Judge: Michael C. Kelley, Case: 20AVCV00674, Date: 2022-09-01 Tentative Ruling

Case Number: 20AVCV00674    Hearing Date: September 1, 2022    Dept: A15

Background

This wrongful foreclosure action was filed by Plaintiffs Melvyn Hayward and Roshunda Chappel against Defendant U.S. Bank Trust National Association, as Trustee of The Igloo Series IV Trust (“U.S. Bank” or “Defendant”) regarding the real property located at 6160 Laternia Way, Palmdale, CA 93552 (the “Property”). Defendant foreclosed on the Property on August 27, 2020 after Plaintiffs defaulted on a $308,000.00 loan that had been secured by the Property under a May 1, 2007 Deed of Trust. (Def.’s Separate Statement Nos. 1, 2, 34, 39.) Plaintiffs allege Defendant wrongfully foreclosed on and sold the Property while an eviction moratorium was in place.

Plaintiffs filed this action on September 23, 2020. They filed the operative Second Amended Complaint on June 24, 2021. They allege three causes of action for (1) wrongful foreclosure, (2) quiet title, and (3) unfair business practices.

After unsuccessfully demurring to the Second Amended Complaint, Defendant answered on September 22, 2021. (Min. Ord., dated Sept. 2, 2021.)

Defendant filed the instant Motion for Summary Judgment on June 21, 2022, but timely served Plaintiffs on June 16, 2022. Plaintiffs filed a timely Opposition and Defendant filed a timely Reply.

Analysis

Evidentiary Objections-- Code of Civil Procedure section 437c, subdivision (c) states, “In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court.” (Code Civ. Proc., § 437c, subd. (c).)

While the Court “must” rule on all evidentiary objections made in proper form at the summary judgment stage, it is permitted to focus its attention on those which are “important.” (See Code Civ. Proc., § 437c, subd. (q); see also Reid v. Google, Inc. (2010) 50 Cal.4th 512, 532 [the court need only rule on those objections to evidence that were material in the disposition of the motion for summary judgment].)

Here, Plaintiffs have objected to the entirety and to portions of Defendant’s Declaration of Robert Morgan; Morgan is an authorized agent for Federal National Mortgage Association (“Fannie Mae”). (Def. Decl. Fannie Mae Supp. Mot. Summ. Judg. ¶ 1.) Defendant has objected to portions of Plaintiff’s Declaration of Melvyn Hayward.

Motion for Summary Judgment— A party may move for summary judgment in any action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding.  (Code Civ. Proc., § 437c, subd. (a).)  To prevail on a motion for summary judgment, the evidence submitted must show there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.  (Code Civ. Proc. § 437c, subd. (c).)  

“A defendant moving for summary judgment bears the initial burden of proving there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action.” (Castellon v. U.S. Bancorp (2013) 220 Cal.App.4th 994, 997.) “The defendant has shown that the plaintiff cannot establish at least one element of the cause of action by showing that the plaintiff does not possess, and cannot reasonably obtain, needed evidence[.]” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853-854.)

“Once the defendant has made such a showing, 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 as to a defense to the cause of action.” (Castellon v. U.S. Bancorp, supra, 220 Cal.App.4th at 997.) “The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)

“A triable issue of material fact exists where ‘the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.’” (California Medical Assn. v. Aetna Health of California Inc. (2021) 63 Cal.App.5th 660, 665, quoting Aguilar v. Atlantic Richfield Co, supra, 25 Cal.4th at 850.)

“[T]hough the court may not weigh the plaintiff's evidence or inferences against the defendants' as though it were sitting as the trier of fact, it must nevertheless determine what any evidence or inference could show or imply to a reasonable trier of fact. . . . In so doing, it does not decide on any finding of its own, but simply decides what finding such a trier of fact could make for itself.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at 856.)

Here, Defendant moves for summary judgment, or in the alternative, summary adjudication, as to all three of Plaintiffs’ causes of action.

First Cause of Action for Wrongful Foreclosure

The elements of the cause of action for wrongful foreclosure are: (a) the trustee caused an illegal, fraudulent, or wilfully oppressive sale of real property under a power of sale in a deed of trust, (b) the party attacking the sale was harmed or prejudiced, and (c) the party attacking the sale has tendered the amount of the secured indebtedness, or is excused from tendering. (Miles v. Deutsche Bank Nat. Trust Co. (2015) 236 Cal.App.4th 394, 408-410.)

Here, Plaintiffs argue Defendant wrongfully sold the Property in violation of a foreclosure moratorium. Defendants argue the foreclosure was not illegal because the foreclosure moratoriums did not apply to Plaintiffs’ situation, Plaintiffs have not tendered the amount of secured indebtedness, and Plaintiffs did not incur economic damages.

COVID-19 Foreclosure Moratorium

The aforementioned COVID-19 foreclosure moratorium was codified in Title 15, section 9056 of the United States Code. This section states:

Except with respect to a vacant or abandoned property, a servicer of a Federally backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 18, 2020.

(15 U.S.C. § 9056(c)(2).) A “Federally backed mortgage loan” is defined in the statute as “any loan which is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from 1- to 4- families that is,” in relevant part, purchased or securitized by Fannie Mae. (Id., § 9056(a)(2)(G).)

While the moratorium in the CARES Act expired 60 days after March 18, 2020, the U.S. Federal Housing Finance Agency issued several extensions of the moratorium to Fannie Mae-insured mortgages; the most recent extension expired on July 30, 2021. (FHFA Extends COVID-19 Foreclosure and REO Eviction Moratoriums (June 24, 2021) Federal Housing Finance Agency < https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-COVID-19-Foreclosure-and-REO-Eviction-Moratoriums.aspx> [as of August 31, 2022].)

Here, the parties do not dispute that Defendant foreclosed on the Property on August 27, 2020—during the foreclosure moratorium. (Def.’s Separate Statement No. 39.) While Plaintiffs allege that the loan was backed, purchased, and securitized by Fannie Mae at the time of the foreclosure, Defendant argues Plaintiffs’ loan was not federally backed, and therefore ineligible for relief under the foreclosure moratorium. (Second Am. Compl. ¶ 13.) To support its argument, Defendant submits the following proposed facts:

On May 1, 2007, Fannie Mae acquired Plaintiffs’ loan from its originating lender—Countrywide Mortgage Ventures, LLC—before subsequently selling the loan and all beneficial interest under the Deed of Trust to Defendant. (Def.’s Separate Statement Nos. 1, 3, 11.) Defendant asserts that, after this sale, Fannie Mae at no time securitized or guaranteed the loan. (Id. at No. 13.)

Defendant supports these proposed facts with the Morgan Declaration, which Plaintiffs unsuccessfully objected to; the declaration of Defendant’s loan servicing agent’s corporate counsel; and a Notice of Sale indicating the loan was sold to “LSF11 Master Participation Trust.” (Def.’s Separate Statement No. 11.)

Plaintiffs attempt to dispute this fact by arguing that the Notice of Sale does not indicate whom the loan was purchased from—i.e., they argue that Defendant’s evidence does not support the proposed fact.

However, the Court finds that the two declarations sufficiently support the fact that Fannie Mae sold the loan and at no point thereafter securitized or guaranteed said loan. Furthermore, the fact that the Notice of Sale did not indicate whom the loan was purchased from does not negate the crux of Defendant’s proposed facts—that Fannie Mae no longer owned it. The Notice of Sale makes clear that LSF11 Master Participation Trust was the new owner.

Therefore, the Court treats these facts as undisputed. Under these undisputed facts, Defendant has made a prima facie showing that Plaintiffs’ loan was not backed, purchased, or securitized by Fannie Mae, which means it was not a Federally backed mortgage; and if the loan was not Federally backed, the foreclosure moratorium did not apply. If the foreclosure moratorium did not apply, then Plaintiffs’ claim for wrongful foreclosure based on violation of the moratorium must fail.

Upon shifting the burden to Plaintiffs, they do not produce any controverting evidence. Therefore, the Court finds there is no triable issue of material fact as to whether Plaintiffs’ loan was protected by the foreclosure moratorium. As such, the Court must find that Defendant did not wrongfully foreclose on the Property. Defendant is therefore entitled to summary adjudication of the First Cause of Action.

Because it finds Plaintiffs’ loan did not qualify for protection under the foreclosure moratorium, the Court does not address Plaintiffs’ opposing argument that they did not need to tender the full amount of indebtedness. The Court declines to address this because Plaintiffs’ argument—combined with the undisputed fact that Plaintiffs “have never tendered the unpaid debt due under the loan”--does not negate the fact that the foreclosure was not illegal. (Def.’s Separate Statement No. 36.)

Second Cause of Action for Quiet Title

An action for quiet title is brought “to establish title against adverse claims to real or personal property or any interest therein.” (Code Civ. Proc., § 760.020, subd. (a).)

Here, Plaintiffs argue that they hold title to the Property, and that Defendant does not hold title, because Defendant’s claim of title is based on a wrongful foreclosure from August 27, 2020. (Second Am. Compl. ¶¶ 28, 30.)

As the Court has already held that this foreclosure was not illegal, Plaintiffs’ claim for quiet title also fails. Defendant is therefore entitled to summary adjudication of the Second Cause of Action.

Third Cause of Action for Unfair Business Practices

Business and Professions Code section 17200 describes unfair competition as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bus. & Prof. Code, § 17200.) 

“California courts have consistently interpreted such language broadly. An ‘unlawful business activity’ includes ‘“anything that can properly be called a business practice and that at the same time is forbidden by law.”’ [Citation.] The Legislature ‘intended. . . to permit tribunals to enjoin on-going wrongful business conduct in whatever context such activity might occur.’ [Citation.]” (People v. McKale (1979) 25 Cal.3d 626, 632.) Our Supreme Court has held that ongoing conduct requires “a pattern of behavior” or “a course of conduct.” (State of California ex rel. Van de Kamp v. Texaco, Inc. (1988) 46 Cal.3d 1147, 1170.)

Here, Plaintiffs also based their Third Cause of Action for unfair business practices on the alleged wrongful foreclosure. (Second Am. Compl. ¶ 35.) However, as the Court has found that the foreclosure was not wrongful, Plaintiffs’ unfair business practices claim similarly fails. Therefore, Defendant is entitled to summary adjudication of the Third Cause of Action.

Conclusion