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Dayton v. Bank of Am.

California Court of Appeals, First District, Second Division
Jun 24, 2022
No. A162388 (Cal. Ct. App. Jun. 24, 2022)

Opinion

A162388

06-24-2022

EDWARD RANDOLPH DAYTON, Plaintiff and Appellant, v. BANK OF AMERICA, N.A., Defendant and Respondent.


NOT TO BE PUBLISHED

(Solano County Super. Ct. No. FCS052246)

RICHMAN, ACTING P. J.

In 2013, plaintiff Edward Dayton spoke on the phone with a representative of his mortgage lender, defendant Bank of America, N.A. (BANA), and refused BANA's offer of a subsequent meeting to discuss his financial situation and options for avoiding foreclosure. In 2016, Dayton applied for and was offered a permanent loan modification from BANA, which he chose not to accept. After his property was sold in 2017 at a trustee's sale, Dayton brought suit alleging BANA had failed to comply with the Homeowner Bill of Rights (Civ. Code, § 2923.4 et seq.) during the 2013 phone call. The trial court granted summary judgment for BANA, and we affirm. 1

Further statutory references are to the Civil Code.

BACKGROUND

The factual background is drawn from the moving papers on summary judgment, and Dayton's response that the facts set forth were undisputed.

On or about March 23, 1993, Dayton obtained a loan in the amount of $101,199 from Countrywide Funding Corporation, secured by a deed of trust on real property on Crowley Lane in Fairfield.

On February 2, 2012, Dayton submitted a loan modification application to BANA. And in September 2012, Dayton submitted a second loan modification application. BANA denied the second application on December 19, 2012.

On November 4, 2013, Dayton called the loan servicing department at BANA and spoke with Almita Sasso. Dayton asked Sasso for the monthly payment amount and principal balance on his loan so that he could provide that information to Keep Your Home California in order to apply for mortgage assistance. Sasso told Dayton that his monthly payment was $806.49, and the principal balance was $73,103.29. She also informed him that there were 69 payments past due and the amount in arrears at that time was $91,943.

Toward the end of the call, the following exchange took place:

"Sasso: [A]lso, I wanted to give you, on the way out, the telephone number for the Housing [and] Urban Development. I don't know if that's the one you're going through, but the number, it's given as an alternative way of assistance, okay, in case we couldn't help you.

"Dayton: This is the HUD number?

"Sasso: Yes.

"Dayton: Yeah. 2

"Sasso: 1-800-569-4287. [¶] . . . [¶]

"Sasso: Also, because you're in California, you have the right to schedule a subsequent meeting with an associate from Bank of America, who will govern [sic] your financials at this point and determine whether you have any type of assistance available to you from our end. Are you interested in scheduling an appointment?

"Dayton: No. No. Not right now. That's not

"Sasso: No. You have 14 days from today to change your mind. If you do so, just give us a call, and we'll schedule it for you. And third, but not last, okay, because you're in California, you have the right to counsel, okay? That means an advisor, a mediator, okay, or an attorney, if you-if you think you need it, okay? So, . . . if you think you need it, seek for the assistance."

On April 2, 2015, a notice of default was recorded on the property.

In October of 2016, Dayton submitted a third application to BANA seeking a loan modification. In the "Monthly Household Income" section of the application, Dayton indicated that he had a monthly income of $8,960 when "working," and of $1,800 "when unemployed."

On November 25, 2016, BANA approved Dayton for a permanent loan modification under the Veterans Affairs (VA) Traditional Loan Modification Program. The modification offered Dayton a new principal balance of $140,049.21 and a new monthly payment, including escrowed taxes and insurance, of $2,294.53. The letter offering the modification also indicated that Dayton had been considered for, but did not qualify for, several other loan modification programs. The letter required Dayton to sign the agreement and return it by December 25 in order to accept the modification. Dayton did not do so. 3

On June 22, 2017, BANA transferred the servicing of Dayton's loan to Carrington Mortgage Service LLC (Carrington). On September 14, the trustee, Quality Loan Service, LLC, recorded a notice of trustee sale. And on October 16, BANA was granted title to the property as the foreclosing beneficiary. BANA later obtained judgment against Dayton in an unlawful detainer action.

On January 31, 2019, Dayton brought suit against BANA, Carrington, and Quality Loan Service, LLC. The operative amended complaint asserts a single cause of action against BANA for declaratory and monetary relief based on the assertion that BANA failed to comply with section 2923.55, subdivision (b)(2) before recording the April 2015 notice of default.

BANA answered the complaint in April 2019, and in April of 2020, moved for summary judgment. In support, BANA filed a memorandum of points and authorities, a separate statement of seven undisputed material facts, a request for judicial notice of the deed of trust, notice of default, notice of trustee's sale, and declarations of BANA's Arsheen Littlejohn and BANA's counsel Joel Spann, attaching various exhibits, including Dayton's September 2012 and 2016 loan modification applications and BANA's responses to those applications. In August 2020, BANA filed a supplemental declaration of Joel 4 Spann attaching excerpts of Dayton's deposition transcript, as well as the transcript of the November 4, 2013 call with BANA.

In his initial clerk's transcript on appeal, Dayton omitted all of BANA's moving papers except for Exhibit B to the Spann declaration-the transcript of the November 4, 2013 phone call between Dayton and Sasso. On March 28, 2022, we granted Dayton's motion to augment the record with BANA's moving papers, including BANA's memorandum of points and authorities, two declarations in support, BANA's reply brief, and its request for judicial notice. We also permitted the parties to file supplemental briefs addressing the augmentation. On April 6, BANA moved to further augment the record, indicating that Dayton had omitted certain exhibits to the two declarations filed in support of BANA's summary judgment motion and seeking to include complete copies, as well as the trial court's order granting summary judgment. On May 10, we granted BANA's motion to so augment the record.

In October 2020, Dayton filed opposition and a response to BANA's separate statement of undisputed facts, indicating that each of the seven allegedly undisputed facts were in fact undisputed. Later that month, BANA filed a reply.

On October 29, 2020, after issuing a tentative ruling in BANA's favor, the trial court heard oral argument on the motion, and on January 8, 2021, entered a nine-page order granting it. The trial court concluded that BANA's alleged violation of section 2923.55 was not "material," that any violation was cured when BANA offered Dayton a loan modification in November of 2016, and that BANA was not required to record a new notice of default before foreclosing on the property under the circumstances.

On January 29, 2021, judgment was entered for BANA, from which Dayton appealed in propria persona. 5

"Under the law, a party may choose to act as his or her own attorney. [Citations.] '[S]uch a party is to be treated like any other party and is entitled to the same, but no greater consideration than other litigants and attorneys. [Citation.]' [Citation]. Thus, as is the case with attorneys, pro. per. litigants must follow correct rules of procedure. (Kabbe v. Miller (1990) 226 Cal.App.3d 93, 98; Bistawros v. Greenberg (1987) 189 Cal.App.3d 189, 193 [self-represented party 'held to the same restrictive procedural rules as an attorney']; Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 638-639 [same].)" (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246-1247.)

DISCUSSION

Standard of Review

"Code of Civil Procedure section 437c, subdivision (c) provides that summary judgment is properly granted when there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc, § 437c, subd. (c).) As applicable here, moving defendants can meet their burden by demonstrating that 'a cause of action has no merit,' which they can do by showing that '[o]ne or more elements of the cause of action cannot be separately established . . . .' (§ 437c, subd. (o)(1); see also, Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 486-487.) Once defendants meet this burden, the burden shifts to plaintiff to show the existence of a triable issue of material fact. (§ 437c, subd. (p)(2).)

"On appeal '[w]e review a grant of summary judgment de novo; we must decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. [Citations.]' (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) Put another way, we exercise our independent judgment, and decide whether undisputed facts have been established that negate plaintiffs claims. (Romano v. Rockwell Internat., Inc., supra, 14 Cal.4th at p. 487.) As we put it in Fisherman's Wharf Bay Cruise Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320: '[W]e exercise an independent review to determine if the defendant moving for summary judgment met its burden of establishing a complete defense or of negating each of the plaintiffs theories and establishing that the action was without merit.' (Accord, Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945, 972.)" (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 253.) 6

The Homeowner Bill of Rights

The Homeowner Bill of Rights (§ 2923.4 et seq.) (HBOR), effective January 1, 2013, was enacted "to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower's mortgage servicer, such as loan modifications or other alternatives to foreclosure." (§ 2923.4.)

As relevant here, section 2923.55, subdivision (a) provides that a mortgage servicer shall not record a notice of default until "30 days after initial contact is made as required by paragraph (2) of subdivision (b)," which in turn provides:

Section 2923.55 was subject to a sunset provision effective January 1, 2018, but was reenacted effective January 1, 2019. (Stats. 2018, ch. 404, § 6.)

"(2) A mortgage servicer shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgage servicer shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgage servicer shall schedule the meeting to occur within 14 days. The assessment of the borrower's financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically."

Section 2924.12, subdivision (b), provides that "[a]fter a trustee's deed upon sale has been recorded, a mortgage servicer . . . shall be liable to a 7 borrower for actual economic damages . . . resulting from a material violation of Section 2923.55 . . . by that mortgage servicer . . . where the violation was not corrected and remedied prior to the recordation of the trustee's deed upon sale."

Analysis

Dayton's opening brief argues that the mortgage servicer must "assess the borrower's financial situation and explore options for the borrower to avoid foreclosure" before a notice of default is recorded, and "[s]imply offering a subsequent meeting does not meet the contact requirements of the statute." Dayton does not cite any authority for the proposition that where, as here, the borrower expressly refuses to set up a subsequent meeting for the purpose of assessing his or her financial situation, the servicer must then immediately conduct that assessment as part of the initial contact. Nevertheless, even assuming that BANA violated section 2923.55 by not assessing Dayton's financial situation and options to avoid foreclosure at the time of the phone call in November 2013, Dayton cannot show that he is entitled to relief under the HBOR because he has failed to show that the alleged violation was "material," or that the violation was "not corrected and remedied prior to the recordation of the trustee's deed upon sale." (§ 2924.12, subd. (b).)

"Neither the HBOR nor California case law expressly defines the term 'material' for purposes of section 2924.12. However, federal district courts applying California law have held that a violation is material if it affected the borrower's loan obligations, disrupted the loan-modification process, or otherwise harmed the borrower in connection with the borrower's efforts to avoid foreclosure. (See, e.g., Cardenas v. Caliber Home Loans, Inc. (N.D. Cal. 2017) 281 F.Supp.3d 862, 870 (Cardenas) [no material violation where 8 plaintiff alleged no facts suggesting that statutory breaches' "affected [her] loan obligations," disrupted [her] loan modification process, or caused [her] to suffer harm that [she] would not have suffered otherwise']; Galvez v. Wells Fargo Bank, N.A. (N.D. Cal., Oct. 4, 2018, No. 17-cv-06003-JSC) 2018 U.S. Dist. Lexis 172087, at p. *12 (Galvez) [applying Cardenas's standard].) In other words, the HBOR creates no liability for a technical violation that does not thwart its purposes. California case law involving the materiality requirement is consistent with this rule. (Compare Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1124, fn. 7 (Schmidt) [if borrower had opportunity to discuss financial situation and foreclosure alternatives with lender, purpose of statute is met, and any violation by lender in failing to initiate contact was not material] with Berman v. HSBC Bank USA, N.A. (2017) 11 Cal.App.5th 465, 472 [lender materially violated HBOR by sending borrower letter affording him shorter time than required by statute to appeal initial denial of loan modification, which 'effectively diminished' borrower's right to appeal].)" (Billesbach v. Specialized Loan Servicing LLC (2021) 63 Cal.App.5th 830, 845 (Billesbach).)

Two recent cases considering materiality and cure under the HBOR are illustrative.

In Schmidt, supra, 28 Cal.App.5th 1109, the plaintiffs and the mortgage servicer had numerous telephone conversations in the months before a notice of default was recorded on the property, during which they discussed the plaintiffs' financial situation, a loss mitigation review, a loan modification application, and payment options. (Id. at p. 1121.) The plaintiffs also submitted a loan modification application, which the lender reviewed and denied, before the notice of default was recorded. (Id. at p. 1113.) 9

The Court of Appeal concluded that the servicer had complied with section 2923.55, in part by reviewing and processing the loan modification application:

"We further conclude that [the servicer] complied with the requirements of former section 2923.55, subdivision (b)(2) by fully reviewing and processing the Schmidts' loan modification application before recording the notice of default. (See, e.g., Hutchful v. Wells Fargo Bank, N.A. (9th Cir. 2012) 471 Fed.Appx. 693, 694 [trial court had 'properly construed the notice requirement of California Civil Code § 2923.5 as having been met by [the borrower's] extensive discussions with [the lender] regarding loan modification']; Bell v. Wells Fargo Bank, N.A. (C.D. Cal., Oct. 28, 2014, No. CV 14-4316-JFW) 2014 WL 12611283, p. *3 [loan modification review satisfies the requirement that the lender assess the borrower's financial situation and explore alternatives to foreclosure]; Keng Hee Paik v. Wells Fargo Bank, N.A. (N.D. Cal., Aug. 3, 2011, No. C 10-04016 WHA) 2011 WL 3359697, p. *3 [lender's review of two loan modification applications demonstrated 'conclusive[] compli[ance]' with former section 2923.5, predecessor statute to former section 2923.55].)" (Schmidt, supra, 28 Cal.App.5th at p. 1121.) The Court of Appeal therefore affirmed the trial court's grant of summary judgment to the defendants on the plaintiff's claims under the HBOR. (Id. at p. 1112.)

In Billesbach, supra, 63 Cal.App.5th 830 the defendant mortgage servicer recorded a notice of default and scheduled a foreclosure sale of the borrower's property. (Id. at p. 836.) After the borrower filed an action under the HBOR to enjoin the foreclosure, the servicer postponed the sale and reviewed the borrower's application for a loan modification, ultimately offering him a trial-period modification plan. (Id. at 836-837.) The borrower 10 did not accept the modification and the foreclosure went forward as planned. (Id. at p. 837.) As in Schmidt, the court concluded that the servicer had complied with the HBOR by considering the borrower's loan modification application:

"After appellant filed his lawsuit, respondent postponed the foreclosure sale, provided appellant with a single point of contact, communicated with him about foreclosure alternatives, reviewed his loan-modification application, and ultimately offered him a trial-period modification plan. These curative measures satisfied the HBOR's purpose to ensure that borrowers have a meaningful opportunity to obtain loss-mitigation options. (See Schmidt, supra, 28 Cal.App.5th at p. 1124, fn. 7.) It is true that respondent remained in technical non-compliance with the HBOR: it communicated with appellant only after it recorded its notice of default, and its declaration of compliance was inaccurate at the time it was recorded. Yet appellant offered no evidence that these pre-sale violations affected his loan obligations, disrupted his loan-modification process, or otherwise harmed him, despite appellant's subsequent remedial actions. Absent any meaningful harm to appellant, respondent's uncured violations were not material. (See Schmidt, supra, p. at 1124, fn. 7; Cardenas, supra, 281 F.Supp.3d at p. 870; Galvez, supra, U.S. Dist. Lexis 178087, at p. *12.)" (Billesbach, supra, 63 Cal.App.5th at p. 846, fn. omitted.)

The court also rejected the argument that the servicer was required to file a new notice of default before foreclosing on the property, because "[r]equiring a servicer to record a new, identical notice of default following full consideration of the borrower's loan-modification application would do nothing to further the HBOR's purpose." (Billesbach, supra, 63 Cal.App.5th 11 at p. 847.) The Court of Appeal affirmed the trial court's grant of summary judgment to the defendants on the plaintiff's HBOR claims. (Id. at p. 852.)

Summary judgment was proper in Schmidt and Billesbach. Likewise here.

Dayton has failed to allege-either in his complaint or in his briefs on appeal-that the purported violation of section 2923.55 was in any way "material," i.e., that the failure to explore his financial situation on the November 4, 2013 call "affected [his] loan obligations, disrupted the loan-modification process, or otherwise harmed [him] in connection with [his] efforts to avoid foreclosure." (Billesbach, supra, 63 Cal.App.5th at p. 845.) Indeed, the sale of the property did not take place for almost 4 years after the November 4, 2013 phone call, during which time Dayton applied for-and was offered-a permanent loan modification to help him avoid foreclosure. Dayton's allegations are simply of a entirely "technical violation" that did not thwart the purposes of the HBOR. (Ibid.)

Similarly, any violation of section 2923.55 in November of 2013 was cured in 2016 when BANA processed another loan modification application for Dayton and offered him a permanent loan modification. "[T]he HBOR's purpose [is] to ensure that borrowers have a meaningful opportunity to obtain loss-mitigation options." (Billesbach, supra, 63 Cal.App.5th at p. 846; see § 2923.4, subd. (a).) It is undisputed that BANA reviewed and processed a loan modification application from Dayton in 2016, and offered him a permanent loan modification. By doing so, BANA remedied any 2013 violation of section 2923.55, subdivision (b)(2). (See Billesbach, supra, 63 Cal.App.5th at p. 846 [lender cured violation of 2923.55 where lender "communicated with him about foreclosure alternatives, reviewed his loan-modification application, and ultimately offered him a trial-period 12 modification plan" even after filing a notice of default]; Schmidt, supra, 28 Cal.App.5th at p. 1121 [concluding the loan servicer "complied with the requirements of former section 2923.55, subdivision (b)(2) by fully reviewing and processing the [homeowner's] loan modification application"].)

For the first time on reply, Dayton makes several unsuccessful attempts to distinguish Billesbach, including on the ground that his loan had two different servicers, that his loan was assigned to two customer relationship managers, that BANA failed to assign a "single point of contact" to Dayton, and that the borrower in Billesbach contacted the lender prior to the notice of default being recorded, whereas no contact occurred between Dayton and BANA "prior to nor during the loan modification process of October 2016-December 2016." (See Billesbach, supra, 63 Cal.App.5th at pp. 838-841.) But these differences had nothing to do with the reasoning of Billesbach-reasoning which applies as well to the facts of this case.

Also for the first time on reply, Dayton argues that Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry) supports a finding that BANA violated section 2933.55. We reject this argument, for the reasons given in Billesbach: "In support of his position that a servicer must record a new notice of default to cure prior violations, appellant cites Mabry, supra, 185 Cal.App.4th 208. There, the Court of Appeal held that non-compliance with the pre-HBOR version of section 2923.5 rendered a notice of default invalid. (Mabry, supra, at p. 223.) The court then remanded the matter and instructed the trial court, if it determined the servicer had violated section 2923.5, to postpone the foreclosure sale until the servicer complied with the statute and filed a new notice of default. (Mabry, at p. 237.) Mabry 13 is inapposite. Initially, beyond its mere instruction to the trial court, the Mabry court did not meaningfully discuss whether subsequent compliance with the statute could cure prior violations without a new notice of default. Indeed, the servicer had not attempted to cure the alleged violations (id. at pp. 215-217), and it does not appear from the court's opinion that the parties even raised the issue. Moreover, Mabry did not assess the required remedial measures through the lens of section 2924.12's materiality requirement. Former section 2923.5 included no express private right of action. In concluding that a private right of action was nevertheless implied in the statute, the court relied in part on section 2924g, subdivision (c)(1)(A), which set forth grounds for postponement of a foreclosure sale, including the 'open-ended possibility that any court of competent jurisdiction may issue an order postponing the sale.' (Mabry, at p. 223.) Neither former section 2923.5 nor section 2924g included a materiality requirement, and the court never addressed such a requirement. Accordingly, Mabry is not instructive on the issues in this case." (Billesbach, supra, 63 Cal.App.5th at p. 847, fn. omitted.)

"As noted, former section 2923.5's substantive provisions were largely similar to those of current section 2923.55."

DISPOSITION

The judgment is affirmed. 14

We concur: Miller, J., Mayfield, J. [*] 15

[*] Superior Court of Mendocino County, Judge Cindee Mayfield, sitting as assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.


Summaries of

Dayton v. Bank of Am.

California Court of Appeals, First District, Second Division
Jun 24, 2022
No. A162388 (Cal. Ct. App. Jun. 24, 2022)
Case details for

Dayton v. Bank of Am.

Case Details

Full title:EDWARD RANDOLPH DAYTON, Plaintiff and Appellant, v. BANK OF AMERICA, N.A.…

Court:California Court of Appeals, First District, Second Division

Date published: Jun 24, 2022

Citations

No. A162388 (Cal. Ct. App. Jun. 24, 2022)