Judge Andrew E. Cooper, Case 22CHCV00834 2023-05-17 Tentative Ruling

MAY 16, 2023

Los Angeles Superior Court Case # 22CHCV00834

MOVING PARTY: Defendants Fay Servicing, LLC; and U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust (collectively, “Defendants”)

RELIEF REQUESTED: Defendants demur to the second, third, and fifth causes of action Plaintiff’s First Amended Complaint (“FAC”).[1] Defendants also seek an order striking portions of the complaint relating to certain monetary damages sought.

TENTATIVE RULING: The unopposed demurrer is sustained without leave to amend. Defendants’ motion to strike is granted without leave to amend. Defendants’ request for judicial notice is granted.

This is a wrongful foreclosure action wherein Plaintiff, who owns and resides at the property located at 23540 Cherry Street, Santa Clarita, CA 91321 (the “Subject Property”), brings various causes of action against Defendants, which include alleged violations of the California Homeowner Bill of Rights (“HBOR”). (Civ. Code, § 2923.4 et seq.)

Plaintiff alleges that she obtained a mortgage loan on the Subject Property in the amount of $608,000, for which the deed of trust was recorded on 11/17/06. (Ex. A to FAC.) The deed of trust was allegedly assigned three times, with each assignment recorded on 6/5/14, 6/6/14, and 6/6/14. On 8/12/19, a Notice of Default and Election to Sell was recorded, and on 12/13/21, a Notice of Trustee’s Sale was recorded as to the Subject Property.

On 6/13/22, Plaintiff alleges that she applied for a loan modification through defendant Fay Servicing, LLC (“Fay”) via her agent, Non-Profit Alliance of Consumer Advocates (“Non-Profit.”) Plaintiff alleges that Fay informed Non-Profit that the application could not be approved because it was missing documents. Plaintiff alleges that on 9/1/22, Non-Profit submitted a second loan modification agreement on her behalf, which was ultimately denied on 9/16/22.

On 10/10/22, Plaintiff filed her complaint against Defendants alleging the following causes of action: (1) Violation of Civil Code § 2923.5; (2) Violation of Civil Code § 2924, subd. (a)(1); (3) Violation of Civil Code § 2923.6, subd (c); (4) Violation of Civil Code § 2923.7; (5) Violation of Civil Code § 2924.9; (6) Violation of Civil Code § 2924.10; (7) Unfair Business Practices, Violation of Business and Professions Code § 17200 et seq.; and (8) Cancellation of Written Instruments, Civil Code § 3412. On 11/3/22, Plaintiff dismissed the second cause of action against Defendants.

On 1/20/23, the Court sustained Defendants’ demurrer to the third, fourth, and sixth causes of action in Plaintiff’s complaint, and granted Defendants’ motion to portions of the complaint pertaining to pre-foreclosure monetary relief, with leave to amend.

On 2/10/23, Plaintiff filed her FAC, alleging against Defendants the following causes of action: (1) Violation of Civil Code § 2923.5; (2) Violation of Civil Code § 2923.6, subd (c); (3) Violation of Civil Code § 2923.7; (4) Violation of Civil Code § 2924.9; (5) Violation of Civil Code § 2924.10; (6) Unfair Business Practices, Violation of Business and Professions Code § 17200 et seq.; and (7) Cancellation of Written Instruments, Civil Code § 3412.

On 3/14/23, Defendants filed the instant demurrer with motion to strike. No opposition has been filed to date.

Before filing its demurrer, “the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and serve a meet and confer declaration stating either: “(A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer;” or “(B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.” (Id. at subd. (a)(3).)

Here, counsel for Defendants declares that on 3/3/23, he telephoned Plaintiff’s attorney’s office, and spoke with an attorney assisting with the case about the issues raised in the instant demurrer and motion to strike. (Decl. of Alexander Farrell, ¶ 4.) However, the parties were unable to reach an agreement. (Id. at ¶ 5.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

As a general matter, a¿party may respond to a pleading against it by demurrer based on any single or combination of eight enumerated grounds, including¿that¿“the pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).)

In¿a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co.¿(2004) 116 Cal.App.4th 968, 994.)¿“A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc.¿v.¿Accountants, Inc. Servs.¿(2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.)

Here, Defendants¿demur to the second, third, and fifth causes of action in Plaintiff’s FAC pursuant to Code of Civil Procedure section 430.10, subdivision¿(e),¿arguing that each cause of action fails because¿Plaintiff fails¿to allege facts sufficient to¿state¿a cause of action against Defendants.

Plaintiff’s second cause of action alleges that Defendants violated Civil Code section 2923.6, subdivision (c). Under this portion of the HBOR, “if a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer at least five business days before a scheduled foreclosure sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending.” (Civil Code § 2923.6, subd. (c) [emphasis added].)

Plaintiff alleges that Defendants failed to rescind their foreclosure efforts after her 6/13/22 loan modification application was filed. (FAC ¶ 37.) However, as Defendants note, Plaintiff failed to submit a complete loan modification application, according to her own allegations. (Dem. 3:3–4; FAC ¶¶ 18, 21, 23–24.)

Moreover, “Defendants owed no such duty to rescind the Notice of Default and Notice of Trustee’s Sale, as both notices were recorded before Plaintiff submitted a loan medication application” (Dem. 3:6–8.) As the Notice of Default was recorded on 8/12/19, and the Notice of Trustee’s Sale was recorded on 12/13/21, with the foreclosure sale scheduled for 1/13/22, the statute does not apply to the facts of the instant case, where Plaintiff filed her incomplete application six months after the later of these documents had been recorded. (Civil Code § 2923.6, subd. (c).)

Based on the foregoing, the Court finds that Plaintiff has failed to allege facts sufficient to support her third cause of action against Defendants. The Court notes that its analysis is identical to that in the previous demurrer, and Plaintiff has therefore failed to amend her complaint to cure the defects set forth in the previous demurrer nor shown any possibility that she may successfully amend her FAC further. Accordingly, the Court sustains Defendants’ demurrer to Plaintiff’s second cause of action without leave to amend.

Plaintiff’s third cause of action alleges that Fay failed to assign a “single point of contact” to Plaintiff in violation of Civil Code section 2923.7. Under this portion of the HBOR, “when a borrower requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” (Civ. Code § 2923.7, subd. (a).) “For purposes of this section, ‘single point of contact’ means an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described” below. (Id., subd. (e).)

“The single point of contact shall be responsible for doing all of the following: (1) Communicating the process by which a borrower may apply for an available foreclosure prevention alternative and the deadline for any required submissions to be considered for these options; (2) Coordinating receipt of all documents associated with available foreclosure prevention alternatives and notifying the borrower of any missing documents necessary to complete the application; (3) Having access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative; (4) Ensuring that a borrower is considered for all foreclosure prevention alternatives offered by, or through, the mortgage servicer, if any; and (5) Having access to individuals with the ability and authority to stop foreclosure proceedings when necessary.” (Id., subd. (b).)

The Court previously found that this cause of action was contradicted by Plaintiff’s own allegations that her agent spoke to a team of individuals employed by Fay who stated that her application was missing documents, in addition to several phone calls with various individuals at Fay regarding her application. (FAC ¶¶ 18–21, 24.) Plaintiff realleges the same facts in her FAC, adding that Fay allegedly failed to assign a SPOC within a reasonable time, resulting in a failure to provide Plaintiff with “any details regarding the basis for denial” of her loan modification application. (Id. at ¶¶ 44, 46.) However, the Court notes that Plaintiff does not support these allegations with any additional facts. Furthermore, as Defendants observe, Plaintiff’s contention that she “was not provided with any details regarding the basis for denial” is contradicted by her allegation that her application was denied as incomplete and due to “excessive payment increase.” (Dem. 4:16–18, citing FAC ¶ 24.)

Based on the foregoing, the Court finds that Plaintiff has failed to allege facts sufficient to support her third cause of action against Defendants, and has likewise failed to amend her complaint to cure the same defects set forth in the previous demurrer. Accordingly, the Court sustains Defendants’ demurrer to Plaintiff’s third cause of action without leave to amend.

Plaintiff’s fifth cause of action alleges that Defendants violated Civil Code section 2924.10. This portion of the HBOR provides: “When a borrower submits a complete first lien modification application or any document in connection with a first lien modification application, the mortgage servicer shall provide written acknowledgment of the receipt of the documentation within five business days of receipt.” (Civ. Code § 2924.10, subd. (a).) “For purposes of this section, a borrower’s first lien loan modification application shall be deemed to be ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” (Id., subd. (b).)

Here, Plaintiff alleges that Defendants failed to provide her with such a written notice of receipt of her 6/13/22 loan modification application. (FAC ¶ 56.) However, as the Court previously found, Plaintiff’s application was incomplete by her own admissions. (FAC ¶¶ 18, 21, 23–24.) As such, Defendants were not required to give Plaintiff notice of receipt of her application under Civil Code section 2924.10.

As Civil Code section 2924.10 is again inapplicable to the facts of the instant case, the Court finds that Plaintiff has failed to allege facts sufficient support her fifth cause of action against Defendants. The Court notes that Plaintiff has failed to amend her complaint to cure the defects set forth in the previous demurrer. Accordingly, the Court sustains Defendants’ demurrer to Plaintiff’s fifth cause of action without leave to amend.

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

Here, Defendants move to strike the portions of the Plaintiff’s complaint pertaining to monetary damages in the pre-foreclosure context.

Counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 435.5, subdivision (a).

Before a foreclosure sale has taken place, a homeowner is only entitled to injunctive relief, rather than monetary relief. (Civ. Code § 2429.12, subd. (a).) “While monetary damages are available post foreclosure, prior to a foreclosure the ‘only’ remedy that a borrower may seek is an action to enjoin a violation ‘of the specified sections, along with any trustee's sale.’” (Lucioni v. Bank of Am., N.A. (2016) 3 Cal.App.5th 150, 160.)

Here, the foreclosure sale has not yet taken place, and therefore, Plaintiff is not entitled to the recovery of monetary damages. The Court notes that it previously granted Defendants’ motion to strike portions of Plaintiff’s original complaint referencing pre-foreclosure monetary relief. As such, Defendants’ instant motion to strike the same language contained in the FAC is granted without leave to amend.

The unopposed demurrer is sustained without leave to amend. Defendants’ motion to strike is granted without leave to amend.

[1] Plaintiff mistakenly numbers these causes of action as the third, fourth, and sixth causes of action within the body of the FAC. The Court will refer to the causes of action based on the corrected order in which they appear in the FAC.