Case Name: Brannon, et al. v. Bank of America, N.A., et al.
Case No.: 2015-1-CV-288509

This is a wrongful foreclosure action. In the first amended complaint (“FAC”), plaintiffs Deborah Brannon and David Brannon (“David”) (collectively, “Plaintiffs”) allege the following: In 2004, Plaintiffs refinanced their loan by executing a promissory note (“the Note”) secured by a deed of trust (“DOT”) against the subject property (“the Property”). (FAC, ¶ 10.) On March 11, 2010, while in bankruptcy-related loan modification negotiations, defendant Bank of America, N.A. (“BANA”) improperly sold the Property and caused the trustee’s deed upon sale (“TDUS”) to be recorded. (Id., ¶¶ 1, 11, & 14.) Even though BANA recorded a rescission (“TDUS Rescission”) on January 3, 2011, Plaintiffs are informed and believe that BANA has continued to report that it holds title based on information in a public database search and a title report. (Id., ¶¶ 11-12.) In or about November 2012, David re-entered and began to occupy the Property. (Id., ¶ 16.) Plaintiffs informed BANA of David’s occupancy, submitted their first loan modification application in 2013, and subsequently submitted PG&E bills and other documents to prove occupancy. (Id., ¶¶ 15-20.) BANA failed to provide a single a point of contact, lost documents, required Plaintiffs to re-submit such documents, and ultimately stopped processing the application after deeming it incomplete in April 2015. (Id., ¶¶ 21-29.) Thereafter, BANA sought payment for the months when it failed to give Plaintiffs documentation of the rescission, despite having previously advised that they had been “credited” for that period. (Id., ¶ 30.) Upon BANA’s invitation and indication that they “qualified financially for a modification,” Plaintiffs submitted their second loan modification application in September 2015. (Id., ¶¶ 30-31.) On September 29, 2015, Plaintiffs received a denial of their second application based on BANA’s claim that the Property was not owner-occupied. (Id., ¶ 32.) Plaintiffs appealed and provided PG&E bills to prove occupancy on October 13, 2015, and BANA dual-tracked by causing a notice of trustee’s sale (“NOTS2”) to be recorded on November 23, 2015, even though it had not issued a decision on the appeal. (Id., ¶¶ 32 & 64.)

In the FAC, Plaintiffs assert causes of action against BANA for: (1) quiet title; (2) slander of title; (3) invasion of privacy—false light; (4) violation of Civil Code section 2923.6; (5) violation of 12 C.F.R. Section 1024.41; (6) 12 C.F.R. Section 1024.41(g); (7) violation of Civil Code section 2923.7, subdivision (b)(2); and (8) declaratory relief.

BANA demurs to the FAC as a whole and to each cause of action for failure to state a claim and makes a request for judicial notice in support thereof. (See Code Civ. Proc. [“CCP”], § 430.10, subd. (e).) Plaintiffs make a request for judicial notice in support of the opposition.
I. Judicial Notice
BANA’s request for judicial notice of recorded documents and Plaintiffs’ bankruptcy petition is GRANTED. (See Evid. Code, § 452, subds. (c)-(d); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265; see also Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301; see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)
Plaintiffs’ request for judicial notice of facts is DENIED because the facts are reasonably subject to dispute and not capable of immediate and accurate determination, and Plaintiffs have not filed documents to support the facts with the Court. (See Evid. Code, § 452, subd. (h); see also Cal. Rules of Court, rules 3.1113(l) & 3.1306(c).)

II. Demurrer

On demurrer, courts admit “all material facts properly pleaded” and facts subject to judicial notice, but not contentions, deductions, or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) If a demurrer is sustained and the plaintiff has not previously had an opportunity to amend in response to a demurrer, then leave to amend is liberally allowed as a matter of fairness, unless the pleading shows on its face that it is incapable of amendment. (City of Stockton v. Super. Ct. (2007) 42 Cal.4th 730, 747.)

A. First Cause of Action for Quiet Title

BANA persuasively argues that Plaintiffs cannot state a claim for quiet title without pleading tender. A borrower may not quiet title against a secured lender without first paying the outstanding debt on which the mortgage or deed of trust is based. (See Miller v. Provost (1994) 26 Cal.App.4th 1703, 1707; see also Aguilar v. Bocci (1974) 39 Cal.App.3d 475, 477; see also Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 87.) Since Plaintiffs have not alleged tender, they have not stated a claim for quiet title. In opposition, Plaintiffs contend that they do not need to allege tender because they do not dispute BANA’s security interest. If so, then Plaintiffs cannot state a claim for quiet title because they have not alleged an adverse claim to title against which a determination is sought. (See CCP, § 761.020, subd. (c).) Thus, BANA’s demurrer to the first cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

B. Second Cause of Action for Slander of Title

BANA argues that Plaintiffs have not pleaded a claim for slander of title based on the TDUS because the publication of the TDUS is privileged and they do not allege malice. (See Civ. Code, § 2924, subd. (d); see also Civ. Code, § 47, subd. (c)(1); see also Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 333-334.) Nevertheless, this claim is based at least in part on the allegation that BANA continued to report that it was the record owner of title to the Property after recording the TDUS Rescission. (FAC, ¶ 42.) If Plaintiff alleges facts to support the slander of title claim based on this allegation, then the demurrer to the second cause of action will be overruled. (See PHII, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [providing that a demurrer cannot be sustained to only a portion of a cause of action].) Additionally, BANA takes issue with the element of pecuniary loss. Slander of title is only actionable if it causes “some special pecuniary loss or damage.” (Fearon v. Fodera (1915) 169 Cal. 370, 379-380; see also Sumner Hill Homeowners’ Association Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1030.) Plaintiffs allegedly suffered loss “in the form of denial of credit to Plaintiffs and emotional distress.” (FAC, ¶ 43.) Such damages are not pecuniary and do not support a claim for slander of title. Therefore, BANA’s demurrer to the second cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

C. Third Cause of Action for Invasion of Privacy—False Light

To the extent the false light claim is based on the publication of the TDUS (FAC, ¶¶ 48-50), BANA persuasively argues that the publication is privileged unless Plaintiffs sufficiently plead malice, and they do not allege facts to show malice. (See Civ. Code, § 2924, subd. (d); see also Civ. Code, § 47, subd. (c)(1); see also Kachlon v. Markowitz, supra, 168 Cal.App.4th, at pp. 333-334.) To the extent the claim is based on the publication of information obtained from a public search and a title report (FAC, ¶ 49), BANA contends that Plaintiffs have not alleged that it actually published those statements. This argument is well-taken. Nothing in the FAC suggests that BANA was involved in the publication of the information obtained from the alleged public search and title history report. Therefore, Plaintiffs have not pleaded a false light claim based on the TDUS, the database search results, or the title report.

Plaintiffs also allege that BANA are liable for false light based on the continued false reports of ownership after the recordation of the TDUS Rescission. (FAC, ¶¶ 48-50.) The demurrer will be overruled if Plaintiffs sufficiently plead a false light claim based on the continued reports. (See PHII, Inc. v. Super. Ct., supra, 33 Cal.App.4th, at p. 1682.) BANA argues that Plaintiffs do not sufficiently allege publication. Publication is an essential element of a false light claim. (See Price v. Operating Engineers Local Union No. 3 (2011) 195 Cal.App.4th 962, 970 [stating the elements in connection with an anti-SLAPP motion].) Publication means “publicity in the sense of communication to the public in general or to a large number of persons as distinguished from one individual or a few.” (Kinsey v. Macur (1980) 107 Cal.App.3d 265, 270; see also Timperley v. Chase Collection Service (1969) 272 Cal.App.2d 697, 700.) Plaintiffs allege on information and belief that BANA has continued to report that it is the true holder of title to the Property. (FAC, ¶ 49.) They do not allege that BANA published its reports to the public in general or to any specified number of persons. Therefore, they have not sufficiently pleaded publication with respect to the continued reports. It is unnecessary for the Court to consider BANA’s remaining arguments with respect to the alleged continued reports.
In light of the foregoing, BANA’s demurrer to the third cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.
D. Fourth Cause of Action for Violation of Civil Code Section 2923.6 & Seventh Cause of Action for Violation of Civil Code Section 2923.7, Subdivision (b)(2)
BANA argues that the bankruptcy petition shows that the Property is not owner-occupied. It is true that Civil Code sections 2923.6 and 2923.7 apply only to deeds of trust that are “secured by owner-occupied residential real property,” meaning that the property is the borrower’s “principal place of residence” and “is security for a loan made for personal, family, or household purposes.” (Civ. Code, § 2924.15, subd. (a).) Even so, the petition simply states that in 2008, Plaintiffs sought a homestead exemption for another property. (BANA’s RJN, Ex. 9, at p. 12.) It does not demonstrate that the Property was not owner-occupied when Plaintiffs allegedly applied for loan modifications after David allegedly began to reside at the Property. (See FAC, ¶¶ 12-32.) BANA’s argument therefore lacks merit.
Next, to the extent Plaintiffs assert that BANA violated Civil Code section 2923.6, subdivision (f) by failing to send a written denial of their appeal and the reasons for the denial of the appeal (FAC, ¶ 66.), BANA contends that it was not required to send a notice of denial of the appeal. This argument is well-taken. Civil Code section 2923.6, subdivision (f) requires the mortgage servicer to send written notice of the denial of the application itself, not the appeal. Accordingly, Plaintiffs have not stated a claim for violation of Civil Code section 2923.6, subdivision (f).

Civil Code section 2923.6 provides that, if a borrower submits a complete loan modification application, then the beneficiary, trustee, and servicer of the loan are prohibited from dual-tracking until after the application has been denied. (Civ. Code, § 2923.6, subds. (c)-(e).) In this context, an “application shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” (Id., subd. (h).) Plaintiffs cannot state a claim for violation of this provision based on their first application because they allege that BANA deemed it to be incomplete. (FAC, ¶¶ 18-29.) As for the second application allegedly submitted in September 2015 (id., ¶¶ 31-32), Plaintiffs claim that BANA violated Civil Code section 2923.6, subdivision (e) by recording NOTS2 “without having made a written determination on the appeal.” (FAC, ¶¶ 62 & 65.) Notably, Plaintiffs had previously had a fair opportunity to be evaluated consistent with the requirements of Civil Code section 2923.6 by submitting their first loan modification application. (Id., ¶¶ 16-29.) Therefore, BANA was not obligated to evaluate Plaintiffs’ second application unless there was a change in their financial circumstances that they documented and submitted to BANA. (See CCP, § 2923.6, subd. (g).) Plaintiffs do not allege facts to show any such change in financial circumstances or submission of documentation about a change to BANA. Therefore, they have not adequately pleaded a claim for violation of Civil Code section 2923.6.
Civil Code section 2923.7 requires a mortgage servicer to establish “a single point of contact.” (Civ. Code, § 2923.7, subd. (a).) A “single point of contact” is defined to include a “team of personnel.” (Id., subd. (e).) Thus, the allegation that BANA assigned multiple individuals to their first application (FAC, ¶¶ 18-32 & 87-88) does not support a claim for violation of Civil Code section 2923.7. Additionally, Plaintiffs allege that BANA’s personnel violated Civil Code section 2923.7, subdivision (b)(2) by losing documents submitted in support of their application. (FAC, ¶¶ 84-89.) That subdivision states that the single point of contact is responsible for “[c]oordinating receipt of all documents associated with available foreclosure prevention alternatives and notifying the borrower of any missing documents necessary to complete the application.” (Civ. Code, § 2923.7, subd. (b)(2).) Plaintiffs may only state a claim for a violation of Civil Code section 2923.7 if the violation is material. (See CCP, § 2924.12, subd. (a).) Plaintiffs’ contention that the violation was material (FAC, ¶ 89) is not accepted as true for purposes of demurrer. (See Blank v. Kirwan, supra, 39 Cal.3d, at p. 318.) Plaintiffs allege facts showing that, although their assigned point of contact lost documents, Plaintiffs re-submitted all of their documents before BANA deemed their first application to be incomplete. (FAC, ¶¶ 21-29 & 87-88.) Nothing in the FAC suggests that BANA’s agents caused their first application to be deemed incomplete, or that BANA’s agents lost any documents in connection with the second application. Therefore, Plaintiffs have not alleged facts to show any material violation of Civil Code section 2923.7.
BANA’s demurrer to the fourth and seventh causes of action is accordingly SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

E. Fifth Cause of Action for Violation of 12 C.F.R. Section 1024.41 & Sixth Cause of Action for Violation of 12 C.F.R. Section 1024.41(g)

12 C.F.R. section 1024.41 applies to “mortgage loans,” i.e. “any federally related mortgage loan, as that term is defined in § 1024.2 subject to the exemptions in § 1024.5(b), but does not include open-end lines of credit (home equity plans).” (12 C.F.R. § 1024.31.) Plaintiffs allege that they had a mortgage loan that they refinanced through non-party Countrywide pursuant to the Note secured by the DOT. (FAC, ¶¶ 1-2 & 9-10.) As BANA persuasively argues, Plaintiffs do not allege facts to show that the loan is a “federally related mortgage loan” as defined in the applicable federal regulations. Accordingly, BANA’s demurrer to the fifth and sixth causes of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

F. Eighth Cause of Action for Declaratory Relief

BANA’s contention that the demurrer to the declaratory relief claim should be sustained because Plaintiffs did not adequately plead facts to support the other causes of action lacks merit. To state a claim for declaratory relief, the plaintiff simply needs to allege the existence of an actual controversy relating the parties’ rights and duties under a written instrument with respect to property, even if the plaintiff is not entitled to a favorable declaration. (Columbia Pictures Corp. v. De Toth (1945) 26 Cal.2d 753, 760; CCP, § 1060.) Plaintiffs allege facts to support the reasonable inference that a controversy exists as to whether BANA has the right to seek payment on the Note for the months between the foreclosure auction and the recordation of the TDUS Rescission. (FAC, ¶¶ 11, 13, & 92-95.) BANA’s demurrer to the eighth cause of action is therefore OVERRULED.