Law & Motion Calendar

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9:00 A.M. LAW & MOTION CALENDAR

1.         24CV04489, Barta v. Pure Luxury Limousine Service    

Defendant Pure Luxury Limousine Service’s (“Defendant”) motion to compel arbitration is GRANTED as to Plaintiff Joao Barta’s (“Plaintiff”) individual claims. Plaintiff’s Complaint is stayed pending completion of arbitration.

       I.            Procedural History

This action arises from the employment of Plaintiff with Defendant. As part of the hiring process, Plaintiff signed an Alternative Dispute Resolution Agreement (“Agreement”) on March 13, 2023 and states in relevant part:

1. Both Pure Luxury Limousine Service, Inc. (“Company”) and the undersigned employee (“Employee”) acknowledge and agree that in, the event employment disputes arise between them, both parties will be bound by this Alternative Dispute Resolution Agreement (“Agreement”) providing for final and binding arbitration of disputes relating to the Employee’s employment with the Company or the termination of employment. Both the Company and the undersigned Employee hereby expressly wave any right that either party has or may have to a jury trial of any dispute covered by this Agreement and arising out of or in any way relates to the Employee’s employment with the Company including, but not limited to, the termination of said employment.

2. The purpose of this Agreement is to encourage the speedy, cost-effective resolution of disputes between the Company and its employees concerning any of the terms, conditions or benefits of employment and disputes arising from termination of the employment relationship, but excluding any claims for which arbitration is disallowed as a matter of law. Both the Company and the Employee shall be required to submit any dispute(s) covered by this Agreement to binding arbitration in accordance with the then-current rules of the American Arbitration Association rules and procedures for the resolution of employment disputes.

6. The enforceability of this agreement shall be governed by California law. Should any part of this Agreement be declared by a court of competent jurisdiction to be invalid, unlawful or otherwise unenforceable, the remaining parts shall not be affected thereby; the parties expressly agree that, to the extent permitted by law, they shall arbitrate their dispute without reference to or reliance upon the invalid, unlawful or unenforceable part of the Agreement.

7. This Agreement is the full and complete Agreement of the parties relating to resolution of disputes about conditions of employment and/or termination of employment.       

(Buffo Declaration, Exhibit A)

Plaintiff filed a Complaint alleging eight causes of action: (1) failure to pay minimum and straight time wages, (2) failure to pay overtime wages, (3) failure to provide meal periods, (4) failure to authorize and permit rest periods, (5) failure to timely pay wages at termination, (6) failure to provide accurate itemized wage statements, (7) failure to indemnify employees for expenditures, and (8) unfair business practices. (See Class Action Complaint, filed July 30, 2024.)

Defendant seeks to compel Plaintiff to submit his claims to arbitration and to stay Plaintiff’s Complaint pending completion of arbitration.

Plaintiff asserts that the Court should deny the motion to compel arbitration because the Agreement is procedurally and substantively unconscionable.

    II.            Governing Law

A.    Unconscionability

Both procedural and substantive unconscionability must be present before a court can refuse to enforce an arbitration provision based on unconscionability. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243.)

1.      Procedural

“Procedural unconscionability pertains to the making of the agreement; it focuses on the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) First, the court must determine whether the contract is adhesive, meaning it is standardized and offered by the party with superior bargaining power on a take-it-or-leave-it basis. (Baltazar, supra, 62 Cal.4th at 1245.) Then the court determines whether the circumstances of the contract’s formation created such oppression or surprise that the overall fairness must be subject to closer scrutiny. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126 [“OTO”].)

 2.      Substantive

 “Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246.) Mere unequal benefit is insufficient to show substantive unconscionability, rather, the terms must be “so one-sided as to shock the conscience.” (24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1213.) Though many factors go into determining substantive unconscionability, the primary consideration in assessing substantive conscionability is mutuality. (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 655.)  

  III.            Analysis

 A.    Procedural Unconscionability

1.      Adhesion Contract

In Opposition, Plaintiff asserts that the Agreement is both procedurally and substantively unconscionable. Regarding procedural unconscionability, Plaintiff argues that the Agreement is an adhesion contract, which makes the contract per se unconscionable. (Opposition, 3:17–4:12.) Specifically, Plaintiff argues that since the contract was on a take-it-or-leave-it basis with no opportunity to negotiate the terms of the contract, the contract is one of adhesion. (Opposition 3:23–27.)

The Court finds that this Agreement is one of adhesion because it is a standardized agreement imposed as a condition of Plaintiff’s employment. Defendant does not dispute this fact. (Motion to Compel, 7:3–5.) However, adhesion alone does not make an agreement procedurally unconscionable per se—the Court must also review the circumstances of the contract’s formation for oppression or surprise. (OTO, supra.)

2.      Oppression or Surprise

Relevant factors in determining whether there was oppression includes “(1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney.” (Hasty v. Am. Auto. Assn. etc. (2023) 98 Cal.App.5th 1041, 1056.)

Defendant argues that the Agreement is not procedurally unconscionable because the Agreement was not the result of surprise or oppression. (Motion to Compel 7:2–25.) Defendant asserts that Plaintiff received the agreement before his first day of work giving him time to review or negotiate its terms, Defendant did not exert any pressure on Plaintiff to sign the Agreement, and that the Agreement itself is plain and unambiguous. (Motion to Compel, 7:16–25.) Defendant further claims that Plaintiff is fluent in English and Plaintiff did not dispute this fact. (Reply, 5:21–26)

Plaintiff argues that failing to include the American Arbitration Association (“AAA”) rules and procedures (referenced in the Agreement) with the Agreement itself or tell Plaintiff how to access these rules made it impossible for Plaintiff to know how to initiate arbitration or understand the critical  areas of arbitration, which highlights the oppressive nature of the agreement. (Opposition, 5:8–18.)

The Court finds these arguments uncompelling. Here, Plaintiff had two weeks to review the Agreement before he began working as a driver for Defendant. (Buffo Declaration, ¶2.) Plaintiff claims he was never given an opportunity to negotiate the terms of the Agreement. (Barta Declaration, ¶ 7.) However, Defendant allegedly offers to answer questions about pre-employment forms, including the Agreement, during the training process and Plaintiff did not raise any questions about the forms during this time. (Reply, 7:13–17; Buffo Declaration, ¶¶ 3–4). Failing to ask to negotiate or request attorney review of the Agreement does not mean that Plaintiff never had an opportunity to have attorney review or to negotiate the terms. Plaintiff does not contest that he had a two-week period from when he was first given the Agreement on March 13, 2023, to when he began working as a driver on March 30, 2023, to review and engage in negotiations or seek clarifications. Additionally, Plaintiff’s reliance on Parada v. Superior Ct. to support this contention is misplaced. (Parada v. Superior Ct. (2009) 176 Cal.App.4th 1554, 1570–571.) The agreement in Parada contained a provision that “Any deletions from, additions to or cutting or mutilation of any portion of this Agreement will render the Agreement unacceptable.” (Ibid.) The Agreement at issue here had no such provision. In fact, the Agreement states that it “may not be modified except by the parties in writing,” which implies that Plaintiff had the option to modify the Agreement in writing throughout his entire period of employment with Defendant. (See Buffo Declaration, Exhibit A, ¶ 7.) Furthermore, Plaintiff does not claim any pressure at the hands of Defendant to sign the Agreement. The Agreement itself is a two-page document with seven short paragraphs that uses plain English and reasonably sized font without legalese or legal jargon.

Defendant’s failure to include the AAA rules and procedures with the Agreement is one factor but is not dispositive of a finding of procedural unconscionability. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721.) The Agreement does specify that the arbitration will occur “in accordance with the then-current rules of the American Arbitration Association rules and procedures for the resolution of employment disputes.” (See Buffo Declaration, Exhibit A, ¶ 2.) Rules and procedures of the AAA for employment disputes are reasonably accessible to Plaintiff through independent search, which he would have had two weeks to review himself or solicit an attorney for assistance. (See Lane v. Francis Cap. Mgmt. LLC (2014) 224 Cal.App.4th 676, 691–92 [concluding that “[F]ailure to attach a copy of the AAA rules did not render the agreement procedurally unconscionable. There could be no surprise, as the arbitration rules referenced in the agreement were easily accessible to the parties—the AAA rules are available on the Internet”].) Even though the Agreement requires Plaintiff to arbitrate all claims “in any way related to [his] employment,” this also applies equally to Defendant. (See Buffo Declaration, Exhibit A, ¶ 1; Fitz, supra, at 725 [reasoning that “arbitration agreements imposed in adhesive contexts lack basic fairness if they require one party but not the other to arbitrate all claims arising out of the same transaction or occurrence”].)

Plaintiff further claims he has no recollection of receiving the Agreement at any point during his employment, that he did not know what the word “arbitration” meant, or that no one at his job explained the contents or significance of the Agreement or gave him a copy of the agreement. (Barta Declaration, ¶¶ 6–11.) However, the Agreement is clearly labeled “Alternative Dispute Resolution Agreement” in bolded font and is signed and dated by Plaintiff and was kept in his personnel file. It was not the duty of Defendant to explain to Plaintiff what arbitration meant or explain its contents when the Agreement is a contract on its face. (Marin Storage & Trucking, Inc. v. Benco Contracting & Eng'g, Inc. (2001) 89 Cal.App.4th 1042, 1049 [“ordinarily one who signs an instrument which on its face is a contract is deemed to assent to all its terms. A party cannot avoid the terms of a contract on the ground that he or she failed to read it before signing”] [citations omitted].) There is no argument that Plaintiff was unable to access his personnel file from Defendant to retain a copy of the Agreement. Additionally, Plaintiff’s assertion that he did not know he was waiving certain rights by signing the Agreement is unpersuasive. The only section of the Agreement that is bolded to bring emphasis to that section is at the end of the first paragraph which states that “Both the Company and the undersigned Employee hereby expressly wave any right that either party has or may have to a jury trial of any dispute covered by this Agreement and arising out of or in any way relates to the Employee’s employment with the Company including, but not limited to, the termination of said employment.” (See Buffo Declaration, Exhibit A, ¶ 1.)

Therefore, the only factors that could support a finding procedural unconscionability of the Agreement are the fact that the contract was one of adhesion, and Defendant did not provide a copy of the applicable AAA rules or tell Defendant where he could retrieve the rules. However, the circumstances of the Agreement formation here do not show an inequity in bargaining power between the Parties, a lack of a meaningful choice, or terms that unreasonably favor Defendant. Thus, based on the foregoing, the Agreement was not formed as a result of oppression or surprise.

B.     Substantive Unconscionability

While a contract must show both procedural and substantive unconscionability, they are not required “to be present in the same degree” and are evaluated on a “sliding scale.” (OTO, supra, at 125 citing Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114.) “[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable” and vice versa. (Ibid.)

Defendant claims the Agreement is not substantively unconscionable because it is a fair and reasonable agreement that does not “shock the conscience.” (Motion to Compel, 7:27–8:16.)

Plaintiff argues that the Agreement is substantively unconscionable for four main reasons: (1) the Agreement is unclear as to how to initiate arbitration, (2) the Agreement does not provide for a neutral arbitrator, (3) the Agreement does not allow for adequate discovery, and (4) the Agreement does not allow for judicial review. (Opposition, 5:20–9:25.)

In its Reply, Defendant asserts that the way to initiate arbitration is an online form linked on the same information page for the AAA employment arbitration rules. (Reply, footnote 3, p. 8.) Defendant also contends that the AAA employment arbitration rules have a section on the selection for a neutral arbitrator that requires the arbitrator to “have no personal or financial interest in the results of the proceeding in which they are appointed and have no relation to the underlying dispute or to the parties or their counsel that may create an appearance of bias” and that the AAA provides procedures for disqualifying arbitrators if they are biased or lack independence. (Reply, 9:21–10:6.) Additionally, Defendant asserts that the discovery process is described in the AAA employment arbitration rules online, which allows Plaintiff to subpoena witnesses, among other discovery protocols and requirements for employers. (Reply, 10:7–17.) Lastly, Defendant contends that a requirement of having a provision allowing for judicial review is a misapplication of Armendariz, supra. (Reply, 10:18–11:7.)

The Court agrees with Defendant. The AAA reemployment arbitration rules are readily available on the internet and cover the initiation of arbitration, require a neutral arbitrator, and allow for adequate discovery as determined by the arbitrator. While Plaintiff asserts that the AAA procedures “presumably” fail to entitle him to third-party discovery, no evidence to this effect is submitted. The California Arbitration Act provides third party discovery procedures. (Berglund v. Arthroscopic & Laser Surgery Ctr. of San Diego, L.P. (2008) 44 Cal.4th 528, 535–36, 539 [reasoning that where discovery rights under C.C.P. section 1283.05 apply, parties to the arbitration also have rights to discovery from non-parties and Plaintiff maintains judicial remedies if the non-party fails to comply with the arbitrator’s order].) While the Agreement does not explicitly state that it allows for judicial review, the Agreement requires the arbitrator to “issue a decision or award, in writing, stating the essential findings of fact and conclusions of law supporting the decision or award” and prevents the arbitrator from “issu[ing] any award contrary to or inconsistent with the law, including the statute(s) at issue.” (See Buffo Declaration, Exhibit A, ¶ 5.) Armendariz highlights the importance of judicial review of an arbitrator’s written arbitration decision. (Armendariz, supra, at 107.) However, as found in Armendariz, here, the Court is not reviewing a petition to confirm an arbitration award, and thus, the assertion of inadequate judicial review of an arbitration award is premature. (Ibid.) Accordingly, Plaintiff fails to show that the Agreement is so one-sided as to “shock the conscience” and therefore fails to show substantive unconscionability.

“The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.” (OTO, supra, at 126.) Given the aforementioned facts and circumstances, Plaintiff fails to show that the Agreement is procedurally and substantively unconscionable in part or in whole that would move this Court to withhold enforcement.

C.    Severance of the Agreement

Plaintiff argues that the Agreement’s innumerable defects render it unconscionably tainted and the Court may not sever portions of the Agreement. (Opposition, 9:27–10:21.)

The Court does not find any of the Agreement’s sections to be unconscionable, so severance is irrelevant.

D.    California Labor Code Section 229

Lastly, Plaintiff asserts that since the Agreement is governed by California law, California Labor Code section 229 prevents Plaintiffs causes of action related to unpaid wages from being arbitrated. (Opposition, 10:24–13:14.)

In its Reply, Defendant argues that Labor Code section 229 does not apply because the Federal Arbitration Act (“FAA”) preempts the application of the California Labor Code in cases like this that involve interstate commerce. (Reply, 11:19–12:18.) Defendant claims that even if Section 229 applied, all of Plaintiff’s claims are still subject to the arbitration provision because it requires arbitration of all employment claims. (Reply, 12:21–13:25.)

Here, the Agreement covers “any dispute covered by this Agreement and arising out of or in any way relates to the Employee’s employment with the Company, including, but not limited to, termination of said employment” and requires “[t]he enforceability of this agreement to be governed by California law.” (See Buffo Declaration, Exhibit A, ¶¶ 1, 6.) The Court in Bravo v. RADC Enterprises, Inc. held that the arbitration agreement, with choice-of-law clause requiring interpretation in accordance with California law, required all claims to be arbitrated, including plaintiff’s wage claims. (Bravo v. RADC Enterprises, Inc. (2019) 33 Cal.App.5th 920.) Similar to the Agreement here, the agreement in Bravo was a two-page arbitration agreement covering “any and all disputes” arising from plaintiff’s employment “including any claims brought by the Employee related to wages” under the California Labor Code. (Id. at 921–22.) The Court found that the parties could not have intended to apply Section 229 to the agreement “because that section prohibits arbitrating wage claims and requires the courts to disregard private agreements to arbitrate” and the application of Section 229 contradicts the parties’ intent to arbitrate. (Id. at 922–23 [reasoning that plaintiff’s interpretation of the choice-of-law provision is untenable because “it unnecessarily sets one clause in conflict with the rest of the agreement” and “we read documents to effectuate and harmonize all contract provisions”].) Therefore, the Agreement here requires all of Plaintiff’s claims related to his employment to be arbitrated, which includes his wage claims. Since all eight of Plaintiff’s claims in his Complaint “aris[e] out of or in any way relate to the Employee’s employment with the Company,” Plaintiff is required to arbitrate all of his claims and Labor Code section 229 does not restrict any of his claims from being arbitrated.

 IV.            Conclusion

Based on the foregoing, Defendant’s motion to compel arbitration is GRANTED. Plaintiff’s Complaint is stayed pending completion of arbitration.

Defendant shall submit a written order on its motion to the Court consistent with this tentative ruling and in compliance with Rule of Court 3.1312(a) and (b).

2-3.      SCV-272155, Axos Bank, FSB v. Wilcox

Plaintiff, Axos Bank, FSB (“Plaintiff” or “Axos”), filed the currently operative first amended complaint (“FAC”) against defendants Ayn Wilcox and Alan Wilcox (together “Defendants”), and Does 1-10 with one cause of action for declaratory relief. Defendants have in turn filed a cross-complaint alleging 13 causes of action derived from the underlying facts and this case. Defendants have subsequently filed the currently operative first amended cross-complaint (“FAXC”) against Plaintiff, AmeriHome Mortgage Company (“AmeriHome”), BW Real Estate (“BW”), Western Alliance Bank (“Western”, together with AmeriHome and BW, “Additional Cross-Defendants”) (Axos with Additional Cross-Defendants, “Cross-Defendants”) and Roes 1-10 alleging fourteen causes of action derived from the same underlying circumstances as the FAC. Thereafter, Plaintiff dismissed the FAC. Cross-Defendants demurred to the FAXC, which was sustained to multiple causes of action. Defendants have now filed a second amended cross-complaint (“SAXC”).

This matter is on calendar for Plaintiff’s demurrer to each cause of action in the SAXC. Additional Cross-Defendants have also filed a Demurrer to multiple causes of action. Plaintiff’s demurrer is in part OVERRULED or SUSTAINED without leave to amend. Additional Cross-Defendants’ Demurrer is also in part OVERRULED or SUSTAINED without leave to amend.

                   I.            Procedural Issues

AmeriHome has raised the defense that Defendants have amended to add a cause of action not in conformity with the Code of Civil Procedure. “Following an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court's order.” Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023 (“Harris”). “(S)uch granting of leave to amend must be construed as permission to the pleader to amend the cause of action which he pleaded in the pleading to which the demurrer has been sustained.” People By and Through Dept. of Public Works v. Clausen (1967) 248 Cal.App.2d 770, 785 (“Clausen”). “The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.” Harris, supra, 185 Cal.App.4th at 1023. Where an amendment exceeds the leave granted by the court, a motion to strike is the proper vehicle to remedy the issue. Community Water Coalition v. Santa Cruz County Local Agency Formation Com. (2011) 200 Cal.App.4th 1317, 1329. This is addressed in substance below.

                II.            Governing Law

A.    Demurrers Generally

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. CCP § 430.30(a). In the event a demurrer is sustained, leave to amend should be granted where the complaint’s defect can be cured by amendment. The Swahn Group, Inc. v. Segal (2010) 183 Cal.App.4th 831, 852.

At demurrer, all facts properly pleaded are treated as admitted, but contentions, deductions and conclusions of fact or law are disregarded. Serrano v. Priest (1971) 5 Cal.3d 584, 591. Similarly, opinions, speculation, or allegations contrary to law or facts which are judicially noticed are also disregarded. Coshow v. City of Escondido (2005) 132 Cal.App.4th 687, 702. Generally, the pleadings “must allege the ultimate facts necessary to the statement of an actionable claim. It is both improper and insufficient for a plaintiff to simply plead the evidence by which he hopes to prove such ultimate facts.” Careau & Co. v. Security Pac. Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1390; FPI Develop., Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384. Each evidentiary fact that might eventually form part of a party’s proof does not need to be alleged. C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872. Conclusory pleadings are permissible and appropriate where supported by properly pleaded facts. Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6. “The distinction between conclusions of law and ultimate facts is not at all clear and involves at most a matter of degree.” Burks v. Poppy Const. Co. (1962) 57 Cal.2d 463, 473. Leave to amend should generally be granted liberally where there is some reasonable possibility that a party may cure the defect through amendment. Blank v. Kirwan (1985) 39 Cal.3d 311, 318.

B.     Negligence

“The elements of a cause of action for negligence are: duty; breach of duty; legal cause; and damages.” Friedman v. Merck & Co. (2003) 107 Cal.App.4th 454, 463. Whether a duty of care is owed is a question for the court and not a jury. Ballard v. Uribe (1986) 41 Cal.3d 564, 572. “Legal duties are not discoverable facts of nature, but merely conclusory expressions that, in cases of a particular type, liability should be imposed for damage done.” Tarasoff v. Regents of University of California (1976) 17 Cal.3d 425, 434. “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.” Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 927 (Internal quotations omitted). Generally, once there is privity of contract between the lender and the consumer, the proper remedy is for breach of contract, and the application of tort law violates the economic loss rule. Id. at 937 (“[Biakanja v. Irving (1958) 49 Cal.2d 647]) does not displace the contractual economic loss rule when that rule squarely applies.”). “A duty of care may arise through statute or by operation of the common law.” Id. at 920 (internal quotations omitted). The central question in whether a duty is owed outside of contract claims in mortgage contexts is whether the lender’s conduct has fallen outside the scope of their “role as a lender”. Id. at 928.

C.     The Real Estate Settlement Procedures Act (“RESPA”)

Federal law regulates the real estate settlement process and various loan servicing functions through the Real Estate Settlement Procedures Act (“RESPA”), 12 USC § 2601, et seq. Violations of RESPA are also violations of California Law. Financial Code § 50505 (a). Under RESPA, mortgage lenders are required to make various disclosures to a borrower whenever a loan is assigned, sold, or transferred. 12 USC § 2605 (c).  Lenders also have obligations to reply to borrower requests for information during the transfer process. 12 USC § 2605 (e). Lenders must acknowledge receipt of the borrower request within 5 days of receipt. 12 USC § 2605 (e)(1)(A). Lenders must provide a substantive response within 30 days of receipt. 12 USC § 2605(e)(2).

“Asserting a defendant's failure to respond to a QWR and the suffering of general damages is insufficient to state a claim under RESPA.” Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 531, disapproved of on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919. “RESPA's provisions relating to loan servicing procedures should be “construed liberally” to serve the statute's remedial purpose.” Medrano v. Flagstar Bank, FSB (9th Cir. 2012) 704 F.3d 661, 665–666. “(U)nder § 2605(e), a borrower's written inquiry requires a response as long as it (1) reasonably identifies the borrower's name and account, (2) either states the borrower's ‘reasons for the belief ... that the account is in error’ or ‘provides sufficient detail to the servicer regarding other information sought by the borrower,’ and (3) seeks ‘information relating to the servicing of [the] loan.’” Id. at 666. Challenges to the validity of the loan are not qualified written requests related to the service of the loan, and as such, trigger no duty to respond. Id. at 667-668.

D.    Negligent Misrepresentation, Fraud, and Fraud by Concealment

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.

Fraud may be accomplished though suppression of a fact by one who is bound to disclose it. Civ. Code § 1710 (3). “(T)he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612–613. “A failure to disclose a fact can constitute actionable fraud or deceit in four circumstances: (1) when the defendant is the plaintiff's fiduciary; (2) when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations that are misleading because some other material fact has not been disclosed.” Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 255.

To establish reliance on fraud, reliance upon the truth of the fraudulent misrepresentation does not have to be a predominant factor, but it must be a substantial factor in the plaintiff’s subsequent conduct. OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 864.  Plaintiffs in fraud by concealment claims must show that if the information had not been omitted, plaintiff would have been aware of it and therefore would have behaved differently. Id. The pleading must be adequately specific to show actual reliance on the omission, and that the damages causally resulted therefrom. Id. California law “requires a plaintiff to allege specific facts not only showing he or she actually and justifiably relied on the defendant's misrepresentations, but also how the actions he or she took in reliance on the defendant's misrepresentations caused the alleged damages.” Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1499. Reasonable reliance may, where the facts are clear, be determined as a matter of law. Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17, 22. “Reliance on an alleged misrepresentation is not reasonable when plaintiff could have ascertained the truth through the exercise of reasonable diligence.” Rowland v. PaineWebber Inc. (1992) 4 Cal.App.4th 279, 286 (disapproved on other grounds by Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415).

“‘[I]n California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] “Thus ‘the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect.’[Citation.] [¶] This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 993; see Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166-1167 [“ ‘the plaintiff must allege the names of the persons who made the representations, ... to whom they spoke, what they said or wrote, and when the representation was made’ ”]; see also Lazar v. Superior Court (1996) 12 Cal.4th 631, 645. “However, the requirement of specificity is relaxed when the allegations indicate that the defendant must necessarily possess full information concerning the facts of the controversy [citations] or when the facts lie more in the knowledge of the defendant.” Daniels, at p. 1167, internal quotations and citations omitted; see Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158. In pleading fraud claims, “(e)very element of the cause of action must be alleged in full, factually and specifically.” Id. at 1249. In general, as with showing fraud, oppression, or malice sufficient to support punitive damages, while plaintiffs must plead facts, with respect to intent and the like, a “general allegation of intent is sufficient.” Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616, 632; see Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060 (in pleading promissory fraud, a general allegation that the promise was made without intent to perform was sufficient); see also Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 608 (pleading that a hospital intentionally withheld that a health practitioner was operating without a medical license was sufficient to meet the pleading requirements for intent).

“The elements of a negligent misrepresentation are ‘(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’” Borman v. Brown (2020) 59 Cal.App.5th 1048, 1060; Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1252; see also, Hasso v. Hapke (2014) 227 Cal.App.4th 107, 127; Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196. A cause of action for negligent misrepresentation sounds in fraud and therefore, “each element must be pleaded with specificity.” Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166; see also, Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14 [the elements of negligent misrepresentation “must be pled with particularity…”]. This means “a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant…the names of the persons who made the representations [and] their authority to speak on behalf of the corporation...” West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793; see also, Lazar v. Superior Court (1996) 12 Cal.4th 631, 645. Thus, “general and conclusory allegations do not suffice,” and “the policy of liberal construction of the pleadings...will not ordinarily be invoked to sustain a pleading defective in any material respect.” Lazar, supra, 12 Cal.4th at 645.

E.     Emotional Distress

Claims of intentional infliction of emotional destress require: “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct. Whether treated as an element of the prima facie case or as a matter of defense, it must also appear that the defendants' conduct was unprivileged. Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.” Davidson v. City of Westminster (1982) 32 Cal.3d 197, 209 internal citations and quotations omitted. To constitute a basis for emotional distress, the alleged conduct must extend beyond mere insults, indignities, threats, annoyances, petty oppressions or other trivialities. Hughes v. Pair (2009) 46 Cal.4th 1035, 1051. The conduct must be such that on hearing of the alleged conduct an average member of the community would resent the defendant and lead the community member to exclaim, “Outrageous!” Cochran v. Cochran (1998) 65 Cal.App.4th 488, 494. “In order to avoid a demurrer, the plaintiff must allege with great specificity the acts which he or she believes are so extreme as to exceed all bounds of that usually tolerated in a civilized community.” Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832 (Internal quotations omitted). “Without such pleading, no cause of action for intentional infliction of emotional distress will stand.” Ankeny v. Lockheed Missiles and Space Co. (1979) 88 Cal.App.3d 531, 536.

“Severe emotional distress means ‘emotional distress of such substantial quality or enduring quality that no reasonable [person] in civilized society should be expected to endure it.’” Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1004, quoting Girard v. Ball (1981) 125 Cal.App.3d 772, 787–788. “(T)he requisite emotional distress may consist of any highly unpleasant mental reaction such as fright, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment or worry.” Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 397.

F.      Conversion

The elements of conversion are: 1) plaintiff’s ownership or right to possession of the property; 2) defendant’s conversion through a wrongful act; and 3) damages. Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208. “Money may be the subject of conversion if the claim involves a specific, identifiable sum; it is not necessary that each coin or bill be earmarked.” Id. Conversion can include the misappropriation of intangible property, such as net operating losses, so long as they reflect a definite amount and rights of possession and exclusive use are sufficiently definite and certain. Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 125. Credit accounts are also appropriate for conversion actions as long as plaintiffs can show they had a property right in its credit card account, evidenced by proving their interest is specific, showing they had control over its credit card account, and they had an exclusive claim to the balance in the account. Welco, supra at 212. “A plaintiff must specifically identify the amount of money converted, not that a specific, identifiable amount of money has been entrusted to the defendant.” Id. at 216.

G.    Rosenthal Fair Debt Collection Practices Act (“RFDCPA”)

The Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) is stated in Civil Code sections 1788, et seq.  The RFDCPA was enacted “to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts…” Civ. Code §1788.1(b). The RFDCPA applies to the collection of consumer debts resulting from “consumer credit transactions” in which “property, services or money is acquired on credit ... primarily for personal, family, or household purposes.” Civ. Code § 1788.2(e). The prohibited unfair or deceptive practices include use of threats, harassment, profanity and making false representations about the nature or status of the debt. Civ. Code §§1788.10-1788.16. “The Rosenthal Act ... incorporates the FDCPA, so that a violation of the FDCPA is per se a violation of the Rosenthal Act.” Young v. Midland Funding LLC (2023) 91 Cal.App.5th 63, 89 (internal quotations omitted).

“No debt collector shall collect or attempt to collect a consumer debt by means of the following practices: … (b) Collecting or attempting to collect from the debtor the whole or any part of the debt collector’s fee or charge for services rendered, or other expense incurred by the debt collector in the collection of the consumer debt, except as permitted by law.” Civ. Code § 1788.14(b). “No debt collector shall collect or attempt to collect a consumer debt by means of the following practices: … (e) The false representation that the consumer debt may be increased by the addition of attorney’s fees, investigation fees, service fees, finance charges, or other charges if, in fact, such fees or charges may not legally be added to the existing obligation.” Civ. Code § 1788.13. The RFDCPA applies to home loans, and collection actions thereon. Best v. Ocwen Loan Servicing, LLC (2021) 64 Cal.App.5th 568, 579.

H.    Unfair Competition Law

Business & Professions Code section 17200, prohibits “any unlawful, unfair or fraudulent” business practices.  Bus. & Prof. Code §17200.  “Since section 17200 is [written] in the disjunctive, it establishes three separate types of unfair competition” and “prohibits practices that are either ‘unfair’ or ‘unlawful,’ or ‘fraudulent.’”  Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1496; see also CelTech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., (1999) 20 Cal.4th163, 180 (1999).

A party may bring a section 17200 claim only if he or she shows that he or she “suffered injury in fact and has lost money or property as a result of the unfair competition.” Bus. & Prof. Code § 17204. To have standing, a plaintiff must sufficiently allege that (1) he has “lost ‘money or property’ sufficient to constitute an ‘injury in fact’ under Article III of the Constitution” and (2) there is a “causal connection” between the defendant’s alleged UCL violation and the plaintiff’s injury in fact. See, Rubio v. Capital One Bank (9th Cir. 2010) 613 F.3d 1195, 1203-1204. The UCL incorporates other laws and treats violations of those laws as unlawful business practices independently actionable under state law. Chabner v. United Omaha Life Ins. Co. (9th Cir. 2000) 225 F.3d 1042, 1048. Violation of almost any federal, state, or local law may serve as the “unlawful” basis for a UCL claim. Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838-839. In addition, a business practice may be “unfair or fraudulent in violation of the UCL even if the practice does not violate any law.” Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 827.

Where plaintiff’s UCL claim is entirely derivative of other fatally flawed causes of action, the UCL claim also fails. See, Hawran v. Hixson (2012) 209 Cal.App.4th 256, 277 [finding plaintiff's “UCL claim is derivative of [his] defamation cause of action, that is, it is based on the same [allegations] and likewise that cause of action stands or falls with that underlying claim.”]. “A breach of contract may ... form the predicate for Section 17200 claims, provided it also constitutes conduct that is ‘unlawful, or unfair, or fraudulent.” Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 645 (internal quotations omitted, emphasis original).

“With respect to the unlawful prong, virtually any state, federal or local law can serve as the predicate for an action under section 17200.” People ex rel. Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 515 (internal quotations omitted). “Unlike common law fraud, a UCL fraud claim “can be shown even without allegations of actual deception, reasonable reliance and damage”; what is required to be shown is that members of the public are likely to be deceived.” Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 258 (internal quotations omitted)(“Collins”). Fraud claims under the UCL must be stated with “reasonable particularity”. Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261; Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.

I.        Accounting

“A cause of action for accounting requires a showing of a relationship between the plaintiff and the defendant, such a fiduciary relationship, that requires an accounting or a showing that the accounts are so complicated they cannot be determined through an ordinary action at law.” Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413. “An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179

J.       Declaratory Relief

Any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.

Code Civ. Proc., § 1060 (emphasis added)

“Declaratory relief operates prospectively, and not merely for the redress of past wrongs. It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs; in short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.” SJJC Aviation Services, LLC v. City of San Jose (2017) 12 Cal.App.5th 1043, 1062 (internal quotations omitted)

             III.            Evidentiary Issues

The Court takes permissive judicial notice of both the content of Plaintiff’s Complaint and First Amended Complaint under Evid. Code § 452, but not the truth of any allegations therein. Similarly, the Court takes judicial notice of the FAXC, and the Court’s September 25, 2024 order on demurrer.

             IV.            Axos’s Demurrer

A.    Agency

As an initial matter, there are several instances in the opposition where Defendants rely upon allegations against one cross-defendant or another as agents of each other in order to defend a cause of action. Defendants’ sole allegation regarding agency simply states that each of the Cross-Defendants is the agent of the others. SAXC ¶ 18- ¶20. However, such allegations are “egregious examples of generic boilerplate”, and properly disregarded as conclusory pleading. Moore v. Regents of University of California (1990) 51 Cal.3d 120, 134, fn. 12; cf. Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1172 (Agency was adequately pled where plaintiffs alleged “BofA ‘had authority to represent and bind [U.S. Bank] in regard to a modification of’ their loan and U.S. Bank ‘directed and authorized [BofA's] conduct in connection with the [loan] modification by directing [BofA] concerning what to tell’ appellants.”). Agency is inadequately pled. Accordingly, the Court need not engage in further consideration on the matter.

B.     RESPA

What appears clear is that claims under RESPA may be found deficient if the pleading does not convey adequate facts to trigger a defendant’s duty to respond. Defendants’ allegations regarding their qualified written requests (“QWRs”) contain substantial specificity as to when Defendants sent the communications, and the timing of the responses, and that they were unable to make loan payments, asking for information on where to remit payment.

Defendants contend that “RESPA's provisions relating to loan servicing procedures should be “construed liberally” to serve the statute's remedial purpose.” Medrano v. Flagstar Bank, FSB (9th Cir. 2012) 704 F.3d 661, 665–666. Accordingly, they argue that their submissions to Axos via the web portal (SAXC ¶ 42) as opposed to the address listed on the Notice of Assignment (SAXC, Ex. 3.) makes no difference. Given that Axos timely responded, this seems to be of no consequence to the cause of action how Defendants submitted the QWR.

Defendants aver that the QWRs are sufficient. As the Court explains below, the contention that the challenge to the enforceability of the loan itself is not a QWR. Medrano v. Flagstar Bank, FSB (9th Cir. 2012) 704 F.3d 661, 665–666. It does not relate to the issue of servicing. In contrast, Defendants’ initial contact under the QWR on July 30, 2022 appears materially distinguishable. Axos was informed that Defendants’ account had been closed and seeking clarity as to where Defendants should be remitting payment. SAXC¶ 42. Axos responded by telling Defendants there was no need to make a monthly payment, as their loan had been paid off. SAXC ¶ 44. This entire action, and Axos’s efforts to remedy that error, stem from the inaccuracy of that statement. Accordingly, the SAXC adequately pleads that Axos failed to respond as required by 12 U.S.C. § 2605.

Axos also argues that Defendants fail to plead damages. Defendants plead various types of damages of varying viability. SAXC ¶ 99. At demurrer, any viable form of damages will support the cause of action. Particularly, Defendants aver that they were charged late charges resulting from Axos’s failure to accurately respond. Ibid. This appears to be an adequate assertion of economic damages resulting from Axos’s failure to timely respond in correcting the account.

Accordingly, Defendants have adequately pled the elements for a cause of action under RESPA. Axos’s demurrer to the first cause of action in the SAXC is OVERRULED.

C.     Negligence

From the FAXC, Defendants have pivoted their negligence claims entirely to the concept that Axos had a duty of care arising from statute, RESPA, and their breach of RESPA gives rise to negligence claims. The viability of the RESPA claims against Axos have already been addressed. The claims for negligence are still deficient due to the economic loss rule.

Defendants argue that under Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 923, “tort claims from fraud and statutory violations are not barred by the economic loss rule.” This is a correctly cited portion, but an obvious and glaring misstatement of the case. Fraud claims are not precluded by the economic loss rule. Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 991. Meanwhile, the Sheen court’s holding as to statutory damages could not be further from Defendants’ position. The economic loss rule appears to preclude using statutory duties as imposing a new form of tort liability outside of those statutory causes of action. The court in Sheen likens mortgage relationships to those of employer-employee. Id. at 931. In that vein, the Sheen court quotes in part their prior opinion in an employment case. Ibid. “The effect would be to transform a category of contract claims into torts, and to pile additional measures of tort damages on top of statutory recovery, even in cases of good-faith mistake.” Voris v. Lampert (2019) 7 Cal.5th 1141, 1162. That logic applies soundly here. Defendants have their statutory claim. Negligence liability based solely on RESPA would impermissibly expand tort into matters of contract.

Defendants’ allegations of RESPA violations may satisfy the element of a duty of care, but accordingly concede a contractual relationship. The economic loss rule therefore bars their claims in tort absent factual pleading supporting that the cause of action arises independent of the mortgage contract.

Therefore, as to Axos, the demurrer to the second cause of action is SUSTAINED without leave to amend.

D.    Fraud, Negligent Misrepresentation and Fraud by Concealment

Defendants assert three causes of action predicated on misrepresentation or withholding of information. Defendants assert only two actions undertaken in reliance on the misrepresentations or concealment. First, Defendants state that they stopped making payments to AmeriHome based on Axos’s representation that their loan was paid off. SAXC ¶ 129. Second, Defendants aver that they made two payments to AmeriHome “in protest” and “under duress”. SAXC ¶ 130.

Defendants specify several instances where Axos made affirmative representations to them that their loan was paid off. Cross-Defendants continue to attack the reasonableness of Defendants belief that their loan was somehow paid in full despite having alleged no actions which would support such a conclusion.

Indeed, while Defendants assert that the Court is required to take their allegations at face value, this is not true where they are contradicted by attached exhibits. There is no contradiction here, and both the allegations of the SAXC and Exhibits attached concede facts making Defendants’ reliance unreasonable as a matter of law. Exhibits 1 and 2 to the SAXC state that Plaintiff’s had a $652,000 loan, dated June 8, 2022, with an expected pay off date of July 1, 2052. See also, SAXC ¶¶ 35-37. Defendants assert no facts which would support the assumption that their loan was paid in full mere months after its origination. Defendants continue to assert, without any cited authority, that they were not required to make payments because their loan was no longer secured by the property under the Full Reconveyance. Defendants have failed to plead reasonable reliance as a matter of law under these facts.

Furthermore, Defendants still plead conflicting acts undertaken in reliance. As noted, Defendants made payments “under duress”. SAXC ¶ 130. In contrast, they would have “paid all [their] financial obligations” had they been aware of all the relevant information. SAXC ¶ 146. Defendants have not pled reasonable reliance as a matter of law and appear to be unable to do so.

The fraud by concealment claim fails for an additional reason. Defendants still have not pled the information which was concealed. Defendants vaguely assert “above-described” facts. SAXC ¶143, ¶145, and ¶147. However, Defendants never clearly plead what information was withheld in order to adequately state a concealment claim.

The demurrer to the third, fourth and fifth causes of action is SUSTAINED without leave to amend.  

E.     Intentional Infliction of Emotional Distress

Defendants aver that this claim states outrageous conduct because “whether conduct is outrageous is usually a question for the trier of fact.” Defendant’s Opposition to Axos’s Demurrer, pg. 10:15-16; quoting Agarwal v. Johnson (1979) 25 Cal.3d 932, 946 disapproved of by White v. Ultramar, Inc. (1999) 21 Cal.4th 563. Agarwal contains no such quotation. Despite this, Defendants are generally correct that “whether conduct is ‘outrageous’ is usually a question of fact.” So v. Shin (2013) 212 Cal.App.4th 652, 672. However, this does not abrogate Defendants’ obligation to plead facts which may be found to meet the standard of outrageous conduct. Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832. Where determination of the outrageous conduct is so clear that it may be determined as a matter of law, it is appropriate to resolve at demurrer. Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1609.

There is relevant authority which states that where mortgage servicers provide information which is “confusing, confused, tardy, or flat wrong”, that is insufficient to “exceed all bounds of what a civilized society usually tolerates.” Sheen v. Wells Fargo Bank, N.A. (2019) 38 Cal.App.5th 346, 358, aff'd (2022) 12 Cal.5th 905. As this Court previously opined, “(t)he conduct alleged against Axos does not rise beyond mere insults, indignities, threats, annoyances, petty oppressions or other trivialities. See Hughes v. Pair (2009) 46 Cal.4th 1035, 1051.” The SAXC fails to remedy the Court’s prior observation.

While Defendants argue vociferously that the conduct is outrageous, nothing resembles cases where outrageous conduct was found. Axos allegedly mismanaged Defendants’ mortgage, threatened foreclosure and penalties, and provided false reports to consumer reporting agencies. SAXC ¶ 169. “Cross-Defendants’ RESPA and statutory violations and described conduct were outrageous because Cross-Defendants’ were repeatedly notified and failed to act timely at the Wilcoxes’ expense.” SAXC ¶ 171. These allegations of violating contract oriented statutory obligations bears no resemblance to the jurisprudence on outrageous conduct. To quote the prior order:

Cases where allegations were found to be outrageous sufficient to survive demurrer are marked by their allegations of conduct not acceptable in a civilized society. Kiseskey v. Carpenters' Trust for So. California (1983) 144 Cal.App.3d 222, 229 (plaintiff received repeated harassing calls, threatening the safety of his family); Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 498 (use of racial epithets in combination with discriminatory employment action was sufficient to allege outrageous conduct). In contrast, courts of appeal have repeatedly held that alleged conduct must be sufficiently outrageous, or the matter is susceptible to demurrer. Cochran v. Cochran (1998) 65 Cal.App.4th 488, 497 (even where defendant’s comments were clearly threatening, where the threats lacked immediacy and had veiled meaning, the statements were not sufficiently outrageous and demurrer was properly sustained); Ankeny v. Lockheed Missiles and Space Co. (1979) 88 Cal.App.3d 531, 536 (vague and conclusory allegations of outrageous conduct does not satisfy that element, and a cause of action for intentional infliction of emotional distress so plead will not withstand demurrer.) Defendants provide only vague pleading of uncertainty and possible foreclosure. The outrageousness of conduct is only a matter for a finder of fact “(w)here reasonable men may differ”. Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 499. Without outrageous facts, creditor/debtor relationships do not comprise facts sufficient to be outrageous conduct. Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1009.

Court’s 9/25/24 Order, Section IV(C).

Defendants fail to plead outrageous conduct to support intentional infliction of emotional distress. The demurrer to the sixth cause of action is therefore SUSTAINED without leave to amend.

F.      Conversion

Defendants allege that the Cross-Defendants converted the escrow account in which they maintained an interest. As to Axos, Defendants have simply pled that they ratified AmeriHome’s actions in seizing the escrow account. For the reasons already covered above regarding agency, this is insufficient. Therefore, there are no facts to support Axos being liable for conversion.

The demurrer to the seventh cause of action is therefore SUSTAINED without leave to amend.

G.    Rosenthal Fair Debt Collection Practices Act

As this Court has already determined, the Rosenthal Fair Debt Collection Practices Act applies to mortgage loans. However, the pleading thereon only refers to fees charged by AmeriHome, not Axos. As has already been addressed, allegations of agency asserted in a conclusory manner do not suffice. In this cause of action, Defendants assert that Axos “as the predecessor and originator of the mortgage loan, [] controlled and dominated all aspects of its servicing and proper transfer to other successor service providers.” SAXC ¶ 201.

The prior problem with Defendants assertion of the RFDCPA remains. There is no alleged representation or attempt to collect the mortgage by Axos at this time. The allegation of agency does not connect the transfer of the loan to the allegations of collection efforts by AmeriHome. Indeed, the allegation is self-defeating, as in the same paragraph Defendants admit that “Axos caused the spread of misinformation on which all parties reasonably relied”, ostensibly including AmeriHome. SAXC ¶ 201. Defendants have not pled facts connecting Axos to the representations made by AmeriHome.

Therefore, as to the RFDCPA claim, the demurrer is SUSTAINED without leave to amend.

H.    Unfair Competition Law

Despite pleading a statutory violation, Defendants’ UCL claim still fails. Defendants still have not adequately pled standing under the UCL. Again, referring to the prior order:

Standing under the UCL requires that Defendants show a loss of money or property to bring UCL claims. Defendants provide no authority showing that their alleged damage to credit scores is concrete enough to be a loss of property as required under the UCL. Defendants plead that a variety of fees “could” be imposed, or that they “may” be charged attorneys’ fees. These are too speculative to state a UCL claim.

The only ascertainable loss of property that the Defendants had was the seizure of the escrow accounts. First, Defendants have made no effort to connect this seizure of property to the allegedly actionable conduct under the UCL. The seizure of the escrow account appears to be an alleged wrong separate and apart from any claims of alleged unlawful conduct or fraud. Second, the seizure of the escrow account is not alleged as conduct by Axos, and therefore the Defendants are not entitled to any restitution from Axos under the UCL. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143 (remedies under the UCL are restrained to restitution and injunctive relief, and “disgorgement” of property in which a plaintiff does not have a direct interest is not an appropriate remedy, even where the substance of the claim is clear).

The SAXC still raises no factual allegations regarding the taking of money or property by Axos. Defendants have not pled standing as to Axos for UCL claims.

Therefore, as to the UCL claim, the demurrer is SUSTAINED without leave to amend.

I.        Accounting

None of the prior deficiencies with the cause of action for accounting have been remedied. Defendants still fail to plead a cause of action for accounting because they fail to show standing to bring the claim (at common law, accounting claims are for where plaintiff is owed funds, not defendant), they fail to show that the related accounting is so complicated as to require judicial intervention, and they have a remedy to request an accounting without judicial intervention. Indeed, Defendants plead facts which make clear that there is little mystery to them as to what has occurred with their account. SAXC ¶ 116. Accordingly, Defendants have failed to show an accounting claim applies to the facts pled.

Therefore, as to the accounting claim, the demurrer is SUSTAINED without leave to amend.

J.       Declaratory Relief

The cause of action for declaratory relief previously had the demurrer sustained with leave to amend, particularly as to the declaration regarding attorney’s fees. Plaintiff cites de la Cuesta v. Superior Court (1984) 152 Cal.App.3d 945, 949, averring that any determination of attorney’s fees is premature, and therefore the cause of action is not ripe. Plaintiff’s cited case is unpersuasive. In de la Cuesta, the Court of Appeal found that the motion to set attorney’s fees was premature under Civil Code § 1717, and accordingly there was no judiciable controversy until such time that the foreclosing mortgage lender requested unreasonable fees. This is distinguishable from the case at bar. Plaintiff’s cause of action is for declaratory relief, which properly allows Defendants to seek “a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” CCP § 1060. The cause of action is proper to “be used in the interests of preventive justice, to declare rights rather than execute them.” SJJC Aviation Services, LLC v. City of San Jose (2017) 12 Cal.App.5th 1043, 1062. Accordingly, the claim for declaratory relief appears judiciable and adequately pled.

Therefore, the demurrer to the eleventh cause of action is OVERRULED.

                V.            Additional Cross-Defendants Demurrer

A.    RESPA

Defendants’ cause of action for RESPA also fails against AmeriHome.

Defendants fail to state the essential element identified by the court in Medrano, namely why their account was in error. That court explained: “(U)nder § 2605(e), a borrower's written inquiry requires a response as long as it (1) reasonably identifies the borrower's name and account, (2) either states the borrower's ‘reasons for the belief ... that the account is in error’ or ‘provides sufficient detail to the servicer regarding other information sought by the borrower,’ and (3) seeks ‘information relating to the servicing of [the] loan.’” Medrano v. Flagstar Bank, FSB (9th Cir. 2012) 704 F.3d 661, 666. Challenges to the validity of the loan are not qualified written requests related to the service of the loan, and as such, trigger no duty to respond. Id. at 667-668.

Defendants allegations regarding the issues they raised to AmeriHome appear to be challenges to the validity of the loan itself, owing to the errors of Axos. The tenor of Defendants’ position in the QWRs to AmeriHome is an attempt to benefit from Axos’s obvious error. The content of the notice to AmeriHome is not adequately related to servicing, so much as the Defendants’ contention that the loan was no longer valid. As such, it fails to be a QWR as required to trigger AmeriHome’s obligation to reply. Defendants have accordingly pled no RESPA claim against AmeriHome.

AmeriHome avers that Defendants’ RESPA cause of action should be disallowed because it exceeds the scope of the allowable amendment on the prior demurrer. The proper method to raise improper amendment is a motion to strike. However, to this effect, to allow further amendment of an unpermitted cause of action appears improper. Defendants cannot appropriately amend the cause of action, because the inclusion of the cause of action was not proper in the first place. The demurrer is SUSTAINED without leave to amend without prejudice absent a motion seeking a procedurally proper amendment.

B.     Negligence

As is stated above, Defendants failed to plead any form of duty owed by Cross-Defendants, and therefore there is no negligence cause of action under the common law. Further, particularly as to Additional Cross-Defendants, it is not clear what act is alleged to breach any duty of care, as Plaintiffs fail to provide any particularize allegation of negligent act beyond acts which may be proscribed exclusively to Axos. Defendants’ subsequent efforts to claim duties owed under RESPA also fail, as Defendants have not pled adequate facts to support a showing that RESPA was violated.

Therefore, as to the negligence cause of action, the Demurrer is SUSTAINED without leave to amend.

C.     Fraudulent Concealment

As the Court has elucidated above, Defendants have not adequately shown what information was concealed, nor have they pled anything which can be said to have been undertaken due to some concealed fact. Similarly, there is no reasonable reliance. Defendants make no allegations as to what information Additional Cross-Defendants had which may have impacted their course of action. No fact being concealed, the cause of action for concealment is therefore inadequately pled.

Therefore, as to this cause of action, Demurrer is SUSTAINED without leave to amend.

D.    Intentional Infliction of Emotional Distress

The conduct alleged against Additional Cross-Defendants appears to also fail to meet the standard for outrageous conduct as described above. Previously, the Court pointed out that the allegations of the FAXC distinguished between Cross-Defendants only in that AmeriHome allegedly intimated some surveillance of Defendants had occurred. Defendants have added (limited) additional specificity as to this claim so the Court could adequately determine whether this was outrageous conduct. SAXC ¶ 69.

The Court previously pointed out that even the allegations of surveillance may not raise an allegation of outrageous conduct as a matter of law. Even having the benefit of the Court’s prior ruling, Defendants have provided no authority to this effect. Meanwhile, there exists authority to the contrary. Teague v. Home Ins. Co. (1985) 168 Cal.App.3d 1148, 1153 (in workers compensation action, surveillance and even breaking and entering were insufficient to state outrageous conduct for an IIED claim at demurrer).

Therefore, as to the IIED claims against Additional Cross-Defendants, the Demurrer is SUSTAINED without leave to amend.

E.     Conversion

The Court previously overruled the demurrer as to the conversion claim. Procedurally, this constitutes a basis alone for overruling the demurrer. See Bennett v. Suncloud (1997) 56 Cal.App.4th 91, 96-97; cf. Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 877 (It is within the Court’s power to reexamine the sufficiency of the pleading, regardless of whether the prior order was issued by the same judge or a prior judge on the case). The cause of action was previously adequately pled, and it remains so. Without some coherent explanation for what has changed, the assertion to the contrary is ill taken. To quote the prior order:

As to the conversion claim against Additional Cross-Defendants, the claim is adequately pled. Defendants plead that the escrow account held $5,931.63, that Additional Cross-Defendants had no right thereon, and that Defendants now cannot recover those funds to which they have a property interest. There is nothing before the Court at this juncture which would state that Additional Cross-Defendants are entitled to the money in the escrow account as a matter of law. The FAXC states the opposite.

The expressed logic still applies. Defendants’ escrow account was intended to cover taxes and fees and was their property. AmeriHome seized the excess funds. The SAXC does not disclose a legal basis for AmeriHome to seize the account contents. Accordingly, the cause of action for conversion is still adequately pled.

Therefore, as to the conversion cause of action against the Additional Cross-Defendants, the Demurrer is OVERRULED.

F.      RFDCPA

Unlike their allegations against Axos, Defendants allege that AmeriHome threatened and in fact collected fees associated with their attempts to collect on the mortgage. However, Defendants still have not provided any factual allegations supporting the conclusion that the fees “may not be legally added to the existing obligation.” Civ. Code § 1788.13. The Exhibits to the SAXC provide evidence to the contrary. See Exhibit 2, ¶ 9. Defendants have therefore not pled a violation of the RFDCPA.

Therefore, as to the RFDCPA claim against Additional Cross-Defendants, the Demurrer is SUSTAINED without leave to amend.

G.    Unfair Competition Law

As noted above, Defendants fail to state a UCL claim for multiple reasons. The FAXC fails to state fraudulent conduct by Additional Cross-Defendants (indeed, they are omitted from the affirmative fraud claims), and no violation of statute has been adequately pled. Defendants have not alleged a taking of property caused by the alleged UCL violations.

Therefore, as to the UCL cause of action against Additional Cross-Defendants, the Demurrer is SUSTAINED without leave to amend.

H.    Accounting

For the reasons described above, the cause of action for accounting against Additional Cross-Defendants also fails.

As to the tenth cause of action, the demurrer is SUSTAINED without leave to amend.

I.        Declaratory Relief

While Defendants aver that they have a declaratory relief cause of action against “Cross-Defendants”, the only facts asserted apply to Axos, and not Additional Cross-Defendants. The only controversy remaining in this cause of action is the attorney’s fees dispute addressed above. There are no facts attributing this cause of action to Additional Cross-Defendants

As to the eleventh cause of action, the demurrer is SUSTAINED without leave to amend.

              VI.            Issuance of Order to Show Cause

Defendants’ Opposition, as is addressed in several instances above, is rife with errors of law. In opposing both demurrers to intentional infliction of emotional distress, Defendants have provided a quotation from a case which fails to contain the quoted material. Agarwal v. Johnson (1979) 25 Cal.3d 932, 946. Defendants miscite cases by name. See Kight v. CashCall, Inc. (2011) 200 Cal.App.4th 1377 (cited by Defendants as “Knight v. CashCall, Inc.”). Defendants repeatedly misattribute cases for legal propositions that they do not support. For example, Defendants cite Kight v. CashCall, Inc. (2011) 200 Cal.App.4th 1377 for the proposition that “what constitutes a notice clear to a ‘reasonable borrower’” is a question of fact which should be resolved by a trier of fact. That case in no way relates to RESPA, or the reasonable borrower standard therein, but rather reasonable expectations of privacy under eavesdropping statutes. The principles are not analogous.  

This is to say nothing of Defendants’ countless citations to federal cases that are irrelevant to the instant matter. While Defendants may have a prospective argument for the persuasive value of decisions of other Circuits on interpretation of federal statutes, there is no coherent explanation for why Defendants would cite federal district courts interpreting the law of another state (Illinois, Indiana), and how that would be relevant to this Court’s determination of California law. To cite a particularly egregious example, Defendant’s Opposition to Axos, pg. 10:16-17 cites Rosen v. MLO Acquisitions LLC (N.D. Ind. 2020) 505 F.Supp.3d 823, to support the argument that outrageous conduct is best determined by a jury. This raises several problems. Rosen does not relate to outrageous conduct as averred, it is from the federal district court from the Northern District of Indiana, and it does not even relate to intentional infliction of emotional distress causes of action at all. Such pettifoggery is wasteful of Court resources and opposing counsel’s time.

The confluence of issues raised here causes the Court concern that large language models may have been utilized without appropriate review by counsel.

Therefore, the Court finds a basis to issue an order to show cause to Defendants’ Counsel. Defendants Counsel are to show cause why sanctions should not be issued under CCP § 128.7, and a report to the California State Bar should not issue. Defendants’ Counsel are to file a declaration 21 days prior to hearing stating the names of the attorneys who drafted the oppositions, the relevant time expended thereon, and the resources used in producing the material. Counsel Julie Bonnel-Rogers must also submit a declaration in response to the OSC and appear in-person at the hearing, owing to her status as signatory on each of the submitted papers.

The OSC re: sanctions is set for June 4, 2025, at 3:00 pm in Department 19.

           VII.            Conclusion

Based on the foregoing, the Demurrer by Axos each SUSTAINED without leave to amend as to the second through tenth causes of action and OVERRULED as to the first and eleventh causes of action.

The Demurrer by Additional Cross-Defendants is SUSTAINED without leave to amend except as to the seventh cause of action, which is OVERRULED.  

Defendants’ counsel will show cause why they should not be sanctioned on June 4, 2025 at 3:00 pm in Department 19. Defendants’ Counsel are to file a declaration 21 days prior to hearing.

Axos shall submit a written order to the Court consistent with this tentative ruling and in compliance with Rule of Court 3.1312(a) and (b).

END OF 9:00 A.M. CALENDAR

3:00 PM CALENDAR
 

1.         23CV01987, Cignetti v. FM Restaurants HQ, LLC

Plaintiff Alessandra Cignetti (“Plaintiff”) filed a complaint against FM Restaurants HQ, LLC(“Defendant”), and Does 1-20, with causes arising out an alleged incident of sexual harassment during the course of employment (the “Complaint”).

This matter is on calendar for the motion by Defendant for summary judgment, or in the alternative adjudication, of the Complaint pursuant to Cal. Code Civ. Proc. (“CCP”) § 437. The motion for summary judgment is DENIED. The motion for summary adjudication is GRANTED in part and DENIED in part.

I.                    Evidentiary and Pleading Issues

Plaintiff’s objections are incorporated into their separate statement and therefore fail to conform with the Rules of Court. Objections must be asserted in a separate document. Cal. Rule of Court 3.1354. Plaintiff’s objections are therefore OVERRULED as failing to conform to the Rules of Court.

Defendant’s objections on reply are asserted as a separate document  but nonetheless are interposed in a method rendering them unintelligible. Defendant has included the language to which they object in each objection, and Plaintiff’s cited evidence, but with no citation to the relevant material fact (which is the only form of evidence to which they object). In this manner, the objections also fail to conform to an allowable format under Cal. Rule of Court 3.1354. Defendant’s objections are therefore OVERRULED.

Defendant’s initial notice of motion is also deficient. Defendant requests summary judgment, or in the alterative, summary adjudication. However, the request for summary adjudication fails to comport with the provisions of CCP § 437c and the Rules of Court. Rather than requesting summary adjudication of any individual causes of action, Defendant requests summary adjudication of ten discrete issues, which apply variously to different causes of action. Adjudication of “issues” is not generally permitted absent stipulation of the parties. CCP § 437c(t). Despite this, Plaintiff expresses no prejudice, and the Court examines the summary adjudication on its merits (though by cause of action).

II.                 Underlying Facts

Plaintiff was hired by Defendant on January 2, 2023. Defendant’s Separate Statement of Undisputed Material Facts (“DUMF”) ¶ 2. Defendant maintains a book of policies and [procedures that it provided to employees during their onboarding, and which was in use during Plaintiff’s entire employment. DUMF ¶ 5-6. The handbook contains an anti-harassment policy. DUMF ¶ 7. The policy, “prohibit(s) unlawful harassment . . . in the workplace, including sexual harassment, by any employee…” DUMF ¶ 8. The handbook states, “Unwelcome sexual advances, requests for sexual favors, widespread sexual favoritism, and other verbal, physical or visual conduct of a sexual nature constitute unlawful sexual harassment if (i) submission to such conduct is made an explicit or implicit term or condition of employment; (ii) submission to or rejection of such conduct is used as the basis for employment decisions affecting an individual; or (iii) such conduct has the purpose or effect of either (a) unreasonably interfering with an individual’s work performance or (b) creating an intimidating, hostile, or offensive working environment.” DUMF ¶ 9. It further states, “Examples of conduct which may violate this policy include, but are not limited to: offensive or unwelcome sexual flirtations, advances or propositions; threats and demands to submit to sexual requests; offering employment benefits in exchange for sexual favors; making or threatening reprisals after a negative response to sexual advances; widespread sexual favoritism; verbal abuse of a sexual nature; graphic verbal commentaries about an individual’s body; sexually degrading words used to describe an individual; sexually-oriented jokes, emails, or written materials; visual conduct, including leering, making sexual gestures, displaying of sexually suggestive objects or pictures, cartoons or posters; accessing sexually explicit, pornographic and/or socially offensive websites, chat rooms or other material on the internet or other computer systems; and the unwelcome physical touching of others.” DUMF ¶ 11. Anti-harassment training is also required as part of the hiring process and is provided again periodically. DUMF ¶ 12-13.

 The handbook provides that employees who violate the anti-harassment policy “will be subject to disciplinary action, up to and including termination of employment.” DUMF ¶ 15. When an employee has been subject to unlawful discrimination, the handbook tells employees to “immediately notify the employee’s supervisor, Human Resources or any member of Management.” DUMF ¶ 16. If an employee has been exposed to harassment or a violation of law, the employee has “a duty to immediately bring the incident(s) to the attention of the employee’s supervisor. As an alternative, the employee may report any complaints directly to Human Resources or to any member of Management.” DUMF ¶ 17. Any supervisor who receives a complaint must report it to Human Resources. DUMF ¶ 20. The handbook informs employees that ““The Company will investigate all reports or complaints of harassment or discrimination thoroughly, promptly, fairly, and discreetly.” DUMF ¶ 22. It further provides that ““The investigator will be impartial and qualified, and will document his or her progress throughout the investigation.” DUMF ¶ 23.

The handbook also obligates employees to “cooperate fully in the investigation process by making themselves reasonably available to meet with the investigator and providing any information (including documentation) they may have regarding any improper conduct that has occurred.” DUMF ¶ 24. The handbook states that ““The Company considers any discrimination and/or harassment to be a serious offense which can result in disciplinary action for the offender, up to and including termination,” and “[i]f an investigation has concluded that harassment or discrimination occurred, the Company will take appropriate remedial corrective action, up to and including termination.” DUMF ¶ 25.

Roberto Torres (“Torres”) was also employed by Defendant in January 2023, and worked as a prep cook. DUMF ¶ 26. Torres was not a supervisor. DUMF ¶ 27. On January 20, 2023, Kevin Foulke (“Foulke”), a manager, recorded into the store log that Plaintiff had reported an incident between herself and Torres. DUMF ¶ 28. Plaintiff reported (and Foulke placed into the log) that Torres had followed her into the walk-in freezer and placed her in a hug that was uncomfortable and inappropriate. DUMF ¶ 29. Foulke also recorded that Plaintiff had heard stories from other female coworkers about similar incidents with Torres. DUMF ¶ 30. When confronted by Foulke, Torres denied the incident. DUMF ¶ 31. Foulke placed in the log that he advised Torres not to follow co-workers into the freezer with the door shut, and not to make “uninvited contact”. DUMF ¶ 32.

Plaintiff had gone into the walk-in freezer looking for a brownie. DUMF ¶ 34. Torres came in behind her, and when she turned around, he placed his arms around Plaintiff “like a hug”. DUMF ¶ 34-35. Torres grabbed Plaintiff’s lower back, but did not touch her buttocks. DUMF ¶ 37-38; Defendant’s Exhibit 13, Plaintiff’s Deposition. Torres did not pull Plaintiff’s lower body to him, or squeeze her. DUMF ¶ 40-41. Torres did not kiss Plaintiff. DUMF ¶ 42. The “hug” lasted around two seconds before Plaintiff escaped, leaving Torres in the freezer. DUMF ¶ 43-44. Plaintiff reported the matter to Foulke at end of shift. DUMF ¶ 45. Foulke helped Plaintiff identify Torres and told her he would talk to Torres and “we’re going to handle it”. DUMF ¶ 46-47.

On January 23, 2023, the store’s general manager, Sue Shuster (“Shuster”) emailed Human Resources regarding the January 20, 2023, incident. Shuster reported that she had spoken with Plaintiff, and that Torres had been advised against touching other employees. DUMF ¶ 48-50. HR responded to Shuster by asking that Plaintiff submit a written statement. DUMF ¶ 51.

Plaintiff worked shifts for Defendant on January 22, 24, 25 and 26. DUMF ¶ 52. Plaintiff resigned on January 29, 2023. DUMF ¶ 3. On January 30, Shuster emailed HR stating that she had asked Plaintiff to write a statement, but Plaintiff had resigned. DUMF ¶ 53. Plaintiff never saw Torres again on her remaining shifts with Defendant. DUMF ¶ 54. Human Resources reached out twice to contact Plaintiff via her cell phone, and left voicemails, but never received a response from Plaintiff. DUMF ¶ 55-58. There were no cameras in the refrigerator, and no witnesses to the incident. DUMF ¶ 59-60. When questioned by management, Torres denied hugging Plaintiff. DUMF ¶ 61. Torres had never before been the subject of a similar investigation by Defendant. DUMF ¶ 62. Plaintiff told both Foulke and Shuster that Torres had behaved this way toward other employees, but did not provide names. DUMF ¶ 63-64. Torres was made to sign an anti-harassment policy reminder as a result of Plaintiff’s report. DUMF ¶ 67. While Plaintiff alleges that Torres had harassed her in other manners, she never reported that conduct to Defendant during her employment. DUMF ¶ 68-72. Defendant carried workers compensation insurance during January 2023. DUMF ¶ 76.

During the incident, Plaintiff was placed into a hug against her will. Plaintiff’s Separate Statement of Additional Material Facts (“PAMF”) ¶ 7. Plaintiff recounts that during the incident, Torres moved his mouth toward her, as if to kiss her. PAMF ¶ 8. Torres rubbed her lower back while she was in the hug. PAMF ¶ 9. Plaintiff told a female co-worker, Vanessa Carreon about the incident immediately afterward. PAMF ¶ 11. Carreon told Plaintiff that Torres had done similar things to her. PAMF ¶ 13. Two more female employees told Plaintiff about their own similar experiences. PAMF ¶ 17. When Plaintiff made the report of the incidents to Foulke, he told Plaintiff that he would talk with Torres, which Plaintiff pressed would not be an adequate response. PAMF ¶ 20-22.

Plaintiff called out of work the day following the incident due to associated anxiety. PAMF ¶ 24. When Plaintiff returned on January 22, Shuster met with her. PAMF ¶ 26. Shuster told Plaintiff that Torres would not be fired, and it was “her word against his”. PAMF ¶ 27. Plaintiff was advised by Shuster to “keep her distance” from Torres. PAMF ¶ 28. Plaintiff told Shuster that Torres should be fired. PAMF ¶ 30. Plaintiff subsequently received permission from Shuster to leave a shift early because Torres was going to be working at the same time as Plaintiff. PAMF ¶ 39. Plaintiff was sufficiently worried about crossing paths with Torres, that she felt she had to resign to avoid Torres. PAMF ¶ 40. Accordingly, her resignation email told Shuster that she no longer felt comfortable working for Defendant. PAMF ¶ 41. Torres suffered no disciplinary action other than the policy reminder and verbal counseling. PAMF ¶ 43.

Shuster’s email to Human Resources on January 23 acknowledged that in the past, she had heard about “this kind of behavior” by Torres a couple years prior. PAMF ¶ 36. No interviews were performed other than those of Plaintiff and Torres by management. PAMF ¶ 37.

III.              The Burdens on Summary Judgment and Adjudication

A.    Generally

Summary adjudication “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” CCP § 437c(c). “Summary adjudication of an affirmative defense is properly granted when there is no triable issue of material fact as to the defense, and the moving party is entitled to judgment on the defense as a matter of law.” Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 977–978.

A moving party does not meet its initial burden if some “reasonable inference” can be drawn from the moving party’s own evidence which creates a triable issue of material fact. See, e.g. Conn v. National Can Corp. (1981) 124 Cal.App.3d 630, 637; Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840. If the moving plaintiff does not meet its initial burden, the defendant has no evidentiary burden. CCP § 437c(p)(1).

If a plaintiff meets its initial burden, the burden shifts to the defendant to provide sufficient evidence to raise a triable issue of fact as to the defense asserted. CCP § 437c(p)(1). An issue of fact exists if “the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” Aguilar, 25 Cal.4th at 845.

B.     Ratification

“An agency may be created, and an authority may be conferred, by a precedent authorization or a subsequent ratification.” Civil Code, § 2307. “Ratification is not an element of a claim; it is a choice to adopt someone's act as one's own.” Ratcliff v. The Roman Catholic Archbishop of Los Angeles (2022) 79 Cal.App.5th 982, 1003. “The failure to investigate or respond to charges that an employee has committed an intentional tort or the failure to discharge the employee may be evidence of ratification.” Samantha B. v. Aurora Vista Del Mar, LLC (2022) 77 Cal.App.5th 85, 109. “Whether an employer has ratified an employee's conduct is generally a factual question.” Baptist v. Robinson (2006) 143 Cal.App.4th 151, 170. “An employer is not relieved of liability for ratification simply because it eventually terminates the employee.” Samantha B. v. Aurora Vista Del Mar, LLC (2022) 77 Cal.App.5th 85, 109.

C.     Sexual Harassment

“The employer is liable for harassment by a nonsupervisory employee only if the employer (a) knew or should have known of the harassing conduct and (b) failed to take immediate and appropriate corrective action.” Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1419–1420, citing Gov. Code § 12940 (j)(1).

An employer may also be held liable for failure “to take all reasonable steps necessary to prevent discrimination and harassment from occurring.” Gov. Code, § 12940 (k). “When a plaintiff seeks to recover damages based on a claim of failure to prevent ... harassment ... she must show three essential elements: 1) plaintiff was subjected to ... harassment ...; 2) defendant failed to take all reasonable steps to prevent ... harassment ...; and 3) this failure caused plaintiff to suffer injury, damage, loss or harm.” Caldera v. Department of Corrections and Rehabilitation (2018) 25 Cal.App.5th 31, 43–44 (Internal quotations omitted). “There can be no liability for an employers’ failure to prevent harassment claim unless actionable harassment occurred.” Ibid.

“A single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment if the harassing conduct has unreasonably interfered with the plaintiff's work performance or created an intimidating, hostile, or offensive working environment.” Gov. Code, § 12923 (statutorily rejecting the standard in Brooks v. City of San Mateo (9th Cir. 2000) 229 F.3d 917, 925).

Once an employer is informed of the sexual harassment, the employer must take adequate remedial measures. The measures need to include immediate corrective action that is reasonably calculated to 1) end the current harassment and 2) to deter future harassment. (Sarro v. City of Sacramento (E.D.Cal.1999) 78 F.Supp.2d 1057, 1061–1062.) The employer's obligation to take prompt corrective action requires 1) that temporary steps be taken to deal with the situation while the employer determines whether the complaint is justified and 2) that permanent remedial steps be implemented by the employer to prevent future harassment once the investigation is completed. (Swenson v. Potter (9th Cir.2001) 271 F.3d 1184, 1192.) An employer has wide discretion in choosing how to minimize contact between the two employees, so long as it acts to stop the harassment. (Id. at pp. 1194–1195.) “[T]he reasonableness of an employer's remedy will depend on its ability to stop harassment by the person who engaged in harassment.” (Ellison v. Brady (9th Cir.1991) 924 F.2d 872, 882.)

Bradley v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1630.

D.    Constructive Discharge

“Constructive discharge occurs when the employer's conduct effectively forces an employee to resign. . . (A) constructive discharge is legally regarded as a firing rather than a resignation.” Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1244-1245 (“Turner”).“In order to establish a constructive discharge, an employee must plead and prove, by the usual preponderance of the evidence standard, that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee's resignation that a reasonable employer would realize that a reasonable person in the employee's position would be compelled to resign.” Id. at 1251. “For purposes of this standard, the requisite knowledge or intent must exist on the part of either the employer or those persons who effectively represent the employer, i.e., its officers, directors, managing agents, or supervisory employees.” Ibid.

“[T]he applicable standard is whether the adverse working conditions [are] so intolerable or unusually adverse that any reasonable employee would resign rather than endure [them].” Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 827, quoting Turner at 1247. “Whether conditions were so intolerable or aggravated under that standard is usually a question of fact; however, summary judgment against an employee on a constructive discharge claim is appropriate when, under the undisputed facts, the decision to resign was unreasonable as a matter of law.” Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1022.

E.     False Imprisonment

“The elements of a tortious claim of false imprisonment are: (1) the nonconsensual, intentional confinement of a person, (2) without lawful privilege, and (3) for an appreciable period of time, however brief.” Easton v. Sutter Coast Hosp. (2000) 80 Cal.App.4th 485, 496; see also Civil Code § 43. An appreciable period “can be as brief as 15 minutes.” Fermino v. Fedco, Inc. (1994) 7 Cal.4th 701, 715.

F.      Affirmative Defense - Exclusive Remedy of Workers Compensation

“Liability for the compensation provided by this division, in lieu of any other liability whatsoever to any person except as otherwise specifically provided in Sections 3602, 3706, and 4558, shall, without regard to negligence, exist against an employer for any injury sustained by his or her employees arising out of and in the course of the employment and for the death of any employee if the injury proximately causes death,” so long as the necessary conditions are met. Labor Code § 3600. As long as the conditions of Lab. Code § 3600 are met, workers compensation benefits are the exclusive remedy available to an injured worker. Labor Code § 3602.

“Every employer except the state shall secure the payment of compensation … (b)y being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state” or by following the process for being self-insured. Labor Code § 3700. Where workers’ compensation is the exclusive remedy, trial courts lack subject matter jurisdiction over the employee’s claim. Brown v. Desert Christian Center (2011) 193 Cal.App.4th 733, 737. “If any employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against such employer for damages, as if this division did not apply.” Lab. Code, § 3706.

One of the purposes of the Workers Compensation Act is “to guarantee prompt, limited compensation for an employee's work injuries, regardless of fault, as an inevitable cost of production”. Bradshaw v. Park (1994) 29 Cal.App.4th 1267, 1276. Once an employer has received notice of an injury, the employer must submit the claim to the worker’s compensation insurer within five days. Lab. Code, §§ 3760 & 6409.1. “(G)enerally speaking, a defendant in a civil action who claims to be one of that class of persons protected from an action at law by the provisions of the Workers' Compensation Act bears the burden of pleading and proving, as an affirmative defense to the action, the existence of the conditions of compensation set forth in the statute which are necessary to its application.” Doney v. Tambouratgis (1979) 23 Cal.3d 91, 96. Ratification of intentional torts serves to abrogate the exclusive remedy of workers compensation. Hart v. National Mortgage & Land Co. (1987) 189 Cal.App.3d 1420, 1432.

IV.              Analysis

A.    First Cause of Action - Sexual Harassment and Hostile Work Environment

1.      Defendant Shifts the Burden on one Issue, but Fails on Others

Defendant asserts that Plaintiff’s first cause of action for sexual harassment and hostile work environment is deficient, because Plaintiff cannot meet several essential elements of her claims, or that affirmative defenses apply. Some of these arguments prevail sufficiently to shift the burden at summary judgment. Defendant particularly argues that the harassment was not severe or pervasive, that the harassment cannot be imputed to Defendant, and that Workers Compensation is the exclusive remedy for Plaintiff’s alleged harm.

First, to Defendant’s contention that it cannot be imputed with Torres’s conduct, Defendant shifts their burden. Defendant avers that it gave Torres a verbal warning after Plaintiff reported the incident, reached out to Plaintiff to investigate, and that during the balance of Plaintiff’s time working with Defendant, she was never working at the same time as Torres. Defendant provided evidence of its substantive anti-harassment policies and procedures.  These appear to be immediate and appropriate corrective action as would be required to prevent liability for Torres’s conduct as a non-supervisor. Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1419–1420.

As to severity, Defendant fails to shift their burden. While Defendant urges this Court to follow jurisprudence which predates Government Code “Gov. Code” § 12923, subsequent cases have made clear that the standard has continued to evolve. Defendant argues that Gov. Code § 12923 is merely a restatement of modern law on the subject, and that prior jurisprudence still holds up to scrutiny, citing Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal.App.5th 865. This is not an entirely accurate representation of the holding of that case. The Beltran court did find that the passage of Gov. Code § 12923 did not “change” the law sufficient to prevent it from being retroactive. Id. at 879. Despite this, the Beltran court opines on the status of prior jurisprudence, stating “These cases are no longer good law when it comes to determining what conduct creates a hostile work environment in the context of a motion for summary judgment or adjudication. (§ 12923; CACI No. 2524.)” Id. at 880. This is to say, Gov. Code § 12923 was a clarification of prior law, and did not substantively change the intended effect of the statute, but that does not mean it does not affect the jurisprudence thereon which misapprehended the statute.

In another case cited by Defendant, the Second District Court of Appeal recently provided further clarification:

To the extent Hughes suggests that ‘an isolated incident of harassing conduct may qualify as ‘severe’” only if “it consists of ‘a physical assault or the threat thereof’ ” (Hughes, at p. 1049, 95 Cal.Rptr.3d 636, 209 P.3d 963), such a suggestion is no longer the law. Under section 12923 an isolated incident of harassing conduct need only have “unreasonably interfered with the plaintiff's work performance or created an intimidating, hostile, or offensive work environment.” (§ 12923, subd. (b).) A physical assault or threat is not required.

Wawrzenski v. United Airlines, Inc. (2024) 106 Cal.App.5th 663, 698–699, review denied (Feb. 11, 2025); quoting Hughes v. Pair (2009) 46 Cal.4th 1035, 1049.

To this effect, the Court analyzes the facts presented by Defendant. Defendant provides evidence that Plaintiff was assaulted by another employee. She was placed into a hug against her will, her lower back was rubbed, and her assailant attempted to kiss her. Torres was simply told not to touch other employees, and not to go into the walk-in freezer with female employees. Defendant was provided with knowledge that other female employees had experienced similar treatment from Torres, to which the response was that those employees “should have come forward earlier.” Defendant’s Exhibit 1, Plaintiff’s Depo., pg. 123:1-6.

Defendant presents its own evidence on this issue in a manner which raises concern. Defendant avers that Plaintiff was not kissed by Torres (DUMF 43), but Defendant’s own Exhibit 7 states that Plaintiff informed Defendant that Torres tried “to kiss her neck”. This appears to be misleading. Defendant’s attempt to downplay the severity of the incident fails to meet its burden on this issue. At summary judgment, Defendant does not show that the incident here fails to meet the modern definition of severe as a matter of law. It seems apparent that a reasonable person would find this conduct disrupted their “emotional tranquility in the workplace”. Gov. Code § 12923 (a); see also Wawrzenski v. United Airlines, Inc. (2024) 106 Cal.App.5th 663, 697. Indeed, the instruction from the legislature could not be more clear. “Harassment cases are rarely appropriate for disposition on summary judgment.” Gov. Code, § 12923 (e). The facts posed by Defendant fail to show that there are not triable issues of material fact as to the severity of the incident.

As to the last contention related to Plaintiff’s first cause of action, Defendant fails to shift their burden. Plaintiff’s FEHA related claims are clearly not barred by the workers compensation exclusivity rule. Defendant provides no applicable case to this effect. Meanwhile, the jurisprudence to the contrary is clear and unambiguous. “[S]ection 132a does not provide an exclusive remedy and does not preclude an employee from pursuing FEHA and common law wrongful discharge remedies.” Fretland v. County of Humboldt (1999) 69 Cal.App.4th 1478, 1485, quoting City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, 1158. Defendant simply makes this contention without even the most basic authority in support.

2.      Plaintiff Meets the Shifted Burden

Most of Defendant’s raised issues as to the first cause of action failed to show a lack of triable fact. As to whether Defendant can be attributed Torres’s actions, Plaintiff meets the shifted burden. Upon the report of sexual harassment, the burden on Defendant was to take “immediate and appropriate corrective action”. Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1419–1420, citing Gov. Code § 12940 (j)(1). Plaintiff offers countervailing evidence against Defendant’s contention that there was appropriate corrective action taken. Plaintiff reported the incident on January 20, 2023. That same day, the manager on duty spoke to Torres. Plaintiff presents evidence that no other employees were interviewed as part of Defendant’s investigation, even though Plaintiff told them Torres had previous incidents with other female employees. This is despite the fact that Schuster had heard of similar incidents before the events of January 20, 2023. Plaintiff presents evidence that Torres was not, as Defendant asserts in their papers, required to undertake additional sexual harassment training, but merely had to sign an affirmation of policy. These issues appear to raise sufficient triable issues of fact regarding whether the conduct of Defendant was “appropriate” corrective action. This is a determination for a finder of fact, and not appropriate for summary judgment.

There being triable issues of material fact, summary judgment is inappropriate. Summary judgment is DENIED. Summary adjudication of the first cause of action is DENIED.

B.     Fourth Cause of Action – Failure to Prevent Sexual Harassment

Defendant raises the severity of the harassment, that Torres’s actions cannot be attributed to them, and that they responded promptly and appropriately. Analysis of these issues follows the same analysis as Section III(A) above. Defendant also asserts that their actions thereafter were reasonable. Defendant cites to California Fair Employment & Housing Com. v. Gemini Aluminum Corp. (2004) 122 Cal.App.4th 1004, 1025, which relates to discrimination claims under Gov. Code § 12940 (k). Based on largely the same facts as their assertion of lack of liability for Torres’s acts, they shift the initial burden as to this cause of action.

Though Defendant has shifted their burden on this issue, Plaintiff met the shifted burden with the same evidence already expounded upon above. Plaintiff presents evidence that she was placed on shift overlapping with Torres mere days after the incident. Defendant was aware that Torres might have engaged in “this kind of behavior” before. Defendant’s Exhibit 7. Defendant’s investigation involved manager contact with Torres, and Plaintiff’s initial report. Defendant attempted to receive some form of supplemental interview with Plaintiff, but did not have the Human Resources representative interview Torres at all. These are adequate facts to raise triable issues regarding the sufficiency of Defendant’s investigation. In combination with Plaintiff being placed on overlapping shifts as an alleged assailant so shortly after reporting an incident appears to be sufficient to raise a triable issue of fact in whether Defendants acted reasonably.

Accordingly, there are triable issues of material fact as to failure to prevent sexual harassment. Summary adjudication thereon is accordingly DENIED.

C.     Fifth Cause of Action - Constructive Termination

As with the sexual harassment allegations, Defendant shifts their initial burden as to constructive termination. The same evidence shows that Defendant’s actions were reasonable and that they appropriately responded to the report of harassment.

Defendant also contends that Plaintiff did not raise that her conditions were intolerable. This fails at the first step. Plaintiff’s deposition (even in the excerpts provided by Defendant) makes clear that Plaintiff communicated to Shuster her dissatisfaction that Torres would not face repercussions beyond being counseled. Shuster was also the person who told Plaintiff that she would be working with Torres the same day as their conversation. Shuster was the person who released Plaintiff for the day, but had also told her to “keep her distance”, and that its “just something that happens”. See Defendant’s Exhibit 13, pg. 121. Defendant fails to show that they did not have notice of the condition. The remaining question is whether Plaintiff can produce evidence that conditions meet the definition of intolerable.

In the same vein, as Defendant shifts their initial burden, Plaintiff presents evidence to meet it. The primary jurisprudence, Turner, states that Plaintiff may not merely “quit and sue”. Turner, supra, 7 Cal.4th at 1246. Plaintiff must provide evidence that conditions were so intolerable that a reasonable employee would quit. Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 827. Plaintiff provides evidence of intolerable conditions sufficient to survive summary judgment.

The Court finds Atalla v. Rite Aid Corp. (2023) 89 Cal.App.5th 294 (“Atalla”), instructive, mostly due to its distinguishing facts. In that case, plaintiff was sexually harassed by a district manager through text messages. Id. at 305. Prior to this they had established a friendship, and this was the single incident of harassment in their relationship. Id. at 304. Plaintiff reported the harassment six days later through legal counsel. Id. at 305. Defendant suspended the district manager the following day. Id. at 306.Three days later, he was fired. Ibid. While defendant offered plaintiff to come back to work, her legal counsel informed them that she would not be returning. Ibid. Accordingly, defendant sent plaintiff a separation letter, while reiterating that she was welcome to return. Ibid. Plaintiff filed suit claiming, among other causes of action, constructive termination. Ibid. The trial court, and the court of appeal thereafter, found the claim deficient. Id. at 321-322. Given that defendant had speedily suspended, and subsequently fired, the district manager, plaintiff had willingly separated herself from defendant without any risk of exposure to further harassment. Id. at 322.

This is distinguishable from the case at bar. While Plaintiff reported the incident mere hours after its occurrence, Plaintiff presents evidence that within two days Defendant had acted in three ways which appears relevant for the consideration of constructive termination. First, Defendant informed Plaintiff within two days after the incident that Defendant would not be fired, before any substantive investigation had occurred. She was placed back on shift in a manner which would have exposed her to Torres within a matter of days after the incident. Plaintiff avers that she was told that she should just avoid eye contact with Torres, and that these things happen. Defendant performed no interviews beyond those of Torres. While Plaintiff did not provide further information to Defendant, Defendant provides no authority showing that Plaintiff’s initial report is somehow insufficient to trigger their obligations. It is also worth noting that even Defendant’s evidence shows that this would be the third discussion with Plaintiff regarding the incident, having already done the initial report to Foulke, and a discussion with Shuster on or about January 22. Given the evolved definition of sexual harassment since 2019, there appears to be adequate evidence of intolerable conditions for the matter to be properly submitted to a finder of fact. As such, Plaintiff has raised a triable issue of material fact as to the constructive discharge cause of action.

Therefore, summary adjudication of constructive discharge is DENIED.

D.    Second Cause of Action - Assault and Battery

Defendant asserts that they cannot be held liable for Torres’ alleged assault and battery as an intentional tort outside the scope of his job duties. As an initial matter, Defendant shifts the burden as to this issue. As with the issue of sexual harassment by a non-supervisor, Defendant shows that they would not be adopted automatically but rather require sufficient showing of ratification. Defendant therefore shifts the burden.

Defendant also argues that workers compensation is Plaintiff’s exclusive remedy for this harm. Defendant misapplies the argument. It is not the case that Plaintiff’s exclusive remedy is workers' compensation. Rather, Defendant has statutory immunity for intentional torts, absent some exception. Lab. Code, § 3601 (b); Fretland v. County of Humboldt (1999) 69 Cal.App.4th 1478, 1487. Accordingly, the burden is shifted to Plaintiff.

While Defendant shifts their burden, Plaintiff argues that Defendant is vicariously liable due to ratification. As the Court has extensively explored above, Defendant’s actual actions taken in response to the incident appear de minimus. Defendant’s posturing of making Torres re-sign the sexual harassment policy appears to be triable in light of being informed of not just Plaintiff’s incident, that there were other employees who had experienced similar incidents, and their ongoing knowledge of Torres’s prior incidents of “this kind of behavior”. Defendant’s Exhibit 7. As a result, there appears to be a triable issue of material fact as to ratification. Ratification stands not just to imbue vicarious liability for Torres’s intentional tort, but to abrogate the immunity granted by Labor Code § 3601 (b). Hart v. National Mortgage & Land Co. (1987) 189 Cal.App.3d 1420, 1432.

There are triable issues of fact as to Plaintiff’s second cause of action for assault and battery. Accordingly, summary adjudication of this cause of action is DENIED.

E.     Third Cause of Action - False Imprisonment

Defendant also shifts their burden as to Plaintiff’s false imprisonment cause of action. The Court has already addressed Defendant’s arguments regarding workers compensation, and therefore analysis turns to the substance of the claim. Plaintiff pleads that she was restrained by Torres for a period of seconds. While the law on false imprisonment makes clear that the imprisonment relates to a period of confinement “for an appreciable period of time, however brief.” Easton v. Sutter Coast Hosp. (2000) 80 Cal.App.4th 485, 496, the cases on the subject do not contemplate a period of seconds satisfying this standard. Rather, as the Supreme Court opines, “(t)hat length of time can be as brief as 15 minutes.” Fermino v. Fedco, Inc. (1994) 7 Cal.4th 701, 715, citing Alterauge v. Los Angeles Turf Club (1950) 97 Cal.App.2d 735, 736. Given that Plaintiff alleges (and affirmed in deposition) that her restraint was approximately two seconds in duration, Defendant has adequately provided prima facie evidence that Plaintiff cannot meet her evidentiary burden as to an element of the cause of action.

Plaintiff offers no factual discrepancy from her pleading in this regard. Plaintiff merely asserts that the facts alleged meet the standard for false imprisonment. This is a purely legal argument appropriate for determination as summary adjudication. Plaintiff provides neither countervailing authority regarding the duration of false imprisonment, nor provide evidence meeting the jurisprudence on that cause of action. There is no triable issue of fact as to false imprisonment.

Summary adjudication of false imprisonment is GRANTED.

IV.  Conclusion

Based on the foregoing, the motion for summary adjudication is GRANTED.

Plaintiff shall submit a written order to the court consistent with this tentative ruling and in compliance with Rule of Court 3.1312(a) and (b).       

2-3.      24CV01805, Briscoe v. Morales

Plaintiff Jandon Brisco (“Plaintiff”) filed the complaint (the “Complaint”) against Eriberto Morales (“Morales”), Debroah A. Caron (“Caron”), Cindy K. Silversmith (“Silversmith”), Tracy L. Stevenson Howell (“Stevenson-Howell”, together with Caron and Silversmith, “440 Defendants”), the 440 Club (the “Club”), and Does 1-50, with two causes of action related to allegations that Morales struck Plaintiff with a vehicle.

This matter is on calendar for 440 Defendants’ motions to compel further responses to requests for production of documents and special interrogatories. The parties met with a discovery facilitator, Mr. Michael Brook, and Plaintiff agreed to provide supplemental responses. As of February 28, 2025, Plaintiff has provided subsequent responses, and therefore the motion to compel appears to be moot, and the current controversy is predicated on responses which are not before the Court.

The Court has the jurisdiction to make determinations regarding the sufficiency of the supplemental responses. Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 410-411. This matter is continued to Friday May 30, 2025 at 3:00 pm in Department 19.

The parties are ORDERED to meet and confer regarding the sufficiency of the current round of responses. 440 Defendants are ordered to file an updated separate statement 21 court days prior to hearing. Plaintiff will file any opposition 12 court days prior to hearing. 440 Defendant’s reply is due 7 court days prior to hearing.

4.         24CV03925, Petaluma City Schools v. Greenbacker Renewable Energy Corporation

Petaluma City Schools (“Plaintiff”) filed their original complaint on July 2, 2024, against Greenbacker Renewable Energy Corporation (“Greenbacker”); MP2/IRG-Petaluma City Schools, LLC (“MP2/IRG”); MP2 Capital, LLC, (“MP2 Capital”), and DOES 1 through 50, (collectively referenced as “Defendants”). The complaint alleges causes of action for (1) breach of contract, (2) negligence, and (3) nuisance. Plaintiff then filed its first amended complaint (“FAC”) on November 22, 2024, before any defendant appeared. The FAC now contains the following claims: (1) breach of contract, (2) promissory estoppel, and (3) nuisance. 

Defendants Greenbacker and MP2/IRG then filed their demurrer on January 8, 2025, attacking only the 1^st and 2^nd causes of action. The Demurrer to the First Amended Complaint is OVERRULED in full.  Defendants are required to answer within 10 days of service of the notice of entry of the order.  California Rule of Court (“CRC”) 3.1320(g).  Plaintiff is to serve the notice of entry of this order within 5 days of entry of this order.  CRC 3.1320(g).

I.                   Facts

In the FAC, Plaintiff complains that Defendants breached an agreement (the “Agreement”) for the installation and maintenance of a solar-power energy system on the roofs of Plaintiff’s school campus at Kenilworth Junior High School (“Kenilworth”). It alleges that it entered into the Agreement on December 12, 2006 with RGD Energies, Inc. (“RGD”), by which RGD agreed to “arrange for, at its own expense, the design, installation, operation and maintenance of a photovoltaic electricity generation system” (the “System”) and Plaintiff would purchase electricity which the System generated based on performance guaranties. The Agreement also allegedly required RGD to repair and maintain the system and operate at least 80% of the rated operational capacity. It alleges that it and RGD entered into Amendment One (the “Amendment”) to the Agreement on February 29, 2008, which provided specific details on issues such as System performance. The Amendment, among other things, detailed the requirement for the System to provide the 80% operational capacity throughout its life and that the Amendment would last 20 years starting in about 2007.    

Plaintiff now alleges that Defendant Greenbacker is the parent company of Defendants MP2Capital, LLC (“MP2 Capital”) and MP2/IRG-Petaluma City Schools, LLC (“MP2/IRG”) and that they are the successors in interest to RGD under the Agreement. It asserts that Defendants “all agreed in writing to be bound by all rights, benefits, privileges, duties, liabilities, and obligations under the Agreement, as amended.” 

Plaintiff alleges that RGD “and/or” Defendants had elected to use peel-and-stick solar panels attached to the metal roofs of Kenilworth. The roof panels have a 30-year life expectancy and were installed in around 2005. Plaintiff alleges that it “had issues with the underperformance of” the System, which failed to meet and warranted 80% operational capacity, and on June 26, 2019, it issued a notice of default for the underperformance. It also alleges that it eventually discovered that Defendants failed to maintain and repair the System as required. Plaintiff on February 2, 2024, gave Defendants 72-hour notice of major leaks on a Kenilworth roof which allegedly resulted from the adhesive used to attach the System panels to the roof. Greenbacker allegedly inspected the roof on February 22, 2024, finding that one System panel had caused the leak. It accordingly unpeeled the panel and patched the entire bay where the panel had been located.  Plaintiff complains, however, that the method of installing the System and the compounds used caused further rot and water damage to various buildings at Kenilworth and that Defendants “have refused to replace the defective Solar Panels and repair the roofs at Kenilworth.”

II.                Demurrer

Defendants demur separately to the first and second causes of action in the FAC on the grounds that each fails to state facts sufficient to constitute a cause of action. They argue that Plaintiff fails to set forth the essential terms of the Agreement or attach a copy of the Agreement to the complaint and the allegations show the causes of action to be untimely based on Code of Civil Procedure section 337.1.

Plaintiff opposes the demurrer.  It contends that the allegations sufficiently set forth the contract terms and do not show the claims to be untimely. Regarding dates, it points out that the allegations require the minimum 80% output throughout the life of the system, and in February 2024, only about five months before filing the complaint on July 2, 2024, it notified Defendants of its discovery that the System was not properly maintained and caused damage to its building.  

Defendants reply to the opposition, reiterating their arguments. They contend that Plaintiffs must plead their claims with reasonable precision sufficient to acquaint them with the nature of their alleged breach, Plaintiff’s allegations are based on Defendants’ assumed knowledge, and the allegations are uncertain and inconsistent with the referenced contracts. They note that Plaintiff has not attached the contract documents to the complaint or FAC but they provide these in their reply papers. They also argue that Plaintiff relies improperly on authority governing summary judgment.  

III.             Discussion

A demurrer can only challenge a defect appearing on the face of the complaint, exhibits thereto, and judicially noticeable matters. Code of Civil Procedure (“CCP”) section 430.30; Blank v. Kirwan (1985) 39 Cal.3d 311, 318. The grounds for a demurrer are set forth in CCP section 430.10. One of the grounds, in subdivision (e), is the general demurrer that the pleading fails to state facts sufficient to constitute a cause of action.

Demurrer for failure to state facts sufficient to constitute a cause of action is a general demurrer, which must fail if there is any valid cause of action. CCP section 430.10(e); Quelimane Co., Inc. v. Steward Title Guar. Co. (1998) 19 Cal.4th 26, 38-39. For example, if a party directs a general demurrer against a cause of action labelled “fraud” based on failure to state that cause of action, the demurrer will fail if the complaint sets forth a valid cause of action for malpractice.  Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908

A written contract may be pleaded either in haec verba, i.e. verbatim, or generally “according to its legal intendment and effect.” Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189. 198-199. A party may plead the contract terms by attaching a copy to the complaint and incorporating it therein. See Davies v. Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086, 1091. Normally, a party may also generally plead contract conditions and their satisfaction, unless the allegations show the condition to be an event or show incomplete performance or where the plaintiff is alleging waived or excused performance. Careau & Co. v. Security Pac. Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1390.

By contrast, a plaintiff must allege more than a mere conclusion that the defendant “breached” or violated the terms and must allege some facts showing what constituted the breach.  Bentley v. Mountain (1942) 51 Cal.App.2d 95, 98; Wise v. Southern Pac. Co. (1963) 223 Cal.App.2d 50, 60.

A general demurrer lies where the allegations set forth dates affirmatively showing the statute of limitations to bar the cause of action. See, e.g., Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, at 995; Vaca v. Wachovia Mortg. Corp. (2011) 198 Cal.App.4th 737, at 746. However, the running of the statute must appear “clearly and affirmatively” from the face of the complaint. Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42. The failure to allege dates is irrelevant and will not support any demurrer because a party does not need to allege any specific dates. Union Carbide Corp. v. Sup.Ct. (1984) 36 Cal.3d 15, 25. In Union Carbide, the Supreme Court rejected the argument that the plaintiff needed to plead facts negating the statute-of-limitations defense where the complaint did not allege any dates at all, explaining that because the complaint alleged that the events occurred “at a time unknown,” the allegations were sufficient. The United Western court similarly rejected the argument on demurrer that a party needed to plead dates for a “potentially time-barred claim” in order to determine if the claim is timely or not.

The applicable limitations period for claims based on breach of written contract is four years, pursuant to CCP section 337, the provision on which Defendants specifically rely. 

In their reply, Defendants argue that Plaintiff relies improperly on authority governing summary judgment. The court notes that it is relying on the above authority governing the standards for demurrer and no authority which Plaintiff provides alters the court’s understanding of the standards to apply on demurrer.   

A.                Contract Terms and Their Breach

Plaintiff sufficiently pleads the essential contract terms and their breach, as explained in the facts above. Plaintiff alleges that it entered into the Agreement with RGD. Defendants are the successors in interest to RGD and “all agreed in writing to be bound by all rights, benefits, privileges, duties, liabilities, and obligations under the Agreement, as amended.” The Agreement requires RGD, and thus each Defendant, to “arrange for, at its own expense, the design, installation, operation and maintenance of” the System for photovoltaic electricity generation, requires them to repair and maintain the system, and requires them to operate the System at a minimum of 80% of the rated operational capacity. It alleges that it and RGD entered into the Amendment which, among other things, details the requirement for the System to provide the 80% operational capacity throughout its life and that the Amendment would last 20 years starting in about 2007.            

Defendants’ argument is based on the erroneous view that Plaintiff must plead more details of the contract terms, or attach a copy. Plaintiff has sufficiently pleaded the essential terms. These show that Defendants must provide the required operational output at a minimum of 80% capacity and are responsible for installing, maintaining, and operating the System. It also alleges that Defendant have failed to provide the required output and have failed to maintain the System so that it caused the specified alleged roof damage and leaks.  

In their reply, Defendants contend that Plaintiffs must plead their claims with reasonable precision sufficient to acquaint them with the nature of their alleged breach, Plaintiff’s allegations are based improperly on Defendants’ assumed knowledge, and the allegations are uncertain and inconsistent with the referenced contracts. These arguments are unpersuasive and, moreover, improper.  Defendants are incorrect that the allegations are insufficiently clear to put them on notice of the alleged breaches and damages. The allegations are sufficiently clear, as set forth above. Moreover, Defendants’ claims that they do not sufficiently understand what Plaintiff claims they did to breach any obligations is improper because it is a new argument not raised in the actual demurrer. As explained above, Defendants base their demurrer on two arguments only: lack of sufficient allegation of the contract terms and untimeliness. They may not raise entirely new arguments in their reply, which they have improperly done. Defendants also improperly in reply raise an entirely new demurrer ground, uncertainty. They asserted only the general demurrer on the ground that the FAC fails to state facts sufficient to constitute a cause of action.  They did not assert the demurrer for uncertainty and therefore may not do so in their reply.          

Finally, Defendants improperly argue, based on extrinsic evidence, that the allegations conflict with the actual Agreement terms. They note that Plaintiff has not attached the Agreement documents to the complaint or FAC or alleged specific terms which Defendants contend conflict with the allegations. Instead, Defendants provide purported Agreement documents in their reply papers as evidence and rely on these. As explained above, a demurrer may only be based on the face of the complaint, exhibits thereto, and judicially noticeable matters. Defendants’ exhibits are therefore improper extrinsic evidence outside the scope of a demurrer. 

B.                 Timeliness

Defendants contend that the causes of action accrued when Plaintiff first discovered the underperformance of the System, by June 2019. However, that is not correct. Plaintiff alleges that the Agreement requires Defendants to maintain the required output throughout the life of the System, it had “issues” with the System not operated at that output, and it simply gave a notice of an underperformance in June 2019.  This does not apply to subsequent instances of underperformance but is instead, on the face of the pleading, merely potentially nothing more than an example of one instance of underperformance. By the allegations, it is possible that subsequent instances of underperformance occurred and that claims for those may not be untimely. Moreover, even if Defendants were correct as to the claims for underperformance, this allegation and date of 2019 has no bearing on the claims for the lack of maintenance and resulting building damage. Plaintiff has pleaded only one date for that, February 2024, and that date is only about five months before Plaintiff filed the complaint.

On the face of the pleadings, no cause of action is necessarily untimely. The fact that a cause of action may possibly be untimely, as explained above, is not the standard. The cause of action must necessarily be untimely on the face of the pleading for a demurrer to lie on this basis.

IV.             Conclusion

The court OVERRULES the demurrer in full.  The prevailing party shall prepare and serve a proposed order consistent with this tentative ruling within five days of the date set for argument of this matter. Opposing party shall inform the preparing party of objections as to form, if any, or whether the form of order is approved, within five days of receipt of the proposed order. The preparing party shall submit the proposed order and any objections to the court in accordance with California Rules of Court, Rule 3.1312.

5.         24CV06452, Redwood Credit Union v. Segura

Plaintiff Redwood Credit Union (“Plaintiff”) filed the complaint in this action against defendants Kristian J. Segura (“Defendant”), seeking possession of personal property and for breach of contract, claim and delivery, and declaratory relief, arising out of a retail installment sales contract for the sale of a 2015 GMC Yukon XL, VIN 1GKS2HKC7FR588612  (the “Vehicle”).

Defendant has filed a motion to dismiss, and to compel arbitration pursuant to CCP § 1281.2.

1. Governing Law 

   A. Compelling Arbitration

A party seeking to compel arbitration pursuant to CCP § 1281.2 must “plead and prove a prior demand for arbitration under the parties’ arbitration agreement and a refusal to arbitrate under the agreement.” Mansouri v. Sup. Ct. (2010) 181 Cal.App.4th 633, 640-641. “The party seeking to compel arbitration has the initial burden to plead and prove the existence of a valid arbitration agreement that applies to the dispute.” Dennison v. Rosland Cap. LLC (2020) 47 Cal.App.5th 204, 209; see also, Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972; Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236. “Once that burden is satisfied, the party opposing arbitration must prove any defense to the agreement’s enforcement, such as unconscionability [or waiver].” Id; see also, Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59.

2. Motion to Dismiss and Demurrer

Defendant has filed a motion to dismiss, however such motions are not the norm in California. However, Defendant cites the statute relating to demurrers, and therefore this Court treats it as such. Defendant fails to raise a basis under which the Complaint is insufficient as a matter of law.

Defendant has filed a notice of non-opposition but did so before the time when an opposition would be due. Therefore, it has no effect. Plaintiff’s opposition was due nine court days before the hearing. CCP § 1005. They have filed a timely opposition.

Defendant raises argument averring that this court does not have jurisdiction, specifically contending that this court has no jurisdiction, because jurisdiction is vested with an arbitrator. There are various reasons why this is incorrect. It is worth noting that Defendant asks this Court to compel Plaintiff to arbitration, which seems to concede the issue of jurisdiction that he asserts. This Court has various powers over the arbitration proceedings. See CCP § 1286.2.

Confusingly, despite having no issue with the result of being compelled to arbitration, Plaintiff feels the need to assert that Defendant cannot bring the motion, because Plaintiff never refused to arbitrate. The filing of a lawsuit by a plaintiff is sufficient to show that plaintiff has refused to arbitrate claims, allowing a defendant to move for arbitration. Hyundai Amco America, Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577. Regardless of Plaintiff’s extraneous arguments, the matter must be arbitrated under federal rules, which bears no impact on the sufficiency of the Complaint. The Court has jurisdiction. 

Defendant’s demurrer is OVERRULED.

3. Compelling Arbitration

Defendant moves the Court to compel arbitration. Defendant has provided evidence of an arbitration agreement. Plaintiff has filed a non-opposition to that motion.

The motion to compel arbitration is GRANTED. Defendant’s request to dismiss the action is DENIED. 

1. Stay

Issuance of the stay is mandatory upon granting the motion. CCP § 1281.4; see also OTO, supra, 8 Cal.5th at 140. A stay of the present proceedings is GRANTED. This matter shall be stayed pending the outcome of the Arbitration.

Plaintiff shall submit a written order to the court consistent with this tentative ruling and in compliance with Rule of Court 3.1312(a) and (b).

6.         25CV01332, Brumley v. Iron Oak Home Loans, Inc.

Plaintiff Verrina Brumley (“Plaintiff’) filed the presently operative complaint (“Complaint”) against defendants Iron Oak Home Loans, Inc. (“Iron Oak”), Forge Trust co. (“Forge”), CFBO Beverly Shane IRA Account No. 844275 (“CFBO”), John Shane and Beverly Shane, in their capacity as co-trustees of the Shane Family Trust dated November 17, 2005 (the “Shanes”), Sunwest Trust (“Sunwest”, together with all other defendants, “Defendants”), and Does 1-20. This matter is on calendar for Plaintiff’s motion for preliminary injunction under CCP §§ 526 and 527. It is GRANTED conditioned on Plaintiff posting a bond of $66,003.73.

1. Facts and Procedural History

Plaintiff is the current owner of the property located at 8520 and 8522 Alden Lane, Windsor, California (the “Property”). Plaintiff resides there. Defendants, other than Iron Oak, are the mortgagor for the Property. Iron Oak is the mortgage servicer and mortgage broker. On October 1, 2018, Plaintiff obtained a loan through Defendants secured by the Property, with an interest rate of 10.5%. This is a balloon mortgage with a maturity date of November 1, 2020, at which point the full amount became due. Plaintiff has a monthly interest-only payment of $2,712.50. Plaintiff and Defendants executed a loan modification agreement with an extension on the maturity date to May 1, 2021.

Plaintiff is in default of the payments on her loan. She is also in arrears on property taxes and has failed to make homeowners insurance payments. Defendants issued a notice of Default on July 3, 2024. On November 19, 2024, Plaintiff filed for bankruptcy protection under Chapter 13. Defendants received an exemption to proceed with foreclosure proceedings from the bankruptcy court.

Prior to the issuance of the Temporary Restraining Order, Defendants had initiated foreclosure on the property and scheduled a foreclosure sale for March 14, 2025. The Complaint was filed on March 10, 2025. Plaintiff’s application for TRO and the injunction followed on March 12, 2025, and the TRO issued. This hearing follows to determine whether a preliminary injunction is appropriate.

2. Motion for Preliminary Injunction

The matter now before the court is the Plaintiff’s motion for preliminary injunction. Plaintiff seeks to enjoin Defendants from effectuating a foreclosure sale.

The ultimate purpose of a preliminary injunction is to preserve the status quo. Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528. The court may only grant such a preliminary injunction where the Plaintiff has a right to equitable relief if the case goes to trial. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995-998. CCP §526 lists the specific circumstances where an injunction would be appropriate. These grounds include whether Plaintiff appears entitled to the requested relief, whether the requested relief includes a prayer to restrain the actions at issue, whether continued activity would create waste or great or irreparable injury to a party, and whether a party is about to do something regarding the subject matter of the action and tending to render judgment ineffectual, among others. CCP §526(a). 

As is usual with all injunctions, a preliminary injunction will issue only if there is no adequate legal remedy. CCP § 526. The party seeking the injunction must show an imminent threat of irreparable injury, often equated with an “inadequate legal remedy.” CCP § 526(a)(2); Korean Philadelphia Presbyterian Church v. Cal. Presbytery (2000) 77 Cal.App.4th 1069, 1084. 

The requirement that the injury be “imminent” simply means that the party to be enjoined is, or realistically is likely to, engage in the prohibited action. Korean Philadelphia Presbyterian Church, supra. The court should not grant the injunction if the conduct or injury complained of is not occurring.  Cisneros v. U.D. Registry, Inc. (1995) 39 Cal.App.4th 548, 574. The irreparable injury will exist if the party seeking the injunction will be seriously injured in a way that later cannot be repaired. People ex rel. Gow v. Mitchell Bros., Etc. (1981) 118 Cal.App.3d 863, 870-871.

The party seeking a preliminary injunction must also demonstrate a reasonable probability of success. See CCP § 526(a)(1); San Francisco Newspaper Printing Co., Inc. v. Sup.Ct. (Miller) (1985) 170 Cal.App.3d 438, 442. Plaintiff must make a prima facie showing that he is entitled to relief under these standards but need not rise to the requirements for a final determination. Triple A Machine Shop, Inc. v. State of California (1989) 213 Cal.App.3d 131, 138. Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, at 1543, provides an example of how to determine whether the plaintiff has satisfied this requirement. The plaintiff in Scaringe sought to halt construction that would block his view. The court stated that in order to show a reasonable probability of success, the plaintiff had to demonstrate an enforceable servitude or CCRs.

The court must conduct a two-prong equitable balancing test, weighing the probability of prevailing on the merits against the determination as to who is likely to suffer greater harm. Robbins v. Sup.Ct. (1985) 38 Cal.3d 199, 206. Shoemaker v. County of Los Angeles (1995) 37 Cal.App.4th 618, 633. This determination involves a mix of the two elements, and the greater the Plaintiff’s showing on one element, the weaker it may be on the other. Butt v. State of Calif. (1992) 4 Cal.4th 668, 678. 

If the court grants a preliminary injunction, it must require an undertaking or a cash deposit.  CCP § 529.

3.  “Prohibitory” vs. “Mandatory” Injunctions

“[A]n injunction is prohibitory if it requires a person to refrain from a particular act and mandatory if it compels performance of an affirmative act that changes the position of the parties.” Davenport v. Blue Cross of California (1997) 52 Cal.App.4th 435, 446-448. (rejecting “preservation of status quo” as test for prohibitory injunction). An order that a party not encumber or dispose of assets is prohibitory because “[i]t directs affirmative inaction by defendant, not affirmative action” Oiye v. Fox (2012) 211 Cal.App.4th 1036, 1048. 

With respect to preliminary injunction, courts should only grant mandatory preliminary injunctions “in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Ass'n v. Furlotti (1999) 70 Cal.App.4th 1487, 1493; see also, Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178, 1184; Brown v. Pacifica Found., Inc. (2019) 34 Cal.App.5th 915, 925; Board of Supervisors v. McMahon (1990) 219 Cal.App.3d 286, 295; Hagen v. Beth (1897) 118 Cal. 330, 331.

The injunction sought here is prohibitory. It orders that Defendants not take affirmative actions in foreclosing on the property. Preventing Defendants from pursuing or causing to be completed a foreclosure sale is a prohibitory request. Defendants need only take no action to comply.

4. Irreparable Injury

There is a threat of irreparable harm where there is an “inadequate legal remedy” or where the injury cannot be readily repaired or undone. CCP § 526(a)(2); see People ex rel. Gow v. Mitchell Brothers’ Santa Ana Theater (1981) 118 Cal.App.3d 863, 870-871. 

Real property is generally considered unique so that damages cannot readily make up for any loss or injury. See CC § 3387. However, this is not necessarily true where the real property is solely for investment, in which case damages may be an adequate remedy, rendering an injunction unnecessary. Jessen v. Keystone Sav. & Loan Ass’n (1983) 142 Cal.App.3d 454, 458.  

Plaintiff offers evidence that she currently resides at the Property, and accordingly, will be subject to irreparable harm if the injunction is not granted. Given that real property is unique, this seems inarguable. Iron Oak makes no argument in response as to the irreparable nature of the harm. Based on the evidence Iron Oak’s harm appears to be entirely monetary. Accordingly, however frustrating to Defendants the delay caused by an injunction may be, the balance of this factor weighs strongly in favor of Plaintiff.

5. Likelihood of Success on the Merits

Plaintiff argues that she has a substantial likelihood of prevailing on the matter because the loans were usurious, and Defendants seek to foreclose on properties not secured by the loan. Iron Oak opposes, averring that Plaintiff cannot prevail on her causes of action.

It is worth noting that Plaintiff offers no evidence that the loans were usurious beyond their conclusion to this effect and the rate charged. Non-consumer loans are capped according to the rate charged at the San Francisco Federal Reserve Bank (“SFFRB”). See Cal. Const., art. XV, § 1 (2)(b). Consumer loans are always capped at 10%. Cal. Const., art. XV, § 1 (1). No evidence is offered as to the current rate of the SFFRB at the time the loan was issued. Iron Oak offers evidence that this was a business loan, offered substantially less protection. Furthermore, usury claims only void the interest on the transaction, and make no impact on the principle still owed. Gregg v. Phillips (1930) 105 Cal.App. 132, 133. Plaintiff even concedes that she owes in excess of $100,000 if the usury claims are found to prevail, and is without explanation as to how she can avoid foreclosure thereon.

Defendants also argue that loans by brokers are generally exempt from usury laws. Cal. Const., art. XV, § 1. Plaintiff points out on reply that this expectation is not without limits, and that the broker must be acting for compensation in their capacity of arranging the loan. Civ. Code, § 1916.1. Defendants present no evidence related to their compensation, but Plaintiff offers no evidence to refute the position. It appears a dubious contention that Iron Oak performed this function for free. No party has made a persuasive showing on this issue.

Iron Oak also offers evidence that while there are two APNs associated with the property, Plaintiff avers in her bankruptcy documents that it is a single parcel. Furthermore, Plaintiff offers no evidence that the addresses are distinguishable beyond the fact that they have two different street addresses. Defendants do not show evidence of when the second APN was issued, or whether its omission on the loan documents occurred. Accordingly, this minimal information weighs lightly in favor of Defendants.

Based on the evidence presented, the Court finds that Plaintiff has made a relatively weak showing that she will prevail.

6. Balancing Test

While Plaintiff has shown relatively low probability of prevailing on the merits, the irreparable harm is obvious. The great weight of the irreparable harm to be suffered by Plaintiff in the event injunction issues means that it appears erroneous to deny Plaintiff’s right thereon.

7. Undertaking

As noted above, if the court grants a preliminary injunction, it must require an undertaking or a cash deposit. CCP § 529. The amount must cover any damages to defendant if the court finally determines that plaintiff was not entitled to the injunction. CCP § 529; see Top Cat Productions, Inc. v. Michael’s Los Feliz (2002) 102 Cal.App.4th 474, 478. The court should thus determine the potential likely harmful effect of the injunction as the basis for the amount. Abba Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 14. The court should consider lost profits or other damages as well as costs of defense where trial is necessary to defeat the preliminary injunction but should not consider the strength of plaintiff’s case on this point. Id. at 15-16. The court also has the authority to waive the bond requirement if it finds that the plaintiff is indigent or unable to obtain sufficient sureties, but the court must weigh all relevant factors. CCP § 995.240

Plaintiff argues that the security against the home is sufficient to allow the Court to waive the bond amount. For this proposition, Plaintiff cites various unpublished federal authority. The authority does not stand for the proposition for which Plaintiff offers it. The federal cases cited offer no salient analysis of this Court’s obligations under the CCP. Plaintiff’s cases only relate to the Federal Rules of Civil Procedure. See, e.g., Dougherty v. Bank of America, N.A. (E.D. Cal., Feb. 17, 2017, No. 2:15-CV-01226-TLN-DB) 2017 WL 1349012, at *6. Accordingly, they are entitled to no weight in interpreting the Court’s obligations under CCP § 529. Plaintiff also cites one superior court case, which similarly provides no authority upon which this Court may rely. In the alternative, Plaintiff proposes a single month’s mortgage payment as security. This is entirely unpersuasive, as the probability that this action will terminate in a single month is not anchored in the realities of civil litigation. A single month’s mortgage does not reasonably represent the expected damages of granting the injunction.

Iron Oak avers that Plaintiff should have to put forward the full amount due as the undertaking, totaling $371,614.76. This does not appear synonymous with the harm in granting the injunction, which is the standard by which the bond is set. In large part, the value of real property remains relatively constant. However, Iron Oak raises several meritorious categories of items which appear to be articulable damages in the event the injunction is wrongly issued. Plaintiff ostensibly has overdue taxes on the property which Defendants may have to pay to avoid county foreclosure, amounting to $4,293,20. Defendants have, to date, $6,385.53 in insurance costs. Iron Oak also avers an estimated $6,500 in attorney’s fees.

Furthermore, it appears appropriate to guard against the possibility that the Property may devalue while Defendants are enjoined, sufficient that it will limit their recovery when foreclosure occurs. Plaintiff’s estimation of mortgage payments bears some value on the ongoing harm to Defendants. Assuming an optimistically speedy adjudication of this litigation, it may last at least eighteen months. Plaintiff’s monthly payment is $2,712.50. Calculating for a year and a half, that totals $48,825.

Therefore, between ongoing mortgage payments, overdue taxes, attorney’s fees, and insurance costs, the appropriate bond amount is $66,003.73.

VIII.            Conclusion

Based on the foregoing, the request for Preliminary Injunction is GRANTED, conditioned on Plaintiff posting a bond of $66,003.73. Upon Plaintiffs’ posting of the undertaking the preliminary injunction will issue, prohibiting Defendants from pursuing or causing to be completed a foreclosure sale on the Property. 

Plaintiff shall post a bond of $66,003.73 within seven (7) days of this order.

Plaintiff’s counsel shall submit a written order to the Court consistent with this tentative ruling and in compliance with Rule of Court 3.1312(a) and (b).

      

**This is the end of the Tentative Rulings.***