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September 2013 Newsletter

The Import & Impact of Glaski v. Bank of America

A month has passed since the California Court of Appeal handed

down their decision in Glaski v. Bank of America, N.A., 218 Cal. App.

4th 1079 (2013). In that month, the opinion has been published and

Bank of America’s petition for rehearing denied. Now binding on all

California trial courts, the opinion has attracted much attention and

praise in the foreclosure defense world. This article summarizes the

court’s major findings, places the decision into the current legal

landscape, and analyzes both its potential impact and its limitations.

I. The Court’s Conclusions

Ultimately, the court’s conclusions are rooted in two basic and

related inquiries that clarify (and in some respects simplify) the

“authority to foreclose” question in California, at least for the time

being. First, does the borrower allege that the foreclosing party was

not the beneficiary based on specific facts? Second, if borrower’s claim

is based on a failed assignment, was the assignment void, or voidable?

If borrowers can allege specific facts showing that the purported

beneficiary derived their authority from a void assignment, their

claims, under Glaski, may now survive the pleading stage in California

courts.

A. Alleging that the Assignment Granting the Beneficiary’s Power to

Foreclose is Void, is a Specific, Factual Allegation and the Basis for a

Valid Wrongful Foreclosure Claim

The court divides wrongful foreclosure claims based on an authority

to foreclose theory into two categories: 1) borrowers who allege,

generally, that the foreclosing entity was not the “true beneficiary

2

under the deed of trust;” and 2) borrowers who allege, with specific

facts, that the foreclosing entity was not the true beneficiary.1

Borrowers in the first category rarely make it past the pleading stage,

but borrowers in the second group may. In other words, it is not

enough to say “X is not the true beneficiary,” but it may be enough to

allege “X is not the true beneficiary because Y.” If “Y” is a specific,

factual allegation that shows the foreclosing entity did not have the

authority to foreclose, then the claim is viable.

The court then explained that “[o]ne basis for claiming that a

foreclosing party did not hold the deed of trust” is if the assignment

purportedly giving that party foreclosing power is void.2 The court did

not say that attacking a beneficiary’s assignment is the only way to

bring a wrongful foreclosure claim, only that this particular defect,

when alleged with specific facts, is enough to put the authority to

foreclose at issue. Glaski alleged that the assignment of his deed of

trust and note to the WaMu Securitized Trust was void because it

occurred after the trust’s closing date.

B. Standing: Void vs. Voidable Assignment

Many securitization-based wrongful foreclosure claims fail because

the borrowers do not have “standing” to challenge how their loan was

securitized.3 The Glaski court framed this issue simply, focusing on the

assignment: “When a borrower asserts an assignment was ineffective,

a question often arises about the borrower’s standing to challenge the

assignment of the loan (note and deed of trust) –an assignment to

which the borrower is not a party.”4 The court cites federal cases from

1 See Glaski v. Bank of Am., N.A., 218 Cal. App. 4th 1079, 160 Cal. Rptr. 3d 449, 460

(2013). 2 Glaski, 160 Cal. Rptr. 3d at 461 (emphasis added). 3 See, e.g., Rodenhurst v. Bank of Am., 773 F. Supp. 2d 886, 898-99 (D. Haw. 2011)

(“[C]ourts have uniformly rejected the argument that securitization of a mortgage

loan provides the mortgagor a cause of action.”); Junger v. Bank of Am., N.A., 2012

WL 603262, at *3 (C.D. Cal. Feb. 24, 2012) (“[P]laintiff lacks standing to challenge

the process by which his mortgage was (or was not) securitized because he is not a

party to the PSA.”); Bascos v. Fed. Home Loan Mortg. Corp., 2011 WL 3157063, at *6

(C.D. Cal. July 22, 2011) (“Plaintiff has no standing to challenge the validity of the

securitization of the loan as he is not an investor in of the loan trust.”). 4 Glaski, 160 Cal. Rptr. 3d at 461.

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other circuits,5 and a California Jurisprudence treatise to conclude, “a

borrower can challenge an assignment of his or her note and deed of

trust if the defect asserted would void the assignment.”6 California

courts have largely adopted a knee-jerk reaction to securitization

theories, throwing those claims out because the borrower is not a party

to, or third-party beneficiary of, the assignment agreement (the PSA in

most cases). The Glaski court broke with California precedent in

framing the issue as one of void versus voidable assignments, allowing

theories based on void assignments to survive pleading.

C. A Post-Closing Date Transfer to Trust Renders the Assignment Void

The court had thus far established: 1) Glaski’s attack on the

beneficiary’s assignment was specific enough that it went beyond a

general challenge foreclosing party’s right to foreclose; and 2)

generally, void assignments give a borrower standing to challenge the

loan’s securitization, even though the borrower was not a party to, or

third-party beneficiary of, the PSA. The court then analyzed whether

Glaski’s specific allegations, taken as true, would void the assignment,

giving him standing.

Like many mortgage loans, Glaski’s note and deed of trust were

sold (assigned) to a trust to be bundled with other mortgages, sliced up

and sold again. Through a subsequent FDIC takeover, acquisition, and

more assignments, defendant Bank of America either became the

“successor trustee” to the WaMu trust, or acquired the Glaski deed of

trust from JP Morgan, who bought all of WaMu’s assets from the

FDIC.7 Either way, the possible chains of title are broken because the

transfer from JP Morgan Chase to the WaMu Securitized Trust

occurred long after the closing date of the trust.8

But does a post-closing assignment to a trust render that

assignment void? To answer this question, the Glaski court analyzed

5 Id. (citing Reinagel v. Deutsche Bank Nat’l Trust Co., 722 F.3d 700, at *3 (5th Cir.

2013); Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 361 (6th Cir.

2013); Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291 (1st Cir. 2013)). 6 Glaski, 160 Cal. Rptr. 3d at 461 (emphasis original). 7 Id. 8 Id. The WaMu trust, by its own terms, closed in 2005. Id. at 454. An assignment

recorded in 2008 “stated that JP Morgan transferred and assigned all beneficial

interest under the Glaski deed of trust [and note] to ‘LaSalle Bank NA as trustee for

WaMu [Securitized Trust].’”Id.

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New York law, which, according to the pleadings, was controlling,9 to

conclude that an assignment transferred after a trust’s closing date is

void, rather than voidable.10

Glaski pled both threshold questions with the requisite specificity:

1) he alleged that Bank of America was not the beneficiary because the

assignment purporting to give it foreclosing power was invalid; and 2)

the assignment was void, not voidable, because the transfer to the

trust occurred after the trust’s closing date. The first point got him

past Gomes, and the second established his standing.

D. Tender

The court addressed the tender issue briefly, but it was still critical

to its ruling and again emphasizes the importance of distinguishing

whether a foreclosure sale is void or voidable. “Tender is not required

where the foreclosure sale is void, rather than voidable, such as when a

plaintiff proves that the entity lacked the authority to foreclose on the

property.”11 Because tender was not required, and because Glaski

stated a cognizable claim for wrongful foreclosure, the court reversed

the trial court’s dismissal of the complaint, and vacated and overruled

the order sustaining the Bank of America’s demurrer.

II. Placing Glaski in the California Foreclosure Landscape

A. Distinguishing Gomes: Specificity

Gomes was probably Glaski’s biggest hurdle. The court dedicated an

entire section of its opinion to differentiate its findings from those in

Gomes.12 The borrower in Gomes also brought a wrongful foreclosure

claim, alleging that the foreclosing entity, MERS, was not the

beneficiary’s nominee because the unknown beneficiary did not appoint

MERS as nominee, or give MERS authorization to foreclose.13 Unlike

9 Id. at 462. 10 Id. at 463 (“[T]he [WaMu trust] trustee’s attempt to accept a loan after the closing

date would be void as an act in contravention of the trust document.”). The closing

date is meant to protect the interests of the trust’s investors because it ensures

REMIC status, exempting investors from federal income tax (with respect to the

trust). Id. at 460 n.12, 463. 11 Id. at 466. 12 Glaski, 160 Cal. Rptr. 3d at 464. 13 Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149, 1152 (2011).

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Glaski, however, Gomes left his argument there. He did not take the

crucial step of explaining why MERS, who was listed as beneficiary

and nominee in the deed of trust,14 was not the true beneficiary.15

Rather, Gomes alleged that CC § 2924 afforded him the right to “test”

whether MERS had the beneficial interest before the sale took place.16

“Whether” is the key word and the difference between a Gomes claim

and a Glaski claim. Gomes wanted to investigate whether or not MERS

was the beneficiary. By contrast, Glaski alleged that Bank of America

was definitely not the beneficiary because the assignment giving them

beneficiary status was late to the trust, and therefore void. Gomes

asked, “who has the authority to foreclose?” whereas Glaski stated: “X

definitely does not have authority for these reasons . . . .” The Gomes

court found that CC § 2924 provides no right for borrowers to ask

“whether” the foreclosing party had the authority to do so.17

B. Distinguishing Nguyen: Void vs. Voidable

The Glaski court also had to reckon with Nguyen v. Calhoun, 105

Cal. App. 4th 428 (2003), which held that anything outside of the

foreclosure sale process cannot be used to challenge a presumably valid

and complete sale.18 Specifically, the court had to consider whether an

“ineffective transfer to the WaMu Securitized Trust” was an aspect of

the foreclosure sale, or if it fell outside of that sale and was therefore

irrelevant.19 Because the transfer to the trust was fundamental to

Bank of America’s authority to foreclose, and would void the sale itself,

the court decided that the trust transfer was part of the foreclosure

sale and a valid basis for challenging the foreclosure.20

C. Distinguishing Fontenot: Burden Shifting

14 Id. at 1151. 15 Instead, Gomes claimed he “‘d[id] not know the identity of the Note’s beneficial

owner,’” but that whoever “authorized” MERS to foreclose was not the beneficiary or

the beneficiary’s agent. Id. at 1152. He gave no specific reason for believing this,

other than that his loan was “sold . . . on the secondary mortgage market.” Id. 16 Id. 17 Id. at 1155 (“[Section 2924 does not] provide for a judicial action to determine

whether the person . . . foreclos[ing] . . . is indeed authorized.”). 18 See Nguyen v. Calhoun, 105 Cal. App. 4th 428, 441-42 (2003). 19 Glaski, 160 Cal. Rptr. 3d at 466. 20 Id.

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The Glaski opinion nowhere cites Fontenot v. Wells Fargo Bank, N.A., 198

Cal. App. 4th 256 (2011), but it is important to recognize why Glaski came out

differently from that case. As in Glaski, the borrower in Fontenot alleged that an

invalid assignment voided the entire foreclosure transaction.21

Unlike Glaski,

however, Fontenot based her invalid assignment theory, not on specific facts like

a late transfer to a trust, but on the theory that the assignor (MERS) had the

burden to prove the assignment was valid, and could not do so.22

The court

determined that MERS did not bear that burden because nothing in the statutory

scheme regulating nonjudicial foreclosures created that duty: “[A] nonjudicial

foreclosure sale is presumed to have been conducted regularly, and the burden of

proof rests with the party attempting to rebut this presumption.”23

If “‘the party

challenging the trustee’s sale [can] prove such irregularity and . . . overcome the

presumption of the sale’s regularity,’” that could shift the burden to defendant to

show a valid assignment.24

This is precisely what Glaski accomplished: by

pleading specifically that the assignment is void because of the late transfer to the

trust, Glaski rebutted the presumption of regularity, which is all he needed to do at

the pleading stage.

III. The Promise & Limits of Glaski

Glaski cannot be used to bolster every securitization theory. To

employ Glaski principles effectively, advocates should undertake the

same analysis the court did. First, does the borrower simply allege the

foreclosing party does not hold the beneficial interest in the deed of

trust (Gomes), or does the borrower allege that the foreclosing party

could not possibly be the rightful beneficiary because the assignment

giving them that interest was invalid? (Glaski). Second, do the

borrower’s allegations render the assignment void or voidable? If void,

then Glaski could lend support to both the borrower’s standing and

their wrongful foreclosure claim. The HBOR Collaborative will monitor

Glaski’s implications and influence as other courts interpret this

important decision.

21 See Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 269 (2011). 22 See id. at 269-70. 23 Id. at 270. 24 Id. (quoting Melendrez v. D & I Inv., Inc., 127 Cal. App. 4th 1238, 1258 (2005)).

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Summaries of Recent Cases25

State Cases

Challenging the Authority to Foreclose Requires Specific

Factual Allegations

Siliga v. Mortg. Elec. Registration Sys., Inc., __ Cal. App. 4th __,

2013 WL 4522474 (Aug. 27, 2013): Nonjudicial foreclosures are

regulated by statute. Borrowers may not bring the foreclosing entities

to court to require them to prove anything outside of what is already

required by statute. These types of actions are “preemptive” in that

they do not seek redress for specific misconduct (which would create a

valid cause of action), but rather generally allege that the entity

initiating a foreclosure lacks the authority to do so. “Such an action is

‘preemptive’ if the plaintiff alleges no ‘specific factual [basis]’ for the

claim that the foreclosure was not initiated by the correct person”

(emphasis added).

Here, borrowers alleged MERS lacked the authority to foreclose

because: 1) when the lender went out of business, their agreement with

MERS (making MERS the DOT beneficiary and the lender’s nominee)

“lapsed,” negating any authority to foreclose MERS did possess; 2)

MERS had no authority to assign the note, and any DOT assignment

without a note assignment is void; and 3) MERS required the lender’s

authorization to assign the DOT and the note to satisfy the statute of

frauds, authorization it did not have. As to the first allegation, the

borrowers failed to allege in the complaint that the lender had gone out

of business. The lender’s chapter 11 bankruptcy indicates

reorganization, but “neither the company’s death nor an incapacity to

contract.” Second, MERS’ authority to assign the note derives from its

“agency agreement” with the lender. A general allegation that MERS

lacked authority, without alleging a specific problem with the agency

agreement, is not sufficient to state a claim. Lastly, the claim that

MERS lacked written authorization to assign the note and DOT,

without a more factual allegation, attempts to make MERS prove its

authority to foreclose outside the statutory scheme. Without sufficient

25 Cases without Westlaw citations can found at the end of the newsletter.

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factual allegations, the court affirmed the dismissal of borrower’s

complaint.

Litigation Privilege Does Not Bar a UCL Claim Based on

Rosenthal Act and FDCPA Violations

People v. Persolve, LLC, __ Cal. App. 4th __, 2013 WL 4354386

(Aug. 15, 2013): California’s litigation privilege bars suits based on any

communication “made in judicial or quasi-judicial proceedings . . . to

achieve the object of the litigation.” CC § 47. If the privilege directly

conflicts with a “coequal” state statute, a court will decide which takes

precedence by evaluating which is more specific, the statute or the

privilege, and whether application of the privilege would render the

statute “significantly or wholly inoperable.” Usually an UCL claim

would fail the specificity element because Bus. & Prof. Code § 17200 is

much broader than the litigation privilege. Because this UCL claim

was based on alleged violations of the FDCPA and Rosenthal Act,

however, the privilege does not bar this UCL claim. Not only are those

two statutes more specific than the litigation privilege (explicitly

forbidding creditors from misleading debtors, providing false

information, etc.), but applying the privilege to prevent FDPCA and

RFDPCA-based claims would render those statutes “meaningless.” The

whole point of the FDCPA and RFDPCA is to regulate debt collection

conduct, much of which occurs in litigation, or in preparation for

litigation. The Court of Appeal reversed the trial court’s dismissal and

allowed the county D.A.’s UCL claim to continue.

CCP § 1162 Notice Requirements; CCP § 1161a’s Required

Compliance with CC § 2924

Bank of New York Mellon v. Preciado, Nos. 1-12-AP-001360 & 1-

12-AP-001361 (Cal. App. Div. Super. Ct. Aug. 19, 2013): To be effective,

UD notices to quit must be properly served: 1) by personal service; 2)

or if personal service failed, by leaving the notice with a person of

“suitable age and discretion” at the residence or business of the tenant

(or former borrower) and then mailing a copy; 3) or if the first two

methods failed, by posting a notice at the residence and mailing a copy.

CC § 1162. Here, the process server’s affidavit stated that “after due

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and diligent effort,” he executed “post and mail” service. The trial court

accepted this statement as evidence of compliance with CC § 1162, but

the appellate division reversed. The statute indicates that “post and

mail” is the last available method of service, not the first. Since the

affidavit does not specifically assert that personal service was ever

attempted, the trial court erred in assuming that service complied with

CC § 1162. Further, defendants’ appeal based on defective service was

not barred because they failed to assert it as an affirmative defense.

Proper service is an “essential [UD] element” and tenants’ “general

denial” of each statement in the complaint put service at issue.

Post-foreclosure UD plaintiffs must also demonstrate duly perfected

title and compliance with CC § 2924 foreclosure procedures. CCP §

1161a. “Duly” perfected title encompasses all aspects of purchasing the

property, not just recorded title. The trial court relied on plaintiff’s

trustee’s deed upon sale, showing plaintiffs purchased the property at

the foreclosure sale. The court ignored contradicting testimony alleging

that the property was sold to the loan’s servicer, not plaintiff. Further,

“to prove compliance with section 2924, the plaintiff must necessarily

prove the sale was conducted by the trustee.” Here, the trustee’s deed

upon sale identifies one trustee, but the DOT identifies another. The

trial court erred in accepting the recorded trustee’s deed upon sale as

conclusive evidence of compliance with § 2924, and the appellate

division reversed.

TPP Requires Servicer to “Re-review” Borrower for Permanent

Modification

Lovelace v. Nationstar Mortg. LLC, No. 34-2012-00119643-CU-BC-

GDS (Cal. Super. Ct. Sacramento Co. Aug. 22, 2013): Borrowers must

allege performance, breach, consideration, and damages to plead a

breach of contract claim. Here, borrowers sufficiently alleged each

element and defendant’s demurrer was overruled. The predecessor

servicer sent borrowers a TPP agreement and letter, requiring

borrowers to sign and return the agreement, make their payments,

and contact the servicer when the TPP ended, so servicer could “re-

review” them for a permanent modification. Borrowers performed all

aspects of the contract, but Nationstar, the current servicer, breached

by refusing to “re-review” them for a modification. To show

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consideration and damages, borrowers successfully alleged the time

and effort required in applying for a modification. Nationstar argued

that the TPP agreement and letter only constituted an “agreement to

agree in the future.” The TPP language clearly indicated, though, that

the servicer would perform a re-review if the borrower met the other

requirements, so this argument was unavailing.

Preliminary Injunction Granted on SPOC Claim; Dual

Tracking: First Application Requirement

Rogers v. OneWest Bank FSB, No. 34-2013-00144866-CU-WE-GDS

(Cal. Super. Ct. Sacramento Co. Aug. 19, 2013): HBOR’s single-point-

of-contact provision requires servicers to provide borrowers seeking

foreclosure alternatives with a single person (or team) that handles the

borrower’s application, has updated information, and the authority to

stop a foreclosure sale. Here, the court granted borrower’s request for a

preliminary injunction to stop the foreclosure of her home because her

servicer gave her at least three points of contact over the course of one

month. One of these contacts informed her she did not qualify for a

HAMP modification. This contact, though, should have remained

borrower’s contact until the servicer determined she did not qualify for

any foreclosure alternative, as required by CC § 2923.7(c). Because the

borrower was shuffled to different people after this HAMP denial but

before she was denied for other alternatives, the court granted the

injunction and set a $10,000 bond.

HBOR prohibits dual tracking while a servicer reviews a borrower’s

first modification application. Even when the first application was

submitted pre-HBOR (1/1/13), if the servicer gave it a full review and

denied the application, the servicer has no duty to halt the foreclosure

process until it considered a second application (absent a change in

financial circumstances). Here, borrower submitted their first

application in 2012, which was denied by defendant in April 2013.

Borrower’s second application was submitted, at defendant’s

invitation, in May 2013, and defendant subsequently recorded an NTS.

Borrower argued that her 2012 application should not bar the dual

tracking claim based on her second application because HBOR “does

not apply retroactively to a 2012 loan modification request.” The court

pointed to the language in CC § 2923.6(g) (specifically including pre-

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1/1/13 applications in its “first lien loan modification” definition) and

found the borrower unlikely to prevail on the merits of her dual

tracking claim.

Motion to Quash UD Service: CCP § 1161b’s 90-day Notice

Requirement

Deutsche Bank Nat’l Trust Co. vs. Pastor, No. 1417736 (Cal.

Super. Ct., Santa Barbara Co. Aug. 9, 2013): A motion to quash is the

correct procedural challenge to a court’s exercise of personal

jurisdiction. In the unlawful detainer context, a defendant should bring

a motion to quash if the notice period is inappropriate. Here, plaintiff

served tenant a 30-day notice instead of the 90-day notice required for

tenants occupying foreclosed property. CCP § 1161b. Plaintiff argued

that as the daughter of the former homeowners, who still occupied the

property, the tenant only required a 30-day notice. Tenant provided

credible evidence that her parents no longer occupied the property,

convincing the court to grant the motion to quash. Plaintiff must serve

tenant with a 90-day notice in accordance with CCP § 1161b, and can

only move forward with a UD after those 90 days.

Federal Cases

Fair Credit Reporting Act

Ferguson v. Wells Fargo Bank, __ F. App’x __, 2013 WL 4406843

(9th Cir. Aug. 19, 2013): The Fair Credit Reporting Act requires

furnishers of credit information (including servicers of mortgage loans)

to, upon notification of a dispute, “investigate and report” on their

calculations and conclusions. Here, borrower alleged that though Wells

Fargo may have responded to the dispute notification by completing

and returning a form sent by the credit-reporting agency, they

incorrectly reported that the borrower had gone through bankruptcy.

Upon production of this form, the district court granted summary

judgment to Wells Fargo. A factual dispute exists, however, because

Wells Fargo left a space blank instead of entering a particular code,

which would presumably have indicated that the borrower had not

gone through bankruptcy. The Ninth Circuit reversed and remanded.

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HOLA Does Not Preempt State Tort Law Claims; Tender;

Specifically Pled Fraud Claim; Modification Does Not Give Rise

to a Duty of Care

Wickman v. Aurora Loan Servs., LLC, 2013 WL 4517247 (S.D. Cal.

Aug. 23, 2013): State laws regulating or affecting the “processing,

origination, servicing, sale or purchase of . . . mortgages” are

preempted by the Home Owner’s Loan Act, as applied to federal

savings associations. State tort law claims that only incidentally affect

those areas of banking, however, are not preempted. Here, borrower

claimed fraud, negligent misrepresentation, and promissory estoppel

based on their servicer’s promise to work with the borrower on a loan

modification in good faith. Laws based in the “general duty not to

engage in fraud,” do not require anything additional from the servicer,

and do not demand or require a modification. These laws only

incidentally affect defendant’s business practices, and borrower’s

claims are therefore not preempted by HOLA.

Tender is usually required to bring a claim for wrongful foreclosure.

There are at least three exceptions to this general rule: 1) when it

would be inequitable to demand tender; 2) when the borrower seeks to

prevent a sale from happening, rather than undo a completed sale; and

3) when the sale is (or would be) void, rather than voidable. This

borrower brought his wrongful foreclosure claim after a notice of

trustee sale was recorded, but before an actual sale. Accordingly,

tender was not required here.

Fraud claims demand very specific pleading of: 1) a misrepresentation;

2) defendant’s knowledge that the misrepresentation is false; 3)

defendant’s intent to induce borrower’s reliance; 4) the borrower’s

justifiable reliance; and 5) damages. Many claims for fraud in wrongful

foreclosure cases are dismissed for lack of specificity. But here,

borrower was able to describe several conversations with a specific

employee of defendant, when those conversations occurred, and the

misrepresentations made. Not all statements were ultimately held to

constitute a claim for fraud, but the employee’s statement assuring

borrower he was eligible for a loan modification despite his

unemployed status does serve as the basis for a fraud claim. The

employee told the borrower that being unemployed would actually help

him qualify for a modification because of “financial hardship.”

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Borrower alleged defendant knew this statement was false,

maintained a policy of denying modifications based on unemployed

status, and never intended to review him for a modification in good

faith. The fraud claim based on this statement survived the motion to

dismiss.

As outlined in Rosenfeld (above), a claim for negligent

misrepresentation requires the establishment of a duty of care owed

from the lender/servicer to the borrower. The court declined to find a

duty here, where defendant allegedly misrepresented the borrower’s

ability to secure a modification while unemployed. The court does not

imply that any and all modification negotiations fail to give rise to a

duty of care, only that this particular negotiation and assurance does

not.

Dual Tracking: “Document” & “Submit” Requirements for a

Second Application; Modification Does Not Give Rise to a Duty

of Care

Rosenfeld v. Nationstar Mortg., LLC, 2013 WL 4479008 (C.D. Cal.

Aug. 19, 2013): Dual tracking protections are afforded to borrowers

who submit a second modification application if they can “document”

and “submit” to their servicer a “material change in financial

circumstances.” Here, borrowers submitted their first modification

application in 2012, and while that application was under review,

alerted their servicer that their income was reduced. With this

information, the servicer put them on a TPP plan, and then offered a

permanent modification in 2013. Borrowers objected to the terms of the

modification, asserting that the servicer did not consider the reduction

in income. Defendant scheduled a foreclosure sale, concluding that

borrowers had rejected the loan modification offer. While the sale was

scheduled, borrowers contend their financial circumstances changed a

second time, because they paid off credit card debt, reducing their

expenses. Their CC § 2923.6 claim alleges that dual tracking

protections should extend to a second modification application, which

they should be allowed to submit based on their changed

circumstances. The court disagreed, largely because borrowers’

complaint did not allege when the credit card debt was extinguished,

or when (and if) borrowers made their servicer aware of this change, as

14

required. Alleging a change in financial circumstances in a complaint

does not fulfill the “document” and “submit” requirements in CC §

2923.6(c). The court dismissed borrower’s UCL claim based on the

alleged dual track.

To state a claim for negligence, a plaintiff must establish that

defendant owed them a duty of care. Generally, there is no duty of care

between a financial institution and a borrower, if their relationship is

confined to a usual lender-borrower relationship. This court

determined “that activities related to loan modifications fall squarely

within defendants’ traditional money-lending role.” Without a duty of

care, the borrowers’ negligence claim was dismissed.

CC § 2923.5 Pleading Requirements vs. Preliminary Injunction

Requirements

Weber v. PNC Bank, N.A., 2013 WL 4432040 (E.D. Cal. Aug. 16,

2013): A servicer may not record an NOD until 30 days after they

contact the borrower to discuss foreclosure alternatives. Servicers must

make a diligent effort to contact the borrower under specific statute

requirements. A servicer must record an NOD declaration (with the

NOD) attesting to their statutory compliance. Here, borrowers’ 2923.5

claim survived a motion to dismiss because they alleged not only that

their servicer never contacted them before recording an NOD, but that

the servicer could not have made a diligent attempt to contact them.

The specificity of this second allegation was crucial to their claim: they

asserted that their home telephone number had not changed since loan

origination, the servicer had successfully contacted borrowers in the

past, they had a working, automated answering machine that recorded

no messages from the servicer, and that they never received a certified

letter from servicer. These factual allegations put the veracity of

defendant’s NOD declaration at issue and defeated the motion to

dismiss. The court also indicated that, if borrowers’ allegations were

true, not only would defendant have violated CC § 2923.5, but the

NOD itself would be invalid, stopping the foreclosure.

The court allowed the § 2923.5 claim to move forward, but denied

borrowers’ request for a preliminary injunction. To win a PI, a moving

party must demonstrate that they are likely to succeed on the merits of

15

their claim. Here, even though borrowers pled their § 2923.5 claim

with sufficient specificity, they failed to provide sufficient evidence to

show that they are likely to prevail on the merits. Defendant offered

evidence of a diligent effort to contact borrowers, and of actual contact.

Defendant produced copies of letters allegedly sent to borrowers

offering to discuss financial options regarding their loan. The letters

also memorialize several telephone conversations with borrowers.

Borrowers’ argument that these phone conversations were initiated by

them, not by the servicer, as required by statute, was deemed “likely

unmeritorious” by the court, which denied the PI.

Dual Tracking: PI Granted on 2011 Application

Ware v. Bayview Loan Servicing, LLC, 2013 WL 4446804 (S.D.

Cal. Aug. 16, 2013): In California federal district courts, a party

seeking a preliminary injunction must show they are likely to succeed

on the merits, to suffer irreparable harm without the PI, that the

balance of equities tips in their favor, and that the PI serves the public

interest. Here, borrowers sought a PI to prevent the foreclosure of their

property, alleging three separate violations of HBOR’s dual tracking

provision. First, they claimed that defendant’s cursory denial of their

short sale application violated CC § 2923.6(f), which requires servicers

to identify reasons for a denial. The measure only applies to loan

modifications however, not short sales, so this claim was deemed

unlikely to prevail on the merits. Second, borrowers claimed they

should be granted dual tracking protections on their second

modification application because they sent a letter to their servicer

asserting an increase in “routine expenses.” This “barebones”

description of a change in financial circumstances does not constitute

“documentation” under CC § 2923.6(g). Lastly, borrowers alleged a

dual tracking violation based on 2013 foreclosure actions, which

occurred before defendant made a determination on borrower’s 2011

modification application. Defendant pointed to their internal policy of

denying modifications to borrowers in bankruptcy (which borrowers

were in, from 2011-2013) as proof of the evaluation and denial. The

court determined that this policy did not, by itself, constitute an

“evaluation” for purposes of CC § 2923.6. To proceed with a foreclosure

after HBOR became effective, defendant had to “expressly” deny

borrower’s 2011 modification application. Because borrowers are likely

16

to prevail on this third dual tracking claim, foreclosure constitutes

irreparable harm, a mere delay does not unduly burden defendants,

and because it is in the public’s interest to enforce a newly enacted

state law, the court granted the PI.

Wrongful Foreclosure Burden of Proof

Barrionuevo v. Chase Bank, 2013 WL 4103606 (N.D. Cal. Aug. 12,

2013): Wrongful foreclosure plaintiffs normally bear the burden of

proving a defendant lacked authority to foreclose. If, however, 1) no

foreclosure has taken place; and 2) the borrower has alleged a “specific

factual basis” attacking the servicer’s authority to foreclose, the burden

shifts to defendant to prove authority. (The court implies this burden

shifting is unsettled law and does not seem certain the burden should

shift to defendant, but goes through the analysis anyway.) Here, the

borrower pled an authority to foreclose theory based on WaMu’s

securitization (selling) of borrower’s loan. When Chase subsequently

purchased all of WaMu’s assets, the loan could not have been included

in the purchase because the loan was no longer WaMu’s to sell.

Purchasing and owning nothing, Chase lacked authority to foreclose.

This theory was specific enough to survive a motion to dismiss and

shift the burden to defendant. Chase provided evidence to support

their assertion that the loan was not securitized before Chase’s

purchase: sworn testimony that it possesses the original note and

DOT, electronic records attesting to its authority to foreclose, and the

absence of borrower’s loan number in the WaMu trust. Even if the

burden had not shifted to Chase, the court found borrower’s evidence

insufficient to survive a summary judgment motion. The court was not

persuaded by their expert’s research into the WaMu trust, reasoning

that, absent proof that borrower’s specific loan was sold to the trust,

the expert’s findings amounted to speculation and opinion. A jury could

reasonably conclude from Chase’s evidence that Chase had authority to

foreclose on borrower’s property.

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First & Second TPP Agreements as Distinct Bases for Fraud &

Promissory Estoppel Claims; Pre-HBOR Authority to Foreclose

Theory

Alimena v. Vericrest Fin., Inc., 2013 WL 4049663 (E.D. Cal. Aug. 9

2013): Deceit (a type of common law fraud) requires: 1)

misrepresentation; 2) knowledge of falsity; 3) intent to defraud; 4)

justifiable reliance; and 5) causal damages. In this case, borrower

successfully pled several counts of intentional misrepresentation based

on separate misrepresentations by their servicer, Citimortgage.

Borrower’s first TPP agreement misrepresented Citi’s intentions

because it required borrowers to make timely TPP payments and

maintain documentation, and bound Citi to consider them for a

permanent modification if those conditions were met – something Citi

never did. Citi’s alleged conduct during the modification process (oral

and written promises, assurances, etc.), coupled with their ultimate

refusal to consider borrowers for a permanent modification, shows

knowledge and intent to defraud. Absent Citi’s TPP agreement and

assurances, borrowers would not have made their TPP payments,

demonstrating reasonable reliance. Finally, borrowers adequately pled

damages – even though their delinquency predated their modification

application—by pointing to the “dozens” of “fruitless hours” spent

trying to meet Citi’s requests (fruitless because Citi never intended to

modify), a delayed bankruptcy filing, and the TPP payments

themselves. Alleging similar facts, borrowers successfully pled another

two counts of intentional misrepresentation against Citi for 1) their

promise, and then failure, to honestly review borrower’s second HAMP

application, and 2) Citi’s notice (in letter form) of a second TPP and

subsequent failure to review them for a modification in good faith. To

show damages stemming from the second TPP, borrowers added the

sale of their car, which Citi assured borrowers would qualify them for a

modification.

From the same set of facts, borrowers successfully stated two claims

for promissory estoppel, based on each TPP agreement. Central to the

court’s reasoning was its basic view of the first TPP’s language, which

“constitutes an enforceable agreement to permanently modify a

mortgage” if the requirements are met by the borrower. Those

requirements were: 1) making timely TPP payments; 2) continuing to

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submit requested documentation; and 3) continuing to qualify for the

modification under HAMP. To plead a PE claim, borrowers must

amend their complaint to allege the third element: that they continued

to qualify for HAMP throughout the TPP process. Their PE claim is

still viable based on a different allegation, however: that Citi was

obligated to evaluate them for a permanent modification in good faith,

and failed, evidenced by Citi’s false accusation that borrowers failed to

supply all required documents, resulting in denial. Borrowers also

have a viable PE claim based on the second TPP. “After all trial period

payments are timely made and you have submitted all the required

documents, your mortgage will be permanently modified,” is a clear

and unambiguous promise, and their TPP payment evidenced

justifiable reliance, and constitutes an injury.

Pre-HBOR, CC § 2924 required foreclosing entities to record an NOD,

let three months pass, and then record an NTS. HBOR clarified that

the foreclosing entity must also possess the authority to foreclose. CC §

2924(a)(6). Even without this additional protection, though, these

borrowers successfully pled a wrongful foreclosure claim based on an

authority to foreclose theory. They alleged that defendant Lone Star

was the beneficiary and note holder when MERS, not Lone Star,

assigned the DOT to Citi. Because Lone Star held the note, was the

loan’s beneficiary, and apparently did not appoint MERS as its agent,

MERS did not have the authority to assign anything, voiding the

foreclosure. (Borrowers must present evidence, showing that MERS

was not Lone Star’s agent, at a later stage.)

HOLA Preemption; CC § 2923.5 Requirements; Wrongful

Foreclosure Claim Based on Loan Securitization

Cerezo v. Wells Fargo Bank, N.A., 2013 WL 4029274 (N.D. Cal.

Aug. 6, 2013): California federal district courts have adopted several

different analyses to determine whether national banks can invoke

HOLA preemption, despite HOLA’s application to federal savings

associations. This court objected to the popular “bright line method[ ]

of applying HOLA wholesale to any successor in interest to a federal

savings association . . . .” Logically, it makes more sense to examine

the conduct being litigated. If the conduct arises from the savings

association’s activities, apply HOLA. If the conduct arises from the

19

bank’s activities, then discern “whether the action stems from the

successor’s obligations on instruments originating from the [savings

association] or whether the successor is acting independently of any

requirements from the instruments.” The court though, declined to

decide the HOLA issue without sufficient briefing.

CC § 2923.5 only applies to owner-occupied property (defined in CC §

2924.15). Borrower’s failure to allege compliance with this requirement

was not fatal to their claim, however, because defendant conceded this

element by requesting judicial notice of their § 2923.5 declaration, in

which defendant did not dispute owner-occupancy.

A § 2923.5 declaration attests to a servicer’s due diligence in

attempting to contact the borrower. Here, borrowers alleged that

defendant never contacted them pre-NOD, nor had defendant complied

with § 2923.5’s due diligence requirements. Further, defendant’s §

2923.5 declaration was invalid because it was signed by someone who

lacked personal knowledge of its contents. The court found personal

knowledge not required to sign a declaration.26 Borrower’s § 2923.5

claim survived anyway, though, because their allegation that they

were never contacted is a triable issue. While the claim survived, the

court denied borrower’s request for an injunction, reasoning that the

borrowers may delay the foreclosure by prevailing on the merits.

As in Barrionuevo (above), borrower’s authority to foreclose theory is

premised on the original lender’s securitization of the note before

defendant invalidly purchased it. Other courts have found “that

securitization of the . . . note does not result in loss of the power of sale

under a DOT,” but this court disagrees. Securitizing the note sells the

“proceeds from the mortgage,” and it would be illogical if the seller

somehow retained the right to foreclose on the property.

Class Certification on Contract, Rosenthal Act, & UCL Claims

Based in TPP Agreements

26 Notably, the court did not discuss CC § 2924.17, which became effective January 1,

2013 as part of HBOR. This statute requires servicers to review § 2923.5 declarations

and ensure that their contents are supported by “competent and reliable evidence.”

In this case, the NOD was recorded in 2012, and § 2924.17 may have then not

applied, even though the litigation began in 2013.

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Gaudin v. Saxon Mortg. Servs. Inc., 2013 WL 4029043 (N.D. Cal.

Aug. 5, 2013): The court certified the proposed class in this HAMP TPP

breach of contract case because all essential certification elements

were met. Notably, the named plaintiff’s basic claim – that compliance

with TPP requirements created an enforceable contract requiring

defendant to provide her with a permanent modification—raised

common and typical questions that pertained to a defined,

ascertainable class: borrowers who complied with the same TPP

agreement, with the same servicer, and were never given permanent

modifications. The court analyzed each claim to determine whether

they predominate and are superior to the individual class members.

All contract elements (performance, breach, consideration, and

damages) must meet the “predominance and superiority” requirement

for the breach of contract claim to survive class certification. Here, not

only were TPP payments themselves ruled consideration, but so too

was applying for a modification (which requires “burdensome

documentation”), jeopardizing credit ratings by reduced mortgage

payments, and risking a pointless loan extension (with additional

interest and late payments) if a permanent modification was never

granted. This consideration was common to all class as participants in

the same TPP agreement.

Under the FDCPA, entities that collect “‘a debt which was not in

default at the time it was obtained’” are not considered “debt

collectors.” There is no similar restriction in the Rosenthal Act. To

bring a valid claim under the Rosenthal Act, then, a borrower does not

need to be in default, whereas an FDCPA claim requires default to

have standing. Plaintiffs’ Rosenthal Act claims also meet class

certification requirements because the Rosenthal violations are in the

“four corners” of the TPP, common to all class members.

There are three possible prongs within a UCL claim: unlawful, unfair,

and fraudulent. The unlawful prong bases a UCL violation on another

actionable claim. Here, the Rosenthal Act violation provides the basis

for borrower’s unlawful claim. The unfair prong involves an evaluation

of harm to the plaintiff and benefit to the defendant, a public policy, or

unfair competition. Here, the TPP agreement itself, and defendant’s

“uniform” practice of denying permanent modifications, provide the

basis for an “unfair” inquiry. Fraudulent practices must be likely to

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deceive the public. Defendant’s systemic practice of denying

modifications based on certain criteria, after a borrower complied with

their TPP, could deceive the public. All three UCL prongs are

actionable as to the entire class.

Valid Dual Tracking Claim After Voluntarily Postponed Sale

Young v. Deutsche Bank Nat’l Trust Co., 2013 WL 3992710 (E.D.

Cal. Aug. 2, 2013): A HBOR dual tracking claim may still be viable

even when no foreclosure sale is currently scheduled. Here, borrower

alleged they submitted a complete modification application to their

servicer, who then recorded an NTS without evaluating the

application. After borrower filed his complaint, the servicer voluntarily

postponed the sale and a modification evaluation is underway. The

court still granted borrower leave to amend their complaint to include

a dual tracking claim because the NTS violated the statute, even if the

statute’s goals (a postponed sale and a modification evaluation) are

currently being met. That the NOD was recorded pre-HBOR (before

1/1/13) is irrelevant because borrower only alleges that the NTS and

the scheduling of the foreclosure sale violated dual tracking provisions.

Pre-Default Foreclosure Claim; Delayed Discovery Rule; UCL

Standing; HOLA Preemption; Duty of Care

Gerbery v. Wells Fargo Bank, N.A., 2013 WL 3946065 (S.D. Cal.

July 31, 2013): Claim ripeness is determined by: 1) “whether delayed

review of the issue would cause hardship to the parties, and 2) whether

the issues are fit for judicial decision or would benefit from further

factual development.” Importantly, the injury to plaintiff does not need

to have occurred, if the injury is “certainly impending.” In this case,

borrowers brought UCL, fraud, negligent misrepresentation,

promissory estoppel, and contract claims while current on their

mortgage payments. The court nevertheless found these claims ripe

because borrower’s mortgage payments have increased by over $2,000,

an “economic injury sufficient to satisfy the ripeness inquiry.” Further,

delayed review would drive borrowers closer to foreclosure, and

defendant’s conduct has already occurred, even if the ultimate harm

has not.

22

Borrower’s claims were nevertheless time barred. Usually, statute of

limitations clocks begin when the conduct or transaction transpired.

Under the doctrine of delayed discovery, SOL clocks can toll until the

plaintiff discovered (or had reasonable opportunity to discover) the

misconduct. To take advantage of this tolling, a borrower must show:

1) when and how they made their discovery; and 2) why it was

unreasonable for them to discover the misconduct sooner. Here, the

court dismissed borrower’s claims with leave to amend because

borrowers made no attempt to assert the doctrine besides claiming

that that were unaware of defendant’s fraud until 2011 (the loan

originated in 2007 and they brought suit in 2013).

UCL standing requires a “distinct and palpable injury” that was

caused by the UCL violation. Here, borrower’s alleged injuries—

foreclosure risk, forgone opportunities to refinance, and hiring an

attorney and experts—are not particular enough to constitute UCL

standing. The court advised borrowers to plead the increased mortgage

payments as an injury.

Applying a HOLA preemption analysis to a national bank, this court

nevertheless found borrower’s UCL, fraud, and negligent

misrepresentation claims not preempted. Even though defendant’s

conduct arguably qualifies as “servicing,” and would therefore fall

under the purview of HOLA and OTS regulations, the specific type of

alleged misrepresentation here, promising to honestly and fairly

evaluate borrower’s modification application, “‘rel[ies] on the general

duty not to misrepresent material facts,’” and is not preempted.

To claim negligent misrepresentation, a borrower must show “some

type of legal relationship giving rise to a duty of care” between

themselves and their servicer. Generally, servicers do not owe a duty of

care to a borrower because their relationship does not exceed the usual

lender-borrower relationship. The court cites two exceptions to this

rule. First, if the servicer’s activities go beyond that usual relationship.

Second, if the servicer’s actions meet the conditions of a six-factor test

developed by the California Supreme Court. Here, borrowers’ claim

that defendant attempted to induce them into skipping mortgage

payments so defendant could eventually foreclose, meets both

exceptions. “[W]hen the lender takes action intended to induce a

borrower to enter into a particular loan transaction that is not only

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intended to protect the lender - the lender’s activities have exceeded

those of a conventional lender.” Additionally, the court found the

dramatic increase in borrower’s mortgage payments a basis for

establishing a duty of care according to the six-factor California

Supreme Court test. The payments were a foreseeable and certain

financial strain, directly resulting from defendant’s

misrepresentations, for which defendant was morally to blame, and

finding a duty of care here is in the public’s interest. Even with this

duty of care though, borrowers need to amend their complaint to meet

the specificity requirements for negligent misrepresentation claims.

HOLA Preemption & Laws of General Applicability

Babb v. Wachovia Mortg., FSB, 2013 WL 3985001 (C.D. Cal. July

26, 2013): The Home Owner’s Loan Act and its attendant OTS

regulations govern federal savings associations. This court adopts the

view that a national bank may assert HOLA preemption defensively if

it purchased a loan that originated with a federal savings associated.

Other California federal district courts have focused on the conduct

being litigated, rather than loan origination, to determine whether

HOLA applies. Here though, Wells Fargo was allowed to assert HOLA

preemption because it acquired a loan originated by a FSA.27

Under HOLA, “state laws of general applicability . . . are preempted if

their enforcement would impact federal savings associations” in

relation to loan-related fees, disclosures and advertising, processing,

origination, or servicing. Here, borrowers based their promissory

estoppel claim on their servicer’s delayed response to the modification

application. The servicer’s actions, though, amounted to loan

“servicing,” expressly preempted under HOLA. Borrowers’ other claims

(breach of contract, breach of implied covenant of good faith and fair

dealing, negligence, negligent and intentional interference with

prospective economic advantage, fraud, and UCL), all based on state

laws of general applicability, were also preempted by HOLA and

27 Also, the court uses “Wachovia” to describe defendant, only noting in the

Background that Wachovia was “later acquired by Wells Fargo.” Even if this court

did adopt the conduct-related approach, it is unclear from the opinion whose

servicing conduct is at issue, Wells Fargo’s or Wachovia’s.

24

dismissed. The court equated the modification process with loan

servicing in every instance.

National Housing Act’s Servicing Standards & Federal

Jurisdiction

Smith v. Deutsche Bank Nat’l Trust, 2013 WL 3863947 (E.D. Cal.

July 24, 2013): Federal courts exercise original jurisdiction over “all

civil actions arising under [federal] law.” The “mere mention” of a

federal law does not, however, automatically bestow federal subject

matter jurisdiction. “A claim arises under federal law ‘only if it

involves a determination respecting the validity, construction, or effect

of such a law and the result of the action depends on that

determination.’” In other words, the federal question must be

“substantial.” While not dispositive, the lack of a private right of action

in the federal law often indicates that federal jurisdiction is

inappropriate. Here, defendant removed borrower’s original state case

to federal court based on a wrongful foreclosure claim, which stemmed

from a violation of the foreclosure prevention servicing requirements in

the National Housing Act. The court agreed that this was too tenuous

a thread on which to base jurisdiction. Neither the NHA nor its

foreclosure prevention provisions provide for a private right of action.

Further, the question before the court – a state based wrongful

foreclosure claim—does not delve into the “validity, construction, or

effect” of the NHA provisions. The case was remanded to the more

appropriate state court.

Breach of Contract and Promissory Estoppel Claims Based on

Modification Offer Letter

Loftis v. Homeward Residential, Inc., 2013 WL 4045808 (C.D. Cal.

June 11, 2013): To plead a breach of contract claim, borrowers must

allege a contract, their performance, defendant’s breach, and damages.

Here, defendant’s congratulatory letter, alerting borrowers of their

modification eligibility, constituted an express contract. The letter

instructed borrowers that they could “accept” the “offer” by (1)

completing and returning the agreement and (2) continuing to make

TPP payments. Borrowers performed by fulfilling these instructions

25

and defendant breached by refusing to modify, and instead, raising the

loan’s interest rate. Damages are often difficult to show, if borrower’s

default, not the servicer’s refusal to modify, led to foreclosure. Here

though, borrowers successfully pled damages by alleging they were

current on their mortgage and TPP payments before defendant raised

their interest rate. It was this raise (contract breach) that led to

increased monthly payments, eventual default, and foreclosure.

Defendant’s statute of frauds defense failed. The offer letter was

printed on defendant’s letterhead and signed, complying with the

statute of frauds: a writing “subscribed by the party to be charged.”

Defendant’s failure to return a signed copy to borrowers does not

change this analysis because the letter already memorialized the

contract in writing, and defendant intended to be bound by the

contract if the borrower fulfilled its requirements.

Borrower’s promissory estoppel claim survives for similar reasons.

First, the offer letter constitutes a clear and unambiguous promise: “if

you comply . . . we will modify your mortgage loan.” Borrowers alleged

lost refinancing, bankruptcy, and sale opportunities, and the court

agreed that this constituted reasonable, detrimental reliance.

Defendant argued that borrowers had time to pursue these

opportunities between the alleged breach and the foreclosure sale. The

court determined potential opportunities occurring after the breach do

not negate reliance.

Correction to August newsletter:

Caldwell v. Wells Fargo Bank, N.A., 2013 WL 3789808 (N.D. Cal.

July 16, 2013).

Original: CC § 2923.6(g) allows for resubmission of an application for

a first lien loan modification. Dual tracking protections therefore do

not protect a borrower who previously defaulted on a modification

plan. Here, the court found the borrower unlikely to prevail on the

merits (for purposes of a TRO request) of her dual tracking claim

despite an alleged change in income, because her default on her first

modification disqualified her from any further modification evaluation.

Revised: CC § 2923.6(g) provides dual-tracking protections for

resubmission of an application for a loan modification if there has been

26

a “material change in the borrower’s financial circumstances since the

date of the borrower’s previous application,” which has been

documented and submitted to the servicer. Here, the court determined

that Wells Fargo evaluated the borrower’s second loan modification

application and denied the application based on its internal policy of

denying second modifications to borrowers who previously defaulted on

a modification constitutes an “evaluation” under HBOR. The borrower

was deemed unlikely to prevail on the merits of her dual tracking

claim because of Wells Fargo’s proper denial under its internal

modification evaluation policy, not because her previous default

disqualified her from HBOR’s dual tracking protections on a second

modification evaluation. Under CC § 2923.6, she was entitled to a

second evaluation because of her change in financial circumstances.

She received an evaluation and was denied.

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COL?\iY OF SASTA CL\RA

APPELL \TE 1>1\'1510;';

THE BANK OF I\CW YORK. ~·tELLON,

Plaintiff and Respond~nt,

v.

VIDAL A. PRECIADO, ET AL

Ddendants and Appellants.

Case Nos. \-12 -:\1'-00 1360 nnd 1- 12 -:\1'-00 \)6\

ORDER

The appcJ! by appellants Vidal Preciado ("Prec iado"), Roland Luke ("Luke"), nnd

Kenm:th I-[cnderson ("Henderson") (collectively, "Appellants") from the un!lIwfu! detainer

judgments entered on M:lfCh Hi, 2012, C;l.mc on regubrly for hearing and was heard and

submitted on August 16. 2013. We hereby hold as follows:

I'roceduraill is tory

This is:m appeal from IWO related unlawful detainer actions. 1 Respondent '1l1e Bank of

New York Mellon ("Bank") is the owner of 1343 State Street, in Alviso, Cali fornia. On July

25,20 11 , B.lnk (lcquired title to this property (It a trustee's sale pursuant to foreclosure upon a

det'd of trusl. TIle property W(lS previously owned by Precbdo and occupied by Appellants.

, Sep:lfn:~ C1~fk 's TrJnscript~ "efe p:l:pnf~d for Case ~os . l-ll-CV -215285 ( A~t1e~1 :':0. , . I 2 ·AI'·QO 1 360) i!.' <:! I. I I·CV ·215 25 S ("preJI 1"0. 1·12·:\ N )O 13 61). I ~ order 10 avoid t o:lfusio:l. the C krk' s T rar\lcrip:.s in Ih~ rNO

elses " ill be eileJ as ""CT-2S6"" nrod ""CT-2SS.~ respectively. A sir.gle Repo:-.er·s Tra.""lsc:i;J: ("RT') "ns pre~ued as the trials took pbee al the SJme lime.

ORDER

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On September 1. 20 11. 113m: sen 'cd :1 wlinen nolice 1o Appellants to qui t and deli \'cr

possession ofl he property witlun three days, 30 d<! ys. or 90 days (depending 0 :1 thei: OCCU~3~Cy

SHlIUS).: After \\';!. iling more ,h.," 90 days, !Junk fi lt'd two unlowful detainer complaints il.g3inst

Appell :!.nl' on December 19, 20 11.3 TIle complaints incom e!l:- described the p:,open)' e..5 being

loc:llcd in San Jose instead of 1\1 \' iso. Appd l:1nts fi led indi\'idua] answers to the complaints.

:md Henderson nnd l uke also filed indivi du:!.I prejudgment cJ3ims of ri ght 10 po15ession,'

Trial on Ihc un!:\w(ul dClaint'T aCliom w:u h!:ld on March lei , 201 2, befo:e Li e

lionomhk- SOCt:.llcS Mnnouki:m.' That same day, It judgment was cnlered in eilch Cil5 C which

I\w:m.led B:mk possession of the property, rent, :md d3m3ges.' lIowe','(:r, \\ h~n th~ 5heriff

sOIl£ht 10 (':-. ::n l1C tltc wri t. it \\';15 disco\'t' red thaI the property w:n incorrectl y lis ted as ~ing in

I 51\n Jose. The sheriff was un:'Lble 10 cxecute the \\Ti t due to this c rro ~. :md Bank moved fo ~ an 12 J ,ex pJ.o"'te or-Jer 10 amend the judgment. On April 13 . 2012. the court enl~red 3.."1 ord~r a:ne::din g 13

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th~ juds~en:.s 10 change the propcny address to Alviso, '

AI Appellants' request. the court st3yed Appell:!.nts' evic tion (or ':0 enys. cp to !:'.d

i:-:;:Iud:n£ .. \ p: i! 2S, 20 12.9 Appell:mts filcd indi \"idU3! noticcJ of 3ppca1 fro~ !~e \ 12.: ch 16.

20 12 j udgm~nts. to

,\ppc::. l::.hi lity

A finz l judgment in :l limited civil casc is appe:ll3b1c to L1c :l?pellate division of 6 :

s~p= rio: court. (Code Civ. Prot., § 90 .. ;,], subd. (a).) The t~bJ court entered judg::l~n: i:: t:':~ s :

limiterl civil cases on ~1nrch 16. 201 2. Accordingly. the judgments are apPcJ.b:'!e 10 ti:~

Appclb te Dh"ision.

1/1

: Stt CT .. 2!6. pp. 9 .. !2. CT ·283, pp 9· 12. I 5 : e CT .. 2!6. pp. 1· 12. cr·28~. PI' . 1· 12 • Sec CT .. 2!6. pp 20·25. JO .. J I. CT .. 2&8 , rp 10·N . 27·jO. 45"":6 ) 'On Ihl! Wlle e ly. i'!ecmlo lik d • "Ion l>ful filrec1osu:e =cl jo~ 'SJin il UJlIl ~lI J other c: r:~, Cl:l:J; . (See cr .. 2M. p 20C0 .. W)

StC CT·2!6. pp IjO· ! jO. CT .. 2&8, rp II J· &-I . · See CT .. 286, Pi" 1J2 .. 165. CT ·188. rp SH IS I Sce CT.2S6. P? 166 .. 167.Cr·2n . r? 119 .. 120. • Sn CT·156. p 23J . C T .. 2u' pp. 129·1J2 I' See C1 .286. pj). 26] .. 265. 270·212. CT·::!!. r p 161 .. t6-1. t69 .. 171 .

2

OlllER

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On nppcal. Appellants make the following Ilrgumcnts:

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111e Appci1n!c Division must conduct an independent review of the entire rt:conl pursuant to People II. Wende ;

"111e SCfyicc Process was liucrcd \\ith gross procedural irregulari ties";

Ihnk of Amctk'a did not produce evidence sufficient to prove that Lite forcdosurc sale was conducted in strict compliance with Civil (ode section 291..: :mc! thll ti tk was duly perfected; and

Uank improperly filed two SCp:l!2.IC unlawful detainer actions fa: the same propeny.

StantianlornCl"iew

In an appeal from an unlawful detainer jUdgment, "(wJc revicw the trial coun's findings

of (:lct to determine whether the)' arc sUfponed by subs1:mtial evidence," (Palm Properry

b ll"eS /l/l i!Jl/S, LLC v. rad~gar (2011) 19'; Cal.App.4th 1419. 1425.) To the extent the trial COUtt

drew conc:lusions of b w based upon its findings of fan, we review those conclusions of law d~

no\'o. (/d. at pp. 1425·1426.)

I' rop!!.'" Y. Wend e is In :tpp licable 10 Ch'il Appc:lls

Ap?ellants' first argument is that the Appellate Division must conduct an independent

rc\'icw oflhe entire record pursuant to People \'. Wendr (1979) 25 Cal.3d 436. Howe\'er. a

Wendt' review only upplics to criminal uppeals. (See In re Sade C. (1996) 13 Cal.4th 952, 98';')

In civil ::tppc31s, the nppellnte coens ue 110/ required to perform an u.'1lSs i5!cd stud\" of

thc record O~ rC\'jcw of the law relevant 10 a p:my's contentions on appeal. (Air CO!lriefl

Intt rnal. \P. Employmt lll Dewfopmel:t D~pl. (2007) 150 CaLApp.4lh 923, 928; GUlhrry,'. Slale

o/California (1998) 63 CnLApp.4lh 11 08, I! 15 .) Instead. a part(s failure to perform its duty

to providt! nrgument, citations to the record, nnd legal authority in support of a contention mly

be trelteu as a waiver of the issue. (A nw)(f Corp. \'. Hamil/on & Samuels (2002) 100

Cal.App.4th 1286, 130 1; Peopft ex ref. l Oll! Cen/llry flu. Co. \'. Hili/ding Permit Consultonts.

II/C, (2000) 86 Cal.App.4th 280, 284 ; GMhrey, sllpra, at pp. I I I $.1116.) Thus. ApprllalllS'

requC5t for an independent Wende review is improper.

3

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Apl'd lal1ls at~lIl! that they ww: not properly ser\'ed Wilh notices terminating their

I cn~ l h;~· . As:\ 1l1\:T\.'quisilc \0 minS an unlawful detainer tletion. a tenant must be ser.'cd wilh

dlhc[ a 3, 30. ,'I' 90 ,I:\rs' 1I0lice, dcp(,lIding on the individual's slatus ns n tenant. (Code Ci \',

\'\w .. §§ 11 61. 1161:1. 11 61 b.) Code of Civil Procedure section 116i! provides three methods

l, r ~cn'i ng these noli,'cs: ( I) by personal dcli\"cl')" \0 the !('n:lnl (pcrsoru[ service); or (2) jfthe

ICII:lnl is at-sen! from his residence :md Usu:li pl3cc of business, by Jcu\'ing a copy \\i lh a person

t' f suitable age and di scret ion at either pInel.'. and sending a copy through the mail to the ten:mfi

tc~idcnc~ (substituted service); or (3) if a place of residence and usual place of business cannot

h: :lsCCMJincd or n person of suitable :l£e or discretion C!lrulot be found there, then by :lffixing II

((lPY in :l cOI1~r i cllous pbcc lln thc property :lnd ddi\'cring a cepy to (l person residing there, if

5\I\:h n pencn can be found,:!.:1d al$o s ~'nd ins a copy through th: m:lil addressed to the tenant a1

the place where the propeny is sitUlltcd (post:md mllil service), A notice is \'alid and

cnfl)r,'cable only if the lessor has strictly complied '\i th these statutori ly m:mdlllcd requirements

f",r 5eryice. (LM om io \'. -'(otta (1998) 67 Cal.App.4lh 110, 11 3·14; Liebo\'ich v.

ShClhrokHh:my (1 997) ~ 6 Clll.App.-i lh 511, 5 I 3,)

AI trial. Henderson testified that he did not receive any notice to quit. (RT, p. 14: 11·15.)

In rcsponse, )) :mk ' s counsel e .~pl:!. ine-d Ihal llllthe- occupants were- sefyed with a notice 10 quit

on Scpleillber I, 20 11 . Bank' s counsd referred the court 10 Exhibit B of Dank's complainl

wh ich CO:ltaincJ the proofs of ser\'ice for the notices. (RT, p. 14 : 16·23.) In the proofs of

sen'ice, reg istered process sener Kris VOfS.JIZ (,-Vorsatz") declared that he served the notices

('II September I, 20 II. (CT ·286, pp. 11.12; CT ·288 , ['[I 11 . 12) ,\ ecornin8 to the proofs of

scrvice, "[aJftt:r dU!: and diligc r11 cOort" "orsatz posted a copy of the notices on 1343 Stale

Street, S3" Jose, ClI1ifomi3. (id) Thereafter, Versatz mailed a copy of e<!ch notice :o n post

oOicl." box that was designated as Presiado 's mailing address. (Id.) The court then entered

judpllenl for Bank. (RT, p. 14:26·27.)

2S II ---------------II 11n~Jfhr, unkH olh~rwis~ stJled, all section re rnenc~ ;lre to the Code of C:\'il Procedure.

4

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Where serv;ce is carried out by a registered process server, Evidence Code section 647

2 applies to c\imin31C the necessity of calling the process server as:l \\~t ness 31lfial. (Pa/III

3 I'roprrty /III'l'stlll l'lIts, L!.C \', )'adegar, slIpra, 194 CaLApp.41h :H p. 1427.) Under Evidence

4 Codc section 647. "[I]hc return of a process server [ I uJ:on process or notice establishes n

.s presumption. affecting Ihc burden of producing evidence. of thc facts slaled in the return ," A5

6 U:mk did not produce VO(5317. as a witness, the question is whether Vorsalz's proofs of scry icc

7 cslab l ish~d Dlnk complied w;lh thc notice requircmentsof seClion 11 62.

8 In Iligh/nnd Plas/lcs, Inc. \'. Enders (1980) 109 Cal.AppJd Supp. 1, thc coun analyzed

9 whelher there was sufficient evidence that the landlord complied wilh the "post and mail"

10 provision of section 1162. The court noted thlt this code section does not requi re:1 showing of

II rcasonlble diligence in atlempting personal service before utilizing the substi tuted service

12 provisior.s, as required in Code ofC ivjl Procedure section 41 5.20, subdivi sion (b). (ld at p. 6.)

13 It docs require, however, "that if the tenant c:mnot be located fo r personll service that the

14 person mlking this substituted service first determine either thlllhe tenant 'S', .. place of

15 residence and business cannot be ascertained, o~ that a person of suitable age or discretion there

16 CMnot b: found .. .. ' .. (ld) In Highland Plastics, the deputy marshll lestified Ihat when he

\7 attempted to serve the 30·day notice on dd::ndant. no O:lC answered his knock on the door of

18 the premises which had been identified to him as the place of residence and business of

19 defendant. (ld. at pp. 6-7,) When there was no response to the deputy's knock, he then posted

20 the not ice "in a conspicuous place on the property" and mailed a copy to the place where the

21 propeny was situated. (lei. at p. 7.) Thus, the court conduded that there was substantial

22 evidence supporting the trial court 's find ing that there hJd been (! proper service of the not ice

23 utiliz ing the "pOSt :lnd nl:lij" provi sions :ls neither the defend~nt nOr:l person of suitable age and

24 discretion co uld be found. (lei.)

25 Similarly, in flo:::: \'. Lewis (1989) 215 Cal.App.3d 314, the court held that trial coun

26 properly found that the landlord's "post and mail" procedure of service of n Ihrce·dlY notice

27 pursuant to section 1162 was :ldequate, In that case, testimony at trial established that the

28 landlord's agent went to th~ apartment, rang the bell and knocked on the door. When no one

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:mswC'red.the employee l:lpC'd n copy of lhe notice to the door :md slipped another copy under

2 the door. He Ihen posted another copy by mlil :!ddre~5!d to the (cnlnt. (It/. at p. 3! 6.) Since no

3 one \\-:lS pres,"nt when the procC'ss serve, went 10 Ih," :!.p:;nmenl. ~post and mair' service \\-:lS

4 authoriud under settion 1162. (ld. at p. 31 i.)

5 As explained :!.bove. no sho\\inS ofre:lSon3ble dilisen,"e in 3ltempting personal sen"ice

6 before utilizing the substituted service pro\'isions is rC'quired under the statule. (See Ho:: v.

7 L,'" is. supra. 215 Cal.App.3d at p" 317.) Ne\"enheless. "post ilnd m3il" scn'ice is not

S 3uthorized 3S a first-reson melhod of sm;ce. Here, Vors:ltz's deelnrntion does not establish

9 Ihat Bank complied wilh seclion 1162 as it does show Ihll person:li serviee was fver auempted.

10 The proofs of service do nOI st He Ih:ll Appell:!nts were not home or Ihul no one of a suitable age

II was home whC'n the sen'er posted the r!otiC'e "in:l conspicuous pbce:"

12 In its opposition brier". Bm.!.:. argue,; th:!.t Appellants m:!.y not eh:llknge service of the

13 notices as Ihey did nOI include this lS enlffinn:lIiw defense in their answers. Dank is mistaken.

14 An affirmative defense is e.!l o.!Iegation of new m:mer in thC' answer th:lt is not responsi\'e to an

15 essential allegation in the eompb.int. In other words. an 2flinnati\'e defense is an allegation

16 relied on by the deicndant that is not put in issue by the phintifr s complaint. (B~l'iIl ,'. l O/lra

17 ( 1 99~) 2i Cal.AppAlh 694. 69S; Stare Farm .\fut. Au/o. IllS Co \". Sllprrior Court (199 1) 228

t S Cnl .AppJd 721. 725 .) Where the answer :llleg:s f:l.cts showing th:lt some essential allegation of

19 the complaint is not true. those f:lets lre not "new m:ltler:' but only a tr3.\"ersc. (Ibid.) Because

20 proper serdee of the tennin:l.tion notices W:lS an essentid element of Dank 's unlnwful detainer

21 actions. Appel!:l.nts· general denbl of e:lch s!Jlem: m of lhe compbint sufficiently put the

22 service of the notices:n issue:!.nd Appellants were not required to pleld ineffective notice as an

23 af1innalil'C' defense. (See BeviIJ v. Zoura. supra. 27 Cal.App.4lh at p. 698.)

24 According!y, the judgment for possession must be reversed because Bnnk f3i1ed to

25 est3bl ish proper senite of the notices. (See Li~bol'ich \". Shah -okhkhany. supra, 56

26 Cal.App.4th at p. 514.)

27 III

28 III

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Sale ill Complia nce with Ch'iI Coll e § 2924 ct seq, and the IJccti of T n n t

2 "I listoricallya cause of action for unlawful detainer was available only to a land lord

3 against his tenant." (Gross v. Superior COllrt (1985) 171 Cal.App.3d 265. 271 .) The remedy

.: lUIS been expanded by statute to :ldditional categories of plaintiffs (sec Code Civ. Proc. , § 11( 1)

5 :lnd defendants (sec Code Civ. Proc., § 116Ia). The: purpose of section 1161 a of Ihc Code of

6 Civil Procedure was to make clear that one i1cquiring ownership through foreclosure could nlsa

7 evict by a summary procedure. (Sec Gross v. SlIperior COllrt. lIIpra, 17 1 Cn l.App.3d 01 p. 271 .)

8 In 30 un lawful detainer action brought pursuanl lo Code of Civ ill'rocedurc section

9 1161a, subdivision (b)(3), the piaintiffmusl show that h: acquired the property nt a regulnrly

10 conducted sa le nnd Ihereafter "du ly perfected" his title. (Slcplu:I1S \'. lIollis (1987) 196

I I Cal.A pp.3d 948, 952; Emlls \'. Superior COlirt (1977) 67 C(lI.AppJ d 162, 169.) "[Wlhere the

12 pl.:iillli ff in the unlawful detainer action is the purchaser at a Irustee' s sale, he or she 'need only

!3 prove:l sale in com pliance wi th the statute: and deed of trust, followed by purchase at sueh sale,

I': :!Ild Ihe defendant mly raise objections only on Ihal phase of the issue of ti tJe.' " (O/d Nat '/

J 5 Fill Sm 's v. Stibtrl (1987) 194 Cal.App.jd 460. 465 .) "The statute" with which a post·

16 fo reclosure plaintiff must prove compliance is Civil Code section 2924. (Seidell v. Ilng/o ·

17 Cali/oril la Trllst Co. (1942) 55 Cnl.App.2d 9D, 920.) On appell, Appcl13.nts asserted thl ! Dank

18 did 1I0t lIlt'et its a Oirm:,tin~ butdt'll in this regard.

19 ;\lll ial, Bunk pro\'ided the Trustee' s Deed UponS.,le, recordt'd August S, 20 11 . (Sec

20 RT, p. 5: 1.11 .) The Trustee's Deed Upon Sale purportedly showed Ihat Bank purchased the

21 property li t the truSlcc' s sule held on July 25, 2011. (S ec CT·286, pp. 6·S.) Luke then testified

22 that he w~s III the (mction, rind that Ih t' property "went back \0 [lank of Americu." (St'c itT, p.

23 6:25 ·26.) I'lccittdo testified thaI the loan was ori!;inally with Count-ywide, :tnd tht'n

24 COl1rurywide W:IS "1:lkcl1 over by Bank of America." (Sec RT, p. 6:17·28.) Tht' court

25 I'C)llOnded, "\Veil, [ don' l know what Bank of America did or didn't do, bUlthey hrlvc {I deed I

26 Illl're showin!! it's dilly nUlhl'nticntcd, the det'd that Bank of New YorK Mellon owns the propt'rty

27 ill·re." (Sec RT, p. 7:16-1 9.) When I\ ppcllanls pre:sst'd !lank 10 provt' it ownt'd tht' property, the

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court st:l1ed, "Thcy h:l.vc a dced showing thJt they O\m the property. and that's 011 they need to

2 do." (SC'C' RT, p. 8:21 ·23 ,)

J The trial court erred \\hen it found that the Trmtee' s Deed Upon Sok was sufficient

.: proo f thai Ihnk acquired the property :lt 11 regularly conducted sak and thcn:after "duly

5 pcrfected" its titk, "{TJit le is du ly perfcctC'd whcn nil steps hJ\'C' ix:C'n taken to make it perfect.

6 i.e" \0 COllVCY to the purchaser that which he h:ts purchJsC'd, \':did and good beyond:l ll

7 re:lsonJbk doubt. which includC's good record (i lk. but is nol li mi!ed to good record lil le, as

8 between the p;lr1ies to the tr:msJction. The lerm 'duly' implies th:lt all of those elements

9 !1eccssJ:-)' to J valid sJle exist, el Se there would nOI be J SJlc at ~1J. (Kessler ~'. Bridge (19 58 )

10 161 Cal App.2d Supp. 837. 84 1 li nlern~l citations om itted].) Uncb:l decd of trust, power of

II sale upon the trustor's default veSls in the trusteC'. (Ca/I'o I'. HSBe Balik USA, NA. (201 I) 199

12 Cal.AppAth 118, 122.) Therefore, in order to provC' compli:lnce with section 2924, the pla intiff

13 must necessarily provC' the s:llC' was conducted by the t:ustee.

I": Here, the Trustee's Deed Upon Sale indicates th~ p~operty was sold by Recontrust

15 Comp:my, i\" ,A. :!cting os trustee. However. th: D~ed of Trmt identifies Comr:1onwe]!th Lar:d

16 Title Comp:!ny as the trustee. (S ee CT·286, p. 121.) Ihr.k did r:ot provide any evidence

17 C'slaolishing Recontrust's authority 10 conduct the trus tC'c' s sale. As BmT..: failed to p:ovide :!.!ly

18 evidence that Recontrust was substituted for the origin~l trustee, Ba.'lk was nOI entitled to

19 jcdgmer.:.

20 ,.\prellanls' r~cmaining ,\rgumenIJ

21 Given our decision to reverse the judgments, we need not rcach Appclb.ms ' rem:!ining

22 arguments.

23 III

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, ORDER

123

2323561332372372382402412412502612883333333433372433353363321883382573343400002006340000200733966634000021133400002114340000211534000021164000021903400000006303534000020083400002009

SUPERIOR COURT OF CALIFORNIA,

MINUTE ORDER

TIME: 09:00:00 AM JUDICIAL OFFICER PRESIDING: Raymond Cadei

COUNTY OF SACRAMENTO GORDON D SCHABER COURTHOUSE

DATE: 08/22/2013 DEPT: 54

CLERK: D. AheeREPORTER/ERM: BAILIFF/COURT ATTENDANT: C. Chambers

CASE INIT.DATE: 02/29/2012CASE NO: 34-2012-00119643-CU-BC-GDSCASE TITLE: Lovelace vs. Nationstar Mortgage LLCCASE CATEGORY: Civil - Unlimited

EVENT ID/DOCUMENT ID: ,9864587EVENT TYPE: Hearing on Demurrer - Civil Law and Motion - Demurrer/JOPMOVING PARTY: Nationstar Mortgage LLCCAUSAL DOCUMENT/DATE FILED: Demurrer, 04/15/2013

STOLOAPPEARANCES STOLO

StoloNature of Proceeding: Hearing on Demurrer to Second Amended Complaint TENTATIVE RULING Defendant Nationstar Mortgage LLC's ("Nationstar") demurrer to the second amended complaint("SAC") of Plaintiffs Jeff and Stacey Lovelace (the "Lovelaces") is OVERRULED.

This is a nonjudicial foreclosure case. The court previously sustained Nationstar's demurrers to theoriginal and first amended complaints. The SAC contains a single cause of action for breach of contract.The contract at issue is the Trial Period Plan ("TPP") attached to the SAC as Exhibit C. The Lovelaceshave alleged six different breaches of the TPP and have pleaded each breach as a separate "count"within their breach of contract cause of action. Nationstar demurs on grounds that the allegations fail tostate a cause of action.

In the first count, the Lovelaces allege that that the TPP required them to (1) execute and return theTPP, (2) make certain payments on a temporary basis, and (3) contact Nationstar at the conclusion ofthe trial period so that the latter could perform a "re-review" to determine the Lovelaces' eligibility for apermanent modification. (Nationstar's predecessor in interest--not Nationstar--is actually identified in theTPP, but the Lovelaces allege that Nationstar succeeded to its predecessor's benefits and obligations inthe TPP.) The Lovelaces further allege that they fully performed under the TPP, but that Nationstarfailed to perform the re-review needed to determine eligibility for a permanent modification. Becausethese allegations suffice to state a breach of contract cause of action, Nationstar's demurrer is overruled.

In overruling the demurrer, the court rejects Nationstar's argument that the Lovelaces have merelyalleged oral promises to modify their loan, which Nationstar argues are unenforceable given the statuteof frauds. (See Moving Memo. at 5:8-23 [citing CC § 2922].) Even if some of the Lovelaces' allegationsin the SAC depart from the terms of the TPP, and thus could be considered unenforceable oralpromises, the TPP contains written promises that satisfy the statute of frauds. The TPP provides:

"To accept this offer and enter into the Trial Period Modification, all borrowers must sign both copies ofthe enclosed Trial Period Plan. You must then return BOTH signed copies to us - along with your first

MINUTE ORDER DATE: 08/22/2013 Page 1 DEPT: 54 Calendar No.

CASE TITLE: Lovelace vs. Nationstar Mortgage LLC CASE NO: 34-2012-00119643-CU-BC-GDS

trial period payment in the amount of $2,800.00 - no later than 03/13/11."

(SAC, Exh. C.) The TPP at Exhibit C is signed, and the Lovelaces allege that they made the requiredpayments. The TPP further provides, "Once your final payment has been submitted, contact us for are-review of your modification." The Lovelaces alleges that they made contact when they made their lasttrial payment.

Given that the TPP is a signed, written instrument that imposed a duty upon Nationstar to conduct are-review of the Lovelaces' eligibility at the end of the trial period, Nartionstar's argument that the allegedpromises are unenforceable under the statute of frauds is unpersuasive.

In rejecting Nationstar's statute-of-frauds argument, the court notes Nationstar's argument in the Replythat some of the terms that the Lovelaces allege are part of the TPP are found in a letter to which theTPP is attached. Thus, reasons Nationstar, promises appearing in the letter are not part of the TPP andcannot be used to overcome the demurrer. The court disagrees because the letter can be construed toconstitute a part of and/or explain the TPP.

The letter and accompanying document headed "TRIAL PERIOD PLAN/MODIFICATION AGREEMENT"are numbered sequentially "1" through "4." The final page, where the Lovelaces were required toprovide signatures, contains a header with the words "Page Three" and the words "FORBEARANCEAGREEMENT." Thus, exactly how the letter and attachments interrelate is somewhat ambiguous. Inaddition, the court notes in this regard that the attachment does not contain an integration clause.

Moreover, the letter arguably explains terms in the attachment itself. Thus, for example, where theattachment states that a permanent modification would be forwarded "[i]f/[o]nce we are able to finalizeyour modified loan terms," the letter directed the Lovelaces to contact Nationstar for re-review at the endof the trial period and provided that the trial loan payments "[we]re an estimate of what your payment(s)will be IF we are able to modify your loan under the terms of the program." Read together, theseprovisions could be construed to require the Lovelaces to trigger the re-review, at which time Nationstarwould determine whether the Lovelaces qualified for a permanent modification under applicable programguidelines.

Suffice it to say that, at this point in the case, the court cannot conclude as a matter of law that the letterplays no role in establishing the terms of the TPP. Thus, the court rejects Natonstar's corollaryargument that the parol evidence bar precludes reference to the letter.

Likewise, the court rejects Nationstar's argument that the written promise to conduct a re-review canonly be construed as an "agreement to agree in the future." (Moving Memo. at 6:8-16.) The TPP can beconstrued to obligate Nationstar to perform a re-review to determine whether the Lovelaces qualified fora permanent loan modification. (See SAC, Exh. C at 1 ["You are eligible for the [TPP...¶...] The monthlytrial period payments...are an estimate of what your payment(s) will be IF we are able to modify yourloan under the terms of the program"] [ellipses added].) Thus, although the TPP does not represent anagreement that the Lovelaces would qualify for a permanent modification, it can be construed torepresent an agreement that Nationstar would perform the re-review to determine whether the Lovelacesqualified for a permanent modification under program guidelines. Because such a construction does notreduce the TPP to an agreement to agree in the future, Nationstar's contrary argument is unavailing.

Next, Nationstar argues that the demurrer should be sustained because the written TPP was not basedupon new legal consideration. (See Moving Memo. at 6:18-7:2.) The Lovelaces, however, allege thatthey expended time to submit financial documentation in order to obtain the TPP. (See SAC, ¶ 47.) TheTPP can be construed to support this allegation. (See SAC, Exh. C at ["The monthly trial periodpayments are based on the income information that you previously provided"].) At least one court has

MINUTE ORDER DATE: 08/22/2013 Page 2 DEPT: 54 Calendar No.

CASE TITLE: Lovelace vs. Nationstar Mortgage LLC CASE NO: 34-2012-00119643-CU-BC-GDS

held that, in the context of a trial loan modification, time and energy expended to submit financialdocumentation is consideration sufficient to support a breach of contract cause of action. (See Ansanelliv. JP Morgan Chase Bank, N.A. (C.D. Cal., Mar. 28, 2011) 2011 U.S. Dist. LEXIS 32350, at *9-11 [citingCalifornia cases].) Given the Lovelaces' allegation that they expended time and energy to theirdetriment, the court rejects Nationstar's "no new consideration" argument.

Next, Nationstar argues that the law does not require them to offer a permanent loan modification. Thecourt need not reach this issue because the Lovelaces have pleaded a breach of contract cause ofaction based on Nationstar's alleged failure to re-review their eligibility for a permanent modification.Whether that re-review would have resulted in the Lovelaces' qualification for a permanent modificationunder applicable guidelines involves factual issues that the court cannot currently decide. The factremains, however, that the Lovelaces have alleged a promise that Nationstar did not perform and whichdeprived the Lovelaces of an opportunity to qualify for a permanent modification. Liberally construingthese allegations, as the court must on demurrer, the Lovelaces have stated a breach of contract causeof action.

The court notes that it must overrule Nationstar's demurrer if the allegations state a cause of action onany theory. Although the Lovelaces have formatted the SAC into separate counts, each count is merelya portion of a single cause of action for breach of contract. Because the first count based upon thealleged failure to conduct the re-review states a cause of action, it is irrelevant whether other counts alsostate causes of action. Indeed, the court cannot sustain a demurrer to a mere count or other portion of acause of action. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682.) If Nationstar wishedto eliminate discrete counts in the SAC, it was required to file a motion to strike, not a demurrer. (Id. at1682-1683.)

Nationstar argues next that the demurrer should be sustained because the Lovelaces have not allegeddamages resulting from any breach. As previously discussed, the Lovelaces have alleged detriment inthe form of lost time and energy associated with the submission of financial records. Absent authority forthe proposition that such detriment cannot constitute damage as a matter of law, the court rejectsNationstar's no-damage argument.

Finally, Nationstar argues that the demurrer should be sustained because the Lovelaces impermissiblyadded co-defendants without leave of court. The Lovelaces counter that they were required to name thenew defendants as indispensable parties. Whether or not the Lovelaces were required to obtain leave ofcourt to add the new defendants to the SAC, the court is not persuaded that any failure to do so entitlesNationstar to an order sustaining a demurrer. Nationstar has no evident standing to demur on behalf ofthe newly named defendants. Moreover, it is unclear that the allegations relative to the newly nameddefendants bear upon the question whether the Lovelaces have stated a cause of action againstNationstar. And to the extent Nationstar wished to strike allegations directed against newly nameddefendants as improper, it was required to file a motion to strike not a demurrer. Accordingly, theallegations directed at newly named defendants do not lead the court to sustain Nationstar's demurrer.

Nationstar's request for judicial notice of recorded land documents is UNOPPOSED and GRANTED. Intaking judicial notice of these documents, the court accepts the fact of their existence, not the truth oftheir contents. (Herrera v. Deutsche Bank Nat'l Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

Counsel are advised that the Sacramento County Superior Court's Local Rules were revised andrenumbered as of 01/01/13. When giving notice of the court's tentative ruling system, counsel shouldcite Local Rule 1.06, not former Local Rule 3.04.

Nationstar is directed to file its answer no later than September 3, 2013.

MINUTE ORDER DATE: 08/22/2013 Page 3 DEPT: 54 Calendar No.

CASE TITLE: Lovelace vs. Nationstar Mortgage LLC CASE NO: 34-2012-00119643-CU-BC-GDS

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice isrequired.

COURT RULING There being no request for oral argument, the Court affirmed the tentative ruling.

STOLO

MINUTE ORDER DATE: 08/22/2013 Page 4 DEPT: 54 Calendar No.

MINUTE ORDER DATE: 08/22/2013 Page 4 DEPT: 54 Calendar No.

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2323561332372372382402412412502612883333333433372433353363321883382573343400002006340000200733966634000021133400002114340000211534000021164000021903400000006303534000020083400002009

SUPERIOR COURT OF CALIFORNIA,

MINUTE ORDER

TIME: 09:00:00 AM JUDICIAL OFFICER PRESIDING: Raymond Cadei

COUNTY OF SACRAMENTO GORDON D SCHABER COURTHOUSE

DATE: 08/19/2013 DEPT: 54

CLERK: D. Ahee, K. PratchenREPORTER/ERM: S. Adams CSR# 12554BAILIFF/COURT ATTENDANT: C. Chambers

CASE INIT.DATE: 06/07/2013CASE NO: 34-2013-00144866-CU-WE-GDSCASE TITLE: Rogers vs. OneWest Bank FSBCASE CATEGORY: Civil - Unlimited

EVENT TYPE: Motion for Preliminary Injunction

STOLOAPPEARANCES STOLOAldon L Bolanos, counsel, present for Plaintiff(s).Deanna Rogers, Plaintiff is present. Walter Dauterman, counsel, present for the Plaintiff.Elizabeth Rogers was present.Tiffany Rochet, counsel, present telephonically for the Defendant.

StoloNature of Proceeding: TRO OSC RE: Preliminary Injunction TENTATIVE RULING Plaintiff Deanne Rogers' motion for preliminary injunction is GRANTED.

Plaintiff moves for an injunction preventing Defendant OneWest Bank FSB or its agents from taking anyaction to sell, transfer, encumber, or otherwise interfere in any manner whatsoever to her title to herhome at 8340 Linderhof Way, Sacramento, CA 95828.

This is an action for violation of the California Homeowner Bill of Rights (Civ. Code §§2923.6 and2923.7.) Plaintiff alleges that violated the Homeowner Bill of Rights by dual-tracking her into foreclosurewith multiple points of contact.

CCP Section 527 generally authorizes a court to enter a preliminary injunction. "To obtain a preliminaryinjunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harmthat it will suffer if an injunction is not issued pending an adjudication of the merits. Past Californiadecisions further establish that, as a general matter, the question whether a preliminary injunction shouldbe granted involves two interrelated factors: (1) the likelihood that the plaintiff will prevail on the merits,and (2) the relative balance of harms that is likely to result from the granting or denial of interiminjunctive relief." (White v. Davis (2003) 30 Cal.4th 528, 554.)

"[T]he party seeking the injunction must present sufficient evidentiary facts to establish a likelihood that itwill prevail." (Tahoe Keys Property Owners' Assn. v. State Water Resources Control Board (1994) 23Cal.App.4th 1459, 1478.) In support of her motion, Plaintiff presents evidence that on April 15, 2013 shecontacted Defendant regarding a possible loan modification. (Declaration of Deanna Rogers ("RogersDeclaration"), ¶ 3.) On April 23, 2013, Plaintiff received a Residential Mortgage Assistance ("RMA")

MINUTE ORDER DATE: 08/19/2013 Page 1 DEPT: 54 Calendar No.

CASE TITLE: Rogers vs. OneWest Bank FSB CASE NO: 34-2013-00144866-CU-WE-GDS

package from Defendant. (Id., Ex. 1.) Plaintiff sent a completed package on May 6, 2013. (Id., ¶4, Ex.2.) On May 10th, John from OneWest called and left Plaintiff a voicemail indicating that he would be thesingle point of contact and that the application was being processed. (Id. ¶5.) Plaintiff attempted toreturn John's call on multiple occasions, but her call was not returned. (Id.) On May 29, 2013, Plaintifffound the Notice of Trustee's sale posted to her door. (Id. ¶6.) In response, Plaintiff phoned Defendantsand spoke with Brian Fearon who indicated that he would be the single point of contact and that her loanwas being processed and no further documents were required. (Id. ¶ 7.) Mr. Fearon refused to considerpostponing the Trustee's Sale. (Id.) On June 5, 2013, Plaintiff called Defendant to check on the statusof her application. She spoke with "Donita" who indicated that she was the single point of contact andthat no additional paperwork would be required. (Id. ¶8.) Plaintiff later received a call from Donitarequesting that she resubmit her information directly to the underwriter. (Id. ¶9.) Plaintiff has notreceived any notification that her loan modification had been denied or rejected. (Id. ¶ 11.)

Plaintiff argues that Defendant's conduct violated various provisions of the recently-enacted HomeownerBill of Rights. Plaintiff contends that Civil Code §2923.6(c) prohibits a lender from recording a notice ofdefault or notice of sale, or conducting a trustee's sale while a loan modification application is pending. Alender must make a written determination that the borrower is not eligible for a loan modification before itmay proceed with the foreclosure process. (Civil Code §2923.6(c)(1).) Plaintiff also argues thatDefendant violated the "single point of contact" rule which provides that "upon request from a borrowerwho requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish asingle point of contact and provide to the borrower one or more direct means of communication with thesingle point of contact." (Civ. Code §2923.7(a).)

Civ. Code §2923.6

In opposition, Defendant argues that it did not receive Plaintiff's RMA by May 28, 2013 (day of the Noticeof Trustee's Sale was recorded.) Defendant correctly notes that the RMA package attached as Exhibit 2to Plaintiff's declaration is not signed or dated. (See Rogers Declaration, Ex. 2.) Plaintiff's declarationstates that she mailed the RMA on May 6, 2013.

Defendant further argues that in November 2012, Plaintiff applied for, but was denied a HAMP loanmodification because she had insufficient income to qualify for the modification. (Declaration of CharlesBoyle ("Boyle Decl."), ¶ 8.) Plaintiff's HAMP application was denied in April 2013. (Id. ¶ 9.) Accordingto Defendant, pursuant to Civ. Code §2923.6(g), it was not obligated to re-review Plaintiff for a loanmodification without sufficient showing that Plaintiff's financial condition changed since her HAMP denial.Civ. Code §2923.6(g) provides

In order to minimize the risk of borrowers submitting multiple applications for first lien loan modificationsfor the purpose of delay, the mortgage servicer shall not be obligated to evaluate applications fromborrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lienloan modification prior to January 1, 2013, or who have been evaluated or afforded a fair opportunity tobe evaluated consistent with the requirements of this section, unless there has been a material changein the borrower's financial circumstances since the date of the borrower's previous application and thatchange is documented by the borrower and submitted to the mortgage servicer.

(Civ. Code §2923.6(g).)

In reply, Plaintiff argues that Civ. Code §2923.6(g) does not apply here because the Homeowners' Bill ofRights does not apply retroactively to a 2012 loan modification request. While the Homeowners' Bill ofRight was effective January 1, 2013, the Court is not convinced that the retroactivity doctrine applieshere. (See e.g. Michael J. Weber Living Trust v. Wells Fargo Bank, N.A. (N.D. Cal. Mar. 25, 2013) 2013U.S. Dist. LEXIS 41797, *11-12 [because Plaintiff had not demonstrated that there was a material

MINUTE ORDER DATE: 08/19/2013 Page 2 DEPT: 54 Calendar No.

CASE TITLE: Rogers vs. OneWest Bank FSB CASE NO: 34-2013-00144866-CU-WE-GDS

change in his financial circumstances since his last denial in June 2012, Plaintiff had not demonstratedthat it is likely to succeed on its Homeowners' Bill of Rights causes of action.].) Moreover, as draftedCiv. Code §2923.6(g) applies to evaluations made prior to January 1, 2013.

Given the above, for the purposes of this motion only, the Court finds that Plaintiff has not shown alikelihood of prevailing on her Civ. Code §2923.6 cause of action.

Civ. Code §2923.7

In opposition, Defendant argues that it assigned Ben Work as Plaintiff's single point of contact and "loancounselor" as noted in Defendant's letters sent on May 31, June 6, June 14 and June 25. (See BoyleDecl., ¶ 12.) According to Defendant, Plaintiff concedes that she took it upon herself to contact variousrepresentatives at OneWest before she was assigned a single point of contact. (Opposition, 4:28-5:1.)

"The single point of contact provision. . . is intended to prevent borrowers from being given therunaround, being told one thing by one bank employee while something entirely different is beingpursued by another. Under the legislation, the single point of contact must be responsible for, amongother things, "[h]aving access to current information and personnel sufficient to timely, accurately, andadequately inform the borrower of the current status of" his loan modification request and "[h]avingaccess to individuals with the ability and authority to stop foreclosure proceedings when necessary."(Jolley v. Chase Home Finance, LLC (2013) 213 Cal. App. 4th 872, 904-905 [internal citations omitted].)

In reply, Plaintiff proffers a May 20, 2013 email from Brian Fearon from OneWest seeking updatedinformation on Plaintiff's application. (Reply Declaration of Deanna Rogers, Ex. 1.) Plaintiff responded,and on May 29, 2013, Mr. Fearon directed Plaintiff to reapply for HAMP. (Id.) Plaintiff contends that thisemail demonstrates that Defendant received the completed loan modification application as early asMay 20, 2013 and that Mr. Fearon was another point of contact.

The Court finds that for the purposes of this motion only, that Plaintiff has presented sufficientevidentiary facts to establish a likelihood that she will prevail. (Tahoe Keys Property Owners' Assn.,supra, 23 Cal.App.4th at 1478.) Given the May 20th email, it appears that Mr. Fearon was Plaintiff'ssingle point of contact. Although Mr. Fearon directed Plaintiff to reapply for HAMP, "the single point ofcontact shall remain assigned to the borrower's account until the mortgage servicer determines that allloss mitigation options offered by, or through, the mortgage servicer have been exhausted or theborrower's account becomes current." (Civ. Code §2923.7(c).) Thus, it appears that Mr. Fearon shouldhave remained Plaintiff's single point of contact because he had not yet determined that all lossmitigation options had been exhausted. Based on the foregoing, the Court concludes that Plaintiff hasmet her burden to demonstrate alikelihood of prevailing on the merits of her claims.

Balance of the Harms

The Court agrees that Plaintiff will undoubtedly suffer great injury if her residence is sold. Accordingly,the relevant factors favor Plaintiff, and the court will grant the motion for preliminary injunction.

Bond is set in the amount of $10,000.

The prevailing party shall prepare a formal order for the Court's signature pursuant to C.R.C. 3.1312.

Although the notice of motion provided notice of the Court's tentative ruling system as required by LocalRule 1.06, the notice does not comply with the current rule. Moving counsel is directed to review theLocal Rules, effective January 1, 2013.

MINUTE ORDER DATE: 08/19/2013 Page 3 DEPT: 54 Calendar No.

CASE TITLE: Rogers vs. OneWest Bank FSB CASE NO: 34-2013-00144866-CU-WE-GDS

COURT RULING The matter was argued and submitted. The Court affirmed the tentative ruling. The $10,000 bond to beposted by close of business on 8/20/13.

STOLO

MINUTE ORDER DATE: 08/19/2013 Page 4 DEPT: 54 Calendar No.

MINUTE ORDER DATE: 08/19/2013 Page 4 DEPT: 54 Calendar No.

Judge Donna Geck

Department 4 SB-Anacapa

1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION

Deutsche Bank National Trust Company vs Robert Pastor et al

Case No: 1417736

Hearing Date: Fri Aug 09, 2013 9:30

Nature of Proceedings: Motion: Quash/Dismiss UD Complaint

This is an unlawful detainer action following a foreclosure sale. The property at

issue is located at 25 Canejo Road, Santa Barbara, California 93103. Plaintiff

Deutsche Bank National Trust Company acquired the property at a public auction

on September 29, 2011. Plaintiff’s ownership is evidenced by a trustee’s deed upon

sale that was recorded with the Santa Barbara County Recorder’s Office on October

4, 2011. On March 11, 2013, plaintiff caused to be served on defendant Robert

Pastor, a tenant at the property, a written notice requiring him to vacate the

premises within 90 days. On May 16, 2013, plaintiff caused to be served on

defendant Brooke Robbins, also a tenant at the property, a written notice requiring

her to vacate the premises within 30 days. Plaintiff alleges that Brooke Robbins’s

parents, Vincent and Virginia Robbins, the former owners of the property, still

occupy the property and therefore the code section requiring 90 days’ notice to

vacate did not apply to Brooke Robbins.

Defendants Robert Pastor and Brooke Robbins now move for an order quashing

service of the summons on the ground that Brooke Robbins was not served with the

notice to vacate at least 90 days prior to the filing of the unlawful detainer action on

June 25, 2013. Defendants also contend that the two notices to vacate that were

served on them are void because they did not contain the mandatory language to

tenants concerning reclaiming abandoned property.

A defendant may file a motion to quash service of the summons and complaint on

the ground that the court lacks jurisdiction. Code of Civil Procedure Section 418.10

provides, in relevant part:

“(a) A defendant, on or before the last day of his or her time to plead or within any

further time that the court may for good cause allow, may serve and file a notice of

motion for one or more of the following purposes:

“(1) To quash service of summons on the ground of lack of jurisdiction of the court

over him or her.”

A motion to quash is the proper procedure to challenge an unlawful detainer

complaint on the ground that the court lacks personal jurisdiction. Parsons v.

Superior Court (2007) 149 Cal.App.4th Supp. 1. In Parsons, plaintiff landlord

served defendants, the owners of a houseboat, with a 30-day notice to terminate

their tenancy. After defendants failed and refused to vacate the tenancy, plaintiff

filed an unlawful detainer complaint and obtained a court order allowing it to serve

the complaint by posting. Defendants responded by filing a motion to quash service

of the summons on the ground that the Floating Home Residency Law (Civ. Code

§800.70) requires a 60-day notice to terminate a houseboat tenancy. The trial court

denied the motion, but the appellate division of the superior court reversed and

ordered the trial court to hold further proceedings on the merits of the motion. The

court found that defendants’ use of a motion to quash was proper because the

challenge to the notice extended beyond the face of the complaint to the issue

whether a 30-day or 60-day notice was required and the issue could only be resolved

by competent evidence. Id., at 7.

California cases also hold that if an unlawful detainer action is filed prematurely,

i.e., before expiration of the applicable notice period, the complaint is defective and

must be dismissed. See, Lamanna v. Vognar (1993) 17 Cal.App.4th Supp. 4, 6

(holding that unlawful detainer action for nonpayment of rent filed prematurely

because 3-day notice period had not yet expired). The only recourse in such cases is

to refile the complaint after the claim has properly ripened into a cause of action.

Lee v. Bank of America (1994) 27 Cal.App.4th 197, 205.

In the case at bar, defendant Brooke Robbins contends that she is covered by Code

of Civil Procedure Section 1161b, subdivision (a), which provides:

“Notwithstanding Section 1161a, a tenant or subtenant in possession of a rental

housing unit under a month-to-month lease or periodic tenancy at the time the

property is sold in foreclosure shall be given 90 days’ written notice to quit pursuant

to Section 1162 before the tenant or subtenant may be removed from the property

as prescribed in this chapter.”

Section 1161b, subdivision (d), provides an exception to the 90-day notice

requirement and states:

“This section shall not apply if any party to the note remains in the property as a

tenant, subtenant, or occupant.”

Plaintiff alleges in its complaint that Vincent and Virginia Robbins, the former

borrowers, are still “co-occupant[s]” of the property therefore it was only necessary

to serve Brooke Robbins with a 30-day notice to vacate the premises, pursuant to

Code of Civil Procedure Section 1161a, subdivision (c). (Comp., ¶¶ 8, 10.) In the

motion to quash, Brooke Robbins disputes this allegation, claiming that her parents

vacated the property after a judgment of eviction was entered against them on May

9, 2013 in Santa Barbara Superior Court Case No. 1414898. (B. Robbins Dec., ¶11.)

Brooke Robbins says that her parents have not remained at the property, and are

not co-occupants of the property, but instead, reside with her brother, Brian

Robbins, at 3626 San Remo Drive in Santa Barbara. (Ibid.) The court

finds this evidence persuasive and will grant the motion to quash as to defendant

Brooke Robbins for failure to serve her with a 90-day notice unless plaintiff can

present more persuasive evidence to the contrary at the hearing on the motion. (In

an unlawful detainer action, any opposition to a motion to quash may be filed up to

the day before the hearing or may be made orally at the hearing. Cal. Rules of

Court, Rule 3.1327(b)(c).) Assuming a 90-day notice was required, the complaint

filed on June 25, 2013 was too early because Brooke Robbins was only served with

the notice to vacate 40 days earlier, on May 16, 2013.

Defendants argue that the notices to vacate are void for the additional reason that

they did not contain language regarding defendants’ right to reclaim abandoned

property, as required by Civil Code Section 1946.1, subdivision (h). That section

provides:

“Any notice given by an owner pursuant to this section shall contain, in

substantially the same form, the following:

“‘State law permits former tenants to reclaim abandoned personal property left at

the former address of the tenant, subject to certain conditions. You may or may not

be able to reclaim property without incurring additional costs, depending on the

cost of storing the property and the length of time before it is reclaimed. In general,

these costs will be lower the sooner you contact your former landlord after being

notified that property belonging to you was left behind after you moved out.’”

Defendants contend that Civil Code Section 1946.1(h) and Code of Civil Procedure

Section 1161b(a) co-exist and that they were entitled to a 90 days’ notice that

included language about their right to reclaim abandoned property. The court

disagrees. The language about reclaiming abandoned property only applies when

an owner of residential property gives notice “pursuant to this section,” i.e., Civil

Code Section 1946.1. That section requires that a lease be terminated with either a

60-day or 30-day notice, depending on how long the tenant has resided at the

property. The code section has no application here, where notice

to vacate was given pursuant to Code of Civil Procedure Section 1161b(a). The

motion to quash for failure to include the language in Civil Code Section 1946.1(h)

in the notices will therefore be denied.

Tentative Ruling:

The motion to quash service of the summons on defendant Brooke Robbins is

granted, unless plaintiff can present persuasive evidence that Vincent and Virginia

Robbins are still co-occupants in possession of the subject property. In all other

respects, the motion to quash is denied. Defendant Robert Pastor is ordered to file

his answer to the complaint within 5 days of the date of this ruling.

27

Recent Regulatory Updates

HAMP Supplemental Directive 13-06 (Aug. 30, 2013)

Borrower Notice of Interest Rate Step-Ups

HAMP Tier-1 modifications will soon reach the end of their initial five-

year terms. After the first five years, the interest rates on the loan

increase by one percent each year until they reach a pre-determined

cap. At least 120 days (but not more than 240 days) before the first

adjusted payment is due, servicers must notify borrowers of the

increase. As the interest rates increase over time, servicers must notify

the borrowers of each additional increase at least 60 days (but not

more than 120) before the borrower’s first payment is due.

Servicing Transfers

When a loan is transferred from one servicer to another, the new

servicer must abide by any TPP agreement already in-place between

the previous servicer and the borrower. This is true even if the new

servicer determines that the old servicer incorrectly calculated

borrower’s TPP payments. “The borrower must be allowed to complete

the trial period plan pursuant to the terms of the trial period plan

notice.”

Upon successful completion of a TPP, the new servicer must offer the

borrowers a permanent loan modification. If the TPP payment amount

incorrectly exceeded the correct TPP amount by 10% or more, the new

servicer must re-run the waterfall to determine accurate permanent

modification payments. If the TPP payments were incorrectly less than

what they should have been, the servicer does not need to re-run the

waterfall.

Death & Divorce: Impact on Non-Occupants and Non-Borrowers

Non-occupants who inherit or are awarded property after death or

divorce, when the original borrower was successfully completing a

TPP, must now be treated as occupant non-borrowers and co-borrowers

under HAMP Handbook, Chapter 2, sections 8.9.1 and 8.9.2.

28

Non-borrowers who inherit or are awarded the property when the

original borrower was not in a TPP plan may apply for HAMP and

given a TPP plan if they qualify. These new owners should be

“evaluate[d] . . . as if he or she was the borrower.” If investor guidelines

on a particular loan allow for the loan’s assumption, servicers should

process the assumption and loan modification simultaneously.

Return of Fully Executed Modification Agreement

Servicers must sign and return a permanent modification agreement to

the borrowers no later than 30 days after receiving the signed-

borrower copy of the agreement, and the borrower’s compliance with

the TPP.

Fannie Mae Servicing Guide Announcement SCV– 2013–17 (Aug.

28, 2013)

Widows & Orphans

New owners –widows, orphans, or other survivors of the original

borrower—must be allowed to assume the loan, make mortgage

payments, and enter into foreclosure prevention alternatives, even if

the new owner is not on the original note. Further, servicers must

“implement policies and procedures” that will allow them to quickly

identify the party that took over ownership of the property, and to

communicate with that person. If the loan is delinquent and the new

owner cannot bring it current, they must be evaluated for foreclosure

prevention alternatives.

Unemployment Forbearance

Before a borrower’s first unemployment forbearance period expires, or

when the borrower alerts their servicer that they have been re-

employed, the servicer must re-evaluate the borrower for a second

unemployment forbearance, or for another foreclosure prevention

alternative, whichever is applicable. Before a borrower’s extended

unemployment forbearance period is set to expire, or if the borrower

becomes re-employed, the servicer must evaluate the borrower for

another foreclosure prevention alternative.

29

HAMP Rules on Loss Mitigation

Tuesday, September 24, 2013 12:00pm to 1:30pm Pacific Time

1.5 Hours of MCLE Credit

Reserve your webinar seat! Register now!

This free webinar will introduce the basic structure of the federal Home Affordable Modification Program (HAMP) and place it in the context of other available modification programs. We will review topics including eligibility, how modifications are done, and servicer requirements for timing and notice. Updates on recent developments will be included. Presenter: Alys Cohen, staff attorney, National Consumer Law Center

The HBOR Collaborative is comprised of San Francisco-based housing advocacy center, the National Housing Law Project (NHLP), and its project partners, Western Center on Law & Poverty, the National Consumer Law Center, and Tenants Together. The HBOR Collaborative is funded by the Office of the California Attorney General under the national Mortgage Settlement. The HBOR Collaborative offers free training, technical assistance, litigation support, and legal resources to California’s consumer attorneys and the judiciary on all aspects of the new California Homeowner Bill of Rights (HBOR). The goal of the Collaborative is to ensure that California’s homeowners and tenants receive the intended benefits secured for them under the Homeowner Bill of Rights by providing legal representation with a broad array of support services and practice resources. To learn more about California HBOR and all upcoming trainings, consumer attorneys should go to http://calhbor.org/. Register here or at the HBOR Collaborative for this training. After registering, you will receive a confirmation email containing information about joining the webinar. System Requirements: PC-based Attendees: Require Windows 8, 7, Vista XP, or 2003 Server, Mac-based Attendees: Require Mac OSX 10.6 or newer, Mobile attendees: IPhone, IPad, Android phone or Android tablet. Questions? If you need help registering for this webinar, please contact jhiemenz@nclc.org

30

SAVE THE DATE! Wednesday October 23rd, 2013

The HBOR Collaborative presents:

REPRESENTING HOMEOWNERS & TENANTS UNDER THE HOMEOWNER BILL OF RIGHTS

This free training will be held at:

Sierra Curtis Neighborhood Association 2791 24th Street, Sacramento

The HBOR Collaborative presents a free all-day training on the nuts and bolts of representing tenants and homeowners under California’s Homeowner Bill of Rights (HBOR). The training will cover HBOR basics and provide practical tips for representing clients. HBOR became effective on January 1, 2013 and codifies the broad intentions of the National Mortgage Settlement’s pre-foreclosure protections. It also provides tenants in foreclosed properties with a host of substantive and procedural protections. The training will cover the interplay of HBOR with NMS, CFPB servicing rules, and the Protecting Tenants at Foreclosure Act. We will also discuss HBOR’s attorney fee provisions. Registration information will be available in mid-September. The HBOR Collaborative, a partnership of four organizations, National Housing Law Project, National Consumer Law Center, Tenants Together and Western Center on Law and Poverty, offers free training, technical assistance, litigation support, and legal resources to California’s consumer attorneys and the judiciary on all aspects of the new California Homeowner Bill of Rights, including its tenant protections. The goal of the Collaborative is to ensure that California’s homeowners and tenants receive the intended benefits secured for them under the Homeowner Bill of Rights by providing legal representation with a broad array of support services and practice resources.

To contact the HBOR Collaborative team or for more information on our services for attorneys, please visit http://calhbor.org/

5 Hours of MCLE Credit, including 1 hour of

Ethics

Continental breakfast and lunch will be

provided.

31

The HBOR Collaborative and its services, including this free training for attorneys, are funded by a grant from the Office of the Attorney General of California from the National Mortgage Settlement to assist California consumers. This training would not be possible without the invaluable support of our partners the California State Bar and Housing Opportunities Collaborative.

Note: Please visit our web site at www.calhbor.org for information on

other upcoming trainings.