51 Cal.App.5th 666
Cal. Ct. App.2020Background
- Adams obtained a senior deed of trust in 2006 and later a junior loan; the junior lender foreclosed in 2008 and purchased the property, which remained subject to the senior deed of trust.
- Adams remained the named borrower on the senior deed of trust (Bank of America as successor to Countrywide; ReconTrust as trustee).
- In 2016–2017 Adams alleged she applied for a loan modification of the senior loan; she claimed Bank of America recorded a notice of default and notice of trustee’s sale and failed to provide a single point of contact while her application was pending (HBOR violations).
- Defendants moved for judgment on the pleadings; Adams did not oppose; the trial court granted judgment without leave to amend and denied her later attempt to file an amended complaint.
- On appeal the court held the complaint did not plead that the property was Adams’s "principal residence" as required by section 2924.15 (the HBOR’s "owner-occupied" limitation), but found the trial court abused its discretion by refusing leave to amend and reversed and remanded with leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does HBOR apply where borrower is not pleaded as the property’s principal residence? | Adams argued HBOR dual-tracking and single-point-of-contact protections apply because she was a borrower with a pending modification. | Bank argued HBOR protections apply only to owner-occupied property and Adams failed to allege she was the principal resident (and may no longer own). | Court: HBOR’s defined term "owner-occupied" means the property must be the borrower’s principal residence; Adams’ complaint failed to plead that fact. |
| Whether the deed of trust/buyer status negated Adams’s status as a borrower for HBOR purposes | Adams relied on being named "borrower" on the deed of trust and residency assertions in other filings. | Defendants argued the trustee’s sale after the junior foreclosure removed any ownership/residency entitlement, defeating HBOR coverage. | Court: Statutory definitions control; being named borrower on the deed of trust is sufficient for "borrower" status; defendants offered no authority that junior foreclosure revoked borrower status. |
| Sufficiency of pleading for other HBOR provisions (e.g., §2923.5, §2924.17) | Adams asserted violations of multiple HBOR provisions beyond dual-tracking and single point of contact. | Defendants argued §2924.15’s principal-residence limitation defeats those claims and alleged lack of facts to support §2924.17. | Court: Claims subject to §2924.15 fail for the same reason (no principal residence alleged); §2924.17 also not pleaded with adequate facts. |
| Whether trial court abused discretion by denying leave to amend | Adams argued she could plead facts showing the property was her principal residence and sought leave to amend. | Defendants did not oppose leave if court required principal-residence pleading. | Court: There was a reasonable possibility an amendment could cure the defect; denial of leave to amend was an abuse of discretion — reversed and remanded with leave to amend. |
Key Cases Cited
- Kapsimallis v. Allstate Ins. Co., 104 Cal.App.4th 667 (Cal. Ct. App. 2002) (standards for judgment on the pleadings and de novo review)
- Sanchez v. Truck Ins. Exchange, 21 Cal.App.4th 1778 (Cal. Ct. App. 1994) (leave to amend if reasonable possibility defect can be cured)
- Aubry v. Tri-City Hospital Dist., 2 Cal.4th 962 (Cal. 1992) (abuse-of-discretion review of denial of leave to amend)
- Schifando v. City of Los Angeles, 31 Cal.4th 1074 (Cal. 2003) (reasonable-possibility standard for amendment analysis)
- Great Lakes Properties, Inc. v. City of El Segundo, 19 Cal.3d 152 (Cal. 1977) (statutory definitions prescribed by legislature are controlling)
- Valbuena v. Ocwen Loan Servicing, LLC, 237 Cal.App.4th 1267 (Cal. Ct. App. 2015) (HBOR remedies: injunctive relief pre-foreclosure, monetary relief post-sale)
- Sosinsky v. Grant, 6 Cal.App.4th 1548 (Cal. Ct. App. 1992) (limitations on judicially noticeable factual assertions)
- Vons Companies, Inc. v. Seabest Foods, Inc., 14 Cal.4th 434 (Cal. 1996) (appellate courts generally do not judicially notice evidence not presented to trial court)
- Blank v. Kirwan, 39 Cal.3d 311 (Cal. 1985) (pleading standards for causes of action)