Court Opinion

ID: 6497077
Source: CourtListenerOpinion
Date Created: 2022-07-01 00:02:27.635825+00
Date Added: 2024-06-11T08:49:42.182727
License: Public Domain

Filed 6/30/22 Peralta v. Shellpoint Mortgage CA1/4
        NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not
been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            FIRST APPELLATE DISTRICT

                                        DIVISION FOUR

 ROBERT PERALTA, as
 Trustee, etc.,
           Plaintiff and Appellant,                          A161437

 v.                                                          (Contra Costa County
 SHELLPOINT MORTGAGE,                                        Super. Ct. No. MSC19-
 LLC, et al.,                                                00695)
           Defendants and
           Respondents.

          Robert Peralta appeals from the judgment that followed the
trial court’s order sustaining the demurrer of Shellpoint
Mortgage, LLC and the Bank of New York Mellon (collectively,
Shellpoint). He contends the trial court erred in sustaining
Shellpoint’s demurrer without leave to amend. We conclude that
Robert can amend his complaint to state valid causes of action
against Shellpoint, so we will reverse the judgment.
                                        BACKGROUND
          Because this case comes after the trial court sustained
Shellpoint’s demurrer, we draw the facts from the properly
pleaded material facts in the second amended complaint. (Sheen
v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 916.)

                                                      1
      Beatriz Peralta took out a loan to buy a property in
Hercules, and the loan was secured by a deed of trust on the
property. By 2016, Shellpoint was the servicer on the loan.
      Beatriz was current on the loan until February 2018, when
she became ill. She passed away in August 2018. Beatriz
requested a loan modification with Shellpoint before her death,
but Shellpoint failed to appoint a single point of contact to
communicate with her about foreclosure alternatives.
      Sometime after Beatriz’s death, her son Robert Peralta
notified Shellpoint that Beatriz had died and the property had
been transferred to him, qualifying him as her successor in
interest. Within three months of Beatriz’s death, Robert was able
to start making payments on the loan, but Shellpoint refused to
accept the payments due to the arrears on the loan.
      In December 2018, Shellpoint caused a notice of default to
be recorded. Shellpoint attached a declaration to the notice of
default stating that 30 days or more had passed since Shellpoint
had initially contacted Beatriz to assess her financial situation
and explore options for her to avoid foreclosure. However,
Shellpoint had failed to contact Beatriz by phone or in person to
explore options to avoid foreclosure before recording the notice of
default.
      After Shellpoint caused a notice of trustee’s sale to be filed
in March 2019, Robert filed a complaint to enjoin the sale. After
several rounds of demurrers and amendments, in January 2020
Robert filed the second amended complaint, in which he alleged
one cause of action for violation of Civil Code section 2923.5 and

                                  2
former section 2923.7, subdivision (a) (Stats. 2012, ch. 87, § 9);
one cause of action for violation of former Civil Code section
2920.7; and one cause of action under the Unfair Competition
Law (UCL), Business and Professions Code section 17200 et seq.1
In July 2020 the trial court sustained Shellpoint’s demurrer to
the second amended complaint without leave to amend.2 Robert
appealed.3
                             DISCUSSION
  I.   Standard of Review and Statutory Overview
       “ ‘In reviewing an order sustaining a demurrer, we examine
the operative complaint de novo to determine whether it alleges
facts sufficient to state a cause of action under any legal theory.’
[Citation.] ‘ “ ‘ “We treat the demurrer as admitting all material

       1   Undesignated statutory citations are to the Civil Code.
       2Because Robert concedes that the trial court properly
sustained the demurrer to the claim for violation of former
section 2920.7, we do not discuss it further.
       3While the second amended complaint identifies the
plaintiff as “Robert Peralta, as Trustee of the Beatriz Peralta
Revocable Trust” (capitalization omitted), the notice of appeal
identifies the appellant as simply “Robert Peralta.” At oral
argument, Shellpoint argued for the first time that Robert’s
failure to identify himself as the trustee deprived him of standing
to appeal. We disagree. When an appellant identifies himself or
herself as a trustee but has standing to appeal only as an
individual, courts will disregard the trustee label as merely
descriptive. (Graham v. Lenzi (1995) 37 Cal.App.4th 248, 254.)
We apply the same principle here and hold that the absence of
the descriptive label of trustee does not deprive Robert of
standing to appeal. This is especially appropriate here, where
the thrust of Robert’s appeal is that he can amend his complaint
to change his capacity as plaintiff.

                                    3
facts properly pleaded, but not contentions, deductions or
conclusions of fact or law. . . . We also consider matters which
may be judicially noticed.” . . . Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in
their context.’ ” ’ ” (Mathews v. Becerra (2019) 8 Cal.5th 756,
768.)
        “ ‘ “When a demurrer is sustained without leave to amend,
the reviewing court must determine whether there is a
reasonable probability that the complaint could have been
amended to cure the defect. . . .” [Citation.] The abuse of
discretion standard governs our review of that question.
[Citation.] “The plaintiff bears the burden of proving there is a
reasonable possibility of amendment.” [Citation.] To satisfy that
burden, the plaintiff “ ‘must show in what manner he can amend
his complaint and how that amendment will change the legal
effect of his pleading.’ ” ’ ” (Larson v. UHS of Rancho Springs,
Inc. (2014) 230 Cal.App.4th 336, 342–343.)
        In the first cause of action, the complaint alleged that
Shellpoint violated two statutes, section 2923.5 and former
section 2923.7, subdivision (a), that are part of the Homeowner
Bill of Rights (Civ. Code, §§ 2920.5, 2923.4–2923.7, 2923.9–
2923.12, 2923.15, 2923.17–2923.20) (HBOR). “The [HBOR]
[citations], effective January 1, 2013, was enacted ‘to ensure that,
as part of the nonjudicial foreclosure process, borrowers are
considered for, and have a meaningful opportunity to obtain,
available loss mitigation options, if any, offered by or through the
borrower’s mortgage servicer, such as loan modifications or other

                                   4
alternatives to foreclosure.’ ([Civ. Code, ]§ 2923.4, subd. (a).)”
(Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal.App.4th
1267, 1272.) The events relevant to this case transpired in 2018,
so we apply the versions of the HBOR statutes in effect at that
time.
        Section 2923.5, subdivision (a) prohibits a mortgage
servicer, among others, from recording a notice of default until 30
days after the servicer initially contacted the borrower either “in
person or by telephone in order to assess the borrower’s financial
situation and explore options for the borrower to avoid
foreclosure.” (§ 2923.5, subd. (a)(1)(A), (2).) Subdivision (b) of the
same statute obligates a servicer to include with a recorded
notice of default “a declaration that the mortgage servicer has
contacted the borrower” or that contact was excused. (§ 2923.5,
subd. (b).)
        Former section 2923.7, subdivision (a), stated, “Upon
request from a borrower who requests a foreclosure prevention
alternative, the mortgage servicer shall promptly establish a
single point of contact and provide to the borrower one or more
direct means of communication with the single point of contact.”
        Section 2920.5, subdivision (c)(1) defines “borrower” for the
purposes of section 2923.5 and former section 2923.7 as “any
natural person who is a mortgagor or trustor and who is
potentially eligible for any federal, state, or proprietary
foreclosure prevention alternative program offered by, or
through, his or her mortgage servicer.”

                                   5
       Section 2924.12, subdivision (a)(1) and section 2924.19,
subdivision (a)(1) provide that if “a trustee’s deed upon sale has
not been recorded, a borrower may bring an action for injunctive
relief to enjoin a material violation of” sections 2923.5 and
2923.7, among other provisions.
 II.   Standing
       The trial court ruled that Robert had not alleged facts
supporting his standing to raise claims under section 2923.5 and
former section 2923.7 because, as relevant here, he brought his
claims as the trustee of the Beatriz Peralta Revocable Trust and
he had not alleged that the trust was the “borrower” as defined in
the HBOR. The court noted that the deed of trust recorded on
the property, which the trial court judicially noticed, listed the
borrower as “Beatriz Peralta, an unmarried woman.”4 The trial
court also found the UCL claim failed because it relied on the
alleged HBOR violations and because Robert had not alleged he
personally suffered any damages from Shellpoint’s conduct.
       Robert does not disagree with the trial court’s ruling that
he lacked standing as a trustee to raise the HBOR and UCL
claims. Instead, he contends the trial court erred in denying
leave to amend because he can amend the complaint to overcome
the standing problems the trial court identified. Robert presents
several alternative theories for how he might have standing. We
need address only his theory that he can allege HBOR and UCL

       4While Robert disagrees with other aspects of the trial
court’s use of judicial notice, he does not argue that the trial court
improperly noticed this document as evidence of the identity of
the borrower.

                                  6
claims that belonged to Beatriz as her successor in interest,
because that theory is viable.
      As the complaint alleged and as is reflected in the notice of
default attached to the complaint, Beatriz obtained the loan and
signed a deed of trust to secure it. Section 2924.12, subdivision
(a)(1) and section 2924.19, subdivision (a)(1) allow the “borrower”
to assert a claim for violations of section 2923.5 and section
2923.7, and section 2920.5, subdivision (c)(1) defines the
“borrower” as a natural person who is a mortgagor or trustor.
Thus, Beatriz was the person who had standing to assert the
claims alleged under section 2923.5 and former section 2923.7.
As the borrower, she also would have suffered the late fees and
interest that the complaint alleged followed from Shellpoint’s acts
of unfair competition based on the HBOR violations, so she had
standing to assert a UCL claim as well.
      Beatriz is deceased, but that is not necessarily the end of
the matter. Section 377.20, subdivision (a) of the Code of Civil
Procedure states, “(a) Except as otherwise provided by statute, a
cause of action for or against a person is not lost by reason of the
person’s death, but survives subject to the applicable limitations
period.” Section 377.30 of the Code of Civil Procedure further
provides, “A cause of action that survives the death of the person
entitled to commence an action or proceeding passes to the
decedent’s successor in interest, subject to Chapter 1
(commencing with Section 7000) of Part 1 of Division 7 of the
Probate Code, and an action may be commenced by the decedent’s
personal representative or, if none, by the decedent’s successor in

                                  7
interest.” These two statutes create a presumption that Beatriz’s
claims survived her death and allow Beatriz’s personal
representative or, if none, her successor in interest to assert her
claims on her behalf. Code of Civil Procedure section 377.11
defines a “decedent’s successor in interest” as “the beneficiary of
the decedent’s estate or other successor in interest who succeeds
to a cause of action or to a particular item of the property that is
the subject of a cause of action.” Code of Civil Procedure section
377.10 defines “beneficiary of the decedent’s estate” as the person
or persons “who succeed to a cause of action, or to a particular
item of property that is the subject of a cause of action” under the
decedent’s will or, if none, the laws of intestate succession.
      Robert asserts here that he can amend his complaint to
allege that he has standing under these statutes as Beatriz’s
successor in interest because the second amended complaint
alleged the property passed to him after his mother’s death. This
satisfies the requirements of the statute that Robert be either the
beneficiary of Beatriz’s estate or have succeeded to the
“particular item of the property that is the subject” of the HBOR
and UCL causes of action. (Code Civ. Proc., § 377.11.)
      Section 377.32 establishes additional requirements for a
litigant suing as a decedent’s successor in interest. The text of
the statute is set forth in the margin,5 but briefly summarized, it

      5 Code of Civil Procedure section 377.32 states: “(a) The
person who seeks to commence an action or proceeding or to
continue a pending action or proceeding as the decedent's
successor in interest under this article, shall execute and file an
affidavit or a declaration under penalty of perjury under the laws

                                  8
requires anyone who seeks to file an action as a decedent’s
successor to file a declaration under penalty of perjury describing
details about the decedent’s death and the administration of the
decedent’s estate, attesting that the declarant is the decedent’s
successor in interest, and averring that no one else has a superior
right to commence the proceeding. (Code Civ. Proc., § 377.32,
subd. (a).) It is unclear whether such a declaration is a necessary
condition for a suit to proceed. (Parsons v. Tickner (1995)
31 Cal.App.4th 1513, 1523–1524 [“Literally, this provision does
not require that the affidavit be filed as a condition precedent to

of this state stating all of the following: [¶] (1) The decedent’s
name. [¶] (2) The date and place of the decedent’s death. [¶] (3)
‘No proceeding is now pending in California for administration of
the decedent’s estate.’ [¶] (4) If the decedent’s estate was
administered, a copy of the final order showing the distribution of
the decedent's cause of action to the successor in interest. [¶] (5)
Either of the following, as appropriate, with facts in support
thereof: [¶] (A) ‘The affiant or declarant is the decedent's
successor in interest (as defined in Section 377.11 of the
California Code of Civil Procedure) and succeeds to the decedent's
interest in the action or proceeding.’ [¶] (B) ‘The affiant or
declarant is authorized to act on behalf of the decedent’s
successor in interest (as defined in Section 377.11 of the
California Code of Civil Procedure) with respect to the decedent's
interest in the action or proceeding.’ [¶] (6) ‘No other person has a
superior right to commence the action or proceeding or to be
substituted for the decedent in the pending action or proceeding.’
[¶] (7) ‘The affiant or declarant affirms or declares under penalty
of perjury under the laws of the State of California that the
foregoing is true and correct.’ [¶] (b) Where more than one person
executes the affidavit or declaration under this section, the
statements required by subdivision (a) shall be modified as
appropriate to reflect that fact. [¶] (c) A certified copy of the
decedent’s death certificate shall be attached to the affidavit or
declaration.”

                                 9
commencing or continuing the action. However, failure to file the
affidavit could possibly subject the action to a plea in
abatement”].) Even if the declaration is necessary, though,
Robert asserts that he can provide it, so he can satisfy all
relevant statutory requirements to assert a claim for Beatriz for
violations of the HBOR and UCL.
      Shellpoint does not dispute that Robert qualifies as a
successor in interest under Code of Civil Procedure section
377.30. Instead, it raises several other arguments why Robert
cannot allege that he has standing as Beatriz’s successor in
interest, but none of them has merit.6 First, it argues that Robert
forfeited this successor standing theory by failing to raise it in
the trial court. But Shellpoint admits that a plaintiff can
demonstrate in an appellate court for the first time that a
complaint can be amended to state a valid cause of action, so this
argument is baseless. (Smith v. State Farm Mutual Automobile
Ins. Co. (2001) 93 Cal.App.4th 700, 711.)
      Second, Shellpoint argues that Robert cannot be Beatriz’s
successor in interest under Code of Civil Procedure section 377.30
because Robert’s prior complaints allege that he took title to the
property as the trustee for the Beatriz Peralta Revocable Trust,
not as an individual, as he now contends. Shellpoint invokes the
sham pleading doctrine that prevents plaintiffs “ ‘from amending
complaints to omit harmful allegations, without explanation,
from previous complaints to avoid attacks raised in demurrers or

      6Shellpoint does not dispute that Beatriz’s HBOR and UCL
claims survived her.

                                 10
motions for summary judgment.’ ” (State of California ex rel.
Metz v. CCC Information Services, Inc. (2007) 149 Cal.App.4th
402, 412.)
      The sham pleading doctrine does not bar Robert’s proposed
amendment. “The sham pleading doctrine is not ‘ “intended to
prevent honest complainants from correcting erroneous
allegations . . . or to prevent correction of ambiguous facts.” ’
[Citation.] Instead, it is intended to enable courts “ ‘to prevent an
abuse of process.” ’ ” (Deveny v. Entropin, Inc. (2006)
139 Cal.App.4th 408, 426.) The Supreme Court has “ ‘made it
clear that “a party should be allowed to correct a pleading by
omitting an allegation which, it appears, was made as the result
of mistake or inadvertence.” ’ ” (Hendy v. Losse (1991) 54 Cal.3d
723, 743.) As Robert details in his brief, he named himself in a
trustee capacity due to a mistake about whether the property was
an asset of Beatriz’s trust and whether his status as trustee was
the correct designation for the capacity in which he was alleging
Beatriz’s claims. This is an acceptable explanation for why he
has changed his position. (Deveny, at pp. 426–427 [accepting a
plaintiff’s explanation for inconsistent allegations that he
determined after consulting with experts that the earlier
allegation was incorrect].)
      It is particularly appropriate to allow Robert to amend his
pleading given that Robert’s new standing theory does not affect
the substance of the HBOR and UCL claims against Shellpoint.
This is unlike a situation where a plaintiff changes an allegation
regarding a key fact that is an element of a cause of action to

                                  11
avoid a demurrer. (See, e.g., Hendy v. Losse, supra, 54 Cal.3d at
p. 743 [plaintiff changed allegation that defendant was an
employee to allege defendant was an independent contractor,
without stating that he had a factual basis for the change].)
Robert’s change from designating himself as a trustee to
designating himself as an individual does not affect the core of
the allegations about Shellpoint’s actions in relation to Beatriz or
make his proposed amended complaint a sham designed only to
avoid a demurrer.7 (Branick v. Downey Savings & Loan Assn.
(2006) 39 Cal.4th 235, 243 [“courts have permitted plaintiffs who
have been determined to lack standing . . . to substitute as
plaintiffs the true real parties in interest” for the same cause of
action].)
      Third, Shellpoint argues the deed of trust defines a
successor in interest of the borrower as someone who has taken
title to the property and gives the successor the benefits of the
loan only if the successor is approved by the lender. Shellpoint’s
reliance on the deed of trust’s definition of a successor in interest
is misplaced. The question is whether Robert satisfies the

      7 Robert argues that his proposed amendment is not barred
by the statute of limitations because it relates back to the
original complaint. Shellpoint does not dispute this, which we
treat as a concession. Even had Shellpoint not conceded the
point, we would hold that the amendment relates back because it
does not change the core allegations of the HBOR and UCL
causes of action. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383,
408–409 [“The relation-back doctrine requires that the amended
complaint must (1) rest on the same general set of facts, (2)
involve the same injury, and (3) refer to the same instrumentality,
as the original one”].)

                                 12
statutory requirements of a successor in interest to assert
Beatriz’s HBOR and UCL claims under Code of Civil Procedure
sections 377.30 and 377.32, not whether he qualifies as a
successor in interest under the terms of the deed of trust, loan, or
some other document.
       Fourth, Shellpoint objects that Robert has not filed or
presented the declaration required by Code of Civil Procedure
section 377.32, along with the requisite certified copy of Beatriz’s
death certificate. (Code Civ. Proc., § 377.32, subds. (a), (c).)
Robert did not present the declaration in the trial court because
he did not raise the issue of standing under Code of Civil
Procedure section 377.30 until this appeal. Robert’s
representation in this court that he can and will file the
necessary declaration if allowed leave to amend his complaint is
sufficient.
       Finally, Shellpoint questions why Robert did not simply file
a new action rather than amending his complaint when the trial
court sustained the demurrer. Shellpoint cites no authority that
would require Robert to file a new complaint rather than
amending his existing complaint, and we are aware of none.
III.   Shellpoint’s alternative arguments
   A. Section 2923.5
       Shellpoint argues that even if Robert properly alleges
standing, the allegations in his complaint would still fail to state
any valid causes of action. Robert’s claim that Shellpoint violated
section 2923.5 relies on the allegations that Shellpoint recorded a
notice of default without first contacting Beatriz in person or by

                                  13
phone to discuss alternatives to foreclosure and that its
declaration that it did contact Beatriz was false because Beatriz
had died before they claimed to have contacted her. Shellpoint
argues that both of these allegations are insufficient. As to the
declaration, Shellpoint notes that the declaration states only that
“[t]hirty (30) days, or more,” had passed since Shellpoint
contacted Beatriz and that Robert did not allege when he notified
Shellpoint about Beatriz’s death. Thus, according to Shellpoint,
nothing in the declaration or complaint shows that Shellpoint
claimed to have contacted Beatriz after her death in August 2018.
Because Shellpoint could have contacted Beatriz months earlier,
prior to her death, it contends the declaration is not false.
      We agree with this reasoning, to a point. Robert’s position
that Shellpoint claimed to have contacted Beatriz after she died
is not substantiated by the declaration, which is an exhibit
attached to the complaint. (Bank of New York Mellon v.
Citibank, N.A. (2017) 8 Cal.App.5th 935, 943 [“Exhibits attached
to the complaint take precedence to the extent they contradict
allegations in the complaint”].) Logically, the declaration’s
statement in December 2018 that 30 days or more had passed
since Shellpoint contacted Beatriz could mean that it contacted
before her death in August 2018.
      However, while the August 2018 date of Beatriz’s death
does not necessarily render Shellpoint’s declaration false, the
declaration would be false if we accept the complaint’s separate
allegation that Shellpoint failed to contact Beatriz in person or by
phone before her death. Thus, our disagreement with Robert’s

                                 14
theory that the date of Beatriz’s death itself disproves
Shellpoint’s declaration does not necessarily doom this cause of
action. Robert’s section 2923.5 claim would survive if he
sufficiently alleged that Shellpoint’s declaration was false in light
of his allegation that Shellpoint failed to contact Beatriz in
person or by phone to discuss foreclosure alternatives.
      Shellpoint’s attack on Robert’s allegation that it failed to
contact Beatriz before her death rests on a conflict Shellpoint
perceives between two allegations in the complaint. After
alleging that Shellpoint failed to contact Beatriz, the complaint
alleged on information and belief that before her death Beatriz
requested a loan modification with Shellpoint. Shellpoint argues
that these allegations are inconsistent, since Beatriz could only
have requested a loan modification if she had communicated with
Shellpoint.
      Reading the complaint as a whole, the allegations are not
inconsistent. Section 2923.5, subdivision (a)(2) requires a
servicer to contact a borrower “in person or by telephone.”
Consistent with the statute, the complaint alleged that Shellpoint
did not contact Beatriz in person or by phone. The complaint
does not allege that Beatriz requested a loan modification in
person or by telephone, merely that she requested a loan
modification. Beatriz could have requested a loan modification
through some other means, such as writing a letter, sending a
fax, or emailing Shellpoint. Thus, Beatriz’s alleged loan
modification request does not necessarily contradict the
complaint’s allegation that Shellpoint failed to contact her by

                                 15
telephone or in person, as required before the recording of a
notice of default under section 2923.5.
      Shellpoint cites several federal district court decisions
holding that a mere assertion of a lack of contact like Robert’s is
insufficient to state a claim that a servicer violated section
2923.5’s contact requirements, and that gave conclusive effect to
the servicer’s declaration of compliance for the purposes of a
motion to dismiss. (Major v. Wells Fargo Bank, N.A. (S.D. Cal.,
Aug. 15, 2014, No. 14-CV-998-LAB-RBB) 2014 U.S. Dist. Lexis
114977, at *6–*7 (Major); Maguca v. Aurora Loan Servs. (C.D.
Cal., Oct. 28, 2009, No. SACV09-1086 JVS (Anx)) 2009 U.S. Dist.
Lexis 104251, at *5–*6; Juarez v. Wells Fargo Bank, N.A. (C.D.
Cal., Nov. 11, 2009, No. CV09-3104 AHM (AGRx)) 2009 U.S. Dist.
Lexis 110892, at * 5.) These decisions are inapposite because
they rely on federal pleading standards, not the notice pleading
standards applicable in California courts. (Morris v. JPMorgan
Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 304, fn. 14
(Morris).) Under California law, the decisions are not persuasive.
Giving conclusive effect to a servicer’s declaration of compliance
in the face of a simple claim of its falsity, like Maguca and Juarez
did, impermissibly raises the bar for alleging a failure to file a
truthful declaration.8

      8 In a related vein, Robert contends that the trial court
erred by taking judicial notice of Shellpoint’s declaration attached
to the notice of default. He argues it was improper to use judicial
notice of the existence of a document like the declaration as
conclusive evidence of the truth of statements contained within
the declaration. It does not appear that the trial court noticed
the declaration in the way Robert suggests; that is Shellpoint’s

                                 16
         Major and a case it cited held the plaintiffs should have
alleged something more than just lack of contact, such as
whether the plaintiffs were purposefully avoiding contact with
the defendants, whether they could have been contacted if the
defendants had tried with due diligence, or whether the plaintiffs
received any phone calls or personal messages from the
defendants. (Major, supra, 2014 U.S. Dist. Lexis 114977, at *7;
Newman v. Bank of New York Mellon (E.D. Cal., Apr. 11, 2013,
No. 1:12-CV-1629 AWI GSA) 2013 U.S. Dist. Lexis 52487, at *31–
*32.) Allegations such as these are not necessary to state a claim
under section 2923.5 in California court. The statute allows a
servicer to record a notice of default without contacting a
borrower if the servicer exercised due diligence in trying to
contact the borrower. (§ 2923.5, subds. (a)(2), (e).) But where a
servicer claims to have contacted a borrower, like Shellpoint did
here in its declaration, the servicer’s diligence and specific steps
it may have taken or the borrower’s attempts to avoid contact do
not matter, at least at the pleadings stage. If the servicer
believes such circumstances constitute a defense, it can explore
these issues in discovery and raise them at summary judgment or
trial.
   B. Former section 2923.7, subdivision (a)
         In 2018, former section 2923.7, subdivision (a) stated,
“Upon request from a borrower who requests a foreclosure

argument on appeal. In any event, there was no need to
judicially notice the declaration because Robert attached it to the
complaint.

                                   17
prevention alternative, the mortgage servicer shall promptly
establish a single point of contact and provide to the borrower one
or more direct means of communication with the single point of
contact.”
      Shellpoint argues that Robert’s claim under former section
2923.7, subdivision (a) that it failed to appoint a single point of
contact fails because Robert does not allege that Beatriz was
making efforts to pursue an alternative to foreclosure. But the
second amended complaint explicitly alleged on information and
belief that Beatriz “requested a loan modification with Shellpoint
before her death.” Shellpoint does not explain why this is
insufficient to allege a request for a foreclosure alternative.
      Shellpoint also argues the complaint is insufficient because
it does not allege that Beatriz requested a single point of contact.
Shellpoint appears to be relying on a line of federal cases that
held that the phrase “[u]pon request” in former section 2923.7,
subdivision (a) required a borrower to request a single point of
contact before a servicer was obligated to provide one. (Green v.
Cent. Mortg. Co. (N.D. Cal. 2015) 148 F.Supp.3d 852, 873–874
[collecting cases].) This division recently rejected these cases’
approach and held that the “[u]pon request” phrase refers merely
to the timing of when a servicer must appoint a single point of
contact. (Morris, supra, 78 Cal.App.5th at pp. 300–303.) Robert
was not required to allege that Beatriz requested a single point of
contact, so the complaint is sufficient. (Ibid.)

                                 18
   C. Materiality
      Shellpoint separately argues that the complaint fails to
allege that either of the HBOR violations were material. When a
trustee’s deed has not been recorded, as is apparently the case
here, section 2924.12, subdivision (a)(1) and section 2924.19,
subdivision (a)(1) establish that “a borrower may bring an action
for injunctive relief to enjoin a material violation of” section
2923.5 and 2923.7. (Italics added.)
      This division recently addressed the pleading standard for
materiality under the HBOR in Morris, supra, 78 Cal.App.5th
279. “ ‘A material violation is one that affected the borrower’s
loan obligations, disrupted the borrower’s loan modification
process, or otherwise harmed the borrower.’ ” (Id. at p. 304.)
“[W]e read the ‘otherwise harmed the borrower’ prong of this test
to mean harm to the borrower in her efforts to be considered for a
loss mitigation option (§ 2923.4).” (Id. at p. 304, fn. 14.)
“Ultimately . . . , we ask whether the alleged violation
undermined the overall purpose of the HBOR. [Citation.] In
doing so, we need not recharacterize the purpose of the HBOR
because the Legislature has stated it plainly: ‘The purpose of the
act that added this section is to ensure that, as part of the
nonjudicial foreclosure process, borrowers are considered for, and
have a meaningful opportunity to obtain, available loss
mitigation options, if any, offered by or through the borrower’s
mortgage servicer, such as loan modifications or other
alternatives to foreclosure.’ ” (Id. at pp. 304–305.)

                                  19
      The second amended complaint sufficiently alleges
materiality. As to section 2923.5, subdivision (a), the complaint
alleged that Shellpoint failed to contact Beatriz more than 30
days in advance of filing the notice of default and falsely declared
that it had done so. The point of such contact and the servicer’s
obligation to document the contact in a declaration is to help a
borrower explore foreclosure alternatives, consistent with the
HBOR’s purpose of giving borrowers a meaningful opportunity to
obtain any available loss mitigation options. (Morris, supra,
78 Cal.App.5th at p. 304 & fn. 14.) Shellpoint’s failure to comply
with this requirement logically undermined the purpose of the
HBOR, and the complaint thus sufficiently alleges materiality.
      Robert’s allegation that Shellpoint failed to appoint a single
point of contact in violation of former section 2923.7,
subdivision (a) is similarly material. Shellpoint faults the
complaint for not alleging that Shellpoint gave Beatriz the “run
around,” that Beatriz was pursuing a foreclosure alternative, or
that the failure to appoint a single contact person resulted in the
denial of a loan modification. We have already noted that the
complaint does allege that Beatriz requested a foreclosure
alternative in the form of a loan modification. The other
allegations Shellpoint mentions are not necessary. The purpose
of the single point of contact requirement is to give a single
source of information to help borrowers seeking loss mitigation
options. (Morris, supra, 78 Cal.App.5th at p. 305.) Shellpoint
cannot credibly contend that this purpose was achieved despite
its alleged complete failure to appoint a single point of contact.

                                 20
Because the HBOR’s purpose is to ensure that borrowers have a
meaningful opportunity to obtain loss mitigations options, a
servicer’s actions that prevent a borrower from learning of such
options are material. As noted in Morris, it “would render the
SPOC statute effectively unenforceable” if we accepted
Shellpoint’s argument that a complete failure to comply with the
statutory requirement could be immaterial. (Id. at p. 306.)
      Shellpoint cites several decisions that have held a
complaint failed to plead materiality. Cardenas v. Caliber Home
Loans, Inc. (N.D. Cal. 2017) 281 F.Supp.3d 862, 870 held that
allegations that the defendants violated section 2924.17 by
recording, without standing, an inaccurate notice of substitution
of trustee were not material because the lack of standing and
inaccuracies did not affect the borrower’s obligations, disrupt a
loan modification process, or cause the plaintiff harm. Schmidt v.
Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1124, fn. 7 held that a
servicer’s alleged failure to initiate contact with a borrower was
immaterial, to the extent that it violated the HBOR at all,
because the borrower contacted the servicer and the statutory
purpose of substantive discussions between the two was achieved.
Cornejo v. Ocwen Loan Servicing, LLC (E.D. Cal. 2015)
151 F.Supp.3d 1102, 1113 held that a servicer’s alleged failure to
timely send an acknowledgment of a loan modification
application was not material because the borrowers did not allege
that the loan modification process was disrupted or that they
were harmed. Finally, Galvez v. Wells Fargo Bank, N.A.
(N.D. Cal., Oct. 4, 2018, No. 17-CV-06003-JSC) 2018 U.S. Dist.

                                21
Lexis 172087, at *10–*11 held that a plaintiff’s allegation that
the servicer improperly “dual tracked” a foreclosure and review of
a loan modification application did not allege a material violation.
The plaintiff had alleged that the dual tracking harmed her
because she was never able to have her application reviewed, but
the court held this was insufficient and the plaintiff needed to
allege that she either was denied a modification to which she was
entitled or had foregone other foreclosure alternatives. (Id. at
*10–*14.)
      Most of these decisions are not on point because “federal
district judges have more latitude to dismiss claims at the
pleading stage under Bell Atlantic Corp. v. Twombly [(2007)
550 U.S. 544] than California trial judges have under our
traditional notice pleading standards.” (Morris, supra,
78 Cal.App.5th at p. 304, fn. 14.) All these decisions are also
distinguishable. Only Schmidt concerned a violation like those
Robert alleges here, involving a failure to contact a borrower.
But unlike that case, where the servicer and borrower
nonetheless were in contact with one another so that the servicer
could provide the borrower the necessary information, Shellpoint
and Beatriz were allegedly not in contact, so Beatriz did not
receive a meaningful opportunity to obtain any loss mitigation
options.
   D. UCL Claim
      The second amended complaint alleged a cause of action
under the UCL, relying on the HBOR cause of action.
California’s UCL generally provides for equitable and

                                22
restitutionary relief from unfair competition, which the UCL
defines as any “unlawful, unfair or fraudulent business act or
practice.” (Bus. & Prof. Code, §§ 17200, 17203; Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co.
(1999) 20 Cal.4th 163, 179.) “By proscribing ‘any unlawful’
business practice, ‘section 17200 “borrows” violations of other
laws and treats them as unlawful practices’ that the unfair
competition law makes independently actionable.” (Cel-Tech, at
p. 180.)
      The trial court sustained Shellpoint’s demurrer to the UCL
claim, both because it had sustained the demurrer to the HBOR
claim and because it believed Robert had not alleged that he
personally lost money or property in a nontrivial amount. Our
conclusions that Robert can adequately allege standing to pursue
a HBOR claim on Beatriz’s behalf and has stated a claim for
violation of the HBOR dictates that the trial court’s ruling on the
UCL claim must also be reversed.
   E. Implied covenant of good faith and fair dealing
      Robert argues for the first time on appeal that he should be
allowed to amend his complaint to state a claim on his own behalf
that Shellpoint breached the implied covenant of good faith and
fair dealing in the loan agreement. We have already concluded
that Robert can amend his complaint to state viable claims under
section 2923.5, former section 2923.7, subdivision (a), and the
UCL, so it is unnecessary for us to address whether this
additional theory of liability is also viable. Robert is free to raise
it in the trial court, which can address it in the first instance.

                                  23
                                DISPOSITION
       The judgment is reversed as to the first and third causes of
action. The judgment is affirmed as to the second cause of action.
The trial court is directed to enter a new and different order
overruling the demurrers with respect to the first and third
causes of action. The cause is remanded for further proceedings
consistent with this opinion. Robert Peralta shall recover his
costs on appeal.

                                               BROWN, J.

WE CONCUR:

POLLAK, P. J.
NADLER, J.9
Peralta v. Shellpoint, LLC, et al. (A161437)

       9Judge of the Superior Court of California, County of
Sonoma, assigned by the Chief Justice pursuant to article VI,
section 6 of the California Constitution.

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