Ratliff v. EMC Mortgage








Filed 3/22/17 Ratliff v. EMC Mortgage CA1/3






NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION THREE


LONNIE RATLIFF, JR. et al.,
Plaintiffs and Appellants,
v.
EMC MORTGAGE, LLC et al.,
Defendants and Respondents.


A144123

(Alameda County
Super. Ct. No. RG14730545)


This is an appeal from judgment following the dismissal with prejudice of plaintiffs Lonnie and Janet Ratliff’s first amended complaint against defendants EMC Mortgage, LLC, Tiffany Skaife, vice-president of EMC Mortgage, LLC, and Homesales, Inc. (collectively, EMC). Plaintiffs’ first amended complaint asserts claims for unfair business practices and declaratory relief, and seeks injunctive relief and general damages.[1] The trial court sustained EMC’s demurrer to the first amended complaint without leave to amend after finding, among other things, that plaintiffs lacked standing to pursue their claims, requiring dismissal. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
According to the allegations of the operative complaint (to wit, the first amended complaint), which we accept as true for purposes of this appeal (Searle v. Wyndham Int’l (2002) 102 Cal.App.4th 1327, 1330), in 2007, plaintiffs defaulted on a $630,000 loan from EMC secured on a deed of trust against real property located in Alameda County, wherein plaintiffs resided (hereinafter, subject property).[2] On October 2, 2007, following EMC’s foreclosure on the subject property, there was a trustee’s sale at which the subject property was sold at a public auction by EMC, as the foreclosing beneficiary, to EMC, as the foreclosing beneficiary, for $620,000. Plaintiffs subsequently filed two lawsuits against EMC challenging the legality of the foreclosure proceedings, both of which were ultimately dismissed with prejudice by the trial court.
Many years later, in the fall of 2013, defendant Tiffany Skaife, vice-president of defendant EMC, executed and recorded a grant deed transferring title to the subject property to defendant Homesales. According to this grant deed: “This is a Bonafide Gift and the Grantors [defendant EMC] received nothing in return.”
On November 4, 2013, defendant Homesales filed an unlawful detainer action against plaintiffs with respect to the front unit of the subject property, and, on February 4, 2014, filed a second such action against plaintiffs with respect to the rear unit of this property. Summary judgment has been entered in favor of Homesales in the first action. The second action remained pending at the time of appellate briefing.
On June 25, 2014, plaintiffs initiated this lawsuit, suing EMC for, among other things, violation of the Unfair Business Practices Act, Business and Professions Code section 17200, et seq. (hereinafter, UCL), and Penal Code section 115.5. Plaintiffs sought declarative and injunctive relief on this basis, as well as general damages. According to their original complaint, defendant Tiffany Skaife, who signed the grant deed on the subject property on September 16, 2013, is a “well-known and notorious ‘Robo-Signer’ ” that, with the knowledge of all defendants, falsely signed and recorded essential legal instruments, including the grant deed, for a fee without any personal knowledge of the instruments’ accuracy. This complaint further alleged that all defendants, “as part of their business practices, fraudulently and knowingly procured, or offered false or fraudulently prepared documents to fabricate the missing gaps in the chain of title or to falsely demonstrate compliance with the California Codes and allowed the . . . Grant Deed to Homesales to be prepared, created, executed, notarized and recorded in California in violation of California Penal Code section 115.5 et seq.”[3]
On July 3, 2014, plaintiffs moved to consolidate this lawsuit with the two unlawful detainer cases pending in Alameda Superior Court, in which defendant Homesales sued plaintiffs for possession of the subject property. Plaintiffs argued that, unless this action was consolidated with the two unlawful detainer actions filed against them, they would be unable to raise Homesales’ violation of Penal Code section 115.5 as a defense in the unlawful detainer actions because, ordinarily, issues regarding property title cannot be adjudicated in such actions. This motion was denied by the trial court on August 6, 2014, on the grounds that, first, plaintiffs had failed to make the requisite showing that common issues of law or fact exist with respect to this action and the unlawful detainers actions; two, summary judgment had already been granted in favor of Homesales in one of the unlawful detainer actions; and, three, plaintiffs had already twice litigated, and lost, the issue of whether defendant EMC wrongfully foreclosed on the subject property in 2007.
On September 10, 2014, following a contested hearing, the trial court sustained EMC’s demurrer to the original complaint with leave to amend only for the purpose of alleging additional facts to support their causes of action and not to add any additional causes of action. In accordance with this restriction, plaintiffs then filed the operative complaint, to wit, the first amended complaint, on September 24, 2014, asserting causes of action for violation of the UCL, declaratory relief and injunctive relief. With respect to the UCL cause of action, the first amended complaint repeated the allegations that, as part of their business practices, defendants fraudulently and knowingly procured, fraudulently prepared and recorded a false grant deed in violation of Penal Code section 115.5 et seq. The first amended complaint further alleges the “false Grant Deed contains irregularities as to the signatures, was not executed with personal knowledge, contains defective and false declarations, was not executed by properly authorized parties, was executed by a nationally-known illegal Robo-Signer, and was knowingly used in court by Homesales, Inc. to prosecute two Unlawful Detainer cases in this Alameda County Court.” And, finally, plaintiffs asked for a declaration of the parties’ respective rights regarding the legality of the grant deed and Homesales’ interest in the subject property, a court order prohibiting any eviction proceedings against them, and general damages in an amount deemed appropriate by the court.
On October 8, 2014, EMC filed a demurrer to the first amended complaint, which was heard November 12, 2014. Following this hearing, the trial court issued an order sustaining the demurrer, this time without leave to amend, and judgment of dismissal was subsequently entered in EMC’s favor. Plaintiffs’ timely notice of appeal followed.
DISCUSSION
Plaintiffs’ challenge to the judgment following the order sustaining EMC’s demurrer to the first amended complaint without leave to amend is reviewed according to well-established legal rules. Specifically, an order sustaining a demurrer is reviewed de novo. We “ ‘treat the demurrer as admitting all material facts properly pleaded, 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.] And when it 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.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318. See also People ex rel. Gallegos v. Pacific Lumber Co. (2008) 158 Cal.App.4th 950, 957.)
Here, the trial court sustained EMC’s demurrer after finding plaintiffs lacked standing to pursue a UCL claim. According to the trial court, in light of plaintiffs’ concession that they lost title to the subject property in 2007, they cannot allege having lost any money or property as a result of the alleged unfair business practice -- to wit, the “robo-signing” of the grant deed when Homesales acquired the subject property from EMC in 2013. The trial court further pointed out that the only remedy sought by plaintiffs with respect to the first cause of action is “general damages,” which is not an available remedy under the UCL. And finally, the trial court found that, because the second and third causes of action are predicated on the same insufficient allegations set forth with respect to the UCL cause of action, plaintiffs have likewise failed to state a valid cause of action for declaratory or injunctive relief. We agree.
Business and Professions Code, section 17200 defines unfair competition to include “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266-1267.) “In order to give substance to this prohibition, a UCL action ‘ “ ‘borrows’ violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices . . . .” ’ [Citation.]” (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1590.) And when a violation is established, the UCL authorizes the court to “make such orders or judgments . . . as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition . . . or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (Bus. &Prof. Code,§ 17203.)
Here, as the trial court recognized, plaintiffs’ UCL claim fails to state facts sufficient to constitute a cause of action. Under Business and Professions Code section 17204, a private plaintiff may bring a UCL action only if the private plaintiff “has suffered injury in fact and has lost money or property as a result of the unfair competition.”[4] Yet in the first amended complaint, the only allegation with respect to the UCL cause of action relating to any purported injury or loss sustained by plaintiffs is this: “As a direct and proximate result of the unfair business practices of the above specified Defendants and each of them, as alleged herein, Plaintiffs have incurred damages in that they have been subject to an eviction case against them and are threatened with a lockout.” Yet, as the trial court recognized, there are no allegations in the firstamended complaint that plaintiffs have suffered injury in fact or lost money or property as a result of the unfair business practice(s) they have alleged – to wit, the recording of a forged or fraudulent grant deed.
In particular, even recognizing that plaintiffs at one time had a property interest in the subject property, this interest was undeniably extinguished in 2007, long before EMC allegedly engaged in the unlawful practice of robo-signing. Plaintiffs offer no explanation, much less allegation in their complaint, as to how they have sustained any actual injury or harm as a result of the recording of a grant deed executed by other parties in 2013, several years after their own interest in the property was forfeited.
Thus, while it may be true that “injury in fact is not a substantial or insurmountable hurdle,” and “it suffices . . . to ‘ “ ‘allege[] some specific, ‘identifiable trifle’ of injury’ ” ’ (Kwikset Corp. v. Superior Court (2011)51 Cal.4th 310, 324), in this case, even this low hurdle has not been overcome. As the California Supreme Court explains, the language “as a result of” in Business and Professions Code section 17204 means that, to pursue a UCL claim, a private plaintiff must demonstrate actual reliance on the alleged fraudulent record: “[T]here is no doubt that reliance is the causal mechanism of fraud. [Citation.] Additionally, because it is clear that the overriding purpose of Proposition 64 was to impose limits on private enforcement actions under the UCL, we must construe the phrase ‘as a result of’ in light of this intention to limit such actions. [Citation.] Therefore, we conclude that this language imposes an actual reliance requirement on plaintiffs prosecuting a private enforcement action under the UCL’s fraud prong.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 326; see also Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1108 [justifiable reliance, a necessary element of fraud, exists “when the misrepresentation . . . was an immediate cause of the plaintiff's conduct which alters his legal relations, and when without such misrepresentation . . . he would not, in all reasonable probability, have entered into the contract or other transaction”].) Here, even aside from plaintiffs’ failure to allege injury in fact, there are no allegations that plaintiffsreliedon the grant deed they claim to be fraudulent and false, or that this allegedly fraudulent and false instrument causedthem to part with any money or property.
Thus, in the absence of any facts suggesting that plaintiffs have “suffered injury in fact and has lost money or property as a result of [EMC’s] unfair competition” (Bus. & Prof. Code, § 17204), the trial court’s ruling to sustain the demurrer to plaintiffs’ UCL cause of action was appropriate. (Peterson v. Cellco Partnership, supra, 164 Cal.App.4th at p. 1590 [to survive a demurrer, “[a] private plaintiff must make a twofold showing: he or she must demonstrate injury in fact and a loss of money or property caused by unfair competition”].)[5]
In so holding, we note that, because plaintiffs’ second and third causes of action for declaratory and injunctive relief are predicated on the same set of insufficient facts as the UCL cause of action, the trial court was further justified in sustaining the demurrer to those remaining causes of action.[6]As the trial court appropriately found, declaratory relief requires a plaintiff to allege facts demonstrating the existence of a “actual and present controversy” between the parties. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80.) Here, however, given plaintiffs’ concession that they have not had a title interest in the subject property since 2007, they cannot state a claim against defendants based on their independent execution of the grant deed in 2013.
On appeal, plaintiffs make little effort to counter the trial court’s findings that they have failed to assert sufficient facts to state a valid cause of action based on EMC’s allegedly unfair business practice(s). Rather, disregarding thetrial court’s express finding of lack of standing, plaintiffs insist the demurrer was erroneously sustained on res judicata grounds, referencing their unsuccessful appeal of a 2007 trial court order affirming the legality of EMC’s foreclosure action against them. Plaintiffs then fall back on the broad argument that they “should have been allowed to file an amended complaint because surely the law anticipates that if an individual or business entity creates and records a false and fraudulent Grant Deed and then records it, someone will be injured in some way by that action. When Robo-Signers prepared, signed and recorded these false documents affecting real property then residents living in those properties may suffer damages (for example, emotional distress, physical illness, costs associated with defending against an eviction case, costs of relocation, etc.).”
However, as the case law discussed above makes clear, plaintiffs’ argument does not suffice to overcome the judgment of dismissal. Putting aside whether the trial court made an implied finding of “res judicata”,it is plaintiffs’ failure to allege facts sufficient to state a cause of action under the UCL that, ultimately, is fatal to their case. As our Supreme Court explains, “injury in fact is ‘an invasion of a legally protected interest which is (a) concrete and particularized, [citations]; and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical,’ ” [citation].’ [Citations.] ‘Particularized’ in this context means simply that ‘the injury must affect the plaintiff in a personal and individual way.’ [Citation.]” (Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at pp. 322-323.) Plaintiffs’ broad argument that residents, like themselves, “living in . . . properties [with robo-signed title documents] may suffer damage,” does not meet this standard.
Nor do plaintiffs’ arguments meet the standard for demonstrating an abuse of discretion by the trial court in denying themyet another opportunity to amend the operative complaint. As explained above, when determining whether the trial court abused its discretion by sustaining a demurrer without leave to amend, “[t]he burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Further, “where the nature of the plaintiff's claim is clear, and under substantive law no liability exists, a court should deny leave to amend because no amendment could change the result.” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.)
These rules defeat plaintiffs’ challenge to the trial court’s refusal to authorize further amendment. Plaintiffs’broad and conclusory statements, mentioned above,that “residents [like themselves] . . . may suffer damages” when legal instruments are robo-signeddo not meet their burden of proving there is a reasonable possibility the defects in the first amended complaint could be cured by another round of amendment. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459.) Accordingly, the court’s ruling was proper.
Finally, because we agree with the trial court that plaintiffs have not stated, and cannot state, sufficient facts to constitute a cause of action for any alleged unlawful business practice of EMC, we find no basis upon which to reverse the trial court’s independent ruling to deny plaintiffs’ motion to consolidate this lawsuit with the two unlawful detainer cases filed against them by defendant Homesales. Quite simply, putting aside the issue of whether these unlawful detainer lawsuits have merit, the fact remains there is no valid cause in this action with which to consolidate them. (See Folgelstrom v. Lamps Plus, Inc. (2011) 195 Cal.App.4th 986, 994 [the trial court properly sustained the retailer’s demurrer to the customer’s UCL claim given the customer’s failure to allege that he suffered an economic injury as a result of the allegedly unfair business practice].)Accordingly, the judgment must stand.
DISPOSITION
The judgment of dismissal is affirmed. Defendants are to recover their costs on appeal.


_________________________
Jenkins, J.


We concur:


_________________________
McGuiness, P. J.


_________________________
Siggins, J.


Lonnie Ratliff, Jr., et al. v. EMC Mortgage, LLC, et al.,A144123




Publication courtesy of California pro bono lawyer directory.
Analysis and review provided by Chula Vista Property line attorney.
San Diego Case Information provided by www.fearnotlaw.com



[1] Plaintiffs are proceeding in propria persona on appeal.
[2] The subject property includes both the rear unit and front unit of 2304 9th Avenue in Oakland.
[3] Penal Code section 115.5 provides as follows:
“(a) Every person who files any false or forged document or instrument with the county recorder which affects title to, places an encumbrance on, or places an interest secured by a mortgage or deed of trust on, real property consisting of a single-family residence containing not more than four dwelling units, with knowledge that the document is false or forged, is punishable, in addition to any other punishment, by a fine not exceeding seventy-five thousand dollars ($75,000).
“(b) Every person who makes a false sworn statement to a notary public, with knowledge that the statement is false, to induce the notary public to perform an improper notarial act on an instrument or document affecting title to, or placing an encumbrance on, real property consisting of a single-family residence containing not more than four dwelling units is guilty of a felony.”
[4] As explained by our colleagues in the Fourth District, Division Three: “Section 17204 of the UCL governs a plaintiff’s standing to assert a UCL claim. (§§ 17204, 17203.) Prior to the enactment of Proposition 64 in November 2004, the UCL ‘did not predicate standing ‘on a showing of injury or damage” ’ and was thus ‘subject to abuse by attorneys who used it as the basis for legal “ ‘shakedown’ ” schemes’ and frivolous lawsuits. [Citations.] Toaddress this problem, Proposition 64 amended section 17204 to accord standing only to certain specified public officials and to any person who ‘ “ ‘has suffered injury in fact and has lost money or property as a result of such unfair competition.’ ” ’ ([Citation]; see§ 17204.) Thus, in the aftermath of Proposition 64, only plaintiffs who have suffered actual damage may pursue a private UCL action.” (Peterson v. Cellco Partnership, supra,164 Cal.App.4th at p. 1590.)
[5] We hasten to note one additional pleading deficiency. Aside from plaintiffs’ failure to meet their burden of alleging any unfair or fraudulent business practice by EMC that caused them to suffer a cognizable injury, there is no actual relief to which plaintiffs would be entitled in this case. As stated above, a private UCL plaintiff is only entitled to recover that which “may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (§ 17203.) Here, however, plaintiffs seek only “general damages,” which are not recoverable under the UCL. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150 [“While [private plaintiffs] can bring suit under the act to enjoin a business from engaging in unfair competition, it is well established that individuals may not recover damages”].) Thus, because the only relief sought by plaintiffs in the first amended complaint – to wit, general damages-- is unavailable to a private plaintiff in a UCL action, the trial court had further grounds for sustaining the demurrer.
[6] As EMC notes, injunctive relief is a remedy, not an independent cause of action. (Shell Oil Co. v. Richter (1942) 52 Cal.App.2d 164; County of Del Norte v. City of Crescent City (1999) 71 Cal.App.4th 965, 973.)