Court Opinion

ID: 4036692
Source: CourtListenerOpinion
Date Created: 2016-09-23 19:03:16.229857+00
Date Added: 2024-06-11T14:49:55.516741
License: Public Domain

Filed 9/23/16 Gomez v. Bank of America CA2/4
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                 DIVISION FOUR

MARIA DE LOS ANGELES AURORA                                             B261092
GOMEZ et al.,
                                                                        (Los Angeles County
         Plaintiffs and Appellants,                                     Super. Ct. No. BC533686)

         v.

BANK OF AMERICA, N.A., et al.,

         Defendants and Respondents.

         APPEAL from a judgment of the Superior Court of Los Angeles County, Holly E.
Kendig, Judge. Affirmed in part, reversed in part.
         Thomas K. Bourke for Plaintiffs and Appellants.
         Reed Smith, Peter J. Kennedy, Mathew Wrenshall, Dennis Peter Maio and Paul D.
Fogel, for Defendants and Respondents.
                                   INTRODUCTION

       Plaintiffs and appellants are 19 individuals who invested and lost money in a
Ponzi scheme created by disgraced mortgage broker Kaveh Vahedi. About half of them
secured the funds to invest in the Ponzi scheme by taking out mortgage loans from
Countrywide Bank, FSB and Countrywide Home Loans, Inc., brokered by Vahedi.
Plaintiffs sued defendants and respondents Bank of America, N.A., as successor in
interest, Countrywide Bank, FSB, and Countrywide Home Loans, Inc., (collectively,
defendants1), alleging that defendants and Vahedi engaged in a “two-prong” conspiracy:
assisting Vahedi in his Ponzi scheme and placing plaintiffs into fraudulent mortgage
loans they could not afford, resulting in substantial losses once the scheme collapsed and
Vahedi ceased covering payments on the unfavorable loans. The trial court twice
sustained defendants’ demurrers on multiple grounds, ultimately denying leave to amend
as to all claims. Plaintiffs appeal the dismissal of their complaint. We affirm in part and
reverse in part.
                      FACTUAL AND PROCEDURAL HISTORY
I.     Factual Allegations
       The following facts are alleged in plaintiffs’ first and second amended complaints.
Countrywide Home Loans, Inc. (CHL) originated residential home mortgage loans.
Countrywide Bank, FSB (Countrywide Bank) was a “federally-chartered, savings bank”
that funded loans originated by CHL. In 2008, Bank of America “merged” with both
Countrywide Bank and CHL, “acquiring substantially all of their assets,” and therefore is
their successor in liability.
       CHL operated by using a “nationwide network of over 30,000 mortgage brokers.”
CHL purportedly controlled these brokers through “at-will Wholesale Broker
Agreements” and marketed the brokers to loan applicants and borrowers as “carefully
screened” business partners. One of CHL’s “business partners” was Vahedi, who

       Plaintiffs also sued several individuals, Vahedi’s family members and
       1

employees, none of whom are parties to this appeal. Therefore, we refer to the entity
defendants collectively as “defendants” herein.
                                             2
performed mortgage broker services through his corporation, KGV Investments, Inc.
(KGV). KGV also used the name “Countywide Financial,” which plaintiffs allege
Vahedi deliberately chose to suggest an affiliation with the Countrywide entities. Vahedi
was licensed as a real estate broker in 1995, but his license expired in March of 1999.
However, he continued to work with CHL as a mortgage broker until August 2009.
       Plaintiffs allege that defendants and Vahedi conspired to “take advantage” of
“unsophisticated consumers” through a scheme involving “two interrelated and
inextricably intertwined aspects . . . : (1) a mortgage-fraud aspect, and (2) a Ponzi-loan
aspect.” The scheme involved a three-step process. First, Vahedi would “seduce and
charm his victims,” many of whom were longtime friends or clients, through exorbitant
displays of wealth2 and claims of his business prowess and “ability to get large loans,
primarily from Countrywide.” Next, in the Ponzi-loan portion of the scheme, he would
offer his victims a “lucrative, but highly confidential deal” whereby they would invest in
Vahedi’s various businesses around the world. Vahedi told plaintiffs these investments
were “risk-free” and that he would guarantee the repayment of their principal, payable at
any time upon demand, as well as an additional return, paid in monthly installments.
       Finally, Vahedi “would arrange for Plaintiffs to raise the money to invest by
taking out cash-out Home Equity Loans of Credit (HELOCs) on their homes.” During
the loan application process, Vahedi and other KGV employees would inflate income,
asset, and employment information without plaintiffs’ knowledge, in order to obtain the
largest possible loan amount. Vahedi promised plaintiffs that the large monthly mortgage
loan payments would be amply covered by the returns on their investments with him.
       In all, between 2005 and 2008, defendants funded “loans with over $6 million of
cash-out proceeds to Ponzi-loan victims,” including 10 of the plaintiffs here. The
remaining plaintiffs, using other sources of funding, also loaned millions of dollars to
Vahedi as part of his Ponzi scheme. Vahedi kept the scheme afloat through 2008 by

       2
         Plaintiffs allege Vahedi’s wealth came in part from commissions he had made on
earlier mortgage loans and in part from the proceeds of loans in the early part of the
Ponzi scheme.
                                             3
making many payments to Ponzi investors and by sending “lulling emails” with various
excuses for nonpayment. In the fall of 2008, “when Vahedi’s scheme began to implode,
he fabricated a phony IRS letter” to explain why his payments had stopped. The letter
stated that over $500 million of his assets was frozen in Switzerland as a result of an IRS
investigation into a multi-million dollar business deal.
       In November 2012, Vahedi pled guilty in federal court to bank fraud and other
felonies, admitting to knowingly making “false statements on at least 250 loan
applications” submitted to defendants and other lenders and to defrauding over 30
“investor victims” out of more than $8 million in Ponzi loans. In December 2013,
Vahedi was sentenced to 18 years in prison.
       Plaintiffs alleged that defendants played a role in the Vahedi scheme by “turn[ing]
a blind eye” to over 250 fraudulent mortgage loan applications submitted by KGV and
Vahedi between 1999 and 2008, and further failing to follow proper underwriting
procedures, such as checking fraud reports, confirming the status of Vahedi’s broker
license, and verifying borrower documentation, all of which allowed Vahedi to continue
his misconduct unabated. Defendants also promoted and “vouched” for Vahedi and
KVG as a trusted “business partner,” a relationship plaintiffs allege they relied on when
deciding to invest with Vahedi.
       As a result of the scheme, plaintiffs lost millions of dollars in Ponzi loans that
Vahedi never repaid. In addition, many plaintiffs were saddled with loans they could not
afford and could not refinance due to the fabricated information on their original
applications.
II.    Federal Action
       In October 2012, 17 of the same plaintiffs filed a federal lawsuit against
defendants and others, asserting both federal and state claims arising out of Vahedi’s
mortgage loan and Ponzi scheme. Following a motion to dismiss, an amended complaint,
and a second motion to dismiss, the district court dismissed the federal claims with
prejudice and declined to exercise supplemental jurisdiction over the state claims. The

                                              4
Ninth Circuit affirmed that decision in March 2016. (Gomez v. Bank of Am., No. 14-
55129, 2016 WL 807367 (Mar. 2, 2016).
III.   State Action
       Plaintiffs filed the instant action in Los Angeles County Superior Court on January
17, 2014. To remedy a “technical problem,” they filed a first amended complaint (FAC)
a few days later. Therein, 10 plaintiffs (the borrower plaintiffs) alleged that they had
obtained mortgages from Countrywide and used proceeds from those loans to invest with
Vahedi—Maria and Elias Gomez, Vachik Alvandi, Evelin Raft, Robert and Heather
Ferguson, Douglas and Sharon Marks, and Roberta and Ronald Barteck.3 The remaining
nine plaintiffs (the non-borrower plaintiffs) invested with Vahedi using other funding
sources—Fred Shokoufi, Leesha Keller, Tadeh and Idet Keshmeshian, Celaris Zadorian,
Herayr Zahrabi, Sharon and Shelley Reuveni, and David Valentino.4
       The FAC alleged nine causes of action against defendants and several individuals:
(1) fraud, (2) unfair business practices and false advertising, (3) breach of fiduciary duty,
(4) negligence, (5) negligent misrepresentation, (6) elder and dependent adult abuse, (7) a
claim asserting violation of “property and privacy” rights under the California
Constitution, (8) identity theft, and (9) breach of contract.
       Defendants demurred to the FAC. Defendants argued that plaintiffs failed to
allege facts sufficient to establish liability or causation by defendants. They further
asserted that plaintiffs’ claims were barred by the applicable statutes of limitations and
that each cause of action failed to state a claim. Plaintiffs opposed, pointing in particular
to their allegations regarding defendants’ statements about KGV and Vahedi as trusted
“business partners,” defendants’ failure to monitor Vahedi’s conduct or catch numerous

       3
          As discussed further below, although the Bartecks have been consistently
included by both parties in the group of borrower plaintiffs, they allege that they obtained
a mortgage loan from defendants brokered by Vahedi, but used other funds for their
investment in Vahedi’s Ponzi scheme.
        4
          Although the allegations in the FAC are inconsistent on this point, it appears that
Keller and Shokoufi applied for Countrywide loans, but ultimately did not obtain them.
Thus, both parties and the trial court included them in the group of non-borrower
plaintiffs.
                                              5
“red flags” in the mortgage loan documents, and defendants’ purported activity that
removed them from the role of a traditional lender and increased the duties they owed to
plaintiffs. Both parties sought judicial notice of materials including Vahedi’s criminal
plea agreement, the federal court’s rulings dismissing the federal complaint, and other
trial court rulings on separate lawsuits brought by other Vahedi investors.
       The trial court sustained the demurrer, finding that the plaintiffs failed to allege
sufficient facts to establish liability by defendants based on theories of conspiracy or
agency, failed to establish causation, and failed to adequately allege facts that would toll
the statutes of limitations. The court further found that each of plaintiffs’ causes of action
was inadequately pled. Plaintiffs were granted leave to amend as to the borrower
plaintiffs only. As to the non-borrower plaintiffs, the court found that they “failed to
make any showing that they could cure” the defects in the FAC.
       The borrower plaintiffs filed a second amended complaint (SAC) in September
2014, omitting the claims for constitutional violations and identity theft, and reasserting
the remaining seven claims. The SAC encompassed more than 200 pages, including a 66
page appendix providing “additional factual detail as to who, what, when, where, and
how of the fraud, breach of fiduciary duty, conspiracy, and aiding and abetting.”5
       Defendants again demurred. The trial court sustained the demurrer, this time
without leave to amend as to all remaining claims. The court found that “neither the
pleading nor the arguments for and against the demurrer have changed” and therefore
“essentially the same problems” were present in the SAC. In particular, the court
concluded that “plaintiffs fail to allege that anything Countrywide did caused their
damages from Vahedi’s Ponzi scheme, and fail to adequately allege facts that would
make Countrywide liable under agency, aiding and abetting, and conspiracy theories.”

       5
          Oddly, despite the considerable length of the SAC, only the “appendix” contains
the allegations with the necessary factual detail to support plaintiffs’ claims. The SAC
itself is a jumble of conclusory allegations, frequently repeated, and page after page of
improper legal argument. Particularly given the repetition and extraneous matter, the size
of this pleading is unnecessary and increases the burden on opposing counsel and the
court.
                                              6
As to the statutes of limitations, the court rejected plaintiffs’ argument that they were
entitled to tolling based on delayed discovery, as the SAC lacked any facts
demonstrating “when any particular plaintiff discovered his or her injury, or why or how
that plaintiff was unable to discover that the loan payments were unaffordable, or the
fraud associated with Vahedi’s Ponzi scheme, earlier (that is, when loan repayment began
in 2008 or when Vahedi stopped making payments on the Ponzi scheme between
9/14/2008 and 1/16/2009).” The court further sustained the demurrer as to each cause of
action.
          The court entered a judgment of dismissal in favor of defendants and against all
plaintiffs. Plaintiffs timely appealed.
                                          DISCUSSION
I.        Standard of Review
          We independently review the trial court’s ruling sustaining a demurrer to
determine de novo whether the complaint alleges facts sufficient to state a cause of
action. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) We “give the
complaint a reasonable interpretation, reading it as a whole and its parts in their context.
[Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded,
but do not assume the truth of contentions, deductions or conclusions of law.
[Citations.]” (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) We also
consider judicially noticed matters in determining whether the complaint states facts
sufficient to constitute a cause of action. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
“The judgment must be affirmed ‘if any one of the several grounds of demurrer is well
taken. [Citations.]’ [Citation.] However, it is error for a trial court to sustain a demurrer
when the plaintiff has stated a cause of action under any possible legal theory.
[Citation.]” (Aubry v. Tri–City Hospital Dist. (1992) 2 Cal.4th 962, 966–967.)
          We review an order denying leave to amend by determining “whether there is a
reasonable possibility that the defect can be cured by amendment: if it can be, the trial
court has abused its discretion and we reverse; if not, there has been no abuse of

                                               7
discretion and we affirm. [Citations.] The burden of proving such reasonable possibility
is squarely on the plaintiff.” (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)
II.    Defendants’ Liability
       Vahedi was undisputedly the central actor in the schemes that injured plaintiffs.
As a result, plaintiffs’ claims are largely premised on holding defendants vicariously
liable for Vahedi’s conduct based on theories of conspiracy, partnership/agency, and
aiding and abetting. The trial court rejected all of these theories as to all plaintiffs and
further found that the SAC did not adequately allege causation. We disagree in part.
Assuming the truth of plaintiffs’ allegations, as we must at this stage, we conclude that
the borrower plaintiffs have adequately alleged agency liability as well as causation in the
SAC. On the other hand, the non-borrower plaintiffs, who proceed only under a
conspiracy theory, have not alleged any facts in the FAC (the operative pleading as to
them) connecting defendants’ conduct to their claims. We therefore affirm the trial
court’s order sustaining the demurrer to the FAC as to the non-borrower plaintiffs in its
entirety.
       A.     Conspiracy
       The FAC and SAC are replete with references to a conspiracy between defendants
and Vahedi to “target[] unsophisticated consumers for financial gain by fraudulent
means,” specifically, through the “interrelated and inextricably intertwined” mortgage
loan and Ponzi loan aspects of Vahedi’s scheme. To adequately allege civil conspiracy, a
complaint must state: (1) the formation and operation of the conspiracy; (2) the wrongful
act or acts done pursuant thereto; and (3) the resulting damage. (Wise v. Southern Pacific
Co. (1963) 223 Cal.App.2d 50, 64-65, disapproved on other grounds by Applied
Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.) Civil
conspiracy is not an independent tort; rather, it is a “legal doctrine that imposes liability
on persons who, although not actually committing a tort themselves, share with the
immediate tortfeasors a common plan or design in its perpetration. [Citation.]” Thus,
proof of a conspiratorial agreement requires proof of “knowledge on the part of the
alleged conspirators of its unlawful objective and their intent to aid in achieving that

                                               8
objective.” (Schick v. Lerner (1987) 193 Cal.App.3d 1321, 1327; see also Michael R. v.
Jeffrey B. (1984) 158 Cal.App.3d 1059, 1069 [“mere knowledge, acquiescence, or
approval of an act, without cooperation or agreement to cooperate is insufficient to
establish liability”]; Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 784-786 (Wyatt)
[conspiracy requires agreement to commit tortious scheme and “knowledge of its
unlawful purpose”].)
       While knowledge and intent ‘“‘may be inferred from the nature of the acts done,
the relation of the parties, the interest of the alleged conspirators, and other
circumstances’”’ (Wyatt, supra, 24 Cal.3d at p. 785), “‘[c]onspiracies cannot be
established by suspicions. . . . Mere association does not make a conspiracy.’” (Davis v.
Superior Court (1959) 175 Cal.App.2d 8, 23.) Rather, a plaintiff pleading conspiracy
must allege facts showing “some participation or interest in the commission of the
offense.” (Ibid.)
       Plaintiffs here do not allege facts demonstrating defendants’ knowledge of, or
intent to aid in, Vahedi’s Ponzi scheme to steal large amounts of money from his
investors. Indeed, while they argue that defendants benefited from the scheme with
respect to the borrower plaintiffs—because Vahedi used some of the proceeds to make
early loan payments and because the loans generated commissions and fees—they do not
attempt to explain how or why defendants would become involved in such a scheme with
respect to non-borrowers. Instead, plaintiffs claim that defendants “probably” knew of
Vahedi’s scheme and turned a blind eye toward his conduct. But the factual allegations
in the SAC regarding defendants’ knowledge and implied agreement relate, at best, to
Vahedi’s submission of fraudulent mortgage applications. The SAC does not allege facts
supporting the purported overarching conspiracy to take those loan proceeds from the
borrower plaintiffs and use them to invest in Vahedi’s Ponzi scheme. The allegations in
the FAC are deficient for the same reasons as to the non-borrower plaintiffs.
       The inability to sufficiently plead conspiracy is fatal to the claims alleged by the
non-borrower plaintiffs. Plaintiffs’ counsel acknowledged during argument on the
demurrer to the FAC that the non-borrower plaintiffs were proceeding only on a

                                               9
conspiracy theory. Counsel’s concession underscores the gap between defendants’
alleged conduct and the non-borrower plaintiffs. Without the portion of the scheme
related to mortgage loan fraud, these plaintiffs allege no basis to connect defendants to
their injuries from Vahedi’s Ponzi scheme.6 Therefore, we conclude none of the
plaintiffs have sufficiently alleged a conspiracy between defendants and Vahedi as a basis
for their claims. With respect to the non-borrower plaintiffs, we affirm the trial court’s
judgment in favor of defendants on this ground.
       B.     Agency
       Plaintiffs assert several arguments regarding the nature of the relationship between
defendant and Vahedi, including actual and ostensible agency and partnership. Plaintiffs

       6
         At oral argument, plaintiffs’ counsel claimed that the non-borrower plaintiffs’
claims were also viable under an aiding and abetting theory. But the infirmities in
plaintiffs’ allegations regarding defendants’ knowledge and participation apply here as
well. (See, e.g., Fiol v. Doellstedt (1996) 50 Cal.App.4th 1318, 1325-1326 [aiding and
abetting liability requires actual knowledge and substantial assistance in the tortious
activity].) Further, we are not persuaded by the four federal cases plaintiffs’ cite, all of
which allowed aiding and abetting allegations to proceed, but under distinguishable
factual circumstances. (See Arreola v. Bank of America, Nat. Ass'n (C.D.Cal. Oct. 5,
2012, No. CV 11-06237) 2012 WL 4757904, at *1 [bank manager admitted accepting
bribes to facilitate Ponzi scheme and bank provided “suspicious” services to fraudster,
including wiring large sums of money to his personal accounts in Mexico]; Benson v.
JPMorgan Chase Bank, N.A. (N.D.Cal. April 15, 2010, Nos. C-09-5292, C-09-5560)
2010 WL 1526394, at *3-4 [alleging bank’s knowledge where face of investor’s checks
demonstrated fraud, investor funds commingled and wired to offshore bank accounts];
Gonzales v. Lloyds TSB Bank, PLC (C.D.Cal. 2006) 532 F.Supp.2d 1200, 1204, 1207
[bank knew of commingling of investors’ funds and the moving of millions of dollars
into and out of the fraudster’s accounts, and bank’s senior manager acknowledged he was
“nervous” but continued to assist in fraud]; Neilson v. Union Bank of California, N.A.
(C.D.Cal. 2003) 290 F.Supp.2d 1101, 1120 [allowing claim for aiding and abetting where
complaint alleged bank actively participated in Ponzi scheme with actual knowledge of
crimes, including by transferring money from investors’ accounts into Ponzi account and
“utiliz[ing] atypical banking procedures” to service fraudster’s account].) In particular,
we note that the discussion of “atypical” banking procedures in Neilson, upon which
plaintiffs rely, involves procedures by the defendant bank that were different than those
the bank concurrently used with other customers. (See Neilson, supra, 290 F.Supp.2d at
p. 1120.) Here, on the other hand, plaintiffs allege defendants’ procedures were
“atypical” in that they were not those of a “traditional” lender.
                                             10
acknowledge that ordinarily, a mortgage broker acts as the agent for the borrower, not the
lender. (See, e.g., Wyatt, supra, 24 Cal.3d at p. 782 [“A mortgage loan broker is
customarily retained by a borrower to act as the borrower’s agent in negotiating an
acceptable loan.”].) However, they contend that on these facts Vahedi was acting as a
dual agent for both plaintiff borrowers and defendants. Because we conclude that
plaintiffs have sufficiently alleged facts supporting ostensible agency, we need not reach
the remaining alternative arguments. (See Aubry v. Tri–City Hospital Dist., supra, 2
Cal.4th at pp. 966–967 [error to sustain demurrer when plaintiff has stated a cause of
action under any possible legal theory].)
       “An agent is one who represents another, called the principal, in dealings with
third persons.” (Civ. Code, § 2295.) “‘In California agency is either actual or ostensible.
(Civ. Code, § 2298.) An agency is actual when the agent is really employed by the
principal. (Civ. Code, § 2299.) An agency is ostensible when a principal causes a third
person to believe another to be his agent, who is really not employed by him. (Civ. Code,
§ 2300.) [¶] An agent has the authority that the principal, actually or ostensibly, confers
upon him. (Civ. Code, § 2315.). . . . Ostensible authority . . . is the authority of the agent
which the principal causes or allows a third person to believe that the agent possesses.
(Civ. Code, § 2317.)’ [Citation.]” (J.L. v. Children’s Institute, Inc. (2009) 177
Cal.App.4th 388, 403.) Recovery against the principal for the acts of an ostensible agent
requires proof of three elements: “The person dealing with an agent must do so with a
reasonable belief in the agent’s authority, such belief must be generated by some act or
neglect by the principal sought to be charged and the person relying on the agent’s
apparent authority must not be negligent in holding that belief. [Citations.]” (Id. at pp.
403-404.) “Ostensible agency cannot be established by the representations or conduct of
the purported agent; the statements or acts of the principal must be such as to cause the
belief the agency exists. [Citations.]” (Id. at p. 404.) “‘Liability of the principal for the
acts of an ostensible agent rests on the doctrine of “estoppel,” the essential elements of
which are representations made by the principal, justifiable reliance by a third party, and
a change of position from such reliance resulting in injury. [Citation.]’ [Citation.]”

                                              11
(Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal.App.4th 741, 747
(Kaplan).)
       Whether ostensible agency exists “‘. . . is a question of fact . . . and may be
implied from circumstances. [Citations.]’” (Kaplan, supra, 59 Cal.App.4th at p. 748.)
In Kaplan, for example, the plaintiff filed an action for real estate fraud against his
broker, who independently owned and operated a Coldwell Banker franchise. (Id. at
p. 743.) Pursuant to the requirements of the franchise agreement, the broker included in
his advertising a disclaimer that his franchise was independently owned and operated, but
in much smaller print than he used in other parts of the document that touted his
relationship with Coldwell Banker. (Id. at p. 744.) In opposing summary judgment, the
plaintiff presented evidence that he “‘went for the sign,’ did not notice the disclaimer
language, and trusted Coldwell Banker, a large reputable company with a national
existence.” (Ibid.) The court of appeal found that a triable issue as to ostensible agency
precluded summary judgment. While Coldwell Banker “made no specific representations
to appellant personally,” it did, however, “make representations to the public in general
upon which appellant relied,” such as that it “‘stood behind’” the broker’s company. (Id.
at p. 747.) Moreover, the broker’s approved use of the venerable Coldwell Banker name
and logo, the advertising campaign, and description of the franchise as a “member”
caused plaintiff to belief he was dealing with the broker as Coldwell Banker’s agent, and
raised a factual issue as to whether an “ordinary reasonable person” might rely on the
same belief. (Kaplan, supra, at p. 748.)
       Similarly, here, plaintiffs allege that materials mailed by defendants to borrowers
touted KGV as its “carefully selected” and “carefully screened” “business partner” and
referred further questions regarding the loan application to “KGV Investments Inc. dba
Countywide Financial.” These materials also urged plaintiffs not to opt out of sharing
their personal information with these “carefully screened business partners,” so that
Countrywide could provide plaintiffs with “valuable product and service offerings” from
those partners to “help you accomplish your homeownership and other financial goals.”
Plaintiffs further allege that defendants knew of, and tacitly approved Vahedi’s continued

                                              12
use of the name “Countywide Financial,” which furthered the association between
Vahedi and the Countrywide brand. These allegations are sufficient to establish
ostensible agency at the pleading stage. Defendants assert that plaintiffs’ reliance on
such statements was unreasonable and that the Ponzi scheme was outside the scope of
any ostensible agency. While we recognize the problems articulated by defendants, they
concern matters of evidentiary proof that cannot be resolved as a matter of law. Thus, we
conclude plaintiffs have alleged sufficient factual detail in the SAC to plead Vahedi’s
ostensible agency.
       C.     Causation
       In their challenge to plaintiffs’ ability to establish causation for their claims,
defendants argue that plaintiffs’ injuries were caused by their decision to invest in
Vahedi’s Ponzi scheme and that no conduct by defendants had a material effect on that
decision. While acknowledging that causation is “typically a fact question,” defendants
suggest we may reach it here because the alleged facts “permit only one reasonable
conclusion.” (Milligan v. Golden Gate Bridge Highway and Transp. Dist. (2004) 120
Cal.App.4th 1, 9.) We disagree.
       It is true that plaintiffs may face difficulty proving that any conduct by defendants
caused their injuries, particularly given the apparent timing of the “business partner”
letters after at least some plaintiffs already had decided to invest and in light of the
extraordinary efforts Vahedi made to groom his victims and convince them of his wealth
and his good intentions. However, the borrower plaintiffs have alleged harm through
both mortgage fraud and the Ponzi scheme, and contend that conduct by defendants—
both in promoting Vahedi and in failing to follow proper procedures to supervise both
Vahedi and the loan underwriting process—was a substantial factor in causing their
injuries. These allegations are sufficiently pled to overcome demurrer on this issue.
III.   Statute of Limitations
       The trial court also sustained defendants’ demurrers on the grounds that plaintiffs’
claims were barred by the applicable statutes of limitations. The statutes of limitations
for this case range from two to four years. (See Code Civ. Proc. §§ 337 [breach of

                                              13
written contract, four years]7, 338, subd. (a) [unfair business practices pursuant to False
Advertising Law, three years], 338, subd. (d) [fraud, three years]; Bus. & Prof. Code §
17208 [unfair business practices pursuant to Unfair Competition Law, four years];
Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606-607 [fraudulent breach of fiduciary
duty, three years; non-fraudulent breach of fiduciary duty, four years under § 343];
Ventura Cty. Nat’l Bank v. Macker (1996) 49 Cal.App.4th 1528, 1529-1531 [negligence
and negligent misrepresentation, two years]; Welf. & Inst. Code § 15657.8 [financial
abuse of elder or dependent adult, four years].)
       The starting point for the running of a limitations period is the date of the “accrual
of the cause of action.” (Fox v. Ethicon Endo–Surgery, Inc. (2005) 35 Cal.4th 797, 806
(Fox).) As a general rule, the accrual date of a cause of action is “‘when the cause of
action is complete with all of its elements.’” (Ibid.) Plaintiffs do not dispute that they
had incurred injuries as of 2008—at that point, all of them had made their investments in
Vahedi’s Ponzi scheme, and the mortgage loans issued to the borrower plaintiffs had
closed. But they argue that their claims did not accrue until much later based on delayed
discovery. They also assert fraudulent concealment by defendants, class action tolling
and tolling under the last overt act doctrine, each discussed below, as bases for tolling the
statute of limitations. In addition, although plaintiffs did not file their state complaint
until 2014, they argue that the applicable filing date for statute of limitations purposes is
October 10, 2012, the date they filed their federal lawsuit. Defendants do not dispute the
application of this date. The trial court did not find that plaintiffs’ claims against
defendants were tolled based on the federal lawsuit, but did so with respect to individual
defendant John Park, with no explanation as to this discrepancy. We agree that the
limitations period is subject to equitable tolling where, as here, “‘an injured person has
several legal remedies and, reasonably and in good faith, pursues one.’ [Citation.]”
(McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 100; see
also Addison v. State of Calif. (1978) 21 Cal.3d 313, 319.) Thus, for the plaintiffs who

       7
        All further statutory references are to the Code of Civil Procedure unless stated
otherwise.
                                              14
first pursued their claims against defendants in federal court,8 the statutes of limitations
are tolled during the pendency of that action, beginning October 10, 2012.
       A.       Delayed Discovery/Fraudulent Concealment
       Although their claims would have otherwise accrued in 2008 or earlier, plaintiffs
contend they did not discover them until 2012, and therefore invoke the rule of delayed
discovery to avoid the limitations bar. “An important exception to the general rule of
accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the
plaintiff discovers, or has reason to discover, the cause of action. [Citation.]” (Fox,
supra, 35 Cal.4th at p. 807.) “A plaintiff has reason to discover a cause of action when
he or she ‘has reason at least to suspect a factual basis for its elements.’ [Citations.]”
(Ibid.; see also Gutierrez v. Mofid (1985) 39 Cal.3d 892, 897 [“the uniform California
rule is that a limitations period dependent on discovery of the cause of action begins to
run no later than the time the plaintiff learns, or should have learned, the facts essential to
his claim”].)
       In order to rely on the discovery rule, “‘[a] plaintiff whose complaint shows on its
face that his claim would be barred without the benefit of the discovery rule must
specifically plead facts to show (1) the time and manner of discovery and (2) the inability
to have made earlier discovery despite reasonable diligence.’ [Citation.]” (Fox, supra,
35 Cal.4th at p. 808.) In assessing allegations of delayed discovery, the court places the
burden on plaintiff to allege facts showing diligence; conclusory allegations will not
withstand demurrer. (Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 638.)
       By their allegations in the SAC, plaintiffs admit—some expressly, some
implicitly—that Vahedi’s Ponzi scheme began to implode in late 2008, that Vahedi
continued to make some months of payments on their investments but stopped no later
than early 2009, and that he also sent “lulling” emails with explanations for nonpayment
that ended in early to mid-2009. They also acknowledge that some of the Ponzi victims
realized the fraudulent nature of the scheme within a few months after the payments

       8
         This tolling does not apply to the Fergusons, the only plaintiffs here who were
not also parties to the federal lawsuit.
                                              15
ended. For example, the Gomezes allege that Vahedi made “all his payments as
promised” on their Ponzi loan until late 2008. They also detailed numerous emails sent
by Vahedi in late 2008, blaming “bank errors” and offering other excuses for missed
payments. Then, by “March 12, 2009, due to his nonpayment and recent failures to
communicate, the Gomezes concluded that they had been harmed” by Vahedi. The
remaining borrower plaintiffs allege similar facts of lulling and discovery.
       Despite these facts, plaintiffs contend they did not discover their causes of action
against defendants until 2012, when they learned of defendants’ involvement in the
scheme from their attorney. Thus, although they knew of Vahedi’s orchestration of the
Ponzi scheme by mid-2009, plaintiffs allege that they could not have discovered
defendants’ participation in the mortgage fraud or the Ponzi scheme at that time, because
they did not have access to their loan documents, were not aware of the
misrepresentations in those documents, and did not suspect that the Ponzi scheme
extended beyond Vahedi.
       We are not persuaded, for several reasons. First, with respect to the Ponzi aspect
of the scheme, knowledge of defendants’ precise identity or role is not required to trigger
accrual of plaintiffs’ claims. Rather, the discovery rule “only delays accrual until the
plaintiff has, or should have, inquiry notice of the cause of action;” on the other hand, the
fact that plaintiff does not have reason to suspect the defendant’s identity is generally
insufficient to invoke delayed discovery. (Fox, supra, 35 Cal.4th at p. 807.) In other
words, “‘the statute of limitations begins to run when the plaintiff suspects or should
suspect that her injury was caused by wrongdoing, that someone has done something
wrong to her.’” (Bernson v. Browning-Ferris Indus. of Calif., Inc. (1994) 7 Cal.4th 926,
932; see also Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397-398 [“‘wrong’ being
used, not in any technical sense, but rather in accordance with its ‘lay understanding’”];
Knowles v. Sup.Ct. (Labo) (2004) 118 Cal.App.4th 1290, 1299-1300 [“When a plaintiff
has cause to sue based on knowledge or suspicion of negligence the statute starts to run as
to all potential defendants.”].) Thus, once plaintiffs were aware of their injuries as a
result of the fraudulent Ponzi scheme, the statutes of limitations on those claims began to

                                             16
run as to both Vahedi and defendants. This is particularly appropriate on these facts,
given that plaintiffs have alleged that they relied on the connection between defendants
and Vahedi in deciding both to make their Ponzi investments and to take out mortgage
loans. Having done so, they cannot reasonably claim they were not, at a minimum, on
inquiry notice as to defendants’ potential role in the resulting harm.
       Second, with respect to the mortgage loans, plaintiffs deliberately link the
“inextricably intertwined” mortgage loan and Ponzi loan aspects of the alleged scheme in
order to trigger delayed discovery of the problems with their mortgage loans.
Specifically, plaintiffs assert they were unaware that their loans were unaffordable and
contained other unfavorable terms at the time the loans closed, or even when payments
began, because Vahedi’s promised repayment installments on the Ponzi loans obscured
the defects with the mortgage loans. Therefore, at the latest, once Vahedi’s lulling
payments ceased in late 2008 or early 2009, plaintiffs were on notice that their loans were
actually unaffordable. And while they allege that some plaintiffs requested their loan
files from defendants starting in 2012, there are no allegations in the SAC explaining why
they did not request those documents in 2009, or why they could not have done so. Their
allegations therefore fall short of establishing delayed discovery past mid-2009.9
       Putting these pieces together, we conclude that plaintiffs adequately alleged
delayed discovery until mid-2009, at the latest. Because the Fergusons did not file their

       9
         We reject, however, defendants’ assertion that plaintiffs must have, or should
have, been aware of these schemes by 2008 at the latest. This assertion is unsupported by
the SAC, which specifically alleges lulling payments and emails through mid-2009, as
detailed herein, and ignores the trial court’s finding that “Vahedi stopped making
payments on the Ponzi scheme between 9/14/2008 and 1/16/2009.” Defendants contend
that by September 2008, plaintiffs alleged they had received “hundreds” of lulling emails
from Vahedi and therefore at this point plaintiffs could not reasonably remain free of
suspicion. We disagree. Defendants misstate the allegations of individual plaintiffs,
many of whom only began receiving lulling emails in lieu of payments in the second half
of 2008 as well as the applicable case law. (See Brownlee v. Vang (1965) 235
Cal.App.2d 465, 477 [finding plaintiff justifiably relied on defendant based on lulling
statements made for eight years].)
                                             17
claims until 2014, more than four years later, all of their claims are barred.10 The other
borrower plaintiffs filed their federal lawsuit in October 2012, more than three years after
their claims accrued in mid-2009. Therefore, their claims with two and three year
limitations periods are barred, unless the statutes of limitations are tolled, as addressed
below. However, these plaintiffs have adequately alleged that their claims with four year
statutes of limitations—namely the claims for unfair business practices, non-fraudulent
breach of fiduciary duty, breach of contract, and elder and dependent adult abuse—were
filed within the applicable limitations period. The trial court erred in sustaining
defendants’ demurrer as to these four claims on this basis.
       B.      Fraudulent Concealment
       In addition, plaintiffs suggest that defendants’ alleged role in fraudulently
concealing their wrongdoing, principally by refusing to produce the complete loan files
upon request, operates to toll the limitations period. The purpose of allowing tolling
based on fraudulent concealment is “to disarm a defendant who, by his own deception,
has caused a claim to become stale and a plaintiff dilatory.” (Regents of Univ. of Calif. v.
Sup.Ct. (Molloy) (1999) 20 Cal.4th 509, 533.) However, the alleged misconduct by
defendants occurred in 2012, when plaintiffs requested their loan files. By then, plaintiffs
had been on inquiry notice, if not actual notice, of their claims for three years and cannot
allege reasonable reliance on any concealment by defendants at that late date. (See
Grisham v. Philip Morris U.S.A., Inc., supra, 40 Cal.4th at pp. 637-638 [“A defendant’s
fraud in concealing a cause of action against him [or her] will toll the statute of
limitations, and that tolling will last as long as a plaintiff’s reliance on the
misrepresentation is reasonable.”].)

       10
          With respect to the Bartecks, they allege they are “former customers” of
Countrywide, who took out a mortgage loan with defendants in 2007, but did not use the
proceeds from that loan as the source of their investment with Vahedi. They offer no
explanation for why they were not on notice as to any deficiencies with their mortgage
loan once repayment began. Their claims related to mortgage fraud are therefore time-
barred. Their claims related to the Ponzi aspect of the scheme, once un-moored from the
mortgage fraud aspect, lack sufficient connection to defendants, as with the non-borrower
plaintiffs.
                                               18
       C.     Class Action Tolling
       Plaintiffs also argue that five class action complaints filed by unrelated borrowers
against defendants regarding their underwriting and lending practices operate to toll the
statutes of limitations here. To do so, plaintiffs invoke the tolling rule under American
Pipe & Construction Co. v. Utah (1974) 414 U.S. 538, 554 and its progeny that, in
certain circumstances, the filing of a class action complaint tolls the running of the statute
of limitations for all members of the purported class until class action certification is
denied. As limited by the California Supreme Court in Jolly v. Eli Lilly & Co. (1988) 44
Cal.3d 1103, 1121 (Jolly), this rule recognizes two competing policy considerations: first,
“protection of the class action device,” and second, “effectuation of the purposes of the
statute of limitations.” (Jolly, supra, 44 Cal.3d at p. 1121.) Under the latter
consideration, “[t]he policies of ensuring essential fairness to defendants and of barring a
plaintiff who has ‘slept on his rights,’ . . . are satisfied” when the class action complaint
“notifies the defendants not only of the substantive claims being brought against them,
but also of the number and generic identities of the potential plaintiffs who may
participate in the judgment.” (Ibid. [quoting American Pipe, supra, 414 U.S. at pp. 554-
555].) Accordingly, the Jolly court concluded that tolling did not apply, because the
differences in the nature of the class claims from the “gravamen of plaintiff’s complaint,”
and in factual and legal issues (including those “involved in proving causation, damages
and defenses”) meant the class suit “could not have apprised defendants of plaintiff’s
substantive claims. Therefore, plaintiff cannot now claim that [the class] complaint put
defendants on notice of allegations related to personal injury within the statutory period
of limitation so that they might prepare their defense.” (Id. at pp. 1123-1124.)
       Following Jolly, California courts have limited the application of this rule to
instances “where the class action and the later individual action . . . are based on the same
claims and subject matter and similar evidence.” (Perkin v. San Diego Gas & Electric
Company (2014) 225 Cal.App.4th 492, 504; see also Becker v. McMillin Construction
Co. (1991) 226 Cal.App.3d 1493, 1499, 1501 [limitations statute tolled for purported
class member “where the class action and the later individual action or intervention are

                                              19
based on the same claims and subject matter and similar evidence” provided notice];
accord Crown, Cork & Seal Co. v. Parker (1983) 462 U.S. 345, 354-355, (conc. opn. by
Blackmun, J.) [“The rule should not be read . . . as leaving a plaintiff free to raise
different or peripheral claims following denial of class status. [¶] . . . [T]he [] court
should take care to ensure that the [later individual] suit raises claims that ‘concern the
same evidence, memories, and witnesses as the subject matter of the original class suit,’
so that ‘the defendant will not be prejudiced.’”] (Quoting American Pipe, supra, 414
U.S. at p. 562).)
       Here, plaintiffs point to five “nationwide borrower-class action” complaints filed
against defendants between 2007 and 2009, ultimately consolidated under a master class
complaint. According to plaintiffs, these class actions named a putative class of
Countrywide borrowers and alleged unfair competition and fraud claims related to a
scheme between defendants and their network of mortgage brokers to “steer[] borrowers
into subprime loans in order to maximize the profits [they] would earn from the
securitization of these loans.”
       Crucially, plaintiffs concede that none of these class action cases involved claims
related to Vahedi’s Ponzi scheme, or any other broker Ponzi scheme. Nevertheless, they
argue that tolling should apply because the borrower plaintiffs are putative class members
and the allegations “overlap” with the class actions to the extent they involve misdeeds
by brokers and defendants in putting borrowers into risky, unaffordable loans. Plaintiffs’
argument ignores the requirements of Jolly and subsequent cases, as cited by both the
trial court and defendants here, that the cases involve the “same” claims and subject
matter; instead, plaintiffs suggest without support that cases with merely “similar” claims
and “overlapping” allegations may invoke tolling. We are not persuaded. The focus of
plaintiffs’ complaint involves an alleged scheme between defendants and Vahedi to
convince plaintiffs to invest with Vahedi and to raise the seed money for that investment
through unfavorable mortgage loans. Nothing in the class action allegations identified by

                                              20
plaintiffs could have put defendants on notice of this purported scheme. Under these
circumstances, we agree with the trial court that class action tolling does not apply.11
       Having rejected plaintiffs’ tolling arguments, we conclude that six of the borrower
plaintiffs—the Gomezes, Alvandi, Raft, and the Markses—have sufficiently alleged facts
to support delayed discovery of their claims for unfair business practices, non-fraudulent
breach of fiduciary duty, elder and dependent adult abuse (as to the Markses) and breach
of contract. The remaining claims are time barred.
IV.    Adequacy of Remaining Causes of Action
       Finally, we turn to individual analyses of the four remaining causes of action.
While we agree with the trial court that plaintiffs’ breach of contract claim fails, we
conclude the claims for unfair business practices, non-fraudulent breach of fiduciary
duty, and elder or dependent adult abuse are sufficiently pled.
       A.     Unfair business practices
       Plaintiffs’ second cause of action alleges both violations of the Unfair Competition
Law (UCL), Business & Professions Code section 17200, and the False Advertising Law
(FAL), Business & Professions Code section 17500. However, the FAL claim is time
barred, as noted above. Thus, we examine only plaintiffs’ allegations related to their
UCL claim.
       The UCL prohibits “any unlawful, unfair or fraudulent business act or practice.”
(Bus. & Prof. Code § 17200.) The “unlawful” prong borrows violations of other laws
and treats them as “‘unlawful practices’” independently actionable under the UCL. (Cel–
Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 180.)
“‘Virtually any law—federal, state or local—can serve as a predicate for an action under

       11
         Plaintiffs also rely on Wyatt, supra, 24 Cal.3d at p. 786 for the proposition that
“when 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. [Citation.]” But this doctrine does not aid plaintiffs
here, as we conclude they have not adequately pled the existence of a conspiracy.
Accordingly, plaintiffs cannot assert the last overt act doctrine in order to toll the statutes
of limitations on their claims.
                                              21
Business and Professions Code section 17200. [Citation.]’” (Ticconi v. Blue Shield of
California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 539.)
       Plaintiffs allege that defendants are liable under the UCL in two ways: first, under
an agency theory, for Vahedi’s undisputed violations of the law while engaging in both
the fraudulent mortgage loan and the Ponzi portions of the scheme; and second, for
defendants’ own conduct in connection with those schemes. In a two paragraph response
in their appellate brief, defendants do not challenge the availability of agency liability to
a UCL claim (although they generally challenge agency, as previously discussed).
Instead, they simply contend that even if they had violated the UCL in the manner
alleged, those violations would be “immaterial,” because they did not cause plaintiffs’
injuries.
       We conclude that plaintiffs have adequately pled their UCL claim under either
theory. First, we previously concluded that the SAC contained sufficient allegations to
proceed on a claim of liability based on ostensible agency. Given that conclusion,
plaintiffs may base their UCL claim on allegations that Vahedi, as defendants’ agent,
violated numerous laws by preparing and submitting fraudulent mortgage loan
applications, failing to make required disclosures to plaintiffs regarding those
applications, and taking money from plaintiffs with the intent to defraud them in the
Ponzi scheme. (See People v. JTH Tax, Inc. (2013) 212 Cal.App.4th 1219, 1242 [holding
that “persons can be found liable for misleading advertising and unfair business practices
under normal agency theory”]; cf. People v. Toomey (1984) 157 Cal.App.3d 1, 15
[permitting UCL liability based on evidence of “defendant’s participation in the unlawful
practices, either directly or by aiding and abetting the principal,” or through a conspiracy,
but finding that the “concept of vicarious liability has no application” to UCL actions].)
Second, as with defendants’ general arguments regarding causation, their challenge to the
materiality of defendants’ alleged violations presents a question of fact that we cannot
resolve in demurrer. (See, e.g., Rosh v. Cave Imaging Systems, Inc. (1994) 26
Cal.App.4th 1225, 1235.) Accordingly, we reverse the trial court’s order sustaining
defendants’ demurrer as to the UCL claim.

                                              22
       B.     Non-fraudulent breach of fiduciary duty
       In their third cause of action, plaintiffs allege “breach, conspiracy to breach, and
aiding and abetting breach of fiduciary duty and constructive fraud arising from breach of
fiduciary duty.” The parties do not dispute that Vahedi owed fiduciary duties to the
borrower plaintiffs as a mortgage broker and that he breached those duties in numerous
ways.12 Plaintiffs contend that defendants are liable for Vahedi’s breaches based on
agency, conspiracy, and aiding and abetting theories. In addition, they allege that
defendants stepped out of a traditional role of a lender and assumed the duties of a
mortgage broker, thereby triggering their own fiduciary duties to plaintiffs and
subsequently breaching those duties. Defendants focus on the fact that traditional lenders
under California law owe no fiduciary duties to borrowers. (See, e.g., Nymark v. Heart
Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096 [“[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. [Citations]”].) They assert that defendants could not have
operated as a mortgage broker under the applicable law.
       Whether a fiduciary relationship exists in any given situation is a question of fact.
(Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1575-1576.) While defendants urge
us to find as a matter of law that they could not have acted as mortgage brokers here, we
need not reach this issue. Plaintiffs have alleged that Vahedi breached his fiduciary
duties (see, e.g., Wyatt, supra, 24 Cal.3d at pp. 782-783 [mortgage broker breaches
fiduciary duties by providing “materially misleading and incomplete information”
regarding the terms of a loan even if the correct terms are in the loan documents]) and
that defendants are liable for those breaches based on the principal/agent relationship
between defendants and Vahedi (see Kaplan, supra, 59 Cal.App.4th at pp. 744, 747
[allowing plaintiffs’ claims against principal for broker’s acts of fraud, misrepresentation

       12
         Although the parties did not address it, we note that the breadth of Vahedi’s
alleged conduct would likely encompass both fraudulent and non-fraudulent breaches.
Only the latter type avoid the statute of limitations bar.
                                             23
and breach of fiduciary duty, where plaintiffs presented triable issue of fact as to
ostensible agency between broker and principal]). These allegations are sufficient to
plead a claim for breach of fiduciary duty.
       C.      Elder and dependent adult abuse
       We next examine the sixth cause of action brought by the Markses for abuse under
the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600
et seq.) (the Act). This statute was enacted to protect elderly and dependent adults from
various forms of abuse, including financial abuse. (Welf. & Inst. Code, §§ 15600,
15610.07.) Douglas Marks alleges that he is “partially disabled by physical limitations in
his normal activities of walking” and therefore seeks relief as a dependent adult under the
abuse act.13
       The Act was substantively amended effective January 2009. (See Das v. Bank of
America, N.A. (2010) 186 Cal.App.4th 727, 736-737 (Das) [substantive 2008
amendments to the Act were not retroactive in effect].) As effective during the time
period covering the Markses’ mortgage application and Ponzi loan to Vahedi (2007),
section 15610.30 provided: “(a) ‘Financial abuse’ of an elder or dependent adult occurs
when a person or entity does any of the following: [¶] (1) Takes, secretes, appropriates,
or retains real or personal property of an elder or dependent adult to [sic] a wrongful use
or with intent to defraud, or both. [¶] (2) Assists in taking, secreting, appropriating, or
retaining real or personal property of an elder or dependent adult to [sic] a wrongful use
or with intent to defraud, or both. [¶] (b) A person or entity shall be deemed to have
taken, secreted, appropriated, or retained property for a wrongful use if, among other

       13
          “Dependent adult” is defined as “any person between the ages of 18 and 64
years who resides in this state and who has physical or mental limitations that restrict his
or her ability to carry out normal activities or to protect his or her rights, including, but
not limited to, persons who have physical or developmental disabilities, or whose
physical or mental abilities have diminished because of age.” (Welf. & Inst.Code §
15610.23, subd. (a).) The parties have not raised on appeal the issue of whether Douglas
Marks qualifies as a “dependent adult” under this section. We therefore do not reach this
issue.
                                              24
things, the person or entity takes, secretes, appropriates or retains possession of property
in bad faith.” (See Das, supra, 186 Cal.App.4th at p. 736-737.)
       On appeal, the parties dispute the extent of knowledge required to trigger liability
under the Act, particularly with respect to the Ponzi scheme. The amended version of
this section replaced the “bad faith” element in subdivision (b) with the requirement that
the actor “knew or should have known that this conduct is likely to be harmful to the
elder or dependent adult.” (Welf. & Inst. Code, § 15610.30, subd. (b).) Plaintiffs rely on
the later version but raise no argument suggesting why it would be applicable here, when
the alleged events at issue occurred prior to 2009. Although defendants correctly cite
Das, supra, 186 Cal.App.4th at p. 745, in support of the proposition that acts of
assistance by defendants require a showing of actual knowledge, neither party addresses
the statutory amendment or the “bad faith” requirement under the prior version.
       We need not resolve this issue, however, because we conclude that the Markses
have adequately stated a claim for dependent adult abuse based on alleged direct conduct
by defendants. Specifically, plaintiffs allege that defendants wrongfully retained
“excessive fees and interest” paid by plaintiffs on their “toxic” mortgages, that these
payments were higher than defendants would have charged on an affordable loan, and
that defendants purposefully accepted fraudulent mortgage applications and issued
inflated loan amounts in order to gain these fees. These allegations are sufficient to plead
that defendants committed a “taking” of the Markses’ property within the meaning of the
Act as it existed prior to 2009. (See, e.g., Wood v. Jamison (2008) 167 Cal.App.4th 156,
164-165 [elder’s attorney engaged in financial abuse by improperly accepting as fee
certain funds to which elder was entitled through loan]; Zimmer v. Nawabi (E.D. Cal.
2008) 566 F.Supp.2d 1025, 1034 [allowing elder abuse claim based on receipt of fees
which broker “wrongfully obtained as a result of [its employee’s] false statements about
the terms of plaintiff’s refinance, which it knew were less favorable to plaintiff than her
previous mortgage”].)

                                             25
       D.     Breach of contract
       Plaintiffs’ seventh cause of action alleges breach of contract by Countrywide
Bank. Specifically, plaintiffs allege they entered into a “written Home Equity
Confirmation Agreement” (the agreement) as part of the mortgage loan process and
attach a copy of the document to the SAC as an exhibit. The paragraph at issue,
paragraph 11, provides: “The Lender estimates that it will take approximately 30 days to
process, approve, close and fund the loan. . . . However, this Agreement is not a
commitment to close and fund the loan prior to the expiration date. . . . The Lender
agrees to exercise reasonable efforts to obtain third-party documentation. . . .” Plaintiffs
contend that this language created an obligation for defendants “to obtain third-party
[verification] of [Plaintiffs’] income and employment” prior to funding the loan, and that
defendants breached this obligation by failing to submit forms to the Internal Revenue
Service (IRS) requesting such verification.
       Defendants argue, and the trial court found, that plaintiffs failed to adequately
plead any breach by defendants of the cited contractual provision. We agree. We may
consider the truth of any documents attached to the complaint, and if they contradict
factual allegations in the complaint, we give the documents credence. (Dodd v. Citizens
Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627.) Contrary to plaintiffs’ claims,
the contract does not contain any promises by Countrywide Bank to obtain certain
documentation, or to do so prior to closing or funding the loan. Nor do plaintiffs allege
any other conduct by defendants that breached the contract, apart from failing to submit
the verification forms to the IRS. As such, plaintiffs have not alleged any conduct by
defendants that breached the agreement. We therefore affirm the trial court’s order
sustaining the demurrer as to this cause of action.
       E.     Leave to amend
       Finally, we note that plaintiffs have not attempted to explain how they could
amend to correct any deficiencies outlined by the trial court and herein. As such, for the
causes of action we have found to be properly dismissed, we conclude the trial court did
not err in doing so without further leave to amend.

                                              26
                                     DISPOSITION
       We reverse the trial court’s order on the demurrer as to the second cause of action
for unfair business practices and the third cause of action for non-fraudulent breach of
fiduciary duty, as to plaintiffs Maria and Elias Gomez, Vachik Alvandi, Evelin Raft, and
Douglas and Sharon Marks, and the sixth cause of action for dependent adult abuse as to
plaintiffs Douglas and Sharon Marks. In all other respects, the judgment is affirmed.
The parties shall bear their own costs on appeal.
             NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                       COLLINS, J.

We concur:

EPSTEIN, P. J.

WILLHITE, J.

                                            27