Braich v. PHH Mortgage Corporation

Filing 31

ORDER VACATING HEARING AND REQUIRING FURTHER BRIEFING. Signed by Judge Richard Seeborg on 2/3/15. (cl, COURT STAFF) (Filed on 2/3/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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HARJINDER SINGH BRAICH,

Case No. 14-cv-04221-RS

Plaintiff,
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United States District Court
Northern District of California

v.

ORDER VACATING HEARING AND
REQUIRING FURTHER BRIEFING

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PHH MORTGAGE CORPORATION,
Defendant.

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In this action, plaintiff Harjinder Singh Braich challenges a non-judicial foreclosure sale of

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certain residential property he owned in Union City, California. Although pleaded in several

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counts, the gravamen of Braich’s claim is that defendant allegedly violated the California

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Homeowner Bill of Rights, specifically California Civil Code §2923.6, by engaging in so-called

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“dual tracking.” Braich contends that defendant illegally pursued and consummated a foreclosure

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sale while a loan modification application he brought in the Fall of 2013 was pending.

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Defendant moves to dismiss, arguing, among other things, that Braich had submitted no

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completed application sufficient to trigger the protections of §2923.6. As defendant also points

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out, however, §2923.6 applies only to “owner-occupied residential real property.” See §2923.6 (j)

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(“This section shall apply only to mortgages or deeds of trust described in Section 2924.15”); Cal.

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Civil Code §2924.15 (§2923.6 “shall apply only to first lien mortgages or deeds of trust that are

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secured by owner-occupied residential real property . . . . For these purposes, ‘owner-occupied’

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means that the property is the principal residence of the borrower and is security for a loan made

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for personal, family, or household purposes.”)
The allegations of the First Amended Complaint (“FAC”) which must be accepted as true
for purposes of a motion to dismiss, support a strong inference that the subject property was not

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“owner occupied residential real property” at the relevant time. Because Braich admittedly had

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submitted a prior loan modification application, when he reapplied in the Fall of 2013 he was

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obliged to establish a material change in his financial circumstances to be entitled to the

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protections of §2923.6. See §2923.6(g) (“In order to minimize the risk of borrowers submitting

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multiple applications for first lien loan modifications for the purpose of delay, the mortgage

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servicer shall not be obligated to evaluate applications from borrowers who have already been

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evaluated or afforded a fair opportunity to be evaluated for a first lien loan . . . unless there has

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United States District Court
Northern District of California

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been a material change in the borrower’s financial circumstances since the date of the borrower’s

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previous application and that change is documented by the borrower and submitted to the

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mortgage servicer.”) The FAC alleges that Braich’s reapplication relied on changed

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circumstances including his (1) having obtained a new job in Lodi, California, and (2) having

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rented out the subject property, thereby increasing his income and lowering his expenses.

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Although the complaint elsewhere alleges that Braich was a Union City resident “at all times

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mentioned,” the reasonable inference is that at some point prior to submitting the loan

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modification application in dispute, Braich converted the property from his principal residence

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into an income-generating investment property. Thus, as presently pleaded, the complaint does

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not plausibly allege any claim that might require the subject property to have been Braich’s

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primary residence at the time of the loan modification application.

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Braich’s opposition to the motion to dismiss fails to address this issue, perhaps because it

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was not a primary focus of the moving papers. Nevertheless, it appears to be a potentially

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dispositive issue. Accordingly, the hearing set for February 5, 2014 is vacated. Within 14 days of

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this order, Braich shall submit a supplemental brief, not to exceed ten pages addressing (1)

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whether he has alleged, or could allege, a claim under §2923.6 given whatever the facts may

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actually be with respect to his residency or non-residency in the subject property, and (2) whether

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CASE NO.

2

14-cv-04221-RS

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and the extent to which a failure to qualify for the protections of §2923.6, would or would not

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preclude any or all of his remaining claims. Within seven days thereafter, defendant may submit

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a response, also not to exceed 10 pages. The matter will then be submitted for decision or reset

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for oral argument, as may appear appropriate at that juncture.

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IT IS SO ORDERED.

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Dated: February 3, 2015
______________________________________
RICHARD SEEBORG
United States District Judge

United States District Court
Northern District of California

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CASE NO.

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14-cv-04221-RS