Tag Archives: Foreclosure

Wells Fargo says we don’t dual track you just never really applied for a modification 7944 pages later it was not “complete”

21 Nov

Upon doing the deposition of Joeffery Long Wells Fargo I was amazed that they could be so blatant as against the California Homeowners Bill of Rights but then again it is Wells Fargo

Joffrey Long rough draft

Joffrey Long exhibits

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Pacific Western Bank $227,000 in attorney fees for a 2 hour bench trial eviction wow !!!!

23 Dec

Brillouet Trial Brief 7-8-15

Timothy L. McCandless, Esq. SBN 145577
Law Offices of Timothy L. McCandless
26875 Calle Hermosa Suite A,
Capistrano Beach, CA 92624
Telephone: (925) 957-9797

Attorneys for Defendants
Pierrick Briolette and Yong C. Briolette

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF VENTURA
COASTLINE REAL ESTATE HOLDINGS, INC.

Plaintiff,

vs.

PIERRICK BRILLOUET, an individual;
YONG BRILLOUET, an individual; and DOE 1 through DOE 10, INCLUSIVE;
Defendants.
)
)
) Case No. 56-2014-00461981-CU-UD-VTA

DEFENDANTS’ OPPOSITION TO
PLAINTIFF’S MOTION FOR
ATTORNEY’S FEES AND COSTS, MEMORANDUM OF POINTS AND
AUTHORITIES

DATE: January 6, 2016
TIME: 8:30 a.m.
DEPT.: 41

BANKmagesDefendants Pierrick Brillouet and Yong C. Brillouet respectfully submit their Opposition to Plaintiff’s Motion for Attorney’s Fees and Costs as follows:
MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION AND HISTORICAL PERSPECTIVE
Dates relevant to this matter are as follows:
On December 31, 2014, Plaintiff Coastline Real Estate Holdings, LLC filed the instant unlawful detainer action.
A two hour bench trial was conducted on September 8, 2015, and the court awarded possession to the Plaintiff.
Judgment was entered on October 7, 2015. The time to file an appeal was November 6, 2015, because the matter was filed as a limited action.
Additionally, the deadline to file the present Motion For Attorney’s was November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). However the Motion was not filed until December 4, 2015. As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.
Plaintiff now seeks the award of $227,084.50 in attorney’s fees. The Declaration of Attorney Richman at Paragraph 19 specifically alleges that he expended 769.85 hours “in this matter.” However, when you review the charges, the hours were actually incurred for by other parties (Western Commercial Bank, Pacific Western Bank), in entirely different actions. The assertion of 769.85 hours by Plaintiff’s counsel related to this action is an intentional misrepresentation pursuant to California Rules of Professional Conduct 5-200(b).
Additionally, the identical charges were already disallowed in a prior motion in a different action, and therefore are barred by collateral estoppel.
Even worse, Defendant redacted in its Motion what attorney services were performed and the amount of time which was expended in completing those tasks. As a result, even if Plaintiff was entitled to recovery attorney’s fees for this case, based on the information served on Defendant, it is impossible to determine: (1) the nature of the service provided, (2) whether that service was necessary, (3) the amount of time which was expended to complete the service, and (4) is the amount of time and charge a reasonable fees for the “alleged” services. Given the foregoing, the Motion must be denied.
II. THE MOTION IS UNTIMELY FILED.
The unlawful detainer action was filed as a limited action, the Plaintiff paid the filing fee for a limited action, and the defendants likewise paid the filing fees for a limited action. The action was tried as a limited action.
Judgment was entered on October 7, 2015.
The deadline to file the present Motion For Attorney’s was thirty (30) days later, or November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). Section 3.1702 provides in pertinent part:
(b) Attorney’s fees before trial court judgment
(1) Time for motion
“A notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court-including attorney’s fees on an appeal before the rendition of judgment in the trial court-must be served and filed within the time for filing a notice of appeal under rules 8.104 and 8.108 in an unlimited civil case or under rules 8.822 and 8.823 in a limited civil case.”

The parties did not enter into a stipulation to extend the time for Plaintiff to file its Motion for Attorney’s Fees.
Plaintiff filed the instant Motion on December 4, 2015.
California Rules of Court Rule 8.822(1)(A) provides in pertinent part:
Rule 8.822. Time to appeal
(a) Normal time
(1) “Unless a statute or rule 8.823 provides otherwise, a notice of appeal must be filed on or before the earliest of:

(A) 30 days after the trial court clerk serves the party filing the notice of appeal a document entitled “Notice of Entry” of judgment or a file-stamped copy of the judgment, showing the date it was served;”

As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.

III. THE INSTANT MOTION IS NOT SUPPORTED IN CONTRACT OR
STATUTE AND MUST BE DENIED.
Plaintiff Coastline Real Estate Holdings, LLC purchased the position of Pacific Western Bank. Defendants believe that Plaintiff is a wholly owned subsidiary of Pacific Western Bank.
Pacific Western Bank (as successor in interest) became a Defendant in Superior Court of California, County of Ventura Case No. 56-2014-00458447-CU-OR-VTA stylized as:
Pierrick Brillouet and Yong Brillouet v. Western Commerical Bank, brought the identical motion for attorney’s fees. That motion was denied. The court adopted its Tentative Ruling which stated:

The Bank is only entitled to an award of attorney fees in this matter if a contractual provision exists which provides for such an award.
The Bank argues that the construction trust deed contains an attorney provision which provides it with a basis for attorney fees. However, the deed only permits an award of attorney fees by a court “[i]f Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any appeal.” (Emphasis added). Only actions which the “Lender institutes” are subject to the attorney’s fees provision and this action was not brought by the lender. The Bank has made no argument for the extension of the plain language of the provision which would encompass the current suit and as such it has not demonstrated it is entitled to fees under the construction trust deed.
The Bank claims that it is also entitled to attorney fees under the Promissory Note which provides:
Lender may hire or pay someone else to collect this note. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fee and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower will also pay any court costs, in addition to all other sums provided by law.
This was not a suit brought to collect the note. While “that amount” includes attorney fees and legal expenses, there is no indication that the court is authorized to make an award of these fees and expenses as a result of the current litigation. The Promissory Note does not indicate that the prevailing party in an action such as this is entitled to reasonable attorney fees.
The Bank also points to the assumption agreement as a basis for fees. It allegedly provides that “[i]f any lawsuit, arbitration or other proceedings is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover the reasonable fees and costs of its attorneys in such proceeding.” This lawsuit didn’t involve the interpretation or enforcement of the terms of the assumption agreement. Santisas v. Goodin (1988) 17 Cal.4th 599 is of no help to the Bank as it involved an expansive attorney’s fee clause that clearly applied to the suit and the question was whether Civil Code §1717(b)(2) thwarted its application. That is not the case here.” A true and correct copy of the Tentative Ruling is attached hereto as Exhibit “1” and is incorporated by this reference.
Notwithstanding the court’s prior Order denying the very same attorney’s fees, Plaintiff in the instant action once again argues the identical points and seeks fees which are unsupported, unreasonable, and which are untimely. As such, the Motion for Attorney’s fees must be denied.
IV. MOVANTS HAVE THE BURDEN OF PROVING THE REASONABLE
NATURE OF THE SERVICES ALLEGED.
The Declaration of Attorney Steven N. Richman contains an attachment which purports to be a listing of the attorney services which were provided. However, a summary inspection shows that the listing of services, the time incurred for such service and the amount charged for such services have been redacted.
As such, Plaintiffs cannot determine the propriety of: (1) the nature of the services provided, (2) whether those services were necessary, (3) the amount of time which was expended to complete the services, and (4) whether the amount of time and charge is a reasonable fee for the particular service rendered.
Attorney fee shifting statutes and contractual provisions usually provide only the right to recover “reasonable attorneys’ fees” incurred as a result of the litigation. In order to determine the reasonableness of the fee award requested, courts generally start with the “lodestar amount,” which is the reasonable number of hours spent on the litigation multiplied by the reasonable hourly rate. Serrano v. Priest, 20 Cal.3d 25, 48 (1977); Thayer v. Wells Fargo Bank, N.A., 92 Cal.App.4th 819 (2001).
Once this amount is determined, the court can take into consideration additional factors to adjust the “lodestar” either up or down as appropriate. Such factors include: the novelty or difficulty of the issues involved in the case and the skill required to present those issues; the extent to which the nature of the case precluded the employment of other attorneys; and the fee arrangement of the attorney and the client. Serrano, 20 Cal.3d at 48; Thayer, 92 Cal. App.4th at 833. The party seeking the fees has the burden of proof to establish that the time spent and the hourly fee charged is reasonable. Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807 (1992).
This particular case was an unlawful detainer action, the trial lasted two hours, the trial presented no novel issues, nor did it require herculean efforts. The case was disposed by bench trial within two hours. As such, although Defendants believe that no right to attorney’s fees exists in this matter, if the court is going to award attorney’s fees, then Movant has failed to prove the reasonableness of the fees requested. Given the foregoing the Motion should be denied.
Dated: December 22, 2015 LAW OFFICES OF
TIMOTHY L. MCCANDLESS
By ____________________________
Timothy L. McCandless, Esq.
Attorney for Defendants
Pierrick Brillouet and Yong C. Brillouet

 

Denial of Loan Modification mortgage redlining as a constitutional right

8 Sep

Punitive Damages for Civil Rights – Convincing the Jury and Judge By Jeffrey Needleboa-billboard1“Let this case serve as a lesson for all employers who would ignore the existence of racial harassment in the workplace.” With those introductory words, the Ninth Circuit Court of Appeals affirmed a jury’s verdict for $1 million in punitive damages and $35,612 in compensatory damages. In the process, not only was justice served for the Plaintiff, Troy Swinton, but strong precedent was created for future civil rights claimants. Swinton v. Potomac Corporation, 270 F.3d 794 (9th Cir. Oct. 24, 2001). Although the Defendant portrayed the racial harassment suffered by Mr. Swinton as “jokes”, the Ninth Circuit correctly understood that neither the verdict nor the discrimination was a laughing matter. Id. at 799. Not only did the Plaintiff get what he deserved, but the Defendant, Potomac Corporation, got what it deserved as well.

On the issue of liability, the Court in Swinton analyzed at considerable length the various of theories of holding an employer liable and a variety of evidentiary issues relevant to liability and punitive damages. The Court also considered the legal issues which define the availability of a punitive damages award and the legal standard for keeping the punitive damages once awarded. The Court determined that a ratio of punitive to compensatory damages of 28:1 was not excessive. Satisfying the legal standard concerning an award of punitive damages, however, is only half the battle. Convincing the jury that an award of punitive damages is appropriate can often be the more difficult task.

 

Convincing the Jury

It is uniquely the function of punitive damages to punish the defendant, and to deter future misconduct by the defendant and others similarly situated. Especially for large corporations, relatively insubstantial compensatory damages don’t begin to measure the enormity of the defendant’s wrongful behavior, and have no deterrent effect. It is for that reason that punitive damages are an essential ingredient in all civil rights litigation.

The availability of punitive damages in civil rights cases affords juries the opportunity to enhance the quality of equal opportunity and\or constitutional freedoms, not just for the litigants before the court, but in the community at large. They create an opportunity to give contemporary meaning and vitality to the universal ideals which distinguish this country as a free society. Punitive damages in civil rights cases promotes this highest public purpose.

The challenge to trial lawyers is to communicate to juries the broad and compelling social justification for a punitive damages award. This requires a special focus on social issues which transcend a monetary award from a particular defendant to a particular plaintiff. In order to achieve the intended purpose, it must be clearly explained to the jury that an award of punitive damages doesn’t represent what the plaintiff deserves, but what the defendant deserves for its reckless disregard of fundamental constitutional or civil rights.

exclusionAlmost all Americans are extremely passionate about the Bill of Rights and the right to equal opportunity. The eloquence to convince them that these are ideals which need to be perpetuated can be legitimately borrowed from Thomas Jefferson or James Madison in the case of constitutional rights, or legendary civil rights leaders, such as Martin Luther King, Jr. or Thurgood Marshall for the cases involving equal opportunity. For example, liberal use of quotations from King’s “I have a Dream” speech have almost irresistible appeal. References to Jackie Robinson, the first African American major league baseball player for the Brooklyn Dodgers, or Rosa Parks, who refused to sit on the back of the bus, always resonate with jurors.

A brief historical review of the struggle for equal opportunity is appropriate to communicate to the jury their role in a continuing effort. The Civil Rights Act of 1866, 42 U.S.C. Section 1981, is often utilized in cases involving race harassment or discrimination. This statute was originally enacted to guarantee the civil rights of newly emancipated slaves, and to eliminate the vestiges of slavery which existed immediately after the Civil War. But initially, the statute didn’t fulfill its intended purpose. In the years immediately after the Civil War, newly emancipated slaves were denied the most basic civil rights; they were denied the right to own property, to vote, to enter places of public accommodation and hold employment. African Americans were second class citizens in this county in virtually every sense of the word.

Comparisons to the system of apartheid in South Africa serve to illustrate that the principles the jury is being asked to vindicate are the ideals that distinguish our country as a free society. In our country the repressive system of segregation wasn’t called apartheid, it was called Jim Crow. But the concept was essentially the same. For almost 90 years after the Civil War, Jim Crow was the rule of law. In May of 1954, the Supreme Court rejected the concept and required integration in the public schools. Important civil rights statutes followed. Substantial progress has been made. But the vestiges of slavery still exist in the country. The proof is nowhere more powerfully demonstrated than in the facts presented in this case, Swinton v. Potomac. Mr. Swinton was the only African-American of approximately 140 employees. Swinton, 270 F.3d at 799. At the workplace there were jokes about a wide variety of ethnic groups, including whites, Asians, Polish people, gays, Jews, and Hispanics. A co-worker testified that the majority of the people at U.S. Mat had actually witnessed the use of racially offensive language, and another employee testified that “just about everybody” at U.S. Mat had heard “racial slurs and comments.” Id. at 800. During the short time he was at U.S. Mat, Swinton heard the term “nigger” more than fifty times. Id. Swinton’s immediate superior as supervisor of the shipping department, witnessed the telling of racial jokes and laughed along. The supervisor also acknowledged making “racial jokes or a slur” two or three iStock_000015861187Mediumtimes. The supervisor also overheard one of the two plant managers make racial jokes on several occasions. The supervisor further admitted that although he had an obligation under company policy to report the racial harassment, he never made any such report and never told anyone to stop making such jokes. Id. at 799-800. Some of the racial “jokes” included: “What do you call a transparent man in a ditch? A nigger with the shit kicked out of him. Why don’t black people like aspirin? Because they’re white, and they work. Did you ever see a black man on ‘The Jetsons’? Isn’t it beautiful what the future looks like? Reference to ‘Pontiac’ as an acronym for ‘Poor old nigger thinks it’s a Cadillac.’ Id. at 799. “The jokes and comments ranged from numerous references to Swinton as a ‘Zulu Warrior’ to a comment in the food line, ‘They don’t sell watermelons on that truck, you know, how about a 40-ouncer?’ On the subject of Swinton’s broken-down car, it was suggested why don’t you get behind it and push it and call it black power and why don’t you just jack a car. You’re all good at that.” Id. at 800. The “jokes” and slurs started the day Swinton began to work for the defendant, and didn’t stop until the day six months later he left in disgust.

The civil justice system provides an opportunity for the jury to dispense social justice for the victim of bigotry and to fulfill the purpose of the Civil Rights Act of 1866; the elimination of the vestiges of slavery. Plaintiff’s counsel can explain to the jury that their verdict will help fulfill the purpose of this 140 year old civil rights statute, and give it contemporary meaning and vitality.

Many civil rights cases involve wrongful discharge from employment. For the purpose of compensatory damages, the appropriate focus is the injury to victim, including the economic hardship created and the emotional distress associated with being unemployed for a prolonged and continuing period. For the purpose of punitive damages, however, it is important to maintain a focus on the broader social issues involved. We need the contribution everyone is capable of making so that we can actualize our potential as a society. We can’t afford to exclude people from the workplace. In employment discrimination cases, the damage is not limited to the injury and social injustice suffered by the employee, it extends to the broader society which is deprived of the contribution the employee is capable of making. The jury must be made aware that punitive damages are intended to prevent future civil rights violations and to redress the injury suffered by the broader society.

6a00d83451b7a769e201676871ac87970b-320wiThe focus of Swinton v. Potomac was racial harassment. But these principles apply with equal force to other protected classifications. President Franklin Roosevelt was disabled! He spent the most productive years of his life in a wheel chair. Its hard to imagine what American society would be like without his contribution. Statistics appearing in the Congressional History of the American with Disabilities Act can be utilized to demonstrate the need for reasonable accommodation, not only so the disabled person can live with dignity, but also so that society can reap the benefits of his or her contribution.

Shirley Chisholm was the first female African American representative in the United States Congress. She experienced both racial and sexual discrimination. Ms. Chisholm can be quoted as saying that sexual discrimination was by far the more destructive of the two. The historical fight for women’s equal rights in many ways parallels the fight for racial equality. Historically, women could not own real property, enter into contracts or vote. African Americans got the legal right to vote before women. Counsel can explain the full meaning of dower rights, and that civil rights statutes were required so that women could work without discrimination and receive equal pay. Susan B. Anthony and other historic champions of women’s rights can be quoted liberally. Comparisons to the Taliban in Afghanistan serve to demonstrate the fundamentality of women’s rights in a free society.

Precious few jurors will deny the great value of these fundamental rights. Punitive damages in a civil rights case is just one vehicle for assessing their monetary worth.

Convincing the Judge In Kolstad v. American Dental Association, 527 U.S. 526, 119 S.Ct. 2118 (1999), the Court ruled that the controlling standard required Plaintiff to prove that the defendant acted with malice or with reckless indifference to the federally protected rights of an aggrieved individual. “Applying this standard in the context of §1981a, an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages.” Id. at 536. The Court rejected the more onerous egregious conduct standard. Id. at 538-539. The Court declined, however, to allow vicarious liability “for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer’s good faith efforts to comply with Title VII.” Id at 544.

Morgan-Stanley2-300x199The Court in Kolstad also established a standard for imputing punitive damages liability to a corporate wrongdoer. Without briefing, the Court adopted the Restatement (Second) of Agency and the Restatement (Second) of Torts. “Suffice it to say here that the examples provided in the Restatement of Torts suggest that an employee must be “important,” but perhaps need not be the employer’s “top management, officers, or directors,” to be acting “in a managerial capacity.” Id. at 543. “[D]etermining whether an employee meets this description [managerial capacity] requires a fact-intensive inquiry. . . .” Id. In EEOC v. Wal-Mart , 187 F.3d 1241 (10th Cir. 1999), the Tenth Circuit considered, in light of Kolstad, “the evidentiary showing required to recover punitive damages under a vicarious liability theory against an employer accused of violating the American with Disabilities Act.” Id. at 1243. In determining whether the managers had sufficient authority to impute punitive damages, the Court acknowledged that “authority to ‘hire, fire, discipline or promote, or at least to participate in or recommend such actions,’ is an indicium of supervisory or managerial capacity.” (emphasis added). Id. at 1247. Citing Miller v. Bank of America, 600 F.2d 211, 213 (9th Cir. 1979), the Court found that both the supervisor and the store manager had sufficient authority to bind the corporation for punitive damages. Id.

Applying these standards in Swinton, the Court ruled “that the inaction of even relatively low-level supervisors may be imputed to the employer if the supervisors are made responsible, pursuant to company policy, for receiving and acting on complaints of harassment.” Swinton v. Potomac Corp., 270 F.3d at 810. Citing Deters v. Equifax Credit Information Servs., Inc., 202 F.3d 1262 (10th Cir.2000), the Court in Swinton ruled that the good faith defense could not apply “because the very person the company entrusted to act on complaints of harassment failed to do so, and failed with malice or reckless disregard to the plaintiff’s federally protected rights.” Id. In addition, the existence of employment policies is not sufficient. In order to satisfy the good faith defense, employment policies must be implemented and in Swinton they were not. Id.

Remittitur23458820In BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996), the Supreme Court established the standard for constitutionally excessive awards of punitive damages. As stated repeatedly by the Supreme Court, there is no mathematical bright line. “Only when an award can fairly be categorized as “grossly excessive” in relation to these interests [punishment and deterrence] does it enter the zone of arbitrariness that violates the Due Process Clause.” BMW, supra at 568. The Court announced three “guideposts” to assist courts in determining whether an award violates this standard: the “degree of reprehensibility” of the tortfeasor’s actions; “the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damage award”; “and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” Id . at 575.

In reference to reprehensibility, the Court in Swinton recognized the so called “hierarchy of reprehensibility,” with acts and threats of violence at the top, followed by acts taken in reckless disregard for others’ health and safety, affirmative acts of trickery and deceit, and finally, acts of omission and mere negligence. Id. at 818. Although the Court recognized that racial harassment is not the worst kind of tortious conduct, “in sum, we have no trouble concluding that the highly offensive language directed at Swinton, coupled by the abject failure of Potomac to combat the harassment, constitutes highly reprehensible conduct justifying a significant punitive damages award.” Id.

In reference to the ratio of compensatory damages to punitive damages, quoting BMW, the Court acknowledged, “[i]ndeed, low awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of non-economic harm might have been difficult to determine.” BMW at 582. Because Swinton made only $8.50 an hour, this was such a case.

For the purpose of evaluating the ratio, the Court also considered Plaintiff’s counsel’s repeated admonition to the jury “not to get carried away,” the financial asserts of the Defendant and “the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred.” Swinton at 819. After comparing similar cases, the Court had no trouble in concluding that a ratio of 28:1 was not excessive. Id . at 819-820.

In reference to analogous civil penalties, the Court refused to impose the cap of $300,000 made applicable to other types of civil rights cases pursuant to the Civil Rights Act of 1991; 42 U.S.C. Section 1981. Id. at 820. There are no caps on punitive damages under 42 U.S.C. Section 1981.

Conclusion Punitive damages in civil rights cases are a meaningful way of promoting important social values.

One dollar damages and 87,525.oo in attorney fees that’s how you spell FAIR DEBT COLLECTION PRACTICES ACT ( You’ve gotta love the courts in Martinez, Ca ie. Contra Costa county)

24 Apr

Heritage Pac. Fin. v. Monroy, 2013 Cal. App. 

Court of Appeal of California, First Appellate District, Division Two

23458820

HERITAGE PACIFIC FINANCIAL, LLC, Plaintiff, Cross-defendant, and Appellant, v. MARIBEL MONROY, Defendant, Cross-complainant, and Respondent.

 

Contra Costa County Super. Ct. No. C10-01607.

 

 

Core Terms


heritage, trial court, promissory note, attorney’s fees, tort claim, cause of action, lender, mortgage, notice, demurrer, hourly rate, loan application, fraud claim, prevailing, trust deed, misrepresent, lawsuit, summary adjudication, debt collector, cross-complaint, foreclosure, spend, borrower, consumer, leave to amend, mortgage loan, consensual, assignee, seller, owed

Judges: Lambden, J.; Kline, P.J., Richman, J. concurred.

Opinion by: Lambden, J.

 

Opinion

Maribel Monroy executed two promissory notes with WMC Mortgage Corp. (WMC) when purchasing a home in Richmond, California in 2006 (the Richmond property). After a foreclosure on the senior deed of trust, Heritage Pacific Financial, LLC (Heritage) acquired Monroy’s second promissory note from WMC. Heritage sent Monroy a letter attached to a complaint and summons advising her that Heritage had filed a lawsuit against her alleging various fraud claims. The letter admonished that any misinformation provided by Monroy on her original loan application with WMC could result in civil liability and that Heritage would proceed with a lawsuit if it were unable to resolve the matter with Monroy. Monroy filed a cross-complaint against Heritage, alleging violations of the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) and the federal Fair Debt Collection Practices Act (FDCPA or the Act).

After permitting Heritage to amend its complaint three times, the trial court sustained Monroy’s demurrer against Heritage’s pleading on the grounds that Heritage had failed to provide or allege an [2] assignment agreement with sufficient particularity to demonstrate that the assignment of Monroy’s promissory note included an intent to assign WMC’s tort claims against the borrower. Thereafter, Monroy moved for summary judgment or adjudication on her cross-complaint. The court denied her motion as to her claim of a violation of the Rosenthal Act but granted the motion as to a violation of the FDCPA, on the condition that Monroy agree to damages in the amount of one dollar. Monroy agreed to the damage award of one dollar and the court entered judgment in her favor. Subsequently, Monroy requested attorney fees and costs under title15 of the United States Code section 1692k(a)(3), and the court found that Monroy was the prevailing party and entitled to attorney fees and costs in the amount of $89,489.60. The court concluded that the issues regarding the cross-complaint and complaint were interrelated and could not be reasonably separated. Heritage separately appealed the judgment and the award of attorney fees and we, on our own motion, consolidated the appeals.

On appeal, Heritage argues that it sufficiently set forth allegations to support a claim that the assignment from WMC included [3] an intent to assign WMC’s tort claims against Monroy and that the trial court improperly weighed the evidence when sustaining the demurrer without leave to amend. It also contends that triable issues of fact exist regarding Monroy’s FDCPA claim and therefore the trial court erred in granting summary judgment. Finally, it objects to the award and amount of attorney fees. We are not persuaded by Heritage’s argument, and affirm the judgment and the award of attorney fees.

 

BACKGROUND

Monroy is Spanish speaking and works as a housekeeper. On November 26, 2006, she purchased the Richmond property for $425,000. Monroy executed two promissory notes with WMC. She obtained a senior mortgage loan for $340,000 and a junior mortgage loan for $85,000 (the note, the second note, or the promissory note). Both promissory notes were secured by a deed of trust on the property. The beneficiary of each deed of trust was Mortgage Electronic Servicing Corporation.

Both the first and second promissory notes provided in the first paragraph the following: “I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this [4] Note will be called the ‘Note holder.'” Monroy signed a form stating that the information in the loan application was true and correct and acknowledged that “any intentional or negligent misrepresentation of this information . . . may result in civil liability, including monetary damages.”

On her loan application, Monroy claimed to make $9,200 per month as the owner of Maribel’s Cleaning Services. Monroy signed a certification that she did not have a family or business relationship with the seller of the property.

The seller of the Richmond property was Marvin E. Monroy, Monroy’s son. He received $53,258.49 as a result of the sale. Monroy bought the house from her son because he was not able to make the mortgage payments.

At this same time, on November 20, 2006, property in Manteca (the Manteca property) was purchased in Monroy’s name and a promissory note was executed for the amount of $312,000. According to Monroy, the Manteca property was purchased under her name as a result of identity theft. She stated that in 2006 she was unaware of this transaction. She averred that she has never been to the Manteca Property. In 2008, Monroy submitted to the credit-reporting agency a verified fraud [5] statement. In this statement, she asserted that a mortgage in Manteca was opened in her name as a result of the identity theft.

Monroy failed to make her mortgage payments on the Richmond property, which resulted in a foreclosure on the senior deed of trust on August 28, 2008.

On May 22, 2009, Heritage acquired Monroy’s second promissory note as part of a “larger pool of loans.” Heritage is a limited liability company organized under the laws of the State of Texas and its principal place of business is in Dallas County, Texas. Heritage sent Monroy a letter stating that it had purchased her second unpaid loan. Heritage was unsuccessful in speaking with Monroy. In October 2009, Heritage sent by certified mail another notice of the transfer of the ownership of the note. Heritage sent Monroy a third notice in December 2009. In this notice, it asserted that she was obligated to pay Heritage the unpaid balance on the second promissory note.

Heritage did further research and concluded that Monroy had misrepresented her income and submitted false documentation regarding her income on her original loan application. Heritage also discovered that Monroy’s son was the seller of the Richmond property. [6] Additionally, it uncovered the documents related to the Manteca property.

On June 1, 2010, Heritage filed a complaint against Monroy for intentional misrepresentation, fraudulent concealment, promise without intent to perform, and negligent misrepresentation based on her loan application with WMC. Heritage alleged that it was not barred from pursuing its action by any antideficiency statute because it was not seeking a deficiency judgment for the balance of a promissory note following foreclosure, but was seeking a judgment for Monroy’s alleged fraud in connection with her loan application. Heritage requested actual damages in the amount of $85,000, the sum owed on the promissory note, and also asked for punitive damages.

On June 27, 2010, Monroy received a letter dated May 25, 2010, from Heritage that attached Heritage’s summons and complaint against her. The letter advised her about its civil action against her and stated in bold type: “Should you wish to voluntarily provide us with your federal tax return transcripts, a signed copy of Form 4506-T (Request for Transcript of Tax Return) and/or your proof of residency in the property made the subject of our Complaint, please contact [7] us at your earliest convenience . . . .” The letter directed: “If you notify us of your intent to voluntarily provide us with this documentation, we may suspend actions to provide you with an opportunity to provide us with copies of the same.” The letter told Monroy to notify Heritage if she wanted to provide a copy of her promissory note as Heritage, “as assignee of the promissory note, has the right to reverify the information contained therein.” The letter admonished Monroy that “any misinformation or misrepresentations provided in the [loan] application are a violation of federal law and may result in ‘civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation’ for which Heritage . . . currently seeks.” The letter warned that if Heritage was unable to resolve the matter by the date Monroy’s answer to the complaint was due, Heritage would “have no other option but to proceed with litigation against” her. The letter declared that it was “from a debt collector” and was “an attempt to collect a debt.”

On July 28, 2010, Monroy answered Heritage’s complaint and filed a cross-complaint alleging violations of the Rosenthal [8] Act (Civ. Code, § 1788 et seq.) and the FDCPA (15 U.S.C. § 1692 et seq.). A little more than a month later, on September 2, Heritage demurred to the cross-complaint and filed a motion to strike the pleading. On November 16, 2010, Monroy filed a motion for judgment on the pleadings on Heritage’s complaint.

On December 28, 2010, the trial court overruled Heritage’s demurrer to Monroy’s cross-complaint and denied its motion to strike. On this same date, the court granted with leave to amend Monroy’s motion for judgment on Heritage’s complaint. The court explained that Heritage had failed to allege that the lender had assigned its fraud claims to it and Heritage had conceded that no California legal authority held that the assignment of a promissory note automatically constituted an assignment of a lender’s fraud claims. The court added: “If [Heritage] chooses to amend its complaint so as to specifically allege an assignment of the lender’s fraud claims, [Heritage] shall make such allegations with the particularity required of a fraud cause of action, and [Heritage] shall attach as an exhibit to the amended complaint a full and legible copy of any written assignment agreement.”

Heritage [9] filed its first amended complaint for the same four causes of action on December 23, 2010. Heritage attached Monroy’s second promissory note for $85,000, and alleged in the pleading that the assignment was recorded on the last page of the promissory note.

Monroy demurred to the first amended complaint.On April 7, 2011, the trial court sustained Monroy’s demurrer “with one last opportunity” for Heritage to amend. (Bold omitted.) The court explained that Heritage had “still failed to adequately allege an assignment of the original lender’s tort claims, as distinct from an assignment of the original lender’s contractual rights under the subject promissory note.” The court citedSunburst Bank v. Executive Life Ins. Co.(1994) 24 Cal.App.4th 1156, 1164.The court concluded that Heritage had “not attached to its complaint a written assignment agreement, as specified in the court’s ruling on the motion for judgment on the pleadings, and [Heritage]ha[d]not alleged the formation of an oral assignment agreement.”

The trial court noted in the order that Heritage had represented at oral argument that it would amend the pleading to allege “the existence of either a written assignment of the original [10] lender’s tort claims, or an assignment agreement implied in fact from circumstances other than the mere assignment of contractual rights.” The court admonished Heritage that its future pleading must “allege with the particularity required of a fraud cause of action all the circumstances showing the formation and terms” of an implied agreement if Heritage was relying on an assignment implied in fact. The amended complaint also needed to allege “whether the subject promissory note was assigned before or after foreclosure of the first deed of trust and the corresponding extinguishment of the second deed of trust securing the promissory note.”

On May 10, 2011, Heritage filed its second amended complaint (the SAC). The SAC again set forth claims for intentional misrepresentation, fraudulent concealment, promise without intent to perform, and negligent misrepresentation. Heritage alleged that after the foreclosure on the first deed of trust, WMC sold Monroy’s promissory note secured by the second deed of trust on the Richmond property and “assigned any and all rights WMC may have including but not limited to any right to fraud claims against [Monroy]. Such assignment is evidenced by signature [11] and stamp of the secretary of WMC . . . on the last page of the note . . . .” Heritage further alleged: “In assigning [Monroy’s] loan, [Heritage] as assignee of WMC obtained all rights, title and interest in and to the mortgage loan by [Monroy]. The assignment to [Heritage] included assignment of the original lender’s (WMC) tort claim. The assignment of tort claims is implied in the language of the loan sell agreement to [Heritage] including but not limited to language such as ‘Seller does hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest in the loan.’ The loan sell agreement also provided that ‘the Seller transfers assign, set-over, quitclaim and convey to Buyer all right, title and interest of the Seller in the mortgage loan.'”

The SAC also added the following language: “The assignment of the tort claim is also implied by conduct of the parties in the secondary mortgage market as it is custom and practice in the mortgage industry to assign any and all rights and interests including any right to tort claim against the borrower when selling mortgage loan. [Heritage] alleges that based on the conduct of the parties and the language included [12] in the buy sell agreement of the loan, and the custom and practice of lenders such as WMC, the assignment of [Monroy’s] loan by WMC included assignment of any and all tort claims.” The SAC also asserted that the language of the loan application signed by Monroy implied the assignment of tort claims.

Monroy demurred to the SAC, and Heritage attached a declaration of Diane Taylor, a representative for WMC Mortgage, LLC, to its “sur-reply in support” of its opposition to Monroy’s demurrer. Taylor’s declaration dated August 4, 2011, stated: “As Assistant Secretary, I am authorized to speak on behalf of WMC Mortgage, LLC, successor to WMC . . . .” She stated that WMC relied on the information provided by the borrower applying for a loan to determine the borrower’s “eligibility for the products offered.” She stated: “When WMC sold its mortgage loans to third parties, WMC assignedallof its legal rights (in tort as well as contract), as the originating lender, to the buyer—including, but not limited to, the right to recover against a borrower for fraud.” (Underline omitted.)

On August 15, 2011, the trial court filed its order sustaining without leave to amend Monroy’s demurrer to Heritage’s [13] SAC. The court explained: “Despite being afforded an opportunity to amend, [Heritage] has still failed to adequately allege an assignment of the original lender’s tort claims, as distinct from an assignment of the original lender’s contractual rights under the subject promissory note. [Citation.] [Heritage] has not attached to its complaint a written assignment agreement . . . , and [Heritage] has not adequately alleged the formation of an oral assignment agreement.”

The trial court stated that there was an independent ground for sustaining the demurrer without leave to amend. The SAC stated that the promissory note was assigned after foreclosure of the first deed of trust and the corresponding extinguishment of the second deed of trust securing the promissory note. The court found that “there was no underlying property interest supporting an incidental assignment of the original lender’s fraud claims.”

On November 18, 2011, Monroy filed a motion for summary judgment or summary adjudication on her cross-complaint. Monroy asserted that Heritage was involved in the business practice of filing invalid fraud claims to avoid California’s antideficiency laws in order to collect on nonrecourse [14] debts or convert them into recourse default judgments. With regard to the claim of violating the FDCPA, Monroy alleged that Heritage was a debt collector and was engaged in a deceptive debt collections practice within the meaning of title 15, United States Code sections1692d, 1692e, and 1692f. Monroy cited the letter Heritage sent her after it had filed the lawsuit against her. Monroy also asserted that Heritage had violated provisions of the Rosenthal Act underCivil Code sections 1788.17and1788.13, subdivision (k). Monroy claimed that she was entitled to $1,000 for Heritage’s violation of the FDCPA and $1,000 for Heritage’s violation of the Rosenthal Act.

Heritage opposed the motion for summary judgment and also requested a continuance to conduct additional discovery. In its opposition to Monroy’s motion for summary judgment, Heritage agreed that it was a debt collector but disputed the contention that the FDCPA applied. Heritage argued that the FDCPA did not apply because Monroy bought the Richmond property for her son and also purchased a home in Manteca. It also disputed the allegation that it engaged in deceptive debt collections practices within the meaning of the FDCPA or [15] that it violated the Rosenthal Act.

On February 21, 2012, the trial court issued its order granting in part and denying in part Monroy’s motion for summary adjudication on her cross-complaint. The court granted Monroy’s motion as to her claim that Heritage violated the FDCPA. The court found that Heritage’s conduct in threatening Monroy with the prosecution of legal claims that had no merit violated the FDCPA. The court noted that Heritage had made a binding judicial admission that it received the assignment of Monroy’s note after the foreclosure of the first deed of trust, and that event extinguished the second deed of trust securing Monroy’s note. The court advised that it could not grant summary adjudication on her cause of action for monetary damages because the issue of the amount of damages remained unresolved; it thus awarded statutory damages in the nominal amount of one dollar. The court added: “If Monroy insists on receiving a greater amount, then summary adjudication must be denied and the matter must proceed to trial.”

The trial court denied Monroy’s summary adjudication motion with regard to her claim that Heritage violated the Rosenthal Act. The court concluded there was [16] a triable issue of fact as to Heritage’s statutory “unclean hands” defense. The court also sustained a number of Heritage’s objections to the declaration of Monroy’s counsel.

The trial court denied Heritage’s request for a continuance to conduct additional discovery. Heritage’s four discovery motions were set for a hearing 10 days after the scheduled trial date and thus the court found that Heritage’s discovery requests were untimely. Further, the court found that there was no good cause for granting a continuance.

On March 12, 2012, the trial court filed its entry of judgment in favor of Monroy and against Heritage and awarded Monroy nominal statutory damages of one dollar on her cross-complaint, the maximum sum she could receive without a trial on her FDCPA claim. The order stated that Monroy was the “prevailing party.”

Heritage filed a timely notice of appeal.

On March 23, 2012, Monroy filed a memorandum of costs. On May 10, 2012, Monroy filed her motion for attorney fees and costs under title15 of the United States Code section 1692k(a)(3). Heritage filed its memorandum in opposition on June 6, 2012.

The trial court held a hearing on Monroy’s fee motion on June 19, 2012. At the conclusion [17] of the hearing, the court stated it was granting Monroy’s motion. The court explained: “As the judge in this case, I did go over the billings and I didn’t see anything that I could say was unreasonable for hours spent on certain tasks. And I felt the hourly rate was within the acceptable parameters for Bay Area attorneys.”

On July 10, 2012, the court filed its order granting Monroy’s motion for an award of attorney fees and expenses. The order stated that Monroy was the prevailing party and entitled “to the full amount of her attorney’s fees relating to the FDCPA claim as well as to Heritage’s complaint.” The court added: “The issues are synonymous and interrelated and cannot reasonably be separated.” The court concluded that counsel’s hourly fee rate of $450 was “within acceptable parameters for attorneys of [counsel’s] skill and experience practicing” in the San Francisco Bay area, and that the time spent was 194.5 hours. The court denied the enhancement requested. The court awarded fees in the amount of $87,525 ($450 x 194.5). The court awarded litigation expenses in the amount of $1,964.60.

On this same date, July 10, 2102, the trial court entered an amended judgment, stating that [18] it had sustained with prejudice Monroy’s demurrer to Heritage’s SAC, and had granted Monroy’s motion for summary adjudication on her claim in her cross-complaint for violations of the FDCPA. The court repeated that Monroy shall take statutory damages of one dollar on her cross-complaint, the maximum she could receive without a trial. The court stated that Monroy was the prevailing party and awarded her $89,489.60 for attorney fees and litigation costs and expenses ($87,525 + $1,964.60). Thus, the total judgment in favor of Monroy and against Heritage was $89,490.60 ($89,489.60 + $1.00 in damages).

Heritage filed a timely notice of appeal from the order awarding attorney fees. This court on its own motion consolidated both of Heritage’s appeals.

On November 8, 2012, Monroy filed a request for judicial notice of an order in a class certification lawsuit against Heritage and of Heritage’s requests for default judgments against other plaintiffs in a different lawsuit. Heritage opposed the request and argued that Monroy is asking this court to take judicial notice of facts in documents and these facts may not be true. On December 5, 2012, we issued an order that the opposed request for judicial [19] notice would be decided with the merits of the appeal.

“‘Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.’ [Citation.]While courts take judicial notice of public records, they do not take notice of the truth of matters stated therein. [Citation.] ‘When judicial notice is taken of a document, . . . the truthfulness and proper interpretation of the document are disputable.’ [Citation.]” (Herrera v. Deutsche Bank National Trust Co.(2011) 196 Cal.App.4th 1366, 1375.)Accordingly, we take judicial notice of the existence of these court documents (Evid. Code, §§ 452, subd. (d),459, subd. (a)), but do not take notice of the disputed facts in the documents.

 

DISCUSSION

I.The Demurrer against Heritage’s SAC

A.The Standard of Review, The Pleading Requirements for Alleging Fraud, and the Burden of Proof When Alleging an Assignment

The trial court sustained Monroy’s demurrer against Heritage’s SAC without leave to amend. The standard of review governing an appeal from the judgment after the trial court sustains a demurrer without leave to amend is well established. “‘We treat the demurrer as admitting [20] all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan(1985) 39 Cal.3d 311, 318.)

Here, Heritage alleged that it had a right to pursue misrepresentations Monroy made in her loan application to WMC based on a claim that WMC assigned its torts claims against Monroy to it. “The burden of proving an assignment falls upon the party asserting rights thereunder [citations].” (Cockerell v. Title Ins. & Trust Co.(1954) 42 Cal.2d 284, 292.) [21] An assignment agreement “must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Mission Valley East, Inc. v. County of Kern(1981) 120 Cal.App.3d 89, 97.)An assignment is “a manifestation to another person by the owner of the right indicating his [or her] intention to transfer, without further action or manifestation of intention, the right to such other person, or to a third person.” (Cockerel,at p. 291.)As with contracts generally, the nature of an assignment is determined by ascertaining the intent of the parties. (Cambridge Co. v. City of Elsinore(1922) 57 Cal.App. 245.)

Furthermore, the policy of liberal construction of the pleadings does not apply to fraud causes of action. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court(1996) 12 Cal.4th 631, 645.)This requirement serves two purposes.First, it gives the defendant notice of the definite charges to be met. Second, the allegations “should be sufficiently specific that the court can weed out nonmeritorious actions on the basis of the pleadings. Thus the pleading should be sufficient ‘”to [22] enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.'”” (Committee on Children’s Television, Inc. v. General Goods Corp.(1983) 35 Cal.3d 197, 216-217, superseded by statute on another issue.)

 

B.The Adequacy of the Fraud Allegations

Heritage argues that it adequately alleged that WMC assigned its fraud claims against Monroy to it. The trial court’s insistence that it had to attach a document establishing the assignment shows, according to Heritage, that the court improperly considered the sufficiency of the evidence when ruling on the demurrer. For the reasons discussed below, we disagree with Heritage’s contention.

Heritage cites various allegations in its SAC where it asserted in a conclusory fashion that WMC assigned to Heritage its tort claims when WMC transferred to Heritage its rights under Monroy’s promissory note. In particular it cites its allegations that WMC “sold the loan and assigned any and all rights WMC may have including but not limited to any right to fraud claim” against Monroy. It further alleged that this assignment was “evidenced by signature and stamp of the secretary of WMC” on the [23] last page of the note. Heritage set forth in its SAC that as the assignee of WMC, Heritage “obtained all rights, title and interest in and to the mortgage loan by defendant[,]” including WMC’s tort claim. Heritage claimed that the assignment of tort claims was implied by the following language in the agreement between Heritage and WMC: “‘Seller does hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest in the loan.’ The loan sell agreement also provided that ‘the Seller transfers assign, set-over, quitclaim and convey to Buyer all rights, title and interest of the Seller in the mortgage loan.'” The SAC added that WMC acknowledged on May 9, 2011, that it assigned to Heritage its tort claims.

Heritage contends that its SAC also alleged assignment of the tort claims based on implied conduct of the parties, as follows: “The assignment of the tort claim is also implied by conduct of the parties in the secondary mortgage market as it is custom and practice in the mortgage industry to assign any and all rights and interests including any right to tort claim against the borrower when selling mortgage loan. [Heritage] alleges that based on the conduct [24] of the parties and the language included in the buy sell agreement of the loan, and the custom and practice of lenders such as WMC, the assignment of [Monroy’s] loan by WMC included assignment of any and all tort claims.”

Heritage also maintains that the language in Monroy’s loan implied an assignment, as Monroy acknowledged the following: “‘Each of the undersigned specifically represents to Lender and to lender’s actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns and agrees and acknowledges that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application. . . . (6) The Lender, its servicers, successors or assigns may rely on this information contained in the application. . . .'” (Bold omitted.)

Heritage insists that the foregoing language and the attached document, which was the written indorsement [25] containing the signature and stamp of the secretary of WMC on the last page of the promissory note, were sufficient, and the trial court should have overruled Monroy’s demurrer.

We agree that the allegations in Heritage’s SAC and the attached indorsement showed an assignment of Monroy’s promissory note. However, the assignment of this contract right did not carry with it a transfer of WMC’s tort rights. While no particular form of assignment is required, it is essential to the assignment of a right that the assignor manifests an intention to transfer “the right.” (Sunburst Bank v. Executive Life Ins. Co., supra,24 Cal.App.4th at p. 1164.)

An assignment of a right generally carries with it an assignment of other rights incident thereto.(Civ. Code, § 1084.)The fraud claims based on Monroy’s loan application with WMC are not “incidental to” the transfer of the promissory note to Heritage.”A suit for fraud obviously does not involve an attempt to recover on a debt or note.” (Guild Mortgage Co. v. Heller(1987) 193 Cal.App.3d 1505, 1512; see alsoMillner v. Lankershim Packing Co.(1936) 13 Cal.App.2d 315, 319-320[assignment of mortgage did not include assignment of right to recover for [26] injury to the mortgaged property];Schauer v. Mandarin Gems of Cal., Inc.(2005) 125 Cal.App.4th 949, 956-957[divorce agreement awarding diamond ring purchased by husband to wife did not automatically transfer husband’s claim against jeweler for fraud].)For example, inWilliams v. Galloway(1962) 211 Cal.App.2d 302, the corporation’s sale and transfer to a second corporation “‘[a]llpersonal property'” and all “‘property held on aleas[e]holdbasis'” did not transfer a claim for money the first corporation had against its former lessor.(Id.at pp. 304-305.)

In the present case, the indorsement and allegations established that WMC assigned the second promissory note to Heritage. The transfer of the promissory note provided Heritage with contract rights. Fraud rights are not, as a matter of law, incidental to the transfer of the promissory note.1

It is true that incidental rights may include certain ancillary causes of action but the assignment agreement “must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Mission Valley East, Inc. v. County of Kern, supra,120 Cal.App.3d at p. 97.) [27] “[A] basic tenet of California contract law dictates that when a particular right or set of rightsisdefined in an assignment, additional rightsnotsimilarly defined or named cannot be considered part of the rights transferred.” (DC3Entertainment, LLC v. John Galt Entertainment, Inc.(W.D. Wash. 2006) 412 F.Supp.2d 1125, 1144.)

Here, none of the allegations regarding assignment in the SAC specified that the assignment was transferring the ancillary right of a tort claim. The document attached by Heritage did not support any claim of an assignment by WMC to Heritage of its fraud claims against Monroy. This document was the promissory note signed by Monroy, which, on the last page, contained the signature and stamp of the secretary of WMC. Directly under “Pay to the order of” was Heritage’s stamp.The transfer of the promissory note by indorsement did not show a clear intent to assign WMC’s fraud claim. (SeeComm. Code, § 3201 et seq.) The conveyance of the promissory note to Heritage does not establish that WMC assigned to Heritage its right to the performance of other, distinct obligations owed by Monroy, such as the obligation to provide truthful information. (SeeCambridge Co. v. City of Elsinore, supra,57 Cal.App. at pp. 249-250.)

Additionally, [28] the allegations did not show an assignment of the tort claims based on custom and practice. “While no particular form of assignment is necessary, the assignment, to be effectual, must be a manifestation to another person by the owner of the right indicating his intention to transfer, without further action or manifestation of intention, the right to such other person, or to a third person.[Citation.]” (Cockerell v. Title Ins. & Trust Co., supra,42 Cal.2d at p. 291.)The parties’ intention is determined by considering their words and acts as well as the subject matter of the contract. (Lumsden v. Roth(1955) 138 Cal.App.2d 172, 175.)The assignment agreement in the present case is completely silent regarding any tort claim and nothing in the agreement suggests that the assignment included any rights other than those rights incidental to the contract rights. Heritage cannot allege general custom and practice to expand the assignment agreement to include ancillary rights not specified.

Heritage claims that the decision inNational Reserve Co. v. Metropolitan Trust Co.(1941) 17 Cal.2d 827, 833(National Reserve) supports its position that WMC’s tort claims were assigned with the transfer [29] of the note. Our Supreme Court inNational Reservestated that an unqualified assignment of a contract vests in the assignee “all rights and remedies incidental thereto.” (Id.at p. 833.) Heritage then proceeds to cite portions of the following quote: “If . . . an accrued cause of action cannot be asserted apart from the contract out of which it arises or is essential to a complete and adequate enforcement of the contract, it passes with an assignment of the contract as an incident thereof. Thus, the assignment of a contract passes from assignor to assignee an accrued cause of action for rescission [citations], and a creditor’s assignee acquires the right to set aside a prior fraudulent conveyance by the debtor.[Citations.] As a corollary, if an assignor by express provision of a contract is denied the right to assert an accrued cause of action after he has assigned away his interest in the contract, the right to sue passes to his assignee. There would otherwise be no one to enforce the right.” (Ibid.)

Heritage ignores the language inNational Reserve, supra,17 Cal.2d 827, which directly preceded the paragraph it quotes from the decision. In the preceding paragraph, the Supreme Court [30] noted that incidental rights may “include certain ancillary causes of action arising out of the subject of the assignment and accruing before the assignment is made.” (Id.at p. 833.) However, “[u]nlessan assignment specifically or impliedly designates them, accrued causes of action arising out of an assigned contract, whetherex contractuorex delicto,do not pass under the assignment as incidental to the contract if they can be asserted by the assignor independently of his continued ownership of the contract and are not essential to a continued enforcement of the contract.” (Ibid.)

Applying the legal principles set forth inNational Reserveto the present case, Heritage has failed to state a claim for a cause of action for fraud based on Monroy’s loan application. Neither the indorsement nor the other allegations in the SAC authorize the assignment, specifically or impliedly, of WMC’s tort claims. As already stressed, fraud is an ancillary cause of action to the promissory note.

Heritage maintains that it did not have to allege details and could simply allege a clear statement of the ultimate facts necessary to the cause of action. (SeeLyon v. Master Holding Corp.(1942) 50 Cal.App.2d 238, 241.) [31] Heritage claims that it was sufficient for it to plead the ultimate fact of ownership of the property at the time it filed this action and cites a 1924 case,Commercial Credit Co. v. Peak(1924) 195 Cal. 27, 32-33.This case does not help Heritage.Commercial Creditinvolved recovering the value of personal property or chattel. (Id.at p. 29.)This case did not involve a promissory note; it did not involve a claim based on the assignment of a tort; nor did it involve claims based on fraud. Thus,Commercial Credithas no application to the present case. Heritage ignores that every element of a fraud cause of action must be pleaded specifically.

Finally, Heritage complains that the trial court was assessing the veracity of the allegations in the SAC, and cites the court’s order instructing it to attach a writing to show an assignment as proof that the court improperly assessed the weight of the evidence. We disagree with Heritage’s conclusion.

“A written contract may be pleaded either by its terms––set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference––or by its legal effect.[Citation.] In order to plead a contract [32] by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mutual, Inc.(2006) 142 Cal.App.4th 1457, 1489.)Since the allegations in Heritage’s pleadings did not set forth with specificity any assignment of the tort claims, the trial court properly instructed Heritage to attach the written agreement that evinced an intent to assign the tort claims.

Accordingly, we conclude that the trial court did not err when it found that Heritage failed to state causes of action for fraud based on assignment.2

 

C.Denying Heritage Leave to Amend its SAC

Heritage contends that the trial court abused its discretion when it did not permit it to amend its SAC.

The court abuses its discretion in sustaining the demurrer without leave to amend if the plaintiff can show a reasonable possibility of curing the defect in the complaint by amendment.(Blank v. Kirwan, supra,39 Cal.3d at p. 318.) Heritage has the burden of proving that an amendment would cure the defect.(Schifando v. City of Los Angeles(2003) 31 Cal.4th 1074, 1081.)

In support of its argument that it should have been permitted to amend its pleading a third time, Heritage argues that its SAC was sufficient and that it could have amended the pleading to indicate that WMC intended to transfer its tort rights to Heritage. In the trial court, Heritage attached a [34] declaration of Taylor, a representative for WMC Mortgage, LLC. Taylor’s declaration dated August 24, 2011, stated: “As Assistant Secretary, I am authorized to speak on behalf of WMC Mortgage, LLC, successor to WMC . . . .” She confirmed that WMC relied on the information provided by the borrower applying for a loan to determine the borrower’s “eligibility for the products offered.” She declared: “When WMC sold its mortgage loans to third parties, WMC assignedallof its legal rights (in tort as well as contract), as the originating lender, to the buyer—including, but not limited to, the right to recover against a borrower for fraud.” (Underline omitted.)

Taylor’s declaration on August 24, 2011, more than two years after Heritage acquired Monroy’s unpaid note as part of a “larger pool of loans,” does not shed any light on the parties’ intent at the time of the assignment. The assignment agreement contains absolutely no language indicating that WMC intended to transfer any rights ancillary to the right to collect on the promissory note. Contract “rights” do not exist as disembodied abstractions apart from a contract that created them. More precisely, in California, “the intention of the [35] parties as expressed in the contract is the source of contractual rights and duties.” (Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co.(1968) 69 Cal.2d 33, 38.) Thus, we assess the intent at the time the agreement is formed, not years later.

The trial court provided Heritage with ample opportunity to cure the defect in its pleading; Heritage failed to demonstrate it could cure the defect. The trial court thus did not abuse its discretion in sustaining the third demurrer against Heritage’s pleading without leave to amend.

 

II.The Grant of Summary Adjudication on Monroy’s Cross-Complaint

A.The Trial Court’s Ruling

Monroy alleged violations of the Rosenthal Act and the FDCPA in her cross-complaint. She claimed that Heritage violated the FDCPA by attempting to collect a debt not owed, by using unconscionable, false, deceptive, and/or misleading means to seek to collect a debt, and by threatening legal actions that could not be legally taken.

Monroy moved for summary adjudication on her claims and the trial court denied the motion as to her claim of violating the Rosenthal Act. It granted her motion as to her claim that Heritage violated the FDCPA, and awarded Monroy damages in the amount [36] of one dollar. The court found that Heritage’s conduct in threatening Monroy with the prosecution of legal claims that had no merit violated the FDCPA.3

 

B.Standard of Review

To prevail on a summary adjudication motion, a cross-complainant must prove “each element of the cause of action entitling the party to judgment on that cause of action. . . .” (Code Civ. Proc., § 437c, subd. (p)(1).) Only if the cross-complainant satisfies this burden will the burden shift to the cross-defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Ibid.) The cross-defendant “may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall [37] set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.” (Ibid.)

“In reviewing whether these burdens have been met, we strictly scrutinize the moving party’s papers and construe all facts and resolve all doubts in favor of the party opposing the motion.[Citations.]” (Innovative Business Partnerships, Inc. v. Inland Counties Regional Center, Inc.(2011) 194 Cal.App.4th 623, 628.) On appeal, the trial court’s ruling is examined under a de novo standard of review.(Brinton v. Bankers Pension Services, Inc.(1999) 76 Cal.App.4th 550, 555.)

 

C.The FDCPA

The purpose of the FDCPA is “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” (15 U.S.C. § 1692(e).) “A basic tenet of the Act is that all consumers, even those who have mismanaged their financial affairs resulting in default on their debt, deserve ‘the right to be treated in a reasonable and civil manner.'” (Bass v. Stopler, Koritzinsky, Brewster & Neider, S.C.(7th Cir. 1997) 111 F.3d 1322, 1324 [38] (Bass).) Since the FDCPA is a remedial statute, “it should be construed liberally in favor of the consumer.” (See, e.g.,Johnson v. Riddle(10th Cir. 2002) 305 F.3d 1107, 1117.)

The word “‘creditor’ means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.” (15 U.S.C. § 1692a(4).) “The term ‘debt’ means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” (15 U.S.C. § 1692a(5).)

The FDCPA defines “‘debt collector'” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. . . .[T]he [39] term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. . . .” (15 U.S.C. § 1692a(6).)

Under the FDCPA, “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” (15 U.S.C. § 1692e.) A violation of this section includes “[t]hefalse representation of” “the character, amount, or legal status of any debt[.]” (15 U.S.C. § 1692e(2)(A).) A violation also includes “[t]hethreat to take any action that cannot legally be taken . . . .” (15 U.S.C. § 1692e(5).) Additionally, a violation occurs if the debt collector uses “any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer” (15 U.S.C. § 1692e(10)) or makes “[t]hefalse representation or implication that accounts have been turned over to innocent purchasers for value” (15 U.S.C. § 1692e(12)).

State courts have concurrent jurisdiction over claims under the FDCPA. (15 U.S.C. § 1692k(d).) The FDCPA will not impose any liability “to any act done or [40] omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.” (15 U.S.C. § 1692k(e).)

 

D.Heritage Violated the FDCPA

When alleging a claim under the FDCPA, a plaintiff must establish that (1) the plaintiff is a consumer, as defined by the FDCPA; (2) the debt arises out of a transaction primarily for personal, family or household purposes; (3) the defendant is a debt collector, as that phrase is defined by the FDCPA; and (4) the defendant violated a provision of the Act. (15 U.S.C. § 1692e;Heintz v. Jenkins(1995) 514 U.S. 291, 294;Wallace v. Washington Mut. Bank, F.A.(6th Cir. 2012) 683 F.3d 323, 326.)

Monroy’s claim was based on the collection letter dated May 25, 2010, sent to her by Heritage. She received the letter on June 28, 2010, and it was attached to the summons and complaint against her. The letter advised that Heritage had commenced a civil action against Monroy and admonished her that “any misinformation or misrepresentations provided in the [loan] application are a violation of federal [41] law and may result in ‘civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation’ for which Heritage . . . currently seeks.” The letter warned that if Heritage was unable to resolve the matter by the date Monroy’s answer was due, Heritage would “have no other option but to proceed with litigation against” her. The letter declared that it was “from a debt collector” and was “an attempt to collect a debt.” In the trial court, in Heritage’s separate statement of disputed facts in support of its opposition to Monroy’s motion for summary adjudication, Heritage admitted that it was a debt collector and that it was attempting to collect an alleged debt against Monroy.

Thus, the undisputed facts established that Heritage was a debt collector and attempting to collect a debt from Monroy. Monroy’s obligation was to pay for “personal, family, or household purposes” (15 U.S.C. § 1692a(5)), as this was a debt incurred to purchase a home in which, according to Monroy’s declaration, she intended to live. There was evidence that a Manteca property was also purchased in Monroy’s name, but there is no evidence that she ever lived in [42] that home or intended to live in that home. Indeed, the unchallenged evidence was that Monroy was the victim of identity theft and that she did not know anything about the Manteca property. Monroy stated that she lived at the Richmond property and Heritage presented no evidence that she resided at another location.

The evidence also supported a finding that the letter Heritage sent to Monroy violated the FDCPA. The letter attached to the complaint and summons threatened Monroy with a lawsuit for any misinformation she provided on her loan application with WMC. Heritage asserted that Monroy owed it the money for any fraud on her application because it was now the owner of the promissory note. As discussed extensively above, Heritage’s claims based on fraud had no merit. Thus, Heritage violated the FDCPA when it indicated in the letter that it had the right to sue Monroy for any misinformation submitted on the promissory note and when it attempted to induce her to settle with Heritage.

Additionally, according to Ben Ganter, the director of client relations for Heritage, Heritage acquired Monroy’s unpaid note as part of a larger pool of loans that included both secured and unsecured mortgage [43] loans. He acknowledged that Heritage then “seeks to collect on the unpaid balances of the notes it purchased” and that “Heritage’s business model is collecting on the loans it purchases.” Heritage purchased Monroy’s junior loan without any knowledge about the accuracy of the loan application. Before Heritage discovered the alleged fraud, it sent Monroy letters telling her that she was obligated to pay Heritage “for the unpaid balance of the note . . . .” According to Ganter, a third notice of Monroy’s obligation to pay [Heritage] for the unpaid balance on the Note was sent via postal mail in December of 2009. These notices clearly violated the FDCPA because, as the trial court found, Heritage had made a binding judicial admission that it received the assignment of Monroy’s note after the foreclosure of the first deed of trust, and that event extinguished the second deed of trust securing Monroy’s note under the antideficiency statutes (seeCode Civ. Proc., § 580b).

Heritage complains that Monroy alleged that the complaint sent to her attached to the letter violated the FDCPA and a legal action is not a communication covered by the FDCPA. We need not address this argument because Monroy’s [44] claim was not based on a communication under the FDCPA, but based on the debt collector’s using “false, deceptive, or misleading representation or means in connection with the collection of any debt.” (15 U.S.C. § 1692e.)

Heritage also argues that “debt,” as defined by the FDCPA, does not include tort claims. As already noted, Heritage also violated the FDCPA when it sent a notice demanding payment on the money owed on the promissory note when that debt had been extinguished under the antideficiency statutes. Furthermore, we disagree with Heritage’s argument that tort claims are never debts under the FDCPA.

In support of its argument that a “debt” does not include a tort claim, Heritage cites various cases that have held that any obligation to pay damages arising from a tort claim, court judgment, or criminal activity does not constitute a debt under the FDCPA. (See, e.g.,Fleming v. Pickard(9th Cir. 2009) 581 F.3d 922, 925-926[cause of action for tortious conversion is not a debt under the FDCPA];Turner v. Cook(9th Cir. 2004) 362 F.3d 1219, 1227[tort judgment resulting from business-related conduct not a debt under the FDCPA because “‘when we speak of ‘transactions,’ we refer to [45] consensual or contractual arrangements, not damage obligations thrust upon one as a result of no more than her own negligence'”];Hawthorne v. Mac Adjustment, Inc.(11th Cir. 1998) 140 F.3d 1367, 1371[holding that the obligation to pay arose from a tort, and not from a consumer transaction, and therefore was not a debt under the FDCPA];Zimmerman v. HBO Affiliate Group(3d Cir. 1987) 834 F.2d 1163, 1167-1169.)

In the cases cited by Heritage, the obligations to pay were created by something other than a consumer transaction and were not consensual.(See, e.g.,Fleming v. Pickard, supra,581 F.3d at p. 925[“‘at a minimum, a “transaction” under the FDCPA must involve some kind of business dealing or other consensual obligation'”].)Thus, we agree that courts have consistently excluded tort obligations or criminal activity from the FDCPA‘s definition of “debt”whenthe tort obligations do not arise out of a consensual transaction.InZimmerman v. HBO Affiliate Group, supra,834 F.2d 1163, for example, the Third Circuit held that the FDCPA did not apply to attempts by cable television companies to collect money from people who allegedly had stolen cable television signals by installing [46] illegal antennas.(Zimmerman,at pp. 1167-1169.)There was no FDCPA “debt” inZimmermanbecause the obligations arose out of a theft rather than a transaction. Neither the complaint nor the demand letter included any assertion of an offer of extension of credit and therefore no transaction had occurred. (Zimmerman,at pp. 1167-1169.)

As already stressed, a debt or obligation under the FDCPA must be based on a consumer consensual or contractual arrangement, not a damage obligation. (See, e.g.,Hawthorne v. Mac Adjustment, Inc., supra,140 F.3d at p. 1372). Unlike the cases upon which Heritage relies, the present case is not a situation in which Monroy never had a contractual arrangement of any kind with WMC. Rather, Monroy’s alleged debt to Heritage arose out of her transaction with WMC to purchase the Richmond property.The alleged fraud claims clearly arose out of a residential mortgage transaction and Heritage cannot avoid the application of the FDCPA simply because it alleged in its pleading that Monroy’s obligation to it was based on the misrepresentations she made on her loan application rather than on a breach of her obligations under the contract.

Heritage declares that the present [47] case is similar toTurner v. Cook, supra,362 F.3d 1219, butTurneris clearly distinguishable from the present case. InTurner,the appellees obtained a judgment against Stephen Turner and “the judgment arose from allegations of various business interference torts” by Turner against the appellees.(Id.at pp. 1222-1223.) Subsequently, the appellees filed a claim that Turner fraudulently conveyed his real and personal property to prevent the appellees from collecting on the judgment.(Id.at p. 1223.)Turner claimed that the appellees violated the FDCPA when attempting to collect the judgment.(Turner,at pp. 1223-1224.)When rejecting the claim under FDCPA, the Ninth Circuit held that a tort judgment is not a debt under the FDCPA. (Turner,at p. 1227.)Turner had admitted that the judgment was based on alleged business interference torts, not any consumer transaction, and it was immaterial that the fraudulent conveyance action involved Turner’s home. (Id.at p. 1228.)

InTurner v. Cook, supra,362 F.3d 1219, the liability arose from tortious activity, not from a consensual transaction. By contrast, here, Monroy and WMC entered into a consensual loan agreement for the purchase of a [48] residential home.

Heritage argues that the present liability did not arise out of a consensual transaction because WMC did not consent to mortgage fraud. Heritage maintains that the present transaction is the same as the theft of goods or services.

Heritage’s argument is contrary to the court decisions that have held that there is no automatic fraud exception to the FDCPA. (See, e.g.,F.T.C. v. Check Investors, Inc.(3d Cir. 2007) 502 F.3d 159, 170;Keele v. Wexler(7th Cir. 1998) 149 F.3d 589, 595.) “‘Absent an explicit showing that Congress intended a fraud exception to the Act, the wrong occasioned by debtor fraud is more appropriately redressed under the statutory and common law remedies already in place, not by a judicially-created exception that selectively gives a green light to the very abuses proscribed by the Act.'” (F.T.C.,at p. 170.)

The breadth of the phrase “any obligation or alleged obligation” is not limited to a particular set of obligations.(Bass, supra,111 F.3d at p. 1325.) Thus, a replevin action, even though it is a tort claim, may be a debt under the FDCPA.(Rawlinson v. Law Office of William M. Rudow, LLC(4th Cir. 2012) 460 Fed.Appx. 254, 257.)“[A] court should [49] look beyond the label of the debt collection practice to determine whether a ‘debt’ is being collected.” (Ibid.)

Here, WMC and Monroy consented to the loan application. The fraud action, even though it is a tort claim, arose from the consensual loan transaction, and thus it is a debt under the FDCPA.

 

E.No Defense to the Application of the FDCPA

Heritage contends that it has a defense, as a matter of law, to the application of the FDCPA. It claims that it relied on an advisory opinion by the Federal Trade Commission (FTC) that collecting on tort damages is not a debt for purposes of the FDCPA.

The FDCPA provides an affirmative defense for “‘any act done or omitted in good faith in conformity with any [FTC] advisory opinion’ . . . .” (Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA(2010) 599 U.S. 573,[130 S.Ct. 1605, 1607](Jerman), quoting15 U.S.C. § 1692k(e).) However, “ignorance of the law will not excuse any person, either civilly or criminally.” (Jerman,at p.[p. 1611].)

The “advisory opinion” relied upon by Heritage is a letter dated August 27, 1992, written to an attorney in Florida.4The attorney wished to know if the claim for civil damages against an alleged [50] shoplifting offender would be covered under the FDCPA. The letter stated that these torts would not be debts as defined in the FDCPA and admonished that “[t]heviews expressed herin represent an informal staff opinion. As such, they are not binding on the [FTC]. . . .”

This letter is an “informal staff opinion” and not an advisory opinion. Furthermore, the claim of damages arising from a theft, as was the subject of the FTC’s letter, is clearly distinguishable from the present case. As already discussed, Heritage was not collecting on tort damages, but on a claim of fraud arising out of a loan contract.

Courts held as early as 1998 that there is no automatic fraud exception to the FDCPA. (Keele v. Wexler, supra,149 F.3d at p. 595[“neither the text nor underlying legislative history of the FDCPA lends itself to the recognition of a fraud exception”].) Heritage’s ignorance of the law does not provide it with an affirmative [51] defense to the application of the FDCPA.

 

F.No Triable Issue of Fact

Heritage argues that the trial court should not have granted the summary adjudication motion because there was a triable issue of fact as to whether the tort claims had been assigned. It complains that the court refused to consider its evidence of assignment.

In support of this argument, Heritage citesCadlerock Joint Venture, L.P. v. Lobel(2012) 206 Cal.App.4th 1531(Cadlerock). InCadlerock,a single lender provided a borrower with two non-purchase money loans secured by two deeds of trust against the same real property, and then assigned the junior loan to a third party.(Id.at p. 1536.)The court held that the assignee of the junior loan was not precluded from seeking a deficiency judgment against the borrower after the senior loan was extinguished by a foreclosure sale of the property. (Id.at pp. 1546-1547.)The court stressed that the junior loan had been assigned prior to the foreclosure sale. (Ibid.) InCadelrock,the antideficiency statute did not preclude the assignee of the junior loan from seeking a deficiency judgment after the extinguishment of the senior loan, held by a different entity, because there [52] was no evidence that the lender created two loans “as an artifice to evade”Code of Civil Procedure section 580d. (Cadlerock,at p. 1547.)

Cadlerockhas no applicability to the present case. Unlike the situation inCadlerock,Monroy’s loans were purchase money loans and the antideficiency statutes applied to both her senior and junior loans underCode of Civil Procedure section 580b. Furthermore, the junior loan was assigned to Heritageafterthe foreclosure. Critical to the holding inCadlerockwas the fact that the junior loan had been assigned prior to the trustee’s sale. (Cadlerock, supra,206 Cal.App.4th at pp. 1546-1547.)

Here, the undisputed facts establish that Monroy’s loans were covered by the antideficiency statutes and that the junior loan was assigned to Heritage after the foreclosure on the senior loan. Thus, there was no triable issue of fact that Heritage could seek payment for breach of the promissory note. Furthermore, as already discussed, Heritage has failed to identify any evidence that raised a triable issue of material fact as to its argument that the assignment agreement included WMC’s potential tort claims against Monroy. Accordingly, we conclude the trial court [53] did not err in granting Monroy’s motion for summary adjudication on her claim that Heritage violated the FDCPA.

 

III.Attorney Fees

A.Fees Awarded and the Standard of Review

The trial court found that Monroy was the prevailing party and entitled to attorney fees under the FDCPA. (15 U.S.C. § 1692k(a)(3).) The court awarded Monroy attorney fees in the amount of $450 an hour for 194.5 hours for the lodestar amount of $87,525. The court also awarded Monroy litigation expenses in the amount of 1,964.60.

“Unless authorized by either statute or agreement, attorney’s fees ordinarily are not recoverable as costs. [Citations.]” (Reynolds Metals Co. v. Alperson(1979) 25 Cal.3d 124, 127-128.)The FDCPA provides for attorney fees to be awarded to the prevailing party.(15 U.S.C. § 1692k(a)(3).) “Courts have discretion in calculating reasonable attorney’s fees under this statute” (Jerman, supra,599 U.S. at p.[130 S.Ct. at p. 1621]), but the award of at least some modicum of attorney’s fees is mandatory under the FDCPA when the defendant is found to have violated the Act because “congress chose a ‘private attorney general’ approach to assume enforcement of the FDCPA” (Camacho v. Bridgeport Financial, Inc.(9th Cir. 2008) 523 F.3d 973, 978).

“‘On [54] review of an award of attorney fees after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees . . . have been satisfied amounts to statutory construction and a question of law.'” (Connerly v. State Personnel Bd.(2006) 37 Cal.4th 1169, 1175.)

Any challenge based on the amount of the fee awarded is reviewed for an abuse of discretion.(PLCM Group, Inc. v. Drexler(2000) 22 Cal.4th 1084, 1095(PLCM Group) [“the trial court has broad authority to determine the amount of a reasonable fee”].)An appellate court will interfere with the trial court’s determination of the amount of reasonable attorney fees only where there has been a manifest abuse of discretion.(Fed-Mart Corp. v. Pell Enterprises, Inc.(1980) 111 Cal.App.3d 215, 228.)”‘The “experienced trial judge is the best judge of the value of professional services rendered in [the] court, and while [the judge’s] judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong” ‘—meaning that [the trial judge] abused [his [55] or her] discretion.” (PLCM Group,at p. 1095.)

“[T]hefee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] The reasonable hourly rate is that prevailing in the community for similar work. [Citations.] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.[Citation.] Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. [Citation.]” (PLCM Group, supra,22 Cal.4th at p. 1095.)

 

B.The Degree of Success

Heritage contends that the trial court did not apply the proper standard of law, and then argues that the attorney fee award was excessive because the trial court did not reduce the award on the basis that Monroy’s success was limited. The [56] decision whether to reduce an award because of a determination that the party enjoyed limited success is not reviewed de novo, as Heritage argues, but for an abuse of discretion.

The United States Supreme Court has held that the level of a party’s success is relevant to the amount of the fees to be awarded, and fees should not be awarded for the work on an unsuccessful claim. (Hensley v. Eckerhart(1983) 461 U.S. 424, 434-435.) The court inHensleydid not discuss the FDCPA, but addressed a nearly identical fee shifting statute applicable to civil rights litigation (42 U.S.C. § 1988).The court recognized that “unrelated claims [may be] unlikely to arise with great frequency” because the case may present a single claim or the claims “will involve a common core of facts or will be based on related legal theories. Much of counsel’s time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis.Such a lawsuit cannot be viewed as a series of discrete claims. Instead the district court should focus on the significance of the overall relief obtained” in relation to the hours reasonably expended on the litigation. (Hensley,at p. 435.)

“If [57] . . . a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly ratemaybe an excessive amount. This will be true even where the plaintiff’s claims were interrelated, nonfrivolous, and raised in good faith. . . .[T]hemost critical factor is the degree of success obtained.” (Hensley v. Eckerhart, supra,461 U.S. at p. 436, italics added.)To be compensable, an attorney’s time must be “reasonable in relation to the success achieved.” (Ibid.)

Here, Heritage argues that Monroy’s attorney fees are unreasonably large in comparison to Monroy’s recovery of $1.00. It also maintains that Monroy admitted at her deposition that she did not know what the case was about and, thus, according to Heritage, she had no stake in this action. Heritage complains that the trial court failed to take into consideration the limited amount of success achieved and asserts that its violation of the FDCPA was only a technicality as Monroy could not show any damages.

In support of this argument, Heritage cites federal and California cases involving attorney fees in non-FDCPA cases.(Farrar v. Hobby(1992) 506 U.S. 103; [58] Chavez v. City of Los Angeles(2010) 47 Cal.4th 970, 989;Environmental Protection Information Center v. Department of Forestry & Fire Protection(2010) 190 Cal.App.4th 217, 238;Sokolow v. County of San Mateo(1989) 213 Cal.App.3d 231, 249.) These cases stress that the degree or extent of the plaintiff’s success must be considered when determining reasonable attorney fees. For example, inFarrar,the plaintiff filed a lawsuit alleging a violation of his civil rights under title42 of the United States Code section 1983and demanded $17 million from six defendants and, after 10 years of litigation and two trips to the Court of Appeals, he received one dollar from one defendant.(Farrar,at p. 107.)The United States Supreme Court held that attorney fees should not be awarded because a technical vindication of one’s constitutional rights alone was not enough to justify an award of attorney fees undersection 1988. (Farrar,at p. 115.)The award of only nominal damages highlighted the plaintiff’s failure to prove actual injury or any basis for awarding punitive damages. (Ibid.)

Courts have applied the reasoning ofFarrar v. Hobby, supra,506 U.S. 103to FDCPA cases. (See, e.g.,Zagorski v. Midwest Billing Services, Inc.(7th Cir. 1997) 128 F.3d 1164, 1166 [59] [remanding to the district court to determine reasonable attorney fees in a FDCPA case and instructing the court to use as a guide the methodology “traditionally employed in determining appropriate fees” under title42 United States Code section 1988];Johnson v. Eaton(5th Cir. 1996) 80 F.3d 148, 151[plaintiff awarded no actual or statutory damages and the mere technical violation of the FDCPA was not sufficient to support an award of attorney fees];Tolentino v. Friedman(7th Cir. 1995) 46 F.3d 645, 651.)Although courts when awarding attorney fees in FDCPA cases have followedFarrarby considering limited or partial success, these same courts have generally been reluctant to reduce fee awards on the basis of a low monetary recovery since FDCPA statutory damages are capped at $1,000, and a $1,000 recovery doe not render a plaintiff’s success “limited.” (See, e.g.,Defenbaugh v. JBC & Associates, Inc.(N.D. Cal. Aug. 10, 2004, No. C-03-0651 JCS) 2004 WL 1874978.)Congress created an incentive for attorneys to represent plaintiffs in FDCPA cases by providing for fee shifting, and a requirement of proportionality between attorney fees and damages would discourage attorneys from accepting [60] representation of FDCPA plaintiffs; this would be inconsistent with the FDCPA‘s statutory scheme. (See, e.g.,Phenow v. Johnson, Rodenberg & Lauinger, PLLP(D.Minn. 2011) 766 F.Supp.2d 955, 959.)The fees should be adequate to attract competent counsel, but they should not be “so large that it is a windfall for attorneys––who should not be encouraged to grow fat off of lackluster cases, or pester the court with trifles in the hopes of capturing large attorneys’ fees from dubious claims.” (Obenauf v. Frontier Financial Group, Inc.(D.N.M. 2011) 785 F.Supp.2d 1188, 1214.)

Here, Monroy alleged violations of the FDCPA and the Rosenthal Act and did not allege actual damages, but requested the maximum statutory damages of $1,000 under each statute for a total statutory award of $2,000. Her sole complaint was that Heritage had engaged in an unlawful collections effort, which was evinced by the collection letters and the lawsuit against her. Monroy was completely successful in establishing the unlawfulness of Heritage’s behavior.Monroy agreed to a nominal damage award to avoid the costs of litigation, but she was still the prevailing party. A plaintiff who wins a nominal amount of statutory [61] damages has brought a “successful action” under the FDCPA. (SeeThornton v. Wolpoff & Abramson, LLP(11th Cir. 2008) 312 Fed.Appx. 161, 164.)

Under the FDCPA, the court in awarding damages is to consider “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional . . . .” (15 U.S.C. § 1692k(b)(1).) Here, the trial court recognized that Heritage wrote a number of letters to Monroy that violated the FDCPA. The court considered that Monroy did not seek to add unnecessary legal fees by insisting on litigating the damages. It also considered that she did not initiate the lawsuit against Heritage, but filed a counterclaim in response to Heritage’s attempts to force her to pay money that she did not owe.

Lastly, while the award here was nominal, that is not necessarily controlling because “an award of nominal damages can represent a victory in the sense of vindicating rights even though no actual damages are proved.” (Farrar v. Hobby, supra,506 U.S. at p. 121, O’Connor, J., concurring.) Success may be measured by “the significance of the legal issues on which the plaintiff prevailed and [62] the public purpose the litigation served.” (Morales v. City of San Rafael(9th Cir. 1996) 96 F.3d 359, 365.) This lawsuit may spur Heritage to cease unlawful conduct against other consumers, which is an important consideration.

We thus conclude that the trial court did not abuse its discretion in not reducing the attorney fee award based on an argument that Monroy achieved limited success.

 

C.The Number of Hours Expended

Heritage objects to the amount of the fee charged by Peter B. Fredman, counsel for Monroy, and asserts that the calculation included hours for work not reasonably expended in pursuit of Monroy’s successful claim. (See, e.g.,Harman v. City and County of San Francisco(2007) 158 Cal.App.4th 407, 424[appellate court determined trial court properly deleted hours spent on unsuccessful petition for rehearing of a prior appeal].) Specifically, Heritage objects to the following: 2.4 hours spent by Fredman on March 25, 2011, for attending to a letter from Heritage that threatened Fredman with a libel suit; .06 of an hour spent on April 21 and 22, 2011, for drafting a declaration in support of a motion in a different superior court class action lawsuit where Heritage was a party; [63] 9.6 hours for attending to matters regarding the class action case and/or conferring with class counsel; 7.9 hours for communicating with another attorney regarding a demurrer hearing;5.02 of an hour on May 31, 2011, for reviewing investigation material of a defendant in another case involving Heritage; .08 of an hour on July 25, 2011, for a conference with another person involving Heritage in Bankruptcy Court; and 3.2 hours for an appearance at a summary judgment hearing when Fredman missed the hearing but made an appearance later to deliver a proposed order.Heritage claims that awarding fees for the foregoing, which equals 23.26 hours, was an abuse of discretion.

At the hearing on attorney fees, counsel for Heritage made a number of specific complaints about the reasonableness of the hours billed. For example, Heritage argued that Fredman billed his client .6 hours for preparing a declaration for another action; Heritage also objected to billing [64] for work allegedly done on other cases unrelated to the present action. The trial court responded that it did not see “any of this in any of your papers.” Counsel for Heritage answered that it was in its opposition. The court commented that it would have to take another look, but instructed counsel to proceed with argument. At the end of the hearing, the court affirmed its tentative ruling. Heritage maintains that the court made its ruling without reviewing its papers as promised and therefore it clearly abused its discretion.

The record indicates that the trial court reasonably exercised its discretion in determining the number of hours spent on the lawsuit. The trial court considered Heritage’s argument that the abovementioned charges were unreasonable. The court listened to argument and obviously concluded that the argument by Heritage’s counsel lacked merit and that it was unnecessary to read through the opposition papers again to determine if each specific objection had actually been raised in Heritage’s opposition.

The trial court stated, “As the judge in this case, I did go over the billings and I didn’t see anything that I could say was unreasonable for hours spent on certain [65] tasks.” Thus, the court specifically stated that it found the hours worked by Monroy’s attorney to have been reasonably spent, and rejected Heritage’s argument that approximately 24 hours were unreasonably spent.The trial court had a reasonable basis for making this determination in light of the detailed timekeeping records and supporting declarations provided by Fredman. Heritage has failed to demonstrate that the court’s finding that these hours were reasonably expended in pursuit of Monroy’s claim exceed the bounds of reason. (See, e.g.,Maughan v. Google Technology, Inc.(2006) 143 Cal.App.4th 1242, 1250.)

 

D.The Reasonable Hourly Rate

Heritage contends that the hourly rate of $450, which the trial court awarded Fredman, was unreasonable.

In determining hourly rates, the court must look to the “prevailing market rates in the relevant community.” (Bell v. Clackamas County(9th Cir. 2003) 341 F.3d 858, 868.)The rates of comparable attorneys in the forum district are usually used. (SeeGates v. Deukmejian(9th Cir. 1992) 987 F.2d 1392, 1405.)In making its calculation, the court should also consider the experience, skill, and reputation of the attorney requesting fees. (Schwarz v. Secretary of Health & Human Services(9th Cir. 1995) 73 F.3d 895, 906.) [66] The court may rely on its own knowledge and familiarity with the legal market in setting a reasonable hourly rate. (Ingram v. Oroudjian(9th Cir. 2011) 647 F.3d 925, 928.)”Affidavits of the plaintiffs’ attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the plaintiffs’ attorney, are satisfactory evidence of the prevailing market rate.” (United Steelworkers of America v. Phelps Dodge Corp.(9th Cir. 1990) 896 F.2d 403, 407.)

Here, Fredman declared that he had 15 years of experience and his “old” hourly rate was $450 per hour. (He declared that his rate had increased to $500-$525 per hour.) He noted that this rate had been approved for his work in a class action settlement in the superior courts and federal court. He added that this hourly rate did not include a contingency risk. Fredman also attached the declaration of Attorney Richard Pearl. Pearl summarized the hourly rates charged by various law firms for comparable services. According to his analysis, fees awarded in class actions cases in 2012, for 12-15 years of experience, varied from $455 to $610 per hour.

The trial court concluded [67] that counsel’s hourly fee rate of $450 was “within acceptable parameters for attorneys of counsel’s skill and experience practice in the San Francisco Bay area” and it denied the enhancement Fredman requested. The court added: “Whether it’s this kind of case or any other kind of case, I know that is a fee that is charged in the community. I can’t say that it’s unreasonable.”

Heritage claims that the trial court abused its discretion in accepting the hourly rate of $450 because it did not consider similar work in the community that was equally complex.It argues that the attorney fees discussed by Pearl in his declaration were not applicable because they were class action cases and more complex than the present case. Heritage also distinguishes the cases cited by Fredman where the courts awarded him his hourly rate of $450 as being complex class action cases that did not allege a violation of the FDCPA. Heritage cites a 2007 federal case where the billing rate in a FDCPA case was reduced to $250. (Navarro v. Eskanos & Adler(N.D. Cal. Nov. 26, 2007, No. C 02-03430 WHA) 2007 WL 4200171(Navarro), vacated byNavarro v. Eskanos & Adler(N.D. Cal. Dec. 11, 2007, No. C 06-2231 WHA) 2007 WL 448306.)

We [68] do not find Heritage’s argument to be persuasive. The attorney fees awarded inNavarro,a 2007 federal case where the legal work was completed in 2006, have little relevance to the hourly rate of fees for legal work done in 2010 through 2012. Monroy’s counsel submitted evidence supporting his hourly rate and Heritage did not submit evidence of current rates contradicting this rate. Accordingly, we conclude that the trial court did not abuse its discretion when it used the hourly rate of $450.

 

E.Block Billing

Heritage asserts that the trial court should have reduced the amount of the attorney fees requested because Fredman used block billing. In support of this argument, Heritage states that Fredman submitted records demonstrating that he billed 182.6 hours in this litigation. Heritage fails to provide any citation to the record to support this statement.

Heritage complains in a conclusory fashion that Fredman assigned a block of time to multiple tasks rather than itemizing the time spent on each task. It asserts that the use of block billing makes it impossible to discern the amount of time spent on each task. In support of this argument, Heritage relies onBell v. Vista United School Dist.(2000) 82 Cal.App.4th 672.6 [69] InBell,the court reversed an attorney fee award because the block billing made it impossible for the court to apportion the fees between a cause of action alleging a Brown Act violation for which statutory fees are allowed and other causes of action. (Id.at p. 689.)Browndoes not suggest that block billing is never appropriate.

Trial courts retain discretion to penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not. (Christian Research Institute v. Alnor(2008) 165 Cal.App.4th 1315, 1324-1325;Bell v. Vista Unified School Dist., supra,82 Cal.App.4th at p. 689.) The trial court identified [70] no such problem here, and Heritage has completely failed to show that block billing occurred or that 182.6 hours billed for litigation was unreasonable.

 

F.Apportionment

Heritage argues that the trial court erred when it awarded attorney fees associated with the litigation in defense of the tort claims against Monroy because no statute or contract provided for fees in defense of these claims. In a separate argument, it asserts that the court should also have separated the fees associated with Monroy’s unsuccessful claim of a violation of the Rosenthal Act.

In attacking the fees awarded, Heritage in its opening brief does not even mention the trial court’s ruling that the issues raised by Heritage’s complaint and Monroy’s counter claims for violating the Rosenthal Act and the FDCPA “are synonymous and interrelated and cannot reasonably be separated.” Noticeably absent from Heritage’s briefs in this court is any discussion of the substantial authority supporting a trial court’s decision not to apportion fees when all of the claims are interrelated.

“When a cause of action for which attorney fees are provided by statute is joined with other causes of action for which attorney fees are not [71] permitted, the prevailing party may recover only on the statutory cause of action. However, the joinder of causes of action should not dilute the right to attorney fees. Such fees need not be apportioned when incurred for representation of an issue common to both a cause of action for which fees are permitted and one for which they are not. All expenses incurred on the common issues qualify for an award.” (Akins v. Enterprise Rent-A-Car Co. of San Francisco(2000) 79 Cal.App.4th 1127, 1133see alsoLiton Gen. Engineering Contractor, Inc. v. United Pacific Insurance(1993) 16 Cal.App.4th 577, 588.)

The record supports the trial court’s conclusion that Heritage’s fraud claims based on WMC’s assignment of the promissory note and Monroy’s counter claims that Heritage violated the Rosenthal Act and FDCPA were interrelated. The facts and issues related to Heritage’s claims and Monroy’s counter claims were almost identical, as they both related to the question whether Heritage had a legal right to collect money from Monroy. We agree with the trial court’s finding that Heritage’s causes of action were closely interrelated with Monroy’s counter claims.

We conclude that nothing in the record indicates [72] that the trial judge, who presided over the entire case, abused her discretion in calculating the award of attorney fees.

 

DISPOSITION

The judgment and the order awarding attorney fees are affirmed. Heritage is to pay the costs of both appeals.

Eviction could validate a void Foreclosure sooo……. Watch out !

2 Apr

Lorenzo VelezBecause an unlawful detainer action is a summary proceeding usually limited to the issue of immediate possession of real property, a judgment in such an action usually has  [21] limited res judicata effect “and will not prevent one who is dispossessed from bringing a subsequent action to resolve questions of title.” (Vella v. Hudgins (1977) 20 Cal.3d 251, 255 (Vella).) An exception to this rule is contained in Code of Civil Procedure section 1161a, which extends the summary eviction remedy beyond the conventional unlawful detainer suit brought by a landlord to include actions by certain purchasers of property. (Vella, at p. 255.) In these cases, title to the property may be an issue.

In Malkoskie, the court applied the exception to the rule that title cannot be tried in unlawful detainer in circumstances similar to the present case. There, Wells Fargo Bank, N.A. (Wells Fargo), after purchasing real property at a nonjudicial foreclosure sale, brought an unlawful detainer action against the previous homeowners pursuant to Code of Civil Procedure section 1161a, subdivision (b)(3). This subdivision permits an unlawful detainer action against a person who holds over and continues possession of real property after receiving a three-day written notice to quit the property, “[w]here the property has been sold in accordance with Section 2924 of the Civil Code, under  [22] a power of sale contained in a deed of trust executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected.” (Code Civ. Proc., § 1161a, subd. (b)(3), italics added.) In a subsequent action by the previous homeowners seeking to set aside the nonjudicial foreclosure sale, the court held that the judgment in the unlawful detainer action “conclusively resolved” the validity of title to the property in Wells Fargo’s favor. (Malkoskie, supra, 188 Cal.App.4th at p. 974.)

Likewise, in the UD action, the complaint alleged that U.S. Bank purchased the property at a foreclosure sale in accordance with Civil Code section 2924, and that it was seeking possession of the property pursuant to Code of Civil Procedure section 1161a, subdivision (b). Subdivision (b) sets forth five circumstances under which an unlawful detainer action may be commenced, all of which require the plaintiff to purchase the property and to duly perfect title. Subdivision (b)(3) appears to be the only circumstance which applies to the facts stated in the complaint. 10 The complaint in the UD action thus raised the issue of title to the property. (Malkoskie, supra, 188 Cal.App.4th at p. 974.)

Although the judgment in the UD action was obtained by default, the issue of title was necessarily and actually decided. By permitting their default in the UD action to be entered, the Sarkisians confessed the truth of all material allegations in the complaint, including U.S. Bank’s allegations that it purchased the property at a foreclosure sale and thereafter perfected its interest in the property. (Fitzgerald v. Herzer (1947) 78 Cal.App.2d 127, 131.) The Sarkisians therefore are collaterally estopped from denying that U.S. Bank holds title to the property. (Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 871 [“Even a judgment of default in a civil proceeding is ‘res judicata as to all issues aptly pleaded in the complaint and defendant  [24] is estopped from denying in a subsequent action any allegations contained in the former complaint’ “].)

Each of plaintiffs’ causes of action in this case rest on the premise that U.S. Bank did not acquire title to the property. Because U.S. Bank conclusively established in the UD action that it holds title to the property, the trial court correctly sustained the bank defendants’ demurrer to the FAC.

Pro Per wins in the First Apellate District against Bank of America

2 Apr

Intenganv.BAC Home Loans Servicing LP, 2013 Cal. App. LEXIS 225 (Copy citation)

Court of Appeal of California, First Appellate District, Division Five

March 22, 2013, Opinion Filed

A135782

Reporter: 2013 Cal. App. LEXIS 225 | 2013 WL 1180435

ARDEN M. INTENGAN, Plaintiff and Appellant, v. BAC HOME LOANS SERVICING LP et al., Defendants and Respondents.

Notice:CERTIFIED FOR PARTIAL PUBLICATION*

Prior History:  [1]Superior Court of San Mateo County, No. CIV 505111, Raymond Swope, Judge.

Core Terms

demurrer, judicial notice, borrower, trust deed, cause of action, foreclosure, notice, third amended complaint, notice of default, beneficiary, sustain a demurrer, wrongful foreclosure, due diligence, lender, default, modify, mortgage, trustee sale, telephone, foreclosure sale, trial court, recording of a notice, foreclose, purported

Case Summary

Procedural Posture
Plaintiff borrower’s third amended complaint sought to preclude corporate defendants from foreclosing on her property. Plaintiff contended that defendants lacked authority to foreclose under the relevant deed of trust and notice of default. The San Mateo County Superior Court, California, entered a judgment of dismissal after it sustained defendants’ demurrer to the third amended complaint without leave to amend.

Overview
Plaintiff alleged that defendants did not contact her or attempt to contact her with due diligence as required byCiv. Code, § 2923.5. The court held that judicial notice could not be taken of defendants’ compliance with§ 2923.5. While judicial notice could be properly taken of the existence of a declaration of compliance, it could not be taken of the facts of compliance asserted in the declaration, at least where plaintiff alleged and argued that the declaration was false and the facts asserted in the declaration were reasonably subject to dispute. Even if the “facts” stated in the declaration could be the subject of judicial notice, the declaration contained only a conclusory assertion that defendant bank complied with the statute; nowhere did it state when, how, or by whom the elements of due diligence were accomplished, or how the declarant knew if they were. The most these averments could do was create a factual dispute as to whether defendants complied with the statute. Because plaintiff stated a cause of action for wrongful foreclosure based on the purported failure to comply with§ 2923.5before recordation of the notice of default, it was error to sustain the demurrer.

Outcome
The judgment of dismissal was reversed.

LexisNexis® HeadnotesHide sectionHide

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
Civil Procedure > Appeals > Standards of Review > De Novo Review
Evidence > Judicial Notice > General Overview
HN1 In its de novo review of an order sustaining a demurrer, the appellate court assumes the truth of all facts properly pleaded in the complaint or reasonably inferred from the pleading, but not mere contentions, deductions, or conclusions of law. The appellate court then determines if those facts are sufficient, as a matter of law, to state a cause of action under any legal theory. In making this determination, the appellate court also considers facts of which the trial court properly took judicial notice.  Shepardize – Narrow by this Headnote

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
Evidence > Judicial Notice > General Overview
HN2 A demurrer may be sustained where judicially noticeable facts render the pleading defective, and allegations in the pleading may be disregarded if they are contrary to facts judicially noticed.  Shepardize – Narrow by this Headnote

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
Civil Procedure > Appeals > Standards of Review > General Overview
HN3 In order to prevail on appeal from an order sustaining a demurrer, the appellant must affirmatively demonstrate error. Specifically, the appellant must show that the facts pleaded are sufficient to establish every element of a cause of action and overcome all legal grounds on which the trial court sustained the demurrer. The appellate court will affirm the ruling if there is any ground on which the demurrer could have been properly sustained.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN4 As a general rule, a plaintiff may not challenge the propriety of a foreclosure on his or her property without offering to repay what he or she borrowed against the property. A valid tender of performance must be of the full debt, in good faith, unconditional, and with the ability to perform.Civ. Code, §§ 1486,1493,1494,1495.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN5 SeeCiv. Code, § 2923.6.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN6 Civ. Code, § 2923.6, does not grant a right to a loan modification. To the contrary, it merely expresses the hope that lenders will offer loan modifications on certain terms and conspicuously does not require lenders to take any action. In other words, there is no “duty” under§ 2923.6to agree to a loan modification.  Shepardize – Narrow by this Headnote

Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN7 Civ. Code, § 2923.5, subd. (a)(1), precludes a trustee or mortgage servicer from recording a notice of default until 30 days after the loan servicer has made initial contact with the borrower to assess the borrower’s financial situation and explore options for avoiding foreclosure, or has satisfied the due diligence requirements of the statute. Due diligence requires sending a letter by first class mail, making three attempts to contact the borrower by telephone, and sending a certified letter if no response is received within two weeks of the telephone attempts.§ 2923.5, subd. (e).  Shepardize – Narrow by this Headnote

Evidence > Judicial Notice > General Overview
Real Property Law > Financing > Topic Summary ReportForeclosures > General Overview
HN8 Civ. Code, § 2923.5, requires not only that a declaration of compliance be attached to the notice of default, but that the bank actually perform the underlying acts (i.e., contacting the borrower or attempting such contact with due diligence) that would constitute compliance. While judicial notice may be properly taken of the existence of the declaration, it may not be taken of the facts of compliance asserted in the declaration, at least where the borrower has alleged and argued that the declaration is false and the facts asserted in the declaration are reasonably subject to dispute.  Shepardize – Narrow by this Headnote

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Demurrers
HN9 A demurrer is not the appropriate procedure for determining the truth of disputed facts.  Shepardize – Narrow by this Headnote

Headnotes/SyllabusExpand SectionShow

Counsel: Arden M. Intengan, in pro. per., for Plaintiff and Appellant.

Severson & Werson,Jan T. ChiltonandM. Elizabeth Holtfor Defendants and Respondents.

Judges: Opinion byNeedham, J., withJones, P. J., andBruiniers, J., concurring.

Opinion by: Needham, J.

Opinion

NEEDHAM, J.—Arden M. Intengan (Intengan) appeals from a judgment of dismissal entered after the court sustained the demurrer to her third amended complaint without leave to amend. Essentially, Intengan sought to preclude respondents from foreclosing on her property, contending they lack authority to do so under the relevant deed of trust and notice of default. In this appeal, Intengan argues that the demurrer should not have been sustained because she alleged facts sufficient to state a cause of action, including a claim based on respondents’ alleged failure to contact her or attempt with due diligence to contact her before recording the notice of default (Civ. Code, § 2923.5). She also contends the court should have ruled on her motion to strike the demurrer.

We will reverse the judgment. In the published portion of our opinion, we conclude that judicial notice could not be taken of respondents’ [2] compliance withCivil Code section 2923.5, and Intengan’s allegations that respondents did not comply with the statute were sufficient to state a cause of action for wrongful foreclosure. In the unpublished portion of the opinion, we conclude that Intengan failed to state any other cause of action and the court did not err in denying leave to amend.

I. FACTS AND PROCEDURAL HISTORYOn June 26, 2006, Intengan borrowed $696,500 from Countrywide Bank, N.A. (Countrywide). The loan was secured by a deed of trust on Intengan’s real property in Daly City. Under the deed of trust, the beneficiary was Mortgage Electronic Registration Systems, Inc. (MERS), the trustee was respondent ReconTrust Company, N.A. (ReconTrust), and BAC Home Loans Servicing LP (BAC) serviced the note. BAC’s successor is respondentBank of America, N.A.

On or about December 28, 2010, MERS assigned its beneficial interest in Intengan’s deed of trust to “TheBank of New York Mellonfka TheBank of New York,as Successor Trustee toJPMorgan ChaseBank, N.A., as Trustee for the Holders of SAMI II Trust 2006-AR7, Mortgage Pass-Through Certificates, Series 2006-AR7” (Bank of New York).

On December 28, 2010, ReconTrust, as agent [3] for the beneficiary under the deed of trust, recorded a notice of Intengan’s default on Intengan’s loan; the notice of default and election to sell under deed of trust indicated that she was more than $46,000 in arrears.

Purportedly accompanying the notice of default was a declaration by Samantha Jones, “MLO Loan Servicing Specialist of BAC Home Loans Servicing, LP,” in which she states under penalty of perjury thatBank of America“tried with due diligence to contact the borrower in accordance withCalifornia Civil Code Section 2923.5.” The declaration does not provide any facts to support this conclusion, such as the specifics of any attempt to contact Intengan.

A notice of trustee’s sale was recorded by ReconTrust on April 5, 2011, setting a sale date of April 26, 2011. Intengan does not allege that the sale occurred, and the respondents’ brief represents that no sale took place and that Intengan has been in possession of the property for nearly two years without making payments on her loan.

A.Original, First Amended, and Second Amended ComplaintsOn April 25, 2011—the day before the scheduled foreclosure sale—Intengan filed a complaint against defendants, including BAC and ReconTrust, [4] asserting causes of action for declaratory relief, injunctive relief, and an accounting. Before any defendant responded, Intengan filed a first amended complaint and then a second amended complaint.

BAC and ReconTrust filed a demurrer to Intengan’s second amended complaint. The court sustained their special demurrer to the first and second causes of action, with leave to amend in order to state a violation ofCivil Code section 2923.5. The court also sustained their general demurrer to the third cause of action for an accounting, without leave to amend.

B.Third Amended ComplaintIntengan filed her third amended complaint in January 2012 against BAC, ReconTrust, and others. This time, she purported to assert causes of action for wrongful foreclosure, fraud, intentional misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, slander of title, quiet title, declaratory relief, violation ofBusiness and Professions Code section 17200, unjust enrichment, and injunctive relief seeking to enjoin the pending foreclosure sale.

In February 2012, respondents filed a demurrer to the third amended complaint. Although the demurrer is central to the issues [5] on appeal, neither Intengan nor respondents include the demurrer in the record. The record does contain, however, respondents’ request for judicial notice in support of their demurrer, by which they sought judicial notice of the deed of trust on Intengan’s property, the notice of default, the assignment of the deed of trust toBank of New York,and the notice of trustee’s sale.

In June 2012, Intengan filed an opposition and “motion to strike” the demurrer, “on the grounds that Defendant[]Bank of America’sDemurrer does not state facts sufficient to constitute a demurrer, is uncertain, is ambiguous, is unintelligible, is irrelevant, is false, contains improper matters and/or is not drawn or filed in conformity with the laws of California.” She urged that the demurrer misstated facts and ignored the law, and therefore it should be stricken or denied. The purported motion was not accompanied by a notice of hearing.

The court granted respondents’ request for judicial notice and sustained their demurrer to the third amended complaint without leave to amend. A judgment of dismissal was entered on June 15, 2012.

This appeal followed.

II. DISCUSSIONAs mentioned, Intengan argues that the court [6] erred in sustaining the demurrer and further erred in failing to rule on her motion to strike the demurrer.

A.DemurrerHN1 In our de novo review of an order sustaining a demurrer, we assume the truth of all facts properly pleaded in the complaint or reasonably inferred from the pleading, but not mere contentions, deductions, or conclusions of law. (Buller v. Sutter Health(2008) 160 Cal.App.4th 981, 985–986 [74 Cal. Rptr. 3d 47].) We then determine if those facts are sufficient, as a matter of law, to state a cause of action under any legal theory. (Aguilera v. Heiman(2009) 174 Cal.App.4th 590, 595 [95 Cal. Rptr. 3d 18].)

In making this determination, we also consider facts of which the trial court properly took judicial notice. (E.g.,Avila v. Citrus Community College Dist.(2006) 38 Cal.4th 148, 165, fn. 12 [41 Cal. Rptr. 3d 299, 131 P.3d 383].)HN2 A demurrer may be sustained where judicially noticeable facts render the pleading defective (Evans v. City of Berkeley(2006) 38 Cal.4th 1, 6 [40 Cal. Rptr. 3d 205, 129 P.3d 394]), and allegations in the pleading may be disregarded if they are contrary to facts judicially noticed (Hoffman v. Smithwoods RV Park, LLC(2009) 179 Cal.App.4th 390, 400 [102 Cal. Rptr. 3d 72](Hoffman); seeFontenot v. Wells Fargo Bank, N.A.(2011) 198 Cal.App.4th 256, 264–265 [129 Cal. Rptr. 3d 467](Fontenot) [in sustaining [7] demurrer, court properly took judicial notice of recorded documents that clarified and to some extent contradicted plaintiff’s allegations]).

HN3 In order to prevail on appeal from an order sustaining a demurrer, the appellant must affirmatively demonstrate error. Specifically, the appellant must show that the facts pleaded are sufficient to establish every element of a cause of action and overcome all legal grounds on which the trial court sustained the demurrer. (Cantu v. Resolution Trust Corp.(1992) 4 Cal.App.4th 857, 879–880 [6 Cal. Rptr. 2d 151].) We will affirm the ruling if there is any ground on which the demurrer could have been properly sustained. (Debro v. Los Angeles Raiders(2001) 92 Cal.App.4th 940, 946 [112 Cal. Rptr. 2d 329].)

boa-billboard11.Wrongful Foreclosure (First Cause of Action)The first purported cause of action in Intengan’s third amended complaint is for “wrongful foreclosure.” Intengan alleges there was “an unauthorized Trustee, document irregularities, improper signatories, and [a] defective Notice of Default”; she further alleges that “due to the chain of assignments, it is now unknown and doubtful who is the current lender/beneficiary/assignee with legal authority and standing regarding the mortgage on [the] [8] subject property.” Intengan also claims that BAC and ReconTrust failed to comply with a number of Civil Code sections regulating nonjudicial foreclosures, including the requirement of contacting the borrower, or attempting to do so with due diligence, underCivil Code section 2923.5.

a.Failure to tenderHN4 CA(1) (1)As a general rule, a plaintiff may not challenge the propriety of a foreclosure on his or her property without offering to repay what he or she borrowed against the property. (Karlsen v. American Sav. & Loan Assn.(1971) 15 Cal.App.3d 112, 117 [92 Cal.Rptr. 851][judgment on the pleadings properly granted where plaintiff attempted to set aside trustee’s sale for lack of adequate notice, because “[a] valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust”]; seeUnited States Cold Storage v. Great Western Savings & Loan Assn.(1985) 165 Cal.App.3d 1214, 1222–1223 [212 Cal. Rptr. 232][“the law is long-established that atrustoror his successor must tender the obligation in full as a prerequisite to [a] challenge of the foreclosure sale”];FPCI RE-HAB 01 v. E & G Investments, Ltd.(1989) 207 Cal.App.3d 1018, 1021–1022 [255 Cal. Rptr. 157][tender rule is based on “the [9] equitable maxim that a court of equity will not order a useless act performed … [¶] … if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs”].)

Intengan’s third amended complaint alleges her willingness “to tender the appropriate and reasonable mortgage payments.” That allegation, however, is plainly insufficient. A valid tender of performance must be of the full debt, in good faith, unconditional, and with the ability to perform. (Civ. Code, §§ 1486,1493,1494,1495.)

Intengan’s third amended complaint also asserts that “tender is not required inasmuch as there is [a] void foreclosure, not a voidable one.” (SeeDimock v. Emerald Properties(2000) 81 Cal.App.4th 868, 877–878 [97 Cal. Rptr. 2d 255].) However, Intengan does not allege that she was fraudulently induced into the loan; nor does she otherwise attack the validity of the debt. Nor do her allegations indicate a defect in the foreclosure procedure that would render a resulting sale voidon its face, particularly when considered in light of the documents that were judicially noticed. On the other hand, as we shall discusspost, Intengan has [10] alleged a defect in the foreclosure procedure—the failure to comply withCivil Code section 2923.5—which, if true, would render the foreclosure either void or voidable. Whether or not this would remove the need to allege tender is an issue we need not address, since an allegation of tender is unnecessary for another reason.

According to the allegations of the third amended complaint—as well as representations in the respondents’ brief—no foreclosure sale had occurred as of the time of the ruling on the demurrer. While the tender requirement may apply to causes of action toset asidea foreclosure sale, a number of California and federal courts have held or suggested that it does not apply to actions seeking toenjoina foreclosure sale—at least where the lenders had allegedly not complied with a condition precedent to foreclosure. (See, e.g.,Pfeifer v. Countrywide Home Loans, Inc.(2012) 211 Cal.App.4th 1250, 1280–1281 [150 Cal. Rptr. 3d 673][failure to allege tender of full amount owed did not bar declaratory relief or injunctive relief based on wrongful foreclosure, where lenders had not yet foreclosed and borrowers alleged that lenders had not complied with servicing regulations that were a [11] condition precedent to foreclosure];Mabry v. Superior Court(2010) 185 Cal.App.4th 208, 225 [110 Cal. Rptr. 3d 201](Mabry) [borrower not required to tender full amount of indebtedness in seeking to enjoin foreclosure sale based on alleged failure to comply withCiv. Code, § 2923.5];Barrionuevo v. Chase Bank, N.A. (N.D.Cal. 2012) 885 F.Supp.2d 964, 969–970 & fn. 4(Barrionuevo) [no tender requirement where foreclosure sale had not yet occurred, in case where noncompliance withCiv. Code, § 2923.5was alleged].)

b.Wrongful foreclosure theoriesIntengan contends that the foreclosing beneficiary under the deed of trust,Bank of New York,has not been shown to have standing to foreclose. She alleges: “Defendants made transfers, assignments of the subject loan and that due to the chain of assignments, it is now unknown and doubtful who is the current lender/beneficiary/assignee with legal authority and standing regarding the mortgage on the subject property.”

Intengan fails to allege wrongful foreclosure on this ground. The records of which the court took judicial notice, without Intengan’s objection, identify the foreclosing beneficiary to be theBank of New York. [12] Specifically, the recorded deed of trust names MERS as the original beneficiary, the recorded assignment of the deed of trust assigns all beneficial interest under the deed of trust from MERS toBank of New Yorkas the new beneficiary, and the notice of trustee sale was dated and recorded afterBank of New Yorkbecame the beneficiary. (SeeFontenot, supra, 198 Cal.App.4th at pp. 264–265[court may take judicial notice of the fact of the existence and legal effect of legally operative documents, such as the identity of the beneficiary designated in the deed of trust, where not subject to reasonable dispute];Scott v.JPMorgan ChaseBank, N.A.(Mar. 18, 2013, A132741) 214 Cal.App.4th ___ [2013 Cal.App.Lexis 211].) While Intengan’s pleading includes the unsupported conclusion that there was no assignment of the deed of trust in favor of “TheBank of New York Mellonfka TheBank of New Yorkas Trustee,” the recorded assignment of which the court took judicial notice shows there was, and Intengan neither alleges nor argues facts from which the assignment might be inferred to be invalid. (SeeFontenot, supra, at pp. 264–265.) Under these circumstances, the judicially noticed facts contradict the conclusory allegations [13] of the third amended complaint, and those allegations may be disregarded. (Id.at p. 265;Hoffman, supra, 179 Cal.App.4th at p. 400.)1

Similarly, Intengan alleges that respondents could not provide a valid “chain of assignments” from previous [14] lenders including Countrywide. From the outset, however, MERS (not Countrywide) was the beneficiary under the deed of trust, and the assignment of the deed of trust shows that MERS assigned its interest toBank of New York.(SeeFontenot, supra, 198 Cal.App.4th at pp. 264–265.)

Intengan also alleges the conclusion that the notice of trustee’s sale arose from an “unauthorized Trustee, document irregularities, [and] improper signatories.” Although she alleges that the substitution of ReconTrust as trustee was not recorded until February 17, 2011, the records of which the court took judicial notice—including the original deed of trust—show that ReconTrust was the trustee from the beginning and throughout the date of the notice of default and notice of trustee sale. (SeeFontenot, supra, 198 Cal.App.4th at pp. 264–265.) Furthermore, both beneficiaries and trustees—and their agents—may record notices of default. (Civ. Code, § 2924, subd. (a)(1).) Thus, ReconTrust was authorized to record the notice of default as the trustee, and it was also authorized to record the notice of default as the agent of the beneficiary. Intengan’s allegations fail to state facts from which it may be inferred [15] that the notice of default or the notice of trustee’s sale was invalid on this ground.

Intengan further alleges that respondents did not comply with the requirements of Civil Code sections 2823.6,2923.5, or2923.6, before proceeding with the foreclosure. There is no Civil Code section 2823.6. Her allegations as toCivil Code section 2923.6are unavailing, but her allegation as toCivil Code section 2923.5suffice to state a cause of action.

CA(2) (2)In January 2012, when Intengan’s third amended complaint was filed, and June 2012, when it was dismissed,Civil Code section 2923.6provided:HN5 “It is the intent of the Legislature that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority.” (Civ. Code, § 2923.6, former subd. (b).)2Intengan alleged that, pursuant to Civil Code section “2823.6”—which we take to mean “2923.6”—“Defendants are now contractually bound to implement the loan modification as provided therein.” ButHN6 Civil Code section 2923.6does not grant a right to a loan modification. To the contrary, it “merely expresses the hope that lenders will offer loan [16] modifications on certain terms” and “conspicuously does not require lenders to take any action.” (Mabry, supra, 185 Cal.App.4th at p. 222 & fn. 9, italics omitted.) In other words, “[t]hereis no ‘duty’ underCivil Code section 2923.6to agree to a loan modification.” (Hamilton v. Greenwich Investors XXVI, LLC(2011) 195 Cal.App.4th 1602, 1617 [126 Cal. Rptr. 3d 174].)

HN7 CA(3) (3)Civil Code section 2923.5precludes a trustee (like respondent ReconTrust) or mortgage servicer (such as BAC/respondentBank of America) from recording a notice of default until 30 days after the loan servicer has made initial contact with the borrower to assess the borrower’s financial situation and explore options for avoiding foreclosure, or has satisfied the due diligence requirements of the statute. (Civ. Code, § 2923.5, subd. (a)(1).) Due diligence requires sending a letter by first-class mail, making three attempts to contact the borrower by telephone, and sending a certified letter if no response is received within two weeks of the telephone attempts. [17] (Civ. Code, § 2923.5, subd. (e).)

Intengan expressly alleged in her third amended complaint that respondents “did not complywith such contact and due diligence requirements pursuant toCivil Code section 2923.5.” (Italics added.) In support of their demurrer, respondents sought judicial notice of the notice of default, including the attached declaration of Samantha Jones, which averred thatBank of America“tried with due diligence to contact [Intengan] in accordance withCalifornia Civil Code Section 2923.5.” But in her opposition to the demurrer, Intengan argued that she had never spoken with Jones in person or over the telephone, heard any recording from Jones “over the telephone or any other method recorded by ‘Ms. Jones’, DefendantsBank of Americaor Mr. Julian,” or “communicated with ‘Ms. Jones’ by any method of communication whatsoever nor received any communication whatsoever from ‘Ms. Jones’ other than by the ‘Ms. Jones’ Declaration DefendantsBank of Americaand Mr. Julian have provided.”

Construing the allegations of the third amended complaint broadly (as we must on demurrer), we conclude that Intengan stated a cause of action for wrongful foreclosure based on respondents’ [18] alleged noncompliance withCivil Code section 2923.5. Intengan alleged that defendants did not contact her or attempt to contact her with due diligence as required by the statute. Although respondents sought judicial notice of Jones’s declaration regarding compliance with the statute, Intengan disputed the truthfulness of Jones’s declaration by denying that she was ever contacted or received any telephone message. She also argued at the demurrer hearing that it was inappropriate to turn the hearing into an evidentiary hearing—in other words, that a demurrer may not be sustained by resolving a conflict in the evidence. And in this appeal Intengan argues that, while judicial notice may be taken of the existence of a document such as a declaration, accepting the truth of itscontentspresents an entirely different matter.

CA(4) (4)Intengan is correct.HN8 Civil Code section 2923.5requires not only that a declaration of compliance be attached to the notice of default, but that the bank actually perform the underlying acts (i.e., contacting the borrower or attempting such contact with due diligence) that would constitute compliance. While judicial notice could be properly taken of theexistenceof Jones’s [19] declaration, it could not be taken of the facts of compliance assertedinthe declaration, at least where, as here, Intengan has alleged and argued that the declaration is false and the facts asserted in the declaration are reasonably subject to dispute. (See, e.g.,Joslin v. H.A.S. Ins. Brokerage(1986) 184 Cal.App.3d 369, 374–376 [228 Cal. Rptr. 878](Joslin) [facts disclosed in a deposition and not disputed could be considered in ruling on a demurrer, but facts disclosed in the deposition that were disputed could not be, since “ ‘judicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.’ ”].) Indeed, respondents only sought judicial notice of the documents attached to its request, not the underlying fact of its attempt to contact Intengan.

Taking judicial notice that the bank actually performed certain acts that might constitute compliance with its statutory obligations, based solely on a declaration that avers compliance in a conclusory manner, would of course be vastly different than merely taking judicial notice that the declaration was signed and attached to the notice [20] of default (or, as discussedante, from taking judicial notice of the legal effect of a legally operative deed of trust that names its beneficiary). At least in this case, what the bank actually did to comply with the statute is reasonably subject to dispute and cannot be judicially noticed, even though the existence of the declaration (and the legal effect of a deed of trust) is not reasonably subject to dispute and can be judicially noticed. (SeeSkov v. U.S. Bank National Assn.(2012) 207 Cal.App.4th 690, 696 [143 Cal. Rptr. 3d 694](Skov) [where bank sought judicial notice of a notice of default declaration stating compliance withCiv. Code, § 2923.5, whether the bank “complied withsection 2923.5is the type of fact that is reasonably subject to dispute, and thus, not a proper subject of judicial notice”].)

Furthermore, even if the “facts” stated in Jones’s declarationcouldbe the subject of judicial notice, the declaration contains only a conclusory assertion thatBank of Americacomplied with the statute: nowhere does it state when, how, or by whom the elements of due diligence were accomplished, or how the declarant knew if they were.3More importantly, the most these averments could do is create a factual dispute [21] as to whether respondents complied with the statute. (SeeMabry, supra, 185 Cal.App.4th at pp. 235–236[competing accounts as to possibility of compliance withCiv. Code, § 2923.5created conflict in the evidence].)HN9 A demurrer is “ ‘simply not the appropriate procedure for determining the truth of disputed facts.’ ” (Joslin, supra, 184 Cal.App.3d at p. 374; seeSkov, supra, 207 Cal.App.4th at pp. 696–697[assuming the truth of the plaintiff’s allegations, a disputed issue of compliance withCiv. Code, § 2923.5cannot be resolved at the demurrer stage]; see alsoBarrionuevo, supra, 885 F.Supp.2d 964, 976–977[borrowers’ allegation that bank did not contact them before filing the notice of default was sufficient to state a violation ofCiv. Code, § 2923.5, despite judicial notice taken of declaration in notice of default that asserted statutory compliance];Argueta v. J.P. Morgan Chase(E.D.Cal. 2011) 787 F.Supp.2d 1099, 1107(Argueta) [despite judicial notice of notice of default including declaration of compliance withCiv. Code, § 2923.5, plaintiff’s allegations were sufficient to preclude dismissal where plaintiffs alleged that they did not receive phone calls, [22] phone messages, or letters before the notice of default was recorded].)

On this basis, Intengan stated a cause of action for wrongful foreclosure based on the purported failure to comply withCivil Code section 2923.5before recordation of the notice of default. For this reason, it was error to sustain the demurrer.4

2.–10.* [23]

11.Intengan’s Other ArgumentsIntengan contends that the court’s ruling on the demurrer “is partial and therefore inconsistent with California statutory and case law,” “amounts to a constructive tax” in violation of her constitutional rights, violates her constitutional right to be free from illegal takings, resulted from a misapplication of law and ignorance of the facts, and violates her “Constitutional Right to separation of powers.” She contends that “[n]oevidence exists in the record that Judge Swope had any probable cause to institute any forfeiture action against Appellant Intengan [24] by the Wrongful Demurrer Ruling resulting in the loss of Appellant Intengan’s lawsuit.” She asserts that the “refusals” ofBank of Americaand the trial court “resemble an Orwellian conundrum.” She “further requests that this Court piece together Appellant Intengan’s Constitutional Right that Judge Swope and RespondentsBank of Americashattered Humpty Dumpty-like due to their acts of partiality, misapplication of law, ignorance of facts and unconstitutionality and by their refusals to contemplate the gravity of their decisionmaking before proceeding contrary to law.” Intengan additionally refers us to Lewis Carroll’s Alice’s Adventures in Wonderland (1865). And she urges us to do justice and mercy in this case, providing numerous quotations from the Bible.

We have fully considered all of Intengan’s arguments in arriving at our disposition of her appeal. We conclude the trial court erred in sustaining the demurrer to the third amended complaint, only in that Intengan adequately alleged a violation ofCivil Code section 2923.5, which might be pursued under her theory of wrongful foreclosure. Accordingly, the judgment of dismissal must be reversed, and the order sustaining the demurrer to the [25] third amended complaint must be reversed solely as to her purported cause of action for wrongful foreclosure, based exclusively on the alleged violation ofCivil Code section 2923.5, potentially providing relief only in the form of a postponement of the foreclosure sale.

B., C.*

III. DISPOSITIONThe judgment of dismissal is reversed. The order sustaining the demurrer is reversed, solely as to a cause of action for wrongful foreclosure based on allegations that respondents did not comply withCivil Code section 2923.5. Appellant shall recover her costs on appeal.

Jones, P. J., andBruiniers, J., concurred.

Must contact 2923.5

2 Apr

Barrionuevov.Chase Bank, N.A., 885 F. Supp. 2d 964 (Copy citation)

United States District Court for the Northern District of California

August 6, 2012, Decided; August 6, 2012, Filed

No. C-12-0572 EMC

Reporter: 885 F. Supp. 2d 964 | 2012 U.S. Dist. LEXIS 109935 | 2012 WL 3235953

JOSE BARRIONUEVO, et al., Plaintiffs, v. CHASE BANK, N.A., et. al., Defendants.

Core Terms

notice, foreclosure, trust deed, beneficiary, chase, reconveyance, wrongful foreclosure, borrower, notice of default, mutual, cause of action, motion to dismiss, trustee sale, foreclose, default, mortgagee, deed, beneficial interest, voidable, void, subject property, nonjudicial, authorized agent, slander of title, irregularity, securitize, diligence, convey, entity, bus

Counsel: For Jose Barrionuevo, Flor Barrionuevo, Plaintiffs:Michael James Yesk, LEAD ATTORNEY, Law Offices of Michael Yesk, Pleasant Hill, CA.

For California Reconveyance Corporation, JP Morgan Chase Bank, N.A. as acquirer of certain assets from Washington Mutual Bank, FA, Defendants:John Charles Hedger, Bryan Cave LLP, San Francisco, CA.

Judges: EDWARD M. CHEN, United States District Judge.

Opinion by: EDWARD M. CHEN

Opinion

[966] ORDER DENYING DEFENDANTSJP MORGAN CHASEBANK, N.A. AND CALIFORNIA RECONVEYANCE CO.’S MOTION TO DISMISS

(Docket No. 23)

I.INTRODUCTION

Plaintiffs Jose and Flor Barrionuevo (collectively “the Barrionuevos”) sued DefendantsJP Morgan ChaseBank (“Chase”) and California Reconveyance Corporation (“California Reconveyance”) on February 3, 2012, after California Reconveyance attempted to foreclose on a Deed of Trust (“DOT”) that the Barrionuevos executed for the purchase of a home in California. Pls.’ Opp. to Mot. to Dismiss (Docket No. 25) at 1. Chase is the successor in interest toWashington Mutual Bank(“Washington Mutual”), who executed the DOT with the Barrionuevos and funded the loan for the purchase of the subject property. In their amended complaint, the Barrionuevos assert claims against Defendantsfor wrongful foreclosure, slander of title, violatingCalifornia Civil Code § 2923.5, and violating California’s Unfair Business Practices Act (Cal. Bus. Prof. Code §§ 17200).SeePls.’ Am. Compl. (Docket No. 20). On February 23, 2012, the Barrionuevos movedex partefor a temporary restraining order barring Defendants from completing California’s nonjudicial foreclosure process, which this Court denied on February 29, 2012, after a hearing on the merits.SeePls.’ Mot. for TRO (Docket No. 5); Min. Entry Den. TRO (Docket No. 13). California Reconveyance and Chase thereafter filed a motion to dismiss pursuant toFed. R. Civ. P. 12(b)(6).SeeDefs.’ Mot. to Dismiss (Docket No. 23). Having considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument.Fed. R. Civ. P. 78;Local Rule. 7-6. For the following reasons, Defendants’ motion isDENIED.

II.FACTUAL & PROCEDURAL BACKGROUND

On February 28, 2006, the Barrionuevos entered into a DOT with Washington Mutual and California Reconveyance for the purchase of a single family home in Dublin, California. Defs.’ Mot. to Dismiss, Ex. A. The DOT was recordedin Alameda County on March 3, 2006, against the subject property (known as 5931 Annadele Way) to secure a promissory note in favor of Washington Mutual for a loan of $1,720,000. Pls.’ Am. Compl. ¶ 9. The DOT conveys title and power of sale to California Reconveyance, and names Washington Mutual as both “Lender” and “Beneficiary.” Defs.’ Mot. to Dismiss, Ex. A at 1-3. In the event of default or breach by the borrower, and after first having been given an opportunity to cure, the DOT grants to the Lender the power [967] “to require immediate payment in full of all sums secured by this security instrument without further demand,” and “the power of sale and any other remedies permitted by Applicable law.” Defs.’ Mot. to Dismiss, Ex. A at 15.

In May of 2006, the Barrionuevos allege that Washington Mutual “securitized and sold Plaintiffs’ Deed of Trust to the WMALT Series 2006-AR4 Trust,” naming La Salle Bank as Trustee. Pls.’ Am. Compl. ¶ 10. In support of this allegation they point to a report prepared by Certified Forensic Loan Auditors, which apparently reaches the same conclusion.SeePls.’ Am. Compl., Ex. A – Property Securitization Analysis Report. In September of 2008, after the purportedsale of the Barrionuevos’ DOT, the U.S. Office of Thrift Supervision closed Washington Mutual and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver.SeePls.’ Am. Compl. ¶ 11; Defs.’ Mot. to Dismiss at 2. Shortly thereafter, Chase acquired certain assets of Washington Mutual from the FDIC.Id.Having been sold at an earlier point to the WMALT Series 2006-AR4 Trust, the Barrionuevos allege that any beneficial interest under their DOT could not have been purchased or obtained by Chase during this acquisition.SeePls.’ Opp. to Mot. to Dismiss at 3.

About a year later, California Reconveyance initiated nonjudicial foreclosure proceedings against the Barrionuevos regarding the subject property by recording a “Notice of Default and Election to Sell Under Deed of Trust” with the County of Alameda on April 7, 2009. Pls.’ Am. Compl., Ex. B – Notice of Default. The Notice of Default identified Washington Mutual as the beneficiary of record, and included a statement that “the beneficiary or its designated agent declares that it has contacted the borrower” or has “tried with due diligence to contact the borrower as required byCalifornia Civil Code 2923.5.”Id.at 2. TheBarrionuevos allege, contrary to this statement, that neither of the Defendants contacted Plaintiffs “at least 30 days prior to recording the Notice of Default” in violation of§ 2923.5.1SeePls.’ Am. Compl. ¶¶ 28, 32. Thereafter, California Reconveyance recorded three separate Notices of Trustee’s Sales regarding the subject property with the County of Alameda, the most recent having been filed with the County on February 2, 2012. Pls.’ Am. Compl. ¶¶ 13-14;see alsoDefs.’ Mot. to Dismiss, Ex. C, D, and E.2

The Barrionuevos initiated suit against Chase and California Reconveyance on February 3, 2012, with a complaint listing nine causes of action. Compl. (Docket No. 1). They have since filed an amended complaint listing only four causes of action, namely (1) Wrongful Foreclosure, (2) Slander of Title, (3) Violation ofCal. Civ. Code § 2923.5, [968] and (4) Violation of the California Unfair Business Practices Act (Cal. Bus. Prof. Code §§ 17200).SeePls.’ Am. Compl. Soon after Plaintiffs’ amended their complaint, Defendants jointly moved to dismiss the amended complaint “pursuant toRule 12(b)(6) of the Federal Rules of Civil Procedure, in its entirety, for failure to state a claim upon which relief can be granted.” Defs.’ Mot.to Dismiss at 1.

III.DISCUSSION

A.Legal Standard

UnderFederal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted.SeeFed. R. Civ. P. 12(b)(6).A motion to dismiss based onRule 12(b)(6)challenges the legal sufficiency of the claims alleged.SeeParks Sch. of Bus. v. Symington,51 F.3d 1480, 1484 (9th Cir. 1995).In considering such a motion, the Court may consider facts alleged in the complaint, materials incorporated into the complaint by reference, and matters of which the Court may take judicial notice.3Zucco Partners LLC v. Digimarc Corp.,552 F.3d 981, 989 (9th Cir. 2009).A court must also take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although “conclusory allegations of law and unwarranted inferences are insufficient to avoid aRule 12(b)(6)dismissal.”Cousins v. Lockyer,568 F.3d 1063, 1067 (9th Cir. 2009).Thus, “a plaintiff’s obligation to provide the “grounds” of his “entitle[ment]to relief” requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”Bell Atl. Corp. v. Twombly,550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).

At issue in a12(b)(6)analysis is “not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims” advanced in his or her complaint.Scheuer v. Rhodes,416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974). While “a complaint need not contain detailed factual allegations . . . it must plead ‘enough facts to state a claim to relief that is plausible on its face.'”Cousins,568 F.3d at 1067 (9th Cir. 2009).”A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconductalleged.”Ashcroft v. Iqbal,556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009);see alsoBell Atl. Corp. v. Twombly,550 U.S. at 556.”The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than sheer possibility that a defendant acted unlawfully.”Id.

B.Tender Rule

Chase and California Reconveyance argue as a threshold matter that “this Motion should be granted and Plaintiffs’ Complaint dismissed, in its entirety” because the Barrionuevos have failed to provide or allege a willingness to “tender the outstanding indebtedness owed under the promissory note and Deed of Trust.” Defs.’ Mot. to Dismiss at 8.They argue that, absent an offer to tender the obligation in full, California law deprives plaintiffs of standing to challenge nonjudicial foreclosure proceedings.SeeId.at 7-8. [969] As this Court explained inTamburri v. Suntrust Mortgage, et. al.,No. C-11-2899 EMC, 2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 (N.D. Cal. Dec. 15, 2011), the exceptions and qualifications to California’s ‘tender rule’ counsel against such a mechanical application of the rule at the pleading stage.

“The California Court of Appeal has held that the tender rule applies in an action to set aside a trustee’s sale for irregularitiesin the sale notice or procedure and has stated that ‘[t]herationale behind the rule is that if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs.'”Cohn v. Bank of America,No. 2:10-cv-00865 MCE KJN PS, 2011 U.S. Dist. LEXIS 3076, 2011 WL 98840, at *9 (E.D. Cal. Jan. 12, 2011)(quotingFPCI RE-HAB 01 v. E & G Invs., Ltd.,207 Cal. App.3d 1018, 1021, 255 Cal. Rptr. 157 (1989)). As Defendants rightly point out, it is a general rule that “an action to set aside a trustee’s sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security. This rule is premised upon the equitable maxim that a court of equity will not order that a useless act be performed.”Arnolds Mgmt. Corp. v. Eischen,158 Cal. App. 3d 575, 578-79, 205 Cal. Rptr. 15 (1984).

However, as this Court discussed at length inTamburri,”the tender rule is not without exceptions.”Tamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *3. Several court have recognized a general equitable exception to applying the tender rule where “it would be inequitable to do so.”Onofrio v. Rice,55 Cal. App. 4th 413, 424, 64 Cal. Rptr. 2d 74 (1997)(internalcitations and quotations omitted);see e.g.Humboldt Sav. Bank v. McCleverty,161 Cal. 285, 291, 119 P. 82 (1911)(recognizing that there are “cases holding that, where a party has the right to avoid a sale, he is not bound to tender any payment in redemption;” adding that, “[w]hatevermay be the correct rule, viewing the question generally, it is certainly not the law that an offer to pay the debt must be made, where it would be inequitable to exact such offer of the party complaining of the sale”);Robinson v. Bank of Am.,12-CV-00494-RMW, 2012 U.S. Dist. LEXIS 74212, 2012 WL 1932842, at *3 (N.D. Cal. May 29, 2012)(inequitable to apply tender rule in certain circumstances);Bowe v. Am. Mortg. Network, Inc.,CV 11-08381 DDP SHX, 2012 U.S. Dist. LEXIS 80044, 2012 WL 2071759, at *2 (C.D. Cal. June 8, 2012)(same);Giannini v. American Home Mortg. Servicing, Inc.,No. 11-04489 TEH, 2012 U.S. Dist. LEXIS 12241, 2012 WL 298254, at *3 (N.D. Cal. Feb.1, 2012)(same).In the instant case, the Barrionuevos have a fairly strong argument that tender – or at least full tender – should not be required because they are contesting not only irregularities in sale notice or procedure, but the validity of the foreclosure in the first place.Courts have declined to require tender in just such circumstances.SeeIn re Salazar,448 B.R. 814, 819 (S.D. Cal. 2011)(“If U.S. Bank was not authorized to foreclose the [Deed of Trust] under Civil Codesection 2932.5, the foreclosure sale may be void, and Salazar would not need to tender the full amount of the Loan to set aside the sale.”);Sacchi v. Mortgage Electronic Registration Systems, Inc.,No. CV 11-1658 AHM (CWx), 2011 U.S. Dist. LEXIS 68007, 2011 WL 2533029, at *9-10 (C.D. Cal. June 24, 2011)(declining to require tender in wrongful foreclosure action because it “would permit entities to foreclose on properties with impunity”).

Further, a growing number of federal courts have explicitly held that the tender rule only applies in cases seeking to set aside a completed sale, rather than an action seeking to prevent a sale in the first place.See, e.g.,Vissuet v. Indymac Mortg. Services,No. 09-CV-2321-IEG (CAB), 2010 U.S. Dist. LEXIS 26241, 2010 WL 1031013, at *2 (S.D. Cal. March 19, 2010)(“[T]heCalifornia ‘tender [970] rule’ applies only where the plaintiff is trying to set aside a foreclosure sale due to some irregularity.”);Giannini v. American Home Mortg. Servicing, Inc.,No. 11-04489 TEH, 2012 U.S. Dist. LEXIS 12241, 2012 WL 298254, at *3 (N.D.Cal. Feb. 1, 2012)(“While it is sensible to require tender following a flawedsale – where irregularities in the sale are harmless unless the borrower has made full tender – to do so prior to sale, where any harm may yet be preventable, is not.”);Robinson v. Bank of Am.,12-CV-00494-RMW, 2012 U.S. Dist. LEXIS 74212, 2012 WL 1932842 (N.D. Cal. May 29, 2012)(the court found it “inequitable to apply the tender rule to bar plaintiff’s claims” in part because “there has been no sale of the subject property”).4The cases cited by Defendants in support of applying the tender rule are distinguishable in that each of them addresses challenges levied against completed trustees’ sales, not pre-sale challenges as here.SeeU.S. Cold Storage of Calif. v. Great W. Savings & Loan Assn.,165 Cal. App. 3d 1214, 212 Cal. Rptr. 232 (1985)(plaintiff challenged irregularities in sale notice or procedure after trustee sale was held);Arnolds Mgmt. Corp. v. Eischen,158 Cal. App. 3d 575, 205 Cal. Rptr. 15 (Cal. Ct. App. 1984)(action by junior lienor to set aside a completed trustee sale);Abdallah v. United Sav. Bank,43 Cal. App. 4th 1101, 51 Cal. Rptr. 2d 286 (1996)(action challenging validity of trustee sale after sale occurred);Karlsen v. Am. Sav. & Loan Assn.,15 Cal. App. 3d 112, 92 Cal. Rptr. 851 (Cal. Ct. App. 1971)(action to cancel a completed trustee sale under a deed oftrust).

Finally, as this Court explained in length inTamburri,”where a sale is void, rather than simply voidable, tender is not required.”Tamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *4(citing Miller & Starr California Real Estate 3d § 10:212 (“When the sale is totally void, a tender usually is not required.”)).A sale that is deemed “void” means, “in its strictest sense [] that [it] has no force and effect,” whereas one that is deemed “voidable” can be “avoided” or set aside as a matter of equity.Little v. CFS Serv. Corp.,188 Cal. App. 3d 1354, 1358, 233 Cal. Rptr. 923 (1987)(internal quotation marks omitted).In a voidable sale, 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 performhis obligations under the contract so that equity will not have been employed for an idle purpose.”Dimock v. Emerald Properties LLC,81 Cal. App. 4th 868, 878, 97 Cal. Rptr. 2d 255 [971] (2000).That reasoning does not extend to a sale that is voidab initio,since the contract underlying such a transaction is a “nullity with no force or effect as opposed to one which may be set aside” in reliance on equity.Id.at 876.InDimock,the California Court of Appeal held that where an incorrect trustee had foreclosed on a property and conveyed it to a third party, and the conveyed deed was not merely voidable but void, tender was not required.Id.at 878(“Because Dimock was not required to rely upon equity in attacking the deed, he was not required to meet any of the burdens imposed when, as a matter of equity, a party wishes to set aside a voidable deed…In particular, contrary to the defendants’ argument, he was not required to tender any of the amounts due under the note.”).For the purposes of the ‘tender rule,’ the Court findsDimockto be sufficiently analogous to the present case to counsel against its application here.

Moreover, the relevant documentation in this case supports the finding that the sale isvoid. Where a notice defect provides the basis for challenging a sale under a deed of trust, as is the case here with the Barrionuevos’ allegation of noncompliance withCal. Civ. Code § 2923.5, California courts examine in detail the deed of trust’s language to determine whether it contains “conclusive presumption language in the deed” regarding notice defects that would render the sale merely voidable as opposed to void.Little,at 1359.As was explained inTamburri,

when a notice defect is at issue, it is not the extent of the defect that is determinative.Rather, “what seems to be determinative” is whether the deed of trust contains a provision providing for a conclusive presumption of regularity of sale.Little,188 Cal. App. 3d at 1359, 233 Cal. Rptr. 923.”Where there has been a notice defect and no conclusive presumption language in the deed, the sale has been held void.”Id.(emphasis in original). In contrast, “[w]herethere has been a notice defect and conclusive presumption language in a deed, courts have characterized the sales as ‘voidable.'”Id.(emphasis added).

Tamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *5.InLittle,the court considered a deed provision stating “[t]herecitals insuch Deed of any matters, proceedings and facts shall be conclusive proof of the truthfulness and regularity thereof” to be conclusive presumption language.Little,at 1360.In this case, the Barrionuevos’ deed of trust provides no such conclusive presumption language. Therefore, “the Court cannot conclude, at least at this juncture, that the sale is merely voidable wherein tender would be required.”Ottolini v. Bank of America,No. C-11-0477 EMC, 2011 U.S. Dist. LEXIS 92900, 2011 WL 3652501, at *4 (N.D.Cal. Aug. 19, 2011);see alsoTamburri,2011 U.S. Dist. LEXIS 144442, 2011 WL 6294472 at *5.

These exceptions and qualifications to the tender rule raise significant doubts as to whether it should be mechanically applied at the pleading stage under the allegations of the complaint herein. Thus, as inTamburri,the Court declines to dismiss the complaint on the basis of the Barrionuevos’ failure to allege tender.

C.Wrongful Foreclosure

The Barrionuevos’ cause of action for wrongful foreclosure is based upon their belief that “Cal Reconveyance cannot conduct a valid foreclosure sale on behalf of Defendant JP Morgan because it is not thetruepresent beneficiary under Plaintiffs’ Deed of Trust.” Pls.’ Am. Compl. ¶ 18. This belief is based upon thefollowing chain of events:

In May of 2006, shortly after Plaintiffs entered into the Deed of Trust, WaMu [Washington Mutual] securitized and sold the beneficial interest in the Deed [972] of Trust to the Series 2006-AR4 Trust. From that point on, the Series 2006-AR4 Trust became the onlytruebeneficiary under Plaintiffs’ Deed of Trust. Thus, whenJP Morgan [Chase]acceded to certain of WaMu’s assets in 2008, it could not have included the beneficial interest in Plaintiffs’ Deed of Trust as WaMu had already sold the beneficial interest two yearsprior,in 2006. Since WaMu no longer owned the beneficial interest in Plaintiffs’ Deed of Trust, it had nothing to convey to Defendant JP Morgan in 2008 and Defendant JP Morgan isnotthetruebeneficiary.Id.

Related to the allegation that Chase did not acquire Plaintiffs’ DOT from Washington Mutual, the Barrionuevos further base their wrongful foreclosure claim on the grounds that the Defendants have failed to comply withCalifornia Civil Code § 2932.5, in that they have not “recorded a document in the public chain of title reflecting from whom [they] acquired the beneficial interest in Plaintiffs’ Deed of Trust,” as required by the statute.Id.at 21.Section 2932.5provides as follows:

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 acknowledged and recorded.

Cal. Civ. Code § 2932.5(emphasis added).

Chase and California Reconveyance question Plaintiffs’ assertion that the DOT for the subject property was securitized into the Series 2006-AR4 Trust.SeeDefs.’ Mot. to Dismiss at 5 (“A careful analysis of the information provided in the prospectus for which the “Property securitization Analysis Report” provides a website address demonstrates the Loan at issue is not part of the WMALT Series 2006-AR4 Trust.”);see alsoDefs.’ Reply Br. ISO Mot. to Dismiss (Docket 26) at p. 2 (“As shown in the analysis of Defendant’s motion, there is no connection between the prospectus for the Series 2006-AR4 Trust and the Plaintiffs’ mortgage loan. There was no securitization.”). Neither the Defendants’ Motion to Dismiss, the Plaintiff’s ResponseBrief, nor the Defendant’s Reply Brief address the§ 2932.5element of the Barrionuevos’ wrongful foreclosure cause of action. The Court will, therefore, confine its analysis of the wrongful foreclosure claim to the Plaintiff’s argument that the Defendants are not the current beneficiaries under the DOT.

Plaintiffs properly assert that only the “true owner” or “beneficial holder” of a Deed of Trust can bring to completion a nonjudicial foreclosure under California law. Pls.’ Response Brief at 4.In California, a “deed of trust containing a power of sale…conveys nominal title to property to an intermediary, the “trustee,” who holds that title as security for repayment of [a] loan to [a] lender, or “beneficiary.”Kachlon v. Markowitz,168 Cal. App. 4th 316, 334, 85 Cal. Rptr. 3d 532 (2008)(internal citations omitted). The “trustee in nonjudicial foreclosure is not a true trustee with fiduciary duties, but rather a common agent for the trustor5and beneficiary.”Id.335(internal citations omitted).The trustee’s duties “are twofold: (1) to “reconvey” the deed of trust to the trustor upon satisfaction of the debt owed to the beneficiary, resulting in a release of the lien created by [973] the deed of trust, or(2) to initiate nonjudicial foreclosure on the property upon the trustor’s default, resulting in a sale of the property.”Id.at 334(internal citations omitted).The beneficiary, ultimately, is the party that initiates nonjudicial foreclosure, since the trustee who records a Notice of Default pursuant toCal. Civ. Code § 2924does so as the authorized agent of beneficiary.SeeCal. Civ. Code § 2924(a)(1);see alsoKachlon,168 Cal. App. 4th at 334(“When the trustor defaults on the debt secured by the deed of trust,the beneficiarymay declare a default and make a demand on the trustee to commence foreclosure.”) (emphasis added).

Several courts have recognized the existence of a valid cause of action for wrongful foreclosure where a party alleged not to be the true beneficiary instructs a trustee to file a Notice of Default and initiate nonjudicial foreclosure.For example, the court inSacchi v. Mortgage Electronic Registration Systems, Inc.,No. CV 11-1658 AHM (CWx), 2011 U.S. Dist. LEXIS 68007, 2011 WL 2533029, at *9-10 (C.D. Cal. June 24, 2011), upheld a plaintiff’s wrongful foreclosure claimagainst an entity alleged to have “no beneficial interest in the Deed of Trust when it acted to foreclose on Plaintiffs’ home.” There, the court expressed dismay when confronted with counsel’s arguments suggesting that “someone . . . can seek and obtain foreclosure regardless of whether he has established the authority to do so.”2011 U.S. Dist. LEXIS 68007, [WL] at *7. The court asked, if defendants’ argument that “the recording and execution date is inconsequential and in no way connotes that the DOT’s beneficial interest was transferred at that precise time” was accepted, “how is one to determine whether (and when) the purported assignment was consummated?How could one ever confirm whether the entity seeking to throw a homeowner out of his residence had the legal authority to do so?”2011 U.S. Dist. LEXIS 68007, [WL] at *6.

Similarly, inJavaheri v. JPMorgan Chase Bank, N.A.,CV10-08185 ODW FFMX, 2011 U.S. Dist. LEXIS 62152, 2011 WL 2173786, at *5-6 (C.D. Cal. June 2, 2011), the court denied Defendant JPMorgan’s motion to dismiss a very similar wrongful foreclosure claim to the one at issue here when the plaintiff alleged that Washington Mutual, plaintiff’s original lender, had “transferred Plaintiff’s Note to Washington Mutual Mortgage Securities Corporation” priorto its closure by the U.S. Office of Thrift Supervision and JPMorgan’s subsequent acquisition of its assets.2011 U.S. Dist. LEXIS 62152, [WL] at *5. The court took note of the fact that the plaintiff had produced specific “facts regarding the transfer of Plaintiff’s Note” suggesting that Washington Mutual had indeed alienated its beneficial interest to plaintiff’s deed of trust prior to JPMorgan’s later acquisition of Washington Mutual’s assets.Id.”Coupled with Plaintiff’s allegation that JPMorgan never properly recorded its claim of ownership in the Subject Property,” the court ruled that the “abovementioned facts regarding the transfer of Plaintiff’s Note prior to JPMorgan’s acquisition of [Washington Mutual]’s assets raise Plaintiff’s right to relief above a speculative level,” and held that plaintiff’s allegation “that JPMorgan did not own his Note and therefore did not have the right to foreclose” was sufficient to withstand JPMorgan’s motion to dismiss.2011 U.S. Dist. LEXIS 62152, [WL] at *5-6.

Likewise inOhlendorf v. Am. Home Mortg. Servicing,279 F.R.D. 575, 583 (E.D. Cal. 2010), the court recognized that, while “proof of possession of the note” is not necessary to “legally institute non-judicial foreclosure proceedings againstplaintiff,” the plaintiff still had a viable claim for wrongful foreclosure insofar as he argued that defendants “are not the proper parties to foreclose.”Id.at 583. “Accordingly,” the court denied “defendants motion to dismiss plaintiff’s wrongful foreclosure [claim]…insofar as it is premised [974] on defendants being proper beneficiaries.”Id.Finally, inCastillo v. Skoba,No. 10cv1838 BTM, 2010 U.S. Dist. LEXIS 108432, 2010 WL 3986953, at*2 (S.D. Cal. Oct. 8, 2010), the court granted a preliminary injunction in a foreclosure case where it concluded that “Plaintiff is likely to succeed on the merits of his claim that neither Aurora nor Cal-Western had authority to initiate the foreclosure sale at the time the Notice of Default was entered.” There, the court ruled on the record before it that the applicable “[d]ocumentsdo not support a finding that either Cal-Western was the trustee or Aurora was the beneficiary on May 20, 2010 when the Notice of Default was recorded.”Id. See alsoRobinson v. Countrywide Home Loans, Inc.,199 Cal. App. 4th 42, 46 Fn. 5, 130 Cal. Rptr. 3d 811 (2011)(“a borrower who believes that the foreclosing entity lacks standing to do so” is not “without a remedy. The borrower can seek to enjoin the trustee’s saleor to set the sale aside.”);Gomes v. Countrywide Home Loans, Inc.,192 Cal. App. 4th 1149, 1156, 121 Cal. Rptr. 3d 819 (2011)(upholding the dismissal of plaintiff’s wrongful foreclosure action, but noting as “significant” the fact that cases cited by plaintiff permitting wrongful foreclosure action “identified aspecific factual basisfor alleging that the foreclosure was not initiated by the correct party.[plaintiff] has not assertedanyfactual basis to suspect that [defendant] lacks authority to proceed with the foreclosure.”) (emphasis in original).

In the present case, the Barrionuevos allege that Chase and California Reconveyance recorded their April 7, 2009, Notice of Default without the legal right to do so, given that the prior alienation of Plaintiff’s DOT by Washington Mutual in 2006 precluded these Defendants from obtaining any beneficial interest in the DOT.SeeAm. Compl. ¶¶ 16-22; Pls.’ Response Brief at 3. In tandem to their § 2935.2 claim, Plaintiffs allege that this prior alienation of the DOT renders Defendants’ Notice of Default and subsequent Notices of Trustee’s Sales invalid. The allegation challenging the validity of Washington Mutual’s assignment of Plaintiffs’ DOT to Chase suggeststhat the foreclosing parties did not have authority to issue the Notices. Despite Defendants’ invitation to the contrary, further examination into the 2006 transaction would require a factual inquiry not suitable in a 12(b)(6) motion. Thus, insofar as Plaintiffs contend that the Notice of Default is invalid due to a lack of authority to foreclose, their wrongful foreclosure claim is similar to those advanced inSacchi, Javaheri, Ohlendorf, Skoba,and, of course, this Court’s ruling inTamburri.

Accordingly, this Court finds that the Plaintiffs have sufficiently stated a claim for wrongful foreclosure. Regardless of whether§ 2932.5applies, under California law a party may not foreclose without the legal power to do so. Plaintiff alleges that the wrong parties issued the Notice of Default. At the12(b)(6)stage, given the factual uncertainties underlying the parties’ arguments, Plaintiffs’ claim is sufficient to withstand a motion to dismiss.

D.Slander of Title

The Barrionuevos next advance a cause of action for slander of title. In their amended complaint, they allege that Chase “acted with malice and a reckless disregard for the truth by simply assuming it was the beneficiary underPlaintiffs’ Deed of Trust” when it recorded a “Notice of Trustee’s Sale…that cannot lead to a valid foreclosure.” Am. Compl. ¶ 24. They further allege that “the recordation of the February 2, 2012 Notice of Trustee’s Sale was therefore false, knowingly wrongful, without justification, in violation of statute, unprivileged, and caused doubt to be placed on Plaintiffs’ title to the property,” and that the “recordation of the [975] foregoing documents directly impairs the vendibility of Plaintiffs’ property on the open market in the amount of a sum to be proved at trial.”Id.¶ 25. Neither Plaintiffs nor Defendants address this cause of action in any of the papers accompanying Defendants’ Motion to Dismiss.

The California Court of Appeals for the Fifth District recently outlined the elements required to successfully bring a cause of action for slander of title. InSumner Hill Homeowners’ Assn., Inc. v. Rio Mesa Holdings, LLC,the court explained that “slander or disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof some special pecuniary loss or damage.”205 Cal. App. 4th 999, 1030, 141 Cal. Rptr. 3d 109(citingFearon v. Fodera169 Cal. 370, 148 P. 200 (1915)). The required elements of this tort are “(1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss.”Id.(citingTruck Ins. Exchange v. Bennett,53 Cal.App.4th 75, 84, 61 Cal. Rptr. 2d 497 (1997);Howard v. Schaniel,113 Cal.App.3d 256, 263-264, 169 Cal. Rptr. 678 (1980)).

The Barrionuevos’ amended complaint is sufficient to “to state a claim to relief that is plausible on its face'”with regard to this tort.Cousins,568 F.3d at 1067 (9th Cir. 2009).Plaintiffs allege, and Defendants do not appear to question, that they effected a publication regarding Plaintiffs title to the subject property (i.e.the Notice of Default and the three Notices of Trustee’s Sales).Whether that publication was done “without privilege or justification” is somewhat harder to discern.InGudger v. Manton,the California Supreme Court held that “a rival claimant of property is conditionally privileged to disparage or justified in disparaging another’s property in land by an honest and good-faith assertion of an inconsistent legally protected interest in himself.”21 Cal. 2d 537, 545, 134 P.2d 217 (1943).TheGudgerCourt went on to say that an “express finding of lack of goodfaith, or of actual malice…would destroy the privilege or justification here discussed.”Id.at 546.Plaintiffs allege quite clearly that Defendants published the February 2, 2012, Notice of Trustee’s sale with “malice and a reckless disregard for the truth.” Am. Compl. ¶ 24. Broadly construing their amended complaint, it would be fair to conclude that Plaintiffs view the remaining three Notices published by Chase and California Reconveyance in a similar light. Thus, on balance, Plaintiffs have alleged sufficient facts to satisfy this element of the tort at the12(b)(6)stage. Likewise, Plaintiffs allege with some force the apparent falsity of Defendants’ four publications.Finally, the Barrionuevos claim that Defendants’ publications “directlyimpair[ed]the vendibility of Plaintiffs’ property on the open market,” and caused Plaintiffs to incur costs related to bringing “this action to cancel the instruments casting doubt on Plaintiffs’ title,” is sufficient to allege the “direct pecuniary loss” element to a slander of title action.Id.at ¶¶ 25-26.See alsoSumner Hill,205 Cal. App. 4th at 1030(“it is well-established that attorney fees and litigation costs are recoverable aspecuniary damages in slander of title causes of action.”).

Accordingly, to the extent Defendants’ Motion to Dismiss reaches Plaintiffs’ action for slander of title, Plaintiffs have met their burden to plead sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”Ashcroft v. Iqbal,129 S. Ct. at 1949.

E.California Civil Code § 2923.5

California Civil Code § 2923.5(a)(1)provides that “[a] mortgagee, trustee, beneficiary, [976] or authorized agent may not file a notice of default pursuant toSection 2924until 30 daysafterinitial contact is made as required by paragraph (2) or 30 daysaftersatisfying the due diligence requirements as described in subdivision (g).”Cal. Civ. Code § 2923.5(a)(1)(emphasis added).Underparagraph (2), “[a] mortgagee, beneficiary, or authorized agent 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.”Id.§ 2923.5(a)(2). Undersubdivision (g), “[a] notice of default may be filed . . . when a mortgagee, beneficiary, or authorized agent hasnotcontacted a borroweras required by paragraph (2) of subdivision (a) provided that the failure to contact borrower occurred despite the due diligence of the mortgagee, beneficiary, or authorized agent.”Id.§ 2923.5(g)(emphasis added). If a mortgagee, beneficiary, or authorized agent fails to comply with§ 2923.5, “then there is no valid notice of default and, without a valid notice of default, a foreclosure sale cannot proceed.”Mabry v. Superior Court,185 Cal. App. 4th 208, 223, 110 Cal. Rptr. 3d 201 (2010).The only remedy for a violation of this section is “to postpone the sale until there has been compliance withsection 2923.5.”Id.(citingCal. Civ. Code § 2924g, subdivision (c)(1)(A)).

In the instant case, the Barrionuevos assert that Chase and California Reconveyance violated§ 2923.5(a)(1)because they failed to contact them prior to filing the notice of default on April 7, 2009. Am. Compl. ¶¶ 28, 32. Despite the fact that the Defendants’ Notice of Default included a statement that “the beneficiary or its designated agent declares that it has contacted the borrower” or has “tried with due diligence to contact the borrower as required byCalifornia Civil Code 2923.5,” Plaintiffs assert that they were, in fact, “nevercontacted.” Am. Compl., Ex. B – Notice of Default; Am. Compl. ¶ 28. Defendants initially argue that the Barrionuevos fail to state a claim under this cause of action because they offer “no specified factual support” for their allegations. Defs.’ Mot. to Dismiss at 9. However, their Reply Brief offers a very different assessment:

Plaintiffs could not be clearer; “Plaintiffs allege that the Declaration is false because Plaintiffs werein factnever contacted.” (Plaintiffs’ opposition,p. 6, ln 21-23). Plaintiffs therefore claim that Defendant never called, never left a voice message, and never knocked on their door to discuss their default on the loan before having the NOD [Notice of Default] recorded. Plaintiffs’ allegation also means that Defendant never offered them a trial loan modification payment plan or even offered to evaluate them for a loan modification before recording the NOD.

Defs.’ Reply Brief at 3 (emphasis in original). Defendants nonetheless contends that “[w]henthe foreclosing entity declares that it tried to contact the borrower, the statutory requirements are satisfied.Id..Defendants are mistaken.

A mortgagee, beneficiary, or authorized agent has satisfied the “duediligence” requirement of§ 2923.5:

if it was not able to contact the borrower after (1) mailing a letter containing certain information; (2) then calling the borrower “by telephone at least three times at different hours and on different days”; (3) mailing a certified letter, with return receipt requested, if the borrower does not call back within two weeks; (4) providing a telephone number to a live representative during business hours; and (5) posting a link on the homepage of its Internet Web site with certain information.

Argueta v. J.P. Morgan Chase,787 F. Supp. 2d 1099, 1107 (E.D. Cal. 2011)(citing [977] Cal. Civ. Code. § 2923.5(g)).Defendants have given no indication that they exercised “due diligence” as defined in the statute in trying to contact the Barrionuevos prior to recording the Notice of Default, other than their declaration in the Notice itself that they complied with the statute. When a plaintiff’s allegations dispute the validity of defendant’s declaration of compliance in a Notice of Default as here, the plaintiff has “plead ‘enough facts to state a claim to relief that is plausible on its face.'”Cousins,568 F.3d at 1067 (9th Cir. 2009).SeeArgueta,787 F. Supp. 2d at 1107;Caravantes v. California Reconveyance Co.,10CV1407, 2010 U.S. Dist. LEXIS 109842, 2010 WL 4055560 (S.D. Cal. Oct. 14, 2010).Accordingly, Plaintiff’s allegations of non-compliance are sufficient to defeat a motion to dismiss.

F.Unfair Business Practices Act

California’s Unfair Business Practices Act, codified asCal. Bus. Prof. Code §§ 17200, prohibits unfair competition, which is defined as,inter alia,”any unlawful, unfair or fraudulent business act or practice.”Cal. Bus. & Prof. Code § 17200. Plaintiffs asserts claims under§ 17200for Chase and California Reconveyance’s violation ofCal Civ. Code § 2923.5, and openly acknowledge that their§ 17200claim “is a derivative cause of action.” Pls.’ Response Brief at 7. They also acknowledge that “plaintiffs’ ability to pursue this cause of action depends on the success or failure of their substantive causes of action.”Id.

Defendants challenge the§ 17200claim on the basis that “a violation [ofCal Civ. Code § 2923.5] does not impact plaintiffs with an actual loss of money or property to give standing underCal. B&P § 17200.” Defs.’ Reply Brief at 3. However, “[i]tis undisputed that foreclosure proceedings were initiated which put [the Barrionuevos] interestin the property in jeopardy; this fact is sufficient to establish standing as this Court has previously held.”Clemens v. J.P. Morgan Chase Nat’l Corporate Services, Inc.,No. C-09-3365 EMC, 2009 U.S. Dist. LEXIS 111646, 2009 WL 4507742, at *7 (N.D. Cal. Dec. 1, 2009)(citingSullivan v. Washington Mut. Bank, FA,No. C-09-2161 EMC, 2009 U.S. Dist. LEXIS 104074, at *13 (N.D. Cal. Oct. 23, 2009).See alsoSacchi,2011 U.S. Dist. LEXIS 68007, 2011 WL 2533029 at *8-9(refusing to dismiss underFRCP 12(b)(6)plaintiff’ssection 17200claim, in part, because plaintiff alleged a violation ofCal Civ. Code § 2923.5).

Second, Defendants repeat their argument that Plaintiffs have “failed to allege facts sufficient to demonstrate that defendants violatedSection 2923.5” Defs.’ Mot. to Dismiss at 9-10. “A plaintiff alleging unfair business practices under [17200] must state with reasonable particularity the facts supporting the statutory elements of the violation.”Khoury v. Maly’s of California, Inc.,14 Cal. App. 4th 612, 619, 17 Cal. Rptr. 2d 708 (1993). As a derivative claim based upon defendants’ alleged failure to comply withCal Civ. Code § 2923.5, the Barrionuevos’§ 17200claim rises and falls along with that underlying cause of action.Having already determined thatPlaintiffs’§ 2923.5claim was pled with enough specificity and factual support to withstand Defendant’s motion to dismiss, the Court finds Plaintiffs’§17200claim is likewise sufficiently pled underRule 12(b)(6).

IV.CONCLUSION

For the foregoing reasons, the CourtDENIESDefendants’ motion to dismiss.

This Order disposes of Docket No. 23.

IT IS SO ORDERED.

Dated: August 6, 2012

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