MotionMotionCal. Super. - 6th Dist.December 9, 2015O o 0 J A N h h B R A W N N N N N N N N N N m m e e e s m m e e pe d e d e d e e 0 N N A N n n b w = O O N Y R W = , o o WRIGHT, FINLAY & ZAK, LLP Gwen H. Ribar, Esq., SBN 188024 Ruby J. Chavez, Esq., SBN 267405 4665 MacArthur Court, Suite 200 Newport Beach, CA 92660 Tel: (949) 477-5050; Fax: (949) 608-9142 Attorney for Defendants, SELECT PORTFOLIO SERVICING, INC. and THE BANK OFNEW YORK MELLON TRUST CO., N.A. f/k/a THE BANK OF NEW YORK TRUST CO., N.A., ASTRUSTEE FOR MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATES CHASE FLEX TRUST SERIES 2007-1 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CRUZ GENE MICHALAK, Case No.: 15CV00281 Plaintiff, [Assignedfor allpurposes to Hon. VS. Burdick, Paul- Dept.5 | SELECT PORTFOLIO SERVICING, DEFENDANTS’ NOTICE OF INC., a business entity form unknown, MOTION AND MOTION FOR THE WOLF FIRM,a business entity IMPOSITION OF SANCTIONS Form unknown. THE BANK OF NEW UNDER CALIFORNIA CODE OF YORK MELLON TRUST CO., N.A. CIVIL PROCEDURE, SECTION f/k/a THE BANK OF NEW YORK 128.7; MEMORANDUM OF POINTS TRUST CO., N.A., AS TRUSTEE FOR AND AUTHORITIES IN SUPPORT MULTI-CLASS MORTGAGE PASS- THEREOF THROUGH CERTIFICATES CHASE FLEX TRUST SERIES 2007-1, a Hearing: business entity of form unknown, and Date: October 6, 2016 19 DOES 1-100, inclusive, Time: 8:30 am. Dept: 5 Defendants. Complaint Filed: November 2, 2015 [Filed concurrently with Defendants’ Requestfor Judicial Notice, Declaration ofRuby J. Chavez; Declaration of Rebecca Adelman] TO THE HONORABLE COURT, ALL PARTIES AND THEIR ATTORNEYS OFRECORD: 1NOTICE OF MOTION AND MOTION FOR SANCTIONS O O 0 1 O N n v b h W N N D N N N N N N N N m e m m e m e m p d p d e a pe d e t 0 I N B R A W N = O 0 N Y R W = o PLEASE TAKE NOTICE that on October 6, 2016, at 8:30 a.m. or as soon thereafter as the matter may be heard in Department “5” of the above-captioned Court located at 701 Ocean Street, Santa Cruz, California, Defendants, SELECT PORTFOLIO SERVICING, INC. (“SPS”) and THE BANK OF NEW YORK MELLON TRUST CO., N.A. f/k/a THE BANK OF NEW YORK TRUST CO., N.A., AS TRUSTEE FOR MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATES CHASE FLEX TRUST SERIES 2007-1 (“The Trust”) (collectively referred to as “Defendants™) under California Code of Civil Procedure, section 128.7, will and hereby move the Court for an order imposing sanctions against Plaintiff GENE MICHALAK (“Plaintiff”) in the amount of $10,263.00 for his filing and continued prosecution of the Complaint, which is frivolous, moot, and was primarily brought for an improper purpose. As required by California Code of Civil Procedure, section 128.7(c)(1) (“Section 128.77), this Motion and the supporting papers were served (via overnight delivery) on Plaintiff on August 16, 2016, in order to provide the twenty-one (21) day “safe harbor” period. Plaintiff, however, has failed and refuses to correct the Section 128.7 violation by dismissing the action; thus, prompting the filing of this Motion. This Motion is based upon this notice of motion and motion, the memorandum ofpoints and authorities below, Request for Judicial Notice in Support Thereof, the Declaration of Ruby J. Chavez filed concurrently herewith, the Declaration of Rebecca Adelman filed concurrently herewith, the pleadings on file herein, and such other matters as the Court may find acceptable and material. Respectfully submitted, "Dan FINLAY & ZAK, LLP Gwen H. Ribar, Esq. Ruby J. Chavez, Esq. Attorneys for Defendants, SELECT PORTFOLIO SERVICING, INC. and THE BANK OF NEW YORK MELLON TRUST CO., N.A. f/k/a THE BANK OF NEW YORK TRUST CO.,N.A., AS TRUSTEE FOR MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATES CHASE FLEX TRUST SERIES 2007-1 Dated: August 16,2016 By: 2 NOTICE OF MOTION AND MOTION FOR SANCTIONS O O « © ~ ~ O v h h B A W N N O N N N N N N N N e m e m me d e d ee d p d p d p e 0 ~ ~ Y R W = O W Y N N E W N E D However, Plaintiff continually failed to provide all documents that SPS requested.’ On March 20, 2014 and again on May 6, 2015, SPS sent letters to Plaintiff and his wife indicating that the applications were deemed closed because they were incomplete. Indeed, no complete loan application was pending on September 8, 2015 when the Notice of Trustee’s Sale wasrecorded.’ Asfrivolous as this lawsuit appears, based on these facts, this is not the first time Plaintiff has attempted to exploit the courts to stay a pending foreclosure. First, on November 6, 2013, Plaintiff and his wife filed a lawsuit in the Superior Court of Santa Cruz County, captioned Gene Michalak and Marilyn Michalak v. JPMorgan Chase Bank, N.A. et al, under case number CV178115.% On or about December 17, 2014, this matter was fully resolved and resulted in a dismissal with prejudice of all Defendants, including SPS and the Trust.” Then, on October 19, 2015, Plaintifffiled a Chapter 13 Bankruptcy Petition.® The bankruptcy was ultimately dismissed on or about January 25, 2016.° Plaintiff then improperly filed the instant lawsuit against SPS and the Trust to again delay the foreclosure and drive up litigation costs for Defendants. However, on January 30, 2016, Plaintiff fully reinstated under the Loan and the Notice of Default and Notice of Trustee’s Sale were subsequently rescinded.” Plaintiff then defaulted on the Loan again which is now due for payments beginning on February 1, 2016 and thereafter.!! No foreclosure has commencedatthis time. III.LEGAL STANDARD According to California Code ofCivil Procedure, section 128.7(b) (“Section 128.7”), an attorney or unrepresented party who submits a pleading or motion to the court makes a “certification” - to the best of his/her knowledge, information, and belief, formed after a reasonable inquiry under the circumstances - that: 1. The pleading is not primarily presented for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation, * See Declaration of Rebecca Adelman (“Declaration ofAdelman™), § 7, 8. 3 See Declaration of Adelman, 1 9; Notice of Trustee’s Sale, Exhibit “4” to the RIN. § See Complaint in Case No. CV178115, Exhibit “5” to the RIN. 7 See Dismissal in Case No. CV178116, Exhibit “6” to the RIN. 8 See Chapter 13 Bankruptcy Docket, Exhibit “7” to the RIN. ® See Chapter 13 Bankruptcy Docket, Exhibit “7” to the RIN. 1 See Declaration of Adelman, 1 10, 11; See Notice of Rescission recorded on August 4, 2016, Exhibit “8” to the RIN. 1 See Declaration of Adelman, § 12. 4 NOTICE OF MOTION AND MOTION FOR SANCTIONS S O O O N N W n B R N = N O N N D N N N N N N e m e a e a e a e e e e e m 0 0 ~ ~ a N W n P h - = O Y N N R W N D 2. The claims, defenses, and other legal contentions therein are warranted byexisting law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; AND 3. The allegations and other factual contentions have evidentiary support or,if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation and discovery. Code Civ. Proc. § 128.7(b)(1) - (3). A violation of any of these “certifications” may give rise to monetary and non-monetary sanctions against the offending attorneys, law firms, and/or parties. Code Civ. Proc. § 128.7(c), (d); see Eichenbaum v. Alon (2003) 106 Cal.App.4th 967, 976. In determining whether any of the “certifications” have been violated, an objective test is applied. Bockrath v. Aldrich Chem. Co., Inc. (1999) 21 Cal.4th 71, 82. In Bockrath v. Aldrich Chem. Co., Inc. (1999) 21 Cal.4th 71, 82, the California Supreme Court held: < . it is sharp practice to implead defendants in a products liability suit alleging long-term exposure to multiple toxins unless, after a reasonable inquiry, the plaintiff actually believes that evidence has been or is likely to be found raising a reasonable medical probability that each defendant's product was a substantial factor in causing the harm ... The actual-belief standard requires more than a hunch, a speculative belief, or wishful thinking: it requires a well-founded belief... If the plaintiff does not believe the requisite evidence exists, but does actually believe that it is likely to be discovered later, ‘after a reasonable opportunity for further investigation or discovery’ (Code Civ. Proc., § 128.7, subd. (b)(3)), the complaint must so state [Citation omitted].” (Emphasis added.) In addition, this “certification” does not stop at the filing of the pleadings. Instead, the attorney or unrepresented party “certifies” the formerly filed pleading any time he/she later advocates the positions set forth therein. Code Civ. Proc. § 128.7(b); see Childs v. State Farm Mut. Auto. Ins. Co. (5th Cir. 1994) 29 F.3d 1018, 1026 (interpreting Federal Rules of Civil Procedure, Rule 11); Cromwell v. Cummings (1998) 65 Cal.App.4th Supp. 10, 14 (holding that federal case law construing Rule 11 is “persuasive authority with regard to the meaning of section 128.7”); Rutter Group, Cal. Prac. Guide Civ. Pro. Before Trial, Ch. 9, § § 9:1160 - 1161 (2010 ed., West). This potential for sanctions creates an ongoing affirmative duty of investigation as to both law and fact, which deters frivolous actions and meritless litigation strategies. See, Business Guides, Inc. v. Chromatic Communication Enterprises, Inc. (1991) 498 U.S. 533, 550, 111 S.Ct. 922, 929 (interpreting Federal Rules ofProcedure, Rule 11). Based 5 NOTICE OF MOTION AND MOTION FOR SANCTIONS O O 0 0 N N r R W N N N N N N N N N N N m m e m e e e m e a e m e d e e e d 0 1 ] O Y E s W N = O N Y 0 N Y W N = © on the objective test discussed above, Plaintiff has violated Section 128.7 by filing and continuing to prosecute the allegations in the Complaint. IV. ARGUMENT A. Plaintiff’s First Cause of Action for Violations of Cal. Civil Code Section 2923.6 Violates Section 128.7. Plaintiff alleges that no written determination was made prior to the recordation ofthe Notice of Trustee’s Sale. However, this is patently false as SPS reviewed and denied Plaintiff's loan modification applications on multiple occasions prior to September 8, 2015, the date that the Notice of Trustee’s Sale was recorded. On March 20, 2014 and again on May 6, 2015, SPS sent borrowers loan modification denial letters because borrowers did not provide SPS with the documents that SPS requested. No complete loan application was pending on September 8, 2015 when the Notice of Trustee’s Sale was recorded.'® Thus, there could be no violation of Civil Code § 2923.6(c). Moreover, Civil Code § 2923.6(c) only applies “[i]f a borrower submits a complete application for a first lien loan modification...” Plaintiff cannot plead that he submitted a complete loan modification application prior to the recording of the Notice of Trustee’s Sale since he received multiple denial letters beforehand for the failure to submit a complete package.Also, “a mortgage servicer shall not be obligated to evaluate applications from borrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification...” Civil Code § 2923.6(g). Since Plaintiff has already been afforded a fair opportunity to be evaluated on March 20, 2014 and again on May 6, 201, SPS is no longer obligated to evaluate applications at this time. Nonetheless, this cause of action is moot since Defendants corrected any alleged violation of | dual tracking by rescinding the Notice of Default and Notice of Trustee’s Sale. Civil Code section § 2924.12 clearlystates: (a)(1) If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9,2924.10,2924.11, or 2924.17. 12 See Declaration of Adelman, § 7,8. 13 See Declaration of Adelman, § 9; Notice of Trustee’s Sale, Exhibit “4” to the RIN. 14 See Declaration of Adelman, § 7, 8. 6 NOTICE OF MOTION AND MOTION FOR SANCTIONS N O 0 ~~ ] O N W n B W N e N N N N N N N N N = = m 1 e m e i e e e m 0 0 N N O N L L l x W N = O 0 0 N Y W N R O (c) A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent 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 priorto the recordation of the trustee's deed upon sale.” [Emphasis added.] Here, the alleged violation was corrected and remedied as allowed for by Civil Code section 2924.12(c). On August 4, 2016, the Notice of Default and Notice of Trustee’s Sale were rescinded by way of a recorded Notice of Rescission.”” Thus, Defendants cannot be liable for the alleged violation of Civil Code section 2923.6 as a matter of law. Thus, because Plaintiff cannot truthfully allege that Defendants engaged in any “dual tracking” under section 2923.6,it is improper for Plaintiff to continue to maintain this cause of action under Civil Code § 128.7. B. Plaintiff’s Negligence Claim Fails to Comply with Civil Code Section 128.7. Plaintiff alleges that Defendants breached their “duty” by dualtracking when recording a Notice of Trustee’s Sale prior to any “denial” in violation of the Homeowner’s Bill ofRights. As discussed above, the applicable statute is Civil Code § 2923.6 which requires that Plaintiff allege (1) that he submitted a complete loan modification application to SPS prior the recording of the Notice of Trustee’s Sale and (2) that he was not already evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification. Civil Code § 2923.6(c), (g). Plaintiffhas not and cannot truthfully allege either as required to maintain this cause of action, which is duplicative of his first cause of action. C. Plaintiff’s Third Cause of Action for Violations of California Business and Professions Code, Section 17200, Et Seq. Lacks Any Factual or Legal Basis. California Business and Professions Code, section 17200 (“Section 17200) prohibits any unlawful, unfair or fraudulent business acts or practices and unfair, deceptive, untrue or misleading advertising. Puentes v. Wells Fargo Home Mortg., Inc. (2008) 160 Cal.App.4th 638, 643-644 (hereafter Puentes). “Unlawful” practices are “forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.” Saunders v. Sup.Ct. (1999) 27 Cal.App.4th 832, 838. “Unfair” practices constitute “conduct that threatens an incipient violation of an antitrust law, or 15 See Declaration of Adelman, 1 11; See Notice of Rescission recorded on August 4, 2016, Exhibit “8”to the RIN. 7 NOTICE OF MOTION AND MOTION FOR SANCTIONS O o 0 N N A N L n A W N = N O N N N N N N N N k k e a p e e a ee d pm d km d pe d e d 0 N Y L n B A L D E O Y Y N O Y R A W N D = D violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” Cal- Tech Communications, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 187. When determining “whether the challenged conduct is unfair within the meaning of the unfair competition law..., courts may not apply purely subjective notions of fairness.” Id. at 184. The “fraudulent” prong under the UCL requires a showing of actual or potential deception to some members of the public, or harm to the public interest. (/d. at 180; see also McKell v. Wash. Mut., Inc. (2006) 142 Cal.App.4th 1457. “A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” Khoury v. Maly's ofCalifornia, Inc. (1993) 14 Cal.App.4th 612, 619. Plaintiff’s cause of action lacks any legal or factual basis because Plaintiff did not allege any facts to demonstrate any conduct by Defendants that could be classified as an unlawful, fraudulent, or unfair business act or practice. Plaintiff did not allege any conduct by Defendants that could constitute a violation of an antitrust law, or to violate the policy or spirit of such law. See, Wilson v. Hynek (2012) 207 Cal.App.4th 999; Durrell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1366. Further, Plaintiff did not allege any conduct by Defendants that could be found to significantly threaten or harm competition. Plaintiff also fails to plead fraud with the required specificity. In Paragraph 79 of the Complaint, Plaintiff contends that Defendants failed to disclose the nature of the charges and fees assessed, and that Defendants charged “unnecessary fees” that were never incurred by Defendants. Plaintiff did not state facts with reasonable particularity as required to state a cause of action. Plaintiff did not plead “facts which show how, when, where, to whom, and by what means...” Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73-74. Likewise, Plaintiff fails to allege the names of the person who made the allegedly fraudulent representation, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4™ 153, 157. Plaintiff also does not plead actual reliance on the alleged fraudulent conduct that caused him immediate injury. In addition, Plaintiffs cause of action fails because Plaintiff did not allege any facts to demonstrate his standing to allege his claim against Defendants. To have standing to allege a claim for 8 NOTICE OF MOTION AND MOTION FOR SANCTIONS O O 0 0 J O N W h H h Ww W N N = N O N N N N N O N R N N N M m m m e m e m em t m d e d p d 0 J O N h h WL W O m O D N A W W N e O O violation of Section 17200, a plaintiff must allege that he suffered an injury-in-fact as a result of the unfair competition. Cal Bus. & Prof Code, §17204; Durrell v. Sharp Healthcare, supra, 183 Cal.App.4th at p. 1359. Plaintiff did not and cannot allege that he suffered an injury-in-fact as a result of Defendant’s purportedly deceptive conduct. Lastly, Plaintiff’s cause of action fails because it is predicated on his remaining causes of action, all of which fail. “[Slection 17200 ‘borrows’ violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable....” Puentes, supra, 160 Cal.App.4th at p. 643-644. Here, for the reasons set forth above, all of the remaining causes of action asserted in this Complaint lack merit as Defendants did not engage in “dual tracking” and complied with the law governing non-judicial foreclosures. As a result, Plaintiff should be sanctioned under Section 128.7 for maintaining this cause of action against Defendants. V. CONCLUSION Due to Plaintiff’s violations of California Code of Civil Procedure, section 128.7, as set forth above, Plaintiff should be sanctioned in the amount of $10,263.00, the amount expended by Defendants in defending this Action. Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP Dated: August 16, 2016 By: o Oh ne, Gwen H. Ribar, Esq. Ruby J. Chavez, Esq. Attorneys for Defendants, SELECT PORTFOLIO SERVICING, INC. and THE BANK OF NEW YORK MELLON TRUST CO., N.A. flk/a THE BANK OF NEW YORK TRUST CO.,N.A., AS TRUSTEE FOR MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATES CHASE FLEX TRUST SERIES 2007-1 9 NOTICE OF MOTION AND MOTION FOR SANCTIONS H W L W N N O 0 3 O N w n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I, Nancy C. Wheeler, declare as follows: I am employed in the County of Orange, State of California. I am over the age of eighteen (18) and not a party to the within action. My business address is 4665 MacArthur Court, Suite 200, Newport Beach, California 92660. I am readily familiar with the practices of Wright, Finlay & Zak, LLP, for collection and processing of correspondence for mailing with the United States Postal Service. Such correspondence is deposited with the United States Postal Service the same day in the ordinary course of business. Iam aware that on motion of party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. On August 16, 2016,I served the within DEFENDANTS’ NOTICE OF MOTION AND MOTION FOR IMPOSITION OF SANCTIONS UNDER CALIFORNIA CODE OFCIVIL PROCEDURE, SECTION 128.7; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF, on all interested parties in this action as follows: hs by placing [ ] the original [X] a true copy thereof enclosed in sealed envelope(s) addressed as follows: } Gene Michalak 48 Ashton Ave. San Francisco, CA 94112 (831) 818-9459 Gene Michalak 2904 Granite Creek Ave. Scotts Valley, CA 95066 (831) 818-9459 Gene Michalak 5610 Scotts Valley Dr. #B401 Scotts Valley, CA 95066 (831) 818-9459 [1 (BY MAIL SERVICE) I placed such envelope(s) for collection to be mailed on this date following ordinary business practices. { ] (BY CERTIFIED MAIL SERVICE) I placed such envelope(s) for collection to be mailed on this date following ordinary business practices, via Certified Mail, Return Receipt Requested. [ ] (BY PERSONAL SERVICE) I caused personal delivery by ATTORNEY SERVICE of said document(s) to the offices of the addressee(s) as set forth on the attached service list. [1 (BY FACSIMILE) The facsimile machine I used, with telephone no. (949) 477-9200, complied with California Rules of Court, Rule 2003, and no error was reported by the machine. Pursuant to California Rules of Court, Rule 2006(d), I caused the machine to print a transmission record of the transmission, a copy ofwhich is attached to the original Proof of Service. [x] (BY FEDERAL EXPRESS- NEXT DAY DELIVERY) I placed true and correct copies thereof enclosed in a package designated by Federal [xpress with the delivery fees provided for. PROOF OF SERVICE ll 11 Xx] (CM/ECFElectronic Filing) I caused the above document(s) to be transmitted to the office(s) of the addressee(s) listed by electronic mail at the e-mail address(es) set forth above pursuant to Fed.R.Civ.P.5(b)(2)(E). “A Notice of Electronic Filing (NEF) is generated automatically by the ECF system upon completion of an electronic filing. The NEF, when e-mailed to the e-mail address of record in the case, shall constitute the proof of service as required by Fed.R.Civ.P.5(b)(2)(E). A copy of the NEF shall be attached to any document served in the traditional manner upon any party appearing pro se.” (State) I declare under penalty ofperjury under the law of the State of California that the foregoing is true and correct. (Federal) I declare under penalty ofperjury under the laws of the United States ofAmerica that the foregoing is true and correct. Executed on August 16, 2016, at Newport Beach, California. 00d NarcyC. Wheeler 2 PROOF OF SERVICE
