Case Number: VC065369 Hearing Date: December 17, 2019 Dept: SEC

#6

TENTATIVE ORDER

Defendant Ocwen Loan Servicing, LLC’s motion for summary judgment or, in the alternative, for summary adjudication is DENIED.

Plaintiff to give NOTICE.

Defendant Ocwen Loan Servicing, LLC moves for summary judgment or, in the alternative, for summary adjudication pursuant to CCP 437c.

Objections

Plaintiff’s evidentiary objections to Raleigh Declaration are overruled.

Defendant’s evidentiary objections to the Castanon Declaration are overruled. Defendant’s objections to the Parke Declaration are sustained as to Nos. 1, 4-8, and the remaining objections are overruled.

Complaint

This breach of contract action was filed by Plaintiff Delia Castanon on 2/25/16. Plaintiff and her father, Robert Castanon, were joint tenants of the real property located at 11826 Loma Drive, Whittier, California. On 9/3/11, after Plaintiff’s father passed away, defendant would not communicate with plaintiff because she was not the “borrower” and because Ocwen would not talk to her, plaintiff had difficulty making payments through the phone center and online systems at Ocwen causing the loan to generate late fees and ultimately caused the loan to become past due. Ocwen promised Plaintiff a loan modification that would enable her to bring the loan current, and then assume the loan under her name. Plaintiff fulfilled all of defendant’s terms, only to have defendant later issue a permanent modification that was in conflict with its promise. The result caused the plaintiff, whose name would now be on the loan (when it had not been prior) to immediately be 120 days past due, in default, and at imminent risk of foreclosure, thus degrading her credit. Plaintiff’s FAC asserts causes of action for:

1. Breach of Contract

2. Breach of Implied Covenant of Good Faith and Fair Dealing

3. Promissory Estoppel

4. Violation of B&P §17200 et seq.

5. IIED

6. NIED

The 5th and 6th causes of action were stricken on 7/10/19.

Standard

A defendant moving for summary judgment/adjudication has met its burden of showing a cause of action has no merit if the defendant can show one or more elements of the plaintiff’s cause of action cannot be established. (CCP 437c(p)(2).)

ISSUE 1

UNCLEAN HANDS: The equitable doctrine of unclean hands applies when a plaintiff has acted unconscionably, in bad faith, or inequitably in the matter in which the plaintiff seeks relief. (Salas v. Sierra Chem. Co. (2014) 59 Cal.4th 407, 432.) Unclean hands provides a complete defense to a plaintiff’s action. (DeGarmo v. Goldman (1942) 19 Cal.2d 755, 765.) Whether the defense applies depends on the analogous case law, the nature of the misconduct, and the relationship of the misconduct to the claimed injuries. (Blain v. Doctor’s Co. (1990) 222 Cal.App.3d 1048, 1060; see also Unilogic, Inc. v. Burroughs Corp. (1992) 10 Cal.App.4th 612, 621- unclean hands properly allowed of defense in breach of contract action.) A defense of unclean hands may be made and granted on motion for summary judgment. (See e.g., DeRosa v. Transamerica Title Ins. Co. (1989) 213 Cal.App.3d 1390.)

Ocwen contends Plaintiff has unclean hands because she misrepresented to Ocwen that she was in continued ownership and occupancy of the Property (Defense Separate Statement (DSS) 22-27.) According to Ocwen, the property was sold to CEHA on 12/18/14 for failure to pay delinquent dues. (DSS 13.) Based on Plaintiff’s misrepresentation, Ocwen offered her a Streamline Modification Trial Period Plan (“TPP”) on 4/24/15. (DSS 27.)

In opposition, Plaintiff presents evidence that she made no such misrepresentation in her Family Transfer Package on 3/7/15. Therein, she attests that she will occupy the property as her principle residence or second home for at least one year after the date of occupancy. The HOA did not own the property until 6/18/15. (Disputed DSS 22.)

The court finds triable issues exist regarding whether Plaintiff made misrepresentations in her application, which would constitute bad faith or unclean hands.

Summary adjudication of Issue 1 is DENIED.

ISSUE 2

BREACH OF CONTRACT: The elements of a cause of action for breach of contract are: 1) existence of a contract; 2) plaintiff’s performance or excused nonperformance; 3) defendant’s breach (or anticipatory breach); and 4) resulting damage. (Wall Street Network Ltd., v. N.Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Defendant contends Plaintiff lacks standing to enforce the TPP because the TPP was offered to the Borrower’s Estate, not Plaintiff. (Ocwen Decl., Ex. G.) This argument lacks merit, or at minimum, triable issues exist. Plaintiff is the Borrower’s daughter. Plaintiff and Ocwen exchanged numerous correspondence, and Ocwen accepted Plaintiff’s trial payments. Ocwen did not present any evidence that it disputed Plaintiff’s status as the “Borrower’s Estate.”

Alternatively, Defendant contends that the TPP contract violates the statute of frauds because Plaintiff did not sign it. However, it is unclear if the statute of frauds applies to the TPP because it is essentially a contract to enter into another contract. More importantly, the TPP does not require Plaintiff’s signature. Instead, it instructs Plaintiff “to accept this offer: You must make your first trial period payment by the first payment due date designated below. If you fail to make the first trial period payment due date and we do not receive the payment by the last day of the month in which it is due, this offer will be revoked… To successfully complete the trial period plan, you must make the trial period plan payments below… $1,603.61 by 6/1/2015… $1,603.61 by 7/1/2015… $1,603.61 by 8/1/2015.” (Raleigh Decl., Ex. G at p.3.) Plaintiff presents evidence that she did as instructed and made the required payments. (Castanon Decl., Pars. 37, 40, 42.)

Further, triable issues exist regarding Defendant’s breach and/or excuse from performance. Plaintiff declares that she made payments for October and November 2015, but the permanent loan modification agreement did not account for the September and October payments. (Castanon Decl., Par. 57.) Further, Plaintiff made November and December payments, but those payments were returned to her. (Id. at Pars. 50-51.) Even if Plaintiff signed the permanent modification, she was told that she would be in arrears for five months and that foreclosure proceedings would ensue regardless. (Id. at Pars. 57-58.) Thus, triable issues exist regarding Defendant’s breach. Defendant contends in reply that because Plaintiff lost ownership of the property, Ocwen was excused from performing under the TPP. However, Ocwen voluntarily paid the CEHA Lien on behalf of Plaintiff, and whether this payment excuses Ocwen’s performance under the TPP is a triable issue.

Finally, Ocwen contends Plaintiff cannot establish damages. However, triable issues exist regarding Plaintiff’s damages. Plaintiff paid the September and October 2015 payments, but these payments were not reflected in the Permanent modification agreement.

Summary adjudication of Issue 2 is DENIED.

ISSUE 3

BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING: The elements are: 1) existence of contractual relationship; 2) implied duty; 3) breach; and 4) causation of damages. (E.g., Smith v. San Francisco (1990) 225 Cal.App.3d 38, 49; 1 Witkin Sum. Cal. Law (10th ed. 2005) Contracts § 800.)

In cases were plaintiffs have been offered a TPP under HAMP, case law holds that the implied covenant of good faith and fair dealing imposes an obligation of good faith upon lenders deciding whether to offer borrowers a loan modification or foreclosure alternative. (See Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49; 76.) “[I]n light of HAMP Supplemental Directive 09-01, if a borrower complies with his or her TPP and if the borrower’s representations on which loan modification is based remain accurate, then the lender must offer the borrower a good faith permanent loan modification.” (Bushell v. JPMorgan Chase Bank, NA (2013) 220 Cal.App.4th 915, 929.)

Triable issues exist regarding Plaintiff’s bad faith claim. Plaintiff declares that she made payments for October and November 2015, but the permanent loan modification agreement did not account for the September and October payments. (Castanon Decl., Par. 57.) Further, Plaintiff made November and December payments, but those payments were returned to her. (Id. at Pars. 50-51.) Even if Plaintiff signed the permanent modification, she was told that she would be in arrears for five months and that foreclosure proceedings would ensue regardless. (Id. at Pars. 57-58.) Thus, triable issues exist regarding whether Defendant breached the implied covenant of good faith and fair dealing.

Summary adjudication of Issue 3 is DENIED.

ISSUE 4

PROMISSORY ESTOPPEL: The elements of promissory estoppel are: (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the party asserting estoppel must be injured by his reliance. (Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 411, 416; see also Smith v. City & County of San Francisco (1990) 225 Cal.App.3d 38, 48 [to allege promissory estoppel, pleadings must allege facts demonstrating such reliance on promises, beyond just conclusory allegations of reasonable reliance upon promises]; Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, 226 [agreement to work on a mortgage reinstatement and loan modification was a “clear and unambiguous promise” and, in reliance, plaintiff relinquished a legal right to stay foreclosure by filing bankruptcy].)

Triable issues exist regarding promissory estoppel. The TPP instructs Plaintiff “to accept this offer: You must make your first trial period payment by the first payment due date designated below. If you fail to make the first trial period payment due date and we do not receive the payment by the last day of the month in which it is due, this offer will be revoked… To successfully complete the trial period plan, you must make the trial period plan payments below… $1,603.61 by 6/1/2015… $1,603.61 by 7/1/2015… $1,603.61 by 8/1/2015.” (Raleigh Decl., Ex. G at p.3.) Plaintiff presents evidence that she did as instructed and made the required payments. (Castanon Decl., Pars. 37, 40, 42.)

Plaintiff declares that she also made payments for October and November 2015, but the permanent loan modification agreement did not account for the September and October payments. (Castanon Decl., Par. 57.) Further, Plaintiff made November and December payments, but those payments were returned to her. (Id. at Pars. 50-51.) Even if Plaintiff signed the permanent modification, she was told that she would be in arrears for five months and that foreclosure proceedings would ensue regardless. (Id. at Pars. 57-58.) Thus, triable issues exist regarding whether Plaintiff detrimentally relied on Defendant’s promise.

Summary adjudication of Issue 4 is DENIED.

As triable issues exist, Defendant’s motion for summary judgment is DENIED.