Filed 3/26/20 Whitaker v. Wells Fargo, N.A. CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Sutter)

—-

HERBERT WHITAKER,

Plaintiff and Appellant,

v.

WELLS FARGO, N.A.,

Defendant and Respondent.

C081559

(Super. Ct. No. CVCS131545)

The Homeowner Bill of Rights (HBOR) was enacted “to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower’s mortgage servicer, such as loan modifications or other alternatives to foreclosure.” (Civ. Code, § 2923.4.) “Among other things, HBOR prohibits ‘dual tracking,’ which occurs when a bank forecloses on a loan while negotiating with the borrower to avoid foreclosure. (See § 2923.6.)” (Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal.App.4th 1267, 1272.)

Section 2923.6 of HBOR addresses dual tracking by prohibiting a lender from recording a notice of default, notice of sale, or conducting a trustee’s sale, when the borrower has submitted a complete application for a loan modification, unless the lender has made a written determination that the borrower is not eligible for a loan modification and a 30-day period for the borrower to appeal that determination has expired. (§ 2923.6, subd. (c)(1), (d), (e)(1).)

In this appeal from summary judgment in favor of defendant Wells Fargo, N.A. (Wells Fargo), we reject the trial court’s determination that it is undisputed an initial application by plaintiff Herbert Whitaker in December 2012 for a loan modification was evaluated by Wells Fargo or that Whitaker was afforded a fair opportunity to be evaluated for modification, as required by section 2923.6, subdivision (g), for Wells Fargo to proceed with foreclosure thereafter. Here, Wells Fargo expressly informed Whitaker that it was “not able to review you for a loan modification,” indicating Wells Fargo did not conduct an evaluation.

Wells Fargo followed this letter with a series of letters requesting that Whitaker provide more documentation to support a loan modification application and acknowledging receipt of documentation from him. Ultimately, Wells Fargo informed Whitaker that his application was denied as incomplete because he had failed to provide the documentation requested. Yet, two days later, Wells Fargo again acknowledged receipt of documents from Whitaker.

On this record, we cannot conclude there was no genuine issue of triable fact that Wells Fargo evaluated Whitaker’s loan modification application before proceeding with foreclosure or that his application was incomplete.

The judgment will be reversed.

FACTUAL AND PROCEDURAL BACKGROUND

In the summer of 2012, Whitaker defaulted on his home loan, after the death of his wife resulted in a loss of income. A Wells Fargo representative informed Whitaker that he could participate in the loan modification process. In September or October 2012, Whitaker submitted an application for a loan modification to Wells Fargo.

On December 4, 2012, a Wells Fargo representative wrote a letter to Whitaker regarding a loan modification under the Home Affordable Modification Program (HAMP). The letter stated: “We carefully reviewed the information you sent us. At this time, you do not meet the requirements of the Home Affordable Modification Program because: [¶] We have not been able to reach you to discuss your situation, and without input from you, we are not able to review you for a loan modification.”

The letter continued, “There may be other mortgage assistance options available to help you avoid a foreclosure sale.” The options listed in the letter included the following: “If you’re interested in staying in your home, you may be eligible for help through a different mortgage assistance program.”

On December 6, 2012, the same Wells Fargo representative sent a letter to Whitaker stating: “I’m writing to inform you of changes in the status of your mortgage assistance and let you know what to expect going forward . . . Please understand that, at this time, I am not able to help you find a mortgage assistance solution. [¶] For that reason, the normal collections process will resume if appropriate. This means you will begin receiving phone calls and notices from the collections department. They will keep you informed of the process and also inquire about any changes in your financial situation.”

On December 7, 2012, the Wells Fargo representative wrote Whitaker that “we have referred your mortgage to our foreclosure attorney and the foreclosure process has begun. However, you may still have an opportunity to keep your home or prevent foreclosure, even if you previously indicated that you do not wish to stay in your home.”

The letter urged Whitaker to avoid foreclosure. The letter stated: “We previously sent you a letter informing you about available mortgage assistance options to avoid foreclosure, along with a Customer Information Package for you to complete and return to us to be evaluated for these options. If you did not receive these documents, no longer have them, or if you did not return all the required information, please contact me immediately at the phone number below for a new package. Please keep in mind that we cannot evaluate you for mortgage assistance options until we receive the completed package.”

The letter reiterated, “[w]e will continue to work with you to help you avoid a foreclosure sale. However, please understand that your mortgage has been referred to foreclosure and that process will move forward at the same time.” On that point, the letter stated, “Please note that a foreclosure sale will not be scheduled if you send us a completed application, either in response to this letter or as an appeal for [sic] a denial, within 30 days of this letter.”

In opposition to Wells Fargo’s motion for summary judgment, Whitaker submitted a declaration stating: “After I submitted my first loan modification in or about September 2012, I followed up with Wells about the loan modification several times and was given the run around and was transferred to voicemails. [¶] . . . I never received a letter from Wells stating that I was denied a loan modification regarding the September 2012 loan modification. I was just told to resubmit documents on numerous occasions in November 2012. I was even directed by Wells to resubmit the entire loan modification application on at least three occasions. I never received a letter dated December 4, 2012.”

On December 13, 2012, Wells Fargo recorded a notice of default.

On January 24, 2013, a Wells Fargo representative sent Whitaker a letter thanking him for “sending us your documentation supporting your request for mortgage payment assistance.” The representative asked Whitaker to call Wells Fargo immediately “[b]ecause you are currently in the foreclosure process, [and] you have limited time to receive assistance before a foreclosure sale is scheduled.” The letter continued, “If we don’t speak with you and receive all required documents before the scheduled foreclosure sale, we may not be able to stop the sale. Investor and state guidelines may require more time.” The representative asked that Whitaker, when he called, have ready information on his monthly gross income, any additional household income, current monthly expenses, and reason for his financial hardship.

The next day, January 25, 2013, the Wells Fargo representative sent another letter to Whitaker stating: “We’re writing to let you know we received the documents you sent us to move forward with your request for mortgage assistance. We’d like to thank you for responding to our request for documentation.” The letter continued: “Now that we’ve received your documents, our home preservation team will carefully review what you’ve submitted to determine if you’re eligible for mortgage assistance. We’ll follow up with you again soon to outline next steps in the process and address any additional documents that might be needed to complete our review. [¶] After we ensure that we have all the documents we need, we will review and validate those materials to determine if you’re eligible for a loan modification.” The representative also stated that “[w]e’ll continue to work with you to help you avoid a foreclosure sale,” and “we will not conduct a foreclosure sale on this loan while your documents are being reviewed and if allowed by state law and/or investor guidelines.” The letter closed: “Please note: Depending on when we receive additional documentation required for our review, we may not be able to stop a pending foreclosure sale or postpone an initial foreclosure sale date for the loan referenced above. If you do not send us all the required documentation requested in this letter, you may not be eligible for an alternative foreclosure prevention options [sic], and foreclosure proceedings will continue.”

From February 8, 2013, through May 9, 2013, Wells Fargo representatives sent a series of letters to Whitaker thanking him for submitting documentation and committing to reviewing the documents to determine his eligibility for a loan modification, but also warning him that time was limited because the foreclosure process was continuing. A letter dated February 8, 2013, was similar in form to the letter dated January 24, 2013. A letter dated February 22, 2013, was similar to the letter dated January 25, 2013. Letters dated March 15, April 23, May 1, May 6, and May 9, 2013, were abbreviated forms of the letter dated January 25, 2013.

During this period, on March 26, 2013, Wells Fargo recorded a notice of trustee’s sale, scheduling a sale for April 22, 2013, but also advising Whitaker that the sale may be postponed one or more times.

On May 20, 2013, a Wells Fargo representative wrote Whitaker that, “We carefully reviewed the information you sent us and explored a number of mortgage assistance options. At this time, you do not meet the requirements of the program because: [¶] You did not provide us with all of the information needed within the required time frame.” The letter, however, again advised Whitaker that there may be other mortgage assistance options to avoid a foreclosure sale and urged him to contact Wells Fargo to learn about the options. Wells Fargo committed to work with Whitaker to avoid a foreclosure sale but stated that “[i]f your mortgage has been or will be referred to foreclosure, that process moves forward at the same time.”

Notwithstanding the May 20, 2013 letter to Whitaker denying him a loan modification, the same Wells Fargo representative sent Whitaker a letter dated May 22, 2013, essentially identical to the letter dated January 24, 2013. The letter began: “Thank you for sending us your documentation supporting a request for mortgage payment assistance. We’re here to help you, but it’s critical that we hear from you immediately to determine what options may be available to you.” The letter repeated: “Because you are currently in the foreclosure process and a foreclosure sale is scheduled on your home, you have limited time to receive assistance. That’s why you must call us immediately. If we don’t speak with you and receive all required documents before the scheduled foreclosure sale, we may not be able to stop the sale.”

On the same date, May 22, 2013, a Wells Fargo representative sent yet another letter to Whitaker, advising that “I am not able to help you find a mortgage assistance solution” and “[f]or that reason, the normal collections process will resume if appropriate.”

In his declaration regarding the events of this period, Whitaker stated, “I received a letter dated February 22, 2013 acknowledging receipt of all documents.” He further stated: “I spoke with Wells on April 23, 25, 26, and 30, 2013. Each time Wells requested documents I had already sent them.” Regarding April 2013 in particular, Whitaker stated: “I was directed by Wells to resubmit the entire application because the application had gone stale. I gathered the information again, and submitted all requested documents. I received a letter dated April 23, 2013, once again acknowledging and thanking me for supplying all supporting documents. Wells represented to me that I was under loan modification review. I had submitted a complete loan modification by providing each document Wells requested.”

With respect to the May 2013 correspondence from Wells Fargo, Whitaker declared: “While I received a letter dated May 20, 2013 stating that I did not meet the requirements of the program because I did not provide information, I did in fact provide all the requested information. In fact, I received a letter dated May 22, 2013 (just two days later) from Wells stating ‘Thank you for sending us your documentation.’ ”

On July 22, 2013, Whitaker’s residence was sold at a trustee’s sale.

On August 16, 2013, Whitaker filed a complaint against Wells Fargo, ASC, and the Federal National Mortgage Company (Fannie Mae). After a series of demurrers, Whitaker filed a third amended complaint alleging claims for violation of HBOR, wrongful foreclosure, and fraud. Further demurrers resulted in the dismissal of Fannie Mae and narrowed Whitaker’s claim to a single count for violation of the dual tracking prohibition in section 2923.6. On September 17, 2014, Wells Fargo answered the third amended complaint.

On July 24, 2015, Wells Fargo filed a motion for summary adjudication or summary judgment to dismiss Whitaker’s remaining claim. On October 6, 2015, Whitaker filed an opposition to Wells Fargo’s motion, including written objections to certain items of evidence Wells Fargo submitted to support the motion. On October 13, 2015, Wells Fargo filed a reply.

On October 19, 2015, the trial court conducted a hearing on Wells Fargo’s motion.

On December 11, 2015, the trial court issued a four-page ruling on the motion. Preliminarily, the court (1) denied as untimely Whitaker’s motion to strike a declaration submitted by Wells Fargo, (2) overruled Whitaker’s written objections to Wells Fargo’s evidence for failure to provide a proposed order as required by California Rules of Court, rule 3.1354(c), (3) stated that evidence to which Whitaker orally objected at the hearing was not considered in the disposition of the motion, and (4) granted Wells Fargo’s request for judicial notice of the deeds of trust, assignment of deed of trust, notice of default, substitution of trustee, notice of trustee’s sale, and a trustee’s deed upon sale.

On Whitaker’s HBOR claim, the trial court ruled that, based on subdivision (g) of section 2923.6 and citing, inter alia, the December 4, 2012 letter to Whitaker, “[t]he facts establish [Whitaker] was afforded a fair opportunity to be evaluated for a first lien loan modification and, therefore, [Wells Fargo] was under no obligation to provide further evaluation under the HBOR.” The court cited facts from Wells Fargo’s statement of undisputed facts and Whitaker’s opposing statement, and the supporting evidence cited, to the effect that Whitaker had submitted a first loan modification application to Wells Fargo in September 2012, Wells Fargo evaluated the application, and denied it on December 4, 2012.

The court directed Wells Fargo to prepare an order consistent with the court’s ruling. Wells Fargo submitted a proposed order that cut and pasted the court’s rulings into the order. In signing the order on January 4, 2016, the court struck out the rulings on the motion to strike, evidentiary objections, and requests for judicial notice, as well as the analysis of Whitaker’s HBOR claim, and left only the cited undisputed facts and supporting evidence as the basis of the order granting summary judgment.

On February 2, 2016, the court entered judgment in favor of Wells Fargo. On March 9, 2016, Whitaker appealed.

DISCUSSION

Standard of Review

The standard of review on a grant of summary judgment is de novo. (California Public Records Research, Inc. v. County of Yolo (2016) 4 Cal.App.5th 150, 165; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860.) We must affirm the judgment if the papers submitted show there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Assad v. Southern Pacific Transportation Co. (1996) 42 Cal.App.4th 1609, 1612.) We review the evidence in a light favorable to the plaintiff as the losing party, construing the plaintiff’s evidentiary submissions liberally while strictly scrutinizing the defendant’s showing, and resolving evidentiary doubts or ambiguities in favor of the plaintiff. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768-769 (Saelzler).) “We review the trial court’s ruling, not its rationale; thus, we are not bound by the trial court’s stated reasons for granting summary judgment.” (McIntosh v. Mills (2004) 121 Cal.App.4th 333, 338.)

Section 2923.6, Subdivision (g)

The correspondence from Wells Fargo to Whitaker—most of it submitted by Whitaker in opposition to Wells Fargo’s motion for summary judgment—establishes that summary judgment was not appropriately granted by application of section 2923.6, subdivision (g) of HBOR.

Section 2923.6, subdivision (g), of HBOR addresses multiple applications for loan modification. The version of the statute operative at the time of the trial court’s summary judgment ruling provided: “In order to minimize the risk of borrowers submitting multiple applications for first lien loan modification for the purpose of delay, the mortgage servicer shall not be obligated to evaluate applications from borrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification prior to January 1, 2013, or who have been evaluated or afforded a fair opportunity to be evaluated consistent with the requirements of this section, unless there has been a material change in the borrower’s financial circumstances since the date of the borrower’s previous application and that change is documented by the borrower and submitted to the mortgage servicer.” (Stats. 2012, ch. 87, § 7.) Section 2923.6, subdivision (g), effective January 1, 2019, deletes the statutory language referring to evaluation of loan modifications prior to January 1, 2013. (Stats. 2018, ch. 404, § 7.)

Our review of the evidence includes Whitaker’s declaration stating that, “After I submitted my first loan application in or about September 2012, I followed up with Wells about the loan modification several times and was given the run around and was transferred to voicemails.” This statement contains a tacit admission that Whitaker submitted more than one loan application.

However, section 2923.6, subdivision (f), requires that “[f]ollowing the denial of a first lien loan modification application, the mortgage servicer shall send written notice to the borrower identifying the reasons for denial . . . .” We conclude that rather than provide reasons for denying the application, Wells Fargo admitted it had not undertaken to evaluate Whitaker’s application. Wells Fargo stated: “We have not been able to reach you to discuss your situation, and without input from you, we are not able to review you for a loan modification.” Notably, Wells Fargo does not state that Whitaker’s application is incomplete or identify additional documents needed to complete the application. The letter does not state that Whitaker’s application is denied.

The trial court relied on a Wells Fargo declaration ostensibly explaining the December 4, 2012 letter. The declaration stated that “[o]n November 5, 15, and 30, 2012, a Wells Fargo representative called Mr. Whitaker and left messages requesting that he complete his application by providing missing documents. [¶] . . . Because Mr. Whitaker never responded to the requests for the missing documents, Wells Fargo sent him a letter dated December 4, 2012, informing him that he did not qualify for a HAMP loan modification.”

However, the December 4 letter does not mention missing documents, let alone specify which documents are missing, or state that Whitaker’s first loan application was denied because documents were missing. The declaration itself does not identify what documents were said to be missing.

The December 4 letter is deficient in another respect. Section 2923.6, subdivision (f), requires that written notice of denial include “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal of the denial of the first lien loan modification and instructions regarding how to appeal the denial.” The December 4, 2012 letter it did not contain this information. Instead, three days later, Wells Fargo sent another letter stating: “Please note that a foreclosure sale will not be scheduled if you send us a completed application, either in response to this letter or as an appeal for [sic] a denial, within 30 days of the date of this letter.”

For these reasons, we conclude that summary judgment was not properly granted based on the application of section 2923.6, subdivision (g).

Incomplete Application

Wells Fargo devotes the majority of its response on appeal to argument that Whitaker did not provide the documents Wells Fargo requested to complete a loan modification application after the December 4, 2012 letter and prior to foreclosure on July 22, 2013. We conclude this argument and the evidence Wells Fargo relies on do not support summary judgment on Whitaker’s dual tracking claim.

To begin with, notwithstanding subsequent events, Wells Fargo recorded a premature notice of default on December 13, 2012, in violation of HBOR. Section 2923.6, subdivision (c)(1), provides that a notice of default may not be recorded until “[t]he 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.” Assuming arguendo the December 4, 2012 letter was a determination that Whitaker was not eligible for a loan modification, the 30-day appeal period required by subdivision (d) had not expired. Indeed, the appeal period would not expire until 30 days after the December 7, 2012 letter, which was the first time Wells Fargo even alluded to a 30-day period to appeal.

More fundamentally, Wells Fargo has not established that there is no triable issue of material fact that Whitaker’s post-December 4, 2012 application for loan modification was denied as incomplete prior to the foreclosure on July 22, 2013. Indeed, Wells Fargo’s evidence, particularly its documentary evidence, is insufficient.

Wells Fargo relies on a single page of an unauthenticated, four-page May 9, 2013 letter to Whitaker that states “[o]ur records indicate that this loan is currently under review for a loan modification. In order to continue our review, we will need the following information signed and dated.” The letter itemizes the documents needed as: (1) a letter explaining bank deposits over $500 for March and April; (2) a letter stating year-to-date income; (3) monthly profit-and-loss statements; and (4) the last two months’ bank statements.

Wells Fargo combines this letter with a log entry on May 17, 2013, by the Thomason Law Center (Thomason), which was assisting Whitaker in the application process, that in response to Thomason’s inquiry, Wells Fargo stated it was requesting the documents itemized in the May 9, 2013 letter. Whitaker informed Thomason he would provide the requested documents shortly. Wells Fargo points to subsequent entries in Thomason’s log recording statements by Wells Fargo that the requested documents were not received.

In this scenario, however, Wells Fargo skips over the interplay of its May 20, 2013 and May 22, 2013 letters to Whitaker. In the May 20 letter, the bank told Whitaker “[w]e carefully reviewed the information you sent us and explored a number of mortgage assistance options. At this time, you do not meet the requirements of the program because: [¶] You did not provide us with all of the information needed within the required time frame.” In this letter, unlike the December 7, 2012 letter, there was no reference to a right to appeal. As Whitaker points out in his declaration, two days later on May 22, 2013, Wells Fargo wrote Whitaker: “Thank you for sending us your documentation supporting your request for mortgage payment assistance.” Construing this evidence and resolving any ambiguity in favor of Whitaker as we must (Saelzler, supra, 25 Cal.4th at pp. 768-769), these letters suggest that Wells Fargo acknowledged on May 22 receiving documentation needed to complete Whitaker’s application that prompted the letter on May 20.

Wells Fargo contends that it is insufficient for Whitaker to declare he provided the requested documents, because he has not offered specific facts showing that he submitted the requested documents and a complete application was pending at the time of foreclosure. This argument boils down to the assertion that Whitaker has not offered evidence that he provided the specific documents, i.e., those identified in the May 9, 2013 letter, to complete a loan modification application.

However, as noted, we do not rely solely on Whitaker’s declaration. The record is replete with correspondence from Wells Fargo after December 4, 2012, through May 2013 acknowledging receipt of documents from Whitaker and thanking him for providing them. The documents received are not identified and none of the letters specify any documents still needed. In particular, the letter on May 22, 2013, is to that same effect. The letter thanked Whitaker “for sending us your documentation supporting your request for mortgage payment assistance,” omitted further description of the documents received, and did not identify any documents still needed. Thus, Well Fargo’s own evidence supports Whitaker’s statements that he provided the documents requested and the application was complete. That the evidence does not establish the specific documents received is attributable to Wells Fargo’s practice of using form letters for communicating with its customers during the loan modification process.

In sum, Wells Fargo’s own correspondence in combination with Whitaker’s declaration is sufficient to create a triable issue of material fact whether Wells Fargo engaged in “dual tracking” in violation of HBOR by proceeding to foreclosure while a loan modification application was pending.

Actual Economic Damages

Lastly, Wells Fargo claims “Whitaker lacks a viable HBOR claim because he has no actual economic damages ‘resulting from’ the alleged dual-tracking.” This claim has no merit.

Section 2924.12, subdivision (b), provides in relevant part that “[a]fter a trustee’s deed upon sale has been recorded, a mortgage servicer, mortgagee . . . shall be liable to a borrower for actual economic damages . . . resulting from a material violation of Section . . . 2923.6 . . . by that mortgage servicer, mortgagee . . . where the violation was not corrected and remedied prior to the recordation of the trustee’s deed upon sale.” Section 2924.12 also provides for treble damages or statutory damages for an intentional or reckless violation of specified HBOR provisions or willful misconduct by the lender, as well as an award of reasonable attorney fees and costs to a prevailing borrower. (§ 2924.12, subds. (b), (h).) “[T]he prohibition against dual tracking is given teeth by section 2924.12, which provides remedies for a violation of section 2923.6 or other specified provisions of the statutory scheme.” (Monterossa v. Superior Court (2015) 237 Cal.App.4th 747, 753.) The damages remedy was available to Whitaker because a trustee’s deed upon sale was recorded for the subject property on August 19, 2013.

Wells Fargo argues that Whitaker’s claims of approximately $21,000 spent on removing a tree and fixing a septic tank were not caused by dual tracking, even though Whitaker testified in deposition that he would not have incurred these expenditures if he knew Wells Fargo would not modify his loan. Wells Fargo maintains “[t]here is simply no causal connection between the alleged dual-tracking and Whitaker spending money to remove a tree or fix a septic tank.” Wells Fargo further argues that Whitaker spent the money for his own benefit because he is still residing on the property.

We need not decide whether Whitaker has raised a triable issue of fact that he suffered damages within the meaning of section 2924.12, subdivision (b), by virtue of evidence of these expenses. As Whitaker points out in reply, “he lost his home due to Wells Fargo’s conduct.” A borrower’s loss of the opportunity to keep a home is a legally cognizable injury under California law. (Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 948-949.) Wells Fargo’s failure to comply with section 2923.6 regarding Whitaker’s loan modification application deprived him of the opportunity to save his home. It makes no difference that Whitaker continues to live in his home while this litigation is pending. The home has been sold.

DISPOSITION

The judgment is reversed. Whitaker shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)

/s/

RAYE, P. J.

We concur:

/s/

HOCH, J.

/s/

RENNER, J.