Judge: Stephen Morgan, Case: 23AVCV00247, Date: 2023-05-16 Tentative Ruling
Case Number: 23AVCV00247 Hearing Date: May 16, 2023 Dept: A14
Background
This is an action regarding real
property. Plaintiff Dennis Bretches (“Plaintiff”) alleges that on or about
January 02, 2009, he took out a mortgage loan against the real property located
at 1910 Shamrock Avenue Palmdale, California 93550 (the “Property”) from
Instamortgage.com in the amount of $199,350.00. Plaintiff further alleges that
in or around June 2020, he entered into a forbearance agreement to last 18
months and, on or around December 2021, the forbearance ended. Plaintiff
presents that he continued to make his regularly scheduled mortgage payments
starting in December 2021. Plaintiff contends that on or around August 2022,
Defendant Nationstar Mortgage, LLC dba Mr. Cooper (“Defendant”) stopped
accepting payments from Plaintiff. Plaintiff alleges that over the next several
months, he would regularly seek non-foreclosure alternatives from various
agents of Defendants, but all efforts were rebuffed and, on or around January
2023, Plaintiff submitted a complete loss mitigation application to Defendant
for review and is still awaiting the results.
On March 06, 2023, Plaintiff
filed his Complaint alleging four causes of action for: (1) Negligent
Misrepresentation, (2) Intentional Misrepresentation, (3) Violation of Business
and Professions Code § 17200, and (4) Promissory Estoppel.
On April 13, 2023, Defendant
filed this Demurrer.
On May 03, 2023, Plaintiff filed
his Opposition.
On May 08, 2023, Defendant filed
its Reply.
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Legal Standard
Standard for Demurrer – A demurrer for sufficiency tests whether
the complaint states a cause of action.¿ (Hahn v.¿Mirda¿(2007) 147 Cal.
App. 4th 740, 747.) ¿When considering demurrers, courts read the allegations
liberally and in context.¿ (Taylor v. City of Los Angeles Dept. of Water and
Power¿(2006) 144 Cal. App. 4th 1216, 1228.)¿ In a demurrer proceeding, the
defects must be apparent on the face of the pleading or by proper judicial
notice.¿ (Cal. Code Civ. Proc. § 430.30(a).)¿A demurrer tests the pleadings alone
and not the evidence or other extrinsic matters.¿ (SKF Farms v. Superior
Court¿(1984) 153 Cal. App. 3d 902, 905.)¿ Therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed.¿¿(Ibid.)¿¿The
only issue involved in a demurrer hearing is whether the complaint, as it
stands, unconnected with extraneous matters, states a cause of action.¿ (Hahn,¿supra,¿147
Cal.App.4th at 747.)¿¿¿¿¿¿¿¿
¿¿¿¿¿¿¿¿
A general demurrer admits the truth of all
factual, material allegations properly pled in the challenged pleading,
regardless of possible difficulties of proof.¿¿(Blank v. Kirwan (1985) 39
Cal.3d 311, 318.)¿ Thus, no matter how unlikely or improbable, plaintiff’s
allegations must be accepted as true for the purpose of ruling on the
demurrer.¿¿(Del E. Webb Corp. v. Structural Materials Co.¿(1981) 123
Cal.App.3d 593, 604.)¿ Nevertheless, this rule does not apply to allegations
expressing mere conclusions of law, or allegations contradicted by the exhibits
to the complaint or by matters of which judicial notice may be taken.¿¿(Vance
v. Villa Park¿Mobilehome¿Estates¿(1995) 36 Cal.App.4th 698, 709.)¿A general
demurrer does not admit contentions, deductions, or conclusions of fact or law
alleged in the complaint; facts impossible in law; or allegations contrary to
facts of which a court may take judicial notice.¿¿(Blank,¿supra,
39 Cal.3d at p. 318.)¿¿¿¿¿¿¿¿¿
¿¿¿¿¿¿¿¿¿
Pursuant to¿Code Civ. Proc.¿§430.10(e), the
party against whom a complaint has been filed may object by demurrer to the
pleading on the grounds that the pleading does not state facts sufficient to
constitute a cause of action.¿ It is an abuse of discretion to sustain a
demurrer without leave to amend if there is a reasonable probability that the
defect can be cured by amendment.¿¿(Schifando¿v. City of Los Angeles¿(2003)
31 Cal.4th 1074, 1082,¿as modified (Dec. 23, 2003).)¿¿¿¿¿¿¿¿¿
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¿¿¿
Meet and Confer Requirement – Before filing a demurrer or a motion to strike, the demurring or
moving party is required to meet and confer with the party who filed the
pleading demurred to or the pleading that is subject to the motion to strike
for the purposes of determining whether an agreement can be reached through a
filing of an amended pleading that would resolve the objections to be raised in
the demurrer. (Cal. Code Civ. Proc. §§ 430.41 and 435.5.)
The Court notes that Defendant, the moving
party, attempted to meet and confer via email correspondence on April 06, 2023;
however, no agreement was reached between counsels. (Decl. Jared D. Bissell ¶¶
3-4.) It is unclear from the declaration whether counsels conversed to attempt
to resolve disagreements regarding the current Complaint. “A determination by
the court that the meet and confer process was insufficient shall not be
grounds to overrule or sustain a demurrer.” (Cal. Code Civ. Proc. §
430.41(a)(4).) The Court determines the Demurrer on its merits.
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Discussion
Request for Judicial Notice
– GRANTED under Cal. Evid. Code § 453 as the Assignment of Deed of Trust is
executive act performed by an administrative agency (Cal. Evid. Code § 452(c); Scott
v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 753), and a fact
or proposition that is not reasonably subject to dispute and are capable of
immediate and accurate determination by resort to sources of reasonably
indisputable accuracy (id. at (h)).
Application –Defendant
believes that Plaintiff’s Complaint is time-barred as the applicable statute
for Plaintiff’s causes of action are two years and all of Plaintiff’s causes of
action relate to Defendant’s alleged promise regarding Plaintiff’s 2020
forbearance. Defendant presents that Plaintiff cannot allege Negligent
Misrepresentation as: (1) Plaintiff does not identify any alleged
misrepresentation of a past or existing material fact and Plaintiff admits that
Defendant accepted Plaintiff’s mortgage payments after the end of the
forbearance; (2) Plaintiff’s Complaint lacks specificity as Plaintiff fails to
identify the person that purportedly made the misrepresentation; the means by
which the representation was made; or a date upon which the purported
misrepresentation was made; and (3) Plaintiff fails to demonstrate a duty owed
by Defendant. Likewise, Defendant believes that Plaintiff cannot allege
Intentional Misrepresentation for some of the same reasons – no
misrepresentation is identified and the pleadings lack specificity required for
fraud. Regarding Promissory Estoppel, Defendant highlights that no promised
from Defendant is detailed, Plaintiff admits that Defendant complied with any
purported promise that Defendant would grant Plaintiff a forbearance and accept
post-forbearance mortgage payments, and Plaintiff has not suffered any injury
as there has been no foreclosure sale or recorded Notice of Default. Finally,
Defendant believes that Plaintiff lacks standing to bring a claim under the
Unfair Competition Law (“UCL”), Cal. Business and Professions Code §§ 17200 et
seq., as Defendant’s conduct did not cause the pending foreclosure and
Defendant has not acted unlawfully, fraudulently, or unfairly, so there is no
act upon which to base a UCL violation.
Plaintiff argues that the
Demurrer should be denied as part of Defendant’s attack on the Complaint is
based on extrinsic evidence. It appears the “extrinsic evidence” that Plaintiff
takes issue with is the assertion that Plaintiff cannot show an injury in fact
and that Plaintiff’s claims are time barred. (See Opp. 3:1-8.) Plaintiff
believes that each cause of action is specifically pled. That is:
·
Negligent Misrepresentation is sufficiently
pled. The Court notes that while Plaintiff defines and lists the elements of
Negligent Misrepresentation, no argument is given as to how the Complaint meets
the elements listed.
·
Intentional Misrepresentation is sufficiently
pled. Again, Plaintiff defines Intentional Misrepresentation and lists the
elements, but no argument is given as to how the Complaint ties in to the
elements.
·
Plaintiff states that he has alleged a clear and
unambiguous promise on the part of “Rushmore” in Paragraph 27 of the Complaint.
Plaintiff specifies that “Rushmore’s representatives made two promises: (1) Plaintiff’s
applications for mortgage assistance would be reviewed in good faith; and (2)
Plaintiff would be reviewed for all available loss mitigation options.” (Opp.
7:9-10.)
·
Plaintiff presents that “the determination of
whether a complaint properly alleges a cause of action for violation of Section
17200 ‘is a question of fact, requiring the court to consider and weigh the
evidence from both sides.’ [Citations.]” (Opp. 8:28, 9:1-4.) Plaintiff believes
that such a determination cannot usually be made on demurrer. Plaintiff again
brings up “Rushmore” and states that Plaintiff has detailed numerous attempts
to obtain a loan modification application, Defendant’s misrepresentations
regarding her mailing of the documents, and Plaintiff’s failure to ever be reviewed
based on her financial documentation Plaintiff states that he has alleged only
“that as a result of Defendant’s conduct, they relied on Rushmore’s promises to
help them and to review them for a modification and did not explore other
option.” (Opposition 9:12-14.) Plaintiff further presents that Defendant (1)
breached that duty of care when they failed to provide the documents promised
and continuously misrepresented her efforts to do so, and (2) “Paintiff’s
allegations are that Defendant failed to adhere to the basic tenets of fairness
under Promissory Estoppel, UCL, and Implied Contract, which required Defendant
to consider Plaintiff for a loan modification in good faith and based on
Plaintiff’s financial documentation as promised by Rushmore.” (9:20-23.)
Defendant’s Reply reiterates and
highlights that Plaintiff’s Complaint is time-barred by the two-year statute of
limitations set out in Cal. Code Civ. Proc. § 339(1). Defendant further argues
that the Opposition is nonsensical and does not address the arguments set forth
in the Demurrer. Defendant presents that Plaintiff restates the elements of the
causes of action pled without addressing any further detail and, when further
detail is provided, it is regarding a different case.
Regarding Plaintiff’s concerns
that the argument of claims being time-barred is “extrinsic,” case law allows
such arguments:
The statute of
limitations defense “‘may be asserted by general demurrer if the complaint
shows on its face that the statute bars the action.’ (1 Schwing, Cal.
Affirmative Defenses (2007) Statute of Limitations, § 25:78, p. 1609, fns.
omitted; see Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 550 [305
P.2d 20].) There is an important qualification, however: ‘In order for the bar
of the statute of limitations to be raised by demurrer, the defect must clearly
and affirmatively appear on the face of the complaint; it is not enough that
the complaint shows merely that the action may be barred.’ (McMahon v.
Republic Van & Storage Co., Inc. (1963) 59 Cal.2d 871, 874 [31 Cal.
Rptr. 603, 382 P.2d 875]; see also, e.g., Geneva Towers Ltd. Partnership v.
City and County of San Francisco (2003) 29 Cal.4th 769, 781 [129 Cal. Rptr.
2d 107, 60 P.3d 692].) ‘The ultimate question for review is whether the
complaint showed on its face that the action was barred by a statute of
limitations, for only then may a general demurrer be sustained and a judgment
of dismissal be entered thereon.’ (Moseley v. Abrams (1985) 170
Cal.App.3d 355, 358 [216 Cal. Rptr. 40].)” (E-Fab, Inc. v. Accountants, Inc.
Services (2007) 153 Cal.App.4th 1308, 1315–1316 [64 Cal. Rptr. 3d 9].)
(Mitchell v. State Dept. of
Public Health (2016) 1 Cal.App.5th 1000, 1007.)
As to whether the Court can
consider if an injury occurred, should the
defects related to injury be apparent on the face of the pleading or by proper
judicial notice, the Court believes it can analyze and discuss the injury or
lack thereof. (See Cal. Code Civ. Proc.
§ 430.30(a).) The Court notes that case law shows that demurrers do discuss
lack of injury when it is an element of an action. (See Durell v. Sharp
Healthcare (2010) 183 Cal.App.4th
1350 [injury related to standing]; Beasley v. Tootsie Roll Industries, Inc.
(2022) 85 Cal.App.5th 901 [demurrer sustained in part due to Plaintiff’s
failure to allege cognizable injury; not discussed by appellate court]; Noori
v. Countrywide Payroll & HR Solutions, Inc. (2019) 43 Cal.App.5th 957
[demurrer to first amended complaint sustained without leave to amend because
complaint fails to assert facts supporting the injury element].)
The Court also notes that, though Plaintiff provides an argument about
an entity named “Rushmore” in his Opposition to the Demurrer, specifically for
the Third Cause of Action (Violation of Cal. Bus. & Prof. Code § 17200) and
Fourth Cause of Action (Promissory Estoppel), no such entity is a part of this
action. Further, the pleadings do not even name “Rushmore.” Paragraph 27, which
Plaintiff cites to as containing the allegations of a promise on behalf of
Rushmore reads: “MR COOPER refusing to accept PLAINTIFF’S mortgage payments is
negligent.” (Complaint ¶ 27.) The Court is concerned as it believes that
Plaintiff’s counsel may have erred by using information from a separate case as
part of Plaintiff’s Opposition. Defendant’s Reply mirrors the Court’s concern
as Defendant believes that Plaintiff’s Opposition was copied and pasted from a
different case, demonstrating a lack of good faith.
i.
First Cause of Action (Negligent
Misrepresentation)
“The elements of negligent
misrepresentation are (1) the defendant made a false representation as to a
past or existing material fact; (2) the defendant made the representation
without reasonable ground for believing it to be true; (3) in making the
representation, the defendant intended to deceive the plaintiff; (4) the
plaintiff justifiably relied on the representation; and (5) the plaintiff
suffered resulting damages. [Citation.]” (Majd v. Bank of America, N.A. (2015) 243 Cal.App.4th 1293, 1307.) Negligent
Misrepresentation has a three-year statute of limitations. (See Cal. Code Civ.
Proc. § 338(d).)
The factual allegations presented
by Plaintiff are:
On or about January
2, 2009, PLAINTIFF took out a mortgage loan against the PROPERTY from
Instamortgage.com in the amount of $199,350.00 (the “LOAN”). (A true and
correct copy of the Deed of Trust (“DOT”); recorded on January 9, 2009 with the
Los Angeles County Recorder’s Office as Document Number 2009-0029965; is
attached hereto as Exhibit A and is herein incorporated by reference. See
Exhibit A.
In or around June
2020, PLAINTIFF entered into a forbearance agreement to last 18 months (“2020
FORBEARANCE”).
On or around
December 2021, the 2020 FORBEARANCE ended.
PLAINTIFF continued
to make his regularly scheduled mortgage payments starting December 2021.
On or around August
2022, MR. COOPER stopped accepting payments from PLAINTIFF.
Over the next
several months, PLAINTIFF would regularly seek non-foreclosure alternatives
from various agents of Defendants. However, PLAINTIFF’s efforts to seek non-foreclosure
alternatives were systematically rebuffed by Defendants’ agents.
On or around January
2023, PLAINTIFF submitted a complete loss mitigation application to MR. COOPER
for review (“JANUARY 2023 APPLICATION”).
PLAINTIFF is still
awaiting the results of the JANUARY 2023 APPLICATION.
(Complaint ¶¶ 11-18.)
The First Cause of Action
(Negligent Misrepresentation) states: “On or around August 2022, MR. COOPER
stopped accepting payments from PLAINTIFF. MR COOPER refusing to accept
PLAINTIFF’s mortgage payments is negligent.” (Complaint ¶¶ 23-24; see also ¶ 27
[MR COOPER refusing to accept PLAINTIFF’S mortgage payments is negligent.”].)
Plaintiff’s cause of action
continues: “PLAINTIFF reasonably relied on said representations and was induced
to believing that MR COOPER would accept PLAINTIFF’S mortgage payments after
the 2020 FORBEARANCE ended.” (Complaint
¶ 25.)
It is unclear what the
representation is. As pled, there seems to be no representation made by
Defendant. Plaintiff simply states that Defendant’s refusal to accept
Plaintiff’s mortgage payments is negligent.
Thus, as pled, the Complaint is
insufficient to state a cause of action for Negligent Misrepresentation.
ii.
Second Cause of Action (Intentional
Misrepresentation)
“The elements of fraud that will
give rise to a tort action for deceit are: “ ‘(a) misrepresentation (false
representation, concealment, or nondisclosure); (b) knowledge of falsity (or
‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable
reliance; and (e) resulting damage.’ ” (Engalla v. Permanente Medical Group,
Inc. (1997) 15 Cal.4th 951, 974 [internal quotation marks omitted].)
Plaintiff, in the Intentional Misrepresentation
Cause of Action states:
Defendants, and
their respective authorized agents, whose names are currently unknown, but will
be added by reserved amendment to the complaint herein when ascertained, made
the following representations to PLAINTIFF: (1) the 2020 FORBEARANCE would last
18 months; (2) after the 2020 FORBEARANCE ends, PLAINTIFF would resume monthly
mortgage payments; and (3) MR COOPER would accept the mortgage payments.
(Complaint ¶ 31.)
It appears the alleged
misrepresentation is the representation that Defendant would accept the resumed
mortgage payments. However, Plaintiff concedes that Defendant accepted payments
until August 2022. (Complaint ¶ 32.) Here, it appears that Defendant did not
provide a false representation as Plaintiff concedes that mortgage payments
were accepted after the forbearance ended.
Despite the concession that
acceptance of the mortgage payments occurred, Plaintiff states that “[w]hen
aforesaid Defendants made these representations, they knew them to be false and
made these representations with the intention to deceive and defraud PLAINTIFF
and induce PLAINTIFF to act in reliance on these representations in the manner
hereinafter, or with the expectation that PLAINTIFF would act.” (Complaint ¶
33.) It appears that Plaintiff is using this paragraph to show knowledge of the
falsity. However there appears to be issues on the face of the pleadings with
this element: (1) the statement was not false as acceptance of the mortgage
payments occurred, and (2) paragraph 33, the allegation that Defendant knew
such statements to be false and had intent to deceive Plaintiff, is conclusory.
A demurrer does not admit the truth of “conclusions of fact or law.” (Blank,
supra, 39 Cal.3d 311, 318.) While circumstantial evidence may be used to
support a fraud cause of action, the particularity requirement for pleading
fraud requires more evidence than Plaintiff provides in his Complaint.
Specifically, as pled, there is no evidence to support the allegation that
Defendant intended to deceive and defraud Plaintiff in any way. Further, under
the standard set by Lazar v. Superior Court (1996) 12 Cal.4th 631,
parties avoid conclusory pleadings in fraud causes of action by detailing the
how, when, where, to whom, and by what means fraud was committed. Plaintiff’s
Intentional Misrepresentation Cause of Action does not adhere to this standard.
Finally, Intentional
Misrepresentation requires resulting damages. The Complaint fails to allege any
cognizable damage. Specifically, Plaintiff alleges the following:
In reliance on those
representations, PLAINTIFF was lulled into action and was led to believe that
as long as he made his monthly payments, he would not face foreclosure.
Had PLAINTIFF known
the actual facts, he would have taken action to avoid foreclosure, rather than
relying on Defendants’ misrepresentations that MR COOPER would accept his
regularly assumed payments.
(Complaint ¶¶ 34-35.)
However, Plaintiff is still
awaiting the results of his complete loss mitigation application. (See
Complaint ¶ 18.) No foreclosure has occurred. Therefore, the Complaint fails to
allege any resulting damage from the purported misrepresentation.
iii.
Third Cause of Action (Violation of California
Business & Professions Code § 17200)
“Unfair competition” includes any
unlawful, unfair or fraudulent business act or practice and unfair, deceptive,
untrue or misleading advertising and any act prohibited by the Business and
Professions Code. (See Cal. Bus. & Prof. Code § 17200.)
“ ‘The scope of the UCL is quite
broad. [Citations.] Because the statute is framed in the disjunctive, a
business practice need only meet one of the three criteria to be considered
unfair competition. [Citation.]’ (McKell v. Washington Mutual, Inc.
(2006) 142 Cal.App.4th 1457, 1471 [49 Cal. Rptr. 3d 227] (McKell).) In
addition to pleading facts sufficient to show that the defendant's acts
constituted an unlawful, unfair, or fraudulent business practice, a plaintiff
alleging a UCL cause of action must also plead facts sufficient to establish he
or she has standing to bring an action under the UCL as amended by Proposition
64.” (Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th
1235, 1253.)
The pleadings state broadly:
The conduct and
business practices of Defendants, and their agents, alleged herein, constituted
unfair business practices within the provisions of California Business &
Professions Code§ 17200 et seq. As such, Defendants, and each of them, are
liable for the unfair, and fraudulent conduct of itself, its agents, and its
predecessors.
(Complaint ¶ 41.)
This broad language continues in
the following paragraphs where the alleged unfair business practices are
consistently referred to as “conduct” or “business practices.” (See Complaint
¶¶ 42-43, 45-48.) It appears that the “conduct” that Plaintiff is alleging to
be unfair, deceptive, untrue, and/or misleading may be the purported
misrepresentations. (See Complaint ¶ 44 [“On the same grounds already alleged
herein, Defendants misrepresentations also violated the policy behind said
statutes.”].) It also appears that the pleadings are proceeding under the
“unfair” prong. (See Complaint ¶¶ 41, 45.)
The Court needs not decide
whether the conduct alleged meets any of the definitions of “unfair” because,
as analyzed, ante, it is unclear what the misrepresentation(s)
attributed to Defendant are. As such, the Third Cause of Action fails to
incorporate sufficient facts in its pleadings to constitute a cause of action
for a violation of Cal. Bus. & Prof. Code § 17200 as there appears to be no
misrepresentation on behalf of Defendant as pled.
iv.
Fourth Cause of Action (Promissory Estoppel)
The elements of an action for
promissory estoppel are: (1) a promise clear and unambiguous in its terms; (2)
reliance by the party to whom the promise is made; (3) [the] reliance must be
both reasonable and foreseeable; and (4) the party asserting the estoppel must
be injured by his or her reliance. (Granadino v. Wells Fargo Bank, N.A. (2015)
236 Cal.App.4th 411, 416.)
As mentioned, ante, the
paragraph that Plaintiff directs the Court to does not nclude the alleged
promise as Plaintiff’s Opposition focuses on “Rushmore.”
Plaintiff’s Complaint states, in
relevant part:
The representations
made by said Defendants were in fact false.
The true facts are
as follows: (1) PLAINTIFF made his regular mortgage payments starting December
2021; (2) MR COOPER accepted the payments starting December 2021; and (3) MR
COOPER stopped accepting payments starting August 2022.
When aforesaid
Defendants made these representations, they knew them to be false and made
these representations with the intention to deceive and defraud PLAINTIFF and
induce PLAINTIFF to act in reliance on these representations in the manner
hereinafter, or with the expectation that PLAINTIFF would act.
(Complaint ¶¶ 55-57.)
As analyzed, ante, there
appears to be an issue with the alleged “misrepresentation” as Plaintiff has
conceded that mortgage payments were accepted, and (2) the alleged
misrepresentation is not sufficiently pleaded (i.e., specificity). Further, a
cause of action for promissory estoppel requires a clear promise. No such
promise is alleged.
Accordingly, the Demurrer is
SUSTAINED.
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Leave to Amend
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment. (Goodman v.
Kennedy¿(1976), 18 Cal.3d 335, 348.) While under California law leave to
amend is liberally granted, “leave to amend should not be granted where, in all
probability, amendment would be futile.” (Vaillette v. Fireman's Fund Ins.
Co. (1993), 18 Cal. App. 4th 680, 685).¿ “A trial court does not abuse its
discretion when it sustains a demurrer without¿leave to amend¿if either (a) the
facts and the nature of the claims are clear and no liability exists, or (b) it
is probable from the nature of the defects and previous unsuccessful attempts
to plead that the plaintiff cannot state a claim.” (Cantu v. Resolution
Trust Corp.¿(1992)¿4 Cal.App.4th 857, 889.)¿¿¿
Here, the bulk of the
deficiencies in the Complaint stem from a failure to adequately plead a
misrepresentation on behalf of Defendant. The Court believes this may be
rectified by an amendment. Further, time has passed since filing of the
Complaint. As such, the issues related to Plaintiff’s injury or injuries may
have occurred and can now be pled.
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Conclusion
Defendant Nationstar Mortgage LLC
dba Mr. Cooper’s Motion Demurrer is SUSTAINED.