2018-00233544-CU-WE

Maureen Singh vs. Wells Fargo Bank, N.A.

Nature of Proceeding: Motion for Preliminary Injunction

Filed By: Harrison, Kim A.

This matter was originally set for hearing on 7/23/2018 but was continued by the court to 8/27/2018 in order to permit the parties to submit no later than 8/13/2018 additional evidence bearing on the question of whether plaintiff is entitled to the requested preliminary injunction. Specifically, plaintiff was directed to submit documentary evidence which substantiates her claims that (1) no payment on the TPP was due in February 2018 and (2) she made all the payments required under the TPP, while defendant Wells Fargo Bank (“Bank”) was directed to submit documentary evidence which substantiates its claims that (1) plaintiff’s February payment was returned for insufficient funds and (2) plaintiff herself requested to cancel the TPP payment due on March 1st.

The court received Bank’s submission of additional evidence filed on 8/13/2018 but no evidence at all was submitted by plaintiff by the 8/13/2018 court-imposed deadline and for this reason alone, denial of the requested preliminary injunction would be warranted.

On 8/20/2018, the parties requested a further continuance of the hearing on this matter to 11/26/2018. In an apparent but mistaken belief that this continuance entitled her to additional time, plaintiff did not submit her purported documentary evidence until nearly three months later but as shown below, her evidence remains insufficient to enable to court to find that plaintiff has a reasonable probability of prevailing on the merits of the causes of action currently alleged in her complaint.

Factual Background

This wrongful foreclosure case was commenced on 5/24/2018. Plaintiff alleges in her complaint violation of three specific Civil Code provisions, breach of contract, breach of the implied covenant of good faith, negligence and unfair business practices against Wells Fargo Bank (“Bank”) and Affinia Default Services. On 5/25/2018 plaintiff sought and obtained a Temporary Restraining Order (“TRO”) and an Order to Show Cause re: preliminary injunction (“OSC”) prohibiting defendants from proceeding with the foreclosure sale of plaintiff’s home which had been scheduled for 5/29/2018 based on a variety of allegedly wrongful conduct.

According to plaintiff, she was told that after her initial January 2018 TPP payment, no additional payments on the TPP were due until March 2018 and she avers that she made all the payments required under the TPP, making it improper for Bank to foreclose on her home.

According to Bank, plaintiff’s three TPP payments were due on the 1st of January, February and March but the February payment was returned for insufficient funds while plaintiff herself called to cancel the payment due on March 1st, thereby justifying the foreclosure sale.

Analysis

As noted above, this court requested Bank to submit documentary evidence substantiating its claims that (1) plaintiff’s February payment was returned for insufficient funds and (2) plaintiff herself requested to cancel the TPP payment due on

March 1st. These two claims are borne out by the Supplemental Luhman Declaration filed by Bank on 8/13/2016 and the attachments thereto.

Plaintiff was directed to submit documentary evidence to substantiate her claims that

(1) no payment on the TPP was due in February 2018 and (2) she made all the payments required under the TPP. However, the only purported evidence is an email sent by plaintiff herself which tends to show that plaintiff was apparently attempting to contact Bank on 2/2/2018 to discuss her loan, her need to leave the country, etc. However, aside from the lack of proper authentication for this email, it does not tend to establish either that no payment on the TPP was due in February 2018 or that plaintiff otherwise made all the payments required under the TPP.

Based on the evidence now before it, the court finds that plaintiff has no reasonable probability of prevailing on the merits of her causes of action since she has failed to demonstrate with evidence that (1) no payment on the TPP was due in February 2018 and/or (2) she actually made all the payments required under the TPP. Moreover, Bank has presented evidence which substantiates its claims that (1) plaintiff’s February payment was returned for insufficient funds and (2) plaintiff herself requested to cancel the TPP payment due on March 1st.

Since plaintiff has failed to demonstrate her compliance with the requirements of the TPP, she is not entitled to a permanent modification nor is she legally entitled to an injunction against the pending foreclosure proceedings.

While plaintiff’s reply papers argue that Bank violated HUD-FHA Loss Mitigation guidelines and also failed to appoint a single point of contact, she has failed to produce competent evidence of either and in fact, plaintiff’s own declaration filed on 5/25/2018 indicates Bank did assign a single point of contact.

The TRO and OSC issued on 5/25/2018 are hereby discharged.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)

Item 11 2018-00233544-CU-WE

Maureen Singh vs. Wells Fargo Bank, N.A.

Nature of Proceeding: Hearing on Demurrer to Plaintiff’s Complaint

Filed By: Shah, Raagini R.

*** If oral argument is requested, the parties must at the time oral argument is requested notify the clerk and opposing counsel of the causes of action that will be addressed at the hearing. The parties are also reminded that pursuant to local court rules, only limited oral argument is permitted on law and motion matters. ***

Defendant Wells Fargo Bank, N.A.’s (“Defendant”) demurrer to Plaintiff Maureen Singh’s (“Plaintiff”) complaint is ruled upon as follows.

The Court did not consider Plaintiff’s request for judicial notice in ruling on the demurrer.

Overview

This is a non-judicial foreclosure action. Plaintiff alleges that in June 2016, she took out a Federal Housing Administration Loan (“FHA Loan”) in the amount of $242,526, which was secured by a Deed of Trust (“DOT”) on her home. In June 2017, the DOT was assigned to Defendant. Plaintiff fell behind on her mortgage payments.

On October 10, 2017, Defendant recorded a Notice of Default and Election to Sell (“NOD”). On October 15, 2017, Plaintiff applied for a loan modification application by submitting a complete application. She was assigned a single point of contact Samantha Cortenas (“Cortenas”), and complied with all requests for additional documents.

On November 17, 2017, Plaintiff was approved for a Home Affordable Modification Trial Period Plan (“TPP”). She was told orally that she was approved. She never received a copy of an approval letter of paperwork for the TPP. In early January, the first trial payment plan was taken out of Plaintiff’s checking account. Plaintiff advised Defendant that she never received confirmation of her loan modification and requested a new copy of the TPP.

Plaintiff thereafter attempted to contact Cortenas regarding the status of her loan, but was unable to reach her. Plaintiff was able to contact one of Defendant’s advisors who told her that she was put back onto the TPP and to not worry about her first payment until approximately March 2018. She signed and returned the TPP to Defendant via facsimile on January 17, 2018.

On February 20, 2018, Defendant caused to be recorded a Notice of Trustee’s Sale (“NOTS”). Plaintiff again attempted to reach her Cortenas, but was unsuccessful. She spoke with other representatives who told her that she was put back on the TPP. Cortenas eventually responded to Plaintiff and advised that “she was off the HAMP TPP” and could not be put back on. Plaintiff requested a conference call to take place between her Cortenas and the two other advisors, but the Cortenas did not contact Plaintiff.

Plaintiff inquired about the pay off balance to bring it current, but Defendant never responded.

The Complaint asserts the following causes of action: (1) violation of Civ. Code §2924.11, (2) violation of Civ. Code §2923.7, (3) violation of Civ. Code §2924.17, (4) breach of contract, (5) violation of duty of good faith and fair dealing, (6) negligence, and (7) violation of B&P Code §17200.

Defendant demurs to each cause of action on the ground that Plaintiff fails to state sufficient facts.

Breach of contract

1. Payments

The demurrer on the ground that Plaintiff failed to allege that she made the required payments under the TPP is OVERRULED. Defendant points to paragraphs 27-29 of the complaint to support its argument that Plaintiff failed to make the required payments. Paragraphs 27-29 do not state that Plaintiff failed to make payments. Paragraph 27 provides “The Wells Fargo advisor that she spoke with told her she was put back onto the Home Affordable Modification Trial Period Plan and to not worry about her first payment until approximately March 2018.” Paragraph 28 provides “Ms. Singh in reliance on the agent of Wells Fargo’s statements, signed and returned the Trial

Payment Plan to Wells Fargo Bank, N.A. via facsimile on January 17, 2018.” Paragraph 29 provides “Ms. Singh then left the country for a family emergency in Fiji.” Nothing on the face of the pleadings shows that Plaintiff did not make the required payments.

2. Statute of Frauds

Plaintiff alleges that “Wells Fargo’s agent orally amended the terms of the contract by requesting that Plaintiff submit the Trial Payment Period Plan in January 2018, telling her orally she was back on the plan, and accepting her first trial period payment plan payment.” (Complaint, ¶ 64.) Defendant demurs on the ground that the oral agreement is barred by the statute of frauds.

“A mortgage or deed of trust also comes within the statute of frauds. Civil Code section 2922 states: ‘A mortgage can be created, renewed, or extended, only by writing, executed with the formalities required in the case of a grant of real property.’” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 553.) An agreement to modify a contract that is subject to the statute of frauds is also subject to the statute of frauds.”

Full performance, however, is an exception to the statute of frauds. (Corvello v. Wells Fargo Bank, NA (9th Cir. 2013) 728 F.3d 878, 885 [plaintiffs alleged that they complied with the obligations of the TPP by submitting accurate documentation and made the requirement trial payments, therefore, they may enforce the contract.) Here, Plaintiff alleges that she was in full compliance at all times with her obligations under the TPP and sent back the appropriate documentation. (Complaint, ¶ 66.) Taking these allegations as true, they are sufficient as an exception to the statute of frauds.

The demurrer is OVERRULED.

3. Parol Evidence Rule

The demurrer on the ground that any oral representation is barred by the parole evidence rule is OVERRULED. “The parol evidence rule generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument. An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. (Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th 1, 13.)

The Court cannot conclude that the TPP was an “integrated written instrument” constituting a “final expression of one or more terms of an agreement.” The TPP does not include an integration clause which expressly states that the agreement is the entire agreement and no oral agreements/modifications are permitted. Indeed, the terms of the TTP itself shows that it may not be the final expression of the terms. For example, the TPP states “sometimes trial periods extend beyond the dates stated, so please continue to make your trial payments in the same amount by the same date of each month.”

4. Damages

Defendant demurs on the ground that Plaintiff cannot allege damages as a result of any breach because she defaulted on the loan and failed to comply with the TPP agreement. The demurrer is OVERRULED. As explained above, the complaint on its face does not show that Plaintiff failed to make the required payments. Taking these allegations as true, Defendant’s failure to abide by the TPP and offer her a loan modification could result in Plaintiff being damaged. Moreover, Plaintiff alleges that she inquired about the pay off balance to bring it current, but Defendant never responded.

Violation of Civ. Code §2924.11 – Dual Tracking

Defendant demurs on the ground that there was no dual tracking because Plaintiff failed to comply with the TPP when the NOTS was recorded on February 20, 2018. The demurrer is OVERRULED. The complaint does not show that Plaintiff failed to make the required payments. The demur on the ground that Plaintiff fails to allege a “material violation” is also OVERRULED. As alleged, Defendant recorded the NOTS while Plaintiff was in the TPP and had complied with the terms of the TPP.

Violation of Civ. Code §2923.7

Civ. Code §2923.7 requires that a mortgage servicer provide a “single point of contact

“ which means an “individual or team of personnel each of whom has the ability and authority to perform the responsibilities described in subdivisions (b) to (d), inclusive. The mortgage servicer shall ensure that each member of the team is knowledgeable

about the borrower’s situation and current status in the alternatives to foreclosure process.”

Plaintiff alleges that Cortenas was not available to Plaintiff directly and that Cortenas did not respond to her inquiries. She alleges that Defendant has set up a scheme that makes it virtually impossible for mortgage customers to reach her single point of contact directly.

Defendant demurs on the ground that it was permitted to provide her with a team of personnel to assist her. The demurrer is OVERRULED. While Defendant may have been permitted to provide her with a team of personnel, there are no allegations that Defendant provided her with such a team. Rather, Plaintiff specifically alleges that Defendant assigned Cortenas as her single point of contact.

The demur on the ground that Plaintiff fails to allege a “material violation” is also OVERRULED. Here, given that Plaintiff alleges that Defendant engaged in the very conduct prohibited by Civil Code § 2923.7 the Court concludes that for pleading purposes, the violation is “material.”

Violation of Civ. Code §2924.17

The demurrer is SUSTAINED without leave to amend. Civ. Code §2924.17 was repealed, effective January 1, 2018 and thus, it provides Plaintiff with no basis on which to seek relief from Defendant

Violation of Duty of Good Faith and Fair Dealing

Having overruled the demurrer to the breach of contract cause of action, the demurrer to this cause of action is OVERRULED for the same reasons.

Negligence

The demurrer on the ground that Defendant owed no duty to Plaintiff is OVERRULED.

As with all negligence claims, the threshold question is whether the defendant owed a duty of care to the plaintiff and it is well established that this question is one of law which the Court alone answers after considering the various factors identified by the California Supreme Court in Biakanja v. Irving (1958) 49 Cal.2d 64. (See Rossetta v. CitiMortgage, Inc. (3DCA 2017) 5 Cal.App.5th 628, 637-638; Witkin, Summary of Cal. Law (9th ed. 1988), Torts §732.) As the Third District recently explained, the “general rule” is that lenders (and servicers) do not owe borrowers a duty of care unless their involvement in a transaction goes beyond their “conventional role as a mere lender of money” but added that “California Courts of Appeal have not settled on a uniform application of the Biakanja factors in cases that involve a loan modification.” (Rossetta , at 637.)

In Rossetta, the lender refused to consider a loan modification application until the borrower was three months delinquent, and the lender directed the borrower’s behavior in a way that exceeded the role of a conventional lender, including repeatedly requesting submission of the same documents and insisting that the borrower submit nonexistent documents. (Rossetta at 634, 641.) The court held that “the change in the parties’ relationship can and should be factored into our application of the Biakanja factors” and that a lender may owe a duty when it “voluntarily undertake[s] to renegotiate loan” because “the lender usually has greater bargaining power and fewer incentives to exercise care.” (Rossetta at 640.)

The Rossetta court also found Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941 to be persuasive. In Alvarez, the plaintiffs alleged the lender breached its duty of care by failing to review their loan modification applications in a timely manner, foreclosing on their properties while they were under consideration for a HAMP modification, misplacing their applications, and mishandling them by relying on incorrect salary information. The Alvarez court held that if a lender agrees to consider modification of the plaintiffs’ loan, the lender has a duty to exercise reasonable care in processing the loan modification application. “The borrower’s lack of bargaining power, coupled with conflicts of interest that exist in the modern loan servicing industry, provide a moral imperative that those with the controlling hand be required to exercise reasonable care in their dealings with borrowers seeking a loan modification.” (Id. at 949.)

The Court concludes that Plaintiff’s allegations rise to the level of Alvarez. Specifically, Plaintiff was offered a TPP. Defendant’s agent(s), however, mishandled Plaintiff’s TPP or were misinformed regarding the status of the TPP when Plaintiff was told that she was placed back onto the TPP and not to worry about her first payment until March 2018, but then later told that she could not be put back onto the TPP.

Defendant’s demur on the ground that Plaintiff cannot allege damages as a result of any breach because she defaulted on the loan and failed to comply with the TPP is OVERRULED. As explained above, the complaint on its face does not show that Plaintiff failed to make the required payments. Taking these allegations as true, Defendant’s negligence could result in Plaintiff being damaged.

Violation of B&P Code §17200

Given that the Court has overruled the statutory causes of action that may be the underlying basis for this cause of action, the demurrer is OVERRULED.

Defendant shall file and serve an answer by no later than December 6, 2018.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.

The court notes that moving party has indicated the incorrect address in its notice of motion. The correct address for Department 54 of the Sacramento County Superior Court is 813 6th St, Sacramento California 95814, Second Floor. Moving party shall notify responding party(ies) immediately.

The notice of motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06(A). Defendant’s counsel is directed to contact Plaintiff’s counsel forthwith and advise counsel of Local Rule 1.06 and the Court’s tentative

ruling procedure. If Defendant’s counsel is unable to contact Plaintiff’s counsel prior to hearing, Defendant’s counsel shall be available at the hearing, in person or by telephone, in the event opposing party appears without following the procedures set forth in Local Rule 1.06(A).