Demurrer (Judge William D. Stewart)


Case Number: EC064722??? Hearing Date: September 23, 2016??? Dept: A

Sharman v Select Portfolio Servicing

DEMURRERS (2)

Item: 14
Case: EC064722
Date: 9/23/16

MP: Defendants, Select Portfolio, MERS, and Wilmington Bank
Defendant, JPMorgan Chase Bank
RP: Plaintiff, Samantha Sharman (No opposition)

ALLEGATIONS IN FIRST AMENDED COMPLAINT:
The Plaintiff obtained a loan secured by a deed of trust recorded on her real property in 2007. The Plaintiff began to seek a modification of the loan in 2008.
The Defendants have improperly commenced a non-judicial foreclosure proceeding on the Plaintiff?s property by violating the Homeowners? Bill of Rights and engaging in unfair business practices. The Plaintiff seeks damages and an order quieting title to her property.

CAUSES OF ACTION IN FIRST AMENDED COMPLAINT:
1) Dual-Tracking (Civil Code sections 2923.6 and 2924.11)
2) Failure to Designate Single Point of Contact (Civil Code section 2923.7)
3) Quiet Title
4) Declaratory Relief
5) Violation of Business and Professions Code section 17200
6) Lack of Standing
7) Intentional Misrepresentation
8) Negligent Misrepresentation
9) Promissory Estoppel

RELIEF REQUESTED:
1. Defendants, Select Portfolio, MERS, and Wilmington Bank
Demurrer to each cause of action in First Amended Complaint.

2. Defendant, JPMorgan Chase Bank
Demurrer to each cause of action in First Amended Complaint.

DISCUSSION:
This hearing concerns the demurrer of the Defendants, Select Portfolio, MERS, and Wilmington Bank, and the demurrer of Defendant, JPMorgan Chase Bank. Since arguments in support of their demurrers to each cause of action are similar, the following analyzes them together. The Plaintiff did not file any opposition papers.

1. First Cause of Action for Dual-Tracking
The Defendants argue that this cause of action does not plead sufficient facts to show that they violated section 2923.6. The Plaintiff alleges that the Defendants violated section 2923.6 by proceeding with a trustee sale while she was under review for a loan modification.
Section 2923.6 is part of the Homeowner Bill of Rights (?HBOR?), which is codified at Civil Code sections 2920.5, 2923.4 to 2923.7, 2924, 2924.9 to 2924.12, 2924.15, 2924.17 to 2924.20. HBOR was enacted ?to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower’s mortgage servicer, such as loan modifications or other alternatives to foreclosure.? Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal. App. 4th 1267, 1272. HBOR provides for injunctive relief for statutory violations that occur prior to foreclosure in section 2924.12(a) and monetary damages when the borrower seeks relief for violations after the foreclosure sale has occurred in section 2924.12(b). In addition, section 2924.12 permits the Court to award attorney?s fees to a prevailing borrower. Since this is a statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619.
As an initial issue, the Plaintiff does not plead that her property has been sold. Under section 2924.12, she may request an injunction to obtain relief from the alleged violations. However, she may not seek damages under HBOR. Accordingly, the Plaintiff?s allegation in paragraph 46 and in numerous other locations that she is authorized to seek damages is incorrect.
The Plaintiff?s claim is based on section 2923.6, which provides that if a borrower submits a complete application for a first lien loan modification to the borrower’s mortgage service, then a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee sale while the complete first lien loan modification is pending. The violation occurs when the loan servicer records a notice of default while a loan modification application is pending.
As noted above, the Plaintiff must plead with reasonable particularity the facts supporting the statutory elements of the claimed violation. The Plaintiff does not allege when she submitted a specific loan modification to each of the Defendants or when each of the Defendants recorded a notice of default while the loan modification was pending. Instead, the Plaintiff alleges in paragraph 44 the vague allegations that the Defendants continued with a trustee sale while she was under review for a loan modification. This is insufficient because it does not show that the Defendants recorded a notice of default while a specific request for a loan modification was pending.
The use of the term ?Defendants? also shows a lack of reasonable particularity. The Plaintiff directed this cause of action against all the Defendants, i.e., each of moving Defendants: Select Portfolio, MERS, Wilmington Bank, and JPMorgan Chase Bank. There are no allegations showing that the Plaintiff submitted loan applications to each of these Defendants and that each of them recorded notices of default.
The Plaintiff?s caption for the first cause of action indicates that her claim is also based on Civil Code section 2924.11, which provides that if a foreclosure prevention alternative is approved in writing after the recordation of a notice of default, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of sale or conduct a trustee?s sale while the borrowing is in compliance. The Plaintiff does not allege any facts to show that the Defendants violated this section. There are no allegations that a notice of default was recorded, that the Defendants approved a loan modification in writing, that the Plaintiff was in compliance with the loan modification, or that the Defendants recorded a notice of sale or conducted a trustee?s sale. This is insufficient to plead a claim for the violation of section 2924.11.

Therefore, the Court wi sustain the demurrer to the first cause of action because it lacks the reasonably particular facts needed to plead the statutory claim.
California law imposes the burden on the Plaintiff to demonstrate the manner in which she can amend her pleadings to state this claim against the Defendants. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

2. Second Cause of Action for Failure to Designate Single Point of Contact
The Defendant argues that this cause of action lacks the particular facts needed to plead the claim. Section 2923.7 requires a mortgage servicer, upon request, to establish a single point of contact and provide one or more direct means of communication with the single point of contact.
The Plaintiff does not allege that she ever requested a single point of contact from any of the three moving Defendants. Since the statutory duty is imposed ?upon request?, the Plaintiff has not pleaded the facts necessary to plead the cause of action.
In addition, there are no allegations showing that the Defendants have recorded a notice of default or explaining how the failure to establish a single point of contact has caused any harm to the Plaintiff. The Plaintiff alleges in paragraph 64 that she may seek damages. However, as noted above, the Plaintiff may not seek damages under HBOR before a sale of her property. Instead, she is limited to an injunction for the alleged violation of section 2923.7.

Accordingly, the Court will sustain the demurrer to the second cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

3. Third Cause of Action for Quiet Title
The Defendants argue that this cause of action lacks sufficient facts.

Under California law, a cause of action to quiet title is pleaded sufficiently when the plaintiff alleges, in simple language, that the plaintiff is the owner and in possession, and that the defendant claims an adverse interest without right. Thornton v. Stevenson (1960) 185 Cal. App. 2d 708, 713.
The Plaintiff does not identify the adverse interest of each of the moving Defendants. Instead, the Plaintiff alleges in paragraph 71 that the Defendants? claims are without any right. This is insufficient because it does not identify the adverse interest that each Defendant claims and for which the Plaintiff seeks a judgment quieting title.
Further, case law requires the Plaintiff to plead that she can clear the debt to quiet title to the property in their name. Aguilar v. Bocci (1974) 39 Cal. App. 3d 475, 477-478 (holding that a party cannot quiet title without satisfying a debt because a cloud upon title will persist until the debt is paid). The Plaintiff does not allege that she can clear the debt that is secured by the deed of trust that she alleges is recorded on her property and which is the basis for the non-judicial foreclosure proceeding.
It appears from allegations in paragraphs 114 to 119 that she is relying on the ruling in Yvanova v. New Century Mortgage Corp. (2016) 6 Cal.4th 919 to claim that the Defendants have no right to the property. In Yvanova, the California Supreme Court held that a borrower has standing to sue for wrongful foreclosure where an alleged defect in the assignment renders the assignment void. Id. at 942 – 943. The Court in Yvanova expressly limited its ruling to the post-foreclosure context. Id. at 934 to 935. The Court stated that the ?narrow question? under review was whether a borrower seeking remedies for wrongful foreclosure has standing, not whether a borrower could preempt a nonjudicial foreclosure. Id. The Court added that the ?concrete? question at issue is whether a plaintiff should be permitted to amend the complaint to seek redress, in a wrongful foreclosure count, for the trustee’s sale that has already taken place.? The Court stated ?We do not address the distinct question of whether, or under what circumstances, a borrower may bring an action for injunctive or declaratory relief to prevent a foreclosure sale from going forward.? Accordingly, the opinion in Yvanova is limited to holding that a plaintiff has standing to bring a lawsuit to challenge a void assignment after a foreclosure has occurred.
Subsequent case law states that Yvanova does not provide standing for a pre-foreclosure suit to challenge a defendant?s ability to foreclose. Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal. App. 4th 808, 814 to 815. In Saterbak, the plaintiff was in default, but no foreclosure sale had occurred. The plaintiff claims that the alleged ?lender? was not the true ?lender? and had no right to foreclose on the ground that the deed of trust had not been assigned properly. The trial court sustained a demurrer without leave to amend and the Court of Appeal affirmed because it found that Yvanova did not provide standing to pre-foreclosure lawsuits.
In the pending case, the Plaintiff does not allege that a foreclosure sale has taken place. Since this is a pre-foreclosure lawsuit, the rulings in Yvanova do not apply and do not provide the Plaintiff with any standing to attack the Defendants? rights in the property.

Accordingly, the Court will sustain the demurrer to the third cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

4. Fourth Cause of Action for Declaratory Relief
The Defendants argue that this cause of action is derivative on the other claims in her Complaint.
It is general rule that in an action for declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a contract and requests that the rights and duties be adjudged. City Of Tiburon v. Northwestern Pac. R.R. Co. (1970) 4 Cal. App. 3d 160, 170; see CCP section 1060 (identifying the remedy of declaratory relief).
First, the Plaintiff does not plead sufficient facts to identify an actual controversy with each Defendant. In paragraph 83, the Plaintiff seeks declaratory relief regarding the Defendants? adverse interests in her property. In paragraph 85, the Plaintiff seeks a judicial declaration that requires the Defendants to convey by a grant deed a title in fee simple to the Plaintiff. There are no allegations showing that the Defendants have title in fee simple that they could convey to the Plaintiff. Further, there are no allegations that identify the adverse interest that each, separate Defendant is claiming in the property and there are no allegations that show that an actual controversy exists between the Plaintiff and each of the Defendants with regards to these unidentified adverse interest.
Second, there are grounds for a demurrer to a declaratory relief cause of action that is wholly derivative on claims for statutory violations and the statutory claims lack required facts. Ochs v. PacifiCare of California (2004) 115 Cal. App. 4th 782, 794. As discussed above, the Plaintiff has not pleaded sufficient facts to state her claims based on Civil Code sections 2923.6 and 2923.7. To the extent that the Plaintiff is seeking a declaration regarding conduct required by these statutes, the cause of action for declaratory relief lacks sufficient facts to seek a judicial declaration.

Accordingly, the Court will sustain the demurrer to the fourth cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

6. Fifth Cause of Action for Violation of Business and Professions Code 17200
The Defendants argue that this cause of action lacks sufficient facts.

The Plaintiff?s fifth cause of action is brought for the violation of Business and Professions Section 17200, which defines unfair competition to be any unlawful, unfair, or fraudulent business practice. In order to plead a claim under Business and Professions Code section 17200, there must be allegations demonstrating that the Defendants engaged in an unlawful, unfair, or fraudulent business act or practice. Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal. App. 4th 659, 676-677. This includes anything that can properly be called a business practice and that at the same time is forbidden by law. Id. Further, to plead this statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619.
A review of the fifth cause of action reveals that it does not contain any particular facts that identify a business act of the Defendant that violates section 17200. In paragraphs 98 and 101, the Plaintiff alleges that the Defendants? has engaged in a fraudulent and unfair business practice by refusing to cancel a foreclosure sale when they have a complete package in for review. This is an attempt to plead the violation of Civil Code section 2923.6, which bars a lender from recording a notice of default before denying an application for a loan modification. As noted above in the analysis of the first cause of action, there are no allegations showing that the Defendants have recorded a notice of default, which is necessary to plead an unlawful business practice that violates Civil Code section 2923.6. Further, there are no allegations showing that each, separate Defendant intends to hold a foreclosure sale, despite receiving an application to modify the loan. There are no allegations that identify the basis for holding each, separate Defendant liable for an unfair business practice. This is insufficient to plead an unlawful business practice claim.
In addition, a claim for a ?fraudulent? business practice must include allegations that members of the public have an expectation or an assumption about the matter in question and that the members of the public are likely to be deceived by the business practice. Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal. App. 4th 824, 838. There are no allegations that show that members of the public have an expectation or assumption about whether the Defendants would foreclose on the Plaintiff?s property while an application for a loan modification was under review. There are no allegations that show the Defendants? conduct would deceive members of the public. Instead, the Plaintiff?s claim concerns her personal property and not a matter in which members of the public have any expectations or assumptions. This is insufficient to plead a fraudulent business practice.
Therefore, the Court will sustain the demurrer to the fifth cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

6. Sixth Cause of Action for Lack of Standing
There is no cause of action for ?lack of standing? in California law. It appears from allegations in paragraphs 114 to 119 that she is relying on the ruling in Yvanova v. New Century Mortgage Corp. (2016) 6 Cal.4th 919 to claim that the Defendants have no right to the property. However, as discussed above in the analysis of the third cause of action for quiet title, the holding in Yvanova applies only in post-foreclosure circumstances. Since the Plaintiff does not allege that a foreclosure has occurred, the Plaintiff does not plead sufficient facts to bring a claim under Yvanova.
Therefore, the Court will sustain the demurrer to the sixth cause of action.

It does not appear reasonably possible to correct the defects in this cause of action by amendment because California law does not recognize a preemptive suit to challenge a party?s authority to commence a foreclosure proceeding. California law imposes the burden on the Plaintiff to demonstrate the manner in which he can amend his pleadings to state his claims against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend.

7. Seventh Cause of Action for Intentional Misrepresentation and Eighth Cause of Action for Negligent Misrepresentation
The Defendants argue that these causes of action lack the particular facts needed to plead the claims.
The seventh cause of action for intentional misrepresentation must include the following elements:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

The eighth cause of action for negligent misrepresentation must include the following elements:

1) a misrepresentation of a past or existing material fact;
2) without reasonable grounds for believing it to be true;
3) with intent to induce another’s reliance on the fact misrepresented;
4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and
5) damages.
B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.

These causes of action are torts of deceit and the facts constituting each element must be alleged with particularity; the claims cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since the claims must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. In addition, pleadings against a corporation must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the Plaintiff?s Complaint reveals that it lacks the particular allegations needed to state these claims against each Defendant. The Plaintiff alleges in paragraph 125 of the seventh cause of action and in paragraph 137 of the eighth cause of action that the Defendants represented to the Plaintiff that her application for a loan modification had been submitted and that she would be informed when a decision was made. The Plaintiff alleges that this was false.
There are no allegations identifying how, when, where, or by what means these representations were tendered. There are no allegations identifying the person who spoke on behalf of the Defendants, who are business entities. This is insufficient to plead these causes of action.

Therefore, the Court will sustain the demurrers to the seventh and eighth causes of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

8. Ninth Cause of Action for Promissory Estoppel
The Defendants argue that the Plaintiff has failed to sufficient facts to constitute this cause of action.
The elements of a cause of action for promissory estoppel claim are the following:

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 reliance.
Aceves v. U.S. Bank N.A. (2011) 192 Cal. App. 4th 218, 225.

The promise must be clear and unambiguous in its terms and cannot be established from preliminary discussions and negotiations. Garcia v. World Savings, FSB (2010) 183 Cal. App. 4th 1031, 1044. Further, a hopeful expectation cannot satisfy the element of reliance. Aceves, 192 Cal.App.4th at 227.
A review of this cause of action reveals that in paragraphs 149 and 150, the Plaintiff alleges that the Defendants promised to review the modification application, to submit it to an investor for review, to contact the Plaintiff once a decision was made, and to postpone the trustee sale. However, there are no allegations that identify how the Plaintiff relied to her detriment. Instead, the Plaintiff alleges in paragraph 139 that she continued to seek a loan modification, submitted all requested information regarding a loan modification, and did not take any action to protect her property from foreclosure. This does not identify the injury caused by the Plaintiff?s reliance, e.g., that she did not take a specific action as a result of the promise and the failure to take this action caused her damages.
Further, the alleged promise to postpone the trustee?s sale was a modification of the Defendants? right to foreclosure under the deed of trust. Such an agreement must satisfy the statute of frauds. Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544, 552-553. A gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust deed ordinarily would be unenforceable under Civil Code section 1698, i.e., the statute of frauds. Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal. 3d 665, 673. There are no allegations that the promise was made in writing.
Therefore, the Court will sustain the demurrer to the ninth cause of action.
California law imposes the burden on the Plaintiff to demonstrate the manner in which she can amend her pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not file any opposition papers, did not request leave to amend, and did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

RULING:
1. Defendants, Select Portfolio, MERS, and Wilmington Bank
SUSTAIN demurrers to each cause of action in First Amended Complaint without leave to amend.

2. Defendant, JPMorgan Chase Bank
SUSTAIN demurrers to each cause of action in First Amended Complaint without leave to amend.