Conroy v. Wells Fargo Bank, N.A.
| Decision Date | 28 July 2017 |
| Docket Number | C078914. |
| Citation | 13 Cal.App.5th 1012 |
| Parties | NICHOLAS CONROY et al., Plaintiffs and Appellants, v. WELLS FARGO BANK, N.A., et al., Defendants and Respondents. |
| Court | California Court of Appeals Court of Appeals |
United Law Center and Danny A. Barak for Plaintiffs and Appellants.
National Housing Law Project, Kent Qian ; Law Offices of Elizabeth S. Letcher, Elizabeth S. Letcher ; Law Office of Eric Andrew Mercer and Eric Andrew Mercer for National Housing Law Project, California Reinvestment Coalition, Housing and Economic Rights Advocates, Law Foundation of Silicon Valley, Legal Services of Northern California, Neighborhood Legal Services of Los Angeles County, Public Good Law Center, Eric Andrew Mercer; Kamala D. Harris , Attorney General, Nicklas A. Akers , Assistant Attorney General, Michele Van Gelderen and Alica K. Hancock , Deputy Attorneys General, as Amici Curiae on behalf of Plaintiffs and Appellants.
Severson & Werson and Jan T. Chilton for Defendants and Respondents.
In 2005, Nicholas and Mary Conroy refinanced their residence with a mortgage loan that was secured by a deed of trust on the property. Five years later, the Conroys stopped making payments and defaulted on their loan. In an effort to avoid foreclosure, the Conroys filed suit against defendants Wells Fargo Bank, N.A., successor by merger to Wells Fargo Home Mortgage, Inc.; Fidelity National Title Insurance Company also known as Default Resolution Network, LLC; and HSBC Bank USA, N.A., as trustee for Merrill Lynch Mortgage Backed Securities Trust, Series 2007-2 (Wells Fargo). The Conroys' first amended complaint alleged causes of action for intentional misrepresentation, negligent misrepresentation, negligence, violation of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), equitable accounting, promissory estoppel, violations of Civil Code sections 2923.6 and 2923.7,1 and for declaratory relief. The trial court sustained Wells Fargo's demurrer without leave to amend and entered a judgment of dismissal.
On appeal, the Conroys contend the trial court erroneously dismissed their causes of action for (1) intentional and negligent misrepresentation by ignoring their allegations Wells Fargo made several material representations about refinancing while Wells Fargo never intended to modify the loan, (2) negligence by mistakenly concluding Wells Fargo did not owe a duty of care to the Conroys, (3) promissory estoppel by ignoring allegations Wells Fargo deliberately miscalculated the Conroys' income as a pretext for denial of loan modification, (4) violations of section 2923.6 by concluding the statute does not apply to the Conroys' request for a loan modification after the effective date of the statute, (5) violation of section 2923.7 by construing the statute to require a borrower to affirmatively request a single point of contact with the loan servicer, and (6) under the UCL by concluding this claim was merely derivative of other claims, all of which were dismissed. The Conroys abandon their causes of action for equitable accounting and declaratory relief.
In addition to the parties' briefs, we have received and considered an amicus curiae brief from the Attorney General and another from the National Housing Law Project, California Reinvestment Coalition, Housing and Economic Rights Advocates, Law Foundation of Silicon Valley, Legal Services of Northern California, Neighborhood Legal Services of Los Angeles County, Public Good Law Center, and Eric Andrew Mercer (collectively the National Housing Law Project).
We conclude the Conroys' operative complaint does not state valid causes of action for intentional or negligent misrepresentation because they did not properly plead actual reliance or damages proximately caused by Wells Fargo. The trial court properly determined the Conroys could not assert a tort claim for negligence arising out of a contract with Wells Fargo. For lack of detrimental reliance on any of Wells Fargo's alleged promises, the Conroys did not set forth a viable cause of action for promissory estoppel even under a liberal construction of the operative complaint.
The Conroys' claim under section 2923.6 is not viable because subdivision (g) of that statute excludes loan modification applications undertaken before January 2, 2013. Because Wells Fargo considered and rejected a loan modification for the Conroys before that date, section 2923.6 does not apply to them. The plain language of section 2923.7 requires a borrower to expressly request a single point of contact with the loan servicer. The Conroys' operative complaint did not allege they ever requested a single point of contact. And the Conroys do not state they can amend their cause of action to allege they actually requested a single point of contact. The trial court properly dismissed the Conroys' UCL claim because it is merely derivative of other causes of action that were properly dismissed.
Accordingly, we affirm the trial court's judgment of dismissal.
In reviewing a trial court's order sustaining a demurrer without leave to amend, we apply the de novo standard of review to exercise our independent judgment regarding whether the operative complaint states valid causes of action as a matter of law. (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300 [58 Cal.Rptr.2d 855, 926 P.2d 1042].) For purposes of review, we assume the truth of properly pleaded factual allegations in the operative complaint and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their context. (Ibid.) "We do not assume the truth of contentions, deductions, or conclusions of fact or law, and may disregard allegations that are contrary to the law or to a fact that may be judicially noticed." (Fischer v. Time Warner Cable Inc. (2015) 234 Cal.App.4th 784, 790 .) And we may accept factual allegations made by plaintiffs in "an affidavit filed voluntarily in opposition to the defendant's demurrer" when the affidavit contradicts the plaintiffs' pleadings. (Able v. Van Der Zee (1967) 256 Cal.App.2d 728, 734 (Able); see also C.R. v. Tenet Healthcare Corp. (2009) 169 Cal.App.4th 1094, 1103 [on demurrer, sworn statements "may be accepted when made by a party but not those of third parties or an opponent"]; Rauber v. Herman (1991) 229 Cal.App.3d 942, 953, fn. 3 [on demurrer sustained without leave to amend, taking judicial notice of plaintiff's declarations filed in support of their request for preliminary injunction].)
We review the trial court's denial of leave to amend for abuse of discretion. (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 44 (Rakestraw).) To secure a reversal, plaintiffs must demonstrate a reasonable probability they can amend their complaint to cure any fatal defect. (Id. at p. 43.) (Rakestraw, at p. 43.)
Consistent with the standard of review, we recount the factual background based on the Conroys' first amended complaint (the operative complaint) and declarations filed by the Conroys in support of their request for a preliminary injunction.
In 2004, Nicholas and Mary Conroy received a residential property in Cameron Park by quitclaim deed from Mary's mother. In 2005, the Conroys took out a mortgage on the property that was secured by a deed of trust. In 2009, the Conroys' household income decreased significantly and they had difficulty making mortgage payments. The Conroys unsuccessfully attempted to refinance their loan.
In June 2010, Nicholas's employer That month, the Conroys contacted Wells Fargo about a loan modification but were informed by a Wells Fargo agent that they were required to miss three mortgage payments before the modification process could begin. The Conroys made no further loan payments but continued to live in the house.
The Conroys would unsuccessfully apply six times for a loan modification with Wells Fargo, which serviced the loan on behalf of Fidelity National Title Insurance Company (the loan's trustee) and HSBC Bank USA, N.A., as trustee for Merrill Lynch Mortgage Backed Securities Trust, Series 2007-2 (the loan's beneficiary).
The first loan modification process began in November 2010 when Wells Fargo notified the Conroys they might be eligible for a Federal Housing Administration Home Affordable Modification Program (HAMP) loan modification. In December 2010, Wells Fargo informed the Conroys they were required to sign a Dodd-Frank certification. Although the Conroys assert they were not required to sign...
To continue reading
Request your trial
-
Brumbaugh v. Mufg Union Bank, N.A.
...in the loan transaction does not exceed the scope of its conventional role as mere lender of money.'" (See Conroy v. Wells Fargo Bank, N.A. (2017) 13 Cal.App.5th 1012, 1029.) That general rule is for negligence, not negligent misrepresentation. (Alvarez v. BAC Home Loans Servicing, L.P. (20......
-
Montes v. Wells Fargo Bank, N.A.
...court to reconsider that conclusion in light of recent California case law. See Mot. at 10 (citing Conroy v. Wells Fargo Bank, N.A., 13 Cal. App. 5th 1012 (2017)). Because the record shows neither a breach of that duty nor resulting damages, the court need not reach that reconsideration req......
-
Johnson v. Nationstar Mortg., LLC
...argument in reply, since the case that it relied on has been vacated. See Reply at 4 n. 1 (citing Conroy v. Wells Fargo Bank, N.A., 13 Cal. App. 5th 1012, 221 Cal. Rptr. 3d 551 (Ct. App. 2017), reh'g granted, opinion not citeable (Aug. 25, 2017), vacated, No. C078914, 2017 WL 5711804 (Cal. ......