Spinosi v. Quality Loan Service Corp. CA4/3 ( 2014 )

Filed 1/31/14 Spinosi v. Quality Loan Service Corp. CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
JOEL SPINOSI et al.,
Plaintiffs and Appellants, G047664
v. (Super. Ct. No. 30-2012-00586502)
QUALITY LOAN SERVICE OPINION
CORPORATION et al.,
Defendants and Respondents.
Appeal from an order of the Superior Court of Orange County, William M.
Monroe, Judge. Affirmed.
Law Office of Lenore Albert and Lenore L. Albert for Plaintiffs and
Appellants.
Severson & Werson, Jan T. Chilton, Eric J. Troutman, Andrew A. Wood
and Kerry W. Franich for Defendants and Respondents.
* * *
Plaintiffs Joel and Rose Spinosi appeal from the court’s November 15,
2012 order denying their application for a preliminary injunction to enjoin the foreclosure
1
sale of their home. The trial court concluded plaintiffs were unlikely to prevail on the
merits. We agree. Accordingly, we affirm the order.
2
FACTS
In April 2007, Joel borrowed $930,000 from SCME Mortgage Bankers,
Inc. (SCME), secured by a deed of trust executed by both plaintiffs on their home in Coto
1
Plaintiffs also purport to appeal from the court’s $1,500 sanctions order
imposed on their attorney. But the sanctions order is not appealable at this time. (Code
Civ. Proc., § 904.1, subd. (b) [sanctions order of $5,000 or less is appealable only after
final judgment or by petition for extraordinary writ].)
2
Under Code of Civil Procedure section 527, subdivision (a), a trial court
may grant a preliminary injunction based on sufficient grounds shown in either a verified
complaint or affidavits. The record contains no affidavit of a party verifying either the
complaint or first amended complaint. We therefore take no facts supporting plaintiffs’
injunction application from the allegations of those documents. Furthermore, most of the
record references in plaintiffs’ opening brief (they did not file a reply brief) are to
documents which were not before Judge Monroe on November 12, 2012, when he ruled
on plaintiffs’ injunction application.
We grant defendants’ request that we take judicial notice of certain
documents related to Joel’s bankruptcy case.
We deny plaintiffs’ request for judicial notice of the Federal National
Mortgage Association’s (Fannie Mae) Announcement 09-05R since it is irrelevant to the
court’s ruling on their preliminary injunction application. The record reflects they did not
qualify for the Home Affordable Modification Program. (See West v. JP Morgan Chase
Bank, N.A. (2013) 214 Cal. App. 4th 780, 785 [U.S. Dept. of the Treasury implemented the
Home Affordable Modification Program to “help homeowners avoid foreclosure during
the housing market crises of 2008”].) The record does not show that the Special
Forbearance/Workout Agreement between the parties was entered into pursuant to
FannieMae’s HomeSaver Forbearance program.
To avoid confusion and for ease of reference, we refer to the plaintiffs
singularly by their first names. We mean no disrespect.
2
De Caza. In a February 2, 2010 letter, defendant Aurora Loan Services, LLC (Aurora)
advised Joel that it had tried unsuccessfully to contact him at least three times and asked
him to contact Aurora about the then-owing arrearage of over $11,900 on the loan and to
discuss with Aurora bringing the loan current before foreclosure became necessary.
In March 2010, Joel signed a Special Forbearance/Workout Agreement (the
Forbearance Agreement), which required him to make six monthly payments between
March and August of 2010. The Forbearance Agreement stated, inter alia: “The
aggregate Plan payment will be insufficient to pay the Arrearage. At the Expiration Date,
a portion of the Arrearage will still be outstanding. Because payment of the Plan
payments will not cure the Arrearage, Customer’s account will remain delinquent. Upon
the Expiration Date, Customer must cure the Arrearage through a full reinstatement,
payment in full, loan modification agreement or other loan workout option that Lender
may offer (individually and collectively, a ‘Cure Method.’) Customer’s failure to enter
into a Cure Method will result in the loan being disqualified from any future Lender Loss
Mitigation program with respect to the loan evidenced by the Note, and regular collection
activity will continue, including . . . commencement or resumption of the foreclosure
process . . . .” The Forbearance Agreement expired on August 15, 2010.
On September 20, 2010, Aurora advised Joel in writing that he was $11,826
in default and could cure the default by paying that sum by October 20, 2010.
Meanwhile, in June 2010, Joel had submitted incomplete documentation to
Aurora seeking a loan modification. In October 2010, Joel submitted additional
documents. In November 2010, Aurora advised Joel that plaintiffs’ monthly housing-to-
income ratio was too high and they did not qualify for a modification. In February 2011,
defendants recorded a notice of default and election to sell under the deed of trust. In
April 2011 Joel submitted a new application for a loan modification. In May of 2011
Joel submitted additional documents.
3
In June 2011, plaintiffs filed their first lawsuit against defendants.
In July 2011, Aurora offered plaintiffs a traditional loan modification
because their loan balance was too high to qualify for the federal Home Affordable
Modification Program. Plaintiffs did not accept the offer.
In January 2012, Judge William M. Monroe sustained defendants’ demurrer
to plaintiffs’ complaint — without leave to amend as to five causes of action and with
leave to amend as to four causes of action. Judge Monroe also denied without prejudice
plaintiffs’ application for a preliminary injunction, ruling that plaintiffs had failed to
establish a probability of success on any cause of action which would effectively stop any
foreclosure. Plaintiffs voluntarily dismissed their complaint.
The trustee’s sale was scheduled for July 30, 2012.
On July 26, 2012, plaintiffs filed a second lawsuit against defendants.
Plaintiffs simultaneously filed an ex parte application for a temporary restraining order
and an order to show cause to preliminarily enjoin the trustee’s sale. Plaintiffs asserted,
inter alia, (1) they had reached an agreement with their loan servicer that they could cure
the default by paying $16,786; (2) they wire transferred $16,786 to their servicer as
instructed; and (3) the servicer failed to rescind the default even though it was cured.
Plaintiffs supported their application with their counsel’s declaration that an assignment
of the deed of trust had been notarized by a robo- or surrogate signer.
Judge Jamoa A. Moberly granted plaintiffs a temporary restraining order
and scheduled an order to show cause hearing for a preliminary injunction. Defendants
peremptorily challenged Judge Moberly. The case was reassigned to Judge David T.
McEachen.
Defendants filed an opposition to plaintiffs’ injunction application,
supported by the declaration of Aurora’s vice-president, who declared, inter alia, there
are “no records in the payment history reflecting any payment by Spinosi in the sum of
$16,786.27.” The declaration also set forth the history of Aurora’s transactions and
4
communications with plaintiffs based on her review of Aurora’s “servicing records,
payment records and loan origination file.”
On September 12, 2012, plaintiffs filed a first amended complaint
captioned as a class action, thereby superseding the operative complaint on which the
temporary restraining order had issued. On September 25, 2012, Judge McEachen
transferred the case to Judge Monroe. Judge McEachen stated that California Rules of
Court, rule 3.300 (concerning related cases) is meant to prevent judge shopping, although
Judge McEachen stated, “I’m not saying that that was [plaintiffs’] intent.”
The hearing on plaintiffs’ application for a preliminary injunction finally
was held on November 15, 2012. Defendants’ demurrer to the first amended complaint
was also heard on that date. Plaintiffs and their counsel did not appear nor did they
contact the court or defense counsel. Judge Monroe observed that plaintiffs’ allegation
they tendered $16,786 “to wipe out the entire arrears appears to have been a total
3
fabrication, included for the sole purpose of securing” a temporary restraining order. In
a lengthy ruling, Judge Monroe (1) found that plaintiffs had engaged in illegal judge
shopping and had hidden the illegal judge shopping by failing to file a notice of related
cases and failing to advise Judge Moberly the new case was largely identical to plaintiffs’
prior lawsuit; (2) sustained defendants’ demurrer to the first amended complaint, with
leave to amend two causes of action; (3) denied plaintiffs’ preliminary injunction motion
and dissolved the temporary restraining order; and (4) scheduled an order to show cause
requiring plaintiffs’ counsel to personally appear concerning monetary sanctions for
illegal judge shopping and misleading a judge with false statements “regarding the
alleged $16,786.27 payoff and plaintiffs’ bankruptcy filing/stay.”
3
The court’s November 15, 2012 order states that no declaration supports the
assertion of a $16,786 wire transfer, nor is this “crucial fact” referenced in the pleadings
and that the pleadings in fact “suggest the opposite.”
5
DISCUSSION
The Court Did Not Abuse Its Discretion by Denying Plaintiffs’ Injunction Application
Our review of the court’s order is limited to considering “whether the trial
court abused its discretion in ‘“evaluat[ing] two interrelated factors when deciding
whether or not to issue a preliminary injunction. The first is the likelihood that the
plaintiff will prevail on the merits at trial. The second is the interim harm that the
plaintiff is likely to sustain if the injunction were denied as compared to the harm the
defendant is likely to suffer if the preliminary injunction were issued.”’” (People ex rel.
Gallo v. Acuna (1997) 14 Cal. 4th 1090, 1109.) “‘Generally, the ruling on an application
for a preliminary injunction rests in the sound discretion of the trial court.’” (Hunt v.
Superior Court (1999) 21 Cal. 4th 984, 999.) “We do not interfere absent a clear showing
the trial court’s discretion has been abused.” (Husain v. McDonald’s Corp. (2012) 205
Cal. App. 4th 860, 867.)
“‘Discretion is abused when a court exceeds the bounds of reason or
contravenes uncontradicted evidence.’” (Husain v. McDonald’s Corp., supra, 205
Cal.App.4th at p. 867.) “‘Where the evidence is conflicting, we do not reweigh it . . . .’”
(Ibid.) “‘“[T]he trial court is the judge of the credibility of the affidavits filed in support
of the application for preliminary injunction and it is that court’s province to resolve
conflicts.”’ [Citation.] Thus, even when presented by declaration, ‘if the evidence on the
application is in conflict, we must interpret the facts in the light most favorable to the
prevailing party and indulge in all reasonable inferences in support of the trial court’s
order.’” (Whyte v. Schlage Lock Co. (2002) 101 Cal. App. 4th 1443, 1450.)
Plaintiffs bear the burden to “make a clear showing of an abuse of
discretion.” (IT Corp. v. Country of Imperial (1983) 35 Cal. 3d 63, 69.) They have failed
to do so, having provided us with inadequate record references, legal argument, and
citation to authority. (McComber v. Wells (1999) 72 Cal. App. 4th 512, 522.) As noted in
6
footnote 2, most of plaintiffs’ record references are to documents which were not before
Judge Monroe at the time he denied their injunction application. (Reserve Insurance Co.
v. Pisciotta (1982) 30 Cal. 3d 800, 813 [when reviewing correctness of trial court’s
judgment, appellate court considers “only matters which were part of the record at the
time the judgment was entered”].) Plaintiffs’ brief relies largely on federal case law and
standards, and also raises theories of liability, such as negligence and Civil Code section
2924.12, which were not captioned causes of action alleged in their complaint or first
amended complaint (nor have plaintiffs cited their complaint and/or first amended
complaint as encompassing those theories).
Even if we consider on the merits plaintiffs’ contentions in their injunction
application, we find no error. A moving party must support an injunction application
with a verified complaint and/or affidavits. (Code Civ. Proc., § 527, subd. (a).) The
record contains no verified pleading, but does include plaintiffs’ counsel’s declaration
(Albert’s declaration) supporting their injunction application.
Plaintiffs’ injunction application alleged they had wire transferred $16,786
to their loan servicer to cure the loan default pursuant to an agreement with the servicer,
but the servicer failed to rescind the default. But there is no evidence of such a payment
in Albert’s declaration or the supporting exhibits. Indeed, Judge Monroe found untrue
the plaintiffs’ allegation they made a $16,786 payment.
A second contention in plaintiffs’ injunction application was that plaintiffs’
payments under the Forbearance Agreement cured the loan default by mutual agreement
of the parties. There is no evidence of this in Albert’s declaration or its supporting
exhibits. Moreover, the Forbearance Agreement specified that payments thereunder
would not cure the arrearage and that the loan account would remain delinquent after the
Forbearance Agreement expired.
7
Finally, plaintiffs’ injunction application argued that SCME’s assignment
of the deed of trust to Aurora was invalid because it was allegedly robo-signed in the
names of Jan Walsh and notary Irene Guerrero. Plaintiffs contended they were harmed
by the allegedly invalid assignment because it allowed Aurora fraudulently to foreclose
on their home. Plaintiffs alleged Walsh was an employee of defendants Aurora and
Quality Loan Service Corporation. But the deed of trust assignment (attached as an
exhibit to Albert’s declaration) is executed by Walsh, as vice president of SCME. There
is no evidence concerning Walsh in Albert’s declaration or its supporting exhibits.
Although Albert’s declaration does not mention Walsh, it does discuss
Guerrero, who notarized Walsh’s signature on the assignment. Albert’s declaration states
she had Guerrero’s signature analyzed by an expert forensic document examiner on two
prior occasions “wherein it is conclusive” that Guerrero’s signature on the Nebraska
acknowledgment of the assignment was robo- or surrogate-signed. In support, Albert
attached as an exhibit the report of a forensic document examiner opining that certain
handwriting features in three questioned signatures of Guerrero indicated that someone
else probably prepared the signatures; however, the examiner stated his opinion was “due
to the limited amount of comparable exemplars submitted for IRENE GUERRERO.”
Also attached as an exhibit to Albert’s declaration was a press release of the
Nevada Attorney General announcing an indictment of two title officers, Gary Trafford
and Gerri Sheppard, for a robo-signing scheme in Clark County, Nevada between 2005
and 2008. Albert’s declaration refers to the indictment of “Gary Trafford of QLS,”
apparently asserting Trafford was an employee of defendant Quality Loan Service
Corporation. This is the only hint we have as to the identity of Trafford and his alleged
relevance to this case.
8
Albert also purported to attach copies of Civil Code sections 2924 and
2923.5 (for the proposition that “everything the plaintiffs are complaining about such as
servicer forced defaults, dual tracking and robo-signing will now be expressly illegal on
January 1, 2013”). The record reflects however, that Albert did not attach copies of those
statutes. Furthermore, the court’s November 15, 2012 order observed that robo-signing
was not yet illegal in California.
The court further found that plaintiffs failed to show they suffered any harm
from robo-signing if it did occur, since plaintiffs “readily admit that they have made no
payments on their house since mid-2010, with no plans to make up the deficiency, and as
such have no right to keep the home.” As defendants point out, the “assignment merely
substituted one creditor for another without altering [plaintiffs’] rights or obligations
under their loan agreement.” Moreover, defects in notarization of an assignment of a
deed of trust do not affect its validity as between the parties to it. (Herrera v. Federal
National Mortgage Assn. (2012) 205 Cal. App. 4th 1495, 1510 [“Nothing in the
comprehensive statutory scheme governing nonjudicial foreclosures ([Civ. Code,] §§
2924 through 2924l ) contains a requirement that [an] assignment of [a deed of trust]
must be acknowledged and recorded before [a] foreclosure sale”].)
It was within the trial court’s province to judge the credibility and relevance
4
of Albert’s declaration and the supporting exhibits and to weigh them accordingly.
(Whyte v. Schlage Lock Co., supra, 101 Cal.App.4th at p. 1450.) The court did not abuse
its discretion by finding plaintiffs were unlikely to prevail on the merits.
4
Defendants correctly note the sparse evidence of robo-signing was
inadmissible hearsay, as was much of the material in the Albert declaration.
9
DISPOSITION
The court’s order is affirmed. Defendants shall recover their costs on
appeal.
IKOLA, J.
WE CONCUR:
MOORE, ACTING P. J.
ARONSON, J.
10