Judge: Christopher K. Lui, Case: 22STCV15940, Date: 2022-08-25 Tentative Ruling

Case Number: 22STCV15940    Hearing Date: August 25, 2022    Dept: 76

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the demurrer addressed herein.  As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.  Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.  If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.

            Plaintiff allege that Defendants steered Plaintiff into a “hard money loan” mortgage used to evade the requirements of the Dodd-Frank Amendments to the Truth-in-Lending Act (“TILA”). Defendant lender allegedly deprived Plaintiff of use of loan funds needed to make necessary repairs to the property and caused the property to be sold a trustee’s sale.

Defendant Lil’ Wave Financial, Inc. dba Superior Loan Servicing demurs to the Complaint.

TENTATIVE RULING

            Defendant Lil’ Wave Financial, Inc. dba Superior Loan Servicing’s demurrer to the Complaint is SUSTAINED with leave to amend as to the first through sixth causes of action.          

            Plaintiff is given 30 days’ leave to amend.

ANALYSIS

Demurrer

Meet and Confer

            The Declaration of Kristi M. Wells reflects that Plaintiff’s counsel did not respond to meet and confer efforts. This satisfies CCP § 430.41(a)(3)(B).

Discussion

1.         First Cause of Action (Violation of Civil Code § 2923.7); Second Cause of Action (Violation of Civil Code § 2923.6).

            Defendant argues that these code sections only apply to owner-occupied residential real property, but the Complaint does not allege that the property meets this requirement.

            Civil Code § 2923.7(f) provides: “(f) This section shall apply only to mortgages or deeds of trust described in Section 2924.15.”

            In turn, Civil Code § 2924.15(a) provides in pertinent part:

(a) Unless otherwise provided, . . . Sections . . . 2923.6, 2923.7 . . . shall apply only to a first lien mortgage or deed of trust that meets either of the following criteria:

(1)

(A) The first lien mortgage or deed of trust is secured by owner-occupied residential real property containing no more than four dwelling units.

(B) For purposes of this paragraph, “owner-occupied” means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes.

(2) The first lien mortgage or deed of trust is secured by residential real property that is occupied by a tenant, contains no more than four dwelling units, and meets all of the conditions described in subparagraph (B).

(A) For the purposes of this paragraph:

(i) “Applicable lease” means a lease entered pursuant to an arm’s length transaction before, and in effect on, March 4, 2020.

(ii) “Arm’s length transaction” means a lease entered into in good faith and for valuable consideration that reflects the fair market value in the open market between informed and willing parties.

(iii) “Occupied by a tenant” means that the property is the principal residence of a tenant.

(B) To meet the conditions of this subparagraph, a first lien mortgage or deed of trust shall have all of the following characteristics:

(i) The property is owned by an individual who owns no more than three residential real properties, or by one or more individuals who together own no more than three residential real properties, each of which contains no more than four dwelling units.

(ii) The property is occupied by a tenant pursuant to an applicable lease.

(iii) A tenant occupying the property is unable to pay rent due to a reduction in income resulting from the novel coronavirus.

(C) Relief shall be available pursuant to subdivision (a) of Section 2924 and Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 for so long as the property remains occupied by a tenant pursuant to a lease entered in an arm’s length transaction.

(Civ. Code § 2924.15(a).)

            Here, the Complaint does not allege that the property at issue is Plaintiff’s residential real property. As such, Civil Code, § 2923.6 and 2923.7 would not apply. This ground for demurrer is well-taken.

            The demurrer to the first and second causes of action is SUSTAINED with leave to amend.

3.         Third Cause of Action (Wrongful Foreclosure).

            Defendant argues that, because this cause of action is based upon violation of the above §§ 2923.7 and 2923.6, this cause action also fails.

            Also, there is no allegation as to what demurring Defendant Superior did.

            ¶ 62 alleges that Defendants held a Trustee’s Sale in violation of the two code sections pled above. As discussed above, there are insufficient facts pled to demonstrate those two code sections are applicable.

            Moreover, demurring defendant Superior Loan Servicing is alleged to be a loan servicing company. (Complaint, ¶ 11.) Plaintiff must allege Superior’s role in the alleged wrongful foreclosure.

            The demurrer to the third cause of action is SUSTAINED with leave to amend.

4.         Fourth Cause of Action (Fraud).

            Defendant argues that this cause of action is not plead with the requisite specificity as against demurring Defendant Superior.

            “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 fourth cause of action does not include any specific allegations against demurring Defendant Superior. As such, fraud is not pled with the requisite specificity against Superior.

            The demurrer to the fourth cause of action is SUSTAINED with leave to amend.

5.         Fifth Cause of Action (Quiet Title.)

            Defendant argues that there are no allegations that Superior has a claim adverse to Plaintiff’s title.

To state a cause of action to quiet title, the plaintiff must allege: (1) plaintiff is the owner; (2) in possession of the land; (3) defendant claims an interest adverse to plaintiff; and (4) defendant’s claim is without right. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 740-41.) 

An element of a cause of action for quiet title is “[t]he adverse claims to the title of the plaintiff against which a determination is sought.” (Code Civ. Proc., § 761.020, subd. (c).) West did not satisfy this element because none of the defendants to the third amended complaint has adverse claims to title. In support of the demurrer to the third amended complaint,  [*803]  Chase Bank requested the trial court take judicial notice of the recorded trustee's deed upon sale issued to Green Island Holdings, LP, as grantee. A court may take judicial notice of a recorded deed. (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 194 [147 Cal. Rptr. 3d 41].) The trustee's deed upon sale includes a recitation that “[t]he grantee herein WASN'T the foreclosing beneficiary.” (Original capitalization.)

(West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 802-03.)

            Here, Plaintiff does not pled what adverse claim demurring Defendant Superior asserts as to the subject property.

            The demurrer to the fifth cause of action is SUSTAINED with leave to amend.

6.         Sixth Cause of Action (Violation of Bus. & Prof. Code § 17200 et seq.)

            Defendant argues that this cause of action is not plead specifically as against demurring Defendant Superior.

            Defendant also argues that the loan is not subject to Civil Code § 2924 or any subsection thereof because the property is not owner-occupied, nor residential.

            ¶ 84 of the Complaint identifies Defendants’ violation of Civil Code §§ 2923.6 and 2923.7 as the basis for this cause of action. For the reasons discussed above, the Complaint does not allege sufficient facts to demonstrate that these code sections apply.

            The demurrer to the sixth cause of action is SUSTAINED with leave to amend.