Homero Cano vs. Nbs Default Services, LLC

Demurrer to Complaint

Cal. Super. - 4th Dist.November 2, 2016

A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P o e N N n t 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 David M. Newman (# 246351) dnewman@afrct.com ANGLIN, FLEWELLING, RASMUSSEN, CAMPBELL & TRYTTEN, LLP 301 N. Lake Avenue, Suite 1100 Pasadena, California 91101-4158 Telephone: (626) 535-1900 Facsimile: (626) 577-7764 Attorneys for Defendant WELLS FARGO BANK, N.A., successor by merger with Wells Fargo Bank Southwest, N.A., f/k/a Wachovia Mortgage, FSB, f/k/a World Savings Bank, FSB SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE - CENTRAL JUSTICE CENTER HOMERO CANO; LIDIA CANO, Case No.: 30-2016-00884445 Plaintiffs, [Assigned to the Honorable James L. Crandall, Dept. C33] \2 WELLS FARGO BANK, N.A.’S NOTICE NBS DEFAULT SERVICES, LLC; WELLS OF DEMURRERS AND DEMURRERS TO FARGO BANK, N.A.; THE HARVEY LANE COMPLAINT; MEMORANDUM OF TRUSTE # 12345; WORLD SAVINGS POINTS AND AUTHORITIES; BANK, FSB; and DOES 1 THROUGH 45, DECLARATION OF DAVID M. INCLUSIVE, NEWMAN Defendants. [Filed concurrently with Requestfor Judicial Notice] Date: January 26, 2017 Time: 1:30 p.m. Dept.: C33 Reservation No.: 72497788 Action Filed: November 2, 2016 Trial Date: None Set TO PLAINTIFFS AND THEIR COUNSEL OF RECORD:PLEASE TAKE NOTICE that on January 26, 2017, at 1:30 p.m., in Department C33 ofthe above-entitled Court, located at 700 Civic Center West, Santa Ana, California 92701, the Honorable James L. Crandall presiding, Defendant Wells Fargo Bank, N.A., successor by merger 1 WELLS FARGO BANK’S NOTICE OF DEMURRERS AND DEMURRERS TO COMPLAINT A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O 0 0 0 A N h h 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 with Wells Fargo Bank Southwest, N.A., f/k/a Wachovia Mortgage, FSB, f/k/a World Savings Bank, FSB (“Wells Fargo”) will demurto all causes of action in the Complaint. Grounds for the demurrersare set forth in the accompanying statement of demurrers. The demurrersare based on this notice, the statement of demurrers, the memorandum of points and authorities, the complaint, the accompanying request for judicial notice, and on Wells Fargo’s argumentat the hearing. Pursuant to Code of Civil Procedure § 430.41, a declaration of counsel is attached hereto concerning meet and confer efforts. Dated: December 13, 2016 Respectfully submitted, ANGLIN, FLEWELLING, RASMUSSEN, CAMPBELL & TRYTTEN, LLP By: _/4a [id M. Newman Atténeys for Defendant WELLS FARGO BANK, N.A., successor by merger with Wells Fargo Bank Southwest, N.A., f/k/a Wachovia Mortgage, FSB, f/k/a World Savings Bank, FSB 2 WELLS FARGO BANK'S NOTICE OF DEMURRERS AND DEMURRERS TO COMPLAINT A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O R 9 S N n t » 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATEMENT OF DEMURRERS Grounds for the demurrersare: First Cause of Action: Violation of Homeowners Bill of Rights (Civil Code § 2923.5) Plaintiffs fail to state a cause of action because: (1) the “note ownership” theory of wrongdoing is not a recognized basis for a claim in California; (2) Plaintiffs do not allege that they satisfy the statutory prerequisites; and (3) Plaintiffs do not allege the statutory violations with particularity. Civ. Proc. Code § 430.10(e). Second Cause of Action: Wrongful Foreclosure Plaintiffs fail to state a cause of action because: (1) the “note ownership” theory of wrongdoing is not a recognized basis for a claim in California; and (2) Plaintiffs fail to plead tender. Civ. Proc. Code § 430.10(¢). Third Cause of Action: Cancellation of Written Instrument Plaintiffs fail to state a cause of action because: (1) the “note ownership” theory of wrongdoing is not a recognized basis for a claim in California; and (2) Plaintiffs fail to plead tender. Civ. Proc. Code § 430.10(e). Fourth Cause of Action: Set Aside Auction Sale Plaintiffs fail to state a cause of action because: (1) the “note ownership” theory of wrongdoing is not a recognized basis for a claim in California; and (2) Plaintiffs fail to plead tender. Civ. Proc. Code § 430.10(¢). Fifth Cause of Action: Constructive Fraud Plaintiffs fail to state a cause of action because: (1) the “note ownership” theory of wrongdoing is not a recognized basis for a claim in California; (2) Wells Fargo did not owe a fiduciary duty to Plaintiffs; and (3) Plaintiffs cannot convert a contract claim into a tort claim. Civ. Proc. Code § 430.10(e). SixthCause of Action: Fraud in theInducement Plaintiffs fail to state a cause of action because: (1) the “note ownership” theory of wrongdoing is not a recognized basis for a claim in California; (2) Wells Fargo did not owe a 3 WELLS FARGO BANK’S NOTICE OF DEMURRERS AND DEMURRERS TO COMPLAINT A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O 0 0 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 fiduciary duty to Plaintiffs; and (3) Plaintiffs cannot convert a contract claim into a tort claim. Civ. Proc. Code § 430.10(e). Seventh Cause of Action: Intentional Infliction of Emotional Distress Plaintiffs fail to state a cause of action because foreclosing on a deed oftrust is not outrageous behavior. Civ. Proc. Code § 430.10(e). Eighth Cause of Action: Slander of Title Plaintiffs fail to state a cause of action because: (1) Plaintiffs lack legal title; and (2) Plaintiffs fail to plead tender. Civ. Proc. Code § 430.10(e). Ninth Cause of Action: Quiet Title Plaintiffs fail to state a cause of action because: (1) Plaintiffs lack legaltitle; and (2) Plaintiffs fail to plead tender. Civ. Proc. Code § 430.10(¢). Tenth Cause of Action: Declaratory Relief Plaintiffs fail to state a cause of action because there is no actual and present controversy between the parties. Civ. Proc. Code § 430.10(¢). Eleventh Cause of Action: Negligence Plaintiffs fail to state a cause of action because: (i) Plaintiffs cannot allege the existence of a duty of care concerning the loan modification process; and (ii) Plaintiffs fail to plead damages. Civ. Proc. Code § 430.10(¢). 1" 1" 1 1 /1/ 1" 1 1 1 4 WELLS FARGO BANK'S NOTICE OF DEMURRERS AND DEMURRERS TO COMPLAINT A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P w m b h W N O e a 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Twelfth Cause of Action: Violation of Bus. & Prof. Code 17200 Plaintiffs fail to state a cause of action because: (i) Plaintiffs fail to plead any unfair, unlawful, or fraudulent business practice; and (ii) Plaintiffs lack standing and have no available remedy under the statute. Civ. Proc. Code § 430.10(e). Respectfully submitted, Dated: December 13, 2016 ANGLIN, FLEWELLING, RASMUSSEN, CAMPBELL & TRYTTEN,LLP JN/ By: / _ Dax3jd M. Newman Atto s for Defendant WELLS FARGO BANK, N.A., successor by merger with Wells Fargo Bank Southwest, N.A., f/k/a Wachovia Mortgage, FSB, f’k/a World Savings Bank, FSB 5 WELLS FARGO BANK'S NOTICE OF DEMURRERS AND DEMURRERS TO COMPLAINT A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P H A W N h h 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page(s) MEMORANDUM OF POINTS AND AUTHORITIES .......coocoimmeiiiierieieeeree evee1 1. INTRODUCTIONLoctitenastiesseas esses sss esate estas eres eb esnasanea 1 2. SUMMARY OF RELEVANT ALLEGATIONS AND FACTS......cocoovereereeereeievis 1 3. NONE OF THE CAUSES OF ACTION HAVE MERIT .........cooiimeieieceeeeeven2 A. All Causes OfAction Based On The “Securitization / Note-Ownership” Theory Are Fatally FIawed .........cccooveovmiiirieieecnicecrceieecece2 The First Cause Of Action For Violation OfHomeowners Bill Of Rights. ............. 5 C. Second, Third, And Fourth Causes OfAction: Wrongful Foreclosure, Cancellation Of Written Instruments, And “Set Aside Auction Sale” ......o.ocevn..n..6 D. Fifth And Sixth Causes OfAction: Constructive Fraud And Fraud In The CONCEAIMENL ....ccviiccie cseatersa bans7 E. Seventh Cause Of Action: Intentional Infliction Of Emotional Distress.................8 F. Eight And Ninth Causes Of Action: Slander Of Title And Quiet Title...................9 G. Tenth Cause OfAction: Declaratory Relief............ocoovvevieeiviinieeeeeeeeeeeeeene 10 H. The Eleventh Cause Of Action For Negligence ........cocouecvvvvmiviveviiiecieeeeeee, 11 I. The Twelfth Cause OfAction For Violation OfBus. & Prof. Code § T7200...centersesses eben este n eben aes sean 12 i. Plaintiffs Have Not Pled Facts Under The “Unlawful Prong” .................. 13 ii. Plaintiffs Have Not Pled Facts Under The “Unfair Prong” ....................... 13 1il. Plaintiffs Have Not Pled Facts Under The “Fraudulent Prong” ................ 14 iv. Plaintiffs Lack Standing To Allege A UCL Cause Of Action................... 14 4. CONCLUSION ....ooiiiiicicietestersaassesses eens essa sebeset eas sasas teases 15 i TABLE OF CONTENTS A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O e N Y n n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) FEDERAL CASES Campos v. Wells Fargo Bank, N.A., 2015 U.S. Dist. LEXIS 116599 (C.D. Cal. Aug. 31, 2015) .cccoiimiiiiiiiniinierseinieneiniies 14 Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042 (9th Cir. 2000)weveeressess esssesessasses 13 Colbert v. Sage Point Lender Servs., LLC, 2014 U.S. Dist. LEXIS 178468 (E.D. Cal. Dec. 29, 2014) .....ccovivinmiiririiniicicnscncine6 Covarrubias v. Fed. Home Loan Mortg. Corp., 2014 U.S. Dist. LEXIS 10527 (S.D. Cal. Jan. 28,2014)...c..cocviiiiiiiiiiennnenncenses2 Davenport v. Litton Loan Servicing, LP, 725 F.Supp.2d 862 (N.D. Cal. 2010) .....coiiiiiiicirceiteitessesaan,8 Deleon v. Wells Fargo Bank, N.A., 729 F.Supp.2d 1119 (N.D. Cal. 2010)c.countentities5 Frazier v. Aegis Wholesale Corp., 2011 U.S. Dist. LEXIS 145210 (N.D. Cal. Dec. 16, 2011) .c.ccccinmiiiiiniiicinieneiecenns 3 Hale v. World Sav. Bank, 2012 WL 4675561 (E.D. Cal. Oct. 1, 2012)cocoons2 Krug v. Wells Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 143218 (N.D. Cal. Dec. 13, 2011)ccc4 Lueras. Cornejo v. Ocwen Loan Servicing, LLC, 151 F.Supp.3d 1102 (E.D. Cal.2015)...12 Marty v. Wells Fargo Bank, 2011 U.S. Dist. LEXIS 29686 (E.D. Cal. Mar. 21, 2011) .c.ccoiiniiiiiniiceiicneecn3 Santos v. Countrywide Home Loans, 2009 U.S. Dist. LEXIS 103453 (E.D. Cal. Nov. 6, 2009) .......ccoovrininiimirnninniircseienenes 10 STATE CASES Aas v. Superior Court, 24 Cal.dth 627 (2000) c.veveriireeceeeeiieierectasscasaabereseases7 Abdallah v. United Sav. Bank. 43 Cal.APP.4th 1101 (1996)ecientesseneben7, 10 ii TABLE OF AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P N o A N n h A x W w 10 I1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Caldth 503 (1994) ....oooeomiiricrrceeeteeetassetsetsesse seenee eves esses erases sens 7 Bundren v. Superior Court, 145 Cal.APDP.3d, 785 (1983) weitereeectsetree seers essere essen seers ess8 Calif. Assn. ofPrivate Special Edu. Sch. v. Department ofEducation, 141 CalApp.4th 360 (20006) .........cvevereririieieeriteteieiee cscs tsieseeseeeterase sse see e ses enans 10,11 Carter v. Prime Healthcare Paradise Valley LLC, 198 Cal.ApP.4th 396 (2011)coorsetsensesseesne ns eere nan 6 Cel-Tech Commc ns, Inc., v. L.A. Cellular Tel. Co., 20 Calidth 163 (1999) ......oviiriirnierieeeeee rstesteers sees esses rena 13 Committee On Children’s Television v. General Foods Corp., 35 Cal.3d 197 (1983) couriercreteeaterscnetsecon eeee anes sees eres reser sees 14 Covenant Care, Inc. v. Superior Court, 32 Caldth 771 (2004) c..ccourriiicrnieeeeieeeeesessessessee nesses essere s esses ras eons 6 Daro v. Superior Court, 151 Cal.App.4th 1079 (2007) ....covveiieieeeeeietiesieteeessseetse sees eeesese serene 14 Debrunner v. Deutsche Bank Nat I Trust Co., 204 Cal.App.4th 433 (2012) ..eviiriieeeieeeteseeeet ssaessereevs e essere esses sees es essere sneer4 Farmers Ins. Exch. v. Super. Court, 2 CaliAth 377 (1992)ccoeeseee ereeseseers en saene 13 Foley v. Interactive Data Corp., 47 Cal.3d 654 (1988)...cessesseatereeeenters eres eessera7 Fontenot v. Wells Fargo Bank, N.A., 198 Cal.APP.4th 256 (2001) ..euiiiiiiiiieteeeeeeeeteeeeeeeeeeee a ce eeeeteeseerste4,12 G.R. Holcomb Estate Co. v. Burke, 4 Cal.2d 289 (1935)ootetnar ee ersteeres9 Gaffney v. Downey Sav. & Loan, 200 Cal.App.3d 1154 (1988) ...ocvoviieeeieiereiie ieee tesasses seers e assesssess 10 Gomes v. Countrywide Home Loans, Inc., 192 Cal.APP.4th 1149 (2011)weitereeee eee oversees erases eee, 3 Hall v. Time, Inc., 158 Cal.ApP.4th 847 (2008) ....evevvieiiriiireetieeeiereeseteeeessen eves senses sss seses 14 Herrera v. Federal National Mortgage Assn., 205 Cal.ApP.Ath 1495 (2012) ..eeoiicreeeeeeeeee eaeeee eeeeeeese ers e ree se sensesessen4 iii TABLE OF AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P « 0 N N O N n n O o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ingels v. Westwood One Broad Servs., Inc., 129 Cal.App.4th 1050 (2005) ...eoveviciieireieciicteee ectsnese12,13 Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.APP.Ath 497 (2013)ceceeasessreeeae3 Karlsen v. American Sav. & Loan Ass'n, 15 CalLAPP.3A 112 (1971)cereraeeaessbbeasis a nr nsenae7 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003) c.eoriienreeircerereeieeeiesetceteraessere brass asst sabessneha stares 12 Lewis v. Superior Court, 30 Cal.App.4th 1850 (1994) ....oveeieiiniciiccitiiteterestsbeebs9,10 LiMandri v. Judkins, 52 Cal.APP.Ath 326 (1997) ceuvveeeeeienieeieeiiceeiecnesree se secsssssssbeebsasses ease eta nae anaes 11 Lopez v. Southern Cal. Rapid Trans. Dist., 40 Cal.3d 780 (1985) ..cueererierereiierinie st ete sree estate sree basse sb essesseassas sass renee ae bebe nas enes 6 Lueras v. BAC Home Loans Servicing, LP, 221 Cal.APP.4th 49 (2013)weenieetaesas11,12 McElroy v. Chase Manhattan Mortg. Corp., 134 Cal.APP.4th 388 (2005) «eeveeterest eb sass sbe sasseste sree be eer enees7 Mendoza v. JPMorgan Chase Bank, N.A., 228 Cal.App.4th 1020 (2014) ..ccooiiiiirercie tceterasbeebs passim Nguyen v. Calhoun, 105 Cal.App.4th 428 (2003) ...ocvverieicinniiinistensscrasaestessassss ee sree 10 Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal.ApP.3d 1089 (1991)cece11, 12 Perlas v. GMAC Mortg., LLC, 187 Cal.App.4th 429 (2010) .evenieviiereiiriec ircsnessees8, 12 Peterson v. Cellco P’ship, 164 Cal.App.4th 1583 (2008) «.c.veovevirieiiiecieiniii inci itiisetsesresen re saaeseebasb sabes es rene 14 Potter v. Firestone Tire & Rubber Co., 6 Cal.dth 965 (1993) ....iuiiieiieieireeiiciereccrineeeereeseeasesbebe8 Ragland v. U.S. Bank Nat. Assn., 209 Cal.App.4th 182 (2012)eectsessesaes12 Robinson v. Countrywide Home Loans, Inc., 199 Cal.APP.4th 42 (2011)ceoesseseaseseas3 iv TABLE OF AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ross v. Creel Printing & Publishing Co., 100 CalApP.4th 736 (2002) ...ocuvurrueieirieiencieineireseteseseester estsbeses esses se eneseseees 8 Saunders v. Superior Court, 27 CalLAPP.4th 832 (1994)weerensears 13, 14 Shell Oil Co. v. Richter, 52 Cal.APP.2d 164 (1942) c.countseesetesees vse senses sees sane 10 Shimpones v. Stickney, 219 Cal. 637 (1934)ceostebeterases enter7 Sierra—Bay Fed. Land Bank Assn. v. Superior Court, 227 Cal.APP.3d 318 (1991)eectstessaceesatesesastenses eer eeenn8 Siliga v. Mortgage Electronic Registration Systems, Inc., 219 Cal.APP.4th 75 (2013)coeuressesstress seaseesnenero3,4 Software Design and Application Ltd. v. Hoeffer & Arnolt, Inc., 49 Cal.APP.4th 472 (1996)wc.eetsessseset eres eee ses eens esses rennn 11 Stafford v. Ballinger, 199 Cal.APP.2d 289 (1962)ouvertesreesseerseres sae sees 9, 10 Tollefson v. Roman Catholic Bishop, 219 Cal.APP.3d 843 (1990) ....eueieiieeeieieetetceterasees erates eee sees eres anes 9 United States Cold Storage v. Great W. Sav. & Loan Ass 'n., 165 CalLAPP.3d 1214 (1985)oeuvrestesteseerste sets e ears en serene7 Wagner v. Benson 101 Cal.APP.3d 27 (1980) c.vecvveiieeiriereeeeteteetersteste essere seesesseseres een 11 STATE STATUTES Cal. Bus. & Prof. Code § 17200 ..........oviveriieiieeieecreeseeeesense sess eesereasss eee sesssen ons 12, 13, 14 Cal. CIV. COE § TO60........uoereeeatesenerosees se esses esosstessoese. 11 Cal. Civ. €ode § 2923.5...essessseeserasan2 Cal. Civ. Code §§ 2923.5, 2923.55......ccimirerrereiieeiesetcese se ceseeses eases ett se sates st eress sess seas sensesseseos6 Cal. Civ. Code § 2923.55...erectteetaesses esters esas e sess terete eee sen sees5,6 Cal. Civ. Code §8 2924-2924...eveseeeeee etree ease sees renee3 Cal. Civ. Code § 2924.15(8) .....cevveeirceirceeneieieieetersseersesseseteesses eae nearer ereslv Cal. Civ. Proc. Code § 761.020 ....c.cuiuerieiririiceeierceceeeeeeeeeseeseset essere sess eres eres eases 10 Vv TABLE OF AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OTHER AUTHORITIES 5 Witkin, California Procedure, Pleadings § 749 (Sth ed. 2008)........ccoovnviiiiiiiiniiiiie9 vi TABLE OF AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P MEMORANDUM OF POINTS AND AUTHORITIES 1. INTRODUCTION This lawsuit should be dismissed with prejudice. Although Plaintiffs assert twelve claims for relief, the allegations largely boil down to a single complaint about Wells Fargo’s lack of authority to complete the non-judicial foreclosure process. No state or federal law affords Plaintiffs any relief. Given the pleading deficiencies, amendment would be futile. The Court should sustain these demurrers in their entirety without leave to amend. 2. SUMMARY OF RELEVANT ALLEGATIONS AND FACTS In May 2005, Plaintiffs borrowed $416,000 from World Savings Bank, FSB (which is Wells Fargo’s predecessor) pursuant to a written promissory note that was secured by a Deed of Trust (“DOT”) on real property located at 12345 Harvey Lane Drive, Garden Grove, California 92841. (Comp., 9 24, Ex. A)." Plaintiffs allege facts concerning the ali-too-common “the-bank-doesn’t-own-my-loan” theory of wrongdoing. Somehow, at some unspecified point, Wells Fargo allegedly transferred, assigned, or otherwise disposed of the promissory note and DOT to a ‘securitized trust’ that divested Wells Fargo’s ability to collect loan payments and/orinitiate the foreclosure process. (See, e.g., Comp., § 10-13, 31-33, 35-39, 69, 97, and 135). Atits core, the entire lawsuit is premised on the discredited theory that Wells Fargo “is not the beneficiary of the deed of trust” and does not possess the original promissory note, thereby making the entire foreclosure process void. (Comp., § 40-41, and 44-45). Plaintiffs also vaguely allege that Wells Fargo failed to credit payments that were made towards the loan. (Comp., § 67). Plaintiffs do not specify when this alleged failure occurred, or how much wasallegedly misapplied. They merely allege that the failure to credit paymentsled to the wrongful initiation of foreclosure proceedings. (Comp., § 89). Indeed, according to the October 2015 Notice of Default (“NOD”) recorded by Defendant NBS Default Services (the trustee for the DOT), Plaintiffs ceased making loan payments in early 2014. (Comp., § 26, Ex. World Savings Bank eventually merged into Wells Fargo. 1 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P 10 11 12 13 14 15 16 17 18 19 20 2] 22 23 24 25 26 27 28 C). Plaintiffs allege that, prior to the NOD, Wells Fargo did not contact them in orderto discuss alternativesto foreclosure, which they claim violated Civil Code § 2923.5. (Comp., 9 26-27). Since Plaintiffs remained in default on their loan, NBS Default Services recorded a Notice of Trustee's Sale in June 2016. (Comp., § 28, Ex. D). It indicates that Plaintiffs owed $405,945.17 on the loan. Plaintiffs did not repay that debt before the sale so the sale proceeded in July 2016 and Defendant The Harvey Lane Trust purchased the property at auction. (Comp. 29, Ex. E). The Harvey Lane Trust then initiated an unlawful detainer action with the Orange County Superior Court, Case No. 30-2016-00867116-CL-UD-CJC. The Court entered judgment in favor ofThe Harvey Lane Trust and awarded possession in an Order dated November18, 2016. Plaintiffs now assert 12 causes of action against the defendants. As explained below, none ofthem have merit. 3. NONE OF THE CAUSES OF ACTION HAVE MERIT The Court should sustain these demurrers and dismiss all twelve causes of action. A. All Causes Of Action Based On The “Securitization / Note-Ownership” Theory Are Fatally Flawed Although Plaintiffs assert twelve causes of action in the Complaint, the gravamen ofthe lawsuit is that Wells Fargo foreclosed without any legal authority or standing to do so because it was “not the note holder or a beneficiary at any time” with respect to the DOT. (Comp., § 69). This position relies on the discredited ‘my-lender-does-not-own-my-loan’ theory that state and federal courts in California have consistently dismissed for years. “Theories that securitization undermines the lender’s right to foreclose on a property have been rejected by the courts.” Hale v. World Sav. Bank, 2012 WL 4675561, at *7 (E.D. Cal. Oct. 1, 2012); Covarrubias v. Fed. Home Loan Mortg. Corp., 2014 U.S. Dist. LEXIS 10527 (S.D. Cal. Jan. 28, 2014). The position of California courts is summarized in Mendoza v. JPMorgan Chase Bank, N.A., 228 Cal.App.4th 1020 (2014). The appellate court upheld a trials court’s decision to sustain a demurrer without leave to amend to causes of action for wrongful foreclosure, declaratory relief, and quiettitle because the plaintiff lacked standing to challenge irregularities 2 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P N o O 0 0 3 O N W a 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 in the securitization process and failed to demonstrate any prejudice. The trial court properly “rejected [Plaintiff’s] attemptto void the trustee’s sale based on purported defects in the assignment of her deed of trust, irregularities in the substitution of trustees, and flaws in the securitization of her loan.” Id. at 1024. As the Mendoza court noted, “Many courts have aborted homeowners’ lawsuits following foreclosure, holding that the homeowners did not have standing to challenge a vast array of irregularities in the transfer of rights and obligations under assignments and substitutions.” Mendoza, supra, 228 Cal.App.4th at 1030. This is because California does not recognize a cause of action whereby a borrower may “test whether the person electing to sell the property is, or is duly authorized to do so by, the owner ofa beneficial interest init.” Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149, 1154 (2011) (“Nothing in the statutory provisions establishing the nonjudicial foreclosure process suggests that such a judicial proceeding is permitted or contemplated”); Robinson v. Countrywide Home Loans, Inc., 199 Cal.App.4th 42, 45-46 (2011) (“We agree with the Gomes court that the statutory scheme (§§ 2924-2924) does not provide for a preemptive suit challenging standing”); Siliga v. Mortgage Electronic Registration Systems, Inc., 219 Cal.App.4th 75, 82 (2013). In Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497 (2013), the court affirmed dismissal of a declaratory action challenging the lender’s standing to initiate a nonjudicial foreclosure. In upholding the trial court’s decision to sustain the demurrer without leave to amend,it noted: “[Plaintiff] asserts she has a right to bring a preemptive judicial action to determine whether Defendants have the authority to initiate nonjudicial foreclosure on her home; however ... she fails to identify legal authority for such a preemptive action in the statutory provisions setting forth the nonjudicial foreclosure scheme.” Id. at 512-513. Thus, even if Wells Fargo did securitize the loan (which it did not), mere allegations of ‘securitization,’ without anything more,are ineffective to justify any claim seeking to attack a foreclosure sale. See, e.g, Frazier v. Aegis Wholesale Corp., 2011 U.S. Dist. LEXIS 145210, at *9 (N.D. Cal. Dec. 16, 2011) (“Plaintiffs seem to argue that the only persons who would have authority to foreclose are the certificate holders ofthe securitized trust ... Courts, however, have typically rejected such arguments”); Marty v. Wells Fargo Bank, 2011 U.S. Dist. LEXIS 29686, 3 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O o x X 3 O n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 at ¥*#20-21 (E.D. Cal. Mar. 21, 2011) (“plaintiff also claims that the ‘securitization’ of the note was an improper conversion and alteration of the note and deed oftrust... This claim is frivolous, has no support in the law and should be dismissed with prejudice”); Krug v. Wells Fargo Bank, N.A.,2011 U.S. Dist. LEXIS 143218 (N.D. Cal. Dec. 13, 2011) (dismissing with prejudice claims based on allegation that, “as a result of his loan having been ‘securitized” ... the entities now seeking to foreclose lack standing to do s0.”). Plaintiffs’ theory is a legal nullity that has been resoundingly rejected bystate and federal courts alike as applied to non-judicial foreclosure. Non-judicial foreclosure in California is governed by a comprehensive statutory scheme with an exhaustive list ofprocedural requirements that must besatisfied by foreclosing lenders. Nowhere do these extensive statutory provisions state or even suggest that production of a “wet ink original promissory note”is a prerequisite to foreclosure by trustee’s sale. This principle was affirmed in Debrunner v. Deutsche Bank Natl Trust Co., 204 Cal.App.4th 433, 440 (2012) (“We likewise see nothing in the applicable statutes that precludes foreclosure when the foreclosing party does not possess the original promissory note.”). Moreover, even if securitization were a valid basis to challenge the foreclosure sale, Plaintiffsfail to plead any prejudice. “[Whether a plaintiff homeowner's challengeis to defects arising in the foreclosure proceedings or during the securitization process, she must demonstrate prejudice.” Mendoza, supra, 228 Cal.App.4th at 1035. “California courts find a lack of prejudice when a borroweris in default and cannot show that the allegedly improper assignment interfered with the borrower’s ability to pay orthat the original lender would not have foreclosed under the circumstances.” Id.; see also Siliga, supra, 219 Cal.App.4th at 83 (“The assignment of the deed of trust and the note did not change [plaintiffs’] obligations under the note, and there is no reason to believe that ... the original lender would have refrained from foreclosure in these circumstances.”); Herrera v. Federal National Mortgage Assn., 205 Cal.App.4th 1495, 1508 (2012) (finding no prejudice from assignment of loan where borrowers defaulted on the loan and failed to tender and cure default); Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 272 (2001) (finding no prejudice where borrower was in default and did not allege that transfer of note interfered with borrower’s ability to pay). Here, Plaintiffs fail to allege any facts about 4 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P A W N O w 0 2 A N w n 10 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 prejudice. They defaulted on their loan and there is nothing to suggestthat even if the securitization process were properly conducted, they would not have also faced foreclosure. Finally, even if Wells Fargo were required to show that it owned the loan and was authorized to foreclose,it could do so. As demonstrated by admissions in the Complaint and Judicially-noticeable documents, Wells Fargo is the successor-in-interest to the original lender, World Savings, and so hasstanding to enforce the Note as secured by the DOT. In this regard, the following is key: ¢ Plaintiffs admit having obtained a loan from World Savings in 2006 in the amount of $416,000 that was secured by a Deed of Trust which identifies World Savings as the “lender/beneficiary” (Comp., Ex. A); e World Savings changed its name to “Wachovia Mortgage, FSB” on December 31, 2007, and effective November 2009, Wachovia Mortgage, FSB became known as Wachovia Mortgage, a division of Wells Fargo (Request for Judicial Notice “RIN”, Ex. A). These documents demonstrate that World Savings, the original lender, simply changed its name twice and is now merged into Wells Fargo. Several federal district courts facing similar arguments recognized the corporate succession from World Savings to Wells Fargo, and in so doing, noted Wells Fargo’s authority to foreclose. DeLeon v. Wells Fargo Bank, N.4.,729 F.Supp.2d 1119, 1121 (N.D.Cal. 2010). Thus,by virtue of the merger, Wells Fargo has succeeded to all ofthe rights and obligations attendant to the note and the deed oftrust without the need of any further transfer or assignment. The securitization argument has been put in the legal equivalent of the trash bin. Plaintiffs’ bluster about securitization fails to support to the allegations in the Complaint. B. The First Cause Of Action For Violation Of Homeowners Bill Of Rights Plaintiffs allege that Wells Fargo failed to satisfy the ‘due diligence’ requirements of Civil Code § 2923.55 ~ i.e., the requirement to contact Plaintiffs before recording the NOD to explore alternatives to foreclosure. (Comp., § 50-51). This cause of action fails for two reasons. 3 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P c o N N N h \ ° 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 First, the claim fails because Plaintiffs do not allege that the loan with Wells Fargo is a “first lien” against property that is “owner-occupied” as the “principal residence” that is for “personal, family, or household purposes.” Such allegations are required for any HBOR claim, including § 2923.55. See Civ. Code § 2924.15(a) (“Sections 2923.5, 2923.55 ... shall apply only to first lien mortgages or deeds oftrust that are secured by owner-occupied residential real property containing no more than four dwelling units. For these purposes, owner-occupied means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes.”). Since these allegations are absent in the Complaint, there is no basis for asserting this claim. Second, as a matter of pleading, HBOR requires of a plaintiff factual allegations that are reasonably particular, for no such statutory claim is facially made if the pleading is merely conclusory or merelyrecites or describes the statute itself. Covenant Care, Inc. v. Superior Court, 32 Cal.4th 771, 790 (2004); Carter v. Prime Healthcare Paradise Valley LLC, 198 Cal.App.4th 396, 410 (2011) (“[W]here,as here, statutory remedies are invoked, the facts ‘must be pleaded with particularity.”); Lopez v. Southern Cal. Rapid Trans. Dist., 40 Cal.3d 780, 795 (1985) (“every fact material to the existence of [defendant’s] statutory liability must be pleaded with particularity.”). Plaintiffs fail the test. Harm and damages are not assumed from statutory recitations and conclusory facts, even for HBOR. Colbert v. Sage Point Lender Servs., LLC, 2014 U.S. Dist. LEXIS 178468,at *15 (E.D. Cal. Dec. 29, 2014) (granting motion to dismiss; “The Court cannot assume Plaintiff suffered actual damages from the violations of the Homeowners Bill of Rights.”). Dismissal is appropriate. C. Second, Third, And Fourth Causes Of Action: Wrongful Foreclosure, Cancellation Of Written Instruments, And “Set Aside Auction Sale” These three equitable claims revolve around the “Securitization / Note-Ownership” theory mentioned above. For the reasons previously explained, the allegations in support of this theory do no give rise to legally cognizable claims. In addition, Plaintiffs cannot undo the sale and cancel their legal obligations under the Note and DOT without tender of the outstanding debt. Case law is clear that tenderis required in 6 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O 0 0 0 A N n n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 any cause of action seeking to rescind a trustee’s sale, especially where there is a bonafide purchaser. McElroy v. Chase Manhattan Mortg. Corp., 134 Cal.App.4th 388 (2005); Karlsen v. American Sav. & Loan Ass'n, 15 Cal.App.3d 112, 121 (1971); Abdallah v. United Sav. Bank. 43 Cal.App.4th 1101, 1109 (1996) (explaining that the tenderrule applies to “any cause of action for irregularity in the sale procedure”); United States Cold Storage v. Great W. Sav. & Loan Ass'n., 165 Cal.App.3d 1214, 1225 (1985). To obtain her requested relief, tender of the loan proceeds would be required, at minimum. Shimpones v. Stickney, 219 Cal. 637, 649 (1934). Plaintiffs’ failure to plead tenderis fatal to any attempt to seek this equitable remedy. See Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1109 (1996). Dismissal is required. D. Fifth And Sixth Causes Of Action: Constructive Fraud And Fraud In The Concealment These two fraud-based claims revolve around the “Securitization / Note-Ownership” theory mentioned above. For the reasons previously explained, they are defective. | Furthermore, Plaintiffs also appear to allege that Wells Fargo somehow “defrauded”them, by failing to properly credit loan payments. (Comp., 9 89). If that were the case, then Plaintiffs would have a cause of action for breach of contract — Wells Fargo’s failure to adhere to the payment requirements of the Promissory Note and DOT — rather than a fraud claim. Claims for breach of contract, even if the breach is negligent, fraudulent, or willfully malicious, do not mutate into tort causes of action. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal4th 503, 515-516 (1994) (facts did not exist to justify making a fraud case out of a breach ofcontract case). The Supreme Court rejected an effort to convert a breach of contract claim into one for tort in Aas v. Superior Court, 24 Cal.4th 627 (2000): A person may not ordinarily recoverin tort for breach of duties that merely restate contractual obligations. Instead, courts will generally enforce the breach of a contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies. Id. at 643 (quoting Erlich v. Menezes, 21 Cal.4th 543, 552 (1999); see also Foley v. Interactive Data Corp., 47 Cal.3d 654, 693 (1988) (court will not create a tort out of what is merely a breach of contract). 7 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P S a O 0 0 3 O Y W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finally, both causes of action fail because Wells Fargo owed no fiduciary duty to Plaintiffs. Both constructive fraud and fraud in the concealment require the existence of a fiduciary duty to disclose information. However,a loan transaction does not give rise to a fiduciary or confidential relationship that requires such duties and disclosures. See Perlas v. GMAC Mortg., LLC, 187 Cal.App.4th 429 (2010). “Absent special circumstances ... a loan transaction is at arm’s length and there is no fiduciary relationship between the borrower and lender... A commercial lender pursues its own economic interests in lending money.” Id. at 436 (citing Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal.App.3d 1089, 1096 (1991)). “A lender ‘owes no duty ofcare to the [borrowers] in approving their loan.” Id. (quoting Wagner v. Benson (1980) 101 Cal.App.3d 27, 35). Like the lender in Perlas, Wells Fargo owed no fiduciary duty to Plaintiffs. For these reasons, dismissal is required. E. Seventh Cause Of Action: Intentional Infliction Of Emotional Distress Plaintiffs allege that Wells Fargo’s conductin proceeding with the foreclosure sale is “outrageous” and inflicted emotional distress. (Comp., 9 106-112). The elements for this cause of action are: (1) defendant’s extreme and outrageous conduct; (2) that defendantintended to cause, or recklessly disregarded the probability of causing, emotional distress; (3) that plaintiff suffered severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by defendant’s outrageous conduct. Potter v. Firestone Tire & Rubber Co., 6 Cal.4th 965, 1001 (1993). Outrageous conduct must be “so extreme as to exceed all bounds of that usually tolerated in a civilized community.” 7d. at 1001. “In the context of debt collection, courts have recognized that the attempted collection of a debt by its very nature often causes the debtor to suffer emotional distress.” Ross v. Creel Printing & Publishing Co., 100 Cal.App.4th 736, 745 (2002). “Frequently, the creditor intentionally seeks to create concern and worry in the mind ofthe debtor in order to induce payment.” Bundren v. Superior Court, 145 Cal.App.3d, 785 789 (1983). Yet “where a lending party in good faith asserts its right to foreclose according to contract, however, its conductfalls shy of ‘outrageous,’ however wrenching the effects on the borrower.” Davenport v. Litton Loan Servicing, LP, 725 F.Supp.2d 862, 884 (N.D. Cal. 2010); Sierra—Bay Fed. Land Bank Assn. v. 8 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P A w ~ ~ S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Superior Court, 227 Cal.App.3d 318, 334 (1991) (“It is simply not tortious for a commercial lenderto lend money, take collateral, or to foreclose on collateral when a debt is not paid.”). Itis for the Court to determine whether the plaintiffhas alleged conductthat might be extreme and outrageous. Tollefson v. Roman Catholic Bishop, 219 Cal.App.3d 843, 858 (1990). Here,this cause of action fails because the crucial element of outrageous conductis absent. The Complaint points to no conduct of Wells Fargo outside generally accepted debt collection and/or foreclosure and/or loan modification activity, whichis inherently stressful for debtors. Case law is clear that activities such as those alleged by Plaintiffs are not, as a matter of law, outrageous conduct. Since thatis all that Plaintiffs allege, this cause of action fails. F. Eight And Ninth Causes Of Action:Slander Of Title And Quiet Title In these two causes of action, Plaintiffs challenge the acts of Wells Fargo in foreclosing on the property. Both causes of action fail for the same reason: Plaintiffs do not have legaltitle to the property. A slander oftitle cause of action consists of: 1) plaintiff's ownership ofthe property; 2) defendant’s disparagementof plaintiff's title; and 3) “specific allegations, as special damages, of the particular financial loss suffered by the disparagement.” 5 Witkin, Cal. Procedure (Sth ed. 2008), Pleadings §749 (citing Burkett v. Griffith, 90 Cal. 532 (1891)). Similarly, an action to quiettitle cannot be maintained by someone who does not hold legaltitle. Mendoza, supra, 228 Cal.App.4th at 1038 (quiettitle claim “fails as a matter of law because she does not demonstrate paramounttitle”); G.R. Holcomb Estate Co. v. Burke, 4 Cal.2d 289, 297-299 (1935) (“It has been repeatedly held in this state that an action to quiet title will not lie in favor of the holder of an equitable title as against the holder of a legal title”); Lewis v. Superior Court, 30 Cal.App.4th 1850, 1866 (1994) (party “never had standing to bring a quiet title action, because whatever interest it might haveis only equitable, and the holder of equitable title cannot maintain a quiet title action against the legal owner”); Stafford v. Ballinger, 199 Cal.App.2d 289, 294 -295 (1962) (complaint does not state cause of action to quiet title because it “disclose[s] that appellant does not havelegaltitle to the property in question.”). Since Plaintiffs lacktitle as a result of the 9 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P ~ ~ S Y n n h w O N o o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 foreclosure sale, which provided title to The Harvey lane Trust, these causes of action fail as a matter of law. Second, as noted above, Plaintiffs cannot quiettitle because they do not plead tender. Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1109 (1996) (the tender requirement applies “to any cause ofaction for irregularity in the sale procedure”); Gaffney v. Downey Sav. & Loan, 200 Cal.App.3d 1154, 1165 (1988) (tender of full debt is a prerequisite to enjoining a foreclosure). “The rules which govern tenders are strict and are strictly applied...” Nguyen v. Calhoun, 105 Cal.App.4th 428, 439 (2003). Third, Plaintiffs cannot quiettitle because they do not plead the required allegations, nor is the Complaint verified. Quiettitle requires a verified complaint setting forth: (1) a description of the property that is the subject of the action; (2) the title of the plaintiff as to which a determination is sought and the basis of the title; (3) the adverse claims to the title of the plaintiff] against which a determination is sought; (4) the date as to which determination is sought; and (5) a prayer for determination oftitle ofthe plaintiff against the adverse claims. Civ. Proc. Code § 761.020. Plaintiffs do not allege all ofthese necessary elements in a verified complaint. Moreover, the claim fails as to Wells Fargo because Wells Fargo does not currently make an adverse claim to the title, which is a necessary ingredient for a quiettitle claim. Lewis v. Superior Court, 30 Cal.App.4th 1850, 1866 (1994); Stafford v. Ballinger, 199 Cal.App.2d 289, 294 — 295 (1962). In light of these pleading defects, dismissal is appropriate. G. Tenth Cause Of Action: Declaratory Relief Plaintiffs assert a claim for declaratory relief based on the same premise as the other claims: that Wells Fargo did not have the ability to foreclose. Declaratory relief is a remedy, not an independentclaim. Shell Oil Co. v. Richter, 52 Cal.App.2d 164, 168 (1942); Santos v. Countrywide Home Loans, 2009 U.S. Dist. LEXIS 103453,at *13 (E.D. Cal. Nov. 6, 2009) (“Declaratory and injunctive relief are not independent claims, rather they are forms of relief”). A request for declaratory relief does not create a cause of action that otherwise does not exist. Calif. Assn. ofPrivate Special Edu. Sch. v. Department ofEducation, 141 Cal.App.4th 360, 377 (2006). To state a declaratory relief cause of action, a 10 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 plaintiff must specifically plead an actual present controversy undera valid and binding written instrument, and the facts of the respective claims concerning the underlying subject must be given. Id.; Civ. Code § 1060. As the Mendoza court noted, “Since the property has been sold, there remain no prospective claims appropriate for declaratory relief. Moreover, the substance of herallegationsto secure declaratory relief is merely duplicative of her cause of action for wrongful foreclosure.” Plaintiffs satisfy none ofthe requirements for equitable relief. The parties’ relationship is over; the loan has been cancelled due to the foreclosure sale. Dismissal is required. H. The Eleventh Cause OfAction For Negligence Plaintiffs allege that Wells Fargo negligently handled the foreclosure process and the processing ofpayments. (Comp., 9 156-158). The cause of action fails because Wells Fargo owed no duty of care to Plaintiffs in connection with loan servicing and foreclosure, and the absence of a duty ofcare renders any negligence-based cause of action invalid. “[A]bsent a duty, the defendants care, or lack ofcare,is irrelevant.” Software Design and Application Ltd. v. Hoefer & Arnolt, Inc., 49 Cal.App.4th 472, 481 (1996). The inability to plead a duty of care “precludes his maintenance of a cause of action on any negligence theory.” LiMandri v. Judkins, 52 Cal.App.4th 326, 349 (1997). California law is clear: “as a generalrule, a financial institution owes no duty ofcare to a borrower when the institution’s involvement in the loan transaction does not exceed the scope ofits conventional role as a mere lender of money.” Nymark, supra, 231 Cal.App.3d at 1095 (emphasis added); Wagner v. Benson, 101 Cal.App.3d 27, 35 (1980) (“Liability to a borrowerfor negligence arises only when the lender‘actively participates’ in the financed enterprise beyond the domain ofthe usual money lender.”). In Lueras v. BAC Home Loans Servicing, LP, 22] Cal.App.4th 49, 67-68 (2013), the court held that there is no “common law duty to offer or approve a loan modification... [or] a duty of care to handle [a borrower’s] loan in such a way to prevent foreclosure and forfeiture of his property.” Lueras held that “a loan modification is the renegotiation of loan terms, which falls squarely within the scope of a lending institution’s conventional role as a lender of money.... The Biakanja factors do not support imposition of a common law duty to offer or approve a loan modification... [or] a duty 11 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P N O d N n y o N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of care to handle [a borrower’s] loan in such a way to prevent foreclosure and forfeiture of his property.” Lueras represents the approach taken by California state courts as to lender-borrower activities, including servicing, modification, and foreclosure. See, e.g., Perlas v. GMAC Morig., LLC, 187 Cal.App.4th 429 (2010); Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 269 (2011). Lenders also owe no duty ofcare to borrowers in processing loan documents or approving loans. Ragland v. U.S. Bank Nat. Assn., 209 Cal.App.4th 182, 207 (2012).2 In this case, there is nothing to suggest that Wells Fargo did anything that “exceed|ed] the] scope of its conventional role as a mere lender of money” when considering Plaintiffs for a loan modification. Nymark, 231 Cal.App.3d at 1096. Plaintiffs: (1) obtained a loan from Wells Fargo; (2) defaulted on the loan; and (3) thereafter sought a loan modification. That was the extent of the parties’ relationship. There is no allegation indicating that the parties had more than a traditional lender-borrower relationship concerning the loan modification process. On the contrary, the allegations demonstrate that the parties were at an arms-length relationship and Wells Fargo acted in its traditional role as money lender by trying to collect on a debt that Plaintiffs owed. Dismissal is required. 1. The Twelfth Cause Of Action For Violation Of Bus. & Prof. Code § 17200 This cause ofaction is derivative ofthe allegations underlying the other cause of actions. Plaintiffs attempt to convert the other cause of actions into a cause of action for unlawful business practices. (Comp., §Y 163-168). A cause of action under Business & Professions Code § 17200 (“UCL”) requires an allegation of particular facts showing ongoing unlawful, unfair, and fraudulent business acts on the part of the defendant. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1143 (2003). Where a plaintiff cannot state a cause of action under the “borrowed” law,he or she cannot state a UCL cause of action either. Ingels v. Westwood One Broad Servs., Inc., 129 2 A very recent published California federal district court case affirms the reasoning of Lueras. Cornejo v. Ocwen Loan Servicing, LLC, 151 F.Supp.3d 1102, 1116 (E.D. Cal. 2015) (dismissing negligence claim; “The Court agrees with the Lueras rationale. In the Court’s view, making a loan modification falls squarely within the lender’s ‘conventional role as a lender of money’ and does not constitute ‘active participation’ outside the role as lender.”). 12 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P O o 0 0 J O N n h a 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal.App.4th 1050, 1060 (2005) (“A defendant cannot be liable under § 17200 for committing unlawful business practices without having violated another law.”). In the Complaint, Plaintiffs cannot state any ongoing unlawful, unfair, and fraudulent business acts. i Plaintiffs Have Not Pled Facts Under The “Unlawful Prong” “[A]n action based on [the UCL] to redress an unlawful business practice ‘borrows’ violations of other laws and treats these violations . . . as unlawful practices, independently actionable undersection 17200 et seq. and subject to the distinct remedies provided thereunder.” Farmers Ins. Exch. v. Super. Court, 2 Cal.4th 377, 383 (1992) (quotations and citations omitted); Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000). The violation of almost any federal, state, or local law may serveas the basis for a UCL cause of action. Saunders v. Superior Court, 27 Cal.App.4th 832, 838-39 (1994). Wherea plaintiff cannot state a cause of action under the “borrowed” law, he or she cannot state a UCL cause of action either. See, Silvas v. E-Trade Mortgage Corp., 514 F.3d 1001 at 1007 n.3 (holding that a time-barred TILA cause of action could not be recast under the UCL, which has a longer limitations period); Ingels v. Westwood One Broad. Servs., Inc., 129 Cal.App.4th 1050, 1060 (2005) (“A defendant cannot be liable under § 17200 for committing unlawful business practices without having violated another law.”). Since Plaintiffs’ otherallegations in the Complaint fail, Plaintiffs cannot support a UCL cause of action. ii. Plaintiffs Have Not Pled Facts Under The “Unfair Prong” The “unfair” prong applies when the practice at issue allegedly violates “the policy or spirit of [anti-trust] laws because its effects are comparable to a violation ofthe law, or that otherwise significantly threatens or harms competition.” Cel-Tech Comme ns, Inc., v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 187 (1999). As explained in Cel-Tech, the “unfair” prong applies to business practices that offend an established “public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” Id. at 184 (citations omitted). Furthermore, the “unfair” business practice must be “tethered”to a constitutional provision, statute or regulation. Id. at 185. Here, Plaintiffsfail to “tether”the unfair practice to any provision, statute, or regulation. 13 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P o O 0 N O N h h BR N W R ) e e B N N N N N N = — ® I 3 0 B O N = 3S 0% »®» J a r > oR Z B iii. Plaintiffs Have Not Pled Facts Under The “Fraudulent Prong” The “fraudulent” prong, post-enactment of Proposition 64, applies where a business act or practice actually misleads a plaintiff. Hall v. Time, Inc., 158 Cal.App.4th 847, 849 (2008). Here, Plaintiffs fail to make any such allegations. They do notsatisfy the pleading requirements for any fraud-based cause of action. Moreover,to plead a cause of action under the UCL based on fraud, a plaintiffmust allege the existence of a scheme to mislead consumers and that each misrepresentation to each consumer conformed to that scheme. Committee On Children’s Television v. General Foods Corp., 35 Cal.3d 197, 211 (1983). It must be shown that members ofthe public “are likely to be deceived.” Saunders v. Superior Court, 27 Cal.App.4th 832, 839 (1994). In the Complaint, the allegations relate only to the loan and therefore are defective under this prong. iv. Plaintiffs Lack Standing To Allege A UCL Cause Of Action To sue under the UCL, “[a] private plaintiff must make a two-fold showing: he or she must demonstrate injury in fact and a loss ofmoney or property caused by unfair competition.” Peterson v. Cellco P ship, 164 Cal.App.4th 1583, 1590 (2008); see also, Daro v. Superior Court, 151 Cal.App.4th 1079, 1098 (2007) (“a private person has no standing under the UCL unless that person can establish that the injury suffered and the loss ofproperty or money resulted from conduct that fits within one ofthe categories of ‘unfair competition’ in section 17200.”). As one recent court noted in Campos v. Wells Fargo Bank, N.A.,2015 U.S. Dist. LEXIS 116599 (C.D. Cal. Aug. 31, 2015; J. Selna): “The claim must also be dismissed because Campos has failed to allege that he lost money or property as a result of Wells Fargo’s unfair or fraudulent conduct, as is necessary for ‘injury in fact’ standing under the UCL.” Id. at *19. In this case, Plaintiffs have not made a showing that they lost money or property as a result ofan alleged UCL violation. Plaintiffs have paid no money to Wells Fargo except for possible regular loan payments — payments they were required to make and which were not obtained by an unfair business practice. Moreover, the UCL does not provide for recovery of damages, only restitution. Since Plaintiffs have no available remedy, they have no standing under the UCL, rendering the cause of action fatally defective. 14 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P ~ ~ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. CONCLUSION For the foregoing reasons, the Court should sustain these demurrers in full without leave to amend and dismiss the Complaint with prejudice. Respectfully submitted, Dated: December 13, 2016 ANGLIN, FLEWELLING, RASMUSSEN, CAMPBELL & TRYTTEN,LLP By:JA JsM. Newman Attgrdeys for Defendant WELLS FARGO BANK, N.A,, successor by merger with Wells Fargo Bank Southwest, N.A., /k/a Wachovia Mortgage, FSB, f/k/a World Savings Bank, FSB 15 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P w m h k W N O o 0 a 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF DAVID M. NEWMAN 1, David M. Newman, declare: 1. 1 am an attorney at law licensed to practice before this Court and am employed with the law firm of Anglin, Flewelling, Rasmussen, Campbell & Trytten, LLP, counsel of record for Defendant Wells Fargo Bank, N.A., successor by merger with Wells Fargo Bank Southwest, N.A., formerly known as Wachovia Mortgage, FSB, formerly known as World Savings Bank, FSB (“Wells Fargo”). 1 make this declaration in support of Wells Fargo’s demurrers. 2. On December 8, 2016, I met and conferred with Plaintiff Homero Cano regarding the allegations and claims in the Complaint and Wells Fargo’s anticipated basis for demurring to the claims. We were unable to reach any agreement. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on this 13® day of December, 2016, in Pasadena, JLo M. Newman California. 16 MEMORANDUM OF POINTS AND AUTHORITIES A N G L I N F L E W E L L I N G R A S M U S S E N C A M P B E L L & T R Y T T E N L L P v o L e 3 N N n h A 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) I am employed in the County of Los Angeles, State of California. I am over the age of 18 years and not a party to the within action. My business address is 301 N. Lake Avenue, Suite 1100, Pasadena, CA 91101. On the date below, I served the foregoing document(s) described as: WELLS FARGO BANK, N.A.’S NOTICE OF DEMURRERS AND DEMURRERS TO COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF DAVID M. NEWMAN on the interested parties in this action by placing a true and correct copy enclosed in a sealed envelope as follows: Plaintiffs In Pro Per: Homero Cano Lidia Cano 12345 Harvey Lane Garden Grove, CA 92841 Bd BY MAIL: I am readily familiar with the firm’s practice of collection and processing correspondence by mailing. Under that same practice it would be deposited with U.S. Postal Service on that same day with postage fully prepaid in Pasadena, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on December 13, 2016, in Pasadena, California. \ Yvonne L. Blum DSie (Type or Print Name) —Ysignawre of Declarant) PROOF OF SERVICE