Judge: Mel Red Recana, Case: 24STCV14265, Date: 2024-11-06 Tentative Ruling
Case Number: 24STCV14265 Hearing Date: November 6, 2024 Dept: 45
Hearing
date: November 6, 2024
Moving
Party: Defendant Select Portfolio
Servicing, Inc.
Responding
Party: Unopposed
Demurrer
to Complaint
The Court considered
the moving papers.
The
demurrer is SUSTAINED with 30 days leave to amend.
Background
On June 7, 2024,
Plaintiff Nicole Alexandra Feryanitz (“Plaintiff”) filed a Complaint against
Defendants Select Portfolio Servicing, Inc. (“SPS”); MTC Financial Inc. dba
Trustee Corps. (“MTC”); Athas Capital Group (“ACG”); Malcolm Cisneros
(“Cisneros”); All Persons Claiming Legal, Equitable Lien and Estate in the
Property located at 21231 Dove Circle, Huntington Beach, CA 92646 APN.149 403
20 (collectively, “Defendants”); and DOES 1 through 20, inclusive for: (1) Injunction
Enjoining Defendant from Foreclosing on the Property; (2) Unfair Business
Practice; and (3) Declaratory Relief.
On August 7, 2024,
Defendant SPS filed the instant Demurrer to Complaint. No opposition has been
filed.
Legal
Standard
“The primary function of a pleading is to give the other party notice so
that it may prepare its case [citation], and a defect in a pleading that
otherwise properly notifies a party cannot be said to affect substantial
rights.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.)¿
“A¿demurrer¿tests the legal sufficiency of the factual allegations in a
complaint.” (Ivanoff v. Bank of America, N.A.¿(2017) 9 Cal.App.5th 719,
725.) The Court looks to whether “the complaint alleges facts sufficient to
state a cause of action or discloses a complete defense.” (Id.) The
Court does not “read passages from a complaint in isolation; in reviewing a
ruling on a demurrer, we read the complaint ‘as a whole and its parts in their
context.’ [Citation.]” (West v. JPMorgan Chase Bank, N.A. (2013) 214
Cal.App.4th 780, 804.) The Court “assume[s] the truth of the properly pleaded
factual allegations, facts that reasonably can be inferred from those expressly
pleaded and matters of which judicial notice has been taken.” (Harris, supra,
56 Cal.4th p. 240.) “The court does not, however, assume the truth of
contentions, deductions or conclusions of law. [Citation.]” (Durell v. Sharp
Healthcare (2010) 183 Cal.App.4th 1350, 1358.)¿¿¿
¿ A general demurrer may be brought
under Code of Civil Procedure section 430.10, subdivision (e) if insufficient
facts are stated to support the cause of action asserted or under section
430.10, subdivision (a), where the court has no jurisdiction of the subject of
the cause of action alleged in the pleading. All other grounds listed in
Section 430.10, including uncertainty under subdivision (f), are special
demurrers. Special demurrers are not allowed in limited jurisdiction courts.
(Code Civ. Proc., § 92, subd. (c).)¿¿¿
¿ Leave to amend must be allowed where
there is a reasonable possibility of successful amendment. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to
show the Court that a pleading can be amended successfully. (Id.)¿¿
Request
for Judicial Notice
Defendant SPS’ request for judicial
notice of (1) Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing recorded on 09/21/22 as Instrument No. 2022200031071 – Ex. 1;
(2) Grant Deed recorded on 04/10/24 as Instrument No. 2024000089593 – Ex. 2;
and (3) Notice of Default and Election to Sell under Deed of Trust recorded on
12/20/23 as Instrument No. 2023000312994 – Ex. 3.
The request for judicial notice is
GRANTED pursuant to Evidence Code Sections 452(c), (d), (h).
Discussion
Meet and Confer
Prior to filing
a demurrer, the demurring party is required to meet and confer with the party
who filed the pleading demurred to for the purposes of determining whether an
agreement can be reached through a filing of an amended pleading that would
resolve the objections to be raised in the demurrer. (Code Civ. Proc., § 430.41.)¿¿¿
Here, SPS counsel
of record, Paula Hernandez, attests to meet and confer efforts prior to the
filing of the present demurrer in the moving papers. (Dem. at 2:13-15.) Ms. Hernandez
states the parties met and conferred telephonically did not reach an agreement
regarding amendment. (Id.) However, the declaration regarding the meet
and confer states Plaintiff’s counsel failed to respond Ms. Hernandez request
to meet and confer or otherwise failed to meet and confer in good faith by
checking the box for Item 2(b). The Court is unclear if Ms. Hernandez
inadvertently checked the wrong box item on the declaration form due to the
inconsistency with the representations made in the moving papers.
Nonetheless, the
Court will exercise its discretion and rule on the merits below.
Demurrer
Defendant
SPS demurs to the entire on the grounds that the first, second, and third
causes of action fail to state sufficient facts to constitute a cause of action
against SPS.
First Cause of Action
for Injunctive Relief
First, SPS
contends Plaintiff has no standing to seek injunctive relief for violation of
the California Homeowner Bill of Rights (“HBOR”) codified under Civil Code
Section 2923.4 because the Property is not owner-occupied, Plaintiff does not
allege in the Complaint that the Property is her primary residence, and
judicially noticeable documents demonstrate that she transferred her interest
in the Property to a corporation called Dove Enterprises Inc. on April 9, 2024.
“To qualify for
a permanent injunction, the plaintiff must prove (1) the elements of a cause of
action involving the wrongful act sought to be enjoined (here, declaratory
relief); and (2) the grounds for equitable relief.” (San Diego Unified Port
Dist. v. Gallagher (1998) 62 Cal.App.4th 501, 503.)
Civil Code
Section 2923.4, subdivision (a) states in pertinent part: “The purpose of the
act that added this section is to ensure that, as part of the nonjudicial
foreclosure process, borrowers are considered for, and have a meaningful
opportunity to obtain, available loss mitigation options, if any, offered by or
through the borrower’s mortgage servicer, such as loan modifications or other
alternatives to foreclosure. Nothing in the act that added this section,
however, shall be interpreted to require a particular result of that process.”
(Civ. Code, § 2923.4, subd. (a); see also Penermon v. Wells Fargo Bank, N.A.
(N.D. Cal. 2014) 47 F.Supp.3d 982, 993.)
The HBOR “…is
limited in that it only applies to foreclosures of first liens on owner-occupied,
on-to-four unit properties.” (Ibid.) Under Civil Code Section 2924.15,
subdivision (a)(1)(B), “ ‘owner-occupied’ means that the property is the
principal residence of the borrower and is security for a loan made for
personal, family, or household purposes.” (Civ. Code, § 2924.15, subd. (a); see
also Adams v. Bank of America, N.A. (2020) 51 Cal.App.5th 666, 673.)
The Complaint alleges
the following: Plaintiff is the equitable owner of the subject property located
at 21231 Dove Circle, Huntington Beach, CA 92646 APN.149 403 20 (the
“Property”) pursuant to a Deed of Trust (“DOT”) executed on September 22, 2022.
(Compl., ¶2.) The DOT is in favor of Defendants and their predecessors in
interest. (Id. at ¶10.) Defendants have not considered Plaintiff for a
loan modification or her request for approval of a short sale on the basis she
does not qualify. (Id. at ¶¶11-12.) Unless enjoined by an order of the
Court, Defendants will foreclose on the Property and render Plaintiff homeless.
(Id. at ¶¶16, 21-24.)
Assuming the
truth of the Complaint allegations and the judicially noticeable documents, one
could reasonably infer the equitable owner of the Property in 2022 was
Plaintiff. However, based on the judicially noticeable documents on could
reasonably infer that the equitable owner is Dove Enterprises Inc. as of April
10, 2024. (RJN, Ex. 2.) Furthermore, the Complaint is devoid of any factual
allegations that Plaintiff occupies the Property or that it is her principal
place of residence as required by HBOR.
Therefore, the
demurrer is SUSTAINED with 30 days leave to amend as to the first cause
of action.
Second Cause of
Action for Unfair Business Practice
Next, SPS
contends the second cause of action fails because it is derivative of
Plaintiff’s first cause of action.
“To bring a UCL
claim, a plaintiff must show either an (1) ‘unlawful, unfair, or fraudulent
business act or practice,’ or (2) ‘unfair, deceptive, untrue or misleading
advertising.” (Adhav v. Midway Rent A Car, Inc. (2019) 37 Cal.App.5th
954, 970.)
The Complaint
alleges the following: Defendants have engaged in unfair conduct by having and
continuing to string Plaintiff along but refuse to consider Plaintiff for a
loan modification or any alternative means of retention including a loan
modification or a short sale. (Compl., ¶27.) Defendants have failed to comply
with Federal and California provisions implemented to enable homeowners to
retain their homes and avoid foreclosure sale and eviction. (Id. at
¶¶11, 25.)
Assuming the
truth of the Complaint allegations, one could reasonably infer that Defendants
purported unfair conduct is based on violations of the HBOR. Thus, the second
cause of action is derivative of the first cause of action and fails for the
reasons set forth above.
Therefore, the
demurrer is SUSTAINED with 30 days leave to amend as to the second cause
of action.
Third Cause of
Action for Declaratory Relief
Finally, SPS
contends the third cause of action fails because the Complaint fails to plead
that an actual controversy exists, i.e., the invalidity of the DOT.
“To qualify for
declaratory relief under section 1060, plaintiffs were required to show their
action (as refined on appeal) presented two essential elements: ‘(1) a proper
subject of declaratory relief, and (2) an actual controversy involving
justiciable questions relating to the rights or obligations of a party.’ ” (Lee
v. Silveira (2016) 6 Cal.App.5th 527, 546.)
The Complaint
alleges the following: Plaintiff contends that she is entitled to a loan
modification of her loan or an opportunity to do a short sale of the Property
in lieu of foreclosure, whereas Defendants dispute such contentions. (Compl.,
¶¶29, 32.) Defendants assert Plaintiff is not qualified for a loan modification
at all. (Id. at ¶32) There is an actual controversy as to the
enforceability and existence of the DOT. (Id. at ¶34.) Plaintiff desires
a judicial determination of her rights and duties, and a declaration that
Defendants are obligated to assist Plaintiff exhaust all reasonable efforts for
Plaintiff to retain her home. (Id. at ¶33.) Plaintiff seeks judicial
declaration vacating the foreclosure sale date of June 22, 2024 until Plaintiff
is considered for a loan modification, or a short sale option to sell the
Property and payoff Defendants’ loan in lieu of a foreclosure sale. (Id.
at ¶35.)
Assuming the
truth of the Complaint allegations, one could reasonably infer that the parties
disagree as to whether or not Plaintiff is entitled a loan modification or
short sale in lieu of a foreclosure sale. However, the Complaint is devoid of
any factual allegations as to the DOT being invalid and unenforceable. By
contrast, one could reasonably infer from the judicially noticeable documents
that the DOT is valid.
Therefore, the
demurrer is SUSTAINED with 30 days leave to amend as to the third cause
of action.
It
is so ordered.
Dated: November 6, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court