Case Name: Alton Purvis, Jr. v. Wells Fargo Bank, N.A., et al.
Case No.: 19-CV-343490

Currently before the Court are the demurrer and motion to strike by defendant Wells Fargo Bank, N.A. (“Wells Fargo”).

Factual and Procedural Background

This is a foreclosure action. Plaintiff Alton Purvis, Jr. (“Purvis”) is the owner of residential real property located at 3421 Antonacci Court in San Jose, California (“Property”). (First Amended Complaint (“FAC”), ¶ 8.) In March 2006, Purvis obtained a loan in the amount of $695,000 secured by the Property, and executed a Deed of Trust (“DOT”) in favor of World Savings Bank, FSB (“World Savings”). (Id. at ¶ 10 & Ex. A.) Thereafter, the beneficial interest in the loan was transferred to Wells Fargo. (Id. at ¶ 10.)

In late 2008, Purvis sought a loan modification from Wells Fargo, but Wells Fargo refused to modify the loan because Purvis had made all of his monthly payments. (FAC, ¶ 11.) Wells Fargo advised Purvis that only borrowers who were at least two months behind in payments were considered for a loan modification and Purvis should stop making payments on the loan, as that was the only way Wells Fargo would help him. (Ibid.)

In early 2009, in reliance on Wells Fargo’s representations, Purvis stopped making monthly payments on the loan and, thereafter, submitted a loan modification application. (FAC, ¶ 11.) The request for a loan modification was ultimately denied. (Ibid.) Purvis re-applied for a loan modification on multiple occasions and continuously submitted complete loan applications. (Ibid.) However, Wells Fargo falsely claimed that it had not received documents, the documents it received were unsigned, and Purvis needed to re-apply and submit new application materials. (Ibid.)

Between 2011 and 2012, Purvis filed for bankruptcy and made regular payments on the loan for several years. (FAC, ¶ 11.)

In March 2017, Wells Fargo initiated foreclosure proceedings. (FAC, ¶ 11.) That month, a Notice of Default (“NOD”) executed by authorized representative Craig Zinda was recorded against the Property. (Id. at ¶ 10.) Purvis alleges that the Declaration of Compliance accompanying the NOD is false because Wells Fargo never contacted him to discuss loss mitigation options or advise him of his right to an in-person meeting within 14 days. (Ibid.) Purvis also alleges that the NOD falsely stated that he only had the right to stop the sale of the Property by paying the entire amount demanded. (Ibid.)

The next month, Purvis applied for a loan modification. (FAC, ¶ 11.) Purvis was also forced to file for Chapter 13 bankruptcy. (Ibid.) During this time, Purvis voluntarily increased his monthly payment amount. (Ibid.)
In March 2018, Wells Fargo eventually denied Purvis’s request for a loan modification. (FAC, ¶ 11.) Wells Fargo’s stated reasons for denying the application were false because Wells Fargo intentionally modified its criteria to ensure that Purvis would not qualify for a loan modification. (Ibid.)

Several months later, Purvis again applied for a loan modification, which was promptly denied by Wells Fargo without conducting a sufficient review. (FAC, ¶ 11.) Wells Fargo then gave Purvis conflicting information regarding the time to appeal the denial of his loan modification request. (Ibid.) Although a Home Preservation Specialist promised to mail Purvis the guidelines used to evaluate his application, Wells Fargo delayed providing Purvis with the criteria, information, and calculations used to evaluate his loan modification application, which interfered with the preparation of his appeal. (Id. at ¶¶ 11 & 59.)

From March 2018 to December 2018, Purvis made direct payments to Wells Fargo in the sum of $3,400, which Wells Fargo accepted. (FAC, ¶¶ 10 & 11.)

In January 2019, Wells Fargo returned Purvis’s loan payment for December 2018. (FAC, ¶ 11.) Additionally, a Notice of Trustee’s Sale (“NOTS”) executed by authorized representative Tommy Phi was recorded, scheduling a sale of the Property for March 11, 2019. (Id. at ¶ 10.)

The following month, Rushmore began servicing the loan. (FAC, ¶ 13.) Rushmore advised Purvis that the March 11, 2019 trustee sale would be postponed if he submitted a loan modification application by March 6, 2019. (Id. at ¶ 14.) Purvis submitted a complete loan modification application to Rushmore by March 6, 2019, and was informed by Rushmore the trustee’s sale was postponed. (Id. at ¶¶ 14 & 15.) However, when Purvis contacted the trustee, the trustee informed him that it had not received any request for postponement from Rushmore. (Id. at ¶¶ 59 & 60.)

As of March 2019, Purvis had over $50,000 in a suspense account, which had not been applied to the loan due to errors by Wells Fargo and Rushmore (collectively, “Defendants”). (FAC, ¶¶ 12 & 15.)

Based on the foregoing allegations, Purvis filed the operative FAC against Defendants, alleging causes of action for: (1) violation of Civil Code sections 2923.5 and/or 2923.55; (2) violation of Civil Code section 2923.6; (3) violation of Civil Code section 2923.7; (4) violation of Civil Code section 2924.17; (5) violation of Civil Code sections 2924 and/or 2924b; (6) violation of Civil Code section 2924.11; (7) promissory estoppel; (8) negligence; (9) intentional misrepresentation; (10) negligent misrepresentation; (11) promise without intention to perform; (12) declaratory relief; (13) quiet title; (14) slander of title; (15) cancellation of instruments; (16) violation of Business and Professions Code section 17200 (the “UCL”); and (17) accounting.

On May 2, 2019, Wells Fargo filed the instant demurrer and motion to strike. Purvis filed papers in opposition to the demurrer and motion to strike on July 23, 2019. On July 30, 2019, Wells Fargo filed a reply in support of its motion to strike.

Discussion

I. Demurrer

Wells Fargo demurs to each and every cause of action of the FAC on the ground of failure to allege facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

A. Request for Judicial Notice

Wells Fargo asks the Court to take judicial notice of: recorded documents pertaining to the Property (Exhibits A, F, and G); a Certificate of Corporate Existence issued by the Office of Thrift Supervision to World Savings (Exhibit B); a letter from the Office of Thrift Supervision authorizing a name change from World Savings to Wachovia Mortgage, FSB (“Wachovia”) (Exhibit C); a certified copy of Wachovia’s charter (Exhibit D); the Comptroller of Currency’s official certification regarding the evolution of Wachovia into Wells Fargo (Exhibit E); and the docket and documents filed in the bankruptcy case of In Re: Alton Purvis Jr. (United States Bankruptcy Court, Northern District of California, Case No. 17-52004) (Exhibits H-M).

As to the recorded documents pertaining to the Property, the law is clear that recorded real property records are generally proper subjects for judicial notice under Evidence Code section 452. (See Evid. Code, § 452, subds. (c), (h); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (Fontenot), disapproved on other grounds in Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919 [“[t]he official act of recordation and the common use of a notary public in the execution of such documents assure their reliability, and the maintenance of the documents in the recorder’s office makes their existence and text capable of ready confirmation, thereby placing such documents beyond reasonable dispute”].) While it would be improper to take judicial notice of the truth of statements of fact recited within such documents, a court is permitted to take judicial notice of the legal effect of the language therein when that effect is clear. (Fontenot, supra, 198 Cal.App.4th at p. 265.) As such, the Court may take judicial notice of existence and legal effect of the recorded documents pertaining to the Property.

With respect to the World Savings and Wachovia documents, those documents are referenced only once to provide background regarding Wells Fargo’s acquisition of Purvis’s loan and are not discussed relative to an argument raised on demurrer. As such, the Court declines to take judicial notice of them as they are not helpful or necessary to resolving the pending demurrer. (See Silverado Modjeska Recreation & Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18 [“ ‘There is … a precondition to the taking of judicial notice in either its mandatory or permissive form—any matter to be judicially noticed must be relevant to a material issue.’ [Citations.]”].)

Finally, the docket and the documents filed in Purvis’s bankruptcy case are generally proper subjects of judicial notice as the documents are court records relevant to arguments raised in the pending demurrer. (See Evid. Code, § 452, subd. (d) [permitting judicial notice of court records]; see also First American Title Co. v. Mirzaian (2003) 108 Cal.App.4th 956, 960 [taking judicial notice of court docket]; People v. Woodell (1998) 17 Cal.4th 448, 455 [courts may “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.”.)

Accordingly, Wells Fargo’s request for judicial notice is DENIED IN PART and GRANTED IN PART. The request is DENIED as to the World Savings and Wachovia documents. The request is GRANTED as to the recorded documents pertaining to the Property as well as the docket and documents filed in Purvis’s bankruptcy case.

B. Legal Standard

The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “ ‘[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice’ [citation].” (Hilltop Properties, Inc. v. State (1965) 233 Cal.App.2d 349, 353; see Code Civ. Proc., § 430.30, subd. (a).) “ ‘It is not the ordinary function of a demurrer to test the truth of the … allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. … .’ [Citation.] Thus, … ‘the facts alleged in the pleading are deemed to be true, however improbable they may be. [Citation.]’ [Citations.]” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958.)

C. General Argument Regarding Claims for Violations of the Homeowners’ Bill of Rights (the “HBOR”)

Preliminarily, Wells Fargo asserts that Purvis’s claims for violations of the HBOR (i.e., the first through sixth causes of action) fail because the HBOR only protects borrowers and Purvis is not a borrower as that term is defined in the HBOR. Wells Fargo contends that the term “borrowers” excludes individuals who are in bankruptcy. Wells Fargo argues that Purvis was in bankruptcy from 2017 to December 2018, and his claims for violations of the HBOR are predicated on conduct that occurred between July and November 2018. Wells Fargo concludes that Purvis, therefore, was not a borrower entitled to protection under the HBOR.

Civil Code section 2920.5, subdivision (c)(2)(C) defines a “borrower” under the HBOR to exclude “[a]n individual who has filed a case under Chapter 7, 11, 12, or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case, or granting relief from a stay of foreclosure.” A plaintiff’s status as a borrower under the statute is assessed as of the time of time of the alleged violations of the HBOR. (Foronda v. Wells Fargo Home Mortgage, Inc. (N.D. Cal., Nov. 26, 2014, 14-CV-03513-LHK) 2014 WL 6706815, at *8, fn. 8.)

Here, the claims for violations of the HBOR are not based solely on conduct that occurred between July and November 2018, while Purvis was in bankruptcy. For example, many of the HBOR claims are predicated on the recording of the NOD and NOTS, which occurred in March 2017 and January 2019, respectively. In addition, some of the HBOR claims are predicated on Wells Fargo’s alleged failure to provide Purvis with a single point of contact in connection with his loan modification applications. As Purvis submitted applications for a loan modification as early as 2009 and as late as March 6, 2019, it cannot be said that Wells Fargo’s alleged failure to provide a single point of contact only occurred while Purvis was in bankruptcy. Furthermore, some of the HBOR claims are based on Wells Fargo’s alleged failure to apply money in a suspense account to Purvis’s loan. There is nothing in the FAC demonstrating that this alleged wrongful conduct only occurred while Purvis was in bankruptcy.

Because Wells Fargo’s argument regarding standing under the HBOR fails to dispose of any claim in its entirety, the demurrer to the HBOR claims cannot be granted on this basis. (See PHII, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 (PHII) [a demurrer cannot be granted as to only a portion of a claim].)

D. General Argument Regarding Judicial Estoppel

Wells Fargo argues that the doctrine of judicial estoppel bars all of Purvis’s claims because Purvis failed to disclose the existence of the claims in his bankruptcy filings.

“The doctrine of judicial estoppel, sometimes called the doctrine of ‘ “ ‘preclusion of inconsistent positions’ ” ’ [citation] precludes a party from obtaining an advantage by asserting one position, and then seeking a second advantage by asserting an incompatible position. [Citation].” (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 448–449 (Minish).) “However, ‘numerous decisions have made clear that judicial estoppel is an equitable doctrine, and its application, even where all necessary elements are present, is discretionary.’ [Citations.] Moreover, because judicial estoppel is an extraordinary and equitable remedy that can impinge on the truth-seeking function of the court and produce harsh consequences, it must be ‘applied with caution and limited to egregious circumstances’ [citations] that is, ‘ “ ‘when a party’s inconsistent behavior will otherwise result in a miscarriage of justice.’ ” ’ [Citation.]” (Id. at p. 449.)

Judicial estoppel applies “when ‘ “(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. [Citations.]” ’ [Citations.]” (Thomas v. Gordon (2000) 85 Cal.App.4th 113, 118; Minish, supra, 214 Cal.App.4th at p. 449.)

With respect to actions filed subsequent to bankruptcy proceedings, a party may be judicially estopped from asserting a cause of action not raised in a reorganization plan or otherwise mentioned in the debtor’s schedules or disclosure statements. (Hamilton v. State Farm Fire & Casualty Company (9th Cir. 2001) 270 F.3d 778, 783.) The underlying premise is that debtors are required under bankruptcy statutes to disclose all of their personal property, including actual and potential claims or causes of action, and that such property is part of the bankruptcy estate. (Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 132-133, 136-137 (Gottlieb).) “Courts of various jurisdictions have held that a debtor’s assertion [in a civil action] of legal claims not disclosed in earlier bankruptcy proceedings constitutes an assumption of inconsistent positions” because “[t]he omission of a cause of action or claim ‘from . . . mandatory bankruptcy filings is tantamount to a representation that no such claim existed.’” (Id. at p. 137, citations omitted.)

However, “[a]n inconsistent argument sufficient to invoke judicial estoppel must be attributable to intentional wrongdoing.” (Haley v. Dow Lewis Motors (1999) 72 Cal.App.4th 497, 509-510.) “[N]ondisclosure in bankruptcy filings, standing alone, is insufficient to support the finding of bad faith intent necessary for the application of judicial estoppel.” (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1019 (Cloud).) Furthermore, the determination of whether a debtor acted in bad faith generally cannot be resolved on demurrer since it is not an evidentiary motion and consideration of evidence is required for such determination. (See ibid. [cases involving judicial estoppel have generally been decided after a fact-finding or evidence-reviewing proceeding]; see also Haley, supra, 72 Cal.App.4th at p. 510 [“[W]hether judicial estoppel should be applied is a factual question.”].)

Here, the FAC does not state, or otherwise show, that Purvis’s failure to include his claims against Wells Fargo was not due to ignorance, fraud, or mistake. The documents from the bankruptcy proceedings likewise do not address Purvis’s motivations or show he did not fail to mention his claims as a result of ignorance, fraud, or mistake. Thus, whether Purvis’s failure to include his claims in his bankruptcy plan was intentional or the result of ignorance, fraud, or mistake is a factual issue that cannot be decided on demurrer. (See Cloud, supra, 67 Cal.App.4th at p. 1019.)

Moreover, it is not apparent from the face of the pleading that all causes of action existed during the bankruptcy proceedings. Debtors are only required to identify known claims; they are not required to disclose hypothetical claims. (Gottlieb, supra, 141 Cal.App.4th at p. 133.) At least some of the causes of action are predicated on wrongful conduct that allegedly took place after the amended bankruptcy plan was confirmed by the bankruptcy court in June 2018.

In light of the foregoing, the demurrer is not sustainable on the basis that Purvis is judicially estopped from asserting his claims.

E. First Cause of Action

Wells Fargo argues that the first cause of action for violation of Civil Code sections 2923.5 and/or 2923.55 fails to allege sufficient facts to state a claim. Wells Fargo asserts that the cause of action is based on allegations that it did not contact Purvis prior to the recordation of the NOD to explore options to avoid foreclosure. Wells Fargo cites to case law providing that Civil Code sections 2923.5 and 2923.55, subdivision (b)(2) can be satisfied even where it is the borrower who initiates contact with the servicer to discuss loan modification at least 30 days prior to the recording of the NOD. Wells Fargo concludes that Purvis cannot state a cause of action for violation of Civil Code sections 2923.5 and/or 2923.55 because he alleges that it denied his loan modification application before the NOD was recorded.

Wells Fargo’s argument fails to address and dispose of the first cause of action in its entirety. The first cause of action is not predicated solely on allegations that Wells Fargo did not contact Purvis prior to the recordation of the NOD to explore options to avoid foreclosure. As currently pleaded, the first cause of action is also based on allegations that Wells Fargo violated Civil Code section 2923.55, subdivision (b)(1) as it did not provide Purvis with a statement that he could request certain documents, such as a copy of his DOT or mortgage. (FAC, ¶¶ 20 & 21.) Because Wells Fargo’s argument on demurrer does not address its alleged violation of Civil Code section 2923.55, subdivision (b)(1), it fails to dispose of the first cause of action as a whole. (See PHII, supra, 33 Cal.App.4th at p. 1682 [a demurrer cannot be granted as to only a portion of a claim].)

Accordingly, Wells Fargo’s demurrer to the first cause of action is OVERRULED.

F. Second and Sixth Causes of Action

Wells Fargo argues that the second cause of action for violation of Civil Code section 2923.6 and the sixth cause of action for violation of Civil Code section 2924.11 fail to allege sufficient facts to state a claim. Wells Fargo begins by quoting Civil Code section 2923.6, which states that “[i]f a borrower submits a complete application for a first lien loan modification …, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending.” Wells Fargo contends that because Purvis does not allege the Property “went to sale following the submission” of his loan modification application on March 6, 2019, there was no “event that could trigger dual tracking.” (Mem. Ps. & As., p. 6:10-13.)

Wells Fargo’s argument is not well-taken as to the second cause of action. The second cause of action is based, in part, on the recordation of the NOD. (FAC, ¶ 27.) As is relevant here, Purvis alleges that he initially submitted a loan modification application in early 2009, which was ultimately denied. (FAC, ¶ 11.) Purvis further alleges that he then re-applied for a loan modification on multiple occasions and continuously submitted complete loan applications. (Ibid.) However, Wells Fargo allegedly had the NOD recorded while Purvis was being reviewed for a loan modification. (Id. at ¶¶ 10 & 27.) Thus, the recordation of the NOD arguably triggered the dual tracking statutes.

Wells Fargo argument is well-taken as to the sixth cause of action. In the sixth cause of action, Purvis alleges that Wells Fargo violated Civil Code section 2924.11 because it scheduled a trustee sale of the Property for March 11, 2019, even though his March 6, 2019 loan modification application was still under review. (FAC, ¶¶ 52-56.)

Purvis appears to be relying on the version Civil Code section 2924.11 that was in effect from January 1, 2018 to December 31, 2018. Subdivision (a) of that provision states, “If a borrower submits a complete application for a foreclosure prevention alternative offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or authorized agent shall not record a notice of sale or conduct a trustee’s sale while the complete foreclosure prevention alternative application is pending, and until the borrower has been provided with a written determination by the mortgage servicer regarding that borrower’s eligibility for the requested foreclosure prevention alternative.” (Civ. Code, § 2924.11, subd. (a).)

However, Purvis does not allege any facts that trigger the dual tracking provision in Civil Code section 2924.11. For example, Purvis does not allege that he had submitted a complete loan modification application that was under review when the NOTS was recorded on January 31, 2019. Similarly, Purvis does not allege that the trustee’s sale proceeded as scheduled on March 11, 2019. Consequently, Purvis fails to establish that Wells Fargo violated Civil Code section 2924.11.

Accordingly, Wells Fargo’s demurrer to the second cause of action is OVERRULED. Wells Fargo’s demurrer to the sixth cause of action is SUSTAINED with 10 days’ leave to amend.

G. Third Cause of Action

Wells Fargo argues that the third cause of action for violation of Civil Code section 2923.7 fails to allege sufficient facts to state a claim because a “single point of contact” is defined, in part, as a team of personnel and Purvis merely alleges that he was forced to communicate with several individuals regarding his loan.

Civil Code section 2923.7 provides that “[u]pon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact [(‘SPOC’)] and provide to the borrower one or more direct means of communication with the single point of contact.” (Civ. Code § 2923.7, subd. (a).) The section defines “single point of contact” as an individual or team of personnel, each of whom has the ability and authority to perform the responsibilities stated under Section 2923.7, subdivisions (b) through (d). (Civ. Code, § 2923.7, subd. (e).) “The mortgage servicer shall ensure that each member of the team is knowledgeable about the borrower’s situation and current status in the alternatives to foreclosure process.” (Ibid.)

Here, Wells Fargo’s argument is not well-taken. Purvis not only alleges that he was forced to communicate with several individuals regarding his loan, but that those individuals provided him with conflicting information, lacked knowledge of his loan modification applications and/or the status of the foreclosure proceedings, and were not “responsive or knowledgeable about [his] account” as required under Civil Code section 2923.7. (FAC, ¶ 11 & 35.) These allegations go well beyond a mere assertion that Purvis was required to deal with multiple individuals.

Accordingly, Wells Fargo’s demurrer to the third cause of action is OVERRULED.

H. Fourth Cause of Action

Wells Fargo argues that the fourth cause of action for violation of Civil Code section 2924.17 fails to allege sufficient facts to state a claim because the statute is “limited to recorded documents” and “[Purvis’s] protestations regarding ‘forcing [him] into the foreclosure process …’, holding money in a suspense account, and inviting [him] to apply for a modification are of no moment because those actions/inactions were not reflected in recorded documents.” (Mem. Ps. & As., p. 7:3-6.)

Civil Code section 2924.17, subdivision (a) states that “[a] declaration recorded pursuant to Section 2923.5 or, until January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of sale, assignment of a deed of trust, or substitution of trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924, or a declaration or affidavit filed in any court relative to a foreclosure proceeding shall be accurate and complete and supported by competent and reliable evidence.” Civil Code section 2924.17, subdivision (b) further requires a mortgage servicer to ensure it has “reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose” before filing such declaration.

Here, Wells Fargo’s argument does not address or dispose of the fourth cause of action in its entirety. (See PHII, supra, 33 Cal.App.4th at p. 1682 [a demurrer cannot be granted as to only a portion of a claim].) In the fourth cause of action, Purvis alleges, among other things, that Wells Fargo violated the statute because it did not properly review his loan information or verify whether it had the right to foreclose by reviewing competent and reliable evidence before it filed the NOD. (FAC, ¶ 41.) Wells Fargo’s argument fails to address these allegations or explain why these allegations are insufficient to state a claim for violation of Civil Code section 2924.17.

Accordingly, Wells Fargo’s demurrer to the fourth cause of action is OVERRULED.

I. Fifth Cause of Action

Wells Fargo argues that the fifth cause of action for violation of Civil Code sections 2924 and/or 2924b fails to allege sufficient facts to state a claim. Wells Fargo asserts the claim is based on allegations that it violated the statutes when it recorded the NOTS. Wells Fargo states that Purvis apparently believes it was required to record a new NOD prior to filing the NOTS. Wells Fargo contends that it was not required to rescind the NOD as rescission is only required if the loan is fully reinstated.

Wells Fargo’s argument does not address or dispose of the fifth cause of action in its entirety. (See PHII, supra, 33 Cal.App.4th at p. 1682 [a demurrer cannot be granted as to only a portion of a claim].) In the fifth cause of action, Purvis alleges, among other things, that Wells Fargo violated Civil Code section 2924b because it did not properly mail him a copy of the NOD and NOTS. (FAC, ¶¶ 46-48.) Wells Fargo’s argument fails to address these allegations or explain why these allegations are insufficient to state a claim for violation of Civil Code section 2924b.

Accordingly, Wells Fargo’s demurrer to the fifth cause of action is OVERRULED.

J. Seventh Cause of Action

Wells Fargo argues that the seventh cause of action for promissory estoppel fails to state a claim because Purvis does not allege sufficient facts showing that he detrimentally relied on the alleged promises. Wells Fargo contends that Purvis cannot establish he relied on the alleged promises to his detriment because “there are no allegations that the Property has been sold at public auction.” (Mem. Ps. & As., p. 8:4-6.)

“In California, under the doctrine of promissory estoppel, [a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” (Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 779, internal quotation marks and citations omitted.) In essence, it is “a doctrine which employs equitable principles to satisfy the requirement that consideration must be given in exchange for the promise sought to be enforced.” (Id. at pp. 779–780, internal quotation marks and citations omitted.) “The elements of a promissory estoppel claim are ‘(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.’ ” (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 943-945.)

In the seventh cause of action, Purvis alleges, among other things, that Wells Fargo promised to send him the guidelines used to determine the outcome of his October/November loan modification application, but it failed to “timely send the data as promised.” (FAC, ¶¶ 59 & 60.) In reliance on the promise, Purvis refrained from taking action and incurred additional fees, costs, and interest, which inflated the sums allegedly due and owing on the loan. (Id. at ¶¶ 61-63.) On demurrer, Wells Fargo does not address Purvis’s allegations regarding the additional fees, costs, and interest allegedly incurred as a result of the delay or explain why these allegations are insufficient to establish that Purvis relied to his detriment on the alleged promise.

Accordingly, Wells Fargo’s demurrer to the seventh cause of action is OVERRULED.

K. Eighth Cause of Action

Wells Fargo argues that the eighth cause of action for negligence fails to state a claim because Purvis does not allege sufficient facts demonstrating that it owed him a duty of care.

In the eighth cause of action, Purvis alleges that Wells Fargo “had a duty to exercise reasonable care and skill in servicing the [loan] [and] processing [loan] modification requests … .” (FAC, ¶ 67.)

It is well-settled that “as a general rule, a financial institution owes no duty of care to a borrower when the institution’s role 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.) With that said, in the foreclosure context there is a split of authority as to whether a loan modification falls within the scope of traditional money-lending activities. Some courts have concluded it does. (See, e.g., Lueras v. BAC Home Loan Servicing, LP (2013) 221 Cal.App.4th 49, 67 (Lueras); Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 207.) In contrast, other courts have held a lender owes a borrower a duty to use reasonable care in reviewing a loan modification request once it undertakes to consider it. (See, e.g., Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 945-952 (Alvarez); Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1181 (Daniels); Rossetta v. CitiMortgage, Inc. (2017) 18 Cal.App.5th 628, 640 (Rossetta).) The latter courts reached this conclusion through application of six factors established by the California Supreme Court in Biakanja v. Irving (1958) 49 Cal.3d 647 (Biakanja) to determine whether a legal duty should be imposed. These factors include the extent to which a transaction is intended to affect the plaintiff, the foreseeability of harm to the plaintiff, and the closeness of connection between the defendant’s conduct and the injury suffered, among others. (Biakanja, supra, 49 Cal.3d at p. 650.)

The Court finds the second line of cases more persuasive for several reasons. First, they were better reasoned as the conclusions in favor of a duty of care were supported by analysis of the Biakanja factors whereas the first line of cases was not. (Compare Alvarez, supra, 228 Cal.App.4th at pp. 948-950; Daniels, supra, 246 Cal.App.4th at pp. 1182-1183; Rosetta, supra, 18 Cal.App.5th at pp. 641-643 with Lueras, supra, 221 Cal.App.4th at p. 68; Ragland, supra, 209 Cal.App.4th at p. 207.) Second, it agrees with the Sixth District’s observation in Daniels that the context in which the “general rule” of no duty was developed differs from situations where homeowners are seeking loan modifications. (See Daniels, supra, 246 Cal.App.4th at pp. 1180-1181.) Specifically, that rule was established in the context of third parties filing actions to hold construction lenders liable for borrowers’ failings, a situation where liability would only make sense if the lender was actively involved in the borrower’s construction project. (Ibid.) Third, the Court agrees with the Alvarez and Rosetta courts’ conclusion a duty of care should exist because the relationship between the parties is different “at the time the borrower first obtained a loan versus the time the loan is modified.” (Rosetta, supra, 18 Cal.App.5th at p. 640; see also Alvarez, supra, 228 Cal.App.4th at p. 949.) While, at the outset, a party can seek a different lender if he or she does not like the terms of a loan, once the loan is obtained, lenders have fewer incentives to exercise care because the borrower is “captive, with no choice of servicer, little information, and virtually no bargaining power.” (Ibid.) Finally, the finding of a duty of care in this context is consistent with California’s strong public policy in favor of protecting borrowers from improper lender conduct and unnecessary foreclosure, as demonstrated by the Legislature’s enactment of the HBOR. (See Alvarez, supra, 228 Cal.App.4th at pp. 945-952.)

For these reasons, the demurrer is not sustainable on the basis that Wells Fargo did not owe Purvis a duty of care.
Accordingly, Wells Fargo’s demurrer to the eighth cause of action is OVERRULED.

L. Ninth and Tenth Causes of Action

Wells Fargo initially argues that the ninth and tenth causes of action for intentional misrepresentation and negligent misrepresentation, respectively, fail to state a cause of action because the claims are based on the allegation that it told Purvis he had to stop making payments on the loan to qualify for a modification, which is a representation regarding a future event. Wells Fargo further asserts that Purvis cannot establish the element of reliance to the extent the claims are predicated on its alleged misrepresentation regarding the reasons for its denial of Purvis’s loan modification application. Finally, Wells Fargo argues that Purvis cannot establish the element of duty, as required to plead a claim for negligent misrepresentation, because it did not exceed its conventional role as a mere money lender.

As a preliminary matter, Wells Fargo’s argument regarding the existence of a legal duty lacks merit for the reasons set forth above in the Court’s discussion of the eighth cause of action.

Next, Wells Fargo’s remaining arguments fail to address and dispose of the ninth and tenth causes of action in their entirety. The claims are based, in part, on allegations that Wells Fargo falsely represented to Purvis that his time to appeal the denial of his loan modification application had been extended by two weeks. (FAC, ¶¶ 76 & 84.) This alleged misrepresentation is a representation regarding an existing and material fact; it is not a representation regarding a future event. Furthermore, Wells Fargo does not contend, or otherwise demonstrate, that Purvis did not rely on that misrepresentation to his detriment.

Accordingly, Wells Fargo’s demurrer to the ninth and tenth causes of action is OVERRULED.

M. Eleventh Cause of Action

Wells Fargo argues that the eleventh cause of action for promise without intention to perform fails to state a claim because the alleged promises are barred by the parol evidence rule. Wells Fargo asserts that the claim is based on contractual promises, which are inconsistent with the loan agreement, an integrated document.

When an integration clause expressly states that the contract is the parties’ entire agreement regarding a particular matter and it supersedes all prior and contemporaneous agreements between the parties regarding the subject matter, the contract is the final expression of the parties’ agreement and supersedes all other prior or contemporaneous agreements regarding the subject matter. (See Grey v. American Management Services (2012) 204 Cal.App.4th 803, 806-809; see also Code Civ. Proc., § 1856, subd. (a) [“Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to the terms included therein may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement.”].)

Here, the eleventh cause of action is based on promises that Wells Fargo allegedly made to Purvis after the parties entered into the loan agreement. (FAC, ¶ 90.) Because the existence of an integration clause and application of the parol evidence rule would only prohibit evidence regarding the existence of a prior or contemporaneous agreement, the promises that form the basis of the cause of action are not barred by the parol evidence rule.

Accordingly, Wells Fargo’s demurrer to the eleventh cause of action is OVERRULED.

N. Twelfth Cause of Action

Wells Fargo argues that the twelfth cause of action for declaratory relief fails to state a claim because the cause of action seeks a declaration regarding “the validity of the commencement of the foreclosure process” and Purvis’s other causes of action raise this issue. (Mem. Ps. & As., p. 11:12-19.)

“The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action. The object of the [declaratory relief] statute is to afford a new form of relief where needed and not furnish a litigant with a second cause of action for the determination of identical issues.” (California Ins. Guarantee Assn. v. Super. Ct. (1991) 231 Cal.App.3d 1617, 1623-1624, internal quotations and citations omitted; see also Pacific E. R. Co. v. Dewey (1949) 95 Cal.App.2d 69, 71 [stating that declaratory relief is “usually unnecessary where an adequate remedy exists under some other form of action”].)

In the eleventh cause of action, Purvis alleges that a dispute has arisen among the parties as to their duties and obligations regarding the loan, the DOT, and the foreclosure. (FAC, ¶¶ 101 & 102.) Purvis further alleges that the disputes concern, but are not limited to, “the ownership rights and the validity of the commencement of the foreclosure process.” (Id. at ¶ 103.) Purvis asserts that “a declaration of rights and duties of the parties herein are essential to determine the actual status and validity of the loan, deed of trust, nominated beneficiaries, actual beneficiaries, loan servicers, trustees instituting foreclosure proceedings and related matter.” (Id. at ¶ 105.)

Given the scope of these allegations, it is not readily apparent that Purvis’s other causes of action would necessarily determine all of the issues raised in the claim for declaratory relief.

Accordingly, Wells Fargo’s demurrer to the twelfth cause of action is OVERRULED.

O. Thirteenth Cause of Action

Wells Fargo initially argues that the thirteenth cause of action for quiet title fails to state a claim because Purvis must establish fraud to quiet title to the Property and his fraud claims are inadequately pleaded. Wells Fargo also asserts that Purvis cannot state a claim for quiet title because he has not alleged that he has or can tender the outstanding debt.

Wells Fargo’s initial argument lacks merit because Purvis’s claims for fraud survive the instant demurrer.

Wells Fargo’s remaining argument regarding tender is not well-taken. As a general rule, a debtor cannot set aside the foreclosure or quiet title against the lender or other purchaser without also alleging he or she paid the secured debt before the action is commenced. (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112 (Lona); Lueras, supra, 221 Cal.App.4th at pp. 86-87.) This is often referred to as the “tender rule.” (See Lona, supra, 202 Cal.App.4th at p. 115.) It is undisputed that Purvis does not allege that he tendered the amount due on his loan or made an offer to do so.

However, tender is not required “where it would be inequitable to impose such condition on the party challenging the sale” and where “the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face.” (Lona, supra, 202 Cal.App.4th at pp. 112-113.)

Here, Purvis alleges that the DOT is fraudulent and, therefore, void. (FAC, ¶¶ 108 & 109.) Tender is not required to attack a deed that is void. (See Lona, supra, 202 Cal.App.4th at pp. 112-113.) Thus, Purvis is not required to plead that he tendered the amount due.

Accordingly, Wells Fargo’s demurrer to the thirteenth cause of action is OVERRULED.

P. Fourteenth Cause of Action

Wells Fargo argues that the fourteenth cause of action for slander of title fails to state a claim because the cause of action is premised on allegations that the foreclosure documents recorded by Wells Fargo were false and the recordation of such documents is privileged under Civil Code sections 47 and 2924.

Slander of title occurs when there is an unprivileged publication of a false statement which disparages title to the property and causes pecuniary loss. (Stalberg v. Western Title Ins. Co. (1994) 27 Cal.App.4th 925, 929.) Elements of slander of title are: (1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss. (Manhattan Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1051.)

Civil Code section 2924, subdivision (d) provides in pertinent part: “All of the following shall constitute privileged communications pursuant to Section 47: [¶] (1) The mailing, publication, and delivery of notices as required by this section. [¶] (2) Performance of the procedures set forth in this article.” The privilege afforded under Civil Code section 2924 is the qualified common interest privilege of Civil Code section 47, subdivision (c), and applies to “the statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures … .” (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 333.) The common interest privilege does not apply if the defendant acted with actual malice, i.e., motivated by hatred or ill will, or in reckless disregard of the plaintiff’s rights. (Id. at p. 336.) The privilege applies to all torts except malicious prosecution. (Ibid.)

Here, the slander of title claim is based on the recording of the allegedly fraudulent NOD and NOTS. (FAC, ¶¶ 114-116.) Such notices are subject to the common interest privilege unless Purvis can allege facts establishing actual malice. In the FAC, Purvis has alleged only conclusions, but not facts demonstrating actual malice as required to overcome the privilege.

Accordingly, Wells Fargo’s demurrer to the fourteenth cause of action is SUSTAINED with 10 days’ leave to amend.

Q. Fifteenth Cause of Action

Wells Fargo initially argues that the fifteenth cause of action for cancellation of instruments fails to state a claim because such a cause of action is actually a claim for rescission and rescission is a remedy, not an independent cause of action. Wells Fargo also asserts that the claim fails because Purvis has not alleged that he has or can tender the full amount of the outstanding debt.

Wells Fargo’s initial argument lacks merit as the Sixth District Court of Appeal has recognized cancellation of instruments as a valid cause of action. (See Thompson v. Ioane (2017) 11 Cal.App.5th 1180, 1193–1194 [“ ‘Under Civil Code section 3412, “[a] written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.” To prevail on a claim to cancel an instrument, a plaintiff must prove (1) the instrument is void or voidable due to, for example, fraud; and (2) there is a reasonable apprehension of serious injury including pecuniary loss or the prejudicial alteration of one’s position. [Citation.]’ [Citation.]”].)

Wells Fargo’s remaining argument regarding tender also lacks merit. As previously explained, tender is not required “where it would be inequitable to impose such condition on the party challenging the sale” and where “the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face.” (Lona v. Citibank, N.A., supra, 202 Cal.App.4th at pp. 112-113.) “The tender rule is not absolute; tender is not required to cancel a written instrument that is void and not merely voidable.” (Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 819.) Here, Purvis alleges that the DOT is fraudulent and, therefore, void. (FAC, ¶¶ 108, 109, 121, & 123-125.) Thus, Purvis is not required to plead that he tendered the amount due.

Accordingly, Wells Fargo’s demurrer to the fifteenth cause of action is OVERRULED.

R. Sixteenth Cause of Action

Wells Fargo argues that the sixteenth cause of action for violation of the UCL fails to state a claim. Wells Fargo asserts that the claim fails to the extent it is predicated on violations of the HBOR because those claims do not survive demurrer. Wells Fargo also contends that there are not sufficient facts to support the claim to the extent it is based on unfair or fraudulent conduct.

The UCL “prohibits ‘unfair competition,’ which it defines as ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by [Section 17500].” (Hansen v. Newegg.com Americas, Inc. (2018) 25 Cal.App.5th 714, 722, quoting Bus. & Prof. Code, § 17200.) “ ‘ “Because … section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. ‘In other words, a practice is prohibited as “unfair” or “deceptive” even if not “unlawful” and vice versa.’ ” ’ ” [Citation.]” (Puentes v. Wells Fargo Home Mortgage, Inc.(2008) 160 Cal.App.4th 638, 644.)

“Under its ‘unlawful’ prong, ‘the UCL borrows violations of other laws … and makes those unlawful practices actionable under the UCL.’ [Citation.]” (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554.) “Thus, a violation of another law is a predicate for stating a cause of action under the UCL’s unlawful prong.” (Ibid.)

As Wells Fargo points out, the sixteenth cause of action is based, in part, on Purvis’s causes of action for violations of the HBOR. Because the majority of those claims survive the instant demurrer, they may properly form the basis of Purvis’s UCL claim.

Accordingly, Wells Fargo’s demurrer to the sixteenth cause of action is OVERRULED.

S. Seventeenth Cause of Action

Wells Fargo argues that the seventeenth cause of action for accounting fails to state a claim because Purvis does not allege that any balance is due to him; instead, he seeks an accounting to determine how much money he owes Wells Fargo.
“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179; St. James Church of Christ Holiness v. Super. Ct. (1955) 135 Cal.App.2d 352, 359 [to state a cause of action for an accounting, only the simplest pleading is required: (1) the fiduciary relationship or other circumstances appropriate to the remedy; and (2) a balance due from the defendant to the plaintiff that can only be ascertained by an accounting].)

In the seventeenth cause of action, Purvis alleges that he paid money to Wells Fargo, the money “was not accounted for properly and as such, money is due to [him] from [Wells Fargo], including any unnecessary interest, fees and costs added to the Subject Loan.” (FAC, ¶¶ 136 & 137.)

Because Purvis alleges that Wells Fargo owes him money, Wells Fargo’s argument on demurrer is not well-taken.

Accordingly, Wells Fargo’s demurrer to the seventeenth cause of action is OVERRULED.

II. Motion to Strike

Wells Fargo moves to strike Purvis’s request for punitive damages under Civil Code section 3294 and monetary damages under the UCL.

A. Legal Standard

Under Code of Civil Procedure section 436, a court may strike out any irrelevant, false, or improper matter inserted into any pleading or strike out all or part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) The grounds for a motion to strike must appear on the face of the challenged pleading or from matters of which the court may take judicial notice. (Code Civ. Proc., § 437, subd. (a).) In ruling on a motion to strike, the court reads the pleading as a whole, all parts in their context, and assuming the truth of all well-pleaded allegations. (See Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63, citing Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255.)

B. Punitive Damages

Wells Fargo argues that the request for punitive damages should be stricken because Purvis does not allege facts showing that any of its officers, directors, or managing agents committed, ratified, or authorized the alleged wrongful conduct.

A request for punitive damages against a corporation must allege that an officer, director, or managing agent of the corporation was either personally responsible for the allegedly despicable conduct or that an officer, director, or managing agent of the corporation: (1) had advance knowledge of the despicable conduct and consciously disregarded it; or (2) authorized or ratified the despicable conduct. (See Civ. Code, § 3294, subd. (b).)

Upon review of Purvis’s punitive damages allegations, it is readily apparent that Purvis fails to adequately allege that an officer, director, or managing agent of the corporation: (1) had advance knowledge of the despicable conduct and consciously disregarded it; or (2) authorized or ratified the despicable conduct. (See Civ. Code, § 3294, subd. (b).) There are no facts alleged in the FAC addressing any conduct whatsoever by an officer, director, or managing agent of Wells Fargo. Thus, the allegations of the FAC are insufficient to support the request for punitive damages.

Accordingly, Wells Fargo’s motion to strike the request for punitive damages is GRANTED with 10 days’ leave to amend.

C. Damages in Connection with the UCL Claim

Wells Fargo moves to strike paragraph 131 of the FAC, to the extent it seeks monetary damages under the UCL, arguing that monetary damages are not permitted under the UCL.

In opposition, Purvis does not address Wells Fargo’s argument.

“While private individuals can sue under the UCL [citation], courts can issue orders only to prevent unfair competition practices and ‘to restore to any person in interest any money or property … which may have been acquired by means of such unfair competition’ [citation]. Thus, a private plaintiff’s ‘remedies are “ ‘generally limited to injunctive relief and restitution.’ ” [Citations.]’ ” (Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1401.) Under the UCL, an order for “restitution” is one “ ‘compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.’ [Citation.]” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144–1145.) “In fact, ‘restitution is the only monetary remedy expressly authorized by section 17203.’ [Citation.]” (Ibid.)

In paragraph 131 of the FAC, Purvis appears to seek monetary damages other than restitution in connection with his UCL claim.

Accordingly, Wells Fargo’s motion to strike paragraph 131 to the extent it seeks monetary damages under the UCL is GRANTED without leave to amend. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [a plaintiff has the burden to show in what manner the complaint can be amended and how that amendment will change the legal effect of the pleading].)