Judge: Thomas D. Long, Case: 22STCV07165, Date: 2022-08-11 Tentative Ruling
Case Number: 22STCV07165 Hearing Date: August 11, 2022 Dept: 48
SUPERIOR
COURT OF THE STATE OF CALIFORNIA
FOR THE
COUNTY OF LOS ANGELES - CENTRAL DISTRICT
Plaintiff, vs. SELECT PORTFOLIO SERVICING, INC., et al., Defendants. |
) ) ) ) ) ) ) ) ) ) ) |
[TENTATIVE] ORDER SUSTAINING DEFENDANT’S
DEMURRER TO FIRST AMENDED COMPLAINT; MOOTING MOTION TO STRIKE Dept. 48 8:30 a.m. August 11, 2022 |
On May 20, 2022, the Court sustained a demurrer by Select Portfolio
Servicing, Inc. (“Defendant”). Plaintiff
filed a first amended complaint (“FAC”) on June 8, 2022. On July 12, 2022, Defendant filed another demurrer
and motion to strike. Defendant’s request
for judicial notice is granted.
DEMURRER
When considering demurrers, courts read the allegations liberally and
in context, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015)
236 Cal.App.4th 1401, 1406.) Courts also
consider exhibits attached to the complaint and incorporated by reference. (See Frantz v. Blackwell (1987) 189 Cal.App.3d
91, 94.) “Because a demurrer
challenges defects on the face of the complaint, it can only refer to matters outside
the pleading that are subject to judicial notice.” (Arce ex rel. Arce v. Kaiser Found. Health
Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)
A. Indispensable Party
As with the prior demurrer, Defendant demurs to the entire FAC on the
grounds that Plaintiff failed to join an indispensable party. (Demurrer at pp. 4-5.) A defendant may demur when
a plaintiff fails to join parties who claim an interest in the subject of the action
or their absence cannot provide complete relief to the parties. (Code Civ. Proc., §§ 389, subd. (a), 430.10, subd.
(d).) All
parties to a trustee sale transaction are indispensable and must be joined in an
action to set aside the sale. (Banc of
America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180
Cal.App.4th 1090, 1103.)
On December 16, 2021, a Trustee’s Deed Upon of Sale was recorded, granting
Josef Haghnazarzadeh the property in dispute.
(FAC ¶ 18 & Ex. I.) Because he
is the recorded owner of the property for which Plaintiff seeks to set aside the
sale, he is an indispensable party and must be joined. Plaintiff did not remedy this deficiency after
the demurrer to the Complaint and again does not address this in her opposition.
The demurrer to the entire FAC is sustained on this ground.
B. Conclusively Valid
Sale
Defendant demurs to the entire complaint on the grounds that there
is a conclusive presumption of validity for the trustee’s sale. (Demurrer at pp. 5-6.) “A recital in the deed executed pursuant to the
power of sale of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of default or the personal
delivery of the copy of the notice of default or the posting of copies of the notice
of sale or the publication of a copy thereof shall constitute prima facie evidence
of compliance with [the requirements for sale under subdivision (a)] and conclusive
evidence thereof in favor of bona fide purchasers and encumbrancers for value and
without notice.” (Civ. Code, § 2924, subd.
(c).) The presumption is conclusive as to
a bona fide purchaser, and “a trustor has no right to set aside a trustee's deed
as against a bona fide purchaser for value by attacking the validity of the sale. [Citation.]
The conclusive presumption precludes an attack by the trustor on a trustee’s
sale to a bona fide purchaser even though there may have been a failure to comply
with some required procedure which deprived the trustor of his right of reinstatement
or redemption.” (Moeller v. Lien (1994)
25 Cal.App.4th 822, 831.)
Like the Complaint, the FAC alleges Defendant did not follow all required
procedures before the non-judicial foreclosure sale of the property. (FAC ¶¶ 20, 27, 32, 47, 63; see Complaint ¶¶ 20,
27, 31, 42, 52.) However, the Trustee’s Deed
Upon Sale states, “All requirements of law regarding the recording and mailing of
copies of the Notice of Default and Election to Sell, the recording, mailing, posting,
and publication of the Notice of Trustee’s Sale have been complied with.” (FAC, Ex. I.)
Plaintiff does not alleges facts to overcome the conclusive presumption. Plaintiff does not address this in her opposition.
The demurrer is sustained on this ground.
C. No Tender of All
Amounts Due
Defendant argues Plaintiff does not allege tender of all amounts due. (Demurrer at pp. 6-7.) A plaintiff must allege tender of the debt in
order to maintain any cause of action for irregularity in the foreclosure sale procedure. (Abdallah v. United Savings Bank (1996)
43 Cal.App.4th 1101, 1109.)
The Notice of Default reflects a default in the amount of $27,377.06
as of January 31, 2020. (FAC, Ex. G.) The foreclosure sale was set for April 5, 2021,
and continued to December 8, 2021. (FAC ¶
17.) The complaint does not allege that Plaintiff
tendered the $27,377.06 due. Instead, it
states in a conclusory manner than Plaintiff is excused from the tender requirement
due to Defendant’s statutory violations.
(Complaint ¶ 40.)
Plaintiff does not address this in her opposition.
The demurrer is sustained on this ground.
D. Civil Code section
2924m
Like the Complaint, the FAC’s claims are based in part on an alleged
violation of Civil Code section 2924m, subdivision (c)(2). (E.g., FAC ¶¶ 19-20, 32, 47, 63.) Defendant argues Plaintiff lacks standing to bring
a claim under Civil Code section 2924m, subdivision (c), and she does not plead
facts showing a violation. (Demurrer at pp.
7-8.)
A trustee’s sale of real property containing one to four residential
units is not final until the earliest of the following: (1) if a prospective owner-occupant
is the last and highest bidder at the trustee’s sale, the date upon which the conditions
set forth in Section 2924h for the sale to become final are met; (2) fifteen days
after the trustee’s sale unless at least one eligible tenant buyer or eligible bidder
submits to the trustee either a bid or a nonbinding written notice of intent to
place such a bid; or (3) the date upon which a representative of all of the eligible
tenant buyers submits to the trustee a bid in an amount equal to the full amount
of the last and highest bid at the trustee’s sale. (Civ. Code, § 2924m, subd. (c).)
An “eligible tenant buyer” is a person occupying the property as their
primary residence under a rental or lease agreement and who is not the mortgagor. (Civ. Code, § 2924m, subd. (a)(2).) An “eligible bidder” is an eligible tenant buyer,
a prospective owner-occupant (who cannot be the mortgagor), or other specified entities. (Civ. Code, § 2924m, subds. (a)(1)(C)(i), (a)(3).) However, Plaintiff alleges she was the “rightful
and lawful owners of” the property, and she was the mortgagor before the foreclosure. (FAC ¶¶ 1, 10-11; see FAC, Ex. G.) Accordingly, she cannot be an “eligible tenant
buyer” or “eligible bidder” for bidding under Civil Code section 2924m, subdivision
(c).
Additionally, the trustee’s sale is deemed final upon the earliest
of the events specified in section 2924m, subdivision (c). The FAC does not allege facts showing that the
fifteen-day period for an eligible tenant buyer or eligible bidder to bid was the
earliest of the events.
In sum, Plaintiff has not and cannot plead a violation of this section.
However, Civil Code section 2924m, subdivision (c) is not the only
basis for Plaintiff’s causes of action. The
FAC alleges other statutory violations, including failure to record a Substitution
of Trustee. “Ordinarily,
a general demurrer does not lie as to a portion of a cause of action, and if any
part of a cause of action is properly pleaded, the demurrer will be overruled.” (Fire Ins. Exchange v. Superior Court (2004)
116 Cal.App.4th 446, 452.)
The demurrer is overruled on this ground.
E. First Cause of Action
– Violation of Civil Code section 2924, subd. (a)(1)
The first cause of action alleges the trustee named in the Notice of
Default failed to record a Substitution of Trustee with the Los Angeles County Recorder’s
Office. (FAC ¶ 27.) Defendant provides a judicially noticeable copy
of the Substitution of Trustee, recorded on February 4, 2020, the same day as the
Notice of Default. (RJN, Ex. 12; see FAC,
Ex. G.) Plaintiff’s opposition states that
she will abandon this cause of action. (Opposition
at p. 1.)
The demurrer is sustained.
F. Second Cause of
Action – Wrongful Foreclosure
The second cause of action alleges wrongful foreclosure. “The basic elements of a tort
cause of action for wrongful foreclosure track the elements of an equitable cause
of action to set aside a foreclosure sale.
They are: ‘(1) the trustee or mortgagee caused an illegal, fraudulent, or
willfully oppressive sale of real property pursuant to a power of sale in a mortgage
or deed of trust; (2) the party attacking the sale (usually but not always the trustor
or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor
challenges the sale, the trustor or mortgagor tendered the amount of the secured
indebtedness or was excused from tendering.’”
(Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th
394, 408.)
Like
the Complaint, the FAC alleges wrongful foreclosure based on violations of Civil
Code sections 2923.5; 2924, subdivisions (a)(1) and (a)(6); 2934a, subdivisions
(a)(1) and (e); and 2924m, subdivision (c)(2).
(FAC ¶ 32.)
A
notice of default may not be filed until 30 days after contacting or attempting
to contact the borrower in order to assess the borrower’s financial situation and
explore options for the borrower to avoid foreclosure. (Civ. Code, § 2923.5, subds. (a)-(b).) Aside from identifying the statute, the complaint
contains no factual allegations showing a violation of this section. “Generally, ‘[w]he[n] a party relies for recovery
upon a purely statutory liability it is indispensable that he plead facts demonstrating
his right to recover under the statute. The
complaint must plead every fact which is essential to the cause of action under
the statute.’” (Baskin v. Hughes Realty,
Inc. (2018) 25 Cal.App.5th 184, 207; see also Fisher v. San Pedro Peninsula
Hospital (1989) 214 Cal.App.3d 590, 604 [applying “the general rule that facts
in support of each of the requirements of a statute upon which a cause of action
is based must be specifically pled”].)
Before
a foreclosure sale, a notice of default must be
filed, which may be recorded by a substituted trustee under the deed of trust. (Civ. Code, § 2924, subds. (a)(1), (a)(6).) A sale conducted by a substituted trustee who
does not record the substitution is void.
(Civ. Code, § 2934a, subds. (a)(1), (e).) Judicially noticeable documents and exhibits attached
to the complaint show these sections were not violated. (RJN, Ex. 12; FAC, Ex. G.)
And as discussed above, Plaintiff has not pleaded a violation of Civil
Code section 2924m, subdivision (c)(2).
In opposition, Plaintiff argues that she has “properly pled that SPS
was involved in the transaction devised by the other Defendant when they engaged
in the improper transferring that took place when the Trustee’s Deed Upon Sale was
recorded.” (Opposition at p. 3.) This does not overcome the deficiencies discussed
above.
Because Plaintiff does not allege an illegal, fraudulent, or willfully
oppressive sale of real property, the demurrer is sustained.
G. Third Cause of Action
– Unfair Business Practices
The third cause of action alleges violations of Business and Professions
Code section 17200. California’s
Unfair Competition Law (“UCL”) includes any unlawful, unfair, or fraudulent business
act or practice and unfair, deceptive, untrue, or misleading advertising. (Bus. & Prof. Code, § 17200.) The UCL embraces “anything that can properly be
called a business practice and that at the same time is forbidden by law.” (Cel-Tech Communications, Inc. v. Los Angeles
Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) “By proscribing any unlawful business practice,
section 17200 borrows violations of other laws and treats them as unlawful practices
that the unfair competition law makes independently actionable.” (Ibid.; see Klein v. Earth Elements,
Inc. (1997) 59 Cal.App.4th 965, 969 [“Virtually any law can serve as the predicate
for a section 17200 action.”].)
Plaintiff bases this cause of action on violations of Civil
Code sections 2923.5; 2924, subdivisions (a)(1) and (a)(6); 2934a, subdivisions
(a)(1) and (e); and 2924m, subdivision (c)(2).
As discussed above, Plaintiff has not properly pleaded violations of any
of these statutes.
The
demurrer is sustained.
H. Fourth Cause of Action
– Cancellation of Instruments
The fourth cause of action seeks cancellation of the Notice of Default,
Notice of Trustee’s Sale, and Trustee’s Deed Upon Sale due to violations of Civil
Code sections 2923.5; 2924, subdivisions (a)(1) and (a)(6); 2934a, subdivisions
(a)(1) and (e); and 2924m, subdivision (c)(2).
As discussed above, Plaintiff has not pleaded violations of these statutes,
so they cannot serve as the basis for cancellation.
The
demurrer is sustained.
MOTION TO STRIKE
The Court may, upon a motion or at any time in its discretion: (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, subds. (a)-(b).)
Defendant moves to strike allegations regarding punitive damages, emotional
distress, damages for unfair business practices, and credit impairment damages.
Because the Court sustains the demurrer in full, the motion to strike
is moot.
CONCLUSION
The demurrer is SUSTAINED. Because
Plaintiff failed to cure the deficiencies of the original Complaint and has not
shown how she can properly amend the FAC, no further leave to amend is granted.
The motion to strike is MOOT.
Moving party to give notice.
Parties
who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org
indicating intention to submit. Parties intending
to appear are encouraged to appear remotely and should be prepared to comply with
Dept. 48’s new requirement that those attending court in person wear a surgical
or N95 or KN95 mask.
Dated this 11th day of August 2022
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Hon. Thomas D. Long Judge of the Superior
Court |