Opinion
B313034
03-17-2022
KENNETH DYMMEL et al., Plaintiffs and Appellants, v. NATIONSTAR MORTGAGE LLC, Defendant and Respondent.
Rodriguez Law Group and Patricia Rodriguez for Plaintiffs and Appellants. Troutman Pepper Hamilton Sanders and Jared D. Bissel for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. 19STCV46160, Mel Red Recana, Judge. Affirmed.
Rodriguez Law Group and Patricia Rodriguez for Plaintiffs and Appellants.
Troutman Pepper Hamilton Sanders and Jared D. Bissel for Defendant and Respondent.
CRANDALL, J.[*]
Kenneth and Ruth Dymmel (collectively, the Dymmels) have been significantly in arrears on their home mortgage since 2014, and the balance as of 2019, $1,260,594.78, vastly exceeds the initial amount that they borrowed.
In November 2019, more than three months after a notice of default and election to sell their property had been recorded, the Dymmels submitted a loan modification application, as to which there was no response. In December 2019, they sued various mortgage holders and servicers, defendants Bank of America, N.A. (Bank of America), Nationstar Mortgage LLC (Nationstar), and Aztec Foreclosure Corporation (Aztec), for failing to accept their loan modification application.
Bank of America and Aztec are not parties to this appeal.
Nationstar, the current mortgage servicer, responded to the lawsuit by filing a motion for judgment on the pleadings, which the trial court granted. The Dymmels appeal from this order. As we discuss below, their challenges to the judgment are meritless. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On February 27, 2007, the Dymmels executed a promissory note secured by a deed of trust held by Bank of America in the amount of $854,400 (the Loan).
On August 14, 2013, Bank of America evidently packaged the Loan into a mortgage-backed security, held by Banc of America Funding Corporation Mortgage Pass-Through Certificates, Series 2007-C (BAFC).
On June 12, 2014, BAFC assigned the Loan to U.S. Bank National Association, in capacity as trustee for BAFC.
On August 13, 2014, BAFC recorded a substitution of trustee, substituting Sage Point Lender Services, LLC as the deed of trust's trustee. That same day, Sage Point recorded a notice of default and its election to sell the property. At this time the Loan was approximately $299,185 in arrears.
On December 15, 2014, a second substitution of trustee was recorded, substituting Barrett Daffin Frappier Treder & Weiss, LLP as the deed of trust's trustee. It included a declaration stating that Barrett had mailed a copy of the second substitution to the Dymmels. On August 29, 2016, Barrett rescinded the 2014 notice of default.
On August 2, 2019, Aztec was substituted in as the Loan's trustee. That same day, Aztec recorded a notice of default, as well as its election to sell the property. At this point, the Loan was approximately $439,080.55 in arrears.
On November 1, 2019, Aztec recorded a notice of trustee's sale setting the property's sale date for December 4, 2019, as approximately $1,260,594.78 was owed on the Loan.
On November 25, 2019, the Dymmels submitted a loan modification application to Aztec as to which there was purportedly no response.
On December 4, 2019, Aztec sent the Dymmels correspondence informing them that the property's sale date had been postponed to January 8, 2020. Nationstar currently services the Loan. The trustee sale has yet to occur.
Mortgage servicers "agree to service the collateral, such as mortgage pools, in accordance with the negotiated pooling and servicing agreement." (Dunaway, Law of Distressed Real Estate (2021) Mortgage Modification, § 3A:25.)
On December 24, 2019, the Dymmels filed their verified complaint asserting causes of action for: (1) a violation of Civil Code section 2924.11; (2) a violation of section 2934, subdivision (a); (3) breach of the covenant of good faith and fair dealing; and, (4) unfair competition under Business and Professions Code section 17200.
Subsequent undesignated statutory references are to the Civil Code.
The trial court granted Nationstar's motion for judgment on the pleadings, ruling that the Dymmels were relying on a superseded version of section 2924.11, that their second cause of action provided no private right of enforcement, that their claim for breach of the covenant of good faith and fair dealing failed because they had not fully performed on the underlying contract, and that the unfair competition claim was unsupported because a necessary predicate violation did not exist.
The Dymmels timely appealed.
DISCUSSION
We independently review an order granting a motion for judgment on the pleadings to determine whether the facts asserted in the complaint are sufficient to state a cause of action. (RLI Ins. Co. v. CAN Casualty of California (2006) 141 Cal.App.4th 75, 80.) We assume the truth of all properly pleaded factual allegations, and may also consider evidence outside the pleadings, such as facts taken following a request for judicial notice, that was relied upon by the trial court without objection. (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321.)
Initially, we observe the Dymmels do not challenge the trial court's dismissal of their second cause of action-violation of section 2934, subdivision (a). Any claim of error involving this cause of action is forfeited. (Sierra Palms Homeowners Assn. v. Metro Gold Line Foothill Extension Construction Authority (2018) 19 Cal.App.5th 1127, 1136.)
The first cause of action premised upon section 2924.11 does not state a claim because the current version of that statute (not the superseded provision relied upon in the complaint) comes into effect only if a foreclosure prevention alternative has been "approved in writing" by a loan servicer. The Dymmels' complaint makes no such allegation. Rather, it alleges that the Dymmels "unlawfully" received no response to their application, which is insufficient under section 2924.11. The Dymmels' opening brief appears to concede this fatal pleading defect.
Section 2924.11, subdivision (a) provides, in pertinent part, as follows: "If a foreclosure prevention alternative is approved in writing prior to the recordation of a notice of default, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default under [certain] circumstances." (Italics added.)
This claim additionally fails because a mortgage holder or servicer has no duty to respond to, let alone modify, an application to modify a defaulted mortgage. (See Sheen v. Wells Fargo Bank, N.A. (Mar. 7, 2022, S258019) ___ Cal.5th ___, ___ [2022 WL 664722 at p. *7.)
The claim for breach of the covenant of good faith and fair dealing set forth in the third cause of action requires the Dymmels to allege, among other things, that they "did all, or substantially all of the significant things that the contract required them to do or that they were excused from having to do those things." (CACI No. 325 (2020 rev.).) Yet their Loan was $299,185 in default as of August 13, 2014, and had ballooned to $439,080.55 by 2019, when Aztec recorded its notice of default against the property. Because the Dymmels' obligation under the Loan was to make scheduled payments, and the complaint does not allege they were excused from doing so, this cause of action fails as a matter of law. Relatedly, the unfair competition claim "fails for want of an underlying claim." (Myles v. PennyMac Loan Services, LLC (2019) 40 Cal.App.5th 1072, 1076.)
DISPOSITION
The judgment is affirmed. Nationstar shall recover its costs on appeal.
We concur: CHANEY, J. BENDIX, Acting P. J.
[*] Judge of the San Luis Obispo County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.