The opinion
Filed 7/28/23 Urani v. PNC Bank CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
CATHERINE URANI,
Plaintiff and Appellant, A161438
v.
PNC BANK, N.A., (Contra Costa County
Super. Ct. No. MSC1902430)
Defendant and Respondent.
Catherine Urani appeals from the entry of judgment on her
complaint for violations of the Homeowner Bill of Rights (Civ.
Code, §§ 2923.6, 2923.7)1 and related claims. Urani claimed that
PNC Bank, N.A., violated the statute by mishandling her
application for a loan modification. The trial court concluded
Urani failed to allege a material violation of the statute, and it
sustained PNC’s demurrer. We reverse as to the Homeowner Bill
of Rights claims and affirm as to the remaining causes of action.
BACKGROUND
A.
The Homeowner Bill of Rights is designed to ensure that,
as part of the nonjudicial foreclosure process, a mortgage servicer
meaningfully considers the borrower’s suitability for any
1 Undesignated statutory references are to the Civil Code.
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available loss mitigation options that the servicer offers, such as
a loan modification. (§ 2923.4.) While the statute does not give
borrowers a right to obtain any particular option (ibid.), it does
impose procedures that the servicer must follow.
For material violations of specified provisions, the statute
authorizes preforeclosure injunctive relief (§ 2924.12, subd.
(a)(1)), postforeclosure claims for actual economic damages (and
additional damages for more egregious violations) (§ 2924.12,
subd. (b)), and attorney fees and costs for prevailing claimants
(§ 2924.12, subd. (h)). Any preforeclosure injunctive relief shall
remain in place until the court determines that the violations
have been corrected and remedied. (§ 2924.12, subd. (a)(2).)
B.
In her operative complaint, Urani alleged that PNC
serviced the mortgage loan on her home. As explained in more
detail below, when she applied for a loan modification, PNC
violated the Homeowner Bill of Rights by pursuing foreclosure
while her application was pending (a practice known as dual
tracking), by assigning a single point of contact who failed to
perform her duties under the statute, and by failing to provide a
written list of reasons for denying her application. Although a
trustee’s sale was scheduled for November 2019, it apparently did
not take place.
Urani sued under the Homeowner Bill of Rights to enjoin
the sale. She also brought claims for negligence and unfair
competition (Bus. & Prof. Code, § 17200 et seq.).
PNC demurred. Among other grounds, it argued Urani
failed to allege any material violation of the Homeowner Bill of
Rights and failed to allege standing under the unfair competition
law because she did not clearly allege she qualified for a loan
modification and the trustee’s sale had not proceeded. The trial
court sustained PNC’s demurrer with leave to amend. After
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Urani waived the opportunity to amend, the court sustained the
demurrer without leave to amend and dismissed the case.
DISCUSSION
A.
PNC contends this appeal is moot. We disagree.
A case is moot when the decision of the reviewing court can
have no practical impact or provide the parties with any effectual
relief. (MHC Operating Limited Partnership v. City of San Jose
(2003) 106 Cal.App.4th 204, 214.) Generally, the burden of
persuasion is on the respondent. (Parkford Owners for a Better
Community v. County of Placer (2020) 54 Cal.App.5th 714, 721.)
Citing section 2924.12, PNC claims the matter is moot
because there are no pending foreclosure proceedings against
Urani’s property and the only available preforeclosure relief is an
injunction to stop the trustee’s sale. Urani concedes the 2019
sale was cancelled, with no new notice of default or notice of sale
recorded since then. Still, she urges that her account remains in
default with no foreclosure prevention alternatives in place, and
nothing prevents PNC from restarting the foreclosure process.
PNC acknowledges that Urani was not approved for a loan
modification and that foreclosure could begin anew with the
recording of a new notice of trustee’s sale.
We turn to the statute to see if Urani can obtain relief. An
injunction is authorized when “a trustee’s deed upon sale has not
been recorded.” (§ 2924.12, subd. (a)(1).) Any injunction shall
remain in place “and any trustee’s sale shall be enjoined” until
material violations are corrected and remedied. (§ 2924.12, subd.
(a)(2), italics added.) These provisions make it clear that an
injunction may issue with or without a particular trustee’s sale
on notice. The statute authorizes a motion to dissolve an
injunction “based on a showing that the material violation has
been corrected and remedied” (§ 2924.12, subd. (a)(2))—not
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merely because a notice of default expired or a scheduled sale
was cancelled. The preforeclosure relief authorized by the statute
could still aid Urani, so her appeal is not moot.
Finally, PNC contends that there are no material violations
to support an injunction, and it corrected any technical violations.
These issues are intertwined with the merits of Urani’s appeal, to
which we turn now.
B.
Urani contends the trial court applied the wrong standard
and erroneously held she alleged no material violations of the
Homeowner Bill of Rights. We agree.
1.
We review an order sustaining a demurrer de novo,
exercising our independent judgment as to whether, as a matter
of law, the complaint states a cause of action on any available
legal theory. (Churchman v. Bay Area Rapid Transit Dist. (2019)
39 Cal.App.5th 246, 249.) We assume the truth of all material
factual allegations together with those matters subject to judicial
notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
2.
There is not much dispute that Urani alleged PNC
committed procedural violations of the statute during the
modification process. We see at least three.
First, when a complete application for loan modification is
pending, the servicer may not record a notice of default or a
notice of sale until the servicer provides written denial of the
application and gives the borrower at least 30 days to appeal.
(Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th
279, 311 (Morris); § 2923.6, subds. (c)(1), (d).)
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Urani alleged that when she applied for a modification in
the spring of 2019, PNC denied her application, supposedly
because she had not submitted all needed information. Her
single point of contact explained PNC did not have a particular
deed it had not previously requested and said Urani could re-
apply due to the mix-up. Urani applied again. PNC asked her to
provide another newly requested deed by October 3, 2019. Her
husband emailed a copy of the deed on September 20, at which
point the application was complete. But the trustee recorded a
notice of sale on September 26, about a month before PNC denied
Urani’s application in late October.
These allegations describe dual tracking, a violation of
section 2923.6. Urani alleged PNC allowed a notice of sale to be
recorded while her complete application was still pending.
Second, the servicer must establish a single point of contact
responsible for ensuring the borrower is considered for available
foreclosure alternatives (§ 2923.7, subd. (b)(4)), communicating
the application process and deadlines (§ 2923.7, subd. (b)(1)), and
coordinating receipt of the application documents while notifying
the borrower of missing items (§ 2923.7, subd. (b)(2)). The
contact must have access to current information and personnel
sufficient to timely, accurately, and adequately inform the
borrower of her status (§ 2923.7, subd. (b)(3)) and to individuals
empowered to stop the foreclosure process when necessary
(§ 2923.7, subd. (b)(5)).
Building on her dual tracking theory, Urani alleged her
single point of contact failed to notify her of documents missing
from her applications and lacked access to colleagues who could
stop the foreclosure proceedings while her application was still
pending. These allegations describe another violation of the
statute.
Finally, the servicer must send a written notice to the
borrower giving the reasons for denial and instructing her how to
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appeal. (§ 2923.6, subd. (f).) This is important because the
servicer’s reasoning could provide grounds for an appeal. Here,
Urani alleged that PNC’s denial letter merely told her to contact
her representative for a statement of reasons. She thus alleged
PNC failed to explain its determination in writing as required by
the statute.
3.
PNC primarily contends any “technical” violation Urani
alleged was not material. The parties generally agree that a
material violation is one that affected the borrower’s loan
obligations, disrupted the loan modification process, or otherwise
harmed the borrower in her efforts to be considered for a loss
mitigation option. (Morris, supra, 78 Cal.App.5th at pp. 304–305
& fn. 14.)
Urani alleged that here. She pled that if her application
were adequately reviewed, it would have been approved, “or at
the very least, she would better know her options and have been
able to pursue other foreclosure prevention alternatives” at an
earlier time. These are not bare conclusions or contradictions,
but alternative theories of materiality. (See Crowley v. Katleman
(1994) 8 Cal.4th 666, 690–691 [recognizing modern practice of
pleading alternative factual or legal theories when in doubt as to
which is most accurate].) They are similar to allegations found
adequate in Morris and other California authorities on the theory
that the modification process was disrupted.2 (See Morris, supra,
78 Cal.App.5th at pp. 311–313; Berman v. HSBC Bank USA, N.A.
2 PNC’s discussion of federal authorities ignores “that
federal district judges have more latitude to dismiss claims at the
pleading stage . . . than California trial judges have under our
traditional notice pleading standards.” (Morris, supra, 78
Cal.App.5th at p. 304, fn. 14.) For this reason, PNC’s federal
authorities do not support dismissing Urani’s claims.
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(2017) 11 Cal.App.5th 465, 472–474 (Berman); Potocki v. Wells
Fargo Bank, N.A. (2019) 38 Cal.App.5th 566, 570–571.)
Like the trial court, PNC deems materiality lacking
because Urani did not unequivocally allege she qualified for a
modification and admits her application was ultimately denied.
But Urani alleged PNC repeatedly miscommunicated about her
application, allowed a trustee’s sale to be noticed while it was
pending, and denied it weeks later without explanation. This
disrupted the modification process, whether or not Urani was
ultimately entitled to a modification. (See Berman, supra, 11
Cal.App.5th at p. 474; Morris, supra, 78 Cal.App.5th at pp. 311–
313.) The bare fact that PNC denied Urani’s application does not
show it reviewed the complete application in good faith; the dual
tracking and other alleged mistakes suggest it did not. Moreover,
had PNC provided Urani its reasons for denying the application,
she might have been able to pursue a successful appeal. The
complaint alleges material violations of the statute.
4.
On a similar note, PNC argues it corrected and remedied
any violations by postponing the sale until it denied Urani’s
application. (See § 2924.12, subd. (c); Schmidt v. Citibank, N.A.
(2018) 28 Cal.App.5th 1109, 1115.)
PNC relies primarily on Billesbach v. Specialized Loan
Servicing LLC (2021) 63 Cal.App.5th 830 to support this
argument. But Billesbach was decided on summary judgment,
based on evidence that the loan servicer postponed the
foreclosure sale, provided a single point of contact, communicated
with the borrower about foreclosure alternatives, fully considered
his application, and offered him a trial-period modification plan.
(Id. at pp. 837, 846.) Based on this evidence, the court of appeal
found the statute’s purpose to ensure that borrowers have a
meaningful opportunity to obtain loss mitigation options was
satisfied. (Id. at p. 846.)
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As already discussed, nothing like that is alleged here. The
bare fact that PNC denied Urani’s application does not show the
alleged violations were corrected and the statute’s purpose was
satisfied.
C.
Finally, the trial court found that Urani failed to allege
negligence and unfair competition. Urani does not address the
negligence claim in her briefing. And she defends the unfair
competition claim only by arguing she adequately pled her
underlying Homeowner Bill of Rights claims, failing to squarely
address the trial court’s ruling that she did not allege standing
under the unfair competition law. Urani has thus abandoned
these claims on appeal. (See Behr v. Redmond (2011) 193
Cal.App.4th 517, 538.)
DISPOSITION
The judgment of dismissal is reversed. The order
sustaining PNC’s demurrer is reversed as to the first and second
causes of action under the Homeowner Bill of Rights; we affirm
as to the remaining claims. PNC shall bear Urani’s costs on
appeal.
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______________________
BURNS, J.
We concur:
____________________________
JACKSON, P.J.
____________________________
SIMONS, J.
A161438
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