Filed 9/17/19 Merritt v. Countrywide Financial Corp. CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

SALMA MERRITT et al.,

Plaintiffs and Appellants,

v.

COUNTRYWIDE FINANCIAL CORP. et al.,

Defendants and Respondents.

H041560

(Santa Clara County

Super. Ct. No. CV159993)

Plaintiffs Salma Merritt and David Merritt obtained two loans to purchase a home. After they were unable to repay the loans, they brought an action against several defendants for predatory lending practices. Plaintiffs appeal from a judgment of dismissal entered after the trial court granted motions for judgment on the pleadings brought by defendants. On appeal, plaintiffs contend: (1) Code of Civil Procedure section 438 precluded defendants’ motions for judgment on the pleadings; (2) the doctrines of law of the case and stare decisis barred the motions; (3) the trial court erred in finding that four of the five causes of action were barred by the statute of limitations; and (5) the trial court erred in dismissing the fraud-based causes of action based on the implied waiver rule. We affirm the judgment.

I. Factual and Procedural Background
II.
Prior to February 2006, defendants began a deceptive marketing campaign to promote “teaser” interest rates for residential loans for unsophisticated borrowers, including plaintiffs. Defendants charged fees, which far exceeded their costs, in connection with the loans. They also falsely inflated the value of real property, thereby raising their profits.

On February 27, 2006, plaintiffs agreed to purchase residential property in Sunnyvale for $729,000. Plaintiffs knew at that time that Salma’s disability payments would be reduced in a year or two. A loan officer at Wells Fargo Bank N.A. (Wells Fargo) told plaintiffs that CHL’s loan products “would better suit [their] needs” due to their credit status.

In March 2006, plaintiffs contacted Colyer, the branch manager of CHL, about whether CHL would loan them 90 to 95 percent of the purchase price. They told him that one broker was offering to provide a loan with monthly payments of $4,600 and another was offering a loan with monthly payments of $4,800. Colyer stated that he could provide them with a loan with payments “ ‘maybe 40 percent lower’ ” than the quotes they had received from other lenders. In mid-March 2006, plaintiffs were told that they were eligible for a loan of $729,000 with monthly payments of $1,800 to $2,200. Colyer discouraged them from making a down payment and later told plaintiffs that CHL would provide two loans: “[T]he first mortgage will be fixed for five years at about $3,200 monthly and what we call a second or HELOC [Home Equity Line of Credit] . . . for about $1,200” monthly. Plaintiffs complained that these payments were more than he had initially promised. However, Colyer “countered with promises, half-truths and lies” and used “their naivety to trick them into accepting a loan program totally unsuitable for them.”

Plaintiffs eventually sought a loan of $739,000, which would allow them to purchase the property and to make improvements of $10,000. On March 27, 2006, they signed the loan documents. They signed a promissory note by which they obtained a loan of $591,200 from CHL, and a deed of trust was recorded against the property. The note was entitled “ ‘InterestOnly’[] ADJUSTABLE RATE NOTE” and stated that the initial fixed interest rate would be 6.5 percent but would change to an adjustable rate based on the LIBOR rate as published in the Wall Street Journal. It also stated that the adjustable interest rate would never be greater than 11.5 percent. On the same day, plaintiffs signed a Home Equity Confirmation Agreement with CHL by which they also obtained a loan of $147,800 (second loan), which was secured by a second deed of trust. This document stated that it was an “adjustable rate mortgage loan, and the interest rate was subject to periodic adjustment” based on the “WSJ Prime Rate” index. It also stated that the current interest rate was 7.5 percent and the interest rate would never be greater than 18 percent. Plaintiffs were not given all of the documents that they had signed.

When plaintiffs read some of the loan documents the following day, they discovered that they had been given two loans and not a single Federal Housing Administration (FHA) loan, which Colyer had promised them. They contacted Colyer, who told them the payments would be over $4,569. Plaintiffs became “surprised and concerned” when Colyer also falsely told them that the “loans were conventional and the same as prime loans.” He stated that if they made the payments for a year, he guaranteed that they would be given a new loan that would reduce their payments.

Plaintiffs made monthly payments on both loans until September 2008. At that time, Salma’s disability payments were significantly decreased and they could no longer afford to make the mortgage payments. Plaintiffs defaulted on their loans.

Bank of America later took over the servicing of plaintiffs’ loans. “On or about January 20, 2009,” Bank of America provided plaintiffs with copies of their loan documents, which were different from those that they recalled signing. About a week later, plaintiffs attempted to rescind the loans. Bank of America responded by offering a modification of both loans.

On February 24, 2009, plaintiffs signed two loan modification agreements with CHL. They entered into a “Loan Modification Agreement,” which “amend[ed] and supplement[ed]” the promissory note and deed of trust. This agreement deemed the loan current and converted the loan’s adjustable interest rate to a fixed interest rate. It set the interest rate at 4.5 percent with monthly payments of interest only of $2,261.36 for the period between March 1, 2009 until April 1, 2012. At that time, the fixed interest rate would be 6.5 percent and payments of principal and interest would be $4,134.09. The agreement acknowledged that the unpaid principal balance of the loan was “$603,028.16 as of April 1, 2009.” Plaintiffs also affirmed that they would be “bound by, and comply with, all terms and provisions thereof, as amended by this Agreement.”

Plaintiffs entered into another “Loan Modification Agreement,” which “modif[ied] and supplement[ed]” the second loan. It deemed the loan current, stated that the unpaid balance was $95,750.50 and reduced the margin stated in the Home Equity Agreement from three to zero percentage points. Plaintiffs also affirmed that the terms of the second loan that were not modified remained “in full force and effect.”

Plaintiffs made no further payments on the loans. On March 18, 2009, plaintiffs filed suit in the United States District Court for the Northern District of California against Countrywide defendants, Wells Fargo, and Wells Fargo’s Chief Executive Officer, and alleged state and federal claims. They did not name Bear Stearns as a defendant. On October 28, 2009, the district court dismissed the federal claims with prejudice. It also declined to retain supplemental jurisdiction over the state law claims and dismissed these claims “without prejudice to Plaintiffs’ right to refile their non-federal claims in state court.”

Plaintiffs appealed from the order dismissing their federal claims, but not from dismissal of the state law claims.

On December 22, 2009, plaintiffs filed their state law claims in Santa Clara County. They did not name Bear Stearns as a defendant.

On November 9, 2010, the trial court sustained the state law claims of Wells Fargo without leave to amend. Plaintiffs appealed. In December 2011, this court reversed the judgment and directed the trial court to sustain Wells Fargo’s demurrer to the first and second causes of action with leave to amend to state a single cause of action for conspiracy to defraud. (Merritt v. Wells Fargo Bank, N.A. (Dec. 19, 2011, H036259) [nonpub. opn.].)

In April 2011, plaintiffs filed their third amended complaint. They changed the identity of defendants “Does 1-30” to “the CEO, Board of Directors, President(s), Vice President(s) and other managers of Bear Stearns.”

In August 2011, the trial court sustained Bank of America’s and Lewis’s demurrer to the third amended complaint without leave to amend. The demurrer, which was brought by CFC, CHL, Colyer, Sambol, and Mozilo, to the first (conspiracy to commit fraud), third (conspiracy to commit unfair business practices), fourth (conspiracy to commit a violation of Bus. & Prof. Code, § 17200), and fifth (conspiracy to commit untrue or misleading advertising – violation of Bus. & Prof. Code, § 17500) causes of action was overruled. Their demurrer to the second (conspiracy to commit breach of fiduciary duty), sixth (conspiracy to breach title insurance contract), and seventh (conspiracy to commit intentional infliction of emotional distress) causes of action was sustained without leave to amend. Plaintiffs appealed. In September 2013, this court reversed the judgments in favor of Bank of America and Lewis. (Merritt v. Mozilo (Sept. 13, 2013, H037414 [nonpub. opn.].)

On March 8, 2012, plaintiffs filed the FAC. It alleged five causes of action: (1) conspiracy to commit fraud; (2) negligent misrepresentation; (3) conspiracy to commit unfair business practices (below costs sales); (4) conspiracy to commit unfair business practices (violation of Bus. & Prof. Code, § 17200 – fraudulent acts); and (5) conspiracy to commit unfair business practices (untrue or misleading advertising – violation of Bus. & Prof. Code, § 17500).

The FAC changed the identity of “Doe I” by naming “Bear Stearns” as Doe I. It alleged that Bear Stearns had engaged in the conspiracy from 2000 to 2012. It also alleged that Bear Stearns filed bankruptcy in 2008 and “JP Morgan Chase” had “purchased” Bear Stearns, and Chase was “liable for the illegal acts of Bear Stearns.”

On July 16, 2014, the Ninth Circuit Court of Appeals reversed the district court’s dismissal of plaintiffs’ Truth in Lending Act (TILA) rescission claim and vacated its dismissal of plaintiffs’ Real Estate Settlement Practices Act (RESPA) claim. (Merritt v. Countrywide Fin. Corp. (9th Cir. 2014) 759 F.3d 1023; Merritt v. Countrywide Fin. Corp. (2014) 583 Fed.Appx. 662.) On remand, after plaintiffs amended their complaint, the district court dismissed their claims. Plaintiffs appealed, and judgment was recently affirmed in Merritt v. Countrywide Financial Corporation (9th Cir. Aug. 26, 2019, No. 16-16311) 2019 WL 4014341.

On July 15, 2014, the Countrywide defendants filed a motion for judgment on the pleadings as to each of the five causes of action. In August 2014, the trial court issued a tentative ruling in which it denied the motion. Following a hearing, the trial court granted the motion without leave to amend. The trial court found that the first, second, third, and fifth causes of action were barred by the statute of limitations. The trial court also found that the first, second, fourth, and fifth causes of action were barred by the implied waiver rule. The trial court dismissed the third cause of action for below cost sales, because plaintiffs were not competitors in the same market with Countrywide defendants.

On September 29, 2014, plaintiffs filed a motion for reconsideration of the order. A few days later, Chase filed a motion for judgment on the pleadings. The trial court denied plaintiffs’ motion for reconsideration on the ground that plaintiffs had “not offered any ‘new or different facts, circumstances, or law’ justifying reconsideration.” The trial court granted Chase’s motion for judgment on the pleadings without leave to amend. The trial court reasoned that Chase’s liability was based on allegations that it conspired with Countrywide defendants and since the court had granted Countrywide defendants’ motion for judgment on the pleadings, there could be no liability against Chase.

III. Discussion
IV.
Plaintiffs contend that the trial court erred when it granted defendants’ motions for judgment on the pleadings.

A. Standard of Review
B.
“The standard of review for a motion for judgment on the pleadings is the same as that for a general demurrer: We treat the pleadings as admitting all of the material facts properly pleaded, but not any contentions, deductions or conclusions of fact or law contained therein.” (Duncan v. County of Santa Barbara (2006) 135 Cal.App.4th 1281, 1298.) We will not, however, credit the allegations in the complaint where they are contradicted by facts that either are subject to judicial notice or are evident from exhibits attached to the pleading. (Hill v. Roll Internat. Corp. (2011) 195 Cal.App.4th 1295, 1300 (Hill).) We review de novo whether a cause of action has been stated as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) We do not review the validity of the trial court’s reasoning and therefore will affirm its ruling if it was correct on any theory. (Hill, at p. 1300.)

We also note that “ ‘it is fundamental that a reviewing court will ordinarily not consider claims made for the first time on appeal which could have been but were not presented to the trial court. [Citation.]’ [Citation.] We will therefore ‘ignore arguments, authority, and facts not presented and litigated in the trial court.’ [Citation.] Such arguments raised for the first time on appeal are generally deemed forfeited. [Citation.]” (Perez v. Grajales (2008) 169 Cal.App.4th 580, 591-592 (Perez).)

C. Code of Civil Procedure Section 438
D.
Plaintiffs contend that the trial court erred procedurally when it granted Countrywide defendants’ motions for judgment on the pleadings, because defendants had raised the same grounds in their motion that had previously been overruled on demurrer.

Code of Civil Procedure section 438 states that a defendant may make a motion for judgment on the pleadings if “either of the following conditions exist: [¶] (i) The court has no jurisdiction of the subject of the cause of action alleged in the complaint. [¶] (ii) The complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., § 438, subd. (c)(1)(B).) Subdivision (g)(2) of this statute provides that a motion for judgment on the pleadings may be made when “[t]he moving party did not demur to the complaint . . . on the same grounds as is the basis for the motion provided for in this section.”

In their motion for judgment on the pleadings, Countrywide defendants asserted that the first (conspiracy to commit fraud), second (negligent misrepresentation – Wells Fargo), and fifth (conspiracy to commit unfair business practices in violation of Bus. & Prof. Code § 17500) causes of action did not state facts sufficient to constitute causes of action, because they were barred by the statute of limitations and the doctrines of equitable estoppel and implied waiver. They also claimed that the third cause of action (conspiracy to commit unfair business practices in violation of § 17043) did not state facts sufficient to constitute a cause of action, because it was barred by the statute of limitations and plaintiffs lacked standing. They further argued that the first, second, fourth (conspiracy to commit unfair business practices in violation of § 17200), and fifth causes of action did not state facts sufficient to constitute a cause of action, because they were barred by the implied waiver rule and equitable estoppel.

In ruling on the motion, the trial court granted plaintiffs’ request to take judicial notice of Merritt v. Wells Fargo Bank, N.A., supra, H036259, Merritt v. Mozilo, supra, H037414, and Merritt v. Countrywide Fin. Corp., supra, 759 F.3d 1023. The trial court concluded that these opinions did not support plaintiffs’ contention that Code of Civil Procedure section 438 barred Countrywide defendants’ motion for judgment on the pleadings. We agree.

As to Merritt v. Wells Fargo Bank, N.A., supra, H036259 and Merritt v. Mozila, supra, H037414, this court did not consider whether plaintiffs’ complaints, which have since been amended, failed to state causes of action, because they were barred by the statute of limitations or the doctrines of equitable estoppel and implied waiver. As to Merritt v. Countrywide Fin. Corp., supra, 759 F.3d 1023, the federal appellate court held that the statute of limitations under the federal RESPA might be equitably tolled and remanded for further proceedings. Thus, there is nothing in these opinions to indicate that Countrywide defendants demurred to the complaint on the same grounds as they did in their motion for judgment on the pleadings.

The trial court also granted plaintiffs’ request for judicial notice of: a demurrer, dated April 29, 2011, by Countrywide defendants to the third amended complaint; and Judge Pierce’s order, dated August 10, 2011, which was considered by this court in Merritt v. Mozila, supra, H037414. The trial court concluded that plaintiffs failed to “identify where in any previous demurrer Defendants made an argument which is a basis for the current motion.” Thus, plaintiffs have forfeited this issue on appeal. (Perez, supra, 169 Cal.App.4th at pp. 591-592.)

Assuming that the issue has not been forfeited, plaintiffs’ argument fails. In relying on the demurrer to the third amended complaint brought by some of the Countrywide defendants, plaintiffs contend that these defendants asserted that “the complaint failed to allege facts sufficient to state claims for fraud and UCL violations” because they signed a modification agreement and thus “waived their rights.” Since their citations to the record do not support their position, we disregard this contention. (Grant-Burton, supra, 99 Cal.App.4th at p. 1379.)

Plaintiffs next contend that these defendants asserted that the claims were barred by the statute of limitations. However, the statute of limitations defense was asserted in the demurrer only as to the intentional infliction of emotional distress cause of action, which is not included in the FAC. Some of the Countrywide defendants demurred to the conspiracy to commit unfair business practices in violation of the section 17500 cause of action on the following grounds: none of defendants’ acts constituted unfair business practices under section 17500; plaintiffs lacked standing; and plaintiffs failed to set forth facts demonstrating a conspiracy. But Countrywide defendants’ motion for judgment on the pleadings as to this cause of action was based on the statute of limitations and the doctrines of equitable estoppel and implied waiver. As to the cause of action for conspiracy to commit unfair business practices in violation of section 17200, these defendants demurred to the third amended complaint on the ground that plaintiffs lacked standing. Countrywide defendants contended in their motion for judgment on the pleadings, however, that this cause of action was barred by the doctrines of equitable estoppel and implied waiver. Thus, Countrywide defendants did not raise the same grounds in their motion for judgment on the pleadings that had previously been overruled on demurrer to the third amended complaint.

Moreover, assuming that Countrywide defendants did not meet the requirements of Code of Civil Procedure section 438, there was no error. After the enactment of this statute in 1994, the California Supreme Court recognized that a motion for judgment on the pleadings was “allowed by common law. [Citations.] Generally, as such motions were, so they remain.” (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 482, fn. 2.) “ ‘A motion for judgment on the pleadings may be made at any time either prior to the trial or at the trial itself. [Citation.]’ [Citation.] Such motion may be made on the same ground as those supporting a general demurrer, i.e., that the pleading at issue fails to state facts sufficient to constitute a legally cognizable claim or defense. [Citation.]” (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650.) Under the common law, “[t]he motion may be made even when a general demurrer has been previously overruled. The interests of all parties are advanced by avoiding a trial and reversal for defect in pleadings. The objecting party is acting properly in raising the point at his first opportunity, by general demurrer. If the demurrer is erroneously overruled, he is acting properly in raising the point again, at his next opportunity. If the trial judge made the former ruling himself, he is not bound by it. [Citation.] And, if the demurrer was overruled by a different judge, the trial judge is equally free to reexamine the sufficiency of the pleading. [Citations.]” (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 877.)

Plaintiffs’ reliance on Higgins v. Del Faro (1981) 123 Cal.App.3d 558 is misplaced. In Higgins, the defendant filed a demurrer to the complaint on the ground that the escrow agreement, which had been attached as an exhibit to the complaint, was not the agreement between the parties and thus the plaintiff had failed to state a cause of action. (Id. at p. 560.) The trial court overruled the demurrer. (Ibid.) The plaintiff later made a motion to amend the complaint to include the parties’ agreement. (Id. at p. 561.) The trial court denied the motion and granted a judgment on the pleadings in favor of the defendant. (Ibid.) The reviewing court stated: “The original demurrer to the complaint should have notified plaintiff of the insufficiency of her pleadings and the amendment should have been made at that time. . . . Had the demurrer been sustained, an amendment was in order, and the issue now before this court would probably have been resolved. Also, the overruling of the demurrer led plaintiff to believe a cause of action had been stated and that they could introduce evidence to support it at trial.” (Id. at p. 565.) Higgins is distinguishable from the present case. Here, unlike in their demurrer, Countrywide defendants’ motion for judgment on the pleadings focused on the modified loan agreements attached to the FAC, which conflicted with the allegations of that pleading. Moreover, Countrywide’s motion for judgment on the pleadings did not set forth the same issues that had been raised in their prior demurrer.

E. Doctrines of Law of the Case and Stare Decisis
F.
Plaintiffs argue that the trial court failed to follow the doctrines of law of the case and stare decisis.

“ ‘ “The law of the case doctrine states that when, in deciding an appeal, an appellate court ‘states in its opinion a principle or rule of law necessary to the decision, that principle or rule becomes the law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal.’ ” [Citation.]’ [Citation.]” (Hotels Nevada, LLC v. L.A. Pacific Center, Inc. (2012) 203 Cal.App.4th 336, 356 (Hotels).) “The doctrine applies to a rule of law necessarily decided in an appellate decision and determines ‘ “the rights of the same parties in any subsequent retrial or appeal in the same case.” ’ [Citations.]” (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 108 (Optional).)

“Under the doctrine of stare decisis, all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction. . . . Decisions of every division of the District Courts of Appeal are binding upon all the justice and municipal courts and upon all the superior courts of this state . . . . Courts exercising inferior jurisdiction must accept the law declared by courts of superior jurisdiction. It is not their function to attempt to overrule decisions of a higher court. [Citations.]” (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455 (Auto Equity).)

“It is a fundamental rule of that doctrine that a decision is not authority for what is said in the opinion but only for the points actually involved and actually decided. [Citations.] . . . The statement of a principle not necessary to the decision will not be regarded either as a part of the decision or as a precedent that is required by the rule of stare decisis to be followed [citations] . . . .” (Childers v. Childers (1946) 74 Cal.App.2d 56, 61-62 (Childers).)

Here, the issues on appeal are: whether the statute of limitations barred four of the five causes of action; and whether plaintiffs impliedly waived or were equitably estopped from alleging fraud-based causes of action after they entered into the two loan modification agreements.

Plaintiffs contend that this court held in Merritt v. Mozila, supra, H037414 that the allegations in the complaint were legally sufficient to hold Bank of America and Lewis accountable for conspiracy to commit fraud in the modification of the loans. But plaintiffs have overlooked that the issues of the applicability of the implied waiver rule, equitable estoppel, or statute of limitations were not “actually involved and actually decided” in this opinion. (Childers, supra, 74 Cal.App.2d at pp. 61-62.) Plaintiffs also rely on language from this decision that the “loan modification ‘was a continuation of predatory lending practices of Countrywide.’ ” This quotation is taken from a summary of the allegations in complaint. This court did not consider in Merritt v. Mozilo, supra, H037414 whether any exhibits attached to the FAC refuted these allegations.

As to Merritt v. Wells Fargo Bank, N.A., supra, H036259, Countrywide defendants were not parties to this appeal, which involved only Wells Fargo. Thus, law of the case does not apply. (Optional, supra, 18 Cal.App.5th at p. 108.) Plaintiffs focus on footnote 4 of the opinion and claim that this court “found that the allegations showed that [they] never consummated the modification contract.” Plaintiffs have mischaracterized the record. This footnote states: “In their amendment to the first amended complaint, the Merritts allege they refused to consummate the loan modification agreement and have not made any payments pursuant to the agreement.” (Merritt v. Wells Fargo Bank, N.A., supra, H036259.) This court summarized the allegations in the complaint but did not decide whether plaintiffs signed and consummated the modification agreements.

Plaintiffs appear to be arguing that the doctrines of law of the case and stare decisis applied to Judge Pierce’s earlier ruling on the demurrer. As previously discussed, the issues considered and decided in Judge Pierce’s order overruling the demurrer were different from those before the trial court in this case. (Hotels, supra, 203 Cal.App.4th at p. 356.) The doctrine of stare decisis is also inapplicable, because this ruling was not made by a court of superior jurisdiction. (Auto Equity, supra, 57 Cal.2d at p. 455.)

G. Statute of Limitations
H.
Plaintiffs contend that the trial court erred when it found that the first, second, third, and fifth causes of action were barred by the statute of limitations.

The parties agree that the three-year statute of limitations as set forth in Code of Civil Procedure section 338, subdivision (d) applies to the first and second causes of action for fraud and misrepresentation as well as to the third cause of action for below costs sales.

Plaintiffs claim, however, that the statute of limitations for the fifth cause of action for a violation of section 17500 is four years under section 17208. Plaintiffs’ opening brief fails to support their position with argument and citations to authority. (Cal. Rules of Court, rule 8.204(a)(1)(B).) Plaintiffs also failed to raise this argument before the trial court. Thus, the issue has been forfeited. (Perez, supra, 169 Cal.App.4th at pp. 591-592.)

Even assuming that plaintiffs have not forfeited this issue, it fails. The fifth cause of action alleged a violation of section 17500, the false advertising law (FAL). It alleged that CHL falsely advertised it would provide a loan with “no closing cost and interest rates as low at 1%” that would “meet [plaintiffs’] goal of $2,000 or so monthly payments.”

Section 17208 sets forth a four-year statute of limitations for “[a]ny action to enforce any cause of action pursuant to this chapter,” that is, chapter 5 of part 2 of division 7 of the General Business Regulations, which includes only sections 17200-17210. But section 17500 is contained in another chapter: chapter 1 of part 3 of division 7 of the General Business Regulations. Thus, section 17208 does not govern the FAL claim. Since the FAL contains no statute of limitations, the three-year statute of limitations for “[a]n action upon a liability created by statute” applies. (Code Civ. Proc., § 338, subd. (a); see, e.g., Yumul v. Smart Balance, Inc. (N.D.Cal. 2010) 733 F.Supp.2d 1117, 1130.)

Plaintiffs next argue that 28 United States Code section 1367, subdivision (d) tolled the statute of limitations for their state law claims until the appeal of their federal law claims in federal court was final.

28 United States Code section 1367, subdivision (d) provides: “The period of limitations for any claim asserted under subsection (a) [conferring supplemental jurisdiction over state law claims related to federal claims] . . . shall be tolled while the claim is pending [in federal court] and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.” In Artis v. District of Columbia (2018) ___ U.S. ___ [138 S.Ct. 594] (Artis), the United States Supreme Court considered the meaning of “tolled” as used in this statute and concluded that “the limitations period is suspended (stops running) while the claim is sub judice elsewhere, then starts running again when the tolling period ends, picking up where it left off.” (Id. at pp. ___, ___ [138 S.Ct. at pp. 601, 603-604].)

Plaintiffs do not dispute that their causes of action accrued on March 28, 2006, when they read some of the loan documents and discovered that CHL had misrepresented the terms of their loans. Plaintiffs filed their federal action on March 18, 2009, 10 days before the three-year statute of limitations expired. The limitations period for plaintiffs’ state law claims was suspended while these claims were under consideration by the federal district court. On October 28, 2009, the federal district court dismissed the state law claims without prejudice to their right to refile them in state court. Though plaintiffs appealed from the order dismissing their federal claims, they did not appeal from the order dismissing their state claims. Since 28 United States Code section 1367, subdivision (d) refers to the tolling of “claims,” rather than cases or actions, their state law claims were no longer pending in federal court. Under Artis, plaintiffs’ state law claims were tolled for 40 days. (Artis, supra, ___ U.S. at p. ___ [138 S.Ct. at pp. 603-604].) Thus, when plaintiffs filed their claims in state court on December 22, 2009, the three-year statute of limitations had already expired.

Relying on Kendrick v. City of Eureka (2000) 82 Cal.App.4th 364 (Kendrick), Okoro v. City of Oakland (2006) 142 Cal.App.4th 306 (Okoro), and Bodine v. Graco, Inc. (9th Cir. 2008) 533 F.3d 1145 (Bodine), plaintiffs contend that 28 United States Code section 1367, subdivision (d) tolled the statute of limitations of their state law claims until 30 days after their appeal in federal court was final.

In Kendrick, the plaintiffs filed federal and state claims in federal court. (Kendrick, supra, 82 Cal.App.4th at p. 366.) The district court granted the defendants’ motion for summary judgment as to the plaintiffs’ federal law claims, and declined to exercise supplemental jurisdiction and dismissed the plaintiffs’ state law claims without prejudice. (Id. at p. 367.) The plaintiffs appealed from the order dismissing their state law claims. (Ibid.) The federal appellate court affirmed the order. (Ibid.) After the plaintiffs’ petition for writ of certiorari was denied by the United States Supreme Court, the plaintiffs filed a complaint in state court. (Ibid.) At issue was whether the state law claims were barred by the one-year statute of limitations. (Id. at p. 368.) The Kendrick court concluded: “[T]he tolling provision of [28 United States Code] section 1367(d) includes the time during which a federal appeal with the Court of Appeals is pursued, and the 30–day grace period commences once the judgment of dismissal is affirmed by that court. This tolling is not extended by the later filing of a petition for writ of certiorari with the United States Supreme Court.” (Id. at p. 369.) Unlike in Kendrick, plaintiffs did not appeal from the order dismissing their state law claims.

In Okoro, the plaintiffs filed a civil rights action in federal court in which they alleged federal and state law claims against the City of Oakland (City), two individual defendants, and unnamed police officers as fictitious defendants. (Okoro, supra, 142 Cal.App.4th at p. 308.) After the individual defendants had been dismissed from the case, the district court granted the City’s motion for summary judgment and entered a final judgment as to the federal claims and declined to exercise supplemental jurisdiction over the state law claims. (Id. at p. 309.) When the plaintiffs filed their complaint in state court, they named two police officers. The trial court found that the claims against the two officers were barred by the statute of limitations, because the individual defendants had been dismissed before the final judgment. (Ibid.) The trial court further concluded that the dismissal began the running of time under the statute of limitations and thus the state law claims were time-barred. (Ibid.) The Okoro court reversed the judgment. The appellate court reasoned that the dismissal of the individual defendants was not an appealable order. (Id. at pp. 312-313.) Since the case remained pending in federal court, the statute of limitations was tolled under 28 United States Code section 1367, subdivision (d). (Okoro, at pp.312-313.) In contrast to Okoro, here, the dismissal of plaintiffs’ state law claims was a final appealable order. Since plaintiffs did not challenge the dismissal of these claims when they appealed from the order dismissing their federal claims, the statute of limitations for their state law claims was not tolled.

We are also not persuaded by plaintiffs’ reliance on Bodine. The Bodine court stated in a one-sentence footnote that it “assume[d]” that the plaintiff’s state law claims were tolled while the case was pending in federal court. (Bodine, supra, 533 F.3d at p. 1154, fn. 10.) “[L]anguage contained in a judicial opinion is ‘ “to be understood in the light of the facts and issue then before the court, and an opinion is not authority for a proposition not therein considered. [Citation.]” ’ [Citations.]” (People v. Banks (1993) 6 Cal.4th 926, 945.) Since the Bodine court did not consider the issue of tolling, this case does not support plaintiffs’ position.

I. Implied Waiver Rule and Equitable Estoppel
J.
Plaintiffs contend that the trial court erred when it applied the implied waiver rule and dismissed the first, second, fourth, and fifth causes of action, which were based on fraud and deceit. They argue that they never intended to waive their rights to sue for fraud.

The trial court concluded that plaintiffs’ acceptance of the loan modification agreements constituted an implied waiver of their right to seek damages arising from fraud or deceit.

Oakland Raiders v. Oakland-Alameda County Coliseum (2006) 144 Cal.App.4th 1175 (Oakland Raiders) is instructive. In that case, the plaintiff claimed that it had been fraudulently induced to enter into a contract. (Id. at p. 1179.) However, the plaintiff entered into a new agreement which incorporated and supplemented the original contract and obtained “significant monetary . . . concessions by virtue of the new contract” after it had discovered the fraud. (Id. at pp. 1181-1182, 1193.) The Oakland Raiders court reversed a jury verdict in favor of the plaintiff on the grounds of implied waiver and equitable estoppel. (Id. at pp. 1179, 1190.) The court observed that “California law has, for more than a century, recognized that a plaintiff claiming to have been induced into signing a contract by fraud or deceit is deemed to have waived a claim of damages arising therefrom if, after discovery of the alleged fraud, he enters into a new contract with the defendant regarding the same subject matter that supersedes the former agreement and confers upon him significant benefits. [Citations.]” (Id. at p. 1185.) The court further noted that implied waiver is “better understood as an application of the doctrine of equitable estoppel . . . .” (Id. at p. 1189.) Quoting our Supreme Court in Schmidt v. Mesmer (1897) 116 Cal. 267 (Schmidt), the court stated: “Noting the injustice of permitting a party to gain new benefits ‘without giving any warning to the other party that he intends at some future time to charge him with fraud,’ the court fashioned the rule that a party aware of the alleged fraud must stand at arm’s length from his adversary and not enter into a new agreement extracting concessions, lest he be deemed to have waived his claim of fraud. [Citation.]” (Oakland Raiders, at p. 1189.)

“Implied waiver, especially where it is based on conduct manifestly inconsistent with the intention to enforce a known right, may be determined as a matter of law where the underlying facts are undisputed [citation], or the evidence is susceptible of only one reasonable conclusion [Citations.]” (Oakland Raiders, supra, 144 Cal.App.4th at p. 1191.)

Here, plaintiffs attempted to rescind the loan agreements after they received complete copies of the documents in January 2009. Bank of America responded by offering to modify the loan agreements. About a month later, plaintiffs signed the loan modification agreements in which they acknowledged that these agreements modified and supplemented the original notes and the deed of trust. The modified agreements provided significant benefits to plaintiffs: Bank of America deemed the loans current, thus agreeing not to foreclose on plaintiffs’ property based on their defaults; converted the loan’s adjustable rate to a fixed rate; reduced the loan’s interest rate from 6.5 percent to 4.5 percent for three years, after which the rate was fixed at 6.5 percent, while the prior adjustable rate permitted 11.5 percent interest; and reduced the interest rate of the second loan by 3 percent. Thus, plaintiffs’ acceptance of the loan modification agreements impliedly waived their right to pursue fraud claims against defendants.

Plaintiffs also rely on the allegations of the FAC to support their contention that the loan modification agreements were fraudulent, and thus the trial court erred when it applied the implied waiver rule and equitable estoppel.

The FAC alleged that plaintiffs “determined [the loan modification agreements were] designed to nullify and cover-up the fraudulent aspects of the original loan;” “[t]he loan modification[] on its face conceals past fraud”; and in “February . . . 2009 defendants Lewis and Does 71-80 made representations that the modification of their loans would combine both loans into one, include property taxes, be a 30-year-fixed loan that would be below 30% of Plaintiffs[’] monthly income.” The FAC also alleged that defendants “continued to mislead Plaintiffs [in the loan modification agreements by] representing that they only needed to pay the interest and was in fact designed to not pay down the principle. Further on April 1, 2012 monthly payments doubled and this did not include HELOC payments which Defendants failed to disclose and did not include property taxes, home owners insurance, HOA fees and positioned Plaintiffs, again, to not be able to prospectively repay loan and would cause them to default and be foreclosed upon.”

The loan modification agreements refute plaintiffs’ contention. Each agreement is no more than one and a half pages and fully and clearly discloses its terms. No one could reasonably interpret the terms of these agreements as plaintiffs have done in the FAC.

Relying on City of Ukiah v. Fones (1966) 64 Cal.2d 104, Utility Audit Co. v. City of Los Angeles (2003) 112 Cal.App.4th 950, Old Republic Ins. Co. v. Fsr Brokerage (2000) 80 Cal.App.4th 666, 679, and DRG/Beverly Hills, Ltd. v. Chopstix Dim Sum Café & Takeout III, Ltd. (1994) 30 Cal.App.4th 54, plaintiffs argue that “[t]he trial court erred in not properly applying waiver standards” since the “intent to waive cannot stand if facts are disputed.” (Boldface omitted.) Here, the undisputed facts establish that the trial court properly found that the implied waiver rule applied. Moreover, all of these cases are factually distinguishable from the present case.

K. Stipulated Judgment and Injunction
L.
Plaintiffs argue that defendants are “enjoined from seeking waivers by borrowers in loan modification agreements.” (Boldface omitted.)

Plaintiffs request that this court take judicial notice of the stipulated judgment and injunction (injunction) filed in People v. Countrywide Financial Corp., et al., (Super. Ct. L.A. County, N.W. Dist., 2008, No. LC083076). They focus on the following language: “6.3.11 No Releases with Respect to Loan Modifications. There will be no requirement that Eligible Borrowers release claims against CFC or an CFC Affiliate in connection with loan modifications offered under Section 6 of this Stipulated Judgment and Injunction.” Plaintiffs first referred to the injunction in their request for judicial notice that accompanied their motion for reconsideration. As previously noted, the motion was denied and plaintiffs have not raised any issue as to this order. We deny the request to take judicial notice. (Duffey, supra, 31 Cal.App.5th at p. 241, fn. 6.)

Even if this court were to take judicial notice of the injunction, plaintiffs’ argument has no merit. The injunction also states: “6.8.1 No Third Party Beneficiaries Intended. Section 6 of this Stipulated Judgment and Injunction is not intended to confer upon any person any rights or remedies, including rights as a third party beneficiary. Section 6 of this Stipulated Judgment and Injunction is not intended to create a private right of action on the part of any person or entity other than the parties hereto.” A consent order “is not enforceable directly or in collateral proceedings by those who are not parties to it even if though they were intended to be benefitted by it.” (Blue Chip Stamps v. Manor Drug Stores (1975) 421 U.S. 723, 750, abrogated on other grounds by Merrill Lynch v. Dabit (2006) 547 U.S. 71.) Here, plaintiffs were not parties and the injunction did not create any rights in favor of third parties.

V. Disposition
VI.
The judgment is affirmed. Defendants shall recover costs on appeal from plaintiffs.

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Mihara, Acting P. J.

WE CONCUR:

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Grover, J.

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Danner, J.

Merritt v. Countrywide Financial Corp. et al.

H041560