Judge: Olivia Rosales, Case: 19NWCV00899, Date: 2022-08-11 Tentative Ruling
DEPARTMENT SE-C LAW & MOTION PROCEDURES ARE AS FOLLOWS: APPEARANCES: The Court will hear oral arguments on all matters at the scheduled time of hearing. If all counsel intend to submit on the Tentative Order and do not want oral argument, please advise the clerk, in Department “C”, by calling (562-345-3702). If all sides submit on the Tentative Order and the clerk is so advised, the Tentative Order will become the final order of the court and the prevailing party shall give written Notice of Ruling per CRC 3.1312. If the Moving and Responding parties do not agree to submit on the Tentative Order, the motion will be called as calendared for hearing. There is no need to contact Department “C”, as the matter will remain on calendar for hearing. If the Moving party does not call Department “C” to submit on the Tentative Order and there is no appearance by any party, then the motion(s), at the Court’s discretion, may be taken off calendar without ruling on the motion(s). ORDERS: The minute order reflecting the Court’s Order will constitute the final Order. No additional orders should be submitted to the Court for signature unless required by law or by the Court. Prevailing party shall give written Notice of Ruling per CRC 3.1312. Minute orders, which constitute the final Order of the Court, will only be sent to the parties via U.S. mail for the following: OSC re: sanctions, OSC re: contempt or matters taken under submission after oral arguments or briefing. Counsel or parties may request copies of all other minute orders/final orders either at the clerk’s office or in writing. If a request is in writing, a self-addressed stamped envelope and the appropriate fee for copies shall be submitted.
Case Number: 19NWCV00899 Hearing Date: August 11, 2022 Dept: SEC
BROWN v. SELECT PORTFOLIO
SERVICING, INC.
CASE NO.: 19NWCV00899
HEARING: 08/11/22
JUDGE: OLIVIA ROSALES
#6
TENTATIVE ORDER
I.
Defendants SELECT PORTFOLIO SERVICING, INC.
and US BANK, NA’s demurrer to Plaintiffs’ Fourth Amended Complaint is SUSTAINED
without leave to amend.
II.
Defendants SELECT PORTFOLIO SERVICING, INC.
and US BANK, NA’s Motion to Strike Portions of Plaintiffs’ Fourth Amended
Complaint is MOOT.
Moving Parties to give Notice.
Defendants SELECT PORTFOLIO SERVICING, INC. and US BANK,
NA’s Request for Judicial Notice is GRANTED. (Cal. Ev. Code §452.)
This action for
quiet title was filed on November 25, 2019. The operative Fourth Amended
Complaint (“4AC”) asserts the following causes of action: (1) Unfair
Competition (Viol. Of Cal. Civ. Code §17200 et seq.); (2) Violation of the
Homeowners Bill of Rights (Viol. Of Cal. Civ. Code §2923.5); (3) Fraud; (4)
Breach of Implied Covenant of Good Faith and Fair Dealing; (5) Unlawful Foreclosure;
and (6) Negligence.
Defendants SELECT PORTFOLIO SERVICING, INC. and US BANK, NA
(“Select Portfolio”) demur to each cause of action.
Second Cause of Action – HBOR Violation
Cal. Civ. Code § 2923.6 precludes a mortgage servicer from recording a notice
of default, notice of sale or proceeding with a trustee’s sale while a first
lien loan modification application has been submitted. Thus, § 2923.6 prohibits
recording a notice of default while a modification application is still under
review.
Plaintiffs allege that “The Plaintiffs had repeatedly attempted mortgage
modifications with the defendants SPS on behalf of Chase through Bear Stearns
and each time were never formally denied or approved of the requested
modification.” (4AC ¶26) “Plaintiffs were assigned to Relationship Manager
Michael Taylor from August 12, 2016 to January 13, 2018. During this period
Michael Taylor received a completed loan modification application, all the
Plaintiffs’ questions, and requests, and was in receipt of all requested
information.” (4AC ¶31.) “The Plaintiff was never denied a loan modification in
writing. [¶] The Plaintiff currently has a request for loan modification
pending.” (4AC ¶¶37-38.) “Despite the fact that the Plaintiff had a pending
loan modification and a pending bankruptcy the Defendant scheduled a
foreclosure sale date for November 28, 2017 in violation of the law.” (4AC
¶40.) “Plaintiff brought suit for Quiet Title and Unlawful Foreclosure in 2018.
[¶] As part of the Settlement Agreement with defendants, the plaintiff
dismissed the Quiet Title and Unlawful foreclosure claims for fair
consideration of their application for mortgage modification and $500.
Following the case dismissal Plaintiff filed numerous applications for mortgage
modification in April, July, and August 2018.” (4AC ¶¶41-43.) “Plaintiff
vigilantly attempted to communicate with defendants. [¶] Defendant’s set a
foreclosure sale date for March 2019. [¶] The illegal foreclosure sale date
actually went forward, illegally selling the property.” (4AC ¶¶44-46.)
The Settlement Agreement entered into by
Plaintiffs and Select Portfolio, attached as Exhibit 1 to the 4AC states, in
pertinent part, “if the Agreement including the Request for Dismissal and the
Stipulated Judgment of Possession, are timely and fully executed and timely
provided to counsel for SPS, SPS will postpone the foreclosure sale of the
Property to at least February 15, 2018. SPS will review the Loan for a possible
modification on the condition that a complete modification application is
submitted to SPS by December 29, 2017. Whether a modification of the Loan
will be provided is solely in the discretion of SPS… and SPS… cannot be held
liable for any decision on any modification application submitted.” (emphasis
added) (4AC Ex. 1(3)(G).)
SPS now argues that since Plaintiffs do not
sufficiently allege that a complete loan modification application was submitted
prior to December 29, 2017, that SPS had no obligation to consider any complete
loan modification applications submitted in 2018. This argument is well-taken.
Based on the express terms of the Settlement
Agreement, Select Portfolio was not obligated to review the alleged
modification applications allegedly submitted in April, July, and August 2018.
(See 4AC ¶43.)
At ¶31, Plaintiffs allege that they
submitted a “complete” loan modification application sometime between August
2016 to January 2018. (4AC ¶31.) This conclusory allegation is devoid of any
facts. Statutory claims must be pled with specificity—Plaintiffs must
specifically allege when a completed loan modification application was
submitted. It does not suffice to allege that Plaintiffs submitted a completed
loan modification sometime during a time period spanning over a year. As pled,
the Court cannot determine whether a complete loan modification application was
submitted prior to December 29, 2017.
The demurrer to the second cause of action
is SUSTAINED without leave to amend.
Third Cause of Action – Fraud
The elements of a cause of action for intentional fraud are
1) misrepresentation (false representation, concealment, or nondisclosure); 2)
knowledge of falsity (scienter); 3) intent to defraud or induce reliance; 4)
justifiable reliance; and 5) damages. (See Cal. Civ. Code §1709.) “Fraud in the
inducement is a subset of the tort of fraud. It occurs when the promisor knowns
that he is signing but his consent is induced by fraud, mutual assent is
present and a contract is formed, which, by reason of the fraud, is voidable.”
(Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294-295.)
Fraud actions are subject to strict requirements of
particularity in pleading. (Committee on Children’s Television, Inc. v.
General Foods Corp. (1983) 35 Cal.3d 197, 216.) Fraud must be pleaded with
specificity rather than with general and conclusory allegations. (Small v.
Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity
requirement means a plaintiff must allege facts showing how, when, where, to
whom, and by what means the representations were made, and, in the case of a
corporate defendant, the plaintiff must allege the names of the persons who
made the representations, their authority to speak on behalf of the
corporation, to whom they spoke, what they said or wrote, and when the
representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631,
645.)
Plaintiffs allege that Defendants induced Plaintiffs into entering into
a Settlement Agreement in exchange for “a fair review of a loan modification
and also a payment of $500.” (4AC ¶83.) Plaintiffs allege that they relied on
Defendants’ misrepresentations to their detriment and would have sought legal
assistance sooner or exercised other available options but for Defendants’
misrepresentations. (4AC ¶¶ 93-106.) Plaintiffs allege that they were not
granted a fair review of their loan modification application(s), and that they
never received the $500 promised. These allegations do not suffice. Plaintiffs
fail to allege sufficient facts to constitute a cause of action for fraudulent
inducement. Plaintiffs do not allege the misrepresentations with the requisite
factual specificity. In addition, Plaintiffs did not allege facts showing
knowledge of falsity, intent to induce reliance, and justifiable reliance.
The demurrer to the third cause of action is SUSTAINED without leave to
amend.
Fourth Cause of Action – Breach of Implied Covenant of
Good Faith and Fair Dealing
“The prerequisite for any action for breach of the implied covenant of
good faith and fair dealing is the existence of a contractual relationship
between the parties, since the covenant is an implied term in the contract.” (Smith
v. San Francisco (1990) 225 Cal.App.3d 38, 49.)
Plaintiffs allege that this claim is based on the 2018 Settlement
Agreement (now attached to the 4AC). The “implied covenant of good faith and
fair dealing is limited to assuring compliance with the express terms of the
contract, and cannot be extended to create obligations not contemplated by the
contract.” (Pasadena Live, LLC v. City of Pasadena (2004) 114
Cal.App.4th 1089, 1093-1094.)
The 4AC does not allege facts demonstrating Defendants’ refusal to
discharge contractual responsibilities. As indicated above, Plaintiffs do not
sufficiently allege that a complete loan modification application was submitted
prior to December 29, 2017 (in satisfaction of the terms of the Settlement
Agreement). Therefore, Select Portfolio was under no obligation to consider
Plaintiffs’ untimely (late) loan modification applications submitted in 2018. The
implied covenant claim improperly seeks to impose on Defendants’ the obligation
to modify Plaintiffs’ loan. The Settlement Agreement does not require Select
Portfolio to offer a loan modification.
The demurrer to the fourth cause of action is SUSTAINED with without
leave to amend.
First Cause of Action – Unfair Competition
To state a claim under §17200, Plaintiffs must
allege whether the conduct complained of is a fraudulent, unlawful or an unfair
business practice. To bring a claim under the fraud prong, Plaintiffs must
allege an affirmative misrepresentation, conduct or business practice on the
part of a defendant; or an omission in violation of defendant’s duty to
disclose; and that is likely to deceive members of the public. (Buller v.
Sutter Health (2008) 160 Cal.App.4th 981, 986.) To state a claim under the
unfairness prong, Plaintiffs must allege that one or more of Defendant’s
business practices are unfair, unlawful or fraudulent; and the remedy sought is
authorized by law. (Paulus v. Bob Lynch Ford, Inc. (2006) 139
Cal.App.4th 659, 676; see also Kwikset Corp. v. Superior Court (2011) 51
Cal.4th 310, 337.) To state a claim under the unlawful prong, Plaintiffs must
allege a violation of law and cite that law. (Graham v. Bank of America,
N.A. (2014) 226 Cal.App.4th 594, 610 [demurrer to SAC which failed to
allege violation of a law was properly sustained without leave to amend].)
In light of the Court’s rulings above, the demurrer
to the first cause of action is SUSTAINED without leave to amend.
Fifth and Sixth Causes of Action
“Following an order sustaining a demurrer… with leave to
amend, the plaintiff may amend his or her complaint only as authorized by the
court’s order.” (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th
1018, 1023.) The leave is construed as permission to the pleader to amend the
causes of action to which the demurrer has been sustained, not add entirely new
causes of action. (Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995,
1015; People ex. Rel. Dept. of Pub. Wks. v. Clausen (1967) 248 Cal. 2d
770, 785.).
Without leave of Court, Plaintiffs added in a fifth cause of
action for Unlawful Foreclosure and a sixth cause of action for Negligence.
These amendments go beyond the scope of the previous order granting leave to
amend, and Plaintiffs did not seek leave to amend prior to adding these new
claims. The demurrer to the fifth and sixth causes of action is SUSTAINED
without leave to amend.