Sanchez vs. Ocwen Loan Servicing, LLC

Motion to Strike

Cal. Super. - 4th Dist.October 14, 2014

O O 0 1 O N n n B W N N N N N N N N N m m e m ee d e m e m e d e m e a pe a R n 9 R A W mR , D O O N S N N R E W N = , WRIGHT, FINLAY & ZAK, LLP T. Robert Finlay, Esq., SBN 167280 Nicholas G. Hood, Esq., SBN 238620 Sheri M. Kanesaka, Esq., SBN 240053 4665 MacArthur Court, Suite 200 Newport Beach, CA 92660 Tel: (949) 477-5050; Fax: (949) 608-9142 nhood@wrightlegal.net; skanesaka@wrightlegal.net Attorneys for Defendant FAY SERVICING, LLC SUPERIOR COURT OF CALIFORNIA COUNTY OF ORANGE ALFREDO DOMINGUEZ SANCHEZ; EDUARDO AVALOS; AND DANIEL DOMINGUEZ, Plaintiff, vs. OCWEN LOAN SERVICING, LLC; BANK OF AMERICA, N.A.; FAY SERVICING, LLC; AND DOES 1 -10, inclusive, Defendants Case No.: 30-2014-00750703-CU-OR-CJC Hon. Walter Schwarm Dept. C19 NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ THIRD AMENDED COMPLAINT BY DEFENDANT FAY SERVICING, LLC; MEMORANDUM OF POINTS AND AUTHORITIES on Date: March 22, 2016 Time: 9:00 a.m. Dept.: C19 [Filed concurrently with Requestfor Judicial Notice] ACTION FILED: October 14,2014 NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ THIRD AMENDED COMPLAINT BY FAY SERVICING, LLC O O 0 0 ~ ~ O N W n W O N D N N N N N N N N N m m a m a m d e d e m p a p a p m W w N N L h R A W = O Y N S Y R N W N m S MEMORANDUM OF POINTS AND AUTHORITIES L INTRODUCTION Plaintiffs assert four causes of action against FAY for violations of California’s Homeowner Bill of Rights (“HBOR?”) Sections 2923.6, 2923.7, and 2924.10, and a claim for Business and Professions Code §§ 17200 et seq. (“UCL”) asserted against all defendants. Plaintiffs improperly seek, among other things, damages in connection with the HBOR claims and “disgorgement of illicit” profits in connection with their UCL claim. However, as a matter of law, Plaintiffs are not entitled to the requested relief. HBOR is explicit that where the subject property has not been foreclosed upon, borrowers are entitled to only injunctive relief. Borrowers are entitled to damages only if a property has been foreclosed upon. In this case, Plaintiffs are well aware that there is no pending foreclosure with respect to the subject property, much less a completed sale. Likewise, the UCL circumscribes the relief allowed in these types of cases to injunctive relief and restitution. Attorneys’ fees and general, special and consequential damages are not allowed. Thus, the Motion should be granted and the portions of the TAC identified herein should be struck. Finally, Plaintiffs fail to specify which remedies they seek in connection with their five causes of action. In addition to the HBOR and UCL claims, Plaintiffs assert a claim for negligent misrepresentation but only against defendant Ocwen Loan Servicing, LLC (“OCWEN”). However, Plaintiffs’ prayer seeks (a) “all damages sustained, not to exceed $70,000 . . . [which] includes past and future economic and compensatory damages, past and future non-economic and special damages, and other damages”, and (b) reasonable attorneys’ fees and costs, and any otherrelief as it may deem just and proper. (TAC, 9Y 2, 4 of the Prayer.) Because Plaintiffs are entitled to different remedies under their claims and because the claims are the subject of demurrers filed by OCWEN and FAY, which will likely dispose of several of the claims, at a minimum, Plaintiffs should be required to specify in their prayer which remedies apply to which causes of action. II. STATEMENT OF FACTS On or about October 22, 2009, Plaintiffs borrowed $342,022.00 from the originating lender, Trust One Mortgage Corporation (“Trust One”) and its successors and assigns, which is secured by a recorded deed of trust (“DOT”) against the real property located at 2121 West 9" Street, Santa Ana, 1 MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO STRIKE PORTIONS OF PLAINTIFFS’THIRD AMENDED COMPLAINT S O © 3 O N W n R W N D N N N N N N N N N N N m E H m m m e m e m e m a p m e m p m W W N N n n B W W = D O O N D W N California 92703 (“Property”) (the DOT, together with its promissory note, are collectively referred to herein as the “Loan”). (See Request for Judicial Notice (“RIN”), Ex. 1.) On June 30, 2011, an Assignment of Deed of Trust was recorded, referencing assignment of the Loan to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP. (See RIN Ex. 2.) Plaintiffs defaulted upon their obligations under the Loan and, on June 21, 2012, when the Loan was over $56,000.00 in arrears, non-party Recontrust Company, N.A. (“Recontrust™) recorded a Notice of Default and Election to Sell Under Deed of Trust (the “NOD”). (See RIN Ex. 3.) Since Plaintiffs failed to cure their default under the Loan, on September 24, 2012, Recontrust recorded a Notice of Trustee’s Sale (the “NOTS”). (See RIN Ex. 4.) In April 2013, Plaintiffs and BANA executed a Loan Modification Agreement,’ which was recorded on May 30, 2013. (See RIN Ex. 5.) In or around March 2014, defendant OCWEN began servicing the Loan. (TAC, § 14.) On August 22, 2014, an Assignment of Deed of Trust was recorded, referencing assignment of the Loan to Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in its individual capacity but as trustee ofARLP Trust 2 (“Christiana Trust”). (See RIN Ex. 6.) In or around June 20135,servicing of the Loan was transferred to FAY. (TAC, § 16.) As ofthe date of this Demurrer, the Property has not been foreclosed upon and no new notice of default has been recorded since the Modification Agreement was recorded. III. LEGAL STANDARD The Court may, upon motion made pursuant to Code of Civil Procedure (“CCP”) § 436, strike out any irrelevant, false, or improper matter inserted in any pleading, or all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (See Cal. Civ. Proc. Code §§ 435 and 436.) The grounds for a motion to strike “shall appear on the face of the pleading or from any matter of which the court is required to take judicial notice.” (See Cal. Code Civ. Pro. § 437(a).) A demand for judgment requesting relief not supported by the allegations of the complaint is an immaterial matter and may be stricken. (Cal. Civ. Proc. Code § 431.10(b)(3) and (c).) Unsupported ! BANA executed the Loan Modification Agreement on behalf ofitself “or as successor by merger to BAC Home Loans Servicing, LP.” (See RIN, Ex. 5.) 2 MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO STRIKE PORTIONS OF PLAINTIFFS’THIRD AMENDED COMPLAINT O O 0 1 O N w n B W N D D O N N Y N N D N N N N m m e s e a e m e m e m e m e m e m © N N A Y B R W N = O O N Y E R W N = D conclusions of law may also be stricken from a complaint. (See Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6.) Moreover, a motion to strike should be granted where a requested award is not legally recoverable. (See Cal. Civ. Code. § 3294(a); Commodore Home Systems, Inc. v. Sup.Ct. (1982) 32 Cal.3d 211, 214-215.) IV. ARGUMENT A. Because There Has Been No Trustee’s Sale, Plaintiffs Are Not Entitled to Monetary Damages Under HBOR. In connection with Plaintiffs’ first, second, and third causes of action for alleged violations under HBOR,Plaintiffs request “damagesifpost foreclosure.” (See TAC, 23, 11. 10-11; 32, 11. 12-13; 9 40, 1. 13-14.) Under HBOR enacted on January 1, 2013,it is undisputed that the California Legislature only intended to create a limited private right of action for certain statutes and only allowing for certain remedies. (See Cal. Civ. Code § 2924.12.) In particular, Section 2924.12 specifically defines the scope of a borrower’s private right of action under the HBOR. First, if a trustee’s deed upon sale has not been recorded, then a borrower’s private right of action is as follows: If 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. (Cal. Civ. Code § 2924.12 (a)(1) [emphasis added].) However,if a trustee’s deed upon sale has been recorded, then a borrower’s private right of action changes and the borroweris only entitled to actual economic damages. (See Cal. Civ. Code § 2924.12(b).) The language of Section 2924.12 demonstrates that a borrower only has a private right of action for damages when (1) there is a material violation of any of the enumerated statues AND (2) a trustee’s deed upon sale has been recorded. If a trustee’s deed upon sale has not been recorded, then a borrower is only entitled to injunctive relief. Here, Plaintiffs’ first, second, and third causes of action asserted against FAY allege violations of Sections 2923.6, 2923.7, and 2924.10 of HBOR. In connection with these claims, Plaintiffs assert 3 MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO STRIKE PORTIONS OF PLAINTIFFS’THIRD AMENDED COMPLAINT S S O X N N N R W N s N N N N N N N N N m e m m e m e m p m e m p m e m e m 0 N N n n R R W N = O D O 0 d Y N N R W N that they “are entitled to an injunction prior to foreclosure” AND “damagesif post foreclosure.” (See TAC, § 23, 11. 10-11; 932, 11. 12-13; 440, 1. 13-14.) However, Plaintiffs are not entitled to both an injunction and damages, and there is no pending foreclosure of the Property. Indeed, no new notice of default has been recorded since the Modification Agreement was recorded. As the Property has not been foreclosed upon, the request for damages should be stricken. B. Plaintiffs Are Not Entitled to Disgorgement of Illicit Profits or Damages Under the UCL. In connection with Plaintiffs” UCL claim, Plaintiffs demand that Defendants “disgorge their illicit profits.” (TAC, § 64.) However, the scope of remedies allowed under the UCL is limited to generally injunctive relief and restitution. (See Cal. Bus. & Prof. Code § 17204; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Company (1999) 20 Cal.4th 163, 170-180.) General, special, or consequential damages, and attorneys’ fees, are not permissible under the UCL. Rather, the only monetary recover under the UCL is restitution. (See Cel-Tech, supra, Cal.App.4th at p. 179.) Thus, nonrestitutionary disgorgement is not allowed in an individual action under the UCL. (See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1152 [holding that nonrestitutionary disgorgement is not allowed in an individual action under the UCL]; Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 137-38 [rejecting the argument that nonrestitutionary disgorgement was available in a representative action under the UCL].) As nonrestitutionary disgorgement is not allowed as a matter of law, Plaintiffs’ demand that FAY “disgorge their illicit profits” must be struck from the TAC. C. Plaintiffs Should Be Required to Specify Which Remedies Apply to Which Causes of Action. Finally, Plaintiffs fail to specify which remedies they seek in connection with their five causes of action. Plaintiffs assert claims for (1) violations of HBOR Sections 2923.6, 2923.7, and 2924.10, (2) negligent misrepresentation (against defendant OCWEN only), and (3) violations of the UCL. However, Plaintiffs’ prayer seeks (a) “all damages sustained, not to exceed $70,000 . . . [which] includes past and future economic and compensatory damages, past and future non-economic and 4 MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO STRIKE PORTIONS OF PLAINTIFFS’THIRD AMENDED COMPLAINT N C 0 0 1 O N U t B s W N ) N Y N N N N N N N N m m e m m a em a e m p e e a e e p m 0 3 n n B R W N = O N N N R A W m = special damages, and other damages”, and (b) reasonableattorneys’ fees and costs, and any other relief as it may deem just and proper. (TAC, 92, 4 of the Prayer.) As set forth above, Plaintiffs are entitled to only injunctive relief and restitution for their UCL claim. Attorneys’ fees and costs may be available under HBOR under certain circumstances. However,these claims are the subject of FAY’s concurrently filed demurrer to the TAC and will likely be dismissed. At a minimum, Plaintiffs should be required to specify in their prayer which remedies apply to which causes of action because the allowed remedies available under each claim may be different. V. CONCLUSION For the foregoing reasons, FAY respectfully requests that the Court grant this Motion and strike the portions of Plaintiffs’ TAC with prejudice as set forth above, and to provide such other and further relief as justice requires. Respectfully Submitted, WRIGHT, FINLAY & ZAK, LLP Dated: February 24, 2016 By: Sheri M.Krfesaka, Esq. Attorneys for Defendant FAY SERVICING, LLC 5 MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO STRIKE PORTIONS OF PLAINTIFFS’THIRD AMENDED COMPLAINT 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I, Kim Walsh, declare as follows: I am employed in the County of Orange, State of California. Iam 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. I am aware that on motion ofparty 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 February 24, 2016, I served the within NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ THIRD AMENDED COMPLAINT BY DEFENDANT FAY SERVICING, LLC; MEMORANDUM OF POINTS AND AUTHORITIES onall interested parties in this action as follows: [X] by placing [ ] the original [X] a true copy thereof enclosed in sealed envelope(s) addressed as follows: SEE ATTACHED SERVICE LIST [X] (BY MAIL SERVICE) I placed such envelope(s) for collection to be mailed on this date following ordinary business practices. [] (BY GOLDEN STATE OVERNIGHT- NEXT DAY DELIVERY) I placed true and correct copies thereof enclosed in a package designated by Golden State Overnight with the delivery fees provided for. [] (CM/ECEFElectronic 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 ofservice as required by Fed.R.Civ.P.5(b)(2)(E). A copy ofthe NEF shall be attached to any document served in the traditional manner upon any party appearing pro se.” [X] (State) I declare under penalty of perjury under the law of the State of California that the foregoing is true and correct. Executed on February 24, 2016, at Newport Beach, California. AnUOpLabs | Y Kim Walsh 1 PROOF OF SERVICE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SERVICE LIST John E. Mortimer, Esq. Law Office of John E. Mortimer 2973 Harbor Blvd, Suite 594 Costa Mesa, CA 92626 (951) 297-1504 Johnemortimer@gmail.com Attorneyfor Plaintiffs, Alfredo Dominguez Sanchez; Eduardo Avalos and Daniel Dominguez Suzanne M. Hankins, Esq. Loren W. Coe, Esq. SEVERSON & WERSON,A Professional Corporation 19100 Von Karman Avenue, Suite 700 Irvine, CA 92612 Tel: (949) 442-7110, Fax: (949) 442-7118 Attorneysfor Defendant, Ocwen Loan Servicing, LLC . John B.Sullivan, Esq, SEVERSON & WERSON,A Professional Corporation One Embarcadero Center, Suite 2600 San Francisco, CA 94111 Tel: (415) 398-3344; Fax: (415) 956-0439 Attorneysfor Defendant, Ocwen Loan Servicing, LLC Stuart W. Price, Esq. Brendon K. Barton, Esq. Allan Bareng, Esq. BRYAN CAVE, LLP 3161 Michelson Drive, Suite 1500 Irvine, CA 92612-4414 Attorneysfor Defendant, Bank ofAmerica, N.A. 2 PROOF OF SERVICE