The provisions comprising the HBOR have been relocated to different sections
(and at times, returned to the original sections) of the Civil Code, and have been slightly
amended since its passage. At the time of the recording of the notice of default in this
case, the HBOR required a mortgage servicer to do a number of things before recording a
notice of default or moving forward with a trustee's sale of a property.4 For example, the
HBOR prohibited a mortgage servicer from recording a notice of default before sending
the borrower a letter explaining its right to request various loan documents. (See former
4 Many sections of the HBOR were subject to a sunset provision, effective on January 1, 2018. (Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 157.) Former Civil Code sections 2923.55 and 2923.6 are two of the sections subject to the sunset provision. (Former § 2923.55, subd. (i); former § 2923.6, subd. (k).) All references to former sections 2923.55 and 2924.6 are to the version of these statutes in effect between January 1, 2013 and December 31, 2017. 6
Civ. Code,5 § 2923.55, subds. (a)–(b).) "[The] HBOR provides for injunctive relief for
statutory violations that occur prior to foreclosure [citation], and monetary damages when
the borrower seeks relief for violations after the foreclosure sale has occurred [citation]."
(Valbuena, supra, 237 Cal.App.4th at p. 1272.) Section 2924.12, subdivision (c),
provides a safe harbor by encouraging the curing of violations: "A mortgage
servicer . . . shall not be liable for any violation that it has corrected and remedied prior to
the recordation of the trustee's deed upon sale, or that has been corrected and remedied by
third parties working on its behalf prior to the recordation of the trustee's deed upon sale."
Relevant to this appeal, former section 2923.55 provided, in relevant part: "(a) A
mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent may not record a
notice of default pursuant to Section 2924 until all of the following: [¶] . . . [¶] (2) Either
30 days after initial contact is made as required by paragraph (2) of subdivision (b) or 30
days after satisfying the due diligence requirements as described in subdivision (f).
[¶] . . . [¶] [(b) ](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
5 Further statutory references are to the Civil Code unless otherwise indicated. 7
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."
Also relevant to this appeal is former section 2923.6, which sought to encourage
loan modifications as an alternative to foreclosures. For example, former section 2923.6,
subdivision (c) provided:
"If 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, trustee, 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. [¶] (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."
Former section 2923.6 also required mortgage servicers, mortgagees, trustees,
beneficiaries, or agents to provide borrowers with 30 days to appeal the denial of a loan
modification, as well as additional time after the denial of an appeal. (See former
§ 2923.6, subds. (d), (e).) The statute further required that borrowers be provided
"written notice to the borrower identifying the reasons for [the modification] denial,
including" the amount of time a borrower had to request an appeal, "instructions
8
regarding how to appeal the denial," as well as information regarding the basis of the
denial and possible other foreclosure alternatives. (Id., subd. (f).)
B. Statutory repeal
As an initial matter, the defendants contend that the Schmidts' appeal is rendered
moot as a result of "the repeal of Civil Code §§ 2923.55 and (in substantial part) 2923.6."
The principle on which the defendants rely is known as the statutory repeal doctrine.
(See Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112,
1151.) "Under [the statutory repeal] doctrine, . . . ' "where a right or a right of action
depending solely on statute is altered or repealed by the Legislature, in the absence of
contrary intent, e.g., a savings clause, the new statute is applied even where the matter
was pending prior to the enactment of the new statute." ' [Citation.]" (Ibid.)
Although it is true that the Legislature repealed former section 2923.55, and some
of section 2923.6, and in doing so did not include a savings clause, the defendants fail to
acknowledge that the Legislature essentially re-enacted all but a small portion of section
2923.55 when it enacted many of the same provisions in section 2923.5, effective January
1, 2018.6 Similarly, some of the provisions of former section 2923.6 were re-enacted or
6 The only provisions from former section 2923.55 that were not re-enacted in section 2923.5 are those provisions in subdivision (b), which required mortgage servicers to send a letter, in writing, to the borrower that includes information regarding the Servicemembers Civil Relief Act (50 U.S.C. Appen. § 501 et seq.), as well as information alerting the borrower to the fact that the borrower may request copies of certain documents, including the borrower's payment history, the promissory note, the deed of trust or mortgage, as well any assignment that would be required to demonstrate the right to foreclose. (Compare former section 2923.55 with section 2923.5.) Although the Schmidts attempt to rely on purported failures in meeting the obligations of subdivision 9
were replaced by similar but slightly different provisions in section 2924.11, effective
January 1, 2018. In addition, section 2924.12, which authorizes a cause of action for
HBOR violations and sets forth the remedies available for such violations, was amended
in minor ways, but was not repealed. (Compare former § 2924.12 (eff. Jan. 1, 2015) with
current § 2924.12 (eff. Jan. 1, 2018).)
We therefore reject defendants' contention that the Schimdts' appeal is moot in its
entirety, pursuant to the statutory repeal doctrine. However, we also conclude that we
need not delve into the intricacies of the defendants' statutory repeal argument because
the judgment must be affirmed on other grounds.
C. Evidentiary issues
Another preliminary matter involves the Schmidts' challenge to the trial court's
overruling of their objections to a significant portion of the evidence offered by the
defendants in support of the motion for summary judgment. Because it is possible that
(b) of former section 2923.55 in asserting that summary judgment should not have been granted, the Schmidts cannot rely on this theory because the allegations of the complaint do not include any claim that the defendants failed to meet the written notice requirements of former section 2923.55, subdivision (b), nor do they include factual allegations that could support such a claim. (see Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1250 (Conroy) [the pleadings set the boundaries of the issues to be resolved].) Courts must decline to consider a theory raised by a plaintiff in opposition to summary judgment if the argument is not supported by the pleadings: "The materiality of a disputed fact is measured by the pleadings." (Ibid.) A moving defendant "need address only the issues raised by the complaint; the plaintiff cannot bring up new, unpleaded issues in his or her opposing papers." (Government Employees Ins. Co. v. Superior Court (2000) 79 Cal.App.4th 95, 98, fn. 4.) Given that there is no indication in the operative complaint that the Schmidts were relying on a purported violation of former section 2923.55, subdivision (b), the Schmidts cannot now attempt to assert that a violation of this provision establishes that the trial court erred in granting summary judgment. 10
reversal of an evidentiary ruling could affect the outcome of a motion for summary
judgment, we first consider the evidentiary issue that the Schmidts raise.
The Schmidts argue that they objected to "much of th[e] declaration" of Rebecca
Adelman, an SPS employee. They assert that the trial court "refused to rule on most of
these objections," and further assert that the evidence provided by Adelman's declaration
was "not admissible to prove Respondents' arguments."
"In determining whether a triable issue was raised or dispelled, we must disregard
any evidence to which a sound objection was made in the trial court, but must consider
any evidence to which no objection, or an unsound objection, was made. [Citations.]"
(McCaskey v. California State Automobile Assn. (2010) 189 Cal.App.4th 947, 957.)
" ' "Pursuant to the weight of authority, appellate courts review a trial court's
rulings on evidentiary objections in summary judgment proceedings for abuse of
discretion. [Citations.]" [Citation.] The party challenging a trial court's evidentiary
ruling has the "burden to establish such an abuse, which we will find only if the trial
court's order exceeds the bounds of reason. [Citation.]" ' " (Butte Fire Cases (2018) 24
Cal.App.5th 1150, 1169; but see Reid v. Google, Inc. (2010) 50 Cal.4th 512, 535 ["[W]e
need not decide generally whether a trial court's rulings on evidentiary objections based
on papers alone in summary judgment proceedings are reviewed for abuse of discretion
or reviewed de novo"].) We will follow the weight of authority and apply the abuse of
discretion standard. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs
(The Rutter Group 2017) ¶ 8.168, p. 8-148.)
11
Contrary to the Schmidts' contention on appeal, the trial court did not decline to
rule on their objections to the Adelman declaration. Rather, the trial court overruled all
of their objections on the ground that the Schmidts' objections failed to comply with
California Rules of Court, rule 3.1354(b)(3), which requires that a litigant "[q]uote or set
forth the objectionable statement or material" objected to. The Schmidts do not even
attempt to address the basis for the court's ruling with respect to their objections to the
Adelman declaration, and our review of the record supports the trial court's conclusion
that the Schmidts' objections fail to meet the requirements of the California Rules of
Court for the format of evidentiary objections. The trial court acted well within its
discretion in overruling the objections for failing to meet these standards. We therefore
reject the Schmidts' contention that the trial court erred in admitting and considering the
Adelman declaration.
D. Defendants are entitled to summary judgment
1. Summary judgment legal standards
"[T]he party moving for summary judgment bears the burden of persuasion that
there is no triable issue of material fact and that [it] is entitled to judgment as a matter of
WL 1267884 at [4] ["The purpose of the contact requirement is fully satisfied if the
contact occurs regardless of who initiated the contact. If the borrower initiates a call in
which the parties discuss the borrower's financial condition and explore options for the
borrower to avoid foreclosure, we can see no good reason to construe section 2923.5,
subdivision (a)(2) as requiring the mortgagee, beneficiary or authorized agent to initiate
another call for the same purpose"].)
We agree with these federal courts, and with SPS, who argues that we would be
elevating form over substance if we were to conclude that only those contacts between a
lender or its agent and a borrower that are initiated by the lender may satisfy the
requirements of former section 2923.55, subdivision (b)(2). The content of the
discussions had between SPS and the Schmidts satisfy the requirements set forth in
former section 2923.55, subdivision (b)(2), regardless of which party initiated the
telephone calls during which the discussions were had.
In addition, even if we were to accept the Schmidt's suggestion that we should
interpret the word "contact" in former section 2923.55, subdivision (b)(2) to require that
the lender initiate the contact, the evidence in this case suggests that SLS did initiate a
19
number of telephone calls with the Schmidts and discussed with them the matters
required by former section 2923.55, subdivision (b)(2). For example, on dates in March,
April and May 2014, SPS initiated contact with the Schmidts and discussed the Schmidts'
financial situation, loan modification application, and payment options, and informed the
Schmidts of their right to request a loss mitigation meeting within 14 days of each of
these telephone calls. During one of these calls, in May 2014, SPS also provided the
Schmidts with the HUD counseling referral telephone number. In August, September,
and October 2014, after the Schmidts had been advised that their loan modification had
been denied, SPS contacted them on multiple dates and discussed other potential options
to avoid foreclosure, including a short sale or a payment plan. These calls were all
initiated by SPS.7
b. Alleged violations of section 2923.6
The Schmidts contend that the trial court erred in granting summary judgment
with respect to their claim that the defendants violated former section 2923.6. Former
7 Further, even if none of the telephone calls between SPS and the Schmidts had been initiated by SPS, and even if the statute did require that the lender initiate the contact, we are not convinced that the Schmidts would be entitled to injunctive relief on the ground that SPS had not initiated contact with them to discuss the matters required by former section 2923.55, subdivision (b)(2). Again, violations of the statute's provisions must be "material" in order to support a cause of action for an injunction. We conclude that if the purpose of the statute is met—if the borrower has had an opportunity to have at least two substantive discussions with the lender regarding the borrower's financial situation and possible options for avoiding foreclosure—then the fact that one or both of these discussions may have arisen as a result of the borrower initiating the telephone call with the lender or its agent cannot be considered to constitute a "material" violation of the statute. 20
section 2923.6 implemented the Legislature's intent to encourage loan modifications or
workout plans when such modifications or plans would be beneficial to all investors in a
loan pool. (See former § 2923.6, subd. (a).) The provision prohibited the recording of a
notice of default or notice of sale (or the conducting of a trustee's sale) during the
pendency of a first lien loan modification application, and set forth a number of
requirements that had to be met before a notice of default or notice of sale could be
recorded. (See former § 2923.6, subds. (c)–(f).)
On appeal, the Schmidts concede that "both [of their] applications for modification
were denied and written notice was sent," in compliance with section 2923.6. However,
they assert that material issues of fact remain with respect to whether the notices sent
complied with the requirements of section 2923.6. Specifically, the Schmidts assert that
the notices "failed to explain to the Schmidts how to file an appeal," and instead "only
indicate [that] they had a right to appeal and the time [in which] to do so."
The Schmidts' argue that material issues of fact remain with respect to whether the
written notices complied with the requirement of former section 2923.6 that the written
notice of denial include "instructions regarding how to appeal the denial" (former
§ 2923.6, subd. (f)(1)). This argument fails, however, because the Schmidts do not allege
in the operative complaint that this type of violation occurred. Rather, the Schmidts
allege in the SAC that "[a]s of the date of the notice of default and notice of sale of the
Subject Property as alleged herein, there had not yet been any written determination that
the Plaintiffs were not eligible for a first lien loan modification, nor had any appeal
period had yet expire [sic], Plaintiffs did not refuse to accept an offered first lien loan
21
modification within 14 days of the offer, Plaintiffs did not accept a written first lien loan
modification, on which they had defaulted or breached, plaintiffs were not been given
[sic] at least 30 days from the date of a written denial of the modification to appeal the
denial and to provide evidence that the determination was in error and the sale was
noticed less than 31 days after written notice of denial, particularly in that no notice of
denial of the modification was ever given."8 (Italics added.) There is no allegation that
the defendants failed to comply with former section 2923.6, subdivision (f)(1)'s
requirements by failing to provide "instructions regarding how to appeal the denial" of
the loan modification. Rather, the allegations related to a violation of former section
2923.6 involve assertions that the Schmidts' loan modification application remained
pending and had not yet been denied at the time the notice of default and notice of sale
were recorded.
Again, we may not consider a new theory raised by a plaintiff in opposition to
summary judgment, or on appeal from the granting of summary judgment, where that
theory is not supported by the pleadings. (See Conroy, supra, 45 Cal.4th at p. 1250 [the
pleadings set the boundaries of the issues to be resolved].) Given that the Schmidts did
not include an allegation in the SAC that the defendants failed to provide the Schmidts
with sufficient instructions regarding how to appeal the denial of their loan modification
application, the Schmidts may not now rely on this theory to escape summary judgment.
8 Again, the Schmidts now concede that written denial of their loan modification applications was, in fact, provided. 22
3. No remaining material questions of fact have been demonstrated with respect to the Business and Professions Code section 17200 violations asserted in the SAC
The Schmidts acknowledge that their claims for violations of section 17200 are
predicated on the alleged violations of the HBOR that they assert in the SAC. Because
we have concluded that the defendants are entitled to summary adjudication of the
Schmidts' claims for violations of HBOR, it follows that the defendants are also entitled
to summary adjudication of the section 17200 claims that are premised on the HBOR
violations.
IV.
DISPOSITION
The judgment of the trial court is affirmed. The defendants are entitled to their
costs on appeal.
AARON, J.
WE CONCUR:
McCONNELL, P. J.
O'ROURKE, J.
23
AI Brief
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Holding. The court affirmed summary judgment for the defendants, holding that the mortgage servicer satisfied the contact and notice requirements of former Civil Code section 2923.55 by engaging in extensive discussions with the borrowers regarding their financial situation and foreclosure alternatives. The court further held that the borrowers failed to raise a triable issue of fact because their declarations of non-recollection did not contradict the defendants' evidence of compliance.
Issues
Whether the trial court erred in granting summary judgment on claims alleging violations of the Homeowners' Bill of Rights (HBOR).
Whether the defendants satisfied the contact and notice requirements of former Civil Code section 2923.55.
Whether the trial court abused its discretion in overruling the plaintiffs' evidentiary objections for failure to comply with California Rules of Court, rule 3.1354(b)(3).
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“The Adelman declaration provides more than enough evidence to demonstrate that the defendants satisfied the requirements of former section 2923.55 prior to the recording of the notice of default.”