Case Name: Guidi v. Paul Financial, LLC, et al.
Case No.: 1-13-CV-242947
Defendants Roundpoint Mortgage Servicing Corporation (“Roundpoint”) and RBS Financial Products, Inc. (“RBSFP”) and Random Properties Acquisition Corp. III (“Random”) each demur to the third amended complaint (“TAC”) filed by plaintiffs Larry Guidi and Sharon Guidi (collectively, “Plaintiffs”).
This is an action arising out of the foreclosure of a property located at 1009 Heatherstone Avenue in Sunnyvale (the “Property”). In June 2007, Plaintiffs contacted an agent (the “Agent”) to refinance the loan on the Property. (TAC at ¶ 25.) Plaintiffs allege that they requested a 30-year fixed mortgage but that the loan they received was instead “an adjustable rate, interest only loan.” (Id. at ¶ 26.) Plaintiffs allege that the Agent did not disclose various terms of the loan but also acknowledge that “[a]t the time of signing, [they] noticed that the terms of the loan had changed into an adjustable rate, interest only loan,” and signed the documents anyway. (Id.) Plaintiffs ultimately obtained a loan from Paul Financial, LLC (“Paul”) in the amount of $618,000 (the “Loan”), secured by a deed of trust (“DOT”) on the Property. (TAC, Exhibit E; RBS’s Request for Judicial Notice (“RJN”), Exhibit A.)
On November 16, 2010, Plaintiffs were informed that Roundpoint was the new servicer for Loan. (TAC at ¶ 7, Exhibit B.) On May 10, 2012, an assignment of deed of trust was recorded transferring all beneficial interest in the DOT from Paul to RBSFP. (RJN, Exhibit B.) On May 31, 2012, a substitution of trustee was recorded by Roundpoint, as agent for RBS, substituting defendant Quality Loan Service Corporation (“Quality”) as trustee. (Id., Exhibit C.)
In early 2012, Plaintiffs defaulted on the Loan but did not contact their lender for a modification until January 2013. (TAC at ¶ 28.) Plaintiffs applied twice that month for a modification but were denied both times. (Id.) Quality subsequently recorded a notice of default reflecting an arrearage in the amount of $34,944.96. (RJN, Exhibit D.) On September 6, 2012, Quality recorded a notice of trustee’s sale. (Id., Exhibit E.) On September 27, 2012, all beneficial interest in the DOT was assigned to Random. (Id., Exhibit F.) Plaintiffs allege that RBSFP was the lender pursuant to the September 27, 2012 assignment.
On May 5, 2014, Plaintiffs filed the TAC asserting the following causes of action: (1) violation of Business & Professions Code § 17200 et seq. in loan servicing; (2) violation of Business & Professions Code § 17200 in foreclosure process; (3) set aside pending trustee’s sale based on wrongful foreclosure (Civ. Code, § 2923.5); (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) reformation of fraudulent contract and restitution; (7) quiet title; and (8) declaratory relief. The TAC alleges misconduct in two phases relative to the Loan: (1) servicing and (2) foreclosure.
On May 20, 2014, Roundpoint filed the instant demurrer to the fourth, fifth, sixth and seventh causes of action on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) On June 6, 2014, RBSFP and Random (collectively, “RBS”) filed a demurrer to the fourth, fifth, sixth, seventh and eighth causes of action on the grounds of uncertainty and failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subs. (e) and (f).)
Roundpoint’s request for judicial notice is GRANTED. (See Evid. Code, § 452, subd. (h); see Alfaro v. Committee Housing Imp. System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1382; Evans v. Cal. 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 the 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”].)
RBS’s request for judicial notice is GRANTED. (See Evid. Code, § 452, subd. (h); see Alfaro, supra, 171 Cal.App.4th at 1382; see also Fontenot, supra, 198 Cal.App.4th at 264-265.)
As an initial matter, in their opposition Plaintiffs concede the merits of Roundpoint’s arguments relative to the fourth, fifth and sixth causes of action. Consequently, Roundpoint’s demurrer to these claims on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.
Roundpoint’s demurrer to the seventh cause of action (quiet title) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Generally, “a mortgagor cannot quiet his title against the mortgagee without paying the debt secured.” (Shimpones v. Stickney (1934) 219 Cal.637; see also Kelley v. Mortgage Elec. Registration Sys. (N.D. Cal. 2009) 642 F.Supp.2d 1048, 1057.) Here, Plaintiffs fail to allege tender, much less a willingness to tender, which would be sufficient (see e.g., Newsom v. Countrywise Home Loans, Inc. (N.D. Cal. 2010) 714 F.Supp.2d 1000, 1015-1016), instead pleading only that they are “willing to allege tender at this point if the Court so requires.” (TAC at ¶ 16.)
Plaintiffs also concede the merits of RBS’s arguments relative to the fourth, fifth, sixth and eighth causes of action. Consequently, RBS’s demurrer to these claims on the grounds of uncertainty and failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.
RBS’s demurrer to the seventh cause of action on the ground of uncertainty is OVERRULED. A demurrer for uncertainty is disfavored and will be sustained only where the allegations of the complaint are so unintelligible that the defendant cannot reasonably respond to them. (See Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) The allegations of the seventh cause of action do not qualify as such.
For the same reasons articulated above with respect to Roundpoint’s demurrer to the seventh cause of action, RBS’s demurrer to this claim on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.
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