Judge: Kenneth J. Medel, Case: 37-2023-00036469-CU-OR-CTL, Date: 2024-03-29 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - March 28, 2024

03/29/2024  09:30:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

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Civil - Unlimited  Other Real Property Demurrer / Motion to Strike 37-2023-00036469-CU-OR-CTL HALLER VS NATIONSTAR MORTGAGE LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 09/25/2023

Defendants' Demurrer to Plaintiff's Complaint is SUSTAINED. The Court will hear as to whether leave to amend should be granted.

Based on the facts pled and the facts of which the Court can take judicial notice, plaintiff obtained a loan secured by real property in March, 2026. The Deed of Trust, evidencing the security interest in her property was recorded on March 30, 2006 in the official records of San Diego County. (RJN, Ex. 1) Countrywide Home Loans was the original lender, and MERS was the nominee for the beneficiary and its successors and assigns. (Id.) Plaintiff obtained a second loan two months later. That Deed of Trust and Assignment of Rents was recorded on May 30, 2006. (RJN, Ex. 2). On May 31, 2011, MERS assigned all beneficial interest under the Deed of Trust to BAC Home Loans Servicing, LP. (RJN, Ex. 3) By that point, the Loan was in Default, and BAC Home Loans Servicing recorded a Notice of Default on January 20, 2012, stating that the loan was due for the February 1, 2009 payment. (RJN, Ex. 4) On July 20, 2012, the beneficial interest under the Loan was assigned to Bank of America, N.A. BAC Home Loans Servicing's successor by merger. (RJN, Ex. 5) On September 23, 2015, the beneficial interest under the Loan was assigned to U.S. Bank National Association, as Trustee, Successor In Interest to Bank of America, National Association, as Trust, Mutual Mortgage Pass-Through CERTIFICATES WMALT Series 2006-AR4 Trust. (RJN, Ex. 6) U.S. Bank as Trustee is a named Defendant in this action. On October 12, 2015, Barrett Daffin Frappier Treder & Weiss, LLP was substituted as the Trustee under the Deed of Trust. (RJN, Ex. 7). On March 10, 2016 a Second Notice of Default was recorded. (RJN, Ex. 8). At that point, the Loan was still due for the February 1, 2009 payment. (Id.) In April 2018, that Notice of Default was rescinded. (RJN, Ex. 9) In November 2019, Affinia Default Services, LLC was substituted as the Trustee under the Deed of Trust. (RJN, Ex. 10) On November 12, 2019, Affinia Default Services caused a Third Notice of Default to be recorded. (RJN, Ex. 11) At that time, the Loan was due for the December 1, 2018 payment. (Id.) The Declaration of Compliance attached to the Notice of Default stated that the loan servicer had 'tried with due diligence to contact the borrower' to discuss options to avoid foreclosure. (Id.) Notices of Trustee's Sales were recorded on February 20, 2020, August 25, 2021, September 1, 2021, and September 20, 2022. (RJN, Exs. 12, 13, 14, and 15).

To date no foreclosure sale has been conducted.

Plaintiff filed a Complaint alleging six causes of action: 1. VIOLATION OF CIV. CODE § 2923.5; 2.

VIOLATION OF CIV. CODE § 2924(a)(1); 3. VIOLATION OF CIV. CODE § 2924.9; 4. NEGLIGENCE; 5.

UNFAIR BUSINESS PRACTICES, VIOLATION OF BUS. & PROF. CODE § 17200, ET SEQ.; 6.

CANCELLATION OF WRITTEN INSTRUMENTS, CIV.CODE § 3412 - Plaintiff's Claim for Violation of Civil Code Section 2923.5 California Civil Code section 2923.5(a) provides, 'A mortgage servicer, mortgagee, trustee, beneficiary, Calendar No.: Event ID:  TENTATIVE RULINGS

3029232  40 CASE NUMBER: CASE TITLE:  HALLER VS NATIONSTAR MORTGAGE LLC [IMAGED]  37-2023-00036469-CU-OR-CTL or authorized agent shall not record a notice of default' until thirty days after contact is made to 'assess the borrower's financial situation and explore options for the borrower to avoid foreclosure' or thirty days after certain due diligence requirements are satisfied. Section 2923.5(a) forms part of the California Homeowner Bill of Rights ('HBOR').

Pursuant to California Civil Code section 2924.12(a)(1), Plaintiff is limited to injunctive relief for a material violation of Section 2923.5(a) where 'a trustee's deed upon sale has not been recorded.' To obtain pre-foreclosure relief for violation of Section 2923.5(a), the violation must be material. See Cal. Civ. Code § 2924.12(a)(1)); Morris v. JPMorgan Chase Bank, N.A., 78 Cal. App. 5th 279, 295-97 (2022) ('[HBOR] also limits liability-for injunctive relief prior to foreclosure, and for damages following foreclosure-to 'material violation' of listed provisions.'). 'A material violation is one that affected the borrower's loan obligations, disrupted the borrower's loan modification process, or otherwise harmed the borrower.' Billesbach v. Specialized Loan Servicing LLC, 63 Cal. App. 5th 830, 837 (2021).

Here, no trustee's deed upon sale has been recorded. See generally, RJN. Therefore, Plaintiff is limited to pre-foreclosure injunctive relief and must establish a material violation. However, Plaintiff does not allege how any failure to contact her pursuant to Section 2923.5(a) affected her obligations on the Loan, or the modification process. See Compl. ¶¶ 10-25. She only implies these contacts did not occur because she 'received no mail or messages,' in violation of the statute. Meanwhile, Plaintiff admits to submitting an application to Nationstar in June 2023, more than three years after the Notice of Default was recorded in November 2019. Compl. ¶¶ 14-16. Plaintiff attaches a loan modification application to her Complaint as Compl. Ex. G. Plaintiff thereby availed herself of other options to avoid foreclosure and had opportunities to speak with representatives of Nationstar.

The filing of a declaration of the type attached to the NOD in this case creates a rebuttable presumption that can only be refuted by facts-not conclusory allegations. Maguca v. Aurora Loan Servs., (C.D. Cal. Oct. 28, 2009) 2009 U.S. Dist. LEXIS 104251, at * 5-6 (taking judicial notice of notice of default and declaration, and dismissing claim under Section 2923.5, holding that '[t]he claim fails because the allegations in the FAC, which the Court notes are conclusory, are contradicted by the notice of default' attaching the required declaration); Ortiz v. Accredited Home Lenders, Inc., (S.D. Cal. 2009) 639 F.

Supp. 2d 1159, 1166 (claim under Section 2923.5 dismissed where declaration of compliance accompanied the Notice of Trustee's Sale attached to the complaint); Gentsch v. Ownit Mortg. Solutions, Inc., (E.D. Cal. May 14, 2009) No. 09-0649, 2009 U.S. Dist. LEXIS 45163, at *16 (claim under Section 2923.5 dismissed where declaration of compliance accompanied the Notice of Trustee's Sale attached to the complaint). Here, Plaintiff's merely alleges that she 'received no mail or messages.' Without more, this allegation does not overcome the presumption of compliance as stated in the Declaration and the claim fails.

- Civil Code Section 2924(a)(1).

Plaintiff's Opposition states that 'Plaintiff will cease to pursue causes of action for violation of California Civil Code section 2924(a)(1).' (Opposition, pg. 1) Plaintiff concedes that the claim lacks merit because, to the extent Plaintiff alleges Affinia Default Services, LLC ('Affinia') lacked authority to record foreclosure notices with respect to the Deed of Trust, this allegation is belied by a 'Substitution of Trustee' lawfully executed on October 29, 2019 and recorded November 8, 2019. RJN, Ex. 10; Yvanova v. New Century Mortg. Corp., 62 Cal. 4th 919, 919 n.1 (2016) (taking judicial notice of substitution of trustee). The Substitution of Trustee substituted Affinia as trustee. Id. Ex. 10. The subsequent foreclosure notices were therefore recorded by a lawfully substituted trustee. Compl. ¶ 15, Exs. E, F; RJN, Exs. 11-15. In addition, as set forth below, Plaintiff has not alleged to have tendered the indebtedness secured by the Deed of Trust.

- Violation of Civil Code 2924.9.

Section 2924.9(a) provides, 'within five business days after recording a notice of default pursuant to Section 2924, a mortgage servicer that offers one or more foreclosure prevention alternatives shall send a written communication to the borrower...' Here, Plaintiff alleges Defendants 'failed to notify PLAINTIFF of all foreclosure prevention alternatives within 5 business days after Notice of Default recorded, as required by Civ.Code §2924.9.' Compl. ¶ 41.

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3029232  40 CASE NUMBER: CASE TITLE:  HALLER VS NATIONSTAR MORTGAGE LLC [IMAGED]  37-2023-00036469-CU-OR-CTL Plaintiff must show the violation must be material to obtain pre-foreclosure relief. See Cal. Civ. Code § 2924.12(a)(1)); Morris, 78 Cal. App. 5th at 295. Plaintiff admits to submitting an application to Nationstar in June 2023 after the Notice of Default was recorded in November 2019. Compl. ¶¶ 14, 16. Plaintiff thereby availed herself of foreclosure prevention alternatives and had multiple opportunities to discuss the Loan with Nationstar. As such, Plaintiff simply cannot show how an alleged failure to provide foreclosure alternatives within the five-day period prevented her from applying for a modification.

- Negligence To succeed in a negligence action, the plaintiff must show that (1) the defendant owed the plaintiff a legal duty, (2) the defendant breached the duty, and (3) the breach proximately or legally caused (4) the plaintiff's damages or injuries.' Thomas v. Stenberg, 206 Cal. App. 4th 654, 662 (2012). Here, Plaintiff alleges Defendants 'breached its duty of ordinary care and good faith' when it violated various sections of HBOR and TILA. Compl. ¶¶ 45. California courts have long held that no duty of care is owed to a borrower where an institution's involvement in the loan transaction 'does not exceed the scope of its conventional role as a mere lender of money.' Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal. App. 3d 1089, 1096 (1991). Courts have explained that a loan transaction is at arms-length and that 'a residential lender owes [no] common law duty of care to offer, consider, or approve a loan modification, or to explore and offer foreclosure alternatives.' Lueras v. BAC Home Loans Servicing, LP, 221 Cal. App. 4th 49, 67 (2013); see Oaks Mgmt. Corp. v. Superior Court, 145 Cal. App. 4th 453, 466 (2006). In a recent decision involving a loan modification review, the California Supreme Court, after thoroughly analyzing recent authority concerning the economic loss rule, reviewing a contrary line of cases, and surveying the law across the country, sided with Lueras and held that 'a lender owes no tort duty sounding in general negligence principles to 'process, review and respond carefully and completely to' the borrower's application.' Sheen v. Wells Fargo Bank, N.A., 12 Cal. 5th 905, 948 (2022), reh'g denied (June 1, 2022).

Here, Plaintiff's purported damages are pure economic losses, i.e., 'financial harm unaccompanied by physical or property damage.' Id. at 922. Plaintiff alleges Defendants' negligence caused 'additional and unnecessary late penalties' and 'higher arrears that is no longer affordable.' Compl. ¶ 48. Because Plaintiff alleges only economic losses for her negligence claim, he cannot establish 'affirmative statutory duties extrinsic to loan modification.' Id. ¶ 46.

- B&P 17200 Cal. Bus. & Prof. Code § 17200 et seq. ('UCL'), requires the allegation of particular facts showing ongoing unlawful, unfair, or fraudulent business acts on the part of the defendant. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1143 (2003). Furthermore, '[a] plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.' Khoury v. Maly's of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993).

Business & Professions Code section 17204 restricts private standing to bring a UCL claim to 'a person who has suffered injury in fact and has lost money or property as a result of unfair competition.' 'To satisfy the narrower standing requirements imposed by Prop. 64, a party must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.' Kwikset Corp. v. Super. Ct., 51 Cal. 4th 310, 322 (2011).

A plaintiff fails to satisfy the causation prong of the statute if he or she would have suffered 'the same harm whether or not a defendant complied with the law.' Daro v. Super. Ct.,151 Cal. App. 4th 109, 1099 (2007). In the context of foreclosure cases, a plaintiff lacks standing to bring a UCL cause of action when they default on the loan prior to any alleged unfair business practices. Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 523 (2013) (disapp'd of on other grounds by Yvanova, 62 Cal. 4th 919); Cornejo v. Ocwen Loan Serv., LLC, 151 F. Supp. 3d 1102, 1118 (E.D. Cal. 2015); Graham v. Bank of Am., N.A., 226 Cal. App. 4th 594, 614 (2014). When a borrower's 'home was subject to nonjudicial foreclosure because of [the borrower's] default on her loan, which occurred before Defendants' alleged wrongful acts, [the borrower] cannot assert the impending foreclosure of her home (i.e., her alleged economic injury) was caused by [the servicer's] wrongful actions.' Jenkins, 216 Cal. App. 4th at 523.

Therefore, since the borrower 'cannot show any of the alleged violations have a causal link to her economic injury,' the borrower lacks standing to assert her claim based on the trustee's sale of the subject property. Id. at 523-524.

- Cancellation of Written Instruments Calendar No.: Event ID:  TENTATIVE RULINGS

3029232  40 CASE NUMBER: CASE TITLE:  HALLER VS NATIONSTAR MORTGAGE LLC [IMAGED]  37-2023-00036469-CU-OR-CTL To state a claim for cancellation, a plaintiff must allege: (i) reasonable apprehension that the instrument left standing might cause serious injury to the plaintiff; (ii) the instrument is valid on its face; (iii) the instrument is void or voidable; (iv) the instrument existed or under the defendant's possession and control when the action was filed; and (v) if the instrument is voidable rather than void, that the plaintiff acted promptly to rescind. Cal. Civ. Code §§ 3412, 3413; Hironymous v. Hiatt, 52 Cal. App. 727, 731 (1921). Plaintiff fails to allege any fact to satisfy either requirement. Plaintiff alleges the Notice of Default and Notice of Trustee's Sale 'are voidable or void ab initio.' Compl. ¶ 64. First, Plaintiff cannot establish these documents are void or voidable.

Further, like a wrongful foreclosure claim, '[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.' Karlsen v. American Sav.

& Loan Assn., 15 Cal. App. 3d 112, 117 (1971). Plaintiff has not alleged, nor can she allege, to have tendered the indebtedness secured by the Deed of Trust. This lack of tender is fatal to her cancellation of instruments claim.

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