Case Number: BC605792??? Hearing Date: July 19, 2016??? Dept: 37
CASE NAME: Johnson v. HSBC Bank USA, N.A., et al.
CASE NO.: BC605792
HEARING DATE: 7/19/16
DEPARTMENT: 37
CALENDAR NO.: 2
TRIAL DATE: None
NOTICE: OK
SUBJECT: Motion for Judgment on the Pleadings
MOVING PARTY: Defendants Select Portfolio Servicing, Inc. and HSBC Bank USA, N.A.
OPPOSING PARTY: None
COURT?S TENTATIVE RULING
The unopposed motion for judgment on the pleadings is granted with 20 days leave to amend. Counsel for Defendants to give notice.
STATEMENT OF THE CASE
This action concerns a home mortgage loan secured by real property located at 3890 Westside Avenue, Los Angeles, California 90008. Plaintiff alleges that he is the victim of fraud, and he seeks to prevent the foreclosure sale of his residence. In the complaint, Plaintiff asserts causes of action for 1) declaratory relief, 2) promissory estoppel, 3) negligence, 4) rescission, and 5) violation of the Unfair Competition Law. Defendants now move for judgment on the pleadings. Plaintiff has not filed an opposition to the motion.
DISCUSSION
I. Legal Standard
A defendant may move for judgment on the pleadings if the complaint does not state facts sufficient to constitute a cause of action against the defendant. (Code Civ. Proc., ? 438, subds. (b)(1) & (c)(1)(B)(ii).) Except as provided by statute, the rules governing demurrers govern motions for judgment on the pleadings. (Cloud v. Northrup Grumman Corp. (1998) 67 Cal.App.4th 995, 999.) Therefore, the grounds for a motion for judgment on the pleadings must be apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Ibid.) The court accepts the truth of all material facts properly pleaded, but not the truth of ?contentions, deductions or conclusions of law.? (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)
II. Request for Judicial Notice
Defendants request that the court judicially notice the following documents: 1) the deed of trust recorded on May 15, 2005; 2) the assignment of deed of trust recorded on September 16, 2008; 3) the notice of default and election to sell recorded on May 14,
2008; 4) the notice of rescission of declaration of default recorded on December 5, 2012; 5) the substitution of trustee recorded on April 9, 2014; 6) the notice of default and election to sell recorded on April 22, 2014; and 7) the notice of trustee?s sale recorded on December 10, 2015. The request is granted. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265.)
III. First Cause of Action: Declaratory Relief
In the first cause of action for declaratory relief, Plaintiff seeks a judicial declaration that Defendants have no right to foreclose against the subject real property. (Compl. ? 60.) The gist of the cause of action is that Plaintiff was a victim of fraud, a ?straw buyer victim.? He alleges that Defendants fabricated a loan application in his name, using his social security number, to create a false loan. He alleges that he learned of the fraud in 2007 when his monthly payments nearly doubled from what he had previously been paying. (Compl. ?? 37-38.) As Defendants point out, these allegations demonstrate that the first cause of action is time-barred by the three-year limitations period for fraud-based claims. (Code Civ. Proc., ? 338, subd. (d).) Not only did the loan originate on May 1, 2006 (RJN, Exh. 1), but Plaintiff alleges that he discovered the fraud in 2007 (Compl. ? 38), more than three years before Plaintiff filed suit on December 31, 2015. Accordingly, the motion is granted with 20 days leave to amend as to the first cause of action.
IV. Second Cause of Action: Promissory Estoppel
In the second cause of action, Plaintiff fails to allege that Defendants made a clear and unambiguous promise that Plaintiff should stop making payments on his mortgage loan. (See US Ecology, Inc. v. State (2005) 129 Cal.App.4th 887, 901.) Plaintiff alleges that he was instructed by a woman named Janice, who worked for Countrywide, that he should cease making payments ?on the belief by Countrywide that the loan was fraudulently originated.? (Compl. ? 63.) Plaintiff alleges that Janice told Plaintiff that the increase in monthly payments meant ? ?something is not right,? ? and that Janice instructed him, ? ?Do not make another payment until I get back to you!? ? (Compl. ? 34.) Thus, Plaintiff alleges that someone other than Defendants made the purported promise, and he does not allege that Defendants ratified the conduct of Countrywide?s employee. Similarly, it is not clear from the purported promise what Countrywide intended to do, or that Plaintiff was justified in relying on the promise. (Broberg v. Guardian Life Ins. Co. of America (2009) 171 Cal.App.4th 912, 929.) As Defendants point out, the allegations that Plaintiff approached the authorities to avoid his loan obligations suggests that he did not in fact rely on Countrywide?s statement that it would remedy the alleged fraud. (See Compl. ?? 39-43.) Accordingly, the motion is granted with leave to amend as to the second cause of action for promissory estoppel.
V. Third Cause of Action: Negligent Servicing
The third cause of action is based on Defendants? alleged negligence in failing to review Plaintiff?s account for indicia of fraud. Plaintiff alleges that in servicing his loan,
Defendants refused to review and evaluate the documents submitted by Plaintiff to establish the purported fraud and instead insisted on foreclosing due to Plaintiff?s nonpayment. (Compl. ? 67.) Plaintiff also alleges that Defendants refused to consider Plaintiff?s requests to rescind the subject loan. (Compl. ?? 68-72.) However, the general rule is that ? ?a financial institution owes no duty of care to a borrower when the institution?s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.? ? (Lueras v. BAS Home Loan Servicing, LP (2013) 221 Cal.App.4th 49, 63, citing Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) Here, Plaintiff does not allege that Defendants exceeded their role as loan servicers or otherwise allege facts giving rise to a duty of care to consider the rescission. In addition, as set forth below, Plaintiff?s attempt to rescind the loan was untimely. Accordingly, the motion is granted with leave to amend as to the third cause of action.
VI. Fourth Cause of Action: Rescission
The fourth cause of action is for rescission of the loan under the Truth in Lending Act (TILA) (15 U.S.C. ? 1601 et seq.). The cause of action fails to state sufficient facts for at least two reasons. First, the claim is time-barred by the TILA?s three-year limitations period. ?The Truth in Lending Act gives borrowers the right to rescind certain loans for up to three years after the transaction is consummated.? (Jesinoski v. Countrywide Home Loans, Inc. (2015) 574 U.S. __ [135 S.Ct. 790, 791].) ?Even if a lender never makes the required disclosures, the ?right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever comes first.? ? (Id. at p. 792, quoting 15 U.S.C. ? 1635(f).) Here, it appears that although Plaintiff consummated the loan on May 1, 2006 (RJN, Exh. 1), he did not send his purported rescission letter until February 28, 2015. (Compl. ? 51.)
Second, Plaintiff does not allege tender of the outstanding debt. ?In order to prevail on a TILA rescission claim, the borrower will be obligated to tender the property the borrower received from the creditor under the loan.? (Park v. Wachovia Mortgage, FSB (S.D.Cal., Sept. 30, 2011, No. 10cv1547 WQH (RBB)) 2011 WL 4571874, at p. *2; accord, Garcia v. Wachovia Mortgage Corp. (C.D. Cal. 2009) 676 F.Supp.2d 895, 901 [? ?Rescission is an empty remedy without [the plaintiff?s] ability to pay back what she has received? ?].) Rescission is not available without full tender. Accordingly, the motion is granted with leave to amend as to the fourth cause of action.
VII. Fifth Cause of Action: Unfair Competition Law
The fifth cause of action is derivative of the underlying causes of action already discussed. Plaintiff alleges that Defendants? actions ?as described hereinabove constitutes deceptive, unfair and unlawful business practices.? (Compl. ? 97.) However, for the reasons discussed, Plaintiff fails to state facts to support the underlying causes of action. Accordingly, Plaintiff fails to sufficiently allege that Defendants engaged in unfair, unlawful, or fraudulent business acts or practices, or that
Plaintiff suffered an economic injury as a result of such acts or practices. For these reasons, the motion is granted with leave to amend as to the fifth cause of action.