners insurance policy and require Plaintiff to reimburse Wells Fargo for the insurance premium paid on his behalf. Ibid.

In Opposition, Plaintiff “concedes that his homeowners insurance lapsed, and that he was unaware of the issue until he saw the actual insurance contract from Empire Fire and Marine Insurance.” Opposition, p.8. In the Separate Statement, Plaintiff meekly attempts to “dispute” Wells Fargo’s undisputed facts but fails to address the material facts asserted, which amounts to a failure to comply with CCP § 437c(b)(3). See WF UMF Nos. 3-6, 10. The evidence shows that in September 2008, Well Fargo’s records reflected that Plaintiff’s prior homeowner’s insurance expired on August 12, 2008 and Plaintiff had yet to provide a copy of his homeowner’s insurance policy renewal. Doepp Decl., ¶4. Wells Fargo then sent Plaintiff a series of letters requesting Plaintiff’s homeowner’s insurance policy, and, when Wells Fargo did not receive a response, it obtained temporary insurance coverage and requested reimbursement. Doepp Decl., ¶¶4-7. On December 4, 2008, Wells Fargo received proof of insurance from Plaintiff with an effective date of November 20, 2008, so Wells Fargo cancelled the temporary policy effective November 20th, and requested Plaintiff pay $1,198.90 for the August 12 through November 20, 2008 time period. Doepp Decl., ¶8. Accordingly, Wells Fargo adjusted Plaintiff’s monthly Loan payment to spread the premium amount over 12 payments, starting on April 1, 2009, totaling $2,825.58 per month. Doepp Decl., ¶9.

While Plaintiff’s allegations of breach stem from his argument that he paid off the $1,198.90 (TAC ¶¶72-75; see also Opposition, pp.8-10), this does not show a “breach” of the insurance policy terms of the Deed of Trust. As explained above, Wells Fargo was entitled to obtain insurance for Plaintiff and seek reimbursement for having to do so. This is undisputed. As such, Wells Fargo meets its initial burden under CCP § 437c(p)(2) of showing that Plaintiff cannot establish Wells Fargo breached the Deed of Trust with respect to the insurance provisions. Whether Wells Fargo made accounting errors based on Plaintiff’s failure to allegedly pay off the $1,198.90 is not a breach of contract claim for the Deed of Trust, but possibly a wrongful foreclosure claim. In Opposition, Plaintiff fails to show a triable issue of material fact. Also, Plaintiff’s argument that the insurance premium was too high fails to show a breach. For these reasons, the Court grants the Motion for Summary Adjudication as to Issue No. 2, eliminating Plaintiff’s second cause of action.

Third and Fourth Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

*4 The court took the matter under submission on February 24, 2015, after listening to the very impressive arguments of counsel so that it could consider its tentative ruling regarding the Fourth Cause of Action. Defense counsel insisted that if the court was inclined to grant summary adjudication as to the second cause of action, then it should do the same with regard to the fourth cause of action. The court disagrees.

“Every contract imposes on each party a duty of good faith and fair dealing in contract performance and enforcement such that neither party may do anything to deprive the other party of the benefits of the contract. [Citations.] ‘This covenant not only imposes upon each contracting party the duty to refrain from doing anything which would render performance of the contract impossible by any act of his own, but also the duty to do everything that the contract presupposes that he will do to accomplish its purpose.” ’ Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 76.

Wells Fargo argues that Plaintiff merely “restates the breach of contract claims” and does “not identify the express contractual terms that form the basis” of his claims “or what actions taken by Wells Fargo actually breached the covenant of good faith and fair dealing,” Motion, pp. 10-11. However, “[b]reach of a specific contractual provision is not a prerequisite to asserting this cause of action.” Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 855, fn12. For both causes of action, Plaintiff alleges that he was harmed by Wells Fargo’s accounting practices which deprived him of the benefits under the Mortgage Note and insurance binder. TAC ¶¶84, 96. As such, Plaintiff’s allegations “go beyond the statement of a mere contract breach ….” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, as modified on denial of reh’g (Oct. 31, 2001). Moreover, even if the Court were to construe Wells Fargo’s evidence of its accounting contained in Exhibit 8 as proof that its accounting practices did not deprive Plaintiff of his benefits, Wells Fargo fails to offer any explanation whatsoever (for example, through an expert declaration) as to how or why these spreadsheets show their accounting practices were correct. As such, Wells Fargo’s arguments fail.

A careful reading of the fourth cause of action reveals that there is more to it than allegations regarding breach of the Deed of Trust terms regarding the insurance payments and obligation of the homeowner. The thrust of this cause of action has to do with the way in which Wells Fargo accounted for the monies that it determined plaintiff owed as a result of plaintiff’s failure to maintain his homeowner’s insurance. In the fourth cause of action, plaintiff alleges that Wells Fargo mishandled the escrow account established to collect monies to pay the insurance premiums that Wells Fargo was forced to pay when plaintiff failed to do so. (Complaint, ¶¶91-95). As a result, of Wells Fargo’s breach of the covenant of good faith and fair dealing in handling the escrow account and the related accounting, plaintiff was deprived of the benefit of the mortgage contract when Wells Fargo caused the property to go into default. This then forced plaintiff to make a payment of $54,512.67. Wells Fargo, by is failure to explain the contents of Exhibit 8 and the import of the exhibit has failed to meet its initial burden of proof in this regard. For these reasons, it does not follow that summary adjudication is warranted on the fourth cause of action simply because the court granted it on the second cause of action. They are different animals.

*5 Wells Fargo also argues that no special relationship exists between Plaintiff and Wells Fargo to warrant tort recovery. Motion, p. 11. However, it is unclear how this argument would eliminate Plaintiff’s implied covenant claims. It is true that “[b]ecause the covenant of good faith and fair dealing essentially is a contract term that aims to effectuate the contractual intentions of the parties, ‘compensation for its breach has almost always been limited to contract rather than tort remedies.” ’ Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 43. But, Wells Fargo fails to explain how, even if it could show there is no special relationship between itself and Plaintiff, that would eliminate Plaintiff’s claims; it only shows that Plaintiff cannot recover tort remedies for his claims. The proper procedural avenue to bar plaintiff from recovering tort remedies for these causes of action would have been motion to strike those damages. Again, Wells Fargo’s burden as the party moving for summary adjudication is to show that one or more elements of Plaintiff’s cause of action cannot be established or that there is a complete defense. CCP § 437c(p)(2). Based on the foregoing, Wells Fargo simply fails to meet its initial burden of proof, and the Court denies the Motion as to Issues 3 and 4, thereby leaving Plaintiff’s third and fourth causes of action intact.

Damages

Wells Fargo argues that Plaintiff fails to establish recoverable damages, as his allegations of credit damage and stroke are insufficient. Motion, pp.11-12. However, this ignores Plaintiff’s allegations of compensatory damages based on the arrears Plaintiff has allegedly had to pay as a result of Wells Fargo’s alleged incorrect accounting practices. See TAC ¶¶60, 77, 84, 96; Opposition, p. 13. Civil Code § 3300 allows for compensatory damages for breach of contract claims. As Wells Fargo did with respect to Plaintiff’s third and fourth causes of action, it attempts to misconstrue Plaintiff’s allegations and narrow the Court’s view of the issues while ignoring aspects of Plaintiff’s claims that defeat Wells Fargo’s arguments. In reply, Wells Fargo fails to address the above issue. Reply, pp.6-8. Accordingly, Wells Fargo fails to meet its initial burden of proof under CCP § 437c(p)(2), and the Court thereby denies the Motion as to Issues 1-4.

Sixth Cause of Action – Fraud (Suppression of Fact)

Plaintiff alleges a fraud claim against Wells Fargo, arguing, in part, that Wells Fargo first provided him with a detailed accounting showing that he had been paying his mortgage, but then later provided him with an accounting showing he was in arrears. TAC ¶¶102-112. “[T]he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.

Wells Fargo argues that it owed Plaintiff no duty of care, thus, Plaintiff cannot establish an element of his claim. Motion, p. 14. Although Wells Fargo points out that “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” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096), Plaintiff points out that “[t]he duty to disclose may arise without any confidential relationship where the defendant alone has knowledge of material facts which are not accessible to the plaintiff (Magpali v. Farmers Group, Inc. (1996) 47 Cal.App.4th 1024, 482, as modified on denial of reh’g (Aug. 20, 1996)). Here, as explained above, Plaintiff alleges that Wells Fargo misled him by informing him he was in arrears, information which was only available to Wells Fargo. Moreover, as explained above, there is a triable issue of material fact as to whether Plaintiff was, in fact, delinquent in his property taxes, which affects his monthly payments.

*6 The remainder of Wells Fargo’s arguments focus on Plaintiff’s allegations that Wells Fargo failed to disclose the actual penalties, interest, and points associated with late payments. Motion, pp. 12-14. While these arguments are well taken, they do not dispose of Plaintiff’s claim, given the above allegations relating to Wells Fargo’s duty to provide Plaintiff the correct information about his arrears. Additionally, Wells Fargo makes a final, quick argument as to damages at the top of page 15, but fails to articulate how this applies to the fraud cause of action. Therefore, the Court denies Wells Fargo’s Motion as to Issue No. 5, leaving Plaintiff’s sixth cause of action intact.

Eighth and Seventeenth Causes of Action – Breach of Fiduciary Duty

Plaintiff’s eighth cause of action alleges that Wells Fargo was responsible for the escrow account related to Plaintiff’s Mortgage Note, and the escrow balance was listed as zero and then showed a surplus (meaning it should have been closed), but, due to Wells Fargo’s accounting practices, Plaintiff’s surplus “became an arrearage,” leading to his mortgage being defaulted. TAC ¶¶116-20. Plaintiff’s seventeenth cause of action makes a similar allegation against Wells Fargo that is more or less derivative of the eighth cause of action. TAC ¶¶175-84. “In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101.

Wells Fargo argues that both of Plaintiff’s causes of action fail because Wells Fargo owed no duty to Plaintiff. Motion, pp. 15-16. While Wells Fargo makes the same argument again that it owed no duty based on Nymark (as well as other cases), Plaintiff points out that a fiduciary duty can be established in cases involving escrow holders. Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, 1179 (“An escrow holder has a fiduciary duty to the escrow parties to comply strictly with the parties’ instructions. [Citation.] The holder only assumes this duty by agreeing to execute the escrow. The obligation to exercise reasonable skill and diligence in carrying out the escrow instructions, and to comply strictly with the depositor’s written instructions are within the duties undertaken in the contract.”). Wells Fargo admits that it established an escrow account so that Plaintiff could reimburse Wells Fargo for the delinquent property taxes. Doepp Decl., ¶12. However, as explained above, there is a triable issue regarding whether those taxes were in fact delinquent. Wells Fargo argues there was also no breach (Motion, p. 16); however, that again goes towards whether it properly accounted for Plaintiff’s escrow and payments made. As previously stated, Wells Fargo failed to show that its accounting was correct (there was no expert declaration offered, only an unexplained spreadsheet in Exhibit 8). Therefore, Wells Fargo fails to meet its initial burden of proof, and the Court denies this Motion as to Issue Nos. 6 and 11, leaving Plaintiff’s eighth and seventeenth causes of action intact.

Tenth Cause of Action – Accounting

Plaintiff alleges a cause of action for accounting against Wells Fargo in order to determine the true amount of money allegedly due from Wells Fargo to Plaintiff as a result of defaulting on Plaintiff’s mortgage. TAC ¶¶121-26. While Wells Fargo cites case law which states that an accounting “it not an independent cause of action but merely a type of remedy” (Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82 disapproved of on other grounds by McWilliams v. City of Long Beach (2013) 56 Cal.4th 613), there are many cases stating that accounting is a cause of action. See e.g., Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179 (“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.”); Kritzer v. Lancaster (1950)96 Cal.App.2d 1, 7.

*7 Wells Fargo next argues that Plaintiff’s accounting claim fails because Wells Fargo does not owe Plaintiff a fiduciary duty. Motion, p. 16. However, this argument fails because “a fiduciary relationship between the parties is not required to state a cause of action for accounting. All that is required is that some relationship exists that requires an accounting.” Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179. As explained by Plaintiff, Wells Fargo is in the unique position to account for how monies it incurred or had possession of were spent, of which Plaintiff is unaware. Opposition, pp. 16-17. Wells Fargo’s remaining arguments that there can be no accounting claim because “there are no amounts due from Wells Fargo to Plaintiff and because Wells Fargo provided Plaintiff with an accounting (Motion, p. 16) ignores Plaintiff’s allegations that Wells Fargo allegedly did not properly account for Plaintiff’s payments. Again, Wells Fargo fails to show that its accounting was correct and there is a triable issue of material fact regarding whether Plaintiff’s property taxes were delinquent. Thus, the Court denies Wells Fargo’s Motion as to Issue No. 7, leaving Plaintiff’s tenth cause of action intact.

Eleventh Cause of Action – Wrongful Foreclosure Action

Plaintiff alleges a wrongful foreclosure cause of action based on violations of Civil Code §§ 2923.5, 2923.55, and 2924. TAC ¶¶127-49. In Opposition, Plaintiff concedes that his § 2923.55 claim fails due to Section 2924.12(a)(1). Opposition, p.18. But, as Plaintiff points out, Section 2924.12(a)(1) only references Section 2923.55, not 292.5, and Wells Fargo cites no case law interpreting 2924.12(a)(1) to apply to 2923.5. Also, as Section 2923.55 is only part of the basis for the eleventh cause of action, whether Plaintiff’s entire eleventh cause of action fails as a result depends on the remainder of Wells Fargo’s arguments.

Wells Fargo first argues that because Plaintiff’s default on his mortgage is undisputed, his wrongful foreclosure claim fails. Motion, p. 17. However, Plaintiff has raised a triable issue of material fact regarding whether he had delinquent property taxes, which impacts whether the amounts that Wells Fargo said he owed were correct. Therefore, Wells Fargo’s argument is not persuasive.

Wells Fargo next argues that Plaintiff ignored Wells Fargo’s attempt to explore foreclosure alternatives and to assess his financial situation. Motion, pp. 17-18. Plaintiff alleges that Wells Fargo authorized and/or initiated foreclosure proceedings on May 31, 2013 without first providing proper notice to Plaintiff as required by Section 2923.5. TAC ¶128. Wells Fargo presents evidence that it sent Plaintiff a letter on December 7, 2012, and that Plaintiff did not respond. WF UMF No. 32. However, Wells Fargo’s position once again fails to completely dispose of the cause of action as Plaintiff also alleges that Wells Fargo did not contact Plaintiff via telephone as required by subsections (e)(2)(A) or (f)(3) (TAC ¶¶31 -32), and Wells Fargo offers no evidence of compliance under these sections. Finally, Wells Fargo’s argument regarding damages and attorney’s fees is misplaced and should have been part of a motion to strike. See Motion, p. 18.

Based on the foregoing, the Court grants, in part, the Motion re: Issue No. 8 only as to Plaintiff’s claim under Section 2923.55, and denies, in part, the remainder of Wells Fargo’s Motion re: Issue No. 8. Wells Fargo makes sporadic arguments attempting to attach Plaintiff’s eleventh cause of action, but fails to completely dispose of it.

Twelfth Cause of Action – Unfair Business Practices Pursuant to California Section 17200 et seq.

Plaintiff alleges an unfair competition claim against Wells Fargo based on allege violations of Civil Code §§ 2920 et seq., 2923.5, and deceptive and fraudulent business acts or practices. TAC ¶¶150-61. “[U]nfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice….” Bus. & Prof. Code § 17200. “Because section 17200 is written in the disjunctive, a business act or practice need only meet one of the three criteria— unlawful, unfair, or fraudulent—to be considered unfair competition under the UCL.” Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986. “[T]o state a claim under the [unfair competition law] one need not plead and prove the elements of a tort.[ ] [Citation.] Instead, the plaintiff must establish that the practice is either unlawful (i.e., is forbidden by law), unfair (i.e., harm to victim outweighs any benefit) or fraudulent (i.e., is likely to deceive members of the public).” Albillo v. Intermodal Container Services, Inc. (2003) 114 Cal.App.4th 190, 206.

*8 Wells Fargo argues that Plaintiff lacks standing to bring a UCL claim, as the foreclosure proceedings were a direct result of Plaintiff’s failure to submit a full monthly payment due on the loan. Motion, p. 19. For example, in Jenkins v. JP Morgan Chase Bank, N.A., “[a]s [the plaintiff’s] home was subject to nonjudicial foreclosure because of [the plaintiff’s] default on her loan, which occurred before Defendants’ alleged wrongful acts, [the plaintiff] cannot assert the impending foreclosure of her home (i.e., her alleged economic injury) was caused by Defendants’ wrongful actions.” (2013) 216 Cal.App.4th 497, 523, as modified (June 12, 2013). Unlike Jenkins, there is a possibility that Wells Fargo miscalculated the payments owed by Plaintiff because there is a disputed issue of material fact regarding whether Plaintiff was delinquent on property taxes, thereby making Wells Fargo, possibly at fault for the default. Therefore, Wells Fargo fails to show that Plaintiff lacks standing.

Wells Fargo next argues that Plaintiff has not identified unlawful conduct because Plaintiff’s other claims, upon which his UCL claim is based, all fail. Motion, pp. 19-20. Wells Fargo also argues that Plaintiff has not identified fraudulent conduct. Motion, p.20. However, these arguments are not persuasive because Plaintiff’s Section 2923.5 claim has withstood the instant Motion for Summary Judgment, and so has Plaintiff’s Fraud cause of action. Wells Fargo is correct that Plaintiff’s allegations against Wells Fargo lack the requisite “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 187. But, given the disjunctive nature of Section 17200 claims, this does not eliminate Plaintiff’s twelfth cause of action. As such, the Court denies Wells Fargo’s Motion as to Issue No. 9.

Thirteenth Cause of Action – Permanent Injunction

Plaintiff seeks injunctive relief in order to prevent Wells Fargo from foreclosing upon his home. TAG ¶¶162-74. “The elements of a cause of action for injunctive relief are (1) a tort or other wrongful act constituting a cause of action [Citation.]; and (2) irreparable injury, i.e., a factual showing that the wrongful act constitutes an actual or threatened injury to property or personal rights which cannot be compensated by an ordinary damage award.” Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410. Here, Plaintiff subsequently reinstated his loan and, as a result, the May 2013 notice of Default was rescinded. Doepp Decl., ¶27. Thus, there is currently nothing to enjoin. In Opposition, Plaintiff fails to address this argument. Therefore, the Court grants the Motion as to Issue No. 10, eliminating Plaintiff’s thirteenth cause of action.

Defendant is ordered to give notice.

DATED: February 24, 2015

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Hon. Samantha P. Jessner

Los Angeles Superior Court

 

Superior Court of California.

Department: 21

Contra Costa County

Jodi PULLAN,

v.

NATIONSTAR MORTGAGE LLC.

No. MSC13-02448.

March 26, 2015.

Hearing on Demurrer to 2nd Amended Complaint of Pullan Filed by Nationstar Mortgage, LLC

* TENTATIVE RULING: *

*1 The Court rules as follows on the demurrer brought by defendant Nationstar Mortgage LLC (“Nationstar”). The demurrer is opposed by plaintiff Jodi Pullan (“plaintiff”). The demurrer is directed to plaintiff’s Second Amended Complaint (“SAC”).

The general demurrer is sustained without leave to amend, as to both causes of action. (Code Civ. Proc., § 430.10, subd. (e).) Nationstar’s request for judicial notice is granted. The preliminary injunction is hereby dissolved. Nationstar shall prepare a proposed judgment of dismissal, separate from any formal order on the demurrer, and shall submit that proposed judgment to plaintiff’s counsel for approval as to form.

The basis for the Court’s ruling on the demurrer is as follows:

The Second Cause of Action

The Second Cause of Action is for common law negligence. Plaintiff has failed to state a cause of action for negligence, because she has failed to allege facts showing the existence of a duty of care. (See, Lueras v. BAC Home Loans Servicing LP (2013) 221 Cal.App.4th 49, 62-68.)

When there are conflicting decisions in the California appellate courts, a California trial court is free to follow the decision it finds more persuasive. (See, Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456 [“the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions”].) On the issue of whether a lender owes a borrower a duty of care when negotiating a loan modification, the Court finds the Lueras decision more persuasive than the Alvarez decision on which plaintiff relies. (See, Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941.) There are two reasons why this is so.

First, Lueras is consistent with a long line of California decisions holding that a lender owes no negligence duty to a borrower, unless the lender “actively participates in the financed enterprise” beyond its ordinary role as a lender. (Wagner v. Benson (1980) 101 Cal.App.3d 27, 35.) Alvarez is not consistent with that long line of California decisions. The Court notes that plaintiff has alleged no facts showing that Nationstar stepped outside of its ordinary role as a mortgage lender.

Second, every conceivable aspect of the nonjudicial foreclosure process in California is intensely regulated by comprehensive statutory schemes, including, but not limited to, the California Homeowner Bill of Rights. (See, Civ. Code, § 2920, et seq.) There are also federal statutory schemes that sometimes come into play, such as the federal Truth In Lending Act. Under plaintiff’s negligence theory, a lender could scrupulously comply with all applicable state and federal statutes and regulations, down to the finest detail, and still find itself liable to the borrower under a nebulous and inherently speculative negligence theory. Absent a California Supreme Court decision favoring Alvarez over Lueras, the Court declines to recognize such a theory.

The First Cause of Action

The First Cause of Action is for violation of the California Homeowner Bill of Rights (“HBOR”). Plaintiff has failed to state a cause of action under HBOR, based on the following analysis.

  1. Single Point of Contact.

*2 Plaintiff alleges that Nationstar has changed her “single point of contact” numerous times. (SAC, ¶ 43.) However, plaintiff offers no reasoned analysis as to how such changes constitute an HBOR violation. So long as there is only one person or team designated as the single point of contact at any given time, the lender is in compliance. (Civ. Code, § 2923.7.)

Thus for example, plaintiff alleges that she was informed on one occasion that her former single point of contact “no longer worked for Nationstar.” (SAC, ¶ 45(c).) Under plaintiff’s logic, Nationstar would be obligated to keep that former employee as the designated single point of contact, even though doing so would leave plaintiff with no one to communicate with. That is not a rational interpretation of the statute.

Further, under HBOR the single point of contact can be a “team of personnel each of whom has the ability and authority to perform the responsibilities,” rather than a single individual. (Civ. Code, § 2923.7, subd. (e).) Accordingly, the mere fact that plaintiff dealt with more than one individual does not demonstrate an HBOR violation.

Finally, while plaintiff has alleged the kind of frustration that any individual may experience when dealing with a large business institution, plaintiff has failed to allege a “material” violation of the single point of contact provision. (See, Johnson v. PNC Mortg. (N.D. Cal. Aug. 12, 2014) 2014 U.S. Dist. LEXIS 111846, p. 42 [““even if there were [an HBOR] violation, it was immaterial”].) Plaintiff has been represented by counsel since at least July 2013, and was able to submit a loan modification application, obtain a denial, and contest that denial. (SAC, ¶ 29 and passim.)

  1. Dual Tracking.

Plaintiff also alleges that Nationstar has engaged in “dual tracking.” (Civ. Code, § 2923.6.) These allegations do not support a cause of action.

2a. Relief Available.

No trustee’s sale has occurred. (SAC, ¶ 56.) Accordingly, plaintiff’s sole remedy is a preliminary injunction lasting until any “material violation” has been cured. (Civ. Code, § 2924.12, subds. (a) and (c).)

2b. The Multiple Applications Exception.

Plaintiff alleges that she was considered for and obtained a first lien loan modification in October 2012: an unemployment forbearance plan. (SAC, ¶¶ 22-23.) This forbearance plan was unsuccessful, not because of any misconduct on Nationstar’s part, but rather because plaintiff “could not afford to bring the loan current at the time the plan ended in March 2013.” (SAC, ¶ 23.)

Accordingly, Nationstar was not required to consider plaintiffs March 2013 application for an additional loan modification, under the multiple applications exception to the dual tracking statute. (Civ. Code, § 2923.6, subd. (g).) The fact that Nationstar voluntarily chose to consider the March 2013 application does not subject Nationstar to HBOR liability; a lender cannot be punished for doing more than HBOR requires. To construe HBOR otherwise would compel all lenders, through rational self-interest, to do only the minimum that HBOR requires — with obviously unsatisfactory public policy implications.

Plaintiff argues in her opposition memorandum that the March 2013 application reflected a “material change in financial circumstances,” so that the multiple applications exception to the dual tracking statute does not apply. This rather startling argument lacks merit, for two independent reasons.

*3 First, the argument is not supported by the allegations of the Second Amended Complaint. In the paragraph where plaintiff alleges that she submitted “a complete application for a loan modification,” plaintiff says nothing about a “material change in financial circumstances.” (SAC, ¶ 24.) In fact, plaintiff affirmatively alleges that her financial circumstances have not changed: since 2010, plaintiff “has not been able to find full time employment in her field, but has worked in temporary positions.” (SAC, ¶ 19.) Plaintiff’s under-employment rendered her unable to make her mortgage payments in 2010 (SAC, ¶¶ 19-20), and still unable to bring her mortgage loan current in March 2013 (SAC, ¶ 23).

Second, when plaintiff attempts to identify the “material change in financial circumstances” in her opposition memorandum, the change she describes is as follows: “she could no longer afford to make her payments.” (Opposition, page 8, lines 6-13.) This is baffling: plaintiff appears to be arguing that while she could not afford to make her mortgage payments in 2010, she really could not afford to make her mortgage payments in March 2013. What is the change? Further, to the extent that this argument can be understood, plaintiff appears to be arguing that the “material change in financial circumstances” was a deterioration in her financial circumstances. This makes no sense. Obviously, a “material” change must be a change showing an improvement in the borrower’s financial circumstances, one that is sufficiently substantial to justify the tedious process of re-evaluating the borrower’s chances of successfully modifying her loan. Plaintiff does not allege, and does not argue, that there has been any improvement in her financial circumstances since 2010.

In sum, the multiple applications exception to HBOR constitutes one fully independent ground for sustaining Nationstar’s demurrer. (Civ. Code, § 2923.6, subd. (g).)

2c. Material Violation.

Plaintiff is entitled to a preliminary injunction only against a “material” violation of the dual tracking statute. (Civ. Code, § 2924.12, subd. (a).) The word “material” cannot be ignored; a statute must be interpreted so as to give effect to all of its language. In the case at bar, plaintiff has failed to allege facts showing that any technical violations of the dual tracking provisions were “material.”

Thus, plaintiff acknowledges that she received a denial letter dated October 26, 2013, which stated the reason for the denial (“excessive forbearance”), and which included “a chart of the data Nationstar used to make this determination.” (SAC, ¶ 40.) Plaintiff alleges that the denial contained “numerous errors in the data included in this chart.” (Ibid.) However, plaintiff alleges no facts that would indicate what the “errors” are, much less how any such errors are “material” to plaintiff’s eligibility for a loan modification. (Ibid.) Indeed, plaintiff appears to be making a deliberate effort to obstruct the Court’s ability to ascertain the existence of a “material” violation of HBOR; she fails to attach any of the subject communications as exhibits to her pleading.

The Court finds that a “material” dual tracking violation is one that, if corrected, might substantially affect a lender’s decision to grant or deny an application for a first lien loan modification. However, plaintiff’s counsel, who have evidenced a highly detailed knowledge of the Home Affordable Mortgage Program (“HAMP”) guidelines, make no effort to argue that plaintiff was even close to being eligible for a HAMP loan modification in March 2013, or at any later time. To the contrary, plaintiff affirmatively argues that her financial circumstances had only deteriorated as of March 2013. (Opposition, page 8, lines 6-13.)

*4 While there is apparently no published California appellate authority on point, the Court must assume that the Legislature intended HBOR to be interpreted in harmony with the other statutes governing nonjudicial foreclosure. And it has always been part of California law that a defect in the nonjudicial foreclosure process must be prejudicial in order to be actionable. (See, Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 232 [notice of default’s designation of incorrect beneficiary not prejudicial]; Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94-99.)

In sum, plaintiff’s failure to allege a “material” HBOR violation constitutes a second, fully independent ground for sustaining Nationstar’s demurrer. (See, Johnson v. PNC Mortg. (N.D. Cal. Aug. 12, 2014) 2014 U.S. Dist. LEXIS 111846, p. 42 [““even if there were [an HBOR] violation, it was immaterial”].)

  1. The Equities.

Taking a step back from the intricacies of the HBOR statute and looking at the larger picture, plaintiff’s only available HBOR remedy is a preliminary injunction, and that is an equitable remedy. (See, Davenport v. Blue Cross of California (1997) 52 Cal.App.4th 435, 454-455 [“[a] preliminary injunction is an equitable remedy, and … one who seeks equity must do equity”].) In the case at bar, plaintiff has not alleged facts showing that the equities favor granting her further injunctive relief. To the contrary, this would appear to be a classic case of ‘no good deed goes unpunished.’

Thus, when plaintiff was diagnosed with cancer in 2007, Nationstar’s predecessor completely re-wrote plaintiff’s mortgage loan, converting it “from an adjustable rate mortgage loan to a fixed rate loan for ten years at 3% interest, so that she could afford her payments.” (SAC, ¶¶ 16-17.) And when plaintiff lost her job in 2010, Nationstar’s predecessor did not rush to foreclose; rather, it waited to record a notice of default until November 2011, an act which plaintiff concedes it had every right to do. (SAC, ¶ 21.) Nationstar’s predecessor then offered plaintiff an unemployment forbearance plan. (Ibid.) Next, when Nationstar acquired the loan, Nationstar did not rush to foreclose; Nationstar instead offered plaintiff a second unemployment forbearance plan, in August 2012. (SAC, ¶ 22.) And when plaintiff completed that plan, in March 2013, Nationstar voluntarily invited plaintiff to submit an application for an additional loan modification, even though Nationstar was not required to do so under HBOR. (SAC, ¶ 23.) Nationstar’s only reward, for conduct that can only be described as exemplary in the nonjudicial foreclosure context, is this meritless lawsuit.

In sum, the Court has sympathy for plaintiff’s difficult financial circumstances, and the challenge of finding affordable alternative housing in the San Francisco Bay Area. But mortgage lenders are not social welfare institutions. No valid purpose would be served by delaying foreclosure indefinitely, so that plaintiff’s counsel can continue to manufacture picayune objections to Nationstar’s HBOR compliance, and so that plaintiff can continue to live in a residence she has been unable to afford for the past five years — at Nationstar’s expense. That would not be equitable, and it is not required under HBOR.

 

Superior Court of California.

Santa Clara County

Robert Joseph MARTINEZ,

v.

NATIONSTAR MORTGAGE, LLC, et al.

No. 1-15-CV-277330.

July 2, 2015.

Trial Order

*1 After full consideration of the arguments and authorities submitted by each party, the court makes the following rulings:

This is a wrongful foreclosure action for damages by the former owner of the subject property (“the Property”), plaintiff Robert Joseph Martinez (“Plaintiff”), against defendants Nationstar Mortgage, LLC (“Nationstar”) and Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Pass Through Certificates 2006-QO3 (“DBTCA”) (collectively, “Defendants”), defendant Veriprise Processing Solutions, LLC (“Veriprise”), and others. In the first amended complaint (“FAC”), Plaintiff alleges the following:

Plaintiff executed a note (“the Note”) secured by a deed of trust (“the DOT”) against the Property in 2006. (FAC, ¶¶ 3 & 14, & Ex. D.) Nationstar is the current mortgage servicer. (Id., ¶ 4 & Ex. A.) Beginning in 2013, Plaintiff called Nationstar “several times to obtain mortgage assistance and to discuss his options to bring his loan current,” and Nationstar advised that his only option was to reinstate the loan for the amount past due. (Id., ¶¶ 17 & 64.) It rejected his attempts to make partial payments. (Id., ¶ 18.) The named beneficiary, Mortgage Electronic Registration Systems, Inc. (“MERS”), assigned its interest in the Note and the DOT to DBTCA pursuant to an assignment recorded on September 23, 2014. (Id., ¶¶ 5 & 82-88, & Ex. B.) Plaintiff defaulted on the Note, and on September 23, 2014, Defendants, through Veriprise, recorded a notice of default (“the NOD”). (Id., ¶¶ 6 & 16, & Ex. C.) Defendants, through Veriprise, recorded a notice of trustee’s sale (“the NOTS”) on February 2, 2015, noticing the sale for February 24, 2015. (Id., ¶ 19 & Ex. E.) On February 19, 2015, the Homeowner Rights Law Group, APC (“HRLG”) submitted Plaintiff’s loan modification application to Nationstar and requested that the sale be postponed. (Id., ¶¶ 20-21.) Defendants negligently reviewed the application, did not postpone the sale, and advised that there was not enough time to review the application and Plaintiff’s only option to postpone the sale was to reinstate the account. (Id., ¶¶ 26, 31, & 121-123.) Defendants, through Veriprise, sold the Property at auction on February 24, 2015. (Id., ¶¶ 35, 65-68, 72-74, & 77-80.) After Plaintiff filed this action and obtained a temporary restraining order to enjoin the recording of the trustee’s deed upon sale (“TDUS”), the third-party purchaser recorded the TDUS. (Id., ¶¶ 39-40.) Thereafter, the Court denied Plaintiff’s request for a preliminary injunction. (Id., ¶ 40 & Ex. E.)

Plaintiff asserts claims against Defendants for (1) wrongful foreclosure (violation of Civil Code section 2923.55); (2) wrongful foreclosure (violation of Civil Code section 2923.6); (3) wrongful foreclosure (violation of Civil Code section 2924.9); (4) wrongful foreclosure (violation of Civil Code section 2924.10); (5) wrongful foreclosure (violation of Civil Code section 2924); (6) violation of the unfair competition law (“UCL”); (7) negligence; and (8) breach of implied covenant of good faith and fair dealing. Defendants demur to each cause of action for failure to state a claim and make a request for judicial notice in support thereof. (See Code Civ. Proc. [“CCP”], § 430.10, subd. (e).)

*2 Defendants’ request for judicial notice of the DOT, the assignment, the NOD, the NOTS, the TDUS, and the order denying the motion for a preliminary injunction is GRANTED. (See Evid. Code, § 452, subds. (c)-(d) & (h); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264 [courts may take judicial notice of recorded real property records]; see also Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [judicial notice is limited to relevant matters].) The Court also takes judicial notice of the original complaint in this case. (See Evid. Code, § 452, subd. (d); see also Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383-384 [stating that the court may take judicial notice of the prior complaint where the amended complaint contradicts or omits facts].)

On demurrer, courts admit “all material facts properly pleaded,” but do not admit “contentions, deductions or conclusions of fact or law” stated in the subject complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Plaintiff’s assertions regarding the joint and several liability (FAC, ¶¶ 7-8), the requirement to tender the debt (id., ¶¶ 12-13), the procedures and legal effect of the HBOR (id., ¶¶ 42-44, 54, 57, 63, 68, 71, & 76), and the legal standards applicable to UCL claims (id., ¶¶ 96-97, 106, & 113) are legal contentions and conclusions that are not admitted for purposes of demurrer.

Turning to the first four causes of action, Plaintiff seeks damages for alleged violations of the HBOR based on purported irregularities in the non-judicial foreclosure procedures.1 A plaintiff must allege tender of the debt “in order to maintain any cause of action for irregularity in the sale procedure.” (Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; see also Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117; see also West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 801.) Plaintiff has not alleged that he tendered the amount of the indebtedness. Therefore, he has not stated a claim for wrongful foreclosure based on violations of either Civil Code section 2923.55, 2923.6, 2924.9, or 2924.10.

In any event, in order to state a claim for violations of Civil Code section 2923.55, 2923.6, 2924.9, or 2924.10, Plaintiff must allege facts showing that (1) Defendants committed a material violation of one or more of these statutes, (2) the violation was not corrected before the TDUS was recorded, and (3) he suffered resulting damages. (See Civ. Code § 2924.12, subd. (b).)

Civil Code section 2923.55 provides that a notice of default must “include a declaration that the mortgage servicer has contacted the borrower, has tried with due diligence to contact the borrower … , or that no contact was required.” (Civ. Code, § 2923.55, subd. (c).) A borrower may state a claim “by alleging the lender did not actually contact the borrower … despite a contrary declaration in the recorded notice of default.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal. App. 4th 1481, 1494.) The DOT contains a declaration that states that Nationstar complied with Civil Code section 2923.55, subdivision (b)(2) by contacting Plaintiff to assess his financial situation and explore options to avoid foreclosure. (FAC, Ex. C; RJN, Ex. 3.)

*3 Plaintiff alleges on information and belief that the declaration is false. (FAC, ¶ 54.) He alleges on information and belief that he never received a written statement or telephone call regarding options to avoid foreclosure, etc. or a certified letter or follow-up call with the number to find a HUD-certified housing counseling agency, and could not locate such a number on Nationstar’s website. (Id., ¶¶ 45-52.) Facts concerning the receipt of such communications by Plaintiff are presumptively within his personal knowledge. It is therefore improper for Plaintiff to plead these facts on information and belief. (See Hall v. James (1926) 79 Cal.App. 433, 435-436.) In any event, Nationstar was simply required to “contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” (Civ. Code, § 2923.55, subd. (b)(2).) “Any meeting may occur telephonically,” and “the borrower shall be provided the” number to find a HUD-certified housing counseling agency. (Ibid.) Notably, Plaintiff does not allege that Nationstar failed to initially meet with him in person and provide the telephone number to find a HUD-certified housing counseling agency. Therefore, he has not stated a claim for violation of Civil Code section 2923.55.

In addition, Civil Code section 2923.6 states that “[i]f a borrower submits a complete application for a first lien loan modification … , a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not … conduct a trustee’s sale, while the complete first lien loan modification application is pending.” (Civ. Code, § 2923.6, subd. (c), italics added.) An application is “deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer.” (Civ. Code, §§ 2923.6, subd. (h) & 2924.9, subd. (b), italics added.)

Plaintiff alleges that only five calendar days before the scheduled trustee’s sale, he filed a loan modification application. (FAC, ¶ 21.) He generally states that his application was “complete” (id., ¶ 35), and specifically alleges that on February 23, 2015, Nationstar advised that it was still reviewing the application “for completeness” (id., ¶ 26). “California courts have adopted the principle that specific allegations in a complaint control over an inconsistent general allegation. ( [Citations].)” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1236.) Thus, Plaintiff’s specific allegation that the application was still under review for completeness takes precedence over his general allegation. Furthermore, the FAC omits facts stated in the original complaint that show his application was not complete. For example, Plaintiff alleged that on February 23, 2015, Nationstar requested that he provide additional documentation. (Compl., ¶ 25.) Plaintiff allegedly provided the requested documents at 4:51 p.m. PST on February 23, 2015, and Nationstar had not finished reviewing his application for completeness when the sale occurred the next morning. (Id., ¶¶ 28-34.) Thus, the FAC and matters subject to judicial notice show that Plaintiff’s application was not complete and pending at the time of the sale. In light of the foregoing, Plaintiff has not adequately alleged a claim for a violation of Civil Code section 2923.6.

As for Civil Code section 2924.9, that statute requires “a mortgage servicer that offers one or more foreclosure prevention alternatives” to send a “written communication to the borrower” within five business days after recording the notice of default that includes the following information: “(1) That the borrower may be evaluated for a foreclosure prevention alternative…. (2) Whether an application is required …. (3) The means and process by which a borrower may obtain an application.” (Civ. Code, § 2924.9, subd. (a).) Plaintiff alleges that Defendants did not send him written information about the foreclosure prevention alternatives “for which Plaintiff could obtain an evaluation,” the means and process by which he could obtain an application, and the application itself. (FAC, ¶ 72.) However, the mortgage servicer is not required to provide the application itself or information about alternatives for which the borrower “could obtain an evaluation.” Plaintiff also does not allege how this purported violation caused any harm. Notably, Plaintiff allegedly communicated with Nationstar multiple times about possible foreclosure prevention alternatives between 2013 and the sale of the Property. (Id., ¶¶ 17 & 64.) Thus, Plaintiff has alleged facts showing that he did not suffer damages due to any purported violation of this procedure. Plaintiff has not stated a claim for violation of Civil Code section 2924.9.

*4 Next, Civil Code section 2924.10 provides that, “[w]hen a borrower submits a complete first lien modification application or any document in connection with” such an application, “the mortgage servicer shall provide written acknowledgment of the receipt of the documentation within five business days.” (Civ. Code, § 2924.10, subd. (a).) The NOTS was recorded on February 2, 2015, stating that the trustee’s sale would occur on February 24, 2015. (FAC, Ex. 4.) Plaintiff alleges that HRLG submitted a loan modification application on his behalf on Thursday, February 19, 2015. (FAC, ¶ 21.) That is only five calendar days, and three business days, before the date scheduled for the sale. Plaintiff allegedly never received written confirmation of his application, and is informed and believes that Defendants intentionally delayed his application. (Id., ¶ 37.) However, since he submitted the documents less than five business days before the date scheduled for the trustee’s sale, Nationstar was not required to provide written acknowledgement before the sale. Moreover, Plaintiff’s allegations show that his own delay in submitting the application left Nationstar with the inability to review his application for completeness before the trustee’s sale. (Id., ¶ 21.) To the extent Plaintiff seeks damages for not having received written confirmation of the receipt of his application after the sale occurred, he alleges no facts showing that this constitutes a material violation of the HBOR that caused damages. Plaintiff has not stated a claim for violation of Civil Code section 2924.10.

To summarize, Plaintiff has not adequately alleged facts to support his first four causes of action for wrongful foreclosure because he has not alleged a tender offer or facts to show actionable violations of Civil Code section 2923.55, 2923.6, 2924.9, or 2924.10. A demurrer may be properly sustained without leave to amend where the nature of the claim is clear and no liability exists under the substantive law. (Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 535.) The allegations contained in the FAC and original complaint show that he cannot state a claim against Defendants for violations of Civil Code sections 2923.6, 2924.9, and 2924.10, or against DBTCA for violation of Civil Code section 2923.55. Accordingly, the demurrer to the first four causes of action against DBTCA and the second, third, and fourth causes of action against Nationstar for failure to state a claim is SUSTAINED WITHOUT LEAVE TO AMEND.

However, it is possible for Plaintiff to state a claim against Nationstar for violation of Civil Code section 2923.55 if he properly alleges tender, Nationstar’s failure to contact him as required, and resulting harm. The demurrer to the first cause of action against Nationstar is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

Plaintiff’s fifth cause of action is for wrongful foreclosure in violation of Civil Code section 2924, subdivision (a)(6). That statute provides that only “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” may commence the foreclosure process. (Civ. Code, § 2924, subd. (a)(6).) Plaintiff alleges on information and belief that the assignment of MERS’ beneficial interest to DBTCA never occurred and is therefore invalid because DBTCA’s closing date passed before the purported assignment. (FAC, ¶¶ 82-86.) Plaintiff asserts that the foreclosure sale was therefore invalid because DBTCA lacked standing. (Id., ¶¶ 87-89.) However, the non-judicial foreclosure scheme does not “require that the foreclosing party have an actual beneficial interest.” (Jenkins v. JP Morgan Chase Bank, N.A. (2011) 216 Cal.App.4th 497, 513.) The alleged sham assignment does not prevent Defendants from foreclosing on the property. In any event, to recover on a wrongful foreclosure claim, a borrower must demonstrate that the alleged imperfection in the foreclosure process was prejudicial, and he or she cannot do so if he or she was in default. (Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th at p. 272; see also Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85.)

Plaintiff cannot allege facts showing prejudice as a result of the assignment, as the assignment merely substituted one creditor for another without changing his obligation to repay the debt. (See Jenkins v. JP Morgan Chase Bank N.A., supra, 216 Cal.App.4th, at p. 515.) Plaintiff’s reliance on Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 is misplaced, as that decision represents a minority view. (See Jenkins v. JPMorgan Chase Bank, N.A., supra, 216 Cal.App.4th at pp. 514-516; Newman v. Bank of N.Y. Mellon (E.D. Cal. 2013) 2013 U.S. Dist. LEXIS 147562 at p. *9, fn. 2 [no courts have yet followed Glaski and Glaski is in a clear minority on the issue]; Mottale v. Kimball Tirey & St. John, LLP (S.D. Cal. 2014) 2014 U.S. Dist. LEXIS 3398 at p. *12 [the weight of authority rejects Glaski as a minority view on the issue of a borrower’s standing to challenge an assignment as a third party to that assignment].) The demurrer to the fifth cause of action against Defendants is therefore SUSTAINED WITHOUT LEAVE TO AMEND.

*5 The seventh cause of action is for negligence in loan servicing. The elements of negligence include a legal duty and breach. (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673.) Plaintiff alleges that “Defendants, once undertaking to review Plaintiff for a loan modification, were under a duty to exercise reasonable care,” to comply with the HBOR, and to “fairly evaluate” him for “all available foreclosure prevention alternatives, including a loan modification.” (FAC, ¶¶ 120 & 123.) To the contrary, lenders do not have a common-law duty of care in negligence, to offer, consider, or approve a loan modification, to offer foreclosure alternatives, or to handle loans so as to prevent foreclosure. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 68.) Bank advice directly related to loan modification is within the scope of a conventional role as a lender and does not support a duty. (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 207.) Contrary to Plaintiff’s contention, the six-factor test established in Biakanja v. Irving (1958) 49 Cal.2d 647, 650 does not support the conclusion that Defendants owed him a legal duty. To the extent Plaintiff alleges that Defendants negligently failed to postpone the sale, there is no legal basis that required them to do so. (See Civ. Code, § 2924g, subd. (a)(1) & (c)(1) [requiring the trustee’s sale to take place at the time specified in the notice, and allowing it to be postponed only for certain reasons].) In any event, Plaintiff has not adequately pleaded breach. (FAC, ¶¶ 121-123.) In sum, Plaintiff has not stated a claim for negligence. Given that Defendants did not owe him any legal duty, Plaintiff cannot state a claim for negligence in loan servicing. The demurrer to the seventh cause of action against Defendants is therefore SUSTAINED WITHOUT LEAVE TO AMEND.

Plaintiff alleges that Defendants violated the implied covenant of good faith and fair dealing in the Note and the DOT by delaying Plaintiff’s efforts to obtain a loan modification with the intent to deny his application. (FAC, ¶¶ 132-138.) However, the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract. (Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094.) The Note and the DOT do not require Defendants to offer a loan modification or consider his application. (FAC, Ex. D; RJN, Ex. 1.) The fact that Defendants did not approve of Plaintiff’s application for a loan modification is of no consequence. (See Pazargad v. Wells Fargo Bank, N.A. (C.D. Cal. 2011) 2011 U.S. Dist. LEXIS 94850 at p. *11 [district court determined that defendants did not act in bad faith by failing to extend to a loan modification to plaintiffs nor did they have a legal duty to do so].) Plaintiff has not stated a claim for breach of the implied covenant of good faith and fair dealing. Since the NOD shows that Plaintiff defaulted on the Note and the DOT therefore authorized Defendants to conduct a non-judicial foreclosure sale of the Property (FAC, Exs. CD; RJN, Exs. 1 & 3), no liability exists as a matter of law. (See Jenkins v. JP Morgan Chase Bank, N.A., supra, 216 Cal.App.4th, at pp. 525 & 535.) Accordingly, the demurrer to the eighth cause of action against Defendants is SUSTAINED WITHOUT LEAVE TO AMEND.

The sixth cause of action is a UCL claim. Business & Professions Code section 17200 prohibits any “unlawful, unfair or fraudulent business practices.” Plaintiff alleges that Defendants practices were unlawful, unfair, and fraudulent because they violated the HBOR and refused to postpone the sale. (FAC, ¶¶ 98-105 [unlawful], 107-112 [unfair], & 114 [fraudulent].) The viability of a UCL claim stands or falls with the antecedent substantive causes of action. (Krantz v. BT Visual Images, LLC (2001) 89 Cal.App.4th 164, 178.) It follows that he has not stated a UCL claim based on the same facts alleged in connection with the other causes of action, as those causes of action do not state a claim.

Also, to state a claim under the UCL, the plaintiff must allege facts showing standing, i.e. that he or she “has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code § 17204.) This requires facts showing “a causal link between [the alleged] economic injury, the impending nonjudicial foreclosure of [the subject property],” and Defendants’ allegedly unfair, unlawful, or fraudulent business practices. (See Jenkins v. JP Morgan Chase Bank, N.A., supra, 216 Cal.App.4th, at p. 523.) Where the plaintiff defaulted on a loan and therefore triggered the power of sale in the deed of trust, any alleged wrongdoing by the defendants during the non-judicial foreclosure process could not have caused the economic. (Ibid.) Here, the DOT shows that Plaintiff defaulted on the Note and could not make payments. (FAC, ¶¶ 16-18 & Ex. C.) It is indisputable that Plaintiff’s default subjected the Property to non-judicial foreclosure. Any wrongful act allegedly committed by Defendants during the subsequent non-judicial foreclosure process could not have caused Plaintiff to lose the Property through foreclosure as a matter of law. Therefore, the demurrer to the sixth cause of action against Defendants is SUSTAINED WITHOUT LEAVE TO AMEND.

*6 The Court will prepare the order.

 

Superior Court of California.

Department 58

Los Angeles County

Estanislao Perez DE LOS REYES, Jr., et al,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY, et al.

No. BC548929.

December 12, 2014.

Order & Ruling: Demurrer is Sustained as to the 2nd and 4th COAs with 30 days Leave to Amend and is Otherwise Overruled.

Rolf M. Treu, Judge.

  1. Background

*1 On 6/18/14, Plaintiffs Estanislao Perez De Los Reyes Jr. and Rachelle Patricia De Los Reyes filed this action against Defendants Deutsche Bank National Trust Company; Atlantic & Pacific Foreclosure Services, LLC; and Carrington Mortgage Services, LLC arising out of the handling of Plaintiffs’ applications for a loan modification. On 10/1/14, in response but prior to the hearing on Defendants’ demurrer, Plaintiffs filed a First Amended Complaint asserting causes of action for (1) violation of Civil Code § 2923.55, (2) violation of Civil Code § 2923.6, (3) violation of Civil Code § 2923.7, (4) violation of Civil Code § 2924.10, (5) violation of Civil Code § 2924.17, (6) promissory estoppel, (7) negligence, and (8) violation of Bus. & Prof. Code § 17200.

  1. Factual Allegations of the FAC

On 6/29/05, Plaintiffs took a loan secured by property located at 24262 W. Kirby Court, Valencia, CA 91354. ¶ 11. In early 2009, Rachelle lost her job which caused a default on the loan. ¶ 13. Although foreclosure documents were filed (¶¶ 14-17), Plaintiffs were approved for a permanent loan modification (¶ 18) and the foreclosure documents were rescinded (¶ 19).

In early 2012, Estansilao lost his job (¶ 20): in anticipation of defaulting, Estansilao contacted Carrington to inquire about loan assistance programs (¶ 21): based on Carrington’s advice, Plaintiffs stopped making their payments in June 2012 (¶ 22). On 7/16/12, Plaintiffs submitted a complete financial package (¶¶ 23-26) and in early August 2012, Plaintiffs received a “Home Affordable Unemployment Program Forbearance Agreement” (“HAUP”) effective until 8/1/13 which Plaintiffs accepted and complied with its terms ¶¶ 27-29). On 5/13/13, Estansilao informed Carrington that he was still unemployed and requested an extension of the HAUP agreement (¶¶ 30) but was told that extension could be discussed after the August payment (¶ 31): on 7/15/13, Estansilao was told that the HAUP agreement would be extended another 6 months if all payments were made until then (¶¶ 32-34). Plaintiffs forewent non-foreclosure alternatives and made payments through September 2013. ¶ 35.

On 10/1/13, Estansilao spoke with Leslie Knox, Carrington’s agent, who stated that the HAUP agreement had expired and that a loan modification application would be needed: Estansilao requested Ms. Knox to be their single point of contact. ¶ 36. On 10/18/13, Plaintiffs submitted a complete loan modification application. ¶ 38. On 10/28/13, Estansilao was unable to reach Ms. Knox and was connected with another agent, Sally, who stated that additional financial information was required which Estansilao sent. ¶ 39. On 11/6/13, Estansilao was unable to reach Ms. Knox and was connected with another agent, Francine, who stated that his RMA (request for modification and affidavit) needed to be resubmitted which Estansilao sent. ¶ 40. On 11/18/13, Ms. Knox told Estansilao that he would be contacted with an update (¶ 41): Plaintiffs were not contacted, and on 12/12/13, Estansilao was informed that Ms. Knox no longer worked with Carrington and was connected with another agent, Jill Daunhauer who stated that there was no loan modification application on record (¶ 42). On 12/13/13, Plaintiffs submitted a complete loan modification application. ¶ 43. On 12/23/13, Estansilao was unable to reach Ms. Daunhauer and was connected with another agent, Moses who stated that Plaintiffs’ loan modification application was received, ¶ 44. On 1/9/14, Estansilao sought an update from Ms. Daunhauer who stated that proof of occupancy was required which Estansilao sent, ¶¶ 45-47.

*2 On 2/24/14, Plaintiffs received a letter from Wilma Finck, Carrington’s relationship manager, denying their loan modification application because their payments could not be reduced by at least 10%. ¶ 48. On 2/28/14, Estansilao sought an explanation from Ms. Finck who stated that she did not understand the denial. ¶ 49. On 3/4/14, Estansilao sent a letter appealing the denial of the loan modification application to Scott Perkins, Carrington’s supervisor of the home retention department (¶ 31). ¶ 50, Ex. N. On 3/14/14, Estansilao was unable to reach Ms. Finck and was connected with another agent Anthony who could not explain the reason for the loan modification denial but confirmed receipt of their appeal letter, ¶ 51. Over the next few months, Estansilao was connected with several different agents who were unable to explain the loan modification denial. ¶ 52. On 5/5/14, Estansilao was connected to an agent, Gil, who stated that Plaintiffs’ loan modification application was being re-reviewed and that foreclosure would not proceed until determination thereof in writing. ¶ 53. On 5/23/14, Estansilao was connected to an agent, Maria, who stated that his appeal was still under review but that Carrington was moving forward with foreclosure. ¶ 54. On 6/12/14, a notice of default was recorded. ¶ 56.

III. Demurrer

  1. HBOR Claims

Defendants argue that Plaintiffs fail to allege material violations (Civil Code § 2924.12(a)(1) (concerning injunctive relief), (b) (concerning treble actual damages or statutory damages)) for the Homeowners Bill of Rights claims. Plaintiffs argue that materiality is not required: but this is contrary to the express language of the pertinent provisions of Civil Code § 2924.12.

  1. a) 1st COA, Civil Code § 2923.55

Plaintiffs’ 1st COA alleges that Defendants failed to contact them to assess their financial situation and explore options to avoid foreclosure (see Civil Code § 2923.55(b)(2)) or comply with their due diligence requirements (see § (f)) prior to recording the notice of default (see § (a)(2)). FAC ¶¶ 68-70. Plaintiffs also allege that Defendants failed to inform them of the right to request certain information (Civil Code § 2923.55(b)(1)(B)). FAC ¶ 71. That Defendants are alleged to have been reviewing Plaintiffs’ appeal of the denial of the loan modification application does not establish that Defendants complied with the necessarily simple requirements to assess and explore options. See Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 232 (addressing Civil Code § 2823.5). Although Plaintiffs may fail to allege sufficient facts to establish the materiality of the failure to inform Plaintiffs of the right to request certain information, the alleged failure to contact Plaintiffs to assess their financial situation and explore other options is sufficient to support a material violation at the pleading stage. Therefore, the demurrer is overruled as to the 1st COA.

  1. b) 2nd COA, Civil Code § 2923.6

Plaintiffs’ 2nd COA alleges that Defendants failed to provide written notice of a determination on their appeal of the denial of the loan modification application prior to recording the notice of default (Civil Code § 2923.6(e)(2)). FAC ¶¶ 85-87. Defendants argue that Plaintiffs’ 3/4/14 letter (FAC Ex. N) did not constitute an appeal because it did not seek an appeal or provide evidence that the denial of the loan modification was in error (Civil Code § 2923.6(d)). The Court agrees. Although Plaintiffs characterize the 3/4/14 letter as an appeal, a review of the letter indicates that Plaintiffs only sought reconsideration of the denial of the loan modification application and presented new facts such as Rachelle’s new job.

To the extent Plaintiffs assert that Defendants failed to evaluate the 3/4/14 letter due to a material change in their finances (Opp’n p. 4:3-19), this is a theory based on Civil Code § 2923.6(g) which is not asserted in the FAC and for which Plaintiffs fail to allege facts that they documented and submitted such information to Defendants. The demurrer is sustained as to the 2nd COA.

The Court notes that Defendants have also argued that Plaintiffs fail to allege facts that the 3/4/14 letter was properly sent. However, Defendants fail to cite to any authority that requires Plaintiffs to plead such facts: to the extent Defendants assert that the letter was improperly directed to an employee (Dem. p. 5:14-15), this improperly attempts to raise disputed factual issues at the pleading stage.

  1. c) 3rd COA, Civil Code § 2923.7

*3 Plaintiffs’ 3rd COA alleges that Defendants failed to provide a single point of contact that was consistent, knowledgeable, and authoritative throughout the loan modification process. FAC ¶¶ 96, 100-102 (asserting various violations of Civil Code § 2923.7(b)). Plaintiffs allege that they were unable to reach Ms. Knox at times and Ms. Knox could not update Plaintiffs as to the status of their loan modification application (FAC ¶¶ 39-41); and that other agents to whom Plaintiffs were connected could not find Plaintiffs’ submitted loan modification application on record (id. ¶ 42) or provide an explanation as to the denial of Plaintiffs’ loan modification application (id. ¶¶ 49, 51-52). Defendants argue that Plaintiffs were provided with a single point of contact through Ms. Knox and a team of personnel (see Civil Code § 2923.7(a), (e)) and that Plaintiffs fail to allege material violations. However, this improperly attempts to dispute the factual allegations at the pleading stage. The demurrer is overruled as to the 3rd COA.

  1. d) 4th COA, Civil Code § 2924.10

Plaintiffs’ 4th COA alleges that Defendants failed to provide written acknowledgment of receipt of the applications and failed to inform Plaintiffs of any deficiencies in the applications or of the application process or deadlines. FAC ¶¶ 114-115. Although Plaintiffs attempt to allege that they were wholly ignorant of the loan modification process (id. ¶ 116), this is not supported by the factual allegations. As further detailed in the Court’s summary of Plaintiffs’ allegations, Plaintiffs submitted two loan modification applications, submitted additional information concerning the applications after being told to do so by Defendants’ agents, and sought further explanation or reconsideration of the denial of Plaintiffs’ application. See also id. ¶ 118. As alleged, Plaintiffs’ damages are the result of Defendants’ denial of Plaintiffs’ loan modification application and initiating the foreclosure process before complying with the other requirements as stated in the 1st through 3rd COAs. Plaintiffs fail to allege material violations of Civil Code § 2924.10. Therefore, the demurrer is sustained as to the 4th COA.

  1. e) 5th COA, Civil Code § 2924.17

Plaintiffs’ 5th COA alleges that Defendants’ notice of default was not accurate, complete, or supported by competent and reliable evidence as to the right to foreclose (Civil Code § 2924.17(a)-(b)). FAC ¶¶ 126-127. The 5th COA is dependent on Plaintiffs’ 1st through 4th COAs: because Plaintiffs’ 1st and 3rd COAs are sufficiently stated, the 5th COA survives. Cf. Kong v. City of Hawaiian Gardens (2002) 108 Cal.App.4th 1028, 1047 (stating that a demurrer cannot be directed to part of a cause of action). Therefore, the demurrer is overruled as to the 5th COA.

  1. 6th COA, Promissory Estoppel

Plaintiffs’ 6th COA is based on the promises that their HAUP agreement would be extended for an additional six months (FAC ¶¶ 133-136) and that foreclosure proceedings would not be initiated until a final determination of Plaintiffs’ appeal of the denial of their loan modification application (id. ¶¶ 137-140). Defendants argue that this fails to support detrimental reliance or damages. See Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, 226-27. The Court disagrees. Defendants’ argument improperly attempts to dispute the allegations at the pleading stage because Plaintiffs allege that they made all HAUP payments and refrained from pursuing other options to prevent foreclosure such as filing for bankruptcy protection (FAC ¶¶ 136, 140) but that Plaintiffs’ home is now subject to foreclosure, Plaintiffs’ credit has been severely damaged, and greater arrears have resulted (id. ¶ 143). Although Plaintiffs fail to allege sufficient facts to support appeal of the denial of the loan modification application, Plaintiffs’ factual allegations support that Defendants should have reasonably expected that the promises would induce inaction by Plaintiffs with respect to the HAUP agreement and the determination on their loan modification application. See Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 947-48.

  1. 7th and 8th COAs, Negligence/Negligence Per Se and Unfair Business Practices

*4 Defendants argue that they owe no duty of care as a lender or loan servicer (see, e.g., Nymark v. Heart Fed. Sav. & Loan Ass’n (1991) 231 Cal.App.3d 1089, 1098) or in connection with consideration for a loan modification (see, e.g., Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 68-69).

Defendants also argue that Plaintiffs fail to allege facts to support unlawful (see, e.g., Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554 (violations of other laws)), unfair (id. at 1555 (substantial consumer injury that is not outweighed by any countervailing benefits and is not an injury the consumer themselves could reasonably have avoided)), or fraudulent conduct (id. at 1556 (public likely to be deceived)); or that Plaintiffs have suffered monetary or property loss as a result of the alleged violations (see, e.g., Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1590).

However, Plaintiffs’ surviving claims are sufficient to support that Defendants’ owed Plaintiffs a duty (see Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 951) and unlawful or unfair conduct, as well as resulting damages. Therefore, the demurrer is overruled as to the 7th and 8th COAs.

  1. Leave to Amend

Plaintiff has requested leave to amend. Because this is the first challenge to the pleadings addressed by the Court, leave to amend is granted. Plaintiff is cautioned however, that the 2nd Amended Complaint will be his third attempt to properly plead his case.

 

Superior Court of California.

Santa Barbara County

Pilar CASO,

v.

WELLS FARGO BANK NA et al.

No. 1467464.

July 14, 2015.

Tentative Ruling

James Sherman, Judge.

CIVIL, LAW & MOTION

*1 Nature of Proceedings: Demurrer and Motion to Strike Third Amended Complaint

Tentative Ruling:

  1. The court sustains defendant Wells Fargo Bank, N.A.’s demurrer to the first, second, fourth and fifth causes of action in plaintiff Pilar Caso’s third amended complaint without leave to amend. The court overrules the demurrer to the third cause of action.
  2. The court grants defendant Wells Fargo Bank, N.A.’s motion to strike portions of plaintiff Pilar Caso’s third amended complaint and orders stricken the following words at 19:20 of the third amended complaint: “For compensatory damages as will be more fully proven at time of trial.”

Background: Plaintiff Pilar Caso filed her original complaint in this action on June 10, 2014. Defendant Wells Fargo Bank, N.A. (“WFB”), filed a demurrer and motion to strike the original complaint. Prior to the hearing on the demurrer and motion to strike, Caso filed her first amended complaint (FAC). WFB filed a demurrer and motion to strike the FAC. On November 12, 2014, the court sustained WFB’s demurer with leave to amend and granted the motion to strike the claims for punitive damages and attorney fees without leave to amend. On December 12, 2014, Caso filed her second amended complaint (“SAC”) asserting seven causes of action: 1) fraud; 2) misrepresentation; 3) unfair business practices; 4) no notice of trustee’s sale; 5) violation of homeowner’s bill of rights (“HBOR”; 6) declaratory relief; and 7) lack of standing. On March 18, 2015, the court sustained WFB’s demurrer to the SAC with leave to amend as to the first, second, third, fifth, and seventh causes of action. On May 1, 2015, Caso filed a third amended complaint (“TAC”) asserting five causes of action: 1) fraud; 2) unfair business practices; 3) violation of HBOR; 4) declaratory relief; and 5) lack of standing. WFB now demurs to the TAC and moves to strike portions of it.

TAC: In her TAC, Caso alleges: Caso is the owner of the real property located at 4357 Cuna Drive in Santa Barbara, which is and has been her residence since she purchased it on December 4, 1998. [TAC ¶¶ 1, 9]On June 24, 2004, Caso obtained a loan secured by a first deed of trust (DOT) on the property. The loan is a variable interest rate loan in the principal amount of $990,000 and carries a maximum interest rate of over 10 percent. [TAC ¶2, Exhibit 2] WFB is the lender and servicer of the loan. [TAC Exhibits 2, 3] Defendant NBS Default Services, LLC (NBS) is the current trustee under the DOT. [TAC ¶5]

After origination of the loan, it was then placed into a pool with other mortgage loans which were securitized. [TAC ¶10] There was no proper transference of title or recording. [TAC ¶11]

In August 2011, Caso began a loan modification process with WFB. On

August 24, 2011, Caso submitted a completed modification package to WFB, containing all the documents WFB requested. CASO has been attempting to modify the first loan for several years since then. WFB has failed to modify the loan or to take required action to offer a trial plan. [TAC ¶13] From August 2011 through December 2013, 140 outbound calls were made to WFB by Caso or on her behalf. All these calls were made in Caso’s effort to secure a loan modification from WFB. Additionally, numerous times financial documents were faxed to

*2 WFB at its request. [TAC ¶14]

In October 2011, Caso was removed from loan modification review based upon WFB’s claim that it had made several unsuccessful attempts via telephone to collect the required financial information necessary to conduct a review. Bank’s claim was untrue as Caso had continuous telephone contact with Bank during this period. [TAC ¶15, Exhibit 3] As a result of a complaint filed with the loan modification department at WFB in November 2011, Caso’s loan modification application was assigned to “Laquisha.” Loan modification documents were resubmitted numerous times and several times Caso was told a complete application had been made. On June 6, 2012, Caso was told she needed to submit everything again, which she did. [TAC ¶16]

On June 7, 2012, a complaint was filed by Caso with the office of the president of WFB. The modification file was then assigned to Tina Harder in that office. A whole new modification file was started with Harder. [TAC ¶17] Caso operates several laundromats as a sole owner of that business. Caso documented income from that business, but WFB refused to credit that income because it was not in the form of paychecks. The financial documents Caso submitted clearly indicated as much and WFB’s underwriter – “Mike” -stated he realized she made that income. [TAC ¶18] “Mike” told Caso that as long as she was able to show paychecks for the income that she reported, Caso was approved for a loan modification based on the financials submitted. [TAC ¶ 19] In January 2013, Caso stopped taking draws from her company and started taking paychecks to comply with WFB’s requirement that income be received in the form of paychecks. [TAC ¶20]

In February 2013, another complete loan modification package was sent to WFB. Caso was assigned Oyaffa Clinton as her specific point of contact. This soon changed and became a series of people, one after another. Documents were re-requested numerous times. On May 31, 2013, the loan modification was again denied with no significant reason for the denial despite Caso having submitted the exact financial figures that the previous underwriter had represented would guarantee approval of a loan modification. [TAC ¶ 21]

Following a series of complaints by Caso, WFB reconsidered the modification, this time denying it on May 28, 2013, based upon WFB’s assertion that the proposed modification failed the net present value test. The letter included no net present value analysis or evidence of the means by which Bank achieved the asserted result. [TAC ¶22, Exhibit 4] Caso complained that the gross income figure stated in the May 28 letter was wrong and that Caso’s gross income was sufficient to pass the net present value test for a modified loan. Then WFB denied her modification request in a letter dated July 25, 2013, stating that a modification required approval from the investor who owns the mortgage and the investor declined the request to modify the mortgage. The July 25 letter identified the investor as “U.S. Bank, N.A.” (TAC ¶23, Exhibit 7]

*3 Caso made several Qualified Written Requests to WFB for the identity of the investor on her loan. In response WFB has identified two investors: U.S. Bank, N.A., and Goldman Sachs. WFB finally clarified the investor as being Goldman Sachs. It then listed U.S. Bank, N.A. and its address as the contact for Goldman Sachs. WFB has not explained the relationship between U.S. Bank, N.A. and Goldman Sachs, or how the two own the mortgage. In a letter dated October 13, 2014, WFB stated a new reason for denial of the modification request: “The investor of this account does allow modifications; however, due to the amount of the unpaid principal balance this account is not eligible.” [TAC ¶24, Exhibit 8]

On September 6, 2013 a Notice of Default (“NOD”) was recorded against the property. [TAC ¶25, Exhibit 5] CASO believes that a Notice of Trustee’s Sale (“NOTS”) has been recorded, although a copy has never been served on her. [TAC ¶25] (The NOTS was recorded on December 12, 2013. [WFB’s Request for Judicial Notice (“RJN”) Exhibit G] )

WFB issued a Foreclosure Attorney Procedure Manual which outlined the steps its agents and employees should take to conduct a foreclosure. The procedures violate HAMP guidelines, the Pooling and Service Agreement, and HBOR. [TAC ¶26, Exhibit 6]

Caso was current in her payments until WFB employees told her she would only receive attention and consideration for a loan modification if she was behind in payments. [TAC ¶¶ 29, 30] Caso was told that as long as she was engaged in the loan modification process, her home would not be foreclosed upon and any foreclosure would be stopped until a final decision was made on her loan modification request. [TAC ¶31]

WFB engaged in a time consuming “loan modification” procedure without any intention of making any modification. [TAC ¶28] Caso justifiably relied on WFB’s representations that it was working with her toward modifying her loan, and that they would suspend all further foreclosure activity on her home. As a result of her reliance on their representations, Caso did not pursue other avenues for resolving her loan default or take any steps to sell her house or otherwise cure her default, believing that while the loan was in the process of being modified, WFB or NBS would take no further action to foreclose upon the home. [TAC ¶34]

Caso’s reliance on WFB’s representation caused her harm in that she has nearly lost title to the property through the pending trustee sale and is now incurring legal fees in an attempt to obtain a judicial order stopping the illegal sale and confirming her status as legal owner of the property. [TAC ¶36]

Demurrer: WFB demurs to the complaint as a whole and to each of the five causes of action. Caso opposes the demurrer.

  1. Fraud Cause of Action: A party must plead fraud specifically; general and conclusory allegations do not suffice. Lazar v. Superior Court, 12 Cal.4th 631, 645 (1996). “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” id. “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 157 (1991).

The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure) of material fact; (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 990 (2004).

*4 Actionable deceit exists where a promise is made “without any intention of performing it.” Civ. Code § 1710(4); Building Permit Consultants, Inc. v. Mazur, 122 Cal.App.4th 1400, 1414 (2004). ‘“Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” Lazar v. Superior Court, supra, 12 Cal.4th at 638. Otherwise the elements of fraud are the same as for intentional misrepresentations of present material facts. “[A]n action based on a false promise is simply a type of intentional misrepresentation, i.e., actual fraud.” Tarmann v. State Farm Mut. Auto. Ins. Co., supra, 2 Cal.App.4th at 159.

Caso alleges that she was current in her mortgage payments until she was told that her loan could only be modified if she was behind in payments. [TAC ¶¶ 29, 30] First, she does not say when she was told this, by whom, their authority, or by what means. Second, the statement contradicts a prior verified pleading.

On December 17, 2013, Caso filed a verified complaint against WFB in Case No. 1439281, based on some of the same allegations made here. [RJN Exhibit D] In that complaint, Caso stated that her business took a significant downturn in 2007, but she stayed current in mortgage payments by leveraging money from her savings. However, after exhausting her financial resources, Caso reluctantly fell behind in her mortgage payments in October 2010. [Verified Complaint ¶¶ 19, 16, 5:22-6:1 – there are two paragraphs 19 and 16 in that complaint] With a demurrer to her first amended complaint pending, Caso dismissed Case No. 1439281 on May 6, 2014, and filed this action on June 10, 2014. (Caso had changed the allegation in the first amended complaint, which is not verified.)

A ‘plaintiff may not discard factual allegations of a prior complaint, or avoid them by contradictory averments, in a superseding, amended pleading.” ’ Continental Ins. Co. v. Lexington Ins. Co., 55 Cal.App.4th 637, 646 (1997). “[A] pleaded fact is conclusively deemed true as against the pleader.” Dang v. Smith, 190 Cal.App.4th 646, 657 (2010). “The only effect of an earlier allegation in such a context is to prevent the pleader from amending her pleading so as to contradict the judicially admitted matter. [Citation] Because the original allegation is conclusively deemed true, the pleader is not permitted to assert its logical opposite.” Id. at 658.At the very least, some explanation, or purported explanation” should be given in the amended complaint “for the contradiction or complete change.” Findey v. Garrett, 109 Cal.App.2d 166, 179 (1952).

Caso cannot escape her statements under penalty of perjury in a prior case by dismissing that case and filing another action a month later. Caso offers no explanation why the very specific allegations in her verified complaint regarding her financial situation and default in mortgage payments are not true. The new, unverified allegation regarding being told to default lacks specificity required for allegations of fraud. Based on her judicial admissions, Caso did not justifiably rely on any alleged representation about the necessity of missing payments to qualify for consideration of a loan modification.

Caso says she relied on representations that WFB was working with her toward a modification when it had no intention of doing so. But her prior admission reflects that Caso cannot plead any resulting damage. There has been no sale of her property and her only alleged damage is the cost of this lawsuit. Caso says she did not pursue other means of curing the arrearage but does not say what those means were or why she could not pursue them now. The foreclosure sale is a result of the default in payments dating back to October 2010, which explains why the claimed arrearage as of September 4, 2013, was $198,654.81. [TAC Exhibit 3]

*5 Caso has failed to plead facts sufficient to constitute the cause of action for fraud. The court sustains the demurrer to the first cause of action.

  1. Unfair Business Practices: A cause of action under B&P Code § 17200 (commonly referred to as a “UCL” claim) must allege a business practice that is unlawful, unfair or fraudulent. The statute is interpreted broadly because “unfair or fraudulent business practices may run the gamut of human ingenuity and chicanery.” Motors, Inc. v. Times Mirror Co., 102 Cal.App.3d 735, 740 (1980).

WFB claims that the reasonable particularity standard for pleading applies to a claim under B&P Code § 17200. But that is not the case. In addressing pleading requirements for UCL claims, the California Supreme Court has held contrary to the suggestion … that the court may require fact-specific pleading, the well-settled rule is otherwise except in pleading fraud.” Quelimane Co. v. Stewart Title Guaranty Co., 19 Cal.4th 26, 46-47 (1998).

In its rulings on demurrers to the FAC and SAC, the court sustained the demurrer to this cause of action because Caso failed to allege a causal link between her actual injury and any unfair or unlawful business practice. A UCL claim can be prosecuted “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” B&P Code § 17204. Therefore, “to have standing to assert a claim under the UCL, a plaintiff must have ‘suffered injury in fact and [have] lost money or property as a result of such unfair competition.” ’ Aron v. U-Haul Co. of California, 143 Cal.App.4th 796, 802 (2006).

Caso admits that she defaulted on her loan in October 2010. This default triggered the lawful enforcement of the power of sale clause in the DOT, which in turn subjected her home to nonjudicial foreclosure. Thus, she cannot assert a UCL cause of action. Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 523 (2013). The court sustains the demurrer to the second cause of action.

  1. HBOR: Civil Code § 2923.7(a) provides: “Upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” That person “shall remain assigned to the borrower’s account until the mortgage servicer determines that all loss mitigation options offered by, or through, the mortgage servicer have been exhausted or the borrower’s account becomes current.” Civil Code § 2923.7(c). “For purposes of this section, ‘single point of contact’ means an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described in subdivisions (b) to (d), inclusive. The mortgage servicer shall ensure that each member of the team is knowledgeable about the borrower’s situation and current status in the alternatives to foreclosure process.” Civil Code § 2923.7(e).

“If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section … 2923.7….” Civil Code § 2924.12(a)(1). “Any injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise to the action for injunctive relief.” Civil Code § 2924.12(a)(2).

*6 Caso alleges that WFB identified one point of contact on February 15, 2013 -Offaya Clinton. She could not reach this individual and was directed to others who were unfamiliar with Caso and her file. [TAC ¶53] On April 24, 2013, before a decision had been reached on the loan modification, Caso was given a new point of contact – Miriam Miller. [FAC ¶54] Again, this contact was not available and Caso was directed to others who were not working as a team and had no knowledge of Caso’s situation or status. [FAC ¶v 54, 55]

In sustaining the demurrers to this cause of action in the FAC and SAC, the court noted that Caso alleged that a specific point of contact includes a team of personnel and that the obligation was that such personnel must have the authority to act on Caso’s loan application. Caso did not make any allegation of a lack of authority, so the court sustained the demurrer.

Now Caso has added the allegation that the single point of contact team must be knowledgeable about the borrower’s situation and current status and WFB’s designated single point of contact team was not. It is not sufficient to simply designate a single point of contact. That person or team must carry out the substantive obligations that HBOR demands of single points of contact. Johnson v. PNC Mortgage,  at *6 (N.D. Cal. Feb. 12, 2015).

Caso has stated a cause of action for injunctive relief under HBOR. The court overrules the demurrer to the third cause of action.

  1. Declaratory Relief: CCP § 1060 provides that any person may ask the court for a declaration of its rights or duties “in cases of actual controversy relating to the legal rights and duties of the respective parties.” A “cardinal rule of pleading is that only the ultimate facts need be alleged” and the ultimate facts in a declaratory relief action “are those facts establishing the existence of an actual controversy. A party need not establish that it is also entitled to a favorable judgment.” Ludgate Ins. Co. v. Lockheed Martin Corp., 82 Cal.App.4th 592, 606 (2000).

“An essential requirement of the procedure, however, is that there be a real controversy between parties, involving justiciable questions relating to their rights and obligations. Facts and not conclusions of law must be pleaded which show a controversy of concrete actuality as opposed to one which is merely academic or hypothetical [citation]; for, as has been aptly said, a statute providing for a declaration of rights ‘does not constitute a court a fountain of legal advice.” ’ Wilson v. Transit Authority of Sacramento, 199 Cal.App.2d 716, 722 (1962).

Caso “desires a judicial determination of her rights and duties, and a declaration as to the validity of the loan agreement, loan transactions, and Defendants’ right to proceed with a Trustee’s Sale of the Property.” [TAC ¶68] Nothing in the complaint calls into controversy the validity of the original loan and loan transactions.

The HBOR cause of action concerns the right to proceed with a trustee’s sale, at least temporarily. In this limited respect, Caso has stated a legal controversy and justiciable questions. But the object of the declaratory relief statute “is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.” Cal. Ins. Guar. Ass’n v. Superior Court, 231 Cal.App.3d 1617, 1624 (1991). Since the right to proceed with the trustee’s sale based on the alleged HBOR violation will be fully adjudicated, no additional relief can be granted in the declaratory relief cause of action.

*7 The court sustains the demurrer to the fourth cause of action.

  1. Lack of Standing: Caso alleges: “Because Defendants, and each of them, have no ownership interest in a note or trust deed secured by Plaintiffs property, they lack standing to commence a foreclosure on Plaintiff’s property or to instruct NBS, or any other Trustee for that matter, to commence or prosecute a foreclosure through Trustee’s sale.” [TAC ¶75] In the complaint, Caso alleges lack of possession of or interest in the note and failure to identity the investor in the mortgage under the securitized trust or pooling and service agreement.

The foreclosing party need not possess the original promissory note or even have a beneficial interest in the note and DOT to commence a non-Judicial foreclosure sale. Debrunner v. Deutsche Bank National Trust Co., 204 Cal.App.4th 433, 440-441 (2012).

To the extent that Caso seeks to raise issues arising out of the securitization of the loan or the pooling and servicing agreement, as an unrelated third party to the alleged securitization, she “lacks standing to enforce any agreements, including the investment trust’s pooling and servicing agreement, relating to such transactions.” Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497, 515 (2013). “Furthermore, even if any subsequent transfers of the promissory note were invalid, [the borrower] is not the victim of such invalid transfers because her obligations under the note remained unchanged. Instead, the true victim may be an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.”

Id. (In this regard, WFB cited Mendoza v. JPMorgan Chase Bank, N.A., 228 Cal.App.4th 1020 (2014). However, the Supreme Court granted review of that case and it is not citable. Mendoza v. JPMorgan Chase Bank, S220675, 337 P.3d 493 (Cal. 2014).)

As discussed above Caso is not prejudiced by any issues arising out of the foreclosure because of her admitted default. Absent any prejudice, [a plaintiff has] no standing to complain about any alleged lack of authority or defective assignment.” Siliga v. Mortgage Electronic Registration Systems, Inc., 219 Cal.App.4th 75, 85 (2013). ‘[T]he homeowner-plaintiff’s claimed injury is foreclosure. The foreclosure resulted from a default which would have occurred regardless of what entity was named as trustee. Thus, the homeowner-plaintiff does not suffer an injury as a result of the assignment of deed of trust, even if the assignment was fraudulent. Accordingly, the homeowner-plaintiff lacks standing to complain.” Carollo v. Vericrest Fin., Inc., 2012 U.S.Dist.LEXIS 137017 *9 (N.D. Cal. 2012).

The court sustains the demurrer to the fifth cause of action.

  1. Leave to Amend: “If there is a reasonable possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend. [Citation.] The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended. [Citation.]” Hendy v. Losse, 54 Cal.3d 723, 742 (1991). “It is not up to the judge to figure that out.” Lee v. Los Angeles County Metropolitan Transportation Authority, 107 Cal.App.4th 848, 854 (2003). The plaintiff has the burden “to show what facts he or she could plead to cure the existing defects in the complaint.” McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 792 (2008). “To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action.” Cantu v. Resolution Trust Corp., 4 Cal.App.4th 857, 890 (1992).

*8 Caso has not suggested how she might amend her complaint to cure the deficiencies discussed above. This is Caso’s fourth complaint – sixth counting the two in Case No. 1439281. This is the third demurrer in this case and another one was pending when Caso dismissed Case No. 1439281. The reasons for the failure of the fraud and UCL claims – no economic damage -and the meritless challenge to WFB’s standing to foreclose are not susceptible to fixing. Therefore, the court sustains the demurrer to the first, second and fifth causes of action without leave to amend.

Motion to Strike: WFB moves to strike the claim for compensatory damages from the TAC because HBOR only provides for injunctive relief. Caso opposes this motion because she asserts fraud and UCL claims under which she may seek compensatory damages. In light of the ruling on the demurrer, the HBOR claim is the only remaining cause of action in the case. As discussed above, Caso is only entitled to injunctive relief under HBOR. Therefore, the court grants the motion to strike and orders stricken the following words at 19:20 of the TAC: “For compensatory damages as will be more fully proven at time of trial.”

Chris NASSIRI,

v.

GREEN TREE SERVICING LLC.

No. 56-2014-00448803-CU-OR-VTA.

June 22, 2015.

Minute Order

Pamela Anderson, specially appearing for counsel Stephen R Golden, present for plaintiff(s).

David M Liu, counsel, present for defendant(s) telephonically.

Kevin DeNoce, Judge.

*1 CASE CATEGORY: Civil – Unlimited

CASE TYPE: Other Real Property

EVENT TYPE: Demurrer (CLM) to first amended complaint

MOVING PARTY: Green Tree Servicing LLC, Specialized Loan Servicing LLC

CAUSAL DOCUMENT/DATE FILED: Demurrer to First Amended Complaint and Memorandum of Points and Authorities, 05/12/2015

At 8:48 a.m., court convenes in this matter with all parties present as previously indicated.

Telephonic appearance by counsel for Plaintiffs and Defendant.

Counsel have received and read the court’s written tentative ruling.

Matter submitted to the Court with argument.

The Court finds/orders:

The Court takes this matter under submission as of 06/22/2015.

After considering all argument by counsel:

The Court, having previously taken the Demurrer to first amended complaint under submission, now rules as follows:

The Court’s tentative is adopted as the Court’s ruling.

The court’s ruling is as follows:

Deny Defendants’ request for judicial notice of unauthenticated (Ev. C. section 1401), uncertified (See e.g., People v.Preslie (1977) 70 Cal.App.3d 486, 495.) copies of documents.

Sustain without leave to amend as to causes of action: 1 – Violation of CC 2924 (a)(6); 2 – Violation of CC 2924.17 (b); 3 – Violation of CC 2924.17 (a); and 4 – Wrongful foreclosure per CC 2923.5 (agents of trustees are allowed to record notices of default). Plaintiffs have not pled violations of CC 2924.17 (a) or (b) and have failed to allege any facts that would support any claim that Defendants did not comply with CC 2923.5.

Sustain without leave to amend as to cause of action 5 – Unfair business practices: this was premised on the allegations made in support of causes of action 1-4 which were not viable.

Sustain without leave to amend as to cause of action 6 – Breach of contract: Defendants are alleged to be loan servicers. They are not parties to the note or deed of trust nor are they successors in interest.

Sustain without leave to amend as to cause of action 7 – Negligence: Plaintiffs have not alleged that there was no review or that there was a denial out of hand so no breach of any duty.

Sustain without leave as to cause of action 8 – Quiet title: Defendants have no interest in the real property.

Sustain without leave to amend as to Defendant Specialized Loan Servicing, LLP as to cause of action 9 – Viol of Real Estate Settlement Procedures Act (RESPA). Plaintiffs did not allege that Specialized Loan Servicing, LLP was sent any RESPA request.

Answer by D Green Tree Servicing LLC to cause of action 9 due by 6-29-15.

Discussion:

C/A s 1 – Viol of CC 2924 (a)(6), 2 – Viol of CC 2924.17 (b), 3 – Viol of CC 2924.17 (a) & 4 – Wrongful foreclosure per CC 2923.5

Ds argue, and Ps concede, that these code sections are only viable if the dwelling is an owner occupied dwelling.

Ds also argue that Ps cannot challenge the non judicial foreclosure process under these causes of action pursuant to Jenkins v JP Morgan Chase NA (2013) 216 CA 4th 497. In Jenkins, the plaintiff was challenging the investment trust’s pooling agreement as well as the failure to assign the deed of trust. The plaintiff in Jenkins was challenging the right of the beneficiary or its agent to commence the non judicial foreclosure process. The Court of Appeal recognized that a plaintiff seeking a remedy for a foreclosing party’s misconduct with regards to the initiation and processing of the nonjudicial foreclosure, may serve as the basis for a valid cause of action.

*2 Ps alleged, under the first cause of action, that they were informed and believed that the Ds did not have standing to pursue foreclosure against Ps because the Ds were not the real parties in interest and did not hold a beneficial interest in Ps’ note and deed of trust. Ds are, per P’s own allegations, loan servicers. Such entities are separate and apart from the lender itself. Loan servicers are, by their very nature, agents of the lenders. Lenders or an assigned beneficiary would be the ones with the beneficial interest in the note and deed of trust, not the servicer.

CC 2924 provides that agents of the trustee, mortgagee or beneficiary are entitled to record notices of default.

CC 2924.17 (a) and (b) provide:

“(a) A declaration recorded pursuant to Section 2923.5 or, until January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924, or a declaration or affidavit filed in any court relative to a foreclosure proceeding shall be accurate and complete and supported by competent and reliable evidence.

(b) Before recording or filing any of the documents described in subdivision (a), a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose, including the borrower’s loan status and loan information.”

CC 2924.12 (a)(1) allows a plaintiff to seek injunctive relief for violation of the above prior to recording of a trustee’s deed upon sale.

Ps only allege that the recordation of the notice of default (10-7-13) and the notice of trustee sale (1-22-14) were done in violation of CC 2924.17 (b) and that a statement of what the borrower can request is served on the borrower.

CC 2924.17 (b) provides that before recording a notice of default, the servicer shall ensure that it has reviewed competent and reliance evidence to substantiate the borrower’s default. Ps do not allege any facts that suggest that the servicer did not have competent or reliable evidence concerning their default.

CC 2924.17 (a) pertains to the declaration filed under CC 2923.55. CC 2923.55 (b), among other things, requires the servicer to send a letter to the borrower that explains what documents the borrower may request. P alleges, at paragraph 37 that they are ‘informed and believe’ that Ds did not comply with CC 2923.55 and did not provide Ps copies of the required documents. Ps know whether or not the letter was sent to them and Ps certainly know whether or not they asked for copies of documents and they definitely know whether or not those documents, if requested, were sent. Sustain w/o leave as to C/As 1-4

C/A 5 Unfair business practices

In Camacho v Auto. Club of S. C (2006) 142 CA 4th 1394, 1403, the Court of Appeal adopted the definition taken from section 5 of the Federal Trade Commission Act. The factors were stated as: “ (1) the consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided.”

As was stated under the analysis for C/As 1-4, Ps did not demonstrate injury and, with the case of C/A 3, an ability to legally bring a claim.

Sustain w/o leave

C/A 6 – Br of contract

Ps claim a contract, by way of the note and deed of trust, with the original lender and its successors. Ps then allege that the deed of trust required notice to be given to them of any change of the loan servicer. Ps have not sued the original lender or any of its successors. The loan servicers are not parties to the note or deed of trust.

*3 Sustain w/o leave

C/A 7 – Negligence

Ps allege that the Ds owed a duty to Ps to review their loan modification application and make a determination with accurate information regarding the loan modification. Ds argue that no duty was owed by Ds to P. Ds argue that CC 2923.5 does not guarantee a right to a loan modification.

Ps argue that a duty was owed to them.

Ps did not allege that they were denied or that no consideration was given to their application. Ps alleged that Green Tea asked for supporting documentation. Paragraphs 17 & 19. Paragraph 21 alleged that D sought more documents and paragraph 22 alleged that Ps submitted those documents. More documents were sought and supplied. Paragraphs 23-25. Ps have not alleged that there was no review or that there was a denial out of hand.

Sustain w/o leave

C/A 8 – Quiet title

Ps claim that they are entitled to title in the property. Ps haven’t sued the correct Ds to quiet title. The beneficiary of the note and deed of trust might have an interest in this matter. The loan servicer has no “interest” in the property.

Fonteno v Wells Fargo Bank (2014) 228 CA 4th 1358 does not support P because there, the plaintiff sued the lender, which Ps here have not done and the plaintiff there wasn’t to cancel the trustee’s deed upon sale (after the foreclosure) because the foreclosure sale took place without Wells Fargo having complied with certain requirements in the deed of trust.

Sustain w/o leave

C/A 9 – Viol of RESPA

Plaintiffs did not allege that Specialized Loan Servicing, LLP was sent any RESPA request.

Sustain w/o leave as to D Specialized Loan Servicing LLC.

Notice to be given by clerk.

Superior Court of California.

Marin County

Susan PEREIRA, et al, Plaintiff,

v.

BAYVIEW LOAN SERVICING, LLC, et al, Defendant.

No. CV1501444.

July 7, 2015.

Trial Order

Geoffrey M. Howard, Judge.

*1 NATURE OF PROCEEDINGS: 1) HEARING ON DEMURRER – BY DEFENDANTS TO PLAINTIFFS’ COMPLAINT [DEFT] BANK OF NEW YORK MELLON, A BUSINESS ENTITY [DEFT] BAYVIEW LOAN SERVICING, LLC, A BUSINESS ENTITY 2) NOTICE OF MOTION – MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ COMPLAINT [DEFT] BANK OF NEW YORK MELLON, A BUSINESS ENTITY [DEFT] BAYVIEW LOAN SERVICING, LLC, A BUSINESS ENTITY

RULING

The demurrers by defendant Bank of New York Mellon (“Mellon”) to the first cause of action are off calendar. In the first cause of action, Mellon is not a named defendant. It has no standing to demur.

All other demurrers by Mellon and defendant Bayview Loan Servicing, LLC (“Bayview”) are overruled.

Defendants’ motion to strike is denied.

Judicial notice.

Defendants’ request for judicial notice of their Exhibits 1, 3 and 4 is granted. (Ev. Code § 452, subd.(d).) The court takes “notice” of the content and existence of the deed of trust, notice of default and notice of trustee’s sale.

Defendants’ request for judicial notice of their Exhibit 2, which they describe as Plaintiffs’ “Ex Parte Paperwork,” is denied. The request for “notice” of Defendants’ Exhibit 2 is not proper or necessary to a ruling on the demurrer.

“Strictly speaking, a court takes judicial notice of facts, not documents.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-267.) “ ‘Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” ’ (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117-1118 (emphasis added).) “A court may take judicial notice of something that cannot reasonably be controverted, even if it negates an express allegation of the pleading.” (Id. (emphasis added).)

Defendants do not ask the court to treat court records supporting Plaintiffs’ ex parte application as dispositive. In effect, Defendants ask the court to judicially notice the “fact” that Plaintiffs never submitted a complete loan modification application. (See supporting memorandum, p.7:14-16.) That “fact” is reasonably subject to dispute.

In addition, Defendants cite Exhibit 2 to support their argument that Plaintiffs have no claim regarding the lack of an assigned single point of contact (“SPOC”). They contend: “Plaintiffs…fail to allege with actual facts or evidence that their supposed inability to reach the SPOC by telephone somehow interfered with their attempts to modify the subject loan….” (Supporting memorandum, p.8:24-28.) In opposition to the demurrer, Plaintiffs need not produce “evidence.” Whether Bayview met its obligation to provide a SPOC is a matter reasonably subject to dispute. The impact of such failure also is a matter reasonably subject to dispute.

First cause of action for violation of Civil Code 2923.7 (the “single point of contact” requirement).

Bayview’s general and special demurrers are overruled.

*2 HBOR standing: The complaint and judicially noticed documents do not show Plaintiffs’ lack of standing under the Homeowner Bill of Rights (“HBOR”). As noted in the court’s May 2015 order granting Plaintiffs’ preliminary injunction application, “Civil Code § 2924.15(a) requires only that the plaintiff currently reside in the property as a primary residence, not that plaintiff has done so at all times from the beginning of the loan.” From the “Second Home Rider” with the deed of trust, it may be inferred that the Dillon Beach property was not Plaintiffs’ primary residence in 2005. This inference does not conflict with Plaintiff’s allegation that: “Currently, and all times mentioned herein, Plaintiffs reside in the Property as their principal residence.” (Complaint, ¶10 (emphasis supplied). See also ¶40.) Nothing in the pleading negates the possibility that Plaintiffs made the property their principal residence sometime between 2005 and their submission of a loan-modification application around late 2012. (Complaint, ¶ 12.)

In fact, if the court granted Defendants’ request for judicial notice of their Exhibit 2, it would “notice” Plaintiffs’ evidence that the Dillon Beach property did become Plaintiffs’ primary residence prior to February 2013. (See also court’s order filed May 13, 2015, Exh.A, p.2.)

Single point of contact:

Applying to entities with a high volume of foreclosures, Civil Code section 2923.7 does not merely require appointment of some individual as a “single point of contact.” The borrower must have one or more direct means of communication with the SPOC, who has defined responsibilities. The SPOC must have the ability and authority to perform those responsibilities, and be knowledgeable about the borrower’s situation and current status. The SPOC must remain assigned to the borrower’s account until all loss mitigation options are exhausted or the account paid. (Civ. Code § 2923.7, subds.(e), (c).)

Here, Plaintiffs allege facts showing that they had no “direct communication” with the initially appointed SPOC; i.e., she was not available for their calls. The SPOC did not perform responsibilities set forth in section 2923.7, subdivision (b). Bayview then changed the assignment during the loan-modification process. According to the complaint, the new SPOC required Plaintiffs to submit an entirely new application. The second SPOC also was unavailable during critical time periods. (Complaint, ¶31.) Just three days after the second SPOC requested another round of documents, Defendants had a NOD recorded. (¶32.) In addition to flaws in Bayview’s communication and coordination, Plaintiffs adequately allege that the second SPOC did not: 1)ensure that Plaintiffs were considered for all foreclosure prevention alternatives offered; and 2)have access to individuals with the ability to “to stop foreclosure proceedings when necessary.” (See subd.(b)(4)-(5).)

Nothing before the court shows that the violations were not “material,” as a matter of law. Defendants’ stated reason for denying a modification was that Plaintiffs had not provided all the requested documents. (Complaint, ¶34.) Plaintiffs allege that they did provide all such documents. The complaint suggests that if Plaintiffs had a meaningful SPOC, they could have completed the application process to Bayview’s satisfaction.

The Legislature expressed its intent that “the mortgage servicer offer the borrower a loan modification or workout plan if such modification or plan is consistent with its contractual or other authority.” (See Civ. Code § 2923.6, subd.(b). See also Civ. Code § 2923.4 (while nothing in HBOR compels a particular result, the Act’s purpose is to ensure borrowers have a “meaningful” opportunity to obtain a loan modification or other loss mitigation option offered through the borrowers’ servicer).) It cannot be inferred that Plaintiffs would be in the foreclosure process regardless of whether Bayview had met requirements of section 2923.7.

Second cause of action for violation of Civil Code 2923.6 (the “dual-track” prohibition).

*3 Defendants’ general and special demurrers are overruled.

“Complete” application: Defendants argue that since they continued to request documents throughout the loan-modification process, Plaintiffs never “completed” their application—leaving Defendants free to record a notice of default and notice of trustee’s sale during the modification process.

In effect, Defendants interpret section 2923.6 to give servicers complete discretion as to when a borrower’s application is “complete.” This interpretation departs from the plain language of the statute. It also is not reasonable or consistent with the Legislature’s intent in adopting HBOR. A servicer could continually request duplicative or unnecessary rounds of paperwork simply to prevent the borrower from asserting section 2923.6 ‘s “dual track” prohibition. The borrower’s opportunity to obtain a modification would not be “meaningful.” (Civ. Code § 2923.4.) A notice of default and notice of trustee’s sale could be recorded, as here, while the servicer requested updated pay information or documents to replace those the servicer had lost. (See complaint, ¶30-33, 37, 42-45.) Read as a whole, HBOR suggests that an application may be “complete” even though it contains some technical deficiencies or lacks documentation the servicer intends to request in the future. (See Civ. Code § 2924.10 and, generally, Code Civ. Procedure § 1858 (“where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all”).) Section 2923.6, subdivision (h), itself requires that the servicer’s timeframes be “reasonable.”

Like Plaintiffs’ standing under HBOR and the adequacy of the SPOC, Plaintiffs’ submission of a “complete” application is a factual question which cannot be resolved on demurrer. (Complaint, ¶¶42, 45.)

Third cause of action for negligence.

Defendants’ general and special demurrers are overruled. The question of “duty” is “not subject to black-and-white analysis—and not easily decided on the ‘general rule’.” (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 898. See also Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 945-946.) Based on consideration of the factors outlined in Biakanja v. Irving (1958) 49 Cal.2d 647, 650, the complaint adequately specifies Defendants’ alleged duty. It also specifies the particular conduct by Defendants which was negligent and caused Plaintiff harm. (See, e.g., Alvarez, 228 Cal.App.4th at 948-951, and Garcia v. Ocwen Loan Servicing, LLC (N.D.Cal.2010) 2010 WL 1881098, *2-*4.) While Plaintiffs do not allege a completed trustee’s sale (compare Alvarez, supra, 228 Cal.App.4th at 948), they were in the loan-modification process for more than two years. (Complaint, ¶¶12, 34.) It may be reasonably inferred that Plaintiffs relied on this process, as well as their rights under HBOR, in not pursuing other avenues to avoid foreclosure. Along with other factors, the complaint adequately shows the certainty of harm to Plaintiffs. (Alvarez, supra, 228 Cal.App.4th at 948. See also, e.g., Ansanelli v. JP Morgan Chase Bank, N.A. (2011) 2011 WL 1134451, *7.)

*4 In arguing the contrary, Defendants rely on Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4′ 49. The Lueras court found a reasonable possibility that plaintiff/borrowers could state a negligent misrepresentation claim, but not a claim for negligence. To the extent the Lueras court’s ruling differs from the ruling in Alvarez, the court finds the latter opinion persuasive. (See also, e.g., MacDonald v. Wells Fargo Bank N.A. (N.D.Cal.2015) .)

Fourth cause of action for unfair business practices.

Defendants’ general and special demurrers are overruled.

Defendants argue that Plaintiffs failed to allege a violation of HBOR and, accordingly, a “predicate unfair, unlawful, or fraudulent business practice.” (Supporting memorandum, p. 11:4-6.) Plaintiffs need not allege a specific violation of existing law in order to show an “unfair” or “fraudulent” practice.

At any rate, as explained above, Plaintiffs adequately allege violations of Civil Code sections 2923.6 and 2923.7.

In opposition to the demurrer, Plaintiffs need not show the “probable validity” of their claim. (Compare supporting memorandum, p.10:22-23, and reply memorandum, p.7:l-2.)

Motion to strike.

Defendants’ motion to strike is denied as to all parts of the complaint listed in their notice of motion.

1)Emotional distress damages (p.13:6-8)—Defendants cite cases decided in the different context of wrongful termination. As explained above, the complaint states a negligence cause of action. “[D]amages for negligently inflicted emotional distress may be recovered in the absence of physical injury or impact.” (Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1074, 1079.) In citing the “general rule” for determining duty in lender/borrower cases (see supporting memorandum, p.4:18-20), Defendants again disregard Alvarez, supra, and other recent authority pertaining to a lender’s duty of care.

Defendants had a preexisting relationship with Plaintiffs. They allegedly violated statutory and common law duties of care in pursuing foreclosure of Plaintiffs’ home. At any rate, the pleading suggests a possible basis for a finding of bad faith. (Compare Smith v. Sup. Ct. (1992) 10 Cal.App.4th 1033, 1040.)

2)Damages including foreclosure fees (p.l3:24-25)–Defendants’ supporting memorandum does not specifically address “foreclosure fees.” Plaintiffs might seek restitution for improperly charged fees. Regardless of whether Plaintiffs are in default on their loan, such fees could be improper if Defendants recorded a notice of default or notice of trustee’s sale in violation of HBOR.

3)“[R]estitution, disgorgement of sums wrongfully obtained, costs of suit, reasonable attorneys’ fees, and such other and further relief as the Court may deem just and proper” (p.14:1-3)—Defendants argue that the unfair competition statute does not include an attorney’s fee provision. They do not address Plaintiffs’ allegation that they could recover fees as the prevailing party under the deed of trust’s fee provision. (Complaint, ¶9.) Further, “a prevailing party on an unfair competition claim may seek attorney fees as a private attorney general under Code of Civil Procedure section 1021.5….” (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1179-1180.)

4)“[F]or an order stating that Defendants engaged in unlawful business practices” (prayer No.5)—If Plaintiffs prevail on their unfair business practices claim, the court’s judgment could include a finding that Defendants engaged in unlawful business practices. This request for relief is not improper.

*5 Moreover, Defendants’ challenge seems to rest on their argument that Plaintiffs have no unfair business practices cause of action. As explained above, the fourth cause of action does state a cause of action.

5)“[D]amages, disgorgement” (prayer No.6)—HBOR does not provide for a borrower’s recovery of damages prior to a trustee’s sale. (See Civ. Code § 2924.12, subds.(a),(b).) However, the “damages” prayer could relate to Plaintiffs’ negligence claim. It is not necessarily tied to the first and second causes of action.

6)“[C]ompensatory damages” (prayer No. 7)—The prayer does not pertain only to the two causes of action under HBOR. Plaintiffs might prevail on their negligence cause of action, allowing their recovery of compensatory damages.

Parties must comply with Marin County Superior Court Local Rules, Rule 1.10(B) to contest the tentative decision. In the event that no party requests oral argument in accordance with Rule 1.10(B), the prevailing party shall prepare an order consistent with the announced ruling as required by Marin County Superior Court Local Rules, Rule 1.11.

Superior Court of California.

Santa Barbara County

Phillip J WARD et al,

v.

BANK OF AMERICA NA et al.

No. 15CV00654.

August 14, 2015.

Tentative Ruling

Donna Geek, Judge.

CIVIL LAW & MOTION

*1 Nature of Proceedings: Demurrer

In their complaint against defendants Bank of America, NA. (“BOA”) and Recontrust Company, NA., plaintiffs Phillip J. Ward and Zebborah D. Ward allege:

On April 16, 2007, plaintiffs financed their real property located at 5507 Cathedral Oaks Road in Santa Barbara through Countrywide Home Loans by virtue of a note and deed of trust (“DOT”). [Complaint ¶¶ 3, 8] (The original lender was actually “America’s Wholesale Lender.” [Complaint Exh. E] ) Plaintiffs default of the loan was occasioned by high payments, the structure of the loan, and interest rate. They were not in default because the prior breach of the terms of the note by defendants excused their performance. (Plaintiffs do not say what this breach was.) The declaration of due diligence attached to the notice of default (“NOD”) is invalid and the NOD is void because the required “penalty of perjury” and person with actual knowledge is missing. BOA and Recontrust did not have the power to record the NOD because Recontrust was not the trustee of record at the time the NOD was recorded. The official records of Santa Barbara County do not contain any evidence of the recording of the substitution of trustee before the recording of the NOD. [¶ 9]

Defendants or their predecessors misrepresented or failed to disclose the terms of the loan, plaintiffs were ignorant to the true facts, and plaintiffs relied on the representations in agreeing to the loan. [¶¶ 68-74] Had defendants or their predecessors investigated plaintiffs’ financial capabilities, they would have been forced to deny plaintiffs this loan, [¶ 75] In the NOD, defendants misrepresented their right to receive payments and they were the owners of the note and DOT. [¶¶ 80-87]

Defendants are not holders in due course of the promissory note as required by Comm. Code § 3301. [¶¶ 14] None of the defendants was ever disclosed as the beneficiary in accordance with Civil Code § 2924. [¶ 19] Defendants lack standing to foreclose because the assignment was not duly acknowledged and recorded as required by Civil Code § 2932.5. [¶¶ 35, 36, 27]

The causes of action in the complaint are: 1) violation of B&P Code § 17200; 2) injunctive relief; 3) violation of Civil Code § 1572; 4) fraud; 5) intentional misrepresentation; and 6) violation of Civil Code §§ 2923.5 and 2924.

Demurrer: Defendants demur to the complaint on the ground that plaintiffs have failed to state facts sufficient to constitute the causes of action. Plaintiffs oppose the demurrer.

  1. Request for Judicial Notice (“RJN”): Defendants ask the court to take judicial notice of an assignment of deed of trust filed on October 24, 2011, the NOD recorded on November 13, 2012; and the rescission of the NOD recorded on January 22, 2013. Plaintiffs do not oppose the RJN.

The court will take judicial notice of recorded documents. Herrera v. Deutsche Bank National Trust Co., 196 Cal.App.4th 1366, 1375 (2011). “The official act of recordation and the common use of a notary public in the execution of [recorded real property documents, including deeds of trust] assure their reliability, and the maintenance of the documents in the recorder’s office makes their existence and text capable of ready confirmation, thereby placing such documents beyond reasonable dispute.”

*2 Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 264-265 (2011). “In addition, courts have taken judicial notice not only of the existence and recordation of recorded documents but also of a variety of matters that can be deduced from the documents.” Id. at 265. The court is permitted to take judicial notice of the legal effect of a document’s language when that effect is clear. Id.

The court grants the RJN.

  1. Demurrer Standards: The court assumes the truth of allegations in the complaint that have been properly pleaded and give it a reasonable interpretation by reading it as a whole and with all its parts in their context. Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal.4th 553, 558 (1998). However, the assumption of truth does not apply to contentions, deductions, or conclusions of law and fact. People ex rel. Lungren v. Superior Court, 14 Cal.4th 294, 300-301 (1996). The court assumes the truth of the properly pleaded material facts and the reasonable inferences that may be drawn therefrom. Reynolds v. Bement, 36 Cal.4th 1075, 1083 (2005). The court also considers matters which may be judicially noticed. Zelig v. County of Los Angeles, 27 Cal.4th 1112, 1126 (2002). “Doubt in the complaint may be resolved against plaintiff and facts not alleged are presumed not to exist.” C & H Foods Co. v. Hartford Ins. Co., 163 Cal.App.3d 1055, 1062 (1984).
  2. Fraud Causes of Action: The third, fourth, and fifth causes of action are claims for fraud. A party must plead fraud specifically; general and conclusory allegations do not suffice. Lazar v. Superior Court, 12 Cal.4th 631, 645 (1996). “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” Id. “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 157 (1991).

The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure) of material fact; (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 990 (2004).

  1. Loan Origination Claims: Plaintiffs generally allege misrepresentations regarding or failure to disclose loan terms. First, plaintiffs do not state what representations were made to them. “To plead tort liability based on false or incomplete statements, the pleader must set forth at least the substance of those statements. [A plaintiff] can hardly claim not to know what statements were made to it. We can conceive of no excuse for its failure to plead them ‘with specificity.” ’ Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 878 (2008). Nor do plaintiffs allege facts demonstrating how, when, where, to whom, and by what means the representations were tendered. Plaintiffs do not provide the specificity for corporate representations.

A fraud claim must be commenced within three years of accrual and the cause of action “is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud ….” CCP § 338(d). A plaintiff must plead the facts which excuse its failure to discover the fraud sooner and could not with reasonable diligence have discovered the true facts. Holder v. Home Sav. & Loan Asso., 267 Cal.App.2d 91, 110(1968); Orange County Rock Products Co. v. Cook Bros. Equipment Co., 246 Cal.App.2d 698, 703 (1966).

*3 “The ‘discovery rule’ assumes that all conditions of accrual of the action -including harm – exist, but nevertheless postpones commencement of the limitation period until ‘the plaintiff discovers or should have discovered all facts essential to his cause of action.” ’ CAMSI IV v. Hunter Technology Corp., 230 Cal.App.3d 1525, 1536 (1991) [citations omitted].

The word discovery as used in the statute is not synonymous with knowledge. And the court must determine, as a matter of law, when, under the facts pleaded, there was a discovery by the plaintiff, in the legal sense of that term. Consequently, an averment of lack of knowledge within the statutory period is not sufficient; a plaintiff must also show that he had no means of knowledge or notice which followed by inquiry would have shown the circumstances upon which the cause of action is founded.

Bainbridge v. Stoner, 16 Cal.2d 423, 430 (1940).

The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action. The discovery rule does not encourage dilatory tactics because plaintiffs are charged with presumptive knowledge of an injury if they have “’ “information of circumstances to put [them] on inquiry””’ or if they have “’ “the opportunity to obtain knowledge from sources open to [their] investigation.””’ [citation] In other words, plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation.

Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 807-808 (2005). The plaintiffs “must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” Id. at 808.

Plaintiffs obtained the loan in April 2007 and did not file their complaint until April 2015 – eight years later. Plaintiffs do not state when and how they discovered the alleged fraud. They allege they were in default of payments because of the amount of the payments, the structure of the loan, and the interest rate when the NOD was recorded in October 2011. At the very latest, they would have discovered any alleged misrepresentation regarding these aspects of the loan in October 2011, and the three-year statute ran in October 2014.

The loan terms are clearly stated in the note. A lender has no obligation “to explain what was stated in black and white.” Kim v. Sumitomo Bank, 17 Cal.App.4th 974, 981 (1993).

  1. NOD Claims: Plaintiffs complain that defendants made misrepresentations of their authority and ownership of the loan in the NOD. Plaintiffs say only: “Plaintiffs did rely on these representations and because of their reliance their property will be foreclosed and Plaintiffs’ reliance will be justified.” [Complaint ¶ 84]

Detrimental reliance is an essential element of fraud. Lazar v. Superior Court, supra, 12 Cal.4th at 642. “A misrepresentation of fact is material if it induced the plaintiff to alter his position to his detriment.” Broberg v. The Guardian Life Ins. Co. of America, 171 Cal.App.4th 912, 928 (2009) [citation and internal quotation omitted]. “[T]he mere assertion of ‘reliance’ is insufficient. The plaintiff must allege the specifics of his or her reliance on the misrepresentation to show a bona fide claim of actual reliance.” Cadlo v. Owens-Illinois, Inc., 125 Cal.App.4th 513, 519 (2004).

*4 Plaintiffs also fail to plead any damage resulting from the NOD representations.

The court sustains the demurrer to the third, fourth, and fifth causes of action.

  1. Violations of Civil Code §§ 2923.5, 2932.5 and 2924: In their sixth cause of action, plaintiffs allege defects in the foreclosure process. First, these claims are moot because Recontrust executed and recorded a notice of rescission of the NOD in January 2013. There is no pending foreclosure. Even if these claims were not moot, they would fail.

Plaintiffs claim defendants lack authority to foreclose but there is no authority for a cause of action challenging the authority of a foreclosing party. “California’s nonjudicial foreclosure scheme is set forth in Civil Code sections 2924 through 2924k, which ‘provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.’… ‘Because of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute.” ’ Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149, 1154 (2011) [citations omitted]. The statute does not provide “for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized” and courts have found “no ground for implying such an action.” Id. at 1155.

Further, Civil Code 2924(a)(1), permits a notice of default to be filed by the “trustee, mortgagee, or beneficiary, or any of their authorized agents.” “The provision does not mandate physical possession of the underlying promissory note in order for this initiation of foreclosure to be valid.” Debrunner v. Deutsche Bank National Trust Co., 204 Cal.App.4th 433, 440 (2012).

Plaintiffs rely on various Commercial Code statutes. But the cited sections of the Commercial Code (particularly section 3301) do not “displace the detailed, specific, and comprehensive set of legislative procedures the Legislature has established for nonjudicial foreclosures. Id. at 441. “[T]he California Commercial Code is of no avail, as it has no application in the instant context of real property financing.” Spence v. Wells Fargo Bank, N.A., Plaintiff contends that defendants failed to comply with Civil Code § 2932.5, which provides: “Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.” But that section applies to mortgages, not deeds of trust. Stockwell v. Barnum, 7 Cal.App. 413, 417 (1908) (construing former Civil Code § 858, which reads substantially the same as current Civil Code § 2932.5). “The holding of Stockwell has never been reversed or modified in any reported California decision in the more than 100 years since the case was decided. The rule that section 2932.5 does not apply to deeds of trust is part of the law of real property in California.” Calvo v. HSBC Bank USA, N.A., 199 Cal.App.4th 118, 123 n2 (2011).

*5 Plaintiffs contend that defendants have not complied with Civil Code § 2923.5, which provides that a mortgage servicer, trustee, beneficiary, or authorized agent my not record a NOD until 30 days after initial contact with the borrower to explore options to avoid foreclosure or due diligence in attempting to contact the borrower. Plaintiffs do not allege substantive failure to comply with this provision, only that the declaration is not made under penalty of perjury (it is) and there is no indication that the person signing has personal knowledge.

First, it is not clear the declaration required in Civil Code § 2923.5(b) must be under penalty of perjury. Mabry v. Superior Court, 185 Cal. App. 4th 208, 234 (2010). Given “the multiplicity of persons who would necessarily have to sign off on the precise category” in the statute, the declaration need only track the language of the statute and need not be custom-drafted for each NOD. Id. at 235.

In any event, a mortgage servicer, trustee, beneficiary, or authorized agent is not liable “for any violation that it has corrected and remedied prior to the recordation of a trustee’s deed upon sale….” Civil Code § 2924.12(c). No trustee’s sale occurred and, therefore, no deed was recorded. The rescission of the NOD has remedied any violation of § 2923.5.

The court sustains the demurrer to the sixth cause of action.

  1. Violation of B&P Code § 17200 (“Unfair Competition Law” or “UCL”): Plaintiffs allege that defendants violated the UCL. A cause of action under the UCL must allege a business practice that is unlawful, unfair or fraudulent. Claims for relief under the UCL “stand or fall depending on the fate of the antecedent substantive causes of action.” Krantz v. BT Visual Images, 89 discussed above are plaintiffs’ only substantive claims and they both fail.

Plaintiffs lack standing to bring a UCL claim. A UCL claim can be prosecuted “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” B&P Code § 17204. Therefore, “to have standing to assert a claim under the UCL, a plaintiff must have ‘suffered injury in fact and [have] lost money or property as a result of such unfair competition.” ’ Aron v. U-Haul Co. of California, 143 Cal.App.4th 796, 802 (2006). Plaintiffs do not plead that they have lost money or property as a result of any alleged actions by defendants.

The court sustains the demurrer to the first cause of action.

  1. Injunctive Relief. “A permanent injunction is an equitable remedy, not a cause of action, and thus it is attendant to an underlying cause of action.” County of Del Norte v. City of Crescent City, 71 Cal.App.4th 965, 973 (1999). A “’cause of action must exist before injunctive relief may be granted.”’ Camp v. Board of Supervisors, 123 Cal.App.3d 334, 356 (1981) [citation omitted]. Plaintiffs’ substantive causes of action fail and so must their claim to injunctive relief.
  2. Leave to Amend: “If there is a reasonable possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend. [Citation.] The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended. [Citation.]” Hendy v. Losse, 54 Cal.3d 723, 742 (1991). “It is not up to the judge to figure that out.” Lee v. Los Angeles County Metropolitan Transportation Authority, 107 Cal.App.4th 848, 854 (2003). The plaintiff has the burden “to show what facts he or she could plead to cure the existing defects in the complaint.” McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 792 (2008). “To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action.” Cantu v. Resolution Trust Corp., 4 Cal.App.4th 857, 890 (1992).

*6 Plaintiffs do not suggest how they could amend their complaint to cure the defects in the pleading discussed above. In their opposition to the demurrer, plaintiffs discuss various violations of the Homeowners’ Bill of Rights (“HBOR”) that they did not allege in their complaint. HBOR became effective on January 1, 2013. HBOR does not apply retroactively. Therefore, the NOD recorded in December 2012 does not constitute a violation of HBOR. Williams v. Wells Fargo Bank, NA, , at *5 (C.D. Cal. Jan. 27, 2014).

Because of the mootness, statute of limitation, and other substantive issues discussed above, it does not appear that plaintiffs can amend their complaint to state a cause of action against defendants. Therefore, the court sustains the demurrer to the entire complaint without leave to amend.

Tentative Ruling:

The court sustains the demurrer of defendants Bank of America, N.A., and Recontrust Company, N.A., to the entire complaint of plaintiffs Phillip J. Ward and Zebborah D. Ward, without leave to amend.

Superior Court of California.

Central Justice Center

Orange County

Andrea E. LUCAS, Jack P. Lucas, and Barbara Jean Bausch, Plaintiffs,

v.

MERIDIAN FORECLOSURE SERVICE f/k/a/ MTDS, Inc., a California Corporation d/b/a Meridian Trust Deed Service, as Trustee, et al., Defendants.

No. 30-2013-00651662.

December 21, 2015.

*1 Dept. C22

Order on Motion for Summary Judgment, or in the Alternative, for Summary Adjudication

Deborah C. Servino, Judge.

The court grants the Motion for Summary Judgment or, in me Alternative, Summary Adjudication of Issues, of Defendants Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Trust 2007-AR11, Mortgage Pass-Through Certificates, Series 20Q7-AR11 under the Pooling and Servicing Agreement Dated April 1, 2007; OneWest Bank, FSB, Mortgage Electronic Registration Systems, Inc. (“MERS”); and Ocwen Loan Servicing, LLC, The court finds that Defendants have met their burden to show that there are no triable issues of disputed fact as to all of the material allegations of the second amended complaint Plaintiffs have failed to meet their burden to produce evidence showing some triable issue of material fact to controvert Defendants” evidence

Defendants’ Request for Judicial Notice is denied as to Exhibit 1 only, but granted as to the other exhibits. As to Exhibit 1, it is unnecessary to ask the court to take judicial notice of materials previously filed in this case “[A]ll that is necessary is to call the court’s attention to such papers,’ -(Weil & Brown. Cal Practice Guide Civil Procedure Before Trial (The Rutter Group 2014) ¶ 9.53.1a. p 9(1)-33.)” As to the remaining exhibits, judicial notice is appropriate (See Evid. Code, §§ 452, subd (c) [official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States], subd (d) [records of any court of this state or any court of record of the United States of any state of the United States). & subd. (h) [facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy].)

Defendants’ Objections to Plaintiffs Exhibits and to Plaintiffs’ Request for Judicial Notice are sustained in their entirety, Plaintiffs’ Request for Judicial Notice filed in a joint document listing exhibits and attaching over 5000 pages of material, is denied Plaintiffs refer to the court’s docket and specific entries thereon without specifying how or why the documents are relevant or admissible Furthermore, it is not necessary to request judicial notice of materials previously filed in this case. The court also notes some documents are incorrectly labelled Plaintiffs further request judicial notice of discovery responses, which are not judicially noticeable and have not been property authenticated Plaintiffs attempt to characterize certain documents, rather than listing them by name, which is confusing given the volume of material submitted. Finally, not a single exhibit is authenticated by any declaration

The court declines to rule on Plaintiffs Written Objections to Evidence, because neither the objections nor the proposed order comply with California Rules of Court rule 3 1354. Furthermore, the objections are to the Separate Statement which is. not evidence.

First Cause of Action for Declaratory Relief

*2 Plaintiffs seek a declaration from the court that the deed of trust and notice of default and all other documents recorded by Defendants or on their behalf, be cancelled Plaintiffs’ theory is that the note and deed of trust were an invalid contract, because Porch light, as it was listed in the deed of trust, did not exist, and each Defendant proffers the Porch light note and deed of trust as authorization to take later action. (Second Amended Complaint [“SAC”] ¶¶ 52-53.)

Defendants’ evidence establishes that Porchlight Inc. and Family Trei, Inc. were both valid entities. Plaintiffs do not contest the loan was in fact issued, or that they received funds from the loan that allowed a refinance of prior existing mortgage loans and a cash payout Plaintiff Barbara Bausch and Plaintiff Andrea Lucas testified they understood Porchlight to be the lender Plaintiffs have presented no evidence that the note, deed of trust, or notice of default were improper or an inaccurate reflection of Plaintiffs’ understanding of the loan They do not claim the funds they received did not exist or that the Joan was never funded Someone provided money to Plaintiffs. Plaintiffs have no standing to challenge the later assignments and other recorded documents, because they were not parties to these agreements. (Jenkins v. JP Morgan Chase Bank. N.A (2013) 216 Cat.App.4th 497, 515 [relevant parties to transaction were holders/transferors of promissory note and third party acquirers/transferees of the note]; Herrera v. Federal National Mortgage Assn. (2012) 205 CaJ.App.4th 1495,1507 [promissory note is negotiable instrument, so borrower must anticipate it can and might be transferred to another creditor as to plaintiff. assignment merely substituted one creditor for another without changing obligations under the note].)

Even if Plaintiffs were to show some irregularity in the chain of title, they have not been prejudiced thereby. When a borrower is in default, as are Plaintiffs (they have not made a payment since 2013), and when they cannot show the allegedly improper assignment interfered with their ability to pay or that the original lender would not have foreclosed, there is no prejudice. (Siliga v. Mortgage Elec. Registration Sys., Inc. (2013) 219 Cal App.4th 75, 85 [assignment did not change obligations under rote and no reason to believe original lender would have refrained from foreclosure].) Finally, even if Plaintiffs were to show some Irregularity in the original Joan documents, they have waived or are estopped from asserting it, because Plaintiff Barbara Bausch applied for and received a loan modification in 2003, and she failed to challenge the validity of the loan or modification m her bankruptcy. (See e.g., Billmeyer v. Plaza Bank of Commerce (1995) 42 Cal.App.4th 1086,1091 [judicial estoppel precludes party from asserting position in judicial proceeding Which is inconsistent with position previously asserted in prior proceeding; debtor’s failure to disclose potential lender-liability lawsuit in bankruptcy proceeding estops debtor from bringing later action].) Plaintiffs fail to address the waiver/estoppel argument with legal authority, referring to it as rhetoric, so opposition to the argument has been essentially waived. (See Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852 [when appellant fails to raise point or asserts it but fails to support it with reasoned argument and citations to authority court treats point as waived] (citation omitted))

Second Cause of Action for Violation of Civ. Code § 2924.12, et seq.

*3 Plaintiffs request an injunction to enjoin Defendants from further recording documents related to the property or attempting to foreclose during the pendency of the action. Plaintiffs allege Defendants were required to provide them with certain documents, including a copy of the promissory note, deed of trust, assignments, and payment history, and that by failing to do so: Defendants are estopped from recording further documents (SAC ¶¶ 57-58.) However, there is no indication how the alleged failure to provide any of these documents constitutes a material violation of section 2923.55, which requires a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent to take certain steps at least 30 days prior to recording a notice of default. The evidence shows the only borrower, Plaintiff Barbara Bausch, had several phone conversations with Defendant Indymac Mortgage Services, where she discussed in detail the default and her inability to cure it, her options to avoid foreclosure, payments made and not made, etc. There was also written correspondence exchanged on 6/3/12, 10/3/12. 11/2/12, 11/14/12, 12/11/12, 3/6/13, and 3/22/13, within which loan modification, short sale, and other foreclosure avoidance options were communicated. On these facts, Barbara Bausch had ample notice of the impending foreclosure and any violation is not actionable. (See Civ. Code, § 2924 12. subd. (a).)

Third Cause of Action for Negligent Misrepresentation

Plaintiffs contend Defendants misrepresented that Defendant One West Bank was and is the duly appointed servicer contracted with the owner, holder or real party in interest of the note and deed of trust, that One West Bank has the right to collect payments from Plaintiffs; and that Plaintiffs were required to miss payments in order to obtain a loan modification. (SAC ¶ 63.) The elements of a negligent misrepresentation cause of action are (1) a misrepresentation of past or existing material fact; (2) made without reasonable ground for believing it to be true: (3) made with the intent to induce another’s reliance on the fact misrepresented; (4) justifiable reliance on the misrepresentation, and (S) resulting damage (Ragland v. U.S. Bank National Association (2012) 209 Cal.App.4th 182, 196 [citations omitted].) “The existence of a duty of care owed by a defendant to a plaintiff is a prerequisite to establishing a claim for negligence.” (Nymark v. Heart Fed. Sav. & Loan Assn. (1991) 231 Cal.App 3d 1089, 1095.) “[A]s a general rule, 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.” (Id. at p 1096.) In Lueras v. BAC Home Loans Servicing LP (2013) 221 Cal.App.4th 49, 67-68, the court held a tender does not owe a borrower a common law duty to offer consider or approve a loan modification, or to offer the borrower alternatives to foreclosure, or to handle the loan in such a way to prevent foreclosure and forfeiture of property. However, the general rule has exceptions, and the court also held the lender does have a duty to a borrower to not make material misrepresentations about the status of an application for a loan modification or about the date, time, or status of a foreclosure sale. (Id. at p. 68.)

Here, the court has already rejected Plaintiffs’ contention concerning the nature of successor Defendants to rely on the original deed of trust. Defendants demonstrated that there is no evidence One West Bank told any Plaintiff to stop making payments or made any -promise that a loan modification would occur, lo the contrary, Defendants’ evidence demonstrates that the Plaintiffs were told that they could not be advised to stop payment and that there was no guarantee of a loan modification. Plaintiffs have failed to meet their burden to produce evidence showing some triable issue of material fact to controvert Defendants’ evidence. Without an actionable material misrepresentation, there is no duty.

Fourth Cause of Action for Fraud

Plaintiffs contend Defendant One West Bank misrepresented that (1) IndyMac Mortgage Services, a division of One West Bank, FSB, was the same entity as IndyMac Federal Bank, F.S.S., so they would be deceived into believing the loan servicer had not changed (SAC ¶ 84); (2) its intent to consummate a loan modification when it induced Plaintiffs to miss payments (SAC ¶ 86); (3) it was the authorized servicer of the loan [SAC¶87); and (4) between June 2008 and March 2009, Plaintiffs had received a loan modification (SAC ¶ 87). To prevail on a fraud cause of action, Plaintiffs must prove: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974 [citation omitted].)

*4 Here, there is no evidence of any of the fraud elements. Even if the name IndyMac was confusing, Plaintiffs have not established how that may have affected their ability to repay the loan. The court has already rejected the contention Defendants induced Plaintiffs into missing payments, and the 12/4/2008 Loan Modification Agreement refutes a claim mere was never a modification Furthermore. Andrea Lucas testified she immediately started making reduced payments when the modification became effective.

Fifth Cause of Action for Violation of Unfair Practices Act (Bus. & Prof. Code, § 17200)

Plaintiffs contend Defendants Meridian Foreclosure Service. One West Bank, and MERS committed mortgage fraud by recording false documents concerning foreclosure of the property. (SAC ¶¶ 107-108.) This claim is dependent upon Plaintiffs’ contentions that Defendants have no interest in or right to the note or deed of trust, a contention the court rejects To state a UCL claim, Plaintiffs must allege acts or injuries within the terms of Business and Professions Code section 17200, which prohibits unfair competition, including unlawful, unfair or fraudulent business acts (Cel-Tech Comm., Inc. v. Los Angeles Cellular Tele. Co. (1999) 20 Cal.4th 163,180.) A UCL action is equitable in nature and damages cannot be recovered. (Id. at pp 179-180.) It requires a person to have suffered injury in fact and have lost money or property as a result of unfair competition in order to have standing for a UCL cause of action (Pfizer Inc. v Superior Court (2010) 182 Cat.App 4th 622, 630.) Here, there is no evidence of unfair competition Plaintiffs have failed to meet their burden to produce evidence showing some triable Issue of material fact to controvert Defendants’ evidence.

Sixth Cause of Action for Intentional Infliction of Emotional Distress

Plaintiffs allege Defendants’ conduct was outrageous by attempting to steal Plaintiffs’ family home without authority and utilizing fabricated and wrongfully recorded or false, forged, and void documents in doing so (SAC ¶ 117 ) Recovery on this theory requires a showing of “outrageous” conduct which is so extreme as to exceed all bounds of that usually tolerated in a civilized community. (Yu v. Signet Bank/Virginia (1999) 69 Cal App.4th 1377, 1398 [citation omitted].) An assertion of legal rights in pursuit of one’s own economic interests does not qualify as “outrageous” under this standard (Ibid [citation omitted)],) Here, Defendants engaged in routine loan servicing and foreclosure activities Plaintiffs have failed to meet theif burden to produce evidence showing some triable issue of material fact to controvert Defendants evidence.

Seventh Cause of Action for Quiet Title

Code of Civil Procedure section 761 020 provides that to state a quiet title cause of action, the plaintiff must file a verified complaint that includes, (t j a description of the property: (2) the basis for plaintiffs title. (3) the adverse Claim or claims to title; (4) the date as of which the determination is sought; and (5) a prayer for determination of plaintiffs title against the adverse claims (See Code Civ Proc. § 761 020. see also Dellino v. Platinum Community Bank (S.D. Cal. 2009) 628 F.Supp.2d 1226, 1236 [applying California law]) Here. Plaintiffs admit they fell behind on their monthly mortgage payments. Plaintiffs, therefore, admit to the merits of Defendants adverse claim, so their quiet title action fails as a matter of law.

Conclusion

The court finds that Defendants have met their initial burden of producing admissible evidence sufficient to show that the Plaintiffs’ action has no merit. Plaintiffs have not met their burden to produce substantial evidence showing a triable issue of material fact. They cannot controvert the moving parties’ declarations and evidence by evidence “based on speculation, imagination, guess work, or mere possibilities.” (Doe v Salesian Soc. (2008) 159 Cal.App.4th 474, 481.) Accordingly the court grants the motion for summary judgment Defendants shall give notice of the ruling. Defendants are ordered to file and serve a proposed judgment.1 The January 25. 2016 trial is hereby vacated.

*5 The Clerk is ordered to give notice of this Order.

DATED 12/21/2015

<<signature>>

DEBORAH C. SERVINO

Superior Court of California.

Marin County

Robert WONG, Plaintiff,

v.

WESTERN PROGRESSIVE, LLC, et al, Defendant.

No. CV1500023.

July 8, 2015.

Trial Order

Roy O. Chernus, Judge.

*1 NATURE OF PROCEEDINGS: 1) HEARING ON DEMURRER – TO PLAINTIFF’S FIRST AMENDED COMPLAINT [DEFT] BANK OF AMERICA, N.A., A NATIONAL ASSOCIATION [DEFT] RECONTRUST COMPANY, N.A., A CORPORATION 2) HEARING ON DEMURRER – TO FIRST AMENDED COMPLAINT [DEFT] CHRISTINA TRUST [DEFT] OCWEN LOAN SERVICING, LLC, A LIMITED LIABILITY COMPANY

RULING

  1. DEMURRER TO THE FIRST AMENDED COMPLAINT BY DEFENDANTS BANK OF AMERICA, N.A. (HEREINAFTER “BANA” AND RECONTRUST COMPANY, N.A. (“RECONTRUST”).

Defendants’ demurrers to the first, second, third, fourth, fifth, sixth, seventh, eighth, ninth, eleventh and twelfth causes of action of the first amended complaint (“FAC”) are sustained.

BANA’s demurrer to the tenth cause of action is sustained.

As to the first, eleventh and twelfth causes of action, Plaintiff is granted leave to amend.

As to all other causes of action, leave to amend is denied.

Judicial notice.

Defendants’ request for judicial notice is granted. The court takes notice of the content and existence of Exhibits A-K, all recorded documents. (Ev. Code § 452, subd.(c).)

First cause of action (negligence).

The FAC does not state a negligence cause of action. Plaintiff contends that “there has been an illegal, fraudulent and willful oppressive sale of Plaintiff’s real property by [BANA] and ReconTrust….” (Opposition memorandum, p.3:16-18.) The judicially noticed documents show that in June 2011, ReconTrust rescinded the notice of default it had recorded in March 2010. (RJN Exhs.B, E.) They further show that by assignments recorded in January 2014 and May 2014 (RJN Exhs.F, G), BANA transferred all rights, title and interest in the property to Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, as Trustee of ARLP Trust 3 (hereinafter “Christiana”). By a document dated February 12, 2014, and recorded on March 12, 2014, Christiana substituted Western Progressive, LLC (“Western”) as trustee. (RJN Exh.H.)

The foreclosure of Plaintiff’s property was based on a notice of default and a notice of trustee’s sale which Western recorded on March 26, 2014, and July 30, 2014, respectively. Western conducted the trustee’s sale which resulted in conveyance of the property to Christiana. (RJN Exhs.I, J, K.) Plaintiff does not dispute this timeline. (See FAC, ¶¶23-24.) Thus, it appears that BANA and ReconTrust are not “foreclosing Defendants.” (Compare, e.g., FAC, ¶¶17, 42.) Plaintiff does not state a negligence claim against these Defendants by alleging that they foreclosed on the subject property “without having the legal authority and/or proper documentation to do so.” (FAC, ¶39.)

Plaintiff also does not state a negligence claim against these defendants by alleging that they prepared and filed “false documents.” (FAC, ¶39.) The FAC sets forth no facts showing that the BANA assignment to Christiana was invalid. To the extent it suggests that a problem may have occurred with securitization (FAC, ¶17), or separation of the note from the deed of trust (¶¶26, 30), Plaintiff’s contentions lack merit. “Because a promissory note is a negotiable instrument, a borrower must anticipate it can and might be transferred to another creditor. As to plaintiff, an assignment merely substituted one creditor for another, without changing [his] obligations under the note.” (See Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 514-515 (citation omitted). See also deed of trust, RJN Exh.A, p.12, ¶20, and Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85 (absent any prejudice, plaintiffs had “no standing to complain about any alleged lack of authority or defective assignment”).)

*2 The original promissory note need not be produced. (Debrunner v. Deutsche Bank Nat’l Trust Co. (2012) 204 Cal.App.4th 433, 440-441.) “California courts have refused to allow trustors to delay the nonjudicial foreclosure process by pursuing preemptive judicial actions challenging the authority of a foreclosing ‘beneficiary’ or beneficiary’s ‘agent.” ’ (Siliga, supra, at 82.) The FAC fails to identify a “specific factual basis” for alleging that the foreclosure was not initiated by the correct party. (See Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1156.)

Plaintiff further alleges that Defendants were negligent in “failing to properly and accurately credit payments by Plaintiffs [sic] toward the loan.” (¶39.) This allegation is overly conclusory. The FAC does not show that any such mistakes contributed to Plaintiff’s default.

Plaintiff does not allege that he was not in default. The FAC does not show the basis for a “duty” according to considerations summarized in Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 945-946, and Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 899-901.

As to ReconTrust, the cause of action is deficient for another reason. A qualified privilege extends to required mailing, publication and delivery of notices in statutory nonjudicial foreclosure proceedings, as well as performance of such procedures. (See Civ. Code, § 2924, subd.(d), and 4 Miller & Starr, California Real Estate (3d ed.), § 10:228.) Under Civil Code section 47, subdivision (c), a trustee “may have liability if it acts with malice, but is immune from liability if it acts in good faith or is merely negligent in recording a notice of default without adequate investigation,” (4 Miller & Stan, supra, § 10:228.) This is a negligence cause of action. Plaintiff does not allege facts that would show malice or otherwise defeat the privilege.

Defendants’ supporting memorandum does not acknowledge or address the analyses in Alvarez, supra, and Jolley, supra. Since Defendants’ prior demurrers became moot before the court issued a substantive final order, the court will allow Plaintiff leave to amend his cause of action.

Second and third causes of action (wrongful foreclosure, and to set aside trustee’s sale).

The FAC does not state a cause of action against these defendants for “wrongful foreclosure” or an order setting aside a foreclosure sale. As explained above, the judicially noticed documents show that these defendants were not “Foreclosing Defendants.” (FAC, ¶42.) As also explained above, the cause of action cannot be based on the sale of the loan to investors “as a ‘mortgage backed security’….” (FAC, ¶45.)

Plaintiff further alleges that Defendants failed to meet requirements of the “contact” statute, Civil Code section 2923.5. Even if Plaintiff could sue for such violation after a completed foreclosure (see Civ. Code §§ 2924.19, 2912.12), the FAC does not show that these defendants had any involvement with the loan during the time period of the notice of default. Plaintiff does not explain how Defendants might be described as a “mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent” within the meaning of Civil Code section 2923.5, subdivision (a)(1).

The third cause of action does not mention BANA as an entity lacking “legal authority to foreclose.” (FAC, ¶72.) Plaintiff alleges that Western, Christiana and Ocwen Loan Servicing, LLC (“Ocwen”) never had authority to foreclose because the deed of trust was “improperly assigned and/or transferred to the foreclosing Defendants from the original lender.” (Id., ¶77.) The FAC does not show an improper assignment or transfer to Christiana.

*3 Plaintiff has not shown a reasonable possibility of amending these causes of action to state a legally valid cause of action.

Fourth cause of action for injunctive relief.

The FAC does not state a cause of action against Defendants for “injunctive relief.” Plaintiff seeks an order granting injunctive relief expressly precluding Defendants “from enforcing the non-judicial foreclosure and from removing Plaintiff from the property during the pendency of this action.” (FAC, p.20:5-11.)

From the judicially noticed documents, it appears that a trustee’s sale has occurred. (RJN Exh.K.) Therefore, this cause of action is moot. Plaintiff does not suggest any possible amendments to this cause of action.

Fifth and sixth causes of action for fraud “in the concealment” and fraud “in the inducement.”

The FAC does not state a cause of action for fraud. Plaintiff alleges that Defendants concealed “the fact that the Loans were securitized as well as the terms of the Securitization Agreements….” (FAC, ¶98.) Defendants allegedly “concealed the fact that Borrower’s loan changed in character inasmuch as no single party would hold the Note but rather the Notes would be included in a pool with other notes, split into tranches, and multiple investors would effectively buy shares of the income stream from the loans. Changing the character of the loan in this way had a materially negative effect on Plaintiffs that was known by Defendant but not disclosed.” (Id.) Had the truth been disclosed, “Plaintiffs” would not have entered into the loan agreement. (¶99.) “Plaintiff’s reasonable reliance on the misrepresentations was detrimental.” (¶101.)

Plaintiff cites no authority indicating that a lender has a general duty to disclose the fact of securitization or terms of such agreements. Further, he alleges no facts to show how BANA’s failure to disclose the future possibility of securitization actually caused him economic harm. (See, e.g., Bank of America Corp. v. Sup. Ct. (2011) 198 Cal.App.4th 862, 865, 872-873.)

The sixth cause of action alleges an intentional misrepresentation that Defendants were “entitled to exercise the power of sale provision contained in the Deed of Trust.” The FAC adds that Defendants made their “material” misrepresentation in order to “induce the Plaintiff to rely on the misrepresentations and foreclosure on the Property.” Further, the “material” misrepresentation was “made with the purpose of initiating the securitization process as illustrated above….” (¶109.)

Plaintiff does not sufficiently allege the content and circumstances of the alleged misrepresentation. (See Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.) The FAC does not show the misrepresentation to be untrue. At the time of Plaintiff’s decision to enter into the loan agreement (see FAC, ¶102), it appears that BANA had rights to exercise the power of sale. Plaintiff suggests that the power was later lost in BANA’s assignment to Christiana. Again, the FAC does not show an invalid assignment. It also does not show that Plaintiff was damaged by the fact of securitization. Plaintiff lacks standing to object to any violations of a pooling and servicing agreement, even if the FAC adequately alleged such violations. (See Jenkins v. JP Morgan Chase Bank, N.A., supra, 216 Cal.App.4th at 514-515.)

*4 Plaintiff’s opposition does not point to any “concealments” or “misrepresentations” unrelated to his deficient claims regarding the securitization process. Accordingly, leave to amend is denied.

Seventh cause of action for intentional infliction of emotional distress.

The FAC does not state a cause of action for intentional infliction of emotional distress. “A party is not subject to liability for infliction of emotional distress when it has merely pursued its own economic interests and properly asserted its legal rights.” (See, e.g., Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67.)

Plaintiff does not allege that he was not in default at the time of the 2010 notice of default. Defendants rescinded the notice in June 2011. Even if some technical defect prompted the rescission, the FAC does not show conduct by these defendants which was “so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (See, e.g., Christensen v. Superior Court (1991) 54 Cal.3d 868, 903.)

It appears that Plaintiff could not state a cause of action based on the 2010 notices in any event. The applicable statute of limitations is a two-year statute, commencing from the time that Defendants’ conduct results in Plaintiff’s severe emotional distress. (See Code Civ. Procedure § 335.1 and Kiseskey v. Carpenters’ Trust for Southern Calif. (1983) 144 Cal.App.3d 222, 232.) “Severe emotional distress means ‘emotional distress of such substantial quantity or enduring quality that no reasonable man in a civilized society should be expected to endure it.” ’ (Id. at 231 (citations omitted).)

If the 2010 foreclosure process caused Plaintiff such distress, the judicially noticed documents show that the process ended no later than June 2011. Plaintiff did not file this action until January 2015. The FAC does not show any role by these Defendants in the 2014 foreclosure process.

Plaintiff has not shown the reasonable possibility of stating a legally sufficient cause of action.

Eighth cause of action for slander of title.

Plaintiff does not state a cause of action for slander of title against Defendants. Plaintiff alleges that Defendants disparaged Plaintiff’s “exclusive valid title by and through the preparing, posting, publishing, and recording of forged and fraudulent real estates [sic] documents previously described herein, including, but not limited to, the Notice of Default, Notice of Trustee’s Sale, and Trustee’s Deed.” (FAC, ¶126.)

A three-year statute of limitations applies to this cause of action. (Code Civ. Procedure § 338, subd.(g).) Even if a “slander of title” occurred in 2010, such “slander” ended with the June 2011 notice of rescission. Plaintiff did not file this action within three years of that date.

At any rate, Plaintiff alleges no facts showing that the 2010 documents were false. He does not allege or argue that he was not in default at that time. He merely alleges he was not in default in the “manner” stated in the notice. (¶121.) From the FAC, it appears that the recorded notices were privileged. (Civ. Code § 2924, subd.(d).) In an apparent attempt to show malice, Plaintiff alleges that Defendants “knew the documents were false….” (¶131.) Again, the FAC does not sufficiently allege that the documents were “false.” In making that contention, Plaintiff appears to rely on his deficient claims regarding securitization and an invalid assignment. (See ¶¶125-126.)

*5 Plaintiff further alleges that Defendants published the documents to “obtain the Property for their own use by unlawful means.” (FAC, ¶133.) The FAC does not show any “unlawful means.” It also fails to show that these defendants had any role in the foreclosure proceedings which led to Plaintiff’s loss of his property. Leave to amend is denied.

Ninth cause of action to quiet title.

Plaintiff does not state a “quiet title” cause of action against these defendants. As explained above, the judicially noticeable documents show that BANA assigned its rights to Christiana, and that Western was substituted as trustee, prior to the foreclosure proceedings which led to the trustee’s sale.

The elements of this cause of action include a substantive right to relief. (See, e.g., Leeper v. Beltrami (1959) 53 Cal.2d 195, 216.) Plaintiff has not adequately alleged such a right, or shown a reasonable possibility of an amendment setting forth such right. The cause of action appears to be based on Plaintiff’s legally invalid claims regarding securitization and separation of the note from the deed of trust. (¶¶135-137,139.) Leave to amend is denied.

Tenth cause of action for rescission (BANA only).

ReconTrust’s demurrer is off calendar. As this cause of action is against BANA only, ReconTrust has no standing to demur.

BANA’s demurrer is sustained without leave to amend. The subject loan was made in 2007. (FAC, ¶15.) With exceptions which apparently would not apply here, a three-year statute of limitations pertains to federal Truth in Lending Act (“TILA”) rescission claims. (15 U.S.C. § 1635, subd.(f).) The period runs from “the date of consummation of the transaction or upon the sale of the property, whichever occurs first.” Thus, to the extent this cause of action concerns TILA violations, it appears to be time-barred.

As explained above, fraudulent “concealment” of securitization provides no basis to rescind. The FAC does not show that any transfers of the note and deed of trust were “illegal” or “fraudulent.” (Compare FAC, ¶143.)

Eleventh cause of action for declaratory relief.

Plaintiff’s requests for a judicial determination appear to be based on claims made in prior causes of action, which fail as a matter of law. (See, e.g., ¶152.)

Ordinarily, a complaint “is sufficient if it shows an actual controversy; it need not show that plaintiff is in the right.” (5 Witkin, Cal. Procedure, Pleading, § 877.) However, this rule is “subject to a practical modification where the plaintiff seeks ordinary remedies and declaratory relief on the same facts, and the trial court, on the pleadings or at the trial, properly decides that the plaintiff has stated no cause of action for the ordinary remedies.” (Id., ¶878. See also, e.g., Ratcliff Architects v. Vanir Const. Mgmt., Inc. (2001) 88 Cal.App.4th 595, 607.)

Since the court has decided to grant Plaintiff leave to amend certain causes of action, Defendants have not established Plaintiff’s inability to state any claim. Therefore, Defendants’ demurrer to this cause of action is sustained with leave to amend.

Twelfth cause of action for unfair business practices.

Plaintiff alleges that Defendants improperly characterized his accounts as being in default or delinquent in order to generate unwarranted fees, instituted improper or premature foreclosure proceedings, misapplied Plaintiff’s payments, failed to provide proper payment information, collected improper fees, failed to disclose fees, ignored grace periods, executed and recorded false and misleading documents, and acted as beneficiaries and trustees without legal authority to do so. The cause of action is based on legal conclusions, not facts. (FAC, ¶162.)

*6 The conclusory allegations do not show Plaintiff to be “a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Profs. Code § 17204.)

The FAC does not set forth facts showing conduct by these defendants which was actually “unlawful.” It does not set forth facts showing practices of Defendants which are likely to deceive the public. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 312.) The final prong of section 17200, regarding “unfair” conduct, also does not apply here. While the FAC suggests a public policy violation (see ¶ 164), “the public policy which is a predicate to the action must be ‘tethered’ to specific constitutional, statutory or regulatory provisions.” (See Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 854. See also, e.g., Scripps Clinic v. Sup. Ct. (2003) 108 Cal. App.4th 917, 940.) Plaintiff’s pleading fails to show a connection to such provisions.

On the other hand, this cause of action is not based only on Plaintiff’s legally invalid claims that Defendants lack standing to foreclose. As the cause of action is deficient partly because of a lack of specificity, Defendants’ demurrer is sustained with leave to amend.

Angela Wang as an “indispensable party.”

In a footnote within their supporting memorandum, Defendants argue that “Angela Wang is a necessary party to this action since she is a co-borrower….” (Memorandum, p.2:23-24.) Defendants’ demurrer includes no demurrer to the entire complaint based on Wang’s absence from the action. Moreover, in the circumstance of a missing party, “the usefulness of a demurrer is doubtful. The proper procedure is a court order to bring in the missing party.” (See 5 Witkin, Cal. Procedure (5th ed.2008), Pleading, § 972, citing Code of Civil Procedure section 389.)

Leave to amend.

To the extent the court granted leave to amend, Plaintiff may file a second amended complaint within 20 days of the date he is served with notice of the court’s written ruling on this demurrer.

  1. DEMURRER TO THE FIRST AMENDED COMPLAINT BY DEFENDANTS CHRISTIANA TRUST, A DIVISION OF WILMINGTON SAVINGS FUND SOCIETY, FSB, AS TRUSTEE OF ARLP TRUST 3 (HEREINAFTER “CHRISTIANA”) AND OCWEN LOAN SERVICING, LLC (“OCWEN”).

Defendants’ demurrers to the first, second, third, fourth, fifth, sixth, seventh, eighth, ninth, eleventh and twelfth causes of action of the first amended complaint (“FAC”) are sustained.

Defendants’ demurrers to the tenth cause of action are off calendar. As this cause of action appears to be asserted only against BANA, these defendants have no standing to demur.

As to the first, second, eleventh and twelfth causes of action, Plaintiff is granted leave to amend.

As to all other causes of action, leave to amend is denied.

Judicial notice.

Defendants’ request for judicial notice of Exhibits 1-11, all recorded documents, is granted. (Ev. Code § 452, subd.(c).)

Defendants’ request for judicial notice of Exhibit 12 is denied. As the FAC superseded the original complaint, the “findings” in the court’s earlier order are not dispositive. Plaintiff filed opposition to the demurrer to the FAC.

Defendants’ request for “judicial notice” of Exhibit 13, an opinion of the Supreme Court of New York, Appellate Division, Second Department, is denied. Even if this court was bound to follow the New York court’s analysis, the issues are different here. The opinion concerned a motion for summary judgment. “Notice” of Exhibit 13 is unnecessary to this court’s decision.

First cause of action (negligence).

*7 The FAC does not state a negligence cause of action. Plaintiff contends that “there has been an illegal, fraudulent and willful oppressive sale of Plaintiff’s real property by [Christiana] and Ocwen….” (Opposition memorandum, p.5:10-14.)

The judicially noticed documents show that by assignments recorded in January 2014 and May 2014 (RJN Exhs.6, 9), Bank of America, N.A. (“BANA”) transferred all rights, title and interest in the property to Christiana. By a document dated February 12, 2014, and recorded on March 12, 2014, Christiana substituted Western Progressive, LLC (“Western”) as trustee. (RJN Exh.7.)

The foreclosure of Plaintiff’s property was based on a notice of default and a notice of trustee’s sale which Western recorded on March 26, 2014, and July 30, 2014, respectively. It appears that Western conducted the trustee’s sale which resulted in conveyance of the property to Christiana. (RJN Exhs.8, 10, 11.) Plaintiff does not dispute this timeline. (See FAC, ¶¶23-24.) Ocwen’s name appears on the December 2013 assignment, the March 2014 notice of default, and the trustee’s deed upon sale. (RJN Exhs.6, 8, 11.) Thus, it appears that Christiana and Ocwen qualify as “foreclosing Defendants.” (See, e.g., FAC, ¶¶17, 42.)

However, Plaintiff does not state a negligence claim against these defendants by alleging that they foreclosed on the subject property “without having the legal authority and/or proper documentation to do so.” (FAC, ¶39.) The FAC alleges no facts showing that Defendants lacked legal authority or proper documentation to foreclose. It does not show the preparation and filing of “false documents” (FAC, ¶39), or the invalidity of the BANA assignment to Christiana. To the extent it suggests that a problem may have occurred with securitization (FAC, ¶17), or separation of the note from the deed of trust (¶¶26, 30), Plaintiff’s contentions lack merit. “Because a promissory note is a negotiable instrument, a borrower must anticipate it can and might be transferred to another creditor. As to plaintiff, an assignment merely substituted one creditor for another, without changing [his] obligations under the note.” (See Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 514-515 (citation omitted). See also deed of trust, RJN Exh.1, p. 12, ¶20, and Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4 75, 85 (absent any prejudice, plaintiffs had “no standing to complain about any alleged lack of authority or defective assignment”).)

The original promissory note need not be produced. (Debrunner v. Deutsche Bank Nat’l Trust Co. (2012) 204 Cal.App.4th 433, 440-441.) “California courts have refused to allow trustors to delay the nonjudicial foreclosure process by pursuing preemptive judicial actions challenging the authority of a foreclosing ‘beneficiary’ or beneficiary’s ‘agent.” ’ (Siliga, supra, at 82.) The FAC fails to identify a “specific factual basis” for alleging that the foreclosure was not initiated by the correct party. (See Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1156.)

Plaintiff further alleges that Defendants were negligent in “failing to properly and accurately credit payments by Plaintiffs [sic] toward the loan.” (¶39.) This allegation is overly conclusory. The FAC does not show that any such mistakes contributed to Plaintiff’s default.

*8 Plaintiff does not allege that he was not in default. The FAC does not show the basis for a “duty” according to considerations summarized in Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 945-946, and Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 899-901.

Defendants’ supporting memorandum does not acknowledge or address the analyses in Alvarez, supra, and Jolley, supra. Since Defendants’ prior demurrers became moot before the court issued a substantive final order, the court will allow Plaintiff leave to amend his cause of action.

Second and third causes of action (wrongful foreclosure, and to set aside trustee’s sale).

Defendants’ demurrers to the second and third causes of action are sustained.

Unlike BANA and Ocwen, these defendants appear to be “foreclosing Defendants.” (FAC, ¶¶17, 18.) However, the cause of action seems to be based largely on Plaintiff’s unsupported contention that Defendants lacked authority to foreclose. (See ¶¶45-46, 50, 51, 54-55, 77.) As explained above, the cause of action cannot be based on the sale of the loan to investors “as a ‘mortgage backed security’….” (FAC, ¶45.)

Plaintiff alternatively alleges that Defendants failed to meet requirements of the “contact” statute, Civil Code section 2923.5. Prior to the Homeowner Bill of Rights (“HBOR”), the only remedy for noncompliance with section 2923.5 was “postponement of the foreclosure sale.” (See Skov v. U.S. Bank Nat. Assn. (2012) 207 Cal.App.4th 690, 695-696. See also Mabry v. Sup. Ct. (2010) 185 Cal.App.4th 208, 214 (the remedy for noncompliance with section 2923.5 “is a simple postponement of the foreclosure sale, nothing more”).) However, with HBOR’s adoption, “[a]fter a trustee’s deed upon sale has been recorded, a mortgage servicer, mortgagee, beneficiary, or authorized agent shall be liable to a borrower for actual economic damages pursuant to Section 3281, resulting from a material violation of Section 2923.5…by that mortgage servicer, mortgagee, beneficiary, or authorized agent where the violation was not corrected and remedied prior to the recordation of the trustee’s deed upon sale.” (See Civ. Code § 2924.19, subd. (b)(applying to low-volume foreclosing entities), and Civ. Code § 2924.12, subd.(b)(applying to high-volume foreclosing entities).) Treble and statutory damages are available for cases of reckless, intentional or willful misconduct.

Nonetheless, the FAC does not include facts showing Defendants’ “material violation of Section 2923.5” and failure to correct and remedy the violation prior to recording of the trustee’s deed upon sale. The FAC alleges that Defendants “failed to comply with the statute requiring that the notice of default include a ‘declaration that the mortgagee, beneficiary or authorized agent has contacted the borrower’ pursuant to subdivision (a)(2),” just two paragraphs after the FAC acknowledges that Defendants did include a section 2923.5 declaration with the notice of default. (FAC, ¶¶58, 60.) It does not allege how the notice was materially deficient. While it alleges that Defendants failed to assess Plaintiff’s financial situation “correctly,” section 2923.5 “does not require the lender ‘to consider a whole new loan application or take detailed loan application information’ from the borrower.” (Skov, supra, 207 Cal.App.4th at 690.) Even if “the declaration was executed on behalf of a corporation that was not in existence at the time of the declaration” (FAC, ¶58), the FAC does not explain how this defect would have affected Plaintiff. Statutory causes of action must be pleaded with particularity. Plaintiff cannot merely allege that Defendants violated a statute.

*9 Since HBOR makes damages remedies available, Plaintiff is granted leave to amend the second cause of action.

Plaintiff offers no reasoned argument that a section 2923.5 violation, even if “material,” could be the basis for setting aside a trustee’s sale. Leave to amend the third cause of action is denied.

Fourth cause of action for injunctive relief.

The FAC does not state a cause of action against Defendants for “injunctive relief.” Plaintiff seeks an order granting injunctive relief expressly precluding Defendants “from enforcing the non-judicial foreclosure and from removing Plaintiff from the property during the pendency of this action.” (FAC, p.20:5-11.)

From the judicially noticed documents, it appears that a trustee’s sale has occurred. (RJN Exh. 11.) Therefore, this cause of action is moot. Plaintiff does not suggest any possible amendments to this cause of action.

Fifth and sixth causes of action for fraud “in the concealment” and fraud “in the inducement.”

The FAC does not state a cause of action for fraud. Plaintiff alleges that Defendants concealed “the fact that the Loans were securitized as well as the terms of the Securitization Agreements….” (FAC, ¶98.) Defendants allegedly “concealed the fact that Borrower’s loan changed in character inasmuch as no single party would hold the Note but rather the Notes would be included in a pool with other notes, split into tranches, and multiple investors would effectively buy shares of the income stream from the loans. Changing the character of the loan in this way had a materially negative effect on Plaintiffs that was known by Defendant but not disclosed.” (Id.) Had the truth been disclosed, “Plaintiffs” would not have entered into the loan agreement. (199.) “Plaintiff’s reasonable reliance on the misrepresentations was detrimental.” (¶101.)

Plaintiff cites no authority indicating that a lender has a general duty to disclose the fact of securitization or terms of such agreements. Further, he alleges no facts to show how any alleged non-disclosure actually caused him economic harm. (See, e.g., Bank of America Corp. v. Sup. Ct. (2011) 198 Cal.App.4th 862, 865, 872-873.)

The sixth cause of action alleges an intentional misrepresentation that Defendants were “entitled to exercise the power of sale provision contained in the Deed of Trust.” The FAC adds that Defendants made their “material” misrepresentation in order to “induce the Plaintiff to rely on the misrepresentations and foreclosure on the Property.” Further, the “material” misrepresentation was “made with the purpose of initiating the securitization process as illustrated above….” (¶109.)

Plaintiff does not sufficiently allege the content and circumstances of the alleged misrepresentation. (See Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.) The FAC does not show the misrepresentation to be untrue. At the time of Plaintiff’s decision to enter into the loan agreement (see FAC, ¶102), it appears that BANA had rights to exercise the power of sale. Plaintiff suggests that the power was later lost in BANA’s assignment to Christiana. Again, the FAC does not show an invalid assignment. It also does not show that Plaintiff was damaged by the fact of securitization. Plaintiff lacks standing to object to any violations of a pooling and servicing agreement, even if the FAC adequately alleged such violations. (See Jenkins v. JP Morgan Chase Bank, N.A., supra, 216 Cal.App.4th at 514-515.)

*10 Plaintiff’s opposition does not point to any “concealments” or “misrepresentations” unrelated to his deficient claims regarding the securitization process. Accordingly, leave to amend is denied.

Seventh cause of action for intentional infliction of emotional distress.

The FAC does not state a cause of action for intentional infliction of emotional distress. “A party is not subject to liability for infliction of emotional distress when it has merely pursued its own economic interests and properly asserted its legal rights.” (See, e.g., Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67.)

Plaintiff alleges that these defendants intentionally misrepresented that they were entitled to exercise the power of sale provision in the deed of trust, ¶¶116.) As noted above, he does not allege facts showing Defendants were not entitled to exercise the power of sale. He does not allege facts showing that Christiana acted to foreclose without any “right, title, or interest….” (¶117.) Even if Plaintiff had adequately alleged a violation of section 2923.5, such violation alone would not amount to conduct “so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (See, e.g., Christensen v. Superior Court (1991) 54 Cal.3d 868, 903.)

Further, Plaintiff does not allege severe emotional distress—i.e., “emotional distress of such substantial quantity or enduring quality that no reasonable man in a civilized society should be expected to endure it.” (Kiseskey v. Carpenters’ Trust for Southern Calif. (1983) 144 Cal.App.3d 222, 231 (citations omitted).)

Plaintiff has not shown the reasonable possibility of stating a legally sufficient cause of action.

Eighth cause of action for slander of title.

Plaintiff does not state a cause of action for slander of title against Defendants. Plaintiff alleges that Defendants disparaged Plaintiff’s “exclusive valid title by and through the preparing, posting, publishing, and recording of forged and fraudulent real estates [sic] documents previously described herein, including, but not limited to, the Notice of Default, Notice of Trustee’s Sale, and Trustee’s Deed.” (FAC, ¶126.)

Plaintiff alleges no facts showing that the 2014 documents were false. He does not allege or argue that he was not in default at that time. He merely alleges he was not in default in the “manner” stated in the notice. (¶121.)

From the FAC, it appears that the recorded notices were privileged. (Civ. Code § 2924, subd.(d).) In an apparent attempt to show malice, Plaintiff alleges that Defendants “knew the documents were false….” ¶131.) Again, the FAC does not sufficiently allege that the documents were “false.” In making that contention, Plaintiff appears to rely on his deficient claims regarding securitization and an invalid assignment. (See ¶¶125-126.) Leave to amend is denied.

Ninth cause of action to quiet title.

The elements of this cause of action include a substantive right to relief. (See, e.g., Leeper v. Beltrami (1959) 53 Cal.2d 195, 216.) Plaintiff has not adequately alleged such a right, or shown a reasonable possibility of an amendment setting forth such right. The cause of action appears to be based on Plaintiff’s legally invalid claims regarding securitization and separation of the note from the deed of trust. (¶¶135-137, 139.) Leave to amend is denied.

Eleventh cause of action for declaratory relief.

*11 Plaintiff’s requests for a judicial determination appear to be based on claims made in prior causes of action, which fail as a matter of law. (See, e.g., ¶152.)

Ordinarily, a complaint “is sufficient if it shows an actual controversy; it need not show that plaintiff is in the right.” (5 Witkin, Cal. Procedure, Pleading, § 877.) However, this rule is “subject to a practical modification where the plaintiff seeks ordinary remedies and declaratory relief on the same facts, and the trial court, on the pleadings or at the trial, properly decides that the plaintiff has stated no cause of action for the ordinary remedies.” (Id., ¶878. See also, e.g., Ratcliff Architects v. Vanir Const. Mgmt., Inc. (2001) 88 Cal.App.4th 595, 607.)

Since the court has decided to grant Plaintiff leave to amend certain causes of action, Defendants have not established Plaintiff’s inability to state any claim. Therefore, Defendants’ demurrer to this cause of action is sustained with leave to amend.

Twelfth cause of action for unfair business practices.

Plaintiff alleges that Defendants improperly characterized his accounts as being in default or delinquent in order to generate unwarranted fees, instituted improper or premature foreclosure proceedings, misapplied Plaintiff’s payments, failed to provide proper payment information, collected improper fees, failed to disclose fees, ignored grace periods, executed and recorded false and misleading documents, and acted as beneficiaries and trustees without legal authority to do so. The cause of action is based on legal conclusions, not facts. (FAC, ¶ 162.) As to a section 2923.5 violation, the incorporated allegations fail to show how Defendants materially violated the statute.

The conclusory allegations do not show Plaintiff to be “a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Profs. Code § 17204.)

The FAC does not set forth facts showing conduct by these defendants which was actually “unlawful.” It does not set forth facts showing practices of Defendants which are likely to deceive the public. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 312.) The final prong of section 17200, regarding “unfair” conduct, also does not apply here. While the FAC suggests a public policy violation (see ¶164), “the public policy which is a predicate to the action must be ‘tethered’ to specific constitutional, statutory or regulatory provisions.” (See Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 854. See also, e.g., Scripps Clinic v. Sup. Ct. (2003) 108 Cal.App.4th 917, 940.) Plaintiffs pleading fails to show a connection to such provisions.

On the other hand, this cause of action is not based only on Plaintiff’s legally invalid claims that Defendants lack standing to foreclose. As the cause of action is deficient partly because of a lack of specificity, Defendants’ demurrer is sustained with leave to amend.

Leave to amend.

To the extent the court granted leave to amend, Plaintiff may file a second amended complaint within 20 days of the date he is served with notice of the court’s written ruling on this demurrer.

Parties must comply with Marin County Superior Court Local Rules, Rule 1.10(B) to contest the tentative decision. In the event that no party requests oral argument in accordance with Rule 1.10(B), the prevailing party shall prepare an order consistent with the announced ruling as required by Marin County Superior Court Local Rules, Rule 1.11.

Superior Court of California.

Department: 21

Contra Costa County

DELANEY,

v.

HOMECOMING FINANCIAL.

No. MSC13-00836.

June 18, 2015.

Hearing on Demurrer to 4th Amended Complaint of Delaney Filed by Mortgage Electronic Registration Systems, et al.

* TENTATIVE RULING: *

*1 The Court rules as follows on the demurrer brought by the following defendants: Aurora Loan Services, LLC (“Aurora”); Deutsche Bank, as Trustee (“Deutsche Bank”); Mortgage Electronic Registration Systems (“MERS”); and; Nationstar Mortgage LLC (“Nationstar”). The demurrer is directed to plaintiffs’ Fourth Amended Complaint (“4th-AC”), filed on January 2, 2015.

Defendants’ general demurrer is sustained without leave to amend, as to the entire 4th-AC. (Code Civ. Proc, § 430.10, subd. (e).) This ruling disposes of all causes of action, as against all parties. Defendants shall prepare a proposed judgment of dismissal, separate from any formal order on the demurrer, and shall submit that proposed judgment to plaintiffs’ counsel for approval as to form.

Defendants’ request for judicial notice is granted. Defendants’ attorneys of record, the law firm of Severson & Werson, are admonished to tab their exhibits in all future filings, whether in this action or in any other action; the eight exhibits to the request for judicial notice were not tabbed. (See, Cal. Rules of Court, rule 3.1110, subd. (f).) The Court’s legal research attorneys have been compelled to perform this clerical task for defendants. The law firm of Severson and Werson is further admonished that the individual attorneys shown on the caption page of any future non-complying document may be sanctioned for violations of the above-cited rule, at the rate of $ 50.00 per un-tabbed exhibit.

The basis for the Court’s ruling on the demurrer is as follows.

  1. Status of Selected Defendants.

Defendant Quality Loan Service Corp. (“QLS”) filed a declaration of non-monetary status on June 14, 2013. (See, Civ. Code, § 2924/.) Plaintiffs did not timely contest the declaration. Accordingly, this ruling in favor of the primary defendants is also dispositive of plaintiffs’ non-monetary claims against nominal defendant QLS. The proposed judgment shall so state, and shall include a dismissal with prejudice of defendant QLS.

Former defendant LSI Title Company (“LSI”) also filed a declaration of non-monetary status on June 14, 2013. (See, Civ. Code, § 2924/.) Plaintiffs did not timely contest the declaration. However, former defendant LSI is not named in the caption of the 4th-AC and is not identified in its introductory allegations. Accordingly, the non-monetary status of that former defendant is moot and need not be addressed in the proposed judgment.

Former defendants Homecomings Financial Network, New Century Title Company, and Aurora Bank, F.S.B are not named in the caption of the 4th-AC and are not identified in its introductory allegations. Accordingly, the possible liability of those former defendants is moot and need not be addressed in the proposed judgment.

For these reasons, the Court’s ruling on the demurrer is dispositive of all causes of action as against all defendants, and the corresponding judgment when entered will finally conclude this entire action.

  1. The First Cause of Action

Plaintiffs’ First Cause of Action is captioned “to set aside trustee’s sale.” The Court has sustained defendants’ demurrer because there is no such cause of action. Further, this cause of action would appear to be entirely duplicative of the Second Cause of Action for cancellation of the trustee’s deed.

*2 The Court advised plaintiffs of these issues in the Court’s ruling on defendants’ demurrer to the Third Amended Complaint. The Court ruled, in pertinent part, as follows: “Plaintiffs shall not reallege this cause of action unless plaintiffs are prepared to cite, in future proceedings, a published California decision recognizing the existence of such a cause of action.” In the opposition to the current demurrer, filed on April 28, 2015, plaintiffs do not cite such a decision.

  1. The Second Cause of Action

Plaintiffs’ Second Cause of Action is for cancellation of the trustee’s deed. The Court has sustained defendants’ demurrer on the following grounds.

  1. Parties.

Plaintiffs name Aurora and QLS as defendants in this cause of action, in addition to defendant Nationstar. This is improper, because Nationstar is the only grantee of the trustee’s deed. (RJN, Exh. “F”.) Nationstar is the only proper defendant. (Cf., Lawrence v. Long Beach Pleasure Pier Co. (1919) 44 Cal.App.410, 414 [cancellation possible only as against owner of promissory note].)

  1. Civil Code § 2923.5

The alleged violation of Civil Code section 2923.5 does not render the subject notice of default void. (See, 4th-AC, ¶ 39.) There are several reasons why this is so.

First, the notice of default was recorded in 2010. At that time, the only remedy for violation of section 2923.5 was a temporary injunction before foreclosure. (See, Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 77 [“[t]he only remedy afforded by section 2923.5 is, however, a one-time postponement of the foreclosure sale before it happens”].) In the case at bar, the trustee’s sale has already taken place. (4th-AC, ¶ 45; RJN, Exh. “F”.) Plaintiffs offer no legal analysis supporting the proposition that the remedies of the California Homeowner Bill of Rights (“HBOR”) can be applied retroactively to a section 2923.5 violation that occurred several years before HBOR’s effective date.

Second, even if HBOR remedies could be applied retroactively, the statutory remedy for such a violation after foreclosure is limited to monetary relief. (See, Civ. Code, § 2924.19, subd. (b).) In the Second Cause of Action, plaintiffs allege only a common law cause of action for the cancellation of an instrument, and not a statutory cause of action for HBOR damages.

Third, plaintiffs affirmatively allege that they were in contact with defendants concerning “a HAMP loan modification” in May 2010, five months before recordation of the notice of default. (4th-AC, ¶ 201.) Thus, defendants were not required to contact plaintiffs before recording the notice of default in October 2010 in order to discuss loss mitigation options; defendants were already in contact with plaintiffs.

Finally, plaintiffs affirmatively allege that the parties engaged in two years of negotiations, and entered into two forbearance agreements, prior to foreclosure. (FAC, ¶ 41 and Exhs. “E” and “F”.) This shows substantial compliance with Civil Code section 2923.5, and such substantial compliance relieves defendants of liability for any previous violation of section 2923.5. (See, Civ. Code, § 2924.19, subd. (c).)

The Court notes that, while section 2923.5 does create a private right of action, it remains a very limited one even after the enactment of HBOR. (See, Mabry v. Superior Court (2010) 185 Cal.App.4th 208.) Section 2923.5 is intended only to allow for the narrowly construed “assessment” and “exploration” contemplated by the statute; the lender “does not have any duty to become a loan counselor,” and is under no obligation to negotiate a loan modification. (Id., 185 Cal.App.4th at 231-232. See also, Civ. Code, § 2923.4, subd. (a) [nothing in HBOR “shall be interpreted to require a particular result” in loss mitigation efforts].)

  1. HBOR Dual Tracking.

*3 The alleged violation of HBOR’s prohibition against ‘dual tracking’ does not render the trustee’s deed void. (4th-AC, ¶ 49-52.) After foreclosure, the only remedy for such a violation is a monetary remedy. (See, Civ. Code, § 2924.12, subd. (b).) In the Second Cause of Action, plaintiffs allege only a common law cause of action for the cancellation of an instrument, and not a statutory cause of action for HBOR damages.

Further, as noted above, plaintiffs affirmatively allege that defendants actively considered them for a loan modification over a period of two years, and even entered into two separate forbearance agreements. (4th-AC, ¶ 41 and Exhs. “E” and “F”.) Thus, plaintiffs had already been “afforded a fair opportunity to be evaluated” before HBOR went into effect. (See, Civ. Code, § 2923.6, subd. (g).) Yet plaintiffs fail to allege that any new application still under consideration in 2013 documented a “material change” in their financial circumstances. (Ibid.) Accordingly, plaintiffs have failed to adequately allege a ‘dual tracking’ HBOR violation.

In this regard, plaintiffs have failed to comply with the Court’s order sustaining defendants’ demurrer to the Third Amended Complaint. Specifically, the Court directed plaintiffs to provide “a full and intelligible chronology” and to attach “full and legible copies of all documents referenced in the complaint.” (See, Minute Order, dated 11-3-14, numbered paragraphs 6 [“Chronology”] and 7 [“Exhibits”].) Plaintiffs have not provided such a chronology for the alleged HBOR violation, and have not attached copies of any of their applications for a loan modification or any of defendants’ written responses to those applications. (See, 4th-AC, ¶ 51.) Statutory causes of action must be pleaded with particularity, and plaintiffs have failed to meet that standard here.

  1. Service of the Notice of Trustee’s Sale.

The alleged failure to serve plaintiffs with the notice of trustee’s sale, or to post the notice of trustee’s sale at plaintiffs’ residence, does not render the trustee’s deed void. (4th-AC, ¶¶ 42-49.) There are several reasons why this is so.

Failure to Adequately Allege Notice Violation

Plaintiffs’ 4th-AC is 73 pages and 446 paragraphs long. The portion of this pleading devoted to alleging facts showing a lack of service and a lack of posting is a single six-word sentence: “Plaintiffs were never served this NOTS.” (4th-AC, p. 9, ¶ 42.) The Court finds this pleading inadequate.

With regard to the issue of service, plaintiffs allege no ultimate facts showing a lack of service; they allege only the conclusion that service was not effected. Absent some other alleged basis for this conclusion, the Court must presume that the only basis for this conclusion is plaintiffs’ failure to receive the notice. However, under established California law, plaintiffs’ failure to receive the notice does not invalidate the trustee’s sale:

The trustor need not receive actual notice of the trustee’s sale so long as notice is provided to the trustor that is in compliance with the statute. (Strutt v. Ontario Sav. & Loan Assn. (1970) 11 Cal. App. 3d 547, 553-554 [90 [*89] Cal. Rptr. 69].) As one court has held: “We pointedly emphasize, however, that Civil Code sections 2924-2924h, inclusive, do not require actual receipt by a trustor of a notice of default or notice of sale. They simply mandate certain procedural requirements reasonably calculated to inform those who may be affected by a foreclosure sale and who have requested notice in the statutory manner that a default has occurred and a foreclosure sale is imminent.” (Lupertino v. Carbahal (1973) 35 Cal. App. 3d 742, 746-747 [111 Cal. Rptr. 112]; see also Lancaster Security Inv. Corp. v. Kessler (1958) 159 Cal. App. 2d 649, 652 [324 P.2d 634].)

*4 (Knapp v. Doherty (2004) 123 Cal.App.4th 76, 88-89.)

As a number of recent Court of Appeal decisions have indicated, the California nonjudicial foreclosure process is meant to be self-contained, and the courts are reluctant to interject themselves into this “comprehensive nonjudicial scheme.” (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154.) In light of that public policy consideration, the Court believes that something more than a bare, conclusory allegation of the lack of receipt of a notice is required.

With regard to the issue of posting, plaintiffs fail to allege non-compliance even in conclusory terms. Plaintiffs describe the posting process (4th-AC, ¶ 47), but do not allege any defect in defendants’ compliance with that process. Clarity on the issue of posting is particularly important in the case at bar, because plaintiffs’ residence is a condominium (4th-AC, ¶ 10), and plaintiffs do not allege that defendants would have had access to plaintiffs’ front door in order to effect posting. If defendants had no such access, they were permitted to post at a “conspicuous place” near the entrance to the condominium complex. (Civ. Code, § 2924f, subd. (b)(3).) Plaintiffs do not affirmatively allege that they routinely inspected the community notice board or other conspicuous place near the entrance to their condominium complex where notices are usually posted, and thus have alleged no basis for knowledge of whether the notice of trustee’s sale was or was not posted by defendants in June 2012.

Failure to Allege Prejudice

In addition to failing to adequately allege a defect in service of the notice of trustee’s sale, plaintiffs have also failed to allege facts showing how any such defect was prejudicial. (See, Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 232 [notice of default’s designation of incorrect beneficiary not prejudicial]. See also, Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94-99.) If, following lengthy pre-trial proceedings and a full trial on the merits, the Court were ultimately to cancel the trustee’s deed based on a defect in defendants’ service or posting of the notice of trustee’s sale, what would happen next? Presumably, defendants would simply record a new notice of trustee’s sale and foreclose again. Plaintiffs have never denied that they are in default on their loan, and that they have been in default since 2010.

In this regard, it is particularly apt to note one of plaintiffs’ multiple failures to comply with the Court’s order sustaining defendants’ demurrer to the Third Amended Complaint. The Court ordered in pertinent part as follows:

  1. Causation. In any cause of action based on negotiations for a loan modification, plaintiffs shall allege facts showing how any wrongful act by defendants could be deemed the proximate cause of plaintiffs’ alleged damages. Plaintiffs shall allege the dollar amount of their monthly mortgage payments at the time of default, the maximum dollar amount that plaintiffs could have afforded to pay under a loan modification agreement, and the material terms of the loan modification agreement that they believe they should have been offered. [Emphasis added.] If plaintiffs were unable to afford modified monthly payments that would have provided for the amortization of their loan at a market interest rate, over a commercially reasonable period of time, any wrongful act related to negotiations for a loan modification could not be deemed the proximate cause of the subject foreclosure sale, and thus could not be deemed the proximate cause of plaintiffs’ alleged damages.

*5 (Minute Order, dated 11-3-14.) In the 4th-AC, plaintiffs do not make even a token effort to comply with this aspect of the Court’s previous order. Instead, the question of prejudice is left entirely to speculation.

Failure to Allege Equities

Further, a cause of action for cancellation is equitable in nature. (Ebbert v. Mercantile Trust Co. (1931) 213 Cal.496, 499.) And it is axiomatic that one who seeks equity must do equity. (See, Davenport v. Blue Cross of California (1997) 52 Cal.App.4th 435, 454-455.)

In the case at bar, plaintiffs have failed to allege facts showing that the equities favor granting them the remedy of cancelling the trustee’s deed at this late date. Plaintiffs came into default on their loan in 2010, and had approximately two and a half years between the recordation of the notice of default (October 2010) and the trustee’s sale (March 2013), to sell their residence, refinance their residence, bring their loan current, file a Chapter 13 bankruptcy, or take any other mitigation measures that might have been available to them to prevent foreclosure. Plaintiffs acknowledge that defendants agreed to not one but two separate forbearance agreements in order to give plaintiffs time to try to save their home. (4th-AC, Exhs. “E” and “F”.) Plaintiffs have not offered to pay the loan on the terms they agreed to, and as noted above they have not alleged facts indicating that they have the ability to make payments even on a modified loan. How is it equitable to allow plaintiffs to remain in their home indefinitely, making no rental or mortgage payments?

The Sham Pleading Rule

Finally, insofar as the cancellation cause of action is based on defendants’ alleged failure to properly serve and post the notice of trustee’s sale, the cause of action is barred by the sham pleading rule. (See generally, Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946 [“any inconsistencies with prior pleadings must be explained”].) This may be demonstrated by a review of this action’s procedural history.

The Original Complaint. Plaintiffs’ original Complaint was filed on April 16, 2013. This was only a month after the trustee’s sale, at a time when all the circumstances surrounding the sale were fresh in plaintiffs’ memory. Plaintiffs relied primarily on alleged defects in the securitization process. (Complaint, ¶ 31, ¶ 66, etc.) Plaintiffs alleged in general terms that all of the recorded foreclosure documents were void because of defective securitization; they were all “false documents.” (Complaint, ¶ 68, ¶ 106, ¶¶ 150-151, etc.) Plaintiffs also alleged the breach of a forbearance agreement, a violation of Civil Code section 2923.5, fraud, etc. (Complaint, ¶ 101, ¶ 108, ¶ 121, etc.)

There is only one isolated paragraph in the entire 206-paragraph pleading that asserts, in impermissibly conclusory terms, a “failure to comply with the notice requirements …” (¶ 119.) No specific notice problem is alleged as to any specific recorded document. (Ibid.) This paragraph is directed only to the issue of tender, and is not asserted as a substantive ground for setting aside the trustee’s sale.

The First Amended Complaint. Plaintiffs’ First Amended Complaint (“FAC”) was filed on August 26, 2013. Of the 12 causes of action set forth in the original Complaint, only one was re-asserted in the First Amended Complaint: wrongful foreclosure. The other 11 causes of action, such as those for violation of the federal TILA and RESPA statutes, were abandoned without explanation — and four new causes of action were added.

*6 In this pleading, plaintiffs allege that the notice of trustee’s sale is “void and ineffective” — but not because of any problem with service of the notice of trustee’s sale. (FAC, ¶ 27 and Exh. “I”.) Rather, plaintiffs allege that the notice is void because “it reflects an acceleration of debt absent compliance with Paragraph 22 of the Deed of Trust.” (Ibid.) Plaintiffs make no mention of a failure to properly serve the notice of trustee’s sale anywhere in the FAC. (See, e.g., ¶ 30 [listing reasons why foreclosure wrongful].) The one paragraph of the original Complaint that referenced a “failure to comply with the notice requirements” is omitted from the FAC. In fact, plaintiffs affirmatively allege as follows: “Plaintiffs are attempting to set aside this trustee’s sale on grounds other than irregularities in the sale notice or procedure …” (FAC, ¶ 33.)

The Second Amended Complaint. Plaintiffs filed their Second Amended Complaint (“SAC”) on March 27, 2014. This pleading sets forth the same five causes of action as the FAC. Plaintiffs again allege in the SAC that the notice of trustee’s sale is “void and ineffective because, without limitation, it reflects an acceleration of debt absent compliance with paragraph 22 of the Deed of Trust.” (SAC, ¶ 29, page 9, lines 1-3.) And plaintiffs again make no mention of a failure to properly serve the notice of trustee’s sale anywhere in the SAC. (See, e.g., SAC ¶ 32 [listing reasons why foreclosure wrongful].) To the contrary, plaintiffs again affirmatively allege as follows: “Plaintiffs are attempting to set aside this trustee’s sale on grounds other than irregularities in the sale notice or procedure …” (SAC, ¶ 35.)

The Third Amended Complaint. With a demurrer pending, and pursuant to an ex parte application, plaintiffs filed their Third Amended Complaint (“TAC”) on July 10, 2014. This pleading has double the number of causes of action set forth in the FAC and the SAC; plaintiffs added a new negligence cause of action and four new fraud causes of action.

As they did in the FAC and the SAC, plaintiffs allege in the TAC that the notice of trustee’s sale is “void and ineffective because, without limitation, it reflects an acceleration of debt absent compliance with paragraph 22 of the Deed of Trust.” (TAC, ¶ 31.) The TAC has a bewildering footnote stating that the notice of trustee’s sale was recorded “without providing notice to Plaintiffs,” but the alleged date of recordation is March 22, 2013 — which is the date of the trustee’s sale itself, and not the date the notice was recorded. (TAC, p. 8, ¶ 33 and fn. 1. See, RJN, Exh. “F”, third page [reciting date of trustee’s sale].)

Whatever this footnote may mean, defective notice is not asserted as a ground for setting aside the trustee’s sale. (See, e.g., TAC, ¶ 36 [listing reasons why foreclosure wrongful].) To the contrary, plaintiffs yet again affirmatively allege as follows: “Plaintiffs are attempting to set aside this trustee’s sale on grounds other than irregularities in the sale notice or procedure …” (TAC, ¶ 39.) In plaintiffs’ opposition to defendants’ demurrer to the TAC, plaintiffs argued that the trustee’s sale was void because the trustee was “not contractually empowered to hold a sale on the property,” and not because defendants failed to properly serve the notice of trustee’s sale. (Opposition, filed on September 9, 2014, p. 8, lines 9-13.)

Fourth Amended Complaint. In the Fourth Amended Complaint (“4th-AC”), filed on January 2, 2015, the heart of plaintiffs’ case is suddenly revealed as defendants’ alleged failure to serve and post the notice of trustee’s sale. Plaintiffs inexplicably abandon their previous theory that the notice was void instead for a completely different reason: because it allegedly violated the contractual provisions of the deed of trust.

*7 Conclusion. Plaintiffs’ pleading is a protean creature that radically changes causes of action and legal theories without explanation. The pleading went from 12 causes of action to 5, and then the from 5 to 10. Legal theories such as fraud are abandoned and then re-asserted. In two versions of the pleading, plaintiffs make no mention of any problem with service of the notice of trustee’s sale (the FAC and the SAC). In two other versions of the pleading, plaintiffs make only a conclusory reference in passing to a notice problem (the Complaint and the TAC). In three versions of this pleading, plaintiffs affirmatively allege that they are not asserting “irregularities in the sale notice or procedure” as a basis for cancelling the trustee’s deed (the FAC, SAC, and TAC).

The Court regards this as procedural gamesmanship designed only to delay a likely inevitable post-foreclosure eviction. Accordingly, the Court finds that plaintiffs’ Second Cause of Action, insofar as it is based on defendants’ alleged failure to properly serve and post the notice of trustee’s sale, is barred by the sham pleading rule.

Plaintiffs’ Authorities Distinguishable

The legal authorities cited by plaintiffs are distinguishable.

The Little decision is distinguishable on several grounds. (See, Little v. CFS Service Corp. (1987) 188 Cal.App.3d 1354.) First, the Court of Appeal was careful to restrict its holding to” the particular facts before us,” finding that under those particular facts there was “substantial and prejudicial defective notice.” (Id., at 1360-62.) In the case at bar, plaintiffs have failed to allege facts showing prejudice, as noted above. Second, in Little the trustee failed to give notice to a junior lien holder and a judgment creditor who would have had a financial interest in bidding at the foreclosure sale. In the case at bar, plaintiffs have alleged no analogous failure to give notice to third parties; they tacitly concede that the notice was properly published to the public, so that any third party who might have wished to bid on the property could do so. Finally, in Little the notice error was discovered before the trustee’s deed had been delivered and recorded, so that declaring the sale “void” did not violate the strong policy against setting aside a completed foreclosure sale.

The holding of the Little decision was noted in a thoughtful recent decision of the First District. (See, Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 11.) However, the court had little difficulty distinguishing the Little decision on the same basic grounds identified above. (Id., at 10-12 [in deciding whether trustee’s sale is void or voidable courts focus on “the nature and severity of the defect … and its practical effect on the foreclosure process”].) The court upheld a trial court order sustaining a demurrer without leave to amend. (Id., at 20.)

The Pierson decision cited by plaintiffs need not be distinguished, because the holding of that decision was to uphold the sustaining of a demurrer without leave to amend. (See, Pierson v. Fischer (1955) 131 Cal.App.2d 208, 213-217.) Further, any statements in Pierson concerning service of the notice of trustee’s sale are mere dicta, because the court ultimately found that — regardless of any defect in such service — the recitations as to the regularity of the sale set forth in the trustee’s deed were conclusive. (Id., at 216.)

Finally, the Holland decision cited by plaintiffs is distinguishable on the same basic grounds as the Little decision. (See, Holland v. Pendleton Mortg. Co. (1943) 61 Cal.App.2d 570.) In Holland, there was apparently no notice of the trustee’s sale given to anyone. In the case at bar, plaintiffs tacitly concede that the notice of trustee’s sale was properly published to the public, and that it was properly continued from date to date until the sale finally took place. Plaintiffs allege only that they themselves failed to receive the recorded notice of sale in June 2012, nine months before the trustee’s sale finally took place. Because plaintiffs do not allege that they themselves were in a position offer a cash bid in an amount over defendants’ allowable credit bid, plaintiffs have failed to allege how the notice defect caused them any prejudice.

  1. Tender.

*8 For the reasons stated above, plaintiffs have failed to allege facts showing that the trustee’s sale was void, as opposed to merely voidable. Plaintiffs have also failed to allege facts showing any other applicable exception to the tender rule. Accordingly, this cause of action is barred for the additional reason that plaintiffs have failed to allege tender. (See, Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 439 [the tender rule is strictly applied]; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109 [plaintiff is required to allege tender “to maintain any cause of action for irregularity in the sale procedure”]; Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 578-580 [statement of the tender rule]; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117 [tender must be “valid and viable”].)

  1. The Third Cause of Action

Plaintiffs’ Third Cause of Action is a common law cause of action for wrongful foreclosure. Plaintiffs have failed to adequately allege a “wrongful” foreclosure for the reasons stated above. Further, plaintiffs have failed to comply with the Court’s previous order with regard to alleging the element of causation.

  1. The Fourth Cause of Action

Plaintiffs’ Fourth Cause of Action is for violation of the Unfair Competition Law (“UCL”). Defendants’ general demurrer is sustained because plaintiffs have failed to intelligibly allege an unlawful, unfair, or fraudulent act. (See, Bus. & Prof. Code, § 17200.) Further, plaintiffs have failed allege to facts showing that they are entitled to an authorized UCL remedy.

  1. Derivative.

Insofar as this cause of action is derivative of a wrong alleged in the First, Second, or Third Cause of action, it lacks merit for the reasons stated above.

  1. Unintelligibility.

Insofar as this cause of action is intended to state some new wrong, the Court finds this cause of action to be an unintelligible mass of rhetoric and legal conclusions. As just one example, plaintiffs allege that they are entitled to recover “the excessive fees paid at Defendants’ direction as alleged by the FTC …” (4th-AC, ¶ 121.) The Court has no idea what plaintiffs are referring to in this language; there are no corresponding allegations elsewhere in the cause of action identifying any excessive fees, or mentioning the FTC — which the Court assumes is meant to refer to the Federal Trade Commission. This language appears to have been recycled from a pleading filed in a different action, without regard to its applicability.

  1. Right to UCL Remedy.

Plaintiffs have failed to meaningfully comply with the Court’s previous order. In its ruling on the demurrer to the Third Amended Complaint, the Court specifically directed plaintiffs “to clarify their standing to bring a UCL cause of action on their own personal behalf, with particular attention to the nature of the restitutionary relief or injunctive relief that they may properly claim.” (See, Bus. & Prof. Code, §§ 17203 and 17204; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150.)

Instead of complying with this order, plaintiffs continue to allege claims for the improper remedy of compensatory damages: damages for “[t]he cost of relocating out of the home” (4th-AC, ¶ 123); damages “[a]s a result of the loss of credit score”’ (4th-AC, ¶ 125); etc. Plaintiffs also seek their attorney fees in this cause of action, even though attorney fees are not authorized in a UCL cause of action. (See, Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 179.)

  1. Causation.

Finally, plaintiffs have failed to adequately allege causation, for purposes of a UCL cause of action. (See, Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 522-524.) Plaintiffs have twice formally affirmed the validity of the indebtedness and their uncured default. (4th-AC, Exhs. “E” and “F”.)

  1. The Fifth Cause of Action

*9 Plaintiffs have intentionally omitted their previous Fifth Cause of Action, leaving only a placeholder caption. (4th-AC, p. 20, lines 12-14.) Accordingly, no ruling is required.

  1. The Sixth Cause of Action

The Sixth Cause of Action is for common law negligence. Plaintiffs have failed to state a cause of action for negligence, because they have failed to allege facts showing the existence of a duty of care. (See, Lueras v. BAC Home Loans Servicing LP (2013) 221 Cal.App.4th 49, 62-68.)

When there are conflicting decisions in the California appellate courts, a California trial court is free to follow the decision it finds more persuasive. (See, Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456 [“the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions”].) On the issue of whether a lender owes a borrower a duty of care when negotiating a loan modification, the Court finds the Lueras decision more persuasive than the Alvarez decision on which plaintiffs rely. (See, Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941.) There are two reasons why this is so.

First, Lueras is consistent with a long line of California decisions holding that a lender owes no negligence duty to a borrower, unless the lender actively participates in a financed enterprise beyond its ordinary role as a lender. (See, e.g., Wagner v. Benson (1980) 101 Cal.App.3d 27, 35.) Alvarez is not consistent with that long line of California decisions. The Court notes that plaintiffs have alleged no facts showing that defendants stepped outside of their ordinary roles as a lender or lender’s agent.

Second, every conceivable aspect of the nonjudicial foreclosure process in California is intensely regulated by comprehensive statutory schemes, including, but not limited to, the California Homeowner Bill of Rights. (See, Civ. Code, § 2920, et seq.) There are also federal statutory schemes that sometimes come into play, such as the federal Truth In Lending Act. Under plaintiffs’ negligence theory, a lender could scrupulously comply with all applicable state and federal statutes and regulations, down to the finest detail, and still find itself liable to the borrower under a nebulous and inherently speculative negligence theory. Absent a California Supreme Court decision favoring Alvarez over Lueras, the Court declines to recognize such a theory.

  1. The Seventh through Tenth Causes of Action.
  2. Failure to Allege In Ordinary and Concise Language.

Plaintiffs’ Seventh through Tenth Causes of Action are for fraud and negligent misrepresentation. These causes of action comprise paragraphs 192 through 446 of the 4th-AC, at pages 31 to 72. It would appear that plaintiffs did not pay attention to the conditions on leave to amend set forth in the Court’s previous order, which included the following condition: “All facts shall be alleged ‘in ordinary and concise language.”’ (See, Code Civ. Proc., § 425.10, subd. (a)(1).) This constitutes one fully independent ground for sustaining defendants’ demurrer.

  1. Failure to Adequately Allege Fraud Elements.

Defendants’ demurrer to these causes of action is also sustained on the ground that plaintiffs have failed to intelligibly allege a fraud or negligent misrepresentation theory as to any of the named defendants. (See, Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157 [special requirements for alleging fraud against corporation]; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 [the strict standard of fraud pleading]. See also, Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519 [the strict standard of fraud pleading applies to a cause of action for negligent misrepresentation]; Tarmann, supra, 2 Cal.App.4th at 159 [there is no cause of action for negligently misrepresenting the intention to perform a promise].) With regard to the Tenth Cause of Action for false promise fraud, plaintiffs failed to intelligibly allege the “data” or “facts” that “show” or “back up” the existence of a secret intention not to perform; the bare allegation that a promise was made without the intention to perform is not sufficient. (See, Hills Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 707-708.)

  1. Failure to Allege Causation.

*10 In addition to other pleading defects, plaintiffs have failed to allege facts showing the element of causation. The Court highlighted this pleading defect in its previous ruling, and specifically instructed plaintiffs on how they must try to address this defect. (See, Minute Order, dated 11-3-14, numbered paragraph 9 [“Causation”].) Plaintiffs simply ignored this aspect of the previous ruling when drafting the 4th-AC.

  1. Allegations Re Mortgage Insurance.

Plaintiffs allege that “[t]he structure of securitization provided insurance to pay the monthly cash flow to the investor” as part of their fraud theory. (4th-AC, ¶ 197.) It appears that plaintiffs are somehow relying on the contractual relationship between the servicer and the holder of the beneficial interest. (4th AC, ¶¶ 194-196.) Plaintiffs argue that, based on this relationship, “there is no investor or holder in due course” who can assert plaintiffs’ default. (4th-AC, ¶ 197.)

These allegations are unintelligible. Are plaintiffs seriously arguing that their securitized mortgage loan simply vanished into thin air, and that they now hold the property free and clear, because someone advanced payments to the investors in the securitized mortgage loan between the time of default and the time of foreclosure? And what do plaintiffs mean when they base this perplexing theory on “Bloomberg screens”? (Ibid.)

The proposition that borrowers can default with impunity and evade their loan obligations simply because a servicer and the holder of the beneficial interest have some kind of side agreement between themselves is patently absurd. Plaintiffs cite no legal authority in support of that theory, and the Court rejects it.

  1. Allegations of Defective Securitization.

Plaintiffs allege “the assignment’s invalidity” as part of their fraud theory. (4th-AC, ¶ 199.) This violates the Court’s previous order that all allegations concerning defective securitization were to be omitted from the 4th-AC. (See, Minute Order, dated 11-3-14, numbered paragraph 11 [“Defective Securitization”].)

  1. Unintelligibility.

As with the Fourth Cause of Action, the Court finds these causes of action to constitute an unintelligible mass of rhetoric and legal conclusions. As just one example, consider the following allegations concerning defendant MERS:

  1. MERS is liable to Plaintiffs for filing false documents with the government agency.
  2. Furthermore, MERS is a co—conspirator of the negligence and fraud in the wrongfully foreclosure [sic] of Plaintiffs’ home. MERS is the brainchild of the mortgage industry, designed to facilitate the transfer of mortgages on the secondary mortgage market and save lenders the cost of filing assignments. The founding members of MERS include Mortgage Bankers Association of America, the Federal National Mortgage Association and many real estate financial institutions.

[ … ]

  1. MERS is liable from [sic] preventing Plaintiffs from contacting the true owner of the note as a result of the fraudulent and negligent conduct of ALS and Nationstar, as purported servicers of the loan, is [sic] counter to the interests of Plaintiffs in bringing their loan current.
  2. MERS also has deprived Plaintiffs from exercising their rights under both federal and state law in defending foreclosure proceedings.

These allegations make no sense. With regard to paragraph 206, what “false documents” were filed with what “government agency” ? With regard to paragraph 207, how does the fact that MERS was formed to facilitate the transfer of mortgages render it liable for common law fraud in the case at bar, and how can one conspire to commit negligence? With regard to paragraph 211, how were plaintiffs prejudiced by dealing with a loan servicer, rather than dealing with the unidentified “true owner of the note”? With regard to paragraph 212, what “rights” under what “federal and state law” did MERS prevent plaintiffs from exercising, how did MERS accomplish this, and how does such conduct meet the definition of common law fraud?

*11 Plaintiffs would appear to be gambling that if they cram enough unrelated and indecipherable allegations into a fraud cause of action, the Court will give them the benefit of the doubt and assume that there must be a fraud theory in there somewhere. The Court will not make that assumption. Plaintiffs have had ample opportunity to plead an intelligible fraud theory: it is now clear that they simply cannot do so.

 

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