2011-00095502-CU-BT

Barry Hutchens vs. Federal Home Loan Mortgage

Nature of Proceeding: Motion for Summary Judgment and/or Adjudication

Filed By: Dossier, Claire Y. Filed By: Dossier, Claire Y.

*** If oral argument is requested, the parties are directed to notify the clerk and
opposing counsel at the time of the request which of the 32 Undisputed Material
Facts offered by the moving defendants in support of summary judgment will be
addressed at the hearing and the parties should be prepared to point to specific
evidence which is claimed to show the existence or non-existence of a triable
issue of material fact. ***

Defendants Aurora Loan Services LLC (“ALS”) and Federal Home Loan Mortgage
Corporation’s (“FHLM”) (collectively “Defendants”) motion for summary judgment or
alternatively, for summary adjudication of issues is GRANTED in part and DENIED in
part, as follows.

Both moving and opposing counsel are admonished for failing to comply with CRC
Rule 3.1350(g), which requires that all evidence, including declarations, when in
excess of 25 pages be bound in a single volume of evidence with a table of contents.

This litigation arises out of plaintiff Hutchens’ mortgage loan for real property located in
Fair Oaks, California. According to the First Amended Complaint (“1AC”) filed on
5/20/2011, plaintiff Roberts has been the tenant in possession of that property but
foreclosure proceedings have been commenced. The 1AC originally sought to assert
nine (9) causes of action (“COA”) relating to the subject mortgage loan and the
subsequent foreclosure proceedings but as a result of an earlier demurrer to the 1AC,
several purported COA were dismissed. The following six (6) COA remain: Breach of
covenant of good faith and fair dealing; violation of Business & Professions Code
§17200; violation of Civil Code §2924(C); violation of Civil §2924g(e)(2); promissory
estoppel; and wrongful foreclosure.

Defendants now move for summary judgment on the entire complaint on the grounds
that there are no triable issues of material fact and that defendants are entitled to
judgment as a matter of law. In support of summary judgment, defendants offer
Undisputed Material Fact (“UMF”) Nos. 1-32. In the alternative, defendant move for
summary adjudication of each of the six remaining COA on various grounds, arguing
that plaintiffs cannot prevail on their asserted theories of liability. In support of
summary adjudication of each remaining COA except for the one based on Business &
Professions Code §17200, defendants rely essentially on the same UMF offered in
connection with the motion for summary judgment. (For unknown reasons, defendants
re-numbered these virtually identical UMF in connection with the motion for summary
adjudication and created undue difficulty for the Court to discuss the UMF in this ruling.
In an attempt to rectify this and make a clear ruling, the Court will refer to the UMF
solely by the numbers they bear in connection with the summary judgment motion (i.e.,
UMF Nos. 1-32) rather than the numbers associated with summary adjudication of the
individual COA.)

Plaintiffs oppose defendants’ motion arguing primarily that there are triable issues of
material fact which preclude judgment in favor of defendants. Plaintiffs assert that a
number of the UMF advanced by defendants are disputed but plaintiffs offer no
Additional Material Facts (“AMF”) of their own pursuant to Code of Civil Procedure
§437c(b)(3) in an attempt to show any triable issue of material fact which might
otherwise defeat the present motion. Similarly, the opposition appears to make no
argument that defendants failed to satisfy their initial burden of production under Code
of Civil Procedure §437c(p)(2).

While there appears to be in the opposition no clear, unequivocal request to continue
the pending motion in order to permit plaintiffs to conduct additional discovery needed
to oppose the present motion, the Court notes that plaintiff Roberts’ Declaration seems
to suggest that additional discovery might be needed. Even if this were construed as a
formal request for additional discovery pursuant to Code of Civil Procedure §437c(h),
the request must be denied because plaintiffs have failed to show through a competent
declaration not only that there likely exists evidence which would support an opposition
to the present motion but also that such discovery could not have reasonably been
completed prior to the opposition’s due date. (See, Cooksey v. Alexakis (2004) 123
Cal.App.4th 246, 251, 255-256; Combs v. Skyriver Communications, Inc. (2008) 159
Cal.App.4th 1242, 1270.) The Court also notes that plaintiffs failed to make a request
for continuance “as soon as possible,” as recommended by Weil & Brown. (Weil &
Brown, Civil Procedure Before Trial, Ch. 10:207.6.)

Defendants’ request for judicial notice of various documents, including but not limited
to documents relating to the subject mortgage and the subsequent foreclosure
proceedings many of which were previously recorded, is GRANTED. Although
plaintiffs object to judicial notice being granted as to all recorded documents on the
grounds that judicial notice does not extend to the contents of these documents and/or
assumes the truth of those contents, this Court may according to the recent decision of
Scott v. JPMorgan Chase Bank, NA (2013) 214 Cal.App.4th 743 properly take judicial
notice of legally operative recorded documents and other matters not reasonably
subject to dispute. Moreover, it does not appear that defendants are requesting the
Court to take judicial notice of the contents of these documents or to assume the truth
of their contents. Accordingly, plaintiffs’ objection to defendants’ request for judicial
notice is of no consequence and is overruled.

Plaintiffs’ request for judicial notice is GRANTED except as Exhibits 3 (Dept. of Justice
“Press Release”) and 4 (Attorney General’s Summary of the “California Homeowner
Bill of Rights” (“CHBOR”), both of which are inadmissible hearsay and neither of which
represents an “official act” of any state or federal government which may be judicially
noticed.

All of defendants’ objections to plaintiffs’ evidence are SUSTAINED.

All of plaintiffs’ objections to defendants’ evidence are OVERRULED. The Court notes
that all but one of plaintiffs’ objections challenge the authentication of three (3)
particular documents cited in the Louvan Declaration filed in support of this motion.
However, the Louvan Declaration is facially sufficient to establish that these three
documents are what they purport to be and to make them admissible. Plaintiffs’
suggestion that these documents “appear” different than ones produced in discovery
goes solely to the weight of the evidence, not its admissibility but on a summary
judgment/adjudication motion, the Court rules only the admissibility of evidence without
weighing any evidence.

Motion for Summary Judgment

As noted above, defendants offer UMF Nos. 1-32 as support for summary judgment on
the entire complaint. However, defendants’ moving papers have failed to satisfy their
initial burden of production under Code of Civil Procedure §437c(p)(2) such that the
motion for summary judgment must be denied regardless of the evidence offered by
the opposition. Specifically, the Court finds that both UMF Nos. 21 and 24 are not
supported by admissible evidence as required by Code of Civil Procedure §437c(b)(1).

UMF 21 asserts, “[Plaintiff] Hutchens understood the [Trial Period Plan (“TPP”)] did not
guarantee a permanent loan modification.” The only evidence cited as support for
UMF 21 is plaintiff Hutchens’ deposition testimony at Page 59:16 – Page 60:5.
However, these two pages are not included in Exhibit 24 to the moving papers even
though this is the specific exhibit identified as support for UMF 21. Consequently, the
moving papers failed to meet defendants’ initial burden of production under Code of
Civil Procedure §437c(p)(2) and the motion for summary judgment must be denied
without consideration of the opposition.

Similarly, UMF 24 is not supported by the only evidence cited by defendants as
support for this UMF. The evidence cited for UMF 24 is the “Aurora Declaration” but
this declaration can be found nowhere among the moving papers. Even assuming the
correct citation is to the McCann Declaration, Paragraph 8 of this declaration does not
provide any support for the claim that “the trustee’s sale of the property was
postponed” while Hutchens’ applications for a loan modification were reviewed.
Instead, Paragraph 8 of the McCann Declaration merely establishes that ALS
considered and denied three different loan modification applications from plaintiff
Hutchens. This, however, is insufficient to support UMF 24 and because this UMF is
not supported by the cited evidence, summary judgment must be denied.

Defendants cannot now try to argue that UMF Nos. 21 and 24 are somehow
immaterial or should otherwise be disregarded because defendants’ inclusion of these
UMF in the moving separate statement effectively concedes the “materiality” of both
UMF, whether intended or not. (See, Nazir v. United Airlines, Inc. (2009) 178
Cal.App.4th 243, 252 (citing Weil & Brown, Civil Procedure Before Trial, Ch.10:95.1)
[moving party’s inclusion of facts in its separate statement effectively concedes each
fact’s “materiality,” whether intended or not, and if there is a triable dispute relating to
any one, the motion must be denied].)

Although summary judgment must be denied for the foregoing reasons, it is worth
noting here that if had defendants produced with their moving papers evidence
sufficient to satisfy their initial burden of production under Code of Civil Procedure
§437c(p)(2), the Court likely would have granted defendants’ motion for summary
judgment because it does not appear that plaintiffs have presented admissible
evidence which is sufficient to establish the existence of any triable issue of material
fact despite the well established rule that the evidence offered in opposition to
summary judgment must be construed liberally while the evidence in support is
construed narrowly. (See, e.g., DiLoreto v. Bd. of Education (1999) 74 Cal.App.4th
267; Alvarez v. State of California (1999) 75 Cal.App.4th 903.) Plaintiffs admit that a
handful of defendants’ 32 UMF are “undisputed” (see, UMF Nos. 1-2, 5-6, 8, 25-26)
and insist the majority of the UMF is in dispute. After a careful review of the opposition
and the evidence to which no objection has been sustained, it appears that that none
of the UMF which plaintiffs claim to be disputed actually presents a triable issue of
material fact which precludes summary judgment here. Plaintiffs failed to cite any
admissible evidence in response to UMF Nos. 9-12, 16, 22-24, 27-28 and 30-32 and
thus, failed to demonstrate any triable issue of material fact with respect to these UMF.
(It should be noted here that although the opposition included a declaration by plaintiff
Hutchens, this declaration contains no facts whatsoever so plaintiffs’ reference to it is effectively meaningless.)

Even where plaintiffs did cite some arguably admissible evidence, their own responses
to UMF Nos. 3-4, 7, 9-10, 12-15, 17-23 and 27-32, respectively, fail to show any
legitimate, material dispute over these UMF. For instance, UMF 17 essentially asserts
that on 6/29/2009, plaintiff Hutchens certified under penalty of perjury that the subject
property was “owner-occupied” by him. The opposition claims this UMF is disputed
because “The loan application and request for loan modifications all indicate this was
an investment property” and “When [ALS] sent ‘customized offer’ for signatures,
Hutchens just signed and sent them back as he was advised by [ALS] that he qualified
for HASP program.” While these two statements in response may be true, neither
actually shows any substantive, material dispute relating to whether plaintiff Hutchens
stated under penalty of perjury on 6/29/2009 that he personally occupied the property
as his residence. Hutchens claim that he did not read the documents cited by
defendants before signing them does not change the fact he signed the documents
and thereby affirmed the accuracy of their contents. Accordingly, there is no triable
issue of material fact with respect to UMF 17.

UMF 21, discussed above, states, “[Plaintiff] Hutchens understood the TPP did not
guarantee a permanent loan modification.” The opposition insists this UMF incorrectly
characterizes Hutchens’ testimony and the opposition cites another portion of the
deposition as support. But the testimony actually cited by plaintiffs is non-responsive.
The testimony cited by plaintiffs found at Page 61:6-16 relates only to the specific
amount of the monthly payment which could be anticipated under a permanent loan
modification, rather than whether a permanent loan modification was or was not
guaranteed. Thus, plaintiffs have shown no triable issue of material fact with respect
to UMF 21.

Although the Court found above that UMF 24 is not supported by defendants’ cited
evidence, plaintiffs offered no evidence whatsoever in response to UMF 24.
Therefore, had defendants’ supported UMF 24 with competent evidence, the Court
would be unable to find any triable issue of material fact in connection with UMF 24.

Finally, UMF 29 asserts that 6/17/2010, the date on which the trustee’s sale occurred,
is not more than 365 days after 6/16/2009, the date on which the sale was originally
set to occur. Plaintiffs contend this UMF is not true but this Court has calculated that
6/17/2010 is exactly 365 days after 6/16/2009. Consequently, UMF 29 correctly states
that it not more than 365 days after 6/16/2009 and thus, there is no triable issue of
material fact with respect to UMF 29.

Motion for Summary Adjudication

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Issue 1. Defendants seek summary adjudication of the 1 COA for breach of the
implied covenant of good faith and fair dealing on the grounds that there was no
contract/agreement which obligated defendants to grant a permanent modification of
the original mortgage on the subject property; defendants are not parties to the original
mortgage; and plaintiff Hutchens did substantially perform his obligations since he not
only defaulted on the original mortgage but also misrepresented the subject property
was his principal residence. As support, defendants offer UMF Nos. 3-10 and 17-20.

Because, as discussed above in connection with the motion for summary judgment,
plaintiffs failed to demonstrate with admissible evidence the existence of a triable issue of material fact with respect to UMF Nos. 3-10 or 17-20, the Court concludes that
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defendants are entitled to summary adjudication of the 1 COA for breach of the
implied covenant of good faith and fair dealing on the grounds cited.

The Court notes that in response to UMF 20, plaintiffs claim they were approved for a
loan modification under “HASP” (an term which appears to be defined nowhere in the
opposition papers) but the sole evidence cited as support (Pl. Evid., Ex. 2, p.417)
merely indicates the loan “is eligible,” with no indication that a “HASP” modification
was ever actually offered or accepted. Similarly, the opposition argues that the TPP
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provided under HAMP can form the basis of the 1 COA but plaintiffs concede HAMP
modifications are permissible only where the property is owner-occupied, which
plaintiffs admit is not true here. (See, Pl. Resp. to UMF 20.) Finally, plaintiffs concede
this COA cannot be based on the original loan documents as they contain no promise
of a loan modification. (Memo. P&A in Oppos., p.4:14-15.)

Issue 2. Defendants move for summary adjudication of the 3rd COA for violation of
Business & Professions Code §17200 on the ground that plaintiff Hutchens cannot
identify any “unlawful” actions by defendants who complied with the nonjudicial
foreclosure statutes and as support, defendants cite no UMF whatsoever, arguing that
because none of the actions alleged by plaintiff violate any statute, there is no need for
the Court to consider any UMF in connection with the 3rd COA.

The Court holds that defendants failed to meet their initial burden of production under
Code of Civil Procedure §437c(p)(2) with respect to summary adjudication of the 3rd
COA because Business & Professions Code §17200 provides for liability where it is
shown that a defendant engaged in any
unlawful, unfair or fraudulent conduct. Consequently, plaintiff Hutchens’ alleged
inability to identify any “unlawful” actions by defendants is not, in and of itself,
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dispositive of the 3 COA. Instead, in order to satisfy their initial burden relative to the
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3 COA, defendants were required to demonstrate there is no evidence of any
unlawful, unfair or fraudulent conduct. Additionally, the Court finds that defendants
failed to meet their initial burden because their motion for summary adjudication of
Issue 2 is not supported by any admissible evidence as required by Code of Civil
Procedure §437c(b)(1). For these reasons, summary adjudication is denied with
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respect to the 3 COA on the ground asserted regardless of whether plaintiffs
submitted any admissible evidence in opposition.

Issue 3. Defendants contend they are entitled to summary adjudication on the 5th
COA for violation of Civil Code §2924(C) because this COA is actually based on Civil
Code §2924b(b)(1) and because both the notice of default and notice of trustee’s sale
were mailed to plaintiff Hutchens in compliance with the nonjudicial foreclosure
statutes. In support, defendants offer UMF Nos. 14-16.

While the opposition asserts that plaintiff Hutchens states in his declaration he never
received the proper notices, no such statement is actually found in the Hutchens
declaration. In fact, the Hutchens declaration contains no facts at all and since plaintiff
Roberts was not the borrower who was entitled to any notice of the foreclosure
proceedings, her declaration cannot establish any triable issue of material fact with
respect to this COA based on the provisions of Civil Code §2924b(b)(1).

As noted above in connection with the summary judgment motion, plaintiffs failed to
produce admissible evidence which shows any triable issue of material fact with
respect to UMF Nos. 14-16 and thus, defendants are entitled to summary adjudication
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on the 5 COA.

Issue 4. Defendants seek summary adjudication of the 6th COA for violation of Civil
§2924g(e)(2) on the ground that the judicially noticeable record shows the trustee’s
sale did not occur more than 365 days after the date it was originally noticed to take
place and as support, defendants cite UMF Nos. 23 and 28-29 only.

The Memorandum of Points & Authorities in opposition argue at Page 9:1-9 that
defendants’ notice of the trustee’s sale was invalid because the sale had been
postponed more than three (3) times but no new notice was given. Although this
alleged “fact” is found in response to UMF 23, plaintiffs cited no evidence whatsoever
as support and thus, this “fact” must be disregarded.

Because plaintiffs have failed to meet their burden of producing admissible evidence
demonstrating some triable issue of material fact relating to UMF Nos. 23 and 28-29,
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defendants are also entitled to summary adjudication of the 6 COA for violation of
Civil §2924g(e)(2) on the ground stated in the moving papers.

Issue 5. Defendants move for summary adjudication of the 7th COA for promissory
estoppel because it is based on the TPP which was provided under the Home
Affordable Mortgage Program (“HAMP”) but HAMP is inapplicable since plaintiff
Hutchens did not use the subject property as his principal residence. Additionally,
defendants assert that they made no clear, unambiguous promise and that there was
no detrimental reliance by plaintiff Hutchens. In support of summary adjudication of
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the 7 COA, defendants offer UMF 21 only.

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Summary adjudication must be denied as to the 7 COA because as explained above,
defendants failed to meet their initial burden of production with respect to UMF 21 in
that they failed to produce admissible evidence to support this UMF. More specifically,
defendants failed to include the cited pages of plaintiff Hutchens’ deposition transcript
which purportedly supports UMF 21. Thus, summary adjudication must be denied
regardless of the evidence offered by the opposition.

Issue 6. Defendants contend summary adjudication is appropriate for the 8th COA for
wrongful foreclosure because plaintiffs have failed to tender the underlying debt in
order to set aside the completed foreclosure sale and because defendants complied
with the nonjudicial foreclosure statutes. As support, defendants cite UMF Nos. 11-12
only.

In response to Issue 6, plaintiffs argue that defendants failed to comply with the
nonjudicial foreclosure statutes and that no tender is required, either because an
exception applies or because plaintiffs have a setoff against the amount otherwise
due. However, the opposition failed to produce any admissible evidence to support
either contention. Moreover, contrary to the opposition’s suggestion, this Court finds
nothing “inequitable” about requiring tender of the underlying debt when plaintiff
Hutchens received a $382,500 loan to acquire the subject property and further agreed
that if he failed to repay the loan according the stated terms and conditions, it could be
sold at auction in order to satisfy his debt. Finally, plaintiffs’ challenge to the
foreclosure sale on the ground that it is unclear who actually holds the original note is
simply inconsistent with California law for the reasons cited in Gomes v. Countrywide
Home Loans, Inc. (2011) 192 Cal.App.4th 1149. There, the Court of Appeal stated in pertinent part:

“California’s nonjudicial foreclosure scheme is set forth in Civil Code sections
2924 through 2924k, which ‘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.4th 822, 830 (
Moeller).) ‘These provisions cover every aspect of exercise of the power of sale
contained in a deed of trust.’ (I. E. Associates v. Safeco Title Ins. Co. (1985) 39
Cal.3d 281, 285.) ‘The purposes of this comprehensive scheme are threefold:
(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient
remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from
wrongful loss of the property; and (3) to ensure that a properly conducted sale is
final between the parties and conclusive as to a bona fide purchaser.’ (Moeller,
at p. 830.) ‘Because of the exhaustive nature of this scheme, California
appellate courts have refused to read any additional requirements into the non-
judicial foreclosure statute.’ ( Lane v. Vitek Real Estate Industries Group
(E.D.Cal. 2010) 713 F.Supp.2d 1092, 1098; see also Moeller, at p. 834 [“It
would be inconsistent with the comprehensive and exhaustive statutory scheme
regulating nonjudicial foreclosures to incorporate another unrelated cure
provision into statutory nonjudicial foreclosure proceedings.”].)” (Gomes, at
1154.)

The Fourth District Court of Appeal further held that California law does not “provide
for a judicial action to determine whether the person initiating the foreclosure process
is indeed authorized, and we see no ground for implying such an action.” (Gomes, at
1155.) The Gomes Court explained:

“Gomes…alleg[es] that Civil Code section 2924, subdivision (a), by ‘necessary
implication,’ allows for an action to test whether the person initiating the
foreclosure has the authority to do so. We reject this argument. Section 2924,
subdivision (a)(1) states that a ‘trustee, mortgagee, or beneficiary, or any of
their authorized agents’ may initiate the foreclosure process. However,
nowhere does the statute provide for a judicial action to determine whether the
person initiating the foreclosure process is indeed authorized, and we see no
ground for implying such an action. (See, Lu v. Hawaiian Gardens Casino, Inc.
(2010) 50 Cal.4th 592, 596 [legislative intent, if any, to create a private cause of
action is revealed through the language of the statute and its legislative
history].) Significantly, ‘[n]onjudicial foreclosure is less expensive and more
quickly concluded than judicial foreclosure, since there is no oversight by a
court, ‘[n]either appraisal nor judicial determination of fair value is required,’ and
the debtor has no postsale right of redemption.’ (Alliance Mortgage Co. v.
Rothwell (1995) 10 Cal.4th 1226, 1236.) The recognition of the right to bring a
lawsuit to determine a nominee’s authorization to proceed with foreclosure on
behalf of the noteholder would fundamentally undermine the nonjudicial nature
of the process and introduce the possibility of lawsuits filed solely for the
purpose of delaying valid foreclosures.” (Id.)

Since plaintiffs failed to produce admissible evidence showing a triable issue of
material fact with respect to UMF Nos. 14-16, defendants are entitled to summary
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adjudication on the 8 COA on the grounds asserted.

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In light of the foregoing, summary adjudication is granted as to the 1 , 5 , 6 and 8 COA but denied as to the remainder.

This minute order is effective immediately. Pursuant to CRC Rule 3.1312, counsel for
defendants to prepare an order which conforms to Code of Civil Procedure §437c(g).