Disregarding the statutory requirements for relief under the CHBR, district court allows claim to proceed on equitable grounds

In another CHBR case, Bingham v. Ocwen Loan Servicing, LLC, 13-CV-04040-LHK, (N.D. Cal. Apr. 16, 2014) a Northern District of California court held that even where the facts in the complaint showed that relief under the CHBR is unavailable, dismissal was not warranted because there were still equitable considerations to take into account. The mortgagor in that case sought injunctive and monetary relief under Sections 2924.12(a) and (b) of CHBR for the mortgagee’s violation of the CHBR’s dual tracking prohibition. If a trustee’s deed upon sale has been recorded, Section 2924.12(b) provides an action for economic and statutory damages. If a trustee’s deed upon sale has not been recorded, Section 2924.12(a) authorizes injunctive relief. The mortgagee in the case moved to dismiss the complaint on the ground that neither statutory remedy was available to the mortgagor. The mortgagor could not seek injunctive relief because he failed to tender a sum sufficient to cure default. Nor could the mortgagor recover damages under Section 2924.12(b) because the trustee’s deed was not yet recorded. The Court rejected both arguments. It determined that there was no tender requirement for relief under 2924.12(a) and, even though 2924.12(b) authorizes damages for violation of 2923.6 when a trustee’s deed has been recorded, the fact that a trustee’s deed has not been recorded is not an impediment to monetary relief. Disregarding the statute, the Court adopted the reasoning of another court in observing that adopting this tactic would be a perversion of the spirit of the [CHBR]. The mortgagee also argued that because the sale has already taken place, relief under 2924.12(a) amounts to action for wrongful foreclosure. The failure to tender a sum sufficient to cure a default is fatal to a common law wrongful foreclosure claim. The Court disagreed noting that the tender rule may be excused where it would be inequitable to require tender. Further factual development was needed to enable the court to adequately assess the equities. But even at this stage, the court noted there were two factors to suggest that excusing tender would be appropriate. First, requiring tender for injunctive relief at common law could effectively leave Plaintiff with no remedy whatsoever for Defendants’ violation of dual tracking. The Court would likely view this as sufficiently inequitable to excuse tender. Second, in cases where monetary damages are unavailable due to a defendant’s failure to record a trustee’s deed upon sale, requiring full tender would render the mandatory language in Section 2923.6 meaningless, and if no trustee’s deed upon sale is ever recorded, leave homeowners with no remedy at all. Lenders could simply ignore the statute and foreclose upon homeowners who appear unable to tender the full amount of the debt for which the property was security while a loan modification application is still pending.

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