Judge: Jon R. Takasugi, Case: 24STCV28561, Date: 2025-05-28 Tentative Ruling

Case Number: 24STCV28561    Hearing Date: May 28, 2025    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ demurrer is SUSTAINED, WITH 20 DAYS LEAVE TO AMEND.

            On 10/31/2024, pro per Plaintiff Jorge Alberto Vaca (Plaintiff) file suit against BSI Financial Services (BSI), Homexpress Mortgage Corp., Shellpoint Mortgage Servicing, Mortgage Electronic Registration Systems, Inc., Entra Default Solutions, LLC, Stewart Title Guaranty Company, and Morgan Stanley Holding Co., alleging: (1) violation of California Civil Code section 2924; (2) breach of contract; (3) declaratory relief.

            On 4/2/2025, Defendant NewRez, LLC dba Shellpoint Mortgage Servicing, Mortgage Electronic Registration Systems, Inc. (MERS) and Morgan Stanley Holding Co. (collectively, Defendants) demurred to the FAC.

            The motion is unopposed.

Discussion 

            Defendants argue that Plaintiff has not sufficiently alleged either the first or second cause of action, the two claims against asserted against them.

            After review, the Court agrees.

            As for the first cause of action, Plaintiff alleges that Defendants failed to comply with Civil Code section 2924 by proceeding to foreclosure without providing adequate documentation of loan ownership, failing to respond to his inquiries, and initiating foreclosure based on this alleged conflicting and inaccurate information. (FAC, ¶ 31.) However, Plaintiff fails to specify what related provisions Defendants violated and which Defendants were involved in each alleged violation. For example, as to MERS, section 2924 contains no requirement that MERS respond to Plaintiff's inquiries as alleged and Plaintiff FAC is silent as to what inquiries he sent, if any, to MERS. Additionally, as to Shellpoint and Morgan Stanley, BSI issued a retraction letter stating that the previous letter regarding the sale of the loan to Shellpoint was sent due to an internal error. (FAC ¶ 24.) As such, it appears Shellpoint and Morgan Stanley have no interest and were not involved in Plaintiff's loan.

            As for the second cause of action, Plaintiff alleges Defendants breached the mortgage contract. Plaintiff alleges that he entered into a consumer credit transaction with Homexpress for a refinanced loan and that Defendants breached the mortgage contract by failing to do their due diligence and performance regarding Plaintiff's promissory note by providing misleading, erroneous, and deceitful loan terms on the "interest rate and (APR)," transferring and securitizing the loan without proper notice, failing to provide documentation of these transfers, and failing to respond adequately to Plaintiff's inquiries. (FAC, ¶ 36.)

But, Plaintiff fails to assert what specific document he's referring to as the contract

and what Defendants were involved in which alleged breach. BSI's retraction letter establishes that Shellpoint and Morgan Stanley have no interest and were not involved in loan. Moreover as to Shellpoint, even if Shellpoint was the loan servicer and assuming the “contract” at issue is the DOT, Shellpoint's status as a loan servicer is insufficient to establish contractual privity with Plaintiff. (Lomboy v. SCME Mortg. Bankers (N.D.Cal. May 26, 2009) No. C–09– 1160 SC, 2009 WL 1457738, at *5 ["as a loan servicer, [the loan servicer] is not a party to thedeed of trust itself."].) ) The fact that a loan servicer may enter into a contract with the lender or creditor of the "loan does not create contractual privity between [the servicer] and [the plaintiff]." (Conder v. Home Sav. of Am. (C.D. Cal. 2010) 680 F.Supp.2d 1168, 1174; Grant v. Seterus, Inc (C.D. Cal. Dec. 9, 2016) No. CV1606692SJOAJWX, 2016 WL 10988678 at *10.)

            Plaintiff did not oppose this motion, which the Court takes to be a concession on the merits.

            Plaintiff will be afforded leave to amend to allege facts which address the uncertainties identified here, and which could show that Shellpoint and Morgan Stanley are proper parties.

            Based on the foregoing, Defendants’ demurrer is sustained, with 20 days leave to amend.

It is so ordered.

Dated:  May    , 2025

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.