CASE NAME: RAJINDER SINGH vs. U.S. BANK N.A.
HEARING ON DEMURRER TO 1st Amended COMPLAINT of SINGH
FILED BY U.S. BANK NATIONAL ASSOCIATION, SELECT PORTFOLIO SERVICING, INC.
* TENTATIVE RULING: *

The Court rules as follows on the general and special demurrers to plaintiffs’ First Amended Complaint (“FAC”), brought by defendant U.S. Bank, N.A. (“USB”) and Select Portfolio Servicing, Inc. (“SPS”).

Defendants’ unopposed request for judicial notice is granted.

Defendants’ general and special demurrers to the First, Second, Third, and Fourth Causes of Action are sustained with leave to amend. (Code Civ. Proc., section 430.10, subds. (e) and (f).) Defendants’ general demurrer to the remaining causes of action is sustained without leave to amend. (Code Civ. Proc., section 430.10, subd. (e).) Any further amended complaint shall be filed on or before April 28, 2014.

In any further amended complaint, plaintiffs shall state the surviving causes of action against USB separately from the surviving causes of action against SPS. Plaintiffs specifically allege that USB did not acquire an interest in the subject loan until November 2011, which is a point in time after much of the alleged wrongful conduct by SPS and only shortly before USB began the privileged conduct of initiating and prosecuting an action for judicial foreclosure. (FAC, paragraph 6.) It is not clear to the Court that the potential liability of USB and the potential liability of SPS are co-extensive. If plaintiffs contend that USB is vicariously liable for actions taken by SPS before USB acquired an interest in the subject loan, plaintiffs shall allege facts supporting such liability with the heightened specificity required of a fraud cause of action.

In any further amended complaint, plaintiffs shall state their fraud causes of action based on the allegation set forth in paragraph 40 of the FAC (false representation) separately from their fraud causes of action based on the allegations set forth in paragraph 41 of the FAC (false promise); the Court regards these as two distinct fraud theories. False representation fraud is based on the false statement of a past or present material fact, while false promise fraud is based on a false statement concerning future conduct — the performance of the promise. False promise fraud is more in the nature of concealment; the promisor is concealing a secret intention not to perform the promise. (See, Hills Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 707-708 [a plaintiff must plead “data” or “facts” that “show” or “back up” the existence of an intention not to perform].)

In stating any fraud theory based on paragraph 40, plaintiffs shall bear in mind the truthful pleading rule. (See, Dwan v. Dixon (1963) 216 Cal.App.2d 260, 265.) Plaintiffs themselves have asked the Court to take judicial notice of the prior judicial foreclosure action. (Opposition Memorandum, filed on 1-17-14, page 9, fn. 1.) In so doing, the Court has taken judicial notice of plaintiffs’ contention that they made partial payments during the loan modification application process because it was all they could afford, and not because plaintiffs were advised to go into default. (Rajinder Singh Dec., filed on June 26, 2013 in C12-00069, paragraph 5 and Exhibit “A.” See also, Minute Order entered on 7 12 13.)

In any further amended complaint, the ultimate facts necessary to support each cause of action, and only those ultimate facts, shall be set forth within the body of the cause of action “in ordinary and concise language.” (Code Civ. Proc, section 425.10, subd. (a)(1).) Key ultimate facts shall not be incorporated by reference, and extraneous ultimate facts shall be omitted. Each item of reasonable reliance described in paragraph 44 of the FAC shall be alleged with the heightened specificity required of a fraud cause of action. Also, plaintiffs shall comply with section 425.10 of the Code of Civil Procedure, subdivision (a)(2); plaintiffs shall allege the estimated dollar amount of each item of monetary damages they claim (other than damages for emotional distress), and shall allege how that amount was calculated.

Plaintiffs shall not add any new causes of action beyond the scope of this ruling, and shall not add any new defendants, without first obtaining leave of court by noticed motion. (See, Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1022 23.)

The legal grounds for sustaining the demurrers are as follows. All issues not addressed in this ruling, such as the applicability and implications of the litigation privilege, are reserved for future consideration.

1st C/A (Fraud). The First Cause of Action is labeled “intentional misrepresentation.” The Court has sustained defendants’ general demurrer on the ground that plaintiffs have failed to articulate an intelligible theory of intentional misrepresentation fraud, and have failed to allege the elements of a fraud cause of action with adequate particularity. (Code Civ. Proc., section 430.10, subd. (e).) The Court has sustained defendants’ special demurrer on the ground that plaintiffs fail to make clear whether they are alleging false representation fraud, false promise fraud, or both. (Code Civ. Proc., section 430.10, subd. (f).) The First Cause of Action is labeled “intentional misrepresentation,” but plaintiffs’ opposition memorandum suggests that plaintiffs are relying entirely on a false promise fraud theory. If plaintiffs are relying on both of these two distinct fraud theories, each theory should be set out in a separate cause of action.

2nd C/A (Negligent Misrepresentation). The Second Cause of Action is for negligent misrepresentation. However, plaintiffs’ allegations are internally inconsistent. Paragraph 50 of the FAC (mislabeled as 48) refers to negligent conduct, but paragraph 51 (mislabeled as 49) appears to refer to intentional conduct. Further, plaintiffs do not intelligibly allege in what respect the representation described in paragraph 49 was false; if plaintiffs contend that it was USB’s policy to gratuitously modify loans that were not in default, plaintiffs should allege this fact explicitly. (See also, Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519 [the strict standard of fraud pleading applies to a cause of action for negligent misrepresentation]; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159 [there is no cause of action for negligently misrepresenting the intention to perform a promise].) Given the confusing nature of the current allegations, the Court reserves for future consideration the issue of duty, as it applies to this cause of action.

3rd C/A (UCL). The Third Cause of Action is for violation of the Unfair Competition Law (“UCL”). Insofar as this cause of action is based on defendants’ alleged fraud, it lacks merit for the reasons stated above. Insofar as this cause of action is based on “unfair” conduct, plaintiffs’ allegations are not sufficient. (See, Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1364-66.) Insofar as this cause of action is based on ‘unlawful” conduct, plaintiffs have failed to identify the statute or regulation that defendants allegedly violated. Finally, the only two remedies that plaintiffs seek, damages and the disgorgement of profits, are not remedies that can be granted in a cause of action brought under the UCL. (FAC, paragraph 55. See, Bus. & Prof. Code, sections 17203 and 17204; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150-52.)

4th C/A (Promissory Estoppel). The Fourth Cause of Action is for promissory estoppel. Despite the opportunity to amend, plaintiffs have still failed to allege facts sufficient to support this legal theory. (See, Thomson v. International Alliance of Theatrical Stage Employees & Moving Picture Machine Operators (1965) 232 Cal.App.2d 446, 454.) In particular, plaintiffs have failed to adequately allege the kind of reasonable, foreseeable, and detrimental reliance that would support a cause of action for promissory estoppel. (Compare, Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 227-228 [homeowner relied on promise by declining to convert her Chapter 7 bankruptcy to a Chapter 13 bankruptcy]; Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1040-43 [homeowner relied on promise by obtaining a high cost loan and tendering full payment of the default].)

5th C/A (Intentional Infliction). The Fifth Cause of action is for intentional infliction of emotional distress. Plaintiffs have failed to allege “outrageous” conduct. (See, Ross v. Creel Printing & Publishing Co., Inc. (2002) 100 Cal.App.4th 736, 744-748 [“the attempted collection of a debt by its very nature often causes the debtor to suffer emotional distress”]; Yu v. Signet Bank/Virginia (1999) 69 Cal.App.4th 1377, 1397-98 [“[a]n assertion of legal rights in pursuit of one’s own economic interests does not qualify as “’outrageous’”]. See also, Cochran v. Cochran (1998) 65 Cal.App.4th 488, 494.)

6th C/A (Negligent Infliction). The Sixth Cause of Action is labeled negligent infliction of emotional distress. However, plaintiffs have simply repeated verbatim the charging allegations of the Fifth Cause of Action for intentional infliction of emotional distress. (Compare, paragraphs 61 and 66.) Further, insofar as the gist of this cause of action is negligent misrepresentation, it is entirely duplicative of the Second Cause of Action; and insofar as the gist of this cause of action is common law negligence other than negligent misrepresentation, plaintiffs have failed to allege facts showing that defendants owed plaintiffs a duty of care. (See, Wagner v. Benson (1980) 101 Cal.App.3d 27, 35.)

7th C/A (FDCPA). The Seventh Cause of Action is for violation of the Fair Debt Collection Practices Act. Plaintiffs concede in their opposition memorandum that USB is not a proper defendant in this cause action. (Supplemental Memorandum, filed on 2-28-14, page 4, footnote 2.) With regard to SPS, loan servicers are not “debt collectors” covered by the FDCPA. (See, Lal v. Am. Home Servicing, Inc. (E.D. Cal. 2010) 680 F. Supp. 2d 1218, 1224 [“[t]he law is well settled that FDCPA’s definition of debt collector ‘does not include … a mortgage servicing company’”].) Also, foreclosing on real property under a deed of trust is not an act to collect a debt, as contemplated under the FDCPA. (See, Nordeen v. Bank of Am. N.A. (In re Nordeen) (B.A.P. 9th Cir. 2013) 495 B.R. 468, 488.) Finally, even if the FDCPA were applicable, plaintiffs fail to allege in what specific respect SPS misrepresented “the character, amount or legal status of the debt owed to USB,” and plaintiffs fail to allege facts showing how SPS can be held liable for the acts of an individual whom plaintiffs characterize as “USB’s attorney.” (FAC, paragraphs 71 and 72.)

8th C/A (Negligence). The Eighth Cause of Action is labeled “negligence.” Like the Sixth Cause of Action, the Eighth Cause of Action would appear to be entirely duplicative of the Second Cause of Action for negligent misrepresentation. Further, as noted above, there is no cause of action for negligently misrepresenting the intention to perform a promise, and plaintiffs have failed to allege facts showing that defendants owed plaintiffs a common law duty of care. (See, Tarmann, supra, 2 Cal.App.4th at 159; Wagner, supra, 101 Cal.App.3d at 35.)

9th C/A (Breach of Fiduciary Duty). The Ninth Cause of Action is for breach of fiduciary duty. Plaintiffs have failed to allege facts establishing the existence of a fiduciary relationship between plaintiffs and defendants. (See, Oaks Management Corporation v. Superior Court (2006) 145 Cal.App.4th 453, 466, and decisions there cited.)