2012-00136361-CU-OR

Edwin Tolbert vs. The Bank Of New York Mellon

Nature of Proceeding: Hearing on Demurrer

Filed By: Jewett-Brewster, Monique

Defendants JPMorgan Chase Bank, NA, California Reconveyance Company, and
Mortgage Electronic Registration Systems’ demurrer to Plaintiffs Edwin and Teresa
Tolbert’s first amended complaint (“FAC”) is ruled upon as follows.

In this foreclosure action, Plaintiffs allege causes of action for wrongful foreclosure,
violation of the Homeowner Bill of Rights (“HBOR”), promissory estoppel, fraud,
intentional misrepresentation, declaratory relief, quiet title, slander of title, accounting,
violations of Bus. & Prof. Code § 17200, unjust enrichment, and injunctive relief.

The Court declines Defendants’ request to disregard Plaintiffs’ opposition on the basis
that it was untimely served. Defendants were able to file a reply fully addressing the
opposition.

Defendants’ request for judicial notice is granted. (See Poseidon Devel., Inc. v.
Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117-18; see also
Startford Irrig. Dist. v. Empire Water Co. (1941) 44 Cal.App.2d 61, 68 [recorded land
documents, not contracts, are the subject of judicial notice on demurrer].) The court,
however, does not accept the truth of any facts within the judicially noticed documents
except to the extent such facts are beyond reasonable dispute. (See Poseidon Devel.,
152 Cal.App.4th at 1117-18.) 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.”) Special Demurrer

Defendants’ special demurrer to the FAC on the basis of uncertainty is overruled.
Demurrers for uncertainty are disfavored and only sustained where the complaint is so
muddled that the defendant cannot reasonably respond. The favored approach is to
clarify theories in the complaint through discovery. (Khoury v. Maly’s of Calif., Inc.
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(1993) 14 Cal.App.4 612, 616.) The Court has reviewed the FAC and finds that
Defendants can reasonably respond. While Plaintiffs have lumped defendants
together, these moving Defendants can clarify any uncertainty through discovery.

General Demurrer

First Cause of Action (Wrongful Foreclosure)

Defendants’ demurrer is overruled. Here, while a number of theories are alleged as
basis for this cause of action, the Court finds Plaintiffs have adequately alleged a
cause of action based on an alleged violation of Civil Code § 2923.5 as they alleged
that Defendants failed to comply with the contact and due diligence requirements of
Civil Code § 2923.5. (FAC ¶ 39.) While Defendants argue that Plaintiff failed to allege
that the subject property is their principal residence in order to invoke the protections
of the statute, the Court finds that while Plaintiffs may not have used the specific terms
“principal residence” it can be inferred from the FAC that the subject property at issue
is the Plaintiffs’ residence. In addition, while the notice of default contains a
declaration of due diligence, Plaintiffs have essentially alleged that the declaration is
false as they have alleged that Defendants failed to comply with the contact
requirements. Resolution of that issue is a factual one that cannot be decided on a
demurrer. Further, tender is not required in connection with a claim based upon Civil
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Code § 2923.5. (Mabry v. Superior Court (2010) 185 Cal.App.4 208, 225-226.)
Thus, regardless of the viability of any other of the numerous theories set forth in the
First Cause of Action, at a minimum, a claim has been stated for violation of Civil Code
§ 2923.5 and the demurrer to the first cause of action is overruled.

As a result, the Court need not and does not address the numerous other attacks on
the other theories in the first cause of action.

Second Cause of Action (Violation of California Homeowners Bill of Rights (HBOR))

Defendants’ demurrer is overruled. First, the Court disagrees that Civil Code § 2923.6
does not apply because the HBOR became effective January 1, 2013, and the
foreclosure commenced before that time. Indeed, as written that section contemplates
application to foreclosures initiated before that date given that the section applies to
loan modification evaluations that took place prior to January 1, 2013. (Civ. Code §
2923.6(g) [discussing loan modifications “prior to January 1, 2013].) In any event,
Plaintiffs have essentially alleged violations of the HBOR which are continuing,
specifically, the failure to provide a single point of contact for the loan modification
process as required by Civ. Code § 2923.7. Thus the demurrer on this basis is
overruled.

In addition, the Court finds that Plaintiffs adequately alleged a violation of the HBOR.
Plaintiffs essentially allege that Defendants violated the HBOR by failing to establish a
single point of contact, failing to verify document irregularities, and dual tracking their
loan. (FAC ¶¶ 53-55.) Indeed, they allege that Defendants are attempting to proceed
with foreclosure despite the fact that they are pursuing a loan modification and “have
not provided Plaintiffs with a singe point of contact.” (FAC ¶¶ 54, 55.) Civil Code §
2923.7 provides that “[u]pon request from a borrower who requests a foreclosure
prevention alternative, the mortgage servicer shall promptly establish a single point of
contact and provide to the borrower one or more direct means of communication with
the single point of contact.” (Civ. Code § 2923.7(a).) While Defendants argue that
Plaintiff did not specifically allege that they requested a single point of contact, the
Court finds that such fact can be inferred from the allegations that they requested a
loan modification and that Defendants have not provided them a single point of contact
for them to “properly communicate with the real party in interest as regards
negotiations on loan workout and modification.” (FAC ¶¶ 54-55.) Thus, Plaintiffs have
stated a claim under Civil Code § 2923.7. On this basis alone, the demurrer to the
second cause of action is overruled, regardless of the merits of the other alleged
violations of the HBOR.

The Court also notes that no authority is cited for the proposition that tender would be
required for an alleged violation of the HBOR.

Third Cause of Action (Promissory Estoppel)

Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action. Plaintiffs were required to allege facts
showing “a promise which the promisor should reasonably expect to induce action or
forebearance on the part of the promisee or a third person and which does induce
such action or forebearance…” (US Ecology, Inc. v. State of California (2005) 129
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Cal.App.4 887, 904-905.) Here, Plaintiffs alleged that Defendants “made verbal
promises and assurances to Plaintiffs that the loan will be modified.” (FAC ¶ 62.)
However, not only do they not allege facts demonstrating who made the promise or
when it was made, but they do not allege that they detrimentally relied upon the
promise, as essential element of the cause of action. The demurrer is therefore
sustained with leave to amend.

Fourth and Fifth Causes of Action (Fraud and Intentional Misrepresentation)

Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action. Plaintiffs have failed to allege these fraud
based causes of action with the level of specificity required when alleging fraud against
a corporate entity. Plaintiffs completely fail to allege “the names of the person who
made the allegedly fraudulent representations, their authority to speak, to whom they
spoke, what they said or wrote, and when it was said or written.” ( Tarmann v. State
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Farm Mut. Auo Ins. Co. (1991) 2 Cal.App.4 153, 157.) The demurrer is therefore
sustained with leave to amend.

Given the above, the Court need not reach the other grounds asserted by Defendants
in connection with these two causes of action.

Sixth Cause of Action (Declaratory Relief)

Defendants’ demurrer is sustained with leave to amend. This cause of action seeks
declarations regarding the identical issues that are the subject of Plaintiffs’ other
causes of action in the FAC. (FAC ¶¶ 75-84.) “The declaratory relief statute should
not be used for the purpose of anticipating and determining an issue which can be
determined in the main action. The object of the statute is to afford a new form of relief
where needed and not to furnish a litigant with a second cause of action for the
determination of identical issues.” (General of America Ins. Co. v. Lilly (1968) 258
Cal.App.2d 465, 470.) Plaintiffs have not alleged any facts showing that declaratory
relief is proper under the circumstances given they merely seek declarations regarding
the identical issues in their other causes of action. On this basis alone, the demurrer is
sustained with leave to amend.

Given the above, the Court need not reach the other grounds asserted by Defendants
in connection with this cause of action.

Seventh Cause of Action (Quiet Title)

Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action. “It is settled in California that a mortgagor
cannot quiet his title against the mortgagee without paying the debt secured.” (
Shimpones v. Stickney (1934) 219 Cal.637, 649.) This is true even where the debt is
unenforceable. (Mix v. Sodd (1981) 126 Cal.App.3d 386, 390.) Here, the allegations
that Plaintiffs stand ready to tender the appropriate mortgage payments is insufficient
as they seek to quiet title to the property, specifically they seek to establish title free
from any other interest. (FAC ¶ 90.) To do so, they would need to allege that they are
ready to tender not simply the mortgage payments, but rather, the entire debt owed.
On this basis alone, the demurrer is sustained with leave to amend.

Given the above, the Court need not reach the other grounds asserted by Defendants
in connection with this cause of action.

Eighth Cause of Action (Slander of Title)

Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action. Plaintiffs were required to allege (1) a false
statement disparaging title to their property; (2) publication; (3) absence of privilege;
and (4) damage. (Appel v. Burman (!984) 159 Cal.App.3d 1209, 1214.) Here,
Plaintiffs have failed to adequately allege absence of privilege. Indeed, recording of
notice of default is a privileged act. (Civil Code § § 47, 2924.) Documents recorded
with the Count Recorder’s office are privileged documents pursuant to Civil Code 47.
The privilege applies to foreclosures conducted pursuant to statutes governing
procedures for exercising a power of sale. Wilton v Mountan Wood Homeowners
Association, Inc. ( 1993) 18 Cal.App.4th 565, 569. The mailing, publication, and
delivery of notices as required, and the performance of the procedures set forth in this
article, are privileged communications within Civil Code section 47. Civil Code 2924.

Indeed, while the Court has found that Plaintiffs have adequately alleged that the
declaration of compliance with Civil Code § 2923.5 was not correct, the conclusory
allegation that the document was recorded with malice is not sufficient. Plaintiffs must
allege facts that “publication was motivated by hatred or ill will towards the plaintiff or
by a showing that the defendant lacked reasonable grounds for belief in the truth of the
publication and therefore acted in reckless disregard of the plaintiff’s rights.” (Kachlon
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v. Markowitz (2008) 168 Cal. App.4 316, 336.) Plaintiffs’ opposition fails to overcome
this argument and points to no allegations in the FAC demonstrating that malice has
been adequately alleged. Simply using the term “malicious” is not sufficient. Ninth Cause of Action (Accounting)

Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action. Plaintiffs were required to allege that “some
balance is due” to them. (Whann v. Doell (1923) 192 Cal. 680, 684; see also Brown v.
Bank of America, N.A. (E.D.Cal. Mar. 31, 2011) 2011 U.S.Dist.LEXIS 38991 at *23
[“plaintiff has not alleged that he is due any monies from defendants. Absent such an
allegation, plaintiff has no right to an accounting”].) Plaintiffs fail to allege Defendants
owe them money and have failed to allege a basis for an accounting.

Given the above, the Court need not reach the other grounds asserted by Defendants
in connection with this cause of action.

Tenth Cause of Action (Bus. & Prof. Code § 17200)

Defendants’ demurrer is sustained with leave to leave to amend for failure to state
facts sufficient to constitute a cause of action. The demurrer on the ground that
Plaintiffs lack standing because they did not allege they lost money or property is
overruled as they alleged that they were required to pay improper fees and charges.
(FAC ¶ 108.) However, Plaintiffs were required to “state with reasonable particularity
the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of
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California, Inc. (1993) 14 Cal.App.4 612, 619.) Here, while Plaintiffs allege that
Defendants engaged in unlawful, unfair and fraudulent acts by assessing improper
fees, mishandling payments, etc. there are no facts demonstrating how these actions
were unlawful, unfair, or fraudulent. No statute is identified to plead an unlawful claim,
no facts are alleged to show an unfair claim, and no facts are alleged to demonstrate
how any alleged conduct was fraudulent for purposes of § 17200 (e.g., likely to
deceive the public). The demurrer is therefore sustained with leave to amend.

Eleventh Cause of Action (Unjust Enrichment)

Defendants’ demurrer is sustained with leave to amend. Unjust enrichment “is a
general principle underlying various doctrines and remedies, including quasi-
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contract.” (Jogani v. Superior Court (2008) 165 Cal.App.4 901, 911.) To that end,
Plaintiffs fail to identify the specific conduct upon which this cause of action is based
and how exactly Defendants have been unjustly enriched.

Twelfth Cause of Action (Injunctive Relief)

Defendants’ demurrer is overruled. While Defendants are correct that injunctive relief
is a remedy not an independent cause of action and that a cause of action must exist
before such relief can be granted, they are incorrect that Plaintiffs have not alleged a
cause of action for which injunctive relief could be granted. Indeed, as discussed
above, Plaintiffs adequately alleged causes of action for wrongful foreclosure and
violation of the HBOR. Further, contrary to Defendants’ suggestion, the Court does
not at this stage, evaluate whether Plaintiffs are actually entitled to a preliminary
injunction, for example, whether they have shown a likelihood of success and that the
balance of harms tips in their favor.

Finally, the Court need not and does not address any other arguments asserted by
Defendants in the instant demurrer (e.g. securitization, challenges to Defendants’
standing to foreclose, tender where not separately addressed in connection with a specific cause of action).

In sum, the demurrer is overruled as to the first, second, and twelfth causes of action
and sustained with leave to amend as to the remainder.

Where leave was given Plaintiffs may file and serve a second amended complaint no
later than December 2, 2013. Defendants shall file and serve their response within 15
days thereafter, 20 days if the second amended complaint is served by mail.
(Although not required by any statute or rule of court, Plaintiffs are requested to attach
a copy of the instant minute order to the second amended complaint to facilitate the
filing of the pleading.)

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