Judge: Joseph Lipner, Case: 24STCV10864, Date: 2024-10-08 Tentative Ruling
Case Number: 24STCV10864 Hearing Date: October 8, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
WILLIAM ZEPEDA, et al., Plaintiffs, v. BMO HARRIS BANK, N.A. SUCCESSOR BY
MERGER TO BANK OF THE WEST, Defendant. |
Case No:
24STCV10864 Hearing Date: October 8, 2024 Calendar Number: 7 |
Defendant BMO Harris Bank, N.A. (“Defendant”) demurs to the
first, second, third, fourth, and sixth claims in the Complaint filed by
Plaintiff William Zepeda, as an individual, and Plaintiff William Zepeda, as
successor to the Estate of Lydia Meza (collectively, “Plaintiff”).
The Court SUSTAINS the demurrer to the fourth and sixth
claims WITH LEAVE TO AMEND. Plaintiff
shall amend within 20 days.
The Court SUSTAINS the demurrer to the remaining claims
WITHOUT LEAVE TO AMEND.
This is a contract dispute relating to a mortgage agreement.
The following facts are taken from the allegations of the Complaint, which the
Court accepts as true for the purposes of the demurrer.
In
2009, Defendant’s predecessor in interest, Bank of the West, made a $149,000.00
loan to Lydia Meza, Plaintiff’s mother.
Meza
passed away in 2010. Plaintiff subsequently made monthly mortgage payments of
$772.64 to Defendant.
In
April 2023, Plaintiff received a letter from Defendant indicating that the loan
was in default and that “he must pay $3,237.30, which is the total amount due
as of the date of this notice, plus any additional payments or other sums
which come due after the date of this letter.” (Complaint ¶ 18, Ex. G
[emphasis in original].) The letter informed Plaintiff that default must be
cured by May 6, 2023.
On
June 8, 2023, Plaintiff made a payment of $3,237.30. (Complaint at ¶ 20.)
On
July 26, 2023, a notice of default was recorded against the subject property. As
set forth in the Notice of Default, the amount due was $4,964.81 as of July 26,
2023.
Around
August 1, 2023, Defendant stopped accepting Plaintiff’s mortgage payments.
On October 25, 2023, the newly substituted foreclosure
trustee, Trustee Corps, recorded a Notice of Trustee’s Sale scheduling the sale
for November 28, 2023.
On October 27, 2023, in response to a request from
Plaintiff, Trustee Corps provided Plaintiff with a payoff quote in the amount
of $84,049.68. The letter stated that the payoff window closed on October 30,
2023, the following Monday. The letter stated that the amount actually due upon
repayment may be greater due to potential interest and late charges.
On October 30, 2023, Plaintiff paid off the loan for the sum
of $84,049.68. However, Plaintiff alleges that the actual principal balance of
his loan when Defendant stopped accepting repayments was $73,654.04.
On November 9, 2023, the deed of trust was reconveyed to
Plaintiff. (Complaint ¶ 40, Ex. T.)
Plaintiff
filed this action on May 1, 2024, raising claims for (1) violation of Civil
Code, section 2923.5, subd. (b) for failure to provide foreclosure
alternatives; (2) violation of Civil Code, section 2924c, subd. (a)(2) for
failure to rescind a notice of default; (3) negligence; (4) slander of title;
(5) breach of the covenant of good faith and fair dealing; and (6) intentional
infliction of emotional distress (“IIED”).
Defendant
demurred to the Complaint on August 30, 2024. Defendant demurs to every claim
except for the fifth claim for breach of the covenant of good faith and fair
dealing. Plaintiff filed an opposition and Defendant filed a reply.
The Court grants Defendant’s request for judicial notice and
takes notice of the submitted records from the United
States District Court for the Central District of California as public records.
“The party against whom a complaint or cross-complaint has
been filed may object, by demurrer or answer as provided in Section 430.30, to
the pleading on any one or more of the following grounds:
(a) The court has
no jurisdiction of the subject of the cause of action alleged in the pleading.
(b) The person who filed the pleading does not have the
legal capacity to sue.
(c) There is
another action pending between the same parties on the same cause of action.
(d) There is a defect or misjoinder of parties.
(e) The pleading does not state facts sufficient to
constitute a cause of action.
(f) The pleading is
uncertain. As used in this subdivision, “uncertain” includes ambiguous and
unintelligible.
(g) In an action
founded upon a contract, it cannot be ascertained from the pleading whether the
contract is written, is oral, or is implied by conduct.
(h) No certificate was filed as required by Section 411.35.”
(Code Civ. Proc., § 430.10.)
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).
“A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the borrower,
has tried with due diligence to contact the borrower as required by this
section, or that no contact was required because the individual did not meet
the definition of “borrower” pursuant to subdivision (c) of Section 2920.5.”
(Civil Code, section 2923.5, subd. (b).)
Defendant argues that the only remedy available for
violations of section 2923.5 is a postponement of the foreclosure sale.
Plaintiff agrees in his opposition that there is no recovery available for this
claim. (Opposition at p. 7:9-10.)
The Court therefore sustains the demurrer to this claim
without leave to amend.
“If the trustor, mortgagor, or other person authorized to
cure the default pursuant to this subdivision does cure the default, the
beneficiary or mortgagee or the agent for the beneficiary or mortgagee shall,
within 21 days following the reinstatement, execute and deliver to the trustee
a notice of rescission that rescinds the declaration of default and demand for
sale and advises the trustee of the date of reinstatement. The trustee shall
cause the notice of rescission to be recorded within 30 days of receipt of the
notice of rescission and of all allowable fees and costs.” (Civ. Code, § 2924c,
subd. (a)(2).)
“No charge, except for the recording fee, shall be made
against the trustor or mortgagor for the execution and recordation of the
notice which rescinds the declaration of default and demand for sale.” (Civ.
Code, § 2924c, subd. (a)(2).)
Defendant argues that this claim is moot because the notice
of default was cancelled by operation of law when Plaintiff repaid the loan in full,
and the deed of trust was reconveyed. Plaintiff does not contest this argument
and concedes that the cause of action “may be moot”. (Opposition at p. 8:11-13.)
Plaintiff admits in the Complaint that the deed of trust was
reconveyed. (Complaint ¶ 40, Ex. T.)
The Court therefore sustains the demurrer to this claim
without 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.)
“[A]s a general rule, a financial institution owes no duty
of care to a borrower when the institution's involvement in the loan
transaction does not exceed the scope of its conventional role as a mere lender
of money.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231
Cal.App.3d 1089, 1096.)
Plaintiff argues that the issue of whether a financial
institution owes a duty of care to a borrower “involves the balancing of
various factors, among which are the extent to which the transaction was
intended to affect the plaintiff, the foreseeability of harm to him, the degree
of certainty that the plaintiff suffered injury, the closeness of the
connection between the defendant's conduct and the injury suffered, the moral
blame attached to the defendant's conduct, and the policy of preventing future harm.”
(Biakanja v. Irving (1958) 49 Cal.2d 647, 650.)
“Subsequent to Biakanja, [the California Supreme
Court has] repeatedly stated that its factors are used to determine whether
persons must exercise reasonable care to avoid negligently causing economic
loss to others with whom they were not in privity.” (Sheen v. Wells Fargo
Bank, N.A. (2022) 12 Cal.5th 905, 937.) “[W]e have never done what
plaintiff now asks us to do: rely on Biakanja to impose a tort duty on a
contracting party to avoid negligently causing monetary harm to another party
to that contract.” (Id. at p. 938.) “[T]here is good reason that our
precedents have applied the Biakanja multifactor test to find liability
only when the parties to a proceeding are contractual strangers. …. The first,
second, and fourth Biakanja factors are heavily skewed in favor of
liability in cases where the litigants are contractual partners and the alleged
duty arises from the underlying contract. …. Applying Biakanja in this and
other similar contexts thus would unduly tip the scale in favor of finding a
tort duty and subvert the economic loss rule in a class of cases in which that
principle clearly applies.” (Id. at p. 941.)
Here, Defendant is a mortgage servicer in privity with
Plaintiff. (Opposition at p. 9:18-26.) It therefore did not owe him a separate
duty of care.
The Court therefore sustains the demurrer to this claim
without leave to amend.
“Slander of title is effected by one who without privilege
publishes untrue and disparaging statements with respect to the property of
another under such circumstances as would lead a reasonable person to foresee
that a prospective purchaser or lessee thereof might abandon his intentions. It
is an invasion of the interest in the vendibility of property. . . . Damages
usually consist of loss of a prospective purchaser.” (Phillips v. Glazer (1949) 94 Cal.App.2d 673, 677, citations
omitted.) “To state a claim for slander of title, a plaintiff must allege (1) a
publication, (2) which is without privilege or justification, (3) which is
false, and (4) which causes direct and immediate pecuniary loss.” (Schep v. Capital One, N.A. (2017) 12
Cal.App.5th 1331, 1336.)
Notices
of default are privileged communications. (Civ. Code, § 2924, subd. (d)(1).) Such communications are subject to the
qualified privilege and require that the statements be made without
malice. (Kachlon v. Markowitz
(2008) 168 Cal.App.4th 316, 341.) Plaintiff argues that
the notice was not privileged because it was made with malice. However, the
Complaint does not explain the asserted malice with sufficient clarity. Nor
does it sufficiently allege the loss suffered by plaintiff.
The Court sustains the demurrer to this claim with 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.)
Defendant argues that Plaintiff has not alleged any
outrageous conduct.
Plaintiff argues that Defendant engaged in outrageous
conduct by falsely claiming that the loan was in default, by sending confusing
pre-dated and post-dated letters following the notice of default, and by
sending the October 27, 2023 letter, which gave Plaintiff less than a day to
pay off the loan and noted that the requested amount might not be sufficient.
While Plaintiff may be able to show that this conduct was
blameful, it does not appear extreme and outrageous. The original notice of
default was not extreme or outrageous because Plaintiff alleges that he did not
attempt to cure the default until after the last date given. Further, the
subsequent notices, while arguably blameful, certainly were not beyond the
bounds of conduct usually tolerated in a civilized society.
The Court sustains the demurrer to this claim with leave to
amend.