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LAW & MOTION TENTATIVE RULINGS
FRIDAY, FEBRUARY 24, 2017, 1:30pm
COURTROOM 19 – Judge Allan D. Hardcastle
3055 Cleveland Avenue, Santa Rosa, CA 95403
Court Call is available for all Law and Motion appearances, EXCEPT parties in small claims cases and motions for claims of exemption which are mandatory appearances.
** To set up Court Call- Please call them directly at (888) 882-6878.
The following Tentative Rulings will become the ruling of the Court unless a party desires to be heard. If you desire to appear and present oral argument as to any motion, you must contact the Judicial Assistant by telephone at (707) 521-6730 by 4:00 p.m. on THURSDAY, FEBRUARY 23, 2017. Any party requesting an appearance must notify all other parties of their intent to appear.
1. MCV-232372 CACH v. Moffat:
Appearances required. The types and degrees of property exempt from levy are described in CCP sections 704.010-704.210. The debtor is directed to bring documentation supporting her claims of exemption.
2. SCV-256266 Beckmann v. JP Morgan Chase:
This matter is on calendar for two motions. In the first motion, defendants PennyMac Corp. and PennyMac Loan Services, Inc. (collectively “PennyMac”) move for summary judgment or alternatively, summary adjudication of the two remaining causes of action in the Third Amended Complaint (“TAC”) of plaintiff Edward Joseph Beckmann, individually and as successor trustee of the East Family Trust, dated July 17, 2000 (“Plaintiff”), including the first cause of action to Set Aside Illegal Trustee’s Sale and the second cause of action for a Violation of Business and the third cause of action for a violation of Professions Code sections 17200, et seq. In the second motion, defendants JPMorgan Chase Bank, N.A. and JPMorgan Chase & Co. (collectively “JPM”) move for summary judgment or alternatively, summary adjudication with respect to Plaintiff’s TAC and the same two causes of action.
JPM’s Request for Judicial Notice of Exhibits A-C is GRANTED. PennyMac’s Motion for Summary Judgment is GRANTED. JPM’s Motion for Summary Judgment is GRANTED.
1. General Rules of Summary Judgment and Summary Adjudication
The purpose of summary judgment and summary adjudication is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) In ruling on the motion, the trial court must draw all reasonable inferences from the evidence in the light most favorable to the opposing party. (Id. at 843, 860.) Summary adjudication motions are “procedurally identical” to summary judgment motions and a party can obtain summary judgment “only by establishing the merit of his [or her] case ‘as a matter of law.” (Code Civ. Proc. §437c(c).) “The phrase “as a matter of law” is another way of saying that the evidence available to the parties, and placed before the court in support of and in opposition to the motion, raises no material issue that a trier of fact could resolve in favor of the party opposing the motion.” (Cole v. Town of Los Gatos (2012) 205 Cal.App.4th 749, 756.)
A defendant moving for summary judgment or summary adjudication must demonstrate that the plaintiff’s cause of action has no merit by showing either that (1) one or more elements of the cause of action cannot be established, or (2) there is a complete defense to that cause of action. (Code Civ. Proc., § 437c(p)(2).) The moving defendant can make this prima facie showing either by presenting evidence that conclusively negates an element of a plaintiff’s cause of action or by presenting evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence. (Id. at 854-855.) Either showing must be supported by evidence, such as affidavits, declarations, admissions, interrogatory answers, depositions, and matters of which judicial notice may be taken. (Code Civ. Proc. §437c(p)(2).) If the moving party makes this prima facie showing, the burden shifts to the plaintiff to show of the existence of a triable issue of material fact. (Aguilar, supra, 25 Cal.4th at 849-850.) The plaintiff “may not rely upon the mere allegations or denials’ of his pleadings to show that a triable issue of material fact exists but, instead, must set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.” (Ibid; see also, Aguilar, supra, 25 Cal.4th at 849.)
In their motions, both PennyMac and JPM argue that summary judgment is warranted on the ground that, because Plaintiff was not a party to the underlying loan agreement, Plaintiff lacks standing to pursue these claims. Specifically, both defendants argue that based on the Court’s prior ruling on defendants’ respective demurrers, which found that Plaintiff was not an intended third party beneficiary to the loan agreement, Plaintiff therefore does not have standing to pursue the remaining claims to set aside the trustee’s sale and for a violation of Business and Professions Code 17200.
In general terms, in order to have standing, a plaintiff must be able to allege injury - that is, some “invasion of the plaintiff’s legally protected interested.” (Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 175; see also, Code Civ. Proc., § 367 [“Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute”].) Standing goes to the existence of a cause of action and may be raised at any time, even at trial or on appeal and the focus of the standing issue is on the plaintiff, not the issues plaintiff wants determined. (Blumhorst v. Jewish Family Services of Los Angeles (2005) 126 Cal.App.4th 993, 1000-1001. A viable claim under the Business and Professions Code requires an “injury in fact” which has been defined as “an invasion of a legally protected interest which is (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical.” (Sarun v. Dignity Health (2015) 232 Cal.App.4th 1159, 1166–1167, citing Kwikset Corporation v. Superior Court (2011) 51 Cal.4th 310, 322.) (internal citations omitted.) However, the Business and Professions Code imposes the additional requirement that the plaintiff have lost money or property. (Ibid.) Indeed, loss of money or property–that is, “economic injury”–“is itself a classic form of injury in fact.” (Ibid, citing Kwikset Corporation, supra, 51 Cal.4th at 323 [“proof of lost money or property will generally satisfy the element of injury in fact.”].) Economic injury may be shown in many ways including a plaintiff surrendering in a transaction more, or acquiring in a transaction less, than he or she otherwise would have; having a present or future property interest diminished; and being required to enter into a transaction, costing money or property, that would otherwise have been unnecessary. (Ibid, citing Kwikset Corporation, supra, 51 Cal.4th at 323.)
In this case, defendants mistakenly equate third party beneficiary status with standing and incorrectly conclude that merely because Plaintiff was not a third party beneficiary to the underlying loan agreement, he necessarily does not have standing to pursue these claims. The Court finds that Plaintiff has sufficiently demonstrated standing to pursue the causes of action remaining in the TAC based on the undisputed fact that Plaintiff is the current sole owner of the subject property. (See, JPM UMF Nos. 43-44.) Thus, irrespective of the fact that the Court has determined that Plaintiff was not an intended third party beneficiary of the loan, as the current owner of the property and sole holder of title, Plaintiff has alleged a sufficient cognizable injury to establish standing to the remaining causes of action. Accordingly, defendants’ motions on the basis of standing are DENIED.
III. Plaintiff’s First Cause of Action to Set Aside the Trustee’s Sale
“A nonjudicial foreclosure sale is accompanied by a common law presumption that it ‘was conducted regularly and fairly” and “[t]his presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity.” (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 103, citing Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1258.) “The mere inadequacy of price, absent some procedural irregularity that contributed to the inadequacy of price or otherwise injured the trustor, is insufficient to set aside a nonjudicial foreclosure sale.” (Ibid.) “It is the burden of the party challenging the trustee’s sale to prove such irregularity and thereby overcome the presumption of the sale’s regularity.” (Ibid.)
Nevertheless, “[i]t is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties.” (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 103, citing Lo v. Jensen (2001) 88 Cal.App.4th 1093, 1097–1098; see also, Angell v. Superior Court (1999) 73 Cal.App.4th 691, 700, 86 Cal.Rptr.2d 657.) “[T]he elements of an equitable cause of action to set aside a foreclosure sale are: (1) the trustee ... caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a ... deed of trust; (2) the party attacking the sale ... was prejudiced or harmed; and (3) in cases where the trustor ... challenges the sale, the trustor ... tendered the amount of the secured indebtedness or was excused from tendering.” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 996, citing Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104; see also, Shetty v. JPMorgan Chase Bank, N.A., (C.D. Cal. 2016) WL 7187944, at *5.) Here, defendants have presented prima facie evidence that neither Plaintiff nor Mr. East met the “tender” element necessary to support this cause of action and Plaintiff has failed to present any evidence whatsoever addressing that issue or demonstrating that there is a triable issue of material fact.
“Because the action is in equity, a defaulted borrower who seeks to set aside a trustee’s sale is required to do equity before the court will exercise its equitable powers.” (Lona, supra, 202 Cal.App.4th at 103, citing MCA, Inc. v. Universal Diversified Enterprises Corp. (1972) 27 Cal.App.3d 170, 177.) “Consequently, as a condition precedent to an action by the borrower to set aside the trustee’s sale on the ground that the sale is voidable because of irregularities in the sale notice or procedure, the borrower must offer to pay the full amount of the debt for which the property was security.” (Id. at 112; citing, Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; see also, Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424 [the borrower must pay, or offer to pay, the secured debt, or at least all of the delinquencies and costs due for redemption, before commencing the action.]; see also, Kalnoki, et al. v. First American Trustee Servicing Solutions, LLC, et al. 2017 WL 432846 at *19; Shetty, supra, (C.D. Cal. 2016) WL 7187944, at *5.) “The rationale behind the rule is that if [the borrower] could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the [borrower].” (Ibid, citing FPCI RE–HAB 01 v. E & G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022.)
There are, however, recognized exceptions to the tender rule and courts have found that tender is not required under certain circumstances, including when the borrower attacks the validity of the underlying debt; where the borrower has a counterclaim or set-off against the beneficiary; where it would be inequitable to impose the requirement; and where the trustee’s deed is void on its face. (Lona, supra, 202 Cal.App.4th at 112, citing, Stockton v. Newman (1957) 148 Cal.App.2d 558, 564 [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Hauger v. Gates (1954) 42 Cal.2d 752, 755 [plaintiff claimed set-off in an amount exceeding the amount due on the note where defendant had failed to deliver personal property under parties’ agreement that was valued at an amount greater than installment payment owing on note]; Humboldt Savings Bank v. McCleverty (1911) 161 Cal.285, 291 [inequitable to require widow to tender full amount of debt for which she was not liable in order to protect her homestead interest in property]; and Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 877-878.)
Here, Plaintiff does not dispute the fact that neither Plaintiff, nor Mr. East, tendered payment of the full amount of the debt due at any time before the subject trustee’s sale. Instead, Plaintiff appears to argue that he should be excepted from the tender requirement for a number of reasons, none of which are persuasive and none of which are applicable in this case. As stated above, a cause of action to set aside a trustee’s sale is an “equitable” action and a defaulted borrower who seeks to set aside a trustee’s sale is required to do equity before the court will exercise its equitable powers. (See, Lona, supra, 202 Cal.App.4th at 103.) Here, not only has Plaintiff failed to allege facts showing that he tendered the funds due to cure the default prior to the trustee’s sale, but it appears to be undisputed that after acquiring the property and subject loan in 2007, Mr. East defaulted on the loan after making just a single payment, and other than the three delinquent TPP payments that Mr. East made during the summer of 2010, neither Mr. East nor Plaintiff have made any payments on the loan. (See, PennyMac Sep. St. Nos. 1, 3-8, 13-14, 27-32; see also, JPM Sep. St. Nos. 1-2, 7-9, 14-23, 38-39.) Thus, Plaintiff has essentially been living rent fee on the property for nearly a decade, while at the same time, apparently earning income by renting the property to third parties. Based on these facts, as well as the underlying law, there is no exception to the tender rule that is applicable or appropriate in this case.
Plaintiff’s failure to tender payment for the balance of the loan is sufficient for the Court to grant defendants’ motions as to this cause of action. Nevertheless, the Court also finds that both defendants have made a prima facie case that Plaintiff will not be able to prove an “illegal, fraudulent or willfully oppressive” sale of the property or that Plaintiff was “prejudiced” or “harmed” by the trustee’s sale. Additionally, the Court finds that Plaintiff has failed to submit sufficient evidence to raise any triable issue of material fact with respect to those elements. Specifically, defendants have sufficiently demonstrated that the TPP that was offered to Mr. East, required payment by May 1, 2010, June 1, 2010 and July 1, 2010 respectively and that Mr. East failed to make timely payments under this TPP plan and that when a permanent loan modification was offered to Mr. East, he rejected the offer and never entered into a permanent loan modification agreement with either defendant. . (See, PennyMac Sep. St. Nos. 4-8, 10; see also, JPM Sep. St. Nos. 14-25.) Plaintiff has offered no evidence to refute these facts and therefore, defendants are entitled to judgment as a matter of law on this cause of action.
IV. Plaintiff’s Third Cause of Action Under Business and Professions Code 17200
A cause of action under Business and Professions Code section 17200 is considered “derivative” and establishes a separate cause of action based on an existing “unlawful, unfair, or fraudulent” business practice. Specifically, section 17200 provides a cause of action for “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising” which results in an “injury in fact” or “lost money or property.” (Bus. & Prof. Code, §§17200 and 17204; see also, Davis v. Ford Motor Credit Co. (2009) 179 Cal.App.4th 581, 593; Bernardo v. Planned Parenthood Fed. of Am (2004) 115 Cal.App.4th 322, 351; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) A violation of the unlawful prong requires an underlying violation of law. (See, Krantz v. BT Visual Images, LLC (2001) 89 Cal.App.4th 164, 178.) An alleged unfair business practice must be tethered to specific “constitutional, statutory, or regulatory provisions.” (See, Scripps Clinic v. Super. Court (2003) 108 Cal.App.4th 917, 940.) A claim under the fraudulent prong must established that reasonable members of the public are likely to be deceived. (See, Rubio v. Capital One Bank (9th Cir. 2010) 613 F.3d 1195, 1203.) Plaintiffs must “state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Malys of Cal., Inc. (1993) 14 Cal.App.4th 612, 619.) With respect to damages, a private plaintiff must allege he or she “has suffered injury in fact and has lost money or property” in order to have standing to sue under this provision. (Bus. & Prof. Code, §17204.)
Here, both defendants have met their burdens and have made prima facie showings that Plaintiff’s cause of action under Business and Professions Code section 17200 has no merit, and thus, the burden shifted to Plaintiff to demonstrate there is a triable issue of material fact. However, Plaintiff has not submitted sufficient evidence in opposition to these motions to raise any triable issue of material fact and therefore, Plaintiff has failed to meet his burden. Accordingly, defendants are entitled to judgment as a matter of law on this cause of action.
Counsel for PennyMac and JPM shall submit separate written orders and judgments to the Court consistent with this tentative ruling and in compliance with Rule of Court 3.1312.