2018-00226486-CU-FR

Deo Singh vs. Ratish Kumar

Nature of Proceeding: Motion for Judgment on the Pleadings

Filed By: Ginelli, R. Jeremie

*** If oral argument is requested, the parties must at the time oral argument is requested notify the clerk and opposing parties of the specific causes of action

that will be addressed at the hearing. The parties are also reminded that pursuant to local rules, only limited oral argument is permitted on law and motion matters. ***

Defendant Kumar’s motion for judgment on the pleadings as to the complaint of plaintiffs in pro per Singh is GRANTED but with leave to amend, as follows.

Factual Background

According to the complaint, plaintiffs in pro per were unable to qualify for a home loan due to their low credit scores and therefore asked for help from “their beloved nephew,” defendant Kumar. Defendant agreed to help, obtaining in 2014 a loan to purchase property in Galt which plaintiffs would use as their primary residence. Plaintiffs allege the parties orally agreed that plaintiffs would pay the monthly mortgage payments, property taxes and insurance, while defendant would be entitled to deduct the mortgage interest and property taxes on his tax returns and also would transfer title to plaintiffs “within 5 years.”

Plaintiffs allege that on 1/18/2018, defendant changed the locks to the home and mailed a 60-day Notice of Termination of Tenancy (“NTT”) to plaintiffs. Despite plaintiffs’ requests, defendant refused to withdraw the NTT. On 2/2/2018 plaintiffs filed their complaint, purporting to assert causes of action for “Violation of FHA Loan Rules and Regulations,” promissory estoppel and fraud (intentional misrepresentation).

On 3/12/2018 defendant filed his answer along with a cross-complaint against plaintiffs for breach of contract (oral month-to-month tenancy), intentional interference with contract (failing to pay rent and fraudulently attempting to obtain loan modification) and breach of the covenant of good faith.

Moving Papers. Defendant Kumar now moves for judgment on the pleadings on the ground that none of the causes of action alleged in the complaint pleads facts sufficient to constitute a valid cause of action against him. As to the first cause of action based on “Violation of FHA Loan Rules and Regulations” (which asserts that defendant false represented in the loan documents he would use the property as his residence rather than as an investment property), defendant contends plaintiffs lack the legal standing to prosecute this claim since they are not parties to the loan agreement and the real party in interest entitled to sue on this theory would be the FHA or another governmental entity like the Department of Housing and Urban Development.

With respect to promissory estoppel, defendant contends this cause of action fails because there is no allegation of any writing signed by him which reflects his agreement to transfer the property to plaintiffs as required by Civil Code §1624(a)(3) and because there is no allegation that plaintiffs have actually been harmed, only that they will in the future lose their home. Moreover, defendant points out that plaintiffs cannot be harmed by the loss of the home which they never actually owned.

In regard to the misrepresentation claim, defendant maintains that it is impermissibly pled with conclusory allegations rather than with the necessary heightened-degree of factual particularity to establish the prima facie elements of justifiable reliance and damages.

Opposition. Plaintiffs oppose, appearing to argue that they are not seeking statutory damages for defendant’s violation of the FHA Rules and Regulations but rather are using these allegations “to bolster their claim that Defendant had no respect and had dared to defraud FHA, including the Plaintiffs,” thereby creating a presumption that “Defendant failed to exercise due care…” (Oppos., p.5:16-22.) The opposition also insists plaintiffs have standing to sue on “all possible causes of action” and have alleged sufficient facts for both promissory estoppel and intentional misrepresentation.

Analysis

“Violation of FHA Loan Rules and Regulations.” The motion is granted as to this first cause of action because plaintiffs lack the legal standing necessary to sue defendant for his alleged fraudulent statement in connection with the FHA loan used to acquire the subject property, particularly since plaintiffs do not appear to have been party to this FHA loan. (See, e.g., Ex. 2 to Compl.)

Promissory Estoppel. The motion must be granted as to this cause of action as well. Although the complaint adequately pleads the existence of a clear, unambiguous promise and arguably plaintiffs’ reliance on the promise, the promise at issue here (i.e

., to transfer title to real property to plaintiffs within five years) is under California’s statute of frauds unenforceable without a writing signed by defendant. Civil Code §1624(a) provides in pertinent part:

The following contracts are invalid, unless they, or some note or memorandum

thereof, are in writing and subscribed by the party to be charged or by the
party’s agent:
…

(3) An agreement…for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.
(Underline added for emphasis.)

In the case at bar, there is no allegation of any writing signed by defendant which purports to reflect his promise to transfer the property to plaintiffs at any time and regardless, the complaint itself admits this alleged promise was indeed oral.

Consequently, this alleged promise is unenforceable despite being cited as the basis for this promissory estoppel cause of action (which, even if proven, would not give rise to an award of monetary damages such as those alleged in Paragraph 21).

Intentional Misrepresentation. Although this cause of action certainly could have and should have been crafted with more attention to detail, the court finds it adequately pleads the element of justifiable reliance in that plaintiffs have alleged in Paragraph 25 they “were fooled by” defendant’s representation he was simply getting the loan on the home for them and would transfer title to them within five years and in Paragraph 25 they were induced by defendant’s representation to make all payments for the mortgage, property taxes and maintenance on the home beginning in 2014. Such allegations are sufficient to satisfy the pleading requirement for the element of justifiable reliance.

On the other hand, this final cause of action for misrepresentation does not plead facts which establish the existence of actual monetary damages recoverable under this

theory of fraud. Paragraph 27 states in pertinent part that defendant has served the NTT on plaintiffs and “has put the house up for sale, rather than transferring [it] to their name,” causing plaintiffs to suffer damages of $90,752 and the loss of their home. However, without more, the mere service of the NTT and/or the commencement of the eviction process would not appear to constitute a monetary loss which is compensable on a claim of fraud. (The court notes that while the opposition asserts defendant “succeeded” in evicting plaintiffs on 6/25/2018, this is not alleged in the complaint itself and therefore cannot be properly considered in connection with the ruling on this motion.) Similarly, the allegation that plaintiffs ‘have suffered the loss of their home’ is legally insufficient here inasmuch as the complaint only asserts defendant “has put up the house for sale,” which must be distinguished from defendant having actually sold the property. In short, this claimed loss is not supported by the facts actually alleged in the complaint and cannot satisfy the element of damages needed to support this misrepresentation cause of action.

Conclusion

For the reasons explained above, defendant’s motion for judgment on the pleadings must be and hereby is granted.

Since this is the first challenge to the complaint, leave to amend is granted. Plaintiffs may file and serve an amended complaint no later than 9/14/2018. Although not required by court rule or statute, plaintiffs are directed to present a copy of this order when the amended complaint is presented for filing.

Defendant to respond within 30 days if the amended complaint is personally served, 35 days if served by mail.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)