Judge Andrew E. Cooper, Case Number: PC056820, Date: 2023-10-12 Tentative Ruling

Los Angeles Superior Court Case # PC056820

MOVING PARTY: Defendants Carrington Mortgage Services and Carrington Foreclosure Services, LLC (formerly known, and erroneously sued herein, as Atlantic & Pacific Foreclosure Services, LLC); and Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home Equity Loan Trust 2005-4 (collectively, “Defendants”)

RESPONDING PARTY: Plaintiffs Lorena Arredondo and Martin Arredondo (collectively, “Plaintiffs”)

RELIEF REQUESTED: An order granting summary judgment in favor of Defendants and against Plaintiffs.

REQUEST FOR JUDICIAL NOTICE: Defendants’ request for judicial notice is granted as to Exhibit Nos. 1–4, 6–8, and 11–15, and denied as to Exhibit Nos. 5, 9–10, and 16–20.

This is a wrongful foreclosure action in which Plaintiffs homeowners allege that Defendants mortgage loan servicers misrepresented to Plaintiffs the true nature of their ownership of the subject property, to collect mortgage payments from Plaintiffs.

As of 1/7/03, Plaintiffs owned and resided at certain real property located at 680 Griswold Street, San Fernando CA 91340. (SSUF #1.) In 2005, Plaintiffs obtained a mortgage refinancing loan, secured by a Deed of Trust dated 6/20/05, and serviced by Defendants. (SSUF #2, 3.) In 2007, Plaintiffs obtained a second mortgage, secured by a junior Deed of Trust, further encumbering the property. (SSUF #4.)

On 1/7/09, the junior lienholder foreclosed on the junior Deed of Trust and conveyed the property to itself, while Plaintiffs remained in possession. (SSUF #8, 9.) In 2010, Plaintiffs applied for a loan modification with Defendants, which was ultimately approved. (SSUF # 10–13.)

On 1/9/12, Defendants recorded a Notice of Default on the mortgage loan and recorded a Notice of Trustee’s Sale on 4/11/12. (SSUF #18.) The foreclosure was put on hold after Plaintiffs filed a bankruptcy case. (SSUF #19.) On 8/13/15, Defendants recorded a new Notice of Trustee’s Sale, and a Trustee’s Deed Upon Sale was recorded reflecting the foreclosure sale. (SSUF #21, 22.)

On 1/7/16, Plaintiffs filed the instant action. On 8/30/17, Plaintiffs filed the operative fourth amended complaint (“4AC”), which alleges against Defendants the following causes of action: (1) Unfair Debt Collection Practice; and (2) Unfair Competition.

On 11/8/17, the Court sustained Defendants’ demurrer against Plaintiffs’ 4AC and Defendants’ motion to strike Plaintiffs’ second cause of action without leave to amend. On 9/23/19, the ruling was partially reversed by the Court of Appeal, who held that the 4AC alleged facts sufficient to support Plaintiffs’ first cause of action, by alleging that Defendants misrepresented the nature of Plaintiffs’ ownership to pressure Plaintiffs to continue paying on the loan. (Arrendondo v. Deutsche Bank National Trust Company (Sept. 23, 2019, B288007) [nonpub. opn.] at pp. 15–16.)

On 7/28/23, Defendants filed the instant motion for summary judgment. On 9/15/23, Plaintiffs filed their opposition. On 10/6/23, Moving Defendants filed their reply.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 65, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381–382.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519–1520.)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.)

Plaintiffs’ sole remaining cause of action against Defendants alleges Unfair Debt Collection under the Rosenthal Fair Debt Collection Practices Act (Civil Code section 1788 et seq.) (the “Rosenthal Act”). The Rosenthal Act was enacted “to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts.” (Stats. 1977, ch. 907, § 1; Civ. Code § 1788.1, subd. (b).)

A violation of the Rosenthal Act may be based on deceptive practices arising from the collection of a debt associated with a mortgage. (Alborzian v. JPMorgan Chase Bank, N.A. (2015) 235 Cal.App.4th 29, 37–38.) Section 1788.13 of the Rosenthal Act incorporates section 1692e of the Federal Debt Collection Practices Act, which provides, “a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” “Whether a debt collection effort entails false representations, threats, or deception is judged objectively from the perspective of the ‘least sophisticated debtor.’ … This unsavvy consumer is charged with a ‘basic level of understanding and willingness to read with care’ … but is of ‘below average sophistication or intelligence,’ and is ‘uninformed or naive.’ … He or she is ‘under no obligation to seek explanation of conflicting or misleading language in debt collection letters.’” (Alborzian, 235 Cal.App.4th at 37 [internal citations omitted].)

Here, Plaintiffs allege in their 4AC that they were advised by Defendants that they could “save their home” by continuing to make payments to qualify for a loan modification. (4AC ¶¶ 18, 20–21.) Defendants argue that “here, the Junior Lienholder assumed ownership of the Property upon foreclosing, but DBNTC’s first-position Loan and DOT remained intact. As borrowers who had contracted for the Loan, Plaintiffs were still obligated to repay it; but, if they did not do so, it was the Junior Lienholder that would lose ownership of the Property at Carrington’s foreclosure sale – and that is precisely what happened.” (MSJ 13:9–13.) Furthermore, Defendants assert that they “never said – in writing or in discussions of any kind – that agreeing to loan modification would enable Plaintiffs to ‘save’ their home.” (Id. at 14:17–19.)

Defendants proffer a Trustee’s Deed Upon Sale, recorded on 1/20/09, reflecting the junior lienholder’s foreclosure sale of the property. (Ex. 6 to MSJ.) Defendants also proffer Plaintiffs’ deposition transcripts, wherein Plaintiff Martin Arredondo states that Defendants did not represent that they could help him save the home. (Dep. of M. Arredondo, 80:2–8.)

Based on the foregoing, the Court finds that Defendants have met their initial burden to establish a defense to Plaintiffs’ Unfair Debt Collection cause of action. The burden therefore shifts to Plaintiffs to show that a triable issue of material fact exists as to whether Defendants represented that Plaintiffs were the true owners of the home and that their ownership could be “saved” by making continued payments on their mortgage loan.

Plaintiffs assert in opposition that “the Rosenthal act is violated by CMS’s statements writings and conduct which deceived Lorena to believe that she owned 680 Griswold, and to make payments to protect her ownership, and work with CMS to save the house.” (Pls.’ Opp. 3:26–28.)[1] “The material issue is creating the false impression that Lorena owned 680 Griswold to collect a debt. In this regard, the declaration testimony of Martin, Danny, and Lorena at deposition would support an inference from the trier of fact that Lorena could protect her ownership of 680 Griswold and that CMS would assist the effort.” (Id. at 6:17–20.)

In support of their arguments, Plaintiffs proffer a letter Defendants sent to Plaintiffs, dated 2/9/10, offering a loan modification if Plaintiffs were found eligible, and stating that “we will work with you to explore other options available to help you keep your home.” (Ex. 110 to Pls.’ Opp.) Plaintiffs proffer Plaintiff Lorena Arredondo’s sworn declaration, wherein she states that she understood the “keep your home” language to mean that she could keep her ownership of the subject property by making monthly payments to Defendants. (Decl. of L. Arredondo ¶ 7.)

The Court sustains Defendants’ evidentiary objection No. 3, against Paragraph 7 of the Declaration of Lorena Arredondo, as it contradicts her prior sworn deposition testimony stating that she cannot read English, and that her husband was primarily responsible for communicating with Defendants. (Dep. of L. Arredondo, 18:16–19:8.) A party's admissions or concessions made during discovery govern and control over the party's contrary affidavits or declarations filed in connection with the summary judgment motion. (D'Amico v. Board of Med. Exam'rs (1974) 11 Cal.3d 1, 20–22.) When there is a clear and unequivocal admission by the plaintiff in the plaintiff's deposition and the plaintiff contradicts that admission in a subsequent declaration, a judge is forced to conclude that there is no substantial evidence of the existence of a triable issue of fact. (Turley v. Familian Corp. (2017) 18 Cal.App.5th 969, 981–983.) Therefore, here, the Court disregards Lorena’s statement interpreting the language found in the 2/9/10 letter from Defendants. (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 459–460; Ex. 110 to Pls.’ Opp.)

Additionally, the Court observes that Plaintiffs acknowledge the junior lienholder’s foreclosure sale on the face of the 4AC, as noted in the Court’s original rulings on previous demurrers, which constitutes “constructive notice of the lack of any interest in the property, and therefore a lack of any basis for fraud.” (4AC ¶ 16; 11/8/17 Min. Order, p. 4–5; 8/10/17 Min. Order, p. 4.)

Based on the foregoing, the Court finds that Plaintiffs have not met their responsive burden to show that a triable issue exists as to whether Defendants deceived them into believing that they owned the subject property, to induce Plaintiffs into making payments for a loan modification. Accordingly, the motion is granted on this ground.

Defendants further assert that Plaintiffs’ Unfair Debt Collection cause of action is time-barred by the applicable statute of limitations. The statute of limitations for actions brought under the Rosenthal Act is one year from the date of the occurrence of the violation. (Civ. Code § 1788.30, subd. (f).)

Here, Defendants argue that Plaintiffs’ claim is time-barred because “Plaintiffs allege the conduct giving rise to their claim occurred in either June of 2010 (when Carrington sent its correspondence with the ‘Helping you stay in your home’ tag line) or in November 2010, when the permanent loan modification was implemented. Yet, they did not file their lawsuit until January 7, 2016 – more than six years after the latest of the dates on which allegedly offending conduct occurred.” (MSJ 17:7–11.)

Based on the foregoing, the Court finds that Defendants have satisfied their initial burden to establish a complete defense to Plaintiffs’ cause of action. The burden thus shifts to Plaintiffs to show that a triable issue of material fact exists as to whether their claim is time-barred.

In opposition, Plaintiffs argue that the statute of limitations is extended by Defendants’ continuing course of conduct.” Under the continuing violation doctrine, a plaintiff may recover for unlawful acts occurring outside the limitations period if they continued into that period. … The continuing violation doctrine requires proof that (1) the defendant's actions inside and outside the limitations period are sufficiently similar in kind; (2) those actions occurred with sufficient frequency; and (3) those actions have not acquired a degree of permanence.” (Wassmann v. South Orange County Community College District (2018) 24 Cal.App.5th 825, 850–851.)

Here, Plaintiffs assert that Defendants “repeatedly treated Lorena as owner of 680 Griswold, and repeatedly demanded payments while ‘working with Lorena to help her keep her home (Ex 110). CMS’ conduct constitutes a continuing pattern and course of conduct and is not composed of unrelated discrete acts.” (Pls.’ Opp. 7:20–22.)

As outlined above, and as Defendants observe, “Plaintiffs do not allege that Carrington told them on a continuing basis that they could save their home, nor is there evidence of such conduct.” (Defs.’ Reply 5:15–16.) Exhibit 110 to Plaintiffs’ opposition is the 2/9/10 letter from Defendants to Lorena regarding her potential eligibility for a loan modification, and Plaintiffs do not point to any supplementary evidence that Defendants repeated any representations about Plaintiffs’ ownership in the home, let alone that those representations were made within the limitations period.

Based on the foregoing, the Court finds that Plaintiffs have not met their responsive burden to show that a triable issue exists as to whether Plaintiffs’ cause of action for Unfair Debt Collection is time-barred under the applicable statute of limitations. Accordingly, the motion is granted on this ground.

[1] The Court notes that Plaintiffs have inconsistently paginated their opposition brief. The Court therefore references the page numbers in the order in which they appear in the electronic filing.