Case Number: BC641999 Hearing Date: February 22, 2018 Dept: 53

princeley aiwize VS. the bank of new york mellon , et al.; BC641999, FEBRUARY 22, 2018; [tentative] order re: DEFENDANTS NEW PENN FINANCIAL, LLC DBA SHELLPOINT MORTGAGE SERVICING and THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR CERTIFICATEHOLDERS OF CWABS ASSET-BACKED NOTES TRUST 2007-SDI’s (ERRONEOUSLY SUED AS THE BANK OF NEW YORK MELLON) DEMURRER TO THE THIRD AMENDED COMPLAINT

Defendants NEW PENN FINANCIAL, LLC DBA SHELLPOINT MORTGAGE SERVICING’S and THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR CERTIFICATEHOLDERS OF CWABS ASSET-BACKED NOTES TRUST 2007-SDI (erroneously sued as THE BANK OF NEW YORK MELLON)’s demurrer to Third Amended Complaint is SUSTAINED.

background

Plaintiffs Princeley Aiwize and Rene Aiwize (jointly, “Plaintiffs”) filed this action on November 28, 2016 against Defendants The Bank of New York Mellon (“BONY”), and New Penn Financial, LLC, dba Shellpoint Mortgage Servicing, LLC (jointly, “Defendants”). After a demurrer was sustained to their First Amended Complaint (“FAC”) and Second Amended Complaint (“SAC”), Plaintiffs filed the operative Third Amended Complaint (“TAC”) on December 11, 2017. The TAC alleges that a Notice of Trustee’s Sale was recorded against their residential property located at 468 W. 47th Place in Los Angeles (the “Property”) while their loan modification application was pending and that their application was subsequently wrongly denied. The TAC asserts causes of action for (1) Violation of California Civil Code Section 2923.6, (2) Violation of California Civil Code Section 2923.7, (3) Negligence and (4) Violation of California Business and Professions Code Section 17200 et seq.

Defendants demur to each cause of action pursuant to CCP §430.10(e) for failure to state facts sufficient to constitute a claim. Plaintiffs oppose.

Discussion

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

A. First Cause of Action – Violation of Civ. Code §2923.6

Civil Code Section 2923.6(c) provides that “[i]f a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired; (2) The borrower does not accept an offered first lien loan modification within 14 days of the offer.”.

Subsection (h) states that “an application shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” “Whether a loan modification application is ‘complete’ is a legal determination that must be made by considering the mandates of section 2923.6(h). A bald allegation that a party submitted ‘complete’ loan modification applications- without sufficient supporting factual allegations-is a conclusory statement, and the Court does not rely on such assertions in evaluating the sufficiency of Plaintiffs complaint.” Stokes v. CitiMortgage, Inc. (C.D. Cal. Sep. 3, 2014) 2014 WL 4359193, *7.

Here, Plaintiffs allege that they submitted a complete loan medication packet on or about June of 2016. (TAC ¶ 49.) They next allege that Shellpoint requested additional documents, which Plaintiffs submitted on or about the beginning of July 2016. (TAC ¶¶ 49-50.) Plaintiffs allege they were assigned multiple SPOCs, each of which would ask for the same information and documents Plaintiffs had just submitted to the previous SPOC, which occurred on multiple occasions from July to August 2016 (TAC ¶¶ 51-53). Moreover, given they allege the first package they submitted in June 2016 was a “complete Request for Mortgage assistance,” the fact that they then allege that “on or about July 7, 2016, unbeknownst to Plaintiffs, while their complete first lien loan modification application was pending,” a notice of sale was recorded, does not make it clear that the application then pending included all of the documents they had apparently submitted again and again, making it a complete package under § 2923.6.

The Court finds that the TAC suffers from the same defects as the SAC despite Plaintiffs having an opportunity to cure these specific defects following the demurrer to the SAC. Plaintiffs’ arguments in their opposition is also unavailing, as the cases cited by Plaintiffs do not compel a different result. Accordingly, demurrer to the first cause of action is sustained without leave to amend.

B. Second Cause of Action – Violation Civ. Code §2923.7

Civil Code §2923.7(a) provides that: “Upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” (Civ. Code §2923.7(a).)

Again, Plaintiffs have not alleged any new, additional facts to overcome demurrer to this cause of action. Plaintiffs’ only new fact is that the various SPOCs were assigned to them “sometime between July or August 2016.” (TAC, ¶ 51.) This does not sufficiently establish any injury arising from the changing SPOCs, which as pointed out by Defendants, may be a “team of personnel” rather than a single individual. (Civ. Code §2923.7(e).) Moreover, Plaintiffs’ analogy to Hendricks v. Well Fargo Bank, N.A., 2015 WL 1644028, at 8-9 (C.D. Cal. Apr. 14, 2015) in inapposite. In that case, the lender failed to assign an SPOC at all. Here, Plaintiffs have alleged that SPOCs were, in fact, assigned to them. Furthermore, Plaintiffs have failed to allege a material violation of Section 2923.7, because Plaintiffs admit to receiving a loan modification review and denial. (TAC, ¶¶ 54-58.) Thus, the demurrer to the second cause of action is sustained without leave to amend.

C. Third Cause of Action – Negligence

“[A]s a general rule, a financial institution owes 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 a mere lender of money.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096 (citations omitted).) “The principle that a financial institution owes no duty to a borrower has been extended to loan servicers as well.” (Griffin v. Green Tree Servicing, LLC 2015 WL 10059081, *11 (citations omitted).)

Plaintiffs have not alleged any additional conduct or activity on the part of Defendants that would exceed scope of their conventional role as a mere lender of money. As discussed in previous rulings on previous demurrers, the Court finds that Lueras v. BAC Home Loans Servicing (2013) 221 Cal.App.4th 49 is closer to the facts as alleged in the TAC than is Alvarez v. BAC Home Loans Servicing, LP (2014) 228 Cal.App.4th 941. In Alvarez, the lender misstated the borrower’s income, “falsely advised him that no documents had been submitted for review,” and falsely advised him “that the second lien holder prevented the modification from taking place.” (See Alvarez, supra, at 44-45.) Here, Plaintiffs have not alleged any mistaken or false advice or conduct taken on the part of Defendants or any of the particular SPOCs with whom Plaintiffs had contact, nor any direct consequences of such conduct.

Finally, as discussed in the sections above, Plaintiffs have not adequately alleged a statutory violation to allege a per se negligence claim. Even if they had, Plaintiffs have not alleged sufficient facts to establish injury. As pointed out by Defendants, Plaintiffs have not alleged that they were foreclosed upon. Accordingly, the demurrer to the third cause of action is sustained without leave to amend.

D. Fourth Cause of Action – Violation of California Business and Professions Code § 17200 et seq.

The viability of an unfair competition law cause of action stands or falls with plaintiffs’ other causes of action, which are insufficiently pled, for the reasons set forth above. (See Krantz v. BT Visual Images, L.L.C. (2001) 89 Cal.App.4th 164, 178.) Plaintiffs have also made no other allegations of fraudulent or unfair conduct apart from those in these causes of action.

Additionally, as also discussed above, Plaintiffs cannot show any compensable injury in fact to demonstrate standing to recover. “A private plaintiff must make a twofold showing: he or she must demonstrate injury in fact and a loss of money or property caused by unfair competition.” (Peterson v. Celico Partnership (2008) 164 Cal.App.4th 1583, 1590 (internal citations omitted).) The injury alleged must be “distinct and palpable,” one that is “concrete and particularized” and “not conjectural or hypothetical.” (Id.) Plaintiffs do not allege that they suffered any monetary or property loss as a result of defendants’ conduct. They have not alleged that the subject property has been sold. Further, any loan payments and other related charges made pursuant to a valid contract cannot support a showing of damage. (See Auerbach v. Great Western Bank (1999) 74 Càl.App.4th 1172, 1185.) For these reasons and those discussed above, Plaintiffs fail to allege injury arising out of Defendants’ actions; accordingly, the demurrer is sustained as to the fourth cause of action without leave to amend.

conclusion

For the foregoing reasons, the demurrer is sustained as to each cause of action without leave to amend.

Defendants are to give notice of this Order.

DATED: February 22, 2018

_____________________________

Howard L. Halm

Judge of the Superior Court