Hatch v. HSBC Bank
Filed 6/17/13
Hatch v. HSBC Bank CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE
STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
TOM HATCH,
Plaintiff and
Appellant,
v.
HSBC BANK, USA, N.A.,
Defendant and
Respondent.
F065424
(Super.
Ct. No. CV-273411)
THE COURT
name="_ftnref1" title="">*
APPEAL from
a judgment of the Superior Court of
Tom Hatch,
in pro. per., for Plaintiff and Appellant.
Katten
Muchin Rosenman, Darrell P. White, Stuart M. Richter, Gregory S. Korman and
Sara Karubian for Defendant and Respondent.
-ooOoo-
Appellant
Tom Hatch appeals the lower court judgment entered in favor of respondent HSBC
Bank, USA, N.A. (HSBC Bank), following a sustaining of respondent’s demurrer
without leave to amend to appellant’s third amended complaint.
On appeal from a judgment
sustaining a demurrer without leave to amend, the reviewing court exercises
the complaint states facts sufficient to state a cause of action. The court assumes the truth of the factual allegations,
but not the truth of conclusions of law.
(Leonte v. ASC State & Local
Solutions, Inc. (2004) 123 Cal.App.4th 521, 525; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) In considering whether the trial court erred
in refusing to allow amendment of a pleading, the appellate court’s standard of
review is based on an abuse of discretion review. It is the plaintiff who has the burden of
proving that an amendment would cure the defect. (Smith
v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 711;
318.)
The court sustained demurrers to
appellant’s complaint, first amended
complaint and second amended complaint before sustaining without leave to
amend the demurrer to the third amended complaint. It is the third amended complaint that is the
subject of this appeal. It purports to
allege causes of action for an invalid assignment of a trust deed, intentional
misrepresentation of fact, negligent misrepresentation, and declaratory relief.
In relevant part, the third amended
complaint alleges that appellant purchased residential property in 2005. The original lender was Crevecor Mortgage,
Inc., and the original beneficiary was MERS, acting solely as nominee for the
lender. While attempting to obtain a
mortgage to purchase the property, a loan officer at Castle Home Loans, Inc.,
now defunct, told appellant that he could obtain a mortgage from Crevecor and
have a monthly mortgage payment of $1,800.
Appellant obtained the mortgage loan from Crevecor based on that
representation and completed the purchase of his home. The loan officer was wrong. The monthly payment was $3,400 per
month. While Castle made the payment for
the first three months, appellant made the $3,400 mortgage payments for almost
three years. HSBC Bank then acquired
appellant’s mortgage loan and has since that time acted through its subsidiary,
HSBC Mortgage, LLC, as the loan servicer.
In 2008, appellant experienced
financial difficulties as a result of losing his job. He contacted HSBC Mortgage about obtaining a
loan modification and was told by an employee of HSBC Mortgage that it would
“‘work with [appellant]’ in obtaining a loan modification, that said
modification would reduce [appellant’s] payments to a ‘reasonable’ level, and
that, if approved for such a loan modification, the monthly payment amount
would be ‘fair and reasonable.’†A loan
modification was approved, but instead of being reduced to a “‘fair and
reasonable’†amount, it was reduced by only $200 per month. Appellant’s subsequent applications for loan
modification were denied.
Appellant alleges that HSBC
Mortgage had no right, title or interest in the subject property, but merely
acted on behalf of the holder in collecting payments on mortgages. However, in July 2008, an assignment of trust
deed was filed, claiming to transfer the beneficial interest from MERS to HSBC
Mortgage. This document was signed in
Los Angeles by a Stella M. Flores, claiming to be an “‘assistant
secretary’†of MERS. Appellant then
alleges on information and belief that as a mere nominee for the beneficiary,
“MERS … never had possession of the underlying note, nor the right to transfer
it to anyone.†Appellant further alleges
that the assignment was not signed by an officer,
but rather by an assistant secretary and therefore on information and belief
that Ms. Flores did not have the authority to sign the trust deed on
behalf of MERS. Thereafter, HSBC
Mortgage substituted House Key Financial Corporation as trustee under the deed
of trust, with HSBC Mortgage claiming to be the beneficiary, servicer and
lender.
The first cause of action is
entitled “Invalid Assignment of Trust Deed.â€
Appellant alleges that MERS had no possession or ownership of the note,
did not have the right and authority to convey an interest in the trust deed,
and that the purported assignment of trust deed was not signed by an officer of
MERS but rather by an assistant secretary without legal authority to assign the
trust deed on behalf of MERS.
Accordingly, appellant alleges the attempted assignment was invalid and,
as a result, HSBC Mortgage could not appoint any entity as trustee of the deed
of trust, making the attempted substitution invalid. Thus, neither House Key nor HSBC was
authorized to foreclose on appellant’s property.
The gravamen of appellant’s first
cause of action is his allegation that MERS’s assistant secretary lacked
authority to sign the assignment.
Appellant fails to allege factual support for that legal
conclusion. He also failed in both the
lower court and in this court to cite any legal authority supporting his
conclusion that as a factual or legal matter Ms. Flores was not authorized
to execute a binding assignment of trust deed on behalf of MERS. As HSBC Bank points out, the assignment was
attached to the third amended complaint, showing that it was notarized and
recorded. Appellant alleges that
Ms. Flores was an “‘assistant secretary’†of MERS. He then argues, without any legal support, that
she was not legally authorized to execute a binding assignment. He had four opportunities in the lower court
to allege additional facts and supporting legal authority and failed to do so. The lower court correctly sustained the
demurrer to this cause of action.
The second cause of action is
entitled “Intentional Misrepresentation of Fact.†Appellant alleges that HSBC Bank’s employee
made promises about material facts without any intention of performing them,
that is, he told appellant that HSBC Bank was willing to negotiate with
appellant to modify the loan, and that it was possible for appellant to obtain
a “‘fair and reasonable’†loan modification.
Appellant alleges that these assurances were made with the intent to
defraud and induce appellant to rely upon them, which appellant in fact did by
not reasonably seeking other re-funding options. Appellant alleges he was damaged by not
receiving a reasonable loan modification that would allow him to retain his property.
The second cause
of action for intentional
misrepresentation of fact also fails to state a cognizable cause of
action. Appellant refers to several
alleged misrepresentations. The first
was that he was told that HSBC Mortgage was willing to negotiate with appellant
to modify the loan. On the other hand,
he admits that his loan was modified and his monthly payment was reduced by
$200. He goes on to allege that HSBC Bank
promised to obtain a “‘fair and reasonable’†loan modification for him and that
this did not occur. A cause of action
based on intentional misrepresentation requires proof that the defendant
falsely represented an important fact.
Ordinarily, an opinion is not considered a representation of fact. For example, a statement regarding a future
event or a judgment about quality, value, authenticity or similar matters are
considered opinions and not representations of fact. (CACI No. 1904; Cohen v. S & S Construction Co. (1983) 151 Cal.App.3d
941, 946.) Here, appellant alleges that
HSBC Bank’s representatives told him that “it was possible for [appellant] to
obtain a ‘fair and reasonable’ loan modification .…†(Par. 47 of third amended complaint.) That is not a statement of fact, but more
reasonably characterized as one of opinion, which cannot be the basis for this
cause of action. (Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 835.)
HSBC Bank also argues that the
“‘fair and reasonable’†representation is too vague for the court to
enforce. We agree. What is fair and reasonable to one may not be
to another. The phrase “fair and
reasonable†lacks sufficient specificity from which it could be objectively
evaluated and enforced. A promise must be definite enough that a court
can determine the scope of the duty, and the limits of performance must be
sufficiently defined to provide a rational basis for the assessment of
damages. (Ladas v. California State Auto.
Assn. (1993) 19 Cal.App.4th
761, 770 & authorities cited therein; Cal. Lettuce Growers v. Union
Sugar Co. (1955) 45 Cal.2d 474, 481 [where contract is so uncertain and
indefinite that the intention of the parties in material particulars cannot be
ascertained, the contract is void and unenforceable]; Civ. Code, § 1598
[contract vaguely expressed is void]; Rochlis
v. Walt Disney Co. (1993) 19 Cal.App.4th 201, 216 [“Promises too vague to be enforced will not support a fraud claim any
more than they will one in contract.â€], overruled on other grounds in
Cal.4th 1238, 1251.)
It was incumbent upon appellant to
also allege that the false promises on which he reasonably relied were a
substantial factor in causing him harm.
(CACI No. 1900; Engalla v.
Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) He alleges that the misrepresentations about
a loan modification caused him not to seek other funding options; however, he
never explains or alleges that had he sought other funding options, he would
have in fact been successful in those efforts and had his mortgage payments
reduced. In other words, he has failed
to allege facts that his reliance on the misrepresentations caused him
harm. The lower court correctly
sustained the demurrer to the second cause of action.
The third cause of action is
entitled “Negligent Misrepresentation of Fact.â€
Appellant alleges that the misrepresentations referred to in the second
cause of action are the basis for his third cause of action and asserts that
when the promises were made, HSBC Bank had no reasonable grounds for believing
they were true. This cause of action
rests upon the existence of a legal duty imposed by contract, statute or
otherwise. (Eddy v. Sharp (1988) 199 Cal.App.3d 858, 864.) A lender does not owe a tort duty of care to
its borrowers absent exceptional circumstances, and none are alleged here. (Nymark
v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096;
57 Cal.App.3d 724, 732.) The
relationship between appellant and HSBC Bank was that of borrower and
lender. Appellant does not allege that
HSBC Bank owed him a duty of care, nor do the facts alleged support such a
conclusion. Moreover, the failure to
allege misrepresentation of a fact and the failure to allege detrimental
reliance validate the lower court order sustaining the demurrer to the third
cause of action.
The fourth cause of action is
entitled “Declaratory Relief.†Appellant desires a judicial determination as
to who were the actual owner and holder of the note, mortgage loan, and
beneficial interest, and whether the assignment of the trust deed was valid or
invalid. This cause of action is based
on the allegations of the first cause of action for invalid assignment of trust
deed. For the same reasons that the
first cause of action fails to state a cause of action, the fourth cause of
action is likewise deficient.
Finally, on the issue of whether
the trial court abused its discretion in denying further leave to amend, we
find no abuse. Appellant filed four
different complaints and was unable to cure the deficiencies cited by the trial
court. Appellant has not presented any
new arguments to this court indicating that he can cure the pleading
deficiencies by amendment.
DISPOSITION
The lower
court judgment is affirmed. Costs are
awarded to HSBC Bank.
name="_ftn1" title="">* Before
Kane, Acting P.J., Franson, J. and Peña, J.
