IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE
December 30, 2010
MANFRED WALLNER, PLAINTIFF AND APPELLANT,
JPMORGAN CHASE BANK, N.A., ET AL., DEFENDANTS AND RESPONDENTS.
Appeal from a judgment of the Superior Court of Orange County, Sheila Fell, Judge. Affirmed. (Super. Ct. No. 30-2009-00125352)
The opinion of the court was delivered by: Aronson, J.
Wallner v. JPMorgan Chase Bank
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Plaintiff Manfred Wallner appeals from the dismissal of his second amended complaint after the trial court sustained defendant JPMorgan Chase Bank, N.A.'s (JPMorgan) demurrer without leave to amend. The second amended complaint alleges defendant Plaza Home Mortgage, Inc. (Plaza) fraudulently induced Wallner to refinance his home mortgage. Wallner sought declaratory and injunctive relief to prevent foreclosure on his home, and restitution to recover all interest he paid on the loan. We affirm the judgment of dismissal.
FACTS AND PROCEDURAL HISTORY
This appeal follows a trial court ruling sustaining a demurrer without leave to amend. As such, we assume the truth of all facts properly pleaded in the second amended complaint (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6 (Evans)), and accept as true all facts that may be implied or inferred from those express allegations (Curcini v. County of Alameda (2008) 164 Cal.App.4th 629, 633, fn. 3). We do not assume the truth of contentions, deductions, or conclusions of fact or law. (Evans, supra, 38 Cal.4th at p. 6.)
According to the operative complaint, Wallner owns a home in Anaheim, California. In May 2006, he received a "cold call" from an agent of Plaza offering to refinance his home mortgage. Wallner explained he recently refinanced with another lender, obtaining a 30-year loan for $650,000 at an interest rate of 5.5 percent. Wallner doubted his home could support a larger loan.
Plaza's agent said he knew all about the other loan and could offer much better terms. Specifically, the agent offered Wallner a 40-year loan for $760,000 at an interest rate of 1.75 percent, which would allow Wallner to "take cash out" and still have lower monthly payments. When Wallner revealed his only income was his Social Security payments and capital gains on stocks, Plaza's agent told him not to worry because the agent would fill out the loan origination documents for Wallner with the appropriate information. The agent not only filled out the documents for Wallner, he also signed them on Wallner's behalf.
To induce Wallner to accept the loan offer, Plaza's agent knowingly made the following false misrepresentations: (1) Wallner's home had sufficient value to support a $760,000 loan; (2) Wallner, who was 78 years old at the time, would live long enough to pay off the 40-year loan; and (3) Wallner would be able to pay back the loan's principal and interest with his Social Security payments and capital gains.
Plaza knew Wallner would be unable to repay the loan, but this did not concern Plaza because it intended to quickly sell the loan rather than collect Wallner's payments. Specifically, Plaza intended to package Wallner's mortgage with other similar mortgages for sale to investors as residential, mortgage-backed securities.*fn1
In reliance on Plaza's representations, Wallner borrowed $760,000 at an annual percentage rate of 1.75 percent. Wallner began making the loan payments, but, in the fall of 2008, he suffered severe stock market losses and could not continue making his mortgage payments. Defendant Quality Loan Services, Inc., recorded a notice of default and election to sell against Wallner's home on April 23, 2009.
In June 2009, Wallner brought this lawsuit to prevent foreclosure on his home. After two false starts, he filed a second amended complaint after the trial court sustained JPMorgan's demurrer to his first amended complaint.
The second amended complaint alleged causes of action for declaratory relief, injunctive relief, restitution, and punitive damages against JPMorgan, Plaza, Washington Mutual Bank, and Quality Loan Services, Inc. It did not allege any connection between Plaza and any other defendant, nor did it allege Plaza transferred Wallner's loan. The complaint did not identify the current holder of Wallner's loan.
On February 3, 2010, the trial court sustained JPMorgan's demurrer without leave to amend on all causes of action.*fn2 The trial court ruled Wallner failed to allege facts sufficient to state any claim against JPMorgan "despite being given 3 opportunities."
During the hearing, Wallner asked the trial court if its ruling applied to the claims against all defendants or just JPMorgan. The trial court explained its ruling affected the claims against JPMorgan only because no other defendant's demurrer had been heard. Wallner responded he did not want to wait for the other defendants to demur to his pleading before appealing the trial court's ruling. He therefore asked the trial court to dismiss the entire action, with prejudice, so he could appeal immediately. The trial court granted that request. The next day, Wallner also filed a request to dismiss the entire action with prejudice.
Before the hearing on JPMorgan's demurrer, Plaza filed its own demurrer that was set for hearing in March 2010. The trial court vacated the hearing on Plaza's demurrer because Wallner had dismissed his case.
A. The Claims Against Plaza Are Not Appealable
Plaza argues we should dismiss this appeal because Wallner's dismissal of the action deprived this court of jurisdiction. As explained below, Wallner's dismissal of the action prevents this court from reviewing his claims against Plaza, but we cannot dismiss the appeal because the claims against JPMorgan are properly before this court.
Ordinarily, a plaintiff's voluntary dismissal is deemed to be non-appealable because it is not a judicial act and constitutes a withdrawal of the plaintiff's claims. (Stewart v. Colonial Western Agency, Inc. (2001) 87 Cal.App.4th 1006, 1012 (Stewart); Gutkin v. University of Southern California (2002) 101 Cal.App.4th 967, 975 ["It is well established that a voluntary dismissal under Code of Civil Procedure section 581 is not appealable. . . . [Citation.] 'A wilful dismissal terminates the action for all time and affords the appellate court no jurisdiction'"].) "However, appellate courts treat a voluntary dismissal with prejudice as an appealable order if it was entered after an adverse ruling by the trial court in order to expedite an appeal of the ruling." (Stewart, supra, 87 Cal.App.4th at p. 1012.)
Wallner's dismissal of his claims against JPMorgan falls within the foregoing exception permitting an appeal from a voluntary dismissal. Wallner dismissed the action only after the trial court sustained JPMorgan's demurrer to all causes of action without leave to amend. Wallner's express purpose was to expedite this appeal.*fn3 Consequently, his claims against JPMorgan are properly before this court. (See Ashland Chemical Co. v. Provence (1982) 129 Cal.App.3d 790, 792-793 [plaintiff who voluntarily dismisses an action may appeal an adverse demurrer ruling when plaintiff dismissed the action to expedite the appeal].)
Wallner's dismissal of his claims against Plaza, however, is governed by the general rule that a voluntary dismissal is not appealable. The trial court ruled on JPMorgan's demurrer, but never ruled on Plaza's demurrer due to Wallner's dismissal.*fn4 Plaza and JPMorgan are separate and distinct parties and, therefore, the trial court's ruling on JPMorgan's demurrer does not affect Wallner's claims against Plaza. The trial court's ruling sustaining JPMorgan's demurrer did not bind either Plaza or Wallner. (See Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1391 ["Because Saltz did not bring his own special motion to strike, he is not bound -- for better or for worse -- by the order denying UDR's motions"], superseded by statute on another ground as stated in Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1349.) Given the lack of an adverse ruling on his claims against Plaza, Wallner's dismissal of those claims is not appealable.
We therefore review Wallner's second amended complaint to determine whether he alleged sufficient facts to state a cause of action against JPMorgan, and, if not, whether the trial court abused its discretion in sustaining JPMorgan's demurrer without leave to amend. Whether Wallner alleged sufficient facts to state a cause of action against Plaza is not before us.
B. Wallner's Second Amended Complaint Fails to State a Cause of Action Against JPMorgan
The second amended complaint alleges causes of action against JPMorgan for declaratory relief, injunctive relief, restitution, and punitive damages. The specific relief Wallner sought included (1) a judicial declaration rendering the promissory note and deed of trust on the Plaza loan void, (2) a permanent injunction restraining any effort to foreclose on his home or otherwise collect on the loan, and (3) a monetary judgment for all interest he paid on the loan. Wallner contends the facts he alleged support a theory Plaza fraudulently induced him into the loan, and that theory "invites" the foregoing "equitable" remedies against all defendants.
We review the second amended complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory. (Koszdin v. State Comp. Ins. Fund (2010) 186 Cal.App.4th 480, 487.) In doing so, we look past the form of the pleading to its substance and ignore any erroneous or confusing labels attached by Wallner. (Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 266.)
The second amended complaint fails to state any cause of action against JPMorgan because there is no allegation JPMorgan had any connection to either the loan or the efforts to foreclose on Wallner's home. No allegations exist to explain how or why JPMorgan possibly could be held responsible for Plaza's alleged fraud in inducing Wallner to refinance his mortgage. The operative complaint's sole allegation referring to JPMorgan is that "Defendant JPMorgan Chase Bank is engaged in the mortgage and banking business in California." Without some allegation establishing a relationship between JPMorgan and either the loan or the efforts to foreclose on his home, Wallner cannot state a cause of action against JPMorgan on any theory.
JPMorgan appeared in the trial court as "JPMorgan Chase Bank, N.A., as an acquirer of certain assets and liabilities of Washington Mutual Bank from the FDIC acting as receiver, erroneously sued herein as Chase Manhattan Bank." This admission is not sufficient to provide the missing allegations because the second amended complaint fails to identify Washington Mutual or any other party as the current holder of Wallner's loan.*fn5 In his reply to JPMorgan's brief, Wallner argues he stated a cause of action by alleging JPMorgan is the current mortgage holder seeking to foreclose against Wallner. The second amended complaint, however, makes no such allegation.
Assuming Wallner amended his complaint to allege JPMorgan is the current holder of his mortgage and is attempting to foreclose on his home, the complaint would still fall short of stating any cause of action against JPMorgan.
First, the second amended complaint failed to allege sufficient facts to support Wallner's fraud in the inducement theory. Wallner alleged Plaza, not JPMorgan, fraudulently induced him to refinance his mortgage. Moreover, to the extent we assume JPMorgan is a successor-in-interest to Plaza, Wallner failed to allege any basis for holding JPMorgan liable for Plaza's fraud.
Where a corporation purchases or otherwise acquires the assets of another corporation, the acquiring corporation generally is not liable for the torts the selling corporation committed before the acquisition. (Fisher v. Allis-Chalmers Corp. Product Liability Trust (2002) 95 Cal.App.4th 1182, 1188.) "This general rule does not apply if '(1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller's debts.'" (Id., quoting Ray v. Alad Corp. (1977) 19 Cal.3d 22, 28.) Wallner failed to allege facts to establish any of these exceptions in his second amended complaint.
Wallner's fraud theory also fails because the second amended complaint did not allege all necessary elements to state a fraudulent inducement claim. To adequately state this claim, Wallner must allege, among other requirements, the misrepresentations caused him damages. (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) Wallner's complaint alleged Plaza misrepresented (1) Wallner's home had sufficient value to support a $760,000 loan, (2) Wallner would live long enough to pay off the 40-year loan, and (3) Wallner's income was sufficient to pay off the principal and interest over the loan's term. These misrepresentations do not relate to the terms of the loan Wallner received. Indeed, the second amended complaint did not allege Wallner received anything other than the loan Plaza promised. The foregoing representations relate to whether Plaza received sufficient security for the loan and reasonably believed Wallner would pay off the loan over its 40-year term. No allegations explain how these misrepresentations damaged Wallner, as opposed to Plaza or any subsequent holder of the loan. Wallner admits he defaulted on the loan because he suffered stock market losses, not because of Plaza's alleged misrepresentations. Without specific allegations connecting the damages Wallner suffered to the alleged misrepresentations, no fraud claim is stated. (See Perlas v. GMAC Mortgage, LLC (2010) 187 Cal.App.4th 429, 434, quoting Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519 ["Each element in a cause of action for fraud . . . must be factually and specifically alleged"].)
Second, Wallner's complaint failed to allege sufficient facts to support his claims for declaratory and injunctive relief. These claims assert the promissory note and deed of trust are void and unenforceable due to Plaza's fraud in the inducement.*fn6 As discussed above, Wallner failed to adequately allege fraud. Moreover, assuming Wallner had adequately alleged fraud in the inducement, it would not permit him to keep the proceeds of the loan and the security for the loan (i.e., his home), while refusing to repay the loan. Fraud can provide a basis for rescinding a transaction. (Civ. Code, §1689, subd. (b)(1) [a party to a contract may rescind the contract if his or her consent was obtained through fraud].) To obtain rescission, however, the rescinding party must "[r]estore to the other party everything of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise, unless the latter is unable or positively refuses to do so." (Civ. Code, § 1691, subd. (b).) The second amended complaint failed to allege Wallner returned or offered to return everything of value he received -- i.e., the $760,000 loan principal. To the contrary, the second amended complaint alleged Wallner was entitled to keep the loan proceeds without repaying it or surrendering the security.
Finally, the second amended complaint failed to allege sufficient facts to state a claim for restitution or unjust enrichment. "The elements of an unjust enrichment claim are the 'receipt of a benefit and [the] unjust retention of the benefit at the expense of another.'" (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593, quoting Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.) Wallner alleged he benefited all defendants through his payment of $66,183.78 in interest on the loan, but he failed to allege how their retention of that benefit is unjust when he retained the $760,000 loan principal. "There is no equitable reason for invoking restitution when the plaintiff gets the exchange which he expected." (Peterson v. Cellco Partnership, supra, 164 Cal.App.4th at p. 1593.)
In sum, Wallner's second amended complaint failed to allege any cause of action against JPMorgan and the trial court therefore properly sustained the demurrer.*fn7
C. The Trial Court Did Not Abuse Its Discretion in Sustaining JPMorgan's Demurrer Without Leave to Amend
Because the trial court sustained JPMorgan's demurrer without leave to amend, we also must decide whether there is a reasonable possibility Wallner can amend his complaint to cure its defects. (Koszdin v. State Comp. Ins. Fund, supra, 186 Cal.App.4th at p. 487.) The abuse of discretion standard of review governs our review of that question. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
As the plaintiff, Wallner "bears the burden of proving there is a reasonable possibility of amendment." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43.) To satisfy that burden, Wallner "'must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.' [Citation.] The assertion of an abstract right to amend does not satisfy this burden. [Citation.] The plaintiff must clearly and specifically set forth the 'applicable substantive law' [citation] and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, the plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action. [Citations.] . . . . [¶] The burden of showing that a reasonable possibility exists that amendment can cure the defects remains with the plaintiff; neither the trial court nor this court will rewrite a complaint. [Citation.] Where the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend. [Citations.]" (Id. at pp. 43-44.)
Here, Wallner fails to request leave to amend or otherwise attempt to show there is a reasonable possibility he can amend his second amended complaint to cure the defects.*fn8 We therefore conclude the trial court did not abuse its discretion by sustaining JPMorgan's demurrer without leave to amend.
The judgment is affirmed. JPMorgan is to recover its costs on appeal. As between Wallner and Plaza, the parties are to bear their own costs on appeal.
BEDSWORTH, ACTING P. J. O'LEARY, J.