Ridley v. Bank of
Filed 8/13/13 Ridley v. Bank of America CA2/5
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
FIVE
ALAN DALE RIDLEY,
Plaintiff and Appellant,
v.
BANK OF AMERICA,
N.A.,
Defendant and Respondent.
B241443
(Los Angeles
County Super.
Ct.
No. YC065423)
APPEAL from
a judgment of the Superior Court
of
County, Cary Nishimoto, Judge.
Affirmed.
Alan Dale
Ridley, in pro. per., for Plaintiff and Appellant.
Bryan
Cave LLP, Brian J. Recor and Andrea N. Wintermitz for Defendant and Respondent.
_________________________________
Plaintiff
and appellant Alan Dale Ridley appeals from a
sustaining a demurrer in favor of defendant and respondent Bank of America,
N.A. (the Bank) in this action arising out of requests for loan
modifications. Ridley contends he stated
causes of action for fraud, breach of contract, intentional infliction of
emotional distress, and negligent misrepresentation. We conclude he has failed to allege a
misrepresentation upon which he relied to his detriment, an enforceable loan
modification contract, or outrageous conduct beyond the bounds of decency. Therefore, we affirm.
FACTS
In July 2006, Ridley and his wife took
out two loans from Countrywide Home Loans,
secured by residential property on Roselle Avenue in Hawthorne. Although Ridley qualified for the loans based
on his salary alone, Countrywide required his wife’s signature before they
would make the loans.
In 2007, Ridley’s salary was
reduced, his wife returned to Bogota, Columbia in 2008, and he filed for
divorce.
In March 2009, Countrywide agreed to
a loan modification after obtaining Ridley’s signature alone. The loans are currently serviced by the Bank.
Ridley applied for additional loan
modifications through a program called Neighborhood Assistance Corporation of
America (NACA). In December 2009, the
Bank approved the modifications, but to be valid, the Bank required certain
documents to be signed and returned by the homeowners. When Ridley failed to have the modification
documents signed by his wife, the Bank denied the modifications.
Ridley’s wife provided permission
for Ridley to sign her name to legal documents to accomplish the divorce. A divorce decree was entered on June 30, 2010. The divorce
decree states there is no community debt.
Ridley signed a document releasing her from any debt, and she executed a
quitclaim deed transferring the property to Ridley. Ridley is no longer able to reach his former
wife.
In November 2010, Ridley applied for
loan modifications through a program called Home Affordable Modification
Program (HAMP), which does not require the signature of both homeowners. However, the trial period plan monthly
payment for the larger loan was not based on Ridley’s correct salary and
provided for payments that were too high for Ridley to pay. The Bank subsequently notified Ridley that he
was not eligible for HAMP because he did not make the required trial payments
by the end of the trial period. Ridley
sent copies of his correct salary and paycheck information but did not receive
a response.
The Bank denied the modification of
the smaller loan on the ground that the home equity loan was insured by a
private mortgage insurance company that had not approved a modification under
HAMP. Ridley asked for additional
information but did not receive a response.
On April
26, 2011, Ridley received a repayment plan from the Bank stating an agreement to
repay delinquent amounts owed to the Bank.
Ridley made the payments stated under the repayment plan.
In June 2011, Ridley sent a
qualified assumption application to the Bank with his ex-wife’s signature. The Bank declined the application. In August 2011, the Bank denied the most
recent loan modification application under NACA for failure to obtain his
ex-wife’s signature.
PROCEDURAL
HISTORY
On August 26, 2011, Ridley filed a
complaint against the Bank for fraud, breach of contract, intentional
infliction of emotional distress, and negligent misrepresentation. The Bank filed a demurrer. On January 26, 2012, Ridley filed an amended
complaint. (In addition to alleging the
facts above, Ridley alleged the Bank intentionally deceived him by denying loan
modifications and allowing interest and fees to increase, causing him emotional
distress. The Bank represented that it
was trying to help him stay in his house and understand the options available
to him, as well as other customer service marketing slogans.)
The Bank filed a demurrer and a
request for judicial notice. Ridley opposed the demurrer and filed a
request for judicial notice. A hearing
was held on April 17, 2012. The trial
court sustained the demurrer as to all of the causes of action without leave to
amend. Ridley filed a notice of appeal
from the April 17, 2012 order. No
rulings were made on the judicial notice requests. A judgment of dismissal was entered on
November 16, 2012. In the interests
of justice, we treat the appeal from the nonappealable
order sustaining a demurrer as filed immediately after entry of
of Court, rule 8.104(d)(2).)
DISCUSSION
I. Standard of Review
“In reviewing the sufficiency of a
complaint against a general demurrer, we are guided by long-settled
rules. ‘We treat the
but not contentions, deductions or conclusions of fact or law. [Citation.]
We also consider matters which may be judicially noticed.’ [Citation.]
Further, we give the complaint a reasonable interpretation, reading it
as a whole and its parts in their context.
[Citation.] When a demurrer is
sustained, we determine whether the complaint states facts sufficient to
constitute a cause of action.
[Citation.]†(Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.) We review
the trial court’s decision de novo. (McCall v. PacifiCare of Cal., Inc.
(2001) 25 Cal.4th 412, 415.)
II. Fraud and Negligent Misrepresentation
Ridley
contends he alleged a cause of action for fraud,
although his arguments are nearly unintelligible. We conclude that he has not alleged any fraud
with the requisite specificity to support a cause of action against the Bank.
A. Elements of
Fraud
“The
elements of fraud, which give rise to the tort action for deceit, are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance
on the misrepresentation, (4)
justifiable reliance, and (5)
resulting damage.
[Citation.] The tort of negligent
misrepresentation, a species of the tort of deceit [citation], does not require
intent to defraud but only the assertion, as a fact, of that which is not true,
by one who has no reasonable ground for
it to be true. [Citation.]†(Conroy
v. Regents of University of California (2009) 45 Cal.4th 1244, 1255.)
“In California,
general and conclusory allegations do not suffice.†(Lazar v. Superior Court (1996) 12
Cal.4th 631, 645.) The normal policy of
liberally construing pleadings against a demurrer will
not be invoked to sustain a fraud cause of action that
fails to set forth such specific allegations. (Ibid.) The heightened pleading
standard for fraud requires “ ‘pleading
facts which “show how, when, where, to whom, and by what means the
representations were tendered.†’ [Citation.]â€
(Ibid.) Thus, “every
element of the cause of action for fraud must be alleged
in full, factually and specifically . . . .†(Wilhelm v. Pray (1986) 186 Cal.App.3d
1324, 1331.) The specificity
requirement serves two purposes:
(1) to furnish the defendant with
certain definite charges that can be intelligently met; and (2) to ensure the complaint
is specific enough so that the court can “weed out
nonmeritorious actions on the basis of the pleadings.†(Committee on Children’s Television, Inc.
v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217, superceded by statute
on another issue.)
B.
NACA Loan Modifications
Ridley
seems to contend the Bank’s statements that the signatures of both borrowers
are required for the NACA modification agreements to be valid are false,
because the Bank accepted one modification without both signatures. This is incorrect.
The modification
of a written contract is governed by Civil Code section
1698, which provides: “(a) A contract in writing
may be modified by a contract in
writing. [¶] (b) A contract
in writing may be modified by an oral agreement to the extent
that the oral agreement is executed by the parties. [¶]
(c) Unless the contract
otherwise expressly provides, a contract in writing may
be modified by an oral agreement supported by new
consideration. The statute of frauds
(Section 1624) is required to be satisfied if the
provisions. [¶] (d)
Nothing in this section precludes in an appropriate case the application
of rules of law concerning estoppel, oral novation and substitution of a new
agreement, rescission of a written contract by an oral
agreement, waiver of a provision of a written
The Bank required each of the loan
modification agreements to be signed by both borrowers, as shown by the
signature lines set forth in each agreement.
In March 2009, Countrywide or the Bank waived the signature requirement
for Ridley’s first loan modification application by agreeing to the
modification based on Ridley’s signature alone and accepting his payments under
the agreement. However, waiver of the
signature requirement for the March 2009 agreement did not operate to waive the
Bank’s right to require both borrowers’ signatures on subsequent loan
modification agreements. No fraud has
been alleged based on the Bank’s adherence to contractual modification
requirements.
C. Calculation of
Reduced Payments and Failure to Respond
Ridley makes several contentions
concerning his application for HAMP. We
find that no cause of action for fraud has been alleged in connection with
these applications.
“‘The United States Department of
the Treasury and other federal agencies created HAMP pursuant to authority
granted by the Emergency Economic Stabilization Act, title 12 United States
Code section 5201 et seq. [Citation.] Mortgage servicers may voluntarily
participate in HAMP. [Citation.] Treasury guidelines set forth threshold
criteria to define the class of eligible borrowers. [Citation.]
The guidelines also set forth accounting steps using a standardized net
present value test to determine whether it is more profitable to modify the
loan or allow it to proceed to foreclosure.
[Citation.]’ (Nungaray v.
Litton Loan Servicing, LP (2011) 200 Cal.App.4th 1499, 1501, fn. 1.)†(Barroso
v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4th 1001, 1005, fn.
1.)
“[C]ourts have determined that
lenders are not required under HAMP to modify eligible loans.†(Lucia v. Wells Fargo Bank, N.A. (N.D.
Cal. 2011) 798 F.Supp.2d 1059, 1070 (Lucia); see also, e.g., Wigod v.
Wells Fargo Bank, N.A. (7th Cir. 2012) 673 F.3d 547, 559, fn. 4 [stating
that courts have uniformly rejected claims of homeowners trying to assert
rights arising under HAMP and citing cases].)
Moreover, “there is no express private right of action against [Troubled
Asset Relief Program (TARP)] fund recipients.â€
(Pantoja v. Countrywide Home Loans, Inc. (N.D. Cal. 2009) 640
F.Supp.2d 1177, 1185.) Therefore, the
Bank was under no obligation to modify Ridley’s loan under HAMP, regardless of
any assistance the Bank may have received from the TARP program.
Ridley seems to contend the Bank
made a false representation by calculating HAMP loan payments based on
incorrect salary information. However,
it appears the Bank calculated the loan payments based on the salary information
it possessed, which was outdated. After
the calculation was completed and presented to Ridley, he attempted to
demonstrate that his salary had decreased.
This does not constitute a misrepresentation by the Bank.
Ridley also seems to contend the
Bank committed fraud with respect to his HAMP applications by failing to
respond to his letters seeking to have his payment recalculated based on
current salary information and failing to respond to questions about his home
equity loan. A lack of response is not a
representation. Therefore, it cannot
form the basis of a fraud action.
D.
Quality Assumption Application
Ridley
seems to contend the Bank committed fraud by denying his application to assume
the entire loan obligation because of his poor credit record. Having reviewed Ridley’s allegations, we
would agree that it is irrational and circular for the Bank to deny his
application to assume the entire loan obligation due to his inability to pay
his mortgage payments and poor credit record, yet deny his application to lower
his mortgage payments because he cannot obtain the signature of his
co-borrower. However, he has not alleged
any fraudulent conduct by the Bank, and he has not shown that he changed his
position to his detriment in reliance on any representation.
E. Loan
Origination
On appeal, Ridley seems to contend
for the first time that Countrywide acted fraudulently in making the original
loans to him, because Countrywide made him believe he could perform his
obligations under the loans, knowing this was not true. However, Ridley has alleged that he qualified
for the loans without a co-borrower and it was a reduction in his salary that
made the mortgage payments unaffordable.
He has not demonstrated that he can allege a cause of action for fraud
against the Bank related to origination of the loans.
III. Breach of Contract
Ridley contends the complaint
alleges a cause of action for breach of contract, but he has failed to allege
an enforceable contract was breached.
“[T]he elements of a cause of action
for breach of contract are (1) the
existence of the contract, (2)
plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff. [Citation.]â€
(Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
Ridley alleges the Bank required
signatures of both borrowers for his December 2009 and April 2011 loan
modification applications under NACA to be valid and effective. Although Ridley believes the Bank could have
and should have modified the loans based on his signature alone, it is clear
the Bank required both borrowers’ signatures and Ridley could not provide his
ex-wife’s signature. Ridley alleges to
have made payments in accordance with the modifications, but the agreements
clearly require both borrowers’ signatures to be valid and he was presumably
required to make higher payments under the original loan agreements. Ridley has not alleged enforceable contracts
with respect to his applications under NACA.
With respect to the HAMP
applications, Ridley admits he did not make payments on the trial plan provided
for one loan and the other loan did not qualify for HAMP. Therefore, Ridley has not alleged an
enforceable contract was made under the HAMP provisions. His requests for additional information and
for recalculation of his salary show that the parties did not enter into an
enforceable contract under HAMP. His
allegations on appeal about an opt-out agreement do not rise to the level of an
enforceable contract.
IV. Intentional Infliction of Emotional
Distress
Ridley contends he has alleged a
cause of action for intentional infliction of emotional distress. We disagree.
“‘The elements of a prima facie case
for the tort of intentional infliction of emotional distress are: (1)
extreme and outrageous conduct by the defendant with the intention of
causing, or reckless disregard of the probability of causing, emotional
distress; (2) the plaintiff’s suffering
severe or extreme emotional distress; and (3)
actual and proximate causation of the emotional distress by the
defendant’s outrageous conduct.
[Citations.] . . . Conduct to be
outrageous must be so extreme as to exceed all bounds of that usually
community.’ (Cervantez v. J. C.
Penney Co. (1979) 24 Cal.3d 579, 593.)â€
(Wilson v. Hynek (2012)
207 Cal.App.4th 999, 1009.)
The trial court properly sustained
the demurrer to the cause of action for intentional
conduct by the Bank that could be considered “outrageous.†At most, this was a situation between lender
and borrower in which the Bank exercised its rights under the loan
agreements. There are no allegations
that any Bank employees threatened, insulted, abused, or humiliated Ridley
during the loan modification process.
Ridley has not shown that he can state a claim for intentional
infliction of emotional
V. Negligent Misrepresentation
Ridley contends he has alleged a
cause of action for negligent misrepresentation based on statements by Bank
employees. He has failed to allege a
cause of action for negligent misrepresentation.
“The elements of negligent
misrepresentation are (1) a
misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing
it to be true, (3) made with the intent
to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the
misrepresentation, and (5) resulting
damage. [Citations.]†(Ragland
v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196.)
Ridley lists several customer
service platitudes that he alleges constituted negligent misrepresentations,
including: 1) we take great pride in helping people achieve
and maintain the dream of homeownership; 2)
it’s not just our business, it’s our passion; 3) we look forward to assisting you; 4) we appreciate the opportunity to serve your
home loan needs; 5) we strive to provide
excellent customer service, and we are aware that our customer satisfaction is
the key to our success; 6) we want to
help you make your mortgage payment more affordable; 7) you are a valued customer; and 8) we want to help you avoid foreclosure. However, Ridley fails to identify who made
the statements to him and when, or how he changed his position to his detriment
in reliance on any of these statements.
He also alleges Bank employees
commented that he was attempting to resolve the issue of a modification based
solely on his signature and they were looking into a simple assumption of the loan
so that his ex-wife would not be required to sign documents related to the
loan. However, he has not alleged that
these statements were false when they were made. In fact, he was attempting to resolve the
issue and the Bank processed his application to assume the loan in his name
alone. He does not explain how he
changed his position to his detriment in reliance on these statements, other
than his hope that the loan assumption would be approved. Ridley simply has not alleged sufficient
facts to support a cause of action for negligent
misrepresentation against the Bank.
DISPOSITION
The judgment is affirmed. Respondent Bank of America, N.A., is awarded
its costs on appeal.
KRIEGLER,
J.
We concur:
TURNER,
P. J.
MOSK,
J.
pleadings allege that Countrywide made both loans. The Bank’s brief on appeal identifies a
second lender on one of the loans.
Because the Bank is servicing both loans, it is of no moment on appeal
whether there was more than one original lender.
