2012-00125096-CU-OR

Leonard C Jones vs. Aegis Wholesale Corporation

Nature of Proceeding: Hearing on Demurrer to Second Amended Complaint

Filed By: Bao, Andrew A.

**If oral argument is requested, at such time, the parties are directed to notify the
clerk of the specific causes of action that will be addressed at the hearing.**

The demurrer of Defendants Citimortgage, Inc., (“Citi”) Carrington Mortgage Services,
LLC, (“Carrington”) and Mortgage Electronic Registration Systems, Inc. (“MERS”)
(collectively “Defendants”) to the second amended complaint (“SAC”) of Plaintiff
Leonard Jones (“Jones”) is ruled upon as follows.

Defendants’ request for judicial notice is granted. In taking judicial notice of the
recorded land documents, the court accepts the fact of their existence, not the truth of
their contents. (Herrera v. Deutsche Bank Nat’l Trust Co. (2011) 196 Cal.App.4th
1366, 1375.)

This action arises out of a residential mortgage loan secured by a Deed of Trust
obtained by Plaintiff in October of 2005. Plaintiff failed to make payments under the
Deed of Trust, and a Notice of Default was recorded on June 27, 2011. A Notice of
Trustee’s Sale was recorded on May 7, 2012. The property was sold at a foreclosure
sale on August 8, 2012 and was records on August 23, 2012.

Plaintiff alleges the following six causes of action: (1) negligence, (2) fraud, (3) breach
of contract, (4) breach of implied covenant of good faith and fair dealing, (5) unjust
enrichment, and (6) slander of title.

Negligence

Defendants demur on the ground that they owed no duty of care to Plaintiff. A lender
does not generally owe a duty of care to a borrower. “Liability to a borrower for
negligence arises only when the lender ‘actively participates’ in the financed enterprise
‘beyond the domain of the usual money lender.'” (Nymark v. Hart Fed. Savings & Loan
Assn. (1991) 231 Cal.App.3d 1089, 1096.) Here, Plaintiff has not alleged any facts
indicating that the moving Defendants actively participated in the origination or
administration of Plaintiff’s loan at all, let alone “beyond the domain of the usual money
lender.”

To the extent Plaintiff alleges that MERS was negligent by splitting the note from the deed and that the foreclosure of his home was somehow wrongful because a single
person or entity did not possess both the note and deed of trust at the time of
foreclosure, Jones errs. (See, e.g., Debrunner v. Deutsche Bank National Trust Co.
(2012) 204 Cal.App.4th 433, 440.)

Additionally, Courts have rejected Plaintiff’s securitization theory. ( Sami v. Wells
Fargo Bank (N.D.Cal. 2012) 2012 U.S.Dist LEXIS 38466, at 14-16 [rejecting claims
that the defendant bank had no enforceable rights to the subject property as a result of
improper securitization and noncompliance with the PSA]; Tilley v. Ampro Mortg.
(E.D.Cal. 2012) 2012 U.S.Dist.LEXIS 1935, at 4 [holding the plaintiff lacked standing to
assert securitization of her loan violated terms of PSA, to which she was not a party].)

To the extent Plaintiff argues that Citi and Carrington violated Civ. Code §2923.5, the
SAC fails to allege that he was not contacted to explore options to avoid foreclosure.
Instead, Plaintiff alleges that he was “harmed” because they would “not consider and
explore financial options with Plaintiff.” Moreover, Plaintiff’s allegation that Citi and
Carrington “had a duty to disclose the fact that Defendants did not own the note” is not
a requirement of Civ. Code §2923.5.

For all of the above reasons, the demurrer is SUSTAINED without leave to amend.

Fraud

Defendants demur on the grounds that Plaintiff failed to allege fraud with sufficient
specificity. The Court agrees. Plaintiff must plead the specific facts establishing each
and every element of fraud. (Lazar v. Superior Court (Rykoff-Sexton, Inc.) (1996)12
Cal.4th 631, 638.) Plaintiff must plead facts which show,
among other things, how, when, where, to whom and by what means any
misrepresentations were made. (Citizens of Humanity, LLC v. Costco Wholesale Corp.
(2009) 171 Cal.App.4th 1, 20.) Furthermore, fraud allegations against corporate
defendants must set forth the names of the individuals who made the
misrepresentations, their authority to speak, to whom they spoke, what they said or
wrote, and when it was said or written. (Id.) These allegations are absent from the
SAC, and the demurrer to the cause of action is SUSTAINED without leave to amend.

To the extent Plaintiff seeks leave to amend to add MERS as a defendant to this cause
of action, the request is DENIED. The Court’s 5/13/2013 Order on Defendants’
demurrer sustained without leave to amend, this cause of action against MERS.

Breach of Oral Contract

Plaintiff alleges that he entered into an oral contract with Carrington and Citi that he
would make payments to them if they would modify his original contract.

Plaintiff offered no consideration for a loan modification, as his payments were merely
good faith payments towards the original debt. In the absence of consideration, a
gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust
deed ordinarily would be unenforceable under section 1698. (Raedeke v. Gibraltar
Sav. & Loan Assn. (1974) 10 Cal. 3d 665, 673.) Moreover, a mortgage or deed of trust
also comes within the statute of frauds. Civil Code section 2922 states: “A mortgage
can be created, renewed, or extended, only by writing, executed with the formalities
required in the case of a grant of real property.” (Secrest v. Security National Mortgage Loan Trust 2002 -2 (2008) 167 Cal. App. 4th 544, 552-553.) Thus, the
agreement to modify the loan cannot be accomplished by an oral contract

Accordingly the demurrer is SUSTAINED without leave to amend.

Breach of Implied Covenant of Good Faith and Fair Dealing

The demurrer is SUSTAINED without leave to amend. The implied covenant of good
faith and fair dealing is “a supplement to an existing contract.” (McClain v. Octagon
Plaza, LLC, (2008) 159 Cal.App.4th 784, 799.) Here, the Court has sustained
Plaintiff’s breach of contract cause of action without leave to amend, thus, he has
failed to allege breach of any contract. Plaintiff, therefore, cannot rely on the implied
covenant of good faith and fair dealing to impose additional obligations on Defendants.

Unjust Enrichment

Defendants demur on the grounds that unjust enrichment is a remedy, not a cause of
action itself. (See McBride v. Boughton (2004) 123 Cal.App.4th 379 , 378; Munoz v.
MacMillan (2011) 195 Cal.App.4th 379, 387.) The Munoz court held, “There is no
freestanding cause of action for ‘restitution’ in California.
[citation] Common law principles of restitution require a party to return a benefit when
the retention of such benefit would unjustly enrich the recipient; a typical cause of
action involving such remedy is ‘quasi-contract.’ [citation]” The Munoz court also cited
with approval Federal Deposit Ins. Corp v. Dintino (2008) 167 Cal.App.4th 333, 346,
which noted, “Whether termed unjust enrichment, quasi-contract, or quantum meruit,
the equitable remedy of restitution when unjust enrichment has occurred ‘is an
obligation (not a true contract [citation]) created by the law without regard to the
intention of the parties, and is designed to restore the aggrieved party to his or her
former position by return of the thing or its equivalent in money.'”

Here, Plaintiff alleges no facts establishing that Defendants have wrongfully benefited
at Plaintiff’s expense. As noted above, his payments were merely good faith payments
towards the original debt.

The demurrer is SUSTAINED without leave to amend.

Slander of Title

The demurrer is SUSTAINED without leave to amend. The recording of documents in
connection with foreclosure proceedings is privileged pursuant to the provisions of Civ.
Code §47. (See Civil Code §2924(d).) Plaintiff has failed to allege any facts to indicate
that the qualified privilege does not apply.

The Court declines to grant leave to amend as this is Plaintiff’s second attempt to cure
the defects.

Defendants shall submit a formal order and judgment of dismissal pursuant to CRC
3.1312 for the Court’s signature.