Judge: Maurice A. Leiter, Case: 22STCV26395, Date: 2023-05-19 Tentative Ruling

Case Number: 22STCV26395    Hearing Date: September 13, 2023    Dept: 54

Hearing Date: September 13, 2023

Department 54, Judge Maurice A. Leiter

Demurrer to Second Amended Complaint

Moving Party: Defendant Trinity Financial Services LLC

Responding Party: Plaintiff Nicole Shepherd

T/R:      TRINITY’S DEMURRER IS OVERRULED.

TRINITY TO FILE AND SERVE AN ANSWER TO THE SECOND AMENDED COMPLAINT WITHIN 30 DAYS OF NOTICE OF RULING.

TRINITY TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, opposition, and reply.

BACKGROUND

On July 12, 2023, Plaintiff Nicole Shepherd filed the operative second amended complaint against Defendants Trinity Financial Services, LLC, et al., asserting causes of action for (1) temporary injunction; (2) permanent injunction; (3) cancellation of deed of trust; (4) quiet title; (5) declaratory relief; (6) fraud; (7) UCL violations; (8) negligent misrepresentation; (9) violation of Civ. Code 2924.17; (10) violation of the Rosenthal Act; (11) violation of Civ. Code 1788.52; (12) breach of contract; (13) breach of the covenant of good faith and fair dealing; and (14) slander of title.

In 2006, Plaintiff executed two deeds of trust in favor of lender Right-Away Mortgage. In 2009, Plaintiff received a modification of the first loan. In 2013, Plaintiff again received a modification, believing both loans had been rolled into one. In 2020, Right-Away assigned the second loan to Trinity. After Plaintiff filed for chapter 13 bankruptcy, Trinity sought to foreclose on the second loan and collect 14 years of interest. Plaintiff asserts the second mortgage should have been extinguished under the Homeowner’s Affordable Modification Program (“HAMP”).

REQUEST FOR JUDICIAL NOTICE

Trinity’s requests for judicial notice are GRANTED as to the existence of the documents, but not as to the truth of the matters asserted in them.

ANALYSIS

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action in it.  (CCP § 430.50(a).)  A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations.  (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.)  The court must treat as true the complaint's material factual allegations, but not contentions, deductions or conclusions of fact or law.  (Id. at 732-33.)  The complaint is to be construed liberally to determine whether a cause of action has been stated.  (Id. at 733.)

A. Fraud and Negligent 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, including negligent misrepresentation, 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.)

Trinity asserts that Plaintiff has failed to allege fraud with the requisite specificity. Plaintiff alleges Trinity misrepresented its authority to collect on the second mortgage. Plaintiff alleges,

84. TRINITY’s statements concerning the amount of the debt to the Plaintiff, such as its November 11, 2022, statement that Plaintiff owed $363,996.51 were not accurate, nor were they true…

…90. Trinity repeatedly represented to the Plaintiff, in writing, from 2020 until just a few weeks ago that it did have said authority…

…91. Some examples of same are Trinity’s payoff demand sent to Plaintiff, dated November 1, 2022, claiming $363,996.51 was owed on the loan, and containing language such as “Make disbursement payment payable to: Trinity Financial Services, LLC” and “THIS IS AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. THIS IS A COMMUNICATION FROM A DEBT COLLECTOR.” In addition, the Plaintiff received a payoff demand, which was dated December 17, 2019, but not received until late June 2020, which contained the same language, and stated that $324,010.15 was owed on the loan.

Plaintiff claims she relied on the misrepresentations by delaying any challenge to Defendant’s loan, resulting in Defendant foreclosing. This is sufficient to state causes of action for fraud.

The demurrer to the sixth and eighth causes of action is OVERRULED.

B. Violation of Civil Code § 2924.17 and Rosenthal Act

Civil Code § 2924.17 provides, “a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure […] shall be accurate and complete and supported by competent and reliable evidence.” The Rosenthal Act prohibits debt collectors from using deceptive collection practices.

Plaintiff alleges Defendant filed a notice of default that was not supported by competent or reliable evidence, and Defendant used deceptive collection practices. This is sufficient to state causes of action for violation of Civil Code § 2924.17 and the Rosenthal Act.

The demurrer to the ninth and tenth causes of action is OVERRULED.

C. Breach of the Implied Covenant of Good Faith and Fair Dealing

Defendant demurs to the cause of action for breach of the implied covenant of good faith and fair dealing on the ground that it is duplicative of the claim for breach of contract. The Court declines to sustain the demurrer on this basis. Plaintiff may allege multiple theories of liability.

The demurrer to the thirteenth cause of action is OVERRULED.

D. Slander of Title

Defendant asserts the claim for slander of title fails because it did not record the NOD and NOTS with malicious intent. Plaintiff alleges otherwise.

The demurrer to the fourteenth cause of action is OVERRULED.