Case Number: YC067758 Hearing Date: April 14, 2014 Dept: SWM

Honorable Cary H. Nishimoto
Department M
Monday – April 14, 2014
Calendar No. ?

PROCEEDINGS

Michael Louis Kelly, et al. v. Unionbancal Corporation, et al.
YC068811
1. Union Bank, N.A’s Demurrer to Second Amended Complaint
2. Ross Gardner’s Demurrer to Second Amended Complaint
3. Ross Gardner’s Motion to Strike Portions of Second Amended Complaint

TENTATIVE RULING

Union Bank, N.A. and Ross Gardner’s Demurrers to Second Amended Complaint are overruled, in part, and sustained, in part.

As to the FIRST CAUSE OF ACTION for Violation of Unfair Competition Law – Business and Professions Code Sec. 17200 et seq., the demurrers are OVERRULED. Answer in 20 days.

Plaintiffs allege sufficient specific facts of an unlawful, fraudulent, or unfair business practice. Plaintiffs allege that they attempted to refinance their home loan with their lender Union Bank. Plaintiffs allege that defendant Union Bank conspired with its appraiser, defendant Gardner, to appraise plaintiffs’ home at an incorrect and artificially low value forcing plaintiffs to either not refinance or to pay down a substantial portion of their mortgage in order to meet the required loan to value ratio. SAC, ¶¶. 16-47.
Plaintiffs allege sufficient facts to demonstrate injury in fact for purposes of Business and Professions Code Section 17204. Plaintiffs allege that they paid money for the appraisal, that their credit rating was impacted negatively, and that they paid on their existing mortgage for a time at a higher rate. SAC, ¶ 56.

Further, plaintiffs have alleged an underlying fraud cause of action to support the B&P 17200 cause of action. See Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 718.

As to the SECOND CAUSE OF ACTION for Breach of Contract, the demurrers are SUSTAINED WITHOUT LEAVE TO AMEND.
“An alleged oral contract with vague and uncertain terms is not binding.” Halvorsen v. Aramark Uniform Services, Inc. (1998) 65 Cal.App.4th 1383, 1389. “Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable. To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.” Ladas v. Cal. State Auto. Assn. (1993) 19 Cal.App.4th 761, 770.

Here, the alleged contractual obligations that defendant Union Bank would utilize a “sufficiently competent appraiser” who would perform an appraisal to “generally accepted appraisal standards” is unduly vague and does not adequately define the scope of defendant’s obligations.

Further, the agreement to provide a “competent appraiser” simply amounts to a promise to do something that is required of by the law. Therefore, the contract is not supported by adequate consideration.

As to defendant Gardner, plaintiffs allege that the agreement was actually entered into by Union Bank and Gardner. SAC, ¶ 60. Thus, this specific allegation contradicts the formation of a contract between plaintiff and Gardner.

As to the THIRD CAUSE OF ACTION for Breach of the Covenant of Good Faith and Fair Dealing, the demurrers are SUSTAINED WITHOUT LEAVE TO AMEND.

As the second cause of action for breach of contract is not alleged with sufficient facts, the demurrer to the third cause of action must also be sustained. Further, the facts of the alleged breach of contract and breach of the covenant are duplicative. See Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.

As to the FOURTH CAUSE OF ACTION for Fraud – Intentional Misrepresentation, the demurrers are OVERRULED. Answer in 20 days.
Plaintiffs allege the required specific facts to state a cause of action. Plaintiffs have identified an individual named Kenneth Villa who supposedly called plaintiffs and offered a refinance opportunity. Plaintiffs allege that he was acting under the authority of defendant Union Bank to contact plaintiffs regarding the refinance of their home. SAC, ¶ 74. Plaintiffs allege specific facts as to when, where, to whom, and how the misrepresentations were made. SAC, ¶. 23. See Tarmann v. State Farm Mutual Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.

Plaintiffs allege specific facts as to the falsity of the representations, defendants’ knowledge of the falsity, intent to deceive, justifiable reliance, and damages. SAC, ¶¶ 16-24, 41.

As to defendant Gardner, plaintiff alleges that he was a co-conspirator in the fraudulent scheme to defraud plaintiffs and other similar customers. SAC, ¶¶ 18-22. “[C]ivil conspiracy is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. As Witkin explains, “If [the plaintiff] can show that each [of several defendants] committed a wrongful act or some part of it, e.g., that each made false representations, he has no need of averments of conspiracy. But if A alone made representations, the plaintiff can hold B and C liable with A only by alleging and proving that A acted pursuant to an agreement (conspiracy) with B and C to defraud.”” Kidron v. Movie Acquisition Corp. (1995) 40 Cal.4th 1571, 1581.

As to the FIFTH CAUSE OF ACTION for Defamation, the demurrers are SUSTAINED WITHOUT LEAVE TO AMEND.
Plaintiffs fail to allege facts to demonstrate that defendants published a false statement. Plaintiffs allege that a defamatory statement was published by Gardner to another agent of defendant Union Bank. The statement was: “The view photo submitted for this appeal does not give the subject property perspective and appears to be a ‘zoomed’ photo reflecting a much closer distance to the beach.” While defendants allege that they were shocked that they were accused of attempting to defraud a bank and that they believed that Gardner was claiming that plaintiffs were deceiving the bank, nowhere does plaintiff allege that the statement itself – that the photo appeared to be zoomed – was false.

Further, the allegations reveal a privilege under Civil Code §47(c). “A privileged publication or broadcast is one made: (c) In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information.”
Defendant Union Bank allegedly retained the appraiser, Gardner, and defendant was allegedly interested in the valuation of the property. Plaintiffs fail to allege facts of malice with respect to the statement. Instead, plaintiff alleged that Gardner did not use reasonable care to determine the truth or falsity of the statement. A pleading of malice requires that the statements were made with knowledge of the falsity or reckless disregard for the truth.

ROSS GARDNER’S MOTION TO STRIKE Portions of Plaintiffs’ Second Amended Complaint, DENIED.

As to item 1, plaintiffs have alleged specific facts of malice, oppression, or fraud to support the allegations and prayer for exemplary damages. Civil Code § 3294.

As to item 2, plaintiffs have identified, in their opposition, a statutory basis for attorneys’ fees pursuant to Code of Civil Procedure § 1021.5. The request for attorneys’ fees are based on “all applicable laws.” Whether plaintiffs may or may not be entitled to attorneys’ fees under Code of Civil Procedure § 1021.5 cannot be determined at this time as the awarding of attorneys’ fees under this Section is made upon the conclusion of the case with a noticed motion.