Judge David J. Cowan, Case 20SMCV00492 2022-12-09 Tentative Ruling

This is a wrongful foreclosure case. Plaintiff Edgar Meinhardt alleges Defendants[1] misrepresented the terms of a home loan, including the amount of the loan, and then wrongfully foreclosed on his home. Plaintiff alleges sixteen causes of action for (1) violation of Civil Code §2923.5, (2) wrongful foreclosure, (3) set aside foreclosure sale, (4) violation of Civil Code §2924.12, (5) violation of the Real Estate Settlement Procedures Act (RESPA), (6) rescission and damages under the Truth in Lending Act (TILA), (7) violation of the Home Ownership and Equity Protection Act (HOEPA), (8) fraud and deceit, (9) negligent misrepresentation, (10) negligence, (11) breach of contract, (12) quiet title, (13) cancellation of instruments, (14) accounting, (15) unfair competition in violation of Business & Professions Code §17200 and (16) declaratory relief. Plaintiff is appearing in pro per.

This hearing is on Plaintiff’s demurrer to, and motion to strike portions of, the verified answer of Defendants Leonard Hsu Jr. and Susan Lee. Plaintiff demurs to Defendants’ twenty affirmative defenses on the grounds (1) none state sufficient ultimate facts or new matters to constitute a defense to any of the causes of action, (2) none refer to the cause of action to which they are intended to answer, and (3) all of the affirmative defenses are uncertain and ambiguous. Plaintiff also moves to strike (1) references in the answer to Susan Lee as default has already been entered against her, (2) references to code sections in Defendants’ ninth affirmative defense for statute of limitations which do not supply a limitations period, (3) all of Defendants’ affirmative defenses on the same grounds as the demurrer, (4) Defendants’ twentieth affirmative defense which reserves the right to add or modify affirmative defenses, and (5) the prayer for attorneys’ fees as there is no contract or statutory basis for such a claim.

As an initial matter, the Court notes that Plaintiff’s meet and confer efforts were insufficient, as Code Civ. Proc. §430.41, subdivision (a), and §435.5, subdivision (a), require meeting and conferring “in person or by telephone.” Plaintiff simply sent a letter by e-mail, thereby frustrating the purpose of the meet and confer requirement, which is to determine whether the parties can reach an agreement as to the issues raised in the demurrer and motion to strike. Nonetheless, in the interest of judicial efficiency, the Court exercises its discretion to consider the merits of Plaintiff’s demurrer and motion to strike, but it notes that subsequent failures to comply with statutory obligations may result in a continuance of the hearing on the subject motion.

Defendant argues that Plaintiff’s demurrer and motion to strike are untimely. The Court agrees. Pursuant to Code Civ. Proc. §1005(b), Plaintiff was required to file his demurrer and motion to strike 16 court days before the noticed hearing on December 9, 2022, plus 2 court days for e-mail service, or by November 10, 2022. He filed and served his demurrer and motion to strike on November 11, 2022. However, given the defects in the answer, the Court exercises its discretion to consider this untimely demurrer and motion to strike. (Jackson v. Doe (2011) 192 Cal.App.4^th 742, 749 (trial court has discretion to consider an untimely demurrer).)

Plaintiff may demur to an answer on the ground of insufficient pleading of defenses. (Code Civ. Proc., §430.20.) Under Code Civ. Proc. §431.30, subdivision (g), every affirmative defense “shall be separately stated, and the several defenses shall refer to the causes of action which they are intended to answer, in a manner by which they may be intelligibly distinguished.” Legal conclusions are insufficient, and an answer must allege “facts averred as carefully and with as much detail as the facts which constitute the cause of action and which are alleged in the complaint.” (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384). Under Code Civ. Proc. §431.30, subdivision (b)(2), “the answer to a complaint must include [a] statement of any new matter constituting a defense. The phrase ‘new matter’ refers to something relied on by a defendant which is not put in issue by the plaintiff. Thus, where matters are not responsive to essential allegations of the complaint, they must be raised in the answer as new matter.” (State Farm Mut. Auto. Ins. Co. v. Superior Court (1991) 228 Cal.App.3d 721, 725.)

Courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”); Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 (“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”).) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Plaintiff demurs to Defendants’ first affirmative defense which states, “Plaintiffs’ Complaint, and each cause of action therein, fails to state a claim upon which relief may be granted.” Plaintiff contends the affirmative defense is a bare legal conclusion and does not provide facts necessary to establish an affirmative defense. The Court disagrees. This affirmative defense must be read in conjunction with Defendants’ denials of facts supporting the Complaint. When so read, the affirmative defense sufficiently pleads why each cause of action fails.

Plaintiff next demurs to the ninth affirmative defense of statute of limitations on the ground it fails to specify the statute and subdivision that creates the time limitation. The Court agrees in part. “In pleading the statute of limitations it is not necessary to state the facts showing the defense, but it may be stated generally that the cause of action is barred by the provisions of section (giving the number of the section and subdivision thereof, if it is so divided, relied upon) of the Code of Civil Procedure.” (Code Civ. Proc. §458; Davenport v. Stratton (1944) 24 Cal.2d 232, 246-247.) Accordingly, a pleading that fails to specify both the applicable statute and subdivision presents no defense. Here, Defendants’ statute of limitations defense cites to “California Code of Civil Procedure §§337, 338, 339, 340, 343, 346, 347, 367, 430.10(d), 430.10(f) and California Civil Code §§1566-1579 et seq.” (Answer ¶283.) The citations to §347 (redemption), §367 (real party in interest requirement), §430.10(d) and (f) (grounds for a demurrer), and §§1566-1579 (consent) are inapplicable and do not support a statute of limitations defense. The citations to §§337, 338, 339, 340 do not specify the applicable subdivision and therefore, do not present a valid defense. The citations to §§343 and 346 are proper as those sections do not contain subdivisions.

Plaintiff also demurs to Defendants’ twentieth affirmative defense, “reserv[ing] the right to add to, delete or modify the affirmative defenses contained in this Answer and to amend these affirmative defenses to conform to proof at trial.” Plaintiff argues this defense is not proper as Defendants cannot unilaterally amend their answer. The Court agrees. Code Civ. Proc. §472 requires a motion for leave to amend the answer to add affirmative defenses.

Plaintiff further demurs to the other seventeen affirmative defenses on the ground they consist only of legal conclusions, and it is unclear how they relate to Plaintiffs’ claims as no new matters or ultimate facts are pled in the Answer for these defenses. The Court agrees. Defendants assert a veritable laundry list of defenses including estoppel, laches, waiver, consent, unclean hands, unjust enrichment, lack of duty of care, lack of breach of contractual duty, litigation privilege, lack of fraudulent conduct, failure to tender, equitable subrogation, equitable lien, Plaintiffs’ breach barring contract claims, full disclosure and exempt loan. But absent the pleading of new matters, it is not clear how any of these defenses apply to each cause of action in the Complaint. All of these defenses are proffered in the form of “terse legal conclusions,” rather than as “facts averred as carefully and with as much detail as the facts which constitute the cause of action are alleged in the complaint.” (FPI Development, 231 Cal.App.3d at 384.) Accordingly, they are all subject to demurrer. However, as there is a reasonable possibility of successful amendment, the Court will sustain the demurrer with leave to amend as to the second to nineteenth affirmative defenses.

The court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (b).) The grounds for a motion to strike are that the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws. (Code Civ. Proc., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)

Here, Plaintiff moves to strike all references to the fact that the answer is being filed on behalf of Susan Lee. The Clerk of the Court entered default for Lee on October 24, 2022. The Answer was filed purportedly on behalf of Lee on November 11, 2022, well after default had already been entered against Lee. Once a default is entered, the defendant is no longer able to file a response or otherwise participate in the case. (Devlin v Kearney Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385-386 (a defendant against whom a default has been entered is out of court and is not entitled to take any further steps in the cause affecting plaintiff's right of action; he cannot thereafter, until such default is set aside in a proper proceeding, file pleadings).) Lee argues that the Court should vacate the default under Code Civ. Proc. § 473 due to attorney neglect. The proper procedure is for Lee to file a motion to vacate rather than raise these arguments in opposition to a motion to strike. Accordingly, the Court grants the motion to strike (1) page 1, caption, the plural “s” in “Defendants” and captioned “AND SUSAN LEE”, (2) page 2, line 1, the plural “s” in “Defendants” and “AND SUSAN LEE,” (3) pages 2-33, the plural “s” in “Defendants”.

Plaintiff also moves to strike references to irrelevant code sections in Defendants’ statute of limitations defense. For reasons stated above, the Court agrees that Defendants have cited to code sections that do not supply a limitations period, and so these sections (Code Civ. Proc. §§347, 367, and 430.10(d) and (f), and Civ. Code §§1566-1579) should be stricken from Defendants’ ninth affirmative defense.

Plaintiff also moves to strike all of Defendants’ affirmative defenses. As the Court has granted a demurrer to all of Defendants’ affirmative defenses save its first affirmative defense, this motion to strike is denied as moot.

Finally, Plaintiff moves to strike page 30, lines 25-26, in the prayer for judgment seeking attorneys’ fees as Defendants have not alleged a statutory or contractual right to attorneys’ fees. The Court agrees. Attorneys’ fees are recoverable only when authorized by contract or law. (Code of Civil Procedure §1033.5, subd.(a)(10); see also De Rothschild v. Diana Lands, 2022 Cal. Super. Lexis 57144 at *3-*4 (granting motion to strike claim for attorneys’ fees where there is no contractual or statutory basis for the claim).) Accordingly, the Court grants the motion to strike the prayer for attorneys’ fees, but does so with leave to amend as there is a reasonable possibility of a successful amendment.

For the foregoing reasons, the Court SUSTAINS IN PART and OVERRULES IN PART Plaintiff’s demurrer. The demurrer is sustained with 20 days’ leave to amend the second to nineteenth affirmative defenses. The demurrer to the twentieth cause of action is sustained without leave to amend. The Court GRANTS IN PART the motion to strike. The motion to strike is granted without leave to amend as to references to Susan Lee and references in Defendants’ ninth affirmative defense for statute of limitations, to Code Civ. Proc. §§347, 367, and 430.10(d) and (f), and Civ. Code §§1566-1579. The motion to strike is granted with 20 days’ leave to amend as to the prayer for attorneys’ fees. The motion to strike is DENIED AS MOOT to the extent it seeks to strike affirmative defenses on which a demurrer has already been sustained.

[1] Defendants are Sunny Acre LLC, Tsasu LLC, Equity Financial Design LLC, Philip Jimenez, Universal Commercial Capital, Eric Tran, Leonard Hsu Jr., Susan Lee, and Christopher XF Lee.

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 200