Judge: Joseph Lipner, Case: 21STCV26349, Date: 2024-12-05 Tentative Ruling
Case Number: 21STCV26349 Hearing Date: December 5, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
FALLON SEABORN, Plaintiff, v. WILSHIRE CONSUMER CREDIT OF LOS
ANGELES, Defendant. |
Case No:
21STCV26349 Hearing Date: December 5, 2024 Calendar Number: 6 |
Defendant Wilshire Commercial Capital, L.L.C. d/b/a Wilshire
Consumer Credit (“Defendant”), which states that it was erroneously sued as
Wilshire Consumer Credit of Los Angeles, demurs to the Second Amended Complaint
(“SAC”) filed by Plaintiff Fallon Seaborn (“Plaintiff”).
The Court defers its ruling on the first, second, and fourth
claims pending (1) factual clarification from Plaintiff as to the interest rate
on the loan; and (2) further argument from Defendant on whether a licensed
“finance lender and broker” is exempt from Article XV, Section 1 of the
California constitution.
The Court SUSTAINS the demurrer to the remaining claims
WITHOUT LEAVE TO AMEND.
The clerk will give notice.
This
case relates to a loan agreement between Plaintiff and Defendant. The following
facts are taken from the allegations of the SAC, which the Court accepts as
true for the purposes of the demurrer.
Plaintiff alleges that Plaintiff and Defendant entered into
an agreement (the “Loan Agreement”) on June 5, 2019 to finance the purchase of
a vehicle, under which Defendant loaned Plaintiff around $3,550.00. (SAC ¶ 3.) Plaintiff’s
subsequent allegation is not entirely legible. Paragraph 3 of the SAC appears
to state that “[t]he Loan Agreement did not specify an illegal high interest
rate per annum, 0785%”. (SAC ¶ 3.) Plaintiff alleges that she relied on
Defendant’s representations regarding the legality of the interest rate and
terms of the loan. (SAC ¶ 4.) Plaintiff alleges elsewhere that the amount of
the loan was around $3,270.00. (SAC ¶ 8.) Plaintiff appears to allege that
certain amounts were deducted for a “Smog fee”, a “Public official fee”, and an
“Administrative Fee”, but it is not clear whether these amounts were deducted
from, or added to, the amount that Plaintiff owed under the Loan Agreement.
(SAC ¶ 8.)
Plaintiff alleges that the interest charged exceeds that
which is allowable under Article XV, Section 1 of the California Constitution.
Plaintiff alleges that she has made payments totaling
$4,000.00 under the Loan Agreement. (SAC ¶ 11.)
Plaintiff
filed this action on July 19, 2021, raising claims for (1) breach of contract;
and (2) intentional tort.
On
April 25, 2024, the Court sustained Defendant’s demurrer to the Complaint. The
Court noted that Plaintiff’s intentional tort claim appeared to be a claim for
usury and that Plaintiff may be able to state a claim for usury. The Court
therefore granted leave to amend.
On May 20, 2024, Plaintiff filed the First Amended Complaint
(“FAC”). The FAC was filed primarily using judicial forms. The FAC was styled
as raising claims for (1) unfair competition (unlawful conduct); (2) unfair
competition (unlawful conduct); (3) unfair competition (fraudulent conduct);
(4) declaratory relief; (5) violation of “Ca Code § 22000 section 50204”; (6)
violation of “Ca Code § 70C-7-201”; (7) violation of “Ca Code § [blank]”; (8)
violation of the EFTA, 15 U.S.C. § 1693k et seq.; (9) intentional infliction of
emotional distress ; (10) violation of Business and Professions Code, section
17500 (untrue or misleading statements); and (11) violation of the EFTA, 15
U.S.C. § 1693k et seq. Despite the list on the caption page, however, the FAC
asserted only one claim: an “intentional
tort” of “usury.” The Court had not granted leave to amend to assert any of the
other new claims.
On August 13, 2024, the Court sustained Defendant’s demurrer
to the FAC on the grounds that Plaintiff had not stated a claim for usury and
had not asserted any of the other claims listed on the caption page. The Court
stated in its order that the question of whether to grant leave to amend was a
close one because there had been two complaints so far, neither of which set
forth an understandable claim or allegation against Defendant. Furthermore,
Plaintiff had not clearly stated what she would do to correct the issues in the
FAC. Nevertheless, the Court erred on the side of caution by allowing Plaintiff
one additional opportunity to state a claim. The Court informed Plaintiff that
the complaint must (1) state what Plaintiff claims in a way that is
understandable to Defendant, the Court, and other readers; and (2) present
claims that are allowable under California law. The Court stated that if the
next version of the complaint did not do so, the Court expects that the case
may be dismissed with prejudice.
On September 12, 2024, Plaintiff filed the SAC. The SAC
raises claims for (1) violation of California usury laws; (2) unfair business
practices in violation of Business & Professions Code, section 17200; (3)
fraudulent misrepresentation; (4) unjust enrichment; (5) violation of Business &
Professions Code, section 17500; (6) breach of contract; (7) negligent
misrepresentation; (8) fraud; and (9) infliction of emotional distress. As with
the FAC, Plaintiff has not obtained leave to amend to assert any of the claims
other than usury or breach of contract.
On October 21, 2024, Defendant demurred to the SAC.
Plaintiff did not file an opposition.
The Court grants Defendant’s request for judicial notice and
takes notice of the requested public records’ existence, but not the truth of
their contents.
As a general matter, 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.) “A demurrer tests the pleading
alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants,
Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) The court assumes the truth
of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is
concerned with is whether the complaint, as it stands, states a cause of
action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)
Where a demurrer is sustained, leave to amend must be
allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335,
348.) The burden is on the plaintiff to show the court that a pleading can be
amended successfully. (Ibid.;
Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f
there is any reasonable possibility that the plaintiff can state a good cause
of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist.
(1969) 70 Cal.2d 240, 245).
“The essential elements of usury are: (1) The transaction
must be a loan or forbearance; (2) the interest to be paid must exceed the
statutory maximum; (3) the loan and interest must be absolutely repayable by
the borrower; and (4) the lender must have a willful intent … to take the
amount of interest which he receives[.]” (Ghirardo v. Antonioli (1994) 8
Cal.4th 791, 798.) “A transaction is rebuttably presumed not to
be usurious.” (Ibid. [emphasis in original].)
The California constitution provides for a maximum interest
rate of the higher of either (1) 10 percent, or (2) 5 percent plus the Federal
Reserve rate on loans to member banks. (Cal. Const., Art. XV § 1.)
Plaintiff has alleged that she entered a loan agreement with
Defendant. Plaintiff appears to allege that the interest was 785% per annum,
although it is still not entirely clear.
Defendant argues that it is licensed as a “finance lender
and broker” with the California Department of Business Oversight and is
therefore exempt from usury laws. (See Request for Judicial Notice.) I In
support of this proposition, Defendant cites Finance Code, sections 22009
(defining “finance lender”) and 22251(b) (fact that a licensed finance lender
makes a loan in the form of a sale or lease of goods does not affect the bona
fides of the amount of the loan), as well as Riebe v. Budget Financial Corp.
(1968) 264 Cal.App.2d 576, 585 (defining “personal property broker”). “Article
XX, section 22 of the California Constitution exempts from the operation of the
usury law various classes of lenders including ‘duly licensed ... personal
property brokers.’ ” (Riebe v. Budget Financial Corp. (1968) 264
Cal.App.2d 576, 584.)
These authorities do not appear to show that a “finance
lender and broker” is exempt from the usury provisions of the California
constitution. If Defendant believes that they do show such an exemption, the
Court requests that Defendant explain the legal basis for that position.
The Court defers ruling on this claim pending (1) factual
clarification from Plaintiff as to the interest rate on the loan; and (2)
further argument from Defendant on whether a licensed “finance lender and
broker” is exempt from Article XV, Section 1 of the California constitution.
Plaintiff does not allege any conduct by Defendant other
than the conduct relating to the Loan Agreement which the Court has already
discussed above. Plaintiff includes a long list of conclusory allegations that
Defendant has violated various state and federal statutes. Plaintiff does not
state any facts in support of these allegations.
Because this claim therefore appears to hinge on Plaintiff’s
usury claim, the Court defers ruling on this claim pending the resolution of
the demurrer to the usury claim.
The facts constituting the alleged fraud must be alleged
factually and specifically as to every element of fraud, as the policy of
“liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12
Cal.4th 631, 645.) “[Fraud’s] particularity requirement necessitates pleading
facts which ‘show how, when, where, to whom, and by what means the
representations were tendered.’ [Citation.]” (Stansfield v. Starkey
(1990) 220 Cal.App.3d 59, 73.) “Less specificity is required when it appears
from the nature of the allegations that the defendant must necessarily possess
full information concerning the facts of the controversy.” (Wald v. TruSpeed
Motorcars, LLC (2010) 184 Cal.App.4th 378, 394 [quotation marks omitted].)
To properly allege fraud against a corporation, the
plaintiffs must plead the names of the persons allegedly making the false
representations, their authority to speak, to whom they spoke, what they said
or wrote, and when it was said or written. (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)
Plaintiff alleges that “Defendant made fraudulent
misrepresentations by charging Plaintiff illegal interest rates and concealing
the true nature of these charges.” (SAC ¶ 27.) It is unclear exactly
representations Plaintiff alleges Defendant made. This is in part due to the
fact that it is unclear (SAC ¶ 3) whether Plaintiff alleges that the Loan
Agreement did, or did not, state the interest rate that Plaintiff would be
charged. When Plaintiff alleges that she relied on Defendant’s representations
about the legality of the rate (SAC ¶ 4) and that Defendant concealed the true
nature of the rate (SAC ¶ 27), it is therefore unclear whether Plaintiff means
that Defendant did not disclose the interest rate, or that Defendant did
disclose the interest rate but represented to Plaintiff that that rate was
legal. (See SAC ¶ 49.)
Furthermore, Plaintiff does not plead the names of the
persons allegedly making the false representations, their authority to speak,
to whom they spoke, what they said or wrote, and when it was said or written.
Plaintiff has not opposed the demurrer or explained what
amendments she could make to cure these defects. Furthermore, these defects
appear in a new claim, raised without leave and asserting new conduct outside
of the usury claim. The Court has already admonished Plaintiff that failure to
present clear claims would likely result in this action being dismissed with
prejudice. The Court therefore determines that further amendment would be
futile.
The Court sustains the demurrer to this claim without leave
to amend.
“The elements for a claim of unjust enrichment are receipt
of a benefit and unjust retention of the benefit at the expense of another. The
theory of unjust enrichment requires one who acquires a benefit which may not
justly be retained, to return either the thing or its equivalent to the
aggrieved party so as not to be unjustly enriched.” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769, quotation
marks and citations omitted.)
Notably, “[u]njust enrichment is not a cause of action”; it
is simply “a restitution claim.” (Hill v.
Roll International Corp. (2011) 195 Cal.App.4th 1295, 1307; see also Melchior v. New Line Productions, Inc. (2003)
106 Cal.App.4th 779, 793 [“there is no cause of action in California for unjust
enrichment”].)
This claim appears entirely contingent on Plaintiff’s usury
claim. The Court therefore defers its ruling on this claim pending the
resolution of the demurrer to the usury claim.
Business and Professions Code, section 17500 prohibits false
or misleading advertising and makes the foregoing a misdemeanor punishable by
imprisonment or a fine. (Bus. & Profs. Code, § 17500.)
“[U]nder the false advertising law, in materially identical
language, standing extends to “any person who has suffered injury in fact and
has lost money or property as a result of a violation of this chapter”. (Kwikset
Corp. v. Superior Court (2011) 51 Cal.4th 310, 322, citing Bus. & Prof.
Code, § 17535.)
Plaintiff has not alleged facts showing false or misleading
advertising by Defendant, nor has she alleged that she lost money or property
as a result of false or misleading advertising by Defendant.
Plaintiff has not opposed the demurrer or explained what
amendments she could make to cure these defects. Furthermore, these defects
appear in a new claim, raised without leave and asserting new conduct outside
of the usury claim. The Court has already admonished Plaintiff that failure to
present clear claims would likely result in this action being dismissed with
prejudice. The Court therefore determines that further amendment would be
futile.
The Court therefore sustains the demurrer with leave to
amend.
If a breach of contract claim “is based on alleged breach of
a written contract, the terms must be set out verbatim in the body of the
complaint or a copy of the written agreement must be attached and incorporated
by reference.” (Harris v. Rudin, Richman
& Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a
plaintiff may also “plead the legal effect of the contract rather than its
precise language.” (Construction
Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189,
198-199.)
In sustaining the demurrer to the original Complaint, the
Court explained that the Complaint was deficient because Plaintiff did not
attach a copy of the underlying contract. Plaintiff still has not attached a
copy of the underlying contract.
Plaintiff has not pleaded her performance or excuse for
nonperformance.
Plaintiff alleges that Defendant breached the Loan Agreement
by charging an illegal interest rate. The SAC does not state what term of the Loan
Agreement Defendant breached.
This claim appeared in the original Complaint, was removed
in the FAC, and has returned in the SAC. Plaintiff still has not cured defects
identified in the original Complaint. The Court determines that further
amendment would be futile.
The Court sustains the demurrer to this claim without leave
to amend.
“California courts
have recognized a cause of action for negligent misrepresentation, i.e., a duty
to communicate accurate information, in two circumstances. The first situation
arises where providing false information poses a risk of and results in physical
harm to person or property. The second situation arises where information is
conveyed in a commercial setting for a business purpose.” (Friedman v. Merck & Co. (2003) 107 Cal.App.4th 454, 477.)
As discussed under the fraudulent misrepresentation claim,
Plaintiff does not plead the names of the persons allegedly making the false
representations, their authority to speak, to whom they spoke, what they said
or wrote, and when it was said or written.
Plaintiff has not opposed the demurrer or explained what
amendments she could make to cure these defects. The Court therefore determines
that further amendment would be futile.
The Court sustains the demurrer to this claim without leave
to amend.
Plaintiff’s second fraud claim appears to concern identical conduct
to Plaintiff’s fraudulent misrepresentation claim, discussed above.
For the reasons explained under that claim, the Court
sustains the demurrer to this claim without leave to amend.
“The elements of a prima facie case for the tort of
intentional infliction of emotional distress are: (1) extreme and outrageous
conduct by the defendant with the intention of causing, or reckless disregard
of the probability of causing, emotional distress; (2) the plaintiff’s
suffering severe or extreme emotional distress; and (3) actual and proximate
causation of the emotional distress by the defendant’s outrageous conduct.
Conduct to be outrageous must be so extreme as to exceed all bounds of that usually
tolerated in a civilized community.” (Wilson
v. Hynek (2012) 207 Cal.App.4th 999, 1009, citation and ellipses omitted.) “Whether
a defendant’s conduct can reasonably be found to be outrageous is a question of
law that must initially be determined by the court; if reasonable persons may
differ, it is for the jury to determine whether the conduct was, in fact,
outrageous.” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 534.)
Conversely,
“[a] claim of negligent infliction of emotional distress is not an independent
tort but the tort of negligence to which the traditional elements of duty,
breach of duty, causation, and damages apply.” (Wong v. Jing (2010) 189
Cal.App.4th 1354, 1377.) “[T]o recover damages for emotional distress on a
claim of negligence where there is no accompanying personal, physical injury,
the plaintiff must show that the emotional distress was ‘serious.’ ” (Ibid.)
“[S]erious mental distress may be found where a reasonable [person], normally
constituted, would be unable to adequately cope with the mental stress
engendered by the circumstances of the case.” (Rodrigues v. State (1970)
52 Haw. 156, 173.)
Plaintiff
alleges that Defendant’s interest rates caused her significant emotional
distress. Plaintiff appears to allege that Defendant unlawfully threatened to
tow, or actually towed, Plaintiff’s vehicle, causing further stress. (SAC ¶
57.)
The
Court sustains the demurrer, for several reasons.
First,
it is unclear whether Plaintiff’s claim is for intentional infliction of
emotional distress, or negligent infliction of emotional distress.
Second,
insofar as Plaintiff’s claim is for intentional infliction of emotional
distress, Plaintiff has not alleged outrageous conduct exceeding all bounds of
that usually tolerated in a civilized community.
Third,
insofar as Plaintiff’s claim is for negligent infliction of emotional distress,
Plaintiff has not alleged negligence, nor has she alleged circumstances under
which a reasonable person would be unable to cope with the resulting stress.
Plaintiff has not opposed the demurrer or explained what
amendments she could make to cure these defects. The Court therefore determines
that further amendment would be futile.
The
Court sustains the demurrer to this claim without leave to amend.