bradley opp 2 demurrer 4ac

8/2/2019 Bradley Opp 2 Demurrer 4AC

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OPPOSITION TO THE DEMURRER TO THE FOURTH AMENDED COMPLAINTBROUGHT BY WELLS FARGO BANK, N.A.; HSBC BANK, USA, NATIONAL ASSOCIATION; MORTGAGE

ELECTRONIC REGISTRATION SYSTEMS, INC.; and MERSCORP, INC. - Page 1 of 10

2Law Offices of Thompson & AssociatesLinda J. DeVore, SBN 123800Trent Thompson, SBN 214367Christopher Nelson, SBN 220566152 S. Harvard StreetHemet, CA 92543(951) 925-3808, Fax (951) 925-3239Attorneys for Plaintiff Leanna Bradley

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89 SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF RIVERSIDE1011

12 ) Case No.: RIC 10010779)) OPPOSITION TO THE DEMURRER TO) THE FOURTH AMENDED COMPLAINT) BROUGHT BY WELLS FARGO BANK,) NA.; HSBC BANK, USA, NATIONAL) ASSOCIATION; MORTGAGE) ELECTRONIC REGISTRATION) SYSTEMS, INC.; and MERSCORP, INC.)))) Date: 12/15/11) Time: 9:00 a.m.) Place: Dept. 2- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

LEANNA BRADLEY, individually and asTrustee,13 Plaintiff,vs.14

15 WELLS FARGO BANK, NATIONALASSOCIATION; BLUE SAPPHIREINVESTMENTS; HSBC BANK, USA,NATIONAL ASSOCIATION, as Trustee;and DOES 3 - 50,

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18 Defendants.19

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21 TO ALL INTERESTED PARTIES:22 PLEASE TAKE NOTICE THAT PLAINTIFF, LEANNA BRADLEY (hereinafter23

24 "Bradley"), hereby opposes the Demurrer to the Fourth Amended Complaint. Bradley's25 arguments are set out in the attached Memorandum of Points & Authorities.26 II27

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MEMORANDUM OF POINTS &AUTHORITIES2

3Facts and Procedure.

4 The Defendants demur to the First and Fourth Causes of Action. They fail to identify5 what those causes of action are, most likely for the purpose of creating confusion for the Court.67 Fourth Cause of Action.89 At one time, Bradley labeled the Fourth Cause of Action as "Violation of Statute:

10 Financial Code 22100." That title was used in the Second Amended Complaint. Thereafter,11 it became clear to Bradley's counsel that there was no private right of action to enforce the12 California Financial Code directly. However, it was permissible to use a violation of said code13 as a prerequisite for bringing an unlawful business practice action under the Unfair Competition14

15 Law (hereinafter "VCL").16 The Third Amended Complaint was brought as a cause of action using the VCL, but17 because it was not clearly labeled as such (and possibly because it requested some unavailable18 remedies' although this issue was not raised by opposing counsel), the demurrer was sustained19 with leave to amend. However, by the time the Third Amended Complaint was filed, it became20

21 apparent that it didn't matter if Bradley thought that the Defendants had violated the California22 Financial Code or some other code. No matter what, the making of a mortgage loan by an23 unlicensed lender was unlawful, and Bradley (utilizing the same set of facts as set out in the24 original complaint) no longer relied on a violation of the Financial Code as a theory of recovery.25

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27 I In this version of the complaint, Bradley had requested declaratory relief. Later, it was learned that onlyrestitution is available under the VCL, in the absence of an ongoing violation of the law. These errors represented asteep learning curve regarding VCL actions and were not made intentionally.28


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California case law at this time to support the theory, the third-party beneficiary contract theorywas dropped. This was merely a matter of costs considerations.

The First Cause of Action as written in the Second Amended Complaint, which cause ofaction had already passed a demurrer, was simply reinstated. It is a cause of action for breach ofwritten contract. The contract is the agreement between Bradley and Wells Fargo Bank, inwhich both sides agreed to use their best efforts to move toward a modification agreement. Thebreach occurred because Wells Fargo Bank did not use its best efforts but in essence violated thecovenant of good faith and fair dealing.'

OF COURSE, BRADLEY THINKS SHE SHOULD HAVE QUALIFIED FORA MODIFICATION OF HER LOAN. BUT SHE DOES NOT SUE FOR FAILURETO RECEIVE THE MODIFICATION. SHE SUES FOR FAILURE OF ASC TO

ADHERE TO THE COVENANT OF GOOD FAITH AND FAIR DEALING FOUND INTHE CONTRACT MADE BETWEEN HER AND ASC.

At some point during the modification application process, Bradley complained to herCongressperson, Mary Bono Mack. Ms. Mack's office instituted an inquiry that went to theOffice of the Comptroller of the Currency, who in turn instituted an inquiry that went toASC/WFB.

Paragraph 38 of the Fourth Amended Complaint, and Exhibit E to the Fourth AmendedComplaint, both address the resulting memorandum sent by ASC/WFB to the Comptroller of the

2 Every contract contains a covenant of good faith and fair dealing. The First Cause of Action is labeled as a Breachof Written Contract, while the Second Cause of Action is labeled as Breach of the Covenant of Good Faith and FairDealing. The First Cause of Action provides for contract remedies, and the Second Cause of Action provides fortort remedies. Bradley is entitled to use both theories for the breach of her contract with ASCiWFB.




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Currency. The memorandum denies that Bradley even sought a loan modification. For ease of2 reading on this motion, a copy of Exhibit E is also attached hereto and incorporated herein.'3 While Paragraph 38 is not part of the First Cause of Action, it nevertheless sheds light on4

5 Bradley's intent to sue for breach of a covenant to use best efforts in processing a loan6 modification request. A modification request which is not even acknowledged when an inquiry7 comes from the Comptroller of the Currency is a request that was not sincerely considered.8 Paragraph 29 of the Fourth Amended Complaint, found in the First Cause of Action,9

10 states that ASC/WFB breached its duty to properly review her modification application.ASC/WFB acquired such a duty when it entered the Trial Modification Plan contract. Bradleyagreed to give certain documents and to remain truthful, and ASC/WFB agreed to honestly

13 review and consider her modification application.14

FACTUAL INACCURACIES.The Demurrer makes it sound as if America's Servicing Company (hereinafter "ASC"), a

division of Wells Fargo Bank (hereinafter "WFB"), was the servicer ofthe promissory note andthe Deed of Trust from the beginning of the loan. See Demurrer pg. 1, lines 6-7. Itfurthermakes it sound as ifHSBC is an assignee of the promissory note and the Deed of Trust. SeeDemurrer pg. 1, lines 8-9. Neither of these assertions are true.

Currently, it is not clear how important it might be to straighten out these inaccuracies.Nevertheless, for the record, Bradley states that ASC and WFB were not the original servicers

3 This memorandum also states that the borrower's last contact for assistance came on 2 / 1 2110 , which is alsoincorrect. The first denial letter was dated 4114110. Thereafter, Bradley sent more documents to ASC/WFB and asecond denial letter came on 5/7/10.The foreclosure took place on 10 /4110 , which was subsequent to the date that ASC/WFB was contacted bythe Office of the Comptroller of the Currency.


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OPPOSITION TO THE DEMURRER TO THE FOURTH AMENDED COMPLAINTBROUGHT BY WELLS FARGO BANK, N.A.; HSBC BANK, USA, NATIONAL ASSOCIATION; M O R T G A G E


on her loan. And, Bradley contends that HSBC is acting as if it were an assignee, but that its2 "assignment" is invalid.3 The claim that Bradley has made no allegations against the demurring Defendants and is4

5 trying to merely "bootstrap" Royal Crown's liability to them is inaccurate, as well. At a6 minimum, Mortgage Electronic Registration Systems (hereinafter "MERS") is responsible for7 accepting a loan from an unlicensed lender. See Fourth Amended Complaint at Paragraph 64.8 Allegations implicating the other Defendants are made as well. See Fourth Amended Complaint9

10 at Paragraphs 65 and 66.11 Because Bradley's VCL claim is made utilizing the prong of the statute entitled12 "unlawful business practice," the claim entails all violations of the law encountered. Just as is13 unlawful to commit a crime (statutory or otherwise), it is unlawful to aid and abet the14 commission of that crime. The demurring Defendants are implicated as aiders and abettors of15

16 the licensing statutes set out for California lenders. Without the willingness of MERS to accept17 the loan from the unlicensed lender, Royal Crown Bancorp could not have made the loan.18

19 THE SITUATION WITH MERSCORP, INC.20 MERSCORP, INC. publishes a document entitled "Rules of Membership," which21

22 explains how a person or an organization becomes a member in the MERS System. There23 may be several versions of the document; failure of the Defendants to comply with discovery24 makes it difficult for Bradley to be precise on this issue concerning which version was operable25 when her loan was made.26 Within the 2009 version of the "Rules of Membership," MERSCORP, INC. is referred to27

28 as "MERS." So, it can be seen that there is name confusion. In this Demurrer, "MERS" is used


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OPPOSITION TO THE DEMURRER TO THE FOURTH AMENDED COMPLAINTBROUGHT BY WELLS FARGO BANK, N.A.i HSBC BANK, USA, NATIONAL ASSOCIATION; MORTGAGE


to identify another business entity, namely Mortgage Electronic Registration Systems, Inc.2 Bradley has sued using both names, until such time as Defendants comply with discovery and3 make it clear who should be the real defendant(s).4

5 The "Rules of Membership" make it clear that an applicant's access to the MERS6 System should be denied if the applicant has violations of statutes, rules or regulations7 applicable to the applicant. MERSCORP, INC. or MERS allowed Royal Crown Bancorp to8 violate its own Rules of Membership because it accepted a loan for registration from Royal9

Crown Bancorp, an unlicensed lender.

THE STATUTE OF LIMITATIONS ARGUMENTS RAISED BYDEFENDANTS ARE NOT WELL TAKEN.

Bradley's loan was made, at close of escrow, and that was on 11/29/06. See FourthAmended Complaint at Paragraph 58. The original complaint in this matter was filed on 6/1110,less than four (4) years after the violation of making the unlawful loan.

The statute oflimitations for a UCL action is four (4) years. Bus. & Prof Code 17208.The relation-back doctrine ensures that the Fourth Amended Complaint does not suffer fromstatute of limitations problems, because the original complaint was timely filed.

"An amended complaint is considered a new action for purposes of the statute oflimitations only if the claims do not relate back to an earlier, timely-filed complaint. Under therelation-back doctrine, an amendment relates back to the original complaint if the amendment:(1) rests on the same general set of facts; (2) involves the same injury; and (3) refers to the sameinstrumentality. An amended complaint relates back to an earlier complaint if it is based on thesame general set of facts, even if the plaintiff alleges a different legal theory or new cause of


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action." Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves &Savitch, LLP (2011) 195 Cal. App. 4th 265, 276-77.

Furthermore, while there is a split of authority between the California Court of AppealDistricts, and no ruling by the California Supreme Court, the delayed discovery rule would seemto be operable to UCL actions in the Fourth Appellate District of the California Court of Appeal.Massachusetts Mutual Life Ins. Co. v. Superior Court (Cal. App. 4th Dist. 2002) 97 Cal. App.4th 1282, 1295. For multiple reasons, there is no statute oflimitations problem.

UNLAWFUL BUSINESS PRACTICES, ALLEGEDPURSUANT TO BUSINESS & PROFESSIONS CODE 17200, ET SEQ.

ARE PROPER IF ONLY ONE INSTANCE OF ILLEGAL CONDUCT IS CITED.The Unfair Competition Law (hereinafter "UCL") has three prongs: unlawful act or

practice, fraudulent act or practice, or unfair practice. Section 17200 "is written in thedisjunctive; it establishes three varieties of unfair competition ---acts or practices which are

unlawful, or unfair, or fraudulent." McCann v. Lucky Money, Inc. (2005) 129 Cal.App.a" 1382,1386. "Because section 17200's definition is 'disjunctive,' the statute is violated where adefendant's act [in the singularl or practice is unlawful, unfair, fraudulent or in violation ofsection 17500." Save Open Space Santa Monica Mountains v. Superior Court (2000) 84Cal.App.4th 235, citation omitted, emphasis added

A 1992 change to the statute allows a plaintiff to bring a cause of action for a single actof misconduct. Prior to the 1992 amendment, Section 17200 was construed as directed atongoing wrongful business conduct, something beyond a single transaction. All of that changedin 1992 with the addition to the statute of two words, "any" and "act." Podolsky v. First




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Healthcare Corp. (1996) 50 Cal.AppAth 632,653-654, citing Historical and Statutory Notes toBus. & Prof Code 17200.

The statute now discusses an "act" !!!. a "practice." This [1992] change did not alter themeaning of "unfair ... business practice" but merely extended it to include single instances ofconduct. Cel-Tech Com. Inc. v. Los Angeles Cellular Tel Co. (1999) 20 Ca1.4th163, 195.

BRADLEY MAY BRING THE FOURTH CAUSE OF ACTION FOR UNLAWFULBUSINESS ACTS WITHOUT ALLEGING ANY "COURSE OF CONDUCT" OR

ONGOING PRACTICES. INASMUCH AS ALLEGINGONE SINGLE UNLAWFUL ACT WILL SUPPORT THIS CAUSE OF ACTION THERE

IS NO NEED TO ALLEGE HOW THE UNLAWFUL ACTION RELATES TO THEGENERAL PUBLIC.

Bradley may bring an action under the UCL for violation of a federal statute, and she doenot have to present a claim premised upon a "pattern of behavior" or a "course of conduct."The Cause of Action may be stated with only one single act that is unlawful. Unfair competitionactions can be brought by a public prosecutor or "by any person acting for the interests o[itself,its members or the general public." Korea Supply Co. v. Lockheed Martin Corp. (2003) 29CalAth 1134, 1143, citing Bus. & Prof Code 17204, emphasis added.

An unlawful business act or practice is an act or practice, committed pursuant to businessactivity that is at the same time forbidden by law. Farmers Ins. Exchange v. Superior Court(1992) 2 Cal. 4th 377,383. Virtually any law can serve as the predicate for a section 17200action. State Farm, Fire & Casualty Co. v. Superior Court (1996) 45 Cal. App. 4th 1093,1102-1103.




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THE ARGUMENT MADE BY DEMURRING DEFENDANTS REGARDINGPREDATORY LENDING LIABILITY IS INACCURATE.

On page 7 of the Demurrer, the Defendants claim that a purchaser of a loan cannot beliable for predatory lending, as it was not the original lender. See Demurrer pg. 7, lines 10-11.The case cited, Levy v. Residential Credit Solutions, refers only to cases brought under theCalifornia Financial Code 4973 (which is very restrictive regarding which loans it encompassesand it does not include Bradley's loan.) Further, the Levy case discusses servicers, notpurchasers. The Levy case has been cited by Manzano v.MetLife Bank NA. (E.D. Cal. 2011)2011 U.S. Dist. LEXIS 56316, and this Manzano case further makes it clear that the rulingpertains to servicers.

None of the Defendants herein are holders in due course. The citation to Bonner v.Select Portfolio Servicing, Inc. is completely irrelevant. See Demurrer pg. 7, lines 11-13.

THIS DEMURRER IS A RE-HASH OF ARGUMENTS ALREADY PRESENTED.IT SHOULD BE OVERRULED IN ITS ENTIRETY.

Dated: November 25,2011LAW OFFICES OF THOMPSON & ASSOCIATESAttorneys for Plaintiff, Leanna Bradley




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SCII!J:'t_A iI I.J ..44t tile" "It .. , ... ",",,. ,,; c.-.,. .."".

MEMORANDUMDate: October 15. 20JOT o:From:

R e:

Office of the Comptroller of the Currency (OCe)Andrew Mitch el lExecutive Mortgage Specialist, Office of the PresidentAmerica's Servicing Company (ASC)Leanna BradleyCase No. 01301349.Loan No. 106-1256044521

I have been asked to respond on behalf of ASC to your request for additional information on theabove referenced case.1. Has the consumer contacted the hank previously?

Yes. The borrower's last contact us for assistance February 12, 2010.2. Has the consumer indicated the desire to stay in the home?The borrower is not contacting us in regards to a desire to stay in the home.3 Isthis an investor loan? If so, who is the investor-, and has the bankcontacted the in''CStor?The investor of the above referenced loan is Nomura. ASCservices the loan inaccordance with Nomura's guidelines.4

5 Has the consumer shown the capacity to re-pay the loan under newterms?Not ApplicableHas the borrower been considered for aUpossible alteenatives for homeretention strategies that arc being offered by the investor or the bank? Ifnot, why?Not Applicable

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7 What is the status of the foreclosure, loan modification or wurkoutprogram? Include referral datc; sales date; or a suspended date offorcclusure.lfthe foreclosure has been completcci, docs tbe state requirea redemption period? If50 how many days?The foreclosure took place October 4,2010. There is no redemption period.If a home retention resolution could not be reached, why?Not Applicable8.


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9. If debt to income is the reason for deellnation please provide the memesfor the decision.Not Applicable10. If a home retention resolution was reached, please provide the details ofthe resolution.Not Applicable11. Name and contact information for the bank personnel should the

consumer require further assistance.!fyou have questions, please Kimberlee Keenan directly at(515) 324..{)968. She is available to assist you Monday through Friday. 8:00 a.m. to5:00 p.m., Central Time.

Sincerely,t - f . . _ _ . . . . .

Andrew MitchellExecutive Mortgage Specialist, Office of the President


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Wells Fargo Correspondence

Date: 10/15/2010Document Type: 14505Client Number: 106Loan Number: 1256044521

Borrower Name: Leanna Bradley

Department: Executive CommunicationsSender(CaseWorker): Kimberlee KeenanPhone #: (515) 324-2399

DSuccessful Quality Check


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(Summary for IExecutive IRegulatory I Case # 437259

Completed as of 10/1512010Keenan, Kimberlee

DM a 1$ _ l i m e . . of: 1 Qf1 5/2 01 0 2 :1 2:S 8 P MLoan Data Case Data Compliance Data

Cit Loan; 106 1256044521 Reason: Letter Dept Date: 101112010State: C A Originator: AuthoriZed 3rd Party Welle Fargo Date: 101112010Customer: Leanna Bradtey Office: OCC SWU Due Date:Man Code: F Type: Standard SLA Date: 1011912010SegInenl Code: ltdParty Cas. II: 1301349-146756 Due Date: 10118/2010ACQID: GMA0701NO,PlFDa .. : CycleDaya: Opt: l' I W F : 11p... Indicator Flags:

b O Ir lI M eS ASC tI.. many RESPA viOla tion. d oc um en te d b y a fo re ns iC : lo an a ud it

! I ! S O i# n : I

; c a s e Comments: !

K e e n a n . I C . i m t I e r I e e c a s e 4 3 1 2 5 9 Rpt v3.0 10/1512010 IPage 1 of 1

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PROOF OF SERVICESTATE OF CALIFORNIA, COUNTY OF RIVERSIDE

I am employed in the County of Riverside, State of California. I am over the age of 18and not a party to the within action; my business address is 152 South Harvard Street, Hemet,California, 92543.

On November 26,2011, I served the forgoing documents described herein as1) Opposition to the Demurrer to the Fourth Amended Complaint brought by

Wells Fargo Bank, N.A.; HSBC Bank, USA, National Association; MortgageElectronic Registration Systems, Inc.; and Merscorp, Inc.On:

Cathy Knecht, Esq.for Wells Fargo Bank, National Association; HSBC Bank, USA, National Association;Mortgage Electronic Registration Systems, Inc.; and MERSCORP, Inc.BARRY, GARDNER &KINCANNON

2214 Faraday Avenue, Carlsbad, CA 92008Dana J. Seyler, Esq.for HSBC Bank USA,National Association, as Trustee for NAAC Mortgage Pass-through Certificates, Series 2007-1BARRETT DAFFIN FRAPPIER TREDER &WEISS, LLP20955 Pathfinder Road, Suite 300, Diamond Bar, CA 91765

(X) BY MAIL. I am "readily familiar" with my firm's practice of collection and processingcorrespondence for mailing. It is deposited with the United States' Postal Service on that sameday in the ordinary course of business pursuant to Code of Civil Procedure 1013(a). I am awarethat on Motion of party served, service is presumed invalid if postal cancellation date or postagemeter date is more than one day after date of deposit for mailing affidavit.

I declare under penalty of perjury under the laws of the State of California that the aboveis true and correct.

Executed November 26,2011 at Beaumont, California.

PROOF OF SERVICE - Page 1 of 1

bradley opp 2 demurrer 4ac

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