Judge: Gary I. Micon, Case: 23CHCV01341, Date: 2024-03-22 Tentative Ruling

Case Number: 23CHCV01341    Hearing Date: March 22, 2024    Dept: F43

Dept. F43

Date: 3-22-24

Case # 23CHCV01341, Wvistano Daniel Perez vs. FCI Lender Services, et al.

Trial Date: N/A

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY: Defendants FCI Lender Services, Inc., Puerto Loreto, LLC, and California TD Specialists

RESPONDING PARTIES: Plaintiff Wvistano Daniel Perez

RELIEF REQUESTED

Demurrer

·         Entire Cross-Complaint

·         First Cause of Action for Violation of Civ. Code § 2923.5

·         Second Cause of Action for Violation of Civ. Code § 2923.7

·         Third Cause of Action for Declaratory Relief

·         Fourth Cause of Action for Violation of Business and Professions Code § 17200

RULING: Demurrer to First through Third Causes of Action sustained without leave to amend; demurrer to Fourth Cause of Action sustained with leave to amend.

SUMMARY OF ACTION

In February 2022, Plaintiff Wvistano Daniel Perez (Plaintiff) took out a mortgage for the subject property in the amount of $2,000,000.00. In late 2022, Plaintiff defaulted on the loan and contacted Defendant FCI to explore his loss mitigation options. Plaintiff alleges that FCI informed him that the loan was due, and he could either pay the defaulted amount or sell the property. On January 20, 2023, Defendants recorded a notice of Default against the property. Plaintiff alleges that Defendants failed to assess Plaintiff’s finances prior to recording the Notice of Default on the property. Plaintiff also alleges that Defendants did not call him or otherwise attempt to contact him regarding non-foreclosure options. Therefore, Plaintiff alleges that Defendants are in violation of Civ. Code §§ 2923.5 and 2923.7.

Though not mentioned in Plaintiff’s First Amended Complaint, Plaintiff himself sold the property on June 22, 2023.

ANALYSIS

Request for Judicial Notice: Defendants have requested that the Court take judicial notice of several recorded deeds showing the chain of title of the subject property. The Court grants this request.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law…” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Entire Complaint; First and Second Causes of Action

One of the deeds that Defendants requested the Court take judicial notice of is a grant deed conveying the subject property from Plaintiff to Ying Gu on June 22, 2023. (RJN, Ex. 6.) Defendants argue in their demurrer that this conveyance of the property from Plaintiff to Ying Gu moots Plaintiff’s complaint.

Section 2923.5 of the Civil Code requires the lender to contact the borrower, before a notice of default is filed, in person or by phone to “assess” the borrower’s financial situation and to “explore” options to prevent foreclosure. (Civ. Code § 2923.5, subd. (a)(1) & (2).) Section 2923.7 involves establishing a single point of contact with the mortgage servicer when a borrower requests a foreclosure prevention alternative. The remedies for violations of these sections involve postponement of foreclosure or enjoinment of the foreclosure.

Civ. Code § 2924.12 sets forth the remedies available to a party under Civ. Code §§ 2923 et seq. and distinguishes between pre-foreclosure (injunction only) and post-foreclosure (economic damages). “For “material violation” of any one of a list of nine statutory provisions within its scheme, [Civ. Code § 2924.12] authorizes preforeclosure injunctive relief (§ 2924.12, subd. (a)(1); § 2924.19, subd. (a)(1)); postforeclosure claims for “actual economic damages pursuant to Section 3281” (§ 2924.12, subd. (b); § 2924.19, subd. (b))6; the greater of trebled damages or $50,000 where the violation was “intentional or reckless” or “resulted from willful misconduct” (§ 2924.12, subd. (b); § 2924.19, subd. (b)); and attorney fees and costs as a reward to prevailing claimants (§ 2924.12, subd. (h); § 2924.19, subd. (h)).” (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 295; see also Cardenas v. Caliber Home Loans, Inc. (N.D.Cal.2017) 281 F.Supp.3d 862; Shupe v. Nationstar Mortgage LLC (E.D.Cal.2017) 231 F.Supp.3d 597.)

In this case, there is no foreclosure to postpone or enjoin. Plaintiff sold the property, so the mortgage no longer exists. Therefore, no remedies are available to him through Civ. Code §§ 2923.5 or 2923.7. The demurrer is sustained for the First and Second Causes of Action without leave to amend because there is no longer a mortgage.

Plaintiff also mentions dual tracking in both his opposition and supplemental opposition. This practice is forbidden by Civ. Code § 2923.6. Dual tracking is “a practice that, described broadly, occurs when a lender or servicer pursues foreclosure while simultaneously going through the motions of reviewing a borrower’s application for foreclosure mitigation, without a good faith intent to entertain the application.” (Morris, 78 Cal.App.5th at 296.) However, nowhere in Plaintiff’s complaint does he mention dual tracking or the fact that he sold the property. Bringing it up in his opposition does not affect the sufficiency of his pleadings. The dual tracking argument also contradicts Plaintiff’s pleadings, which allege that Defendants did not comply with the law, contact Plaintiff, or discuss his options. (FAC, ¶ 33.) These allegations clearly do not follow dual tracking, which involves a servicer reviewing a borrower’s application for foreclosure mitigation. According to Plaintiff’s complaint, that review and mitigation never happened. Therefore, the Court finds Plaintiff’s arguments regarding dual tracking to be without merit.

Furthermore, there would be no declaratory relief available for the Third Cause of Action because the property was sold. However, as discussed below, the Third Cause of Action fails for other reasons as well, as does the Fourth Cause of Action.

Third and Fourth Causes of Action

For the Third Cause of Action, declaratory relief is not considered to be a viable cause of action in California. (Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82 (declaratory relief is not an independent cause of action, but a form of equitable relief); Ball v. FleetBoston Financial Corp. (2008) 164 Cal.App.4th 794, 800 (A dismissal of a claim for declaratory relief is proper where that claim is wholly derivative of other non-viable causes of action).)

In this case, Plaintiff’s cause of action for declaratory relief is derivative of his First and Second Causes of Action, which fail because there is no mortgage to postpone or enjoin, so it could not be a standalone cause of action. Plaintiff also cannot receive declaratory relief for a mortgage that no longer exists. For these reasons, Defendants’ demurrer to Plaintiff’s Third Cause of Action is sustained without leave to amend.

For the Fourth Cause of Action, Business and Professions Code § 17200 prohibits any unlawful, unfair or fraudulent business acts or practices and unfair, deceptive, untrue or misleading advertising. (Puentes v. Wells Fargo Home Mortg., Inc. (2008) 160 Cal.App.4th 638, 643-644.) “A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

Plaintiff has not alleged with particularity facts demonstrating that Defendant violated Section 17200. Furthermore, because Plaintiff sold the property, Plaintiff has not alleged facts demonstrating any ongoing injury. He sold the property, so he is no longer “subject to subsequent foreclosure and eviction.” (FAC, ¶ 69.) Therefore, Defendants’ demurrer to this cause of action is sustained with leave to amend to give Plaintiff the opportunity to plead this cause of action with particularity.

Conclusion

Defendants’ demurrer to Plaintiff’s First through Third Causes of Action is sustained without leave to amend. Defendants’ demurrer to Plaintiff’s Fourth Cause of Action is sustained with leave to amend.

Plaintiff is given 20 days to file an amended complaint.

Moving party to give notice.