Vera v. LoanCare

Background

The lawsuit concerns property in San Jose, California, that was purchased by Amy Vera’s parents in 2005 through a loan secured by a deed of trust. Vera alleged that she became the owner of an undivided 50% interest in the property after the family trust distributed its assets in 2023 and that she became the trust’s sole trustee. The loan later went into default. Defendants recorded a notice of default in November 2022, denied requests for loan forbearance, and foreclosed on the property on June 27, 2023. The property was sold to a third party at a trustee sale.

After the defendants removed the case from state court, the court dismissed the original complaint with leave to amend. Vera then filed the First Amended Complaint as the sole plaintiff. The amended complaint asserted four California-law causes of action: common-law wrongful foreclosure; violations of California Civil Code sections 2923.7 and 2923.6, which are part of the California Homeowner Bill of Rights; and a claim under California Business and Professions Code section 17200, commonly called an unfair-competition or unfair-business-practices claim.

Judicial Notice

The court granted defendants’ request to take judicial notice of recorded public documents concerning the property and LoanCare’s annual reports filed with the California Department of Financial Protection and Innovation. For the annual reports, the court noticed only that the documents had been filed and that their contents existed, not the truth of disputed facts stated in those reports.

Wrongful Foreclosure Claim

The court granted dismissal of the first cause of action without leave to amend. It concluded that Vera had not adequately alleged an illegal, fraudulent, or willfully oppressive foreclosure sale. The alleged failures to provide a single point of contact, avoid dual tracking, properly process a forbearance request, and properly handle an appeal appeared to depend on the Homeowner Bill of Rights claims, which the court separately found insufficient. The court also found that the amended complaint did not allege a tender of the loan amount or an applicable exception to the tender requirement. Finally, it found that Vera had not adequately alleged that the borrower was not in breach or had not failed to perform under the loan.

Because Vera had already amended the complaint once and had not sufficiently identified additional allegations that would cure these defects, the court concluded that further amendment of the wrongful-foreclosure claim would be futile.

Homeowner Bill of Rights Claims

The court granted dismissal of the second and third causes of action with leave to amend. Section 2923.6 addresses dual tracking, and section 2923.7 concerns the requirement that a mortgage servicer establish a single point of contact when a borrower requests a foreclosure-prevention alternative.

The court held that Vera had not plausibly alleged that she was a statutory “borrower.” The loan was taken out by the trustees of the Saipaia Family Trust, while Vera claimed an interest in the property as the trust’s trustee. The court reasoned that a trust is not a natural person and that Vera was not herself the mortgagor or trustor because she did not take out the mortgage or establish the trust. The court also noted that a former statutory provision giving successors in interest rights under the Homeowner Bill of Rights had been repealed in January 2020. Because the borrower requirement was dispositive, the court did not reach defendants’ other arguments concerning these claims.

Unfair-Business-Practices Claim

The fourth cause of action relied on two alleged underlying theories: violations of the Homeowner Bill of Rights and violations of, or failure to comply with, the federal Coronavirus Aid, Relief, and Economic Security Act. The court granted dismissal with leave to amend to the extent the claim was based on alleged Homeowner Bill of Rights violations.

The court denied dismissal to the extent the claim was based on the CARES Act. It explained that defendants’ opening motion did not adequately notify Vera that they were seeking dismissal on the grounds that the CARES Act did not apply to the loan or that it could not serve as the basis for the unfair-business-practices claim. The court declined to consider those arguments because defendants raised them for the first time in their reply brief.

Disposition

Judge Susan Van Keulen ordered that the motion to dismiss the wrongful-foreclosure claim was granted without leave to amend; the motion to dismiss the two Homeowner Bill of Rights claims was granted with leave to amend; and the motion to dismiss the unfair-business-practices claim was granted with leave to amend insofar as it was based on Homeowner Bill of Rights violations and denied insofar as it was based on the CARES Act. Vera could file a Second Amended Complaint by November 26, 2025, with a redline comparing it to the First Amended Complaint.