NorCal TntvRul 7/10/12

* TENTATIVE RULING: *

CIV 507649    Plaintiff VS. AMERICA'S WHOLESALE LENDER, ET AL.

MOTION TO STRIKE PORTIONS OF COMPLAINT FILED BY FIDELITY NATONAL TITLE COMPANY

Fidelity National Title Company’s Motion to Strike is DENIED as being moot in consideration of the ruling on Fidelity’s Demurrer set forth below. 

 DEMURRER TO 1st Amended COMPLAINT of KALOTKIN BY AMERICA'S WHOLESALE LENDER, COUNTRYWIDE FINANCIAL CORPORATION, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, THE BANK OF NEW YORK MELLON, RECONTRUST COMPANY HEARING

The Demurrers as to the First (Wrongful Foreclosure), Second (Fraud), Third (Intentional Misrepresentation), Sixth (Slander of Title), and Seventh (Quiet Title) are OVERRULED.

The Demurrer as to the Fourth Cause of Action (Breach of Contract) is SUSTAINED WITH LEAVE TO AMEND so that Plaintiff can plead a proper cause of action for breach of contract including; existence of the contract (attach a complete copy of the contract, or plead its effect); performance by Plaintiff or excuse for non-performance; breach by Defendants; and resulting damages to Plaintiff. 

The Demurrer as to the Fifth Cause of Action (Breach of the Covenant of Good Faith and Fair Dealing) is SUSTAINED WITH LEAVE TO AMEND so that Plaintiff can plead facts sufficient to constitute a cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing, including the existence of an underlying agreement, and facts constituting the breach by Defendants together with resulting damages. 

The Demurrer as to the Eighth Cause of Action (Declaratory Relief) is SUSTIANED WITH LEAVE TO AMEND so that Plaintiff can plead a proper cause of action for Declaratory Relief, including setting forth the actual controversies that exist between the parties. 

The Demurrer as to the Ninth Cause of Action (Accounting) is SUSTAINED WITH LEAVE TO AMEND so that Plaintiff can plead a proper cause of action for an accounting, including, that she is owed money from Defendants. 

The Demurrer as to the Tenth Cause of Action (UCL Claim) is SUSTAINED WITH LEAVE TO AMEND to that Plaintiff can allege sufficient facts constituting an Unfair Competition Claim, including a predicate underlying claim within the scope of Bus. & Prof. Code section 17200.

The Demurrer as to the Eleventh Cause of Action (Unjust Enrichment) is SUSTAINED WITHOUT LEAVE TO AMEND.  The Court acknowledges that there is a split in authority as to whether unjust enrichment is a separate cause of action; however, the First District appears to be on the side that does not recognize unjust enrichment as a separate cause of action (McBride v. Boughton (2004) 123 Cal. App. 4th 379, 387; Hill v. Roll International Corp. (2011) 195 Cal. App. 4th 1295, 1307). 

The Demurrer as to the Twelfth Cause of Action (Injunctive Relief) is SUSTAINED WITHOUT LEAVE TO AMEND because it is not a separate cause of action. 

DEMURRER TO 1st Amended COMPLAINT of Plaintiff BY FIDELITY NATONAL TITLE COMPANY

Defendant, Fidelity National Title Company’s, Demurrers as to each cause of action of the First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND because each cause of action fails to state facts sufficient to constitute a cause of action against Fidelity, and is uncertain.  Plaintiff also elected not to oppose this demurrer which further precludes her arguments and contentions in support of her pleading from being considered; additionally, Plaintiff did not inform the Court of how she would amend her pleading to remedy the Demurrer.

Fidelity’s first demurrer pointed out that the subject property is encumbered by two Deeds of Trust, and that Fidelity only had dealings with one of the Loans (the Loan for $50,000).  The Loan with which Fidelity had dealings is not the Loan which is the subject of this lawsuit (the Loan for $360,000). 

The first demurrer also pointed out that Fidelity rescinded the notice of default, which had the effect of rescinding the notice of trustee’s sale.  The rescission certainly eliminates any challenges plaintiff might have regarding Fidelity’s conduct regarding the $50,000 Loan.

The First Amended Complaint did very little to clarify which Loan or Loans were being challenged, and to clarify exactly what Fidelity did, or did not do, that is the basis of this lawsuit.  This is plaintiff’s second opportunity to plead her case against Fidelity and she has been put on notice as to Fidelity’s position for months (the Fidelity Demurrer was filed Oct. 17, 2011 and the FAC was filed on Jan. 31, 2012).

* TENTATIVE RULING: *

MSC11-02382 Plaintiff VS. THE BANK OF NEW YORK MELLON

DEMURRER TO 1st Amended COMPLAINT of Plaintiff

FILED BY THE BANK OF NEW YORK MELLON, BANK OF AMERICA, NA, RECONTRUST

 The Court rules as follows on the general demurrer brought by all three named defendants.  (Code Civ. Proc., section 430.10, subd. (e).)  The demurrer to the First Cause of Action is overruled.  The demurrer to the Second Cause of Action is sustained with one last opportunity to amend.  Plaintiffs shall file and serve any further amended complaint on or before July 25, 2012.  The basis for these rulings is as follows.

Defendants’ unopposed request for judicial notice is granted.  Defendants are directed to properly tab their exhibits in all future filings.  (See, Cal. Rules of Court, rule 3.1110, subdivision (f).)  Violations of this instruction may result in the imposition of monetary sanctions.

Plaintiffs’ opposition papers were filed four court days late, and were improperly served by ordinary mail rather than by overnight delivery.  (See, Code Civ. Proc., section 1005, subdivisions (b) and (c).)  Plaintiffs are directed to timely file and properly serve all law and motion papers in future proceedings.  Violations of this instruction may result in the Court striking any non-compliant filings, and imposing monetary sanctions.

First Cause of Action (Civil Code section 2923.5)

Plaintiffs have adequately alleged a violation of section 2923.5 of the California Civil Code.  (See, Skov v. U.S. Bank National Assn., 2012 Cal.App.LEXIS 779, pages 8 9.)  Defendants’ request for judicial notice of the compliance declaration in the recorded notice of default is not dispositive.  (Id., at 5-8.)

 This ruling on the First Cause of Action shall not prejudice defendants’ right to offer evidence, in a motion for summary judgment or at trial, that defendants have complied with section 2923.5.  The Court notes that such compliance may properly be effected after this action was commenced, as authorized by the Mabry decision.  (See, Mabry v. Superior Court (2010) 185 Cal.App.4th 208.)

This ruling on the First Cause of Action also shall not prejudice defendants’ right to oppose the pending motion for a preliminary injunction on the ground that the equities favor defendants.  In this regard, the Court notes that plaintiffs have already achieved a six-month delay in the foreclosure process, which is the only kind of relief authorized by the Mabry decision.

Second Cause of Action (Unfair Competition Law)

Plaintiffs have failed to intelligibly articulate a viable cause of action under the Unfair Competition Law (“UCL”), as against any of the three demurring defendants.  (See, Cal. Bus. & Prof. Code, section 17200, et seq.)  The Court has granted leave to amend only in an abundance of caution.  Any further amended complaint shall conform to the following guidelines.

Plaintiffs may not maintain a UCL cause of action on behalf of any borrowers other than themselves, because they have not complied with the rules applicable to class action lawsuits.  (Cal. Bus. & Prof. Code, section 17203.)

A private plaintiff is entitled to only two remedies: restitution, and injunctive relief.  (Cal. Bus. & Prof. Code, sections 17203 and 17204.)  Consequential damages are not a proper remedy in a UCL cause of action.  (See, Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150.)  In the case at bar, plaintiffs have failed to allege with reasonable particularity any right to restitution or injunctive relief as against any of the three demurring defendants.  Defendants’ alleged violation of section 2923.5 of the Civil Code does not support an independent cause of action under the UCL.  (Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1617.)

 In any further amended complaint, plaintiffs shall set out a separate UCL cause of action against each of the three named defendants.  In each such cause of action, plaintiffs shall allege facts showing a right to UCL relief as against that named defendant.  No additional causes of action may be alleged without leave of court.

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MSC12-01147  RELTUB VS. ONEWEST BANK

TRO AND ISSUANCE OF OSC RE PRELIMINARY INJUNCTION SET BY RELTUB, LLC

Plaintiff’s Application for a Preliminary Injunction is denied. (Cal. Code Civ. Proc., section 526, subd. (a).) Plaintiff has not shown some probability of prevailing.  (Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454, 459.)

Irrespective of the names given to the causes of action, or the numerous descriptions in the “prayer” section of the Complaint, the action is simply one for “wrongful” foreclosure. The many and lengthy “irregularities” raised by the Plaintiffs have been before California’s trial courts on a regular basis and have been constantly rejected. (See: Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 443; Robinson v. Countrywide Home Loans, Inc. (2011) 199 Cal.App.4th 42, 46; Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1155.)

Defendants correctly indicate that California follows the “tender” rule in wrongful foreclosure cases. (See, Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; MCA Inc. v. Universal Diversified Enterprises Corp. (1972) 27 Cal.App.3d 170, 177.) While there are certain exceptions to the tender rule, none apply to the issues raised by Plaintiff in this action which relate entirely to the alleged irregularity of the choice of parties undertaking the foreclosure.

* TENTATIVE RULING: *

HG10516023 Plaintiff VS Litton Loan Servicing, LP

Motion to Renew Motion to Compel Answer to Interrogatories

This Tentative Ruling is issued by Judge Lawrence John Appel

The Motion to Renew Plaintiff's Motion to Compel Answers to Interrogatories and Requests for Admission ("RFAs") against Defendant Bank of America National Association, erroneously sued as "Bank of America" ("BOA"), filed by Plaintiff on June 14, 2012, is DENIED.

First, to the extent the motion is brought under C.C.P. § 1008(b), the court finds that statute inapplicable. Plaintiff is not making a "subsequent application for the same order" as he sought in the motion filed on January 17, 2012. That previous motion sought an order requiring BOA to serve initial responses to the Interrogatories and RFAs. The court appropriately ruled that, given that BOA served verified amended responses in the meantime, the motion was for the most part moot. Because the parties had a dispute as to the form of the verification that was served on March 1, 2012, however, the court issued an order requiring BOA to serve new verifications with specified information. Plaintiff is not seeking initial responses, as he sought in that prior motion, or even a different ruling as to the sufficiency of the verification that was before the court on the prior motion. Instead, he is asserting that the NEW verifications served on March 29, 2012 - which were not before the court on the earlier motion - do not comply with the court's order of March 20, 2012 and/or are insufficient. This type of dispute is not a "subsequent application for the same order" under section 1008(b).

Second, to the extent Plaintiff is asserting that BOA's new verifications do not comply with the March 20, 2012 order, the court finds sufficient compliance. The prior order required BOA to "serve Plaintiff with new verifications that are either executed by an officer or agent of BofA or that clearly set forth facts specifying the individual's agency or other authority to sign BofA's discovery responses on its behalf." The new verifications specify such authority, and attach the operative power of attorney documents under which such authority is purportedly conferred. This is sufficient for present purposes, and the court finds the various arguments about the precise extent of Litton's authority to be beyond the scope of a discovery motion. Further, given that Plaintiff's theory of liability against BOA in this case is mostly if not entirely based on the alleged conduct of Litton and its representatives (see, e.g., Second Amended Complaint, ¶¶ 15-18, 21, 27, including ¶ 16 ["At all times material to this lawsuit, ... Litton was an agent or principal of ... BOA."]), and given the relationship between BOA and Litton described in the power of attorney, it does not appear improper for an agent of Litton to verify responses on BOA's behalf. The court finds the asserted untimely service of the motion (by one day), whether or not correct, to be inconsequential in light of Litton's response on the merits.

The clerk is directed to serve endorsed-filed copies of this order, with proof of service, to counsel and to self-represented parties of record by mail.

* TENTATIVE RULING: *

HG11610044 Plaintiff VS Wells Fargo Home Mortgage

Demurrer to the First Amended Complaint

This Tentative Ruling is issued by Judge Gail Brewster Bereola

On the demurrer of Defendant First American Trustee Servicing Solutions LLC. ("Defendant") to the first amended complaint of Plaintiff, the court orders as follows:

The demurrer to the first cause of action for Wrongful Foreclosure is SUSTAINED, pursuant to C.C.P. § 430.10(e), WITHOUT LEAVE TO AMEND. This cause of action is based on alleged irregularities with respect to (a) the information contained in the notice of default; (b) the asserted lack of possession of the original note; and (c) "Defendants'" purported lack of authority to execute the substitution of trustee. (FAC, ¶¶ 33-43.) First, these allegations are contradicted by the judicially noticed documents upon which they are based. (See RJN, Exhs. A-E.) Among other things, the notice of default contains the required disclosures; there is no need to assign the deed of trust to First American Trustee, which was duly substituted as trustee on July 21, 2010 is entitled to initiate foreclosure proceedings; and there is no need for a foreclosing entity to possess the "original note." (See RJN, Exhs. A-C; Nool v. HomeQ Servicing (E.D. Cal. 2009) 653 F.Supp.2d 1047, 1053, and authority cited therein; R.G. Hamilton Corp. v. Corum (1933) 218 Cal. 92, 95-96; California Trust Co. v. Smead Inv. Co. (1935) 6 Cal.App.2d 432, 435; Miller & Starr, Cal. Real Estate (3d ed.) § 10:181; Civil Code §2924(a)(1).)

Second, these challenges are based solely on alleged procedural irregularities in the foreclosure process, and thus Plaintiffs must demonstrate a valid and viable tender of the indebtedness due on the note and deed and deed of trust, which they have not done, and claim they need not do. (See, e.g., Karlsen v. American Sav. & Loan Ass'n (1971) 15 Cal.App.3d 112, 117; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109; Pantoja v. Countrywide Home Loans Inc. (N.D. Cal. 2009) 640 F.Supp.2d 1177, 1183-1185.)

Third, Plaintiffs fail to allege facts to the effect that these purported procedural irregularities were substantial and material and prejudiced their rights. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) Plaintiffs do not allege, for example, that they were not in default, that the purported irregularities caused their inability to pay off the debt, or that multiple entities claiming to be the rightful beneficiary or trustee caused confusion in the process.

The court notes that Plaintiffs' opposition memorandum does not address any of the above. Instead, it argues that Plaintiffs can state a valid cause of action for violation of Civil Code § 2923.5. That statute is not even mentioned in the first cause of action, and Plaintiff cannot amend to state a cause of action under that statute because the trustee's sale has already occurred. (See Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 235.) Accordingly, the demurrers to the fifth cause of action for Quiet Title, sixth cause of action for Set Aside Sale, and seventh cause of action for Cancel Trustee's Sale are also SUSTAINED, pursuant to C.C.P. § 430.10(e), WITHOUT LEAVE TO AMEND.

Further, the demurrer to the twelfth cause of action for Declaratory Relief and thirteenth cause of action for Injunctive Relief are SUSTAINED, pursuant to C.C.P. § 430.10(e), WITHOUT LEAVE TO AMEND, as such remedies seek to undo the sale and declare that Defendant(s) lacked the authority to sell the property.

The demurrer to the second cause of action for Fraud is SUSTAINED, pursuant to C.C.P. § 430.10(e), WITH LEAVE TO AMEND. To the extent any fraud-based claims are being asserted as against this defendant, Plaintiffs must state, with the required particularity, all facts constituting a cognizable cause of action for fraud against it, including specifying the representations made by First American Trustee Servicing Solutions to Plaintiffs on which they relied (or the material facts concealed, along with facts supporting a duty to disclose them or the statements rendered misleading for want of disclosure), the persons within the corporation who made or concealed such facts (if they are known or can be identified by description), when they were made, the action taken by Plaintiffs in justifiable reliance thereon, and the resulting damage. (See, e.g., Lazar v. Superior Court (1996) 12 Cal.4th 631, 638; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157-158; Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818; Civ. Code § 1710.) As it is drafted, the fraud claims only concern Wells Fargo's agents.

The demurrer to the fourth cause of action for Unfair Business Practices is SUSTAINED, pursuant to C.C.P. § 430.10(e), WITH LEAVE TO AMEND to state with "reasonable particularity" (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619) facts sufficient to constitute a cognizable cause of action against Defendant for violation of Bus. & Prof. Code § 17200. To the extent it is based on the conduct only of other parties, such as the original lender, it is invalid. (See, e.g., Emery v. Visa Internat. Service Ass'n (2002) 95 Cal.App.4th 952, 960.)

The demurrer to the tenth cause of action for Violation of California Rosenthal Act is SUSTAINED, pursuant to C.C.P. § 430.10(e), WITH LEAVE TO AMEND to allege facts sufficient to constitute a cognizable cause of action including facts sufficient to support an assertion that Defendants are covered "debt collectors" and facts more specifically describing conduct by those Defendants that violated the Act. (See, e.g., Nool v. HomeQ Servicing (E.D. Cal. 2009) 653 F.Supp.2d 1047, 1052-1053.)

The demurrer to the fourteenth cause of action for Breach of Fiduciary Duty is SUSTAINED, pursuant to C.C.P. § 430.10(e), WITHOUT LEAVE TO AMEND. Plaintiffs have not pled facts supporting any special relationship between the parties beyond that of borrower and lender. That relationship is not a "fiduciary" one as a matter of law. (See, e.g., Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1093; Price v. Wells Fargo Bank (1989) 213 Cal.App.3d 465, 476-478; Mitsui Manufacturers Bank v. Superior Court (1989) 212 Cal.App.3d 726.)

 Should Plaintiffs fail to amend, Defendant shall answer the remaining causes of action within 10 days of Plaintiffs' deadline for filing a Second Amended Complaint. (See Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial (The Rutter Group 2010 Rev.) § 7:144, p. 7(I)-58 ["If the demurrer was sustained as to only certain causes of action, and the time to amend has expired, the case moves forward on the remaining causes of action.]") The Court will prepare the order and mail copies to the parties. Counsel for Defendant shall file and serve the Notice of Entry of Order no later than five (5) days after the date shown on the Clerk's Certificate of Mailing. SPECIAL NOTE RE COURT REPORTERS: Effective June 4, 2012, the court will not provide a court reporter for civil law and motion hearings, any other hearings, or trials in civil departments. (See amended Local Rule 3.95.)

* TENTATIVE RULING: *

HG12627501 Plaintiff VS Bank Of America, National Association

Order to Show Cause re Preliminary Injunction

This Tentative Ruling is issued by Judge Gail Brewster Bereola

On the motion of Plaintiff for a preliminary injunction, the court orders as follows: PARTIES ARE TO APPEAR AS ORDERED. (See orders dated May 10, 2012 and May 24, 2012.) At the hearing, the court is inclined to rule as follows: Plaintiff's motion for preliminary injunction is DENIED. Courts consider two interrelated questions in deciding whether to issue a preliminary injunction: (1) is the plaintiff likely to suffer greater injury from a denial of the injunction than the defendants are likely to suffer from its grant; and (2) is there a reasonable probability that the plaintiff will prevail on the merits. (Robbins v. Superior Court (1985) 38 Cal.3d 199, 205-06; Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) Based on a consideration of the above factors and all the material before it on the present motion, the court finds that a preliminary injunction pending determination of the merits of Plaintiff's claims is inappropriate.

First, the only evidence submitted by Plaintiff is a declaration, her complaint is unverified, and Plaintiff has failed to submit any evidence indicating any harm that will come to her if an injunction is not issued, though such harm is easy to imagine. (See Declaration of Plaintiff.) Second, Plaintiff has failed to establish a reasonable probability that she will prevail on the merits. The court is sympathetic to the plight of Plaintiff and the countless other people who have been faced with similar situations. However, as revealed by Plaintiff's declaration filed on May 10, 2012, she was aware of the terms of the loan when she chose to enter into the loan agreement in January 2006, more than six years before filing this action. (Plaintiff's Declaration at ¶¶4-5.) Notably, Plaintiff admits that she was contacted about loan modification and declares that she would like the court to enjoin the sale so that she can "obtain a loan modification with the lender." (Ibid., at ¶¶6-9.) It appears that Plaintiff's investment in the housing market simply failed to generate the beneficial results she hoped it would. However, a lender has no duty to act in the borrower's best interest, (rather than its own), to ensure that a borrower can afford the loan they choose, or to modify a loan agreement. (See, e.g., Nymark v. Heart Fed. Savings & Loan Ass'n (1991) 231 Cal.App.3d 1089, 1095 1096.) Indeed, even assuming the complaint was verified, Plaintiff's claims are insufficient to meet her burden of establishing a probability of prevailing on the merits. The claims are not viable, given the facts alleged. For example, Plaintiff fails to allege tender and to articulate facts to the effect that the purported procedural irregularities were substantial and material and prejudiced her rights. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) Plaintiff does not assert, for example, that she was not in default, that the purported irregularities caused her inability to pay off the debt, or that multiple entities claiming to be the rightful beneficiary or trustee caused confusion in the process. Still further, Plaintiff does not have a private right of action to determine whether the entity initiating the foreclosure process is indeed authorized. (See Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1155 ["Section 2924, subdivision (a)(1) states that a 'trustee, mortgagee, or beneficiary, or any of their authorized agents' may initiate the foreclosure process. However, nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action. "].) Still further, MERS does not appear to be a proper party and Plaintiff's allegations as to its involvement in the process appear to be mistaken or attorney error. (See request for judicial notice, Exhibit 1.) Given the foregoing, Plaintiff's failure to submit any competent evidence regarding the viability of her claims and her harm, (or to even allege a viable claim), this court is compelled to DENY the preliminary injunction.

* TENTATIVE RULING: *

HG11591923 Plaintiff VS EMC Mortgage, LLC, a Delaware LLC

Demurrer to the First Amended Complaint

This Tentative Ruling is issued by Judge John M. True, III

The unopposed Demurrer of Defendant Quality Loan Service Corporation ("Quality") to the First Amended Complaint of Plaintiff Celestino Aguilar, pursuant to CCP § 430.10(e), is SUSTAINED IN PART WITHOUT LEAVE TO AMEND as follows:

1. The Demurrer to the First Cause of Action for Violation of Civil Code § 2923.5 is OVERRULED. On February 27, 2012 and April 30, 2012, the Court indicated in its orders that Plaintiff's assertion that Quality did not comply with Civil Code § 2923.5 appeared to be contradicted by allegations concerning his unsuccessful attempts to negotiate a loan modification made in his opposition to the Demurrer to the initial Complaint. In Skov v. U.S. Bank N.A. (2012) -- Cal.App.4th -- , 2012 WL 2549811, certified for partial publication on July 3, 2012, the Sixth District Court of Appeal held that the plaintiff stated a valid claim based on similar allegations of the failure of the bank to engage in good faith negotiations. The Skov court emphasized that the lender's compliance with Section 2923.5 raises a question of fact. Furthermore, Plaintiff is not required to allege that he is ready, willing and able to tender the amount of the indebtedness in order to state a claim under Section 2923.5. See Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 225-226.

2. The Demurrer to the Second Cause of Action for Negligence, Third Cause of Action for Negligence Per Se, Fourth Cause of Action for Intentional Infliction of Emotional Distress, Fifth Cause of Action for Violation of Civil Code § 1632, Seventh Cause of Action for Violation of Civil Code § 1916.7a(8), Eighth Cause of Action for Breach of Fiduciary Duty, Ninth Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing, Tenth Cause of Action for Unconscionability in Violation of Civil Code § 1670.5, Eleventh Cause of Action for Violation of Civil Code § 1918-1921, Twelfth Cause of Action for Violation of Bus.& Prof. Code § 10241.3, Thirteenth Cause of Action for Fraud, and Fourteenth Cause of Action for Conspiracy to Commit Fraud and Conversion, is SUSTAINED WITHOUT LEAVE TO AMEND.

3. The Demurrer to the Sixth Cause of Action for Violation of Bus.& Prof. Code § 17200, based on Plaintiff's allegations of predatory lending by EMC Mortgage, Central Pacific Mortgage Company, and International Home & Loans, Inc., is SUSTAINED WITHOUT LEAVE TO AMEND. Plaintiff has not alleged any facts to support the assertion that Quality participated in the predatory lending scheme or was otherwise unjustly enriched as a result of the actions and/or omissions of the above entities.

* TENTATIVE RULING: *

CV1101193  Plaintiff v CAL-WESTERN RECONVEYANCE CORPORATION, ET AL

1) HEARING ON DEMURRER – TO FIRST AMENDED COMPLAINT [DEFT] PNC BANK, NATIONAL ASSOCIATION [DEFT] WELLS FARGO BANK, N.A.

2) HEARING ON DEMURRER – TO PLAINTIFFS’ FIRST AMENDED COMPLAINT [DEFT] CAL-WESTERN RECONVEYANCE CORPORATION

The demurrers to the first amended complaint are sustained in part and overruled in part as follows:

First Cause of Action – Violation of Civil Code Section 2923.5, Subdivision (b): Sustained with leave to amend. Plaintiffs fail to allege facts showing that section 2923.5, subdivision (b) applies, contrary to the statement in the Notice of Default. Plaintiffs’ reliance on their request for judicial notice to fill this gap fails. The court may not take judicial notice of the truth of what is stated in a declaration. (See North Beverly Park Homeowners Assn. v. Bisno (2007) 147 Cal.App.4th 762, 778.) Assuming Plaintiffs are able to amend, they will need to allege facts showing Defendants did not in fact comply with this section (i.e., did not contact Plaintiffs to assess their financial situation and explore options to prevent foreclosure). (See Debrunner v. Deutsche Bank Nat. Trust Co. (2012) 204 Cal.App.4th 433, 443-444.)

            Contrary to Defendants’ argument, Plaintiffs are not required to allege that they have or will tender the amount owed in order to assert this cause of action, (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 225.)

Second Cause of Action – Violation of Civil Code Section 2924 et seq.: Overruled. Plaintiffs allege facts sufficient to establish a violation of section 2934a, subdivision (a). Although the Substitution of Trustee was executed by PNC Mortgage, Plaintiffs allege that the beneficiary was Wells Fargo. Thus, the allegations show that an entity other than the statutorily authorized entity purported to execute the Substitution of Trustee. (See Sohal v. Federal Home Loan Mortg. Corp. (N.D.Cal. 2011) 2011 WL 3842195 at *4-5.) As the decision in Sohal establishes, tender is not required. The documents offered by Cal-Western do not establish that PNC Bank was in fact the beneficiary at the time it executed the Substitution of Trustee.

Third Cause of Action – Violation of Business and Professions Code Section 17200: Sustained with leave to amend based upon the court’s order sustaining the demurrer to the first cause of action.

The additional argument raised by Defendants lack merit. As the court ruled in connection with the previous demurrer, “the initiation of foreclosure proceedings put the plaintiff’s interest in her property sufficiently in jeopardy to allege an injury under section 17200…” (Rosenfeld v. JPMorgan Chase Bank, N.A. (N.D.Cal. 2010) 732 F.Supp.2d 952, 973, citing Sullivan v. Wash. Mut. Bank, FA (N.D.Cal. 2009) 2009 WL 3458300; see also Rabb v. BNC Mortgage, Inc. (C.D.Cal. 2009) 2009 WL 3045812.) The court cannot determine from the face of the complaint that Plaintiffs’ claims against Defendants are based upon vicarious liability.

Fourth Cause of Action – Violation of Business and Professions Code Section 17200: Overruled based upon the court’s order overruling the demurrer to the second cause of action.

Fifth Cause of Action – Violation of Business and Professions Code Section 17200: Sustained without leave to amend. Penal Code section 134 does not apply to non-judicial foreclosures as they do not constitute a “trial, proceeding, or inquiry whatever, authorized by law.” “…Though regulated by statute as a matter of public policy, nonjudicial foreclosure is a private procedure involving private parties, occurring pursuant to a private power of sale contained in a deed of trust…” (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 339; see also Garretson v. Post (2007) 156 Cal.App.4th 1508, 1520-1521.)

Sixth Cause of Action – Violation of Business and Professions Code Section 17200: Overruled. The allegations supporting the second cause of action support this cause of action.

Seventh Cause of Action – Declaratory Relief: Overruled. In contrast to Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, Plaintiffs have alleged a specific factual basis for alleging that the foreclosure was not initiated by the correct party. Plaintiffs are not simply testing whether Cal-Western has authority to proceed with the foreclosure.

* TENTATIVE RULING: *

CASE#: MSL12-00962    Plaintiff v. Bank of America

HEARING ON DEMURRER TO FAC of Plaintiff

Defendant Bank of America moves this Court for an order sustaining its demurrer to the First Amended Complaint without leave to amend on the grounds that the complaint fails to state facts sufficient to constitute a cause of action and on further grounds that each cause of action is uncertain.  For the reasons set forth below, this Court overrules the demurrer as to alleged violations of Civil Code § 1788.11(d) and Civil Code § 1788.11(e).  This Court sustains the demurrer, in part, for violation of Civil Code § 1788.17 as to ¬¬¬¬15 U.S.C. § 1692C(a)(2) and 15 U.S.C. § 1692(f) with twenty days leave to amend.

This Court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.  Blank v. Kirwan (1985) 39 Cal. 3d 311, 318. This Court also considers matters, which may be judicially noticed.  Id.  430.60. “A demurrer shall distinctly specify the grounds upon which any of the objections to the complaint, cross-complaint, or answer are taken.”  C.C.P. § 430.6.  “Unless it does so, it may be disregarded.”  Id.

The first preliminary issue for this demurrer is whether the secured loans are “consumer debt” within the scope of the Fair Debt Collection Practices Act (FDCPA) and the Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”). When state law is patterned upon federal law, federal interpretation of similar provisions is instructive.  State of California ex rel. Standard Elevator Co., Inc. v. West Bay Builders, Inc. (2011) 197 Cal. App. 4th 963, 975.  “When determining whether a loan is a ‘consumer debt’ for purposes of the FDCPA courts should examine the transaction as a whole and "look to the substance of the transaction and the borrower's purpose in obtaining the loan, rather than the form alone.”  Selby v. Bank of America, Inc. 2011 U.S. Dist. LEXIS 25427 at *22 (citing Slenk v. Transworld Systems, Inc. (9th Cir. 2001) 236 F.3d 1072.  In Selby, where the plaintiff alleged their loans were “consumer credit obligations arising from consumer transactions,” this was sufficient for pleading purposes.  Id. at *22-23.  Plaintiff has pleaded, “Defendant attempted to collect from Plaintiff for an alleged debt incurred for personal, family or household purposes and not for business purposes.”  This encompasses the FDCPA and Rosenthal Act definitions for consumer transactions, so the debt is sufficiently pleaded as consumer debt.

The second preliminary issue is whether defendant may be considered a debt collector under the Rosenthal Act and FDCPA.  Plaintiff’s complaint alleges defendant is debt collector because they “regularly attempt to collect debts alleged to be due another.”  According to the Rosenthal Act, “the term ‘debt collector’ means any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection.”  Civ. Code § 1788.2.  The FDCPA similarly states, “[t]he term ‘debt collector’ means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”  15 U.S.C. § 1692A(6).  Defendant only cites cases relating to foreclosures as authority to show they are not debt collectors.  Whether a foreclosure is debt collection is irrelevant.  This Court finds that defendant is sufficiently pleaded as a debt collector.

Moving on to the substantive claims, plaintiff alleges that defendant violated Civ. Code §§ 1788.11(d) and 1788.17 (for violation of 15 U.S.C. § 1692D(5)) by causing a telephone to ring repeatedly or continuously to annoy the person called.  In support, plaintiff offers the dates and times of at least fourteen of defendant’s calls and the phone number from which the calls came.   What nature and frequency of debt collection constitutes harassment is an issue of fact.  Young v. Asset Acceptance, LLC, 2011 U.S. Dist. LEXIS 49827 at *8-9.  This Court believes plaintiff’s pleading is specific enough that a reasonable person would believe there is a claim for relief under these statutes.

Plaintiff also sues under Civil Code § 1788.11(e) for communicating, by phone or in person, with plaintiff with such frequency as to be unreasonable and to constitute a harassment to the debtor under the circumstances.  “Although there is no bright-line rule, certain conduct generally is found to . . . raise an issue of fact as to whether the conduct constitutes harassment.”  Rucker v. Nationwide, Inc. (E.D. Cal.) 2011 U.S. Dist. LEXIS 2256, at *5 (citing Joseph v. J.J. Mac Intyre Cos., LLC, (N.D. Cal. 2002) 238 F. Supp. 2d 1158, 1168).  Because there no clear rule exists, this Court overrules the demurrer relating to Civil Code § 1788.11(e) because the amount of harassment sufficient is a question of merits.  The number of calls pleaded is sufficient to constitute a claim.

Next plaintiff alleges that defendant used unfair or unconscionable means to collect a debt under Civil Code § 1788.17 (incorporating 15 U.S.C. §1692(f)).  However, plaintiff does not plead unconscionability in her compliant according to the subsections of 15 U.S.C. §1692(f), which govern unconscionable behavior.  When there is a reasonable possibility that the complaint can be cured by amendment, the court should allow leave to amend.  Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.  Plaintiff may have a claim when cured by amendment, so this Court sustains the demurrer with ten days leave to amend.

Finally, Plaintiff has failed to allege facts that constitute a claim for relief as to Civil Code § 1788.17 for violations of 15 U.S.C § 1692C(a)(2).  This portion of the FDCPA states in part, “a debt collector may not communicate with a consumer in connection with the collection of any debt . . . if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address.”  15 U.S.C § 1692C(a)(2). Nothing in the pleading alleges that defendant knew an attorney represented plaintiff, nor that that defendant had knowledge of the attorney’s name or address.  Plaintiff’s opposition to the demurrer asserts that plaintiff provided her legal counsel’s contact information, but defendant continued to call.  Therefore, there is a reasonable possibility that the complaint can be cured by amendment.  Accordingly, The demurrer against claims arising from 15 U.S.C § 1692C(a)(2) is sustained with ten days leave to amend.

* TENTATIVE RULING: *

CASE#: MSC12-00945  Plaintiff v HOMEQ

HEARING ON DEMURRER TO COMPLAINT of Plaintiff FILED BY BARCLAYS

CAPITAL REAL ESTATE INC., U.S. BANK NATIONAL ASSOCIATION

Defendants Barclays Capital Real Estate Inc. dba HomEq Servicing (HomEq) and U.S. Bank National Association as Trustee Under Pooling and Servicing agreement Dated as of March 1, 2006 Asset Backed Securities Corporation Home Equity Loan Trust, Series NC2006-HE2 Asset Backed Pass-through Certificates, Series NC 2006-HE2 (U.S. Bank, as Trustee) demur to plaintiff’s entire complaint and to each of the causes of action therein on the grounds that the complaint, and each cause of action, fail to state facts to constitute a cause of action against demurring defendants.  The court sustains the demurrer without leave to amend as to the first, sixteenth, twenty-first and twenty-second causes of action.  The court sustains the demurrer with leave to amend as to the second, third, fifth, sixth, seventh, tenth, fourteenth, and twentieth causes of action.  The court overrules the demurrer as to the fourth, eighth, ninth, eleventh, twelfth, thirteenth, fifteenth, seventeenth, and nineteenth causes of action.  Plaintiff is granted 20 days leave to amend for those causes of action as to which the demurrer is granted with leave to amend. 

For purposes of a demurrer, the allegations of the complaint taken to be true.  Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 558.  Plaintiff’s complaint contains numerous allegations with regard to many different transactions.  Essentially, two kinds of wrongs are alleged.  First, plaintiff alleges that she was wrongfully persuaded to enter a loan agreement she could not afford.  Second, she argues that the process of “securitizing” that loan was not carried out according to the required procedures, and that because the loan was improperly securitized, the Deed of Trust can no longer be enforced.   Based on these two sets of alleged wrongs, plaintiff asserts twenty-two causes of action against all of the defendants named.  HomEq, the company which serviced the loan, and U.S. Bank as trustee, the successor holder of the loan, demur to each of those causes of action and the complaint as a whole.  The question as to each specific cause of action is whether, on the allegations of the complaint, enough has been alleged to state a cause of action against these defendants.

Plaintiff’s first cause of action is for breach of fiduciary duty.  In general, lenders do not have a fiduciary duty to their borrowers.  Nymark v. Heart Fed. Savings &Loan Assn. (1991), 231 Cal.app. 3d 1089, 1091 n.1.  Plaintiff argues that the allegations in the complaint are sufficient to show “excessive control” by the lender in this case so as to establish a fiduciary duty to her as borrower.  Pension Trust Fund v. Fed. Ins. Co.(, 307 F.3d 944.  Plaintiff points to no specific allegations in the complaint showing such excessive control.  Nor is it apparent how the demurring defendants, who were not involved in origination of the loan, could exercise such control.  Given the roles of the demurring defendants, as a matter of law, the court find that they did not have a fiduciary duty to plaintiff.  The demurrer to the first cause of action is sustained without leave to amend.

Plaintiff’s second cause of action is for breach of the covenant of good faith and fair dealing.  The covenant of good faith and fair dealing implies a promise that a party to a contract will not harm the right of the other party to receive the benefits of the agreement.  Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App. 3d 232, 240.  Plaintiff alleges, in support of this cause of action, that defendants charged monthly payments to plaintiff beyond what she could pay, refused to refinance the loan, and engaged in various improprieties with regard to making the proper disclosures and providing proper documentation.  The breaches alleged are with regard to the origination of the loan, and did not involve these defendants.  Moreover, although plaintiff alleges harm from these actions, the harm is not her failure to get the benefit of the agreement actually entered; the allegations go to whether plaintiff was wrongfully caused to enter the agreement.  The demurrer to the second cause of action is sustained with leave to amend. 

Plaintiff’s third cause of action, for deceit, her sixth cause of action for fraud by intentional misrepresentation, and her seventh cause of action for fraud by concealment all fall within the pleading requirements for causes of action for fraud.  Fraud must be pled specifically.  Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.  “The essential allegations for an action in fraud or deceit are false representation as to a material fact, knowledge of its falsity, intent to defraud, justifiable reliance and resulting damage.”  Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.  The requirement of specificity means that every element must be alleged factually and specifically.  Id. “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent  representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.”   Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.app.4th 153, 157. Here, the complaint makes allegations as to misrepresentations made by “initiating defendants” or “defendants.”  It fails to specify what was said or written at what point in time and by which defendant, let alone the name of the person who spoke or wrote.  The demurrer to the third, sixth and seventh causes of action is sustained with leave to amend. 

Plaintiff’s fourth cause of action is for violation of Business and Professions Code §§17200 et seq., the Unfair Competition Law (UCL).  The nineteenth cause of action similarly alleges unfair and deceptive business practices, specifically the procurement of false and/or fraudulently prepared documents.  The complaint alleges, as to plaintiff and as an ongoing practice as to other borrowers that defendants made misrepresentations and failed to make required disclosures as to the terms of loans, failed to verify assets and income of borrowers, executed and recorded false and misleading documents, and engaged in various unlawful and/or deceptive practices with regard to securitization of loans.  The allegations sufficiently allege ongoing conduct and unlawful behavior so as to support these two causes of action.  The demurrer is overruled as to the fourth and nineteenth causes of action.  

Plaintiff’s fifth cause of action is for promissory estoppel.  The complaint nowhere alleges what promises were made by defendants to plaintiff upon which she relied, and what damages were caused thereby.  The demurrer to the fifth cause of action is sustained with leave to amend. 

Plaintiff’s eighth cause of action is for restitution for unjust enrichment.  Her fifteenth cause of action is for unjust enrichment.  As to both of these causes of action, defendants argue that they cannot stand because unjust enrichment is a principle and not an independent cause of action.  However, some California cases have recognized unjust enrichment as a separate cause of action.  Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593.   The demurrer to the eighth and fifteenth causes of action is overruled. 

Plaintiff’s ninth cause of action is to quiet title.  Defendants argue that because plaintiff has failed to tender payment of what is owed on her loan, this cause of action must fail.  Plaintiff argues that she falls within recently recognized exceptions to the tender rule.  Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112.  Here, as in Lona, plaintiff challenges the validity of the underlying debt.  The demurrer to the ninth cause of action is overruled.

Plaintiff’s tenth cause of action is for civil conspiracy.  To state a cause of action for civil conspiracy, a complaint must allege an underlying tort upon which to base the conspiracy claim.  Morris v. Castle Rock Entertainment, Inc. (2003) 246 F.Supp.2d 290, 296.  Plaintiff must allege the formation and operation of the conspiracy, the wrongful acts done pursuant to the conspiracy and the damage resulting from those acts.  State of California ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal. App. 4th 402, 419.  Plaintiff’s complaint fails to specify what tort or torts form the basis of the conspiracy claim and makes no allegations as to the formation and operation of the conspiracy.  The demurrer to the tenth cause of action is sustained with leave to amend. 

Plaintiff’s eleventh cause of action is for declaratory relief.  A cause of action for declaratory relief requires that a present and actual controversy exists between the parties.  City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.   Here, the allegations of the complaint are sufficient to show an actual controversy regarding the rights and obligations of the parties with regard to the loan agreement.  The demurrer to the eleventh cause of action is overruled. 

Plaintiff’s twelfth cause of action is for rescission/cancellation of void instrument.  Defendants argue that this claim is barred by the three-year statute of limitations set under the Truth In Lending Act (TILA).  However, plaintiff has not expressly premised the cause of action for rescission on the TILA violations alleged in the complaint.  Plaintiff argues that her cause of action did not accrue until she had reason to suspect the wrongdoing at issue – a date allegedly delayed in this case due to defendants’ concealment of relevant facts.  The demurrer to the twelfth cause of action is overruled. 

Plaintiff’s thirteenth cause of action is for accounting, stating that she has no way to know if payments made to defendants were then paid to the true owners of the loan – the investors who own the securitized loan.    Defendants argue that the accounts in this case are “not so complicated as to warrant [an accounting]”.  Memorandum of Points and Authorities in Support of Demurrer, p. 10.  Plaintiff’s allegations regarding the accounting needed – as to what has been paid and what is owed to multiple interested parties -- must be taken as true for purposes of the demurrer.  These allegations are sufficient to state a cause of action for accounting.  The demurrer to the thirteenth cause of action is overruled. 

Plaintiff’s fourteenth cause of action is for violation of Civil Code Section 2934a (d) and (e).  (The complaint names the cause of action as being for violation of Civil Code Sections 2934 (d) and (e), but quotes Civil Code Section 2934a (d) and (e).   These code sections deal with the effective date for substitution of a trustee under a deed of trust and the requirement for inclusion of the substituted trustee’s name, address and telephone number in the notice of sale.  The allegations of the complaint for the most part address, instead, whether the securitization of the note bars foreclosure on the property.  The complaint does allege that no substitution of trustee had been executed at the time the Notice of Default was recorded.  Taking this allegation as true, it is sufficient to state a violation of Civil Code Section 2934a(d).  The allegations of the complaint are not sufficient, however, to state a cause of action for violation of Section 2934a(e).  The demurrer to the fourteenth cause of action is therefore sustained with leave to amend to state facts sufficient to constitute a cause of action pursuant to Section 2934a(e). 

Plaintiff’s sixteenth cause of action is for injunctive relief.  Injunctive relief is a remedy, not a cause of action.  Art Movers, Inc. v. Ni West, Inc. (1992) 3 Cal.App.4th 640, 646.  The demurrer as to the sixteenth cause of action is sustained without leave to amend. 

Plaintiff’s seventeenth cause of action is for wrongful foreclosure.  Defendants demur on the grounds that as a matter of law the foreclosing party need not physically possess the note, that the sale has already been postponed as would be the only remedy available under Civil Code Section 2923.5, and that plaintiff must tender payment in order to seek a remedy for wrongful foreclosure.  The allegations stated in support of this cause of action do not rely on whether the foreclosing defendants possessed the note, but include the allegation that “none of the foreclosing defendants were lawfully appointed as Trustee or had the original Note assigned to them.”  Complaint, ¶247.  The complaint goes on to allege that therefore none of the foreclosing defendants had legal authority to foreclose.  These allegations, if assumed true, are sufficient to constitute a cause of action for wrongful foreclosure.  The demurrer to the seventeenth cause of action is overruled. 

Plaintiff’s eighteenth cause of action is for unconscionability.  As both parties agree, unconscionability in California requires both procedural and substantive unconscionability.  Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.  Plaintiff has failed to allege facts regarding procedural unconscionability as to the origination of her loan.  The demurrer to the eighteenth cause of action is sustained with leave to amend. 

Plaintiff’s twentieth cause of action is to void or cancel the assignment of the deed of trust.  Plaintiff alleges that the assignment of the deed of trust was void because it was not completed by the date required under the Pooling and Servicing Agreement (PSA) governing the transfer of the loan to the trust.  To state a claim that the assignment of the deed of trust was ineffective, plaintiff must allege that the foreclosing defendants “did not receive a valid assignment of the debt in any manner.”  Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 272, emphasis in original.   The demurrer to the twentieth cause of action is sustained with leave to amend.

Plaintiff’s twenty-first cause of action is for violation of Civil Code Section 2923.6.  That section does not impose a duty to offer loan modification to a borrower, or indeed for lenders to take any action.  Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 222 n.9.  The demurrer to the twenty-first cause of action is sustained without leave to amend. 

Plaintiff’s twenty-second cause of action is for violation of Financial Code Sections 4970 through 4979.8.   These provisions govern practices in the origination of certain home loans.  Demurring defendants were not the originators of the loan made to plaintiff.  The demurrer to the twenty-second cause of action is therefore sustained without leave to amend.