Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_15-cv-00993/USCOURTS-caed-1_15-cv-00993-12/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

On October 21, 2016, the jury returned a verdict in favor the plaintiffs. Part of this verdict 

included a finding that the defendants’ conduct was intentional, reckless or willful. Under California 

law, the Court must award the greater of three times the actual damages or $50,000. Next, as agreed 

pretrial, the Court required the jury to consider whether Dora Cornejo suffered emotional distress 

damages. The jury found she did and determined an amount. 

For the reasons set forth below, the Court directs the Clerk of the Court to issue the judgment in 

favor of the plaintiffs in an amount that includes the actual economic damages and the treble the actual 

economic damages but that does not include the emotional distress damages.

I. The statute

Under California’s Homeowners’ Bill of Rights, the state legislature developed a 

comprehensive scheme to afford a meaningful opportunity for homeowners to avoid foreclosure. See

Cal. Civ. Code § 2923.4(a). Toward this end, the statute allows a plaintiff to recover actual damages 

FRANK CORNEJO, et al.,

 Plaintiffs,

v.

OCWEN LOAN SERVICING, LLC, et al.,

Defendants.

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Case No.: 1:15-cv-00993 - JLT

ORDER DIRECTING THE ISSUANCE OF THE

JUDGMENT UNDER FED.R.CIV.P. 58(b)

Case 1:15-cv-00993-JLT Document 101 Filed 11/15/16 Page 1 of 6
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and penalties if there is a material violation of a foreclosure provision. Section 2924.12(b) provides,

After a trustee’s deed upon sale has been recorded, a mortgage servicer, mortgagee, 

trustee, beneficiary, or authorized agent shall be liable to a borrower for actual 

economic damages pursuant to Section 3281, resulting from a material violation of 

Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that 

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent where the 

violation was not corrected and remedied prior to the recordation of the trustee’s 

deed upon sale. If the court finds that the material violation was intentional or 

reckless, or resulted from willful misconduct by a mortgage servicer, mortgagee, 

trustee, beneficiary, or authorized agent, the court may award the borrower the 

greater of treble actual damages or statutory damages of fifty thousand dollars 

($50,000).

Before the trial began, the parties disagreed as to the damages the plaintiffs could recover for 

the penalty. Though both sides agreed that the plaintiffs were limited to actual economic losses to 

compensate them for their losses, they disagreed as to the amount the plaintiff could recover as a 

penalty. The defendants argued that the plaintiffs were entitled to recover three times their economic

losses as the penalty1. The plaintiffs argued they could recover three times their economic losses but 

could also recover three times these losses when added to the emotional distress damages the jury 

awarded. 

The Court found this to be a tortured interpretation of the statute and refused to request the jury 

make a determination about emotional distress damages. However, the Court relented in allowing the 

jury to consider the question only to preserve the issue for appeal. Though the parties reserved their 

right to appeal, they acquiesced to this process.

I. Rule 58

Under Federal Rules of Civil Procedure 58(b)(2), the Clerk may enter judgment only after the 

Court’s approval where the jury returns a special verdict with answers to written questions or where the 

Court grants relief not described in the jury’s verdict. 

Here, the jury determined that the plaintiffs should be awarded a penalty but not the amount of 

the penalty. Thus, the verdict cannot be entered without the Court’s order.

II. Statutory Interpretation

To determine the meaning of a California statute, the Court must determine “the intent of the 

 

1 Both sides agreed that the statutory amount would be the greater of $50,000 or three times the damage amount. The Court 

ignores the $50,000 minimum since the jury’s determination makes this provision irrelevant.

Case 1:15-cv-00993-JLT Document 101 Filed 11/15/16 Page 2 of 6
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Legislature so as to effectuate the purpose of the law.” People v. Coronado, 12 Cal.4th 145, 151 (1995). 

The California Supreme Court first looks to the language of the statute, giving effect to the words' plain 

meaning; “[i]f the language is unambiguous, the plain meaning controls.” Voices of the Wetlands v. 

State Water Res. Control Bd., 52 Cal.4th 499, 519 (2011).”

Courts are required to consider the context of the statute in determining the plain meaning and 

to recognize where the statute uses a term of art. See In re Marriage of Davis, 61 Cal.4th 846, 189 

(2015). Courts are obligated to assign to words, their plain and commonsense meaning. Ste. Marie v. 

Riverside Cty. Reg'l Park & Open-Space Dist., 46 Cal.4th 282, 288 (2009).

As noted above, there is dispute as to whether actual economic damages are recoverable only or, 

whether, if there is an entitlement to treble damages, that the trebled amount should include emotional 

distress damages also. Notably, in the statute, the Legislature took pains to ensure that the 

compensatory damages awardable included only “actual economic losses.” In doing so, it explicitly 

excised emotional distress as a component of damages. The difficulty is, of course, that when 

discussing the availability of treble damages, the statute refers to “actual damages” and does not include 

the descriptor, “economic.” The Court acknowledges that the phrase “actual damages,” when 

considered in the legal field, generally is considered to be synonymous with “compensatory damages,” 

which include damages for emotional harm. However, the phrase “actual damages,” in the lay sense 

would refer to those losses that are measurable. Moreover, when considering the context of the statute, 

the phrase “actual damages” seems to refer to the damages previously determined rather than intending 

that a new “actual damages” amount be determined—and thus determining emotional distress 

damages—before trebling it.

This is supported by logic. A person who loses her home to a wrongful foreclosure suffers no 

lesser emotional harm than one who loses her home to a wrongful foreclosure due to the intentional, 

reckless or willful conduct of the mortgage servicer. Thus, to suggest that the former plaintiff should 

not receive emotional distress damages but the latter one should, introduces capriciousness into the 

statute. To the contrary, the Legislature intended the outrage suffered by the intentional, reckless or 

willful wrongful foreclosure to be adequately compensated by the trebling of the economic losses or, 

anticipating that those losses may be quite small, the award of the statutory amount of $50,000. Indeed, 

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it makes no sense to suggest that the Legislature, when denying emotional distress damages initially, 

would reverse itself and require a penalty that bears no relation to the economic damages plaintiff 

would receive, to be awarded otherwise.

The Court agrees with the rationale of Balmoral Hotel Tenants Assn.v. Lee, 226 Cal.App.3d 

685 (1990). In Balmoral, two groups of tenants sued the landlord for various unlawful actions 

including wrongful eviction. Id. at 688. The tenants succeeded at trial and received an award for breach 

of the covenant of quiet enjoyment, breach of the implied warranty of habitability, negligent infliction 

of severe emotional distress and intentional infliction of emotional distress. Id. As required by the local 

housing ordinance, the court trebled the “actual damage” award, which included the emotional distress 

awards. Id.

On appeal, the Balmoral court first took issue with the use of the word “actual” when coupled

with the word “damages.” Id. at 690. The Court concluded that if the Legislature intended all damages 

to be trebled, it would not have needed to include the word “actual.” Id. Instead, “actual” when used 

with “damages” must mean a limitation on the damages awardable, concluded the court. Id. The court 

agreed also that “actual,” when used in the lay sense, referred to damages that were capable of exact 

measurement. Id. The court held, 

An interpretation of “actual damages” as referring narrowly to out-of-pocket expenses is 

most consistent with the legislative purpose underlying the treble damage provision of 

the section. As explained in Kelly v. Yee (1989) 213 Cal.App.3d 336 [261 Cal.Rptr. 

568], “lawsuits over wrongful evictions are likely to involve small amounts of money 

that may not justify the costs of litigation-expecially in the case of suits brought by the 

very type of tenant the ordinance is especially intended to protect: 'senior citizens, *691 

persons on fixed incomes and low and moderate income households.' (San Francisco 

Admin. Code, § 37.1, subd. (b)(2).) If civil remedies in aid of these tenants are to be 

meaningful, they must provide sufficient financial incentive to justify bringing suit. The 

award of treble damages very clearly serves such a purpose.” (Id. at p. 341.) The 

plaintiffs in Kelly in fact recovered damages of only $1,788 and $3,164. If these 

damages were not trebled, they might not have had the economic incentive to incur the 

expense of protracted litigation.

Balmoral, at 690–91. Balmoral observed, “As the present case illustrates, damages for mental anguish 

may well provide sufficient economic incentive to bring suit without any trebling. The assessment of 

damages for mental suffering, of course, involves considerable variability, but only verdicts at the 

lower end of the spectrum are likely to be so modest as to call for trebling in order to compensate 

the plaintiff for the expense of bringing suit.” Id. at 691, emphasis added.

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Finally, Balmoral expressed concerns that if the trebled amount included emotional distress 

damages that the statute would unconstitutional in that it would award excessive penalties because the 

amount awarded would bear no relationship to the legitimate governmental purpose of encouraging 

tenants to challenge violations of the rent control ordinance. Balmoral, at 691-697. When considering 

the phrase, “actual damages,” as used in the ordinance, the Court concluded, 

The phrase is unquestionably ambiguous; ordinary legal usage suggests that it includes 

damages for mental anguish, but the statutory context tends to favor a narrower 

meaning, limiting the phrase to economic losses. The former meaning will expose 

trebled awards to repeated constitutional attack and sometimes to constitutional 

invalidation; the latter avoids any issue of unconstitutionality. Thus, the question is 

whether we should impute to the legislative body a meaning that will infringe on 

constitutional limits, at least in some cases, or a meaning that stays safely on the side of 

constitutionality. We conclude that the rule favoring the resolution of ambiguity in favor 

of constitutionality applies here. Courts should not impute to the legislative body an 

intent to authorize awards which would repeatedly be subject to complex ad hoc 

adjudications of constitutionality.

Id. at 697.

As in Balmoral, here, prospective plaintiffs under Civil Code section 2924.12 are unlikely to 

suffer large economic losses. Logically, if they had extensive equity in their properties, they would be 

able to sell the properties to avoid the foreclosure. Notably, the Cornejos had little equity given they 

had numerous liens placed on the real property due to other debts they owed. Thus, their circumstances

and those of other plaintiffs like them explain why the Legislature provided a penalty for intentional, 

willful or reckless conduct that was the greater of treble the economic damages or $50,000. 

The award in this case, if the Court was to allow the emotional distress damage amount and add 

it to their economic losses and then treble it, the award would be more than $1 million and would 

equate to about six-and-a-half times the stipulated value of the house at the time of the sale. Given the 

conduct found by the jury to have occurred in this case and the stated purpose of the HBOR, an award 

here that exceeds $1,000,000 is wildly excessive and would likely violate the Eighth Amendment. 

Thus, the Court concludes that the plaintiff’s may not recover emotional distress damages in this case 

and the treble penalty may include only the economic losses found by the jury.

ORDER

Based upon this reasoning, the Court ORDERS:

1. The Clerk of the Court is DIRECTED to issue judgment in this case in favor of the 

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plaintiffs and against the defendants in the amount of $39,642 in economic losses and $118,926 in 

treble damages for the intentional, reckless or willful conduct found by the jury. Thus, the total amount 

awarded is $158,568.

IT IS SO ORDERED.

Dated: November 15, 2016 /s/ Jennifer L. Thurston 

UNITED STATES MAGISTRATE JUDGE

Case 1:15-cv-00993-JLT Document 101 Filed 11/15/16 Page 6 of 6