Judge: Holly J. Fujie, Case: 21STCV40433, Date: 2022-09-26 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Case Number: 21STCV40433    Hearing Date: September 26, 2022    Dept: 56

CASE NO.: 21STCV40433

[TENTATIVE] ORDER RE: DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS

DANEE NICHOLS,

Plaintiff,

vs.

BANK OF AMERICA, N.A.; NATIONSTAR MORTGAGE, LLC; BARRET DAFFIN FRAPPIER TREDER & WEISS, LLP; and DOES 1-10, inclusive,

Defendants.

Date: September 26, 2022
Time: 8:30 a.m.
Dept. 56

MOVING PARTY:

Defendant NATIONSTAR MORTGAGE d/b/a MR. COOPER

(Sued as NATIONSTAR MORTGAGE, LLC)

RESPONDING PARTY:

Plaintiff DANEE NICHOLS

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

This action arises out of the alleged wrongful foreclosure sale of real property (the “Property”). The currently operative first amended complaint (the “FAC”) alleges: (1) violation of Civil Code section 2923.5; (2) violation of Civil Code section 2924, subdivision (a)(1); (3) unfair business practices in violation of Business and Professions Code section 17200 et seq.; (4) cancellation of written instruments under Civil Code section 3412; and (5) wrongful foreclosure

JUDICIAL NOTICE

Defendant has requested the Court take judicial notice of eight documents recorded in the Official Records of the County of Los Angeles. (See RJN 2:2-18.) The Court GRANTS defendant’s requests in their entirety.

In taking notice of recorded documents, the court takes notice of “their existence, recordation, and date of recordation” (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 437), without taking notice of the facts recited therein.

MEET AND CONFER

The party moving for judgment on the pleadings shall, before filing, confer with the responding party in person or by telephone for the purpose of determining if an agreement can be reached that resolves the claims to made in the motion. (Code Civ. Proc. § 439, subd. (a).) The moving party shall then file and serve, along with the motion for judgment on the pleadings, a declaration stating either (a) the means by which the parties conferred, and the fact that they did not reach agreement, or (b) that the responding party failed to respond to or participate in good faith in meet and confer efforts. (Id. subd. (a)(3).)

Jared D. Bissell, counsel of record for the defendant, filed a declaration substantially satisfying these requirements, and plaintiff has not objected that insufficient meet and confer efforts took place. Therefore, the requirements of Code of Civil Procedure section 439 are satisfied

DISCUSSION

A defendant may move for judgment on the pleadings when the “complaint does not state facts sufficient to constitute a cause of action against the defendant.” (Code Civ. Proc. § 438, subds. (b)(1) and (c)(1)(B)(ii).) “A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. Presentation of extrinsic evidence is … not proper on a motion for judgment on the pleadings.” (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999, citations omitted.)

The standard for ruling on a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer: that under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law. (Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216.) Matters which are subject to mandatory judicial notice may be treated as part of the complaint and may be considered without notice to the parties; matters which are subject to permissive judicial notice must be specified in the notice of motion, the supporting points and authorities, or as the court otherwise permits. (Ibid., at fn. 5.) The court “must accept as true all material facts properly pleaded, but does not consider conclusions of law or fact, opinions, speculation, or allegations contrary to law or facts that are judicially noticed.” (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1219-1220, citing Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.)

Upon granting a motion for judgment on the pleadings, the court should also grant leave to amend the deficient complaint as long as there is a reasonable possibility its deficiencies might be cured by amendment. (Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1402.) The burden of demonstrating the possibility that the deficiencies might be cured, however, rests squarely on the plaintiff. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Plaintiff’s First Cause of Action: Violation of Civil Code section 2923.5

The Legislature intended Civil Code section 2923.5 to give defaulting borrowers a last opportunity to take advantage of “available loss mitigation options, if any, offered by or through the borrower's mortgage servicer, such as loan modifications or other alternatives to foreclosure”, before mortgage servicers take the final step of non-judicial foreclosure. (Civ. Code § 2923.4.) Section 2923.5 specifically requires “[a] mortgage servicer [to] contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure” before the servicer records a Notice of Default. (Id. § 2923.5, subd. (a)(2).)

A borrower enjoys few remedies, however, in the event a servicer violates section 2923.5. While section 2923.5 does establish a private right of action in such circumstances, the only available relief is postponement of an imminent foreclosure while a servicer complies with section 2923.5. (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 214.) Section 2923.5 by itself does not create a vehicle for a borrower to obtain damages or avoid a foreclosure sale that has already occurred. (Ibid.)

Plaintiff alleges in the FAC that “on August 12, 2021, a Notice of Trustee’s Sale [for the Property] was recorded …[, t]he sale date was set for October 7, 2021, and the Subject Property was sold on that date.” (Compl. ¶ 14.)

Because a foreclosure sale has already occurred, no relief is available to plaintiff under Civil Code section 2923.4

The Court GRANTS defendant’s motion as to plaintiff’s first cause of action WITHOUT leave for plaintiff to further amend her complaint.

Plaintiff’s Second Cause of Action: Violation of Civil Code section 2924

Plaintiff’s second cause of action rests solely on her allegation that “the purported Trustee Barret, Daffin, Frappier, Treder & Weiss, LLP (BDFTW) failed to record a Substitution of Trustee (SOT) with the Los Angeles County Recorder’s Office in violation of Civ. Code § 2934a(a)(1).” (Compl. ¶ 26.)

The Court has taken judicial notice of official records numbered 20151456421 and 20160873289, both entitled “Substitution of Trustee,” naming BDFWT as trustee on November 18, 2015, and July 21, 2016, respectively. A court taking judicial notice of an official record takes notice “of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document’s authenticity.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265, disapproved on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919.) “A court may take judicial notice of something that cannot reasonably be controverted, even if it negates an express allegation of the pleading.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.)

Plaintiff’s conclusory contention in the complaint does not raise a genuine dispute regarding the authenticity of the documents noted above. Therefore, having taken judicial notice of those documents, the court accepts as true the fact that they were recorded. This fact negates all allegations in support of plaintiff’s second cause of action.

The Court GRANTS defendant’s motion as to plaintiff’s second cause of action WITHOUT leave for plaintiff to further amend her complaint.

Plaintiff’s Third Cause of Action: Unfair Business Practices

Plaintiff rests her third cause of action, for unfair business practices under Business and Professions Code section 17200 et seq. (the Unfair Competition Law or “UCL”), on allegations that defendant’s transfer of the Deed of Trust was unlawful, and that “these acts and more are unlawful and unfair conduct….” (Compl. ¶ 34.) She also alleges “the information provided to [her] was certainly misleading and not consistent as to the status of the loan modification and what she was supposed to do to satisfy the lender’s demands.” (Id. ¶ 37.) Plaintiff’s first allegations are unclear and conclusory. Her second allegations are also general and somewhat confusing. Plaintiff’s case seems to rely on the premise that she was provided no notice, or virtually no notice, of the status of her loan. Her allegation in paragraph 37, however, suggests she communicated with defendant, but was somehow misled. Such general, and perhaps internally inconsistent, allegations cannot support any cause of action.

An action under the UCL must allege behavior that is unlawful, unfair, or fraudulent. (Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 938.) The “unlawful” prong is derivative of other claims; it cannot be sustained without allegations that a defendant has violated some other law. (Krantz v. BT Visual Image, LLC (2001) 89 Cal.App.4th 164, 178.) “Unfair” conduct may be actionable apart from a standalone violation of law, but it must violate public policy in some manner nonetheless. (Camacho v. Auto Club of Southern California (2006) 142 Cal.App.4th 1394, 1403, citing Barquis v. Merchants Collection Association (1972) 7 Cal.3d 94, 112.) Fraudulent acts, though they need not satisfy the heightened pleading standards for tortious fraud generally, must nonetheless “state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

Plaintiff’s allegations satisfy none of these standards. As detailed elsewhere in the Court’s ruling, plaintiff has not sufficiently alleged facts constituting any violation of law. Similarly, her general allegations do not tie any specific actions by defendant to any particular public policy concern. Plaintiff’s general, conclusory allegations also do not state allegations with reasonable particularity; she has offered few specific facts in support of the causes of action she claims.

Plaintiff’s opposition raises, for the first time, various allegations of “negligence” on the part of the defendant, and specific allegations that might, if amended, support claims for unfair or fraudulent acts. (Opp. at pp. 5-7.) She has raised these allegations in the context of wrongful foreclosure, where they are irrelevant; they could, however, support some degree to which public policy has been violated. She also newly alleges defendant “fail[ed] to properly review [her] reinstatement application” (Id. 7:9-11) and “ma[de her] believe [her] application would be reviewed thoroughly, correctly, and fast.” (Id. 6:22-25.) This is the first time plaintiff raises any allegations she applied for reinstatement or had direct communication with defendant regarding the state of her loan. While these new allegations do nothing to save her FAC from dismissal, they could raise a reasonable possibility that defendant engaged in unfair or fraudulent behavior that supports a UCL cause of action.

Plaintiff’s complaint suffers from an additional, essential defect, however. A claim under the UCL, like any other cause of action, requires allegations that establish causation and harm (Kwikset Corporation v. Superior Court (2011) 51 Cal.4th 310, 326.) Where a plaintiff alleges unfair business practices in connection with a foreclosure that occurred after a plaintiff has already defaulted on her loan, the plaintiff cannot satisfy the element of causation. (Jenkins v. JPMorgan Chase Bank (2013) 216 Cal.App.4th 497, 523-523, disapproved on other grounds in Yvanova v. New Century Mortgage Corporation (2016) 62 Cal.4th 919 [plaintiff may have standing where transfer of underlying deed of trust is void].) Plaintiff has effectively conceded in her opposition that the wrongs she claims relate to her “reinstatement application”, i.e., the attempts she made to rehabilitate the loan after default. For this reason, plaintiff’s claim is incapable of amendment under Jenkins.

The Court GRANTS defendant’s motion as to plaintiff’s third cause of action WITHOUT leave for plaintiff to amend her complaint.

Plaintiff’s Fourth Cause of Action: Cancellation of Written Instruments

“The purchaser at a foreclosure sale takes title by a trustee's deed. If the trustee's deed recites that all statutory notice requirements and procedures required by law for the conduct of the foreclosure have been satisfied, a rebuttable presumption arises that the sale has been conducted regularly and properly; this presumption is conclusive as to a bona fide purchaser. [Citation.]” (Moeller v. Lien (1994) 25 Cal.App.4th 822, 830, citing Homestead Savings v. Darmiento (1991) 230 Cal.App.3d 424, 431.) “A properly conducted nonjudicial foreclosure sale constitutes a final adjudication of the rights of the borrower and lender.” (Ibid., citing Smith v. Allen (1968) 68 Cal.2d 93, 96.)

As noted above, plaintiff alleged in her complaint that the property was sold on October 7, 2021. (Compl. ¶ 14.) The Court has also taken judicial notice of the Trustee Deed Upon Sale dated November 8, 2011, Official Record number 20211665056, which contains the proper recitations. Plaintiff has offered no allegations of irregularity in the sale itself in her complaint, nor has she offered any argument in her opposition that would justify cancelling the deed as to an innocent third party.

The Court GRANTS defendant’s motion as to plaintiff’s fourth cause of action WITHOUT leave to further amend her complaint.

Plaintiff’s Fifth Cause of Action: Wrongful Foreclosure

A suit in equity is the traditional method by which a nonjudicial foreclosure sale is challenged. (Anderson v. Heart Federal Savings & Loan Association (1989) 208 Cal.App.3d 202, 209-210.) The party seeking to set aside the sale has the burden of pleading and proof at trial of improper procedure and consequent prejudice. (Id. at 210.) “Case law instructs that the elements of an equitable cause of action to set aside a foreclosure sale are: (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. [Citations.]” (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104.)

“It is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties.” (Bank of America National Trust & Savings Association v. Reidy (1940) 15 Cal.2d 243, 248.) “[A]n action to set aside a trustee's sale for irregularities in sale notice or procedure should [also] be accompanied by an offer to pay the full amount of the debt for which the property was security.” (Arnolds Management Corp. v. Eischen, (1984) 158 Cal.App.3d 575, 578.) “This rule, traditionally applied to trustors, is based upon the equitable maxim that a court of equity will not order a useless act performed.” (FPCI RE-HAB 01 v. E & G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1021, citing Arnolds, supra, at pp. 578-589.) “[I]n order to maintain any cause of action for irregularity in the sale procedure [Citation],” a trustor is “required to allege tender of the amount of [the] secured indebtness.” (Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109.)

Plaintiff has failed to allege any facts supporting tender of the amount of the secured indebtness. Therefore, plaintiff has not stated facts sufficient to state a cause of action. 

Defendant’s motion dwells at length on the importance of the tender rule. Plaintiff nonetheless did not attempt to demonstrate in her opposition that she had attempted to tender, or that she should be relieved from the tender rule. In fact, plaintiff alleged in the opposition that she “was continuously being affected by financial hardship and, as such, sought assistance from [defendant] with the intent of reinstating her loan delinquency.” (Opp. 2:20-22.) This new fact in the opposition weakens plaintiff’s case for amendment, as it suggests plaintiff could not tender the full amount of the indebtedness.

For the foregoing reasons, the Court GRANTS defendant’s motion as to plaintiff’s fifth cause of action WITHOUT leave to further amend her complaint.

RULING

The Court GRANTS defendant’s motion as to all plaintiff’s causes of action and dismisses plaintiff’s complaint in its entirety WITHOUT leave to further amend.

Moving Party is ordered to give notice of this ruling.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 26th day of September 2022.

__________________________

Hon. Holly J. Fujie
Judge of the Superior Court