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Norlito Soriano v. Countrywide Home Loans


June 2, 2011


The opinion of the court was delivered by: Lucy H. Koh United States District Judge


Code § 17200 et seq.)have survived summary judgment. See Dkt. No. 59, April 11, 2011 Order.

Truth in Lending Act ("TILA", 15 U.S.C. § 1601 et seq.), and in part on allegedly unfair acts by defendant. This matter is set for trial beginning on June 6, 2011. The trial is to be bifurcated: the RESPA issue will be tried by a jury, and the UCL claim will be tried by the Court. A pretrial 25 conference was held on May 4, 2011, and a further pretrial conference was held on May 27, 2011.

Defendant Countrywide Home Loans, Inc. (CHL) filed a trial brief. See Dkt. No. 122. In the trial 28 brief, CHL raised two purely legal issues that could be dispositive of Plaintiff's TILA and RESPA

Plaintiff's claims for violation of the Real Estate Settlement Procedures Act ("RESPA", 12 U.S.C. § 2601 et seq.) and violation of California's Unfair Competition Law ("UCL," Bus. & Prof. 20 Plaintiff's UCL claim is based in part on the RESPA claim, in part on a claim for violation of the On May 26, 2011, pursuant to this Court's Guidelines for Final Pretrial Conference in Jury Trials, claims. The Court ordered Plaintiff to respond to the arguments raised in CHL's trial brief at the May 27, 2011 pretrial conference. Plaintiff submitted responsive briefing on May 29, 2011, May Plaintiff's RESPA claim and DENIED as to Plaintiff's TILA claim. and TILA claims discussed in this Order. In its ruling, the Court found that Plaintiff had 8 adequately supported his claimed pecuniary damages resulting from the alleged RESPA violation, in the form of the attorney's fees incurred in sending two follow-up letters regarding the original 30, 2011 and May 31, 2011. For the reasons set forth below, CHL's motion is GRANTED as to

I. Procedural Background*fn1

CHL timely moved for summary judgment of all of Plaintiff's claims, including the RESPA Qualified Written Request (QWR). CHL did not move for reconsideration of the Court's Order on that ground. However, in its trial brief, CHL argues that the damages identified by the Court in the

summary judgment Order are actually not available as RESPA damages because those expenses were incurred before any RESPA violation occurred. claim for damages on the basis that it was time-barred. Plaintiff then sought clarification as to 16 whether his time-barred TILA claim may serve as the basis for a UCL claim. CHL opposed Plaintiff's motion. The Court concluded that a time-barred TILA claim may in fact serve as the 18 basis for a UCL claim. In so holding, the Court addressed CHL's argument (raised in its summary judgment motion) that Plaintiff had no evidence to support holding CHL viable for any TILA violation because the TILA Disclosure itself contains no inaccuracies when compared to the Note.

The Court held that "an assignee may be held liable for a TILA violation when the TILA violation 22 is 'apparent on the face of the disclosure,' meaning that it 'can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount 24 financed, the note, or any other disclosure of disbursement.'" 15 U.S.C. § 1641(e)(2). The Court found that because Plaintiff had introduced evidence of some inconsistent disclosures, he had 26 adequately demonstrated a material dispute such that his TILA claim survived summary judgment.

In its trial brief, CHL renews the argument that an assignee cannot be liable for a TILA violation 2 committed by the loan originator unless that violation is "apparent on the face of the disclosure statement." Now, however, CHL has devoted several pages of briefing and provided numerous citations in support of this argument, whereas in its summary judgment motion this argument was 5 limited to two paragraphs with no case citations. 6

not adequately presented evidence to support a causal relationship between his claimed emotional 8 distress damages and the asserted RESPA violation. The Court's granting of summary judgment of 9

In its ruling on CHL's summary judgment motion, the Court also found that Plaintiff had

Plaintiff's claim for emotional distress damages was based on Plaintiff's failure to carry the burden 10 in light of CHL's summary judgment motion, which demonstrated that Plaintiff had no evidence 11 linking his claimed emotional distress damages to the alleged RESPA violation. Plaintiff moved

for reconsideration of this issue. In his motion for reconsideration, Plaintiff cited evidence that was 13 not cited in his opposition to CHL's summary judgment motion (even though the evidence was 14 available to Plaintiff when the opposition was filed). The Court noted that it is not a settled issue 15 whether emotional distress damages are even available for RESPA violations, but that in any case, 16

Plaintiff had waived his right to present the arguments and evidence included in his motion for 17 reconsideration because he had not raised them in opposition to CHL's summary judgment motion. 18

II. Analysis

a. Waiver of CHL's Arguments

Plaintiff argues that CHL has waived the right to raise the issues it has raised in its trial

22 brief because it failed to make these arguments (or to cite the authority it now cites in support of 23 them) in its motion for summary judgment. In support of this waiver argument, Plaintiff cites a 24 case the Court cited in its Order denying Plaintiff's motion for reconsideration, finding that 25

Plaintiff waived his arguments regarding emotional distress damages because he failed to make 26 those arguments in opposing CHL's motion for summary judgment. "A motion for reconsideration 27

'may not be used to raise arguments or present evidence for the first time when they could 28

reasonably have been raised earlier in the litigation.'" Marlyn Nutraceuticals, Inc. v. Mucos 2

Plaintiff misunderstands the burden-shifting nature of a summary judgment motion. CHL

4 moved for summary judgment of Plaintiff's RESPA claim, and demonstrated that Plaintiff had no 5 evidence to show a causal connection between the claimed emotional distress damages and the 6 alleged RESPA violation. As a result, in opposing CHL's summary judgment motion, Plaintiff 7 carried the burden to introduce evidence showing that there was a material dispute of fact on this 8 point. As recited in the Court's Order on summary judgment, "[o]nce the moving party has 9 satisfied its initial burden of production, the burden of proof shifts to the non-movant to show that 10 that there is a genuine issue of material fact. A party asserting that a fact is genuinely disputed

Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009). 3

must support that assertion by either citing to particular parts of materials in the record or by

showing that the materials cited by the moving party do not establish the absence of a genuine 13 dispute. Fed. R. Civ. P. 56(c)." April 11, 2011 Order at 6. Because Plaintiff failed to carry this 14 burden in his opposition, the Court granted CHL's summary judgment motion. As outlined in the 15

Plaintiff had waived the right to present those facts and argument because he failed to include them 17 in his opposition brief. 18

In contrast, the only burden CHL faced at the summary judgment phase was the burden of

19 persuading the Court that it was appropriate to grant summary judgment in its favor. This is 20 because Plaintiff did not move for summary judgment, so CHL did not face any burden of having 21 claims summarily adjudicated against it. CHL's summary judgment motion succeeded in some 22 respects and failed in others. The fact that CHL failed to raise certain authority or arguments at the 23 summary judgment phase, and therefore lost certain aspects of its summary judgment motion, does 24 not bar CHL from making additional arguments in its trial brief. A trial brief "should address 25 issues of law likely to arise during trial that are not already disposed of by motions in limine." 26

Robert E. Jones et al., Federal Civil Trials and Evidence 1:330 (2010). The Court shares Plaintiff's 27 frustration over CHL's pattern of making assertions with little or no support, then seeking at a 28 hearing or later pleading to raise case law CHL could have and should have previously raised.

Court's Order denying reconsideration on this issue, pursuant to clear Ninth Circuit precedent, Nonetheless, there is no basis to find that CHL waived its right to make these arguments by failing 2 to do so earlier. There is no requirement that a party move for summary judgment at all. Plaintiff 3 has introduced no authority requiring that a party make every possible legal and factual argument 4 at summary judgment. In contrast, when a party faces a burden in opposing a motion for summary 5 judgment, waiver can occur if the party fails to carry that burden by making argument or 6 introducing evidence, loses summary judgment, and then moves for reconsideration on the basis of information it had access to when opposing the summary judgment motion.

9 impossible for the jury or the Court to find in favor of the Plaintiff is a waste of judicial resources.

13 reconsideration. It submitted them in its trial brief, as legal issues for the Court to decide during or 14 after trial. In its discretion, and because resolution of these purely legal issues could moot the need 15 for a jury to be called in this case and/or limit the scope of the bench trial, the Court ordered that 16

Plaintiff respond to these arguments and treats them as supplemental motions for summary 17 judgment. Therefore, the Court resolves these issues below.

motion to dismiss Plaintiff's RESPA claim was based, in part, on its argument that Plaintiff had not 21 sufficiently alleged that he sustained any damages "as a result of" the alleged RESPA violation. 22

Defendant argued that while Plaintiff alleged various damages, he had failed to show a causal 24 connection between these alleged damages and the RESPA violation. The Court largely agreed 25 that Plaintiff had failed to establish a causal connection between the claimed damages and the 26 asserted RESPA violation. However, the Court held that Plaintiff "ha[d] sufficiently established a 27 causal relationship between the claimed RESPA violation and the attorney's fees Plaintiff incurred 28 when his attorney sent follow-up correspondence to CHL after the initial QWR was sent. Had

Most importantly, however, sllowing the case to proceed to trial when it is legally

As discussed below, at least for Plaintiff's RESPA claim, the Court believes it would be legal error for a jury to enter judgment in favor of Plaintiff.

CHL did not submit these arguments in a request for renewed summary judgment or

b. Damages for Claimed RESPA Violation

CHL timely moved for summary judgment of Plaintiff's RESPA claim. Defendant's

See Motion for Summary Judgment (SJ Mot.) at 10-13 (citing 12 U.S.C. § 2605(f)(1)(A)).

CHL properly responded in the first instance, Plaintiff would not have incurred those additional 2 fees, as no follow-up would have been required." April 11, 2011 Order at 9-10. 3

In its trial brief, CHL argues that based on the timing of Plaintiff's follow-up letters, the

4 attorney's fees associated with sending them are not proper RESPA damages. Trial Brief at 4. 5

This is because the letters were sent before CHL's substantive response to Plaintiff's initial QWR 6 was due, and hence before RESPA was allegedly violated. Id. It is undisputed that the initial 7

October 3, 2007 (within 20 business days, as required by 12 U.S.C. § 2605(e)(1)(A)). Plaintiff 9 alleges that CHL violated RESPA when it failed to provide a substantive response to the QWR.

18, 2007. However, the follow-up correspondence was sent on October 30, 2007 and November 13

"as a result of" any RESPA violation because no RESPA violation had yet occurred when the 15 follow-up letters were sent. 16

17 pecuniary damages in order to state a claim for a RESPA violation. Allen v. United Fin. Mortg. 18

Corp., 660 F.Supp.2d 1089, 1097 (N.D. Cal. 2009). In analyzing Plaintiff's claimed RESPA 19 damages, this Court previously relied on a later, consistent order in the Allen case, and on other 20 cases holding that "filing suit generally does not suffice as a harm warranting actual [RESPA] 21 damages" because, if it did, "every RESPA suit would have a built-in claim for damages." Lal v. 22

American Home Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Cal. 2010). By the same 23 principle, the Court finds that due to the timing of Plaintiff's follow-up letters, its initial conclusion 24 that the expense of sending these letters was incurred "as a result of" a RESPA violation was 25 incorrect. Plaintiff could not have incurred the costs of sending follow-up letters as a result of the 26 alleged RESPA violation, because the alleged RESPA violation had not occurred when the letters 27 were sent. 28

QWR was sent on September 20, 2007 and that CHL properly acknowledged receipt of it on 8

RESPA states that such a response must be provided within "60 days (excluding legal public

holidays, Saturdays, and Sundays)." Sixty business days from September 20, 2007 is December 12

21, 2007. Therefore, CHL argues that the costs of sending the follow-up letters were not incurred 14

In support of its argument, CHL cites cases holding that a plaintiff must make a showing of

2 of sending a QWR and follow-up correspondence may be claimed as actual damages resulting from 3 a RESPA violation. See, e.g., Rawlings v. Dovenmuehle Mortg., Inc., 64 F.Supp.2d 1156, 1164 4

(M.D. Ala. 1999) (finding secretarial expenses and costs of travel to obtain "certified 5 correspondence" to be actual damages under RESPA). However, automatically counting the cost 6 of sending a QWR (or any follow-up correspondence) as RESPA damages would, as the court held 7 in Lal, create a "built-in claim for damages" in every RESPA claim. The Court finds that such a 8 holding would be inconsistent with the reasoning expressed in Lal and in this Court's prior 9

In opposing this motion, Plaintiff cites some district court decisions holding that the costs

Summary Judgment Order. The Court's previous ruling that Plaintiff had adequately stated a claim 10 for damages was based on the incorrect understanding that Plaintiff had sent the follow-up letters

cannot claim the costs associated with the follow-up letters as actual damages resulting from the 14 alleged RESPA violation. Plaintiff has failed to allege a causal connection between the alleged

Plaintiff's RESPA claim in favor of CHL. 17

19 asserted TILA violation was not apparent on the face of the TILA Disclosure Statement. The 20

Court previously held that "an assignee may be held liable for a TILA violation when the TILA 21 violation is 'apparent on the face of the disclosure,' meaning that it 'can be determined to be 22 incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the 23 amount financed, the note, or any other disclosure of disbursement.'" 15 U.S.C. § 1641(e)(2). See 24

Pretrial Order of May 4, 2011 at 4. The Court held that Plaintiff had identified at least one 25 inconsistent disclosure potentially giving rise to TILA liability -the Balloon Payment Disclosure, 26 which states that Plaintiff's loan "provides for 359 monthly payments of principal and interest in 27 the amount of $711.54." This disclosure appears to conflict with the terms of the Note and the 28 other disclosure documents, which state that the $711.54 payments will cover principal and interest

after CHL had failed to respond to the QWR and allegedly violated RESPA.

United States District Court

For the Northern District of California

Accordingly, the Court revises its previous summary judgment Order to find that Plaintiff

RESPA violation and any pecuniary damages. Therefore, the Court grants summary judgment of 16

c. TILA Claim

In its trial brief, CHL argues that Plaintiff's TILA claim is legally deficient because the

only for a few months, after which the interest rate "may" rise. The Court also noted that multiple 2 courts had found that TILA "prohibits conflicting or inconsistent disclosures, including situations 3 in which the inconsistency arises from statements in multiple documents." Pretrial Order of May 4

2010). Accordingly, the Court found that Plaintiff's TILA claim survived summary judgment.

4, 2011 at 4 (citing Romero v. Countrywide Bank, N.A., 740 F. Supp. 2d 1129, 1137 (N.D. Cal.

CHL now argues that the Court should only consider whether the TILA Disclosure

Statement itself was inaccurate in light of the Note or another TILA-mandated disclosure. CHL 8 argues that an inconsistency between the TILA Disclosure Statement and documents other than 9 those listed above is irrelevant and cannot give rise to a TILA violation. CHL has not cited (and 10 the Court is not aware of) any authority directly answering the question presented, namely, whether TILA disclosures which are consistent with the terms of the Note may still give rise to TILA

liability when they are inconsistent with other (non-TILA-mandated) disclosures. However, the

Court finds that the language of the statute is the best guide to answering this question. TILA itself 14 states that an assignee may be liable for a TILA violation if it is "apparent on the face of the 15 disclosure," meaning that "the disclosure can be determined to be incomplete or inaccurate by a 16 comparison among the disclosure statement, any itemization of the amount financed, the note, or 17 any other disclosure of disbursement.'" 15 U.S.C. § 1641(e)(2) (emphasis added). Although

Plaintiff alleges that the TILA Disclosure Statement itself was inaccurate, this is based on his 19 unsuccessful argument that terms other than the terms appearing in the Note should apply to the 20

Note. As discussed in previous orders, this Court (and the Superior Court pre-removal to federal court) have rejected this argument at least three times.

TILA requires that lenders provide certain disclosures to borrowers reflecting the terms of

23 the legal obligation between the parties. The Staff Commentary to TILA's implementing statute, Regulation Z, states that "[t]he disclosures shall reflect the credit terms to which the parties are 25 legally bound as of the outset of the transaction . . . The legal obligation normally is presumed to be 26 contained in the note or contract that evidences the agreement . . . If the parties informally agree to 27 a modification of the legal obligation, the modification should not be reflected in the disclosures 28 unless it rises to the level of a change in the terms of the legal obligation." 12 C.F.R. Pt. 226,

Supp. I, ¶17(c)(1). In light of this, the Court believes that CHL is correct in arguing that unless 2

Plaintiff can show that there is an inaccuracy or omission in the TILA Disclosure Statement itself, 3

Plaintiff filed two responses to CHL's TILA argument. The first response is largely

5 unhelpful. In it, Plaintiff cites a number of cases in which courts have denied summary judgment 6 to defendants when plaintiffs have come forward with evidence of discrepancies between TILA-7 mandated disclosures and the operative contract (including a note or mortgage, but not including an 8 additional disclosure such as the Balloon Payment Disclosure). See, e.g., In re Washington, Nos. 9

Plaintiff cannot make out a claim for violation of TILA. 4

06-CV-1625, 04-30492, 05-00021, 2007 WL 846658, at *6 (E.D. Pa., March 19, 2007) (reversing 10 summary judgment of TILA claim where plaintiff identified a discrepancy between TILA-

mandated disclosure and mortgage, which had been incorporated into the note); Brown v.

United States District Court

For the Northern District of California

Mortgagestar, 194 F.Supp.2d 473, 477 (S.D. W.Va. 2002) (denying motion to dismiss TILA claim 13 where plaintiff identified discrepancies between TILA disclosure, deed of trust, and note). These 14 cases support the Court's conclusion that unless the Plaintiff can introduce evidence of an 15 inconsistency between the TILA disclosure and the Note, he cannot show a TILA violation. None 16 of Plaintiff's cited cases find a TILA violation based on a TILA-mandated disclosure that 17 accurately reflects the parties' contract but fails to reflect an additional, inconsistent, non-TILA-18 mandated disclosure. 19

In the second response, Plaintiff argues (without citing any authority) that CHL's argument

20 that the TILA Disclosure Statement is the sole TILA disclosure is a "false major premise," and that 21 instead, "all the disclosures are subject to TILA." In light of the fact that all of the case authority 22 cited by both parties thus far has analyzed only TILA Disclosures or TILA Disclosure Statements 23 and the legal obligations they are meant to summarize, and especially in light of the statutory 24 language stating that an assignee cannot be liable unless a TILA violation is clear on the face of 25

"the disclosure statement," the Plaintiff will have to provide some authority for this argument 26 before the Court can adopt it. In addition, Plaintiff suggests that the TILA Disclosure Statement 27 may have inaccuracies or omissions vis-a-vis the Note (rather than the Balloon Payment Disclosure). Plaintiff asks, "is it clear and conspicuous that the listed payments are for Principal

and Interest? Minimum Payments? Interest Only? 15 or 30-year amortization? No." Plaintiff 2 does not identify what provisions in TILA require the disclosures he complains about or what 3 provisions of the Note the disclosures omit or inaccurately reflect. Plaintiff will have to do much 4 more than this to prove his TILA claim at trial. It is likely that this issue could have been resolved 5 through summary judgment if both parties had more diligently pursued this case. As it stands, the 6

Court will not grant summary judgment to CHL on Plaintiff's TILA claim as it appears there is a 7 genuine dispute as to whether the TILA Disclosure Statement accurately reflects the terms of the 8

Note. 9

III. Conclusion

CHL's motion for summary judgment of Plaintiff's RESPA claim is GRANTED, because

Plaintiff cannot claim any pecuniary damages as a result of the alleged RESPA violation. CHL's

United States District Court

For the Northern District of California

motion for summary judgment of Plaintiff's time-barred TILA claim is denied. Therefore, it 13 appears that the only issue remaining for trial is Plaintiff's UCL claim based on the time-barred 14

TILA claim and based on alleged unfair practices by CHL. Because the UCL claim is not for a 15 jury to decide (as discussed in previous orders), this claim will be tried to the Court. 16


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