Horwich v. Mortgage Electronic Registration Systems, Inc. CA4/3

Opinion

Filed 9/16/26 Horwich v. Mortgage Electronic Registration Systems, Inc. CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

HELEN M. HORWICH, Plaintiff and Appellant, G065220 v. (Super. Ct. No. 30-2022- 01300241) MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. OPINION et al., Defendants and Respondents.

Appeal from orders of the Superior Court of Orange County, Gassia Apkarian, Judge. Reversed and remanded with directions. Request for judicial notice. Denied. Helen M. Horwich, in pro. per; Imperiale Law Group and James Thomas Imperiale for Plaintiff and Appellant. Troutman Pepper Locke, Justin D. Balser and Jennifer M. Wade for Defendants and Respondents Mortgage Electronic Registration Systems, Inc. and Nationstar Mortgage, LLC. Stinson, Jan T. Chilton and Elizabeth C. Farrell for Defendant and Respondent Bank of America, N.A. Anderson, McPharlin & Conners, Vanessa H. Widener and Ali Z. Vaqar for Defendant and Respondent BIRE II, LLC. * * * Helen M. Horwich, who was self-represented intermittently below, appeals from the dismissal of her complaint as to four defendants— Mortgage Electronic Registration Systems, Inc. (MERS), Nationstar Mortgage, LLC (Nationstar), Bank of America, N.A. (BANA), and BIRE II, LLC (BIRE; collectively, respondents). The dismissals were granted pursuant to ex parte requests by respondents in the days after the trial court took off calendar demurrers to a first amended complaint, filed by the same parties, which had been pending for roughly four months. Underlying both dismissals was a determination by the court that although a first amended complaint was served on respondents after the court sustained demurrers to the original complaint, the amended complaint was not timely filed with the court because the court clerk’s office rejected its filing seven weeks after Horwich’s then-attorney had attempted to file it. Horwich contends the trial court erred in granting the dismissals because her attorney timely filed an amended complaint that was wrongfully and belatedly rejected by the court clerk. We conclude the court abused its discretion in granting the dismissal requests. Although there was no amended complaint on file at the time it considered the requests, the court had before it a variety of information about what transpired between the 2 attempted filing of the first amended complaint by Horwich’s then-attorney and the dismissal hearings, and the court was aware Horwich was repeatedly attempting to rectify the technical issues once they were brought to her attention in the days before the dismissals were granted. Based on the collective circumstances known to the court, its decision to dismiss the action with respect to respondents was an abuse of discretion. Accordingly, we reverse the challenged dismissal orders and remand the matter with directions to the court to vacate the dismissals. FACTUAL AND PROCEDURAL BACKGROUND The dispute between the parties in this case concerns a residential piece of property (the property) located in the City of Newport Beach. Horwich purchased the property in 2007. To effectuate the purchase, she obtained a bank loan which was secured by the property through a deed of trust. A couple of years later, the original lender was acquired by another bank. During the almost decade that followed, various other entities obtained some type of interest in the property as successors or assigns of the trustee or beneficiary of the deed of trust. After Horwich allegedly defaulted on her mortgage payment obligations, foreclosure proceedings resulted in a nonjudicial foreclosure and sale of the property at the end of 2018. In the five years that followed, the purchasing entity sold the property and it was subsequently sold to defendant BIRE.1 In December 2022, Horwich sued various entities that were involved in the property-related transactions which occurred between 2007 1 After the complaint in this case was filed, BIRE filed an unlawful detainer action against Horwich. There is a separately pending appeal by Horwich in that matter.

3 and 2023. The complaint alleged a series of fraudulent and illegal conduct which ultimately led to a wrongful foreclosure, depriving her of the property she rightfully owned. At the time Horwich filed the complaint, she was not represented by counsel. Between February and March 2023, MERS, Nationstar, BANA, and BIRE filed demurrers to the complaint. Among other arguments, the demurrers contended the causes of action fell outside the applicable statutes of limitations and the complaint failed to state facts sufficient to plead the various causes of action. In the months that followed, Horwich brought in different attorneys to assist her. She filed a notice of limited scope representation by one attorney for purposes of opposing an ex parte application by defendant High Point Holdings, LLC to vacate a default entered against it. And in September 2023, she moved away from her self-represented status by substituting in an attorney of record, Philip A. Levy. Over the course of the next 10 months, Horwich, through Levy, moved for leave to file a first amended complaint, the case was twice reassigned to a new judge, and the trial court continued the hearings on defendants’ demurrers and Horwich’s motion for leave to July 2024. After Horwich opposed the demurrers, and the demurring defendants met and conferred with her counsel at the trial court’s direction, the parties submitted on the court’s tentative ruling to sustain the demurrers with leave to amend. The court gave Horwich 10 days to file an amended complaint, with the deadline being August 9, 2024. On August 6, 2024, Levy electronically submitted for filing and served on all parties a first amended complaint (the FAC). Within less than a month, on September 4, Levy filed and served a substitution of attorney, 4 signed by Horwich, which substituted out Levy and indicated Horwich would once again be self-represented. The form listed the property as Horwich’s address. On the 5th and 9th of September 2024, the previously demurring defendants filed demurrers to the FAC. The hearings on the demurrers were scheduled for two different dates, one at the end of January 2025 and the other at the beginning of February 2025. MERS and Nationstar served their demurrer by mail and email to Levy on September 5th. BANA and BIRE served their demurrers by mailing a copy to the property address on September 9th. One day after the latter demurrers were placed in the mail for service, Horwich was evicted from the property as a result of the separate unlawful detainer action filed by BIRE. A few weeks later, on September 24, the trial court issued an electronic filing rejection notice concerning the FAC. The notice indicated the following two documents were electronically submitted for filing on August 6, 2024: “Plaintiff’s Verified First Amended Complaint Volume I” and “Plaintiff’s Verified Amended Complaint Volume II.” It further stated the court clerk’s office was rejecting the electronic filing of those documents for two reasons: (1) “The attorney’s telephone number does not match court records”; and (2) “Two first amended complaint [sic] were received as volume I and volume II. Only one ‘first’ amended complaint can be filed. Any other amended complaint must indicate second, third, ect [sic] and leave of court must be granted.” The notice of rejection does not indicate to whom or how it was sent. Roughly one month later, in October 2024, the parties, including Horwich herself, each filed a case management conference (CMC) statement. None of the statements said anything about the FAC or the electronic filing 5 rejection notice. BANA, Nationstar, and MERS served their CMC statements by email and mail to Levy. BIRE served its CMC statement by email to Horwich. A few days later, Horwich provided notice of a change of address, listing a City of Newport Beach P.O. Box as her new address (new address) and specifying that all notices and documents should be sent to the new address. In mid-November 2024, the trial court continued the CMC to the end of January 2025, coinciding with one of the scheduled demurrer hearings. The minute order indicates Levy appeared at the November hearing, and the defendant who provided notice of the court’s rulings served the minute order by email to Levy. In mid-January 2025, the parties again filed CMC statements. None of the statements said anything about the FAC or the related electronic filing rejection notice. Nationstar and MERS served theirs by email and mail to Levy. BANA served its by mail to the property address. And BIRE effectuated service by email to Horwich. Over the course of the following three weeks, a series of events took place which ultimately led to the dismissal of the action as to Nationstar, MERS, BANA, and BIRE. On January 21, BANA provided notice that no opposition to its demurrer had been filed. The notice was served on Horwich by email and by mail to the property address. On January 24, Levy filed on Horwich’s behalf an ex parte application to continue the approaching demurrer hearings to allow Horwich to file oppositions to the demurrers. The reasons supporting the request were twofold: (1) Horwich “was in and out of the hospital after the date of the 6 substitution of attorney” which returned her to self-represented status; and (2) Horwich “thought she was still represented by [Levy] at [the] time oppositions were due.” The application requested a 30-day extension of the hearing dates and indicated Horwich was “ready to hire counsel forthwith” to oppose the demurrers. On January 27, the trial court denied Horwich’s continuance request without holding a hearing and without explaining the reason for the denial. Later that day, Horwich provided notice of limited scope representation by a different attorney, Michael L. Tusken, for purposes of the demurrers and CMC. That night or the next morning, which was the day of the hearing on BANA and BIRE’s demurrers, the trial court posted a tentative ruling indicating it was taking the demurrers off calendar. It elaborated: “Although it appears that the [FAC] was served, it appears from the Court’s file that Plaintiff has not filed the [FAC].” Tusken appeared on Horwich’s behalf at the hearing later that afternoon, and the court confirmed its tentative ruling to take the demurrers off calendar. That same day, January 28, BIRE filed and electronically served an ex parte application for dismissal of the complaint pursuant to Code of Civil Procedure section 581, subdivision (f)(2). It argued dismissal was proper because no first amended complaint was filed within the 10-day time window ordered by the trial court when it sustained the demurrers to the original complaint. BIRE further requested the court enter judgment in its favor. Nationstar and MERS filed a joinder to BIRE’s ex parte application. The next morning, January 29, Horwich filed an opposition to BIRE’s dismissal application and a notice that Tusken would be representing her regarding the application. Horwich said she did not receive notice of the 7 electronic filing rejection concerning the FAC that Levy timely submitted for filing, and she indicated the FAC was submitted in two volumes because the second volume “was the continuation of the [e]xhibits.” She argued that any error was not her fault and she should not be denied due process because of it. Horwich’s supporting declaration said she filed a first amended complaint on January 28, 2025, after she learned the FAC had not been properly filed in August of the prior year. A supporting declaration from Levy stated, inter alia, the telephone number he listed on the FAC had been, and still was, his correct number. That same January 29th morning, BIRE filed an ex parte application to strike the newly submitted first amended complaint, with the hearing set the following day, January 30. The application argued the pleading should be stricken because Horwich did not seek leave to belatedly file a first amended complaint. BIRE served the application on Horwich by mail sent to the property address. On the afternoon of January 29, the trial court held the ex parte hearing concerning BIRE, Nationstar, and MERS’s dismissal requests.2 Tusken appeared at the hearing on Horwich’s behalf. The court granted the applications, in part, and ordered the action dismissed with prejudice as to BIRE, Nationstar, and MERS. It declined to order that judgment be entered in those defendants’ favor. The corresponding orders were filed the same day. On January 30, the trial court issued an electronic filing rejection notice regarding the first amended complaint that Horwich submitted for filing two days earlier. The stated reason for the rejection was Horwich needed to seek leave of court to file an amended complaint. That afternoon, at 2 The appellate record does not contain a transcript of this hearing or any other trial court hearing.

8 BIRE’s request, the court took off calendar BIRE’s ex parte application to strike the first amended complaint. In addition, BANA filed an ex parte application to strike the first amended complaint and to dismiss the action due to Horwich’s failure to file an amended complaint. The hearing on the application was set for February 4. On February 3, Horwich filed on her own behalf an opposition to BANA’s ex parte application. The opposition was identical to that submitted in opposition to BIRE, Nationstar, and MERS’s ex parte applications seeking the same relief. The following day, the trial court denied BANA’s ex parte application without holding a hearing. The minute order stated: “No first amended complaint has been filed, and the time to file has lapsed.” In response, BANA filed a new ex parte application limited to requesting dismissal of the action against it due to Horwich’s failure to file an amended complaint. On February 5, the trial court took off calendar Nationstar and MERS’s demurrers to the FAC for the same reason it took BANA and BIRE’s off calendar roughly a week prior. That evening, Horwich filed an opposition to BANA’s renewed ex parte application for dismissal and provided notice of limited scope representation by a different attorney, James T. Imperiale, for the related hearing scheduled for the following day. She also filed a motion seeking leave to file a first amended complaint. The hearing for the latter was reserved for June 17, 2025. On February 6, the trial court granted BANA’s application for dismissal with prejudice without holding a hearing. The corresponding order was filed the same day.

9 Horwich timely appealed from the orders dismissing the action with prejudice as to BIRE, Nationstar, MERS, and BANA. DISCUSSION Horwich contends the trial court erred in dismissing the action as to each of the respondents, thereby depriving her of her day in court.3 On the record before us, we agree. I. APPLICABLE LAW AND STANDARD OF REVIEW Pursuant to Code of Civil Procedure section 581, subdivision (f), “[a] trial court may dismiss a complaint after a demurrer to the complaint is sustained or a motion to strike is granted with leave to amend, and the plaintiff fails to amend the complaint ‘within the time allowed by the court.’ [Citation.] Where ‘the time allowed’ for amendment is expressly given, ‘the time so given runs from the service of notice of the decision or order.’” (Bai v. Yip (2024) 107 Cal.App.5th 188, 195 (Bai).) As the use of the word “may” indicates, such a dismissal is not mandatory but instead lies within the trial court’s discretion. (Nuño v. California State University, Bakersfield (2020) 47 Cal.App.5th 799, 807 (Nuño.) We review an order dismissing an action pursuant to Code of Civil Procedure section 581, subdivision (f), for an abuse of discretion. (Nuño, supra, 47 Cal.App.5th at p. 807.) “‘The abuse of discretion standard affords considerable deference to the trial court, provided that the court acted in 3 Horwich also makes various arguments concerning the merits of her causes of actions. We do not address those arguments because they are unrelated to the dismissal orders from which she appeals. Similarly, we deny a request for judicial notice filed by Horwich two days before appellate oral argument took place. The request was untimely and the document attached to the request is not relevant to the issue before us.

10 accordance with the governing rules of law.’ [Citation.] ‘An abuse of discretion occurs if, in light of the applicable law and considering all of the relevant circumstances, the court’s decision exceeds the bounds of reason and results in a miscarriage of justice.’” (Id. at p. 808.) II. ANALYSIS Here, the trial court’s grant of the challenged dismissals hinged on Horwich’s failure to file a first amended complaint. However, at the time the court considered the dismissal requests, it was aware Levy submitted the FAC for filing three days before the August 9, 2024 deadline for doing so. In addition, it was aware that filing was not rejected by the superior court clerks until roughly seven weeks later. In the interim time, Horwich had returned to self-represented status, she was evicted from her home, and BIRE, Nationstar, MERS, and BANA had all filed demurrers to the FAC after having been served with it. Further, evidence presented to the trial court raised a question as to the appropriateness of the reasons given for rejection of the FAC filing. Specifically, consistent with the names of the document names ending in “Volume I” and “Volume II,” Horwich explained the FAC was filed by Levy in two volumes because of the length of the exhibits. This was contrary to the rejection notice’s statement that the court received two first amended complaints. (See Bai, supra, 107 Cal.App.5th at p. 195 [court should have recognized “‘confusingly titled’” document as amended complaint because “it is well settled that courts must liberally construe a pleading with a view to substantial justice between the parties, regardless of the titles and labels attached to it”].) The same was true for the second reason provided in the rejection notice—that the attorney’s telephone number did not match court 11 records. Levy was attorney of record for Horwich at the time he submitted the FAC for filing, and his declaration submitted in support of the dismissal oppositions stated the phone number on the FAC was the same phone number he had throughout the litigation. Although the appellate record does not contain a copy of the FAC because of the ultimate filing rejection, we note that all but one of the documents in the record filed by Levy contains the same phone number as that listed for Levy when he was originally substituted in as counsel of record for Horwich. Notably, nothing in the record indicates Horwich was sent, or in fact received, the September 2024 electronic filing rejection notice. The copy of the notice in the record does not indicate how or to whom it was transmitted. Levy was no longer counsel of record at the time the rejection took place, and his declaration says he has no knowledge of whether Horwich, who was self-represented at the time, received a copy of the rejection. Additionally, Horwich’s declaration filed along with the dismissal oppositions states she did not receive notice of the rejection until the trial court issued a tentative ruling taking the first set of demurrers off calendar in late-January 2025. That statement is consistent with other parts of the record which show all parties appear to have been unaware of the filing rejection notice until the court took BIRE and BANA’s demurrers to the FAC off calendar on January 28, 2025, with the explanation that “it appear[ed] from the [c]ourt’s file that [Horwich] ha[d] not filed the [FAC].” Up until that time, all parties were proceeding normally, including filing CMC statements listing anticipated discovery and contemplated future motions. Also before the trial court when it considered the dismissal requests was information about Horwich’s health and mental state between the attempted filing of the FAC and late January 2025. Horwich indicated 12 she and her 94-year-old husband “had to go to the hospital on several occasions,” she became “very serious[ly] depress[ed]” after getting evicted from the property, and she believed Levy had filed oppositions to the FAC related demurrers and had still been representing her. Related to the latter, the record includes many instances of various defendants serving Levy with filings after he substituted out of the case. It also includes many instances of defendants serving Horwich at the property address after she filed a change of address which provided her new address. Adding to the circumstances were Horwich’s multiple attempts to take corrective action once she became aware of the FAC filing problem. On the same day the trial court took the first set of demurrers off calendar due to the lack of an amended complaint on file, Horwich attempted to file the FAC. The court issued a rejection notice two days later because she did not first seek leave to file it. In the meantime, Horwich opposed the ex parte dismissal requests filed by BIRE, Nationstar, and MERS, once again bringing to the court’s attention what had taken place. She also brought in counsel to represent her concerning those requests and her counsel appeared at the related hearing. And even after she received the rejection notice and the court granted the first dismissals, Horwich continued to attempt corrective action by moving for leave to file the FAC. Based on these collective circumstances, the trial court’s decision to dismiss the action with respect to the requesting defendants was an abuse of discretion. California law favors hearings and trial on the merits, with the corollary of this general policy being that “the interests of justice weigh heavily against disposing of litigation on procedural grounds.” (Salas v. Sears, Roebuck & Co. (1986) 42 Cal.3d 342, 347.) Although dismissal statutes represent a recognition that there are certain circumstances in which 13 countervailing policies may outweigh that general policy (see Link v. Cater (1998) 60 Cal.App.4th 1315, 1321), this case does not present such circumstances. Respondents assert we should nevertheless affirm the challenged orders because Horwich cannot demonstrate prejudice. So their argument goes, the demurrers taken off calendar by the trial court demonstrate the FAC did not resolve the defects which led the court to sustain the demurrers to the original complaint, and, therefore, reversing the orders would just delay the inevitable. However, the trial court is better suited to consider and evaluate any demurrers once an amended complaint is filed. Further, even if the court were to sustain demurrers to an amended complaint, it would have the discretion to grant leave to amend. Accordingly, we cannot say the dismissals with prejudice were harmless. DISPOSITION The orders dismissing the action as to BIRE, BANA, Nationstar, and MERS are reversed. On remand, the trial court shall vacate the dismissals. Horwich is entitled to costs on appeal.

DELANEY, ACTING P. J.

WE CONCUR:

GOODING, J.

SERVINO, J.