2013-00143664-CU-OR

Mary E Chapman vs. Bank of America NA

Nature of Proceeding: Hearing on Demurrer and Motion to Strike First Amended Complaint

Filed By: Keller, George H.

*** If oral argument is requested, the parties shall at the time of the request
notify the clerk and opposing counsel of the specific causes of action that will
be addressed at the hearing. ***

Defendants Bank of America, N.A. (“BOA”) and ReconTrust Company (“RTC”) (collectively “Defendants”) demurrer to the First Amended Complaint (“1AC”) is
SUSTAINED with leave to amend.

This case arises from an alleged scheme by which plaintiff’s daughter and son-in-law
obtained a loan which was secured by plaintiff’s home without plaintiff’s knowledge.
According to plaintiff, she was duped by her daughter and son-in-law into removing her
name from the title so that the latter could secure a loan, after which title was returned
to plaintiff. After plaintiff’s son-in-law died and her daughter moved out of state,
plaintiff learned about the lien against her property when a notice of trustee’s sale was
posted on her front door. The daughter represented to plaintiff that the previously
undisclosed lien had been discharged during the daughter’s 2011 bankruptcy.
Plaintiff, a 75 year old widow, now fears the loss of her home as a result of the
previously undisclosed lien.

Chapman’s daughter is not named as a defendant, nor is the estate of her son-in-law.
Plaintiff is currently suing only BOA as the holder of the loan secured by her home,
RTC as the trustee designated by BOA to conduct a foreclosure sale (which has not
yet occurred), and Chicago Title Company.

After the Court sustained defendants’ demurrer to the original complaint, plaintiff filed
the 1AC on 1/24/2014. The 1AC purports to state only two causes of action, one for
declaratory relief and one for negligence. Both causes of action are alleged against all
named defendants. The two demurring defendants now demur to both causes of
action on various grounds discussed below. Plaintiff opposes.

Defendants’ request for judicial notice is UNOPPOSED and GRANTED.

2nd Cause of Action for Declaratory Relief. Defendants demur because plaintiff
never sought or obtained leave of court to allege this claim and because the 1AC fails
to plead facts demonstrating the existence of an actual, present controversy between
the parties relating to their respective rights and obligations. Defendants add that
declaratory relief is not available to address any past wrongs and that plaintiff’s
allegations of improper assignment and securitization of the loan to BOA, “robo-
signing,” and defendants’ lack of a “wet signature” on the promissory note are not only
conclusory but also insufficient to state a valid declaratory relief claim.

Although plaintiff filed an opposition, it fails to meaningfully respond to the substance
of defendants’ contentions regarding this 2nd cause of action. Instead, the opposition
vaguely asserts the controversy at the heart of this cause of action is “the $282,000
loan on top of the $10,000 that Plaintiff had no knowledge of…” and defendants
“committed mortgage fraud which resulted in plaintiff’s house being foreclosed
on…” (Oppos., p.3:7-13.) The opposition further claims “these allegations can be
proven with facts through the discovery process, expert witnesses, and trial,” including
showing that ‘defendants, had they conducted the proper due diligence, would have
found that [CTC] Chicago Title employees were aware of the fraud and negligence and
knew that what they were doing was wrong.’ (Oppos., p.3:14-17.)

The demurrer to the 2nd cause of action is sustained because plaintiff, aside from
failing to seek leave to add this new claim, has clearly failed to plead facts
demonstrating the existence of an actual, present controversy between the parties
relating to their respective rights and obligations. Specifically, the Court points to
Paragraph 18 of the 1AC which provides in its entirety:
“Plaintiff seeks declaratory relief from possible obligations in the future between
Plaintiff and Defendants [BOA] and [RTC] and [CTC], a California Corporation.
Since there may be future relations between and by the parties regarding the
loan that Plaintiff WAS aware of, this must be confronted now to avoid violating
the rule against ‘splitting’ one’s cause of action and would, if allowed, burden
the courts with two lawsuits. Defendants BOA and [RTC], intend to sell, and
unless restrained will sell or cause to be sold, the subject property, all to
Plaintiff’s great and irreparable injury in that defendant [sic] has given notice
that the trustee sale of the property will take place on a certain date and time,
and at a certain address, and if the sale takes place as scheduled. Plaintiff,
having been the victim of fraud and elder abuse, may lose her home of nearly
40 years.” (Emphasis added.)

These allegations do not support the finding of any actual, present controversy
between the parties which justifies the Court’s intervention.

Likewise, the allegations found on Page 8 of the 1AC are insufficient to show a
legitimate dispute between the parties regarding their respective rights and obligations.
These allegations include no specific facts but only generically refer to “[BOA’s]
continued lack of response to unresolved issues in Plaintiff’s loan file;” plaintiff’s
“correspondence including phone calls…(most of which went ignored, unanswered, or
the facts have been distorted and or concealed);” “an overwhelming volume of legal
issues arising out of the…mis-handling [sic] of Plaintiff’s loan file;” BOA’s ‘participation
in the fabrication of mortgage assignment transfers and the possible use of Robo
signers;” the need to “establish proper securitization of the note;” RTC’s “fiduciary duty
to ensure every mortgage assignment be fact checked by the assignor;” “the alleged
debt is ‘unenforceable against the debtor and property of the debtor under any
agreement or applicable law’;” BOA not being “entitled to be named the Beneficiary
under this debt” and “is simply a debt collector;” the absence of a “chain of title naming
[BOA] as the real party of interest or holder of the negotiable instrument;” the
nondischargeability of the debts fraudulently incurred by the original lender,
Homecomings Financial LLC, which is now in bankruptcy; the possible invalidity of the
deed of trust’s assignment due to a possible unauthentic signature and or a signature
made under false pretenses; RTC’s lack of standing to foreclose because it does not
possess “the original ‘wet signature’ Deed of Trust [and] the original ‘wet signature’
Promissory Note.” (Emphasis added.) Aside from several of these theories not
constituting a valid challenge to a non-judicial foreclosure sale, plaintiff has simply
failed to plead facts rather than mere conclusions which give rise to an actual, present
controversy between the parties which requires judicial resolution.

3rd Cause of Action for Negligence. Defendants contend this cause of action is fails
to state a valid claim against them because this cause of action, by its own terms, is
premised solely on the conduct of the original lender in granting the loan to plaintiff’s
daughter and son-in-law in or about 2006 and long before the loan was assigned to the
demurring defendants in 2011. Additionally, defendants maintain this cause of action
fails as a matter of law because under established precedent they owed plaintiff no
duty of care, a prerequisite for recovering on a negligence theory. (See, e.g., Nymark
v. Heart Fed. Sav. & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) Finally,
defendants maintain that this negligence claim is barred by the two year statute of
limitations which commenced in 2006 and expired long before this suit was filed in
2013.
Although the opposition insists the 1AC pleads a valid negligence claim, the Court
holds that this cause of action is deficient in several respects. First, by its own terms,
the cause of action is premised on the alleged negligence of the original lender in
connection with giving to plaintiff’s daughter and son-in-law a loan which they could not
afford. Since the demurring defendants were admittedly not involved in the origination
of this loan, they owed no duty and cannot be liable on a negligence theory. Second,
even if defendants owed a duty, it was owed to plaintiff’s daughter and son-in-law but
not plaintiff’s herself. Third, under California law including but not limited to Nymark, a
lender of money acting within its conventional role owes no duty of care and thus, no
negligence claim can lie. Fourth, as currently pled, this cause of action is time barred
because the conduct on which it is based occurred more than two years before this
suit was commenced and plaintiff has failed to effectively plead around the statute of
limitations. Finally, while the opposition suggests defendants were negligent in their
due diligence in connection with the assignment of this loan in 2011, the Court need
not consider such a suggestion because it is not currently pled in the complaint and a
demurrer tests only the sufficiency of a pleading. For all these reasons, the demurrer
to the negligence cause of action is sustained as well.

Leave to amend is granted and plaintiff may file and serve an amended complaint no
later than 6/9/2014. Although not required by court rule or statute, plaintiff is
directed to present a copy of this order when the amended complaint is
presented for filing.

Defendants to respond within 15 days if the amended complaint is personally served,
20 days if served by mail.

If any defendant intends to demur to the amended complaint or move to strike, it shall
determine if any other defendant who has appeared in this action also intends to
demur or move to strike. If so, all such defendants shall coordinate a single hearing
date for the demurrers and motions to strike. Additionally, a copy of the amended
complaint shall be included with the moving papers.

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