BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al.

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

Tentative Ruling

Defendants SN Servicing Corporation and US Bank Trust National Association as Trustee of the Bungalow Series IV Trust’s (collectively, “Defendants”) demurrer to plaintiff Omar Bermudez’s (“Plaintiff”) First Amended Complaint (“1AC”) is ruled upon as follows.

Defendants’ request for judicial notice of various recorded land documents, the case docket in related bankruptcy court proceedings, and filings by Plaintiff in other cases is granted. In taking judicial notice of these documents, the Court accepts the fact of their existence, not the truth of their contents. (See Professional Engineers v. Dep’t of Transp. (1997) 15 Cal.4th 543, 590 [judicial notice of findings of fact does not mean that those findings of fact are true]; Steed v. Department of Consumer Affairs (2012) 204 Cal.App.4th 112, 120-121 [“[W]hile the existence of any document in a court file may be judicially noticed, the truth of the matters asserted in those documents, including the factual findings of the judge who was sitting as the trier of fact, is not entitled to notice.”]; Sosinsky v.

Grant (1992) 6 Cal.App.4th 1548, 1562-1570.) '[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 the recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity.' (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265.)

This action involves a non-judicial foreclosure regarding real property located at 864 Oak Lane, Rio Linda, California 95673 (the “Property”). This is the third lawsuit filed by Plaintiff regarding foreclosure of the Property.

Plaintiff filed the Complaint in this third case on April 21, 2023, alleging causes of action for violation of Civil Code section 2923.7, violation of Business and Professions Code section 17200 et seq., accounting, wrongful foreclosure, and cancellation of instrument. Defendants demurred to the entire Complaint on the ground each of the five causes of action are uncertain and/or fail to allege facts sufficient to constitute a cause of action. On October 5, 2023, the Court sustained with leave to amend Defendants’ unopposed demurrer, deeming Plaintiff’s failure to oppose a concession on the merits.

The Court’s file reflects that Plaintiff’s 1AC was filed on September 21, 2023, prior to the Court’s ruling on demurrer. However, this discrepancy may be due to a backlog in processing amended complaints. Nonetheless, the 1AC alleges causes of action for: (1) violation of Civil Code section 2923.7; (2) violation of Business & Professions Code section 17200 et seq.; (3) wrongful foreclosure; and (4) cancellation of written

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

instruments, Civil Code section 3412. The only changes made include the removal of the cause of action for accounting and the addition of a few sentences regarding tender; namely, that Plaintiff is “ready, willing, and able to tender the outstanding principal balance of the loan.” (1AC ¶ 58.)

Defendants again demur to each cause of action in the 1AC on the grounds each fails to state facts sufficient to constitute a cause of action and/or is uncertain.

Plaintiff obtained his mortgage loan on February 16, 2007, from Bank of America, N.A. in the original amount of $360,000. (1AC ¶ 10.) The first Notice of Default was recorded on March 20, 2009, and Plaintiff has since spent a decade avoiding foreclosure through the use of partial conveyances of title and third-party bankruptcy filings. (See RJN, Ex. 2-10, 13-24, 26-32; Demurrer at pp. 2-5.)

Legal Standard

The function of a demurrer is to test the sufficiency of the pleading it challenges by raising questions of law. (Salimi v. State Comp. Ins. Fund (1997) 54 Cal.App.4th 216, 219; Nordlinger v. Lynch (1990) 225 Cal.App.3d 1259, 1271.) A demurrer “tests the pleadings alone and not the evidence or other extrinsic matters.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Extrinsic evidence may not properly be considered on demurrer or on a motion to strike. (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881; Hibernia Savings & Loan Soc. v. Thornton (1897) 117 Cal. 481, 482.)

For the purpose of determining the effect of a complaint, its allegations are liberally construed, with a view toward substantial justice. (Code Civ. Proc. § 452; Amarel v. Connell (1988) 202 Cal.App.3d 137, 140-141; Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43, fn. 7.) In this respect, the Court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law, and considers matters which may be judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1111-1112.)

A demurrer may be sustained only if the complaint lacks any sufficient allegations to entitle the plaintiff to relief. (Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778.) “Plaintiff need only plead facts showing that he may be entitled to some relief . . ., we are not concerned with plaintiff's possible inability or difficulty in proving the allegations of the complaint.” (Highlanders, Inc. v. Olsan (1978) 77 Cal.App.3d 690, 696-697.) The sole issue raised by a general demurrer is whether the

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

facts pled state a valid cause of action, not whether they are true. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)

Violation of Civil Code Section 2923.7 (Single Point of Contact)

Civil Code Section 2923.7 states: 'When a borrower 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.' Only material violations of section 2923.7 are actionable. (Civil Code § 2924.12(b).) Courts have interpreted the term “material” to refer to whether the alleged violation affected plaintiff's loan obligations or the modification process. (Cornejo v. Ocwen Loan Servicing, LLC (2015) 151 F.Supp.3d 1102, 1113; Gonzales v. Citimortgage, Inc. (2015) 2015 WL 3505533, at *6.)

Defendants contend Plaintiff has failed to allege any material violation of section 2923.7 because the 1AC alleges he communicated with a specific person, Ms. Coe, over the course of several months regarding the offered Trial Period Plan (“TPP”), which Plaintiff rejected, and of his appeal rights. (1AC ¶¶ 19, 31-35.) Defendants contend Plaintiff’s own allegations demonstrate Ms. Coe informed him of the current status of the foreclosure prevention alternative, but he simply did not like the TPP and chose not to accept it. Defendants also cite to Exhibit 33 in their RJN and argue Plaintiff has omitted additional communications and explanations provided in a prior case.

Plaintiff has opposed on the grounds that he has sufficiently alleged Defendants failed to provide him with a single point of contact while he was seeking a loan modification because by the time he received the formal offer on January 3, 2022 (it was mailed December 28, 2021), the deadline to make a good faith payment as set forth in said letter had already passed (payment was to be made by no later than December 31, 2021). Plaintiff did not speak to Ms. Coe until January 14, 2022. Plaintiff contends because a single point of contact was not provided to advise him regarding his foreclosure prevention options, it resulted in his Property being at risk of foreclosure while he was eligible for a modification.

Keeping in mind that on demurrer, the Court must liberally construe the allegations, the Court finds Plaintiff has sufficiently stated a cause of action. Plaintiff has alleged that a single point of contact was not promptly established when he requested a foreclosure alternative as no contact was provided in time for Plaintiff to timely make a good faith payment and accept the TPP. The purported omitted allegations set forth in Exhibit 33 do not alter the foregoing and are consistent that Plaintiff was not provided a contact to advise him regarding foreclosure prevention alternatives. The demurrer is

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

OVERRULED.

Business & Professions Code Section 17200 et seq.

Defendants demur on the grounds that Plaintiff only alleges wrongdoing after he defaulted on the loan, which defeats his claim under the Unfair Competition Law (“UCL”). (Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 297, 523.) Defendants also contend the claim is derivative of the other claims and, thus, fails as the others do. As the Court has overruled Plaintiff’s first cause of action, that cause of action can support Plaintiff’s UCL claim. The Court also rejects Defendants’ argument that Plaintiff lacks standing because the prospect of losing the home to foreclosure was the result of his own default, not the alleged conduct of Defendants.

Plaintiff has alleged that Defendants essentially made it impossible for him to accept the TPP because he received the formal offer after the deadline to make a good faith payment had passed, which led to the possible foreclosure. Accordingly, the demurrer is OVERRULED.

Wrongful Foreclosure

'A wrongful foreclosure is a common law tort claim. It is an equitable action to set aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that the foreclosure was improper. [Citation.]” (Sciarratta v. U.S. Bank Nat'l Assn. (2016) 247 Cal.App.4th 552, 561-562.) '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.'' (Turner v.

Seterus, Inc. (2018) 27 Cal.App.5th 516, 525 [citations omitted].) 'Where tendering is required and not excused, a plaintiff seeking to set aside an irregular sale must allege tender of the full amount of the loan to maintain any cause of action that either is based on the wrongful foreclosure allegations or seeks redress from that foreclosure.' (Id.)

Defendants contend Plaintiff’s allegation that he is “ready, willing and able to tender the outstanding principal balance of the loan” (1AC ¶ 58) is insufficient and contradicted by his multiple bankruptcy filings and constant negotiation attempts. Plaintiff contends he is not seeking equitable relief (to set aside the sale) in this cause of action and, thus, tender is not required. The Court agrees with Plaintiff. Plaintiff is not seeking to set aside any sale and, instead, is seeking monetary damages. As a result, tender is not required and the demurrer on that basis is OVERRULED.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

Defendants also contend Plaintiff has failed to allege they caused an “illegal, fraudulent, or willfully oppressive” foreclosure sale because the allegations include that Plaintiff was offered a TPP and, instead of tendering payment, he contacted Defendants about the payment. (1AC ¶ 16.) The Court disagrees. The 1AC alleges Defendants informed Plaintiff that he was eligible for a loan modification and that he would receive a formal offer. Plaintiff ultimately received the offer, but by the time he received it, the deadline to make a good faith payment has already lapsed and thus he was never able to even accept the TPP even if he had wanted to.

He then contacted Defendants regarding the payment and was informed that his only option was to appeal and that Defendants then recorded inaccurate foreclosure documents. Accordingly, the Court finds Plaintiff has sufficiently stated a cause of action and the demurrer is OVERRULED.

Cancellation of Instrument

Civil Code section 3412 provides a “written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or cancelled.” Moreover, “because a cause of action to cancel a written instrument under section 3412 sounds in equity, a debtor must generally allege tender or offer of tender of the amounts borrowed as a prerequisite to such claims.” (Saterbak v.

JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 818-819.) The tender requirement “is based on the theory that one who is relying upon equity in overcoming a voidable sale must show that he is able to perform his obligations under the contract so that equity will not have been employed for an idle purpose.” (Dimock v. Emerald Properties LLC (2000) 81 Cal.App.4th 868, 878.)

Defendants contend Plaintiff’s allegation that he is “ready, willing and able to tender the outstanding principal balance of the loan” (1AC ¶ 58) is insufficient and contradicted by his multiple bankruptcy filings and constant negotiation attempts. Plaintiff does not address this argument in opposition, which the Court construes a concession on the merits. The demurrer is, therefore, SUSTAINED. Plaintiff has requested leave to amend, but fails to explain how this defect can be cured. A demurrer must be sustained without leave to amend absent a showing by plaintiff that a reasonable possibility exists that the defect can be cured by amendment. (Blank v Kirwan (1985) 39 Cal.3d 311, 318.) The burden of proving such reasonable possibility rests squarely on the plaintiff. (Torres v City of Yorba Linda (1993) 13 Cal.App.4th 1035, 1041.) Accordingly, leave to amend is DENIED.

Conclusion

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

Defendants’ demurrer is OVERRULED as to the causes of action for violation of Civil Code Section 2923.7, violation of Business & Professions Code section 17200 et seq., and wrongful foreclosure.

Defendants’ demurrer is SUSTAINED without leave to amend as to the cause of action for cancellation of instrument.

The minute order is effective immediately. No formal order pursuant to California Rules of Court, Rule 3.1312, or further notice is required.

NOTICE:

Consistent with Local Rule 1.06(B), any party requesting oral argument on any matter on this calendar must comply with the following procedure:

To request limited oral argument, on any matter on this calendar, you must call the Law and Motion Oral Argument Request Line at (916) 874-2615 by 4:00 p.m. the Court day before the hearing and advise opposing counsel. At the time of requesting oral argument, the requesting party shall leave a voice mail message: a) identifying themselves as the party requesting oral argument; b) indicating the specific matter/motion for which they are requesting oral argument; and c) confirming that it has notified the opposing party of its intention to appear and that opposing party may appear via Zoom using the Zoom link and Meeting ID indicated below. If no request for oral argument is made, the tentative ruling becomes the final order of the Court.

Unless ordered to appear in person by the Court, parties may appear remotely either telephonically or by video conference via the Zoom video/audio conference platform with notice to the Court and all other parties in accordance with Code of Civil Procedure 367.75. Although remote participation is not required, the Court will presume all parties are appearing remotely for non-evidentiary civil hearings. The Department 53/54 Zoom Link is https://saccourt-ca-gov.zoomgov.com/my/sscdept53.54 and the Zoom Meeting ID is 161 4650 6749. To appear on Zoom telephonically, call (833) 568-8864 and enter the Zoom Meeting ID referenced above. NO COURTCALL APPEARANCES WILL BE ACCEPTED.

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SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 02/22/2024 Hearing on Demurrer to Plaintiff's First Amended Complaint in Department 54

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will be forward the form to the Court Reporter’s Office and an official reporter will be provided.