Gray v. Quicken Loans

Filed 3/2/21

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

WILLIAM GRAY, 2d Civ. No. B304532 (Super. Ct. No. 56-2019- Plaintiff and Appellant, 00528118-CU-OR-VTA) (Ventura County) v.

QUICKEN LOANS, INC,

Defendant and Respondent.

Appellant William Gray’s home was destroyed by Ventura’s Thomas Fire. Gray’s hazard insurance policy jointly paid him and his mortgage lender, respondent Quicken Loans, Inc. (Quicken), a total of $1,342,740. The Deed of Trust allowed Quicken to hold the insurance proceeds in escrow and to disburse the funds as repairs to the home were being made. Quicken placed the funds in a non-interest bearing escrow account. Gray filed this action against Quicken, on behalf of himself and others similarly situated, alleging causes of action for breach of fiduciary duty and violations of Civil Code section 2954.81 and Business and Professions Code section 17200. He contends

All statutory references are to the Civil Code unless 1

otherwise stated.

section 2954.8 requires a lender to pay interest on insurance proceeds held in escrow following the partial or total destruction of the insured’s residence or other structure. The trial court sustained Quicken’s demurrer to the complaint without leave to amend. We affirm. Neither section 2954.8 nor the parties’ loan agreement required the payment of interest. DISCUSSION Standard of Review We review an order sustaining a demurrer without leave to amend de novo, exercising our independent judgment as to whether a cause of action has been stated as a matter of law under any legal theory. (Villafana v. County of San Diego (2020) 57 Cal.App.5th 1012, 1016; McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1469.) We give the complaint a reasonable interpretation, considering all material facts that are properly pleaded and matters that may be judicially noticed, but not contentions, deductions or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924.) The Trial Court Properly Sustained Quicken’s Demurrer Without Leave to Amend Section 2954.8, subdivision (a) requires a lender “that receives money in advance for payment of taxes and assessments on the property, for insurance, or for other purposes relating to the property” to pay two percent interest per annum on the amount being held. (Italics added.) Gray contends hazard insurance proceeds are subject to this section because they are paid and received “in advance” of rebuilding. The Deed of Trust requires Gray to maintain hazard insurance on the property. Section 5 provides: “In the event of loss, Borrower shall give prompt notice to the insurance carrier