Judge Peter A. Hernandez, Case Number: 22STCV29109, Date: 2025-04-18 Tentative Ruling

1. Plaintiff Haverstock Bly, LLC’s Motion for Summary Adjudication is DENIED.

2. Defendants Newrez, LLC and The Bank of New York Mellon’s Motion for Summary Judgment is GRANTED.

On September 7, 2022, Plaintiff Haverstock BLY, LLC (“Plaintiff”) filed a complaint against Defendants Newrez, LLC, The Bank of New York Mellon, and ZBS Law, LLP (“Defendants”) on the following causes of action:

On December 8, 2022, Plaintiff filed a First Amended Complaint (“FAC”) against Defendants alleging causes of action for:

On May 5, 2023, the court overruled Defendants’ Demurrer to Plaintiff’s FAC and granted Plaintiff’s Motion for Leave to File a Second Amended Complaint.

On May 17, 2023, Plaintiff filed a Second Amended Complaint (“SAC”) against Defendants alleging causes of action for:

On June 21, 2023, Defendants Newrez, LLC and The Bank of New York Mellon filed an answer to Plaintiff’s SAC.

On May 10, 2024, Plaintiff filed this Motion for Summary Adjudication. On July 15, 2024, Defendant Newrez, LLC filed an opposition. On July 24, 2024, Plaintiff filed a reply.

On July 3, 2024, Defendants Newrez, LLC and The Bank of New York Mellon (“Moving Defendants”) filed this Motion for Summary Judgment. On July 9, 2024, Moving Defendants filed an Amended Motion for Summary Judgment, or in the alternative, Summary Adjudication.[1] On September 10, 2024, Plaintiff filed an opposition. On September 20, 2024, Moving Defendants filed a reply.

“A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding. The motion may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct.” (Code Civ. Proc., § 437c, subd. (1)(a).)

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of fact and that he is entitled to judgment as a matter of law. That is because of the general principle that a party who seeks a court’s action in his favor bears the burden of persuasion thereon. There is a triable issue of material fact if, and only if, 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.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 850, citation omitted.)

“[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar, supra, at p. 850; Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1474, [applying the summary judgment standards in Aguilar to motions for summary adjudication].)

“On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839, citation omitted.)

“The trial court may not weigh the evidence in the manner of a fact finder to determine whose version is more likely true. Nor may the trial court grant summary judgment based on the court's evaluation of credibility.” (Binder, supra, at p. 840, citations omitted; see also Weiss v. People ex rel. Dep’t of Transp. (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)

Plaintiff’s request for judicial notice is granted. “A court may properly take judicial notice of its own records. (Evid. Code, § 452, subd. (e).)” (Garcia v. Sterling (1985) 176 Cal.App.3d 17, 21.) Judicial notice may also be taken of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code §§ 452, subd. (c) and (h).)

The court declines to rule on Defendant Newrez, LLC’s evidentiary objections found in opposition to the evidence filed in support of Plaintiff’s Motion for Summary Adjudication, pursuant to Code of Civil Procedure section 437c, subdivision (q) (i.e., “[i]n granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion”).

On March 5, 2004, Rafi Khan and Rubina Khan (“Khans”) received title for the property located at 501 Haverstock Rd., La Canada Flintridge, CA 91011 (“Subject Property”) by an Individual Grant Deed. (Undisputed Material Facts (“UMF”), No. 1.) In August 2005, the Khans obtained a loan from Horizon Mortgage Bankers. (Id., No. 2.) The loan was secured by a Deed of Trust against the Subject Property which was recorded in Los Angeles County on August 16, 2005. (Ibid.) In May 2012, the Deed of Trust was assigned to Defendant the Bank of New York Mellon (“Bank”). (Id., No. 3.) On December 8, 2015, a Grant Deed was recorded for the sale of the Subject Property from the Khans to Plaintiff. (Id., No. 4.) In 2020, Defendant Newrez, LLC dba Shellpoint Mortgage Servicing (“Newrez”) became the servicer of the loan for Bank. (Id., No. 6.)

On June 1, 2022, Newrez recorded a Notice of Default. (Id., No. 9.) The Notice of Default was mailed to the Khans at the Subject Property. (Id., No. 10.) On September 2, 2022, Newrez recorded a Notice of Trustee’s Sale which was mailed to the Khans at the Subject Property. (Id., Nos. 12-13.) On March 9, 2023, the Subject Property was foreclosed. (Id., No. 16.) As a result of the foreclosure, Plaintiff lost title to the Subject Property. (Id., No. 17.)

Plaintiff moves for summary adjudication as to its third cause of action for wrongful foreclosure asserted against Defendant Newrez, LLC dba Shellpoint Mortgage Servicing (“Newrez”).

“The elements of a wrongful foreclosure cause of action are: (1) The trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.” (Citrus El Dorado, LLC v. Chicago Title Co. (2019) 32 Cal.App.5th 943, 948, quotation marks and brackets omitted.)

Plaintiff argues that the undisputed facts demonstrate wrongful foreclosure as Newrez failed to provide sufficient statutory notice of default to the Khans pursuant to Civil Code section 2924b. (MSA, at p. 5.) Plaintiff contends that the Khans, as the borrowers of the loan, were entitled to statutory notice but did not receive sufficient notice as they lived in Pakistan. (Id., at p. 6.) Plaintiff also contends that Newrez was given the Khans’ contact information so that their current address could be ascertained. (Ibid.) However, Plaintiff notes that Newrez mailed the Notice of Default and Notice of Sale solely to the Subject Property. (Ibid.) As such, Plaintiff argues that the lack of proper notice to the Khans renders the foreclosure of the Subject Property illegal. (Ibid.)

Civil Code section 2924b, subdivision (b)(1) requires that mortgagees, trustees, and others authorized to record a notice of default or sale, within 10 business days after the notice of default is recorded, to mail a copy of the notice which specifies the date by registered or certified mail, postage prepaid, to the trustor or mortgagor at their last known address if different from the address specified in the deed of trust or mortgage with power of sale. (Civ. Code § 2924b, subd. (b)(1).)

The statute defines “last known address” as the “last business or residence physical address actually known by the mortgagee, beneficiary, trustee, or other person authorized to record the notice of default.” (Civ. Code, § 2924b, subd. (b)(3) [emphasis added].) “[A]n address is ‘actually known’ if it is contained in the original deed of trust or mortgage, or in any subsequent written notification of a change of physical address from the trustor or mortgagor pursuant to the deed of trust or mortgage. (Ibid.) “[T]he trustee shall incur no liability for failing to send any notice to the last address unless the trustee has actual knowledge of it.” (Ibid.)

In opposition, Newrez contends that Plaintiff failed to establish that Newrez did not give statutory notice to the Khans. (Opp., at p. 10.) Newrez argues that Plaintiff fails to provide evidence that any new business or residential address for the Khans was actually known to Newrez at any time other than the address of the Subject Property. (Id., at p. 11.) In turn, Newrez contends that the notice provided to the Khans was sufficient under section 2924b. (Ibid.)

In reply, Plaintiff argues that Newrez knew that the Khans did not live at the Subject Property and as Newrez had the contact information of the Khans, Newrez failed to get a current address. (Reply, at p. 2.)

The court finds that a triable issue of fact exists as to whether Newrez had actual notice of a different address for the Khans to mail the Notice of Default and Notice of Sale regarding the Subject Property. There is a presumption that the only address known by Newrez was the one contained in the original Deed of Trust for the Khans’ loan. (Civ. Code, § 2924b, subd. (b)(3).) Plaintiff provides no evidence regarding any subsequent written notification of a change of physical address from the Khans to Newrez that would provide actual notice. Instead, Plaintiff provides evidence of an email exchange with Newrez where Newrez states that “it’s my understanding that [the Khans] are in Pakistan.” (Lew Decl., ¶ 10, Exh. A.) This is insufficient for Plaintiff to carry its burden of showing that the notice requirements of section 2924b were not met. There is contrary evidence from Newrez showing that the only known address for the Khans was that of the Subject Property. (Gonzales Decl., ¶¶ 6-7; ZBS Law Decl., ¶ 9.) Additionally, Plaintiff provides no authority requiring Newrez to find the Khans’ Pakistan address solely because Newrez was provided their contact information.[2] The statutory notice requirement provides that the Khans are the ones required to provide a notification of a change of address. (Civ. Code, § 2924b, subd. (b)(3).)

As such, summary adjudication of Plaintiff’s wrongful foreclosure claim is denied.

Defendants Newrez, LLC and The Bank of New York Mellon’s (“Moving Defendants”) request for judicial notice is granted. “A court may properly take judicial notice of its own records. (Evid. Code, § 452, subd. (e).)” (Garcia v. Sterling (1985) 176 Cal.App.3d 17, 21.) Judicial notice may also be taken of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code §§ 452, subd. (c) and (h).)

The court also grants Plaintiff’s request for judicial notice. (Evid. Code, § 452, subd. (e).)

The court declines to rule on Moving Defendants’ evidentiary objections found in reply to the evidence filed in support of Plaintiff’s opposition, pursuant to Code of Civil Procedure section 437c, subdivision (q) (i.e., “[i]n granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion.”)

Moving Defendants seek summary judgment of Plaintiff’s SAC. In the alternative, Moving Defendants seek summary adjudication of each of the causes of action.

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

In 2020, Defendant Newrez, LLC (“Newrez”) and Plaintiff entered into an agreement by which Plaintiff would sell the Subject Property for less than what was owed on the Khans’ loan (“Short Sale Agreement”). (Undisputed Material Fact (“UMF”), No. 1.) Under the Short Sale Agreement, Plaintiff was required to pay Newrez $1,950,314.18 no later than December 29, 2020. (Id., No. 3.) At Plaintiff’s request, Newrez extended this deadline twice, with a final due date for February 25, 2021. (Id., Nos. 4-5.)

Moving Defendants contend that as Plaintiff did not submit payment by the February 2021 deadline, Plaintiff’s breach of contract claim fails because Plaintiff did not perform. (MSJ, at pp. 5-6; UMF, No. 6; Gonzales Decl., ¶ 14.) Moving Defendants also argue that Plaintiff’s timely performance was not excused. (MSJ, at p. 6.)

The court finds that Moving Defendants have carried their burden of proving no triable issue of material facts remains over whether Plaintiff failed to perform. The burden shifts to Plaintiff. In opposition, Plaintiff does not provide any evidence showing its performance under the Short Sale Agreement. Instead, Plaintiff focuses its arguments on its excuse for nonperformance.

Plaintiff argues that the non-occurrence of payment under the Short Sale Agreement was excused as Newrez repudiated the agreement by failing to provide Plaintiff sufficient time to finish clearing any junior liens on the Subject Property prior to selling and funding the agreement. (Opp., at p. 11.) Plaintiff contends that the terms of the Short Sale Agreement included that Plaintiff would obtain junior lien approval letters and make a payment to Newrez for $1,950,314.18 by December 29, 2020, subject to any extensions. (UMF, No. 62.) Once the funds were received, Newrez would cancel any remaining indebtedness on the Khans’ loan and release the collateral interest on the Subject Property. (Ibid.) Plaintiff also contends that Newrez promised to extend the Short Sale Agreement, as may be needed, to remove the junior liens. (Id., No. 63.) As Newrez denied Plaintiff’s subsequent request for an extension past the February 2021 deadline, Plaintiff argues that Newrez repudiated the Short Sale Agreement excusing Plaintiff’s performance. (Opp., at p. 11.)

Here, the court finds that Plaintiff failed to meet its burden to raise a triable issue of material fact. First, the Short Sale Agreement does not include any terms regarding Newrez’ promise to grant any necessary deadline extensions for Plaintiff to submit payment nor to obtain junior lien approval letters. (Compendium of Exhibits (“COE”), Exhs. 5-6.) Plaintiff does not provide any evidence of Newrez’ promise to grant extensions, except for a self-serving declaration. (Lew Decl., ¶ 7.) Pursuant to Code of Civil Procedure section 437c, subdivision (e), summary judgment may be denied “if the only proof of a material fact offered…is an affidavit or declaration made by an individual who was the sole witness to that fact; or, if a material fact is an individual’s state of mind, or lack thereof, and that fact is sought to be established solely by the individual’s affirmation thereof.” (Code Civ. Proc., § 437c, subd. (e).)

Moreover, Moving Defendants provide Plaintiff’s deposition whereby Plaintiff testifies that following the last extension for February 2021, the Short Sale Agreement had expired as Plaintiff did not submit payment. (COE, Exh. 1, Lew Deposition, at pp. 71, 77.) As such, “[w]here a party’s self-serving declarations contradict credible discovery admissions and purport to impeach that party’s own prior sworn testimony, they should be disregarded.” (Archdale v. American Internat. Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 473.) Thus, the court finds that as Plaintiff failed to perform its obligations under the Short Sale Agreement which required Plaintiff to pay $1,950,314.18 by February 25, 2021, and Plaintiff’s performance was not excused, Plaintiff’s breach of contract claim fails.

Accordingly, Moving Defendants’ request for summary adjudication of the first cause of action is granted.

2^nd Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

The elements for breach of the implied covenant of good faith and fair dealing are: (1) existence of a contract between plaintiff and defendant; (2) plaintiff performed his contractual obligations or was excused from performing them; (3) the conditions requiring defendant’s performance had occurred; (4) the defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant’s conduct. (Merced Irr. Dist. V. County of Mariposa (E.D. Cal. 2013) 941 F.Supp.2d 1237, 1280 [discussing California law].)

Moving Defendants seek summary adjudication of Plaintiff’s second cause of action for breach of the implied covenant of good faith and fair dealing on the grounds that (1) Plaintiff alleges Newrez acted in bad faith by not granting further extensions to clear the third-party liens on the Subject Property although there is no provision on the Short Sale Agreement that require such extension; (2) Plaintiff did not perform under the contract; and (3) Plaintiff suffered no harm. (MSJ, at p. 9.)

As an initial matter, the court has found that it is undisputed that Plaintiff failed to render the payment required by the Short Sale Agreement by the extended deadline. Moreover, the court found that Plaintiff did not raise a triable issue of fact regarding its excuse for nonperformance. As Plaintiff alleged in its breach of contract claim, Plaintiff again contends that Newrez prevented Plaintiff’s performance by not granting an extension for Plaintiff to clear the junior liens as Newrez had allegedly promised. (SAC, ¶¶ 60-61.)

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated … [T]he only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Id., at pp. 1394-1395.) To recover in tort for breach of the implied covenant, the defendant must “have acted unreasonably or without proper cause.” (Id., at p. 1395 [citations and italics omitted].)

The court finds that Moving Defendants carried their burden of showing that Plaintiff did not perform nor was excused from performing under the Short Sale Agreement. As such the burden shifts onto Plaintiff who again fails to raise a triable issue of fact by failing to provide any evidence of a promise from Newrez to grant Plaintiff with infinite extensions to the Short Sale Agreement for the purpose of clearing any junior liens on the Subject Property besides Plaintiff’s self-serving declaration. As such, Plaintiff cannot show that Defendants unfairly interfered with Plaintiff’s right to receive the benefits of the Short Sale Agreement when denying Plaintiff’s extension requests. Additionally, as the facts alleged in Plaintiff’s second cause of action do not go beyond a mere breach of contract claim, Plaintiff’s claim is superfluous. (Careau, supra, 222 Cal.App.3d at 1395.)

Accordingly, Moving Defendants’ request for summary adjudication of the second cause of action is granted.

Moving Defendants seek summary adjudication of Plaintiff’s third cause of action for wrongful foreclosure on the grounds that (1) Plaintiff lacks standing to bring such claim on behalf of the Khans; (2) Newrez properly noticed the foreclosure proceedings; (3) Plaintiff was not prejudiced by the alleged lack of notice to the Khans; (4) Plaintiff had not tendered any funds to Newrez; and (5) Plaintiff cannot show that the foreclosure sale was illegal, fraudulent, or willfully oppressive. (MSJ, at pp. 11-12.)

Plaintiff’s wrongful foreclosure claim is solely based on the allegation that the Khans did not receive the required notices for the foreclosure of the Subject Property. (SAC, ¶¶ 67-68.) However, as explained above, in Plaintiff’s Motion for Summary Adjudication, Plaintiff cannot show that the notice mailed to the Khans at the Subject Property was insufficient. Here, Plaintiff again provides no evidence regarding any subsequent written notification of a change of physical address from the Khans to Newrez that would provide actual notice to require Newrez to mail the notice anywhere besides the Subject Property. As such, the notice provided by Newrez is presumed to be sufficient and Plaintiff’s wrongful foreclosure claim fails. The court declines to discuss the additional arguments raised by Moving Defendants as they are unnecessary for the court to find that Plaintiff’s claim can be summarily adjudicated.

Accordingly, Moving Defendants’ request for summary adjudication of the third cause of action is granted.

The elements of a cause of action for negligent misrepresentation include “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks omitted.)

“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)

Plaintiff’s claims for negligent and intentional misrepresentation are based on Defendants’ alleged promise to grant extensions to Plaintiff under the Short Sale Agreement for Plaintiff to clear any junior liens on the subject property. As discussed above, the court finds that Plaintiff cannot carry its burden of showing that a triable issue of material fact exists regarding whether any defendant made such promises or representations solely based on Plaintiff’s self-serving declaration. Moreover, the court also finds that Plaintiff cannot carry its burden to show that Defendants promised that a Notice of Default would not be recorded on the Subject Property as all that Plaintiff shows in support of such fact is the same self-serving declaration. (Lew Decl., ¶ 33.) Thus, Moving Defendants meet their burden to show that no misrepresentation was made to Plaintiff and Plaintiff fails to raise any triable issue of fact.

Accordingly, Moving Defendants’ request for summary adjudication of the fourth and fifth causes of action is granted.

6^th Cause of Action – Violation of Business & Professions Code § 17200, et seq.

To set forth a claim for a violation of Business and Professions Code section 17200 (“UCL”), plaintiff must establish defendant was engaged in an “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising” and certain specific acts. (Bus. & Prof. Code, § 17200.) A cause of action for unfair competition “is not an all-purpose substitute for a tort or contract action.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)

For the reasons stated above, Plaintiff has submitted no evidence to establish that Defendants engaged in any unlawful conduct in violation of section 17200. In opposition, Plaintiff simply argues that as the other causes of action withstand summary judgment, which they do not, Moving Defendants’ motion must also be denied here. (Opp., at p. 20.) The court finds that Plaintiff has failed to meet its burden of establishing a triable issue of material fact as to the UCL claim. Once again, the court does not consider Plaintiff’s self-serving declaration to be sufficient.

Accordingly, Moving Defendants’ request for summary adjudication of the sixth cause

2. Defendants Newrez, LLC and The Bank of New York Mellon’s Motion for Summary Judgment is GRANTED.

[1] The court will only consider the amended motion and amended documents filed in support.

[2] Plaintiff cites to Estate of Yates (1994) 25 Cal. App. 4th 511 arguing that the court held that the notices were invalid because the foreclosure trustee had actual knowledge of the correct address as it was readily obtainable. (MSA, at p. 6.) However, the court finds that Yates is distinguishable in that it dealt with a borrower who died before paying the balance of the debt not a borrower that changed addresses. Moreover, the court held that the notices were insufficient as to the administrator of the borrower’s estate and not the notices to the decedent borrower. (Estate of Yates, supra, 25 Cal. App. 4th 521 [“[W]e agree with West End that a trustee who has no knowledge that a trustor has died complies with section 2924b by mailing a notice of default to the trustor at his or her last known address. The statutory scheme does not impose any duties upon a trustee to take any steps to locate a trustor or by implication to determine whether he or she is still living.”].)