DemurrerDemurrerCal. Super. - 4th Dist.July 6, 2018OO 0 NN O N Wn pb L N e s N O N N N N N N O N O N = o m o m a e m m m kd e d e d 0 N S N Wn Re L O N D E N S Y R E L N D = Oo WRIGHT, FINLAY & ZAK, LLP Gwen H. Ribar, Esq., SBN 188024 James J. Ramos, Esq., SBN 252916 John J. Daller, Esq., SBN 309121 4665 MacArthur Court, Suite 200 Newport Beach, CA 92660 Tel. (949) 477-5050; Fax (949) 477-9200 Attorney for Defendant, SELECT PORTFOLIO SERVICING, INC. ELECTRONICALLY FILED Superior Court of California, County of San Diego 08/24/2018 at 12:23:00 Pi Clerk of the Superior Court By Richard Day, Deputy Clerk SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN DIEGO - CENTRAL DIVISION RENATO OPENIANO AND MARIA OPENIANO, individuals; Plaintiffs, VS. SELECT PORTFOLIO SERVICING, INC., a corporation; and DOES 1-100, inclusive, Defendants. Case No. 37-2018-00033371-CU-BC-CTL NOTICE OF DEMURRER AND DEMURRER OF DEFENDANT SELECT PORTFOLIO SERVICING, INC. TO PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: October 19, 2018 Time: 9:00 a.m. Dept: 75 TO THIS HONORABLE COURT AND TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on October 19, 2018 at 9:00 a.m. in Department 75 of the above-captioned Court, located at 330 W. Broadway, San Diego, California, 92101, Defendant SELECT PORTFOLIO SERVICING, INC. (“SPS” or “Defendant”) will demurrer to the First Amended Complaint of Plaintiffs, RENATO OPENIANO (“Non-Borrower”) and MARIA OPENIANO (“Borrower”) (Non-Borrower and Borrower may hereinafter collectively be referred to as the “Plaintiffs”), on grounds set forth in the accompanying Demurrer. NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT Oo 0 NN NN nh pbs W N RN RN N N N N N N N m e m d m d e d p d m d m d e d WW N N N Un A W N = O O N Y ND W N = Oo The Demurrer is made pursuant to California Code of Civil Procedure Sections 430.10(e) and (f) on the basis that that the aforementioned Causes of Action fail to state facts sufficient to state a valid claim against Defendant. The Demurrer is based upon this Notice of Demurrer and Demurrer, the supporting Memorandum of Points and Authorities set forth below, and the Request for Judicial Notice served concurrently herewith, the complete files and records in this action, the oral argument of counsel, if any, and such other and further evidence as the Court might deem proper. Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP Dated: August 24, 2018 By: /s/John J. Daller Gwen H. Ribar, Esq. James R. Ramos, Esq. John J. Daller, Esq. Attorneys for Defendant, SELECT PORTFOLIO SERVICING, INC. 2 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 3 OO Wn pb WwW NN N O N N N N N N N N m m m m em e e e a e d «0 N Y nn bk W N N =, O D N S N D W ND = O DEMURRER Defendant generally and specially demurs to Plaintiffs’ First Amended Complaint and to each of the below enumerated causes of action contained therein, on the following grounds: The Entire Complaint The entire First Amended Complaint fails as against Plaintiff Renato Openiano because he lacks standing to allege any of the claims made therein. The First Cause of Action Plaintiffs’ First Cause of Action for Breach of Written Contract fails to allege facts upon which relief may be granted in that there is no valid contract to permanently modify the loan, no facts to suggest a breach of the trial modification, no performance by Plaintiffs, and because Plaintiffs did not suffer any damage. The Second Cause of Action Plaintiffs’ Second Cause of Action for Unfair Business Practice Under Cal. Bus. & Prof. Code §17200, et seq. fails to allege facts upon which relief may be granted in that Plaintiff fails to allege this claim with the required degree of particularity and because Plaintiff fails to allege an injury-in-fact. Furthermore, this claim fails for all of the same reasons as does Plaintiff’s First, Third, and Fourth Causes of Action. The Third Cause of Action Plaintiffs’ Third Cause of Action for Constructive Fraud fails to allege facts upon which relief may be granted in that Plaintiffs fail to allege this claim with the required degree of particularity in that there are no facts suggesting a fiduciary duty owed by Defendant to Plaintiffs, breach of any purported duty, intent to deceive, or that Defendant’s purported conduct caused Plaintiffs’ harm. In" In" In" 1" I 3 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT - N N N N ND N N N N e e e a e a e d e a p a p a © J O N nh BE WLW = O D N Y N R W ND = o OO 0 NN O N Wn Ss L N The Fourth Cause of Action Plaintiffs’ Fourth Cause of Action for Fraudulent Concealment fails to allege facts upon which relief may be granted in that Plaintiffs fail to allege this claim with the required degree of particularity, and because Plaintiffs fail to allege facts suggesting concealment, materiality, a duty to disclose, intent to deceive, or resulting damages. Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP Dated: August 24,2018 By: /s/ John J. Daller Gwen H. Ribar, Esq. James R. Ramos, Esq. John J. Daller, Esq. Attorneys for Defendant, SELECT PORTFOLIO SERVICING, INC. 4 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT O O 00 NN a N Wn bh W N N O N N N N O N RN RN RN Mm r e p m p m me p m p e e d e d 00 ~~ O N Wn bh W N O O Y B N m o II. III. TABLE OF CONTENTS Page No MEMORANDUM OF POINTS AND AUTHORITIES ........ccoovieiireiierinceeicenins 8 INTRODUCTION ..oontiitiieerirreee cesta sete essere sneer e nese sabe sate sae sascssesesestsnneseneene 8 STATEMENT OF FACTS coerce sates secession snes 8 A. The Loan And The TMO cocci ceases 8 B. POE REIAtEH AGHIOMS ..«veoseoanmeeonnesasne onsen bodies is sis 5s 595545 5555555 M0884 R0555 4 BRESH ANT 40d 9 BRATTTIIMIEINTT 8.00 issonsmscosansesesisss as sso ass ns sss mss a ARES ASAN EH EE SH TSS EARNS ARF VATA 10 A. Non-Borrower Lacks Standing To Assert Any Of The Causes Of Action In The FAC Against SPS... erases 11 B. The First Cause Of Action For Breach Of Written Contract Lacks SUTTICTEIIE TIACES vv evaesremsne ss on emuesionsiosis ssi do 458 B4R4558 555 46948 F548 030009 3H FHRER EHF SE ESS 11 1. There Is No Valid Contract To Permanently Modify The Loan Terms .....11 2. Defendant Did Not Breach The TMO Terms .......cccoveivvviinviniinenniecnene, 12 3. No Facts To Suggest Borrower Performed Her Obligations Under "THE: TIVIO) TIETEINS.. ovo wwii sss sissies 5955458855 5 4 aHS BH AS ERO AERIS TSHAT SRATIERY 13 4. No Facts Suggesting Resulting Harm To Plaintiffs...........ccccooviiiienninns 14 5. Plaintiffs’ TILA Allegations Regarding The TMO Lack Validity ............. 14 C. The Second Cause Of Action For Unfair Business Practice Under Business & Professions Code Section 17200, ef seq., Lacks SII ICTCIIE FHOLS. .. oanusnssesseonnenensnseronsm mm amin ih sind 508i S350 HRSA EAST RET HRT 15 1. No IJury I Fath cesmesmmemmmmssesismpsesimssesroressssvensasssaansasassiissssssssadsionsion 15 2. This Claim Rises And Falls With Plaintiffs’ Other Failed Causes OE BABHIONL 1.0 comm sos msm mss x5 55 X33 A SSAA SF AES eterna 16 D The Third Cause Of Action For Constructive Fraud Lacks Sufficient Facts ..16 E The Fourth Cause of Action For Fraudulent Concealment Lacks SUTTICIENE FACES oevvvvvveeeeereeevrereneereenenrenenesssssssnsnssssssssssssssnnsnssssnsssssssrsrsennsnssnnsanses 17 1. No Facts Suggesting Concealment ...........cccvvivriveieivenienneninneeniinnns 18 5 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT O© 0 ~~ O N nv HSH WwW N o N N N N N N RN N N RN = r m e d e m e d e m pe d ee d ee d p e 0 J A N Wn RA W N O R , O O N N N RE W N =, Oo Iv. 2. No Facts To Suggest A Duty To Disclose, That The “Facts” Were Material, Or That There Was An Intent To Deceive Anyways ................. 18 3. No Damages Suffered By Plaintiffs Anyway .......cccccoecernevennencinieneninnens 18 CONCLUISION......coveciisomssonmomsssssasmsssssonsonssnnssnassnssanssonsasns hansnsii nsd sds sdd5h s ain 45 5433 19 6 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 NN O N nn be W N N N N N N N N N N em e m e m e m e a p e h d pe 0 NN O N nn RA W N RL, O O NN Y Y R W ND = O TABLE OF AUTHORITIES Page No. Cases Baker v. Miller (1923) 190 Cal. 263, 267; 22 Pi 11 «cums issn cons swimsssssansinisostsnsnssssssmoss ss ssa sen ia saosin; 12 Bank of America Corp. v. Superior Court (2011) 198 Cal. App.4th 862, 870 .....coueuiirieeieiiietcecieese terres ae 19 Cantu v. Resolution Trust Corp. (1992) 4 Cal APP ATI BIT, 879 ...orcrcrercrrrscssnssivussussorassssiness sninbb i EHEHS 68088045 SANE TASS RS ABST 12 Clifford S. v. Superior Court (1.995) 38. Cal. AppAth TAT; T3 | sessment asses mess sommes ross seems po 12 Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal App. Ath 1150, 1179 .ccccorieraerrsrsisnesensmsansninsiiminsasss sous siess saws e ssass sss smmys 13 Hall v. Time, Inc. (2008) 158 Cal. App.dth 847; 849 ....csummssmmmmmssssnssmsssmusnsmuspssevesssmssssamusssaiassassresg ren 17 Holmes v. California Nat. Guard (2001) 90 Cal. App.4th 297, 314-315 ccc se 12 Ingels v. Westwood One Broadcasting Services, Inc. (2005) 129 Cal. App.4th 1050; 1060 : ccasumsammmsensmssmassmmsmmmasesmaassamms msm: 17 Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal. App.4th 497, 522-523 ....ciiiiiriiininiiieiicii cree 17 Khoury v. Maly's of California (1993) 14 Cal. App. 4h.612, 619 ....ccosumismsmumnsss smmmeammssmnssssssmmmsssmssses soossarrssasrons 16 Ladas v. California State Auto. Assn. (1993) 19 CalLAPP.4th 761, 770 ...ceoueieiniiciiriiniitininiec eset sree esas 13 Nool v. HomeQ) Servicing 17 (2009) 653 F.SUPP. 2d 1047, 1056 occccrcccceveeomsresessssesensesse eres ssss ssesessss essssssessesse s es NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO © NN O N Wn RA W N N N RN N N N N N N Em m m e m e m e m e R e m e m © N N nh ph W N = DO V N D Y R W ND = o Oaks Management Corporation v. Superior Court (2006) 145 Cal. APP.Ath 453, 466 ....oceeueemreeieeerieieieeeeeeee esters everson 18 People v. Superior Crt. (Plascencia) (2002) 103CALAPP.AT 409,420 ....oovoveereereeeeeeeeeeeveese sses s ss senses esses sessss ss s sss 12 Ragland v. U.S. Bank (2012) 209 Cal. App.4th 182, 206 ....ceveveriiiicrireeneiicceirirceiet etcet ra ese rr ens 18 Ross v. Creel Printing & Publishing Company, Inc. (2002) 100 CALAPDP.AT 736, TAB oocoorverereereeereeeere sess seeissseesssss sses sass sess ises sns sess sesssnes 12 Silicon Knights, Inc. v. Crystal Dynamics, Inc. 983 F. Supp. 1303, 1316 (N.D. Cal. 1997) covert 16 Stewart v. Life Ins. Co. of North America (2003) 388 F.Supp.2d 1138 .......c0ceennrnerencsnnnsissoioss sain oom 56 65mm mss 00814584583 449315450 RAE RIS 16 Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 517; fh. 14 csammmmmmmmmmmsmssmssmssssnssemossnpusisagasssesossepys 18 Statutes Bus & Prof Code § 17200........ccmirmersecsmsmnrisissisissesisssasinssessssssssisssssssssensssasassanestsasssssinsssssasassens 10 California Civil Code §§8§ 2923.55,2924.9 and 2923.6........ccveiievisniccncnnnisisinininsenisinissniin. 12 California Civil Code § 2923. 7......cccvuvmmssscsrssissssssnsssssrssnsrssassssssssssisssrsassessssssssmmssssssssssssnmes 11 California Civil Procedure Sections 430.10(€) .....coevevercrreiarinrscsnssesnsecussenens eevee s e e arenes ene 1 Code of Civil Procedure §§ (s) 430.10(e)(f) and 430.30(2) ....coeveverrnenieicncnniiiiiiiiecicnnnes 11 Other Authorities 1 Witkin, Summary of Cal. Law on ed. 1987) Contracts, §145, p.169, citing Rest.2d Contracts, 833, ocr erprneromervrrommemmmnsssiesi bess ES CRS SES A EEE ESHA HE A SAE ASA VE SSB EEA SE A 13 B.E. Witkin, California -Procedure, Vol. 4 Pleading §515, pg. 648 ........coooivniiiniiiinnnns 12 Rules 12 CBIR, BIB. ZOU) rererreraseconanspomsnnon iansssinisossahsn i Hea 60650 088 555 SA EH VASAT 17 8 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT © 0 9 O N nn hs W N DO N N N N N N N N H Hm mm mE e m e m e m 0 I N nt A W N =, O V O N Y D N R= Oo MEMORANDUM OF POINTS AND AUTHORITIES L INTRODUCTION The crux of Plaintiffs’ First Amended Complaint (“FAC”) is that Select Portfolio Servicing, Inc. (“SPS” or “Defendant”) either failed to disclose material terms of a Trial Modification Plan (the “TMO”) that was offered to them or that Defendant breached the terms of said TMO. Yet, neither allegation has any merit, as there were never any terms to be disclosed (since the permanent modification was expressly contingent upon Plaintiffs successfully completing the trial portion of the Trial Modification) and because Defendant never did anything in violation of the actual terms of the TMO. The instant litigation is the third action commenced in connection with the subject loan since March 2016. Like the previous actions, the instant litigation is entirely without merit. As demonstrated herein, each and every one of Plaintiffs’ causes of action lack validity and, therefore, Defendant’s Demurrer should be sustained without leave to amend. IL. STATEMENT OF FACTS A. The Loan And The TMO. On or about or about November 26, 2004, Plaintiff Maria Gracia P. Openiano (“Borrower”) obtained a loan in the amount of $552,000.00 (“the Loan”), the repayment of which was secured by a Deed of Trust (“Deed of Trust”) recorded against certain real property located at 1233 Discovery Bay Drive, Chula Vista, California 91915 (“the Property”).! Plaintiff Renato Openiano (“Non-Borrower”) was not a party to the Loan transaction.” The Deed of Trust was assigned to U.S. Bank NA, successor trustee to Bank of America, NA, successor in interest to LaSalle Bank NA, on behalf of the registered holders of Bear Stearns Asset Backed Securities I LLC, Asset-Backed Certificates, Series 2005-HE6 (“the Trust”), as evidenced by a Corporate Assignment of Deed of Trust that was ultimately recorded against the Property on June 11, 2012. ! See Deed of Trust, attached to Request for Judicial Notice in support of Defendant’s Demurrer to FAC filed concurrently herein (“RIN”) as Exhibit “A”. 2 See Deed of Trust, attached to the RIN as Exhibit “A”. 3 See Corporate Assignment of Deed of Trust, attached to the RIN as Exhibit “B”. 9 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT © 0 J OO Wn bb W w W O N N N N N N N N N O N m m em p m e m e m e e e m e d On December 7, 2007, a Notice of Default was recorded against the Property, specifying that the Loan is due for payments commencing with the payment due on June 1, 2007 and all subsequent payments thereafter.* On or about April 18, 2018, Defendant extended to Borrower the TMO, the terms of which required Borrower to tender three payments in the amounts of $8,556.46 due on June 1, 2018, July 1, 2018, and August 1, 2018, respectively.” The TMO states, in part: “The Plan is designed to assist you in making payments against the lien on the above- referenced property while the account is considered for possible modification. The terms of the Plan, including payment amounts and due dates, are listed below. In order for SPS to consider a modification, you must timely remit all payments under the Plan, and if required, you must provide SPS with information necessary to verify your income and assets, which will support your ability to repay the lien if a modification is approved.” It goes on to state: “If the required payments are made under the Plan, and you submit the required information to SPS verifying your income and assets, SPS will consider a modification of the repayment terms of the lien on the property to make the monthly payments more affordable. You will be notified of the income and asset verification documents that SPS must receive in order for you to be considered for a modification.” On May 26, 2018, Plaintiffs remitted to Defendant a payment in the amount of $8,556.46 (the “1° TMO Payment”).® The 1** TMO Payment is the only payment owed under the terms of the TMO which Plaintiffs allege that they tendered.’ B. Prior Related Actions. On March 3, 2016, Borrower filed a Complaint with the Superior Court of California, County of San Diego, naming SPS as a defendant therein and asserting causes of action for violations of California Civil Code sections 2923.55, 2924.9, and 2923.6; Negligence; Violations of California Business & Professions Code section 17200; and Demand for * See Notice of Default, attached to RIN as Exhibit “C”. 5 See TMO, attached to FAC as Exhibit “A”. ®1d. "1d, 8 See FAC, 148, and Exhibit “G” thereto. ® See Plaintiffs’ Complaint, in general. 10 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 3 O N Wn b w e e Ww AA nh kA W N 2 O D O R N N N N R W ee © Accounting (the “2016 Action”).' Borrower requested dismissal of the 2016 Action, and on April 13, 2017, the 2016 Action was dismissed without prejudice.’ On January 2, 2018, Plaintiffs filed another Complaint with the Superior Court of California, County of San Diego, again naming SPS as a defendant therein and asserting causes of action for violations of California Civil Code sections 2923.6 and 2923.7; Negligence; and Unfair Business Practices (the “January 2018 Action”).’? On or about May 14, 2018, Plaintiffs’ former counsel in the January 2018 Action sought to be relieved from representing Plaintiffs on the grounds that they, citing as grounds for the Motion Plaintiffs, “continually demand[ed] that attorneys file frivolous and unsubstantiated motions with the Court.” Thereafter, Plaintiffs requested dismissal of the January 2018 Action, and on May 18, 2018, the January 2018 Action was dismissed without prejudice." III. ARGUMENT California Code of Civil Procedure (“CCP”) Section(s) 430.10(e)(f) and 430.30(a) allow a defendant to interpose general and special demurrers to a Complaint. Section 430.10 provides, in pertinent part: “the party against whom a complaint or cross complaint has been filed may object, by demurrer or answer, as provided in Section 430.30, to the pleading on any one or more of the following grounds: (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain. As used in this subdivision, ‘uncertain’ includes ambiguous and unintelligible.” Furthermore, “without supporting facts demonstrating the illegality of a rule or regulation, an allegation that (the defendant) is in violation of a specific statute is purely conclusionary and insufficient to withstand demurrer.” Baker v. Miller (1923) 190 Cal. 263, 1° See Complaint filed initiating the 2016 Action, identified as Case No. 37-2016-00007166-CU-OR-CTL, attached to RIN as Exhibit “D”. 1 See Dismissal of 2016 Action, attached to RIN as Exhibit “E”. 12 See Complaint filed initiating the January 2018 Action, identified as Case No. 37-2018-00000028-CU-OR-CTL, attached to RIN as Exhibit “F”. 1 See FAC, Exhibit “F”. 11 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT Oo O0 0 ~ O N nn hx W N N N N N N N N N N E m e m e m e H e m e m e m p m 0 NN O N nt RAR W N = O YO N O N R W ND oo 267, 212. Instead, a Plaintiff must plead facts sufficient to establish every element of that cause of action. Cantu v. Resolution Trust Corp., (1992) 4 Cal.App.4th 857, 879. Moreover, if any element of a cause of action is negated, a demurrer to (that) cause of action is properly sustained. Ross v. Creel Printing & Publishing Company, Inc., et al. (2002) 100 Cal. App.4™ 736, 748. A. Non-Borrower Lacks Standing To Assert Any Of The Causes Of Action In The FAC Against SPS. Standing is typically treated as a threshold issue, in that without it no justiciable controversy exists. People v. Superior Crt. (Plascencia), (2002) 103Cal. App.4th 409,420. “As a general principle, standing to invoke the judicial process requires an actual justifiable controversy as to which the complainant has a real interest in the ultimate adjudication because he or she has either suffered or is about to suffer an injury...” Holmes v. California Nat. Guard, (2001) 90 Cal. App.4th 297, 314-315. “Without standing, there is no actual or justifiable controversy, and courts will not entertain such cases.” Clifford S. v. Superior Court, (1995) 38 Cal. App.4th 747, 751. Non-Borrower is not a party to either the Note or the Deed of Trust, and as such, he has 15° Accordingly, he has no standing to prosecute any of the no “real interest” in this litigation. causes of action asserted in the FAC, and all causes of action asserted by Non-Borrower should be dismissed, with prejudice. B. The First Cause Of Action For Breach Of Written Contract Lacks Sufficient Facts. A Cause of Action for Breach of Contract requires a pleading of the following: (a) the contract; (b) Plaintiff’s performance or excuse for non-performance; (c) Defendant’s breach; and (d) damage to Plaintiff. B.E. Witkin, California -Procedure, Vol. 4 Pleading §515, pg. 648 (WEST 5™ Ed., 2008). 1. There Is No Valid Contract To Permanently Modify The Loan Terms. “Under basic contract law “an offer must be sufficiently definite, or must call for such definite terms in the acceptance that the performance promised is reasonably certain.” Ladas v. 14 See FAC, Exhibit “E”; see also Dismissal of January 2018 Action, attached to RIN as Exhibit “G”. 12 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 J O N Un B W N N N N N O N N N NN mm o m e m m m a e m p m pe d e m xo” J O N nn RA W N , O O N Y D N R E W I N D = o California State Auto. Assn., (1993) 19 Cal. App.4th 761, 770, citing 1 Witkin, Summary of Cal. Law (9™ ed. 1987) Contracts, §145, p.169, citing Rest.2d Contracts, §33. “Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable.” Ladas, supra, 19 Cal. App.4th at p. 770 (citations). Moreover, when it comes to the enforcement of a purported promise to modify a loan, the absence of essential loan modification terms such as the amount of the loan, the interest rate, etc. is fatal to a Cause of Action. Daniels v. Select Portfolio Servicing, Inc., (2016) 246 Cal.App.4th 1150, 1179. There are no material terms upon which Borrower may even remotely assert that there was a permanent modification of the Loan.'® There is nothing to suggest that the parties even discussed the amount of the monthly payments to be owed under the terms of the would-be permanent modification, the purported new interest rate, when the loan matured, whether a balloon payment would be owed, how the arrearages would be capitalized, etc. - Plaintiffs allege that any such terms were hidden from them, when in fact such terms never existed.!” To the contrary, the face of the TMO makes clear that it provided solely for a forbearance of the foreclosure sale while Plaintiffs were considered for a potential permanent modification. As a result, it is clear that the parties never agreed to the same thing in the same sense with respect to the terms of any permanent modification. As such, to the extent Plaintiffs’ First Cause of | Action is based on a supposed permanent modification of the Loan, it necessarily fails. 2. Defendant Did Not Breach The TMO Terms Plaintiffs allege that Defendant, “breached the terms of [the TMO] when on or about May 30, 2018 it commenced and scheduled the July 18, 2018 trustee sale on the subject property in direct violation of “Forbearance” provision in par.4 in page 2 of this contract which states “During the Plan Tern [sic], SPS will not proceed to foreclosure sale or commence 15 See Deed of Trust, attached to RIN as Exhibit “A”; see also TMO, attached to FAC as Exhibit “A”. 1 See generally TMO, attached to FAC as Exhibit “A”. 17 See generally FAC and TMO, attached therein as Exhibit “A”. 13 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT Oo 0 N N O N Wn bs W N N N N N N N N N N H e e a e m e m a e e e m 0 N N Lh hk W N = O O N N h w NY = O foreclosure proceedings on the above referenced property, provided that you are making timely payments in compliance with the terms of the Plan.” (underline added.) The express terms of the TMO provide only that “SPS will not proceed to foreclosure sale or commence foreclosure proceedings..., provided that [Borrower is] making timely payments...” There are no facts to suggest SPS has actually proceeded to sale and, thus, no facts to suggest that it is in breach of the TMO. The May 30, 2018 letter does not constitute proceeding to foreclosure sale or commencing foreclosure proceedings. Furthermore, Plaintiffs have not alleged (and cannot properly allege) that Defendant has, in fact, sold the Property. Notwithstanding the above, the available facts make clear that SPS’ obligation to forbear from proceeding to sale was expressly contingent upon Borrower tendering the payments due on the TMO. Yet, the FAC fails to allege that Borrower remitted the second payment under the TMO by the June 1, 2018 due date or the third payment under the TMO by the July 1, 2018 due date.'® Even if Defendant were to now proceed to sale, it would not be in breach of the TMO terms because the second and third payments required under the TMO were not remitted by their respective due dates - or at all, for that matter. Any purported breach of the TMO by Defendant is speculative at best and cannot survive demurrer. 3. No Facts To Suggest Borrower Performed Her Obligations Under The TMO Terms. | As noted above, a party alleging a claim for breach of contract must establish that he has satisfied his own contractual obligations. On or about April 18, 2018, Defendant extended to Borrower the TMO, the terms of which required Borrower to tender three payments in the amounts of $8,556.46 due on June 1, 2018, July 1, 2018, and August 1, 2018, respectively.’ Plaintiffs assert that they, “performed what was required of them in compliance with the terms of the contract.” However, Plaintiffs all but concede that only the 1 TMO Payment was made.?! Thus, there are no facts to suggest that Borrower performed what was required of her pursuant to the TMO. For this reason alone, '8 See FAC, 163 19 See TMO, attached to FAC as Exhibit “A”. 0 See FAC, 9180. 2! See FAC, 163 14 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO © NN O N wn ps W N N O N D N D N N N N N N D o m e m e m e e p d p m e d a p m co 1 O N Ln A W N , O O N N Y N P E W = Oo Plaintiffs’ claim for Breach of Contract fails. 4. No Facts Suggesting Resulting Harm To Plaintiffs. The FAC similarly fails to allege any facts to show that, if Defendant committed a breach of the TMO, then said breach actually resulted in harm to Plaintiffs. This is because no harm has resulted to Plaintiffs by Defendant’s purported breach - the Property has not been sold, and Plaintiffs continue residing in the Property for free.”? If anything, Plaintiffs have received a windfall in the form of free rent. As such, Plaintiffs’ Breach of Contract cause of action lacks validity and cannot survive demurrer. 5. Plaintiffs’ TILA Allegations Regarding The TMO Lack Validity. The FAC states that the only “material difference” between the FAC and Plaintiffs’ initial Complaint in this action is that “there is no longer a Violations of TILA cause of action in this First Amended Complaint,” however, Plaintiffs “continue to re-asserts [sic] and re-allege that there was TILA violations” in connection with the TMO.? But, Plaintiffs entirely misconstrue the language within the TMO as an offer for a modification of the Loan, when - on its face - the TMO is merely an offer to be considered for a possible modification of the Loan.” As stated in the name of the document - “Trial Modification Plan” - it is a trial plan, not a permanent modification, the terms of which are entirely and clearly delineated therein. Plaintiffs’ misunderstanding is demonstrated by their reference to language under the bold heading “Tax Consequences of Loan Modifications” within the TMO, which states, in part, that, “You will receive further information about the terms of any loan modification offered to you after you have completed your trial plan,” which Plaintiffs assert, “declares that the new loan modification terms will be furnished to Plaintiffs only after making three monthly payments...”?® Plaintiffs’ misunderstanding of the TMO terms is further evidenced by the fact that they allege the language under the bold heading “Plan Payments” within the TMO, “is 22 See Notice of Default, attached to RIN as Exhibit “C”, 3 See FAC, 11. ** See TMO, attached to FAC as Exhibit “A”. 25 Id. 26 See Plaintiffs’ Ex-Parte Application for Temporary Restraining Order and Request for Order to Show Cause Why a Preliminary Injunction Should Not Issue (the “Application”), page 8, lines 25-27. 15 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 J O&O nh bh W w N = NN N N N ND N N N em em m a ee p d e e p d e a p m © N N O N Dh BR W N = DO Y N NN Rr W N = o unlawful, because it requires three payments be made by Plaintiffs prior [sic] receiving the loan modification terms...” But, simply put, Plaintiffs have not received any terms regarding a modification of the Loan because the TMO is not a modification of the Loan, and therefore, there are no Loan modification terms to be provided to Plaintiffs. Notwithstanding the above, a lender is not required to provide additional TILA disclosures when the original loan is modified so long as the rate on said loan does not increase anyway. See 12 C.F.R. §226.20(a)(4). Plaintiffs’ FAC does not suggest that the TMO resulted in an increase to the interest rate. In the absence of such facts, the FAC - at least insofar as it is based on the theory that the TMO violated TILA - necessarily fails. Finally, Plaintiffs’ theory that they are entitled to rescind the TMO based on purported TILA violations (and, as a result, are somehow spared from a foreclosure) makes no sense anyway. It is undisputed that Borrower received a loan in the amount of $552,000.00 that was secured by a Deed of Trust with a power of sale clause which encumbers the Property.?® If the TMO is void as Plaintiffs seem to insist, then - absent payment of the unpaid balance, which is not alleged here - there is nothing preventing Defendant from proceeding to a foreclosure on the Property pursuant to the original terms of the Deed of Trust. C. The Second Cause Of Action For Unfair Business Practice Under Business & Professions Code Section 17200, ef seq., Lacks Sufficient Facts. In order to allege a violation of the Cal. Bus. & Prof. Code §17200 (“UCL”), a plaintiff must state with reasonable particularity the facts supporting the statutory elements of the violation. Silicon Knights, Inc. v. Crystal Dynamics, Inc, (N.D. Cal. 1997) 983 F. Supp. 1303, 1316 (quoting Khoury v. Maly's of California, (1993) 14 Cal. App. 4th 612, 619. A plaintiff must show either an (1) unlawful, unfair, or fraudulent business act or practice, or (2) unfair, deceptive, untrue, or misleading advertising. Stewart v. Life Ins. Co. of North America, (2005) 388 F.Supp.2d 1138. 1. No Injury In Fact. “A plaintiff must have suffered an ‘injury in fact’ and ‘lost money or property as a result 7 See FAC, ] 115. 16 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT oO 0 9 O N Wn hk W N N O N N N N N N N N = E e e e e a a e d e m WwW N N N Ln hk W R = O O N Y R N W D = O of the unfair competition’ to have standing to pursue either an individual or a representative claim under the California unfair competition law.” Hall v. Time, Inc., (2008) 158 Cal.App.4th 847, 849. “[T]he phrase “as a result of” in the UCL imposes a causation requirement; that is, the alleged unfair competition must have caused the plaintiff to lose money or property.” Id. A plaintiff has failed to state a viable Cause of Action under the UCL if the purported injury-in-fact predates the alleged unfair/unlawful/fraudulent conduct. Jenkins v. JP Morgan Chase Bank, N.A., (2013) 216 Cal.App.4th 497, 522-523. With specific respect to a non- judicial foreclosure, if a borrower-plaintiff faced the threat of foreclosure before the wrongful acts are alleged to have taken place, he cannot state a valid claim under the UCL. Id. As discussed above, Plaintiffs were facing the threat of foreclosure before Defendant is alleged to have acted improperly by supposedly breaching the TMO.?” As a result, Plaintiffs may not point to Defendant’s supposed breach of the TMO (eleven years after Borrower fell into default) as proof of an injury-in-fact. Moreover, as discussed in greater depth above, Plaintiffs are far from having suffered any injury here, as they continue to occupy the Property without having paid for it. And, without any facts suggesting any injury-in-fact that was suffered by Plaintiffs as a result of Defendant’s conduct, this cause of action necessarily fails. 2. This Claim Rises And Falls With Plaintiffs’ Other Failed Causes Of Action. A Cause of Action brought under Business & Professions Code §17200 is purely derivative and survives or falls based on the success of the other Causes of Action alleged. Nool v. HomeQ Servicing, (2009) 653 F.Supp. 2d 1047, 1056; Ingels v. Westwood One Broadcasting Services, Inc., (2005) 129 Cal. App.4th 1050, 1060. Plaintiffs’ UCL cause of action is derivative of their other defective causes of action. Thus, it fails for the very same reasons as the other causes of action, and the Demurrer should be sustained without leave to amend. D. The Third Cause Of Action For Constructive Fraud Lacks Sufficient Facts. “The elements of the cause of action for constructive fraud are: (1) fiduciary 28 See Deed of Trust, attached to RIN as Exhibit “A”. 2 See FAC, 9140-144; see also Notice of Default, attached to RIN as Exhibit “C”. 17 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT NO 0 NN S N Ln BA W N = N O N N N N N N N N = e m em e m e m ee d md pe d e d 00 N N nh BR W N = O O N N O Y R A W N = Oo relationship; (2) nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4) reliance and resulting injury (causation).” Younan v. Equifax Inc., (1980) 111 Cal.App.3d 498, 517, fn. 14.“Unlike actual fraud, constructive fraud depends on the existence of a fiduciary relationship of some kind, and this must be alleged.” Id. at 516-517. Unfortunately for Plaintiffs, “[n]o fiduciary duty exists between a borrower and lender in an arm’s length transaction. Ragland v. U.S. Bank, (2012) 209 Cal. App.4th 182, 206; see also Oaks Management Corporation v. Superior Court, (2006) 145 Cal. App.4th 453, 466. As such, this claim fails. Even if Borrower was able to show a fiduciary relationship®®, there are no facts to suggest a plausible nondisclosure by Defendant. As previously set forth, there were not and are not terms of a permanent modification for which Defendant could have disclosed, despite Plaintiffs’ allegation that Defendant did not disclose the terms of some purported permanent modification. Furthermore, Plaintiffs cannot show intent to deceive on Defendant’s part. As previously set forth, Defendant has not “hidden the ball” from Plaintiffs about the terms of the TMO or any actions Defendant may or may not undertake. Finally, Plaintiffs cannot demonstrate reliance and resulting injury. Plaintiffs suggest that they would not have entered into the TMO had the real terms been disclosed to them. Of course, such an argument ignores that Plaintiffs - or at least, Borrower - already owed a contractual duty to make payments on the Subject Loan and, as a result of having been substantially in default, were already facing a foreclosure sale. As a result, Plaintiffs may not point to Defendant’s supposed breach of a fiduciary duty (eleven years after Borrower fell into default) as proof of an injury-in-fact. And, without any facts suggesting any injury-in-fact that was suffered by Plaintiffs as a result of Defendant’s conduct, this cause of action necessarily fails, and the Demurrer should be sustained without leave to amend. E. The Fourth Cause Of Action For Fraudulent Concealment Lacks Sufficient Facts. A Cause of Action for fraud based on concealment requires that the plaintiff allege facts 3 Defendant notes that Non-Borrower cannot demonstrate a fiduciary relationship because he is not a party to the Loan. Non-Borrower does not have standing to assert any of the causes of action contained within the FAC. 18 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 NN O N nn As e W O N N O N N N N N N N O N M m e m p b a e m e b e a e a RN NN A N nn RAR W N L , O D Y N O Y R E W I N D -~ Oo showing: (1) concealment by the defendant of a material fact; (2) duty owed by the defendant to disclose said fact; (3) intentional concealment with the intent to defraud; (4) that plaintiff would not have acted as he did if he had knowledge of the concealed fact; and (5) resulting damages suffered by the plaintiff. Bank of America Corp. v. Superior Court, (2011) 198 Cal. App.4th 862, 870. 1. No Facts Suggesting Concealment. Plaintiffs allege that Defendant concealed from them: (1) that Defendant may proceed with or commence a foreclosure sale; and (2) “the new Loan Mod Plan Terms.. 21 However, there is nothing to suggest Defendant has commenced a foreclosure sale.*® Additionally, Defendant could not have concealed “the new Loan Mod Plan Terms” because no such terms exist (as the permanent terms were expressly conditioned upon Plaintiffs making all trial plan payments first, which they have not done.” Plaintiffs’ vacuous conclusions are insufficient to state a valid cause of action, and the allegations represent little more than self-serving legal conclusions. 2. No Facts To Suggest A Duty To Disclose, That The “Facts” Were Material, Or That There Was An Intent To Deceive Anyway. Even if Defendant concealed either of (1) or (2) above, the fact remains that there is nothing to suggest that Defendant owed a duty to disclose said facts, that they were material in the first place, or that Defendant intended to deceive. In the absence of such facts, this claim fails as against Defendant. 3. No Damages Suffered By Plaintiffs Anyway. Even if Defendant engaged in the alleged concealment, one is hard-pressed to understand how it is that Plaintiffs suffered injury resulting therefrom, as Borrower has been in continuous default of the Loan since June 2007.** Thus, this claim fails, and the Demurrer should be sustained without leave to amend. 31 See FAC, 9149-151. 32 See FAC, in general. 33 See TMO, attached to FAC as Exhibit “A”. 34 See Notice of Default, attached to RIN as Exhibit “C”. 19 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT OO 0 ~~ OO Wn hh W N = N N N N N N N N N E e e e e m e m e d ee e e 00 ~~ O N Wn bh W N = O 0 N N B W ND = O IV. CONCLUSION In light of the above, Defendant respectfully requests that the Court grant their Demurrer to the FAC in its entirety, without leave to amend. Dated: August 24, 2018 20 Respectfully submitted, WRIGHT, FINLAY & ZAK, LLP /s/ John D. Daller Gwen H. Ribar, Esq. James R. Ramos, Esq. John J. Daller, Esq. Attorneys for Defendant, SELECT PORTFOLIO SERVICING, INC. NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT «0 N N Wn Oo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 PROOF OF SERVICE I, Steve Bennett, 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 August 24, 2018, I served the within NOTICE OF DEMURRER AND DEMURRER OF DEFENDANT SELECT PORTFOLIO SERVICING, INC. TO PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF on all interested parties in this action as follows: [] by placing [ ] the original [X] a true copy thereof enclosed in sealed envelope(s) addressed as follows: Renato Openiano and Maria Openiano 1233 Discovery Bay Drive Chula Vista, CA 91915 Tel: (619) 944-6939 Plaintiffs in Pro Per [X] (BY MAIL SERVICE) I placed such envelope(s) for collection to be mailed on this date following ordinary business practices. [] (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. [] (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. [] (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. [] (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 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.” 1 PROOF OF SERVICE Oo 0 9 a N Wn pA 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [X] (State) I declare under penalty of perjury under the law of the State of California that the foregoing is true and correct. Executed on August 24, 2018, at Newport Beach, California. Err Steven E. Bennett 2 PROOF OF SERVICE
