Case Number: KC066609 Hearing Date: April 09, 2014 Dept: O

Hartzheim, et al. v. Bank of America, N.A., et al. (KC066609)
Defendants Bank of America, N.A. and Recontrust Company, N.A.’s DEMURRER TO COMPLAINT

Respondent: Plaintiffs J. and Y. Hartzheim

TENTATIVE RULING

Defendants Bank of America, N.A. and Recontrust Company, N.A.’s demurrer to complaint is SUSTAINED with 10 days leave to amend.

The court critically notes that Plaintiffs have manipulated the font size in the first three pages of their opposition, resulting in a document that is extremely difficult to read. See CRC 2.104 – 2.108. Plaintiffs are reminded of the page limitations in CRC 3.1113(d).

1st – 2nd and 4th CAUSES OF ACTION: BREACH OF CONTRACT, BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING, and PROMISSORY ESTOPPEL:
The elements for a breach of contract cause of action are: (1) the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damages. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.) In alleging a breach of contract cause of action, it is necessary to specify whether the contract is written, oral or implied by conduct. (CCP 430.10(g).) In order to plead a written contract (the first element listed above), a plaintiff must, in addition to alleging the making of the contract, do one of the following: (1) set forth the contract in haec verba; or (2) plead the contract’s legal effect by alleging the substance of its relevant terms. (4 Witkin, California Procedure 4th Edition, ¿¿479-481.) In order to plead an oral contract, a plaintiff must plead its legal effect, i.e., allege the substance of the contractual terms. (Id., at 483.) The elements are for a cause of action for breach of implied covenant of good faith and fair dealing are: 1) Existence of contractual relationship; 2) implied duty; 3) breach; and 4) causation of damages. (E.g., Smith v. San Francisco (1990) 225 Cal.App.3d 38, 49; 1 Witkin Sum. Cal. Law (10th ed. 2005) Contracts § 800.)

Pars. 36-39 allege that Defendant offered Plaintiffs a TPP and Plaintiffs performed. Par. 40 alleges that Defendant breached the TPP by sending them a modification outside of HAMP guidelines. In their demurrer, Defendants point out that there is no requirement under the TPP or applicable law prohibiting an increase in loan payments. Plaintiffs, in opposition, do not address this issue. Instead, Plaintiffs reiterate that Defendants violated the TPP by not offering a loan modification. (Opposition, 3:6-8.) Yet, at 3:9-10, Plaintiffs admit that Defendants offered a loan modification. Thus, the complaint fails to allege breach under the TPP or HAMP.

It appears that Plaintiffs are alleging that the modification that Defendants offered was not satisfactory, and that Defendants made a separate oral promise not to cancel the permanent loan modification if Plaintiffs continued making payments under the TPP. (Complaint, Par. 41.)

However, this oral promise is time-barred. The oral contract was made in March or April 2010 (Complaint, Pars. 22-25) and subject to the 2-year statute of limitations per CCP 339. Plaintiff filed suit on 1/17/14.

Further, the oral promise is subject to the statute of frauds per CC 1624 and 1698. Plaintiffs contend their full performance qualifies as an exception to the statute of frauds, however, mere payment of money cannot constitute full performance. (Secrest v. Sec. Nat’l Mortg. Loan Trust 2002-2 (2009) 167 Cal.App.4th 544, 553.)

Demurrer is SUSTAINED with 10 days leave to amend.

3rd and 5th CAUSES OF ACTION: FRAUD and NEGLIGENT MISREPRESENTATION:
The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See CC 1709.) The elements of a cause of action for negligent misrepresentation are: (1)The defendant must have made a representation as to a past or existing material fact; (2) the representation must have been untrue; (3) regardless of his actual belief the defendant must have made the representation without any reasonable ground for believing it to be true; (4) the representation must have been made with the intent to induce plaintiff to rely upon it; (5) the plaintiff must have been unaware of the falsity of the representation; he must have acted in reliance upon the truth of the representation and he must have been justified in relying upon the representation; (6) and, finally, as a result of his reliance upon the truth of the representation, the plaintiff must have sustained damage. (Continental Airlines, Inc. v. McDonnell Douglas Corp. (1989) 216 Cal. App. 3d 388, 402.) Fraud actions are subject to strict requirements of particularity in pleading. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 216.) A plaintiff must allege what was said, by whom, in what manner (i.e. oral or in writing), when, and, in the case of a corporate defendant, under what authority to bind the corporation. (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.)

Plaintiffs allege that Defendant’s representative, Laurie Joval, instructed Plaintiffs to continue making payments under the TPP, and they would not lose their modification during the process. (Complaint, Pars. 22-30, 60.) The court finds the allegations are sufficiently specific.

However, Plaintiffs’ fraud claims are also time-barred. The representations were made in March or April 2010 (Complaint, Pars. 22-25) and subject to the 3-year statute of limitations per CCP 338. Plaintiff filed suit on 1/17/14.

Further, Plaintiffs fail to address Aas v. Superior court (2000) 24 Cal.4th 627, 643, which bars a person from recovering in tort for breach of duties that merely restate contractual obligations.

Demurrer is SUSTAINED with 10 days leave to amend.

6th CAUSE OF ACTION: UNFAIR BUSINESS PRACTICES:
The Unfair Business Practices Act shall include “any unlawful, unfair, or fraudulent business act or practice.” (B&P Code 17200.) A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.) Even a single incident – a one-time act that is unfair, unlawful or fraudulent – is sufficient to state a claim under 17200. (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969 fn. 3.)

Plaintiff’s Unfair Business Practices claim is based on the preceding defective claims. Further, Plaintiffs lack standing as they have not “lost money or property.” The monthly payments that Plaintiffs made were for payments Plaintiff already owed under the loan.

Demurrer is SUSTAINED with 10 days leave to amend.

7th CAUSE OF ACTION: VIOLATION OF CC 1788.17:
Notwithstanding any other provision of this title, every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of Sections 1692b to 1692j, inclusive, of, and shall be subject to the remedies in Section 1692k of, Title 15 of the United States Code. However, subsection (11) of Section 1692e and Section 1692g shall not apply to any person specified in paragraphs (A) and (B) of subsection (6) of Section 1692a of Title 15 of the United States Code or that person’s principal. (CC 1788.17.)

Plaintiffs contend a mortgage servicer may be a debt collector, citing nonbinding federal authorities: Reyes v. BOA Fargo Bank, N.A. (N.D. Cal., 1/3/11) 2011 WL 30759 and Walters v. Fidelity Mortg. of CA (E.D. Cal. 2010) 730 F.Supp.2d 1185. However, both cases involve collection allegations “beyond the score of the ordinary foreclosure process.”

Plaintiffs merely recite the statute at Pars. 125-130 without any supporting factual allegations of collection conduct beyond the ordinary foreclosure process. Demurrer is SUSTAINED with 10 days leave to amend.