Alo v.
OneWest Bank
Filed 1/29/14 Alo
v. OneWest Bank CA4/3
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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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
FOURTH APPELLATE DISTRICT
DIVISION THREE
LOURDES C. ALO,
Plaintiff and Appellant,
v.
ONEWEST BANK, FSB et al.,
Defendants and Respondents.
G047917
(Super. Ct. No. 30-2012-00540246)
O P I N I O N
Appeal
from a judgment and an order of the Superior
Court of Orange County, Luis A. Rodriguez, Judge. Affirmed.
Petition dismissed and stay dissolved.
Law
Offices of Thomas Gillen, Thomas W. Gillen and Lenore Albert for Plaintiff and
Appellant.
Allen
Matkins Leck Gamble Mallory & Natsis, David R. Zaro and Ryan T. Waggoner
for Defendant and Respondent OneWest Bank.
Schiffer
& Buss and Eric M. Schiffer for Defendant and Respondent Impac Funding
Corp.
* * *
Plaintiff
Lourdes C. Alo stopped paying her mortgage
once she allegedly learned that her appraiser and bank employees had lied to
her regarding the value of the subject property. She tried three times to plead a
two banks involved (the remaining defendants are not parties to this appeal),
and failed on each occasion. The bank
defendants’ demurrers were eventually sustained without further leave to amend. We subsequently stayed foreclosure
proceedings pursuant to a writ of supersedeas to retain the
pending. We conclude that Alo has failed
to plead a proper cause of action against either defendant, and we therefore
affirm the judgment, dismiss the petition and dissolve the stay.
I
FACTS
Underlying Facts
In June 2007, Alo
purchased a single family home in Anaheim (the property). She financed
the $699,000 purchase price with a loan of $629,100, obtained from Impac
Funding Corporation, doing business as Impac Lending Group (collectively
Impac). The $629,000 loan was an
adjustable rate mortgage at 7.6 percent interest. The loan was secured by a
designating Mortgage Electronic Registration Systems, Inc. (MERS) as
beneficiary. OneWest Bank, FSB (OneWest)
allegedly owned Impac as a subsidiary.
Alo used Ultramerica
Mortgage in Los Angeles as her mortgage broker, and the property was appraised by Truong V.
Nguyen of TNK Appraisal, Inc.
In May 2007, Truong
provided an appraisal that valued the property at $710,000 or $715,000. According to Alo, the appraisal also stated
property values in the area had increased in the three preceding years. Alo asserted that she was told by
“defendants’ lending personnel†that the property was appreciating in value,
but in fact the value of the property was never greater than $500,000 and was
$406,000 as of September 2012. Alo
further claimed she was told that the monthly payments were not subject to
increase, the loan was not subject to foreclosure, and that loan modifications
were available. Additionally, she
claimed the true costs of the loan were not disclosed to her.
Alo asserted that she
discovered these facts later, after she had made over $200,000 in
payments. Once she learned these facts,
she stopped making payments. She began
seeking a loan modification in 2009. Her
attempts were unsuccessful.
Procedural History
Alo filed her initial
complaint, which is not included in the record, on January 26, 2012. OneWest demurred, and the
court sustained the demurrer. Both
OneWest and Impac apparently demurred to the first amended complaint, and the
demurrers were once again sustained.
The second amended
complaint (the complaint) was filed on September 25, 2012. The complaint alleged
causes of action for fraud in the inducement, negative fraud, unjust
enrichment, “legal and equitable relief based on fraud and public policy,â€
promissory estoppel, and violations of the unfair competition law (UCL; Bus.
& Prof. Code, § 17200 et seq.). Alo
sought rescission of her loan and replacement “with a note containing
conventional financing terms,†reformation of the lending agreement in
accordance with defendants’ alleged promises, an order prohibiting defendants
from “attempting to service the current loan or initiate any non-judicial
action to enforce the terms†of the June 2007 mortgage.
Both defendants
demurred. Impac argued that none of the
claims stated a cause of action.
Specifically, Impac asserted that the fraud-related causes of action
were barred by the statute of limitations and not pled with sufficient
specificity, the unjust enrichment claim did not allege facts sufficient to
show an unjust retention of a benefit, the promissory estoppel claim failed to
allege a promise by Impac, and the UCL claim was time-barred and insufficiently
pled.
OneWest, meanwhile,
argued that it was merely a loan servicer that did not exist until March 2009,
nearly two years after Alo obtained her loan.
Therefore, OneWest had no role in the appraisal or the origination of
Alo’s loan. OneWest requested judicial
notice of its date of charter and the deed of trust on the property.
Alo’s opposition can
only be characterized as rambling and highly conclusory. It is difficult to summarize. It includes such arguments as: “Defendants would have this Court believe that
the cause of action [for fraud] began to accrue when Plaintiff executed the
Loan documents. Such a position is
untenable as it must be based on the erroneous assumption that Plaintiff knew
she fell victims [sic] to the fraud
at the time of executing the Loan documents, which according to plaintiff’s SAC
and the allegations therein, this Court knows is entirely untrue.†In any event, Alo argued that each cause of
action was sufficiently pled. Impac and
OneWest filed reply briefs.
A hearing was held on November 15, 2012. A tentative ruling was provided
and indicated the court was inclined to sustain the demurrers. After argument, the court sustained the
demurrers without further leave to amend.
The court found the fraud claims were not pled with sufficient
specificity and were time-barred. The remaining
claims were “dependent on supportable fraud allegations which have not been
pled[;] as such they also fail.â€
On November 19, the
court signed an order reflecting its ruling as to OneWest and also signed a
judgment reflecting the dismissal. Alo
filed a notice of appeal on January 10, 2013. A judgment dismissing Impac was filed on July 25, 2013 and transmitted to this court while this appeal was pending.
Also during the pendency
of this appeal, Alo apparently continued to pursue a loan modification. It seems there were difficulties, and on June 26, 2013, Alo received a notice of trustee’s sale for July 16.
On July 15, Alo filed an
ex parte application seeking injunctive relief to prevent the sale, setting the
hearing for July 16. Judge Craig L.
Griffin granted a temporary restraining order and set a hearing for August 8
before Judge Luis Rodriguez, who had ruled on the demurrers. On July 30, Judge Rodriguez, on his own
motion, vacated the temporary restraining order.
At the hearing on August
8, OneWest argued that Alo had failed to take the appropriate steps, including
moving for a stay and posting a bond, to effectuate a stay of foreclosure
proceedings. It also argued she could
not demonstrate a likelihood of success on the merits, and that no loan
modification application was currently pending. Counsel for OneWest stated that during the
prior six months, Alo had received multiple opportunities to submit a complete
loan modification application, and that her application had been denied on July
10 due to her failure to provide the needed documents. She was given a final opportunity to comply
on July 16, but failed to do so. In
reply, Alo argued she was not required to seek a stay or post a bond, and she
believed this court would reverse the ruling on the demurrers. She also argued OneWest could not pursue
foreclosure while “an appeal of her loan modification denial [is]
pending.†She also claimed she had
submitted all of the documents sought by OneWest. The court denied Alo’s request, finding
“there is zero probability of success on the merits†and her theory regarding
appeal of her loan modification was not currently before the court.
Alo subsequently filed a
petition for a writ of supersedeas. We stayed
foreclosure proceedings pending further orders of this court.
II
DISCUSSION
A. Standard of
Review
“In
our de novo review of an order sustaining a demurrer, we assume the truth of
all facts properly pleaded in the complaint or reasonably inferred from the
pleading, but not mere contentions, deductions, or conclusions of law. [Citation.]
We then determine if those facts are sufficient, as a matter of law, to
state a cause of action under any legal theory.
[Citation.]†(Intengan v. BAC
Home Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1052.) “In order to prevail
on appeal from an order sustaining a demurrer, the appellant must affirmatively
demonstrate error. Specifically, the
appellant must show that the facts pleaded are sufficient to establish every
element of a cause of action and overcome all legal grounds on which the trial
court sustained the demurrer.
[Citation.] We will affirm the
ruling if there is any ground on which the demurrer could have been properly
sustained. [Citation.]†(Ibid.)
When a
demurrer is sustained without leave to amend, “we decide whether there is a
reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we
affirm. [Citations.] The burden of proving such reasonable
possibility is squarely on the plaintiff. [Citation.]â€
(Blank v. Kirwan (1985) 39
Cal.3d 311, 318.)
B. OneWest
The complaint alleges that OneWest “has several owned subsidiaries
including Impact [sic] Funding
Corporation dba Impact [sic] Lending
Group (which was the lender on plaintiff’s loan) and Impact [
Home Loans which acted as the ‘servicer’ on plaintiff’s loan.â€
Along with its demurrer
to the complaint, OneWest filed a request for judicial notice of two documents —
an FDIC document reflecting that OneWest was chartered on March 19, 2009, and a copy of the deed of trust on the property, which showed the
lender as “Impac Funding Corporation dba Impac Lending Group.â€
It is proper for a court
to consider matters which may be judicially noticed when deciding a
demurrer. (Blank v. Kirwan, supra, 39
Cal.3d 311 at p. 318.) We are not
required to blindly accept any fact
pleaded in a complaint. OneWest has
submitted evidence that raise an inference that (1) it was not in existence at
the time Alo entered into her loan agreement and (2) it was not a parent
company of Impac at the time. As far as
we can discern, Alo offered no evidence in rebuttal of either proposition in
the trial court.
On appeal, Alo argues that “By way
of admission in their own brief, OneWest purchased Appellant’s loan
. . . .†In fact, what
OneWest stated was that “OneWest merely purchased the right
“OneWest purchased a loan contract, and as successor-in-interest to that loan
contract, OneWest is subject to all potential liabilities and defenses that
accompany that contract.†If this were
true, establishing it should have been a fairly easy task. As it is, Alo has offered nothing to rebut
the presumption raised by OneWest.
Therefore,
the trial court properly sustained OneWest’s demurrer. As there was no reasonable probability of
curing this defect after three attempts at pleading, the trial court did not
abuse its discretion by refusing further leave to amend. (Quelimane
Co. v. Steward Title Guaranty Co. (1998) 19 Cal.4th 26, 39.) Moreover, even if Alo had managed to directly
implicate OneWest, the reasons discussed below with respect to Impac are
equally applicable to OneWest.
C. Impac
1. Fraud
The
elements of a cause of action for fraud are: (1) a misrepresentation; (2) knowledge of
falsity; (3) intent to defraud or induce reliance; and (4) actual reliance by
the plaintiff resulting in damage. (Civ.
Code, § 1709; Conroy v. Regents of University of California
(2009) 45 Cal.4th 1244, 1255; Small v. Fritz Companies, Inc. (2003) 30
Cal.4th 167, 173.)
The
statute of limitations period for fraud claims is three years. (Code of Civ. Proc., § 338, subd. (d); Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 219.) Alo purchased her home in June 2007, with the
deed of trust signed and notarized on June 21, 2007. Her
initial complaint in this action was filed on January 26, 2012, some four years and seven months later. The limitations period
runs from the moment a claim accrues. (See Code Civ. Proc., § 312.)
A complaint disclosing on its face that the limitations period has
expired in connection with one or more counts is subject to demurrer. (ABF Capital
Corp. v. Berglass (2005) 130
Cal.App.4th 825, 833.) If a demurrer
demonstrates that a pleading is untimely on its face, it becomes the plaintiff’s
burden “even at the pleading stage†to establish an exception to the
limitations period. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1197 (Aryeh).)
Despite
the statute of limitations constituting a key basis for the court’s decision to
sustain the demurrers, Alo neglects to mention this issue in her opening
brief. In her reply brief, after
defendants raised the argument, Alo claimed that the “delayed discovery†rule
applied. The delayed discovery rule
delays accrual of a cause of action until a party “‘discovers, or has reason to
discover, the cause of action.’ [Citations.]†(Aryeh,
Alo
attempted to plead delayed discovery by alleging that she had “only come to
discover the true facts herein alleged within the last three years, i.e., after
the collapse of the Countrywide portfolio that was then owned by Bank of
America, and after defaulting on her loan obligations and having the promises
of ‘no foreclosure’ and loan modification not honored.â€
Delayed
discovery “requires a plaintiff to plead facts
showing an excuse for late discovery of the facts underlying his cause of action. [The plaintiff]
must show ‘that he [or she] was not at fault for failing to discover it or had
no actual or presumptive knowledge of facts sufficient to put him [or her] on inquiry.
[Citations.]’ [Citation.]†(Prudential Home
Mortgage Co. v. Superior Court (1998)
66 Cal.App.4th 1236, 1247.) Moreover, a
plaintiff must allege supporting facts, including the date of discovery, the
manner of discovery, and the justification for the failure to discover the
fraud earlier, with the same particularity as with a cause of action for
fraud. (Community
Cause v. Boatwright (1981) 124
Cal.App.3d 888, 900-902.) The plaintiff
must also show diligence beyond mere conclusory allegations. (Grisham
v. Philip Morris,
First,
Alo’s pleading is fatally unspecific and conclusory. She does not list a specific date of
discovery, or even a readily identifiable time frame. She also fails to meet the rest of the
pleading requirements. This alone, after
three attempts, would justify sustaining the demurrer without further leave to
amend.
Moreover,
we do not believe she could plead specific facts in support of delayed
discovery. Several of the key facts that
Alo alleged as misrepresentations were directly contradicted by her deed of
trust, including the claims that she was told that her payments would not
change and she would never be foreclosed upon.
In the section addressing notice to the borrower of any default, the
deed stated: “If the default is not
cured on or before the date specified in the notice, Lender at its option may
require immediate payment in full of all sums secured by this Security
Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable
Law.†(Italics added.) The deed of trust also stated that it
included an “adjustable rate rider,†and an “interest only addendum to rider.†Such language gave Alo reasonable notice that
her payments were “adjustable†and therefore, the payments could indeed change.
By
failing to read the deed of trust, or to inquire further if she did read it, Alo
failed to act with the reasonable diligence that delayed discovery
requires. The deed of trust also
provided her with constructive notice that any of the alleged representations
made to her required further inquiry, regarding, for example, the true costs of
the loan or the appraised value of the property. We therefore conclude that she failed to
satisfy the requirements to plead delayed discovery. Accordingly, the statute of limitations had
run more than a year before Alo filed her complaint. The demurrer was properly sustained without
leave to amend.
name="_ftnref4" title="">[4]
2. Negative Fraud
We
interpret Alo’s claim for “negative fraud†as a cause of action for
concealment. “[T]he elements of a cause of action for fraud based on concealment are: ‘“(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have
been under a duty to disclose the fact to the plaintiff, (3) the
defendant must have intentionally concealed or
suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff
must have been unaware of the fact and would not have acted as he did if he had
known of the concealed or suppressed fact, and
(5) as a result of the concealment or
suppression of the fact, the plaintiff must have sustained damage. [Citation.]†[Citation.]’ [Citation.]†(Kaldenbach v.
Mutual of Omaha Life Ins. Co. (2009)
178 Cal.App.4th 830, 850.) The same
statute of limitations applicable to her cause of action for fraud also applies
here. (Code Civ. Proc., § 338.) For the same reasons discussed above, we
reject Alo’s claim of delayed discovery.
Therefore, the statute of limitations bars Alo’s claim for negative
fraud.
Unjust Enrichment and “Legal and Equitable Relief Based on Fraud and
Public Policyâ€
“[T]here
is no cause of action in California for unjust enrichment.
target="_self">‘The phrase “Unjust Enrichment†does not describe a theory
of recovery, but an effect: the result
of a failure to make restitution under circumstances where it is equitable to
do so.’ [Citation.] Unjust enrichment is
‘“a general principle, underlying various legal doctrines and remedies,â€â€™
rather than a remedy itself. [Citation.]
It is synonymous with restitution. [Citation.]†(Melchior v. New Line
Productions, Inc. (2003) 106 Cal.App.4th 779, 793; see also
Corp. (2011) 195
Cal.App.4th 1295, 1307.) As Alo’s prayer for relief also includes a request for
“restitution,†the cause of action for unjust enrichment is purely duplicative,
and the demurrer could have been properly sustained on that ground.
Even if
such a cause of action was proper, Alo has failed to properly plead it
here. Unjust enrichment requires receipt
of a benefit and unjust retention of the benefit at the expense of another. (Lectrodryer
v. SeoulBank (2000) 77 Cal.App.4th 723, 726.) Here, according to the face of the complaint,
Alo received the loan proceeds and lived in the property. The property is now worth less than the
outstanding balance on the loan. It is
difficult to evaluate how Impac was “unjustly enriched†by the loan.
With
respect to Alo’s claim for “legal and equitable relief based on fraud and
public policy,†this appears to be a poorly pled request for rescission. As with unjust enrichment, rescission is a
remedy, not a cause of action, and rescission was requested in Alo’s prayer for
relief. Therefore, the cause of action
was duplicative and unnecessary, and the demurrer was properly sustained on
that basis alone.
Even if
such a cause of action was necessary, rescission is proper under Civil Code
section 1689, subdivision (b)(1), if “the consent of the party rescinding . . .
was given by mistake, or obtained through duress, menace, fraud, or undue
influence, exercised by or with the connivance of the party as to whom he
rescinds, or of any other party to the contract jointly interested with such
party.†The statute of limitations on
rescission claims is four years (Code Civ. Proc. § 337). For the same reasons we discussed in Section
II.C.1, ante, delayed discovery does
not apply, and the statute of limitations had expired by the time Alo filed her
complaint.
4. Promissory Estoppel
The elements of promissory estoppel are: “‘(1) a promise clear and unambiguous in its
terms; (2) reliance by the party to whom the promise is made; (3) [the]
reliance must be both reasonable and foreseeable; and (4) the party asserting
the estoppel must be injured by his reliance.’ [Citation.]†(US Ecology, Inc.
v. State of California (2005) 129
Cal.App.4th 887, 901-902.) “‘Promissory estoppel is a
“doctrine which employs equitable principles to satisfy the requirement that
consideration must be given in exchange for the promise sought to be enforced.â€
[Citation.]’ [Citation.]â€
(Ibid.)
The “promises†that Alo
alleges here relate to various provisions in the loan agreement. Alo claims, for example, that she was promised
the initial monthly payments were not subject to increase, and the loan
included a “no foreclosure†term.
“promises†ante in conjunction with
Alo’s fraud claim. As we noted, several
of the alleged “promises†were flatly contradicted by the terms of the deed of
trust.
Reliance must be
reasonable. (US Ecology, Inc. v. State of
California, supra, 129
Cal.App.4th at pp. 901-902.) When
parties are dealing at arm’s length, reasonable diligence
requires a party to read
a contract before
signing it. (Brookwood v.
Bank of America (1996) 45 Cal.App.4th 1667, 1674.) Here, the “promises†Alo alleged are directly
contradicted by the terms of the deed, and it was therefore not reasonable for
her to rely on any such promises. As
such, her cause of action for promissory estoppel must fail, and the demurrer
was properly sustained.
5. UCL
Alo’s final cause of
action was under the UCL. The UCL is
codified in Business and Professions Code section 17200 et seq. The UCL prohibits any “unlawful, unfair or
fraudulent business act or practice.â€
“Because Business and Professions Code section 17200 is written in the
disjunctive, it establishes three varieties of unfair competition — acts or
practices which are unlawful, or unfair, or fraudulent.†(Podolsky v. First Healthcare Corp.
(1996) 50 Cal.App.4th 632, 647.)
Although her brief
asserts all three prongs of the UCL apply here, and the complaint alleged
generally “unlawful, unfair, and fraudulent acts†the complaint pled facts
alleging fraud only. The complaint
asserted that “Defendant’s lending personnel knowingly made materially false,
unfair, deceptive, untrue and misleading representations to plaintiff . . . .†These representations were the same
representations upon which Alo based her fraud claim.
The
statute of limitations on UCL claims is four years. (Bus. & Prof. Code, § 17208.) In Aryeh,
the California Supreme Court held that the delayed discovery rule could apply
to UCL claims, based on the gravamen of the claims. (Aryeh,
supra, 55 Cal.4th at pp. 1196-1197.)
Here, the gravamen is fraud (or, perhaps, general “unfairnessâ€). But for the same reasons we discussed
delayed discovery is simply not appropriate on the facts present here. Alo did not adequately plead delayed
discovery, nor did she act in a reasonable and diligent manner with respect to
availing herself of the information readily available to her. The demurrer was therefore properly
sustained.
Leave to Amend
As we
noted ante, the burden of
demonstrating the defects in a complaint can be cured by amendment is on the
plaintiff. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Here, Alo argues her claims were properly
pled, and any deficiencies “could readily be addressed by subsequent
amendment.†We disagree with the first
assertion, and the second is merely conclusory.
We therefore find no abuse of discretion in denying further leave to
amend.
III
DISPOSITION
The
judgment is affirmed. The writ of
supersedeas is dismissed as moot and the stay is dissolved. In the interests of justice, each party is to
bear its own costs on appeal.
MOORE,
J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
THOMPSON, J.
name="_ftn1" title="">[1] A fact disputed by OneWest, which argues it did not exist until
2009 and merely bought the right to service the loan. We shall address this issue
name="_ftn2" title="">[2] Both of these entities, along with Nguyen, were named as
defendants, but apparently Alo could not locate them.
