Judge: Maurice A. Leiter, Case: 20STCV17032, Date: 2023-03-17 Tentative Ruling

Case Number: 20STCV17032    Hearing Date: March 17, 2023    Dept: 54

Hearing Date: March 17, 2023

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 FOR SUMMARY JUDGMENT IS DENIED.

DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION IS DENIED.

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.

On September 30, 2022, the Court denied Defendants’ motion for summary judgment, but sua sponte granted the motion as a motion for judgment on the pleadings. Plaintiffs filed a first amended complaint for (1) violation of Civ. Code § 2924.11; (2) promissory estoppel; (3) wrongful foreclosure; and (4) UCL violations on October 24, 2022.

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

These are the relevant, undisputed facts: 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. By letter dated September 6, 2019, PHH informed Plaintiffs that the short sale application had been conditionally approved.

 On September 27, 2019, PHH emailed Plaintiff’s real estate agent to say the short sale application ultimately had 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 § 2924.11, which prevents a lender from foreclosing on a property if a foreclosure prevention alternative (such as a short sale) has been approved in writing, fails because no prevention alternative had been agreed to by all parties. Plaintiffs assert the September 6, 2019 conditional approval precluded foreclosure. Defendants assert that the conditional approval is not an approval in writing.

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.)

As stated in the Court’s previous ruling on Defendants’ motion for summary judgment, 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 allowed 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 the sale. Defendants assert Plaintiffs could not have reasonably relied on the letter because no one told Plaintiffs the short sale would not go forward on October 8, 2019. This argument is nonsensical; it would allow Defendants to promise whatever they wanted and never perform on that promise.

Defendants have not established as a matter of law that the conditional Short Sale approval good through October 25, 2019 was not a “foreclosure prevention alternative.” As a result, Defendants have not shown that Plaintiffs cannot maintain a claim for violation of Civ. Code § 2924.11. Defendants’ failure to comply with the terms of the September 6, 2019 letter also creates triable issues of fact as to promissory estoppel, wrongful foreclosure and UCL violations.

Defendant’s motion is DENIED.