Case Number: BC649639 Hearing Date: August 09, 2018 Dept: 37

CASE NAME: Solomon v. JPMorgan Chase Bank, et al.

CASE NO.: BC649639

HEARING DATE: 8/9/18

DEPARTMENT: 37

CALENDAR NO.: 11

TRIAL DATE: 2/6/20 (FSC), 2/18/20 (Trial)

NOTICE: OK

SUBJECT: Demurrer to the Second Amended Complaint[1]

DEMURRING PARTY: Defendant JPMorgan Chase Bank, N.A.

OPPOSING PARTY: None
COURT’S TENTATIVE RULING

The court SUSTAINS the demurrer to the first and third causes of action and OVERRULES the demurrer to the fourth cause of action. At the hearing, Defendant Chase should be prepared to discuss whether the accompanying Hyatt Declaration is sufficient to meet the requirements of Code of Civil Procedure, section 430.41, subdivision (a), and the parties should be prepared to discuss whether a reasonable possibility exists that Plaintiff can cure the identified defects, in light of the deemed admissions. Counsel for Defendant JPMorgan Chase Bank, N.A. to give notice.
STATEMENT OF THE CASE

This action arises from Defendants JPMorgan Chase Bank, N.A. (“Chase,” erroneously sued as JPMorgan Chase Bank); Select Portfolio Servicing, Inc. (“SPS”) and Quality Loan Service Corp. (“Quality Loan”)’s alleged wrongful foreclosure and sale of certain real property located at 158 Racquet Club Dr., Compton, CA 90220 (the “Subject Property”). Plaintiff Nigest Solomon (“Solomon”) alleges that she purchased the Subject Property on December 21, 2006 with the assistance of a purchase money loan from Encore Credit Corporation (the “Note”), secured by a first lien deed of trust (“DOT”) recorded on January 5, 2007 as instrument number 20070023. (SAC ¶ 9.) Mortgage Electronic Registration Systems (“MERS”) allegedly assigned all beneficial interest in the DOT to Chase in 2008.

Plaintiff became delinquent in repayment of the note on November 2012, and Chase recorded a notice of default against the Subject Property on February 26, 2013. (Compl. ¶ 12; SAC ¶ 14.) Plaintiff alleges that she entered into an agreement with Chase on May 8, 2012 (the “2012 MOD”) which established a new principal balance of $430,967.58 on the Note, with $276,800 of the new principal balance to be treated as a non-interest bearing principal forbearance (the “deferred balance”). (SAC ¶ 13.) According to Plaintiff, the 2012 MOD provided that if she had not been 3 months in arrears on the 2012 MOD payments on June 1st of each year, beginning from June 1, 2012 and ending on June 1, 2014, then Chase was to forgive one third of the deferred balance. (Ibid.)

The Second Amended Complaint (“SAC”) alleges that Plaintiff received a letter from Chase on October 24, 2013 stating that she had been overcharged on the Note due to an accounting error and that the letter was accompanied by a check in the amount of $26,594. (SAC ¶ 14.) According to Plaintiff, despite Chase’s acknowledgement that Plaintiff was not in arrears with respect to repayment of the 2012 MOD, Chase failed to rescind the NOD and continued to treat her as if she was in arrears. (SAC ¶ 15.) Plaintiff further contends that Chase forced her into a repayment plan in September 2014, which modified the terms of the 2012 MOD and raised her monthly payment to $2,308.66. (SAC ¶ 16(1).) According to the SAC, Plaintiff fell behind on the scheduled payments on the Note in September 2015 and was offered a repayment plan as a form of foreclosure prevention and as an alternative to foreclosure on less favorable terms. (SAC ¶ 16(2).) Solomon alleges that she complied with the terms of the September 2015 repayment plan through March 2016, but that Defendants commenced foreclosure proceedings and recorded a notice of sale of the Subject Property on September 20, 2016. (SAC ¶ 18.) SPS rescinded the NOD on October 26, 2016 and recorded the rescission on October 28, 2016.

In the SAC, Plaintiff alleges four causes of action against Defendants for: (1) negligent infliction of emotional distress (“NIED”); (2) unfair business practices (in violation of the Unfair Competition Law (the “UCL”), Business and Professions Code, § 17200); (3) breach of contract and (4) violation of Civil Code, § 2924c(a)(2). [2]

On June 6, 2018, the court granted Defendant SPS’ motion to establish admissions and deemed the truth of the matters specified in SPS’ Request for Admissions, Set One (“RFA”) admitted. The court entered the order on June 27, 2018. (RJN Ex. A.)

Defendant Chase now demurs to all four causes of action of the SAC on the grounds that the SAC fails to state facts sufficient to constitute a claim against Chase and is uncertain as to Chase. Plaintiff did not file an opposition to the demurrer.
DISCUSSION
I. Request for Judicial Notice

The 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 a recorded document, and the document’s legally operative language . . . . From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265, disapproved on other grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 939.)

Defendant Chase requests the court take judicial notice of its June 27, 2018 Order granting Defendant SPS’ motion to establish admissions. (RJN, Ex. A.) This Order is judicially noticeable. (Evid. Code, § 452, subd. (c).)
DEMURRER
I. Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

On demurrer, a trial court has an independent duty to “determine whether or not the . . . complaint alleges facts sufficient to state a cause of action under any legal theory.” (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 734.) The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3 (Mahan), citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616 (Khoury).)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)
II. Discussion
A. First Cause of Action for NIED; Third Cause of Action for Breach of Contract

Negligent infliction of emotional distress is not an independent tort; it is merely convenient terminology descriptive of the context in which the negligence occurred. (Long v. PKS, Inc. (1993) 12 Cal.App.4th 1293, 1297 (Long).) As with any cause of action for negligence, the traditional elements of duty, breach of duty, causation and damages apply. (Ess v. Eskaton Props. (2002) 97 Cal.App.4th 120, 126 (Ess).) “Damages for severe emotional distress are recoverable in a negligence action when they result from the breach of a duty owed to the plaintiff that is assumed by the defendant or imposed on the defendant as a matter of law, or that arises out of a relationship between the two. (Long, 12 Cal.App.4th at p. 1297.)

A cause of action for breach of contract consists of the following elements: (1) the existence of a contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) the resulting damages to the plaintiff. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) A written contract must be pled verbatim in the body of the complaint, be attached to the complaint and incorporated by reference, or be pled according to its legal effect. (Bowden v. Robinson (1977) 67 Cal.App.3d 705, 718 (Bowden).)

Defendant Chase demurs to the first and third causes of action on the grounds that Plaintiff has admitted that at no time from December 21, 2006 through the present date, has she suffered emotional distress. (RJN Ex. 1 at 3, RFA No. 1.) Defendant further contends that Plaintiff admitted that Chase did not cause her any harm in connection with the subject loan. (Id. at p. 4, RFA No. 5.) Plaintiff did not file an opposition and does not respond to Defendant’s arguments.

Accordingly, the court SUSTAINS the demurrer to the first cause of action for NIED and the third cause of action for breach of contract.
B. Fourth Cause of Action for Violation of Civil Code, § 2924c(a)(2)

Civil Code, section 2924c, subdivision (a)(2) provides, in relevant part:

(2) If the trustor, mortgagor, or other person authorized to cure the default pursuant to this subdivision does cure the default, the beneficiary or mortgagee or the agent for the beneficiary or mortgagee shall, within 21 days following the reinstatement, execute and deliver to the trustee a notice of rescission that rescinds the declaration of default and demand for sale and advises the trustee of the date of reinstatement. The trustee shall cause the notice of rescission to be recorded within 30 days of receipt of the notice of rescission and of all allowable fees and costs.

(Civ. Code, § 2924c, subd. (a)(2).)

Defendant Chase does not discuss Plaintiff’s fourth cause of action in the subject demurrer. Accordingly, Defendant fails to demonstrate that this cause of action is defective on the face of the pleading.
C. Second Cause of Action for Violation of the UCL

The UCL proscribes “unfair competition,” which it defines as, among other things, “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code, § 17200.) By proscribing any “unlawful” business practice, the UCL “ ‘ “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech).) To assert standing under the UCL, a party must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.)

The SAC alleges that Defendants “1) breached the terms of the 2012 MOD; 2) failed to comply with Civil Code section 2924c (a)(2) by failing to rescind the NOD when it was established that PLAINTIFF was not in default; and 3) violated the Civil Code by initiating foreclosure proceedings by filing a notice of sale without first filing a valid notice of default.” (SAC ¶ 26.)

Defendant Chase demurs to the second cause of action on the grounds that Plaintiff’s UCL claim is derivative of the negligence and breach of contract claims and must fail if the supporting claims fail. (Dem. 7.) However, the third cause of action also claims that it is based on Defendant’s alleged violation of Civil Code, section 2924c, subdivision (a)(2). (SAC ¶ 26.) As Defendant did not address this basis of liability, Defendant fails to dispose of the entire third cause of action. (Poizner, supra, 148 Cal.App.4th at p. 119.) The court therefore OVERRULES the demurrer to the third cause of action for violation of the UCL.
III. Conclusion

The court SUSTAINS the demurrer to the first and third causes of action and OVERRULES the demurrer to the fourth cause of action. At the hearing, the parties should be prepared to discuss whether a reasonable possibility exists that Plaintiff can cure the identified defect, in light of the deemed admissions.

[1] Defendant Chase submits the declaration of Robert Hyatt (“Hyatt”) in support of the subject demurrer. Hyatt attests that his colleague, Brian Newman (“Newman”) spoke with Plaintiff’s counsel to discuss the case on June 13, 2018. According to Hyatt, the court had already granted SPS’ motion to establish admissions at the time of the discussion. (Hyatt Decl. ¶ 2.) Hyatt does not state that either he or Newman discussed the contents of the demurrer with Plaintiff’s counsel on June 13, 2018. The Hyatt Declaration is therefore insufficient to meet the requirements of Code of Civil Procedure, section 430.41, subdivision (a). At the hearing, Defendant Chase should be prepared to discuss whether its counsel’s efforts were sufficient to meet the statutory requirements.

[2] The court sustained SPS’ demurrer to the fourth cause of action on March 26, 2018, without leave to amend, and the court also ordered Defendant Quality dismissed without prejudice.