Court Opinion

ID: 4521982
Source: CourtListenerOpinion
Date Created: 2020-04-02 19:02:34.211948+00
Date Added: 2024-06-11T09:25:31.018020
License: Public Domain

Filed 4/2/20
                       CERTIFIED FOR PARTIAL PUBLICATION*

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                              THIRD APPELLATE DISTRICT
                                            (Placer)
                                              ----

    ROBERT WEIMER, JR.,                                               C080550

                 Plaintiff and Appellant,                  (Super. Ct. No. SCV0035286)

          v.

    NATIONSTAR MORTGAGE, LLC, et al.,

                 Defendants and Respondents.

       APPEAL from a judgment of the Superior Court of Placer County, Michael W.
Jones, Judge. Affirmed in part and reversed in part.

      United Law Center, Danny A. Barak, Ronald W. Holland, Stephen J. Foondos and
John S. Sargetis for Plaintiff and Appellant.

       Severson & Werson, Jan T. Chilton, Elizabeth Holt Andrews and Elizabeth C.
Farrell for Defendants and Respondents.

* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of parts II, III.A, C through D of the Discussion.

                                               1
       Plaintiff Robert Weimer, Jr., purchased real property in Carnelian Bay in 1993.
He refinanced the mortgage in 2006 with a loan from defendant Bank of America, N.A.
(BANA). After defaulting, plaintiff entered into a loan modification process with
BANA. Subsequently, loan servicing was transferred, successively, to defendants
Specialized Loan Servicing, LLC (SLS) and Nationstar Mortgage, LLC (Nationstar).
According to plaintiff, BANA, SLS, and Nationstar successively each engaged in
deliberate and negligent misconduct in the loan modification process. In 2014, BANA
transferred beneficial interest in the loan to defendant U.S. Bank, N. A. (U.S. Bank), as
trustee for the Certificateholders of Banc of America Funding Corporation Mortgage Pass
Through Certificates Series 2007-7. Eventually, Nationstar, acting as U.S. Bank’s agent,
recorded a notice of trustee’s sale and had an agent enter onto the property and change
the locks.
       After plaintiff commenced this action, BANA, U.S. Bank, and Nationstar
demurred to a first amended complaint. The trial court sustained the demurrer without
leave to amend as to BANA, concluding that the action against it was time-barred. As to
the other demurring defendants, the court sustained the demurrer with leave to amend.
Plaintiff filed a second amended complaint, asserting causes of action sounding in
intentional and negligent misrepresentation, negligence, trespass to land, seeking
declaratory relief, and asserting violations of the unfair competition law (Bus. & Prof.
Code, § 17200 et seq.). U.S. Bank and Nationstar demurred, SLS separately demurred,
and the trial court sustained the demurrers without leave to amend.
       On appeal,1 plaintiff asserts that the trial court erred in concluding that the action
against BANA was time-barred because BANA’s actions were part of a civil conspiracy

1 Plaintiff separately appeals from two judgments. One judgment dismissed the action as
asserted against SLS. The other judgment identified U.S. Bank, Nationstar, and,
erroneously, BANA, as having successfully demurred to the second amended complaint,

                                              2
with the other defendants, and the timeliness of plaintiff’s action against BANA must be
measured from the last overt act. Plaintiff further asserts that the trial court erred in
sustaining the demurrers to the second amended complaint because he sufficiently stated
each cause of action. Plaintiff also asserts that the trial court should have granted him
leave to amend, however, he largely maintains that his complaint required no
amendment.
       In the unpublished portion of this opinion, we conclude that the action as asserted
against BANA was time-barred. We further conclude that plaintiff sufficiently stated
causes of action sounding in intentional and negligent misrepresentation and violations of
the unfair competition law against the remaining defendants.
       In the published portion of this opinion, based on the test in Biakanja v. Irving
(1958) 49 Cal. 2d 647 (Biakanja) and the analysis in Southern California Gas Leak Cases
(2019) 7 Cal. 5th 381, 397 (Gas Leak), we conclude the remaining defendants had a duty
of care and that plaintiff sufficiently stated a cause of action for negligence against them.

and ordered “these Defendants . . . dismissed from this case with prejudice.” A judgment
of dismissal following BANA’s successful demurrer to the first amended complaint does
not appear in the record, and plaintiff has not appealed from any such judgment.

  “An order sustaining a demurrer is usually not immediately appealable, because it is not
on its face a final judgment. [Citation.] However, it may be treated as a judgment for
purposes of appeal when, like a formal judgment, it disposes of the action and precludes
further proceedings.” (Thaler v. Household Finance Corp. (2000) 80 Cal. App. 4th 1093,
1098.) “[A]n appellate court may deem an order sustaining a demurrer to incorporate a
judgment of dismissal.” (Molien v. Kaiser Foundation Hospitals (1980) 27 Cal. 3d 916,
920, disapproved on another ground in Burgess v. Superior Court (1992) 2 Cal. 4th 1064,
1074.) Here, the order sustaining BANA’s demurrer to the first amended complaint
without leave to amend ended plaintiff’s ability to proceed further in the trial court with
his case against BANA. The only step left to make that order appealable as to BANA
was the formal entry of a dismissal order or judgment. BANA has not sought dismissal
of the appeal. We will deem the order on the demurrer to the first amended complaint to
incorporate a judgment of dismissal as to BANA and will review the order. (See
Sisemore v. Master Financial, Inc. (2007) 151 Cal. App. 4th 1386, 1396.)

                                               3
       Therefore, we will reverse the judgments of dismissal as to U.S. Bank, SLS, and
Nationstar and reverse the orders sustaining the demurrers as to the causes of action in
the second amended complaint for intentional misrepresentation (first cause of action),
negligent misrepresentation (second cause of action), negligence (third cause of action),
and violations of the unfair competition law (sixth cause of action). In all other respects,
the judgments are affirmed.
                 FACTUAL AND PROCEDURAL BACKGROUND
       Plaintiff purchased the subject property in Carnelian Bay in or about 1993 and
alleges he “maintained it as one of his principal residences.” He refinanced the mortgage
on the property on or about May 25, 2006,2 with a loan from BANA. Plaintiff alleged
that, in or about January 2008, BANA froze plaintiff’s bank accounts, and, as a result, he
was not able to pay his mortgage payments for approximately three months.
Additionally, BANA cancelled plaintiff’s line of credit for unknown reasons, which
negatively affected plaintiff’s credit score. Plaintiff alleged that he never found out why
BANA froze his accounts and cancelled his line of credit.
       As a result of his delinquency, plaintiff entered into a loan modification process
with BANA. In or about mid-2009, an agent, employee, or representative of BANA told
plaintiff that he was approved for a loan modification that would reduce his monthly
payments to $8,000 per month, reduce and fix his interest rate, and “reduce his principal”
by $500,000. BANA required plaintiff to make a down payment of $50,000 to secure the
loan modification, and, once it received that payment, it would halt the foreclosure sale.

2  The complaint states that plaintiff refinanced with BANA in 2007. However, in his
brief on appeal, plaintiff represents that this was error, and that he “would amend this
allegation to include the correct year of 2006.” Whether plaintiff refinanced with BANA
in 2006 or 2007 is immaterial to this appeal.

                                             4
Plaintiff asserted that his wife sent BANA a check for $50,000.3 However, the
foreclosure sale was not postponed, and plaintiff “was forced to file a chapter 11
bankruptcy to stop the foreclosure sale.” BANA did not furnish the loan modification.
       In or about early 2010, servicing of the loan was transferred from BANA to SLS.
Plaintiff alleged that SLS notified him that it would take over for BANA in handling his
loan modification application.4 From early 2010 through January 2014, plaintiff
attempted to obtain a permanent loan modification from SLS. However, during this time
period, SLS “refused to honor the terms of the loan modification promised by” BANA,
notwithstanding the one-time $50,000 payment. Plaintiff repeatedly submitted identical
and updated loan modification applications and documents to SLS. Often, plaintiff was
told that the documents were not received despite plaintiff having sent them directly to
the addresses and individuals specified by SLS. Plaintiff alleged that SLS mishandled or
lost the applications and documents. SLS continued to represent to plaintiff that he

3  Defendants filed a request that we take judicial notice of a memorandum of authorities
filed in federal district court by plaintiff in an unrelated case which, according to
defendants, would be relevant to prove that it was someone other than plaintiff’s wife
who tendered the $50,000 payment. Ruling on the request was deferred pending
calendaring and assignment of the panel. We deny defendants’ request for judicial notice
on the ground that the identity of the individual who tendered the $50,000 payment on
plaintiff’s behalf is not relevant to the issues we must resolve on this appeal. (See
Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal. 4th 1057, 1063 [matter to be
judicially noticed must be relevant to a material issue].)
4 The complaint does not state whether SLS volunteered to plaintiff that it would take
over the loan modification process or whether it so informed plaintiff in response to an
inquiry by plaintiff. The complaint alleges: “In or about early 2010, the servicing rights
of the Subject Loan were transferred from [BANA] to SLS. SLS informed Plaintiff that
they would take over for [BANA] in handling Plaintiffs’ loan modification application.
[¶] As a result, Plaintiff renewed his attempts to obtain a loan modification from SLS.”
Reading the language of the complaint liberally (see Longshore v. County of Ventura
(1979) 25 Cal. 3d 14, 22 (Longshore), we assume SLS voluntarily notified plaintiff that it
would take over the modification process without an inquiry by plaintiff.

                                             5
would be approved for a loan modification with terms similar to those previously offered
by BANA. Meanwhile, “[a]s a result,” plaintiff continued to accumulate arrears,
penalties, and fees, and his credit continued to suffer. Additionally, plaintiff expended
time, money, and effort in his attempts to obtain the loan modification.
       On or about April 1, 2014, servicing of the loan was transferred from SLS to
Nationstar. Nationstar informed plaintiff that, as a result of the transfer, he would have to
begin the loan modification application process anew.5 Nationstar refused to honor
BANA’s “previous representation of a permanent loan modification.” Plaintiff once
again had to submit the same applications and documents on multiple occasions, and was
told to send them to locations in Arizona, Texas, and California. A named employee or
agent of Nationstar told plaintiff that he was being evaluated for a Home Affordable
Modification Program (HAMP) loan modification, sent him the application, and told him
to complete it and submit it along with supporting documents.6 Thus, according to the
complaint, Nationstar “represented and led Plaintiff to believe that he was eligible to
apply for and receive a HAMP loan modification.” However, plaintiff could not qualify

5 Similar to SLS, the complaint does not specify whether plaintiff was informed by
Nationstar that it would take over the modification process because he inquired or
whether SLS or Nationstar so informed plaintiff without an inquiry by plaintiff. The
complaint alleges: “On or about April 1, 2014, the servicing rights of the Subject
Property were transferred to Nationstar. [¶] At the time the transfer [from SLS to
Nationstar] occurred Plaintiff was in the middle of applying for a loan modification with
SLS. Nationstar informed Plaintiff that as a result of the transfer he would have to start
the loan modification process over again.” (Capitalization omitted.)
6 “ ‘[T]he United States Department of the Treasury implemented the Home Affordable
[Modification] Program (HAMP) to help homeowners avoid foreclosure during the
housing market crisis of 2008. “The goal of HAMP is to provide relief to borrowers who
have defaulted on their mortgage payments or who are likely to default by reducing
mortgage payments to sustainable levels, without discharging any of the underlying
debt.” ’ ” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal. App. 4th 49, 56,
fn. 1 (Lueras).)

                                             6
for a HAMP loan modification because his loan, at $2,000,000, was well above the
applicable maximum of $729,750. Plaintiff alleged that Nationstar was aware of this.
According to plaintiff, Nationstar had him apply for a HAMP loan modification “so
Plaintiff would maintain his delinquency and Nationstar would retain its status as a
‘special servicer’ for servicing a delinquent account and would enable it to collect
additional fees for servicing a delinquent loan.” (Capitalization omitted.) In the
alternative, plaintiff asserted that Nationstar acted unreasonably in evaluating him for a
loan modification for which he was not qualified. Plaintiff asserted that, like the
servicers before it, Nationstar lost or misplaced plaintiff’s applications and documents.
       According to plaintiff, “[o]n or about, June 23, 2014, an Assignment of Deed of
Trust was effectuated whereby [BANA] transferred its purported beneficial interest under
the Deed of Trust to the U.S. Bank securitized trust.”7
       On or about August 15, 2014, Nationstar hired Cyprexx to enter the subject
property and change the locks. Plaintiff learned of this development after a notice was
placed on his door. Plaintiff contacted Cyprexx, and a named representative told him that
Nationstar had hired Cyprexx to secure and winterize the premises. Plaintiff alleged that
Nationstar and Cyprexx knew plaintiff was still occupying the home. Plaintiff reentered
the property, installed new locks, and directed a caretaker to maintain the property while
he was out of town on business.
       Plaintiff alleged that defendants’ actions constituted a continuing conspiracy to
defraud and take advantage, and, therefore, the statute of limitations should be tolled until
completion of the last overt act. Plaintiff further alleged that it was defendants’ plan to
engage him in the loan modification process, with no intent to grant his loan modification
applications, so that they could obtain additional compensation for servicing a delinquent

7 Plaintiff asserted that this assignment and transfer was void ab initio, but has since
abandoned that claim.

                                              7
mortgage account and collect additional fees for every loan modification application he
submitted.8
          In a first amended complaint, plaintiff asserted eight causes of action against
defendants: (1) intentional misrepresentation, (2) negligent misrepresentation, (3)
promissory estoppel, (4) breach of contract, (5) negligence, (6) trespass to land, (7)
declaratory relief, and (8) violation of Business and Professions Code section 17200.
          Defendants Nationstar, BANA, and U.S. Bank demurred to the first amended
complaint. Defendants asserted, among other things, that plaintiff’s claims against
BANA were all time-barred, and that, as to Nationstar and U.S. Bank, plaintiff failed to
adequately state claims as to each cause of action. Defendants also requested that the
trial court take judicial notice of certain documents and instruments, including several
documents related to plaintiff’s bankruptcy. Plaintiff filed his own request for judicial
notice.
          The trial court granted the requests for judicial notice. The trial court then
sustained defendants’ demurrer to the first amended complaint. The court stated that the
“conclusory and overlapping allegations in the [first amended complaint] focus primarily
upon the purported wrongful actions and conduct of defendant [BANA], which are
followed by further conclusory allegations based primarily upon [BANA’s] actions that
plaintiff purports are attributable to defendants Nationstar and SLS. It is this deficient
pleading that subjects plaintiff’s [first amended complaint] to successful challenge by
defendants in light of the prior bankruptcy. [Citations.] This same deficient pleading

8  Thus, contrary to the contention of defendants’ counsel at oral argument before this
court, reading the language of the complaint liberally (see Longshore, supra, 25 Cal.3d at
p. 22), it does allege that defendants sought to collect application fees for each loan
modification application submitted, and it could be inferred that it collected such fees.
Whether plaintiff could prove this allegation, or whether the collection of fees with each
loan modification application is “prohibited by law” as asserted by defendants’ attorney
at oral argument, is immaterial here.

                                                 8
also subjects the [first amended complaint] to challenge based upon judicial estoppel.
[Citation.] Even if the court were to accept the contentions made by plaintiff, which it
does not, the eight causes of action are simply pled in too conclusory a manner to support
the claims asserted against the moving defendants. Furthermore, the causes of action
alleged against defendant [BANA] . . . are barred in light of the applicable statutes of
limitations. It is for these reasons that the demurrer is sustained.” The court sustained
the demurrer with leave to amend as to defendants U.S. Bank and Nationstar, finding
that, although the allegations were conclusory and failed to support plaintiff’s claims,
plaintiff presented a sufficient showing of his ability to cure the defects. However,
having determined that the causes of action asserted against BANA were time-barred and
plaintiff failed to show an ability to amend the complaint so as to cure this deficiency, the
court sustained the demurrer without leave to amend as to BANA.
       Plaintiff then filed a second amended complaint, asserting six causes of action as
to U.S. Bank, SLS, and Nationstar: (1) intentional misrepresentation, (2) negligent
misrepresentation, (3) negligence, (4) trespass to land, (5) declaratory relief, and (6)
violation of Business and Professions Code section 17200. Plaintiff abandoned his
promissory estoppel and breach of contract causes of action.
       U.S. Bank and Nationstar demurred to the second amended complaint on the same
grounds asserted in their first demurrer. Again, these defendants filed a request for
judicial notice. The trial court granted the request for judicial notice and sustained the
demurrer without leave to amend, concluding that plaintiff’s allegations were insufficient
to state causes of action. The trial court entered judgment in favor of BANA, U.S. Bank,
and Nationstar, dismissing the action insofar as asserted against them. (See fn. 1, ante.)
       SLS filed its own demurrer to the second amended complaint and a request for
judicial notice. The trial court sustained the demurrer, dismissed the second amended
complaint as asserted against SLS without leave to amend, and entered judgment.

                                              9
                                      DISCUSSION
                                  I. Standard of Review
       A demurrer tests the sufficiency of the complaint as a matter of law, and it raises
only questions of law. (Code Civ. Proc., § 589, subd. (a).) “We review a trial court’s
decision to sustain a demurrer for an abuse of discretion.” (Zipperer v. County of Santa
Clara (2005) 133 Cal. App. 4th 1014, 1019 (Zipperer).) “ ‘ “ ‘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.] Further, we give the [complaint] a reasonable interpretation, reading
it as a whole and its parts in their context.” ’ ” (Finch Aerospace Corp. v. City of San
Diego (2017) 8 Cal. App. 5th 1248, 1251-1252.) “[T]he complaint must be liberally
construed and survives a general demurrer insofar as it states, however inartfully, facts
disclosing some right to relief.” (Longshore, supra, 25 Cal.3d at p. 22; see also Daniels
v. Select Portfolio Servicing, Inc. (2016) 246 Cal. App. 4th 1150, 1162 (Daniels) [we
decide “whether a cause of action has been stated under any legal theory when the
allegations are liberally construed”].) “In reviewing an order sustaining a demurrer, we
examine the operative complaint de novo to determine whether it alleges facts sufficient
to state a cause of action under any legal theory. [Citation.] Where the demurrer was
sustained without leave to amend, we consider whether the plaintiff could cure the defect
by an amendment. The plaintiff bears the burden of proving an amendment could cure
the defect.” (T.H. v. Novartis Pharmaceuticals Corp. (2017) 4 Cal. 5th 145, 162.)
                             II. The Action Against BANA
            A. Statutes of Limitations and Commencement of this Action
       “The statute of limitations to be applied in a particular case is determined by the
nature of the right sued upon or the principal purpose of the action, not by the form of the
action or the relief requested.” (Barton v. New United Motor Manufacturing, Inc. (1996)
43 Cal. App. 4th 1200, 1207 (Barton), citing Davies v. Krasna (1975) 14 Cal. 3d 502, 515

                                             10
& Jefferson v. J.E. French Co. (1960) 54 Cal. 2d 717, 718.) “What is significant for
statute of limitations purposes is the primary interest invaded by defendant’s wrongful
conduct.” (Barton, at p. 1207.) BANA acknowledges that the applicable limitations
periods here were up to four years.9
       The claims plaintiff asserts against BANA, all arising out of the handling and
processing of plaintiff’s loan modification, were based on actions taken by BANA prior
to “early 2010,” when “servicing rights of the Subject Loan were transferred from
[BANA] to SLS,” at which time “SLS informed Plaintiff that they would take over for
[BANA] in handling Plaintiff’s loan modification application.” Plaintiff commenced this
action by filing the summons and complaint in October 2014. Thus, without resorting to
a theory of civil conspiracy and the last overt act doctrine, plaintiff’s action asserted
against BANA would be time-barred based on a four-year limitations period, the longest
of the applicable statutes of limitations.10

9 See Code of Civil Procedure section 337, subdivision (a), providing that the statute of
limitations for an action on any contract founded on an instrument in writing is four years
and Business and Professions Code section 17208, providing that the limitations period
for unfair and unlawful business practices is four years. “The duration of the limitations
period applicable to a declaratory relief action is determined by the nature of the
underlying obligation sought to be adjudicated.” (Snyder v. California Ins. Guarantee
Assn. (2014) 229 Cal. App. 4th 1196, 1208.) See also Code of Civil Procedure section
338, subdivision (d) (limitations period for cause of action sounding in intentional
misrepresentation is three years); Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins.
Associates, Inc. (2004) 115 Cal. App. 4th 1145, 1155, citing Code of Civil Procedure
section 339 (cause of action for negligent misrepresentation governed by two-year statute
of limitations where allegations amount to a claim of professional negligence); Newport
Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2016) 6 Cal. App. 5th 1207,
1224 and footnote 5, affirmed (2018) 4 Cal. 5th 637, citing Code of Civil Procedure
section 339, subdivision (1) (statute of limitations for promissory estoppel based on oral
promises is two years); Hydro-Mill, at page 1154 (claim based on professional negligence
governed by two-year statute of limitations set forth in Code Civ. Proc., § 339, subd. (1)).
10 The declaratory relief cause of action in the first amended complaint was the only
cause of action arguably not premised on the handling of the loan modification process.

                                               11
   B. Plaintiff’s Contentions, Civil Conspiracy, and the Last Overt Act Doctrine
       Plaintiff alleged in the first cause of action that the action against BANA was not
time-barred because BANA was part of an ongoing civil conspiracy among defendants.
Plaintiff asserts that, under a civil conspiracy theory, the statute of limitations does not
begin to run until the last overt act. Plaintiff maintains that the recording of the Notice of
Trustee’s Sale in August 2014 should be deemed the last overt act, and, therefore, this
action insofar as asserted against BANA was not time-barred.
       “Proof of a civil conspiracy triggers the ‘last overt act’ doctrine.” (People ex rel.
Kennedy v. Beaumont Investment, Ltd. (2003) 111 Cal. App. 4th 102, 138.) “[W]hen a
civil conspiracy is properly alleged and proved, the statute of limitations does not begin
to run on any part of a plaintiff’s claims until the ‘last overt act’ pursuant to the
conspiracy has been completed.” (Wyatt v. Union Mortgage Co. (1979) 24 Cal. 3d 773,
786.) Thus, we must determine whether the complaint sufficiently alleged a conspiracy
between defendants.
                                         C. Analysis
       In the first amended complaint, under the subheading, “Tolling of the Statute of
Limitations,” plaintiff alleged, in pertinent part: “Plaintiff alleges that Defendants’
actions constitute a continuing conspiracy to defraud and take advantage of Defendants
[sic] and as such, the statute of limitations should be tolled until the completion of the last
overt act. Plaintiff alleges that none of the Defendants actually had the intent to grant
him a loan modification and that it was Defendants’ plan to engage Plaintiff in the loan
modification process because they were able to obtain additional compensation for
servicing a delinquent mortgage account as well as collect additional fees for every loan

However, as to BANA, plaintiff only alleged in that cause of action that it had no right to
service or administer the loan because the transfer of the beneficial interest in the loan
from BANA to U.S. Bank was void ab initio. As set forth ante, any contentions
concerning BANA’s servicing of the loan, which ceased in early 2010, are time-barred.

                                              12
modification application Plaintiff submitted.” Plaintiff further alleged that he was not
knowledgeable in matters pertaining to the mortgage or banking industries, that the facts
constituting defendants’ fraudulent and illegal activities were purposely hidden from him,
and that he did not become aware of the extent of defendants’ fraudulent and illegal
conduct until he retained counsel in August 2014. Plaintiff asserts that each subsequent
cause of action incorporated these allegations.
       We agree with defendants that plaintiff has offered only conclusory assertions of a
conspiracy, rather than alleging any facts that could establish the existence of a
conspiracy.
       In Daniels, supra, 246 Cal. App. 4th 1150, the plaintiffs purported to assert a cause
of action for civil conspiracy “in which they allege respondents ‘conspired’ to ‘deceive
and defraud’ them into participating in the loan modification process.” (Id. at p. 1172.)
The Daniels court considered “whether appellants adequately allege[d] that [BANA’s]
misrepresentations were made pursuant to an agreement among [BANA], U.S. Bank,
SPS, and ReconTrust to defraud appellants” (id. at p. 1173), essentially the same question
we must answer in relation to defendants in the instant action for purposes of making our
determination as to whether the action against BANA is time-barred. As defendants
emphasize, the Daniels court concluded: “Appellants’ conspiracy allegations are too
conclusory. As to the first element, they allege respondents ‘agree[d] . . . to deceive
[appellants] into participating in the loan modification processes.’ There are no factual
allegations about the nature of that agreement. Critically, appellants do not allege that
respondents agreed to defraud them before the alleged misrepresentations were made
(between 2009 and June 2012). Nor can we reasonably infer from the facts alleged that
respondents agreed to defraud appellants before the misrepresentations were made, since
appellants allege SPS did not become their loan servicer until December 1, 2012 and
ReconTrust did not become trustee until August 2012. For these reasons, we conclude
the trial court did not err in sustaining SPS and U.S. Bank’s demurrer as to the civil

                                             13
conspiracy cause of action without leave to amend, nor in granting [BANA] and
ReconTrust’s motion for judgment on the pleadings without leave to amend as to that
claim.” (Ibid.)
       Similarly, we conclude here that plaintiff’s allegations of a civil conspiracy are too
conclusory. Like in Daniels, plaintiff merely asserted that defendants were involved in a
conspiracy to defraud him and asserted that “it was Defendants’ plan to engage Plaintiff
in the loan modification process because they were able to obtain additional
compensation for servicing a delinquent mortgage account as well as collect additional
fees for every loan modification application Plaintiff submitted.” As in Daniels, plaintiff
offered no factual allegations about the nature of the alleged conspiracy. (Daniels, supra,
246 Cal.App.4th at p. 1173.) Also like in Daniels, plaintiff does not, and it appears he
cannot, allege that BANA and its codefendants agreed to defraud plaintiff before or at the
time any of BANA’s misrepresentations were made, all prior to early 2010, during which
time BANA remained the servicer of the loan. And, like in Daniels, we cannot infer that
defendants, including BANA, agreed to defraud plaintiff before such alleged
misrepresentations were made because SLS did not begin servicing the loan until 2010,
and Nationstar did not begin servicing the loan until 2014. There are no allegations that
SLS or Nationstar were involved in any way with plaintiff’s loan until those dates, and
there are no factual allegations addressing a civil conspiracy during those times in
question. SLS and Nationstar were not alleged to have any connection to plaintiff’s loan
so as to be coconspirators with BANA at the relevant times.
       In his reply brief, plaintiff relies on AREI II Cases (2013) 216 Cal. App. 4th 1004.
In that case, the court stated: “It is well settled that ‘ “[b]are” allegations and “rank”
conjecture do not suffice for a civil conspiracy.’ [Citation.] A party seeking to establish
a civil conspiracy ‘must show that each member of the conspiracy acted in concert and
came to a mutual understanding to accomplish a common and unlawful plan, and that one
or more of them committed an overt act to further it. [Citation.] It is not enough that the

                                              14
[conspirators] knew of an intended wrongful act, they must agree—expressly or tacitly—
to achieve it.’ [Citation.] It must be recognized, however, that because of the very nature
of a conspiracy, ‘its existence must often be inferentially and circumstantially derived
from the character of the acts done, the relations of the parties and other facts and
circumstances suggestive of concerted action.’ [Citation.] While a complaint must
contain more than a bare allegation the defendants conspired, a complaint is sufficient if
it apprises the defendant of the ‘character and type of facts and circumstances upon which
she was relying to establish the conspiracy.’ ” (AREI II Cases, at p. 1022.) However,
here plaintiff has not pled facts and circumstances supporting the existence of the
conspiracy.
       Plaintiff in his reply brief asserts that he does not rely only on the loan servicers as
coconspirators, but also on U.S. Bank. Plaintiff belatedly asserted in his reply brief: “the
conduct of all servicers was directed by the purported owner of the Subject Loan,” U.S.
Bank, and that “U.S. Bank controlled all of the loan servicers who serviced the Subject
Loan.” Plaintiff asserts that “the conspiracy could reasonably [be] inferred as between
each servicer and U.S. Bank, without the need for separate conspiracy analyses.”
       Where a plaintiff fails to show how the complaint can be amended in his or her
opening brief, we may properly regard any belated proposed amendments offered in the
plaintiff’s reply brief as forfeited. (Allen v. City of Sacramento (2015) 234 Cal. App. 4th
41, 52, 56 (Allen) [rejecting points raised for the first time in reply brief on appeal
without good cause in reviewing trial court’s ruling sustaining a demurrer without leave
to amend].) “ ‘Obvious considerations of fairness in argument demand that the appellant
present all of his [or her] points in the opening brief. To withhold a point until the
closing brief would deprive the respondent of his [or her] opportunity to answer it or
require the effort and delay of an additional brief by permission. Hence the rule is that
points raised in the reply brief for the first time will not be considered, unless good
reason is shown for failure to present them before.’ ” (Reichardt v. Hoffman (1997) 52

                                              15
Cal. App. 4th 754, 764, quoting Neighbours v. Buzz Oates Enterprises (1990) 217
Cal. App. 3d 325, 335, fn. 8; see also Simpson v. The Kroger Corp. (2013) 219
Cal. App. 4th 1352, 1370 (Simpson) [“Raising a new theory in a reply brief is improper
and unfair to defendants. We may decline to consider an argument raised for the first
time in a reply brief if no good reason is demonstrated for the delay in raising the
point”].) Moreover, if we were receptive to this belated attempt to amend the pleadings,
we would conclude that these allegations, even if they included reference to BANA, are
insufficient to allege a conspiracy between BANA and U.S. Bank.
       In the paragraphs of the first amended complaint to which plaintiff cites for these
propositions in his reply brief, he merely asserted that an agency agreement existed
between U.S. Bank and the servicers; “U.S. BANK and Servicers regularly engaged in
business with each other”; an agency relationship existed in which U.S. Bank directed
Nationstar’s conduct; U.S. Bank’s control over Nationstar was pursuant to contract, was
comprehensive, and U.S. Bank “directed the conduct of NATIONSTAR throughout the
modification process”; and that “upon information and belief, Plaintiff alleges that
because [BANA]/NATIONSTAR/SLS were acting as servicers and agents of U.S.
BANK, U.S. BANK as principal is liable for all other acts complained of by Plaintiff.”
These allegations remain insufficient to allow us to infer a civil conspiracy implicating
BANA of the sort plaintiff advances here.
       Furthermore, according to plaintiff’s allegations, U.S. Bank did not acquire its
beneficial interest in the loan until BANA’s assignment to U.S. Bank in June 2014.
Plaintiff alleged that, “[o]n or about, June 23, 2014, an Assignment of Deed of Trust was
effectuated whereby [BANA] transferred its purported beneficial interest under the Deed
of Trust to the U.S. Bank securitized trust.” Assuming this factual allegation to be true
(Daniels, supra, 246 Cal.App.4th at p. 1162), U.S. Bank could not have conspired with

                                             16
BANA or SLS with regard to the servicing of the loan, as those entities ceased servicing
the loan prior to June 2014.11
       Plaintiff offers in a footnote in his reply brief: “Appellant now realizes that only
Nationstar is singled out under some of the allegations in the agency section of the [first
amended complaint]. This was inadvertent as the allegations apply to both BANA and
SLS, as well.” It is not clear to us, however, that this allegation was, in fact, erroneous or
inadvertent. According to plaintiff’s pleadings, U.S. Bank acquired its beneficial interest
in the loan after Nationstar became the servicer of the loan, after BANA and SLS had
long since ceased functioning in that role. Assuming that factual allegation to be true
(Daniels, supra, 246 Cal.App.4th at p. 1162), plaintiff’s original allegations “singl[ing]
out” Nationstar make sense; no entity other than Nationstar serviced the loan at the time
of and following U.S. Bank’s acquisition of its beneficial interest in the loan.
       Also in his reply brief, plaintiff, in effect, offers to change his theory relative to
BANA. For the first time, plaintiff asserts that BANA retained an ownership interest
under the deed of trust until June 2014. He cites the allegation in his first amended
complaint in which he alleged that, on June 23, 2014, BANA “transferred its purported
beneficial interest under the Deed of Trust to the U.S. BANK securitized trust.” Plaintiff
for the first time in his reply brief now asserts that the first amended complaint alleges
that BANA still had an ownership interest in the loan as of mid-2014 and the first
amended complaint “does not give rise to the inference that BANA’s role in the Subject
Loan ended in or about early 2010, when SLS took over the servicing.” From this,

11  We note here that plaintiff does not offer any allegations involving an alleged
conspiracy between BANA and U.S. Bank in connection with the transfer of the
beneficial interest in the loan from BANA to U.S. Bank. Plaintiff’s conspiracy
allegations are limited to the servicing of the loan and the loan modification process. Nor
does plaintiff assert any factual allegations to the effect that BANA, as beneficial owner
of the loan as opposed to loan servicer, directed the actions of SLS or Nationstar in
servicing the loan in the furtherance of any conspiracy.

                                              17
plaintiff implies that any action against BANA is not time-barred. Having raised this
argument for the first time in his reply brief on appeal, plaintiff has forfeited the issue.
(Allen, supra, 234 Cal.App.4th at pp. 52, 56; Simpson, supra,219 Cal.App.4th at
p. 1370.)12
       Plaintiff asserts that he should have been granted leave to amend the first amended
complaint insofar as asserted against BANA. Plaintiff “requests that the trial court’s
ruling on BANA’s demurrer to the [first amended complaint] be overruled as to his first
cause of action for intentional misrepresentation.” However, once again, we decline to
consider new theories and proposed amendments offered for the first time in plaintiff’s
reply brief on appeal. (Allen, supra, 234 Cal.App.4th at pp. 52, 56; Simpson, supra, 219
Cal.App.4th at p. 1370.)
                                       D. Conclusion
       We conclude that the trial court properly sustained BANA’s demurrer to the first
amended complaint without leave to amend because the action insofar as asserted against
BANA was time-barred.

12  As discussed during oral argument before this court, plaintiff in no way raised the
argument in his opening brief on appeal that the action against BANA was not time-
barred because BANA retained a beneficial ownership interest under the deed of trust
until June 2014. As stated ante, the first and second amended complaints contain
allegations that, “[o]n or about, June 23, 2014, an Assignment of Deed of Trust was
effectuated whereby [BANA] transferred its purported beneficial interest under the Deed
of Trust to the U.S. Bank securitized trust.” This allegation was made in a subsection
addressed to “Securitization Events,” in connection with plaintiff’s claim that this transfer
was void ab initio. This factual allegation in the complaints was not sufficient to raise,
and to avoid forfeiture of, this argument which was not raised in plaintiff’s opening brief
on appeal and which was raised for the first time in his reply brief.

                                              18
               III. The Action Against U.S. Bank, SLS, and Nationstar13
     A. Intentional and Negligent Misrepresentation – Nationstar and U.S. Bank14
        1. Plaintiff’s Contentions
        Plaintiff asserts that the trial court’s reasoning in sustaining the demurrers as to his
misrepresentation claims “was misguided and [plaintiff] should have been given leave to
amend his” second amended complaint. According to plaintiff, the thrust of his
misrepresentation claims is that defendants never intended to grant him a loan
modification, “and that nullified the possibility that they would ever review his
modification application in good faith.” Plaintiff further asserts that defendants had their
representatives make statements to him to imply that further action on his part was
necessary to “get the modification process back on track” and had defendants notified
him earlier that he could not qualify for a loan modification, he would have “pursued
other options.” Plaintiff asserts that the fact that he “was solicited to apply for a loan
modification program (HAMP) that he never could have qualified for is definitively a
material misrepresentation.” Because his loan was too large to qualify for HAMP,
plaintiff asserts that he “was either fraudulently or negligently enticed into applying for a
HAMP loan modification that he could not have, under any circumstances, qualified for.
Accordingly, this misrepresentation was a material misrepresentation.” Plaintiff further
asserts that he relied on defendants’ misrepresentations to his detriment. He asserts that

13 Plaintiff does not challenge the trial court’s ruling as to his declaratory relief cause of
action.
14 The first and second causes of action in the second amended complaint are expressly
asserted against Nationstar, U.S. Bank, and Does 1-50 only. These causes of action are
not asserted against SLS. Plaintiff specifically alleges that Nationstar and its agents made
the intentional and negligent misrepresentations alleged. Thus, we consider these two
causes of action on appeal only as asserted against Nationstar and U.S. Bank.

                                               19
he sustained damages in the form of damage to his credit, increased interest and arrears,
lost opportunity for alternatives to foreclosure, and lost time, energy, and effort.
       2. Elements and Pleading of Intentional and Negligent Misrepresentation
       “The essential elements of . . . intentional misrepresentation are (1) a
misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and
justifiable reliance, and (5) resulting damage. [Citations.] The essential elements of . . .
negligent misrepresentation are the same except that it does not require knowledge of
falsity but instead requires a misrepresentation of fact by a person who has no reasonable
grounds for believing it to be true.” (Chapman v. Skype Inc. (2013) 220 Cal. App. 4th 217,
230-231.)
       “Causes of action for intentional and negligent misrepresentation sound in fraud
and, therefore, each element must be pleaded with specificity. [Citations.] ‘The
specificity requirement means a plaintiff must allege facts showing how, when, where, to
whom, and by what means the representations were made, and, in the case of a corporate
defendant, the plaintiff must allege the names of the persons who made the
representations, their authority to speak on behalf of the corporation, to whom they
spoke, what they said or wrote, and when the representation was made.’ [Citation.]
However, ‘the requirement of specificity is relaxed when the allegations indicate that “the
defendant must necessarily possess full information concerning the facts of the
controversy” [citations] or “when the facts lie more in the knowledge of the” ’ defendant.
[Citation.] The specificity requirement serves two purposes: ‘to apprise the defendant of
the specific grounds for the charge and enable the court to determine whether there is any
basis for the cause of action.’ ” (Daniels, supra, 246 Cal.App.4th at pp. 1166-1167.)
       3. Analysis
              a. Misrepresentations
       Among the representations appearing in the first (intentional misrepresentation)
and second (negligent misrepresentation) causes of action, plaintiff asserted that

                                              20
defendants’ agents repeatedly informed plaintiff that defendants were either not in receipt
of all documents requested of plaintiff or that they “required more and more
documentation, even though [p]laintiff diligently verified both delivery and receipt of
said documents, and each time they were sent.” Plaintiff specifically alleged that
Nationstar “represented that [p]laintiff was eligible to receive a HAMP loan modification
despite the fact that the balance of [p]laintiff’s loan precluded him from HAMP
eligibility.” Plaintiff further alleged that “Nationstar continued to send [p]laintiff HAMP
loan modification applications and continually represented to him that he was eligible to
apply for and receive a HAMP modification.”15
       Additionally, plaintiff specifically alleged “ ‘facts showing how, when, where, to
whom, and by what means the representations were made, and . . . the names of the
persons who made the representations, their authority to speak on behalf of the
corporation, to whom they spoke, what they said or wrote, and when the representation
was made.’ ” (Daniels, supra, 246 Cal.App.4th at pp. 1166-1167.) Plaintiff alleged that
Nationstar, its agents, employees, and representatives, including a named individual,
made the representations. He also alleged that the other names and identities of the
individuals who made the representations were within the possession of defendant. He
represented how, where, and by what means the representations were made, verbally over
the phone as well as in writing between Nationstar agents and plaintiff. He alleged that
the representations were made between January 2014 and May 2015. He alleged that, as

15 Defendants assert that HAMP application forms are commonly used for other
modification programs and thus, simply sending plaintiff this form did not logically
imply Nationstar thought him qualified for HAMP. We reject this argument in that it is
based on facts not in the complaint or in documents that have been the subject of judicial
notice. Moreover, even if the form could be used for other programs, plaintiff
specifically alleged that Nationstar represented he was eligible to receive a HAMP
modification.

                                            21
employees, agents, and representatives, the individuals who made the representations had
authority to speak for Nationstar.
       We conclude that these alleged representations by Nationstar and its agents that
plaintiff was eligible to apply for and receive a HAMP modification constitute sufficient
misrepresentations as to support intentional and negligent misrepresentation causes of
action against Nationstar.16 Additionally, in light of plaintiff’s allegation that Nationstar
acted as an agent for U.S. Bank, we conclude that these representations constitute
sufficient misrepresentations as to support intentional and negligent misrepresentation
causes of action against U.S. Bank.
              b. Knowledge of Falsity
       Plaintiff alleged that Nationstar and its agents “knew or should have known that
Plaintiff would not qualify under the threshold HAMP guidelines. Nationstar regularly
engages in loan modification activities including modifying loans under the HAMP
program. The requirement that the loan amount be no greater than $729,750 is one of the
threshold requirements under the HAMP program, and Nationstar knew or should have
known that there was no way Plaintiff could qualify for a HAMP modification because
his loan balance was more than two times higher than the maximum loan amount for

16  We note that a representation is generally not actionable unless it concerns “past or
existing facts.” (Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells (2000) 86
Cal. App. 4th 303, 309, 310.) Although a false promise to perform in the future can
support a cause of action for intentional misrepresentation, it does not support a cause of
action for negligent misrepresentation. (Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal. App. 4th 153, 158, 159 [“Simply put, making a promise with an honest but
unreasonable intent to perform is wholly different from making one with no intent to
perform and, therefore, does not constitute a false promise. [W]e decline to establish a
new type of actionable deceit: the negligent false promise”].) Thus, an alleged promise
to grant a loan modification does not concern past or existing facts, and cannot be the
basis for a negligent misrepresentation cause of action. However, here, the alleged
misrepresentation is that plaintiff was eligible to apply for and receive a HAMP
modification, which concerns existing facts.

                                             22
HAMP qualification. Yet, Nationstar continued to send Plaintiff HAMP loan
modification applications and continually represented to him that he was eligible to apply
for and receive a HAMP modification.” (Capitalization omitted.)
       This was sufficient to allege knowledge of falsity.
              c. Intent to Induce Reliance
       According to the second amended complaint, Nationstar “intended to induce
Plaintiff[’s] reliance so that Nationstar could keep Plaintiff in the modification process,
collect additional fees for servicing a delinquent mortgage, and ultimately foreclose upon
the Subject Property. Further, Plaintiff alleges that Nationstar received additional
compensation for every loan modification application they received from Plaintiff.”
(Capitalization omitted.) Elsewhere, plaintiff alleged that the misrepresentations “were
part of Defendants’ overall scheme to keep Plaintiff in a modification process it never
intended to complete in order to accrue fees and penalties to which it would not have
been entitled had Plaintiff never entered into the modification process in the first place.
Most, if not all, of the misrepresentations were designed to provide Plaintiff with the false
hope that a modification would be granted in order to induce him to continue with the
process, even after Defendants had issued denials.”
       We conclude that these statements were sufficient to allege intent to induce
reliance.
              d. Actual and Justifiable Reliance
       Plaintiff alleged in his second amended complaint that he was justified in relying
on Nationstar’s misrepresentations “because Nationstar is the servicer of the Subject
Loan and regularly engages in the process of offering HAMP loan modifications in
accordance with HAMP guidelines and Nationstar sent HAMP applications to Plaintiff
on multiple occasions.” (Capitalization omitted.) Elsewhere, plaintiff alleged that, “had
Plaintiff known that Defendants never intended to grant him a modification, he would not

                                             23
have continued in the process and would have either sold the property or sought the aid of
family instead of allowing Defendants to unjustifiably enrich themselves at his expense.”
       Plaintiff was already in default at the relevant times. According to the allegations
of the second amended complaint, based on Nationstar’s misrepresentations about his
application and eligibility for a HAMP loan modification, plaintiff forewent other means
to become current on his loan or even sell his property. Plaintiff allegedly did so in
reliance on the representations of Nationstar, a mortgage loan servicer which regularly
worked with HAMP loan modifications.
       We conclude that plaintiff adequately pleaded actual and justifiable reliance.17
              e. Damages
       Plaintiff alleged: “As a proximate result of Defendants’ conduct in violating their
promises and representations to Plaintiff, Plaintiff has suffered injury, damage to his
credit, increased interest and arrears that he would not have otherwise incurred, faces the
loss of the Subject Property through foreclosure, and forewent seeking other remedies to
cure the default. Further, Defendants charged additional late fees and penalties to
Plaintiff’s mortgage account. Plaintiff expended time, energy and effort into the loan
modification process, granting Defendant access to his personal financial records, which
they would not have been entitled to receive . . . . Plaintiff has had to retain an attorney,
expend legal costs and have suffered further damages in an amount to be shown
according to proof at the time of trial.”
       Plaintiff alleged that he was suffering harm to his credit following BANA’s
freezing of his accounts in 2008, six years before any misrepresentations by Nationstar.

17 Defendants assert that plaintiff easily could have discovered the qualifications for
HAMP loan modifications through online and other research, and therefore he cannot
establish justifiable reliance. We agree with plaintiff that defendants’ assertions are
factual allegations outside of the pleadings and have no place in our determination as to
whether plaintiff has stated a cause of action.

                                              24
However, construing the second amended complaint liberally (Longshore, supra, 25
Cal.3d at p. 22; Daniels, supra, 246 Cal.App.4th at p. 1162), he also alleges that his credit
continued to suffer ongoing damage.
        The complaint further alleges plaintiff might have pursued “other remedies” and
“alternative remedies” had he not relied on Nationstar’s alleged misrepresentations. At
one point, plaintiff refers to other remedies, “such as refinancing while there was equity
in the property, a short sale of the property, borrowed money from family and friends, or
organized investors to pay off the delinquent balance.”18
        Additionally, plaintiff claims to have been damaged in the form of increased
interest, arrears, penalties, and fees that he would not have otherwise incurred.
        Plaintiff further alleges that he expended time, energy and effort in the loan
modification process. In Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal. App. 4th
915 (Bushell), another panel of this court recited that the plaintiffs alleged they sustained
damages “by the considerable time they spent repeatedly contacting Chase and repeatedly
preparing documents at Chase’s request; by discontinuing efforts to pursue a refinance
from other financial institutions or to pursue other means of avoiding foreclosure (such as
bankruptcy restructuring, or selling or renting their home); by having their credit reports
further damaged; and by losing their home and making it unlikely they could purchase
another one.” (Id. at p. 928.) The Bushell court concluded that the plaintiffs adequately
alleged damages in connection with their fraud cause of action. (Id. at pp. 928, 930, 931;
but see Lueras, supra, 221 Cal.App.4th at p. 79 [time and effort spent assembling
materials for loan modification application amounts to a “sort of nominal damage subject
to the maxim de minimis non curat lex—i.e., the law does not concern itself with
trifles”].)

18   See footnote 23, post.

                                              25
       Liberally construing plaintiff’s allegations, as we must (Longshore, supra, 25
Cal.3d at p. 22; Daniels, supra, 246 Cal.App.4th at p. 1162), we conclude that plaintiff
has sufficiently pled damages resulting from Nationstar’s (and, by extension, U.S.
Bank’s) alleged intentional and negligent misrepresentations.19
              f. Conclusion
       Because plaintiff sufficiently pled each element of the causes of action alleging
intentional and negligent misrepresentations, we conclude that the trial court erred in
sustaining Nationstar and U.S. Bank’s demurrer to the first and second causes of action.
                   B. Negligence – SLS, Nationstar, and U.S. Bank
       1. Plaintiff’s Contentions
       Plaintiff maintains that he adequately pleaded the third cause of action sounding in
negligence. According to plaintiff, the trial court erroneously determined that defendants
did not owe plaintiff a duty of care because their involvement did not exceed the scope of
a normal financial institution. Plaintiff asserts that we must undertake a Biakanja
analysis to determine whether defendants owed plaintiff a duty of care. (Biakanja, supra,
49 Cal.2d at p. 650.) And plaintiff asserts that a balancing of the Biakanja factors favors

19 Relevant to damages, plaintiff also alleged that he was forced to file a bankruptcy
petition to stop the foreclosure sale on the property. However, this occurred while
BANA was still the loan servicer, long before Nationstar, or its misrepresentations,
would be implicated. Moreover, while plaintiff alleges that he “faces the loss of the
Subject Property through foreclosure,” he does not allege that the subject property was
indeed foreclosed upon. Facing the possibility of foreclosure, without more, does not
amount to compensable damages. Finally, plaintiff’s reference to retaining an attorney
and legal costs would not give rise to compensable damages. (Khajavi v. Feather River
Anesthesia Medical Group (2000) 84 Cal. App. 4th 32, 62 [“ ‘In the absence of a statute
authorizing attorneys’ fees as an element of damages, or of a contract to pay such fees in
event of the party’s recovery, attorneys’ fees paid by a successful party in an action are
never recoverable against the unsuccessful party’ ”].)

                                            26
a finding of a duty of care. He further asserts that he properly pleaded duty, breach, and
damages.
       Plaintiff relies on this court’s decision in Rossetta v. CitiMortgage, Inc. (2017) 18
Cal. App. 5th 628 (Rossetta), where we concluded that the complaint therein sufficiently
alleged a negligence cause of action, including a duty of care, against a loan servicer for
its handling of a loan modification application. Defendants assert that Rossetta does not
apply because a fact they find crucial to the duty of care—the loan servicer’s direction
making default a condition for being considered for a loan modification—is not present
here. Defendants insist this factor “carried Rossetta across the line.” According to
defendants, plaintiff does not allege any other facts sufficient to give rise to a duty of
care. As we shall explain, we disagree with defendants.
       2. Elements of Negligence and the Negligence Allegations in the Second
       Amended Complaint
       To support a negligence cause of action, a plaintiff must plead and prove: (1) the
defendant owed the plaintiff a legal duty, (2) the defendant breached the duty, and (3) the
breach was a proximate or legal cause of the plaintiff’s injuries. (Merrill v. Navegar, Inc.
(2001) 26 Cal. 4th 465, 477.) “We start by identifying the allegedly negligent conduct by
[defendants] because our analysis is limited to ‘the specific action the plaintiff claims the
particular [defendants] had a duty to undertake in the particular case.’ ” (Lueras, supra,
221 Cal.App.4th at p. 62, quoting Vasquez v. Residential Investments, Inc. (2004) 118
Cal. App. 4th 269, 280.)
       The second amended complaint alleges that Nationstar, SLS, and U.S. Bank acted
unreasonably throughout the loan modification process “by failing to accurately and
reasonably evaluate Plaintiff for a loan modification”; by mishandling and losing
plaintiff’s financial documents; by “misdirect[ing] Plaintiff”; by failing to inform plaintiff
of the documents that were required for the loan modification; by forcing plaintiff to
submit the same documents repeatedly; and by misrepresenting that plaintiff was eligible

                                              27
for a HAMP loan modification for which his loan was not qualified. Plaintiff asserted
that, as a proximate cause of defendants’ negligence, plaintiff “suffered injury, damage to
his credit, increased interest and arrears that he would not have otherwise incurred,
forewent seeking other remedies and solutions, has incurred legal fees and costs, and now
face[s] the possible foreclosure proceedings and the loss of the Subject Properties.”
       3. Duty of Care

       “Recovery in a negligence action depends as a threshold matter on whether the
defendant had ‘ “a duty to use due care toward an interest of [the plaintiff’s] that enjoys
legal protection against unintentional invasion.” ’ ” (Gas Leak, supra, 7 Cal.5th at
p. 397.) “Whether a duty of care exists is a question of law to be determined on a case-
by-case basis.” (Lueras, supra, 221 Cal.App.4th at p. 62.)
       “[A]s a general rule, a financial institution owes no duty of care to a borrower
when the institution’s involvement in the loan transaction does not exceed the scope of its
conventional role as a mere lender of money.” (Nymark v. Heart Fed. Savings & Loan
Assn. (1991) 231 Cal. App. 3d 1089, 1096 (Nymark).) Additionally, California law
generally does not impose a duty of care to avoid causing purely economic losses in
negligence cases. (Gas Leak, supra, 7 Cal.5th at pp. 398-400.) But our high court has
recognized an exception when the plaintiff and defendant have a “special relationship.”
(Ibid., citing J’Aire Corp. v. Gregory (1979) 24 Cal. 3d 799, 804 (J’Aire) [a special
relationship gives rise to a duty on the part of the defendant to use due care to avoid
economic injury to the plaintiff].) The Gas Leak court explained, “[w]hat we mean by
special relationship is that the plaintiff was an intended beneficiary of a particular
transaction but was harmed by the defendant’s negligence in carrying it out,” and cited
Biakanja, supra, 49 Cal. 2d 647, as an example. (Gas Leak, at p. 400, italics added.)
       Previously, courts have stated that the question of whether a special relationship
exists is determined by applying the six factors set forth Biakanja. For example, writing
about J’Aire, our high court in Aas v. Superior Court (2000) 24 Cal. 4th 627, stated:

                                             28
“Applying the Biakanja factors, the court [in J’Aire] held that a ‘special relationship’
[citation] permitting recovery of economic losses (i.e., the relationship defined by the
Biakanja test) existed between the contractor and the tenant.” (Id. at p. 644; see also
North American Chemical Co. v. Superior Court (1997) 59 Cal. App. 4th 764, 782 [“The
necessary ‘special relationship’ required by J’Aire was established by consideration of
six criteria first articulated by the Biakanja court”]; Zamora v. Shell Oil Co. (1997) 55
Cal. App. 4th 204, 211-212 [noting that “[t]he California Supreme Court adopted a six-part
test for determining when a ‘special relationship’ exists between parties which would
permit recovery in a negligence action for economic losses alone”]; Ott v. Alfa-Laval
Agri, Inc. (1995) 31 Cal. App. 4th 1439, 1450, 1454 [courts apply the six-part Biakanja
test employed in J’Aire for deciding whether a special relationship exists; the test applies
whether or not the parties are in contractual privity].)
       In Gas Leak, our high court clarified: “Discerning whether there is a special
relationship justifying liability of this sort can nonetheless be a subtle enterprise. In both
Biakanja and J’Aire we emphasized that our duty determination rested not just on (i) ‘the
extent to which the transaction was intended to affect the plaintiff,’ but also on” the
factors articulated in Biakanja and J’Aire. (Gas Leak, supra, 7 Cal.5th at p. 401.) The
Biakanja factors are: (1) the extent to which the transaction was intended to affect the
plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the
plaintiff suffered injury, (4) the closeness of the connection between the defendant’s
conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct,
and (6) the policy of preventing future harm. (Rossetta, supra, 18 Cal.App.5th at p. 637;
Nymark, supra, 231 Cal.App.3d at p. 1098, citing Biakanja, 49 Cal.2d at p. 650.)
       Thus, in considering whether a duty exists here, we shall both (1) weigh the
factors set forth in Biakanja, and (2) focus particular attention on whether this is a case
where plaintiff was intended to benefit from the transaction but was harmed by the
defendant’s negligence in carrying it out. (Gas Leak, supra, at pp. 400, 401.) However,

                                               29
before applying the Biakanja factors here, we first review other cases applying those
factors to a negligence cause of action arising out of loan modifications.
       Several courts, including this one, have found a duty after applying the Biakanja
factors, when the lender or servicer has voluntarily undertaken to renegotiate a loan
modification but breached the duty to exercise reasonable care in processing the loan
modification application. (Rossetta, supra, 18 Cal.App.5th at p. 640 [residential loan];
Daniels, supra, 246 Cal.App.4th at pp. 1180-1183 [residential loan]; Alvarez v. BAC
Home Loans Servicing, L.P. (2014) 228 Cal. App. 4th 941, 946, 949 (Alvarez) [residential
loan]; Jolley v. Chase Home Finance, LLC (2013) 213 Cal. App. 4th 872, 881 (Jolley)
[construction loan].)
       Relevant to a duty of care, the plaintiffs in Alvarez alleged “that defendants owed
them a duty to exercise reasonable care in the review of their loan modification
applications once they had agreed to consider them. The complaint allege[d] . . . that
defendants ‘undertook to review’ plaintiffs’ loans for potential modification under
[HAMP] and that having done so they owed plaintiffs the duty to exercise reasonable
care in processing and reviewing their applications for loan modifications in accordance
with the federal HAMP guidelines.” (Alvarez, supra, 228 Cal.App.4th at pp. 944-945.)
The Alvarez court weighed the Biakanja factors, considered relevant case law, and
concluded that “the Biakanja factors clearly weigh in favor of a duty. The transaction
was intended to affect the plaintiffs and it was entirely foreseeable that failing to timely
and carefully process the loan modification applications could result in significant harm
to the applicants. Plaintiffs allege that the mishandling of their applications ‘caus[ed]
them to lose title to their home, deterrence from seeking other remedies to address their
default and/or unaffordable mortgage payments, damage to their credit, additional income
tax liability, costs and expenses incurred to prevent or fight foreclosure, and other
damages.’ As stated in [Garcia v. Ocwen Loan Servicing, LLC (N.D.Cal. May 10, 2010,
C 10-0290 PVT) 2010 U.S. Dist. Lexis 45375, 2010 WL 1881098], ‘Although there was

                                              30
no guarantee the modification would be granted had the loan been properly processed, the
mishandling of the documents deprived Plaintiff of the possibility of obtaining the
requested relief.’ ” (Alvarez, at pp. 948-949.) The court found particularly significant the
fifth Biakanja factor—the moral blame attached to the defendant’s conduct—stating, “it
is highly relevant that the borrowers[’] ‘ability to protect his own interests in the loan
modification process [is] practically nil’ and the bank holds ‘all the cards.’ ” (Alvarez, at
p. 949.) In considering the sixth Biakanja factor—preventing future harm—the Alvarez
court took note of the Legislature’s “ ‘strong preference for fostering more cooperative
relations between lenders and borrowers who are at risk of foreclosure, so that homes will
not be lost.’ ” (Id. at p. 950.) This legislative preference was expressed through passage
of the California Homeowner Bill of Rights (Assem. Bill No. 278 (2011-2012 Reg.
Sess.); Sen. Bill No. 900 (2011-2012 Reg. Sess.)), which, among other things, attempted
to eliminate dual tracking.20 (Alvarez, at p. 950.)
       Other courts have reached a different conclusion. Defendants rely on Lueras,
supra, 221 Cal. App. 4th 49. The plaintiff asserted in Lueras that the defendants “owed
him a duty of care to (1) handle his loan ‘in such a way to prevent foreclosure and
forfeiture of his property’; (2) ‘determine modification approvals, explore and offer
foreclosure alternatives with Mr. Lueras prior to default’; (3) ‘exercise reasonable care
and skill in timely and accurately responding to customer requests and inquiries’; (4)
‘record proper land records’; (5) ‘properly service the loan’; (6) ‘ensure chain of title
prior to foreclosing’; and (7) ‘stop all foreclosure sales that are unlawful.’ ” (Id. at p. 62.)
The plaintiff also alleged that the defendants had a duty to offer him a loan modification
and breached that duty by refusing to do so. (Id. at p. 63.) The Lueras court stated: “We

20“Dual tracking” refers to where a bank, lender, or similar institution “initiate[s] a loan
modification review while simultaneously proceeding with foreclosure . . . .” (Majd v.
Bank of America, N.A. (2015) 243 Cal. App. 4th 1293, 1302 (Majd).)

                                              31
conclude a loan modification is the renegotiation of loan terms, which falls squarely
within the scope of a lending institution’s conventional role as a lender of money. A
lender’s obligations to offer, consider, or approve loan modifications and to explore
foreclosure alternatives are created solely by the loan documents, statutes, regulations,
and relevant directives and announcements from the United States Department of the
Treasury, Fannie Mae, and other governmental or quasi-governmental agencies. The
Biakanja factors do not support imposition of a common law duty to offer or approve a
loan modification. If the modification was necessary due to the borrower’s inability to
repay the loan, the borrower’s harm, suffered from denial of a loan modification, would
not be closely connected to the lender’s conduct. If the lender did not place the borrower
in a position creating a need for a loan modification, then no moral blame would be
attached to the lender’s conduct.” (Lueras, at p. 67, italics added.)
       Plaintiff asserts that Alvarez and Lueras are not actually in conflict because, in
Lueras, the court only concluded that the Biakanja factors did not support the “imposition
of a common law duty to offer or approve a loan modification” (Lueras, supra, 221
Cal.App.4th at p. 67, italics added), whereas the Alvarez court focused its discussion on
the actual misconduct alleged and concluded that the Biakanja factors may weigh in
favor of the imposition of a duty when the loan servicer agrees to consider a loan
modification. (Alvarez, supra, 228 Cal.App.4th at p. 948.) This may be true, but whether
or not these lines of cases are in direct conflict, they are not strictly aligned. In Rossetta,
we noted that “California Courts of Appeal have not settled on a uniform application of
the Biakanja factors in cases that involve a loan modification. Although lenders have no
duty to offer or approve a loan modification [citation], courts are divided on the question
of whether accepting documents for a loan modification is within the scope of a lender’s
conventional role as a mere lender of money, or whether, and under what circumstances,
it can give rise to a duty of care with respect to the processing of the loan modification
application.” (Rossetta, supra, 18 Cal.App.5th at pp. 637-638, comparing Lueras, supra,

                                              32
221 Cal.App.4th at p. 67, with Alvarez, supra, 228 Cal.App.4th at p. 948, Daniels, supra,
246 Cal.App.4th at pp. 1180-1183, and Jolley, supra, 213 Cal.App.4th at p. 906.)
       While courts agree that a lender has no duty to offer or approve a loan
modification (Rossetta, supra, 18 Cal.App.5th at pp. 637-638), whether a lender assumes
a duty by considering a loan modification application presents a more nuanced question:
At what point may it be said that “a borrower and lender enter into a new phase of their
relationship when they voluntarily undertake to renegotiate a loan, one in which the
lender usually has greater bargaining power and fewer incentives to exercise care”? (See
Rossetta, at p. 640, citing Alvarez, supra, 228 Cal.App.4th at p. 949.)
       In Alvarez, the court noted that the plaintiffs had alleged “that defendants owed
them a duty to exercise reasonable care in the review of their loan modification
applications once they had agreed to consider them.” (Alvarez, supra, 228 Cal.App.4th
at p. 944, italics added.) Their complaint further alleged that the defendants “ ‘undertook
to review’ plaintiffs’ loans for potential modification under” HAMP and that “having
done so they owed plaintiffs the duty to exercise reasonable care in processing and
reviewing their applications for loan modifications in accordance with the federal HAMP
guidelines.” (Id. at pp. 944-945.) The Alvarez court concluded that, “because defendants
allegedly agreed to consider modification of the plaintiffs’ loans, the Biakanja factors
clearly weigh in favor of a duty.” (Alvarez, at p. 948.)
       Here, leaving aside the allegations asserted against BANA because they are time-
barred,21 plaintiff alleged in the second amended complaint that, once SLS acquired

21  Plaintiff repeatedly discusses BANA’s alleged conduct in freezing plaintiff’s accounts
and line of credit in terms of both moral blameworthiness for purposes of the Biakanja
analysis and in terms of breach. However, as we have held in the unpublished portion of
this opinion, the action against BANA is time-barred, and plaintiff has offered no reason,
other than his conclusory allegations of a civil conspiracy, why U.S. Bank or the
subsequent loan servicers should be liable for the alleged misdeeds of BANA as their
predecessor. (Cf. Daniels, supra, 246 Cal. App. 4th 1169-1170 [rejecting each of the

                                             33
servicing rights of plaintiff’s loan in 2010, SLS notified plaintiff that it would “handl[e]
[p]laintiffs’ loan modification application.” However, SLS refused to honor the terms of
the loan modification BANA had offered, despite the alleged fact that plaintiff’s wife had
tendered the $50,000 payment. Plaintiff alleged that he submitted applications and
documents to SLS on numerous occasions. According to plaintiff, during this time, “SLS
continued to represent that Plaintiff would be approved for a loan modification with
similar terms to the loan modification offered by” BANA.
       In 2014, the servicing rights to the loan were transferred to Nationstar, which
informed plaintiff that he had to begin the loan modification process anew. Plaintiff
again submitted his applications and documents repeatedly. He was instructed where to
send documents, including locations in three different states. A named Nationstar
representative told plaintiff that he was eligible to apply for a HAMP loan modification
and sent him the applications. Nationstar represented “[o]ver the phone and in writing”
that Plaintiff was eligible to apply for and receive a HAMP loan modification. Plaintiff
submitted the HAMP loan modification application on several occasions. Plaintiff
alleged that Nationstar knew plaintiff’s loan was ineligible for a HAMP loan
modification because the balance was far more than the $729,750 maximum, but had him
apply anyway while maintaining his delinquency.

       Turning back to Rossetta, we stated: “We do not hold that a duty of care arises
merely because a lender receives or considers a loan modification application. Nor do we
hold . . . that a duty of care may arise solely by virtue of the parties’ changing
relationship. Rather, we conclude that the change in the parties’ relationship can and
should be factored into our application of the Biakanja factors.” (Rossetta, supra, 18
Cal.App.5th at p. 640.) We continued: “To this end, we find it significant that

plaintiffs’ contentions as to why successor loan servicer should be liable for conduct of
predecessor loan servicer but granting the plaintiffs leave to amend to address the issue].)

                                              34
CitiMortgage allegedly refused to consider Rossetta’s loan modification application until
she was three months behind in her mortgage payments. By making default a condition
of being considered for a loan modification, CitiMortgage did more than simply enhance
its already overwhelming bargaining power; it arguably directed Rossetta’s behavior in a
way that potentially exceeds the role of a conventional lender. [Citation.] At a
minimum, the alleged policy of making default a condition of being considered for a loan
modification informs our application of the Biakanja factors [citation], to which we now
turn.” (Rossetta, at pp. 640-641.) Thus, while we found significant the direction to the
plaintiffs in Rossetta to go into default and that it would inform our application of the
Biakanja factors, we did not conclude that that circumstance was a predicate to a finding
of a duty. Other factors may also be considered.
       For example, here the alleged representations by SLS that plaintiff would be
approved for the modification could be viewed as a guarantee and constitutes
involvement exceeding the scope of the conventional money lending role. Also beyond
the scope of the role of a conventional lender is the alleged misrepresentation by
Nationstar that plaintiff was eligible to apply for and receive a HAMP modification when
he clearly was not. Indeed, these observations are consistent with Lueras. There, in
noting that a lender owes a duty to the borrower not to make material misrepresentations
about the status of a loan modification application or the date, time or status of a
foreclosure sale, the court expressly stated: “The law imposes a duty not to make
negligent misrepresentations of fact.” (Lueras, supra, 221 Cal.App.4th at p. 68.) Here,
plaintiff has alleged that defendant loan servicers made material misrepresentations.
       We now proceed to consider the Biakanja factors as applied to the allegations in
this case.

                                             35
       4. Application of the Biakanja Factors
              a. The Extent to Which Transaction Was Intended to Affect Plaintiff
       The loan modification transaction would affect both plaintiff, as the borrower and
homeowner, and defendants as the loan servicers and the loan owner. As the court in
Daniels stated: “ ‘ “[u]nquestionably” ’ the transaction was intended to affect appellants,
as ‘ “[t]he decision on [appellants’] loan modification application would determine
whether or not [they] could keep [their] home” ’ and at what cost. [Citation.] Moreover,
it was appellants who ‘specifically brought to [BANA’s] attention’ their desire for a loan
modification. [Citation.] Respondents correctly note that the transaction also was
intended to affect and benefit the lender by maximizing its return. But that does not
mean it was not also intended to affect appellants . . . . [Citation.] We conclude the first
factor weighs slightly in favor of finding a duty of care.” (Daniels, supra, 246
Cal.App.4th at p. 1182.) Here, we too conclude the first factor weighs in favor of finding
a duty of care.
              b. The Foreseeability of Harm to Plaintiff
       It would be foreseeable that plaintiff would suffer harm as a result of the defendant
loan servicers negligently processing plaintiff’s loan modification application. Plaintiff
potentially stood to lose his home based on the outcome of the modification process.
“ ‘ “[T]he mishandling of the documents deprived Plaintiff of the possibility of obtaining
the requested relief.” ’ ” (Rossetta, supra, 18 Cal.App.5th at p. 641, quoting Alvarez,
supra, 228 Cal.App.4th at p. 948.) Additionally, defendants assured plaintiff that he was
eligible for and would be approved for or receive a loan modification; thus it was
foreseeable that plaintiff would forgo attempting to sell the home or obtain alternative
funding based on these alleged representations. It was also foreseeable that plaintiff
would accrue additional arrears, penalties, fees, and harm to his credit. And it was
foreseeable that plaintiff would expend considerable time repeatedly contacting SLS and
Nationstar and preparing documents at their request. (See Bushell v. JPMorgan Chase

                                             36
Bank, N.A. (2013) 220 Cal. App. 4th 915, 928 (Bushell).) Thus, this factor favors the
finding of a duty of care.
               c. The Degree of Certainty Plaintiff Suffered Injury
        Plaintiff alleges that he suffered injury in the form of damage to his credit,
increased interest and arrears, forgone opportunities to pursue other remedies and the
expenditure of time repeatedly contacting SLS and Nationstar and preparing documents
he sent multiple times. We need not consider the extent of these injuries, a matter that is
a question of fact. Nor are we required to find that all of these injuries can be proven.
For purposes of determining whether facts supporting a duty have been stated in the
complaint, we need only determine whether the facts in the second amended complaint
establish that some injuries are certain.22 We conclude that plaintiff’s allegations
adequately establish certainty of injury at this stage of the proceedings. (See Rossetta,
supra, 18 Cal.App.5th at p. 641; Daniels, supra, 246 Cal.App.4th at p. 1182.)
Accordingly, we conclude the third Biakanja factor weighs in favor of finding a duty of
care.

22  Defendants assert plaintiff alleged no facts to show there was any “realistic chance” of
an alternative to avoid foreclosure. They assert the allegation that plaintiff “ ‘forewent
seeking other remedies to cure the default’ ” were conclusory and implausible. They
assert that the “bankruptcy filing showed the property was ‘underwater’—worth less than
the loan it secured. So no lender would likely refinance the property.” Normally, we
would expect more specificity by a plaintiff, but where, as here, plaintiff’s allegations
indicate he was told he would receive a modification by SLS and he was told he would
receive a HAMP modification by Nationstar, it may be reasonably inferred he did not
fully investigate alternatives as a result of those representations. What damages were
realistic under this circumstance represents a question of fact that cannot be resolved by
demurrer. As for the loan being more than the home was worth, we acknowledge that the
bankruptcy filing at the page of the record cited by defendants indicates as much.
However, the bankruptcy filing does not indicate how much the home was worth or the
difference between the amount owed and the value of the home. Again, whether selling
the home to investors or otherwise was realistic is a question of fact that cannot be
resolved at this stage of the case.

                                              37
              d. The Closeness of the Connection Between Defendants’ Conduct and
              Injury
       The second amended complaint alleges that plaintiff was current on his mortgage
payments until BANA froze his accounts. Thereafter, defendants SLS and Nationstar
successively strung plaintiff along in the loan modification process, allegedly causing the
damages set forth ante. SLS assured plaintiff he would be approved for the modification
and Nationstar represented plaintiff was eligible to apply for and receive a HAMP
modification. Therefore, over and over again, he continued to submit his applications for
loan modifications. While it is clear a lender does “not have a common law duty of care
to offer, consider, or approve a loan modification, or to offer [the borrower] alternatives
to foreclosure” (Lueras, supra, 221 Cal.App.4th at p. 68), defendants here allegedly made
representations to plaintiff reassuring him of his ultimate success with the process, thus
going beyond the mere consideration of his loan modification applications. SLS’s and
Nationstar’s conduct is connected to plaintiff’s asserted injuries. “Construing the
complaint liberally, as we must, we conclude the fourth Biakanja factor weighs in favor
of finding a duty of care.” (Rossetta, supra, 18 Cal.App.5th at p. 642.)
              e. The Moral Blame Attached to Defendants’ Conduct
       As we have said, plaintiff’s allegations go beyond the loan servicers negligently
processing his loan modification applications. Rather, he alleges that SLS and Nationstar
deliberately strung him along for their own benefit, and to plaintiff’s detriment.
According to plaintiff’s allegations, by doing so, SLS and Nationstar would continue to
collect fees in servicing a delinquent account. Plaintiff, meanwhile, would continue to
accrue additional arrears, penalties, fees, and harm to his credit.
       As we concluded in Rossetta, “the borrower’s lack of bargaining power, coupled
with the lender’s alleged incentive to unnecessarily prolong the loan modification
process, ‘provide a moral imperative that those with the controlling hand be required to
exercise reasonable care in their dealings with borrowers seeking a loan modification.’ ”

                                              38
(Rossetta, supra, 18 Cal.App.5th at p. 642, quoting Alvarez, supra, 228 Cal.App.4th at
p. 949.) Moreover, based on plaintiff’s allegations, SLS and Nationstar are particularly
blameworthy given the misrepresentations they allegedly made to plaintiff. While we
found in Rossetta that the defendant’s moral blame was “heightened” because it induced
the plaintiff to default (Rosetta, at p. 642), a circumstance that is not alleged here, we
nevertheless conclude that moral blame here is heightened by the loan servicers’ alleged
misrepresentations regarding the loan modification plaintiff sought. We conclude that the
fifth Biakanja factor weighs in favor of finding a duty of care.
              f. Policy of Preventing Future Harm
       Agreeing with Alvarez, we stated in Rossetta: “with respect to the sixth factor, the
legislature has enacted the California Homeowner Bill of Rights, which ‘demonstrates “a
rising trend to require lenders to deal reasonably with borrowers in default to try to
effectuate a workable loan modification” ’ and ‘ “expressed a strong preference for
fostering more cooperative relations between lenders and borrowers who are at risk of
foreclosure, so that homes will not be lost.” ’ [Citations.] Imposing a duty of care in the
particular circumstances of this case would serve the policies underlying these legislative
preferences, and prevent future harm to borrowers, by giving lenders an incentive to
handle loan modification applications in a timely and responsible manner. [Citation.]
We conclude the sixth Biakanja factor weighs in favor of finding a duty of care.”
(Rossetta, supra, 18 Cal.App.5th at pp. 642-643, quoting Alvarez, supra, 228 Cal.App.4th
at p. 950.)
       However, we note that the court in Daniels concluded that the policy of preventing
future harm appears to cut both ways. “ ‘Imposing negligence liability may give lenders
an incentive to handle loan modification applications in a timely and responsible manner.
On the other hand, absent a duty in the first place to modify a loan or even to evaluate
such an application under objective standards limiting the lender’s discretion, imposing
negligence liability for the mishandling of loan modification applications could be a

                                              39
disincentive to lenders from ever offering modification.’ ” (Daniels, supra, 246
Cal.App.4th at p. 1183.) For these reasons, the Daniels court concluded it could not say
whether or not the imposition of a duty would prevent future harm to borrowers. (Ibid.)
       Here, however, we conclude that this factor favors the finding of a duty of care. In
addition to serving the policies underlying legislative preferences we discussed in
Rossetta, future harm will be avoided by preventing servicers from stringing borrowers
along, making misrepresentations and reassuring borrowers that they will receive loan
modifications.
              g. Weighing the Biakanja Factors
       Having carefully weighed the Biakanja factors, we conclude the allegations in the
second amended complaint adequately allege a cause of action for negligence that is
sufficient to survive demurrer.
       5. Special Relationship Exception to the No Tort Duty for Economic
       Losses Rule
       While this appeal was pending, our colleagues in the Court of Appeal, Second
District, Division Eight, decided Sheen v. Wells Fargo Bank, N.A. (2019) 38 Cal. App. 5th
346, review granted, Nov. 13, 2019, S258019 (Sheen). Applying the rule that there is no
tort duty for purely economic losses, the court declined to find a duty in the context of
residential loan modification negotiations. (Sheen, at p. 348.) The Sheen court relied on
the approach taken by our high court in Gas Leak, supra, 7 Cal. 5th 391, and the
Restatement of Torts. We disagree with Sheen, because it did not consider the special
relationship exception our high court discussed in Gas Leak.
       In Gas Leak, residents in a Los Angeles suburb were forced to relocate due to a
leak at a major natural gas storage facility. The local economy was devastated as a result.
(Gas Leak, supra, 7 Cal.5th at pp. 395-396.) Business entities in the area sued for
economic losses resulting from the loss of business previously generated by the relocated
residents. (Id. at p. 396.) Following the rule adopted in numerous other jurisdictions and

                                             40
the Restatement of Torts, our high court rejected the plaintiffs’ contention that the gas
company had a tort duty to guard against purely economic losses. (Gas Leak, at pp. 394-
395, 403-408.)
       However, our high court was careful to point out that there is an exception to this
general rule. When there is a special relationship between a plaintiff and the defendant,
California law permits recovery solely for economic losses. (Gas Leak, supra, 7 Cal.5th
at p. 400.) The court in Gas Leak expressly stated that the case before it did not involve a
special relationship (id. at p. 408), but recognized Biakanja as an example of a special
relationship case.23 (Gas Leak, at p. 400.) As we have noted, the Gas Leak court
described a “special relationship” as one where “the plaintiff was an intended beneficiary
of a particular transaction but was harmed by the defendant’s negligence in carrying it
out.” (Ibid.) Later in the opinion, in describing the majority rule barring tort liability for
economic damages, the court wrote: the “consensus cuts sharply against imposing a duty
of care to avoid causing purely economic losses in negligence cases like [the case before
the court]: where purely economic losses flow not from a financial transaction meant to
benefit the plaintiff (and which is later botched by the defendant), but instead from an
industrial accident caused by the defendant (and which happens to occur near the
plaintiff).” (Id. at p. 403, italics added.) Based upon the italicized text, we think our high
court excludes from the no-tort-duty-for-economic-damages rule claims for economic
damages arising from “botched” financial transactions meant to benefit the plaintiff.

23  Describing Biakanja, the court in Gas Leak wrote: “There, we held that the intended
beneficiary of a will could recover for assets she would have received if the notary had
not been negligent in preparing the document. [Citation.] A special relationship existed
between the intended beneficiary and the notary in Biakanja, we emphasized, because
‘the “end and aim” of the transaction’ between the nonparty decedent and the notary was
to ensure that the decedent’s estate passed to the intended beneficiary.” (Gas Leak,
supra, 7 Cal.5th at p. 400.)

                                              41
       Applying Biakanja and Gas Leak, we conclude that a special relationship exists in
this case, a circumstance apparently not considered by the court in Sheen because the
special relationship exception is not referenced anywhere in the opinion. Here, the
borrower is an intended beneficiary of the modification transaction and this, along with
the Biakanja factors, establishes a special relationship and duty.
       There is a further consideration that supports our conclusion that a special
relationship warranting a finding of duty exists in this case. Plaintiff here had no choice
as to the entities with which he negotiated for the modification -- SLS and Nationstar.
Nor for that matter did plaintiff choose U.S. Bank; he refinanced, choosing to obtain a
loan from BANA. U.S. Bank, acting as trustee, came into the picture much later when
the loan was securitized. This is not a situation where a borrower went to a mortgage
lending entity which, after evaluating the borrower and the borrower’s security, issued a
loan and the same entity then serviced the loan and negotiated any changes in the loan
terms. As the court in Alvarez noted, in modern loan servicing, “borrowers are captive,
with no choice of servicer, little information, and virtually no bargaining power.
Servicing rights are bought and sold without input or approval by the borrower.
Borrowers cannot pick their servicers or fire them for poor performance. The power to
hire and fire is an important constraint on opportunism and shoddy work in most business
relationships. But in the absence of this constraint, servicers may actually have positive
incentives to misinform and under-inform borrowers. Providing limited and low-quality
information not only allows servicers to save money on customer service, but increases
the chances they will be able to collect late fees and other penalties from confused
borrowers.” (Alvarez, supra, 228 Cal.App.4th at p. 949.) These considerations, which
the Alvarez court noted in discussing the Biakanja factor of moral blameworthiness, are
additional justification for finding that borrowers seeking to modify their residential loans
like plaintiff are in a special relationship with the lenders and/or loan servicers. The no-

                                             42
tort-duty-for-economic-damages rule discussed in Gas Leaks and relied upon in Sheen
simply does not apply here.24
       4. Breach, Proximate Cause, and Damages
       Plaintiff alleged that Nationstar and SLS breached their duty to him by “failing to
accurately and reasonably evaluate Plaintiff for a loan modification. SLS mishandled and
lost Plaintiff’s financial documents, misdirected Plaintiff, failed to inform Plaintiff of
documents that were needed for the loan modification review.” Liberally construing the
pleading (Longshore, supra, 25 Cal.3d at p. 22; Daniels, supra, 246 Cal.App.4th at
p. 1162), we assume that by “misdirected,” plaintiff meant to allege that SLS represented
he would be granted the modification, an allegation made more than once elsewhere in
the complaint. Similarly, as alleged in the complaint, Nationstar misrepresented that
Plaintiff was eligible for a HAMP loan modification that he could have never qualified
for instead of other loan workout options or modification that Plaintiff could have
qualified for. Plaintiff further alleged that, as a proximate cause of SLS and Nationstar’s

24  We also note the absence of important factors that compelled our high court’s
conclusion that there should be no tort duty for economic damages in Gas Leak and cases
like it. The court in Gas Leak sought to avoid limitless liability to an indeterminate
number of plaintiffs. (Gas Leak, supra, 7 Cal.5th at pp. 403-408.) The court also noted
that defendants in industrial accident cases will have more difficulty obtaining third-party
insurance coverage against purely economic losses than will individual plaintiffs seeking
comparable first-party insurance. (Id. at p. 405.) Also, line-drawing problems relating to
both “space and time” result from imposing such a duty. (Id. at pp. 408-409.) For
example, there would be “no workable way to limit geographically who may recover
purely economic losses.” (Id. at p. 410.) The court also observed that “the Restatement
echoes widespread judicial concern that purely economic losses ‘proliferate more easily
than losses of other kinds’ and are ‘not self-limiting.’ ” (Id. at p. 407.) And our high
court noted that, only when the foregoing considerations are “weak or absent,” such as in
Biakanja, does a duty to guard against purely economic losses exist under the
Restatement approach to negligence claims. (Ibid.) In a negligent residential loan
modification case, such as we have here, all of these considerations are absent.

                                              43
breaches, he sustained damages as discussed ante. We conclude that, at this stage of the
proceedings, plaintiff has adequately alleged breach, proximate cause, and damages.
       5. Conclusion
       We conclude that plaintiff pleaded duty, breach, proximate cause, and damages
sufficiently to state a negligence cause of action. Therefore, we conclude the trial court
erred in sustaining the demurrers to plaintiff’s negligence cause of action.
                            C. Trespass to Land – Nationstar
       1. The Parties’ Contentions
       Plaintiff asserts that the trial court erred in sustaining defendants’ demurrers as to
his cause of action for trespass to land. According to plaintiff, the fact that he defaulted
on his mortgage payments in 2009 and that a notice of trustee’s sale was recorded on
August 4, 2014, “have no effect on [plaintiff’s] possession of the Subject Property in
August 2014.” According to plaintiff, until the property sold, it was his. Plaintiff asserts
that he properly pleaded that he owned and possessed the land when Cyprexx entered.
       Defendants respond that the trial court correctly concluded that plaintiff’s
allegations were insufficient because they did not show that defendants were not
authorized to enter the premises in light of plaintiff’s default. Defendants assert that
section 9 of the deed of trust, which was the subject of their granted request for judicial
notice, authorized entry when the borrower was in default. Defendants assert that
consent is a complete defense to a trespass claim, and in section 9 of the deed of trust,
plaintiff consented to an entry such as that performed by Cyprexx.
       2. Elements of Trespass to Land
       “ ‘Trespass is an unlawful interference with possession of property.’ [Citation.]
The elements of trespass are: (1) the plaintiff’s ownership or control of the property; (2)
the defendant’s intentional, reckless, or negligent entry onto the property; (3) lack of
permission for the entry or acts in excess of permission; (4) harm; and (5) the defendant’s
conduct was a substantial factor in causing the harm.” (Ralphs Grocery Co. v. Victory

                                             44
Consultants, Inc. (2017) 17 Cal. App. 5th 245, 261-262.) “ ‘Where there is a consensual
entry, there is no tort, because lack of consent is an element of the wrong.’ ” (Spinks v.
Equity Residential Briarwood Apartments (2009) 171 Cal. App. 4th 1004, 1043.)
       3. Section 9 of the Deed of Trust
       Section 9 provides, in pertinent part: “If (a) Borrower fails to perform the
covenants and agreements contained in this Security Instrument, (b) there is a legal
proceeding that might significantly affect Lender’s interest in the Property and/or rights
under the Security Instrument (such as a proceeding in bankruptcy, probate, for
condemnation or forfeiture, for enforcement of a lien which may attain priority over this
Security Instrument or to enforce laws or regulations), or (c) Borrower has abandoned the
Property, then Lender may do and pay for whatever is reasonable or appropriate to
protect Lender’s interest in the Property and rights under this Security Instrument,
including protecting and/or assessing the value of the Property, and securing and/or
repairing the Property. . . . Securing the Property includes, but is not limited to, entering
the Property to make repairs, change locks, replace or board up doors and windows, drain
water from pipes, eliminate building or other code violations or dangerous conditions,
and have utilities turned on or off.” (Italics added.)
       4. Analysis
       Plaintiff has alleged in the second amended complaint that, on or about August 15,
2014, Nationstar hired Cyprexx to enter onto the property “and change the locks on his
doors.” Plaintiff only learned that this occurred because a notice was placed on the door.
Plaintiff called Cyprexx, and a representative told him that Nationstar had hired Cyprexx
“to secure the premises and to ‘winterize’ it.” Plaintiff averred that he “was only recently
able to gain access to the premises because of the locked doors.” He further alleged that
all of his personal effects and furniture were still in the property when Cyprexx entered
the premises and changed the locks. Plaintiff asserted that Cyprexx entered onto the
property “and changed the locks without [plaintiff’s] knowledge or consent.” With

                                              45
regard to damages in connection with this cause of action, plaintiff asserted that he was
unable to enter the premises, and he suffered emotional distress upon learning that
strangers had entered his house “and changed the locks without his knowledge or
consent. Further Plaintiff was forced to expend funds to hire a locksmith to enter the
premises to change the locks again and now has a care taker maintaining the property to
ensure no one else trespasses onto the property when Plaintiff is not there.”
       That plaintiff was in default is not disputed. Thus, plaintiff “fail[ed] to perform
the covenants and agreements contained in” the deed of trust. A notice of trustee’s sale
was recorded on August 4, 2014. As a result of plaintiff’s failure to perform, under
section 9 of the deed of trust, Nationstar, as loan servicer, was authorized to, among other
things, enter the property and “change locks.” That is exactly what plaintiff alleges
Cyprexx, as Nationstar’s agent, did, and no more. The action taken by Cyprexx, on
behalf of Nationstar, was expressly authorized under section 9 of the deed of trust.
       Thus, plaintiff failed to allege a legally sufficient cause of action sounding in
trespass to land because there are no allegations that Nationstar, or Cyprexx on its behalf,
exceeded the scope of the action authorized under the deed of trust. As the trial court
correctly concluded, the second amended complaint is silent as to how Nationstar lacked
authority to enter onto the property and change the locks, particularly in light of the
express provisions of the deed of trust authorizing such action.
       Plaintiff asserts that no amendment to the trespass to land cause of action is
necessary. However, he further represents that he can amend the second amended
complaint to address arguments concerning the deed of trust. In this regard, he asserts
only: “[I]f this Court agrees with the trial court that [plaintiff] should have addressed
Respondents[’] rights under the Deed of Trust and Notice of Default, [Plaintiff] can
allege that unless and until the Subject Property was sold at a trustee’s sale, it constituted
his property.”

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       We conclude that it is not reasonably possible that the defect in the second
amended complaint could be cured by amendment. The only amendment proposed by
plaintiff—that at the relevant time the property remained his property—could not change
the result. (See generally Zipperer, supra, 133 Cal.App.4th at p. 1020 [where the nature
of the claim is clear and under substantive law no liability exists, court should deny leave
to amend because no amendment could change the result]; see also Schifando v. City of
Los Angeles (2003) 31 Cal. 4th 1074, 1081 [plaintiff bears burden of proving amendment
would cure defect]; Blank v. Kirwan (1985) 39 Cal. 3d 311, 318 [same]; Mendoza v.
JPMorgan Chase Bank, N.A. (2016) 6 Cal. App. 5th 802, 809 [same].)
       Accordingly, the trial court properly sustained Nationstar’s demurrer to the fourth
cause of action without leave to amend.
            D. Unfair Competition Law – SLS, Nationstar, and U.S. Bank
       1. The Unfair Competition Law
       The “unfair competition law’s scope is broad.” (Cal-Tech Communications, Inc.
v. Los Angeles Cellular Telephone Co. (1999) 20 Cal. 4th 163, 180 (Cal-Tech
Communications).) “[I]t defines ‘unfair competition’ to include ‘any unlawful, unfair or
fraudulent business act or practice.’ ” (Ibid., quoting Bus. & Prof. Code, § 17200, fn.
omitted.) “By proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows”
violations of other laws and treats them as unlawful practices’ that the unfair competition
law makes independently actionable.” (Cal-Tech Communications, at p. 180.)
“However, the law does more than just borrow. The statutory language referring to ‘any
unlawful, unfair or fraudulent’ practice . . . makes clear that a practice may be deemed
unfair even if not specifically proscribed by some other law.” (Ibid.) “ ‘Because
Business and Professions Code section 17200 is written in the disjunctive, it establishes
three varieties of unfair competition-acts or practices which are unlawful, or unfair, or
fraudulent. “In other words, a practice is prohibited as ‘unfair’ or ‘deceptive’ even if not
‘unlawful’ and vice versa.” ’ ” (Cal-Tech Communications, at p. 180.)

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       “A business practice is ‘fraudulent’ within the meaning of [Business and
Professions Code] section 17200 if it is ‘likely to deceive the public. [Citations.] It may
be based on representations to the public which are untrue, and “ ‘also those which may
be accurate on some level, but will nonetheless tend to mislead or deceive. . . . A
perfectly true statement couched in such a manner that is likely to mislead or deceive the
consumer, such as by failure to disclose other relevant information, is actionable under’ ”
the [unfair competition law]. [Citations.] The determination as to whether a business
practice is deceptive is based on the likely effect such practice would have on a
reasonable consumer.’ ” (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal. App. 4th 1342,
1380.) “A ‘fraudulent’ activity includes any act or practice likely to deceive the public,
even if no one is actually deceived.” (Jolley, supra, 213 Cal.App.4th at p. 907.)
“ ‘Unlike common law fraud, a Business and Professions Code section 17200 violation
can be shown even without allegations of actual deception, reasonable reliance and
damage.’ ” (Brakke v. Economic Concepts, Inc. (2013) 213 Cal. App. 4th 761, 772.)
       “The standard for determining what business acts or practices are ‘unfair’ in
consumer actions under the [unfair competition law] is currently unsettled.”
(Zhang v. Superior Court (2013) 57 Cal. 4th 364, 380, fn. 9.) Prior to the Supreme
Court’s opinion in Cal-Tech Communications, courts applied a balancing test to
determine whether a practice was “unfair” under the unfair competition law. (See, e.g.,
Klein v. Earth Elements, Inc. (1977) 59 Cal. App. 4th 965, 969-970.) Specifically, courts
would balance the impact of the practice on the alleged victim, against the reasons,
justifications, and motives of the alleged wrongdoer. (Ibid.) The Supreme Court rejected
this approach in Cal-Tech Communications, an anti-competitive practices case, holding
that a cause of action for unfair business practices must “be tethered to some legislatively
declared policy or proof of some actual or threatened impact on competition.” (Cal-Tech
Communications, supra, 20 Cal.4th at pp. 186-187.) Although Cal-Tech
Communications disapproved of applying the balancing test in consumer cases, the

                                             48
Supreme Court expressly limited that holding to anti-competitive practices cases,
stating: “Nothing we say relates to actions by consumers.” (Id. at p. 187, fn. 12.)
       Following Cal-Tech Communications, a split in authority has developed
concerning the standard for consumer claims under the “unfair” prong of the unfair
competition law. (Compare Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93
Cal. App. 4th 700, 718-719 [adopting the pre-Cal-Tech Communications balancing test]
with Gregory v. Albertson’s, Inc. (2002) 104 Cal. App. 4th 845, 854 [adopting the
“tether[ing]” test]; see also Camacho v. Automobile Club of Southern California (2006)
142 Cal.App.4th 1394,1403 [adopting the test for unfairness set forth in 15 U.S.C.
§ 45(n)].) This court long ago adopted the balancing test (Progressive West Ins. Co. v.
Superior Court (1999) 135 Cal. App. 4th 263, 285-286) and, in the absence of any
discussion of the appropriate standard by the parties, we continue to apply that test.
       2. Plaintiff’s Contentions
       Plaintiff asserts that the trial court erred in sustaining defendants’ demurrers to the
sixth cause of action alleging a violation of the unfair competition law. Plaintiff asserts
that defendants’ actions were unlawful in that they “improperly reviewed him for a loan
modification and, in fact, reviewed him for a program in HAMP that he could have never
qualified for.” Asserting that promissory fraud is a form of deceit prohibited by
subdivision (4) of Civil Code section 1710, plaintiff asserts that his allegations suffice to
state a cause of action under the “unlawful” prong. Plaintiff further asserts that whether
conduct qualifies as “unfair” within the meaning of the unfair competition law is an issue
of fact not appropriate for demurrer. According to plaintiff, defendants’ practices were
likely to deceive consumers. Plaintiff further asserts that, for largely the same reasons,
defendants’ conduct is actionable under the “fraudulent” prong.
       3. Analysis
       The complaint alleges defendants subjected plaintiff to a fraudulent application
process, stringing him along with false assurances that a loan modification would be

                                             49
forthcoming or that he was eligible for a HAMP modification, and then claiming, falsely
and repeatedly, that plaintiff failed to supply requested documents. The complaint further
alleges that defendants intentionally delayed the loan modification process by demanding
that plaintiff submit the same documents over and over again, all in an attempt to increase
arrears, penalties, and fees. These allegations adequately support a cause of action under
the “fraudulent” and “unfair” prongs of the unfair competition law. (See Rufini v.
CitiMortgage, Inc. (2014) 227 Cal. App. 4th 299, 310 [allegation that lender “pretended to
engage in loan modification efforts while actually intending to foreclose” stated unfair
competition law cause of action under “fraudulent” and “unfair” prongs]; Majd, supra,
243 Cal.App.4th at p. 1304 [borrower sufficiently alleged violation of the unfair
competition law based, in part, on lender’s false assertion that he failed to provide
required documentation].)
       Defendants in their respondents’ brief and plaintiff in reply discuss the remedies
available to plaintiff in connection with this cause of action and whether he is entitled to
them. “While the scope of conduct covered by the [unfair competition law] is broad, its
remedies are limited. [Citation.] A[n] [unfair competition law] action is equitable in
nature; damages cannot be recovered. [Citation.] Civil penalties may be assessed in
public unfair competition actions. . . . [Citation.] We have stated that under the [unfair
competition law], ‘[p]revailing plaintiffs are generally limited to injunctive relief and
restitution.’ ” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134,
1144.) Plaintiff seeks both injunctive relief, enjoining the sale of the property, and
disgorgement and restitution of late fees, penalties, and charges. Thus, plaintiff sought
the appropriate remedies. (See ibid.) At this stage, reviewing the sustaining of
defendants’ demurrers, we do not consider whether plaintiff will be able to prove his
entitlement to these remedies or the scope of the appropriate remedies.
       We conclude the trial court erred in sustaining the demurrers to the unfair
competition law cause of action.

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                                      DISPOSITION
       The order on the demurrer to the first amended complaint that we deem to
incorporate a judgment of dismissal as to BANA is affirmed. The judgments of dismissal
in favor of U.S. Bank, SLS, and Nationstar are reversed. The orders sustaining the
demurrers to the second amended complaint are affirmed in part and reversed in part.
The orders are reversed as to the causes of action for intentional misrepresentation (first
cause of action) and negligent misrepresentation (second cause of action) insofar as
asserted against Nationstar and U.S. Bank, and as to the causes of action for negligence
(third cause of action) and violations of the unfair competition law (sixth cause of action)
insofar as asserted against Nationstar, U.S. Bank, and SLS. In all other respects, the
judgments are affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(3),(5).)

                                                     /s/
                                                  MURRAY, J.

We concur:

    /s/
BUTZ, Acting P. J.

    /s/
DUARTE, J.

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