Judge: Christopher K. Lui, Case: 21STCV41956, Date: 2022-10-13 Tentative Ruling
Case Number: 21STCV41956 Hearing Date: October 13, 2022 Dept: 76
Plaintiffs allege that Defendants wrongfully foreclosed on his property while a loan modification was in progress and during a COVID-19 moratorium, and a promise to allow the loan modification given while Plaintiff was suffering from colon cancer.
Defendants
Carrington Mortgage Services, LLC, and Deutsche Bank National Trust Company, as
Indenture Trustee, for New Century Home Equity Loan Trust 2006-2 demur to the First
Amended Complaint and move to strike portions thereof.
TENTATIVE RULING
Defendants
Carrington Mortgage Services, LLC, and Deutsche Bank National Trust Company, as
Indenture Trustee, for New Century Home Equity Loan Trust 2006-2’s demurrer to
the First Amended Complaint is SUSTAINED without leave to amend as to
the first through seventh causes of action.
Defendants’
motion to strike is GRANTED as to the following: Eighth cause of action (1AC,
¶¶ 118-144); Prayer, ¶¶ 9-16 re: eighth cause of action; Ninth cause of action
(1AC, ¶¶ 145-160); Tenth cause of action for accounting (1AC,. ¶¶ 161-163); Prayer
¶ 6 re: tenth cause of action; Eleventh cause of action for wrongful
foreclosure (1AC, ¶¶ 164-177); Demand for loan modification and injunction
(Prayer, ¶ 5); Demand for loan modification (Prayer, ¶ 8).
Defendants’
motion to strike is MOOT as to the following: Sixth cause of action for violation
of B & P Code § 17200 (1AC, ¶¶ 89-98); Demand for imposition of constructive
trust (1AC, ¶ 109); Demand for loan modification (¶ 36B);
The case is ordered dismissed with prejudice.
ANALYSIS:
Demurrer
Meet and Confer
The
form Declaration of Kathryn A. Moorer reflects that Plaintiff’s counsel failed
to meet and confer in good faith. This satisfies CCP § 430.41(a)(3)(B).
Request For Judicial Notice
Defendants
request that the Court take judicial notice of the following:
(1)
A Notice of Rescission of Notice of Default record on December 28, 2011,
as instrument number 20111765909;
(2) A Notice of Substitution of Attorney recorded on June 5, 2019, as
instrument number 20190524064; (3) A Notice of Default and Election to Sell
Under Deed of Trust recorded on June 5, as instrument number 20190524065; (4) A
Notice of Trustee's Sale recorded on September 9, 2019 as instrument number
20190921281; (5) Order Granting In Rem Relief From the Automatic Stay entered
April 16, 2020 as Docket No.30 in U.S. Bankruptcy Court of Nevada, Case No.
20-10838-mkn.
Requests
Nos. 1-5 are GRANTED per Evid. Code § 452(d)(court records).
Discussion
1. First
Cause of Action (Declaratory Relief/Declaratory Relief [Seeking To Insure The “Status
Quo”] With a TRO/Preliminary Injunction Based Upon The Pending “Loan Modification”
While Staying Any Pending Wrongful Foreclosure).
To qualify
for declaratory relief, [plaintiff] would have to demonstrate its action
presented two essential elements: “(1) a proper subject of declaratory relief,
and (2) an actual controversy involving justiciable questions relating to
[Wilson's] rights or obligations … . [Citation.]” (Citation omitted.) A
declaration of rights or duties with respect to property may be a proper
subject of declaratory relief. (Citations omitted.) But even assuming that
Wilson's action satisfies the first requirement, it must still present an
“actual controversy.” (Code Civ. Proc., § 1060.) “The ‘actual controversy’
language in Code of Civil Procedure section 1060 encompasses a probable future
controversy relating to the legal rights and duties of the parties.
[Citation.]” (Citation omitted.) It does not embrace controversies that are
“conjectural, anticipated to occur in the future, or an attempt to obtain an
advisory opinion from the court.” (Citation omitted.) Thus, while a party
may seek declaratory judgment before an actual invasion of rights has occurred,
it must still demonstrate that the controversy is justiciable. (Citation
omitted.) And to be justiciable, the controversy must be ripe. (Citation
omitted.)
(Wilson & Wilson v. City Council of Redwood City (2011) 191
Cal.App.4th 1559, 1582.)
“The court may refuse to exercise the power granted by this
chapter in any case where its declaration or determination is not necessary or
proper at the time under all the circumstances.” (Civ. Proc. Code, § 1061.) Here,
given the ruling on the demurrer to the remaining causes of action, combined
with the ruling on the motion to strike, declaratory relief is not necessary or
proper under all the circumstances.
The
demurrer to the first cause of action is SUSTAINED without leave to
amend.
2. Second
Cause of Action (Breach of the Covenant of Good Faith and Fair Dealing).
Defendant
essentially argues that his cause of action cannot be stated if the conduct
alleged is expressly authorized by the Contract. Here, the Deed of Trust authorized
non-judicial foreclosure of the property.
The
elements of a breach of the implied covenant of good faith and fair dealing
sounding in contract are: (1) the existence of a
contractual relationship between the parties (Racine & Laramie, Ltd. v.
Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031); (2) defendant was not expressly
permitted by the contract to engage in the conduct which constitutes the
alleged breach (Wolf v. Walt Disney
Pictures & Television (2008) 162 Cal.App.4th 1107, 1120-1121); (3)
defendant subjectively lacked a good faith belief in the validity of the act or
the act was intended to frustrate the common purpose of the agreement (Wolf, supra, 162 Cal.App.4th at 1123) or defendant’s conduct was objectively unreasonable (Carma Developers, Inc. v. Marathon Development California, Inc.
(1992) 2 Cal.4th 342, 372-73); (4) the act or conduct was contrary to the contract’s express purposes or the
parties' legitimate expectations as expressed in a specific contractual
obligation (Carma Developers, supra, 2 Cal.4th at 373) or
otherwise frustrates the other party’s rights to express contractual benefits (Racine & Laramie, Ltd., supra, 11 Cal.App.4th at
1031-32; Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094); and (5) resulting damages (Thompson Pacific Construction, Inc. v. City
of Sunnyvale (2007) 155 Cal.App.4th 525, 541).
Here, the
Complaint alleges that Defendants breached the covenant of good faith and fair
dealing by representing to Plaintiff they would review the loan modification
papers, and were precluded by unspecified “applicable law(s)” from proceeding
with the Trustee’s Sale. (1AC, ¶ 40.) Plaintiff
also incorporates obligations under the Homeowners Bill of Rights into this
cause of action. (1AC, ¶¶ 53-57.) However,
the implied covenant of good faith and fair dealing would not require
Defendants to review the loan modification papers or grant the loan modification
in good faith. Indeed, Plaintiff does
not allege an existing contract whereby Defendants agreed to grant a loan modification.
As the court explained in Racine
& Laramie, Ltd. v. Department of Parks & Recreation (1992) 11
Cal.App.4th 1026, 1031–1035 [14 Cal. Rptr. 2d 335], the implied covenant is a
supplement to an existing contract, and thus it does not require parties
to negotiate in good faith prior to any agreement.
(McClain v. Octagon Plaza, LLC (2008) 159
Cal.App.4th 784, 799 [bold emphasis added].)
There is no obligation to deal
fairly or in good faith absent an existing contract. (Citations omitted.) If
there exists a contractual relationship between the parties, as was the case
here, the 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. (Citation omitted.)
(Racine & Laramie, Ltd. v. Department of
Parks & Recreation (1992) 11 Cal.App.4th 1026, 1032 [bold emphasis and
underlining added].)
The demurrer to the second cause of
action is SUSTAINED without leave to amend.
3. Third
Cause of Action (Intentional Misrepresentation).
Defendants
argue that this cause of action is not pled with the requisite specificity.
“To
establish a claim for deceit based on intentional misrepresentation, the
plaintiff must prove seven essential elements: (1) the defendant represented to
the plaintiff that an important fact was true; (2) that representation was
false; (3) the defendant knew that the representation was false when the
defendant made it, or the defendant made the representation recklessly and
without regard for its truth; (4) the defendant intended that the plaintiff
rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was
harmed; and (7) the plaintiff's reliance on the defendant's representation was
a substantial factor in causing that harm to the plaintiff. (Citations
omitted.)” (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498 [italics omitted].)
Fraud must be pleaded with specificity rather than with “
‘general and conclusory allegations.’ ” (Small v. Fritz Companies, Inc. (2003)
30 Cal.4th 167, 184 [132 Cal. Rptr. 2d 490, 65 P.3d 1255].) The specificity
requirement means a plaintiff must allege facts showing how, when, where, to
whom, and by what means the representations were made, and, in the case of a
corporate defendant, the plaintiff must allege the names of the persons who
made the representations, their authority to speak on behalf of the
corporation, to whom they spoke, what they said or wrote, and when the
representation was made. (Lazar v. Superior Court, supra, 12 Cal.4th at p. 645.)
We enforce the specificity requirement in consideration of
its two purposes. The first purpose is to give notice to the defendant with
sufficiently definite charges that the defendant can meet them. (Committee on
Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216
[197 Cal. Rptr. 783, 673 P.2d 660].) The second is to permit a court to weed
out meritless fraud claims on the basis of the pleadings; thus, “the pleading
should be sufficient ‘ “to enable the court to determine whether, on the facts
pleaded, there is any foundation, prima facie at least, for the charge of
fraud.” ’ ” (Id. at pp. 216–217.)
(West v. JPMorgan Chase Bank, N.A.
(2013) 214 Cal.App.4th 780, 793.)
Here, the fraud cause of action does
not plead who on behalf of Defendants made exactly what representation to
Plaintiff, when and in what manner (orally or in writing), why such
representation was known to be false when made, and Plaintiff’s reasonable reliance
which caused him damages.
The demurrer to the third cause of
action is SUSTAINED without leave to amend.
4. Fourth
Cause of Action (Quiet Title).
The
elements required to state a cause of action to quiet title are: (1) a legal description
of the property and the street address or common designation, if any; (2) the
title of the plaintiff as to which a determination of quiet title is sought;
(3) the adverse claims to plaintiff's title; (4) the date as of which the determination
is sought; and (5) a prayer for determination of plaintiffs title against the
adverse claims. (Code Civ. Proc., § 761.020.)
Defendants
argue that Plaintiff does not join all parties with adverse claims as to which
he seeks free and clear title, nor allege the determination of his title against
those claims. At least three other deeds
of trust in favor of other lenders whose claims are also adverse are attached
to the 1AC as Exhibit 8.
This
argument is not persuasive. Any judgment
rendered against non-parties will not quiet title as against them. A plaintiff takes that risk when omitting
potential defendants from a quiet title action.
Defendants
also argue that Plaintiff has not alleged that he tendered payment of the debt.
This argument is persuasive, as Plaintiff has not alleged tender of the underlying
debt.
(Lueras v. BAC Home Loans Servicing,
LP (2013) 221 Cal.App.4th 49, 86.)
The
demurrer to the fourth cause of action is SUSTAINED without leave to
amend.
5. Fifth
Cause of Action (Negligence/Negligent Misrepresentation).
Defendants
argue that this cause of action has not been pled with the requisite
specificity.
“The elements of negligent misrepresentation are ‘(1)
the misrepresentation of a past or existing material fact, (2) without
reasonable ground for believing it to be true, (3) with intent to induce
another's reliance on the fact misrepresented, (4) justifiable reliance on the
misrepresentation, and (5) resulting damage.’ (Citation omitted.)” (National
Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group,
Inc. (2009) 171 Cal.App.4th
35, 50.)
The
same pleading specificity requirement applicable to fraud applies to pleading
negligent misrepresentation. (Cadlo v. Owens-Illinois, Inc., (2004) 125
Cal.App.4th 513, 519.)
Moreover,
“[t]o be actionable, a negligent
misrepresentation must ordinarily be as to past or existing material facts.
‘[P]redictions as to future events, or statements as to future action by some
third party, are deemed opinions, and not actionable fraud.’ (Citation
omitted.)” (Tarmann v. State Farm Mut.
Auto. Ins. Co. (1991) 2
Cal.App.4th 153, 158.) There is no
cause of action for a negligent false promise. (Id. at 159: “Simply
put, making a promise with an honest but unreasonable intent to perform is
wholly different from making one with no intent to perform and, therefore, does
not constitute a false promise.”)
Here,
the negligent misrepresentation cause of action does not allege who on behalf of Defendants made
exactly what representation to Plaintiff, when and in what manner (orally or in
writing), why such representation was made without a reasonable basis for
believing it to be true, and Plaintiff’s reasonable reliance which caused him damages.
As
for negligence, Defendants argue that a financial institution owes no duty of
care to a borrower. This argument is persuasive in that the Complaint alleges
negligence in connection with the loan modification process. (1AC, ¶ 74.) The
California Supreme Court recently held that “a lender owes no duty to a borrower in its processing of a
loan modification application.” (Sheen v. Wells Fargo Bank, N.A.
(2022) 12 Cal. 5th 905, 929.)
The demurrer to the fifth cause of
action is SUSTAINED without leave to amend.
6. Sixth
Cause of Action (Violation of Business and Professions Code § 17200 et seq.)
Defendants
argue that this cause of action fails because it is derivative of the other
claims which fail. Defendants also argue that Plaintiff has not pled injury in
fact because the loss of property was caused by his default on the loan in
February 2019 and the alleged unlawful acts occurred after the threat of
foreclosure. This argument is persuasive.
In the context of a nonjudicial foreclosure, there is no
causation for purposes of standing to bring a B & P Code § 17200 cause of
action if Plaintiff’s default which triggered the power of sale in the
trustee’s sale was not caused by the defendant’s alleged unlawful, unfair or
fraudulent conduct:
Additionally, the Kwikset Corp. court
held a plaintiff can satisfy the causation prong of the standing requirements
under Business and Professions Code section 17204—i.e., show the “plaintiff's
economic injury [occurred] ‘as a result of’ the unfair competition …”—by
showing a “ ‘causal connection’ ” between the economic injury and the alleged
unfair conduct. (Kwikset Corp., supra, 51 Cal.4th at p. 326.) A plaintiff fails to satisfy the causation
prong of the statute if he or she would have suffered “the same harm whether or
not a defendant complied with the law.” (Daro v. Superior Court (2007) 151
Cal.App.4th 1079, 1099 [61 Cal. Rptr. 3d 716].)
. . .
. . . Jenkins's third cause of action
must also satisfy the second prong of the standing requirements under
[*523] Business and Professions Code section 17204 (i.e.,
causation), which required her to plead a
causal link between her economic injury, the impending nonjudicial
foreclosure of her home, and the six unfair or unlawful acts allegedly
committed by Defendants. (Bus. & Prof. Code, § 17204.) Importantly,
Jenkins admits in both her SAC and opening brief that she defaulted on her loan. It is also indisputable Jenkins's default triggered the lawful enforcement of the
power of sale clause in the deed of trust, and it was the triggering of the
power of sale clause that subjected Jenkins's home to nonjudicial foreclosure.
Moreover, Jenkins's SAC and opening brief acknowledge her default occurred
prior to the six unlawful or unfair acts she alleges as the basis of her UCL
action. As Jenkins's home was subject to nonjudicial foreclosure because of Jenkins's
default on her loan, which occurred before Defendants' alleged wrongful acts,
Jenkins cannot assert the impending foreclosure of her home (i.e., her alleged
economic injury) was caused by Defendants' wrongful actions. Thus, even if we
assume Jenkins's third cause of action alleges facts indicating Defendants'
actions violated at least one of the UCL's three unfair competition prongs
(unlawful, unfair, or fraudulent), Jenkins's SAC cannot show any of the alleged
violations have a causal link to her economic injury. In light of these facts,
we conclude the demurrer to Jenkins's third cause of action was proper.
(Jenkins v. JPMorgan Chase
Bank, N.A. (2013) 216 Cal.App.4th 497, 522-23 (bold emphasis and
underlining added), overruled in part on other grounds in Yvanova v. New
Century Mortgage Corp. (2016) 62 Cal.4th 919, 939.)
The
demurrer to the sixth cause of action is SUSTAINED without leave to amend.
7. Seventh
Cause of Action (Breach of Contract, Promissory Estoppel/Promissory Fraud, Imposition
of Constructive Trust).
Defendants
argue that no contractual duty to modify the loan is pled, and the trustee’s
sale was expressly authorized by the Deed of Trust.
“A cause of
action for damages for breach of contract is comprised of the following
elements: (1) the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) the resulting damages to
plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990)
222 Cal.App.3d 1371, 1388 [272 Cal.Rptr. 387], italics added.)
(Durell
v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367.)
Here,
Plaintiff has not alleged that the parties actually entered into a loan
modification agreement, nor the terms of that agreement. Plaintiff only alleges
that a loan modification application was under review. (See 1AC, ¶¶ 19, 66.)
Defendants
also argue that no promise clear and unambiguous in its terms, nor reasonable
and foreseeable reliance, is pled for promissory estoppel.
The
elements of promissory estoppel are: (1) a clear and unambiguous promise; (2)
reasonable and foreseeable reliance by the party to whom the promise is made;
(3) substantial detriment; (4) the party asserting estoppel must be injured by
the reliance.
(Toscano v. Greene Music (2004)
124 Cal.App.4th 685, 692; Flintco Pacific, Inc. v. TEC Management Consultants, Inc. (2016)
1 Cal.App.5th 727, 734.)
Here, Plaintiff does not allege that
terms of a clear and unambiguous promise regarding the loan modification, nor
detrimental reliance. In other words, Plaintiff does not allege what action or
forbearance was induced by a clear and unambiguous promise. “In California,
under the doctrine of promissory estoppel,
‘A promise which the promisor should reasonably expect io induce action or forbearance on
the part of the promisee or a third person and which does induce such action or
forbearance is binding if injustice can be avoided only by enforcement of the
promise.’” (Kajima/Ray Wilson v. L.A. Cty. Metro. Transp. Auth.
(2000) 23 Cal. 4th 305, 310.)
The
demurrer to the seventh cause of action is SUSTAINED without leave to
amend.
Motion To Strike
Meet and Confer
The
form Declaration of Kathryn A. Moorer reflects that Plaintiff’s counsel failed
to meet and confer in good faith. This satisfies CCP § 435.5(a)(3)(B).
Discussion
Defendants
move to strike the following:
¿ Eighth cause
of action (1AC, ¶¶ 118-144),
Following an order sustaining a demurrer or a motion for judgment on the
pleadings with leave to amend, the plaintiff may amend his or her complaint
only as authorized by the court's order. (People ex rel. Dept. Pub. Wks. v.
Clausen (1967) 248 Cal.App.2d 770, 785 [57 Cal. Rptr. 227] [leave to amend
complaint does not constitute leave to amend to add new defendant].) The
plaintiff may not amend the complaint to add a new cause of action without
having obtained permission to do so, unless the new cause of action is within
the scope of the order granting leave to amend. (See Patrick v. Alacer Corp.
(2008) 167 Cal.App.4th 995, 1015 [84 Cal. Rptr. 3d 642] [acknowledging rule but
finding it inapplicable where new cause of action “directly responds” to trial court's
reason for sustaining the demurrer].) Here, the new cause of action is not
within the scope of the order granting leave to amend.
(Harris v.
Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)
Because Plaintiff did not obtain
leave to add this completely new cause of action for violation of the California
Homeowner Bill of Rights—Civil Code § 2924.17, the request to strike this cause
of action is GRANTED per CCP § 436(b)(part of pleading not drawn or filed in conformity
with the laws of this state or order of the court).
¿ Prayer, ¶¶ 9-16
re: eighth cause of action,
Given
the foregoing ruling, there is no eighth cause of action to support the
requested remedies. As such, the motion to strike this prayer is GRANTED.
¿ Ninth cause
of action (1AC, ¶¶ 145-160)
Because Plaintiff did not obtain leave to add this
completely new cause of action for violation of the Civil Code § 2923.55 et
seq., the request to strike this cause of action is GRANTED per CCP § 436(b)(part
of pleading not drawn or filed in conformity with the laws of this state or
order of the court).
¿ Tenth cause
of action for accounting (1AC,. ¶¶ 161-163)
Because Plaintiff did not obtain leave to add this
completely new cause of action for an accounting, the request to strike this cause
of action is GRANTED per CCP § 436(b)(part of pleading not drawn or filed in conformity
with the laws of this state or order of the court).
¿ Prayer ¶ 6
re: tenth cause of action
Given
the foregoing ruling, there is no tenth cause of action to support the
requested remedy. As such, the motion to strike this prayer is GRANTED.
¿ Eleventh
cause of action for wrongful foreclosure (1AC, ¶¶ 164-177)
Because Plaintiff did not obtain leave to add this
completely new cause of action for wrongful foreclosure, the request to strike
this cause of action is GRANTED per CCP § 436(b)(part of pleading not drawn or
filed in conformity with the laws of this state or order of the court).
¿ Sixth cause
of action for violation of B & P Code § 17200 (1AC, ¶¶ 89-98)
Given
the ruling on the demurrer, the motion to strike is MOOT as to this request.
¿ Demand for
imposition of constructive trust (1AC, ¶ 109)
Given
the ruling on the demurrer, the motion to strike is MOOT as to this request.
¿ Demand for
loan modification (¶ 36B)
Given
the ruling on the demurrer, the motion to strike is MOOT as to this request.
¿ Demand for
loan modification and injunction (Prayer, ¶ 5)
Given
the ruling on the demurrer and motion to strike, there are no causes of action to
support the requested remedy. As such, the motion to strike this prayer is
GRANTED.
¿ Demand for
loan modification (Prayer, ¶ 8)
Given
the ruling on the demurrer, there is no cause of action to support the
requested remedy. As such, the motion to strike this prayer is GRANTED.
The
case is ordered dismissed with prejudice.