Judge: Melvin D. Sandvig, Case: 23CHCV01204, Date: 2023-10-24 Tentative Ruling

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Case Number: 23CHCV01204    Hearing Date: April 10, 2024    Dept: F47

Dept. F47

Date: 4/10/24

Case #23CHCV01204

 

DEMURRER TO THE FIRST AMENDED COMPLAINT

 

Demurrer filed on 1/19/24.

 

MOVING PARTY: Defendants Loancare, LLC and Lakeview Loan Servicing LLC

RESPONDING PARTY: Plaintiff Kyle A. Perez, Executor of the Estate of Kyle T. Perez

NOTICE: ok

 

Demurrer is to the entire First Amended Complaint:

            1.  Negligent Misrepresentation

            2.  Intentional Misrepresentation

            3.  Breach of Contract

            4.  Declaratory Relief

            5.  Promissory Estoppel

            6.  Violation of Business & Professions Code 17200

 

RULING: The demurrer is sustained without leave to amend as to the 1st and 2nd causes of action and overruled as to the 3rd, 4th, 5th and 6th causes of action.  Answer is due within 30 days.    

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of foreclosure proceedings against property located at 9251 Notre Dame Avenue in Chatsworth, California (the Property).  In or about July 2017, Kenneth T. Perez (Borrower) took out a mortgage loan from Skyline Home Loans in the amount of $501,215.00.  (First Amended Complaint (FAC) ¶16).  In or around August 2018, Borrower executed a Power of Attorney in favor of Plaintiff Kyle A. Perez, Executor of the Estate of Kyle T. Perez (Plaintiff).  (Id. ¶17).  On 5/26/19, Borrower died.  (Id. ¶18).  By Last Will and Testament of Kenneth T. Perez, Plaintiff was appointed executor of the Estate of Kenneth T. Perez.  Id.  In or around December 2021, Plaintiff alleges that he received a loan modification agreement (2021 Loan Modification Agreement) from Defendant Loancare, LLC (Loancare) executed by Defendant Lakeview Loan Servicing LLC (Lakeview) (collectively, Defendants) stating the first modification payment would be due on 3/1/22 in the amount of $2,514.84 with an interest rate of 3.625%.  (Id. misnumbered ¶10 on p.3:12-16 of the FAC).  Plaintiff alleges that he signed and notarized the 2021 Loan Modification Agreement and returned it to Loancare.  (Id. ¶19).

 

Plaintiff alleges that on or around 1/21/22, he contacted Loancare and spoke to supervisor, Lashea, who stated Loancare did not receive the 2021 Loan Modification Agreement.  (Id. ¶20).  Plaintiff alleges that he re-sent the executed 2021 Loan Modification Agreement to Loancare two more times.  (Id. ¶21).  In or around April 2022, Plaintiff alleges that Loancare rejected the 2021 Loan Modification Agreement due to signatures not matching.  (Id. ¶22).  On or around 4/15/22, Plaintiff re-sent the 2021 Loan Modification Agreement to Loancare with notarized signatures along with two checks for March and April 2022.  (Id. ¶¶23-24).

Plaintiff alleges that instead of applying the two payments to the 2021 Loan Modification Agreement, Loancare applied them to the original loan terms.  (Id. ¶25).  Plaintiff contacted Loancare to inquire why the payments were not being applied to the 2021 Loan Modification Agreement and requested that if the payments were not going to be applied to the 2021 Loan Modification Agreement, that they be returned.  (Id. ¶26).  Loancare returned the payments to Plaintiff.  (Id. ¶27).  Between April 2022 and October 2022, Plaintiff alleges that he contacted Loancare regarding the status of the executed 2021 Loan Modification Agreement.  (Id. ¶28).  On or about 10/17/22, Defendant National Default Servicing Corporation (National Default), on behalf of Loancare, recorded a Notice of Default (NOD) against the Property.  (Id. misnumbered ¶11 p.4:12-16 of FAC).  Thereafter, from November 2022 through February 2023, Plaintiff alleges that he spoke to various Loancare agents regarding the 2021 Loan Modification Agreement.  (Id. ¶¶29-34). 

 

On or around 2/9/23, National Default, on behalf of Loancare, recorded a Notice of Trustee’s Sale (NOS) against the Property indicating that Loancare intends to sell the Property.  (Id. misnumbered ¶12 p.5:5-9 of FAC and ¶35). 

 

On 4/26/23, Plaintiff filed this action against Loancare, Lakeview and National Default for: (1)   Negligent Misrepresentation; (2) Intentional Misrepresentation; (3) Declaratory Relief; (4)   Promissory Estoppel and (5) Violation of Business & Professions Code 17200.  After meet and confer efforts failed to resolve issues Defendants had with the complaint, on 7/23/23, Loancare and Lakeview filed (served on 6/30/23) a demurrer to the entire complaint on the ground that each cause of action failed to state sufficient facts to constitute a cause of action.  CCP 430.10(e). Plaintiff opposed the demurrer.  Defendants filed and served a late reply to the demurrer.  On 10/24/23, this Court sustained the demurrer with 30 days leave to amend. 

 

On 11/27/23, Plaintiff filed the subject First Amended Complaint (FAC) alleging causes of action for: (1) Negligent Misrepresentation, (2) Intentional Misrepresentation, (3) Breach of Contract, (4) Declaratory Relief, (5) Promissory Estoppel and (6) Violation of Business and Professions Code 17200.  After meet and confer efforts failed to resolve the issues Defendants  have with the First Amended Complaint, they filed and served the instant demurrer to the entire First Amended Complaint.  Plaintiff has opposed the demurrer.  Although Defendants filed a Case Management Statement on 4/2/24, as of 4/8/24 no reply (which was due on or before 4/3/24 – CCP 1005(b)) to the opposition has been filed.

 

ANALYSIS

 

3rd Cause of Action – Breach of Contract

 

In response to an order sustaining a demurrer with leave to amend, a plaintiff may amend the complaint to add a new cause of action where the new cause of action directly responds to the trial court’s reason for sustaining the demurrer.  See Harris (2010) 185 CA4th 1018, 1023 citing Patrick (2008) 167 CA4th 995, 1015. 

 

In ruling on the demurrer to the original complaint, this Court noted that Plaintiff appeared to be attempting to allege a claim for breach of contract.  (See 10/24/23 Minute Order,  p.4, p.5).  As such, the Court finds that amending the complaint to include a breach of contract cause of action falls within the order granting leave to amend. 

 

The elements of such a claim are: (1) the existence of a contract, (2) plaintiff’s performance, (3) breach by defendant and (4) damage resulting from the breach.  First Commercial Mortgage Co. (2001) 89 CA4th 731, 745.

 

Defendants admit that the lender offered Plaintiff a loan modification.  (Demurrer, p.8:8; See also FAC ¶131).  Plaintiff has alleged that he accepted the offer by signing and returning the agreement along with two checks to Loancare in relation to the modification agreement.  (FAC misnumbered ¶10 on p.3 and ¶¶10, 19-24, 132-137).  The demurrer also seemingly admits Defendants’ receipt of the executed agreement but claims that it was rejected due to issues with the paperwork and Plaintiff’s signature.  (Demurrer, p.8:8-10).  The Court finds that, at the pleading stage, Plaintiff has alleged sufficient facts to establish the existence of a contract.  Whether or not Defendants had proper bases to reject the executed contract cannot be determined on demurrer.    

 

Plaintiff has also alleged sufficient facts to support his performance under the loan modification agreement, Loancare’s breach, and damages resulting therefrom.  (See FAC ¶¶19-22, 130, 135-137, 144-148).    

 

1st Cause of Action – Negligent Misrepresentation & 2nd Cause of Action – Intentional Misrepresentation

 

The elements of a negligent misrepresentation cause action are: (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant made the representation without reasonable ground for believing it to be true; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.  Majd (2015) 243 CA4th 1293, 1307.  The elements of a fraud/intentional misrepresentation cause of action are: (1) a material representation or deceit that is false; (2) knowledge of falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damages.  Philipson & Simon (2007) 154 CA4th 347, 363.      

 

Fraud-based claims must be pled with specific facts showing how, when, where, to whom, and by what means the representations were made.  Lazar (1996) 12 C4th 631, 645.  When fraud is pled against a corporation, a plaintiff must allege: (1) the names of the persons who made the allegedly fraudulent statements or omissions, (2) their authority to speak, (3) to whom they spoke, (4) what they said or wrote and (5) when it was said or written.  Tarmann (1991) 2 CA4th 153, 157; Lazar, supra.

 

Plaintiff has  failed to plead the alleged misrepresentations made by Loancare and/or Lakeview with the requisite factual specificity.  Plaintiff refers to conduct purportedly committed by “Defendants” collectively.  (See FAC ¶¶61-63, 71-73, 107-110)  While Plaintiff includes some first names of purported representatives of Loancare, Plaintiff has not alleged sufficient facts to establish those individual’s authority to speak on behalf of the entity Defendants, nor has Plaintiff clearly alleged that representations made by the identified individuals were false. 

 

As noted in the ruling on the demurrer to the original complaint, the negligent misrepresentation and intentional misrepresentation causes of action appear to be veiled breach of contract claims.  Plaintiff has now had two opportunities to plead his fraud-based claims and has failed to adequately do so.  Additionally, while Plaintiff requests leave to amend, if the demurrer is sustained, Plaintiff fails to give any indication as to how he can cure the defects in these claims as is his burden.  See Hedwall (2018) 22 CA5th 564, 580.     

 

4th Cause of Action – Declaratory Relief

 

The basis for declaratory relief is the existence of an actual, present controversy over a proper subject.  See City of Cotati (2002) 29 C4th 69, 79; CCP 1060; Jolley (2013) 213 CA4th 872, 909.  The purpose of such a claim is to provide a new form of relief where needed and not to give a litigant a second cause of action for the determination of identical issues.  California Insurance Guarantee Association (1991) 231 CA3d 1617, 1624.  Declaratory relief operates prospectively to declare future rights not to redress past wrongs.  See  Yang 2011 WL 902108, *5; Canova (2007) 150 CA4th 1487, 1497 .

 

Plaintiff has sufficiently alleged an actual controversy exists as to whether the executed Loan Modification Agreement was properly rejected and/or whether Defendants must abide by same going forward.  Plaintiff may assert the declaratory relief claim in the alternative to his breach of contract cause of action. 

 

5th Cause of Action – Promissory Estoppel

 

The elements of a promissory estoppel cause of action are: (1) a clear and unambiguous promise by defendant, (2) plaintiff’s reasonable and foreseeable reliance, (3) plaintiff’s substantial detriment or injury caused by the reliance on the promise, and (4) damages measured by the extent of the obligation assumed and not performed.  US Ecology, Inc. (2005) 129 CA4th 887, 901; Toscano (2004) 124 CA4th 685, 692; Garcia (2010) 183 CA4th 1031, 1037.  A plaintiff must also allege facts showing defendants’ failure to fulfill the promise was a substantial factor in causing the plaintiff’s damages.  US Ecology Inc., supra at 902–05.

 

Contrary to Defendants’ assertion, Plaintiff has sufficiently alleged a clear and unambiguous promise based on the terms of the Loan Modification Agreement.  Plaintiff has also alleged sufficient facts to support the remaining elements of the cause of action.  Plaintiff may properly assert this claim in the alternative to the breach of contract cause of action. 

 

6th Cause of Action – Violation of California Business & Professions Code 17200

 

Business and Professions Code 17200, et seq., the Unfair Competition Law, prohibits acts of unfair competition, including any unlawful, unfair, fraudulent or deceptive business practice as well as “unfair, deceptive, untrue or misleading advertising. 

 

Plaintiff has alleged that Defendants have violated the unfair and fraudulent prongs of the Unfair Competition Law.  (FAC ¶¶166-172).

 

The demurrer focuses on the argument that that Plaintiff cannot show a violation of a predicate law and merely concludes that Plaintiff has failed to allege or establish unfair or fraudulent conduct.  (See Demurrer, p.13:7-8).  The Court finds that Plaintiff has alleged sufficient facts to state a claim for violation of Business and Professions Code based on the unfair prong of the statute. 

 

CONCLUSION

 

The demurrer as to the 1st and 2nd causes of action for negligent misrepresentation and intentional misrepresentation is sustained without leave to amend.  The demurrer as to the 3rd, 4th, 5th and 6th causes of action is overruled.  Answer is due within 30 days.