Case Name:   Carnero, et al. v. Mortgage Electronic Registration Systems, Inc., et al.

Case No.:       1-13-CV-255256

On October 1, 2009, plaintiffs Jose Carnero and Marta Carnero (collectively, “Plaintiffs”) filed a complaint with the United States District Court for the Northern District of California, in Carnero, et al. v. EMC Mortgage Corp., et al. (N.D.Cal. 2009) Case No. C 09-4696 JF (HRL) (hereafter, “the federal action”), alleging the wrongful foreclosure of the property at 1558 Minnesota Avenue in San Jose (“subject property”).  On November 22, 2010, the federal court [Hon. Fogel] granted defendants’ motion to dismiss the second amended complaint with prejudice, and to dismiss without prejudice the action as to certain defendants, including defendant National Default Servicing Corporation (“NDSC”), for failure to prosecute.  Plaintiffs did not subsequently file another complaint against NDSC in the federal court.

 

On October 13, 2009, Plaintiffs filed a complaint in Carnero, et al. v. EMC Mortgage Corp., et al. (Santa ClaraCounty, 2009, case no. 1-09-CV-154682) (hereafter, “the 2009 action”), alleging the wrongful foreclosure of the subject property.  On March 10, 2010, Plaintiffs filed a first amended complaint, naming a number of new defendants, including defendant NDSC.  Second and third amended complaints were subsequently filed, and on October 12, 2011, the Court [Hon. McKenney] sustained a demurrer to the third amended complaint without leave to amend, and entered judgment in favor of Defendants.  The 2009 action was never appealed.

 

On June 4, 2012, Plaintiffs filed a complaint in Carnero, et al. v. National Default Servicing Corporation (Santa ClaraCounty, 2012, case no. 1-12-CV-225835) (hereafter, “the 2012 action”), again alleging the wrongful foreclosure of the subject property.  On May 16, 2013, the Court [Hon. Overton] sustained NDSC’s demurrer to the second amended complaint without leave to amend, and on June 21, 2013, the Court entered judgment of dismissal of the entire action.  On July 15, 2013, Plaintiffs filed a notice of appeal with regards to this action and the case is currently pending with the Sixth District.

 

On October 28, 2013, Plaintiffs again filed a complaint against NDSC in the instant action alleging causes of action for violations of the Homeowners Bill of Rights, sections 2923.55 and 2924.17; and, declaratory relief.  On June 30, 2014, Plaintiffs filed a petition for writ of mandate.  On July 8, 2014, the Sixth District denied the petition and closed the appeal.

 

The motion by Defendant Mortgage Electronic Systems, Inc. to set aside default

 

Defendant Mortgage Electronic Registration Systems, Inc.’s (“MERS”) motion to set aside the default is GRANTED.  (See Code Civ. Proc. § 473, subd. (b).)  MERS shall file a response to the complaint within ten days.

 

 

 

Demurrer and motion for monetary sanctions by Defendant NDSC

 

NDSC moves for $6,941.50 in monetary sanctions pursuant to Code of Civil Procedure section 128.7 against Plaintiffs on the ground that, despite Plaintiffs’ knowledge that the suit lacked merit, the complaint in the instant action was nevertheless presented to the Court as a means to harass or increase costs of litigation for NDSC.  NDSC also demurs to the complaint on the grounds that the complaint is barred by res judicata and collateral estoppel and fails to state facts sufficient to constitute a cause of action.  The Court will first address whether the complaint has any merit and NDSC’s demurrer.

 

The complaint is barred by the doctrines of res judicata and collateral estoppel

 

“The doctrine of collateral estoppel precludes relitigation of an issue previously adjudicated if: (1) the issue necessarily decided in the previous suit is identical to the issue sought to be relitigated; (2) there was a final judgment on the merits of the previous suit; and (3) the party against whom the plea is asserted was a party, or in privity with a party, to the previous suit.”  (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 910; see also Vandenberg v. Super. Ct. (Centennial Ins. Co.) (1999) 21 Cal.4^th 815, 828-829 (stating “res judicata does not merely bar relitigation of identical claims or causes of action… [but] may also preclude a party to prior litigation from redisputing issues therein decided against him, even when those issues bear on different claims raised in a later case”; also stating that “because the estoppel need not be mutual, it is not necessary that the earlier and later proceedings involve the identical parties or their privies…[o]nly the party against whom the doctrine is invoked must be bound by the prior proceeding”).)  “Under [the res judicata] doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date.”  (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4^th 888, 897.)  “Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief.”  (Id.)

 

In the 2009 action, Plaintiffs filed a third amended complaint that alleged causes of action against NDSC and other defendants for: violations of TILA; fraud and violation of the California Financial Code; unfair business practices; false advertising; intentional misrepresentation; rescission; conversion; concealment; rescission/cancellation; negligence and negligent misrepresentation; and, violation of Civil Code sections 2923.5 and 2924, and Code of Civil Procedure section 2015.5 and Regulation Z.  The third amended complaint in the 2009 action specifically alleged that NDSC violated 2923.5, et seq. and 2924, et seq. and alleges that “the [Notice of Default] should have never happened because the subject loan transactions had been rescinded and there have been two pending claims in Federal and State Court against the same property.”  (Third amended complaint in 2009 action, ¶ I.4.)  The third amended complaint in the 2009 action alleges that the assignment of the note was void due to the defendants’ lack of possession of the note, and that defendants wrongfully foreclosed on the subject property despite their knowledge that they lacked the authority to foreclose based on the void assignments.

 

In the instant action, the complaint similarly alleges violations of Civil Code sections 2923.5, et seq. and 2924, et seq.; however, the complaint specifically alleges the violations of “recently-enacted” sections 2923.55 and 2924.17—effective as of January 1, 2013.  The complaint also similarly alleges that the notice of default was defective because NDSC did not have the legal authority to execute the NOD because of an invalid substitution of trustee assigning the interest in the deed of trust and note.

 

The foreclosure statutes “provide a comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a power of sale contained in a deed of trust.”  (Moeller v. Lien (1994) 25 Cal.App.4^th 822, 830; see also California Golf, L.L.C. v. Cooper (2008) 163 Cal.App.4^th 1053, 1070 (stating same).)  Here, both the complaint in the instant action and the third amended complaint in the 2009 action sought to resolve the issue as to whether NDSC’s conduct related to the foreclosure was in violation of the foreclosure statutes and thus “wrongful.”  (See Sommer v. Hawkes (Nov. 5, 2010) 2010 Cal.App.Unpub. LEXIS 8826 *1, *5-*10 (stating that issue preclusion applies where foreclosure related to same deed of trust determined to be invalid, concluding that “[t]he trial court therefore properly concluded that this action is barred by the preclusive effect of the judgment in case No. PN22173 under the doctrine of issue preclusion”) (nonpub.).)  The 2009 action resulted in a final judgment on the merits.  Plaintiffs in the instant action were also the plaintiffs in the 2009 action.  Here, it is clear that the doctrine of collateral estoppel and res judicata preclude the relitigation of the issues necessarily decided by the 2009 action sought by the instant complaint.  Accordingly, the demurrer to the complaint in the instant action is SUSTAINED without leave to amend on this basis.

 

The complaint also fails to state facts sufficient to constitute a cause of action.

 

NDSC’s request for judicial notice is GRANTED.  (See Evid. Code § 452, subds. (c), (d), and (h); see also Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4^th 1356, 1382, quoting Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal. App. 4^th 1106, 1117; see also Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4^th 540, 549; see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4^th 256, 264-265 (stating that “a court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language… [and, f]rom this, the court may deduce and rely upon the legal effect of the recorded document”); see also Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4^th 875, 882 (stating that “[t]he court may in its discretion take judicial notice of any court record in the United States… includ[ing] any orders, findings of facts and conclusions of law, and judgments within court records”; see also Day v. Sharp (1975) 50 Cal.App.3d 904, 914.)

 

The complaint alleges that there is no valid recorded substitution of Trustee, thereby rendering the foreclosure sale as void.  At the same time, the complaint alleges that the foreclosure sale has yet to occur.  The complaint alleges that NDSC violated the Homeowners Bill of Rights, new statutes that became effective January 1, 2013.  In opposition, Plaintiffs clarify that they rely on Glaski v. Bank of America (2013) 218 Cal.App.4^th 1079, and their belief that the foreclosure statutes upon which they rely are retroactive.

 

In Glaski, the appellate court decided to create a split of authority by holding that a borrower has standing to challenge the assignment of a loan to a securitized trust, even if the borrower was not a party to or a beneficiary of the assignment agreement.  The Glaski holding was in direct contradiction to an earlier opinion that year, Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4^th 497, which plainly stated that as “an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under [a] promissory note, [a plaintiff] lacks standing to enforce any agreements, including the investment trust’s pooling and servicing agreement, relating to such transactions. Furthermore, even if any subsequent transfers of the promissory note were invalid, [plaintiff] is not the victim of such invalid transfers because [his] obligations under the note remained unchanged.”  (Id. at p.515; see also Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4^th 75, 85 (stating that “[t]he assignment of the deed of trust and the note did not change the [plaintiffs’] obligations under the note, and there is no reason to believe that Accredited as the original lender would have refrained from foreclosure in these circumstances… [and thus] the [plaintiffs] have no standing to complain about any alleged lack of authority or defective assignment”).)

 

As explained by a number of cases, the Glaski holding is a distinct minority view and most federal district court cases have criticized it or declined to follow it.  (See Sporn v. JPMorgan Chase Bank N.A. (Jan. 27, 2014) 2014 Cal. App. Unpub. LEXIS 568 *1, *12-*14 (stating that “Glaski has been called ‘an outlier’ [citations] and, as set out in Sandri, most California federal district court cases have criticized it or declined to follow it”) [nonpub. opn.]; see also Gieseke v. Bank of Am., N.A. (N.D.Cal. Feb. 22, 2014) 2014 U.S. Dist. LEXIS 23794 *1, *9 (stating that “courts in this and other districts have noted that ‘Glaski represents a distinct minority view on the standing of third parties to enforce or assert claims based on alleged violations of a PSA,’ and that ‘courts in… [the Northern] District have expressly rejected Glaski and adhered to the majority view that individuals who are not parties to a PSA cannot base wrongful foreclosure claims on alleged deficiencies in the PSA/securitization process”; also stating that “[n]o published Court of Appeal decisions have attempted to reconcile Glaski with other California authority, but the one unpublished opinion to address this point characterized Glaski as the minority view and concluded that “the majority view is the better one.), quoting Apostol v. Citimortgage, Inc. (N.D.Cal. Nov. 21, 2013) 2013 U.S. Dist. LEXIS 167308 *1, *22-*23; see also Bergman v. Bank of Am., N.A. (N.D.Cal. Jan. 22, 2014) 2014 U.S. Dist. LEXIS 7933 *1, *10-*11 (stating that “Glaski represents a minority view… [t]he Court would decline to follow Glaski here… Plaintiffs do not allege—and cannot allege—that they are parties to the PSA and, thus, they lack standing to enforce it”); see also Rivac v. Ndex West LLC (N.D.Cal. Dec. 17, 2013) 2013 U.S. Dist. LEXIS 177073 *1, *13 (stating that “[t]his court is persuaded by the ‘majority position’ of courts within this district, which is that Glaski is unpersuasive, and that ‘plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA’”); see also Sepehry-Fard v. Dept. Stores Natl. Bank (N.D.Cal. Dec. 13, 2013) 2013 U.S. Dist. LEXIS 175320 *1, *14, fn. 6 (stating that “this Court has rejected the Glaski holding, finding it inconsistent with the majority of cases addressing the issue”); see also Shkolnikov v. JPMorgan Chase Bank (N.D.Cal. Dec. 14, 2012) 2012 U.S. Dist. LEXIS 177573 *1, *36 (stating that “plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA”); see also Dahnken v. Wells Fargo Bank, N.A. (N.D.Cal. Nov. 8, 2013) 2013 U.S. Dist. LEXIS 160686 *1, *5-*6 (stating that “the court adopts the ‘majority position’ of courts within this district, which is that ‘plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA’”); see also Maxwell v. Deutsche Bank Nat’l Trust Co. (N.D.Cal. Nov. 18, 2013) 2013 U.S. Dist. LEXIS 164707 *1, *5 (stating that “the majority of courts, including many judges in this district and circuit, as well as other California courts, have disagreed with [the Glaski] decision and its conclusion”); see also Subramani v. Wells Fargo Bank N.A. (N.D.Cal. Oct. 30, 2013) 2013 U.S. Dist. LEXIS 156556 *1, *9-*10 (stating that “the Court follows Jenkins, which appears to state the majority rule”); see also Newman v. Bank of N.Y. Mellon (E.D. Cal. Oct. 10, 2013) 2013 U.S. Dist. LEXIS 147562 *1, *9, fn. 2 (stating that “no courts have yet followed Glaski and Glaski is in a clear minority on the issue”); see also Toneman v. United States Bank (C.D.Cal. June 14, 2013) 2013 U.S. Dist. LEXIS 98996 *1, *28-*29; see also Mottale v. Kimball Tirey & St. John, LLP (S.D.Cal. Jan. 10, 2014) 2014 U.S. Dist. LEXIS 3398 *1, *12 (stating that “the weight of authority rejects Glaski as a minority view on the issue of a borrower’s standing to challenge an assignment as a third party to that assignment”); see also Boza v. US Bank Natl. Assn. (C.D.Cal. Oct. 28, 2013) 2013 U.S. Dist. LEXIS 161196 *1, *17-*21 (stating that “other district courts have declined to follow Glaski, noting that it is ‘in a clear minority’ on the issue of standing”; also noting that “New York courts have held that a beneficiary can ratify a trustee’s ultra vires act… [and thus]  New York courts do not apply New York Estates, Powers & Trusts Law § 7-2.4 literally”); also stating that “Glaski’s interpretation of New York Estates, Powers, and Trusts § 7-2.4 ‘would injure the parties that the statute is intended to protect’ because the purpose of the relevant provisions of the PSA is to ‘avoid[] later challenges’ to transfers into the trust, and ‘certificateholders would be harmed if they could not receive foreclosure proceeds because a transfer . . . did not comply with [the PSA]”); see also Sandri v. Capital One, N.A. (In re Sandri) (Bankr. N.D.Cal. 2013) 501 B.R. 369, 374-377 (stating that “Glaski is inconsistent with the majority line of cases and is based on a questionable analysis of New York trust law”); see also Flores v. EMC Mortg. Co. (E.D.Cal. Feb. 18, 2014) 2014 U.S. Dist. LEXIS 20772 *1, *17 (stating that “numerous courts disagree with and refuse to follow Glaski, including this Court; see also Snell v. Deutsche Bank Natl. Trust Co. (E.D.Cal. Jan. 27, 2014) 2014 U.S. Dist. LEXIS 11122 *1, *12-*15 (dismissing claim, noting that Jenkins was “in direct conflict with Glaski… [n]umerous courts have subsequently expressed their disagreement with Glaski and have continued to follow the Jenkins approach… the majority of courts, including many judges in this district and circuit, as well as other California courts, have disagreed with [the Glaski] decision and its conclusion…[and t]his Court adopts the majority position that ‘plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA’”); see also Covarrubias v. Fed. Home Loan Mortg. Corp. (S.D.Cal. Jan. 28, 2014) 2014 U.S. Dist. LEXIS 10527 *1, *10-*14 (stating that “the Court declines to follow Glaski and finds that Plaintiff lacks standing to challenge an agreement to which she was not a party”); see also Nguyen v. J.P. Morgan Chase Bank N.A. (N.D.Cal. Jan. 16, 2014) 2014 U.S. Dist. LEXIS 6009 *1, *6 (stating that “every court in this district that has evaluated Glaski has found it unpersuasive”); see also Diunugala v. JP Morgan Chase Bank, N.A. (S.D.Cal. Oct. 3, 2013) 2013 U.S. Dist. LEXIS 144326 *1, *22-25 (same); see also Haddad v. Bank of Am., N.A. (S.D.Cal. Jan. 8, 2014) 2014 U.S. Dist. LEXIS 2205 *1, *9-*14 (dismissing first amended complaint due to lack of standing, noting that Glaski’s reasoning is unpersuasive); see also Gates v. LPP Mortg., Inc. (C.D.Cal. Dec. 30, 2013) 2013 U.S. Dist. LEXIS 183638 *1, *8, fn.4 (stating that “[a]lthough a contrary rule was stated in Glaski [citation], the Court declines to follow this minority view”); see also Zapata v. Wells Fargo Bank, N.A. (N.D. Cal. Dec. 10, 2013) 2013 U.S. Dist. LEXIS 173187 *1, *4-*6 (stating that “Plaintiffs rely on Glaski [citation], to argue that they can challenge the securitization process… Glaski, however, is in the clear minority on this issue… [e]very court in this district that has evaluated Glaski has found it is unpersuasive and not binding authority”; also stating that “[u]ntil binding authority rules otherwise, the undersigned will follow the majority rule in Jenkins… therefore… plaintiffs have no standing to base their claims for relief on the securitization process or breaches of the Pooling and Service Agreement”); see also Scomparin v. Deutsche Bank Natl. Trust Co. (In re Scomparin) (Bankr. N.D.Cal. Jan. 15, 2014) 2014 Bankr. LEXIS 201 *1, *22-*23 (stating that “[c]onsistent with Sandri and the majority of California court decisions that have addressed this issue, this court finds that Plaintiff has no standing to successfully challenge the validity or effectiveness of the transfer”).)  This court, too, adopts the better reasoned majority view of Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4^th 497.

 

As to Plaintiffs’ belief that the Homeowners Bill of Rights is retroactive, Plaintiffs are simply mistaken.  (See Tavares v. Nationstar Mortg. LLC (S.D. Cal. July 14, 2014) 2014 U.S. Dist. LEXIS 95537 *1, *19 (stating that “[s]ection 2923.55 was enacted pursuant to the Homeowner Bill of Rights, effective January 1, 2013, and is not retroactive”); see also Nan Hui Chen v. Deutsche Bank Nat’l Trust Co. (N.D. Cal. June 9, 2014) 2014 U.S. Dist. LEXIS 79675 *1, *28-*29 (stating that “Plaintiff claims that Defendants violated the California Civil Code sections 2923.55, 2923.7, and 2924.17… [h]owever, the allegedly improper actions occurred before the enactment of the code sections upon which Plaintiff relies, and… [t]he Court finds said sections are not retroactive and thus cannot apply to actions that occurred prior to their enactment”); see also Martinez v. Wells Fargo Bank, N.A. (N.D.Cal. Apr. 17, 2014) 2014 U.S. Dist. LEXIS 53924 *1, *9 (stating that “Defendants could not have violated the current versions of Civil Code §§ 2923.55, 2924.9, and 2924.17 when they filed a Notice of Default in October, 2012, because those statutes did not become effective until 2013, and ‘there is no indication that the [HBOR] is intended to be, or will be, applied retroactively’”).)  Accordingly, the complaint fails to state facts sufficient to constitute a cause of action and the demurrer to the complaint is SUSTAINED without leave to amend on this basis as well.

 

NDSC’s motion for sanctions pursuant to Code of Civil Procedure section 128.7

 

NDSC’s request for judicial notice is GRANTED.  (See Evid. Code § 452, subds. (c), (d), and (h); see also Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4^th 1356, 1382, quoting Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal. App. 4^th 1106, 1117; see also Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4^th 540, 549; see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4^th 256, 264-265 (stating that “a court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language… [and, f]rom this, the court may deduce and rely upon the legal effect of the recorded document”); see also Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4^th 875, 882 (stating that “[t]he court may in its discretion take judicial notice of any court record in the United States… includ[ing] any orders, findings of facts and conclusions of law, and judgments within court records”; see also Day v. Sharp (1975) 50 Cal.App.3d 904, 914.)

 

On March 21, 2014, NDSC’s counsel sent Plaintiffs the motion for sanctions pursuant to Code of Civil Procedure section 128.7, and a letter informing them of the purported violation and the 21-day safe harbor provision indicated in section 128.7, subdivision (c)(1).  The letter instructs Plaintiffs “that if you do not dismiss defendant National Default Servicing Corporation from the above-mentioned lawsuit, with prejudice, on or before the expiration of this ‘safe harbor’ period (i.e., on or before April 11, 2014), I will proceed with the filing of this Motion for Sanctions with the Court.”  On April 14, 2014, NDSC filed the motion for monetary sanctions against Plaintiffs in the amount of $6,941.50 pursuant to Code of Civil Procedure section 128.7 “for their maintenance of causes of action and prayers for relief against Defendant which they know or reasonably should have known were and are without any factual or legal merit….”

 

For reasons stated above, the complaint in the instant action is without merit.

 

As stated above, despite the pending appeal in the 2012 action, there has been a final adjudication on the merits in the 2009 action.  In opposition, Plaintiffs merely contend that “Judge McKenny [sic] also erred an order sustaining Demurrer to Plaintiffs’ TAC without leave to amend October 6, 2011 Carnero v. EMC 109CV154682.”  (Pls.’ opposition to motion for imposition of monetary sanctions, p.11:8-9.)  Plaintiffs offer no support for this assertion, and in any event, it would be an untimely and improper motion for reconsideration.  (See Code Civ. Proc. § 1008.)  Moreover, for purposes of res judicata, “[a]n erroneous judgment is as conclusive as a correct one.”  (Weil v. Barthel (1955) 45 Cal.2d 835, 839; see also Esparza v. County of Los Angeles (2014) 224 Cal.App.4^th 452, 467 (stating same); see also Lumpkin v. Jordan (1996) 49 Cal.App.4^th 1223, 1232 (stating same); see also People v. Ocean Shore Railroad, Inc. (1948) 32 Cal.2d 406, 418 (stating that “even though [the decision] is erroneous, that fact alone will not prevent the application of res judicata”).)  Thus, Plaintiffs’ bald contention that Judge McKenney was simply wrong to have dismissed the 2009 action is irrelevant and unhelpful for Plaintiffs.  If anything, it further demonstrates that Plaintiffs failed to make a reasonable inquiry under the circumstances with regards to the factual and legal merit of their own claims in the instant complaint in violation of Code of Civil Procedure section 128.7, subdivision (b).

 

Further, as stated above, Plaintiffs are also incorrect regarding the retroactivity of the Homeowners Bill of Rights—the source for each of their claims in the instant complaint—and Plaintiffs did not have a reasonable basis for their belief that the Homeowners Bill of Rights’ retroactivity.  As stated above, courts have made clear that the Homeowners Bill of Rights is not retroactive.  Even the case the Plaintiffs quote in their opposition—a trial court case, Lockett, et al. v. Bank of America, N.A., et al. (Los Angeles County, April 3, 2013, case no. BC491093)— states that “[t]he California Homeowner Bill of Rights, Civil Code Section 2924 went into effect January 1, 2013, has not been applied retroactively.”  (Id. at p.4:14-16 of tentative ruling adopted by trial court).)  In their opposition, Plaintiffs then presented the statement “Therefore, CAHOBOR is retroactive,” citing to their quoted trial court case.  (Pls.’ opposition to motion for imposition of monetary sanctions, p.13:1-6.)  Here, Plaintiffs cited a trial court case in their opposition that plainly stated that the Homeowner Bill of Rights was not retroactive, then provided a statement to the contrary to support their legal contention.  Not only did Plaintiffs fail to make a reasonable inquiry with regards to the merits of their claims, but Plaintiffs made an inquiry, found a case that demonstrated that their claims lacked merit, and nevertheless refused to correct their conduct.  It is clear that Plaintiffs have violated Code of Civil Procedure section 128.7, subdivision (b) on this ground as well.

 

It is clear that the complaint filed by Plaintiffs in the instant action was presented primarily for an improper purpose, namely, to harass NDSC, cause unnecessary delay and needlessly increase the costs of litigation.  (Code Civ. Proc. § 128.7, subd. (b)(1).)  As previously stated, Plaintiffs’ claims and legal contentions were not supported by law.  (Code Civ. Proc. § 128.7, subd. (b)(2).)  After service of the motion for sanctions, Plaintiffs did not withdraw their complaint against NDSC or correct their conduct.  NDSC has exercised due diligence with regards to their motion.

 

NDSC is entitled to $841.50 for costs and filing fees relating to the motion and incurred in this action, and $3,000 in attorney fees.  Accordingly, NDSC’s motion for monetary sanctions pursuant to Code of Civil Procedure section 128.7 against Plaintiffs is GRANTED in the amount of $3,841.50.  Plaintiffs Jose Carnero and Marta Carnero shall pay counsel for NDSC a total of $3,841.50 within 20 days of the filing date of this order.

 

The Court will prepare the order.  After NDSC has served notice of entry of the order, NDSC shall prepare a judgment of dismissal.