Promissory Estoppel 2020 California Appellate Court Decision

April 2, 2020 | Weimer v. Mortgage, 2020 Cal. App. LEXIS 270

Court of Appeal of California, Third Appellate District

April 2, 2020, Opinion Filed

C080550

Reporter

2020 Cal. App. LEXIS 270 *

ROBERT WEIMER, JR., Plaintiff and Appellant, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants and Respondents.

Notice:

CERTIFIED FOR PARTIAL PUBLICATION*

Prior History:

[*1] APPEAL from a judgment of the Superior Court of Placer County, No. SCV0035286, Michael W. Jones, Judge.

Disposition:    Affirmed in part and reversed in part.

Core Terms

modification, cause of action, lender, borrowers, factors, documents, duty of care, special relationship, allegations, servicers, second amended complaint, sustain a demurrer, trial court, weighs, misrepresentation, economic loss, demurrer, mortgage, asserts, damages, Leak, negligent misrepresentation, leave to amend, default, first amended complaint, high court, foreclosure, eligible, judicial notice, foreseeable

Counsel: United Law Center, Danny A. Barak, Ronald W. Holland, Stephen J. Foondos and John S. Sargetis for Plaintiff and Appellant.

Severson & Werson, Jan T. Chilton, Elizabeth Holt Andrews and Elizabeth C. Farrell for Defendants and Respondents.

Judges: Opinion by Murray, J., with Butz, Acting P. J., and Duarte, J., concurring.

Opinion by: Murray, J.

Opinion

MURRAY, J.—Plaintiff Robert Weimer, Jr., purchased real property in Carnelian Bay in 1993. He refinanced the mortgage in 2006 with a loan from defendant Bank of America, N.A. (BANA). After defaulting, plaintiff entered into a loan modification process with BANA. Subsequently, loan servicing was transferred, successively, to defendants Specialized Loan Servicing, LLC (SLS) and Nationstar Mortgage, LLC (Nationstar). According to plaintiff, BANA, SLS, and Nationstar successively each engaged in deliberate and negligent misconduct in the loan modification process. In 2014, BANA transferred beneficial interest in the loan to defendant U.S. Bank, N. A. (U.S. Bank), as trustee for the Certificateholders of Banc of America Funding Corporation [*2]  Mortgage Pass Through Certificates Series 2007-7. Eventually, Nationstar, acting as U.S. Bank’s agent, recorded a notice of trustee’s sale and had an agent enter onto the property and change the locks.

After plaintiff commenced this action, BANA, U.S. Bank, and Nationstar demurred to a first amended complaint. The trial court sustained the demurrer without leave to amend as to BANA, concluding that the action against it was time-barred. As to the other demurring defendants, the court sustained the demurrer with leave to amend. Plaintiff filed a second amended complaint, asserting causes of action sounding in intentional and negligent misrepresentation, negligence, trespass to land, seeking declaratory relief, and asserting violations of the unfair competition law (Bus. & Prof. Code, § 17200 et seq.). U.S. Bank and Nationstar demurred, SLS separately demurred, and the trial court sustained the demurrers without leave to amend.

On appeal,1 plaintiff asserts that the trial court erred in concluding that the action against BANA was time-barred because BANA’s actions were part of a civil conspiracy with the other defendants, and the timeliness of plaintiff’s action against BANA must be measured from the last overt act. Plaintiff [*3]  further asserts that the trial court erred in sustaining the demurrers to the second amended complaint because he sufficiently stated each cause of action. Plaintiff also asserts that the trial court should have granted him leave to amend, however, he largely maintains that his complaint required no amendment.

In the unpublished portion of this opinion, we conclude that the action as asserted against BANA was time-barred. We further conclude that plaintiff sufficiently stated causes of action sounding in intentional and negligent misrepresentation and violations of the unfair competition law against the remaining defendants.

In the published portion of this opinion, based on the test in Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja) and the analysis in Southern California Gas Leak Cases (2019) 7 Cal.5th 381, 397 (Gas Leak), we conclude the remaining defendants had a duty of care and that plaintiff sufficiently stated a cause of action for negligence against them.

Therefore, we will reverse the judgments of dismissal as to U.S. Bank, SLS, and Nationstar and reverse the orders sustaining the demurrers as to the causes of action in the second amended complaint for intentional misrepresentation (first cause of action), negligent misrepresentation (second cause of action), negligence [*4]  (third cause of action), and violations of the unfair competition law (sixth cause of action). In all other respects, the judgments are affirmed.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff purchased the subject property in Carnelian Bay in or about 1993 and alleges he “maintained it as one of his principal residences.” He refinanced the mortgage on the property on or about May 25, 2006,2 with a loan from BANA. Plaintiff alleged that, in or about January 2008, BANA froze plaintiff’s bank accounts, and, as a result, he was not able to pay his mortgage payments for approximately three months. Additionally, BANA cancelled plaintiff’s line of credit for unknown reasons, which negatively affected plaintiff’s credit score. Plaintiff alleged that he never found out why BANA froze his accounts and cancelled his line of credit.

As a result of his delinquency, plaintiff entered into a loan modification process with BANA. In or about mid-2009, an agent, employee, or representative of BANA told plaintiff that he was approved for a loan modification that would reduce his monthly payments to $8,000 per month, reduce and fix his interest rate, and “reduce his principal” by $500,000. BANA required plaintiff [*5]  to make a down payment of $50,000 to secure the loan modification, and, once it received that payment, it would halt the foreclosure sale. Plaintiff asserted that his wife sent BANA a check for $50,000.3 However, the foreclosure sale was not postponed, and plaintiff “was forced to file a chapter 11 bankruptcy to stop the foreclosure sale.” BANA did not furnish the loan modification.

In or about early 2010, servicing of the loan was transferred from BANA to SLS. Plaintiff alleged that SLS notified him that it would take over for BANA in handling his loan modification application.4 From early 2010 through January 2014, plaintiff attempted to obtain a permanent loan modification from SLS. However, during this time period, SLS “refused to honor the terms of the loan modification promised by” BANA, notwithstanding the one-time $50,000 payment. Plaintiff repeatedly submitted identical and updated loan modification applications and documents to SLS. Often, plaintiff was told that the documents were not received despite plaintiff having sent them directly to the addresses and individuals specified by SLS. Plaintiff alleged that SLS mishandled or lost the applications and documents. SLS continued [*6]  to represent to plaintiff that he would be approved for a loan modification with terms similar to those previously offered by BANA. Meanwhile, “[a]s a result,” plaintiff continued to accumulate arrears, penalties, and fees, and his credit continued to suffer. Additionally, plaintiff expended time, money, and effort in his attempts to obtain the loan modification.

On or about April 1, 2014, servicing of the loan was transferred from SLS to Nationstar. Nationstar informed plaintiff that, as a result of the transfer, he would have to begin the loan modification application process anew.5 Nationstar refused to honor BANA’s “previous representation of a permanent loan modification.” Plaintiff once again had to submit the same applications and documents on multiple occasions, and was told to send them to locations in Arizona, Texas, and California. A named employee or agent of Nationstar told plaintiff that he was being evaluated for a Home Affordable Modification Program (HAMP) loan modification, sent him the application, and told him to complete it and submit it along with supporting documents.6 Thus, according to the complaint, Nationstar “represented and led Plaintiff to believe [*7]  that he was eligible to apply for and receive a HAMP loan modification.” However, plaintiff could not qualify for a HAMP loan modification because his loan, at $2,000,000, was well above the applicable maximum of $729,750. Plaintiff alleged that Nationstar was aware of this. According to plaintiff, Nationstar had him apply for a HAMP loan modification “so Plaintiff would maintain his delinquency and Nationstar would retain its status as a ‘special servicer’ for servicing a delinquent account and would enable it to collect additional fees for servicing a delinquent loan.” (Capitalization omitted.) In the alternative, plaintiff asserted that Nationstar acted unreasonably in evaluating him for a loan modification for which he was not qualified. Plaintiff asserted that, like the servicers before it, Nationstar lost or misplaced plaintiff’s applications and documents.

According to plaintiff, “[o]n or about, June 23, 2014, an Assignment of Deed of Trust was effectuated whereby [BANA] transferred its purported beneficial interest under the Deed of Trust to the U.S. Bank securitized trust.”7

On or about August 15, 2014, Nationstar hired Cyprexx to enter the subject property and change the [*8]  locks. Plaintiff learned of this development after a notice was placed on his door. Plaintiff contacted Cyprexx, and a named representative told him that Nationstar had hired Cyprexx to secure and winterize the premises. Plaintiff alleged that Nationstar and Cyprexx knew plaintiff was still occupying the home. Plaintiff reentered the property, installed new locks, and directed a caretaker to maintain the property while he was out of town on business.

Plaintiff alleged that defendants’ actions constituted a continuing conspiracy to defraud and take advantage, and, therefore, the statute of limitations should be tolled until completion of the last overt act. Plaintiff further alleged that it was defendants’ plan to engage him in the loan modification process, with no intent to grant his loan modification applications, so that they could obtain additional compensation for servicing a delinquent mortgage account and collect additional fees for every loan modification application he submitted.8

In a first amended complaint, plaintiff asserted eight causes of action against defendants: (1) intentional misrepresentation, (2) negligent misrepresentation, (3) promissory estoppel, (4) breach of [*9]  contract, (5) negligence, (6) trespass to land, (7) declaratory relief, and (8) violation of Business and Professions Code section 17200.

Defendants Nationstar, BANA, and U.S. Bank demurred to the first amended complaint. Defendants asserted, among other things, that plaintiff’s claims against BANA were all time-barred, and that, as to Nationstar and U.S. Bank, plaintiff failed to adequately state claims as to each cause of action. Defendants also requested that the trial court take judicial notice of certain documents and instruments, including several documents related to plaintiff’s bankruptcy. Plaintiff filed his own request for judicial notice.

The trial court granted the requests for judicial notice. The trial court then sustained defendants’ demurrer to the first amended complaint. The court stated that the “conclusory and overlapping allegations in the [first amended complaint] focus primarily upon the purported wrongful actions and conduct of defendant [BANA], which are followed by further conclusory allegations based primarily upon [BANA’s] actions that plaintiff purports are attributable to defendants Nationstar and SLS. It is this deficient pleading that subjects plaintiff’s [first amended complaint] to successful [*10]  challenge by defendants in light of the prior bankruptcy. [Citations.] This same deficient pleading also subjects the [first amended complaint] to challenge based upon judicial estoppel. [Citation.] Even if the court were to accept the contentions made by plaintiff, which it does not, the eight causes of action are simply pled in too conclusory a manner to support the claims asserted against the moving defendants. Furthermore, the causes of action alleged against defendant [BANA] . . . are barred in light of the applicable statutes of limitations. It is for these reasons that the demurrer is sustained.” The court sustained the demurrer with leave to amend as to defendants U.S. Bank and Nationstar, finding that, although the allegations were conclusory and failed to support plaintiff’s claims, plaintiff presented a sufficient showing of his ability to cure the defects. However, having determined that the causes of action asserted against BANA were time-barred and plaintiff failed to show an ability to amend the complaint so as to cure this deficiency, the court sustained the demurrer without leave to amend as to BANA.

Plaintiff then filed a second amended complaint, asserting six causes [*11]  of action as to U.S. Bank, SLS, and Nationstar: (1) intentional misrepresentation, (2) negligent misrepresentation, (3) negligence, (4) trespass to land, (5) declaratory relief, and (6) violation of Business and Professions Code section 17200. Plaintiff abandoned his promissory estoppel and breach of contract causes of action.

U.S. Bank and Nationstar demurred to the second amended complaint on the same grounds asserted in their first demurrer. Again, these defendants filed a request for judicial notice. The trial court granted the request for judicial notice and sustained the demurrer without leave to amend, concluding that plaintiff’s allegations were insufficient to state causes of action. The trial court entered judgment in favor of BANA, U.S. Bank, and Nationstar, dismissing the action insofar as asserted against them. (See fn. 1, ante.)

SLS filed its own demurrer to the second amended complaint and a request for judicial notice. The trial court sustained the demurrer, dismissed the second amended complaint as asserted against SLS without leave to amend, and entered judgment.

DISCUSSION

1. Standard of Review

A demurrer tests the sufficiency of the complaint as a matter of law, and it raises only questions of law. (Code Civ. Proc., § 589, subd. (a).) “We review [*12]  a trial court’s decision to sustain a demurrer for an abuse of discretion.” (Zipperer v. County of Santa Clara (2005) 133 Cal.App.4th 1014, 1019 (Zipperer).) “‘”‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the [complaint] a reasonable interpretation, reading it as a whole and its parts in their context.”‘” (Finch Aerospace Corp. v. City of San Diego (2017) 8 Cal.App.5th 1248, 1251-1252.) “[T]he complaint must be liberally construed and survives a general demurrer insofar as it states, however inartfully, facts disclosing some right to relief.” (Longshore, supra, 25 Cal.3d at p. 22; see also Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1162 (Daniels) [we decide “whether a cause of action has been stated under any legal theory when the allegations are liberally construed”].) “In reviewing an order sustaining a demurrer, we examine the operative complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory. [Citation.] Where the demurrer was sustained without leave to amend, we consider whether the plaintiff could cure the defect by an amendment. The plaintiff bears the burden of proving an amendment could cure the defect.” (T.H. v. Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162.)

1. The Action Against BANA

1. Statutes of Limitations [*13]  and Commencement of this Action

[NOT CERTIFIED FOR PUBLICATION]

1. Plaintiff’s Contentions, Civil Conspiracy, and the Last Overt Act Doctrine

[NOT CERTIFIED FOR PUBLICATION]

1. Analysis

[NOT CERTIFIED FOR PUBLICATION]

1. Conclusion

[NOT CERTIFIED FOR PUBLICATION]

III. The Action Against U.S. Bank, SLS, and Nationstar13

1. Intentional and Negligent Misrepresentation — Nationstar and U.S. Bank14

1. Plaintiff’s Contentions

[NOT CERTIFIED FOR PUBLICATION]

2. Elements and Pleading of Intentional and Negligent Misrepresentation

[NOT CERTIFIED FOR PUBLICATION]

3. Analysis

1. Misrepresentations

[NOT CERTIFIED FOR PUBLICATION]

1. Knowledge of Falsity

[NOT CERTIFIED FOR PUBLICATION]

1. Intent to Induce Reliance

[NOT CERTIFIED FOR PUBLICATION]

1. Actual and Justifiable Reliance

[NOT CERTIFIED FOR PUBLICATION]

1. Damages

[NOT CERTIFIED FOR PUBLICATION]

1. Conclusion

[NOT CERTIFIED FOR PUBLICATION]

1. Negligence — SLS, Nationstar, and U.S. Bank

1. Plaintiff’s Contentions

Plaintiff maintains that he adequately pleaded the third cause of action sounding in negligence. According to plaintiff, the trial court erroneously determined that defendants did not owe plaintiff a duty of care because their involvement did not exceed [*14]  the scope of a normal financial institution. Plaintiff asserts that we must undertake a Biakanja analysis to determine whether defendants owed plaintiff a duty of care. (Biakanja, supra, 49 Cal.2d at p. 650.) And plaintiff asserts that a balancing of the Biakanja factors favors a finding of a duty of care. He further asserts that he properly pleaded duty, breach, and damages.

Plaintiff relies on this court’s decision in Rossetta v. CitiMortgage, Inc. (2017) 18 Cal.App.5th 628 (Rossetta), where we concluded that the complaint therein sufficiently alleged a negligence cause of action, including a duty of care, against a loan servicer for its handling of a loan modification application. Defendants assert that Rossetta does not apply because a fact they find crucial to the duty of care—the loan servicer’s direction making default a condition for being considered for a loan modification—is not present here. Defendants insist this factor “carried Rossetta across the line.” According to defendants, plaintiff does not allege any other facts sufficient to give rise to a duty of care. As we shall explain, we disagree with defendants.

2. Elements of Negligence and the Negligence Allegations in the Second Amended Complaint

To support a negligence cause of action, a plaintiff must plead [*15]  and prove: (1) the defendant owed the plaintiff a legal duty, (2) the defendant breached the duty, and (3) the breach was a proximate or legal cause of the plaintiff’s injuries. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 477.) “We start by identifying the allegedly negligent conduct by [defendants] because our analysis is limited to ‘the specific action the plaintiff claims the particular [defendants] had a duty to undertake in the particular case.'” (Lueras, supra, 221 Cal.App.4th at p. 62, quoting Vasquez v. Residential Investments, Inc. (2004) 118 Cal.App.4th 269, 280.)

The second amended complaint alleges that Nationstar, SLS, and U.S. Bank acted unreasonably throughout the loan modification process “by failing to accurately and reasonably evaluate Plaintiff for a loan modification”; by mishandling and losing plaintiff’s financial documents; by “misdirect[ing] Plaintiff”; by failing to inform plaintiff of the documents that were required for the loan modification; by forcing plaintiff to submit the same documents repeatedly; and by misrepresenting that plaintiff was eligible for a HAMP loan modification for which his loan was not qualified. Plaintiff asserted that, as a proximate cause of defendants’ negligence, plaintiff “suffered injury, damage to his credit, increased interest and arrears that he would not have otherwise incurred, [*16]  forewent seeking other remedies and solutions, has incurred legal fees and costs, and now face[s] the possible foreclosure proceedings and the loss of the Subject Properties.”

3. Duty of Care

“Recovery in a negligence action depends as a threshold matter on whether the defendant had ‘”a duty to use due care toward an interest of [the plaintiff’s] that enjoys legal protection against unintentional invasion.”‘” (Gas Leak, supra, 7 Cal.5th at p. 397.) “Whether a duty of care exists is a question of law to be determined on a case-by-case basis.” (Lueras, supra, 221 Cal.App.4th at p. 62.)

“[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096 (Nymark).) Additionally, California law generally does not impose a duty of care to avoid causing purely economic losses in negligence cases. (Gas Leak, supra, 7 Cal.5th at pp. 398-400.) But our high court has recognized an exception when the plaintiff and defendant have a “special relationship.” (Ibid., citing J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804 (J’Aire) [a special relationship gives rise to a duty on the part of the defendant to use due care to avoid economic injury to the plaintiff].) The Gas Leak court explained, “[w]hat we mean by [*17]  special relationship is that the plaintiff was an intended beneficiary of a particular transaction but was harmed by the defendant’s negligence in carrying it out,” and cited Biakanja, supra, 49 Cal.2d 647, as an example. (Gas Leak, at p. 400, italics added.)

Previously, courts have stated that the question of whether a special relationship exists is determined by applying the six factors set forth Biakanja. For example, writing about J’Aire, our high court in Aas v. Superior Court (2000) 24 Cal.4th 627, stated: “Applying the Biakanja factors, the court [in J’Aire] held that a ‘special relationship’ [citation] permitting recovery of economic losses (i.e., the relationship defined by the Biakanja test) existed between the contractor and the tenant.” (Id. at p. 644; see also North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 782 [“The necessary ‘special relationship’ required by J’Aire was established by consideration of six criteria first articulated by the Biakanja court”]; Zamora v. Shell Oil Co. (1997) 55 Cal.App.4th 204, 211-212 [noting that “[t]he California Supreme Court adopted a six-part test for determining when a ‘special relationship’ exists between parties which would permit recovery in a negligence action for economic losses alone”]; Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1450, 1454 [courts apply the six-part Biakanja test employed in J’Aire for deciding whether a special relationship exists; the test applies whether or not the parties [*18]  are in contractual privity].)

In Gas Leak, our high court clarified: “Discerning whether there is a special relationship justifying liability of this sort can nonetheless be a subtle enterprise. In both Biakanja and J’Aire we emphasized that our duty determination rested not just on (i) ‘the extent to which the transaction was intended to affect the plaintiff,’ but also on” the factors articulated in Biakanja and J’Aire. (Gas Leak, supra, 7 Cal.5th at p. 401.) The Biakanja factors are: (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm. (Rossetta, supra, 18 Cal.App.5th at p. 637; Nymark, supra, 231 Cal.App.3d at p. 1098, citing Biakanja, 49 Cal.2d at p. 650.)

Thus, in considering whether a duty exists here, we shall both (1) weigh the factors set forth in Biakanja, and (2) focus particular attention on whether this is a case where plaintiff was intended to benefit from the transaction but was harmed by the defendant’s negligence in carrying it out. (Gas Leak, supra, at pp. 400, 401.) However, before applying the Biakanja factors here, we first review [*19]  other cases applying those factors to a negligence cause of action arising out of loan modifications.

Several courts, including this one, have found a duty after applying the Biakanja factors, when the lender or servicer has voluntarily undertaken to renegotiate a loan modification but breached the duty to exercise reasonable care in processing the loan modification application. (Rossetta, supra, 18 Cal.App.5th at p. 640 [residential loan]; Daniels, supra, 246 Cal.App.4th at pp. 1180-1183 [residential loan]; Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 946, 949 (Alvarez) [residential loan]; Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 881 (Jolley) [construction loan].)

Relevant to a duty of care, the plaintiffs in Alvarez alleged “that defendants owed them a duty to exercise reasonable care in the review of their loan modification applications once they had agreed to consider them. The complaint allege[d] . . . that defendants ‘undertook to review’ plaintiffs’ loans for potential modification under [HAMP] and that having done so they owed plaintiffs the duty to exercise reasonable care in processing and reviewing their applications for loan modifications in accordance with the federal HAMP guidelines.” (Alvarez, supra, 228 Cal.App.4th at pp. 944-945.) The Alvarez court weighed the Biakanja factors, considered relevant case law, and concluded that “the Biakanja factors clearly weigh in favor of a duty. The transaction [*20]  was intended to affect the plaintiffs and it was entirely foreseeable that failing to timely and carefully process the loan modification applications could result in significant harm to the applicants. Plaintiffs allege that the mishandling of their applications ‘caus[ed] them to lose title to their home, deterrence from seeking other remedies to address their default and/or unaffordable mortgage payments, damage to their credit, additional income tax liability, costs and expenses incurred to prevent or fight foreclosure, and other damages.’ As stated in [Garcia v. Ocwen Loan Servicing, LLC (N.D.Cal. May 10, 2010, C 10-0290 PVT) 2010 U.S. Dist. Lexis 45375, 2010 WL 1881098], ‘Although there was no guarantee the modification would be granted had the loan been properly processed, the mishandling of the documents deprived Plaintiff of the possibility of obtaining the requested relief.'” (Alvarez, at pp. 948-949.) The court found particularly significant the fifth Biakanja factor—the moral blame attached to the defendant’s conduct—stating, “it is highly relevant that the borrowers[‘] ‘ability to protect his own interests in the loan modification process [is] practically nil’ and the bank holds ‘all the cards.'” (Alvarez, at p. 949.) In considering the sixth Biakanja factor—preventing [*21]  future harm—the Alvarez court took note of the Legislature’s “‘strong preference for fostering more cooperative relations between lenders and borrowers who are at risk of foreclosure, so that homes will not be lost.'” (Id. at p. 950.) This legislative preference was expressed through passage of the California Homeowner Bill of Rights (Assem. Bill No. 278 (2011-2012 Reg. Sess.); Sen. Bill No. 900 (2011-2012 Reg. Sess.)), which, among other things, attempted to eliminate dual tracking.20 (Alvarez, at p. 950.)

Other courts have reached a different conclusion. Defendants rely on Lueras, supra, 221 Cal.App.4th 49. The plaintiff asserted in Lueras that the defendants “owed him a duty of care to (1) handle his loan ‘in such a way to prevent foreclosure and forfeiture of his property’; (2) ‘determine modification approvals, explore and offer foreclosure alternatives with Mr. Lueras prior to default’; (3) ‘exercise reasonable care and skill in timely and accurately responding to customer requests and inquiries’; (4) ‘record proper land records’; (5) ‘properly service the loan’; (6) ‘ensure chain of title prior to foreclosing’; and (7) ‘stop all foreclosure sales that are unlawful.'” (Id. at p. 62.) The plaintiff also alleged that the defendants had a duty to offer him a loan modification [*22]  and breached that duty by refusing to do so. (Id. at p. 63.) The Lueras court stated: “We conclude a loan modification is the renegotiation of loan terms, which falls squarely within the scope of a lending institution’s conventional role as a lender of money. A lender’s obligations to offer, consider, or approve loan modifications and to explore foreclosure alternatives are created solely by the loan documents, statutes, regulations, and relevant directives and announcements from the United States Department of the Treasury, Fannie Mae, and other governmental or quasi-governmental agencies. The Biakanja factors do not support imposition of a common law duty to offer or approve a loan modification. If the modification was necessary due to the borrower’s inability to repay the loan, the borrower’s harm, suffered from denial of a loan modification, would not be closely connected to the lender’s conduct. If the lender did not place the borrower in a position creating a need for a loan modification, then no moral blame would be attached to the lender’s conduct.” (Lueras, at p. 67, italics added.)

Plaintiff asserts that Alvarez and Lueras are not actually in conflict because, in Lueras, the court only concluded that [*23]  the Biakanja factors did not support the “imposition of a common law duty to offer or approve a loan modification” (Lueras, supra, 221 Cal.App.4th at p. 67, italics added), whereas the Alvarez court focused its discussion on the actual misconduct alleged and concluded that the Biakanja factors may weigh in favor of the imposition of a duty when the loan servicer agrees to consider a loan modification. (Alvarez, supra, 228 Cal.App.4th at p. 948.) This may be true, but whether or not these lines of cases are in direct conflict, they are not strictly aligned. In Rossetta, we noted that “California Courts of Appeal have not settled on a uniform application of the Biakanja factors in cases that involve a loan modification. Although lenders have no duty to offer or approve a loan modification [citation], courts are divided on the question of whether accepting documents for a loan modification is within the scope of a lender’s conventional role as a mere lender of money, or whether, and under what circumstances, it can give rise to a duty of care with respect to the processing of the loan modification application.” (Rossetta, supra, 18 Cal.App.5th at pp. 637-638, comparing Lueras, supra, 221 Cal.App.4th at p. 67, with Alvarez, supra, 228 Cal.App.4th at p. 948, Daniels, supra, 246 Cal.App.4th at pp. 1180-1183, and Jolley, supra, 213 Cal.App.4th at p. 906.)

While courts agree that a lender has no duty to offer or approve a loan modification (Rossetta, supra, 18 Cal.App.5th at pp. 637-638), whether a lender assumes a duty by [*24]  considering a loan modification application presents a more nuanced question: At what point may it be said that “a borrower and lender enter into a new phase of their relationship when they voluntarily undertake to renegotiate a loan, one in which the lender usually has greater bargaining power and fewer incentives to exercise care”? (See Rossetta, at p. 640, citing Alvarez, supra, 228 Cal.App.4th at p. 949.)

In Alvarez, the court noted that the plaintiffs had alleged “that defendants owed them a duty to exercise reasonable care in the review of their loan modification applications once they had agreed to consider them.” (Alvarez, supra, 228 Cal.App.4th at p. 944, italics added.) Their complaint further alleged that the defendants “‘undertook to review’ plaintiffs’ loans for potential modification under” HAMP and that “having done so they owed plaintiffs the duty to exercise reasonable care in processing and reviewing their applications for loan modifications in accordance with the federal HAMP guidelines.” (Id. at pp. 944-945.) The Alvarez court concluded that, “because defendants allegedly agreed to consider modification of the plaintiffs’ loans, the Biakanja factors clearly weigh in favor of a duty.” (Alvarez, at p. 948.)

Here, leaving aside the allegations asserted against BANA because they are time-barred,21 plaintiff [*25]  alleged in the second amended complaint that, once SLS acquired servicing rights of plaintiff’s loan in 2010, SLS notified plaintiff that it would “handl[e] [p]laintiffs’ loan modification application.” However, SLS refused to honor the terms of the loan modification BANA had offered, despite the alleged fact that plaintiff’s wife had tendered the $50,000 payment. Plaintiff alleged that he submitted applications and documents to SLS on numerous occasions. According to plaintiff, during this time, “SLS continued to represent that Plaintiff would be approved for a loan modification with similar terms to the loan modification offered by” BANA.

In 2014, the servicing rights to the loan were transferred to Nationstar, which informed plaintiff that he had to begin the loan modification process anew. Plaintiff again submitted his applications and documents repeatedly. He was instructed where to send documents, including locations in three different states. A named Nationstar representative told plaintiff that he was eligible to apply for a HAMP loan modification and sent him the applications. Nationstar represented “[o]ver the phone and in writing” that Plaintiff was eligible to apply [*26]  for and receive a HAMP loan modification. Plaintiff submitted the HAMP loan modification application on several occasions. Plaintiff alleged that Nationstar knew plaintiff’s loan was ineligible for a HAMP loan modification because the balance was far more than the $729,750 maximum, but had him apply anyway while maintaining his delinquency.

Turning back to Rossetta, we stated: “We do not hold that a duty of care arises merely because a lender receives or considers a loan modification application. Nor do we hold . . . that a duty of care may arise solely by virtue of the parties’ changing relationship. Rather, we conclude that the change in the parties’ relationship can and should be factored into our application of the Biakanja factors.” (Rossetta, supra, 18 Cal.App.5th at p. 640.) We continued: “To this end, we find it significant that CitiMortgage allegedly refused to consider Rossetta’s loan modification application until she was three months behind in her mortgage payments. By making default a condition of being considered for a loan modification, CitiMortgage did more than simply enhance its already overwhelming bargaining power; it arguably directed Rossetta’s behavior in a way that potentially exceeds the role of a [*27]  conventional lender. [Citation.] At a minimum, the alleged policy of making default a condition of being considered for a loan modification informs our application of the Biakanja factors [citation], to which we now turn.” (Rossetta, at pp. 640-641.) Thus, while we found significant the direction to the plaintiffs in Rossetta to go into default and that it would inform our application of the Biakanja factors, we did not conclude that that circumstance was a predicate to a finding of a duty. Other factors may also be considered.

For example, here the alleged representations by SLS that plaintiff would be approved for the modification could be viewed as a guarantee and constitutes involvement exceeding the scope of the conventional money lending role. Also beyond the scope of the role of a conventional lender is the alleged misrepresentation by Nationstar that plaintiff was eligible to apply for and receive a HAMP modification when he clearly was not. Indeed, these observations are consistent with Lueras. There, in noting that a lender owes a duty to the borrower not to make material misrepresentations about the status of a loan modification application or the date, time or status of a foreclosure sale, the [*28]  court expressly stated: “The law imposes a duty not to make negligent misrepresentations of fact.” (Lueras, supra, 221 Cal.App.4th at p. 68.) Here, plaintiff has alleged that defendant loan servicers made material misrepresentations.

We now proceed to consider the Biakanja factors as applied to the allegations in this case.

4. Application of the Biakanja Factors

1. The Extent to Which Transaction Was Intended to Affect Plaintiff

The loan modification transaction would affect both plaintiff, as the borrower and homeowner, and defendants as the loan servicers and the loan owner. As the court in Daniels stated: “‘”[u]nquestionably”‘ the transaction was intended to affect appellants, as ‘”[t]he decision on [appellants’] loan modification application would determine whether or not [they] could keep [their] home”‘ and at what cost. [Citation.] Moreover, it was appellants who ‘specifically brought to [BANA’s] attention’ their desire for a loan modification. [Citation.] Respondents correctly note that the transaction also was intended to affect and benefit the lender by maximizing its return. But that does not mean it was not also intended to affect appellants . . . . [Citation.] We conclude the first factor weighs slightly in favor [*29]  of finding a duty of care.” (Daniels, supra, 246 Cal.App.4th at p. 1182.) Here, we too conclude the first factor weighs in favor of finding a duty of care.

1. The Foreseeability of Harm to Plaintiff

It would be foreseeable that plaintiff would suffer harm as a result of the defendant loan servicers negligently processing plaintiff’s loan modification application. Plaintiff potentially stood to lose his home based on the outcome of the modification process. “‘”[T]he mishandling of the documents deprived Plaintiff of the possibility of obtaining the requested relief.”‘” (Rossetta, supra, 18 Cal.App.5th at p. 641, quoting Alvarez, supra, 228 Cal.App.4th at p. 948.) Additionally, defendants assured plaintiff that he was eligible for and would be approved for or receive a loan modification; thus it was foreseeable that plaintiff would forgo attempting to sell the home or obtain alternative funding based on these alleged representations. It was also foreseeable that plaintiff would accrue additional arrears, penalties, fees, and harm to his credit. And it was foreseeable that plaintiff would expend considerable time repeatedly contacting SLS and Nationstar and preparing documents at their request. (See Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 928 (Bushell).) Thus, this factor favors the finding of a duty of care.

1. The Degree of Certainty Plaintiff Suffered [*30]  Injury

Plaintiff alleges that he suffered injury in the form of damage to his credit, increased interest and arrears, forgone opportunities to pursue other remedies and the expenditure of time repeatedly contacting SLS and Nationstar and preparing documents he sent multiple times. We need not consider the extent of these injuries, a matter that is a question of fact. Nor are we required to find that all of these injuries can be proven. For purposes of determining whether facts supporting a duty have been stated in the complaint, we need only determine whether the facts in the second amended complaint establish that some injuries are certain.22 We conclude that plaintiff’s allegations adequately establish certainty of injury at this stage of the proceedings. (See Rossetta, supra, 18 Cal.App.5th at p. 641; Daniels, supra, 246 Cal.App.4th at p. 1182.) Accordingly, we conclude the third Biakanja factor weighs in favor of finding a duty of care.

1. The Closeness of the Connection Between Defendants’ Conduct and Injury

The second amended complaint alleges that plaintiff was current on his mortgage payments until BANA froze his accounts. Thereafter, defendants SLS and Nationstar successively strung plaintiff along in the loan modification process, allegedly causing the damages [*31]  set forth ante. SLS assured plaintiff he would be approved for the modification and Nationstar represented plaintiff was eligible to apply for and receive a HAMP modification. Therefore, over and over again, he continued to submit his applications for loan modifications. While it is clear a lender does “not have a common law duty of care to offer, consider, or approve a loan modification, or to offer [the borrower] alternatives to foreclosure” (Lueras, supra, 221 Cal.App.4th at p. 68), defendants here allegedly made representations to plaintiff reassuring him of his ultimate success with the process, thus going beyond the mere consideration of his loan modification applications. SLS’s and Nationstar’s conduct is connected to plaintiff’s asserted injuries. “Construing the complaint liberally, as we must, we conclude the fourth Biakanja factor weighs in favor of finding a duty of care.” (Rossetta, supra, 18 Cal.App.5th at p. 642.)

1. The Moral Blame Attached to Defendants’ Conduct

As we have said, plaintiff’s allegations go beyond the loan servicers negligently processing his loan modification applications. Rather, he alleges that SLS and Nationstar deliberately strung him along for their own benefit, and to plaintiff’s detriment. According to plaintiff’s allegations, [*32]  by doing so, SLS and Nationstar would continue to collect fees in servicing a delinquent account. Plaintiff, meanwhile, would continue to accrue additional arrears, penalties, fees, and harm to his credit.

As we concluded in Rossetta, “the borrower’s lack of bargaining power, coupled with the lender’s alleged incentive to unnecessarily prolong the loan modification process, ‘provide a moral imperative that those with the controlling hand be required to exercise reasonable care in their dealings with borrowers seeking a loan modification.'” (Rossetta, supra, 18 Cal.App.5th at p. 642, quoting Alvarez, supra, 228 Cal.App.4th at p. 949.) Moreover, based on plaintiff’s allegations, SLS and Nationstar are particularly blameworthy given the misrepresentations they allegedly made to plaintiff. While we found in Rossetta that the defendant’s moral blame was “heightened” because it induced the plaintiff to default (Rosetta, at p. 642), a circumstance that is not alleged here, we nevertheless conclude that moral blame here is heightened by the loan servicers’ alleged misrepresentations regarding the loan modification plaintiff sought. We conclude that the fifth Biakanja factor weighs in favor of finding a duty of care.

1. Policy of Preventing Future Harm

Agreeing with Alvarez, we stated in Rossetta [*33] : “with respect to the sixth factor, the legislature has enacted the California Homeowner Bill of Rights, which ‘demonstrates “a rising trend to require lenders to deal reasonably with borrowers in default to try to effectuate a workable loan modification”‘ and ‘”expressed a strong preference for fostering more cooperative relations between lenders and borrowers who are at risk of foreclosure, so that homes will not be lost.”‘ [Citations.] Imposing a duty of care in the particular circumstances of this case would serve the policies underlying these legislative preferences, and prevent future harm to borrowers, by giving lenders an incentive to handle loan modification applications in a timely and responsible manner. [Citation.] We conclude the sixth Biakanja factor weighs in favor of finding a duty of care.” (Rossetta, supra, 18 Cal.App.5th at pp. 642-643, quoting Alvarez, supra, 228 Cal.App.4th at p. 950.)

However, we note that the court in Daniels concluded that the policy of preventing future harm appears to cut both ways. “‘Imposing negligence liability may give lenders an incentive to handle loan modification applications in a timely and responsible manner. On the other hand, absent a duty in the first place to modify a loan or even to evaluate such an application under objective [*34]  standards limiting the lender’s discretion, imposing negligence liability for the mishandling of loan modification applications could be a disincentive to lenders from ever offering modification.'” (Daniels, supra, 246 Cal.App.4th at p. 1183.) For these reasons, the Daniels court concluded it could not say whether or not the imposition of a duty would prevent future harm to borrowers. (Ibid.)

Here, however, we conclude that this factor favors the finding of a duty of care. In addition to serving the policies underlying legislative preferences we discussed in Rossetta, future harm will be avoided by preventing servicers from stringing borrowers along, making misrepresentations and reassuring borrowers that they will receive loan modifications.

1. Weighing the Biakanja Factors

Having carefully weighed the Biakanja factors, we conclude the allegations in the second amended complaint adequately allege a cause of action for negligence that is sufficient to survive demurrer.

5. Special Relationship Exception to the No Tort Duty for Economic Losses Rule

While this appeal was pending, our colleagues in the Court of Appeal, Second District, Division Eight, decided Sheen v. Wells Fargo Bank, N.A. (2019) 38 Cal.App.5th 346, review granted, Nov. 13, 2019, S258019 (Sheen). Applying the rule that [*35]  there is no tort duty for purely economic losses, the court declined to find a duty in the context of residential loan modification negotiations. (Sheen, at p. 348.) The Sheen court relied on the approach taken by our high court in Gas Leak, supra, 7 Cal.5th 391, and the Restatement of Torts. We disagree with Sheen, because it did not consider the special relationship exception our high court discussed in Gas Leak.

In Gas Leak, residents in a Los Angeles suburb were forced to relocate due to a leak at a major natural gas storage facility. The local economy was devastated as a result. (Gas Leak, supra, 7 Cal.5th at pp. 395-396.) Business entities in the area sued for economic losses resulting from the loss of business previously generated by the relocated residents. (Id. at p. 396.) Following the rule adopted in numerous other jurisdictions and the Restatement of Torts, our high court rejected the plaintiffs’ contention that the gas company had a tort duty to guard against purely economic losses. (Gas Leak, at pp. 394-395, 403-408.)

However, our high court was careful to point out that there is an exception to this general rule. When there is a special relationship between a plaintiff and the defendant, California law permits recovery solely for economic losses. (Gas Leak, supra, 7 Cal.5th at p. 400.) The court in Gas Leak expressly stated that the case [*36]  before it did not involve a special relationship (id. at p. 408), but recognized Biakanja as an example of a special relationship case.23 (Gas Leak, at p. 400.) As we have noted, the Gas Leak court described a “special relationship” as one where “the plaintiff was an intended beneficiary of a particular transaction but was harmed by the defendant’s negligence in carrying it out.” (Ibid.) Later in the opinion, in describing the majority rule barring tort liability for economic damages, the court wrote: the “consensus cuts sharply against imposing a duty of care to avoid causing purely economic losses in negligence cases like [the case before the court]: where purely economic losses flow not from a financial transaction meant to benefit the plaintiff (and which is later botched by the defendant), but instead from an industrial accident caused by the defendant (and which happens to occur near the plaintiff).” (Id. at p. 403, italics added.) Based upon the italicized text, we think our high court excludes from the no-tort-duty-for-economic-damages rule claims for economic damages arising from “botched” financial transactions meant to benefit the plaintiff.

Applying Biakanja and Gas Leak, we conclude that a special [*37]  relationship exists in this case, a circumstance apparently not considered by the court in Sheen because the special relationship exception is not referenced anywhere in the opinion. Here, the borrower is an intended beneficiary of the modification transaction and this, along with the Biakanja factors, establishes a special relationship and duty.

There is a further consideration that supports our conclusion that a special relationship warranting a finding of duty exists in this case. Plaintiff here had no choice as to the entities with which he negotiated for the modification ߞ SLS and Nationstar. Nor for that matter did plaintiff choose U.S. Bank; he refinanced, choosing to obtain a loan from BANA. U.S. Bank, acting as trustee, came into the picture much later when the loan was securitized. This is not a situation where a borrower went to a mortgage lending entity which, after evaluating the borrower and the borrower’s security, issued a loan and the same entity then serviced the loan and negotiated any changes in the loan terms. As the court in Alvarez noted, in modern loan servicing, “borrowers are captive, with no choice of servicer, little information, and virtually no bargaining [*38]  power. Servicing rights are bought and sold without input or approval by the borrower. Borrowers cannot pick their servicers or fire them for poor performance. The power to hire and fire is an important constraint on opportunism and shoddy work in most business relationships. But in the absence of this constraint, servicers may actually have positive incentives to misinform and under-inform borrowers. Providing limited and low-quality information not only allows servicers to save money on customer service, but increases the chances they will be able to collect late fees and other penalties from confused borrowers.” (Alvarez, supra, 228 Cal.App.4th at p. 949.) These considerations, which the Alvarez court noted in discussing the Biakanja factor of moral blameworthiness, are additional justification for finding that borrowers seeking to modify their residential loans like plaintiff are in a special relationship with the lenders and/or loan servicers. The no-tort-duty-for-economic-damages rule discussed in Gas Leaks and relied upon in Sheen simply does not apply here.24

4. Breach, Proximate Cause, and Damages

Plaintiff alleged that Nationstar and SLS breached their duty to him by “failing to accurately [*39]  and reasonably evaluate Plaintiff for a loan modification. SLS mishandled and lost Plaintiff’s financial documents, misdirected Plaintiff, failed to inform Plaintiff of documents that were needed for the loan modification review.” Liberally construing the pleading (Longshore, supra, 25 Cal.3d at p. 22; Daniels, supra, 246 Cal.App.4th at p. 1162), we assume that by “misdirected,” plaintiff meant to allege that SLS represented he would be granted the modification, an allegation made more than once elsewhere in the complaint. Similarly, as alleged in the complaint, Nationstar misrepresented that Plaintiff was eligible for a HAMP loan modification that he could have never qualified for instead of other loan workout options or modification that Plaintiff could have qualified for. Plaintiff further alleged that, as a proximate cause of SLS and Nationstar’s breaches, he sustained damages as discussed ante. We conclude that, at this stage of the proceedings, plaintiff has adequately alleged breach, proximate cause, and damages.

5. Conclusion

We conclude that plaintiff pleaded duty, breach, proximate cause, and damages sufficiently to state a negligence cause of action. Therefore, we conclude the trial court erred in sustaining the demurrers to plaintiff’s negligence cause [*40]  of action.

1. Trespass to Land — Nationstar

1. The Parties’ Contentions

[NOT CERTIFIED FOR PUBLICATION]

2. Elements of Trespass to Land

[NOT CERTIFIED FOR PUBLICATION]

3. Section 9 of the Deed of Trust

[NOT CERTIFIED FOR PUBLICATION]

4. Analysis

[NOT CERTIFIED FOR PUBLICATION]

1. Unfair Competition Law — SLS, Nationstar, and U.S. Bank

1. The Unfair Competition Law

[NOT CERTIFIED FOR PUBLICATION]

2. Plaintiff’s Contentions

[NOT CERTIFIED FOR PUBLICATION]

3. Analysis

[NOT CERTIFIED FOR PUBLICATION]

DISPOSITION

The order on the demurrer to the first amended complaint that we deem to incorporate a judgment of dismissal as to BANA is affirmed. The judgments of dismissal in favor of U.S. Bank, SLS, and Nationstar are reversed. The orders sustaining the demurrers to the second amended complaint are affirmed in part and reversed in part. The orders are reversed as to the causes of action for intentional misrepresentation (first cause of action) and negligent misrepresentation (second cause of action) insofar as asserted against Nationstar and U.S. Bank, and as to the causes of action for negligence (third cause of action) and violations of the unfair competition law (sixth cause of action) insofar as asserted against [*41]  Nationstar, U.S. Bank, and SLS. In all other respects, the judgments are affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3),(5).)

Butz, Acting P. J., and Duarte, J., concurred.

Footnotes

*

Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified for publication with the exception of parts II, III.A, C through D of the Discussion.

1

Plaintiff separately appeals from two judgments. One judgment dismissed the action as asserted against SLS. The other judgment identified U.S. Bank, Nationstar, and, erroneously, BANA, as having successfully demurred to the second amended complaint, and ordered “these Defendants . . . dismissed from this case with prejudice.” A judgment of dismissal following BANA’s successful demurrer to the first amended complaint does not appear in the record, and plaintiff has not appealed from any such judgment.

“An order sustaining a demurrer is usually not immediately appealable, because it is not on its face a final judgment. [Citation.] However, it may be treated as a judgment for purposes of appeal when, like a formal judgment, it disposes of the action and precludes further proceedings.” (Thaler v. Household Finance Corp. (2000) 80 Cal.App.4th 1093, 1098.) “[A]n appellate court may deem an order sustaining a demurrer to incorporate a judgment of dismissal.” (Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, 920, disapproved on another ground in Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1074.) Here, the order sustaining BANA’s demurrer to the first amended complaint without leave to amend ended plaintiff’s ability to proceed further in the trial court with his case against BANA. The only step left to make that order appealable as to BANA was the formal entry of a dismissal order or judgment. BANA has not sought dismissal of the appeal. We will deem the order on the demurrer to the first amended complaint to incorporate a judgment of dismissal as to BANA and will review the order. (See Sisemore v. Master Financial, Inc. (2007) 151 Cal.App.4th 1386, 1396.)

2

The complaint states that plaintiff refinanced with BANA in 2007. However, in his brief on appeal, plaintiff represents that this was error, and that he “would amend this allegation to include the correct year of 2006.” Whether plaintiff refinanced with BANA in 2006 or 2007 is immaterial to this appeal.

3

Defendants filed a request that we take judicial notice of a memorandum of authorities filed in federal district court by plaintiff in an unrelated case which, according to defendants, would be relevant to prove that it was someone other than plaintiff’s wife who tendered the $50,000 payment. Ruling on the request was deferred pending calendaring and assignment of the panel. We deny defendants’ request for judicial notice on the ground that the identity of the individual who tendered the $50,000 payment on plaintiff’s behalf is not relevant to the issues we must resolve on this appeal. (See Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063 [matter to be judicially noticed must be relevant to a material issue].)

4

The complaint does not state whether SLS volunteered to plaintiff that it would take over the loan modification process or whether it so informed plaintiff in response to an inquiry by plaintiff. The complaint alleges: “In or about early 2010, the servicing rights of the Subject Loan were transferred from [BANA] to SLS. SLS informed Plaintiff that they would take over for [BANA] in handling Plaintiffs’ loan modification application. [¶] As a result, Plaintiff renewed his attempts to obtain a loan modification from SLS.” Reading the language of the complaint liberally (see Longshore v. County of Ventura (1979) 25 Cal.3d 14, 22 (Longshore), we assume SLS voluntarily notified plaintiff that it would take over the modification process without an inquiry by plaintiff.

5

Similar to SLS, the complaint does not specify whether plaintiff was informed by Nationstar that it would take over the modification process because he inquired or whether SLS or Nationstar so informed plaintiff without an inquiry by plaintiff. The complaint alleges: “On or about April 1, 2014, the servicing rights of the Subject Property were transferred to Nationstar. [¶] At the time the transfer [from SLS to Nationstar] occurred Plaintiff was in the middle of applying for a loan modification with SLS. Nationstar informed Plaintiff that as a result of the transfer he would have to start the loan modification process over again.” (Capitalization omitted.)

6

“‘[T]he United States Department of the Treasury implemented the Home Affordable [Modification] Program (HAMP) to help homeowners avoid foreclosure during the housing market crisis of 2008. “The goal of HAMP is to provide relief to borrowers who have defaulted on their mortgage payments or who are likely to default by reducing mortgage payments to sustainable levels, without discharging any of the underlying debt.”‘” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 56, fn. 1 (Lueras).)

7

Plaintiff asserted that this assignment and transfer was void ab initio, but has since abandoned that claim.

8

Thus, contrary to the contention of defendants’ counsel at oral argument before this court, reading the language of the complaint liberally (see Longshore, supra, 25 Cal.3d at p. 22), it does allege that defendants sought to collect application fees for each loan modification application submitted, and it could be inferred that it collected such fees. Whether plaintiff could prove this allegation, or whether the collection of fees with each loan modification application is “prohibited by law” as asserted by defendants’ attorney at oral argument, is immaterial here.

13

Plaintiff does not challenge the trial court’s ruling as to his declaratory relief cause of action.

14

The first and second causes of action in the second amended complaint are expressly asserted against Nationstar, U.S. Bank, and Does 1-50 only. These causes of action are not asserted against SLS. Plaintiff specifically alleges that Nationstar and its agents made the intentional and negligent misrepresentations alleged. Thus, we consider these two causes of action on appeal only as asserted against Nationstar and U.S. Bank.

20

“Dual tracking” refers to where a bank, lender, or similar institution “initiate[s] a loan modification review while simultaneously proceeding with foreclosure . . . .” (Majd v. Bank of America, N.A. (2015) 243 Cal.App.4th 1293, 1302 (Majd).)

21

Plaintiff repeatedly discusses BANA’s alleged conduct in freezing plaintiff’s accounts and line of credit in terms of both moral blameworthiness for purposes of the Biakanja analysis and in terms of breach. However, as we have held in the unpublished portion of this opinion, the action against BANA is time-barred, and plaintiff has offered no reason, other than his conclusory allegations of a civil conspiracy, why U.S. Bank or the subsequent loan servicers should be liable for the alleged misdeeds of BANA as their predecessor. (Cf. Daniels, supra, 246 Cal.App.4th 1169-1170 [rejecting each of the plaintiffs’ contentions as to why successor loan servicer should be liable for conduct of predecessor loan servicer but granting the plaintiffs leave to amend to address the issue].)

22

Defendants assert plaintiff alleged no facts to show there was any “realistic chance” of an alternative to avoid foreclosure. They assert the allegation that plaintiff “‘forewent seeking other remedies to cure the default'” were conclusory and implausible. They assert that the “bankruptcy filing showed the property was ‘underwater’—worth less than the loan it secured. So no lender would likely refinance the property.” Normally, we would expect more specificity by a plaintiff, but where, as here, plaintiff’s allegations indicate he was told he would receive a modification by SLS and he was told he would receive a HAMP modification by Nationstar, it may be reasonably inferred he did not fully investigate alternatives as a result of those representations. What damages were realistic under this circumstance represents a question of fact that cannot be resolved by demurrer. As for the loan being more than the home was worth, we acknowledge that the bankruptcy filing at the page of the record cited by defendants indicates as much. However, the bankruptcy filing does not indicate how much the home was worth or the difference between the amount owed and the value of the home. Again, whether selling the home to investors or otherwise was realistic is a question of fact that cannot be resolved at this stage of the case.

23

Describing Biakanja, the court in Gas Leak wrote: “There, we held that the intended beneficiary of a will could recover for assets she would have received if the notary had not been negligent in preparing the document. [Citation.] A special relationship existed between the intended beneficiary and the notary in Biakanja, we emphasized, because ‘the “end and aim” of the transaction’ between the nonparty decedent and the notary was to ensure that the decedent’s estate passed to the intended beneficiary.” (Gas Leak, supra, 7 Cal.5th at p. 400.)

24

We also note the absence of important factors that compelled our high court’s conclusion that there should be no tort duty for economic damages in Gas Leak and cases like it. The court in Gas Leak sought to avoid limitless liability to an indeterminate number of plaintiffs. (Gas Leak, supra, 7 Cal.5th at pp. 403-408.) The court also noted that defendants in industrial accident cases will have more difficulty obtaining third-party insurance coverage against purely economic losses than will individual plaintiffs seeking comparable first-party insurance. (Id. at p. 405.) Also, line-drawing problems relating to both “space and time” result from imposing such a duty. (Id. at pp. 408-409.) For example, there would be “no workable way to limit geographically who may recover purely economic losses.” (Id. at p. 410.) The court also observed that “the Restatement echoes widespread judicial concern that purely economic losses ‘proliferate more easily than losses of other kinds’ and are ‘not self-limiting.'” (Id. at p. 407.) And our high court noted that, only when the foregoing considerations are “weak or absent,” such as in Biakanja, does a duty to guard against purely economic losses exist under the Restatement approach to negligence claims. (Ibid.) In a negligent residential loan modification case, such as we have here, all of these considerations are absent.

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