Calub v. Bank of New York Mellon Trust CA4/2 (2014) · DecisionDepot
Calub v. Bank of New York Mellon Trust CA4/2
California Court of Appeal Dec 17, 2014 No. E058124Unpublished
Filed 12/17/14 Calub v. Bank of New York Mellon Trust CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
ISIDRO T. CALUB et al.,
Plaintiffs and Appellants, E058124
v. (Super.Ct.No. RIC10000218)
BANK OF NEW YORK MELLON OPINION TRUST, CO., NA et al.,
Defendants and Respondents.
APPEAL from the Superior Court of Riverside County. Paulette Durand-Barkley,
Cal.App.4th [429,] 436.) A lender does not protect the success of a borrower’s
investment. (Nymark v. Heart Fed. Savings & Loan Assn., supra, 231 Cal.App.3d at p.
1096.) Borrowers must be responsible for their own economic decisions. (Perlas, at p.
436.)
Finally, even if there were an actionable representation or omission, the Calubs
must plead and prove they sustained damage as a result of the concealment or
suppression of fact. (Bank of America Corp. [v. Superior Court (2011)] 198 Cal.App.4th
[862,] 873.) The Calubs do not make that showing here. They allege the representations
or omissions were made with an intent to defraud them by inducing them to refinance
their home with an ARM loan, which “could be quickly marketed to international
investors and which could bring immediate revenue to defendants.”
However, the Calubs do not allege a sufficient nexus between the purported
misrepresentations or concealment and their alleged economic harm: “[H]omeowners
who did not obtain loans from [defendants] likewise suffered a decline in property values,
a decline in their home equity, and reduced access to their home equity lines of credit.
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Irrespective of whether a homeowner obtained a loan from [defendants], or obtained a
loan through another lender, or whether a homeowner owned his or her home free and
clear, all suffered a loss of home equity due to the generalized decline in home values.”
(Bank of America Corp. v. Superior Court, supra, 198 Cal.App.4th at p. 873.)
As in Graham, the damages the Calubs allege they incurred are the result of a
decline in the overall market. It is now universally recognized that, in 2007, the
California real estate market was over-valued but the Calubs do not allege they could
have or would have obtained a better loan from a different lender absent the alleged
representations regarding the appraisal. They received the benefit of their bargain by
refinancing and obtaining over $250,000. The foreclosure sale was caused by the
Calubs’ default, not defendants’ conduct. Therefore, the Calubs have not sufficiently
pleaded a causal connection between any damages and any actionable fraud by
defendants.
D. UCL Claims
For the same reasons, the Calubs cannot state any UCL claims. California UCL
law broadly prohibits three types of unfair competition—acts or practices which are
unlawful, fair or fraudulent—to protect the public from fraud, deceit, and unlawful
conduct. (Bus. & Prof. Code, § 17200; Zhang v. Superior Court (2013) 57 Cal.4th 364,
370; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1350; Graham,
supra, 226 Cal.App.4th at pp. 609-614; Cansino, supra, 224 Cal.App.4th at pp. 1473-
1475.)
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The FAC alleges that defendants violated the UCL in three ways. In paragraph 44
of the FAC, the Calubs allege that the two misrepresentations constitute an unlawful
business practice. This allegation fails to state a claim for relief due to lack of specificity,
in the same way plaintiffs’ fraud claim based on the same misrepresentations is deficient.
(See Krantz v. BT Visual Images (2001) 89 Cal.App.4th 164, 178; Cansino, supra, 224
Cal.App.4th at p. 1474.)
In paragraphs 47 and 48 of the FAC, the Calubs allege “Defendants’ Lending
Personnel” and “‘Defendant financial institutions’” violated the UCL by “colluding”
with others in the housing industry to inflate the value of real estate “to entice plaintiffs
and others into ‘top loaded’ or ‘leveraged’ homes,” and then later refusing to refinance
based on the true value of the homes. These allegations contradict the Calubs’ other
allegations that they bought their home in 2001 and refinanced the mortgage in 2007,
borrowing against the value of their home. The Calubs were not “enticed” to purchase a
“top loaded” or “leveraged” home. This allegation cannot support a UCL claim.
On appeal, the Calubs argue that their injury resulted from the failure of their
home to appreciate, as defendants represented it would in 2007. The FAC demonstrates
that the Calubs accepted the loan terms, relying on the appraisal and assurances that their
home would continue to appreciate. The Calubs do not allege, however, that their injury
resulted from any misstatements contained on the face of the loan document. Instead,
although the indebtedness could increase due to negative amortization, the Calubs
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gambled the home’s value would increase in a corresponding way, allowing them to
refinance when necessary.
For the first time on appeal, the Calubs list a raft of purported UCL violations
which did appear in the FAC. However, the Calubs do not explain how defendants may
be liable when plaintiffs cannot base their claims on the 2007 appraisal or representations
about the future value of the property.
E. Declaratory Relief
The third cause of action seeks a declaration regarding the applicability of the
National Mortgage Settlement (NMS) Consent Judgment to the instant dispute.2
Declaratory relief is available to “[a]ny person interested under a written instrument . . .
who desires a declaration of his or her rights or duties with respect to another, or in
respect to, in, over or upon property . . . in cases of actual controversy relating to the legal
rights and duties of the respective parties. . . .” (Code Civ. Proc., § 1060; Maguire v.
Hibernia S. & L. Soc. (1944) 23 Cal.2d 719, 728.) Once the court determines an “actual
controversy” exists, the court has discretion under Code of Civil Procedure section 1061
to refuse to make a declaration of rights and duties “including a determination of any
question of construction or validity arising under a written instrument or contract, ‘where
its declaration or determination is not necessary or proper at the time under all the
2We grant BOA’s motion for judicial notice filed October 11, 2013. (Evid. Code, §§ 452 and 459; Cal. Rules of Court, rule 8.252.)
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circumstances.’” (Maguire, at pp. 728, 730.) The trial court’s determination is reviewed
on appeal for abuse of discretion. (Orloff v. Metropolitan Trust Co. (1941) 17 Cal.2d
484, 485.)
The NMS, however, does not apply because the foreclosure of the Calubs’
property in September 2011 predated the NMS in March 2012. Furthermore, the Calubs
have no standing to enforce the NMS consent judgment. “‘[I]ndividual borrowers are
merely incidental beneficiaries of the National Mortgage Settlement, and so have no right
to bring third-party suits to enforce the Consent Judgment.’ (Rehbein v. CitiMortgage,
Inc. (E.D.Va. 2013) 937 F.Supp.2d 753, 762; Jurewitz v. Bank of America, NA (S.D.Cal.
2013) 938 F.Supp.2d 994, 998.)” (Graham, supra, 226 Cal.App.4th at pp. 615-616.)
F. Leave to Amend
The Calubs seek a third opportunity to plead claims for fraud, violations of the
UCL and declaratory relief. They do not demonstrate how they can amend the FAC or
change its legal effect: “‘The assertion of an abstract right to amend does not satisfy this
burden.’” (Maxton v. Western States Metals (2012) 203 Cal.App.4th 81, 95; Cansino,
supra, 224 Cal.App.4th at p. 1475; Graham, supra, 226 Cal.App.4th at p. 619.)
We perceive no reasonable possibility that the Calubs could cure the defects of the
FAC by amendment: “‘The burden of proving such reasonable possibility is squarely on
the plaintiff.’” (Maxton v. Western States Metals, supra, 203 Cal.App.4th at p. 95;
Cansino, supra, 224 Cal.App.4th at p. 1475; Graham, supra, 226 Cal.App.4th at p. 618;
see Willemsen v. Mitrosilis, supra, 230 Cal.App.4th at p. 634.) The trial court did not
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abuse its discretion in denying leave to amend. (Campbell v. Regents of University of
California (2005) 35 Cal.4th 311, 320.)
IV
DISPOSITION
The Calubs cannot successfully state a claim or amend the first amended
complaint. The trial court did not abuse its discretion in sustaining defendants’ demurrers
without leave to amend.
We affirm the judgment. In the interests of justice, the parties shall bear their own
costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
CODRINGTON J.
We concur:
McKINSTER Acting P. J.
MILLER J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the plaintiffs' claims were time-barred and failed to state a cause of action because representations regarding property value and future market appreciation are not actionable as fraud. Furthermore, the court found no fiduciary relationship between the lender and borrower and concluded that the plaintiffs failed to establish a causal link between the alleged misrepresentations and their economic losses.
Issues
Whether the plaintiffs' claims for fraud and unfair competition were barred by the statute of limitations.
Whether the plaintiffs sufficiently pleaded a causal connection between the alleged misrepresentations and their economic damages.
Whether the plaintiffs had standing to enforce the National Mortgage Settlement consent judgment.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“We conclude that the Calubs’ claims are time-barred and otherwise fail to state a cause of action.”
“Statements regarding the appraised value of the property are not actionable fraudulent misrepresentations.”
“As a matter of law, defendants' alleged representations—that plaintiffs’ property would continue to appreciate in the future and that plaintiffs could then sell or refinance their home based on this forecasted future appreciation—are not actionable in fraud.”