Matthew D. Mellen (Bar No.
233350)
Duncan McGee Nefcy (Bar No. 315142)
MELLEN LAW FIRM
One Embarcadero Center, Fifth Floor
San Francisco, CA 94111
Telephone: (415) 315-1653
Facsimile: (415) 276-1902
Attorney for Plaintiffs,
GUILLERMINA GARCIA-BARRERA
ROGELIO BARRERA
SUPERIOR COURT OF THE STATE OF CALIFORNIA
SANTA CLARA COUNTY
GUILLERMINA GARCIA-BARRERA, an Case No.: 17CV317925
individual; ROGELIO BARRERA, an
individual; PLAINTIFFS’ OPPOSITION TO
DEFENDANT WELLS FARGO’S
Plaintiff, DEMURRER TO THE FIRST
AMENDED COMPLAINT
v.
WELLS FARGO BANK, N.A., a business Date: August 9, 2018
entity; CLEAR RECON CORP., a business Time: 9:00AM
entity; And Does 1 through 100, inclusive, Dept: 9
Defendants.
Action Filed October 23, 2017
Trial Date None Set
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
I. INTRODUCTION
In the case at hand, Plaintiffs GUILLERMINA GARCIA-BARRERA and ROGELIO
BARRERA (“Plaintiffs”) are facing the foreclosure of their home based on the misapplication of
their loan payments to Defendant Wells Fargo (“Defendant”). Plaintiffs fell behind in their
mortgage payments and filed Chapter 13 bankruptcy in order to bring their loan current. Since
then, Plaintiffs made payments for their loan by submitting payments through the Chapter 13
Trustee, as well as to their loan servicer directly. Despite this fact, Defendants are foreclosing on
Plaintiff’s home on a default totaling approximately $167,000. Plaintiffs steadfastly assert that
their payments have not been applied to their account correctly, as well as asserting that
Defendant has been charging them insurance when they should not have been.
II. STATEMENT OF FACTS
Plaintiffs are the owners of the property located at 826 N. White Rd., San Jose, CA 95127
(hereinafter “Property”). (FAC ¶7). In or around May 2006, Plaintiffs obtained $612,500.00 in
financing secured by the Property, executing a Promissory Note and Deed of Trust in favor of
World Savings Bank, F.S.B. (FAC ¶8, Defendant’s Request for Judicial Notice (“RJN”) Ex. A).
The loan payment included an escrow payment designed to pay the taxes and insurance on the
property. (FAC ¶8, RJN Ex. A)
In January 2011, Plaintiffs received a HAMP modification agreement which modified the
terms of their loan, including the principal balance, which was modified to $632,680.46. (FAC
¶9, RJN Ex. B).
Unfortunately, Plaintiffs soon thereafter fell into arrears due to an unexpected financial
hardship and eventually filed Chapter 13 bankruptcy, which they filed a petition for on July 22,
2011 (FAC ¶ 10-11). During the course of the bankruptcy, Plaintiffs made payments towards the
loan, including the arrearage and monthly payments. (FAC ¶11).
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
In a letter dated April 17, 2015, Defendant Wells Fargo indicated they did not have
evidence of hazard insurance on the property. (FAC ¶12) Defendant Wells Fargo stated they
purchased insurance and added the cost to Plaintiff’s account. However, the loan originally
provided that that escrow account paid for the insurance. (FAC ¶12).
In a letter dated May 7, 2015, Defendant Wells Fargo thanked Plaintiff for evidence of
hazard insurance procured by Plaintiffs (FAC ¶13). However, Defendant continued to charge
Plaintiffs the same amounts in escrow each month. (Id.)
Plaintiffs Chapter 13 bankruptcy petition was dismissed on February 29, 2016. (FAC
¶14). Soon thereafter, on April 20, 2016, Defendant Clear Recon Corp. recorded a Notice of
Default for Plaintiffs’ loan which stated that Plaintiffs’ loan was in default for $167,914.08, for
non-payment on the loan since August 2011 (FAC ¶15).
On August 31, 2017, Defendants caused a Notice of Trustee’s Sale to be recorded for the
Property, in which Defendants contend the total amount owed on Plaintiffs’ loan is $771,419.05.
(FAC ¶18). Plaintiffs believe that the amounts set forth in the Notice of Default and Notice of
Trustee’s Sale do not reflect the payments Plaintiffs have made toward the loan since July 2011.
(FAC ¶18).
III. LEGAL ARGUMENT
A. Plaintiff Objects to Defendant’s Request for Judicial Notice.
Under California Rule of Evidence § 452, judicial notice may be taken of Facts and
propositions that are not reasonably subject to dispute and are capable of immediate and accurate
determination by resort to sources of reasonably indisputable accuracy. (Cal. Evid. Code §
452(h).) Judicial notice under Evidence Code § 451 and 452, is intended to cover facts that are
not reasonably subject to dispute and are easily verified. (Gould v. Maryland Sound Industries,
Inc., (1995) Cal App 2d Dist.) 31 Cal App 4th 1137.) Plaintiff asks the court to limit the
acceptance of Defendant’s request for judicial notice accordingly.
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
B. Legal Standard.
On demurrer, the factual allegations in the complaint, together with all reasonable
inferences, must be accepted as true. (Wolfe v. State Farm Fire & Casualty Insurance Co. (1996)
46 Cal.App.4th 554, 559-560.) The demurrer must be overruled if the factual allegations,
together with any matters subject to judicial notice, state a cause of action under any possible
legal theory, regardless of the causes of action set forth in the complaint itself. (Id.; also see
Brousseau v. Jarrett (1977) 73 Cal.App.3d 864.) Moreover, all facts are to be construed in the
light most favorable to the plaintiff. (Perdue v. Crocker Natl. Bank (1985) 38 Cal. 3d 913, 922.)
A plaintiff need not plead facts with specificity where the facts are within the knowledge and
control of the defendant and are unknown to plaintiff. (Credit Managers Association of Southern
California v. Superior Court (1975) 51 Cal.App.3d 352, 361.) Whether the plaintiff can prove her
allegations, or whether defendant can demonstrate possible difficulty in making such proof is
irrelevant to the reviewing court. (Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist.
Agricultural Assn. (1986) 42 Cal. 3d 929, 936; citing Alcorn v. Anbro Engineering, Inc. (1970) 2
Cal.3d 493, 496.) If there is a reasonable possibility that a pleading defect can be cured, leave to
amend must be granted. (Platt v. Coldwell Banker Residential Real Estate Servs. (1990) 217 Cal.
App. 3d 1439, 1444.)
The complaint must be "liberally construed, with a view to substantial justice between the
parties." (Code Civ. Proc. § 452.) The court gives the complaint a reasonable interpretation, and
treats the demurrer as admitting all material facts properly pleaded. (Aubry v. Tri-City Hosp.
Dist. (1992) 2 Cal.4th 962, 966-67; Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) When ruling on
a demurrer, it is improper for the court to consider extrinsic evidence. (See, e.g., Ion Equip. Corp.
v. Nelson (1980) 110 Cal.App.3d 868, 881.) A party may also demur on the ground that the
pleading is uncertain, ambiguous or unintelligible. (Code Civ. Proc. § 430.10, subd. (f).)
However, "[a] demurrer for uncertainty is strictly construed, even where a complaint is in some
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
respects uncertain, because ambiguities can be clarified under modern discovery procedures."
(Khoury v. Maly's of California, Inc. (1993)14 Cal.App.4th 612, 616.) Here, Plaintiff’s
allegations clearly meet the standard necessary to survive a demurrer challenge.
C. Plaintiffs’ Causes of Action as Stated in the First Amended Complaint is Not Barred
by the Doctrine of Res Judicata or the Proceeding Bankruptcy
As alleged in the First Amended Complaint, Plaintiffs claim that Defendant failed to
review competent and reliable evidence to substantiate the supposed default before causing Clear
Recon Corp. to record a Notice of Default and Notice of Trustee’s sale for Plaintiffs’ property.
Furthermore, Plaintiffs claim that they made ongoing payments since initial falling into default
that were not properly applied to the loan, and Defendant charged Plaintiffs for an insurance
policy in 2015 despite acknowledging Plaintiffs procured evidence of having hazard insurance.
For these reasons, Plaintiffs have provided enough factual basis for their claims to survive
Defendant’s demurrer.
Defendant heavily relies on Siegel v Federal Home Loan Mortg. Corp., (9th Cir. 1998) 143
F.3d. 525,529) to argue that the Proof of Claim filed in the bankruptcy proceeding should be
given preclusive effect in this proceeding. However, Defendant’s reliance is due to a
misunderstanding of the facts or a misunderstanding of Siegel.
Later courts, including the 9th District themselves, have distinguished the ruling in Siegel
through various means, including but not limited to highlighting distinguishing facts similar to
those as Plaintiffs alleged in their First Amended Complaint. In Gaudin v. Saxton Mort. Services,
Inc., (9th Cir. 2011) 820 F. Supp. 2d 1051, 1053, the Court found that, “This action, however,
does not challenge the legality of the original loan agreement, the validity of Saxon's security
interest, or the amount of indebtedness and arrearage under that agreement. As such, it does not
implicate any of the matters that were raised by Saxon's proof of claim in the bankruptcy
proceeding.”
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
Defendant attempts this demurrer using broad, sweeping language as to the contents of
their Exhibits provided with this demurrer while failing to acknowledge the actual amounts in
controversy. Plaintiffs contend that this analysis and Defendant’s argument is outside the scope of
res judicata.
As stated in Defendants’ Memorandum of Points and Authorities, “As the amount due in
the Proof of Claim closely matches the NOD balance, it can be inferred it accurately reflects the
default at the time it was recorded.” Contrary to Defendant’s assertations, the amount in the Proof
of Claim does not “closely match” the NOD balance; the NOD asserts more than $33,000 in
excess of that found in the Proof of Claim. Plaintiffs believe, alleged, and brought suit claiming
that part or all of this excess amount is due to the misapplication of their payments which
occurred after the dates on the Proof of Claim.
Furthermore, Defendant does not bring any specific argument against Plaintiffs’ claim that
Defendant unilaterally procured and charged insurance payments to Plaintiff despite knowing and
acknowledging that Plaintiff has procured their own hazard insurance. For these forgoing reasons,
Plaintiffs believe that their first cause of action should survive demurrer. However, if this Court
finds otherwise, Plaintiffs asks for leave to amend.
D. Plaintiffs’ have Sufficiently Pled a Claim Under §2924(a)(1)(C) for their Second
Cause of Action
Despite Defendant’s staunch insistence that the NOD meets requirements of §2924(a)(1)
(C), Plaintiffs claimed that the statutory requirements have not been fulfilled. As required by Cal.
Civ. Code §2924(a)(1)(C), “…a notice of default shall include…[a] statement
setting forth the nature of each breach actually known to the beneficiary.”
Without admitting to the authenticity or accuracy of the proposed exhibits by Defendants,
the NOD cited by Defendant as their Exhibit J does not contain a statement setting forth the
nature of each breach actually known to the beneficiary as required by statue. The NOD attached
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
to the demurrer only lists the amount Defendant claims is due and the date when it was claimed to
be due. Defendant’s failure to include a statement setting forth the nature of each breach to inform
Plaintiffs of their alleged breaches in violation of §2924(a)(1)(C).
Plaintiffs admit, as they admitted in their First Amended Complaint, that they fell behind
in their arrears. While Defendant attempts to use this as a smoking gun, Plaintiff cannot see how
that fact is relevant to the demurrer at hand. While Plaintiffs did fall behind in their payments,
they were unable to determine exactly how their payments were calculated or the nature of their
breaches due to Defendant’s violation of §2924(a)(1)(C). By the allegations and facts laid out in
the complaint, this cause of action also satisfies the burden required to survive demurrer.
E. Plaintiffs’ Third Cause of Action for Declaratory Relief Should Survive Demurrer
Based on the Points Outline Above
Defendant’s only basis for demurrer on the Plaintiffs’ third cause of action is that
declaratory relief cannot stand independently as its own substantive basis for liability. While
Defendant makes a great point, based on the reasoning above Plaintiffs’ ask this Court to find that
all or some of their claims survive demurrer, and on that basis, find that Plaintiffs’ claim for
declaratory relief also survives demurrer.
IV. CONCLUSION
As the Court is well aware, the facts and pleadings are to be viewed in
a light most favorable to Plaintiffs, and ambiguities in the Complaint are
presumed to resolvable by the Plaintiffs at a later date through discovery.
Defendant’s demurrer wrongly attempts to use presumptions, implications,
and legal contentions as facts to dismiss Plaintiffs’ Complaint. Plaintiffs ask
this court to overrule this demurrer, not only because Defendant failed to
show why Plaintiffs’ complaint should be dismissed on demurrer, but also for
Defendant’s attempt to treat this demurrer as a trial.
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
For the foregoing reasons, Plaintiff respectfully requests that the Court overrule
Defendant’s Demurrer to Plaintiff’s First Amended Complaint. However, should the Court deem
the allegations insufficient, Plaintiffs respectfully request leave to amend.
DATED: July 27, 2018 Respectfully submitted,
MELLEN LAW FIRM
Duncan McGee Nefcy
Counsel for Plaintiffs
GUILLERMINA GARCIA-BARRERA
ROGELIO BARRERA
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PLAINTIFFS’ OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT
