Judge: Randy Rhodes, Case: 22CHCV00834, Date: 2023-01-20 Tentative Ruling
Case Number: 22CHCV00834 Hearing Date: January 20, 2023 Dept: F51
Dept. F-51¿
Date: 1/20/23
Case #22CHCV00834
¿
DEMURRER WITH
MOTION TO STRIKE
Demurrer with Motion to Strike Filed: 11/14/22
MOVING PARTY: Defendants Fay Servicing, LLC; and U.S.
Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust (collectively,
“Defendants”)
RESPONDING PARTY: Plaintiff Sonja Coulter, an individual
(“Plaintiff”)
NOTICE: OK
RELIEF REQUESTED: Defendants demur to Plaintiff’s entire
complaint. Defendants also seek an order striking portions of the complaint
relating to certain monetary damages sought.
TENTATIVE RULING: The demurrer is OVERRULED as to Plaintiff’s first, fifth,
seventh, and eighth causes of action, and SUSTAINED as to Plaintiff’s third,
fourth, and sixth causes of action, with 20 days leave to amend. Defendants’
motion to strike is GRANTED as to the portions of the complaint pertaining to
pre-foreclosure monetary relief, and DENIED as to monetary relief under the
UCL. Defendants’ request for judicial notice is granted.
I.
BACKGROUND
This is a wrongful foreclosure
action wherein Plaintiff, who owns and resides at the property located at 23540
Cherry Street, Santa Clarita, CA 91321 (the “Subject Property”), brings various
causes of action against Defendants, which include alleged violations of the
California Homeowner Bill of Rights (“HBOR”). (Civ. Code, § 2923.4 et seq.)
Plaintiff alleges that she obtained
a mortgage loan on the Subject Property in the amount of $608,000, for which
the deed of trust was recorded on 11/17/06. (Ex. A to Compl.) The deed of trust
was allegedly assigned three times, with each assignment recorded on 6/5/14,
6/6/14, and 6/6/14. On 8/12/19, a Notice of Default and Election to Sell was
recorded, and on 12/13/21, a Notice of Trustee’s Sale was recorded as to the
Subject Property.
On 6/13/22, Plaintiff alleges that
she applied for a loan modification through defendant Fay Servicing, LLC
(“Fay”) via her agent, Non-Profit Alliance of Consumer Advocates
(“Non-Profit.”) Plaintiff alleges that Fay informed Non-Profit that the application
could not be approved because it was missing documents. Plaintiff alleges that
on 9/1/22, Non-Profit submitted a second loan modification agreement on her
behalf, which was ultimately denied on 9/16/22.
On 10/10/22, Plaintiff filed her
complaint against Defendants alleging the following causes of action: (1) Violation of Civil Code § 2923.5; (2) Violation of
Civil Code § 2924, subd. (a)(1); (3) Violation of Civil Code § 2923.6, subd
(c); (4) Violation of Civil Code § 2923.7; (5) Violation of Civil Code § 2924.9;
(6) Violation of Civil Code § 2924.10; (7) Unfair Business Practices, Violation
of Business and Professions Code §
17200 et seq.; and (8) Cancellation of Written Instruments, Civil Code § 3412. On 11/3/22,
Plaintiff dismissed her second cause of action against Defendants.
On 11/14/22, Defendants filed the
instant demurrer with motion to strike. On 12/15/22, Plaintiff filed her
opposition. On 1/11/23, Defendants filed their reply.
II.
DEMURRER
Meet-and-Confer
Before filing its demurrer, “the
demurring party shall meet and confer in person or by telephone with the party
who filed the pleading that is subject to demurrer for the purpose of
determining whether an agreement can be reached that would resolve the
objections to be raised in the demurrer.” (Code Civ. Proc. § 430.41, subd.
(a).) The demurring party
must file and serve a meet and confer declaration stating either: “(A) The
means by which the demurring party met and conferred with the party who filed
the pleading subject to demurrer, and that the parties did not reach an
agreement resolving the objections raised in the demurrer;” or “(B) That the
party who filed the pleading subject to demurrer failed to respond to the meet
and confer request of the demurring party or otherwise failed to meet and
confer in good faith.” (Id. at subd. (a)(3).)
Here, counsel for Defendants
declares that on 11/3/22, he telephoned Plaintiff’s attorney’s office, and
spoke with an attorney assisting with the case about the issues raised in the
instant demurrer and motion to strike. (Decl. of Alexander Farrell, ¶ 4.) After Plaintiff’s
dismissal of her second cause of action on that same date, the parties’
attorneys met and conferred further, but were unable to reach an agreement. (Id.
at ¶¶ 5–6.)
Therefore, counsel has satisfied
the preliminary meet and confer requirements of Code of Civil Procedure section
430.41, subdivision (a).
Analysis
As a general matter, a¿party may
respond to a pleading against it by demurrer on the basis of any single or
combination of eight enumerated grounds, including¿that¿“the pleading does not
state facts sufficient to constitute a cause of action.” (Code Civ. Proc., §
430.10, subd. (e).)
In¿a demurrer proceeding, the
defects must be apparent on the face of the pleading or via proper judicial
notice.¿(Donabedian v. Mercury Ins. Co.¿(2004) 116 Cal.App.4th 968,
994.)¿“A demurrer tests the pleading alone, and not the evidence or facts
alleged.” (E-Fab, Inc.¿v.¿Accountants, Inc. Servs.¿(2007) 153
Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the
complaint’s properly pleaded or implied factual allegations. (Ibid.) The
only issue a demurrer is concerned with is whether the complaint, as it stands,
states a cause of action. (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740,
747.)
Here, Defendants¿demur to Plaintiff’s
entire complaint pursuant Code of Civil Procedure section 430.10,
subdivision¿(e),¿arguing that each cause of action fails because¿Plaintiff fails¿to
allege facts sufficient to¿state¿a cause of action against Defendants.
A.
Failure to Allege Facts Sufficient to
State a Cause of Action
1.
Violation of Civil Code § 2923.5
Plaintiff’s first cause of action
alleges that Defendants violated Civil Code section 2923.5. Civil Code section 2923.5 requires mortgage
servicers to act with “due diligence” to contact the borrower either in person
or by telephone before recording a notice of default against that borrower.
(Civ. Code § 2923.5, subds. (a)–(b).) Due diligence requires the mortgage
servicer to mail the borrower a letter, attempt to reach the borrower by
telephone on three different occasions, send a certified letter with return
receipt requested, and provide means for the borrower to contact it. (Id.,
subd. (e).)
Plaintiff alleges in her complaint that the 8/12/19 Notice
of Default was recorded without any notice to her, in violation of Civil
Code § 2923.5, subdivision
(a)(2). (Compl. ¶¶ 28–30.) Defendants argue that “the Declaration of Compliance
attached to the Notice of Default states that Defendants exercised due
diligence to contact Plaintiff to assess her financial situation and explore
foreclosure prevention options, and that more than thirty days had passed.”
(Dem. 5:18–20.) Specifically, the declaration states that “the due diligence
efforts were satisfied on 5/6/19.” (Ex. “E” to Compl.; Ex. 4 to Def.’s RJN.)
Plaintiff argues in opposition that
“though regardless of their declaration that they attempted contact, none was
made. Plaintiff was available by phone and mail and never received a phone call
from FAY nor any written notifications regarding their [sic] available options.”
(Pl.’s Opp. 4:15–18.) Defendants argue in reply that Plaintiff’s allegation
that she did not receive any contact is insufficient to overcome the
presumption created by the declaration of compliance. (Defs.’ Reply, 2:22–26.)
In Skov v. U.S. Bank National
Assn. (2012) 207 Cal.App.4th 690, the Court of Appeal reversed the trial
court’s ruling sustaining a demurrer to plaintiff’s cause of action for
violation of Civil Code 2923.5,
because “the issue of compliance cannot be resolved at this stage of the
litigation.” (207 Cal.App.4th at 696–697.) Here, as in Skov,
Plaintiff has raised a question of fact as to whether Defendants have complied
with the due diligence requirements of Civil Code 2923.5 in attempting to contact Plaintiff, despite the existence
of the declaration of compliance attached to the notice of default.
Accordingly, the Court adopts the same reasoning as in Skov,
and finds that plaintiff has alleged facts sufficient to support her first
cause of action against Defendants for violation of Civil Code 2923.5.
2.
Violation of Civil Code § 2923.6, subd. (c)
Plaintiff’s third cause of action alleges
that Defendants violated Civil Code section 2923.6, subdivision (c). Under this
portion of the HBOR, “if a borrower submits a complete application for a
first lien loan modification offered by, or through, the borrower’s mortgage
servicer at least five business days before a scheduled foreclosure
sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent
shall not record a notice of default or notice of sale, or conduct a trustee’s
sale, while the complete first lien loan modification application is pending.”
(Civil Code § 2923.6, subd. (c) [emphasis added].)
Plaintiff alleges that Defendants
failed to rescind their foreclosure efforts after her 6/13/22 loan modification
application was filed. (Compl. ¶
45.) However, as Defendants note, Plaintiff failed to submit a complete loan
modification application, according to her own allegations. (Dem. 7:23–24;
Compl. ¶¶ 18, 21,
23–24.)
Moreover, “Defendants owed no such
duty to rescind the Notice of Default and Notice of Trustee’s Sale, as both
notices were recorded before Plaintiff submitted a loan medication application”
(Dem. 8:2–4.) As the Notice of Default was recorded on 8/12/19, and the Notice
of Trustee’s Sale was recorded on 12/13/21, with the foreclosure sale scheduled
for 1/13/22, the statute does not apply to the facts of the instant case, where
Plaintiff filed her incomplete application six months after the later of
these documents had been recorded. (Civil Code § 2923.6, subd. (c).)
Accordingly, the Court finds that
Plaintiff has failed to allege facts sufficient support her third cause of
action against Defendants.
3.
Violation of Civil Code § 2923.7
Plaintiff’s fourth cause of action
alleges that Fay failed to assign a “single point of contact” to Plaintiff in
violation of Civil Code section 2923.7. Under this portion of the HBOR, “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.”
(Civ. Code §
2923.7, subd. (a).) “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” below. (Id., subd.
(e).)
“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;
and (5) Having access to individuals with the ability and authority to stop
foreclosure proceedings when necessary.” (Id., subd. (b).)
Defendants argue that Plaintiff’s
fourth cause of action fails because she has alleged that her agent spoke to a
team of individuals employed by Fay, and the statute defines “single point of
contact” to include such a group. (Dem 8:24–9:2; Compl. ¶¶ 18–21, 24.) In opposition, Plaintiff does not
dispute that the team of individuals at Fay constitutes a “single point of
contact,” but instead argues that they “must provide the borrower with
information about foreclosure prevention alternatives, deadlines for
applications, how and where a borrower should submit their application, and
must alert the borrowers if any documents are missing.” (Pl.’s Opp. 7:3–6.)
As Defendants observe, Plaintiff
received email communications from Fay stating that her application was missing
documents, in addition to several phone calls with various individuals at Fay
regarding her application. (Compl. ¶¶
18–21, 24; Defs.’ Reply, 4:9–13.) “Thus, Plaintiff’s own allegations show that
Defendants complied with section 2924.10(a).” (Defs.’ Reply, 4:12–13.)
Based on the foregoing, the Court
finds that Plaintiff has failed to allege facts sufficient support her fourth
cause of action against Defendants.
4.
Violation of Civil Code § 2924.9
Plaintiff’s fifth cause of action alleges
that Defendants violated Civil Code section 2924.9. Under this section of the
HBOR, a mortgage servicer must provide a borrower with foreclosure prevention
alternatives within five business days after recording a notice of default, by
sending written communication to the borrower with various information about
such alternatives. (Civ. Code § 2924.9, subd. (a).)
Plaintiff alleges that Defendants
failed to notify Plaintiff with any such foreclosure prevention alternatives
within five business days of recording the 8/12/19 Notice of Default. (Compl. ¶¶ 53–54.) Defendants
rely on the same Declaration of Compliance attached to the 8/12/19 Notice of
Default to assert that they fulfilled their obligations under Civil Code
section 2924.9. However, the declaration purports to verify that Defendants
used due diligence to attempt to contact Plaintiff “as required by California
Civil Code §
2923.55.” (Ex. “E” to
Compl.; Ex. 4 to Def.’s RJN.)
This declaration is insufficient to meet the separate
requirements of Civil Code section 2924.9. Moreover, as in the above section
discussing Plaintiff’s first cause of action, here, Plaintiff has raised a
factual question as to Defendants’ compliance with the statute. As such an
issue cannot be resolved at the demurrer stage, the Court finds that Plaintiff
has alleged facts sufficient to support her fifth cause of action against
Defendants. (Skov, 207 Cal.App.4th at 696–697.)
5.
Violation of Civil Code § 2924.10
Plaintiff’s sixth cause of action
alleges that Defendants violated Civil Code section 2924.10. This portion of
the HBOR provides: “When a borrower submits a complete first lien modification
application or any document in connection with a first lien modification
application, the mortgage servicer shall provide written acknowledgment of the
receipt of the documentation within five business days of receipt.” (Civ. Code § 2924.10, subd. (a).) “For
purposes of this section, a borrower’s first lien loan modification application
shall be deemed to be ‘complete’ when a borrower has supplied the mortgage
servicer with all documents required by the mortgage servicer within the
reasonable timeframes specified by the mortgage servicer.” (Id., subd.
(b).)
Here, Plaintiff alleges that Defendants failed to provide
her with such a written notice of receipt of her 6/13/22 loan modification
application. (Compl. ¶ 59.) However, as Defendants observe, and as noted above,
Plaintiff’s application was incomplete, as admitted by her own allegations. (Dem.
9:3–10; Compl. ¶¶
18, 21, 23–24.) As such, Defendants were not required to give Plaintiff notice
of receipt of her application under Civil Code section 2924.10.
As Civil Code section 2924.10 is
inapplicable to the facts of the instant case, the Court finds that Plaintiff has
failed to allege facts sufficient support her sixth cause of action against
Defendants.
6.
Violation of Business and Professions Code
section 17200 et seq.
Plaintiff’s seventh cause of action
alleges that Defendants violated Business and Professions Code section 17200 et
seq. (the “UCL”). To set forth a claim for unfair business practices in
violation of the UCL, a plaintiff must establish that the defendant was engaged
in an “unlawful, unfair or fraudulent business act or practice and unfair,
deceptive, untrue or misleading advertising” and certain specific acts. (Bus.
& Prof. Code, § 17200.)
Unlawful Conduct
“In essence, an action based on Business
and Professions Code section 17200 to redress an unlawful business practice
‘borrows’ violations of other laws and treats these violations, when committed
pursuant to business activity, as unlawful practices independently actionable
under section 17200 et seq. and subject to the distinct remedies provided
thereunder.” (People ex rel. Bill Lockyer v. Fremont Life Ins. Co.
(2002) 104 Cal.App.4th 508, 515.)
Here, Defendants argue that Plaintiff has
failed to allege any illegal conduct that would give rise to a violation under
the “unlawful” prong of the UCL. (Dem. 10:2.) Plaintiff argues in opposition
that she has sufficiently pled a violation of the HBOR. (Pl.’s Opp., 9:14–15.)
As set forth above, Plaintiff has successfully
alleged facts sufficient to state a cause of action under the HBOR,
specifically Civil Code sections 2923.5 and 2924.9. Accordingly, Plaintiff has alleged facts
sufficient state a cause of action for a violation of the UCL under the
“unlawful” prong.
Unfair Conduct
A plaintiff alleging an “unfair” business
practice under the UCL must show that the defendant's conduct is “tethered to
an underlying constitutional, statutory or regulatory provision, or that it
threatens an incipient violation of an antitrust law, or violates the policy or
spirit of an antitrust law.” (Graham v. Bank of America, N.A. (2014) 226
Cal.App.4th 594, 613.)
Defendants argue that the pleading
standard for an “unfair” business practice under the UCL requires Plaintiff to “plead facts that (1) her injury, due to
the purported unfair business practice, is substantial, (2) her injury is not
outweighed by any countervailing benefits to consumer or competition, and (3)
that the injury is something that he could not reasonably have avoided.” (Dem.
10:11–15, citing Camacho v. Automobile Club of Southern California
(2006) 142 Cal.App.4th 1394, 1403.) However, in Graham, the Court of
Appeal specifically considered the Camacho standard, and declined to
apply it, in favor of the standard requiring a plaintiff to “show the
defendant's conduct is tethered to an underlying constitutional, statutory or
regulatory provision.” (Graham, 226
Cal.App.4th at 613.)
Here, Plaintiff’s
allegations arise from Defendants’ alleged violations of the HBOR. (Compl. ¶ 68.) As such, the
requirement of Defendants’ conduct be “tethered” to an underlying statutory
provision has been met. (Ibid.) Accordingly, the Court finds that
Plaintiff has successfully alleged facts sufficient state a cause of action for
a violation of the UCL under the “unfair” prong.
Fraudulent Conduct
“‘Fraudulent,’ as used in the statute,
does not refer to the common law tort of fraud but only requires a showing members of the public ‘are likely to be deceived.’” (Olsen
v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 618.)
Here, Plaintiff alleges that Defendants’ “acts and more are unlawful and unfair
conduct has caused substantial harm to PLAINTIFF and the California citizenry
at large.” (Compl. ¶
70.) Defendants argue that Plaintiff’s conclusory
allegation cannot state a cause of action against Defendants for fraudulent
conduct in violation of the UCL because the transactions at issue are wholly
private in nature. (Dem. 10:26–11:3.)
Plaintiff argues in opposition that she
has sufficiently pled fraudulent conduct “by demonstrating the acts of
misrepresentation by FAY in that Plaintiff was reasonably under the impression
that he [sic] would be granted a good faith modification review when FAY did
not give Plaintiff a determination for a prolonged period of time.” (Pl.’s Opp.
11:11–14.) As Defendants observe, Plaintiff’s opposition “fails to acknowledge that the loan is a
private agreement not involving the public. Thus, Plaintiff also fails to state
a claim under the ‘fraudulent’ prong.” (Defs.’ Reply, 6:27–7:2.)
Based on the foregoing, the Court
finds that Plaintiff
has not alleged facts sufficient state a cause of action for a violation of the
UCL under the “fraudulent” prong.
Standing
In order to have standing under the UCL, a
party must “(1) establish a loss or deprivation of money or property sufficient
to qualify as injury in fact, i.e., economic injury, and (2) show that that
economic injury was the result of, i.e., caused by, the unfair business
practice or false advertising that is the gravamen of the claim.” (Kwikset
Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.)
Defendants argue that here, “Plaintiff cannot attribute alleged loss of
equity and other purported damages to Defendants’ alleged actions, as these
alleged damages were caused by her own default.” (Dem. 11:14–16.) Plaintiff
argues in opposition that she “has been wrongfully deprived of a proper and
diligent loan modification review and in the process incurred late &
interest fees as a result of the prolonged review and has had to endure the
expenses of the instant litigation as a result of FAY’S failure to properly
review Plaintiff’s loan modification application. Such expenditures provide
Plaintiff with standing under the UCL.” (Pl.’s Opp. 10:7–11.)
In their reply, Defendants argue that Plaintiff’s allegations
still fail to confer her standing under the UCL because “she was obligated to
pay for any late fees and past due interest and amounts charged under the loan
upon default of the loan, and not because of the allegedly deficient loan
modification review.” (Defs.’ Reply, 7:19–21.) However, Plaintiff’s complaint
states that the charges she incurred would have been otherwise mitigated if not
for Defendants’ alleged conduct. (Compl. ¶ 68.)
The Court finds this sufficient at the demurrer stage to
confer Plaintiff with standing under the UCL.
As the Court finds that Plaintiff has
standing and has sufficiently alleged facts to support a cause of action under
the “unlawful” and unfair” prongs of the UCL, Defendants’ demurrer is overruled
as to Plaintiff’s seventh cause of action.
7.
Cancellation of Written Instruments, Civil
Code § 3412
Plaintiffs’ eighth cause of action
seeks to cancel the Notice of Default, Notice of Trustee’s Sale, and Trustee’s
Deed Upon Sale pursuant to Civil Code section 3412. (Compl. ¶ 77.) Under this
statute, a “written instrument, in respect to which there is a reasonable
apprehension that if left outstanding it may cause serious injury to a person
against whom it is void or voidable, may, upon his application, be so adjudged,
and ordered to be delivered up or canceled.” (Civ. Code § 3412.)
“To prevail on a claim to cancel an
instrument, a plaintiff must prove (1) the instrument is void or voidable due
to, for example, fraud, and (2) there is a reasonable apprehension of serious
injury including pecuniary loss or the prejudicial alternation of one's
position.” (Weeden v. Hoffman (2021) 70 Cal.App.5th 269, 294.)
Here, Plaintiff alleges that the
subject documents are void or voidable as clouds on title and were wrongfully
recorded. (Compl. ¶
79.) Defendants argue that this cause of action must necessarily fail as it is
based on the alleged HBOR violations. (Dem. 11:25–28.) Defendants further argue
that “there is no defect in the Notice of Default or the Notice of Trustee’s
Sale,” and that no Trustee’s Deed Upon Sale has been recorded as the foreclosure
sale has not occurred.” (Dem. 11:28–12:2.)
In opposition, Plaintiff argues
that she “has properly pled that FAY
was involved in the improper transferring that took place with the recording of
the Notice of Default.” (12:9–10.) As the Court has overruled Defendants’
demurrer as to Plaintiff’s first and fifth causes of action alleging violations
of the HBOR, the Court accordingly finds that Plaintiff has sufficiently
alleged facts to support a cause of action for cancellation of the Notice of
Default and Notice of Trustee’s Sale.
Accordingly, the Court finds that Plaintiff has alleged facts
sufficient to support her eighth cause of action against Defendants.
B.
Judicial Estoppel
Defendants argue that Plaintiff is barred from bringing her
first, fifth, and eighth causes of action under the doctrine of judicial
estoppel. (Dem. 3:16–5:7.) Judicial estoppel refers to the preclusion against
taking inconsistent positions in the same lawsuit or in successive lawsuits. (M.
Perez Co. v. Base Camp Condominiums Ass'n No. One (2003) 111 Cal.App.4th
456, 463.) “The prior inconsistent assertion need not be made to a court of
law. Statements to administrative agencies may also give rise to judicial
estoppel.” (People v. Torch Energy Services, Inc. (2002) 102 Cal.App.4th
181, 189.)
The elements for judicial estoppel are as follows: “(1) the
same party has taken two positions; (2) the positions were taken in judicial or
quasi-judicial administrative proceedings; (3) the party was successful in
asserting the first position; (4) the two positions are completely
inconsistent; and (5) the first position was not taken as a result of
ignorance, fraud, or mistake.” (County of Imperial v. Superior Court
(2007) 152 Cal.App.4th 13, 34.)
Defendants observe, and the Court takes judicial notice,
that Plaintiff filed a Chapter 13 bankruptcy petition on 1/11/22. (Ex. 5 to
Defs.’ RJN.) As part of the bankruptcy proceedings, Plaintiff represented that
she held an interest in the Subject Property and that she had no “claims
against third parties, whether or not [she had] filed a lawsuit or made a
demand for payment.” (Ex. 7 to Defs.’ RJN.) On 7/29/22, Plaintiff’s bankruptcy
case was dismissed for Plaintiff’s failure to make all required pre-confirmation
plan payments. (Ex. 13 to Defs.’ RJN.)
Here, Defendants argue that Plaintiff’s representations to
the bankruptcy court that she had no claims against Defendants, when their
alleged misconduct had already taken place, bar her from bringing her first,
fifth, and eighth causes of action in the instant case under the doctrine of
judicial estoppel. (Dem. 3:16–5:7.) However, while Plaintiff has taken two
inconsistent positions in two different judicial proceedings, the bankruptcy
case was ultimately dismissed. (Ex. 13 to Defs.’ RJN.) “Judicial estoppel does
not apply when a party merely advocates inconsistent provisions; rather, it
applies when a party successfully asserts one position and later attempts to
benefit from asserting an inconsistent position.” (RSL Funding, LLC v.
Alford (2015) 239 Cal.App.4th 741, 748.)
As Plaintiff’s bankruptcy case was ultimately dismissed, the
doctrine of judicial estoppel does not apply to bar Plaintiff’s first, fifth,
and eighth causes of action.
Accordingly, the demurrer is OVERRULED as to Plaintiff’s
first, fifth, seventh, and eighth causes of action, and SUSTAINED as to
Plaintiff’s third, fourth, and sixth causes of action.
The court may, upon a motion, or at any
time in its discretion, and upon terms it deems proper, strike any irrelevant,
false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436,
subd. (a).) The court may also strike all or any part of any pleading not drawn
or filed in conformity with the laws of this state, a court rule, or an order
of the court. (Id., §
436, subd.
(b).) The grounds for moving to strike must appear on the face of
the pleading or by way of judicial notice. (Id., § 437.)
Here, Defendants move to strike the
portions of the Plaintiff’s complaint pertaining to monetary damages in a
pre-foreclosure context and under the UCL.
//
//
Meet and Confer
“Before filing a motion to strike
pursuant to this chapter, the moving party shall meet and confer in person or
by telephone with the party who filed the pleading that is subject to the
motion to strike for the purpose of determining if an agreement can be reached
that resolves the objections to be raised in the motion to strike.” (Code Civ.
Proc. § 435.5, subd. (a).) The parties are required to meet and confer at least
five days before the date a motion to strike must be filed, otherwise the
moving party is granted a 30-day extension to file the motion. (Ibid.)
Here, as set forth above, counsel
for Defendants and Plaintiff met and conferred to discuss the issues raised in
the instant demurrer and motion to strike. (Farrell Decl., ¶¶ 4–6.) Therefore,
counsel has satisfied the preliminary meet and confer requirements of Code of
Civil Procedure section 435.5, subdivision (a).
Pre-Foreclosure Remedies
Before a foreclosure sale has taken
place, a homeowner is only entitled to injunctive relief, rather than monetary
relief. (Civ. Code §
2429.12, subd. (a).) “While monetary damages are available postforeclosure,
prior to a foreclosure the ‘only’ remedy that a borrower may seek is an action
to enjoin a violation ‘of the specified sections, along with any trustee's
sale.’” (Lucioni v. Bank of Am., N.A. (2016) 3 Cal.App.5th 150, 160.)
Here, the foreclosure sale has not
yet taken place. Accordingly, as Plaintiff is not entitled to the recovery of monetary
relief, the Court grants Defendants’ motion to strike portions of paragraphs 31,
46, 51, 56, 61 of Plaintiff’s complaint, and paragraphs 1, 2, and 9 of its
prayer for relief, pertaining to “civil and statutory penalties” and monetary
relief.
UCL
“A
UCL action is equitable in nature; damages cannot be recovered. … We have
stated that under the UCL, ‘[p]revailing plaintiffs are generally limited to
injunctive relief and restitution.’” (Korea Supply Co. v. Lockheed Martin
Corp. (2003) 29 Cal.4th 1134, 1144.) “The object of restitution is to
restore the status quo by returning to the plaintiff funds in which he or she
has an ownership interest.” (Id. at 1149.) While restitution applies to
funds in which a plaintiff had actual prior possession, or a vested interest,
it does not apply when the plaintiff had a mere “expectancy” in the funds. (Id.
at 1149–1150.)
Here,
Plaintiff alleges that she “has suffered an
actual, pecuniary injury of the loss of the equity in the value of the Subject
Property, and the costs of seeking a remedy for FS DEFENDANT and LSF8
DEFENDANT’s wrongful actions.” (Compl. ¶ 73.) As previously mentioned, the complaint states that the late charges and
other related fees Plaintiff incurred would have been otherwise mitigated if
not for Defendants’ alleged misconduct. (Compl. ¶ 68.) As Plaintiff has pled that she has in fact paid
these costs, she has therefore alleged an ownership interest in them, and thus
qualifies for restitutionary relief under the UCL.
Accordingly,
the Court denies Defendants’ motion to strike paragraph 73 of the
complaint.
IV.
LEAVE TO AMEND
Where a demurrer is sustained,
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 plaintiff to show the court that a pleading can be amended
successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118,
226.) However, “[i]f there is any reasonable possibility that the plaintiff can
state a good cause of action, it is error to sustain a demurrer without leave
to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240,
245).
Here, the Court notes that this is
the first demurrer brought in this action, and that Plaintiff has specifically
requested leave to amend in her opposing papers. Accordingly, under the Court’s
liberal policy of granting leave to amend, the Court grants Plaintiff 20 days
leave to amend the complaint to cure the defects set forth above.
CONCLUSION
The demurrer is OVERRULED as to Plaintiff’s first, fifth,
seventh, and eighth causes of action, and SUSTAINED as to Plaintiff’s third,
fourth, and sixth causes of action, with 20 days leave to amend. Defendants’
motion to strike is GRANTED as to the portions of the complaint pertaining to
pre-foreclosure monetary relief, and DENIED as to monetary relief under the
UCL. Defendants’ request for judicial notice is granted.