WILLIAM H. ORRICK, District Judge.
This case arises from a defaulted home loan and an unsuccessful attempt at a loan modification after that default. Plaintiff Steve Johnson brings claims against servicer Nationstar Mortgage, LLC, asserting that Nationstar's conduct during the parties' dealings amounted to breach of contract, violations of California law, and negligence. Before me is Nationstar's motion for summary judgment and Johnson's request for leave to amend his complaint, filed after the hearing on the summary judgment motion. The undisputed facts show that Johnson agreed to the clear terms of the trial payment plan and then failed to comply with those terms. The amendment Johnson proposes would be futile. Accordingly, I will grant Nationstar's motion for summary judgment.
In 2007, Johnson purchased the real property located at 170 King Street #1111 in San Francisco, secured by a promissory note in favor of Bank of America, N.A. in the amount of $635,250.00. Request for Judicial Notice ("RJN")
On September 9, 2016, Nationstar sent a letter to Johnson's bankruptcy attorney indicating that it had approved Johnson to enter into a trial payment plan ("TPP") under the Streamline Home Affordable Modification Program ("HAMP").
Johnson called Nationstar on October 31, 2016 to discuss the September letter. Tr. 2, 6. He had received the offer from his attorney over the weekend and was concerned about the October payment. Id. at 6. The Nationstar representative told him that it was "okay" that he had not made the payment yet and that Nationstar could process the payment that day. Id. at 7. The representative also told him that if he did not accept the TPP offer by providing payment, the offer would be cancelled and foreclosure proceedings would begin. Id. at 13, 16.
Johnson provided the Nationstar representative with his Bank of America routing number and checking account number over the phone. Id. at 15. The representative confirmed that Nationstar would process October's payment of $4,135.88 that day. Id. Johnson authorized Nationstar to process his payment, and Nationstar provided him with a confirmation number. Id. at 16-17. In addition, Johnson re-scheduled the payments due in November and December from the first of the month to November 18 and December 7, respectively. Id. at 19-20. The representative explained that Nationstar would "automatically draft" all three payments to the checking account that Johnson had provided, and he gave Johnson confirmation numbers for each transaction. Id. at 20-21. At the end of the call, Johnson confirmed with the representative that if "the successful payments [happened] in October, November, December . . . sometime in January," he would receive a final modification offer. Id. at 24.
On November 10, 2016, Nationstar sent Johnson a letter telling him that the October 31 transaction was returned because there were insufficient funds in his account. Janati Decl. Ex. 4. A December 1, 2016 letter informed Johnson that his November 18 transaction was returned because Johnson had stopped payment on it. Id. Ex. 5; Mohseni Decl. Ex. F, Request for Admission ("RFA") No. 6.
On November 29, 2016, Clear Recon Corporation recorded a Notice of Trustee's Sale on Johnson's property, setting a December 27, 2016 sale. RJN Ex. 10.
Johnson filed this action in state court on June 9, 2017, and Nationstar removed it to federal court on June 27, 2017. Notice of Removal [Dkt. No. 1]; id. Ex. 1 ("Compl.") [Dkt. No. 1-1]. Johnson amended his complaint on August 2, 2017. First Amended Complaint ("FAC") [Dkt. No. 14]. Both the original and first amended complaint asserted five causes of action against Nationstar. See id. On February 9, 2018, I granted in part Nationstar's motion to dismiss, leaving three claims: breach of contract, violation of section 2923.7 of the California Homeowner's Bill of Rights ("HBOR"), and negligence. See Order on Motion to Dismiss ("Order on MTD") [Dkt. No 37]. Finding good cause, I also granted defense counsel's motion to withdraw as attorney for Johnson, who now proceeds pro se. Id. at 2.
Nationstar now moves for summary judgment. Motion for Summary Judgment ("Mot.") [Dkt. No. 58]. Although Johnson timely opposed Nationstar's motion on June 18, two days later he requested leave to amend his opposition, which I granted. See Dkt. Nos. 60, 61, 62. Johnson never filed an amended opposition. I heard argument on July 17, 2019, and at that time I gave Johnson leave to submit relevant portions of the HAMP guidelines as he requested. See Dkt. No. 65. On July 19, he filed a notification of supplemental authorities and request for leave to further amend his complaint. Notice and Request ("Supp. Br.") [Dkt. No. 66].
Summary judgment on a claim or defense is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify "specific facts showing there is a genuine issue for trial." Id. The party opposing summary judgment must then present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
On summary judgment, the Court draws all reasonable factual inferences in favor of the non-movant. Id. at 255. In deciding a motion for summary judgment, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
Nationstar moves for summary judgment on the grounds that the undisputed evidence shows (i) Johnson defaulted on his mortgage loan; (ii) Johnson breached the TPP by failing to make the required payments; (iii) Johnson's default authorized Nationstar to foreclose on his property; (iv) Nationstar appointed Johnson a single point of contact in accordance with § 2923.7; and (v) Nationstar did not breach any duty of care owed to Johnson in processing his TPP or otherwise servicing his loan.
The elements of a cause of action for breach of contract are (i) the existence of the contract, (ii) plaintiff's performance or excuse for nonperformance, (iii) defendant's breach, and (iv) the resulting damages to the plaintiff. Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011). According to the first amended complaint, Johnson's theory is that Nationstar breached the contract by attempting to debit his account twice in November 2016 and by proceeding with non-judicial foreclosure.
Johnson has not presented sufficient evidence to create a triable issue on his breach of contract claim; instead, the undisputed evidence shows that he failed to perform on the terms of the TPP. See Oasis W. Realty, 51 Cal. 4th at 821 (noting that a plaintiff's performance or excuse for nonperformance is an essential element of a contract claim). Nationstar unambiguously set forth the terms of the TPP in the offer letter and during the phone call. The TPP offer letter stated that Nationstar had to "receive[]" each trial payment during the month in which it was due, and accordingly, the first trial payment was due no later than October 31. Offer Letter 1. On the call—which the transcript accurately reflects, according to Johnson —the representative told him that Nationstar could process the first payment "right [then]," to which Johnson replied, "Okay." Tr. 7. The representative explained that the TPP offer would expire if Johnson did not make a payment that day and explicitly stated that Nationstar would "automatically draft [the payment] to the checking account" Johnson provided. Id. at 16, 20.
Despite this correspondence, Johnson maintained during discovery that he believed his payment would be processed "like a normal check," rather than as an automatic transfer of funds. See Depo. 54:4-10; RFA No. 4. When Nationstar debited his account immediately, he believed that Nationstar had been "deceptive" and that it had "mishandled" his good-faith payment, and so he stopped payment on the November transaction. See Depo. 54:18-20; RFA No. 6. Johnson admitted that he had insufficient funds in his account to make the first payment on October 31, but he recalled telling the representative that funds would not be available in his account until November 1. RFA Nos. 5, 6; Interrog. No. 3. According to the transcript, this exchange did not occur. Tr. 19.
Johnson's arguments under the HAMP guidelines do not create a triable issue. Johnson cannot enforce the guidelines against Nationstar because he lacks a standalone right to do so and because he is not a third-party beneficiary of the servicers' agreement. See Woodall v. Wells Fargo & Co., No. 15-cv-05347-JST, 2016 WL 4539499, at *2 (N.D. Cal. Aug. 30, 2016); Hoffman v. Bank of Am., N.A., No. C 10-2171 SI, 2010 U.S. Dist. LEXIS 70455, at *14 (N.D. Cal. June 30, 2010). In addition, he fails to identify provisions where the guidelines in fact impose the requirements and limitations he suggests are present.
Because Johnson, not Nationstar, breached the TPP, Nationstar could not have breached by beginning foreclosure proceedings. Instead, it was entitled to do so under the terms of the TPP and the Deed of Trust. See Offer Letter at 6; Deed of Trust at 13. In his supplemental briefing, Johnson submitted articles describing settlements Nationstar has entered into and fines regulatory boards have ordered it to pay, but these articles are not enough to create a genuine issue of material fact in his case. See Suppl. Br. 2-5. For all of these reasons, summary judgment is appropriate on Johnson's breach of contract claim.
Johnson alleges that by not providing him with a single point of contact, Nationstar violated Section 2923.7 of the California Civil Code. FAC ¶¶ 54-57. The HBOR provides, "When a borrower requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact." Cal. Civ. Code § 2923.7(a). A single point of contact is "an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described in subdivisions (b) to (d)."
Nationstar is entitled to summary judgment on this claim because the undisputed evidence shows that it assigned Johnson an SPOC. Nationstar submitted the letters it sent to Johnson on November 15, 2014, October 8, 2015, and October 24, 2016. Janati Decl. Ex. 6. Each one provided Johnson with the contact information of an updated Dedicated Loan Specialist that Nationstar had assigned to him. Janati Decl. Ex. 6. The first two letters were sent to Johnson's attorney and identified Kristi Berry and then Michael Petrini as Johnson's SPOC. Id. The last letter was sent to Johnson at his property and named Todd Beyersdorf. Id. These letters provided Johnson with the phone extensions and fax numbers of each specialist. Id. The September 2016 letter, which informed Johnson he had been approved for the TPP, also referenced Michael Petrini, his Dedicated Loan Specialist at the time. Offer Letter 1.
These letters show Nationstar complied with its obligation to provide Johnson with an SPOC. See Gilliam v. Bank of Am., N.A., No. 17-cv-01296, 2019 WL 1063399, at *8 (C.D. Cal. Feb. 20, 2019) (granting summary judgment where the borrower presented nothing to undermine the letters the servicer had sent). The letters also demonstrate that Nationstar provided two means for reaching each specialist assigned to him. See Cal. Civ. Code § 2923.7(a) (requiring "one or more direct means of communication").
Neither of Johnson's arguments save this cause of action from summary judgment. First, he contends that Nationstar violated section 2923.7 by assigning new specialists to his account. RFA No. 11. But the statute does not prevent the servicer from replacing the contact over time so long as these changes do not "cause a borrower's account to be insufficiently reviewed or managed." See Hild v. Bank of Am., N.A., No. 14-cv-2126, 2015 WL 1813571, at *7 (C.D. Cal. Apr. 21, 2015). Second, Johnson argues that while Nationstar purported to provide him with an SPOC, it did not assign one "in actuality." Oppo. at 7. Nationstar violated section 2923.7 by giving Johnson "the run around" and "[stonewalling] his loan modification attempts." FAC ¶ 54. Johnson argues that Nationstar has no record of his SPOCs making contact with him and that his SPOCs were never "available" to him. Oppo. 7. In discovery responses, Johnson asserted that his Dedicated Loan Specialists were not available to speak with him and that when he did reach someone, "they could not provide updates, dates, expected decision time frames, nothing." See RFA No. 11; Interrog. pg. 6.
Even if this conduct could constitute a section 2923.7 violation, Johnson submits no evidence to support a finding that these interactions occurred as he says they did.
In addition, for this claim to survive Johnson would have to present evidence that the alleged violation was material, namely that it "affected [his] loan obligations or the modification process." See Morton, 2016 WL 7117041, at *4. Instead, the evidence shows that Johnson was "afforded a meaningful opportunity to obtain . . . an alternative to foreclosure in the form of a loan modification." See Dowling v. Bank of Am., N.A., No. 14-cv-01041, 2017 WL 3284675, at *5 (E.D. Cal. Aug. 2, 2017). Nationstar presents evidence that Johnson made no attempt to communicate with Nationstar after failing to comply with the TPP terms. Janati Decl. ¶¶ 9-12. Nationstar is entitled to summary judgment on this claim.
Under California negligence law, a plaintiff must prove four elements: (i) duty, (ii) breach, (iii) causation, and (iv) damages. Conroy v. Regents of Univ. of Cal., 45 Cal.4th 1244, 1250 (2009). Johnson asserts in his complaint that as his loan servicer, Nationstar owed him a duty to exercise reasonable care in processing and reviewing his loan application. FAC ¶ 60. Nationstar allegedly breached that duty by "(1) failing to review Plaintiff's loan modification application in a timely manner; (2) failing to provide Plaintiff with a good faith review of their loan modification application; (3) approving Plaintiff for a Trial Modification, but refusing to provide a permanent loan modification; and (4) initiating and continuing foreclosure in violation of public policy and statutory restrictions on foreclosures." Id. ¶ 61.
As I have noted previously, there is a common law duty to exercise reasonable care in the processing of a borrower's application for a loan modification. Order on MTD 9. Accordingly, Nationstar does not assert that it owed no duty of care to Johnson. Mot. 11. Instead, Nationstar argues that summary judgment is appropriate because it did not breach any duty to Johnson by refusing to provide a permanent loan modification despite approving him for a trial modification. Id. at 12. In addition, Johnson's allegation that foreclosure was a violation of "public policy and statutory restrictions" is conclusory. Id.
Johnson has provided no evidence that would allow a jury to find in his favor on the negligence claim. His first two theories of breach—that Nationstar failed to review his loan modification application in a timely or good faith manner—have no factual basis because Johnson did not submit a loan modification application. See FAC ¶¶ 21, 56.
In his opposition, Johnson implies that Nationstar violated "statutory restrictions and public policy" by resuming foreclosure proceedings in alleged violation of HAMP guidelines. Oppo. 8. Johnson argues that before his loan was transferred from Bank of America to Nationstar for servicing, Bank of America approved Johnson for a loan modification. Id. Johnson contends that after the transfer Nationstar was "obligated to honor that modification" in keeping with "HAMP federal guidelines." Id. However, Johnson did not allege this fact in his complaint, nor has he submitted any evidence of a prior approval by Bank of America.
Because Johnson has no viable theory of negligence nor any evidence to support his allegations, Nationstar is entitled to summary judgment on this claim.
Johnson has requested leave to file an amended complaint to research the "relationship between Washington's Outrage Statute and California's Intentional Infliction of Emotional Distress Statute as well as research into a False and Deceptive Business Claim [and] Promissory Estoppel."
Federal Rule of Civil Procedure 15 dictates that "[t]he court should freely give leave [to amend] when justice so requires." Fed. R. Civ. P. 15(a)(2). "Courts consider five factors when deciding whether to grant a motion for leave to amend pursuant to Rule 15: (i) bad faith on the part of the movant; (ii) undue delay in filing the motion; (iii) prejudice to the opposing party; (iv) futility of amendment; and (v) whether the plaintiff has previously amended the complaint." Victor v. R.C. Bigelow, Inc., No. 13-cv-02976-WHO, 2015 WL 4104609, at *1 (N.D. Cal. July 7, 2015). "Above all, in exercising its discretion, the court `must be guided by the underlying purpose of Rule 15—to facilitate decision on the merits, rather than on the pleadings or technicalities.'" Castillo-Antonio v. Mejia, No. 14-cv-03637-JSC, 2014 WL 6735523, at *1 (N.D. Cal. Nov. 26, 2014).
It would be futile to allow Johnson to amend his Complaint to assert these claims. First, there is no reason why the Washington common law tort of outrage should apply to this case, in which a California resident alleges an injury that occurred in California in connection with a piece of property in California. Second, over the past two years of overseeing this case, I have heard no suggestion of any conduct by Nationstar that "exceed[ed] all bounds of that usually tolerated in a civilized community" that would form the basis for an IIED claim. See Miller v. Fortune Commercial Corp., 15 Cal. App. 5th 214, 228-29 (2017) (citation omitted). Third, although Johnson does not cite a statute for his "False and Deceptive Business Claim," I already dismissed Johnson's claim under California Business and Professions Code section 17200 after agreeing with Nationstar that Johnson's default, not Nationstar's alleged unlawful acts, caused his economic harm. See Order on MTD 11. I am aware of no other California law under which the fact of this case could possibly fit. Fourth, the facts do not support a promissory estoppel claim because the only "clear and unambiguous" promise Nationstar made to Johnson was laid out in the letter and call transcript. See Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 792 (9th Cir. 2012); see also Alvarez v. Nationstar, 2017 WL 1153029, at *3 (N.D. Cal. March 28, 2017) (dismissing the promissory estoppel claim because Nationstar had only vaguely promised that it would provide a "good faith" review of the loan modification application). In addition, the timing of the motion, coming after the hearing on Nationstar's motion for summary judgment, strongly counsels against allowing Johnson to amend.
For the reasons set forth above, Johnson's request for leave to amend his complaint is DENIED, and Nationstar's motion for summary judgment is GRANTED. Judgment shall be entered accordingly.
