2018-00232496-CU-OR

Yelena Markevich vs. Fay Servicing, LLC

Nature of Proceeding: Hearing on Demurrer to First Amended Complaint

Filed By: Logan, Jana

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

The demurrer of Defendants Fay Servicing, LLC, (Fay), U.S. Bank, N.A., as trustee, (U.S. Bank) and Attorney Lender Services, Inc. (ALSI) (collectively “Defendants) is SUSTAINED with and without leave to amend.

Defendants’ request for judicial notice of court documents and recorded land documents is DENIED because the documents are not relevant to the court’s ruling.

Overview

This is a nonjudicial foreclosure case. The plaintiff is Yelena Markevich (Markevich). Markevich alleges that she is the debtor on the promissory note, that she is in possession of the property, and that she is the beneficiary under the land trust that holds title. (See FAC, ¶ 4.) The property in question was sold at auction in February 2018. (Id., ¶ 60.) Fay is Markevich’s loan servicer. U.S. Bank caused the sale to occur in its purported role as beneficiary under the deed of trust. ALSI was the trustee at auction.

The court sustained Defendants’ demurrer to the original complaint but granted leave to amend. Like the original complaint, the FAC contains causes of action for wrongful foreclosure, unfair competition under B&P Code § 17200 et seq., dual tracking in violation of the Homeowner’s Bill of Rights (HBOR), and violation of 12 U.S.C. § 2605 et seq. Defendants demur to each of these causes of action on grounds the allegations fail to state a valid cause of action. Markevich opposes in part and concedes in part.

Discussion

Preliminarily, the court rejects ALSI’s position that it should be dismissed from the action on grounds it acted only as a trustee under the deed of trust and filed a Declaration of Non-Monetary Status. A party filing such a declaration only becomes a nominal defendant if no timely objection to the declaration is raised. (See CC ¶ 2924l (d).) Because Markevich objected, ALSI is not relieved of the obligation to litigate.

The First Cause of Action for Wrongful Foreclosure

The demurrer is SUSTAINED without leave to amend.

Despite some amendments, (see Moving Memo. at 1:3-6), and despite the fact that the property has now been sold at auction, the FAC presents the same overall theories of wrongful foreclosure as those in the original complaint. The court rejected these theories in a long ruling on Defendants’ demurrer to the complaint. (See Order of

8/13/18.) The court incorporates that ruling herein by reference and sustains the instant demurrer for the same reasons.

The court offers a few additional observations. Markevich continues to allege that the assignment of the original beneficiary’s interest to U.S. Bank under the deed of trust is void because the individuals executing the assignments did so without proper authority. (See FAC, ¶¶ 16-18, 29-34, 44-46.) The court abides by its prior determination that any such unauthorized act rendered the assignments voidable, not void. (See Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 819-820 [“robo-signed” assignments are voidable.) It is undisputed that only a void assignment supports a wrongful foreclosure cause of action. Because the allegations cannot be construed to establish any void assignment, the allegations do not state a claim of wrongful foreclosure.

Because Markevich has failed to demonstrate a reasonable likelihood she can cure the first cause of action through further amendment, leave to amend is denied.

The Second Cause of Action for Unfair Competition under B&P Code § 17200

The demurrer is SUSTAINED with leave to amend.

Markevich concedes her failure to allege the loss of money or property conferring standing to advance the second cause of action. (See B&P Code § 17204.)

Markevich’s request for leave to amend is granted.

The Third Cause of Action for Dual Tracking under CC § 2924.11

The demurrer is SUSTAINED with leave to amend.

Markevich originally brought her dual tracking claim pursuant to former CC § 2924.6. The court sustained Defendants’ demurrer to that cause of action because § 2924.6 no longer prohibits dual tracking. Section 2924.11 now governs dual tracking under the HBOR.

Markevich alleges that in violation of § 2924.11(a), Fay and U.S. Bank instructed ALSI to sell the property at auction even though her loan modification application was then-pending before Fay. Defendants argue that the allegations are defective for because the Notice of Sale was recorded before Markevich submitted application. This argument lacks merit because § 2924.11(a) bars the sale–not just the recording of a Notice of Sale–while a loan modification application is pending. Because Markevich alleges that the sale took place before she received a decision on her application, the timing of the Notice of Sale is not determinative.

Defendants also argue that Markevich cannot obtain damages based on dual tracking because the exclusive remedy is a postponement of the sale. That argument lacks merit as well. Under CC § 2924.12(b), damages are available if a trustee’s deed upon sale has been recorded.

Defendants argue next that Markevich has not alleged damages because she admittedly was in default on the property before it was sold. Given that Markevich was in default when the property was sold, and given that she was not the title holder at

that time, the court agrees that damages have not been alleged.

The court grants leave to amend.

The Fourth Cause of Action for Violation of 12 U.S.C. § 2605 [RESPA]

The demurrer is SUSTAINED with leave to amend.

Sections 2605 et seq. provides borrowers with a damages remedy when loan servicers fail timely to respond to a borrower’s qualified written request (QWR). The statute defines QWR to mean:

[W]ritten correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that-

(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and

(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

(10 U.S.C. § 2605(e)(B).) Markevich alleges that she “incurred actual damages relating to her ability to challenge, prior to the sale and while awaiting both the response to her QWR (as well as awaiting a determination as to her Loan Modification Application Packet), the foreclosure process, before her house was wrongfully and illegally sold out from under her feet.” (FAC, ¶ 127.) As noted above, Markevich concedes elsewhere that she did not hold title when the property as sold. Given this, her otherwise vague allegations of resulting damage are insufficient to survive demurrer.

The court grants leave to amend the third cause of action but is unlikely to grant further leave to amend.

Disposition

The demurrer is sustained with and without leave to amend on the terms above.

No later than 12/03/18, Markevich may file an serve a second amended complaint (SAC) in an attempt to cure the second through fourth causes of action; response(s) due within 30 days thereafter, 35 days if the SAC is served by mail.

Although not required by any statute or rule of court, Markevich is requested to attach a copy of the instant minute order to the SAC to facilitate the filing of the pleading.

If any defendant intends to demur to the SAC or move to strike, it shall determine if any other defendant who has appeared in this action also intends to demur or move to strike. If so, all such defendants shall coordinate a single hearing date for the demurrers and motions to strike. Additionally, a copy of the SAC shall be included with the moving papers.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or

further notice is required.