Courtesy of Bergman & Gutierrez LLP
Todd Brown v. Bank of America, CV12-0309
Hearing: Defendant’s Demurrer
Date: September 5, 2012
________________________________________________________________________
Plaintiffs Counsel
Todd and Renee Brown – Penelope Bergman, Esq.
Defendant Counsel
Bank of America Wendy – Miele, Esq.
________________________________________________________________________
TENTATIVE RULING
Todd and Renee Brown (Plaintiffs) bring this action against Bank of America, N.A.
(Defendant) for alleged damages suffered as a result of Defendant’s actions and tactics
related to Plaintiffs’ loan modification process. In other words, this is not the typical
challenge to the lender’s non-judicial foreclosure on the borrower’s property.
Plaintiffs’ complaint includes causes of action for negligence, unfair business practices,
violation of Civil Code §1788 and promissory estoppel. Defendant demurs to all four
causes of action. Plaintiffs oppose the motion.
Defendant demurs to the entire complaint on res judicata grounds based upon a prior
ruling in a federal action, and on Plaintiff’s failure to tender the full amount owed.
In the federal action, Plaintiffs challenged Defendant’s foreclosure proceeding. The
Federal Court summarized the action as follows: “The gravamen of plaintiffs’ claims is
that defendants improperly attempted to transfer the loan to a trust in order to securitize
it, but failed to do so by the closing date specified in the Pooling & Service
Agreement…”1
With regard to the collateral estoppel issue, the parties agree that the following elements
must be established: “(1) the issue necessarily decided in the previous proceeding is
identical to the one that is sought to be relitigated; (2) the previous proceeding terminated
with a final judgment on the merits; and (3) the party against whom collateral estoppel is
asserted was a party to or in privity with a party in the previous proceeding. [Citation.]”
(Syufy Enterprises v. City of Oakland (2002) 104 Cal.App.4th 869, 878.)
Here, Defendant contends the Federal Court’s ruling addressed the identical issues at
stake in this action. Defendant’s argument is premised upon the assumption that
“Plaintiffs are still attempting to prevent foreclosure of the Property.” However,
Plaintiffs are not challenging the foreclosure in this action. Rather, the gravamen of
Plaintiffs’ claim is that Defendant was negligent in the handling of Plaintiffs’ loan
modification proceedings. Consequently, the issues adjudicated in the federal action are
not “identical” to the ones that are at issue in this action.
For the same reasons, Defendant asserts that the action is barred because of Plaintiffs’
failure to allege a viable tender of the full amount owed. A plaintiff is required to tender
full payment of the secured indebtedness in order to challenge or set aside the
foreclosure. (Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; Miller
v. Provost (1994) 26 Cal.App.4th 1703, 1710.) As stated above, Plaintiffs are not seeking
to set aside the foreclosure.
With regard to the negligence cause of action, Defendant demurs on the grounds that as a
financial lender, it owes no legal duty to Plaintiffs. As a general rule, a financial
institution owes no duty of care to a borrower in a loan transaction. (Nymark v. Heart
Federal Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) A duty arises only
when a lender actively participates beyond the scope of its conventional role. (Id)
In California, the test for determining whether a financial institution owes
a duty of care to a borrower-client “ ‘involves the balancing of various
factors, among which are [1] the extent to which the transaction was
intended to affect the plaintiff, [2] the foreseeability of harm to him, [3]
the degree of certainty that the plaintiff suffered injury, [4] the closeness
of the connection between the defendant’s conduct and the injury suffered,
[5] the moral blame attached to the defendant’s conduct, and [6] the policy
of preventing future harm.’ ” (Citations) (Nymark, supra at 1098.)
According to Defendant, Plaintiffs have not alleged that Defendant had any dealings in
any financial enterprises involving Plaintiffs that would impose a duty of care as a matter
of law. In response, Plaintiffs cite to numerous federal district court cases in which the
district judges, relying on the Nymark factors identified above, determined the lender did
owe a duty of care to the borrower. While only advisory, those decisions provide
compelling reasons supporting a claim that a bank that undertakes a loan modification
participates beyond the scope of a conventional lender. (See Garcia v. Ocwen Loan
Servicing, LLC (N.D. Cal., May 10, 2010) 2010 WL 1881098— “Here, by asking
Plaintiff to submit supporting documentation, Defendant undertook the activity of
processing Plaintiff’s loan modification request. Having undertaken that task, it owed
Plaintiff a duty to exercise ordinary care in carrying out the task.”
Next, Defendant demurs to the unfair business practices cause of action on the grounds
Plaintiffs fail to allege any prohibited practice on Defendant’s part, and on the grounds
Plaintiffs cannot establish any entitlement to the specific remedies available under
Business & Professions Code §17200.
The unfair competition law (Bus. & Prof. Code §17200, et. seq.) focuses on conduct and
prohibits “anything that can properly be called a business practice and that at the same
time is forbidden by law.” (Albillo v. Intermodal Container Services, Inc. (2003) 114
Cal.App.4th 190, 206.) Therefore, to state a valid claim, a plaintiff must establish that the
practice is either unlawful (i.e., is forbidden by law), unfair (i.e., harm to victim
outweighs any benefit) or fraudulent (i.e., is likely to deceive members of the public).
(Id.)
In this instance, Plaintiffs allege sufficient facts to establish a claim that Defendant’s
practice of misrepresenting its intent to modify the loan and inducing Plaintiffs into
making trial payments were deceptive and fraudulent business practices sufficient to
support a viable cause of action. (See Boschma v. Home Loan Center (2011) 198
Cal.App.4th 230, 254.) Additionally, Plaintiffs seek restitution and injunctive relief
pursuant to the remedies allowed under Business & Professions Code §17200.
Defendant demurs to the third cause of action for violation of the Rosenthal Fair Debt
Collection Practices Act (Civil Code §1788) on the grounds Defendant is not a “debt
collector” engaged in the practice of debt collection under the Act. In support of this
position, Defendant cites to federal authority defining “debt collectors” under the Federal
Fair Debt Collection Practices Act. To the contrary, some district courts have held a
mortgage servicer to be a “debt collector” under the Rosenthal Act. (See Reyes v. Wells
Fargo Bank, N.A. (N.D. Cal., Jan. 3, 2011) 2011 WL 30759, 19-21 and Walters v.
Fidelity Mortg. of CA (E.D. Cal. 2010) 730 F.Supp.2d 1185, 1203 where the plaintiff’s
claim arose “out of debt collection activities beyond the scope of the ordinary foreclosure
process” such that a remedy was available under the RFDCPA.)
Finally, Defendant demurs to the promissory estoppel cause of action on the basis the
deed of trust obligated Plaintiffs to pay the total amount due, such that it was not
reasonable for Plaintiffs to have relied on “purported representations”, and they cannot
establish damages because they were required to perform under the deed of trust.
Additionally, Defendant contends an oral loan modification is barred by the statute of
frauds. Thus, any purported representation regarding a loan modification was only a
“gratuitous promise.”
In opposition, Plaintiffs cite to Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, in
which the appellate court reversed the trial court’s sustaining of a demurrer to a
promissory estoppel cause of action. The Aceves court held that the bank’s promise to
work on a loan modification was sufficiently concrete to be enforceable, that the
plaintiff’s reliance was reasonable, that the plaintiff was damaged and that the oral
promise was enforceable. (Id. at 226-231) The same appears to be alleged by Plaintiff in
this action.
Defendant’s demurrer to all causes of action is overruled.
To whom it may concern, BofA is trying to illegally foreclose on a predatory loan made for house flipping created by Countrywide on 10/17/2012.
Please help us save our home. Please read this letter and the letters attached. Countrywide changed our loan at last second, or already had it written, while we were under the assumption we were signing what our lock-in agreement stated. At signing we noticed we were signing a different interest rate than that in which we locked-in at so I called and Countrywide said “you couldn’t afford the cheaper loan, we thought we told you”. No they didn’t tell us and the documents state that they were supposed to notify us with 72 hours of signing if there were any changes to the loan. I said “if you told us, then why am I calling you in the middle of signing escrow”? I then asked about the lock-in agreement and their answer was, the same, that we couldn’t afford the cheaper loan. Countrywide knew that we made arrangements to vacate our previous place of residence and would have no where to live, so to keep my family off of the street as a homeless family, we signed. We did not get one tax break of new home buyers, that everyone seems to have received. We didn’t want to do business with Bank of America so we went with Countrywide, then their illegal mortgage practices and loans were sold to Bank of America forcing us to allow racial nonchristian Jesus hating American hating employees to service our loan. We have made six attempts to modify our loan to the original lock-in agreement of 5.75%, and they started listening but once they heard of my faith in God doing His will. We was ignored on five attempts and told once we didn’t qualify. We have asked for copies of all correspondence of these attempts and they denied our QWR with an attorney telling us we can’t use a QWR for a phishing expedition looking for faults of the bank. I sent a QWR because I want a copy of my lock-in agreement that was signed by both my wife and I, but instead, BofA retaliates and threatens foreclosure, getting us to fear loosing our home (terrorist attack against us) by sending real estate agents and Obamas team to try and get us to bow to their demands with out listening to our rights. BofA has ignored our requests for our signed documents to be copied and sent to us. I have done everything under the sun, including using the power of God added to the sun and mans conscience to get them to hear me. I have posted my story on the internet, news companies and social networks, only to be ignored and have my posts removed. Are people really thinking BofA and Obama are God? I will not relent until Bank of America and all financial institutions are equal towards All, in the name of My Lord, Jesus Christ! I want my Lock-in agreement to prove this is a predatory loan and BofA upholds their rights against me. I owe $52-53,000 to get my loan current. Because of realtors, Brokers, and financial lenders practices of trying to flip houses, the estimated worth and value of our home has decreased about the same amount. We purchased the home for $190,000 with a rider of $5,300 which went towards the down payment as well as $3,000 down payment, when the home was advertised for $0 down and $0 at closing with 0 credit. Now the property is worth $143,000. Who is going to pay for the loss that I incurred against my loan? Who is the mortgage police to back the consumer, that will listen? Is everyone afraid to go up against Bank of America? My Country has failed me. We are On the verge of family being homeless, verge of divorce, and going crazy. So we put the World and Universe, in Gods hand and power, so has He heard our cries and shall perform and accomplish, His Will upon All!
1. Why did Countrywide change my 5.75% mortgage loan, I Locked-in at, to 6.25% right before signing escrow, without discussing it with me 72 hours prior as loan documents states must be done?
2. Why did Countrywide tell me I couldn’t afford the cheaper loan and that they thought they told us prior already, when I called during signing?
3. Why did Countrywide change my loan to one I doubted my wife and I could afford, when my family was going to have nowhere to live if we didn’t sign?
4. Why did Countrywide tell us their copy machine was broken when we signed our lock-in agreement?
5. Why didn’t Countrywide give us a copy of our Lock-in agreement document when we asked for it since the beginning of our mortgage?
6. Why did Countrywide sell our note to Bank of America that we did not want to do business with nor support, and not hand deliver the note?
7. Why are we forced to do business with Bank of America and forced to allow them to service our loan?
8. Why did Bank of America ignore us on 5 modification attempts to our previous lock-in agreement and only answered and told once that we didn’t qualify?
9. Why does Bank of America deny our QWR for all Loan, escrow, Lock-in agreement, and 6 modification attempts, documents?
10. Why does Bank of America Bank of America threaten to foreclose, selling our note, and actually put our loan into default with pre-foreclosure, still denying us our QWR?
11. Why is it legal for real estate companies and internet sites allowed to show our house available in pre-foreclosure, for 2/3 the cost I purchased it for, at a monthly mortgage half of what I am being forced to pay?
12. Why is it ok for Bank of America to foreclose on my mortgage when the amounts due are the same amounts our houses estimated worth has depreciated, due to Real Estate company’s, Countrywide’s and Bank of America’s practices of unequal, racial, judgmental, predatory lending for greed of money with house flipping and greed of money, no matter who it puts on the street and causes to be homeless?
13. Why is it ok for the home builder to tell us they’re not going to fix the cracks in our stucco unless they can fit a nickel inside it?
14. Why is it ok for banks to exercise their legal document rights, ignoring and denying the consumer their documented rights when the consumer cannot afford the greed of an attorney?
15. Why does everyone, banks, governments, other nations and countries think they can do what they do against Americans and God’s true Children everywhere, and get away with it, without judgment from God?
16. Why did the American Government bail out these banks with tax payers money, for doing these things to Christian Americans that choose to be the True Children of God?
Your Judgment is here, life of your own conscience knowledge, truth and action of un-repented sin of mortality and impurity expressed towards existence, reality and destiny, to have life upon and within yourself. They are your truths, beliefs and actions you decided to agree upon and express upon all things existing or going to, even yourself.
Malachi 3
The Coming Messenger
1 “Behold, I send My messenger, And he will prepare the way before Me.
And the Lord, whom you seek, Will suddenly come to His temple, Even the Messenger of the covenant, In whom you delight. Behold, He is coming,”
Says the Lord of hosts.
2 “But who can endure the day of His coming? And who can stand when He appears?
For He is like a refiner’s fire And like launderers’ soap.
3 He will sit as a refiner and a purifier of silver; He will purify the sons of Levi, And purge them as gold and silver, That they may offer to the Lord An offering in righteousness.
4 “Then the offering of Judah and Jerusalem Will be pleasant to the Lord, As in the days of old, As in former years.
5 And I will come near you for judgment; I will be a swift witness Against sorcerers, Against adulterers, Against perjurers, Against those who exploit wage earners and widows and orphans, And against those who turn away an alien— Because they do not fear Me,” Says the Lord of hosts.
6 “For I am the Lord, I do not change; Therefore you are not consumed, O sons of Jacob.
7 Yet from the days of your fathers You have gone away from My ordinances And have not kept them. Return to Me, and I will return to you,” Says the Lord of hosts. “But you said, ‘In what way shall we return?’
Do Not Rob God
8 “Will a man rob God? Yet you have robbed Me! But you say, ‘In what way have we robbed You?’ In tithes and offerings.
9 You are cursed with a curse, For you have robbed Me, Even this whole nation.
10 Bring all the tithes into the storehouse, That there may be food in My house, And try Me now in this,” Says the Lord of hosts, “If I will not open for you the windows of heaven And pour out for you such blessing That there will not be room enough to receive it.
11 “And I will rebuke the devourer for your sakes, So that he will not destroy the fruit of your ground, Nor shall the vine fail to bear fruit for you in the field,” Says the Lord of hosts;
12 “And all nations will call you blessed, For you will be a delightful land,” Says the Lord of hosts.
The People Complain Harshly
13 “Your words have been harsh against Me,” Says the Lord, “Yet you say, ‘What have we spoken against You?’
14 You have said, ‘It is useless to serve God; What profit is it that we have kept His ordinance, And that we have walked as mourners Before the Lord of hosts?
15 So now we call the proud blessed, For those who do wickedness are raised up;
They even tempt God and go free.’”
A Book of Remembrance
16 Then those who feared the Lord spoke to one another, And the Lord listened and heard them; So a book of remembrance was written before Him For those who fear the Lord And who meditate on His name.
17 “They shall be Mine,” says the Lord of hosts, “On the day that I make them My jewels. And I will spare them As a man spares his own son who serves him.”
18 Then you shall again discern Between the righteous and the wicked, Between one who serves God And one who does not serve Him.
Malachi 4
The Great Day of God
1 “For behold, the day is coming, Burning like an oven, And all the proud, yes, all who do wickedly will be stubble. And the day which is coming shall burn them up,” Says the Lord of hosts, “That will leave them neither root nor branch.
2 But to you who fear My name The Sun of Righteousness shall arise With healing in His wings; And you shall go out And grow fat like stall-fed calves.
3 You shall trample the wicked, For they shall be ashes under the soles of your feet On the day that I do this,” Says the Lord of hosts.
4 “Remember the Law of Moses, My servant, Which I commanded him in Horeb for all Israel, With the statutes and judgments.
5 Behold, I will send you Elijah the prophet Before the coming of the great and dreadful day of the Lord.
6 And he will turn The hearts of the fathers to the children, And the hearts of the children to their fathers, Lest I come and strike the earth with a curse.”
Hey Zion, Awesome! And, it will all work out in the end, and if not, it’s not the end!
Hey Zion did you check to make sure the foreclosing APN numbers match your original survey and Numbers in section A of previous Mortgage Titles? Sometimes the foreclosing Attorney(s) try to foreclose in the number of the Bond or Security, rather than the real property in interest, in preparation for Nasdaq. This scenario is especially prevalent with the “Trustees” and the “Aces.”