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EVANS LAW FIRM, INC.
1 INGRID M. EVANS (State Bar No. 179094)
3053 Fillmore Street, #236 ELECTRONICALLY
2 San Francisco, CA 94123 F I L E D
Telephone: 415.441.8669 Superior Court of California,
3 Facsimile: 888.891.4906 County of San Francisco
4 E-mail: ingrid@evanslaw.com 07/07/2020
Attorneys for Plaintiffs Clerk of the Court
BY: RONNIE OTERO
5 Deputy Clerk
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SAN FRANCISCO UNLIMITED JURISDICTION
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JANE DOE and JOHN DOE, individuals, Case No. CGC-20-583629
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Plaintiffs,
10 PLAINTIFFS JANE DOE AND JOHN
vs. DOE O O I ION O DEM E
11 TO COMPLAINT BY DEFENDANTS
12 CITIBANK, N.A. a national banking
association; CITIMORTGAGE INC. a Date: July 23, 2020
13 Missouri Corporation; QUYEN QUACH, an Time: 9:30AM
individual; and DOES 1 through 100, Dept.: 302
14 inclusive, Judge: The Hon. Ethan P. Schulman
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EVANS LAW FIRM, INC.
Defendants.
16 Action Filed: March 11, 2020
Trial Date: Not Yet Assigned
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
1 TABLE OF CONTENTS
2 I. INTRODUCTION ..1
II. STATEMENT OF FACTS AND PROCEDURAL HISTORY .5
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A. STATEMENT OF FACTS ..5
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B. PROCEDURAL HISTORY ... .6
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III. LEGAL ARGUMENT ..7
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A. DEFENDANTS DEM RRER FAILS S BSTANTI EL 7
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1. PLAINTIFFS SUFFICIENTLY PLEAD FACTS SHOWING BREACH OF CONTRACT
8 BECAUSE PLAINTIFFS ALLEGE EXISTENCE OF AGREEMENT, BREACH BY
9 DEFENDANTS AND HARM FROM BREACH ..7
10 2. PLAINTIFFS PROPERLY PLEAD CONVERSION BECAUSE THE LAW DOES NOT
REQUIRE THAT THEY PLEAD AN IDENTIFIABLE S M .....8
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12 3. PLAINTIFFS PROPERLY PLEAD NEGLIGENCE BECAUSE DEFENDANTS OWE A
D T OF CARE TO PLAINTIFFS AND DEFENDANTS STAT TOR IOLATIONS
13 COMPRISE NEGLIGENCE PER SE ..9
14 4. PLAINTIFF S CA SE OF ACTION FOR IOLATION OF THE CONS MER LEGAL
15 REMEDIES ACT IS VALID BECAUSE MORTGAGES AND MORTGAGE
EVANS LAW FIRM, INC.
ADMINISTRATIONS ARE SERVICES UNDER THE ACT ..9
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5. PLAINTIFFS PROPERLY PLEAD A CAUSE OF ACTION UNDER THE UCL
17 BECAUSE PLAINTIFFS PLEAD THAT DEFENDANTS NLA F L, NFAIR, AND
18 FRAUDULENT PRACTICES IN VIOLATION OF THE UCL TO THE ECONOMIC
HARM OF PLAINTIFFS AND OTHERS ..11
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6. DEFENDANTS BREACHED THE DUTY OF GOOD FAITH AND FAIR DEALING
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THEY OWED PLAINTIFFS BY FAILING TO PROVIDE THE RELATIONSHIP LOAN
21 PRICING BENEFITS TO WHICH PLAINTIFFS WERE ENTITLED ..12
22 7. PLAINTIFFS PROPERLY PLEAD A CUASE OF ACTION UNDER THE CALIFORNIA
FAIR EMPLO MENT AND HO SING ACT BASED ON THE OCC S CONSENT
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ORDER CITING DEFENDANTS IOLATION OF THE FAIR HOUSING ACT ..13
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8. PLAINTIFFS MAY USE PSEUDONYMS . ....14
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26 B. PLAINTIFFS CAN PLEAD ADDITIONAL FACTS TO CURE ANY DEFECT .. .15
27 C. DEFENDANTS REF SED TO REDACT CONFIDENTIAL INFORMATION . ..15
28 IV. CONCLUSION ..15
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TABLE OF CONTENTS AND TABLE OF AUTHORITIES
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TABLE OF AUTHORITIES
2
Statutes
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42 U.S.C. § 1983 7 n.6
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5 42 U.S.C. §§3601-3619 ... .12,14
6 C .C C 1550 .. .. 7
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Cal. Civ. Code § 1559 . .8-9
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C .G C § 12927 . ..4, 14
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10 California Rule of Court 3.1320 ... .7 .5
11 C.C.P. § 430.41(a) . .1
12 C.C.P. § 1005 . .1
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14 Cases
Amparan v. Plaza Home, 678 F.Supp. 961 (N.D. Cal. 2008) .. ..8 .7
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Andre v. Bank of Am., N.A., 2016 WL 69914 (N.D. Cal. Jan. 6, 2016) . .9 .8
16 Aronson v. Bank of America Nat. Trust & Sa ings Ass n, 9 Cal.2d 640 (1937) .9
17 Bhandari v. Capital One, N.A., 2013 WL 1736789 (N.D. Cal. Apr. 22, 2013) .. ..8 .7
18 Biakanja v. Irving, 49 Cal.2d 647 (1958) .10
19 Blank v. Kirwan, 39 Cal.3d 311 (1985) ... 7
20 Bucella v. Mayo, 102 Cal.App.3d 315 (1908) .. .1 .1
Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342 (1992) .. .13n.11
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Cel-Tech Commun., Inc. v. L.A. Cellular Telephone Co., 20 Cal.4th 163 (1999) 12
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Chirico v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1999 WL 1285458 (N.D. Cal. Dec. 13,
23 1999) ..8 .7
24 Consumer Sols. REO, LLC v. Hillery, 658 F.Supp.2d 1002 (N.D. Cal. 2009) .11 .10
Doe v. Lincoln Unified School District, 188 Cal.App.4th 758 (2010) .. .4, 14
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Dunzweiler v. Superior Court, 267 Cal.App.2d 572 (1968) . .15
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Fairbanks v. Superior Court, 46 Cal.4th 56 (2009) 11 .10
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Fischer v. Machado, 50 Cal.App.4th 1069 (1996) . .2, 9
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TABLE OF CONTENTS AND TABLE OF AUTHORITIES
Gerdlund . Elec. Dispensers Int l, 190 Cal.App.3d 263 (1987) .. .13 .11
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Gomes v. Mortg. Elec. Registration Sys., Inc., 2012 WL 370542 (E.D. Cal. Feb. 3, 2012) . 9 .8
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Hernandez v. Hilltop Fin. Mortgage, Inc., Case No. 06-7401 SI, 2007 WL 3101250, at *6 (N.D. Cal.
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Oct. 22, 2007) .. ..11
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Hitz v. First Interstate Bank, 38 Cal. App. 4th 274 (1995) . ..11
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In re Tobacco II Cases, 46 Cal.4th 298 (2009) . 13
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Jackson v. Pacific Gas & Electric Co., 95 Cal.App.2d 204 (1949) . ..15
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Jefferson v. Chase Home Finance LLC, Case N. C06-6510TEH, at *5 (N.D. Cal. May 3, 2007) 11
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Kagan v. Gibraltar Sav. Loan Ass'n, 35 Cal. 3d 582 (1984) ... ..11
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Kelley v. Mortg. Elec. Registration Sys., Inc., 642 F.Supp.2d 1048 (N.D. Cal. May 23, 2019) .. ..9n.8
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LeCyr v. Dow, 30 Cal. App. 2d 457, 462 (1939) . ..15
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Lucas v. Hamm, 56 C .2 583 (1961) 9
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Lueras v. BAC Home Loans Servicing, 221 Cal.App.4th 49 (2013) .10 .9
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McClain v. Octagon Plaza, LLC, 159 Cal. App.4th 784 (2008) .. 13 .11
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McCready v. Chicago Title Co., 2016 WL 4156974 (Cal. App., Aug. 5, 2016) .. ..1 .1
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McKell v. Wash. Mut., Inc., 142 Cal.App.4th 1457 (2006) ..9, 11
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Mejia v. EMC Mortgage Corp., 2010 WL 11515305 (C.D. Cal. Feb. 22, 2010) ..11 .10
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Muniz v. Wells Fargo & Co., 2018 WL 2197556 (N.D. Cal. May 14, 2018) .. ..9 .8
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Na arro . U.S. Bank Nat l Ass n, 2015 WL 1576939 (Cal. App. Apr. 7, 2015) . .1 .1
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Newsom v. Countrywide Home Loans, Inc., 714 F.Supp.2d 1000 (N.D. Cal. 2010) . 13 .11
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N mark . Heart Fed. Sa . & Loan Ass n, 231 Cal.App.3d 1089 (1991) 10 .9
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Owens v. Haslett, 98 Cal.A .2 831 (1950) . .. ..8
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Pasadena Live v. City of Pasadena, 114 Cal. App.4th 1089 (2004) . .. ..13
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PCO v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 150 Cal.App.4th 384 (2007)..9
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Perry v. Robertson, 201 Cal.App.3d 333, 341 (1988) .8
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Quezada v. Loan Ctr. Of Cal., Inc., 2008 WL 5100241 (E.D. Cal. Nov. 26, 2008) ..8 .7
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Quiroz v. Seventh Ave. Center, 140 Cal.App.4th 1256 (2006) ..3, 10
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Roddenberry v. Roddenberry, 44 Cal.App.4th 634 (1996) ..8
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TABLE OF CONTENTS AND TABLE OF AUTHORITIES
1 Rossetta v. CitiMortgage, Inc., 18 C .A .5 628 (2017) 10
2 Sandigo v. Ocwen Loan Servicing, LLC, 2019 WL 2233051 (N.D. Cal. May 23, 2019) ..9 .8
3 Schwartz v. State Farm Fire and Casualty Co., 88 Cal.App.4th 1329 (2001) ..13
4 Sisemore v. Master Financial, 151 Cal. App. 1386, 142 (2007) 4, 12, 14
5 Smith v. State Farm Mutual Automobile Ins. Co., 93 Cal.App.4th 700 (2001) .12
6 Speegle v. Bd. of Fire Underwriters 29 Cal.2d 34 (1946) .. 7
7 T.K. v. Adobe Sys. Inc., 2018 WL 1812200 (N.D. Cal. Apr. 17, 2008) .13
8 Vigdor v. Super Lucky Casino, 2017 WL 2720218 (N.D. Cal. June 23, 2017) .. ..8 .7
9 Voris v. Lampert, 7 Cal.5th 1141 (2019) .. 2,9
10 Wallis v. PHL Associates, Inc., 168 Cal.Ap..4th 882 (2008) .15
11 Weimer v. Nationstar Mortgages, LLC, Case No. C080550, at *22 (Cal. Ct. App. Apr. 22, 2020) .10
12 Welco Electronics, Inc. v. Mora, 223 Cal.App.4th 202 (2014) ..9
13 Westrick v. State Farm Insurance Co., 137 Cal.App.3d 685 (1982) 10
14 Wong v. American Servicing Co., Inc., 2009 WL 5113516, at *6 (E.D. Cal. Dec. 18, 2009) .10 .9
15 Zelig v. City of L.A., 27 Cal.4th 1112 (2002) . 7 .6
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TABLE OF CONTENTS AND TABLE OF AUTHORITIES
1 I. INTRODUCTION
2 The Court should overrule Defendants Demurrer because of its procedural defects and because
3 Plaintiffs have sufficiently plead all causes of action 1:
4 Procedural Deficiencies
5 Defendants failed to conduct a meaningful meet and confer process before filing the Demurrer.
6 Under C.C.P. 430.41(a)(1), [a]s part of the meet and confer process, the demurring part shall
identify all of the specific causes of action that it believes are subject to demurrer and identify
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with legal support the basis of the deficiencies. (emphasis added). Defendants never
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identified any legal support for their demurrer positions during the meet and confer process. See
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Declaration of Ingrid M. Evans dated June 5, 2020 ( Evans Decl. ).
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Defendants failed to meet and confer with Plaintiffs on a hearing date before Defendants filed the
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Demurrer. Defendants pre-emptive filing violates the procedure set by the Court during the
12 pandemic: For motions filed on or after June 1, 2020, the moving party should confer with all
13 other parties before scheduling and noticing a hearing, and may then e-file and notice the
14 hearing in accordance with Code of Civil Procedure section 1005 or other applicable
15 requirements. On June 2, prior to any meet and confer on the hearing date, Defendants served
EVANS LAW FIRM, INC.
16 Plaintiffs with a Memorandum of Points and Authorities, a Declaration of Out-of-State Counsel,
17 and a Request for Judicial Notice. Evans Decl. ¶ 2. No Notice of Hearing was served with these
papers, and no hearing date, time or location appeared on the papers. Id.2
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19 Substantive Deficiencies in Demurrer
COUNT ONE (BREACH OF CONTRACT): Plaintiffs Complaint alleges two breaches of
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contract: (1) Defendants breached the Promissory Note between Plaintiffs and Defendant
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23 1 The Causes of Action are adequately plead against all Defendants. Complaint ¶ 8 alleges that
Quach acts as a home lending officer for Defendants. Exhibits A and B to the Baumhart
24 Declaration both show Quach as the Originator of the loan transaction. Defendants have no support
for their position that facts against Defendant Quach are not adequately plead. Bucella v. Mayo,
25 102 Cal.App.3d 315, 325-26 (1908) is a post-trial decision where the documents involved in the
transaction contain nothing whatever suggesting that defendant had anything to do with the
26 transaction. Defendants additional citations to unpublished opinions (McCready v. Chicago Title
Co., 2016 WL 4156974 (Cal. App., Aug. 5, 2016) and Na arro . U.S. Bank Nat l Ass n, 2015 WL
27 1576939 (Cal. App. Apr. 7, 2015) are improper under California Rule of Court 8.1115(a).
2 Subsequently, on June 18 Defendants served a Notice of the Demurrer. Evans Decl. ¶ 4.
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
Citibank by charging an interest rate3 that derives from Defendants unlawful practice of den ing
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Relationship Loan Pricing ( RLP ) benefits to Plaintiffs (Compl. ¶¶ 11-15) and (2) breached
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Defendants own RLP Agreement b den ing Plaintiffs (and other California consumers) an
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interest rate discount to which Plaintiffs (and other California consumers) were entitled as third-
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party beneficiaries of that RLP. Compl. ¶¶ 1, 2, 11-15, and 20-27. The unlawful interest rate
5 and third-party beneficiary breach are based on a March 2019 Consent Order between Defendant
6 Citibank, N.A. and the Office of Comptroller of the Currency (OCC) finding that Defendants
7 denied RLP benefits in violation of the law and charged higher rates of interest to members of
8 the public including Plaintiffs and other California consumers than Defendants were permitted
9 to. Compl. ¶¶ 14-15. The interest rate term of Plaintiff s Note ( 3.125% ) is e pressl plead as
10 the material, unlawful contract term at issue. Compl. ¶ 12. The denial of the third-party benefits
of the RLP is expressly plead. Compl. ¶¶ 11-13. The economic harm as a result of the breaches is
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expressly plead. Compl. ¶¶ 1, 2, 11-15, and 20-27.
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COUNT TWO (CONVERSION): The sum converted b Defendants is identifiable here:
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Plaintiffs made monthl mortgage pa ments following the closing at the amount at the 3.125%
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interest rate charged by Defendants. Compl. ¶11 and 29-32. The amount Plaintiffs had to pay
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versus the lower amount to which the were entitled is identifiable. Compl. 29-32. This
16 identifiable loss is ongoing every month Plaintiffs make their mortgage payments because
17 Defendants have not allowed Plaintiffs the reduced rate of interest to which the are entitled
18 for the life of the loan. Compl. ¶ 13, Fischer v. Machado, 50 Cal.App.4th 1069, 1072 (1996)
19 (sufficient to plead an identifiable amount); Voris v. Lampert, 7 Cal.5th 1141, 1150 (2019)
20 (sum just needs to be capable of being determined).
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23 3 The higher rate was 3.125% which as Plaintiffs allege derives from Defendants unlawful
practice of denying certain borrowers RLP discounts. Compl. ¶ 12. The rate is thus an unlawful
24 object of the contract and not enforceable under Cal. Civ. Code Section 1550. Both the Promissory
Note and the Deed of Trust provide remedies for borrowers who are charged more than permitted
25 by lawful practices. Section 5 of Defendants Notes provides that if the interest charges b
Defendants e ceed the permitted limits of the law, charges must be reduced to the permitted
26 limits and an sums alread collected from the Borrower which e ceed permitted limits will be
refunded to Borrower. See E hibit B to the Declaration of Peter B. Baumhart ( Baumhart Decl. )
27 at Section 5 Defendants Deed of Trust at Section 14 ( Loan Charges ) reads identicall . E h.
A, Baumhart Decl.
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
COUNT THREE (NEGLIGENCE): Plaintiffs plead that Defendants owed them a duty to
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disclose material information and breached that duty by (1) telling Plaintiffs the higher rate
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Defendants were charging was the optimum interest rate available, (2) failing to disclose the
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e istence of an available discounts , and (3) charging the higher rate despite Plaintiff s
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eligibilit for a lower rate. Compl. 11-12. By paying an interest rate higher than they should
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have, Plaintiffs were harmed by this breach as fully described in Paragraphs 11-13 of the
6 Complaint, and the breach was a substantial factor in causing that harm because had
7 [Defendants] informed Plaintiffs of the more favorable rate to which they were entitled, Plaintiffs
8 may well have made different decisions about (1) the home Plaintiffs purchased, and (2) if and
9 when Plaintiffs would have sold their prior home which they were forced to do by Defendants at
10 a time that was not economically favorable to Plaintiffs. Compl. 13. Moreover, the OCC s
11 findings of statutory violations by Defendants constitute negligence per se. Quiroz v. Seventh
Ave. Center, 140 Cal.App.4th 1256, 1284-1285 (2006).
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COUNT FOUR (CLRA): Plaintiffs properly plead a CLRA claim: (1) Plaintiffs are consumers
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who had a qualifying banking relationship with Defendants at the time of a mortgage loan
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origination that entitled Plaintiffs to a loan discount among the other financial services
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Defendants were providing them (Compl. ¶ 2): (2) Defendants committed fraud in providing
16 these financial services to Plaintiffs and other California consumers by (a) denying Plaintiffs and
17 other California consumers the lower interest rates to which they were entitled (Compl. ¶¶ 11-
18 15), (b) failing to disclose the availabilit of the interest rate discount services to Plaintiffs and
19 other consumers who had a qualif ing banking relationship (Compl. 11)and (c)
20 affirmatively misrepresenting the interest rate the were charging Plaintiffs was the optimum
21 interest rate available to Plaintiffs (Compl. 11); and (3) Plaintiffs were harmed as a result of
the fraudulent financial services, misrepresentations, and concealments. See Compl. ¶¶ 13-15
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and 39-52.
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COUNT FIVE (UCL): Plaintiffs adequately plead that Defendants engaged in the following
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unlawful, unfair and fraudulent business practices:
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a. Defendants affirmativel told Plaintiffs the were receiving the optimum interest
26 rate available (Compl. 11);
b. Defendants failed to disclose the e istence of an available discounts (Compl.
27 11);
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
c. Defendants acknowledged that Plaintiffs were overcharged by Defendants (Compl. ¶
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12);
2 d. Defendants unlawfully denied the benefits of the RLP program to qualifying consumers
like Plaintiffs according to the March 2019 Consent Order of the Office of the
3 Comptroller of the Currency (OCC) (Compl. ¶ 14);
e. According to the Consent Order, Defendants impermissibly discriminated against certain
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consumers, including Plaintiffs, in violation of the Fair Housing Act, 42 U.S.C. Sections
5 3601-3619, (Compl. ¶¶ 14-15 and 56); and
f. According to the Consent Order certain Bank borrowers did not receive the RLP benefit
6 for which they were eligible and were adversely affected on the basis of their race, color,
7 national origin, and/or sex. (Compl. 15).
Further, the statutor violations cited in the OCC s Consent Order and corollar State law
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violations, are sufficient prerequisites for all three prongs of the Unfair Competition Law.
9 Compl. ¶¶ 53-68.
10 COUNT SIX (BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING): At all
11 relevant times herein, Plaintiffs had an ongoing business relationship with Defendants for a
12 variety of financial services. Compl. ¶¶ 1-2 and 11-19. Defendants owed Plaintiffs a duty of
13 good faith and fair dealing which Defendants breached by: affirmatively telling Plaintiffs they
14 were receiving the optimum interest rate available (Compl. 11) and failing to disclose the
existence of any available discounts (Compl. ¶ 11). See Compl. ¶¶ 2-3,11-17 and 69-74.
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COUNT SEVEN (CFEHA): Plaintiffs properl plead Defendants violations of the California
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Fair Emplo ment and Housing Act (CFEHA) b pleading (1) OCC identified Defendants
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violations of the anti-discriminatory protections of the Fair Housing Act in their March 2019
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Consent Order (Compl. ¶¶ 14-15,56-57, and 75-79.), (2) Defendants inadequate personnel
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training and eligibility guidelines resulted in the violative conduct (Compl. ¶¶ 78-79), and (3)
20 Plaintiffs have been injured and have suffered monetary losses because of Defendants
21 violations of the California Fair Employment and Housing Act and its implementing
22 regulations. (Compl. 79). These Fair Housing Act anti-discriminatory violations, plead in the
23 complaint, constitute violations of the CFEHA under the governing cases. Sisemore v. Master
24 Financial, 151 Cal. App. 1386, 142 (2007).
25 Plaintiffs may use a pseudonym to prosecute this case in order to protect personal information. 4
Doe v. Lincoln Unified School District, 188 Cal.App.4th 758, 766 (2010).
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28 4 Defendants did not raise this issue in the telephone meet and confer. Evans Dec.¶ 3.
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
II. STATEMENT OF FACTS AND PROCEDURAL HISTORY
1
A. STATEMENT OF FACTS
2 1. DEFENDAN ELA ION HI LOAND ICING
3 Prior to selling Plaintiffs a mortgage for purchase of Plaintiffs home, Defendants had a
4 Relationship Loan Pricing Services Program ( RLP ) under which customers, such as Plaintiffs and
5 other qualifying California consumers, could receive either a credit to closing costs or an interest
6 rate reduction ( the RLP Benefits ). Compl. ¶¶ 2, 14, and 15. At all relevant times, Plaintiffs were
7 qualifying bank customers for the RLP Benefits, according to Defendants own acknowledgment.
8 Compl. ¶ 12. As such Plaintiffs and other California consumers stood as third-party beneficiaries
9 to the RLP.
10 2. DEFENDAN FINANCIAL E ICE
11 After Defendants had implemented their RLP Program, Plaintiffs purchased a Citibank
Mortgage (No. 1124341267) on their primary residence in the City and County of San Francisco
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that closed on or about July 29, 2016 in the initial principal amount of $2,800,000. See Complaint
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at ¶ 12. At the time Plaintiffs took out the mortgage from Defendants, Plaintiffs were told that
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3.125% was the optimum interest rate available to Plaintiffs through Citibank/CitiMortgage. Id.
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Defendants did not disclose the existence of any available discounts including but not limited to
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any reduction in the interest payable by Plaintiffs for which they may have qualified under
17 Defendants Relationship Loan Pricing (RLP) program. Id. Plaintiffs performed all obligations
18 required of them under the terms of their contract with Defendants. Id.
19 3. DEFEANDAN EF ND
20 On May 23, 2019, Plaintiffs received a letter from Defendant CitiMortgage that informed
21 Plaintiffs that in fact Plaintiffs were eligible for an interest rate signif icantly lower than that
22 charged Plaintiffs under the Note. Complaint ¶ 13. Accompan ing Defendants Ma 23, 2019 letter
23 was a check in the amount of $35,000, issued by Citibank to in Defendants words correct an
24 unintentional oversight. Complaint ¶ 13.
25 Further, Plaintiffs acted in reliance on Defendants representations that the interest rate offered to
26 Plaintiffs was the lowest rate available to them, and that Plaintiffs were not eligible for any other
27 services, such as the Relationship Loan Pricing Service, that would have lowered the rate. Complaint ¶
28 13. If Defendants had informed Plaintiffs of the more favorable rate to which they were entitled,
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
1 Plaintiffs may well have made different economic decisions that would have enabled Plaintiffs to have
2 avoided the economic losses the sustained b rel ing on the Defendants representations. Those
3 economic decisions and the losses Plaintiffs sustained included economic decisions about (1) the home
4 Plaintiffs purchased, and (2) if and when Plaintiffs would have sold their prior home which they were
5 forced to do by Defendants at a time that was not economically favorable to Plaintiffs. Complaint ¶ 13.
6 By making these economic decisions without Defendants disclosing the true Relationship Loan Pricing
7 service benefit for which Plaintiffs were eligible, Plaintiffs suffered further economic loss. Complaint ¶
8 13.
4. OFFICE OF COMPTROLLER OF THE CURRENCY CONSENT ORDER
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Following receipt of the May 2019 letter, Plaintiffs discovered that the Office of the Comptroller of
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the Currenc ( OCC ) and CITIBANK, N.A. entered into a Consent Order dated March 19, 2019 in
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which the OCC issued findings that as a result of the Bank s unlawful practices certain Bank borrowers
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did not receive the RLP benefit to which the were entitled. Compl. 14. Further, the OCC
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concluded that [a]s a result of the ineffective risk management and control weaknesses, certain Bank
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borrowers did not receive the RLP benefit for which they were eligible and were adversely affected on
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the basis of their race, color, national origin, and/or se . Compl. ¶ 14. According to the OCC,
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Defendants practices constituted violations of the Fair Housing Act, 42 U.S.C. 3601-19. Compl. ¶¶
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14-15 and 75-79. Complaint ¶ ¶14-15. Plaintiffs and other borrowers were victims of the Bank s
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unlawful practices in denying certain borrowers RLP benefits. Complaint ¶¶ 2-3 and 11-15.
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B. PROCEDURAL HISTORY
20 Plaintiffs filed the within Complaint on or about March 11, 2020 and timely served all Defendants.
21 After two extensions granted by Plaintiffs Defendants served the within Demurrer (originally without
22 any Notice or date/time/Department for hearing) on June 2, 2020. Subsequently, on June 18,2020,
23 Defendants served a Notice. Evans Decl. ¶ 4.
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PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
III. LEGAL ARGUMENT
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A. DEFENDAN DEM E FAIL B AN I EL 5 BECAUSE PLAINTIFFS
2 HAVE SUFFICIENTLY PLEAD EACH CAUSE OF ACTION.
3 Courts consider an demurrer as admitting all material facts and give the complaint a reasonable
interpretation, reading it as a whole and its parts in their conte t. Speegle v. Bd. of Fire Underwriters
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29 Cal.2d 34, 42 (1946); Blank v. Kirwan 39 Cal.3d 311, 318 (1985). In instances when a complaint
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does not state a cause of action, but the defect can be cured by amendment, leave to amend must be
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granted. Blank, supra, 39 Cal.3d at 318.6
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1. PLAINTIFFS SUFFICIENTLY PLEAD FACTS SHOWING BREACH OF CONTRACT
8 BECAUSE PLAINTIFFS ALLEGE EXISTENCE OF AGREEMENT, BREACH BY
DEFENDANTS AND HARM FROM BREACH.
9 Plaintiffs plead two breach of contract theories:
10 a. DEFENDANTS BREACHED THEIR CONTRACT WITH PLAINTIFFS BY
CHARGING AN INTEREST RATE DE I ED F OM HE BANK
11
UNLAWFUL PRACTICES (IN A MATERIAL TERM THAT IS NOT A LAWFUL
12 OBJECT).
Defendants breached the contract by charging Plaintiffs an interest rate derived from the Bank s
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unlawful practice of denying certain borrowers RLP benefits as determined in the OCC Consent Order,
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Compl. ¶¶ 11-15). The interest rate thus derived was not a lawful object under Cal. Civil Code Section
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1550:
16 It is essential to the existence of a contract that there should be:
17 1. Parties capable of contracting;
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5 Defendants demurrer also fails procedurall because Defendants:
19 (1) Failed to conduct a meaning meet and confer. California requires that the parties meet and confer in
20 person or by phone before a moving party can file a Demurrer, and that the party intending a demurrer
[a]s part of the meet and confer process, the demurring party shall identify all of the specific causes of
21 action that it believes are subject to demurrer and identify with legal support the basis of the
deficiencies. C.C.P. § 430.41(a) (emphasis added). Defendants failed to identify any legal support
22 during the phone conference they set up as a meet and confer. Evans Decl. ¶ 2.
23 (2) Defendants failed to timely file and serve a notice of motion as required by California Rule of
Court 3.1320 (c) ( A part filing a demurrer must serve and file therewith a notice of hearing that
24 must specify a hearing date in accordance with the provisions of Code of Civil Procedure section
1005. ) (emphasis added). Defendants served Plaintiffs with a Memorandum of Points and Authorities,
25 a Declaration of Out-of-State Counsel, and a Request for Judicial Notice but no Notice. Evans Decl. ¶ 2.
26 The Notice was not served until June 18. Evans Decl. ¶ 4.
6 Defendants citation to Zelig v. City of L.A., 27 Cal.4th 1112, 1126 (2002) does not apply. Zelig
27 was a demurrer based on governmental immunity and failure to plead deprivation of rights under
the Civil Rights Act, 42 U.S.C. § 1983.
28
7
PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT
2. Their consent;
1
3. A lawful object; and,
2 4. A sufficient cause or consideration.
See Cal. Civ. Code 1550 (contract must have lawful object ); Owens v. Haslett, 98 Cal.App.2d 831,
3
835 (1950) (party breaches a contract where party s conduct is an unlawful business practice).
4
Plaintiffs were harmed as a result of the breach. Compl. ¶¶ 11-15. The contract term at issue here is an
5 unlawful object : an interest rate derived from an unlawful business practice, alleged in specific terms
6 as the 3.125% interest charged b Defendants . Compl. 11. In particular, Plaintiffs allege that the
7 higher rate derived from Defendant s unlawful practice of denying RLP Benefits to eligible consumers
8 as determined in the Consent Order (Compl. ¶¶ 14-15, 23-24). The higher rate derived from an
9 unlawful practice breached Defendants contract limiting interest to amounts permitted under the law.
10 See Baumhart Decl., at Section 14 of Exh. A (Deed of Trust), and Section 5 of Exh,. B (Note).
Defendant s cases do not in any way address the breach alleged here a contract term (interest rate)
11
derived from Defendants unlawful business practice. (Compl. ¶¶ 11-15). Roddenberry v. Roddenberry,
12
44 Cal.App.4th 634, 655 (1996) was an appeal of a judgment after trial on the interpretation of contract
13
terms. Perry v. Robertson, 201 Cal.App.3d 333, 341 (1988) does not require that a copy of the contract
14
be annexed to the complaint as Defendants claim; it was a case involving an oral contract. Defendants
15
EVANS LAW FIRM, INC.
federal court decisions do not address the breach by unlawful conduct either. 7
16 b. PLAINTIFFS ARE THIRD- A BENEFICIA IE OF DEFENDAN L
17 CONTRACT.
Defendants created the RLP e pressl for the benefits of its qualif ing customers. Compl.
18
1, 2, and 11-15). Defendants have admitted Plaintiffs were qualifying customers and thus eligible
19 beneficiaries of the RLP. Compl. ¶ 12. By charging Plaintiffs a higher rate of interest than the RLP
20 allowed, Defendants breached the terms of their own RLP Agreement. Id. Plaintiffs, and other
21 California consumers, were harmed as third-party beneficiaries to the RLP. Compl. ¶¶ 12-15. Cal. Civ.
22 Code § 1559 provides:
23 A contract, made expressly for the benefit of a third person, may be enforced by him at any time
before the parties thereto rescind it.
24
25 7 Chirico v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1999 WL 1285458 (N.D. Cal. Dec. 13, 1999);
Bhandari v. Capital One, N.A., 2013 WL 1736789 (N.D. Cal. Apr. 22, 2013); Vigdor v. Super Lucky
26
Casino, 2017 WL 2720218 (N.D. Cal. June 23, 2017); Lopez v. World Savings Loan, 105 Cal. App.4th
27 729 (2003); Amparan v. Plaza Home, 678 F.Supp. 961 (N.D. Cal. 2008); and, Quezada v. Loan Ctr. Of
Cal
Preview
EVANS LAW FIRM, INC. 1 INGRID M. EVANS (State Bar No. 179094) 3053 Fillmore Street, #236 ELECTRONICALLY 2 San Francisco, CA 94123 F I L E D Telephone: 415.441.8669 Superior Court of California, 3 Facsimile: 888.891.4906 County of San Francisco 4 E-mail: ingrid@evanslaw.com 07/07/2020 Attorneys for Plaintiffs Clerk of the Court BY: RONNIE OTERO 5 Deputy Clerk 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA 7 COUNTY OF SAN FRANCISCO UNLIMITED JURISDICTION 8 JANE DOE and JOHN DOE, individuals, Case No. CGC-20-583629 9 Plaintiffs, 10 PLAINTIFFS JANE DOE AND JOHN vs. DOE O O I ION O DEM E 11 TO COMPLAINT BY DEFENDANTS 12 CITIBANK, N.A. a national banking association; CITIMORTGAGE INC. a Date: July 23, 2020 13 Missouri Corporation; QUYEN QUACH, an Time: 9:30AM individual; and DOES 1 through 100, Dept.: 302 14 inclusive, Judge: The Hon. Ethan P. Schulman 15 EVANS LAW FIRM, INC. Defendants. 16 Action Filed: March 11, 2020 Trial Date: Not Yet Assigned 17 18 19 20 21 22 23 24 25 26 27 28 0 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT 1 TABLE OF CONTENTS 2 I. INTRODUCTION ..1 II. STATEMENT OF FACTS AND PROCEDURAL HISTORY .5 3 A. STATEMENT OF FACTS ..5 4 B. PROCEDURAL HISTORY ... .6 5 III. LEGAL ARGUMENT ..7 6 A. DEFENDANTS DEM RRER FAILS S BSTANTI EL 7 7 1. PLAINTIFFS SUFFICIENTLY PLEAD FACTS SHOWING BREACH OF CONTRACT 8 BECAUSE PLAINTIFFS ALLEGE EXISTENCE OF AGREEMENT, BREACH BY 9 DEFENDANTS AND HARM FROM BREACH ..7 10 2. PLAINTIFFS PROPERLY PLEAD CONVERSION BECAUSE THE LAW DOES NOT REQUIRE THAT THEY PLEAD AN IDENTIFIABLE S M .....8 11 12 3. PLAINTIFFS PROPERLY PLEAD NEGLIGENCE BECAUSE DEFENDANTS OWE A D T OF CARE TO PLAINTIFFS AND DEFENDANTS STAT TOR IOLATIONS 13 COMPRISE NEGLIGENCE PER SE ..9 14 4. PLAINTIFF S CA SE OF ACTION FOR IOLATION OF THE CONS MER LEGAL 15 REMEDIES ACT IS VALID BECAUSE MORTGAGES AND MORTGAGE EVANS LAW FIRM, INC. ADMINISTRATIONS ARE SERVICES UNDER THE ACT ..9 16 5. PLAINTIFFS PROPERLY PLEAD A CAUSE OF ACTION UNDER THE UCL 17 BECAUSE PLAINTIFFS PLEAD THAT DEFENDANTS NLA F L, NFAIR, AND 18 FRAUDULENT PRACTICES IN VIOLATION OF THE UCL TO THE ECONOMIC HARM OF PLAINTIFFS AND OTHERS ..11 19 6. DEFENDANTS BREACHED THE DUTY OF GOOD FAITH AND FAIR DEALING 20 THEY OWED PLAINTIFFS BY FAILING TO PROVIDE THE RELATIONSHIP LOAN 21 PRICING BENEFITS TO WHICH PLAINTIFFS WERE ENTITLED ..12 22 7. PLAINTIFFS PROPERLY PLEAD A CUASE OF ACTION UNDER THE CALIFORNIA FAIR EMPLO MENT AND HO SING ACT BASED ON THE OCC S CONSENT 23 ORDER CITING DEFENDANTS IOLATION OF THE FAIR HOUSING ACT ..13 24 8. PLAINTIFFS MAY USE PSEUDONYMS . ....14 25 26 B. PLAINTIFFS CAN PLEAD ADDITIONAL FACTS TO CURE ANY DEFECT .. .15 27 C. DEFENDANTS REF SED TO REDACT CONFIDENTIAL INFORMATION . ..15 28 IV. CONCLUSION ..15 i TABLE OF CONTENTS AND TABLE OF AUTHORITIES 1 TABLE OF AUTHORITIES 2 Statutes 3 42 U.S.C. § 1983 7 n.6 4 5 42 U.S.C. §§3601-3619 ... .12,14 6 C .C C 1550 .. .. 7 7 Cal. Civ. Code § 1559 . .8-9 8 C .G C § 12927 . ..4, 14 9 10 California Rule of Court 3.1320 ... .7 .5 11 C.C.P. § 430.41(a) . .1 12 C.C.P. § 1005 . .1 13 14 Cases Amparan v. Plaza Home, 678 F.Supp. 961 (N.D. Cal. 2008) .. ..8 .7 15 EVANS LAW FIRM, INC. Andre v. Bank of Am., N.A., 2016 WL 69914 (N.D. Cal. Jan. 6, 2016) . .9 .8 16 Aronson v. Bank of America Nat. Trust & Sa ings Ass n, 9 Cal.2d 640 (1937) .9 17 Bhandari v. Capital One, N.A., 2013 WL 1736789 (N.D. Cal. Apr. 22, 2013) .. ..8 .7 18 Biakanja v. Irving, 49 Cal.2d 647 (1958) .10 19 Blank v. Kirwan, 39 Cal.3d 311 (1985) ... 7 20 Bucella v. Mayo, 102 Cal.App.3d 315 (1908) .. .1 .1 Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342 (1992) .. .13n.11 21 Cel-Tech Commun., Inc. v. L.A. Cellular Telephone Co., 20 Cal.4th 163 (1999) 12 22 Chirico v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1999 WL 1285458 (N.D. Cal. Dec. 13, 23 1999) ..8 .7 24 Consumer Sols. REO, LLC v. Hillery, 658 F.Supp.2d 1002 (N.D. Cal. 2009) .11 .10 Doe v. Lincoln Unified School District, 188 Cal.App.4th 758 (2010) .. .4, 14 25 Dunzweiler v. Superior Court, 267 Cal.App.2d 572 (1968) . .15 26 Fairbanks v. Superior Court, 46 Cal.4th 56 (2009) 11 .10 27 Fischer v. Machado, 50 Cal.App.4th 1069 (1996) . .2, 9 28 ii TABLE OF CONTENTS AND TABLE OF AUTHORITIES Gerdlund . Elec. Dispensers Int l, 190 Cal.App.3d 263 (1987) .. .13 .11 1 Gomes v. Mortg. Elec. Registration Sys., Inc., 2012 WL 370542 (E.D. Cal. Feb. 3, 2012) . 9 .8 2 Hernandez v. Hilltop Fin. Mortgage, Inc., Case No. 06-7401 SI, 2007 WL 3101250, at *6 (N.D. Cal. 3 Oct. 22, 2007) .. ..11 4 Hitz v. First Interstate Bank, 38 Cal. App. 4th 274 (1995) . ..11 5 In re Tobacco II Cases, 46 Cal.4th 298 (2009) . 13 6 Jackson v. Pacific Gas & Electric Co., 95 Cal.App.2d 204 (1949) . ..15 7 Jefferson v. Chase Home Finance LLC, Case N. C06-6510TEH, at *5 (N.D. Cal. May 3, 2007) 11 8 Kagan v. Gibraltar Sav. Loan Ass'n, 35 Cal. 3d 582 (1984) ... ..11 9 Kelley v. Mortg. Elec. Registration Sys., Inc., 642 F.Supp.2d 1048 (N.D. Cal. May 23, 2019) .. ..9n.8 10 LeCyr v. Dow, 30 Cal. App. 2d 457, 462 (1939) . ..15 11 Lucas v. Hamm, 56 C .2 583 (1961) 9 12 Lueras v. BAC Home Loans Servicing, 221 Cal.App.4th 49 (2013) .10 .9 13 McClain v. Octagon Plaza, LLC, 159 Cal. App.4th 784 (2008) .. 13 .11 14 McCready v. Chicago Title Co., 2016 WL 4156974 (Cal. App., Aug. 5, 2016) .. ..1 .1 15 EVANS LAW FIRM, INC. McKell v. Wash. Mut., Inc., 142 Cal.App.4th 1457 (2006) ..9, 11 16 Mejia v. EMC Mortgage Corp., 2010 WL 11515305 (C.D. Cal. Feb. 22, 2010) ..11 .10 17 Muniz v. Wells Fargo & Co., 2018 WL 2197556 (N.D. Cal. May 14, 2018) .. ..9 .8 18 Na arro . U.S. Bank Nat l Ass n, 2015 WL 1576939 (Cal. App. Apr. 7, 2015) . .1 .1 19 Newsom v. Countrywide Home Loans, Inc., 714 F.Supp.2d 1000 (N.D. Cal. 2010) . 13 .11 20 N mark . Heart Fed. Sa . & Loan Ass n, 231 Cal.App.3d 1089 (1991) 10 .9 21 Owens v. Haslett, 98 Cal.A .2 831 (1950) . .. ..8 22 Pasadena Live v. City of Pasadena, 114 Cal. App.4th 1089 (2004) . .. ..13 23 PCO v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 150 Cal.App.4th 384 (2007)..9 24 Perry v. Robertson, 201 Cal.App.3d 333, 341 (1988) .8 25 Quezada v. Loan Ctr. Of Cal., Inc., 2008 WL 5100241 (E.D. Cal. Nov. 26, 2008) ..8 .7 26 Quiroz v. Seventh Ave. Center, 140 Cal.App.4th 1256 (2006) ..3, 10 27 Roddenberry v. Roddenberry, 44 Cal.App.4th 634 (1996) ..8 28 iii TABLE OF CONTENTS AND TABLE OF AUTHORITIES 1 Rossetta v. CitiMortgage, Inc., 18 C .A .5 628 (2017) 10 2 Sandigo v. Ocwen Loan Servicing, LLC, 2019 WL 2233051 (N.D. Cal. May 23, 2019) ..9 .8 3 Schwartz v. State Farm Fire and Casualty Co., 88 Cal.App.4th 1329 (2001) ..13 4 Sisemore v. Master Financial, 151 Cal. App. 1386, 142 (2007) 4, 12, 14 5 Smith v. State Farm Mutual Automobile Ins. Co., 93 Cal.App.4th 700 (2001) .12 6 Speegle v. Bd. of Fire Underwriters 29 Cal.2d 34 (1946) .. 7 7 T.K. v. Adobe Sys. Inc., 2018 WL 1812200 (N.D. Cal. Apr. 17, 2008) .13 8 Vigdor v. Super Lucky Casino, 2017 WL 2720218 (N.D. Cal. June 23, 2017) .. ..8 .7 9 Voris v. Lampert, 7 Cal.5th 1141 (2019) .. 2,9 10 Wallis v. PHL Associates, Inc., 168 Cal.Ap..4th 882 (2008) .15 11 Weimer v. Nationstar Mortgages, LLC, Case No. C080550, at *22 (Cal. Ct. App. Apr. 22, 2020) .10 12 Welco Electronics, Inc. v. Mora, 223 Cal.App.4th 202 (2014) ..9 13 Westrick v. State Farm Insurance Co., 137 Cal.App.3d 685 (1982) 10 14 Wong v. American Servicing Co., Inc., 2009 WL 5113516, at *6 (E.D. Cal. Dec. 18, 2009) .10 .9 15 Zelig v. City of L.A., 27 Cal.4th 1112 (2002) . 7 .6 EVANS LAW FIRM, INC. 16 17 18 19 20 21 22 23 24 25 26 27 28 iv TABLE OF CONTENTS AND TABLE OF AUTHORITIES 1 I. INTRODUCTION 2 The Court should overrule Defendants Demurrer because of its procedural defects and because 3 Plaintiffs have sufficiently plead all causes of action 1: 4 Procedural Deficiencies 5 Defendants failed to conduct a meaningful meet and confer process before filing the Demurrer. 6 Under C.C.P. 430.41(a)(1), [a]s part of the meet and confer process, the demurring part shall identify all of the specific causes of action that it believes are subject to demurrer and identify 7 with legal support the basis of the deficiencies. (emphasis added). Defendants never 8 identified any legal support for their demurrer positions during the meet and confer process. See 9 Declaration of Ingrid M. Evans dated June 5, 2020 ( Evans Decl. ). 10 Defendants failed to meet and confer with Plaintiffs on a hearing date before Defendants filed the 11 Demurrer. Defendants pre-emptive filing violates the procedure set by the Court during the 12 pandemic: For motions filed on or after June 1, 2020, the moving party should confer with all 13 other parties before scheduling and noticing a hearing, and may then e-file and notice the 14 hearing in accordance with Code of Civil Procedure section 1005 or other applicable 15 requirements. On June 2, prior to any meet and confer on the hearing date, Defendants served EVANS LAW FIRM, INC. 16 Plaintiffs with a Memorandum of Points and Authorities, a Declaration of Out-of-State Counsel, 17 and a Request for Judicial Notice. Evans Decl. ¶ 2. No Notice of Hearing was served with these papers, and no hearing date, time or location appeared on the papers. Id.2 18 19 Substantive Deficiencies in Demurrer COUNT ONE (BREACH OF CONTRACT): Plaintiffs Complaint alleges two breaches of 20 contract: (1) Defendants breached the Promissory Note between Plaintiffs and Defendant 21 22 23 1 The Causes of Action are adequately plead against all Defendants. Complaint ¶ 8 alleges that Quach acts as a home lending officer for Defendants. Exhibits A and B to the Baumhart 24 Declaration both show Quach as the Originator of the loan transaction. Defendants have no support for their position that facts against Defendant Quach are not adequately plead. Bucella v. Mayo, 25 102 Cal.App.3d 315, 325-26 (1908) is a post-trial decision where the documents involved in the transaction contain nothing whatever suggesting that defendant had anything to do with the 26 transaction. Defendants additional citations to unpublished opinions (McCready v. Chicago Title Co., 2016 WL 4156974 (Cal. App., Aug. 5, 2016) and Na arro . U.S. Bank Nat l Ass n, 2015 WL 27 1576939 (Cal. App. Apr. 7, 2015) are improper under California Rule of Court 8.1115(a). 2 Subsequently, on June 18 Defendants served a Notice of the Demurrer. Evans Decl. ¶ 4. 28 1 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT Citibank by charging an interest rate3 that derives from Defendants unlawful practice of den ing 1 Relationship Loan Pricing ( RLP ) benefits to Plaintiffs (Compl. ¶¶ 11-15) and (2) breached 2 Defendants own RLP Agreement b den ing Plaintiffs (and other California consumers) an 3 interest rate discount to which Plaintiffs (and other California consumers) were entitled as third- 4 party beneficiaries of that RLP. Compl. ¶¶ 1, 2, 11-15, and 20-27. The unlawful interest rate 5 and third-party beneficiary breach are based on a March 2019 Consent Order between Defendant 6 Citibank, N.A. and the Office of Comptroller of the Currency (OCC) finding that Defendants 7 denied RLP benefits in violation of the law and charged higher rates of interest to members of 8 the public including Plaintiffs and other California consumers than Defendants were permitted 9 to. Compl. ¶¶ 14-15. The interest rate term of Plaintiff s Note ( 3.125% ) is e pressl plead as 10 the material, unlawful contract term at issue. Compl. ¶ 12. The denial of the third-party benefits of the RLP is expressly plead. Compl. ¶¶ 11-13. The economic harm as a result of the breaches is 11 expressly plead. Compl. ¶¶ 1, 2, 11-15, and 20-27. 12 COUNT TWO (CONVERSION): The sum converted b Defendants is identifiable here: 13 Plaintiffs made monthl mortgage pa ments following the closing at the amount at the 3.125% 14 interest rate charged by Defendants. Compl. ¶11 and 29-32. The amount Plaintiffs had to pay 15 EVANS LAW FIRM, INC. versus the lower amount to which the were entitled is identifiable. Compl. 29-32. This 16 identifiable loss is ongoing every month Plaintiffs make their mortgage payments because 17 Defendants have not allowed Plaintiffs the reduced rate of interest to which the are entitled 18 for the life of the loan. Compl. ¶ 13, Fischer v. Machado, 50 Cal.App.4th 1069, 1072 (1996) 19 (sufficient to plead an identifiable amount); Voris v. Lampert, 7 Cal.5th 1141, 1150 (2019) 20 (sum just needs to be capable of being determined). 21 22 23 3 The higher rate was 3.125% which as Plaintiffs allege derives from Defendants unlawful practice of denying certain borrowers RLP discounts. Compl. ¶ 12. The rate is thus an unlawful 24 object of the contract and not enforceable under Cal. Civ. Code Section 1550. Both the Promissory Note and the Deed of Trust provide remedies for borrowers who are charged more than permitted 25 by lawful practices. Section 5 of Defendants Notes provides that if the interest charges b Defendants e ceed the permitted limits of the law, charges must be reduced to the permitted 26 limits and an sums alread collected from the Borrower which e ceed permitted limits will be refunded to Borrower. See E hibit B to the Declaration of Peter B. Baumhart ( Baumhart Decl. ) 27 at Section 5 Defendants Deed of Trust at Section 14 ( Loan Charges ) reads identicall . E h. A, Baumhart Decl. 28 2 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT COUNT THREE (NEGLIGENCE): Plaintiffs plead that Defendants owed them a duty to 1 disclose material information and breached that duty by (1) telling Plaintiffs the higher rate 2 Defendants were charging was the optimum interest rate available, (2) failing to disclose the 3 e istence of an available discounts , and (3) charging the higher rate despite Plaintiff s 4 eligibilit for a lower rate. Compl. 11-12. By paying an interest rate higher than they should 5 have, Plaintiffs were harmed by this breach as fully described in Paragraphs 11-13 of the 6 Complaint, and the breach was a substantial factor in causing that harm because had 7 [Defendants] informed Plaintiffs of the more favorable rate to which they were entitled, Plaintiffs 8 may well have made different decisions about (1) the home Plaintiffs purchased, and (2) if and 9 when Plaintiffs would have sold their prior home which they were forced to do by Defendants at 10 a time that was not economically favorable to Plaintiffs. Compl. 13. Moreover, the OCC s 11 findings of statutory violations by Defendants constitute negligence per se. Quiroz v. Seventh Ave. Center, 140 Cal.App.4th 1256, 1284-1285 (2006). 12 COUNT FOUR (CLRA): Plaintiffs properly plead a CLRA claim: (1) Plaintiffs are consumers 13 who had a qualifying banking relationship with Defendants at the time of a mortgage loan 14 origination that entitled Plaintiffs to a loan discount among the other financial services 15 EVANS LAW FIRM, INC. Defendants were providing them (Compl. ¶ 2): (2) Defendants committed fraud in providing 16 these financial services to Plaintiffs and other California consumers by (a) denying Plaintiffs and 17 other California consumers the lower interest rates to which they were entitled (Compl. ¶¶ 11- 18 15), (b) failing to disclose the availabilit of the interest rate discount services to Plaintiffs and 19 other consumers who had a qualif ing banking relationship (Compl. 11)and (c) 20 affirmatively misrepresenting the interest rate the were charging Plaintiffs was the optimum 21 interest rate available to Plaintiffs (Compl. 11); and (3) Plaintiffs were harmed as a result of the fraudulent financial services, misrepresentations, and concealments. See Compl. ¶¶ 13-15 22 and 39-52. 23 COUNT FIVE (UCL): Plaintiffs adequately plead that Defendants engaged in the following 24 unlawful, unfair and fraudulent business practices: 25 a. Defendants affirmativel told Plaintiffs the were receiving the optimum interest 26 rate available (Compl. 11); b. Defendants failed to disclose the e istence of an available discounts (Compl. 27 11); 28 3 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT c. Defendants acknowledged that Plaintiffs were overcharged by Defendants (Compl. ¶ 1 12); 2 d. Defendants unlawfully denied the benefits of the RLP program to qualifying consumers like Plaintiffs according to the March 2019 Consent Order of the Office of the 3 Comptroller of the Currency (OCC) (Compl. ¶ 14); e. According to the Consent Order, Defendants impermissibly discriminated against certain 4 consumers, including Plaintiffs, in violation of the Fair Housing Act, 42 U.S.C. Sections 5 3601-3619, (Compl. ¶¶ 14-15 and 56); and f. According to the Consent Order certain Bank borrowers did not receive the RLP benefit 6 for which they were eligible and were adversely affected on the basis of their race, color, 7 national origin, and/or sex. (Compl. 15). Further, the statutor violations cited in the OCC s Consent Order and corollar State law 8 violations, are sufficient prerequisites for all three prongs of the Unfair Competition Law. 9 Compl. ¶¶ 53-68. 10 COUNT SIX (BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING): At all 11 relevant times herein, Plaintiffs had an ongoing business relationship with Defendants for a 12 variety of financial services. Compl. ¶¶ 1-2 and 11-19. Defendants owed Plaintiffs a duty of 13 good faith and fair dealing which Defendants breached by: affirmatively telling Plaintiffs they 14 were receiving the optimum interest rate available (Compl. 11) and failing to disclose the existence of any available discounts (Compl. ¶ 11). See Compl. ¶¶ 2-3,11-17 and 69-74. 15 EVANS LAW FIRM, INC. COUNT SEVEN (CFEHA): Plaintiffs properl plead Defendants violations of the California 16 Fair Emplo ment and Housing Act (CFEHA) b pleading (1) OCC identified Defendants 17 violations of the anti-discriminatory protections of the Fair Housing Act in their March 2019 18 Consent Order (Compl. ¶¶ 14-15,56-57, and 75-79.), (2) Defendants inadequate personnel 19 training and eligibility guidelines resulted in the violative conduct (Compl. ¶¶ 78-79), and (3) 20 Plaintiffs have been injured and have suffered monetary losses because of Defendants 21 violations of the California Fair Employment and Housing Act and its implementing 22 regulations. (Compl. 79). These Fair Housing Act anti-discriminatory violations, plead in the 23 complaint, constitute violations of the CFEHA under the governing cases. Sisemore v. Master 24 Financial, 151 Cal. App. 1386, 142 (2007). 25 Plaintiffs may use a pseudonym to prosecute this case in order to protect personal information. 4 Doe v. Lincoln Unified School District, 188 Cal.App.4th 758, 766 (2010). 26 27 28 4 Defendants did not raise this issue in the telephone meet and confer. Evans Dec.¶ 3. 4 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT II. STATEMENT OF FACTS AND PROCEDURAL HISTORY 1 A. STATEMENT OF FACTS 2 1. DEFENDAN ELA ION HI LOAND ICING 3 Prior to selling Plaintiffs a mortgage for purchase of Plaintiffs home, Defendants had a 4 Relationship Loan Pricing Services Program ( RLP ) under which customers, such as Plaintiffs and 5 other qualifying California consumers, could receive either a credit to closing costs or an interest 6 rate reduction ( the RLP Benefits ). Compl. ¶¶ 2, 14, and 15. At all relevant times, Plaintiffs were 7 qualifying bank customers for the RLP Benefits, according to Defendants own acknowledgment. 8 Compl. ¶ 12. As such Plaintiffs and other California consumers stood as third-party beneficiaries 9 to the RLP. 10 2. DEFENDAN FINANCIAL E ICE 11 After Defendants had implemented their RLP Program, Plaintiffs purchased a Citibank Mortgage (No. 1124341267) on their primary residence in the City and County of San Francisco 12 that closed on or about July 29, 2016 in the initial principal amount of $2,800,000. See Complaint 13 at ¶ 12. At the time Plaintiffs took out the mortgage from Defendants, Plaintiffs were told that 14 3.125% was the optimum interest rate available to Plaintiffs through Citibank/CitiMortgage. Id. 15 EVANS LAW FIRM, INC. Defendants did not disclose the existence of any available discounts including but not limited to 16 any reduction in the interest payable by Plaintiffs for which they may have qualified under 17 Defendants Relationship Loan Pricing (RLP) program. Id. Plaintiffs performed all obligations 18 required of them under the terms of their contract with Defendants. Id. 19 3. DEFEANDAN EF ND 20 On May 23, 2019, Plaintiffs received a letter from Defendant CitiMortgage that informed 21 Plaintiffs that in fact Plaintiffs were eligible for an interest rate signif icantly lower than that 22 charged Plaintiffs under the Note. Complaint ¶ 13. Accompan ing Defendants Ma 23, 2019 letter 23 was a check in the amount of $35,000, issued by Citibank to in Defendants words correct an 24 unintentional oversight. Complaint ¶ 13. 25 Further, Plaintiffs acted in reliance on Defendants representations that the interest rate offered to 26 Plaintiffs was the lowest rate available to them, and that Plaintiffs were not eligible for any other 27 services, such as the Relationship Loan Pricing Service, that would have lowered the rate. Complaint ¶ 28 13. If Defendants had informed Plaintiffs of the more favorable rate to which they were entitled, 5 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT 1 Plaintiffs may well have made different economic decisions that would have enabled Plaintiffs to have 2 avoided the economic losses the sustained b rel ing on the Defendants representations. Those 3 economic decisions and the losses Plaintiffs sustained included economic decisions about (1) the home 4 Plaintiffs purchased, and (2) if and when Plaintiffs would have sold their prior home which they were 5 forced to do by Defendants at a time that was not economically favorable to Plaintiffs. Complaint ¶ 13. 6 By making these economic decisions without Defendants disclosing the true Relationship Loan Pricing 7 service benefit for which Plaintiffs were eligible, Plaintiffs suffered further economic loss. Complaint ¶ 8 13. 4. OFFICE OF COMPTROLLER OF THE CURRENCY CONSENT ORDER 9 Following receipt of the May 2019 letter, Plaintiffs discovered that the Office of the Comptroller of 10 the Currenc ( OCC ) and CITIBANK, N.A. entered into a Consent Order dated March 19, 2019 in 11 which the OCC issued findings that as a result of the Bank s unlawful practices certain Bank borrowers 12 did not receive the RLP benefit to which the were entitled. Compl. 14. Further, the OCC 13 concluded that [a]s a result of the ineffective risk management and control weaknesses, certain Bank 14 borrowers did not receive the RLP benefit for which they were eligible and were adversely affected on 15 EVANS LAW FIRM, INC. the basis of their race, color, national origin, and/or se . Compl. ¶ 14. According to the OCC, 16 Defendants practices constituted violations of the Fair Housing Act, 42 U.S.C. 3601-19. Compl. ¶¶ 17 14-15 and 75-79. Complaint ¶ ¶14-15. Plaintiffs and other borrowers were victims of the Bank s 18 unlawful practices in denying certain borrowers RLP benefits. Complaint ¶¶ 2-3 and 11-15. 19 B. PROCEDURAL HISTORY 20 Plaintiffs filed the within Complaint on or about March 11, 2020 and timely served all Defendants. 21 After two extensions granted by Plaintiffs Defendants served the within Demurrer (originally without 22 any Notice or date/time/Department for hearing) on June 2, 2020. Subsequently, on June 18,2020, 23 Defendants served a Notice. Evans Decl. ¶ 4. 24 25 26 27 28 6 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT III. LEGAL ARGUMENT 1 A. DEFENDAN DEM E FAIL B AN I EL 5 BECAUSE PLAINTIFFS 2 HAVE SUFFICIENTLY PLEAD EACH CAUSE OF ACTION. 3 Courts consider an demurrer as admitting all material facts and give the complaint a reasonable interpretation, reading it as a whole and its parts in their conte t. Speegle v. Bd. of Fire Underwriters 4 29 Cal.2d 34, 42 (1946); Blank v. Kirwan 39 Cal.3d 311, 318 (1985). In instances when a complaint 5 does not state a cause of action, but the defect can be cured by amendment, leave to amend must be 6 granted. Blank, supra, 39 Cal.3d at 318.6 7 1. PLAINTIFFS SUFFICIENTLY PLEAD FACTS SHOWING BREACH OF CONTRACT 8 BECAUSE PLAINTIFFS ALLEGE EXISTENCE OF AGREEMENT, BREACH BY DEFENDANTS AND HARM FROM BREACH. 9 Plaintiffs plead two breach of contract theories: 10 a. DEFENDANTS BREACHED THEIR CONTRACT WITH PLAINTIFFS BY CHARGING AN INTEREST RATE DE I ED F OM HE BANK 11 UNLAWFUL PRACTICES (IN A MATERIAL TERM THAT IS NOT A LAWFUL 12 OBJECT). Defendants breached the contract by charging Plaintiffs an interest rate derived from the Bank s 13 unlawful practice of denying certain borrowers RLP benefits as determined in the OCC Consent Order, 14 Compl. ¶¶ 11-15). The interest rate thus derived was not a lawful object under Cal. Civil Code Section 15 EVANS LAW FIRM, INC. 1550: 16 It is essential to the existence of a contract that there should be: 17 1. Parties capable of contracting; 18 5 Defendants demurrer also fails procedurall because Defendants: 19 (1) Failed to conduct a meaning meet and confer. California requires that the parties meet and confer in 20 person or by phone before a moving party can file a Demurrer, and that the party intending a demurrer [a]s part of the meet and confer process, the demurring party shall identify all of the specific causes of 21 action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies. C.C.P. § 430.41(a) (emphasis added). Defendants failed to identify any legal support 22 during the phone conference they set up as a meet and confer. Evans Decl. ¶ 2. 23 (2) Defendants failed to timely file and serve a notice of motion as required by California Rule of Court 3.1320 (c) ( A part filing a demurrer must serve and file therewith a notice of hearing that 24 must specify a hearing date in accordance with the provisions of Code of Civil Procedure section 1005. ) (emphasis added). Defendants served Plaintiffs with a Memorandum of Points and Authorities, 25 a Declaration of Out-of-State Counsel, and a Request for Judicial Notice but no Notice. Evans Decl. ¶ 2. 26 The Notice was not served until June 18. Evans Decl. ¶ 4. 6 Defendants citation to Zelig v. City of L.A., 27 Cal.4th 1112, 1126 (2002) does not apply. Zelig 27 was a demurrer based on governmental immunity and failure to plead deprivation of rights under the Civil Rights Act, 42 U.S.C. § 1983. 28 7 PLAINTIFFS OPPOSITION TO DEFENDANTS DEMURRER TO THE COMPLAINT 2. Their consent; 1 3. A lawful object; and, 2 4. A sufficient cause or consideration. See Cal. Civ. Code 1550 (contract must have lawful object ); Owens v. Haslett, 98 Cal.App.2d 831, 3 835 (1950) (party breaches a contract where party s conduct is an unlawful business practice). 4 Plaintiffs were harmed as a result of the breach. Compl. ¶¶ 11-15. The contract term at issue here is an 5 unlawful object : an interest rate derived from an unlawful business practice, alleged in specific terms 6 as the 3.125% interest charged b Defendants . Compl. 11. In particular, Plaintiffs allege that the 7 higher rate derived from Defendant s unlawful practice of denying RLP Benefits to eligible consumers 8 as determined in the Consent Order (Compl. ¶¶ 14-15, 23-24). The higher rate derived from an 9 unlawful practice breached Defendants contract limiting interest to amounts permitted under the law. 10 See Baumhart Decl., at Section 14 of Exh. A (Deed of Trust), and Section 5 of Exh,. B (Note). Defendant s cases do not in any way address the breach alleged here a contract term (interest rate) 11 derived from Defendants unlawful business practice. (Compl. ¶¶ 11-15). Roddenberry v. Roddenberry, 12 44 Cal.App.4th 634, 655 (1996) was an appeal of a judgment after trial on the interpretation of contract 13 terms. Perry v. Robertson, 201 Cal.App.3d 333, 341 (1988) does not require that a copy of the contract 14 be annexed to the complaint as Defendants claim; it was a case involving an oral contract. Defendants 15 EVANS LAW FIRM, INC. federal court decisions do not address the breach by unlawful conduct either. 7 16 b. PLAINTIFFS ARE THIRD- A BENEFICIA IE OF DEFENDAN L 17 CONTRACT. Defendants created the RLP e pressl for the benefits of its qualif ing customers. Compl. 18 1, 2, and 11-15). Defendants have admitted Plaintiffs were qualifying customers and thus eligible 19 beneficiaries of the RLP. Compl. ¶ 12. By charging Plaintiffs a higher rate of interest than the RLP 20 allowed, Defendants breached the terms of their own RLP Agreement. Id. Plaintiffs, and other 21 California consumers, were harmed as third-party beneficiaries to the RLP. Compl. ¶¶ 12-15. Cal. Civ. 22 Code § 1559 provides: 23 A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. 24 25 7 Chirico v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1999 WL 1285458 (N.D. Cal. Dec. 13, 1999); Bhandari v. Capital One, N.A., 2013 WL 1736789 (N.D. Cal. Apr. 22, 2013); Vigdor v. Super Lucky 26 Casino, 2017 WL 2720218 (N.D. Cal. June 23, 2017); Lopez v. World Savings Loan, 105 Cal. App.4th 27 729 (2003); Amparan v. Plaza Home, 678 F.Supp. 961 (N.D. Cal. 2008); and, Quezada v. Loan Ctr. Of Cal