2012-00123747-CU-BT

Stephen D Keenan vs. OneWest Bank FSB

Nature of Proceeding: Hearing on Demurrer to Third Amended Complaint (Deutsche Bank)

Filed By: Hasenkampf, Anton L.

The demurrers of Defendants OneWest Bank, FSB’s (“OneWest”) and Deutsche Bank
National Trust Company (“Deutsche Bank”) (collectively “Defendants”) to Plaintiff
Stephen D. Keenan, Sr.’s (“Keenan”) third amended complaint (“TAC”) are
SUSTAINED without leave to amend.

This is a nonjudicial foreclosure case. The property was sold at a trustee’s sale.
OneWest allegedly serviced Keenan’s loan, (TAC, ¶ 7), and Deutsche Bank allegedly
acted as beneficiary under the deed of trust. The TAC contains two causes of action,
viz., the First Cause of Action for Breach of Loan Modification Agreement and the
Second Cause of Action for Wrongful Foreclosure. Defendants demur to both causes
of action on grounds that Kennan’s allegations do to state facts sufficient to state a
cause of action. The court previously sustained Defendants’ demurrers to these
causes of action as previously alleged and granted leave to amend.

The demurrers boil down to two questions: (1) Did Keenan’s bankruptcy relieve him of
the obligation under the deed of trust to pay private mortgage insurance, taxes and/or
insurance into an escrow account, and (2) did 15 U.S.C. § 1639d(d) relieve Keenan of
the obligation to pay taxes and insurance into an escrow account? Because the court
answers “no” to both of these questions, it concludes that Keenan still has not alleged
a breach of contract or wrongful foreclosure and, therefore, that the demurrers must be
sustained. Moreover, although Keenan requests leave to amend, he has failed to
demonstrate that he can remedy his pleading defects through further amendment.
Accordingly, the court denies leave to amend.

Keenan’s Bankruptcy

There is no dispute that Keenan’s modified loan payments were rejected, and that the
nonjudicial foreclosure of his home commenced, because Keenan stopped paying
PMI, taxes and insurance into an escrow account pursuant to the terms of the deed of
trust. There is also no dispute that the loan modification agreement affirmed and
incorporated by reference the deed of trust. Although the court previously rejected
Keenan’s argument that his discharge in bankruptcy relieved him of any obligation to
pay items into escrow, he advances that argument again. The court continues to
reject the argument. Defendants have once again cited authorities undermining
Keenan’s position, (see Moving Memo. at 7:3-8:9), yet Keenan has not cited any
authorities of his own. Given the authorities cited, the court continues to conclude that
Keenan’s bankruptcy did not allow him to withhold escrow payments otherwise due
under the deed of trust. Consequently, Keenan’s allegations that Defendants
breached the loan modification agreement by attempting to enforce the escrow
provisions in the deed of trust, and that they wrongfully foreclosed after Keenan failed
to perform his escrow obligations, do not state a breach of contract cause of action.

15 USC § 1639d(d)

Keenan alleges that “recurring charges in impound were no longer permitted or
required under 15 U.S.C. 1639d(d)… .” (TAC, ¶¶ 20, 28.) As Defendants point out,
however, that section was not enacted until after the original loan, the deed of trust
and the loan modification agreement came into effect. Thus, Defendants argue that,
assuming 15 USC § 1639d would otherwise impact Keenan’s obligation to pay
impounds, it cannot have such an impact retroactively. Federal statutes do not apply
retroactively absent clear Congressional intent otherwise. (See, e.g., Carr v. United
States (2010) 560 U.S. 438, 130 S. Ct. 2229, 2237, fn. 6 [“Absent a clear statement of
that intent, we do not give retroactive effect to statutes burdening private interests”];
see also Scott v. Boos (9th Cir. 2000) 215 F.3d 940, 943.) The court’s review of §
1639d does not disclose any clear intent for retroactive application, and nothing in the
parties’ submitted materials suggests otherwise. Accordingly, the court agrees with
Defendants and concludes that 15 USC § 1639d does not allow Keenan to state any
cause of action.

Judicial Notice

Defendants’ request for judicial notice is UNOPPOSED and GRANTED.

Conclusion

The demurrers are sustained without leave to amend.

Defendants shall submit a formal order governing both demurrers as well as separate
judgments of dismissal.

Counsel are advised that the Sacramento County Superior Court’s Local Rules were
revised and renumbered as of 01/01/13. When giving notice of the court’s tentative
ruling system, counsel should cite Local Rule 1.06, not former Local Rule 3.04.