Court Opinion

ID: 2655388
Source: CourtListenerOpinion
Date Created: 2014-03-04 01:01:43.774014+00
Date Added: 2024-06-11T12:36:22.355437
License: Public Domain

Filed 3/3/14 Ferguson v. Trust Holding Service Co. CA2/4
                    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                         SECOND APPELLATE DISTRICT

                                                        DIVISION FOUR

SUSAN L. FERGUSON et al.,                                                     B230972

                    Plaintiffs and Appellants,                                (Los Angeles County
                                                                              Super. Ct. No. EC049118)
                     v.

TRUST HOLDING SERVICE
COMPANY et al.,

                    Defendants and Respondents.

          APPEAL from a judgment of the Superior Court of Los Angeles County,
David S. Milton, Judge. Affirmed in part, reversed in part, and remanded with directions.
          Susan L. Ferguson, in pro. per.; Campbell & Farahani and Frances M. Campbell
for Plaintiffs and Appellants.
          Ronald D. Tym for Defendant and Respondent Yun Matsuba.
                                         ______________________________
       Susan Ferguson and Brent Berry appeal from a judgment in favor of Trust Holding
Service Company (THS), Owner Management Services, LLC (OMS), and Yun Matsuba.
Appellants argue the trial court erred in granting a motion for nonsuit on their causes of
action for rent skimming and fraud.1 We agree as to the rent skimming cause of action
and reverse its dismissal. We affirm the judgment in all other respects.

                       FACTUAL AND PROCEDURAL SUMMARY
       Appellants rented a property in Burbank on a one-year lease, beginning on
August 1, 2006. In November 2006, Joseph Huynh bought the property with two
promissory notes, for $600,000 and $150,000, secured by deeds of trust in favor of New
Century Mortgage Corporation. In June 2007, Huynh transferred the property into an
inter vivos trust, with THS as the trustee and Huynh as the sole beneficiary. Beginning
on August 1, 2007, after the expiration of the one-year lease, appellants made monthly
rent payments to THS.
       On August 3, 2007, appellants received a notice that the first lien on the property
was in default in the amount of $17,155.43. Dan Powers, a THS employee, assured
Ferguson that the property would be sold at a short sale to THS investors. In November
2007, appellants received a notice of trustee’s sale under the first deed of trust, showing
an unpaid balance of $626,547.23. Powers again assured Ferguson that a short sale was
being negotiated.
       In May 2008, THS gave appellants a 60-day notice to vacate the property by
July 31, 2008, claiming that plumbing problems had rendered it uninhabitable. A
plumber had been called to the property several times, and two weeks before the notice,
appellants had paid for plumbing repairs and deducted the expense from the rent.
Appellants contested the notice to vacate as retaliatory. On July 14, 2008, the property
was sold to Avelo Mortgage LLC (Avelo) at a trustee’s sale. On August 6, 2008, Avelo
notified appellants to vacate the premises.

       1
           Appellants do not contest the dismissal of their quiet title cause of action.

                                                2
       In a series of letters between July 11 and August 14, 2008, appellants notified THS
they needed to move because the property had been sold. They repeatedly demanded that
THS return their security deposit and last month’s rent and refund their payment of rent
for the period from July 15 to July 31, 2007. THS refused to do so until appellants
vacated the premises and returned the keys. According to THS, it was contesting the
foreclosure sale and was in the process of repurchasing the property. THS eventually
offered to forward the security deposit and rent to the new landlord, which it identified as
Wells Fargo Bank, if appellants chose to remain on the property. Appellants continued to
live there without paying rent until June 2010. They moved out after a writ of possession
and a $10,000 judgment were issued in favor of Avelo in the last of four unlawful
detainer actions against appellants.
       Prior to that, in June 2009, Huynh had quitclaimed the property to appellants.
Appellants sued THS for rent skimming and fraud, and to quiet title. Avelo was named
as a defendant in the quiet title cause of action. We affirmed the order of dismissal as to
Avelo. (Ferguson v. Avelo Mortg., LLC (June 1, 2011, B223447) review den. and opn.
ordered nonpub. Sept. 14, 2011, S194764.)
       A one-day bench trial of appellants’ claims against THS was held in December
2010. The trial court allowed an amendment to the second amended complaint to add
OMS and Matsuba as defendants. Matsuba had been identified by THS as its person
most knowledgeable, and she was added as a defendant on the theory that she was doing
business under fictitious business names. Matsuba was called as a hostile witness in
appellants’ case-in-chief. She testified that the property was brought to THS for a short
sale, that THS used the rent collected from appellants to pay off the $150,000 second
deed of trust at the end of 2007 or beginning of 2008, and that THS was denied access to
the property.
       After appellants rested, THS moved for a nonsuit. The court denied appellants’
request to reopen the case, explaining that it had no ability to do so after a nonsuit
motion. As to the rent skimming cause of action, the court credited Matsuba’s testimony
that the second deed of trust was paid off in full and that the short sale fell through

                                              3
because THS was denied access to the property. The court found that there was no
evidence to support appellants’ alternative theory—that THS collected rent under a false
claim of title, and concluded that it was irrelevant whether THS collected rent without a
broker’s license. The court did not make a clear finding whether appellants had standing
to sue under the rent skimming statute or whether they had suffered damages. The court
found there was no fraud because THS was attempting to arrange a short sale and
appellants could not show detrimental reliance. The court granted the motion for nonsuit
and dismissed the case. Judgment of dismissal was entered in favor of THS.
       This appeal followed. The judgment of dismissal was later amended to add
Matsuba and OMS, who were then added as respondents to this appeal. Due to ongoing
bankruptcy proceedings involving THS and OMS, the appeal proceeds only against
Matsuba.

                                      DISCUSSION
       A motion for nonsuit is no longer recognized in a bench trial after the close of the
plaintiff’s evidence. The correct motion in that situation is for judgment under Code of
Civil Procedure section 631.8, and a motion for nonsuit may be treated as a motion for
judgment for the defendant under that statute. (Lingenfelter v. County of Fresno (2007)
154 Cal.App.4th 198, 206, and cases cited.) Thus, we treat the court’s nonsuit order as
one for judgment.
       Code of Civil Procedure section 631.8 requires the trial court to “make a statement
of decision.” In a one-day trial, as here, the statement of decision may be made orally on
the record. (Id., § 632.) Although the trial court did not issue a cohesive statement of
decision when it granted the motion, its position on most issues may be ascertained from
the discussion with counsel.
       In a motion for judgment, the trial court “must decide questions of credibility,
must weigh the evidence, and must make findings of fact. [Citations.]” (Lingenfelter v.
County of Fresno, supra, 154 Cal.App.4th at p. 204.) In reviewing an order granting
such a motion, we are bound by the trial court’s findings that are supported by substantial

                                             4
evidence, but not by its interpretation of the law. (People ex rel. Dept. of Motor Vehicles
v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1012.)
          The denial of a motion to reopen evidence is reviewed for abuse of discretion, as is
the denial of leave to amend the complaint. (Horning v. Shilberg (2005) 130 Cal.App.4th
197, 208; Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.)
                                                  I
          In this section, we address the parties’ divergent interpretations of several
provisions of the rent skimming statutes, Civil Code section 890 et seq.2 The purpose of
statutory construction is to give effect to the legislative intent, which is “generally
determined from the plain or ordinary meaning of the statutory language. The statute’s
every word and provision should be given effect so that no part is useless, deprived of
meaning or contradictory. Interpretation of the statute should be consistent with the
purpose of the statute and statutory framework.” (Fireman’s Fund Ins. Co. v. Workers’
Comp. Appeals Bd. (2010) 189 Cal.App.4th 101, 109.)
   A. Section 890, subdivision (a)(1)
          Rent skimming is defined as “using revenue received from the rental of a parcel of
residential real property at any time during the first year period after acquiring that
property without first applying the revenue or an equivalent amount to the payments due
on all mortgages and deeds of trust encumbering that property.” (§ 890, subd. (a)(1).)
Appellants argue that THS engaged in rent skimming under this subdivision because it
did not make payments on any or all liens.3 Matsuba in turn appears to contend that the
statute was not intended to apply where the revenue from rent is insufficient to cover the
payments due under all liens, and therefore payments are made on some liens but not on
others.

          2
              Unless otherwise indicated, statutory references are to the Civil Code.
          3
        We use the word “liens” as a shorthand substitute for the phrase “mortgages and
deeds of trust.”
                                                  5
       Typically, a rent skimmer makes no payments on any lien. (See People v. Bell
(1996) 45 Cal.App.4th 1030, 1039, 1041.) But the plain language of section 890,
subdivision (a)(1) requires that revenue from rent be applied first to the payments due on
all liens. On its face, the statute reaches cases where a portion of the revenue from rent is
applied to payments due on some but not all liens, and the remaining portion is applied to
something other than payments due on liens. On that basis, a valid claim for rent
skimming under this subdivision could be made by showing that (1) no payments were
made on any liens, (2) a portion of the rent revenue was applied to payments due on some
but not all liens, or (3) rent revenue was used to make anticipatory payments on some
liens while foregoing payments already due on others. We do not decide whether paying
one lien over another qualifies as rent skimming where payments are due under both
liens, and rent revenue is insufficient to pay both.
   B. Section 890, subdivision (a)(2)
       The definition of rent skimming also includes “receiving revenue from the rental
of a parcel of residential real property where the person receiving that revenue, without
the consent of the owner or owner’s agent, asserted possession or ownership of the
residential property, whether under a false claim of title, by trespass, or any other
unauthorized means, rented the property to another, and collected rents from the other
person for the rental of the property.” (§ 890, subd. (a)(2).) Appellants argue THS
engaged in rent skimming under this subdivision because it collected rent without a
broker’s license and under a forged trust agreement.
       As the court explained in People v. Lapcheske (1999) 73 Cal.App.4th 571, 574,
section 890, subdivision (a)(2) defines rent skimming in the context of adverse
possession, where a defendant rents out someone else’s property on the defendant’s own
behalf without the owner’s consent. The statute was not intended to impose liability for
licensing violations, but for collecting rent while asserting possession or ownership of the

                                              6
property by “unauthorized means,” such as a false claim of title or trespass. (§ 890, subd.
(a)(2).)4 Appellants do not have a valid claim for rent skimming under this subdivision.
   C. Section 891, subdivision (d)
       Section 891 allows a tenant of a residential property to “bring an action against a
person who has engaged in rent skimming with respect to that property for the recovery
of actual damages, including any security, as defined in Section 1950.5, and moving
expenses if the property is sold at a foreclosure sale and the tenant was required to
move.” (§ 891, subd. (d).) A prevailing tenant also is entitled to attorney fees and costs
and may be awarded punitive damages. (Ibid.)
       Matsuba argues that to recover actual damages under the statute tenants must show
they were required to move because of a foreclosure. In the trial court, THS cited the
Witkin and Rutter Group treatises for this proposition. (See 4 Witkin, Summary of Cal.
Law (10th ed. 2005) Security Transactions in Real Property, § 96, p. 889 [“tenants
required to move by a foreclosure, . . . may bring actions for rent skimming”]; Friedman
et al., Cal. Practice Guide: Landlord–Tenant (The Rutter Group 2013) ¶ 2:534, p. 2B-164
[“Tenants forced to vacate their units prematurely because of foreclosure sale resulting
from the rent skimming practice likewise have a civil damages remedy: They are entitled
to recover actual damages—including any security under . . . § 1950.5, and moving
expenses—plus attorney fees and costs”].) The trial court did not make a clear finding on
this issue, although it suggested that appellants may have a claim for their security
deposit under section 1950.5.
       To the extent the court may have granted the nonsuit motion on the ground that a
tenant needs to vacate the property in order to bring a claim for rent skimming, the syntax

       4
         Appellants do not appear to challenge the court’s conclusion that it was unable to
decide whether the trust agreement was forged because of the fact that some letters in the
signatures were printed and others were in cursive. Appellants claim their theory at trial
was that the notary public’s signature on the trust agreement was forged, and that Huynh
was a “straw buyer” for THS. That theory does not fit into the definition of rent
skimming in section 890, subdivision (b) that rent be collected without the owner’s
consent.

                                             7
of section 891, subdivision (d) does not support such a ruling. The subordinate clause, “if
the property is sold at a foreclosure sale and the tenant was required to move,” modifies
the last antecedent “moving expenses” rather than the remote antecedent “actual
damages.” (See Orthopedic Systems, Inc. v. Schlein (2011) 202 Cal.App.4th 529, 545
[explaining the last antecedent rule of statutory construction].) Nothing in the plain
language of subdivision (d) suggests that it was intended to apply only to tenants forced
to move or forced to move prematurely. In foreclosure, tenants on fixed-term leases may
be asked to move only under certain limited circumstances, and even tenants on month-
to-month leases and periodic tenancies are entitled to substantial notice before they are
required to quit. (See Deering’s Ann. Code Civ. Proc. (2014 supp.) foll. § 1161b, p. 64
[currently requiring 90-day notice, up from former 60-day notice requirement].) It is
undisputed that Avelo gave appellants the statutorily required notice to quit after the
foreclosure, brought several unlawful detainer actions against them after they refused to
vacate pursuant to that notice, and was awarded a writ of possession requiring appellants
to move out. Appellants eventually did incur moving expenses as a result of the
foreclosure.5
       Moreover, a tenant need not vacate the premises to be able to sue a former
landlord for a security deposit if the landlord did not turn over the deposit to the new
landlord and did not notify the tenant in accordance with section 1950.5, subdivision (h).
(See § 1950.5, subd. (j) [former and successor landlords jointly and severally liable for
non-return of security deposit].) The former landlord’s obligation to return the security
deposit cannot be offset by the tenant’s post-transfer breaches, as those defenses belong
to the successor landlord. (See Trypucko v. Clark (1983) 142 Cal.App.3d Supp. 1, 8.)
Thus, the fact that appellants remained on the property after the foreclosure does not
preclude them from suing their former landlord for their security deposit. It is undisputed
that THS did not return appellants’ security deposit. There also is no evidence that the

       5
         The notice to quit that THS gave appellants in May 2007 is irrelevant since there
is no evidence that it caused appellants to move out.
                                              8
security deposit was transferred to Avelo or that appellants were notified of a transfer as
required by section 1950.5, subdivision (h)(1).
       In sum, appellants had standing to bring a claim under section 891, subdivision (d)
even though they remained on the property after the foreclosure. While we need not
determine what actual damages besides the security deposit and moving expenses may be
recoverable under this subdivision, we note that, under section 891, subdivision (c), a
lender may sue to recover rent collected by a rent skimmer. As tenants, appellants were
required to pay rent as consideration for living on the property but had no interest in how
rent revenue was applied; they cannot claim the rent they paid to THS as actual damages.
Nor should THS be held accountable for appellants’ decision to embroil themselves in
the long-lasting legal battle to quiet title to the property following the foreclosure or to
hold over and defend against Avelo’s unlawful detainer actions.
                                              II
       Appellants argue there was no substantial evidence to support dismissal of their
claims for rent skimming and fraud, and the trial court abused its discretion in denying
their request to reopen the evidence.
       In applying the substantial evidence standard of review to a judgment entered
under Code of Civil Procedure section 631.8, we review the record in the light most
favorable to the judgment and draw all reasonable inferences in favor of the prevailing
party. “We will not reverse the trial court’s order granting the motion if its findings are
supported by substantial evidence, even if other evidence in the record conflicts.” (Combs
v. Skyriver Communications, Inc. (2008) 159 Cal.App.4th 1242, 1263.) But the
substantial evidence standard “does not require us to blindly seize any evidence in
support of the trier of fact’s findings in order to affirm the judgment. [Citation.] Rather,
it compels us to determine whether a reasonable trier of fact could have found for the
respondent based on the entire record. [Citation.] This is so because ‘substantial’ is not
synonymous with ‘any’ evidence, but refers to the quality, not the quantity of the
evidence. [Citation.] So, after reviewing the whole record, we must determine whether
there exists substantial evidence, which is evidence of ponderable legal significance that

                                               9
is reasonable, credible and of solid value, supporting the challenged findings of the trier
of fact.” (Quigley v. McClellan (2013) 214 Cal.App.4th 1276, 1282–1283.)
   A. Rent Skimming
       The dispositive factual issues on appellants’ rent skimming claim under section
890, subdivision (a)(1) are (1) whether THS applied rent revenue (or an equivalent
amount) to payments due on the two liens before it used that money for any other
purpose, and (2) whether it used the rent revenue (or a portion of it) to pay off the junior
lien, making payments on that lien that were not yet due.
       It is undisputed that appellant paid $2,500 in monthly rent, for a total of $30,000
between August 2007 and July 2008. It also is undisputed that THS made no payments
on the senior lien during that period, and that in August 2007 the payments on that lien
were in default by over $17,000. The only evidence that THS paid off the junior lien
came from the testimony of Matsuba, who was called as a hostile witness in appellants’
case-in-chief.6 Contrary to Matsuba’s contention on appeal, there is no evidence that the
junior lien was in default or foreclosure at any time. The portion of her own testimony on
which Matsuba relies does not mention the junior lien at all. Instead, it states generally
that the “house is upside down in default at the time. House is foreclosing. They want to
do a short sales [sic].” This testimony is consistent with evidence of the default and
foreclosure of the senior lien, but it does not support an inference that the junior lien also
was in foreclosure.
       Matsuba identified New Century as the junior lien holder. She claimed it was paid
off “some time December 2007 or early 2008.” Matsuba could not account for THS’s
use of rent revenue between August 2007 and the time the junior lien was paid off. She
testified generally that THS paid the property’s taxes and insurance, made plumbing
repairs, and had “to save the money” to pay off the junior lien. None of these uses of rent

       6
           Matsuba’s short, halting, disjointed statements are often vague and difficult to
follow.
                                               10
revenue is allowed under section 890, subdivision (a)(1) before that revenue is applied to
outstanding payments on all liens.7
       Matsuba contends the evidence shows the junior lien of $150,000 was completely
paid off, citing to the trial court’s statement that THS “paid off $150,000 second.” Her
testimony was as follows: “I know we have the documents for paid off the junior liens
and right here exhibit no. 3—$150,000 for the junior liens. We paid off. The documents
should be—legal department have it.” Exhibit no. 3, which Matsuba referenced, is the
second deed of trust on the property; it sets out $150,000 as the amount owed on the
junior lien, not the amount actually paid on it. Matsuba did not testify as to how much
THS actually paid to retire the lien, and no other evidence was presented on that point.
       At the beginning of trial, appellants’ counsel moved for a continuance or to
exclude THS’s documentary evidence of a payoff letter and documents relating to a short
sale, which she maintained she had not seen before. The court denied the motion, but the
record does not show the documents were introduced in appellants’ case-in-chief. It
would be speculative to conclude that THS paid $150,000 on the junior lien without some
evidence that this amount was actually due and not subject to negotiation. It also is
unclear from the record why THS would make such a substantial payment when it
collected no more than $30,000 in rent. Nor did Matsuba explain why the junior lien had
to be paid off first.
       As to the senior lien, Matsuba testified, “[W]e was going to be paid off Avelo.
We were set up to pay it off in July. We have to take care of the junior lien first. . . . [¶]
First lien was 2008 July. We got denied access the property. That’s why house got
sold.” From this testimony, the trial court deduced that THS tried to pay off the first lien,
but because it was denied access to the premises, it was “unable to get the moneys needed
to do that . . . .” The court’s inference that THS needed access to the property to obtain

       7
         Section 893 creates an affirmative defense for a natural person who uses revenue
from rent to correct code violations relating to habitability within 30 days of collecting
the rent if the person has no other funds. Matsuba does not rely on this defense.

                                              11
funding was speculative. Matsuba’s testimony does not make clear who denied THS
“access to the property” and when, or why access was needed. Although Matsuba
testified the property was brought to THS for a short sale, she did not testify that THS
actually tried to negotiate a short sale on the first lien, and no documents relating to a
short sale were offered during appellants’ case in chief.8
       The purpose of a motion for judgment under Code of Civil Procedure section
631.8 is “to avoid the unnecessary deferral of a ruling that otherwise could be made after
the plaintiff’s evidence.” Since the denial of such a motion does not preclude the
defendant from presenting evidence, the motion allows “the defendant to submit the case
on the merits after presentation of the plaintiff’s evidence, without being put to the
Hobson’s choice of presenting unnecessary evidence or taking the chance of losing
without it.” (Lingenfelter v. County of Fresno, supra, 154 Cal.App.4th at p. 205.) We
cannot say that the evidence elicited in appellants’ case-in-chief made it unnecessary for
the defense to present evidence regarding the short sale of the senior lien and payoff of
the junior lien. While the court could have credited Matsuba’s testimony that the junior
lien was discharged and drawn reasonable inferences from that fact, her testimony was
too vague to establish that THS applied rent revenue (or an equivalent amount) in the first
instance to payments that were actually due on the liens.
       The court incorrectly believed it had no discretion to reopen the evidence after a
nonsuit motion and abused its discretion in denying appellants’ request to be allowed to
rebut the unfavorable testimony on which the court based its findings. Under Code of

       8
         In their reply brief, appellants cite In re Mi La Sul (Bkrtcy. C.D.Cal. 2007) 380
B.R. 546, where the court dismissed bad faith bankruptcy petitions filed by THS,
Matsuba, and entities connected to them because the petitions were filed “to gain time so
that a Matsuba employee can continue to seek a short sale of the first trust deed and thus
a Matsuba entity will become the owner of the property without paying the full amount of
the liens on that property. It is to create equity in property that had none when a Matsuba
company gained control of it.” (Id. at p. 551.) The bankruptcy court also explained that
“[o]nce title is transferred to the trust, Matsuba or one of her entities begins negotiating
with the most junior liens to pay them off at less than is owed.” (Id. at p. 552.) In re Mi
La Sul highlights the dearth of evidence before the trial court in this case.

                                              12
Civil Procedure section 631.8, “[t]he court may consider all evidence received, provided,
however, the party against whom the motion for judgment has been made shall have had
an opportunity to present additional evidence to rebut evidence received during the
presentation of evidence deemed by the presenting party to have been adverse to him, and
to rehabilitate the testimony of a witness whose credibility has been attacked by the
moving party.” Trial courts have broad discretion in deciding whether to reopen the
evidence and may do so even after a motion for judgment. (Horning v. Shilberg, supra,
130 Cal.App.4th at p. 208; Howard Contracting, Inc. v. G. A. MacDonald Construction
Co. (1998) 71 Cal.App.4th 38, 49.) A failure to exercise discretion upon request is an
abuse of discretion. (Kim v. Euromotors West/The Auto Gallery (2007) 149 Cal.App.4th
170, 176.)
       At oral argument, Matsuba’s counsel asserted that a court may allow additional
evidence in rebuttal only if it considered “defensive matter” in ruling on the motion for
judgment, citing People v. Mobile Oil Corp. (1983) 143 Cal.App.3d 261, 271. Counsel
incorrectly assumed that Matsuba’s testimony was not “defensive matter” since it was
elicited by appellants. Appellants called Matsuba as an adverse witness and conducted a
“cross-examination” of her under Evidence Code section 776. “[E]vidence elicited from
an adverse party under section 776 is not treated as the plaintiff’s evidence.” (Miller v.
Dussault (1972) 26 Cal.App.3d 311, 318, cited in People v. Mobile Oil Corp., at p. 269.)
Once it became clear that the court would consider and credit Matsuba’s testimony,
which was adverse to appellants’ case, appellants had the right to request permission to
present rebuttal evidence, and the court erred in failing to exercise its discretion on their
request.
       Appellants argue they should have been allowed to rebut the inferences the trial
court drew from Matsuba’s testimony—that THS actually paid $150,000 on the junior
lien and that appellants denied THS access to the property—by presenting THS’s
discovery responses on the lien payment issue and by recalling Ferguson on the access
issue. ARB 10-11)~ Ferguson testified only that THS sought access to the property in
March or April 2008, but she was not asked specifically whether access was granted or

                                              13
denied. Matsuba in turn testified only that THS was denied access to the property, but
she was not asked who denied THS access or when that occurred. The testimony was,
thus, not directly in conflict, and Ferguson’s credibility was not necessarily at issue. But
to the extent the court was prepared to draw inferences unfavorable to appellants, they
had the right to recall Ferguson, or present other evidence, to rebut Matsuba’s testimony.
(See Howard Contracting, Inc. v. G. A. MacDonald Construction Co., supra, 71
Cal.App.4th at p. 49.)
         We reverse the dismissal of the rent skimming cause of action and remand the case
for a limited new trial on that cause. On retrial, the posture of the case will be the same
as if the motion for judgment had not been granted. (See People ex rel. Dept. of Motor
Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1017–1018, quoting Pinsker v.
Pacific Coast Soc. of Orthodontists (1969) 1 Cal.3d 160, 166–167.)
   B. Fraud
         Appellants argue they were fraudulently induced to pay rent to THS by its
assurance that the house would not be sold at foreclosure. They also claim they would
not have paid rent had they known THS did not have a broker’s license and that the trust
agreement was forged. The trial court found that appellants had shown no detriment. We
agree.
         A fraud plaintiff must show that he or she has suffered consequential damages in
reasonable reliance on the actionable misrepresentation. (Rossberg v. Bank of America,
N.A. (2013) 219 Cal.App.4th 1481, 1499.) It is unclear how appellants were damaged by
making their normal monthly rent payments and living on the property the entire time
they paid rent. (Cf. id. at p. 1500 [finding plaintiffs suffered no damages from continuing
to pay on loans in reliance on promised loan modification where bank credited payments
toward amount they undisputedly owed and allowed them to remain in their home].)
         The fraud claim was properly dismissed.
                                              III
         In a similar vein, appellants argue the court should have granted them leave to
allege a violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.,

                                              14
UCL) because THS collected rent without a broker’s license. While the court initially
stated it could not permit an amendment after a nonsuit motion, it did consider the request
on the merits and rejected it because appellants were not entitled to restitution of rent
they paid to live on the property.
       The denial of a motion for leave to amend is prejudicial only if the proposed
amendment would support a valid claim for relief. (Huff v. Wilkins, supra, 138
Cal.App.4th at p. 746.) Appellants are ineligible for restitution under the UCL because
they cannot show an economic injury in fact; there is no evidence that, by paying their
normal monthly rent to THS, they expended more money than they otherwise would have
had to pay to live on the property. (See Kwikset Corp. v. Superior Court (2011) 51
Cal.4th 310, 323, 337.) The court did not abuse its discretion in denying leave to allege a
violation of the UCL.
       The record does not support appellants’ argument that the court abused its
discretion in not allowing them to allege a cause of action under section 1950.5 for the
return of their security deposit. The trial court at one point stated, “I suppose [appellants
are] in the position to bring a suit under 1950.5.” Appellants’ counsel specified that
appellants could sue for “bad faith retention of the security deposit.” But counsel did not
ask the court for leave to amend the complaint to state a separate cause of action under
section 1950.5.

                                             15
                                     DISPOSITION
       The judgment is reversed in part, and the matter is remanded for a new trial on the
rent skimming cause of action consistent with the views expressed in this opinion. The
judgment is affirmed in all other respects. The parties are to bear their own costs on
appeal.
       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                 EPSTEIN, P. J.
We concur:

       WILLHITE, J.

       MANELLA, J.

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