Judge: Lee W. Tsao, Case: 23NWCV00378, Date: 2023-09-12 Tentative Ruling

Case Number: 23NWCV00378    Hearing Date: September 12, 2023    Dept: C

CHAVEZ v. NEW REZ, LLC

CASE NO.:  23NWCV00378

HEARING:  9/12/23

#6

TENTATIVE RULING

Defendants Newrez LLC, Shellpoint Mortgage Servicing, and JP Morgan Mortgage Acquisition Corp.’s unopposed demurrer to the Complaint is OVERRULED as to the First, Third, and Sixth causes of action, and SUSTAINED as to the Fourth, Fifth, Seventh, and Eighth causes of action with 10 days leave to amend. 

Moving Parties to give NOTICE.

Defendants Newrez LLC, Shellpoint Mortgage Servicing, and JP Morgan Mortgage Acquisition Corp demurs to the 1^st, 3^rd – 8^th causes of action on the ground that the claims fail to state facts sufficient to constitute a cause of action.

Complaint

This is a wrongful foreclosure action, asserting causes of action for:

1.      Violation of Civ. Code § 2923.5

2.      Violation of Civ. Code § 2924(a)(1)

3.      Violation of Civ. Code § 2923.6(c)

4.      Violation of Civ. Code § 2923.7

5.      Violation of Civ. Code § 2924.9

6.      Violation of Civ. Code § 2924.10

7.      Unfair Business Practices, Violation of Bus. & Prof. Code § 17200, Et Seq.

8.      Cancellation Of Written Instruments, Civ. Code § 3412

1^st CAUSE OF ACTION

VIOLATION OF CIV. CODE § 2923.5:  CC § 2923.5 requires mortgage servicers to act with “due diligence” to contact the borrower either in person or by telephone to assess their financial situation and explore foreclosure prevention options before recording a notice of default (“NOD”) against that borrower. (Civ. Code § 2923.5(a)-(b))

The declaration attached to the NOD indicates that the mortgage servicer acted with due diligence in contacting Plaintiff before recording of the NOD. (RJN Ex. C.)  The Complaint alleges Plaintiff was staying at home when the Notice of Default was issued, and Plaintiff received no mail or messages. The court determines that the 1^st cause of action is sufficiently pled. 

Accordingly, the demurrer to the 1^st cause of action is OVERRULED.

3^rd CAUSE OF ACTION

VIOLATION OF CIV. CODE § 2923.6(c):  “If a borrower submits a complete application for a first lien loan modification…a mortgage servicer… 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.” (Civ. Code § 2923.6(c)).

Plaintiff’s Mortgage Assistance Application is attached to the Complaint.  (Complaint, Ex. F.)  Defendants point out that Plaintiff failed to attach the required financial documentation.  According to Defendants, Plaintiff admits that Defendants requested further documentation in order to complete the application and implies that documents were missing. (Demurrer, p. 5; Complaint, ¶21.)  However, Plaintiff specifically alleges that he called Shellpoint on February 1, 2023 and was told they did get the missing documents.  The court determines that the 3^rd cause of action is sufficiently pled. 

Accordingly, the demurrer to the 3^rd cause of action is OVERRULED.

4^th CAUSE OF ACTION

VIOLATION OF CIV. CODE § 2923.7:  CC § 2923.7 requires assignment of a single point of contact (“SPOC”) upon request from the borrower, who is responsible for certain enumerated tasks including communications regarding foreclosure prevention alternatives. (Civ. Code § 2923.7(a)).

Plaintiff alleges that the assigned SPOC went on a two-week vacation, that Shellpoint had someone else take over the files for this period in time, and that he "did talk to the SPOC" as it related to the loan application in the period in question. (Complaint, ¶15.)  As such, Plaintiff admits that he was assign a SPOC.

Accordingly, the demurrer to the 4^th cause of action is SUSTAINED with 10 days leave to amend. 

5^th CAUSE OF ACTION

VIOLATION OF CIV. CODE § 2924.9:  Within five business days of a notice of default being recorded, a written communication be sent to the borrower that includes 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.)

¶ 51 alleges that Defendants failed to notify Plaintiff of “all foreclosure prevention alternatives” within 5 days after the Notice of Default was recorded.  However, this is not what the statute requires.

Accordingly, the demurrer to the 5^th cause of action is SUSTAINED with 10 days leave to amend. 

6^th CAUSE OF ACTION

VIOLATION OF CIV. CODE § 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. (Civ. Code § 2924.10(a).)

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. (Civ. Code § 2924.10(b)).

Plaintiff’s Mortgage Assistance Application is attached to the Complaint.  (Complaint, Ex. F.)  Defendants point out that Plaintiff failed to attach the required financial documentation.  According to Defendants, Plaintiff admits that Defendants requested further documentation in order to complete the application and implies that documents were missing. (Demurrer, p. 5; Complaint, ¶21.)  However, Plaintiff specifically alleges that he called Shellpoint on February 1, 2023 and was told they did get the missing documents.  The court determines that the 3^rd cause of action is sufficiently pled. 

Accordingly, the demurrer to the 6^th cause of action is OVERRULED.

7^th CAUSE OF ACTION

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

Standing under the UCL is established only where the plaintiff “has suffered injury in fact and has lost money or property” as a result of the alleged unfair practices.  (B&P Code section 17204.)

A borrower who defaults on a loan before the defendant’s alleged wrongful acts does not have standing to sue under Business and Professions Code section 17200 because the default caused the foreclosure proceedings, credit damage, late fees, etc., not the defendant’s conduct. (See, Jenkins v. JP Morgan Chase Bank, N.A., (2013) 216 Cal.App.4th 497, 522-523, disapproved on other grounds by Yvanova v. New Century Mortg. Corp., (2016) 62 Cal.4th 919, 929.)

Here, the Notice of Default was recorded on July 26, 2022, before any of Defendants’ wrongful acts are alleged to have occurred.  The demurrer to the 7^th cause of action is SUSTAINED with 10 days leave to amend. 

8^th CAUSE OF ACTION

CANCELLATION OF WRITTEN INSTRUMENTS, CIV. CODE § 3412: 

¶ 74 seeks to cancel the Trustee’s Deed upon Sale, but no such Deed was attached to the Complaint.  The demurrer to the 8^th cause of action is SUSTAINED with 10 days leave to amend.