Date: 11-11-2018

Case Style: David Schmidt v. Citibank, N.A.

Case Number: D072993

Judge: Aaron

Court: California Court of Appeals Fourth Appellate District, Division One on appeal from the Superior Court, County of San Diego

Plaintiff's Attorney: Stephen F. Lopez

Defendant's Attorney: Gwen H. Ribar, Jonathan D. Fink and Ruby J. Chavez

Description: 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
2
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
3
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.
4
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."
5
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.
6
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.
7
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.
8
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
9
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
10
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.
11
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.)
12
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
13
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
14
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
15
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
16
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"];
17
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
18
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
19
[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
20
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
22
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.

Outcome: The judgment of the trial court is affirmed. The defendants are entitled to their
costs on appeal.

Plaintiff's Experts:

Defendant's Experts:

Comments: