Judge Mark A. Young, Case SC129804 2023-03-03 Tentative Ruling

Judge: Mark A. Young, Case: SC129804, Date: 2023-03-03 Tentative Ruling

Case Number: SC129804 Hearing Date: March 3, 2023 Dept: M

CASE NAME: Roberts, et al., v. Bank of America, N.A., et al.

CASE NO.: SC129804

MOTION: Demurrer to the Fifth Amended Complaint

HEARING DATE: 3/3/2023

Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. 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 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. (CCP §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations omitted.)

A special demurrer for uncertainty is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP § 435(b)(1); Cal. Rules of Court, Rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)

“Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading. (Id.)

Analysis

BANA’s request for judicial notice is GRANTED.

Defendant Bank of America N.A. (“BANA”) demurs to Plaintiff’s second cause of action for fraud. BANA argues that the allegations of intent to induce reliance on the misrepresentation are conclusory, fails to establish knowledge of falsity by any BANA representative, or allege damages stemming from any misrepresentation.

The elements of fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) In California, fraud must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

“A plaintiff asserting fraud by misrepresentation is obliged to plead and prove actual reliance, that is, to “ ‘establish a complete causal relationship’ between the alleged misrepresentations and the harm claimed to have resulted therefrom.” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835.) Aside actual reliance, a plaintiff must also show “justifiable” reliance, i.e., “circumstances were such to make it reasonable for [the] plaintiff to accept [the] defendant's statements without an independent inquiry or investigation.’” (Id. at 864.) The relevant intent is to induce reliance on the representation, not to defraud, deceive or produce a particular harm. (Small v. Fritz Cos., Inc. (2003) 30 Cal.4th 167, 173-174.)

The Court concludes that the 5AC meets the heighted pleading standard for fraud. As previously discussed, Plaintiff specified the who-what-when-where-how-by what means required for specificity. Moreover, Plaintiff now alleges BANA’s intent to induce reliance on the misrepresentations, and knowledge of the truth at the time of the representation, which are quintessential questions of fact. BANA employees made the misrepresentations “without the intention to perform.” knowing that “no loan modification would take place and they would file a notice of foreclosure.” (5AC ¶ 18.) BANA “intended to induce reliance on their BANA misrepresentations” regarding the loan modification and foreclosure. (¶¶ 18-19.) Defendant never intended to make any arrangement with Plaintiff regarding modification, a 2% loan reduction over 30 years, working with plaintiff as to payments on the subject Note, or to not notice a foreclosure as represented. (¶ 20.) BANA “had the full facts and more knowledge than the plaintiff… BANA possessed full information concerning the facts[.]” (¶ 19.) The allegations concerning Plaintiff’s reliance also state how Plaintiff was substantially damaged beyond the loss of her house due to foreclosure. If not for the promise of a modification, Plaintiff would have sought various alternative financing which was available to her but was prevented due to Defendant’s promises. (¶¶ 19-20, 22.) Further, the Notice of Foreclosure impacted Plaintiff’s credit capacity. (Id.) This has resulted in out of pocket expenses, disabling plaintiff from getting lower interest loans, additional penalties and interest, which would not have occurred but for the loan modification. (¶ 22.)

These allegations are sufficient for pleading purposes. Furthermore, these facts are sufficient to state a breach of an independent duty beyond a breach of any previously pled contract. Accordingly, Defendant’s demurrer is OVERRULED. Defendant to file an answer within ten days.