Judge: Joel L. Lofton, Case: 23AHCV01145, Date: 2024-06-20 Tentative Ruling

Case Number: 23AHCV01145    Hearing Date: June 20, 2024    Dept: X

   Tentative Ruling

Judge Joel L. Lofton, Department X

HEARING DATE:     June 20, 2024                                      TRIAL DATE: No date set.

CASE:                         William Jacobo, Jr. v. Jack R. Barnes et al.

CASE NO.:                 23AHCV01145

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY:               Defendants:

                                                            (1)       Breckenridge Property Fund 2016, LLC

                                                            (2)       Defendants Jack R. Barnes, Trustee of the Jack R.

                                                Barnes Living Trust, dated April 21, 1995; Jack R. Barnes, Trustee of the SCS Investment Trust, dated September 1, 2006, So-Cal Capital, Inc., Patrick Lacy

RESPONDING PARTY:     Plaintiff William Jacobo, Jr. [NO OPPOSITION]

SERVICE:                             OK / Unopposed, but SEE BELOW for further discussion.

OPPOSITION:                      N/A, no opposition filed.

REPLY:                                  OK / Unopposed.

RELIEF REQUESTED

Defendants demur to Plaintiff’s First Amended Complaint.

BACKGROUND

This is a wrongful foreclosure case. Self-represented plaintiff William Jacobo Jr. sued defendants Jack R. Barnes (“Barnes”), in his capacity as trustee of two different trusts; So-Cal Capital, Inc. (“SCCI”); Patrick Lacy, an individual (“Lacy”); C&H Trust Deed Service (“C&H”); Breckenridge Property Fund 2016, LLC (“Breckenridge”); and Does 1-100 on May 19, 2023. Plaintiff filed his operative first amended complaint (FAC) on November 17, 2023, for:

            1.         Unfair Business Practices,

            2.         Fraud,

            3.         Breach of the Implied Covenant of Good Faith and Fair Dealing,

            4.         Conversion,

            5.         Quiet Title,

            6.         Fraud in the Inducement,

            7.         Unfair Business Practices,

            8.         Breach of Fiduciary Duty,

            9.         Wrongful Foreclosure,

            10.       Civil Conspiracy,

            11.       Aiding and Abetting,

            12.       Unlawful Joint Venture,

            13.       Injunctive Relief,

            14.       Rescission, and

            15.       Violations of RESPA and TILA.

On December 22, 2023, Barnes, Lacy, and SCCI (“the Barnes Defendants”) demurred to the FAC.

On February 9, 2024, Breckenridge demurred to the FAC.

(Plaintiff has yet to file a proof of service on C&H.)

Plaintiff filed no opposition to either demurrer.

Breckenridge filed a reply on June 6, 2024. The Barnes Defendants filed a Notice of Non-Opposition on June 20, 2024.

TENTATIVE RULING

Defendants’ demurrers are sustained without leave to amend.

OBJECTIONS TO EVIDENCE

N/A.

REQUESTS FOR JUDICIAL NOTICE

Barnes, SCCI, and Lacy request judicial notice of seven (7) documents. The Court denies all seven requests, as the materials are unnecessary to disposition of the defendants’ motions.

LEGAL STANDARD

Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220.)

When considering a demurrer, a court reads the allegations stated in the challenged pleading liberally and in context, and “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) Put differently: for purposes of demurrer, the court treats all facts alleged – but only the facts alleged – in the complaint as true. (Picton v. Anderson Union High School District (1996) 50 Cal.App.4th 726, 732.) “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 (2007) 147 Cal.App.4th 740, 747.)

DISCUSSION

            1. Notice of Motions and Hearings

Moving and supporting papers for a demurrer must be filed and served at least sixteen (16) court days prior to the hearing. (See Code Civ. Proc., § 1005(b).)

The Barnes Defendants filed proofs of service demonstrating they served Plaintiff by mail at the address he listed on the pleading, more than sixteen (16) court days ahead of the hearing. Breckenridge did not file proof of service as to Plaintiff concurrently with its motion.

Plaintiff appeared in court on February 26, 2024, and at that hearing the Court set the hearing dates for both demurrers for June 13, 2024. (See 02-26-2024 Minute Order.) Plaintiff personally received notice from the Court at the hearing. The Court also ordered Breckenridge to give notice of the ruling. Breckenridge thereafter filed proof of service of its moving papers by mail.

On May 8, 2024, the Court advanced and continued the June 13, 2024 hearings to June 20, 2024. The Court served all parties by mail. The notices mailed to Plaintiff were returned to the Court as undeliverable. But the address listed on the mailings matches the address Plaintiff has provided on his pleadings and has used throughout this litigation. Whether Plaintiff believed the hearing would occur on June 13 or June 20, he had notice of Defendants’ motions, and he filed no timely opposition.

The Court finds notice was properly given and Plaintiff opted not to oppose.

            2. Meet and Confer

“Before filing a demurrer ... , the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41(a).)

The parties’ counsels both filed declarations establishing they satisfied section 430.41. (Ananian Decl., ¶ 3; Turner Decl., ¶ 4.)

/ / /

DISCUSSION

            1. Breckenridge, Barnes, and Lacy

As to all the defendants except SCCI, the FAC fails for uncertainty.

A party may demur to a complaint where “[t]he pleading is uncertain,” meaning also that it is “ambiguous [or] unintelligible.” (Cal. Code Civ. Proc. § 430.10, subd. (f).) The law encourages courts to liberally construe pleadings and disfavors demurrers for uncertainty. (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279. 292.) But particularly where the complaint does not properly distinguish between multiple defendants, such that it is not clear which factual allegations are made as to which parties, the complaint fails for ambiguity. (See Hawley Bros. Hardware Co. v. Brownstone (1899) 123 Cal. 643, 646-647.) Similarly, allegations made against multiple defendants are fatally uncertain where plaintiff alleges the same harm against multiple defendants but makes no effort to either apportion their liability or show why it cannot be apportioned in the complaint. (See Landau v. Salam (1971) 4 Cal.3d 901, 909.)

The FAC ascribes various wrongs to SCCI. As to the other defendants, it alleges two facts. First, the FAC alleges ownership of the loan SCCI issued to Plaintiff was transferred to one or more of the other defendants at some point. (Id., ¶¶ 33, 36.) That allegation describes no wrongdoing. Second, the FAC alleges Barnes “made the purchase [of Plaintiff’s mortgage] without performing due diligence” – which again, does not state any claim. (Id., ¶ 36.) Otherwise, the FAC refers either to SCCI individually or to “Defendants” collectively and makes boilerplate allegations of conspiracy. There is no way to ascertain which defendants apart from SCCI might be liable, how, or why.

The demurrers of all defendants except SCCI are sustained on the basis of uncertainty.

Plaintiff filed no opposition. Consequently, he has not carried his burden to show the FAC could be cured by amendment.

The demurrers are sustained without leave to amend.

            2. SCCI

As to SCCI: in the “General Allegations” portion of his pleading, Plaintiff alleges SCCI engaged in a host of irresponsible or illegal lending tactics, in general, and that these practices were also directed to Plaintiff, in general. (See FAC, ¶¶ 14-31.) It cannot be ascertained from this section what allegations Plaintiff levies against SCCI having to do with his own alleged loan, specifically.

In his “Specific Allegations”, Plaintiff alleges that when SCCI sold him his mortgage loan they “knew or should have known that the property was overvalued”, that SCCI “did not explain to [him] the difference between an ARM and less risky loans”, and that Plaintiff never could have made the payments and would not have been approved for his loan “but for the bank.” (Id., ¶¶ 36-38.)

The Court evaluates each of Plaintiff’s claims against these few specific facts.

                        a. Fraud-Based Claims (1, 2, 6, 7, 14)

Plaintiff’s first, second, sixth, seventh, and fourteenth causes of action are all premised on an underlying fraud. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. ‘Thus “ ‘the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect.” ’ [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ ” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, citations omitted; see also Robinson Helicopter Co., Inc. v. Dana Corp. (34 Cal.4th 979, 993.) Plaintiff’s general allegations do not establish any of the who, what, where, etc. required for fraud claims under law. He has not stated any of these claims.

                        b. Multiple-Defendant Claims (10, 11, 12)

Plaintiff’s tenth through twelfth causes of action claim defendants worked in concert with one another in various unspecified ways. For reasons discussed above with regard to the non-SCCI defendants, these claims fail for uncertainty.

                        c. Injunctive Relief (13)

As to the thirteenth cause of action: injunctive relief is a form of relief, not a cause of action. The demurrer is sustained.

                        d. Breach of Covenant of Good Faith and Fair Dealing (3)

As to the third cause of action for breach of covenant: breach of covenant, like breach of contract, requires a plaintiff to plead a contract and plead breach. (See Racine v. Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031-1032 (Racine & Laramie) [covenant is “read into contracts” and “supplement[s] ... express ... covenants”].)

Plaintiff describes his claim for breach of covenant as follows:

“Defendant SO-CAL CAPITAL INC... agreed to terms, such as a prepayment clause, with the promise that the clause would be waived in the future at the time of a refinance. These terms were designed to give Defendants an unfair advantage over Plaintiff William Jacobo, Jr. therefore further induce the Plaintiff to refinance the RMLs in the future or be unable to make payments and stay in the home. By agreeing to these conditions and then not enforcing them in good faith, Defendants, and each of them, have breached this covenant.”

(FAC, ¶ 54.)

There are no allegations of breach of covenant here. Plaintiff only specifies one term (“prepayment clause”) and vaguely suggests there were also others that were “not enforc[ed] ... in good faith”. (Ibid.) This does not describe a breach of the covenant of good faith, which requires him to plead the defendant “engaged in conduct which ... frustrate[d] [his] rights to the benefits of the contract.” (Racine & Laramie, supra, 11 Cal.App.4th at pp. 1031-1032.)

The demurrer to the third cause of action is sustained.

                        e. Conversion (4)

As to conversino: the basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property; (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages. [Citation.]’ (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119 (Fremont), emphasis added.)

There are no allegations in the FAC that suggest any improper disposition of Plaintiff’s personal property. The demurrer is sustained.

                        f. Quiet Title (5)

A quiet title action requires a plaintiff to (1) describe the property subject to his action, (2) describe his title to which a determination is sought, (3) specify adverse claims against his title, (d) identify the date as of which the determination is sought, and (e) pray for such a determination. (Deutsche Bank National Trust Co. v. McGurk (2012) 206 Cal.App.4th 201, 210.)

It cannot be ascertained from the complaint what precise title Plaintiff contends he has in the Property or the specific adverse claims against it, or the date from which he seeks a determination.

The demurrer to the fifth cause of action is sustained.

                        g. Breach of Fiduciary Duty (8)

To state a claim for breach of fiduciary duty a plaintiff must plead “the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Thomson v. Canyon (2011) 198 Cal.App.4th 594, 604.) “A fiduciary relationship is ‘ “any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.’ ” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29.)

Plaintiff alleges no such relationship. In fact, the FAC alleges he engaged in arms-length transactions with the lender defendants. This is at odds with a fiduciary relationship.

The demurrer is sustained as to this cause of action.

                        h. Wrongful Foreclosure (9)

“Case law instructs that the elements of an equitable cause of action to set aside a foreclosure sale are: (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. [Citations.]”

(Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104.)

As discussed above, Plaintiff has not pled any fraud with specificity. He has also not pled facts showing he tendered any secured indebtedness or was excused; he only alleges he has “request[ed] to negotiate”. (FAC, ¶ 39.) This does not state a claim for wrongful foreclosure.

                        i. RESPA and TILA violations (15)

Plaintiff also alleges defendants violated the federal Real Estate Settlement Procedures Act and Truth in Lending Act. Defendants argue there is no private cause of action for a RESPA violation, and Plaintiff does not argue otherwise. Defendants also argue this was a commercial rather than a consumer loan, based on their request for judicial notice of the parties’ loan document.

As to RESPA: Defendants’ unrebutted case law is directly on point. “Congress did not intend to create a private right of action for disclosure violations under 12 U.S.C. § 2603.” (Bloom v. Martin (1994) 865 F.Supp. 1377, 1384.) Plaintiff’s claim based on RESPA disclosures fails.

As to the commercial/consumer loan distinction: Defendants’ arguments rely on evidence outside the four corners of the pleading and only questionably subject to judicial notice. The Court doesn’t need to grapple with the boundaries of judicial notice for its decision. Plaintiff’s FAC simply fails to state a claim.

California’s “fact pleading” rules require a pleading to apprise an adversary of the factual basis of the plaintiff’s claim, providing information detailed enough for the adversary to prepare a defense. (See Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 719-721.) The standard is even higher for statutory claims, wherein a plaintiff must plead the basis for statutory liability with particularity. (See Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396, 407.)

Here, Plaintiff’s allegations, which merely list violations, do not give enough specifics for SCCI to prepare a defense. For example, Plaintiff refers to failures to make certain specific disclosures “[a]t the time of [his] loan application” (FAC, ¶ 122) – but he does not allege when he made that application, or to which of the defendants. Particularly given the uncertainty of the rest of the FAC, SCCI cannot be expected to prepare a defense on this sole basis.

Defendants’ argument regarding the nature of Plaintiff’s loan is persuasive in the context of particularity rules, without the Court taking notice of any other materials. The FAC does not clearly state the nature of Plaintiff’s loan. The attachments to the FAC compound the problem by showing that the deed was transferred between corporate entities. Plaintiff has not pled a cause of action under either RESPA or TILA.

As with all the other causes of action, plaintiff has filed no opposition, so he has made no showing he can cure the FAC. The demurrer is sustained without leave to amend.

CONCLUSION AND ORDER

Defendants’ unopposed demurrers are sustained in their entireties, without leave to amend.

Dated:   June 20, 2024                                                ___________________________________

                                                                                    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.  alhdeptx@lacourt.org