Schmidt v. CitiBank, N.A.
239 Cal. Rptr. 3d 648
| Cal. Ct. App. 5th | 2018Background
- In 2007 the Schmidts took a $1,820,000 mortgage on a La Jolla residence; they defaulted and stopped paying in October 2013.
- SPS (servicer) began servicing the loan in March 2014; multiple loan modification applications were submitted (2013, 2014, 2016) and ultimately denied; no trustee's sale occurred by June 2017.
- SPS records showed numerous telephone contacts (initiated by both SPS and the Schmidts) between March–Nov 2014 discussing finances, loss mitigation, and providing HUD counselor number; notice of default recorded Jan 14, 2015.
- Schmidts sued alleging violations of HBOR (former Civ. Code §§ 2923.55, 2923.6) and Bus. & Prof. Code § 17200, seeking injunctive relief, damages, and restitution.
- Trial court granted defendants' summary judgment; appeal challenges sufficiency of evidence and contends triable issues remain about compliance with former §§ 2923.55 and 2923.6.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether servicer complied with former Civ. Code § 2923.55 (contact/assessment before NOD) | Schmidts: contacts did not occur within 30 days prior to NOD and many calls were not initiated by servicer, so statutory contact requirement unmet | Defendants: records show multiple substantive calls initiated by servicer and borrower between Mar–Nov 2014 assessing finances and exploring alternatives; HUD number provided | Held: summary judgment for defendants — records and Adelman declaration established compliance; Schmidts’ lack of recollection insufficient to create triable issue; statute does not require servicer to be the initiator |
| Whether servicer violated former Civ. Code § 2923.6 (stay during pending complete loan-mod application / appeal procedures) | Schmidts: modification applications were pending/denial procedures (appeal instructions, timing) were inadequate, so sale notice was premature | Defendants: written denials were provided and procedural requirements were met; no pleaded claim about inadequate appeal instructions | Held: summary judgment for defendants — plaintiffs’ operative complaint did not plead the appeal-instruction theory; plaintiffs conceded denials were sent, so no triable issue on § 2923.6 theory alleged in the complaint |
| Whether evidentiary rulings admitting servicer declaration were erroneous | Schmidts: trial court improperly overruled objections to Adelman declaration | Defendants: objections did not comply with court rules; trial court acted within discretion | Held: trial court did not abuse discretion; objections failed to meet format requirements, so declaration considered |
| Whether § 17200 claim survives independent of HBOR claims | Schmidts: § 17200 claim premised on HBOR violations | Defendants: § 17200 derivative of failed HBOR claims | Held: summary judgment on HBOR claims disposes of § 17200 claim as well |
Key Cases Cited
- Valbuena v. Ocwen Loan Servicing, LLC, 237 Cal.App.4th 1267 (discusses HBOR purpose and remedies)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (summary judgment burden and procedure)
- Mabry v. Superior Court, 185 Cal.App.4th 208 (scope of § 2923.5/2923.55 contact requirement)
- Conroy v. Regents of University of California, 45 Cal.4th 1244 (pleadings define issues for summary judgment)