SAN JOSE — The California Sixth District Court of Appeal recently ruled that California's Unfair Competition Law (UCL) does not apply to a California couple who attempted to challenge the repossession of their home.

In a May 9 ruling, associate justices Patricia Bamattre-Manoukian, Franklin D. Elia and Nathan D. Mihara banned William and Lori Hellmuth’s from UCL claims regarding a preemptive foreclosure on their Salinas property, which was collateral for a $1,088,000 loan from Bank of America.

The issue started in 2010 when the couple filed Chapter 13 bankruptcy that was changed to Chapter 7 and discharged in October 2012. According to the Hellmuths, Bank of America, among other noted creditors, unlawfully started a foreclosure on their collateral property.

Citing California Code Section 2424, the couple argued that their mortgage promissory note was untouchable because it was secured in a trust and protected under the law, and that the repossession of their home went against the trust’s pooling and service agreement. Bank of America and other creditors demurred to the complaint and filed a request for judicial notice for the couple's bankruptcy and loan files.

“Even assuming that a notice of default has been filed against the Salinas property, there is no merit to the Hellmuths’ contention that they have a claim under Section 2924,” the order said. “We exercise our independent judgment as to whether the complaint states a cause of action as a matter of law.”

The trial court sustained the defendant’s demurrers in 2015 without leave to amend, and the couple appealed the judgment of dismissal. 

“We therefore conclude that plaintiffs have not met their burden on appeal, and the trial court did not abuse its discretion in denying leave to amend,” the order said. “We further determine that plaintiffs have failed to allege the existence of an actual controversy involving justiciable questions relating to the parties’ respective rights or obligations.”

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