Court Opinion

ID: 4909282
Source: CourtListenerOpinion
Date Created: 2021-09-08 23:03:12.877763+00
Date Added: 2024-06-11T08:13:19.964042
License: Public Domain

Filed 9/8/21 Stiles v. Bank of New York Mellon CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE

 DONA STILES,

      Plaintiff and Appellant,                                         G058948

           v.                                                          (Super. Ct. No. 30-2017-00936807)

 BANK OF NEW YORK MELLON et al.,                                       OPINION

      Defendants and Respondents.

                   Appeal from a judgment of the Superior Court of Orange County, Thomas
A. Delaney, Judge. Affirmed.
                   Graham & Associates and Anthony G. Graham for Plaintiff and Appellant.
                   Klinedinst, Ian A. Rambarran and Michael W. Carruth for Defendants and
Respondents.

                                             *               *               *
              Plaintiff Dona Stiles appeals from a judgment entered after the court
sustained, without leave to amend, the demurrer of defendants Bank of New York Mellon
(BONY), Bayview Loan Servicing, LLC (Bayview), and Seaside Trustee, Inc. (Seaside)
to her fourth amended complaint. The complaint essentially alleged defendants
wrongfully foreclosed on plaintiff’s home because the promissory note had been
transferred to Fannie Mae, which purportedly left defendants with no interest in the
property. On appeal, plaintiff argues she pleaded sufficient facts to support claims for
wrongful foreclosure, negligence, conversion, racketeering, fraud, and unfair competition
                                              1
(Bus. & Prof. Code, § 17200 et seq. (UCL)). We disagree and affirm the judgment.
                                          FACTS
The Fourth Amended Complaint
              In 2019, plaintiff filed the operative fourth amended complaint against
defendants and BAC Home Loan Servicing, which is not a party to this appeal. The
complaint alleged plaintiff purchased her home (the Property) in 2005, executing a
promissory note (Note) and deed of trust (Deed of Trust) in the amount of $820,000. The
Deed of Trust lists Countrywide Home Loans, Inc. (Countrywide) as the lender.
              According to the complaint, Countrywide transferred its interest in the loan
to Bank of America in 2008. In 2009, Bank of America then allegedly sold its interest in
the loan to Fannie Mae with BONY acting as the trustee in the sale. The complaint
alleged plaintiff was unaware of these two transfers, which are central to this appeal.
              In 2011, Bank of America’s subsidiary, BAC Home Loan Servicing, and
plaintiff entered into a loan modification agreement including a balloon payment for
$482,398. The complaint alleged “Bank of America and BAC Home Loan Servicing had
no legal authority to execute a loan modification as they no longer held title to
the . . . Property, since it had already been fully paid off under a Purchase and Sale
       1
        All further statutory references are to the Business and Professions Code unless
otherwise stated.

                                              2
Agreement by Fannie Mae.” The complaint further alleged Bank of America and BAC
Home Loan Servicing collected unlawful payments on the modified loan from plaintiff
until December 2013 “without ever disclosing that the Note had been sold to Fannie Mae,
and that [their] interest had been paid off.”
              In 2013, Mortgage Electronic Registration Systems, Inc. (MERS), acting as
a nominee for Countrywide, assigned all beneficial interest under the Deed of Trust and
Note to BONY. According to the complaint, this was a fraudulent assignment because
the Note had already been sold to Fannie Mae in 2009. Plaintiff believed “[d]efendants
were conspiring to collect on her Note, in secret and without disclosure, as many times as
possible.”
              In 2014, Bank of America sent a letter to plaintiff indicating it was
transferring servicing of plaintiff’s Note to Bayview. A few weeks later, BONY
executed a limited power of attorney giving Bayview the authority to execute foreclosure
proceedings. The complaint claimed “[n]one of these transfers were effective because at
the time of the transfer, none of the transferors had any interest in the Note because it had
been sold to Fannie Mae in 2009.”
              In the following months, defendants allegedly filed false claims with the
mortgage insurance company and “used [a] fictitious loan number to file claims with
HUD and with the insurance carrier, and to acquire title insurance because they knew
there was a higher risk that their fraudulent mortgage and foreclosure documents would
be discovered if they used the original loan number.” In 2015, Bayview executed a
substitution of trustee naming Seaside as the new trustee under the Deed of Trust. The
substitution was recorded in April 2016. According to the complaint, the substitution
was “void ab initio” because no Substitution of Trustee Affidavit was filed. In
September 2016, Bayview then provided “fraudulently altered copies” of the Note and
Deed of Trust to plaintiff.

                                                3
               Although the operative fourth amended complaint does not explicitly say
plaintiff defaulted on her loan, her prior complaints noted she stopped making payments
because she did not recognize the fictitious loan number and knew defendants had no
right to collect payments. The fourth amended complaint similarly alleged “[p]laintiff
relied on their representation that this was the loan number they sought to collect under,
and withheld money that otherwise would have gone towards the mortgage on her house.”
(Italics added.) A notice of default and a notice of trustee’s sale were recorded in 2016.
At the end of the year, the Property was sold at a foreclosure sale to BONY.
               Following the sale, BONY initiated unlawful detainer proceedings against
plaintiff in 2017, and plaintiff filed a Chapter 7 bankruptcy petition a few months later.
The court in the unlawful detainer case ultimately granted BONY’s motion for summary
                                                                             2
judgment and ordered possession of the Property be restored to BONY.
               Based on the above allegations, the complaint alleged “none of the named
[d]efendants owned the Note at the time of the foreclosure sale” because “the
Note . . . was sold or transferred to Fannie Mae [in 2009].” Seaside also “was not
lawfully appointed as trustee by any of the [d]efendants.” The complaint concluded the
foreclosure sale was fraudulent because “none of the [d]efendants . . . had the right to
declare the default, cause notices of default to be issued or recorded, foreclose on
[p]laintiff’s interest in the . . . Property, or take possession . . . .” The complaint
accordingly alleged causes of action for: (1) wrongful foreclosure; (2) negligence; (3)
conversion; (4) racketeering; (5) fraud; and (6) unfair business practices under the UCL.

       2
        Although the complaint indicates BONY filed the unlawful detainer action and a
motion for summary judgment, it later states the court granted Bayview’s motion for
summary judgment. We assume this was an error and that the court granted BONY’s
motion for summary judgment.

                                                4
Defendants’ Demurrers
              In August 2019, defendants filed a demurrer. With respect to the wrongful
foreclosure claim, they argued plaintiff failed to allege a willfully oppressive fraudulent
sale, prejudice, or tender. As to the negligence claim, defendants claimed they did not
owe a duty of care to plaintiff because they merely “acted in their conventional role as a
lending institution.” They also argued plaintiff’s conversion claim failed because she
was not entitled to possession of the Property when she defaulted on her loan. With
respect to the racketeering cause of action, they argued plaintiff did not plead any of the
necessary elements to support the claim. They further claimed plaintiff did not meet the
heightened pleading standards required to maintain her fraud cause of action. Finally,
they argued the UCL claim failed because plaintiff could not establish her other causes of
action.
The Court’s Order and Judgment
              In December 2019, the court sustained defendants’ demurrer without leave
to amend. First, the court held the complaint failed to plead a wrongful foreclosure claim
because plaintiff did “not allege tender or grounds for excuse from tender.” The court
explained: “Where a borrower moves to set aside a trustee’s sale on the ground the sale
is voidable due to irregularities in the sale notice or procedure, the borrower must offer to
tender the full amount owed on the debt.” According to the court, plaintiff sought “to
overcome a voidable sale on equitable grounds” by “alleging the sale is invalid due to
defects in the foreclosure process.” Citing Javaheri v. JPMorgan Chase Bank, NA. (C.D.
Cal., Aug. 13, 2012, Civ. A. No. 2:10-CV-08185-ODW), 2012 WL 3426278, 2012 U.S.
Dist. LEXIS 114510, the court noted California courts “have consistently rejected
theories such as the one posited by [p]laintiff that [d]efendants no longer had any
authority to foreclose on the Property because the Note was sold to a securitized loan
trust.” The court accordingly found plaintiff was not excused from the obligation to

                                              5
tender. The court further held plaintiff did not allege facts to establish the foreclosure
was wrongful.
              Second, the court held the complaint failed to allege a negligence claim
because “banks generally do not owe such a duty [of care] to borrowers in an arm’s
length transaction such as a loan or loan modification.” To the extent plaintiff claimed
defendants committed negligence in 2009 in connection with the origination of the loan,
the court found the claim was time barred. Third, the court held the conversion claim
failed “because [plaintiff] allege[d] no facts that establish her right to possession of the
Property or the proceeds of the sale of the Property.”
              Fourth, the court found plaintiff failed to plead facts with sufficient
particularity showing defendants participated in specific racketeering activities included
in 18 U.S.C. § 1962 or a pattern of racketeering activity. Fifth, the court held plaintiff’s
fraud claim failed because she did not allege justifiable reliance. Although the complaint
alleged defendants created a fictitious loan number and wanted plaintiff to rely on their
representations that she needed to pay them, the court noted plaintiff did not believe
defendants and withheld money. Finally, the court found plaintiff’s UCL claim failed
because the complaint did not allege any “unfair, fraudulent, or unlawful conduct
prohibited by the UCL.” The court accordingly entered judgment in February 2020.
                                       DISCUSSION
Standard of Review
              “On appeal from a judgment after an order sustaining a demurrer, we
review the order de novo, exercising our independent judgment on whether the complaint
states a cause of action as a matter of law. [Citation.] We give the complaint a
reasonable interpretation, reading it as a whole and viewing its parts in context.
[Citation.] We deem all properly pleaded material facts as true. [Citation.] We must
also accept as true those facts that may be implied or inferred from those expressly
alleged.” (McMahon v. Craig (2009) 176 Cal.App.4th 1502, 1508-1509.)

                                               6
                 Not only does “‘the plaintiff ha[ve] the burden of showing that the facts
pleaded are sufficient to establish every element of the cause of action,’” but he or she
must also “‘overcome[e] all of the legal grounds on which the trial court sustained
the demurrer . . . .’” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481,
1490, italics added.) “The judgment must be affirmed ‘if any one of the several grounds
of demurrer is well taken.’” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)
          “While the decision to sustain . . . a demurrer is a legal ruling subject to de novo
review on appeal, the granting of leave to amend involves an exercise of the trial court’s
discretion.” (McMahon v. Craig, supra, 176 Cal.App.4th at p. 1509.) “The plaintiff
bears the burden of proving there is a reasonable possibility of amendment. [Citation.]
The plaintiff may make this showing for the first time on appeal. [Citations.] [¶] To
satisfy that burden on appeal, a plaintiff ‘must show in what manner he can amend his
complaint and how that amendment will change the legal effect of his pleading.’
[Citation.] The assertion of an abstract right to amend does not satisfy this burden.
[Citation.] The plaintiff must clearly and specifically set forth the ‘applicable substantive
law’ [citation] and the legal basis for amendment, i.e., the elements of the cause of action
and authority for it. Further, the plaintiff must set forth factual allegations that
sufficiently state all required elements of that cause of action. [Citations.] Allegations
must be factual and specific, not vague or conclusionary.” (Rakestraw v. California
Physicians’ Service (2000) 81 Cal.App.4th 39, 43-44.) If the plaintiff fails to meet his or
her burden, “there is no basis for finding the trial court abused its discretion . . . .” (Id. at
p. 44.)
Wrongful Foreclosure
                 “The basic elements of a tort cause of action for wrongful foreclosure track
the elements of an equitable cause of action to set aside a foreclosure sale. They are: ‘(1)
the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real
property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking

                                                 7
the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and
(3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor
tendered the amount of the secured indebtedness or was excused from tendering.’”
(Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408.) “[M]ere
technical violations of the foreclosure process will not give rise to a tort claim; the
foreclosure must have been entirely unauthorized on the facts of the case.” (Id. at p.
409.)
              Here, the gravamen of plaintiff’s claim is that defendants had no authority
to foreclose on the Property because the Note was previously sold to Fannie Mae.
Because defendants allegedly knew they had no such authority, the foreclosure actions
were fraudulent. But plaintiff cannot avoid her obligation to tender. As a general rule, a
homeowner in default must first tender payment of the obligation in full to achieve
standing to challenge nonjudicial foreclosure proceedings. (Lona v. Citibank, N.A.
(2011) 202 Cal.App.4th 89, 112 (Lona).) “‘The rationale behind the rule is that if [the
borrower] could not have redeemed the property had the sale procedures been proper, any
irregularities in the sale did not result in damages to the [borrower].’” (Ibid.) The tender
rules are strictly applied, and it is a debtor’s obligation to make an unambiguous tender of
the entire amount of the debt. (Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 439.)
              Recognized exceptions to the tender rule include when: (1) “the borrower’s
action attacks the validity of the underlying debt”; (2) a counterclaim offsets the amount
due; (3) “it would be inequitable to impose such a condition on the party challenging the
sale”; and (4) the trustee’s deed is void on its face. (Lona, supra, 202 Cal.App.4th at pp.
112-113.) Relying on the first and third exceptions, plaintiff claims she is exempt from
the tender requirements because defendants “are not the noteholder[s] and thus are owed
no debt” and application of the tender rule would be inequitable. But plaintiff does not
claim the Note or Deed of Trust evidencing the loan from Countrywide is void. At most,
she disputes defendants’ right to enforce them. The foreclosure process cannot be

                                              8
attacked based on irregularities unless tender is made. (Shuster v. BAC Home Loans
Servicing, LP (2012) 211 Cal.App.4th 505, 512.)
              Citing Lona, supra, 202 Cal.App.4th 89, plaintiff argues “the tender rule
cannot apply where the sale was, as here, void due to fraud and where the seller did not
have the right to sell.” But the facts in Lona are distinguishable from the instant case. In
Lona, the borrower sued the lender and others to set aside a trustee’s sale, claiming he
was a victim of predatory lending because he did not understand the loan documents he
signed. (Lona, at p. 95.) The borrower had an eighth-grade education from Mexico and
lacked fluency in English. (Id. at pp. 97, 99.) The trial court granted summary judgment
in favor of the lender on the ground that the borrower failed to tender the amounts due on
the loan. (Id. at pp. 95, 98-99.) The Court of Appeal reversed because the borrower was
attacking the validity of the underlying loan as unconscionable. (Id. at pp. 114-115.)
Unlike the borrower in Lona, plaintiff did not allege the documents underlying her loan
were illegal, invalid, or void. Lona accordingly fails to provide plaintiff any relief from
the tender rule.
              Plaintiff’s reliance on Dimock v. Emerald Properties (2000) 81 Cal.App.4th
868 (Dimock) is also misplaced. In Dimock, a new trustee replaced the former trustee
after a substitution of trustee was recorded, but the former trustee conducted the trustee’s
sale. (Dimock, at p. 874.) The Court of Appeal held the sale was “void as opposed to
merely voidable” because the former trustee had no power to convey the property. (Id. at
p. 876.)
              Relying on the void versus voidable distinction, plaintiff contends she was
not required to tender the amount of the debt because the allegedly fraudulent
assignments to Bank of America and then to BONY rendered the trustee’s sale void. But
“California’s statutory nonjudicial foreclosure scheme (§§ 2924-2924k) does not require
that the foreclosing party have a beneficial interest in or physical possession of the note.”
(Shuster v. BAC Home Loans Servicing, LP, supra, 211 Cal.App.4th at p. 511.) Plaintiff

                                              9
also has not alleged facts demonstrating the assignments affected the substituted trustee’s
(Seaside’s) authority to sell.
              In any event, plaintiff did not allege how the purportedly fraudulent
assignments caused harm to her because she does not allege the assignments interfered
with her ability to pay the loan or that Fannie Mae would have refrained from
foreclosure. (Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495,
1507-1508.) For the foregoing reasons, the court properly sustained the demurrer without
                  3
leave to amend.
Negligence
              “The elements of a cause of action for negligence are (1) a legal duty to use
reasonable care, (2) breach of that duty, and (3) proximate cause between the breach and
(4) the plaintiff’s injury.” (Mendoza v. City of Los Angeles (1998) 66 Cal.App.4th 1333,
1339.) “The existence of a duty of care owed by a defendant to a plaintiff is a
prerequisite to establishing a claim for negligence.” (Nymark v. Heart Fed. Savings &
Loan Assn. (1991) 231 Cal.App.3d 1089, 1095.)
              Plaintiff’s negligence claim fails for the absence of a legal duty of care. As
the court correctly noted, “banks generally do not owe . . . a duty [of] care to borrowers in
an arm’s length transaction such as a loan or loan modification.” (See also Ragland v.
U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 206 [“No fiduciary duty exists
between a borrower and lender in an arm’s length transaction.”].) “[A]s a general rule, a

       3
          Relying on the request for judicial notice submitted with their demurrer,
defendants note there is a “clear, concise chain of title” permitting defendants to initiate
foreclosure proceedings. They argue the recorded documents “stand in direct
contradiction to [plaintiff’s] whole case – this unsupported claim of the 2009 transfer to
Fannie Mae.” If true, we agree these documents would be inconsistent with the
complaint’s allegations and provide yet another reason as to why plaintiff fails to state a
wrongful foreclosure claim. But it is not clear that the court granted the request for
judicial notice or if other recorded documents contradict defendants’ assertion. We
accordingly do not rely on this argument.

                                             10
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., supra, 231
Cal.App.3d at p. 1096.)
              Plaintiff argues a relationship between her and defendants, sufficient to
create a duty of care, arose because defendants “converted [her] property to their own use
and thus a constructive trust has arisen.” Defendants accordingly had “a duty of care as a
constructive trustee . . . .” She claims “[t]he facts as alleged support a claim for breach of
that duty of care since [defendants] have sold on that property to a third party when they
had no lawful right to do so since they had no legitimate interest in the Subject Property.”
              But the complaint did not advance this constructive trustee theory. Instead,
the complaint alleged defendants “had a duty to exercise reasonable care and skill to
maintain proper and accurate records and to discharge and fulfill the other incidents
attendant to the maintenance, accounting and servicing of records, including, but not
limited to, disclosing to [p]laintiff any actions taken by them and refraining from taking
any action against the interests of the [p]laintiff that they did not have the legal authority
to take, and providing all relevant information regarding the [p]laintiff’s Note and Deed
of Trust . . . .” Because the complaint did not identify any special relationship between
plaintiff and defendants or allege defendants exceeded their conventional roles, the court
did not err by dismissing the negligence claim. Plaintiff’s conclusory assertion that “[t]he
complaint could be amended to more explicitly allege” defendants’ duty of care as
constructive trustees does not satisfy her burden of proving a reasonable possibility of
amendment.
Conversion
              “‘“‘Conversion is the wrongful exercise of dominion over the property of
another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to
possession of the property; (2) the defendant’s conversion by a wrongful act or

                                              11
disposition of property rights; and (3) damages.’”’” (Lee v. Hanley (2015) 61 Cal.4th
1225, 1240.) The complaint alleged “[d]efendants, by and through the acts alleged
herein, did and are currently exercising dominion and control over the property of
[p]laintiff in taking [p]laintiff’s property and proceeds from the sale of the same in the
amount of $997,500.” But the complaint did not allege facts supporting the first element
of a conversion claim – plaintiff’s right to possession of the Property or proceeds from
the sale. Instead, the complaint suggests plaintiff was in default by alleging she
“withheld money that otherwise would have gone towards the mortgage on her house.”
The court accordingly did not err by sustaining the demurrer.
Racketeering
               To state a civil claim under the Racketeer Influenced and Corrupt
Organizations Act (RICO), plaintiffs must allege: “(1) conduct; (2) of an enterprise; (3)
through a pattern; (4) of racketeering activity.” (Sedima, S.P.R.L. v. Imrex Co., Inc.
(1985) 473 U.S. 479, 496.) RICO’s racketeering activities are listed in section 1961,
subdivision (1) of title 18 of the United States Code, as conduct that violates specific
statutes. The list includes mail fraud, wire fraud, fraud on a financial institution, and
extortionate credit transactions (18 U.S.C. § 1961, subdivision (1).) “To establish a
pattern of racketeering activity, plaintiffs must allege at least two predicate acts that ‘“are
interrelated by distinguishing characteristics”‘ [citation] and ‘amount to or pose a threat
of continued criminal activity.’” (Charles J. Vacanti, M.D., Inc. v. State Comp. Ins.
Fund (2001) 24 Cal.4th 800, 826.) For a RICO claim based on fraud, the pleader must
“state the time, place, and specific content of the false representations as well as the
identities of the parties to the misrepresentation.” (Moore v. Kayport Package Exp., Inc.
(9th Cir. 1989) 885 F.2d 531, 541.)
               The complaint alleged defendants violated RICO by “[u]sing a fraudulent
loan number to obtain money and property in violation of 18 U.S. Code § 1029”;
“[d]evising and intending to defraud [p]laintiff out of her money and property, and for the

                                              12
purpose of executing this scheme, deposited multiple letters in a post office or authorized
depository for mail matter in violation of 18 U.S. Code § 1341”; (3) [d]evising and
intending to defraud [p]laintiff out of her money and property, transmitted or caused to be
transmitted by means of wire, radio or television communication in interstate commerce
writings, pictures and sounds for the purpose of executing such scheme in violation of 18
U.S. Code § 1343”; and (4) “[k]knowingly executing and attempting to execute a scheme
or artifice to obtain assets and security, while it was under the custody and control of a
financial institution, by means of false or fraudulent pretenses, representations and
promises in violation of 18 U.S. Code § 1344.”
              Plaintiff’s RICO claim fails because she failed to allege with specificity any
other particular borrower(s) who were defrauded or otherwise victimized by a statutory
predicate offense. She accordingly failed to properly allege a pattern of racketeering
activity. (Medallion Television Ent., Inc. v. SelecTV of California (9th Cir.1987) 833
F.2d 1360, 1365 [existence of “pattern of racketeering activity” depends on whether acts
are isolated or sporadic, as opposed to indicating a threat of continuing activity].)
              Federal cases also have held foreclosure proceedings do not support RICO
claims. “Plaintiff’s RICO claim appears to be nothing more than conclusory allegations
punctuated by threadbare recitals of the elements of a RICO cause of action. Plaintiff’s
attempt to cast a straightforward foreclosure proceeding as a pattern of racketeering
activity is simply improper.” (Zacharias v. JP Morgan Chase Bank, N.A. (N.D.Cal. No.
12–06525 SC, Feb. 13, 2013) 2013 WL 588757 at *3.) “[B]ecause the alleged damages
arise from plaintiffs’ conduct (failure to stay current on their loan payments), rather than
from any action by defendants, plaintiffs cannot state a viable RICO claim.” (Rivac v.
Ndex W. LLC (N.D.Cal. No. C 13–1417 PJH, July 10, 2013) 2013 WL 3476659 at *8.)
“The activity underlying plaintiff’s claims was a simple loan transaction and foreclosure
under a deed of trust. This is not the kind of unlawful activity contemplated by the Civil

                                             13
RICO Act.” (Johnson v. Wachovia Bank FSB (E.D.Cal. No. 10–2839 GEB, Sept. 17,
2012) 2012 WL 4092426 at *3, fn. 2.)
               With respect to the possibility of amendment, plaintiff generally claims
“funds unlawfully obtained were . . . used to engage in the [defendants’] business – the
provision of loans to their customers throughout the United States, a fact of which this
Court could take judicial notice.” She contends she could have amended “[i]f the [court]
needed further amplification.” This vague and conclusory allegation does not satisfy
plaintiff’s burden of proving a reasonable possibility of amendment. The court
accordingly did not err by sustaining defendants’ demurrer to plaintiff’s RICO claim.
Fraud
               To state a fraud cause of action, a plaintiff must allege “(1) a
misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of
falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance;
and (5) resulting damage.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34
Cal.4th 979, 990.) Fraud must be pleaded with particularity. (Small v. Fritz Companies,
Inc. (2003) 30 Cal.4th 167, 184.) This means the complaint must include specific facts
showing “‘“how, when, where, to whom, and by what means the representations were”’”
made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) In a cause of action made
against a corporation, the complaint must also state the names of the people who
allegedly made the misrepresentations, their authority to act on behalf of the corporation,
to whom the people spoke, the statements made, and the dates of the statements. (Ibid.)
               In addition to the purportedly “fraudulent” assignments to Bank of America
and BONY, the complaint alleged defendants used a “counterfeit” Note that “included a
handwritten fictitious loan number, and was not certified or notarized and did not contain
‘certification’ stamps from any escrow company on any page, including the signature
page, which was endorsed in blank with an undated, stamped signature ostensibly of
David A. Spector, as Managing Director for Countrywide Home Loans, Inc.” According

                                                14
to the complaint, Spector was not employed by defendants on the date of the signature.
Among other things, the complaint further alleged defendants omitted to state that they
did not have authority to foreclose on the Property or that the Note was sold to Fannie
Mae in 2009.
               Despite these allegations, the court correctly held the complaint failed to
adequately plead justifiable reliance. The complaint merely alleged “[p]laintiff relied on
their representation that this was the loan number they sought to collect under, and
withheld money that otherwise would have gone towards the mortgage on her house.” In
other words, plaintiff apparently failed to pay her mortgage because she thought she was
being defrauded. If true, this cannot constitute justifiable reliance because plaintiff
withheld money and did not rely on defendants’ purported misrepresentations to induce
payment to them.
               Plaintiff claims she “‘had no reason to suspect wrongdoing until she was
informed of the fraud by her counsel during the unlawful detainer action filed against her
after foreclosure by’ defendants.” She contends she “could have amended the
[c]omplaint to add these facts.” But even if these facts were fleshed out in a fifth
amended complaint, they would not address the issue of justifiable reliance. The court
accordingly did not err by sustaining the demurrer without leave to amend.
Unfair Competition Law
               Section 17200 prohibits unfair competition, including “any unlawful, unfair
or fraudulent business act or practice . . . .” “By proscribing ‘any unlawful’ business act
or practice [citation], the UCL ‘“borrows”‘ rules set out in other laws and makes
violations of those rules independently actionable. [Citation.] However, a practice may
violate the UCL even if it is not prohibited by another statute. Unfair and fraudulent
practices are alternate grounds for relief.” (Zhang v. Superior Court (2013) 57 Cal.4th
364, 370.)

                                             15
              Here, plaintiff premises her UCL claim on her other causes of action.
Because she had not met the pleading requirements for those claims, the court properly
sustained defendants’ demurrer to the UCL cause of action. (Smith v. State Mutual
                                                       4
Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 718.)
                                     DISPOSITION
              The judgment is affirmed. Defendants shall recover their costs on appeal.

                                                 THOMPSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

FYBEL, J.

       4
          In addition to attacking the substance of the complaint, defendants argue most of
plaintiff’s claims are time-barred. They contend the “causes of action for negligence,
racketeering, fraud, and violations of [section 17200] all accrued in 2009 when (based on
[plaintiff’s] allegations) Countrywide sold the loan trust containing her loan to Fannie
Mae.” Because plaintiff filed the instant action in 2017, defendants argue her claims are
time-barred but do not identify the specific limitation periods. They also suggest the
court agreed and found five of the six causes of action were time-barred, but the court’s
order only addresses the statute of limitations with respect to the negligence claim.
Because we affirm on the merits, we need not address the issue.

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