Judge: Lee W. Tsao, Case: 22NWCV00753, Date: 2023-02-21 Tentative Ruling
Case Number: 22NWCV00753 Hearing Date: February 21, 2023 Dept: C
VALLADOLID, et al. v. FAY SERVICING, LLC, et al.
CASE
NO.: 22NWCV00753
HEARING:
2/21/23 @ 9:30 AM
#3
TENTATIVE
RULING
This
is a wrongful foreclosure action filed by Plaintiffs Rigoberto and Yaneth
Vallodolid. Plaintiffs allege that they
obtained a mortage loan on March 19, 2008.
(Complaint, ¶ 10.) On April 11,
2022, a Notice of Default was recorded, and on July 14, 2022, a Notice of
Trustee’s Sale was recorded. (Id., ¶¶
15-16.) On August 9, 2022, the property
was sold at a Trustee’s sale. (Id., ¶
16.) Between January – May 2022, they
submitted a complete loan modification application. (Id., ¶ 17.)
When Plaintiff received the
Notice of Trustee Sale, PLAINTIFFS called the servicer and told them they had
the money to reinstate the loan. (Id., ¶
20.) Plaintiffs wired the money by wire
on August 9, 2022 at 12:00 pm. (Id., ¶21.) Based thereon, the Complaint
asserts causes of action for:
1. Violation of CC § 2923.5
2. Violation of CC § 2924(a)(1)
3. Violation of CC § 2923.6(c)
4. Violation of CC § 2923.7
5. Violation of CC § 2924.9
6. Violation of CC § 2924.10
7. Wrongful Foreclosure
8. Interpleader Pursuant to CCP § 386, CC §§ 2924j and 2924k
9. Violation of Bus. & Prof. Code § 17200
10. Cancellation of Written Instruments, CC § 3412
VIOLATION OF CC § 2923.5: At least 30 days before recording a notice of
default, “A mortgage servicer 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 mortgage servicer shall advise the borrower that he or she has the
right to request a subsequent meeting and, if requested, the mortgage servicer
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.” (CC § 2923.5(a).)
Here, ¶ 25 alleges that a Notice of Default
was recorded, while Plaintiffs “were staying in their home… and received no
mail or messages.” Plaintiffs fail to allege
that Defendant did not contact Plaintiffs 30 days prior to the notice of
default.
Accordingly, the demurrer to the 1st
cause of action is SUSTAINED with 10 days leave to amend.
2nd
and 8th CAUSES OF ACTION
Plaintiffs
state that they will not pursue the CC § 2924(a)(1) and Interpleader
claims. Accordingly, the demurrer to the
2nd and 8th causes of action is SUSTAINED without leave
to amend.
3rd
CAUSE OF ACTION
VIOLATION OF CC § 2923.6(c): “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. 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 until any of
the following occurs: (1) The mortgage servicer makes a
written determination that the borrower is not eligible for a first lien loan
modification, and any appeal period pursuant to subdivision (d) has expired. (2) The borrower does not accept an
offered first lien loan modification within 14 days of the offer. (3) The borrower accepts a written
first lien loan modification, but defaults on, or otherwise breaches the
borrower’s obligations under, the first lien loan modification.” (CC § 2923.6(c).)
Plaintiffs
allege that Defendants violated Section 2923.6 because Plaintiffs submitted a
complete loan modification application between January – May 2022. (Complaint, ¶ 37.) On April 11,
2022, a Notice of Default was recorded, and on July 14, 2022, a Notice of
Trustee’s Sale was recorded. (Id., ¶¶
15-16.)
The
court finds the allegations are sufficient to withstand demurrer. Demurrer to the 3rd cause of
action is OVERRULED.
4TH CAUSE OF ACTION
VIOLATION OF CC § 2923.7: “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.” (CC §
2923.7(a).)
¶ 44 alleges that between January – May 2022,
Plaintiffs submitted a loan modification application, and requested the
appointment of a Single Point of Contact. ¶ 45 alleges that Defendant failed to assign a
Single Point of Contact within a reasonable time after receipt of the loan
modification application.
The
court finds the allegations are sufficient to withstand demurrer. Demurrer to the 4th cause of
action is OVERRULED.
5TH CAUSE OF ACTION
VIOLATION OF
CC § 2924.9: “Unless a borrower has
previously exhausted the first lien loan modification process offered by, or
through, his or her mortgage servicer described in Section 2923.6, 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 that includes all of the following
information: (1) That the borrower may be evaluated for a foreclosure
prevention alternative or, if applicable, foreclosure prevention
alternatives. (2) Whether an application is required to be submitted by the
borrower in order to be considered for a foreclosure prevention
alternative. (3) The means and process by which a borrower may obtain an
application for a foreclosure prevention alternative.” (CC § 2924.9(a).)
¶¶ 51-52 allege that Defendant failed to
notify Plaintiffs of all foreclosure prevention alternatives within 5 business
days after the Notice of Default was recorded.
The
court finds the allegations are sufficient to withstand demurrer. Demurrer to the 5th cause of
action is OVERRULED.
6TH CAUSE OF ACTION
VIOLATION OF CC § 2924.10: “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.” (CC § 2924.10(a).)
¶ 56 alleges that Defendant failed to provide written notice
to Plaintiffs of receipt of the loan modification application within 5 business
days of receipt.
The
court finds the allegations are sufficient to withstand demurrer. Demurrer to the 6th cause of
action is OVERRULED.
7TH and 9th CAUSES OF
ACTION
WRONGFUL FORECLOSURE:
¶ 60 alleges
that Defendant wrongfully foreclosed on the property based on CC § 2923.6(c), 2923.7, 2924.9
and 2924.10.
B&P Code § 17200: The Unfair Business Practices Act shall include “any
unlawful, unfair, or fraudulent business act or practice.” (B&P Code § 17200.)
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 California, Inc. (1993) 14 Cal.App.4th 612,
619.)
¶ 83(e) alleges that Defendant violated CC § 2923.6(c), 2923.7, 2924.9
and 2924.10.
Because the
court found that the claims in the 3rd – 6th causes of
action are adequately pled, Plaintiffs have adequately pled a claim for
wrongful foreclosure and unlawful business practices claim.
Accordingly,
demurrer to the 7th and 9th causes of action is
OVERRULED.
10th CAUSE OF ACTION
CANCELLATION OF WRITTEN INSTRUMENTS, CC §
3412: To
bring a cause of action for cancellation of a written instrument, a plaintiff
must allege facts affecting the validity and invalidity of the instrument which
is attacked. (Kroeker v. Hurlbert
(1940) 38 Cal.App.2d 261, 266; Little v. Smith (1920) 47 Cal.App. 8, 12,
15.)
“After a trustee’s deed upon sale has been recorded, a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to Section 3281,
resulting from a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by
that mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent
where the violation was not corrected and remedied prior to the recordation of
the trustee’s deed upon sale.”
¶
16 alleges that a sale occurred on August 9, 2022. Therefore, Plaintiff’s remedy is money
damages under the HOBR, not cancellation of instruments.
“A person who is subject to
service of process and whose joinder will not deprive the court of jurisdiction
over the subject matter of the action shall be joined as a party in the action
if (1) in his absence complete relief cannot be accorded among those already
parties or (2) he claims an interest relating to the subject of the action and
is so situated that the disposition of the action in his absence may (i) as a
practical matter impair or impede his ability to protect that interest or (ii)
leave any of the persons already parties subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of
his claimed interest. If he has not been so joined, the court shall order that
he be made a party.” (CCP § 389(a).)
"The
plaintiff shall name as defendants in the action the persons having adverse
claims to the title of the plaintiff against which a determination is
sought." (CCP § 762.010.)
Here,
Plaintiff admits that the property was sold on August 9, 2022 (Complaint, ¶
16), and seeks to cancel the sale. However,
Plaintiff failed to name the necessary and indispensable third party bona fide
purchaser, TRTD, LLC. (RJN, Ex. 2.)
Accordingly,
the demurrer to the 10th cause of action is SUSTAINED with 10 days
leave to amend.