NorCal Tentative Rulings - what the judges are thinking ...

For week of 4/9/2012

* TENTATIVE RULING: *

DEUTSCHE BANK NATIONAL TRUST COMPANY, ET AL. VS. Homeowner

DEMURRER TO 3rd Amended CROSS-COMPLAINT of Homeowner BY TICOR TITLE INSURANCE COMPANY

The Court rules on the demurrer by Cross-Defendant Ticor Title Insurance Company to the Third Amended Cross-Complaint as follows:

As to the Third Cause of Action for Aiding and Abetting Fraud, the general demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.  Liability may be imposed on one who aids and abets the commission of an intentional tort if the person knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act.  Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal. App. 4th 1138, 1145.  “California courts have long held that liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant substantially assisted.”  Id.  It cannot be inferred from the allegations in the cross-complaint, particularly paragraphs 47 and 48, that Ticor had actual knowledge of the alleged fraud by Jimmy Swain and/or New Century.  Since Cross-Complainant previously was granted an opportunity to allege facts establishing actual knowledge, the general demurrer is sustained without leave to amend.

As to the Seventh Cause of Action for Reformation of the Recorded Deed and the Ninth Cause of Action for Slander of Title, the general demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.  Cross-Complainant concedes in her opposition that these claims do not state sufficient facts to constitute causes of action against Ticor.

As to the Tenth Cause of Action for Elder Financial Abuse, the general demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.  The cross-complaint does not allege facts from which it can be inferred that Ticor, as title insurer to the lender, in bad faith engaged in alleged acts of financial elder abuse, or assisted in alleged financial elder abuse with actual knowledge of wrongful conduct.  See Das v. Bank of America (2010) 186 Cal.App.4th 727, 736-737, 744-745

As to the Eleventh Cause of Action for Unfair Business Practices in Violation of Bus. & Prof. Code §§ 17200 et seq., the general demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.  “A plaintiff alleging unfair business practices must state with reasonable particularity the facts supporting the statutory elements of the violation” under Bus. & Prof. Code §§ 17200 et seq.  Khoury v. Maly’s of Calif., Inc. (1979) 14 Cal.App.4th 612, 619.  The conclusory assertions in the cross-complaint, particularly in paragraphs 79 and 80, do not allege conduct by Ticor sufficient to constitute a cause of action for unfair business practices.  Cross-Complainant has not indicated her opposition brief how the pleading could be amended to state a viable claim against Ticor. 

* TENTATIVE RULING: *

Homeowner, ET AL. VS. WACHOVIA MORTGAGE CORPORATION, ET AL.

DEMURRER TO COMPLAINT of Homeowner BY WACHOVIA MORTGAGE CORPORATION

Demurrer is SUSTAINED WITH LEAVE TO AMEND as to the First through Sixth, Ninth, and Tenth Causes of Action on the ground that each claim is subject to a statute of limitations of four or fewer years.  Each claim accrued upon closing of the loan in November 2005, and Plaintiffs did not file their complaint until October 2011.  The Complaint contains no allegations of fact that Plaintiffs learned of the fraud only in December 2010, as argued in their Opposition.  Further, no allegations explain why Plaintiffs waited until December 2010 to investigate the nature of their loan.  In addition, each cause of action is deficient as follows:

First and Fifth Causes of Action (Negligence, Breach of Fiduciary Duty): Complaint fails to allege a legal duty.  Generally a lender owes no duty of care to potential borrowers in approving a loan.  Wagner v. Benson (1980) 101 Cal.App.3d  27, 35.; No fiduciary relationship exists between a bank lender and its loan customer.  Price v. Wells Fargo (1989) 2313 Cal.App.3d 465, 476.

Second and Third Causes of Action (Intentional Infliction Of Emotional Distress; Bus. & Prof. Code § 17200): The complaint alleges wrongful acts by the mortgage broker, but contains no allegations that Defendant Wachovia committed any “extreme or outrageous” conduct against Plaintiffs or engaged in any “unfair, unlawful, or fraudulent” business practice. 

Fourth Cause of Action (Civil Code § 1916.7(a)(8)): The complaint does not allege that Plaintiffs were ever charged a prepayment penalty. 

Ninth Cause of Action (Bus. & Prof. Code § 10241.3): The statute imposes a requirement on a broker, not on a lender such as Defendant Wachovia. 

Tenth Cause of Action (Fraud): Complaint alleges no misrepresentation made by Defendant Wachovia to Plaintiffs.

The Demurrer to the Sixth Cause of Action (“Unconscionability”) is SUSTAINED WITHOUT LEAVE TO AMEND.  No such cause of action exists.  (Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758, 766).

The Demurrer is OVERRULED as to the Eighth Cause of Action (Civil Code ¶ 1918.5 et seq).  The AMPTA preempts state law only to the extent state law conflicts with federal law.  See Ansley v. Ameriquest Mortg. Co. (9th Cir. 2003) 340 F.3d 858, 864.  The complaint alleges a lender’s requirement to notify borrowers of rate changes.  (Complaint ¶ 104).  Defendant Wachovia argues that this notification requirement “would require a conflicting set of disclosures.”  (Demurrer P&A at 6:22-24).  However, Defendant Wachovia does not identify any provision of federal law that conflicts with this requirement.  Regardless, the 8th cause of action also alleges that loans such as Plaintiffs’ loan must meet certain approval standards.  (Complaint ¶¶ 101-103; see Civ. Code § 1920, subd. (a)).  Defendant Wachovia’s demurrer fails to address this portion of the 8th cause of action.  Nothing in the demurrer argues that this statutory requirement is preempted by any part of AMPTA.

The Demurrer is OVERRULED as to the Eleventh Cause of Action (validity of lien).  The demurrer argues that the claim fails because it is based on the earlier causes of action, all of which fail.  The argument lacks merit because the Eleventh Cause of Action is unrelated to the allegations behind the First through Tenth causes of action.  Rather, the Eleventh Cause Of Action contends only that the deed of trust is unenforceable because no defendant possesses the promissory note.  The demurrer does not address the sufficiency of the claim.

The Demurrer is SUSTAINED WITH LEAVE TO AMEND as to the Twelfth Cause of Action (Quiet Title).  Plaintiffs allege that Defendants have no claims of interest in the property, “as a result of the conduct more fully described in the preceding allegations” (Complaint ¶ 132).  As set forth above, the Complaint does not allege any wrongful conduct or cause of action against Defendant Wachovia.  Thus, the complaint alleges no facts that would void or invalidate Defendant Wachovia’s alleged lien interest. 

Demurrer is SUSTAINED WITH LEAVE TO AMEND as to the Thirteenth Cause of Action (Declaratory Relief) for failure to allege the existence of any controversy or any ultimate facts demonstrating the existence of a controversy. 

* TENTATIVE RULING: *

Homeowner VS. AURORA LOAN SERVICES, ET AL.

MOTION TO CONSOLIDATE CIV 511344 WITH CLJ 205077 BY Homeowner

Plaintiff's  Motion to Consolidate is DENIED.  Moving party has failed to properly serve and file the motion to consolidate in action number 511344 and action number 205077 pursuant to CRC Rule 3.350 (a)(1)(C).  Further, the motion fails to comply with the provisions of CRC Rule 3.350 (a)(1)(B).  In addition, on February 21, 2012, the court entered judgment in favor of Aurora Loan Services, LLC and against defendants Homeowner in San Mateo County Superior Court civil action number 205077, the unlawful detainer action.  Thus, consolidation pursuant to CCP § 1048 is inappropriate because a judgment has been entered in one of the two pending actions. 

* TENTATIVE RULING: *

Homeowner v. ONEWEST BANK, FSB, et al.

Demurrer of OneWest Bank, U.S. National Bank, and MERS

The Demurrer is sustained without leave to amend for failure to state facts sufficient to constitute a cause of action. CCP 430.10(e). Plaintiffs have not alleged sufficient facts to constitute a cause of action for wrongful foreclosure.

A Notice of Default may be issued by the trustee, mortgagee or any of their agents. Civil Code 2924(a)(1)(3); 2924b(b)(4). Mis-identification of the trustee in the Notice of Default is not a material defect and Plaintiffs have not demonstrated prejudice. Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177 (N.D. Cal. 2009); Knapp v. Doherty (2004) 123 Cal. App. 4th 76.

Interests in the Note and Deed of Trust are properly assigned by MERS. Gomes v. Countrywide Home Loans (2011) 192 Cal. App. 4th 1149; Parcray v. Shea Mortgage,  Inc., 2010 U.S. Dist. LEXIS 40377, *31 (E.D. Cal. Apr. 23, 2010); Benham v. Aurora Loan Services, 2009 U.S. dist. LEXIS 78384, *8-9 (N.D. Cal. Sept. 1, 2009).

Civil Code Sections 2924 through 2924k provide a comprehensive framework for regulation of nonjudicial foreclosure sales pursuant to a power of sale contained in a deed of trust. Plaintiffs have not alleged facts that demonstrate cause to enjoin the nonjudicial foreclosure. Gomes v. Countrywide, supra; Moeller v. Lien (1994) 25 Cal. App. 4th 822.

Plaintiffs have not alleged sufficient facts to constitute a cause of action for declaratory relief, and have not demonstrated how they could allege such facts. CCP 1060, 1061. Cardellini v. Casey (1986) 181 Cal. App. 3d 389; Travers v. Louden (1967) 254 Cal. App. 2d 926; Gomes v. Countrywide, supra.

Plaintiffs have not alleged sufficient facts to constitute a cause of action for unfair business practices, and have not demonstrated how they could allege such facts. Bus. & Prof. Code 17200 et seq. Hall v. time, Inc. (2008) 158 Cal. App. 4th 847; Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619; Distor v. U.S. Bank NA, 2009 U.S. Dist. LEXIS 98361, 20-21 (N.D. Cal. Oct. 22, 2009). On the basis of the facts alleged, Plaintiffs have not stated a cause of action.

The automatic stay, 11 USC 362(a), does not stay this action, filed by Plaintiffs. Taking defensive measures, such as filing a demurrer, does not violate 11 USC 362(a). Kelsey v. Waste Management (1999) 76 Cal. App. 4th 590; Shah v. Glendale Fed. Bank (1996) 44 Cal. App. 4th 1371, 1373-1378; Shorr v. Kind 892 F. 2d 575, 577 (7th Cir. 1989), Mays v. U.S. Bank National Assn., 2010 U.S. Dist. LEXIS 16351, 1-2 (E.D. Cal. Feb. 5, 2010); Cobb v. Aurora Loan Servs., LLC, 408 B.R. 351, 354-355 (E.D. Cal. 2009) ; Business Organizations with Tax Planning (Matthew Bender), Chapter 156, Sec. 156.08.

* TENTATIVE RULING: *

Homeowner. et.al. vs. Metrocities Mortgage LLC et. al

Plaintiffs assert six (6) causes of action arising out of a nonjudicial foreclosure sale. The moving Defendants demur to all 6 causes of action. A party may file a demurrer to a complaint where the pleading does not state facts sufficient to constitute a cause of action. (Code of Civil Procedure §430.10(e).) A demurrer tests the legal sufficiency of the pleadings, not the truth of the plaintiff’s allegations or accuracy of the described conduct. (Picton v. Anderson Union High School (1996) 50 Cal.App.4th 726, 733.) As such, all properly pled facts are assumed to be true as well as those that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1153.) Here, Plaintiffs fail to state sufficient facts to support any causes of action as to the moving Defendants.

The deficiencies in each cause of action are as follows:

1st Cause of Action – Violations of the Rosenthal Act: The Plaintiffs fail to state sufficient facts to assert a cause of action for violations to the Rosenthal Act. The Rosenthal Fair Debt Collection Practices Act incorporates portions of the federal Fair Debt Collection Practices Act. (see Civil Code §1788.17.) Foreclosure actions do not fall under the Rosenthal Act and the moving Defendants are not “debt collectors” for the purposes of the Act. (see Odinma v. Aurora Loan Services (N.D. Cal. 2010) 2010 WL 1199886.)

2d Cause of Action – Negligence: The Plaintiffs fail to state sufficient facts to assert a cause of action as a lender is only liable for negligence where it “actively participates” by exceeding its scope “beyond the domain of the usual money lender.” (Nymark v. Heart Fed. Sav. & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) The negligence action fails to allege any fact that the moving Defendants exceeding their scope beyond that of a normal money lender.

3d Cause of Action – Breach of Fiduciary Duty: Plaintiffs fail to state sufficient facts of a special relationship to assert a breach of fiduciary action. Generally, loan transactions are “arm’s length” transactions with no fiduciary relationship between the borrower and lender. (Perlas v. GMAC Mortg., LLC (2010) 187 Cal.App.4th 429, 436.)

4th Cause of Action – Fraud: Fraud must be specifically pled, with facts stating how, when, where, to whom and by what means any misrepresentations were made to a plaintiff. (Citizens of Humanity, LLC v. Costco Wholesale Corp. (2009) 171 Cal.App.4th 1, 20.) In addition, fraud allegations against a corporate defendant require the names of individuals who made misrepresentations, their authority to speak on behalf of the corporation, whom the individuals spoke to, what was said or written, and when it was said or written. (Ibid.) Plaintiffs fail to plead the fraud action with specificity and the cause of action is devoid of any specific factual allegations as to the corporate defendants.

5th Cause of Action – UCL Violations: “The UCL does not proscribe specific activities, but broadly prohibits any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. …By proscribing ‘any unlawful business practice,’ section 17200 ‘borrows’ violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable. Because section 17200 is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. In other words, a practice is prohibited as ‘unfair’ or ‘deceptive’ even if not ‘unlawful’ and vice versa.” [Citations and quotations omitted.] (Puentes v. Wells Fargo Home Mortg., Inc. (2008) 160 Cal.App.4th 638, 643-644.) A plaintiff alleging unfair business practices must state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly's of California, Inc. (1993) 14 Cal. App. 4th 612, 619.) The Plaintiffs fail to allege specific facts as to any of the three prongs for a UCL cause of action.

6th Cause of Action – Breach of Implied Covenant of Good Faith and Fair Dealing: The Plaintiffs sixth cause of action fails since there is no allegation of an underlining contract. A breach of the covenant of good faith and fair dealing permits a recovery in contract.

A breach of the implied covenant of good faith and fair dealing action requires a plaintiff allege a valid contract between the parties. Moreover, the implied covenant cannot be extended to create obligations not contemplated by the contract. (Racine & Laramie v. Department of Parks and Recreation (1992) 11 Cal.App.4th 1026, 1031-32.)

While the Plaintiffs do not formally allege a TILA action, the Complaint can be interpreted to make a claim for such a cause of action. However, Plaintiffs fail to sufficiently state a TILA cause of action. A TILA claim must be brought within three years from the consummation of the loan. (McOmie-Gray v. Bank of America (9th Cir. 2012) 667 F.3d 1325, 1328.) Plaintiffs entered into the loan in April of 2007 but did not bring the action until 2012. As such, the claim is barred by the statute of limitations. Further, rescission under the TILA does not apply to a residential mortgage where the loan is issued for customers that reside in or expect to reside in the dwelling. (15 USC §1602(w); Gomez v. Wachovia Mortgage Corp. (N.D. Cal. 2010) 2010 WL 291817, 5.) Even if Plaintiffs were able to state a rescission claim, they have failed to allege an ability to tender. (15 USD §1635(b); 12 CFR §226.23(d); Keen v. American Home Mortgage Servicing, Inc. (E.D. Cal 2009) 2009 WL 3380454, 4; Garza v. American Home Mortgage (E.D. Cal 2009) 2009 WL 188604, 5.)

The Plaintiffs’ allegations against Defendant MERS and the allegations of chain of title deficiencies also fail to state sufficient facts for a cognizable cause of action. The nature and ability of MERS to initiate foreclosures has been upheld at the appellate court level. (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1151.) The allegations of an inability to discern who owns a beneficial interest in the loan are not necessarily an indicator that a foreclosing entity lacked authority from a holder of a beneficial interest. (Robinson v. Countrywide Home Loans, Inc. (2011) 199 Cal.App.4th 42, 46.) Nonetheless, if the Plaintiffs could claim deficiencies in the chain of title, they fail to allege facts to sufficiently show they were prejudiced by imperfections in the foreclosure process. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256.)

The court presumes the facts alleged in the Complaint and in the moving papers state the strongest case for the Plaintiffs. (see Live Oak Publishing Co. v. Cohagan (1991) 234 Cal.App.3d 1277, 1286.) Plaintiffs bear the burden of demonstrating how the complaint may be amended to cure the defects therein. (Assoc. of Comm. Org. for Reform Now v. Dept. of Indus. Relations (1995) 41 Cal.App.4th 298, 302.) A demurrer will be sustained without leave to amend absent a showing by plaintiff that a reasonable possibility exists that the defects can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A review of the Complaint does not show that it may be cured with an amendment. Further, the court deems the failure to oppose the demurrer as an abandonment of the claims. (Herzberg v. County of Plumas (2005) 133 Cal.App.4th 1, 20.) As such, the demurrer is sustained without leave to amend.

* TENTATIVE RULING: *

Federal Home Loan Mortgage Corp. vs. Homeowner

Defendants’ motion for order staying instant action is denied. Defendants initially moved to stay the action on the grounds that they had filed a notice of appeal from the judgment of dismissal entered in Placer County Superior Court Case No. SCV-. In Case No. SCV-, the Defendants sought to set aside the foreclosure of their home based on allegations of negligent misrepresentation and fraud. The Defendants argued that there was a likelihood that the judgment of dismissal would be overturned on appeal, making the trustee’s sale of the property a nullity, and causing irreparable injury if the instant unlawful detainer action was allowed to proceed to trial in the meantime. However, following the filing of defendants’ motion to stay, the Court of Appeal dismissed the appeal of the dismissal in Case No. SCV-, determining that the order appealed from is nonappealable. The Defendants now argue in their reply brief that they will be filing an appeal in the future, once they obtain their judgment of dismissal, and that the stay is proper pending resolution of this future appeal.

This unlawful detainer action was filed on May 6, 2011. The Defendants filed a motion to consolidate the unlawful detainer action with Case No. SCV-, which was denied by order dated August 23, 2011. They then filed a motion to stay the unlawful detainer action based on the allegations of SCV-, which was denied by order dated September 26, 2011. In ruling on the motion to consolidate, the court noted:

... in light of the procedural history of these cases, the present motion to consolidate appears in part as an end-run, attempting to have the court reconsider its prior ruling on the request for injunctive relief or, in the process, to gain delay in the trial of the unlawful detainer action, which is designed to be a summary proceeding.

(Ruling on Motion to Consolidate, dated Aug. 23, 2011.) The same appears to be true with respect to the motion before the court.

As admitted by both sides, procedures exist for the Defendants to seek a stay from an unlawful detainer judgment pending appeal of such judgment. However, the authorities cited by the Defendants do not support their argument that stay of the unlawful detainer action is proper pending a future appeal in Case No. SCV-, particularly where the court has previously found no basis to consolidate or stay this action. In addition, the Defendants present no evidence, only conclusory argument, to support their contention that they have made “a strong factual showing that ‘substantial justice supports reversing the lower court’s sustaining of the demurrer to the Defendants first amended complaint [in SCV-]”. (Reply at 3:6-10.)

* TENTATIVE RULING: *

Homeowner vs. Wells Fargo Bank. N.A. et al

Defendants’ unopposed demurrer to the first amended complaint (“FAC”) is sustained without leave to amend.

Plaintiff’s first cause of action for breach of contract fails to state facts sufficient to constitute a valid cause of action. For a breach of contract claim, the complaint must indicate whether the alleged contract it is written, oral, or implied by conduct. Code Civ. Proc. § 430.10 (g). If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference. Otworth v. Southern Pacific Transp. Co. (1985) 166 Cal.App.3d 452, 458-459, citing Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 59. Plaintiff fails to set out the terms verbatim, or attach a copy of the alleged instrument. Plaintiff also fails to adequately allege breach of any contract.

Plaintiff’s second cause of action for breach of the implied covenant of good faith and fair dealing fails to state facts sufficient to constitute a valid cause of action. An implied covenant “will not be read into a contract to prohibit a party from doing that which is expressly permitted by the agreement itself.” Wolf v. Walt Disney Pictures and Television (2008) 162 Cal.App.4th 1107, 1120. If defendant did expressly what it was given the right to do, there is no breach of the implied covenant. Carma Developers, Inc. v. Marathon Dev. Co., Inc. (1992) 2 Cal.4th 342, 374. The bank did not have a duty to grant plaintiffs a loan modification, and the implied covenant cannot impose a duty where none existed. Further, the tort of breach of the implied covenant does not apply in cases that involve ordinary banking transactions. Mitsui Mfrs. Bank v. Superior Court (1989) 212 Cal.App.3d 726, 729.

Plaintiff’s third cause of action for harassment fails to state facts sufficient to constitute a valid cause of action. Plaintiff fails to adequately allege a “knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose.” Code Civ. Proc. § 527.6(b). Plaintiff also fails to allege facts showing that the purported conduct would cause a reasonable person to suffer substantial emotional distress. Id.

Plaintiff’s fourth cause of action for unjust enrichment fails to state facts sufficient to constitute a valid cause of action. Plaintiff fails to allege facts showing that Wells Fargo’s received and unjustly retained TARP funds at plaintiff’s expense. Plaintiff alleges no facts showing entitlement to TARP funds received by Wells Fargo.

Plaintiff’s fifth cause of action for willful infliction of emotional distress fails to state facts sufficient to constitute a valid cause of action. Plaintiff fails to allege “extreme and outrageous” conduct for the purpose of this claim. To be outrageous, conduct must be so extreme as to exceed all bounds of that usually tolerated in a civilized community. Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal. 4th 965. defendant's conduct must go so far beyond the bounds of decency that it may be regarded as atrocious. Wong v. Tai Jing (2010) 189 Cal. App. 4th 1354. Plaintiff’s allegations fall well short of meeting these standards.

Plaintiff’s sixth cause of action for wrongful foreclosure fails to state facts sufficient to constitute a valid cause of action. Plaintiff does not allege tender, or the present ability to tender, the full amount due under the note. US Cold Storage v. Great W. Sav. & Loan (1985) 165 Cal. App. 3d 1214; Abdallah v. United Savs. Bank (1996) 43 Cal.App. 4th 1101.

The court presumes that the facts alleged in the FAC state the strongest case for plaintiff. Live Oak Publishing Co. v. Cohagan (1991) 234 Cal.App.3d 1277, 1286. Plaintiff bears the burden of demonstrating how the complaint may be amended to cure the defects therein. Assoc. of Comm. Org. for Reform Now v. Dept. of Indus. Relations (1995) 41 Cal.App.4th 298, 302. A demurrer shall be sustained without leave to amend absent a showing that a reasonable possibility exists that the defects can be cured by amendment. Blank v. Kirwan (1985) 39 Cal.3d 311, 318. The FAC does not suggest on its face that it is somehow capable of amendment and plaintiff fails to make any showing that the FAC can be amended to change its legal effect.

* TENTATIVE RULING: *

Plaintiffs’ Demurrer to Answer and Motion to Strike Affirmative Defenses in Answer

To deny the motion to strike the seventh and ninth affirmative defenses from the answer. (CCP §§ 435, 436.) To overrule the demurrer to the third, fourth, eighth and ninth affirmative defenses on the ground of uncertainty. (CCP § 430.20(b).) To sustain the demurrer to the second, third, fourth, fifth, sixth, and eighth affirmative defenses on the ground of failure to state facts sufficient to constitute a defense, with leave to amend. (CCP § 430.20(a).) To overrule the demurrer to the first, seventh and ninth affirmative defenses.

Demurrer and Motion to Strike Answer: A plaintiff may demur to the answer on the grounds of (1) failure to state facts sufficient to constitute a defense, (2) uncertainty, and (3) failure to state whether the contract alleged in the answer is written or oral. (CCP § 430.20.)

Here, plaintiffs demur to the answer on the grounds of uncertainty and failure to state facts sufficient to constitute a defense.

With regard to the demurrer for uncertainty, plaintiffs demur to the third, fourth, eighth and ninth affirmative defenses on the ground that they are uncertain because they fail to state which cause of action they are intended to answer. However, it does not appear that the defenses are uncertain.

Demurrers for uncertainty are disfavored, and will only be sustained where the complaint or answer is so bad that the other party cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) Judges will otherwise overrule demurrers for uncertainty and direct counsel to clear up any ambiguities through discovery or stipulations. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2010) § 7:86, p. 7(I)-37.) Thus, demurrers for uncertainty will almost certainly be overruled where they are directed to inconsequential matters, the facts alleged in the complaint or answer are presumptively within the knowledge of the other party or ascertainable through discovery, or where the issues are not dispositive of one or more causes of action. (Khoury, supra, at 616.)

Here, the third defense alleges that “Plaintiffs are guilty of laches and have waived their rights, if any, under the Complaint.” (Answer, p. 13, Third Affirmative Defense.) Thus, it appears that defendants intend the third affirmative defense to apply to all causes of action in the complaint. As a result, plaintiffs cannot claim that the affirmative defense is so ambiguous that they cannot determine the issues they must admit or deny, or what defenses are being raised. Any ambiguities can be cleared up in discovery.

Likewise, the fourth affirmative defense alleges that “Plaintiffs’ Complaint is barred because Plaintiffs have engaged in acts and courses of conduct which constitute unclean hands.” (Answer, p. 13, Fourth Affirmative Defense.) Again, it appears that defendants intend this defense to apply to the entire complaint, and thus the defense is not uncertain. If there are ambiguities, the parties can resolve them in the discovery process.

The eighth affirmative defense alleges that plaintiffs failed to mitigate their damages, and the ninth affirmative defense alleges that plaintiffs’ damages were not caused by defendants, and were in fact caused by the conduct of plaintiffs or others. (Answer, p. 14, Eighth and Ninth Affirmative Defenses.) While it is not clear which causes of action these defenses are directed toward, it appears that they are intended to answer all claims for monetary damages in the complaint. The parties can resolve any ambiguities through discovery or stipulations. Therefore, the court intends to overrule the demurrer for uncertainty.

Next, plaintiffs demur to all of the affirmative defenses for failure to state facts sufficient to constitute a defense, as well as moving to strike affirmative defenses seven and nine for improperly alleging denials of the allegations of the complaint rather than alleging “new matter” constituting an affirmative defense.

“It is important to observe what matters are not put in issue by a denial. This plumbs the line between defenses by denial and defenses by allegation of new matter. [Citation.] A defense in the nature of ‘yes, the allegations are true, but . . .’ is not put in issue by the denial. What is put in issue by a denial is limited to the allegations of the complaint.” (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 383.)

“All facts which directly tend to disprove any one or more of these averments [in the complaint] may be offered under the general denial: all facts which do not thus directly tend to disprove some one or more of these averments, but tend to establish a defense independently of them, cannot be offered under the denial; they are new matter, and must be specially pleaded.” (Pomeroy, Code Remedies (5th ed. 1929) § 549, pp. 900-901, italics in original, fn. omitted.)

In general, whatever defendant bears the burden of proving at trial is “new matter” and thus must be specifically pleaded in the answer. (California Academy of Sciences v. County of Fresno (1987) 192 Cal.App.3d 1436, 1442.) Comparative fault of the plaintiff in a negligence action is an example of an affirmative defense that must be pled in the answer. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2010) § 6:436, p. 6-114, see also 5 Witkin, Cal Procedure: Pleading (5th ed. 2008) § 1103, pp. 530-531.)

By contrast, facts showing some essential allegation of the complaint is not true are not “new matter” but only a traverse. Such matters are in issue under a general denial, and need not be specially pleaded in the answer. (City of Santa Barbara v. Superior Court (Janeway) (2007) 41 Cal.4th 747, 780.)

Here, the seventh affirmative defense alleges that plaintiffs’ complaint, and each cause of action therein, fails to state facts sufficient to allow recovery of punitive damages. (Answer, p. 14, Seventh Affirmative Defense.) Thus, the defense essentially alleges the affirmative defense of failure to state facts sufficient to constitute a cause of action, or in this case a claim for punitive damages, which is considered to be an affirmative defense. (CCP § 430.80(a); Weil & Brown, supra, at 6:473.1, p. 6-126.) The contention that the complaint fails to state facts sufficient to constitute a cause of action is not a denial of the allegations of the complaint, but rather an objection to the way that the complaint is pled. Therefore, it is not a traverse or denial, but instead is considered “new matter”, and as such it is not subject to being stricken.

Likewise, the ninth affirmative defense is also properly alleged. A defense of comparative or contributory negligence is a proper affirmative defense. (Weil & Brown, supra, § 6:436, p. 6-114, see also 5 Witkin, Cal Procedure: Pleading (5th ed. 2008) § 1103, pp. 530-531.) Here, defendants have also included a denial that plaintiffs have been damaged, but they then allege that, if it is determined that plaintiffs were damaged, such damages were not caused by defendants, but resulted from the conduct of plaintiffs or others who were either not employed by defendants or acted outside the course and scope of their employment, without the consent or verification of defendants. (Answer, p. 14, Ninth Affirmative Defense.) Thus, defendants are alleging “new matter”, namely that plaintiffs were the cause of their own damages. As a result, the court will not strike the seventh and ninth affirmative defenses.

On the other hand, the court intends to sustain the demurrer to several of the affirmative defenses for failure to state facts sufficient to constitute valid defenses. Affirmative defenses must be alleged “as carefully and with as much detail as the facts which constitute the cause of action and are alleged in the complaint.” (See Pomeroy, Code Remedies, supra, § 563, at p. 917.) Simply alleging a legal conclusion, such as “plaintiff’s claim is barred by laches”, is not sufficient to state an affirmative defense. (FPI Development, supra, 231 Cal.App.3d at 384.)

Here, defendants’ second, third, fourth, fifth, sixth, and eighth causes of action are insufficiently alleged, since they only allege legal conclusions such as waiver, laches, unclean hands, equitable estoppel, good faith, and failure to mitigate damages without any supporting facts. Thus, the court intends to sustain the demurrer to these affirmative defenses for failure to state facts sufficient to state an affirmative defense, with leave to amend. However, the court intends to overrule the demurrer to the first, seventh and ninth affirmative defenses, as they sufficiently allege defenses based on failure to state a claim and comparative fault.