Court Opinion

ID: 6326723
Source: CourtListenerOpinion
Date Created: 2022-03-24 23:01:29.171864+00
Date Added: 2024-06-11T09:22:16.009654
License: Public Domain

Filed 3/24/22 Resendez v. Bayview Loan Servicing CA4/2

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO

 GREGORY F. RESENDEZ,

          Plaintiff and Appellant,                                       E076395

 v.                                                                      (Super.Ct.No. RIC1902770)

 BAYVIEW LOAN SERVICING LLC et                                           OPINION
 al.,

          Defendants and Respondents.

         APPEAL from the Superior Court of Riverside County. Chad W. Firetag, Judge.

Affirmed.

         Gregory F. Resendez, in Pro. Per., for Plaintiff and Appellant.

         Wolfe & Wyman, Stuart B. Wolfe and Cathy L. Granger for Defendants and

Respondents.

         Plaintiff and appellant Gregory F. Resendez appeals the grant of the demurrer filed

by respondents and defendants Bayview Loan Servicing, LLC (Bayview) and Bank of

New York Mellon, as Trustee for Certificate holders CWALT, Inc., Alternative Loan

                                                             1
Trust 2006-6CB, Mortgage Pass-Through Certificates, Series 2006-6CB (BONY;

collectively Lenders), and dismissal of his second amended complaint (SAC) without

leave to amend.

       Resendez filed his SAC against Lenders in connection with the default on a loan

for his property located in Romoland. He alleged in the SAC two causes of action

against Lenders for violations of the Homeowner Bill of Rights (Civ. Code,1 §§ 2920 et.

seq.) (HBOR), one cause of action for negligence, and one cause of action for a violation

of Business and Professions Code section 17200, unfair competition law (UCL). The

trial court granted Lenders’ demurrer to the SAC and dismissed without leave to amend.

Resendez contends on appeal that the trial court erred by dismissing the SAC as to all

causes of action.

                      FACTUAL AND PROCEDURAL HISTORY

       A.      FACTS2

       According to the operative SAC, Resendez filed the SAC against Lenders, Select

Portfolio Servicing Inc. (Select Services), and the Wolfe Firm. Resendez owned the

property located at 29093 Overboard Drive in Romoland, which was in Riverside

County. A grant deed was recorded on February 10, 2006. Resendez obtained a

mortgage loan and BONY was the beneficiary. Select Services serviced the mortgage

       1   All further statutory references are to the Civil Code unless otherwise indicated.

       2 In this appeal from a judgment dismissing a complaint after the granting of a
demurrer without leave to amend, we “assume the truth of the complaint’s properly
pleaded or implied factual allegations.” (Schifando v. City of Los Angeles (2003) 31
Cal.4th 1074, 1081.)

                                               2
from approximately 2010 until November 2016 for BONY, and Bayview had serviced

the loan since 2016 on behalf of BONY. The Wolfe Firm had been appointed substitute

trustee on December 10, 2014, and was the current foreclosing trustee on the Resendez’s

home.

        Resendez reached out to Bayview on December 17, 2017, in order to obtain a loan

modification. John Koscinski was assigned as Resendez’s single point of contact

(SPOC). Resendez submitted a completed loan modification packet on January 11, 2018,

and was advised the evaluation of the packet would be completed in 30 days. On January

30, 2018, he received a letter from Bayview introducing another SPOC.

        On March 11, 2018, Bayview requested that Resendez send additional

information. Resendez faxed the documents and received confirmation on March 14,

2018, that his loan modification packet was complete. He received a phone call from

Dawn Killen, another SPOC, on March 27, 2018, ensuring him that his file was complete

and that it would be at least 10 more days for a decision. On April 3, 2018, a notice of

trustee’s sale was taped on his front door by the Wolfe Firm. The notice of trustee’s sale

was recorded on April 12, 2018. The sale was scheduled for May 9, 2018.

        Killen contacted Resendez on April 17, 2018. She claimed not to know about the

notice of trustee’s sale. She advised Resendez that his loan modification was still being

considered by Bayview. On April 24, 2018, he received another call from Killen

advising him that his loan modification packet would be reviewed in the next 48 hours.

Bayview had misplaced documents but had found them. The foreclosure was on hold

until the loan modification could be considered.

                                             3
      On April 24, 2018, he received notice from Bayview that his loan modification

request had been denied and he had 30 days to appeal. On May 23, 2018, Resendez filed

an appeal from the decision to deny his loan modification. On June 22, 2018, Bayview

confirmed the denial of the loan modification. On July 11, 2018, he was advised that his

SPOC at Bayview was Sandra Correa.

      The Wolfe Firm sent Resendez notice of the trustees sale, which had been

rescheduled to June 20, 2018. It was again postponed, until August 15, 2018. On August

14, 2018, Resendez filed for Chapter 13 bankruptcy protection. The trustee’s sale was

postponed again until September 26, 2018, and then until December 5, 2018. On

December 4, 2018, Resendez filed for Chapter 7 bankruptcy protection. The Wolfe Firm

postponed the sale several times to May 8, 2019. On May 6, 2019, Resendez filed his

original complaint to prevent Lenders from conducting an illegal, wrongful foreclosure

on his home. Resendez insisted that Lenders, the Wolfe Firm and Select Service were

attempting to conduct an illegal wrongful foreclosure on his property.

      B.     ORIGINAL COMPLAINT AND FIRST AMENDED COMPLAINT

      Resendez filed his original complaint on May 6, 2019. He alleged five causes of

action, including violations of the HBOR. Specifically, sections 2923.5, 2924.11, and

2923.7. He also alleged a negligence cause of action, and a violation of the UCL.

Resendez sought injunctive relief under the HBOR to stop the recording of a trustee’s

deed upon sale. He attached exhibits. A demurrer to the original complaint was filed by

Select Services as to two of the causes of action, and Resendez filed opposition. Lenders

also filed a demurrer to the original complaint. The demurrer to the complaint filed by

                                            4
Select Services was granted on August 26, 2019, and Lenders’ demurrer was granted on

September 20, 2019. Resendez was given 30 days leave to amend.

       Resendez filed a first amended complaint (FAC) against Lenders, Select Services

and the Wolfe Firm on October 21, 2019. He raised the same five causes of action as in

the original complaint. The first cause of action was a claim pursuant to section 2923.5

regarding notice to him of the default. Lenders filed a demurrer, and Resendez filed

several oppositions.3 Lenders’ demurrer to the first amended complaint was granted on

January 16, 2020, and Resendez was given 20 days to amend. However, as to the first

cause of action, it was dismissed without leave to amend.

       C.      SECOND AMENDED COMPLAINT

       On February 5, 2020, Resendez filed his SAC. He alleged five causes of action.

He acknowledged that the first cause of action had already been dismissed by the trial

court. The second cause of action against Lenders, Select Services and the Wolfe Firm

alleged a violation of section 2924.11, subdivision (a), an allegation of dual tracking.

Resendez alleged that a notice of sale or trustee’s sale could not be recorded while a

foreclosure prevention alternative was pending. Lenders deemed Resendez’s loan

modification packet complete on January 11, 2018, and Resendez sent additional

documentation on March 11, 2018. Bayview sent verification that the packet was

complete on March 14. There was further confirmation that he had submitted a

completed packet on March 27, 2018. Nonetheless, on April 3, 2018, the notice of

       3   Lenders’ demurrer has not been made a part of the record on appeal.

                                             5
trustee’s sale was posted on his door and it was recorded on April 12, 2018. Resendez

alleged that this was impermissible “dual tracking” as Lenders could not record the notice

of trustee’s sale while the loan modification was pending. Resendez rejected that section

2924.12, subdivision (c), a safe harbor provision in the HBOR for lenders who remedy

their violations prior to the foreclosure sale, applied to the case. The fact that the

foreclosure sale did not occur did not absolve Lenders. Resendez was entitled to

injunctive relief for the violation of section 2924.11.

       The third cause of action alleged a violation of section 2923.7, subdivision (b)(3),

which required Bayview to provide a SPOC who provided him with information on the

status of his loan. Killen had misadvised him as to the status of the foreclosure sale and

his loan modification status. The fact that the loan modification was reviewed and denied

before the foreclosure sale did not absolve Lenders under section 2924.12, subdivision

(c).

       The fourth cause of action was for negligence. Resendez acknowledged that there

was a split of authority on whether a financial institution has a duty of care to a borrower.

Resendez insisted that Lenders owed a duty of care in the processing of his loan

modification application and breached its duty of care. Killen, his SPOC in April 2018,

contacted him and advised him that Bayview had misplaced some of his documents and

initially denied the loan modification based on the missing documents. However, the

documents were found and the loan modification was reevaluated. Resendez insisted that

Lenders were negligent by mishandling the loan modification by misplacing documents

and dual tracking. As a result, he incurred additional expenses, fell further behind on his

                                               6
loan and missed out on several opportunities to look for relief elsewhere. Further, he

suffered irreparable damage to this credit.

       The fifth cause of action was for a violation of the UCL. Resendez noted that

under the UCL, the business practice must be unlawful, unfair and fraudulent. Lenders

actions were careless, negligent and reckless conduct. Resendez alleged, “Plaintiff

suffered all of these injures in addition to Dual Tracking which further led to additional

fees spent as well as increases to his arrears which make further trying to obtain a loan

modification that much more difficult.”

       Resendez demanded $150,000 in statutory damages under the HBOR, general and

special damages, civil penalties including an injunction, punitive damages and costs.

       Resendez attached several exhibits. This included the original application for a

loan modification sent on December 31, 2017, to John Koscinski. Exhibit C was the

letter from Bayview on January 5, 2018, acknowledging receipt of the loan modification

request and that he would receive notice of a decision within 30 days. Exhibit D was the

letter sent on January 8, 2018, advising Resendez he needed to submit additional

documentation, which was sent by a different SPOC, Bibi Ghanie. On January 10, 2018,

Resendez sent the documents. Exhibit F was the confirmation sent on January 11, 2018,

that the loan modification request was complete and would be reviewed in 30 days.

Exhibit G was Killen’s letter to Resendez identifying herself as the SPOC as of January

30, 2018.

                                              7
      Exhibit H was the notice sent on February 9, 2018, that his application was

incomplete, and advising him to submit further documentation. Resendez faxed the

documents on March 11, 2018. Exhibit K was the notification on March 21, 2018, that

he did not qualify for loan modification because his request was incomplete as documents

were missing. Exhibit L was a document purporting to memorialize that Killen contacted

him on March 27, 2018, advising him to disregard the letter on March 21, indicating it

was sent in error. She advised Resendez that the underwriting department was busy but

she hoped to get back to him in 10 days.

      Exhibit M was the notice of trustee’s sale that was taped on Resendez’s front door

on April 3, 2018. It was recorded on April 12, 2018, and the sale was set for May 9,

2018. Exhibit Q was the denial of his loan modification that was sent to him on April 24,

2018, explaining that he would not be eligible for a loan modification based on the loan

amount and his income.

      Resendez also included several notices sent to him by The Wolfe Firm postponing

the trustee’s sale. Exhibits W and Z show that Resendez filed Chapter 13 bankruptcy on

August 14, 2018, and filed Chapter 7 bankruptcy on December 4, 2018.

      Lenders apparently filed a demurrer to the SAC on March 10, 2020, but that

document has not been included in the record. Resendez also filed a reply to the

demurrer on September 17, 2020, but that has also not been included in the record.

                                            8
       D.     TRIAL COURT RULING

       The trial court issued a tentative ruling on September 30, 2020. The trial court

found that regardless of whether there were material issues of fact regarding Lenders’

alleged violations of sections 2923.64 and 2923.7, Lenders fell within the safe harbor

provision of section 2924.12, subdivision (c). The safe harbor provision provides that a

mortgage servicer shall not be liable for any violation of the HBOR if the violation has

been corrected and remedied prior to the recordation of the trustee’s deed on sale. The

trial court found, “[Resendez] alleges in the SAC that [Lenders] ultimately deemed the

loan modification application complete, subsequently reviewed and denied the

application and upheld the decision following [Resendez]’s appeal—all of which

occurred prior to the recordation of a trustee’s deed of sale (in fact, no sale has taken

place) . . . As such—and based solely upon the facts alleged in the SAC—Civ. Code

§ 2924.12(c) shields [Lenders] from any liability for their alleged violations of Civ. Code

§§ 2923.6 and 2923.7.”

       The trial court further ruled as to the fourth and fifth causes of action. “As to

[Resendez]’s fourth cause of action for negligence, as the court noted in its prior ruling, a

lender generally does not owe a duty of care to a borrower where there are no allegations

that the lender did anything wrongful that prevented the borrower from making the

original monthly payments under a loan. [Citations.] Here, the SAC contains no

       4 Despite Resendez alleging in the second cause of action that the violation was of
section 2924.11, the trial court analyzed the claim under section 2923.6. This appears to
be because section 2924.11 only applies to approved loan modification applications.

                                              9
allegations to demonstrate [Lenders] acted outside the scope of a traditional lender and/or

servicer. Instead, [Resendez] simply added argument to the SAC—the same argument

that had been previously rejected by this Court. (See SAC, ¶¶ 57-67.) Finally,

[Resendez]’s UCL cause of action is entirely derivative of his other causes of action . . .

and thus fails as a matter of law.”

       Resendez did not request oral argument. On October 22, 2020, the trial court

adopted the tentative ruling, and dismissed the SAC against Lenders without leave to

amend. Notice of entry of judgment was filed on November 11, 2020. Resendez filed

his appeal on January 5, 2021.

                                      DISCUSSION

       Resendez essentially claims that the trial court erred by dismissing the SAC as to

all “five” causes of action.

       A.     STANDARD OF REVIEW

       A demurrer should be sustained when “[t]he pleading does not state facts

sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).)

       “We independently review the superior court’s ruling on a demurrer and determine

de novo whether the complaint alleges facts sufficient to state a cause of action or

discloses a complete defense. [Citations.] We assume the truth of the properly pleaded

factual allegations, facts that reasonably can be inferred from those expressly pleaded and

matters of which judicial notice has been taken. [Citations.] We liberally construe the

pleading with a view to substantial justice between the parties.” (Regents of University of

                                             10
California v. Superior Court (2013) 220 Cal.App.4th 549, 558; see also Rufini v.

CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 303-304.)

       We initially note the trial court considered that the SAC only contained four

causes of action. Resendez attempts to argue on appeal that the first cause of action in

the FAC was wrongfully dismissed by the trial court. This was a claim of a violation of

section 2923.5—notice of default contact requirements. However, in the SAC, Resendez

stated, “[O]n January 16, 2020, the Court sustained Defendant Bayview’s Demurrer to

the First Cause of Action to the FAC also without leave to amend.” Resendez made no

other argument. The first cause of action was dismissed and is not properly reviewed on

appeal from the dismissal of the SAC.

       B.     HBOR PROVISIONS

       Resendez contends the trial court erred by dismissing the first and second causes

of action finding that the safe harbor provision of section 2924.12, subdivision (c),

applied.

       The HBOR 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 alternatives to foreclosure.” (§ 2923.4.)

Among other things, HBOR prohibits “dual tracking,” which occurs when a bank

forecloses on a loan while negotiating with the borrower to avoid foreclosure.

(§ 2923.6.) Section 2923.6, subdivision (c) provides, in part, “If a borrower submits a

complete application for a first lien loan modification offered by, or through, the

                                             11
borrower’s mortgage servicer at least five business days before a scheduled foreclosure

sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not

record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete

first lien loan modification application is pending. A mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent shall not record a notice of default or notice of

sale or conduct a trustee’s sale until any of the following occurs: [¶] (1) The mortgage

servicer makes a written determination that the borrower is not eligible for a first lien

loan modification, and any appeal period pursuant to subdivision (d) has expired.”

       “Under the practice of dual tracking, financial institutions continue to pursue

foreclosure while evaluating a borrower’s loan modification application. ‘The result is

that the borrower does not know where he or she stands, and by the time foreclosure

becomes the lender’s clear choice, it is too late for the borrower to find options to avoid

it.’ [Citation.] Section 2923.6 bars this practice and regulates servicers’ consideration of

loan-modification applications.” (Billesbach v. Specialized Loan Servicing LLC (2021)

63 Cal.App.5th 830, 848.)

       Here, the Wolfe Firm notified Resendez, while the loan modification process was

ongoing, of the scheduled notice of trustee’s sale. That sale never occurred, but it does

appear that this notice was in violation of section 2923.6, as Lenders were actively

reviewing Resendez’s request for a loan modification.

                                             12
       As for the third cause of action, section 2923.7, subdivision (a) provides that

“When a borrower 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.” “For purposes of this

section, ‘single point of contact’ means an individual or team of personnel each of whom

has the ability and authority to perform the responsibilities described in subdivisions (b)

to (d), inclusive. The mortgage servicer shall ensure that each member of the team is

knowledgeable about the borrower's situation and current status in the alternatives to

foreclosure process.” (§ 2923.7, subd. (e).) The SPOC shall keep the borrower advised,

among other things, as to the status of his or her loan, available foreclosure prevention

alternatives, inform the borrower of the current status of any loan modification, and be

able to stop the foreclosure proceedings when necessary. (§ 2923.7, subdivision (b).)

       The SPOC requirement helps prevent borrowers from being “given the run around,

being told one thing by one bank employee while something entirely different is being

pursued by another.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872,

905.) Only a material violation of the SPOC requirement is actionable. (§ 2924.12, subd.

(a)(1).)

       Here, Resendez was assigned several SPOCs at Bayview. Bayview clearly

communicated who the SPOC was, and they were responsive to Resendez’s inquiries.

However, Killen advised Resendez she had no idea that a notice of trustees sale had been

recorded, information she should have known. For purposes of this argument, we will

assume that Resendez showed that there was a violation of section 2923.7.

                                             13
       “Section 2924.12, subdivision (c) encourages mortgage servicers to cure any

material violation by providing a safe harbor: ‘A mortgage servicer . . . shall not be liable

for any violation that it has corrected and remedied prior to the recordation of the

[foreclosure sale] . . . .’ [Citation.] Thus, in the context of damages liability, the material

effect of a violation must be measured after the foreclosure sale is recorded. By the

statute’s terms, a temporary disruption of the normal foreclosure process that is corrected

and causes no lasting harm to the borrower’s rights will give rise to no liability.”

(Billesbach v. Specialized Loan Servicing LLC, supra, 63 Cal.App.5th at p. 845.)

       Here, prior to the foreclosure sale (if one even occurred), Lenders found that

Resendez had submitted a complete loan modification application, it reviewed the

application, and denied it on its merits. Lenders cured any violations prior to pursuing

the foreclosure sale.

       Resendez insists the provision does not apply to Lenders because they did not ever

“correct” or “remedy” the violations of section 2923.6 and 2923.7 because it was his

filing of the instant lawsuit that stopped the foreclosure sale. However, the correction

found by the trial court was that Lenders clearly reviewed Resendez’s loan modification

once it deemed it complete and denied it based on his income, not because of missing

documents. Resendez does not claim that the loan modification was improperly denied.

Further, Lenders remedied the notice of foreclosure, the dual tracking, by putting the

foreclosure on hold until it could complete review of Resendez’s loan modification and

appeal. In fact, as of the filing of the original complaint, no foreclosure sale had

occurred.

                                              14
       Resendez refers to Valbuena v. Ocwen Loan Servicing, LLC (2015) 237

Cal.App.4th 1267, which he claims is “similar” to this case. However, in Valbuena, the

lender actually foreclosed on the property while the loan modification process was

ongoing. (Id. at pp. 1270-1271) It is unlike this case wherein Lenders stopped the

foreclosure process while the loan modification process was ongoing, and there was no

sale. There is no doubt that section 2924.12, subdivision (c), applies in this case and

warranted dismissal of the second and third causes of action.

       C.      NEGLIGENCE

       Resendez contends the trial court erred by finding that Lenders did not owe a

common law duty of care in processing his loan modification application. He insists that

Lenders breached their duty of care and caused him injury giving rise to a negligence

claim. After oral argument in this case, the California Supreme Court issued its opinion

in Sheen v. Wells Fargo Bank, N.A. (2022) ___ Cal.5th ___ [2022 WL 664722] (Sheen)

addressing the split of authority in the appellate courts as to whether a lender owes a duty

to a borrower to process, review, and respond carefully and completely to a borrower’s

loan modification application. The California Supreme Court has concluded that a lender

does not owe a duty to a borrower in processing a borrower’s loan modification

application.

       “ ‘Duty is not universal; not every defendant owes every plaintiff a duty of care.

A duty exists only if “ ‘the plaintiff’s interests are entitled to legal protection against the

defendant’s conduct.’ ” [Citation.] Whether a duty exists is a question of law to be

resolved by the court.’ [Citations.] ‘A duty of care may arise through statute’ or by

                                               15
operation of the common law.” (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at

*5].)

        Prior to Sheen, several courts had found a lender has a duty of care in situations

where the lender or servicer voluntarily undertakes to renegotiate a loan modification and

breached the duty to exercise reasonable care in processing the loan modification

application. (Weimer v. Nationstar Mortgage, LLC (2020) 47 Cal.App.5th 341, 347-348;

Rossetta v. Citi Mortgage, Inc. (2017) 18 Cal.App.5th 628, 640; accord Daniels v. Select

Portfolio Servicing Inc.(2016) 246 Cal.App.4th 1150, 1180-1183 (Daniels); Alvarez v.

BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 948 (Alvarez). Another

appellate court found that there was no common law duty of care to offer, consider, or

approve a loan modification. (See Lueras v. BAC Home Loans Servicing, LP (2013) 221

Cal.App.4th 49, 68.)

        Several of these courts considered the question of whether a lender owes a

common law duty to a borrower when considering a loan modification by evaluating the

factors set forth in Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja), which held that

whether the defendant in a specific case “will be held liable to a third person not in

privity is a matter of policy and involves the balancing of various factors,” including:

(1) “the extent to which the transaction was intended to affect the plaintiff,” (2) “the

foreseeability of harm to [the plaintiff],” (3) “the degree of certainty that the plaintiff

suffered injury,” (4) “the closeness of the connection between the defendant’s conduct

and the injury suffered,” (5) “the moral blame attached to the defendant’s conduct,” and

(6) “the policy of preventing future harm.” (Id. at p. 650.)

                                              16
       For example, the court in Alvarez, supra, 228 Cal.App.4th 941, applied the

Biakanja factors. In that case, the lender relied on inaccurate information in the loan

modification documents to deny the loan modification. Further, the lender stated that no

documents had been received on another loan modification application when in fact the

documents were submitted by the borrower. (Alvarez, at pp. 944-945.) The court found

that the failure to “timely” and “carefully process” the loan modification application

could cause significant harm to the applicant. (Id. at pp. 948-949.) Similarly, in Daniels,

supra, 246 Cal.App.4th 1150 the court found, “a lender may owe a duty of care to a

borrower based on the Biakanja factors, despite the fact that the lender was acting as a

conventional lender.” (Id. at p. 1181.) Applying the factors in Biakanja, the court in

Daniels, concluded that the factors weighed in favor of the plaintiff based on the lender

advising him to stop making payments so he could seek a loan modification and taking

years to decide on the loan modification. (Daniels, at pp. 1182-1183.) In the SAC,

Resendez relied on the common law duty of care and the Biakanja factors to support that

Lenders owed him a duty of care.

       The California Supreme court has now rejected that a lender owes a duty of care to

a borrower in processing and reviewing a loan modification application. In Sheen, the

borrower submitted loan modification applications to Wells Fargo on second and third

loans he obtained on his property after being notified of defaults on the loans. The

plaintiff never heard from Wells Fargo about the loan modification applications and

received notice that the entire debt had been accelerated and was due and owing. The

third loan was forgiven by Wells Fargo and the second loan was eventually sold. The

                                            17
entity that purchased the second loan foreclosed on the property. The plaintiff filed his

complaint alleging, among other things, that Wells Fargo had a common law duty to

process, review and respond carefully and completely to his loan modification request to

avoid causing him monetary loss. The trial court granted Wells Fargos’s demurrer to the

complaint finding no duty and the appellate court affirmed. The California Supreme

Court granted review on the question of whether a lender had a duty to borrower to

process, review, and respond carefully and completely to borrower’s loan modification

application. (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at *2-5].)

        The California Supreme Court first noted that the plaintiff only alleged a common

law duty of negligence, and did not rely on any statute or regulation that may impose a

duty to avoid purely economic losses. Similarly here, Resendez relies only on common

law to support his negligence claim.5 The court concluded that there was no common

law duty “in light of the economic loss rule” which provides that “there is no recovery in

tort for negligently inflicted ‘purely economic losses’ meaning financial harm

unaccompanied by physical or property damage.” It found that the plaintiff had provided

no persuasive argument to ignore the economic loss rule and found no common law duty

to support a negligence claim. (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at *6-

15].)

        The California Supreme Court also rejected that the factors in Biakanja applied.

(Sheen, supra, ___ Cal.5th ____ [2022 WL 664722 at *15, *19].) The court found,

        5The court mentions the HBOR but does not specifically state that it created a
duty on behalf of Lenders. (Sheen, supra, ___ Cal.5th ___ [2022 WL 664722 at *5-6].)

                                            18
“Biakanja itself thus makes clear that its multifactor test finds application only when the

plaintiff is a ‘third person not in privity’ with the defendant. [Citation.] Under its terms,

Biakanja does not apply when the plaintiff and defendant are in contractual privity for

purposes of the suit at hand. . . . Biakanja does not displace the contractual economic

loss rule when that rule squarely applies.” (Ibid.)

       Finally, the California Supreme Court rejected that any policy considerations or

the policy of preventing future loss gave rise to a negligence action. (Sheen, supra, ___

Cal.5th ____ [2022 WL 664722 at *19-21].) The court also encouraged the Legislature

to consider the issue because it was in a better position to determine “what additional

protection homeowners in California should be afforded.” (Id. at *22.) It also found,

“To the extent they are inconsistent with our opinion, we disapprove of Weimer v.

Nationstar Mortgage, LLC, supra, 47 Cal.App.5th 341 []; Rossetta v. CitiMortgage, Inc. ,

supra, 18 Cal.App.5th 628 []; Daniels, supra, 246 Cal.App.4th 1150 []; and Alvarez . . .,

supra, 228 Cal.App.4th 941.” (Sheen, supra, ___ Cal.5th ____ [2022 WL 664722 at *22,

fn. 12].)

       Based on the foregoing, Lenders did not owe a duty of care in processing and

reviewing Resendez’s loan modification application. The trial court did not commit error

by dismissing the negligence cause of action.

       D.     UCL

       Resendez’s fifth cause of action was dismissed as being derivative of the other

claims. Resendez alleged that due to the dual tracking he incurred additional fees and the

inept handling of his loan modification was unfair and unlawful. These were the

                                             19
allegations of the second and fourth causes of action. Resendez’s UCL cause of action is

derivative of the other causes of action asserted in the complaint and thus “stands or

falls” with those claims. (Hawran v. Hixson (2012) 209 Cal.App.4th 256, 277; see also

Myles v. PennyMac Loan Services, LLC (2019) 40 Cal.App.5th 1072, 1075.) The trial

court properly dismissed the fifth cause of action.

       E.     LEAVE TO AMEND

       A party seeking to amend must set forth precisely what factual allegations are to

be added. (Casiopea Bovet, LLC v. Chiang (2017) 12 Cal.App.5th 656, 664.) “The

plaintiff must clearly and specifically state ‘the legal basis for amendment, i.e., the

elements of the cause of action,’ as well as the ‘factual allegations that sufficiently state

all required elements of that cause of action.’ ” (Maxton v. Western States Metals (2012)

203 Cal.App.4th 81, 95, disapproved on other grounds by Ramos v. Brenntag Specialties,

Inc. (2016) 63 Cal.4th 500; see also Fuller v. First Franklin Financial Corp. (2013) 216

Cal.App.4th 955, 962 [noting the plaintiff bears the “burden on appeal to show in what

manner it would be possible to amend a complaint to change the legal effect of the

pleading,” and further noting a court of review “otherwise presume[s] the pleading has

stated its allegations as favorably as possible”].) Resendez has not requested leave to

amend his complaint and made no showing that the foregoing defects can be cured. We,

therefore, find no reasonable possibility of amendment.

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                                    DISPOSITION

      The judgment is affirmed. As the prevailing party, Lenders are awarded their

costs on appeal.

      NOT TO BE PUBLISHED IN OFFICIAL REPORTS

                                                     MILLER
                                                                           Acting P. J.

We concur:

CODRINGTON
                               J.

SLOUGH
                               J.

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