Case Number: EC060586 Hearing Date: February 13, 2015 Dept: A
McGoldrick v Central Mortgage

DEMURRER & MOTION TO STRIKE

Calendar: 5
Case No: EC060586
Date: 2/17/15

MP: Defendants, Central Mortgage Co. and MERS
RP: Plaintiff, Brian McGoldrick

ALLEGATIONS IN SECOND AMENDED COMPLAINT:
The Plaintiff purchased his property with a loan secured by a deed of trust. The Defendants wrongfully assert that the Plaintiff is in default even though the Plaintiff has made all his payments. In addition, the Defendants have incorrectly claimed that the Plaintiff allowed his insurance on the property to lapse and have improperly charged late fees. When the Plaintiff brought this action to seek relief, the Defendants then sent him a bill for attorney’s fees that they had incurred.

CAUSES OF ACTION IN SECOND AMENDED COMPLAINT:
1) Breach of Contract
2) Breach of Implied Covenant of Good Faith and Fair Dealing
3) Negligence
4) Negligence Per Se
5) Promissory Estoppel
6) Fraud
7) Violation of Rosenthal Fair Debt Collections Practices Act
8) Declaratory Relief

RELIEF REQUESTED:
Demurrer to third, fourth, sixth, and tenth causes of action.
Strike claim for punitive damages.

DISCUSSION:
Trial is set for April 13, 2015.

This hearing concerns the demurrer and motion to strike of Defendants, Central Mortgage Co. and MERS.

1. Demurrers to Third Cause of Action for Negligence, Fourth Cause of Action for Negligence Per Se, and Tenth Cause of Action for Violation of Rosenthal Fair Debt Collections Practices Act
The Court has already considered and overruled the Defendant’s demurrers to these causes of action. Under California law, when a trial court overrules a demurrer to a cause of action, the court is foreclosed from rendering a new determination on the viability of the claims unless the defendant files a motion for reconsideration under CCP section 1008 and complies with its requirement to identify a new fact, circumstances, or law. Bennett v. Suncloud (1997) 56 Cal. App. 4th 91, 96-97.
On October 23, 2014, the Court issued a ruling that overruled the Defendant’s demurrers to the third, fourth, and tenth causes of action. The Defendant did not file a timely motion for reconsideration under CCP section 1008.
Accordingly, the Court will overrule the Defendant’s demurrers to the third, fourth, and tenth causes of action.

2. Demurrer to Sixth Cause of Action for Fraud
The Defendant then argues that the Plaintiff has failed to plead the claim with particularity. A review of the Plaintiff’s sixth cause of action reveals that lacks the particularity required to plead a fraud claim. Further, the Plaintiff’s cause of action begins by pleading that the Defendant made a false representation and then switches to a different legal theory – that the Defendant concealed material facts. These are different causes of action and have different elements.

The essential elements of a fraud claim based on a false representation are the following:

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 essential elements of a fraud claim based on fraudulent concealment are the following:

1) the defendant must have concealed or suppressed a material fact,
2) the defendant must have been under a duty to disclose the fact to the plaintiff,
3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff,
4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and
5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.
Lovejoy v. AT&T Corp. (2004) 119 Cal. App. 4th 151, 157-158.

Facts constituting each element of fraud must be alleged with particularity; the claim 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.

The Plaintiff alleges in paragraph 101 that Central Mortgage Company made false representations that it would apply the FPD premium, commence foreclosure proceedings only after a full investigation and resolution of Plaintiff’s claims, investigate the Plaintiff’s insurance, deem Plaintiff’s account current, investigate and explain charges, provide accurate information regarding the account, and follow applicable law. Since this is an attempt to plead a false representation, 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, fraud 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. The Plaintiff’s Second Amended Complaint lacks these particular facts.
Further, there are no particular facts indicating that the Defendant knew that these facts were false or that the Defendant intended to defraud the Plaintiff. Instead, the Plaintiff alleges in paragraph 102 that the “representations were knowingly false at the time that they were made by Central”. This does not allege that the Defendant knew they were false or that it intended to defraud.

The Plaintiff then alleges in paragraph 103 that Central Mortgage Company concealed facts that it had charged attorney’s fees to the Plaintiff’s account, that it would not investigate the Plaintiff’s claim or account, that it would not consider evidence of insurance, that the Plaintiff had the option to receive the FPI premium refund in cash, that it was keeping an unlawful surplus amount in Plaintiff’s escow account, that it charged inflated FPI premiums, that its purchase of premiums for FPI was unlawful, that it was not going to make an attempt to obtain FPI in the open market, that it would charge a premium for undisclosed administrative fees and kickbacks, that it kept its own commissions, that it had a scheme with Great American and Southwest related to FPI, that it would charge Plaintiff for backdated FPD policies, that it would charge illegitimate administrative fees, that it would violate applicable laws, that it would charge attorney’s fees and costs in violation of the note and law, and that it would commence foreclosure proceedings regardless of its investigation of the Plaintiff’s account. Since this is an attempt to plead a fraud by concealment claim, there must be particular allegations that the Defendant had a duty to disclose each of these facts. The Plaintiff’s Second Amended Complaint lacks these particular facts.

Therefore, the Court will sustain the demurrer to the sixth cause of action. This is the Plaintiff’s third attempt to plead his claims. California law imposes the burden on the Plaintiff to demonstrate the manner in which he can amend his pleadings to state her claims against these Defendants. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff does not meet this burden and made only a routine request for leave to amend. Accordingly, the Court will not grant leave to amend.

3. Motion to Strike
The Defendant requests that the Court strike the claim for punitive damages from paragraph 94 of the fourth cause of action for negligence per se, from paragraph 105 of the sixth cause of action for fraud, and from the prayer for relief.
CCP section 436 authorizes the Court to strike portions from a pleading that are improper or not drawn in conformity with California law. A motion to strike is the procedure to attack an improper remedy. Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1561-1562.
A complaint including a request for punitive damages must include allegations showing that the plaintiff is entitled to an award of punitive damages. Clauson v. Superior Court (1998) 67 Cal. App. 4th 1253, 1255. A claim for punitive damages cannot be pleaded generally and allegations that a defendant acted “with oppression, fraud and malice” toward plaintiff are insufficient legal conclusions. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.

First, the fourth cause of action for negligence per se is based on the claim that the Defendant violated Civil Code section 1717, which concerns the award of attorney’s fees to a party that prevails in an action related to a contract. The Plaintiff alleges that the Defendant violated section 1717by charging the Plaintiff for attorney’s fees that it has accrued in litigation before a determination on the prevailing party has been made.
In paragraph 94, the Plaintiff alleges that the Defendant acted with malice, fraud, or oppression. There are no fact allegations that support these legal conclusions. This is insufficient to plead a claim for punitive damages. Accordingly, the Court will strike the claim for punitive damages from paragraph 94 of the fourth cause of action.

ALso, the sixth cause of action for fraud lacks sufficient facts and, as noted above, the Defendant’s demurrer is sustained as to it. Since this will remove the cause of action, the request to strike the claim for punitive damages in paragraph 105 of the sixth cause of action is moot.

Third, the prayer for relief is based on the claims for punitive damages in paragraphs 94 and 105 of the fourth and sixth causes of action. Since these paragraphs are being removed, there are no allegations supporting the claim for punitive damages in the prayer for relief. Accordingly, the Court will strike the claim for punitive damages from the prayer for relief.

Therefore, the Court will grant the Defendant’s motion to strike in its entirety and remove the claims for punitive damages from the Second Amended Complaint. Since the Plaintiff offers no grounds to find that he can correct the defects in his third attempt to plead his claims by amendment, the Court will not grant leave to amend.

RULING:
OVERRULE demurrers to third, fourth, and tenth causes of action
SUSTAIN demurrer to sixth cause of action without leave to amend.

GRANT motion to strike.