Court Opinion

ID: 9939458
Source: CourtListenerOpinion
Date Created: 2024-02-09 22:02:21.390911+00
Date Added: 2024-06-11T13:41:14.941077
License: Public Domain

Filed 2/9/24
           CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION SEVEN

    KUMCHAI KIM MIYAHARA,              B317726

         Plaintiff and Appellant,      (Los Angeles County
                                       Super. Ct. No. 20STCV44166)
         v.

    WELLS FARGO BANK, N.A.,

         Defendant and Respondent.

      APPEAL from a judgment of the Superior Court of
Los Angeles County, Yolanda Orozco, Judge. Affirmed in part,
reversed in part, and remanded with directions.
      Shapero Law Firm and Sarah Shapero for Plaintiff and
Appellant.
      Lagerof and Jeremy E. Shulman for Defendant and
Respondent.
                    ________________________

*     Pursuant to California Rules of Court, rules 8.1100 and
8.1110, this opinion is certified for publication with the exception
of part C in the Discussion.
                       INTRODUCTION

       This case involves the trial court’s application of judicial
estoppel to an individual homeowner on demurrer. We conclude
the trial court erred by not giving the homeowner leave to allege
facts that her failure to disclose the present lawsuit in a prior
bankruptcy was the product of mistake or inadvertence. In 2017
Kumchai Kim Miyahara (Miyahara) was experiencing financial
difficulty and sought to refinance her home. While in the process
of obtaining a refinance loan that would have enabled her to keep
her home, Miyahara discovered a fraudulent lien had been placed
on her property by West H&A LLC. The fraudulent lien
prevented her from obtaining the loan.
       Miyahara sought the assistance of her lender, Wells Fargo
Bank, N.A. (Wells Fargo), in clearing title but was unsuccessful.
Wells Fargo then filed a notice of default. Miyahara
subsequently filed for chapter 13 bankruptcy in 2017. The
bankruptcy court confirmed her bankruptcy plan in 2018 but
dismissed her case in 2019 after Miyahara failed to make
payments under the plan.
       In 2020 Miyahara filed this action claiming that the actions
of Wells Fargo prevented her from securing an interest rate
comparable to one she would have received prior to filing for
bankruptcy. Wells Fargo demurred, arguing Miyahara’s
complaint was barred by judicial estoppel because Miyahara
failed to list any claim against Wells Fargo in her bankruptcy
schedule. After Wells Fargo filed its demurrer, Miyahara
amended her bankruptcy schedule to include her claim against
Wells Fargo. The trial court sustained the demurrer without

                                 2
leave to amend, agreeing with Wells Fargo that her lawsuit was
barred by judicial estoppel.
       Miyahara argues the trial court erred in ruling her
complaint was barred by judicial estoppel. Although we conclude
Miyahara took inconsistent positions and that the bankruptcy
court accepted her original position, the trial court erred in
concluding on demurrer that, as a matter of law, her failure to
disclose was not the product of mistake or inadvertence.
Miyahara is entitled to leave to amend to allege such facts.
Although not considered by the trial court, we also conclude the
demurrer should be sustained for the alternative reason that
Miyahara’s causes of action fail to state a claim. We determine
that Miyahara’s causes of action for breach of the covenant of
good faith and fair dealing (first cause of action), and for
violations of the Rosenthal Act, Civil Code section 1788.17
(second cause of action), Business and Professions Code
section 17200 (third cause of action), and the Homeowner Bill of
Rights, Civil Code section 2924.17 (fourth cause of action) fail to
state a claim, but that she should be granted leave to amend
except as to the fourth cause of action.
       Accordingly, we reverse the judgment and affirm in part
and reverse in part the order sustaining the demurrer with
directions to the trial court to allow Miyahara leave to amend as
outlined above.

      FACTUAL AND PROCEDURAL BACKGROUND

A.   Miyahara Files this Action
     According to the allegations in the complaint, Miyahara
purchased real property located on Hercules Drive in Los Angeles

                                 3
in June 1988. At the time of the purchase, Miyahara “obtained a
loan from World Savings Bank, FSB in the amount of $740,000.
In March 2006, [Miyahara] obtained a [refinance] loan for the
Property from World Savings Bank in the amount of $920,000.”1
      In 2013 and 2014 Miyahara became estranged from her
husband “and he stopped supporting her.” Following the
estrangement, “Plaintiff called Wells Fargo to request a loan
modification [and] Wells Fargo told [her] to work with the U.S.
Department of Housing and Urban Development.” Although
Miyahara worked with the Department of Housing and Urban
Development (HUD) “and other family members to secure a loan
modification, . . . her loan modification application was ultimately
declined.” According to “[a] letter from HUD . . . the property was
valued by an outside appraisal at $2.5 million, a loan
modification was not in Defendant’s interest, and Defendant
wanted to foreclose.” Miyahara “pawned all of her personal
belongings to pay the outstanding balance of arrears to avoid
foreclosure.”
      In November 2016 Miyahara “again faced financial
hardship and had trouble making her loan payments.” Miyahara
again contacted Wells Fargo “to request a loan modification [and]
was told by Wells Fargo that they would help her, and to
simultaneously explore other options for refinancing. Plaintiff

1     In January 2008 World Savings Bank, FSB changed its
name to Wachovia Mortgage, FSB. Wachovia Mortgage merged
with Wells Fargo Bank, N.A. in November 2009. (See Brown v.
Wells Fargo Bank, N.A. (2012) 204 Cal.App.4th 1353, 1355, fn. 1
[“After World Savings Bank FSB issued the loan . . . it changed
its name to Wachovia Mortgage FSB. Wachovia Mortgage
merged into and became a division of Wells Fargo Bank, NA.”].)

                                 4
enlisted the services of Fritz Hoffman of South Bay Equity
Lending, who was able to secure Plaintiff another loan.”
      On April 5, 2017 “during the time that [Miyahara’s]
refinance was in process, a Notice of Default was recorded by
Wells Fargo.”2 In June 2017 the loan secured by Hoffman went
into escrow and “[a]t or around that time, Plaintiff first learned of
a $920,000 lien on the property from West H&A LLC.” The
assignment of deed of trust purported to assign the deed from
Wells Fargo to West H&A LLC.3 The discovery of the lien
“halted . . . refinance.”
      Upon learning of the lien, Miyahara sought assistance from
Wells Fargo to clear title so she could refinance the property. But
“conversations with Wells Fargo representatives did not result in
any assistance with the lien.” On July 26 Hoffman contacted
Wells Fargo on behalf of Miyahara. Wells Fargo informed
Hoffman “the assignment should be viewed as invalid” and “there
was nothing more they could do.” Although “Wells Fargo
understood that the invalid lien . . . would interfere with
[Miyahara’s] ability to refinance her mortgage . . . [Wells Fargo]
continued with foreclosure proceedings.”
      On August 2 Miyahara hired attorney Robert E. Opera “to
speak to Wells Fargo on her behalf to resolve the invalid
mortgage assignment.” Since the foreclosure sale was set for
September 20, however, Miyahara “was forced to hire” a

2    The notice of default served by Wells Fargo indicated
Miyahara was $39,042.68 behind in her payments.
3     The assignment of deed of trust was dated June 12, 2017
and signed by Michael C. Jackson and Ryan Alexander Urquiziu
on behalf of West H&A LLC. The assignment of deed of trust
was not signed by anyone on behalf of Wells Fargo.

                                 5
bankruptcy attorney to file a chapter 13 bankruptcy petition on
her behalf in order “to stay the foreclosure on the property.”
Miyahara filed her bankruptcy petition on September 19.
       In June 2018, while her bankruptcy was pending, Wells
Fargo’s mortgage fraud division contacted Miyahara to inform
her a fraudulent lien was found on her account, and she should
contact the police. In late 2018 Miyahara’s bankruptcy attorney
“received a letter from Wells Fargo stating that they were taking
West H&A to court.” The bankruptcy attorney later “received a
second letter from Wells Fargo, indicating that they won their
case against West H&A” making Wells Fargo once again the first
lienholder on Miyahara’s property.
       The judicially noticeable facts before the trial court provide
additional context. In August 2018 Wells Fargo filed a motion for
relief from the automatic bankruptcy stay “so that title can be
cleared to the subject property in the name of Ms. Miyahara and
that Wells Fargo Bank, N.A. be named first lienholder on the
property via Quiet Title, Declaratory Judgment and Cancellation
of Instrument action in California state court.” According to the
motion for relief, the lien filed by West H&A LLC “has been one
of many fraudulent assignments in various locations across the
United States as part of a conspiracy and scheme to collect
mortgage payments from homeowners and to defraud and
confuse lenders such as Wells Fargo Bank N.A.” Miyahara
stipulated to the motion and the bankruptcy court granted it, but
specifically ordered that “the automatic stay shall remain in
effect with respect to any foreclosure proceedings on the subject

                                  6
real property. The relief sought by Wells Fargo does not affect or
modify the Chapter 13 Plan.”4
       The fraudulent lien was removed from the property, but
Miyahara was unable to make agreed-upon payments under her
bankruptcy plan. “On December 24, 2019, Plaintiff received a
letter that her Chapter 13 Bankruptcy Petition had been
dismissed.”
       “On January 21, 2020 a Notice of Trustee Sale was
recorded on the Property.” Although Miyahara sought an
extension, Wells Fargo would not extend the trustee sale date. In
May 2020 Miyahara applied for another refinance loan but was
only eligible for a loan with 9.5 percent interest. As a result of
the stress caused by this process, Miyahara “has broken out in
hives all over her body.”
       On November 17, 2020 Miyahara filed her complaint
against Wells Fargo for intentional interference with prospective
economic advantage, breach of the implied covenant of good faith
and fair dealing, violation of Civil Code section 1788.17, and
violation of Business and Professions Code section 17200. The
complaint alleged Miyahara “could not refinance her mortgage
because of the invalid lien” and, consequently, “lost the refinance
offer when she was forced to file for Chapter 13 bankruptcy [and]

4      In April 2018 Nationstar Mortgage LLC filed a lawsuit in
federal court against West H&A LLC and numerous other parties
claiming that they engaged in nationwide fraudulent activity to
defraud both property owners and lenders. The district court
eventually appointed a temporary receiver to clear title to the
properties that were impacted by the fraudulent scheme. The
district court cancelled and declared void ab initio the fraudulent
assignment recorded on Miyahara’s home by West H&A LLC on
March 27, 2019.

                                 7
is unable to secure an interest rate comparable to pre-bankruptcy
refinance rate.”

B.     Wells Fargo Demurs to the Complaint, and Miyahara Files
       a First Amended Complaint and Amends Her Chapter 13
       Bankruptcy Schedule
       Wells Fargo demurred to the complaint. Acknowledging
that Wells Fargo and Miyahara were “targets of a fraud attempt
by non-party West H&A LLC,” Wells Fargo argued it “had no
obligation to clear the fake assignment recorded on the Property
title [but] did so anyways at its [own] expense” and that it “was
well within its rights to purse foreclosure to address [Miyahara’s]
payment default that began more than four years ago.” It further
argued the complaint was barred by the doctrine of judicial
estoppel, and requested judicial notice of Miyahara’s chapter 13
bankruptcy schedule to argue “she never disclosed any claims
against Wells Fargo” before the bankruptcy court confirmed the
bankruptcy plan, and which was eventually dismissed by the
bankruptcy court in December 2019 due to Miyahara’s failure to
make agreed-upon payments. Wells Fargo also contended the
complaint did not plead sufficient facts to state a cause of action.
       Rather than oppose the demurrer, Miyahara filed a first
amended complaint on June 24, 2021. The first amended
complaint eliminated the cause of action for intentional
interference with prospective economic advantage and added a
new cause of action for violation of Civil Code section 2924.17.
       On July 2, 2021 Miyahara filed a motion to reopen her
chapter 13 bankruptcy case, which the bankruptcy court granted.
On July 13, 2021 Miyahara amended her chapter 13 bankruptcy
schedule to include “Claims against Wells Fargo for mishandling

                                 8
of debtor’s loan.” The bankruptcy court permitted the filing of
the amended schedule, but there is no record of any activity to
reprocess the amended schedule or the chapter 13 plan based on
the new information presented in the amended bankruptcy
schedule.5

C.     Wells Fargo Demurs to the First Amended Complaint and
       the Trial Court Sustains the Demurrer Without Leave to
       Amend
       On August 5, 2021 Wells Fargo demurred to the first
amended complaint. Wells Fargo again argued Miyahara was
judicially estopped from pursuing her claim because of her failure
to list Wells Fargo in her original bankruptcy filing, and that
each cause of action was insufficiently pled.
       Miyahara filed an opposition. According to Miyahara,
“[w]hat makes Defendant’s actions particularly egregious is the
fact that at the time the invalid lien was discovered, Plaintiff was
seeking to refinance her mortgage to avoid foreclosure. Instead of
taking any action to assist Plaintiff . . . Defendant intentionally
continued to pursue the foreclosure. As a result, Plaintiff was left
with no choice but to file for bankruptcy . . . . Now, following
bankruptcy, Plaintiff cannot secure a loan with interest rate
below 9.5%. Plaintiff now faces a continually growing amount of
arrears and the imminent loss of her property to foreclosure.”
Miyahara argued judicial estoppel did not apply because she
disclosed “Claims against Wells Fargo for mishandling of debtor’s

5     We grant Miyahara’s request to take judicial notice of the
bankruptcy claims register, and trustee’s final report and account
dated February 12, 2020. (Evid. Code, § 452, subd. (d) [court may
take judicial notice of “any court of record of the United States”].)

                                  9
loan” in her amended bankruptcy schedule, and also argued each
cause of action was sufficiently pled to state a claim.
       The trial court sustained Wells Fargo’s demurrer without
leave to amend and ordered defendant to submit a proposed
judgment of dismissal. The trial court reasoned Miyahara was
judicially estopped from pursing this action against Wells Fargo
because “she failed to disclose on her Chapter 13 Schedule or
elsewhere that she had assets in the form of potential claims
against Defendant . . . Plaintiff now asserts an inconsistent
position, that she has a potential asset by way of causes of action
against Defendant.”
       As to Miyahara’s amendment of her bankruptcy schedules
to include “claims against Wells Fargo for mishandling of [her]
loan,” the trial court explained this amendment was made after
the bankruptcy had already been dismissed. As the trial court
explained, “Plaintiff argues that she amended her Chapter 13
schedule on July 13, 2021 in order to include her causes of action
against Defendant as assets. . . . [A]t the time plaintiff amended
the schedule the Bankruptcy Action was no longer pending
having been dismissed on December 23, 2019. . . . [¶] Plaintiff
only amended her Chapter 13 Schedule after Plaintiff learned
this was a ground upon which Defendant intended to
demurrer . . . A plaintiff’s amendment of a bankruptcy schedule
only after a defendant files a dispositive motion on judicial
estoppel grounds is insufficient, particularly where a party had
knowledge of her potential claims at the time the original
bankruptcy schedule was filed with the Bankruptcy Court.”
       The trial court entered judgment on November 29, 2021.
Miyahara timely appealed.

                                10
                          DISCUSSION

A.     Standard of Review
       “‘“‘On appeal from an order of dismissal after an order
sustaining a demurrer, our standard of review is de novo, i.e., we
exercise our independent judgment about whether the complaint
states a cause of action as a matter of law.’” [Citation.] In
reviewing the complaint, “we must assume the truth of all facts
properly pleaded by the plaintiffs, as well as those that are
judicially noticeable.” [Citation.] We may affirm on any basis
stated in the demurrer, regardless of the ground on which the
trial court based its ruling.’” (Ward v. Tilly’s, Inc. (2019)
31 Cal.App.5th 1167, 1174; see T.H. v. Novartis Pharmaceuticals
Corp. (2017) 4 Cal.5th 145, 162.)
       “When a trial court sustains a demurrer without leave to
amend, ‘we must decide whether there is a reasonable possibility
the plaintiff could cure the defect with an amendment. . . . If we
find that an amendment could cure the defect, we conclude that
the trial court abused its discretion and we reverse; if not, no
abuse of discretion has occurred. . . . The plaintiff has the burden
of proving that an amendment would cure the defect.’”
(Modisette v. Apple Inc. (2018) 30 Cal.App.5th 136, 155; see
Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)

B.    Judicial Estoppel
      “‘“[J]udicial estoppel is an equitable doctrine aimed at
preventing fraud on the courts.”’” (Thomas v. Gordon (2000)
85 Cal.App.4th 113, 118.) It is an “extraordinary remedy that is
applied ‘with caution.’” (Kitty-Anne Music Co. v. Swan (2003)
112 Cal.App.4th 30, 35; accord, Haley v. Dow Lewis Motors, Inc.

                                11
(1999) 72 Cal.App.4th 497, 511.) “The doctrine applies when
‘(1) the same party has taken two positions; (2) the positions were
taken in judicial or quasi-judicial administrative proceedings;
(3) the party was successful in asserting the first position (i.e.,
the tribunal adopted the position or accepted it as true); (4) the
two positions are totally inconsistent; and (5) the first position
was not taken as a result of ignorance, fraud, or mistake.’”
(Aguilar v. Lerner (2004) 32 Cal.4th 974, 986-987; accord,
Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516, 532-533.)
       As noted by Jogani v. Jogani (2006) 141 Cal.App.4th 158,
170, “We do not suggest that there are ‘inflexible prerequisites or
an exhaustive formula for determining the applicability of
judicial estoppel. Additional considerations may inform the
doctrine’s application in specific factual contexts.’ [Citation.]
Further, given that ‘judicial estoppel is an equitable doctrine, . . .
its application, even where all necessary elements are present, is
discretionary.’” Whether judicial estoppel applies is a question of
law. (Kelsey v. Waste Management of Alameda County (1999)
76 Cal.App.4th 590, 597; accord, Kitty-Anne Music Co. v. Swan,
supra, 112 Cal.App.4th at p. 35.)
       “[W]here a debtor in bankruptcy violates its statutory and
fiduciary duty to disclose a current claim during a bankruptcy
proceeding, equitable and judicial estoppel operate as a bar to
further litigation by the debtor.” (International Engine Parts,
Inc. v. Feddersen & Co. (1998) 64 Cal.App.4th 345, 350.) “‘By
virtue of this failure to disclose, equitable and judicial estoppel
operate against further litigation.’” (Conrad v. Bank of America
(1996) 45 Cal.App.4th 133, 138; see Hamilton v. State Farm Fire
& Cas. Co. (9th Cir. 2001) 270 F.3d 778, 783 (Hamilton) [“In the
bankruptcy context, a party is judicially estopped from asserting

                                 12
a cause of action not raised in a reorganization plan or otherwise
mentioned in the debtor’s schedules or disclosure statements.”].)
“‘“The rationale”’” for these decisions “‘“is that the integrity of the
bankruptcy system depends on full and honest disclosure by
debtors of all of their assets. The courts will not permit a debtor
to obtain relief from the bankruptcy court by representing that no
claims exist and then subsequently to assert those claims for his
own benefit in a separate proceeding.”’” (Gottlieb v. Kest (2006)
141 Cal.App.4th 110, 140 (Gottlieb); accord, Hamilton, at p. 785.)

      1.    Miyahara Took Inconsistent Positions in the
            Bankruptcy Court and Trial Court
       Miyahara argues the trial court erred in finding she took
an inconsistent position when she failed to list any claims or
causes of action against Wells Fargo in her original chapter 13
bankruptcy schedule.6 Miyahara contends her original
bankruptcy schedule identified West H&A LLC’s “fraudulent
claim of $300,000” and the “debtor to do quiet title action.”
Although Miyahara admits she “could have identified the claim
more specifically or” separately listed the claim, she contends
“the claims are not clearly inconsistent since [Miyahara] did
actually identify the lien issue that gave rise to the dispute
against [Wells Fargo].” We disagree because the bankruptcy

6     “Chapter 13 bankruptcy is a voluntary proceeding that
allows a debtor to retain control over some assets while the
debtor repays creditors over a three-to-five-year period. In
exchange for retaining control of some assets, the property
accumulated during the repayment period becomes part of the
bankruptcy estate and is used to repay creditors.” (Brown v.
Barclay (9th Cir. 2020) 953 F.3d 617, 619-620.)

                                  13
laws require all claims and causes of action against third parties,
such as Wells Fargo, be disclosed.
       “The bankruptcy code . . . places an affirmative duty on
debtors to schedule their assets and liabilities with the
bankruptcy court.” (Yack v. Washington Mutual Inc. (N.D. Cal.
2008) 389 B.R. 91, 95-96, citing 11 U.S.C. § 521(1).) This includes
“‘contingent and unliquidated claims’” as well as “‘all potential
causes of action.’” (Gottlieb, supra, 141 Cal.App.4th at p. 133;
accord, Hamilton, supra, 270 F.3d at p. 778.) In chapter 13
bankruptcy proceedings, a debtor must disclose not only the
claims he is aware of when he files a petition, but also those
potential claims which are acquired “after the commencement of
the case but before the case is closed, dismissed, or converted.”
(11 U.S.C. § 1306(a)(1); accord, Gottlieb, at p. 133.)
       Although Miyahara identified West H&A LLC’s fraudulent
lien in her original chapter 13 schedule, she never identified any
claim or cause of action against Wells Fargo while her
bankruptcy was pending. “‘Courts of various jurisdictions have
held that a debtor’s assertion [in a civil action] of legal claims not
disclosed in earlier bankruptcy proceedings constitutes an
assumption of inconsistent positions. . . . This holding stems
from the requirement that a debtor seeking the shelter provided
by federal bankruptcy laws disclose all legal or equitable property
interests to a bankruptcy court. . . . [¶] The omission of a cause
of action or claim “from . . . mandatory bankruptcy filings is
tantamount to a representation that no such claim existed.”’”
(Gottlieb, supra, 141 Cal.App.4th at p. 137.)

                                 14
       Hamilton is instructive. There the debtor filed a chapter 7
bankruptcy case in which he listed on his schedule a $160,000
vandalism loss against his estate but failed to list on his schedule
of assets a claim against his homeowners’ insurer for this same
loss. (Hamilton, supra, 270 F.3d at p. 781.) After the debtor
received his discharge in bankruptcy, he filed a claim against the
insurer in district court following the dismissal of his bankruptcy
case. (Id. at pp. 781-782.) The Ninth Circuit concluded the
lawsuit was barred by judicial estoppel because “Hamilton clearly
asserted inconsistent positions. He failed to list his claims
against State Farm as assets on his bankruptcy schedules, and
then later sued State Farm on the same claim.” (Id. at p. 784.)
Although the debtor claimed State Farm “was fully aware of his
pending claims,” this was insufficient because “Hamilton is
required to have amended his disclosure statements and
schedules to provide the requisite notice, because of the express
duties of disclosure imposed on him by 11 U.S.C. 521(1), and
because both the court and Hamilton’s creditors base their
actions on the disclosure statements and schedules.” (Ibid.)
       Similarly, Miyahara failed to list her claim against Wells
Fargo and, after her bankruptcy was dismissed in December
2019, she filed this action against Wells Fargo in November 2020.
This is an inconsistent position that was not rectified by filing an
amended bankruptcy schedule after the bankruptcy petition had
already been dismissed by the bankruptcy court. (See 11 U.S.C.
§ 1306(a)(1) [in chapter 13 bankruptcy proceedings, debtors must
disclose not only the claims they are aware of when filing a
petition, but also potential claims acquired “after the
commencement of the case but before the case is closed,
dismissed, or converted”]; see Balthrope v. Sacramento County

                                15
Dept. of Health and Human Services (9th Cir. 2010)
398 Fed.Appx. 285, 286 [“Contrary to Balthrope’s contention, he
was required to amend his bankruptcy petition to include the
post-petition claim because his Chapter 13 bankruptcy
proceeding had not been closed, dismissed, or converted.”].)

       2.     The Bankruptcy Court Accepted Miyahara’s Position
       The bankruptcy court confirmed Miyahara’s chapter 13
bankruptcy plan on January 24, 2018. Despite the bankruptcy
court’s confirmation of her plan, Miyahara contends she did not
successfully persuade the bankruptcy court to adopt an
inconsistent position. According to Miyahara, she “proposed to
pay her regular monthly mortgage payment and cure all pre-
petition arrearages owed to Wells Fargo Bank” and the
bankruptcy court, in confirming her chapter 13 plan, ordered her
to pay 100 percent of all nonpriority, unsecured creditors,
including Wells Fargo. (See Gottlieb, supra, 141 Cal.App.4th at
p. 137 [“Nevertheless, one of the judicial estoppel factors—
success in asserting the prior position—is not present: The
bankruptcy court did not ‘adopt[] the [prior] position or accept[] it
as true.’”]; accord, Hamilton v. Greenwich Investors XXVI, LLC
(2011) 195 Cal.App.4th 1602, 1613 [“the court found the doctrine
did not apply because ‘the bankruptcy court did not adopt or
accept the truth of [plaintiff’s] position that [the debtor] did not
have any legal claims’ and ‘the bankruptcy case was dismissed
without confirmation of a plan of reorganization’”].)

                                 16
       The bankruptcy court confirmed Miyahara’s bankruptcy
plan based on the disclosures made in her bankruptcy schedule,
and thus the bankruptcy court accepted her position for purposes
of judicial estoppel.7 As Hamilton explained, “‘In chapter 13
cases, debtors file schedules on which the chapter 13 trustee and
the court rely to confirm chapter 13 plans. In those chapters, the
discharge occurs only if the plan is confirmed; therefore, false
statements in the schedules or disclosure statement are
effectively “accepted” by the Court.’” (Hamilton v. Greenwich
Investors XXVI, LLC, supra, 195 Cal.App.4th at p. 1611, fn. 4.)
       Although the bankruptcy court ultimately dismissed
Miyahara’s bankruptcy petition, it did so after confirming her
plan, which is sufficient for purposes of judicial estoppel. (See
Gottlieb, supra, 141 Cal.App.4th at p. 141 [“‘The meaning of
“acceptance” in the bankruptcy context is construed broadly to
“protect[] the integrity of the bankruptcy process.” . . . Among
other possibilities, . . . the confirmation of a plan may constitute
sufficient “acceptance” of the accuracy of schedules so as to
permit judicial estoppel.’”]; see also Ah Quin v. County of Kauai
Department of Transportation (9th Cir. 2013) 733 F.3d 267, 271
[“In the bankruptcy context, the federal courts have developed a

7      Wells Fargo also argues the bankruptcy court’s stay
indicates it accepted Miyahara’s representations and that gave
her an unfair advantage. But a bankruptcy stay is automatic
upon the filing of the petition and does not depend on the specific
claims debtors list in their bankruptcy schedules. (See Gottlieb,
supra, 141 Cal.App.4th at p. 142 [“The automatic stay cannot be
deemed an adoption or acceptance of [debtor]’s prior position
because it was not premised even in part on [its] nondisclosure of
the legal claim.”]; id. at p. 144 [“‘that benefit existed irrespective
of the claims [debtor] listed (or failed to list) in her filings’”].)

                                  17
basic default rule: If a plaintiff-debtor omits a pending (or soon-
to-be-filed) lawsuit from the bankruptcy schedules and obtains a
discharge (or plan confirmation), judicial estoppel bars the
action.”].)

      3.     The Trial Court Improperly Determined on Demurrer
             that Miyahara’s Actions Were Not the Result of
             Mistake or Inadvertence
       Miyahara concedes her original bankruptcy schedules did
not list her present claim against Wells Fargo but argues that
this was the result of mistake or inadvertence. “‘[T]he doctrine of
judicial estoppel does not apply “when the prior position was
taken because of a good faith mistake rather than as part of a
scheme to mislead the court.” [Citation.] An inconsistent
argument sufficient to invoke judicial estoppel must be
attributable to intentional wrongdoing.’” (Haley v. Dow Lewis
Motors, Inc., supra, 72 Cal.App.4th at pp. 509-510; accord,
MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works
Co., Inc. (2005) 36 Cal.4th 412, 422 [judicial estoppel does not
apply when the inconsistent positions were the “‘“result of
ignorance, fraud, or mistake”’”]; Jackson v. County of Los Angeles
(1997) 60 Cal.App.4th 171, 183 [“‘The gravamen of judicial
estoppel is not privity, reliance, or prejudice. Rather, it is the
intentional assertion of an inconsistent position that perverts the
judicial machinery.’”].) Accordingly, courts examine “whether a
debtor has engaged in a deliberate scheme to mislead and gain
unfair advantage, as opposed to having made a mistake born of
misunderstanding, ignorance of legal procedures, lack of
adequate legal advice, or some other innocent cause.” (Cloud v.

                                 18
Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1020
(Cloud).)
       Miyahara was represented by counsel in her bankruptcy
and argues she was “not attempting to ‘[keep] any potential
proceeds from creditors’ by concealing a claim against Wells
Fargo [and her] voluntary plan provided for full payment to Wells
Fargo, without objection to the claim, as well as 100% to all
remaining creditors.” In other words, Miyahara contends that
despite her nondisclosure, she did not intentionally “‘“[c]onceal
[her] claims; get rid of [her] creditors on the cheap, and start over
with a bundle of rights.”’” (Gottlieb, supra, 141 Cal.App.4th at
p. 146.) Indeed, “nondisclosure in bankruptcy filings, standing
alone, is insufficient to support the finding of bad faith intent
necessary for the application of judicial estoppel” (Cloud, supra,
67 Cal.App.4th at pp. 1017-1019 [“‘We are persuaded . . . that
policy considerations militate against adopting a rule that the
requisite intent for judicial estoppel can be inferred from the
mere fact of nondisclosure in a bankruptcy proceeding. Such a
rule would unduly expand the reach of judicial estoppel in post-
bankruptcy proceedings and would inevitably result in the
preclusion of viable claims on the basis of inadvertent or good-
faith inconsistencies. . . . [W]e are unwilling to treat careless or
inadvertent nondisclosures as equivalent to deliberate
manipulation when administering the “strong medicine” of
judicial estoppel.’”]).
       Wells Fargo contends that “Miyahara does not cite to
anything in the record supporting an argument for inadvertence,
and no such facts exist[]. To the contrary, the record confirms the
absence of inadvertence since Miyahara was represented by
bankruptcy counsel and clearly disclosed her claims regarding

                                 19
West H&A LLC.” But the record also demonstrates that Wells
Fargo initially rejected Miyahara’s request to help her clear title
before the bankruptcy and then decided it would clear title while
Miyahara was in bankruptcy, potentially leading her to believe
she had no claim against Wells Fargo because it was doing what
she had initially requested.
       In any event, this case was decided on demurrer and
Miyahara was not given leave to allege facts supporting “a
mistake born of misunderstanding, ignorance of legal procedures,
lack of adequate legal advice, or some other innocent cause.”
(Cloud, supra, 67 Cal.App.4th at p. 1020.) More broadly, “[c]ases
concerning judicial estoppel have generally been decided after a
fact-finding or evidence-reviewing proceeding of some sort”
because the doctrine often “requires consideration of the
evidence.” (Id. at pp. 1019-1020 [reversing judgment on the
pleadings because factual issues precluded application of judicial
estoppel]; see Kelsey v. Waste Management of Alameda County
(1999) 76 Cal.App.4th 590, 597 [judicial estoppel did not apply
where defendant failed “to adduce evidence [plaintiff]
intentionally omitted his claim” from his chapter 13 bankruptcy
schedules].)
       Wells Fargo further argues the timing of Miyahara’s
amendment to her bankruptcy schedule raises an inference her
omission was deceitful, citing two federal cases decided in
different procedural postures.8 Although it is plausible the

8     Dzakula v. McHugh (9th Cir. 2014) 746 F.3d 399 affirmed a
dismissal based on Federal Rule of Civil Procedure 12(b)(1),
which goes beyond the pleadings and did not apply California’s
equitable estoppel standards. Ceja-Corona v. CVS Pharmacy,

                                20
timing of her amendment to the bankruptcy schedules could
support an inference of bad faith, we cannot say this is so as a
matter of law. Rather, it is reasonable to infer from Miyahara’s
disclosure of her potential claim against West H&A LLC
involving the fraudulent lien and her full payment plan to all her
creditors (even if she subsequently defaulted after the plan was
confirmed) that her failure to disclose her claim against Wells
Fargo was not part of a “‘“scheme to mislead the [bankruptcy]
court”’” or her creditors. (Haley v. Dow Lewis Motors, Inc, supra,
72 Cal.App.4th at p. 509; see Cloud, supra, 67 Cal.App.4th at
p. 1019; see also Gottlieb, supra, 141 Cal.App.4th at p. 146.) On
demurrer Miyahara is entitled to reasonable inferences in her
favor. (See Bank of New York Mellon v. Citibank, N.A. (2017)
8 Cal.App.5th 935, 952 [“On demurrer, we draw all reasonable
inferences in favor of the plaintiff.”].) Further, as noted above,
whether Miyahara’s failure to list her claims was the result of
mistake or inadvertence raises factual questions not amenable to
resolution on demurrer. (See TracFone Wireless, Inc. v. County of
Los Angeles (2008) 163 Cal.App.4th 1359, 1368 [“Questions of fact
may be resolved on demurrer only when there is only one
legitimate inference to be drawn from the allegations of the
complaint.”]; see also Cloud, at p. 1021 [“[T]he doctrine of judicial
estoppel ought to be applied only quite sparingly. In order to
determine whether to apply the doctrine in a given case, the facts
must be carefully evaluated. That cannot be done on a pleading
motion, and hence the judgment here must be reversed.”].)

Inc. (9th Cir. 2016) 664 Fed.Appx. 649 affirmed a dismissal after
summary judgment.

                                 21
       In sum, the trial court should have allowed Miyahara an
opportunity to amend her complaint to allege facts showing why
her conduct was the result of mistake or inadvertence. (See Green
Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th
425, 432 [“‘When the trial court sustains a demurrer without
leave to amend, we must also consider whether the complaint
might state a cause of action if a defect could reasonably be cured
by amendment. If the defect can be cured, then the judgment of
dismissal must be reversed to allow the plaintiff an opportunity
to do so.’”].)

C.     Miyahara’s Causes of Action Fail To State a Claim, but She
       Is Generally Entitled to Leave To Amend**
       Wells Fargo argues that even if judicial estoppel does not
bar Miyahara’s complaint, we should nevertheless affirm because
she “lacked any viable claim.” The trial court did not reach the
issue of whether each cause of action was sufficiently pled, but
“[a] judgment of dismissal after a demurrer has been sustained
without leave to amend will be affirmed if proper on any grounds
stated in the demurrer, whether or not the court acted on that
ground.” (Carman v. Alvord (1982) 31 Cal.3d 318, 324.) “If we
find that an amendment could cure the defect, we conclude that
the trial court abused its discretion and we reverse; if not, no
abuse of discretion has occurred. . . . The plaintiff has the burden
of proving that an amendment would cure the defect.”
(Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
“[S]uch a showing can be made for the first time to the reviewing
court.” (Smith v. State Farm Mutual Automobile Ins. Co. (2001)

**    See footnote *, ante.

                                22
93 Cal.App.4th 700, 711; accord, Gomes v. Countrywide Home
Loans, Inc. (2011) 192 Cal.App.4th 1149, 1153-1154.)

       1.    Implied Covenant of Good Faith and Fair Dealing
       “Under California law, every contract includes an implied
covenant of good faith and fair dealing.” (Prager University v.
Google LLC (2022) 85 Cal.App.5th 1022, 1039.) “The covenant is
read into contracts and functions “‘as a supplement to the express
contractual covenants, to prevent a contracting party from
engaging in conduct which (while not technically transgressing
the express covenants) frustrates the other party’s rights to the
benefits of the contract.’” . . . A breach of the implied covenant of
good faith is a breach of the contract [citation], and ‘breach of a
specific provision of the contract is not . . . necessary’ to a claim
for breach of the implied covenant of good faith and fair dealing.”
(Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013)
218 Cal.App.4th 1230, 1244.)
       Here, the operative complaint alleges Wells Fargo breached
the implied covenant of good faith and fair dealing “by continuing
to foreclose on the Property after learning of the invalid lien,
which Wells Fargo understood was preventing Plaintiff from
refinancing her mortgage. Wells Fargo knew that the lien on
Plaintiff’s account was invalid yet refused to take any action to
remedy the situation so that Plaintiff could avoid foreclosure.
Instead, Wells Fargo forced Plaintiff to file for bankruptcy to stay
the foreclosure proceedings, thereby impacting her ability to
refinance her mortgage in the future.”

                                 23
       Wells Fargo argues this allegation is insufficient “because
she was . . . in default under the loan prior to any activity
concerning the fake assignment,” and that Miyahara “failed to
specify an express contractual right that was allegedly interfered
with, belying any breach of implied covenant claim.” Although
Miyahara contends the contract allowed her the opportunity to
pay off the default following a breach, she concedes she did not
specify the contractual term upon which she relies and asks for
leave to amend so she can “set forth the exact term that the
Defendant breached.” We agree that leave should be given in
order to allow Miyahara to allege what clause of the contract was
allegedly breached and whether the alleged provision upon which
she relies is “‘reasonably susceptible’ to the meaning ascribed to
it in the complaint.” (Klein v. Chevron U. S. A., Inc. (2012)
202 Cal.App.4th 1342, 1384-1385; see Connell v. Zaid (1969)
268 Cal.App.2d 788, 795 [“‘in considering a pleading attacked by
general demurrer,’ plaintiff’s ‘“construction of . . . [the contract]
should be accepted, if such construction be reasonable”’”].)
       Wells Fargo also argues Miyahara failed to allege how she
was damaged by any alleged breach. But Miyahara argues she
can allege “she has suffered loss of money” in an amended
complaint. We agree Miyahara should be given the opportunity
to allege what damages, if any, she may have suffered. (See
McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, 297
[“The trial court has discretion to allow amendments to the
pleadings ‘in the furtherance of justice.’ (Code Civ. Proc., § 473,
subd. (a)(1).) ‘This discretion should be exercised liberally in
favor of amendments.’”]

                                 24
        2.      The Rosenthal Act
        “‘The Rosenthal Act was enacted “to prohibit debt collectors
from engaging in unfair or deceptive acts or practices in the
collection of consumer debts.”’” (Young v. Midland Funding LLC
(2023) 91 Cal.App.5th 63, 77.) The Act prohibits specified acts by
debt collectors (Civ. Code, §§ 1788.10-1788.16), and requires them
to comply with provisions of the federal Fair Debt Collection
Practices Act (15 U.S.C. § 1692 et seq.). Miyahara alleges Wells
Fargo’s foreclosure violated the Rosenthal Act.
        Wells Fargo argues this cause of action is time-barred
because “[a] cause of action under the Rosenthal Fair Debt
Collection Practices Act (RFDCPA) must be brought ‘within one
year from the date of the occurrence of the violation,’” which,
according to Wells Fargo, occurred in 2017 when Miyahara
learned Wells Fargo was attempting to foreclose on her property.
There is a one-year statute of limitations from the date of
occurrence of the violation (Civ. Code, § 1788.17, subd. (f)), but
the law recognizes an exception for a continuing violation. (See
Komarova v. National Credit Acceptance, Inc. (2009)
175 Cal.App.4th 324, 344-345 [discussing continuing violation
doctrine].) Although not alleged in the operative complaint,
Miyahara argues on appeal she could amend her complaint to
allege she “continued to be harmed by Respondent’s refusal to
correct the unlawful lien and, in fact, continues to be harmed,
because she had to file for bankruptcy which has negatively
impacted her credit and she can no longer obtain a low interest
rate as a result.” Such allegations of a continuing harm, as
opposed to a continuing violation, are insufficient. Further, “[t]he
test . . . for use of the continuing violation doctrine is whether the
violations constitute ‘a continuing pattern and course of conduct,’

                                 25
or ‘unrelated discrete acts.’” (Komarova, at p. 344.) Miyahara
should have the opportunity to amend to allege facts, if any,
demonstrating how Wells Fargo engaged in a continuing violation
that extended into the limitations period. (Id. at p. 345 [“because
the harassing phone calls were a continuing course of conduct
that extended into the limitations period, plaintiff could recover
under the continuing violation doctrine for all of the violations
that occurred during those calls”].)
       Wells Fargo further argues this cause of action “failed to
allege facts constituting ‘unfair or unconscionable’ debt collection
attempts by Wells Fargo” because it “had a contractual right to
pursue foreclosure to address the payment default, and Wells
Fargo was under no obligation to remedy the fraud of third-party
West H&A LLC.” Despite Miyahara’s argument that Wells
Fargo’s “actions were unfair and unconscionable when it pursued
foreclosure when it knew that there was a false lien on the
property that prevented her refinance,” we agree with Wells
Fargo the viability of this cause of action hinges on whether it
could pursue foreclosure under the deed of trust without
demanding full repayment, and what specific provision of the
Fair Debt Collections Practice Act (incorporated into the
Rosenthal Act) has been violated. (See 15 U.S.C. § 1692f; Civ.
Code, §§ 1788.10-1788.16.) But, as noted above, at the very least
Miyahara is entitled to leave to amend to address these
deficiencies. (See Howard v. County of San Diego (2010)
184 Cal.App.4th 1422, 1428 [“The policy favoring amendment is
so strong that it is a rare case in which denial of leave to amend
can be justified.”].)

                                26
      3.      Violation of Business and Professions Code
              Section 17200
       Wells Fargo argues the third cause of action lacks merit
because it is based on the other defective causes of action, and
further contends Miyahara lacks standing because she has not
suffered “an injury in fact.” As pled, the section 17200 cause of
action is derivative of the previous causes of action. (See
Aleksick v. 7-Eleven, Inc. (2012) 205 Cal.App.4th 1176, 1185
[“When a statutory claim fails, a derivative UCL claim also
fails”].) Thus, to the extent the first two causes of action were
insufficiently pled, the UCL cause of action was also
insufficiently pled. But, for the same reasons as above, leave to
amend is proper. Miyahara’s allegations she suffered economic
injury by having to pay attorney fees and costs of suit to prevent
the sale of her home, as well as late fees and appraisal fees, and
the destruction of her credit requiring her to pay more in interest
is sufficient under section 17200 to allege standing and whether
she would be entitled to restitution. (Bus. & Prof. Code, § 17204
[“Actions for relief pursuant to this chapter shall be prosecuted
exclusively in a court of competent jurisdiction . . . by a person
who has suffered injury in fact and has lost money or property as
a result of the unfair competition”]; see Kwikset Corp. v. Superior
Court (2011) 51 Cal.4th 310, 330, fn. 15 [“Because the issue here
is only the threshold matter of standing, not whether and how
much to award in restitution, a specific measure of the amount of
this loss is not required. It suffices that a plaintiff can allege an
“‘identifiable trifle’” [citation] of economic injury.”].)

                                 27
      4.      The Homeowner Bill of Rights
      Miyahara alleged Wells Fargo violated the Homeowner Bill
of Rights (Civ. Code, § 2924.17) “by failing to review competent
and reliable evidence to substantiate its rights to collect amounts
in default while the fraudulent assignment was recorded and it
was, arguably, not the owner of the loan or entitled to collect
payments during the time period where the assignment was
recorded.” As Wells Fargo notes, Lucioni v. Bank of America,
N.A. (2016) 3 Cal.App.5th 150, 162 held that
“Section[ ] 2924.17 . . . do[es] not create a right to litigate,
preforeclosure, whether the foreclosing party’s conclusion that it
had the right to foreclose was correct.” Miyahara did not address
in the trial court or on appeal how she would amend her
complaint to state a valid cause of action for violation of the
Homeowner Bill of Rights. (See Czajkowski v. Haskell & White,
LLP (2012) 208 Cal.App.4th 166, 173 [“The plaintiff has the
burden of proving the possibility of cure by amendment”]; see
In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830
[“We are not bound to develop appellants’ argument for them.
[Citation.] The absence of cogent legal argument or citation to
authority allows this court to treat the contention as waived”].)
Accordingly, Miyahara does not have leave to amend the fourth
cause of action.

                         DISPOSITION

       The judgment is reversed. The order sustaining the
demurrer without leave to amend is affirmed in part and
reversed in part. The order is affirmed as to the cause of action
for violation of the Homeowner Bill of Rights (fourth cause of

                                28
action). We reverse the order sustaining the demurrer and
dismissing on the basis of judicial estoppel without leave to
amend. The trial court is directed to enter a new order
sustaining the demurrer as to judicial estoppel, and the causes of
action for breach of the implied covenant of good faith and fair
dealing (first cause of action), violation of the Rosenthal Act
(second cause of action) and violations of Business and
Professions Code section 17200 (third cause of action) with leave
to amend. The parties are to bear their own costs on appeal.

                              MARTINEZ, J.

We concur:

      SEGAL, Acting P. J.

      FEUER, J.

                                29