Friday, September 6, 2013

Lender Liability, Successor Liability . . . The judgment of dismissal is reversed, and the case is remanded to the trial court... BUT THE CASE IS UNPUBLISHED.

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 The deceit cause of action alleged that Harris had misrepresented to the Sundquists
that they “could refinance or modify immediately after obtaining the loan” and that
Harris or Kennaugh had misrepresented “that the loan application prepared by Defendant
correctly stated the [Sundquists’] income.” The civil conspiracy cause of action alleged
that the various defendants “conspired and agreed to implement a scheme to defraud and
victimize [the Sundquists] through the predatory lending practices and other unlawful
conduct alleged herein.” The breach of fiduciary duty cause of action was based on the
same two misrepresentations as the deceit cause of action, as well as Harris’s failure to
disclose that Ella and Harris “received a financial benefit from the lender MISSION
HILLS for convincing [the Sundquists] to sign the loans with their particular terms.” The
negligence cause of action was likewise based on the origination of the loan.

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         The Sundquists’ allegation that Bank of America was “liable for all acts of
MISSION HILLS based on successor liability law” is not an allegation of fact; rather, it
is a conclusion of law. As such, we disregard it for purposes of assessing the sufficiency
of the Sundquists’ complaint. (See Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at
p. 967.) That leaves the allegations that the bank “assumed all liabilities on the loan in its
purchase of the loan from MISSION HILLS” and that the bank “assumed all liability of
the original lender by the terms of which it succeeded to the Subject Loan.” Taken
together, and giving them “a liberal construction with a view to substantial justice
between the parties” (Miglierini v. Havemann (1966) 240 Cal.App.2d 570, 572), these
allegations can be read to assert that pursuant to the specific terms under which Bank of
America purchased the Sundquists’ loan from Mission Hills, Bank of America agreed to
assume all liability to which Mission Hills was subject in connection with that loan.
Such a broad assumption of liability would include tort liability arising from the conduct
of Mission Hills and/or its agents in the origination of the loan.

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  In short, the allegations of the Sundquists’ complaint, sparse though they are,
suffice to allege that Bank of America assumed any liability Mission Hills had with
respect to the origination of the Sundquists’ loan. Accordingly, the demurrer to the first
six causes of action was not properly sustained on this basis.

 DISPOSITION

 The judgment of dismissal is reversed, and the case is remanded to the trial court
with instructions to vacate its order sustaining the demurrer in its entirety without leave to
amend and to enter a new order: (1) sustaining the demurrer to the causes of action for
civil conspiracy, negligence, and wrongful foreclosure without leave to amend;
(2) sustaining the demurrer to the cause of action for promissory estoppel with leave to
amend; and (3) overruling the demurrer to the causes of action for deceit, breach of
fiduciary duty, aiding and abetting a breach of fiduciary duty, and unfair competition.
The Sundquists shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a).)

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