Judge: Kenneth J. Medel, Case: 37-2023-00024368-CU-OR-CTL, Date: 2024-01-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - January 25, 2024

01/26/2024  09:30:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

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Civil - Unlimited  Other Real Property Demurrer / Motion to Strike 37-2023-00024368-CU-OR-CTL VENEGAS VS SHELLPOINT MORTAGE SERVICING LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 09/25/2023

Defendant NewRez LLC dba Shellpoint Mortgage Servicing's Demurrer is SUSTAINED. The Court GRANTS NewRez LLC's Request for Judicial Notice and takes judicial notice of the documents referenced therein.

On June 9, 2023, plaintiffs, in pro per, filed a Complaint alleging nice causes of action including, (1) FRAUD & CONSPIRACY TO COMMIT FRAUD; (2) TORTIOUS VIOLATION OF STATUTE; (3) CONVERSION; (4) REFORMATION (NOTE); (7). VIOLATION OF BUSINESS & PROFESSIONS CODE §17200 (8) VIOLATION OF CIV. CODE §2923.6; (9) VIOLATION OF CIV. CODE §1788.17; (10) VIOLATION OF CA CIV. CODE §1572; 10. INJUNCTIVE RELIEF; SPECIFIC PERFORMANCE Defendant filed a Demurrer to each of the causes of action. This Court has not received an Opposition.

However, Defendant has filed a Reply, indicating that an Opposition has been at least served on the Defendant.

In reading the Demurrer and Reply, the Court agrees that Complaint fails to state a cause of action and SUSTAINS the Demurrer.

In the Complaint, plaintiffs allege that Shellpoint is 'trying to steal the equity' in property. Plaintiffs allege that they were denied a loan modification. (See Comp., p. 2.) Plaintiffs further allege fraud against Shellpoint because it denied Plaintiffs' application for a loan modification 'on the grounds the property had too much equity.' (Comp., ¶ 3.) Plaintiffs acknowledge in the pleading that Shellpoint informed them that the denial was based on the negative Net Present Value of their loan, under a potential modification.

(Comp., ¶ 22; Ex. B, ¶ 32.) Plaintiffs allege that 'the documents show without doubt that defendants who will be performing the unlawful foreclosure of their property, lacked standing to perform such foreclosure.' No documents are attached to Plaintiffs' Complaint except emails and a summary declaration attached as Exhibits A and B.

Based on the pleadings and the documents of which the Court has taken judicial notice, on August 10, 2005, Plaintiffs obtained a $548,000.00 loan, which was secured by a Deed of Trust on the Property.

(RJN, Ex. A.) The Deed of Trust was assigned to The Bank of New York Mellon fka The Bank of New York as Trustee for the Certificateholders CWALT, Inc. Alternative Loan Trust 2005-56 Mortgage Pass-Through Certificates, Series 2005-56 ('BNYM'), and an Assignment of Deed of Trust was properly recorded on October 18, 2010. (RJN, Ex. B.) Plaintiffs defaulted on their monthly Loan payments, beginning in February 2022, and a Notice of Default was recorded against the Property on October 14, 2022. (RJN, Ex. C.) Plaintiffs do not allege a sale has occurred.

Plaintiffs' First Cause of Action for Fraud Plaintiffs allege 'defendants conspired, reached an agreement to defraud Plaintiff's out of their property, and they put their scheme into play.' (Comp., ¶16.) Plaintiffs must plead (1) a false representation of an important fact (2) upon which Plaintiffs relied, (3) Calendar No.: Event ID:  TENTATIVE RULINGS

3023566  30 CASE NUMBER: CASE TITLE:  VENEGAS VS SHELLPOINT MORTAGE SERVICING LLC  37-2023-00024368-CU-OR-CTL made with the knowledge of its falsity, (4) with the intent to defraud, and (5) resulting in damages.

Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.

Plaintiffs have not pled Fraud with specificity as required under the law. Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331. Facts must be pled that show how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d. 59, 73. Against a corporation, the fraud cause of action must allege specific names of the person(s) who made the misrepresentation, their authority to speak for the corporation, to whom they spoke to, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.

No factual details have been pled to support the alleged fraudulent scheme. Based on the pleadings, Plaintiffs were denied due to negative Net Present Value of the Loan under a potential modification.

(Comp., Ex. B at ¶ 32.) The Net Present Value formula was developed by the U.S. Department of Treasury and is recognized as a legitimate grounds for denying a loan modification application under California's Homeowner Bill of Rights. See Civ. Code § 2923.6(f)(3).

Second Cause of Action for Conversion Plaintiffs allege that Shellpoint's alleged actions 'show an intention or purpose to convert' the Property by taking possession of it. (Comp., ¶¶46-47.) Conversion ordinarily involves personal property and not real property. Salma v. Capon (2008) 161 Cal.App.4th 1275, 1295. Even so, Plaintiffs have not sufficiently plead any of the elements of a conversion claim. Plaintiffs vaguely refer to Shellpoint's 'intention' to convert the Property, but do not actually allege that the Property has been converted given that plaintiffs still reside in the property. No foreclosure sale has occurred.

Third, Fourth, or Fifth Cause of Action Plaintiffs' Complaint does not allege a third, fourth, or fifth cause of action. The caption on the first page of Plaintiffs' Complaint lists a third cause of action for Tortious Violation of Statute, a fourth cause of action for Conversion, and a fifth cause of action for Reformation (Note).

Sixth cause of action for violation of the UCL.

Case law is clear that a borrower who defaults on a loan before the defendant's alleged wrongful act(s) does not have standing to sue under Section 17200 because the default caused the foreclosure proceedings, credit damage, late fees, etc., not the defendant's conduct. See Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 522-523 , disapproved on other grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 929. Accordingly, Plaintiffs cannot satisfy the standing and causation requirement of the UCL, because their own default led to the initiation of foreclosure proceedings and any related damages, not Shellpoint's conduct. See Jenkins, supra, at 522-523.

Nor have plaintiffs identified unlawful or unfair practices. There are no specific statutes or public policies cited. As stated above, fraud has not been shown.

Seventh Cause of Action for Violation of Civil Code § 1788.17 Fails Plaintiffs' seventh cause of action arises under the Rosenthal Act at Civil Code § 1788.17. It is entirely unclear what particular communication or activity is meant to form the basis of Plaintiffs' claim.

Plaintiffs simply state that Shellpoint violated various provisions of the FDCPA, without identifying any specific communication or the details associated therewith. (See Comp., ¶¶57-61.) Eighth Cause of Action for Violation of Civil Code § 1572 This particular cause of action alleges fraud related to origination of the Loan, this claim is also time-barred. Civil Code § 1572 defines actual fraud on a contract, and is subject to the same elements and pleadings standards as Plaintiffs' first cause of action for common law fraud, as outlined above.

This cause of action alleges that Shellpoint's predecessors misrepresented Plaintiffs' ability to afford the payments on the Loan at origination. (Comp., ¶¶ 63-73.) Plaintiffs contend that Shellpoint's predecessors 'would have been forced to deny' Plaintiffs the Loan if they had properly investigated Plaintiffs' financial capabilities. (Comp., ¶70.) In Perlas v. GMAC Mortgage, LLC (2010) 187 Cal.App.4th 429, the plaintiffs brought claims for fraud against their mortgage lender based on the contention that they had relied on the lender's false determination that they qualified for the loan as a determination by the lender that they could afford the loan. The Court held that plaintiffs had failed to state a cause of action for fraudulent misrepresentation/concealment, reasoning that the lender's efforts to determine the creditworthiness and ability to repay by a borrower are for the lender's protection, not the borrower's, and that borrowers rely on their own judgment and risk assessment in deciding whether to accept a loan. (Id. at 436.) Calendar No.: Event ID:  TENTATIVE RULINGS

3023566  30 CASE NUMBER: CASE TITLE:  VENEGAS VS SHELLPOINT MORTAGE SERVICING LLC  37-2023-00024368-CU-OR-CTL Further, the claim is time-barred. The statute of limitations for a fraud claim in California is three (3) years. Code Civ. Proc. § 338(d). The Loan was originated in August of 2005. (See RJN, Ex. A.) Therefore, the statute of limitations for any fraud claims relating to origination of the Loan expired nearly fifteen (15) years prior to Plaintiffs' bringing this action.

Ninth Cause of Action for Cancellation of Instruments Plaintiffs allege that 'Defendants have committed a 'fraud upon the court' by presenting forged signatures of Plaintiff or due to undue influence to an elderly and frail Plaintiff.' (Comp., ¶75.) The remainder of the 'allegations' within this cause of action are comprised of verbatim citations of an entire appellate decision regarding an interlocutory divorce decree and the full text of Section 473. (Comp., p. 15-18.) It is entirely unclear how this legal authority relates to Plaintiffs' claim for cancellation of instruments.

Tenth Cause of Action for Reasonable/Detrimental Reliance It is unclear what particular cause of action is being actually being brought against Shellpoint here. 'As a preliminary matter, detrimental reliance is not a cause of action under California law. It is an element of promissory estoppel . . .' Manh v. FDIC (C.D. Cal. March 26, 2012) 2012 U.S. Dist. LEXIS 196505, at *10-11. Similarly, reasonable reliance is an element of fraud-based causes of action, such as misrepresentation, nondisclosure, and concealment. See e.g., Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062. Plaintiffs have not stated any actionable claim within their tenth cause of action.

Injunctive Relief Plaintiffs assert an eleventh cause of action for injunctive relief against Shellpoint. It is well-established that injunctive relief is a remedy, not a cause of action. See Shell Oil Co. v. Richter (1942) 52 Cal.App.2d 164, 168. 'A cause of action must exist before a court may grant a request for injunctive relief.' Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 65. As none of Plaintiffs' other causes of action can be maintained, their request for injunctive relief necessarily fails as well.

Leave to Amend Civil Procedure § 472a, subdivision (c), provides that, when a demurrer is sustained, the court may grant leave to amend the pleading, as specified. The burden of proving a reasonable possibility that an amendment can cure the defect is squarely on the plaintiff. Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 502 fn. 16. Plaintiff must demonstrate how the complaint can be amended to state a cause of action. No such showing has been made.

The Court will hear as to leave to amend.

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