Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_16-cv-04713/USCOURTS-cand-5_16-cv-04713-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Personal Property

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SUNIL KUMARAN VETHODY, et al.,

Plaintiffs,

v.

NATIONAL DEFAULT SERVICES 

CORPORATION, et al.,

Defendants.

Case No.16-cv-04713-VKD 

ORDER DISMISSING CLAIMS 1-4 AND 

DENYING DEFENDANTS’ MOTION 

FOR SUMMARY JUDGMENT RE 

CLAIM 5

Re: Dkt. No. 100

Before the Court is defendants Select Portfolio Servicing, Inc. (“SPS”) and National 

Default Servicing Corporation’s (“NDS”) Motion for Summary Judgment or, in the Alternative, 

Partial Summary Judgment on Plaintiffs’ Second Amended Complaint. Dkt. No. 100. All parties 

have consented to magistrate judge jurisdiction. Dkt. Nos. 8, 9. Having considered the parties’ 

moving papers, declarations, and exhibits as well as the parties’ arguments at the hearing on June 

26, 2018, for the reasons set forth below, the Court DISMISSES the Vethodys’ state law claims

and DENIES defendants’ motion for summary judgment with respect to the Vethodys’ remaining 

federal claim.

I. FACTUAL BACKGROUND

Except where otherwise noted, the following facts are undisputed: 

Plaintiffs Sunil Kumaran Vethody and Bindu Baburajan Vethody own a home in San Jose, 

where they have lived since 2000. Dkt. No. 101-1 ¶ 2. In or around May 2015, the Vethodys fell 

behind in their mortgage payments. Id. ¶ 9. Defendant NDS is the trustee on the deed of trust 

securing the Vethodys’ mortgage loan, and defendant SPS is the current servicer of the Vethodys’ 

loan. Id. ¶ 6.

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In the spring of 2016, the Vethodys applied for a loan modification with SPS. Id. ¶ 4. The 

Vethodys’ son, Arjun Vethody, began contributing his income to the Vethodys’ household 

expenses at some point, and the Vethodys subsequently included evidence of his income in their 

application materials. Id. ¶ 10; Dkt. No. 100-1 ¶ 6. 

Thereafter, the Vethodys and SPS engaged in months of communications concerning the 

documents and information SPS deemed necessary for the Vethodys’ application. As of June 10, 

2016, the Vethodys had provided a non-obligor certification (“NOC”) for their son, a hardship 

letter, some pay stubs for Sunil Vethody from a company named “N.V. Hospitality,” and a profit 

& loss (“P&L”) statement for N.V. Hospitality covering the period of time from February to April 

2016. Dkt. No. 100-1 ¶ 20; see also Dkt. No. 101-1 ¶ 11; Dkt. No. 101-2 ¶ 9, Ex. E. On June 13, 

2016, SPS sent the Vethodys a letter stating that their application was incomplete and requesting 

by July 13, 2016 the two most recent and consecutive pay stubs for each borrower receiving 

wages. Dkt. No. 100-1 ¶ 21, Ex. D; Dkt. No. 101-1 ¶ 13. Four days later, on June 17, 2016, SPS 

sent another letter reiterating that the application was incomplete and requesting by July 17, 2016 

the following: (1) updated pay stubs, as the ones previously provided were over 90 days old; (2) 

that the Vethodys call SPS to clarify the P&L statement received; and (3) a “non-customer income 

certification” for each non-customer residing in the Vethodys’ primary residence and whose 

income was being utilized for mortgage payments. Dkt. No. 100-1 ¶¶ 22-23, Ex. E; Dkt. No. 101-

1 ¶ 14. 

On June 24, 2016, the Vethodys’ authorized representative called SPS and explained that 

the P&L statement previously submitted was for Arjun Vethody, and that the pay stubs were for 

Sunil Vethody. Dkt. No. 100-1 ¶ 24. On June 27, 2016, Bindu Vethody separately called SPS and 

asked for clarification regarding the documents and information SPS still required. Dkt. No. 101-

1 ¶ 16. On that call, Mrs. Vethody explained that because Mr. Vethody was self-employed and 

currently earned income on a profit-share basis from a recently created business, there were no pay 

stubs to provide. Id.; Dkt. No. 100-1 ¶ 26, Ex. I at 23. She also explained that the P&L statement 

was for Arjun Vethody’s business. Dkt. No. 101-1 ¶ 16; see also Dkt. No. 100-1 ¶ 26. According 

to SPS’s contact record, Sunil Vethody also called SPS on that same day, explaining that although 

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he had previously worked for his son’s company, N.V. Hospitality, he did not work there any 

longer, and that the only current income SPS should consider was the income reflected in the N.V. 

Hospitality P&L statement.

1

 Dkt. No. 100-1 ¶ 27. On that same day, SPS asked Mr. Vethody to 

submit an updated NOC, because the NOC previously submitted was missing some information. 

Id. SPS’s contact record for June 27, 2016 notes: “New paystubs will not be sent in”; “All 

questions about pay stubs answered with clarifying comment”; and “P&L quesation [sp] answered 

in clarifying comment.” Dkt. No. 100-1, Ex. I at 23. The Vethodys submitted an updated NOC

on June 29, 2016. Dkt. No. 100-1 ¶ 29; Dkt. No. 101-1 ¶ 17.

On July 1, 2016, and despite the earlier notation in the contact record, SPS sent the 

Vethodys a letter stating that their application was incomplete and requesting clarification by July 

31, 2016 concerning the wages and payroll expenses reflected in the P&L statement previously 

submitted. Dkt. No. 100-1 ¶ 30, Ex. F. On July 11, 2016, Mrs. Vethody called SPS, and SPS 

informed her that the P&L statement submitted was incomplete because it lacked the names of the 

individuals receiving salaries from N.V. Hospitality. Id. ¶ 32. 

On July 14, 2016, the Vethodys’ authorized representative called SPS to discuss SPS’s 

remaining questions about the P&L statement. Id. ¶ 33. The Vethodys’ representative informed 

SPS that the N.V. Hospitality salaries reflected in the February-April 2016 P&L statement were 

paid to Sunil Vethody. Id. SPS interpreted this information as conflicting with Mr. Vethody’s 

statement on June 27, 2016 that he was no longer employed at N.V. Hospitality. Id. 

Consequently, SPS sent the Vethodys a letter on July 21, 2016 stating that their application was 

incomplete and requesting that they contact SPS by August 20, 2016 to provide clarification 

concerning Mr. Vethody’s pay stubs. Id. ¶ 34, Ex. G. 

 

1

The record contains some inconsistencies. At his deposition, Mr. Vethody testified that he did 

not earn money through profit sharing. Dkt. No. 100-2 ¶ 2, Ex. J at 19:17-20. (“Q. Did you ever 

have any type of profit-sharing income during the 2012-to-2016 period of time? A. No. My son 

had the money and support. No, I don’t personally have profit sharing.”). Mr. Vethody also 

testified at his deposition that he never spoke to anyone at SPS on the telephone. Dkt. No. 100-2 ¶

2, Ex. J at 20:2–21:6. 

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On July 25, 2016, the Vethodys submitted unspecified “additional loan modification 

application documents” to SPS.

2

 Id. ¶ 35. SPS’s declarant states that those documents confirmed 

that Mr. Vethody was “no longer employed by N.V. Hospitality, Inc.” but that “SPS, however, 

required clarification as to whether Mr. Vethody was receiving any income.” Id. On July 29, 

2016, SPS sent another letter to the Vethodys stating that their application was incomplete and 

requesting that they contact SPS by August 28, 2016 to provide clarification concerning the pay 

stubs. Id. ¶ 36, Ex. H. 

Before the expiration of that deadline, defendants recorded a Notice of Trustee’s Sale 

(“NOTS”) on August 1, 2016. Dkt. No. 100-1 ¶ 39. The Vethodys received a copy of the NOTS 

on August 2, 2016, and Mrs. Vethody called and spoke with SPS employee Carissa Ewing that 

same day. Dkt. No. 101-1 ¶¶ 19, 21, Ex. A; Dkt. No. 100-1 ¶ 40, Ex. I at 20. The parties dispute 

the content of that telephone call. Mrs. Vethody states that “after reviewing our file with me, Ms. 

Ewing confirmed that SPS had everything it needed for the modification review and that the 

application was complete.” Dkt. No. 101-1 ¶ 21. Conversely, defendants’ contact record notes 

that Ms. Ewing “advised that we need the following . . . Received clarification that borrower is no 

longer [e]mployed in NV Hospitality however we need clarification whether borrower is getting 

any source of income if then we need POI docs,” and further that Mrs. Vethody stated that her

“income with NV Hospitality is [their] only source of income.” Dkt. No. 100-1, Ex. I at 20. 

According to SPS, the latter statement conflicted with Mrs. Vethody’s earlier statement on June 

27, 2016 that she was unemployed. 

The parties’ communications continued for several weeks after the NOTS was recorded 

and received. On August 4, 2016, SPS’s contact record shows that a clarifying comment was 

received, that Mrs. Vethody provided a P&L statement for N.V. Hospitality for the period of time 

from February to April 2016, and that she explained that she did not receive pay stubs as N.V. 

Hospitality was Arjun Vethody’s self-employment income. Id. at 18. On August 9, 2016, Mrs. 

Vethody called SPS again and clarified that she did not work and did not receive any income at 

 

2 Nothing in the record identifies the additional documents.

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all, that only Mr. Vethody and their son Arjun Vethody worked, and that SPS had received the 

proof of income for both Mr. Vethody and his son. Id.; Dkt. No. 100-1 ¶ 41. Mrs. Vethody called 

again on August 10, 2016, stating again that she did not work and had no income, that Mr. 

Vethody was no longer employed at N.V. Hospitality and instead worked as an independent 

contractor at Tekonix and did not receive any pay stubs, and that N.V. Hospitality was his son’s 

business. Dkt. No. 100-1 ¶ 42, Ex. I at 16–17; see also Dkt. No. 101-1 ¶ 23. On this August 10 

call, SPS requested another P&L statement from the Vethodys. Dkt. No. 100-1, Ex. I at 16–17; 

Dkt. No. 101-1 ¶ 23. The SPS contact record also reflects that on August 10, the Vethodys 

provided a list of individuals receiving a salary from N.V. Hospitality. Dkt. No. 100-1, Ex. I at 

16. This list did not include Mr. Vethody. Id.

On August 17, 2016, the Vethodys filed this lawsuit against defendants. Dkt. No. 1. 

On September 14, 2016, SPS asked again for clarification about the status of Mr. 

Vethody’s employment at N.V. Hospitality and his source(s) of income. Dkt. No. 101-2 ¶¶ 33, 35, 

38, Ex. C at SPS005724. SPS’s contact record indicates that SPS received a letter from the 

Vethodys on September 26, 2016, and two days later, SPS noted, “Received all the document, 

locked document packet ready for POI fifs.” Id., Ex. C at SPS005720.

On October 3, 2016, SPS’s contact record indicates that documentation for the Vethodys’

loan modification application was complete. Dkt. No. 101-2, Ex. C at SPS005719 

(“Documentation Complete: Yes.”). 

To date, the Vethodys’ house has not been sold. Dkt. No. 100-1 ¶ 44.

II. LEGAL STANDARD

A. Summary Judgment

A party may move for summary judgment on a “claim or defense” or “part of . . . a claim 

or defense.” Fed. R. Civ. P. 56(a). Summary judgment is appropriate when, after adequate 

discovery, there is no genuine issue as to any material facts and the moving party is entitled to 

judgment as a matter of law. Id.; see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). 

Material facts are those that might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 

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477 U.S. 242, 248 (1986). A dispute as to a material fact is “genuine” if there is sufficient 

evidence for a reasonable jury to return a verdict for the nonmoving party. Id.

A party seeking summary judgment bears the initial burden of informing the court of the 

basis for its motion, and of identifying those portions of the pleadings and discovery responses 

that demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Where 

the moving party will have the burden of proof at trial, it must affirmatively demonstrate that no 

reasonable trier of fact could find other than for the moving party. Southern Calif. Gas. Co. v. 

City of Santa Ana, 336 F.3d 885, 888 (9th Cir. 2003).

On an issue where the nonmoving party will bear the burden of proof at trial, the moving 

party may discharge its burden of production either (1) by “produc[ing] evidence negating an 

essential element of the nonmoving party’s case” or (2) after suitable discovery, by “show[ing] 

that the nonmoving party does not have enough evidence of an essential element of its claim or 

defense to discharge its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co., 

Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1103 (9th Cir. 2000); see also Celotex, 477 U.S. at 324–25.

Once the moving party meets its initial burden, the opposing party must then set forth specific 

facts showing that there is some genuine issue for trial in order to defeat the motion. See Fed. R. 

Civ. P. 56(e); Anderson, 477 U.S. at 250. “A party opposing summary judgment may not simply 

question the credibility of the movant to foreclose summary judgment.” Anderson, 477 U.S. at 

254. “Instead, the non-moving party must go beyond the pleadings and by its own evidence set 

forth specific facts showing that there is a genuine issue for trial.” Far Out Prods., Inc. v. Oskar, 

247 F.3d 986, 997 (9th Cir. 2001) (citations and quotations omitted). The non-moving party must 

produce “specific evidence, through affidavits or admissible discovery material, to show that the 

dispute exists.” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). Conclusory or 

speculative testimony in affidavits and moving papers is insufficient to raise a genuine issue of 

material fact to defeat summary judgment. Thornhill Publ’g Co., Inc. v. Gen. Tel. & Elecs. Corp., 

594 F.2d 730, 738 (9th Cir. 1979).

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In deciding a motion for summary judgment, a court must view the evidence in the light 

most favorable to the nonmoving party and draw all justifiable inferences in its favor. Anderson, 

477 U.S. at 255; Hunt v. City of Los Angeles, 638 F.3d 703, 709 (9th Cir. 2011).

B. Mootness

“Mootness is a jurisdictional issue.” Foster v. Carson, 347 F.3d 742, 745 (9th Cir. 2003). 

A claim is moot if it has lost its character as a present, live controversy and if no effective relief 

can be granted due to subsequent developments. Am. Tunaboat Ass’n v. Brown, 67 F.3d 1404, 

1407 (9th Cir. 1995). “If there is no longer a possibility that [a litigant] can obtain relief for his 

claim, that claim is moot and must be dismissed for lack of jurisdiction.” Ruvalcaba v. City of 

L.A., 167 F.3d 514, 521 (9th Cir. 1999).

The Court has a continuing duty to dismiss an action whenever it appears that it lacks 

jurisdiction. Fed. R. Civ. P. 12(h)(3); see also Csibi v. Fustos, 670 F.2d 134, 136 n.3 (9th 

Cir.1982) (noting that lack of subject matter jurisdiction can be raised sua sponte by a court at any 

time, as it is “the duty of the federal courts to assure themselves that their jurisdiction is not being 

exceeded”). Because the issue of mootness may render the court without jurisdiction to review the 

substance of the complaint, the court addresses the mootness question first. See, e.g., del Campo 

v. Kennedy, 491 F. Supp. 2d 891, 899 (N.D. Cal. 2006).

III. DISCUSSION

The Vethodys have asserted five claims for relief. The first four claims arise under the 

California Homeowner’s Bill of Rights (“HBOR”), and the fifth claim arises under the federal 

regulations implementing the Real Estate Settlement Procedures Act (“RESPA”): 

1. Violation of the HBOR prohibition against “dual tracking” under Cal. Civil Code § 

2923.6(c);

2. Injunctive relief under Civil Code § 2924.12(a) for a violation of Cal. Civil Code § 

2923.6(c);

3. Violation of HBOR’s requirement of a single point of contact responsible for 

coordinating receipt of all documents associated with available foreclosure prevention 

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alternatives and notifying the borrower of any missing documents necessary to 

complete the application under Cal. Civil Code § 2923.7(b)(2);

4. Violation of HBOR’s requirement of a single point of contact having access to 

individuals with the ability and authority to stop foreclosure proceedings when 

necessary under Cal. Civil Code § 2923.7(b)(5); and

5. Failure to exercise reasonable diligence in obtaining documents and information to 

complete a loss mitigation application under 12 C.F.R. § 1024.41(b)(1). 

Dkt. No. 83 ¶¶ 36-73.

A. HBOR Claims

Defendants argue that they are entitled to summary judgment on the Vethodys’ HBOR 

claims for two reasons: (1) no dual tracking occurred because the Vethodys never submitted a 

complete application prior to the NOTS issuance, and (2) the NOTS has expired, rendering the 

Vethodys’ claims moot. The Court considers the mootness argument first, as it must determine 

whether it still has jurisdiction over the claims at issue before examining their merits. See Fed. R.

Civ. P. 12(h)(3); Csibi, 670 F.2d at 136 n.3; del Campo, 491 F. Supp. 2d at 899.

The parties do not dispute that the NOTS expired on August 1, 2017, and that no 

foreclosure sale took place while the NOTS was active. In their complaint, the Vethodys seek 

injunctive relief and attorneys’ fees for their HBOR claims. Dkt. No. 83 ¶¶ 44, 52, 57, 62. These 

are the only remedies the HBOR provides. Cal. Civ. Code § 2924.12(a)(1), (h). However, 

because the NOTS has expired and the Vethodys’ house was never sold, injunctive relief is neither 

available nor warranted. Thus, the four HBOR claims are moot. Foster, 347 F.3d at 746 (“Where 

the activities sought to be enjoined already have occurred, and the appellate courts cannot undo 

what has already been done, the action is moot, and must be dismissed.”) (quoting Bernhardt v. 

Cnty. of Los Angeles, 279 F.3d 862, 871 (9th Cir. 2002).

In their opposition brief, the Vethodys argue that their claims are not moot because the 

HBOR statute provides that a prevailing borrower who successfully obtains injunctive relief may 

be eligible for attorneys’ fees and costs. Dkt. No. 101 at 8–9; Cal. Civ. Code § 2924.12(h). The 

Vethodys did not obtain an injunction, nor did they seek a preliminary injunction. However, they 

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contend that “the Notice of Trustee’s sale expired only by virtue of Plaintiffs brin[g]ing the instant 

action” and that their “lawsuit effectively enjoined the foreclosure sale of Plaintiffs’ property 

during the interim of this lawsuit until the Notice of Trustee’s Sale expired and was rendered 

inoperative.” Dkt. No. 101 at 9, 10. Consequently, they argue, the possibility of an award of 

attorneys’ fees and costs creates a live controversy. 

“[T]he existence of a claim for attorney fees is not sufficient to revive an otherwise moot 

action.” Foster, 347 F.3d at 746 (citing Cammermeyer v. Perry, 97 F.3d 1235, 1238 (9th Cir. 

1996)). Other judges in this district have dismissed foreclosure actions as moot under similar 

circumstances, despite the possibility that the plaintiffs in those cases might be eligible for 

attorneys’ fees under HBOR. See, e.g., Pearson v. Green Tree Servicing, LLC, No. 14-cv-04524-

JSC, 2014 WL 6657506, at *1, 3–4 (N.D. Cal. Nov. 21, 2014) (dismissing case as moot, but 

without prejudice to plaintiff filing a motion for attorneys’ fees); Le v. Bank of N.Y. Mellon, 152 F. 

Supp. 3d 1200, 1214–15 (N.D. Cal. 2015) (finding HBOR claims mooted by expiration of notice 

of sale, but noting that grounds could exist for granting plaintiff prevailing party status for the 

purposes of future motion for attorneys’ fees); Mace v. Ocwen Loan Servicing, LLC, No. 16-cv05480-MEJ, 2018 WL 368601, at *4–5 (N.D. Cal. Jan. 11, 2018) (dismissing case as moot 

following defendant’s issuance of notice of rescission, while not precluding plaintiffs from 

seeking attorneys’ fees at a later time). The Court expresses no opinion at this time as to whether 

the Vethodys would qualify as a “prevailing borrower” eligible for attorneys’ fees under Cal. Civ. 

Code § 2924.12(h).

Because the parties do not dispute that the NOTS expired and that the Vethodys’ house has 

not been sold, the Court finds the Vethodys’ HBOR claims are moot. Accordingly, the Court 

DISMISSES claims 1, 2, 3 and 4 of the complaint for lack of subject matter jurisdiction. 

B. RESPA Claim

The RESPA implementing regulations provide that “[a] servicer shall exercise reasonable 

diligence in obtaining documents and information to complete a loss mitigation application.” 12 

C.F.R. § 1024.41(b)(1). Borrowers may enforce the provisions of C.F.R. § 1024.41 pursuant to 

the provisions of Section 6(f) of RESPA, 12 U.S.C. § 2605(f). 12 C.F.R. § 1024.41(a). An 

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application is complete when “a servicer has received all the information that the servicer requires 

from a borrower in evaluating applications for the loss mitigation options available to the 

borrower.” Id. § 1024.41(b)(1). According to the text of the regulation itself and the Consumer 

Financial Protection Bureau’s official interpretation, then, a servicer has the discretion to decide 

when applications are “complete”—at least with respect to information within the control of the

borrower. 12 C.F.R. § 1024, supp. I, § 41(b)(1) cmt. 1 (“A servicer has flexibility to establish its 

own application requirements and to decide the type and amount of information it will require 

from borrowers applying for loss mitigation options.”)3; 12 C.F.R. § 1024, supp. I, § 41(b)(1) cmt. 

5 (“A loss mitigation application is complete when a borrower provides all information required 

from the borrower notwithstanding that additional information may be required by a servicer that 

is not in the control of a borrower.”). “Although a servicer has flexibility to establish its own 

requirements regarding the documents and information necessary for a loss mitigation application, 

the servicer must act with reasonable diligence to collect information needed to complete the 

application.” 12 C.F.R. § 1024, supp. I, § 41(b)(1) cmt. 4. “Reasonable diligence” by the servicer 

includes requesting the information necessary to make an application complete promptly after 

receiving the application. Id.

Unlike the HBOR statute, nothing in the RESPA statute or the implementing regulations 

indicates when a servicer’s conduct ceases to be “reasonable diligence” in pursuit of necessary 

information and becomes instead an effort to avoid a decision on the merits of the application. Cf. 

Cal. Civ. Code § 2924.11(f) (noting under HBOR that “an application shall be deemed ‘complete’ 

when a borrower has supplied the mortgage servicer with all documents required by the mortgage 

servicer within the reasonable timeframes specified by the mortgage servicer”); Curtis v. 

Nationstar Mortg. LLC, No. 14-cv-05167-HRL, 2016 WL 1275599, at *5 (N.D. Cal. Apr. 1, 2016) 

(rejecting argument “that the application cannot be complete until Defendants deem it complete” 

and refusing to “read the [HBOR] prohibition against dual tracking to grant loan servicers 

unilateral discretion to determine whether applications are complete or incomplete”); Greene v. 

 

3 Available at https://www.consumerfinance.gov/eregulations/1024-Subpart-Interp/2015-

18239#1024-41-b-1-Interp-1. 

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Wells Fargo Bank, N.A., 2016 WL 360756, at *4 (N.D. Cal. Jan. 28, 2016) (rejecting defendant’s 

contention that Cal. Civ. Code § 2923.6(h) “permits a mortgage servicer to create a moving target 

where borrowers have no way of knowing whether a loan modification application is complete 

unless the mortgage servicer tells them so,” because such a reading would permit mortgage 

servicers to avoid the application of Section 2923.6 by noticing a trustee’s sale and then afterward

requesting additional documents that it had not previously required). Neither defendants nor the 

Vethodys cite any case law or other authority on this point.

Defendants move for summary judgment on the Vethodys’ RESPA claim, arguing that the 

undisputed facts demonstrate that SPS properly processed the Vethodys’ application and advised 

them of the required documentation. Dkt. No. 100 at 17–18. Defendants argue that the Vethodys’ 

inability to obtain substantive loan modification review was because they failed to provide SPS 

with the information SPS required and because they submitted conflicting information to SPS, and 

not because SPS did not act in a reasonably diligent manner. The Vethodys do not address a 

servicer’s discretion regarding what documents are necessary to complete a loan modification 

application under 12 C.F.R. § 1024(b)(1), but rather assert that their application was complete and 

defendants simply failed to realized that because defendants were not reasonably diligent. Dkt. 

No. 101 at 14. Specifically, the Vethodys contend that defendants repeatedly requested documents

and information that the Vethodys had already supplied and, in some instances, after SPS had 

advised the Vethodys that nothing further was needed. Dkt. No. 101 at 13. The Vethodys argue 

that SPS’s repeated requests for documents and information evidence a failure to exercise 

reasonable diligence in violation of 12 C.F.R. § 1024(b)(1).

As the party moving for summary judgment on an issue for which the Vethodys bear the 

burden of proof, defendants must produce evidence either negating an essential element of the 

Vethodys’ claim or showing that they lack sufficient evidence of an essential element of the claim. 

Defendants rely on the declaration of an SPS Document Control Officer who lacks personal 

knowledge of the communications between SPS representatives and the Vethodys, but who attests 

to the business practices that result in the creation and maintenance of SPS’s written “contact 

record” reflecting its communications with the Vethodys. Dkt. No. 100-1. According to 

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defendants, the contact record demonstrates that SPS diligently sought complete and accurate 

information from the Vethodys, and such information was not supplied before the NOTS issued. 

Dkt. No. 11 at 18; Dkt. No. 103 at 13. Defendants do not rely on testimony from any of the 

various SPS employees that actually interacted with the Vethodys. 

The Vethodys primarily rely on the declaration of Bindu Vethody. Dkt. No. 101-1. They 

argue that Mrs. Vethody’s declaration demonstrates that the Vethodys submitted all the documents 

necessary for their loan modification application, and that SPS repeatedly asked for documents or 

information that the Vethodys had already provided. Mrs. Vethody’s declaration does not attach 

as exhibits any copies of what the Vethodys purportedly submitted to SPS or any copies of any 

letters from SPS, with the exception of the NOTS that SPS recorded on August 1, 2016. The 

Vethodys did not submit a declaration from their authorized representative. 

Defendants object to certain portions of the Vethodys’ evidence, including portions of Mrs. 

Vethody’s declaration which they contend are inconsistent with her deposition testimony. Before 

addressing the question of whether defendants have met their burden on summary judgment with 

respect to the RESPA claim, the Court addresses defendants’ objections to certain evidence on 

which the Vethodys rely in opposing summary judgment. Dkt. No. 103-1.4

1. Vethody Declaration ¶ 18

Defendants object to Paragraph 18 of Mrs. Vethody’s declaration (Dkt. No. 101-1), which 

states, “On July 29, 2016, our authorized agent contacted SPS to confirm the status of the 

application and was advised that the application was complete and was sent to underwriting.” 

Dkt. No. 103-1 at 2. Defendants object on the basis that the statement lacks personal knowledge 

and foundation under Federal Rule of Evidence 602 and that it also constitutes inadmissible 

hearsay under Federal Rule of Evidence 802. The Court agrees. The declaration is not made 

 

4 Defendants filed their objections separately from their reply brief, contrary to Civil Local Rule 7-

3(c), which states that “[a]ny evidentiary and procedural objections to the opposition must be 

contained within the reply brief or memorandum.” Defendants’ reply brief discusses some of 

those evidentiary objections, but it does not contain all of the objections in the separate 

submission. However, the Court will consider the separate submission, because the separate 

submission and reply brief collectively are within the 15-page limit for a reply brief. Civil L.R. 7-

3(c), 7-4(b).

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based upon personal knowledge of the communication between the Vethodys’ representative and 

SPS, and the Vethodys offer it to prove the truth of the matter asserted in the statement—i.e., that 

SPS had concluded their loan modification application was complete as of July 29, 2018 and had 

communicated that to their authorized representative. See, e.g., Dkt. No. 101 at 9–11. 

Defendants’ objections are sustained, and the Court will strike Paragraph 18.

2. Vethody Declaration ¶ 20

Defendants object to Paragraph 20 of Mrs. Vethody’s declaration for the same reasons they 

object to Paragraph 18. The specific portion of Paragraph 20 that defendants find objectionable 

states, “ . . . and [we] had been told on July 29, 2016 that the file was complete and had been sent 

to underwriting . . . .” Defendants point out that only the authorized representative (and not Mr. or 

Mrs. Vethody) participated in the conversation during which it is alleged an SPS representative 

said the Vethodys’ file was complete. Dkt. No. 103 at 6, 11–12. If that is the case, the challenged 

statement in Paragraph 20 is not made on personal knowledge. For the same reasons discussed 

above, defendants’ objections are sustained, and the Court will strike the challenged portion of 

Paragraph 20 concerning the purported July 29, 2016 communication.

3. Vethody Declaration ¶ 21

Defendants object to Paragraph 21 of Mrs. Vethody’s declaration as inconsistent with her

deposition testimony, and therefore insufficient to create a genuine dispute of material fact. 

Paragraph 21 of the declaration states:

Therefore, we contacted Defendant about the Notice of Trustee’s 

Sale, but SPS’ representative Carissa Ewing merely informed me 

that it was standard procedure for SPS to record a Notice of 

Trustee’s Sale during the modification process. However, after 

reviewing our file with me, Ms. Ewing confirmed that SPS had 

everything it needed for the modification review and that the 

application was complete. In addition, Ms. Ewing advised that she 

could get the Notice of Trustee’s Sale cancelled since we had 

supplied all information SPS needed for the review.

Mrs. Vethody suggests in her declaration, but does not expressly state, that the contact described 

in Paragraph 21 took place on August 2, 2016. See Dkt. No. 101-1 ¶¶ 20-22 (“On August 2, 2016, 

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we received a copy of the Notice of Trustee’s Sale. . . . Therefore, we contacted Defendant about 

the Notice of Trustee’s Sale, but SPS’[s] representative Carissa Ewing merely informed me that it 

was standard procedure for SPS to record a Notice of Trustee’s Sale during the modification 

process. . . . Thereafter, we attempted to contact Carissa Ewing, by voicemail and email on August 

3, 2016, August 4, 2016, and August 9, 2016.”). At her deposition, however, Mrs. Vethody 

testified that she did not speak with Ms. Ewing until August 5 or 6. Dkt. No. 100-2, Ex. K at 32:7-

20. 

Defendants note correctly that a party cannot create a genuine issue of fact to defeat

summary judgment by contradicting previously sworn testimony without explaining the 

contradiction or attempting to resolve the disparity. See, e.g., Cleveland v. Policy Mgmt. Sys. 

Corp., 526 U.S. 795, 806–07 (1999); Van Asdale v. Int’l Game Tech., 577 F.3d 989, 998 (9th Cir. 

2009). 

The Vethodys did not file any written response to defendants’ objections to evidence. 

When asked about the apparent inconsistency at the hearing, counsel for the Vethodys did not 

offer an explanation, but argued that any inconsistency regarding the date of the conversation was 

immaterial given the Vethodys’ contention that the loan modification application was complete 

before the NOTS issued, regardless of what SPS may have said about it. Dkt. No. 105 at 

11:13:47-11:14:54.

The inconsistency between Mrs. Vethody’s deposition testimony and her declaration is not 

material to the issues presented on summary judgment. Whether the conversation Mrs. Vethody

describes took place on August 2 or instead on August 5 or 6 does not make it more or less 

significant for purposes of assessing whether, as a matter of law, the Court may find defendants 

acted with reasonable diligence. Defendants do not appear to dispute that Ms. Ewing and Mrs. 

Vethody spoke in early August 2016 after SPS recorded the NOTS.5 To the extent defendants 

suggest that a dispute regarding the date of the conversation prevents the Court from considering

 

5

The defendants’ own contact record reflects a communication between Ms. Ewing of SPS and 

Mrs. Vethody on August 2, 2016. Dkt. No. 100-1 ¶ 40; see also Dkt. No. 100-1, Ex. I at 20.

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the substance of the alleged communication on summary judgment, the Court overrules that 

objection.

4. Vethody Declaration ¶¶ 23, 24, and 25

Defendants object to Paragraphs 23, 24, and 25 of Mrs. Vethody’s declaration as 

irrelevant. These paragraphs concern communications between the Vethodys and SPS in August 

2016 concerning additional requests for and provision of documents. Defendants appear to argue 

that these paragraphs are irrelevant because the communications occurred after the NOTS issued. 

Because those communications may be relevant to and probative of the question of what

documents and information were necessary to complete the Vethodys’ application, the Court 

overrules defendants’ objections to these paragraphs.

5. Koster Declaration ¶¶ 8-9, Exhibits D and E

Defendants object to Exhibits D and E attached to the declaration of the Vethodys’

counsel, Allan Koster, for lack of personal knowledge and lack of foundation under Federal Rule 

of Evidence 602, as inadmissible hearsay under Rule 802, and as lacking authentication under 

Rule 901. Exhibit D purports to consist of pay stubs for Sunil Vethody from N.V. Hospitality and 

a “salary break up” listing N.V. Hospitality employees who received salaries or wages. Exhibit E 

purports to be a P&L statement for N.V. Hospitality covering the period from February to April 

2016. 

As the Vethodys’ attorney, Mr. Koster may properly attest that Exhibits D and E are true 

and correct copies of documents that SPS produced to the Vethodys. Such testimony is within his 

personal knowledge. With respect to defendants’ authenticity objection, the authentication

requirement is satisfied by “evidence sufficient to support a finding that the item is what its 

proponent claims.” Fed. R. Evid. 901(a). At the summary judgment hearing, defendants did not 

dispute that SPS had produced Exhibits D and E during discovery to the Vethodys. Defendants 

further clarified that they did not dispute that SPS originally received those documents from the 

Vethodys. Rather, defendants appear to object solely that there is no evidentiary basis for Mr. 

Koster to attest to when the Vethodys originally provided the documents in Exhibits D and E to 

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SPS. Defendants’ objection is not well-taken, as Mr. Koster does not, in fact, attest to the date on 

which SPS received Exhibits D and E.

6

 Defendants’ objections on this point are overruled.

Having addressed defendants’ evidentiary objections, the Court turns to the admissible 

evidence presented on summary judgment with respect to the remaining RESPA claim. The 

critical issue here is whether SPS acted with reasonable diligence in obtaining and evaluating the 

information and documents required for the Vethodys’ loan modification application. The 

evidence on this point is disputed, particularly with respect to the two categories of documentation 

that appear to have spawned the bulk of the communications between SPS and the Vethodys: Mr. 

Vethody’s pay stubs and the N.V. Hospitality P&L statements.

Pay stubs. It is undisputed that the Vethodys provided pay stubs for Mr. Vethody from his 

work at N.V. Hospitality on June 10, 2016. On June 17, 2016, SPS requested updated pay stubs, 

as the ones the Vethodys had provided were over 90 days old. On June 27, 2016, at least one of 

the Vethodys clarified by telephone that Mr. Vethody was no longer employed at N.V. Hospitality 

and that there were no additional pay stubs to provide. Even when Mr. Vethody moved on to an 

independent contractor position at Tekonix, he did not receive pay stubs. Pay stubs are 

information that SPS might reasonably require if they existed, but if they did not exist and could 

not be obtained from the Vethodys’, it would be neither reasonable nor diligent for SPS to 

continue to demand them. 

After June 27, 2016, SPS continued to send letters seeking clarification concerning the pay 

stubs. Dkt. No. 100-1, Exs. G, H. Defendants argue that these letters resulted from the Vethodys’ 

representative communicating to SPS on July 14, 2016 that “Sunil Vethody was receiving a 

salary,” which SPS (or at least the SPS employee who spoke to the Vethodys’ representative) felt 

conflicted with Mr. Vethody’s statement on June 27 that he was no longer employed at N.V. 

Hospitality. Dkt. No. 103 at 4; Dkt. No. 100-1 ¶ 33. SPS may have been genuinely confused; 

however, the pay stubs that SPS received from the Vethodys and produced in discovery are dated

 

6

SPS’s own contact record suggests that SPS received at least some of the documents in Exhibits 

D and E from the Vethodys on June 10, 2016. Dkt. No. 100-1, Ex. I at 24–25 (indicating that pay 

stubs, hardship letter, proof of income, and an NOC were received by fax on June 10, 2016).) 

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October 5, 2015, November 6, 2015, and April 10, 2016, and reflect Mr. Vethody’s employment 

with N.V. Hospitality during those periods. Dkt. No. 101-2, Ex. D at SPS000203–05. This is not 

inconsistent with the Vethodys’ statement that as of June 27, 2016, Mr. Vethody no longer worked 

there. Moreover, the letters SPS sent while attempting to ascertain the status of Mr. Vethody’s 

income continued to mention pay stubs, despite the Vethodys repeatedly informing SPS that no 

pay stubs existed. Whether SPS’s efforts to understand Mr. Vethody’s income were reasonably 

diligent actions, or instead reflected a lack of diligence, is a question of fact that cannot be 

resolved as a matter of law on summary judgment.

P&L statements. The same is true with respect to the P&L statements. The Vethodys first 

submitted an N.V. Hospitality P&L statement on June 10, 2016. SPS noted that it needed

clarification regarding the identity of the people whose income was reflected in the P&L statement 

on June 17, 2018. The Vethodys’ representative informed SPS on June 24, 2016 that the P&L 

statement was for Arjun Vethody’s business. Mrs. Vethody’s declaration does not address SPS’s 

subsequent request for the N.V. Hospitality salary breakdown by employee, but according to 

SPS’s contact record, it appears that the first time SPS sought clarification concerning the names 

of the N.V. Hospitality employees receiving salaries or wages was in a telephone call with the 

Vethodys’ representative on July 14, 2016. Dkt. No. 100-1, Ex. I at 22.

At the hearing, counsel for defendants acknowledged that a dispute existed concerning 

when SPS received certain documents from the Vethodys—in particular, the outstanding N.V. 

Hospitality salary breakdown by employee. The Vethodys argue that the documents were 

submitted on June 10, 2016, whereas the defendants contend that that information was not 

provided to SPS until August 10, 2016. Mrs. Vethody states in somewhat conclusory fashion that 

during the month of May 2016, the Vethodys submitted “all information and documents needed 

for the application, including . . . a profit and loss statement,” and that on August 10, SPS 

requested another P&L statement for Arjun Vethody. Dkt. No. 101-1 ¶¶ 11, 23. The SPS contact 

record indicates that it received the salary breakdown on August 10, 2016. Dkt. No. 100-1, Ex. I 

at 16. 

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Thus, the issue of whether defendants were reasonably diligent in their efforts to obtain 

complete information concerning the P&L statement requires determining whether Mrs. 

Vethody’s testimony or SPS’s business records are more credible, and also requires determining 

whether the information the Vethodys provided to SPS explaining the P&L statements was

sufficient and should have been deemed so by SPS. These are not determinations that can be 

made on summary judgment. See James v. Ocwen Loan Servicing, LLC, No. 1:17-cv-0501, 2017 

WL 6336770, at *5–6 (S.D. Ohio Dec. 12, 2017) (denying summary judgment where 

determination of credibility of defendant’s business records versus plaintiff’s self-serving 

declaration lay within the province of the jury). 

IV. CONCLUSION

For the foregoing reasons, the Court DISMISSES the Vethodys’ four HBOR claims, which 

are mooted by the expiration of the Notice of Trustee’s Sale. The Court DENIES defendants’ 

motion for summary judgment as to the remaining RESPA claim.

IT IS SO ORDERED.

Dated: July 16, 2018

VIRGINIA K. DEMARCHI

United States Magistrate Judge

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