Bell-Sparrow v. Wells Fargo Bank, N.A.

ARLENE BELL-SPARROW, Plaintiff and Appellant, v. WELLS FARGO BANK, N.A., Defendant and Respondent.

A134659

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO

FILED: April 10, 2013

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Alameda County

Super. Ct. No. HG11575269)

Plaintiff Arlene Bell-Sparrow (plaintiff or Ms. Bell-Sparrow) appeals from the judgment of dismissal entered following the sustaining of a general demurrer to her second amended complaint. We conclude that the trial court, having given plaintiff generous opportunity to correct deficiencies that were pointed out to her in detail, did not err in denying plaintiff leave to file a fourth pleading. In light of this conclusion, we affirm the judgment of dismissal.

BACKGROUND

Some preliminary points must be established. First, the root of this dispute is a loan obligation plaintiff originally assumed with a financial institution that is no longer in existence and which also went through a couple of mergers. The obligation eventually ended up with defendant Wells Fargo Bank, N.A. For purposes of simplicity, and to avoid cluttering up the narrative with these not-really-relevant events, we shall generally proceed as though Wells Fargo was the original lender. Second, although there is a Mr. Sparrow, and while he did make various appearances in this litigation, he departed just prior to entry of the judgment and is not a party to this appeal. The references to himwill therefore reduced to only those necessary for avoiding misconception and for resolving Ms. Bell-Sparrow's appeal. Third, the following will not recount numerous procedural events that have no bearing on this appeal. Finally, this opinion will have extensive excerpts from the trial court's comprehensive—and thoughtful—orders, to which minor, nonsubstantive changes (i.e., substituting Wells Fargo for Bank) have been made.

In April 2007, the Sparrows refinanced their residence in Union City with a $604,000 loan from Wells Fargo. The loan was secured with a deed of trust on the property.

In 2009, the Sparrows filed separate bankruptcy petitions. Each of the petitions recited that the property was worth $445,000 (by Mr. Sparrow) or $480,000 (by plaintiff), but that $645,000 was owed Wells Fargo. On schedule D of each petition, the box for whether this claim was "disputed" was not checked. Each of the petitions was executed under penalty of perjury. Both Mr. Sparrow and plaintiff received discharges in bankruptcy near the end of 2009, although the discharges warned that "a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the discharged debtor's property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case."

On April 21, 2011, Wells Fargo recorded a notice of default on the obligation, on the ground that plaintiff was more than $65,000 in arrears. Plaintiff—who at all times has represented herself—responded with her initial verified complaint against Wells Fargo on May 11, 2011. The complaint is 80 pages long, with more than 50 pages of attached exhibits. There are 12 causes of action, styled as follows: (1) declaratory relief; (2) fraud; (3) tortious violation of statute [i.e., Civil Code § 2923.6]; (4) quiet title; (5) reformation; (6) violation of Business and Professions Code § 17200; (7) violation of Civil Code section 2923.6; (8) violation of Civil Code section 1788.17; (9) violation of Civil Code section 1572; (10) injunctive relief; (11) violation of Civil Code section 2923.52; (12) violation of Civil Code section 2923.53.

Wells Fargo filed a general demurrer alleging numerous defects in plaintiff's complaint. The demurrer included what is a fair assessment of plaintiff's complaint:

"The Complaint contains two 'Claims for Relief' and ten 'Causes Of Action.' (These are referred to herein as the '1st' through '12th' Causes of Action.) The 80-page Complaint is confusing—it refers to unfurnished exhibits and intersperses allegations with excerpts from news articles, legislative findings, argument, statutes, and the result of a 'forensic audit.' However, boiled down to essentials, the Complaint appears to be based on the following claims:

"[Wells Fargo] induced Plaintiffs to accept a loan they could not afford by representing that Plaintiffs qualified for the loan and that the loan was 'within Plaintiffs' financial needs and limitations.' [¶] [Wells Fargo] did not disclose the 'true cost of the loan,' that payments would exceed Plaintiffs' income, and other terms. [¶] Plaintiffs could not make the payments. [¶] Wells Fargo refused to modify Plaintiffs' loan. [¶] [Wells Fargo] initiated foreclosure in violation of the foreclosure laws and the Rosenthal Fair Debt Collection Practices Act."

In addition to alleging that plaintiff's causes of action were either time-barred or failed to state a claim, Wells Fargo argued that "All of plaintiff's claims against Wells Fargo are preempted under the Federal Home Owner's Loan Act [12 U.S.C. § 1461 et seq.]," and "Plaintiffs are judicially and equitably estopped from asserting their claims against [Wells Fargo]."

The trial court ruled as follows:

"The demurrer to the First Cause of Action for Declaratory Relief, in both of the versions alleged in the Complaint, is SUSTAINED WITH LEAVE TO AMEND. Plaintiffs have not alleged facts that show an actual controversy. Plaintiffs have not alleged that they are willing or have the ability to tender an amount sufficient to cure the default. Defendants are not required to have possession of the original note. (Pantoja v. Countrywide Loans, Inc. (N.D.Cal. 2009) 640 F.Supp.2d 1177, 1186.) The allegation that the deed of trust and note were separated is incomprehensible, and does not state a viable claim for relief as a matter of law. (See Pantoja, supra, 640 F.Supp.2d at1188-1190; Gomes v. Countrywide Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154-1156.)

"The demurrer to the Second Cause of Action for Fraud, in both of the versions alleged in the Complaint, is SUSTAINED WITH LEAVE TO AMEND. Plaintiffs have not alleged facts with particularity that support a claim for fraud. Plaintiffs alleges some facts that are not actionable, such as failure to determine whether Plaintiffs could repay. Plaintiffs allege some facts that are irrelevant to fraud, such as the class action settlement and the forensic loan audit. The allegations concerning representations made to Plaintiffs lack specificity, as do the allegations that Plaintiffs reasonably relied on Defendants' representations.

"The demurrer to the Third Cause of Action for Tortious Violation of Civil Code section 2923.6 and the Seventh Cause of Action for Violation of Civil Code section 2923.6 is SUSTAINED WITHOUT LEAVE TO AMEND. Section 2923.6 does not create a private right of action in favor of borrowers and does not create a duty owed by lenders to provide a loan modification to borrowers.

"The demurrer to the Fourth Cause of Action for Reformation is SUSTAINED WITH LEAVE TO AMEND. Defendants Wells Fargo did not have a duty to ensure that Plaintiffs were able to repay the loan.

"The demurrer to the Fifth Cause of Action to Quiet Title and Set Aside Foreclosure is SUSTAINED WITH LEAVE TO AMEND. Defendant Wells Fargo did not have a duty to ensure that the loan was in Plaintiffs' best interests, or that they would be able to repay.

"The demurrer to the Sixth Cause of Action for Violation of Business & Professions Code section 17200 is SUSTAINED WITH LEAVE TO AMEND. The claim incorporates 68-pages of pleading. Plaintiffs have not alleged what unlawful, unfair, or fraudulent act by Defendant Wells Fargo is the basis for this claim. Plaintiffs do not allege facts supporting a claim for restitution.

"The demurrer to the Eighth Cause of Action Violation of the Fair Debt Collection Practices Act is SUSTAINED WITHOUT LEAVE TO AMEND. Civil Code section1788.17, also known as the Rosenthal Act, does not apply to attempts by lenders to initiate foreclosure proceedings on loans secured by real property.

"The demurrer to the Ninth Cause of Action for Violation of Civil Code section 1572 is SUSTAINED WITH LEAVE TO AMEND. Plaintiffs have not alleged fraud with particularity. Defendants did not have a duty to determine Plaintiffs' ability to repay.

"The demurrer to the Tenth Cause of Action for Injunctive Relief is SUSTAINED WITH LEAVE TO AMEND. The claim is dependent upon the existence of an underlying claim for relief, which is lacking.

"The Court does not find it necessary at this time to rule on Defendants' arguments based on (1) the statute of limitations or (2) judicial estoppel resulting from the prior bankruptcy proceeding filed by Plaintiff Ronald W. Sparrow. The Court does not agree with Defendants that Plaintiffs' claims are barred by the Homeowners Loan Act. [Citations.]"

On August 25, 2011, plaintiff filed a 40-page first amended complaint with causes of action for (1) declaratory relief; (2) fraud; (3) reformation; (4) to quiet title and set aside foreclosure; (5) violation of Business & Professions Code section 17200; (6) violation of Civil Code section 1572, negligent misrepresentation; and (7) injunctive relief.

Wells Fargo again demurred. The grounds varied, but in large part asserted that the deficiencies noted in the court's ruling had not been cured. Wells Fargo reiterated that all of the causes of action were "barred by judicial and equitable estoppel as a result of discharge orders issued in plaintiffs' bankruptcy proceedings."

The trial court ruled on this demurrer as follows (with minor editorial changes):

"The demurrer to the First Cause of Action is SUSTAINED...