California Court of Appeals, Fourth District, First Division
Order Filed Date: 8/21/13
APPEAL from a judgment of the Superior Court of San Diego County No. 37-2010-00088855- CU-BT-CTL, Lisa A. Foster, Judge. Affirmed.
Haskins & Associates, Steven W. Haskins, Margaret A. Pitchkolan and Jesse T. Farris, for Plaintiffs and Appellants.
Sheppard, Mullin, Richter & Hampton, Edward D. Vogel, Karin D. Vogel and Mark G. Rackers, for Defendant and Respondent.
Plaintiffs and appellants Henry Aspiras and Gloria Aspiras appeal from a judgment entered after the trial court dismissed with prejudice their second amended complaint for fraud, negligent misrepresentation and violation of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200, et seq.) against defendant and respondent Wells Fargo Bank, N.A. (Wells Fargo). The court dismissed the case after plaintiffs declined to amend their pleading following the sustaining of Wells Fargo's demurrer with leave to amend. Plaintiffs contend the court erred by failing to accept the second amended complaint's allegations as true, including as to Wells Fargo's ratification of alleged misrepresentations made by an employee concerning plaintiffs' mortgage loan and loan modification status. They further contend the court should have overruled Wells Fargo's demurrer because they pleaded fraud and negligent misrepresentation with the requisite specificity. At this court's request, the parties briefed the application, if any, of Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872 (Jolley). Having considered the parties' arguments, we distinguish Jolley and decline to apply its dicta concerning the duties of care of a conventional lender. We reject plaintiffs' other contentions, and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The facts are taken from plaintiffs' second amended complaint; we accept as true the properly pleaded material allegations and facts that may properly be judicially noticed. (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 806; Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 435.)
Plaintiffs financed the purchase of their San Diego residence with a promissory note for $625, 300 and deed of trust, which was recorded in December 2004. In April 2008, plaintiffs refinanced the home with Wachovia Mortgage FSB (Wachovia), and in October 2008, began loan modification negotiations with Wachovia. In January 2009, the trustee recorded a notice of default and election to sell under the deed of trust; the notice states plaintiffs were $11, 144.27 in arrears as of January 20, 2009. Wachovia transferred the loan to Wells Fargo in October 2009, and plaintiffs resumed loan modification negotiations with it.
On or about February 5, 2010, Wells Fargo sent plaintiffs a letter informing them that preliminary review indicated they may not be eligible for the Home Affordable Modification Program (HAMP),  but it had been directed to place their mortgage in a "Trial Period Plan" until March 7, 2010, and that they should contact Wells Fargo no later than that date if they disagreed with its preliminary decision concerning HAMP eligibility. During the remainder of the month, plaintiffs spoke with various Wells Fargo representatives and at Wells Fargo's request, submitted financial documents to Wells Fargo in early March. On March 9, 2010, Wells Fargo informed plaintiffs by letter it would not adjust the terms of their mortgage.
On March 11, 2010, Gloria Aspiras called Wells Fargo in order to reopen the modification process and spoke with a person in its customer service department who identified himself or herself as a Wells Fargo employee. During that call, the employee told Ms. Aspiras that her loan had been transferred to the foreclosure department, there was no scheduled trustee's sale date, and the modification would be reopened if plaintiffs submitted documents showing additional income. At some point later, Ms. Aspiras was told she had been preapproved for a loan modification but would need to submit another package and that a loan negotiator would be calling her shortly. As a result of that conversation, she submitted another loan modification package.
On March 15, 2010, Wells Fargo representative Shannon Gordon, who was with Wells Fargo's "home preservation" team, contacted plaintiffs regarding loan modification negotiations. Plaintiffs explained to Gordon that Wells Fargo's February 5, 2010 letter contained inaccurate information concerning their income; that they had more income than what was represented. At Gordon's direction, plaintiffs submitted additional documents needed to process their request, and they did so on March 18, and March 24, 2010. On March 18, 2010, Gordon told plaintiffs their loan modification was "under review." The next day, however, Wells Fargo sold plaintiffs' home at a trustee's sale to third party investors. A trustee's deed upon sale was recorded on April 1, 2010. The investors sold the home about six weeks later for almost $200, 000 more than the purchase price.
On or about March 21, 2010, plaintiffs spoke again with Gordon, who informed them their home had been sold at the trustee's sale two days earlier. Plaintiffs had never received prior notice that Wells Fargo would be selling the home, and told Gordon, who responded that some notice should have been sent. Gordon told Ms. Aspiras to fax a letter to the bank stating he was engaged in modification efforts with them.
On or about March 24, 2010, Wells Fargo sent plaintiffs a letter offering them a special forbearance agreement that they could accept by signing and returning the letter with the first of several specified installment payments. That agreement required plaintiffs to make installment payments during a trial period, after which their loan would not be "contractually current, " but Wells Fargo would review their remaining outstanding payments and fees for a loan modification. The agreement further stated: "If your loan is in foreclosure, we will instruct our foreclosure counsel to suspend foreclosure proceedings once the initial installment has been received, and to continue to suspend the action as long as you keep to the terms of the Agreement. Upon full reinstatement, we will instruct our foreclosure counsel to dismiss foreclosure proceedings and report to the credit bureaus accordingly." Plaintiffs were unable to comply with the terms of the forbearance agreement because their home had already been sold. On March 24, and March 26, 2010, Gordon continued to tell plaintiffs that their loan modification was under review.
At the time their home was sold at the trustee's sale, plaintiffs had enough cash in the bank to pay the principal balance of the loan or alternatively to pay all amounts owing to keep their home from being foreclosed, and they intended to make such a payment if Wells Fargo did not modify their loan.
Plaintiffs' Lawsuit and Amendments of their Complaint
Ten days after the trustee's sale, plaintiffs sued Wells Fargo for fraud, negligent misrepresentation and "unlawful business practices" under the UCL. Wells Fargo generally and specially demurred and the court overruled its special demurrer but sustained its general demurrers with leave to amend, ruling Gordon's statements were opinion and did not constitute actionable fraud, and the February 5, 2010 letter informed plaintiffs they did not receive a modification. Plaintiffs then filed a first amended complaint, to which Wells Fargo again demurred on grounds it failed to state facts sufficient to constitute a cause of action. Wells Fargo asserted plaintiffs in fact received written notice of the trustee's sale, which was to take place on May 12, 2009, and it asked the court to take judicial notice of that document, which was recorded on April 23, 2009. It reiterated its ...