ROMEO M EVANGELISTA, ET AL. VS SELECT PORTFOLIO SERVICING INC, ET AL.

Tentative Rulings

Case Number: *******1769 Hearing Date: October 27, 2022 Dept: 31

DEMURRER WITH MOTION TO STRIKE PLAINTIFFS’ FIRST AMENDED COMPLAINT IS SUSTAINED

Background

The instant action arises out of the non-judicial foreclosure of the real property located at 15548 Harvest Street, Granada Hills, California (“subject property”). On November 2, 2006, Romeo M. Evangelista and Mari Darlene Evangelista (“Plaintiffs”) executed a Deed of Trust for the purpose of purchasing the subject property, in the amount of $480,000.00. Following a series of financial hardships, Plaintiffs defaulted on the Deed of Trust. On September 28, 2015, The Wolf Firm, acting on behalf of Select Portfolio Servicing, Inc., filed a Notice of Default against the subject property.

Subsequently, on June 29, 2021, The Wolf Firm, acting on behalf of Select Portfolio Servicing, Inc., recorded a Notice of Trustee Sale against the subject property. The subject property was, thereafter sold at a non-judicial foreclosure sale on November 15, 2021. Plaintiffs, in large part, contend Select Portfolio Servicing, Inc. violated various sections of the Civil Code by failing to contact Plaintiffs prior to recording the Notice of Default for the purposes of discussing alternatives to foreclosure, and additionally, by failing to halt the Trustee’s sale when Plaintiffs submitted various applications for a loan modification.

On December 8, 2021, Plaintiffs filed the operative First Amended Complaint (“FAC”) against the following entities and individuals: Select Portfolio Servicing, Inc. (“Select”) ; U.S. Bank, National Association (“U.S. Bank”); The Wolf Firm; Coldwell Banker Real Estate LLC; Nino Loquellano; Joe Breckner; and Does 1 through 20. Plaintiffs’ First Amended Complaint alleges the following causes of action:

1. Violation of Civil Code 2923.5 (against Select);

2. Violation of Civil Code 2923.6 (against Select):

3. Quiet Title (against all Defendants)

4. Violation of Business and Professions Code 17200 (against “Select”); and

5. Set Aside Foreclosure (against all Defendants).

On January 14, 2022, Defendants Select Portfolio Servicing, Inc.; and U.S. Bank, National Association (collectively “Defendants”) filed a Demurrer with Motion to Strike Plaintiff’s FAC. No opposition papers have been filed.

On February 18, 2022, the Court rejected Plaintiffs’ request for a temporary restraining order prohibiting all named Defendants in this action, as well as their agents, from performing any of the following acts: (1) approaching the subject property; (2) initiating any unlawful detainer actions against Plaintiffs; and (3) attempting to sell the subject property or place the subject property on the market.

On June 29, 2022, the Plaintiffs filed a notice of Substitution of Attorney.

The hearing on the demurrer was continued to allow Defendant to serve papers on Plaintiffs’ new counsel of record.

Proof of Service on Plaintiffs’ counsel of record by email was filed on September 13, 2022.

Plaintiffs filed an ex parte application seeking to be relieved of their counsel on the basis that they have not been able to communicate with their attorney. The ex parte was denied. Plaintiffs brought a noticed motion to withdraw attorney Timothy G. McFarlin as the counsel of record. Plaintiffs explain that a noticed motion was brought because Mr. McFarlin cannot be found and thus his signature cannot be obtained for the substitution of attorney.

At another ex parte hearing, the Court explained to Plaintiffs that they can hire another attorney and have the new attorney file a substitution of attorney form stating that the attorney is the counsel of record for Plaintiffs. (10/17/22.)

No substitution of attorney form has been filed by Plaintiffs. Accordingly, the Court reviews the Demurrer on the merits.

Meet and Confer

Defendants’ counsel, Steven M. Dailey, states that on January 06, 2022, he spoke to Plaintiff’s counsel via telephone to meet and confer regarding the demurrer with motion to strike. (Dailey Decl. 2). Parties were unable to reach an agreement resolving the objections raised in the demurrer or the motion to strike. (Id.)

After Plaintiffs submitted a substitution of attorney, this Court required the Defendants to file proof of service on the Plaintiffs new counsel, which Defendant did via email on September 13, 2022.

Plaintiffs have represented that they will seek new counsel, but no new substitution of attorney form has been filed. In their upcoming motion, Plaintiffs concede that they know the Defendants have filed a Demurrer that is set to be heard on October 27, 2022. (See Mot. to Withdraw Attorney.)

Therefore, because Plaintiffs have proper notice of the Demurrer and Defendants have informed the current counsel of record about the upcoming Demurrer, the Court finds the meet and confer requirement has been met. “Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” (Code Civ. Proc., 430.41, subd. (a)(4).)

Legal Standard

A. Demurrer

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 Hospital 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.)B. Motion to Strike

Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (Code of Civ. Proc., 435(b)(1); Cal. Rules of Court (CRC), Rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code of Civ. Proc., 436, subds. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)

C. Leave to Amend

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)

Request for Judicial Notice

The Court may take judicial notice of records of any court of record of the United States. (Evid. Code t 452(d)(2).) The Court may also take judicial notice of a recorded deed. (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 194.) However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.)

Defendants’ request for Judicial Notice of the following:

1) Notice of Default recorded November 7, 2007 in Official Records Recorder’s Office, Los Angeles County as Document Number 20072499953. A true and correct copy is attached as Exhibit “1.”

2) Notice of Trustee’s Sale recorded February 21, 2008 in Official Records Recorder’s Office, Los Angeles County as Document Number 20080301751. A true and correct copy is attached as Exhibit “2.”

3) Notice of Trustee’s Sale recorded October 6, 2009 in Official Records Recorder’s Office, Los Angeles County as Document Number 20091516721. A true and correct copy is attached as Exhibit “3.”

4) Notice of Trustee’s Sale recorded March 18, 2010 in Official Records Recorder’s Office, Los Angeles County as Document Number 20100373222. A true and correct copy is attached as Exhibit “4.”

5) Notice of Rescission of Notice of Default and Election to Sell Under Deed of Trust recorded April 27, 2010 in Official Records Recorder’s Office, Los Angeles County as Document Number 20100565926. A true and correct copy is attached as Exhibit “5.”

6) Assignment of Deed of Trust recorded July 7, 2011 in Official Records Recorder’s Office, Los Angeles County as Document Number 20110918979. A true and correct copy is attached as Exhibit “6.”

7) Notice of Default and Election to Sell Under Deed of Trust recorded July 30, 2013 in Official Records Recorder’s Office, Los Angeles County as Document Number 20131111668. A true and correct copy is attached as Exhibit “7.”

8) Notice of Rescission of Declaration of Default and Demand for Sale and of Notice of Breach and Election to Sell Under Deed of Trust recorded June 23, 2014 in Official Records Recorder’s Office, Los Angeles County as Document Number 2017064553. A true and correct copy is attached as Exhibit “8.”

9) Notice of Trustee’s Sale recorded May 8, 2018 in Official Records Recorder’s Office, Los Angeles County as Document Number 20180448079. A true and correct copy is attached as Exhibit “9.”

10) Notice of Trustee’s Sale recorded June 7, 2019 in Official Records Recorder’s Office, Los Angeles County as Document Number 20190535205. A true and correct copy is attached as Exhibit “10.”

11) Notice of Trustee’s Sale recorded June 29, 2021 in Official Records Recorder’s Office, Los Angeles County as Document Number 20211014282. A true and correct copy is attached as Exhibit “11.”

12) Docket regarding In re Romeo Evangelista, United States Bankruptcy Court, Central District, Case No. 1:18-bk-12388-MB. A true and correct copy is attached as Exhibit “12.”

13) Petition and Schedules filed September 26, 2018 regarding In re Romeo Evangelista, United States Bankruptcy Court, Central District, Case No. 1:18-bk12388-MB. A true and correct copy is attached as Exhibit “13.”

14) Docket regarding In re Romeo Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:19-bk-10632-MT. A true and correct copy is attached as Exhibit “14.”

15) Petition filed March 18, 2019 regarding In re Romeo Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:19-bk-10632-MT. A true and correct copy is attached as Exhibit “15.”

16) Docket regarding In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:19-bk-12230-MT. A true and correct copy is attached as Exhibit “16.”

17) Petition and Schedules filed September 5, 2019 regarding In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:19-bk-12230-MT. A true and correct copy is attached as Exhibit “17.”

18) Docket regarding In re Romeo Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:19-bk-13118-MT. A true and correct copy is attached as Exhibit “18.”

19) Petition filed December 16, 2019 In re Romeo Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:19-bk-13118-MT. A true and correct copy is attached as Exhibit “19.”

20) Docket regarding In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:20-bk-10427-MT. A true and correct copy is attached as Exhibit “20.”

21) Petition filed February 25, 2020 regarding In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:20-bk-10427- MT. A true and correct copy is attached as Exhibit “21.”

22) Order Granting Motion for Relief from the Automatic Stay filed May 5, 2020 regarding In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, Case No. 1:20-bk-10427-MT. A true and correct copy is attached as Exhibit “22.”

Defendants’ Request for Judicial Notice is GRANTED.

Discussion

I. DEMURRER

Defendants Select Portfolio Servicing, Inc.(“Select”); and U.S. Bank, National Association (collectively “Defendants”) demurrer to the entire First Amended Complaint (FAC).

A. Failure to Allege Tender

Defendants assert that Plaintiffs do not allege tender of all amounts due, therefore, all causes of action challenging the foreclosure sale are barred by the Tender Rule. (See Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 579 [“A cause of action ‘implicitly integrated’ with the irregular sale fails unless the trustor can allege and establish a valid tender.”].) A suit challenging the validity of a sale requires the plaintiff to prove “‘1) the trustee ... caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a ... deed of trust; (2) the party attacking the sale suffered prejudice or harm; and (3) the trustor ... tenders the amount of the secured indebtedness or was excused from tendering.’ (Citation).”

Plaintiffs allege that Defendant Select Portfolio Services, Inc. (“Select”) is a Residential Mortgage Service Company engaged in deceptive practices by failing to discuss alternatives to foreclosure in violation of Civil Code section 2923.5. (FAC 2, 20.) The Plaintiffs state they submitted loan modification packages to Defendant Select. (FAC 23.) More importantly, Plaintiffs assert that “[a]t all times material to this matter and all filings, Plaintiffs have remained ready, willing, and able to tender payment to Defendant SELECT, in accordance with agreements entered into by the parties.” (FAC 29.) Moreover, the Plaintiffs plead facts to show they were excused from tendering due to the fact that Defendant Select failed to respond or review the submitted loan modification applications. (FAC 47.)

Therefore, accepting the Plaintiffs’ allegations as true for purposes of a demurrer, the Plaintiffs have pleaded they could tender payment or were excused from tendering payment. Consequently, the Plaintiffs’ FAC complies with the Tender Rule, and the demurrer is OVERRULED as the assertion that the FAC fails to plead the Tender Rule.

B. Judicial Estoppel

Defendants assert that Plaintiffs’ FAC is barred by judicial estoppel because Plaintiffs filed Schedules that did not identify any claims or causes of action against Defendants as property in their bankruptcy case. (RJN Ex. 13, Schedule A/B, Nos. 33, 34.) Defendants allege that on September 26, 2018, Plaintiff Romeo M. Evangelista filed a Chapter 13 bankruptcy petition that was voluntarily dismissed on October 31, 2018. (RJN Ex. 12.)

“In the bankruptcy context, the federal courts have developed a basic default rule: If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the action. (Citations) The reason is that the plaintiff-debtor represented in the bankruptcy case that no claim existed, so he or she is estopped from representing in the lawsuit that a claim does exist.” (Ah Quin v. County of Kauai Dept. of Transp. (9th Cir. 2013) 733 F.3d 267, 271 [italics original].)

Plaintiff Romeo Evangelista’s first bankruptcy case, (In re Romeo Evangelista, United States Bankruptcy Court, Central District of California, No. 1:18-bk-12388-MB) was dismissed on October 31, 2018, long before this Complaint was filed on November 15, 2021.

The second bankruptcy case, (In re Romeo Evangelista, United States Bankruptcy Court, Central District of California, No. 1:19-bk-10632-MT) was dismissed on April 12, 2019. (RJN Ex. 14, 15.)

The third bankruptcy case was filed by Plaintiff Marie Darlene Evangelista (In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, No. 1:19-bk-12230-MT) and was dismissed on November 17, 2019.(RJN Ex. 16, 17.)

The fourth bankruptcy case (In re Romeo M. Evangelista, United States Bankruptcy Court, Central District of California, No. 1:19-bk-13118-MT) was dismissed on January 29, 2020. (RJN Ex. 18, 19.)

The fifth bankruptcy case was filed by Plaintiff Marie Darlene Evangelista (In re Marie Darlene Evangelista, United States Bankruptcy Court, Central District of California, No. 1:20-bk-10427) and was dismissed on March 20, 2022, for failure to file Schedules. (RJN Ex. 20, 21.) On May 5, 2020, the Court entered an Order Granting the Motion for Relief from the Automatic Stay in Favor of US Bank, as to the subject property. (RJN Ex. 22.)

The Court does not find that Plaintiffs took a totally inconsistent position in the Bankruptcy Court and in this present action as all bankruptcy filings and dismissals occurred before this actions was commenced. Neither does the Court find that Plaintiffs succeeded in getting the Bankruptcy Court to accept the first position, that no claim against Defendants existed, or that the Plaintiffs obtained an unfair advantage by obtaining a discharge or confirmation without allowing the creditors to learn of the pending lawsuit. (Ah Quin, supra, 733 F.3d at 272, referencing New Hampshire v. Maine (2001) 532 U.S. 742.) Therefore, judicial estoppel is inapplicable to this action.

The Court OVERRULES the demurrer on the basis of Judicial Estoppel.

C. First COA: Violation of Civil Code 2923.5

Under Civil Code section 2923.5(a)(1):

“A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default pursuant to Section 2924 until both of the following:

(A) Either 30 days after initial contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in subdivision (e).

(B) The mortgage servicer complies with paragraph (1) of subdivision (a) of Section 2924.18, if the borrower has provided a complete application as defined in subdivision (d) of Section 2924.18.”

(Civ. Code, 2923.5 subs. (a)(1).)

Under Civil Code section 2923.5(a)(2)

“A mortgage servicer shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgage servicer shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgage servicer shall schedule the meeting to occur within 14 days. The assessment of the borrower’s financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically.”

(Civ. Code, 2923.5 subd. (a)(2).)

The FAC asserts that Defendant Select failed to communicate with Plaintiffs regarding alternatives to foreclosure and failed to provide options to avoid foreclosure or cooperate with the Plaintiffs in submitting their load modification application. (FAC 11) Defendant Select never afforded consideration for programs that could provide an alternative to foreclosure. (Id.) Prior to issuing the Notice of Default (“NOD”) neither Defendant Select nor its agents contacted the Plaintiffs to assess the household’s financial situation and explore options pursuant to section 2923.5(a)(2). (FAC 21.)

“[N]either Defendants SELECT, nor any of its authorized agents have advised the Plaintiff of the statutory right to request a meeting regarding foreclosure alternatives which would be scheduled within fourteen (14) days, pursuant to 2923.5(a)(2). Neither Defendant SELECT nor any of its authorized agents have provided Plaintiff with a toll-free telephone number to contact a United States Department of Housing and Urban Development (HUD) certified housing counseling agency. Neither Defendant SELECT, nor any of its authorized agents employed due diligence in an effort to contact the Plaintiff.” (FAC 21.)

The FAC further alleges that the Plaintiffs gathered all required information forms and submitted multiple loan modifications to Defendant Select but Select failed to assist Plaintiffs in any way. (FAC 23.) Plaintiffs allege they received letters from Defendant Select confirming that the documents had been received and that Select would begin the evaluation process for a modification and that the process would take thirty days and that Select would respond after completing its review. (FAC 24.) Instead, Select negligently mishandled their application packages. (FAC 25.)

On September 28, 2015, Defendant “The Wolf” acting on behalf of Defendant Select, recorded the NOD against the subject property despite Defendant Select failing to comply with section 2923.5. (FAC 36, 27.) As such, the Plaintiffs were damaged because Plaintiffs were not afforded an adequate opportunity to investigate alternatives to foreclosure prior to the recording of the NOD. (FAC 40.)

Defendant Select asserts that causes of action for statutory violations must be pleaded with reasonable particularity, but none of the cited cases by Defendant Select support this proposition. In Morris v. JPMorgan Chase Bank, N.A. (2022) in assessing the borrower’s claims under the Homeowners Bill of Rights (HBOR), the appellatel court did not apply a heightened pleading standard on demurrer but instead asserted that a complaint “need only contain a ‘statement of the facts constituting the cause of action, in ordinary and concise language’ (Code Civ. Proc., 425.10, subd. (a)(1)) and will be upheld so long as it gives notice of the issues sufficient to enable preparation of a defense.’” (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 292.)

However, Defendant Select is correct in asserting that the first cause of action appears to be barred by the statute of limitations since the NOD was recorded on September 29, 2018, but this action was not filed until November 15, 2021. (See Code of Civ. Proc. 338 subd. (a) [three year statute of limitations for an “action upon a liability created by statute, other than a penalty or forfeiture.”]

Second, Defendant Select asserts that Plaintiffs do not allege facts to dispute the Declaration of Compliance attached to the NOD. (FAC Ex. B.) The Declaration of Compliance attached to the NOD states that “On 04/27/2015 contact was made with the borrower to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure as required by California Civil Code 2923.55(b)(2).” (Id.) Plaintiffs do not dispute the allegation that contact was made or allege facts to dispute or rebut the Declaration of Compliance.

Moreover, unlike the Plaintiffs in Turner v. Seterus, Inc. (2018) who sought to reinstate the loan to cure the default, Plaintiff here is seeking to redeem the property. (See Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516, 528 [“plaintiffs’ cause of action arises from their right to reinstate Turner's loan and their allegation that, but for Seterus's failure to accept Zeleny's tender of the $30,800, Turner would have cured the default, which would have entitled Turner to reinstate the loan and extinguished the basis for the trustee's sale. The basis for plaintiffs’ wrongful foreclosure cause of action is thus wholly different from the basis for redemption.”] [italics original].) Accordingly, Plaintiffs were required to plead that the irregularities were material under the HBOR. (See Civ. Code, 2914.12 subd. (a)(1).)

“‘To successfully challenge a foreclosure sale based on a procedural irregularity,’ in an action at law or in equity, ‘the plaintiff must show both that there was a failure to comply with the procedural requirements for the foreclosure sale and that the irregularity prejudiced the plaintiff.’ (Citation.) Mere technical violations of the foreclosure process will not suffice.’(Citation)” (Morris, supra, 78 Cal.App.5th at 294-295.)

For the reasons stated, the Demurrer is SUSTAINED WITH LEAVE TO AMEND as to the first cause of action.

D. Second COA: Violations of Civil Code 2923.6

The California HBOR prohibits “dual tracking” which “occurs when a lender or servicer pursues foreclosure while simultaneously going through the motions of reviewing a borrower's application for foreclosure mitigation, without a good faith intent to entertain the application.” (Morris, supra, 78 Cal.App.5th at 296.) The “dual tracking” prohibition applies to any “mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent.” (Civ. Code, 2923.6, subd. (c).)

“In essence, [section 2923.6] forbids the initiation and pursuit of a trustee's sale until a completed and still pending application of loan modification is fully resolved. (Citation.) Where loan modification is denied, the bar on dual tracking prohibits the recording of a notice of default, the recording of a notice of sale, or the conduct of a sale, until the lender or servicer sends the borrower a written denial letter, giving reasons for the denial and advising the borrower she has 30 days to appeal. (Citation.).” (Morris, supra, 78 Cal.App.5th at 296.)

Under Civil Code section 2923.6 subdivision (b), the mortgage servicer is obligated to “offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority.”

Section 2923.6 subdivisions (b) and (c) further provides:

“If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer at least five business days before a scheduled foreclosure sale, a mortgage servicer . . . 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 . . 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.

(3) The borrower accepts a written first lien loan modification, but defaults on, or otherwise breaches the borrower’s obligations under, the first lien loan modification.”

(Id.)

The FAC alleges that the Plaintiffs tried to contact Defendant Select about the loan, both by phone and in person but Plaintiffs “could not even establish de minimis levels of contact” with Defendant Select and attempts at contact were rebuffed when Plaintiffs were transferred or the calls were terminated without warning. (FAC 22.) Defendant Select also failed to designate a single point of contact. (FAC 26.) Plaintiffs also submitted multiple completed first lien loan modifications but Defendant Select failed to respond to or review the Plaintiffs’ submitted loans. (FAC 46-47.) Consequently, the Plaintiffs have a “pending” loan within the meaning of section 2923.6 subdivision (c). (FAC 47.) Therefore, Defendant Select improperly “dual-tracked” the foreclosure while Plaintiffs’ loan modification application should have been under consideration. (FAC 48.)

Defendant Select demurrers on the basis that Plaintiffs have not provided sufficient information such as when the applications were sent or that they submitted “all the documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer” in order for the application to be deemed “complete.” (Civ. Code, 2914.10 subd. (b).) Moreover, without a time frame of when the applications were sent, Defendant Select cannot determine if the Plaintiffs’ claims are barred by the statute of limitations. The NOD was recorded on September 15, 2015, and if the Notice of Trustee’s Sale on May 8, 2018, was recorded while the application was pending, then the claims are time-barred by the three-year statute of limitations. (See Code Civ. Proc. 338 subd. (a).) Moreover, the Plaintiffs do not allege that any application was pending on June 7, 2019, and June 29, 2021, when the Notice of Trustee’s Sale was recorded or when the sale took place on November 15, 2021.

The Court finds Billesbach v. Specialized Loan Servicing LLC (2021) inapplicable because the Plaintiffs have plead that they submitted a loan application that was not processed by Defendant Select who failed to respond or review the application. (FAC 47.) Therefore, the Plaintiffs have plead fact to show that the pre-sale violations disrupted the loan modification process. (See Billesbach v. Specialized Loan Servicing LLC (2021) 63 Cal.App.5th 830, 846.) Moreover, unlike the loan-servicer in Billesbach, Defendant Select has not alleged they took subsequent remedial actions to cure the violations by the subject property that was foreclosed on. (Id.)

The Court finds Defendant’s arguments persuasive in other respects as stated above and therefore the Demurrer is SUSTAINED WITH LEAVE TO AMEND as to the second cause of action.

E. Third COA: Quiet Title

A verified complaint for quiet title must contain (1) a description of the property, (2) the title of the plaintiff as to which a determination is sought and its basis, (3) the adverse claims to the title of the plaintiff against which a determination is sought, (4) the date as to which determination is sought, and (5) a prayer for determination of title. (Code Civ. Proc., 761.020.) This cause of action also requires tender of indebtedness. (Aguilar v. Bocci (1974) 39 Cal.App.3d 475.) To prevail in an action to quiet title, the plaintiff must prove title superior to that of the defendant. (Gerhard v. Stephens (1968) 68 Cal.2d 864, 918.)

Although Plaintiffs have plead that they are ready, willing, and able to tender payment to Defendant Select, Plaintiffs have not plead that they have superior title to that of Defendants. (See FAC 29.) Plaintiffs only allege that they are statutorily protected from foreclosure through Civil Code 2923.6. Lastly, although Plaintiffs state that Defendants and Does 1 to 10 may claim an adverse interest, Plaintiff has not sufficiently alleged “[t]he adverse claims to the title of the plaintiff against which a determination is sought” including liens or specific adverse claims. (Code Civ. Proc., 761.020 subd. (c).)

For the stated reasons, the Demurrer to the third cause of action is SUSTAINED WITH LEAVE TO AMEND.

F. Fourth COA: Unfair Competition Law

Business and Professions Code section 17200 (“UCL”) prohibits “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code, 17200; see Clark v. Superior Court (2010) 50 Cal.4th 605, 610.) To plead this statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

The UCL prohibits five types of wrongful conduct: (1) unlawful business acts or practices; (2) unfair business acts of practices; (3) fraudulent business acts or practices; (4) unfair, deceptive, untrue or misleading advertising; and (5) any act prohibited by Business & Professions Code Sections 17500-17577.5. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 906–907.)

The FAC alleges that Defendant Select engaged in unlawful and fraudulent conduct related to the foreclosure of the subject property through acts of intentional misrepresentation surrounding pre-foreclosure obligations, including dual-tracking. (FAC 57.) Plaintiffs allege that they were defrauded by being led to believe that Defendant Select would review their loan modification application and not foreclose. (FAC 59.) Defendant Selects conduct is likely to deceive the public at large by actively encouraging borrowers to defer judgment and loss mitigation efforts to its departments because Defendant Select wants to “help them save their home,” yet Defendant Select purely seeks to maximize its profits through foreclosures conducted in violation of the law. (FAC 58.)

Defendant Select demurs to the fourth cause of action on the basis that Plaintiffs lack standing because they cannot allege an injury in fact. The Court finds that the Plaintiffs have sufficiently pleaded loss of the subject property to foreclosure as a result of Defendant Select’s pre-foreclosure conduct and thus have standing to assert a UCL cause of action.

Although Defendant Select is correct in asserting that Plaintiffs cannot maintain a cause of action for violation of the UCL under the unlawful prong because the Demurrer was sustained as to the first through third causes of action, Plaintiffs can maintain a cause of action under the fraudulent or unfair prongs of the UCL.

“A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.) Lastly, a fraudulent business practice claim under section 17200 “is not based upon proof of the common law tort of deceit or deception, but is instead premised on whether the public is likely to be deceived.” (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1499.) Since the fraudulent prong is not based on a tort, Plaintiffs do not have to plead with particularity intentional misrepresentation. Here, Plaintiffs sufficiently plead that Defendant Select’s practices were fraudulent because Plaintiffs and the public are likely to be deceived into believing that Defendant Select wanted to help avoid foreclosure but instead never processed their loan applications. (FAC 55, 57.)

Plaintiffs can also maintain a cause of action under the “unfair” prong of the UCL because the utility of the Defendant Select’s conduct when weighed against the gravity of harm to the alleged victim, the practice would be deemed unfair because it “offends established public policy” and/or “the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 718-719.)

Though “unfair business practices” is not specifically plead in the Complaint, the complaint must be liberally constructed and material facts, including those that may be implied or inferred, are taken as true for the purpose of ruling on a demurrer. (See Kiseskey v. Carpenters' Trust for So. California (1983) 144 Cal.App.3d 222, 228.) Accordingly, the Plaintiffs allegations that Defendant Select engaged in dual tracking is sufficient to sustain a cause of action for violations of the UCL under either the unfair or the fraudulent prong of the UCL. (See Jolley, supra, 213 Cal.App.4th at 907.)

The demurrer to the fourth cause of action is SUSTAINED.

G. Fifth COA: Set Aside Foreclosure

Wrongful foreclosure is a common law tort claim. It is an equitable action to (1) set aside a foreclosure sale, or (2) an action for damages resulting from the sale on the basis that the foreclosure was improper. (See Miles v. Deutsche Bank Nat’l Trust Co. (2015) 236 Cal.App.4th 394, 408–409.) The elements of a wrongful foreclosure cause of action are: “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.” (Id. at p. 408.)

“‘[A]n action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can establish that at the time the power of sale was exercised or the foreclosure occurred, no breach of condition or failure of performance existed on the mortgagor's or trustor's part which would have authorized the foreclosure or exercise of the power of sale.’ (Citations.) In other words, mere technical violations of the foreclosure process will not give rise to a tort claim; the foreclosure must have been entirely unauthorized on the facts of the case.” (Miles, supra, 236 Cal.App.4th at 408-409.)

Plaintiffs allege mere irregularities in the foreclosure process such as the fact that Defendants failed to assess Plaintiff’s financial situation or explore options to avoid foreclosure. (FAC 61.) Specifically, the FAC alleges Defendant Select failed to cooperate in approving Plaintiffs for a reasonable monthly mortgage payment. (FAC 62.) The allegations as plead are insufficient to sustain a cause of action for wrongful foreclosure because the violations are mere technicalities rather than evidence of illegal, fraudulent, or willfully oppressive sale. Furthermore, the Demurrer to the first and second causes of action has been sustained.

Therefore, the demurrer to the fifth cause of action is SUSTAINED WITH LEAVE TO AMEND.

II. MOTION TO STRIKE

Defendants request that the following be stricken from the Complaint:

A. Attorneys’ Fees (pg. 14, paragraph 7 of prayer)

Defendants request that allegations regarding attorneys’ fees be stricken since Plaintiffs appear to be in pro per and did not allege a statutory or contractual basis for attorneys’ fees.

The motion to strike the above is GRANTED WITH LEAVE TO AMEND.

B. Allegations Regarding Damages

Page 13, paragraph 3 of the Prayer states: “For compensatory damages in an amount to be proven at trial[.]”

Page 13, paragraph 5 of the Prayer states: “For statutory damages in the amount of the greater of treble actual damages incurred by the Plaintiffs or $100,000.00 pursuant to Civil Code 2924.12[.]”

Although damages are not available under the UCL, Civil Code section 2924.12 allows for economic damages for material violations of section 2923.6 which is Plaintiffs’ second cause of action. (Civ. Code, 2924.12 subd. (b).) Section 2924.12 also allows the court to award “the greater of treble actual damages or statutory damages of fifty thousand dollars ($50,000)” “[i[f the court finds that the material violation was intentional or reckless, or resulted from willful misconduct[.]” (Id.)

Since the demurrer is sustained with leave to amend as to the second cause of action, the Defendants’ request to strike the allegation of damages is GRANTED WITH LEAVE TO AMEND.

Conclusion

The demurrer is SUSTAINED WITH 30 DAYS LEAVE TO AMEND as to the first, second, third, fourth and fifth causes of action.

The motion to strike is GRANTED WITH 30 DAYS LEAVE TO AMEND.

Moving party to give notice.

Case Number: *******1769 Hearing Date: February 18, 2022 Dept: 31

MOTION FOR A TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE FOR ISSUANCE OF A PRELIMINARY INJUNCTION IS DENIED

Background

The instant action arises out of the non-judicial foreclosure of the real property located at 15548 Harvest Street, Granada Hills, California (“subject property”). On November 2, 2006, Romeo M. Evangelista and Mari Darlene Evangelista (“Plaintiffs”) executed a Deed of Trust for the purposes of purchasing the subject property, in the amount of $480,000.00. Following a series of financial hardships, Plaintiffs defaulted on the Deed of Trust.

On September 28, 2015, The Wolf Firm, acting on behalf of Select Portfolio Servicing, Inc., filed a Notice of Default against the subject property. Subsequently, on June 29, 2021, The Wolf Firm, acting on behalf of Select Portfolio Servicing, Inc., recorded a Notice of Trustee Sale against the subject property. The subject property was, thereafter, sold at a non-judicial foreclosure sale on November 15, 2021. Plaintiffs, in large part, contend Select Portfolio Servicing, Inc. violated various sections of the Civil Code by failing to contact Plaintiffs prior to recording the Notice of Default for the purposes of discussing alternatives to foreclosure, and additionally, by failing to halt the Trustee’s sale when Plaintiffs submitted various applications for a loan modification.

On November 15, 2021, Plaintiffs initiated the present action by filing a Complaint.

On November 24, 2021, Plaintiffs filed a Motion for a Temporary Restraining Order and Order to Show Cause for Issuance of a Preliminary Injunction.

On December 8, 2021, Plaintiffs filed the operative First Amended Complaint against the following entities and individuals: Select Portfolio Servicing, Inc.; U.S. Bank, National Association (“U.S. Bank”); The Wolf Firm; Coldwell Banker Real Estate LLC; Nino Loquellano; Joe Breckner; and Does 1 through 20. Plaintiffs’ First Amended Complaint alleges the following causes of action: (1) Violation of Civil Code 2923.5; (2) Violation of Civil Code 2923.6; (3) Quiet Title; (4) Violation of Business and Professions Code 17200; and (5) Set Aside Foreclosure.

On February 4, 2020, Defendants Select Portfolio Servicing, Inc. and U.S. Bank filed an Opposition to Plaintiffs’ Motion for Temporary Restraining Order and Order to Show Cause for Issuance of a Preliminary Injunction.

Plaintiffs have not filed a Reply.

Legal Standard

Preliminary injunctive relief is an equitable remedy in nature. (Jamison v. Department of Transp. (2016) 4 Cal.App.5th 356, 361.) The purpose of preliminary injunctive relief is to preserve the status quo pending final resolution upon a trial. (Grothe v. Cortlandt Corp. (1992) 11 Cal.App.4th 1313, 1316.) The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. (14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396. 1402.)

Preliminary, or prejudgment, injunctive relief comes in two (2) forms. (Code Civ. Proc., 527.) The first form of prejudgment injunctive relief is a temporary restraining order. (Code Civ. Proc., 527, subd. (c).) A temporary restraining order has the same force and effect as a preliminary or permanent injunction but differs in that it may be issued without notice to the opposing party, without a bond or undertaking, and remains in effect for a limited time, terminating automatically when a preliminary injunction is either issued or denied. (Code Civ. Proc., 527, subd. (b); see Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2021) 9:538.) The second form of prejudgment injunctive relief is a preliminary injunction. (Code Civ. Proc., 527, subd. 527, subd. (a).) A preliminary injunction is issued following a noticed motion, or an order to show cause, and remains in effect until resolution of the lawsuit. (See Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2021) 9:539.) Where a party requests a temporary restraining order, the party may, at the same time, request an order to show cause as to why a preliminary injunction should not be issued. (Cal. Rules of Court, Rule 3.1150, subd. (a).)

In determining whether to issue preliminary injunctive relief prior to trial, by way of temporary restraining order or preliminary injunction, the trial court considers two (2) factors: (1) the likelihood the plaintiff will prevail on the merits of her case at trial, and (2) the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the court grants preliminary injunctive relief. (Code Civ. Proc. 526; Husain v. McDonald’s Corp. (2012) 205 Cal.App.4th 860, 866-67; White v. Davis (2003) 30 Cal.4th 528, 554; Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286.) The balancing of harm between the parties “involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.” (Husain, supra, 205 Cal.App.4th at 867.)

Pursuant to Code of Civil Procedure, section 526, subdivision (a), preliminary injunctive relief may be issued “when it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief . . . consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually,” or “when it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.” (Code Civ. Proc., 526, subd. (a)(1)-(a)(2).) Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See, e.g., ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016; Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.) Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. (See Code Civ. Proc. 527, subd. (a).) For this reason, a pleading alone rarely suffices. (Weil & Brown, California Procedure Before Trial, (The Rutter Group 2007) 9:579.) The burden of proof is on the plaintiff as moving party. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

“The decision to grant a preliminary injunction rests in the sound discretion of the trial court . . . before the trial court can exercise its discretion the applicant must make a prima facie showing of entitlement to injunctive relief. The applicant must demonstrate a real threat of immediate and irreparable injury.” (Triple A Machine Shop, Inc. v. State of California (1989) 213 Cal.App.3d 131, 138.) “[A]n injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff,” and the party seeking injunctive relief bears the burden to prove its absence. (Dep’t of Fish & Game v. AndersonCottonwood Irrigation Dist. (1992) 8 Cal.App.4th 1554, 1564-1565.)

Request for Judicial Notice

Defendants’ Request for Judicial Notice is GRANTED, pursuant to Evidence Code section 452, subd. (d). (Evid. Code, 452, subd. (d) [“Judicial notice may be taken of the following matters . . .: (d) Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.”].)

Discussion

Plaintiffs move for a temporary restraining order prohibiting all named Defendants in this action, as well as their agents, from performing any of the following acts: (1) approaching the subject property; (2) initiating any unlawful detainer actions against Plaintiffs; and (3) attempting to sell the subject property or place the subject property on the market. Plaintiffs, further, seek a temporary restraining order requiring Defendants to rescind the foreclosure sale upon the subject property, which occurred on November 15, 2021. Additionally, Plaintiffs request that this Court schedule an order to show cause as to why a preliminary injunction should not issue against all named Defendants.

Following a consideration of the parties’ arguments and evidence, the Court finds that Plaintiffs have failed to demonstrate a possibility of prevailing on the merits of their First Amended Complaint, and therefore, have failed to meet their burden in demonstrating their entitlement to a temporary restraining order and a subsequent order to show cause.

Plaintiffs have failed to demonstrate the probability of prevailing on the merits of the First Amended Complaint. As noted above, Plaintiffs’ First Amended Complaint alleges five (5) causes of action: (1) Violation of Civil Code 2923.5; (2) Violation of Civil Code 2923.6; (3) Quiet Title; (4) Violation of Business and Professions Code 17200; and (5) Set Aside Foreclosure. Plaintiffs fail to identify for this Court the elements of each cause of action alleged within the First Amended Complaint, and additionally fail to demonstrate how the facts asserted within the First Amended Complaint satisfy each element of each cause of action—demonstrating to this Court a probability of success on each cause of action.

While Plaintiffs may rely upon the verified First Amended Complaint to demonstrate a probability of prevailing on the merits of their causes of action (Code Civ. Proc., 526, subd. (a)), Plaintiffs fail to identify and draw a connection between the elements of each cause of action alleged and the ultimate facts purportedly alleged within the verified Complaint. Rather, Plaintiffs merely cite to a variety of statutes, and improperly leave it to the Court to discern the evidence which might support each cause of action.

Further, Plaintiffs have not, alternatively, submitted any affidavits or other admissible evidence to the Court demonstrating a probability of prevailing upon the merits of their five (5) causes of action. While Plaintiffs attach a variety of documents to the moving papers, none of the documents has been properly authenticated and, therefore, may not be taken as evidence during the Court’s consideration of Plaintiffs’ present Motion. (Evid. Code, 1401, subd. (a) [“Authentication of a writing is required before it may be received in evidence.”].) It follows, Plaintiffs have failed to meet their burden in demonstrating a sufficient probability of prevailing upon the merits of the First Amended Complaint, and therefore, a temporary restraining order, and subsequent order to show cause, may not issue. (O’Connell, supra, 141 Cal.App.4th at p. 1481 [holding the burden of proof is on the plaintiff as moving party].)

Conclusion

Plaintiffs’ Motion for a Temporary Restraining Order and Order to Show Cause for Issuance of a Preliminary Injunction is DENIED.

Clerk is to give notice.

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.