Judge: Melvin D. Sandvig, Case: 23CHCV00693, Date: 2023-09-20 Tentative Ruling
Case Number: 23CHCV00693 Hearing Date: September 20, 2023 Dept: F47
Dept. F47
Date: 9/20/23
Case #23CHCV00693
DEMURRER TO THE
ORIGINAL COMPLAINT
Demurrer filed on 6/6/23.
RESPONDING PARTY: Plaintiffs
Hezequias Kizito and Jennie Kizito
NOTICE: ok
Demurrer is to the entire Complaint:
1. Violation of
Civil Code 2923.5
2.
Violation of Civil Code 2924(a)(1)
3.
Violation of Civil Code 2924.9
4.
Unfair Business Practices – Violation of Business & Professions Code
17200, et seq.
5.
Breach of Contract
6.
Breach of Contract Two
RULING: The demurrer is sustained with 20 days
leave to amend.
SUMMARY OF FACTS & PROCEDURAL HISTORY
This action arises out of non-judicial foreclosure
proceedings initiated against Plaintiffs Hezequias Kizito and Jennie Kizito’s
(“Plaintiffs”) property by Defendants Select Portfolio Servicing, Inc. (“SPS”)
and U.S. Bank NA, successor trustee to Bank of America, NA, successor in
interest to LaSalle Bank NA, as trustee, on behalf of the holders of the Wa Mu
Mortgage Pass-Through Certificates, Series 2006-AR12 (the “Trust”)
(collectively, “Defendants”).
Plaintiffs reside at the real property located at 17225
Celtic Street, Granada Hills, CA 91344 (the “Property”). (Complaint ¶1). On 8/28/06, Plaintiffs obtained a $520,000
loan (the “Loan”) from lender Washington Mutual Bank, N.A. (“WaMu”). (Complaint ¶10). The Loan is secured by a Deed of Trust (the
“DOT”) encumbering the Property. (Complaint
¶10, Ex.A). The DOT listed WaMu as its
beneficiary, and California Reconveyance Company as trustee. Id. Plaintiffs allege that in March 2011, they
entered into a Loan Modification Agreement with Chase Home Finance, LLC (the
“2011 Loan Modification Agreement). (Complaint
¶11, Ex.B).
On 1/19/22, Defendants recorded a Notice of Default
(“NOD”) against the Property. (Complaint
¶16, Ex.G). According to the NOD, as of
1/17/22, the amount past due on the loan was $123,127.62. Id. The NOD also contains a Declaration of
Compliance made pursuant to Civil Code 2923.55 stating that due diligence
efforts were satisfied under Civil Code 2923.5(e). Id.
After the NOD was recorded, Plaintiffs submitted an
application for a loan modification to SPS. (See Complaint ¶17, Ex.H). SPS reviewed Plaintiffs’ application, and
approved Plaintiffs for a second loan modification. Id.
Plaintiffs found the modification offered by SPS to be “unacceptable.”
On 6/24/22, Plaintiffs filed a prior action, LASC Case
No. 22CHCV00470, which was initially assigned to Department F49 in the
Chatsworth Courthouse and then transferred to Department 51. The prior action concerned the same Property
and alleged causes of action against the same Defendants for: (1) Violation of Civil Code 2923.5, (2) Violation of Civil
Code 2924(a)(1), (3) Violation of Civil Code § 2924.9, (4) Unfair Business
Practices – Violations of Business & Professions Code 17200, et seq., (5) Cancellation
of Written Instruments – Civil Code 3412, and (6) Breach of Contract. (RJN, Ex.2, 3). After Defendants’ demurrer was sustained with
leave to amend, Plaintiffs filed a First Amended Complaint alleging causes of
action for: (1) Violation of Civil Code 2923.5, (2) Violation of Civil Code § 2924.9,
(3) Unfair Business Practices – Violations of Business & Professions Code
17200, et seq., (4) Cancellation of Written Instruments – Civil Code 3412, and
(5) Breach of Contract. (RJN, Ex.2,
4). With a Motion for Leave to Amend
pending, Plaintiffs dismissed their (First Amended) Complaint on 2/21/23
without prejudice.
On 3/10/23, Plaintiffs filed the instant action against
Defendants for: (1) Violation of Civil Code 2923.5; (2) Violation of Civil Code
2924(a)(1); (3) Violation of Civil Code 2924.9; (4) Unfair Business Practices –
Violation of Business & Professions Code 17200, et seq.; (5) Breach of
Contract and (6) Breach of Contract Two.
Plaintiffs’ counsel failed to respond to Defendants’ counsel’s meet and
confer efforts regarding the issues presented in this demurrer. (See Meet & Confer Declaration
filed 6/6/23). Therefore, on 6/6/23,
Defendants filed and served the instant demurrer to the entire complaint on the
ground that each of the causes of action fails to state facts sufficient to
constitute a cause of action. CCP
430.10(e). Plaintiffs have opposed the
demurrer and Defendants have filed a reply to the opposition.
ANALYSIS
Defendants’ Request for Judicial Notice (RJN) is granted.
Based on the opposition to the demurrer, it appears that
Plaintiffs are addressing a different pleading than the complaint at issue in
this action and which is subject of the instant demurrer. For example, Plaintiffs refer to a First
Amended Complaint when only the original complaint has been filed in this
action. (Opposition, p.4:26-p.5:3,
p.5:5-21, p.6:15, p.7:6-7). Plaintiff’s
also confusingly claim that a cause of action for violation of Civil Code
2924(a) is not present in their First Amended Complaint after stating that they
have sufficiently pled such a claim. (See
Opposition, p.4:26-p.5:3). Plaintiffs’
operative complaint does include as its second cause of action a claim for
violation of Civil Code 2924(a)(1). (See
Complaint, p.7:7-24). The Court notes
that the footer of Plaintiffs’ complaint in this action also incorrectly
asserts that the pleading is “Plaintiffs’ Verified Amended Complaint.”
1st Cause of Action – Violation of Civil
Code 2923.5 & 3rd Cause of Action – Violation of Civil Code
2924.9
In the 1st cause of action Plaintiffs allege
that Defendants violated the Homeowners Bill of Rights (“HOBR”) by recording a
NOD without contacting Plaintiffs to assess their financial situation and
explore options to avoid foreclosure in violation of Civil Code 2923.5(a)(2). (Complaint ¶31). Similarly, Plaintiffs allege in their 3rd
cause of action that Defendants violated Civil Code 2924.9 by failing to
“notify Plaintiffs of all foreclosure prevention alternatives within 5 business
days after the Notice of Default [was] recorded.” (Complaint ¶41). The opposition shows that Plaintiffs
misunderstand Defendants’ argument in the demurrer. Contrary to Plaintiffs’ assertion, Defendants
do not argue, and Plaintiffs have not alleged, that the Loan first went into
default on 1/17/22 and Defendants recorded a NOD two days later on
1/19/22. Rather, Defendants claim that
the amount of the deficiency as of 1/17/22 was $123,127.62, not that Plaintiffs
first defaulted on 1/17/22.
Regardless, accepting the Plaintiffs’ allegations as true
as the Court must on demurrer, the face of the complaint and exhibits attached
thereto show that Defendants cured the alleged violations when SPS subsequently
reviewed and approved Plaintiffs for a trial loan modification a week after
recording the NOD and for a second loan modification in May of 2022. (Complaint ¶¶11, 17, Ex.B, H). As such, the NOD of default was/is not void
because the defects were cured and, therefore, are not material. See Billesbach (2021) 63 CA5th
830, 837, 845-847.
2nd Cause of Action – Violation of
2924(a)(1)
This cause of action is based on the claim that
Defendants violated Civil Code 2924(a)(1) because Clear Recon Corp had not been
substituted as the trustee under the DOT at the time it recorded the NOD. (Complaint ¶¶35-36). Judicially noticed facts show that the NOD
was recorded by the duly authorized trustee under the DOT as permitted by Civil
Code 2924(a)(1). (See RJN, Ex.1);
Ram (2015) 234 CA4th 1, 16.
As noted above, Plaintiffs deny the existence of this
cause of action in their pleading. (See
Opposition, p5:1-3).
4th Cause of Action – Unfair Business
Practices – Violation of Business & Professions Code 17200, et seq.
The Unfair Competition Law (“UCL”) “‘establishes three
varieties of unfair competition-acts or practices which are unlawful, or
unfair, or fraudulent.’” Shvarts
(2000) 81 CA4th 1153, 1157. Here, Plaintiffs
conclude that SPS engaged in unlawful, unfair, and fraudulent business
practices. (Complaint ¶47). However, this allegation is based on the preceding
statutory-based causes of action. (Complaint
¶48). Since the preceding causes of
action fail to state claims, so does the 4th cause of action.
5th Cause of Action – Breach of Contract
& 6th Cause of Action – Breach of Contract Two
The elements of a breach of contract cause of action are:
(1) the contract, (2) plaintiff’s performance or excuse for nonperformance
under the contract, (3) defendant’s breach and (4) resulting damage to
plaintiff. Richman (2014) 224
CA4th 1182, 1186. Here, Plaintiffs
contend that Defendants breached the contracts by recording the NOD two days
after Plaintiff defaulted on the loan and by not complying with the terms of
the agreements as successor in interest of the loan by commencing with
foreclosure proceedings.
As noted above, Plaintiffs misconstrue when Defendant
recorded the NOD in relation to the date of default. The NOD of default merely states the amount
owed as of 1/17/22, not that Plaintiffs defaulted on that date. Plaintiffs also fail to adequately allege how
Defendants failed to comply with the loan terms. Additionally, Plaintiffs have not alleged
facts showing their own performance under the terms of the contracts.
CONCLUSION
Based on the foregoing, the demurrer is sustained. The Court notes that Plaintiffs fail to
address the fact that although this is only the original complaint in this
action, the subject complaint is actually the third time Plaintiffs have
attempted to assert their claims against Defendants. (See RJN, Ex.2-4). However, given the liberal policy of allowing
leave to amend, the Court will give Plaintiffs one more opportunity to try to
cure the defects in their claims against Defendants.