Judge: Lee W. Tsao, Case: 22NWCV00078, Date: 2023-01-05 Tentative Ruling
Case Number: 22NWCV00078 Hearing Date: January 5, 2023 Dept: C
MONTEJANO v. JP MORGAN CHASE BANK
CASE NO.: 22NWCV00078
HEARING: 01/05/23
#6
TENTATIVE ORDER
I.
Defendant JPMORGAN CHASE BANK, N.A.’s Demurrer
to Plaintiffs’ First Amended Complaint is SUSTAINED with 20 days leave to
amend.
II.
Defendant JPMORGAN CHASE BANK, N.A.’s Motion to
Strike Portions of Plaintiffs’ First Amended Complaint is MOOT.
Moving Party to give Notice.
Defendant JP MORGAN CHASE BANK, N.A.’s Request for Judicial
Notice is GRANTED. (Cal. Ev. Code §452.)
This action for
quiet title was filed on January 31, 2022. The operative First Amended
Complaint (“FAC”) asserts the following causes of action: (1) Wrongful
Foreclosure; (2) Cancellation of Instruments; (3) Quiet Title; (4) Violation of
Cal. Civ. Code §2923.5; (5) Unfair Competition; and (6) Unjust Enrichment.
Defendant JPMORGAN CHASE BANK, N.A. (“Chase”) specially and
generally demurs to each cause of action.
Uncertainty
Chase argues that Plaintiffs’ claims are fatally uncertain. This
argument lacks merit because “[a] special demurrer for uncertainty is not
intended to reach the failure to incorporate sufficient facts in the pleading
but is directed at the uncertainty existing in the allegations actually made.”
(Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145-146.) Moreover,
demurrers for uncertainty are disfavored and will only be sustained where the
pleading is so bad that the defendant cannot reasonably respond, i.e., he or
she cannot reasonably determine what issues must be admitted or denied, or what
counts or claims are directed against him or her. (Khoury v. Maly’s of
Calif. Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for uncertainty is
strictly construed, even where a complaint is in some respects uncertain,
because ambiguities can be clarified under modern discovery procedures.” (Ibid.)
Here, it is clear from Chase’s other arguments that they understand what Plaintiffs
at least attempt to allege, and there is no true uncertainty. The demurrer is
not sustained on the basis of uncertainty.
Judicial Estoppel
as to Chase
Judicial estoppel precludes a party from gaining an advantage by taking
one position, and then seeking a second advantage by taking an incompatible
position. (Yanez v. U.S. (1993) 989 F.2d 323, 326; Russell v. Rolfs
(9th Cir. 1990) 893 F.2d 1033, 1037). The doctrine's goals are to
maintain the integrity of the judicial system and to protect parties from
opponent's unfair strategies. (Patriot Cinemas, Inc. v. General Cinema Corp.
(1st Cir. 1987) 834 F.2d 208, 212, 214). California state courts apply this
doctrine. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171,
181-183.) The doctrine is applied by the
courts to prevent internal inconsistency, preclude litigants from playing
"fast and loose" with the courts, and prohibit "parties from
deliberately changing positions according to exigencies of the moment. (U.S.
v. McCaskey (5th Cir. 1993) 9 F.3d 368, 387.) The elements of judicial
estoppel are “(1) the same party has taken two positions; (2) the positions
were taken in judicial or quasi-judicial administrative proceedings; (3) the
party was successful in asserting the first position (i.e., the tribunal
adopted the position or accepted it as true); (4) the two positions are totally
inconsistent; and (5) the first position was not taken as a result of
ignorance, fraud, or mistake.” (Owens v. County of Los Angeles (2013)
220 Cal.App.4th 107, 121.)
Plaintiffs’ claims
against Chase are not precluded due to judicial estoppel. Plaintiffs do not
allege facts indicating inconsistent positions from previously filed bankruptcy
actions. The judicial estoppel arguments raised in demurrer raise factual
determinations inappropriately raised at this juncture.
Res Judicata
The elements of res
judicata are: (1) a claim or issue raised in the present action is identical to
a claim or issue litigated in a prior proceeding; (2) the prior proceeding
resulted in a final judgment on the merits; and (3) the party against whom the
doctrine is being asserted was a party or in in privity with a party to the
prior proceeding. (Brinton v. Bankers Pension Services, Inc. (1999) 76
Cal.App.4th 550, 556.) A court can take judicial notice of prior actions and
can sustain a demurrer on the defense of res judicata. (Britz, Inc. v. Dow
Chem. Co. (1999) 73 Cal.App.4th 177, 180.)
“California adheres
to a ‘primary rights’ theory in determining whether the claims or causes of
action are the same. The significant factor is whether the claim or cause of
action is for invasion of a single primary right. Whether the same facts are
involved in both suits is not conclusive. Moreover, more than one act may
constitute a single cause of action. Under Pomeroy’s primary rights theory, ‘…a
cause of action consists of 1) a primary right possessed by the plaintiff, 2) a
correspondent primary duty devolving upon the defendant, and 3) a delict or
wrong done by the defendant which consist in a breach of such primary right and
duty. Thus, two actions constitute a single cause of action if they both affect
the same primary right.” (Burdette v. Carrier Corp. (2008) 158
Cal.App.4th 1668, 1685.) Moreover, a dismissal, with prejudice, is a bar to any
future action involving the same subject matter. (Wouldridge v. Burns
(1968) 265 Cal.App.2d 82, 84.)
Plaintiffs’ claims against Chase are not barred by res judicata.
The bankruptcy court made no ruling regarding Plaintiffs’ allegations here
pertaining to Chase’s purported misconduct. Thus, the demurrer is not sustained
on res judicata grounds.
Statute of Limitations
The statute of limitations is an affirmative defense. The
delayed discovery rule is an exception to the affirmative defense of the
statute of limitations. If it is shown that an action would otherwise be
time-barred, a plaintiff wishing to avoid the statute of limitations bar may
rely on the delayed discovery rule. Such a plaintiff bears the burden of
proving its application. (Investors Equity Life Holding Co. v. Schmidt
(2011) 195 Cal.App.4th 1519, 1533.) “In order to rely on the discovery rule for
delayed accrual of a cause of action, a plaintiff whose complaint shows on its
face that his claim would be barred without the benefit of the discovery rule
must specifically plead facts to show (1) the time and manner of discovery and
(2) the inability to have made earlier discovery despite a reasonable
diligence.” (Fox Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)
In assessing the sufficiency of the allegations of delayed discovery, the court
places the burden on the plaintiff to “ ‘show diligence; ‘conclusory
allegations will not withstand demurrer.’” (Id.)
Statutory claims an reclaims sounding in fraud must be
brought within 3 years. (CCP §338(a), (c), and (d). This includes Plaintiffs’
claim for cancellation of instruments. (See Zakaessian v. Zakaessian
(1945) 70 Cal.App.2d 721, 725.) The statute of limitation for Plaintiffs’ UCL
claim is 4 years. (B&P Code §17208.)
Here, Plaintiffs allege that Chase created a forged
Assignment of DOT which was improperly recorded on December 12, 2008. (FAC
¶18.) Plaintiffs do not allege any facts to support the applicability of the
delayed discovery rule to bypass the statute of limitations defense. As
indicated, facts must be alleged—unsupported conclusory statements do not
suffice.
The demurrer to the first through sixth causes of action
based on the statute of limitations is properly SUSTAINED with 20 days leave to
amend.
First Cause of Action – Wrongful Foreclosure
“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 power of sale in a mortgage or
deed of trust; (2) the party attacking the sale 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.” (Sciarratta v. U.S. Bank Natl. Assn. (2016) 247 Cal.App.4th
552, 562.)
Plaintiffs’ wrongful foreclosure claim is based on their
contention that Chase lacked authority to foreclose because the Assignments are
void. (FAC §54 (d)-(i).) However, Plaintiffs
do not have standing to challenge the assignments. Yvanova v. New Century
Mortg. Corp. (2016) 62 Cal.4th 919 held that a borrower has
standing to challenge an assignment post-foreclosure only where the defect in
the assignment renders the assignment void rather than voidable. In Saterbak
v. JP Morgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 815, the court
held that such an assignment is merely voidable, not void, and that the
borrower lacks standing to challenge the assignment. “Yvanova expressly offers no opinion as to whether, under New York
law, an untimely assignment to a securitized trust made after the trust's
closing date is void or merely voidable. (Id.
at pp. 940–941, 199 Cal.Rptr.3d 66, 365 P.3d 845.) We conclude such an
assignment is merely voidable. (See Rajamin
v. Deutsche Bank Nat'l Trust Co. (2d Cir.2014) 757 F.3d 79, 88–89 [“the
weight of New York authority is contrary to plaintiffs' contention that any
failure to comply with the terms of the PSAs rendered defendants' acquisition
of plaintiffs' loans and mortgages void as a matter of trust law”; “an
unauthorized act by the trustee is not void but merely voidable by the
beneficiary”].) Consequently, Saterbak lacks standing to challenge alleged
defects in the MERS assignment of the DOT to the 2007–AR7 trust.” (Id.) Plaintiff urges the Court to
follow Glaski v. Bank of America, N.A. (2013) 128 Cal.App.4th 1079.
However, Glaski has been highly criticized. After Glaski was
decided, the New York trial court’s decision on which Glaski relied was
overturned. (Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th
802. 812.)
Moreover, to the extent Plaintiffs are attempting to allege
that the Assignments are void because they were robo-signed by MERS—
allegations regarding “robo-signing” would render the assignment voidable and
not void. (See Maynard v. Wells
Fargo Bank, N.A., 2013 WL 4883202, at *9 (S.D. Cal. 2013).
Based on the allegations of the FAC and the judicially
noticeable documents, it is unclear how the assignments are void. In the
interests of justice, the Demurrer to the first cause of action is SUSTAINED
with 20 days leave to amend.
Second Cause of Action – Cancellation of Instruments
The elements of a cause of action for instrument
cancellation are (1) a written instrument; (2) a reasonable apprehension that
it may cause serious injury to someone; (3) as to whom it is void or voidable.
(Cal. Civ. Code §3412.)
The demurrer to the second cause of action is SUSTAINED with
20 days leave to amend for the same reasons noted in the Court’s analysis under
the First Cause of Action. Plaintiffs have not successfully alleged that the
Assignments at issue are void.
Third Cause of Action – Quiet Title
The
elements for a quiet title action are: (1) a description of the property; (2)
Plaintiff’s title or interest and the basis; (3) defendant is asserting an
adverse claim or antagonistic property interest; (4) date as of which the
determination is sought; and (5) prayer for determination of title. (CCP
§761.020.) “[A]s a general matter an action to quiet title cannot be maintained
by the owner of equitable title as against the holder of legal title.” (Warren
v. Merrill (2006) 143 Cal.App.4th 96, 113.) However, where a party acquires
legal title through fraud, that party may hold the property “as a constructive
trustee for the defrauded party, and the defrauded party would “based on the
equities, [hold] superior title.” (Ibid.)
The
demurrer to the third cause of action is SUSTAINED with 20 days leave to amend.
As indicated, Plaintiffs do not sufficiently allege an equitable interest in
the subject property via fraud.
Fourth
Cause of Action – Violation of Cal. Civ. Code §2923.5
“A borrower may state a cause of action under [Civil Code]
section 2923.5 by alleging the lender did not actually contact the borrower or
otherwise make the required efforts to contact the borrower despite a contrary declaration
in the recorded notice of default. (Rossberg v. Bank of America, N.A.
(2013) 219 Cal.App.4th 1481, 1494.) However, for violation of Cal. Civ. Code
§2923.5, “the sole available remedy is ‘more time’ before a foreclosure sale
occurs. After the sale, the statute provides no relief.” (Stebley v. Litton
Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526.) Here, the foreclosure
sale has already occurred. Therefore, a remedy under Cal. Civ. Code §2923.5 is
not available.
Fifth Cause of Action – Unfair Competition
To state a claim under §17200, Plaintiffs must
allege whether the conduct complained of is a fraudulent, unlawful or an unfair
business practice. To bring a claim under the fraud prong, Plaintiffs must
allege an affirmative misrepresentation, conduct or business practice on the
part of a defendant; or an omission in violation of defendant’s duty to
disclose; and that is likely to deceive members of the public. (Buller v.
Sutter Health (2008) 160 Cal.App.4th 981, 986.) To state a claim under the
unfairness prong, Plaintiffs must allege that one or more of Defendant’s
business practices are unfair, unlawful or fraudulent; and the remedy sought is
authorized by law. (Paulus v. Bob Lynch Ford, Inc. (2006) 139
Cal.App.4th 659, 676; see also Kwikset Corp. v. Superior Court (2011) 51
Cal.4th 310, 337.) To state a claim under the unlawful prong, Plaintiffs must
allege a violation of law and cite that law. (Graham v. Bank of America,
N.A. (2014) 226 Cal.App.4th 594, 610 [demurrer to SAC which failed to
allege violation of a law was properly sustained without leave to amend].)
In light of the Court’s rulings above, the demurrer
to the first cause of action is SUSTAINED with 20 days leave to amend.
Sixth Cause of Action – Unjust Enrichment
Under the law of
restitution, an individual may be required to make restitution if he is
unjustly enriched at the expense of another.
A person is enriched if he receives a benefit at another's expense. (Ghirardo v. Antonioli (1996) 14 Cal.4th
39, 51.)
There is a split of authority across the appellate courts regarding
whether unjust enrichment is a cause of action or a principle of law. Jogani v. Superior Court (2008) 165
Cal.App.4th 901, 911 and Melchior v.
New Line Prods., Inc. (2003) 106 Cal.App.4th
779, 794 hold that unjust enrichment is a principle underlying various
doctrines and remedies, including quasi-contract. On the other hand, Hirsch v. Bank
of America (2003) 107 Cal.App.4th 708, First Nationwide
Savings v. Perry (1992) 11 Cal.App.4th 1657, and Lectrodryer
v. Seoul Bank (2000) 77 Cal.App.4th 723 view it as a separate
cause of action.
Regardless of whether
unjust enrichment is a cause of action or not, Plaintiff may still allege it as
a theory supporting the remedy of rescission.
A complaint may state multiple legal theories upon which recovery might
be predicated for one claim for relief.
(Newhall Land & Farming Co. v. Superior Court (1993) 19 Cal.
App. 4th 334, 351.)
Accordingly, the
demurrer to the sixth cause of action is SUSTAINED with 20 days leave to amend.
Plaintiff has not sufficiently alleged facts to support the remedy of
rescission (e.g., quasi-contract).
Motion to Strike
The Motion to Strike
Portions of Plaintiffs’ First Amended Complaint is rendered MOOT by the Court’s
ruling on the Demurrer above.
Upcoming Demurrers
The Court notes that other Defendants in this action have
Demurrers scheduled for January 24, 2023, and January 26, 2023.