Judge: Maurice A. Leiter, Case: 23STCV30760, Date: 2024-08-15 Tentative Ruling

Case Number: 23STCV30760    Hearing Date: August 15, 2024    Dept: 54

Hearing Date: August 15, 2024

Department 54, Judge Maurice Leiter

Demurrer to First Amended Complaint; Motions to Strike

Moving Party: Defendant US Bank Trust National Association, as Trustee of FW-BKPL Series I Trust; Defendant Wells Fargo Bank, N.A.

Responding Party: Plaintiff Hsiang Chi “Lisa” Huang

T/R:     DEFENDANT US BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE OF FW-BKPL SERIES I TRUST’S DEMURRER IS SUSTAINED WITH 30 DAYS LEAVE TO AMEND AS TO THE FIRST, SECOND, AND EIGHTH CAUSES OF ACTION AND OVERRULED AS TO THE FIFTH CAUSE OF ACTION.

            THE MOTIONS TO STRIKE FILED BY DEFENDANT US BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE OF FW-BKPL SERIES I TRUST AND DEFENDANT WELLS FARGO BANK, N.A. ARE BOTH GRANTED WITH 30 DAYS LEAVE TO AMEND.

            DEFENDANT WELLS FARGO BANK, N.A. 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

This is an action arising from the alleged wrongful foreclosure of real property located at 1806 Camden Avenue, South Pasadena, CA 91030. On December 18, 2023, Plaintiff Hsiang Chi “Lisa” Huang sued Defendants Wells Fargo Bank, N.A., U.S. Bank Trust National Association, as Trustee of FW-BKPL Series I Trust, Clear Recon Corp., Massis Tarbinian, and Houry Kelian. On March 14, 2024, Plaintiff filed the operative First Amended Complaint (“FAC”) alleging causes of action for (1) wrongful foreclosure; (2) breach of contract; (3) breach of contract; (4) negligence; (5) negligence; (6) cancellation of instruments; (7) quiet title; and (8) violation of Bus. and Prof. Code § 17200, et seq.

On May 13, 2024, Plaintiff dismissed the fourth cause of action against Wells Fargo. The second and eighth causes of action are the only ones asserted against Wells Fargo.

On May 22, 2024, Plaintiff filed a Substitution of Attorney Form indicating that she was now self-represented.

Before the Court are Wells Fargo’s Motion to Strike, and US Bank’s demurrer to the first, second, fifth, and eighth causes of action in the FAC, and its motion to strike.

Plaintiff’s opposition to US Bank’s demurrer indicates that she is now represented by Adam Apollo, Esq. Mr. Apollo has not substituted into this action through a substitution of attorney form. The Court will consider Plaintiff’s opposition to the demurrer. Plaintiff is advised to comply with the requirements of the Code of Civil Procedure and California Rules of Court.

JUDICIAL NOTICE

            The Court GRANTS Defendant US Bank’s request for judicial notice. (Evid. Code §§ 452, 453.)  

ANALYSIS

“A demurrer tests the sufficiency of a complaint as a matter of law.”  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) “[T]he court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.”  (Ibid.) A demurrer accepts as true all well pleaded facts and those facts of which the court can take judicial notice but not deductions, contentions, or conclusions of law or fact. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) Although courts construe pleadings liberally, sufficient facts must be alleged to support the allegations pled to survive a demurrer. (Rakestraw v. California Physicians' Serv. (2000) 81 Cal.App.4th 39, 43.) In ruling on a demurrer, “[t]he complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436(a).) The court also may strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436(b).)

A. First Cause of Action for Wrongful Foreclosure  

            “The basic elements of a tort cause of action for wrongful foreclosure track the elements of an equitable cause o faction to set aside a foreclosure sale.” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408.) “They are: (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a 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.” (Ibid.) “[M]ere technical violations of the foreclosure process will not give rise to a tort claim; the foreclosure must have been entirely unauthorized on the facts of the case.” (Id. at p. 409.) A plaintiff is “required to allege tender of the amount of . . . indebtedness in order to maintain any cause of action for irregularity in the sale procedure . . . .” (Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109.)

            Plaintiff’s allegations that she fully performed under the Loan Agreement by paying the loan continuously and regularly and “was not in default either under the Loan or the conditions within the Deed of Trust” conflict with US Bank’s Request for Judicial Notice. (FAC, ¶ 29.) The Court “disregard[s] any allegations of [a] complaint that conflict with judicially noticed documents as well as those that represent bare legal conclusions.” (York v. City of Los Angeles (2019) 33 Cal.App.5th 1178, 1193.) As of April 29, 2022, Plaintiff was in default in the amount of $23,310.63 as to the Deed of Trust. (RJN at Ex. 16.) Plaintiff failed to cure the default pursuant to the Deed of Trust. (RJN at Ex. 17.) Plaintiff makes no allegation that she tendered the amount of indebtedness. (FAC, ¶ 32.) Plaintiff’s allegation that she was not in default conflicts with Defendant US Bank’s request for judicial notice. Plaintiff has failed to allege that she tendered the amount of indebtedness; the first cause of action is insufficient.

            The Court SUSTAINS the demurrer of US Bank to the first cause of action in the FAC with 30 days leave to amend.

B. Second Cause of Action for Breach of Contract   

To state a cause of action for breach of contract, a party must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.) “

            The second cause of action for breach of contract is insufficiently alleged. (FAC, ¶¶ 37-42.) Plaintiff has failed to set forth the verbatim language of the Loan Agreement and Deed of Trust or to attach a copy of the documents to the FAC. Plaintiff merely alleges that “[u]nder the Loan Agreement and Deed of Trust, Plaintiff . . . agreed to pay the total loan amount of $166,200. The Loan owner, Defendant [Wells Fargo] has a duty to accept Plaintiff’s . . . monthly repayment if Plaintiff . . . tenders the payment in a way that complies with the agreement.” (FAC, ¶ 38.) Plaintiff has not stated the terms of repayment or the payment instructions.

The demurrer of US Bank to the second cause of action is SUSTAINED with 30 days leave to amend.  

C. Fifth Cause of Action for Negligence    

            To state a cause of action for negligence, a plaintiff must allege the following: (1) a legal duty to use due care; (2) a breach of such legal duty; and (3) the breach as the proximate or legal cause of the resulting injury. (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.) Whether a duty of care exists is a question of law to be determined on a case-by-case basis. (Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 472.)

“Lenders and borrowers operate at arm’s length.” (Lueras v. BAC Home Loans Servicing (2013) 221 Cal.App.4th 49, 64.) “[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” (Ibid.) “Liability to a borrower for negligence arises only when the lender actively participates in the financed enterprise beyond the domain of the usual money lender.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) “In general, there is not recovery in tort for negligently inflicted purely economic losses, meaning financial harm unaccompanied by physical or property damage.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) This economic loss rule also “functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties.” (Ibid.)

            The economic loss rule does not bar Plaintiff’s cause of action for negligence because Plaintiff has alleged she lost her ownership interest in the Property. (FAC, ¶ 57.) Plaintiff has not alleged only economic losses. Plaintiff alleges that US Bank did not provide proper notice of prior alleged defaults or of the subsequent foreclosure sale. (FAC, ¶ 55.) Plaintiff alleges that Defendant US Bank breached its duty to provide possible foreclosure alternatives to Plaintiff. (FAC, ¶¶ 52-53.)

            The demurrer to the fifth cause of action for negligence in the FAC is OVERRULED.

D. Eighth Cause of Action for Violation of Bus. and Prof. Code § 17200, et seq.

            California Business and Professions Code section 17200 prohibits “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code § 17200; see Clark v. Superior Court (2010) 50 Cal.4th 605, 610.) “An unlawful business practice or act is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law.” (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.)¿As for fraud, to establish a fraudulent practice under the UCL, the plaintiff must show that members of the public are likely to be deceived. (See West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 806.)¿Lastly, “[a] business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.) A cause of action for violation of Bus. & Prof. Code § 17200 must be directed “at a minimum, ongoing conduct.” (Mangini v. Aerojet-General Corp. (1991) 230 Cal.App.3d 1125, 1156.)

            The eighth cause of action is insufficiently alleged. Plaintiff alleges only past conduct but does not allege any ongoing conduct by US Bank. (FAC, ¶¶ 68-77.)

            The Court SUSTAINS the demurrer of US Bank to the eighth cause of action in the FAC with 30 days leave to amend.

E. Motions to Strike  

            US Bank and Wells Fargo each filed motions to strike. Plaintiff failed to oppose either one. Plaintiff has conceded to the arguments in the motions to strike; “[c]ontentions are waived when a party fails to support them with reasoned argument and citations to authority.” (Moulton Niguel Water Dist v. Colombo (2003) 111 Cal.App.4th 1210, 1215.)

            The Court has sustained the demurrers to the first, second, and eighth causes of action. The Court GRANTS the motions to strike with 30 days leave to amend.