Case Number: BC529821    Hearing Date: July 21, 2014    Dept: 34

Moving Party: Defendant Bank of America, N.A. (“BoA” or “defendant”)

Resp. Party: Plaintiff Anthony Caldwell

Defendant’s motion for judgment on the pleadings is GRANTED, with leave to amend.

Defendant’s Request for Judicial Notice is GRANTED. However,
the court does not take judicial notice of hearsay facts contained in recorded documents, including an assignment of deed, and substitution of trustee, where they are in dispute. (Glaski v. Bank of Amer. (2013) 218 Cal.App.4th 1079, 1102; Herrera v. Deutsche Bank Nat. Trust Co. (2011) 196 Cal.App.4th 1366, 1375 [addressing judicial notice of a recorded assignment of deed and substitution of trustee, and reversing summary judgment, by concluding that the bank defendant failed to show it was a beneficiary under the deed of trust, with regard to a foreclosure sale].)

PRELIMINARY COMMENTS:

The Court disregards the declaration and exhibits filed by plaintiff in opposition to this motion. Like a demurrer, the grounds for a motion for judgment on the pleadings must appear on the face of the complaint or from judicially noticed items. (See Code Civ. Proc., § 438(d).) Plaintiff’s declaration and exhibits are extrinsic evidence that may not be considered on such a motion.

Further, the Court would appreciate plaintiff complying with CRC Rule 3.1110(f) in all future pleadings. If Plaintiff’s attorney continues to violate the California Rules of Court when submitting pleadings (see, e.g., the court’s order of June 9, 2014), the Court will be forced to impose sanctions.

BACKGROUND:

Plaintiff commenced this action on 12/9/13 against defendants for: (1) vacate foreclosure sale; (2) Bus. & Prof. Code § 17200; and (3) violation of duty of reasonable care regarding modification. Plaintiff obtained a loan in 2005 but fell behind on his mortgage payments in 2009. (Compl., ¶ 6.) Plaintiff began a loan modification program in 2011 with BAC Loan Servicing Inc. (Ibid.) Despite this, Bank of America proceeded with foreclosure in August 2012, which constitutes illegal “dual tracking.” (Ibid.) Plaintiff alleges that, during the modification process with BAC, their personnel deliberately destroyed documents or claimed they did not receive them as part of a plan to deny the modification and seize plaintiff’s home. (Id., ¶ 7.)

On 4/2/14, the Court found that this action and 13F10299 are related cases. On 6/9/14, the Court denied plaintiff’s motion to consolidate the actions.

ANALYSIS:

First Cause of Action to Vacate Foreclosure Sale

Defendant first argues that this claim fails because plaintiff has not tendered the amount due and owing. “A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust.” (Karlsen v. American Sav.& Loan Assn. (1971) 15 Cal.App.3d 112, 117. Accord Sierra-Bay Fed. Land Bank Ass’n v. Sup. Ct. (1991) 227 Cal.App.3d 318, 337.)

Recognized exceptions to the requirement to tender the debt are: (1) the borrower attacks the validity of the debt (e.g., based on fraud); (2) the borrower has a counter-claim or set-off against the beneficiary sufficient to cover the amount due; (3) it would be inequitable as to a party not liable for the debt; and (4) the trustee’s deed is void on its face, apart from equitable principals (e.g., trustee lacked power to convey property). (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112-113.) Though plaintiff’s opposition asserts that an exception applies, there is nothing in the complaint which supports this assertion. The other arguments raised in the opposition, e.g., that defendant did not comply with HAMP and the foreclosure was by one who was not the trustee, are also not asserted in the complaint.

Moreover, this cause of action is based on a violation of the Homeowner’s Bill of Rights. (See Compl., ¶ 10.) The items for which defendant requests judicial notice establish that the alleged conduct occurred in 2012. (See RJN, Exhs. A-D.) The California Homeowner Bill of Rights, Civil Code Section 2924 went into effect January 1, 2013, has not been applied retroactively. (McGough v. Wells Fargo Bank, N.A. (N.D.Cal., 2012) 2012 WL 5199411, *5, fn.4.) No California case has found that the HBOR is to be applied retroactively.

Accordingly, defendant’s motion for judgment on the pleadings as to the first cause of action is GRANTED with leave to amend.

Second Cause of Action for Violation of Bus. & Prof. Code § 17200

Plaintiff’s second cause of action alleges that defendant engaged in unlawful acts by dual tracking in violation of HOBR and OCC regulations. The second cause of action appears to be based on the same facts as the first cause of action. As discussed above, HOBR is not to be applied retroactively and thus cannot support this cause of action. The complaint does not clearly allege other facts to support the second cause of action. Plaintiff appears to acknowledge this, and requests leave to amend in his opposition.

Accordingly, defendant’s motion for judgment on the pleadings as to the second cause of action is GRANTED with leave to amend.

Third Cause of Action for Negligence

“[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” (Nymark v. Heart Fed. Sav.& Loan Ass’n (1991) 231 Cal.App.3d 1089, 1096.) However, there are exceptions where the institution exceeded the conventional role as a mere lender of money, or where the Biakanja case factors apply: “(1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 899, 906.) Plaintiff attempts to allege facts in the complaint as to the Biakanja factors. (See Compl., ¶¶ 19, 22.)

In Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, the Fourth District held that lenders do not have a common-law duty of care in negligence, to offer, consider, or approve a loan modification, to offer foreclosure alternatives, or to handle loans so as to prevent foreclosure. (Id. at p. 68.)

Moreover, the Court in Lueras recognized that there was no claim for negligence where it is not alleged that the bank did anything wrong to make the borrower unable to make the original monthly loan payments or that the bank caused or exacerbated the default by negligently servicing the loan. (See Lueras, 221 Cal.App.4th at p. 68.) Plaintiff does not allege that defendants caused or exacerbated plaintiff’s default on the loan.

In the opposition, plaintiff asserts that defendant made material misrepresentations regarding the loan modification. Again, these assertions are not mentioned in the complaint. Accordingly, defendant’s motion for judgment on the pleadings as to the third cause of action is GRANTED with leave to amend.

Plaintiff has 20 days leave to amend.