Case Number: KC066666    Hearing Date: July 28, 2014    Dept: J

Re: Gladwin Gill v. Capital One, N.A., et al. (KC066666)

DEMURRER TO FIRST AMENDED COMPLAINT

Moving Party: Defendant Capital One, N.A.

Respondent: Plaintiff Gladwin Gill

POS: Moving OK; Opposing OK; Reply served by regular mail contrary to CCP § 1005(c)

Plaintiff commenced this action alleging wrongful foreclosure on 2/18/14. The First Amended Complaint, filed on 5/23/14, asserts causes of action for:

1. Breach of Contract
2. Intentional Infliction of Emotional Distress
3. Declaratory Relief
4. Injunctive Relief
5. Unfair Business Practices

Plaintiff alleges that in 2005, he obtained a $1,000,000 loan from Bank of America (“Loan”), secured by a deed of trust for the real property located at 20600 East Via Verde Street, Covina CA 91724 (“Property”), but he defaulted prior to August 2009; that he entered into a loan modification agreement with Bank of America in August 2009, whereby his monthly payments and interest rate would be lowered for five years; that the Loan was assigned to Defendant Capital One in November 2011; that Capital One refused to honor the loan modification; and that Capital one improperly refused his monthly payments and wrongfully initiated a nonjudicial foreclosure.

On 3/12/14, the Court granted an uncontested preliminary injunction in favor of Plaintiff provided he makes monthly mortgage payments to Defendant Capital One, N.A. in the amount of $2,648.79.

Trial is set for 1/16/15.

JUDICIAL NOTICE:

The court takes judicial notice of the documents recorded with the Los Angeles County Recorder’s Office, attached to Defendant’s request as Exhibits A-D. (Ev C § 452(c); Lockhart v. MVM, Inc. (2009) 175 Cal.App.4th 1452, 1460.)

The court declines to take judicial notices of “[p]ertinent portions of the Consent Judgment” in the matter of United States of America vs. Bank of America Corp., et al. and Pinel v. Aurora Loan Services (N.D. Cal. 2011) 814 F. Supp.2d 930, on the grounds that they are not relevant for the purposes of the demurrer.

OBJECTION TO DECLARATION OF EUGENE S. ALKANA:

Defendant’s objection to the Declaration of Eugene S. Alkana, Esq. is overruled, as the Declaration is relevant on the issue of whether the demurrer should be sustained with leave to amend.

DEMURRER:

Defendant Capital One, N.A. (“Capital One” or “Defendant”) demurs to the First Amended Complaint (“FAC”) on the grounds that it fails to state facts sufficient to constitute a cause of action against Defendant.

FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT:

The elements for breach of contract cause of action are: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach (or anticipatory breach); and (4) resulting damage. (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

“The statute of frauds requires any contract subject to its provisions to be memorialized in a writing subscribed by the party to be charged or by the party’s agent. [Citations.] An agreement for the sale of real property or an interest in real property comes within the statute of frauds. That includes a promissory note and a deed of trust securing performance under the note. [Citation.] ‘An agreement to modify a contract that is subject to the statute of frauds is also subject to the statute of frauds.’ ” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1503.) Under these principles, a loan modification agreement changing the terms of the applicable note and deed of trust must be in a writing signed by the bank. (Ibid.)

To state a claim for promissory estoppel, plaintiff must sufficiently allege: (1) a clear and unambiguous promise; (2) reliance; (3) substantial detriment; and (4) resulting injury. (Poway Royal Mobilehome Owners Assn. v. City of Poway (2007) 149 Cal.App.4th 1460, 1471.) “[T]he doctrine of promissory estoppel is used to provide a substitute for the consideration which ordinarily is required to create an enforceable promise.” (Raedeke v. Gibraltar Sav. & Loan Assn., supra, 10 Cal.3d at 672-73.)

The FAC alleges that in or about August 2009, Bank of America offered Plaintiff a loan modification agreement (FAC ¶ 8, Exh. B); Plaintiff completed the Modification paperwork and returned it to Bank of America (Id. ¶ 9); Plaintiff then commenced payments pursuant to the Modification (Ibid.); in or about November 2011, Bank of America assigned the Promissory Note, as modified by the Modification, to Capital One (Id. ¶ 10); Capital One breached the Modification by demanding that Plaintiff pay the amount of $4,747.00 per month, an amount almost twice the amount of the agreed-upon monthly payment of $2,567.59 pursuant to the Modification and further demanded an interest rate of 5.625% rather than the modified rate of 3% (Id. ¶ 11); subsequent to November 2011, Plaintiff’s payments to Capital One were wrongfully rejected although the payments were timely made and in the correct amount pursuant to Modification (Id. ¶ 12); and that Defendants breached the terms of the Modification by wrongfully refusing Plaintiff’s tender of payment and by instituting non-judicial foreclosure against Plaintiff’s property (Id. ¶ 22).

However, the loan modification agreement attached as Exhibit “B” to the FAC is not signed by Bank of America. While Plaintiff alleges that Defendant is estopped to assert the validity of the modification because the completed Modification and payments were received and accepted by Bank of America (FAC ¶ 9), the FAC fails to adequately allege facts demonstrating substantial detriment, a necessary element of a claim for promissory estoppel.

Thus, the demurrer to the first cause of action is sustained .

SECOND CAUSE OF ACTION FOR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS:

Intentional Infliction of Emotional Distress requires (1) outrageous conduct by defendant; (2) intentional or reckless causing emotional distress; (3) severe emotional distress; and (4) causation. (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal. App. 4th 1228, 1259.) Conduct is extreme and outrageous when it exceeds all bounds of decency usually tolerated by a decent society, and is of a nature which is especially calculated to cause, and does cause, mental distress. Liability does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590; see also Cochran v. Cochran (1998) 65 Cal.App.4th 488, 494.)

The FAC fails to adequately allege any “outrageous” conduct by Defendant. Accordingly, the demurrer to the second cause of action is sustained.

THIRD CAUSE OF ACTION FOR DECLARATORY RELIEF:

An action for declaratory relief lies when there is an actual bona fide dispute between parties as to a legal obligation arising under the circumstances specified in CCP § 1060 and, in addition, the controversy must be justiciable – i.e., presents a question as to which there is more than one answer. (Western Motors Servicing Corp. v. Land Development & Inv. Co. (1957) 152 Cal.App.2d 509.)

The FAC fails to adequately allege an actual controversy. Thus, the demurrer to the third cause of action is sustained.

FOURTH CAUSE OF ACTION FOR UNFAIR BUSINESS PRACTICES:

In order to properly assert a claim for Unfair Business Practices, Bus & Prof C. § 17200, the complaint must allege a business practice that is unfair, unlawful or fraudulent, and an authorized remedy. (Bus & Prof C § 17200.)

The FAC fails to adequate allege facts to support a business practice that is unfair, unlawful or fraudulent. Accordingly, the demurrer to the fourth cause of action is sustained.

FIFTH CAUSE OF ACTION FOR INJUNCTIVE RELIEF:

Injunctive relief requires a wrongful act stating a cause of action and basis for equitable relief (e.g., ordinarily irreparable harm must be threatened, or a remedy at law is inadequate). (Brownfield v. Daniel Freeman Marina Hosp. (1989) 208 Cal. App. 3d 405, 410.)

The FAC fails to sufficiently allege a wrongful act by Defendant as a basis for the injunction. Accordingly, the demurrer to the fifth cause of action is sustained.

The court is inclined to grant Plaintiff’s request for leave to amend, but will hear from counsel for Plaintiff as to which cause(s) of action leave it sought. The court is not inclined to grant leave to amend the cause of action for intentional infliction of emotional distress.