McBride v. PHH Mortgage Corp.

Opinion

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

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

for failure to properly allege a predicate law violation. IT IS THEREFORE ORDERED that PHH’s motion for summary judgment be, and the same hereby is, GRANTED. The Clerk is directed to enter final judgment for defendant and close the case. Dated: September 19, 2024 Aitteom th Ld. be—~ WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE