Judge: Lee W. Tsao, Case: 22NWCV00078, Date: 2023-09-07 Tentative Ruling
Case Number: 22NWCV00078 Hearing Date: October 26, 2023 Dept: C
MONTEJANO v. JP MORGAN CHASE BANK
CASE NO.: 22NWCV00078
HEARING: 10/26/23
#4
I.
Defendant JPMORGAN CHASE BANK, N.A.’s Demurrer
to Plaintiffs’ Second Amended Complaint is SUSTAINED with 10 days leave to
amend.
II.
Defendant JPMORGAN CHASE BANK, N.A.’s Motion to
Strike Portions of Plaintiffs’ Second Amended Complaint is MOOT.
III.
Defendant SELECT PORTFOLIO SERVICING, INC. and
U.S. BANK, NA’s Demurrer to Plaintiffs’ Second Amended Complaint is SUSTAINED
with 10 days leave to amend.
IV.
Defendant SELECT PORTFOLIO SERVICING, INC. and
U.S. BANK, NA’s Motion to Strike Portions of Plaintiffs’ Second Amended
Complaint is MOOT.
V.
Defendant QUALITY LOAN SERVICE CORPORATION’s
Demurrer to Plaintiffs’ Second Amended Complaint is SUSTAINED with 10 days
leave to amend leave to amend.
Moving Parties to give notice.
A Vesco Hearing is also scheduled for hearing on October 26,
2023 at 9:30 a.m. Dept. SE-C under Vesco v. Superior Court of Ventura (2013) 221
Cal.App.4th 275.
These matters were originally set for hearing on September
7, 2023. Therefore, Plaintiffs’ Opposition was supposed to be filed by August
24, 2023. (CCP §1005(b).) Without leave of Court, Plaintiffs filed an untimely
Opposition on September 5, 2023—2 days before the hearing. The untimely
Opposition memorandum is about 30 pages long, which exceeds the maximum page
limit set by the California Rules of Court. (see CRC Rule 3.1113(d).) In the
interests of justice and judicial efficiency, the Court exercised its discretion
to consider Plaintiffs’ untimely and procedurally defective Opposition papers.
These matters were CONTINUED as indicated above, and Moving Parties were
permitted to file Replies.
Defendants JP MORGAN CHASE BANK, N.A.; and SELECT PORTFOLIO
SERVICING, INC. and U.S. BANK, NA’s Requests for Judicial Notice are GRANTED.
(Cal. Ev. Code §452.)
Plaintiffs’ Request for Judicial Notice of Exhibits a, B,
and C is GRANTED. (Cal. Ev. Code §452.) Plaintiffs’ Request for Judicial Notice
of Exhibits E and F is DENIED—these documents are not properly subject to
judicial notice.
This action for
quiet title was filed on January 31, 2022. The operative Second Amended
Complaint (“SAC”) filed on March 20, 2023 asserts the following causes of
action: (1) Wrongful Foreclosure; (2) Cancellation of Instruments; (3) Quiet
Title; (4) Violation of Cal. Civ. Code §2923.5; and (5) Unfair Competition.
Plaintiffs MINA
MONTEJANO an individual, and JUAN MORALES MATA of the LU100 Trust dated July
10, 2019 (collectively “Plaintiffs”) (in pro per) allege that “Plaintiffs
discovered… there were Assignments, Substitutions, Notice of Default, Notice of
Trustee Sale, and Trustee’s Deed Upon Sale that were either created without
authority or in violation of the HBOR Act.” (SAC ¶22.)
Defendant JPMORGAN CHASE BANK, N.A. (“Chase”) generally
demurs to every cause of action. In addition, Chase argues that the entire SAC
is barred by the doctrine of judicial estoppel and the statute of limitations.
Chase also specially demurs to each cause of action on grounds of uncertainty.
SELECT PORTFOLIO SERVICING, INC. and U.S. BANK, NA (“U.S.
Bank”) generally demurs to every cause of action. U.S. Bank also argues that
the entire SAC is barred by the doctrine of judicial estoppel.
Defendant QUALITY LOAN SERVICE CORPORATION (“Quality Loan”)
generally demurs to the first, second, third, and fifth causes of action, and
additionally argues that the second cause of action is barred by the statute of
limitations. The Court notes that the fourth cause of action is not asserted
against Quality Loan.
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. Chase’s demurrer is not sustained on
the basis of judicial estoppel.
Judicial Estoppel
as to U.S. Bank
Plaintiffs’ claims
against U.S. Bank, as alleged, are precluded by judicial estoppel.
Plaintiffs allege inconsistent positions from previously filed bankruptcy
actions. Mina Montejano acknowledged in previously filed bankruptcy filings
that SPS/US Bank was the lender and Mina Montejano did not dispute the loan. U.S. Bank’s demurrer is SUSTAINED with 10
days leave to amend as to US Bank on judicial estoppel grounds.
Statute of Limitations as to Chase and Quality Loan
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, and that
consequently, US Bank never acquired any rights, title, or interest to
Plaintiff’s DOT. (SAC ¶26.) 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 fifth causes of action
based on the statute of limitations is properly SUSTAINED with 10 days leave to
amend as to Chase.
The demurrer to the
second cause of action based on the statute of limitations is properly
SUSTAINED with 10 days leave to amend as to Quality Loan.
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 SAC and the judicially
noticeable documents, it is unclear how the assignments are void.
The demurrers to the first cause of action are SUSTAINED with
10 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 demurrers to the second cause of action are SUSTAINED with
10 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
demurrers to the third cause of action are SUSTAINED with 10 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.
The demurrers to the fourth cause of action are SUSTAINED with
10 days leave to amend.
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 demurrers
to the fifth cause of action are SUSTAINED with 10 days leave to amend.
Motions to Strike
The Motions to Strike
Portions of Plaintiffs’ Second Amended Complaint are rendered MOOT by the
Court’s ruling on the Demurrer above.
Leave to Amend
The Court’s tentative
rulings are to sustain the demurrers without further leave to amend (as
indicated above). Leave to amend is allowed where there is a reasonable
probability that the defects can be cured by amendment. However, “[t]he burden
of proving such reasonable possibility is squarely on [Plaintiffs].” (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318.)
Given Plaintiffs arguments in Opposition, and the liberality associated
with granting leave to amend—leave to amend is permitted as indicated above.