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Morris v. Residential Credit Solutions, Inc.

United States District Court, E.D. California

August 1, 2016

CHAD MORRIS, Plaintiff,
v.
RESIDENTIAL CREDIT SOLUTIONS, INC, Defendant.

          ORDER

          Troy L. Nunley United States District Judge

         This matter is before the Court pursuant to Plaintiff Chad Morris’s (“Plaintiff) Motion for Attorneys’ Fees. (ECF No. 32.) Defendant Residential Credit Solutions, Inc. (“Defendant”) has filed an opposition[1] (ECF No. 32), to which Plaintiff has replied (ECF No. 36). The Court has carefully considered the briefing submitted by both parties. For the reasons set forth below, Plaintiffs motion is hereby DENIED WITHOUT PREJUDICE.

         I FACTUAL AND PROCEDURAL BACKGROUND

         On or about August 16, 2005, Plaintiff purchased the property located at 21 Riverscape Court, in Sacramento, California. (Compl., ECF No. 1-2 at ¶ 6.) The purchase price of the property was $519, 000. (ECF No. 1-2 at ¶ 6.) Plaintiff invested $51, 900 as a down payment on the property and took out a first mortgage for $415, 200 with Countrywide Financial. (ECF No. 1-2 at ¶ 6.) Additionally, Plaintiff took out a second mortgage for $51, 900 with Countrywide Financial. (ECF No. 1-2 at ¶ 6.) Plaintiff alleges that he made complete and timely mortgage payments each month for the first seven years of his mortgages. (ECF No. 1-2 at ¶ 7.)

         In 2008, Countrywide Financial was purchased by Bank of America (“BOA”) and Plaintiffs mortgage and deed of trust were transferred to BOA. (ECF No. 1-2 at ¶ 9.) Throughout this period, Plaintiff continued to make complete and timely mortgage payments. (ECF No. 1-2 at ¶ 9.) Throughout 2011 and 2012, Plaintiff attempted to receive a loan modification from BOA, but was unable to receive the required information to complete the process. (ECF No. 1-2 at ¶ 10.) In 2013, Plaintiff fell behind on his mortgage payments. (ECF No. 1-2 at ¶ 11.) Afterwards, Plaintiff again began the loan modification process with BOA. (ECF No. 1-2 at ¶ 11.)

         After months of negotiating a loan modification with BOA, on or about May 28 2013, Plaintiff received a letter from BOA stating that RCS had taken over the servicing rights on Plaintiffs home loan. (ECF No. 1-2 at ¶ 12.) On or about July 16, 2013, Plaintiff received a letter from RCS stating RCS’s loan modification process and indicating that Plaintiff would have to start over in his search for a home loan modification. (ECF No. 1-2 at ¶ 13.) From July of 2013 through February of 2014, Plaintiff attempted to acquire a home loan modification from RCS. (ECF No. 1-2 at ¶ 14.) In doing so, Plaintiff was required to provide the same information several times to RCS. (ECF No. 1-2 at ¶ 14.) Plaintiff alleges that once he provided the information RCS would claim that the information that they had already received was out of date and needed to be updated. (ECF No. 1-2 at ¶ 14.) Plaintiff would then send all the information requested, and RCS would state that it needed additional information that was not previously requested. (ECF No. 1-2 at ¶ 14.) Once the information was again provided, RCS would once again assert that the information previously provided was out of date and needed to be resent. (ECF No. 1-2 at ¶ 14.) During this period, Plaintiff had multiple points of contact. (ECF No. 1-2 at ¶ 14.) Each new point of contact was unfamiliar with Plaintiff’s loan and his numerous attempts to achieve a loan modification. (ECF No. 1-2 at ¶ 14.)

         On or about February 26, 2014, Plaintiff received a notice of default from RCS. (ECF No. 1-2 at ¶ 15.) Plaintiff immediately contacted RCS to discuss this matter. (ECF No. 1-2 at ¶ 15.) Once again, Plaintiff was given a new point of contact and was told that the notice of default was simply a formality and as long as Plaintiff continued with the loan modification process no further action would be taken. (ECF No. 1-2 at ¶ 15.) Plaintiff continued to provide RCS all the information requested in hopes of achieving a loan modification. (ECF No. 1-2 at ¶ 15.) Each time Plaintiff sent information RCS would either state it needed new information or state that they already received information that was old and needed to be updated. (ECF No. 1-2 at ¶ 15.) At no point during Plaintiff’s almost daily discussions with RCS was he informed that a foreclosure was being sought. (ECF No. 1-2 at ¶ 15.)

         On May 28, 2014, Plaintiff received a notice of foreclosure at his residence. (ECF No. 1-2 at ¶ 16.) The date of sale was scheduled for June 18, 2014, at 2:00 pm. (ECF No. 1-2 at ¶ 16.) Plaintiff again contacted RCS. (ECF No. 1-2 at ¶ 16.) Once again, RCS stated that this was simply a procedural step and that they would continue to work on getting a loan modification for Plaintiff. (ECF No. 1-2 at ¶ 16.)

         On June 4, 2014, Plaintiff filed a complaint for injunctive relief and damages alleging violations of California Civil Code sections 2923 and 2924, fraudulent mortgage practices and punitive damages. (ECF No. 1-2.) On June 10, 2014, Plaintiff sought an ex parte application for temporary restraining order and preliminary injunction in Sacramento County Superior Court. (ECF No. 1-3.) At the hearing Judge Raymond Cadei granted Plaintiffs temporary restraining order and set a hearing regarding a preliminary injunction. (ECF No. 1-4.) On June 18, 2014, Defendant removed this case to federal court and subsequently filed a motion to dismiss on June 25, 2014. (ECF No. 4.) Plaintiff filed a motion for preliminary injunction on July 21, 2014. (ECF No. 17.)

         On February 5, 2015, this Court granted in part and denied in part Defendant’s Motion to Dismiss. (ECF No. 25.) Specifically, the Court granted Defendant’s motion to dismiss Plaintiff’s First Cause of Action for Injunctive relief and denied Defendant’s motion to dismiss Plaintiffs Second Cause of Action for Fraud. (ECF No. 25.) The Court found that Plaintiffs First Cause of Action, entitled injunctive relief, was in fact for violations of the Consumer Financial Protection Bureau Act of 2010 and California Civil Code §2924.11 and that the remedy sought was injunctive relief. (ECF No. 25 at 7.) The Court determined that Plaintiff had not alleged a violation of Cal. Civ. Code § 2924.11 because Plaintiff did not plead that a foreclosure prevention alternative had been approved in writing, as required under this section of the statute. Thus, the Court dismissed Plaintiffs First Cause of Action, but granted leave to amend. (ECF No. 25 at 15.)

         As to Plaintiffs Second Cause of Action, Fraud, the Court found that Plaintiff had sufficiently pleaded fraud and determined that Plaintiff had met his burden for preliminary injunctive relief pursuant to Plaintiffs fraud allegations. (ECF No. 25.) Thus, the Court granted Plaintiffs request for injunctive relief.

         On February 23, 2016, Plaintiff filed the instant motion for attorney’s fees based on the Third District Court of Appeal of California’s ruling in Monterossa v. Superior Court, 237 Cal.App.4th 747, 749 (2015), which held that a borrower who obtains a preliminary injunction enjoining the trustee’s sale of his or her home is a “prevailing borrower” within the meaning of section 2924.12 and may recover attorney’s fees. (ECF No. 32.)

         II. STANDARD OF LAW

         In an action involving a substantive question of state law, federal courts apply the forum state’s law to determine whether a party is entitled to an award of attorneys’ fees. MRO Commc’ns, Inc. v. Am. Tel. & Tel. Co.,197 F.3d 1276, 1282 (9th Cir. 1999). Under California law, the court may award reasonable attorneys’ fees and costs to a “prevailing borrower” in an action challenging a foreclosure. See Cal. Civ. Code § 2924.12(i); Monterossa, 237 Cal.App.4th at, 753, 757. A borrower is deemed to ...


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