17-CIV-05831 LAFRANCE GRAVES, ET AL. VS. OCWEN SERVICING LLC, ET AL.

LAFRANCE GRAVES OCWEN SERVICING LLC
HAYK M. GRIGORYAN ADAM F. SUMMERFIELD

HEARING ON DEMURRER TENTATIVE RULING:

Defendant Ocwen Loan Servicing, LLC’s (Ocwen) Demurrer to Plaintiffs Lafrance and Gloria Graves’ 6-29-18 First Amended Complaint (FAC) is SUSTAINED as to all asserted claims, as set forth below. Code Civ. Proc. § 430.10(e).

As to the First Cause of Action for violation of Bus. & Prof. Code § 17200, the Demurrer is SUSTAINED WITH LEAVE TO AMEND. This claim is predicated on the alleged HBOR statutory violations and common law claims asserted in the other causes of action, which for the reasons state below, are not sufficiently plead.

As to the Second Cause of Action for violation of the Homeowner’s Bill of Rights (HBOR), the Demurrer is SUSTAINED WITH LEAVE TO AMEND. The FAC alleges violations of two HBOR statutes: Civ. Code §§ 2923.7 (single point of contact) and 2924.11 (dual-tracking). No cause of action is properly alleged under § 2923.7. As the Court previously noted in granting Ocwen’s Motion for Judgment on the Pleadings as to this claim, § 2923.7 does not apply absent allegations that Plaintiffs requested and were denied a single point of contact (SPOC), neither of which is alleged here. Indeed, Plaintiffs’ original Complaint conceded Plaintiffs were assigned a team of personnel as permitted under Section 2923.7. See Original Complaint, ¶¶ 20, 22, 24-25; Civ. Code § 2923.7(e) (Section 2923.7(e) provides that a single point of contact can mean “an individual or team of personnel. . . .”). As for § 2924.11, as Defendants note, prior to a foreclosure sale, Plaintiffs’ only remedy is injunctive relief (see § 2924.12). Plaintiffs seek only damages, which is not available pre-sale. Because the FAC does not allege that any foreclosure sale has occurred, no cause of action is stated. See Civ. Code §§ 2924.12(a)(1) and (b); Rockridge Trust v. Wells Fargo, N.A. (2013) 985 F.Supp.2d 1110, 1148-1149; Vasquez v. Bank of America, N.A. (N.D. Ca. 2013) 2013 WL 6001924 at *7.

As to the Third Cause of Action for negligence, the Demurrer is SUSTAINED WITHOUT LEAVE TO AMEND. As stated in the Court’s previous Order sustaining Ocwen’s Motion for Judgment on the Pleadings as to this claim, although there is some conflicting authority on the issue of whether a lender/servicer owes a duty of care to a borrower in the context of reviewing a loan modification application, the bulk of authority suggests there normally is no such duty of care. Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1095–1096 (a lender/servicer’s activities relating to the lending of money do not create a duty of care for purposes of a negligence claim); Lueras v. BAC Home Loans Servicing LP (2013) 221

October 9, 2018 Law and Motion Calendar PAGE 7 Judge: HONORABLE SUSAN GREENBERG, Department 3 ________________________________________________________________________ Cal.App.4th 49, 64 (collecting cases holding that reviewing a loan modification request is a traditional money lending activity). The cases finding a duty of care in the context of a loan modification involved allegations of conduct that do not apply here. See, e.g., Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872 (involving a construction loan, not a residential loan). Reviewing a loan modification application falls squarely within a lender/servicer’s role as a lender of money, and thus cannot support a negligence claim under the facts alleged here.

As to the Fourth Cause of Action for “fraud and/or misrepresentation,” the Demurrer is SUSTAINED WITH LEAVE TO AMEND. Although fraud must be plead with specificity, the FAC does not clearly allege what fraudulent misrepresentation or concealment occurred. Civ. Code § 1572; CACI 1900, 1901. This cause of action appears to be based on an alleged intentional misrepresentation. The Court previously sustained Ocwen’s Motion for Judgment on the Pleading as to this claim so that Plaintiff could amend the Complaint to specifically identify the alleged misrepresentation of fact. Plaintiffs then filed a FAC that is essentially identical to the original Complaint with respect to the fraud allegations. Similarly, if Plaintiffs allege fraud by concealment, the alleged concealment must be identified with particularity. Further, because Plaintiffs allege fraud against a corporate entity, they must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, specifically what they said or wrote, and when it was said or written. Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.

Ocwen’s unopposed Request for Judicial Notice as to various documents recorded in the San Mateo County Clerk-Recorder’s Office is GRANTED. Evid. Code § 452(c).

If the tentative ruling is uncontested, it shall become the order of the Court, pursuant to CRC Rule 3.1308(a)(1), adopted by Local Rule 3.10. If the tentative ruling is uncontested, DEMURRING PARTY is directed to prepare, circulate, and submit a written order reflecting this Court’s ruling verbatim for the Court’s signature, consistent with the requirements of CRC Rule 3.1312. The proposed order is to be submitted directly to Judge Susan L. Greenberg, Department 3.