Case Name: Lynette Trevillion v. FCI Lender Services, Inc., et al.
Case No.: 1-12-CV-226862

This action arises out of the servicing of residential mortgage loans issued to plaintiff Lynette Trevillion (“Plaintiff”). On November 18, 2014, the Court (Hon. Carol Overton) sustained the demurrer of defendants Litton Loan Servicing, L.P. (“Litton”) and Ocwen Loan Servicing, LLP (“Ocwen”) to Plaintiff’s second amended complaint (“SAC”) over Plaintiff’s opposition. The Court previously sustained Litton and Ocwen’s unopposed demurrers to the original and first amended complaints.

Plaintiff filed her operative third amended complaint (“TAC”) on December 1, 2014, asserting a claim for fraud and a claim for “intentional tort” asserting breach of fiduciary duty. At issue are demurrers by the following defendants to the TAC: (1) defendants Jaime Pierce (“Pierce”), Mark Brencick (“Brencick”), and J&J Financial Group, Inc. (“J&J”) (collectively, the “J&J Defendants”); (2) defendant Regent Financial, LLC (“Regent”); and (3) Litton and Ocwen. Litton and Ocwen’s demurrer was initially noticed to be heard on February 17, 2015, but the hearing was continued to February 24, 2015, so that all three demurrers came on for hearing on that date.

I. The J&J Defendants’ Demurrer

The TAC alleges that J&J extended Plaintiff a home equity line of credit on June 18, 2008, and Pierce and Brencick prepared her application materials. (See TAC, Attachment FR-2.a., pp. 1-2.) On June 24, 2008, J&J transferred its interest in this loan to Regent. (Id. at p. 2.)

The J&J Defendants demur to both causes of action in the TAC pursuant to Code of Civil Procedure (“CCP”) section 430.10, subdivisions (e) and (f).

A. Request for Judicial Notice

The J&J Defendants’ request for judicial notice of a deed of trust associated with Plaintiff’s property and assignment thereof is GRANTED. (See Evid. Code § 452, subd. (h); Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264 [“courts have taken judicial notice of the existence and recordation of real property records, including deeds of trust, when the authenticity of the documents is not challenged”].)

B. Uncertainty

As an initial matter, the demurrer to each claim on the ground of uncertainty is OVERRULED. Uncertainty is a disfavored ground for demurrer and a demurrer on this ground is typically sustained only where the pleading is so unintelligible that the defendant cannot reasonably respond. (See Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616 [“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.”].) Here, Plaintiff’s claims are alleged clearly enough to enable a response.

C. Demurrer to the First Cause of Action for Fraud

The J&J Defendants contend that Plaintiff’s fraud claim is not pleaded with adequate specificity and is time-barred.

Plaintiff’s claim against the J&J Defendants is premised on her allegations that she was promised an interest rate of 16% on her home equity loan, but was in fact charged interest at a rate of 21.9% (see TAC, Attachment FR-2.b., p. 1), and that various defendants concealed their intent to charge Plaintiff additional fees, including an origination fee of $3,500 charged by J&J (see id., Attachment FR-2.b., p. 1, Attachment FR-3, p. 1).

As urged by the J&J Defendants, Plaintiff fails to plead her fraud claims with adequate specificity. Fraud must be pleaded with particularity and by facts that show how, when, where, to whom, and by what means the representations were tendered. (See Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14.) Here, it is unclear which defendant Plaintiff alleges promised her an interest rate of 16% and when this promise was made, as well as who concealed J&J’s $3,500 origination fee and when this fee was charged.

In addition, Plaintiff’s fraud claim is governed by a three-year statute of limitations. (See CCP, § 338, subd. (d).) Her complaint was filed on June 19, 2012, more than four years after J&J issued the home equity loan on June 18, 2008. Plaintiff alleges that she became aware of the 21.9% interest rate on the home equity loan after receiving a statement in April 2012. (See TAC, Attachment FR-2.b., p. 2.) However, this allegation does not establish Plaintiff’s inability to have earlier discovered her claim despite reasonable diligence, which must be specifically pleaded to withstand demurrer on the basis of delayed discovery. (See Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.) With respect to concealment, given that it is unclear when the $3,500 J&J fee was charged, it is similarly unclear whether Plaintiff exercised reasonable diligence in discovering her claim based on concealment of that fee.

The J&J Defendants’ demurrer to the first cause of action is accordingly SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND for failure to state a claim.

D. Demurrer to the Second Cause of Action for Breach of Fiduciary Duty

As the Court found in its prior order, the J&J Defendants owed Plaintiff no duty of care as lenders of her home equity loan. (See Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979 [it is axiomatic that there is no fiduciary relation between a bank and its loan customers]; Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096 [“as a general rule, a financial institution owes no duty of care to a borrower … Liability to a borrower for negligence arises only when the lender actively participates in the financed enterprise beyond the domain of the usual money lender.”], internal quotations omitted.) It still does not appear from Plaintiff’s allegations or arguments in opposition to the J&J Defendants’ demurrer that the J&J Defendants exceeded their traditional role with respect to Plaintiff’s loan, or that the parties had any relationship beyond that of borrow and lender.

The J&J Defendants’ demurrer to the second cause of action is thus SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim.

II. Regent’s Demurrer

Plaintiff alleges that J&J transferred its interest in Plaintiff’s home equity loan to Regent on June 24, 2008, and Regent charged her a lender’s fee of $3,750. (See TAC, Attachment FR-2.a., p. 2, Attachment FR-2.b., p. 1.)

Regent demurs to both causes of action in the TAC pursuant to CCP section 430.10, subdivisions (e) and (f).

A. Request for Judicial Notice

Regent’s request for judicial notice is GRANTED as to a deed of trust associated with Plaintiff’s property and assignment thereof. (See Evid. Code § 452, subd. (h); Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th at p. 264.) The request for judicial notice is also GRANTED as to the Court’s (Hon. Carrie Zepeda) June 5th, 2014 order denying Plaintiff’s motion to set aside the Court’s (Hon. Carol Overton) December 17th, 2013 order sustaining Litton and Ocwen’s unopposed demurrer to the original complaint. (Evid. Code, § 452, subd. (d).)

B. Uncertainty

Regent’s demurrer on the ground of uncertainty is OVERRULED. (See Khoury v. Maly’s of California, Inc., supra, 14 Cal.App.4th at p. 616.) Plaintiff’s claims against Regent are alleged clearly enough to enable a response.

C. Demurrer to the First Cause of Action for Fraud

Like the J&J Defendants, Regent argues that Plaintiff’s fraud claim is not pleaded with adequate specificity and is time-barred. Plaintiff’s claim against Regent appears to depend upon her allegation that Regent concealed its intent to charge her a lender’s fee, rather than any affirmative misrepresentation.

Regent’s demurrer to the first cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND for failure to state a claim on both grounds raised by Regent. Again, it is unclear when the lender’s fee was charged and which defendants Plaintiff alleges concealed it. (See Charnay v. Cobert, supra, 145 Cal.App.4th at p. 185, fn. 14.) In addition, Plaintiff does not plead reasonable diligence to avoid the bar of the statute of limitations, given that Regent acquired Plaintiff’s loan on June 24, 2008 and it would appear that she should have discovered any claims arising from Regent’s acquisition of the loan at that time. (See Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 808.)

D. Demurrer to the Second Cause of Action for Breach of Fiduciary Duty

Regent’s demurrer to the second cause of action is SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim. As with the J&J Defendants, there is no indication that Regent exceeded its traditional role with respect to Plaintiff’s loan. (See Kim v. Sumitomo Bank, supra, 17 Cal.App.4th at p. 979; Nymark v. Heart Fed. Savings & Loan Assn., supra, 231 Cal.App.3d at p. 1096.)

III. Litton and Ocwen’s Demurrer

Plaintiff alleges that she obtained a first mortgage loan from defendant New Century Mortgage in March of 2006. (TAC, Attachment FR-2.a., p. 1.) The loan was transferred to Litton and then to Ocwen. (Id.)

Litton and Ocwen demur to the first and second causes of action on the grounds that each claim fails to state a cause of action and is uncertain. (CCP, § 430.10, subds. (e) and (f).)

A. Request for Judicial Notice

Litton and Ocwen’s request for judicial notice of deeds of trust associated with Plaintiff’s property, assignments thereof, and an associated substitution of trustee and notice of default is GRANTED. (See Evid. Code § 452, subd. (h); Fontenot v. Wells Fargo Bank, N.A., supra, 198 Cal.App.4th at p. 264.)

B. Uncertainty

Litton and Ocwen’s demurrer on the ground of uncertainty is OVERRULED. (See Khoury v. Maly’s of California, Inc., supra, 14 Cal.App.4th at p. 616.) Again, Plaintiff’s claims are clear enough to respond to.

C. The First Cause of Action for Fraud

Litton and Ocwen’s demurrer to the first cause of action is SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim. As the Court found in its prior order, Plaintiff alleges no misrepresentation or concealment attributable to these defendants, who did not originate either of Plaintiff’s loans and are not alleged to have changed the terms thereof or charged Plaintiff any fees. Plaintiff does not explain or support her allegation that the transfer of her mortgage included the transfer of any liability incurred by the originator. The Court previously sustained Litton and Ocwen’s demurrer on this basis, and Plaintiff still fails to offer any specific facts supporting a fraud claim against these defendants.

D. The Second Cause of Action for Breach of Fiduciary Duty

Litton and Ocwen’s demurrer to the second cause of action is also SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim. Again, there is no indication that these defendants exceeded their traditional roles with respect to Plaintiff’s loan. (See Kim v. Sumitomo Bank, supra, 17 Cal.App.4th at p. 979; Nymark v. Heart Fed. Savings & Loan Assn., supra, 231 Cal.App.3d at p. 1096.) The Court previously sustained Litton and Ocwen’s demurrer on this basis, and Plaintiff offers no new facts supporting this claim.