O'Connor-Rose v. JPMorgan Chase Bank, N.A.

Filing 77

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 2/10/14: #58 Defendant's motion for summary judgment be, and the same hereby is, GRANTED. The Clerk of the Court is directed to enter judgment in accordance with this Order and close the file. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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DONNA RUTH O’CONNOR ROSE,
Plaintiff,

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CIV. NO. 2:12-225 WBS CMK
MEMORANDUM AND ORDER RE: MOTION
FOR SUMMARY JUDGMENT

v.
J.P. MORGAN CHASE, N.A.,

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Defendant.

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Plaintiff Donna Ruth O’Connor Rose brought this action

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against defendant J.P. Morgan Chase, N.A., for breach of contract

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arising out of alleged misconduct related to her home mortgage

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loan.

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Federal Rule of Civil Procedure 56.

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I.

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Defendant now moves for summary judgment pursuant to

Factual & Procedural History
On December 2, 2005, plaintiff obtained a mortgage loan

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from defendant secured by real property located at 2945 Sporting

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Court in Redding, California.

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(“Sanclemente Decl.”) Ex. 2 (Docket No. 58-4).)

(Decl. of Jennifer M. Sanclemente

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The Deed of

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Trust obligated plaintiff to make periodic payments on the loan.

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(Id. ¶ 1.)

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to pay the loan balance then due, the Deed of Trust permitted

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defendant to hold these funds in a suspense account without

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applying them to the loan balance until plaintiff paid the

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remainder of the balance outstanding.

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stated that defendant would apply plaintiff’s loan payments to

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monthly loan balances in the order that those balances became

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due.

If plaintiff submitted a payment that was inadequate

(Id.)

The Deed of Trust

(Id. ¶ 2.)

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In the event that plaintiff failed to make payments on

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the loan, the Deed of Trust provided that defendant would notify

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plaintiff that she was in default, require payment by a specified

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date, and inform plaintiff that failure to pay could result in

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acceleration of the total amount due on the loan and the sale of

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the property.

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by the date specified, the Deed of Trust authorized defendant to

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foreclose on the property.

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the default, the Deed of Trust provided that the foreclosure

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trustee would reconvey the property to plaintiff.

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(Id. ¶ 22.)

If plaintiff did not cure the default

(Id.)

If plaintiff was able to cure

(Id. ¶ 23.)

The Deed of Trust also contained provisions authorizing

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defendant to collect several types of fees from plaintiff.

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provision permitted defendant to impose late fees for untimely

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payments.

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recover “all expenses incurred” as a result of plaintiff’s

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default on the loan “including, but not limited to, reasonable

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attorneys’ fees and costs of title evidence.”

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third provision authorized defendant to recoup any money it paid

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to a foreclosure trustee to reconvey the defaulted property to

(Id. ¶ 1.)

One

Another provision allowed defendant to

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(Id. ¶ 22.)

A

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defendant.

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“corporate advance transactions” and billed them to plaintiff in

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the form of “corporate advance fees” that it assessed against

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plaintiff’s loan balance.

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2).)

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(Id. ¶ 23.)

Defendant recorded these fees as

(Sanclemente Decl. ¶ 9 (Docket No. 58-

Between June 1, 2006 and December 31, 2008, plaintiff

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incurred sixteen charges for making late monthly payments.

(See

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Sanclemente Decl. ¶ 11; Sanclemente Decl. Ex. 3 at 326-41 (Docket

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No. 58-5).)

On October 26, 2009, defendant recorded a Notice of

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Default against the property because plaintiff had not made any

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loan payments since June 30, 2009.

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Sanclemente Decl. Ex. 6 (Docket No. 58-8.)

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over five months after she had made her last payment, plaintiff

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sent defendant a cashier’s check for $15,218.49.

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Decl. ¶ 11; Decl. of Michael A. Doran (“Doran Decl.”) ¶ 45

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(Docket No. 70).)

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December 15, 2009.

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Ex. 7 (Docket No. 58-9).)

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(Sanclemente Decl. ¶ 10;
On December 10, 2009,

(Sanclemente

Defendant rescinded that Notice of Default on
(Sanclemente Decl. ¶ 12; Sanclemente Decl.

Although plaintiff was able to cure her default in

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2009, she incurred six more charges for making late payments in

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2010.

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plaintiff made three payments of $2,779.00 in January, February,

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and March, but made no loan payments in April or May.

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at 312; Sanclemente Decl. ¶ 14.)

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a Notice of Default on June 2, 2011, reflecting an arrearage of

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$11,488.72.

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totaling $13,885.49 in late June 2011, (see Doran Decl. Ex. 8

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(Docket No. 70-8)), which defendant applied to satisfy

(See Sanclemente Decl. Ex. 3 at 313-18.)

In 2011,

(See id.

As a result, defendant recorded

Plaintiff sent defendant two cashier’s checks

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plaintiff’s outstanding loan balances for February, March, April,

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May, and June of that year (see id.; Sanclemente Decl. ¶ 14).

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Defendant rescinded the Notice of Default on July 7, 2011.

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(Sanclemente Decl. ¶ 15; Sanclemente Decl. Ex. 10 (Docket No. 58-

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12).)

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Plaintiff then missed her July 2011 loan payment.

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(Sanclemente Decl. ¶ 16; Sanclemente Decl. Ex. 3 at 310-11.)

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August 15, 2011, plaintiff made a payment of $5,185.58, which

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On

defendant applied to satisfy plaintiff’s July 2011 and August

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2011 loan payments as well as outstanding late fees and corporate

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advance fees that plaintiff owed.

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(Docket No. 58-13).)

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plaintiff a letter informing her that there was $1,008.86 in her

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suspense account, and that she could satisfy her loan payment for

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September 2011 by sending defendant $1584.73, the difference

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between the loan payment due and the amount in the suspense

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account.

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(See Sanclemente Decl. Ex. 11

On August 17, 2011, defendant sent

(See id.; Doran Decl. Ex. 8 (Docket No. 70-8).)
After defendant sent this letter, but before plaintiff

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made any payment on the loan, defendant deducted an additional

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$1028.26 in corporate advance fees from plaintiff’s suspense

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account.

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309.)

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$1584.73 to pay the remaining amount due for September 2011,

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defendant placed that payment into the suspense account because

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it was insufficient to satisfy the total amount plaintiff owed

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for that month.

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at 270 (Docket No. 58-6).)

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the next several months, defendant used those payments to satisfy

(Sanclemente Decl. ¶ 18; Sanclemente Decl. Ex. 3 at

As a result, when plaintiff submitted a payment for

(Sanclemente Decl. ¶ 18; Sanclemente Decl. Ex. 4
When plaintiff submitted payments for

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the previous month’s balance, and plaintiff remained delinquent

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on her loan.

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D. Rosen Ex. 1 (“Rosen Report”) at 4-5 (Docket No. 58-19).)

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(See Sanclemente Decl. ¶¶ 19-22; Decl. of Michael

By December 31, 2011--three days after plaintiff filed

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this action--plaintiff had an outstanding balance of $2807.93,

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which consisted of the loan payment due for December 2011 and

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three late charges.

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at 278.)

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balance of $5631.44, which consisted of the payments due for

(Rosen Report at 3; Sanclemente Decl. Ex. 4

By March 7, 2012, plaintiff had an outstanding loan

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February and March 2012 and four late charges.

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3; Sanclemente Decl. Ex. 4 at 292.)

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loan payments since February 2012.

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(Rosen Report at

(Docket No. 70-21).

Plaintiff has not made any
(See Doran Decl. Ex. 21

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Plaintiff initiated this action on December 28, 2011 in

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Shasta County Superior Court, and defendant removed the action to

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this court pursuant to 28 U.S.C. § 1441(b) based on diversity

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jurisdiction.

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the complaint to bring a claim for breach of contract and a claim

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for constructive fraud.

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the constructive fraud claim with prejudice on August 2, 2012.

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(Docket No. 39.)

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plaintiff’s breach of contract claim pursuant to Federal Rule of

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Civil Procedure 56.

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II.

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(Docket No. 1.)

Plaintiff subsequently amended

(Docket No. 27.)

The court dismissed

Defendant now moves for summary judgment on

(Docket No. 58.)

Evidentiary Objections
On a motion for summary judgment, “[a] party may object

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that the material cited to support or dispute a fact cannot be

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presented in a form that would be admissible in evidence.”

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R. Civ. P. 56(c)(2).

Fed.

“[T]o survive summary judgment, a party
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does not necessarily have to produce evidence in a form that

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would be admissible at trial, as long as the party satisfies the

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requirements of Federal Rules of Civil Procedure 56.”

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Goodale, 342 F.3d 1032, 1036–37 (9th Cir. 2003) (quoting Block v.

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City of Los Angeles, 253 F.3d 410, 418–19 (9th Cir. 2001))

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(internal quotation marks omitted).

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party’s evidence is presented in a form that is currently

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inadmissible, such evidence may be evaluated on a motion for

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summary judgment so long as the moving party’s objections could

Fraser v.

Even if the non-moving

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be cured at trial.

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433 F. Supp. 2d 1110, 1119–20 (E.D. Cal. 2006) (Shubb, J.).

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A.

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See Burch v. Regents of the Univ. of Cal.,

Plaintiff’s Objections
Plaintiff initially raises a variety of objections to

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Defendant’s Statement of Undisputed Facts,1 the Declaration of

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Jennifer M. Sanclemente, and the Declaration of Michael Rosen on

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the basis of relevance, lack of foundation, and undue prejudice.

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(See Docket Nos. 67-69.)

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summary judgment standard itself.

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1119-20.

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no genuine dispute of material fact.

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improper legal conclusions or without personal knowledge are not

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facts and can be considered as arguments, not as facts, on

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summary judgment.

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this evidence, lawyers should challenge its sufficiency.

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These objections are duplicative of the
See Burch, 433 F. Supp. 2d at

A court can award summary judgment only when there is
Statements based on

Instead of challenging the admissibility of

This court does not consider statements of undisputed
fact in ruling on a motion for summary judgment. Instead, the
court looks to the evidence itself (whether in the declarations,
depositions, or discovery responses) referenced in the moving or
opposing papers to determine whether there are disputed issues of
material fact.
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Objections on any of these grounds are superfluous, and the court

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will overrule them.

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Next, plaintiff objects to the Declaration of Jennifer

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M. Sanclemente on the basis that she “has not established herself

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as an expert” and is therefore not competent to testify about how

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defendant accounted for plaintiff’s loan payments.

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Objections to Sanclemente Decl. ¶ 1(i)(a) (Docket No. 68).)

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objection is misplaced because Sanclemente, an employee of

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defendant responsible for maintaining customer account records,

(Pl.’s

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is a lay witness whose testimony is based on her “personal

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knowledge of the facts” set forth in her declaration.

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(Sanclemente Decl. ¶ 1.)

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This

objection.

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The court will therefore overrule this

Plaintiff also objects to the exhibits attached to

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Sanclemente’s declaration on the basis that they are inadmissible

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hearsay.

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However, Sanclemente avers that these exhibits consist of

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financial records about plaintiff’s mortgage loan that were

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“maintained in the course of Chase’s regularly and ordinarily

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conducted business activities.”

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Sanclemente also avers that she has personal knowledge of these

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records and has authenticated that they are records of

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plaintiff’s mortgage payments and charges against her account.

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(Id. ¶¶ 1, 5.)

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Fed. R. Evid. 803(6), and the court will overrule this objection.

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Plaintiff also objects to the Declaration of Michael D.

(Pl.’s Objections to Sanclemente Decl. ¶ 1(i)(b).)

(Sanclemente Decl. ¶¶ 3, 4.)

These exhibits are therefore not hearsay, see

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Rosen on the basis that Rosen is incompetent to testify as an

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expert.

(Pl.’s Objections to Rosen Decl. ¶ 1(i)(c) (Docket No.
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69).)

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qualified “by knowledge, skill, experience, training, or

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education” to testify as an expert if:

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Federal Rule of Evidence 702 permits a witness who is

(a) the expert’s scientific, technical, or other
specialized knowledge will help the trier of fact to
understand the evidence or determine a fact in issue;
(b) the testimony is based on sufficient facts or
data; (c) the testimony is the product of reliable
principles and methods; and (d) the expert has
reliably applied the principles and methods to the
facts of the case.
Fed. R. Evid. 702.

“A trial court has broad latitude not only in

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determining whether an expert’s testimony is reliable, but also

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in determining how to determine the testimony’s reliability.”

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Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9th Cir.

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2011) (citing Kumho Tire Co. v. Carmichael, 526 U.S. 137, 145

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(1999)).

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Rosen, who is a certified public accountant with a

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Ph.D. in agricultural economics and who has served as a financial

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and accounting expert in over 300 cases, is qualified to offer

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expert testimony about how plaintiff’s loan payments were

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accounted for.

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The court is also satisfied that Rosen has relied on a sufficient

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quantity of data, that his accounting methodology is reliable,

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and that he has reliably applied this methodology to the facts of

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the case.

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therefore satisfies the criteria set forth by Rule 702 and is

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sufficiently reliable according to the standards set forth by

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Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579

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(1993), Kumho Tire, 526 U.S. 137, and their progeny.

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(See Rosen Report at 1-2; Rosen Report Exs. 1-2.)

(See Rosen Report at 2-6.)

Rosen’s testimony

Plaintiff contends that Rosen’s testimony is
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nonetheless improper because the application of plaintiff’s

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payments to her loan balance implicates “issue[s] of contract law

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and promissory estoppel, not accounting.”

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Rosen Decl. ¶ 1(i)(c).)

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testimony.

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“whether payments made by [plaintiff] had been accurately applied

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towards the balances,” not the legal question of whether

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plaintiff had performed her obligations under the mortgage loan

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or whether defendant had breached its obligations under the loan.

(Pl.’s Objections to

This argument mischaracterizes Rosen’s

Rosen’s testimony concerns the factual question of

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(Rosen Report at 2.)

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testimony bears on these questions, it is well-established that

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“testimony in the form of an opinion or inference otherwise

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admissible is not objectionable because it embraces an ultimate

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issue to be decided by the trier of fact.”

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Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051, 1058 (9th Cir.

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2008) (citing Fed. R. Evid. 704(a)).

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overrule this objection.

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Even if plaintiff were correct that Rosen’s

Nationwide Transport

The court will therefore

Plaintiff also objects to Rosen’s testimony on the

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basis that defendant did not disclose the Schedule of Corporate

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Advance Transactions or identify the names of the attorneys who

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were billed for foreclosure-related fees.

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Rosen Decl. ¶ 1(i)(b).)

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substantiate this assertion.

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that she was aware that Rosen relied on this information since

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April 29, 2013, the date on which defendant produced his expert

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report. (See id.)

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could have sought to compel defendant to produce this

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information.

(Pl.’s Objections to

Plaintiff offers no evidence to
In any event, plaintiff concedes

Plaintiff had over nine months in which she

Even if plaintiff were correct that defendant had
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failed to include this information in its initial disclosures,

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this alone “would not warrant the extreme sanction of exclusion.”

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Semtech Corp. v. Royal Ins. Co. of Am., Civ. No. 03-2460 GAF

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PJWx, 2005 WL 6192906, at *3 (C.D. Cal. Sep. 8, 2005) (citation

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omitted).

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The court will therefore overrule this objection.
Finally, plaintiff contends that Rosen “has not

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established [himself] as an expert who can rely on hearsay

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documents to formulate a non-accounting opinion.”

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Objections to Rosen Decl. ¶ 1(ii).)

(Pl.’s

Those documents are

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identical to several documents attached as exhibits to the

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Sanclemente Declaration that the court has already held are

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admissible as business records under Federal Rule of Evidence

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803(6).

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B.

The court will therefore overrule this objection.

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Defendant’s Objections
Defendant objects to every paragraph in the Declaration

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of Michael Doran.

(See Def.’s Objections to Doran Decl. (Docket

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No. 72.)

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on the basis of relevance, lack of foundation, impermissible

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opinion testimony, and speculation are all duplicative of the

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summary judgment standard itself and the court will overrule

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them.

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consider the evidence that defendant characterizes as

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inadmissible evidence of settlement negotiations, (see Def.’s

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Objections to Doran Decl. ¶ 56), and therefore overrules that

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objection as moot.

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that defendant characterizes as hearsay or improper expert

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opinion, the court concludes that this evidence does not raise a

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genuine issue of material fact sufficient to withstand summary

As with plaintiff’s objections, defendant’s objections

See Burch, 433 F. Supp. 2d at 1119–20.

The court does not

Even if the court considered the evidence

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judgment, and therefore overrules these objections as moot.

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III. Discussion

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Summary judgment is proper “if the movant shows that

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there is no genuine dispute as to any material fact and the

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movant is entitled to judgment as a matter of law.”

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P. 56(a).

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of the suit, and a genuine issue is one that could permit a

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reasonable jury to enter a verdict in the non-moving party’s

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favor.

Fed. R. Civ.

A material fact is one that could affect the outcome

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

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(1986).

The party moving for summary judgment bears the initial

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burden of establishing the absence of a genuine issue of material

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fact and can satisfy this burden by presenting evidence that

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negates an essential element of the non-moving party’s case.

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Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

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Alternatively, the moving party can demonstrate that the non-

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moving party cannot produce evidence to support an essential

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element upon which it will bear the burden of proof at trial.

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Id.

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Once the moving party meets its initial burden, the

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burden shifts to the non-moving party to “designate ‘specific

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facts showing that there is a genuine issue for trial.’”

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324 (quoting then-Fed. R. Civ. P. 56(e)).

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the non-moving party must “do more than simply show that there is

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some metaphysical doubt as to the material facts.”

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Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

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“The mere existence of a scintilla of evidence . . . will be

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insufficient; there must be evidence on which the jury could

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reasonably find for the [non-moving party].”
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Id. at

To carry this burden,

Matsushita

Anderson, 477 U.S.

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at 252.

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In deciding a summary judgment motion, the court must

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view the evidence in the light most favorable to the non-moving

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party and draw all justifiable inferences in its favor.

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255.

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and the drawing of legitimate inferences from the facts are jury

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functions, not those of a judge . . . ruling on a motion for

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summary judgment . . . .”

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Id. at

“Credibility determinations, the weighing of the evidence,

Id.

“[T]he elements of a cause of action for breach of

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contract are (1) the existence of the contract, (2) plaintiff’s

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performance or excuse for nonperformance, (3) defendant’s breach,

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and (4) the resulting damages to the plaintiff.”

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Realty, Inc. v. Goldman, 51 Cal. 4th 811, 821 (2011).

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make payments on the terms required by a mortgage loan

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constitutes non-performance and ordinarily bars a plaintiff from

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prevailing on a breach of contract claim based on that loan.

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See, e.g., Wise v. Wells Fargo Bank, N.A., 850 F. Supp. 2d 1047,

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1056 (C.D. Cal. 2012) (holding that, because plaintiff “admits .

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. . to having defaulted on the Loan,” her “breach of contract

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cause of action fails as a matter of law”); Barsoumian v. Aurora

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Mortg. Servs., LLC, Civ. No. 12-4368 PA (AGRx), 2012 WL 6012984,

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at *4 (C.D. Cal. Dec. 3, 2012) (“Plaintiff’s FAC admits that he

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was behind on his mortgage payments and in default on the loan .

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. . . Plaintiff has failed to . . . perform[] his obligations

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under that contract.”)

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Oasis W.
Failure to

Here, defendant has offered evidence that plaintiff was

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in default on her loan when she filed this action.

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2011, plaintiff was current on her loan payments through August
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On August 15,

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2011 and had a surplus of $1008.06 remaining in her suspense

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account.

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Between August 16 and August 22, 2011, however, defendant

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assessed five corporate advance fees totaling $1028.06, which it

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deducted from plaintiff’s suspense account.

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18; Sanclemente Decl. Ex. 3 at 309.)

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payment for $1584.73 to satisfy her September 2011 balance, that

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payment constituted a partial payment and was placed in her

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suspense account without being applied to her loan balance.

(See Sanclemente Decl. Ex. 11; Rosen Report at 4-5.)

(Sanclemente Decl. ¶

When plaintiff sent in a

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(Sanclemente Decl. ¶ 18; Sanclemente Decl. Ex. 4 at 270.)

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Defendant then applied plaintiff’s October 2011 payment to her

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September 2011 balance, her November 2011 payment to her October

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2011 balance, and so forth.

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when plaintiff filed this lawsuit on December 28, 2011, she was

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in default on her loan.

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Plaintiff offers no evidence that she cured the default at any

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time thereafter; on the contrary, plaintiff’s default grew from

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$2807.93 on December 31, 2011 to $5631.44 on March 7, 2012, and

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she has not made any payment since that point.

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Decl. Ex. 4 at 278, 292; Rosen Report at 3.)

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(Rosen Report at 5.)

As a result,

(See id.; Sanclemente Decl. ¶¶ 19-22.)

(See Sanclemente

Plaintiff contends that this apparent default resulted

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not from her failure to perform under the terms of the Deed of

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Trust, but from defendant’s failure to correctly calculate her

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loan balance and apply her payments to the loan.

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Decl. ¶ 58; Pl.’s Resps. to Def.’s 1st Set of Interrogs. ¶ 4

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(Docket No. 58-18.)

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Defendant’s accounting records show that plaintiff was current on

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her loan payments as of August 15, 2011, and had $1008.06 in her

(See Doran

There is no evidence to support this claim.

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suspense account.

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Decl. ¶17.)

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corporate advance fees that defendant assessed against

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plaintiff’s suspense account between August 16 and 22, 2011, each

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of which has a matching entry in the accounting records

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representing a foreclosure-related fee that plaintiff incurred as

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a result of her default in June 2011.

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at 309-10; Sanclemente Decl. Ex. 5 (Docket No. 58-7).)

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(See Rosen Report Ex. 3 at 29; Sanclemente

Those records also document each of the five

(Sanclemente Decl. Ex. 3

Once defendant assessed these fees, plaintiff had a

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deficit in her suspense account.

(See id.; Rosen Report Ex. 3 at

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30.)

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was not enough to satisfy the required loan payment of $2592.79.

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(Rosen Report at 5; Sanclemente Decl. ¶ 18.)

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explicitly authorized defendant to hold partial payments in the

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suspense account in lieu of applying them to plaintiff’s loan

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balance.

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plaintiff received her next loan statement on September 22, 2011,

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it informed her that she had $1584.73 -- the amount of her

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previous payment -- in her “Unapplied Funds Balance” and that she

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owed $5,293.15, consisting of two outstanding monthly payments of

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$2592.79 and a late fee of $107.57.

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270; Doran Decl. Ex. 11 (Docket No. 70-11).)

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consistent with Rosen’s accounting of plaintiff’s loan payments.

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(See Rosen Report Ex. 3 at 28-29.)

When plaintiff sent in a payment of $1584.73, that payment

(Sanclemente Decl. Ex. 2 ¶ 1.)

The Deed of Trust

As a result, when

(Sanclemente Decl. Ex. 4 at
Those numbers are

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Plaintiff’s argument that defendant misapplied her loan

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payments is premised on her attorney’s own “summary of accounting

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based on the verified Second Amended Complaint and verified

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answer by Chase.”

(Doran Decl. ¶ 56; Doran Decl. Ex. 21 (Docket
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1

No. 70-21).)

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of the corporate advance fees or late fees that defendant billed

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to plaintiff from August 2011 onwards.

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By contrast, defendant’s evidence explicitly accounts for the

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assessment of these fees.

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Rosen explicitly state that defendant assessed corporate advance

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fees before plaintiff sent in her September 2011 payment, and

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rely on this fact to conclude that defendant accurately declined

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to apply plaintiff’s September 2011 payment of $1584.73 to her

This accounting is incomplete because it omits all

(See Doran Decl. Ex. 21.)

For instance, both Sanclemente and

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account because it was a partial payment.

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18; Rosen Report at 4-5.)

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certified public accountant named Wayne Brown, concedes that “the

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loan was still in arrears for the September 2011 payment even

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after the $1584.73 was paid” because “this payment was posted to

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a suspense account.”

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(Sanclemente Decl. ¶

Even plaintiff’s own expert witness, a

(Doran Decl. Ex. 20 (Docket No. 70-20).)

Plaintiff then contends that she was not in default on

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the loan because the fees that defendant assessed for

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foreclosure-related services were unlawful.

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plaintiff argues that the imposition of these fees violated

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section 2924.17 of the California Civil Code, which requires a

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loan servicer to ensure that it has “reviewed competent and

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reliable evidence to substantiate the borrower’s default and the

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right to foreclose” before recording a Notice of Default.

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Opp’n at 3-4 (Docket No. 66).)

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were unlawful, plaintiff reasons, the fees that defendant

26

incurred in recording and rescinding them were also unlawful.

27

(Id.)

28

In particular,

(Pl.’s

Because the Notices of Default

Section 2924.17 is part of the Homeowner’s Bill of
15

1

Rights (“HBOR”), which “took effect on January 1, 2013.”

2

Rockridge Trust v. Wells Fargo, N.A., --- F. Supp. 2d ----, Civ.

3

No. 13:1457 JCS, 2013 WL 5428722, at *28 (N.D. Cal. Sep. 25,

4

2013).

5

unless there is an express retroactivity provision, a statute

6

will not be applied retroactively unless it is very clear from

7

extrinsic sources that the Legislature . . . must have intended a

8

retroactive application.”

9

4th 828, 841 (2002).

10

“California courts comply with the legal principle that

Myers v. Philip Morris Cos., 28 Cal.

Plaintiff has not cited, and the court cannot identify,

11

any authority for the proposition that section 2924.17 or any

12

other provision of the HBOR applies retroactively to Notices of

13

Default recorded before January 1, 2013.

14

numerous courts have held that the HBOR “does not apply

15

retroactively.”

16

JAM AC, 2013 WL 3804039, at *3 (E.D. Cal. July 19, 2013); see

17

also, e.g., Rockridge Trust, 2013 WL 5428722 at *28; Morgan v.

18

Aurora Loan Servs., LLC, Civ. No. 12-4350 CAS MRWx, 2013 WL

19

5539392, at *6 (C.D. Cal. Oct. 7, 2013).

20

that the corporate advance fees violated section 2924.17 is

21

therefore unavailing.

22

On the contrary,

Emick v. JP Morgan Chase Bank, Civ. No. 2:13-340

Plaintiff’s contention

Plaintiff also contends that defendant could not bill

23

her for foreclosure-related attorneys’ fees because the

24

attorneys’ services constituted legal malpractice and therefore

25

are “worth nothing.”

26

because plaintiff cannot assert a claim premised on the

27

malpractice of attorneys retained by defendant.

28

cites a number of cases in support of the proposition that an

(Pl.’s Opp’n at 4.)

16

This contention fails

While plaintiff

1

attorney may “be liable to a third party for malpractice,” the

2

California Supreme Court has clarified that this rule applies

3

only where the third party was an “intended, third party

4

beneficiar[y] of the contract to provide legal services.”

5

Borrissoff v. Taylor & Faust, 33 Cal. 4th 523, 530 (2004)

6

(citations omitted).

7

of the foreclosure proceedings that defendant initiated against

8

her property; defendant was. Plaintiff therefore cannot bring a

9

claim premised on the alleged malpractice of defendant’s

Plaintiff was not the intended beneficiary

10

attorneys because “an attorney has no duty to protect the

11

interests of an adverse party.”

12

954, 961 (1986).

13

Fox v. Pollack, 181 Cal. App. 3d

Plaintiff also argues that the imposition of the

14

corporate advance fees was unlawful because the mortgage loan was

15

“unconscionable to start out with.”

16

California law, “a court may choose not to enforce a contract or

17

a portion of a contract that it finds unconscionable.”

18

v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 966 (N.D. Cal.

19

2010) (citing Cal. Civ. Code § 1670.5).

20

unenforceable on this basis if it is both procedurally and

21

substantively unconscionable.

22

Servs., Inc., 498 F.3d 976, 981-82 (9th Cir. 2007).

23

term is procedurally unconscionable when “there is oppression or

24

surprise due to unequal bargaining power,” and is substantively

25

unconscionable when it generates “results [that] are overly harsh

26

or one-sided.”

27

Discover Bank v. Superior Court, 36 Cal. 4th 148, 160 (2005)).

28

(Pl.’s Opp’n at 2.)

Under

Rosenfeld

A contract term is only

Shroyer v. New Cingular Wireless
A contract

Rosenfeld, 732 F. Supp. 2d at 966 (citing

There is no evidence that the mortgage loan or any
17

1

provision contained therein was procedurally unconscionable.

2

provisions authorizing corporate advance fees are plainly written

3

into the Deed of Trust, which plaintiff “ha[d] a duty to read . .

4

. before signing.”

5

that a loan provision permitting a lender to adjust the interest

6

rate on plaintiff’s home mortgage was not procedurally

7

unconscionable because the loan agreement “clearly explains the

8

terms of repayment”); see also, e.g., Emp. Painters Trust v. J &

9

B Finishes, 77 F.3d 1188, 1192 (9th Cir. 1996) (“A party who

The

Rosenfeld, 732 F. Supp. 2d at 966 (holding

10

signs a written agreement is bound by its terms, even though the

11

party neither reads the agreement nor considers the legal

12

consequences of signing it.”).

13

There is likewise no evidence that this provision was

14

“hidden” from plaintiff or that she had an “absence of meaningful

15

choice” about whether to sign the Deed of Trust.

16

Mortg., 850 F. Supp. 2d 1057, 1080-81 (E.D. Cal. 2012) (O’Neill,

17

J.) (citing A & M Produce Corp. v. FMC Corp., 135 Cal. App. 3d

18

473, 486 (4th Dist. 1982)).

19

testifies that he was present when defendant’s loan broker

20

suggested that plaintiff enter into the mortgage loan, that he

21

did not “support the plaintiff obtaining such a loan,” but that

22

he was nevertheless “not able to convince plaintiff of the

23

problems with borrowing far in excess of her income.”

24

Decl. ¶ 8.)

25

formation of the contract, plaintiff’s argument that the

26

provision authorizing corporate advance fees is unconscionable is

27

unavailing.

28

Altman v. PNC

In fact, plaintiff’s lawyer

(Doran

Absent any evidence of oppression or surprise in the

See Rosenfeld, 732 F. Supp. 2d at 966.

Plaintiff then suggests that defendant’s imposition of
18

1

the fees constituted a breach of contract because she was not

2

“promptly notified” of them, as required by the Deed of Trust.

3

(Doran Decl. ¶ 25.)

4

Trust does not require defendant to “promptly notify” plaintiff

5

of any fees.

6

cites states that “Borrower shall promptly furnish to Lender all

7

notices of amounts to be paid” as escrow items.

8

Decl. Ex. 2 ¶ 3 (emphasis added).)

9

defendant has an obligation to notify plaintiff of corporate

10
11

This argument fails because the Deed of

The provision of the Deed of Trust that plaintiff

(Sanclemente

It does not state that

advance charges, promptly or otherwise.

(See id.)

Nor did defendant fail to notify plaintiff of the

12

corporate advance charges.

In a Mortgage Loan Statement dated

13

September 22, 2011, defendant indicated that it had billed five

14

separate corporate advance charges to plaintiff’s account, stated

15

the amount of each charge, and notified plaintiff that there was

16

$1584.73 remaining in her suspense account.

17

(Docket No. 70-11).)

18

received this letter and that he reviewed it “shortly after

19

September 22, 2011.”

20

attorney claims that he “didn’t crack the ‘code’” of what the

21

charges stated referred to, (see id.), this failure reflects his

22

own lack of comprehension, not any failure by defendant to notify

23

plaintiff of the corporate advance fees.

24

notified plaintiff on multiple occasions that it had billed her

25

for foreclosure-related fees, and accurately stated the amount

26

she owed on every monthly statement it issued.

27

Decl. Ex. 4 at 270-294.)

28

confused by these charges, they were free to “contact a Customer

(Doran Decl. Ex. 11

Plaintiff’s attorney admits that plaintiff

(Doran Decl. ¶ 27.)

Although plaintiff’s

In fact, defendant

(See Sanclemente

If plaintiff or her attorney were

19

1

Care Professional,” who defendant invited plaintiff to call with

2

“any questions regarding [her] balance.”

3

(Id. at 270.)

At oral argument, plaintiff’s attorney raised a new

4

argument: even if plaintiff appeared to be in default when she

5

filed this lawsuit, this default was excused because an

6

accounting error in 2009 caused her to overpay her loan by

7

several thousand dollars.

8

the exhibits with him to oral argument, plaintiff’s attorney

9

nonetheless assured the court that there was ample support for

Having not brought his brief or any of

10

this conclusion and that it was a matter of “simple math.”

11

Despite the court’s repeated invitations to identify portions of

12

the record that supported this theory, he was unable to do so.

13

After several minutes of fumbling through incomprehensible pieces

14

of paper that he characterized as “evidence,” plaintiff’s

15

attorney exhausted the court’s patience and the matter was taken

16

under submission.

17

searched through the file again in attempt to find some support

18

for counsel’s theory.

19

After the hearing, the court independently

It has found none.

In short, the undisputed evidence shows that defendant

20

correctly applied plaintiff’s payments from July 2011 onward to

21

her account, that plaintiff’s payments from September 2011 onward

22

were untimely, and that she was in default on her loan at the

23

time she filed this action.

24

clear why defendant chose to inform plaintiff that she had

25

$1008.06 remaining in her suspense account immediately before

26

billing her for corporate advance fees that she had incurred over

27

a month prior, plaintiff offers no evidence that defendant’s

28

billing was erroneous or that the fees it charged her were

While the court is not entirely

20

1

unlawful.2

2

she has failed to perform under the terms of that loan and

3

therefore cannot prevail on her breach of contract claim.

4

Wise, 850 F. Supp. 2d 1056.

5

defendant’s motion for summary judgment.

6
7

10

See

Accordingly, the court must grant

IT IS THEREFORE ORDERED that defendant’s motion for
summary judgment be, and the same hereby is, GRANTED.

8
9

Because plaintiff is in default on her mortgage loan,

The Clerk of the Court is directed to enter judgment in
accordance with this Order and close the file.
Dated:

February 10, 2014

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

2

In addition to the arguments she raises in her
Opposition, plaintiff alleges at various points in the Complaint
and in her responses to defendant’s interrogatories that
defendant’s billing practices failed to comply with the Real
Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et
seq., and its implementing regulations. (See Compl. ¶ 81; Resps.
to Def.’s 1st Set of Interrogs. ¶ 4.) Plaintiff does not
identify which portions of RESPA or its regulations that
defendant allegedly violated or cite any authority in support of
her claim that defendant’s imposition of corporate advance fees
violated RESPA. To the extent plaintiff claims that the fees
were unlawful because they were based on misrepresentations of
the amount due on her loan, this argument fails because
defendant’s accounting demonstrates that it accurately calculated
the amount due on the loan and applied plaintiff’s payments
appropriately.
21