30-2013-00687437
1. Demurrer by Defendants to Amended Complaint:

(a) Request for Judicial Notice :
Defendants request that the court take judicial notice of 5 documents recorded with the Orange County Recorder in connection with the property: (1) deed of trust – 3/6/07; (2) assignment of deed of trust – 10/4/12; (3) substitution of trustee – 12/21/12; (4) notice of default – 12/21/12; and (5) notice of trustee’s sale (setting sale for 4/24/13) – 4/5/13.

These documents, and their legal effect, may properly be judicially noticed under Cal. Evid. Code § 452 (f) as to the existence of the recorded documents and their legal consequence. Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App. 4th 256, 264. The court may not take judicial notice of the truth of matters stated in the recorded documents. Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal. App. 4th 1106, 1117-18. Plaintiffs do not oppose the request for judicial notice.

(b) The fraud and misrepresentation causes of action:
The demurrer is overruled.
Here, Defendants’ only objection to Plaintiffs’ misrepresentation causes of action is lack of falsity. Defendants contend that the allegation that WFB offered Plaintiffs a forbearance agreement establishes the truth of the alleged representations that WFB could give Plaintiffs a loan modification and makes immaterial the falsity of the representation that WFB owned the loan.

But nothing in the allegations of the FAC shows that a forbearance agreement and a loan modification are the same thing. [Indeed, they are not. A forbearance agreement is temporary relief while a loan modification is permanent.] In the absence of allegations or law establishing that a loan modification and a forbearance agreement are the same thing, the alleged fact that Plaintiffs were offered the latter does not change the alleged fact that they were falsely told they could get the former.

(c) The negligence cause of action:
The elements of a negligence cause of action are: the legal duty to use due care, breach of that duty, and the breach is the proximate or legal cause of the resulting injury. Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal. App. 4th 49, 62.

As a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money. [See Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal.App.3d 1089, 1096 (1991).] Liability to a borrower for negligence arises only when the lender actively participates in a financed enterprise beyond the domain of a usual money lender. Id. To determine the extent of any such duty, courts look to the precise conduct complained of, and compare that to the six Biakanja factors. [See Jolley v. Chase Home Finance, LLC (2013) 213 Cal. App. 4th 872, 899]:

(1) the extent to which the transaction was intended to affect the plaintiff;
(2) the foreseeability of harm to the plaintiff;
(3) the degree of certainty that the plaintiff suffered injury;
(4) the closeness of the connection between the defendant’s conduct and the injury suffered;
(5) the moral blame attached to the defendant’s conduct; and
(6) the policy of preventing future harm.

There has been a conflict among various courts who have considered the issue about whether a lender who engages in loan modification negotiations has stepped outside its conventional role and taken on a duty of care to the borrower. At this date, however, the California Courts of Appeal have settled on the rule that the loan modification process falls within a lender’s conventional role and does not give rise to a duty of care beyond those obligations and duties set forth in the note and deed of trust. [See Aspiras v. Wells Fargo Bank, N.A. (213) 219 Cal. App. 4th 948, 952, 963-64; Lueras v. BAC Home Loans Servicing, LP., supra, 221 Cal. App. 4th at 67-69 (finding, however, that lender “does owe a duty to a borrower to not make material misrepresentations about” loan modification application or foreclosure sale).]

The demurrer to this cause of action is sustained without leave. The court already sustained a demurrer with leave to amend and Plaintiffs did little to fix the deficiencies.

(d) The 4th Cause of Action for Intentional Infliction of Emotional Distress against WFB
The essential elements of a cause of action for Intentional infliction of emotional distress include:

(1) Extreme and outrageous conduct by the defendant;
(2) With the intention of causing, or reckless disregard of the probability of causing, emotional distress;
(3) Resulting in severe or extreme emotional distress;
(4) Actually caused by the defendant’s outrageous conduct.

Hughes v. Pair (2009) 46 Cal. 4th 1035, 1050-51; Huntingdon Life Sciences v. Stop Huntingdon Animal Cruelty USA (2005) 129 Cal. App. 4th 1228, 1259.

To properly plead “extreme and outrageous conduct,” the alleged conduct must (1) be pled with reasonable particularity and (2) be so extreme as to exceed all bounds of that usually tolerated in a civilized community and which would – to the average member of the community – arouse resentment against the actor. Hughes, supra, 46 Cal. 4th at 1051; McMahon v. Craig (2009) 176 Cal. App. 4th 1502, 1516; Berkley v. Dowds (2007) 152 Cal. App. 4th 518, 528.

Plaintiffs premise their claim for IIED on allegations of WFB’s (i) instructions to go into default in order to obtain a loan modification, (ii) repeated (mis)representations regarding the status of Plaintiff’s loan modification application, and (iii) requests for further information without informing Plaintiffs that no loan modification was possible due to WFB’s lack of authority to modify the loan.

Plaintiffs’ allegations in this case, while reflecting poorly on WFB, do not amount to extreme and outrageous conduct. The demurrer to this cause of action should be sustained without leave to amend at this time.
Should additional facts be disclosed in discovery that meet the standard then Plaintiffs can move to amend at that time.

The court already sustained a demurrer with leave to amend and Plaintiffs did little or nothing in the away of amendment.

(e) 5th Cause of Action for Violation of B&P Code § 17200
To state a UCL claim, Plaintiffs must allege acts or injuries within the terms of B&P Code § 17200. B&P § 17200 et seq. (“UCL”) prohibits unfair competition, including unlawful, unfair or fraudulent business acts. Cel-Tech Comm., Inc. v. Los Angeles Cellular Tele. Co. (1999) 20 Cal. 4th 163, 180. A UCL action is equitable in nature and damages cannot be recovered. Id. at 179-80. It requires a person to have suffered injury in fact and have lost money or property as a result of unfair competition in order to have standing for a UCL cause of action. Pfizer Inc. v. Superior Court (2010) 182 Cal. App. 4th 622, 630.

The UCL does not proscribe specific activities, but broadly prohibits any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. Because section 17200 is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. In other words, a practice is prohibited as “unfair” or “deceptive” even if not “unlawful” and vice versa.” Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal. App. 4th 638, 643-44 (2008).

Here, Defendants’ sole ground for demurrer is their contention that all the predicate cause of action fail so the section 17200 claim must fail as well. But Plaintiffs have sufficiently alleged fraud. The demurrer to this cause of action is overruled.

Moving Party shall give Notice.

2. Motion by Defendants for an Order Striking Portions of Operative Complaint:

The motion is granted to the attorney fees and denied as to the punitive damages.

Plaintiffs do not allege a basis for recovery of attorneys’ fees. Nor have they opposed that portion of the motion to strike. As for punitive damages, Plaintiffs have alleged fraud so they have alleged a basis for recovery of punitive damages. Civ. Code § 3294.

Moving Party shall give Notice.