28 Cal.App.5th 1109
Cal. Ct. App.2018Background
- David and Hedda Schmidt obtained a $1,820,000 mortgage in 2007 and defaulted; no payments since Oct. 2013. The loan was assigned to Citibank as trustee; Select Portfolio Servicing, Inc. (SPS) later serviced the loan.
- SPS received and reviewed Schmidts' loan modification applications (submitted Mar. 2014 and Feb. 2016); the Mar. 2014 application was denied in July 2014; a later application was denied in June 2017.
- SPS's records showed multiple telephone contacts (SPS-initiated and borrower-initiated) between Mar.–Nov. 2014 discussing finances, loss mitigation, and providing HUD counseling phone number prior to the Jan. 14, 2015 notice of default.
- Schmidts sued alleging violations of the Homeowners’ Bill of Rights (former Civ. Code §§ 2923.55, 2923.6) and Business & Professions Code § 17200, seeking injunctive relief and damages and to stop a trustee’s sale.
- Defendants moved for summary judgment relying on SPS records and employee declaration; trial court granted summary judgment and entered judgment for defendants. Schmidts appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether defendants violated former Civ. Code § 2923.55 (contact requirement) before recording NOD | Schmidts: no contact within 30 days before NOD; thus statutory contact/notice requirements not met | Defendants: records show repeated substantive telephone contacts and provision of HUD number, satisfying § 2923.55 | Court: Defendants met prima facie showing; Schmidts’ vague "lack of recall" testimony failed to create triable issue; summary judgment for defendants |
| 2. Whether "contact" must be lender‑initiated to satisfy § 2923.55 | Schmidts: contacts initiated by borrower cannot satisfy statute | Defendants: statute does not require lender initiation; substantive discussions suffice | Court: Rejected lender‑initiation requirement; borrower‑initiated substantive calls can satisfy the statute; alternatively many calls were SPS‑initiated |
| 3. Whether defendants violated former Civ. Code § 2923.6 (stay while modification pending / appeal procedures) | Schmidts: notices allegedly failed to explain how to appeal; sale occurred while application pending | Defendants: written denials were provided; Schmidts did not plead the appeal‑instruction theory | Court: Schmidts did not plead the appeal‑instruction theory in SAC, so they cannot raise it in opposition; no triable issue on § 2923.6 as pleaded |
| 4. Evidentiary objections to servicer declaration | Schmidts: trial court erred in overruling objections to SPS employee declaration | Defendants: objections failed to comply with court rules; declaration admissible | Court: Overruling was within discretion because objections did not follow rule 3.1354(b)(3); declaration considered |
Key Cases Cited
- Valbuena v. Ocwen Loan Servicing, LLC, 237 Cal.App.4th 1267 (Cal. Ct. App. 2015) (HBOR purpose and injunctive vs. post‑sale remedies)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (Cal. 2001) (summary judgment burden of persuasion rules)
- Mabry v. Superior Court, 185 Cal.App.4th 208 (Cal. Ct. App. 2010) (interpretation of borrower contact/assessment requirement)
- Conroy v. Regents of Univ. of Cal., 45 Cal.4th 1244 (Cal. 2009) (pleadings set the boundaries of issues in litigation)
- Wiener v. Southcoast Childcare Centers, Inc., 32 Cal.4th 1138 (Cal. 2004) (appellate review standard for summary judgment)