Case Number: EC061328 Hearing Date: April 11, 2014 Dept: A

Adarme v Rancho Horizon LLC

DEMURRERS (2) & MOTION TO STRIKE

Calendar: 5
Case No: EC061328
Date: 4/11/14

MP: Defendant, Melrose 6 Homeowners Association
Defendant, Bank of America
RP: Plaintiffs, Avelina Adarme and Nathalene Parero

ALLEGATIONS IN FIRST AMENDED COMPLAINT:
The Plaintiffs’ property was sold in a foreclosure proceeding to Defendant, Rancho Horizon, LLC. The proceedings were wrongfully initiated by Defendants, Bank of America and Quality Loan Services, because the Plaintiffs owed nothing on the loan and the loan was deemed closed.
Further, the Defendant, Melrose 6 Homeowners Association, caused damages because it allowed the locks to be changed at the Plaintiffs’ property and for the Plaintiffs’ property to be removed.
The Plaintiffs, Avelina Adarme and Nathalene Parero, were in possession of the property. Avelina Adarme is the mother of Nathalene Parero. The property was owned by Nathalene Parero.

CAUSES OF ACTION IN FIRST AMENDED COMPLAINT:
1) Negligence
2) Violation of Homeowners Bill of rights
3) Violation of Civil Code section 789.3
4) Wrongful Eviction
5) Forcible Entry
6) Conversion
7) Violation of Civil Code section 1983
8) Trespass
9) Invasion of Privacy
10) Intentional Infliction of Emotional Distress

RELIEF REQUESTED:
1. Defendant, Melrose 6 Homeowners Association
Demurrer to 10th cause of action
Strike claim for punitive damages and claim for attorney’s fees

2. Defendant, Bank of America
Demurrer to 1st and 2nd causes of action

DISCUSSION:
This hearing concerns the demurrers and motion to strike of Defendants, Melrose 6 Homeowners Association, and Bank of America, to the First Amended Complaint.

1. Defendant, Melrose 6 Homeowners Association
a. Demurrer to 10th Cause of Action for Intentional Infliction of Emotional Distress
The Defendant argues that the tenth cause of action does not plead any facts regarding itself and that there are no allegations identifying any outrageous conduct.
The elements of the tort of intentional infliction of emotional distress are the following:

1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress;
2) the plaintiff’s suffering severe or extreme emotional distress; and
3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct. Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.”
Christensen v. Superior Court (1991) 54 Cal.3d 868, 903

The Plaintiffs did not identify the conduct of Melrose 6 Homeowners Association. The Plaintiff pleads facts regarding the conduct of Rancho Horizon, LLC. However, there are no allegations that identify the specific conduct in which an employee or agent of Melrose 6 Homeowners engaged so that the Defendant has notice of the Plaintiffs’ claim. Since the cause of action does not plead any facts showing that Melrose 6 Homeowners engaged in outrageous conduct, the cause of action lacks sufficient facts.

Therefore, the will will sustain the demurrer to the tenth cause of action.

The Plaintiffs argue that the Defendant acted outrageous by falsely asserting, through its agent, Mr. Avanesyan, that an eviction notice had been placed. These allegations were not alleged in the tenth cause of action. Since it appears reasonably possible for the Plaintiffs to add allegations to correct the defect in their tenth cause of action, the Court will grant leave to amend.

b. Motion to Strike
The Defendant requests that the Court strike the claims for punitive damages and for attorney’s fees because they are not supported by allegations demonstrating that the Plaintiffs are entitled to awards of punitive damages and for attorney’s fees.
A complaint including a request for punitive damages must include allegations showing that the plaintiff is entitled to an award of punitive damages. Clauson v. Superior Court (1998) 67 Cal. App. 4th 1253, 1255. Under Civil Code section 3294, a plaintiff may recover an award of punitive damages on a showing that the defendant acted with malice, oppression, or fraud.
A review of the pleadings reveals that the only cause of action in which the Plaintiffs sought an award of punitive damages against the moving Defendant, Melrose 6 Homeowners Association, was the tenth cause of action for intentional infliction of emotional distress. Since that cause of action is subject to a demurrer, there are no allegations showing that the Plaintiffs are entitled to an award of punitive damages against the moving Defendant. This is grounds to strike the claim for punitive damages.
Under CCP section 1033.5, a party may recover attorney’s fees only when permitted by contract, statute, or law. A review of the pleadings reveals no allegations that identify a contract, statute, or law that authorizes an award of attorney’s fees against the moving Defendant. This is grounds to strike the claim for attorney’s fees.

Therefore, the Court will grant the Defendant’s motion to strike.

2. Defendant, Bank of America
a. Demurrer to 1st Cause of Action for Negligence
The Defendant argues that the first cause of action for negligence does not plead facts demonstrating that it had any duty to Plaintiff, Avelina Adarme. A complaint in an action for negligence must allege:

1) the defendant’s legal duty of care towards the plaintiff;
2) the defendant’s breach of that duty;
3) injury to the plaintiff as a proximate result of the breach; and
4) damage to the plaintiff.
Jones v. Grewe (1987) 189 Cal. App. 3d 950, 954.

An initial issue is that the Plaintiffs did not comply with CRC rule 2.112(3) by drafting a caption that identifies the parties asserting the cause of action. There are two Plaintiffs in this action: Avelina Adarme and Nathalene Parero. In the first cause of action, the singular “Plaintiff” is used to plead the claim. Since the Plaintiffs did not draft a proper caption, it appears that the cause of action was brought on behalf of one, but not both Plaintiffs.
The allegations indicate in paragraph 58 that the Defendants engaged in negligence when they handled the Plaintiff’s loan. This indicates that the Plaintiff’s theory of negligence is that the Defendants breached duties they owned to the recipient of the funds under the loan agreement.
The First Amended Complaint includes allegations in paragraph 15 that Nathalene Parero financed the property by obtaining a loan for $300,000 secured by a deed of trust on the property. This indicates that Nathalene Parero was the recipient of the funds under the loan agreement. There are no allegations indicating that Avelina Adarme was a party to the loan agreement. Since the pleadings do not allege any facts showing that Avelina Adarme was a party to the loan agreement, the cause of action lacks sufficient facts to plead a claim for negligence by Avelina Adarme against the Defendant.
Therefore, the Court will sustain the demurrer to the first cause of action as brought by Avelina Adarme.

It does not appear reasonably possible to correct this defect by amendment because any duty to manage the loan was owed to Nathalene Parero and not Avelina Adarme, who was not a party to the loan agreement. California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to correct the defects identified in the demurrer. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs make a generic request for leave to amend, but offer no basis to find that they can plead a negligence claim by Avelina Adarme regarding a loan to which she was not a party.
Accordingly, the Court will not grant leave to amend.

b. Demurrer to 2nd Cause of Action for Violation of Homeowners’ Bill of Rights
The Defendant argues that this cause of action cannot be pleaded because it is based on conduct that occurred before the Homeowners’ Bill of Rights became effective.
The Homeowners Bill of Rights is a collection of statutes that became effective on January 1, 2013 and that add new procedures to California’s non-judicial foreclosure proceedings. Civil code section 2924.12 creates a statutory cause of action to enforce these requirements. If a trustee’s deed upon sale has not been recorded, then a borrower may bring an action for injunctive relief to enjoin a material violation of Civil code sections 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17. If a trustee’s deed upon sale has been recorded, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable to a borrower for actual economic damages pursuant to Section 3281, resulting from a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent where the violation was not corrected and remedied prior to the recordation of the trustee’s deed upon sale. In addition, section 2924.12 permits the Court to award attorney’s fees to a prevailing borrower.
This is a statutory claim and 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.

The Plaintiffs allege in paragraph 82 that the Defendant violated Civil Code section 2923.55. Section 2923.55 requires a mortgage servicer, trustee, beneficiary, or authorized agent to use due diligence to contact the borrower prior to issuing a notice of default.
The Plaintiffs allege in paragraph 78 that the Defendant failed to contact the Plaintiff prior to recording the notice of trustee’s sale. This is insufficient to plead a claim under section 2923.55 because section 2923.55 does not require any attempt to contact prior to a notice of trustee’s sale. Instead, it applies only to a notice of default.
A review of the pleadings reveals that the Plaintiffs allege in paragraph 19 that the Defendant recorded a notice of default on February 8, 2011. Since the notice of default was recorded on February 8, 2011, the Defendant had no duty under Civil Code section 2923.55 because section 2923.55 was enacted until January 1, 2013. Accordingly, the pleadings do not demonstrate that the Defendant violated Civil Code section 2923.55.

In the opposition, the Plaintiffs repeat that the Defendant failed to contact them prior to recording the notice of trustee’s sale (see opposition, page 7, lines 6 to 7). As discussed above, section 2923.55 does not impose any duty to contact a borrower prior to recording a notice of trustee’s sale.
Further, the Plaintiffs argue that the Defendants were required to make an effort to contact them concerning a subsequent default. However, section 2923.55 does not include any requirement to make multiple attempts to contact a borrower. Instead, it provides that prior to recording a notice of default, the mortgage servicer, trustee, beneficiary, or authorized agent to use due diligence to contact the borrower. The Plaintiffs do not plead any facts demonstrating that the Defendant violated section 2923.55 by recording a notice of default without attempting to contact the Plaintiffs after January 1, 2013, when section 2923.55 became effective. This is insufficient to plead the cause of action.

Therefore, the Court will sustain the demurrer to the second cause of action.

It does not appear reasonably possible to correct this defect by amendment because section 2923.55 was not effective when the notice of default was recorded on February 8, 2011. California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to correct the defects identified in the demurrer. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs make a generic request for leave to amend, but offer no basis to find that they can plead a statutory claim for the violation of Civil Code section 2923.55.
Accordingly, the Court will not grant leave to amend.

RULING:
1. Defendant, Melrose 6 Homeowners Association
SUSTAIN demurrer to 10th cause of action with leave to amend.
STRIKE claim for punitive damages and claim for attorney’s fees

2. Defendant, Bank of America
SUSTAIN demurrer to 1st cause of action without leave to amend as brought by Avelina Adarme.
SUSTAIN demurrer to 2nd cause of action without leave to amend.