Aljumaiah v. Quality Loan Service Corp., et al.

(Santa Monica Courthouse: Dept. M) August 28, 2026 DEPARTMENT M LAW AND MOTION RULINGS

Quality Loan Service Corp., et al. CASE NO.: 25SMCV05444 MOTION: Demurrer to the First Amended Complaint HEARING DATE: 8/28/2026 LEGAL STANDARD A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (CCP Sec.Sec. 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A "demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law." (S.

Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations omitted.) A special demurrer for uncertainty is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond--i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (CCP Sec. 430.10(f); Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, "ambiguities can be clarified under modern discovery procedures." (Ibid.) "Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given." (Angie M. v.

Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show¿ in what manner ¿plaintiff can amend the complaint, and¿ how ¿that amendment will change the legal effect of the pleading.¿(Id.) ANALYSIS Defendant Select Portfolio Servicing, Inc. ("SPS") demurs to Plaintiff Omar Aljumaiah's First Amended Complaint ("FAC"), including the First, Fifth, Sixth, Seventh, Eighth, and Ninth causes of action stated against SPS.

Wrongful Foreclosure "The elements of a wrongful foreclosure cause of action are: (1) The trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of

trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering." (Citrus El Dorado, LLC v. Chicago Title Co. (2019) 32 Cal.App.5th 943, 948, cleaned up.) SPS asserts that Plaintiff fails to allege his standing. "As a general rule only parties with an interest in the secured loan or in the real property security itself have standing to challenge or attempt to set aside a nonjudicial foreclosure sale." (Banc of America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180 Cal.App.4th 1090, 1103; see Hacker v.

Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 278-79 [demurrer was properly sustained against a wrongful foreclosure cause because the plaintiff did not allege "that he was the owner of the property or the borrower of the note securing the property" but leave to amend should have been granted since plaintiff proposed that he was assignee of the borrower and obtained a grant deed prior to foreclosure].) Plaintiff was merely a¿tenant, not an owner or otherwise a party to the loan. While caselaw contemplates standing for non-trustor/mortgagors, this generally refers to other parties to the loan or security interest in the property aside from the trustor/mortgagor, such as a trustee or beneficiary.

Again, Plaintiff does not allege that he has an interest in the loan or security itself. For similar reasons, Plaintiff would not be able to establish that he suffered prejudice from the foreclosure, as opposed to prejudice stemming from Bobs' failure to pay the loan. Therefore, to continue on this cause of action Plaintiff will need to show authority that he has standing to pursue this claim as a stranger to the loan or security in the Property. Plaintiff asserts that he has a protected interest in the subject Property via his right of first refusal to buy the property. (FAC P. 112.)

A right of first refusal is a conditional contractual right to purchase property in the event the landlord elects to sell, giving a tenant a preference to purchase the property over other purchasers. (J&A Mash & Barrel, LLC v. Superior Ct. of Fresno Cnty., (2022) 74 Cal. App. 5th 1, 34; see Hartzheim v. Valley Land & Cattle Co. (2007) 153 Cal.App.4th 383, 389 [the conditional right is enforceable against third persons entering into a contract to buy the property with notice of the holder's right].)

Plaintiff fails to show that this contingent contractual right is equivalent to an interest in the loan or security in the property. It is contingent contractual right that ripens only upon the landlord's decision to sell, and not a right to ownership, equitable title, or security interest in the land. Plaintiff does not show that this contingent right ever even ripened, i.e., that Bobs decided to sell. Plaintiff also claims that he was an "eligible tenant buyer" with the right to participate in the post-sale bidding process under Civil Code section 2924m.

This is a more colorable argument. An eligible tenant buyer has some cognizable interest in the foreclosure process. While section 2924m does not enact a private cause of action, it does recognize a viable statutory right which could be protected by common law causes of action in tort. (See Elsner v. Uveges (2004) 34 Cal.4th 915, 927 [under the common law doctrine of negligence per se, statutes may be borrowed to establish

a duty of care or a standard of care].) Giving eligible buyers under section 2924m standing for wrongful foreclosure under the current facts would potentially be in line with the purpose of the legislative scheme, since Plaintiff alleges a post-foreclosure transfer to an investor. (See Applegate v. Carrington Foreclosure Servs., LLC, (2025) 112 Cal. App. 5th 356, 360 [the scheme is designed to mitigate "the transfer of residential property ownership from owner-occupants to landlord investors"]; see also Civ.

Code Sec. 3523 [for every wrong there is a remedy].) On the other hand, the mere right to bid under section 2924m is still not an interest in the secured loan or in the real property security itself. There is no direct or analogous authority located by the Court that is on point. Plaintiff also likely has other potentially viable remedies, independent of a wrongful foreclosure claim, such as those under Bus. & Prof. Code Sec. 17200 and tortious interference claims, as well as the breach of contract/fraud claims against Bobs (the lessor and direct cause of Plaintiff's alleged loss).

Thus, as a matter of first impression, the Court will not recognize an eligible tenant buyer's standing under a wrongful foreclosure theory, especially absent a perfected bid. Furthermore, the FAC fails to allege Plaintiff's compliance with section 2924m to give him standing as an eligible tenant buyer, with the requisite factual detail of statutory claims, . Plaintiff only concludes that he made a notice of intent to bid. The FAC alleges that on April 22, 2024, within 15 days of the sale, Aljumaiah submitted a Notice of Intent to Bid to Quality Loan to purchase the Property, and that he was ready, willing, and able to proceed with an all-cash bid to purchase the Property at the time he presented the Notice of Intent to Bid. (FAC P. 29.)

The FAC provides only the conclusion that the Notice of Intent to Bid also satisfied all the requirements of Section 2924m, including proof and certification of eligibility as an Eligible Tenant Buyer, and all other necessary documentation. (FAC P. 30.) The FAC does not allege all the specific facts required to make a valid intent to bid pursuant to section 2924m(c)(2)(A)-(D). Even assuming the intent to bid was properly submitted, Plaintiff also does not allege that he perfected his bid. Under section 2924m(c)(3), (4), Plaintiff had to tender a bid in an amount that exceeds the last and highest bid at the trustee's sale within 45 days.

Plaintiff does not explain why compliance with the section 2924m's bidding process should be excused, like a tender of the remaining loan amount might be excused in a traditional wrongful foreclosure claim. (FAC P. 59.) Plaintiff alleges that SPS refused to consider his intent to bid, but this did not prevent him from tendering a bid as required by the statute. At best, Plaintiff alleges that he did not receive notice of the trustee's sale. (FAC P. 53.) Of course, he was not entitled to such notice. (Civil Code Sec. 2924b.)

The only instance in which a lessee is entitled to receive foreclosure notices is if the lease "is recorded subsequent to the deed of trust or mortgage being foreclosed." (Civ. Code Sec. 2924b(c)(2)(D).) Plaintiff does not allege his lease was recorded, so he has not established that he was legally entitled to any foreclosure notices. Plaintiff does not allege entitlement to mailing notice under section 2924b. More importantly, the FAC shows that he had sufficient notice to make a timely intent to bid or actual bid as an eligible tenant buyer.

Thus, the purported lack of notice would not excuse any tender of the statutory bid here. Accordingly,

the demurrer is SUSTAINED without leave to amend. UCL Business and Professions Code section 17200 prohibits "any unlawful, unfair or fraudulent business act or practice." (Bus. & Prof. Code Sec. 17200; see Clark v. Superior Court (2010) 50 Cal.4th 605, 610.) "An unlawful business practice or act is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law." (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.)¿A violation of other laws is deemed independently actionable under the UCL. (Law Offices of Mathew Higbee v.

Expungement Assistance Services (2013) 214 Cal.App.4th 544, 554.) "'Virtually any law--federal, state or local--can serve as a predicate for a section 17200 action.'" (Id.) To bring a claim under the fraud prong, a plaintiff must allege an affirmative misrepresentation, conduct, or business practice on the part of a defendant; or an omission in violation of a defendant's duty to disclose; and that is likely to deceive members of the public. (Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986.)

A private party has standing to bring a UCL claim if he or she has suffered injury in fact and has lost money or property as a result of unfair competition. (Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th 544, 555-56.) The FAC alleges that SPS failed to provide the required statutory notices, conducted and confirmed a foreclosure sale without authority, and knowingly accepted and relied upon fraudulent Section 2924m declarations despite being on notice of irregularities. (FAC P. 81.)

As discussed, Plaintiff fails to show that SPS violated any statutory duties owed to Plaintiff, including duties to notice as a tenant or duties under the bidding process. Plaintiff fails to allege his own compliance with the bidding process such that he actually lost his right to purchase the property under section 2924m. Plaintiff also does not allege that SPS had any duty to disclose beyond the statutory duties discussed above. Accordingly, the demurrer is SUSTAINED without leave to amend. Intentional/Negligent Interference with Prospective Economic Advantage SPS argues that the FAC fails to allege that SPS engaged in independently wrongful conduct in support of these claims.

The elements for the tort of intentional interference with prospective economic advantage are: "(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant." (Korea Supply Co. v.

Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.) Negligent interference with prospective economic advantage is established where plaintiff demonstrates that: (1) economic relationship existed between plaintiff and third party which

contained reasonably probable future economic benefit or advantage to plaintiff; (2) defendant knew of existence of relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part probable future economic benefit or advantage of relationship; (3) defendant was negligent; and (4) such negligence caused damage to plaintiff in that relationship was actually interfered with or disrupted and plaintiff lost in whole or in part economic benefits or advantage reasonably expected from relationship. (Venhaus v.

Shultz (2007) 155 Cal.App.4th 1072, 1078.) Both causes of action require that the defendant not only knowingly interfere with the plaintiff's expectancy, but engage in conduct that was¿wrongful¿by some legal measure.¿(Della Penna v. Totyota Motor Sales, U.S.A., Inc. (1995) 11 Cal. 4th 376, 393; National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal. App. 4th 412, 439-440.).) "An act is not independently wrongful merely because defendant acted with an improper motive." (Korea Supply Co., supra, 29 Cal.4th at 1158.)¿It must be "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard." (Id. at 1159.)

Plaintiff alleges that SPS knew of the relationship between Aljumaiah and Bobs, and knew of the relationship between Aljumaiah and the trustee. (FAC P. 87.) SPS allegedly engaged in a "fraudulent scheme" to deprive Aljumaiah from obtaining notice of the trustee sale that would have allowed Aljumaiah to purchase the Property, to deprive Aljumaiah of his right to purchase the Property, and to deprive Aljumaiah of his future tenancy at the Property. (FAC P. 88.) However, as discussed, SPS did not owe Plaintiff any statutory duty to give him notice of the trustee sale.

Plaintiff does not allege any irregularity in the foreclosure process on part of SPS. In fact, SPS's alleged failure to give notice did not deprive Plaintiff of the opportunity to purchase the Property per section 2924m. Plaintiff allegedly had such an opportunity, noticed his intent to bid, but did not apparently comply with the bidding process. Additionally, SPS is statutorily enabled to rely on Ostayan's bid under section 2924m(d). Thus, it is difficult to conclude that SPS's alleged reliance on Ostayan's fraudulent bid could be considered independently wrongful.

Therefore, the FAC does not establish that SPS engaged in independently wrongful conduct which actually interfered Intentional Interference with Contractual Relations To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage. (Pacific Gas & Electric Co. v.

Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.) "Intent" in this context does not refer to specific intent, rather a plaintiff must "plead that the defendant '[knew] that the interference is certain or substantially certain to occur as a result of his action.'" (Korea Supply Co., supra, 29 Cal.4th at 1157.)¿

Plaintiff alleges that SPS disrupted performance of his lease with Bobs by engaging in a "fraudulent scheme" to deprive him of notice of the trustee's sale. (FAC, P.P. 101-102.) The Court takes the fraudulent scheme as referring to Ostayan's fraudulent bid. As discussed, Ostayan's fraudulent declaration (or SPS's reliance thereon) could not have interfered with Plaintiff's lease with Bobs. Bobs's failure to pay caused the foreclosure sale, and the foreclosure sale would have happened regardless of Ostayan's fraudulent bid.

At best, it would have gone some other bidder post-sale. Either way, Plaintiff's lease would have been extinguished by foreclosure of the senior lien. (Dover Mobile Estates v. Fiber Form Prods. (1990) 220 Cal.App.3d 1494, 1498.) Accordingly, the demurrer is SUSTAINED without leave to amend. Negligence The duties claimed here are statutory in nature. Generally, to assert a claim for negligence based on a statutory duty, a plaintiff must show "a violation of a statute and a substantial probability that the plaintiff's injury was caused by the violation of the statute before the burden of proof shifts to the defendant to prove the violation of the statute did not cause the plaintiff's injury." (Toste v.

CalPortland Construction (2016) 245 Cal. App. 4th 362, 371.) "It is well settled the trustee's duties regarding the notice of default and sale are strictly defined and limited to what is described in the statutory scheme." (Banc of Am. Leasing & Cap., LLC v. 3 Arch Tr. Servs., Inc. (2009) 180 Cal. App. 4th 1090, 1097.) "[T]he Legislature intended to cover the entire subject area of nonjudicial foreclosures by statute" to define the duties among and between the pertinent parties. (I. E. Associates v.

Safeco Title Ins. Co. (1985) 39 Cal. 3d 281, 288.) "California courts have refused to impose duties on the trustee other than those imposed by statute or specified in the deed of trust." (Heritage Oaks Partners v. First American Title Ins. Co. (2007) 155 Cal. App. 4th 339, 345.) The trustee's " 'only duties are: (1) upon default to undertake the steps necessary to foreclose the deed of trust; or (2) upon satisfaction of the secured debt to reconvey the deed of trust.' " (Id.) The trustee generally "has no duty to take any action except on the express instructions of the parties or as expressly provided in the deed of trust and the applicable statutes. (Citrus El Dorado, supra, 32 Cal.App.5th at 949.)

Plaintiff alleges SPS violated its duties: (a) comply with statutory requirements for notice of default and trustee's sale; (b) exercise reasonable care in conducting foreclosure proceedings; and (c) refrain from accepting or relying upon fraudulent Section 2924m declarations. (FAC P. 106.) In line with the above discussion, the Court is not persuaded that Plaintiff has established that these duties are owed to him, or that SPS actually violated any duties potentially owed to Plaintiff's prejudice.

SPS did not owe Plaintiff a statutory duty to provide him with any foreclosure notices. (Civil Code Sec. 2924b.) Plaintiff does not show that SPS could not rely on Ostayan's bid per section 2924m(d). Plaintiff does not show that Plaintiff was damaged as a result of the foreclosure sale even if Ostayan's bid was not accepted,. Plaintiff

does not show that he complied with the bidding process as an eligible tenant bidder. Accordingly, the demurrer is SUSTAINED without leave to amend. | Home -->)" -->