Judge: Barbara M. Scheper, Case: 23STCV22094, Date: 2023-12-19 Tentative Ruling
Case Number: 23STCV22094 Hearing Date: December 19, 2023 Dept: 30
Dept.
30
Calendar
No. 11
Bryant
vs. Alameda Mortgage Corp., et. al.,
Case No. 23STCV22094
Tentative
Ruling re: Defendants’ Demurrer to
Complaint; Motion to Strike
Defendants The Money Source and
ServBank aka Allied First Bank (collectively, TMS) demur to the first through sixth
and tenth causes of action in Plaintiff Dana Traci Bryant’s Complaint, and move
to strike the first through fourth causes of action. The demurrer is overruled
as to the sixth cause of action and otherwise sustained, with ten (10) days
leave to amend. The motion to strike is denied as moot.
In reviewing the legal sufficiency of a
complaint against a demurrer, a court will treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions, or
conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank);
C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055,
1062.) It is well settled that a “demurrer lies only for defects appearing on
the face of the complaint[.]” (Stevens v. Superior Court (1999) 75
Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is
tested against a general demurrer are well settled. We not only treat the
demurrer as admitting all material facts properly pleaded, but also give the
complaint a reasonable interpretation, reading it as a whole and its parts in
their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19
Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a
demurrer, the complaint must be construed liberally by drawing reasonable
inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co.
(2000) 78 Cal.App.4th 952, 958.)
When ruling on a demurrer, the
Court may only consider the complaint’s allegations or matters which may be
judicially noticed. (Blank, supra, 39 Cal.3d at p. 318.) The Court may
not consider any other extrinsic evidence or judge the credibility of the
allegations plead or the difficulty a plaintiff may have in proving his
allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868,
881.) A demurrer is properly sustained only when the complaint, liberally
construed, fails to state facts sufficient to constitute any cause of action. (Kramer
v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)
In April 2020, Plaintiff obtained a
loan (Loan 9063) from Defendant Alameda Mortgage Corporation (AMC) to refinance
the mortgage on her home. (Comp. ¶ 12, Ex. A [52].) Plaintiff alleges that she
“canceled loan 9063 within a month of discovering fraud in this loan,” and
“canceled and rescinded loan 9063 within the three day statutory window.”
(Comp. ¶¶ 55-56.) The Complaint does not plead the date on which Plaintiff
cancelled Loan 9063. Plaintiff also alleges that AMC paid off Loan 9063 on
September 12, 2022. (Comp. ¶ 30.)
On
July 18, 2022, Plaintiff obtained a second loan (Loan 6449) from AMC to refinance
her mortgage again. (Comp. ¶ 26, Ex. B [155].) On July 28, 2022, Plaintiff
allegedly cancelled and rescinded Loan 6449 and returned all money from the
loan to AMC via check (“Check 626”). (Comp. ¶ 29.) However, AMC did not cancel
Loan 6449, and on October 31, 2022, it sold the loan to TMS. (Comp. ¶ 30.) AMC
later repurchased Loan 6449 from TMS on July 7, 2023. (Comp. ¶ 28.)
Plaintiff
has asserted claims against TMS for: (1) Breach of Contract; (2) Breach of
Implied Covenant of Good Faith and Fair Dealing; (3) Negligence; (4) Fraud; (5)
Slander of Title; (6) Conversion; and (10) Negligent Infliction of Emotional
Distress.
First and Second
Contract-Based Causes of Action
Plaintiff’s
claims for breach of contract and breach of implied covenant good faith and
fair dealing are premised upon TMS’s alleged breaches of both Loan 6449 and
Loan 9063. (Comp. ¶¶ 53, 91.) Plaintiff alleges that she cancelled and
rescinded both loans within their respective three-day statutory windows, and
that “AMC represented in writing that it was going to cancel all interests in
loan 6449 on August 8, 2022.” (Comp. ¶ 57.) Additionally, “TMS represented in
writing that it was going to cancel loan 6449 on December 15, 2022.” (Comp. ¶
58.) Plaintiff then “waited a reasonable time for [AMC] to cancel all interests
in her home and 6449, then she returned all money and property she got from
6449, less damages…” (Comp. ¶ 59.) However, AMC and TMS both allegedly failed
to cancel loan 6449. (Comp. ¶¶ 60-61.) Plaintiff also alleges in general terms
that TMS aided, adopted, and conspired with AMC in breaching Loan 9063. (Comp.
¶ 69.)
A demurrer
for uncertainty may be sustained when a defendant cannot reasonably determine
to what he or she is required to respond; for example, when a plaintiff joins
multiple causes of action as one, fails to properly identify each cause of
action, or fails to state against which party each cause of action is asserted
if there are multiple defendants, a complaint is uncertain. (Williams v.
Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) The Court agrees with
TMS that the first and second causes of action are subject to demurrer based on
uncertainty, because each combines alleged breaches of two separate loans into
one cause of action. (Comp. ¶¶ 53, 91.)
Third Cause of Action
for Negligence
Plaintiff’s
third cause of action alleges that TMS breached its “duty to use reasonable
care, in loan formation, loan drafting, loan origination, loan execution, loan
advertising, loan servicing, debt collection, publications, accounting,
transactions,” and other areas. (Comp. ¶ 25.) TMS allegedly breached those
duties because it knew or should have known “that loan 6449 is of such nature
that if it was not properly originated, drafted, assembled . . . for the known
material use and purpose for which it was intended by [Plaintiff], that it was
likely to injure [Plaintiff].” (Comp. ¶ 33.)
This cause of action fails because “a financial institution
owes no duty of care to a borrower when the institution's involvement in the
loan transaction does not exceed the scope of its conventional role as a mere
lender of money.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th
905, 927; see Mitsui Manufacturers Bank v. Superior Court (1989) 212
Cal.App.3d 726, 730.) Plaintiff has pled no facts suggesting that TMS’s conduct
exceeded the scope of its role as a mere lender of money, and so has failed to
allege any duty of care owed to her by TMS.
Plaintiff
argues that TMS may be held liable for negligence based on duties of care
imposed by federal statutes, citing Financial Code §
50505 (“Any person who violates any provision of any of the following federal
acts or regulations violates this division…”). This section creates liability
for a statutory cause of action under the California
Residential Mortgage Lending Act (Fin. Code § 50000, et seq.) and is
inapplicable here. (See Fin. Code §§ 50000, 50001.) Plaintiff cites no authority suggesting that this section
may support liability for negligence. Plaintiff’s citations to California
statutory claims under the UCL (Bus. & Prof Code § 17200) and the Rosenthal
Act (Civ. Code § 1812.702) are similarly inapposite.
Fourth Cause of Action for
Fraud
The
elements of fraud are: (1) misrepresentation (false representation,
concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent
to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See
Civil Code §1709.) Fraud actions are subject to strict requirements of
particularity in pleading. (Committee on Children’s Television, Inc. v.
General Foods Corp. (1983) 35 Cal.3d 197, 216.)
The liberal construction of pleadings
does not apply to a fraud claim. Instead, a fraud claim must be pled with
specificity. (Tenet Healthsystem Desert, Inc. v. Blue Cross of California¿(2016)
245 Cal.App.4th 821, 837.) “The particularity requirement demands that a
plaintiff plead facts which show how, when, where, to whom, and by what means
the representations were tendered.” (Cansino v. Bank of America (2014)
224 Cal.App.4th 1462, 1469.) “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.)
Under her fourth cause of
action, Plaintiff alleges that her agreement to Loan 6449 was fraudulently
induced by misrepresentations made by Defendant Jason Smith, an employee of
AMC, in January 2022. (Comp. ¶¶ 4, 50.) Smith allegedly misrepresented the interest
rate and amount that Plaintiff would be able to obtain on the second refinance.
(Comp. ¶¶ 52, 70.) Further misrepresentations were later made by Defendant
Timothy Larin, another employee of AMC. (Comp. ¶¶ 4, 84.)
With respect to TMS,
Plaintiff alleges that the AMC defendants “aided adopted and conspired with
[TMS]” in defrauding Plaintiff. (Comp. ¶ 97.) Plaintiff further alleges that on
December 15, 2022, TMS falsely represented that “they were going to require
[AMC] to repurchase loan 6449, timely,” and “would contact the credit bureaus
and the insurer of 6449 and delete references to loan 6449.” (Comp. ¶ 111.)
Plaintiff’s allegations
lack sufficient specificity to support a claim for fraud against a corporation;
Plaintiff must “allege the names of the persons who made the allegedly
fraudulent representations [and] their authority to speak.” (Tarmann, 2
Cal.App.4th at 157.) The Complaint also lacks any factual allegations in
support of the claim that TMS aided and abetted AMC’s fraud. Although Plaintiff argues that the specificity requirements for
pleading fraud do not apply because TMS committed fraudulent concealment,
Plaintiff’s claim against TMS is based on TMS’s alleged affirmative
misrepresentations, not on concealment. (Comp. ¶¶ 111-117.)
Fifth Cause of Action for
Slander of Title
“The elements of a cause of
action for slander of title are (1) a publication, which is (2) without
privilege or justification, (3) false, and (4) causes pecuniary loss.” (La
Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 472 [emphasis in
original].)
Plaintiff alleges that TMS
has “slandered her title to real property,” because they “knew and confirmed
the cancellation and recission of loan 6449 but maintained their fraudulent
falsehood by recording 6449 at the Los Angeles County Recorder and possibly
with other third party publications.” (Comp. ¶ 124.)
As TMS points out, the
attached Deed of Trust for Loan 6449 shows that it was recorded by AMC on July
15, 2022. (Comp., Ex. B [191].) AMC sold Loan 6449 to TMS on October 31, 2022,
then repurchased the loan from TMS on July 7, 2023. (Comp. ¶¶ 28, 30.) Because TMS
did not make the alleged publication, Plaintiff’s slander of title claim fails
against it. (See Nolte
v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406 [facts
appearing in attached exhibits “also are accepted as true and are given
precedence, to the extent they contradict the allegations”].) Plaintiff cites
no authority suggesting that TMS’s failure to correct a recording made by a
third party may itself constitute an actionable “publication.”
Sixth Cause of Action
for Conversion
To
plead a cause of action for conversion, one must allege (1) the plaintiff’s
ownership or right to possession of personal property; (2) defendant’s
disposition of the property inconsistent with plaintiff’s rights; and (3)
resulting damages. (Fremont Indemnity Co. v. Fremont General Corp.
(2007) 148 Cal.App.4th 97, 119.) “To mandate a conversion action ‘it is not essential that
plaintiff shall be the absolute owner of the property converted but she must
show that she was entitled to immediate possession at the time of conversion.’ ” (Hartford Financial Corp. v.
Burns (1979) 96 Cal.App.3d 591, 598.)
“Conversion is a strict
liability tort. The foundation of the action rests neither in the knowledge nor
the intent of the defendant. Instead, the tort consists in the breach of an
absolute duty; the act of conversion itself is tortious. Therefore, questions
of the defendant's good faith, lack of knowledge, and motive are ordinarily
immaterial.” (Regent Alliance Ltd. v. Rabizadeh (2014) 231 Cal.App.4th
1177, 1181.) “The rule of strict liability applies equally to purchasers of
converted goods, or more generally to purchasers from sellers who lack the
power to transfer ownership of the goods sold.” (Ibid.)
Plaintiff’s sixth cause of
action is based on TMS’s alleged conversion of Check #626, through which
Plaintiff “returned all money from the 6449 loan to [AMC] . . . less damages.”
(Comp. ¶¶ 30, 132.) Plaintiff alleges that AMC “wrongfully converted check #626
into a payment for loan 6449.” (Comp. ¶ 135.) In doing so, AMC “aided adopted
and conspired with [TMS].” (Comp. ¶ 132.) Additionally, Plaintiff alleges that
“TMS claims [AMC] gave them about $73,000 of that money,” and “TMS applied the
approximate $73,000 into a lump sum payment in January 2023” to reduce the
principal of the loan. (Comp. ¶¶ 137-138.) In April-May 2023, TMS “removed the
lump sum payment, and then reapplied that money into monthly payments, from
somewhere near the start of the loan to about May and/or June 2023.” (Comp. ¶
138.) “At one point [TMS] lowered [Plaintiff’s] monthly payments to reflect the
large reduction in principal, but reversed that and demanded she pay the full
6449 monthly amount including escrow.” (Comp. ¶ 138.)
TMS
argues that it did not dispose of the funds from Check #626 in a manner
inconsistent with Plaintiff’s property rights when it used the money to pay
down Loan 6449. However, Plaintiff alleges that after she rescinded the loan on
July 28, 2022, both AMC and TMS “independently confirmed in writing the
cancellation and recission of the 6449 loan.” (Comp. ¶ 29.) Although TMS would
not purchase the loan until October 31, 2022 (Comp. ¶ 30), the allegation that
AMC confirmed recission in writing shows that AMC and TMS’s later use of the
funds to pay down the loan was inconsistent with Plaintiff’s rights. (See Kim
v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284 [“California
cases permitting an action for conversion
of money typically involve those who have
misappropriated, commingled, or misapplied specific funds held for the benefit
of others”].) Accordingly, the demurrer is overruled as to the sixth cause of
action.
Tenth
Cause of Action for Negligent Infliction of Emotional Distress
“[T]here is no independent tort of
negligent infliction of emotional distress. The tort is negligence, a cause of
action in which a duty to the plaintiff is an essential element. That duty may
be imposed by law, be assumed by the defendant, or exist by virtue of a special
relationship.” (Potter v. Firestone Tire & Rubber Co. (1993) 6
Cal.4th 965, 984-985 [citations omitted]; see Moon v. Guardian Postacute
Services, Inc. (2002) 95 Cal.App.4th 1005, 1009 [“NIED is a tort in
negligence, and the plaintiff must establish the elements of duty, breach of
duty, causation, and damages.”].) “Unless a defendant assumes a duty to the
plaintiff in which the emotional condition of the plaintiff is the object,
recovery for negligent infliction of emotional distress is ordinarily available
only if the defendant breaches some other legal duty which threatens physical
injury, and the emotional distress is proximately caused by that breach of
duty.” (Kerins v. Hartley (1994) 27 Cal.App.4th 1062, 1072.)
As with Plaintiff’s cause of action
for negligence, the NIED claim against TMS fails because Plaintiff has not pled
any duty of care owed to her by TMS. (Sheen, supra, 12
Cal.5th at 927.)
Motion
to Strike
TMS moves to strike Plaintiff’s
first through fourth causes of action, arguing that Plaintiff has failed to
sufficiently state the claims. Because the demurrer is sustained as to those
causes of action, the motion to strike is denied as moot.