47 Cal.App.5th 341
Cal. Ct. App.2020Background
- Weimer refinanced his Carnelian Bay home with Bank of America (BANA) (2006), defaulted, and paid $50,000 after promises of a permanent loan modification that never materialized.
- Servicing transferred from BANA to Specialized Loan Servicing (SLS) in ~2010 and to Nationstar in April 2014; Nationstar repeatedly had Weimer submit HAMP applications despite his loan being ineligible due to size.
- U.S. Bank acquired the beneficial interest in June 2014; Nationstar (as U.S. Bank’s agent) recorded a notice of trustee’s sale and hired Cyprexx to change the locks in August 2014.
- Weimer sued for (inter alia) intentional and negligent misrepresentation, negligence, trespass, and UCL violations. The trial court sustained BANA’s demurrer without leave (time-barred) and sustained demurrers by U.S. Bank, Nationstar, and SLS to the second amended complaint without leave.
- On appeal the Court: affirmed the dismissal as to BANA (claims time‑barred); reversed the dismissals as to U.S. Bank, Nationstar, and SLS insofar as they related to misrepresentation (Nationstar & U.S. Bank), negligence (Nationstar, U.S. Bank, SLS), and UCL claims (Nationstar, U.S. Bank, SLS); affirmed dismissal of the trespass claim against Nationstar.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether actions against BANA were time‑barred or tolled by a civil conspiracy/last overt act | Tolling: alleged continuing conspiracy; statute of limitations should run from last overt act (trustee’s sale/lockout in 2014) | Claims against BANA accrued when BANA stopped servicing (~early 2010); conspiracy allegations are conclusory, so tolling fails | Demurrer as to BANA properly sustained w/o leave; claims time‑barred (affirmed) |
| Sufficiency of intentional & negligent misrepresentation (Nationstar & U.S. Bank) | Servicer representatives told Weimer he was eligible for HAMP and to apply; that was false and induced reliance and damages | Defendants argued pleadings were conclusory and lacked particularity or were not actionable promises | Court held misrepresentation claims sufficiently pleaded as to Nationstar and, via agency allegations, U.S. Bank; demurrers reversed |
| Duty in negligence claim arising from loan‑modification processing (SLS, Nationstar, U.S. Bank) | Servicers undertook to consider modifications, made material misrepresentations, and had superior control—Biakanja factors support a special relationship and duty | Lender/servicer has no duty beyond conventional lender role; courts are divided and policy disfavours imposing tort duty for economic loss | Applying Biakanja/Gas Leak factors court found a special relationship and duty; negligence claim adequately pleaded; demurrers reversed |
| Trespass claim for lock‑change by servicer’s agent (Nationstar/Cyprexx) | Weimer alleged unauthorized entry and lock change while he still occupied property | Deed of trust §9 expressly authorized reasonable actions to protect lender’s interest including entry and changing locks when borrower in default | Deed of trust authorized the lock/change; trespass claim deficient and demurrer properly sustained without leave (affirmed) |
| UCL (Bus. & Prof. Code §17200) based on fraud/unfair practices in modification process (SLS, Nationstar, U.S. Bank) | Practices were fraudulent/unfair—soliciting applications for ineligible HAMP modifications, stringing along borrowers, and collecting fees | Defendants challenged sufficiency and remedies | Court found allegations support fraudulent and unfair prongs; demurrers reversed (remedies to be determined later) |
Key Cases Cited
- Biakanja v. Irving, 49 Cal.2d 647 (Cal. 1958) (sets six‑factor test for imposing a duty in cases seeking purely economic recovery; basis for "special relationship" analysis)
- Southern California Gas Leak Cases, 7 Cal.5th 381 (Cal. 2019) (clarifies no‑tort‑duty rule for pure economic loss but recognizes Biakanja "special relationship" exception)
- Daniels v. Select Portfolio Servicing, Inc., 246 Cal.App.4th 1150 (Cal. Ct. App. 2016) (conspiracy pleadings and limits on inferring conspiracies among successive servicers)
- Rossetta v. CitiMortgage, Inc., 18 Cal.App.5th 628 (Cal. Ct. App. 2017) (service‑of‑modification conduct and Biakanja factors: voluntary renegotiation can trigger duty depending on facts)
- Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49 (Cal. Ct. App. 2013) (no common‑law duty to offer or approve loan modification; limits on negligence claims)
- Alvarez v. BAC Home Loans Servicing, L.P., 228 Cal.App.4th 941 (Cal. Ct. App. 2014) (found Biakanja factors supported a duty where servicer agreed to consider HAMP modifications and mishandled applications)
- Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872 (Cal. Ct. App. 2013) (loan‑modification processing and duties; discussed in duty analysis)
- Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal.App.3d 1089 (Cal. Ct. App. 1991) (general rule that financial institutions owe no tort duty when acting within conventional lender role)