Judge: Joel L. Lofton, Case: 21AHCV00133, Date: 2022-08-31 Tentative Ruling
Case Number: 21AHCV00133 Hearing Date: August 31, 2022 Dept: X
Tentative Ruling
Judge Joel L. Lofton, Department X
HEARING DATE: August 31, 2022 TRIAL DATE: No date set.
CASE: JUAN HERNANDEZ-SANCHEZ, an individual, v. WINDSTREAM CAPITAL, LLC, a limited liability company; THE WOLF FORM, a California Corporation; ASSET MANAGEMENT HOLDINGS II, LLC, a Florida Limited Liability Company, and DOES 1 through 100, inclusive.
CASE NO.: 21AHCV00133
DEMURRER
MOVING PARTY: Defendants Windstream Capital (“Windstream”) and Asset Management Holdings, II, LLC (“Asset Management”)
RESPONDING PARTY: No response filed.
SERVICE: Filed June 28, 2022
OPPOSITION: No opposition filed.
RELIEF REQUESTED
Windstream and Asset Management (collectively “Demurring Partiers”) demurrer to the first amended complaint.
BACKGROUND
This case arises out of Plaintiff Juan Hernandez-Sanchez’s (“Plaintiff”) home mortgage. Plaintiff alleges that on or around October 13, 2006, Plaintiff entered into a home mortgage (“Loan”) for a sum of $97,600.00 secured by Plaintiff’s home, located at 3044 La Corona Avenue, Altadena, CA 91001 (“Property”). Plaintiff alleges that Mortgage Electronic Registrations Systems, Inc. (“MERS”) was named the beneficiary and Fidelity National Title Company (“Fidelity”) was named the trustee of the deed of trust. Plaintiff alleges that he became behind on his payments on or around January 2008 and his loan was underwater and unsecured.
Plaintiff alleges that on or around September 8, 2021, Defendant the Wolf Firm (“Wolf Firm”) on behalf of Defendant Windstream Capital, LLC (“Windstream”) recorded a notice of default and election to sell under deed of trust. Plaintiff alleges that he was never provided with notice that Fidelity had assigned its rights as the trustee to Wolf Firm. Plaintiff alleges that he never received a letter from Windstream informing him they were servicing the loan. Plaintiff also alleges that he was never provided documents authenticating the Loan or provided loss mitigation information.
Plaintiff filed a first amended complaint (“FAC”) on May 24, 2022, alleging seven causes of action for (1) violation of the Federal and Rosenthal Fair Debt Collection Practices Act, (2) violation of the Truth in Lending Act, (3) violation of California Civil Code section 2924.17, (4) promissory estoppel, (5) negligent misrepresentation, and (6) unfair business practices, Business and Professions Code section 17200. The Court notes that Plaintiff’s FAC uses a caption that purports to allege seven causes of action, but the body of the FAC only alleges six causes of action.
TENTATIVE RULING
Windstream’s demurrer is sustained to the entirety of the FAC without leave to amend.
Asset Management’s demurrer is sustained as to the third cause of action without leave to amend.
Asset Management’s demurrer is overruled as to the second and sixth causes of action.
REQUEST FOR JUDICIAL NOTICE
Demurring Parties’ request for judicial notice numbers one through five are granted pursuant to Evidence Code section 452, subdivision (c).)
Demurring Parties’ request for judicial notice number six is denied.
LEGAL STANDARD
A general demurrer may be taken to a complaint where “[t]he pleading does not state facts sufficient to constitute a cause of action.” (Code of Civ. Proc. § 430.10(e).) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc. section 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn v. Mirda, supra, 147 Cal.App.4th 740, 747.)
Additionally, a special demurrer to a complaint may be brought on the ground the pleading is uncertain, ambiguous, or unintelligible. Code Civ. Proc section 430.10(f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191.) A demurrer based on uncertainty is disfavored and will be strictly construed even when the pleading is uncertain in some respects. (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrers based on uncertainty are “granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.)
DISCUSSION
Meet and Confer
Counsel David Chaffin provides that on June 17, 2022, he attempted to schedule a meet and confer telephone meeting with Plaintiff’s counsel, but Plaintiff’s counsel did not respond. (Chaffin Decl. ¶¶ 4-5.)
I. FIRST CAUSE OF ACTION FOR VIOLATION OF FAIR DEBT COLLECTION PRACTICES
Windstream demurrers to the first cause of action on the grounds that mortgage servicers are not “debt collectors” under the Fair Debt Collection Practices Act (“FDCPA”) and the actions alleged do not constitute a violation of the FDCPA.
“When alleging a claim under the FDCPA, a plaintiff must establish that (1) the plaintiff is a consumer, as defined by the FDCPA; (2) the debt arises out of a transaction primarily for personal, family or household purposes; (3) the defendant is a debt collector, as that phrase is defined by the FDCPA; and (4) the defendant violated a provision of the Act.” (Heritage Pacific Financial, LLP v. Monroy (2013) 215 Cal.App.4th 972, 997.)
“It is well-established that mortgage servicers do not fall within the definition of debt collector.” (Jenkins v. BAC Home Lending Servicing, LP (M.D.GA 2011) 822 F.Supp.2d 1369.) Plaintiff, however, alleges that Asset Management is the servicer of his mortgage. (FAC ¶¶ 17-18.) Windstream’s arguments, therefore, do not apply to Plaintiff’s allegations against it.
Plaintiff alleges that Windstream violated 15 U.S.C. 1692(e) by including interest and fees. However, Plaintiff does not provide the basis for his claim that such calculations are prohibited by federal law. Plaintiff merely asserts that he is “unsure if the subject second loan was charged off.” (FAC ¶ 26.) Plaintiff continues that if his loan was charged off, Windstream unlawfully included accrued interest and fees in its Notice of Default. (Ibid.) Plaintiff’s allegations are based on his own uncertainty and therefore insufficient to allege a violation of the FDCPA.
Further, Windstream asserts that because Plaintiff’s FDCPA’s claim fails, so too must his Rosenthal Act claim.
Unlike for the FDCPA, cases analyzing the Rosenthal Act have held that mortgage servicers are included as “debt collectors”. “[T]he Rosenthal Act's definition of ‘debt collector’ applies to a mortgage servicer who engages in debt collection practices in attempting to obtain repayment of mortgage debt”. (Davidson v. Seterus, Inc. (2018) 21 Cal.App.5th 283, 304.) As previously stated, Plaintiff is not alleging Windstream as the servicer. However, Plaintiff similarly fails to allege any action that would constate a violation of the Rosenthal Act because he merely alleges that Windstream unlawfully added interest and fees and that he is “unsure” his loan was charged off. (FAC ¶ 26.)
Windstream’s demurrer to the first cause of action is sustained.
II. SECOND CAUSE OF ACTION FOR VIOLATION OF THE TRUTH IN LENDING ACT
Demurring Parties assert that Plaintiff’s second cause of action fails because it only applies to a servicer, which Plaintiff alleges is Asset Management.
“A servicer of a transaction subject to this section shall provide the consumer, for each billing cycle, a periodic statement meeting the requirements of paragraphs (b), (c), and (d) of this section.” (12 C.F.R. 1026.41, subd. (a)(2).)
Here, Plaintiff alleges that Asset Management is Windstream’s servicer. (FAC ¶ 18.) Thus, Plaintiff’s second cause of action fails to state a claim against Windstream. However, Moving Parties do not present any argument as to why Plaintiff’s second cause of action fails as to Asset Management.
Windstream’s demurrer to the second cause of action is sustained.
Asset Management’s demurrer to the second cause of action is overruled.
III. THIRD CAUSE OF ACTION FOR VIOLATION OF CALIFORNIA CIVIL CODE SECTION 2924.17
Demurring Parties argue that Plaintiff’s third cause of action fails to state a claim for violation of Civil Code section 2924.17.
“Before recording or filing any of the documents described in subdivision (a), a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower's default and the right to foreclose, including the borrower's loan status and loan information.” (Civ. Code section 2924.17, subd. (b).)
Plaintiff asserts that Defendants violation Civil Code section 2924.17 by adding interest and fees. However, as previously stated, Plaintiff merely asserts that he is “unsure if the subject second loan was charged off.” (FAC ¶ 26.) Plaintiff has failed to allege a basis for violation of Civil Code section 2924.17.
Demurring Parties’ demurrer to Plaintiff’s third cause of action is sustained.
IV. FOURTH CAUSE OF ACTION FOR PROMISSORY ESTOPPEL
Windstream demurrers to the fourth cause of action on the grounds that Plaintiff fails to allege a clear and unambiguous promise and fails to plead reasonable reliance.
“The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.’ ” (Flintco Pacific, Inc. v. TEC Management Consultants, Inc. (2016) 1 Cal.App.5th 727, 734.) “The promise must, in addition, be ‘clear and unambiguous in its terms.’ [Citation.]” [Citation.] For a promise to be enforceable, it need only be ‘ “definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.’ ” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 803-804.)
In West v. JPMorgan Chase Bank, N.A., supra, 214 Cal.App.4th at p. 804, the Court held that the plaintiff’s allegations, in isolation, were insufficient to allege promissory estoppel. In West, the plaintiff alleged that “ ‘Defendant made clear, definite and certain promises to Plaintiff to induce her to enter into oral executed and written HAMP agreements, including promises not to sell during the HAMP reevaluation, that there was no foreclosure date pending, that it would send Plaintiff the NPV input data, that Plaintiff would have 60 days to obtain a reevaluation for a HAMP permanent modification, all of which were false causing Plaintiff to forbear from taking legal action against it, to relinquish mortgage payments (under false pretenses), and incur damages and personal injuries.’ ” (Ibid.) The Court ultimately held that the third amended complaint read as a whole sufficiently alleged clear and specific promises. (Ibid.)
Here, unlike the allegations in West, both Plaintiff’s isolated allegations and FAC as a whole fail to allege a clear and unambiguous promise. Plaintiff alleges that Windstream “promised to send the Plaintiff documentation confirming the debt and providing Plaintiff with loss mitigation options.” (FAC ¶ 61.) Plaintiff’s allegations provide an even more barebones and unspecified promise as compared to the allegations in West. Further, elsewhere in the FAC, Plaintiff alleges that Windstream never responded to his attempts to discuss loss mitigation options, which is in direct contrast with his claims that Windstream promised to send loss mitigation options. (FAC ¶ 69.)
Plaintiff has failed to allege a promise sufficient to state a claim for promissory estoppel. Windstream’s demurrer to Plaintiff’s fourth cause of action is sustained.
V. FIFTH CAUSE OF ACTION FOR NEGLIGENT MISREPRESENTATION
Windstream demurrers to Plaintiff’s fifth cause of action on the grounds that the FAC fails to allege facts with the required specificity.
The elements of negligent misrepresentation are “[M]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another's reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage. (Hydro-Mill Co., Inc. v. Hayward, Tilton, & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154.) “For policy reasons, some causes of action, such as fraud and negligent misrepresentation, must be pleaded with particularity—that is, the pleading must set forth how, when, where, to whom, and by what means the representations were made.” (Foster v. Sexton (2021) 61 Cal.App.5th 998, 1028.)
The FAC broadly alleges Windstream and its employees made false representations to Plaintiff. (FAC ¶ 68.) Plaintiff, however, fails to allege any facts demonstrating who made the representations, when the representations were made, or by what means. Plaintiff merely alleges that Windstream agreed to send Plaintiff documentation confirming and verifying the amount of debt but failed to do so. (FAC ¶ 70.)
Plaintiff has failed to allege a cause of action for negligent misrepresentation with the required particularity. Windstream’s demurrer to Plaintiff’s fifth cause of action is sustained.
VI. SIXTH CAUSE OF ACTION FOR UNFAIR BUSINESS PRACTICES
“ ‘By proscribing “any unlawful” business practice, “section 17200 ‘borrows' violations of other laws and treats them as unlawful practices” that the unfair competition law makes independently actionable.’ ” (Aleksick v. 7-Eleven, Inc. (2012) 205 Cal.App.4th 1176, 1185.) “When a statutory claim fails, a derivative UCL claim also fails.” (Ibid.)
Plaintiff’s sixth cause of action for unfair business practices largely rely on his other allegations. Plaintiff alleges that Defendants violated 12 CFR § 1026.41, Defendants failed to comply with the requirements of Civil Code section 2924, et seq., and Defendants made misrepresentations to Plaintiff.
As previously stated, Plaintiff’s FAC states a claim against Asset Management for violation of 12 CFR § 1026.41. However, those allegations do not apply to Windstream, an entity not alleged to be the servicer of Plaintiff’s loan. Further, Plaintiff’s allegations of misrepresentations similarly fail because Plaintiff fails to allege any misrepresentation with an adequate level of specificity. Plaintiff also alleges that Defendants engaged in actions such as “falsifying documents, failing to deliver material documents, and concealment” (FAC ¶ 93) and that Defendants failed to comply with the deliver material disclosures under Civil Code section 2924, et seq., (FAC ¶ 81).
Plaintiff’s allegations against Windstream, however, amount to legal conclusions. Plaintiff does not allege specific facts to show how Windstream purportedly engaged in prohibited conduct. Thus, Plaintiff has failed to state an unfair business practices claim against Windstream.
Windstream’s demurrer to the sixth cause of action is sustained.
Asset Management’s demurrer to the sixth cause of action is overruled.
CONCLUSION
Windstream’s demurrer is sustained to the entirety of the FAC without leave to amend.
Asset Management’s demurrer is sustained as to the third cause of action without leave to amend.
Asset Management’s demurrer is overruled as to the second and sixth causes of action.
Moving party to give notice.
Dated: August 31, 2022 ___________________________________
Joel L. Lofton
Judge of the Superior Court
Parties who intend to submit on this tentative must send an email to the court indicating their
intention to submit. Parties intending to appear are strongly encouraged to appear remotely. alhdeptx@lacourt.org