Opinion
A146242
12-11-2017
MARY ADEN, Plaintiff and Appellant, v. ONEWEST BANK, N.A., et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. C14-00512)
Plaintiff Mary Aden appeals judgments entered in favor of defendants OneWest Bank, N.A. (OneWest), Financial Freedom Acquisition LLC (FFA), and the law firm of Malcolm Cisneros, a law corporation (MC), following the entry of an order sustaining without leave to amend demurrers to plaintiff's third amended complaint. The amended complaint seeks to recover damages based on a variety of theories, all arising out of the foreclosure of a reverse mortgage on her home. We conclude the court erred in sustaining the demurrer to the causes of action for breach of the covenant of good faith and fair dealing and financial elder abuse. Accordingly, we shall reverse the judgment entered in favor of OneWest and FFA and remand with instructions to issue an order overruling the demurrer with respect to these causes of action. We shall affirm the judgment as to MC on the ground that its conduct is protected by the litigation privilege.
FFA is a wholly owned subsidiary of OneWest. In August 2015, about the same time judgment was entered, OneWest merged into CIT Bank N.A. (CIT Bank). CIT Bank filed a respondent's brief in this appeal. In response to some confusion regarding whether CIT Bank was also representing FFA on appeal, counsel for CIT Bank filed an express joinder in the respondent's brief on behalf of FFA. Plaintiff has opposed the joinder as untimely. We need not resolve the matter as joinder is unnecessary. CIT Bank's brief was clearly filed in support of the judgment entered in favor of both OneWest and its subsidiary FFA.
Factual and Procedural Background
On March 14, 2014, plaintiff filed a complaint against defendants and recorded a lis pendens on the disputed property. A third amended complaint (complaint) alleges causes of action for financial elder abuse, breach of the covenant of good faith and fair dealing, intentional and negligent infliction of emotional distress, quiet title, rescission, repudiation and reformation of contract, fraud and negligent misrepresentation. The causes of action against Bank of America to quiet title and to reform or rescind the contract are not before us and remain pending.
The complaint alleges in relevant part as follows:
Plaintiff and her now deceased husband married in 1976 and in 2002 with community funds purchased from their landlord the Richmond home which for many years they had been renting. The sellers executed an "individual grant deed" to plaintiff's husband, "Bascir M. Aden, an unmarried man," and took back a loan secured by a deed of trust signed only by Bascir M. Aden. The complaint alleges that plaintiff "did not know she was not on the deed for the Aden Home along with Mr. Aden" and that all payments on the loan were made with community funds. The complaint further alleges that "identification of Mr. Aden as an 'unmarried man' on the deed did not affect her community property interest in the Aden Home."
On August 2, 2006, plaintiff's husband entered into a Home Equity Conversion Loan (the reverse mortgage) with Financial Freedom Senior Funding Corporation (Financial Freedom), which was secured by a deed of trust that, without plaintiff's knowledge, named only plaintiff's husband as the borrower. The adjustable rate promissory note provides for payment of principal and interest upon receipt of notice from the lender demanding immediate payment and that immediate payment may be required if "a borrower dies and the property is not the principal residence of at least one surviving borrower." The note defines the "borrower" as "each person signing at the end of this note." Although plaintiff acknowledges she did not sign the note, the complaint alleges on information and belief that Financial Freedom knew, or should have known, that her husband was married, that the loan application "did not ask Mr. Aden whether he was married," and that "it was industry practice and [Financial Freedom's] practice, to counsel couples not to put both spouses on reverse mortgages loan documents because it was alleged that the couple would qualify for a higher loan amount with only one borrower." The complaint further alleges, "The statute which governs Home Equity Conversion Mortgages ('HECM'), namely the 'insurance of home equity conversion mortgages for elderly homeowners, is found at 12 U.S.C. 1715z-20(j) and mandates that 'the homeowner's obligation to satisfy the loan obligation is deferred until the homeowner's death, the sale of the home, or the occurrence of other events specified in regulations of the secretary. For purposes of this subsection, the term "homeowner" includes the spouse of a homeowner.' [emphasis added.] The statute requires that HECM loans, by default, apply to both parties, that any reference to a homeowner is by default, reference to the couple, and that the obligation to satisfy this loan is deferred until both parties have died."
Home equity conversion loans are reverse mortgages insured by the Federal Housing Administration. (See 12 U.S.C.A. § 1715z-20.)
In September 2009, the deed of trust held by Financial Freedom was transferred to FFA. Plaintiff's husband died on July 3, 2013.
CIT Bank submitted documents to the trial court showing Financial Freedom was closed by the Federal Deposit Insurance Company (the FDIC) in July 2008 and that the mortgage subsequently was sold by the FDIC to FFA. CIT Bank has requested this court to take judicial notice of these documents, as well as additional documents relating to the mortgage at issue, all of which were judicially noticed by the trial court. This request is denied as unnecessary because the documents were part of the record before the trial court and are included in the record on appeal. (Davis v. Southern California Edison Co. (2015) 236 Cal.App.4th 619, 632, fn. 11.)
On July 26, 2013, OneWest/FAA sent a letter regarding the mortgage to plaintiff's deceased husband at plaintiff's home address. In response, plaintiff's counsel sent a letter to OneWest informing it that plaintiff was the borrower's wife, that they were married at the time he entered the mortgage, that she had a community property interest in the property, and that she intended to remain in the home and pay the lender the lesser of the loan balance or 95 percent of the appraised value of the home.
On October 15, 2013, FFA transferred its interest in the deed to its parent company OneWest.
In respondents brief, the CIT Bank indicates, without citation to the record, that the transfer between FFA and One West occurred in July 2011.
On October 30, 2013, a notice of default and election to sell was recorded. On November 7, 2013 and again on February 7, 2014, a notice was mailed to plaintiff's deceased husband at plaintiff's home address indicating that the mortgage was in default and the home might be sold. On February 12, 2014, a notice of trustee's sale was recorded, indicating that the home would be sold on March 17, 2014. According to the complaint, "Throughout this time period leading up to the illegal trustee's sale, Mrs. Aden's counsel made multiple contacts with . . . OneWest and/or FFA, to attempt to postpone this sale until the issues could be resolved. [¶] . . . In these contacts, Mrs. Aden's counsel was forced to make contact through a single phone number for 'Financial Freedom' provided to it . . . . Persons who answered the telephone at this number as representatives of 'Financial Freedom' refused to provide their last names, identifying information, direct phone contact and/or supervisor contact information. Mrs. Aden's counsel was unable to speak with the same representative twice. She never received a substantive response to these contacts from a representative, despite her counsel's numerous calls and faxes."
On February 25, 2014, OneWest transferred its interest under the deed of trust to Bank of America. Plaintiff was not given notice of the transfer and the assignment of the deed of trust was not recorded until April 10, 2014.
Plaintiff filed the present action on March 14, 2014, seeking to delay the trustee sale originally noticed for March 17. The foreclosure did not go forward on that day and, on March 18, "Mrs. Aden's counsel was then directed to MC, who defendants, including MC itself, indicated represented the 'lender.' " MC did not respond to plaintiff's overtures until March 28, when it informed plaintiff's counsel by email that its client intended to hold the foreclosure auction in 48 minutes. MC stated that its client was OneWest/FFA and did not disclose to plaintiff or her attorney that the foreclosing entity was actually Bank of America. At the auction, the home was "returned to the bank" based on a bid of $150,000. The trustee's deed recorded on April 4 indicates that Bank of America was the grantee.
On April 14, 2014, MC sent a representative on behalf of Bank of America to plaintiff's home "with papers regarding her relocation from her home." On May 6, 2014, MC had a three-day notice served on plaintiff on behalf of Bank of America.
MC and OneWest and FFA filed demurrers to the third amended complaint. Following a hearing, the court issued an order sustaining the demurrers without leave to amend and subsequently entered judgments of dismissal in favor of MC, FFA and OneWest. Plaintiff timely filed notices of appeal.
A third notice of appeal was filed with respect to a judgment of dismissal entered in favor of defendant Financial Freedom, but the appeal was dismissed prior to briefing.
Discussion
1. Standard of Review
" 'On review of an order sustaining a demurrer without leave to amend, our standard of review is de novo, "i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law." [Citation.]' [Citation.] ' " 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.]" [Citation.] 'We affirm if any ground offered in support of the demurrer was well taken but find error if the plaintiff has stated a cause of action under any possible legal theory. [Citations.] We are not bound by the trial court's stated reasons, if any, supporting its ruling; we review the ruling, not its rationale.' " (Walgreen Co. v. City and County of San Francisco (2010) 185 Cal.App.4th 424, 433.)
2. Claims against CIT Bank
Plaintiff's complaint names OneWest and FFA as defendants in six causes of action: The first cause of action for elder abuse, the second cause of action for breach of the covenant of good faith and fair dealing, the third and fourth causes of action for intentional and negligent infliction of emotional distress and the ninth and tenth causes of action for fraud and negligent misrepresentation.
A. Preliminary Arguments
CIT Bank argues that the foreclosure of the reverse mortgage was necessarily valid because FFA and OneWest were bona fide purchasers for value and thus entitled to rely on the recorded title. The court rejected this argument, explaining that "only a bona fide encumbrancer without knowledge of the facts calling title into question may rely on [the title]" and that the complaint alleges that both OneWest and FFA had actual knowledge of plaintiff's marriage. We agree with the trial court that whether OneWest and FFA "were entitled to rely on the title is not a question the court may determine as a matter of law" in ruling on the demurrer.
CIT Bank also argues that plaintiff is barred from challenging the recorded title under the one year statute of limitations found in Family Code section 1102, subdivision (d). As the trial court correctly noted, the statute of limitations does not bar plaintiff's claim against the defendants if the defendants had knowledge of the marriage relation. (Byrd v. Blanton (1983) 149 Cal.App.3d 987, 993 [statute does not bar legal action when "property stood in the name of her husband alone and was conveyed by him alone without her knowledge or consent to a donee who knew of the marriage relation and the nonsigning spouse's lack of knowledge or consent."].) Because the complaint alleges FFA and OneWest knew that Mr. Aden was married, this issue cannot be resolved on demurrer.
Family Code section 1102, subdivision (d) provides: "No action to avoid any instrument mentioned in this section, affecting any property standing of record in the name of either spouse alone, executed by the spouse alone, shall be commenced after the expiration of one year from the filing for record of that instrument in the recorder's office in the county in which the land is situated."
Third, CIT Bank argues that plaintiff has failed to identify any property that was taken from her because she has not sufficiently alleged that her home was community property. The court rejected this argument on the ground that plaintiff has "alleged facts which support a conclusion that she had, at the relevant times, a community property interest in the subject property" and that in addition, she alleged that "she lives in the home" and would suffer harm if forced to vacate the home. While CIT Bank may be correct that the "legal title is presumed to be correct," plaintiff has alleged facts sufficient to overcome that presumption.
Finally, CIT Bank argues FFA did not assume any liability of Financial Freedom when it acquired the servicing rights to the loan from the FDIC, so that it cannot be held liable for any misconduct surrounding the origination of the mortgage. CIT Bank mischaracterizes plaintiff's complaint as seeking to hold FFA and OneWest liable for Financial Freedom's misconduct. As discussed in detail below, the complaint alleges that FFA and OneWest engaged in specific wrongful conduct by, among other things, attempting to enforce rights under the deed of trust while it knew or should have known the deed of trust was invalid, and by concealing from plaintiff facts that would have permitted her to pay off the loan. Thus, the complaint alleges more than mere assumption of liability for Financial Freedom's allegedly wrongful conduct.
B. Breach of the Covenant of Good Faith and Fair Dealing
" 'Every contract imposes on each party a duty of good faith and fair dealing in each performance and in its enforcement.' [Citations.] Simply stated, the burden imposed is ' "that neither party will do anything which will injure the right of the other to receive the benefits of the agreement." ' [Citations.] Or, to put it another way, the 'implied covenant imposes upon each party the obligation to do everything that the contract presupposes they will do to accomplish its purpose.' " (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1393.)
A claim for breach of the covenant of good faith and fair dealing is a "claim founded upon contract . . . . 'When a court enforces the implied covenant it is in essence acting to protect "the interest in having promises performed [citation]" . . . .' [Citation.] . . . 'The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purposes.' [Citation.] In short, it is an implied-in-law term of the contract. Therefore, its breach will always result in a breach of the contract, although a breach of a consensual (i.e., an express or implied-in-fact) contract term will not necessarily constitute a breach of the covenant." (Careau & Co. v. Security Pacific Business Credit, Inc., supra, 222 Cal.App.3d at pp. 1393-1394.)
"Intended contract beneficiaries may 'possess the rights of parties to the contract' " . . . including "the benefits of the implied covenant of good faith and fair dealing." (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1034.) "Under California law third party beneficiaries of contracts have the right to enforce the terms of the contract under Civil Code section 1559 which provides: 'A contract made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.' Traditional third party beneficiary principles do not require that the person to be benefited be named in the contract. [Citations.] A third party may qualify as a beneficiary under a contract where the contracting parties must have intended to benefit that individual and such intent appears on the terms of the agreement. " (Harper v. Wausau Ins. Corp. (1997) 56 Cal.App.4th 1079, 1086-1087; Prouty v. Gores Technology Group (2004) 121 Cal.App.4th 1225, 1232-1233 [" 'The word "expressly," by judicial interpretation, has now come to mean merely the negative of "incidentally." ' "]; see also Northwestern Mutual. Ins. Co. v. Farmers' Ins. Grp. (1978) 76 Cal.App.3d 1031, 1042 [unnamed permissive driver is an "express third party beneficiary" of an automobile insurance policy because he is "one of a class for whose benefit the policy was expressly made"].)
Plaintiff's complaint alleges several times that she was "an intended beneficiary of the loan agreement," "an intended contract beneficiary," and "an intended third party beneficiary of the HECM Deed of Trust and reverse mortgage agreement." She alleges, albeit obliquely and rather confusingly, that she was intended to be treated as a "borrower" under the reverse mortgage agreement, contrary to CIT Bank's argument that she was simply incidentally benefited by the agreement. Plaintiff relies on allegations in the complaint that at the time the agreement was entered, it was Financial Freedom's practice to advise couples not to put both spouses on reverse mortgage loan documents so that the couple would qualify for a higher loan amount; that she and her deceased husband had no reason to and did not hide their marriage; and that under the terms of the reverse mortgage as described to her by her husband, she was entitled to stay in her home until her death. Plaintiff also relies on the fact that at the time the mortgage was entered, federal law governing the insurance of home equity conversion loans required, as a condition of insurance, that a home equity conversion mortgage provide that the homeowner's obligation to satisfy the loan obligation is deferred until the homeowner's death (absent sale of the property or other specified events) and that the term "homeowner" includes the spouse of a homeowner. (12 U.S.C.S. § 1715z-20(j).) This statute relates to the issuance of federal insurance and may not be controlling as to what must be included in the terms of the agreement. (See, e.g., Nationstar Mortgage LLC v. Goeke (N.Y. 2017) 151 A.D.3d 1237, 1238 [The statute "refers to conditions that prevent the Secretary of Housing and Urban Development from insuring a home equity conversion mortgage [citation]. Whether the mortgage at issue is insurable pursuant to that provision does not affect plaintiff's rights to foreclose pursuant to the note and mortgage."].) The provision nonetheless lends support to plaintiff's claim that the parties intended that plaintiff be treated as a borrower under the agreement. (E.g., ibid.) Thus, assuming the truth of plaintiff's allegations, as we must for the purpose of ruling on the demurrer, plaintiff has standing to assert a claim for breach of the implied covenant of good faith and fair dealing.
Plaintiff's request for judicial notice of advisory letters prepared by the United States Department of Housing and Urban Development regarding the insurance of Home Equity Conversion Loans, as well as "the California Legislature's passing of Senate Bill No. 1150 (the Home Owner's Bill of Rights) on September 29, 2016" and related legislative history is denied. Judicial notice of the enactment of the statute and the related legislative history notice is not necessary. " 'Citation to the material is sufficient.' " (People ex rel. Harris v. Delta Air Lines, Inc. (2016) 247 Cal.App.4th 884, 893, fn. 7.) Moreover, subsequent legislation providing more explicit protection for persons in plaintiff's position, though perhaps reflecting appropriate public policy considerations, is not relevant to the interpretation of agreements predating that legislation.
The trial court sustained the demurrer to this cause of action, reasoning that plaintiff "has not alleged that any defendant failed to perform any express obligation provided under the reverse mortgage—that any defendant breached any express contractual obligation. Rather, she alleges, in sum, that the foreclosure proceedings were invalid. But even if true, that would not be a breach of any express obligation in the reverse mortgage, which by its express terms provides for the foreclosure proceeding following Mr. Aden's death."
The premise of the trial court's ruling is plainly incorrect. The complaint in effect alleges that under the terms of the reverse mortgage agreement, the lender was not entitled to demand payment of the loan so long as she is living, so that the lender breached the agreement by demanding payment prematurely. The complaint alleges that "[b]y taking the actions previously pleaded, each defendant breached this covenant of good faith and fair dealing by interfering with or failing to cooperate with Mrs. Aden in the performance of the agreement and the HECM deed of trust." The allegation that FFA and OneWest, when parties to the reverse mortgage agreement, interfered with plaintiff's ability to obtain the benefit of the agreement sufficiently alleges breach of the covenant of good faith and fair dealing.
C. Elder Abuse
The trial court sustained the demurrer to the elder abuse cause of action on the ground that the factual allegations in the complaint "do not support a conclusion that any defendant's conduct constituted a 'wrongful' taking, or a taking with intent to defraud." We disagree.
"Financial elder abuse" under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.) occurs when a person or entity "[t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder . . . for a wrongful use or with intent to defraud, or both." (§ 15610.30, subd. (a)(1).) A person or entity that assists in the foregoing conduct is also liable for elder abuse. (§ 15610.30, subd. (a)(2).) A person or entity is "deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains possession of property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder . . . adult." (§ 15610.30, subd. (b).) "For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder . . . is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder . . . ." (§ 15610.30, subd. (c).)
Plaintiff's complaint alleges that the "illegal foreclosure auction of the Aden home . . . [and] the improper foreclosure actions leading up to it" constitute an illegal taking under the statute. Plaintiff alleges that Bank of America's foreclosure was wrongful. The complaint alleges that the deed of trust was invalid because it omitted her community interest in the property and that Bank of America knew or should have known that it was foreclosing on an invalid deed of trust. Plaintiff also alleges that she was not in default on the mortgage because as an intended beneficiary of the reverse mortgage, she was entitled to stay in her home until both she and her husband died. Plaintiff alleges further that OneWest and FFA assisted in the wrongful foreclosure by, among other things, (1) accepting Financial Freedom's "invalid interest under the mortgage agreement and attempted to enforce rights under the . . . deed of trust while it knew or should have known it was invalid"; (2) failing to respond to plaintiff's request to discuss the matter before the sale; and (3) misrepresenting that they were the foreclosing lender and had the authority to foreclose when they did not.
Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 527-528 (Stebley), relied on by CIT Bank, is distinguishable. In Stebley, plaintiffs alleged that the lender violated Civil Code section 2923.5 by filing a notice of default without fully and fairly exploring alternatives to foreclosure. In ruling on the lender's demurrer, the court held that plaintiff's allegation was insufficient to support a claim from wrongful foreclosure and that, absent an allegation of wrongful foreclosure, plaintiffs could not allege a cause of action for financial elder abuse. (Id. at pp. 525-526, 528.) The court explained, "Plaintiffs correctly point out that bad faith or intent to defraud is no longer required in elder or dependent adult abuse cases. [Citation.] But they still must allege at least a 'wrongful use' of property. [Citation.] As we held in an analogous case, 'It is simply not tortious for a commercial lender to lend money, take collateral, or to foreclose on collateral when a debt is not paid. . . . [A] commercial lender is privileged to pursue its own economic interests and may properly assert its contractual rights.' " (Id. at pp. 527-528.) Unlike the situation in Stebley, plaintiff has alleged that OneWest and FFA assisted Bank of America in a foreclosure of her home that was wrongful and known to be invalid. This is sufficient to withstand a demurrer to the claim for elder abuse. (See Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 479, fn. 4 [distinguishing Stebley on ground that court in "Stebley simply found that the act of foreclosure—an exercise of contractual rights based upon a legitimate and lawfully obtained mortgage—did not constitute a 'wrongful use.' "].)
CIT Bank mistakenly argues that to prevail on her elder abuse claim, under Civil Code section 3294 plaintiff was required to plead with particularity, that an officer, director, or managing agent of the corporate defendants "had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded." Welfare and Institutions Code section 15657, subdivision (c), incorporates the heightened pleading requirements of section 3294 only if the elder abuse claim seeks enhanced statutory remedies.
D. Intentional and Negligent Infliction of Emotional Distress
The trial court sustained the demurrer to the causes of action for negligent and intentional infliction of emotional distress on the grounds that plaintiff's complaint fails to allege any "extreme and outrageous conduct" by OneWest or FFA and does not allege facts that support a duty by either defendant to plaintiff. We agree with the trial court's conclusion in both respects.
Without regard to the degree of offensiveness of defendants' conduct, the negligent infliction cause of action fails for the absence of a duty owed by the defendants to the plaintiff. "A claim of negligent infliction of emotional distress is not an independent tort but the tort of negligence to which the traditional elements of duty, breach of duty, causation, and damages apply." (Wong v. Jing (2010) 189 Cal.App.4th 1354, 1377; Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 205.) And it is clear that "[n]o fiduciary duty exists between a borrower and lender in an arm's length transaction." (Ragland, at p. 206.)
The intentional infliction cause of action fails because "[t]he act of foreclosing on a home (absent other circumstances) is not the kind of extreme conduct that supports an intentional infliction of emotional distress claim." (Quinteros v. Aurora Loan Services (E.D.Cal. 2010) 740 F.Supp.2d 1163, 1172.) "A party is not subject to liability for infliction of emotional distress when it has merely pursued its own economic interests and properly asserted its legal rights." (Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67.) However wrongful defendants' conduct may have been—giving rise to liability under other legal theories—there is no allegation that defendants engaged in any form of unseemly conduct subjecting plaintiff to embarrassment or distress beyond that which necessarily arises from the pursuit of their asserted legal rights. To the extent Ragland v. U.S. Bank National Assn., supra, 209 Cal.App.4th at page 205 suggests otherwise, we respectfully disagree.
E. Fraud and Negligent Misrepresentation
Plaintiff alleges that FFA and OneWest "misrepresented, affirmatively or through omission, who the actual 'lender' was after February 24, 2014," and that each expressly told plaintiff that "it was the 'lender' and that it was conducting the foreclosure auction." The complaint also alleges that OneWest or FFA caused the document reflecting the transfer of OneWest's or FFA's interest in her home to Bank of America "not to be timely recorded, thereby concealing the transfer until after the illegal foreclosure sale." Plaintiff alleges that she relied on the material misrepresentation that either OneWest or FFA "dba Financial Freedom" was the foreclosing entity and directed all of her communications to the contact information they provided with "no way of knowing that in fact her communication attempts were futile because she was not speaking with a representative of the foreclosing entity."
The trial court sustained the demurrer on the ground that plaintiff failed to allege that the wrongful foreclosure was "causally connected to any alleged misrepresentation." The court also noted that it did not "discern any justifiable reliance by plaintiff on any particular representation."
" ' "A plaintiff asserting fraud by misrepresentation is obliged to . . . ' "establish a complete causal relationship" between the alleged misrepresentations and the harm claimed to have resulted therefrom.' " [Citation.] [Citation.] This requires a plaintiff to allege specific facts not only showing he or she actually and justifiably relied on the defendant's misrepresentations, but also how the actions he or she took in reliance on the defendant's misrepresentations caused the alleged damages." (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1499.)
Plaintiff does not directly respond to the trial court's ruling in either of her briefs on appeal. Her argument appears to be that defendant's misrepresentations caused the foreclosure because they prevented her from contacting the foreclosing lender, Bank of America, which if advised of the true facts would not have proceeded with the foreclosure. This theory, however, is contrary to the allegations in the complaint that each of the defendants, including Bank of America, knew or should have known that the deed was invalid. Accordingly, plaintiff has failed to demonstrate any error in the trial court's ruling sustaining the demurrer to these causes of action. Nor has plaintiff presented any reason to disagree with the trial court that she had "ample opportunity" to plead the necessary facts so that leave to amend would be futile.
3. Claims against MC
Plaintiff's complaint names MC as a defendant in two causes of action: The first cause of action for elder abuse and the second cause of action for breach of the covenant of good faith and fair dealing. Although the trial court sustained MC's demurrer based on its acceptance of the defendants' arguments as to the insufficiency of those claims—rulings that we have just disapproved—the trial court initially rejected MC's contention that its conduct is protected by the litigation privilege. In defense of its dismissal from the action, MC reasserts this contention.
The complaint alleges among other things that shortly after plaintiff filed the present action, OneWest and/or FFA advised her to direct further communications to MC. In response to a letter from plaintiff's counsel, MC confirmed that it represented OneWest, who was the foreclosing "lender." The following day, MC informed plaintiff's counsel by email that the foreclosure sale would be proceeding that day. On April 14, 2014, MC sent a representative to plaintiff's home "with papers regarding her relocation from her home." Thereafter, on May 6, MC served a three-day notice on plaintiff demanding that she vacate her home.
Plaintiff alleges that MC committed financial elder abuse by assisting in the illegal foreclosure of her home in that, among other things, the attorneys failed to respond to plaintiff's requests to discuss the matter between March 17, 2014 and March 27, 2014, misrepresented to plaintiff that MC represented the foreclosing lender and had authority to foreclose when it did not, and assisted Bank of America in the eviction process when it knew or should have known the foreclosure auction and Bank of America's claim to title were invalid. Plaintiff's claim for breach of the covenant of good faith and fair dealing is premised on allegations that MC acted as OneWest's agent in pursuing the foreclosure.
MC argues, as it did in the trial court, that all of plaintiff's claims are barred by the litigation privilege found in Civil Code section 47, subdivision (b). Section 47, subdivision (b) renders absolutely privileged communications made as part of a "judicial or quasi-judicial proceeding." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) "The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." (Ibid.)
The trial court rejected MC's argument on the ground that the litigation privilege does not apply in nonjudicial foreclosure proceedings. On appeal, MC argues that all of its communications were made in connection with judicial proceedings after plaintiff filed the present action.
The court acknowledged that the "qualified privilege" found in Civil Code section 47, subdivision (c) and Civil Code section 2924, subdivision (d) was applicable but concluded that the allegations of the complaint exceeded the scope of the qualified privilege. MC does not challenge this finding on appeal.
Initially, we reject plaintiff's contention that MC's argument is not cognizable on appeal because MC failed to cross-appeal. In reviewing an order sustaining a demurrer, "[a]ppellate courts first review the complaint de novo to determine whether or not the plaintiff's complaint alleges facts sufficient to state a cause of action under any legal theory [citation], or in other words, to determine whether or not the trial court erroneously sustained the demurrer as a matter of law." (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) If a "proper ground for sustaining the demurrer exists, this court will still affirm the demurrers even if the trial court relied on an improper ground, whether or not the defendants asserted the proper ground in the trial court." (Id. at p. 880, fn. 10.) Thus, MC may defend the order sustaining its demurrer and the judgment in its favor on a ground rejected by the trial court. It was not required to file a cross-appeal to defend the judgment on this ground.
Turning to the merits of MC's contention, " 'For well over a century, communications with 'some relation' to judicial proceedings have been absolutely immune from tort liability by the privilege codified as section 47(b). At least since then- Justice Traynor's opinion in Albertson v. Raboff (1956) 46 Cal.2d 375, California courts have given the privilege an expansive reach.' [Citation.] The privilege extends to 'any publication . . . that is required [citation] or permitted [citation] by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is invoked.' " (Crossroads Investors, L.P. v. Federal National Mortgage Assn. (2017) 13 Cal.App.5th 757, 786.)
Here, the facts alleged in the complaint establish conclusively that MC's communications with plaintiff were responsive to her filing of the complaint in this action on March 14, 2014. Although the complaint challenged the validity of nonjudicial foreclosure proceedings, plaintiff's complaint sought to enjoin the foreclosure and MC was representing its clients in opposing the requested injunction. Likewise, MC's service of the three-day notice following the auction is protected as reasonably related to a foreseeable unlawful detainer proceeding. (Bisno v. Douglas Emmett Realty Fund 1988 (2009) 174 Cal.App.4th 1534, 1552; Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1486-1488.) Accordingly, we uphold the judgment entered in favor of MC, albeit for a different reason than relied on by the trial court.
Disposition
The judgment entered in favor of MC is affirmed. The judgment entered in favor of FFA and OneWest is reversed and the matter is remanded with instructions to enter an order overruling the demurrer with respect to the first and second causes of action. Plaintiff shall recover her costs incurred on the appeal of the judgment entered in favor of FFA and OneWest. MC shall recover its costs on appeal.
Pollak, J. We concur: McGuiness, P. J.
Siggins, J.