2017-00208161-CU-OR

Nicole Kelly vs. Pennymac Loan Services, LLC

Nature of Proceeding: Hearing on Demurrer to the 3rd Amended Complaint

Filed By: Roberts, Britt M.

Defendant PennyMac Loan Services LLC’s (“Defendant”) demurrer to the third cause of action for IIED of plaintiff Nicole Kelly’s (“Plaintiff”) Third Amended Complaint (“TAC”) is SUSTAINED without leave to amend.

Defendant’s request for judicial notice is granted. The Court, however, does not accept the truth of any facts within the judicially noticed documents except to the extent such facts are beyond reasonable dispute. (See Poseidon Devel. 152 Cal.App.4th at 1117-18; see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265 (“[A] court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in the recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity.”)

In this foreclosure action, Plaintiff alleges that on December 19, 2013, she financed the subject property and that the note was secured by a deed of trust on the property. She alleges Defendant recorded a Notice of Default (“NOD”) on September 23, 2014, and a Notice of Trustee’s Sale (“NTS1”) on July 7, 2016. The NTS1 she received set a

trustee’s sale for September 12, 2016. Plaintiff alleges that Defendant recorded a second Notice of Trustee’s Sale (“NTS2”) on August 5, 2016, setting a trustee’s sale for September 2, 2016. She alleges Defendant did not properly serve the NTS2 on her and that she had no knowledge of the NTS2 prior to September 2, 2016.

Plaintiff alleges the subject property was sold on September 2, 2016, and that she had no prior notice of the sale. She alleges that at the time of the sale she was in the process of preparing a bankruptcy petition to be filed prior to the September 12, 2016, sale date indicated in the NTS1. According to Plaintiff, if she had received proper notice of the NTS2, she would have taken appropriate action to protect her interest in the subject property. Plaintiff alleges she filed her bankruptcy petition on September 9, 2016, and when she attempted to give notice to Defendant of the petition she was informed a trustee sale had been scheduled for September 2, 2016 and the property had already been sold.

This is Defendant’s third time demurring to Plaintiff’s cause of action for IIED. The Court sustained with leave to amend Defendant’s two prior demurrers to this cause of action. Defendant contends the TAC still fails to state a cause of action for IIED on the grounds that her cause of action is largely unchanged from prior versions, alleges nothing more than non-judicial foreclosure, insufficiently alleges in a conclusory fashion that Plaintiff was “harassed and stalked by multiple individuals,” and fails to allege any facts demonstrating Plaintiff suffered severe emotional distress.

In opposition, Plaintiff contends Defendants obtained her home through fraud and intentionally misled her as to the actual sale date, which is sufficient to state a claim.

The established elements of a claim for intentional infliction of emotional distress are that a plaintiff must identify facts demonstrating that “(1) the defendant engaged in extreme and outrageous conduct with the intention of causing, or reckless disregard of the probability of causing, severe emotional distress to the plaintiff; (2) the plaintiff actually suffered severe or extreme emotional distress; and (3) the outrageous conduct was the actual and proximate cause of the emotional distress.” (Ross v. Creel Printing

& Publ’g Co. (2002) 100 Cal.App.4th 736, 744-45.)

The Court may, as a threshold matter, determine whether the alleged conduct rises to the level of “extreme and outrageous.” It is well-established that creditors enjoy a qualified privilege to pursue and protect their own economic interests by asserting their legal rights “even though [there may be a] substantially certain that in so doing emotional distress will be caused.” (Fletcher v. Western Nat’I Life Ins. Co. (1970) 10 Cal.App.3d 376, 395.) “An assertion of legal rights in pursuit of one’s own economic interests does not qualify as ‘outrageous’ under this standard.” (Yu v. Signet Bank/Virginia (1999) 69 Cal. App. 4th 1377, 1398.)

The conduct at issue “must be so extreme as to exceed all bounds of that usually tolerated in a civilized society.” (Trerice v. Blue Cross of California (1989) 209 Cal.App.3d 878, 883.) Moreover, where a claim for emotional distress is based on the same conduct alleged to show fraud, no recovery for emotional distress is permitted. ( Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67; see Channell v. Anthony (1976) 58 Cal.App.3d 290, 315; O’Neil v. Spillane (1975) 45 Cal.App.3d 147, 159.)

The Court finds Plaintiff has failed to state a cause of action for IIED. Again, Plaintiff continues to rest her claim for IIED upon allegations that Defendants engaged in fraud

because she never received notice of NTS2. Even accepting these allegations as true, the Court cannot conclude that Defendant’s alleged conduct of failing to give notice of NTS2 was extreme and outrageous as a matter of law. Plaintiff’s claim is more properly characterized as an economic one.

Further, Plaintiff’s vague allegation that she was “harassed and stalked by multiple individuals” does not allege that these individuals included Defendant itself, or as Defendant is an entity, persons associated with Defendant or taking such actions at Defendant’s direction or behest. Without any allegations that indicate Defendant is somehow responsible for the alleged harassment by the individuals, there is no showing Defendant acted outrageously. Plaintiff’s added allegation that Defendant indicated they would work with Plaintiff on foreclosure prevention, but did not, is also insufficient to rise to the requisite level of “extreme or outrageous” to support an IIED claim.

As to Defendants last argument regarding severe emotional distress, this argument is improper and not considered by the Court. “A party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint, cross-complaint, or answer on grounds that could have been raised by demurrer to the earlier version of the complaint, cross-complaint, or answer.” (Code Civ. Proc. § 430.41(b).) Defendants could have raised this argument previously on demurrer. Because they failed to do so, they are barred from doing so here.

For the foregoing reasons, Defendant’s demurrer to the third cause of action in the TAC is SUSTAINED. As the TAC represents Plaintiff’s third attempt to state a claim, and as she has failed to set forth any arguments indicating she can cure the defect, leave to amend is denied.