Judge: Kevin C. Brazile, Case: 22STCV34318, Date: 2023-02-24 Tentative Ruling

Hearing Date: February 24, 2023

Case Name: Tatum v. Specialized Loan Servicing, LLC, et al.

Case No.: 22STCV28937

Matter: Demurrer

Moving Party: Defendant Specialized Loan Servicing, LLC

Responding Party: Plaintiff Tatum Tatum

Notice: OK

Ruling: The Demurrer is sustained, without leave to amend.

Moving party to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On December 8, 2022, Plaintiff Tatum Tatum filed the operative First Amended Complaint (“FAC”) against Defendants Specialized Loan Servicing, LLC (“SLS”), 7866 Fareholm Drive, LLC, and NBS Default Services, LLC for (1) assault, (2) battery, (3) conversion, (4) violation of Civil Code § 789.3, (5) violation of Civil Code § 1954, (6) violation of Civil Code § 1940.2, (7) promissory estoppel, (8) violation of the implied covenant of good faith and fair dealing, (9) violation of Civil Code § 2923.7, (10) violation of Civil Code § 2924.11, (11) violation of Civil Code § 2924.17, (12) intentional infliction of emotional distress (“IIED”), (13) fraud, (14) deceit, (15) negligent misrepresentation, (16) intentional interference with prospective economic advantage, (17) civil conspiracy, (18) violation of Business & Professions Code § 17200, (19) quiet title, (20) declaratory relief, (21) breach of contract, (22) forcible detainer, and (23) tenant harassment (violation of Los Angeles Municipal Code §§ 45.30 et. seq.)  Plaintiff alleges that Defendants pursued a wrongful foreclosure of his home, physically beat Plaintiff, and subsequently engaged in a self-help eviction by changing the locks to Plaintiff’s home.  

Defendant SLS demurs to the 7th-11th, 13th-16th, and 19th-21st causes of action for uncertainty and failure to state sufficient facts.  

When considering demurrers, courts read the allegations liberally and in context, and “treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)  “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.)  It is error “to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.”  (Aubry v. Tri-City Hospital Dist.¿(1992) 2 Cal.4th 962, 967.)

1. Procedural Issues

Plaintiff makes a number of procedural arguments, but these arguments lack merit because Plaintiff has not shown any prejudice.  To the contrary, Plaintiff has responded to all of the issues for the Demurrer.

2. 19th and 20th Causes of Action (“COAs”)

The Demurrer is sustained as to the 19th and 20th causes of action, without leave to amend.   This is because the Court did not grant leave to reassert such claims when sustaining SLS’s prior demurrer.  Plaintiff has acknowledged this error.  

3. 7th, 8th, & 21st COAs

The contract-claims are premised on promises by SLS to (1) delay a foreclosure of the subject property and (2) deliver any surplus funds resulting from a trustee’s sale to Plaintiff.  These promises are not consistent with the duties and obligations set forth by the subject deed of trust, and no written agreement is alleged supporting the propriety of such promises by a loan servicer.  There is nothing alleged that would properly modify or amend the deed of trust, which states that the trustee is obligated to administer surplus funds and foreclosures.  Reliance on any oral promise would also be unreasonable.  Any oral promise would be barred by the statute of frauds, and the FAC’s allegations as to improvements to the property do not properly relate to the obligations at issue so as to allege part-performance.  Therefore, the Demurrer is sustained as to the 7th, 8th, and 21st causes of action for promissory estoppel, breach of the implied covenant, and breach of contract.  Leave to amend is denied.  

4. 9th-11th COAS

Previously, the Court stated that “SLS . . . argues that Plaintiff’s statutory claims under Civ. Code §§ 2923.7 (9th), 2924.11 (10th), and 2924.17 (11th) fail because these statutes apply to owner-occupied properties and the subject property was an investment property. [¶] The Complaint states Plaintiff moved into the subject property, but it does not specifically state that the property was Plaintiff’s principal residence.  (Civ. Code § 2924.15.)  Thus, the Demurrer is sustained as to the ninth through eleventh causes of action, with twenty days leave to amend.”

The FAC now states, “Tatum Tatum moved into The Property and made it his primary residence before March 2020, and moved many of his personal things into The Property after he made it his primary residence. These personal things included enough furniture to fully furnish The Property, and many precious personal things. Tatum Tatum also placed orchids and lots of flowers and potted plants in The Property’s kitchen and on its patio.”  (FAC ¶ 18.)

Respectfully, this is a conclusion that shall be ignored.  The FAC makes clear that the subject property was obtained through 1031 exchange, which relates to property “held for use in a trade or business or for investment.”  (Cal. Prac. Guide Real Prop. Trans. Ch. 13(III)-C.)

  Plaintiff argues, “In colloquial language, ‘investment purposes’ can mean, among other things, that the property could be held with the hope of future gain in value, and a property’s owner can certainly reside in a property even if that property is being held for investment purposes.”

This is not accurate as “Real estate held for personal use . . . is not held for use in a trade or business or for investment, even if the taxpayer expects it to appreciate in value.”  (Cal. Prac. Guide Real Prop. Trans. Ch. 13(III)-C.)

Additionally, the subject deed of trust obligated Plaintiff to maintain insurance against rent loss and assigned rents to the lender upon Plaintiff’s default.  (RJN, Exhibit A.)

Plaintiff further argues that “even if Tatum Tatum had hypothetically bought The Property for investment purposes, without residing there, at the time he bought The Property in or around July 2019, he was certainly residing in The Property in or before March 2020, and in September 2020 . . . .”

However, the correspondence relating to Plaintiff’s loan, which is attached to the FAC, shows it was mailed to Plaintiff at an address other than the subject property.  (FAC, Exhibits B, D.)  This correspondence is dated after March 2020, when Plaintiff alleges he had moved into the subject property as his primary residence.  

As the FAC again fails to properly allege that the subject property was Plaintiff’s primary residence, the Demurrer is sustained as to the 9-11th causes of action, without leave to amend.

5. 13th-15th COAs

The fraud-claims are premised on the representations (1) that the subject property would be sold to the highest bidder; (2) that Plaintiff would receive any surplus funds; and (3) that the sale would be postponed.

Given that the deed of trust defines the obligations as to any trustee’s sale and surplus funds, there was not justifiable reliance with respect to any representations by SLS.  The fraud-claims are also not particularly pled.

The Demurrer is, therefore, sustained as to the 13th through 15th causes of action, without leave to amend.

6. 16th COA

The elements of a claim for interference with prospective economic advantage are “(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.”  (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.)  

“To establish a claim for interference with prospective economic advantage . . . a plaintiff must plead that the defendant engaged in an independently wrongful act.”  (Id. at p. 1158.)  Because the HBOR and fraud claims have failed, Plaintiff has again failed to plead wrongful conduct.  Therefore, the Demurrer is sustained as to the 16th cause of action, without leave to amend.

7. Summary 

The Demurrer is sustained, without leave to amend.  The Request for Judicial Notice is granted.  

Moving party to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.