Case Number: BC611617 Hearing Date: January 17, 2018 Dept: 50

Superior Court of California

County of Los Angeles

Department 50

julie a. croom, et al.

Plaintiffs,

vs.

ditech financial llc, et al.

Defendants.

Case No.:

BC611617

Hearing Date:

January 17, 2018

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

DEFENDANTS DITECH FINANCIAL LLC AND THE BANK OF NEW YORK MELLON’S MOTION FOR SUMMARY JUDGMENT

Background

Plaintiffs Julie A. Croom and Stanley T. Croom (jointly “Plaintiffs”) filed this action on February 25, 2016 against Defendants Ditech Financial LLC; MTC Financial Inc.; and The Bank of New York Mellon. This action arises from a dispute over a mortgage on real property located in Long Beach, California (the “Property”). The Complaint asserts causes of action for (1) violations of Civil Code §2923.6; (2) negligence; (3) violations of Business & Professions Code §17200, et seq.; and (4) declaratory relief.

Ditech Financial LLC (“Ditech”) and The Bank of New York Mellon (jointly, “Defendants”) now move for summary judgment as to each cause of action.

Evidence

Plaintiffs object to the Declaration of Christy Christensen in its entirety on the grounds that Ms. Christensen has no personal knowledge of the matters asserted in the declaration, but rather only that Ditech’s business records are its business records. Plaintiffs argue that she lays no foundation for her purported personal knowledge of the validity of the records, citing Hayman v. Block. (1986) 176 Cal.App.3d 629, 639 [sic – 638]).

Defendants argue in response that Ms. Christensen, having (a) been employed by Ditech for 15 years, (b) reviewed its business records, and (c) been authorized to testify on Ditech’s behalf regarding those records, satisfies the business records hearsay exception and need not have personal knowledge of the events attested to in those records, citing Evidence Code § 1271 and Unifund CCR, LLC v. Dear (2015) 243 Cal.App.4th Supp. 1, 8. However, while a declarant attesting to the authenticity of certain business records need not have personal knowledge of the matters discussed in their contents, they must explain how they have gained the appropriate knowledge to be able to attest to the authenticity of the records. Christensen does not adequately do this. For example, simply stating that a declarant has been employed for a certain number of years by the company, has reviewed the records presented and is authorized by the company to speak on its behalf does not explain how the declarant gained the appropriate knowledge to adequately testify as to the authenticity of those records.

As an example, Christensen states that “Ditech maintains a computer database (the “Loan Records”) of acts, transactions, payments, communications, escrow account activity. . . .” (Christensen Decl. ¶ 2), but does not explain how she has knowledge of this fact or how she knows of all the contents of the Loan Records that she then discusses in the same paragraph. Indeed, as Defendants cite, while a qualified witness “need not be the custodian, the person who created the record, or one with personal knowledge in order for a business record to be admissible under the hearsay exception,” (Unifund at 8), that witness “need[s] to be familiar with the procedures followed.” ((Jazayeri v. Mao (2009) 174 Cal.App.4th 301, 322.) Here, Christensen does not give any explanation as to how she is familiar with any of the procedures followed in order for her testimony to satisfy the business records exception to the hearsay rule. The remainder of the declaration suffers from the same deficiency. Accordingly, Plaintiffs’ objection to the entirety of the Christensen Declaration is sustained. The Court does consider and cite to certain documents referenced in the Declaration if they have been cited to and relied upon by Plaintiffs; by so doing, Plaintiffs have waived objections thereto.

Defendants’ objections are ruled upon as follows: Objections Nos. 1, 6, 9 and 14 are sustained as to the word “complete” only. Objection No. 2 is sustained as to the second sentence. Objections Nos. 3-5, 7, 10-13 and 15 are overruled. Objections Nos. 8 and 16 are sustained at to “I now know . . . all along” only. Objection No. 17 is sustained as the website Plaintiffs submit has not been established by them to be from the same time period during which they purport to have relied on Ditech’s website’s representations. Objection Nos. 18 and 19 are sustained. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, n.2 (“any matter to be judicially noticed must be relevant to a material issue.”); Santa Ana Hosp. Med. Ctr. v. Belshe (1997) 56 Cal.App.4th 819, 831 (“a written trial court ruling has no precedential value”).)

The Court grants Plaintiffs’ request for judicial notice as to Plaintiffs’ Exhibit A attached to their request pursuant to Evid. Code. § 452(d).

Defendants’ requests for judicial notice are granted pursuant to Evidence Code § 452. (See also Evans v. California Trailer Court, Inc. 28 Cal.App.4th 540, 549 (“[A] court may take judicial notice of recorded deeds.”); Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265 (disapproved of on separate grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919.) (“[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, assuming there is no genuine dispute regarding the document’s authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.”))

Discussion

A defendant moving for summary judgment must show either: “that one or more elements of the cause of action … cannot be established”; or “that there is a complete defense to that cause of action.” (CCP § 437c(p)(2).) “[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (CCP §437c (c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. ((Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Id.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” ((Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

First Cause of Action – Violations of Cal. Civ. Code § 2923.6 (“Homeowners’ Bill of Rights” (“HBOR”))

Modification of Loan as Cure of § 2923.6 Violations

Defendants argue that Plaintiffs’ first cause of action for Violations of § 2923.6 cannot stand because, even if they had in fact violated the statute, any such violations were cured when Defendants offered Plaintiffs a loan modification which Plaintiffs accepted in March 2017. Defendants cite Cal. Civ. Code § 2924.12, which provides: “A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not be liable for any violation that it has corrected and remedied prior to the recordation of the trustee’s deed upon sale. . . .” Plaintiffs appear to concede this fact, arguing solely that they should have the opportunity to retain their § 2923.6 cause of action as a basis for their UCL cause of action. However, Plaintiffs cite no authority for their position. Because it is undisputed that whatever violations of § 2923.6 are alleged to have been committed by Defendants have since been cured, the motion for summary adjudication is granted to the first cause of action.

Second Cause of Action – Negligence

Defendants argue that they did not owe Plaintiffs a duty of care, but that even if they did, they did not breach that duty and did not cause Plaintiffs any injury. Assuming Defendants owed Plaintiffs a duty and breached that duty – the admissible evidence does not indicate that Plaintiffs have suffered damages from any such breach. Defendants argue and Plaintiffs concede, as discussed above, that ultimately, Plaintiffs were approved for a loan modification and their home was not foreclosed upon. The only evidence Plaintiffs offer of damages they suffered are conclusory statements in their declarations that the modified loan added $95,371.04 to their indebtedness, and then, in a conclusory fashion: “Had my loan been modified earlier on when I first applied, the amount of recapitalized debt would have been smaller.” (See, e.g., S. Croom Decl. ¶ 39.) This statement is speculation without any further admissible evidence offered in support. Further, while Plaintiffs argue that Ditech admits Plaintiffs have been charged amounts that they would not have had to pay had Ditech approved their initial application, there is no evidence of these additional fees or costs submitted by Plaintiffs. Accordingly, the motion for summary adjudication is granted as to the second cause of action.

Third Cause of Action – Violation of Gov. Code § 17200 et seq. (“UCL”)

Defendants first argue that Plaintiffs’ claim for UCL violations fails because there was no violation of the UCL. Prohibited unfair competition under Business and Professions Code §§17200, et seq. includes “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code §17200.) “[A] business act or practice need only meet one of the three criteria—unlawful, unfair, or fraudulent—to be considered unfair competition under the UCL.” ((Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986.) A “violation of another law is a predicate for stating a cause of action under the UCL’s unlawful prong.” ((Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554.)

As discussed above, because there was no violation of §2923.6, there can be no violation of the UCL on “unlawful” grounds.

Plaintiffs argue in conclusory fashion that they meet the “low threshold” for the unfair prong of the UCL. A business practice is “unfair” if “(1) the consumer injury is substantial, (2) the injury is not outweighed by any countervailing benefits to consumers or competition, and (3) the injury is one that consumers themselves could not reasonably have avoided.” (Morgan v. AT&T Wireless Servs., Inc. (2009) 177 Cal.App.4th 1235, 1255.) Further, a finding of unfairness must “be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition.” (Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 187.) Plaintiffs cite Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 323, which states: “There are innumerable ways in which economic injury from unfair competition may be shown. A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary.” However, Plaintiffs provide no evidence that establishes any of these economic injuries. As discussed above, Plaintiffs’ statements that the $95,371.04 added to their indebtedness “would have been smaller” is speculation without any further admissible evidence offered in support. (Plaintiffs’’ Decls. ¶ 39.) Further, while Plaintiffs argue that Ditech admits Plaintiffs have been charged amounts that they would not have had to pay had Ditech approved their initial application, there is no evidence that shows what these fees or additional costs were such that they constitute a “substantial injury” to Plaintiffs.

Because the evidence does not raise a material issue of fact as to whether there was substantial injury to Plaintiffs, there is no injury to be outweighed by any countervailing benefits to consumers or competition, and no injury that consumers cannot reasonably have avoided. Accordingly, the motion for summary adjudication is granted as to the third cause of action.

Fourth Cause of Action – Declaratory Relief

Defendants argue, inter alia, that Plaintiffs’ declaratory relief claim fails because the relief they alleged to seek in the Complaint has already occurred. Plaintiffs appear to concede that the declaratory relief sought in their Complaint has been mooted. They argue, however, that a declaration is still required in regard to Defendants’ claim of the comparative negligence of third parties. They argue that they need a declaration affirming the roles of all prior loan servicers as agents for BNYM as the beneficiary so that ultimately BNYM can be found 100% liable for all the acts of these loan services. However, Plaintiffs did not seek such declarations in their Complaint. They cannot now, in their opposition, make new requests for relief. Accordingly, the declaratory relief claim fails and the motion for summary adjudication is granted as to the fourth cause of action.

Conclusion

Based on the foregoing, Defendants’ motion for summary judgment is granted.

Defendants are ordered to give notice.

DATED: January 17, 2018 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court