Supporting, Informing & Connecting People in Foreclosure
For week of 3/05/2012 -
* TENTATIVE RULING: *
Plaintiff v Wells Fargo Bank
ALLEGATIONS IN SECOND AMENDED COMPLAINT:
The Defendants improperly foreclosed upon the Plaintiffs’ property by refusing to provide a loan modification.
CAUSES OF ACTION IN SECOND AMENDED COMPLAINT:
1) Set Aside Trustee’s Sale
2) Cancellation of Trustee’s Deed
3) Quiet Title
5) Wrongful Foreclosure
6) Breach of Fiduciary Duty
7) Constructive Fraud
8) Negligent Misrepresentation
10) Unfair Business Practices
11) Promissory Estoppel
Demurrer to each cause of action.
This case arose after the Defendant initiated foreclosure proceedings on the Plaintiffs’ property because they were in default on a loan secured with a deed of trust on her property. The Plaintiffs claim that the foreclosure and sale of their property was improper because the Defendant failed to provide a loan modification.
The Defendant provides a copy of the notice of default and election to sell that was recorded on June 11, 2009 in exhibit D to its request for judicial notice. A copy of the trustee’s deed upon sale that was recorded on October 7, 2010 is attached as exhibit H.
This hearing concerns the demurrer of Defendant, Wells Fargo Bank. In addition, the Defendant, First American Trustee Servicing Solutions, LLC, has filed a notice of joinder with the demurrer.
The Defendant argues that the Plaintiffs cannot maintain any of their claims based on the wrongful foreclosure because they do not allege that they tendered the amount due. To plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the Defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109 (affirming an order sustaining a demurrer without leave to amend in a case claiming that the foreclosure and sale of a home was improper). A valid tender must be nothing short of the full amount due the creditor. Gaffney v. Downey Sav. & Loan Ass'n (1988) 200 Cal. App. 3d 1154, 1165. The Court of Appeal found that the following summary of the tender rule describes this requirement:
The rules which govern tenders are strict and are strictly applied, and where
the rules are prescribed by statute or rules of court, the tender must be in such
form as to comply therewith. The tenderer must do and offer everything that
is necessary on his part to complete the transaction, and must fairly make
known his purpose without ambiguity, and the act of tender must be such that
it needs only acceptance by the one to whom it is made to complete the . transaction
The underlying principle for the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118.
Further, this applies to any cause of action implicitly integrated with the voidable sale. Id. at 121. In Karlsen, the Court found that causes of action for breach of an oral agreement to delay the sale, for an accounting, and for a constructive trust failed because the plaintiff had not made a valid tender. In Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, the Court found that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender. The Court in Karlsen reasoned that absent an effective and valid tender, the foreclosure sale would become valid and proper. Karlsen, 15 Cal.App.3d at 121.
A review of the First Amended Complaint reveals that each cause of action is implicitly integrated with the sale. The Plaintiffs’ first, second, third, and fifth causes of action directly attack the sale by seeking to set it aside, to cancel the trustee’s deed upon sale, to quiet title, and to claim that it was a wrongful foreclosure.
The sixth cause of action for breach of fiduciary duty and the seventh cause of action for construction fraud include claims that the Defendant’s breaches of its fiduciary duty resulted in the wrongful foreclosure of the Plaintiffs’ property. The eighth cause of action for negligent misrepresentation includes the claim that the Defendant negligently misrepresented that it had authority to foreclose on the property. The ninth cause of action for negligence includes claims that the Defendants failed to disclose information about the loan. The damages for this cause of action resulted in the loss of the Plaintiffs’ property. The tenth cause of action for unfair business practices and the fourth cause of action for accounting claim that the Defendant obtained monies through its unlawful conduct that resulted in the sale of the Plaintiffs’ property. The eleventh cause of action for promissory estoppel seeks damages on the ground that the Defendant breached a promise not to sell the property. Each of these causes of action are implicitly integrated with the sale because the Plaintiffs claim damages based on the sale of their property.
Accordingly, the Plaintiffs must plead facts to satisfy the tender rule. A review of the Plaintiffs’ Second Amended Complaint reveals that they do not plead that they made an unconditional tender of the full amount due. Accordingly, the Plaintiff has not satisfied the tender rule.
The Plaintiffs argue that the tender rule is not required because the foreclosure sale was void. Under California law, the tender rule does not apply when it would be inequitable, such as when the instrument is void. Fleming v. Kagan (1961) 189 Cal. App. 2d 791, 797. If the plaintiffs’ action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424. However, when the plaintiffs’ action claims that there was fraudulent conduct in the foreclosure procedure, then tender is required. See Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575 (holding that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender).
Here, there are no allegations that the deed of trust is void. There are no allegations that the debt underlying the deed of trust is void. Instead, the Plaintiffs allege that the Defendant made misrepresentations to induce the Plaintiffs to default on the subject loan. These allegations do not demonstrate that the underlying debt is void. Instead, they are allegations that the Defendant engaged in fraudulent conduct in the foreclosure procedure. Since the Plaintiffs are not seeking to rescind the underlying debt on the ground that it invalid, tender is required.
The Plaintiffs also argue that the Defendants’ failure to provide the notice of default and a notice of substitute makes the sale void. However, these irregularities with the foreclosure procedures make the sale voidable, not void, because they do not make the deed of trust or the underlying debt invalid. As noted above, to plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the Defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109. Absent an effective and valid tender, the foreclosure sale becomes valid and proper. Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 121.
The Plaintiffs are seeking to set aside a foreclosure sale that occurred in 2010. As noted above, the principle underlying the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118. It would not be inequitable to require the Plaintiffs to tender the amount that they owe because otherwise, any Court order finding that there was an irregularity in the foreclosure proceedings would be an idle act in that the Defendants would simply begin the foreclosure proceedings again because the Plaintiffs cannot tender the amount due.
Therefore, the Court will sustain the demurrers to the entire complaint. In addition, the Court will grant the joinder of Defendant, First American Trustee Servicing Solutions, LLC, because the lack of tender bars the Plaintiffs from pleading their claims.
This is the Plaintiffs’ third attempt to plead their complaint. A review of their opposition papers reveals no assertion that they can satisfy the tender rule. Since the Plaintiffs have not demonstrated that they can correct the lack of tender by amendment, the Court will not grant leave to amend.
SUSTAIN demurrers to each cause of action without leave to amend.
* TENTATIVE RULING: *
White, LLC v. Bank of America, N.A., et al.
Moving Party: Defendants Bank of America, N.A.; ReconTrust Company, N.A.; and Mortgage Electronic Registration System, Inc.
Responding Party: Plaintiff White, LLC
Tentative Ruling: Demurrer is sustained without leave to amend as to the Second Cause of Action, and overruled as to remainder.
Plaintiff White, LLC filed this action against Defendants Bank of America, N.A. (“BANA”); ReconTrust Company, N.A. (“ReconTrust”); and Mortgage Electronic Registration System, Inc. (“MERS”) arising out of the non-judicial foreclosure concerning real property located at 3106 Highland Ave., Santa Monica, CA 90405 (“Property”).
Factual Allegations of the Complaint –
On 1/27/06, Plaintiff executed a written promissory note in the amount of $825,000 to BANA, which was secured by a deed of trust on the Property which was recorded on 2/8/06. The deed of trust named First Trustee Services, Inc. as trustee and MERS as beneficiary. On 8/26/11, ReconTrust recorded a notice of default on the Property. BANA and/or ReconTrust has posted a notice of trustee’s sale which has not been forwarded to Plaintiff or recorded.
Plaintiff alleges that a breach of the obligation for which the deed of trust secures has not occurred. Plaintiff alleges that the loan has been transferred such that Defendants do not own the loan or notes and are not authorized to initiate foreclosure proceedings. Plaintiff asserts causes of action for (1) declaratory relief, (2) injunctive relief, (3) accounting, and (4) quiet title.
Defendants demur to the complaint on several grounds. Plaintiff filed opposition. The Court has not received a timely reply.
1. Failure to Attach Deed of Trust
First, Defendants argue that the complaint is uncertain due to Plaintiff’s failure to attach the deed of trust. However, Plaintiff is not alleging a breach of contract claim. Based on Plaintiff’s allegation that it has not breached the obligation for which the deed of trust secures (see Complaint ¶ 12), there is no indication that the failure to attach the deed of trust results in the omission of a material portion (see Gilmore v. Lycoming Fire Ins. Co. (1880) 55 Cal. 123, 124).
Second, Defendants argue that Plaintiff fails to allege tender. However, Plaintiff’s allegation that it has not breached the obligation for which the deed of trust secures (see Complaint ¶ 12) disputes any indebtedness which would under normal circumstances require the allegation of tender (see, e.g., Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; Aguilar v. Bocci (1974) 39 Cal.App.3d 475, 477-78).
3. Statute of Limitations
Third, Defendants argue that the statute of limitations bars this action. However, Plaintiff’s complaint is based on Defendants initiation of non-judicial foreclosure proceedings, beginning in 8/26/11. The statute of limitations does not run as from the date of the execution of the deed of trust.
4. Non-Judicial Foreclosure
Fourth, Defendants argue that Plaintiff improperly challenges the non-judicial foreclosure. The Court acknowledges the general principles that a plaintiff cannot sue to determine whether the foreclosure was authorized (see Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1155) and that a plaintiff must allege prejudicial procedural irregularity to challenge the foreclose sale (see 6 Angels, Inc. v. Stuart-Wright Mortg., Inc. (2001) 85 Cal.App.4th 1279, 1284). To the extent that Plaintiff’s complaint challenges the foreclosure sale (see, e.g., Complaint ¶¶ 11, 13-15), it is improper. However, Plaintiff’s complaint is also based on its allegation that it has not breached the obligation for which the deed of trust secures (see Complaint ¶ 12). Defendants’ demurrer based on this ground is only directed at part of the causes of action which is improper (see Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047).
Fifth, Defendants argue that Plaintiff fails to plead the existence of a fiduciary relationship or other circumstances appropriate for an accounting claim. However, a fiduciary relationship is not required to state a cause of action for accounting (see Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179), and Plaintiff’s allegations pertaining to its relationship to BANA (see Complaint ¶ 8) is sufficient to allege an accounting claim.
6. Injunctive Relief
Lastly, Defendants argue that there is no cause of action for injunctive relief. The Court agrees (see Shell Oil Co. v. Richter (1942) 52 Cal.App.2d 164, 168). However, as indicated by the Court’s analysis above, Plaintiff has alleged sufficient causes of action to support an injunctive relief remedy. Therefore, the demurrer is sustained without leave to amend on this issue.
* TENTATIVE RULING: *
Federal National Home Mortgage Association v. Defendant
Defendant has filed a motion to quash service of the amended verified complaint.
On February 9, 2012, defendant filed a motion to quash service of summons and complaint. The motion raised several grounds, including improper verification and lack of evidence of perfected title to the premises. On February 16, 2012, the court granted the motion as to the verification and denied it as to the issue of title.
On February 23, 2012, plaintiff filed an amended verified complaint.
On February 29, 2012, defendant filed a second motion to quash service on the ground that the amended complaint was served on counsel instead of by summons on defendant herself.
The court apparently erred in granting the first motion to quash since the verification issue, upon which the court granted the motion, is properly raised by motion to strike, not motion to quash. Therefore, the court denies the motion to quash nunc pro tunc to February 16, 2012. On its own motion nunc pro tunc, the court orders plaintiff to correct the verification. Plaintiff has done by way of the first amended complaint.
The instant motion to quash is denied.
Defendant to answer only within five days.
Plaintiff to give notice.
* TENTATIVE RULING: *
Plaintiff v. SAXON MORTGAGE SERVICES, INC. ET AL.
Demurrer of defendants Bank of America, N.A. and Saxon Mortgage Services, Inc. to third amended complaint.
Tentative order: Demurrer of defendant Bank of America, N.A. and of defendant
Saxon Mortgage Services, Inc. to Third Amended Complaint. Tentative Ruling: sustain without leave to amend.
FIRST CAUSE OF ACTION FOR Wrongful Foreclosure, SECOND CAUSE OF ACTION FOR Set Aside Trustee Sale and THIRD CAUSE OF ACTION FOR Cancel Trustee’s Deed. Plaintiff alleges a violation of CIVIL CODE §2934a because a substitution of trustee was executed after the Notice of Default. However, plaintiff fails to provide any authority to show that a substitution of trustee executed after the Notice of Default violates CIVIL CODE §2934a. CIVIL CODE §2934a(c) states that a substitution of trustee may be executed after the recording of a notice of Default. Plaintiff also alleges a violation of CIVIL CODE §2923.5. However, Plaintiff may pursue a private right of action for alleged violations of CIVIL CODE §2923.5 only to postpone a pending foreclosure sale. Mabry v. Superior Court, (2010) 185 Cal.App.4th 208. Here, the foreclosure sale has already taken place. Plaintiff alleges violations of Civil Code §2924. However, Plaintiff’s allegations of violations of Civil Code §2924 are conclusory without any factual support. Finally, Plaintiff alleges that Bank of America could not have been the foreclosing beneficiary because the US Bank - Bank of America assignment occurred after the foreclosure sale. However, Plaintiff fails to show that a recordable assignment of the Deed of Trust was necessary to transfer the power of sale to Bank of America. The power of sale is contained in a promissory note and is assigned by the transfer of that instrument. The Deed of Trust follows the note. Civil Code §2936. The MERS system was created to avoid having to prepare a recordable Assignment of the Deed of Trust. Fontenot v. Wells Fargo Bank, (2011) 198 Cal.App.4th 256, 267. “Plaintiff's cause of action ultimately seeks to demonstrate that the nonjudicial foreclosure sale was invalid because HSBC lacked authority to foreclose, never having received a proper assignment of the debt. In order to allege such a claim, it was not enough for plaintiff to allege that MERS's purported assignment of the note in the assignment of deed of trust was ineffective. Instead, plaintiff was required to allege that HSBC did not receive a valid assignment of the debt in any manner. Plaintiff rests her argument on the documents in the public record, but assignments of debt, as opposed to assignments of the security interest incident to the debt, are commonly not recorded. The lender could readily have assigned the promissory note to HSBC in an unrecorded document that was not disclosed to plaintiff. To state a claim, plaintiff was required to allege not only that the purported MERS assignment was invalid, but also that HSBC did not receive an assignment of the debt in any other manner. There is no such allegation.” Id. at 271-72. Similarly, in the instant action Plaintiff failed to allege facts to demonstrate that Bank of America did not obtain a power of sale in any manner other than the U.S. Bank - Bank of America assignment. Further, Plaintiff alleges no facts to demonstrate that she was prejudiced by the US Bank - Bank of America assignment. Id. at 272-73.
* TENTATIVE RULING: *
JPMorgan Chase Bank v. Tri-State Land Services
Demurrer to Defendant's Second Amended Cross-complaint by JPMorgan Chase Bank, N.A.
The second amended cross-complaint for (1) wrongful initiation of civil process, (2) abuse of process, (3) intentional interference with contract & economic advantage, (4) negligent interference with contract & economic advantage, (5) intentional infliction emotional distress, (6) negligent infliction of emotional ddistress, (2nd 6) slander of title, (7) libel per se and (8) quiet title. Defendant JPMorgan demurs on the grounds that each cause of action fails to state facts sufficient to constitute a cause of action and is uncertain. For the following reasons, the demurrer is sustained with 20 days’ leave to amend.
First Cause of Action: Cross-complainant has not alleged termination of any action in his favor. It appears that this cause of action is based upon the complaint in this matter, although that is not entirely clear because in ¶ 6 cross-complainant refers to the “above-described civil actions.” However, no civil actions are described in the preceding paragraphs. Assuming the cause of action is based upon the complaint in this matter, the cause of action fails because the absence of a pleading of termination of the prior proceeding in the plaintiff's favor is fatal to the complaint for malicious prosecution. 5 B. Witkin, Cal. Procedure (5th ed. 2008) Plead, § 757.
Second Cause of Action: cross-complainant has failed to plead an ulterior motive for filing a lis pendens. In an action for abuse of process, a plaintiff must allege (1) the ulterior motive or purpose of the defendant in using the process, and (2) the wrongful act, i.e., use of the process in an improper manner. See Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94,104. Cross-complainant has alleged neither. The cross-complaint simply alleges that JPMorgan obtained a lis pendens on property conveyed to cross-complainant based upon a claim in excess of any legitimate claim of cross-defendants. Cross-complaint, ¶ 10. There is no authority cited that holds this is a basis for maintaining an action for abuse of process. In addition, in its complaint JPMorgan’s claim of title is based upon cross-complainant’s alleged failure to give JPMorgan notice of the action in which cross-complainant obtained title to the subject property. None of this shows an ulterior motive improper use of process.
Third and Fourth Causes of Action: These causes of action impermissibly combine claims based upon interference with economic advantage and with contract and fail to allege the existence of either a contract or economic relationship.
Fifth and Sixth Causes of Action: See the discussion above.
Second Sixth Cause of Action: Cross-complainant fails to allege either any act of disparagement or any pecuniary loss. A cause of action for slander of title consists of (1) plaintiff’s title, (2) defendant’s disparagement, and (3) pecuniary damage. The wrongful act may be a false oral or written disparagement, or a false claim of an interest. The complaint must specifically allege, as special damages, the particular financial loss caused by the disparagement. 5 Witkin, Cal. Procedure (5th ed. 2008) Plead, § 749.
Seventh Cause of Action: The cross-complaint does not allege any libelous matter.
Eighth Cause of Action: Cross-complainant has no standing to claim title in this action for another cross-complainant, Ditz & Bugs, Ltd.
* TENTATIVE RULING: *
Re: Fresno Flex Inc., et al v. River View, et al.
Motion: Defendants’ Motions to Bifurcate
Tentative Ruling: To DENY both motions for all of the reasons set forth in Plaintiff’s Opposition.
Defendants ask the court to hold a separate trial on the issue of their affirmative defenses Defendants argue that this would promote judicial economy. (CCP 592, 597, 1048 (b).) Defendants argue that (1) legal issues should be tried before factual issues (CCP 592), (2) that separate trials may promote judicial economy by possibly avoiding an unnecessary trial on damages (CCP 1048 (b), and that special defenses should be tried first (CCP 597.) In their Opposition, Plaintiffs argue correctly that none of these reasons apply here.
First, Defendants’ affirmative defenses are NOT pure legal issues, but rather are mixed question of law and fact. For example, Defendants argue that the lease agreement was terminated when they obtained an unlawful detainer judgment against Plaintiffs. But as Plaintiffs correctly point out, in ruling on the motion for summary judgment, this court has already noted that there are numerous mixed questions of law and fact that must be resolved to determine whether the lease was terminated by the unlawful detainer action.
Second, Plaintiffs argue correctly that bifurcating the affirmative defenses mayl actually make the trial more complex and may require duplicative testimony before the court and the jury. Furthermore, there is no easy way to bifurcate legal issues and separate them from factual issues where, as here, the issues appear to be intertwined.
Third, Plaintiffs argue correctly that Defendants’ affirmative defenses are not special defenses, such as res judicata, which must be tried before the court under CCP 597. Plaintiffs argue correctly that Defendants misstate the holding of Windsor Square Homeowners’ Association v. Citation Homes (1997) 54 Cal.App.4th 547, 557-558, which does not hold that all affirmative defenses must be tried first before the court. That’s a shockingly absurd contention for counsel to be representing to the court. (Zinkin’s Memo in Support at p. 6, lines 21 – 24.)
Defendants also misstate the holding of Alexander v. Code Masters Group Ltd. (2002) 104 Cal.App.4th 129, 141-142.) (Zinkin’s Memo in Support at p. 7, lines 5 – 7.) That case does not hold that determining the existence and validity of a contract is a question of law. On the contrary, the case appears to explain that it can often be a mixed question of law and fact.
* TENTATIVE RULING: *
Plaintiff v. California Reconveyance Company, et al
Motion: By plaintiff for leave to file first amended complaint
The additional facts offered in the proposed first amended complaint do appear to support the additional claims included in the amended pleading, and it is appropriate to eliminate the parties and claims that have been dismissed pursuant to the settlement between plaintiffs and some of the defendants.
The remaining defendants were properly served and have offered no basis for denying the motion. The motion will therefore be granted. Plaintiff’s counsel is directed to file an original copy of the first amended complaint within 5 days of this order.
Plaintiff’s counsel is also reminded to comply in all future filings with CRC Rule 3.1110(f), and in any future motion to amend, with CRC Rule 3.1324.
Pursuant to California Rules of Court, Rule 3.1312, subd. (a) and Code of Civil Procedure section 1019.5, subd. (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.
The time in which the amended complaint must be filed and served will run from service by the clerk of the minute order. All new allegations in the first amended complaint are to be set in boldface type.
* TENTATIVE RULING: *
Plaintiff v. BAC Home Loans Servicing, LP, et al
Ruling: To sustain with leave to amend as indicated below.
Plaintiff filed this action in pro per on 12/1/11, seeking injunctive and equitable relief preventing defendants from selling their home at a trustee’s sale. The complaint alleges that the trustee sale was to occur on December 2, 2011 (the day after the complaint was filed), “despite legal deficiencies in the procedure of which defendants have been made aware.” The specific deficiencies identified include the following:
¶5 Plaintiffs had served their “Qualified Written Request” by fax pursuant to 12 USC §260-5 on November 11, 2011…to determine whether and to what extent the defendants have legal standing and other required legal bases upon which to pursue foreclosure of plaintiff’s home.
¶7 The purported lenders and trustees…have not complied with CC §2923.6, therefore all subsequent notices of default or of Trustee’s Sales are void as a matter of law. Plaintiffs have attempted in good faith to mediate the loan but the true beneficiary has refused to negotiate in good faith. They have not complied with the requirement to meet with plaintiffs in person or by telephone in order to assess their financial situation or explore options to avoid foreclosure. There was required an initial contact and thereafter, at our request, a subsequent meeting within 14 days. Such would likely have been successful.
Based on these allegations, they ask the court to enjoin further action by defendants to sell their home.
Defendant claims that the allegations of the complaint, read along with the documents for which they ask judicial notice, show that they have complied with all notice requirements in relation to the transfer of beneficiary, and that the requirements of CC §2923.5 have also been met. That statute provides, in relevant part:
(a) (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after initial contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in subdivision (g).
(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. During the initial contact, the mortgagee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower's financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically.
(b) A notice of default filed pursuant to Section 2924 shall include a declaration that the mortgagee, beneficiary, or authorized agent has contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required pursuant to subdivision (h).
Defendant notes that the Notice of Default recorded on January 22, 2010 includes, as page 4, the declaration required by subsection (b). See defendant’s exhibit 2. And it argues that to the extent plaintiffs are complaining in ¶7 that the ‘true beneficiary” has refused to negotiate in good faith by meeting in person or by telephone and setting a subsequent meeting in 14 days if one is requested, the statute allows an “authorized agent” of the mortgagee or beneficiary to make this required contact, and the declaration is signed by BAC Home Loans Servicing LP, identified in exhibit 3.
Defendants also demur to the extent Husband is asserting any claims in relation to the property, on the grounds that he has no standing to pursue such claims. In this regard they ask the court to take judicial notice of the quitclaim deed attached to the Request for Judicial Notice as exhibit 5, which shows that Husband relinquished his interests in the property to Wife on October 4, 2011.
In this case, the court can take judicial notice under Evid. Code §452(c) and (h) of the recorded quitclaim deed attached as exhibit 5 to defendants’ request for judicial notice. It shows that Husband no longer had a legal interest in the property as of the time this action was filed, and thus defendants’ demurrer based on his lack of standing will be sustained, with leave to amend only if he can “plead around” the judicially noticeable fact that he has relinquished any interest in the property.
It also appears, from defendants’ exhibit 3 that defendants have complied with the federal requirement that the borrower be notified of any transfer of loan servicing. And while plaintiffs allege that they served a qualified written request for information as provided under 12 USC §2605(e), they don’t specifically allege that defendants failed to respond within the allowed time.
Defendants have also shown through a judicially noticeable document compliance with the declaration requirements of CC §2923.5. Plaintiffs don’t specifically claim that an agent of the mortgage holder failed to contact them as required by the statute. Rather they claim that the “true beneficiary” has refused to “negotiate in good faith.” But the statute doesn’t require good faith negotiations; it only requires that the contact be made, that certain information be provided, and that, if requested, a subsequent meeting be scheduled.
Here, plaintiffs haven’t specifically alleged that the requested such a meeting, and defendants have shown that a declaration was filed under penalty of perjury by an employee of BAC Home Loans Servicing LP (the successor to lender Countrywide Home Loans Inc.) that the required contact was made.
The general demurrer will therefore be sustained, with leave to amend only if plaintiffs can “plead around” those judicially noticeable facts by identifying in what specific way each of the cited statutes has been violated and what statutory remedies they are claiming they are entitled to.
While plaintiffs have alleged that the “true beneficiary” failed to make the required contact, the statute doesn’t appear to require that the beneficiary of the deed of trust make the required contact, or that a loan modification be offered. See Mabry v. Superior Court (2011) 185 Cal.App.4th 208, as holding that the statute doesn’t require the mortgagee to actually offer a loan modification; only to discuss possible options. See e.g. fn. 9 at page 223.
And see 185 Cal.App.4th at 214, noting that the remedy available for a violation of CC §2923.5 is not an injunction against proceeding with a foreclosure sale that is otherwise proper, but rather a 30 day delay in the foreclosure process to allow the required contact and discussions to take place.
To the extent plaintiffs are basing their claims on the holding in U.S. Bank v. Ibanez (2011) 458 Mass. 637, that case applied a Massachusetts statute, not either of the two statutes plaintiffs claim defendants here have violated.
Thus plaintiffs will need to both identify how each of these statutes was violated, and what statutory remedies they are seeking. Plaintiffs will be given 30 days in which to file and serve a first amended complaint.
Replies are closed for this discussion.
SoCal tentative rulings updated.