2013-00142131-CU-OR

Travis Doster vs. Bank of America

Nature of Proceeding: Hearing on Demurrer

Filed By: Kang, Grace B.

Defendants Bank of America, N.A. (“BofA”) and Recontrust Company, N.A.
(“Recontrust”) (collectively “Defendants”) filed a Demurrer to the First Amended
Complaint (“FAC”) of Plaintiff Travis Doster (“Plaintiff” or “Doster”). Plaintiff filed an
opposition. Plaintiff filed an Opposition and Defendant filed a Reply, and the Court in
its discretion considered these filings despite Defendant’s arguments regarding the
timeliness of service. For the reasons that follow, Defendants’ demurrer is
OVERRULED in part and SUSTAINED in part, and Plaintiff shall have LEAVE TO
AMEND his pleading.

Plaintiff asserts causes of action for: (1) violation of the California Homeowner’s Bill of
Rights (“HOBR”); (2) cancellation of instruments; (3) fraud; (4) breach of oral contract;
and (5) “money had and received/unjust enrichment.” Plaintiff seeks injunctive relief,
declaratory relief, and damages. (See generally, First Am. Compl.[FAC])

Factual Allegations
In his FAC, Plaintiff alleges that “on or about February 2, 2006, Plaintiff obtained a loan
from” BofA for $485,000, secured by real property at 1930 Rolling Hills Road in
Sacramento, California. (FAC ¶¶ 1, 4.) Plaintiff alleges that he “executed a note and
deed of trust, which he delivered to” BofA. (Id. ¶ 4.) Plaintiff alleges that BofA is “no
longer in possession of” either document, however, and that BofA “‘recreated,’ i.e.,
forged [P]laintiff’s signature without his permission, on another set of documents upon
which it now relies in both collecting monthly payments and attempting to foreclose.” (
Id. ¶ 4.)

Plaintiff alleges that, when he sent a “mortgage verification demand letter” to BofA
seeking “the true documentation” he signed on February 2, 2006, it responded by
sending “documentation on which his signature was forged.” (Id. ¶ 5.) Plaintiff alleges
that the allegedly “fraudulent documentation” was recorded on February 23, 2006, and
that the delay in recording was likely “caused by the loss of, and subsequent
‘recreation’ of, Plaintiff’s mortgage papers.” (Id. ¶ 5.) Plaintiff alleges that Defendants
“may not enforce the mortgage by non-judicial foreclosure sale, because if they are
truly the parties in beneficial interest, they would only hold an equitable mortgage on
the property due to their lack of an enforceable documented mortgage against it.” (Id.)

Plaintiff also alleges that he applied for a loan modification from BofA in 2009. (Id. ¶
9.) Plaintiff alleges that he repeatedly “received denials from Defendant [BofA] based
on ‘missing or lost documents,” knowing full well that his packages sent were
complete.” (Id. ¶ 9.) Plaintiff alleges that, “[f]or 9 months, Plaintiff reapplied for
modification approximately every 2 weeks to receive the same bogus responses from
Defendant” BofA, and that “[e]ach application was not only complete, but qualified for
modification under the HAMP program . . . .” (Id. ¶ 10.) Plaintiff also alleges that “[o]n
or about May 3, 2013,” BofA “denied Plaintiff’s request for a modification on the
grounds that the investor did not participate in HAMP, identifying the ‘investor’ as ‘BAC
SEC.’” (Id. ¶ 11.) Plaintiff alleges that “BAC SEC” has never appeared in his chain of
title, and that the relevant documents indicate BofA issued a “Corporate Assignment of
Beneficial Interest” to Defendant Wells Fargo, N.A. (“Wells Fargo”) as “beneficiary,” in
July 2011. (Id.) Defendant Wells Fargo has initiated the foreclosure process. (Id. ¶
12.) Plaintiff alleges that BofA cannot have it both ways, i.e., either “BAC SEC” or
Wells Fargo is the beneficiary under the deed of trust, but not both: if it is “BAC SEC,”
then Wells Fargo’s foreclosure activities are improper, and if it is Wells Fargo, then
BofA falsely denied the requested modification and falsely facilitated nonjudicial
foreclosure proceedings. (Id. ¶ 13.) Plaintiff alleges that BofA and Wells Fargo
“willfully caused RECONTRUST to fabricate and record” certain documents, such as a
Substitution of Trustee, Notice of Default, and Notice of Sale, and that Recontrust
“knowingly and willingly” participated in such “wrongful disclosure racket.” (Id. ¶ 16.)

Plaintiff also alleges that after he filed for Chapter 7 bankruptcy, he “missed payments”
on the mortgage from April 2010 through October 2011. (Id. ¶ 17.) Plaintiff alleges
that “prior to and during filing,” BofA “instructed Plaintiff to simply resume payments
after the bankruptcy, with “promises” regarding the past due amount ranging from ‘we
will eventually modify your loan’ to ‘we will offer you a forbearance agreement.’” (Id. ¶¶
18-19.) Plaintiff alleges that, after the bankruptcy discharge on February 3, 2012, that
“in reliance on Bank of America’s representations,” Plaintiff “resumed payments” and
“did not miss a single payment from February 2, 2012, until the present.” (Id. ¶ 20.)
Plaintiff also alleges that “in every single conversation with Bank of America from
September 2010 through January 2013” it was represented that “a compromise was
forthcoming [but] they had not gotten to it [yet], so ‘do not worry.’” (Id. ¶ 21.) Then, in
September 2012, Defendant allegedly “began sending Plaintiff collection notes
referencing balances dating prior to the initiation of Plaintiff’s bankruptcy proceedings,”
and in January 2013, “Defendant refused further payments on Plaintiff’s account,
demanding payment in full of the alleged arrearage.” (Id. ¶¶ 23-25.) A Notice of
Default was recorded on the property in February 2012, which alleged “a default which did not take into account more than 12 payments Defendants [had] accepted in the
interim.” (Id. ¶ 27.)

Request for Judicial Notice
Defendants’ Request for Judicial Notice (“Def.’s RJN”), which seeks judicial notice of
public records of the County Recorder’s Office and a bankruptcy court order, is
unopposed and GRANTED pursuant to Evidence Code §§ 452(c)-(d) and 453.

In taking judicial notice of these documents, the Court accepts the fact of their
existence, not the truth of their contents. (See Professional Engineers v. Dep’t of
Transp. (1997) 15 Cal.4th 543, 590 (judicial notice of findings of fact does not mean
that those findings of fact are true); Steed v. Department of Consumer Affairs (2012)
204 Cal.App.4th 112, 120-121.) In taking judicial notice of the recorded land
documents, the court accepts the fact of their existence, not the truth of their contents.
(Herrera v. Deutsche Bank Nat’l Trust Co. (2011) 196 Cal.App.4th 1366, 1375 (“While
courts take judicial notice of public records, they do not take notice of the truth of
matters stated therein.”); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198
Cal.App.4th 256, 265 (“[A] court may take judicial notice of the fact of a document’s
recordation, the date the document was
recorded and executed, the parties to the transaction reflected in the recorded
document, and the document’s legally operative language, assuming there is no
genuine dispute regarding the document’s authenticity.”).)

Demurrer
A demurrer challenges only the legal sufficiency of a complaint, not the truth or the
accuracy of its factual allegations or the plaintiff’s ability to prove those allegations. (
Ball v. GTE Mobilnet of California (2000) 81 Cal.App.4th 529, 534-35.)

Entire Complaint
Defendants BofA and Recontrust demur to Plaintiff’s entire First Amended Complaint
“on grounds that the pleading fails to state facts constituting a cause of action . . . and
the pleading is uncertain.” (Demurrer at 3.) The Court is not persuaded that Plaintiff’s
pleading is “uncertain” under Code of Civil Procedure § 430.10(f), and the demurrer is
OVERRULED in this regard. As to whether each cause of action is properly supported
by factual allegations under Code of Civil Procedure § 430.10(e), the Court analyzes
each cause of action separately, below.

Defendants also urge that Plaintiff must “make a valid and viable tender” of his
indebtedness in order to maintain his various causes of action. (Def.’s Ps & As at 3
(citing Abdallah v. United Savs. Bank (1996) 43 Cal.App.4th 1101, 1109-10, and other
cases).) However, Defendant has not shown that all of Plaintiff’s claims are subject to
a general demurrer due to a blanket application of the tender rule. (Code Civ. Proc. §
430.50 (“A demurrer to a complaint or cross-complaint may be taken to the whole
complaint or cross-complaint or to any of the causes of action stated therein.”).)
Defendants’ cited authorities address claims to set aside foreclosure sales, and
Defendants have not shown that such authorities extend to claims for fraud and breach
of oral contract arising in the particular factual context of this case. (Def.’s Ps & As at
3 (citing cases).) For instance, Defendants have not shown that alleged fraud in
connection with representations made during modification negotiations is the legal
equivalent of alleging an “irregularity in the sale procedure” that would require
application of the “tender rule.” (Id. (quoting Abdulla, supra, 43 Cal.App.4th at 1109).)
Further, tender is not required where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the
property, or where it would be inequitable require tender (see, e.g. Onofrio v. Rice
(1997) 55 Cal.App.4th 413, 424; Chavez v. Indymac Mortgage Servs., (2013) 219 Cal.
App. 4th 1052, 1062). Accordingly, Defendant’s demurrer is OVERRULED in this
regard.

First Cause of Action (Violation of HOBR)
Defendants BofA and Recontrust demur to Plaintiff’s first cause of action under HOBR,
Civil Code §§ 2924.17 et seq., on grounds that it “fails to state facts sufficient to
constitute a cause of action against Defendants under Code of Civil Procedure §
430.10(e).” (Demurrer at 3.) Plaintiff’s pleading contains two “counts” of alleged
HOBR violations: “robosigning” and “failure to validate mortgage before proceeding
with collection.” (First Am. Compl. at 7-9.)

Defendant argues that the first cause of action to fail as a matter of law because the
alleged events underlying it predate HOBR’s enactment date. (Def.’s Ps & As at 4-7.)
“The California Homeowner Bill of Rights became effective on January 1, 2013.” (
Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86 (emphasis
added) (citing Cal. Const., art. IV, § 8, subd. (c)(1) [effective date of new statutes is
Jan. 1, following 90 days after enactment]).) Of course, the HOBR does not have
retroactive application. (Boring v. Nationstar Mortg., LLC, 2014 U.S. Dist. LEXIS
1706.)

Yet, Plaintiff has alleged that the events underlying his “failure to validate mortgage”
theory occurred, “[a]s alleged above, on or about February 2013 . . .” when Defendants
allegedly responded to his letter in a way that was “intentionally misleading as to the
entitled owner of the note.” (First Am. Compl. ¶¶ 36-37 (emphasis added) (failing to
explain how the letter was “misleading” and failing to describe the letter’s contents).)
However, this allegation is conclusory and, as a result, cannot properly be considered
an alleged fact underlying this claim. Correspondingly, the allegation does show that
the events underlying the claim occurred after HOBR’s enactment date. Whether an
alleged response was “intentionally misleading” is not a factual allegation that the
Court can properly consider on a demurrer. Moreover, not withstanding the pleading’s
reference to facts “as described above” regarding correspondence in “February 2013,”
the Court’s review of the pleading did not reveal additional factual allegations
describing the allegedly-misleading nature of such correspondence or its timing, nor
does it reference “February 2013.” Accordingly, Defendant’s argument is well-taken.

As to the “robosigning” theory of HOBR liability, Plaintiff argues that “robosigned”
documents were recorded after HOBR’s enactment date and in violation of Civil Code
§ 2924.17. (Pl.’s Oppo. at 6-8.) The HOBR section upon which Plaintiff premises his
“robosigning” claim, Civil Code § 2924.17, pertains to documents that were “recorded”
or “filed,” yet the pleading does not clearly allege dates of recording/filing after HOBR’s
enactment. On judicially noticed documents, however, a Notice of Default was
recorded on February 13, 2013, i.e., after HOBR’s enactment. (Exh. H to Def.’s RJN.)
Accordingly, Defendants have not shown that Plaintiff’s “robosigning” theory of liability
under HOBR should be dismissed as a matter of law because it predates HOBR’s
enactment.

However, Defendants also argue that Plaintiff’s robosigning allegations are conclusory,
and the Court agrees. In his Opposition, Plaintiff argues that BofA had previously
denied his modification request in part due to the potential interest of an entity called “BAC SEC,” such that “BAC SEC” might therefore be the current beneficiary under the
Deed of Trust, such that Recontrust and Wells Fargo may not have properly recorded
the Notice of Default on February 13, 2013, and such that the document may have
been recorded in violation of HOBR, Civil Code § 2924.17. (Pl.’s Oppo. at 7 (citing
First Am. Compl. ¶¶ 12, 14, 15, 31).) However, this argument is not clearly borne out
by factual allegations in Plaintiff’s pleading. The allegations underlying the alleged
“robosigning” are few. (First Am. Compl. ¶¶ 30-32.) While Plaintiff’s Opposition brief
suggests that the “robosigning” theory is based on allegations regarding “BAC SEC’s”
potential interest in the mortgage/property, arguments of counsel are not evidence. (
Porterville Citizens for Responsible Hillside Development v. City of Porterville (2007)
157 Cal.App.4th 885, 895, fn. 9. [“It is axiomatic that arguments of counsel are not
evidence”]), the paragraphs beneath the robosigning “count” of the HOBR claim do not
clearly reference “BAC SEC,” and mostly reference conclusory allegations that
inadequately support the claim. (See First Am. Compl. ¶¶ 30-32 (alleging that various
documents were “false,” “not verified,” and “forged” – yet the factual allegation
apparently underlying these conclusions is the alleged forgery of Plaintiff’s signature
on loan documents, not forgery of any substantive provision of the mortgage/loan
documents – and alleging that BofA “transferred all beneficial interest years prior to . . .
July 2011,” yet not identifying which factual allegations, if any, support such alleged
“transfer.”).) If Plaintiff intends his “BAC SEC” allegations to the basis for his
“robosigning” theory of HOBR liability, his pleading should clearly reflect as much. If
Plaintiff intends his “forged signature” allegations to be the basis for his “robosigning”
theory, his pleading should clearly say so. At present, Plaintiff’s pleading does not
clearly identify which factual allegations are intended as the premise(s) for his
“robosigning” theory, and the facts expressly underlying the “robosigning” claim are
conclusory. (First Am. Compl. ¶¶ 30-35)

Accordingly, Defendants’ demurrer is SUSTAINED WITH LEAVE TO AMEND as to the
first cause of action for violation of HOBR. In amending his pleading, beneath the
heading for his first cause of action Plaintiff shall clearly delineate which factual
allegations underlie the claim, and should not rely on broad references to “facts
alleged above.” Also beneath the heading for his first cause of action, plaintiff should
include factual allegations pertaining to the timing of events, such as the recordings of
various documents, that he alleges give rise to each “count” of the alleged HOBR
violation(s).

Second Cause of Action (Cancellation of Instruments)
Defendants BofA and Recontrust demur to Plaintiff’s second cause of action on
grounds that it “fails to state facts sufficient to constitute a cause of action against
Defendants under Code of Civil Procedure § 430.10(e).” (Demurrer at 3.)

Defendants argue that the second cause of action is time-barred on grounds that
Plaintiff’s “loan documents were signed in 2006.” (Def.’s Ps & As at 2 (citing Code Civ.
Proc. §§ 338(d) and 337).) The argument is well taken. While Plaintiff argues in his
Opposition that his pleading alleges facts supporting application of the delayed
discovery rule insofar as he allegedly discovered that the documents appeared
falsified “through his efforts to validate the mortgage in February 2013” (Pl.’s Oppo. at
3), Plaintiff failed to identify the pages or paragraphs of his pleading that include
factual allegations supporting such delayed discovery, and on the Court’s review, the
pleading does not contain the allegation that Plaintiff first discovered the alleged
forgery “in February 2013.”
In order to rely on the discovery rule for delayed accrual of a cause of action, “[a]
plaintiff whose complaint shows on its face that his claim would be barred without the
benefit of the discovery rule 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.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)
The discovery rule “postpones accrual of a cause of action until the plaintiff discovers,
or has reason to discover, the cause of action.” (Aryeh v. Canon Business Solutions,
Inc. (2013) 55 Cal.4th 1185, 1192.)

Here, Plaintiff did not plead facts indicating the time and manner of his discovery or
facts reflecting his inability to have made the discovery earlier despite reasonable
diligence. Accordingly, the demurrer is SUSTAINED WITH LEAVE TO AMEND as to
the second cause of action.

As to Defendant’s argument that Plaintiff “does not plead any facts supporting the
contention that the recorded documents are void or voidable,” Plaintiff has alleged
facts indicating that the agreements have forged signatures. While Plaintiff’s pleading
does not include factual allegations challenging the substantive terms of the
agreements, Defendant has not shown that such allegations are required as a matter
of law for a claim of “cancellation” under Civil Code § 3412 to survive the pleading
stage. Defendant has not shown that a contract with an allegedly forged signature
cannot, as a matter of law, be deemed void or voidable solely on the basis of such
forgery. Nevertheless, because the Court sustains the demurrer to the second cause
of action with leave to amend as described above, in amending his second cause of
action Plaintiff is directed to carefully review Defendant’s arguments in this regard to, if
possible, include additional factual allegations directed thereto.

Third Cause of Action (Fraud)
Defendants BofA and Recontrust demur to Plaintiff’s third cause of action on grounds
that it “fails to state facts sufficient to constitute a cause of action against Defendants
under Code of Civil Procedure § 430.10(e).” (Demurrer at 3.)

Defendants argue that the fraud claim is time-barred because Plaintiff’s “loan
documents were signed in 2006” (Def.’s Ps & As at 2 (citing Cod of Civil Procedure §
338(d)), and also on grounds that the elements of fraud were not alleged with the
requisite specificity. (Id. at 9-10.)

Defendants have not shown that the fraud claim is time-barred based upon the date
the loan documents were allegedly signed. Plaintiff has not clearly alleged “fraud” in
connection with his loan origination. Instead, according to the pleading, the alleged
fraud occurred around the time of his bankruptcy action, when BofA allegedly falsely
promised that it would grant Plaintiff’s forbearance request if he resumed payments on
his mortgage following the bankruptcy. (First Am. Compl. ¶¶ 50-61.) Accordingly,
Defendant has not shown that the fraud claim in this particular case is time-barred.

However, the Court is persuaded that, as pleaded, the facts underlying the fraud claim
lack the requisite specificity. The elements of a cause of action for fraud are: “(1) a
misrepresentation, which includes a concealment or nondisclosure; (2) knowledge of
the falsity of the misrepresentation, i.e., scienter; (3) intent to induce reliance on the
misrepresentation; (4) justifiable reliance; and (5) resulting damages.” (Cadlo v.
Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) “Each element in a cause of
action for fraud or negligent misrepresentation must be factually and specifically alleged.” (Id.) “In a fraud claim against a corporation, a plaintiff 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.” (Perlas v. GMAC Mortgage, LLC (2010) 187 Cal.App.4th 429, 434.)

Here, Plaintiff has not alleged “the names of the persons who made the
misrepresentations,” their authority to speak, specifically “what they said or wrote,” or
precisely “when it was said or written.” (See id.) While Defendant has not shown that
Plaintiff can only satisfy this pleading standard with allegations of exact quotes,
Defendant has persuaded the Court that Plaintiff must support the fraud claim with “the
names of the persons who made the misrepresentations;” additional detailed
allegations as to “what they said or wrote;” and additional allegations as to the dates of
such representations. (See id.)

Accordingly, the demurrer is SUSTAINED as to the third cause of action for fraud,
WITH LEAVE TO AMEND to add additional specific factual allegations supporting the
fraud claim.

Fourth Cause of Action (Breach of Oral Contract)
Defendants BofA and Recontrust demur to Plaintiff’s fourth cause of action on grounds
that it “fails to state facts sufficient to constitute a cause of action against Defendants
under Code of Civil Procedure § 430.10(e).” (Demurrer at 3.)

Defendants argue that the breach of oral contract claim is barred by the statute of
frauds. (Def.’s Ps & As at 11-12.)

Generally, an oral agreement to modify a mortgage loan comes within the statute of
frauds. (Secrest v. Security Nat’l Mortg. Loan Trust 2002-2 (2008) 167 Cal.App.4th
544, 552-53.) Generally, if such agreement is not in writing, it is unenforceable. (Id.)

Plaintiff argues that he has “stated facts sufficient to meet the elements of promissory
estoppel and [the elements of an oral] contract to negotiate particular terms.” (Pl.’s
Oppo. at 9 (citing Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, 230-31).)

Relying upon the Aceves case, Plaintiff contends that he has adequately pleaded
“promissory estoppel” to avoid the statute of frauds. (Pl.’s Oppo. at 5-6, 9.) The court
in Aceves explained that “[t]he elements of a promissory estoppel claim are: “(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, supra, 192
Cal.App.4th at 225-27 (quotation marks and citation omitted).) In Aceves , the plaintiff
had alleged that “U.S. Bank agreed to ‘work with [her] on a mortgage reinstatement
and loan modification’ if she no longer pursued relief in the bankruptcy court,” and the
court held that this was a sufficiently “clear and unambiguous promise” for the
promissory estoppel claim to withstand the pleading phase. (Id.) The court held that
such alleged promise “indicates that U.S. Bank would not foreclose on [the plaintiff’s]
home without first engaging in negotiations with her to reinstate and modify the loan on
mutually agreeable terms.” (Id.) Concluding that the alleged “promise was sufficiently
concrete to be enforceable,” the court held that the plaintiff’s pleading adequately
alleged a claim for promissory estoppel. (Id. at 222.) The court clarified that the
alleged promise was not a promise to modify a loan, it was a “promise to negotiate”
with the plaintiff. (Id. at 226 (emphasis in Aceves).) Here, Plaintiff alleges that BofA promised to “offer him a forbearance of some type” in
exchange for Plaintiff’s “resum[ing] regular payments after his bankruptcy
discharge.” (First Am. Compl. ¶ 64.) Plaintiff also alleges that BofA made a “promise
to modify” his loans in exchange for him making post-bankruptcy payments on his
loan. (Id. ¶ 69.) The alleged “promise to modify” and/or to “promise to forbear” are
unlike the promise “to negotiate” as alleged Aceves . Here, Plaintiff alleges that BofA
promised to “offer him a forbearance of some type,” which is an alleged “promise . . .
to modify a loan” – yet the Aceves court’s promissory estoppel analysis distinguished
exactly this sort of promise. (See Aceves, supra , 192 Cal.App.4th at 226-27
(distinguishing Laks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885 and
explaining that “the question here is simply whether U.S. Bank made and kept a
promise to negotiate with Aceves, not whether, as in Laks, the bank promised to make
a loan or, more precisely, to modify a loan,” and noting that the Laks court upheld
dismissal of a promissory estoppel claim because the bank’s alleged promise to
make/modify a loan did not “include all of the essential terms of a loan”).)

Plaintiff has not shown that the Aceves decision, which involved an alleged promise to
negotiate, is persuasive in this particular case, where Plaintiff has alleged a promise to
modify. (First Am. Compl. ¶ 64 (alleging a promise to “offer him a forbearance”); ¶ 69
(alleging a “promise to modify”).) If Plaintiff alleges a “promise to modify” and/or a
“promise to forbear,” the claim is unsupported with factual allegations stating the clear
and unambiguous terms of such promised modification or forbearance. If, on the other
hand, Plaintiff alleges a promise to negotiate for a modification or forbearance, his
pleading does not clearly allege such a promise, and instead references promises “to
modify” and/or “forbear,” which are outside the scope of Aceves (see Aceves, supra ,
192 Cal.App.4th at 226-27) and are not supported with allegations regarding
unambiguous, concrete terms of such promises. (First Am. Compl. ¶¶ 64, 69.)

Accordingly, the demurrer is SUSTAINED WITH LEAVE TO AMEND as to the fourth
cause of action. If Plaintiff believes he has a good faith basis to continue to pursue
this claim, Plaintiff shall allege additional facts stating all terms of the allegedly
promised modification/ forbearance, and any additional facts supporting the elements
of the promissory estoppel that Plaintiff claims is the basis for his contract claim.

Fifth Cause of Action (Money Had and Received/Unjust Enrichment)
Defendants BofA and Recontrust demur to Plaintiff’s fifth cause of action on grounds
that it “fails to state facts sufficient to constitute a cause of action against Defendants
under Code of Civil Procedure § 430.10(e).” (Demurrer at 4.)

Plaintiff’s fifth cause of action alleges that BofA “received payments from Plaintiff” that
Plaintiff made “in reliance on promises to modify his loan, and failed to perform under
those promises.” (First Am. Compl. ¶¶ 71-74.) The pleading also alleges that “BAC
SEC’s” alleged interest means that the payments BofA collected from Plaintiff were
improper and “wrongly collected.” (Id.)

Defendants argue that the fifth cause of action is time-barred because Plaintiff’s “loan
documents were signed in 2006” (Def.’s Ps & As at 2 (citing Code of Civil Procedure
§§ 338-39), and also on grounds that “unjust enrichment” is “not an independent cause
of action; rather, it is a remedy.” (Id. at 10 (citing Levine v. Blue Shield of Cal. (2010)
189 Cal.App.4th 1117, 1138).) Defendants also cite authorities recognizing a “quasi
contract” cause of action for unjust enrichment, but noting that courts have found that no unjust enrichment cause of action lies where an express binding agreement exists.
(Id. (citing cases).)

Defendant’s demurrer is OVERRULED in this regard. Defendant has not shown that
the claim is time-barred, as Plaintiff has alleged that BofA improperly kept payments
he made following his bankruptcy in February of 2012 (First Am. Compl. ¶¶ 17-22),
within two years of filing this action. Further, as to Defendant’s authorities or argument
that unjust enrichment is a remedy and not an independent cause of action,
Defendants have not persuaded the Court to dismiss this claim as a matter of law at
the pleading stage, although Defendants may further develop this argument and re-
raise it in the context of a dispositive motion or at trial. As Defendants note, some
appellate courts have recognized a cause of action for unjust enrichment. (See Def.’s
Ps & As at 12 (citing Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583,
1593; California Medical Assn. v. Aetna U.S. Healthcare of California, Inc. (2001) 94
Cal.App.4th 151, 171-73).) As to Defendant’s argument that such appellate courts
have disallowed unjust enrichment causes of action where an express contract
governs and defines the parties’ rights, such as the Deed of Trust and the Note in this
case, no factual determination has yet been made as to the validity of either alleged
written agreement. Accordingly, it would be premature to dismiss the claim at the
pleading stage on the basis of the validity of such express agreements, given that in
this particular case Plaintiff has alleged that his signatures on such contracts were
“forged.” Neither party briefed the legal impact of allegedly-forged signatures upon
loan documents where no other specific “forgeries” are alleged as to the substantive
terms of such documents. While the factual allegations supporting such “forgery” are
few, as described above, Plaintiff will amend his pleading to include additional factual
allegations to the extent he can in good faith do so. Given that such additional
allegations are forthcoming, the Court declines to dismiss the fifth cause of action at
this time, and the demurrer is OVERRULED in this regard.

In accordance with the foregoing, Plaintiff shall file and serve a second amended
complaint (“SAC”) by no later than May 9, 2014. Defendants’ response thereto to be
filed and served within 10 days thereafter, 15 days if the SAC is served by mail.
(Although not required by any statute or rule of court, Plaintiff is requested to attach a
copy of the instant minute order to the FAC to facilitate the filing of that pleading.)

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or other notice is required.