Judge: Maurice A. Leiter, Case: 20STCV17032, Date: 2022-09-30 Tentative Ruling

Case Number: 20STCV17032    Hearing Date: September 30, 2022    Dept: 54

Hearing Date: September 30, 2022

Department 54, Judge Maurice A. Leiter

Motion for Summary Judgment, or in the alternative, Motion for Summary Adjudication

Moving Party: Defendants PHH Mortgage Corp., Western Progressive, LLC, U.S. Bank National Association, and Newrez LLC

Responding Party: Plaintiffs Selah Chavet, Esmaily Fuentes, Jim Oberg, and Beth Oberg

T/R:     DEFENDANTS’ MOTION, AS A MOTION FOR JUDGMENT ON THE PLEADINGS, IS GRANTED WITH LEAVE TO AMEND.

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT IS DENIED.

DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION IS DENIED.

PLAINTIFF TO FILE AND SERVE A FIRST AMENDED COMPLAINT WITHIN 15 DAYS OF NOTICE OF RULING.

DEFENDANTS TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing

The Court considers the moving papers, opposition, and reply.

BACKGROUND

On May 20, 2020, Plaintiffs filed a complaint against Defendants, asserting causes of action for (1) violation of Civ. Code § 2923.6; (2) negligence; (3) wrongful foreclosure; and (4) UCL violations. Plaintiffs allege Defendants sold real property despite a conditional approval of Plaintiffs’ short sale application.

ANALYSIS

“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Trial judges are required “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.)

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. (CCP § 437c(p)(2).) 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.” (Id.)  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, 166.) 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.)

Defendants move for summary judgment or in the alternative summary adjudication of Plaintiffs’ causes of action.

A. Statement of Facts

The relevant facts are undisputed. Plaintiffs defaulted on their mortgage loan in 2016. Plaintiffs submitted short sale applications in 2018 that ultimately did not result in a short sale. In 2019, the original loan servicer, Ocwen, transferred the loan to PHH.

Plaintiffs submitted another short sale application on August 8, 2019 for $650,000.00. PHH informed Plaintiffs that that the short sale application had been conditionally approved by letter dated September 6, 2019.

 On September 27, 2019, PHH emailed Plaintiff’s real estate agent to say the short sale application had ultimately been rejected.

On October 2, 2019, Plaintiffs submitted a new short sale offer for $700,000.00. The same day, PHH advised Plaintiffs in an official letter that the $650,000.00 offer was rejected.

On October 8, 2019, PHH sent a letter to Plaintiffs rejecting the $700,000.00 offer, stating there was not enough time to consider the offer before the October 8, 2019 planned foreclosure sale. The property was sold at foreclosure sale that day.

B. Merits

            Defendants assert that Plaintiffs’ first cause of action for violation of Civil Code § 2923.6 fails because this section addresses the rules regarding foreclosure if a loan modification application has been submitted. Defendants emphasize that this action involves a short sale application and argue that Civil Code § 2923.6 is inapplicable.

            In opposition, Plaintiffs cite to Civil Code § 2924.11, which prevents a lender from foreclosing on a property if a foreclosure prevention alternative (that is, a short sale) has been approved in writing by all parties. Plaintiffs assert the September 6, 2019 conditional approval precluded foreclosure. In reply, Defendants assert this this provision is inapplicable because it is not cited in Plaintiffs’ complaint and because Defendants ultimately denied the application.

The Court is unpersuaded that Defendants are entitled to judgment as a matter of law. The September 6, 2019 letter conditionally approving Plaintiffs’ application states, “…we are offering an opportunity to pursue short sale and are providing a 45-day conditional Short Sale approval good through 10/25/19.” (Def. Exh. 23, p. 1, emphasis in original.) In the section titled “FREQUENTLY ASKED QUESTIONS,” the letter provides, “[i]f the Short Sale is not approved due to unacceptable sale terms (low sales price, excessive commission, etc.), a revised purchase contract with a new sales price for review may be submitted.” (Id. p. 4 emphasis in original.)

It is unclear why Plaintiffs’ property was sold on October 8, 2019, when Defendants stated the conditional approval was valid until October 25, 2019. Similarly, the letter specifically allows Plaintiffs to submit a new offer. This was plainly done within the 45-day window provided for in the letter but was not reviewed prior to sale.

Plaintiffs cited the wrong provision of the Homeowner’s Bill of Rights in the operative pleading. But the Court will not grant summary judgment on this basis and will instead treat this motion as a motion for judgment on the pleadings.

The Court of Appeal has discussed this process as follows,

The procedure for resolving a summary judgment motion presupposes that the pleadings are adequate to put in issue a cause of action or defense thereto. (See Coyne v. Krempels (1950) 36 Cal.2d 257, 262, 223 P.2d 244.) However a pleading may be defective in failing to allege an element of a cause of action or in failing to intelligibly identify a defense thereto. In such a case, the moving party need not address a missing element nor, obviously, respond to assertions which are unintelligible or make out no recognizable legal claim. The summary judgment proceeding is thereby necessarily transmuted into a test of the pleadings and the summary judgment motion into a motion for judgment on the pleadings. In these circumstances it has been said that a defendant's “motion for summary judgment necessarily includes a test of the sufficiency of the complaint and as such is in legal effect a motion for judgment on the pleadings.” (Barnett v. Delta Lines, Inc. (1982) 137 Cal.App.3d 674, 682, 187 Cal.Rptr. 219, citations omitted.) 

(FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382.)

The Court GRANTS this motion as a motion for judgment on the pleadings. The motion for summary judgment is DENIED.