Judge: David A. Hoffer, Case: 30-2021-1203308, Date: 2022-08-29 Tentative Ruling
The general demurrers of cross-defendant Fidelity National Title Insurance Co. to both causes of action in the second amended cross-complaint of cross-complainants Francois and Pamela Badeau are SUSTAINED WITHOUT LEAVE TO AMEND.
Cross-defendant Fidelity National Title Insurance Co. demurs generally to both causes of action in the second amended cross-complaint of cross-complainants Francois and Pamela Badeau for: (1) violation of the Rosenthal Fair Debt Collections Act; and (2) declaratory relief.
In demurring, cross-defendant has asked for judicial notice of documents, including a minute order, that have been filed in this case. A request for judicial notice is not needed for the Court to review matters already on file in the case.
In opposing the demurrer, the cross-complainants have submitted a declaration by counsel with exhibits consisting of extraneous matter recently produced by cross-defendant in discovery. The Court cannot consider this material.
A ground for objecting to an opponent’s pleading can be raised by demurrer only if it: (1) appears on the face of the pleading, including in exhibits that the pleading incorporates by reference; or (2) is based on a matter of which the Court is required to or make take judicial notice. See Performance Plastering v. Richmond Am. Hones, Inc. (2007) 153 Cal.App.4th 659, 665; City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cl.App.4th 445, 459; James v. Superior Court (1968) 261 Cal.App.2d 415.
First Cause of Action for Violation of the Rosenthal Fair Debt Collections Act
The first cause of action is for violation of the Rosenthal Fair Debt Collections Act, which is codified at Civ. Code § Civ. Code § 1788. Moving cross-defendant contends that this cause of action fails because it is not a creditor or a debt collector and the underlying transaction is not a consumer credit transaction. Responding cross-complainants contend otherwise; they contend that the moving cross-defendant is attempting to enforce a consumer debt, i.e., the HELOC, citing Civ. Code § 1788.2(f).
The term “debt collection” is defined in the Act as “any act or practice in connection with the collection of consumer debts.” The term “debt collector” is defined as “any person who, in the ordinary course of business, regularly, on behalf of that person or others, engages in debt collection.” Civ. Code § 1788.2(c). The term “consumer credit transaction” is defined as “a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes” and includes a mortgage debt. Civ. Code § 1788.2(e). The terms “consumer debt” and “consumer credit” are defined as “money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction.” Civ. Code § 1788.2(e).
Although there are conclusory allegations in the introductory portion of the SACC and the first cause of action that cross-defendant is a “debt collector” (SACC, ¶¶ 45 and 54), there are other, more specific allegations that show otherwise. Paragraph 38 of the SACC alleges that, “[o]n or about March 31,2020 – 12 years after the Badeaus sold the Property and nearly 11 years after the Badeaus borrowed on the HELOC – Fidelity paid Wells Fargo $190,000 to cover a portion of the Badeaus’ consumer debt and to induce Wells Fargo to record a full reconveyance of the HELOC DOT and clear title to the Property for the Millers.” (SACC, ¶ 38.) A prior paragraph alleges that “Fidelity’s job as the title insurance company was to insure [sic] that the Millers were purchasing clear title subject only to exceptions shown in the policy of title insurance.” (SACC, ¶ 28.)
In the first cause of action, cross-complainants allege that cross-defendant was “attempting to collect the debt of the Badeaus to Wells Fargo, Fidelity was attempting to collect a consumer debt – and violating the Rosenthal Act – prior to making its payment to Wells Fargo.” (SACC, ¶ 59. They also allege on information and belief, that there was an assignment of the “debt” to Fidelity from Wells Fargo, either formally or by operation of law when Fidelity paid Wells Fargo. (See SACC, ¶¶ 56 and 57.)
Although the Court will treat material facts alleged in a pleading as true, it may not consider contentions, deductions, or conclusions of fact or law in judging the sufficiency of the pleading. Modacure v. B & B Vehicle Processing, Inc. (2018) 30 Cal.App.5th 690, 692. The facts show that the cross-defendant was not trying to collect on a consumer debt given to the cross-complainants by Wells Fargo but was trying to recoup its payment to Wells Fargo for reconveyance of the deed of trust.
Therefore, the court sustains the demurrer to this cause of action. Given that the court finds this situation is not a consumer credit transaction, there appears to be no way to amend this cause of action, and the court declines to grant further leave to amend.
Fourth Cause of Action for Declaratory Relief
The fourth cause of action is for declaratory relief. It alleges that the cross-complainants contend that the cross-defendant violated the Rosenthal Act both before and after the cross-defendant paid Wells Fargo and that the cross-defendant denies any violation of the Rosenthal Act. (SACC, ¶¶ 65-66.)
Cross-defendant contends that declaratory relief is not available to litigants acting in an individual capacity under the Rosenthal Fair Debt Collections Practices Act, citing Varnado v. Midland Funding, LLC (N.D.Cal. 2014) 43 F.Supp.3d 985. This is a correct statement of the law as Varnado states as follows at pp. 992-993:
Plaintiff requests a declaration that Defendants violated the FDCPA and the Rosenthal Act, as well as injunctive relief and punitive damages. Defendants contend that declaratory or injunctive relief and punitive damages are not available under either the FDCPA or the Rosenthal Act.
Both the state and federal fair debt collection practices acts incorporate statutory schemes that set forth specific limits on the type and amount of damages. [Citations.] Remedies for claims made under the FDCPA are limited to damages, attorney's fees and costs. [Citations.]. “The FDCPA contains no express provision for injunctive or declaratory relief in private actions....” [Citation.] “Injunctive and declaratory relief are not available to litigants acting in an individual capacity under the FDCPA.” [Citations.] Accordingly, Plaintiff's requests for declaratory and injunctive relief under the FDCPA and Rosenthal Act are dismissed.
Thus, the court sustains the demurrer to this cause of action as well, and, once again, declines to grant further leave to amend.
The cross-defendant is ordered to give notice of this ruling and to submit a proposed order.