Filed 8/20/14 Harris v. Bank of America 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
MONIQUE HARRIS,
Plaintiff and Appellant, E054887
v. (Super.Ct.No. CIVRS1009937)
BANK OF AMERICA, N.A., et al., OPINION
Defendants and Respondents.
APPEAL from the Superior Court of San Bernardino County. Joseph R. Brisco,
Judge. Affirmed.
Monique Harris, in pro. per., for Plaintiff and Appellant.
Bryan Cave, Sean D. Muntz and Allen J. Beck for Defendants and Respondents.
Monique Harris1 (Harris) sued Bank of America, N.A. (Bank); Recontrust
Company, N.A. (Recontrust); Countrywide Home Loans, Inc. (Countrywide); Landsafe,
Inc. (Landsafe); and Shea Homes, Inc. (Shea). The first amended complaint (FAC)
1 Harris is a self-represented litigant, but is also a licensed California attorney.
1 included causes of action for (1) misrepresentation and fraud; (2) fraud in the
inducement of an arbitration agreement; and (3) unlawful business practices in violation
of Business and Professions Code section 17200.2 Bank, Recontrust, Countrywide, and
Landsafe (collectively, “defendants”) demurred to the FAC. The trial court sustained
the demurrer without leave to amend and dismissed Harris’s lawsuit with prejudice.
Harris raises five issues on appeal. First, Harris contends the trial court erred
because the FAC states causes of action for misrepresentation and fraud. Second,
alternatively, Harris asserts the FAC could be amended to cure any defect. Third,
Harris contends the trial court erred by sustaining the demurrer because the FAC states a
cause of action for unlawful, unfair, or fraudulent business practices. (§ 17200.)
Fourth, in the alternative, Harris asserts any defect in the business practices cause of
action could be cured by amendment. Fifth, Harris contends she was not required to
tender payment on her mortgage because the FAC alleged fraud. We affirm the
judgment.
PROCEDURAL HISTORY
A. ORIGINAL COMPLAINT
On September 10, 2010, Harris filed her original complaint against Shea and
Countrywide, and included causes of action for negligence, breach of contract,
misrepresentation and fraud, and unlawful business practices (§ 17200). Countrywide
demurred to the original complaint. The trial court sustained the demurrer without leave
2All subsequent statutory references will be to the Business and Professions Code, unless otherwise indicated.
2 to amend on the negligence and breach of contract causes of action. The trial court
sustained the demurrer with leave to amend on the unlawful business practices, and
misrepresentation and fraud causes of action.
B. AMENDED COMPLAINT
Harris’s FAC was filed in February 2011. Harris sued defendants and Shea. The
causes of action included (1) misrepresentation and fraud, against defendants and Shea;
(2) fraud in the inducement of an arbitration agreement, against Shea; and (3) unlawful
business practices in violation of section 17200, against defendants and Shea.
In the FAC, Harris explained she was seeking to “rescind an illegal and void
residential mortgage loan.” Harris asserted Shea, Countrywide and Landsafe conspired
together in “an ‘inflated appraisal scheme,’” to cause fraudulent property appraisals to
be prepared. Harris alleged Countrywide required homebuyers to have their properties
appraised by Landsafe, and Landsafe used appraisers who appraised properties “at or
above contract price, even [if] it meant completing appraisals in violation of regulatory
guidelines.”
Harris’s home was located in Rancho Cucamonga (the property). Harris asserted
the appraisal of the property was “tainted with false and misleading data, deceptive
practices, and violations of the regulatory standards for professional appraisers.” For
example, Harris alleged the appraiser ignored falling property values. Harris alleged the
appraisal scheme caused homebuyers, such as Harris, “to obtain mortgage loans far in
excess of their property’s true value, which in turn, caused homebuyers to go into
default and face foreclosure.”
3 In May 2007, Harris agreed to purchase the property from Shea for $459,500.
Shea employees, Linda Harrington and Tina Pendleton, told Harris she could cancel the
purchase agreement if the appraisal reflected the property’s value was less than the
agreed-upon purchase price. After entering into the purchase agreement, Shea
employees recommended Harris apply for a mortgage with Countrywide. Harris
entered into a loan agreement with Countrywide on or about August 1, 2007.
Countrywide then ordered an appraisal from Landsafe. The appraisal was assigned to
an “‘approved’ appraiser[] who appraised the [p]roperty on or about August 24, 2007 at
$459,600 ($100 more than the sale/contract price).”
Harris alleged that after the sale of the property closed, she discovered “the
appraisal was false and that the appraiser purposefully failed to consider comparable
sales that would have revealed lower values, failed to disclose information pertaining to
the downward trending real estate market and made false statements of market
stability.” Harris also alleged “the appraiser failed to take into account reduced prices,
incentives and other closing assistance (concessions) provided by Shea Homes that both
Countrywide and Shea Homes knew or should have known would reduce the value of
Shea Homes’ properties.” Harris asserted the property was appraised for “nearly
$100,000 more than the [p]roperty’s true value.”
Harris alleged that if a true and accurate appraisal had been conducted, then she
would have canceled the purchase agreement and not purchased the property. Harris
alleged defendants’ conduct caused her to (1) overpay for her home; (2) overpay
principal, interest, and taxes; and (3) suffer foreclosure.
4 In the FAC, the first and second causes of action for misrepresentation and fraud
were combined under a single heading, i.e., the heading read, “First and Second Causes
of Action.” Harris asserted Shea, Countrywide, and Landsafe participated in “an
‘inflated appraisal scheme’ with the intent to defraud,” and that conduct caused Harris
to overpay for the property by approximately $100,000.
The third cause of action was for fraud in the inducement of the arbitration
agreement. Harris asserted two Shea employees incorrectly told Harris that acceptance
of the arbitration clause in the purchase agreement was required in order to purchase the
property. Harris alleged that she learned the property could have been purchased even
if she elected not to submit to binding arbitration.
The fourth cause of action was for unlawful business practices in violation of
section 17200. Harris asserted defendants’ “‘inflated appraisal scheme’” constituted an
unlawful business practice because it led to “unjust enrichment and is immoral,
unethical, oppressive, unscrupulous, substantially injurious to consumers and offends
public policy.” Harris asserted she “lost money or property as a result” of the
defendants’ business practices.
Harris sought restitution, general damages, punitive damages, costs, attorney’s
fees (if they were incurred), and injunctive relief (a) stopping the trustee’s sale of the
property, (b) rescinding the mortgage on the property, and (c) disgorgement of all
profits associated with the allegedly unlawful business practices, including the $5,000
deposit paid by Harris.
5 C. DEMURRER
Defendants demurred to the FAC. Defendants asserted Harris purchased a
townhome from Shea in May 2007 for a total purchase price of $460,870. Harris
obtained a mortgage from Countrywide in the amount of $368,000. Harris also
obtained a $92,000 home equity line of credit (HELOC). Harris stopped making
mortgage payments on the property in September 2009.
Defendants asserted the first, second, and fourth causes of action, for fraud,
misrepresentation, and unlawful business practices did not include facts sufficient to
constitute a cause of action. Defendants argued appraisal reports are made for the
lender’s benefit, not the buyer’s benefit, and therefore any problems with the appraisal
do not create a cause of action for a buyer because the lender and appraiser do not owe a
duty to the buyer in relation to preparing the appraisal. (Nymark v. Heart Fed. Savings
& Loan Assn. (1991) 231 Cal.App.3d 1089, 1097 (Nymark).) Defendants explained the
appraisal is conducted for the purposes of helping the lender determine how much
money to loan a buyer, and therefore, is only conducted for the lender’s purposes.
Additionally, defendants asserted the fraud and misrepresentation causes of
action failed because Harris did not allege sufficiently specific facts. Defendants argued
Harris failed to allege “how, why, when, where, and by whom, any alleged
misrepresentations were made. She does not provide any detail regarding the alleged
concealment of material facts. Nor does she allege the authority of the individuals
making the statements to speak on behalf of [d]efendants, what they said or wrote, or
when the representations were made.”
6 Defendants also asserted Harris failed to allege she justifiably relied on the
appraisal in purchasing the property. Further, defendants argued Harris, as part of the
loan applications, “expressly acknowledged Countrywide made no representations to
her about the condition or value of the property.” Therefore, defendants asserted, there
could not be justifiable reliance.
As to the fourth cause of action, for unfair business practices, defendants asserted
Harris lacked standing to bring the cause of action because she failed to “demonstrate[]
a loss of money or property. [Harris] is in default on her loan and her property has not
yet been foreclosed upon.” In regard to fraudulent conduct underlying the unfair
business practices allegation, defendants asserted Harris failed to plead facts with
sufficient specificity, as set forth ante. As to Harris’s request for an injunction stopping
the trustee’s sale, defendants argued the foreclosure could not be stopped because Harris
failed to tender payment on the mortgage.
D. OPPOSITION
Harris opposed the demurrer. In regard to misrepresentation and fraud, Harris
argued that she had been told by an employee of Countrywide, Roy West (West), that if
the property appraised for less than the agreed-upon purchase price, then Harris would
not be obligated to purchase the property, and therefore the appraisal was not conducted
merely for the lender’s purposes. Harris asserted she would have canceled the purchase
agreement, had the appraisal been properly conducted and reflected the lower value of
the property.
7 Further, Harris asserted the heightened pleading requirements for fraud are
relaxed when the defendants necessarily possess full information concerning the facts at
issue. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35
Cal.3d 197, 217, superseded by statute on other grounds.) Harris asserted defendants
had full knowledge of the property’s true value and the poor market conditions, and
therefore, they “knew or should have known that their representations . . . were false
and misleading.” As a result, Harris asserted the heightened pleading requirements
were inapplicable.
In regard to unlawful business practices, Harris asserted she did suffer damages
as a result of defendants’ business practices. Harris argued she paid $5,000 to Shea as
part of purchasing the property and she made payments to defendants for a mortgage
that she would not have obtained but for defendants’ unlawful business practices.
Additionally, Harris asserted she could lose her home through foreclosure, which would
result in a loss of property. Harris also asserted defendants “advised the appraiser who
conducted the appraisal herein to inflate the Property’s value in violation of California
Civil Code Section 1090.5.”
Harris asserted she was not required to tender full payment on the mortgage
because requiring payment would permit defendants to benefit from their wrongdoing,
in that full payment would be approximately $100,000 more than the property’s value.
Alternatively, Harris requested leave to amend the FAC because she “is confident she
can adequately plead her causes of action.” Harris did not provide any specific
information regarding how she would amend the FAC.
8 E. REPLY
Defendants replied to Harris’s opposition. Defendants asserted Harris had
negotiated her purchase price with Shea, entered into a purchase agreement with Shea,
and applied for a Countrywide mortgage prior to the appraisal being conducted.
Defendants asserted Harris failed to allege in the FAC and opposition that the appraisal
was conducted for her benefit. Defendants again argued the appraisal is for the lender’s
benefit, not the buyer’s benefit. (Nymark, supra, 231 Cal.App.3d at p. 1097.)
Defendants asserted that even if the appraisal overvalued the home, Harris would not
have a right to recover against defendants because defendants owed no duty to Harris in
relation to the appraisal.
In regard to the fraud pleading requirements, defendants asserted fraud must be
pled with specificity. Defendants asserted the FAC only reflected agents of Shea made
various representations to Harris—not defendants’ agents. Defendants asserted the
allegation in the opposition, that West, a Countrywide employee, made a representation
to Harris about canceling the purchase agreement if the appraised were less than the
purchase price was “inconsistent with [Harris’s] pleaded allegations, and should be
ignored. By the time the appraisal was prepared, [Harris] already agreed to buy the
home, at a price she negotiated with Shea Homes, Inc. The appraisal conducted by
Landsafe was not intended to help [Harris] determine a purchase price. It was intended
for Countrywide to determine whether the loan would be adequately secured.”
In regard to reliance and the alleged comments by West, defendants asserted
Harris could not show she justifiably relied on the comments because (1) Harris had
9 already agreed to purchase the property and negotiated the price prior to the appraisal
being conducted, and (2) in Harris’s loan application she acknowledged “‘neither
Lender nor its agents, brokers, insurers, servicers, successors or assigns has made any
representation or warranty, express or implied, to me regarding the property or the
condition or value of the property.’” Defendants asserted Harris’s failure to dispute
these two facts, or set forth facts reflecting justifiable reliance, cause her causes of
action for misrepresentation and fraud to fail.
Next, defendants asserted Harris failed to allege damages. Defendants asserted
Harris lived at the property payment-free for approximately two years and the property
had not been foreclosed upon. Additionally, defendants asserted Harris agreed to
purchase the property, so if she were paying a high principal, interest, and taxes, that
was her choice. Defendants again stressed that Harris negotiated the purchase prior to
the appraisal being conducted. Defendants again asserted the unlawful business
practices cause of action failed because Harris failed to meet the pleading requirements
for fraud—the act underlying the cause of action.
In regard to the allegation in the opposition—that defendants advised the
appraiser to inflate the property’s value—defendants asserted Civil Code section 1090.5
prohibits a “person with an interest in a real estate transaction involving a valuation
[from] improperly influenc[ing] or attempt[ing] to improperly influence the
development, reporting, result, or review of that valuation, through coercion, extortion,
bribery, intimidation, compensation, or instruction.” Defendants argued Harris failed to
allege defendants had an interest in the real estate transaction, as the term is used in the
10 statute. Additionally, defendants asserted Civil Code section 1090.5 does not create a
private right of action.
Defendants further asserted Harris should be required to tender payment on the
mortgage to stop the trustee’s sale because Harris freely assumed the debt, and it would
be “inequitable to allow her to continue living in [the] property for free.”
F. HEARING
On August 11, 2011, the trial court held a hearing on defendants’ demurrer.
Harris informed the court she was working on a loan modification that would settle the
case. Harris requested the trial court dismiss the case without prejudice. Defendants
asserted Harris decided to dismiss the case after receiving the court’s tentative ruling.
Harris denied the assertion. Harris explained she was planning to request the case be
stayed during the loan modification process, but defendants had suggested she request
the case be dismissed without prejudice. The trial court found Harris had not filed a
request for dismissal, and therefore proceeded with the demurrer hearing.
The court said its tentative ruling was to sustain the demurrer as to the first,
second, and fourth causes of action without leave to amend. Harris asked the court to
grant her leave to amend. Harris explained that when she filed the FAC, Shea was
involved, so Harris alleged a conspiracy between defendants and Shea, but since that
time, Harris and Shea had settled. Harris asserted she could plead facts with more
specificity regarding Countrywide and West’s representations.
11 Defendants asserted the fact that Shea was no longer a party did not change the
facts of the case. Defendants argued the appraisal was not obtained for Harris’s benefit;
rather, it was obtained for the purpose of Countrywide deciding whether to give the loan
to Harris. Moreover, defendants asserted Harris acknowledged in her loan documents
that Countrywide did not make any representations regarding the value of the property.
Harris argued there was precedent reflecting appraisals are conducted for the
buyer’s benefit, not just the lender’s benefit. The court explained Harris’s combined
causes of action for fraud and misrepresentation did not allege (1) fraud committed by
defendants, or (2) acts outside of their role as a lender. In regard to unlawful business
practices, the court found Harris failed to allege “any unfair business practices.” As to
injunctive relief, the court found Harris failed to allege she tendered payment.
Harris responded that tender is not required when fraud is alleged. The court
explained Harris failed to properly allege fraud in regard to defendants. Harris said she
alleged “illegality,” due to the inflated appraisal value. The court concluded Harris had
two opportunities to plead a cause of action but failed to do so. Harris again requested
leave to amend. Harris asserted she could plead the causes of action “with more
specificity,” because “[t]here is a case here.” The court again explained Harris already
had two opportunities to present a cause of action, and since Harris failed to do so, the
court concluded Harris was not able to do so. The court sustained the demurrer without
leave to amend.
12 DISCUSSION
A. MISREPRESENTATION AND FRAUD
1. CONTENTION
Harris contends the trial court erred because the FAC states causes of action for
misrepresentation and fraud.
2. STATUTE OF LIMITATIONS
At the outset, we address an issue we noticed during our reading of the FAC and
original complaint—the statute of limitations. The statute of limitations for a fraud
cause of action is three years. The cause of action accrues from the date of “the
discovery, by the aggrieved party, of the facts constituting the fraud . . . .” (Code of
Civ. Proc., § 338, subd. (d).) However, this tolling provision (allowing for a delay until
discovery of the fraud), requires the plaintiff to plead and prove she did not make the
discovery until within three years prior to the filing of the complaint. (Samuels v. Mix
(1999) 22 Cal.4th 1, 14.)
The FAC reflects the appraisal report was prepared on August 24, 2007. Harris
alleged she learned of the fraud “[a]fter closing and prior to filing the action herein.”
Harris’s original complaint was filed on September 10, 2010. It is unclear exactly when
Harris learned of the fraud. If Harris learned of the fraud shortly after the appraisal
report was completed, then she has missed the statute of limitations because more than
three years passed between August 24, 2007 (the date of the appraisal report) and
September 10, 2010 (the date the original complaint was filed). Since it is unclear from
13 Harris’s allegations if the statute of limitations was missed or met, we will address the
merits of Harris’s appeal.
3. BACKGROUND LAW
“‘A demurrer tests the legal sufficiency of the complaint . . . .’ [Citations.] On
appeal from a dismissal after an order sustaining a demurrer, we review the order de
novo, exercising our independent judgment about whether the complaint states a cause
of action as a matter of law. [Citations.] We give the complaint a reasonable
interpretation, reading it as a whole and viewing its parts in context. [Citations.] We
deem to be true all material facts properly pled. [Citation.] We must also accept as true
those facts that may be implied or inferred from those expressly alleged. [Citation.] If
no liability exists as a matter of law, we must affirm that part of the judgment sustaining
the demurrer. [Citation.]” (Trader Sports, Inc. v. City of San Leandro (2001) 93
Cal.App.4th 37, 43.)
“The elements of fraud that will give rise to a tort action for deceit are: ‘“(a)
misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge
of falsity (or ‘scienter’); (c) intent to defraud, i.e. to induce reliance; (d) justifiable
reliance; and (e) resulting damage.”’ [Citation.]” (Engalla v. Permanente Medical
Group, Inc. (1997) 15 Cal.4th 951, 974.) “The requirements for pleading fraud in most
cases is well established: ‘“‘fraud must be pled specifically; general and conclusory
allegations do not suffice. [Citations.]” (Morgan v. AT&T Wireless Services, Inc.
(2009) 177 Cal.App.4th 1235, 1261-1262 (Morgan).)
14 4. MISREPRESENTATION
In regard to the first element (false representation, concealment, or
nondisclosure), Harris asserts the FAC set forth facts reflecting defendants (1) falsely
represented there were no adverse influences affecting the property’s marketability,
(2) failed to disclose comparable sales that would have revealed lower property values,
(3) failed to disclose information regarding the downward trend of property values
across the broader real estate market, and (4) made false statements of market stability.
In sum, Harris asserts there were two false statements and two failures to disclose.
Harris cites to paragraphs 24 and 25 of the FAC to support her contention.
Paragraph 24 provides: “According to Countrywide and/or its agents and employees
and as stated in the appraisal report prepared by the ‘approved’ appraiser on August 24,
2007, there was ‘no evidence of adverse influences affecting [the Property’s]
marketability.’”
Paragraph 25 reflects: “After closing and prior to filing the action herein,
[Harris] discovered that the appraisal was false and that the appraiser purposefully failed
to consider comparable sales that would have revealed lower values, failed to disclose
information pertaining to the downward trending real estate market and made false
statements of market stability.”
We now discuss the two false statement assertions. The general rule requires the
false statement be made to the plaintiff or directed toward the plaintiff. (Shapiro v.
Sutherland (1998) 64 Cal.App.4th 1534, 1547 [“it would have to have made a false
statement to plaintiff”]; see also Cohen v. Citizens Nat. Trust & Sav. Bank (1956) 143
15 Cal.App.2d 480, 484.) In regard to the two false statements, the problem we encounter
is that the two paragraphs cited by Harris do not reflect the false statements were made
to or directed at Harris. It appears from paragraph 24 that Countrywide, its agents, or its
employees made a statement in an appraisal report. However, a lender generally owes
no duty of care to a borrower in preparing a property appraisal. (Nymark, supra, 231
Cal.App.3d at p. 1097.) Therefore, the fact that false information may have been
included in the property appraisal does not reflect a false statement was made to or
directed at Harris, rather, it was made to Countrywide.
The same problem occurs with the two alleged failures to disclose information.
Harris has failed to allege that defendants had a duty to disclose the information to her.
“[T]he generally recognized rule is that absent an existing duty to volunteer
information, and notice of such duty, mere failure to disclose does not constitute fraud.
[Citations.]” (Crayton v. Superior Court (1985) 165 Cal.App.3d 443, 451.) As
explained in Nymark, a lender does not owe a duty of care to a borrower in preparing a
property appraisal. The appraisal is conducted for the purpose of allowing the lender
“to ascertain the sufficiency of the collateral as security for the loan”—it is not
conducted to assist the buyer. (Nymark, supra, 231 Cal.App.3d at p. 1097.) Therefore,
(1) the law in Nymark reflects defendants did not have a duty to disclose information to
Harris, and (2) Harris’s allegations in the two paragraphs do not reflect defendants bore
a duty to disclose information to Harris.
The exception to the general “no duty” rule set forth in Nymark is that a lender
may owe a duty to a borrower with respect to an appraisal when the lender acts
16 “‘outside the scope of the lender’s conventional role in a loan transaction.’” (Jolley v.
Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 901-902.) Harris does not set
forth this exception or explain how defendants acted outside their typical roles as
lenders. Accordingly, any argument concerning the exception is forfeited. (Boblitt v.
Boblitt (2010) 190 Cal.App.4th 603, 609 (Boblitt) [failure to provide legal argument and
citations to authorities causes the issue to be forfeited]; Advanced Choices, Inc. v.
Department of Health Services (2010) 182 Cal.App.4th 1661, 1672 (Advanced Choices)
[same].)
We conclude the trial court properly sustained the demurrer as to the alleged
false statements because the FAC fails to reflect false statements were made to Harris or
directed at Harris. We conclude the trial court properly sustained the demurrer as to the
alleged failures to disclose because the FAC fails to reflect defendants bore a duty to
disclose the information, and the law in Nymark reflects defendants did not have a duty
toward Harris in regard to the appraisal. Since we have concluded the first element is
not met, we do not address the remaining elements.3
3 The analysis we have conducted concerning (1) defendants not being required to disclose information to Harris, and (2) the alleged false statements not being directed at Harris, could likely also have fit within the elements of reliance or intent. We elected to conduct the analysis under the misrepresentation element because, in our view, the analysis works best within that element, where the question is whether the false statements were made to the plaintiff, and whether there was a duty to disclose information to the plaintiff, i.e., was there a misrepresentation involving the plaintiff.
17 Harris asserts defendants incorrectly rely upon Nymark because Nymark was
decided prior to the “‘mortgage crisis.’” Harris contends that since the mortgage crisis,
courts have rejected the conclusion that an appraisal is conducted solely for the benefit
of the lender. In support of this argument, Harris cites an opinion issued in 1981:
Larsen v. United Federal Sav. and Loan Assn. of Des Moines (Iowa 1981) 300 N.W.2d
281. In Larsen, the Supreme Court of Iowa held a lender has a duty toward the
borrower “with respect to the appraisal.” In other words, Larsen came to the opposite
conclusion of Nymark.
Harris asserts that since Nymark was issued before the mortgage crises, it is no
longer good law. However, she supports her argument with a case that is older than
Nymark. The fact that time has passed since a decision was issued does not mean the
opinion is incorrect. Harris would need to explain why the reasoning in Nymark is
incorrect in order to clarify why the case should not be followed. Since Harris has
failed to explain why the Nymark analysis is flawed, we find her argument to be
unpersuasive. (See generally Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th
182, 205-206 [concluding there is no duty and citing to Nymark].)
Next, Harris contends that regardless of an appraisal being conducted solely for
the lender’s benefit, the lender still has a duty to provide the buyer with an accurate
appraisal “under California law.” Harris does not identify what law, if any, supports her
assertion. Since Harris has not provided law in support of this argument, we deem the
argument to be forfeited. (Boblitt, supra, 190 Cal.App.4th at p. 609; Advanced Choices,
supra, 182 Cal.App.4th at p. 1672.)
18 5. AMENDMENT
In the alternative, Harris asserts the trial court should have granted her leave to
amend the FAC.
If the defect in the complaint can be cured by amendment, then the judgment of
dismissal must be reversed to allow the plaintiff an opportunity to amend. “The
plaintiff bears the burden of demonstrating a reasonable possibility to cure any defect by
amendment. [Citations.] A trial court abuses its discretion if it sustains a demurrer
without leave to amend when the plaintiff shows a reasonable possibility to cure any
defect by amendment. [Citations.] If the plaintiff cannot show an abuse of discretion,
the trial court’s order sustaining the demurrer without leave to amend must be affirmed.
[Citation.]” (Traders Sports, Inc. v. City of San Leandro, supra, 93 Cal.App.4th at pp.
43-44.)
In her appellant’s opening brief, Harris does not provide any detail regarding
how she would amend the FAC to cure the defects. However, from the documents at
the lower court and arguments in her appellant’s reply brief, we infer Harris would
amend the FAC to reflect an employee of Countrywide, West, told Harris that if the
property appraised for less than the agreed-upon purchase price, then Harris would not
be obligated to purchase the property. Harris would further allege Countrywide owed a
duty to Harris in the preparation of the appraisal, based upon the foregoing statement by
West.
The problem with this proposed amendment is that it does not create an inference
that Countrywide owed a duty to Harris in the preparation of the appraisal. Rather, the
19 logical inference to be made from West’s statement is that if the appraisal reflected the
property were worth less than the purchase price that Harris had already agreed upon
with Shea, then her requested loan amount would not be fully funded by Countrywide
(because the property was not found to be adequate security for the loan), and therefore,
Harris would be able to cancel the purchase agreement because she would not have
sufficient funds to proceed with the agreement.
In other words, the statement does not create an inference of a duty owed by
Countrywide to Harris. Rather, West’s statement further supports the conclusion that
the appraisal was conducted only for the lender’s benefit—for the lender to determine if
the property was adequate security, because if it were inadequate, the loan would not be
fully funded. There is nothing in the proposed amendment that would cure the defects
in the FAC. Harris has still failed to show (1) the alleged false statements were made to
her or directed at her, and (2) defendants had a duty to volunteer information to Harris.
There is a rule regarding indirect deception, which provides a defendant may be
liable for false statements that are not made directly to the plaintiff, but which are made
to a third person and the speaker/writer of the statement intends or has reason to expect
that the substance of the misrepresentation will be communicated to the plaintiff and
that the misrepresentation will influence her conduct in the transaction at issue.
(Geernaert v. Mitchell (1995) 31 Cal.App.4th 601, 605-606.)
When applying the indirect deception rule, the same problem described ante,
appears. West’s statement does not reflect an intent or expectation for Harris to be
influenced by the appraisal. Rather, the logical inference from West’s statement is that
20 Harris would be able to cancel the purchase agreement because she would not have
sufficient funds after Countrywide relied upon (or was influenced by) the appraisal and
possibly refused to fully fund the loan for the purchase price that Harris had already
agreed upon, thus leaving Harris without the funds to complete the transaction. In other
words the logical inference from West’s statement and the allegations in the FAC do not
reflect the information in the appraisal was meant to indirectly influence Harris.
Accordingly, we conclude the trial court did not err by denying Harris leave to amend
on the combined fraud and misrepresentation causes of action because Harris has not
show the statements were (1) made to her, (2) directed toward her, or (3) designed to
indirectly influence her.
B. SECTION 17200
Harris contends the trial court erred by sustaining the demurrer because the FAC
states a cause of action for unlawful, unfair, or fraudulent business practices. (§ 17200.)
2. BACKGROUND LAW
Section 17200 et seq. is known as the Unfair Competition Law (UCL). (Morgan,
supra, 177 Cal.App.4th at p. 1240.) “The UCL outlaws as unfair competition ‘any
unlawful, unfair or fraudulent business act or practice . . . . Because the statute is
framed in the disjunctive, a business practice need only meet one of the three criteria to
be considered unfair competition. [Citation.]’ [Citation.]” (Id. at p. 1253.)
21 3. UNLAWFUL BUSINESS PRACTICE
Harris contends the FAC sets forth a cause of action for an unlawful business
practice. In particular, Harris asserts the FAC reflects defendants violated Civil Code
section 1090.5.
“An unlawful business practice under the UCL is ‘“‘“anything that can properly
be called a business practice and that at the same time is forbidden by law.”’”’
[Citation].” (Morgan, supra, 177 Cal.App.4th at p. 1254.) Civil Code section 1090.5,
subdivision (a) provides, in relevant part: “No person with an interest in a real estate
transaction involving a valuation shall improperly influence or attempt to improperly
influence the development, reporting, result, or review of that valuation, through
coercion, extortion, bribery, intimidation, compensation, or instruction.”
Defendants assert they did not have an interest in Harris’s real estate transaction.
However, defendants fail to define the phrase “‘[a] person with an interest in a real
estate transaction.”” Rather, they merely assert Harris has failed to show defendants
had the required interest, whatever those requirements may be. Harris does not explain
how or why defendants had an interest in the real estate transaction. Rather, Harris
simply asserts defendants “had an interest in [Harris’s] real estate transaction.” No
explanation or legal definition of the phrase is provided.
The issue presented is: Does a lender qualify as an interested person in a real
estate transaction. The parties have provided differing conclusions without law or legal
analysis in support of their conclusions. Since the parties have not provided any law on
what it means to be a “person with an interest in a real estate transaction,” and have not
22 provided any legal argument on this point, we cannot determine whether defendants
meet the statutory requirements. As a result, we deem this issue forfeited for failure to
provide law and legal arguments. (Boblitt, supra, 190 Cal.App.4th at p. 609; Advanced
Choices, supra, 182 Cal.App.4th at p. 1672.)
4. FRAUDULENT BUSINESS PRACTICE
Harris contends the trial court erred by sustaining the demurrer in regard to her
allegations of a fraudulent business practice because UCL-fraud claims do not have to
be pled with the specificity of common law fraud claims. Harris is correct that UCL
fraud claims can properly be pled with less specificity than a common law fraud claim.
(Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at
pp. 212-213; Morgan, supra, 177 Cal.App.4th at p. 1256.) However, Harris fails to
explain how, under the UCL, she has properly pled a cause of action for fraudulent
business practices. The law reflecting that the pleading requirements are diminished
does not repair the deficiencies in Harris’s FAC. Since Harris fails to provide a legal
argument regarding how her UCL-fraud allegations are sufficient, we deem the issue to
be forfeited. (Boblitt, supra, 190 Cal.App.4th at p. 609; Advanced Choices, supra, 182
Cal.App.4th at p. 1672.)
5. UNFAIR BUSINESS PRACTICE
Next, Harris asserts the FAC sets forth facts sufficient to support a cause of
action for an unfair business practice. Specifically, Harris contends the FAC reflects an
unfair business practice because defendants (1) improperly influenced appraisers to
inflate property values, (2) improperly influenced appraisers to prepare appraisals that
23 were tainted with false and misleading information, (3) used appraisers who did not
disclose information that would have reflected lower property values and market
instability, and (4) violated regulatory standards for professional appraisers.
There is currently a split of authority concerning the definition of an unfair
business practice. (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1376,
fn. 14; Morgan, supra, 177 Cal.App.4th at pp. 1254-1255.) “Before 1999, some Courts
of Appeal held that ‘an “unfair” business practice occurs when it offends an established
public policy or when the practice is immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers’ [citations], while others held that the
determination whether a practice is unfair ‘involves an examination of [that practice’s]
impact on its alleged victim, balanced against the reasons, justifications and motives of
the alleged wrongdoer’ [citations].
“In 1999, the Supreme Court defined ‘unfair’ in the context of a UCL action by
one competitor against a direct competitor, stating that ‘any finding of unfairness to
competitors under [the UCL must] be tethered to some legislatively declared policy or
proof of some actual or threatened impact on competition.’ [(Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163,
186-187.)] But the Supreme Court also made clear that its discussion about ‘unfair’
practices was limited to actions by competitors alleging anticompetitive practices, and
did not relate to actions by consumers. [Citation.] Nevertheless, some courts of appeal
have applied the Cel-Tech definition of ‘unfair’ to consumer actions [citations], while
others . . . have applied the old definitions [citations]. . . . [I]n Camacho v. Automobile
24 Club of Southern California (2006) 142 Cal.App.4th 1394, a consumer action, Division
Eight of [the Second] [A]ppellate [D]istrict rejected both definitions and instead applied
a definition based upon section 5 of the Federal Trade Commission Act [citation].
Under the definition in Camacho, a practice is unfair if (1) the consumer injury is
substantial, (2) the injury is not outweighed by any countervailing benefits to consumers
or competition, and (3) the injury is one that consumers themselves could not
reasonably have avoided. [Citation.]” (Morgan, supra, 177 Cal.App.4th at pp. 1254-
1255.)
In Harris’s appellant’s opening brief, she cites both pre-1999 rules: (1) the
determination of an unfair practice involves examining the practice’s impact on the
alleged victim, balanced against the reasons, justifications and motives of the alleged
wrongdoer (Motors, Inc. v. Times Mirror Co. (1980) 102 Cal.App.3d 735, 740 [Second
Dist., Div. Five]); and (2) the determination requires examining whether the practice
offends an established public policy or if the practice is immoral, unethical, oppressive,
unscrupulous or substantially injurious to consumers (People v. Casa Blanca
Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 530 [Fourth Dist., Div. One]).
(See Morgan, supra, 177 Cal.App.4th at pp. 1254 [discussing the different rules in
Motors and Casa Blanca].)
Harris does not reconcile the rules or explain which of the two pre-1999 rules she
would like this court to follow. Harris does not discuss Cel-Tech or present the split in
authority following the Cel-Tech decision in 1999. Since Harris presents two different
pre-1999 rules, without legal argument concerning which rule is correct, we determine
25 this issue has been forfeited, because we cannot analyze the issue unless we know
which rule of law to apply. (Boblitt, supra, 190 Cal.App.4th at p. 609; Advanced
6. AMENDMENT
In the alternative, Harris asserts the trial court should have granted her leave to
amend her fourth cause of action. Harris does not provide any information regarding
how she would amend the FAC. (See Holcomb v. Wells Fargo Bank, N.A. (2007) 155
Cal.App.4th 490, 495 [“‘Plaintiff must show in what manner he can amend his
complaint and how that amendment will change the legal effect of his pleading’”].)
Accordingly, we conclude the issue has been forfeited for failure to provide a legal
argument. (Boblitt, supra, 190 Cal.App.4th at p. 609; Advanced Choices, supra, 182
C. TENDER
Defendants assert Harris’s request for injunctive relief fails because a person
must offer to tender the amount due on the mortgage in order to successfully have a
court rescind a mortgage and issue an injunction stopping a trustee’s sale. (Civ. Code,
§ 2905.) Harris’s request for injunctive relief was made in connection with the fourth
cause of action—the alleged violation of Business and Professions Code section 17200.
We have not found an error in the trial court’s order sustaining the demurrer without
leave to amend, which includes the fourth cause of action. Therefore, we do not analyze
this issue because it is moot, in that we have already concluded the trial court properly
26 dismissed the fourth cause of action. (Amaral v. Cintas Corp. No. 2 (2008) 163
Cal.App.4th 1157, 1215 [an issue is moot when no effective relief can be granted].)
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER J.
We concur:
RICHLI Acting P. J.
CODRINGTON J.