Medrano v. Caliber Homes Loans, Inc.

CLAUDIA MEDRANO v. CALIBER HOMES LOANS, INC., et al.

Case No. EDCV 14-02038-VAP (DTBx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

December 19, 2014

PRIORITY SEND

CIVIL MINUTES -- GENERAL

PRESENT: HONORABLE VIRGINIA A. PHILLIPS, U.S. DISTRICT JUDGE

Marva Dillard

Courtroom Deputy

None Present

Court Reporter

ATTORNEYS PRESENT FOR

PLAINTIFFS:

None

ATTORNEYS PRESENT FOR

DEFENDANTS:

None

PROCEEDINGS: MINUTE ORDER GRANTING DEFENDANTS' MOTION TO DISMISS, IN PART, WITH LEAVE TO AMEND (DOC. NO. 13) IN PART (IN CHAMBERS)

Plaintiff Claudia Medrano defaulted on a debt owed to Defendant U.S. Bank Trust, N.A. ("U.S. Bank"), serviced by Defendant Caliber Home Loans, Inc. ("Caliber"), and secured by a deed of trust encumbering Medrano's house. Defendant Summit Management Company, LLC, acting as the trustee of that deed, sold Medrano's house to satisfy Medrano's debt to U.S. Bank. Medrano contends that she was trying to avert the sale by seeking a loan modification, but the runaround Caliber gave her in that process allowed for the trustee's sale of her house in the meantime - in violation of, among other things, California's Homeowners' Bill of Rights. (See generally First Am. Compl. ("FAC") (Doc. No. 1-1).)

Defendants filed a Motion to Dismiss (Doc. No. 13), arguing that Medrano fails to state a claim under the Homeowners' Bill of Rights, that she is not entitled to any equitable relief (e.g., the rescission of the sale) unless she is able to pay off her debt, and that she has failed to join an indispensable party to the suit: a joint tenant with whom she owned the house. As discussed below, the Court GRANTS the Motion only IN PART, WITH LEAVE TO AMEND.

I. BACKGROUND

A. Factual Background

On November 7, 2002, Medrano encumbered the property in question with a deed of trust securing a $172,000 loan. (FAC ¶ 8.) In September 2013, because of difficulty making her monthly payments, Medrano sought a modification from the loan's servicer, Caliber. (Id. ¶ 11.) To avert an impending trustee's sale of the property, she submitted a complete application for a loan modification in October, but on December 26, she received a notice that her house would be sold on February 3, 2014. (Id. ¶ 12.) In January 2014, Medrano contacted Caliber, which denied receiving Medrano's application and refused to delay the Feburary 3 trustee's sale. (Id. ¶ 13.)

To avoid the sale, Medrano sought bankruptcy protection. (Id. ¶ 14.) During the pendency of the bankruptcy proceedings, Medrano re-applied for a loan modification. (Id.) On March 28, Edward, a Caliber representative, called Medrano and confirmed that Medrano's application was complete. (Id. ¶ 15.) Notwithstanding Edward's representation, on April 30, Medrano received a letter from Caliber informing her that her application was being denied because she did not submit the necessary documents. (Id. ¶ 16.)

On May 6, Medrano submitted a written appeal of the denial letter, and Caliber directed her to file a new application for a loan modification; on May 16, Medrano did. (Id. ¶¶ 20-21.) A month later, Caliber sent Medrano two letters simultaneously. (Id. ¶ 22.) One informed her that it received her application (see FAC Ex. D); the other thanked her for sending unspecified documents that Caliber requested previously (see FAC Ex. E).

Nevertheless, with no further communication, Caliber set a new trustee's sale for July 9, 2014. (FAC ¶ 24.) On July 8, Medrano called Caliber and was told by a representative named Natasha that the sale had been canceled while Medrano's modification application was under review. (Id. ¶ 25.) On July 9, Medrano learned that a trustee's sale would, in fact, go forward. She called Caliber again, only to be told that Natasha made Medrano an inaccurate assurance, and nothing could be done to correct the error. (Id. ¶ 27.) Medrano's house sold that day. (Id. ¶ 28.)

On July 10, Medrano called Caliber once more, and spoke to a manager named Jennifer, a representative named Cindy, and another representative named Casca. (Id. ¶¶ 29-31.) They told Medrano that while there had been a hold on the trustee's sale, Caliber removed it on the morning of July 9, and nothing could be done about it. Shortly thereafter, the buyer of Medrano's property began proceedings in California state court to remove her from the premises. (See Id. ¶¶ 32-33.)

B. Procedural History

Medrano filed the First Amended Complaint in the Superior Court of the State of California for the County of San Bernardino on August 22, 2014; Defendants were served on September 2 and removed the action to this Court on October 1. (See generally Not. of Removal (Doc. No. 1).) The FAC contains seven claims for relief. First, Medrano alleges Caliber violated California Civil Code sections 2923.6 and 2924.11 (the so-called "Homeowners' Bill of Rights") by failing to consider her May 6 appeal or May 16 loan modification application properly before selling her house. Section 2923.6(c) prohibits a mortgage servicer (or trustee, or beneficiary of a deed of a trust), from conducting a trustee's sale while a loan modification application is pending; section 2924.11 requires any denial of an application to be in writing, and specific as to the reasons for the denial. (See FAC ¶¶ 38-50.)

Second, Medrano contends that "Caliber, on behalf of U[.]S[.] Bank, caused an illegal, fraudulent, and willfully oppressive sale" of Medrano's house, in so far as its violation of the Homeowners' Bill of Rights led to a wrongful foreclosure. (See id. ¶¶ 51-59.)

Third, Medrano alleges that Caliber's representative, Natasha, fraudulently misrepresented that the July 9 trustee's sale was canceled in order to prevent Medrano "from taking any legal action" to avert it. (See id. ¶¶ 60-66.) Medrano allegedly relied on that representation, and therefore did forgo any such action, to her detriment.

Fourth, Medrano casts the same misrepresentation, if not willful, as negligent, and therefore makes it the basis for a claim of negligent misrepresentation. (See id. ¶¶ 67-73.)

Fifth, Medrano makes a claim for promissory estoppel on the basis that Natasha's representation constituted a promise that caused Medrano to forbear from taking some action, to her detriment. (See id. ¶¶ 74-79.)

Sixth, Medrano claims Caliber acted negligently by:

(i) refusing to provide a meaningful review of [Medrano's] loan modification applications, (ii) failing to provide specific reasons for [Medrano's] denial, (iii) falsely stating that [Medrano's] applications were incomplete when they were not, and (iv) ignoring [Medrano's] request for appeal.

(See id. ¶¶ 80-85.)

Seventh, and finally, Medrano alleges that Caliber's bad acts constitute violations of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200, et seq. (See FAC ¶¶ 86-90.)

Medrano seeks compensatory and punitive damages, injunctive relief (including rescission of the trustee's sale), and costs. (See id. at 17.)

Defendants filed a Motion to Dismiss each of Medrano's claims. First, Defendants argue that Medrano failed to state a claim for a violation of the Homeowners' Bill of Rights, because she did not allege with specificity the facts indicating that her loan modification application was complete. (See Mot. at 5-6.)Moreover, Defendants contend, Medrano's loan was modified twice previously, placing the modification at issue now outside the Bill's protections. (See id. at 7.) In any event, Defendants argue, Caliber complied with the Bill's requirements. (See id. at 7-9.)

Second, Defendants contend that Medrano's Wrongful Foreclosure Claim fails because Medrano failed to state a claim for a violation of the Homeowners' Bill of Rights, and additionally, because she failed to allege that she tendered, or offered to tender, the debt on which she defaulted - a prerequisite to bringing a wrongful foreclosure claim. (See id. at 9.)

As to Medrano's third and fourth claims, Defendants argue that Medrano failed to plead with the required specificity that she changed her position substantially based on Natasha's representations. Additionally, they contend, Medrano's reliance on Natasha's statements was unjustified without a recorded rescission of the trustee's sale, and in any event, Medrano's damages arise from the trustee's sale of her house, not from Natasha's alleged misrepresentation. (See id. at 10-11.) On top of that, Defendants observe that Medrano has not even pled Natasha's representation was false, as Caliber did not remove its hold on the trustee's sale of Medrano's property until the morning after Natasha told Medrano the sale would be postponed. (See id. at 11.)

Nor can Medrano's fifth claim (for promissory estoppel) succeed, Defendants argue, as Medrano did not allege a change in position in reliance on Natasha's representation about the postponement of the July 9 trustee's sale. (See id. at 12-13.) And, Defendants add, Medrano's Negligence Claim - her sixth - fails because neither Caliber nor U.S. Bank owed Medrano a duty of care and because Medrano did not suffer a physical injury required to recover for negligence under California law. (See id. at 13-14.) Defendants posit Medrano's final claim, for a violation of the UCL, fails as well, because none of her other claims - predicates for a UCL violation - are pled successfully. (See id. at 14-15.)

In addition to attacking Medrano's substantive claims, Defendants also argue that Summit should be dismissed with prejudice from the action, because all of Medrano's claims are directed against U.S. Bank and Caliber - none name Summit.(See id. at 16.) Moreover, Defendants would apply the tender rule to all Medrano's claims (not just her Wrongful Foreclosure Claim), thereby resulting in the dismissal of the entire pleading. Finally, Defendants argue the whole First Amended Complaint should be dismissed, pursuant to Federal Rule of Civil Procedure 12(b)(7), because Medrano failed to join an indispensable party as a plaintiff in the lawsuit: the co-owner of the house...