Case Name: Afos v. The Wolf Firm, et al.
Case No.: 16-CV-303756

This action initiated by plaintiff Prisco Afos, Jr. (“Plaintiff”) against defendants The Wolf Firm, U.S. Bank National Association (“U.S. Bank”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and Select Portfolio Servicing, Inc. (“SPS”) relates to the foreclosure of Plaintiff’s home.

According to the allegations of the first amended complaint (“FAC”), Plaintiff owns property located at 597 Novak Drive, San Jose, California (“Subject Property). (FAC, ¶ 3.) On July 12, 2006, Plaintiff executed a written loan agreement with Ownit Mortgage Solutions, Inc. (“Ownit”) and executed a deed of trust (“DOT”) in its favor to secure the loan. (Id. at ¶ 14.) On July 29, 2008, MERS, the beneficiary, recorded a substitution of trustee (“First SOT”), substituting The Wolf Firm as trustee. (Id. at ¶ 15.) Thereafter, on December 9, 2009, MERS assigned the DOT and all beneficial interest to U.S. Bank (“Assignment”), on behalf of a securitized trust. (Id. at ¶ 16.) The First SOT and Assignment are both invalid because MERS had no “standing” to convey, assign, or transfer the DOT. (Id. at ¶¶ 15, 17.) U.S. Bank and SPS subsequently recorded a second substitution of trustee, substituting The Wolf Firm as trustee (“Second SOT”). (Id. at ¶ 18.) The Second SOT is also invalid because U.S. Bank and SPS have no standing to substitute the trustee. (Ibid.)

On March 15, 2012, U.S. Bank and The Wolf Firm recorded a notice of default (“NOD”). (FAC, ¶ 19.) The Wolf Firm recorded a notice of trustee’s sale on February 8, 2016 (“NOTS”). (Id. at ¶ 20.) The NOD and NOTS are defective because they failed to “properly credit Plaintiff for the payments [he] made towards the mortgage and therefore overstates the amount of [his] default.” (Id. at ¶¶ 19-20.) The NOD is additionally defective because neither the loan servicer nor the lender contacted Plaintiff in person or by telephone to discuss options of avoiding foreclosure as required by the Homeowner Bill of Rights prior to recording it. (Id. at ¶ 20.)

Plaintiff asserts twelve causes of action for: (1) constructive fraud; (2) violations of the homeowner bill of rights (“HBOR”); (3) violations of Civil Code section 2923.5; (4) cancellation of instruments; (5) negligence; (6) intentional infliction of emotional distress (“IIED”); (7) slander of title; (8) quiet title; (9) declaratory relief; (10) violations of Business and Professions Code sections 17200, et seq. (“UCL”); (11) fraud in the concealment; and (12) “for damages and other relief.”

SPS, U.S. Bank, and MERS (collectively “Defendants”) presently demur to each cause of action on the ground of failure to state sufficient facts to constitute a cause of action.

I. Preliminary Matters

A. Meet and Confer
Pursuant to Code of Civil Procedure section 430.41, subdivision (a), prior to filing a demurrer, “the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” A court may not overrule a demurrer based on a defendant’s failure to meet and confer. (See Code Civ. Proc., § 430.41, subd. (a)(4).)

In support of the demurrer, Defendants’ counsel filed a declaration stating he could not meet and confer in person or by telephone with Plaintiff because the FAC does not state his telephone number or e-mail address. (Hawks Decl., ¶ 2.) Although Defendants admit they failed to meet and confer prior to filing the demurrer, their explanation is reasonable and the Court will reach the merits of the motion. To that end, Plaintiff is instructed to provide contact information on documents he files in the future. California Rules of Court, rule 2.111(a) requires the party or attorney to list his or her name, mailing address, telephone number, fax number, and e-mail address. Plaintiff should include this information in future papers filed with the Court. The parties are admonished to comply with the meet and confer requirements in the future.

B. Requests for Judicial Notice

In support of their demurrer, Defendants request judicial notice of the DOT and NOD. Evidence Code section 452, subdivision (h) allows a court to take judicial notice of facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy. Recorded property instruments, including deeds of trust, are proper subjects of judicial notice under this provision. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265, disapproved of on other grounds in Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919.) In addition, the requested documents are relevant to an issue under review in the demurrer. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [any matter to be judicially noticed must be relevant to a material issue].) Thus, the documents at issue are proper subjects for judicial notice. Accordingly, the request for judicial notice is GRANTED.

II. Merits of the Demurrer

A. First Cause of Action – Constructive Fraud
Plaintiff’s fraud claim is predicated on two fraudulent acts. Plaintiff alleges Defendants had a duty to disclose the “assignments and substitution of trustee” were void as a matter of law and failed to disclose those facts. (FAC, ¶ 26.) Plaintiff also pleads Defendants engaged in a pattern of defrauding him by failing to properly credit payments and representing he had not fully paid what was required. (Id. at ¶ 28.) Defendants allegedly foreclosed on the Subject Property even though they knew Plaintiff’s non-payment was false. (Ibid.) Defendants contend both alleged fraudulent acts are inadequately pleaded.

As to the alleged non-disclosure that the assignments and substitutions of trustee were void, Defendants assert the claim fails because it is premised on the contention that they lacked standing. Defendants argue MERS was the initial beneficiary under the DOT, and thus possessed standing to record both the SOT and Assignment. Defendants insist there is nothing in the pleading alleging why MERS lacks standing, and under California law, MERS’ authority to take these steps is undisputed. Plaintiff does not address this argument in opposition.

Defendants’ argument is well-taken. Plaintiff’s allegation that Defendants lacked standing to foreclose is a legal conclusion that is not supported by other factual allegations. To plead a lack of authority to foreclose, a plaintiff must allege a factual basis supporting the conclusion. (Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149, 1156 [sustaining demurrer because the plaintiff did not allege “any factual basis to suspect [the defendant] lacks authority to proceed with the foreclosure”].) Here, the FAC does not reflect any factual basis for MERS’ lack of standing to record the SOT and Assignment. Plaintiff simply pleads MERS lacked standing to substitute a trustee and assign the DOT. California recognizes MERS’ authority to commit such acts, and a plaintiff may not initiate an action to discover whether such authority exists. (Ibid.) As such, the MERS’ lack of standing cannot be the basis for a fraud claim because there are no allegations supporting the conclusion it lacked standing.

Turning to the allegations relating to Plaintiff’s payments, Defendants first assert he fails to allege any misrepresentations with the requisite particularity. Defendants specifically point to Plaintiff’s failure to allege which payments or notices are fraudulent. Defendants additionally contend Plaintiff fails to allege to whom he spoke, what was said, or when any alleged conversations took place. Plaintiff does not address the specificity requirement in opposition. Instead, he simply argues he has pleaded all elements of a fraud claim.

“Constructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship. Constructive fraud arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131, internal citation and quotation marks omitted (“Prakashpalan”).) “Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793, internal citation and quotation marks omitted.) “Constructive fraud, like actual fraud, must be pleaded with specificity.” (Knox v. Dean (2012) 205 Cal.App.4th 417, 434.)

Plaintiff fails to meet this pleading standard as the allegations in the FAC are sparse and lack detail. Although Plaintiff alleges the existence of fraudulent payments, he does not specify any payments or when they were made. He similarly does not allege to whom he spoke, what was said, or when any conversations took place. The pleading is completely devoid of any factual detail or support. As such, the demurrer may be sustained on the basis Plaintiff fails to plead the claim with particularity.

Next, Defendants assert Plaintiff fails to allege the elements of reliance, which must be pleaded in order to state a claim for fraud. (See Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 516, fn. 14 [stating the elements for constructive fraud].) Defendants contend Plaintiff fails to plead what he did do or failed to do because of the alleged representations or omissions. This argument is not well-taken. Plaintiff alleges he was unaware of Defendants’ concealment of “material facts,” and as such, did not take any action to remove them as servicer or trustee. (FAC, ¶ 32.) Further, Plaintiff pleads that had he known Defendants misrepresented the amount due, he would have taken legal action sooner in order to maintain title to the Subject Property. (Ibid.) As such, Plaintiff alleges he relied on Defendants’ representations and omissions.

Last, Defendants contend Plaintiff inadequately pleads the element of causation. To state a constructive fraud claim, a plaintiff must plead the injuries resulted from the alleged fraud. (Prakashpalan, supra, 223 Cal.App.4th at p. 1131.) Defendants state Plaintiff pleads he suffered damages in the form of mortgage payments, costs, injury to his credit, and loss to the Subject Property. (See FAC, ¶ 32.) Defendants contend these damages did not result from any representation or omission because Plaintiff admits he was in default. Defendants’ argument is well-taken. The pleading does not reflect that these payments would not have been otherwise charged because Plaintiff was allegedly already in default by a lower amount. The failure to distinguish fees and costs expended solely due to Defendants’ actions is fatal to his claim. This is a critical distinction because it was the default that triggered the enforcement of the power of sale clause in the DOT, and it was the triggering of the power of sale clause that is subjecting Plaintiff’s home to nonjudicial foreclosure. (See Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 523 (“Jenkins”), disapproved of on other grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919.) Thus, Plaintiff inadequately pleads Defendants’ misrepresentations resulted in his alleged damages.

Accordingly, the demurrer to the first cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days’ leave to amend.

B. Second and Third Causes of Action – Violations of HBOR and Civil Code
Section 2923.5

Plaintiff alleges Defendants failed to comply with the due diligence requirements set forth in the HBOR, specifically Civil Code sections 2923.5 (“Section 2923.5”) and 2923.55 (“Section 2923.55”), prior to recording the NOD because neither the loan servicer nor the lender contacted him by phone or in person to discuss options to avoid foreclosure. (FAC, ¶¶ 37-38, 48-50.)

Defendants contend these claims fail because the HBOR did not become effective until 2013 and does not retroactively apply. Section 2923.5 prohibits a mortgage servicer, trustee, beneficiary, or authorized agent from recording a notice of default until certain statutory outreach requirements have been fulfilled. Section 2923.55 provides that a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent may not record a notice of default until the mortgage servicer sends certain statements in writing to the borrower. Thus, these causes of action are predicated on events that were to have occurred prior to the recording of the DOT on March 15, 2012. (See FAC, ¶ 19.) Courts have concluded the HBOR is not retroactive and, thus, does not apply to conduct that occurred before January 1, 2013, when it was enacted. (See Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 158; Rockridge Trust v. Wells Fargo, N.A. (N.D. Cal. 2013) 985 F.Supp.2d 1110, 1153.) As the NOD was recorded before the HBOR came into effect, Plaintiff fails to state a claim for violations of the HBOR and Section 2923.5.

Defendants additionally argue the second and third causes of action are time-barred. “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 that the action may be barred.” (Geneva Towers Ltd. Partnership v. City of San Francisco (2003) 29 Cal.4th 769, 781, citations and quotations omitted.) A plaintiff must file suit within a designated period after the cause of action accrues, meaning “when [the cause of action] is complete with all of its elements[,]” which are “wrongdoing, harm, and causation.” (Nguyen v. Western Digital Corporation (2014) 229 Cal.App.4th 1522, 1538.)

In support, Defendants assert the claim is governed by Code of Civil Procedure section 338, subdivision (a), which provides that an action for a statutory violation has a three-year statute of limitations. Defendants contend the NOD was recorded in 2012, and the action is untimely because it was not initiated until 2016, more than three years later. Although Defendants do not explicitly state so, their argument relies on the implicit premise that the causes of action accrued in 2012. As aptly stated, the applicable statute of limitations is three years. (See Civ. Code, § 338, subd. (a).) As alleged, Plaintiff’s cause of action accrued when the NOD was recorded without satisfying the statutory requirements. Thus, the claims are time-barred unless Plaintiff alleges an exception applies.

In opposition, Plaintiff states he alleges he did not discover the underlying actions until 2016, thereby implicating the delayed discovery rule. “Under the delayed discovery rule, the limitations period does not begin to run until a plaintiff discovers or could have discovered through the exercise of reasonable diligence all facts essential to her cause of action.” (Sylve v. Riley (1993) 15 Cal.App.4th 23, 26.) To benefit from the delayed discovery rule, a plaintiff “must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.” (E-Fab, Inc. v. Accountants, Inc. Services, supra, 153 Cal.App.4th 1308, 1319, original italics, citation and quotation marks removed.) While Plaintiff does allege he only discovered the underlying acts in 2016, that allegation alone is insufficient to toll the statute of limitations. Plaintiff fails to specifically plead any facts showing the time and manner of his discovery or his inability to have made the discovery earlier. As such, he fails to plead the delayed discovery rule applies, and there are no alleged facts reflecting the statute of limitations was tolled.

In light of the above, the demurrer to the second and third causes of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

C. Fourth Cause of Action – Cancellation of Written Instruments

Plaintiff seeks cancellation of the First SOT, Second SOT, NOD, and NOTS because they were recorded “without a factual or legal basis for doing so.” (FAC, ¶¶ 58-59.)

In order to state a claim for cancellation of instrument, a plaintiff must specifically allege the particular instrument he or she asserts constitutes a cloud on his or her title and state facts “showing the apparent validity of the instrument designated, and point out the reason for asserting that it is actually invalid.” (Ephriam v. Metropolitan Trust Co. of Cal. (1946) 28 Cal.2d 824, 833-34.)

Defendants aptly note Plaintiff does not allege why they had no factual or legal basis for recording the First SOT, Second SOT, NOD, and NOTS in connection with this cause of action. Defendants construe Plaintiff’s basis for alleging that they have no factual or legal basis for recording the subject instruments to be their alleged lack of standing, as that is his contention relative to other causes of action. Defendants contend that, for the same reason as stated relative to the constructive fraud claim, Plaintiff fails to plead they lack standing. Defendants argue that, as a result, he also fails to plead the subject instruments are invalid. Plaintiff does not clarify his allegation in opposition. Instead, he states he will continue to suffer damages if the subject instruments are not cancelled.

The Court agrees the pleading is unclear and it appears the claim is based on Defendants’ alleged lack of standing. For the same reasons discussed above relative to the constructive fraud claim, Plaintiff fails to allege sufficient facts supporting the conclusion Defendants lack standing. As Defendants’ lack of standing is the basis the documents are void, Plaintiff fails to plead the subject instruments are invalid. Therefore, there are no allegations supporting the conclusion that the First SOT, Second SOT, NOD, and NOTS are invalid.
Accordingly, the demurrer to the fourth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

D. Fifth Cause of Action – Negligence

Plaintiff alleges Defendants had a duty to exercise reasonable care and skill to maintain proper loan records. (FAC, ¶ 62.) Plaintiff pleads Defendants breached the duty of care by failing to properly and accurately credit his payments to his account, preparing false documents, and foreclosing on the Subject Property without proper authority. (Id. at ¶ 64.)

Defendants contend that no claim for negligence has been stated against them because they did not owe Plaintiff a duty of care, which is a necessary element of this claim. (See Mendoza v. City of Los Angeles (1998) 66 Cal.App.4th 1333, 1339 [stating elements of negligence].) As correctly stated by Defendants, “as a general rule, 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.” (Das Bank of America, N.A. (2010) 186 Cal.App.4th 727, 740; Nymark v. Hear Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) Despite this, courts have carved out an exception; once a lender or servicer undertakes to consider a loan modification request, it owes the borrower a duty to use reasonable care in handling that request. (Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 945-952.) Here, Plaintiff has not alleged any loan modification review was undertaken. There are otherwise no allegations reflecting Defendants’ actions exceeded the scope of the conventional role as money lender. Consequently, Plaintiff fails to plead the element of duty.

Defendants next argue that, even if they owed Plaintiff a duty of care, he fails to plead the element of breach because the allegations are “nonspecific.” This argument is not well-taken. Defendants do not adequately support this argument and fail to explain how the allegations are “nonspecific.” Plaintiff pleads Defendants breached the duty of care by failing to properly and accurately credit his payments to his account, preparing false documents, and foreclosing on the Subject Property without proper authority. (Id. at ¶ 64.) Although the allegation Defendants acted without authority is improperly pleaded for the reasons stated above relative to the first cause of action, Plaintiff still alleges two other forms of breach. Generally, the pleading need only allege the ultimate facts sufficient to state a cause of action. (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) Pleading with specificity is only required relative to a few causes of action, including fraud. (See Knox v. Dean, supra, 205 Cal.App.4th at p. 434.) Defendants advance no legal authority requiring a negligence claim to be specifically pleaded, and the Court is not aware of any. Thus, to the extent Defendants actually argue the claim must be specifically pleaded, that argument is meritless. The Court otherwise finds Plaintiff adequately pleads the element of breach.

Last, Defendants assert Plaintiff fails to plead his damages were proximately caused by their negligence, which is an element of a negligence claim. (See Mendoza v. City of Los Angeles, supra, 66 Cal.App.4th at p. 1339.) For the reasons stated above relative to the first cause of action, Plaintiff does not allege the damages he sustained were the result of Defendants’ actions because he does not dispute he was in default.

Accordingly, the demurrer to the fifth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

E. Sixth Cause of Action – IIED

Plaintiff alleges Defendants intentionally and recklessly misrepresented to him that they were entitled to exercise the power of sale provision in the DOT, even though they were not entitled to do so and had no interest in the Subject Property. (FAC, ¶¶ 67-68.) Plaintiff pleads Defendants did not initiate the foreclosure proceeding in good faith and “committed the acts set forth above with complete; [sic] utter and reckless disregard of the probably of causing Homeowners to suffer severe emotional distress.” (Ibid.) Plaintiff pleads this conduct is outrageous and extreme and, as a result of the conduct, he has suffered severe emotional distress, including lack of sleep, anxiety, loss of appetite, and depression. (Id. at ¶¶ 71, 73, 75.)

To state a claim for IIED, a plaintiff must allege, among other elements: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; and (2) the plaintiff’s suffering severe or extreme emotional distress. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050.) Defendants contend Plaintiff fails to plead both elements.

First, Defendants persuasively argue Plaintiff fails to allege they engaged in extreme and outrageous conduct. “Extreme and outrageous conduct is that which goes beyond all possible bounds of decency so as to be regarded as atrocious and utterly intolerable in a civilized community. Insults, indignities, annoyances, petty oppressions or other trivialities will not suffice. The conduct must be such that it would cause an average member of the community to immediately react in outrage.” (Gomon v. TRW, Inc. (1994) 28 Cal.App.4th 1161, 1172, citations omitted.) As stated above, Plaintiff alleges his emotional distress is caused by Defendants’ initiation of foreclosure proceedings despite their lack of standing. (FAC, ¶¶ 67-68.) For the same reasons stated above in connection with the first cause of action, Plaintiff fails to allege sufficient facts supporting his claim that Defendants lacked standing to foreclose on the Subject Property. As such, the initiation of foreclosure proceedings cannot be said to form the basis of any “outrageous.” Absent additional circumstances, foreclosing upon someone’s home is not the kind of conduct that will support an IIED claim. (Quinteros v. Aurora Loan Services (E.D. Cal. 2010) 740 F.Supp.2d 1163, 1172.)

Next, Defendants contend Plaintiff’s allegations of emotional distress, lack of sleep, anxiety, loss of appetite, and depression are not sufficiently specific to state a claim. “The complaint must plead specific facts that establish severe emotional distress resulting from defendant’s conduct.” (Michaelian v. State Comp. Ins. Fund (1996) 50 Cal.App.4th 1093, 1114.) The emotional distress must be “substantial and enduring” and generalized allegations of feeling “ill, nervous, [and] upset” are insufficient to state a cause of action. (Bogard v. Employers Casualty Co. (1985) 164 Cal.App.3d 602, 617; see also Hamilton v. Prudential Financial (E.D. Cal. 2007) 2007 WL 2827792, at p. *4 [allegations of feeling “ill, nervous, [and] upset” are insufficient to state a cause of action].) Plaintiff fails to plead any specific acts and only alleges his distress in generalized terms. Therefore, he inadequately pleads he suffered severe emotional distress.

Therefore, the demurrer to the sixth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

F. Seventh Cause of Action – Slander of Title

Plaintiff alleges Defendants cannot establish lawful possession and proper transfer and/or endorsement of the DOT, and they have not perfected any claim of title or security interest in the Subject Property. (FAC, ¶ 79.) Plaintiff pleads Defendants disparaged his title to the Subject Property by recording the “real estates documents [sic],” including the DOT and NOTS. (Id. at ¶ 81.)
A crucial element of a slander of title action is a false publication. (La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 472.) Defendants contend Plaintiff fails to plead they recorded a “false publication” because the falseness is predicated on Defendants’ alleged lack of standing. This argument is well-taken. For the reasons stated above, Plaintiff fails to allege the Defendants lacked standing to foreclose on the Subject Property and, consequently, fails to plead the subject documents were false.

As such, the demurrer to the seventh cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

G. Eighth Cause of Action – Quiet Title

Plaintiff pleads Defendants cannot establish lawful possession and proper transfer of the DOT. (FAC, ¶ 89.) Plaintiff alleges Defendants claim an interest adverse to his own and seeks to enjoin them from asserting any adverse claims. (Id. at ¶¶ 90, 94.)

Defendants argue Plaintiff fails to allege he satisfied the terms of the DOT, a necessary requirement to state a claim for quiet title. This argument is well-taken. “A borrower may not . . . quiet title against a secured lender without first paying the outstanding debt on which the mortgage or deed of trust is based.” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 87 [sustaining demurrer due to plaintiff’s failure to plead satisfaction of debt]; Aguilar v. Bocci (1974) 39 Cal.App.3d 475, 477 [borrower cannot quiet title without discharging the debt].) Plaintiff does not allege he satisfied the underlying debt; in fact, he admits he was in default. As such, he fails to plead a claim for quiet title.

Therefore, the demurrer to the eighth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

H. Ninth Cause of Action – Declaratory Relief

Plaintiff alleges an actual controversy exists between himself and Defendants concerning their respective rights and duties regarding the promissory note and DOT and whether Defendants have the authority to foreclose on the Subject Property. (FAC, ¶¶ 97-99.)

“A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the parties under a written instrument or with respect to property and requests that the rights and duties of the parties be adjudged by the court. If these requirements are met and no basis for declining declaratory relief appears, the court should declare the rights of the parties whether or not the facts alleged establish that the plaintiff is entitled to favorable declaration.” (Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947, superseded by regulation on other ground, citations omitted; see also Code Civ. Proc., § 1060.)

Defendants persuasively argue that Plaintiff fails to allege the existence of an actual controversy because he does not allege facts reflecting the subject documents are invalid. As stated above, Plaintiff’s theory of invalidity is predicated on Defendants’ alleged lack of standing to initiate foreclosure proceedings. As Plaintiff fails to plead Defendants lack standing, he also fails to plead the existence of an actual controversy. (See Jenkins, supra, 216 Cal.App.4th at p. 514 [plaintiff failed to state a claim for declaratory relief because she failed to plead the lender lacked authority to foreclose].)

Accordingly, the demurrer to the ninth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

I. Tenth Cause of Action – Violation of the UCL

Plaintiff pleads Defendants’ following acts constitute fraudulent business practices: improperly characterizing accounts as being in default, misapplying payments, failing to provide adequate monthly statements of information regarding account statuses, instituting premature foreclosure proceedings to generate unwarranted fees, seeking to collect charges that are not legally due, “[f]ailing to disclose the fees, costs and charges allowable under the mortgage contract,” “ignoring grace periods,” executing misleading and false documents, and acting as beneficiaries without legal authority to do so. (FAC, ¶ 111.)

“The UCL prohibits, and provides civil remedies for, unfair competition, which it defines as ‘any unlawful, unfair or fraudulent business act or practice.’ Its purpose ‘is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.’” (Kwikset Corp. v. Sup. Ct. (2011) 51 Cal.4th 310, 320, citations omitted.) “Because . . . section 17200 is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. In other words, a practice is prohibited as unfair or deceptive even if not unlawful and vice versa.” (Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 644, citations and quotations marks omitted.) While not clearly articulated, it appears Plaintiff’s claim is based on the unlawful and fraudulent prongs. Defendants contend both are inadequately pleaded. In order for the demurrer to be sustainable, Defendants must advance successful arguments as to both prongs because a demurrer does not lie to a portion of a cause of action. (See PH II, Inc. v. Sup. Ct. (1995) 33 Cal.App.4th 1680, 1682.)

As to the unlawful prong, Defendants argue the predicate claims lack merit, and thus this claim also lacks merit. This argument is well-taken. As Plaintiff fails to allege any unlawful activity, it therefore follows that he cannot state a claim for violation of the UCL based on the same allegations. (See Avila v. Wells Fargo Bank, National Association (N.D. Cal., Dec. 23, 2016, No. C 16-05904 WHA) 2016 WL 7425925, *6 [sustaining demurrer as to a UCL claim because the plaintiff’s other theories of “defendant’s impropriety fail”].)
Turning to the fraudulent prong, Defendants contend Plaintiff does not plead it with requisite specificity. This argument has merit. “A plaintiff alleging unfair business practices . . . 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.) For the reasons stated above relative to the first cause of action, Plaintiff fails to plead any facts in the pleading with particularity. His allegations are vague and without any detail.

Last, relative to both prongs, Defendants assert Plaintiff has failed to allege a loss of money or property caused by any purported misconduct. Defendants argue the only alleged injuries were not caused by their actions. Defendants state that for the same reasons stated above, the fees and charges are due to the uncontested underlying default. A plaintiff must plead he or she “has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.) This requires showing a “causal link between [the alleged] economic injury, [the loss or impending loss of property to foreclosure]” and the defendant’s allegedly unfair, unlawful, or fraudulent business practices. (Jenkins, supra, 216 Cal.App.4th at p. 523.) A plaintiff fails to satisfy the causation prong of the statute (and thus fails to establish standing) if he or she would have suffered “the same harm whether or not a defendant complied with the law.” (Daro v. Sup. Ct. (2007) 151 Cal.App.4th 1079, 1099.) As discussed above, Plaintiff fails to plead his injuries were caused by Defendants’ actions and, consequently, fails to state a claim.

Accordingly, the demurrer to the tenth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

J. Eleventh Cause of Action – Fraud in the Concealment

Plaintiff alleges Defendants concealed the fact the loan was securitized as well as the terms of the securitization agreements, including the incentives paid, the existence of credit enhancement agreements, and the existence of an acquisition provision. (FAC, ¶ 118.)
Plaintiff pleads Defendants knew or should have known “that had the truth been disclosed, [he] would not have entered into the Loan[].” (Id. at ¶ 119.) Plaintiff then alleges “Defendants intended to induce [him] based on these misrepresentations and improper disclosures” and he relied on those misrepresentations. (Id. at ¶¶ 120-121.)

One element of a fraudulent concealment claim is that the defendant must have concealed or suppressed a material fact. (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 (“Boschma”).) Defendants contend Plaintiff fails to plead this element as the loan was not securitized when he obtained it, thus there was nothing to disclose. This argument is well-taken. Plaintiff does not actually allege the loan was securitized when he entered into it. Further, the Assignment, attached as an exhibit to the FAC, reveals the loan was securitized in December 2009 when it was assigned to U.S. Bank. (FAC, ¶ 16; Exh. D.) As such, Plaintiff fails to allege this material fact existed when he obtained the loan.

A plaintiff must also allege that he or she sustained damage as a result of the concealment or suppression of the fact. (Boschma, supra, 198 Cal.App.4th at p. 248.) Defendants assert Plaintiff fails to plead this element. For the reasons stated above relative to the first cause of action, Plaintiff fails to plead causation here as well. There are no allegations in the FAC reflecting his damages would not have occurred absent the securitization process.

In addition, Defendants argue eleventh cause of action is time-barred. In support, Defendants assert the claim is governed by Code of Civil Procedure section 338, subdivision (d), which provides the applicable statute of limitations for actions sounding in fraud is three years. Defendants insist the cause of action began to accrue in 2009 when the Assignment to the securitized trust was recorded. However, under section 338, subdivision (d), the cause of action accrues once the plaintiff discovers the facts constituting the fraud. The allegations of the FAC do not disclose when Plaintiff discovered the facts constituting the alleged fraudulent omission. Consequently, the statute of limitations defense is not clearly and affirmatively apparent from the allegations of the pleading as required. (Geneva Towers Ltd. Partnership v. City of San Francisco, supra, 29 Cal.4th at p. 781 [defect must clearly and affirmatively appear on the face of the complaint].)

Last, Defendants persuasively argue Plaintiff fails to plead the claim with requisite specificity. As stated above, actions sounding in fraud must be pleaded with specificity. (West v. JPMorgan Chase Bank, N.A., supra, 214 Cal.App.4th at p. 793.) This requirement applies to claims for fraudulent concealment. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.) As explained above relative to the first cause of action, Plaintiff fails to plead his claim with requisite particularity.

Accordingly, the demurrer to the eleventh cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.

K. Twelfth Cause of Action – Damages

Plaintiff alleges he is entitled to damages as a direct and proximate result of his above asserted causes of action. (FAC, ¶ 127.)
Defendants persuasively argue a claim for damages is not a cause of action. Damages are an elemental component of a cause of action. (See, e.g., Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1614 [resulting damages as an element of claim for breach of contract cause of action]; Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1453 [resulting damages as element of a fraud claim].) Plaintiff therefore fails to state a claim for “damages.”

As such, the demurrer to the twelfth cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend.