McBride v. PHH Mortgage Corp.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 ROBERT MCBRIDE, an No. 2:23-cv-02242 WBS DB individual, 13 Plaintiff, 14 MEMORANDUM AND ORDER RE: v. DEFENDANT’S MOTION FOR SUMMARY 15 JUDGMENT PHH MORTGAGE CORPORATION, a 16 limited liability company, and DOES 1 through 20, 17 inclusive, 18 Defendants. 19 20 ----oo0oo---- 21 Plaintiff Robert McBride (“McBride” or “plaintiff”) 22 filed this lawsuit under the Homeowner Bill of Rights, Cal. Civ. 23 Code §§ 2923.6-.7, and the Unfair Competition Law (“UCL”), Cal. 24 Bus. & Prof. Code § 17200, alleging that defendant PHH Mortgage 25 Corporation (“defendant” or “PHH”) attempted an illegal 26 foreclosure of his residence. (Docket No. 1.) Defendant now 27 moves for summary judgment on all claims. (Docket No. 23.) 28 1 I. Background 2 Pursuant to a mortgage now serviced by PHH, McBride 3 purchased the single-family home located at 3650 Coyote Road, 4 West Sacramento, CA 95691 (“the property”) in Yolo County as a 5 personal residence for himself and his spouse in 2006. 6 (Statement of Undisputed Facts ¶¶ 1-2 (Docket No. 25-4).) 7 After the COVID-19 pandemic began, plaintiff defaulted 8 on the property’s mortgage. (Declaration of Richard Schwiner 9 (“Schwiner Decl.”) ¶¶ 5, 7-10 (Docket No. 23-1).) The parties 10 entered into a hardship forbearance agreement shortly thereafter 11 so that McBride could defer paying the mortgage. (Id. ¶¶ 11-13.) 12 At most three years later, PHH notified plaintiff that 13 he would need to start making payments towards the mortgage 14 again. (Id. at ¶¶ 14-18.) At first, McBride did not apply for a 15 loan modification, but he attempted to communicate with 16 defendant’s first authorized representative for his account to 17 little effect. (Id.) 18 Sometime between that notice and the beginning of this 19 litigation, plaintiff applied for a loan modification on several 20 occasions. (Id. ¶¶ 18-30.) On each occasion, PHH denied his 21 application. (Id.) Defendant cited illegible pay stubs as the 22 reason for at least some of the denials. (Id. ¶¶ 21-22, 26-27, 23 29.) 24 On April 19, 2023, defendant recorded a Notice of 25 Default regarding McBride’s mortgage, which continued the process 26 of foreclosure on the property. (Id. ¶ 24.) On August 21, 2023, 27 PHH recorded a Notice of Trustee’s Sale with respect to the 28 property. (Id. ¶ 28.) 1 Plaintiff initiated the instant action on October 2, 2 2023. PHH timely answered the Complaint on October 18, 2023. 3 (Docket No. 9.) After filing the Complaint, McBride completed a 4 loan modification application on October 13, 2023. (Schwiner 5 Decl. ¶¶ 31-32.) PHH accepted that application and sent 6 plaintiff an offer for a payment plan in early December 2023. 7 (Declaration of Neil Cooper (“Cooper Decl.”) ¶ 2 (Docket No. 23- 8 2).) The offer has since expired due to a lack of response. 9 (Id.) 10 McBride moved ex parte for a temporary restraining 11 order on February 7, 2024. (Docket No. 14.) Over defendant’s 12 timely opposition (Docket No. 15), the court temporarily enjoined 13 a future foreclosure sale of the property on February 12, 2024 14 (Docket No. 21).1 15 II. Standard 16 Summary judgment is proper “if the movant shows that 17 there is no genuine dispute as to any material fact and the 18 movant is entitled to judgment as a matter of law.” Fed. R. Civ. 19 P. 56(a). A material fact is one “that might affect the outcome 20 of the suit under the governing law,” and a genuine issue is one 21 that could permit a reasonable trier of fact to enter a verdict 22 in the non-moving party’s favor. Anderson v. Liberty Lobby, 23 Inc., 477 U.S. 242, 248 (1986). 24 The moving party bears the initial burden of 25

26 1 The temporary restraining order lacks preclusive effect since it is not a final judgment on the merits. See, e.g., 27 Friends of Gualala River v. Gualala Redwood Timber, LLC, 552 F. Supp. 3d 924, 936 (N.D. Cal. 2021); Benasra v. Mitchell 28 Silberberg & Knupp, 96 Cal. App. 4th 96, 115 (2d Dist. 2002). 1 establishing the absence of a genuine issue of material fact. 2 Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). However, 3 “the underlying facts . . . must be viewed in the light most 4 favorable to the non-moving party.” Matsushita Elec. Indus. Co. 5 v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (alteration in 6 original) (quoting United States v. Diebold, Inc., 369 U.S. 654, 7 655 (1962)). 8 III. Discussion 9 A. Homeowner Bill of Rights 10 Plaintiff sues under two different provisions of the 11 Homeowner Bill of Rights. One claim is based on its prohibition 12 on “dual tracking,” where a lender such as PHH proceeds with 13 foreclosure while reviewing a complete loan modification 14 application. Cal. Civ. Code § 2923.6(c) (“If a borrower submits 15 a complete application for a first lien loan modification offered 16 by, or through, the borrower’s mortgage servicer, a mortgage 17 servicer . . . shall not record a notice of default, or conduct a 18 trustee’s sale, while the complete first lien loan modification 19 application is pending.”). The statute further provides that if 20 the lender offers the borrower such as McBride a loan 21 modification, the borrower has fourteen days to accept that 22 offer. Id.(2). 23 McBride’s other Homeowner Bill of Rights claim arises 24 under its requirement that the lender provide “a single point of 25 contact.” Id. § 2923.7(a). If a borrower requests a single 26 point of contact, the mortgage servicer must provide a person or 27 team of personnel who can “timely, accurately, and adequately 28 inform the borrower of the current status of the foreclosure 1 prevention alternative.” Id. 2 The Homeowner Bill of Rights states that “[a] mortgage 3 servicer . . . shall not be liable for any violation that it has 4 corrected and remedied prior to the recordation of the trustee’s 5 deed upon sale.” Cal. Civ. Code § 2924.12(c). In other words, 6 it “provid[es] a safe harbor” for violations such that “a 7 temporary disruption of the normal foreclosure process that is 8 corrected and causes no lasting harm to the borrower’s rights 9 will give rise to no liability.” Billesbach v. Specialized Loan 10 Servicing LLC, 63 Cal. App. 5th 830, 845-46 (2d. Dist. 2021). 11 Plaintiff’s Homeowner Bill of Rights claims fail 12 because PHH cured any of its violations by offering him a new 13 payment plan in late 2023. See Cal. Civ. Code § 2924.12(a)-(c). 14 Regarding the dual-tracking claim, it is uncontested that on 15 October 13, 2023, McBride completed a loan modification 16 application. (Schwiner Decl. ¶ 31.) In December 2023, defendant 17 extended him an offer for the payment plan, but neither plaintiff 18 nor his spouse accepted PHH’s offer. (Cooper Decl. ¶ 2.) The 19 offer has since expired. Id. In contrast, plaintiff failed to 20 complete a loan modification offer when defendant recorded a 21 Notice of Default on April 19, 2023, or when PHH recorded a 22 Notice of Trustee’s Sale on August 21, 2023. (Schwiner Decl. 23 ¶¶ 24, 28.) 24 McBride offers three arguments in response. First, the 25 payment plan asked plaintiff to pay more than he could afford, so 26 it was not based on plaintiff’s completed application. Second, 27 the payment plan was not a loan modification because it was 28 labeled as a modification settlement offer. Third, the payment 1 plan was invalid because it did not have an interest rate or 2 escrow portion. (Pl.’s Opp’n to Def.’s Mot. for Summ. J. at 10 3 (Docket No. 25).) 4 McBride’s assertions do not create any issue of 5 material fact regarding the payment plan which PHH offered him. 6 What matters is that PHH returned to the negotiating table with a 7 non-frivolous offer based on a fixed dollar amount spread over a 8 definite number of payments. To plaintiff’s first point, he 9 neglects to cite any authority requiring that PHH offer him a 10 suitable loan modification after plaintiff failed to pay his 11 mortgage for at least two years. Even if the payment plan 12 exceeded plaintiff’s monthly income and came after plaintiff 13 commenced litigation, it still had the requisite nexus with his 14 completed application from October 13, 2023. (See Dep. of Robert 15 McBride at 80, ll. 8-16.) 16 As for plaintiff’s second and third arguments, the 17 court is not aware of any provision in the Homeowner’s Bill of 18 Rights which requires PHH to offer McBride a loan modification 19 plan which is affordable to him. The fact that defendant labeled 20 the payment plan “a ‘modification settlement offer’” does not 21 change the fact that it cures plaintiff’s alleged Homeowner Bill 22 of Rights violations. (Galletta Decl. ¶ 3.) The same applies to 23 McBride’s assertions that the payment plan lacked certain 24 financial details, such as an interest rate on the remaining 25 amount. See Billesbach, 63 Cal. App. 5th at 845-46 (quoting Cal. 26 Civ. Code § 2924.12(c)). Accordingly, PHH’s offer satisfies the 27 requirements of the Homeowner Bill of Rights. 28 In addition, plaintiff concedes that defendant assigned 1 him a single point of contact, Gabriel Lara, who discussed the 2 applications and paperwork with him over phone and email between 3 December 15, 2022, and October 2, 2023. (Statement of Undisputed 4 Facts ¶ 4.) Lara functioned as the single point of contact 5 required by sections 2923.7 and 2924.12 of the California Civil 6 Code. 7 In sum, PHH cured plaintiff’s alleged Homeowner Bill of 8 Rights violations by offering him the payment plan and assigning 9 Lara to his account. Put differently, defendant’s offer of a 10 loan modification payment plan renders McBride’s alleged 11 violations of the Homeowner Bill of Rights immaterial. See Cal. 12 Civ. Code § 2924.12(a)-(b). As a result, plaintiff fails to 13 create a genuine issue of material fact regarding either of his 14 first two claims and cannot prevail on them. 15 B. UCL 16 The UCL prohibits any unlawful, unfair, or fraudulent 17 business act or practice. Cal. Bus. & Prof. Code § 17200. As 18 such, a claim arising under it may allege that a business act or 19 practice is unlawful, unfair, and/or fraudulent. Berryman v. 20 Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1553-54 (4th 21 Dist. 2007). To show that a business act or practice is 22 unlawful, McBride must show “a violation of another law [a]s a 23 predicate” for the claim. Id. at 1554. 24 Plaintiff’s third claim, brought under the UCL’s 25 “unlawful” prong, depends on his alleged Homeowner Bill of Rights 26 violations as predicates. (Opp’n at 11.) Because the court 27 concludes that McBride cannot succeed on either of his Homeowner 28 Bill of Rights claims, plaintiff cannot prevail on his UCL claim ne nnn een en nn nnn nnn nnn nnn OE EE I OE EO

1 for failure to properly allege a predicate law violation. 2 IT IS THEREFORE ORDERED that PHH’s motion for summary 3 judgment be, and the same hereby is, GRANTED. The Clerk is 4 directed to enter final judgment for defendant and close the 5 case. 6 | Dated: September 19, 2024 Aitteom th Ld. be—~ WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28