Judge Robert B. Broadbelt, Case 20STCV48390 2022-12-22 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 20STCV48390, Date: 2022-12-22 Tentative Ruling

Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.

MOVING PARTIES: Defendants BM Real Estate Services, Inc., dba Priority Financial Network, and Tzvi Ratner-Stauber

MOVING PARTIES: Defendants Devoir Oblige Capital Group, LLC dba D.O. Capital Group, LLC, FCI Lender Services, Inc., SG Capital Partners, LLC, and Select Portfolio Servicing, Inc.

The court considered the moving, opposition, and reply papers filed in connection with each demurrer and the motion to strike.

Plaintiffs Raymond M. Tash and Katrin Tash (“Plaintiffs”) filed the operative Second Amended Complaint in this action on June 6, 2022, alleging four causes of action for (1) violation of the Fair Debt Collection Practices Act; (2) declaratory relief; (3) fraud by misrepresentation and/or concealment; and (4) negligent misrepresentation.[1]

Two sets of responsive pleadings are pending before the court. First, defendants BM Real Estate Services, Inc. dba Priority Financial Network (“BM Real Estate”) and Tzvi Ratner-Stauber (“Ratner-Stauber”) (collectively, “BM Real Estate Defendants”) move the court for an order sustaining their demurrer to each cause of action alleged by Plaintiffs. Second, defendants Devoir Oblige Capital Group, LLC, aka D.O. Capital Group, LLC, FCI Lender Services, Inc., SG Capital Partners, LLC, and Select Portfolio Servicing, Inc. (collectively, “Entity Defendants”), move the court for an order (1) sustaining their demurrer to Plaintiffs’ first and second causes of action, and (2) striking from the Second Amended Complaint Plaintiffs’ prayer for punitive damages.

The court denies BM Real Estate Defendants’ request for judicial notice as to Exhibit 1.

The court grants BM Real Estate Defendants’ request for judicial notice as to Exhibits 2 and 3. (Evid. Code, § 452, subd. (c); Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. 1.)

The court denies Entity Defendants’ request for judicial notice as to Exhibits 1 and 7.

The court grants Entity Defendants’ request for judicial notice as to Exhibits 4, 5, 6, and 8. (Evid. Code, § 452, subd. (d).)

The court grants Entity Defendants’ request for judicial notice as to Exhibits 2 and 3. (Evid. Code, § 452, subd. (c); Yvanova, supra, 62 Cal.4th at p. 924, fn. 1.)

The court overrules BM Real Estate Defendants’ demurrer to Plaintiffs’ first cause of action for violation of the Rosenthal Fair Debt Collection Practices Act because it states facts sufficient to constitute a cause of action since (1) the Rosenthal Act applies to residential mortgages, and (2) Plaintiffs have alleged that BM Real Estate Defendants are debt collectors regularly engaged in taking routine measures to collect on indebtedness owed to him, it, or its principals, and have communicated with Plaintiffs in an effort to collect on the mortgage debt (SAC ¶¶ 22-23). (Code Civ. Proc., § 430.10, subd. (e); Civ. Code, § 1788.2, subds. (f) [“The term ‘consumer debt’ includes a mortgage debt”], (c) [“The term ‘debt collector’ means any person who, in the ordinary course of business, regularly…engages in debt collection”]; Davidson v. Seterus, Inc. (2018) 21 Cal.App.5th 283, 290 [“mortgage lenders and mortgage servicers can be ‘debt collectors’ under the Rosenthal Act”].)

The court sustains BM Real Estate Defendants’ demurrer to Plaintiffs’ second cause of action for declaratory relief because it fails to state facts sufficient to constitute a cause of action since (1) defendant BM Real Estate assigned its interest in the Deed of Trust to defendant SG Capital Partners, LLC (SAC ¶ 6; RJN Ex. 3) and Plaintiffs have not alleged that BM Real Estate is currently attempting to foreclose on the subject property, such that Plaintiffs have not alleged an “actual, present controversy[,]” and (2) Plaintiffs have not alleged that individual defendant Ratner-Stauber has asserted any right to pursue foreclosure (FAC ¶ 19 [“the entity defendants initiated foreclosure proceedings”].) (Code Civ. Proc., § 430.10, subd. (e); Otay Land Co. v. Royal Indemnity Co. (2008) 169 Cal.App.4th 556, 562.) The court notes that, in opposition, Plaintiffs contend that they “have alleged a claim for violation of the Rosenthal Act against defendants, and therefore have sufficiently alleged an actual controversy.” (Opp., p. 12:17-18.) However, Plaintiffs’ declaratory relief cause of action does not seek a declaration with respect to any violations of the Rosenthal Act, and therefore cannot save this claim.

The court sustains BM Real Estates Defendants’ demurrer to Plaintiffs’ third cause of action for fraud by misrepresentation and/or concealment because it fails to state facts sufficient to constitute a cause of action since Plaintiffs do not allege facts, with the specificity required by California law, establishing that (1) BM Real Estate Defendants made any specific representations to Plaintiffs that BM Real Estate Defendants knew were false at the time they made them, and that Plaintiffs relied on any of these representations, or (2) BM Real Estate Defendants suppressed or concealed a material fact that they were under a duty to disclose to Plaintiffs. (Code Civ. Proc., § 430.10, subd. (e); West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792 [elements of fraud based on intentional misrepresentation], 793 [“Fraud must be pleaded with specificity”]; Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1198 [elements of fraud based on concealment].)

The court sustains BM Real Estate Defendants’ demurrer to Plaintiffs’ fourth cause of action for negligent misrepresentation because it fails to state facts sufficient to constitute a cause of action since Plaintiffs fail to allege facts establishing that BM Real Estate Defendants made a false representation of fact without reasonable grounds for believing it to be true. (Code Civ. Proc., § 430.10, subd. (e); West, supra, 214 Cal.App.4th at p. 792.)

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.”¿ (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.)¿ To satisfy that burden, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”¿ (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The court finds that Plaintiffs have not met their burden to show in what manner they can amend their complaint to render it sufficient. The court therefore sustains the demurrer without leave to amend.

The court sustains Entity Defendants’ demurrer to Plaintiffs’ first cause of action for violation of the Rosenthal Fair Debt Collection Practices Act because it does not state facts sufficient to constitute a cause of action since Plaintiffs fail to allege that Entity Defendants violated the provisions set forth in the Second Amended Complaint. (Code Civ. Proc., § 430.10, subd. (e).)

Plaintiffs appear to base this cause of action on alleged violations of sections 1788.10, 1788.11, 1788.13, and 1788.14 of the Rosenthal Act. (SAC ¶ 24.) As to Entity Defendants, Plaintiffs generally allege that they violated the Rosenthal Act because the Notice of Default and Notice of Sale “contained knowingly false information,” and specifically, “falsely stated that there were material misrepresentations in the loan application, and/or that any alleged incorrect statements were materially false, and/or that the original lender reasonably relied on any such statements in funding the mortgage loan.” (SAC ¶ 25.) The court finds that this conduct does not amount to a violation of any of the sections set forth above. (Civ. Code, §§ 1788.10, [prohibiting a debt collector from threatening a debtor to collect or attempt to collect a consumer debt], 1788.11 [prohibiting a debt collector from collecting a debt by using profane language and engaging in proscribed telephone practices], 1788.13 [prohibiting a debt collector from making certain false representations]; 1788.14 [prohibiting a debt collector from collecting a consumer debt through various means].)

Moreover, while the court acknowledges that “debt collection activities ‘beyond the scope of the ordinary foreclosure process’ can violate the Rosenthal Act[,]” Plaintiffs have not alleged any such conduct on the part of Entity Defendants. (Best v. Ocwen Loan Servicing, LLC (2021) 64 Cal.App.5th 568, 580.) Finally, although Plaintiffs rely on the allegedly harassing conduct of defendant Ratner-Stauber in their opposition, Plaintiffs have not sufficiently alleged that he, as an employee or agent for defendant BM Real Estate (SAC ¶ 8), was acting on behalf of all Entity Defendants. The court therefore finds that Plaintiffs have not alleged facts establishing that Entity Defendants violated the Rosenthal Act.

The court sustains Entity Defendants’ demurrer to Plaintiffs’ second cause of action for declaratory relief because it fails to state facts sufficient to constitute a cause of action since (1) Plaintiffs’ allegations establish that there is no longer any threat of foreclosure following plaintiff Dr. Tash’s payment of the loan in full (SAC ¶¶ 19-20), and (2) Plaintiffs do not expressly allege that Entity Defendants are currently attempting to foreclose on the property, and therefore do not allege “the existence of an actual, present controversy….” (Code Civ. Proc., § 430.10, subd. (e); Otay Land Co., supra, 169 Cal.App.4th at p. 562.)

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.”¿ (Palm Springs Villas II Homeowners Assn., Inc., supra, 248 Cal.App.4th at p. 290.)¿ To satisfy that burden, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”¿ (Goodman, supra, 18 Cal.3d at p. 349.) The court finds that Plaintiffs have not met their burden to show in what manner they can amend their complaint to render it sufficient. The court therefore sustains Entity Defendants’ demurrer without leave to amend.

Entity Defendants move the court for an order striking Plaintiffs’ prayer for punitive damages from the Second Amended Complaint. (SAC ¶ 20; SAC Prayer, ¶ 1.)

The court has sustained Entity Defendants’ demurrer to each cause of action asserted against them without leave to amend for the reasons set forth above. The court therefore denies Entity Defendants’ motion to strike as moot.

The court overrules defendants BM Real Estate Services, Inc., dba Priority Financial Network, and Tzvi Ratner-Stauber’s demurrer to plaintiffs Raymond M. Tash and Katrin Tash’s first cause of action for violation of Fair Debt Collection Practices Act.

The court sustains defendants BM Real Estate Services, Inc., dba Priority Financial Network, and Tzvi Ratner-Stauber’s demurrer to plaintiffs Raymond M. Tash and Katrin Tash’s second cause of action for declaratory relief, third cause of action for fraud by misrepresentation and/or concealment, and fourth cause of action for negligent misrepresentation without leave to amend.

The court orders defendants BM Real Estate Services, Inc., dba Priority Financial Network, and Tzvi Ratner-Stauber to file an answer to plaintiffs Raymond M. Tash and Katrin Tash’s Second Amended Complaint within 15 days of the date of this order.

The court sustains defendants Devoir Oblige Capital Group, LLC aka D.O. Capital Group, LLC, FCI Lender Services, Inc., SG Capital Partners, LLC, and Select Portfolio Servicing, Inc.’s demurrer to plaintiffs Raymond M. Tash and Katrin Tash’s Second Amended Complaint without leave to amend.

The court denies defendants Devoir Oblige Capital Group, LLC aka D.O. Capital Group, LLC, FCI Lender Services, Inc., SG Capital Partners, LLC, and Select Portfolio Servicing, Inc.’s motion to strike portions of plaintiffs Raymond M. Tash and Katrin Tash’s Second Amended Complaint as moot.

The court orders defendants Devoir Oblige Capital Group, LLC aka D.O. Capital Group, LLC, FCI Lender Services, Inc., SG Capital Partners, LLC, and Select Portfolio Servicing, Inc. to lodge and serve a proposed order of dismissal from the Second Amended Complaint filed by plaintiffs Raymond M. Tash and Katrin Tash within 15 days of the date of this order pursuant to Code of Civil Procedure section 581, subdivision (f)(1).

[1] The court notes that the negligent misrepresentation cause of action is erroneously labeled the “fifth cause of action” in the Second Amended Complaint. The court refers to the negligent misrepresentation cause of action as the fourth cause of action in this ruling.

raymond m. tash , et al.; Plaintiffs, vs. devoir oblige capital group, llc , et al.; Defendants.	Case No.:	20STCV48390

	Hearing Date:	December 22, 2022

	Time:	10:00 a.m.

	[Tentative] Order RE: (1) demurrer to second amended complaint; (2) demurrer to second amended complaint; (3) motion to strike portions of second amended complaint