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STAY REQUESTED Trial date: September 21, 2015

IN THE COURT OF APPEAL

OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

BRENDA WHITMAN, ) )

Petitioner, ) vs. )

) THE SUPERIOR COURT OF ) CALIFORNIA FOR THE COUNTY ) OF LOS ANGELES ) ) Respondent )

From the California Superior Court, County of Los Angeles, Case No. BC550713 Judge of the Superior Court, Hon. Mark V. Mooney; Dept. 68; Telephone: (213) 633-1068

ONEWEST BANK, FSB Real Party in Interest

PETITION FOR WRIT OF MANDATE OR OTHER APPROPRIATE

RELIEF AND REQUEST FOR IMMEDIATE STAY; MEMORANDUM OF POINTS AND AUTHORITIES

[SUPPORTING EXHIBITS FILED UNDER SEPARATE COVER]

*Deborah P. Gutierrez, Esq., SBN 240383 Penelope P. Bergman, Esq., SBN 220452 Amanda L. Gray, Esq., SBN 244644 BERGMAN & GUTIERREZ LLP 880 Apollo Street, Suite 334 El Segundo, CA 90245 (310) 893-6200 Telephone (310) 988-2930 Facsimile Attorneys for Petitioner Brenda Whitman

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TABLE OF CONTENTS INTRODUCTION ..................................................................................................... 5

A. Why Writ Relief Should Be Granted ............................................................... 5

B. Why an Immediate Stay Should Issue .............................................................. 6

PETITION FOR WRIT OF MANDATE OR OTHER APPROPRIATE RELIEF ... 7

Statement of Facts ................................................................................................... 8

Basis for Relief .....................................................................................................11

Absence of Other Remedies .................................................................................11

PRAYER ..................................................................................................................12

VERIFICATION ......................................................................................................14

MEMORANDUM OF POINTS AND AUTHORITIES .........................................15

I. Petitioner’s Claims are Not Preempted by HOLA ........................................15

A. HOLA .............................................................................................................15

B. HOLA Preemption Analysis...........................................................................16

C. Petitioner’s State Tort Law Claims Do Not Regulate Federal Savings’ Servicing Operations As Contemplated Under HOLA ........................................17

D. Applicable California Authority Supports The Finding That Petitioner’s Tort and UCL Claims Are Not Preempted By HOLA .................................................18

II. Whitman’s Claims are Not Preempted under the Conflict Preemption Rules of the National Bank Act .........................................................................................21

III. CONCLUSION ..............................................................................................23

CERTIFICATE OF WORD COUNT ......................................................................24

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TABLE OF AUTHORITIES

Cases

Aguayo v. U.S. Bank,

653 F.3d 912 (9th Cir. 2011) ......................................................................... 18, 19

Alvarez v. BAC Home Loans Servicing, L.P.,

228 Cal. App. 4th 941 (2014) ...............................................................................14

Angie M. v. Super.Ct. (Hiemstra),

37 Cal. App. 4th 1217 (1995) .............................................................................2, 8

Barnett Bank v. Nelson,

517 U.S. 25 (1996). ...............................................................................................19

Cheung v. Wells Fargo Bank, N.A.,

987 F. Supp. 2d 972 (N.D. Cal. 2013) ..................................................................16

Cockrell Estate of Cockrell v. Wells Fargo Bank, N.A.,

No. CV 13-2072 SC, 2013 WL 3830048 (N.D. Cal. July 23, 2013) ............ 15, 16

Gerbery v. Wells Fargo Bank, N.A.,

No. 13-CV-614-MMA DHB, 2013 WL 3946065 (S.D. Cal. July 31, 2013) .......16

Gibson v. World Sav. & Loan Assn., 103 Cal. App. 4th 1291 (2002) ............. passim

Harris v. Wells Fargo Bank, N.A.,

No. 12-cv-05629-JST, 2013 WL 1820003 ...........................................................16

Jolley v. Chase Home Finance, LLC,

213 Cal. App. 4th 827 (2013) ...............................................................................14

North American Chem. Co. v. Super.Ct. (Trans Harbor, Inc.),

59 Cal. App. 4th 764 (1997) ................................................................................... 8

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Sarkar v. World Savings FSB,

No. C 13-4375, 2014 WL 457901 (N.D. Cal. Jan. 31, 2014) ...............................16

Smith v. Wells Fargo Bank, N.A.,

135 Cal. App. 4th 1463 (2005) .............................................................................12

Watters v. Wachovia Bank, N.A.,

127 S. Ct. 1559 (2007) ..........................................................................................18

Wickman v. Aurora Loan Servs., LLC,

No. 12CV1702 JAH DHB, 2013 WL 4517247 (S.D. Cal. Aug. 23, 2013) .........16

Wigod v. Wells Fargo Bank, N.A.,

No. 11-1423, 673 F. 3d 547 (7th Cir. 2012) .........................................................17

Wyeth v. Levine,

555 U.S. 555 (2009) ..............................................................................................12

Statutes

12 C.F.R. § 34.4 .......................................................................................................19

12 C.F.R. § 560.2 .................................................................................. 11, 12, 13, 17

12 U.S.C. § 1465 ......................................................................................................18

12 U.S.C. § 21 et seq. ...............................................................................................18

Cal. Bus. & Prof. Code § 17200 ............................................................................1, 5

Cal. Civ. Proc. § 1084 et seq. ..................................................................................... 9

Other Authorities

California Rules of Court, Rule 8.493 ....................................................................... 8

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INTRODUCTION

A. Why Writ Relief Should Be Granted

The issue presented herein is whether the Home Owners’ Loan Act (12

U.S.C. § 1461 et seq., referred to as “HOLA”), which was enacted in1933,

preempts all state tort law, giving a mortgage loan servicer blanket immunity to act

negligently, fraudulently, and deceptively and thereby take advantage of vulnerable

homeowners facing foreclosure. OneWest Bank, and other mortgage loan

servicers, would have this Court believe that simply because HOLA enumerates

“servicing” as an area regulated by the federal law, that any and all conduct which

is even tangentially related to the servicing of a mortgage loan—no matter how

tortious, fraudulent, or deceptive—is preempted by the federal law. Such an

interpretation would give loan servicers, like OneWest, carte blanche to carry out

deceptive practices, while leaving homeowners, like Ms. Whitman, with no legal

recourse to seek compensation for the company’s tortious conduct. A plain

reading of the statute belies this nonsensical outcome and makes clear that such an

expansive interpretation of HOLA is wrong. Binding California decisional

authority is in accord with the plain meaning of the statute, finding that state tort

law is not preempted by HOLA merely because the conduct at issue may involve

the servicing of a mortgage loan or fall within the lending context.1

The Respondent court erred in sustaining OneWest’s demurrers to Ms.

Whitman’s complaint on the basis that her state law claims for negligence,

negligent misrepresentation and violation of Business & Professions Code, section

17200, et seq. (“UCL”) were preempted under HOLA. Petitioner seeks a writ of

mandate overturning the court’s ruling in order to address this important question,

as this issue has been wrongly decided by many trial courts. In Petitioner’s case,

1 See Gibson v. World Sav. & Loan Assn., 103 Cal. App. 4th 1291, 1301-1304 (2002).

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the lower court’s decision to dismiss her tort claims precludes her from obtaining

legal recourse for severe emotional distress, harm to her health, and financial

devastation caused by OneWest’s tortious conduct.

By sustaining OneWest’s demurrers, the lower court has confined her action

to breach of contract. The lower court’s order severely hampers Ms. Whitman’s

ability to assert critical facts surrounding OneWest’s tortious conduct and resulting

damages. For instance, Whitman will be precluded from asserting evidence of the

years of mistreatment and resulting emotional distress. By permitting OneWest to

hide behind HOLA – a law which was never intended to shield bad actors from

their misconduct—the lower court has deprived Ms. Whitman of an opportunity to

plead a substantial portion of her case. Whereas here, the sustaining of a demurrer

as to some but not all causes of action “has deprived a party of an opportunity to

plead a substantial portion of the case,” “extraordinary [writ] relief may prevent a

needless trial and reversal.” Angie M. v. Super.Ct. (Hiemstra), 37 Cal. App. 4th

1217, 1223 (1995) (brackets added).

Petitioner respectfully requests that this Court put an end to the

misapplication of HOLA preemption so that unscrupulous mortgage loan servicers

are prevented from using HOLA as a shield to side-step the very laws that are

necessary to protect vulnerable consumers and ensure that the relationship between

a mortgage loan servicer and its borrowers is held to the same standard as any

other company and its customers.

B. Why an Immediate Stay Should Issue

Trial on Ms. Whitman’s breach of contract claim is currently scheduled for

September 21, 2015. Petitioner requests an immediate stay of this action while

writ review is pending. As a practical matter, if Ms. Whitman is forced to continue

litigating her breach of contract claim, she could end up in the position of having to

conduct two trials—one for her breach of contract claim and another for her tort

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law claims. Presenting two trials involving overlapping facts and issues, identical

evidence, law and motion practice, and witness participation will be a waste of

significant judicial resources, including empaneling two separate juries. Moreover,

the parties are actively engaged in extensive discovery, which is currently limited

to Ms. Whitman’s breach of contract claim. If a writ is issued, discovery would

need to be repeated to allow the parties an opportunity to conduct discovery on Ms.

Whitman’s tort claims. A stay would prevent this unnecessary duplication of

resources. Without a stay, Ms. Whitman will face tens of thousands of dollars in

added attorney’s fees and litigation costs in order to litigate two separate actions.

While OneWest may have unlimited resources, Ms. Whitman does not. Forcing

consumers, like Ms. Whitman, to mount two separate lawsuits in order to enforce

basic state law claims is inequitable and wrongly puts the onus on the aggrieved

consumer to assert basic consumer rights.

A stay of this action would also prevent OneWest from obtaining an unfair

advantage in future litigation related to her tort claims (should she succeed on

appeal). If Ms. Whitman is forced to litigate her breach of contract claim first,

OneWest will gain an unfair advantage and have two bites at its defense strategy.

The potential harm to Ms. Whitman justifies an immediate stay of this action

pending this Court’s writ review.

PETITION FOR WRIT OF MANDATE OR OTHER APPROPRIATE

RELIEF

1. Petitioner Brenda Whitman (“Whitman”) is a plaintiff in an action

pending in respondent court titled, Whitman v. OneWest Bank, FSB, Los Angeles

County Superior Court, case no. BC550713. The Real Party in Interest is

Defendant OneWest Bank, FSB (“OneWest”). As the plaintiff, Whitman has a

beneficial interest in the pending action.

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2. On March 20, 2015, respondent court, Judge Mark V. Mooney

presiding, sustained OneWest’s demurrer to Whitman’s second, third and fourth

causes of action for negligence, negligent misrepresentation and violation of the

UCL. [Ex. 7, p. 085].

3. A transcript of the demurrer hearing is not available, as there was no

court reporter present. The parties presented oral argument concerning the issue of

federal preemption under HOLA as it applies to Ms. Whitman’s tort claims.

Specifically, Ms. Whitman’s counsel made clear that the statute does not preempt

state common-law tort claims and argued the position stated in Petitioner’s

opposition to the demurrer. Respondent court concluded that Ms. Whitman’s tort

and UCL claims were related to servicing, and therefore were preempted under

HOLA. Formal notice of the ruling was waived. [Ex. 7, p. 085].

4. This petition is timely as Whitman has not caused any unreasonable

delay and this petition was filed within 60 days of the lower court’s ruling. [Ex. 7,

p. 085].

5. This petition is being filed in the lowest court capable of granting

relief, as the pending action is venued in the Superior Court of California in the

unlimited civil division.

Statement of Facts

6. On November 24, 2014, Whitman filed the operative first amended

complaint (“complaint”), asserting causes of action for breach of contract,

negligence, negligent misrepresentation, and violation of California Business &

Professions Code, section 17200. [Ex. 1, pp. 001-030]. Whitman’s causes of

action were based on the following pertinent allegations:

A. On or about June 14, 2007, Whitman obtained a mortgage loan

in connection with the Property (hereinafter referred to as the “Loan”),

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which was serviced by OneWest or a division of OneWest. [Ex. 1, p.

002:19-21].

B. In mid-2009, OneWest solicited Whitman to apply for the

Home Affordable Modification Program (“HAMP”) offered through the

U.S. Department of the Treasury. [Ex. 1, p. 002:25-26]. OneWest then

offered Whitman a trial modification plan (“TPP”) that instructed her to

submit reduced monthly mortgage payments, which would cause her to fall

behind on her regular payments. [Ex. 1, pp. 003:7-13; 004:22-25; 023-026].

Believing that she would be able to complete the TPP and receive permanent

modification assistance, Whitman accepted the plan and began making the

modified monthly mortgage payments. [Ex. 1, pp. 003:14-16; 004:1-2].

After collecting Ms. Whitman’s money, OneWest refused to give her a

permanent modification and simply instructed her to reapply. [Ex. 1, p.

004:3-21; 26-28].

C. Ms. Whitman followed OneWest’s instruction and reapplied for

a modification. [Ex. 1, p. 005:3-8]. Despite collecting Ms. Whitman’s

personal and financial information and telling her she would eventually be

modified, OneWest made repeated misrepresentations concerning the status

of the application. [Ex. 1, pp. 005:13-006:6]. Such misrepresentations and

misinformation kept Ms. Whitman engaged in this process while the

arrearages, interest, and fees continued to be added to the back of her loan

balance. Her repeated efforts to obtain a loan modification were made under

the repeated threats of foreclosure by OneWest. [Ex. 1, p. 007:26-13].

D. Desperate to obtain loss mitigation assistance, Ms. Whitman

attended a “NACA” conference, designed to assist home loan borrowers

who were in need of loss mitigation assistance. [Ex. 1, p. 006:7-11]. After

waiting in long lines for days on end, Ms. Whitman eventually met with a

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OneWest representative, who reviewed her financial documentation,

obtained approval for and offered her another trial modification. [Ex. 1, pp.

006:10-24; 028]. Inexplicably, after Whitman made the first payment,

OneWest reneged on its promise to modify and pushed her back into the

loan modification application process. [Ex. 1, pp. 006:25-007:8].

E. After years of engaging in an endless loan modification review

process, Ms. Whitman realized that OneWest had no intention of providing

her with a loan modification or any loss mitigation alternatives. [Ex. 1, p.

007:9-13]. Accordingly, Ms. Whitman filed a legal action against OneWest

and obtained a temporary restraining order (“TRO”) enjoining the sale of her

home. [Ex. 1, p. 007:14-17]. Despite the fact that a judge had issued legal

order preventing OneWest from selling her home, OneWest ignored the

court order and sold Ms. Whitman’s home at a foreclosure sale. [Ex. 1, p.

007:14-17].

F. OneWest’s negligent and deceptive scheme was carried out to

keep Ms. Whitman in a perpetual cycle of modification review so that

OneWest could add arrearages, penalties and fees, which it collected through

the foreclosure sale. [Ex. 1, pp. 015:21-018:13]. OneWest’s dealings with

its customer make clear that it elevates its ability to improve its financial

bottom line over treating consumers fairly—even if it means breaching its

contractual duties and violating state tort laws and court orders. [Ex. 1, p.

019:6-15].

G. Due to OneWest’s misconduct and misrepresentations, Ms.

Whitman suffered damages including loss of her trial modification

payments; inability to sell or refinance the Property; inability to obtain loss

mitigation assistance; financial, emotional and physical distress; damage to

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her credit; loss of investment; and loss of her home. [Ex. 1, pp. 008:18-21;

013:10-16].

7. OneWest demurred to the second, third and fourth causes of action for

negligence, negligent misrepresentation, and violation of California Business &

Professions Code, section 17200 on the sole basis that the state law claims were

barred by preemption of federal law, namely, The Home Owner’s Loan Act, 12

U.S.C. §§ 1461 et seq. (“HOLA”). [Ex. 2, pp. 031-044].

Basis for Relief

8. The lower court sustained OneWest’s demurrer on the ground that

Ms. Whitman’s tort and statutory claims are preempted under HOLA. [Ex. 7, p.

085]. Such a finding is in direct contradiction of the plain language of the statute,

applicable California case law, and clear public policy objectives to protect

vulnerable California consumers. By sustaining the demurrer on this ground and

dismissing Ms. Whitman’s claims, the trial court abused its discretion.

9. OneWest did not demurrer to Ms. Whitman’s first cause of action for

breach of contract, which remains at issue in the lower court and set for trial on

September 21, 2015.

Absence of Other Remedies

10. The court’s order sustaining OneWest’s demurrer has deprived Ms.

Whitman of an opportunity to present a substantial portion of her case. At issue in

this case is OneWest’s wrongful conduct throughout the loan modification process,

including breach of its duty to Ms. Whitman not to make misrepresentations or

engage in unlawful and deceptive business practices. By dismissing Ms.

Whitman’s tort and UCL claims, the lower court has wrongly gutted her case and

precluded her from obtaining tort damages and seeking appropriate relief.

Granting writ relief may prevent a needless trial and reversal, making Ms.

Whitman’s petition appropriate under these circumstances. See Angie M., 37 Cal.

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App. 4th at 1223; North American Chem. Co. v. Super.Ct. (Trans Harbor, Inc.), 59

Cal. App. 4th 764, 773 (1997).

11. Ms. Whitman will suffer substantial and irreparable harm if she is

forced to conduct one trial on her breach of contract claim and then re-litigate the

same issues and same set of facts, should she later prevail on an appeal. Ms.

Whitman would be forced to experience twice the stress and emotional distress of

reliving an extremely difficult time in her life; would incur substantially more in

attorney’s fees and litigation costs, including reporter fees, witness fees, and expert

fees; and would be required to take multiple weeks off work to attend two trials.

Moreover, potentially conducting two separate trials on the same issues is

judicially-inefficient and a waste of judicial resources as both will involve similar,

if not identical, issues, evidence, and witness testimony. Waiting to appeal the

lower court’s decision will indisputably prejudice Ms. Whitman and waste

significant judicial resources.

PRAYER

1. Issue an immediate stay of the trial proceedings. Trial is currently

scheduled to commence on September 21, 2015, in Los Angeles County Superior

Court, case no. BC550713, to remain in effect pending final disposition of this

petition.

2. Issue an order instructing the respondent court to vacate the

September 21, 2015 trial date.

3. Grant the petition and issue a of writ of mandate directing respondent

court to vacate its order sustaining OneWest’s demurrer to the second, third and

fourth causes of action for negligence, negligent misrepresentation and violation of

California Business and Professions Code § 17200, and to enter an order

overruling the demurrer in its entirety. (Cal. Civ. Proc. § 1084 et seq.).

///

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4. An award of Petitioner’s costs pursuant to California Rules of Court,

Rule 8.493.

5. Whatever further relief may be just and proper.

Respectfully submitted,

DATED: May 18, 2015 BERGMAN & GUTIERREZ LLP

By: ______________________________ PENELOPE P. BERGMAN DEBORAH P. GUTIERREZ AMANDA L. GRAY Attorneys for Plaintiff/Petitioner, Brenda Whitman

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VERIFICATION

I, Amanda L. Gray, declare as follows:

I am one of the attorneys for Petitioner Brenda Whitman herein. I have read

the foregoing Petition for Writ of Mandate and Request for Immediate Stay and

know of its contents. The facts alleged in the petition are within my own

knowledge, and I know these facts to be true. Because of my familiarity with the

relevant facts pertaining to the trial court proceedings, I, rather than Petitioner,

verify this petition.

I declare under penalty of perjury that the foregoing is true and correct and

that this verification was executed on May 18, 2015, at El Segundo, California.

DATED: May 18, 2015 By: ______________________________ AMANDA L. GRAY

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MEMORANDUM OF POINTS AND AUTHORITIES

I. Petitioner’s Claims are Not Preempted by HOLA

A. HOLA

Congress enacted HOLA in 1933 to establish federal regulation over savings

and loan associations in response to the collapse of the economy. The purpose of

the statute was to enable “federal savings associations to extend credit without

regard to state laws purporting to regulate or otherwise affect their credit

activities,” except those laws which were expressly excluded by the statute.

Gibson v. World Sav. & Loan Assn., 103 Cal. App. 4th 1291, 1297 (2002).

HOLA created and authorized the Office of Thrift Supervision (“OTS”) to

issue regulations governing federal savings associations. Pursuant to 12 C.F.R. §

560.2(b), the OTS provided illustrative examples of types of state laws that it

intended to be preempted in order to accomplish its statutory objective. Among

those examples are state laws purporting to impose requirements regarding:

(1) Licensing, registration, filings, or reports by creditors…

(4) The terms of credit, including amortization of loans and the deferral and

capitalization of interest and adjustments to the interest rate, balance, payments

due, or term to maturity of the loan, including the circumstances under which a

loan may be called due and payable upon the passage of time or a specified event

external to the loan;

(5) Loan-related fees, including without limitation, initial charges, late

charges, prepayment penalties, servicing fees, and overlimit fees;

(6) Escrow accounts, impound accounts, and similar accounts…

(10) Processing, origination, servicing, sale or purchase of, or investment or

participation in, mortgages; [and]

(11) Disbursements and repayments…

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Section 12 C.F.R. § 560.2(c) illustrates state laws that are not preempted.

This section provides that the following state tort laws, which “only incidentally

affect [] lending operations”, as well as state laws that further a vital state interest

are not preempted:

(1) Contract and commercial law;

(2) Real property law;

(3) Homestead laws specified in 12 U.S.C. 1462a(f);

(4) Tort law;

(5) Criminal law; and

(6) Any other law that OTS, upon review, finds:

(i) Furthers a vital state interest; and

(ii) Either has only an incidental effect on lending operations or is not

otherwise contrary to the purposes expressed in paragraph (a) of this

section.

Thus, the plain language of the statute expressly states that state tort law

claims which only incidentally affect lending operations are not preempted by

HOLA.

B. HOLA Preemption Analysis

Analysis of federal preemption begins with the assumption that the historic

police powers of the state will not be superseded absent a clear intent by Congress.

See Wyeth v. Levine, 555 U.S. 555, 565 (2009); Smith v. Wells Fargo Bank, N.A.,

135 Cal. App. 4th 1463, 1475 (2005); Gibson v. World Sav. & Loan Assn., 103

Cal. App. 4th 1291, 1296-97 (2002). “The states’ historic police powers include

the regulation of consumer protection in general and of the banking and insurance

industries in particular.” Gibson, 103 Cal. App. 4th at 1300. Considering that

federal preemption in this area is disfavored, HOLA must be narrowly construed to

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determine whether state law claims, such as those advanced by Ms. Whitman, are

preempted. Id.

To determine whether a state law is preempted under HOLA, the principle

inquiry is whether application of the state law to a federal savings association

would “impose requirements” on activities regulated by the OTS. 12 C.F.R. §

560.2; Gibson, 103 Cal. App. 4th at 1301. “As to each state law claim, the central

inquiry is whether the legal duty that is the predicate of the [claim] constitutes a

requirement or prohibition of the sort that federal law expressly preempts.”

Gibson, 103 Cal. App. 4th at 1301. While a state law cannot dictate how a federal

savings bank can or cannot operate, “it can insist that, however [the bank] chooses

to operate, it do so free from fraud and other deceptive business practices. Id. at

1305. “Laws which are based on legal principles that a defendant bank has a

requirement to refrain from deceptive conduct are not expressly preempted merely

because laws were violated in the context of a lending relationship.” Id. at 1303.

C. Petitioner’s State Tort Law Claims Do Not Regulate Federal

Savings’ Servicing Operations As Contemplated Under HOLA

The types of laws that Ms. Whitman seeks to enforce do not impose any

requirements on or regulate conventional “servicing” of a mortgage loan as

identified under 12 CFR § 560.2. Although the wrongful conduct at issue was by a

loan servicer, the laws prohibiting the alleged conduct do not involve servicing

restraints. Whitman’s tort and UCL causes of action serve to enforce OneWest’s

duty not to misrepresent matters or engage in negligent conduct – not to impose

additional limits related to servicing. The tort and UCL claims advanced by

Whitman do not seek to regulate OneWest’s servicing operations—rather,

Whitman seeks redress for OneWest’s unlawful and deceptive conduct, whatever

their servicing policies are. The legal duties that arise under Whitman’s claims for

negligence, negligent misrepresentation, and violation of the UCL do not seek to

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regulate the specific business model, operations, and “how-to” of mortgage loan

servicing.

Whitman alleged that once OneWest invited her into and engaged her in the

loan modification review process, it had a legal obligation to exercise reasonable

care and skill with regard to handling her loan modification application; to not

make misrepresentations concerning her loan modification application; and to

refrain from unfair and fraudulent business practices. [Ex. 1, pp. 010-019].

California case law makes clear that a duty of care may arise when a lender or

servicer exceeds its conventional role as a lender by mishandling a loan

modification application. See Alvarez v. BAC Home Loans Servicing, L.P., 228

Cal. App. 4th 941, 948-949 (2014); Jolley v. Chase Home Finance, LLC, 213 Cal.

App. 4th 827 (2013). Whitman’s pleading sufficiently alleges facts to support her

claims that OneWest exceeded its conventional servicing role and breached its

legal obligations to use reasonable care and to not make misrepresentations. Ms.

Whitman’s claims serve to enforce OneWest’s obligations to exercise reasonable

care when it exceeds its traditional servicing role, and to refrain from making

misrepresentations and engaging in deceptive and unfair business practices.

Consistent with these principles, California decisional authority has

unanimously found that state tort law claims are not preempted by HOLA.

D. Applicable California Authority Supports The Finding That

Petitioner’s Tort and UCL Claims Are Not Preempted By HOLA

In Gibson v. World Sav. & Loan Assn., 103 Cal. App. 4th 1291 a California

appeals court held that HOLA did not preempt state tort law and ULC causes of

action. The court found that the duties to refrain from misrepresentation are not

preempted under HOLA, as they do not have any substantial effect on lending: The duties to comply with contracts and the laws governing them and to refrain from misrepresentation, together with the more general provisions of the UCL,

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are principles of general application. They are not designed to regulate lending and do not have a disproportionate or otherwise substantial effect on lending. To the contrary, they are part of the legal infrastructure that undergird all contractual and commercial transactions. Therefore, their effect is incidental and they are not preempted.

Gibson, 103 Cal. App. 4th at 1303-04. Importantly, the court also concluded that

laws which are based on legal principles that a defendant bank has a requirement to

refrain from deceptive conduct are not preempted merely because the laws were

violated in the context of a lending relationship. Id.

Similarly, in Cockrell Estate of Cockrell v. Wells Fargo Bank, N.A., No. CV

13-2072 SC, 2013 WL 3830048, at *2-3 (N.D. Cal. July 23, 2013), the plaintiff

asserted various claims pertaining to false and negligent misrepresentations made

in the context of a loan modification. The court rejected the defendant’s argument

that the claims were preempted under HOLA, finding that while the case may

“relate” to loan servicing, “the claims are tort causes of action whose effects on

loan servicing are incidental, and functionally, the causes of action that Plaintiff

asserts serve only to make Defendant tell the truth and abide by its promises—not

to impose additional requirements specifically related to loan servicing.” Id. at *3.

The court further stated that to hold otherwise “could essentially permit federal

savings associations to lie to their customers with impunity.” Id.

Other California courts have consistently found that state law tort claims are

not preempted by HOLA. See Wickman v. Aurora Loan Servs., LLC, No.

12CV1702 JAH DHB, 2013 WL 4517247 (S.D. Cal. Aug. 23, 2013) (negligent

misrepresentation and promissory estoppel claims, which stemmed from

allegations of false statements by the bank regarding loan modification are not

preempted); Gerbery v. Wells Fargo Bank, N.A., No. 13-CV-614-MMA DHB,

2013 WL 3946065 (S.D. Cal. July 31, 2013) (claims based on allegations which

rely on a general duty not to misrepresent material facts regarding loan

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modification are not preempted under HOLA); Cheung v. Wells Fargo Bank, N.A.,

987 F. Supp. 2d 972 (N.D. Cal. 2013); Sarkar v. World Savings FSB, No. C 13-

4375, 2014 WL 457901 (N.D. Cal. Jan. 31, 2014) (state property law claims,

including quiet title and declaratory relief only have incidental impact on lending

and are not preempted; Harris v. Wells Fargo Bank, N.A., No. 12-cv-05629-JST,

2013 WL 1820003, *6-7 (N.D. Cal. Apr. 30, 2013) (adopting the position that

claims which fall on the “regulatory side of the lender” will be preempted, whereas

claims that fall on the “common law side of the lender” are not; allegations of

misrepresentation in the loan modification process fall on the “common law side of

the lender” and are not preempted).

Other federal jurisdictions have reached the same conclusion. In Wigod v.

Wells Fargo Bank, N.A., No. 11-1423, 673 F. 3d 547 (7th Cir. 2012), the U.S.

Court of Appeals, Seventh Circuit held that claims such as fraud and violation of

consumer protection statutes were not preempted under HOLA. In its ruling, the

court rejected defendant bank’s argument that HOLA preempted state common-

law suits that imposed standards for the servicing of mortgage loans, whether they

conflict with federal policy or not. The court found that the bank’s argument was

“directly at odds with the savings clause of 12 C.F.R. § 560.2.” Id. at 577. The

court also noted that while the OTS had the power to regulate licensing

requirements, imposition of fees and penalties, disclosure requirements, and the

like, it did not have the power to adjudicate disputes between savings and loan

customers and their customers. Id. Accordingly, the court held that HOLA did not

preempt suits by “persons harmed by the wrongful acts of savings and loan

associations seeking basic state common-law type remedies.” Id.

21

II. Whitman’s Claims are Not Preempted under the Conflict Preemption

Rules of the National Bank Act

On July 21, 2010, Congress enacted the Dodd-Frank Act, effectively ending

HOLA “field” preemption. See 12 U.S.C. § 1465, which provides, in pertinent

part:

(a) In general Any determination by a court … regarding the relation of State law to a provision of this chapter or any regulation or order prescribed under this chapter shall be made in accordance with the laws and legal standards applicable to national banks regarding the preemption of State law. (b) Principles of conflict preemption applicable Notwithstanding the authorities granted under sections 1463 and 1464 of this title, this chapter does not occupy the field in any area of State law.

Accordingly, under the National Bank Act (“NBA”)2, which sets forth the

applicable standard for national banks, the principles of “conflict preemption”

(rather than field preemption) apply. “Conflict preemption” means that national

banks (and now federal savings banks) are subject to state laws of general

application that “do not conflict with the letter or the general purposes” of the

NBA [or HOLA]. Watters v. Wachovia Bank, N.A., 127 S. Ct. 1559, 1567 (2007).

In fact, the NBA specifically excludes state law tort claims from preemption (“state

tort laws are expressly excluded from preemption so long as they do not prevent or

significantly interfere with the bank’s exercise of its power.” See 12 C.F.R. §

34.4(b)(2); see also Barnett Bank, 517 U.S. at 33 (1996)). Thus, post-2010, state

2 12 U.S.C. § 21 et seq. and regulations promulgated thereunder by the Office of the Comptroller of Currency (“OCC”). Watters v. Wachovia Bank, N.A., 127 S. Ct. 1559, 1564 (2007). The OCC implemented regulations “specifically directed toward identifying which state laws affecting national banks are preempted.” Aguayo v. U.S. Bank, 653 F.3d 912, 919 (9th Cir. 2011).

22

regulation is permissible “when it does not prevent or significantly interfere with

the [bank’s] exercise of its powers.” Barnett Bank v. Nelson, 517 U.S. 25, 33

(1996). Under a conflict preemption analysis, a law must actually conflict with

federal law before a preemption analysis is even necessary. Such a conflict arises

when compliance with both federal and state regulations is a physical

impossibility, or when state law stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress.” Aguayo v. U.S. Bank,

653 F.3d 912, 918 (9th Cir. 2011).

Here, a conflict analysis demonstrates that state tort law claims are not

preempted since OneWest’s ability to “service” mortgages can be carried out in a

manner that does not violate state law tort claims.

While OneWest’s wrongful conduct began in 2009, it continued beyond

2011, well after the Dodd-Frank Act changed the preemption standard applicable

to federal savings associations. [Ex. 1, pp. 005:13-007:16]. Accordingly,

Whitman’s allegations that give rise to OneWest’s liability and occurred after

Dodd-Frank was enacted, must be analyzed under the conflict preemption rules,

not field preemption originally contemplated under HOLA. Given there is no

conflict between state tort laws and HOLA, Whitman’s claims are not preempted,

and the trial court's ruling must be reversed.

///

///

///

///

///

///

III. CONCLUSION

For the foregoing reasons, Whitman respectfully requests this court to grant

extraordinary relief as prayed - including an immediate stay of this action - and

issue an order directing the superior court to vacate its order sustaining One West's

demurrer as to Whitman's second, third and fourth causes of action for negligence,

negligent misrepresentation and violation of California Business and Professions

Code section 17200, and enter a new order overruling the demurrer in its entirety.

DATED: May 18, 2015

Respectfully submitted,

By:

23

BERGMAN & GUTIERREZ LLP

Attorneys for Pla · Brenda Whitman

CERTIFICATE OF WORD COUNT

(Cal. Rules of Court, Rule 8.204(c)(l))

The text of this brief consists of 4 7 45 words as counted by the Microsoft

Word 2010 word-processing program used to generate the brief.

DATED: May 18, 2015 BERGMAN & GUTIERREZ LLP

Attorneys for ntiff/Petitioner, Brenda Whitman

24

TO BE FILED IN THE COURT OF APPEAL APP-008

COURT OF APPEAL, Second APPELLATE DISTRICT, DIVISION Court of Appeal Case Number:

A HORNEY OR PARTY WITHOUT A HORNEY (Name, State Bar number, and address): Superior Court Case Number. Amanda L. Gray, SBN: 244644

BC550713 -BERGMAN & GUTIERREZ LLP 880 Apollo Street, Ste. 334 FOR COURT USE ONLY

El Segundo, CA 90245 TELEPHONE NO.: (310) 893-6200 FAX NO. (Optional): (310) 988-2930

E-MAIL ADDRESS 1optiona1;: amanda@b-g-law.com ATTORNEY FOR !Name): Appellant/Petitioner: Brenda Whitman

APPELLANT/PETITIONER: Brenda Whitman

RESPONDENT/REAL PARTY IN INTEREST: Onewest Bank, FSB

CERTIFICATE OF INTERESTED ENTITIES OR PERSONS

(Check one): [l] INITIAL CERTIFICATE 0 SUPPLEMENTAL CERTIFICATE

Notice: Please read rules 8.208 and 8.488 before completing this form. You may use this form for the initial certificate in an appeal when you file your brief or a prebriefing motion, application, or opposition to such a motion or application in the Court of Appeal, and when you file a petition for an extraordinary writ. You may also use this form as a supplemental certificate when you learn of changed or additional information that must be disclosed.

1. This form is being submitted on behalf of the following party (name): Appellant/Petitioner: Brenda Whitman

2. a. D There are no interested entities or persons that must be listed in this certificate under rule 8.208.

b. 0 Interested entities or persons required to be listed under rule 8.208 are as follows:

Full name of interested entity or person

(1) Brenda Whitman

(2) Onewest Bank, FSB

(3)

(4)

(5)

D Continued on attachment 2.

Appellant/Petitioner

Respondent/Investor

Nature of interest (Explain):

The undersigned certifies that the above-listed persons or entities (corporations, partnerships, firms, or any other association, but not including government entities or their agencies) have either (1) an ownership interest of 10 percent or more in the party if it is an entity; or (2) a financial or other interest in the outcome of the proceeding that the justices should consider in determining whether to disqualify themselves, as defined in rule 8.208(e)(2).

Date: 05/18/2015

Amanda L. Gray, Esq. (TYPE OR PRINT NAME) (SIG~TJRE OF

Form Approved for Optional Use Judicial Council of Cal~ornia

APP-008 [Rev. January 1, 2009]

{~~/ CERTIFICATE OF INTERESTED ENTITIES OR PERSONS

Page 1of1

les of Court, rules 8.208, 8.488 www.courtinfo.ca.gov

PROOF OF SERVICE Whitman v. Onewest Bank, FSB

Superior Court of California County of Los Angeles; Case No. BC550713

I am a resident of the State of California, over the age of eighteen years, and not a party to the within action. My business address is 880 Apollo Street, Suite 334, El Segundo, CA 90245. On, May 19, 2015, I served the following document(s) by the method indicated below:

PETITION FOR WRIT OF MANDATE OR OTHER APPROPRIATE RELIEF AND REQUEST FOR IMMEDIATE STAY; MEMORANDUM

OF POINTS AND AUTHORITIES

[X] BY OVERNIGHT DELIVERY: I placed the document(s) listed above in a sealed envelope(s) and consigning it to an express mail service for guaranteed delivery on the next business day following the date of consignment to the parties set forth below:

Attorney General's Office 300 S. Spring St., #1700, Los Angeles, CA 90013

District Attorney Office 320 West Temple Street #540 Los Angeles, CA

[X] BY PERSONAL DELIVERY: I placed the documents(s) listed above in sealed envelope(s) and by caused personal delivery of the envelope(s) to the person(s) at the address( es) set forth below:

Attorney for Real Party in Interest Onewest Bank, FSB DYKEMA GOSSETT LLP J. Kevin Snyder, Esq. Lukas Sosnicki, Esq. 333 South Grand Avenue, Suite 2100 Los Angeles, CA 90071 (213) 457-1800

Clerk of the Court Los Angeles County Superior Court 111 N. Hill Street Los Angeles, CA 90012

I declare under penalty of perjury under the laws of the United States that the above is true and correct. Executed on May 19, 2015, at El Segundo, California.

~ Monica Caseres