Opposition Objections

Cal. Super. - 6th Dist.August 15, 2019

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Sarah Shapero (Bar N0. 28 1 748) SHAPERO LAW FIRM One Market, Spear Tower, 36th Floor San Francisco, California 94105 Telephone: (415) 293-7995 Facsimile: (415) 358-41 16 Attorney for Plaintiffs, HECTOR CEREZO AIDA CEREZO Electronically Filed by Superior Court of CA, County of Santa Clara, on 2/28/2020 2:57 PM Reviewed By: J. Viramontes Case #1 9CV352883 Envelope: 41 00831 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA HECTOR CEREZO, an individual; and AIDA CEREZO, an individual. Plaintiff, V. FAY SERVICING, LLC; BARRETT DAFFIN FRAPPIER TREDER & WEISS, LLP; and DOES 1-50, inclusive Defendant Case No.: 19CV352883 PLAINTIFFS’ OPPOSITION TO DEFENDANT FAY SERVICING’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT Date: March 12, 2020 Time: 9:00 am Dept: 19 Judge: Hon. Peter H. Kirwan PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 INIRQIHLCIIQN Plaintiffs brought their First Amended Complaint based 0n Defendant FAY’S mishandling of the foreclosure 0n Plaintiffs’ property. Specifically, Defendant FAY is the servicer of the loan that was tasked With communicating With Plaintiffs regarding the loan and referring Plaintiffs’ property at foreclosure (and following the foreclosure statutes When doing so), however Defendant completely failed in its duties since Plaintiffs had a complete loan modification application pending at the time of the foreclosure. For these reasons, and the reasons set forth fully below, Plaintiffs respectfully request that Defendant’s Demurrer t0 Plaintiffs’ First Amended Complaint be overruled. However, should the Court deem any 0f Plaintiffs’ allegations insufficient, Plaintiffs respectfully request leave t0 amend. I. SIAIEMENJ‘QEEACIS Plaintiffs obtained a loan secured by the property in 0r around November 2006. To secure the loan, we executed a Deed 0f Trust and Promissory Note in favor 0f World Savings, FSB. (FAC at fl 8). Thereafter, the loan transferred t0 Wells Fargo. Plaintiffs were making payments t0 Wells Fargo each month. (FAC at fl 9). In December 2018, When Plaintiffs went t0 make the December 2018 payment due 0n the loan, Wells Fargo informed Plaintiffs that it could not accept the payment because the servicing 0f the loan had transferred t0 Defendant Fay Servicing. (Ld. at 1] 10). Therefore, Wells Fargo informed Plaintiffs that they should contact Fay Servicing t0 make a payment. (Id) This was the first time that Plaintiffs had ever heard that Fay Servicing had taken over the servicing 0f the loan, however, Plaintiffs did as instructed and contacted Fay Servicing. (IgL) Fay informed Plaintiffs that it could not accept the payment 0n the loan! Gd.) Immediately thereafter, Fay and Barrett Daffin Frappier Treder & Weiss, LLP caused a Notice of Trustee’s Sale t0 be recorded against the property. (Id at 11 11). Thereafter, on or around September 21, 2019, Plaintiff faxed t0 Defendant FAY a loan modification application. (m at 11 12). Despite this fact, 0n September 23, 2019, Defendants caused a foreclosure sale t0 take place against Plaintiffs property and a Trustee’s Deed Upon Sale has since been recorded. (Ii) 1 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. LEGAL ARGUMENT A. Legal Standard On demurrer, the factual allegations in the complaint, together with all reasonable inferences, must be accepted as true.(WW (1996) 46 Ca1.App.4th 554, 559-560). The demurrer must be overruled if the factual allegations, together with any matters subject t0 judicial notice, state a cause 0f action under any possible legal theory, regardless of the causes 0f action set forth in the complaint itself. (I(L; also see Wham; (1977) 73 Cal.App.3d 864). Moreover, all facts are to be construed in the light most favorable to the plaintiff.(M (1985) 38 Cal. 3d 913, 922). A plaintiff need not plead facts With specificity Where the facts are Within the knowledge and control 0f the defendant and are unknown t0 plaintiff. (CmdiLManagerxAssggiafiQnQfiSQme CahformaJLSllpmmrfigmfl (1975) 51 Cal.App.3d 352, 361). Whether the plaintiff can prove her allegations, 0r Whether defendant can demonstrate possible difficulty in making such proof is irrelevant to the reviewing court.(WW AgricmnlralAsm (1986) 42 Cal. 3d 929, 936; citing AlcngLAnmenginegfinanQ. (1970) 2 Ca1.3d 493, 496). If there is a reasonable possibility that a pleading defect can be cured, leave t0 amend must be granted. (BlamLQIdMLelLBankeLRfisidfimialRQalfislamSEms. (1990) 217 Cal. App. 3d 1439, 1444). As set forth fully below, Plaintiffs have sufficiently stated all of their causes of action t0 place Defendant on notice of the claims and allegations against them. For these reasons, Defendant’s demurrer must be overruled in its entirety or, alternatively, Plaintiffs must be given leave to amend. B. Plaintiffs’ Claims are Not Barred by the Doctrine 0f Judicial Estoppel. Defendant first argues that Plaintiffs’ claims are barred because they were not disclosed in the January 2019 bankruptcy. (Demurrer at p. 4-5). First, this argument could only apply to Plaintiffs’ claim for breach of the implied covenant 0f good faith and fair dealing, as this is the only claim that contains allegations that occurred prior t0 January 2019. Second, Plaintiffs’ claims are not barred by the doctrine 0f estoppel because Plaintiffs’ bankruptcy was dismissed Without confirmation. 2 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 With regard t0 Defendants’ first argument, judicial estoppel is an equitable doctrine developed by the courts t0 prevent litigants from “playing fast and loose” with the courts by advancing inconsistent positions in the same, 0r different, cases. (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986.) “The doctrine applies when (1) the same party has taken two positions; (2) the positions were taken in judicial 0r quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position 0r accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result 0f ignorance, fraud, 0r mistake.” (Id. at 986-987 [internal citation omitted].) “Because 0f its harsh consequences, the doctrine should be applied with caution and limited to egregious circumstances.” (Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 13 1 - 1 32.) Judicial estoppel is commonly applied following bankruptcy. Where a debtor in bankruptcy seeks t0 reorganize and fails to disclose a potential lawsuit in the bankruptcy proceeding, principles 0f equity may bar the debtor from bringing the lawsuit after the debtor is discharged. However, the doctrine does 1101 apply where the bankruptcy court “did not adopt or accept as the truth 0f the [plaintiff’s] position that [the debtor] did not have any legal claims” and the bankruptcy case “was dismissed without confirmation 0f a plan 0f reorganization.” (Gottlieb v. Kest (2006) 141 Ca1.App.4th 110, 130.) Here, Plaintiffs’ bankruptcy petition did not result in a confirmed plan 0r reorganization. (See Defendant’s RJN, EXh. 19). As there was n0 official determination by the bankruptcy court with respect t0 Plaintiffs’ purported debts, the doctrine 0f judicial estoppel does not operate as a bar t0 any 0f Plaintiffs’ claims in this action. C. Plaintiffs Have Sufficiently Pleaded a Cause ofAction for Breach 0fthe Implied Covenant of Good Faith and Fair Dealing. The covenant of good faith and fair dealing was developed in the contract arena and is aimed at making effective the agreement’s promises." EQley y. Interactiye Data (2011)., 47 Ca1.3d 654, 683 (1988). The covenant 0f good faith and fair dealing is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct Which (while not technically transgressing the express covenants) frustrates the other party’s rights t0 the benefits 0f the contract.”WWW, 221 Cal.App.3d 1136, 1153 (1990). The covenant 0f good faith finds particular application in situations Where one party is invested with a 3 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 discretionary power affecting the rights of another. ag Com, 53 Cal. App. 4th 299, 3 14 (2nd App. Dist, 1997). Such power must be exercised in good faith. Id (citing QamflesmlgpflflngleIhQanLaLJm 826 P.2d 710, 726-727 (Cal. 1992)). Like other contracts, the mortgage contract contains an implied covenant of good faith and fair dealing. See, e.g., , 82 Haw. 120, 123-24, 920 P.2d 334, 337-38 (1996). "Good faith . . . requires that a party vested with contractual discretion must exercise his discretion reasonably and may not do so arbitrarily 0r capriciously." ItiangIQMming CQLSiauffeLChemLm, 753 F.2d 734, 738 (9th Cir. 1985). Pursuant to Covenant 1 0f the Deed 0f Trust securing the loan, Plaintiffs promised t0 “pay on time, all principal and interest due under this Security Notes and any prepayment and late charges due under the Secured Notes.” (FAC at 1] 17). Plaintiffs allege that Defendant breached the covenant 0f good faith and fair dealing and interfered with Plaintiffs’ ability to perform under the contract by refusing Plaintiffs timely payments under the loan. (IgL) In response t0 this claim, Defendant argues that Plaintiffs were already in default and, thus, their claim fails. However, the Deed 0f Trust allowed that Plaintiffs make payments under the loan and they have alleged that they were doing so when Defendant began t0 rej ect their payments. Therefore, there is a breach of the implied covenant 0f good faith and fair dealing regardless of Whether Plaintiffs were current in their payments. Furthermore, contrary t0 Defendant’s assertion, Plaintiffs d0 allege a specific term that was breached, namely, Covenant 1 of the Deed of Trust. (FAC at 1] 17). And Plaintiffs’ alleged how their performance was frustrated - Defendant refused their payments and refused t0 apply them t0 the loan as required under Covenant 1. (FAC at 1] 17). Thus, Plaintiffs’ allegations are sufficient. However, should the Court deem Plaintiffs’ allegations insufficient, Plaintiffs respectfully request leave t0 amend t0 plead their performance under the loan. D. Plaintiffs Have Sufficiently Pleaded a Cause 0f Action for Wrongful Foreclosure. Plaintiffs’ third cause 0f action is for wrongful foreclosure based 0n Defendant’s acts in selling Plaintiffs’ property While Plaintiffs’ loan modification application was pending. (FAC at fl 28). Defendant argues that Plaintiffs’ claim fails for lack 0f tender, however, as set forth below, 4 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 this argument fails and must be overruled. However, should the Court deem Plaintiffs’ allegations insufficient, Plaintiffs respectfully request leave t0 amend. Courts have held that in order to unwind a completed foreclosure sale, one must do equity in order t0 receive equity. in, (Cal. App. 2d Dist. 1971) 15 Cal.App.3d 112, 121. The EBCI court expanded 0n this ruling, holding that the rationale behind the tender requirement is that any irregularities in a sale do not damage a plaintiff if the plaintiff could not have redeemed the property had the sale procedure been proper. mg, (Cal. App. 2nd Dist. 1989)207 Cal. App. 3d 1018, 2011. Thus, the tender requirement is intended to prevent a court 0f equity from ordering a useless act performed. Ii The Ahdallah Court affirmed this ruling When it held that a plaintiff must offer t0 tender before he can challenge irregularities in a foreclosure sale and request rescission ofthe sale. SEE AhdallahleniImLSayings Bank, (Cal. App. 1st Dist. 1996) 43 Cal.App.4th 1101, 1109 (citing ERCI at 1021-1022). However, there is n0 case law that requires a borrower t0 d0 equity when the borrower is not, in fact, seeking equitable relief. The case law cited by Defendant shows that no tender is required unless the borrower requests relief in equity. In the present case, as Plaintiffs are not requesting equitable relief, tender is not required. Thus, Defendant’s argument fails. I. CQNQLUSIQN Based on the foregoing reasons, Plaintiffs respectfully request that the Court overrule Defendant’s Demurrer as to all causes 0f action. However, should the Court deem any of Plaintiffs’ allegations insufficient, Plaintiffs respectfully requests leave t0 amend. DATED: February 27, 2020 Respectfully submitted, SH PERO LAW FIRM ah Shab’ero, Esq. Attorney for Plaintiffs, HECTOR CEREZO AIDA CEREZO 5 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT