Opinion
D070686
01-31-2017
BILLY PARRISH et al., Plaintiffs and Appellants, v. WELLS FARGO BANK, N.A. et al., Defendants and Respondents.
Louis White and Jamil L. White, Michael D. Maloney for Plaintiffs and Appellants. Severson & Werson and Kerry William Franich, Jan T. Chilton and Kristin L. Walker-Probst for Defendants and Respondents, Wells Fargo Bank, N.A. and HSBC Bank USA, N.A.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2013-00687437) APPEAL from a judgment of the Superior Court of Orange County, Deborah J. Servino, Judge. Affirmed. Louis White and Jamil L. White, Michael D. Maloney for Plaintiffs and Appellants. Severson & Werson and Kerry William Franich, Jan T. Chilton and Kristin L. Walker-Probst for Defendants and Respondents, Wells Fargo Bank, N.A. and HSBC Bank USA, N.A.
Billy and Julie Parrish appeal a summary judgment in favor of Wells Fargo Bank, N.A. (Wells Fargo) and HSBC Bank USA, N.A. (HSBC). The Parrishes contend: (1) the trial court abused its discretion by refusing to grant them a continuance to review Wells Fargo's late-filed discovery responses; (2) on the day scheduled for oral argument on the court's tentative ruling, the Parrishes had presented evidence that raised triable issues of material fact that could have defeated summary judgment, but the court erroneously declined to consider such evidence; and (3) even on the trial court record, they raised triable issues of material fact that should have barred summary judgment. We affirm the judgment.
We sometimes refer to the appellants by their first names to avoid confusion and not out of disrespect. --------
FACTUAL AND PROCEDURAL BACKGROUND
We state the facts from the record before the trial court when it made its summary judgment ruling, viewing the evidence and resolving all inferences and doubts from it in favor of the Parrishes as the nonmoving parties. (Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347.)
In 2007, the Parrishes borrowed $600,000 from Sierra Pacific Mortgage Services, Inc. The loan was secured by a deed of trust on real property located in Anaheim, California. Mortgage Electronic Registrations Systems, Inc. (MERS) is listed on the deed of trust as beneficiary and nominee for the lender and its successors and assigns. In 2012, MERS executed an assignment of the deed of trust, which reflected a transfer of its interest under the deed of trust to HSBC, as trustee for Wells Fargo Assets Securities Corporation.
In 2012, a notice of default and election to sell under the deed of trust was recorded, indicating the Parrishes owed $21,733.41 on their loan. In April 2013, a notice of trustee's sale was recorded.
The Parrishes' Complaint
In February 2014, the Parrishes filed a first amended complaint against respondents, alleging causes of action for fraud, negligent representation, negligence, intentional infliction of emotional distress, and violation of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq.). The Parrishes specifically alleged that in or around July 2010, Wells Fargo Home Mortgage Consultant, Perla Soriano, had told them that they were current on their loan; therefore, in order for Wells Fargo to provide them with a loan modification, they had two choices: earn $6,000 more in income, or default on their loan. They followed Soriano's advice and between August 2010 and July 2012 used all their savings and 401k funds to pay their mortgage. Julie had two surgeries and became disabled due to a car accident. As a result, she had to close her child care business. Due to those hardships and Wells Fargo's representations that it would eventually offer them a loan modification, they defaulted on their mortgage in August 2012. The Parrishes alleged they negotiated a loan modification with different Wells Fargo agents over several months. Eventually, in May 2013, Rhonda Overton, a Wells Fargo home preservation specialist, advised them that their loan could be modified if they submitted certain documents, which they did. Nevertheless, in August 2013, Overton informed them Wells Fargo lacked contractual authority to modify their loan because Wells Fargo merely serviced the loan on HSBC's behalf.
The Parrishes alleged that at their request, in September 2013, Congresswoman Loretta Sanchez's office inquired of Wells Fargo about the Parrishes' loan, and Wells Fargo stated it had approved the loan. Nonetheless, in November 2013, Wells Fargo informed the Parrishes that because it was unable to modify their loan, normal collection proceedings against the Parrishes would resume.
The Parrishes claimed they justifiably relied on Wells Fargo's representations "by filling-out form applications, and by providing Wells Fargo with financial information that [it] requested. . . . Additionally, in reliance on Wells Fargo's representations, [the Parrishes] did not explore other options such as arranging to borrow funds from family and/or friends to bring their loan current." (Some capitalization omitted.)
Respondents demurred to the Parrishes' complaint, and the court sustained the demurrer without leave to amend as to the causes of action for negligence and intentional infliction of emotional distress, but overruled it as to the other causes of action.
Respondents' Summary Judgment Motion
In December 2014, respondents moved for summary judgment or alternatively summary adjudication of the remaining causes of action for fraud, negligent representation and UCL on grounds that the Parrishes could not prove an element of those causes of action. Respondents specifically argued that undisputed material facts demonstrated Wells Fargo made no actionable false statements to the Parrishes, who also did not change their position in reliance on any of the supposedly false statements. Respondents pointed to separate deposition testimony by Billy and Julie, in which they disclaimed that a Wells Fargo agent had "guaranteed" them they would get a loan modification. Rather, the Parrishes admitted the Wells Fargo agents had said the Parrishes "may" or "probably could" get a loan modification.
Respondents argued that although Wells Fargo could not modify the Parrishes' loan under one the "Home Affordable Modification Program" (HAMP), Wells Fargo could modify it in other ways. Respondents argued the Parrishes' claim of misrepresentations made to the congresswoman were irrelevant because under the applicable law, the false statements must be made to the Parrishes and not a third party. Respondents argued HSBC was an improper defendant because the Parrishes had never dealt with HSBC; therefore, it should be dismissed from the action.
Respondents claimed the Parrishes could not make out causes of action for fraud or negligent representation because they had failed to establish the elements of justifiable reliance and damages. Wells Fargo submitted the Parrishes' deposition testimony and other testimony indicating they had admitted defaulting on their mortgage as of July 2012, because they had run out of money after Julie was unable to work. Wells Fargo pointed to undisputed evidence it had notified the Parrishes to continue paying their outstanding mortgage bills. In August 2013, Wells Fargo approved the Parrishes for a mortgage assistance option, specifically a special forbearance agreement requiring them to make a mortgage payment by November 2013. Wells Fargo also argued that although the Parrishes contended they had detrimentally relied on Wells Fargo's alleged misrepresentations by filling out applications and providing Wells Fargo with financial information, such harm was not compensable because it was de minimis.
Respondents argued that undisputed material facts showed the Parrishes lacked standing to prosecute the UCL cause of action because the Parrishes could not show a causal link between their alleged economic injury and Wells Fargo's alleged misconduct. Specifically, the foreclosure proceedings were initiated because the Parrishes had defaulted on their loan, not because of Wells Fargo's conduct. Wells Fargo denied committing the alleged unfair, unlawful and fraudulent conduct described in the Parrishes' UCL cause of action; claiming that it had continuously and openly communicated with the Parrishes regarding the potential negative consequences of a loan modification.
The Parrishes' Opposition to Summary Judgment
The Parrishes opposed the motion, arguing that a triable issue of material fact existed as to whether Wells Fargo was able to modify their loan, despite representations made to the Parrishes by Soriano and other agents. Julie submitted a declaration stating: "Between August of 2010 to July[ ] 2012, in reliance on Ms. Soriano's directive, we used up all of our savings and 401k in order to remain current on our mortgage. Eventually, we followed Wells Fargo's directive and became delinquent on approximately four (4) of their monthly mortgage payments." (Some capitalization omitted.)
The Parrishes argued: "For over three . . . years Wells Fargo strung [them] along with promises of a permanent loan modification that [it] knew it could never provide to [them] in the first place. The only loan modification applications that Plaintiffs received from Wells Fargo were under the HAMP [l]oan modification program. . . . However, since Wells Fargo was contractually unable to provide any loan modifications to [them], including HAMP, then all of its representations to [them] concerning the non-existent loan modification were false." (Some capitalization omitted.)
The Parrishes also argued they had presented triable issues of material fact to support their fraud and negligent representation claims based on Wells Fargo's misrepresentations made to Congresswoman Loretta Sanchez's office. The Parrishes contended Wells Fargo generated a document entitled Special Forbearance Agreement, which would have required them to repay a certain amount of their past due mortgage payments to Wells Fargo. The Parrishes had rejected this agreement on grounds: "1) it was clearly not a loan modification, but merely a repayment plan; and 2) the Agreement was an adhesion and/or illusory contract that would allow Wells Fargo in its sole discretion and without further notice to Plaintiffs to terminate the Agreement and continue with the foreclosure of Plaintiffs' home." The Parrishes argued Wells Fargo's "misrepresentations fulfilled their intended purpose of stopping further Congressional inquiry into this matter."
The Parrishes contended they had presented sufficient evidence regarding their damages to defeat summary judgment of the three causes of action: "Plaintiffs stand to lose their home for over twenty years and improvements made to their home for the child care business. Such damages are not speculative as Defendants contend but certain to occur as Wells Fargo has already initiated foreclosure proceedings against [their] property." (Some capitalization omitted.)
Respondents' Reply
Respondents argued in reply that despite their negating the issue of reliance in their moving papers, the Parishes had not raised a triable issue of material fact as to that matter in their opposition. They also reiterated they had made no misrepresentations to the Parrishes, and that the Parrishes lacked standing to prosecute a UCL claim. Respondents objected to Julie's declaration that she had relied on Wells Fargo's "directive" to default on their loan payments as being argumentative and lacking in foundation.
Court's Ruling on Late Discovery and Summary Judgment
The court's tentative order issued one day before oral argument advised the parties: "The court will not entertain a request for continuance once a ruling has been posted and no additional papers will be considered once a ruling has been posted." Nonetheless, at the next day's oral argument, the Parrishes sought to introduce new evidence and declarations, including a declaration written by their attorney stating that on April 3, 2015, the day of a delayed deposition with Wells Fargo's most knowledgeable witness, and also the day of discovery cutoff, the Parrishes had received Wells Fargo's late-filed discovery responses including 6,500 pages of documents and over 80 telephone call recordings. The Parrishes' attorney did not request a continuance. Rather, he claimed the Parrishes lacked time to evaluate and address all the relevant evidence prior to his filing the opposition to summary judgment. Billy and Julie each filed a declaration. A longtime friend of the Parrishes also filed a declaration stating that as of August 2012, he was prepared to loan the Parrishes $25,000 to pay their mortgage.
In light of this situation, the court asked the Parrishes' counsel at the hearing on the motion: "What are you asking the court to do?" Counsel replied: "To consider today's filed moving papers as evidence that creates a triable issue of fact." The court stated: "I'm sorry. You're asking to be able to talk about declarations that were submitted about an hour before this matter was set for calendar which the court hasn't looked at, and you would like to be able to talk about that at this point knowing the seriousness of this matter for your clients?" The Parrishes' counsel proceeded to argue that triable issues of material fact existed to defeat summary judgment.
Following both counsels' arguments, the court rejected the Parrishes' request to consider the late filed declarations: "There were mechanisms to have those filed timely before the court. In addition, it does not comply with [San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308]. [¶] It is evident to the court that these declarations were submitted in response to the court's tentative when the tentatives are posted, that the court will not entertain a request for continuance once a ruling has been posted. No additional papers will be considered once a ruling has been posted. The court is exercising its discretion [and] not finding good cause to consider those declarations at this time."
In granting summary judgment, the court pointed out that the house remained unsold. The court ruled: "Plaintiffs have not shown a triable issue of fact that they defaulted on their loan in reliance on statements by Wells Fargo representatives that Plaintiffs should do so in order to get a loan modification. First, Plaintiffs' evidence does not show that any representative told them to default—as opposed to saying that a loan modification was not available while Plaintiffs were current on their loan. Second, the evidence shows that Plaintiffs stopped paying on their loan when they ran out of money. [¶] Plaintiffs' only evidence to the contrary is Julie Parrish's deposition testimony that Plaintiffs 'possibly' could have borrowed money to pay their mortgage. Plaintiffs have presented no evidence that they could realistically have borrowed money. Theoretical, imaginative, or speculative submissions are insufficient to stave off summary judgment." The court ruled the Parrishes had not shown they could satisfy the damages element of the UCL cause of action: "Plaintiffs point to the imminent loss of their home as their 'injury in fact' under [Business and Professions Code] section 17200. . . . [H]owever, this loss is not caused by the alleged unlawful, unfair, or fraudulent conduct plaintiffs attribute to Defendants."
DISCUSSION
A. The Court Did Not Abuse its Discretion by Not Granting a Continuance
We preliminarily address the Parrishes' contention that the court erred by not granting them a continuance.
"Section 437c, subdivision (h) of Code of Civil Procedure provides: "If it appears from the affidavits submitted in opposition to a motion for summary judgment . . . that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just." It is not sufficient that a declaration in support of such a continuance indicate further discovery or investigation is contemplated; it must show " 'facts essential to justify opposition may exist.' " (Roth v. Rhodes (1994) 25 Cal.App.4th 530, 548; see also New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 215; Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 325-326 (Scott).) Thus, the plaintiff must show "that the . . . discovery requested could reasonably lead to evidence necessary to refute" the defendants' evidence. (Scott, at p. 326.) If the plaintiff does not make the required showing by affidavit, a continuance is not mandatory. (Bahl v. Bank of America (2001) 89 Cal.App.4th 389, 393; Scott, at pp. 315, 326; Mahoney v. Southland Mental Health Associates Medical Group (1990) 223 Cal.App.3d 167, 170 (Mahoney).)
When a continuance is not mandatory because of the plaintiff's failure to meet Code of Civil Procedure section 437c, subdivision (h)'s requirements, the court determines whether the party requesting a continuance has nonetheless established good cause for such a request. (See Cooksey v. Alexakis (2004) 123 Cal.App.4th 246, 254; Lerma v. County of Orange (2004) 120 Cal.App.4th 709, 716.) We review the court's ruling on that question for abuse of discretion. (See Cooksey, at p. 254; Lerma, at p. 716; Scott, supra, 38 Cal.App.4th at p. 326; Mahoney, supra, 223 Cal.App.3d at p. 170.)
A trial court has broad discretion to refuse to consider papers submitted after the deadline where there is no prior court order finding good cause for the late submission. (Bozzi v. Nordstrom, Inc. (2010) 186 Cal.App.4th 755, 765.) The record here shows the trial court did not abuse its discretion in refusing to consider the Parrishes' late documents. Immediately following respondents' April 3, 2015, production of voluminous documents through discovery, if the Parrishes needed more time to respond to the summary judgment motion, it was incumbent on them to apply for a continuance of the April 17, 2015 hearing or appear ex parte to bring this matter to the court's attention. Instead, they waited until the day of the hearing to proffer the new documents and declarations. Further, in arguing the issue to the court, the Parrishes' counsel did not identify which of the documents would create a triable issue of fact. Finally, the Parrishes have not explained why they did not offer as an exhibit to their summary judgment opposition the declaration from the Parrishes' friend offering them financial support, given that the declaration is independent of respondents' production of documents. Under these circumstances, as in Bozzi, supra, the trial court was not obliged to consider the Parrishes' untimely proffer of the undisclosed declarations.
We likewise reject the Parrishes' related argument that its proffered evidence, which the court excluded at the oral argument hearing, showed triable issues of material fact existed on the issues of reliance and damages. We do not consider matters not before the trial court. (See Environmental Protection Information Center v. Department of Forestry & Fire Protection (1996) 43 Cal.App.4th 1011, 1015, 1016 ["in summary judgment cases" we "limit our review to the record as compiled in [the trial] court"].)
I. Standard of Review and Applicable Law
A motion for summary judgment "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) A moving defendant meets the burden of showing that a cause of action has no merit by establishing that one or more elements of a cause of action cannot be established or that there is a complete defense. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849-850; Lackner v. North (2006) 135 Cal.App.4th 1188, 1196 (Lackner).)
On appeal, we independently review an order granting summary judgment, viewing the evidence in the light most favorable to the nonmoving party. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768; Lackner, supra, 135 Cal.App.4th at p. 1196.) In this review, "we apply the same three-step analysis as the trial court. First, we identify the issues framed by the pleadings. Next, we determine whether the moving party has established facts justifying judgment in its favor. Finally, if the moving party has carried its initial burden, we decide whether the opposing party has demonstrated the existence of a triable, material fact issue." (Chavez v. Carpenter (2001) 91 Cal.App.4th 1433, 1438.)
The elements of fraud are (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of its falsity (referred to as "scienter"); (3) intent to induce another's reliance on the misrepresentation (also referred to as intent to defraud); (4) justifiable reliance; and (5) resulting damage. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173 (Small); Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239 (Alliance Mortgage Co.).)
" 'A plaintiff asserting fraud by misrepresentation is obliged to . . . " 'establish a complete causal relationship' between the alleged misrepresentations and the harm claimed to have resulted therefrom." ' " (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062 (Beckwith).) This requires a plaintiff to allege specific facts not only showing he or she actually and justifiably relied on the defendant's misrepresentations, but also how the actions he or she took in reliance on the defendant's misrepresentations caused the alleged damages. (Ibid.)
" ' " 'Misrepresentation, even maliciously committed, does not support a cause of action unless the plaintiff suffered consequential damages.' " ' " (Beckwith, supra, 205 Cal.App.4th at p. 1064.) Indeed, " ' "[a]ssuming . . . a claimant's reliance on the actionable misrepresentation, no liability attaches if the damages sustained were otherwise inevitable or due to unrelated causes." [Citation.]' [Citation.] If the defrauded plaintiff would have suffered the alleged damage even in the absence of the fraudulent inducement, causation cannot be alleged and a fraud cause of action cannot be sustained." (Ibid.) " 'Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff's reliance is justified is a question of fact.' " (Alliance Mortgage Co., supra, 10 Cal.4th at p. 1239.)
In contrast to fraud, "[t]he tort of negligent misrepresentation does not require scienter or intent to defraud[, and it] encompasses '[(1)] [t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true,' [and (2)] '[t]he positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though [he or she] believes it to be true.' " (Small, supra, 30 Cal.4th at pp. 173-174.) The elements of negligent misrepresentation are "(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage." (Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)
"The UCL does not proscribe specific activities, but in relevant part broadly prohibits 'any unlawful, unfair or fraudulent business act or practice.' [Citation.] ' " 'Because [Business and Professions Code] section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. "In other words, a practice is prohibited as 'unfair' or 'deceptive' even if not 'unlawful' and vice versa." ' " ' [Citations.] [¶] A private party has standing to bring a UCL action only if he or she 'has suffered injury in fact and has lost money or property as a result of the unfair competition.' " (Aleksick v. 7-Eleven, Inc. (2012) 205 Cal.App.4th 1176, 1184.)
II. The Court Did Not Err by Granting Summary Judgment
Respondents met their summary judgment burden by showing that the Parrishes' claim for fraud and negligent representation could not be established because they could not show justifiable reliance or damages. Specifically, the Parrishes stated in their depositions that they had defaulted on their mortgage because they had run out of money. This reason is unrelated to any claim regarding Wells Fargo's representations as the cause of their default. (Accord, Big Ting Ren v. Wells Fargo Bank, N.A. (N.D. Cal. Sept. 19, 2013) [2013 WL 5340388 *2] ["[T]he core of [plaintiff's] pleadings on this cause of action remains the contention that Defendant told her she could obtain a loan modification by going late on her payments. This does not rise above the level of encouragement. The choice to pay or not to pay remained with Plaintiff. Plaintiff therefore fails to state a claim for breach of the implied covenant."].) The same analysis applies to the Parrishes' negligent misrepresentation and fraud causes of action. They testified in their deposition that the Wells Fargo agents did not "guarantee" them a loan modification, but rather informed them they "may" or "possibly could" modify their loan.
It is undisputed that Wells Fargo informed the Parrishes in writing that they should continue to make regular mortgage payments until Wells Fargo determined their eligibility for a loan modification. Therefore, we may conclude that the Parrishes' contrary decision to default was not based on reasonable reliance. (Alliance Mortgage Co., supra, 10 Cal.4th at p. 1239.) Absent a showing that the Parrishes reasonably relied on Wells Fargo's representations, they cannot make out a fraud cause of action.
The Parrishes did not meet their summary judgment burden of raising issues of material fact as to the fraud and negligent representation causes of action. The court sustained the respondents' objection to Julie's declaration regarding Wells Fargo's "directive" that the Parrishes default on their mortgage and plaintiffs do not challenge that ruling. We therefore do not consider that evidence. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.)
The Parrishes also cannot make out a claim for violation of the UCL because their claimed damages were not caused by Wells Fargo, but rather by their default on their loan. (Daro v. Superior Court (2007) 151 Cal.App.4th 1079, 1099 [finding causation requirement of the UCL was not met because plaintiff would have suffered the same harm whether or not a defendant complied with the law.].) Further, the UCL claim is predicated on their fraud and negligent representation claims. Having concluded respondents are entitled to summary judgment on those causes of action, we affirm the ruling disposing of the derivative UCL claim as well. (Javorsky v. Western Athletic Clubs, Inc. (2015) 242 Cal.App.4th 1386, 1408, citing Pizarro v. Lamb's Players Theatre (2006) 135 Cal.App.4th 1171, 1177.)
DISPOSITION
The judgment is affirmed. Wells Fargo and HSBC are entitled to their costs on appeal.
O'ROURKE, J. WE CONCUR: HALLER, Acting P. J. AARON, J.