Vargas v. Ocwen Loan Servicing, LLC

MARICELA VARGAS, Plaintiff and Appellant, v. OCWEN LOAN SERVICING, LLC, Defendant and Respondent.

B276239

B283934

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

April 16, 2019

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC538182)

APPEAL from a judgment of the Superior Court of Los Angeles County, Stephanie Bowick, Judge. Affirmed in part, reversed in part with directions.

Golden & Cardona-Loya and Jeremy S. Golden for Plaintiff and Appellant.

Wright Finlay & Zak and Jonathan D. Fink for Defendant and Respondent.

____________________ Maricela Vargas appeals from a judgment and a post-judgment order awarding attorney fees following the trial court's order granting a motion for nonsuit filed by Ocwen Loan Servicing, LLC ("Ocwen") on Vargas's claims for violation of Civil Code section 2923.6, subdivision (c)¹ (one of the provisions of the California Homeowner Bill of Rights ("HBOR")), as well as on her claims for fraud, negligent misrepresentation and negligence.

In case number B276239, Vargas contends that she introduced sufficient evidence at trial to withstand a motion for nonsuit as to each cause of action. In case number B283934, Vargas contends the court erroneously granted attorney fees to Ocwen on the theory that her claims arose out of a loan agreement that had an attorney fee provision.

We reverse the trial court's judgment because we conclude the court should not have granted nonsuit as to the HBOR claim. We affirm the trial court's ruling dismissing the claims for fraud, negligent misrepresentation and negligence. Because of our reversal of the judgment on which the attorney fee award is based, we reverse the order granting Ocwen attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

1. Complaint and Pretrial Proceedings

Vargas filed a complaint against Ocwen on March 4, 2014. The first cause of action alleged Ocwen violated the HBOR by conducting a trustee's sale while a loan modification application was pending (§ 2923.6, subd. (c)), failing to provide Vargas with a written notification that any appeal period pursuant tosubdivision (d) had expired (§ 2923.6, subd. (c)(1)), failing to provide a statutory wait time (§ 2923.6, subds. (d), (e)), and failing to provide written notice (§ 2923.6, subds. (d), (f)).

The second and third causes of action alleged Ocwen committed fraud and negligent misrepresentation by misrepresenting that it was considering Vargas for a loan modification when it did not intend to do so and instead fast-tracking the loan for foreclosure and conducting a trustee's sale. Ocwen's fourth cause of action, for negligence, alleged that Ocwen negligently foreclosed on Vargas's home while her loan modification application was pending.

Ocwen moved for summary judgment or, in the alternative, summary adjudication as to each of Vargas's claims. The trial court denied the motion, finding triable issues remained as to each of the causes of action.

2. Evidence Adduced in Vargas's Case-in-Chief

A six-day jury trial commenced on February 23, 2016, with Vargas presenting evidence over three days. Vargas's witnesses consisted of Ocwen senior loan analyst Gina Feezer, Vargas herself, her brother, her mother and the doctor for whom Vargas worked. The following pertinent evidence was introduced through these witnesses' testimony and the exhibits that were admitted.

a. Loan history

Vargas's parents purchased a house at 2737 Malabar Street in Los Angeles in 1966 when Vargas was eight years old. Vargas resided there with her parents and her brother until her family was evicted in 2014.

In 2007, Vargas, along with her two parents, obtained a "cash-out refinance" mortgage loan with a balloon note. The family modified that loan for the first time in 2010.

In 2011, Ocwen became the servicer of the loan. As a mortgage loan servicer, Ocwen collected payments and was responsible for customer service. If a loan went into default, Ocwen was responsible for sending out notices to customers. Ocwen also handled loan modifications sought by customers on loans it serviced. Legal action, including foreclosures on loan defaults that were not cured, was handled by outside counsel.

On April 20, 2012, Vargas obtained a loan modification from Ocwen reducing the interest rate on her loan from approximately 7.65 percent to 2 percent. The loan agreement lists Vargas as the borrower, with her parents also signing the agreement because they were listed on the title to the property. Vargas subsequently defaulted on that loan after making three payments, with the last in October 2012.

Vargas applied for another loan modification in February 2013,² but it was denied by Ocwen. A foreclosure sale was scheduled for July 26. On July 2, Vargas informed Ocwen she had applied for a state mortgage reinstatement assistance program called "Keep Your Home California." Outside counsel was notified that there was a pending resolution, resulting in the sale being postponed. Vargas's efforts were not successful. She made another request for a loan modification in September, which Ocwen denied.

b. November loan modification request

At some point, the Vargas family received a notice of a trust deed sale scheduled for December 3. On October 21, Ocwen also mailed Vargas a "foreclosure flyer notice" stating that a foreclosure sale had been scheduled for her home, "but it may not be too late to save it." The notice provided a number for Vargas to call to try to stop the foreclosure. It also listed Geesun Rodrigues, a home retention consultant, as the relationship manager for Vargas.

On November 9, Vargas telephoned Ocwen and told the representative she wanted to apply for a modification. The representative stated Ocwen would only send her an application if her income had changed. On November 12, Vargas spoke with Rodrigues and told him her income had gone up and she wanted to apply for a loan modification. Vargas had begun working more hours at her job beginning in September and was making $300 to $400 more per month. Rodrigues told Vargas he would send her a loan modification packet, and he stated "there will be no foreclosure on December 3rd." Vargas believed him. A further telephonic appointment was scheduled for December 2.

Ocwen faxed and mailed her the loan modification application on November 12. The application's instructions provided that the review process may take up to 30 days from receipt of the completed package, and any legal action on her loan would not be stopped or delayed during that time. The instructions stated that if the application was not complete, it would not be reviewed, and urged the applicant to return the completed package as quickly as possible. The application included a checklist of requested documentation.

Vargas faxed the loan modification application and attachments to Ocwen on Thursday, November 21, and her application was marked as received in Ocwen's system on Monday, November 25. The fax cover page indicated, "Here are the forms requested for the modification, including letter from my boss of increased working hours." The cover page further stated, "I will fax you the pay stub for 11-22-13 on Saturday, 11-23-13." Her 60-page submission included a November 19 letter from Vargas's employer stating she was currently scheduled to work 72-80 hours every two weeks "dependent on workload." Vargas also included a pay stub, a W-2 from her place of employment, her 2012 income tax returns, her bank account statements and a monthly rental agreement for the rental unit on her property. On November 23, she faxed to Ocwen the November 22 pay stub she had promised.

Feezer testified that Vargas's loan application was received by the underwriting department ("underwriting") on November 25. However, underwriting never reviewed the submission to determine if it was complete or merited a modification. Rather, on November 26, underwriting denied the application on the basis that Ocwen received it within seven business days of the foreclosure sale scheduled for December 3. On November 27, Ocwen sent a letter to Vargas stating, "We have carefully reviewed your request, and assessed your eligibility for modification. However, the results prevent us from being able to offer a loan modification . . . . [¶] As of the date of this letter your loan has a confirmed sale date within 7 Business days." The denial letter did not advise Vargas of any right to appeal. Ocwen sent an identical letter to Vargas on December 3. Ocwen hadnever informed Vargas her package needed to be received more than seven business days before the scheduled sale date.

On December 1, Vargas telephoned Ocwen to reschedule her telephonic appointment with Rodrigues that had been set for December 2, because Vargas was visiting family in Tijuana. Vargas rescheduled the call for December 5. At this point, Vargas believed Ocwen had all the documents it had requested, and she believed her loan was under review for modification.

On December 3, the foreclosure sale took place. Mid-Cal Realty Services, Inc., a third party, purchased the home at the public auction and then sold the property to West Ridge Rentals, LLC, with a grant deed recorded on December 13.

c. Postforeclosure events

On December 5, Vargas spoke with Rodrigues for their scheduled teleconference, and he told her about the denial of the loan modification request. However, apparently neither Vargas nor Rodrigues was aware that the property had been sold to a third party two days earlier. According to Feezer, the foreclosure department had not yet updated Ocwen's system with that information. The log notes Rodrigues added to the system on December 5 state that...