Search

Attributes

This case was last updated from Los Angeles County Superior Courts on 06/28/2019 at 10:34:14 (UTC).

CHIRELLE ALANA LOONEY VS THE EVERGREEN ADVANAGE, LLC., ET AL

Case Summary

On 07/10/2017 CHIRELLE ALANA LOONEY filed a Contract - Other Contract lawsuit against THE EVERGREEN ADVANAGE, LLC . This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is CRAIG D. KARLAN. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****7792

  • Filing Date:

    07/10/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

CRAIG D. KARLAN

 

Party Details

Plaintiff

LOONEY CHIRELLE ALANA

Defendants

SINGER MAURICE A.

THE EVERGREEN ADVANTAGE LLC

AUDREY MAX GROUP INC.

THE EVERYGREEN ADVANTAGE MANAGEMENT INC.

ADLER STEVEN R.

BRUNNER JESSE

DARVISH SIMON YOUSSEF

ZUCKERMAN DANIEL

AMREZAIE MARY

REZAIC MARYAM

BEHBOUDI MOHAMAD

PREFERRED BANK

Not Classified By Court

LONE OAK FUND LLC

Attorney/Law Firm Details

Plaintiff Attorneys

SHAFFER DOUGLAS D.

SHAFFER DOUGLAS DURAN

Defendant Attorneys

DARVISH ELAN LAW OFFICES OF

NEJADPOUR BARI

GERACI LAW FIRM

BABAK DOUSTKAM

FIRM GERACI LAW

LITIGATION RICHIE

GOMEZ CHARLES GAITAN

DOUSTKAM BABAK

SCHLANGER JOHN

GARRETT & TULLY

AZADEGAN RAMIN

Not Classified By Court Attorney

LEVINE STEPHEN MARC

 

Court Documents

Legacy Document

7/17/2017: Legacy Document

Substitution of Attorney

9/13/2017: Substitution of Attorney

Legacy Document

9/20/2017: Legacy Document

Legacy Document

10/5/2017: Legacy Document

Case Management Statement

10/6/2017: Case Management Statement

Case Management Statement

10/10/2017: Case Management Statement

Proof of Service by Mail

10/12/2017: Proof of Service by Mail

Proof of Service (not Summons and Complaint)

11/16/2017: Proof of Service (not Summons and Complaint)

Substitution of Attorney

3/13/2018: Substitution of Attorney

Legacy Document

5/15/2018: Legacy Document

Substitution of Attorney

7/5/2018: Substitution of Attorney

Other -

7/12/2018: Other -

Opposition

7/12/2018: Opposition

Amendment to Complaint (Fictitious/Incorrect Name)

11/26/2018: Amendment to Complaint (Fictitious/Incorrect Name)

Motion in Limine

12/21/2018: Motion in Limine

Request

12/27/2018: Request

Notice

1/11/2019: Notice

Minute Order

4/10/2019: Minute Order

124 More Documents Available

 

Docket Entries

  • 06/26/2019
  • Order (Continue MTS Hearing); Filed by CHIRELLE ALANA LOONEY (Plaintiff)

    Read MoreRead Less
  • 06/26/2019
  • Stipulation and Order (Continue MTS Hearing); Filed by CHIRELLE ALANA LOONEY (Plaintiff)

    Read MoreRead Less
  • 06/24/2019
  • Declaration (Shaffer Declaration in Support of Plaintiff's Opposition to Defendant Lone Oak's Motion to Strike DOE Amendment); Filed by CHIRELLE ALANA LOONEY (Plaintiff)

    Read MoreRead Less
  • 06/24/2019
  • Opposition (Plaintiff's Opposition to Defendant Lone Oak's Motion to Strike DOE Amendment); Filed by CHIRELLE ALANA LOONEY (Plaintiff)

    Read MoreRead Less
  • 06/04/2019
  • at 08:30 AM in Department N, Craig D. Karlan, Presiding; Hearing on Motion to Strike (not anti-SLAPP) - without Demurrer - Not Held - Advanced and Continued - by Court

    Read MoreRead Less
  • 05/23/2019
  • at 08:30 AM in Department N, Craig D. Karlan, Presiding; Hearing on Motion for Leave to File a Cross-Complaint - Not Held - Rescheduled by Party

    Read MoreRead Less
  • 05/09/2019
  • at 08:30 AM in Department N, Craig D. Karlan, Presiding; Hearing on Motion for Leave to File a Cross-Complaint - Not Held - Rescheduled by Party

    Read MoreRead Less
  • 05/09/2019
  • at 08:30 AM in Department N, Craig D. Karlan, Presiding; Hearing on Motion - Other (to Disolve Prliminary Injunction) - Not Held - Rescheduled by Party

    Read MoreRead Less
  • 05/09/2019
  • at 08:30 AM in Department N, Craig D. Karlan, Presiding; Hearing on Motion for Leave to File a Cross-Complaint - Not Held - Taken Off Calendar by Party

    Read MoreRead Less
  • 05/07/2019
  • at 08:30 AM in Department N, Craig D. Karlan, Presiding; Hearing on Motion for Leave to File a Cross-Complaint - Not Held - Rescheduled by Party

    Read MoreRead Less
221 More Docket Entries
  • 07/17/2017
  • Declaration (of Douglas D. Shaffer ); Filed by Attorney for Plaintiff

    Read MoreRead Less
  • 07/17/2017
  • Order (granting ex parte application of plaintiff Chirelle Alana Looney ); Filed by Attorney for Plaintiff

    Read MoreRead Less
  • 07/17/2017
  • Ex-Parte Application (for temporary restraining order ); Filed by Attorney for Plaintiff

    Read MoreRead Less
  • 07/17/2017
  • Ex-Parte Application

    Read MoreRead Less
  • 07/17/2017
  • Minute order entered: 2017-07-17 00:00:00; Filed by Clerk

    Read MoreRead Less
  • 07/10/2017
  • Summons; Filed by Plaintiff

    Read MoreRead Less
  • 07/10/2017
  • Civil Case Cover Sheet; Filed by CHIRELLE ALANA LOONEY (Plaintiff)

    Read MoreRead Less
  • 07/10/2017
  • Complaint Filed

    Read MoreRead Less
  • 07/10/2017
  • Summons Filed; Filed by Attorney for Plaintiff

    Read MoreRead Less
  • 07/10/2017
  • Complaint; Filed by CHIRELLE ALANA LOONEY (Plaintiff)

    Read MoreRead Less

Tentative Rulings

Case Number: SC127792    Hearing Date: August 21, 2020    Dept: N

TENTATIVE RULING

Defendant Lone Oak Fund, LLC (Doe 2)’s Demurrer is SUSTAINED, with thirty (30) days leave to amend. The Motion to Strike is DENIED, as MOOT.

Defendant Lone Oak Fund, LLC to give notice.

REASONING

Request for Judicial Notice

Defendant Lone Oak (“Lone Oak”) requests that the Court take judicial notice of two court filings in this matter: Lone Oak’s Department of Real Estate Licensure and Defendant Simon Youssef Darvish’s Department of Real Estate Licensure. Court records are judicially noticeable pursuant to Evidence Code section 452, subdivision (d). As such, Lone Oak’s request for judicial notice is GRANTED.  

Lone Oak further filed a supplemental request for judicial notice in its reply. The Court notes, generally, new evidence is not permitted in reply papers.  (See e.g., Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537–1538.)  However, as this is to rebut Plaintiff’s opposition, the request is GRANTED.

The Court notes with respect to documents for which the court grants judicial notice, the Court is not mandated to accept the truth of its contents or the parties’ interpretation of those contents. (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)

Demurrer

A demurrer for sufficiency tests whether the complaint states a cause of action.  (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally, with a view to substantial justice between the parties. (Code Civ. Proc. § 452; Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.  (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.) “We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law. We accept the factual allegations of the complaint as true and also consider matters which may be judicially noticed.” (Mitchell v. California Department of Public Health (2016) 1 Cal.App.5th 1000, 1007.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn, 147 Cal.App.4th at 747.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” (C.A. v. William S. Hart Union High School District (2012) 53 Cal.4th 861, 872.)   

A demurrer to a pleading lies where the pleading is uncertain. (Code Civ. Proc. §430.10(f).) “Uncertain” includes ambiguous and unintelligible. (Id.) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; see also Code Civ. Proc. §430.10(e).) Moreover, “[a] special demurrer should be overruled where the allegations of the complaint are sufficiently clear to apprise the defendant of the issues which he is to meet.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643.)  

Twelfth Cause of Action - Contractual Breach of Implied Covenant of Good Faith and Fair Dealing

The elements of a cause of action for breach of the implied covenant of good faith and fair dealing are: (1) existence of a contract between plaintiff and defendant; (2) plaintiff performed his contractual obligations or was excused from performing them; (3) the conditions requiring defendant’s performance had occurred; (4) the defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant’s conduct. (Merced Irr. Dist. v. County of Mariposa (E.D. Cal. 2013) 941 F.Supp.2d 1237, 1280 [discussing California law].) Allegations must demonstrate defendant’s conduct for failure or refusal to discharge contractual responsibilities was a conscious and deliberate act, not an honest mistake, bad judgment or negligence. (Ibid.) “‘[T]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.’” (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 206 [quoting Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094].)

Here, the First Amended Complaint (“FAC”) alleges in November 2006, Plaintiff Chirelle Alana Looney (“Plaintiff”) was approached by Defendant Maryam Rezaie while Ms. Rezaie was working at Union Bank of California. (FAC ¶ 20.) Given that Ms. Rezaie was a bank employee, Plaintiff generally trusted Ms. Rezaie to act in her best financial interests. (Id.) In September 2014, Ms. Rezaie convinced Plaintiff that it was in Plaintiff’s financial interest to take out a $1 million mortgage against her family home at 18440 Wakecrest Drive, Malibu, California, 90265 (“Malibu home”) from third party lender, Lone Oak, (“Lone Oak Loan”). (FAC ¶ 23.) The loan was secured against Plaintiff’s Malibu home. (Id.) Subsequently, on October 8, 2015, Ms. Rezaie convinced Plaintiff that she would need to refinance the $1 million Lone Oak Loan with two new loans issued by Defendants The Evergreen Advantage, LLC and The Evergreen Advantage Management, Inc. (“Evergreen Loans”). (FAC ¶ 24.) The new loans amount to $1,260,000.00. (Id.)  Plaintiff agreed to enter into the new loan agreements. (Id.)  

The FAC alleges that neither Plaintiff nor the Hutchins Family Trust – for which Plaintiff is the sole beneficiary and trustee – “ever received a single dollar of the proceeds of the Lone Oak or the Evergreen Loans….”  (FAC ¶ 41.) “Upon information and belief, Ms. Rezaie received the proceeds of the $1,000,000 Lone Oak mortgage on or about September 2014 and used these funds to make some, but not all, of the required payments to Lone Oak on [Plaintiff’s] behalf in order to avoid default.” (FAC ¶ 42.) “Of the $1,260,000 obtained from the Evergreen Loans, $1,030,776.82 was used to satisfy the original $1,000,000 Lone Oak loan (which had incurred over $30,000 in interest).” (FAC ¶ 49.) The FAC further alleges Lone Oak breached its implied covenant of good faith and fair dealing when Lone Oak interfered with Plaintiff’s right to receive the benefits of the contract by: “(1) [w]illfully or negligently withholding numerous disclosures relating to the terms of the loan agreements; (2) [w]illfully or negligently placed Plaintiff in a loan that she did not need and could not afford, and subjected her to further financial detriment, while providing [Lone Oak] with financial benefits they would not have otherwise enjoyed.” (FAC ¶ 134.)

Lone Oak contends it performed all its obligations under the contract; thus, the 18th cause of action for breach of contract fails, and, by definition, the 12th cause of action for breach of the implied covenant of good faith and fair dealing also fails. Lone Oak further argues that the allegations are conclusory as there is no indication of what disclosures were withheld, when the disclosures were withheld, by whom, to whom, or how these disclosures were a prerequisite to providing the loan. The Court agrees. As discussed below, the Court finds Plaintiff has not sufficiently alleged a cause of action for breach of contract. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395 [“If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.”].) Additionally, the FAC is devoid of any facts as to how Lone Oak unfairly interfered with Plaintiff’s right to receive the benefits of the contract. 

Plaintiff must attach a copy of the Lone Oak contract to the Second Amended Complaint and identify what provisions thereof have been breached. Moreover, Plaintiff must explain how the funds at issue were not disbursed to Ms. Rezaie, and not Plaintiff. That is, was an escrow company involved, and if so, how did Ms. Rezaie obtain the funds? Accordingly, Lone Oak’s demurrer to the twelfth cause of action is SUSTAINED, with leave to amend.

Thirteenth Cause of action - Fraud – Intentional Misrepresentation

A cause of action for fraud must be alleged with factual specificity and requires the following elements: (1) a representation; (2) its falsity; (3) knowledge of falsity; (4) intent to deceive; and (5) reliance and resulting damages (causation).  (Barbara A. v. John G. (1983) 145 Cal.App.3d 369, 376.) Plaintiff must plead facts showing “how, when, where, to whom and by what means the representations were tendered.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

Additionally, a plaintiff is held to a higher standard when asserting fraud against a corporation and must allege the names of persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote and when it was said or written.  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; see also Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 837.) 

Here, Plaintiff alleges “Defendant” committed fraud when it issued the Lone Oak Loan.  (FAC ¶ 137 – 142.) In the caption above paragraph 137, Plaintiff states, “As Against the Lone Oak Defendant.” (See FAC.) Thus, the Court construes this cause of action as being asserted against Lone Oak alone. Since Plaintiff alleges fraud against a corporation, Plaintiff is held to a higher standard and must allege the names of person who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote and when it was said or written. (See Lazar, supra.) Plaintiff fails to meet her burden here. 

Plaintiff’s contention Lone Oak may be held liable for Ms. Rezaie’s misrepresentation is unavailing. The FAC does not state any facts as to the relationship between Lone Oak and Ms. Rezaie or Ms. Rezaie’s authority to speak on behalf of Lone Oak. Moreover, the FAC did not allege the identity of any of Lone Oak’s authorized representatives, to whom the representative spoke, what was said or written that was untrue, and when it was said or written. In order to satisfy this higher standard, Plaintiff is required to allege these additional facts.

Accordingly, Lone Oak’s demurrer to the thirteenth cause of action is SUSTAINED. with thirty (30) days leave to amend.

Fourteenth Cause of Action - Unfair and Deceptive Business Act Practices B&P § 17200

Business and Professions Code section 17200 prohibits “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code § 17200; see Clark v. Superior Court (2010) 50 Cal.4th 605, 610.) “A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.) The fraudulent prong of a UCL claim is less rigorous than common law fraud as common law fraud requires allegations of actual falsity and reasonable reliance while fraud under UCL does not. (See Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1256.) To establish a fraudulent practice under the UCL, the plaintiff must show that members of the public are likely to be deceived. (See West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 806.)

Here, Plaintiff alleges “[b]y reason of [Lone Oak’s] fraudulent, deceptive, unlawful, unfair and other wrongful conduct as herein alleged, said [Lone Oak] has violated California Business and Professions Code § 17200 et. seq., by consummating an unlawful, unfair and fraudulent business practice, designed to deprive Plaintiff of her home and over $1.2M of equity in the Malibu home.” (FAC ¶ 145.) The Court finds Plaintiff fails to allege with sufficiency any facts to support her claim. 

Plaintiff contends she is prepared to identify additional statutes Lone Oak allegedly violated; however, Plaintiff did not allege these statutes in her FAC. To the extent Plaintiff asserts inadequate legal remedies because of the potential loss of her Malibu home, Plaintiff’s assertion is unavailing. Lone Oak correctly asserts its loan was paid off by Evergreen. Thus, Lone Oak cannot foreclose or place a lien on Plaintiff’s property. Plaintiff therefore has not alleged insufficient legal remedies. 

Accordingly, Lone Oak’s demurrer fourteenth cause of action is SUSTAINED, with thirty (30) days leave to amend. (The Court grants leave to amend this cause of action in light of Plaintiff’s opposition enumerating various alleged statutory violations.)

Fifteenth Cause of Action - Elder Abuse 

Welfare and Institutions Code Section 15610.30 states that financial abuse of an elder occurs when a person or entity takes, secretes, appropriates, obtains, or retains real or personal property of an elder for a wrongful use or with intent to defraud, or both, or assists in doing so, or by undue influence. (Welf. Inst. Code §§ 15610.30(a)(l)-(3).) A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult. (Welf. Inst. Code § 15610.30(b).)

Here, Plaintiff alleges Lone Oak took and appropriated Plaintiff’s property with the intent to defraud her by: (1) enticing Plaintiff to enter into the illegal and unconscionable Lone Oak Loan, (2) failing to distribute the proceeds of the Lone Oak Loan of Plaintiff, and (3) placing a large lien on the Malibu home that was found on an illegal contract. (FAC ¶ 148.)

Lone Oak contends the instant cause of action fails because there is no misappropriation of property. Lone Oak argues Ms. Rezaie, not Lone Oak, caused the harm suffered by Plaintiff. Lone Oak further asserts the FAC does not identify how Lone Oak knew or should have known that entering into an agreement with Plaintiff would have harmed Plaintiff. Additionally, Lone Oak contends Plaintiff fails to plead with particularity any alleged wrong doing by or on behalf of Lone Oak.

In opposition, Plaintiff argues there was misappropriation of property because Lone Oak took Plaintiff’s property consisting of moneys Plaintiff paid in improper fees, charges and interest. In addition, Lone Oak imposed a lien upon her property by wrongful means. Moreover, Plaintiff posits that it was Lone Oak who took the sums identified, not Ms. Rezaie, i.e., that Lone Oak held and failed to distribute the proceeds to Plaintiff and then improperly placed a large lien on the Malibu home. 

It is a “general rule that statutory causes of action must be pleaded with particularity.” (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) Plaintiff’s allegations are merely conclusory. The FAC does not include any facts to support the contentions regarding improper fees, charges and interest, that a lien was placed upon the Malibu property by wrongful means, that Lone Oak took the sums identified, and not Ms. Rezaie, or that Lone Oak knew or should have known its alleged conduct was likely to be harmful to Plaintiff, an elder. Similar to the thirteenth cause of action, Plaintiff is required to plead non-conclusory facts to maintain this cause of action. Accordingly, Lone Oak’s demurrer to the fifteenth cause of action is SUSTAINED, with thirty (30) days leave to amend.

Sixteenth Cause of Action - Violation of Finance Code Section 22750, et. seq. 

Lone Oak contends the instant cause of action fails because the entire transaction was exempt from usury laws. Lone Oak argues usury laws do not apply to the loan at issue because it was made/arranged by a California-licensed real estate broker and a California-licensed finance lender, secured by a lien on real property. Additionally, Lone Oak contends the loan in question was for business use, secured by real property, and made and arranged by a licensed California real estate broker and licensed California finance lender.

In opposition, Plaintiff contends Lone Oak is not exempted from the Finance Lenders Law because it holds a corporate real estate license through its principal, James Allen Rothstein, and is limited to actions taken by him or other licenses serving under him. Plaintiff argues Lone Oak used Therese Charkut and Gerald A. Ducot – who did not have valid and active Real Estate licenses – in securing the loan. Therefore, because Lone Oak used unlicensed individuals in securing the loan on its behalf, it cannot claim the exemption. Moreover, Plaintiff contends Lone Oak is not exempted because it failed to comply with the real estate licensing law under B&P Code Section 10000, et. seq. Specifically, Plaintiff contends no party or individual associated with the loan had a real estate license mortgage loan originator endorsement, nor are any of them registered with the NMLS.

In reply, Lone Oak contends it holds a finance lender’s license, which exempts from usury laws real property secured loans it makes as a lender. Lone Oak submits its California Finance Lender license in its reply to support its contention. (Lone Oak Supplemental RJN, Ex. E.) Moreover, Lone Oak contends the opposition improperly seeks to supplement the FAC in asserting that Lone Oak used more than one unlicensed originator to secure the loan. 

California Constitution, Article 15, Section 1 provides exceptions to rate of interests to the applicable loan here.  Section 1 states, in relevant parts:

However, none of the above restrictions [percentage of interest charged] shall apply to any obligations of, loans made by, or forbearances of, any… loans made or arranged by any person licensed as a real estate broker by the State of California and secured in whole or in part by liens on real property, or any bank as defined in and operating under that certain act known as the “Bank Act”…or any bank created and operating under and pursuant to any laws in this State or of the United States of America…. The provisions in this Section shall supersede all provisions of this Constitution and laws enacted thereunder in conflict therewith.

Similarly, Financial Code §§ 22002, 22050, and 22057 creates exceptions to loans that are made by persons licensed as a real estate broker and secured by a lien on real property.

Here, Plaintiff alleges Lone Oak willfully violated Finance Code section 22750(a) by charging usurious interest rates on the Lone Oak Loan in excess of the ten percent interest rate set forth in the California Constitution, Article XV, Section 1. (FAC ¶ 153.) The FAC further alleges Lone Oak, and other Defendants, deliberately set up the Lone Oak Loan as a “commercial” loan to avoid the consumer protection statutes. (FAC ¶ 155.) The FAC alleges the Lone Oak loan is void. (FAC ¶ 157.)

Based on the judicially noticed documents, including Lone Oak’s California Finance Lender license and Department of Real Estate Licensure, the Court finds the FAC fails to allege sufficient facts to sustain Plaintiff’s sixteenth cause of action. The Court recognizes that Plaintiff asserts in her oppostion that Lone Oak employed unlicensed mortgage originators in issuing the Lone Oak loan. Plaintiff, however, did not allege these facts in the FAC. Moreover, Plaintiff did not cite to any authority or law that holds licensed finance lenders liable for violation of Finance Code and/or California Constitution when it employs unlicensed agents to issue mortgages. Accordingly, Lone Oak’s demurrer to the sixteenth cause of action is SUSTAINED, with thirty (30) days leave to amend.

Seventeenth Cause of Action - Negligence

“In order to state a cause of action for negligence, the plaintiff must state facts showing that defendant had a duty to plaintiff, that the duty was breached by negligent conduct, and that the breach was the cause of damages to the plaintiff.” (Brooks v. Eugene Burger Mgmt. Corp.

Here, Plaintiff alleges Lone Oak owed a duty to Plaintiff to exercise reasonable care to prevent harm to Plaintiff. (FAC ¶ 161.) Lone Oak breached its duty by “engaging in the conduct described herein.” (FAC ¶ 162.) Lone Oak’s breach “was a substantial factor in causing” Plaintiff’s harm. (FAC ¶ 163.) Plaintiff suffered “damages” as the result of Lone Oak’s breach. (FAC ¶ 164.)

Lone Oak contends the instant cause of action fails because it does not owe a duty to Plaintiff. Lone Oak argues nothing alleged in the FAC rises to the level of establishing a relationship beyond that of borrower and lender between Plaintiff and Lone Oak. Additionally, Lone Oak contends that, absent special circumstances, a loan does not establish a fiduciary relationship between a commercial bank and its debtor. 

Plaintiff’s opposition did not address Lone Oak’s absent of duty argument nor did Plaintiff cite to authority or law that imposes a duty between a lender and a borrower. Plaintiff merely contends Lone Oak breached its duty to conduct due diligence to ascertain whether the loan was for a residence; to explain to Plaintiff the difference between a consumer and commercial loan; to make all disclosures to Plaintiff required by law; and to not make a loan to an individual it knew or should have known could not repay. However, a duty must first exist in order for there to be a breach of that duty. 

Here, the FAC does not allege what legal duty Lone Oak owed to Plaintiff besides the conclusory assertion that Lone Oak “owed a duty to Plaintiff” to exercise reasonable care to prevent harm to Plaintiff. Absent special circumstances, though, Lone Oak, as a commercial lender, generally owes no duty of care to a borrower when its involvement in the loan transaction does not exceed the scope of its conventional role as a lender of money.  (See Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) Plaintiff has not alleged any special circumstances that would impose such a duty on Lone Oak. Accordingly, Lone Oak’s demurrer to the seventeenth cause of action is SUSTAINED, with thirty (30) days leave to amend.

Eighteenth Cause of Action - Breach of Contract

To plead a breach of contract cause of action, a plaintiff must allege: (1) the existence of contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) any resulting damages. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.) “A written contract may be pleaded either by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect. [Citation.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mut., Inc.¿(2006) 142 Cal.App.4th 1457, 1489 [citing 4 Witkin, Cal. Proc. (4th ed. 1997) Pleading, §§ 479-480, pp. 572-73].) 

Here, Plaintiff alleges in September 2014, Ms. Rezaie convinced Plaintiff to take out a $1 million mortgage against her Malibu home from Lone Oak. (FAC ¶ 23.) Plaintiff alleges she and Lone Oak entered into the Lone Oak loan agreement as a result of the fraud of Lone Oak. (FAC ¶ 166.) Lone Oak “willfully or negligently breached their obligations under the [Lone Oak] Loan agreement when [Lone Oak] interfered with Plaintiff’s right to receive the benefits of the contract.” (FAC ¶167.) Plaintiff suffered injury as the result of the breach. (FAC ¶ 168.) Plaintiff further alleges that “[o]f the $1,260,000 obtained through the Evergreens Loans, $1,030,776.82 was used to satisfy the original $1,000,000 Lone Oak loan.” (FAC ¶ 49.)

The Court notes Plaintiff did not attach a copy of the contract to the complaint, nor set forth its terms verbatim. Thus, Plaintiff must allege the contract by its legal effect; Plaintiff fails to do so here. That is, the FAC is devoid of facts as to the legal effects of the contract. The Court might reach a different conclusion here had Plaintiff attached a copy of the Lone Oak loan agreement to its complaint, plead the terms verbatim, or alleged the substance of its relevant terms. 

The Court notes with respect to mortgage transactions involving large monetary sums an escrow company is usually involved. Whether one was used here is unclear. The FAC does not identify any parties associated with an escrow company or what role, if any, such escrow played in the distribution of the funds at issue. Again, it is unclear how Ms. Rezaie received the funds at issue. It is also uncler why, if Ms. Rezaie worked for Union Bank, a loan was arranged through Loan Oak and not Union Bank.

Accordingly, Lone Oak’s demurrer to the Eighteenth cause of action is SUSTAINED, with thirty (30) days leave to amend.

Nineteenth Cause of Action - Declaratory Relief

CCP section 1060 provides that a person may bring an action for declaratory relief if he or she “desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property ….” (Code Civ. Proc., § 1060.) To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

Lone Oak contends the instant cause of action fails because declaratory relief is not a cause a action, as this cause of action has been asserted as a remedy for the alleged harm underlying the other causes of action. Additionally, Lone Oak contends Plaintiff is improperly seeking declaratory relief as a remedy for past wrongs. 

Here, the FAC requests “the Court to find Lone Oak and their principals are legally obligated to disgorge to [Plaintiff] all sums of the Lone Oak Loan, and to reimburse to [Plaintiff] all fees, charges and interest that she has paid in connection with the Lone Oak Loans from October 2015 to the present.” (FAC ¶ 170.) However, this cause of action appears to be wholly derivative of the other alleged nonviable causes of action. Accordingly, Lone Oak’s demurrer to the Nineteenth cause of action is SUSTAINED, with thirty (30) days leave to amend.

Motion to Strike

Given the above ruling sustaining the demurrer, the motion to strike is DENIED, as MOOT. 

related-case-search

Dig Deeper

Get Deeper Insights on Court Cases


Latest cases where LONE OAK FUND LLC is a litigant

Latest cases where PREFERRED BANK is a litigant

Latest cases where THE EVERGREEN ADVANTAGE LLC is a litigant

Latest cases represented by Lawyer LEVINE STEPHEN MARC