Redd v. Ocwen Loan Servicing CA1/1

Filed 10/22/13 Redd v. Ocwen Loan Servicing CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

ANN REDD
Plaintiff and Appellant,
A137112
v.
OCWEN LOAN SERVICING, LLC, (Contra Costa County
Super. Ct. No. C12-00747)
Defendant and Respondent.

After receiving notice her mortgage was in default, Ann Redd sued the loan
servicer, Ocwen Loan Servicing, LLC (Ocwen), seeking modification of her mortgage
loan and other relief. The trial court sustained Ocwen‘s demurrer to the complaint on
statute of limitations grounds, without leave to amend. Redd appeals from the ensuing
judgment of dismissal. We affirm.
I. BACKGROUND
A. Complaint
Redd sued Ocwen in pro. per. on March 27, 2012, alleging in relevant part as
follows:
On January 22, 2007, Ocwen opened a mortgage loan account for Redd in the
amount of $496,000 secured by Redd‘s property in Antioch, California. Redd signed a
promissory note, trust deed, and other instruments evidencing this account.1 Just after the
mortgage account was opened, Redd notified Ocwen of errors in the terms of the account

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None of the loan documents were attached as exhibits to the complaint.
and in the computation of the principal loan balance, and ―requested a rectification.‖
Ocwen referred Redd to previous servicers of the loan and refused to accommodate any
changes to the loan balance or any other terms of the account. Redd repeatedly notified
Ocwen of the mistake and errors in the terms of the contract and sought a reduction in the
principal loan balance. She also sought a modification of the terms of the promissory
note. Ocwen refused these requests.
Approximately a week before filing suit, Redd had received a ―Notice of Default‖
from Ocwen. She contacted Ocwen and was informed no modification to the material
terms of the contract would be granted. A representative of Redd contacted Ocwen‘s
―Relationship Manager‖ to protest the principal loan balance was incorrect, and previous
loan servicers including Ocwen had made serious, admitted errors in servicing the
account. Redd‘s agent requested a loan modification and reformation of the loan
contract, especially in view of the fact the market value of the property had fallen
drastically from about $650,000 in December 2007 to about $240,000 by
December 2011. Ocwen‘s representative rebuffed this request, stating ― ‗there would be
no loan modification due to loan owner restrictions,‘ ‖ and only a short sale or deed in
lieu of foreclosure would be permissible to stave off a foreclosure sale of the property.
The complaint further alleged Ocwen or its predecessors in interest engaged in a
pattern and practice of (1) collecting illegal, improper, and excessive fees and charges in
connection with the servicing of the loan, and in connection with delinquent payments;
and (2) improper posting of payments, and rendering of accounts and payment histories.
Due to the errors made in the calculation of the principal loan balance and other
relevant terms, the promissory note Redd signed did not reflect the actual agreement of
the parties. Ocwen knew or should have known its failure to exercise due diligence
preventing such mistakes in the written contract and in ensuring the written contract
reflected the mutual agreement of the parties ―were potentially damaging‖ to Redd, and
she did suffer damages as a result.
Based on these allegations of fact, Redd alleged four causes of action against
Ocwen: (1) ―Modification of Contract‖; (2) ―Reformation of Contract‖; (3) ―Negligence‖

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(based on Ocwen‘s asserted miscalculation of the loan balance, incorrect preparation of
the documents evidencing the loan agreement, and improper posting of principal
payments); and (4) ―Injunctive Relief.‖ The prayer for relief sought general and special
damages as well as an ―Order of Modification, Reformation or Recission of the
Contract,‖ and a temporary injunction against further steps by Ocwen to foreclose on the
property pending resolution of the lawsuit.
B. Demurrer
Ocwen demurred to the complaint on the following grounds: (1) Redd‘s contract
causes of action were barred by the four-year statute of limitations for written contracts in
that she alleged she knew the contract did not conform to the parties‘ agreement and
began seeking to have it reformed ―just after‖ the mortgage account was created in
January 2007, yet she did not file suit until March 27, 2012; (2) Redd‘s negligence claim
failed because Ocwen was not the originator of the loan and it owed Redd no duty of care
in its role as a servicer of the loan; (3) Redd‘s purported cause of action for injunctive
relief failed because a request for injunctive relief is not an independent cause of action,
and none of Redd‘s substantive causes of action stated a viable claim.
Ocwen‘s notice of demurrer notified Redd consistent with local rules that the
parties could obtain the trial court‘s tentative ruling from the court Web site beginning at
1:30 p.m. the day before the hearing and the tentative ruling would become the court‘s
ruling unless by 4:00 p.m. on the court day preceding the hearing, counsel (1) called the
department rendering the decision to request argument, and (2) advised the opposing
counsel or unrepresented parties of his or her decision to appear. The demurrer notice
stated: ―Failure to timely advise the Court and counsel will preclude counsel from
arguing the matter.‖ The notice of demurrer accurately tracked the language of Superior
Court of Contra Costa County, Local Rules, rule 7.D.2

2
We have taken judicial notice of rule 7.D. of the Superior Court of Contra Costa
County Local Rules on our own motion. (Evid. Code, § 452, subd. (e).)

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 In her opposition to the demurrer, Redd argued she had adequately pled each cause
of action. In the alternative she sought leave to amend the complaint but did not specify
how she could amend to overcome the issues cited by Ocwen as the basis for its
demurrer.
C. Demurrer Proceedings
By stipulation and order, the hearing on Ocwen‘s demurrer was rescheduled from
June 12, 2012 to July 24, 2012. The trial court posted its tentative ruling sustaining the
demurrer on statute of limitations grounds, without leave to amend, on July 23, 2012.
The tentative ruling dismissed Redd‘s purported injunctive relief cause of action since the
remedy was not in itself a cause of action and all of Redd‘s other causes of action were
defective. Receiving no timely notice of opposition to the tentative ruling from either
party, the trial court adopted the tentative ruling as its order on the demurrer on July 24,
without a hearing. Although Redd appeared on July 24, she was not permitted to argue.
D. Motion for Reconsideration
Redd timely moved under Code of Civil Procedure section 1008 for the trial court
to reconsider its order on the grounds of new facts and circumstances. She asserted she
became aware in May 2012 of additional evidence in the exclusive possession of the
coborrower and coowner of the property, Harrison Oyedele, who she averred ―was out of
town around the time this case started and could not have participated as a party‖ at that
time. She stated she had ―only recently‖ been made aware by Oyedele that ―there was a
mortgage contract modification done previously on our mortgage account,‖ which she
believed occurred ―sometime in 2009.‖ This claim was supported by Oyedele‘s
declaration in which he stated Ocwen granted a loan modification to him and Redd
―[s]ometime in 2009.‖ Ocwen allegedly offered the loan modification after it ―admitted
errors having been made in the history of the account.‖ According to Oyedele, the
modification did not reduce the mortgage principal ―contrary to [his] expectations and
tacit promises by Ocwen’s agents and principals.‖ He averred he contacted Ocwen
―several times about the need to further adjust the mortgage principal to reflect the actual
amount‖—to no avail—but he and Redd continued to make monthly payments on the

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loan. He also states in his declaration he was ―flabbergasted‖ to learn in November 2011
that Ocwen had extended the term of the loan to 40 years without any disclosure, and that
he demanded Ocwen adjust the loan to a 30-year mortgage consistent with his and Redd‘s
―previously expressed desire,‖ also to no avail. No exhibit was attached to Oyedele‘s
declaration evidencing a 2009 loan modification by Ocwen. Although Redd‘s declaration
is indefinite about the exact date when she became aware of the alleged 2009 loan
modification, it can be inferred from her moving papers she learned of this in May 2012.3
In her reply papers on the motion for reconsideration, Redd also indicated she
wished to amend her complaint to join Oyedele as a plaintiff and to join several other
persons and entities as defendants ―who conspired to deplete the equity in [her] home.‖
She attached the first page of a draft first amended complaint purporting to assert eight
causes of action—based on federal as well as state law—against eight persons and
entities including Ocwen.4 At the hearing on the motion, Oyedele appeared and sought to
be recognized for the purpose of making an oral motion to be joined as a party plaintiff.
The trial court denied the request and denied Redd‘s motion for reconsideration by order
entered October 10, 2012.
The trial court entered a judgment of dismissal on October 25, 2012, and this
timely appeal followed.
II. DISCUSSION
Redd contends the trial court erred in dismissing her complaint without leave to
amend because (1) she had a statutory right to file a first amended complaint under Code

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Her moving papers state Oyedele brought some additional material facts to her
attention ―sometime in May 2012,‖ and that she learned other new facts from specified
documents Oyedele received from Ocwen on July 16, 2012, which were attached to his
declaration. The documents she referred to have nothing to do with a 2009 loan
modification. All refer to events occurring on or before Ocwen became the loan servicer
on Redd‘s account in January 2007.
4
Redd admits she had not completed drafting the proposed complaint at that point.

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of Civil Procedure section 4725 and other statutes, (2) there was a reasonable possibility
an amendment would have cured any defect in her complaint, and (3) her claims were not
time-barred due to the loan modification made in 2009 and Ocwen‘s failure to honor it.
She contends the court also erred by denying her motion for reconsideration, and
rejecting Odeyele‘s oral motion to be joined in the action as an indispensable party.
A. Standard of Review
In reviewing a dismissal following the sustaining of a demurrer without leave to
amend, the appellate court applies two separate standards of review. (Hernandez v. City
of Pomona (1996) 49 Cal.App.4th 1492, 1497.) First, the complaint is reviewed de novo
to determine whether it contains sufficient facts to state a cause of action. (Ibid.) For this
purpose, we accept as true the properly pleaded material factual allegations of the
complaint, along with any other facts subject to judicial notice. (Ibid.) The judgment
must be affirmed if any one of the grounds stated in the demurrer is well taken, regardless
of the grounds cited by the trial court in reaching its decision. (Aubry v. Tri-City Hospital
Dist. (1992) 2 Cal.4th 962, 967; Williams v. Pacific Mutual Life Ins. Co. (1986)
186 Cal.App.3d 941, 951.)
Second, where the demurrer is sustained without leave to amend, reviewing courts
determine whether the trial court abused its discretion in doing so. (Hernandez v. City of
Pomona, supra, 49 Cal.App.4th at p. 1497.) If there is a reasonable possibility the defect
can be cured by amendment, the trial court will have abused its discretion in denying
leave to amend. (Id. at p. 1498.) The plaintiff bears the burden of proving such a
reasonable possibility exists. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
B. Demurrer Ruling
As an initial matter, we reject Redd‘s assertion the trial court erred by failing to
recognize her asserted right to amend her complaint under Code of Civil Procedure

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Code of Civil Procedure section 472 states in relevant part: ―Any pleading may
be amended once by the party of course, and without costs, at any time before the answer
or demurrer is filed, or after demurrer and before the trial of the issue of law thereon, by
filing the same as amended and serving a copy on the adverse party . . . .‖ (Italics added.)

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section 472. The right to file an amended complaint under section 472 ends when ―the
trial of the issue of law‖ raised by the demurrer begins. Under this statute, Redd‘s right
to amend as a matter of course ended at the very latest when she failed to file or serve an
amended pleading before the date and time scheduled for the hearing on Ocwen‘s
demurrer. (See Barton v. Khan (2007) 157 Cal.App.4th 1216, 1221 [under § 472, when a
demurrer is filed, ―a plaintiff has a right to amend his or her pleading . . . up to the time of
the hearing on the demurrer‖].)
The fact the hearing on the demurrer was taken off calendar due to Redd‘s failure
to give timely notice of her desire to oppose the tentative ruling did not extend her time
to amend under Code of Civil Procedure section 472. There is no indication in the record
Redd had an amended complaint ready to be filed on the hearing date, or that she
requested leave to file such a pleading when she appeared for the hearing. Redd had
nearly three full months after the filing of Ocwen‘s demurrer in which to file an amended
pleading. The fact settlement discussions took place between Redd and Ocwen before
the date scheduled for the hearing on the demurrer did not excuse Redd from filing an
amended pleading or giving notice of her desire to contest the tentative ruling. There was
no evidence Ocwen intentionally misled Redd into believing its demurrer would be
withdrawn or deferred if no settlement was finalized before the hearing. Section 472
therefore does not assist Redd. Equally, no other statute or combination of statutes
afforded Redd any absolute statutory right to amend her complaint. The trial court‘s
decision denying Redd leave to amend is subject to appellate review only for abuse of
discretion.6

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Redd‘s objections to the trial court‘s demurrer ruling are set forth in a somewhat
confusing fashion in her briefs. To the extent she is also challenging the dismissal of her
negligence and injunctive relief causes of action, we find no error. Redd‘s negligence
claims as alleged were barred by the two-year statute of limitations for negligence and by
the absence of a common law duty of care by a loan servicer to a mortgagor. (Code Civ.
Proc., § 335.1; Saldate v. Wilshire Credit Corp. (E.D.Ca. 2010) 711 F.Supp.2d 1126,
1132–1133 [applying California law].) Her injunctive relief claim failed because
injunctive relief is an equitable remedy not a cause of action. (Wong v. Jing (2010)

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 When the trial court ruled on Ocwen‘s demurrer it had no information from Redd
concerning how she might be able amend her complaint to address the statute of
limitations issue, or any other issue. The only sentence in Redd‘s memorandum of points
and authorities in opposition to the demurrer that mentioned or referred to amendment of
the complaint was the last sentence of the document: ―In the alternative, Plaintiff
respectfully requests leave to amend or amplify the Complaint.‖ The memorandum, filed
May 31, 2012, otherwise rejected all of the grounds stated in Ocwen‘s demurrer,
defended the complaint exactly as pled, and was entirely silent as to how Redd might
amend or amplify her pleading to survive a demurrer. Since the burden was on Redd to
show ―in what manner [she] can amend [her] complaint and how that amendment will
change the legal effect of [her] pleading‖ (Goodman v. Kennedy (1976) 18 Cal.3d 335,
349 (Goodman)), it was not surprising the trial court denied Redd leave to amend.
This court is in a different position. Code of Civil Procedure section 472c,
subdivision (a) provides: ―When any court makes an order sustaining a demurrer without
leave to amend the question as to whether or not such court abused its discretion in
making such an order is open on appeal even though no request to amend such pleading
was made.‖ Under section 472c, this court may consider amendments to the complaint
that were not proposed to the trial court before it decided the demurrer, as the Supreme
Court did in Goodman. (Rakestraw v. California Physicians’ Service (2000)
81 Cal.App.4th 39, 43 (Rakestraw).)
However, it continues to be the plaintiff‘s burden on appeal to show how a
proposed amendment would change the legal effect of the pleadings. (Mercury Ins. Co.
v. Pearson (2008) 169 Cal.App.4th 1064, 1072.) Redd must set forth factual allegations
that sufficiently state all required elements of the challenged causes of action, and the
allegations ―must be factual and specific, not vague or conclusionary.‖ (Rakestraw,
supra, 81 Cal.App.4th at pp. 43–44.) ―Where the appellant offers no allegations to

189 Cal.App.4th 1354, 1360, fn. 2.) She has not suggested how these defects could be
cured by amendment.

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support the possibility of amendment and no legal authority showing the viability of new
causes of action, there is no basis for finding the trial court abused its discretion when it
sustained the demurrer without leave to amend.‖ (Id. at p. 44.) However, we are not
concerned at this stage with whether the plaintiff will have difficulty in proving the
allegations of the complaint. (Community Cause v. Boatwright (1981) 124 Cal.App.3d
888, 897.)
In essence, Redd contends she can amend her complaint to allege (1) Ocwen
agreed to modify the mortgage contract sometime in January 2009 to lower the principal
balance as well as the interest rate but it only adjusted the interest rate and did not reduce
the principal amount owing, and (2) she and Oyedele made repeated demands to Ocwen
to correct the problem but Ocwen ignored their demands. She states she first discovered
the errors sometime in February 2009. She maintains she was actually seeking judicial
redress in her original complaint ―for the modified mortgage contract granted to [her] and
Oyedele sometime in February 2009,‖ even though the complaint makes no mention of a
2009 modification and instead alleges unequivocally Ocwen refused to modify the
January 2007 loan account in in any respect.
Redd‘s allegations concerning the modification agreement fail to allege with
specificity whether Ocwen‘s promise or agreement to reduce the principal amount of the
loan was oral or written.7 If the agreement was oral, Redd‘s proposed amended
complaint would still be subject to demurrer on statute of limitations grounds. The
statute of limitations for oral agreements is two years. (Code Civ. Proc., § 339,
subd. (1).) She states she became aware Ocwen had not reduced the principal amount
―sometime in February, 2009,‖ but she did not file her complaint until March 27, 2012—

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We note Redd‘s original complaint did not allege she had any contractual
relationship with Ocwen, only that she had a mortgage account serviced by Ocwen. The
lender shown on her 2007 deed of trust was ―DB Home Lending LLC.‖ It is not clear
under these circumstances how Redd could allege a viable breach of contract cause of
action against Ocwen for failing to reduce the principal amount of her loan. We will
nonetheless assume for purposes of analyzing the statute of limitations issue that Ocwen
was a proper defendant on that theory.

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more than two years after discovering Ocwen‘s breach. The record before us strongly
suggests Redd is alleging an oral or implied promise to reduce the principal, not an
express, contractual promise. Oyedele‘s declaration in support of Redd‘s motion for
reconsideration states in reference to the 2009 modification, ―the mortgage principal was
not reduced, contrary to my expectations and tacit promises by Ocwen’s agents and
principals.‖ (Italics added.) He makes no reference to a written contract to that effect,
and attaches no document evidencing such a contract. In her reply brief on appeal, Redd
asserts the 2009 modification on which she proposes to base her amended complaint ―did
not reflect the actual telephonic agreements of the parties.‖
An amended complaint based on an oral promise allegedly breached in January or
February 2009 would not only be subject to demurrer based on the statute of limitations,
it would also be defective under the statute of frauds which, as Redd acknowledges,
requires real estate transactions, including real estate loan modifications, to be in writing.
(See Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th
544, 552–553 [statute of frauds requires a real estate loan modification agreement to be in
a writing signed by the party to be charged].)
While Redd also mentions in her reply brief that Ocwen sent her and Oyedele a
written loan modification agreement to sign, she does not say whether the written
agreement included a reduction in the principal amount of the loan.8 In a paragraph
discussing the existence of a written modification agreement, she states Ocwen ―cannot
deny . . . there was a change in the monthly payment due, the interest rate and the term of
the mortgage contract [in 2009],‖ implying by omission these are the only modifications
evidenced by a written agreement.
In our view, Redd fails to meet her burden of establishing she can state a legally
viable cause of action based on Ocwen‘s failure to modify the principal amount of her
loan. While Redd makes vague and confusing reference in passing to other alleged

8
Redd states she and Oyedele signed the document and returned it to Ocwen by
facsimile, but does not explain why the original document is apparently no longer in her
possession.

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wrongs—unspecified errors made by previous servicers of her account before 2007, and
errors made by Ocwen before the asserted 2009 loan modification—she fails to establish
with specificity how she can allege viable causes of action not dependent on Ocwen‘s
alleged promise to reduce the principal amount of her loan. We decline to consider new
allegations raised for the first time in Redd‘s reply brief, including inchoate claims that
she can amend to state causes of action under recently enacted mortgage reform
legislation.
C. Motion for Reconsideration
The trial court‘s ruling on Redd‘s motion for reconsideration is reviewable on
appeal from the judgment of dismissal. (Code Civ. Proc., § 1008, subd. (g).) The trial
court did not abuse its discretion in denying the motion. Redd failed to establish why she
could not have alleged all of the facts she learned through Oyedele either in her original
complaint or in an amended complaint filed in the four months between the filing of that
complaint and the date set for the hearing on Ocwen‘s demurrer. Thus, she did not
explain why she could not have contacted Oyedele by telephone to learn the relevant
facts before she filed the complaint in March 2012, why she failed to amend the
complaint after Oyedele returned to California in May 2012, or why she failed to amend
the complaint after Oyedele learned of unspecified additional facts on July 16, 2012
(which pertained in any event solely to events before Ocwen took over servicing of the
loan). Facts of which a party seeking reconsideration was aware at the time of the
original ruling are not ―new or different facts,‖ that would support a trial court‘s grant of
reconsideration. (In re Marriage of Herr (2009) 174 Cal.App.4th 1463, 1468.) Even if
Redd had established the 2009 modification was a ―new or different fact[],‖ she failed to
show she could state a viable cause of action based on it, for the reasons discussed ante.
Redd‘s motion for reconsideration was properly denied.
D. Oyedele’s Oral Motion
Assuming Redd has standing to appeal the denial of Oyedele‘s motion to
intervene, the appeal is not well taken. If Redd believed Oyedele was a necessary party,
she could have obtained his authority to name him as a coplaintiff in her original

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complaint, she could have amended her complaint to add him as a party plaintiff after his
return to California in May 2012, or he could have filed and served a complaint in
intervention under Code of Civil Procedure section 387. By the time he did seek to
intervene by oral motion at the hearing on Redd‘s motion for reconsideration, there was
no point in allowing his intervention because the court had already sustained Ocwen‘s
demurrer without leave to amend. The trial court did not err in denying Oyedele‘s
motion.
III. DISPOSITION
The judgment is affirmed.

_________________________
Margulies, Acting P.J.

We concur:

_________________________
Dondero, J.

_________________________
Sepulveda, J.*

*
Retired Associate Justice of the Court of Appeal, First Appellate District
assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.

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