Case Number: BC534936 Hearing Date: June 11, 2014 Dept: 32

CASE NAME: Winthura Silvage Silva, et al. v. PennyMac Loan Services, LLC
CASE NO.: BC534936
HEARING DATE: 06/11/14
DEPARTMENT: 32
CALENDAR NO.: 3
SUBJECT: Demurrer to Complaint
MOVING PARTY: Defendant PennyMac Loan Services, LLC (“Defendant”)
RESP. PARTY: None

COURT’S TENTATIVE RULING

Demurrer to Complaint:

First Cause of Action (Specific Performance) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Second Cause of Action (Breach of Covenant of Good Faith and Fair Dealing) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Third Cause of Action (Set Aside Notice of Trustee’s Sale and Notice of Default) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

Fourth Cause of Action (Set Aside Trustee’s Deed Upon Sale) SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

ANALYSIS

Notice

According to the proof of service, Defendant timely served its notice of demurrer on March 6, 2014 by regular mail. However, Defendant did not serve the points and authorities in support of the demurrer until May 19, 2014 by email. For a hearing date of June 11, 2014 and service by email, which extends the 16 court day service time by two court days, the demurrer papers should have been served by May 15, 2014. (CCP § 1005; § 1010.6(a)(4).

On June 10, 2014, Defendant filed a declaration of its counsel indicating that, on May 15, 2014, Plaintiff’s counsel agreed by email to accept service in this action by email. (Bubman Decl. ¶ 2.) Defendant submits evidence that the points and authorities were served on Plaintiff’s counsel by email on May 19, 2014. (Id. ¶ 3, Exh. B.) Given that the notice of demurrer was timely served and that Plaintiff has not objected to any delay in service of the points and authorities, the Court will consider the demurrer on the merits.

Defendant’s Request for Judicial Notice. Exhibits A: GRANTED. The Court may take judicial notice of the records of any court of record in the United States pursuant to Evid. Code § 452(d). Although the bankruptcy court proof of claim is not certified, no objection has been received.

Exhibits B – E: GRANTED. The Court can take judicial notice of these recorded title records.

First Cause of Action – Specific Performance

The first cause of action is brought solely by Plaintiffs Subhan and Mohamed. Defendant contends that the first cause of action fails because Plaintiffs Subhan and Mohamed have not alleged a contractual relationship with Defendant. In the first cause of action, Plaintiffs Subhan and Mohamed apparently allege that they are entitled to specific performance of a purchase agreement signed between Plaintiff Silva, as the owner of the subject property, and Plaintiff Subhan, as the buyer of the property. (Compl. ¶¶ 13-14.) They also allege that Plaintiff Mohamed, as the broker for Silva, is entitled to quantum meruit payment from Defendant for the value of the services he rendered in marketing the subject property. (Id. ¶¶ 17-21.)

The elements of a claim for specific performance are: (1) Contract breach; (2) inadequacy of a legal remedy; (3) underlying contract reasonable and supported by adequate consideration; (4) existence of a mutuality of remedies; (5) contractual terms sufficiently definite to know what it is to enforce; and (6) substantial similarity between requested performance and promised performance. (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.)

Here, Plaintiffs Mohamed and Subhan have not alleged the existence of a contract with Defendant for Mohamed to sell the property on Defendant’s behalf, or for Subhan to purchase the property. A claim for specific performance may not be maintained by Plaintiffs Mohamed and Subhan against Defendant in the absence of a contractual relationship.

Plaintiff Mohamed seems to include a claim for quantum meruit in the first cause of action for specific performance. (Compl. ¶¶ 19-22.) Although Mohamed alleges that he marketed the property “at solely [sic] direction of PennyMac,” that allegation is contradicted by other portions of the complaint suggesting that Mohamed performed his work as the broker for Plaintiff Silva and/or Subhan. (See Compl. ¶¶ 18, 27.) Accordingly, Mohamed must allege additional facts showing that his services were performed for Defendant.

The demurrer is SUSTAINED WITH LEAVE TO AMEND as to the first cause of action.

Second Cause of Action – Breach of Covenant of Good Faith and Fair Dealing

Defendant contends that the second cause of action fails because Plaintiffs Subhan and Mohamed have not alleged a contractual relationship with Defendant. Defendant contends that Plaintiff Silva has not alleged his damages for this cause of action.

A cause of action for breach of covenant requires the existence of a contractual relationship. (See Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 349-50.) For the reasons stated above as to the first cause of action, Plaintiffs Subhan and Mohamed have not alleged a contractual relationship to support the second cause of action.

Plaintiff Silva essentially alleges that Defendant breached the covenant of good faith and fair dealing “when it sold the property to itself while engaged in negotiations for short sale with Plaintiffs.” (Compl. ¶ 26.) Because a short sale will only occur when the lender agrees to accept less than owed by the borrower (i.e. Silva), Silva fails to allege how he was damaged by Defendant’s refusal to accept the short sale. Moreover, although not argued by Defendant, Plaintiff Silva fails to allege a contractual term that would have required Defendant to accept the short sale.

The demurrer is SUSTAINED WITH LEAVE TO AMEND as to the second cause of action.

Third and Fourth Causes of Action – Set Aside Notice of Trustee’s Sale and Set Aside Trustee’s Deed Upon Sale

The third and fourth causes of action are brought solely by Plaintiff Silva. Plaintiff alleges that the Notice of Default was not “timely” served and that there were multiple unspecified violations of statute related to the Deed of Trust and Promissory Note. (Compl. ¶¶ 37, 40.)

A rebuttable presumption that a foreclosure sale was conducted regularly and fairly must prevail, unless a procedural irregularity constituted a substantial defect that is prejudicial to the trustor or claimant. (Knapp v. Doherty (2004) 123 Cal.App.4th 76, 96.) When a trustee’s deed upon sale states that all statutory notice requirements and procedures required by law for the conduct of the foreclosure have been satisfied, “a rebuttable presumption arises that the sale has been conducted regularly and properly. (Moeller v. Lien, (1994) 25 Cal.App.4th 822, 831.) Here, the trustee’s deed contains such a statement that all statutory notice requirements were complied with. (RJN, Exhibit D.) Plaintiff Silva fails to plead sufficient facts to overcome this presumption. Silva alleges the notice was “not timely [served] in the manner prescribed by law,” but offers no further details. (Compl. ¶ 37.) Moreover, a borrower’s non-receipt of such notices is not sufficient to stop a sale absent a showing that it caused the borrower actual prejudice. (See Knapp, supra.) Finally, Plaintiff fails to provide any ultimate facts in support of his conclusion that there were multiple statutory violations and predatory lending activities. (Compl. ¶¶ 40-41.)

The demurrer is SUSTAINED WITH LEAVE TO AMEND as to the third and fourth causes of action.