Orange County (Cali) Superior Court Judge Firmat posted these notes on
the law and motion calendar to assist attorneys pleading various
theories in wrongful foreclosure cases etc. Some interesting
FOOTNOTES TO DEPT. C-15 LAW AND MOTION CALENDARS
Note 1 – Cause of Action Under CCC § 2923.5, Post Trustee’s Sale -
There is no private right of action under Section 2923.5 once the
trustee’s sale has occurred. The “only remedy available under the
Section is a postponement of the sale before it happens.” Mabry v.
Superior Court, 185 Cal. App. 4th 208, 235 (2010).
Note 2 – Cause of Action Under CCC § 2923.6 – There is no private
right of action under Section 2923.6, and it does not operate
substantively. Mabry v. Superior Court, 185 Cal. App. 4th 208,
222-223 (2010). “Section 2923.6 merely expresses the hope that
lenders will offer loan modifications on certain terms.” Id. at 222.
Note 3 – Cause of Action for Violation of CCC §§ 2923.52 and / or
2923.53 – There is no private right of action. Vuki v. Superior
Court, 189 Cal. App. 4th 791, 795 (2010).
Note 4 - Cause of Action for Fraud, Requirement of Specificity – “To
establish a claim for fraudulent misrepresentation, the plaintiff must
prove: (1) the defendant represented to the plaintiff that an
important fact was true; (2) that representation was false; (3) the
defendant knew that the representation was false when the defendant
made it, or the defendant made the representation recklessly and
without regard for its truth; (4) the defendant intended that the
plaintiff rely on the representation; (5) the plaintiff reasonably
relied on the representation; (6) the plaintiff was harmed; and, (7)
the plaintiff’s reliance on the defendant’s representation was a
substantial factor in causing that harm to the plaintiff. Each element
in a cause of action for fraud must be factually and specifically
alleged. In a fraud claim against a corporation, a plaintiff must
allege the names of the persons who made the misrepresentations, their
authority to speak for the corporation, to whom they spoke, what they
said or wrote, and when it was said or written.” Perlas v. GMAC
Mortg., LLC, 187 Cal. App. 4th 429, 434 (2010) (citations and
Note 5 –Fraud – Statute of Limitations- The statute of limitations for
fraud is three years. CCP § 338(d). To the extent Plaintiff wishes
to rely on the delayed discovery rule, Plaintiff must plead the
specific facts showing (1) the time and manner of discovery and (2)
the inability to have made earlier discovery despite reasonable
diligence.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808
Note 6 – Cause of Action for Negligent Misrepresentation – “The
elements of negligent misrepresentation are (1) the misrepresentation
of a past or existing material fact, (2) without reasonable ground for
believing it to be true, (3) with intent to induce another’s reliance
on the fact misrepresented, (4) justifiable reliance on the
misrepresentation, and (5) resulting damage. While there is some
conflict in the case law discussing the precise degree of
particularity required in the pleading of a claim for negligent
misrepresentation, there is a consensus that the causal elements,
particularly the allegations of reliance, must be specifically
pleaded.” National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge
Integrated Services Group, Inc., 171 Cal. App. 4th 35, 50 (2009)
(citations and quotations omitted).
Note 7 – Cause of Action for Breach of Fiduciary Duty by Lender -
“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. A lender owes no duty of care to the borrowers in
approving their loan. A lender is under no duty to determine the
borrower’s ability to repay the loan. The lender’s efforts to
determine the creditworthiness and ability to repay by a borrower are
for the lender’s protection, not the borrower’s.” Perlas v. GMAC
Mortg., LLC, 187 Cal. App. 4th 429, 436 (2010) (citations and
Note 8 – Cause of Action for Constructive Fraud – “A relationship need
not be a fiduciary one in order to give rise to constructive fraud.
Constructive fraud also applies to nonfiduciary “confidential
relationships.” Such a confidential relationship may exist whenever a
person with justification places trust and confidence in the integrity
and fidelity of another. A confidential relation exists between two
persons when one has gained the confidence of the other and purports
to act or advise with the other’s interest in mind. A confidential
relation may exist although there is no fiduciary relation ….”
Tyler v. Children’s Home Society, 29 Cal. App. 4th 511, 549 (1994)
(citations and quotations omitted).
Note 9 – Cause of Action for an Accounting – Generally, there is no
fiduciary duty between a lender and borrower. Perlas v. GMAC Mortg.,
LLC, 187 Cal. App. 4th 429, 436 (2010). Further, Plaintiff (borrower)
has not alleged any facts showing that a balance would be due from the
Defendant lender to Plaintiff. St. James Church of Christ Holiness v.
Superior Court, 135 Cal. App. 2d 352, 359 (1955). Any other duty to
provide an accounting only arises when a written request for one is
made prior to the NTS being recorded. CCC § 2943(c).
Note 10 – Cause of Action for Breach of the Implied Covenant of Good
Faith and Fair Dealing – “[W]ith the exception of bad faith insurance
cases, a breach of the covenant of good faith and fair dealing permits
a recovery solely in contract. Spinks v. Equity Residential Briarwood
Apartments, 171 Cal. App. 4th 1004, 1054 (2009). In order to state a
cause of action for Breach of the Implied Covenant of Good Faith and
Fair Dealing, a valid contract between the parties must be alleged.
The implied covenant cannot be extended to create obligations not
contemplated by the contract. Racine & Laramie v. Department of Parks
and Recreation, 11 Cal. App. 4th 1026, 1031-32 (1992).
Note 11 – Cause of Action for Breach of Contract – “A cause of action
for damages for breach of contract is comprised of the following
elements: (1) the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) the resulting damages
to plaintiff. It is elementary that one party to a contract cannot
compel another to perform while he himself is in default. While the
performance of an allegation can be satisfied by allegations in
general terms, excuses must be pleaded specifically.” Durell v. Sharp
Healthcare, 183 Cal. App. 4th 1350, 1367 (2010) (citations and
Note 12 – Cause of Action for Injunctive Relief – Injunctive relief is
a remedy and not a cause of action. Guessous v. Chrome Hearts, LLC,
179 Cal. App. 4th 1177, 1187 (2009).
Note 13 – Cause of Action for Negligence – “Under the common law,
banks ordinarily have limited duties to borrowers. Absent special
circumstances, a loan does not establish a fiduciary relationship
between a commercial bank and its debtor. Moreover, for purposes of a
negligence claim, as a general rule, a financial institution owes no
duty of care to a borrower when the institution’s involvement in the
loan transaction does not exceed the scope of its conventional role as
a mere lender of money. As explained in Sierra-Bay Fed. Land Bank
Assn. v. Superior Court (1991) 227 Cal.App.3d 318, 334, 277 Cal.Rptr.
753, “[a] commercial lender is not to be regarded as the guarantor of
a borrower’s success and is not liable for the hardships which may
befall a borrower. It is simply not tortious for a commercial lender
to lend money, take collateral, or to foreclose on collateral when a
debt is not paid. And in this state a commercial lender is privileged
to pursue its own economic interests and may properly assert its
contractual rights.” Das v. Bank of America, N.A., 186 Cal. App. 4th
727, 740-741 (2010) (citations and quotations omitted).
Note 14 – Cause of Action to Quiet Title – To assert a cause of action
to quiet title, the complaint must be verified and meet the other
pleading requirements set forth in CCP § 761.020.
Note 15 – Causes of Action for Slander of Title – The recordation of
the Notice of Default and Notice of Trustee’s Sale are privileged
under CCC § 47, pursuant to CCC § 2924(d)(1), and the recordation of
them cannot support a cause of action for slander of title against the
trustee. Moreover, “[i]n performing acts required by [the article
governing non-judicial foreclosures], the trustee shall incur no
liability for any good faith error resulting from reliance on
information provided in good faith by the beneficiary regarding the
nature and the amount of the default under the secured obligation,
deed of trust, or mortgage. In performing the acts required by [the
article governing nonjudicial foreclosures], a trustee shall not be
subject to [the Rosenthal Fair Debt Collection Practices Act].” CCC §
Note 16 – Cause of Action for Violation of Civil Code § 1632 – Section
1632, by its terms, does not apply to loans secured by real property.
CCC § 1632(b).
Note 17 – Possession of the original promissory note – “Under Civil
Code section 2924, no party needs to physically possess the promissory
note.” Sicairos v. NDEX West, LLC, 2009 WL 385855 (S.D. Cal. 2009)
(citing CCC § 2924(a)(1); see also Lomboy v. SCME Mortgage Bankers,
2009 WL 1457738 * 12-13 (N.D. Cal. 2009) (“Under California law, a
trustee need not possess a note in order to initiate foreclosure under
a deed of trust.”).
Note 18 – Statute of Frauds, Modification of Loan Documents – An
agreement to modify a note secured by a deed of trust must be in
writing signed by the party to be charged, or it is barred by the
statute of frauds. Secrest v. Security Nat. Mortg. Loan Trust 2002-2,
167 Cal. App. 4th 544, 552-553 (2008).
Note 19 – Statute of Frauds, Forebearance Agreement – An agreement to
forebear from foreclosing on real property under a deed of trust must
be in writing and signed by the party to be charged or it is barred by
the statute of frauds. Secrest v. Security Nat. Mortg. Loan Trust
2002-2, 167 Cal. App. 4th 544, 552-553 (2008).
Note 20 – Tender – A borrower attacking a voidable sale must do equity
by tendering the amount owing under the loan. The tender rule applies
to all causes of action implicitly integrated with the sale. Arnolds
Management Corp. v. Eischen, 158 Cal. App. 3d 575, 579 (1984).
Note 21 – Cause of Action for Violation of Bus. & Prof. Code § 17200 –
“The UCL does not proscribe specific activities, but broadly prohibits
any unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising. The UCL governs
anti-competitive business practices as well as injuries to consumers,
and has as a major purpose the preservation of fair business
competition. By proscribing “any unlawful business practice,” section
17200 “borrows” violations of other laws and treats them as unlawful
practices that the unfair competition law makes independently
actionable. Because section 17200 is written in the disjunctive, it
establishes three varieties of unfair competition-acts or practices
which are unlawful, or unfair, or fraudulent. In other words, a
practice is prohibited as “unfair” or “deceptive” even if not
“unlawful” and vice versa.” Puentes v. Wells Fargo Home Mortg., Inc.,
160 Cal. App. 4th 638, 643-644 (2008) (citations and quotations
[A]ny finding of unfairness to competitors under section 17200 [must]
be tethered to some legislatively declared policy or proof of some
actual or threatened impact on competition. We thus adopt the
following test: When a plaintiff who claims to have suffered injury
from a direct competitor’s “unfair” act or practice invokes section
17200, the word “unfair” in that section means 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.
Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.,
20 Cal. 4th 163, 186-187 (1999).
The term “fraudulent” as used in section 17200 does not refer to the
common law tort of fraud but only requires a showing members of the
public are likely to be deceived. Unless the challenged conduct
targets a particular disadvantaged or vulnerable group, it is judged
by the effect it would have on a reasonable consumer.
Puentes, 160 Cal. App. 4th at 645 (citations and quotations
By proscribing “any unlawful” business practice, Business and
Professions Code section 17200 “borrows” violations of other laws and
treats them as unlawful practices that the UCL makes independently
actionable. An unlawful business practice under Business and
Professions Code section 17200 is an act or practice, committed
pursuant to business activity, that is at the same time forbidden by
law. Virtually any law -federal, state or local – can serve as a
predicate for an action under Business and Professions Code section
Hale v. Sharp Healthcare, 183 Cal. App. 4th 1373, 1382-1383 (2010)
(citations and quotations omitted).
“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., 14 Cal. App. 4th 612, 619 (1993) (citations and quotations
Note 22 – Cause of Action for Intentional Infliction of Emotional
Distress - Collection of amounts due under a loan or restructuring a
loan in a way that remains difficult for the borrower to repay is not
“outrageous” conduct. Price v. Wells Fargo Bank, 213 Cal. App. 3d
465, 486 (1989).
Note 23 – Cause of Action for Negligent Infliction of Emotional
Distress – Emotional distress damages are not recoverable where the
emotional distress arises solely from property damage or economic
injury to the plaintiff. Butler-Rupp v. Lourdeaux, 134 Cal. App. 4th
1220, 1229 (2005).
Note 24 – Cause of Action for Conspiracy – There is no stand-alone
claim for conspiracy. Applied Equipment Corp. v. Litton Saudi Arabia
Ltd., 7 Cal. 4th 503, 510-511 (1994).
Note 25 – Cause of Action for Declaratory Relief – A claim for
declaratory relief is not “proper” since the dispute has crystallized
into COA under other theories asserted in other causes of actions in
the complaint. Cardellini v. Casey, 181 Cal. App. 3d 389, 397-398
Note 26 – Cause of Action for Violation of the Fair Debt Collection
Practices Acts – Foreclosure activities are not considered “debt
collection” activities. Gamboa v. Trustee Corps, 2009 WL 656285, at
*4 (N.D. Cal. March 12, 2009).
Note 27 – Duties of the Foreclosure Trustee – The foreclosure
trustee’s rights, powers and duties regarding the notice of default
and sale are strictly defined and limited by the deed of trust and
governing statutes. The duties cannot be expanded by the Courts and
no other common law duties exist. Diediker v. Peelle Financial Corp.,
60 Cal. App. 4th 288, 295 (1997).
Note 28 – Unopposed Demurrer – The Demurrer is sustained [w/ or w/o]
leave to amend [and the RJN granted]. Service was timely and good and
no opposition was filed.
Failure to oppose the Demurrer may be construed as having abandoned
the claims. See, Herzberg v. County of Plumas, 133 Cal. App. 4th 1,
20 (2005) (“Plaintiffs did not oppose the County’s demurrer to this
portion of their seventh cause of action and have submitted no
argument on the issue in their briefs on appeal. Accordingly, we deem
plaintiffs to have abandoned the issue.”).
Note 29 – Responding on the Merits Waives Any Service Defect – “It is
well settled that the appearance of a party at the hearing of a motion
and his or her opposition to the motion on its merits is a waiver of
any defects or irregularities in the notice of the motion.” Tate v.
Superior Court, 45 Cal. App. 3d 925, 930 (1975) (citations omitted).
Note 30 – Unargued Points – “Contentions are waived when a party fails
to support them with reasoned argument and citations to authority.”
Moulton Niguel Water Dist. v. Colombo, 111 Cal. App. 4th 1210, 1215
Note 31 – Promissory Estoppel – “The doctrine of promissory estoppel
makes a promise binding under certain circumstances, without
consideration in the usual sense of something bargained for and given
in exchange. Under this doctrine a promisor is bound when he should
reasonably expect a substantial change of position, either by act or
forbearance, in reliance on his promise, if injustice can be avoided
only by its enforcement. The vital principle is that he who by his
language or conduct leads another to do what he would not otherwise
have done shall not subject such person to loss or injury by
disappointing the expectations upon which he acted. In such a case,
although no consideration or benefit accrues to the person making the
promise, he is the author or promoter of the very condition of affairs
which stands in his way; and when this plainly appears, it is most
equitable that the court should say that they shall so stand.” Garcia
v. World Sav., FSB, 183 Cal. App. 4th 1031, 1039-1041 (2010)
(citations quotations and footnotes omitted).
Note 32 – Res Judicata Effect of Prior UD Action – Issues of title are
very rarely tried in an unlawful detainer action and moving party has
failed to meet the burden of demonstrating that the title issue was
fully and fairly adjudicated in the underlying unlawful detainer.
Vella v. Hudgins, 20 Cal. 3d 251, 257 (1977). The burden of proving
the elements of res judicata is on the party asserting it. Id. The
Malkoskie case is distinguishable because, there, the unlimited
jurisdiction judge was convinced that the title issue was somehow
fully resolved by the stipulated judgment entered in the unlawful
detainer court. Malkoskie v. Option One Mortg. Corp., 188 Cal. App.
4th 968, 972 (2010).
Note 33 – Applicability of US Bank v. Ibanez – The Ibanez case, 458
Mass. 637 (January 7, 2011), does not appear to assist Plaintiff in
this action. First, the Court notes that this case was decided by the
Massachusetts Supreme Court, such that it is persuasive authority, and
not binding authority. Second, the procedural posture in this case is
different than that found in a case challenging a non-judicial
foreclosure in California. In Ibanez, the lender brought suit in the
trial court to quiet title to the property after the foreclosure sale,
with the intent of having its title recognized (essentially validating
the trustee’s sale). As the plaintiff, the lender was required to
show it had the power and authority to foreclose, which is
established, in part, by showing that it was the holder of the
promissory note. In this action, where the homeowner is in the role
of the plaintiff challenging the non-judicial foreclosure, the lender
need not establish that it holds the note.
Note 34 – Statutes of Limitations for TILA and RESPA Claims – For TILA
claims, the statute of limitations for actions for damages runs one
year after the loan origination. 15 U.S.C. § 1640(e). For actions
seeking rescission, the statute of limitations is three years from
loan origination. 15 U.S.C. § 1635(f). For RESPA, actions brought
for lack of notice of change of loan servicer have a statute of
limitation of three years from the date of the occurrence, and actions
brought for payment of kickbacks for real estate settlement services,
or the conditioning of the sale on selection of certain title services
have a statute of limitations of one year from the date of the
occurrence. 12 U.S.C. § 2614.