DONALD RAY HOPKINS, Plaintiff and Appellant,
v.
HOMEWARD RESIDENTIAL, INC., et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.115
MILLER, J.
Plaintiff Donald Ray Hopkins (Hopkins) appeals from judgments in favor of defendants Homeward Residential, Inc. (Homeward) and Citibank, N.A. (Citi) following the trial court’s orders sustaining defendants’ demurrers to Hopkins’s fifth amended complaint without leave to amend.[1]
Hopkins took out a loan secured by a deed of trust on his home. Homeward serviced the loan for the lender, and Hopkins made loan payments to Homeward through a checking account he had with Citi. Hopkins sued Homeward, Citi, and the lender, alleging they conspired “to engage [in] an illegal hard money lending and foreclosure scheme.” Essentially, he claimed that he always made or tried to make timely loan payments, but starting in July 2010, defendants conspired to misplace or misallocate his loan payments. This allegedly resulted in Homeward wrongly charging Hopkins late fees, which eventually caused him to stop making loan payments.
On appeal, Hopkins contends he alleged facts showing Homeward and Citi owed him a duty of care to support his negligence claims. He argues he stated a claim of fraudulent concealment of a material fact, and he pleaded all the elements for claims of elder abuse and unfair competition. Hopkins also argues he was excused from continuing to make loan payments, and, therefore, the trial court erred in finding that he was the cause of his own loss.
We conclude Hopkins has alleged sufficient facts to state claims of negligence and unfair competition against Homeward and Citi, but the trial court properly sustained defendants’ demurrers to the remaining claims. Accordingly, we affirm in part and reverse in part.[2]
FACTUAL AND PROCEDURAL BACKGROUND
A. Hopkins Takes Out a Loan in 2006 and Stops Making Payments in 2011
On or about October 24, 2006, Hopkins borrowed $815,000 from American Brokers Conduit (ABC),[3] secured by a first deed of trust on his residence in Oakland (Oakland house). Hopkins made payments on the loan “via electronic checks” from his checking account with Citi. According to Hopkins, he made all payments until April 2011, when he stopped making payments on the loan.
On June 20, 2011, a “Notice of Default and Election to Sell Under Deed of Trust” regarding the Oakland house was recorded at the Alameda County Recorder’s Office.
B. Hopkins Commences This Lawsuit in 2011
On June 17, 2011, Hopkins filed an original verified complaint against American Home Mortgage Servicing, Inc. (AHMS), which is now known as Homeward,[4] and Citi. Hopkins alleged that, “[d]espite plaintiff making timely payments on the Loan, defendants AHMS and ABC declared the Loan in default, initiated collection activities against plaintiff Hopkins, defamed his otherwise impeccable credit and initiated foreclosure.” After many demurrers, motions to amend, amended complaints, and two trips to federal district court, the trial court sustained defendants’ demurrers to Hopkins’s fourth amended complaint and gave him leave to file another amended complaint.
C. Hopkins Files the Operative Complaint in 2014
On July 16, 2014, Hopkins filed his fifth amended complaint, the operative pleading. As relevant to this appeal, he asserted the following claims: negligence against Homeward (fifth cause of action)[5] and Citi (sixth cause of action), slander of title against all defendants (seventh cause of action), fraud against Citi (eighth cause of action) and Homeward (ninth cause of action), financial elder abuse against all defendants (tenth cause of action), and unfair competition against all defendants (eleventh cause of action). Hopkins attached exhibits to his fifth amended complaint, including the loan agreement, a “Customer Account Activity Statement” from Homeward showing its record of Hopkins’s payment history, and monthly account statements Hopkins received from Citi for July through October 2010.
Hopkins alleged he “made all payments in a timely fashion according to the terms of the [loan agreement] (or at least tried to do so and if not was intentionally thwarted by each and every defendant) through and until April 2011, when plaintiff stopped making payments because defendants, and each of them, had obviously formed a conspiracy to foreclose upon the home and flip-it on the real estate market for a windfall profit.”
More specifically, Hopkins alleged that, starting in July 2010, Homeward contacted Citi “and placed a stop order on plaintiff Hopkins[‘s] (timely) July through October 2010 electronic check payments—all without any party defendant ever informing plaintiff Hopkins that they had done so, or telling him why or where the money went after it left plaintiff’s Citibank account.” Hopkins continued, “Obviously, defendant Citibank, or Citibank officials, secreted Don Hopkins'[s] mortgage payment monies away for itself or themselves, somewhere.”[6] As to Citi, he alleged it “implicated itself in a conspiracy against plaintiff Hopkins with defendants ABC and Homeward by, inter alia, agreeing to stop payment of plaintiff’s July 2010 mortgage payment, . . . thereby making the payment late and setting-off a crescendo of alleged late payments and fees on plaintiff’s ABC/Homeward monthly mortgage payment account.”
He further alleged: “Each month, Mr. Hopkins would get a letter from defendant Homeward, saying that the payments were not received and threatening various actions against him. Every month Don Hopkins would go to the offices of defendant Citibank [and] show a bank officer the letter from Homeward. Every month the Citibank officer would review their records and assured Mr. Hopkins that the payments had been sent to Homeward and duly recorded. Don Hopkins relied on these assurances made by defendant Citibank. After about seven months, . . . Mr. Hopkins began receiving calls from Realtors saying his property was on various `default lists.’ Letters to defendant Homeward were responded to with various explanations as to why the payments had not been sufficient—none of which explanations ever made sense, as plaintiff had made every single payment in full, and on time.”
Hopkins alleged that Homeward charged a series of illegal late fees and penalties and imposed “`forced’ insurance,” and that around March 2011, his “account was so deeply embroiled in the fraudulent schemes of each and every defendant that further payments by plaintiff became not only futile, but excused as a matter of law, equity and simple common sense.” He alleged that comparing his checking account statements from Citi with Homeward’s record of his loan payments “reveals the disparity between the two—and the fraud.”
D. Defendants File Demurrers to the Fifth Amended Complaint
Homeward and Citi demurred, and Citi filed a motion to strike. Citi and Homeward asked the trial court to take judicial notice of the deed of trust recorded in relation to the loan in October 2006 and the notice of default recorded in June 2011. Citi also asked the court to take judicial notice of Hopkins’s fourth amended complaint. The trial court granted defendants’ requests for judicial notice.
Citi relies on “Citibank Check Image Delivery” documents
Citi argued the negligence claim failed because Hopkins failed to allege facts demonstrating Citi owed him a legal duty. It further argued that an exhibit attached to his fourth amended complaint (labeled “Citibank Check Image Delivery”) showed that, contrary to Hopkins’s allegations, payments of $2,560.10 were paid to Homeward on July 21 and August 10, 2010, and payments of $2,560 were paid September 15, and October 7, 2010.[7] Finally, Citi claimed the allegations failed to show causation or damages because Hopkins admittedly stopped making payments on the loan as of April 2011.
As to the claim for slander of title, Citi argued the claim failed on many grounds: first, Citi had no interest in the loan and did not record the notice of default; second, publication of a nonjudicial foreclosure document is privileged; third, Hopkins could not allege falsity of the recording because he admittedly stopped making payments; and, fourth, Hopkins failed to allege third-party reliance or any damages.
As to the fraud claim, Citi maintained that Hopkins failed to allege any of the elements of the claim. According to Citi, Hopkins (1) failed to plead any actionable misrepresentation of material fact, (2) failed to plead Citi had knowledge of the falsity of any misrepresentation of fact, (3) failed to allege intent to defraud by Citi, (4) failed to allege justifiable reliance by Hopkins, and (5) failed to allege facts showing proximate damages.
Citi argued the elder abuse claim failed because Hopkins did not allege specific facts, as opposed to conclusions, to support the claim and, further, the exhibits attached to the fourth amended complaint showed Citi processed and delivered monthly checks to Homeward from July 2010 through March 2011, contradicting Hopkins’s allegations. It argued the claim for unfair competition failed because Hopkins could not allege damage and he failed to allege unlawful, fraudulent, or unfair activity with the requisite specificity.
Homeward relies on the “Customer Account Activity Statement”
Homeward made many arguments similar to Citi’s.[8] Homeward argued that its own record of Hopkins’s payment, the “Customer Account Activity Statement” (CAAS) attached to the fifth amended complaint, contradicted Hopkins’s “gratuitous assertions” that he made all loan payments. Instead, Homeward asserted, the CAAS “demonstrates that the last payment received by Homeward was received on March 9, 2011, which payment was applied to Plaintiff’s January, 2011 payment because Plaintiff was behind on his loan.”[9]
The CAAS attached to the fifth amended complaint showed payments recorded in Hopkins’s loan account from July 2008 to July 2011. It showed that all payments were made by the tenth of the month from July 2008 through June 2010.
Then, for July through October 2010, the CAAS showed timely payments received and then returned a few days later.[10] The CAAS did not indicate why the checks were returned. In July through September 2010, a second payment (after the first was returned) was entered, but no payment was recorded in October 2010. Late charges were assessed in July and October 2010. Thus, the CAAS (which Homeward relies on to show it did nothing wrong) is not consistent with the “Citibank Check Image Delivery” (which Citi relies on to show it did nothing wrong) In particular, the “Citibank Check Image Delivery” showed a payment to Homeward was made on October 7, 2010, but no corresponding payment was recorded in the CAAS, and Homeward assessed a late fee against Hopkins that month.[11]
E. The Trial Court Sustains the Demurrers Without Leave to Amend
On October 22, 2014, the trial court sustained the demurrers without leave to amend. The court ruled the negligence claims failed because Hopkins “has not yet alleged facts demonstrating that [either] defendant owed plaintiff a duty.”
The court ruled the claim for slander of title failed because Hopkins “has not alleged facts showing a tortious injury to his property resulting from unpublished, false, and malicious publication of disparaging statements regarding the title to property owned by plaintiff to plaintiff’s damage.”
The fraud claims failed because “after six opportunities to amend, plaintiff has failed to allege facts as opposed to conclusions showing specifically that [either] defendant should be liable for fraud.”
As to the claim for elder abuse, the court ruled, “The basis of plaintiff’s claim is that payments at issue were converted (in contradiction to the exhibits attached to plaintiff’s complaints)—and that is the reason that the notice of default was recorded. However, plaintiff also admits his decision to stop making payments before the notice of default was recorded. There are simply insufficient facts alleged showing that [either] defendant was responsible for the alleged conversion or responsible under a viable cause of action as a basis to state this claim.” With respect to Homeward, the court further found that the claim was barred by the applicable statute of limitations.
As to the claim of unfair competition, the court ruled Hopkins “did not establish standing, a predicate [to a] viable underlying claim showing [either] defendant’s alleged conduct was unfair or unlawful in support of this claim.”
DISCUSSION
A. Standard of Review
“We independently review the ruling on a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action. [Citation.] We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and matters of which judicial notice has been taken.” (Fremont Indemnity Co. v. Fremont General Corp.(2007) 148 Cal.App.4th 97, 111.) “We do not, however, assume the truth of contentions, deductions, or conclusions of fact or law.” (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) “We construe the pleading in a reasonable manner and read the allegations in context. [Citation.] We affirm the judgment if it is correct on any ground stated in the demurrer, regardless of the trial court’s stated reasons.” (Fremont Indemnity Co., supra, at p. 111.)
“As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) Under the truthful pleading doctrine, however, courts “will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed. [Citations.] Thus, a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless.” (Ibid.)
“If the trial court has sustained the demurrer, we determine whether the complaint states facts sufficient to state a cause of action. If the court sustained the demurrer without leave to amend, as here, we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect.” (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
With these standards in mind, we consider whether Hopkins has stated a cause of action against any defendant.
B. Fifth and Sixth Causes of Action: Negligence
The trial court ruled that the negligence claims against Homeward and Citi failed because Hopkins “has not yet alleged facts demonstrating that defendant owed plaintiff a duty.” Hopkins contends both Homeward and Citi owed him a duty of care under the facts alleged. This contention has merit.
1. Homeward[12]
Hopkins states the question on appeal is whether a loan servicer, such as Homeward, owes a borrower a duty of care in accounting for and handling loan payments. He argues the answer must be yes under our decision in Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872 (Jolley).
In Jolley, we acknowledged “`as a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.'” (Jolley, supra, 213 Cal.App.4th at p. 898.) But, we continued, “the no-duty rule is only a general rule.” (Id. at p. 901.) It does not mean a lender never owes a duty of care to a borrower. Instead, the question whether a lender owes such a duty requires the balancing of the “Biakanja factors” set forth in Biakanja v. Irving (1958) 49 Cal.2d 647, 650 (Biakanja). (Jolley, supra, 213 Cal.App.4th at p. 901.)[13]
Jolley involved a construction loan agreement, and the plaintiff-borrower alleged the lender failed to properly disburse construction funds. (Jolley, supra, 213 Cal.App.4th at p. 877.) We concluded there was a triable issue of material fact as to whether the defendant (the successor to the original lender) was liable for negligence, and reversed a summary adjudication in favor of the defendant. (Id. at p. 897.)
In Jolley, we noted, “[W]e deal with a construction loan, not a residential home loan where, save for possible loan servicing issues, the relationship ends when the loan is funded. By contrast, in a construction loan the relationship between lender and borrower is ongoing, in the sense that the parties are working together over a period of time, with disbursements made throughout the construction period, depending upon the state of progress towards completion. We see no reason why a negligent failure to fund a construction loan, or negligent delays in doing so, would not be subject to the same standard of care.” (Jolley, supra, 213 Cal.App.4th at p. 901, italics added.) Thus, we held the ongoing relationship involved in a construction loan may impose a duty of care owed to the borrower, and we suggested that, in the case of a residential home loan, the ongoing relationship of servicing the loan might also give rise to a duty of care.
While we only suggested the servicing of a home loan may impose a duty of care in Jolley, Division Three of our court decided the issue in Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941 (Alvarez). In Alvarez,homeowners sued their lender and its loan servicer alleging, “among other things, fraud and unfair business practices in the origination of plaintiffs’ residential mortgage loans, and negligence in the subsequent servicing of the loans, including negligent review of plaintiffs’ applications for loan modification.” (Id. at pp. 943-944, italics added.) They alleged the defendants breached their duty to exercise reasonable care by, among other things, “mishandling plaintiffs’ applications [for loan modification] by relying on incorrect information.” (Id. at p. 945, italics added.) The trial court sustained the defendants’ demurrer to the negligence claim, concluding they owed no duty of care to the homeowners. (Id. at p. 944.)
The Court of Appeal reversed. Considering the Biakanja factors, the appellate court concluded the plaintiffs stated a claim of negligence against the defendants: “Here, because defendants allegedly agreed to consider modification of the plaintiffs’ loans, the Biakanja factors clearly weigh in favor of a duty. The transaction was intended to affect the plaintiffs and it was entirely foreseeable that failing to timely and carefully process the loan modification applications could result in significant harm to the applicants. Plaintiffs allege that the mishandling of their applications `caus[ed] them to lose title to their home, deterrence from seeking other remedies to address their default and/or unaffordable mortgage payments, damage to their credit, additional income tax liability, costs and expenses incurred to prevent or fight foreclosure, and other damages.’ . . . `Although there was no guarantee the modification would be granted had the loan been properly processed, the mishandling of the documents deprived Plaintiff of the possibility of obtaining the requested relief.’ [Citation.] Should plaintiffs fail to prove that they would have obtained a loan modification absent defendants’ negligence, damages will be affected accordingly, but not necessarily eliminated.” (Alvarez, supra, 228 Cal.App.4th at pp. 948-949.)
The Alvarez court explained why a duty of care should be imposed on the servicer of the loan in particular. “`[B]orrowers are captive, with no choice of servicer, little information, and virtually no bargaining power. Servicing rights are bought and sold without input or approval by the borrower. Borrowers cannot pick their servicers or fire them for poor performance. The power to hire and fire is an important constraint on opportunism and shoddy work in most business relationships. But in the absence of this constraint, servicers may actually have positive incentives to misinform and under-inform borrowers. Providing limited and low-quality information not only allows servicers to save money on customer service, but increases the chances they will be able to collect late fees and other penalties from confused borrowers.'” (Alvarez, supra, 228 Cal.App.4th at p. 949.) The court reasoned, “The borrower’s lack of bargaining power, coupled with conflicts of interest that exist in the modern loan servicing industry, provide a moral imperative that those with the controlling hand be required to exercise reasonable care in their dealings with borrowers seeking a loan modification.” (Ibid.)
Following Jolley and Alvarez, the Sixth District in Daniels concluded that homeowners stated a claim of negligence where they alleged the loan servicer, among other things, did “not accurately account[] for their trial payments.” (Daniels, supra, 246 Cal.App.4th at p. 1184.) The homeowners also alleged they “attempted to resume making their regular, higher monthly payments, but [the loan servicer] refused to accept those payments.” (Id. at p. 1159.) The Daniels court held, “a loan servicer may owe a duty of care to a borrower through application of the Biakanja factors, even though its involvement in the loan does not exceed its conventional role.” (Id. at p. 1158, fn. omitted.)
Jolley, Alvarez, and Daniels all support the conclusion Hopkins has adequately alleged Homeward owed him a duty of care in processing, and accounting for, his loan payments. Consideration of the Biakanja factors leads us to the same conclusion. The transaction of accepting and accounting for loan payments obviously affected Hopkins. Homeward’s alleged failure to account for payments received and its alleged instruction to Citi to stop payments of Hopkins’s checks resulted in unwarranted late charges, a harm to Hopkins. The injury of unwarranted late fees is certain. There is a close connection between Homeward’s alleged conduct and the harm since, according to Hopkins, his payments would have been timely and no late fees would have been imposed without Homeward’s alleged breach. Instructing Citi to stop payment on Hopkins’s timely payments and failing to account for Hopkins’s payments is morally blameworthy conduct. Finally, the policy of preventing future harm favors imposing a duty on loan servicers not to mishandle and misallocate payments received from borrowers. The Alvarez court observed that the economics and incentives of the loan servicing industry may encourage loan servicers to misinform borrowers to “`increase[] the chances they will be able to collect late fees and other penalties from confused borrowers.'” (Alvarez, supra, 228 Cal.App.4th at p. 949.) The same incentive structure could result in loan servicers keeping sloppy, inaccurate records of loan payments in order to impose unwarranted late fees. The Alvarez court concluded, “The borrower’s lack of bargaining power, coupled with conflicts of interest that exist in the modern loan servicing industry, provide a moral imperative that those with the controlling hand be required to exercise reasonable care in their dealings with borrowers seeking a loan modification.” (Ibid.) We believe loan servicers should be required to exercise reasonable care in their dealings with borrowers who make timely payments as well.[14]
Homeward maintains that even if a duty of care exists, Hopkins has not alleged facts demonstrating it breached that duty. Homeward argues that Hopkins’s allegation that Homeward misplaced or misallocated his loan payments is contradicted by the CAAS, which Hopkins attached to the fifth amended complaint. Homeward asserts, “The CAAS demonstrates that Homeward received and credited all of Appellant’s payments and demonstrates that Appellant made his last payment on March 9, 2011, which payment was applied retroactively, to January, 2011, because Appellant was past due for January 1, 2011 payment.” We disagree.
Hopkins attached the CAAS to his fifth amended complaint presumably because it showed entries for “return check” on July 7, August 5, September 7, and October 6, 2010. These entries for “return check” support his allegation that Homeward contacted Citi “and placed a stop order on plaintiff Hopkins[‘s] (timely) July through October 2010 electronic check payments” without telling Hopkins.
Hopkins alleged he made or tried to make timely payments every month until he stopped making payments in April 2011. He alleged he was improperly charged late fees, sent overdue notices, and eventually threatened with foreclosure. These allegations are not contradicted by the CAAS. The CAAS showed late fees were charged on July 16 and October 18, 2010, and on February 16, April 18, and May 16, 2011, and further showed no credit for payments (i.e., missed payments) in October 2010 and February 2011. Accepting as true Hopkins’s allegation that he made or tried to make timely loan payments every month until April 2011, the CAAS is consistent with his further allegations that Homeward wrongly imposed late fees and failed to account for his payments. Moreover, Hopkins alleged a “disparity” between his checking account statements and Homeward’s accounting, and the exhibits attached to the fifth amended complaint bear this out. Hopkins’s monthly account statement from Citi for October 2010 showed a payment to Homeward of $2,560, but the CAAS showed no credited payment for October 2010. Homeward’s argument fails because the CAAS does not contradict Hopkins’s allegations.[15]
2. Citi
The trial court ruled that Hopkins failed to state a claim of negligence against Citi because Hopkins “has not yet alleged facts demonstrating that defendant owed plaintiff a duty.” As Hopkins pointed out in his opposition to Citi’s demurrer, however, “[i]t is well established that a bank has `a duty to act with reasonable care in its transactions with its depositors.'” (Chazen v. Centennial Bank (1998) 61 Cal.App.4th 532, 543.) Hopkins alleged he was a customer with a checking account at Citi. As such, he was owed a duty of care by Citi.
Citi argues that, even if it owed a duty of care, there has been no breach of that duty. Citi asserts it “dutifully complied with [Hopkins’s] check requests, as it issued monthly checks from July 2010 through October 2010, which were debited from [his] Citi checking account and were credited to the Subject Loan.” Citi, however, does not address the allegations that Hopkins timely instructed Citi to make the July 2010 and subsequent payments, but that Citi permitted Homeward to stop payment without telling Hopkins. Hopkins alleged Citi’s conduct caused his July payment to be late and “set[] off a crescendo of alleged late payments and fees.”[16] We conclude Hopkins has sufficiently alleged a breach of duty by Citi (in stopping payments without telling Hopkins) and resulting harm (late payments and late fees).
Citi argues that Hopkins cannot allege fact to show it caused him damage because he admittedly stopped making payments on his loan in April 2011. This argument, however, ignores the harm of allegedly wrongly imposed late fees and misallocated payments, which preceded Hopkins’s decision to stop making payments on his loan.
3. Conclusion
Citi describes Hopkins’s allegations as “fantastical” and Homeward characterizes them as “gratuitous,” but we must accept the allegations as true, no matter how unlikely or improbable they may be and without regard to Hopkins’s ability to prove them. (Bock v. Hansen (2014) 225 Cal.App.4th 215, 220.) For the reasons explained above, we conclude Hopkins alleged facts sufficient to demonstrate Homeward and Citi owed him a duty of care, and he sufficiently alleged harm in the form of wrongly imposed late fees and misallocated payments.[17] Therefore, the trial court erred in sustaining demurrers to the fifth and sixth causes of action for negligence.
C. Seventh Cause of Action: Slander of Title
The trial court ruled the claim for slander of title failed because Hopkins “has not alleged facts showing a tortious injury to his property resulting from unpublished, false, and malicious publication of disparaging statements regarding the title to property owned by plaintiff to plaintiff’s damage.” Hopkins does not specifically challenge this ruling, and we see no error. (See Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 343 [recording a notice of default is a privileged communication unless done with malice].)
D. Eighth and Ninth Causes of Action: Fraud
The trial court concluded the fraud claims failed because “after six opportunities to amend, plaintiff has failed to allege facts as opposed to conclusions showing specifically that [either] defendant should be liable for fraud.” Hopkins argues his fifth amended complaint stated a cause of action for fraudulent concealment of a material fact against Citi.
Hopkins relies on Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173, in which our high court set forth the elements of fraud: “`”The elements of fraud, which gives rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or `scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.”‘” (Italics added.)
“Fraud allegations `involve a serious attack on character’ and therefore are pleaded with specificity. [Citation.] General and conclusory allegations are insufficient. [Citation.] The particularity requirement demands that a plaintiff plead facts which `”`show how, when, where, to whom, and by what means the representations were tendered.'”‘ [Citation.] Further, when a plaintiff asserts fraud against a corporation, 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.’ [Citation.] Less specificity in pleading fraud is required `when “it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy. . . .”‘” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)
In support of his claim of fraud against Citi, Hopkins alleged that from May 2011 “to the present time,” two employees of Citi, David McGuiness and John Oushana, “repeatedly engaged [in] evasive conduct in successfully avoiding delivering to plaintiff Don Hopkins a copy of the July 2010 electronic check, e.g., the first check that . . . Homeward stated `bounced’ and based upon which . . . Homeward initiated foreclosure and filed a Notice of Default.” He described the Citi employees’ conduct as “stonewalling” and alleged they “hop[ed] that Mr. Hopkins would simply fall victim to the scam and go away.” The fraud claim fails because it lacks the required element of justifiable reliance. Hopkins claims defendants engaged in misconduct in July to October 2010, and he stopped making payments on his loan in April 2011 allegedly because of defendants’ misconduct. The “stonewalling,” however, allegedly began in May 2011, after Hopkins stopped making payments on his loan. Given the sequence of alleged events, it cannot be said that he justifiably relied on these employees’ conduct to his detriment.
Hopkins’s remaining allegations in support of his fraud claims are boilerplate language with no facts specific to defendants. As to Citi, Hopkins alleged “Defendant Citibank’s above-stated conduct [presumably referring to the two employees’ conduct] and concealments and misrepresentations were misleading, false and fraudulent. At the time said defendant engaged [in] the conduct and made the misrepresentations, said defendants willfully and/or negligently concealed and/or misrepresented the true facts, all for the purpose of defrauding and deceiving plaintiff and in violation of law and public policy.” He further alleged, “The aforementioned conduct of each and every defendant was intentional misconduct, misrepresentation, deceit or concealment of material fact(s) known to said defendant with the intention on the part of said defendant to deprive plaintiff of property or legal rights, or otherwise causing injury. . . .” We agree with the trial court that these generic allegations of deception and intent to defraud are insufficient to state a cause of action for fraud.
As to Homeward, Hopkins makes no argument regarding his fraud claim against the loan servicer in his opening brief. As a result, he has forfeited any challenge to the trial court’s ruling on this claim. (Koval v. Pacific Bell Telephone Co. (2014) 232 Cal.App.4th 1050, 1063, fn. 12 [“An appellant’s failure to raise an argument in its opening brief waives the issue on appeal.”].)
Based on the foregoing, we conclude the trial court properly sustained the eighth and ninth causes of action for fraud.
E. Tenth Cause of Action: Elder Abuse
The trial court ruled, “There are simply insufficient facts alleged showing that [either] defendant was responsible for the alleged conversion or responsible under a viable cause of action as a basis to state this claim [for elder abuse].” Hopkins argues on appeal that the trial court erred because (1) Hopkins was excused from continuing to make loan payments (and therefore he has alleged causation and damages), and (2) the claim is not barred by the statute of limitations. These arguments respond to some of the arguments made by defendants in support of their demurrers. However, Hopkins does not address the fundamental issue that he failed to allege sufficient facts, as opposed to legal conclusions, to support this claim.
Under Welfare and Institutions Code section 15610.30, “[f]inancial abuse” of an elder occurs when a person or entity “[t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both” or “[a]ssists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.” (Welf. & Inst. Code, § 15610.30, subd. (a)(1) & (2), italics added.)
Citi argues, as it did below, that a claim of financial elder abuse must be alleged with particularity because the claim involves fraud. We also observe that, for purposes of the statute, taking property “for a wrongful use,” means the defendant breached a contract or engaged in “other improper conduct.” (Paslay v. State Farm General Insurance Company (2016) 248 Cal.App.4th 639, 657.)
We agree with Citi that Hopkins has not alleged sufficient facts to state a claim of elder abuse. He alleged against all defendants: “Each and every defendant took, secreted, appropriated and retained plaintiff’s real or personal property, his home equity, via a deceitful loan and deed of trust secured on plaintiff’s home. Each and every defendant took said property for wrongful use and with intent to defraud.” “Defendants, and each of them, knew or should have known that plaintiff had a right to retain his home equity and that the hard money lending and foreclosure operation was a sham. Each and every defendant acted in bad faith pursuant to W.I.C. § 15610.30(b)(2).” “Each and every defendants’ actions were fraudulent, repeated and were committed with the willful intention and design to injure plaintiff and his property rights.” Hopkins alleged he was a senior and disabled, and “Each and every defendant knew or should have known that plaintiff is disabled and elderly. . . .”
These boilerplate allegations contain no facts regarding wrongful use or intent to defraud by either defendant. Moreover, to the extent Hopkins made allegations beyond parroting the language of the statute, he referred to a “deceitful loan and deed of trust.” But neither Homeward nor Citi is alleged to be a party to the loan agreement. We conclude Hopkins failed to state a claim of elder abuse, and the trial court properly sustained defendants’ demurrers to the tenth of action.
F. Eleventh Cause of Action: Unfair Competition
The trial court ruled that the claim of unfair competition failed because Hopkins “did not establish standing, a predicate [to a] viable underlying claim showing [either] defendant’s alleged conduct was unfair or unlawful in support of this claim.”
Private standing to bring a claim under the unfair competition law (UCL) “`is limited to any “person who has suffered injury in fact and has lost money or property” as a result of unfair competition.'” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 320-321, quoting Bus. & Prof. Code, § 17204.) Here, the trial court found that Hopkins lacked standing, presumably accepting defendants’ argument that Hopkins could not allege damages because he admittedly stopped making payments on the loan in April 2011. But, as we explained in our discussion of negligence, Hopkins sufficiently alleged harm in the form of wrongly imposed late fees and misallocated payments, separate from whether his own action was the cause of the recording of default.
The question remains whether Hopkins alleged sufficient facts to support his claim.
The UCL defines “unfair competition” to “include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. . . .” (Bus. & Prof. Code, § 17200.) “`Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are [1] unlawful, or [2] unfair, or [3] fraudulent. “In other words, a practice is prohibited as `unfair’ or `deceptive’ even if not `unlawful’ and vice versa.”‘” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)
In the fifth amended complaint, Hopkins relied on “the above-stated tortious conduct,” incorporating all prior allegations, to support his claim under the unfair competition law (UCL). He contends his allegations satisfy “the `deceptive’ conduct prong of the UCL,” i.e., the “fraudulent” variety of unfair competition. He also argues defendants’ breaches of their duties of care constitutes an unfair business practice under the UCL.
Our conclusion that Hopkins has not stated a claim of fraud is not dispositive. “The fraudulent business practice prong of the UCL has been understood to be distinct from common law fraud. `A [common law] fraudulent deception must be actually false, known to be false by the perpetrator and reasonably relied upon by a victim who incurs damages. None of these elements are required to state a claim for injunctive relief’ under the UCL. [Citations.] This distinction reflects the UCL’s focus on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting the general public against unscrupulous business practices.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 312.)
It has been held that misleading a borrower about the status of loan modification or pending foreclosure is fraudulent or unfair conduct for purposes of the UCL. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 85 [“It is fraudulent or unfair for a lender to proceed with foreclosure after informing a borrower he or she has been approved for a loan modification, or telling the borrower he or she will be contacted about other options and the borrower’s home will not be foreclosed on in the meantime. . . . It is fraudulent or unfair for a lender to misrepresent the status or date of a foreclosure sale.”].) Here, Hopkins alleged Citi told him his payments to Homeward were being made every month, but Homeward improperly charged late fees, recorded missed payments, and sent overdue notices. Thus, under Hopkins’s allegations, either Citi misled him about payments made to Homeward, or Homeward assessed late fees that were not warranted and misallocated payments. We conclude these are sufficient allegations of fraudulent or unfair conduct for purposes of the UCL. Accordingly, the trial court erred in sustaining defendants’ demurrers to the eleventh cause of action.
DISPOSITION
The judgments are reversed with respect to the fifth cause of action (negligence against Homeward), the sixth cause of action (negligence against Citi), and the eleventh cause of action (unfair competition against both defendants). The judgments are affirmed in all other respects. The parties shall bear their own costs on appeal.
Richman, Acting P.J. and Stewart, J., concurs.
[1] Hopkins filed a notice of appeal on December 17, 2014, although judgments in favor of Homeward and Citi were not filed until January 27, 2015. We elect to treat the premature notice of appeal “as filed immediately after entry of judgment.” (Cal. Rules of Court, rule 8.104(d)(2); see Cabral v. Soares (2007) 157 Cal.App.4th 1234, 1239, fn. 2.)
[2] At oral argument in July 2017, we were told, for the first time, that Hopkins had filed for bankruptcy. We continued oral argument and asked the parties for supplemental briefing on what effect Hopkins’s bankruptcy case has on this appeal. In response, the parties agree the appeal is not subject to an automatic stay under 11 United States Code section 362. We agree with the parties. A bankruptcy stay only applies to actions against the debtor, so it does not apply in this case, where the debtor (Hopkins) initiated the lawsuit. (See Shah v. Glendale Federal Bank (1996) 44 Cal.App.4th 1371, 1375.)
In their supplemental briefing, Homeward and Citi take the position that judicial estoppel applies to this appeal because Hopkins did not list the current lawsuit as an asset in his bankruptcy schedules and, where he did list the lawsuit, he did not give it a value. Therefore, they argue, Hopkins has represented to the bankruptcy court that this lawsuit has no value, and he should be barred from continuing to claim in this court that the lawsuit does have value. Hopkins responds, first, judicial estoppel does not apply and, second, even if it does, this court should not decide the issue on appeal. He is certainly correct on the second issue.
Judicial estoppel applies “when: (1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183, italics added.) “[N]ondisclosure in bankruptcy filings, standing alone, is insufficient to support the finding of bad faith intent necessary for the application of judicial estoppel.” (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1019; see also Kelsey v. Waste Management of Alameda County (1999) 76 Cal.App.4th 590, 598-600[evidence that plaintiff failed to list his claim against defendant in his bankruptcy proceedings was insufficient to establish defendant was entitled to summary judgment based on judicial estoppel].) Here, it is a question of fact whether Hopkins’s failure to identify the current lawsuit as an asset in his bankruptcy filings was the result of ignorance or mistake. (We note that Hopkins’s attorney told the court during September 19, 2017, oral argument that Hopkins had amended his bankruptcy filings so that the lawsuit was listed as an asset of unknown value.) This court is not in a position to resolve issues of fact. Accordingly, we do not consider whether judicial estoppel applies in this case. Defendants are free to raise the issue of judicial estoppel in the trial court.
[3] ABC was named a defendant in the operative complaint, but it is not a party to this appeal.
[4] For clarity and consistency, we will refer to this defendant as “Homeward.” We note that this defendant appeared in court as “AHMS” until at least October 2011, and in July 2012, identified itself as “Homeward Residential, Inc. f/k/a American Home Mortgage Servicing, Inc.”
[5] The first four causes of action were against ABC only and are not relevant to this appeal.
[6] Hopkins further alleged Citi failed to return funds to his account and falsified his monthly account statements so that it appeared the payments were made to Homeward, “thereby secreting and converting the money for itself.”
[7] Although Citi referred to an exhibit attached to the prior complaint, this exhibit (the “Citibank Check Image Delivery”) was also attached to the fifth amended complaint.
[8] In addition, Homeward argued the claim of slander of title failed because the recording of a notice of default would not cast doubt as to Hopkins’s ownership interest in the Oakland house, and the elder abuse claim failed because Homeward did not originate the underlying loan and because the claim was barred by the statute of limitations. Homeward also generally argued Hopkins failed to allege facts showing conduct by Homeward caused him damage.
[9] We observe that Homeward’s position that Hopkins was behind on his loan in March 2011 is inconsistent with Citi’s assertion that it delivered monthly checks to Homeward from July 2010 through March 2011. (And, of course, Homeward’s position conflicts with Hopkins’s allegation that he made timely payments until April 2011.)
[10] Specifically, on July 1, 2010, there is an entry for a payment of $2,560.10, but on July 7, 2010, there is an entry for “return check.” (Capitalization omitted.) On July 16, 2010, there is a late charge assessment of $128.01, and on July 20, 2010, another payment for $2,560.10 is recorded. Similarly, in August, September, and October, there are entries for payment on the first or second day of the month, followed by entries for “return check” a few days later. In August, after the entry for “return check,” a subsequent payment was recorded on August 9, 2010. In September, after the entry for “return check,” a payment was recorded on September 14, 2010. In October, however, a late charge was assessed on October 18, 2010, and there is no record of payment after the entry for a “return check.”
[11] Further, Hopkins’s monthly account statement from Citi for October 2010 (which was attached to the fifth amended complaint) showed a payment to Homeward of $2,560.
[12] At the outset, we reject Homeward’s position that Hopkins should be precluded from arguing the merits of his fifth amended complaint. Hopkins filed an untimely opposition to Homeward’s demurrer, and Homeward claims that, as a result, the trial court refused to consider his papers and sustained its demurrer as unopposed. The court order sustaining Homeward’s demurrer describes the demurrer as “unopposed,” but also states that a tentative ruling was published and contested and the “matter was argued and submitted.” The trial court considered the legal arguments raised in Homeward’s demurrer, heard oral argument, and then ruled on the legal merits of the demurrer. Under these circumstances, we do not believe Hopkins has forfeited all challenges to the court’s ruling. In any event, “we may . . . consider new theories on appeal to challenge or justify the trial court’s rulings” because demurrers raise only questions of law. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1163 (Daniels).)
[13] “The Biakanja factors are six nonexhaustive factors: (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm.” (Jolley, supra, 213 Cal.App.4th at p. 899, citing Biakanja, supra, 49 Cal.2d at p. 650.)
[14] Homeward takes the position that loan servicers do not owe a legal duty to borrowers in connection with the general servicing of residential mortgage loans, citing many federal district court cases that generally state this rule. But all of the cases Homeward cites were decided without the benefit of Daniels, and all but one was decided before Alvarez. Suffice it to say we do not find these cases persuasive authority for Homeward’s position. We likewise are unpersuaded by Homeward’s attempts to distinguish Jolley and Alvarez on the facts. The same reasoning and application of the Biakanjafactors that led the courts to conclude a duty of care existed in Jolley and Alvarez lead us to conclude a duty of care exists under the facts Hopkins has alleged.
[15] Homeward argues the CAAS must “trump” Hopkins’s allegations. To the extent Homeward is arguing we must accept the contents of the CAAS as true under the truthful pleading doctrine, we reject this argument. It is clear Hopkins did not attach the CAAS and his account statements from Citi to his fifth amended complaint so as to adopt the truth of their entire contents. To the contrary, he attached these documents, in part, to demonstrate that they contradicted each other and to show that Homeward kept an incorrect record of his loan payment history. Under these circumstances, there is no basis for Homeward to invoke the truthful pleading doctrine to defeat Hopkins’s allegations. Nor is there any basis for accepting the truth of the contents of the CAAS through judicial notice. (See Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374-375 [“Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning”; “`judicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.'”].) Hopkins disputes the payment history described in the CAAS, and, unlike a contract, the CAAS has no “independent legal significance.” (Cf. Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 758 [in deciding a demurrer, court properly could take judicial notice of a purchase and assumption agreement, which established “facts deriving from the independent legal significance of a contract,” and the facts were not reasonably subject to dispute].)
[16] We also note that the CAAS showed late fees were imposed in July and October 2010 and there was a missed payment in October 2010.
[17] Both defendants argue that Hopkins cannot establish damages because he admittedly stopped making payments on the loan in April 2011, and therefore he is responsible for the recording of the notice of default. Should Hopkins fail to prove defendants were the cause of the recording of the notice of default, “damages will be affected accordingly, but not necessarily eliminated.” (Alvarez, supra, 228 Cal.App.4th at pp. 948-949.)
In addition, for the first time in oral argument on September 19, 2017, both defendants argue that Hopkins’s claims against them should be governed by contract law, not tort law. We decline to consider this argument, “which the briefs do not raise or discuss and which is asserted for the first time in oral argument” (Archdale v. American Intern. Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 472) and which is based on a case that is not citeable.
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