Case Number: KC069358 Hearing Date: June 01, 2018 Dept: J

Re: Zsa Zsa Hill v. Nationstar Mortgage, LLC, etc., et al. (KC069358)

ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION

Moving Party: Plaintiff Zsa Zsa Hill

Respondents: No timely opposition filed

POS: Moving OK

This is a wrongful foreclosure action involving plaintiff’s residential property located at 463 Notre Dame Road in Claremont. The complaint, filed 6/2/17, asserts causes of action for:

Breach of Contract

Breach of Implied Covenant of Good Faith and Fair Dealing

Violation of Civil Code § 2923.55

Violation of Civil Code § 2923.6

Violation of Civil Code § 2923.7

Violation of Civil Code § 2924.9

Violation of Civil Code § 2924.10

Violation of Civil Code § 2924.17

Negligence and Negligence Per Se

Violation of Business & Professions Code § 17200

On 6/6/17, plaintiff’s “Ex Parte Application for an Order Granting Plaintiff’s Request for a Temporary Restraining Order…and That Defendants Show Cause Re: Preliminary Injunction” was heard; at that time, the TRO was granted and an OSC re Preliminary Injunction was set for 6/27/17. Plaintiff was ordered to personally serve the TRO and OSC on the agents for service of process or attorneys for defendants no later than 6/9/17 and to file her proofs of service of the moving papers by 6/12/17.

On 6/12/17, plaintiff filed her proof of services as to (1) Defendant Clear Recon Corp, reflecting personal service of the summons, complaint, ex parte application and TRO on 6/7/17, (2) Defendant Nationstar Mortgage, reflecting personal service of the aforesaid documents on 6/9/17 and as to (3) Defendant HSBC Bank USA, National Association as Trustee for Ellington Loan Acquisition Trust 2007-2, Mortgage Pass-Through Certificates, Series 2007-2, reflecting personal service of the aforesaid documents on 6/7/17.

Pursuant to stipulation of the parties, the 6/27/17 hearing date was continued to 10/20/17, then to 1/26/18, then to 3/1/18, then to 6/1/18 with the temporary restraining order remaining in effect. On 2/21/18, the court ordered, “No further Stipulated Continuances.”

A Case Management Conference is set for 6/1/18.

Plaintiff Zsa Zsa Hill (“plaintiff”) seeks a preliminary injunction enjoining Defendants Nationstar Mortgage, LLC (“Nationstar”), Clear Recon Corp (“CRC”) and HSBC Bank USA, National Association as Trustee for Ellington Loan Acquisition Trust 2007-2, Mortgage Pass-Through Certificates, Series 2007-2 (“HSBC”) from selling the real property located at 463 Notre Dame Road in Claremont (“Subject Property”).

In deciding whether to issue a preliminary injunction, a trial court weighs two interrelated factors: the likelihood the moving party ultimately will prevail on the merits, and the relative interim harm to the parties from the issuance or nonissuance of the injunction. A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim. (Hunt v. Superior Court (1999) 21 Cal.4th 984, 999-1000). Proof of facts is ordinarily made by affidavits or declarations. (CCP § 2009).

LIKELIHOOD OF SUCCESS ON THE MERITS:

Effective January 1, 2013, the Homeowner Bill of Rights (“HBOR”) modified the nonjudicial foreclosure process by ensuring that specified borrowers who may qualify for a foreclosure alternative “are considered for, and have a meaningful opportunity to obtain, available loss mitigation options…” (See CC § 2923.4). The HBOR includes the following provisions:

“A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent may not record a notice of default pursuant to section 2924 until all of the following: (1) The mortgage servicer has satisfied the requirements of paragraph (1) of subdivision (b). (2) Either 30 days after initial contact is made as required by paragraph (2) of subdivision (b) or 30 days after satisfying the due diligence requirements as described in subdivision (f). (3) The mortgage servicer complies with subdivision (c) of Section 2923.6, if the borrower has provided a complete application as defined in subdivision (h) of Section 2923.6.” Civil Code § 2923.55(a). “As specified in subdivision (a), a mortgage servicer shall send the following information in writing to the borrower: (B) A statement that the borrower may request the following: (i) A copy of the borrower’s promissory note or other evidence of indebtedness. (ii) A copy of the borrower’s deed of trust or mortgage. (iii) A copy of any assignment, if applicable, of the borrower’s mortgage or deed of trust required to demonstrate the right of the mortgage servicer to foreclose. (iv) A copy of the borrower’s payment history since the borrower was last less than 60 days past due.” Civil Code § 2923.55(b)(1)(B). “A notice of default recorded pursuant to Section 2924 shall include a declaration that the mortgage servicer has contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required because the individual did not meet the definition of ‘borrower’ pursuant to subdivision (c) of Section 2920.5.” Civil Code § 2923.55(c).

“If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification is pending. A mortgage servicer, mortgagee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired…” Civil Code § 2923.6(c)(1). “If the borrower’s application for a first lien loan modification is denied, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or, if a notice of default has already been recorded, record a notice of sale or conduct a trustee’s sale until the later of: (1) Thirty-one days after the borrower is notified in writing of the denial.

(2) If the borrower appeals the denial pursuant to subdivision (d), the later of 15 days after the denial of the appeal or 14 days after a first lien loan modification is offered after appeal but declined by the borrower, or, if a first lien loan modification is offered and accepted after appeal, the date on which the borrower fails to timely submit the first payment or otherwise breaches the terms of the offer.” Civil Code § 2923.6(e).

“Upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” Civil Code § 2923.7(a).

“Unless a borrower has previously exhausted the first lien loan modification process offered by, or through, his or her mortgage servicer described in Section 2923.6, within five business days after recording a notice of default pursuant to Section 2924, a mortgage servicer that offers one or more foreclosure prevention alternatives shall send a written communication to the borrower that includes all of the following information: (1) That the borrower may be evaluated for a foreclosure prevention alternative or, if applicable, foreclosure prevention alternatives. (2) Whether an application is required to be submitted by the borrower in order to be considered for a foreclosure prevention alternative. (3) The means and process by which a borrower may obtain an application for a foreclosure prevention alternative.” Civil Code § 2924.9(a).

“When a borrower submits a complete first lien modification application or any document in connection with a first lien modification application, the mortgage servicer shall provide written acknowledgment of the receipt of the documentation within five business days of receipt. In its initial acknowledgment of receipt of the loan modification application, the mortgage servicer shall include the following information: (1) A description of the loan modification process, including an estimate of when a decision on the loan modification will be made after a complete application has been submitted by the borrower and the length of time the borrower will have to consider an offer of a loan modification or other foreclosure prevention alternative. (2) Any deadlines, including deadlines to submit missing documentation, that would affect the processing of a first lien loan modification application. (3) Any expiration dates for submitted documents. (4) Any deficiency in the borrower’s first lien loan modification application.” Civil Code § 2924.10(a).

“A declaration recorded pursuant to Section 2923.5 or, until January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924, or a declaration or affidavit filed in any court relative to a foreclosure proceeding shall be accurate and complete and supported by competent and reliable evidence.” Civil Code § 2924.17(a).

“If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10…or 2924.17.” Civil Code § 2924.12(a).

Plaintiff alleges that, in or about 6/15, she contacted Nationstar Mortgage, LLC (“Nationstar”), who had taken over the servicing of her loan on or about 7/1/13, to inquire about possible options to keep her home. (Complaint, ¶¶ 18 & 20). She was instructed to apply for a loan modification. (Id., ¶ 20). Plaintiff submitted a complete loan modification application in or about mid 7/15. (Id., ¶ 21). In or about 9/15, Nationstar approved plaintiff for a trial payment plan (“TPP”). (Id., ¶ 24). Nationstar then sent plaintiff a permanent loan modification (“PLM”) dated 11/19/15. (Id., ¶ 25). Pursuant to the PLM, if plaintiff complied with all of the covenants and representations of the PML, and the preconditions of making all her trial payment plans, the modification would become effective 12/1/15, which was also the date her first PLM payment was due. (Id.). Plaintiff complied and sent her first PLM payment and fully executed PLM Agreement to Nationstar on or before 12/1/15. (Id., ¶ 26). On 2/12/16, a Corrective Assignment of Deed of Trust was recorded against the subject property, which transferred interest in the deed of trust to Defendant HSBC Bank USA, National Association as Trustee for Ellington Loan Acquisition Trust 2007-2, Mortgage Pass-Through Certificates, Series 2007-2 (“HSBC”). (Id., ¶ 28). In or about 3/16, plaintiff attempted to make her PLM payment, but was advised by Nationstar that it would not be accepted because it was not for the right amount. (Id., ¶ 29). She was subsequently advised that there was no PLM because Nationstar had not received her signed PLM. (Id., ¶ 30). Not having received further word about her PLM, plaintiff contacted Nationstar in or about 10/16 to inquire about available options to keep her home. (Id., ¶ 32). She was instructed to reapply for a loan modification. (Id.). She submitted another complete loan modification application in or about early 10/16, which included documentation supporting her material change in financial circumstances; specifically, her monthly income had increased by approximately $1,500.00 since her previous loan modification application submission. (Id., ¶ 33). Over the next three months, Nationstar agents, although confirming her application was complete, requested that plaintiff submit and re-submit duplicative documents she had just provided. (Id., ¶ 34).

Plaintiff further alleges that, in or about early 12/16, Nationstar denied her loan modification, on the basis that the loan had received the maximum number of modifications permitted under the modification program. (Id., ¶ 35). Plaintiff thereafter asked for an explanation of the denial, since her loan had not once been modified, and was told by David Hacebaga (“Hacebaga”) that her denial would be withdrawn and that her file would be reopened to allow her to continue with her modification review. (Id., ¶ 36). Hacebaga asked her to provide some updated information, which she did. (Id.). On or about 1/4/17, plaintiff contacted Nationstar for a modification update; she was told her application was complete and sent for further review. (Id., ¶ 37). On 1/24/17, HSBC caused a Substitution of Trustee to be recorded against the subject property, wherein Defendant Clear Recon Corp (“CRC”) was substituted in as trustee. (Id., ¶ 38). On 1/24/17, CRC recorded a Notice of Default (“NOD”) against the subject property. (Id., ¶ 39 and Exhibit “J” thereto). Plaintiff alleges that the declaration of due diligence accompanying the NOD was false, because no defendant contacted her in person or by phone, assessed her finances, and explored her non-foreclosure options. (Id.). She also did not receive a statement from Nationstar advising her of her right to request certain documents. (Id.).

Plaintiff alleges that, in or about early 2/17, she contacted Nationstar regarding the NOD and pending application. (Id., ¶ 40). The agent she spoke with confirmed that her application was still pending review and could not explain why the NOD was recorded. (Id.). On or about 3/15/17, Nationstar denied her modification application. (Id., ¶ 41). Plaintiff immediately contacted Nationstar for an explanation of the denial, but did not receive an answer. (Id., ¶ 42). On or about 4/3/17, plaintiff appealed the denial. (Id., ¶ 43). About a week or so later, plaintiff spoke with a Nationstar agent, who confirmed that Nationstar had received her appeal and that it was pending review. (Id., ¶ 44). However, on 5/2/17, CRC recorded a Notice of Trustee’s Sale (“NOTS”) against the subject property, despite plaintiff not having received any determination on her pending appeal. (Id., ¶ 45).

Plaintiff’s application is not opposed. Her verified allegations suggest that defendants recorded the NOD without complying with Civil Code § 2923.55 (Id., ¶¶ 39 & 80-83). They further suggest that defendants violated Civil Code § 2923.6 by recording the NOD while plaintiff’s 10/16 complete loan modification application was pending. (Id., ¶¶ 39, 40, 89 and 94-98). Plaintiff also points out that a trustee’s sale was set for 6/7/17, even though her appeal had not been determined. (Id., ¶ 45, 101-104). Plaintiff asserts that no agent, acting as a team or otherwise, was able to comply with Civil Code § 2923.7(b)(1)-(5) (Id., ¶¶ 23, 30-32, 34, 36, 37, 40, 42, 114-115). Plaintiff claims that Defendants Nationstar and HSBC failed to send her written correspondence within five business days after recording the NOD, advising her of the availability and process for requesting other non-foreclosure prevention alternatives, as per Civil Code § 2924.9(a). (Id., ¶ 124). She further claims that Defendants Nationstar and HSBC failed to comply with Civil Code § 2924.10 by failing to provide written acknowledgment of the receipt of her 10/16 complete loan modification application within five business days. (Id., ¶ 130). Plaintiff claims that these defendants also failed to provide such acknowledgment after she submitted updated documentation in or about late 12/16 and in or about early 2/17, or after she submitted her appeal. (Id., ¶¶ 131-136). She claims a Civil Code § 2924.17 violation by defendants on the basis that the declaration of due diligence attached to the NOD was false. (Id., ¶¶ 39 & 146).

Plaintiff’s verified allegations, which are essentially repeated in her accompanying declaration, are unrebutted. Plaintiff, then, has shown a likelihood of success on the merits.

INADEQUATE LEGAL REMEDY OR IRREPARABLE HARM:

Plaintiff has demonstrated the inadequacy of her legal remedy and irreparable harm. Real property is usually deemed “unique,” so that injury or loss cannot be compensated in damages, and injunctive relief is therefore readily granted. (See Civil Code § 3387—damages presumed inadequate for breach of agreement to convey real property).

Accordingly, the application for a preliminary injunction is granted. The court will hear from counsel regarding an undertaking.