Filed 5/18/18 Mackey v. Ocwen Loan Servicing, LLC 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

MARY MACKEY,

Plaintiff and Appellant,

v.

OCWEN LOAN SERVICING, LLC,

Defendant and Respondent.

F074094

(Super. Ct. No. BCV-15-100142)


OPINION

THE COURT*
APPEAL from a judgment of the Superior Court of Kern County. Sidney P. Chapin, Judge.
Mary Mackey, in pro. per., for Plaintiff and Appellant.
Bryan Cave, Christopher L. Dueringer and Kazim A. Naqvi for Defendant and Respondent.
-ooOoo-


Plaintiff filed a second amended complaint against defendant, the loan servicing agent for the mortgage on her real property. She alleged she applied for a loan modification agreement with a fixed rate loan, defendant represented it would, and did, obtain one for her, but the loan she received was a variable rate loan that caused her payments to increase beyond affordability. The trial court sustained defendant’s demurrer to the entire second amended complaint without leave to amend, on the ground it failed to state facts sufficient to constitute a cause of action, and plaintiff appeals. We conclude the demurrer to the breach of contract cause of action should not have been sustained, but the demurrer was properly sustained without leave to amend as to all other causes of action.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff, acting in propria persona, filed a complaint against defendant; defendant demurred, the trial court sustained the demurrer with leave to amend, and plaintiff filed an amended complaint, captioned “Second Amended Complaint.” The second amended complaint contained eight causes of action: (1) violation of Civil Code section 2923.7; (2) intentional misrepresentation; (3) negligent misrepresentation; (4) elder financial abuse (Welf. & Inst. Code, § 15610.30); (5) actual fraud; (6) fraudulent inducement; (7) breach of the covenant of good faith and fair dealing; and (8) breach of contract. Plaintiff alleged she was a senior citizen on a fixed income. Defendant was the loan servicer on the loan on her real property; she applied for a loan modification with a fixed rate loan, and defendant told her she was getting such a loan. Instead, she was given an adjustable rate loan that steadily increased the amount she was required to pay, making it increasingly difficult for her to make her payments and causing her to fear she would lose her house to foreclosure. Defendant demurred to the entire second amended complaint and each cause of action, asserting the pleading failed to state facts sufficient to constitute a cause of action against defendant. Plaintiff filed opposition, but the trial court sustained the demurrer without leave to amend and dismissed the complaint.
Plaintiff filed a motion for reconsideration, alleging there were new facts and circumstances to consider: she attempted to appear at the hearing of the demurrer by telephone, but her call was not connected to the courtroom; additionally, defense counsel left a voicemail message for plaintiff proposing to discuss resolving the matter through a new loan, but later denied he ever made that statement. The trial court denied the motion for reconsideration. Plaintiff appeals from the judgment of dismissal.
DISCUSSION
I. Standard of Review
“On appeal from a dismissal after an order sustaining a demurrer, we review the order de novo, exercising our independent judgment about whether the complaint states a cause of action as a matter of law.” (Traders Sports, Inc. v. City of San Leandro (2001) 93 Cal.App.4th 37, 43.) “In doing so, we accept as true the properly pleaded material factual allegations of the complaint, together with facts that may be properly judicially noticed.” (Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497 (Hernandez).)
When the demurrer is sustained without leave to amend, we review the denial of leave to amend for abuse of discretion. (Hernandez, supra, 49 Cal.App.4th at p. 1497.) “[W]e will only reverse for abuse of discretion if we determine there is a reasonable possibility the pleading can be cured by amendment.” (Id. at p. 1498.) The burden is on the plaintiff to show how the complaint may be amended and how the amendment will cure the defects. (Medina v. Safe-Guard Products, Internat., Inc. (2008) 164 Cal.App.4th 105, 112–113, fn. 8 (Medina).)
II. Sustaining the Demurrer
On appeal, the judgment is presumptively correct and the appellant must affirmatively demonstrate error. (Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 556–557.) “[A]n appellant must do more than assert error and leave it to the appellate court to search the record and the law books to test his claim. The appellant must present an adequate argument including citations to supporting authorities and to relevant portions of the record.” (Id. at p. 557.) “ ‘When a litigant is appearing in propria persona, he is entitled to the same, but no greater, consideration than other litigants and attorneys. . . . Further, the in propria persona litigant is held to the same restrictive rules of procedure as an attorney.’ ” (Bianco v. California Highway Patrol (1994) 24 Cal.App.4th 1113, 1125–1126 (Bianco).)
A. Sufficiency of Allegations
In her brief on appeal, plaintiff makes general assertions that her complaint stated a cause of action. She asserts West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780 (West) supports her assertion of causes of action for fraud and breach of contract against the loan servicing agent. She does not, however, draw parallels between the allegations in the complaint in West and the allegations in her second amended complaint to show that her pleading was sufficient. The fact that the plaintiff in West alleged some of the same causes of action as plaintiff in this action does not establish that the facts alleged in the complaint before us are sufficient to state a cause of action.
1. Fraud
The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure), (2) knowledge of falsity, (3) intent to defraud (i.e., to induce reliance), (4) justifiable reliance, and (5) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar).) “ ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Ibid.) Negligent misrepresentation is also a form of fraud. The elements are the same as those set out above, except negligent misrepresentation requires misrepresentation of a past or existing material fact, not a promise of future action, and the defendant need not know the representation is false, but must make it without reasonable grounds for believing it to be true. (Fox v. Pollack (1986) 181 Cal.App.3d 954, 962; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159.)
Fraud must be pleaded with specificity. (Lazar, supra, 12 Cal.4th at p. 645.) “ ‘This particularity requirement necessitates pleading facts which “show how, when, where, to whom, and by what means the representations were tendered.” ’ [Citation.] A plaintiff’s burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’ ” (Ibid.)
The second amended complaint contained four causes of action for fraud. The second cause of action alleged defendant made misrepresentations and promises to plaintiff without any intention to perform them. The third cause of action incorporated the allegations of the second cause of action, and alleged the promises or representations were negligently made, i.e., made with no reasonable grounds for believing them to be true. The fifth cause of action alleged intentional misrepresentations, and the sixth alleged defendant fraudulently induced plaintiff to enter into an unspecified agreement.
The complaint alleged defendant, “through its employees,” made representations and promises that defendant “was obtaining a fixed rate loan for the Plaintiff, . . . [and] she was, in fact, given a fixed rate loan.” It did not allege who made the representations. It did not allege how they were made: orally or in writing, in person, by telephone, by letter, or by other means. It did not allege when or where the representations were made. Thus, the element of misrepresentation was not adequately alleged.
Actual and justifiable reliance was not alleged factually and specifically. The complaint alleged plaintiff requested, and was told she was receiving, a fixed rate loan, but she was given an adjustable rate loan. As a result, her mortgage payments have been increasing, making it difficult for her to make the payments, causing her financial and emotional distress. The second cause of action alleged “Plaintiff acted in justifiable reliance upon the promises.” The third cause of action alleged “Plaintiff acted in justifiable reliance on the truth of the representations.” The fifth cause of action incorporated the allegations of the second and third causes of action, but contained no other allegation of reliance. The second, third, and fifth causes of action failed to allege facts showing that plaintiff took any actions in reliance on the alleged misrepresentations.
The sixth cause of action for fraudulent inducement alleged defendants, by making the alleged misrepresentations, “intended to fraudulently induce the Plaintiff to enter into the agreement with them to pay them the sums demanded, when they had no intention of performing their duties under the agreement.” Further, “[t]he misrepresentations were material to Plaintiff’s decision to enter into the agreement with the Defendants” and “Plaintiff reasonably relied on the misrepresentations as hereinabove described.” The “agreement” plaintiff allegedly was induced to enter into with defendant was not identified. The fraud causes of action did not allege defendant demanded plaintiff pay it any sums; they did not allege plaintiff entered into any agreement with defendant to pay defendant any sums.
If the agreement referred to in the sixth cause of action was the loan modification agreement plaintiff sought from the mortgage lender, that was not factually and specifically alleged. The sixth cause of action alleged plaintiff was induced to enter into an agreement with defendant, the alleged loan servicing company, not with the lender.
Further, justifiable reliance is not alleged when the plaintiff had the opportunity to read the terms of the contract he or she was allegedly induced to enter into. As defendant pointed out in its demurrer, to be enforceable, a loan modification is required by the statute of frauds to be in writing. “An agreement for the sale of real property or an interest in real property comes within the statute of frauds. (. . . § 1624, subd. (a)(3).) A mortgage or deed of trust also comes within the statute of frauds. . . . [S]ection 2922 states: ‘A mortgage can be created, renewed, or extended, only by writing, executed with the formalities required in the case of a grant of real property.’ ” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552.) “An agreement to modify a contract that is subject to the statute of frauds is also subject to the statute of frauds.” (Id. at p. 553.) The sixth cause of action does not allege factually and specifically how plaintiff’s alleged reliance on defendant’s misrepresentation that the loan modification provided for a fixed rate loan was justifiable, if the written loan modification agreement actually provided for an adjustable rate. “ ‘Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms.’ ” (Meyer v. Benko (1976) 55 Cal.App.3d 937, 943.) Plaintiff alleged defendant presented her with a variable rate loan; she did not allege, for example, that she was unable to read the loan modification agreement or that defendant somehow prevented her from reading it.
The citation to the West case does not assist plaintiff. In West, the plaintiff alleged her home loan went into default; she and the defendant (the lender) agreed to a trial period plan, which temporarily reduced her loan payments. (West, supra, 214 Cal.App.4th at p. 786.) She made the payments as agreed and sought a permanent loan modification, which the defendant denied. While the plaintiff was still communicating with the defendant regarding reevaluating whether she qualified for a permanent loan modification under the applicable federal program, and despite the defendant’s representation that it had not scheduled a foreclosure sale, the defendant conducted a foreclosure sale and sold the plaintiff’s house.
The plaintiff’s complaint alleged the defendant made misrepresentations in specified documents, copies of which were attached to her complaint, and in telephone conferences on specified dates. (West, supra, 214 Cal.App.4th at p. 793.) She identified the misrepresentations made in the documents. Additionally, she specifically described the misrepresentations made to her by telephone, gave the dates of the telephone calls, and identified the persons who made the statements as a supervisor in the loan modification department and another employee in that department. (Id. at pp. 793–794.) The court found the misrepresentations were alleged with sufficient specificity. (Id. at p. 794.) The court also found the plaintiff adequately alleged that justifiable reliance on the misrepresentations caused the plaintiff injury, because the misrepresentations, as well as the defendant’s concealment of the fact the defendant was already proceeding with a foreclosure, allegedly lulled her into a false sense of security and kept her from taking legal action to stop the foreclosure sale. (Id. at p. 795.)
Here, plaintiff did not attach to her complaint copies of documents containing the alleged misrepresentations. She did not identify any persons who made the misrepresentations to her, state by what means they were made, or give the dates on which they were made. She did not allege what actions she took in reliance on the alleged misrepresentations, state facts showing the reliance was justifiable, or specify how those actions resulted in injury to her. Plaintiff has not demonstrated any error in the trial court’s order, to the extent it sustained the demurrer to the second, third, fifth, and sixth causes of action of the second amended complaint.
2. Violation of section 2923.7
Plaintiff’s first cause of action was for violations of section 2923.7. That section provides, in part: “ Upon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact.” (§ 2923.7, subd. (a).) The statute sets out the responsibilities of the “single point of contact,” including communicating with the borrower about foreclosure prevention alternatives, coordinating receipt of related documents, having access to information sufficient to inform the borrower of the status of the foreclosure prevention alternative, and ensuring the borrower is considered for all available foreclosure prevention alternatives. (Id., subd. (b).) “ ‘[S]ingle point of contact’ ” is defined as “an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described” in the statute; each member of the team must be “knowledgeable about the borrower’s situation and current status in the alternatives to foreclosure process.” (Id., subd. (e).)
After quoting from the statute, the first cause of action alleges defendant “did not provide a single contact, or any contact for Plaintiff.” When she wanted information, she had to initiate telephone contact. Defendant’s failure to follow the statutory requirements resulted in confusion and plaintiff did not know the status of her loan modification.
Defendant demurred on three grounds: (1) plaintiff failed to allege the real property that was the subject of the loan in issue was her principal residence (such an allegation was required by §§ 2923.7, subd. (f) & 2924.15); (2) plaintiff failed to adequately allege that defendant did not establish a single point of contact; and (3) .plaintiff failed to allege that she sustained any damages as a result of the alleged lack of a single point of contact.
Plaintiff has made no argument in support of this cause of action. She has not demonstrated that the deficiencies identified by defendant in its demurrer did not exist or did not support the trial court’s decision. We note that the only remedy sought for this cause of action was damages. Damages for violation of section 2923.7 are available only after a trustee’s deed upon sale has been recorded. (§ 2924.12, subds. (a), (b); Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 951.) The second amended complaint does not allege that a nonjudicial foreclosure sale has been conducted or a trustee’s deed has been recorded. Plaintiff has failed to establish any error in the trial court’s ruling sustaining the demurrer to the first cause of action.
3. Elder abuse
Plaintiff’s fourth cause of action is for financial abuse of an elder, in violation of Welfare and Institutions Code section 15610.30. Plaintiff’s brief does not address this cause of action. It fails to demonstrate that the deficiencies identified by defendant in its demurrer did not exist or did not warrant sustaining the demurrer.
Welfare and Institutions Code section 15610.30 provides, in part:
“(a) ‘Financial abuse’ of an elder . . . occurs when a person or entity does any of the following:
“(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder . . . for a wrongful use or with intent to defraud, or both.
“(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder . . . for a wrongful use or with intent to defraud, or both.
“(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder . . . by undue influence, as defined in Section 15610.70. [¶] . . . [¶]
“(c) For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder . . . is deprived of any property right, including by means of an agreement.” (Welf. & Inst. Code, § 15610.30, subds. (a), (c).)
For purposes of this statute, an elder is defined as a person 65 years of age or older. (Welf. & Inst. Code, § 15610.27.) The second amended complaint alleges plaintiff is almost 80 years old.
The fourth cause of action alleges that, by doing the things alleged in the prior causes of action, defendant “negotiated and obtained a variable rate loan for the Plaintiff, taking her personal property, her income, in greater and greater amounts each month causing her great financial hardship.” Because negotiating and obtaining a variable rate loan and accepting payments on it do not, in themselves, constitute a wrongful taking of property, this cause of action must rely on the incorporated allegations of the earlier fraud causes of action to assert a wrongful taking of plaintiff’s property. As previously discussed, however, those causes of action do not allege facts showing plaintiff relied on the alleged misrepresentations in executing the modified loan. Further, they do not allege facts showing any reliance on the alleged misrepresentations was justified. They do not allege, for example, that the loan documents did not disclose that the loan was a variable rate loan or defendant somehow prevented plaintiff from reading the loan documents and discovering the terms of the loan. The fourth cause of action also contains no facts showing defendant exercised any undue influence over plaintiff in the loan modification transaction. Plaintiff has not demonstrated the trial court improperly sustained the demurrer to the fourth cause of action.
4. Breach of contract
The eighth cause of action for breach of contract alleges plaintiff and defendant entered into a written contract “whereby Defendant, OCWEN, when OCWEN assumed the exi[s]ting contract Plaintiffs [sic] had with it [sic] predecessor, INDYMAC, OCWEN agreed to secure a fixed rate loan modification for the Plaintiff, and she agreed that she would provide all relevant documentation, and complete an application package and submit it to the Defendant.” Plaintiff submitted a completed application package with the required documentation. Defendant breached the contract by failing to obtain a fixed rate loan for plaintiff, instead obtaining a variable rate loan, which increased her payments.
The only argument made by defendant in support of its demurrer to this cause of action was that the contract was required by the statute of frauds to be in writing, but plaintiff alleged only an oral agreement. On its face, however, the eighth cause of action alleged a written agreement.
The only ground cited in support of the demurrer to the breach of contract cause of action lacked merit. Consequently, the demurrer to this cause of action should not have been sustained.
5. Breach of the covenant of good faith and fair dealing
The seventh cause of action was for breach of the covenant of good faith and fair dealing. The law implies into every contract a covenant of good faith and fair dealing. (Gomez v. Volkswagen of America, Inc. (1985) 169 Cal.App.3d 921, 925.) It “requires that neither party do anything which will deprive the other of the benefits of the agreement.” (Id. at p. 926.) Accordingly, “[t]he prerequisite to any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.” (Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 49.)
The seventh cause of action does not allege a contract between the parties. It does not incorporate by reference the allegations of the eighth cause of action for breach of contract. Even if it did incorporate the allegations of the breach of contract cause of action, it would merely be duplicative of that cause of action and therefore superfluous.
The allegations of a breach of the covenant of good faith and fair dealing “must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Ibid.)
The seventh cause of action alleged that “Defendants failed to perform any of their duties under the agreement with Plaintiff,” and “breached the implied covenant by their failure to perform according to their agreed upon duties and responsibilities.” It also alleged defendant breached the covenant of good faith and fair dealing by making the misrepresentations previously alleged. The misrepresentations, however, were that defendant would obtain a fixed rate loan modification for plaintiff and that defendant did obtain such a loan modification. The representation that defendant would obtain a fixed rate loan modification was the same promise allegedly made in the contract. Thus, other than the simple failure to perform defendant’s alleged contractual duties, the seventh cause of action did not allege any actions by defendant that breached the covenant. It did not allege any other actions that unfairly frustrated the purpose of the contract, disappointed plaintiff’s reasonable expectations, or deprived plaintiff of the benefits of the agreement. The seventh cause of action was superfluous, added nothing to the complaint, and was properly dismissed.
B. Sufficiency of Order Sustaining the Demurrer
Plaintiff contends the trial court’s order sustaining the demurrer was inadequate because it did not specifically state the grounds on which it was based. “Whenever a demurrer in any action or proceeding is sustained, the court shall include in its decision or order a statement of the specific ground or grounds upon which the decision or order is based.” (Code Civ. Proc., § 472d.) The grounds for a demurrer are set out in Code of Civil Procedure section 430.10, and include: “The pleading does not state facts sufficient to constitute a cause of action.” (Id., § 430.10, subd. (e).) The trial court’s order stated that the demurrer was sustained “on the grounds that the Second Amended Complaint fails to sufficiently allege facts to constitute a cause of action against Defendant.” This adequately identified the ground upon which the demurrer was sustained. (Stevenson v. San Francisco Housing Authority (1994) 24 Cal.App.4th 269, 275.)
C. Plaintiff’s Self-represented Status
Citing federal precedent, plaintiff seems to assert she should be allowed more leeway in her pleading because she is representing herself. California law is to the contrary. “[M]ere self-representation is not a ground for exceptionally lenient treatment. Except when a particular rule provides otherwise, the rules of civil procedure must apply equally to parties represented by counsel and those who forgo attorney representation. . . . A doctrine generally requiring or permitting exceptional treatment of parties who represent themselves would lead to a quagmire in the trial courts, and would be unfair to the other parties to litigation.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 984–985.) “ ‘When a litigant is appearing in propria persona, he is entitled to the same, but no greater, consideration than other litigants and attorneys.’ ” (Bianco, supra, 24 Cal.App.4th at p. 1125.) Plaintiff is not entitled to more leeway than usual in her pleading because she is self-represented.
III. Leave to Amend
“Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment. [Citation.] However, the burden is on the plaintiff to demonstrate that the trial court abused its discretion. [Citations.] Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “While a plaintiff even on appeal can most certainly make a showing that an amendment to the complaint will change its legal effect [citation], it is the plaintiff—not the court—who has the burden of showing that an amendment will have such an effect. . . . ‘It is not up to the judge to figure out how the complaint can be amended to state a cause of action. Rather, the burden is on the plaintiff to show in what manner he or she can amend the complaint, and how that amendment will change the legal effect of the pleading.’ . . . ‘While such a showing can be made for the first time to the reviewing court [citation], it must be made.’ ” (Medina, supra,164 Cal.App.4th at pp. 112–113, fn. 8.)
Plaintiff asserts it was error for the trial court sustain the demurrer without leave to amend. She has not, however, identified any facts she could add to the complaint to cure any of the defects identified in the demurrer. She has not shown how she could amend the complaint, or how the amendment would change the legal effect of the allegations so that they would state a cause of action. “Because appellant has effectively received one opportunity to amend her complaint and she has not suggested on appeal how she would amend if given the opportunity, we discern no abuse of discretion. . . . Where the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend.” (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 745.) Accordingly, we conclude plaintiff has not demonstrated that the trial court abused its discretion by denying her leave to amend.
DISPOSITION
The judgment is reversed. The trial court is directed to vacate its order sustaining the demurrer to the entire second amended complaint without leave to amend and to enter a new order sustaining the demurrer to the first through seventh causes of action without leave to amend, and overruling the demurrer to the eighth cause of action. The parties shall bear their own costs on appeal.