Judge: Alison Mackenzie, Case: 23STCV01460, Date: 2024-06-20 Tentative Ruling
Case Number: 23STCV01460 Hearing Date: June 20, 2024 Dept: 55
NATURE OF PROCEEDINGS:
Defendant Velocity Commercial Capital LLC’s Demurrer to Amended Complaint.
BACKGROUND
BAY AREA DEVELOPMENT CO. (“Plaintiff”), the former
owner of a commercial building located at 14245 Ventura Boulevard in Los
Angeles (the “Property”), brings this case following the foreclosure sale of
the Property. Plaintiff alleges that Defendants VELOCITY COMMERCIAL CAPITAL,
LLC (“Velocity”), U.S. BANK NATIONAL ASSOCIATION, and ASSURED LENDER SERVICES,
INC. wrongfully foreclosed on the Property. Plaintiff also alleges that
Defendants JEFF WINTER and FRANK MENLO, as co-trustees of the Menlo Family
Trusts, recorded a meritless notice of pendency of action (lis pendens) against
the Property in a separate lawsuit in probate court.
The causes of action alleged against Velocity in the
First Amended Complaint (“FAC”) are (1) Unjust Enrichment, (2) Penalty, and (3)
Wrongful Foreclosure. Velocity has filed a demurrer to the three claims alleged
against it. Plaintiff opposes the demurrer.
REQUEST FOR JUDICIAL NOTICE
The Court grants Defendant’s request for judicial
notice of an “Assignment of Deed of Trust.”
LEGAL STANDARD
Demurrers are to be sustained where a pleading fails
to plead adequately any essential element of the cause of action. Cantu v.
Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879-880.
ANALYSIS
Velocity contends that the claims alleged against it
fail as a matter of law because it did not hold a beneficial interest in the
loan for the Property when the events occurred in this case, and thus could not
be liable for the alleged wrongful foreclosure of the Property or the claims
for unjust enrichment and penalty. Velocity argues that it had assigned the
loan to defendant U.S. Bank National Association prior to the forbearance and was
merely a loan servicer at the time of the foreclosure sale.
As reflected in the judicially noticed assignment,
Velocity assigned the deed of trust for the Property to U.S. Bank National
Association in September 2019. This negates the allegation in the FAC that Velocity
is the holder of the deed of trust. FAC, ¶ 3. The documents attached to the FAC
make clear that Velocity did not purchase the Property at the foreclosure sale.
FAC, Exs. A, F. Other documents attached to the FAC make clear that Velocity
was the servicing agent for U.S. Bank, the party who entered into the forbearance
agreement with Plaintiff but was not itself a party to the agreement. Id.,
Ex. B. The Court concludes that Plaintiff cannot state claims against Velocity
based on its purported position as the “holder of the deed of trust” for the
Property when the documents relied on by Plaintiff and the judicially noticed
assignment makes clear that Velocity was not the holder of the deed of trust
and had no ownership interest in the Property at the time of the forbearance
and foreclosure.
Thus, the Court concludes that the FAC fails as a
matter of law as to Velocity. Plaintiff does not mount much of any opposition
to the demurrer, but does seek leave to amend, arguing that it dealt with Velocity
“at all times” even after the assignment. Opp. P. 3. Leave to amend must be
allowed where there is a reasonable possibility of successfully stating a cause
of action. Schulz v. Neovi Data Corp. (2007) 152 Cal.App.4th 86, 92. While
Plaintiff states it dealt with Velocity it fails to articulate what claims it
may still be able to assert against Velocity. The Court will take argument from
the parties as to what amendment Plaintiff could make to allege claims against
Velocity given its status to the Property at the time of the events at issue in
this case.
CONCLUSION
The demurrer is sustained and the Court will decide at
the hearing whether to sustain it with prejudice, after oral argument.