Case Name: Yaminali Javid, et al. v. JP Morgan Chase Bank, N.A., et al.
Case No.: 1-13-CV-239211
After full consideration of the arguments, authorities, and papers submitted by each party, the court makes the following rulings:
On December 3, 2004, plaintiffs Yaminali and Athyia Javid (collectively, “Plaintiffs”) agreed to an ARM loan from Washington Mutual Bank, N.A. (“WAMU”) for $999,999, secured by the subject property. (First Amended Complaint (“FAC”), ¶¶ 2, 19-20.) In 2009, defendant JP Morgan Chase Bank, N.A. (“Chase”) acquired or took over WAMU. (FAC, ¶ 2.) In April 2010, Plaintiffs defaulted on the loan. (FAC, ¶ 25.) Since March 2010, Plaintiffs have tried to modify their loan, contacting Chase at their Santa Clara location to attempt a loan modification. (FAC, ¶ 26.) In April 2010, Plaintiffs apparently talked to an employee at Chase who orally assured Plaintiffs that their loan would be modified, but that “their loan modification as per Obama Plan cannot be done unless they stop making payments.” (FAC, ¶ 27.) On January 2, 2013, a Chase representative told Plaintiffs that they did not qualify for a loan modification and that their loan modification was denied. (FAC, ¶ 36.)
On March 27, 2014, Plaintiffs filed their first amended complaint (“FAC”) against Chase, WAMU, and California Reconveyance Company (“CRC”), asserting causes of action for: (1) breach of oral contract; (2) promissory estoppel; (3) breach of the implied covenant of good faith and fair dealing; (4) fraud; (5) intentional misrepresentation; (6) unfair business practices; (7) quiet title; (8) set aside sale; (9) violation of the California Rosenthal Act; (10) declaratory relief; and (11) preliminary and permanent injunctive relief.
On April 29, 2014, Chase, for itself and as acquirer of certain assets and liabilities of WAMU from the Federal Deposit Insurance Corporation, as Receiver for WAMU, and CRC (collectively, “Defendants”) demurred to the FAC on the grounds that each and every cause of action failed to state facts sufficient to constitute a cause of action. On June 10, 2014, the court (Hon. Joseph H. Huber) sustained the demurrer, without leave to amend, to the first through fourth and seventh through eleventh causes of action. The court overruled the demurrer to the fifth and sixth causes of action.
Pursuant to Code of Civil Procedure section 438, subdivision (c)(1)(B)(ii), Defendants filed the instant motion for judgment on the pleadings as to the fifth and sixth causes of action of the FAC on the grounds that they fail to state sufficient facts to constitute a cause of action.
Defendants’ request for judicial notice of the Purchase and Assumption Agreement (“P & A Agreement”) is GRANTED. (See Evid. Code § 452, subd. (d) and (h); see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [only relevant matters subject to judicial notice]; see also Allen v. United Fin. Mortg. Corp., (N.D. Cal. 2009) 660 F. Supp. 2d 1089, 1094.)
On its own motion, the Court takes judicial notice of the FAC, the court’s June 10, 2014 order, and the Deed of Trust that was recorded in the Santa Clara County Recorder’s Office on December 16, 2004 (the “Deed of Trust”). (See Evid. Code § 452, subds. (c), (d), (h); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 [“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 a recorded document, and the document’s legally operative language [. . .] [and, f]rom this, the court may deduce and rely upon the legal effect of the recorded document”].)
As a preliminary matter, the Court finds that Defendants’ motion is made on different grounds than their demurrer because it raises new arguments that were not addressed by the court (Hon. Joseph H. Huber) when ruling on the previous demurrer. See Farber v. Bay View Terrace Homeowners Assn. (2006) 141 Cal.App.4th 1007, 1010-1013 [holding that the defendant was free to raise its argument regarding standing by motion for judgment on the pleadings because the trial court did not consider that argument when it overruled the demurrer to the complaint]; see also Thomson v. Canyon (2011) 198 Cal.App.4th 594, 603 [since the motion for judgment on the pleadings was based on the parol evidence rule and the parol evidence rule was not raised on demurrer, the defendant’s argument regarding the same was a proper basis for the motion].) Thus, the motion is appropriate under Code of Civil Procedure section 438, subdivision (g). (See Yancey v. Super. Ct. (1994) 28 Cal.App.4th 558, 562, fn.1.)
With respect to the fifth cause of action for intentional misrepresentation, Plaintiffs fail to allege facts sufficient to constitute a cause of action. Plaintiffs’ claim for intentional misrepresentation is premised, in part, on alleged representations regarding whether Plaintiffs would qualify for a loan modification. (FAC, ¶¶ 27, 82, 93, 102.) These representations are speculative and not pleaded with specificity because they do not sufficiently state whether the alleged misrepresentation was written or oral, the authority of the person to speak on Defendants’ behalf, when and where the statement was allegedly made, or to whom the statement was allegedly made. (See Bhandari v. Capital One, N.A., (N.D. Cal. Dec. 21, 2012) 2012 U.S. Dist. LEXIS 182317, 4-5, 14-16.) Additionally, the alleged failure to perform a future act is not actionable fraud. (See Von Schrader v. Milton (1929) 96 Cal.App. 192, 200 (stating that “[a] mere promise to perform an act in the future is not, in a legal sense, a representation, nor does a failure to perform such promise convert it into a false representation”); see also Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 [stating that “predictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud”].)
Moreover, the FAC does not contain any allegations that establish that Defendants knew the alleged representation was false when it was made. Furthermore, since the alleged promise that Plaintiffs would receive a loan modification contained no terms and was ambiguous in nature, there are no resulting damages or justifiable reliance because it was uncertain as to what type of modification Plaintiffs would receive, and it was entirely possible that they would receive a modification with terms that were detrimental to them. (See Bhandari v. Capital One, N.A., supra, at p. 16; see also Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 638 [requiring both as elements of a fraud claim]; see also Blake v. Paramount Pictures, Inc. (D. Cal. 1938) 22 F.Supp. 249, 252 [stating that “[t]o be fraudulent as having been made without intention to perform, a promise must be specific, definite”].) Finally, as noted in the court’s June 10, 2014 order, the remaining representations that are alleged in the FAC, and incorporated by reference into the fifth cause of action, do not constitute misrepresentations. (See Order RE: Defendants’ Demurrer to the First Amended Complaint, p. 8:3-28, 9:1-8.)
To the extent that Plaintiffs’ claim for intentional misrepresentation is premised on Chase’s alleged suppression and/or concealment of information regarding the terms of the loan at origination (FAC, ¶ 104), the allegations fail because Defendants did not assume liability for the origination of the loans by WAMU. (See Order RE: Defendants’ Demurrer to the First Amended Complaint, p. 7:16-22; see also Hilton v. Wash. Mut. Bank (N.D.Cal. Oct. 28, 2009) 2009 U.S. Dist. LEXIS 100441, 1, 8.) Furthermore, Plaintiffs do not explain how Defendants had a duty to disclose information regarding the terms of the loan when they did not participate in the origination of the loan.
With respect to the sixth cause of action for unfair business practices, Plaintiffs fail to allege facts sufficient to constitute a cause of action. Plaintiffs have failed to allege a predicate violation for their UCL claim because, as indicated above, their first through fifth and seventh through eleventh causes of action did not state sufficient facts to constitute a cause of action. Furthermore, the majority of the acts of unfair business practice alleged in the sixth cause of action are acts that relate to the 2004 loan origination, for which Defendants are not liable. (See Hilton v. Wash. Mut. Bank (N.D. Cal. Oct. 28, 2009) 2009 U.S. Dist. LEXIS 100441, 1, 8; see also GECCMC 2005-C1 Plummer St. Office Ltd. Partnership v. JP Morgan Chase Bank, N.A. (9th Cir. 2012) 671 F.3d 1027, 1036.) The remaining acts of unfair business practice alleged in the sixth cause of action, pertaining to Defendants’ purported use of “dual tracking,” are alleged in a conclusory fashion without pleading facts that demonstrate as much. Even if Plaintiffs had pleaded dual tracking with particularity, the statutes that prohibit the practice, such as Civil Code sections 2923.6 and 2924.18, did not go into effect until January 1, 2013, and the FAC alleges that Plaintiffs submitted their loan modification applications in the spring of 2010. (See Reyes-Aguilar v. Bank of Am., N.A., (N.D. Cal. June 24, 2014) 2014 U.S. Dist. LEXIS 86627, 22, fn. 4 [there is no indication that the Legislature intended this statute to have a retroactive effect.]; see also Rockridge Trust v. Wells Fargo, N.A., (N.D. Cal. 2013) 985 F. Supp. 2d 1110, 87-103; see also Evangelatos v. Super. Ct. (1988) 44 Cal.3d 1188, 1208-1210.)
Additionally, specific statutes identified by Plaintiffs, Civil Code sections 1709, 1710, 1711, 1770, and 1920, and Business and Professions Code section 10130 and 17500, are either inapplicable or Plaintiffs have not alleged facts demonstrating that Defendants violated the same. Civil Code section 1920 sets forth requirements for mortgage instruments such that it governs conduct that would have occurred at the time the loan originated, for which Defendants are not liable. (See Civ. Code § 1920.) Civil Code sections 1709, 1710, 1711 concern deceit which is, in essence, a claim for fraud, and Plaintiffs failed to allege facts sufficient to constitute a claim for fraud or intentional misrepresentation. (See Civ. Code §§ 1709-1711; see also Diaz v. Fed. Express Corp., (C.D. Cal. 2005) 373 F.Supp.2d 1034, 1066-1067.) Civil Code section 1770 applies only to transactions involving goods or services and the alleged loan modification that forms the basis of Plaintiffs’ FAC is neither a good nor a service. (See Civ. Code § 1770; see also Justo v. Indymac Bancorp, 2010 U.S. Dist. LEXIS 22831, 9-10 (C.D. Cal. Feb. 19, 2010).) Business and Professions Code section 10130 states that it is unlawful for any person to act or advertise as a real estate broker or salesperson without first obtaining a real estate license, or act as a mortgage loan originator without having obtained a license endorsement, but the FAC does not contain any allegations with regard to Defendants’ licenses. (See Bus. & Prof. Code § 10130.) Finally, Business and Professions Code section 17500 prohibits false or misleading advertising regarding real property, but the FAC does not contain any allegations regarding advertisements done by Defendants with respect to the loan modification. (See Bus. & Prof. Code § 17500; see also Chern v. Bank of America (1976) 15 Cal. 3d 866, 875; see also Bank of the West v. Super. Ct. (1992) 2 Cal. 4th 1254, 1277 [advertising generally means widespread promotional activities directed to the public at large].)
In their opposition, Plaintiffs do not explain how the fifth or sixth causes of action might possibly state facts sufficient to constitute a cause of action if amended. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [“Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”].)
Accordingly, Defendants’ motion for judgment on the pleadings as to the fifth and sixth causes of action is GRANTED, without leave to amend.
The Court will prepare the order. After Defendants have served notice of entry of the order, Defendants shall submit a proposed judgment of dismissal.
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