2015-00183458-CU-OR

Ronald T. Kern vs. Ocwen Loan Servicing, LLC

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

Filed By: Whitworth, Alexandra C.

*** 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 Issues identified in the Notice of Motion and which of the Undisputed Material Facts offered by the moving defendant and/or the Additional Material Facts offered by Plaintiff 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. ***

Defendant Ocwen Loan Serving, LLC’s (“Ocwen”) Motion for Summary Judgment, or in the alternative, Summary Adjudication is ruled upon as follows.

Overview

This is a non-judicial foreclosure action. Plaintiff Ronald T. Kern (“Kern”) alleges that dismissed defendant Seterus, Inc. (“Seterus”) is the successor to Ocwen as the servicer of Kern’s mortgage loan. Co-defendant OneWest Bank, FSB (“Onewest”) is the alleged to be the beneficiary of the deed of trust.

According to the Second Amended Complaint (“SAC”), in or about 2011, Kern sought to modify his loan and reduce his monthly payments. In or about December of that year, he received a HAMP trial payment plan (“HAMP TPP”) from his lender. He completed the HAMP TPP and received a permanent HAMP modification (“PERM HAMP”) in early 2012.

Kern paid on the PERM HAMP initially without incident. However, when Ocwen became his loan servicer in 2013, Ocwen wrongfully refused to accept further PERM HAMP payments and informed him he was in default. Ocwen misrepresented that the PERM HAMP was invalid. Ocwen compelled Kern to apply for a new loan modification to avoid foreclosure.

Kern reluctantly submitted to a new loan modification application process. Ocwen lost documents Kern submitted and delayed the process. Kern also resumed making payments under the existing PERM HAMP, which Ocwen accepted.

In or about July 2014, Ocwen provided Kern with a non-HAMP TPP. Kern completed the non-HAMP TPP, received a PERM non-HAMP, and has made payments on the PERM non-HAMP through the present.

Notwithstanding his performance under the PERM non-HAMP, Kern has received statements indicating he is in arrears. Ocwen personnel have also made threatening and harassing telephone calls to him.

Ocwen representative Tabitha Freeman (“Freeman”) was Kern’s single point of contact and informed him he was a victim of circumstance. Freeman told him in early 2015 that she had fixed the problem so that he would no longer receive threatening telephone calls. Ocwen’s threatening and harassing telephone calls persisted nonetheless.

Another Ocwen representative told Kern in May or June of 2105 that Ocwen intentionally cashed loan payments late, that Ocwen was accepting his payments, but that he was in default. The same representative told Kern Ocwen had an apology letter on file for him and would send it. Then the representative indicated the letter would not be sent due to computer problems.

In or about July 2015, Ocwen returned Kern’s monthly loan payment. Kern had paid on the PERM non-HAMP until then. On or about July 15, 2013, Ocwen sent Kern a letter indicating that Seterus would be his new loan servicer. Ocwen transferred the loan to Seterus in order to escape liability. On or about July 27, 2013, Ocwen sent Kern a letter indicating foreclosure proceedings would commence if he did not cure his

arrearage.

Despite having Kern’s complete loan file, and thus the true facts about his loan payment history, Seterus treated Kern as though he were actually in default. Seterus returned some of Kern’s payments on grounds they were insufficient to bring the loan current. It also held payments in suspense accounts and sent Kern information about loan modifications. Kern nonetheless continued to pay on his PERM non-HAMP. Seterus transferred Kern’s loan to collections. The account wrongfully reflected delinquencies from the PERM HAMP and use of the suspense account.

Seterus was dismissed after the Court sustained Seterus’ demurrer to Kern’s Second Amended Complaint (“SAC”) without leave to amend.

Ocwen previously filed a motion for judgment on the pleadings. After the Court’s ruling, the only remaining causes of action are: (1) Breach of Contract, (2) Breach of Covenant of Good Faith and Fair Dealing, (3) Negligence, (4) Intentional Infliction of Emotional Distress, (5) Intentional Interference with Business Contract, and (6) Violation of B&P Code §17200.

Trial is scheduled for April 16, 2018.

Ocwen moves for summary judgment/adjudication of all causes of action on the grounds that each cause of action “has no merit and fails because there is no triable issue as to any material fact, Plaintiff cannot prove all required elements of his claim.”

Analysis

The motion for summary judgment/adjudication is DENIED because Ocwen fails it satisfy its initial burden. In support of the motion, Ocwen relies on the Declaration of Kyle Lucas (“Lucas”). Lucas’ declaration is used to support approximately 100 of Ocwen’s 126 undisputed material facts. Kern objects to Lucas’ declaration on the grounds that it lacks foundation, is outside of Lucas’ personal knowledge, and none of the attached exhibits fall within the business records exception to the hearsay rule.

The Court agrees with Kern’s objections and SUSTAINS all objections to Lucas’ declaration for the following reasons.

Lucas’ declaration lacks personal knowledge. Personal knowledge “must be shown by facts set forth in the declaration, and not merely by conclusions.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2017) ¶ 10:109, p. 10-47 [emphasis added].) Lucas avers that he is the Senior Loan Analyst for Ocwen Financial Corp (“OFC”), which is not a party to this action. Knowing that OFC is not a party to this action, Lucas states that Ocwen is an “indirect subsidiary” to OFC. (Declaration of Kyle Lucas (“Lucas Decl., ¶ 1.) He further states:

I have personal knowledge of the facts contained in this affidavit based on my duties and responsibilities as a Senior Loan Analyst, and my knowledge and review of Ocwen’s business records, including records for loans released by IndyMac Mortgage Services, a division of OneWest Bank, FSB (“IndyMac”) to Ocwen. These records (which include data compilations, electronically imaged documents, and others) are:

(a) made at or near the time of the occurrence of the matters set forth by and (b) made and kept in the regular course of business. It is the regularly practice of Ocwen to make and keep such records.

(Lucas Decl., ¶ 5.) Lucas then proffers facts which are principally derived from his review of Ocwen’s and IndyMac’s records.

Here, there are no facts supporting Lucas’ personal knowledge. There is no explanation regarding what an “indirect subsidiary” is, or provide facts regarding the relationship between OFC and Ocwen which show that Lucas would have personal knowledge of Ocwen’s record keeping and/or business practices. Nor does Lucas state when he started working at OFC such that he would have personal knowledge of any Ocwen’s record keeping and/or business practice for the time period relating to Kern’s loan modification.

Lucas’ declaration also fails to satisfy the requirements of the business record exception to the hearsay rule. The business record exception requires that: (a) the writing was made in the regular course of a business; (b) the writing was made at or near the time of the act, condition, or event; (c) the custodian or other qualified witness testifies to its identity and the mode of its preparation; and (d) the sources of information and method and time of preparation were such as to indicate its trustworthiness.

Here, as noted above, Lucas fails to provide facts regarding his personal knowledge that (a) the writing was made in the regular course of a business and (b) the writing was made at or near the time of the act, condition, or event. Lucas’ declaration further fails to include facts showing “the mode of [ ] preparation” and that the “sources of information and method and time of preparation were such as to indicate its trustworthiness.” Moreover, to the extent Lucas obtains facts from IndyMac’s records, he has no personal knowledge as to IndyMac’s record keeping and/or business practice.

Lucas’ supplemental declaration filed in reply does not cure the defects noted above. Lucas still fails to explain what an “indirect subsidiary” is, or provide facts regarding the relationship between OFC and Ocwen such that Lucas would have personal knowledge of Ocwen’s record keeping and/or business practices. Nor does Lucas state when he started working at OFC such that he would have personal knowledge of any Ocwen’s record keeping and/or business practice for the time period relating to Kern’s loan modification. Lucas fails to proffer facts demonstrating that he has

personal knowledge that (a) the writing was made in the regular course of a business and (b) the writing was made at or near the time of the act, condition, or event. Lucas’ declaration further fails to include facts showing “the mode of [ ] preparation” and that the “sources of information and method and time of preparation were such as to indicate its trustworthiness.” Moreover, to the extent Lucas obtains facts from IndyMac’s records, he has no personal knowledge as to IndyMac’s record keeping and/or business practice. Indeed, Lucas’ supplemental declaration evidences that he has no personal knowledge regarding the manner/time in which the documents were made. Lucas states that he was “trained” that “data in the RealServicing System is verified as it is input into the system, that the person inputting the information has knowledge of the activity or transaction reflected in the data, and that such input takes place at or near the time of the event which is being documented.” (Lucas Supplemental Declaration, ¶ 10.) He also states that he was “trained” that copies/images of documents in the Vault system are verified as they are input into the system, that the person inputting the copies/images has knowledge of the activity or transaction reflected in the documents, and that such input takes place at or near the time the document was executed.” (Lucas Supplemental Declaration, ¶ 12.) These statements are based on hearsay and are inadmissible.

Having failed to satisfy its initial burden to demonstrate that no triable issue of material fact exists, the burden never shifts to Kern to show a triable issue.

Accordingly, the motion for summary judgment/adjudication is DENIED.

This minute order is effective immediately. Plaintiff shall prepare a formal order pursuant to CRC Rule 3.1312 and CCP 437c(g).