SoCal TntvRul 5/25/12

* TENTATIVE RULING: *

Homeowner v Trustee Sale buyer

MOTION TO SET ASIDE DEFAULT

MP: Defendant, EMC Mortgage, LLC
RP: Plaintiff

RELIEF REQUESTED:
1. Order setting aside the default entered on February 10, 2012

DISCUSSION:
This case arises from the Plaintiff’s claim that his property was fraudulently sold in a foreclosure sale: alleging that Defendant, … obtained title to the property through fraud. He then engaged in fraudulent transfers of the property to Mass Loans, Inc., a shell company, and then Ricardo Montoya. Mr. Montoya obtained money secured by mortgages on the property and then he and … disappeared with the money. Although the other Defendants were notified that the transfers were fraudulent, they performed a foreclosure sale on the property and then illegally attempted to evict the Plaintiff from his property. The Plaintiff brought this action to cancel the deeds, set aside the sale, and to quiet title in his name.
On November 4, 2011, the Court heard the demurrer filed by Defendants, EMC Mortgage LLC and Citibank, N.A. The Court sustained the demurrers without leave to amend. Further, On November 21, 2011, the Court entered a judgment of dismissal in favor of the Defendants (copy of judgment of dismissal in exhibit 1 to moving papers).
The Plaintiff then obtained a default against Defendant, EMC Mortgage LLC, on February 10, 2012.

This hearing concerns the motion of Defendant, EMC Mortgage, LLC, to set aside the default entered against it on February 10, 2012 on the ground that it is a clerical error and void. Under section 473(d) the Court may, upon motion of the injured party, or its own motion, correct clerical mistakes in its judgment or orders as entered, so as to conform to the judgment or order directed, and may, on motion of either party after notice to the other party, set aside any void judgment or order.
The default entered against Defendant, EMC Mortgage LLC, was void because it had been dismissed from this action and a judgment of dismissal had been entered in its favor on November 21, 2011. Accordingly, the Court will vacate the order of default.
The Plaintiff explains in his opposition papers that he obtained a default because the demurrer heard on November 4, 2011 was not brought by EMC Mortgage LLC, but was brought improperly by JPMorgan Chase Bank. A review of the demurrer reveals that it was brought by JPMorgan Chase Bank, successor in interest to EMC Mortgage LLC. Throughout its papers, it referred to itself as “EMC”. Further, the judgment of dismissal states that “EMC” is dismissed and that a judgment shall be entered in favor of “EMC”.
In addition, the Plaintiff raised this issue at the hearing on December 4, 2011 (a portion of transcript in exhibit 1 to Plaintiff’s opposition). The Plaintiff admitted that EMC Mortgage LLC is a wholly owned entity of JP Mortgage Chase, but argued, without any citation to legal authority, that the “part company” should be making the demurrer. The Court did not change its ruling and sustained the Defendants’ demurrer without leave to amend.
Finally, when the Court analyzed the pleadings, it made its determination based on the Plaintiff’s allegations against EMC Mortgage LLC. The Court found on November 4, 2011 that the Plaintiff had not pleaded sufficient facts to state a cause of action against EMC Mortgage LLC because the allegations in the Plaintiff’s complaint demonstrated that the Defendant, Michael Jaimes, that the Defendant, EMC Mortgage LLC, was not involved in the transaction between the Plaintiff and Michael Jaimes, and also that the Plaintiff had not satisfied the tender rule.
Accordingly, when the Court sustained the demurrer, it found that the pleadings were insufficient with respect to EMC Mortgage LLC. The judgment of dismissal was subsequently entered because the Court had found that the Plaintiff could not state a claim against EMC Mortgage LLC. Since the Court sustained the demurrer brought by EMC Mortgage LLC and entered a judgment of dismissal in favor of EMC Mortgage LLC, the default entered against the Defendant, EMC Mortgage LLC, is void.

THEREFORE, the Court will grant the Defendant’s motion under CCP section 473(d) because the default entered against EMC Mortgage LLC is void.

* TENTATIVE RULING: *

Plaintiff v Bank of America

DEMURRER & MOTION TO EXPUNGE LIS PENDENS

MP: Defendants, Bank of America and Recontrust Co.

ALLEGATIONS IN FIRST AMENDED COMPLAINT:
The Defendants wrongfully initiated a non-judicial foreclosure proceeding on the Plaintiffs’ real property without authorization and without discussing loan modification options with the Plaintiff. The Defendants are engaged in unfair business practices and used forged documents to commence the foreclosure proceedings. The Plaintiffs seek damages, attorney’s fees, and orders quieting title on their property.

CAUSES OF ACTION IN FIRST AMENDED COMPLAINT:
1) Fraud
2) Quiet Title
3) Cancellation of Instruments Clouding Title
4) Violation of Business and Professions Code section 17200
5) Declaratory Relief

RELIEF REQUESTED:
1. Demurrer to each cause of action.
2. Expunge lis pendens recorded on the property

DISCUSSION:
This case arises from the Plaintiffs’ failure to make payments on a loan that they secured with a deed of trust on their property (see copy of deed of trust in untabbed exhibit A to Plaintiffs’ First Amended Complaint). The Defendant, Recontrust, is the trustee, and it recorded a notice of default on January 27, 2011 and a notice of trustee’s sale on May 4, 2011 (see untabbed exhibits D and E to Plaintiffs’ First Amended Complaint). The Plaintiff alleges in paragraph 3 of the First Amended Complaint that he filed for Chapter 7 bankruptcy on May 24, 2011 and that he received a discharge in September of 2011.

This hearing concerns the demurrer and motion to expunge the lis pendens that were filed by Defendants, Bank of America and Recontrust Co.

1. Demurrer
a. Standing and Bankruptcy Trustee
First, the Defendants argue that there are grounds for a demurrer because the Plaintiffs do not have standing. The Defendants argue that the pleadings demonstrate that only the bankruptcy trustee has standing to bring this claim.
When an action is brought by someone other than the real party in interest, it is subject to general demurrer. Powers v. Ashton (1975) 45 Cal. App. 3d 783, 787. Generally, only a bankruptcy trustee has standing to prosecute causes of action existing at the time a bankruptcy petition was filed. Bostonian v. Liberty Savings Bank (1997) 52 Cal.App.4th 1075, 1087.
After a person files for bankruptcy protection, any causes of action previously possessed by that person become the property of the bankrupt estate. Cloud v. Northrop Grumman Corp. (1998) 67 Cal. App. 4th 995, 1001 (holding that the plaintiff lacked standing to bring wrongful termination and sexual harassment claims because they became part of her bankruptcy estate). The bankruptcy code places an affirmative duty on the person filing for bankruptcy to schedule his assets and liabilities. Cusano v. Klein (9th Cir. Cal. 2001) 264 F.3d 936, 945-946. If the person failed properly to schedule an asset, including a cause of action, that asset continues to belong to the bankruptcy estate and does not revert to the person upon discharge. Id. Whether a person omits the claim by intent or accident is irrelevant because the unscheduled asset is the property of the bankruptcy estate and remains part of the estate even after the bankruptcy is closed. Id.
Further, a plaintiff who does not disclose a cause of action to the Bankruptcy Court is judicially estopped from asserting the cause of action. Hamilton v. State Farm Fire & Cas. Co. (9th Cir. Cal. 2001) 270 F.3d 778, 783.
The Defendants argue that the Plaintiffs have no standing and are estopped from bringing these claims because they failed to disclose their claims when they filed for bankruptcy. The Defendants request that the Court judicial notice of the records of the US Bankruptcy Court for the Central District of California for Bankruptcy Petition case number 2:11-bk-32519-RN (request for judicial notice, exhibits 5 and 6). The Court may take judicial notice of bankruptcy schedules and a bankruptcy docket because they are public records subject to judicial notice. Runaj v. Wells Fargo Bank (S.D. Cal. 2009) 667 F. Supp. 2d 1199, 1205-1206 (granting a request to take judicial notice of bankruptcy schedules and the bankruptcy docket for the purpose of determining whether a plaintiff had standing to bring claims that were not listed in the bankruptcy schedule).
The bankruptcy petition in exhibit 5 indicates that the Plaintiffs filed a petition for bankruptcy on May 24, 2011. The docket for the bankruptcy court in exhibit 6 indicates that on October 4, 2011, the Plaintiffs obtained a discharge of debts. The bankruptcy case was dismissed on October 19, 2011.
A review of the Complaint demonstrates that the Plaintiffs’ claims arise from loan secured by a deed of trust that was recorded on March 22, 2007 ( copy of deed of trust in exhibit A to complaint). The notice of default was recorded on January 27, 2011 ( copy of notice of default in exhibit D to complaint). The notice of trustee’s sale was recorded on May 5, 2011 ( copy of notice of sale in exhibit E to complaint).
The Plaintiffs claim that the Defendants did not comply with Civil Code section 2923.5 by contacting them before the notice of default was issued and that the Defendants violated Business and Professions Code section 17200 during the foreclosure process. The dates in the exhibits attached to the Plaintiffs’ complaint demonstrate that the Defendants were implementing the foreclosure process during the period of January 2011 through May of 2011.
As noted above, on May 24, 2011, the Plaintiffs filed their petition for bankruptcy. A review of their petition reveals that the Plaintiffs did not disclose their claims against the Defendants in their petition. Accordingly, the Plaintiffs’ pre-petition claims remain part of the bankruptcy estate and the bankruptcy trustee, not the Plaintiffs, has standing to bring the claims.
Further, in the pending case, the Plaintiffs are attempting to file a complaint against the Defendants based on claims that they had before they filed for bankruptcy and which they did not disclose to the Bankruptcy Court in their bankruptcy petition. As noted above, the Plaintiffs are judicially estopped from asserting their claims.
In their opposition, the Plaintiffs do not offer any legal grounds or legal authority to demonstrate that they have standing or that they are not judicially estopped from bringing their claims. Instead, the Plaintiffs offer facts in the declaration of John Rounds, who was the Plaintiffs’ bankruptcy trustee. Mr. Rounds offers opinions on what the bankruptcy court might do with regards to these claims and claims that it would be futile to reopen bankruptcy for these claims. However, the facts and opinions in Mr. Rounds’ declaration are irrelevant to the Court’s determination on the demurrer because they are not facts pleaded in the complaint or facts of which the Court may take judicial notice.
Further, Mr. Rounds’ opinions are irrelevant to the issue of standing. The Plaintiffs’ claims arose before they filed for bankruptcy. Since the Plaintiffs did not disclose them in the Bankruptcy Court, they are judicially estopped from bringing them in this action. Instead, the claims are an asset of the bankruptcy estate and the claims did not revert to the Plaintiffs upon discharge. Since the claims did not revert to the Plaintiffs, the Plaintiffs lack standing to seek any relief on these claims.
In their opposition, the Plaintiffs do not dispute that they failed to schedule these claims in their bankruptcy petition. Since the Plaintiffs do not dispute that they failed to disclose these claims in their petition for bankruptcy, the facts of which the Court may take judicial notice in the bankruptcy petition reveals that there are grounds for a demurrer. Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal. App. 3d 593, 604 (holding that a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless).
Therefore, the Court will sustain the Defendants’ demurrer to the entire First Amended Complaint because the facts of which the Court may take judicial notice in the bankruptcy petition demonstrate that the Plaintiffs are barred under the doctrine of judicial estoppel from bringing their complaint.
The Plaintiffs have the burden of showing the manner in which they can amend their complaint to correct this defect and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs offer no grounds in their opposition papers to demonstrate the manner in which they can amend their pleadings to correct the defect that their claims are estopped. Since it does not appear reasonably possible for the Plaintiffs to correct this by amendment, the Court will not grant leave to amend.

b. Tender Rule
The Defendants then argue that the Plaintiffs cannot maintain any of their claims because the Plaintiffs do not allege that they tendered the amount due. To plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109 (affirming an order sustaining a demurrer without leave to amend in a case claiming that the foreclosure and sale of a home was improper). A valid tender must be nothing short of the full amount due the creditor. Gaffney v. Downey Sav. & Loan Ass'n (1988) 200 Cal. App. 3d 1154, 1165. The Court of Appeal found that the following summary of the tender rule describes this requirement:

The rules which govern tenders are strict and are strictly applied, and where
the rules are prescribed by statute or rules of court, the tender must be in such
form as to comply therewith. The tenderer must do and offer everything that
is necessary on his part to complete the transaction, and must fairly make
known his purpose without ambiguity, and the act of tender must be such that
it needs only acceptance by the one to whom it is made to complete the
transaction.
Id.

The underlying principle for the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118.
Further, this applies to any cause of action implicitly integrated with the voidable sale. Id. at 121. In Karlsen, the Court found that causes of action for breach of an oral agreement to delay the sale, for an accounting, and for a constructive trust failed because the plaintiff had not made a valid tender. In Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, the Court found that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender. The Court in Karlsen reasoned that absent an effective and valid tender, the foreclosure sale would become valid and proper. Karlsen, 15 Cal.App.3d at 121.
A review of the Plaintiffs’ First Amended Complaint reveals that each cause of action is implicitly integrated with the foreclosure proceeding:

1) The first cause of action for fraud claims that the Defendants engaged in fraudulent conduct to induce the Plaintiffs into filing for bankruptcy and to “stampede the Plaintiff’s home to auction”;
2) The second cause of action for quiet title claims that the Defendants have no right to foreclose on their property;
3) the third cause of action to cancel instrument seeks to cancel the notice of default and notice of trustee’s sale;
4) the fourth cause of action for violation of Business and Professions code section 17200 claims that the Defendants engaged in unfair business practice by failing to contact them about alternatives to foreclosure; and
5) the fifth cause of action for declaratory relief seeks a declaration regarding whether the rights and duties of the parties under the deed of trust with respect to the foreclosure proceedings.

Each of these causes of action is implicitly integrated with the foreclosure sale because each of them is based on allegations that the Defendants’ attempt to foreclosure on the Plaintiffs’ property is improper. Accordingly, an essential element of each of the causes of action is an allegation that the Plaintiffs satisfied the tender rule.
A review of the Plaintiffs’ First Amended Complaint reveals that they did not plead that they tendered the amount due.
In their opposition, the Plaintiffs argue that they need not plead that they satisfied the tender rule because it would be inequitable to do so. Under California law, the tender rule does not apply when it would be inequitable, such as when the instrument is void. Fleming v. Kagan (1961) 189 Cal. App. 2d 791, 797. If the plaintiffs’ action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424. However, when the plaintiffs’ action claims that there was fraudulent conduct in the foreclosure procedure, then tender is required. See Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575 (holding that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender).
There are no allegations that the deed of trust is void. There are no allegations that the underlying debt is void or that the Plaintiffs do not owe the money. Instead, the Plaintiffs’ claim is that the Defendants engaged in fraud when they drafted the foreclosure documents, that the Defendants did not contact them prior to commencing the foreclosure proceeding to inquire about alternatives to foreclosure, and that the Defendants are not the holders of the original note. This is not grounds to find that it would be inequitable to require a tender because the Plaintiffs continue to have an obligation under the note to make payments.
Further, the Plaintiffs’ allegations demonstrate that the foreclosure proceedings occurred because they stopped making payments on their loan. In paragraph 3, the Plaintiffs allege that after they depleted their savings, the Plaintiffs filed for bankruptcy on May 24, 2011. There are no allegations that the Plaintiffs continued to make payments on the note. This demonstrates that the foreclosure proceedings occurred because the Plaintiffs did not make the required payments on the note, which was secured by the deed of trust.
As noted above, the principle underlying the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118. If the Plaintiffs cannot tender the amount that they owe on their note, there is no beneficial purpose to intervening because the Defendants would simply begin the foreclosure proceedings again. This would result only in an unjust benefit to the Plaintiffs, who would keep possession of property that they had agreed to use as security for a loan after they stopped making payments. Accordingly, it is equitable to require the Plaintiffs to satisfy the tender rule in their pleadings.
Therefore, the Court will sustain the Defendants’ demurrer to each cause of action in the First Amended Complaint.
Under California law, the Plaintiffs must show in what manner they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs do not present any means by which they can amend their pleading in order to satisfy the tender rule.
Therefore, the Court will sustain the demurrer to the First Amended Complaint without leave to amend.

2. Motion to Expunge Lis Pendens
The Defendants filed this motion to request that the Court expunge a notice of lis pendens on the property. Under CCP section 405.30, at any time after a notice of pendency of action has been recorded, any party with an interest in the real property may apply to the Court to expunge the notice. A lis pendens may be expunged either under CCP section 405.31 if the pleadings do not contain a real property claim or under CCP section 405.32 if the Court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim.
Under CCP section 405.30, the party claiming the lis pendens has the burden of proof of showing either that the pleadings contain a real property claim or that the probable validity of the real property claim can be established by a preponderance of the evidence. Accordingly, the Plaintiffs have the burden of showing that their complaint includes a real property claim and that the probable validity of their real property claim can be established by a preponderance of the evidence.
A review of the pleadings reveals that the Plaintiff no longer has a real property claim. Under CCP section 405.4, a real property claim means the cause or causes of action in a pleading which would, if meritorious, affect a title to, or the right to possession of, specific real property. As discussed in the analysis of the Defendants’ demurrer, the Plaintiffs’ claims are barred because they lack standing and because they did not satisfy the tender rule. Since there are no claims affecting title in the Plaintiffs’ First Amended Complaint, the Plaintiffs cannot meet their burden.
Therefore, the Court will grant the Defendants’ motion to expunge the lis pendens because the Plaintiffs’ First Amended Complaint does not plead any real property claim.

RULING:
SUSTAIN demurrer to First Amended Complaint without leave to amend.
GRANT motion to expunge lis pendens.

* TENTATIVE RULING: *

MOTION FOR PROTECTIVE ORDER

RELIEF REQUESTED:
1. Protective Order barring each Plaintiff from responding to the Defendant's 84 special interrogatories.
2. Order imposing monetary sanctions of $2,360 on Defendant and its attorney.

DISCUSSION:
This case arises from the Plaintiffs' claim that the Defendants failed to pay them proper wages, misclassified them as independent contractors, and overcharged them for rent on an apartment that they occupied as resident managers. No trial is set. The case management conference is set for July 17, 2012.

This hearing concerns the Plaintiffs' motion for a protective order with regards to the Defendant's special interrogatories. CCP section 2030.090 provides that the Court, for good cause shown, may issue a protective order to protect any party from unwarranted annoyance, embarrassment, oppression, or undue burden and expense. The Plaintiffs argue that the Defendant's special interrogatories create an undue burden and expense because the case does not warrant 84 special interrogatories.
Under CCP section 2030.030, no party shall request, as a matter of right, that any other party respond to more than 35 special interrogatories. Since the Defendant served 84 special interrogatories on both Plaintiffs, it was required under CCP section 2030.050 to accompany its special interrogatories with a declaration showing that the number of requests beyond 35 is warranted by the complexity or the quantity of the existing and potential issues in the particular case. CCP section 2030.040(b) provides that when a responding party seeks a protective order on the ground that the number of requests for admission is unwarranted, the propounding party shall have the burden of justifying the number of special interrogatories.
The Defendant argues that the number is justified because these are contention interrogatories. The Defendant explains that there are only twenty eight questions regarding contentions in the Plaintiffs’ complaint and that, in order to create a clear record, the Defendant repeated each question three times in order to obtain the information on facts, then documents containing those facts, and then witnesses with knowledge of those facts supporting the Plaintiffs' contentions.
Further, the Defendant's attorney, Joseph Singleton, provides facts in his declaration to demonstrate that after the Plaintiffs objected, he offered to re-draft and re-serve the special interrogatories as 28 interrogatories in which he sought the same three categories of information, i.e., facts, documents, and witnesses supporting the twenty-eight identified contentions. The Plaintiffs' attorney declined this offer.
Finally, the Defendant's attorney states in paragraph 7 that he granted an extension of approximately 60 days to the Plaintiffs in which to respond to the special interrogatories. Mr. Singleton states that the Plaintiffs ignored the extension.
These facts are sufficient to meet the Defendant's burden because they demonstrate that the number of interrogatories is justified in order to obtain facts, documents containing those facts, and witnesses with knowledge of those facts regarding the Plaintiffs' contentions. Further, although there are 84 interrogatories, there are 28 separate requests for information and the Defendant repeated them solely to ensure that the Plaintiffs did not object that the Defendant had served a compound interrogatory by seeking facts, documents, and witnesses in one interrogatory.
These facts demonstrate that the Defendant has justified the number of special interrogatories that it propounded because they were required to obtain information about the facts, documents, and witnesses supporting the contentions in the Plaintiffs' complaint. Therefore, the Court should deny the Plaintiffs' motion.
Finally, the Defendant requests that the Court impose monetary sanctions on the Plaintiffs for the fees and costs that it incurred in opposing the Plaintiffs' motion. Under CCP section 2030.090(d), the Court shall impose monetary sanctions on a party making an unsuccessful motion for a protective order. It is appropriate to impose monetary sanctions on the Plaintiffs in these circumstances because their motion lacks any merit. The Defendant's special interrogatories were contention interrogatories and the number was required solely because the Defendant repeated the twenty-eight questions about the Plaintiffs’ contentions in order to obtain information the 1) facts, 2) documents, and 3) witnesses supporting the contentions. Since the Plaintiffs' motion caused the Defendant to incur unnecessary fees, monetary sanctions are appropriate.
The Defendant's attorney, Joseph Singleton, provides facts in paragraphs 13 to 15 to demonstrate that he bills at $250 per hour and that he expects to spend nine hours drafting and appearing on this motion. Since this is not an overly complex discovery matter, a more reasonable amount of time to spend on this motion is six hours. Accordingly, the reasonable amount of monetary sanctions is $1,500 (6 hours at $250 per hour).

RULING:
1. DENY Plaintiffs' motion for protective orders.
2. IMPOSE monetary sanctions on the Plaintiffs and their counsel in the amount of $1,500.00.

* TENTATIVE RULING: *

Plaintiff v JP Morgan Chase Bank

MOTION FOR PRELIMINARY INJUNCTION

RP: Defendants, JP Morgan Chase Bank and Cal Reconveyance (NO OPPOSITION)

RELIEF REQUESTED:
Preliminary Injunction barring Defendants from proceeding with a trustee sale of the Plaintiffs’ real property in Glendale, CA 91201

DISCUSSION:
This case arises from the Plaintiffs’ claim that the Defendants are improperly seeking to foreclose on their property because Defendant, Cal Reconveyance, has not been substituted in as the trustee for the deed of trust.
Plaintiffs filed this complaint on April 24, 2012. They appeared on May 4, 2012 with an ex parte application for a temporary restraining order to halt the sale set for May 7, 2012. The Court granted the application and set the OSC regarding a preliminary injunction for May 25, 2012. The Plaintiffs filed proofs of service on May 9, 2012 to demonstrate that they had served both Defendants with the summons and complaint and with notice of this hearing and their motion.

At this hearing, the Plaintiffs seek a preliminary injunction to prevent the Defendants from selling their property pending the trial. CCP section 527(a) requires a motion for a preliminary injunction to establish with facts in affidavits or in a verified complaint that there are grounds to issue a preliminary injunction. Declarations may be used under CCP section 2015.5 because they are equivalent to an affidavit.
Under CCP section 526(a), a preliminary injunction may be issued in the following cases:

1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.
2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.
3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.
4) When pecuniary compensation would not afford adequate relief.
5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.
6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings.
7) Where the obligation arises from a trust.

The Plaintiffs have the burden of establishing grounds exist for the injunction with evidence offered under oath. Ancora-Citronelle Corp. v. Green (1974) 41 Cal. App. 3d 146, 148. The granting or denial of a preliminary injunction rests in the sound discretion of the Court and is based upon a consideration of all the particular circumstances of each individual case. Froomer v. Drollinger (1960) 183 Cal. App. 2d 787, 788-789. If granted, the preliminary injunction does nothing more than to preserve the status quo until the merits of plaintiffs' claim can be adjudicated. Id.
The Plaintiffs must first show that they are entitled to the relief requested. Injunctive relief may be available to prevent an improper private sale of encumbered property on such grounds as that there is no actual default justifying the sale, Bisno v. Sax (1959) 175 Cal App 2d 714, that the secured transaction is itself invalid, Daniels v. Williams (1954) 125 Cal App 2d 310, or that inadequate notice of default was given, Lupertino v. Carbahal (1973 35 Cal App 3d 742.
The Plaintiffs argue that there are grounds to issue the injunction because the notice of default is invalid. Under Civil Code section 2924, the trustee, mortgagee, or beneficiary, or any of their authorized agents may record a notice of default and notice of sale. The Plaintiffs provide a copy of the notice of default in exhibit C to their papers. The notice of default indicates that California Reconveyance is the trustee.
Ray Mateck, an employee of the Plaintiffs' attorney, provides facts in his declaration to demonstrate that he did a search of county records with regards to the Plaintiffs' property and that the records indicate that JP Morgan Chase Custody Services, Inc. was substituted in as the trustee on August 17, 2009 and September 2, 2009 and that there is no other substitution of trustee recorded for any other party. A copy of the substitution of trustee indicating that JP Morgan Chase was substituted in as trustee in place of Verdugo Trustee Service Corp. is attached as untabbed exhibit A to the Plaintiffs' papers.
These facts indicate that JP Morgan Chase Custody Services, Inc. is the trustee for the Plaintiffs' property. Since the Plaintiffs' facts demonstrate that no substitution of trustee was recorded under which California Reconveyance was substituted in place of JP Morgan Chase Custody Services, Inc., the Plaintiffs' fact show that the notice of default recorded by California Reconveyance is void.
Therefore, the Plaintiffs have met their burden of establishing that grounds exist for the Court to issue a preliminary injunction to halt the sale of their real property because the notice of default is void.
Finally, in order to obtain the preliminary injunction CCP section 529 requires the Plaintiffs to provide an undertaking to the effect that the Plaintiffs will pay to the Defendant any damages, not exceeding an amount to be specified, the Defendant may sustain by reason of the injunction, if the Court finally decides that the Plaintiffs were not entitled to the injunction. Although the Plaintiffs request that no undertaking be ordered, the Plaintiffs offer no legal authority under which an injunction may be issued without complying with the express requirement in CCP section 529 that "On granting an injunction, the court or judge must require an undertaking ...."
Here, the Defendants' damages would be the loss of the use of the money they would have obtained from the sale of the property or the rental value they could obtain from renting the property during the pendency of this case. However, the Defendants have not filed any opposition papers to demonstrate the amount of their damages. Since the Defendants have not opposed this motion or offered any evidence of the damages that they will suffer if the Court decides that the Plaintiffs were not entitled to the injunction, the Court will set the undertaking at a small amount, $10,000.

Therefore, the Court will grant the Plaintiffs’ application for a preliminary injunction and order the Plaintiffs to file an undertaking for $10,000.

RULING:
GRANT Plaintiffs' application for a preliminary injunction.
ORDER Plaintiffs to file an undertaking for $10,000.

* TENTATIVE RULING: *

Demurrer and Motion to Strike

The Complaint alleges that the Plaintiffs obtained a loan under a promissory note secured by a deed of trust that was recorded on their real property. The Plaintiffs sought a permanent modification of their loan. When the Plaintiffs could not get an answer from the Defendants regarding the status of a permanent modification, the Plaintiffs stopped making payments. The Defendant then issued a notice of default. The Plaintiffs again sought a modification, but the Defendant advised them that the Plaintiffs were not eligible. A notice of trustee’s sale was issued on August 29, 2011. The Plaintiffs’ home was sold on November 23, 2011. A notice to quit was served on the Plaintiffs on December 12, 2011. Plaintiff alleges the following causes of action in his Complaint:

1) Breach of Written Contract; 2) Breach of Covenant of Good Faith and Fair Dealing; 3) Estoppel; 4) Negligent Misrepresentation; 5) Negligence; 6) Violation of Business and Professions code section 17200; 7) Violation of Civil Code section 2923.6
8) Declaratory Relief; 9) Accounting

The Plaintiffs’ First Amended Complaint includes the following facts in the pleadings and in the exhibits attached to the pleadings:

1) the Plaintiff borrowed $410,000 under a promissory note secured by a deed of trust on their property;
2) a notice of default was recorded on August 17, 2010 on the Plaintiffs’ property that indicated that $13,253.55 was due as of August 16, 2010;
3) a notice of trustee’s sale was recorded on August 29, 2011; and
5) the property was sold on November 23, 2011 at a trustee’s sale to Aurora Loan Services, LLC.

This hearing concerns the demurrer of the Defendants, Aurora Loan Services, LLC and Aurora Bank FSB, to the First Amended Complaint. The Defendants argue that the Plaintiffs cannot maintain any of their claims because the Plaintiffs do not allege that they tendered the amount due. To plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109 (affirming an order sustaining a demurrer without leave to amend in a case claiming that the foreclosure and sale of a home was improper). A valid tender must be nothing short of the full amount due the creditor. Gaffney v. Downey Sav. & Loan Ass'n (1988) 200 Cal. App. 3d 1154, 1165. The Court of Appeal found that the following summary of the tender rule describes this requirement:

The rules which govern tenders are strict and are strictly applied, and where the rules are prescribed by statute or rules of court, the tender must be in such form as to comply therewith. The tenderer must do and offer everything that is necessary on his part to complete the transaction, and must fairly make known his purpose without ambiguity, and the act of tender must be such that it needs only acceptance by the one to whom it is made to complete the transaction.
Id.

The underlying principle for the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118.

Further, this applies to any cause of action implicitly integrated with the voidable sale. Id. at 121. In Karlsen, the Court found that causes of action for breach of an oral agreement to delay the sale, for an accounting, and for a constructive trust failed because the plaintiff had not made a valid tender. In Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, the Court found that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender. The Court in Karlsen reasoned that absent an effective and valid tender, the foreclosure sale would become valid and proper. Karlsen, 15 Cal.App.3d at 121.

A review of the Plaintiffs’ First Amended Complaint reveals that each cause of action is implicitly integrated with the foreclosure proceeding:

1) The first cause of action for breach of contract claims that the foreclosure sale was caused because the Defendants breached an agreement to modify the loan;
2) The second cause of action for breach of the implied covenant of good faith and fair dealing claims that the foreclosure sale was caused because the Defendants breached an implied covenant in the agreement to modify the loan;
3) the third cause of action for estoppel claims that the foreclose sale was caused because the Defendants did not keep a promise to modify the loan;
4) the fourth cause of action for negligent misrepresentation claims that the foreclosure sale was caused because Defendants negligently misrepresented that the Plaintiffs would receive a permanent loan modification;
5) the fifth cause of action for negligence claims that the foreclosure sale was caused by the Defendants’ breach of a duty of care when they did not provide a permanent loan modification to the Plaintiffs;
6) the sixth cause of action for violation of Business and Professions code section 17200 claims that foreclosure sale was caused by the Defendants unfair business practice of depriving the Plaintiffs of their home and of monthly mortgage payments even though the Plaintiffs expected to obtain a permanent loan modification;
7) the seventh cause of action for violation of Civil Code section 2923.6 claims that the foreclosure sale violated Civil Code section 2923.6 because the Defendants did not provide a loan modification;
8) the eighth cause of action for declaratory relief claims that there is an actual dispute as to the ownership of the property because the foreclosure was wrongful; and
9) the ninth cause of action for an accounting seeks an accounting of the moneys paid and owing on the loan that was subject to the foreclosure proceedings.

Each of these causes of action is implicitly integrated with the foreclosure sale because each of them is based on allegations that the sale of the Plaintiffs’ property was improper. Accordingly, an essential element of each of the causes of action is an allegation that the Plaintiffs satisfied the tender rule.

A review of the Plaintiffs’ First Amended Complaint reveals that they did not plead that they tendered the amount due.

In their opposition, the Plaintiffs argue that they need not plead that they satisfied the tender rule because the tender rule is an equitable rule and their complaint includes legal claims. However, as noted above, to plead any cause of action for irregularity in the sale procedure, there must be allegations showing that the plaintiff tendered the amount of the secured indebtedness to the defendant. Abdallah v. United Sav. Bank (1996) 43 Cal. App. 4th 1101, 1109. There is no distinction between legal and equitable causes of action.

The Plaintiffs also argue that requiring the tender would be inequitable because the Defendants’ breach of contract and negligence caused the Plaintiffs to lose their home. Under California law, the tender rule does not apply when it would be inequitable, such as when the instrument is void. Fleming v. Kagan (1961) 189 Cal. App. 2d 791, 797. If the plaintiffs’ action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424. However, when the plaintiffs’ action claims that there was fraudulent conduct in the foreclosure procedure, then tender is required. See Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575 (holding that causes of action for fraud and negligent misrepresentation based on the claim that the defendant had misrepresented the sale date failed because the plaintiff had not made a valid tender).

There are no allegations that the deed of trust is void. There are no allegations that the underlying debt is void. Instead, the Plaintiffs’ claim is that the foreclosure occurred because the Defendants declined to provide a loan modification. This is not grounds to find that it would be inequitable to require a tender.

Further, the Plaintiffs’ allegations demonstrate that the foreclosure proceedings occurred because they stopped making payments on their loan. In paragraph 17, the Plaintiffs allege the following:

Plaintiffs stopped making payments when they could not get an answer from Defendants regarding the status of a permanent modification following the successful completion of their trial modification.

This demonstrates that the foreclosure proceedings occurred because the Plaintiffs did not make the required payments on the loan.

As noted above, the principle underlying the tender rule is that “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idle and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention.” Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal. App. 3d 112, 118. If the Plaintiffs cannot tender the amount that they owe on their note, there is no beneficial purpose to intervening because the Defendants would simply begin the foreclosure proceedings again. This would result only in an unjust benefit to the Plaintiffs, who would continue to stay in a property that they agreed to use as security for a loan on which they stopped making payments. Accordingly, it is equitable to require the Plaintiffs to satisfy the tender rule in their pleadings.

Therefore, the Court sustains the Defendants’ demurrer to each cause of action in the First Amended Complaint.

The Court does not grant leave to amend because the copy of the loan modification agreement contradicts the allegations in the complaint. Allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken are not assumed true for the purposes of a demurrer. Vance v. Villa Park Mobilehome Estates (1995) 36 Cal. App. 4th 698, 709. Such facts appearing in exhibits attached to the complaint are given precedence over inconsistent allegations in the complaint. Dodd v. Citizens Bank (1990) 222 Cal.App.3d 1624, 1627.

In the third cause of action for estoppel, the Plaintiffs allege that the Defendant promised to provide a loan modification. The Plaintiff alleges in paragraph 50 that the Defendant made a written promise to provide the Plaintiffs with a permanent modification provided that the Plaintiffs made all of the payments under a trial modification.

However, a review of the loan modification agreement, a copy of which is attached as untabbed exhibit A to the First Amended Complaint, reveals that the Plaintiffs’ allegations are inconsistent with the written promise that was actually made in the agreement. Paragraph 3 on page 2 of the agreement, which is labeled “The Modification”, provides that the Defendant will send a modification agreement if 1) the Plaintiff’s representations in section 1 of the agreement are true, 2) the Plaintiff complies with the requirements in section 2 of the agreement, 3) the Plaintiff provides all required information and documents, and 4) the lender determinates that the Plaintiff qualifies. This demonstrates that the Defendant agreed to provide a modification if four conditions were satisfied. This is inconsistent with the Plaintiffs’ allegation that the Defendant promised to provide a modification if the Plaintiffs made all their payments under the trial modification.
Further, the cause of action for promissory estoppel must plead the following elements:

1) the defendant made a promise;
2) the defendant should have reasonably expected that the promise will induce action or forbearance of a definite and substantial character on the part of the plaintiff;
3) the plaintiff was induced into an action or forbearance; and
4) injustice can be avoided only by enforcement of the promise.
C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal. 3d 1, 7-8.

Promissory estoppel is a doctrine that uses equitable principles to replace the requirement that both parties provide consideration to make an agreement legally enforceable. Id. For example, in C&K Engineering, the plaintiff solicited bids from defendant and other subcontractors for the installation of reinforcing steel in the construction of a waste water treatment plant. The plaintiff included defendant’s bid in its master bid to the public sanitation district, which accepted the bid. The defendant then refused to perform in accordance with its bid because it claimed that it had miscalculated its bid. The defendant argued that its bid did not create an enforceable contract because the plaintiff has not paid any money to the defendant.
The plaintiff brought an action to recover damages for the defendant's refusal to perform in accordance with its bid. The Court of Appeal found that the doctrine of promissory estoppel applied to make the defendant’s bid enforceable. Promissory estoppel was shown in the circumstances because the defendant had made the bid, the defendant could reasonable expect that its bid would induce the plaintiff to act, the plaintiff was induced to act by including the bid in its master bid for the project, and injustice could be avoided only by enforcing the defendant’s bid. The doctrine of promissory estoppel was necessary to make the bid enforceable because neither party had provided consideration.

As mentioned above, the purpose of promissory estoppel is to make a promise binding, under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange. Youngman v. Nevada Irrigation Dist. (1969) 70 Cal. 2d 240, 249. The doctrine is inapplicable, therefore, if the promisee’s performance was requested at the time the promisor made his promise and that performance was bargained for. Id.

In Youngman, the Supreme Court found that no promissory estoppel claim was pleaded because the allegations showed that the plaintiff had provided consideration to the defendant. The plaintiff alleged that the defendant promised him that he would be granted a merit step increase in his pay each year and that plaintiff relied upon this promise in accepting employment with the defendant, continuing in its employ, and refraining from accepting a job elsewhere. Under these allegations that the defendant’s promise that the plaintiff would receive an annual raise was part of the bargain under which the plaintiff entered the defendant’s employ. The plaintiff provided consideration when he remained in his position and rendered satisfactory service to the defendant under the employment contract. The Court found that there was no need to rely upon the doctrine of promissory estoppel in these circumstances.

The same defect exists in the pending case. The modification agreement requested the Plaintiff to make payments under the trial modification agreement and to provide information and documents. The Plaintiff’s performance was bargained for because it was required in order to satisfy the requirements needed to obtain the final modification of the loan. This demonstrates that the Plaintiff’s performance was requested at the time the Defendant made the promise to make the modification and that the Plaintiff’s performance was bargained for. Accordingly, the doctrine of promissory estoppel is inapplicable in this case and the Court does not grant leave to amend the third cause of action.

Under California law, the Plaintiffs must show in what manner they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs cite this legal authority on page 10 of their opposition papers. However, they do not then follow this legal authority by presenting the means by which they can amend their pleading in order to satisfy the tender rule. At the hearing, if the Plaintiffs cannot demonstrate that they can tender the amount owed, then they cannot plead an essential element of their causes of action and the Court will not grant leave to amend.

Further, the Court does not grant leave to amend the seventh cause of action for violation of Civil Code section 2923.6 because section 2923.6 does not impose an affirmative duty on the Defendant to modify any loan. See Mabry v. Superior Court (2010) 185 Cal. App. 4th 208, 222 (finding that section 2923.6 “merely expresses the hope that lenders will offer loan modifications on certain terms). Accordingly, the Plaintiffs cannot plead a claim for violation of section 2923.6 because the Defendant’s alleged failure to provide a loan modification cannot violate the statute.

In addition, the Court does not grant leave to amend the ninth cause of action for an accounting because the Plaintiffs do not identify a balance due from the Defendants to the Plaintiffs. In order to plead a claim for an accounting, the Plaintiffs must that the Defendants caused losses and are liable to the Plaintiffs and that the true amounts of losses owed to the Plaintiffs cannot be ascertained without an accounting. Kritzer v. Lancaster (1950) 96 Cal. App. 2d 1, 6 to 7. Here, there are no allegations that the Defendants owe money to the Plaintiffs. Instead, this case arises because the Plaintiffs owe money to the Defendants and their house was sold because they did not make the required payments. Accordingly, no cause of action for accounting can be pleaded against the Defendants because they do not owe money to the Plaintiffs.

Finally, in light of the recommended ruling, the Court takes the motion to strike off calendar.

* TENTATIVE RULING: *

Motion for preliminary injunction staying action pending appeal in related action is granted. Defendant has established under CCP section 576(a)(6) that a restraint is necessary to prevent a multiplicity of judicial proceedings.

This order is not prevented by the fact a demurrer was overruled on res judicata grounds because the judgment is not final. This matter should be enjoined until the appeal is concluded to preserve the judgment in the underlying matter from the threat of impairment by any proceedings of this court of concurrent jurisdiction. See generally, Franklin & Franklin v. 7-Eleven Owners for Fair Franchising (2000) 85 Cal.App.4th 1168. This matter involves the same loans and the same question of whether those loans were usurious or not. While plaintiff argues, in effect, that this action presents a different theory as to why the loans are usurious (that is, that the loans were not made or arranged by a licensed real estate broker as argued in the first action, but rather were made or arranged by individual investors who were not licensed real estate brokers and therefore were subject to the prohibition against usury), the statement of decision in the prior matter finds that defendant Dove Street Capital Lenders, LLC believed the loan was arranged by a licensed loan broker and further, that if the female who was represented by SF Properties to be the broker was not a licensed loan broker, then the defendant was fraudulently induced to make the loan. This raises a credible argument for res judicata as to the issue raised in this action of who "made or arranged" the loan if the judgment is affirmed on appeal. While there still might be an argument that the modifications were not arranged by a licensed loan broker, the issues of whether (1) CCP section 1916.1 prevents such an argument from prevailing (see CCP section 1916.1 (". . . The term "made or arranged" includes any loan made by a person licensed as a real estate broker as a principal or as an agent for others, and whether or not the person is acting within the course and scope of such license.") and (2) whether that issue could have been decided in the previous action still remain to be briefed.

* TENTATIVE RULING: *

Motions (2) to compel further responses to Interrogatory No. 17.1 and to deem requests for admissions admitted:

These motions are denied as untimely, having been filed outside the applicable 45 day time limit for such motions without any written document extending time to file.

CCP section 2030.300(c) provides "Unless notice of this motion is given within 45 days of the service of the response, or any supplemental response, or on or before any specific later date to which the propounding party and the responding party have agreed in writing, the propounding party waives any right to compel a further response to the interrogatories." A similar provision applies to requests for admissions. CCP section 2033.290(c) ("Unless notice of this motion [to compel further response] is given within 45 days of the service of the response, or any supplemental response, or any specific later date to which the requesting party and the responding party have agreed in writing, the requesting party waives any right to compel further response to the requests for admission."). This time provision is considered mandatory and failure to file within the 45 day time limit renders the court "without authority to rule on motions to compel other than to deny them." Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410. The burden is on the moving party to show the motion is timely. Sexton , 58 Cal.App.4th at 1409.

Here, the 45 day period for responses served on January 18, 2012 expired on March 8, 2012. Although in a meet and confer letter dated February 24, 2012, counsel requested a stipulation to extend the time to file a motion to compel further responses for 30 days to April 4, there is no writing confirming agreement to the request and there is no writing demonstrating a second stipulation granting another purported extension to May 4, 2012. Defendant failed to meet defendant's burden to demonstrate the motion is timely.

As a separate and independent ground, the motion is denied for failure to file a separate statement. CRC Rule 3.1345 requires that "Any motion involving the content of a discovery request or the responses to such a request must be accompanied by a separate statement. The motions that require a separate statement include a motion: (1) To compel further responses to requests for admission; (2) To compel further response to interrogatories. . ." There is no separate statement here; moreover, the responses are not attached, so the court cannot determine what the requests for admissions request, or confirm that the response set forth in the moving papers was in fact made even if the court were inclined to overlook the absence of a separate statement.

To the extent this is a motion to compel responses (not further responses) to Requests for Admissions Nos. 27, 28, 29 and 30 because the court understands from the motion they were never responded to, then there is no 45 day time restriction. The Request of defendant for an order that the truth of the matters specified in Requests for Admissions be deemed admitted as true and the original of documents designated deemed genuine by plaintiff is granted as to Requests for Admissions Nos. 27, 28, 29 and 30 ONLY.

Monetary sanctions in the amount of $1800 are awarded against plaintiff

* TENTATIVE RULING: *

Defendant AURORA LOAN SERVICES, LLC's demurrer is SUSTAINED without leave to amend. CCP §430.10(e).

Defendant's request for judicial notice is GRANTED. Evidence Code § 452.
The court takes judicial notice that the documents were recorded and the dates they were recorded. Further, the court takes notice of the contents of the documents, not for the truth of the matter asserted therein, but to the extent the statements made provide notice and/or are consistent with statutory requirements and for the legal effect of the operative language. See Fontenot v. Wells Fargo Bank (2011) 198 Cal. App.4th 256.

As a preliminary matter, the court notes that plaintiff filed for bankruptcy. This action was not listed among his assets. Exhibit F. The claims, if any, belonged to the bankruptcy estate. 11 USC § 541(a)(1). He cannot be permitted to state he has no assets and then pursue this claim on his own behalf. He has no standing or is judicially estopped from asserting the claim. The bankruptcy was dismissed for failing to abide by the Chapter 13 plan payments. Exhibits G and H.

The complaint alleges fraud, non-disclosures and other wrongdoing in connection with the origination of a mortgage plaintiff obtained in September 2006. However, demurring defendant was not involved in the origination process and only took over the servicing of the loan after its origination. Defendant allowed plaintiff to apply for two loan modifications under the HAMP plan. Complaint at ¶¶ 26, 28. Plaintiff was informed he did not qualify. ¶ 31.

Nothing in the comprehensive scheme set forth in Civil Code section 2924, et seq., allows a judicial action to determine whether the person initiating the foreclosure process is indeed authorized. See Gomes v. Countrywide Home Loans, Inc., et al.(2011) 192 Cal. App.4th 1149 (review denied). The Fourth District Court of Appeal recently confirmed that the statutory scheme does not provide for a preemptive suit challenging standing. Robinson v. Countrywide Home Loans, Inc.(2011) 199 Cal. App. 4th 42, 46. Civil Code section 2924(a)(1) allows a trustee, mortgagee, beneficiary, or any of their agents to initiate non-judicial foreclosure.

An assignment of a deed of trust does not need to be recorded. Santens v. Los Angeles Finance Co. (1949) 91 Cal. App. 2d 197, 202. Section 2932.5 applies to mortgages, not deeds of trust. Calvo v. HSBC Bank USA, NA (2011) 199 Cal. App. 4th 118. Section 2934 further emphasizes the distinction by stating "any assignment of the beneficial interest under a deed of trust may be recorded. . . ." This is a deed of trust and, even though not required, the substitution was recorded.

Civil Code section 2923.5 does not require lenders to modify loans and does not require that the declaration be made under penalty of perjury or that it specify which of the three methods of compliance was used nor does it need to be signed by the person who performed the options listed. Mabry v. Superior Court (2010) 185 Cal. App. 4th 208, 214. The notice of default contains the required declaration. Exhibit B.

Fraud, must be pled with a higher degree of specificity than is ordinarily required. Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. To comply with the pleading requirement, a plaintiff must plead specific facts that "show how, when, where, to whom, and by what means the representations were tendered." Stansfield v. Starkey (1990) 220 Cal. App.3d 59, 73. In fraud complaints against a corporation, the complaint must also allege their authority to speak on behalf of the corporation. Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal. App. 4th 153, 157. There are no allegations of any statements made by any representative of these defendants.

An agreement to postpone a sale must be in writing to be enforceable. Karlsen v. American Savings and Loan Assoc. (1971) 15 Cal. App. 3d 112, 121. Loan modifications must be signed by the lender to be enforceable pursuant to the statute of frauds. Secrest v. Sec. Nat'l Mort. Loan Trust 2002 (2008) 167 Cal. App. 4th 544, 553. Plaintiff cannot justifiably rely on any alleged oral promises. Plaintiff is not a third party beneficiary under the Home Affordable Modification Program (HAMP). Aleem v. Bank of America, NA (C.D.Cal. Feb. 12, 2010) 2010 U.S. Dist. Lexis 11944 at 12. Nor are lenders required to modify loans under the HAMP guidelines.

Unless supported by consideration, an oral, gratuitous promise to continue a trustee's sale is not enforceable and the trustee may proceed with the sale as noticed. Redecke v. Gibraltar Sav. & Loan Ass'n (1971) 15 Cal. App. 3d 112. Hopeful expectations of a new loan cannot satisfy the requirement of justifiable reliance. Kruse v. Bank of America (1988) 202 Cal. App. 3d 38, 55. Furthermore, any modification to a contract required to be in writing under the statute of frauds, must also be in writing. CC §§ 2922, 1624, see Secrest v. Security Nat'l Mortg. Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544, 553. Plaintiff has not alleged the existence of a valid contract.

"[T]he implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract." Racine & Laramie, Ltd, Inc. v. Dept. of Parks & Rec. (1992) 11 Cal. App. 4th 1026, 1031. There is no obligation to deal fairly or in good faith absent an existing contract. Id. at 1032. The recognition of a tort remedy for a breach of the implied covenant in a noninsurance contract has little authoritative support. Sutherland v. Barclays American/ Mortgage Corp. (1997) 53 Cal. App. 4th 299, 314. Absent an independent duty arising from tort law, there is no tort recovery for noninsurance contract breach. Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal. 4th 85, 102. The plaintiff has not alleged a contract or a breach thereof or that defendant's actions prevented him from making payments. Indeed, plaintiff has not denied he was in default.

The statute of limitations has expired to bring a claim for damages under TILA or HOEPA. 15 USC §§ 1635(f), 1640(e)(f). There is no private cause of action under RESPA and TILA applies only to the entity that acquired the debt obligation. It does not apply to the servicer or the trustee. Even so the statute of limitations has expired. 15 USC § 1640(e).

Plaintiff does not have standing to bring an unfair business practice claim against these defendants. Plaintiff has not alleged injury in fact. "A plaintiff alleging unfair business practices under [California Business and Professions Code section 17200 et seq.] must state with reasonable particularity the facts supporting the statutory elements of the violation." Khoury v. Maly's of California (1993) 14 Cal. App. 4th 612, 617. Plaintiff has not explained what is manifestly unfair about defendants pursuing their rights while plaintiff remains on the property without making payments required pursuant to a signed, notarized and recorded deed of trust.

For these reasons and others set forth in the moving papers, the demurrer is sustained. Generally, leave to amend is granted "if there is any reasonable possibility that the defect can be cured by the amendment." Goodman v. Kennedy (1976) 18 Cal. 3d 335, 349. However, the burden is on the plaintiff to show in what manner he or she can amend the complaint, and how that amendment will change the legal effect of the pleading. Id. Plaintiff has not met this burden. Accordingly, the demurrer is sustained without leave to amend.

* TENTATIVE RULING: *

Wachovia Mortgage v. Homeowner

Motion: Defendant’s Demurrer to Plaintiff Wachovia Mortgage’s First Amended Complaint

To OVERRULE Defendant’s demurrer to Plaintiff’s first, second, and third causes of action pursuant to Code of Civil Procedure § 430.10(e).

To ORDER Defendant to answer the Plaintiff’s first amended complaint within 10 days, running from service of the minute order by the clerk. (California Rules of Court, rule 3.1320(g) and (j)(1).)

Explanation:

1. Defendant’s Demurrer to Plaintiff’s First Cause of Action for Cancellation of Instruments

Defendant contends that the Plaintiff’s first cause of action for cancellation of instrument fails to state facts sufficient to constitute a viable cause of action against Defendant. The elements of a cause of action for cancellation of instrument are: (1) a written instrument; (2) facts showing that the written instrument may cause serious injury to plaintiff; and (3) facts showing that the written instrument is void or voidable against the plaintiff. (Civil Code § 3412; Zakaessian v. Zakaessian (1945) 70 Cal. App. 2d 721, 724-25.)

Initially, Defendant argues that the Plaintiff has no standing to sue and, thus, cannot invoke the power of the Court.

First, the Defendant states that the Plaintiff has no standing because first amended complaint is not verified. Regardless of the fact that a plaintiff’s standing to sue is not determined by the verification, or lack of verification, of a pleading, the Court notes that the last page of the first amended complaint is a verification of the first amended complaint by Sharon Mason, a Vice President Loan Documentation of Plaintiff.

Second, the Defendant states that the Plaintiff has no standing because Plaintiff’s lawyers are not the real parties in interest and do not have personal first-hand knowledge of any of the facts in this case. Nevertheless, the fact that the Plaintiff’s lawyers are not real parties in interest in this action and do not have personal knowledge of the facts does not mean that the Plaintiff has no standing to sue.

Third, Defendant states that Plaintiff and Plaintiff’s lawyers have failed to provide any proof of personal injury to Plaintiff, a violation of anyone’s constitutional rights, or a contract signed by both Plaintiff and Defendant evidencing a meeting of the minds. However, the Plaintiff does not need to prove that Plaintiff suffered a personal injury, that any party’s constitutional rights were violated, or that there was a contract signed by both Plaintiff and Defendant in order to establish that Plaintiff has standing to sue. Therefore, the Court finds that the Defendant’s argument that the Plaintiff does not have standing to sue fails.

Next, the Court finds that the Plaintiff has alleged sufficient facts to constitute a viable cause of action for cancellation of instruments against the Defendant. In the first cause of action, the Plaintiff alleges that a Deed of Trust was executed by Defendant on July 14, 2004 and that the Deed of Trust secured repayment of a $630,000.00 loan evidenced by a promissory note. The Deed of Trust was recorded in the Fresno County Recorder’s Office as Document # 2004-0157223 on July 20, 2004. The Plaintiff further alleges that, on September 1, 2009, a written instrument entitled “Revised Full Reconveyance” was recorded as Document # 2009-0121195, and, on September 3, 2009, a written instrument entitled “Revised Grant Deed,” which also purports to transfer Plaintiff’s interest in the subject property to Defendant Stone Corner Trust, was recorded as Document # 2009-0122528. Plaintiff asserts that these two written instruments will harm Plaintiff because both instruments purport to transfer Plaintiff’s security interest in the subject property and beneficial interest under the deed of Trust to Defendant Stone Corner Trust. Finally, Plaintiff states that the “Revised Full Conveyance” and the “Revised Grant Deed” are fraudulent and that the purported signatory for both the “Revised Full Conveyance” and the “Revised Grant Deed” is not employed by Plaintiff, is not an agent of Plaintiff, and had no authorization to execute any documents on behalf of Plaintiff.

For these reasons, the Court overrules Defendant’s demurrer to Plaintiff’s first cause of action for cancellation of instruments pursuant to Code of Civil Procedure § 430.10(e).

2. Defendant’s Demurrer to Plaintiff’s Second Cause of Action for Quiet Title

Defendant contends that the Plaintiff’s second cause of action for quiet title fails to state facts sufficient to constitute a viable cause of action against Defendant. The essential elements of a cause of action for quiet title are: (1) the complaint must be verified; (2) the legal description and the street address or common designation of the real property; (3) the title of the plaintiff as to which a determination is sought and the basis of the title; (4) the adverse claims to the title of the plaintiff against which a determination is sought; (5) the date as of which the determination is sought; and (6) a prayer for the determination of the title of the plaintiff against the adverse claims. (Code of Civil Procedure § 761.020.)

Initially, Defendant argues that the Plaintiff has no standing to sue and, thus, cannot invoke the power of the Court because the first amended complaint is unverified, the Plaintiff’s lawyers are not proper parties to this action, and the Plaintiff has not provided proof of several matters. However, the Defendant’s arguments fail for the same reasons as discussed in the above section regarding Defendant’s demurrer to the Plaintiff’s first cause of action.

Next, the Court finds that the Plaintiff has alleged sufficient facts to constitute a viable cause of action for quiet title against the Defendant. First, the first amended complaint is verified. Second, the Plaintiff has alleged that the subject real property is legally described in the City of Fresno, County of Fresno. Further, the Plaintiff has alleged that the subject real property’s street address is Fresno, California. Third, the Plaintiff has alleged that it has a security interest in the subject property as the beneficiary under a deed of trust recorded in the Fresno County Recorder’s Office on July 20, 2004. Fourth, the Plaintiff has alleged that a determination is sought against the adverse claims of Defendant [homeowner], Stone Corner Trust, and anyone else who claims any legal or equitable interest in the subject property arising after the Deed of Trust was recorded on July 20, 2004 which is purportedly superior to the Plaintiff’s interest in the subject property. Fifth, the Plaintiff alleges that it seeks to quiet title as against all defendants as of July 20, 2004. Sixth, the Plaintiff alleges a prayer for the determination of its title against the claims of the defendants.

For these reasons, the Court overrules Defendant’s demurrer to Plaintiff’s second cause of action for quiet title pursuant to Code of Civil Procedure § 430.10(e).

3. Defendant’s Demurrer to Plaintiff’s Third Cause of Action for Declaratory Relief

Defendant Andre Provost Jr. contends that the Plaintiff’s third cause of action for declaratory relief facts to state facts sufficient to constitute a viable cause of action against Defendant. In order to establish a cause of action for declaratory relief, a plaintiff must allege (1) a proper subject of declaratory relief within the scope of Code of Civil Procedure § 1060, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party. (5 Witkin, California Procedure (5th ed.) § 853.)

Initially, Defendant argues that the Plaintiff has no standing to sue and, thus, cannot invoke the power of the Court because the first amended complaint is unverified, the Plaintiff’s lawyers are not proper parties to this action, and the Plaintiff has not provided proof of several matters. However, the Defendant’s arguments fail for the same reasons as discussed in the above section regarding Defendant’s demurrer to the Plaintiff’s first cause of action.

Next, the Court finds that the Plaintiff has alleged sufficient facts to constitute a viable cause of action for declaratory relief against the Defendant. First, Plaintiff has alleged proper subjects of declaratory relief – a declaration of its rights “over or upon property” and the validity of the instruments entitled “Revised Full Reconveyance” and “Revised Grant Deed.” Second, in the third cause of action, Plaintiff alleges that, while Defendant contends that the “Revised Full Reconveyance” and “Revised Grant Deed” are valid documents and that Plaintiff no longer has any interest in the real property under the Deed of Trust, the Plaintiff contends that the “Revised Full Reconveyance” and “Revised Grant Deed” are fraudulent and that the Plaintiff still has an enforceable security interest in the real property pursuant to the Deed of Trust. With these allegations, the Plaintiff has alleged an actual controversy involving justiciable questions relating to the rights or obligations of a party.

For these reasons, the Court overrules Defendant’s demurrer to Plaintiff’s third cause of action for declaratory relief pursuant to Code of Civil Procedure § 430.10(e).