Judge: Mark H. Epstein, Case: 24SMCV01240, Date: 2024-06-17 Tentative Ruling

Case Number: 24SMCV01240    Hearing Date: June 17, 2024    Dept: I

This action is brought by plaintiff to stop a non-judicial foreclosure and to obtain damages.  Plaintiff alleges that there was a loan dated 11/18/25 with Encore Credit Corporation as the lender in the amount of $712,000.  A Deed of Trust was executed.  On April 20, 2011, defendant Mortgage Electronic Registration Systems (MERS) recorded an assignment of the deet of trust and thereafter transferred the beneficial interest under the trust to Recontrust Company (RC).  On December 9, 2005, RC allegedly unlawfully caused a document to be recorded substituting the trustee.  On November 18, 2019, defendant Peak Foreclosure (Peak) recorded a Notice of Default, allegedly without proper contact with or notice to plaintiff.  Plaintiff alleges that on February 21, 2024, Peak recorded a Notice of Trustee’s Sale, even though it was not the duly appointed trustee.  Plaintiff seeks damages against RC, Bank of New York Mellon (BONY), Peak, and MERS for the unlawful commencement of the non-judicial foreclosure and specifically for not complying with the Homeowners Bill of Rights (HBOR).  RC has demurred; plaintiff has not opposed.

The fact that plaintiff did not oppose the motion is not a concession that the demurrer should be sustained.  Rather, the court must look at the demurrer independently and determine whether it has merit.  That means that RC must show that the factual allegations, even if true, would not set forth a cause of action.  While the court must take the allegations in the complaint as true as a general matter, the court can also consider documents attached to the complaint, documents upon which the complaint relies if there is no dispute as to their contents, and documents and facts of which the court can take judicial notice.  Where that information or material conflicts with an allegation in the complaint, the court need not accept the allegation as true.

Plaintiff alleges that on April 20, 2011, MERS recorded the assignment of the deed of trust conveying the beneficial interests to RC.  Exhibit B to the complaint, however, shows that on that date the assignment was to BONY, not RC.  The court can accept as true Exhibit B to the complaint notwithstanding the contrary allegation.  As such, it appears that RC is not the holder of the beneficial interests; BONY is.  That fact alone undercuts the causes of action in the complaint.  Accordingly, the demurrer is SUSTAINED WITH LEAVE TO AMEND.  Beyond that, the complaint does not plead fraud with the requisite specificity, and the demurrer is SUSTAINED on that ground as well.  The same problem infects the UCL cause of action.  Paragraphs 44 and 45 of the complaint list legal conclusions, but the court cannot tell what specific activities are unlawful, fraudulent, or unfair.  The demurrer to that cause of action is SUSTAINED.

There are other bases for the demurrer, but in light of the foregoing, the court need not, and does not reach them.

Plaintiff has 30 days leave to amend.