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Bustos v. Wells Fargo Bank, N.A.

California Court of Appeals, Third District, Sacramento

August 28, 2019

ROSANA M. BUSTOS, Plaintiff and Respondent,
WELLS FARGO BANK, N.A., Defendant and Appellant.


          APPEAL from a judgment of the Superior Court of Sacramento County No. 34-2017-00209395-CU-OR-GDS, David I. Brown, Judge. Affirmed.

          Anglin Flewelling Rasmussen Campbell & Trytten, Robert Collings Little, and Robin Carl Campbell for Defendant and Appellant.

          No appearance for Plaintiff and Respondent.

          BUTZ, Acting P. J.

         This is a nonjudicial foreclosure action. In 2012, California enacted legislation known as the California Homeowner Bill of Rights, or HBOR, which imposed specific limitations regarding the nonjudicial foreclosure of owner-occupied residential real property. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86 & fn. 14.) Among other things, the HBOR prohibits “dual track” foreclosures, which occur when a mortgage servicer continues foreclosure proceedings while reviewing a homeowner's application for a loan modification. (Id. at p. 86, fn. 14; Civ. Code, § 2923.6, subd. (c).)[1] The HBOR provides for injunctive relief to remedy statutory violations that occur prior to foreclosure (§ 2924.12, subd. (a)), and monetary damages when the borrower seeks relief for statutory violations after the foreclosure sale has occurred (§ 2924.12, subd. (b)). The HBOR gives trial courts the discretion to award reasonable attorney fees and costs to the “prevailing borrower, ” providing: “A borrower shall be deemed to have prevailed for purposes of this subdivision if the borrower obtained injunctive relief or was awarded damages pursuant to this section.” (§ 2924.12, subd. (h).)

         The trial court granted Rosana Bustos's (Bustos) ex parte application for a temporary restraining order (TRO) and order to show cause regarding preliminary injunction, which sought to prevent a trustee's sale of her home due to several alleged violations of the HBOR related to her submission of a loan modification application. “At the heart” of Bustos's application was a “blatant violation” of the HBOR's prohibition against dual tracking. After the trial court denied Bustos's request for a preliminary injunction and vacated the TRO, it awarded her $4, 260 in attorney fees and costs pursuant to section 2924.12, former subdivision (i).[2] The court reasoned that Bustos was a “prevailing borrower” under the HBOR because she obtained injunctive relief in the form of a TRO against her mortgage servicer-Wells Fargo Bank, N.A. (Wells Fargo).[3] This timely appeal followed.

         On appeal, Wells Fargo contends the trial court erred in interpreting section 2924.12 as authorizing an award of attorney fees and costs to a borrower who obtains a TRO enjoining a trustee's sale of his or her residence. Wells Fargo alternatively contends that the trial court abused its discretion in awarding attorney fees and costs to Bustos under the circumstances of this case. We note that Bustos has not filed a respondent's brief, although this does not absolve us of adjudicating the merits of Wells Fargo's appeal. (In re Bryce C. (1995) 12 Cal.4th 226, 232-233; People v. Hill (1992) 3 Cal.4th 959, 995, fn. 3, overruled on another ground in Price v. Superior Court (2001) 25 Cal.4th 1046, 1069, fn. 13; Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178, fn. 3; see Cal. Const., art. VI, § 13.) We shall affirm the trial court's order.


         1.0 Attorney Fees and Costs Under Section 2924.12

         A TRO, as an interim provisional order granting injunctive relief, is immediately appealable under Code of Civil Procedure section 904.1, subdivision (a)(6). (In re Marriage of Nicholas (2010) 186 Cal.App.4th 1566, 1576; McLellan v. McLellan (1972) 23 Cal.App.3d 343, 357.) An order awarding attorney fees is separately appealable if made after an appealable order or judgment. (Code Civ. Proc., § 904.1, subd. (a)(2); DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 43.)

         “ ‘Generally, we review an award of fees and costs by the trial court for abuse of discretion. [Citation.] “However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law.”' ” (Monterossa v. Superior Court (2015)237 Cal.App.4th 747, 751 (Monterossa).)

         In determining the proper interpretation of a statute, we begin with the statutory language. “ ‘ “As in any case involving statutory interpretation, our fundamental task here is to determine the Legislature's intent so as to effectuate the law's purpose.” [Citation.] “We begin with the plain language of the statute, affording the words of the provision their ordinary and usual meaning and viewing them in their statutory context, because the language employed in the Legislature's enactment generally is the most reliable indicator of legislative intent.” [Citations.] The plain meaning controls if there is no ambiguity in the statutory language. [Citation.] If, however, “the statutory language may reasonably be given more than one interpretation, ‘ “ ‘courts may consider various extrinsic aids, including the purpose of the statute, the evils to be remedied, the legislative history, public policy, and the statutory scheme encompassing the statute.' ”' ” [Citation.]' ” (Fluor Corp. v. Superior Court (2015) 61 Cal.4th 1175, 1198.)

         “ ‘[O]n July 2, 2012, the California Legislature passed Assembly Bill No. 278 and Senate Bill No. 900 (2011-2012 Reg. Sess.), which have since been signed into law by the Governor. These provisions address more pointedly the foreclosure crisis in our state through even greater encouragement to lenders and loan servicers to engage in good faith loan modification efforts. [¶] One of the targets of the legislation is a practice that has come to be known as “dual tracking.” “Dual tracking refers to a common bank tactic. When a borrower in default seeks a loan modification, the institution often continues to pursue foreclosure at the same time.” (Lazo, Banks are foreclosing while homeowners pursue loan modifications, L.A. Times (Apr. 14, 2011); see Sen. Floor Analyses, Conf. Rep. on Assem. Bill No. 278, as amended June 27, 2012, p. 3.) The result is that the borrower does not know where he or she stands, and by the time foreclosure becomes the lender's clear choice, it is too late for the borrower to find options to avoid it. “Mortgage lenders call it ‘dual tracking,' but for homeowners struggling to avoid foreclosure, it might go by another name: the double-cross.” (Lazo, Banks are foreclosing.)' [Citation.]” (Monterossa, supra, 237 Cal.App.4th at p. 752.)

         The prohibition against dual tracking is found in section 2923.6, subdivision (c), which provides in pertinent part: “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer[, ]... a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending.”

         And the prohibition against dual tracking is given teeth by section 2924.12, which provides remedies for a violation of section 2923.6 or other specified provisions of the statutory scheme. The remedies are different, depending on whether a trustee's deed upon sale has been recorded. “If a trustee's deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.” (§ 2924.12, subd. (a)(1).) “Any injunction shall remain in place and any trustee's sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise ...

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