Case Number: EC064722 Hearing Date: May 09, 2016 Dept: A

Sharman v Select Portfolio Servicing

DEMURRER & MOTION TO EXPUNGE LIS PENDENS

Item: 16
Case: EC064722
Date: 5/9/16

MP: Defendants, Select Portfolio, MERS, and Wilmington Bank
RP: Plaintiff, Samantha Sharman

ALLEGATIONS IN COMPLAINT:
The Plaintiff obtained a loan secured by a deed of trust recorded on her real property in 2007. The Plaintiff began to seek a modification of the loan in 2008.
The Defendants have improperly commenced a non-judicial foreclosure proceeding on the Plaintiff’s property by violating the Homeowners’ Bill of Rights and engaging in unfair business practices. The Plaintiff seeks damages and an order quieting title to her property.

CAUSES OF ACTION IN COMPLAINT:
1) Dual-Tracking (Civil Code sections 2923.6 and 2924.11)
2) Failure to Designate Single Point of Contact (Civil Code section 2923.7)
3) Quiet Title
4) Declaratory Relief
5) Violation of Business and Professions Code section 17200
6) Lack of Standing
7) Intentional Misrepresentation
8) Negligent Misrepresentation
9) Promissory Estoppel

RELIEF REQUESTED:
1. Demurrer to each cause of action in Complaint.
2. Order expunging lis pendens.

DISCUSSION:
This hearing concerns the Defendants’ demurrer to the Complaint and motion to expunge the lis pendens. The Plaintiff did not file any opposition papers. Instead, on April 26, 2016, the Plaintiff filed a notice of her intent to “stand” on her Complaint.
In the papers, the Defendants’ attorney, Christopher Lee, states that he attempted to meet and confer with Plaintiff’s counsel on February 25, 26, and 29 and left messages on each date. Ms. Lee states that she did not return his call. Mr. Lee states that when he reached her on March 10, 2016, he was asked to call back after March 14, 2016. Mr. Lee states that when he called back, the Plaintiff’s counsel hung up the phone and refused to speak to him before he could explain the basis of the demurrer.

1. Demurrer to First Cause of Action for Dual-Tracking
The Defendants argue that this cause of action does not plead sufficient facts to show that they violated section 2923.6. The Plaintiff alleges that the Defendants violated section 2923.6 by proceeding with a trustee sale while she was under review for a loan modification.
Section 2923.6 is part of the Homeowner Bill of Rights (“HBOR”), which is codified at Civil Code sections 2920.5, 2923.4 to 2923.7, 2924, 2924.9 to 2924.12, 2924.15, 2924.17 to 2924.20. HBOR was enacted “to ensure that, as part of the nonjudicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower’s mortgage servicer, such as loan modifications or other alternatives to foreclosure.” Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal. App. 4th 1267, 1272. HBOR provides for injunctive relief for statutory violations that occur prior to foreclosure in section 2924.12(a) and monetary damages when the borrower seeks relief for violations after the foreclosure sale has occurred in section 2924.12(b). In addition, section 2924.12 permits the Court to award attorney’s fees to a prevailing borrower. Since this is a statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619.
As an initial issue, the Plaintiff does not plead that her property has been sold. Under section 2924.12, she may request an injunction to obtain relief from the alleged violations. However, she may not seek damages under HBOR.

Section 2923.6 provides that if a borrower submits a complete application for a first lien loan modification to the borrower’s mortgage service, then a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee sale while the complete first lien loan modification is pending. The violation occurs when the loan servicer records a notice of default while a loan modification application is pending.
As noted above, the Plaintiff must plead with reasonable particularity the facts supporting the statutory elements of the claimed violation. The Plaintiff does not allege when she submitted the specific loan modification at issue or when a notice of default was recorded while the specified loan modification was pending. Instead, the Plaintiff alleges in paragraph 44 the vague allegations that the Defendants continued with a trustee sale while she was under review for a loan modification. This is insufficient because it does not show that the Defendants recorded a notice of default while a specific request for a loan modification was pending.
The use of the term “Defendants” also flaunts a lack of reasonable particularity. The Plaintiff directed this cause of action against all the Defendants. This includes the moving Defendants: Select Portfolio, MERS, and Wilmington Bank. There are no allegations showing that the Plaintiff submitted loan applications to each of these Defendants and that each of them recorded notices of default.

Therefore, the Court will sustain the demurrer to the first cause of action because it lacks the reasonably particular facts needed to plead the statutory claim.
California law imposes the burden on the Plaintiff to demonstrate the manner in which she can amend her pleadings to state this claim against the Defendants. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading; a notice of “Standing on the complaint” without more is insufficient – it simply evinces a willingness to waste the time and resources of the court and its staff for no good reason other than the lackadaisical attitude or slovenliness of counsel in filing such a document while also refusing to discuss the merits with counsel or even hinting to the court that some amendment to state a cause of action is possible.

2. Demurrer to Second Cause of Action for Failure to Designate Single Point of Contact
The Defendant argues that this cause of action lacks the particular facts needed to plead the claim. Section 2923.7 requires a mortgage servicer, upon request, to establish a single point of contact and provide one or more direct means of communication with the single point of contact.
The Plaintiff does not allege that she ever requested a single point of contact from any of the three moving Defendants. Since the statutory duty is imposed “upon request”, the Plaintiff has not pleaded the facts necessary to plead the cause of action.
In addition, there are no allegations showing that the Defendants have recorded a notice of default or explaining how the failure to establish a single point of contact has caused any harm to the Plaintiff. The Plaintiff alleges in paragraph 64 that she may seek damages. However, as noted above, the Plaintiff may not seek damages under HBOR before a sale of her property. Instead, she is limited to an injunction for the alleged violation of section 2923.7.

Accordingly, the Court will sustain the demurrer to the second cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

3. Third Cause of Action for Quiet Title
The Defendants argue that this cause of action lacks sufficient facts.

Under California law, a cause of action to quiet title is pleaded sufficiently when the plaintiff alleges, in simple language, that the plaintiff is the owner and in possession, and that the defendant claims an adverse interest without right. Thornton v. Stevenson (1960) 185 Cal. App. 2d 708, 713.
The Plaintiff does not identify the adverse interest of each of the moving Defendants. Instead, the Plaintiff alleges in paragraph 71 that the Defendants’ claims are without any right. This is insufficient because it does not identify the adverse interest that each Defendant claims and for which the Plaintiff seeks a judgment quieting title.

Further, case law requires the Plaintiff to plead that she can clear the debt to quiet title to the property in their name. Aguilar v. Bocci (1974) 39 Cal. App. 3d 475, 477-478 (holding that a party cannot quiet title without satisfying a debt because a cloud upon title will persist until the debt is paid). The Plaintiff does not allege that she can clear the debt that is secured by the deed of trust that she alleges is recorded on her property and which is the basis for the non-judicial foreclosure proceeding.

Accordingly, the Court will sustain the demurrer to the third cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

4. Fourth Cause of Action for Declaratory Relief
The Defendants argue that this cause of action is derivative on the other claims in her Complaint.
It is general rule that in an action for declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a contract and requests that the rights and duties be adjudged. City Of Tiburon v. Northwestern Pac. R.R. Co. (1970) 4 Cal. App. 3d 160, 170; see CCP section 1060 (identifying the remedy of declaratory relief).
First, the Plaintiff does not plead sufficient facts to identify an actual controversy with each Defendant. In paragraph 84, the Plaintiff seeks declaratory relief regarding the Defendants’ adverse interests in her property. In paragraph 87, the Plaintiff seeks a judicial declaration to prevent the Plaintiff from suffering the loss of her real property. However, there are no allegations that identify the adverse interest that each, separate Defendant is claiming or allegations that show that an actual controversy exists between the Plaintiff and each of the Defendants with regards to this unidentified adverse interest.
Second, there are grounds for a demurrer to a declaratory relief cause of action that is wholly derivative on claims for statutory violations and the statutory claims lack required facts. Ochs v. PacifiCare of California (2004) 115 Cal. App. 4th 782, 794. As discussed above, the Plaintiff has not pleaded sufficient facts to state her claims based on Civil Code sections 2923.6 and 2923.7. To the extent that the Plaintiff is seeking a declaration regarding conduct required by these statutes, the cause of action for declaratory relief lacks sufficient facts to seek a judicial declaration.

Accordingly, the Court will sustain the demurrer to the fourth cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

6. Demurrer to Fifth Cause of Action for Violation of Business and Professions Code 17200
The Defendants argue that this cause of action lacks sufficient facts.

The Plaintiff’s fifth cause of action is brought for the violation of Business and Professions Section 17200, which defines unfair competition to be any unlawful, unfair, or fraudulent business practice. In order to plead a claim under Business and Professions Code section 17200, there must be allegations demonstrating that the Defendants engaged in an unlawful, unfair, or fraudulent business act or practice. Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal. App. 4th 659, 676-677. This includes anything that can properly be called a business practice and that at the same time is forbidden by law. Id. Further, to plead this statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619.
A review of the fifth cause of action reveals that it does not contain any particular facts that identify a business act of the Defendant that violates section 17200. In paragraph 96, the Plaintiff alleges that the Defendants’ “conducts” constitutes unlawful, unfair, and fraudulent conduct. There are no allegations that identify the Defendants’ “conducts” that constitute a business practice forbidden by law. This is insufficient to plead the claim.
The Plaintiff also pleads in paragraph 98 that the Defendants violated Civil Code section 2923.6 and that this is an “adequate predicate act” for the claim. As discussed above, the Plaintiff has not pleaded sufficient facts to show that the Defendants each violated section 2923.6 recording a notice of default or notice of trustee’s sale while an application for a loan modification was pending. Accordingly, the Plaintiff has not pleaded sufficient facts to show that there was an “adequate predicate act” for her claim.

Therefore, the Court will sustain the demurrer to the fifth cause of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

6. Demurrer to Sixth Cause of Action for Lack of Standing
There is no cause of action for “lack of standing” in California law. A review of the cause of action reveals that the Plaintiff alleges that she has suffered damages as a result of the wrongful initiation of foreclosure proceedings. It appears that this is a cause of action for wrongful foreclosure.
California law does not recognize a preemptive suit to challenge a party’s standing to commence a foreclosure proceeding. Robinson v. Countrywide Home Loans, Inc. (2011) 199 Cal. App. 4th 42, 46. The statutory scheme for non-judicial foreclosures, enacted at Civil Code sections 2924 to 2924k, does not provide for a preemptive suit challenging standing. Id. Accordingly, a claim for damages for wrongful initiation of foreclosure does not state a cause of action as a matter of law. Id.
Federal law interpreting California law finds that a wrongful foreclosure claim fails to allege a cognizable cause of action in the absence of a foreclosure sale. Vega v. JP Morgan Chase Bank, N.A. (E.D. 2009) 654 F. Supp. 2d 1104, 1113 (citing Munger v. Moore (1970) 11 Cal.App.3d 1, 7, which held that the rule is that a trustee or mortgagee may be liable to the trustor or mortgagor for damages sustained where there has been an illegal, fraudulent or wilfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust.)
Here, the Plaintiff is challenging the Defendants’ ability to commence the non-judicial foreclosure in her sixth cause of action on the ground that the Defendants lack standing. Since there has not been a sale of the property, this is not a cognizable cause of action.

Therefore, the Court will sustain the demurrer to the sixth cause of action.

It does not appear reasonably possible to correct the defects in this cause of action by amendment because California law does not recognize a preemptive suit to challenge a party’s authority to commence a foreclosure proceeding. California law imposes the burden on the Plaintiff to demonstrate the manner in which he can amend his pleadings to state his claims against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet his burden.
Accordingly, the Court will not grant leave to amend.

7. Seventh Cause of Action for Intentional Misrepresentation and Eighth Cause of Action for Negligent Misrepresentation
The Defendants argue that these causes of action lack the particular facts needed to plead the claims.
The seventh cause of action for intentional misrepresentation must include the following elements:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

The eighth cause of action for negligent misrepresentation must include the following elements:

1) a misrepresentation of a past or existing material fact;
2) without reasonable grounds for believing it to be true;
3) with intent to induce another’s reliance on the fact misrepresented;
4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and
5) damages.
B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.

These causes of action are torts of deceit and the facts constituting each element must be alleged with particularity; the claims cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since the claims must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. In addition, pleadings against a corporation must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the Plaintiff’s Complaint reveals that it lacks the particular allegations needed to state these claims against each Defendant. The Plaintiff alleges in paragraph 111 of the seventh cause of action and in paragraph 123 of the eighth cause of action that the Defendants represented to the Plaintiff that her application for a loan modification had been submitted and that she would be informed when a decision was made. The Plaintiff alleges that this was false.
There are no allegations identifying how, when, where, or by what means these representations were tendered. There are no allegations identifying the person who spoke on behalf of the Defendants, who are business entities. This is insufficient to plead these causes of action.

Therefore, the Court will sustain the demurrers to the seventh and eighth causes of action.
California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

8. Ninth Cause of Action for Promissory Estoppel
The Defendants argue that the Plaintiff has failed to sufficient facts to constitute this cause of action.
The elements of a cause of action for promissory estoppel claim are the following:

1) a promise clear and unambiguous in its terms;
2) reliance by the party to whom the promise is made;
3) the reliance must be both reasonable and foreseeable; and
4) the party asserting the estoppel must be injured by his reliance.
Aceves v. U.S. Bank N.A. (2011) 192 Cal. App. 4th 218, 225.

The promise must be clear and unambiguous in its terms and cannot be established from preliminary discussions and negotiations. Garcia v. World Savings, FSB (2010) 183 Cal. App. 4th 1031, 1044. Further, a hopeful expectation cannot satisfy the element of reliance. Aceves, 192 Cal.App.4th at 227.
A review of this cause of action reveals that in paragraph 135, the Plaintiff alleges that the Defendants promised to review the modification application, to submit it to an investor for review, to contact the Plaintiff once a decision was made, and to postpone the trustee sale. However, there are no allegations that identify how the Plaintiff relied to her detriment. Instead, the Plaintiff alleges in paragraph 139 that she submitted the paperwork for a loan modification and did not take any action to protect her property from foreclosure. This does not identify the injury caused by the Plaintiff’s reliance.
Further, the alleged promise to postpone the trustee’s sale was a modification of the Defendants’ right to foreclosure under the deed of trust. Such an agreement must satisfy the statute of frauds. Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544, 552-553. A gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust deed ordinarily would be unenforceable under Civil Code section 1698, i.e., the statute of frauds. Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal. 3d 665, 673. There are no allegations that the promise was made in writing.

Therefore, the Court will sustain the demurrers to the ninth cause of action.
California law imposes the burden on the Plaintiff to demonstrate the manner in which she can amend her pleadings to state the claim against the Defendant. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not meet this burden because she offers no grounds to find that she can add facts regarding each of these Defendants.
Accordingly, the Court will not grant leave to amend because the Plaintiff did not identify the manner by which she can amend her pleading.

9. Motion to Expunge Lis Pendens
The Defendants request that the Court issue an order that expunges the lis pendens recorded on the property on the ground that the Plaintiff’s Complaint does not plead a real property claim and on the ground that the Plaintiffs cannot establish the probable validity of their claims. The Defendants’ request for judicial notice includes the notice of lis pendens that Plaintiff recorded on her property at 3416 Las Palmas Ave., Glendale, on February 2, 2016.
Under CCP section 405.30, at any time after a notice of pendency of action has been recorded, any party with an interest in the real property may apply to the Court to expunge the notice. A lis pendens may be expunged either under CCP section 405.31 if the pleadings do not contain a real property claim or under CCP section 405.32 if the Court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim. Under CCP section 405.30, the party claiming the lis pendens has the burden of proof of showing either that the pleadings contain a real property claim or that the probable validity of the real property claim can be established by a preponderance of the evidence.
Accordingly, the Plaintiff has the burden of showing that her Complaint includes a real property claim and that the probable validity of their real property claim can be established by a preponderance of the evidence.

As discussed above in the analysis of the Defendants’ demurrer, the Court will sustain the demurrers to each cause of action in the Plaintiff’s Complaint. Since there are no remaining causes of action, the Complaint does not contain a real property claim. This is grounds to expunge the lis pendens under CCP section 405.31.

In addition, the Plaintiff did not file any opposition papers. Under CCP section 405.32, the Plaintiff had the burden of establishing, by a preponderance of the evidence, the probable validity of her real property claims. Since the Plaintiff did not offer any admissible evidence, she does not, by a preponderance of the evidence, establish the probable validity of any real property claim. Accordingly, the Plaintiff does not meet her burden of proof and this is grounds to expunge the lis pendens under CCP section 405.32.

Therefore, the Court will grant the Defendants’ motion to expunge the lis pendens.

The Defendants did not request an award of attorney’s fees in their motion; in the absence of such request, the court has no power to award same.

RULING:
1. SUSTAIN demurrers to each cause of action in Complaint without leave to amend.
2. Grant motion to expunge the lis pendens. No attorney fees awarded.