Filed 5/31/16 Walker v. PennyMac Loan Services CA1/3
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 THREE


ART WALKER,
         Plaintiff and Appellant,
                                                                     A142849
v.
PENNYMAC LOAN SERVICES, LLC,                                         (City & County of San Francisco
                                                                     Super. Ct. No. CGC13532110)
         Defendant and Respondent.

         Art Walker appeals after the court sustained demurrers to his complaint for
damages arising from a non-judicial foreclosure sale of his home. The nub of his
allegations is that the bank foreclosed even though he made all of his loan payments on
time and prevented him from reinstating the loan before the sale by refusing to provide
him an accurate reinstatement figure. The complaint sufficiently alleges causes of action
for breach of contract and wrongful foreclosure, so we reverse as to those causes of
action. Other issues that were not addressed in Walker’s opening appellate brief
concerning Civil Code section 2924, subdivision (a)(1)(C),1 false light, and unfair
business practices, are abandoned.
                                                 BACKGROUND
         Because this appeal challenges an order sustaining a demurrer, we draw the
relevant facts from the complaint and documents subject to judicial notice. (Adams v.
Paul (1995) 11 Cal.4th 583, 586; Hamilton v. Greenwich Investors XXVI, LLC (2011)
195 Cal.App.4th 1602, 1608–1609 (Hamilton).)

         1
             Further statutory citations are to the Civil Code.
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                                        I. The Complaint
         Walker refinanced his home in November 2006. Defendant PennyMac Loan
Services, LLC (PennyMac)2 subsequently became the beneficiary of the loan, assumed
servicing the loan and the rights and obligations under the promissory note and deed of
trust.
         As alleged in the operative second amended complaint, PennyMac “recorded a
Notice of Default when Plaintiff was not late on his payments.” (Italics in original)
Walker alleged he made monthly mortgage payments of $3,751.56 every month between
November 2006 and December 2011. He received notices that the amount of his monthly
payments was lowered in January 2012 $2,526.56 and again in July 2012 to $1.914.06.
Walker made those payments through July 2012.
         In June 2012, PennyMac notified Walker that his loan was in default “for his
February 2012 payment, as well as every payment since June 2012.” Walker checked his
statement and saw that since February 2012 none of his payments had been applied to his
account. When he called PennyMac, he was told his payments were not being applied to
his account because they were instead first applied to late charges PennyMac said he had
incurred. Walker unsuccessfully told PennyMac this was incorrect and that his payments
should be applied to his account.
         Walker did not receive his usual monthly mortgage statement in August, so he
called PennyMac and attempted to make a payment. PennyMac said his loan was in
default, so they would no longer accept his payments. In September PennyMac recorded
a notice of default that said Walker had failed to make monthly payments since March
and was in default for $16,139.34. Walker again contacted PennyMac to try to resolve
the dispute, but “after many phone calls throughout September 2012 through February
2013, he was unable to speak with anyone at PennyMac to determine the [amount]


         2
        The complaint names Pnmac Mortage Opportunity Fund Investors, LLC as an
additional defendant and alleges it assumed the ownership of his loan. Because any
differences between the two entities are not relevant to the issues raised on appeal, for
simplicity’s sake we will refer to both entities as PennyMac.
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actually due on his mortgage.” He finally received a reinstatement quote from PennyMac
in February, but the quote was inaccurate “in that it demanded payment for the months of
March 2012 through July 2012, months in which [Walker] had made his mortgage
payment.” (Italics added.) Walker tried to contact PennyMac to determine the correct
reinstatement figure and advise PennyMac that he had already made his payments for
March through July, but PennyMac refused to discuss it with him and continued to
demand payment.
       In April 2013 PennyMac recorded a notice of trustee’s sale. Walker continued
trying to obtain an accurate reinstatement quote throughout that month, but PennyMac
refused to comply. A friend of his attended the May 6, 2013 Trustee’s sale “with enough
cash to either reinstate the loan or purchase the property for the loan amount,” but
PennyMac refused to accept the offer and sold the property to third parties.
       The cause of action for breach of contract alleged PennyMac breached the terms
of the note by misapplying Walker’s February through July 2012 mortgage payments to
late charges before interest and principle. A cause of action for wrongful foreclosure
alleged the notice of default incorrectly stated Walker was in default as of March 1, 2012,
although he had made his payments for March through July; that PennyMac’s arrearage
figure “was an inaccurate amount, inflated with late fees and attorneys’ fees, for months
in which Plaintiff was not late;” and that “from September 2012 through May 2013,
Defendants continued to provide Plaintiff with an inaccurate reinstatement quote, which
demanded that Plaintiff tender monies for months in which Plaintiff was not in default,”
thereby interfering with his statutory right to reinstate his loan prior to the sale. Walker
was, “at all times, ready, willing and able to reinstate the loan” but PennyMac “refused
Plaintiff’s attempts and continued to demand an inaccurate reinstatement amount.”
                                        II. The Demurrers
       Walker filed the initial complaint in June 2013 and a first amended complaint in
November 2013. The amended pleading alleged causes of action for breach of contract,
wrongful foreclosure, false light and unfair competition but omitted a cause of action for
quiet title that appeared in the original pleading. PennyMac filed a demurrer, which was

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sustained as to the causes of action for breach of contract, wrongful foreclosure and false
light.
         When Walker filed a second amended complaint (the complaint), PennyMac
demurred again. This time the court sustained the demurrer without leave to amend and
dismissed the action with prejudice. Its written order stated: “Plaintiff fails to allege an
actionable breach of contract; facts asserted in the complaint do not support [the]
allegation of breach of paragraph 2 of the Deed of Trust. Cause of action for false light is
barred by the statute of limitations. . . . Plaintiff fails to allege tender. Plaintiff did [not]
provide any facts that may be alleged to amend the complaint.”
          Walker appealed from the order on August 14, 2014. Although the record does
not include a judgment of dismissal, in the interest of expediency we will construe the
appeal as from a final judgment. (See McAllister v. County of Monterey (2007) 147
Cal.App.4th 253, 278.)
                                        DISCUSSION
                                   I. Standards of Review
         We review an order sustaining a demurrer de novo to determine whether the
complaint states facts sufficient to constitute a cause of action. (Bower v. AT&T
Mobility, LLC (2011) 196 Cal.App.4th 1545, 1552; Stanton Road Associates v. Pacific
Employers Ins. Co. (1995) 36 Cal.App.4th 333, 340 (Stanton Road).) We construe the
complaint liberally, treating it “ ‘ “as admitting all material facts properly pleaded, but
not contentions, deductions or conclusions of fact or law. [Citation.] We also consider
matters which may be judicially noticed.” [Citation.] Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in their context. . . .’ ”
(Stanton Road, supra, 36 Cal.App.4th at pp. 340–341; Jager v. County of Alameda
(1992) 8 Cal.App.4th 294, 296–297.) When a demurrer is sustained without leave to
amend, “we decide whether there is a reasonable possibility that the defect can be cured
by amendment: if it can be, the trial court has abused its discretion and we reverse; if not,
there has been no abuse of discretion and we affirm. [Citations.] The burden of proving


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such reasonable possibility is squarely on the plaintiff.’ [Citations.]” (Stanton Road,
supra, at p. 341.)
                                        II. Analysis
                                    A. Breach of Contract
       According to the complaint, PennyMac misapplied Walker’s February through
July 2012 mortgage payments to late charges instead of interest and principle. Walker
alleged this was a breach of section 2 of the deed of trust (appended to the complaint)
which in part stated that “ ‘all payments accepted and applied by Lender shall be applied
in the following order of priority: (a) interest due under the Note; (b) principal due under
the Note. . . . Such payments shall be applied to each Periodic Payment in the order in
which it became due. Any remaining amounts shall be applied first to late charges,
second to any other amounts due under this Security Instrument, and then to reduce the
principal balance of the Note.’ ”
       But, as PennyMac observes, the complaint omitted material language from section
2. Specifically, the passage quoted by Walker is qualified by the immediately preceding
phrase, “Except as otherwise described in this Section 2. . . .” (Italics added.) Then,
directly following the quoted language, section 2 goes on to provide: “if Lender receives
a payment from Borrower for a delinquent Periodic Payment which includes a sufficient
amount to pay any late charge due, the payment may be applied to the delinquent
payment and the late charge. If more than one Periodic Payment is outstanding, Lender
may apply any payment received from Borrower to the repayment of the periodic
Payments if, and to the extent that, each payment can be paid in full. To the extent that
any excess exists after the payment is applied to the full payment of one or more Periodic
Payments, such excess may be applied to any late charges due.” PennyMac argues that,
taking section 2 as a whole, Walker failed to allege a breach of contract because his
payments “very well may have been applied to outstanding payments and corresponding
late charges” as authorized by the language omitted from the complaint.
       As a factual matter, that might be the case. Or, it might not. The difficulty with
PennyMac’s argument is that this is a demurrer, and PennyMac’s argument turns on a

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question of fact. The question is not whether Walker can prove a breach of contract, but
whether his allegations, liberally construed, are sufficient to constitute the cause of
action. We think his allegations get over that hurdle. The complaint, read as a whole and
liberally construed, alleges that Walker was not late on his payments; that he made them
every month in an amount instructed by PennyMac; that the loan was current as of
December 2011; and that he thereafter continued to make his payments in the correct
amounts until PennyMac told him in July 2012 that it would no longer accept them.
       For purposes of a demurrer, these allegations support a reasonable inference that
PennyMac applied Walker’s payments to purported late charges that he had not incurred,
rather than to interest and principal, in breach of the deed of trust. “ ‘Ordinarily, a
general demurrer should not be sustained unless the complaint liberally construed fails to
state a cause of action on any theory. [Citations.] Material facts alleged in the complaint
are treated as true for the purpose of ruling on the demurrer. [Citation.] Also taken as
true are facts that may be implied or inferred from those expressly alleged. . . . In short,
the ruling on a demurrer determines a legal issue on the basis of assumed facts, i.e., all
those material, issuable facts properly pleaded in the complaint, regardless of whether
they ultimately prove to be true. The complaint will ordinarily be upheld even though the
facts are not clearly stated, or are intermingled with a statement of irrelevant facts.’ ”
(State of California ex rel. Bowen v. Bank of America Corp. (2005) 126 Cal.App.4th 225,
239–240.) The complaint could certainly have been clearer, but it is sufficient to state a
cause of action for breach of contract.
                                  B. Wrongful Foreclosure
       The cause of action for wrongful foreclosure rests on closely related factual
assertions. As noted, the complaint alleges that from the initial notice of default through
May 2013, PennyMac persisted in giving Walker an inaccurate quote for the amount
necessary to cure his purported default. Walker alleged he made numerous attempts to
obtain an accurate reinstatement figure and was at all times ready, willing and able to
reinstate his loan, but PennyMac’s refusal to comply prevented him from doing so.


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        Mortgage lenders have a statutory duty to provide accurate information to a
defaulting borrower who requests information concerning the amount necessary to
exercise its right to cure the default and reinstate the loan by paying the amount owed. 3
(§ 2924c subds. (a)(1), (e); Anderson v. Heart Federal Savings (1989) 208 Cal.App.3d
202, 215–217 (Anderson); Susilo v. Wells Fargo Bank, N.A. (C.D. Cal. 2011) 796
F.Supp.2d 1177, 1187–1188; In re Tome (Bankr. C.D. Cal. 1990) 113 B.R. 626, 636.).
“The obligation of the [lender] to provide the [borrower] with an accurate accounting of
the amounts due to cure a default is governed by statute. Section 2924 specifies that a
copy of the notice of default must be sent to the [borrower] together with ‘the statement
specified in paragraph (1) of subdivision (b) of Section 2924c’ that the [borrower] may
have the ‘legal right to bring your account in good standing by paying all of your past due
payments plus permitted costs and expenses within the time permitted by law’ and
informs him that: ‘This amount is __________ as of (date). . . .’ ” (Anderson, supra, 208
Cal.App.3d at p. 215.) The notice of default must include the name, mailing address and
telephone number the borrower can use to find out “the amount you must pay, or to
arrange for payment to stop the foreclosure. . . .” (§ 2924c, subd.(b)(1), italics added.)
“Compliance with this provision necessarily requires that the beneficiary provide
accurate information in response to an inquiry by the trustor.” (Anderson, supra, at p.
216.)
        PennyMac does not directly address Walker’s claim that he could and would have
reinstated the loan pursuant to section 2924c but for PennyMac’s refusal to tell him the
amount actually owed. Instead, PennyMac alludes to Walker’s allegation that his friend
unsuccessfully attempted to reinstate the loan or purchase the property at the trustee’s
sale. True, the right to reinstate lapsed five days before the sale (§2924c, subd. (e)), so
his friend’s alleged offer was of no effect. But that ineffective offer has no bearing on
Walker’s distinct allegation that PennyMac prevented him from reinstating his loan

        3
        To be clear, the statutory reinstatement amount does not include “the portion of
principal as would not then be due had no default occurred.” (§ 2924c, subd. (a)(1)(C);
see Miller & Starr, California Real Estate (4th ed. 2015) § 13:230, pp. 13-18 – 13-20.)
                                              7
during the statutory reinstatement period by refusing to provide him an accurate
reinstatement figure.
       PennyMac argues, in essence, that its compliance with section 2924c was good
enough, even if it quoted the wrong reinstatement amount, because Walker was on notice
of the default and “does not allege he suffered prejudice as a result of the purportedly
deficient notice.” Not so. The complaint plainly alleges that Walker was ready, able and
willing to reinstate, and that he would have done so had PennyMac given him an accurate
figure. Assuming the truth of those allegations, prejudice is obvious. PennyMac also
suggests it was Walker’s obligation to dispute the allegedly inaccurate reinstatement
figure by “us[ing] the legal process to attempt to halt the foreclosure sale or pay the
reinstatement and work with or sue PennyMac to recover the overpayment.” Not so.
Section 2924c places the burden on the lender to notify the borrower of the amount
required for reinstatement. (§ 2924c, subd. (b)(1); Anderson, supra, 208 Cal.App.3d at p.
216.) “Because nonjudicial foreclosure is a ‘drastic sanction’ and a ‘draconian remedy’
[citation], ‘ “[t]he statutory requirements must be strictly complied with.” (Ung v.
Koehler (2005) 135 Cal.App.4th 186, 202–203.) By no measure is sending out an
incorrect dollar figure and leaving it to the borrower to pay an incorrect amount and fight
it out in court adequate compliance with the statute.
                                           C. Tender
       PennyMac contends the trial court properly sustained the demurrer as to all causes
of action because the complaint fails to allege that Walker tendered the amount of the
secured indebtedness. Here too, we disagree.
        “A power of sale in a deed of trust is a creature of contract, arising from the
parties’ agreement. . . . As is typical, the deed of trust . . . allows the beneficiary to
exercise its power of sale only if an ‘event of default’ occurs.” (Bank of America., N.A. v.
La Jolla Group II (2005) 129 Cal.App.4th 706, 712.) Here, the breach of contract claim
alleged, in effect, that there was no default triggering PennyMac’s right to foreclose
under the deed of trust. If there was no default, PennyMac had no right to foreclose on
Walker’s property, the trustee’s sale was void, and, under settled law, no tender was

                                                8
required. (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4th 1001, 1016–
1017; see also Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941,
951–952 (Alvarez) [tender not required where borrowers alleged lenders negligently
failed to process applications for loan modification]; Menan v. U.S. Bank Nat. Ass’n
(E.D. Cal. 2013) 924 F.Supp.2d 1151, 1160 [“The law does not require plaintiff to tender
the purchase price to a trustee who has no right to sell the property at all”].)
       We are also unpersuaded that the tender requirement applies to Walker’s claim
that PennyMac interfered with his right of reinstatement under section 2924c. Mabry v.
Superior Court (2010) 185 Cal.App.4th 208 (Mabry) is instructive. The borrower there
alleged that its lender breached its duty under section 2923.5 to contact the borrower to
explore options for preventing foreclosure before filing notice of default. The court held
the borrower was not required to tender the full amount of indebtedness before
challenging the foreclosure on that ground. It explained: “Case law requiring payment or
tender of the full amount of payment before any foreclosure sale can be postponed (e.g.,
Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 578 . . . [‘It is settled
that an action to set aside a trustee’s sale for irregularities in sale notice or procedure
should be accompanied by an offer to pay the full amount of the debt for which the
property was security.’]) arises out of a paradigm where by definition, there is no way
that a foreclosure sale can be avoided absent payment of all the indebtedness. Any
irregularities in the sale would necessarily be harmless to the borrower if there was no
full tender. [Citation.] By contrast, the whole point of section 2923.5 is to create a new,
even if limited, right to be contacted about the possibility of alternatives to full payment
of arrearages. It would be contradictory to thwart the very operation of the statute if
enforcement were predicated on full tender.” (Mabry, supra, 185 Cal.App.4th at p. 225.)
       Here, it would be equally nonsensical to require a borrower who alleges the lender
illegally interfered with his statutory right to reinstate his loan by paying the amounts
then in default to tender the full amount of his indebtedness. By parity of reasoning, we
likewise decline to undermine the right protected in section 2924c, by contorting the
tender rule, generally applied in actions to set aside a trustee’s sale for irregularities in

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sale notice or procedure (Alvarez v. BAC Home Loans Servicing, L.P., supra, 228
Cal.App.4th at p. 951), to apply to claims alleging a violation of section 2924c.
                                  D. Remaining Causes of Action
       “Courts will ordinarily treat the appellant's failure to raise an issue in his or her
opening brief as a waiver of that challenge.” (Paulus v. Bob Lynch Ford, Inc. (2006) 139
Cal. App. 4th 659, 685.) Walker’s opening brief includes no argument concerning the
rulings on his causes of action for false light or, although referenced in the brief’s “Issues
Presented” section, unfair competition. Nor does it present a legal argument as to a
theory of wrongful foreclosure based on section 2924, subdivision (a)(1)(C).
Accordingly, we deem him to have forfeited any challenge to the rulings on those points.
“Issues do not have a life of their own: if they are not raised or supported by argument or
citation to authority, we consider the issues waived.” (Jones v. Superior Court (1994) 26
Cal.App.4th 92, 99.)
                                          DISPOSITION
       The order and judgment on demurrer are reversed as to the causes of action for
breach of contract and wrongful foreclosure in violation of section 2924c. In all other
respects the judgment is affirmed. Walker is entitled to costs on appeal. (Cal. Rules of
Court, rule 8.278.)




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                                   _________________________
                                   Siggins, J.




We concur:




_________________________
McGuiness, P.J.




_________________________
Pollak, J.




Walker v. PennyMac, A142849

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