Tentative Rulings for November 15, 2018 Departments 403 ......2018/11/15 · 1 Tentative Rulings...

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Tentative Rulings for November 15, 2018

Departments 403, 501, 502, 503

There are no tentative rulings for the following cases. The hearing will go forward on

these matters. If a person is under a court order to appear, he/she must do so.

Otherwise, parties should appear unless they have notified the court that they will

submit the matter without an appearance. (See California Rules of Court, rule 3.1304(c).)

17CECG03259 Cano v. Kiwi Transportation, Inc. @ 3:00p.m. (Dept. 501)

The court has continued the following cases. The deadlines for opposition and reply

papers will remain the same as for the original hearing date.

13CECG03503 Munoz v. Tarlton & Co. is continued to 3:30 p.m. in Department 403

on November 27, 2018.

16CECG01934 Magdaleno, et al. v. Fresno Community Hospital and Medical

Center, et al., is continued to Thursday, December 13, 2018, at 3:30

p.m., in Department 403.

17CECG04252 Whittington v. Bakman is continued to Tuesday, November 20, 2018

at 3:30 p.m. in Department 503.

16CECG01254 Fletcher v. Chaudhry is continued to Thursday, November 30, 2018

at 3:00 p.m. in Department 501.

________________________________________________________________

(Tentative Rulings begin at the next page)

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Tentative Rulings for Department 403

(2)

Tentative Ruling

Re: Reyes et al. v. Sage et al.

Superior Court Number: 18CECG02933

Hearing Date: November 15, 2018 (Dept. 403)

Motion: expedited petition to compromise minor’s claim

Tentative Ruling:

To grant. Order signed. Hearing off calendar.

Pursuant to California Rules of Court, Rule 3.1312, subd. (a) and Code of Civil

Procedure section 1019.5, subd. (a), no further written order is necessary. The minute

order adopting this tentative ruling will serve as the order of the court and service by

the clerk will constitute notice of the order.

Tentative Ruling

Issued By: ________RTM_______ on 11/13/18

(Judge’s initials) (Date)

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(29)

Tentative Ruling

Re: Stuart v. Wassabi To Die For, et al.

Superior Court Case No. 17CECG02084


Motions: Compel disclosure

Tentative Ruling:

To order the County to send an opt-in letter to the individuals whose information

Plaintiff seeks to obtain.

Explanation:

“The California Constitution creates a zone of privacy which protects against

unwarranted compelled disclosure of certain private information.” (Los Angeles Gay &

Lesbian Center v. Superior Court (2011) 194 Cal.App.4th 288, 306, internal quotation

marks and citations omitted.) Generally speaking, individuals’ reasonable expectation

of privacy is protected against “serious invasion.” (Id. at p. 307.) Where there is a

reasonable expectation of privacy and the invasion of privacy is serious, the court must

balance the privacy interest at stake against other competing or countervailing

interests, which include the interest of the requesting party, fairness to the litigants in

conducting the litigation, and the consequences of granting or restricting access to the

information. (Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 370-

371.) “Where it is possible to do so, the courts should impose partial limitations rather

than outright denial of discovery.” (Valley Bank of Nevada v. Superior Court (1975) 15

Cal.3d 652, 658, internal citation, quotation marks, and ellipses omitted.)

California Code of Regulations, title 17, section 2500, subdivision (f) provides:

Information reported pursuant to this section is acquired in confidence

and shall not be disclosed by the local health officer except as

authorized by these regulations, as required by state or federal law, or with

the written consent of the individual to whom the information pertains or

the legal representative of the individual. [Bold added.]

Section 2502, subdivision (f) provides:

(f) Confidentiality. Information reported pursuant to this section is acquired

in confidence and shall not be disclosed by the local health officer

except as authorized by these regulations, as required by

state or federal law, or with the written consent of the individual to whom

the information pertains or to the legal representative of that individual.

[Bold added.]

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(1) A health officer shall disclose any information, including

personal information, contained in an individual

case report to state, federal or local public health officials in order

to determine the existence of a disease, its likely cause or the

measures necessary to stop its spread.

(2) A health officer may for purposes of his or her investigation

disclose any information contained in an individual case report,

including personal information, as may be necessary to prevent the

spread of disease or occurrence of additional cases.

(3) A health officer may disclose any information contained in an

individual case report to any person or entity if the disclosure may

occur without linking the information disclosed to the individual to

whom it pertains, and the purpose of the disclosure is to increase

understanding of disease patterns, to develop prevention and

control programs, to communicate new knowledge about a

disease to the community, or for research.

(4) Notwithstanding subsections (1), (2), and (3) above, no

information that would directly or indirectly identify an individual as

one who has applied for or been given services for alcohol or other

drug abuse by a federally assisted drug or alcohol abuse treatment

program (as defined in 42 C.F.R. § 2.11) shall be included in an

individual case report or otherwise disclosed absent the individual's

written consent.

Also, section 2502, subdivision (g), provides that when a health officer collects

information pursuant to that section (at subdivision (b)), that the individual is required to

provide his or her personal information, and that the only way it would be disclosed

would be pursuant to §2502(f)(1) and (f)(2); but non-personal information may be

disclosed pursuant to (f)(3).

The court engages in a three step analysis in addressing the issue of privacy.

“First, the claimant must possess a legally protected privacy interest. Second, the

claimant must have a reasonable expectation of privacy under the circumstances,

including the customs, practices, and physical settings surrounding the circumstances.

Third, the invasion of privacy must be serious in nature, scope, and actual or potential

impact. If the invasion of privacy is serious, then the court must balance the privacy

interest at stake against other competing interests, which include the interest of the

requesting party, fairness to litigants in conducting the litigation, and the consequences

of granting or restricting access to the information. Constructing this balance requires a

meticulous evaluation of the privacy right asserted, the degree of the imposition on that

right, and the interests militating for and against any intrusion on privacy.” (Los Angeles

Gay & Lesbian Center, supra, 194 Cal.App.4th at p. 307, internal citations omitted.)

Whether a legally recognized privacy interest exists is a question of law; whether the

circumstances give rise to a reasonable expectation of privacy and there is a serious

invasion is a mixed question of law and fact. (Id. at p. 308.)

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“A particular class of information is private when well-established social norms

recognize the need to maximize individual control over its dissemination and use to

prevent unjustified embarrassment or indignity. Such norms create a threshold

reasonable expectation of privacy in the data at issue.” (Hill v. National Collegiate

Athletic Assn. (1994) 7 Cal.4th 1, 35, internal citation omitted.) Notwithstanding the

foregoing, privacy concerns are not absolute; rather, they must be balanced against

“other important interests.” (Id. at p. 37.) Invasion of a privacy interest is not a violation

of the state constitutional right to privacy where the invasion is justified by a competing

interest. (Hill, supra, 7 Cal.4th at p. 38.) The court thus must balance the right of a civil

litigant to discover relevant facts against the privacy interests of persons subject to

discovery. (Vinson v. Superior Court (1987) 43 Cal.3d 833, 842; see also Valley Bank of

Nevada, supra,15 Cal.3d at p. 657–658 [court must consider purpose of information

sought, effect disclosure will have on those affected, nature of objections to disclosure,

and availability of alternative, less intrusive means of obtaining the information].) In so

doing, the court must place the burden on the party asserting a privacy interest to

establish its extent and the seriousness of the prospective invasion, and against that

showing must weigh the countervailing interests the opposing party identifies. (Williams

v. Superior Court (2017) 3 Cal.5th 531, 557.) “What suffices to justify an invasion will …

vary according to the context. Only obvious invasions of interests fundamental to

personal autonomy must be supported by a compelling interest.” (Ibid.) Where it is

unlikely that individuals anticipated broad dissemination of their contact information

when they gave it, e.g., to an employer as a condition of employment, “that does not

mean that they would wish it to be withheld from a class action plaintiff who seeks relief

for [e.g.] violations of employment laws.” (Belaire-West Landscape, Inc. v. Superior

Court (2007) 149 Cal.App.4th 554, 561.)

In the case at bar, Plaintiff seeks the names, addresses, and other contact

information of seven individuals who contracted Hepatitis A around the same time that

Plaintiff did. Sections 2500(f) and 2502(f), provide that the County “shall not” disclose

the information that Plaintiff is requesting. The exceptions to this prohibition on disclosure

-authorized disclosure pursuant to regulation, where required by state or federal law, or

with the individual’s consent - are not present here.

Plaintiff meets her burden of showing that the information she seeks is directly

relevant to the action, and has a potential to lead to admissible evidence that will assist

Plaintiff in establishing her claims. Plaintiff’s entitlement to discovery and strengthening

her case, however, is notably lesser than non-party individuals’ privacy interest in their

personal information as relates to Hepatitis A diagnoses.

The seven individuals whose information Plaintiff seeks have a legally protected

privacy interest in their personal identifying information, particularly as it is linked to

medical information. Such expectation is even stronger under the present

circumstances, where the authority underlying the County’s collection of this

information specifically requires the individuals to provide the information, and in return

requires the County to keep it private. (See Calif. Code Reg. §§ 2500, 2502.) The non-

parties’ expectation that this information be kept private is reasonable, and allowing

the disclosure would be a serious invasion.

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Plaintiff fails to provide any authority for the Court to compel the County to

disclose private health information for the purpose of litigating a tort action. However,

the individuals whose information is sought may have an interest in meeting with

Plaintiff’s counsel. (See, e.g., Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40

Cal.4th 360, 371-372; Belaire-West Landscape, Inc., supra, 149 Cal.App.4th at p. 561.)

Under these circumstances, it appears to the Court that an opt-in letter is the best

manner to allow Plaintiff to attempt to obtain the information she seeks and balance

her interest in pursuing her claims, while at the same time protecting the seven

individuals’ right to privacy.

Pursuant to California Rules of Court, rule 3.1312, and Code of Civil Procedure

section 1019.5, subdivision (a), no further written order is necessary. The minute order

adopting this tentative ruling will serve as the order of the court and service by the clerk

will constitute notice of the order.

Tentative Ruling

Issued By: ________RTM_______ on 11/13/18


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(2)

Tentative Ruling

Re: Stumpf and Company v. May E. Baxter Revocable Living Trust



Motion: Petition to Compel Arbitration

Tentative Ruling:

To deny petitioner’s petition to compel arbitration.

Explanation:

The petition must allege specific facts (rather than mere conclusions)

demonstrating the existence of an arbitrable controversy. [Graphic Arts Int'l Union v.

Oakland Nat'l Engraving Co. (1986) 185 CA3d 775, 781.] In addition, a party seeking to

compel arbitration pursuant to CCP § 1281.2 must “plead and prove a prior demand

for arbitration under the parties' arbitration agreement and a refusal to arbitrate under

the agreement.” [Mansouri v. Sup.Ct. (Fleur Du Lac Estates Ass'n) (2010) 181 CA4th 633,

640-641; see Spear v. California State Auto. Ass'n (1992) 2 C4th 1035, 1041.] As in motion

proceedings generally, factual issues should be submitted by affidavits or declarations.

Verified pleadings may not suffice. [See Strauch v. Eyring (1994) 30 CA4th 181,186.]

Petitioner has failed to establish any factual issues as no declarations or affidavits

have been filed. All that is provided is the unverified petition.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure




Tentative Ruling

Issued By: JYH on 11/14/18


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(19) Tentative Ruling

Re: Martin v. Western Oilfields Supply Co.

Fresno Superior Court Case No. 18CECG00516

Hearing Date: November 15, 2018 (Department 501)

Motion: by plaintiff to compel further response to form interrogatory no.

209.2.

Tentative Ruling:

To grant and order a further response without objections to be served on or

before December 17, 2018 by mail and email, limited to age discrimination actions filed

on or after February 9, 2013.

To grant sanctions, payable by defendant and/or its counsel, of $1,127.50.

Explanation:

1. Preliminary Matters

The language of the exchanges between the parties does not show any

agreement to limit the interrogatory beyond a restriction to age discrimination actions

filed in the preceding five years. An agreement takes both parties’ consent, and none

appears here.

Whatever “glitch” there may or may not have been with the pre-trial discovery

conference request, plaintiff properly filed his motion in accordance with the restrictions

set forth in Fresno Superior Court Rules, Rule 2.1.17(A)(4).

The meet and confer efforts were extensive and sufficient.

2. Relevancy and Overbreadth Objections

“To show an interrogatory seeks relevant, discoverable information is not

the burden of the party propounding interrogatories. As a litigant, it is

entitled to demand answers to its interrogatories, as a matter of right, and

without a prior showing, unless the party on whom those interrogatories

are served objects and shows cause why the questions are not within the

purview of the code section. While the party propounding interrogatories

may have the burden of filing a motion to compel if it finds the answers it

receives unsatisfactory, the burden of justifying any objection and failure

to respond remains at all times with the party resisting an interrogatory.”

Williams v. Superior Court (2017) 3 Cal. 4th 531, 541 (internal citations omitted).

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That case involved an interrogatory seeking the identity of other employees who

might have been exposed to the same company policies claimed to be unlawful.

Discovery was ordered, with protection of employee privacy by a letter seeking

permission to contact them. Here, the interrogatory is limited to the identity of those

who already filed a civil suit, and who have therefore waived privacy.

Discovery of age discrimination cases brought by employees who have actually

filed cases against the same employer is reasonably likely to lead to admissible

evidence of other instances of similar employer misconduct. That may show intent, as

opposed to mistake, or non-liability because senior employees were not targeted for

dismissal.

The interrogatory in question is one created by the Judicial Council of California

especially for use in employment dispute cases, pursuant to legislative mandate found

in Code of Civil Procedure section 2033.710. Section 2033.730 notes that such

interrogatories were created in consultation with representatives of the plaintiff’s bar,

the defense bar, the public interest bar, court administrators, and the public. Witkin,

Evidence (5th Ed.) “Discovery,” section 96. Same are regarded as “well-drafted,

balanced, and fair.”

In Perkins v. Superior Court (1981) 118 Cal. App. 3d 761, the complaint stated a

cause of action for personal injury and products liability arising from an explosion of a

car battery supplied by Sears. Plaintiff served on interrogatory on Sears that requested

the names of all cases based on such an explosion brought against Sears, where they

were filed, when the injury occurred, and the disposition of the lawsuit. The trial court

limited the interrogatory to only those accidents involving explosion after a stuck

battery cap was pulled, and to cases served only two years prior to plaintiff’s injury.

Defendants' response was that no records concerning such cases could be found. The

Court of Appeals held that the trial court's ruling was an abuse of discretion. Sears was

ordered to answer the interrogatory for all battery explosion-based cases anywhere in

the United States, for the six years pre-dating the order.

There is a federal equivalent statute for claims such as that brought by plaintiff in

this case, the Age Discrimination in Employment Act, which renders age discrimination

cases against defendant nationwide relevant.

Such information can also show punitive damages liability, or lessen liability. In

TXO Production Corp. v. Alliance Resources (1993) 509 U.S. 443 (“TXO”), the defendant

in TXO appealed the verdict against it on the ground that it was improper to allow

evidence it had engaged in substantially similar wrongdoing for the purpose of proving

its intent and state of mind on the particular occasion in question. Evidence from two

prior lawsuits in two other states was admitted. The U.S. Supreme Court ruled that such

evidence of like misconduct was perfectly proper, and that same furnished a basis for

finding a the award of punitive damages was constitutional:

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"TXO also contends that the admission of evidence of its alleged wrong

doing in other parts of the country . . . led the jury to base its award on

impermissible passion and prejudice. . . Under well-settled law, however,

factors such as these are typically considered in assessing punitive

damages. Indeed, the Alabama factors we approved in Haslip,

included both. See Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 21-22,

113 L. Ed. 2d 1, 111 S.Ct. 1032 (1991) "(b) . . . the existence and frequency

of similar past conduct."

(Id. at 462, fnt. 28.)

See George F. Hillenbrand, Inc. v. Insurance Co. of North Am. (2002) 104 Cal.

App. 4th 784, 821, holding that lack of pattern and practice evidence meant a lower

punitive damages award was proper. See also Textron Financial Corp. v. National

Union Fire Is. Co. (2004) 119 Cal. App. 4th 1061, 1081-1082, discussing the Haslip and

Campbell cases and the use of proof that “the conduct involved repeated actions”

and was not “an isolated incident” as a guidepost for assessing the reasonableness or

lack thereof for a punitive damage award.

Pantoja v. Anton (5th Dist. 2011) 198 Cal. App. 4th 87 held that the trial court erred

in excluding evidence at trial of other instances of sexual harassment of different

women than the plaintiff. The case did not hold that pattern and practice evidence

had to be limited to the particular individual that harassed plaintiff.

Bowen v. Ryan (2008) 163 Cal. App. 4th 916 involved a dentist who was accused

of shoving and choking a difficult patient. The Court held that admission of nine other

instances of physical attacks on patients was improper as evidence of a persons’ prior

acts to prove conduct on a particular occasion. The dentist denied he battered

plaintiff, so the dentist’s intent in doing so was not in question. Here, no one is denying

that defendant fired plaintiff. The question is why – what was defendant’s motive?

Also, that case involved trial, not discovery. Schrand v. Fed. Pacific Electric Co. (6th Cir.

1988) 851 F. 2d 152 also involved trial evidence, not discovery.

This interrogatory may lead to evidence that the company had a nationwide

practice of getting rid of older employees. The fact that evidence of other lawsuits

from different states has been ruled admissible in some instances is persuasive on the

subject to discovery relevancy. Glenfed Development Corp. v. Superior Court (1997)

53 Cal. App. 4th 1113, 1117-1118.

Further, "The possibility evidence otherwise admissible might be excluded at trial

under Evidence Code 352 or some other evidentiary objection is not a relevant

consideration for purposes of ruling on a discovery motion." Norton v. Ein (1994) 24 Cal.

App. 4th 1750, 1760-1761.

The Court may very well limit such evidence at trial. But it is discoverable.

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3. Equally Available Objection

The question asks only for information about employees who have sued this

same defendant. Certainly defendant knows which employees sued it. The defendant

does not have to search courthouses throughout the land to know what cases it was a

defendant in, or which ones involved its own former employees. It can ask its lawyers.

"This exception applies only if the summary is not available and the party

specifies the records from which the information may be ascertained. A broad

statement that the information is available from a mass of documents is insufficient."

Deyo v. Kilbourne (1978) 84 Cal. App. 3d 771, 784. "Thus, it is not proper to answer by

stating, "See my deposition," "See my pleading," or "See the financial statement." (Id. at

784-785.)

Since defendant is the best source of knowledge as to which of its employees

have sued it, defendant is in a far better place to provide information about such

lawsuits. This objection is overruled.

Pursuant to Code of Civil Procedure section 1019.5, subdivision (a), no further written

order is necessary. The minute order adopting this tentative ruling will serve as the order

of the court and service by the clerk will constitute notice of the order.

Tentative Ruling



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Motion: by plaintiff to compel further response to Requests for Production

Nos. 6, 7, 9, and 12.

Tentative Ruling:

To grant and overrule all objections but for privacy of current and former

employees, and claims of attorney/client privilege and work product (for Demand No.

9 only). To order a further response without the preliminary statement, general

objections, or any objection other than those three, to be served along with all

responsive documents (other than those listed on the first page of the log), by

December 4, 2018. Plaintiff’s counsel may chose the site of the production.

To further order that the parties meet and confer on the Belaire notice and either

submit a proposed joint notice and order, or a separate one for each side if no

agreement is reached, by December 14, 2018. Also on that date, a list of those

employees appearing on the documents, with their addresses, is to be provided to

plaintiff’s counsel for counsel’s eyes’ only, for use in mailing the notice.

To grant sanctions, payable by defendant and/or its counsel of record in the

amount of $2,177.50, said payment to be made on or before December 4, 2018.

Explanation:

Defendant provided various responses, along with a prefatory statement and a

list of “general objections,” to the four demands at issue. A privilege log was finally

provided on October 25, 2018. The responses are deficient in several ways, and assert

objections for which there is no evidentiary support.

Defendant bears the burden of proving to this Court, with admissible evidence

and citation to supporting legal authority, that the objections it posed to this discovery

were appropriate. Coy v. Superior Court (1962) 58 Cal. 2d 210, 220. In that case, the

Supreme Court noted that under prior law, a party making objections to written

discovery was required to set a hearing at which he was bound to show that the

objections were meritorious. The Supreme Court noted that while the procedure had

been streamlined to allow objections to be merely served without prior approval by the

Court, the burden to prove their merit continued to rest on the party making the

objection. The Supreme Court reaffirmed this was the law in 2000. [I]f a timely motion

to compel has been filed, the burden is on responding party to justify any objection.”

Fairmont Ins. Co. v. Superior Court (2000) 22 Cal. 4th 245, 255. Accord Williams v.

Superior Court (2017) 3 Cal. 5th 531.

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Defendant states its responses were restricted to information currently available

to it, and that the demands call for speculation. With document demands, the

responding party must “affirm that a diligent search and a reasonable inquiry” have

been made unless the party is able to produce all such documents. That party also has

to state where or who else might have documents, or if there are none, why – such as

that the documents never existed, were destroyed, lost, etc. Code of Civil Procedure

section 2031.230. When that diligent search and reasonable inquiry are concluded, no

speculation is necessary.

Defendant objected to the place of production, but several of the documents

produced were less than legible copies. Given the several months that have passed

since the discovery was sought, the Court finds that plaintiff may properly seek product

at his counsel’s office of the original of any document responsive to the demands at

issue. Plaintiff will need specify to defendant which documents it requires be produced.

The privilege log lists attorney/client communications and work product

documents as responsive to Demand No. 9 only. This objection need be removed from

the further response for the other demands. No preliminary statement or general

objections may be included in the further responses ordered.

Defendant contends responsive documents contain proprietary information.

Proof required show a trade secret exists must consist of admissible evidence of the

following elements:

“(1) the extent to which the information is known outside of his business;

(2) the extent to which it is known by employees and others involved in his

business; (3) the extent of measures taken by him to guard the secrecy of

the information; (4) the value of the information to him and to his

competitors; (5) the amount of effort or money expended by him in

developing the information; (6) the ease or difficulty with which the

information could be properly acquired or duplicated by others.”

Uribe v. Howie (1971) 19 Cal. App. 3d 194, 208. This case was cited by the

California Supreme Court on the trade secret issue in 2004. See State Farm Mutual

Automobile Ins. Co. v. Garamendi (2004) 32 Cal. 4th 1029, 1039. See also Balboa Ins.

Co. v. Trans Global Equities (1990) 218 Cal. App. 3d 1327, 1345. The sole declaration

here is from counsel. As the client provided no admissible evidence of any protectable

information, this objection is overruled as to all demands at issue. That applies to names

of customers or other third parties as well.

As with a claim of trade secret information, an objection on the basis of burden

requires admissible proof from the objecting party of the exact nature of the burden

involved. “An objection based on burden must be sustained by evidence showing the

quantum of work required.” West Pico Furniture Co. v. Superior Court (1961) 56 Cal. 2d

407, 417. Where there is no such evidence, the objection must be overruled. Williams v.

Superior Court (2017) 3 Cal. 5th 531, 552. As no evidence was provided here, this

objection is also overruled as to all demands at issue.

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Defendant objects to the definitions and instructions provided, such as that

defining plaintiff as Mr. Martin and defining defendant as Western Oilfields Supply, on

the basis such are vague. Without any statement as to what is ambiguous, or why the

demand is vague, such an objection is a "nuisance" objection. Standon Co., Inc. v.

Superior Court (1990) 225 Cal. App. 3d 898, 901.

"Whether the description of records is sufficient to inform [responding party] of

that which is desired, presents a question merely of whether under the circumstances

and situation generally, considered in the light of reason and common sense, he ought

to recognize and be able to distinguish the particular thing that is required." Pacific

Automobile Ins. Co. v. Superior Court (1969) 273 Cal. App. 2d 61, 68. The Court notes

that “adverse action” was explained in the meet and confer work. Defendant has

failed to carry its burden on this objection for any demand, and it is overruled as well.

Defendant objects that the discovery “calls for a legal conclusion.” This is an

invalid objection to discovery. The fact that discovery calls for a legal conclusion is not

a ground for refusing to answer, where the party's attorney is there to assist in answering.

Rifkind v. Superior Court (1994) 22 Cal. App. 4th 1255, 1259. See also, Burke v. Superior

Court (1969) 71 Cal. 2d 276, 280. This is why identification of “all documents supporting

your defense of XXX” is a permitted form of discovery. See, e.g., Judicial Council Form

Interrogatories 15.1 and 17.1. This objection is overruled for all requests.

Defendant objected to each demand on the basis of employee privacy. The

“log” states that defendant redacted the names of employees who faced “adverse

action.” It did not identify which request for documents involved such redactions. :

“The current and former employees are potential percipient witnesses to Belaire-

West’s employment and wage practices, and as such their identities are discoverable.”

Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal. App. 4th 554, 562. In West

Pico Furniture Co. v. Superior Court (1961) 56 Cal. 2d 407, 417, the Court ordered an

answer to an interrogatory seeking name, address, job title, etc. for persons who were

witnesses to the transaction at issue.

The identity of such persons and the circumstances of relatively

contemporaneous “adverse actions” they suffered could lead to admissible evidence

of age discrimination in imposing such adverse actions, or lack thereof. Belaire-West

called for mailing of a letter to the persons involved to seek their consent to disclosure

of their private information.

That procedure was approved in Williams v Superior Court (2017) 3 Cal. 5th 531 as

well, and in Cook v. Yellow Freight System, Inc. (E.D. Cal. 1990) 132 F.R.D. 548, a sex

harassment lawsuit. It is appropriately used here as well.

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The Court also overrules the overbreath objection in toto, finding that the

demands are carefully limited to extract information likely to lead to admissible

evidence on the issues in controversy in this case.




Tentative Ruling



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Motion: by plaintiff to seal Exhibit I to Whelan Declaration for Motion to

Compel Further Responses to Document Demands

Tentative Ruling:

To grant.

Explanation:

California law does not permit sealing upon the parties’ stipulation. Rule 2.551(a)

notes that “A record must not be filed under seal without a court order. The Court must

not permit a record to be filed under seal based solely on the agreement or stipulation

of the parties.” That is a codification of the rule of law announced in Stadish v. Superior

Court (1999) 71 Cal. App. 4th 1130.

In Savaglio v. Wal-Mart (2007) 149 Cal. App. 4th 588, the parties entered in to a

stipulation, later executed by the trial judge and made a court order, that permitted

them 30 days after the last document was filed on a particular motion to also file a

motion to “permanently” seal something submitted pertaining thereto. The parties

were under the understanding that they could file whatever they wanted under seal,

and that same would remain under seal unless an objection were made. A newspaper

went to review the files, and found that almost nothing was in the public file. It filed a

motion to unseal, which the trial court denied as premature, on the basis that the issue

would not be ripe until a motion to permanently seal was later made.

The Court of Appeal ruled that the documents must be unsealed. The fact that

counsel subjectively believed the trial court had permitted the parties to submit

whatever they wanted under seal for later determination as to confidentiality was

found by the Court of Appeal to be inexcusable negligence. “Nor could Wal-Mart

reasonably think that it could operate under a parallel legal universe, outside rules 2.550

and 2.551 . . . Wal-Mart’s counsel is duty bound to know and apply these rules of civil

procedure.” (Id. at 600.) The Court there relied on Ten Eyck v. Industrial Forklifts Co.

(1989) 216 Cal. App. 3d 540, where an attorney had argued equity required allowing

him to rely on an incorrect trial court finding of timeliness for a motion for

reconsideration:

“Plaintiff seeks to shift his errors to the trial court. Plaintiff's counsel

was duty-bound to know the rules of civil procedure, and once he

received the notice of entry of judgment he should have

abandoned the motion for reconsideration and filed a notice of

appeal. In addition, assuming arguendo that the trial court was

speaking of plaintiff's motion when it stated that the motion was

17

timely filed, we do not believe that a trial court's pronouncement

that a motion was timely under section 1008 can negate

established law . . .”

(Id. at 545 – 546.)

See also Burkle (2006) 135 Cal. App. 4th 1045, wherein the Court held that a

statute enacted to permit sealing of divorce case financial records on the basis of

financial privacy was found to be a violation of the US Constitution and therefore

unenforceable. And see Universal City Studios v. Superior court (2003) 110 Cal. App. 4th

1273, which found that a settlement agreement could not be sealed because there

was no actual evidence of any harm to come to the parties by having it in the court

record. Huffy v. Superior Court (2003) 112 Cal. App. 4th 97, 106 found that a settlement

agreement could not be sealed, even though it involved a non-party. The Court in

McNair v. NCAA (2015) 234 Cal. App. 4th 25, 35-36 also found a settlement agreement

could not be sealed merely because the parties agreed to keep it confidential.

The First Amendment right to review materials submitted in connection with

motions seeking to determine the merits of a matter is well-established, as shown in the

California Supreme Court case of NBC Subsidiary (KNBC-TV) v. Superior Court (1999) 20

Cal. 4th 1178. It also noted that in 2004, the People of California passed Proposition 59

which added such a right to the California State Constitution, as Article I, section 3,

subdivision (b)(1). That was referred to as the “Sunshine Amendment,” and has never

been the subject of a published court case.

There is an exception. Where a matter involves only a discovery motion, sealing

is permitted. See California Rules of Court, Rule 2.550(a)(3): “These rules do not apply

to discovery motions and records filed or lodged in connection with discovery motions

or proceedings. However, the rules do apply to discovery materials that are used at

trial or submitted as a basis for adjudication of matters other than discovery motions or

proceedings.”

The First Amendment concerns apply only to records used to adjudicate a

matter, not to discovery motions or discovery materials generally. See NBC Subsidiary,

supra, 20 Cal. 4th at 1208, fnt. 25, citing Seattle Times Co. v. Rhinehart (1984) 467 U.S. 20.

Given that the “Sunshine Amendment” has not generated any contrary case law,

sealing is permitted in this instance.




Tentative Ruling



18


Re: Ruiz v. Central California Truck and Trailer Sales, LLC, Superior Court

Case No. 18CECG02858


Motion: Demurrer to Complaint and Motion to Strike

Tentative Ruling:

To take off calendar in light of the filing of an amended complaint on November

1, 2018.

Pursuant to Cal. Rules of Court, Rule 3.1312(a) and Code Civ. Proc. § 1019.5(a),

no further written order is necessary. The minute order adopting this tentative ruling will

serve as the order of the court and service by the clerk will constitute notice of the

order.

Tentative Ruling



19

(30)

Tentative Ruling

Re: Donna Beck dba Global Auto Sales v. Adesa, Inc.



Motions: Defendant Adesa’s motion to stay or dismiss

Application to appear pro hac vice, re: Jonathon P. Reinisch

Tentative Ruling:

To stay plaintiff’s entire complaint, so that it may be adjudicated in the State of

Indiana, in conformity with the relevant forum selection clause. (See Walker Dec., filed:

9/7/18 Ex. A.)

To grant Jonathon P. Reinisch’s application to appear pro hac vice.

Explanation:

The Bancomer, Ricoh, and Olinick decisions provide guidance regarding the

scope of a forum-selection clause. (Bancomer, S.A. v. Sup.Ct. (Reilly) (1996) 44

Cal.App.4th 1450; Cal-State Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th

1666; Olinick v. BMG Ent. (2006) 138 Cal.App.4th 1286). In Bancomer, plaintiffs asserted

tort causes of action for fraudulent inducement against a bank, which was not a party

to the contract containing the forum selection clause. The court held that because

adjudication did not necessitate consideration of the parties' compliance with the

purchase agreement, the tort claims did not fall within the scope of the forum selection

clause. It reasoned that even though “forum selection clauses can be equally

applicable to contractual and tort causes of action… [S]ince the terms of the

purchase agreement, and their interpretation, are irrelevant to the claims alleged, we

conclude the tort causes of action do not relate to ‘any conflicts’ ‘regarding the

interpretation or fulfillment’ of the agreement. (Bancomer, S.A. v. Sup. Ct., supra, 44

Cal.App.4th at pp. 1461-1462, citing Manetti-Farrow, Inc. v. Gucci America, Inc. (1988)

858 F.2d 509, 514.)

In Ricoh, defendants sought to enforce an interpretation of the forum selection

clause which included tortious actions arising from contract negotiations. (Cal-State

Products & Services, Inc. v. Ricoh, supra, 12 Cal.App.4th at p. 1666.) The court agreed

and reasoned that, “a valid choice-of-law clause, which provides that a specified body

of law 'governs' the 'agreement' between the parties, encompasses all causes of action

arising from or relating to that agreement, regardless of how they are characterized,

including tortious breaches of duties emanating from the agreement of the legal

relationships it creates.” (Id. at 1677, citing Nedlloyd Lines B.V. v. Super. Ct. (1992) 3

Cal.4th 459, 470 [emphasis in original].)

https://a.next.westlaw.com/Link/Document/FullText?findType=Y&serNum=1988122621&pubNum=350&originatingDoc=I6fd6eb70fab911d99439b076ef9ec4de&refType=RP&fi=co_pp_sp_350_514&originationContext=document&transitionType=DocumentItem&contextData=(sc.UserEnteredCitation)#co_pp_sp_350_514

https://a.next.westlaw.com/Link/Document/FullText?findType=Y&serNum=1988122621&pubNum=350&originatingDoc=I6fd6eb70fab911d99439b076ef9ec4de&refType=RP&fi=co_pp_sp_350_514&originationContext=document&transitionType=DocumentItem&contextData=(sc.UserEnteredCitation)#co_pp_sp_350_514

20

In Olinick, plaintiff’s alleged torts also arose as a direct result of defendant’s

breach of the employment agreement; plaintiff alleged wrongful termination as a result

of age discrimination. Plaintiff sought to have the tort causes of action severed from

the contract causes of action but the employment contract contained a valid forum

selection clause, and the court refused. The Olinick court ruled that a valid forum

selection provision, agreeing that courts in New York had exclusive jurisdiction over

disputes, encompassed all causes of action arising from or related to the agreement,

regardless of how they were characterized, “including terminated employee's tort

causes of action for statutory age discrimination action under California Fair

Employment and Housing Act (FEHA) and common law wrongful discharge in violation

of public policy.” (Olinick v. BMG Ent., supra, 138 Cal.App.4th at p. 1286.) The court held

that the plaintiff’s age discrimination claim arose from the contract, although it was not

a contractual dispute, in part because the claim was “inextricably intertwined with the

construction and enforcement of the Agreement.” (Id. at pp. 1300-1301.)

Here, the only dispute is regarding the scope of the forum selection clause.

Plaintiff argues that none of its claims are encompassed by it. Plaintiff argues that

defendants’ actions are outside of the scope of the Terms and Conditions because

they do not relate to the conditions of participation in Adesa auctions, the purchase

and sell of vehicles, the rights and duties of buyers and sellers, and the arbitration rights

of buyers and sellers. Plaintiff further contends that the Terms and Conditions do not

cover Adesa’s interactions with third-parties, particularly parties who are not buyers or

sellers, nor do the Terms and Conditions cover plaintiff’s relationships with non-parties to

the agreement.

Despite plaintiff’s arguments, none of its claims can be resolved without

interpretation of Adesa’s terms, in particular Section 12. Section 12 details plaintiff’s

payment obligations for all vehicles purchased at an Adesa auction. (Walker Dec.,

filed: 9/7/18 Ex. A § 12.) It provides, among other terms, that full payment for in-person

sales is due “before the end of business on the day of sale” and that full payment for

online sales is due “within 2 business days from the day of sale.” (Id. at § 12.) Further,

Section 12 provides that Plaintiff “shall not under any circumstances stop payment on

an instrument, refuse to honor an instrument, or withdraw an instrument,” and includes

Plaintiff‘s representation that “the account upon which such instrument is drawn

contains then available funds sufficient for payment.” (Ibid.)

Each cause of action depends upon a finding that defendants’ comments were

slanderous. Plaintiff alleges that when defendant made the statement that plaintiff was

“over $500,000 out of trust with Adesa,” it defamed plaintiff (Complaint, ¶¶ 21-28),

interfered with prospective economic advantages (Id. at ¶¶ 29-33), interfered with

contractual relations (Id. at ¶¶ 30-38), and engaged in unfair competition. (Id. at ¶¶ 39-

43.)

However, “[i]n all cases of alleged defamation, whether libel or slander, the truth

of the offensive statements or communication is a complete defense against civil

liability, regardless of bad faith or malicious purpose.” (Ringler Assocs. Inc. v. Maryland

Casualty (2000) 80 Cal.App.4th 1165, 1180.)

21

Thus, the determination of whether the alleged statement is true, will require

analysis of the applicable payment terms contained in Section 12 of the agreement.

Another example of how plaintiff’s claim is inextricably intertwined with the Terms

and Conditions is provided by Section 14. It sets forth Adesa’s security interest in vehicles

purchased through Adesa and Adesa’s rights upon default. (Walker Dec., filed: 9/7/18

Ex. A § 14.) It provides, in part, that “in order to secure final payment of any

indebtedness owing to [Adesa] by [plaintiff] . . . [plaintiff] hereby grants to [Adesa] a

security interest . . . in any Vehicle.” (Id. at § 14.) Section 14 also explicitly authorizes

Adesa to use “the right of self-help repossession” to cure a default. (Ibid.)

Cause of action three (e.g., tortious interference) also depends on the allegation

that Adesa “threaten[ed] to and/or [did] repossess vehicles which Plaintiff had already

arranged to sell to its clients.” (Complaint, ¶ 37.) It cannot therefore be adjudicated

without consideration of Section 14.

Pro hac vice, re: Jonathon P. Reinisch

California Rules of Court, rule 9.40 sets for the requirements for eligibility to be

admitted pro hac vice in this state. If such requirements are met, the decision whether

to admit or deny the application is a discretionary decision.

Jonathon P. Reinisch meets all the mandatory provisions of rule 9.40. The court

therefore exercises its discretion to so admit him for this case.

Pursuant to California Rules of Court, rule 3.1312 and Code of Civil Procedure




Tentative Ruling



22


23



Re: Rabobank, N.A. v. Triple V Dairy et al.



In the event oral argument is timely requested, it will be

heard at 2:00 p.m. on November 15, 2018, in Dept. 503.

Motion: Receiver’s Application for Payment of Interim Attorney Fees

and Expenses

Tentative Ruling:

To take off calendar the applications set for November 15 and December 12,

2018, in light of the November 1, 2018 Minute Order.




order.

Tentative Ruling

Issued By: KAG on 11/09/18


24


Re: Lewis v. FCA UA LLC





Motion: Plaintiff’s Motion for Attorney Fees and Costs

Tentative Ruling:

To grant the motion for attorney’s fees in the amount of $41,769.75; to defer

ruling on the recoverable costs until defendant’s motion to tax costs. Payment shall be

made by defendant FCA UA LLC to the Knight Law Group within 30 days of the clerk’s

service of this minute order.

Explanation:

A prevailing buyer in an action under the Song-Beverly Act “shall be allowed by

the court to recover as part of the judgment a sum equal to the aggregate amount of

costs and expenses, including attorney's fees based on actual time expended,

determined by the court to have been reasonably incurred by the buyer in connection

with the commencement and prosecution of such action.” (Civ. Code, § 1794, subd.

(d).) The statute “requires the trial court to make an initial determination of the actual

time expended; and then to ascertain whether under all the circumstances of the case

the amount of actual time expended and the monetary charge being made for the

time expended are reasonable. These circumstances may include, but are not limited

to, factors such as the complexity of the case and procedural demands, the skill

exhibited and the results achieved. If the time expended or the monetary charge

being made for the time expended are not reasonable under all the circumstances,

then the court must take this into account and award attorney fees in a lesser amount.

A prevailing buyer has the burden of ‘showing that the fees incurred were “allowable,”

were “reasonably necessary to the conduct of the litigation,” and were “reasonable in

amount.”’” (Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99, 104.)

Calculating the Fees

A court assessing attorney’s fees begins with a touchstone or lodestar figure,

based on the “careful compilation of the time spent and reasonable hourly

compensation of each attorney . . . involved in the presentation of the case." (Serrano

v. Priest (Serrano III) (1977) 20 Cal.3d 25, 48; Robertson v. Fleetwood Travel Trailers of

California, Inc. (2006) 144 Cal.App.4th 785, 817 [lodestar applies to Song-Beverly

litigation].) Here, plaintiff seeks a loadstar of $37,937.50. As the California Supreme

Court has repeatedly made clear, the lodestar consists of "the number of hours

reasonably expended multiplied by the reasonable hourly rate. . . ." (PLCM Group, Inc.

v. Drexler (2000) 22 Cal.4th 1084, 1095 (italics added); Ketchum v. Moses (2001) 24

25

Cal.4th 1122, 1134.) The California Supreme Court has noted that anchoring the

calculation of attorney fees to the lodestar adjustment method "'is the only way of

approaching the problem that can claim objectivity, a claim which is obviously vital to

the prestige of the bar and the courts.'" (Serrano III, supra, 20 Cal.3d at p. 48, fn. 23.)

1. Number of Hours Reasonably Expended

Here, plaintiff’s attorneys expended 110.1 hours on this action, including the

motion for attorney fees. In awarding attorney’s fees, the law requires the court to first

determine the actual amount of time expended by counsel, and then, second, to

determine if that time and fee were reasonable. (Nightingale v. Hyundai Motor

America, supra, 31 Cal.App.4th at p. 104.) Factors affecting reasonableness may

include, “the complexity of the case and procedural demands, the skill exhibited and

the results achieved.” (Ibid.)

Here, the results achieved are excellent, amounting to approximately three times

the price of the vehicle. The complexity and procedural demands of the case were

nominal. The skill exhibited was good. The time spent on each task was reasonable,

and each task was reasonably necessary. Defendant criticizes plaintiff’s use of 10

attorneys on this case. However, defendant fails to point to any instances in the billing

entries of duplicated effort or excessive time on any particular task. The court is aware

of none.

2. Reasonable Hourly Compensation

Reasonable hourly compensation is the "hourly prevailing rate for private

attorneys in the community conducting noncontingent litigation of the same type."

(Ketchum v. Moses, supra, 24 Cal.4th at p. 1133.) Ordinarily, "'the value of an attorney's

time . . . is reflected in his normal billing rate.'" (Mandel v. Lackner (1979) 92 Cal.App.3d

747, 761.)

The requested rates for plaintiff’s counsel are higher than Central California’s

prevailing rates for comparable consumer litigators. Where a party is seeking out-of-

town rates, he or she is required to make a “sufficient showing . . . that hiring local

counsel was impractical.” (Nichols v. City of Taft (2007) 155 Cal.App.4th 1233, 1244.)

Plaintiff has made no showing of any attempt to seek local counsel.

This court awarded William Krieg, a consumer and lemon law attorney with over

40 years of experience, fees based on a rate of $425 per hour in Torres v. Cain Business

Enterprises, Inc., Fresno Superior Court Case No. 13CECG00345. (See Minute Order

dated March 3, 2016.) The court awarded the Knight Law Group, LLP, counsel herein,

fees ranging from $400 per hour to $225 per hour in Tapia v. Hyundai Motor America,

Fresno Superior Court Case No. 15CECG01433. (See Minute Order dated October 6,

2017.) The court awarded fees to the Knight Law Group, LLP ranging from $400 per hour

to $250 per hour in Metzger v. FCA US LLC, et al., Fresno Superior Court Case No.

16CECG02922 on August 30, 2018. Accordingly, the court reduces the hourly rates as

follows:

26

Wirtz Law APC

o Richard Wirtz $400

o Amy Smith $300

o Jessica Underwood $225

o Lauren Veggian $200

o Rebecca Evans $150

o Erin Barns $300

Knight Law Group, LLP

o Steve Mikhov $400

o Amy Morse $300

o Kristina Stephenson-Cheang $300

o Daniel Kalinowski $225

o Zachary Powell $300

3. Multiplier

Plaintiff seeks a multiplier of 0.5 to apply to the lodestar. That would actually

result in a 50% reduction in fees. The court presumes that plaintiff intends to request a

1.5 multiplier.

A multiplier enhancement to the lodestar “is primarily to compensate the

attorney for the prevailing party at a rate reflecting the risk of nonpayment in

contingency cases as a class.” (Ketchum, supra, 24 Cal.4th at p. 1138.) A multiplier

may also be applied where the attorney has shown extraordinary skill, resulting in

exceptional results. (Ibid.; Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 582.)

Courts have substantial discretion to select the factors they deem relevant to their

multiplier analysis. (Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 40–41.)

The factors include: (1) the novelty and difficulty of the questions involved and the skill

displayed in presenting them; (2) the extent to which the nature of the litigation

precluded other employment by the attorneys; and (3) the contingent nature of the

fee award, based on the uncertainty of prevailing on the merits and of establishing

eligibility for the award. (Robertson v. Fleetwood Travel Trailers of California, Inc. (2006)

144 Cal.App.4th 785, 819.)

a. Novelty and Complexity of the Issues

In Blum v. Stenson (1984) 465 U.S. 886, the United States Supreme Court discussed

what might be a basis for an upward adjustment to the lodestar. The Supreme Court

noted that certain suggested bases for an upward adjustment were not warranted

because they were already reflected in the lodestar. (Id. at p. 898.) Specifically, "[t]he

novelty and complexity of the issues presumably were fully reflected in the number of

billable hours recorded by counsel and thus do not warrant an upward adjustment in a

fee based on the number of billable hours times reasonable hourly rates.” (Ibid.)

The instant action is a lemon law case of ordinary complexity and no particular

novelty. Counsel was appropriately compensated through the time billed.

27

b. Skill Displayed

In general, “special skill and experience of counsel should be reflected in the

reasonableness of the hourly rates." (Blum, supra, 465 U.S. at p. 889.) As the California

Supreme Court observed, “[t]he factor of extraordinary skill, in particular, appears

susceptible to improper double counting; . . . a more skillful and experienced attorney

will command a higher hourly rate. (Ketchum, supra, 24 Cal.4th at p. 1138-1139.) “Thus,

a trial court should award a multiplier for exceptional representation only when the

quality of representation far exceeds the quality of representation that would have

been provided by an attorney of comparable skill and experience billing at the hourly

rate used in the lodestar calculation. Otherwise, the fee award will result in unfair

double counting and be unreasonable.” (Id. at p. 1139.)

The skill displayed by plaintiff’s counsel was very good, but not extraordinary.

Counsel’s hourly rates are adequate compensation.

c. Contingent Nature of the Case

This is the most important factor in awarding a multiplier. As explained by the

California Supreme Court: "[The multiplier] for contingent risk [brings] the financial

incentives for attorneys enforcing important constitutional rights . . . into line with

incentives they have to undertake claims for which they are paid on a fee-for-services

basis." (Ketchum, supra, 24 Cal.4th at p. 1138.) The Court further noted that applying a

fee enhancement does not inevitably result in a windfall to attorneys: "Under our

precedents, the unadorned lodestar reflects the general local hourly rate for a fee-

bearing case; it does not include any compensation for contingent risk . . . . The

adjustment to the lodestar figure, e.g., to provide a fee enhancement reflecting the risk

that the attorney will not receive payment if the suit does not succeed, constitutes

earned compensation; unlike a windfall, it is neither unexpected nor fortuitous. Rather,

it is intended to approximate market-level compensation for such services, which

typically includes a premium for the risk of nonpayment or delay in payment of attorney

fees." (Ibid; see also Horsford v. Board of Trustees (2005) 132 Cal.App.4th 359, 399-400.)

This factor weighs in favor of a multiplier.

d. Results Obtained

Plaintiff’s counsel obtained an excellent result. This factor weighs in favor of a

multiplier.

e. Preclusion of Other Work

There is no evidence that plaintiff’s attorneys were unable to take other work

because they were working on plaintiff’s case.

Considering all of the factors, the court grants a 1.25 multiplier, which

compensates counsel for the risk of taking the case on a contingent fee basis, and the

excellent results they achieved, but also takes into account the fact that the case was

28

a fairly routine lemon law action that did not greatly hamper counsel’s ability to litigate

other cases.

This results in a fee of $41,769.75.




order.

Tentative Ruling



29

(30)

Tentative Ruling

Re: John Satragni v. Scott Radtke





Motions: Defendant Scott Radtke’s motion to stay proceedings

Tentative Ruling:

The requests for judicial notice are granted. The motion is denied without

prejudice.

Explanation:

The court has discretion to stay civil proceedings when the interests of justice

require such action. (People v. Coleman (1975) 13 Cal.3d 867, 885; Avant! Corp. v.

Superior Court (2000) 79 Cal.App.4th 876, 885-886, citing Keating v. Office of Thrift

Supervision (9th Cir. 1995) 45 F.3d 322.) And when faced with parallel criminal

proceedings, an analysis should be undertaken "in light of the particular circumstances

and competing interests involved in the case.” (Avant!, supra, 79 Cal.App.4th at 885,

citing Keating, supra, 45 F.3d at 324-325.) In general, courts should consider the

following factors (“the Keating factors”):

(1) the interest of the plaintiffs in proceeding expeditiously with this

litigation or any particular aspect of it, and the potential prejudice to the

plaintiffs of a delay;

(2) the burden which any particular aspect of the proceedings may

impose on the defendants;

(3) the convenience of the court in the management of its cases, and the

efficient use of judicial resources;

(4) the interests of persons not parties to the civil litigation; and

(5) the interest of the public in the pending civil and criminal litigation.

(Avant!, supra, 79 Cal.App.4th at 885, citing Keating, supra, 45 F.3d at 325.)

Here, defendant seeks a stay based upon pending criminal case 1:18 CR-00162

LJO SKO. He argues that this case will deplete limited financial resources and require

him to possibly testify, thereby waiving his Fifth Amendment rights. However, defendant

has provided insufficient evidence to connect the pending criminal action to this

action and has failed to provide convincing evidence regarding his financial condition.

30

Defendant therefore fails to meet his initial burden, or to make a showing under factor

two of the Keating analysis.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure




Tentative Ruling



31

(03)

Tentative Ruling

Re: Newman v. Wells Fargo Bank, N.A.



Motion: Defendant’s Demurrer to First Amended Complaint

Tentative Ruling:

To sustain the demurrer to the entire first amended complaint for uncertainty and

failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc. §

430.10, subd. (e), (f).) To grant leave to amend as to the first, second, third, fourth and

sixth causes of action, and to deny leave as to the fifth cause of action. Plaintiff shall

serve and file her second amended complaint within 10 days of the date of service of

this order. All new allegations shall be in boldface.

Explanation:

Demurrer for Defect or Misjoinder of Parties: Under Code of Civil Procedure

section 430.10, subdivision (d), a defendant can demur to a complaint based on “a

defect or misjoinder of parties.” Here, defendant has attempted to raise plaintiff’s

failure to join her husband to the action as a defect or misjoinder of parties, as plaintiff’s

husband is listed as a co-owner of the property on the deed of trust. However,

defendant has not raised this defect as a specified ground for its demurrer in its notice

of demurrer. The notice of demurrer only mentions uncertainty and failure to state facts

sufficient to constitute a cause of action as grounds. The argument regarding the

failure to join plaintiff’s husband as a party is only raised in the points and authorities

brief, not the notice of demurrer.

Under Code of Civil Procedure section 430.60, “[a] demurrer shall distinctly

specify the grounds upon which any of the objections to the complaint, cross-

complaint, or answer are taken. Unless it does so, it may be disregarded.”

Thus, failure to specify a statutory ground for a demurrer in the notice of demurrer

means that the defendant cannot rely on that ground in its subsequent arguments, and

the court may not rely on that ground in its ruling. Therefore, since defendant has not

properly specified the defect or misjoinder of parties as a separate ground for demurrer

in its notice, the court will not sustain the demurrer based on plaintiff’s alleged failure to

join her husband as a party.

Demurrer for Uncertainty: On the other hand, defendant’s demurrer for

uncertainty is well taken. Under Code of Civil Procedure section 430.10, subdivision (f),

a demurrer will lie where the pleading is uncertain. “As used in this subdivision,

‘uncertain’ includes ambiguous and unintelligible.” (Code Civ. Proc., § 430.10, subd.

(f).)

32

“[T]he facts [in the complaint] must be alleged with sufficient clarity to inform

defendants of the issues to be met.” (Dumm v. Pacific Valves (1956) 146 Cal.App.2d

792, 799, internal citations omitted.) “[T]he failure to allege a date, which appears to

be material, such as the date of an accident, known to plaintiff, and as to which it may

be assumed plaintiff's knowledge is superior to that of defendant, is subject to special

demurrer. . . . Mere recitals, references to or allegations of material facts, which may

be left to surmise, are subject to special demurrer.” (Corum v. Hartford Acc. & Indem.

Co. (1945) 67 Cal.App. 2d 891, 894–895, internal citations omitted.)

Here, plaintiff’s first amended complaint is rife with irrelevant and contradictory

allegations and lengthy citations to legal authorities that are improper in the context of

a complaint. Plaintiff also alleges only vague conclusions to support many of her

claims, and fails to allege any dates or details to support her primary contentions.

For example, plaintiff alleges that defendant conducted the foreclosure sale on

the subject property even though it had agreed to consider a short sale offer for

$150,000 by another party. (FAC, p. 2, lines 7-12.) She also alleges that the offer of

$150,000 was “offered and accepted, thus creating a binding and enforceable

contract. . . .” (Id. at p. 2, lines 13-15.) However, this allegation seems to contradict

later allegations of the complaint, where plaintiff claims that she submitted a short sale

application to defendant, but that defendant never responded to the application with

an approval or denial before proceeding with the sale. (Id. at ¶ 16.) Also, she alleges

that defendant “failed to explore foreclosure alternatives with Plaintiffs [sic] before

recording the Notice of Default and Notice of Trustee Sale. . . .” (Id. at ¶ 34.) Plaintiff

then alleges that defendant “never offered Plaintiff the loan modification and

continued to proceed with the foreclosure.” (Id. at ¶ 40.) However, plaintiff goes on to

allege that defendant made untrue or misleading statements to her, including

statements regarding the loan modification process, offering illusory modification

proposals and misleading plaintiff into believing that the issues would be resolved, and

tricking plaintiff into refraining from exploring other alternatives to foreclosure, as well as

selling the property “with the knowledge that the litigation was filed and pending.” (Id.

at ¶ 44.)

Plaintiff also claims in contradictory fashion that defendant failed to offer her a

reasonable loan modification or loss mitigation alternative, but also that defendant

“fraudulently [kept] plaintiff’s loan medication application in review for several months.”

(Id. at ¶¶ 48, 49.) Later, plaintiff alleges that the defendant did allow her to start the

loan modification process, but then advised her to stop making payments on the

mortgage and induced her to believe that the modification was an alternative to

foreclosure. (Id. at ¶ 63.)

Many of these allegations are internally inconsistent and contradictory, such as

the allegation that defendant refused to offer her a loan modification or other loss

prevention alternative, but somehow defendant also accepted her request for a short

sale or loan modification. Plaintiff also seems to conflate the concepts of loan

modification applications and short sale applications, which creates further confusion.

She never alleges when she submitted the application or applications, when defendant

accepted them, when they were deemed complete, or who the other buyer was who

made the offer to purchase the property for $150,000. Thus, it is unclear whether the

33

application was ever properly made and completed, or whether it was actually

pending when the foreclosure sale took place.

Plaintiff also seems to be alleging both that defendant ignored her loan

modification or short sale application, but also that defendant demanded more

documents and requested that she stop making payments on the loan. She also

alleges inconsistent dates regarding the foreclosure sale, which is alleged to have

occurred on both February 23, 2017 and May 29, 2018. (FAC, ¶¶ 12, 136-137.) It

appears that the references to February 23, 2017 are incorrect, but the ambiguity in this

crucial date does create further confusion. Also, while plaintiff alleges that defendant

conducted the foreclosure sale with knowledge that the present action was pending,

the original complaint was not filed until August 14, 2018, several months after the later

of the two dates alleged for the foreclosure sale. Thus, the reference to the foreclosure

occurring after the filing of the complaint in the present action appears to be incorrect

and misleading.

Plaintiff also alleges her sixth cause of action against “US Bank,” even though

Wells Fargo is the only defendant named in the caption and appears to be the only

other party involved in the loan and foreclosure process. Furthermore, plaintiff’s lengthy

citations to case law in the body of the amended complaint only serve to distract and

confuse the issues further. (See, e.g., FAC, ¶¶ 65-76, which consist entirely of citations to

various cases with lengthy discussion of various legal theories and concepts.)

As a result, the first amended complaint is entirely uncertain, as it is impossible for

defendant to respond to it in a meaningful way. Consequently, the court intends to

sustain the demurrer on the ground of uncertainty.

Demurrer to First Cause of Action: Next, with regard to the demurrer for failure to

state a cause of action as to the first cause of action for violation of Business and

Professions Code section 17200, plaintiff alleges that defendant engaged in unlawful,

unfair, or fraudulent business acts of practices because defendant conducted the

foreclosure sale of plaintiff’s property while plaintiff was still in short sale review with a

buyer who had offered $150,000 to purchase the property, “thus breaching an

agreement (for short sale review) and more importantly violating California Civil Code

section 2923.6 as well as various other provisions of California Homeowners Bill of Rights

(HBOR).” (FAC, p. 2, lines 7-12.) Plaintiff also alleges that defendant “failed to explore

foreclosure alternatives with Plaintiffs before recording the Notice of Default and Notice

of Trustee Sale in violation of Civil Code § 2923.5, HBOR, Fannie Mae/Freddie Mack

Announcements, and the Home Saver plan guidelines.” (FAC, ¶ 34.)

In addition, plaintiff alleges inconsistently that defendant never offered her a

loan modification and continued to proceed with the foreclosure (FAC, ¶ 40), but also

that defendant engaged in deceptive and misleading business practices by making

untrue or misleading statements regarding the loan modification and the process,

offering illusory modification proposals and misleading plaintiff into believing that the

issues would be resolved, misleading plaintiff into refraining from exploring other

alternatives to foreclosure, and selling the subject property with the knowledge that the

litigation was filed and pending. (FAC, ¶ 44.) Plaintiff later alleges that defendant

failed to offer a loan modification to avoid foreclosure, or failed to act in a reasonable

34

time to deny or approve the loan modification application, and that it kept her loan

modification application in review for several months. (FAC, ¶¶ 46-49.) Plaintiff further

alleges that she suffered injury as a result of defendant’s conduct, “including loss of

Plaintiff’s equity, costs and expenses related to protecting Plaintiff’s Residence, reduced

credit score, unavailability of credit, increased costs of credit, reduced availability of

goods and services tied to credit ratings, increased costs of those services, as well as

fees and costs, without limitation, attorneys’ fees and costs and damages for the

inability to get credit. Plaintiff is also entitled to actual damages and penalties under

HBOR.” (FAC, ¶ 50.)

However, plaintiff has not sufficiently alleged facts to support her claim under the

unfair competition law (UCL). Conduct violating the UCL includes "any unlawful, unfair

or fraudulent business act or practice. . . ." (Bus. & Prof. Code, § 17200.) By proscribing

unlawful business practices, the UCL borrows violations of other laws and treats them as

independently actionable. In addition, practices may be deemed unfair or deceptive

even if not proscribed by some other law. Thus, there are three varieties of unfair

competition: practices which are unlawful, or unfair, or fraudulent. (Cel-Tech

Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)

“Unfairness” under Business and Professions Code section 17200 has been

described as violating established public policy or “is immoral, unethical, oppressive or

unscrupulous and causes injury to consumers which outweighs its benefits.” (McKell v.

Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.) “Moreover, where a claim

of an unfair act or practice is predicated on public policy, we read Cel-Tech to require

that the public policy which is a predicate to the action must be 'tethered' to specific

constitutional, statutory or regulatory provisions.” (Scripps Clinic v. Superior Court (2003)

108 Cal.App.4th 917, 940, internal citations omitted.)

“A plaintiff alleging unfair business practices under these statutes must state with

reasonable particularity the facts supporting the statutory elements of the violation.”

(Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619, internal citations

omitted.) “[T]o state a claim under either the UCL or the false advertising law, based on

false advertising or promotional practices, ‘it is necessary only to show that “members

of the public are likely to be ‘deceived.’”'” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939,

951.)

“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. 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, internal citations

omitted.)

Also, only a plaintiff who has “suffered injury in fact and has lost money or

property as a result of the unfair competition” has standing to sue in the UCL. (Bus. &

Prof. Code, § 17204.) This requires a plaintiff to “(1) establish a loss or deprivation of

35

money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2)

show that that economic injury was the result of, i.e., caused by, the unfair business

practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v.

Superior Court (2011) 51 Cal.4th 310, 322.) “A UCL claim will survive a demurrer if the

plaintiff can plead ‘“general factual allegations of injury resulting from the defendant's

conduct.”’” (Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 521.)

Here, plaintiff alleges that she suffered damages from defendant’s unfair,

fraudulent, or deceptive practices. However, the only damages she identifies are harm

to her credit, vague “costs and expenses” related to “protecting” her residence, and

other fees and costs, including attorneys’ fees and costs. (FAC, ¶ 50.) Yet attorney’s

fees and costs are not considered to be sufficient to show actual damage under the

UCL. (See Mashiri v. Vital Recovery Servs., Inc. (S.D. Cal. 2014) 2014 WL 4249800, at *5

[“[a]ttorneys' fees and costs of the suit are insufficient” to confer UCL standing,

reasoning that “[i]f, in fact, all a plaintiff had to do to allege standing was to allege

attorneys' fees in pursuing the suit, every [p]laintiff would be able to allege standing.”].)

Also, emotional distress is not sufficient to confer standing under the UCL.

Emotional distress, while compensated in money in tort claims, is not itself a loss of

money or property. (See Katz v. Cal–Western Reconveyance Corp. (N.D. Cal. 2010)

2010 WL 424453, at *5.) Furthermore, to the extent that plaintiff may be alleging that

she lost money when she made payments under the loan, she has failed to allege any

facts showing that she was not already required to make such payments pursuant to

the underlying note and loan agreement. Indeed, she seems to admit that she did

owe money on the loan.

Moreover, while plaintiff alleges that her credit was damaged as a result of the

foreclosure, it does not appear that such damage is sufficient to confer standing under

the UCL without any allegation that plaintiff actually lost money as a result of the harm

to her credit. (See Witriol v. LexisNexis Group (N.D. Cal. 2006) 2006 WL 4725713 [plaintiff

incurred costs to monitor and repair damage to his credit caused by defendants];

White v. Trans Union, LLC (C.D. Cal. 2006) 462 F.Supp.2d 1079, 1084 [perpetration of

credit reports containing inaccurate erroneous information regarding “due and owing”

debts is a sufficient injury to grant plaintiffs standing]; Rubio v. Capital One Bank (9th Cir.

2010) 613 F.3d 1195, 1204 [loss of actual credit line sufficient injury to confer standing].)

Here, plaintiff alleges harm to her credit, but she alleges no facts showing that she

actually lost money as a result of her damaged credit, such as denial of a loan

application or incurring costs to monitor her credit report.

Thus, plaintiff has failed to allege any facts showing that she suffered an actual

injury due to defendant’s alleged unfair or deceptive conduct, and she has not

alleged that she has standing to sue under the UCL. On the other hand, it is possible

that plaintiff might be able to allege more facts showing that she suffered actual loss of

money if given leave to do so.

Also, plaintiff’s allegations are extremely vague, ambiguous, and confusing, as

discussed above with regard to the demurrer for uncertainty. It is unclear exactly what

defendant did or did not do with regard to plaintiff’s loan and foreclosure. At various

times, plaintiff alleges that defendant either accepted or did not accept her

36

application for either a loan modification or a short sale of the property. She also seems

to allege at some points that defendant either completely ignored the application, or

accepted the application for review but then dragged out the process and

demanded more documents from plaintiff while simultaneously proceeding with the

foreclosure. Plaintiff further alleges that defendant sold the property at foreclosure with

knowledge of the pending litigation, even though she also alleges that the sale

occurred on a date that was before the filing date of the original complaint in the

present action.

It is unclear from the vague and contradictory facts alleged how defendant’s

conduct was fraudulent, misleading, unfair, or unlawful. Also, while plaintiff cites to

several statutes that defendant allegedly violated and that demonstrate predicate

violations to support the UCL claim, many of the statutes cited appear to be

inapplicable here.

For example, plaintiff alleges that defendant violated Civil Code section 2923.5,

which requires the lender to contact the borrower to discuss options for avoiding a

foreclosure before recording a notice of default. Here, however, while the complaint’s

allegations are contradictory and confusing, it appears that defendant did contact

plaintiff to discuss avoiding a foreclosure, as plaintiff alleges that she discussed either a

loan modification or a short sale with defendant. Therefore, Civil Code section 2923.5

does not appear to have been violated here.

Likewise, while plaintiff alleges a violation of Civil Code section 3412, which

discusses grounds for rescission of a written instrument, she alleges no facts that would

support any claim that she has grounds for rescinding a written instrument. It appears

that plaintiff may be contending that the trustee’s deed upon sale was somehow

defective and should be rescinded, but she alleges no facts that would support such a

contention.

Plaintiff also alleges that defendant violated Civil Code section 1695, which

expresses a general legislative policy against fraudulent practices by home equity

purchasers of property of homeowners whose properties are in foreclosure. Again,

however, plaintiff has not alleged any facts showing that she was subjected to

fraudulent or deceptive conduct by a “home equity purchaser” during the foreclosure.

Rather, plaintiff is alleging that it was the lender who conducted the foreclosure despite

the pending application for a short sale or loan modification. There is no allegation that

the purchaser of the property did anything deceptive or fraudulent. Therefore, Civil

Code section 1695 does not appear to apply here, and plaintiff has not shown that it

forms a predicate violation for the purposes of the UCL.

Plaintiff also alleges violations of Civil Code sections 2924.12 and 2924.19(b). Civil

Code section 2924.12, subdivision (a), allows a borrower to bring an action for injunctive

relief to enjoin a material violation of Civil Code sections 2923.5, 2923.7, 2924.11, or

2924.17 where a trustee’s deed upon sale has not yet been recorded. Civil Code

section 2924.12, subdivision (b), also allows the borrower to bring an action for actual

damages against a mortgage servicers, mortagee, trustee, beneficiary or authorized

agent for violations of the same sections. Yet plaintiff alleges no facts to explain how

Civil Code sections 2923.5, 2923.7, 2924.11, or 2924.17 were violated by defendant’s

37

conduct here. Also, Civil Code sections 2923.7, 2924.11 and 2924.17 have been

repealed as of January 1, 2018, so they do not apply here. In addition, Civil Code

section 2923.19 has been repealed as of January 1, 2018, so it cannot form a predicate

violation for the purposes of the UCL claim.

Thus, plaintiff has failed to allege any facts showing that defendant’s conduct

was unlawful, unfair, fraudulent, or misleading, and she has failed to state a claim under

the UCL. As a result, the court intends to sustain the demurrer to the first cause of action

for failure to state facts sufficient to constitute a cause of action, with leave to amend.

Demurrer to Second Cause of Action: Next, with regard to the second cause of

action for breach of the implied covenant of good faith and fair dealing, plaintiff has

also failed to state any facts to support her claim.

“There is implied in every contract a covenant by each party not to do anything

which will deprive the other parties thereto of the benefits of the contract. This

covenant not only imposes upon each contracting party the duty to refrain from doing

anything which would render performance of the contract impossible by any act of his

own, but also the duty to do everything that the contract presupposes that he will do to

accomplish its purpose.” (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417, internal

citations omitted.)

“The covenant of good faith and fair dealing, implied by law in every contract,

exists merely to prevent one contracting party from unfairly frustrating the other party's

right to receive the benefits of the agreement actually made. The covenant thus

cannot ‘“be endowed with an existence independent of its contractual

underpinnings.”’ It cannot impose substantive duties or limits on the contracting parties

beyond those incorporated in the specific terms of their agreement.” (Guz v. Bechtel

Nat. Inc. (2000) 24 Cal.4th 317, 349, internal citations omitted.)

The “covenant is implied as a supplement to the express contractual covenants,

to prevent a contracting party from engaging in conduct that frustrates the other

party's rights to the benefits of the agreement.” (Waller v. Truck Ins. Exchange, Inc.

(1995) 11 Cal.4th 1, 36.) “Breach of the covenant of good faith and fair dealing gives

rise to a contract action . . . or, in limited contexts, a tort action with the tort measure of

compensatory damages and the right to recover punitive damages.” (1 Witkin,

Summary of Cal. Law (10th ed. 2005) Contracts, § 800, p. 894, italics omitted.)

Thus, in order to state a claim for breach of the implied covenant, the plaintiff

also needs to allege facts showing that there was a valid underlying contract. Here,

plaintiff alleges in conclusory terms that there was a valid oral contract between the

parties for defendant to review the short sale or loan modification agreement, and that

plaintiff agreed to default on the loan and submit the necessary paperwork for the

application. (FAC, ¶¶ 57, 63.) However, she does not allege facts showing that any

binding or enforceable agreement actually existed. At most, defendant agreed to

consider the short sale or modification application, which was simply a request to enter

into a new loan or sale agreement. In other words, defendant merely agreed to

consider entering into an agreement, which would not constitute an enforceable

agreement in itself. Nor has plaintiff alleged that she agreed to provide any

38

consideration in return for defendant’s performance, other than providing paperwork

and defaulting on the loan. Yet according to the judicially noticeable documents

provided by defendant, it appears that plaintiff had already defaulted on the loan

before plaintiff submitted the modification or short sale application. (Exhibit C to

Request for Judicial Notice.) Plaintiff never alleges that she was not in default by the

time she requested the modification or short sale, and she seems to concede that she

was in default.

Thus, it does not appear that there was any consideration for the alleged oral

agreement, or that the agreement was anything other than a non-enforceable

“agreement to agree.” “Preliminary negotiations or agreements for future

negotiations—so-called agreements to agree—are not enforceable contracts.”

(Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1174, internal

citation omitted.)

Without an enforceable agreement, defendant cannot have been guilty of

breaching the implied covenant of good faith and fair dealing. Consequently, the

court intends to sustain the demurrer to the second cause of action for breach of the

implied covenant of good faith and fair dealing. However, the court intends to grant

leave to amend, as there is a possibility that plaintiff might be able to allege more facts

to show the existence of a valid agreement that would support the implied covenant

claim.

Demurrer to Third Cause of Action: With regard to the third cause of action for

negligence, plaintiff has alleged that defendant had a duty to properly consider and

process her loan modification application, and that defendant breached its duty when

it asked her to send the same documents numerous times, failed to take control of the

documents she submitted, or shredded them rather than maintaining them properly,

delayed plaintiff’s application, required plaintiff to default in order to qualify for a

modification, and failed to disclose the risks of defaulting. (FAC, ¶¶ 102-112.)

However, there is a split of authority as to whether a bank owes a duty of care to

a borrower when processing a loan modification application. A number of courts in

California, as well as federal district courts, have held that a commercial lender owes

no duty of care to a borrower under normal circumstances. “Lenders and borrowers

operate at arm's length. ‘[A]s 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.’” (Lueras v. BAC

Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 63, internal citations omitted.)

“We conclude a loan modification is the renegotiation of loan terms, which falls

squarely within the scope of a lending institution's conventional role as a lender of

money. A lender's obligations to offer, consider, or approve loan modifications and to

explore foreclosure alternatives are created solely by the loan documents, statutes,

regulations, and relevant directives and announcements from the United States

Department of the Treasury, Fannie Mae, and other governmental or quasi-

governmental agencies. The Biakanja factors do not support imposition of a common

law duty to offer or approve a loan modification. If the modification was necessary

due to the borrower's inability to repay the loan, the borrower's harm, suffered from

39

denial of a loan modification, would not be closely connected to the lender's conduct.

If the lender did not place the borrower in a position creating a need for a loan

modification, then no moral blame would be attached to the lender's conduct.” (Ibid.)

On the other hand, a number of other cases have reached the opposite

conclusion and found that banks may owe a duty of care to borrowers who apply for

loan modifications. In Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th

941, the First District Court of Appeal agreed with the decision in Jolley v. Chase Home

Finance, LLC (2013) 213 Cal.App.4th 872, as well as the decision in Garcia v. Ocwen

Loan Servicing, LLC (N.D. Cal. 2010) 2010 WL 1881098, which both held that the lender

may owe a duty of care when processing a borrower’s loan modification application.

“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.’ As stated in Garcia, ‘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.’

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, internal citations omitted.)

Also, “[t]he 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. Moreover, the allegation in the

complaint that defendants engaged in ‘dual tracking,’ which has now been prohibited

(see Civ. Code, §§ 2923.6, 2924.18) increases the blame that may properly be assigned

to the conduct alleged in the complaint.” (Alvarez, supra, 228 Cal.App.4th at pp. 949-

950.) “The policy of preventing future harm also strongly favors imposing a duty of care

on defendants.” (Id. at p. 950.) Likewise, in Daniels v. Select Portfolio Servicing, Inc.

(2016) 246 Cal.App.4th 1150, the Sixth District Court of Appeal held that a lender may

owe a duty of care to a borrower who applies for a loan modification.

While it is a close call, this court believes that the line of cases holding that a

lender may owe a borrower a duty of care when the borrower applies for a loan

modification is the better rule. The Biankanja factors weigh in favor of imposing a duty

of care on the lender, at least where the lender has agreed to consider a loan

modification application and then fails to process the application in a proper and

timely manner.

The first factor is the extent to which the transaction was intended to affect the

plaintiff. “‘“[U]nquestionably”’ the transaction was intended to affect appellants, as

‘“‘[t]he decision on [appellants'] loan modification application would determine

40

whether or not [they] could keep [their] home’”’ and at what cost.” (Daniels, supra,

246 Cal.App.4th at p. 1182, quoting Alvarez, supra, 228 Cal.App.4th at p. 948.)

The second factor, the potential harm to plaintiff from mishandling the loan

application process, was foreseeable, since even if there was no guarantee that the

loan modification would have been granted, it was certain that if the application was

not handled in a timely manner plaintiff would lose her home.

With regard to the third factor, the degree of certainty that plaintiff suffered

injury, it is somewhat ambiguous here, since defendant points out that plaintiff was

already in default on her loan and she alleges nothing to indicate that she would have

qualified for a loan modification even if it had been processed properly. Plaintiff does

allege that she had a short sale buyer who had made an offer on the property for

$150,000, and that the bank had promised to consider the offer, but it is not clear that

the bank had a duty to accept the offer, which was apparently for considerably less

than what plaintiff owed on the loan. However, she also alleges that she suffered other

harm from the bank’s negligent conduct, such as harm to her credit rating. Therefore,

this factor does appear to weigh in favor of imposing a duty here.

The fourth factor is the closeness of the connection between the defendant’s

conduct and the plaintiff’s alleged injury. Here, at least some of the harm allegedly

suffered by plaintiff, such as the damage to her credit and the fees and penalties she

incurred, were apparently the result of her default on the loan. However, plaintiff does

allege harm in the form of other remedies that she might have taken if the bank had

not delayed consideration of her application. Thus, there are sufficient facts to support

a finding of a duty with regard to the fourth factor.

The fifth factor, the moral blameworthiness of the bank’s conduct, does not

weigh in favor of plaintiff here. Although plaintiff alleges that defendant encouraged

her to default on the loan in order to qualify for a modification, the documents

submitted by the bank indicate that plaintiff was already in default before she applied

for a loan modification or short sale. Plaintiff does not allege that she was not already in

default at the time she sought the modification or short sale. Thus, the need for a

modification does not appear to have been a problem created by defendant, but

rather by plaintiff’s failure to pay on the loan. (Lueras, supra, 221 Cal.App.4th at p. 67

[“If the lender did not place the borrower in a position creating a need for a loan

modification, then no moral blame would be attached to the lender's conduct.”].)

Thus, the fifth factor is at best neutral, and may even support defendant’s position that

it had no duty here.

Finally, the sixth factor, the policy of preventing future harm, weighs in favor of

finding a duty exists. There is a public policy in favor of preventing future harm to loan

borrowers due to banks’ mishandling of loan modification applications. (Alvarez, supra,

228 Cal.App.4th at p. 950.) Imposing a duty of care may give banks an incentive to

offer and approve loan modifications, which would likely prevent future foreclosures

and harm to borrowers.

Therefore, the court finds that a duty of care may exist here. However, as

discussed above with regard to the demurrer for uncertainty, the allegations of the

41

complaint are so vague, confusing, and self-contradictory that plaintiff’s negligence

cause of action still fails to allege a clear claim. As a result, the court intends to sustain

the demurrer to the third cause of action for uncertainty and failure to state facts

sufficient to constitute a cause of action, with leave to amend.

Demurrer to Fourth Cause of Action: Next, with regard to the fourth cause of

action for fraud, plaintiff has failed to allege the specific facts necessary to support a

fraud claim. The elements of fraud are: (1) a knowingly false representation of fact by

the defendant, (2) made with intent to defraud, (3) reliance by the plaintiff, and (4)

resulting damage to the plaintiff. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72-73.)

“’Every element of the cause of action for fraud must be alleged in the proper

manner and the facts constituting the fraud must be alleged with sufficient specificity to

allow defendant to understand fully the nature of the charge made.’” (Id. at p. 73,

quoting Roberts v. Ball, Hunt, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) “Thus

‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to

sustain a pleading defective in any material respect.’” (Ibid, internal citation omitted.)

“This particularity requirement necessitates pleading facts which ‘show how, when,

where, to whom, and by what means the representations were tendered.’” (Ibid,

internal citation omitted.) Also, where the plaintiff seeks to hold a corporation liable for

fraud, she must allege the names of the persons who spoke, their authority to bind the

corporation, what they said or wrote, to whom they spoke or wrote, and when it was

said or written. (Tarmann v. State Farm Mutual Auto. Ins. Co. (1991) 2 Cal.App.4th 153,

157.)

Here, plaintiff has not alleged any specific facts to support her fraud claim

against defendant. Plaintiff does not allege the names of the persons with whom she

spoke, their authority to speak, what they said or wrote, or when it was said or written.

She also does not allege exactly what misrepresentations of fact defendant’s agents

actually made to her, or how she relied on those representations to her detriment. She

merely alleges that defendant’s “agents or assigns misrepresented to Plaintiff that

Plaintiff qualified for a modification to induce Plaintiff to default on the loan.” (FAC, ¶

115.) Plaintiff then alleges that she was damaged because she suffered harm to her

credit history, her ability to borrow money, attorneys’ fees, and filing fees and litigation

costs. (Id. at ¶ 116.) Yet the notice of default seems to indicate that plaintiff was

already in default on the loan at the time she applied from a loan modification.

(Request for Judicial Notice, Exhibit C.) However, due to the lack of any specific dates

in the complaint, it is difficult to be certain when the representations were made, or

whether plaintiff was actually in default when the representations were made.

There is also some ambiguity as to exactly what defendant allegedly promised to

plaintiff, as she has alleged earlier in the complaint that defendant only promised to

consider the application for a short sale, not a loan modification, and that the

application was still in review at the time of the foreclosure sale. (FAC, ¶ 12.) Plaintiff

then alleges in a contradictory fashion that the short sale offer had been accepted

and that there was a binding contract. (Id. at ¶ 13.) Thus, it is entirely unclear what

defendant may have actually promised plaintiff, when it was promised, who made the

promises, and whether harm plaintiff suffered any harm as a result. As a result, the court

42

intends to sustain the demurrer to the fourth cause of action for fraud, with leave to

amend.

Demurrer to Fifth Cause of Action: The fifth cause of action for violation of the

HBOR also fails to state a claim, as the HBOR has been largely repealed since January 1,

2018. Plaintiff relies on Civil Code sections 2923.4, 2923.55, and 2924 to support her

cause of action. However, Civil Code section 2923.4 simply sets forth the purpose of the

HBOR, which is to ensure that borrowers are considered for available loss mitigation

options as an alternative to the foreclosure process. (Civ. Code, § 2923.4, subd. (a).)

The section does not provide for any civil liability on its own.

Civil Code section 2923.55 has been repealed as of January 1, 2018, so it cannot

serve as a basis for liability here. Civil Code section 2924 deals with the procedures for

notices of defaults and foreclosures after a borrower defaults on a mortgage.

However, plaintiff does not allege any facts showing how the bank failed to comply

with the procedures under Civil Code section 2924. Plaintiff simply alleges that the

defendant advised her that she “may be able to be considered for forbearance or

short sale,” and that, if defendant had explored these alternatives with plaintiff, it could

have avoided the illegal sale of the property and preserved plaintiff’s equity. (FAC, ¶

130.) These allegations do not appear to show any defect in the statutory procedures

under Civil Code section 2924, and thus plaintiff has failed to state a claim for violation

of that section, or the HBOR.

As a result, the court intends to sustain the demurrer to the fifth cause of action.

Also, since the HBOR has been repealed, it does not appear that plaintiff can state a

valid cause of action under that statute. Therefore, the court intends to deny leave to

amend the fifth cause of action.

Demurrer to Sixth Cause of Action: Finally, the court intends to sustain the

demurrer to the sixth cause of action for rescission of the foreclosure sale. Under Civil

Code section 3412, “[a] written instrument, in respect to which there is a reasonable

apprehension that if left outstanding it may cause serious injury to a person against

whom it is void or voidable, may, upon his application, be so adjudged, and ordered to

be delivered up or canceled.” (Civ. Code, § 3412.) “In Hibernia Sav. & Loan Soc. v.

Ordway, 38 Cal. 681, in an action to remove a cloud, under section 3412, the court

said, ‘There can be no question but that the facts which show the apparent validity of

the instrument which is said to constitute the cloud, and also the facts showing its

invalidity ought to be stated.’” (Hughes v. Beekley (1927) 85 Cal.App. 313, 316.)

Here, plaintiff alleges no facts to support her contention that the foreclosure sale

was invalid and therefore should be rescinded. She simply alleges in conclusory fashion

that the sale was done in violation of the HBOR, the California Recording Statute, and

other applicable laws. (FAC, ¶ 137.) Yet plaintiff alleges no facts that would tend to

support this conclusory allegation, and there is nothing in the amended complaint that

indicates that there is any defect in the sale of the subject property. Plaintiff’s

allegation that the bank should have allowed her to do a short sale instead of selling

the property in foreclosure fails to demonstrate any defect in the sale itself.

43

Therefore, the court intends to sustain the demurrer to the sixth cause of action

for failure to state facts sufficient to constitute a cause of action. However, since it is

possible that plaintiff might be able to state a claim if given another chance to do so,

the court will grant leave to amend.

Pursuant to CRC 3.1312 and CCP §1019.5(a), no further written order is necessary.

The minute order adopting this tentative ruling will serve as the order of the court and

service by the clerk will constitute notice of the order.

Tentative Ruling



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