Case Number: VC064272 Hearing Date: February 17, 2015 Dept: SEC
FRANCISCO CASTRO ET AL. v. WELLS FARGO BANK NA ET AL.
CASE NO.: VC064272
HEARING: 02/17/15

#12
TENTATIVE ORDER

Defendants WELLS FARGO BANK, N.A. and US BANK NATIONAL ASSOCIATION’s motion for judgment on the pleadings is GRANTED WITH 20 DAYS LEAVE TO AMEND. C.C.P. § 438.

Plaintiffs FRANCISCO CASTRO and MARIA CASTRO had a loan upon which they defaulted on. The property was sold at a non-judicial foreclosure. As a result, Plaintiffs seek damages from Defendants, alleging that Defendants engaged in wrongful mortgage loan modification practices and improperly foreclosed on the property. Defendants move for judgment on the pleadings as to Plaintiffs’ Complaint, which alleges three causes of action for: (1) negligence; (2) wrongful foreclosure; and (3) punitive damages.

Negligence

The elements of a negligence cause of action are “duty, breach of duty, proximate cause, and damages.” Carlsen v. Koivumaki (2014) 227 Cal.App.4th 879, 892. Negligence may be alleged in general terms. Guilliams v. Hollywood Hospital (1941) 18 Cal.2d 97, 101. As a general rule, financial institutions owe no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as mere lender of money. Nymark v. Heart Fed. Savings & Loan Ass’n (1991) 231 Cal.App.3d 1089l; Ragland v. U.S. Bank Nat. Ass’n (2012) 209 Cal.App.4th 182, 207.

Plaintiffs rely on Civil Code section 2923.5 in alleging a duty of care, whereby mortgage servicers are required to contact the borrower 30 days before foreclosing on the property. Compl., ¶¶ 21, 24. While Plaintiffs’ allegations may not have been ideally pleaded regarding duty of care, the issue of whether duty exists is an issue that must be decided beyond the pleading stage. Moreover, Plaintiffs allege that Defendants breached their duty by failing to notify Plaintiffs of possible options to avoid foreclosure. Compl., ¶ 24. However, the first cause of action in the Complaint alleges facts that Defendants did contact Plaintiffs for possible loan modifications on March 23, 2012. Compl., ¶ 20. This satisfies the requirement for mortgage servicers, like Defendants, to contact borrowers before recording a notice of default (which occurred on April 23, 2012). RJN Ex. D.

As such, the motion for judgment on the pleadings as to the first cause of action is granted with leave to amend.

Wrongful Foreclosure

To maintain a wrongful foreclosure claim, a plaintiff must allege that (1) defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a mortgage or deed of trust; (2) plaintiff suffered prejudice or harm; and (3) plaintiff tendered the amount of the secured indebtedness or were excused from tendering. Chavez v. Indymac Mortgage Servs. (2013) 291 Cal.App.4th 1052, 1062.

Plaintiffs lack standing to bring a wrongful foreclosure cause of action as they have not alleged sufficient facts showing compliance with the third element of a wrongful foreclosure claim. Plaintiffs have not alleged that they tendered the amount of the secured indebtedness or that they were excused from tendering this amount. Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 439 (stating that the rules governing tenders are strict and strictly applied and must be complied with). Moreover, Plaintiffs fail to allege damages, instead alleging that they “are about to suffer emotional as well as economic damages.” Compl., ¶ 26.

Furthermore, Defendants argue Plaintiffs cannot rely on Civil Code section 2923.5 as they have complied with the statutory requirement. On March 23, 2012, Defendants contacted Plaintiffs for a possible loan modification, which is more than 30 days before the April 23, 2012 notice of default recording date. Compl., ¶ 20; RJN Ex. D. Civil Code section 2923.5 allows a mortgage servicer to record a notice of default 30 days after making initial contact or satisfying due diligence requirements with the borrower.

For these reasons, the motion for judgment on the pleadings as to the second cause of action is granted with leave to amend.

Punitive Damages

Plaintiffs’ third cause of action for punitive damages fails as punitive damages are merely incident to a cause of action and can never constitute the basis thereof. Hilliard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374, 391 (stating that plaintiff should have pleaded punitive damages with her other causes of action, plus sufficient facts). Because punitive damages cannot be its own separate cause of action, the motion for judgment on the pleadings as to the third cause of action is granted. In order to properly allege punitive damages, Plaintiffs are granted leave to amend to include punitive damage allegations with the first two causes of action.

Request for Judicial Notice

Defendants request that the Court take judicial notice of Exhibits A through H, which include a deed of trust, corporate assignment of deed of trust, substitution of trustee, notice of default, notices of trustee’s sales, and trustee’s deeds upon sale. The request for judicial notice is granted, but only for the limited purposes set forth in Fontenot. Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-67 (“[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.”); McElroy v. Chase Manhattan Mortgage Corp. (2005) 134 Cal.App.4th 388, 394.