Case Name: Brown v. Nationstar Mortgage, LLC, et al.
Case No.: 1-14-CV-262140

On August 12, 2010, plaintiff Amos Brown (“Plaintiff”) entered into a reverse mortgage loan agreement with Bank of America, N.A., secured by the subject property. (See complaint, ¶ 6.) On September 27, 2012, the promissory note and deed of trust were assigned from Bank of America to defendant Nationstar Mortgage, LLC dba Champion Mortgage (“Nationstar”). (See complaint, ¶ 7.) The deed of trust requires that Plaintiff “occupy, establish, and use the Property as Borrower’s principal residence.” (Complaint, exh. B (“deed of trust”), p.2, § 4 (“Occupancy, Preservation, Maintenance and Protection of the Property; Borrower’s Loan Application; Leaseholds”).) Pursuant to that requirement, Nationstar requires a certification from Plaintiff that he occupies the property as his principal residence. (See complaint, ¶ 9.) Despite compliance with that requirement, on September 23, 2013, defendant Sage Point Lender Services, LLC (“Sage Point”), as trustee, recorded a notice of default on the subject property. (See complaint, ¶¶ 7, 9-10.) According to the notice of default, the notice of default was recoded because “the property is not the principal residence of the borrower for reasons other than death.” (Complaint, exh. C (“notice of default”), p.3, ¶ 2.) On March 14, 2014, Plaintiff filed the complaint against Nationstar and Sage Point, asserting causes of action for: breach of contract; negligence; wrongful foreclosure; injunctive relief; declaratory relief; fraud; intentional infliction of emotional distress; breach of the implied covenant of good faith and fair dealing; and, an accounting. On April 2, 2014, Sage Point filed a notice of rescission as to the notice of default. Nationstar demurs to each cause of action of the complaint.

On June 11, 2014, at 3:40pm, Plaintiff filed his opposition. The opposition is untimely pursuant to Code of Civil Procedure section 1005, subdivision (b). Nevertheless, the Court will consider the late-filed opposition.

Defendants’ request for judicial notice of the notice of rescission of declaration of default and demand for sale and of notice of default and election to sell, recorded on April 2, 2014 is GRANTED. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1382, quoting Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal. App. 4th 1106, 1117; see also Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549; see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (stating that “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 a recorded document, and the document’s legally operative language… [and, f]rom this, the court may deduce and rely upon the legal effect of the recorded document”); see also Stormedia Inc. v. Super. Ct. (Werczberger) (1999) 20 Cal.4th 449, 457, fn.9; see also Evid. Code § 452, subds. (c), (d), (h).)

First cause of action: breach of contract

The first cause of action for breach of contract alleges that defendants Nationstar and Sage Point breached the deed of trust by recording a notice of trustee sale. As Nationstar argues, there do not appear to be any actual damages alleged. The first cause of action alleges that, as a result of the breach, Plaintiff lost his property. (See complaint, ¶ 18.) However, judicially noticeable facts demonstrate that this is not true as the notice of default and demand for sale was rescinded. The breach of contract claim also alleges that Plaintiff suffered damages to the fair market value of the property, and incidental damages. (See complaint, ¶ 18.) However, these are not contractual damages arising from the breach of the loan agreement and deed of trust. In opposition, Plaintiff cites to Kachlon v. Markowitz (2008) 168 Cal.App.4th 316. Yet, it is unclear as to how Kachlon is helpful to Plaintiff. There, the appellate court determined that the recording of a notice of default or other procedures in accordance with nonjudicial foreclosure, constituted privileged communications as stated by Civil Code section 2924. (See Kachlon, supra, 168 Cal.App.4th at p.333 (stating that “[w]e hold that section 2924 deems the statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, to be privileged communications under the qualified common interest privilege of section 47, subdivision (c)(1)”).) There is no allegation that Defendants recorded the documents with a malicious intent; indeed, unlike the Kachlon defendants, Defendants rescinded the notice of default. In opposition, Plaintiff does not demonstrate that he can amend the first cause of action to allege facts sufficient to constitute a breach of contract cause of action. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”); see also Childers v. Edwards (1996) 48 Cal.App.4th 1544, 1550 (stating that “[w]inning on liability but failing to prove any damages does not result in any benefit to a plaintiff.. [p]roving liability proves only an element of a cause of action, not the cause of action itself”).) Nationstar’s demurrer to the first cause of action is SUSTAINED without leave to amend as it is clear that the cause of action fails to allege and cannot allege damages. (See Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913 (stating that resulting damages is an element for a breach of contract cause of action).)

Second cause of action: negligence

The second cause of action alleges that Nationstar breached their duty of care and skill to Plaintiff in the servicing of Plaintiff’s loan in recording the notice of default, recording the notice of trustee sale, preparing those documents and participating in the nonjudicial foreclosure process. However, as Defendants assert, “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.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal. App. 3d 1089, 1096.) “Liability to a borrower for negligence arises only when the lender ‘actively participates’ in the financed enterprise ‘beyond the domain of the usual money lender.’” (Wagner v. Benson (1980) 101 Cal.App.3d 27, 35.) The mere recording of a notice of certain documents pursuant to the nonjudicial foreclosure process and servicing of a loan are acts that fall precisely within the domain of a usual money lender. (See Castaneda v. Saxon Mortg. Servs. (E.D. Cal. 2009) 687 F. Supp. 2d 1191, 1198 (stating that “[a]s the servicer of the loan, Saxon does not owe a duty to the borrowers of the loans it services”); see also Watts v. Decision One Mortg. Co., LLC (S.D. Cal. July 13, 2009) 2009 U.S. Dist. LEXIS 59694 *1, *7 (allegation that defendant acted as lender and/or servicer “imposes no legal duty of care”).) Plaintiff fails to allege any legal duty of care. (See Nymark, supra, 231 Cal.App.3d at p.1095 (stating that “[t]he existence of a duty of care owed by a defendant to a plaintiff is a prerequisite to establishing a claim for negligence… [and w]hether a legal duty exists in a given case is primarily a question of law”).) Moreover, as previously stated, the recording of those documents are privileged pursuant to Civil Code sections 2924 and 47 and there is no allegation that Nationstar acted with malice. In opposition, Plaintiff merely recites to those allegations and does not cite to any legal authority as to how those allegations might be outside the domain of a usual money lender. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Nationstar’s demurrer to the second cause of action is SUSTAINED without leave to amend.

Third cause of action: wrongful foreclosure

Plaintiff’s opposition states that “[t]he applicable rule for the wrongful foreclosure here is… with respect to real property, a trustee or mortgagee may be liable to the trustor or mortgagor for damages sustained where there has been an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust.” (Pl.’s memorandum of points and authorities in opposition to demurrer (“Opposition”), p.7:3-7.) However, there has been no sale of the property. Plaintiff’s opposition acknowledges that the notice of trustee sale and notice of default were rescinded. (See Opposition, p.7:14-15.) There is no cause of action for wrongful foreclosure where there has been no foreclosure sale. (See Rosenfeld v. JPMorgan Chase Bank, N.A. (N.D. Cal. 2010) 732 F. Supp. 2d 952, 961 (stating that claim for wrongful foreclosure “is premature… [where] there is no dispute that a foreclosure sale did not take place… [because a] lender or foreclosure trustee may only be liable to the mortgagor or trustor for wrongful foreclosure if the property was fraudulently or illegally sold under a power of sale contained in a mortgage or deed of trust”), citing Munger v. Moore (1970) 11 Cal.App.3d 1, 7; see also Vega v. JP Morgan Chase Bank, N.A. (E.D. Cal. 2009) 654 F.Supp.2d 1104, 1113 (stating that “a purported wrongful foreclosure claim is premature given there has been no foreclosure of the property”); see also Pugh v. JPMorgan Chase Bank, N.A. (E.D. Cal. Oct. 22, 2013) 2013 U.S. Dist. LEXIS 151873 *1, *8 (stating same); see also Canas v. Citimortgage, Inc. (C.D. Cal. July 2, 2013) 2013 U.S. Dist. LEXIS 93937 *1, *12 (stating same).) Nationstar’s demurrer to the third cause of action is SUSTAINED without leave to amend.

Fourth cause of action: injunctive relief

The fourth cause of action seeks to enjoin Defendants “from selling, attempting to sell, or causing to be sold the Property to a third party, under the power of sale in the deed of trust.” (Complaint, ¶ 40.) However, the notice of trustee sale has been rescinded. Plaintiff’s opposition does not address this cause of action. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Accordingly, Nationstar’s demurrer to the fourth cause of action is SUSTAINED without leave to amend.

Fifth cause of action: declaratory relief

The fifth cause of action seeks “[a] judicial declaration to stay any sale of the Property to a third party… [and] that sale of the Property to enforce the deed of trust is improper.” (Complaint, ¶¶ 43-44.) Again, the notice of trustee sale has been rescinded; there is no actual controversy as required by Code of Civil Procedure section 1060. (See also Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947 (stating that “[a] complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy…”) (emphasis added); see also Ephraim v. Metropolitan Trust Co. (1946) 28 Cal.2d 824, 836 (stating that “since no present legal controversy exists, a cause of action for declaratory relief is not stated”).) In opposition, Plaintiff fails to demonstrate that the claim can be amended to state any cognizable cause of action. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Accordingly, Nationstar’s demurrer to the fifth cause of action is SUSTAINED without leave to amend.

Sixth cause of action: fraud

Minimally, a fraud cause of action must “allege the names of the persons 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” and “necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal. 4th 631, 645.) As Nationstar argues, the sixth cause of action fails to allege facts with particularity as it does not allege how, when, where and by what means the representations were tendered. In opposition, Plaintiff clarifies that the fraud claim is premised on the notice of default, in that “the amount owed on the Notice of Default should be nothing… [and] Plaintiffs, on several different occasions, spoke with several of NATIONSTAR’s representatives, who, acting under the authority of NATIONSTAR demanded money when they had no right to do so.” (Opposition, p.8:3-11.) However, the complaint does not allege that Plaintiff paid that demanded money. Instead, the sixth cause of action alleges that Plaintiff suffered damage to his credit, and lost his property. (See complaint, ¶ 52.) As previously stated, Plaintiff acknowledges that he has not lost his property and judicially noticeable facts indicate that the notice of default and notice of trustee sale has been rescinded. There is no allegation that Plaintiff actually attempted to obtain credit; any damages is speculative. (See Lazar, supra, 12 Cal.4th at p.638 (stating that resulting damages is an element for a fraud claim).) Nationstar’s demurrer to the sixth cause of action is SUSTAINED with 10 days leave to amend.

Seventh cause of action: intentional infliction of emotional distress

The elements for intentional infliction of emotional distress are: “1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.” (Davidson v. City of Westminister (1982) 32 Cal.3d 197, 209.) “With respect to the requirement that a plaintiff show severe emotional distress, [the California Supreme C]ourt has set a high bar.” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1051.) To plead “outrageous” conduct, the conduct must be so extreme as to exceed all bounds of that usually tolerated in a civilized community. (See Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001.) “Liability for intentional infliction of emotional distress does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.” (Hughes, supra, 46 Cal.4th at 1051.) Although the notice of default and notice of trustee’s sale has been rescinded, the seventh cause of action alleges that Defendants breached a duty to exercise due care toward Plaintiff as a lender, trustee and servicer of the loan on property, and a duty to execute and perform under the terms of the deed of trust thereby causing severe emotional distress. (See complaint, ¶¶ 56-57.) However, the breach of these duties would not arise to conduct that is so extreme so as to exceed all bounds of that usually tolerated in a civilized community. (See Quinteros v. Aurora Loan Servs. (E.D.Cal. 2010) 740 F.Supp.2d 1163, 1172 (stating that “[t]he act of foreclosing on a home (absent other circumstances) is not the kind of extreme conduct that supports an intentional infliction of emotional distress claim”); see also Mehta v. Wells Fargo Bank, N.A. (S.D.Cal. 2010) 737 F.Supp.2d 1185, 1204 (stating that “[n]o California case has allowed recovery for emotional distress arising solely out of property damage”); see also Davenport v. Litton Loan Servicing, LP (N.D. Cal. 2010) 725 F. Supp. 2d 862, 884 (stating that although “[c]ommon sense dictates that home foreclosure is a terrible event and likely to be fraught with unique emotions and angst… [w]here a lending party in good faith asserts its right to foreclose according to contract, however, its conduct falls shy of ‘outrageous,’ however wrenching the effects on the borrower”).) In opposition, Plaintiff cites to Kruse v. Bank of America (1988) 202 Cal. App. 3d 38. However, once again, Kruse is not helpful to Plaintiff. In Kruse, the court noted that, to the extent that the IIED claim was premised on the fraud claim, it was not permitted, and that to the extent that it was premised on any foreclosure activities, such conduct was privileged. (Kruse, supra, 202 Cal.App.3d at p.67.) The Kruse court further found that any “heartless and insensitive remarks” made outside of the recorded foreclosure documents “merit opprobrium, they do not qualify as the kind of ‘outrageous’ conduct necessary to support an action for intentional infliction of emotional distress.” (Id.) Here, the recording of the notice of default and notice of trustee sale are the sole bases for the cause of action. Pursuant to Plaintiff’s own cited authority, such a claim cannot state a cause of action for intentional infliction of emotional distress. As Plaintiff has demonstrated that he cannot amend the claim to state a viable claim for IIED, Nationstar’s demurrer to the seventh cause of action is SUSTAINED without leave to amend. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).)

Eighth cause of action: unfair business practices

As Nationstar states, the unfair business practices claim fails because Plaintiff fails to allege predicate misconduct. Nationstar’s demurrer is SUSTAINED on this basis.

However, as Nationstar also asserts, “under the UCL, standing extends to ‘a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Kwikset Corp. v. Super. Ct. (Benson) (2011) 51 Cal.4th 310, 321.) Further, as Nationstar argues, the eighth cause of action fails to allege the loss of any money or property as a result of the unfair competition. The eighth cause of action does allege that the unfair business practice was “designed to deprive Plaintiff of his property” (see complaint, ¶ 62); however, as repeatedly noted in this order, judicially noticeable facts demonstrate—and Plaintiff concedes—that the property has not been sold at any trustee sale. The eighth cause of action also alleges that the allegedly unfair business practice was meant to allow Defendants “to receive exorbitant fees and interest in connection with the loan” (see complaint, ¶ 62); but, as Nationstar points out, there is no allegation that Plaintiff ever paid those fees. (See Def.’s memorandum of points and authorities in support of demurrer to complaint, p.9:12-13.) In opposition to the demurrer, Plaintiff apparently concedes that he did not pay those fees, as it does not address the argument. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Accordingly, Nationstar’s demurrer to the eighth cause of action for unfair business practices is SUSTAINED without leave to amend on this basis.

Ninth cause of action: breach of the implied covenant of good faith and fair dealing

In opposition, Plaintiff does not oppose the demurrer to the ninth cause of action for breach of the implied covenant of good faith and fair dealing. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Accordingly, Nationstar’s demurrer to the ninth cause of action is SUSTAINED without leave to amend. (See Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350 (stating that “[t]he covenant thus cannot ‘be endowed with an existence independent of its contractual underpinnings’… [i]t cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement”); see also Avidity Partners, LLC v. State of California (2013) 221 Cal.App.4th 1180, 1204 (stating that “[t]he implied covenant of good faith and fair dealing does not impose substantive terms and conditions beyond those to which the parties actually agreed”); see also Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1369 (stating that the court properly sustained demurrer to breach of covenant of good faith and fair dealing “when the implied covenant cause of action is essentially based on the same allegations as the breach of contract cause of action”); see also Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094 (stating that “”[t]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract”).)

Tenth cause of action: unjust enrichment

Plaintiff also does not oppose the demurrer to the tenth cause of action for unjust enrichment. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Accordingly, Nationstar’s demurrer to the tenth cause of action is SUSTAINED without leave to amend.

Eleventh cause of action: accounting

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179, citing Brea v. McGlashan (1934) 3 Cal.App.2d 454, 460.) Here, the eleventh cause of action does not allege that some balance is due Plaintiff. Indeed, in opposition, Plaintiff states that “[t]he amount of money Plaintiff owes to NATIONSTAR at present is unknown to plaintiff….” (Opposition, p.10:22-23.) As it is clear that the eleventh cause of action cannot state facts sufficient to constitute a claim for accounting, the demurrer to the eleventh cause of action is SUSTAINED without leave to amend. (See Goodman v. Kennedy (1976)18 Cal. 3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; see also Hendy v. Losse (1991) 54 Cal. 3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).)