Case Name: Jenhon Liu v. CitiMortgage, Inc., et al.

Case Number: 1-13-CV-257216

Defendant Lion Share (“Lion Share”) demurs to the fifth through seventh causes of action in the first amended complaint (“FAC”) by plaintiff Jenhon Liu (“Plaintiff”) on the ground of failure to allege sufficient facts. (See Code Civ. Proc. [“CCP”], § 430.10, subd. (e).) Plaintiff does not oppose Lion Share’s demurrer. Since Plaintiff does not oppose Lion Share’s demurrer to the fifth through seventh causes of action, Lion Share’s demurrer is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

Lion Share brings an unopposed motion to expunge lis pendens. (See CCP, § 405.30.) Since it is unopposed, Lion Share’s motion to expunge lis pendens is GRANTED. (See CCP, § 405.31 [“court shall order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim”].) However, Plaintiff has been granted leave to amend the FAC and the amended pleading may allege sufficient facts to state a property claim. Accordingly, the Court grants Plaintiff leave to record another notice of pending action as to the affected property after he files an amended complaint. (See CCP, § 405.36 [“the claimant may not record another notice of pending action as to the affected property without leave of the court in which the action is pending”].)

Defendants CitiMortgage, Inc. (“Citi”) and Verdugo Trustee Service Corporation (“Verdugo”) move to strike portions of the FAC and bring a demurrer to the FAC wherein Citi demurs to the third through sixth and eighth causes of action and Verdugo demurs to the fifth through sixth causes of action on the ground of failure to allege sufficient facts. (See CCP, §§ 430.10, subd. (e) & 435-436.)

Lion Share’s request for judicial notice and Citi and Verdugo’s request for judicial notice are GRANTED. (See Evid. Code § 452, subd. (d); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264 [courts may take judicial notice of the existence and recordation of real property records].)

Citi’s demurrer to the third cause of action (intentional infliction of emotional distress [“IIED”]) and fourth cause of action (negligent infliction of emotional distress [“NIED”]) on the ground of failure to allege sufficient facts is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Absent allegations that Citi threatened, insulted, abused or humiliated the borrower, Plaintiff, this conduct is not “outrageous,” and Plaintiff has not alleged sufficient facts in support of his IIED claim. (See Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1009.) With respect to the NIED claim, Plaintiff alleges that Citi owed him a duty of care not to foreclose on his property (“the Property”) unless he defaulted. (FAC, ¶ 74.) Since Plaintiff does not allege that Citi actively participated in any financial enterprise beyond that of a usual lender, he does not allege facts to support the duty element and accordingly fails to state a claim for NIED. (See Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096 [financial institution owes no duty of care to a borrower when the institution does not exceed the scope of its conventional role as a mere lender of money].)

Citi and Verdugo’s demurrer to the fifth cause of action (quiet title) and sixth cause of action (void/set aside trustee’s sale) on the ground of failure to allege sufficient facts is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Plaintiff does not allege that Citi and Verdugo assert an adverse claim to the Property, and therefore, has not stated a claim to quiet title. (See CCP, § 761.020; see also West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 801-802.) With respect to the sixth cause of action, Plaintiff alleges that he does not need to tender his indebtedness because the foreclosure sale is void, since Citi lacked authority to foreclose because (1) Plaintiff had not defaulted and Citi’s foreclosure therefore lacked a contractual basis, and (2) the Note and DOT were never assigned to Citi. (FAC, ¶¶ 88-94.) The allegation that Plaintiff had not defaulted does not support the claim that Citi lacked a contractual basis to foreclose because Plaintiff does not allege that the promissory note (“the Note”) and deed of trust (“DOT”) were void or that he obtained a loan modification. (Cf. Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1063 [foreclosure sale was void because the lender lacked a contractual basis where the parties executed a loan modification that waived late fees owed on the original note and the lender breached the modified agreement by insisting that the borrower pay the waived late fees and refusing to accept payments that did not include such fees].) Moreover, Plaintiff’s allegation that the assignment to Citi “never happened” (FAC, ¶ 92) contradicts his allegation that Citi became the successor in interest to the Note and DOT (id., ¶¶ 53-54). (See Manti v. Gunari (1970) 5 Cal.App.3d 442, 449, citing Beatty v. Pacific States Sav. & Loan Co. (1935) 4 Cal.App.2d 692, 697 [“where the truth of a fact is directly averred . . . and in another part of the same pleading the same fact is directly controverted or denied, . . . both cannot be true”].) Where the pleading contains contradictory allegations, the Court must accept as true the allegations that are least favorable to Plaintiff, i.e. that Citi had become the successor in interest. (See id.) Plaintiff does not allege sufficient facts to support the claim that the foreclosure was void because he does not allege how the assignment prejudiced him. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) Accordingly, Plaintiff has not alleged facts to support an exception to the tender rule and therefore has not alleged sufficient facts in support of his cause of action to set aside the foreclosure.
Citi’s demurrer to the eighth cause of action on the ground of failure to allege sufficient facts is OVERRULED. (See Motors, Inc. v. Times Mirror Co. (1980) 102 Cal.App.3d 735, 740 [a UCL claim based on an unfair business practice will survive demurrer if the pleading “states a prima facie case of harm, having its genesis in an apparently unfair business practice”].) Courts define “unfair” to include an act or practice that (1) causes injury to the consumer which “is substantial, is not outweighed by any countervailing benefits to consumers or to competition, and is not an injury the consumers themselves could reasonably have avoided” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 806, citation omitted); (2) “offends an established public policy or . . . is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers” (id., internal quotation marks and citations omitted); or (3) violates a public policy “‘tethered’ to specific constitutional, statutory or regulatory provisions” (id., citation omitted). Plaintiff alleges that Citi’s practice of foreclosing without a contractual basis, refusing to accept payments, and pursuing foreclosure based on its assertion that the Property was not insured constitutes an unfair business practice, and further alleges that he was injured because he lost his home and money. (FAC, ¶¶ 104-105.) These allegations are sufficient to state a claim for a violation of the UCL.

In light of the foregoing, Citi and Verdugo’s motion to strike is MOOT to the extent they move to strike paragraphs 67, 70-71, 81, and certain words from page 18, line 9 of the FAC, as those portions of the FAC set forth factual allegations and legal conclusions in support of the third through eighth causes of action. Citi and Verdugo’s motion to strike is GRANTED WITH 10 DAYS’ LEAVE TO AMEND to the extent they move to strike the words “[s]evere emotional distress” from page 10, line 23 of the FAC, since that is a legal conclusion asserted in connection with the second cause of action. (See generally, Perkins v. Super. Ct. (General Tel. Directory Co.) (1981) 117 CA3d 1, 6 [a legal conclusion unsupported by factual allegations may be stricken from a pleading].)