Case Number: BC533051 Hearing Date: May 23, 2014 Dept: 34

Moving Party: Defendant Green Tree Servicing LLC (“defendant”)

Resp. Party: Plaintiff Seanjay Ramanand Sharma (“plaintiff”)

Defendant’s demurrer to the complaint is SUSTAINED. The motion to strike is MOOT.

The Court takes judicial notice of defendant’s exhibit 1. (See Evid. Code, § 452(h).)

BACKGROUND:

Plaintiff commenced this action on 1/15/14 against defendant for: (1) declaratory relief; (2) injunction; (3) breach of written contract; (4) fraud; (5) violation of Bus. & Prof. Code § 17200; (6) account stated; and (7) open book account. On 5/30/07 plaintiff received a mortgage from Universal American Mortgage Company of California in the amount of $259,500.00 secured by a deed of trust on the subject property. (Compl., ¶ 6.) On 9/1/11, the note relating to the mortgage was assigned to defendant. (Ibid.) In addition to the principal and interest on the note, plaintiff was charged a Private Mortgage Insurance (“PMI”), and plaintiff would no longer be required to make PMI payments once the loan to value ratio reached 80%. (Id., ¶ 7.) Beginning in 2012, plaintiff made several requests to defendant about what needed to be done to remove the PMI, including plaintiff’s willingness to pay down the principal to reach the 80% loan to value ratio. (Id., ¶ 9.) Defendant has failed to provide this information to plaintiff. (Id., ¶ 10.) Defendant has failed to provide an appraisal value of the property in order for plaintiff to be able to pay down the principal. (Id., ¶ 11.)

ANALYSIS:

Demurrer

Defendant demurs to the entire complaint and the seven causes of action contained therein on the ground that it fails to state sufficient facts.

Third Cause of Action for Breach of Contract

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.) “If the action is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) However, it is not always necessary to attach the contract or allege its terms verbatim. “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198 199.)

Plaintiff does not allege sufficient facts to support the breach of contract claim. Plaintiff alleges that he was charged the PMI and that the note provided that plaintiff would no longer be required to make PMI payments once the loan to value ratio reached 80%. (Compl., ¶ 25.) Plaintiff alleges that he requested information from defendant as to what needed to be done to remove the PMI, but defendant failed to provide him with information or an appraisal value of the property in order for him to pay down the principal and remove the PMI. (Id., ¶¶ 27-29.) Plaintiff at no point alleges that defendant was obligated to provide the requested information or an appraisal value of the property. Indeed, the document in exhibit B to the complaint suggests that plaintiff was obligated to provide an authorization for defendant to obtain an appraisal, and it is not alleged that plaintiff provided this authorization. (See id., Exh. B.) The only alleged obligation for defendant is to remove the PMI once the loan to value ratio reaches 80%. Plaintiff does not allege that the loan to value ratio has reached 80%.

(In his opposition, plaintiff argues that Defendant “admits” in its demurrer several facts, and cites to the demurrer, “Id., at page 4, footnote 2.” (See Opp., p. 5:4.) The Court notes that there is no footnote on p. 4 of the demurrer.)

Defendant’s demurrer to the third cause of action is SUSTAINED.

Fourth Cause of Action for Fraud

The elements of a fraud claim are: (1) misrepresentation of a fact (or concealment); (2) knowledge of falsity; (3) intent to defraud (to induce reliance); (4) justifiable reliance; and (5) resulting damage. (Buckland v. Threshold Enters., Ltd. (2007) 155 Cal.App.4th 798, 806-807 [disapproved of on other grounds by Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310].) A fraud claim must be specifically pleaded, such that: ” ‘(a) General pleading of the legal conclusion of ‘fraud’ is insufficient; the facts constituting the fraud must be alleged. (b) Every element of the cause of action for fraud must be alleged in the proper manner (i.e., factually and specifically), and the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citation.]’ ” (Hall v. Department of Adoptions (1975) 47 Cal.App.3d 898, 904.) A plaintiff must allege what was said, by whom, in what manner, when, and, in the case of a corporate defendant, the speaker’s authority to bind the corporation. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Plaintiff fails to allege any facts establishing that defendant made a misrepresentation. Instead, plaintiff merely repeats the allegations asserted in the previous causes of action. It is unclear what was said, by whom, in what manner, when, or whether the speaker had authority to bind defendant. There are no facts alleged which show that plaintiff relied on any statement by defendant. Therefore, the fraud cause of action is not sufficiently alleged.

Accordingly, defendant’s demurrer to the fourth cause of action is SUSTAINED.

Fifth Cause of Action for Violation of Bus. & Prof. Code § 17200

California Business and Professions Code section 17200 permits recovery for “any unlawful, unfair, or fraudulent business act or practice.” (Bus. & Prof. Code § 17200.) To state a cause of action under Business and Professions Code section 17200, et seq., plaintiff must show: (1) a business practice; (2) that is unfair, unlawful, or fraudulent; and (3) authorized remedy. (Bus. & Prof. Code § 17200; Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 676.) “[O]nly plaintiffs who have suffered actual damage may pursue a private UCL action. A private plaintiff must make a twofold showing: he or she must demonstrate injury in fact and a loss of money or property caused by unfair competition.” (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1590.) Plaintiff makes a conclusory allegation that he has lost money as a result of defendant’s conduct. (Compl., ¶ 45.)

Plaintiff has not alleged sufficient facts to show that defendant engaged in unlawful conduct. Plaintiff also fails to allege that defendant engaged in fraudulent conduct.

For the “unfair” prong, defendant relies on Cal-Tech Communications v. L.A. Cellular (1999) 20 Cal.4th 163. The test in Cal-Tech “was limited to UCL actions alleging unfair acts or practices against a competitor of the plaintiff,” which is not the situation here. (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 679.) Some cases have applied Cal-Tech to consumer actions, while others have noted that it did not provide a definitive test. (Ibid.)

It is not necessary for a business practice to be “unlawful” in order to be subject to an action under the unfair competition law. “The ‘unfair’ standard, the second prong of [Business and Professions Code] section 17200, also provides an independent basis for relief. This standard is intentionally broad, thus allowing courts maximum discretion to prohibit new schemes to defraud. [Citation.] The test of whether a business practice is unfair ‘involves an examination of [that practice’s] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant’s conduct against the gravity of the harm to the alleged victim…. [Citations.]’ [Citation.] In People v. Casa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 206 Cal.Rptr. 164, the court, acknowledging that the parameters of the term ‘unfair business practice’ had not been defined in a California case, applied guidelines adopted by the Federal Trade Commission and sanctioned by the United States Supreme Court in FTC v. Sperry & Hutchinson Co. (1972) 405 U.S. 233, 244 [92 S.Ct. 898, 905, 31 L.Ed.2d 170, 179].[footnote omitted] The court concluded that an ‘unfair’ business practice occurs when that practice ‘offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’ [Citation.]” [Citation.]

“Examples of unfair business practices include: charging a higher than normal rate for copies of deposition transcripts (by a group of certified shorthand reporters), where the party receiving the original is being given an undisclosed discount as the result of an exclusive volume-discount contract with two insurance companies [citation]; placing unlawful or unenforceable terms in form contracts [citation]; asserting a contractual right one does not have [citations]; systematically breaching a form contract affecting many consumers [citation], or many producers [citation]; and imposing contract terms that make the debtor pay the collection costs [citation].” [Citation.]

(Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 718-719.)

The fifth cause of action is once again based on the claim that defendant failed to perform an appraisal. (See Compl., ¶ 44.) It is unclear how this constitutes conduct which “offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers” because, as stated above, there are no facts alleged which show that defendant was obligated to provide such an appraisal.

Defendant’s demurrer to the fifth cause of action is SUSTAINED.

Sixth Cause of Action for Account Stated and Seventh Cause of Action for Open Book Account

“The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due.” (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.)

“The term ‘book account’ means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonably permanent form and manner and is (1) in a bound book, or (2) on a sheet or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner.” (Code Civ. Proc., § 337a.) An open book account occurs where there is “an account with one or more items unsettled; also, an account with dealings still continuing.” (Mercantile Trust Co. of San Francisco v. Doe (1914) 26 Cal.App. 246, 253 [internal quotations omitted].)

It is unclear how plaintiff has a claim for account stated or open book account since plaintiff is admittedly the debtor. (See, e.g., Compl., ¶ 6.) It is also unclear what relief is being sought in the sixth and seventh causes of action because plaintiff does not allege that defendant owes plaintiff some amount due. Plaintiff merely alleges that there were itemized documents evidence PMI payments, that plaintiff continues to pay the PMI, and that defendant has failed to perform the necessary processes in order to remove the PMI. (Compl., ¶¶ 48-50, 52-54.) It appears that plaintiff is merely repeating the previous claims that defendant is obligated to provide an appraisal. This claim fails for the reasons stated above.

Accordingly, defendant’s demurrer to the sixth and seventh causes of action is SUSTAINED.

First Cause of Action for Declaratory Relief and Second Cause of Action for Injunction

There are two essential elements for declaratory relief: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [plaintiff’s] rights or obligations.” (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.) Declaratory relief is not an independent cause of action, but a form of equitable relief. (See Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82.) “Injunctive relief is a remedy and not, in itself, a cause of action, and a cause of action must exist before injunctive relief may be granted.” (Shell Oil Co. v. Richter (1942) 52 Cal.App.2d 164, 168.) Therefore, plaintiff must allege an actual dispute in order to obtain declaratory or injunctive relief.

Plaintiff seeks a declaratory order and injunction requiring defendant to perform an appraisal on the property. (See Compl., ¶¶ 19, 22.) As discussed above, plaintiff fails to allege facts which establish that defendant was under any obligation to provide such appraisal. Therefore, the first and second causes of action are not sufficiently alleged.

Accordingly, defendant’s demurrer to the first and second causes of action is SUSTAINED.

Motion to Strike

Because the demurrer is sustained in its entirety, the motion to strike is MOOT.

The court will hear argument from the parties as to whether it should sustain the demurrer with or without leave to amend.