United States District Court, N.D. California
For Robin Pearson, Plaintiff: T Theodore Cruz, LEAD ATTORNEY, Attorney at Law, Pittsburg, CA.
For Green Tree Servicing, LLC, Federal National Mortgage Association, Defendants: Jason Allen Savlov, LEAD ATTORNEY, RCO Legal, P.S., Santa Ana, CA.
For Bank of America, N.A., Defendant: Neeru Jindal, LEAD ATTORNEY, Bryan Cave LLP, Santa Monica, CA.
ORDER GRANTING DEFENDANT BANK OF AMERICA'S MOTION TO DISMISS Dkt. Nos. 5, 13, 16
JACQUELINE SCOTT CORLEY, United States Magistrate Judge.
Plaintiff Robin Pearson (" Plaintiff") brings this action to prevent foreclosure of her home. She sues Defendants Green Tree Servicing, LLC (" Green Tree"), Northwest Trustee Services (" Northwest"), Federal National Mortgage Association (" Fannie Mae"), and Bank of America, N.A. (" BANA") (together, " Defendants"), all of whom were involved in the servicing of Plaintiff's mortgage. Plaintiff essentially contends that Green Tree's action in recording a Notice of Default in May of 2013 while her application for a loan modification was pending violated a provision of the California Homeowners Bill of Rights (" HBOR") that prevents " dual tracking" --the processing of loan modification requests and taking steps towards foreclosure at the same time. Plaintiff alleges that BANA and Fannie Mae are also responsible for this dual tracking violation through theories of agency or vicarious liability. Now pending before the Court is Defendant BANA's Motion to Dismiss (Dkt. No. 5), which Defendant Fannie Mae has joined. ( See Dkt. No. 13.) Defendants seek to dismiss Plaintiff's complaint primarily on the ground that her claims are moot, which Plaintiff now concedes. However, Plaintiff still contends that she is entitled to fees and costs pursuant to HBOR. (Dkt. No. 22 at 3.)
Because Green Tree has cured any HBOR violation by filing a Notice of Rescission of Notice of Default, the Court will dismiss Plaintiff's complaint as moot without prejudice to Plaintiff filing a motion for attorney's fees and costs.
A. The California Homeowner Bill of Rights
The California Homeowner Bill of Rights (" HBOR") is a " state law designed to both provide protections for homeowners facing [non-judicial] foreclosure and reform aspects of the foreclosure process." Shapiro v. Sage Point Lender Servs., No. EDCV 14-1591-JGB (KKx), 2014 WL 5419721, at *4 (C.D. Cal. Oct. 24, 2014) (citing Cal. Civ. Code § 2923.4(a)). Among its protections to home borrowers, the HBOR " attempts to eliminate the practice, commonly known as dual tracking, whereby financial institutions continue to pursue foreclosure even while evaluating a borrower's loan modification application." Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1149 (N.D. Cal. 2013); see Cal. Civ. Code § 2923.4 (noting that the purpose of the act is to ensure that borrowers are " considered for, and have a meaningful opportunity to obtain, available loss mitigation options" in order to avoid foreclosure). To that end, once a borrower has submitted a complete loan modification application, the HBOR imposes a variety of requirements on servicers including barring the servicer from recording a notice of default while the application is pending and providing written notice of any denial of a first loan modification. Cal. Civ. Code § 2923.6(c), (f). Relatedly, servicers are required to state in the denial of a loan application that they reviewed competent and reliable evidence about the borrower's loan situation leading to the decision to foreclose. Id. § 2924.17(a).
The HBOR provides a cause of action for borrowers to enjoin a material violation of Sections 2923.6 and 2924.17, among others. Id. § 2924.12(a). However, the HBOR also provides a " safe harbor" for servicers, which states that a servicer " shall not be liable for a violation that it [or a third party] has corrected and remedied prior to the recordation of a trustee's deed upon sale[.]" Id. § 2924.12(c). In other words, if the servicer takes action to correct the violation before proceeding to foreclosure, no liability results. HBOR further provides that " [a] court may award a prevailing borrower reasonable attorney's fees and costs[.]" Id. § 2924.12(i). The law defines a " prevailing borrower" as one who has " obtained injunctive relief or was awarded damages pursuant to this section." Id.
B. Factual and Procedural History
Because Plaintiff concedes that her complaint is moot, a detailed recitation of the facts is not necessary. However, some background is needed to put the outstanding fee dispute into context. The following is compiled from Plaintiff's complaint and amendment thereto, as well as judicially noticeable documents attached to the pleadings.
In August of 2003, Plaintiff took out a loan from BANA secured by her home property in Pittsburg, California. (Dkt. No. 1 at 7 ¶ 1; Dkt. No. 7-1 at 1.) According to Plaintiff, Fannie Mae backed the original mortgage. (Dkt. No. 1 at 10 ¶ 14.) In November of 2012, BANA assigned the deed of trust to Green Tree, which acted as the debt collector and mortgage servicer on the loan. (Dkt. No. 1 at 8 ¶ 2.) Defendant Northwest became the trustee of the deed of trust. (Id. ¶ 3.)
Plaintiff alleges that she stopped making timely mortgage payments in December of 2012. (Id. at 8 ¶ 6.) According to Plaintiff, when she called Green Tree to request a loan modification to prevent foreclosure, an employee offered her only a limited forbearance and refused to send a written offer. (Id. ¶ 8.) Plaintiff then requested, received, and submitted to Green Tree a complete application for a first loan modification; she alleges that, by letter of January 18, 2013, Green Tree stated that it had received her application and would begin to evaluate her eligibility. (Id. ¶ 10.) According to Plaintiff, instead of processing her application, Green Tree (through its trustee Northwest) recorded a Notice of Default and Election to Sell Under Deed of Trust. (Id. at 10 ¶ 13; id. at 19 ¶ 8; Dkt. No. 7-3 at 2-3.) Plaintiff does not allege a pending foreclosure following that notice; instead, over two weeks later, on May 16, 2013, Green Tree offered Plaintiff a loan ...