Hawshon Riley v. Caliber Home Loans, Inc. ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 9 2022
MOLLY C. DWYER, CLERK
FOR THE NINTH CIRCUIT U.S. COURT OF APPEALS
HAWSHON RILEY; DAGNY RILEY, No. 21-55909
Plaintiffs-Appellants, D.C. No.
2:20-cv-01497-DSF-KS
v.
CALIBER HOME LOANS, INC.; U.S. MEMORANDUM*
BANK TRUST, N.A., as trustee for LSF9
Master Participation TrustU.S. Bank Trust,
N.A. as trustee for LSF9 Master
Participation Trust; QUALITY LOANS
SERVICE CORPORATION,
Defendants-Appellees,
and
MILLENNIUM MORTGAGE CORP.;
BANK OF AMERICA, N.A.; BAC HOME
LOANS SERVICING, LP; MORTGAGE
ELECTRONIC REGISTRATION SYSTEM,
INC.; OWEN LOAN SERVICING, LLC;
DOES,
Defendants.
Appeal from the United States District Court
for the Central District of California
Dale S. Fischer, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
Submitted June 7, 2022**
Pasadena, California
Before: M. SMITH, BADE, and VANDYKE, Circuit Judges.
Plaintiffs Hawshon Riley and Dagny Riley appeal from the district court’s
order granting summary judgment against them.1 We have jurisdiction pursuant to
28 U.S.C. § 1291, and reviewing de novo, we affirm. See Buono v. Norton, 371 F.3d
543, 545 (9th Cir. 2004).
Plaintiffs asserted three claims against Defendants in the district court, all of
which primarily allege that foreclosure on their residence was dual tracked while a
loan modification review was pending. First, Plaintiffs alleged that Defendants
engaged in dual tracking under California Civil Code Section 2923.6(c), which
prohibits a mortgage servicer from “continu[ing] foreclosure proceedings while
reviewing a homeowner’s application for a loan modification.” Lueras v. BAC Home
Loans Servicing, LP, 163 Cal. Rptr. 3d 804, 835 n.14 (Cal. Ct. App. 2013). To prove
dual tracking under section 2923.6(c), Plaintiffs had to show that Defendants
(1) recorded a notice of default, (2) recorded a notice of trustee’s sale, or
(3) completed a trustee’s sale, while a loan modification application was being
reviewed or during the time it could be appealed (30 days after its written denial). See
**
The panel unanimously concludes this case is suitable for decision without oral
argument. See Fed. R. App. P. 34(a)(2).
1
The parties are familiar with the facts, so we do not repeat them here.
2
Cal. Civ. Code § 2923.6(c). The undisputed evidence shows that no trustee’s sale has
been completed and the Notice of Default and Notice of Trustee’s Sale were recorded
in December 2016 and March 2018, respectively. Plaintiffs applied for loan
modifications in March or April of 2017, April 2019, July 2019, and October 2019.
Defendants approved the 2017 loan modification, but Plaintiffs failed to accept this
modification offer and did not make any payments under it. Defendants denied the
remaining loan modifications in writing approximately thirty days after each was
submitted. The undisputed evidence shows that none of Plaintiffs’ loan modification
applications were pending (or in the 30-day window to appeal) when the Notice of
Default and Notice of Trustee’s Sale were recorded in December 2016 and March
2018. Accordingly, summary judgment was properly granted in favor of Defendants
as to Plaintiffs’ section 2923.6(c) claim.
Second, Plaintiffs claimed that Defendants breached the implied covenant of
good faith and fair dealing. To prevail, Plaintiffs had to show “(1) the parties entered
into a contract; (2) the plaintiff fulfilled his obligations under the contract; (3) any
conditions precedent to the defendant’s performance occurred; (4) the defendant
unfairly interfered with the plaintiff’s rights to receive the benefits of the contract;
and (5) the plaintiff was harmed by the defendant’s conduct.” Rosenfeld v. JPMorgan
Chase Bank, N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010) (citing Judicial Council
of California Civil Jury Instruction No. 325). Plaintiffs do not dispute that they failed
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to perform and are in default under the loan documents (since at least 2009), which
permitted Defendants to proceed with foreclosure actions. See Storek & Storek, Inc.
v. Citicorp Real Est., Inc., 122 Cal. Rptr. 2d 267, 276 (Cal. Ct. App. 2002) (noting
that “an implied covenant of good faith and fair dealing cannot contradict the express
terms of a contract”). Further, Plaintiffs’ assertions that Defendants breached the loan
documents by taking steps to foreclose while a loan modification application was
pending or that Defendants arbitrarily denied their request for a loan modification are
wholly unsupported by the record. The undisputed facts show that Defendants
provided written reasons for denying each loan modification and never took steps to
foreclose while a loan modification application was pending. Accordingly, summary
judgment was properly granted in favor of Defendants as to Plaintiffs’ implied
covenant of good faith and fair dealing claim.
Finally, Plaintiffs claimed that Defendants’ alleged violation of section
2923.6(c) and alleged breach of the implied covenant amounted to a violation of
California’s Unfair Competition Law (UCL). Cal. Bus. & Prof. Code § 17200.
Because the district court properly granted summary judgment against Plaintiffs on
the first two claims, summary judgment was also properly granted as to the derivative
UCL claim. Krantz v. BT Visual Images, L.L.C., 107 Cal. Rptr. 2d 209, 219 (Cal. Ct.
App. 2001) (holding that a UCL claim stands or falls “depending on the fate of the
antecedent substantive causes of action”). Further, Plaintiffs lack standing to assert
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the UCL claim because the undisputed evidence shows that the foreclosure sale has
not been completed so Plaintiffs failed to establish the necessary loss of money or
property from the alleged unfair competition. Hall v. Time Inc., 70 Cal. Rptr. 3d 466,
469–70 (Cal. Ct. App. 2008) (citing Cal. Bus. & Prof. Code § 17204).
Summary judgment was properly granted. AFFIRMED.
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