Judge: Joseph Lipner, Case: 23STCV14164, Date: 2025-05-15 Tentative Ruling
Case Number: 23STCV14164 Hearing Date: May 15, 2025 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
LAM MY THI NGUYEN, Plaintiff, v. NMSI INC., Defendant. |
Case No:
23STCV14164 Hearing Date: May 15, 2025 Calendar Number: 7 |
Defendant NMSI Inc. (“Defendant”) demurs to the Second
Amended Complaint (“SAC”) filed by Plaintiff Lam My Thi Nguyen (“Plaintiff”).
Defendant additionally moves to strike certain portions of
the SAC relating to Plaintiff’s demand for punitive damages.
The Court OVERRULES the demurrer with respect to the first,
third, seventh, and ninth claims.
The Court SUSTAINS the demurrer with respect to the second,
fourth, fifth, sixth, and eighth claims WITH LEAVE TO AMEND.
The Court SUSTAINS the demurrer with respect to the tenth
claim WITHOUT LEAVE TO AMEND as to NMSI.
The Court expresses no view as to whether such a claim is viable against
the other defendants and does not preclude Plaintiff from including such a
claim against the other defendants in the amended complaint if Plaintiff wishes
to do so and believes such a claim is legally appropriate.
In light of the order granting leave to amend, the Court
DENIES the motion to strike as moot.
This case relates to an allegedly fraudulent loan
transaction involving Plaintiff’s home, and the subsequent foreclosure by
Defendant. The following facts are taken from the allegations of the Complaint,
which the Court accepts as true for the purposes of the demurrer.
Plaintiff is a recent immigrant from Vietnam, and could not
speak English at the time of the underlying transactions in this case.
Plaintiff alleges that, on September 11, 2019, Plaintiff’s
loan broker and real estate broker East West Financial Group (“East West”)
fraudulently sought a loan (the “Loan”) from Defendant using Plaintiff’s
identity. (Complaint ¶¶ 7-11.) The Loan was purportedly sought in order to
finance Plaintiff’s contemplated purchase of a property located at 12939 Lotus
Street, Garden Grove, California 92840 (the “Lotus Property”). (See Complaint,
Ex. A.) The Loan was secured by Plaintiff’s home, located at 10181 Lampson
Avenue, Garden Grove, California 92840 (the “Lampson Property”). (See Complaint
¶ 8, Ex. B.) Plaintiff alleges that she never authorized the Loan. (Complaint ¶
19.)
Neither the seller of the Lotus Property nor Plaintiff, the
borrower on the Loan, ever received money from the Loan. (Complaint ¶ 9.) Defendant
disbursed the Loan to another party, which Plaintiff believes to be East West.
Plaintiff alleges that none of the required payments on the
Loan were made by Plaintiff, except for a one-time payment of $20,000.00 that
Plaintiff made to Defendant in order to save her home. (Complaint ¶ 18.)
In July 2020, Plaintiff’s counsel communicated to Defendant
that Plaintiff did not authorize the Loan or receive any funds from it.
(Complaint ¶ 19.)
In November 2020, Defendant notified Plaintiff that she was
in default on the Loan. (Complaint ¶ 29.)
In December 2020, Plaintiff paid Defendant more than
$20,000.00 on the Loan. (Complaint ¶ 13.) Plaintiff alleges that Defendant
falsely represented to her that this payment would save Plaintiff’s house from
foreclosure. (Complaint ¶ 30.) Plaintiff alleges that Defendant’s
representatives assured Plaintiff’s counsels that Defendant would not proceed
with the foreclosure process against the Property, knowing that the Loan was
fraudulently incurred. (Complaint ¶ 38.) Plaintiff alleges that Defendant made
this representation in order to induce Plaintiff to make the payment.
(Complaint ¶ 31.)
In February 2023, the California Department of Real Estate
(the “Department”) contacted Defendant in connection with an investigation into
alleged fraud by East West, including this matter. (Complaint ¶ 21.)
In March 2023, Defendant filed a lawsuit against East West
and Tiffany Le (“Le”), East West’s CEO and sole owner in the Orange County
Superior Court, captioned NMSI, Inc. v. Eastwest Financial Group, Inc.,
Tiffany Le, Orange County Superior Court Case No. 30-2022-01239093-CU-BC-CJC
(the “Orange County Action”). (Complaint ¶ 20.) Defendant alleged multiple
counts against East West, including conversion and Fraud. (Complaint ¶ 20.)
On April 20, 2023, the Department reached a decision that
East West and Tiffany Le had engaged in substantial misrepresentation, false
promises, and fraud. (Complaint ¶¶ 21-22.)
Plaintiff alleges that, at the time of the foreclosure and
trustee sale of Plaintiff’s home, Defendant knew that Plaintiff was an innocent
victim of fraud because the Loan proceeds had not been disbursed to Plaintiff,
Plaintiff had never made payments on the loan except for the December 2020
payment, Plaintiff’s counsel informed Defendant that Plaintiff had not
authorized the loan, and Defendant sued East West and communicated with the
Department regarding East West’s alleged fraud. (Complaint ¶¶ 17-22.)
In March 2023, Plaintiff received a Notice of Default and
Election to Sell (the “Notice of Default”) from Defendant. (Complaint ¶ 12.)
On March 7, 2024, Defendant foreclosed on the Lampson
Property, Plaintiff’s home. (Compliant ¶ 14, Ex. D.) The Lampson Property was
sold to The Lampson Trust #10181, Vecchio Real Estate Corp., as Trustee.
(Complaint ¶ 14.)
Plaintiff filed this action on June 20, 2023. The operative
complaint is now the SAC, which raises causes of action for (1) wrongful
foreclosure; (2) fraud; (3) to set aside trustee’s sale; (4) breach of oral
contract; (5) promissory estoppel; (6) breach of the implied covenant of good
faith and fair dealing; (7) negligence; (8) negligent misrepresentation; (9)
unjust enrichment; and (10) quiet title.
On April 1, 2025, Defendant filed this demurrer and motion
to strike, in one paper. Plaintiff filed an opposition and Defendant filed a
reply.
“The elements of a wrongful foreclosure cause of action 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.” (Citrus El Dorado, LLC v. Chicago Title Co. (2019)
32 Cal.App.5th 943, 948, quotation marks and brackets omitted.)
A plaintiff is “required to allege tender of the amount of
[the] secured indebtedness in order to maintain any cause of action for
irregularity in the sale procedure[.]” (Abdallah v. United Savings Bank
(1996) 43 Cal.App.4th 1101, 1109.) “Recognized exceptions to the tender rule
include when: (1) the underlying debt is void, (2) the foreclosure sale or
trustee's deed is void on its face, (3) a counterclaim offsets the amount due,
(4) specific circumstances make it inequitable to enforce the debt against the
party challenging the sale, or (5) the foreclosure sale has not yet occurred.”
(Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062.)
Defendant argues that this claim fails because Plaintiff has
not alleged tender or an excuse for lack of tender. The Court disagrees.
Plaintiff alleges circumstances that make it inequitable to enforce the debt
against her – namely, that the debt was fraudulently incurred in her name by a
third party (and that Defendant was aware of this fact). Thus, lack of tender
is not a bar to this claim at the pleading stage.
The
Court overrules the demurrer to this 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.)
“A promise of future conduct is actionable as fraud only if
made without a present intent to perform.” (Magpali v. Farmers Group, Inc.
(1996) 48 Cal.App.4th 471, 481.) “Moreover, something more than nonperformance
is required to prove the defendant's intent not to perform his promise. [I]f
plaintiff adduces no further evidence of fraudulent intent than proof of
nonperformance of an oral promise, [the plaintiff] will never reach a jury.” (Ibid
[citation and quotation marks omitted; cleaned up].)
Plaintiff
has not pled the identity of the persons making the representations, their
authority, to whom they spoke, and when.
Further,
the SAC is uncertain as to whether Defendant represented that the payment
Plaintiff made would save her house from foreclosure permanently, or only
temporarily.
The
Court sustains the demurrer to this claim with leave to amend.
“ ‘[I]t is the general rule that courts have power to vacate
a foreclosure sale where there has been fraud in the procurement of the
foreclosure decree or where the sale has been improperly, unfairly or
unlawfully conducted, or is tainted by fraud, or where there has been such a
mistake that to allow it to stand would be inequitable to purchaser and
parties.’ [Citation.]” (6 Angels, Inc. v. Stuart-Wright Mortgage, Inc.
(2001) 85 Cal.App.4th 1279, 1287.) “To obtain the equitable set aside of a
trustee's sale or maintain a wrongful foreclosure claim, a plaintiff must
allege that (1) the defendants caused an illegal, fraudulent, or willfully
oppressive sale of the property pursuant to a power of sale in a mortgage or
deed of trust; (2) the plaintiff suffered prejudice or harm; and (3) the
plaintiff tendered the amount of the secured indebtedness or was excused from
tendering.” (Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th
1052, 1062.) “Recognized exceptions to the tender rule include when:
(1) the underlying debt is void, (2) the foreclosure sale or trustee's deed is
void on its face, (3) a counterclaim offsets the amount due, (4) specific
circumstances make it inequitable to enforce the debt against the party
challenging the sale, or (5) the foreclosure sale has not yet occurred.” (Ibid.)
Defendant
argues that Plaintiff has not alleged tender. As discussed under the wrongful
foreclosure claim, Plaintiff has adequately alleged an excuse from tender.
The
Court therefore overrules the demurrer to this claim.
The elements of a claim for breach of
contract are “(1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the resulting
damages to the plaintiff.” (Oasis West
Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
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.)
Defendant
argues that Plaintiff is required to set forth the oral agreement verbatim.
Defendant provides no authority in support of its contention that the
requirement to set forth a contract verbatim applies to oral contracts.
The
Court agrees, however, that this claim is vague as to whether Defendant
allegedly agreed to forgo foreclosure temporarily, or permanently. That
difference may affect whether the foreclosure, which occurred several years
later, constituted a breach.
The
Court sustains the demurrer to this claim with leave to amend.
“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, quotation marks and brackets omitted.)
This claim is vague as to whether Defendant allegedly promised
to forgo foreclosure temporarily, or permanently.
The Court sustains the demurrer to this claim with leave to
amend.
“A breach of the implied covenant of good faith and fair
dealing involves something beyond breach of the contractual duty itself and it
has been held that bad faith implies unfair dealing rather than mistaken
judgment.” (Careau & Co. v. Security
Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) “If the
allegations do not go beyond the statement of a mere contract breach and,
relying on the same alleged acts, simply seek the same damages or other relief
already claimed in a companion contract cause of action, they may be
disregarded as superfluous as no additional claim is actually stated … [T]he
only justification for asserting a separate cause of action for breach of the
implied covenant is to obtain a tort recovery.” (Id. at pp. 1394-1395.) To recover in tort for breach of the implied
covenant, the defendant must “have acted unreasonably or without proper cause.”
(Id. at p. 1395 [citations and
italics omitted].)
This
claim turns on Plaintiff’s contention that Defendant breached its oral
agreement with Plaintiff by foreclosing on Plaintiff’s home. The SAC vague as
to whether Defendant allegedly agreed to forgo foreclosure temporarily, or
permanently.
The
Court sustains the demurrer to this claim with leave to amend.
In order to state a claim for negligence, a plaintiff must
allege the elements of (1) “the existence of a legal duty of care,” (2) “breach
of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014)
228 Cal.App.4th 664, 671.)
Plaintiff
alleges that Defendant had a duty to exercise reasonable care to maintain
accurate loan records and refrain from taking any action against Plaintiff that
it did not have legal authority to take. Plaintiff alleges that Defendant
breached this duty by foreclosing on the Lampson Property when it knew that the
Loan was fraudulently procured.
Defendant
argues that it was not negligent because it believed that it was issuing the
Loan to Plaintiff. First, this argument improperly introduces facts outside of
the pleading. Second, Defendant’s state of mind at the time that it issued the
Loan is not at issue – Plaintiff alleges that Defendant knew at the time of the
foreclosure that the Loan was fraudulently procured, because Defendant
was suing East West for conversion and fraud.
The
Court overrules the demurrer to this claim.
The elements of a cause of action for negligent
misrepresentation include “[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, quotation marks omitted.) 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.)
To properly allege fraud against a corporation, the
plaintiff 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.)
As
discussed above under the fraud claim, Plaintiff has not pled the
representations with adequate particularity.
The
Court sustains the demurrer to this claim with 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”].)
Defendant
contends that it was not unjustly enriched, because it merely recouped the Loan
that it issued. The Court disagrees. Plaintiff has adequately alleged that
Defendant wrongfully foreclosed her home. As Defendant points out, “the main
culprit seems to be East West in allegedly obtaining a fraudulent loan under
Plaintiff’s name.” (Demurrer at 12:4-5.) Defendant allegedly acted on this
understanding, by suing East West for its fraudulent actions. But Plaintiff’s
allegations that Defendant knew the Loan was fraudulently procured when it
foreclosed give rise to a claim for wrongful foreclosure, and thus an
allegation of a benefit that may not be justly retained as against Plaintiff.
The
Court overrules the demurrer to this claim.
An action for quiet title seeks “to establish title against
adverse claims to real or personal property or any interest therein.” (Code
Civ. Proc., § 760.020, subd. (a).) In an action for quiet title, Plaintiff must
plead (1) “[a] description of the property that is the subject of the action,”
specifically the location of tangible personal property and the legal
description and street address or common designation of real property, (2)
“[t]he title of the plaintiff as to which a determination under this chapter is
sought and the basis of the title,” (3) “[t]he adverse claims to the title of
the plaintiff against which a determination is sought,” (4) “[t]he date as of
which the determination is sought,” and (5) “[a] prayer for the determination
of the title of the plaintiff against the adverse claims.” (Code Civ. Proc., §
761.020.)
The Defendant agrees that Defendant does not have or claim to
have legal title to the Lampson Property.
Moreover, Defendant does not rebut the point that NMSI is not considered
the legal owner of the Lampson Property.
The Court sustains the demurrer to this claim without leave
to amend as to the claim against NMSI.
Punitive damages are appropriate when a defendant acted with
malice, oppression, or fraud. (Civ. Code, § 3294, subd. (a).) “Malice” is
defined as conduct intended to cause injury to a person or despicable conduct
carried on with a willful and conscious disregard for the rights or safety of
others. (Turman v. Turning Point of Cent.
Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable
conduct subjecting a person to cruel and unjust hardship, in conscious
disregard of the person’s rights. (Ibid.)
“Fraud” is an intentional misrepresentation, deceit, or concealment of a
material fact known by defendant, with intent to deprive a person of property,
rights or otherwise cause injury. (Ibid.)
“In order to survive a motion to strike an allegation of
punitive damages, the ultimate facts showing an entitlement to such relief must
be pled by a plaintiff.” (Clauson v. Superior Court (1998) 67
Cal.App.4th 1253, 1255.) “In passing on the correctness of a ruling on a motion
to strike, judges read allegations of a pleading subject to a motion to strike
as a whole, all parts in their context, and assume their truth.” (Ibid.)
“In ruling on a motion to strike, courts do not read allegations in isolation.”
(Ibid.) Conclusory allegations, devoid of any factual assertions, are
insufficient to support a conclusion that parties acted with oppression, fraud
or malice. (Smith v. Superior Court
(1992) 10 Cal.App.4th 1033, 1042.)
Because the Court sustains the demurrer to the fraud claims
with leave to amend, the Court denies the motion to strike as moot.
Additionally, the Court admonishes Defendant that the motion
to strike is a second motion from the demurrer. It therefore must be filed
separately so that the proper court fees for the motion are paid.