2017-00223865-CU-OR

Ndile George Njenge vs. Bank of America

Nature of Proceeding: Hearing on Demurrer to the 2nd Amended Complaint

Filed By: Gifford, Kaelee M.

Defendants Fay Servicing, LLC (“Fay”) and PROF-2013-S3 Legal Title Trust, by U.S. Bank National Association, as Legal Title Trustee, sued herein as US Bank NA (“US Bank Trust”) (collectively, “Defendants”) demurrer to plaintiff Ndile George Njenge’s (“Plaintiff”) Second Amended Complaint (“FAC”) is sustained without leave to amend.

Defendants’ request for judicial notice is granted. (See Poseidon Devel., Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117-18; see also Stratford Irrig. Dist. v. Empire Water Co. (1941) 44 Cal.App.2d 61, 68 [recorded land documents, not contracts, are the subject of judicial notice on demurrer].) The Court, however, does not accept the truth of any facts within the judicially noticed documents except to the extent such facts are beyond reasonable dispute. (See Poseidon Devel., supra, 152 Cal.App.4th at 1117-18.) see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265 (“[A] 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 the recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity.”)

In this foreclosure action Plaintiff alleges causes of action against Defendants for wrongful foreclosure, breach of oral contract, breach of written contract, quiet title, slander of title, cancellation of instruments, promissory estoppel, negligence, negligent misrepresentation, fraud, violation of the Rosenthal Fair Debt Collection Practices Act, violation of Business & Professions Code § 17200, and declaratory relief. Plaintiff filed his original complaint on December 14, 2017, alleging the foregoing 13 causes of action. On June 15, 2018, Defendants’ demurrer to the initial complaint was sustained with leave to amend as to all causes of action alleged therein. On June 25, 2018, Plaintiff filed the FAC, alleging the same 13 causes of action. On September 4, 2018, Defendants’ demurrer was initially sustained without leave to amend but then Plaintiff was given leave to amend after oral argument. On November 13, 2018, Plaintiff filed the SAC alleging causes of action for wrongful foreclosure, slander of title, cancellation of instruments, negligence and negligent misrepresentation.

While Plaintiff has reduced the number of causes of action in the SAC, and omitted certain allegations from the previous versions, the underlying allegations are essentially the same. To that end, he again alleges that he and his wife refinanced the subject property in September 2007. (SAC ¶ 14.) He alleges that Bank of America (“BOFA”) acquired the loan in 2011. Plaintiff alleges in May 2011, an assignment of deed of trust was recorded transferring the property from the original trustee, Reconstrust Company, NA to Bank of America Home Loan Servicing. (SAC ¶ 16.)

As in the FAC, he again alleges that in November of 2015, that BOFA assigned a different DOT to U.S. Bank for different borrowers (Lucia and Jorge Gasca) against a different legal description. (SAC ¶ 18.) Plaintiffs allege that this is a “wildcard” assignment outside of his chain of title and not effective in transferring the subject DOT against his property and was void ab initio. (SAC ¶ 19.) However, as seen from Defendants’ RJN, the recorded assignment to U.S. Bank, while referring to the Gascas, referred to the DOT given to secure the promissory note covering property located at 550 Wilson Avenue in Sacramento, CA, which is Plaintiff’s property. (RJN Exh. 2.) Further the assignment specifically refers to the DOT recorded on October 1, 2007 in “BOOK 20071001 PAGE 1583” in the official records of Sacramento County which is Plaintiff’s DOT. (Id. Exhs. 1, 2.)

Plaintiff alleges that based on the “invalid” assignment, U.S.Bank was falsely alleged to be his new lender and Fay Servicing alleged to be the servicer. (SAC ¶ 21.) He further alleges that U.S. Bank used the power of the “invalid” assignment to execute an assignment of Plaintiff’s DOT to CAM VXII trust and CAM VXII trust executed an invalid substitution of trustee to Entra Default Solution. (Id. ¶¶ 22, 23) He alleges that Entra Default Solution, LLC executed a Notice of Default and ultimately sold the property on March 20, 2018. (SAC ¶ 24.)

As they did on the previous demurrer, Defendants again demur on the basis that Plaintiff has failed to make any substantive changes

First Cause of Action (Wrongful Foreclosure)

Defendants’ demurrer is sustained without leave to amend for failure to state facts sufficient to constitute a cause of action.

“The elements of a wrongful foreclosure cause of action are: “‘(1) [T]he trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale…was prejudiced or harmed; and (3) … the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.’” [Citation.] “[M] ere technical violations of the foreclosure process will not give rise to a tort claim; the foreclosure must have been entirely unauthorized on the facts of the case.” [Citation.] “[A]ll proximately caused damages may be recovered.” [Citation.] (Sciarratta v. U.S. Bank Nat’l Assn. (2016) 247 Cal.App.4th 552, 561-562.)

As was the case in the previous pleadings, the subject foreclosure activity still involves foreclosure notices that were recorded after Defendants no longer had any interest under the subject Deed of Trust. (RJN Exhs. 3-6.) Thus Defendants did not cause any foreclosure activity. While the SAC fails to allege the dates the various servicers were involved with the loan, the FAC previously alleged that servicing was transferred to BSI Financial in 2016 before any foreclosure notices were recorded. (FAC ¶ 24.) Where an amended complaint omits harmful allegations without explanation, the Court may take judicial notice of the prior pleadings and disregard any inconsistent allegations in the amended pleading. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 751.)

Plaintiff seeks to avoid this fatal defect by arguing that Defendants were responsible for the foreclosure sale conducted by Entra Default Solution, LLC because Defendants were the ones that improperly prepared the “invalid” assignment from BOFA to

themselves and then the assignment to CAM VXII which caused CAM VXII to believe it had the right to foreclose on the property. This argument does nothing more than confirm that Defendants had no involvement in the foreclosure. Defendants neither recorded the Notice of Default nor conducted the foreclosure sale.

While Plaintiff argues that the assignment from BOFA to U.S. Bank was a “wildcard” assignment, this is irrelevant given that Defendants did not foreclose on the property. Moreover, the allegations in support of this theory are insufficient. As set forth above, the RJN makes clear that although the assignment of the DOT from BOFA to U.S.

Bank referred to different borrowers, it specifically referred to Plaintiff’s DOT given to secure the promissory note covering property located at 550 Wilson Avenue in Sacramento, CA, which is Plaintiff’s property. (RJN Exh. 2.) Further the assignment specifically refers to the DOT recorded on October 1, 2007 in “BOOK 20071001 PAGE 1583” in the official records of Sacramento County which is Plaintiff’s DOT. (Id. Exhs. 1, 2.) Plaintiff’s conclusory allegation that the assignment was void is insufficient even if the RJN did not contradict that allegation, which it does. Rather, in order to attempt to allege a void assignment, a plaintiff must allege that there was no valid assignment and that the lender did not receive “an assignment of the debt in any manner.” ( Herrera v. Federal Nat. Mtg. Ass’n. (2012) 205 Cal.App.4th 1495, 1506 [disapproved on other grounds in Yvanova, supra, 62 Cal.4th at 939, fn. 13].) “Furthermore, since the assignment of the debt (the promissory note), as opposed to the security (the DOT), commonly is not recorded, the lender could have assigned the note to the beneficiary in an unrecorded document not disclosed to plaintiffs.” (Id.) Here, there are no actual facts alleged to demonstrate that his DOT was not assigned to Defendants, and/or the entities that ultimately foreclosed upon Plaintiff’s property in any manner.

Second Cause of Action (Slander of Title)

Defendants’ demurrer is sustained without leave to amend for failure to state facts sufficient to constitute a cause of action.

Plaintiff was required to allege facts showing “tortious injury to property resulting from unprivileged, false, malicious publication of disparaging statements regarding the title to property owned by plaintiff, to plaintiff’s damage.” (Southcott v. Pioneer Title Co.

(1962) 203 Cal.App.2d 673, 676.) Plaintiff has made no discernible changes to this cause of action. Plaintiff’s SAC still fails to allege any facts that these Defendants recorded anything on title that could be considered slanderous. To the extent that the cause of action relies upon the “wildcard” assignment or a substitution of trustee, neither of those documents in any way disparage Plaintiff’s title. Further, to the extent it is based on the Notice of Default or any other foreclosure notice, those documents were recorded after Defendants no longer had any interest under the subject Deed of Trust. (RJN Exhs. 3-6.) In any event, recording of foreclosure notices and trustee’s deeds are privileged communications pursuant to CCP § 47. (Civil Code § 2924(d).)

Plaintiff’s arguments regarding the alleged invalidity of the assignment were addressed above.

Third Cause of Action (Cancellation of Instruments)

Defendants’ demurrer is sustained without leave to amend for failure to state facts sufficient to constitute a cause of action. Plaintiff has made no discernible changes to this cause of action. Plaintiff still seeks to cancel recorded foreclosure notices but as

discussed above, Defendants were not involved in that process as they no longer had any interest in the Deed of Trust at the time the foreclosure notices were recorded. Again, Plaintiff’s arguments regarding the alleged invalidity of the assignment were addressed above.

Fourth Cause of Action (Negligence)

Defendants’ demurrer is sustained without leave to amend for failure to state facts sufficient to constitute a cause of action. Plaintiff has made no substantive changes to this cause of action.

The essential elements necessary to state a cause of action for negligence are (1) duty, (2) breach, (3) causation, and (4) damages. (See Quelimane Co. v. Stewart Title Guar. Co. (1998) 19 Cal.4th 26, 57.) Defendant first argues that it owed no duty to Plaintiff. “[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) A loan modification is the renegotiation of loan terms, which falls squarely within the scope of a lending institution’s conventional role as a lender of money. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 67.)

However, as recent cases have recognized, Nymark is but a general rule, as a “lender owes a duty to a borrower not to make material misrepresentations about the status of an application for a loan modification…It is foreseeable that a borrower might be harmed by an inaccurate or untimely communication about a foreclosure sale or about the status of a loan modification application, and the connection between the misrepresentation and the injury suffered could be close.” (Lueras, supra, 221 Cal.Ap.4th at 68-69.) In addition, a financial institution owes a duty of reasonable care in processing a loan modification at least where it was alleged that the defendants agreed to consider loan modifications. (Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 949-951; Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1183.)

As mentioned previously, Plaintiff does not allege that these Defendants agreed to consider a loan modification application. The cause of action is focused on the recording and execution of foreclosure documents, but again, as discussed above, these actions took place after these Defendants no longer had any interest in the Deed of Trust. Thus the allegation that “Defendants” breached a duty by failing to discover they had a void and invalid assignment prior to commencing foreclosure has no relevance to these Defendants. Further as previously determined by the Court, the allegations that the “Foreclosing Defendants breached its [sic] duty of care and skill to Plaintiff by failing to properly train and supervise its agents and employees with regard to California law regarding the execution and recording of foreclosure documents” are conclusory. Plaintiff has failed to allege any facts showing that these specific Defendants owed him any duty much less breached that duty.

Fifth Cause of Action (Negligent Misrepresentation)

Defendants’ demurrer is sustained without leave to amend for failure to state facts sufficient to constitute a cause of action. Plaintiff has made no substantive changes to this cause of action.

The elements of fraud “are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

When pleading a claim for fraud/negligent misrepresentation, each and every element must be alleged, “and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” ( Stansfield v Starkey (1990) 220 Cal.App.3d 59, 73; Cadlo v Owens-Illinois, lnc. (2004) 125 Cal.App.4th 513,519 (stating that “[e]ach element in a cause of action for fraud or negligent misrepresentation must be factually and specifically alleged”). To satisfy the particularity requirement, the plaintiff must plead facts which “show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield, supra, 220 Cal.App.3d at p. 74; see also Lazar v Superior Court (1996) 14 Cal.4th 631, 645.) Also, when asserting a fraud /negligent misrepresentation claim against an entity, plaintiff must “‘allege the names of the persons who made the allegedly fraudulent misrepresentation, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.'” Lazar, supra, 12 Cal.4th at p. 645 (quoting Tarmann v State Farm Mut Auto Ins Co (1991) 2 Cal.App.4th 153, 157).

Plaintiff’s scant allegations simply state that Defendants “made representations to Plaintiff and the world that it [sic] was the holder of Plaintiff’s note and DOT.” (SAC ¶ 53.) This is wholly insufficient. As previously found by the Court, there are no allegations as to when any specific representation was made, how it was made, where, by whom, and by what means. In addition, given that these Defendants were corporate entities, the allegations are also insufficient because Plaintiff failed to allege the names of the persons who made the representations, their authority to speak, what was said or written, and when it was said or written.

The demurrer is sustained in its entirety without leave to amend.

The Court has now sustained Defendants’ demurrer on three occasions and Plaintiff has entirely failed to correct the deficiencies and the Court perceives no reasonable possibility that he can do so. A court may sustain a demurrer with or without leave to amend. (Code Civ. Proc. 472a(c).) Leave to amend a defective complaint should be denied where no liability exists under substantive law. (Rotolo v San Jose Sports & Entertainment, LLC (2007) 151 Cal.App.4th 307, 321.) A demurrer must be sustained without leave to amend absent a showing by plaintiff that a reasonable possibility exists that the defect can be cured by amendment. (Blank v Kirwan (1985) 39 Cal.3d 311, 318.) The burden of proving such reasonable possibility rests squarely on the plaintiff. (Torres v City of Yorba Linda (1993) 13 Cal.App.4th 1035, 1041.) Plaintiff has not met that burden.

Defendants shall submit a proposed order for the Court’s signature pursuant to CRC Rule 3.1312.