Arredondo v. Deutsche Bank Nat'l Tr. Co., B288007
| Decision Date | 23 September 2019 |
| Docket Number | B288007 |
| Parties | LORENA ARREDONDO et al., Plaintiffs and Appellants, v. DEUTSCHE BANK NATIONAL TRUST COMPANY et al., Defendants and Respondents. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. PC056820)
APPEAL from a judgment of the Superior Court of Los Angeles County, Stephen Pfahler, Judge. Affirmed in part; reversed in part and remanded.
Law Offices of Stanley H. Kimmel and Stanley H. Kimmel for Plaintiffs and Appellants.
Wolfe & Wyman, Stuart B. Wolfe and Cathy L. Granger for Defendants and Respondents.
Lorena and Martin Arredondo1 appeal from a judgment of dismissal entered after the trial court sustained without leave to amend the demurrer filed by Deutsche Bank National Trust Company (Deutsche Bank), Carrington Mortgage Services, and Atlantic & Pacific Foreclosure Services (collectively defendants)2 to the Arredondos' claim in their fourth amended complaint for violation of the Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act; Civ. Code, § 1788 et seq.)3 and granted defendants' motion to strike the claims for violation of the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) and aiding and abetting violation of the UCL. The Arredondos alleged Deutsche Bank and Carrington, as the lender and servicer, respectively, of a mortgage on the Arredondos' home, made misrepresentations to the Arredondos about their ability to retain title to their home by continuing to make payments on their mortgage following the foreclosure by the junior lien holder.
The trial court sustained defendants' demurrer to the Rosenthal Act cause of action, finding the alleged misrepresentations were not sufficient to state a claim because the Arredondos knew about the foreclosure, and therefore theywere on notice they no longer owned their home and did not reasonably rely on the representations by Deutsche Bank and Carrington. The court granted defendants' motion to strike the UCL causes of action on the basis the claims were beyond the scope of the court's order granting the Arredondos leave to amend their prior complaint.
The trial court erred in sustaining the demurrer to the Rosenthal Act claim, but it acted within its discretion in striking the UCL causes of action. We reverse the entry of judgment and remand for further proceedings.
In 2003 the Arredondos purchased a property located at 680 Griswold Avenue in San Fernando (the property) to use as their personal residence. In 2005 Lorena obtained a home improvement loan from New Century Mortgage Corporation secured by a deed of trust on the property, which deed of trust was later assigned to Deutsche Bank as the indenture trustee for New Century; the loan was serviced by Carrington. In 2007 the Arredondos obtained a second loan from New Haven Financial,Inc., secured by a second deed of trust on the property in favor of beneficiaries known as the Strickstein Group. In 2009 the Strickstein Group foreclosed on the property. Deutsche Bank continued to hold the first deed of trust, serviced by Carrington, with an outstanding balance.
On March 1, 2009 Martin called Carrington to discuss the Deutsche Bank loan and to disclose the 2009 foreclosure sale. The Carrington representative advised Martin "that the Arredondo's [sic] could save their home, and that they should continue making payments to [Carrington] in order to qualify for a loan modification . . . ."
In November 2010 Carrington "offered Lorena a loan modification 'to permit her to stay in her home,'" and sent the Arredondos a loan modification agreement that provided "on payment of the outstanding loan balance in full, a reconveyance would be issued and recorded providing Lorena with clear fee simple title to the subject property." Carrington approved the loan modification and, as a result, the Arredondos continued to live at the property and made monthly payments on the modified loan.
Lorena was unable to pay the delinquent loan payments demanded by Carrington, and on May 9, 2012 Lorena filed for bankruptcy. Lorena listed the property in the bankruptcy case as real property she owned. Deutsche Bank filed a claim as a secured creditor in the bankruptcy case, representing the note executed by Lorena "was secured by Lorena's ownership of [the property]." Carrington similarly filed a claim as a secured creditor.
In July 2015 Deutsche Bank obtained relief from the automatic stay to redress Lorena's default under the loan modification agreement. Carrington offered the Arredondos a second loan modification, instructing Lorena to stop making loan payments until the modification was finalized. The Arredondos complied and stopped making their monthly payments. However, on February 29, 2016 Deutsche Bank foreclosed on the property and recorded a trustee's deed upon sale.5 In April 2016 Deutsche Bank filed an unlawful detainer action, seeking to evict the Arredondos.
The Arredondos filed this action on January 7, 2016, seeking to quiet title to the property and for damages and other equitable relief.6 On January 31, 2017 the Arredondos filed theirthird amended complaint, to which defendants demurred.7 Following a hearing, the trial court sustained the demurrer, but granted "leave to amend to add a cause(s) of action solely for unfair debt collection practices."
On August 3, 2017 the Arredondos filed their fourth amended complaint, asserting causes of action for violation of the Rosenthal Act, violation of the UCL, and aiding and abetting violation of the UCL. The complaint alleged defendants violated the Rosenthal Act by using "false, deceptive, or misleading representations" to collect payments from the Arredondos, including misrepresenting "the Arredondo[s] could 'save their home,'" Lorena owned the property securing the loan, and payments to Carrington would preserve Lorena's ownership of the property. The Arredondos alleged the representations also constituted unlawful business practices under the UCL, and defendants aided and abetted violation of the UCL.
The Arredondos sought to recover under the Rosenthal Act the payments they made to Carrington after March 1, 2009, statutory penalties, attorneys' fees, and costs. They also sought restitution under the UCL, including return of the payments made by the Arredondos, attorneys' fees, and costs.
Defendants demurred to all causes of action in the fourth amended complaint and moved to strike the UCL causes of action. They argued the Rosenthal Act claim failed as a matter oflaw because the Strickstein Group foreclosed on the property in 2009 and recorded a trustee's deed upon sale transferring ownership to the Strickstein Group, placing the Arredondos on notice they no longer owned the property. Thus, the Arredondos did not reasonably rely on Carrington's assurances they could save their home by repaying their debt to defendants. Defendants also argued the foreclosure by the Strickstein Group did not alter the Arredondos' obligation to make payments on Deutsche Bank's loan, and therefore defendants had a right to collect payments on the loan. The Arredondos argued in their opposition defendants' representations were actionable under the Rosenthal Act, which prohibited false representations made in the collection of a debt, because whether they reasonably relied on defendants' representations was a question of fact.
In a motion to strike, defendants argued the UCL causes of action violated the court's order granting the Arredondos leave to amend the third amended complaint. The Arredondos responded that the UCL claims were closely related to the Rosenthal Act claims, and the trial court's order granted leave to add "cause(s) of action." The Arredondos also asserted the third cause of action for aiding and abetting violation of the UCL was necessary to "cover the identities of defendants which have traded names."
On November 8, 2017, after oral argument, the trial court sustained defendants' demurrer without leave to amend as to the first cause of action. The court reasoned a claim under the Rosenthal Act required "a finding that [the Arredondos] were deceptively led to believe that they owned their home," but the fact the Arredondos had constructive notice from the 2009foreclosure that they no longer had an interest in the property "vitiate[d] this allegation." The court granted defendants' motion to strike the second and third causes of action, explaining the "record supports no finding of leave beyond the Rosenthal . . . Act claim." The trial court found the demurrer as to the UCL claims was moot in light of its ruling granting the motion to strike.
On December 18, 2017 the trial court entered a judgment of dismissal. The Arredondos timely appealed.
Defendants contend we should affirm the judgment because the appellate record does not include a transcript of the hearing on the demurrer or a settled statement, and therefore the appellate record does not show whether the trial court granted defendants' request for judicial notice and considered the supporting documents. As defendants argue, a "'judgment challenged on appeal is presumed correct, and it is the appellant's burden to affirmatively demonstrate error.'" (Ruelas v. Superior Court (2015) 235 Cal.App.4th 374, 383; accord, Randall v. Mousseau (2016) 2 Cal.App.5th 929, 935.) "[D]...
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