Resendez v. Bayview Loan Servicing CA4/2
E076395
| Cal. Ct. App. | Mar 24, 2022Background:
- Resendez owned a Romoland home secured by a mortgage serviced by Select Portfolio (to 2016) then Bayview; Bank of New York Mellon (BONY) was the beneficiary and Wolfe Firm the trustee.
- Resendez applied for a loan modification in late 2017; servicer acknowledged a completed application in January–March 2018 while multiple SPOCs handled his file.
- A notice of trustee’s sale was posted and recorded in April 2018 while his modification was under review; Bayview later denied the modification (and affirmed the denial on appeal) before any trustee’s deed of sale was recorded.
- Resendez filed bankruptcy and repeatedly postponed sales; he sued (SAC) alleging HBOR violations (dual tracking under §2923.6/§2924.11 and SPOC §2923.7), negligence, and UCL violations.
- The trial court sustained defendants’ demurrer, concluding Civil Code §2924.12(c) safe-harbor applied to HBOR claims, no common-law duty supported negligence, and the UCL claim was derivative; dismissal without leave to amend was affirmed on appeal.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Dual-tracking / HBOR (§2923.6 / §2924.11) | Posting/recording notice of sale while modification pending violated HBOR; entitles plaintiff to relief | Any alleged HBOR violations were corrected before a trustee’s deed was recorded; §2924.12(c) safe-harbor bars liability | Court held safe-harbor applies; HBOR dual-tracking claim barred and dismissed |
| SPOC requirement (§2923.7) | SPOC (Killen) gave misleading info about status of sale and file, constituting a material violation | Any SPOC/notification problems were remedied prior to sale recordation; §2924.12(c) shields servicer | Court assumed a violation for argument’s sake but held safe-harbor barred relief and dismissed claim |
| Negligence (common-law duty) | Servicer owed a duty to process the modification with reasonable care; breach caused economic harm | No common-law duty exists to carefully process loan-mod applications; economic-loss rule/contractual context precludes tort recovery | Court followed controlling authority rejecting such a duty and affirmed dismissal of negligence claim |
| UCL (unfair/unlawful) | Servicer’s practices (dual tracking, mishandling) were unfair/unlawful and caused damages | UCL claim is derivative of the other claims and fails if underlying claims fail | Court held UCL claim is derivative and dismissed it |
Key Cases Cited
- Schifando v. City of Los Angeles, 31 Cal.4th 1074 (2003) (standard for reviewing demurrer; assume truth of properly pleaded allegations)
- Billesbach v. Specialized Loan Servicing LLC, 63 Cal.App.5th 830 (2021) (discusses dual-tracking and application of HBOR safe-harbor)
- Biakanja v. Irving, 49 Cal.2d 647 (1958) (multifactor test for imposing duty to third parties)
- Valbuena v. Ocwen Loan Servicing, LLC, 237 Cal.App.4th 1267 (2015) (distinguishes cases where foreclosure occurred during modification review)
- Alvarez v. BAC Home Loans Servicing, L.P., 228 Cal.App.4th 941 (2014) (applied Biakanja to impose duty where servicer mishandled documents)
- Daniels v. Select Portfolio Servicing Inc., 246 Cal.App.4th 1150 (2016) (found duty in specific facts where servicer advised borrower to stop payments)
- Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49 (2013) (rejected common-law duty to offer/consider loan modification)
- Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872 (2013) (explains SPOC purpose to prevent borrower being given conflicting information)
- Hawran v. Hixson, 209 Cal.App.4th 256 (2012) (UCL claims are derivative and rise or fall with underlying causes of action)
- Myles v. PennyMac Loan Services, LLC, 40 Cal.App.5th 1072 (2019) (illustrates UCL standing tied to underlying claims)