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Tobin v. BC Bancorp

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


February 1, 2010

ALBERT TOBIN, AN INDIVIDUAL; JULIET TOBIN, AN INDIVIDUAL, PLAINTIFFS,
v.
BC BANCORP, A CALIFORNIA CORPORATION, ET AL., DEFENDANTS.

The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER DENYING PLEADINGS DEFENDANTS' MOTION FOR JUDGMENT ON THE [Docket No. 86]

This matter comes before the Court on Defendants Wells Fargo Bank ("Wells Fargo"), Indymac Federal Bank, FSB ("Indymac") and Elke Poerschke's motion for judgment on the pleadings. Plaintiffs have filed an opposition to the motion, and Defendants have filed a reply. For the reasons discussed below, the Court denies the motion.

I. BACKGROUND

On or about June 26, 2006, Plaintiffs Albert Tobin, age 79, and Juliet Tobin, age 91, refinanced the mortgage on their primary residence located at 1585 Powell Road in Oceanside, CA. (Corrected Second Amended Complaint ("CSAC") ¶¶ 27-29.) On September 18, 2008, Plaintiffs gave notice of their intent to rescind the loan transaction, due to alleged violations of the Federal Truth In Lending Act ("TILA") by, among others, BC Bancorp, a creditor on the loan. (Id. at ¶ 36.) Despite this notice, Defendants proceeded with foreclosure proceedings against the property prompting Plaintiffs' counsel Deborah L. Raymond to contact Defendant Indymac, the servicer of the loan.

In November 2008, Raymond exchanged e-mail messages with Defendant Elke Poerschke, Vice President of Corporate Compliance at Indymac, in an effort to resolve the dispute and halt the foreclosure proceedings. (Id. at ¶ 39.) The e-mail exchange is attached to the CSAC as Exhibit H, and provides as follows:*fn1

From: Deborah L. Raymond [mailto:draymond@lawinfo.com]

Sent: Friday, November 07, 2008 11:38AM To: Poerschke, Elke Subject: RE: Albert W. Tobin and Juliet E. Tobin / IMFB Loan No. 3002883258 Dear Ms. Poerschke: This email is regards to my above referenced clients. As we discussed, my clients are elderly and the pending Trustee's Sale on their home is causing them severe emotional distress.

Pursuant to the last message that you left on my voice mail, it was my understanding that you were going to review the loan modification Information provided by my clients and have the Trustee's Sale postponed.

I have just looked online and the Trustee's Sale is still pending for 11/20/2008. Please inform me of your intentions and provide me with written confirmation that the Trustee's Sale has been postponed and to what date. Thank you.

From: Poerschke, Elke [mailto:Elke.Poerschke@imb.com]

Sent: Friday, November 07, 2008 1:19 PM To: draymond@lawinfo.com Subject: RE: Albert W. Tobin and Juliet E. Tobin / IMFB Loan No. 3002883258 Dear Ms. Raymond, I have confirmed that the foreclosure was placed on hold and your clients' file has been forwarded to a loss mitigation specialist. I've asked for them to provide me with an update. I will be back in touch with you as soon as I hear from them.

Thank you.

Elke Poerschke

From: Deborah L. Raymond [mailto:draymond@lawinfo.com]

Sent: Wednesday, November 12, 2008 7:50 PM To: Poerschke, Elke Subject: RE: Albert W. Tobin and Juliet E. Tobin / IMFB Loan No. 3002883258

Dear Ms. Poerschke:

Based on your email below, it is my understanding that the Trustee's Sale has been postponed and yet, as of this writing, the foreclosure posting company states that it is still scheduled for November 20, 2008 (see attached). Please explain.

Pursuant to your prior email, I informed my elderly clients (one of whom has just returned from being hospitalized) that you have placed the foreclosure on hold. Ms. Poerschke, we have relied on your representation. If the Tobin's home is unlawfully foreclosed upon, it will cause them serious and irreparable harm. Please provide me with verifiable confirmation that the Trustee's Sale has been postponed and to what date. Thank you.

Deborah L. Raymond

From: Poerschke, Elke [mailto:Elke.Poerschke@imb.com]

Sent: Friday, November 14, 2008 6:48 AM To: draymond@lawinfo.com Subject: RE: Albert W. Tobin and Juliet E. Tobin / IMFB Loan No. 3002883258 Dear Ms. Raymond, I have confirmed with our servicing department that the sale is still on hold (indefinitely). Should you wish to speak with our foreclosure attorney to verify this, you may contact them at 866-795-1852.

Elke Poerschke

(Id., Ex. H.)

On February 6, 2009, Plaintiffs' home was sold at a Trustee's Sale to Defendants Wells Fargo, US Bank, N.A. ("US Bank") and Deutsche Bank National Trust Company as Trustee for Alliance Bancorp Trust ("Deutsche Bank"). (Id. at ¶ 40.) Plaintiffs learned of the sale when an agent of Defendants' came to their residence on February 11, 2009, and told them that their house had been sold. (Id. at ¶ 41.)

That same day, Plaintiffs filed the present case alleging the following claims for relief: (1) violation of the TILA; (2) violation of California Business and Professions Code § 17200 (unfair competition); (3) quiet title; (4) accounting, (5) violation of the California Consumer Legal Remedies Act; (6) violation of the California Elder Abuse Act; (7) breach of fiduciary duty; (8) fraud/constructive trust; and (9) declaratory relief.

On February 20, 2009, Plaintiffs filed a First Amended Complaint adding Defendants Indymac and Poerschke, and asserting the following additional claims for relief: (1) intentional misrepresentation, (2) negligent misrepresentation, (3) intentional infliction of emotional distress, (4) negligent infliction of emotional distress, and (5) breach of contract. (Id.)

On October 30, 2009, Plaintiffs filed a Second Amended Complaint adding Defendants US Bank and Deutsche Bank as Defendants. On January 19, 2010, Plaintiffs filed a Corrected Second Amended Complaint to include Deutsche Bank's proper name.

II. DISCUSSION

Defendants Wells Fargo, Indymac and Elke Poerschke move for judgment on the pleadings on Plaintiffs' second, eighth, ninth, tenth, eleventhand twelfth claims. Plaintiffs oppose the motion in all respects.

A. Standard of Review

"After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). In reviewing a motion for judgment on the pleadings, the court "must accept all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party." Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009) (citing Turner v. Cook, 362 F.3d 1219, 1225 (9th Cir. 2004)). "Judgment on the pleadings is properly granted when there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Id. (citing Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 978 (9th Cir. 1999)).

B. Misrepresentation Claims

The first claims at issue in this motion are Plaintiffs' claims for intentional and negligent misrepresentation. The elements of an intentional misrepresentation claim are: "(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting damage." Conroy v. Regents of Univ. of Cal., 45 Cal. 4th 1244, 1255 (2009) (citing Small v. Fritz Companies, Inc., 30 Cal. 4th 167, 173 (2003)). Negligent misrepresentation requires a showing of the same elements with one exception: Negligent misrepresentation "does not require intent to defraud but only the assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true." Id. (citing Small, 30 Cal. 4th at 173-74). Defendants assert they are entitled to judgment on both of these claims based on the allegations in the Complaint and the attachments thereto.

Defendants' liability for these claims is based on two e-mail messages that Defendant Poerschke sent to Plaintiffs' counsel. The first e-mail was sent on November 7, 2008, and states Defendant Poerschke has "confirmed that the foreclosure was placed on hold and your clients' file has been forwarded to a loss mitigation specialist." (Compl., Ex. H.) In the second e-mail, Ms. Poerschke stated: "I have confirmed with our servicing department that the sale is still on hold (indefinitely)." (Id.) Defendants argue these statements were true because the foreclosure sale did not take place until February 6, 2009. However, this delay does not demonstrate the representations were true. Plaintiffs allege Defendant Poerschke represented that the sale was on hold indefinitely, and this Court is required to construe that allegation in Plaintiffs' favor. As so construed, Defendant Poerschke's statement may have indicated to Plaintiffs that the foreclosure sale would not go forward at all, or at least until Defendants provided Plaintiffs with further notice. Accordingly, this argument does not warrant judgment on the pleadings.

Next, Defendants argue they are entitled to judgment on these claims because they did not make any representations to Plaintiffs, but rather the representations were made to Plaintiffs' counsel. Notably, Defendants fail to cite any authority to support their assertion that their representations must be made directly to Plaintiffs. Indeed, there is authority to the contrary. See Bullock v. Philip Morris USA, Inc., 159 Cal. App. 4th 655, 677 (2008) (stating reliance element of fraud claim "is established if the defendant made a misrepresentation to a third party, the defendant intended or had reason to expect that the substance of the communication would be repeated to the plaintiff and would induce the plaintiff's reliance, and the plaintiff was misled when the substance of the communication was repeated to the plaintiff.") (citations omitted). Therefore, this argument does not warrant judgment on the pleadings.

Defendants next argue they are entitled to judgment because there was no intent to defraud. Defendants assert Plaintiffs' allegations of intent are "simply false," (see Mot. at 8), but that assertion contradicts this Court's obligation to "accept all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party." Fleming, 581 F.3d at 925 (citing Turner, 362 F.3d at 1225). This argument is a non-starter, and does not warrant entry of judgment on the pleadings.

Next, Defendants assert Plaintiffs did not justifiably rely on Defendants' representations. In essence, Defendants argue Plaintiffs' reliance on their representations was unreasonable because Plaintiffs' counsel had access to information about the foreclosure sale and could have discovered that the sale was going to proceed. However, this argument misses the mark. Whether Plaintiffs or their counsel could have discovered that Defendants' representations were false is not the issue. Rather, the issue is whether Defendants' representations caused Plaintiffs to engage in or refrain from certain conduct. See Hall v. Time Inc., 158 Cal. App. 4th 847, 855 n.2 (2008) (stating in fraud case that justifiable reliance is same as causation) (citations omitted). Plaintiffs' allegations that they refrained from seeking a temporary restraining order or bankruptcy protection in light of Defendants' representations are sufficient to meet that element. Accordingly, this argument does not warrant judgment on the pleadings.

Defendants raise yet another argument in support of judgment on the pleadings: Plaintiffs did not suffer any damage. However, the allegations in the Complaint belie this argument. Plaintiffs allege they lost their home as a result of Defendants' misrepresentations. Thus, this argument does not warrant judgment on the pleadings.

Defendants' final argument in support of its motion for judgment on these claims is that their representations are protected by the litigation privilege. Whether a statement is covered by the litigation privilege is an "issue of fact." Edwards v. Centex Real Estate Corp., 53 Cal. App. 4th 15, 39 (1997). Here, the facts are clearly in dispute, with Defendants asserting that Plaintiffs were actually contemplating litigation and Plaintiffs disputing that assertion. Under these circumstances, Defendants are not entitled to judgment on the pleadings on these claims.

C. Infliction of Emotional Distress

The next claims at issue in this motion are Plaintiffs' claim for intentional and negligent infliction of emotional distress. Defendants argue they are entitled to judgment on these claims because they did not intend to cause Plaintiffs emotional distress.*fn2 However, the allegations in the Complaint are to the contrary, and on a motion for judgment on the pleadings, this Court must accept those allegations as true. Accordingly, Defendants are not entitled to judgment on these claims.

D. Breach of Contract

The next claim at issue is Plaintiffs' breach of contract claim. Defendants assert they are entitled to judgment on this claim because there was no contract, and even if there was a contract, there was no breach. However, Plaintiffs have alleged the existence of a contract, (CSAC at ¶ 120), and Defendants' breach. (Id. at ¶ 121.) Accepting these allegations as true, which the Court must on the present motion, Defendants are not entitled to judgment.

E. Unfair Competition

The final claim at issue in this motion is Plaintiffs' claim for unfair competition. Defendants argue they are entitled to judgment on this claim because they did not engage in any wrongful conduct.*fn3 This conclusory argument does not warrant judgment on the pleadings.

F. Wells Fargo Bank

Finally, Defendants argue the claims against Wells Fargo must be dismissed because Defendant Poerschke was not an employee of Wells Fargo, but was employed by Defendant Indymac. Plaintiffs point out, however, that their claims against Wells Fargo do not rely solely on an employer-employee relationship with Defendant Poerschke. They have also alleged theories of conspiracy and agency liability. In light of these alternative theories of liability, the Court declines to dismiss Wells Fargo from this case.

III. CONCLUSION

For these reasons, the Court denies Defendants' motion for judgment on the pleadings.

IT IS SO ORDERED.


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