Filed 8/10/20 Wadsworth v. Ocwen Loan Servicing CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

DAVID R. W. WADSWORTH,

Plaintiff and Appellant,

v.

OCWEN LOAN SERVICING, LLC et al.,

Defendants and Respondents.

E072570

(Super.Ct.No. RIC1824323)

OPINION

APPEAL from the Superior Court of Riverside County. Daniel A. Ottolia, Judge. Affirmed.

David R. W. Wadsworth, in pro. per., for Plaintiff and Appellant.

Houser & Allison, Robert W. Norman, Jr., Emilie K. Edling, and Timothy A. Schneider for Defendants and Respondents, Ocwen Loan Servicing, LLC, Deutsche Bank National Trust Company, and Mortgage Electronic Registration Systems, Inc.

No appearance for Defendant and Respondent, CIT Bank, N.A.

This appeal arises out of a lawsuit and petition for a preliminary injunction by David Wadsworth seeking to delay foreclosure on his home after he defaulted on an adjustable-rate mortgage. In the trial court, Wadsworth claimed the loan servicer, Ocwen Loan Servicing, LLC, didn’t comply with the terms of the deed of trust or with various California statutes requiring them to provide Wadsworth with certain information before foreclosing. Wadsworth also claimed the original lender agreed to include a clause making it a 2 percent fixed-rate mortgage if he made regular payments for a year but failed to include the clause.

Ocwen submitted loan correspondence, business records, recorded documents, and an affidavit from a senior loan analyst which appear to show Ocwen complied with the terms of the deed of trust as well as the relevant statutes. Wadsworth didn’t produce evidence to contradict Ocwen’s records and the trial court denied the preliminary injunction because Wadsworth couldn’t show he was reasonably likely to succeed on the merits of his claims.

On appeal, Wadsworth argues the trial court erred by focusing exclusively on whether he was likely to succeed on the merits to the exclusion of other factors relevant to the issuance of a preliminary injunction, specifically the seriousness of the harm to him of foreclosure. However, it is settled law that a preliminary injunction may not issue unless the proponent shows they establish they have a reasonable probability of prevailing on the merits. (Choice-in-Education League v. Los Angeles Unified School Dist. (1993) 17 Cal.App.4th 415, 422.)

Wadsworth also argues the trial court denied him an opportunity to be heard and to present arguments in support of his request for a preliminary injunction. The record shows otherwise. Wadsworth submitted briefs in support of his request, and he and two representatives were present for the hearing and had the opportunity to speak. The events he points to at a subsequent hearing on a motion for reconsideration do not support finding otherwise.

Finally, respondents have done an excellent job identifying the other issues Wadsworth could have argued to attack the preliminary injunction order as an abuse of discretion. Thus, though he has forfeited those issues on appeal, we will address the merits of the ruling as well. We conclude the record in the trial court provided substantial evidentiary support, largely uncontradicted, that make it unlikely Wadsworth could prevail on any of his claims at trial. Accordingly, it was not an abuse of discretion for the trial court to deny the petition for preliminary injunction.

I

FACTS

A. The Parties
B.
Plaintiff-appellant David Wadsworth brought a wrongful foreclosure action against several corporate defendants seeking to block the foreclosure of his home located at 25685 Big Pine Street, Idyllwild, California.

Defendants-respondents are PHH Mortgage Corporation, successor by merger to the loan servicer Ocwen Loan Servicing, LLC (“Ocwen”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and Deutsche Bank National Trust Company as Trustee for IndyMac INDX Mortgage Loan Trust 2007-AR17, Mortgage Pass-Through Certificates Series 2007-AR171 (“the Trust”).

We rely on Wadsworth’s allegations and the evidence submitted by the parties on the petition for preliminary injunction to set out the facts below.

C. The Loan and Default
D.
On April 30, 2007, Wadsworth obtained a loan for $346,000 secured by a deed of trust against real property in Idyllwild. The loan had an adjustable interest rate, with an initial 10-year interest-only period. Wadsworth was not responsible for making payments on the principal during that period, and his initial monthly payments were to be $1,910.21. Ocwen became the servicer for the loan on November 1, 2013. On January 11, 2018, Ocwen recorded an assignment of the deed of trust to the Trust.

On April 25, 2017, Ocwen sent Wadsworth a letter advising him his interest rate would change from 4 percent to 4.5 percent starting July 1, 2017, consistent with the terms of his adjustable-rate mortgage. With the adjustment, his payment was set to increase from $1,655.92 to $2,626.90. The letter also advised Wadsworth that his interest rate and overall payments could change in the future. Ocwen sent Wadsworth a mortgage statement dated June 2, 2017 that confirmed the amended interest rate and monthly payment amount.

Wadsworth began missing payments on the loan in July 2017.

E. Ocwen’s Communications with Wadsworth
F.
Following Wadsworth’s initial failure to make a payment, Ocwen sent him several letters advising him the loan was delinquent and informing him how to seek help. They sent the first such letter on July 18, 2017. That letter told him his payment was delinquent, requested immediate payment, and provided a customer care 1-800 number so he could discuss mortgage assistance options and ways to avoid foreclosure.

After he missed his August payment, Ocwen sent two more letters notifying him of his situation. One informed him his account was in default and said, “if you do not make these payments or reach another resolution with us further collection activity may continue, including possible foreclosure.” The first letter told Wadsworth of his options—refinance, modification, forbearance, repayment plans, sale, short sale, or deed-in-lieu of foreclosure—and asked him to fill out a form on their website to determine his eligibility for assistance programs. A second, seven-page letter laid out his mortgage assistance resources in detail. On August 24, 2017, Ocwen sent a letter advising Wadsworth of his default and of Ocwen’s intent to accelerate the loan under the terms of the deed of trust.

Ocwen also had several conversations with Wadsworth about his financial situation and alternatives to foreclosure. On September 10, 2017, Ocwen spoke with Wadsworth and advised him of his options to avoid foreclosure. They also advised Wadsworth of his right to request a later meeting within 14 days and provided him with the toll-free number to contact the Department of Housing and Urban Development. During the call, Wadsworth asked for his account status, and Ocwen told him the outstanding balance on the loan was $8,100.44. Ocwen attempted to discuss the loan with Wadsworth on September 15, September 21, October 11, and October 16, 2017, but Wadsworth didn’t answer. Ocwen did speak with Wadsworth on September 24, October 6, October 25, October 30, November 8, November 17, and November 27, 2017, and provided him additional account information.

On December 6, 2017, the Consumer Financial Protection Bureau (“CFPB”) notified Ocwen that Wadsworth had submitted a complaint asserting the monthly payment amount of the loan had wrongfully increased and the original lender of the loan had agreed in 2007 to refinance the loan to a 30-year fixed-rate loan.

On December 20, 2017, Ocwen responded to the CFPB complaint. The letter advised Wadsworth the monthly payment increased in July 2017 because the 10-year interest-only period had expired, which changed the monthly payment to include principal payments. It also advised that Ocwen couldn’t comment on Wadsworth’s negotiations to refinance the loan with the original lender. Ocwen attached the original note between Wadsworth and Colony Mortgage Lenders, Inc. They informed Wadsworth they had no documents or records about the alleged agreement to refinance the account at 2 percent with no closing costs. The letter also advised Wadsworth he was in default and should contact his relationship manager, Siddharth Zaveri, to discuss foreclosure prevention alternatives.

On January 26, 2018, Ocwen approved Wadsworth for a modification and sent him a trial plan with instructions on how to accept it. Under the modification, Wadsworth’s monthly payments would have been $2,210.32. The deadline for accepting was March 1, 2018. Ocwen also continued sending Wadsworth information on other mortgage assistance programs in case Wadsworth wasn’t satisfied with the modification. Wadsworth didn’t submit the first payment required to accept the modification.

On July 31, 2018, Ocwen approved Wadsworth for a second trial modification plan. Under this modification plan, Wadsworth would have monthly payments of $2,434.08. Wadsworth again didn’t accept the modification. Wadsworth didn’t submit any other loan modification application or seek other foreclosure prevention assistance. Ocwen continued sending Wadsworth his monthly mortgage statements, which identified the total monthly payment and total amount past due.

G. Notice of Default
H.
On May 15, 2018, the Trust recorded a substitution of trustee, making The Mortgage Law Firm, PLC the trustee. The new trustee recorded a notice of default the same day, which represented there was a past due balance of $29,070 and that Wadsworth had been contacted as required by Civil Code section 2923.5

On October 19, 2018, the trustee executed and recorded a notice of trustee’s sale, setting an initial sale date of November 13, 2018, and indicating the unpaid principal balance for the loan was $361,417.12.

I. The Wrongful Foreclosure Lawsuit and Request for Preliminary Injunction
J.
Wadsworth filed this lawsuit on November 16, 2018. The complaint included causes of action for violation of (1) Civil Code section 2923.5, (2) Civil Code section 2923.7, (3) Civil Code section 2932.5, as well as causes of action for (4) breach of contract, (5) negligence, and (6) fraud.

Wadsworth also submitted an ex parte application seeking a temporary restraining order to stop Ocwen from conducting the foreclosure sale. Wadsworth’s application said the original lender, Colony Mortgage Lenders, had agreed orally to refinance his existing loan with Countrywide Mortgage with a 30-year fixed-rate loan if Wadsworth agreed to an adjustable-rate mortgage and then maintained a good payment history. According to Wadsworth, he agreed to the new mortgage with that understanding. He said he made all required payments for 10 years and was current on the mortgage until July 2017, when Ocwen increased his monthly payment amount without implementing Colony’s oral promise to modify the loan. Wadsworth also claimed Ocwen hadn’t notified him of its intent to foreclose or of his options for avoiding foreclosure. Wadsworth supported the application with his own declaration.

On November 19, 2018, the trial court granted Wadsworth a temporary restraining order, postponing the foreclosure sale, and scheduled a hearing on whether a preliminary injunction should issue.

K. Denial of a Preliminary Injunction
L.
The trial court held a preliminary injunction hearing on January 18, 2019. Like in this appeal, Wadsworth was not represented by legal counsel, however his brother, Stephen Wadsworth, and his real estate broker, Serghon Afram, were present for the hearing.

The trial court began the hearing by issuing a tentative ruling. “The Court finds that in this case, the plaintiff has failed to submit any evidence supporting the allegations that are contained in the verified complaint and his declaration submitted as part of the ex parte application. [¶] On the other hand, the evidence submitted by Ocwen, including court documents, correspondence between the parties, refutes just about all of the plaintiff’s allegations. [¶] With respect to the defendant’s authority to foreclose, the plaintiff admits in the reply that he has no evidence to show that the assignment or substitution of trustee was invalid, but argues that he seeks additional discovery to prove his allegations. That is insufficient for the purposes of today’s preliminary injunction. [¶] With respect to the contact with plaintiff to discuss loss mitigation, the requirement that the lender contact the borrower, the declaration of the senior loan analyst, Jeanie Freiser (phonetic) from Ocwen, contends that the servicing records for plaintiff indicates that on September 10th, 2017, Ocwen called and spoke with the plaintiff during which plaintiff was advised of his options to avoid foreclosure. Furthermore, Ocwen sent half a dozen letters, from July 2017 to April 23, 2018, that notified plaintiff of his default status. This evidence contradicts plaintiff’s assertion that Ocwen never notified him of their intent to pursue foreclosure.”

The court also held Wadsworth unlikely to succeed on the merits of his fraud and breach of contract allegations. “With respect to fraudulent inducement, I agree with the defense that the statute of frauds bars enforcement of these agreements that date back to 2004. Plaintiff has failed to produce any evidence showing confirmation of the alleged oral agreement that he had with the vice-president for Ocwen. By 2006, Plaintiff was on inquiry notice that he was defrauded, and yet plaintiff did not file this complaint until 2018 such that the fraud and negligence claim are time-barred under CCP section 335.1 and 338 paragraph (e). Therefore, plaintiff has failed to show a probability of success on the merits on the contract or fraud claims. All other claims in your complaint are premised on the same allegations as set forth above. Therefore, those claims fail for the same reasons that the Court has already stated.”

The court therefore denied Wadsworth a preliminary injunction and warned he should prepare for the foreclosure to go forward. Wadsworth, for his part, did not challenge any portion of the court’s tentative ruling or the evidence respondents submitted. Instead, he represented he was trying to sell the property and that he was prepared to purchase the property himself outright. The trial court advised him to speak to defense counsel about that way of resolving the dispute. Because the court denied the request for preliminary injunction, but didn’t dismiss Wadsworth’s complaint, he remained free to pursue damages if he could prove his claims at trial.

The trial court issued a minute order confirming the denial of the preliminary injunction on January 18, 2019. Wadsworth filed a motion for reconsideration, which the trial court denied at a hearing on April 10, 2019 because he hadn’t provided any new evidence, facts, or law to warrant reconsideration.

Wadsworth appealed the order denying a preliminary injunction.

II

ANALYSIS

Wadsworth presents two arguments for reversing the trial court, both focused on what he believes to be improper procedures in the trial court. First, he argues the trial court erred by failing to conduct an adequate hearing. Second, he argues the trial court erred by ruling without making findings on all the issues his petition for a preliminary hearing put in play. Though he has forfeited the issue on appeal, we will exercise our discretion to address a third issue—whether the trial court abused its discretion by concluding he had not shown a reasonable probability of prevailing on the merits of his claims.

A. Standard of Review
B.
When deciding whether to issue a preliminary injunction, the trial court must weigh “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.” (Hunt v. Superior Court (1999) 21 Cal.4th 984, 999.) The court need not reach the relative harm to the parties if the evidence is insufficient to make the plaintiff prevailing a reasonable probability. (Choice-in-Education League v. Los Angeles School Dist., supra, 17 Cal.App.4th at p. 422.)

We review an order denying a petition for preliminary injunction for abuse of discretion. (Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286.) “The party challenging an order granting or denying a preliminary injunction has the burden of making a clear showing of an abuse of discretion. [Citation.] An abuse of discretion will be found only where the trial court’s decision exceeds the bounds of reason or contravenes the uncontradicted evidence.” (Tahoe Keys Property Owners’ Assn. v. State Water Resources Control Bd. (1994) 23 Cal.App.4th 1459, 1470.) “Where the evidence with respect to the right to a preliminary injunction is conflicting, the reviewing court must ‘interpret the facts in the light most favorable to the prevailing party and indulge in all reasonable inferences in support of the trial court’s order.”’ (Gleaves v. Waters (1985) 175 Cal.App.3d 413, 416-417.)

C. Adequacy of the Preliminary Injunction Hearing
D.
Wadsworth, who suffers from a speech impediment due to a serious accident, argues the trial court did not adequately accommodate him and, as a result, improperly ruled on his petition for a preliminary injunction despite not understanding his arguments. In essence, his complaint is the trial court considered only respondents’ arguments, not his own.

To support this position, Wadsworth points to a few stray comments at an April 10, 2019 hearing regarding his motion to reconsider and a motion to comply with a Qualified Written Request (QWR) that occurred months after the trial court denied his petition. He complains the court showed it didn’t consider his arguments when the trial judge said in his tentative ruling he had “read and considered opposition and moving documents.” (Emphasis added by Wadsworth.) This is a misunderstanding. The trial judge was saying he had read and considered both the defendants’ opposition and the plaintiff’s moving papers. He was not saying he had considered only the opposition. The court denied the motion to reconsider because Wadsworth hadn’t provided any new fact, circumstance, or law warranting reconsideration. It denied the motion to comply because he didn’t show he had served the QWR to defendant at the designated address. The comment presents no reason for thinking the trial court failed to give adequate consideration to Wadsworth’s arguments.

Wadsworth also complains other comments by the court at this second hearing show the judge didn’t understand his arguments due to his speech impediment and refused to allow his brother to speak on his behalf. According to Wadsworth, the trial judge displayed an unwillingness to hear his arguments by telling Wadsworth, “I don’t understand you, Mr. Wadsworth” and saying to his brother, “The motions are denied. The hearing is over. Exit the courtroom.” Wadsworth’s representation of these exchanges is misleading.

As we’ve seen, the trial court issued a tentative ruling against Wadsworth on the motion to reconsider after considering the written submissions by both sides. After the ruling, Wadsworth sought to speak. According to the transcript, he said, “Anything short of a payoff payment of loan (unintelligible) of the property be done at gap is fraud.” The trial judge asked for clarification, and Wadsworth said something unintelligible to the court reporter and then said, “I will appeal.” The trial judge responded, “I don’t understand you. I’m sorry. I’ve denied both of your motions.”

At that point, Wadsworth’s brother asked if he could say something, and the trial judge responded, “Yes. Step forward, sir. What’s your name.” After clarifying his relationship and that he had power of attorney to speak for Wadsworth, he claimed to have additional evidence that Wadsworth did in fact send the QWR to the correct address. The brother and defense counsel then engaged in a long exchange about the address. In the end, it appeared Wadsworth and his brother had mistaken a discovery request made on respondents for the QWR filed with the court and served at a different address. After this exchange, Wadsworth’s brother then attempted to reargue the adequacy of notice on the QWR. It was at that point that the trial judge told Wadsworth and his brother that the hearing was over and directed them to exit the court room. This exchange does not establish that the trial judge failed to hear Wadsworth’s arguments. On the contrary, the trial judge allowed the brother to argue the matter at some length, and only terminated the hearing when the brother attempted to reargue the same point.

Wadsworth’s argument has another, more fundamental problem. He’s attempting to prove the trial court didn’t give him a fair hearing on the petition for a preliminary injunction by pointing to deficiencies in the trial court’s understanding of his arguments on the separate motion to comply with the QWR. Thus, nothing he points to as troubling has any bearing on the adequacy of the trial court’s order denying the preliminary injunction. For all these reasons, we conclude the trial court provided Wadsworth an adequate hearing on his petition for a preliminary injunction.

E. Adequacy of the Trial Court’s Ruling
F.
Wadsworth argues the trial court ruled improperly on his petition because it did not make findings on all the factors relevant to issuing a preliminary injunction. Specifically, he objects that the trial court ruled against him only because he hadn’t established a substantial likelihood of success on the merits, but didn’t consider the irreparable damage to him if the foreclosure occurred, the immediacy of that threat, and the absence of any other remedy, among other factors.

We recognize the importance to Wadsworth of losing his home. However, his argument misunderstands the law. To obtain a preliminary injunction, it is required that the proponent of the injunction establish they are likely to prevail on the merits. If they can’t carry their burden on that issue, they can’t obtain an injunction no matter how serious or irreparable the harm. “An injunction should not issue where there is no possibility of success even though its issuance might prevent irreparable harm; there is no justification in delaying that harm where, although irreparable, it is also inevitable.” (Choice-in-Education League v. Los Angeles School Dist., supra, 17 Cal.App.4th at p. 422.) That was the basis of the trial court’s ruling and it was correct.

G. The Trial Court Did Not Abuse Its Discretion by Determining Wadsworth Was Not Likely to Prevail on the Merits
H.
Wadsworth asserted four primary causes of action in support of his request for a preliminary injunction, claiming there were violations of three different California Homeowners’ Bill of Rights statutes (Civ. Code, §§ 2923.5, 2923.7 & 2932.5) and asserting a claim for breach of contract. Because Wadsworth does not argue in his opening brief that the trial court abused its discretion in holding he wasn’t likely to succeed on the merits of any of these claims, he has forfeited those arguments on appeal. (Sierra Palms Homeowners Assn. v. Metro Gold Line Foothill Extension Construction Authority (2018)19 Cal.App.5th 1127, 1136.) However, we will exercise our discretion to address the merits.

1. Civil Code section 2923.5
2.
Civil Code section 2923.5 requires a mortgage servicer to contact a borrower to assess their financial situation and explore options to avoid foreclosure before recording a notice of default. Wadsworth claimed Ocwen violated this section because they didn’t contact him to discuss his loss mitigation options.

Though Wadsworth, not respondents, bore the burden of proof on this issue, Ocwen presented affirmative business record evidence refuting the charge. Ocwen had a telephone call with Wadsworth on September 10, 2017. During the call, they advised Wadsworth of his options to avoid foreclosure, his right to request a subsequent meeting, and the other ways to seek assistance. Ocwen and Wadsworth also discussed the status of the loan and the amount of default during the call. Wadsworth didn’t request a subsequent meeting despite Ocwen’s efforts to follow-up. This evidence as well as numerous other business records support the trial court’s conclusion that Wadsworth was not likely to prevail on this claim.

3. Civil Code section 2923.7
4.
Wadsworth also argued respondents violated the requirement that a mortgage servicer provide a borrower a single point of contact for discussions regarding foreclosure prevention alternatives if the borrower requests one. (Civ. Code, § 2923.7.)

There are two problems with this claim. First, Wadsworth didn’t submit any evidence showing he requested Ocwen to provide a single point of contact. Second, on August 7, 2017, Ocwen sent Wadsworth a letter identifying Siddharth Zaveri as his home retention specialist and told Wadsworth how to contact him. This evidence supports the trial court’s conclusion that Wadsworth was not likely to prevail on this claim.

5. Civil Code section 2932.5
6.
Wadsworth argued before the trial court that Ocwen violated Civil Code section 2932.5, which requires an assignment to be recorded before the power of sale contained in a deed of trust can be exercised by the assignee. According to Wadsworth, Ocwen did not have power to exercise the power of sale because Ocwen was not the owner of the loan.

MERS was the original beneficiary under the deed of trust. Stewart Title was the original trustee under the deed of trust. The Mortgage Law Firm, PLC was properly substituted in as trustee, and the substitution was recorded on May 15, 2018. All of the foreclosure documents were conducted under these valid, recorded assignments, which show the Trust had the authority to conduct the foreclosure. So again, Ocwen demonstrated the Trust’s standing to foreclose the deed of trust and the trial court properly concluded that this claim could not support a preliminary injunction.

7. Breach of contract by Ocwen
8.
Wadsworth alleged Ocwen breached their contract because they never provided him notice of acceleration or an intent to pursue foreclosure, in violation of paragraph 22 of the deed of trust.

Wadsworth wasn’t likely to succeed on the merits of this claim because Ocwen proved they served Wadsworth with notice of his delinquent account. Ocwen sent a letter to Wadsworth on August 24, 2017, which notified him that he was in default, what he could do to cure the default, the date (more than 30 days away) by which he had to cure the default, and the fact that failure to cure would result in acceleration of the sums secured by the deed of trust. Again, the trial court did not abuse its discretion on this record in concluding Wadsworth was not likely to prevail on the merits and therefore was not entitled to a preliminary injunction.

9. Breach of contract and fraud by the lender
10.
Wadsworth also had claims that Colony Mortgage Lenders orally agreed to refinance the mortgage loan in 2007. Wadsworth alleged in a declaration that Colony Mortgage Lenders’ representatives told him they would include a provision in the loan papers specifying the loan would convert to a 30-year fixed 2 percent interest rate mortgage once he made payments for a year. However, it is uncontested the loan documents do not contain that provision, and Wadsworth did not provide other evidence to substantiate that claim. Though it was possible he could obtain such evidence before trial, we cannot conclude on this record that the trial court abused its discretion in concluding Wadsworth hadn’t carried his burden of establishing he was likely to prevail on the merits of his fraudulent inducement claim.

We note the trial court’s conclusion Wadsworth’s fraudulent inducement claim is barred by the statute of frauds is not supported. (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal. 4th 1169, 1183 [“a fraud action is not barred when the allegedly fraudulent promise is unenforceable under the statute of frauds”].) The court’s conclusion that the claim is barred by the statute of limitations because his complaint alleged he had notice that the lender didn’t keep the promise is similarly unsupported. We nevertheless affirm because the trial court didn’t abuse its discretion by concluding Wadsworth’s declaration wasn’t sufficient on its own to establish the likelihood he would prevail. Consequently, Wadsworth may obtain discovery on this claim and pursue it at trial if the parties don’t resolve the dispute.

III

DISPOSITION

We affirm the trial court order denying Wadsworth’s petition for a preliminary injunction. The parties shall bear their own costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

SLOUGH

J.

We concur:

McKINSTER

Acting P. J.

RAPHAEL

J.