Case Name: Ezequiel Hinojos v. Asset Ventures, LLC, et al.
Case No.: 1-13-CV-256853

This action arises out of foreclosure proceedings initiated against plaintiff Ezequiel Hinojos’s (“Plaintiff”) property in San Jose. Plaintiff brings this action against defendant Newport Beach Holdings, LLC (“Newport”), the former holder of the deed of trust secured by the property, and other entities associated with the foreclosure. In his third amended complaint (the “TAC”), Plaintiff asserts claims for (1) violation of Civil Code section 2924c, subdivision (b)(1), (2) unlawful and attempted foreclosure, (3) cancellation of recorded instruments, (4) unfair business practices, and (5) fraud against Newport.

Newport demurs to each of these causes of action on the ground that it fails to state a claim (Code Civ. Proc. (“CCP”), § 430.10, subd. (e)), and moves to strike portions of the TAC (CCP, § 436, subds. (a) and (b)).

I. Requests for Judicial Notice

Newport’s request for judicial notice of its certificate of good standing from the Nevada Secretary of State is GRANTED. (Evid. Code, § 452, subd. (c); Waltrip v. Kimberlin (2008) 164 Cal.App.4th 517, 522, fn. 2 [taking judicial notice of corporate certificate of status]; Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1286-1287 [same].)

Plaintiff’s request for judicial notice of a prior discovery order in this action is DENIED as the order, which pertains to discovery served by Plaintiff upon another defendant, is not relevant to the instant motions by Newport. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [only relevant matters subject to judicial notice].) Deemed admissions by another defendant are not binding against Newport. (See CCP, § 2033.410, subd. (b) [an admission by a party “is binding only on that party”].)

II. Demurrer to the First and Second Causes of Action

Plaintiff’s claims for violation of Civil Code section 2924c, subdivision (b)(1) and unlawful foreclosure arise from alleged deficiencies in the foreclosure proceedings initiated against his property. The Court (Hon. Carol Overton) sustained Newport’s previous demurrer to these claims on the ground that Newport is not liable for violations related to the foreclosure process, because Plaintiff’s allegations reflected that Newport assigned any interest it had in the deed of trust to another defendant before the notice of default was recorded against Plaintiff. In addition, the Court found that Plaintiff had failed to allege any facts in support of his aiding and abetting, co-conspiracy, or joint venture theories of liability.

The instant demurrer to these claims is SUSTAINED WITHOUT LEAVE TO AMEND for the same reasons. With respect to aiding and abetting, Plaintiff does not explain how the passing of the deed of trust through Newport substantially assisted the foreclosing defendants in wrongfully initiating foreclosure proceedings against Plaintiff’s property. (See Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 744 [aiding and abetting liability requires the provision of substantial assistance to the tortfeasor].) Such explanation is also required to state a claim for conspiracy. (See Nicholson v. McClatchy Newspapers (1986) 177 Cal.App.3d 509, 521 [to state a claim for conspiracy, plaintiff must allege the damage resulting from the actions taken pursuant to the conspiracy].) With respect to both of these theories, Plaintiff does not explain how he was prejudiced by the defendants’ asserted scheme as required to state a claim for wrongful foreclosure. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) As to the joint venture theory, Plaintiff again fails to allege that Newport shared profits and losses with the other defendants and had a right to joint control of the purported venture. (See April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 819.)

III. Demurrer to the Third Cause of Action

The Court sustained Newport’s previous demurrer to Plaintiff’s claim for cancellation of recorded instruments on the ground that Plaintiff failed to allege facts indicating that the assignments of the deed of trust are void or voidable.

The instant demurrer to this claim is SUSTAINED WITHOUT LEAVE TO AMEND for the same reasons. Plaintiff argues that because Newport did not register as a foreign LLC pursuant to former Corporations Code section 17050, et seq., it had no right to transact business in California at the time the assignments of the deed of trust were executed in 2012. However, “[t]he purpose of the certificate of qualification is to facilitate service of process and to protect against state tax evasion” (United Medical Management Ltd. v. Gatto (1996) 49 Cal.App.4th 1732, 1741), and Plaintiff cites no authority supporting the proposition that Newport’s alleged failure to register would invalidate the assignments at issue. (See Perlas v. Mortgage Elec. Registration Sys. (N.D. Cal., Aug. 5, 2010, No. C 09-4500 CRB) 2010 U.S.Dist.LEXIS 79705, *18-21 [rejecting this argument in the context of parallel section 2105 of the Corporations Code].) To the contrary, as previously noted by the Court, the Corporations Code expressly provides that a foreign LLC may acquire deeds of trust without registering. This was true under former Corporations Code section 17001, subdivision (ap)(2)(G)-(H) just as it is today. Plaintiff’s alternative theory that Newport is not a valid business entity in any state is inconsistent with the judicially noticeable certificate of good standing and the prosecution of a lawsuit against Newport.

IV. Demurrer to the Fifth Cause of Action

The Court sustained Newport’s prior demurrer to Plaintiff’s fraud claim on the ground that Plaintiff failed to allege any fraudulent conduct attributable to Newport.

The instant demurrer to the fifth cause of action is SUSTAINED WITHOUT LEAVE TO AMEND for the same reason. Plaintiff’s allegations respecting Newport depend upon his theories that Newport was not a valid business entity or was not authorized to transact business in California, which fail for the reasons already discussed. In addition, Plaintiff fails to allege any damages resulting from Newport’s alleged fraud.

V. Demurrer to the Fourth Cause of Action

The demurrer to the fourth cause of action for unfair competition is SUSTAINED WITHOUT LEAVE TO AMEND, given that it depends upon Plaintiff’s other claims and Plaintiff fails to allege any damages resulting from the asserted unfair competition. (See Krantz v. BT Visual Images, LLC (2001) 89 Cal.App.4th 164, 178 [the viability of a section 17200 claim stands or falls with the antecedent substantive causes of action]; Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1590 [“only plaintiffs who have suffered actual damage may pursue a private UCL action”].) The Court previously sustained Newport’s demurrer to this claim as well.

VI. Motion to Strike

The motion to strike is MOOT in light of the rulings above.