Judge Michael E. Whitaker, Case Number: 23SMCV05558, Date: 2024-01-31 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV05558, Date: 2024-01-31 Tentative Ruling

Plaintiff Allen Dwight Moyer’s (“Plaintiff”) First Amended Complaint (“FAC”) alleges four causes of action against Defendant Select Portfolio Servicing (“Defendant”): (1) Violation of Civil Code § 2923.7; (2) Violation of Civil Code § 2924.9; (3) Violation of 12 C.F.R. 1024.38; and (4) Unfair Business Practices.

Defendant demurs to all four causes of action for failure to state a cause of action pursuant to Code of Civil Procedure section 430.10, subdivision (e). Defendant also moves to strike allegations regarding punitive damages, emotional distress, attorneys’ fees, as well as all allegations for “damages,” on the basis that damages are not available for violations of the Homeowners Bill of Rights pre-trustee’s sale or under California’s Unfair Competition Law, Business and Professions Code sections 17200 et seq.

1. Deed of Trust recorded December 21, 2021 in Official Records Los Angeles County Recorder’s Office as Document Number 20211893005.

2. Notice of Default recorded July 31, 2023 in Official Records Los Angeles County Recorder’s Office as Document Number 20230502886.

3. Notice of Trustee’s Sale recorded November 1, 2023 in Official Records Los Angeles County Recorder’s Office as Document Number 20230748246.

4. Complaint filed December 1, 2023 regarding Allen Dwight Moyer v. Select Portfolio Servicing, Inc., Superior Court of the State of California, Santa Clara County, Case No. 23CV426813.

With respect to the first three documents, courts can take judicial notice of the existence and recordation of real property records, including deeds, if authenticity is not reasonably disputed. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-65.) “The official act of recordation and the common use of a notary public in the execution of such documents assure their reliability, and the maintenance of the documents in the recorder’s office makes their existence and text capable of ready confirmation, thereby placing such documents beyond reasonable dispute.” (Ibid.) Moreover, courts can take judicial notice not only of the existence and recordation of recorded documents but also matters that can be deduced from the documents, including the parties, dates, and legal consequences of recorded documents relating to real estate transactions. (Ibid.)

Here, each of the recorded documents bears the stamp of the recorder and of a notary public. Therefore, the Court grants Defendant’s request and takes judicial notice of these documents and the legal effect thereof, but not the truth of the matters asserted therein.

With respect to the complaint, judicial notice may be taken of records of any court in this state. (Evid. Code, § 452, subd. (d)(1).) Because the complaint is part of the record for the Superior Court of the State of California, Santa Clara County, the Court may take judicial notice of it. (Ibid.) However, “while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files. Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof.” (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [cleaned up].) Accordingly, the Court takes judicial notice of the existence of the complaint filed in Santa Clara, but not the truth of the allegations contained therein.

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if one consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

i. First and Second Causes of Action – Violation of Civil Code sections 2923.7 and 2924.9

(a) When a borrower requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.

(b) The single point of contact shall be responsible for doing all of the following:

(1) Communicating the process by which a borrower may apply for an available foreclosure prevention alternative and the deadline for any required submissions to be considered for these options.

(2) Coordinating receipt of all documents associated with available foreclosure prevention alternatives and notifying the borrower of any missing documents necessary to complete the application.

(3) Having access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative.

(4) Ensuring that a borrower is considered for all foreclosure prevention alternatives offered by, or through, the mortgage servicer, if any.

(5) Having access to individuals with the ability and authority to stop foreclosure proceedings when necessary.

(c) The single point of contact shall remain assigned to the borrower’s account until the mortgage servicer determines that all loss mitigation options offered by, or through, the mortgage servicer have been exhausted or the borrower’s account becomes current.

(d) The mortgage servicer shall ensure that a single point of contact refers and transfers a borrower to an appropriate supervisor upon request of the borrower, if the single point of contact has a supervisor.

(e) For purposes of this section, “single point of contact” means an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described in subdivisions (b) to (d), inclusive. The mortgage servicer shall ensure that each member of the team is knowledgeable about the borrower’s situation and current status in the alternatives to foreclosure process.

(a) Unless a borrower has previously exhausted the first lien loan modification process offered by, or through, his or her mortgage servicer described in Section 2923.6, within five business days after recording a notice of default pursuant to Section 2924, a mortgage servicer that offers one or more foreclosure prevention alternatives shall send a written communication to the borrower that includes all of the following information:

(1) That the borrower may be evaluated for a foreclosure prevention alternative or, if applicable, foreclosure prevention alternatives.

(2) Whether an application is required to be submitted by the borrower in order to be considered for a foreclosure prevention alternative.

(3) The means and process by which a borrower may obtain an application for a foreclosure prevention alternative.

Defendant argues that Plaintiff’s first and second causes of action fail because (1) Plaintiff does not satisfy the criteria outlined in Section 2924.15; (2) Plaintiff did not plead with requisite particularity; and (3) Plaintiff does not allege facts that any claimed violation was material.

(a) Unless otherwise provided, paragraph (5) of subdivision (a) of Section 2924 and Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply only to a first lien mortgage or deed of trust that meets either of the following conditions:

(1)(A) The first lien mortgage or deed of trust is secured by owner-occupied residential real property containing no more than four dwelling units.

(B) For purposes of this paragraph, “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.

12. Plaintiff ALLEN DWIGHT MOYER (“Plaintiff”) at all relevant times, has owned the Property located at 4535 Alta Tupelo Drive, Calabasas, CA 91302 (the “Subject Property”). The Subject Property is a single-family-home with less than four dwelling units and has served as Plaintiff’s residence for the times mentioned herein.

13. Plaintiff has owned the Property since December 2021, and he lives therein with his longtime significant other. To purchase the Property, Plaintiff obtained a first position mortgage against the property and concurrently executed a Deed of Trust as security for the note. Defendant SPS is the current servicer of this first lien mortgage and was the mortgage servicer of the loan at all relevant times herein.

31. At all times relevant, Plaintiff was the owner of the Property and resided therein as his principal place of residence.

Defendant contends that, despite these allegations, the property at issue is not in fact Plaintiff’s principal place of residence, because “Plaintiff very recently represented in a Complaint filed in the Superior Court of the State of California, Santa Clara County, No. 23CV426813 that he resides at 12300 Highland Estates, San Martin, California 95046. [RJN, Ex. “4”, pars. 2, 8, 12.]” (Demurrer at pp. 6-7.)

14. While Plaintiff has also owned a property in San Martin, CA since 1999, since purchasing the Subject Property, Plaintiff’s work obligations have required him to travel between the two properties.

While the Court has taken judicial notice of the existence of the Santa Clara complaint, the Court cannot take judicial notice of the truth of any allegations contained therein. Moreover, the allegations in paragraph 14, that work obligations require Plaintiff to travel between the two properties he owns does not negate the other allegations in the FAC that that the property at issue is Plaintiff’s principal place of residence.

Where a statutory scheme is not based on preexisting common law, the “facts in support of each of the requirements of [the] statute upon which a cause of action is based must be specifically pled.” (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604; G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 273-74.)

Here, Defendant contends Plaintiff fails to allege the first cause of action with requisite specificity because (1) “Plaintiff’s general allegation that he was unable to apply for a foreclosure prevention alternative does not implicate a violation of any specific subsection of the statute” and Plaintiff fails to allege whether there were any foreclosure prevention alternatives; and (2) Plaintiff’s allegations that his point of contact was not “adequate” is insufficient to state a plausible cause of action.

15. The instant allegations arise from Defendant’s misconduct pertaining to Plaintiff’s request to be reviewed for a foreclosure prevention alternative.

19. In late 2022 or early 2023, Plaintiff contacted SPS to inform SPS of the financial hardship he was experiencing and to request a foreclosure prevention alternative, such as a deferment, Covid forbearance, or loan modification.

20. At that time, Plaintiff’s loan was assigned to a representative named Yvonne, though most of the time when Plaintiff called, he was only able to speak with the individuals that answered Plaintiff’s call.

21. Early on, when Plaintiff spoke with Yvonne, he told Yvonne that he wanted to apply for a foreclosure prevention alternative and asked Yvonne about the application process.

22. To Plaintiff’s surprise, Yvonne told Plaintiff that SPS would not review him for a foreclosure prevention alternative and that his property was going into foreclosure. Plaintiff specifically asked about applying for a foreclosure prevention alternative, such as a forbearance or loan modification, but Yvonne told Plaintiff he could not do so; his only option was to pay the past due balance. Plaintiff was floored.

23. While Defendant promotes that it offers a Covid forbearance option, payment deferral in the form of a non-interest-bearing balance due at maturity, and loan modifications, Plaintiff was not permitted to apply for any of these options. Thus, Yvonne and failed to ensure Plaintiff was considered for any of these options.

24. In July 2023, despite Plaintiff having requested to be reviewed for a foreclosure prevention alternative, Defendant recorded a Notice of Default for Plaintiff’s Property. The recorded document bears document number 20230502886.

25. Plaintiff did not receive correspondence from SPS which provided the following information: (1) that the borrower may be evaluated for a foreclosure prevention alternative or, if applicable, foreclosure prevention alternatives, (2) whether an application is required to be submitted by the borrower in order to be considered for a foreclosure prevention alternative, and (3) the means and process by which a borrower may obtain an application for a foreclosure prevention alternative.

26. In November 2023, Defendant caused a Notice of Trustee’s Sale to be recorded for the Property, scheduling the sale of Plaintiff’s home. This lawsuit follows.

31. At all times relevant, Plaintiff was the owner of the Property and resided therein as his principal place of residence.

32. At all times relevant, Plaintiff was a borrower, as defined by Civil Code § 2920.5, and Plaintiff’s property was owner-occupied, as defined by Civil Code § 2924.15.

33. At all times relevant, a forbearance plan, loan modification, deferment, and repayment plan are considered “foreclosure prevention alternatives” as defined by Civil Code § 2920.5.

34. California Civil Code § 2923.7(b) requires that a single point of contact [SPOC], among other things, to coordinate the receipt of all documents associated with available foreclosure prevention alternatives and notify the borrower of any missing documents necessary to complete the application; to ensure that a borrower is considered for all foreclosure prevention alternatives offered by, or through, the mortgage servicer; to have access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative; and have access to individuals with the ability and authority to stop foreclosure proceedings when necessary.

35. Defendant violated California Civil Code § 2923.7(b) by failing to provide Plaintiff with a single point of contact who could carry out all their statutory duties. Defendant’s violations of Civil Code 2923.7(b) include:

a. Failing to communicate the process by which Plaintiff could apply for an available foreclosure prevention alternative and the deadline for any required submissions to be considered for these options - Indeed, while Defendant’s website promotes that it offers a Covid forbearance option, payment deferral in the form of a noninterest-bearing balance due at maturity, and loan modifications, Plaintiff was not permitted to apply for any of these options. Thus, Plaintiff’s assigned point of contact failed to ensure Plaintiff was considered for any of these options.

b. Failing to ensure that Plaintiff was considered for all foreclosure prevention alternatives offered by, or through, the mortgage servicer - Indeed, while Defendant’s website promotes that it offers a Covid forbearance option, payment deferral in the form of a non-interest-bearing balance due at maturity, and loan modifications, Plaintiff was not permitted to apply for any of these options. Thus, Plaintiff’s assigned point of contact failed to ensure Plaintiff was considered for any of these options

36. After refusing to assist Plaintiff as required by Civil Code § 2923.7, Defendant began actively foreclosing on Plaintiff’s loan. This amounts to a material violation of Civil Code § 2923.7.

37. As a result of Defendant’s actions, Plaintiff has suffered damages in the form of Plaintiff being prevented from applying for a foreclosure prevention alternative, and in an amount to be determined according to proof at trial. In addition, Plaintiff is facing the imminent loss of his Property to foreclosure

38. Defendant’s conduct amounts to material violations of Civil Code § 2923.7 (b).

(FAC, ¶¶ 12-13; 15 19-26; 31-38.) Thus, Plaintiff has pleaded specific facts that when he contacted his point of contact, Yvonne, in late 2022/early 2023, requesting a foreclosure prevention alternative, Yvonne informed him that Defendant refused to consider him in violation of Section 2923.7, subdivision (b)(4).

Defendant argues Plaintiff fails to plead the second cause of action with requisite particularity, because Plaintiff does not allege he has not previously exhausted the first lien loan modification process offered by or through his mortgage servicer.

Although the phrase “Plaintiff has not previously exhausted the first lien loan modification process offered by or through his mortgage servicer” does not appear in the FAC, the FAC does allege:

9. Plaintiff is informed and believes and based thereon alleges that Defendant SELECT PORTFOLIO SERVICING, INC, (hereinafter “SPS”), is a diversified financial marketing and/or corporation engaged primarily in residential mortgage banking and/or related business and was the servicer of a loan secured by Plaintiff’s property during the time periods alleged herein. Plaintiff is informed and believes and thereon alleges that SPS regularly conducts business in the State of California and County of Los Angeles.

16. For years, Plaintiff has been a high-income earner. He owns a project management firm and has completed significant projects for major companies such as Apple, Microsoft, and high-end hotel chains.

17. However, Plaintiff’s income was not immune from the torment caused by the Covid-19 pandemic, and, in fact, Plaintiff experienced a decrease in his personal income simultaneously with the rapid decline in the entertainment, hospitality, and retail industries that drive Plaintiff’s income.

18. Though Plaintiff was able to maintain the status quo for some time, by late 2022, he was no longer able to sustain the approximately $13,000 mortgage payment on this Property while also keeping up with his other financial obligations. As a result, Plaintiff fell behind in his mortgage payments.

As such, the FAC specifically alleges (1) Plaintiff purchased the subject property in December 2021; (2) Defendant was Plaintiff’s mortgage servicer at all relevant times; (3) Plaintiff’s business was impacted by the Covid-19 pandemic, causing Plaintiff to fall behind on his mortgage payments in late 2022; (4) in late 2022 or early 2023, Plaintiff contacted Defendant to request a foreclosure prevention alternative; and (5) as discussed above, Defendant refused to offer Plaintiff a foreclosure prevention alternative (see FAC ¶¶ 20-26.)

Thus, the FAC alleges sufficient specific facts to create a reasonable inference that Plaintiff had not previously exhausted the first lien loan modification process offered by, or through, his mortgage servicer.

Defendant next contends that Plaintiff failed to allege that any violation was material.

Civil Code section 2924.12, subdivision (a)(1) provides, “If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of […] Section 2923.7[.]” A violation of the Homeowner’s Bill of Rights (of which section 2923.7 is a part) is “material” if “it affected the borrower’s loan obligations, disrupted the loan-modification process, or otherwise harmed the borrower in connection with the borrower’s efforts to avoid foreclosure.” (Billesbach v. Specialized Loan Servicing, LLC (2021) 63 Cal.App.5th 830, 845.)

26. In November 2023, Defendant caused a Notice of Trustee’s Sale to be recorded for the Property, scheduling the sale of Plaintiff’s home. This lawsuit follows.

36. After refusing to assist Plaintiff as required by Civil Code § 2923.7, Defendant began actively foreclosing on Plaintiff’s loan. This amounts to a material violation of Civil Code § 2923.7.

(FAC ¶¶ 22, 24, 26, 36.) Thus, Plaintiff has alleged a material violation, that disrupted Plaintiff’s loan-modification efforts and harmed Plaintiff’s efforts in avoiding foreclosure, as evidenced by the recorded notices of default and trustee’s sale (RJN Exs. 2-3.)

Defendant contends this is insufficient because “Plaintiff obtained the large loan less than two years ago, admits his default, and the Property has not sold.” (Demurrer at p. 9.) The Court disagrees that Plaintiff’s allegations are insufficient. The facts that Plaintiff obtained the loan approximately two years ago, that the loan was large, that Plaintiff defaulted on the mortgage, and that the home may not have sold yet do not have any bearing on whether Defendant’s violation was material. There is no information in the record that Defendant retracted the notice of default or notice of trustee’s sale, or that Defendant has otherwise abandoned its efforts to foreclose upon Plaintiff’s property to engage instead with a loan modification process with Plaintiff.

Therefore the Court overrules Defendant’s demurrer to the first and second causes of action.

ii. Third Cause of Action – Violation of 12 Code of Federal Regulations section 1024.38

(a) Reasonable policies and procedures. A servicer shall maintain policies and procedures that are reasonably designed to achieve the objectives set forth in paragraph (b) of this section.

(2) Properly evaluating loss mitigation applications. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can:

(i) Provide accurate information regarding loss mitigation options available to a borrower from the owner or assignee of the borrower's mortgage loan;

(ii) Identify with specificity all loss mitigation options for which borrowers may be eligible pursuant to any requirements established by an owner or assignee of the borrower's mortgage loan;

Defendant demurs to the third cause of action on the basis that Section 1024.38 does not create a private right of action.

In support, Defendant cites to Moore v. Wells Fargo Bank, N.A. (N.D. Cal. Aug. 28, 2023) 2023 WL 5538268, at p. *4 (“this section does not create a private right of action”); Joussett v. Bank of Am., N.A. (E.D. Pa. Oct. 6, 2016) 2016 WL 5848845, at p. *5 (quoting 78 Fed. Reg. at 10,697-98) (“The Bureau...will be able...to assure compliance with these requirements but there will not be a private right of action to enforce these provisions.”); In re Wells Fargo Forbearance Litigation (N.D. Cal. May 2, 2023) 2023 WL 3237501, at p. *5 (same); Courtois v. Shellpoint Mortgage Servicing, LLC (C.D. Cal. May 26, 2020) 2020 WL 13586024, at *1 (“numerous other courts have concluded that 12 C.F.R. § 1024.38 does not provide a private right of action.”) (collecting cases); Austerberry v. Wells Fargo Home Mortgage. (E.D. Mich. Dec. 7, 2015) 2015 WL 8031857, at *5 (“while Plaintiff is protected by § 1024.38(b)(2), she lacks a private right of action to enforce [it].”)

Although the unpublished federal district court cases Defendant cites are not binding, the Court nonetheless finds them persuasive and instructive in interpreting the federal regulation at issue.[1] Moreover, Plaintiff does not address the third cause of action in his opposition. (Herzberg v. County of Plumas (2005) 133 Cal.App.4th 1, 20 [noting a plaintiff’s failure to oppose a demurrer to a cause of action or portion thereof constitutes an abandonment of the issue or claim].)

Therefore, the Court sustains Defendant’s demurrer to the third cause of action.

Defendant contends Plaintiff fails to state a cause of action for unfair competition, because (1) Plaintiff does not allege any predicate unfair, unlawful, or fraudulent business practice; (2) Plaintiff lacks standing because he cannot allege any lost money or property; and (3) Plaintiff lacks standing because he cannot allege the lost money or property was proximately caused by Defendant.

Because, as discussed above, the Court overrules Defendant’s demurrer to the first and second causes of action, Plaintiff has adequately pleaded a predicate violation of law to support the third cause of action for unfair competition.

66. Here, as a direct and proximate result of Defendant’s unfair and unlawful conduct, Plaintiff’s interests in the subject property is in jeopardy, as Defendants have unlawfully recorded a Notice of Default and Notice of Trustee’s Sale, indicating their intention to proceed with the foreclosure process. Lastly, due to Defendant’s unfair and unlawful conduct, Plaintiff has suffered actual monetary injury, as Plaintiff has needlessly incurred late fees, penalties and costs on his monthly mortgage payment without receiving the benefit of the parties’ bargain.

Thus, Plaintiff adequately alleges that Defendant’s refusal to offer Plaintiff a loan modification has caused Plaintiff to incur late fees, penalties, and costs on his mortgage he would not have incurred, had Defendant modified Plaintiff’s loan. Plaintiff also alleges that Defendant has taken several steps in furtherance of foreclosing on Plaintiff’s home, including recording a notice of default (FAC ¶ 24) and a notice of trustee’s sale (FAC ¶ 26), further putting title to Plaintiff’s home in jeopardy. Therefore, Plaintiff has adequately alleged standing and causation.

As such, the Court overrules Defendant’s demurrer to the fourth cause of action.

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).) On a motion to strike, the court may: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)

Defendant moves to strike allegations regarding punitive damages, emotional distress, attorneys’ fees, as well as all allegations for “damages,” on the basis that damages are not available for violations of the Homeowners Bill of Rights pre-trustee’s sale or under California’s Unfair Competition Law, Business and Professions Code sections 17200 et seq.

In ruling on a motion to strike punitive damages, “judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294. (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (a).) As set forth in the Civil Code,

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice. To wit, there is a heightened pleading requirement regarding a claim for punitive damages. (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.) “When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice. When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].) In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs’ assertions related to their claim for punitive damages were “insufficient to meet the specific pleading requirement.” (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged “the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff's rights. Plaintiff's injuries were exacerbated by the malicious conduct of Defendants. Defendants' conduct justifies an award of exemplary and punitive damages”]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim”].)

Moreover, “the imposition of punitive damages upon a corporation is based upon its own fault. It is not imposed vicariously by virtue of the fault of others.” (City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 36.) “Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive. An award of punitive damages against a corporation therefore must rest on the malice of the corporation’s employees. But the law does not impute every employee’s malice to the corporation. Instead, the punitive damages statute requires proof of malice among corporate leaders: the officers, directors, or managing agents.” (Cruz v. Home Base (2000) 83 Cal.App.4th 160, 167 [cleaned up].)

Here, Plaintiff does not allege fraud, nor does it allege any conduct demonstrating oppression or malice on the part of Defendant’s corporate leaders. Moreover, Plaintiff does not address Defendant’s motion to strike punitive damages in the opposition. (See Herzberg, supra, 133 Cal.App.4th at p. 20.)

Therefore the Court strikes from Prayer for Damages: “6. For exemplary damages in an amount sufficient to punish Defendants’ wrongful conduct and deter future misconduct;” in its entirety.

Defendant first argues that Plaintiff has not substantiated the request for emotional distress damages. (See Erlich v. Menezes (1999) 21 Cal.4th 543 [limiting damages for emotional distress to torts where there are allegations of physical injury and contracts where there has been bodily harm or “serious emotional disturbance was a particularly likely result” of the contract’s breach, noting “contracts pertaining to one’s dwelling are not among those contracts which, if breached, are particularly likely to result in serious emotional disturbance”].)

Plaintiff does not address Defendant’s motion to strike references to emotional distress in the Opposition, and has therefore abandoned the issue. (See Herzberg, supra, 133 Cal.App.4th at p. 20.)

Therefore, the Court strikes from the FAC the words “severe emotional distress” from paragraph 67 of the FAC and the words “damages for emotional distress” from paragraph 5 of the Prayer.

Defendant requests the requests for attorneys’ fees be stricken because “Plaintiff fails to state any statutory or contractual basis supporting his recovery of attorneys’ fees.” (Motion to Strike at p. 9.) The Court disagrees. The Court has overruled Defendant’s demurrer to the first and second causes of action for violations of Civil Code sections 2923.7 and 2924.9, and Section 2924.12, subdivision (h) expressly authorizes reasonable attorneys’ fees in an action brought to enforce violations of those sections.

Therefore, the Court declines to strike Plaintiff’s request for attorneys’ fees incurred in connection with the first and second causes of action.

However, Plaintiff does not cite any statutory or contractual basis for attorneys’ fees incurred in connection with the Fourth Cause of Action for Unfair Competition. As such, the Court strikes the words “reasonable attorney’s fees” from paragraph 70 of the FAC.

Defendant contends that Plaintiff’s request for damages pursuant to Civil Code sections 2923.7 and 2924.9 should be stricken because the home has not sold yet, meaning only injunctive relief is available at this time.

In Opposition, Plaintiff indicates, “Plaintiff concedes that a pre-foreclosure sale claim for violation of Civil Code § 2923.7 does not entitle Plaintiff to damages” and “Plaintiff does not seek damages pursuant to his claim for violation of Civil Code § 2924.9.” (Opposition at p. 2.)

However, Plaintiff opposes Defendant’s request to strike any portion of paragraph 37, arguing that those allegations are necessary to sustain Plaintiff’s claim for violation of section 2923.7, and Plaintiff objects to striking any portion of paragraph 40, which does not contain any allegation of damages.

· the words “compensatory damages, special damages, damages for emotional distress,” from paragraph 5 of the Prayer

The Court denies Defendant’s motion to strike references to “damages” in all other respects.

Defendant argues “[t]he California Supreme Court has unequivocally held that damages are not available under the Unfair Business Practices Act.” (Motion to Strike at p. 5 [collecting cases].) The Court agrees. However, Plaintiff does not request damages pursuant to the fourth cause of action. (See FAC ¶ 69 [“Plaintiff further seeks restitution, disgorgement of sums wrongfully obtained by Defendant for all foreclosure fees and costs during the time Plaintiff was engaged in loss mitigation efforts with the Defendant”]; ¶ 70 (“Plaintiff additionally seeks costs of suit, reasonable attorney’s fees, and such other and further relief as the Court may deem just and proper.”)

The allegations of paragraph 67 (“Plaintiff was injured and suffered actual damages including but not limited to, loss of money and property[…]”) implicate Plaintiff’s standing to bring an Unfair Competition Law (“UCL”) claim. Yet Plaintiff is not requesting damages pursuant to the UCL.

Therefore, the Court denies Plaintiff’s request to strike allegations regarding damages pursuant to the fourth cause of action for Unfair Competition.

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Plaintiff has failed to meet this burden because Plaintiff’s oppositions do not indicate any specific facts Plaintiff could add to the complaint to address the deficiencies the Court has identified.

For the reasons stated, the Court overrules Defendant’s Demurrer to the First, Second, and Fourth Causes of Action, and sustains without leave to amend Defendant’s Demurrer to the Third Cause of Action.

Further, the Court grants in part Defendant’s Motion to Strike, and strikes the following from the FAC:

· The words “6. For exemplary damages in an amount sufficient to punish Defendants’ wrongful conduct and deter future misconduct;” from the Prayer;

· The words “damages for emotional distress” from paragraph 5 of the Prayer;

· The words “compensatory damages, special damages, damages for emotional distress,” from paragraph 5 of the Prayer.

The Court further orders Defendant to file an Answer to the FAC on or before April 15, 2024. Defendant shall provide notice of the Court’s ruling and file a proof of service regarding the same.

[1] “Although [a court] may not rely on unpublished California cases, the California Rules of Court do not prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not binding, authority.” (Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 251, fn. 6, citing in part Cal. Rules of Court, rule 8.1115.)

DEPARTMENT	207
HEARING DATE	March 25, 2024
CASE NUMBER	23SMCV05558
MOTIONS	Demurrer and Motion to Strike Portions of the First Amended Complaint
MOVING PARTY	Defendant Select Portfolio Servicing
OPPOSING PARTY	Plaintiff Allen Dwight Moyer