Resendez v. Bayview Loan Servicing CA4/2 (2022) · DecisionDepot
Resendez v. Bayview Loan Servicing CA4/2
California Court of Appeal Mar 24, 2022 No. E076395Unpublished
Filed 3/24/22 Resendez v. Bayview Loan Servicing CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
GREGORY F. RESENDEZ,
Plaintiff and Appellant, E076395
v. (Super.Ct.No. RIC1902770)
BAYVIEW LOAN SERVICING LLC et OPINION al.,
Defendants and Respondents.
APPEAL from the Superior Court of Riverside County. Chad W. Firetag, Judge.
Affirmed.
Gregory F. Resendez, in Pro. Per., for Plaintiff and Appellant.
Wolfe & Wyman, Stuart B. Wolfe and Cathy L. Granger for Defendants and
Respondents.
Plaintiff and appellant Gregory F. Resendez appeals the grant of the demurrer filed
by respondents and defendants Bayview Loan Servicing, LLC (Bayview) and Bank of
New York Mellon, as Trustee for Certificate holders CWALT, Inc., Alternative Loan
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Trust 2006-6CB, Mortgage Pass-Through Certificates, Series 2006-6CB (BONY;
collectively Lenders), and dismissal of his second amended complaint (SAC) without
leave to amend.
Resendez filed his SAC against Lenders in connection with the default on a loan
for his property located in Romoland. He alleged in the SAC two causes of action
against Lenders for violations of the Homeowner Bill of Rights (Civ. Code,1 §§ 2920 et.
seq.) (HBOR), one cause of action for negligence, and one cause of action for a violation
of Business and Professions Code section 17200, unfair competition law (UCL). The
trial court granted Lenders’ demurrer to the SAC and dismissed without leave to amend.
Resendez contends on appeal that the trial court erred by dismissing the SAC as to all
causes of action.
FACTUAL AND PROCEDURAL HISTORY
A. FACTS2
According to the operative SAC, Resendez filed the SAC against Lenders, Select
Portfolio Servicing Inc. (Select Services), and the Wolfe Firm. Resendez owned the
property located at 29093 Overboard Drive in Romoland, which was in Riverside
County. A grant deed was recorded on February 10, 2006. Resendez obtained a
mortgage loan and BONY was the beneficiary. Select Services serviced the mortgage
1 All further statutory references are to the Civil Code unless otherwise indicated.
2 In this appeal from a judgment dismissing a complaint after the granting of a demurrer without leave to amend, we “assume the truth of the complaint’s properly pleaded or implied factual allegations.” (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
2
from approximately 2010 until November 2016 for BONY, and Bayview had serviced
the loan since 2016 on behalf of BONY. The Wolfe Firm had been appointed substitute
trustee on December 10, 2014, and was the current foreclosing trustee on the Resendez’s
home.
Resendez reached out to Bayview on December 17, 2017, in order to obtain a loan
modification. John Koscinski was assigned as Resendez’s single point of contact
(SPOC). Resendez submitted a completed loan modification packet on January 11, 2018,
and was advised the evaluation of the packet would be completed in 30 days. On January
30, 2018, he received a letter from Bayview introducing another SPOC.
On March 11, 2018, Bayview requested that Resendez send additional
information. Resendez faxed the documents and received confirmation on March 14,
2018, that his loan modification packet was complete. He received a phone call from
Dawn Killen, another SPOC, on March 27, 2018, ensuring him that his file was complete
and that it would be at least 10 more days for a decision. On April 3, 2018, a notice of
trustee’s sale was taped on his front door by the Wolfe Firm. The notice of trustee’s sale
was recorded on April 12, 2018. The sale was scheduled for May 9, 2018.
Killen contacted Resendez on April 17, 2018. She claimed not to know about the
notice of trustee’s sale. She advised Resendez that his loan modification was still being
considered by Bayview. On April 24, 2018, he received another call from Killen
advising him that his loan modification packet would be reviewed in the next 48 hours.
Bayview had misplaced documents but had found them. The foreclosure was on hold
until the loan modification could be considered.
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On April 24, 2018, he received notice from Bayview that his loan modification
request had been denied and he had 30 days to appeal. On May 23, 2018, Resendez filed
an appeal from the decision to deny his loan modification. On June 22, 2018, Bayview
confirmed the denial of the loan modification. On July 11, 2018, he was advised that his
SPOC at Bayview was Sandra Correa.
The Wolfe Firm sent Resendez notice of the trustees sale, which had been
rescheduled to June 20, 2018. It was again postponed, until August 15, 2018. On August
14, 2018, Resendez filed for Chapter 13 bankruptcy protection. The trustee’s sale was
postponed again until September 26, 2018, and then until December 5, 2018. On
December 4, 2018, Resendez filed for Chapter 7 bankruptcy protection. The Wolfe Firm
postponed the sale several times to May 8, 2019. On May 6, 2019, Resendez filed his
original complaint to prevent Lenders from conducting an illegal, wrongful foreclosure
on his home. Resendez insisted that Lenders, the Wolfe Firm and Select Service were
attempting to conduct an illegal wrongful foreclosure on his property.
B. ORIGINAL COMPLAINT AND FIRST AMENDED COMPLAINT
Resendez filed his original complaint on May 6, 2019. He alleged five causes of
action, including violations of the HBOR. Specifically, sections 2923.5, 2924.11, and
2923.7. He also alleged a negligence cause of action, and a violation of the UCL.
Resendez sought injunctive relief under the HBOR to stop the recording of a trustee’s
deed upon sale. He attached exhibits. A demurrer to the original complaint was filed by
Select Services as to two of the causes of action, and Resendez filed opposition. Lenders
also filed a demurrer to the original complaint. The demurrer to the complaint filed by
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Select Services was granted on August 26, 2019, and Lenders’ demurrer was granted on
September 20, 2019. Resendez was given 30 days leave to amend.
Resendez filed a first amended complaint (FAC) against Lenders, Select Services
and the Wolfe Firm on October 21, 2019. He raised the same five causes of action as in
the original complaint. The first cause of action was a claim pursuant to section 2923.5
regarding notice to him of the default. Lenders filed a demurrer, and Resendez filed
several oppositions.3 Lenders’ demurrer to the first amended complaint was granted on
January 16, 2020, and Resendez was given 20 days to amend. However, as to the first
cause of action, it was dismissed without leave to amend.
C. SECOND AMENDED COMPLAINT
On February 5, 2020, Resendez filed his SAC. He alleged five causes of action.
He acknowledged that the first cause of action had already been dismissed by the trial
court. The second cause of action against Lenders, Select Services and the Wolfe Firm
alleged a violation of section 2924.11, subdivision (a), an allegation of dual tracking.
Resendez alleged that a notice of sale or trustee’s sale could not be recorded while a
foreclosure prevention alternative was pending. Lenders deemed Resendez’s loan
modification packet complete on January 11, 2018, and Resendez sent additional
documentation on March 11, 2018. Bayview sent verification that the packet was
complete on March 14. There was further confirmation that he had submitted a
completed packet on March 27, 2018. Nonetheless, on April 3, 2018, the notice of
3 Lenders’ demurrer has not been made a part of the record on appeal.
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trustee’s sale was posted on his door and it was recorded on April 12, 2018. Resendez
alleged that this was impermissible “dual tracking” as Lenders could not record the notice
of trustee’s sale while the loan modification was pending. Resendez rejected that section
2924.12, subdivision (c), a safe harbor provision in the HBOR for lenders who remedy
their violations prior to the foreclosure sale, applied to the case. The fact that the
foreclosure sale did not occur did not absolve Lenders. Resendez was entitled to
injunctive relief for the violation of section 2924.11.
The third cause of action alleged a violation of section 2923.7, subdivision (b)(3),
which required Bayview to provide a SPOC who provided him with information on the
status of his loan. Killen had misadvised him as to the status of the foreclosure sale and
his loan modification status. The fact that the loan modification was reviewed and denied
before the foreclosure sale did not absolve Lenders under section 2924.12, subdivision
(c).
The fourth cause of action was for negligence. Resendez acknowledged that there
was a split of authority on whether a financial institution has a duty of care to a borrower.
Resendez insisted that Lenders owed a duty of care in the processing of his loan
modification application and breached its duty of care. Killen, his SPOC in April 2018,
contacted him and advised him that Bayview had misplaced some of his documents and
initially denied the loan modification based on the missing documents. However, the
documents were found and the loan modification was reevaluated. Resendez insisted that
Lenders were negligent by mishandling the loan modification by misplacing documents
and dual tracking. As a result, he incurred additional expenses, fell further behind on his
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loan and missed out on several opportunities to look for relief elsewhere. Further, he
suffered irreparable damage to this credit.
The fifth cause of action was for a violation of the UCL. Resendez noted that
under the UCL, the business practice must be unlawful, unfair and fraudulent. Lenders
actions were careless, negligent and reckless conduct. Resendez alleged, “Plaintiff
suffered all of these injures in addition to Dual Tracking which further led to additional
fees spent as well as increases to his arrears which make further trying to obtain a loan
modification that much more difficult.”
Resendez demanded $150,000 in statutory damages under the HBOR, general and
special damages, civil penalties including an injunction, punitive damages and costs.
Resendez attached several exhibits. This included the original application for a
loan modification sent on December 31, 2017, to John Koscinski. Exhibit C was the
letter from Bayview on January 5, 2018, acknowledging receipt of the loan modification
request and that he would receive notice of a decision within 30 days. Exhibit D was the
letter sent on January 8, 2018, advising Resendez he needed to submit additional
documentation, which was sent by a different SPOC, Bibi Ghanie. On January 10, 2018,
Resendez sent the documents. Exhibit F was the confirmation sent on January 11, 2018,
that the loan modification request was complete and would be reviewed in 30 days.
Exhibit G was Killen’s letter to Resendez identifying herself as the SPOC as of January
30, 2018.
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Exhibit H was the notice sent on February 9, 2018, that his application was
incomplete, and advising him to submit further documentation. Resendez faxed the
documents on March 11, 2018. Exhibit K was the notification on March 21, 2018, that
he did not qualify for loan modification because his request was incomplete as documents
were missing. Exhibit L was a document purporting to memorialize that Killen contacted
him on March 27, 2018, advising him to disregard the letter on March 21, indicating it
was sent in error. She advised Resendez that the underwriting department was busy but
she hoped to get back to him in 10 days.
Exhibit M was the notice of trustee’s sale that was taped on Resendez’s front door
on April 3, 2018. It was recorded on April 12, 2018, and the sale was set for May 9,
2018. Exhibit Q was the denial of his loan modification that was sent to him on April 24,
2018, explaining that he would not be eligible for a loan modification based on the loan
amount and his income.
Resendez also included several notices sent to him by The Wolfe Firm postponing
the trustee’s sale. Exhibits W and Z show that Resendez filed Chapter 13 bankruptcy on
August 14, 2018, and filed Chapter 7 bankruptcy on December 4, 2018.
Lenders apparently filed a demurrer to the SAC on March 10, 2020, but that
document has not been included in the record. Resendez also filed a reply to the
demurrer on September 17, 2020, but that has also not been included in the record.
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D. TRIAL COURT RULING
The trial court issued a tentative ruling on September 30, 2020. The trial court
found that regardless of whether there were material issues of fact regarding Lenders’
alleged violations of sections 2923.64 and 2923.7, Lenders fell within the safe harbor
provision of section 2924.12, subdivision (c). The safe harbor provision provides that a
mortgage servicer shall not be liable for any violation of the HBOR if the violation has
been corrected and remedied prior to the recordation of the trustee’s deed on sale. The
trial court found, “[Resendez] alleges in the SAC that [Lenders] ultimately deemed the
loan modification application complete, subsequently reviewed and denied the
application and upheld the decision following [Resendez]’s appeal—all of which
occurred prior to the recordation of a trustee’s deed of sale (in fact, no sale has taken
place) . . . As such—and based solely upon the facts alleged in the SAC—Civ. Code
§ 2924.12(c) shields [Lenders] from any liability for their alleged violations of Civ. Code
§§ 2923.6 and 2923.7.”
The trial court further ruled as to the fourth and fifth causes of action. “As to
[Resendez]’s fourth cause of action for negligence, as the court noted in its prior ruling, a
lender generally does not owe a duty of care to a borrower where there are no allegations
that the lender did anything wrongful that prevented the borrower from making the
original monthly payments under a loan. [Citations.] Here, the SAC contains no
4 Despite Resendez alleging in the second cause of action that the violation was of section 2924.11, the trial court analyzed the claim under section 2923.6. This appears to be because section 2924.11 only applies to approved loan modification applications.
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allegations to demonstrate [Lenders] acted outside the scope of a traditional lender and/or
servicer. Instead, [Resendez] simply added argument to the SAC—the same argument
that had been previously rejected by this Court. (See SAC, ¶¶ 57-67.) Finally,
[Resendez]’s UCL cause of action is entirely derivative of his other causes of action . . .
and thus fails as a matter of law.”
Resendez did not request oral argument. On October 22, 2020, the trial court
adopted the tentative ruling, and dismissed the SAC against Lenders without leave to
amend. Notice of entry of judgment was filed on November 11, 2020. Resendez filed
his appeal on January 5, 2021.
DISCUSSION
Resendez essentially claims that the trial court erred by dismissing the SAC as to
all “five” causes of action.
A. STANDARD OF REVIEW
A demurrer should be sustained when “[t]he pleading does not state facts
sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).)
“We independently review the superior court’s ruling on a demurrer and determine
de novo whether the complaint alleges facts sufficient to state a cause of action or
discloses a complete defense. [Citations.] We assume the truth of the properly pleaded
factual allegations, facts that reasonably can be inferred from those expressly pleaded and
matters of which judicial notice has been taken. [Citations.] We liberally construe the
pleading with a view to substantial justice between the parties.” (Regents of University of
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California v. Superior Court (2013) 220 Cal.App.4th 549, 558; see also Rufini v.
CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 303-304.)
We initially note the trial court considered that the SAC only contained four
causes of action. Resendez attempts to argue on appeal that the first cause of action in
the FAC was wrongfully dismissed by the trial court. This was a claim of a violation of
section 2923.5—notice of default contact requirements. However, in the SAC, Resendez
stated, “[O]n January 16, 2020, the Court sustained Defendant Bayview’s Demurrer to
the First Cause of Action to the FAC also without leave to amend.” Resendez made no
other argument. The first cause of action was dismissed and is not properly reviewed on
appeal from the dismissal of the SAC.
B. HBOR PROVISIONS
Resendez contends the trial court erred by dismissing the first and second causes
of action finding that the safe harbor provision of section 2924.12, subdivision (c),
applied.
The HBOR was enacted “to ensure that, as part of the nonjudicial foreclosure
process, borrowers are considered for, and have a meaningful opportunity to obtain,
available loss mitigation options, if any, offered by or through the borrower’s mortgage
servicer, such as loan modifications or other alternatives to foreclosure.” (§ 2923.4.)
Among other things, HBOR prohibits “dual tracking,” which occurs when a bank
forecloses on a loan while negotiating with the borrower to avoid foreclosure.
(§ 2923.6.) Section 2923.6, subdivision (c) provides, in part, “If a borrower submits a
complete application for a first lien loan modification offered by, or through, the
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borrower’s mortgage servicer at least five business days before a scheduled foreclosure
sale, 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.”
“Under the practice of dual tracking, financial institutions continue to pursue
foreclosure while evaluating a borrower’s loan modification application. ‘The result is
that the borrower does not know where he or she stands, and by the time foreclosure
becomes the lender’s clear choice, it is too late for the borrower to find options to avoid
it.’ [Citation.] Section 2923.6 bars this practice and regulates servicers’ consideration of
loan-modification applications.” (Billesbach v. Specialized Loan Servicing LLC (2021)
63 Cal.App.5th 830, 848.)
Here, the Wolfe Firm notified Resendez, while the loan modification process was
ongoing, of the scheduled notice of trustee’s sale. That sale never occurred, but it does
appear that this notice was in violation of section 2923.6, as Lenders were actively
reviewing Resendez’s request for a loan modification.
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As for the third cause of action, section 2923.7, subdivision (a) provides that
“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.” “For purposes of this
section, ‘single point of contact’ means an individual or team of personnel each of whom
has the ability and authority to perform the responsibilities described in subdivisions (b)
to (d), inclusive. The mortgage servicer shall ensure that each member of the team is
knowledgeable about the borrower's situation and current status in the alternatives to
foreclosure process.” (§ 2923.7, subd. (e).) The SPOC shall keep the borrower advised,
among other things, as to the status of his or her loan, available foreclosure prevention
alternatives, inform the borrower of the current status of any loan modification, and be
able to stop the foreclosure proceedings when necessary. (§ 2923.7, subdivision (b).)
The SPOC requirement helps prevent borrowers from being “given the run around,
being told one thing by one bank employee while something entirely different is being
pursued by another.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872,
905.) Only a material violation of the SPOC requirement is actionable. (§ 2924.12, subd.
(a)(1).)
Here, Resendez was assigned several SPOCs at Bayview. Bayview clearly
communicated who the SPOC was, and they were responsive to Resendez’s inquiries.
However, Killen advised Resendez she had no idea that a notice of trustees sale had been
recorded, information she should have known. For purposes of this argument, we will
assume that Resendez showed that there was a violation of section 2923.7.
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“Section 2924.12, subdivision (c) encourages mortgage servicers to cure any
material violation by providing a safe harbor: ‘A mortgage servicer . . . shall not be liable
for any violation that it has corrected and remedied prior to the recordation of the
[foreclosure sale] . . . .’ [Citation.] Thus, in the context of damages liability, the material
effect of a violation must be measured after the foreclosure sale is recorded. By the
statute’s terms, a temporary disruption of the normal foreclosure process that is corrected
and causes no lasting harm to the borrower’s rights will give rise to no liability.”
(Billesbach v. Specialized Loan Servicing LLC, supra, 63 Cal.App.5th at p. 845.)
Here, prior to the foreclosure sale (if one even occurred), Lenders found that
Resendez had submitted a complete loan modification application, it reviewed the
application, and denied it on its merits. Lenders cured any violations prior to pursuing
the foreclosure sale.
Resendez insists the provision does not apply to Lenders because they did not ever
“correct” or “remedy” the violations of section 2923.6 and 2923.7 because it was his
filing of the instant lawsuit that stopped the foreclosure sale. However, the correction
found by the trial court was that Lenders clearly reviewed Resendez’s loan modification
once it deemed it complete and denied it based on his income, not because of missing
documents. Resendez does not claim that the loan modification was improperly denied.
Further, Lenders remedied the notice of foreclosure, the dual tracking, by putting the
foreclosure on hold until it could complete review of Resendez’s loan modification and
appeal. In fact, as of the filing of the original complaint, no foreclosure sale had
occurred.
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Resendez refers to Valbuena v. Ocwen Loan Servicing, LLC (2015) 237
Cal.App.4th 1267, which he claims is “similar” to this case. However, in Valbuena, the
lender actually foreclosed on the property while the loan modification process was
ongoing. (Id. at pp. 1270-1271) It is unlike this case wherein Lenders stopped the
foreclosure process while the loan modification process was ongoing, and there was no
sale. There is no doubt that section 2924.12, subdivision (c), applies in this case and
warranted dismissal of the second and third causes of action.
C. NEGLIGENCE
Resendez contends the trial court erred by finding that Lenders did not owe a
common law duty of care in processing his loan modification application. He insists that
Lenders breached their duty of care and caused him injury giving rise to a negligence
claim. After oral argument in this case, the California Supreme Court issued its opinion
in Sheen v. Wells Fargo Bank, N.A. (2022) ___ Cal.5th ___ [2022 WL 664722] (Sheen)
addressing the split of authority in the appellate courts as to whether a lender owes a duty
to a borrower to process, review, and respond carefully and completely to a borrower’s
loan modification application. The California Supreme Court has concluded that a lender
does not owe a duty to a borrower in processing a borrower’s loan modification
application.
“ ‘Duty is not universal; not every defendant owes every plaintiff a duty of care.
A duty exists only if “ ‘the plaintiff’s interests are entitled to legal protection against the
defendant’s conduct.’ ” [Citation.] Whether a duty exists is a question of law to be
resolved by the court.’ [Citations.] ‘A duty of care may arise through statute’ or by
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operation of the common law.” (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at
[5]].)
Prior to Sheen, several courts had found a lender has a duty of care in situations
where the lender or servicer voluntarily undertakes to renegotiate a loan modification and
breached the duty to exercise reasonable care in processing the loan modification
The California Supreme Court first noted that the plaintiff only alleged a common
law duty of negligence, and did not rely on any statute or regulation that may impose a
duty to avoid purely economic losses. Similarly here, Resendez relies only on common
law to support his negligence claim.5 The court concluded that there was no common
law duty “in light of the economic loss rule” which provides that “there is no recovery in
tort for negligently inflicted ‘purely economic losses’ meaning financial harm
unaccompanied by physical or property damage.” It found that the plaintiff had provided
no persuasive argument to ignore the economic loss rule and found no common law duty
to support a negligence claim. (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at [6]-
15].)
The California Supreme Court also rejected that the factors in Biakanja applied.
(Sheen, supra, ___ Cal.5th ____ [2022 WL 664722 at [15], [19]].) The court found,
5The court mentions the HBOR but does not specifically state that it created a duty on behalf of Lenders. (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at [5]-6].)
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“Biakanja itself thus makes clear that its multifactor test finds application only when the
plaintiff is a ‘third person not in privity’ with the defendant. [Citation.] Under its terms,
Biakanja does not apply when the plaintiff and defendant are in contractual privity for
purposes of the suit at hand. . . . Biakanja does not displace the contractual economic
loss rule when that rule squarely applies.” (Ibid.)
Finally, the California Supreme Court rejected that any policy considerations or
the policy of preventing future loss gave rise to a negligence action. (Sheen, supra, ___
Cal.5th ____ [2022 WL 664722 at [19]-21].) The court also encouraged the Legislature
to consider the issue because it was in a better position to determine “what additional
protection homeowners in California should be afforded.” (Id. at [22].) It also found,
“To the extent they are inconsistent with our opinion, we disapprove of Weimer v.
Nationstar Mortgage, LLC, supra, 47 Cal.App.5th 341 []; Rossetta v. CitiMortgage, Inc. ,