Case Number: KC066459 Hearing Date: June 16, 2014 Dept: J

Re: Samuel Carrillo v. JPMorgan Chase Bank, N.A. (KC066459)

DEMURRER TO FIRST AMENDED COMPLAINT

Moving Party: Defendant JPMorgan Chase Bank, N.A.

Respondent: Plaintiff Samuel Carrillo

POS: Moving OK; Opposing filed just 5 court days prior to the hearing in violation of CCP § 1005(b)

[NOTE: The court has no record of the First Amended Complaint having been filed, and had to obtain a non-conformed copy from the office of plaintiff’s counsel in order to address the demurrer. Counsel for plaintiff is directed to provide the court with a conformed copy of the First Amended Complaint at the hearing.]

In this action alleging violation of the Homeowners Bill of Rights, the Complaint was filed 10/31/13. The First Amended Complaint (“FAC”) asserts causes of action for:

1. Violation of Homeowners Bill of Rights
2. Breach of contract
3. Breach of implied covenant of good faith and fair dealing
4. Negligent misrepresentation
5. Negligence
6. Violation of B&P §17200 et seq.

The Case Management Conference is scheduled for 6/17/14.

Plaintiff alleges that he resides at 18257 Lanaca Street, La Puente, California 91744 (“Property”); that he refinanced in 2008 in the amount of $150,000 with Paramount Residential Mortgage Group (FAC, ¶ 11); that PRMG securitized the loan by selling it to Chase; that the economy experienced recession and he lost his job in 2012, causing him to exhaust his household economic resources and fall behind on his mortgage payments (¶ 15); that the securitization interfered with Plaintiff’s ability to “request” a loan modification (¶¶ 41-42); that Chase told him “they would assist him to avoid defaulting on his loan by offering a good faith loan modification review” (¶ 48); that he completed a loan modification application with Chase; that Chase failed to review the application in good faith and failed to provide a single point of contact (¶ 23); that Chase’s conduct “interfered with [Plaintiff’s] right to receive the benefits bargained for (¶ 34); that Chase sold the loan to investors or beneficiaries who did not wish to participate with the HAMP loan modification program, causing a misdirection that interfered with Plaintiff’s ability to request a loan modification. (¶ 57).

Defendant JPMorgan Chase Bank, N.A. (“Chase”) demurs to each cause of action in the First Amended Complaint on the grounds they fail to state facts sufficient to constitute a cause of action pursuant to CCP Section 430.10(e).

FIRST CAUSE OF ACTION FOR VIOLATION OF HOWMEOWNERS BILL OF RIGHTS (“HBOR”):

HBOR precludes loan servicers from foreclosing until after pre-modification and pre-foreclosure notices, and review of loan-modification applications. It requires a single point of contact for borrowers, and it enables homeowners (1) to request injunctions against foreclosures pending compliance, (2) to obtain damages where violations were not corrected prior to the recordation of the trustee’s deed upon sale, and (3) to obtain penalties when servicers have filed multiple, inaccurate mortgage documents, or committed reckless or willful violations. See Civ. C. §2920.5 – 2924.20. HBOR became effective on 1/01/13, and applies to conduct occurring thereafter. Civil Code Section 3 states that “[n]o part of [this Code] is retroactive, unless expressly so declared.”

In this case, Plaintiffs allegations regarding pre-2013 events fail. Plaintiff’s claims arise in 2012. Further, Plaintiff does not identify the provision of HBOR that was purportedly violated. There is no allegation that the notice of default (“NOD”) has been recorded. Moreover, Plaintiff does not allege that in connection with his loan modification application he requested and subsequently was not provided a single point of contact. Thus, no cause of action is stated. The demurrer is sustained.

SECOND CAUSE OF ACTION FOR BREACH OF CONTRACT:

Plaintiff does not identify a provision of the promissory note (“Note”) or deed of trust (“DOT”) that was allegedly breached. There is no provision in the Note or DOT that requires a loan modification. The demurrer is sustained.

THIRD CAUSE OF ACTION FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING:

Here, there was no contractual provision requiring Chase to modify the loan. In addition, the allegation that the loan was securitized by a third party and purportedly interfered with Plaintiff’s ability to “request” a loan modification does not state a claim against Chase. Moreover, Plaintiff’s own allegations establish that he did in fact “request” a loan modification but was denied. The demurrer is sustained.

FOURTH CAUSE OF ACTION FOR NEGLIGENT MISREPRESENTATION:

Fraud-related causes of action must be pled with particularity. “This particularity requirement necessitates pleading facts that show how, when where, to whom, and by what means the [allegedly false] representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645). “Every element of a cause of action for fraud must be alleged in full, factually and specifically.” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331). Plaintiff does not plead fraud with the requisite particularity.

When it is pled against a corporate entity, Plaintiff must allege the specific names of the persons who made the misrepresentations, their authority to speak and bind the corporation, to whom they spoke, what they said, or written, and when it was said or written. (Tarman v. State Farm (1991) 2 Cal.App.4th 1553). Here, fraud against a corporate entity requires additional specific facts, and Plaintiff must allege the detriment proximately caused. Plaintiff does not plead any factual allegations to show what alleged fraudulent conduct or misrepresentations that are at issue. Plaintiff does not allege the name of any employee, their authority to speak to whom they spoke, what they said or wrote, and when it was said or written. The demurrer is sustained.

FIFTH CAUSE OF ACTION FOR NEGLIGENCE:

As a general rule, lenders “owe[] no duty of care to a borrower when the [lending] institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money. (Nymark v. Heart Fed. Sav. & Loan Ass’n (1991) 231 Cal.App.3d 1089, 1096). Here, Plaintiff alleges that “Defendants were negligent in the selling their loan to unknown investors or beneficiaries who do not wish to participate with the HAMP loan modification program.” (FAC, ¶57). However, Plaintiff admits that another entity, not Chase, purportedly securitized the loan. Moreover, Plaintiff fails to allege facts demonstrating a duty owed to Plaintiff, or showing a breach of that duty. Plaintiff makes conclusory allegations concerning the processing of a loan modification application that was ultimately denied (¶¶15-17, and 62). There is no legal duty to provide a borrower with a loan modification. Lueras v. BAC Home Loan Servicing, LP, 221 Cal.App.4th 49 (2013).

SIXTH CAUSE OF ACTION FOR VIOLATION OF BUSINESS AND PROFESSIONS CODE §17200 ET SEQ.:

Section 17200 permits certain public officials and any person who has suffered injury in fact due to unfair competition or business practices to bring a claim. Here, Plaintiffs do not allege any viable facts in support of unlawful, unfair, or fraudulent business practices in violation of Section 17200. B&P 17200; Shvartz v. Budget Group, Inc. 81 Cal.App.4th 1153, 1158 (2000). Plaintiffs lack standing because they have not suffered injury in fact (loss of money or property). (B&P 17204). Further, their claims regarding securitization and loan modification are meritless and devoid of any supporting facts. None of the purported misdeeds that are set forth in the FAC demonstrate that Plaintiff suffered monetary or property loss as a result of any unfair competition. Plaintiff still holds title to the Property. Plaintiff concedes that he fell behind on his mortgage payments, so the fact that late penalties have accrued is the direct result of his admitted default. Further, there is no allegation of practices that are unfair, unlawful or fraudulent. “Unfair” means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal.App.4th 638, 646 (2008). “Unlawful” means a practice that violates underlying law, but Plaintiff has not succeeded in alleging this. “Fraudulent” requires a showing that members of the public are likely to be deceived. Daughterty v. American Honda Motor Co., Inc., 144 Cal.App.4th 824, 838 (2006). Plaintiff fails to allege that the public had any expectation or made any assumptions regarding the purported Loan at issue. The demurrer is sustained.

The court will hear from counsel for Plaintiff as to whether leave to amend is requested, and as to which cause(s) of action, and will require an offer of proof if so.