Schmidt v. Citibank, N.A.

Filed 11/7/18
CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DAVID SCHMIDT et al., D072993

Plaintiffs and Appellants,

v. (Super. Ct. No. 37-2015-00024415-
CU-OR-CTL)
CITIBANK, N.A., et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of San Diego County,

Gregory W. Pollack, Judge. Affirmed.

Stephen F. Lopez for Plaintiffs and Appellants.

Wright, Finlay & Zak, Gwen H. Ribar, Jonathan D. Fink and Ruby J. Chavez for

Defendants and Respondents.

I.

INTRODUCTION

Plaintiffs David and Hedda Schmidt appeal from a judgment entered in favor of

defendants Citibank, N.A., as Trustee for Structured Asset Mortgage Investments II Trust
2007-AR3 Mortgage Pass Through Certificates Series 2007-AR3, and Select Portfolio

Servicing, Inc. (defendants).

The Schmidts filed this action against the defendants, alleging violations of the

Homeowners' Bill of Rights (HBOR; Civ. Code, §§ 2923.55, 2923.6) and Business and

Professions Code section 17200, and seeking to prevent the completion of a trustee's sale

of their residence.

The defendants moved for summary judgment and presented evidence of extensive

and numerous telephone calls between the Schmidts and Select Portfolio Servicing, Inc.,

the loan servicer, during which the Schmidts' financial situation was discussed, as were

possible options to avoid foreclosure. The trial court granted the defendants' motion for

summary judgment and entered judgment in their favor.

On appeal, the Schmidts contend that summary judgment should not have been

granted because there remain triable issues of fact to be determined. We disagree and

affirm the judgment.

II.

FACTUAL AND PROCEDURAL BACKGROUND

A. Factual background

In January 2007, the Schmidts obtained a $1,820,000 loan, secured by a residence

at 2415 Rue Denise in La Jolla, California (the Property). The Schmidts signed a

promissory note and deed of trust securing the note. The deed of trust was assigned to

2
Citibank, N.A., as Trustee for Structured Asset Mortgage Investments II Trust 2007-AR3

Mortgage Pass Through Certificates Series 2007-AR3.1

The Schmidts defaulted on the loan and entered into a loan modification

agreement in February 2013 with their loan servicer at the time, JPMorgan Chase Bank.

Within approximately seven months, the Schmidts defaulted on the loan modification

agreement.

In March 2014, Select Portfolio Services, Inc. (SPS) began servicing the Schmidts'

loan.

On March 10, 2014, SPS sent the Schmidts a letter with an enclosed document

regarding the Servicemembers Civil Relief Act (SCRA), including information regarding

SCRA eligibility and protections. Between March 18 and November 22, 2014, SPS

employees spoke on the telephone with the Schmidts on numerous occasions about the

status of their mortgage. The evidence presented to the trial court on summary judgment

demonstrated that the Schmidts and SPS employees discussed a variety of matters,

including the Schmidts' financial situation and potential options for avoiding foreclosure.

SPS employees also provided the Schmidts with a toll free number for the Department of

Housing and Urban Development (HUD), as required by the HBOR, on at least three

occasions.

1 Wilmington Trust, N.A. succeeded Citibank, N.A. as trustee of the securitized
trust.
3
 In the meantime, in March 2014, the Schmidts submitted a completed loan

modification application to SPS. In July 2014, SPS denied the March 2014 loan

modification application. The record demonstrates that the Schmidts did not appeal the

denial of the loan modification.

On November 26, 2014, SPS sent the Schmidts a letter indicating that the

Schmidts could request certain documents, including a copy of their payment history, a

copy of the note, the name of the entity that "holds the loan," as well as any "assignments

of mortgage or deed of trust required to demonstrate" the right to foreclose.2

A notice of default regarding the Schmidts' loan was recorded on January 14,

2015. The notice of default stated that the Schmidts had to pay "$84,072.15 as of

1/12/2015" in order to "bring [their] account in good standing." A declaration attached to

the recorded notice of default indicated that SPS had contacted the Schmidts, as required

by Civil Code section 2923.55, subdivision (b)(2).

On April 28, 2015, a notice of trustee's sale was recorded against the property.

In February 2016, the Schmidts filed another loan modification application, which

was not completed until May 2017. This loan modification application was denied on

June 7, 2017.

2 The letter indicated that the Schmidts could obtain copies of any assignments "[i]f
we have commenced foreclosure or filed a Proof of Claim."
4
 The record demonstrates that the Schmidts have not made any payments on the

loan since October 2013. No trustee's sale has taken place, and the total amount owing

on the loan stood at $2,298,570.55 as of June 19, 2017.

B. Procedural background

The Schmidts filed their initial complaint in July 2015, and have amended the

complaint twice since that time. The current operative complaint is the second amended

complaint. The second amended complaint sets forth causes of action for violation of the

HBOR (Civ. Code, §§ 2923.55, 2923.6) and Business and Professions Code section

17200.3 The Schmidts sought damages, restitution, and injunctive relief.

After answering the second amended complaint, the defendants filed a motion for

summary judgment. The Schmidts opposed the motion. After full briefing and a hearing

on the matter, the trial court granted the defendants' motion for summary judgment on

August 4, 2017. The court entered judgment in favor of the defendants on August 23,

2017.

The Schmidts filed a timely notice of appeal from the notice of entry of judgment.

3 A violation of Civil Code section 2924.10 was also alleged, but was subsequently
abandoned.
5
 III.

DISCUSSION

A. Additional background

This appeal involves alleged violations of the HBOR. "The Homeowner Bill of

Rights [citations] (HBOR), effective January 1, 2013, was enacted 'to ensure that, as part

of the nonjudicial foreclosure process, borrowers are considered for, and have a

meaningful opportunity to obtain, available loss mitigation options, if any, offered by or

through the borrower's mortgage servicer, such as loan modifications or other alternatives

to foreclosure.' ([Civ. Code, ]§ 2923.4, subd. (a).)" (Valbuena v. Ocwen Loan Servicing,

LLC (2015) 237 Cal.App.4th 1267, 1272, fn. omitted (Valbuena).)

The provisions comprising the HBOR have been relocated to different sections

(and at times, returned to the original sections) of the Civil Code, and have been slightly

amended since its passage. At the time of the recording of the notice of default in this

case, the HBOR required a mortgage servicer to do a number of things before recording a

notice of default or moving forward with a trustee's sale of a property.4 For example, the

HBOR prohibited a mortgage servicer from recording a notice of default before sending

the borrower a letter explaining its right to request various loan documents. (See former

4 Many sections of the HBOR were subject to a sunset provision, effective on
January 1, 2018. (Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 157.)
Former Civil Code sections 2923.55 and 2923.6 are two of the sections subject to the
sunset provision. (Former § 2923.55, subd. (i); former § 2923.6, subd. (k).) All
references to former sections 2923.55 and 2924.6 are to the version of these statutes in
effect between January 1, 2013 and December 31, 2017.
6
Civ. Code,5 § 2923.55, subds. (a)–(b).) "[The] HBOR provides for injunctive relief for

statutory violations that occur prior to foreclosure [citation], and monetary damages when

the borrower seeks relief for violations after the foreclosure sale has occurred [citation]."

(Valbuena, supra, 237 Cal.App.4th at p. 1272.) Section 2924.12, subdivision (c),

provides a safe harbor by encouraging the curing of violations: "A mortgage

servicer . . . shall not be liable for any violation that it has corrected and remedied prior to

the recordation of the trustee's deed upon sale, or that has been corrected and remedied by

third parties working on its behalf prior to the recordation of the trustee's deed upon sale."

Relevant to this appeal, former section 2923.55 provided, in relevant part: "(a) A

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent may not record a

notice of default pursuant to Section 2924 until all of the following: [¶] . . . [¶] (2) Either

30 days after initial contact is made as required by paragraph (2) of subdivision (b) or 30

days after satisfying the due diligence requirements as described in subdivision (f).

[¶] . . . [¶] [(b) ](2) A mortgage servicer shall contact the borrower in person or by

telephone in order to assess the borrower's financial situation and explore options for the

borrower to avoid foreclosure. During the initial contact, the mortgage servicer shall

advise the borrower that he or she has the right to request a subsequent meeting and, if

requested, the mortgage servicer shall schedule the meeting to occur within 14 days. The

assessment of the borrower's financial situation and discussion of options may occur

during the first contact, or at the subsequent meeting scheduled for that purpose. In either

5 Further statutory references are to the Civil Code unless otherwise indicated.
7
case, the borrower shall be provided the toll-free telephone number made available by the

United States Department of Housing and Urban Development (HUD) to find a HUD–

certified housing counseling agency. Any meeting may occur telephonically."

Also relevant to this appeal is former section 2923.6, which sought to encourage

loan modifications as an alternative to foreclosures. For example, former section 2923.6,

subdivision (c) provided:

"If a borrower submits a complete application for a first lien loan
modification offered by, or through, the borrower's mortgage
servicer, 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. [¶] (2) The borrower does not accept an offered first lien
loan modification within 14 days of the offer. [¶] (3) The borrower
accepts a written first lien loan modification, but defaults on, or
otherwise breaches the borrower's obligations under, the first lien
loan modification."

Former section 2923.6 also required mortgage servicers, mortgagees, trustees,

beneficiaries, or agents to provide borrowers with 30 days to appeal the denial of a loan

modification, as well as additional time after the denial of an appeal. (See former

§ 2923.6, subds. (d), (e).) The statute further required that borrowers be provided

"written notice to the borrower identifying the reasons for [the modification] denial,

including" the amount of time a borrower had to request an appeal, "instructions

8
regarding how to appeal the denial," as well as information regarding the basis of the

denial and possible other foreclosure alternatives. (Id., subd. (f).)

B. Statutory repeal

As an initial matter, the defendants contend that the Schmidts' appeal is rendered

moot as a result of "the repeal of Civil Code §§ 2923.55 and (in substantial part) 2923.6."

The principle on which the defendants rely is known as the statutory repeal doctrine.

(See Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112,

1151.) "Under [the statutory repeal] doctrine, . . . ' "where a right or a right of action

depending solely on statute is altered or repealed by the Legislature, in the absence of

contrary intent, e.g., a savings clause, the new statute is applied even where the matter

was pending prior to the enactment of the new statute." ' [Citation.]" (Ibid.)

Although it is true that the Legislature repealed former section 2923.55, and some

of section 2923.6, and in doing so did not include a savings clause, the defendants fail to

acknowledge that the Legislature essentially re-enacted all but a small portion of section

2923.55 when it enacted many of the same provisions in section 2923.5, effective January

1, 2018.6 Similarly, some of the provisions of former section 2923.6 were re-enacted or

6 The only provisions from former section 2923.55 that were not re-enacted in
section 2923.5 are those provisions in subdivision (b), which required mortgage servicers
to send a letter, in writing, to the borrower that includes information regarding the
Servicemembers Civil Relief Act (50 U.S.C. Appen. § 501 et seq.), as well as information
alerting the borrower to the fact that the borrower may request copies of certain
documents, including the borrower's payment history, the promissory note, the deed of
trust or mortgage, as well any assignment that would be required to demonstrate the right
to foreclose. (Compare former section 2923.55 with section 2923.5.) Although the
Schmidts attempt to rely on purported failures in meeting the obligations of subdivision
9
were replaced by similar but slightly different provisions in section 2924.11, effective

January 1, 2018. In addition, section 2924.12, which authorizes a cause of action for

HBOR violations and sets forth the remedies available for such violations, was amended

in minor ways, but was not repealed. (Compare former § 2924.12 (eff. Jan. 1, 2015) with

current § 2924.12 (eff. Jan. 1, 2018).)

We therefore reject defendants' contention that the Schimdts' appeal is moot in its

entirety, pursuant to the statutory repeal doctrine. However, we also conclude that we

need not delve into the intricacies of the defendants' statutory repeal argument because

the judgment must be affirmed on other grounds.

C. Evidentiary issues

Another preliminary matter involves the Schmidts' challenge to the trial court's

overruling of their objections to a significant portion of the evidence offered by the

defendants in support of the motion for summary judgment. Because it is possible that

(b) of former section 2923.55 in asserting that summary judgment should not have been
granted, the Schmidts cannot rely on this theory because the allegations of the complaint
do not include any claim that the defendants failed to meet the written notice
requirements of former section 2923.55, subdivision (b), nor do they include factual
allegations that could support such a claim. (see Conroy v. Regents of University of
California (2009) 45 Cal.4th 1244, 1250 (Conroy) [the pleadings set the boundaries of
the issues to be resolved].) Courts must decline to consider a theory raised by a plaintiff
in opposition to summary judgment if the argument is not supported by the pleadings:
"The materiality of a disputed fact is measured by the pleadings." (Ibid.) A moving
defendant "need address only the issues raised by the complaint; the plaintiff cannot bring
up new, unpleaded issues in his or her opposing papers." (Government Employees Ins.
Co. v. Superior Court (2000) 79 Cal.App.4th 95, 98, fn. 4.) Given that there is no
indication in the operative complaint that the Schmidts were relying on a purported
violation of former section 2923.55, subdivision (b), the Schmidts cannot now attempt to
assert that a violation of this provision establishes that the trial court erred in granting
summary judgment.
10
reversal of an evidentiary ruling could affect the outcome of a motion for summary

judgment, we first consider the evidentiary issue that the Schmidts raise.

The Schmidts argue that they objected to "much of th[e] declaration" of Rebecca

Adelman, an SPS employee. They assert that the trial court "refused to rule on most of

these objections," and further assert that the evidence provided by Adelman's declaration

was "not admissible to prove Respondents' arguments."

"In determining whether a triable issue was raised or dispelled, we must disregard

any evidence to which a sound objection was made in the trial court, but must consider

any evidence to which no objection, or an unsound objection, was made. [Citations.]"

(McCaskey v. California State Automobile Assn. (2010) 189 Cal.App.4th 947, 957.)

" ' "Pursuant to the weight of authority, appellate courts review a trial court's

rulings on evidentiary objections in summary judgment proceedings for abuse of

discretion. [Citations.]" [Citation.] The party challenging a trial court's evidentiary

ruling has the "burden to establish such an abuse, which we will find only if the trial

court's order exceeds the bounds of reason. [Citation.]" ' " (Butte Fire Cases (2018) 24

Cal.App.5th 1150, 1169; but see Reid v. Google, Inc. (2010) 50 Cal.4th 512, 535 ["[W]e

need not decide generally whether a trial court's rulings on evidentiary objections based

on papers alone in summary judgment proceedings are reviewed for abuse of discretion

or reviewed de novo"].) We will follow the weight of authority and apply the abuse of

discretion standard. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs

(The Rutter Group 2017) ¶ 8.168, p. 8-148.)

11
 Contrary to the Schmidts' contention on appeal, the trial court did not decline to

rule on their objections to the Adelman declaration. Rather, the trial court overruled all

of their objections on the ground that the Schmidts' objections failed to comply with

California Rules of Court, rule 3.1354(b)(3), which requires that a litigant "[q]uote or set

forth the objectionable statement or material" objected to. The Schmidts do not even

attempt to address the basis for the court's ruling with respect to their objections to the

Adelman declaration, and our review of the record supports the trial court's conclusion

that the Schmidts' objections fail to meet the requirements of the California Rules of

Court for the format of evidentiary objections. The trial court acted well within its

discretion in overruling the objections for failing to meet these standards. We therefore

reject the Schmidts' contention that the trial court erred in admitting and considering the

Adelman declaration.

D. Defendants are entitled to summary judgment

1. Summary judgment legal standards

"[T]he party moving for summary judgment bears the burden of persuasion that

there is no triable issue of material fact and that [it] is entitled to judgment as a matter of

law." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, fn. omitted

(Aguilar); accord, Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary

judgment must make a prima facie showing either that the plaintiff cannot establish one

or more elements of a cause of action or that there is a complete defense to the action.

(Aguilar, at p. 850; § 437c, subds. (o), (p)(2).) A defendant moving for summary

judgment may satisfy this initial burden of production by presenting evidence that

12
conclusively negates an element of the plaintiff's cause of action or by relying on

plaintiff's factually devoid discovery responses to show that plaintiff does not possess,

and cannot reasonably obtain, evidence to establish that element. (Aguilar, at pp. 854–

855.) The opposing party has no obligation to show a triable issue of material fact exists

unless and until the moving party has met its burden. (Villa v. McFerren (1995) 35

Cal.App.4th 733, 743–744.) If the defendant makes such a showing, the burden shifts to

the plaintiff to present evidence showing there is a triable issue of material fact. (Aguilar,

at p. 850.)

On review of an order granting summary judgment, an appellate court

"independently examine[s] the record in order to determine whether triable issues of fact

exist to reinstate the action." (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32

Cal.4th 1138, 1142.) "We will affirm an order granting summary judgment . . . if it is

correct on any ground that the parties had an adequate opportunity to address in the trial

court . . . ." (Securitas Security Services USA, Inc. v. Superior Court (2011) 197

Cal.App.4th 115, 120.)

2. Appellants have not shown that any remaining material questions of fact exist
with respect to the HBOR violations asserted in the SAC

a. Alleged violations of former section 2923.55

The Schmidts allege in the SAC that the defendants are "obligated to comply with

Civil Code section 2923.55 with regard to the Subject Property and Subject Loan," and

that, "[d]espite the statements in the notice of default referenced herein to the effect that

attempts to contact Plaintiffs w[ere] made, in fact, Defendants, and each of them, never

13
made any attempt to contact Plaintiffs to discuss their financial situation and options to

avoid foreclosure and did not do so within 30 days prior to the recording of the notices of

default." (Italics added.) The SAC makes no other allegations with respect to the

defendants' purported violations of former section 2923.55.

On appeal, the Schmidts contend that there remain factual issues in dispute as to

whether the defendants complied with the requirements of former section 2923.55 prior

to the recording of the notice of default in January 2015. Relying on Mabry v. Superior

Court (2010) 185 Cal.App.4th 208, 215 (Mabry), they assert that whether a defendant has

complied with the requirements of section 2923.55 is a "classic question of fact that must

be resolved by the trier of fact."

Again, during the relevant time period, former section 2923.55 required that, at

least 30 days prior to recording a notice of default, a "mortgage servicer . . . contact the

borrower in person or by telephone in order to assess the borrower's financial situation

and explore options for the borrower to avoid foreclosure." (Former § 2923.55(b)(2).) It

further provided: "During the initial contact, the mortgage servicer shall advise the

borrower that he or she has the right to request a subsequent meeting and, if requested,

the mortgage servicer shall schedule the meeting to occur within 14 days. The assessment

of the borrower's financial situation and discussion of options may occur during the first

contact, or at the subsequent meeting scheduled for that purpose. In either case, the

borrower shall be provided the toll-free telephone number made available by the United

States Department of Housing and Urban Development (HUD) to find a HUD-certified

housing counseling agency. Any meeting may occur telephonically." (Ibid.) In order to

14
ensure compliance with the statutory requirements, borrowers may bring actions for

injunctive relief "to enjoin a material violation" of certain provisions of the HBOR,

including a material violation of former section 2923.55, before a trustees deed upon sale

has been recorded. (See former § 2924.12, subd. (a)(1); see also current § 2924.12, subd.

(a)(1) [providing for cause of action for injunctive relief for "material violation[s]" of

current section 2923.5].)

"The right conferred by section 2923.5 [the predecessor to former section 2923.55]

is a right to be contacted to 'assess' and 'explore' alternatives to foreclosure prior to a

notice of default." (Mabry, supra, 185 Cal.App.4th at p. 225.) However, even the terms

"assess" and "explore" are to be "narrowly construed in order to avoid crossing the line

from state foreclosure law into federally preempted loan servicing." (Id. at p. 232.)

"Exploration must necessarily be limited to merely telling the borrower the traditional

ways that foreclosure can be avoided (e.g., deeds 'in lieu,' workouts, or short sales), as

distinct from requiring the lender to engage in a process that would be functionally

indistinguishable from taking a loan application in the first place." (Ibid.)

The Adelman declaration provides more than enough evidence to demonstrate that

the defendants satisfied the requirements of former section 2923.55 prior to the recording

of the notice of default. Adelman attests that the records kept by SPS reflect that SPS

initiated telephone calls with the Schmidts on at least 11 occasions between March 2014

and late November 2014. In addition, David Schmidt or his "Authorized Third Party"

called SPS and spoke with an SPS employee another eight times. SPS also attempted to

contact the Schmidts, without success, an additional 35 times between November 2014

15
and January 14, 2015, which was the date the notice of default was recorded. The notes

from the telephone discussions demonstrate that SPS employees discussed the Schmidts'

financial situation with them, provided a loss mitigation review, discussed the Schmidts'

loan modification application, discussed payment options, and offered the Schmidts a

"[l]oss [m]it [m]eeting" on multiple occasions. In addition, the notes indicate that SPS

employees provided the Schmidts with the HUD referral line telephone number. At some

point, the Schmidts' agent and SPS employees discussed the potential sale of the home.

Thus, SLS's records and the Adelman declaration demonstrate that SLS was in contact

with the Schmidts and, as required by former section 2923.55, engaged in discussions "to

assess the [Schmidt's] financial situation," "explore[d] options for the [Schmidts] to avoid

foreclosure," offered the Schmidts additional subsequent meetings for the purpose of

further discussions (and, in fact, engaged in multiple discussions about the Schmidts'

financial situation and alternatives to foreclosure), and provided the Schmidts with the

HUD toll-free telephone number. This evidence clearly establishes a prima facie

showing that all of the contact and notice requirements of former section 2923.55 were

met in this situation.

We further conclude that SPS complied with the requirements of former section

2923.55, subdivision (b)(2) by fully reviewing and processing the Schmidts' loan

modification application before recording the notice of default. (See, e.g., Hutchful v.

Wells Fargo Bank, N.A. (9th Cir. 2012) 471 Fed.Appx. 693, 694 [trial court had "properly

construed the notice requirement of California Civil Code § 2923.5 as having been met

by [the borrower's] extensive discussions with [the lender] regarding loan modification"];

16
Bell v. Wells Fargo Bank, N.A. (C.D.Cal., Oct. 28, 2014, No. CV 14-4316-JFW) 2014

WL 12611283, at *3 [loan modification review satisfies the requirement that the lender

assess the borrower's financial situation and explore alternatives to foreclosure]; Keng

Hee Paik v. Wells Fargo Bank, N.A. (N.D.Cal., Aug. 3, 2011, No. C 10-04016 WHA)

2011 WL 3359697, at *3 [lender's review of two loan modification applications

demonstrated "conclusive[ ] compli[ance]" with former section 2923.5, predecessor

statute to former section 2923.55].)

Because the defendants produced admissible evidence to support their prima facie

showing that the contact and notice requirements of former section 2923.55 were met, the

burden shifted to the Schmidts to offer contrary evidence giving rise to one or more

triable issues of fact. (Law Offices of Dixon R. Howell (2005) 129 Cal.App.4th 1076,

1092.) The Schmidts offered the declaration of Mr. Schmidt. However, with respect to

these contacts, Mr. Schmidt stated only that he "cannot recall any such calls taking place

before January 2015, when a notice of default was recorded regarding [the] loan," that "to

[his] recollection, [he] was never offered a meeting to discuss my situation o[r]

alternatives to foreclosure," and that he did not recall that he "ever reject[ed] such an

offer." A failure to recall does not logically contradict the evidence put forth by the

defendants and is insufficient to demonstrate the existence of a triable issue of fact as to

whether these contacts were, in fact, made. (See Joseph E. Di Loreto, Inc. v. O'Neill

(1991) 1 Cal.App.4th 149, 160 [statements that party was "not sure if the signature was or

was not hers" and that she "could not recall signing such a contract" were "insufficient to

create a triable issue of fact because a failure to recall does not logically contradict [the

17
moving party's] evidence"].) The Schmidts' failure to raise a triable issue of fact by

unequivocally denying all of these contacts, as well as the failure to deny the occurrence

of multiple discussions regarding the loan modification application or receiving notice of

the denial of the loan modification application, left the defendants' prima facie showing

unrebutted and entitled the defendants to summary judgment.

The Schmidts nevertheless contend that material facts remain in dispute because

the "alleged contacts" between SPS and the Schmidts "do not constitute compliance with

Civil Code section 2923.55 because they were initiated by Mr. Schmidt, not the lender or

its agent." (Some formatting omitted.) We disagree with the Schmidt's assertion that

"contacts" between the lender or its agent and the borrow must be initiated by the lender

or its agent in order to comply with former section 2923.55, and that any telephone calls

initiated by the Schmidts, and not by SPS, in which the Schmidts' financial situation and

alternatives to foreclosure were discussed, cannot constitute compliance with former

section 2923.55. The language of the statute does not require that a lender initiate the

contact; rather, the statute requires only that the lender make contact in some manner and

provide the borrower with an opportunity to discuss the borrower's financial situation and

possible options for avoiding foreclosure. (See former § 2923.55, subd. (b)(2).) Indeed,

multiple federal courts have concluded that former section 2923.55, subdivision (b)(2)

does not require that the lender initiate the contact contemplated by the statute. (See

Johnson v. SunTrust Mortg., Inc. (C.D.Cal., Aug. 4, 2014, No. CV-14-2658 DSF) 2014

WL 3845205, at *1, *4 [where record demonstrated that the plaintiffs had initiated

contacts with lender and conceded that during telephone calls "they had discussions with

18
[the lender] SunTrust regarding their financial situation and loan modification options,"

the plaintiffs' alleged former section 2923.55(b)(2) failed]; see also Maomanivong v.

National City Mortgage Co. (N.D.Cal., Sept. 15, 2014, No. C-13-05433 DMR) 2014 WL

4623873 at *9, fn. 9 [holding that the lender or its agents need not be the party to initiate

telephone contact in order to satisfy requirements of former section 2923.55, subdivision

(b)(2)]; Burton v. NDEx West, LLC (Cal. Ct.App., Apr. 16, 2012, No. B232119) 2012

WL 1267884 at *4 ["The purpose of the contact requirement is fully satisfied if the

contact occurs regardless of who initiated the contact. If the borrower initiates a call in

which the parties discuss the borrower's financial condition and explore options for the

borrower to avoid foreclosure, we can see no good reason to construe section 2923.5,

subdivision (a)(2) as requiring the mortgagee, beneficiary or authorized agent to initiate

another call for the same purpose"].)

We agree with these federal courts, and with SPS, who argues that we would be

elevating form over substance if we were to conclude that only those contacts between a

lender or its agent and a borrower that are initiated by the lender may satisfy the

requirements of former section 2923.55, subdivision (b)(2). The content of the

discussions had between SPS and the Schmidts satisfy the requirements set forth in

former section 2923.55, subdivision (b)(2), regardless of which party initiated the

telephone calls during which the discussions were had.

In addition, even if we were to accept the Schmidt's suggestion that we should

interpret the word "contact" in former section 2923.55, subdivision (b)(2) to require that

the lender initiate the contact, the evidence in this case suggests that SLS did initiate a

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number of telephone calls with the Schmidts and discussed with them the matters

required by former section 2923.55, subdivision (b)(2). For example, on dates in March,

April and May 2014, SPS initiated contact with the Schmidts and discussed the Schmidts'

financial situation, loan modification application, and payment options, and informed the

Schmidts of their right to request a loss mitigation meeting within 14 days of each of

these telephone calls. During one of these calls, in May 2014, SPS also provided the

Schmidts with the HUD counseling referral telephone number. In August, September,

and October 2014, after the Schmidts had been advised that their loan modification had

been denied, SPS contacted them on multiple dates and discussed other potential options

to avoid foreclosure, including a short sale or a payment plan. These calls were all

initiated by SPS.7

b. Alleged violations of section 2923.6

The Schmidts contend that the trial court erred in granting summary judgment

with respect to their claim that the defendants violated former section 2923.6. Former

7 Further, even if none of the telephone calls between SPS and the Schmidts had
been initiated by SPS, and even if the statute did require that the lender initiate the
contact, we are not convinced that the Schmidts would be entitled to injunctive relief on
the ground that SPS had not initiated contact with them to discuss the matters required by
former section 2923.55, subdivision (b)(2). Again, violations of the statute's provisions
must be "material" in order to support a cause of action for an injunction. We conclude
that if the purpose of the statute is met—if the borrower has had an opportunity to have at
least two substantive discussions with the lender regarding the borrower's financial
situation and possible options for avoiding foreclosure—then the fact that one or both of
these discussions may have arisen as a result of the borrower initiating the telephone call
with the lender or its agent cannot be considered to constitute a "material" violation of the
statute.
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section 2923.6 implemented the Legislature's intent to encourage loan modifications or

workout plans when such modifications or plans would be beneficial to all investors in a

loan pool. (See former § 2923.6, subd. (a).) The provision prohibited the recording of a

notice of default or notice of sale (or the conducting of a trustee's sale) during the

pendency of a first lien loan modification application, and set forth a number of

requirements that had to be met before a notice of default or notice of sale could be

recorded. (See former § 2923.6, subds. (c)–(f).)

On appeal, the Schmidts concede that "both [of their] applications for modification

were denied and written notice was sent," in compliance with section 2923.6. However,

they assert that material issues of fact remain with respect to whether the notices sent

complied with the requirements of section 2923.6. Specifically, the Schmidts assert that

the notices "failed to explain to the Schmidts how to file an appeal," and instead "only

indicate [that] they had a right to appeal and the time [in which] to do so."

The Schmidts' argue that material issues of fact remain with respect to whether the

written notices complied with the requirement of former section 2923.6 that the written

notice of denial include "instructions regarding how to appeal the denial" (former

§ 2923.6, subd. (f)(1)). This argument fails, however, because the Schmidts do not allege

in the operative complaint that this type of violation occurred. Rather, the Schmidts

allege in the SAC that "[a]s of the date of the notice of default and notice of sale of the

Subject Property as alleged herein, there had not yet been any written determination that

the Plaintiffs were not eligible for a first lien loan modification, nor had any appeal

period had yet expire [sic], Plaintiffs did not refuse to accept an offered first lien loan

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modification within 14 days of the offer, Plaintiffs did not accept a written first lien loan

modification, on which they had defaulted or breached, plaintiffs were not been given

[sic] at least 30 days from the date of a written denial of the modification to appeal the

denial and to provide evidence that the determination was in error and the sale was

noticed less than 31 days after written notice of denial, particularly in that no notice of

denial of the modification was ever given."8 (Italics added.) There is no allegation that

the defendants failed to comply with former section 2923.6, subdivision (f)(1)'s

requirements by failing to provide "instructions regarding how to appeal the denial" of

the loan modification. Rather, the allegations related to a violation of former section

2923.6 involve assertions that the Schmidts' loan modification application remained

pending and had not yet been denied at the time the notice of default and notice of sale

were recorded.

Again, we may not consider a new theory raised by a plaintiff in opposition to

summary judgment, or on appeal from the granting of summary judgment, where that

theory is not supported by the pleadings. (See Conroy, supra, 45 Cal.4th at p. 1250 [the

pleadings set the boundaries of the issues to be resolved].) Given that the Schmidts did

not include an allegation in the SAC that the defendants failed to provide the Schmidts

with sufficient instructions regarding how to appeal the denial of their loan modification

application, the Schmidts may not now rely on this theory to escape summary judgment.

8 Again, the Schmidts now concede that written denial of their loan modification
applications was, in fact, provided.
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 3. No remaining material questions of fact have been demonstrated with
respect to the Business and Professions Code section 17200 violations
asserted in the SAC

The Schmidts acknowledge that their claims for violations of section 17200 are

predicated on the alleged violations of the HBOR that they assert in the SAC. Because

we have concluded that the defendants are entitled to summary adjudication of the

Schmidts' claims for violations of HBOR, it follows that the defendants are also entitled

to summary adjudication of the section 17200 claims that are premised on the HBOR

violations.

IV.

DISPOSITION

The judgment of the trial court is affirmed. The defendants are entitled to their

costs on appeal.

AARON, J.

WE CONCUR:

McCONNELL, P. J.

O'ROURKE, J.

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