Preview
Superior Court of California F
County of Butte
Raymond L. Sandelman SBN 078020 |
Attorney at Law 12/2/2020 L
196 Cohasset Road, Suite 225
Chico, CA 95926-2284 Katia Ape. ce D
(530) 343-5090 / (530) 343-5091 (FAX) By Deputy
Email:Raymond@sandelmanlaw.com Electronically FILED
Attorney for Wayne A. Cook, individually
And as Trustee of The Wayne A. Cook 1998
Family Trust Dated 12/29/98
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF BUTTE
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WAYNE A. COOK, TRUSTEE OF THE NO.: 20CV00905
12 WAYNE A. COOK 1998 FAMILY
13 TRUST DATED 12/29/98, REPLY BRIEF IN SUPPORT OF MOTION
Plaintiff, FOR JUDGMENT ON THE PLEADINGS RE:
14 ANSWER TO THE COMPLAINT
15
Attached Document: Further Declaration of
16 Raymond L. Sandelman
EDWARD F. NIDEROST, et. al.,
17 Hearing Date: 12/9/2020
Defendants.
Hearing Time: 9:00 a.m.
18
/ Department: 1
19 Judge: Tamara Mosbarger
AND RELATED CROSS COMPLAINTS Date of Complaint: 4/22/2020
20 Trial Date: None Set
/
21
22
23 1. Introduction
24 The Opposition Brief does not explain why Defendants oppose the motion for judgment on
25 the pleadings given the fact that in response to the meet and confer communication regarding the
26 deficiencies of the Cross Complaint, counsel for Cross-Complainants did not dispute the pleading
27 deficiencies and promised in writing that she would file an Amended Answer. Counsel for Defendants
28 does not explain why she did not do what she promised (See Section 2, infra).
1
REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS RE: ANSWER TO THE
COMPLAINT
The Opposition Brief does not cite any law discussing the prima facie pleading elements of
any affirmative defense and/or reference the text of any allegation of ultimate facts in the Answer
that satisfies the pleading requirements. Instead, the Opposition Brief makes a general conclusory
claim that Paragraphs 5, 13-16 and 26-34 of the Cross Complaint (not the Answer), are sufficient to
establish both procedural and substantive unconscionability (See Section 3, infra).
2, The Opposition Brief Does Not Explain Why An Opposition Is Being
Filed Given Defense Counsel’s Promise That An Amended Pleading Would Be Filed
The Moving Papers explained that in response to a detailed meet and confer communication
concerning the pleading deficiencies, counsel for Defendants did not defend any of the affirmative
10 defenses as being well pleaded. Instead, Ms. Knowles sent an email on September 15, 2020
il promising to amend the Answer (See Ex. 2 to the Further Declaration of Raymond L. Sandelman).
12 Now for the first time, in an untimely filed Opposition Brief! counsel for Defendants claims that the
13 Second Affirmative Defense adequately pleads an affirmative defense based upon allegations in the
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16 The Opposition Brief does not explain why Defendants did not comply with Code of Civil
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5S 18 support for its position that the pleading is not subject to judgment, or, in the alternative, how the
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19 pleading could be amended to cure any claims it is subject to judgment.”). Defense counsel did not
20 provide any legal support for her position that the pleading is not subject to judgment. Much time
21 has been wasted. If defense counsel had complied with Code of Civil Procedure section 439
22
23 ' The Opposition Brief was due on November 24, 2020, nine court days prior to the December 9, 2020 hearing.
24
Thus, the deadline for serving and filing opposition papers is measured backward from the
date of hearing (9 court days, except on summary judgment or summary adjudication motions),
25
regardless of whether the moving papers were served personally, or by mail, overnight delivery or fax.
26 [See Blake v. Ecker (2001) 93 CA4th 728, 736, 113 CR2d 422, 428, fn. 6 (disapproved on other
grounds by Le Francois v. Goel (2005) 35 C4th 1094, 1107, 29 CR3d 249, 260 (citing text))]
27
Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2020)
28 §9:105
2
REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS RE: ANSWER TO THE
COMPLAINT
claim in the Opposition Brief.
3. The Second Affirmative Defense Does Not State
Ultimate Facts To Constitute A Defense Of Unconscionability
The Opposition Brief asserts that “The allegations of paras. 5, 13-16 and 26-34 of the Cross-
Complaint, all of which are incorporated by refence in the 8th cause of action, are sufficient to
establish both procedural and substantive unconscionability . . .” This argument makes no legal
sense. The motion concerns allegations in the Second Affirmative Defense of the Answer, not
allegations in the Cross Complaint. The allegations in the Cross Complaint were not incorporated
by reference into the Answer. The Second Affirmative Defense contains only conclusory allegations.
10 No ultimate facts regarding the factors of unconscionability have been pleaded.
11
12 4, Any Amendment Should Be Filed On Or Before December 21, 2020
13 As mentioned above, on September 15, 2020 Defense counsel promised to amend the Answer.
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19 5. Conclusion
20 The motion for judgment on the pleadings should be granted. Any amended answer should be
21 filed on or before December 21, 2020.
22
23 Dated: Tycembee 2p Roe
24 Raymond L. Sandelman
Attorney for Wayne A Cook,
25 individually and as Trustee of The
Wayne A. Cook 1998 Family Trust
26
27
28
3
REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS RE: ANSWER TO THE
COMPLAINT
TABLE OF EXHIBITS
Exhibit 2: September 15, 2020 email from Sara Knowles
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TABLE OF EXHIBITS
Raymond L. Sandelman SBN 078020
Attorney at Law
196 Cohasset Road, Suite 225
Chico, CA 95926-2284
(530) 343-5090 / (530) 343-5091 (FAX)
Email:Raymond@sandelmanlaw.com
Attorney for Wayne A. Cook, individually
And as Trustee of The Wayne A. Cook 1998
Family Trust Dated 12/29/98
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF BUTTE
10
WAYNE A. COOK, TRUSTEE OF THE NO.: 20CV00905
11 WAYNE A. COOK 1998 FAMILY
12 TRUST DATED 12/29/98, FURTHER DECLARATION OF RAYMOND
Plaintiff, L. SANDELMAN IN SUPPORT OF MOTION
13 FOR JUDGMENT ON THE PLEADINGS
14 Hearing Date: 12/9/2020
Hearing Time: 9:00 a.m.
15
EDWARD F. NIDEROST, et. al., Department: 1
16 Judge: Tamara Mosbarger
Defendants. Date of Complaint: 4/22/2020
17 Trial Date: None Set
/
18
AND RELATED CROSS COMPLAINTS
19
/
20
21 I, Raymond L. Sandelman, declare
22 1. I am an attorney licensed to practice in all California State Courts and the attorney for
23 Plaintiff Wayne A. Cook, Trustee of The Wayne A. Cook 1998 Family Trust Dated 12/29/98.
24 2. The Moving Papers explained that on September 15, 2020 Ms. Knowles sent me an email
25 stating that she intended to amend the Answer. Attached hereto marked Exhibit 2 is a true and correct
26 copy of her email.
27 I declare under penalty of perjury under the laws of the State of California that the foregoing
28 is true and correct.
1
FURTHER DECLARATION OF RAYMOND L. SANDELMAN IN SUPPORT OF MOTION FOR JUDGMENT ON
THE PLEADINGS
Dated: COmboe 2,U2LE Gye Ge
Raymond L. Sandelman
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Sent: Tuesday, September 15, 2020 1:07 PM
To: Raymond L. Sandelman
Subject: FW: Cook v. Niderost
Categories: Printed
Ray —
Because the cross-complaint and the answer contain may of the same allegations, and because the issues that your raise
overlap to both, | am writing to express to you that | intend to amend both documents. | suggest that | provide both
amended versions to you for your review and comment in the hopes that we can agree as to any remaining issues that
must be addressed by the court. | offer that such draft amended documents will be provided to you within one week
from today’s date.
Sara
From: Raymond L. Sandelman ‘mailto: Raymond@sandelmanlaw.com]
Sent: Wednesday, September 2, 2020 10:43 AM
To: Sara Knowles
Cc: Andrew Morrissey
Subject: Cook v. Niderost
Sara:
1. Introduction
Now that the stay for judicial foreclosures has been lifted, | am writing to address the same pleading issues in the
Answer to the Complaint that were previously raised in context of the filing of a demurrer. Those pleading issues will now
be raised in a motion for judgment on the pleadings. Nothing substantively has changed regarding the pleading
deficiencies since my emails to you on June 16, 2020 and June 30, 2020.
1. [7:275] In General: A motion for judgment on the pleadings has the same function as a general
demurrer but is made after the time for demurrer has expired. Except as provided by CCP § 438 (4 7:277
ff.), the rules governing demurrers apply. [Cloud v. Northrop Grumman Corp. (1998) 67 CA4th 995, 999,
79 CR2d 544, 546 (citing text); Southern Calif. Edison Co. v. City of Victorville (2013) 217 CA4th 218, 227,
158 CR3d 204, 209-210; Templo v. State of Calif. (2018) 24 CASth 730, 735, 234 CR3d 406, 409—“motion
for judgment on the pleadings is equivalent to a demurrer” (internal quotes omitted)]
Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2020)
| will telephone you on the afternoon of September 8" at 1:30 p.m. to discuss the pleading deficiencies. If that
day and time is inconvenient you can call me on the afternoon of the 9" or 10". In the past you have refused to participate
in a telephone conversation. If that happens | will file the appropriate declaration and proceed with the motion.
2. A Defendant Needs To Plead Ultimate Facts In An Answer
EXHIBIT.
California courts have long upheld demurrers to defenses that lack essential allegations of fact or are stated in the
form of bare legal conclusions. (See e.g. Universal Land Co. v. All Persons (1959) 172 Cal.App.2d 739, 741-744 [upholding
demurrer to answer due to missing allegations of fact]; see also City of Mountain View v. Sup. Ct. (1975) 54 Cal.App.3d 72, ”
84 [writ of mandate issued vacating trial court order denying general demurrer to portion of answer for failure to state
facts sufficient to constitute a defense].) Affirmative defenses must be pleaded with facts -- not just legal conclusions. The
answer must aver facts “as carefully and with as much detail as the facts which constitute the cause of action and which
are alleged in the complaint.” (FP/ Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384; “An affirmative defense
must be pled in the same manner as if the facts were set forth in a complaint.” (5 Witkin, California Procedure (5th ed 2008)
Pleading section 1082.) The Answer you filed assert affirmative defenses that don't come close.
The burden of articulating the ultimate facts is something that should be easy for you to do. None of the defenses
were not qualified by the language that they “are reasonably based on a lack of information or belief” and therefore you
certified that the allegations in the defenses have evidentiary support (Code Civ. Proc., § 128.7 subd. (b)(3)). It is just a
matter of you articulating that evidentiary support. Hopefully you did not make the allegations without evidentiary
support because that is sanctionable conduct. You might as well amend the Answer and plead the required ultimate
facts.
3. The Second Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Unconscionability
A party must plead ultimate facts of unconscionability:
Unconscionability should be set forth as an affirmative defense in the answer, with the underlying
material facts as well as the allegation of unconscionability.1 The defendant must plead ultimate facts
demonstrating, for example, either that the agreement constituted a contract of adhesion in which the
plaintiff took unfair advantage of the defendant's weaker bargaining position or that the contract or a
portion of the contract was unduly one-sided, oppressive or inherently unfair.2
Footnotes
*IMO Dev. Corp. v. Dow Corning Corp., 135 Cal.App.3d 451, 460, 185 Cal.Rptr. 341, 346 (4th
Dist.1982) (pleading alleging economic duress does not invoke court's power to declare contract
unconscionable); see Walnut Producers of California v. Diamond Foods, Inc., 187 Cal.App.4th 634, 644,
114 Cal.Rptr.3d 449, 457 (3d Dist.2010) (“unconscionability is determined based on the unique factual
situations of each case”); Morris v. Redwood Empire Bancorp, 128 Cal.App.4th 1305, 27 Cal.Rptr.3d 797
(4th Dist.2005) (leave to amend to allege facts for unconscionability cause of action).
2 IMO Dev. Corp. v. Dow Corning Corp., 135 Cal.App.3d 451, 460, 185 Cal.Rptr. 341, 346 (4th
Dist.1982); see Truta v. Avis Rent A Car System, Inc., 193 Cal.App.3d 802, 238 Cal.Rptr. 806 (1st Dist.1987).
2 Schwing, California Affirmative Defenses (2d ed. 2019) § 55:5.
A contractual provision must be both procedurally and substantively unconscionable, or it will be enforced.
As explained in A & M Produce Co., supra, 135 Cal.App.3d 473, 186 Cal.Rptr. 114,
“unconscionability has both a ‘procedural’ and a ‘substantive’ element,” the former focusing on
“oppression” or “surprise” due to unequal bargaining power, the latter on “overly harsh” or “one-sided”
results. (/d. at pp. 486-487, 186 Cal.Rptr. 114.) “The prevailing view is that [procedural and substantive
unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce
a contract or clause under the doctrine of unconscionability.” (Stirlen v. Supercuts, Inc., supra, 51
Cal.App.4th at p. 1533, 60 Cal.Rptr.2d 138 (Stirlen).) But they need not be present in the same degree
“Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the
contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness
of the substantive terms themselves.” (15 Williston on Contracts (3d ed. 1972) § 1763A, pp. 226-227; see
also A & M Produce Co., supra, 135 Cal.App.3d at p. 487, 186 Cal.Rptr. 114.) In other words, the more
2
substantively oppressive the contract term, the less evidence of procedural unconscionability is required
to come to the conclusion that the term is unenforceable, and vice versa.
Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114
Procedural unconscionability concerns oppression and surprise. Morris v. Redwood Empire Bancorp (2005) 128
Cal. App. 4th 1305, 1319. Oppression refers to the absence of both the power to negotiate and the absence of market
alternatives (128 Cal. App. 4th at 1320). Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 617 holds that
there is a failure to allege unequal bargaining power when there is an absence of facts alleging that the borrower unable
to receive more favorable terms from another lender, or from the lender by paying a different interest rate, or by accepting
a different type of loan, or one with a different term
Graham does not allege he did not have the option to seek another lender or to simply choose
not to enter the market place at the time. (Shadoan, supra, 219 Cal.App.3d at p. 103, 268 Cal.Rptr. 207
[plaintiffs alleged no facts from which to conclude plaintiffs had no bargaining power because they
“alleged no facts indicating that they were unable to receive more favorable terms from another lender,
or from [the bank] by paying a different interest rate, or by accepting a different type of loan, or one with
a different term’”].)
Surprise focuses on whether the challenged term is hidden in a prolix printed form or is otherwise beyond the
reasonable expectation of the weaker party (Morris, 128 Cal. App. 4th. at 1321).
Concluding that a contract is one of adhesion, begins rather than ends the analysis for purposes of
unconscionability (Morris, 128 Cal. App. 4th at 1319-20 confirming adhesiveness is not per se oppressive; Fittante v. Palm
Springs Motors, Inc. (2003) 105 Cal. App. 4th 708, 714). Defendants must allege facts showing that they were surprised
and/or lacked a reasonable alternative source of supply (Morris, 128 Cal.App.4th at 1320). The Answer does not properly
allege that any terms are procedurally unconscionable because the elements of surprise and/or lack of alternate supply.
There are many, many alternative sources of financing; it is difficult for me to imagine the any terms from alternative
lenders that would be more favorable to the Mr. Niderost as trustee.
A provision is substantively unconscionable if it is so one-sided that it shocks the conscience (Morris, 128 Cal. App.
4th at 1322). “Shock the conscience” does not mean “unreasonable.” “With a concept as nebulous as ‘unconscionability’
it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties
have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.”
(Morris,128 Cal. App. 4th at 1322-1323, quoting American Software, Inc. v. Ali (1966) 46 Cal. App. 4th 1386,
1391). Defendants have not alleged that any of the challenged provisions that they proposed are so one-sided that they
“shock the conscience.”
No ultimate facts regarding the factors of unconscionability have been pleaded.
4. The Third Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Duress
"Duress" is defined in Civil Code section 1569 as any of the following: (a) unlawful confinement of the person of
the party, or of the husband or wife of such party, or of an ancestor, descendant, or adopted child of such party, husband,
or wife; (b) unlawful detention of the property of any such person; or (c) confinement of such person, lawful in form, but
fraudulently obtained, or fraudulently made unjustly harrassing or oppressive). A party must plead ultimate facts of
duress:
The defendant should provide specific factual allegations on the issue of duress. General
allegations of duress, coercion, threats, and compulsion are insufficient to raise the issue of duress
without a further statement of the particular supporting facts,” although the plaintiff is likely to waive the
pleading defect by failing to demur in the 10 days permitted by law.? A bald assertion of threat of economic
3
duress is pure legal conclusion, given no evidentiary weight, and insufficient standing alone to defeat
summary judgment.’
Footnotes
* See Marshall v. Packard—Bell Co., 106 Cal.App.2d 770, 774, 236 P.2d 201, 204 (2d Dist.1951)
(detailed pleading of facts required to plead cause of action for duress); Federal Rules of Civil Procedure
8(c)(1) ("In responding to a pleading, a party must affirmatively state ... duress ...”); Annot., Necessity of
Specific Allegations to Support Plea of Coercion or Duress in Civil Action, 70 L.Ed. 619 (1927).
?>McKay v. Retail Auto. Salesmen's Local Union No. 1067, 16 Cal.2d 311, 320, 106 P.2d 373, 378
(1940), cert. denied, 313 U.S. 566, 61 S.Ct. 939, 85 L.Ed. 1525 (1941); Marshall v. Packard—Bell Co., 106
Cal.App.2d 770, 774, 236 P.2d 201, 204 (2d Dist.1951).
3 Code of Civil Procedure § 430.40(b); see § 1:4.
‘Roehm Distributing Co. v. Burgermeister Brewing Corp., 196 Cal.App.2d 678, 682, 16 Cal.Rptr.
881, 884 (4th Dist.1961); Annot., Pleading Duress as a Conclusion, 119 A.L.R. 997 (1939).
2 Schwing, California Affirmative Defenses (2d ed. 2019) § 33:8.
No ultimate facts regarding the factors of duress have been pleaded.
5. The Fourth Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of A Violation of the
Fair Debt Collection Practices Act applicable.
It should be fairly obvious that the Federal Fair Debt Collection Practices Act (15 USC §§ 1692-1692p) concerns
debt collection practices (not transactions):
1. [2:6] Federal Fair Debt Collection Practices Act: The Federal Fair Debt Collection Practices Act
(Federal FDCPA, 15 USC §§ 1692-1692p) is the primary federal legislation dealing with unfair and deceptive
consumer debt collection practices. ...
a. [2:7] Scope of Federal FDCPA: The Federal FDCPA applies only to the collection of “consumer
debts” by “debt collectors.”
Ahart, Enforcing Judgments and Debts (The Rutter Group 2020)
15 U.S.C.A. § 1692¢ regulates communications by debt collectors in connection with debt collection. 15 U.S.C.A.
§ 1692e regulates false or misleading representations by debt collectors . 15 U.S.C.A. § 1692f bars certain unfair practices
by debt collectors. 15 U.S.C.A. § 1692k imposes civil liability for wrongful acts by debt collectors .
The term “debt collector” is defined 15 U.S.C.A. § 1692a (6):
The term “debt collector” means any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which is the collection of any debts, or
who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be
owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this
paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name
other than his own which would indicate that a third person is collecting or attempting to collect such
debts. For the purpose of section 1692f(6) of this title, such term also includes any person who uses any
instrumentality of interstate commerce or the mails in any business the principal purpose of which is the
enforcement of security interests. The term does not include--.. .
4
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or
due another to the extent such activity . . . (ii) concerns a debt which was originated by such person; . .
. (underlining added)
The terms of 15 U.S.C.A. § 1692a (6)(F) mean that Wayne Cook, Trustee’s collection of the $674,062.39 Note is
not within the definition of a debt collector because it is a debt originated by Wayne Cook, Trustee. Similarly, any conduct
of Matthew N. Fine, MD 401K Plan to collect its debt would not make it a debt collector. See also Davidson v. Capital One
Bank (USA), N.A. (11th Cir. 2015) 797 F.3d 1309, 1313 holding that “Unlike debt collectors, creditors typically are not
subject to the FDCPA. See, e.g., Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir.2000). A “creditor” is “any
person who offers or extends credit creating a debt or to whom a debt is owed.” 15 U.S.C.A. § 1692a(4).
There are no ultimate facts alleged that Wayne Cook, Trustee’ et's “principal purpose” of business is the collection
of debts, or is a “a person” who “regularly” collects debts on behalf of others.
To be held liable for violation of the FDCPA, a defendant must—as a threshold requirement—fall
within the Act's definition of “debt collector.” See Heintz v. Jenkins, 514 U.S. 291, 294, 115 S.Ct. 1489, 131
L.Ed.2d 395 (1995); see also, e.g., Romine v. Diversified Collection Servs., 155 F.3d 1142, 1146 (9th
Cir.1998). The FDCPA defines “debt collector,”> in pertinent part, as
“any person who uses any instrumentality of interstate commerce or the mails in any business
the principal purpose of which is the collection of any debts, or who regularly collects or attempts to
collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. §
1692a(6).
Thus, a “debt collector” under the FDCPA is either (1) “a person” the “principal purpose” of whose
business is the collection of debts (whether on behalf of himself or others); or (2) “a person” who
“regularly” collects debts on behalf of others (whether or not it is the principal purpose of his business).
“To state a claim for violation of the FDCPA, a plaintiff must allege that the defendant is a ‘debt collector’
collecting a ‘debt.’” Ines v. Countrywide Home Loans, No. 08cv1267 WQH (NLS), 2008 WL 4791863, *2
(S.D.Cal. Nov. 3, 2008).
Plaintiffs allege that ETS has “violated provisions of ... the [FDCPA].” They do not allege that ETS
is a debt collector, however, nor identify the provisions of the act that have purportedly been violated.
Because plaintiffs do not assert that ETS is a debt collector, they fail to state a claim under the FDCPA.
Furthermore, because “foreclosing on [a] property pursuant to a deed of trust is not the collection of a
debt within the meaning of the FDCPA,” jd. (citing Hulse v. Ocwen Fed. Bank, FSB, 195 F.Supp.2d 1188,
1204 (D.Or.2002) (internal quotation marks omitted)), they do not plead that ETS was “collecting a debt.”
For both reasons, plaintiffs’ FDCPA claim is deficient and ETS's motion to dismiss must be granted.
(underlining added)
Izenberg v. ETS Services, LLC (C.D. Cal. 2008) 589 F.Supp.2d 1193, 1198-1199
The FDCPA establishes two alternative predicates for “debt collector status”: 1) engaging in debt
collection as the “principal purpose” of the entity's business; or 2) engaging in debt collection “regularly.”
Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56, 61 (2d Cir.2004); 15 U.S.C. §
1692a(6). Our focus here is on the second prong of the FDCPA's definition of “debt collector” as one “who
regularly collects or attempts to collect [a debt],” and, specifically, the term “regularly.” 15 U.S.C. §
1692a(6) (emphasis added). The term “regularly” means “{a]t fixed and certain intervals, regular in point
in time. In accordance with some consistent or periodical rule or practice.” Black's Law Dictionary 1286
(6th Ed.1990). In turn, the term “regular” means “steady or uniform in course, practice, or occurrence ...
L} [u]sual, customary, normal or general.” /d. at 1285. Reviewing § 1692a(6) as a whole, it is evident that
Congress “intended the ‘principal purpose’ prong ... to differ from the ‘regularly’ prong” of its definition
of “debt collector.”
James v. Wadas (10th Cir. 2013) 724 F.3d 1312, 1316-1317
5
“Regular” is defined as “appearing or occurring repeatedly from time to time” and is synonymous
with “frequent, habitual, periodic, repeated, steady.” Merriam-Webster Thesaurus (2006). Neither of the
parties have directed the court to an alternative definition of the statutory term.
Riley v. Giguiere (E.D. Cal. 2009) 631 F.Supp.2d 1295, 1303
Plaintiffs have not alleged facts sufficient to plead that Wells Fargo is a debt collector under the
first definition because the FAC “does not expressly state that the ‘principal purpose’ of Wells Fargo's
business is debt collection.” Schlegel, 720 F.3d at 1208-09. Rather, the FAC alleges that “one of the
principal businesses of [Wells Fargo] is debt collection on a regular basis.” FAC, §] 238. As in Schlegel, the
FAC's factual matter, viewed in the light most favorable to Plaintiffs, establishes only that debt collection
is some part of Wells Fargo's business. See Schlegel, 720 F.3d at 1209. For Wells Fargo to be a debt
collector under the first definition, Plaintiffs must allege that the principal purpose of Wells Fargo's
business is debt collection, not that one of Wells Fargo's principal businesses is debt collection.
Rockridge Trust v. Wells Fargo, N.A. (N.D. Cal. 2013) 985 F.Supp.2d 1110, 1137
As to the second element of an FDCPA claim, the statute defines a “debt collector” as “any person
who uses any instrumentality of interstate commerce or the mails in any business the principal purpose
of which is the collection of any debts, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). This languag
distinguishes a “debt collector,” which collects the debts due to another, from a “creditor,” which seeks
to collect on its own debts. See Klar v. Fed. Nat'l Mortg. Ass'n, No. 3:13cv462, 2014 WL 412533, at *7
(E.D.Va. Feb. 3, 2014); Giovia v. PHH Mortg. Corp., No. 1:13cv577, 2013 WL 6039039, at *7 (E.D.Va. Nov.
13, 2013); Blick v. Wells Fargo Bank, N.A., No. 3:11cv81, 2012 WL 1030137, at *7 (W.D.Va. Mar. 27, 2012)
(citing Ruggia, 719 F.Supp.2d at 648), aff'd, 475 Fed.Appx. 852 (4th Cir.2012). (underlining added)
2. M&T Bank Is Not a “Debt Collector” Under the FDCPA
The Hardnetts allege no facts to show that M&T Bank is a “debt collector” under the meaning of
the term in the FDCPA. .. The FDCPA does not create a cause of action against creditors. Klar, 2014 WL
412533, at *7 (“The FDCPA only imposes liability on businesses or groups whose ‘principal purpose . . is
the collection of any debts.’
Hardnett v. M&T Bank (E.D. Va. 2016) 204 F.Supp.3d 851, 859-860, aff'd sub nom. Hardnett v. M & T Bank
(4th Cir. 2017) 699 Fed.Appx. 242, and aff'd sub nom. Hardnett v. M & T Bank (4th Cir. 2017) 699 Fed.Appx.
242
Unpublished federal cases cited by me (and the federal courts) are appropriate legal argument to show
persuasive arguments.
Although we may not rely on unpublished California cases, the California Rules of Court do not
prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not
binding, authority. (Cal. Rules of Court, rule 8.1115; Farm Raised Salmon Cases (2008) 42 Cal.4th 1077,
1096, fn. 18, 72 Cal.Rptr.3d 112, 175 P.3d 1170; DeJung v. Superior Court (2008) 169 Cal.App.4th 533, 548,
fn. 9, 87 Cal.Rptr.3d 99; e.g., Pacific Shore Funding v. Lozo (2006) 138 Cal.App.4th 1342, 1352, fn. 6, 42
Cal.Rptr.3d 283 [citing unreported federal cases as persuasive authority].)
Tichinin v. City of Morgan Hill (2009) 177 Cal.App.4th 1049, fn 10
6. The [First] Fifth Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Predatory
Lending
The conclusory allegations do not state ultimate facts supporting a defense.
(a) The Truth in Lending Act
The Federal Consumer Credit Protection Act, known as the Federal Truth-in-Lending Act (15 U,S.C.A. §§ 1601 et
seq.) permits obligors the right to rescind certain consumer credit transactions (15 U.S.C.A. § 1635). Penalties can be
assessed against creditor who fails to comply with requirement imposed by the statutes (15 U.S.C.A. § 1640) Creditors
must make certain disclosures (12 CFR § 1026.6 , and 12 CFR § 1026.17). Wayne Cook, Trustee is not a creditor under the
Act. 15 U.S.C.A. § 1602(g) defines “creditors”:
The term “creditor” refers only to a person who both (1) regularly extends, whether in connection
with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in
more than four installments or for which the payment of a finance charge is or may be required, and (2)
is the person to whom the debt arising from the consumer credit transaction is initially payable on the
face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. ..
- Any person who originates 2 or more mortgages referred to in subsection (aa) in any 12-month period
or any person who originates 1 or more such mortgages through a mortgage broker shall be considered
to be a creditor for purposes of this subchapter. . . . (underlining added)
Wayne Cook, Trustee as an assignee of the Fine $500,000 note is not a “creditor” because he is not the person to
whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of
indebtedness,
We agree with the district court that The Money Store is not “the person to whom the debt arising
from the consumer credit transaction [was] initially payable on the face of the evidence of indebtedness,”
15 U.S.C. § 1602(g), and is therefore not a “creditor” under TILA with respect to the transactions at issue
here... TILA establishes a straightforward, objective inquiry for determining the identity of the creditor:
it is “the person to whom the debt arising from the consumer credit transaction is initially payable on the
face of the evidence of indebtedness.” 15 U.S.C. § 1602(g). Here, the initial lenders on the loans were
entities other than The Money Store.
Vincent v. The Money Store (2d Cir. 2013) 736 F.3d 88, 106
There are no allegations of ultimate facts that Wayne Cook, Trustee as the payee of the $674,062.39 note is a
creditor within the definition of 15 U.S.C.A. § 1602(g) because there are no allegations that he is a person who regularly
extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable
by agreement in more than four installments or for which the payment of a finance charge is or may be required.
(b) The Higher-Price Mortgage Loan Act (part of Regulation 2).
The regulation that implements the Federal Truth in Lending Act is referred to as ‘Regulation Z.’ It was codified at
12 C.F.R. 226 until it was re-codified at 12 C.F.R. 1026, effective December 30, 2011 (after rulemaking authority under the
Truth in Lending Act was transferred from the Federal Reserve Board to the Consumer Financial Protection Bureau). See
generally Truth in Lending (Regulation Z), 76 FR 79768-01; see also /n re Davis, No. 14 C154, 2014 WL 1339720, at *2 (N.D.
111. Apr. 3, 2014); accord Gilbert v. Residential Funding LLC, 678 F.3d 271, 273 (4th Cir. 2012) (“Regulation Z, 12 C.F.R. §
1026... [was] previously codified at 12 C.F.R. § 226.”); Garcia v. Vazquez, No. EP-14-CV-377-RFC, 2015 WL 11545022, at *3
(W.D. Tex. July 24, 2015). Accordingly, section 1026, et seq. will be discussed herein given that the transactions and
occurrences allegedly took place after December 30, 2011. See Krieger v. Bank of Am., N.A., 890 F.3d 429, 437, n. 4 (3d
Cir. 2018)
Regulation Z defines “creditor” as:
A person who regularly extends consumer credit that is subject to a finance charge or is payable
by written agreement in more than four installments (not including a down payment), and to whom the
obligation is initially payable, either on the face of the note or contract, or by agreement when there is no
note or contract.
12 C.F.R. § 1026.2(a)(17)(i)
The definition “is restrictive and precise, referring only to a person who satisfies both requirements” of the
provision. Cetto v. LaSalle Bank Nat'l Ass’n, 518 F.3d 263, 270 (4th Cir. 2008). Otherwise stated, “[t]he two requirements
are mandatory and without exception.” /d. at 275,
The term “regularly extends consumer credit” is defined as follows:
Aperson regularly extends consumer credit only if it extended credit (other than credit subject to
the requirements of 12 C.F.R. § 1026.32) more than 25 times (or more than 5 times for transactions
secured by a dwelling) in the preceding calendar year. If a person did not meet these numerical standards
in the preceding calendar year, the numerical standards shall be applied to the current calendar year. A
person regularly extends consumer credit if, in any 12-month period, the person originates more than one
credit extension that is subject to the requirements of § 1026.32 or one or more such credit extensions
through a mortgage broker.
12 C.F.R. § 1026.2(a)(17)(v)
12 C.F.R. § 1026.32 pertains to “high cost mortgages.” A “high cost mortgage” is a “consumer credit transaction
that is secured by the consumer's principal dwelling” with an “annual percentage rate at consummation of the transaction
that will exceed by more than 6.5 percentage points ... the average prime offer rate.” 15 U.S.C. § 1602(bb)(1)(A){i)(1).
There are no allegations that Wayne Cook, Trustee is a “person” who “regularly extends consumer credit,” because
the Complaint fails to allege that he “extended any loans at all in the last year, let alone 25, or five secured by a dwelling.”
There are no allegations that there was a “consumer credit transaction that is secured by the consumer’s principal
dwelling” with an “annual percentage rate at consummation of the transaction that will exceed by more than 6.5
percentage points ... the average prime offer rate.”
(c) Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act merely amended TILA. See, e.g., Bhandari v.
Capital One, N.A., No. 12-04533 PSG, 2013 WL 1736789, at *5 (N.D. Cal. Apr. 22, 2013). The Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 USC § 5301 et seq.) provides that original creditors and other “covered persons” and
“service providers” involved in collecting debts related to any consumer financial product or service are prohibited from
using unfair, deceptive or abusive acts or practices. [12 USC §§5531(a), 5536]
No “unfair, deceptive or abusive acts or practices” have been alleged. Ahart, Enforcing Judgments and Debts (The
Rutter Group 2020) explains gives examples of prohibited conduct:
According to the Consumer Financial Protection Bureau (CFPB), examples of unfair, deceptive or
abusive acts or practices under the Act include, but are not limited to, the following:
. Collecting or assessing a debt and/or any additional amounts in connection with a debt
(including interest, fees and charges) not expressly authorized by the agreement creating the debt or
permitted by law;
. Failing to post payments timely or properly or to credit a consumer's account with
payments that the consumer submitted on time and then charging late fees to the consumer;
Taking possession of property without the legal right to do so;
. Revealing the consumer's debt to the consumer's employer and/or coworkers without
the consumer's consent;
Falsely representing the character, amount or legal status of the debt;
° Misrepresenting that a debt collection communication is from an attorney;
. Misrepresenting that a communication is from a government source or that the source
of the communication is affiliated with the government;
. Misrepresenting whether information about a payment or nonpayment would be
furnished to a credit reporting agency;
. Misrepresenting to consumers that their debts would be waived or forgiven if they
accepted a settlement offer, when the company does not in fact forgive or waive the debt;
. Threatening any action that is not intended or that the covered person or service
provider does not have the authorization to pursue, including false threats of lawsuits, arrest, prosecution
or imprisonment for nonpayment of a debt. [CFPB Bulletin 2013-07 (July 10, 2013)}
Debt owners and third party debt collectors also may be found to have engaged in prohibited
deception of consumers by representing that:
. Payments on obsolete debts will result in the removal of information about the client
from the consumer's creditor report;
. Payments on debts in collection will change the consumer's creditor reports, improve
the consumer's creditor score, improve the consumer's creditworthiness or enhance the likelihood that
the consumer will subsequently receive credit from a lender. [CFPB Bulletin 2013-08 (July 10, 2013)]
7. The [Second] Fifth Affirmative Defense Of Violation Of The Covenant Of Good Faith And Fair Dealing, Fails To
State Facts Sufficient To Constitute An Affirmative Defense.
It is difficult to understand how a breach of the covenant of good faith and fair dealing would be legally relevant
to the relief requested in the Complaint. Defendants allege in a conclusory manner unconscionable terms and a failure to
ascertain whether Defendant could pay for the Miller Mansion and that Plaintiff took advantage of the vulnerabilities of
plaintiff (sic) in creating and implementing the transaction. The claim of unconscionability lacks any substance (See the
discussion regarding the Second Affirmative Defense). The remaining claims have nothing to do with a violation of the
covenant of good faith and fair dealing. Exhibit B to the Cross Complaint (which may be judicially noticed) is an offer by Ed
Nidersot to purchase real property using a standard California Association of Realtors form. He was represented by a
licensed real estate broker. The promissory note that he signed is a standard simple note for interest only payments for
seven years,
The implied covenant only protects the express terms of the agreement; it cannot impose substantive duties or
limits on the contracting parties beyond those incorporated in the specific terms of their agreement.
Generally, the implied covenant operates to protect the express covenants or promises of the
contract. [Citation] . . . Nonetheless, because it protects only the express terms of the agreement, [i
annot impose substantive duties or limits on the contracting parties beyond those incorporated in the
specific terms of their agreement. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350, 100
Cal.Rptr.2d 352, 8 P.3d 1089.) (underlining added)
There is no articulation of any ultimate facts that make the implied covenant applicable in this litigation.
We first emphasize a long-established rule concerning implied covenants. To be imposed ““(1) the
implication must arise from the language used or it must be indispensable to effectuate the intention of
the parties; (2) it must appear from the language used that it was so clearly within the contemplation of
the parties that they deemed it unnecessary
Preview
Superior Court of California F County of Butte Raymond L. Sandelman SBN 078020 | Attorney at Law 12/2/2020 L 196 Cohasset Road, Suite 225 Chico, CA 95926-2284 Katia Ape. ce D (530) 343-5090 / (530) 343-5091 (FAX) By Deputy Email:Raymond@sandelmanlaw.com Electronically FILED Attorney for Wayne A. Cook, individually And as Trustee of The Wayne A. Cook 1998 Family Trust Dated 12/29/98 SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF BUTTE 10 il WAYNE A. COOK, TRUSTEE OF THE NO.: 20CV00905 12 WAYNE A. COOK 1998 FAMILY 13 TRUST DATED 12/29/98, REPLY BRIEF IN SUPPORT OF MOTION Plaintiff, FOR JUDGMENT ON THE PLEADINGS RE: 14 ANSWER TO THE COMPLAINT 15 Attached Document: Further Declaration of 16 Raymond L. Sandelman EDWARD F. NIDEROST, et. al., 17 Hearing Date: 12/9/2020 Defendants. Hearing Time: 9:00 a.m. 18 / Department: 1 19 Judge: Tamara Mosbarger AND RELATED CROSS COMPLAINTS Date of Complaint: 4/22/2020 20 Trial Date: None Set / 21 22 23 1. Introduction 24 The Opposition Brief does not explain why Defendants oppose the motion for judgment on 25 the pleadings given the fact that in response to the meet and confer communication regarding the 26 deficiencies of the Cross Complaint, counsel for Cross-Complainants did not dispute the pleading 27 deficiencies and promised in writing that she would file an Amended Answer. Counsel for Defendants 28 does not explain why she did not do what she promised (See Section 2, infra). 1 REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS RE: ANSWER TO THE COMPLAINT The Opposition Brief does not cite any law discussing the prima facie pleading elements of any affirmative defense and/or reference the text of any allegation of ultimate facts in the Answer that satisfies the pleading requirements. Instead, the Opposition Brief makes a general conclusory claim that Paragraphs 5, 13-16 and 26-34 of the Cross Complaint (not the Answer), are sufficient to establish both procedural and substantive unconscionability (See Section 3, infra). 2, The Opposition Brief Does Not Explain Why An Opposition Is Being Filed Given Defense Counsel’s Promise That An Amended Pleading Would Be Filed The Moving Papers explained that in response to a detailed meet and confer communication concerning the pleading deficiencies, counsel for Defendants did not defend any of the affirmative 10 defenses as being well pleaded. Instead, Ms. Knowles sent an email on September 15, 2020 il promising to amend the Answer (See Ex. 2 to the Further Declaration of Raymond L. Sandelman). 12 Now for the first time, in an untimely filed Opposition Brief! counsel for Defendants claims that the 13 Second Affirmative Defense adequately pleads an affirmative defense based upon allegations in the a ae <é 6E 14 Cross Complaint. The next section of this Brief explains that the allegations in the Cross Complaint gs 2g6 Ba og 15 have nothing to do with the allegations in the Answer. Z's oh A<85as As wees 16 The Opposition Brief does not explain why Defendants did not comply with Code of Civil Ze Ze~ Bede38ga$¢ ge 17 Procedure section 439 subdivision (a)(1) (“The party who filed the pleading shall provide legal 5S 18 support for its position that the pleading is not subject to judgment, or, in the alternative, how the ae 28 ge 19 pleading could be amended to cure any claims it is subject to judgment.”). Defense counsel did not 20 provide any legal support for her position that the pleading is not subject to judgment. Much time 21 has been wasted. If defense counsel had complied with Code of Civil Procedure section 439 22 23 ' The Opposition Brief was due on November 24, 2020, nine court days prior to the December 9, 2020 hearing. 24 Thus, the deadline for serving and filing opposition papers is measured backward from the date of hearing (9 court days, except on summary judgment or summary adjudication motions), 25 regardless of whether the moving papers were served personally, or by mail, overnight delivery or fax. 26 [See Blake v. Ecker (2001) 93 CA4th 728, 736, 113 CR2d 422, 428, fn. 6 (disapproved on other grounds by Le Francois v. Goel (2005) 35 C4th 1094, 1107, 29 CR3d 249, 260 (citing text))] 27 Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2020) 28 §9:105 2 REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS RE: ANSWER TO THE COMPLAINT claim in the Opposition Brief. 3. The Second Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Unconscionability The Opposition Brief asserts that “The allegations of paras. 5, 13-16 and 26-34 of the Cross- Complaint, all of which are incorporated by refence in the 8th cause of action, are sufficient to establish both procedural and substantive unconscionability . . .” This argument makes no legal sense. The motion concerns allegations in the Second Affirmative Defense of the Answer, not allegations in the Cross Complaint. The allegations in the Cross Complaint were not incorporated by reference into the Answer. The Second Affirmative Defense contains only conclusory allegations. 10 No ultimate facts regarding the factors of unconscionability have been pleaded. 11 12 4, Any Amendment Should Be Filed On Or Before December 21, 2020 13 As mentioned above, on September 15, 2020 Defense counsel promised to amend the Answer. Be ae sé Se 14 Plaintiff has filed a motion for preference on the grounds that he is dying. That motion is to be heard gs ae oR BszA B30 15 on December 16, 2020. The pleadings should be finalized as soon as possible. Given that Defense 2ounas RAR sas 16 counsel promised to file an amended pleading three months ago, it is appropriate that the Court order Ze ZeL SE? 17 that any amended answer be filed on or before December 21, 2020. gd aa Sa $e ga 5S 18 aa gia ge 19 5. Conclusion 20 The motion for judgment on the pleadings should be granted. Any amended answer should be 21 filed on or before December 21, 2020. 22 23 Dated: Tycembee 2p Roe 24 Raymond L. Sandelman Attorney for Wayne A Cook, 25 individually and as Trustee of The Wayne A. Cook 1998 Family Trust 26 27 28 3 REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS RE: ANSWER TO THE COMPLAINT TABLE OF EXHIBITS Exhibit 2: September 15, 2020 email from Sara Knowles 10 11 12 Qo 13 ae <é oF 14 ga 225 <= Rog 15 oe oun axaS 8s 4228 16 Ze eaZe> 2548ga 17 zc Sy ga BS Ba 18 Ba Bo 19 20 21 22 23 24 25 26 27 28 TABLE OF EXHIBITS Raymond L. Sandelman SBN 078020 Attorney at Law 196 Cohasset Road, Suite 225 Chico, CA 95926-2284 (530) 343-5090 / (530) 343-5091 (FAX) Email:Raymond@sandelmanlaw.com Attorney for Wayne A. Cook, individually And as Trustee of The Wayne A. Cook 1998 Family Trust Dated 12/29/98 SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF BUTTE 10 WAYNE A. COOK, TRUSTEE OF THE NO.: 20CV00905 11 WAYNE A. COOK 1998 FAMILY 12 TRUST DATED 12/29/98, FURTHER DECLARATION OF RAYMOND Plaintiff, L. SANDELMAN IN SUPPORT OF MOTION 13 FOR JUDGMENT ON THE PLEADINGS 14 Hearing Date: 12/9/2020 Hearing Time: 9:00 a.m. 15 EDWARD F. NIDEROST, et. al., Department: 1 16 Judge: Tamara Mosbarger Defendants. Date of Complaint: 4/22/2020 17 Trial Date: None Set / 18 AND RELATED CROSS COMPLAINTS 19 / 20 21 I, Raymond L. Sandelman, declare 22 1. I am an attorney licensed to practice in all California State Courts and the attorney for 23 Plaintiff Wayne A. Cook, Trustee of The Wayne A. Cook 1998 Family Trust Dated 12/29/98. 24 2. The Moving Papers explained that on September 15, 2020 Ms. Knowles sent me an email 25 stating that she intended to amend the Answer. Attached hereto marked Exhibit 2 is a true and correct 26 copy of her email. 27 I declare under penalty of perjury under the laws of the State of California that the foregoing 28 is true and correct. 1 FURTHER DECLARATION OF RAYMOND L. SANDELMAN IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS Dated: COmboe 2,U2LE Gye Ge Raymond L. Sandelman 10 11 12 13 ae ag <é GE 14 285 B08 15 ekas an aeas 16 Ze~ 63 SE? 17 E Sent: Tuesday, September 15, 2020 1:07 PM To: Raymond L. Sandelman Subject: FW: Cook v. Niderost Categories: Printed Ray — Because the cross-complaint and the answer contain may of the same allegations, and because the issues that your raise overlap to both, | am writing to express to you that | intend to amend both documents. | suggest that | provide both amended versions to you for your review and comment in the hopes that we can agree as to any remaining issues that must be addressed by the court. | offer that such draft amended documents will be provided to you within one week from today’s date. Sara From: Raymond L. Sandelman ‘mailto: Raymond@sandelmanlaw.com] Sent: Wednesday, September 2, 2020 10:43 AM To: Sara Knowles Cc: Andrew Morrissey Subject: Cook v. Niderost Sara: 1. Introduction Now that the stay for judicial foreclosures has been lifted, | am writing to address the same pleading issues in the Answer to the Complaint that were previously raised in context of the filing of a demurrer. Those pleading issues will now be raised in a motion for judgment on the pleadings. Nothing substantively has changed regarding the pleading deficiencies since my emails to you on June 16, 2020 and June 30, 2020. 1. [7:275] In General: A motion for judgment on the pleadings has the same function as a general demurrer but is made after the time for demurrer has expired. Except as provided by CCP § 438 (4 7:277 ff.), the rules governing demurrers apply. [Cloud v. Northrop Grumman Corp. (1998) 67 CA4th 995, 999, 79 CR2d 544, 546 (citing text); Southern Calif. Edison Co. v. City of Victorville (2013) 217 CA4th 218, 227, 158 CR3d 204, 209-210; Templo v. State of Calif. (2018) 24 CASth 730, 735, 234 CR3d 406, 409—“motion for judgment on the pleadings is equivalent to a demurrer” (internal quotes omitted)] Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2020) | will telephone you on the afternoon of September 8" at 1:30 p.m. to discuss the pleading deficiencies. If that day and time is inconvenient you can call me on the afternoon of the 9" or 10". In the past you have refused to participate in a telephone conversation. If that happens | will file the appropriate declaration and proceed with the motion. 2. A Defendant Needs To Plead Ultimate Facts In An Answer EXHIBIT. California courts have long upheld demurrers to defenses that lack essential allegations of fact or are stated in the form of bare legal conclusions. (See e.g. Universal Land Co. v. All Persons (1959) 172 Cal.App.2d 739, 741-744 [upholding demurrer to answer due to missing allegations of fact]; see also City of Mountain View v. Sup. Ct. (1975) 54 Cal.App.3d 72, ” 84 [writ of mandate issued vacating trial court order denying general demurrer to portion of answer for failure to state facts sufficient to constitute a defense].) Affirmative defenses must be pleaded with facts -- not just legal conclusions. The answer must aver facts “as carefully and with as much detail as the facts which constitute the cause of action and which are alleged in the complaint.” (FP/ Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384; “An affirmative defense must be pled in the same manner as if the facts were set forth in a complaint.” (5 Witkin, California Procedure (5th ed 2008) Pleading section 1082.) The Answer you filed assert affirmative defenses that don't come close. The burden of articulating the ultimate facts is something that should be easy for you to do. None of the defenses were not qualified by the language that they “are reasonably based on a lack of information or belief” and therefore you certified that the allegations in the defenses have evidentiary support (Code Civ. Proc., § 128.7 subd. (b)(3)). It is just a matter of you articulating that evidentiary support. Hopefully you did not make the allegations without evidentiary support because that is sanctionable conduct. You might as well amend the Answer and plead the required ultimate facts. 3. The Second Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Unconscionability A party must plead ultimate facts of unconscionability: Unconscionability should be set forth as an affirmative defense in the answer, with the underlying material facts as well as the allegation of unconscionability.1 The defendant must plead ultimate facts demonstrating, for example, either that the agreement constituted a contract of adhesion in which the plaintiff took unfair advantage of the defendant's weaker bargaining position or that the contract or a portion of the contract was unduly one-sided, oppressive or inherently unfair.2 Footnotes *IMO Dev. Corp. v. Dow Corning Corp., 135 Cal.App.3d 451, 460, 185 Cal.Rptr. 341, 346 (4th Dist.1982) (pleading alleging economic duress does not invoke court's power to declare contract unconscionable); see Walnut Producers of California v. Diamond Foods, Inc., 187 Cal.App.4th 634, 644, 114 Cal.Rptr.3d 449, 457 (3d Dist.2010) (“unconscionability is determined based on the unique factual situations of each case”); Morris v. Redwood Empire Bancorp, 128 Cal.App.4th 1305, 27 Cal.Rptr.3d 797 (4th Dist.2005) (leave to amend to allege facts for unconscionability cause of action). 2 IMO Dev. Corp. v. Dow Corning Corp., 135 Cal.App.3d 451, 460, 185 Cal.Rptr. 341, 346 (4th Dist.1982); see Truta v. Avis Rent A Car System, Inc., 193 Cal.App.3d 802, 238 Cal.Rptr. 806 (1st Dist.1987). 2 Schwing, California Affirmative Defenses (2d ed. 2019) § 55:5. A contractual provision must be both procedurally and substantively unconscionable, or it will be enforced. As explained in A & M Produce Co., supra, 135 Cal.App.3d 473, 186 Cal.Rptr. 114, “unconscionability has both a ‘procedural’ and a ‘substantive’ element,” the former focusing on “oppression” or “surprise” due to unequal bargaining power, the latter on “overly harsh” or “one-sided” results. (/d. at pp. 486-487, 186 Cal.Rptr. 114.) “The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at p. 1533, 60 Cal.Rptr.2d 138 (Stirlen).) But they need not be present in the same degree “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.” (15 Williston on Contracts (3d ed. 1972) § 1763A, pp. 226-227; see also A & M Produce Co., supra, 135 Cal.App.3d at p. 487, 186 Cal.Rptr. 114.) In other words, the more 2 substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa. Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 Procedural unconscionability concerns oppression and surprise. Morris v. Redwood Empire Bancorp (2005) 128 Cal. App. 4th 1305, 1319. Oppression refers to the absence of both the power to negotiate and the absence of market alternatives (128 Cal. App. 4th at 1320). Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 617 holds that there is a failure to allege unequal bargaining power when there is an absence of facts alleging that the borrower unable to receive more favorable terms from another lender, or from the lender by paying a different interest rate, or by accepting a different type of loan, or one with a different term Graham does not allege he did not have the option to seek another lender or to simply choose not to enter the market place at the time. (Shadoan, supra, 219 Cal.App.3d at p. 103, 268 Cal.Rptr. 207 [plaintiffs alleged no facts from which to conclude plaintiffs had no bargaining power because they “alleged no facts indicating that they were unable to receive more favorable terms from another lender, or from [the bank] by paying a different interest rate, or by accepting a different type of loan, or one with a different term’”].) Surprise focuses on whether the challenged term is hidden in a prolix printed form or is otherwise beyond the reasonable expectation of the weaker party (Morris, 128 Cal. App. 4th. at 1321). Concluding that a contract is one of adhesion, begins rather than ends the analysis for purposes of unconscionability (Morris, 128 Cal. App. 4th at 1319-20 confirming adhesiveness is not per se oppressive; Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal. App. 4th 708, 714). Defendants must allege facts showing that they were surprised and/or lacked a reasonable alternative source of supply (Morris, 128 Cal.App.4th at 1320). The Answer does not properly allege that any terms are procedurally unconscionable because the elements of surprise and/or lack of alternate supply. There are many, many alternative sources of financing; it is difficult for me to imagine the any terms from alternative lenders that would be more favorable to the Mr. Niderost as trustee. A provision is substantively unconscionable if it is so one-sided that it shocks the conscience (Morris, 128 Cal. App. 4th at 1322). “Shock the conscience” does not mean “unreasonable.” “With a concept as nebulous as ‘unconscionability’ it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.” (Morris,128 Cal. App. 4th at 1322-1323, quoting American Software, Inc. v. Ali (1966) 46 Cal. App. 4th 1386, 1391). Defendants have not alleged that any of the challenged provisions that they proposed are so one-sided that they “shock the conscience.” No ultimate facts regarding the factors of unconscionability have been pleaded. 4. The Third Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Duress "Duress" is defined in Civil Code section 1569 as any of the following: (a) unlawful confinement of the person of the party, or of the husband or wife of such party, or of an ancestor, descendant, or adopted child of such party, husband, or wife; (b) unlawful detention of the property of any such person; or (c) confinement of such person, lawful in form, but fraudulently obtained, or fraudulently made unjustly harrassing or oppressive). A party must plead ultimate facts of duress: The defendant should provide specific factual allegations on the issue of duress. General allegations of duress, coercion, threats, and compulsion are insufficient to raise the issue of duress without a further statement of the particular supporting facts,” although the plaintiff is likely to waive the pleading defect by failing to demur in the 10 days permitted by law.? A bald assertion of threat of economic 3 duress is pure legal conclusion, given no evidentiary weight, and insufficient standing alone to defeat summary judgment.’ Footnotes * See Marshall v. Packard—Bell Co., 106 Cal.App.2d 770, 774, 236 P.2d 201, 204 (2d Dist.1951) (detailed pleading of facts required to plead cause of action for duress); Federal Rules of Civil Procedure 8(c)(1) ("In responding to a pleading, a party must affirmatively state ... duress ...”); Annot., Necessity of Specific Allegations to Support Plea of Coercion or Duress in Civil Action, 70 L.Ed. 619 (1927). ?>McKay v. Retail Auto. Salesmen's Local Union No. 1067, 16 Cal.2d 311, 320, 106 P.2d 373, 378 (1940), cert. denied, 313 U.S. 566, 61 S.Ct. 939, 85 L.Ed. 1525 (1941); Marshall v. Packard—Bell Co., 106 Cal.App.2d 770, 774, 236 P.2d 201, 204 (2d Dist.1951). 3 Code of Civil Procedure § 430.40(b); see § 1:4. ‘Roehm Distributing Co. v. Burgermeister Brewing Corp., 196 Cal.App.2d 678, 682, 16 Cal.Rptr. 881, 884 (4th Dist.1961); Annot., Pleading Duress as a Conclusion, 119 A.L.R. 997 (1939). 2 Schwing, California Affirmative Defenses (2d ed. 2019) § 33:8. No ultimate facts regarding the factors of duress have been pleaded. 5. The Fourth Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of A Violation of the Fair Debt Collection Practices Act applicable. It should be fairly obvious that the Federal Fair Debt Collection Practices Act (15 USC §§ 1692-1692p) concerns debt collection practices (not transactions): 1. [2:6] Federal Fair Debt Collection Practices Act: The Federal Fair Debt Collection Practices Act (Federal FDCPA, 15 USC §§ 1692-1692p) is the primary federal legislation dealing with unfair and deceptive consumer debt collection practices. ... a. [2:7] Scope of Federal FDCPA: The Federal FDCPA applies only to the collection of “consumer debts” by “debt collectors.” Ahart, Enforcing Judgments and Debts (The Rutter Group 2020) 15 U.S.C.A. § 1692¢ regulates communications by debt collectors in connection with debt collection. 15 U.S.C.A. § 1692e regulates false or misleading representations by debt collectors . 15 U.S.C.A. § 1692f bars certain unfair practices by debt collectors. 15 U.S.C.A. § 1692k imposes civil liability for wrongful acts by debt collectors . The term “debt collector” is defined 15 U.S.C.A. § 1692a (6): The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include--.. . 4 (F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity . . . (ii) concerns a debt which was originated by such person; . . . (underlining added) The terms of 15 U.S.C.A. § 1692a (6)(F) mean that Wayne Cook, Trustee’s collection of the $674,062.39 Note is not within the definition of a debt collector because it is a debt originated by Wayne Cook, Trustee. Similarly, any conduct of Matthew N. Fine, MD 401K Plan to collect its debt would not make it a debt collector. See also Davidson v. Capital One Bank (USA), N.A. (11th Cir. 2015) 797 F.3d 1309, 1313 holding that “Unlike debt collectors, creditors typically are not subject to the FDCPA. See, e.g., Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir.2000). A “creditor” is “any person who offers or extends credit creating a debt or to whom a debt is owed.” 15 U.S.C.A. § 1692a(4). There are no ultimate facts alleged that Wayne Cook, Trustee’ et's “principal purpose” of business is the collection of debts, or is a “a person” who “regularly” collects debts on behalf of others. To be held liable for violation of the FDCPA, a defendant must—as a threshold requirement—fall within the Act's definition of “debt collector.” See Heintz v. Jenkins, 514 U.S. 291, 294, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995); see also, e.g., Romine v. Diversified Collection Servs., 155 F.3d 1142, 1146 (9th Cir.1998). The FDCPA defines “debt collector,”> in pertinent part, as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Thus, a “debt collector” under the FDCPA is either (1) “a person” the “principal purpose” of whose business is the collection of debts (whether on behalf of himself or others); or (2) “a person” who “regularly” collects debts on behalf of others (whether or not it is the principal purpose of his business). “To state a claim for violation of the FDCPA, a plaintiff must allege that the defendant is a ‘debt collector’ collecting a ‘debt.’” Ines v. Countrywide Home Loans, No. 08cv1267 WQH (NLS), 2008 WL 4791863, *2 (S.D.Cal. Nov. 3, 2008). Plaintiffs allege that ETS has “violated provisions of ... the [FDCPA].” They do not allege that ETS is a debt collector, however, nor identify the provisions of the act that have purportedly been violated. Because plaintiffs do not assert that ETS is a debt collector, they fail to state a claim under the FDCPA. Furthermore, because “foreclosing on [a] property pursuant to a deed of trust is not the collection of a debt within the meaning of the FDCPA,” jd. (citing Hulse v. Ocwen Fed. Bank, FSB, 195 F.Supp.2d 1188, 1204 (D.Or.2002) (internal quotation marks omitted)), they do not plead that ETS was “collecting a debt.” For both reasons, plaintiffs’ FDCPA claim is deficient and ETS's motion to dismiss must be granted. (underlining added) Izenberg v. ETS Services, LLC (C.D. Cal. 2008) 589 F.Supp.2d 1193, 1198-1199 The FDCPA establishes two alternative predicates for “debt collector status”: 1) engaging in debt collection as the “principal purpose” of the entity's business; or 2) engaging in debt collection “regularly.” Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56, 61 (2d Cir.2004); 15 U.S.C. § 1692a(6). Our focus here is on the second prong of the FDCPA's definition of “debt collector” as one “who regularly collects or attempts to collect [a debt],” and, specifically, the term “regularly.” 15 U.S.C. § 1692a(6) (emphasis added). The term “regularly” means “{a]t fixed and certain intervals, regular in point in time. In accordance with some consistent or periodical rule or practice.” Black's Law Dictionary 1286 (6th Ed.1990). In turn, the term “regular” means “steady or uniform in course, practice, or occurrence ... L} [u]sual, customary, normal or general.” /d. at 1285. Reviewing § 1692a(6) as a whole, it is evident that Congress “intended the ‘principal purpose’ prong ... to differ from the ‘regularly’ prong” of its definition of “debt collector.” James v. Wadas (10th Cir. 2013) 724 F.3d 1312, 1316-1317 5 “Regular” is defined as “appearing or occurring repeatedly from time to time” and is synonymous with “frequent, habitual, periodic, repeated, steady.” Merriam-Webster Thesaurus (2006). Neither of the parties have directed the court to an alternative definition of the statutory term. Riley v. Giguiere (E.D. Cal. 2009) 631 F.Supp.2d 1295, 1303 Plaintiffs have not alleged facts sufficient to plead that Wells Fargo is a debt collector under the first definition because the FAC “does not expressly state that the ‘principal purpose’ of Wells Fargo's business is debt collection.” Schlegel, 720 F.3d at 1208-09. Rather, the FAC alleges that “one of the principal businesses of [Wells Fargo] is debt collection on a regular basis.” FAC, §] 238. As in Schlegel, the FAC's factual matter, viewed in the light most favorable to Plaintiffs, establishes only that debt collection is some part of Wells Fargo's business. See Schlegel, 720 F.3d at 1209. For Wells Fargo to be a debt collector under the first definition, Plaintiffs must allege that the principal purpose of Wells Fargo's business is debt collection, not that one of Wells Fargo's principal businesses is debt collection. Rockridge Trust v. Wells Fargo, N.A. (N.D. Cal. 2013) 985 F.Supp.2d 1110, 1137 As to the second element of an FDCPA claim, the statute defines a “debt collector” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). This languag distinguishes a “debt collector,” which collects the debts due to another, from a “creditor,” which seeks to collect on its own debts. See Klar v. Fed. Nat'l Mortg. Ass'n, No. 3:13cv462, 2014 WL 412533, at *7 (E.D.Va. Feb. 3, 2014); Giovia v. PHH Mortg. Corp., No. 1:13cv577, 2013 WL 6039039, at *7 (E.D.Va. Nov. 13, 2013); Blick v. Wells Fargo Bank, N.A., No. 3:11cv81, 2012 WL 1030137, at *7 (W.D.Va. Mar. 27, 2012) (citing Ruggia, 719 F.Supp.2d at 648), aff'd, 475 Fed.Appx. 852 (4th Cir.2012). (underlining added) 2. M&T Bank Is Not a “Debt Collector” Under the FDCPA The Hardnetts allege no facts to show that M&T Bank is a “debt collector” under the meaning of the term in the FDCPA. .. The FDCPA does not create a cause of action against creditors. Klar, 2014 WL 412533, at *7 (“The FDCPA only imposes liability on businesses or groups whose ‘principal purpose . . is the collection of any debts.’ Hardnett v. M&T Bank (E.D. Va. 2016) 204 F.Supp.3d 851, 859-860, aff'd sub nom. Hardnett v. M & T Bank (4th Cir. 2017) 699 Fed.Appx. 242, and aff'd sub nom. Hardnett v. M & T Bank (4th Cir. 2017) 699 Fed.Appx. 242 Unpublished federal cases cited by me (and the federal courts) are appropriate legal argument to show persuasive arguments. Although we may not rely on unpublished California cases, the California Rules of Court do not prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not binding, authority. (Cal. Rules of Court, rule 8.1115; Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1096, fn. 18, 72 Cal.Rptr.3d 112, 175 P.3d 1170; DeJung v. Superior Court (2008) 169 Cal.App.4th 533, 548, fn. 9, 87 Cal.Rptr.3d 99; e.g., Pacific Shore Funding v. Lozo (2006) 138 Cal.App.4th 1342, 1352, fn. 6, 42 Cal.Rptr.3d 283 [citing unreported federal cases as persuasive authority].) Tichinin v. City of Morgan Hill (2009) 177 Cal.App.4th 1049, fn 10 6. The [First] Fifth Affirmative Defense Does Not State Ultimate Facts To Constitute A Defense Of Predatory Lending The conclusory allegations do not state ultimate facts supporting a defense. (a) The Truth in Lending Act The Federal Consumer Credit Protection Act, known as the Federal Truth-in-Lending Act (15 U,S.C.A. §§ 1601 et seq.) permits obligors the right to rescind certain consumer credit transactions (15 U.S.C.A. § 1635). Penalties can be assessed against creditor who fails to comply with requirement imposed by the statutes (15 U.S.C.A. § 1640) Creditors must make certain disclosures (12 CFR § 1026.6 , and 12 CFR § 1026.17). Wayne Cook, Trustee is not a creditor under the Act. 15 U.S.C.A. § 1602(g) defines “creditors”: The term “creditor” refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. .. - Any person who originates 2 or more mortgages referred to in subsection (aa) in any 12-month period or any person who originates 1 or more such mortgages through a mortgage broker shall be considered to be a creditor for purposes of this subchapter. . . . (underlining added) Wayne Cook, Trustee as an assignee of the Fine $500,000 note is not a “creditor” because he is not the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness, We agree with the district court that The Money Store is not “the person to whom the debt arising from the consumer credit transaction [was] initially payable on the face of the evidence of indebtedness,” 15 U.S.C. § 1602(g), and is therefore not a “creditor” under TILA with respect to the transactions at issue here... TILA establishes a straightforward, objective inquiry for determining the identity of the creditor: it is “the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness.” 15 U.S.C. § 1602(g). Here, the initial lenders on the loans were entities other than The Money Store. Vincent v. The Money Store (2d Cir. 2013) 736 F.3d 88, 106 There are no allegations of ultimate facts that Wayne Cook, Trustee as the payee of the $674,062.39 note is a creditor within the definition of 15 U.S.C.A. § 1602(g) because there are no allegations that he is a person who regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required. (b) The Higher-Price Mortgage Loan Act (part of Regulation 2). The regulation that implements the Federal Truth in Lending Act is referred to as ‘Regulation Z.’ It was codified at 12 C.F.R. 226 until it was re-codified at 12 C.F.R. 1026, effective December 30, 2011 (after rulemaking authority under the Truth in Lending Act was transferred from the Federal Reserve Board to the Consumer Financial Protection Bureau). See generally Truth in Lending (Regulation Z), 76 FR 79768-01; see also /n re Davis, No. 14 C154, 2014 WL 1339720, at *2 (N.D. 111. Apr. 3, 2014); accord Gilbert v. Residential Funding LLC, 678 F.3d 271, 273 (4th Cir. 2012) (“Regulation Z, 12 C.F.R. § 1026... [was] previously codified at 12 C.F.R. § 226.”); Garcia v. Vazquez, No. EP-14-CV-377-RFC, 2015 WL 11545022, at *3 (W.D. Tex. July 24, 2015). Accordingly, section 1026, et seq. will be discussed herein given that the transactions and occurrences allegedly took place after December 30, 2011. See Krieger v. Bank of Am., N.A., 890 F.3d 429, 437, n. 4 (3d Cir. 2018) Regulation Z defines “creditor” as: A person who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments (not including a down payment), and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract. 12 C.F.R. § 1026.2(a)(17)(i) The definition “is restrictive and precise, referring only to a person who satisfies both requirements” of the provision. Cetto v. LaSalle Bank Nat'l Ass’n, 518 F.3d 263, 270 (4th Cir. 2008). Otherwise stated, “[t]he two requirements are mandatory and without exception.” /d. at 275, The term “regularly extends consumer credit” is defined as follows: Aperson regularly extends consumer credit only if it extended credit (other than credit subject to the requirements of 12 C.F.R. § 1026.32) more than 25 times (or more than 5 times for transactions secured by a dwelling) in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year. A person regularly extends consumer credit if, in any 12-month period, the person originates more than one credit extension that is subject to the requirements of § 1026.32 or one or more such credit extensions through a mortgage broker. 12 C.F.R. § 1026.2(a)(17)(v) 12 C.F.R. § 1026.32 pertains to “high cost mortgages.” A “high cost mortgage” is a “consumer credit transaction that is secured by the consumer's principal dwelling” with an “annual percentage rate at consummation of the transaction that will exceed by more than 6.5 percentage points ... the average prime offer rate.” 15 U.S.C. § 1602(bb)(1)(A){i)(1). There are no allegations that Wayne Cook, Trustee is a “person” who “regularly extends consumer credit,” because the Complaint fails to allege that he “extended any loans at all in the last year, let alone 25, or five secured by a dwelling.” There are no allegations that there was a “consumer credit transaction that is secured by the consumer’s principal dwelling” with an “annual percentage rate at consummation of the transaction that will exceed by more than 6.5 percentage points ... the average prime offer rate.” (c) Dodd-Frank Wall Street Reform and Consumer Protection Act The Dodd-Frank Wall Street Reform and Consumer Protection Act merely amended TILA. See, e.g., Bhandari v. Capital One, N.A., No. 12-04533 PSG, 2013 WL 1736789, at *5 (N.D. Cal. Apr. 22, 2013). The Dodd-Frank Wall Street Reform and Consumer Protection Act (12 USC § 5301 et seq.) provides that original creditors and other “covered persons” and “service providers” involved in collecting debts related to any consumer financial product or service are prohibited from using unfair, deceptive or abusive acts or practices. [12 USC §§5531(a), 5536] No “unfair, deceptive or abusive acts or practices” have been alleged. Ahart, Enforcing Judgments and Debts (The Rutter Group 2020) explains gives examples of prohibited conduct: According to the Consumer Financial Protection Bureau (CFPB), examples of unfair, deceptive or abusive acts or practices under the Act include, but are not limited to, the following: . Collecting or assessing a debt and/or any additional amounts in connection with a debt (including interest, fees and charges) not expressly authorized by the agreement creating the debt or permitted by law; . Failing to post payments timely or properly or to credit a consumer's account with payments that the consumer submitted on time and then charging late fees to the consumer; Taking possession of property without the legal right to do so; . Revealing the consumer's debt to the consumer's employer and/or coworkers without the consumer's consent; Falsely representing the character, amount or legal status of the debt; ° Misrepresenting that a debt collection communication is from an attorney; . Misrepresenting that a communication is from a government source or that the source of the communication is affiliated with the government; . Misrepresenting whether information about a payment or nonpayment would be furnished to a credit reporting agency; . Misrepresenting to consumers that their debts would be waived or forgiven if they accepted a settlement offer, when the company does not in fact forgive or waive the debt; . Threatening any action that is not intended or that the covered person or service provider does not have the authorization to pursue, including false threats of lawsuits, arrest, prosecution or imprisonment for nonpayment of a debt. [CFPB Bulletin 2013-07 (July 10, 2013)} Debt owners and third party debt collectors also may be found to have engaged in prohibited deception of consumers by representing that: . Payments on obsolete debts will result in the removal of information about the client from the consumer's creditor report; . Payments on debts in collection will change the consumer's creditor reports, improve the consumer's creditor score, improve the consumer's creditworthiness or enhance the likelihood that the consumer will subsequently receive credit from a lender. [CFPB Bulletin 2013-08 (July 10, 2013)] 7. The [Second] Fifth Affirmative Defense Of Violation Of The Covenant Of Good Faith And Fair Dealing, Fails To State Facts Sufficient To Constitute An Affirmative Defense. It is difficult to understand how a breach of the covenant of good faith and fair dealing would be legally relevant to the relief requested in the Complaint. Defendants allege in a conclusory manner unconscionable terms and a failure to ascertain whether Defendant could pay for the Miller Mansion and that Plaintiff took advantage of the vulnerabilities of plaintiff (sic) in creating and implementing the transaction. The claim of unconscionability lacks any substance (See the discussion regarding the Second Affirmative Defense). The remaining claims have nothing to do with a violation of the covenant of good faith and fair dealing. Exhibit B to the Cross Complaint (which may be judicially noticed) is an offer by Ed Nidersot to purchase real property using a standard California Association of Realtors form. He was represented by a licensed real estate broker. The promissory note that he signed is a standard simple note for interest only payments for seven years, The implied covenant only protects the express terms of the agreement; it cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement. Generally, the implied covenant operates to protect the express covenants or promises of the contract. [Citation] . . . Nonetheless, because it protects only the express terms of the agreement, [i annot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) (underlining added) There is no articulation of any ultimate facts that make the implied covenant applicable in this litigation. We first emphasize a long-established rule concerning implied covenants. To be imposed ““(1) the implication must arise from the language used or it must be indispensable to effectuate the intention of the parties; (2) it must appear from the language used that it was so clearly within the contemplation of the parties that they deemed it unnecessary