Judge: Carolyn M. Caietti, Case: 37-2022-00048579-CU-BC-CTL, Date: 2023-09-29 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - September 28, 2023

09/29/2023  10:30:00 AM  C-70 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Carolyn Caietti

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Civil - Unlimited  Breach of Contract/Warranty Demurrer / Motion to Strike 37-2022-00048579-CU-BC-CTL SANTANA VS SERVIS ONE INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 03/13/2023

Defendants Servis One, Inc. dba BSI Financial Services, U.S. Bank Trust National Association, as Trustee of the SCIG Series III Trust; and SN Servicing Corporation's Demurrer to the Verified Complaint is OVERRULED IN PART (1st-7th, 9th-10th causes of action) and SUSTAINED IN PART WITH LEAVE TO AMEND (8th cause of action).

Preliminary Matters Defendant's unopposed request for judicial notice is granted and notice will be taken to the extent permitted. However, while the existence and facial contents of recorded documents are subject to judicial notice under Evidence Code section 452(c) and (h), courts cannot take notice of disputed or disputable facts stated herein. (See, Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. 1. (finding the superior court's granting of a request for judicial notice of a recorded deed of trust, assignment of the deed of trust, substitution of trustee, notices of default and of trustee's sale and trustee's deed upon sale was properly noticed as to the existence and facial contents of the recorded documents); Herrera v. Deutsche National Trust Co. (2011) 196 Cal.App.4th 1366, 1374-75 (judicial notice of recorded documents did not establish the fact a bank was a beneficiary or that an entity was the trustee under a deed of trust).

The Court has not considered the facts in support of the opposition as stated in the Declaration of Raul Santana. (ROA 87; Childs v. Cal. (1983) 144 Cal.App.3d 155, 163 ['the sole function of a demurrer is to test the sufficiency of the challenged pleading...[i]t cannot, properly, be addressed to or based upon evidence or other extrinsic matters'].) Discussion A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) No other extrinsic evidence can be considered (i.e., no 'speaking demurrers'). (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) The complaint must be liberally construed and given a reasonable interpretation, with a view to substantial justice between the parties. (Amarel v. Connell (1988) 202 Cal.App.3d 137, 140–141; see also, Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1111-12 [in ruling on demurrers, courts treat as being true 'not only the complaint's material factual Calendar No.: Event ID:  TENTATIVE RULINGS

3006266  55 CASE NUMBER: CASE TITLE:  SANTANA VS SERVIS ONE INC [IMAGED]  37-2022-00048579-CU-BC-CTL allegations, but also facts that may be implied or inferred from those expressly alleged'].) Defendants demur to each cause of action on grounds the Complaint does not state sufficient facts to constitute each cause of action. Plaintiffs' 248-page Complaint alleges Defendants fraudulently induced Plaintiffs to enter into and then breached a settlement agreement (Ex. A), arising from federal litigation regarding a good faith loan modification on their mortgage. Specifically, Defendants agreed to review Plaintiffs' loan modification and reduce the balance owed on an outstanding loan, but did not, in return for Plaintiffs' promise to dismiss the federal litigation and waive their legal right to sue Defendants in the future.

First Cause of Action: The first cause of action states sufficient facts to constitute a breach of contract. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [elements].) Assuming the truth of the facts alleged, the parties entered into a settlement agreement, requiring Defendants to 'review Plaintiffs for a loan modification' and reduce the balance owed on the loan, but Defendants did not do so and continued to report an inaccurate outstanding loan amount. (Complaint, at ¶¶ 11-20, 55-66, Ex. A [Settlement Agreement].) Damages are also alleged. (E.g., Complaint, at ¶ 67.) Whether or not Defendants conducted a sufficient review in compliance with the Settlement Agreement cannot be determined on a demurrer. (Today's IV, Inc. v. Los Angeles County Metropolitan Transportation Authority (2022) 83 Cal.App.5th 1137, 1165, reh'g denied (Oct. 25, 2022), review denied (Jan. 18, 2023) ['The question of a plaintiff's ability to prove the allegations, or the possible difficulty in making such proof, does not concern the reviewing court and plaintiffs need only plead facts showing they may be entitled to some relief.'].) Thus, the demurrer to the first cause of action is OVERRULED.

Second, Third and Fourth Causes of Action: The second cause of action for fraudulent misrepresentation, third cause of action for promissory fraud and fourth cause of action for fraudulent inducement sufficiently states facts. (Berry v. Frazier (2023) 90 Cal.App.5th 1258, 1270, as modified on denial of reh'g (May 15, 2023), review denied (Aug. 9, 2023); see also, Lazar v. Sup. Ct. (1996) 12 Cal.4th 631, 638 (promissory fraud is a subspecies of fraud and a promise to do something without an intention to perform).) Plaintiffs are only required to plead facts showing entitlement to some relief to survive demurrer; they are not required to present evidence, nor to allege facts not known to them or when the facts lie more in the defendant's knowledge. (Id., at p. 1270.) Here, the Complaint sufficiently states Defendants misrepresented to Plaintiffs that a good faith modification review would be made and the balance on the outstanding loan would be reduced in line with the Settlement Agreement, Plaintiffs reasonably relied on the representations made, Defendants knew their representations were false and intended to deceive them and suffered damage. (E.g., Complaint, at ¶¶ 74-85.) Further, the Complaint alleges Defendants had no intention of honoring false promises of reviewing the loan modification and reducing the outstanding balance. (E.g., Complaint, at ¶ 91.) Thus, the demurrer to the second, third and fourth causes of action are OVERRULED.

Fifth Cause of Action: The fifth cause of action sufficiently states facts to constitute a breach of the covenant of good faith and fair dealing. The law implies in every contract a covenant of good faith and fair dealing, meaning that neither party will do anything which will injure the right of the other to receive the contract's benefits.

(Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 928–929 (ruling an allegation that a bank did not work with the plaintiffs during the modification process in good faith adequately alleged a breach of the covenant); e.g., Complaint, at ¶ 123 [p. 35].) Thus, the demurrer to the fifth cause of action is OVERRULED.

Sixth and Seventh Causes of Action: Defendants argue the sixth cause of action for recission and seventh cause of action for reformation of contract (Civ. Code, § 3399) fail to allege fraud. (Memo., at p. 9: 12-16 & 9:26-27.) As discussed above, fraud is sufficiently alleged. The demurrer to the sixth and seventh causes of action are OVERRULED.

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3006266  55 CASE NUMBER: CASE TITLE:  SANTANA VS SERVIS ONE INC [IMAGED]  37-2022-00048579-CU-BC-CTL Eighth Cause of Action: The eighth cause of action does not state sufficient facts to constitute interference with economic relationships. It is unclear what Plaintiffs mean by 'economic relationships.' (See, Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1140 ['California has traditionally recognized two economic relations torts: interference with the performance of a contract [citation] and interference with a prospective economic relationship [citation].'].) Tortious interference with contractual relations requires the existence of a valid contract between the plaintiff and a third party and tortious interference with prospective economic advantage does not, but a plaintiff must show the defendant knowingly interfered with an economic relationship between the plaintiff and some third party which carries the probability of future economic benefit. (Ibid.) The Complaint does not allege either. In opposition, Plaintiffs do not point to any allegations, but rather seeks leave to amend. Thus, the demurrer to the eighth cause of action is SUSTAINED WITH LEAVE TO AMEND.

Ninth Cause of Action: The demurrer to the ninth cause of action for preliminary injunction is OVERRULED. The Court takes judicial notice of the preliminary injunction it already ordered. (ROA 66 – Minute Order dated April 28, 2023.) Tenth Cause of Action: The demurrer to the tenth cause of action for declaratory relief is OVERRULED. The Complaint alleges an actual controversy relating to the legal rights and duties of the parties under the Settlement Agreement. (C.C.P., § 1060.) For these reasons, the demurrer is OVERRULED IN PART and SUSTAINED IN PART WITH LEAVE TO AMEND.

Concluding Orders Plaintiffs are ordered to file and serve an amended complaint in accordance with the ruling by October 13, 2023.

If the tentative ruling is confirmed without modification, the minute order will be the Court's final ruling.

Defendants are ordered to serve written notice of the Court's final ruling on all appearing parties by October 3, 2023.

Defendants are reminded to comply with Department 70's Policies and Procedures and to provide courtesy copies of all motion paperwork.

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