Ruling
STEPHANIE GAUSS VS DAVID DE WISPELAERE, ET AL.
Jul 18, 2024 |
23TRCV03015
Case Number:
23TRCV03015
Hearing Date:
July 18, 2024
Dept:
M
LOS ANGELES SUPERIOR COURT SOUTHWEST DISTRICT
Honorable Gary Y. Tanaka
Thursday, July 18, 2024
Department M
Calendar No. 18
PROCEEDINGS
Stephanie Gauss v. David De Wispelaere, et al.
23TRCV03015
1.
David De Wispelaere (Wispelaere), Annie Maes (Maes) and Maes Capitals Demurrer to First Amended Complaint
2.
David De Wispelaere (Wispelaere), Annie Maes (Maes) and Maes Capitals Motion to Strike Portions of First Amended Complaint
3.
David De Wispelaere (Wispelaere), Annie Maes (Maes) and Maes Capitals Motion to Augment Bond
TENTATIVE RULING
David De Wispelaere (Wispelaere), Annie Maes (Maes) and Maes Capitals Demurrer to First Amended Complaint is sustained with 20 days leave to amend, sustained without leave to amend, in part, and overruled, in part.
David De Wispelaere (Wispelaere), Annie Maes (Maes) and Maes Capitals Motion to Strike Portions of First Amended Complaint is deemed moot.
David De Wispelaere (Wispelaere), Annie Maes (Maes) and Maes Capitals Motion to Augment Bond is continued to August 26, 2024.
Background
Plaintiffs Complaint was filed on September 12, 2023. Plaintiff alleges the following facts. In September 2020, Plaintiff purchased real property commonly known as 8301 Wiley Post Ave., Los Angeles, CA 90045 (8301 Wiley Post). Plaintiff made a down payment of 25% of the purchasing price and obtained a loan for the balance with FCI Lender Services, Inc. Plaintiff decided to build a duplex. Plaintiff obtained a loan from David De Wispelaere for $1,500,000.00. The duplex has common addresses: 8303 and 8305 Wiley Post Ave., Los Angeles, CA 90045. As part of the loan, De Wispelaere was to pay off the existing FCI loan. Unbeknownst to Plaintiff, De Wispelaere changed the lender from himself to Defendant Annie Maes (Maes). The loan amount was also changed. DeWispelaere and Maes are not licensed to accept consumer loans. During the loan origination process, Plaintiff was never asked to complete a 1003 Loan Application or provide a copy of her credit report, or income or asset verification. Plaintiff alleges that the loan is in violation of federal lending laws and that the loan charges usurious interest.
In the original Complaint, Plaintiff alleged the following causes of action: 1. Violations of the Truth in Lending Act; 2. Violations of the Real Estate Settlement Procedures Act; 3. Violations of the Equal Credit Opportunity Act; 4. Usury; 5. Violations of Cal. Business & Professions Code § 17200, et seq; 6. Financial Abuse of Elder; 7. Injunctive Relief; 8. Negligence.
On March 14, 2024, Defendants demurrer was overruled in part and sustained with leave to amend in part. On April 9, 2024, Plaintiffs filed a First Amended Complaint. The FAC included the first six causes of action, omitted the seventh and eighth causes of action, and added new causes of action for Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, Fraud, and IIED.
Meet and Confer
Defendants set forth a meet and confer declaration in sufficient compliance with CCP § 430.41.
(Decl. Jacoby Perez.)
Demurrer
A demurrer tests the sufficiency of a complaint as a matter of law and raises only questions of law. (
Schmidt v. Foundation
Health (1995) 35 Cal.App.4th 1702, 1706.)
In testing the sufficiency of the complaint, the court must assume the truth of (1) the properly pleaded factual allegations; (2) facts that can be reasonably inferred from those expressly pleaded; and (3) judicially noticed matters. (
Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.)
The Court may not consider contentions, deductions, or conclusions of fact or law.
(
Moore v. Conliffe
(1994) 7 Cal.App.4th 634, 638.) Because a demurrer tests the legal sufficiency of a complaint, the plaintiff must show that the complaint alleges facts sufficient to establish every element of each cause of action.
(
Rakestraw v. California Physicians Service
(2000) 81 Cal.App.4th 39, 43.)
Where the complaint fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer.
(C.C.P., § 430.10(e);
Zelig v. County of Los Angeles
(2002) 27 Cal.App.4th 1112, 1126.)
Sufficient facts are the essential facts of the case "with reasonable precision and with particularity sufficiently specific to acquaint the defendant with the nature, source, and extent of his cause of action.
(
Gressley v. Williams
(1961) 193 Cal.App.2d 636, 643-644.)
"Whether the plaintiff will be able to prove the pleaded facts is irrelevant to ruling upon the demurrer."
(
Stevens v. Superior Court
(1986) 180 Cal.App.3d 605, 609610.)
Under Code Civil Procedure § 430.10(f), a demurrer may also be sustained if a complaint is uncertain.
Uncertainty exists where a complaints factual allegations are so confusing they do not sufficiently apprise a defendant of the issues it is being asked to meet.
(
Williams v. Beechnut Nutrition Corp.
(1986) 185 Cal.App.3d 135, 139, fn. 2.)
Defendants demur to the second, third, sixth, and seventh through tenth causes of action for failure to state facts sufficient to constitute a cause of action. CCP § 430.10(e).
As to the demurrer brought by Defendants David De Wispelaere and Maes Capital, the demurrer is sustained with 20 days leave to amend, in part, and without leave to amend, in part.
Plaintiff has not alleged sufficient factual allegations against these Defendants. The factual allegations are related to alleged aspects and wrongdoing concerning the subject loan. Plaintiff has specifically alleged that these demurring Defendants were not the lenders, but that only Defendant Annie Maes was the lender.
Thus, Defendants David De Wispelaere and Maes Capitals demurrer is sustained with 20 days leave to amend as to the second, third, sixth, and eighth causes of action. The demurrer to the seventh, ninth, and tenth causes of action is sustained without leave to amend.
As to Defendant Annie Maes, the Court makes the following ruling.
Second Cause of Action for Violations of the Real Estate Settlement Procedures Act (RESPA)
The demurrer to the second cause of action is sustained with 20 days leave to amend.
Plaintiff fails to state facts sufficient to state a cause of action.
Defendants argue that RESPA applies only to federally related mortgage loans as defined in 12 U.S.C. § 2602. For purposes of RESPA, a federally related mortgage loan is one involving any loan that is secured by a mortgage on residential real estate where the proceeds are used to pay an existing loan secured by the same property and the loan is made by a federally-insured lender or another agency of the federal government through an housing or urban development program. 12 U.S.C.A. § 2602(1)(A),(B). Miller & Starr § 6:15. The Real Estate Settlement Procedures Act (RESPA), 2 Cal. Real Est. § 6:15 (4th ed.)
Here, Plaintiff has not alleged specific facts to demonstrate that this particular loan would, in fact, qualify as a federally related loan. Curiously, in Plaintiffs opposition, Plaintiff refers to allegations set forth in paragraphs 61 to 63 which are allegations set forth in the first cause of action, and not the second cause of action. Plaintiff also states that allegations to support the conclusion of federally related mortgage loan was set forth in paragraph 87. However, that section refers to TILA not RESPA. PLAINTIFF is informed and believes, and thereon alleges, that both the Loan and DEFENDANTS are subject to TILA[. . .] (FAC, ¶ 87). In any event, if that was a typographical error, the allegation is made on information and belief.
[P]laintiff may allege on information and belief any matters that are not within his personal knowledge, if he has information leading him to believe that the allegations are true and thus a pleading made on information and belief is insufficient if it merely assert[s] the facts so alleged without alleging such information that lead[s] [the plaintiff] to believe that the allegations are true.
Gomes v. Countrywide Home Loans, Inc.
(2011) 192 Cal.App.4th 1149, 11581159 (internal citations and quotations are omitted; emphasis in original.) As to the allegation made on information and belief, Plaintiff has failed to allege sufficient facts that would support the contention that the belief is true.
Defendants demurrer to the second cause of action is sustained with 20 days leave to amend.
Third Cause of Action for Violations of the Equal Credit Opportunity Act (ECOA)
The demurrer to the third cause of action is sustained with 20 days leave to amend. Plaintiff fails to state facts sufficient to constitute a cause of action.
The ECOA makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction [] on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract) 15 U.S.C. § 1691(a). In the original Complaint, Plaintiff failed to allege any facts to show that she was discriminated against due to any protected class as defined in the statute. In the FAC, Plaintiff has now alleged that she is female, of Asian ancestry, born in Korea, uses English as a second language, and was over 62 years of age at the time in question. (FAC, 92.)
However, Plaintiff alleged no facts that she was discriminated against due to these protected categories. The allegations are sheer conclusions without any supporting facts.
Defendants demurrer to the third cause of action is sustained with 20 days leave to amend.
Sixth Cause of Action for Financial Abuse of Elder
Defendants demurrer is sustained with 20 days leave to amend.
Plaintiff fails to state facts sufficient to state a cause of action.
Welf. & Inst. Code, § 15610.30 states, in relevant part: (a) Financial abuse of an elder or dependent adult occurs when a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.
Pleading a claim for elder abuse requires specific facts of intentional or, at a minimum, reckless conduct.
See, Worsham v. OConnor Hospital
(2014) 226 Cal.App.4th 331, 338. To state the statutory cause of action for Financial Elder Abuse, Plaintiff must plead specific facts.
See, Covenant Care v. Superior Court
(2004) 32 Cal.4th 771, 790.
Plaintiff has failed to state the requisite specific facts to state a cause of action.
Plaintiff attempts to allege an elder abuse cause of action based on financial abuse. However, there are no facts to show that demurring Defendant herein took, secreted, appropriated, obtained, or retained real or personal property, or assisted in doing so.
Plaintiff attempts to satisfy the taking requirement by alleging that Defendant withheld loan proceeds, charged interest on loans, clouded title, and destroyed Plaintiffs credit. (FAC, ¶¶ 116-118.)
None of these facts demonstrate an actual taking of Plaintiffs personal property.
Eighth Cause of Action for Breach of Contract
Defendants demurrer is sustained with 20 days leave to amend. Plaintiff fails to state facts sufficient to state a cause of action.
The elements of a cause of action for breach of contract are: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.
Coles v. Glaser
(2016) 2 Cal.App.5th 384, 391(internal quotations omitted). [T]he complaint must indicate on its face whether the contract is written, oral, or implied by conduct. [...] If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.
Otworth v. Southern Pac. Transportation Co.
(1985) 166 Cal.App.3d 452, 45859. Plaintiffs must either: (a) set forth the terms of the contract verbatim, (b) attach a copy of the contract and incorporate it by reference, or (c) plead its legal effect.
McKell v. Washington Mutual, Inc.
(2006) 142 Cal.App.4th 1457, 1489.
First, Plaintiff has failed to specify the contract. Plaintiff makes reference to the Agreement and Loan Documents. (FAC, 132.)
The Agreement was previously defined as the loan agreement.
It appears that the Agreement was attached as Exhibit 2.
It is unclear what other document or documents that Plaintiff also considers to be a contract. Plaintiff alleges a series of breaches, but it is unclear how these activities are to be considered a breach of the contract. Again, as to the loan agreement that was attached as Exhibit 2, none of these allegations appear to be encompassed within the written agreement. Plaintiff has failed to allege her own performance or excuse for non-performance.
Plaintiff has failed to allege resulting damages.
Seventh Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing
Ninth Cause of Action for Fraud
Tenth Cause of Action for IIED
The demurrer to the seventh, ninth, and tenth causes of action is sustained without leave to amend.
Generally, upon the sustaining of the demurrer, the scope of leave to amend is to amend the existing causes of action and not to add new causes of action.
See, People ex rel. Dept. of Pub. Wks. v. Clausen
(1967) 248 Cal.App.2d 770, 785.
Addition of a new cause of action may be proper, however, when it directly responds to the court's reason for sustaining the earlier demurrer.
Patrick v. Alacer Corp.
(2008) 167 Cal.App.4th 995, 1015. The Court notes that these causes of action for Constructive Fraud and Breach of Fiduciary Duty were not set forth in the First Amended Complaint. The scope of leave to amend, upon the sustaining of the demurrer, was not to add new causes of action that were not previously raised.
In the prior demurrer, the Court noted in sustaining the demurrer to the negligence cause of action that upon amendment Plaintiff may add a new cause of action for Breach of Contract. However, the seventh, ninth, and tenth causes of action were not mentioned as causes of action that could be added in the amended pleading.
Motion to Strike
The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading.
CCP § 436(a).
The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.
CCP § 436(b).
The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws.
CCP § 436.
The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice.
CCP § 437.
Defendants move to strike the following:
1. Paragraphs 123-130 in their entirety, constituting the seventh cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing;
2. Paragraphs 133-137, in their entirety, constituting the ninth cause of action for Fraud;
3. Paragraph 138-143, in their entirety, constituting the tenth cause of action for Intentional Infliction of Emotional Distress;
4. The prayer for relief pertaining to the seventh cause of action, located on Page 29, lines 11-15 of the FAC;
5. The prayer for relief pertaining to the ninth cause of action for Fraud, located on Page 28, lines 20-25, of the FAC.
6. The prayer for relief pertaining to the tenth cause of action for Intentional Infliction of Emotional Distress, located on Page 29 of the FAC, lines 26-28, and continuing through lines 1 through 5 of page 30 of the FAC.
The motion to strike is moot upon the sustaining of the demurrer without leave to amend as to the seventh, ninth, and tenth causes of action.
Motion to Augment Bond
Code Civ. Proc., § 996.010 states:
(a) If a bond is given in an action or proceeding, the court may determine that the bond is or has from any cause become insufficient because the sureties are insufficient or because the amount of the bond is insufficient.
(b) The court determination shall be upon motion supported by affidavit or upon the court's own motion. The motion shall be deemed to be an objection to the bond. The motion shall be heard and notice of motion shall be given in the same manner as an objection to the bond.
(c) Upon the determination the court shall order that a sufficient new, additional, or supplemental bond be given within a reasonable time not less than five days. The court order is subject to any limitations in the statute providing for the bond.
(d) If a sufficient bond is not given within the time required by the court order, all rights obtained by giving the original bond immediately cease and the court shall upon ex parte motion so order.
Defendants move to increase the amount of the undertaking from $25,000 to $570,510.23. Defendants contend that, at the time of the original preliminary injunction hearing, the Court relied upon an appraisal evaluation of the property of $2.9 million. Defendants argue that the Court should, instead, utilize its own appraisal of $2.4 million. In addition, Defendants state that their anticipated costs and fees that were evaluated at the original hearing were too low and that this amount exceeds $240,000.
Defendants motion to augment bond is continued to August 26, 2024.
Defendants submitted additional evidence, in the form of the supplemental declarations of David De Wispelaere
and Olivier J. Labarre, with the Reply. The Court has discretion to consider new evidence in reply papers in ruling on a motion provided the other party has notice and an opportunity to respond.
See, Jacobs v. Coldwell Banker Residential Brokerage Co.
(2017) 14 Cal.App.5th 438, 449-50. Plaintiff is provided the opportunity to respond to the new evidence.
Any supplemental opposition and reply are to solely address the new evidence submitted by moving party and any issues that arise therefrom. Any supplemental opposition is to be filed and served under the time requirements of CCP § 1005(b). The supplemental opposition shall be no more than 5 pages in length. The supplemental reply shall be no more than 3 pages in length and no new evidence is authorized with the Reply.
Defendants are ordered to give notice of this ruling.
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