Sanjiv Pai vs. Select Portfolio Servicing, Inc.

Demurrer to Complaint

Cal. Super. - 4th Dist.October 27, 2017

OO 00 NN AN nn RA W N RN N N N N N N N N Mm m m m e e m a a m p 00 NN O N Wn RA W N OR , O O N N N R W N D = o WRIGHT, FINLAY & ZAK, LLP Gwen Ribar, Esq., SBN 188024 Cori B. Jones, Esq., SBN 261018 4665 MacArthur Court, Suite 280 Newport Beach, CA 92660 Tel. (949) 477-5050; Fax (949) 608-9142 gribar@wrightlegal. net; ciones@wrightlegal.net ELECTRONICALLY FILED Superior Court of California, County of Orange 01/03/2018 at 02:18:00 PM Clerk of the Superior Court By Wary WM Johnson, Deputy Clerk Attorneys for Defendants SELECT PORTFOLIO SERVICING, INC. and U. S. Bank NA Successor Trustee to Bank of America, National Association in interest to La Salle Bank NA as Trustee on behalf of] the holders of the Washington Mutual Mortgage Pass Through Certificates WMALT Series 2006-5 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF ORANGE CENTRAL JUSTICE CENTER SANIJIV PAI F.K.A. SANJEEV M. PAIDHUNGAT, Plaintiff, SELECT PORTFOLIO SERVICING, INC.; U.S. BANK NA, SUCCESSOR TRUSTEE TO BANK OF AMERICA, NA, SUCCESSOR IN INTEREST TO LASALLE ) BANK NA, AS TRUSTEE, ON BEHALF OF) THE HOLDERS OF THE WASHINGTON ) MUTUAL MORTGAGE PASS-THROUGH ) CERTIFICATES, WMALT SERIES 2006-5 ) and Does 1 to 10 Inclusive, ) ) ) ) ) Vs. ) ) ) ) ) Defendants. N e ’ SN N m N m N m N e ” Case No. : 30-2017-00952283-CU-OR-CJC [Assigned to Hon. Judge James J. Di Cesare] NOTICE OF DEMURRER AND DEMURRER OF DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND THE US BANK TRUST TO PLAINTIFF'S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF HEARING: Date: February 16,2018 Time: 9:30 AM Dept.: C16 Reservation No.: 72727396 Complaint filed: October 27,2017 [Filed Concurrently with Request for Judicial Notice and Declaration of Demurring Party] TO THE HONORABLE COURT AND TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD, IF ANY: 1 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT Oo © 9 A N nh A W N = N N N N N N N N N N m E e m m m e d e m p m e d e m e m RW N N N LL B R A W L = D O Y R A L N = o PLEASE TAKE NOTICE that on February 16, 2018 at 9:30 AM., or as soon thereafter as this matter may be heard, in Department C16 of the above-entitled Court, located at 700 Civic Center Drive West, Santa Ana, California 92701, the Demurrer of Defendants SELECT PORTFOLIO SERVICING, INC. (“SPS”) and U. S. Bank NA Successor Trustee to Bank of America, National Association in interest to La Salle Bank NA as Trustee on behalf of the holders of the Washington Mutual Mortgage Pass Through Certificates WMALT Series 2006-5 (the “US Bank Trust”) (hereinafter collectively referred to as “Defendants™) to Plaintiff Sanjiv Pai’s, F.K.A. Sanjee M. Paidhungat (“Plaintiff”) Complaint will come on regularly for hearing. This Demurrer is based on the grounds that Plaintiff failed to state facts sufficient to constitute a cause of action in any manner against Defendants. Specifically, this Demurrer is based on the grounds that Plaintiff failed to state facts sufficient to constitute a cause of action for (1) Violation of Homeowner’s Bill of Rights, (2) Negligence, 3) Breach of Contract or Covenant of Good Faith and Fair Dealing, and (4) Violation of Bus. & Prof. Code § 17200. The additional grounds for this demurrer are that Plaintiff failed to join an indispensable party (Co-Borrower, Manjusha Paidhungat). Finally, much of the complaint is drawn in violation of Cal. Rule of Court 2.112 which requires a separate cause of action for each count, and must state at which defendant that cause of action is aimed. Thus the Complaint also fails for uncertainty under Code Civ. Pro. § 430.10(f). This Demurrer will be based on Plaintiffs Complaint, this Notice of Demurrer and Demurrer, the Memorandum of Points and Authorities, the accompanying Request for Judicial Notice and on any other materials on file herein as the Court may consider at the time of hearing on this matter. Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP Dated: January 3, 2018 By: /s/Cori B. Jones Gwen H. Ribar, Esq. Cori B. Jones, Esq. Attorneys for Defendants, SELECT PORTFOLIO SERVICING, INC. and U. S. Bank National Association, as Trustee, Successor in interest to Bank of America, National Association as successor by merger to La Salle Bank NA as Trustee for Washington Mutual Mortgage Pass Through Certificates WMALT Series 2006-5 2 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT N N N N N N N N O N = m e m e e me e d a a a p m © N N wn hk L N P O O N N Y N B R A W L ND = o DEMURRER Defendants SELECT PORTFOLIO SERVICING, INC. (“SPS”) and U. S. Bank NA Successor Trustee to Bank of America, National Association in interest to La Salle Bank NA as Trustee on behalf of the holders of the Washington Mutual Mortgage Pass Through Certificates WMALT Series 2006-5 (the “US Bank Trust”) hereby generally and specially demurs to the below enumerated causes of action contained in the Complaint of Plaintiff Sanjiv Pai (“Plaintiff”), pursuant to Code of Civil Procedure §430.10, et. seq., on the following grounds: DEMURRER TO THE ENTIRE COMPLAINT Plaintiff>s entire complaint is subject to Demurrer pursuant to Code Civ. Pro. § 389 for failure to join an indispensable party, the co-borrower Manjusha Paidhungat, to this action. This Complaint also fails for violation of Ca. Rule of Court 2.112, because it does not state which cause of action was supposedly taken by which Defendant and because of this deficiency, it is subject to a demurrer for uncertainty under Code Civ. Pro. § 430.10(f) as each cause of action either fails to set forth separate claims or to label which defendant each claim is aimed at. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139.) DEMURRER TO THE FIRST CAUSE OF ACTION Defendants demur to Plaintiff’s first cause of action for Violation of multiple sections of the California Homeowner’s Bill of Rights (“HBOR”) on the grounds that it fails to state facts sufficient to constitute a cause of action and Plaintiff fails to allege facts that show a foreclosure document was recorded anyway. [Code Civ. Pro 430.10 (e)] DEMURRER TO THE SECOND CAUSE OF ACTION Defendants demur to Plaintiff’s second cause of action for Negligence on the grounds that it fails to state facts sufficient to constitute a cause of action because Plaintiffs fail to allege facts that would bind SPS to any contract and because Plaintiffs fail to allege facts that there was actually a contract or a breach. [Code Civ. Pro 430.10 (e)] DEMURRER TO THE THIRD CAUSE OF ACTION Defendants demur to Plaintiff’s third cause of action for tortious breach of the implied covenant of good faith and fair dealing on the grounds that it fails to state facts sufficient to constitute a cause of 3 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT OO 0 3 Oo Wn HK W N = N N NN N N N N NN ND = mb e a e a e a e a h m p m e a 0 N N O N nn BA W O N =, DO VW N N N R A L -= Oo action because Plaintiff cannot show that the alleged dual tracking, recordation of false documents, or failure to modify implicates the implied covenant of good faith. Additionally, there are no facts to suggest Plaintiff was deprived of the benefits of his bargain anyway. [Code Civ. Pro 430.10 (e)] DEMURRER TO THE FOURTH CAUSE OF ACTION Defendants demur to Plaintiff’s fourth cause of action for Violations of Unfair Competition Law on the grounds that it fails to state facts sufficient to constitute a cause of action because Plaintiffs’ own evidence shows there was no complete loan modification application under review at the time of the alleged violation and Plaintiff has no standing to allege an injury in fact, where he was in default long before the alleged violation. [Code Civ. Pro 430.10 (e)] Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP Dated: January 3, 2018 By: /s/Cori B. Jones Gwen H. Ribar, Esq. Cori B. Jones, Esq. Attorneys for Defendants, SELECT PORTFOLIO SERVICING, INC. and U. S. BANK NA SUCCESSOR TRUSTEE TO BANK OF AMERICA, NATIONAL ASSOCIATION IN INTEREST TO LA SALLE BANK NA AS TRUSTEE ON BEHALF OF THE HOLDERS OF THE WASHINGTON MUTUAL MORTGAGE PASS THROUGH CERTIFICATES WMALT SERIES 2006-5 4 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT OO 00 3 O N Wn ph W N N N N N N N NN N N m o m mm e m mm em em em e m ee s 0 NN A N Wn BRA W O N D E R O V N N N N D E W L R p d MEMORANDUM OF POINTS AND AUTHORITIES I. Introduction. Plaintiff brings this lawsuit in an attempt to delay a lawful non-judicial foreclosure sale that was initiated for no other reason than Plaintiff’s failure to timely make his loan payments. Plaintiff’s Complaint is riddled with inconsistencies and conclusions of law that do not withstand this Demurrer. First, Plaintiff's Homeowner’s Bill of Rights (“HBOR™) claim fails because his own evidence shows that the modification application allegedly submitted to SPS was incomplete at the time of the supposed violation, there were no documents recorded in violation of HBOR, and Plaintiff’s conclusory allegations of a “material change” are not enough to overcome demurrer. Next, Plaintiff’s Negligence claim fails because he does not state any facts that support an exception to the general rule that a. financial institution owes no duty of care and because he fails to state any damages that are proximately caused by these Defendants anyway. The third cause of action fails because Plaintiff surmises that the Deed of Trust itself contains some sort of covenant for the Defendants to modify it, which is completely antithetical to the purpose of a Deed of Trust. Finally, the claim for violation of Bus. & Prof. Code § 17200 fails because there was no unfair, fraudulent, or illegal practice and Plaintiff cannot state an injury in fact that was caused by these Defendants. For these reasons, as explained more fully below, Plaintiff’s causes of action all fail and the Demurrer should be sustained. II. Statement of Facts. The real property that is the subject of this action is located at 49 Cartier Aisle, Irvine, CA (“Subject Property”). (Complaint, 1.) Plaintiff Sanjiv Pai (fka Sanjeev M. Paidhungat) and co-borrower (who is not a plaintiff in this case) Manjusha Paidhungat, obtained a residential loan in the amount of $403,000.00 (“Subject Loan”) secured by a deed of trust (“DOT”) encumbering the Subject Property. The DOT was recorded on March 22, 2006 with the Orange County Recorder’s Office as instrument number 2006-000188002. (RJN, Exhibit 1.) The DOT identifies Plaintiff Sanjiv Pai and non-party Manjusha Paidhungat as the borrowers. (/d.) On July 20, 2016, a Corporate Assignment of the Deed of Trust was recorded evidencing that the US Bank Trust is the current beneficiary of the Note and Deed of Trust (RJN, Exhibit 2.) 5 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT OO © 39 O N hn AA WwW N = N O N N N ND O N N N N m m E e kd p k e m e a e d pe d p m 0 3 A N LU A W N = O O N Y R W = Oo On March 15, 2017, a Substitution of Trustee was recorded on with the Orange County Recorder’s Office as instrument number 2017-000106239, whereby Quality Loan Service Corporation (“QLSC”) was substituted as the trustee. (RIN, Exhibit 3.) Plaintiff defaulted on the Subject Loan, and on July 18, 2017, a Notice of Default was recorded. (RIN, Exhibit 4.) The complaint does not allege that a sale has taken place or that any other foreclosure notices were recorded after July 18, 2017. III. ARGUMENT The standards applied to ruling on a demurrer are as follows: “Material facts alleged in the complaint are treated as true for the purpose of ruling on the demurrer. [Citation.] Also taken as true are facts that may be implied or inferred from those expressly alleged. [Citation.] However, contentions, deductions or conclusions of fact or law alleged in the complaint are not considered in judging its sufficiency.” State ex rel. Bowen v. Bank of America Corp. (2005) 126 Cal. App.4th 225, 239-240 (quoting Kiseskey v. Carpenters’ Trust for So. California (1983) 144 Cal. App.3d 222, 228). However, leave to amend may be denied if the plaintiff has been given reasonable opportunities to amend and the amended pleadings fail to state a cause of action. Green v. Travelers Indemnity Co., (1986) 185 Cal.App.3d 544, 556 (denial of leave to amend is proper when plaintiff cannot cure defects given undisputed facts and applicable law, especially when one opportunity to amend has been given). Moreover, leave to amend may not be granted “if the facts and nature of plaintiff’s claim are clear and under the substantive law, no liability exists.” Haskins v. San Diego County Dep't of Public Welfare, (1980) 100 Cal. App.3d 961, 965, following Routh v. Quinn, (1942) 20 Cal.2d 488, 492-93; accord, Maple Properties v. Harris, (1984) 158 Cal. App.3d 997, 1012 (“an amendment should not be allowed where it would not serve a useful purpose”). Lastly, the court considers matters on the face of the pleading as well as matters of which it can take judicial notice. Sirott v. Latts, (1992) 6 Cal.App.4th 923, 928. Code of Civil Procedure § 430.30(a) states that a demurrer may be based on matters that are judicially noticeable, while Evidence Code § 452 provides that a court can take judicial notice of recorded documents. A. The Complaint fails because Plaintiff’s Co-Borrower is not a Party: Code of Civil Procedure §389 provides in pertinent part as follows: 6 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT OC 0 ~~ a Un SA W O N = MN RN NN RN N N N N N N = m mm a e m e a p a e m a 0 J O N n h W NN = O V N N ND R A W ND = O “(a) A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if: (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. Here, Plaintiff entered into the Loan along with Manjusha Paidhungat. See, RIN, Ex. 1. However, Plaintiff has failed to join the Co-Borrower as an essential party to this action. As a result, the Court cannot grant complete relief in the Co-Borrower’s absence because he/she is jointly liable under the Loan. That is, whatever the Court’s final disposition of this matter, it will likely affect the Co- Borrower to the same extent as it affects Plaintiff. Further, the Court cannot afford the Co-Borrower any relief, or impose any detriment for that matter, if the Co-Borrower is not joined as a party to this action. See, also In re Marriage of Ramirez, (2011) 198 Cal. App.4™ 336, 344; Washington Mutual Bank v. Blechman, (2007) 157 Cal. App.4™ 662, 667; Patera v. CitiBank, N.A., 79 F. Supp. 3d 1074, 1083 (N.D. Cal. 2015); Trinh v. Citibank, NA, No.12-CV-03902, 2012 U.S. Dist. LEXIS 178395, 2012 WL 6574860, at *2 (N.D. Cal. Dec. 17, 2012) (concluding that joinder of plaintiff's husband, the co- borrower, was required because the husband's "absence from this action would necessarily impair his ability to protect his interest" where plaintiff sought a "declaration that the title to the Subject Property is vested in Plaintiff alone"); Edwards v. Fed. Home Loan Mortgage Corp., No. C 12-04868, 2012 U.S. Dist. LEXIS 162179, 2012 5503532, at *3 (N.D. Cal. Nov. 13, 2012) (holding that the plaintiff's husband, a co-borrower on the underlying loan, was a necessary and indispensable party because "Plaintiff's interest in the Property and her claims asserted regarding the foreclosure are coterminous with [her husband's] interest and claims. If [her husband] is not joined as a party, Defendants have a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of Plaintiff's and [her husband's] mutual interests relating to the Property.") Further, the interests of the Co-Borrower may not be adequately protected if this case continues. The outcome of this litigation will undoubtedly affect the rights of the Co-Borrower in relation to the Subject Property and the Subject Loan. However, without being joined as a party, the Co-Borrower is 7 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT © 00 NN O Y Wn A W N N N N N N N N N N F e mm k m a a e m a a e a p m 00 N N N nh lb W N D = O 0 N N N l w ND R o unable to assert any claims and/or defenses which may affect the Court’s final judgment. Likewise, Movant could face multiple and conflicting rulings if the Co-Borrower comes to Court asserting his/her claims at a later date. This Court also faces the unappealing prospect of having to adjudicate this same matter multiple times with potentially varied outcomes. For that reason alone, this case should not proceed without the Co-Borrower. Thus, Plaintiff's Complaint is subject to this demurrer for failure to include a necessary and indispensable party. B. The Complaint Violates the California Rules of Court. Initially, the first cause of action for “Violation of HBOR” is defective because it improperly lumps multiple causes of action into one. A demurrer for uncertainty under Code of Civil Procedure. Section 430.1 O(f) exists where the cause of action fails to set forth a separate claim. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139.) The obligation to label the separate claims is spelled out in California Rules of Court Rule 2.112, which provides: Each separately stated cause of action, count, or defense must specifically state: (1) Its number (e.g., "first cause of action"); (2) Its nature (e.g., "for fraud"); (3) The party asserting it if more than one party is represented on the pleading (e.g., "by Cross-Complainant Jones"); and (4) The party or parties to whom it is directed (e.g.,"against defendant Smith”). Here the Plaintiff does not meet the Rule 2.112 requirement, because the first cause of action suggested that defendants violated multiple statutes (Cal. Civ. Code § 2923.55, 2924.17, and 2923.6). The failure to plead in compliance with CRC 2.112 subjects the first cause of action to dismissal. C. Plaintiff’s First Cause of Action for Violation of HBOR Fails on the Merits. Plaintiff claims that Defendants (though which individual Defendant is alleged to have taken which action remains fatally uncertain) violated Cal. Civ. Code § 2923.55, 2924.17, and 2923.6. Under Cal. Civ. Code § 2924.12, the enforcement provision of HBOR, an injunction can issue only for an uncorrected material violation of certain sections of HBOR. 1. No Facts Suggesting Material Violations of §$2923.55 or 2924.17. In this case, Plaintiff concludes that Defendants failed to even attempt to contact him or to send him the required notices under § 2923.55 and that the Notice of Default was recorded in violation of § 8 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT OO 0 NN O N n n pbx W N = N o N o N o N o N o N o N o N o N o - - - - - - - - -_ = 0 3 A N nn A W N = E DO YO N N N D W N = o 2924.17 because of this failure. However, such thread bare conclusions - without more - do not withstand the pleading requirements. For this reason alone, Plaintiff’s claim fails. Moreover, this claim also falls short of showing that Defendants materially violated § 2923.55, as Plaintiff fails to explain how, if a technical violation of the statute occurred, such resulted in any prejudice to him. Without such facts, it remains impossible to ascertain whether the alleged violation was sufficiently material to be actionable. 2. No Facts Suggesting Material Violation of § 2923.6 Civ. Code § 2923.6 prohibits a lender/servicer from recording a foreclosure instrument (or initiating a sale) once a borrower has submitted a complete loan modification application. Plaintiff's own allegations confirm that, if a complete application was submitted at all, it was submitted after the Notice of Default in question. Specifically, Plaintiff claims that on September 27, 2017, nearly two months after the Notice of Default was recorded, that he received a notification that his application was “complete.” (Complaint, § 14) Plaintiff does not allege that any other foreclosure instrument was recorded after this date. As such, there are no facts to suggest that Defendant has done anything in violation of the statute. Further, Plaintiff’s concession that he submitted his application based on a “material change in his financial condition” insinuates that he may have been previously reviewed for (or potentially even received) a modification of his loan based on his prior financial condition. (Complaint, § 11). However, the mere allegation that an application was submitted due to a material change in circumstances is not enough. (Castaneda v. Wells Fargo Home Mortgage, 2016 WL777862 at *4 (C.D.Cal. Feb. 26, 2016) ("..to state a claim under section 2923.6(g).... The plaintiff must do more than submit a new loan modification with different financial information.") As the Castaneda court observed, to overlook the requirement that borrowers document material changes in their financial circumstances "would be to defeat the intent of subsection (g), which is to "relieve mortgage servicers from evaluating multiple loan applications submitted for the purpose of delay." (Castaneda at *4, citing Winierbower v. Wells Fargo Bank, MA., 2013 WL 1232997 at *3 (C.D.Cal. Mar. 27, 2013).) Because Plaintiff here does not allege what was submitted to the Defendants to evidence his material change in circumstances, he has not stated a cause of action. | 1" 9 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT Oo 0 NN O N nn Bs W N N N N N N N RN N N m e ea mm em p m F E e d ee 0 N N Ln BE W N R O O N N N N R W e o D. The Second Cause of Action for Negligence Fails. In order to plead a proper cause of action for negligence, Plaintiff must allege: 1) facts showing a legal duty of care, 2) negligence constituting a breach of the duty, and 3) injury to the plaintiff as a proximate result of the breach. Peter W. v. San Francisco Unified School Dist., (1976) 60 Cal. App. 3d 814, 820. The existence of a legal duty to use reasonable care in a particular factual situation is a question of law for the court to decide. Vasquez v. Residential Investments, Inc., (2004) 118 Cal. App.4th 269, 278. Here, Plaintiff’s Negligence claim fails because Defendants do not owe Plaintiff any duty of care. It is well-established that a lender does not owe any fiduciary duty to its borrower. “[A] financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the...conventional role as a mere lender of money....” Wagner v. Benson (1980) 101 Cal.App.3d 27, 34-35; Nymark v. Heart Federal Savings & Loan Association (1991) 231 Cal.App.3d 1089, 1096. Loan modifications are characterized as a traditional money lending activity. Lueras v. BAC Home Loans Servicing, LP, (2013) 221 Cal. App. 4th 49, 67; see, Sanguinetti v. CitiMortgage, Inc. (N.D.Cal., Sept. 11, 2013, No. 12-5424 SC) 2013 WL 4838765, p. *6, 2013 U.S. Dist. Lexis 130129, p. *17 (“Loan modifications are part of the lending process, and negotiating a lending agreement's terms is one of a bank's key functions”). Accordingly, loan servicers have been held to owe no tort duty of care to borrowers during the workout process. (Id.) Consequently, Plaintiff's negligence cause of action fails on the first element, because nothing about his situation removes it from the standard borrower-lender relationship, wherein a lender may act in its own interests. (See, Palmer v. MTC Financial, Inc., 2017 U. S. Dist. LEXIS 81371 at *25 (E.D.Cal. May 26, 2017).) Some courts have looked beyond the general rule to factors articulated in Biakanja v. Irving (1958) 49 Cal.2d 647, 650 to determine the existence of a duty. Yet, even if this Court were inclined to look at the Biakanja factors, no such analysis can be made here, where there are no facts alleged that would support the finding of a duty. Those cases in which plaintiffs have been permitted to pursue negligence claims arising from loan servicing have referred to servicers' positive assurances of assistance, including loan modification, upon which borrowers have ostensibly relied. See, i.e., Bunce v. 10 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT NO 0 NN O N nn B R A W N BN D N D N N N N N N N R e e m e a m a e a p m em e d pe 0 N N BR W N = O O N DN W O N em Ocwen Loan Servicing, LLC, 2013 U.S. Dist. LEXIS 100111 at *13-*14 (E.D.Cal. July 16, 2013) (collecting cases). Here, there are no allegations that Defendants participated in activities beyond the “traditional lending activity”. Indeed, Plaintiff alleges he unilaterally contacted the Defendants with his request for a loan modification. (Complaint, § 11) Thus, because there are no facts pled that would institute a duty here, the negligence claim necessarily fails. Where there is no duty, there can be no breach or any damages that were proximately caused by these Defendants and this claim fails. | G. The Third Cause of Action for Breach of Covenant of Good Faith and Fair Dealing Fails. Plaintiff allege that Defendants breached the Implied Covenant of Good Faith and Fair Dealing (“Implied Covenant”) by “dual tracking the foreclosure of the Subject Property, by filing and recording of false documents and by the lack of modification...and/or that Defendants never intended to modify the Subject Loan.” (Complaint, 32). In order to allege a claim for breach of the Implied Covenant, a plaintiff must allege that the defendant’s refusal to discharge its contractual responsibilities was prompted by a conscious and deliberate act, which unfairly frustrates the agreed common purposes, disappoints his reasonable expectations thereby depriving him of the benefits of the agreement. Careau & Co. v. Security Pacific Business Credit, Inc., (1990) 222 Cal.App.3d 1371, 1395. 1. Defendants’ Alleged Dual Tracking Does Not Support this Claim. As discussed in greater detail above, there are no facts whatsoever to suggest dual tracking by Defendants. To the contrary, Plaintiff’s own allegations suggest that there was not a complete loan modification application pending at the time the Notice of Default was recorded and, thus, no duty owed by Defendants to refrain from recording it. Notwithstanding the above, the Implied Covenant is “limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract...” Pasadena Live, LLC v. City of Pasadena, (2004) 114 Cal. App.4™ 1089, 1094. . “It is universally recognized the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.” Carma Developers (California), Inc. v. Marathon Dev. California, Inc., (1992) 2 Cal.4™ 342, 373. This is because the Implied Covenant is intended only to “protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purpose.” Id. Here, there is nothing in the express terms of the 11 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT Oo 0 J O N Un Bh W N BN N N ND N D R N N O N m e e m ee md e a ee e d e a 0 N N N Un A W N R O VO N I N RA W N = o O loan contract or Deed of Trust which speaks to “dual tracking.” As such, even if, as Plaintiff insists, Defendants engaged in dual tracking, the fact remains that it does not implicate the Implied Covenant. 2. Defendants’ Alleged Recordation of False Documents Does Not Support this Claim. As touched on above, in order to survive an attack by demurrer, a Complaint must state more than just speculative legal conclusions. Rather, a plaintiff must allege ultimate facts and cannot avoid this duty by simply reciting unfounded “contentions, deductions or conclusions of fact or law.” Ashou v. Liberty Mut. Fire Ins. Co., (2006) 138 Cal. App.4™ 748, 755. There are simply no facts offered by Plaintiff to suggest that Defendants have recorded any false documents, much less any facts to suggest that doing so somehow violates the Implied Covenant. In the absence of any such facts, this claim fails to the extent it is based on Plaintiff’s wistful conclusion that Defendant breached the loan contract by “filing and recording false documents.” 3. No Implied Covenant in the Contract Requiring Modification of Said Contract. As noted above, the Implied Covenant simply does not work to create obligations not specifically contemplated by the contract. Pasadena Live, supra, 114 Cal. App.4™ at p.1094. Plaintiffs contention that there was an implied duty in the loan contract which required Defendants to modify the contract itself must be disregarded as absurd. The fundamental benefit a loan offers to a borrower is the receipt of sums of money from the lender. As such, any implied covenants necessarily arise out of this fundamental benefit. But, the loan contract does not provide any provisions, express or otherwise, which require Defendants to modify the terms of Plaintiff’s loan. And, in fact, Plaintiff's desire to modify the loan contract is diametrically opposed to the express terms set forth in the agreement. To impose a contractual duty on a lender/servicer to modify the terms of the agreed-upon contract would frustrate the purpose of agreeing to the initial terms in the first place. Because the terms of the contract do not relate to any such duty, no implied duty exists. As such, this claim fails to the extent it relies on any implied duty arising under loan contract to modify the terms of the subject loan. 4. No Facts Suggesting Plaintiff Were Denied Fruits of the Contract Anyway. A plaintiff alleging a claim for Breach of the Implied Covenant must allege facts showing that he was unfairly deprived of the benefits of the agreement. Careau & Co. v. Security Pacific Business Credit, Inc., (1990) 222 Cal. App.3d 1371, 1395. 12 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT NO 00 NN O Y nn hs W N NN N N NN NN N N N N mE k e e m p m p m a e m e m 0 J NN Un bh W N = O O N D D A W N = Plaintiff does not dispute that he received the loan proceeds. Moreover, as discussed at length above, there is nothing in the original loan contract which entitles Plaintiff to renegotiate the terms of his loan. Thus, Plaintiff cannot point to its inability to do so as proof that it was. As such, this claim fails. G. Plaintiffs Fourth Cause of Action for Alleged Violations of the Bus. & Prof Code § 17200 also Fails. California Business and Professions Code, section 17200 (“Section 17200) prohibits any unlawful, unfair or fraudulent business acts or practices and unfair, deceptive, untrue or misleading advertising. (Puentes v. Wells Fargo Home Mortg., Inc. (2008) 160 Cal. App.4th 638, 643-644 (hereafter Puentes).) “Unlawful” practices are “forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.” (Saunders v. Sup.Ct. (1999) 27 Cal. App.4th 832, 838.) “Unfair” practices constitute “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” (Cal- Tech Communications, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 187.) When determining “whether the challenged conduct is unfair within the meaning of the unfair competition law..., courts may not apply purely subjective notions of fairness.” (Id. at 184.) The “fraudulent” prong under the UCL requires a showing of actual or potential deception to some members of the public, or harm to the public interest. (Id. at 180; see also McKell v. Wash. Mut., Inc. (2006) 142 Cal.App.4th 1457.) “A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.) Plaintiff s cause of action fails because Plaintiff did not allege any facts to demonstrate any conduct by Defendants that could be classified as an unlawful, fraudulent, or unfair business act or practice. Plaintiff did not allege any conduct by Defendants that could constitute a violation of an antitrust law, or to violate the policy or spirit of such law. (See, Wilson v. Hynek (2012) 207 Cal. App.4th 999; Durrell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1366.) Further, Plaintiff did not allege any conduct by Defendants that could be found to significantly threaten or harm competition. For this reason alone, Plaintiff's cause of action fails and is subject to this Demurrer. 13 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT Oo 0 3 Wn» B R A W N N O N D N D N N N N N N RN = m m e m e m e m e m e a pe a pe e 0 NN A N Un B R A W N = O 0 N N YY R W R O In addition, “[a] plaintiff must have suffered an ‘injury in fact’ and ‘lost money or property as a result of the unfair competition’ to have standing to pursue either an individual or a representative claim unde the California unfair competition law.” Hall v. Time, Inc., (2008) 158 Cal.App.4™ 847, 849. With specific respect to a non-judicial foreclosure, if a borrower-plaintiff faced the threat of foreclosure beford the wrongful acts are alleged to have taken place, he cannot state a valid claim under §17200. Jenkins v. JP Morgan Chase Bank, N.A., (2013) 216 Cal.App.4™ 497, 522-523. In this case, Plaintiff wag apparently facing the threat of foreclosure long before Defendants are alleged to have acted improperly] (by supposedly bungling the modification process), as Plaintiff alleges that he did not submit a loan modification application until after the foreclosure was initiated. (Complaint, 10-11). As a result) Plaintiffs may not point to Defendant’s supposed failure to process their loan modification application (after Plaintiffs fell into default) as the cause of their alleged injury. Thus, this claim necessarily fails. Lastly, Plaintiff’s cause of action fails because it is predicated on his remaining causes of action, all of which fail. “[S]ection 17200 ‘borrows’ violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable....” (Puentes, supra, 160 Cal.App.4th at p. 643-644.) Here, for the reasons set forth in this Demurrer, all of the remaining causes of action asserted in this Complaint fail. As a result, this cause of action for unfair business practices cannot stand independently and is subject to this Demurrer. IV. Conclusion. It is the Plaintiff who bears the burden of showing that a complaint can be amended and how that amendment will change the legal effect of his pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Hendy v. Losse (1991) 54 Cal.3d 723, 742 (leave to amend properly denied where plaintiff failed to | show a factual basis existed to amend complaint). Here, Plaintiff has not alleged any facts to show that 1! 11 1 14 DEFENDANTS DEMURRER TO PLAINTIFF'S COMPLAINT © RX NN a nh A W N N N N N ND N N NN ND - pt -_- pe d e d e d -_- = o o ~ J aN Wn E N Ww N o p- [e n] \ O o o ~ oN w n . Ww N o -_ DO he has any viable causes of action. For the reasons set forth above, Defendants respectfully request that the Demurrer to the Complaint be sustained in its entirety without leave to amend. Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP Dated: January 3, 2018 By: /s/Cori B. Jones Gwen Ribar, Esq. Cori B. Jones, Esq. Attorneys for Defendants, SELECT PORTFOLIO SERVICING, INC. and U. S. Bank National Association, as Trustee, Successor in interest to Bank of America, National Association as successor by merger to La Salle Bank NA as Trustee for Washington Mutual Mortgage Pass Through Certificates WMALT Series 2006-5 15 DEFENDANTS DEMURRER TO PLAINTIFF’S COMPLAINT _N O N wn Bs oo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I, Nancy C. Wheeler, declare as follows: I am employed in the County of Orange, State of California. I am over the age of eighteen (18) and not a party to the within action. My business address is 4665 MacArthur Court, Suite 200, Newport Beach, California 92660. I am readily familiar with the practices of Wright, Finlay & Zak, LLP, for collection and processing of correspondence for mailing with the United States Postal Service. Such correspondence is deposited with the United States Postal Service the same day in the ordinary course of business. I am aware that on motion of 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. On January 3, 2018, I served the within NOTICE OF DEMURRER AND DEMURRER OF DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND THE US BANK TRUST TO PLAINTIFF’S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF, on all interested parties in this action as follows: [X] by placing [ | the original [X] a true copy thereof enclosed in sealed envelope(s) addressed as follows: Stephen F. Lopez, Esq. Stephen F. Lopez Esq. APC 1331 W. Ist Street, Suite 102 Santa Ana, CA 92703 Telephone: (714) 760-9753 Facsimile: (714) 242-6944 Email: Steve@sflopesg.com Attorney for, Plaintiff, Sanjiv Pai, tka Sanjeev M. Paidhungat [X] (BY MAIL SERVICE) I placed such envelope(s) for collection to be mailed on this date following ordinary business practices. [1] (BY CERTIFIED MAIL SERVICE) I placed such envelope(s) for collection to be mailed on this date following ordinary business practices, via Certified Mail, Return Receipt Requested. [1] (BY PERSONAL SERVICE) I caused personal delivery by ATTORNEY SERVICE of said document(s) to the offices of the addressee(s) as set forth on the attached service list. [ 1 (BY FACSIMILE) The facsimile machine I used, with telephone no. (949) 477-9200, complied with California Rules of Court, Rule 2003, and no error was reported by the machine. Pursuant to California Rules of Court, Rule 2006(d), I caused the machine to print a transmission record of the transmission, a copy of which is attached to the original Proof of Service. [1] (BY FEDERAL EXPRESS OVERNIGHT- NEXT DAY DELIVERY) I placed true and correct copies thereof enclosed in a package designated by Federal Express Overnight with the delivery fees provided for. [1] (CM/ECEF Electronic Filing) I caused the above document(s) to be transmitted to the office(s) of the addressee(s) listed by electronic mail at the e-mail address(es) set forth above pursuant to Fed.R.Civ.P.5(b)(2)(E). “A Notice of Electronic Filing (NEF) is generated automatically by the ECF system upon completion of an electronic filing. The NEF, when e-mailed to the e-mail address of record in the case, shall constitute the proof of service as required by 1 PROOF OF SERVICE Ww Ko uN \O 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [X] Fed.R.Civ.P.5(b)(2)(E). A copy of the NEF shall be attached to any document served in the traditional manner upon any party appearing pro se.” (State) I declare under penalty of perjury under the law of the State of California that the foregoing is true and correct. Executed on January 3, 2018, at Newport Beach, California. Nancy C. Wheeler 2 PROOF OF SERVICE