Tash v. Devoir Oblige Capital Group CA2/3

Filed 6/20/24 Tash v. Devoir Oblige Capital Group CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION THREE

RAYMOND M. TASH et al., B327414

Plaintiffs and Appellants, Los Angeles County

Super. Ct. No.

v. 20STCV48390

DEVOIR OBLIGE CAPITAL

GROUP, LLC, et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of

Los Angeles County, Robert B. Broadbelt, Judge. Affirmed.

Neufeld Marks and Paul S. Marks for Plaintiffs and

Appellants.

Wright, Finlay & Zak, Jonathan D. Fink and Cathy K.

Robinson for Defendants and Respondents.

_________________________

Plaintiffs Raymond and Katrin Tash appeal a judgment

of dismissal following an order sustaining the demurrer of

defendants Devoir Oblige Capital Group, LLC aka D.O. Capital

Group, LLC (Devoir Oblige); FCI Lender Services, Inc. (FCI);

SG Capital Partners, LLC (SG Capital); and Select Portfolio

Servicing, Inc. (SPS) (collectively, respondents). Respondents

became the successor mortgagees and loan servicers after

plaintiffs defaulted on their home mortgage. Although plaintiffs

admit executing and submitting a loan application that contained

false information, they allege a loan officer for their original

lender was responsible for including the falsehoods in the

application. Thus, plaintiffs contend respondents violated

the Rosenthal Fair Debt Collection Practices Act (the Rosenthal

Act or the Act, Civ. Code, § 1788 et seq.) by recording a notice

of default that stated plaintiffs’ loan application contained

materially false information.1 The trial court sustained

respondents’ demurrer, concluding respondents could not

be held liable for the loan officer’s alleged misconduct because

plaintiffs had specifically alleged the loan officer was an

employee of the original lender in his dealings with plaintiffs.

We affirm.

BACKGROUND

Consistent with the applicable standard of review, we draw

our statement of facts from the allegations of plaintiffs’ operative

second amended complaint and other matters properly subject

to judicial notice. (Stevenson v. Superior Court (1997) 16 Cal.4th

880, 885; Hanouchian v. Steele (2020) 51 Cal.App.5th 99, 103

1 Statutory references are to the Civil Code, unless otherwise

designated.

2

(Hanouchian).) “ ‘[W]e treat as true all material facts properly

pleaded, but not contentions, deductions or conclusions of fact

or law.’ ” (Hanouchian, at p. 103.)

Between late 2018 and early 2019, plaintiffs applied for

a loan from BM Real Estate Services, Inc. dba Priority Financial

Network (BM Real Estate) to purchase a home in Los Angeles.

They worked directly with a loan officer and employee of

BM Real Estate named Tzvi Ratner-Stauber.

Before preparing the loan documents, Ratner-Stauber met

with Raymond Tash to discuss plaintiffs’ application.2 During

the meeting, Tash disclosed that, in 2014, he lost a townhome

in Oregon to foreclosure and, two weeks later, he filed for

personal bankruptcy.

Sometime after the meeting, Ratner-Stauber presented

Tash with a partially filled out loan application that he asked

Tash to complete. Contrary to Tash’s disclosures, Ratner-

Stauber had prepared the application to state there had been

no bankruptcies or foreclosures within the past seven years.

The application also stated that no part of the down payment

was borrowed, even though Ratner-Stauber had himself

facilitated a separate loan to finance part of the down payment.

After receiving the application, Tash again discussed the

bankruptcy with Ratner-Stauber and supplied additional

information about the bankruptcy. Tash signed a later

version of the application that disclosed the bankruptcy, but

the application still falsely stated the down payment was

2 Because the relevant allegations concern only Raymond

Tash, we refer to him singly by his last name.

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not financed and plaintiffs had not had a property foreclosed

upon within the past seven years.

BM Real Estate funded the loan sometime in 2019.

First American Title Insurance Company (First American Title)

was the trustee under the deed of trust.

In late 2019, plaintiffs missed a few mortgage payments.

The amount of the default exceeded $200,000. On two

unspecified dates, plaintiffs tendered funds to SPS, the then-

current loan servicer, to reinstate the loan. On both occasions,

SPS returned the funds and advised plaintiffs that the loan

had been accelerated due to a false statement in plaintiffs’

loan application. Thus, only a full repayment of the loan

(in excess of $2 million) would be accepted.3

In June 2020, SG Capital acquired the loan from

BM Real Estate. Sometime after that, Devoir Oblige acquired

the loan from SG Capital. FCI acted as loan servicer for

Devoir Oblige.

In August 2020, First American Title recorded a notice

of default and notice of sale on the property. Before the sale

could take place, Tash filed a petition for bankruptcy. In the

bankruptcy, he managed to obtain an alternative home loan

3 The deed of trust securing plaintiffs’ loan provides that

“Borrower shall be in default if, during the Loan Application

process, Borrower or any persons . . . with Borrower’s knowledge

or consent gave materially false, misleading, or inaccurate

information or statements to Lender (or failed to provide Lender

with material information) in connection with the Loan.” The

deed of trust authorizes the lender to accelerate the debt based

on “Borrower’s breach of any covenant or agreement in this

Security Instrument.”

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(albeit at a significantly higher interest rate) and paid off the

original mortgage.

Plaintiffs sued respondents, as well as BM Real Estate,

Ratner-Stauber, and First American Title. As relevant to this

appeal, the operative second amended complaint asserts a cause

of action for violation of the Rosenthal Act against respondents

and the other defendants.4 In support of the claim, the complaint

alleges the defendants’ foreclosure notices “falsely stated that

there were material misrepresentations in [plaintiffs’] loan

application, and/or that any alleged incorrect statements were

materially false, and/or that the original lender reasonably

relied on any such statements in funding the mortgage loan.”

Respondents challenged the pleading by demurrer on

the ground that it failed to allege sufficient facts to state a claim

for violation of the Rosenthal Act. Among other things, they

argued the complaint admitted Tash executed and submitted

a loan application with several material misrepresentations;

none of respondents’ alleged conduct constituted a violation

of the Rosenthal Act; and, at most, Ratner-Stauber allegedly

engaged in inappropriate debt collection activity, but he was

not respondents’ agent.

The trial court sustained respondents’ demurrer without

leave to amend and entered a judgment of dismissal.5 Plaintiffs

filed a timely notice of appeal.

4 The operative pleading also asserted a cause of action for

declaratory relief against respondents and the other defendants.

Plaintiffs do not challenge the dismissal of this claim.

5 The trial court overruled in part a separate demurrer

filed by BM Real Estate and Ratner-Stauber, allowing plaintiffs’

Rosenthal Act claim to go forward against those defendants.

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DISCUSSION

The Rosenthal Act aims “to prohibit debt collectors from

engaging in unfair or deceptive acts or practices in the collection

of consumer debts and to require debtors to act fairly in entering

into and honoring such debts.”6 (§ 1788.1, subd. (b).) Among

other things, the Act “generally requires ‘debt collector[s]

collecting or attempting to collect a consumer debt’ to comply

with the provisions of its federal counterpart, the Fair Debt

Collection Practices Act (FDCPA) (15 U.S.C. § 1692 et seq.).”

(Hagey v. Solar Service Experts, LLC (2023) 94 Cal.App.5th

1303, 1308, quoting § 1788.17; accord Best v. Ocwen Loan

Servicing, LLC (2021) 64 Cal.App.5th 568, 576 [the Act

“incorporates the FDCPA, so that a violation of the FDCPA

is per se a violation of the Rosenthal Act”].)7 Any debt collector

who violates the Act is liable for “any actual damages sustained

by the debtor as a result of the violation.” (§ 1788.30, subd. (a).)

Plaintiffs contend respondents’ alleged conduct violated

provisions of the FDCPA prohibiting a debt collector from using

“any false, deceptive, or misleading representation or means in

6 The Act defines “ ‘consumer debt’ ” as “money, property, or

their equivalent, due or owing or alleged to be due or owing from

a natural person by reason of a consumer credit transaction.”

(§ 1788.2, subd. (f).) The term “includes a mortgage debt.” (Ibid.)

7 Section 1788.17 provides: “Notwithstanding any other

provision of this title, every debt collector collecting or attempting

to collect a consumer debt shall comply with the provisions of

Sections 1692b to 1692j, inclusive, of, and shall be subject to the

remedies in Section 1692k of, Title 15 of the United States Code.”

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connection with the collection of any debt.”8 (15 U.S.C. § 1692e;

see § 1788.17 [incorporating 15 U.S.C. § 1692e into Rosenthal

Act].) They point specifically to the allegation that the

notice of default “falsely stated that there were material

misrepresentations in [plaintiffs’] loan application, and/or that

any alleged incorrect statements were materially false, and/or

that the original lender reasonably relied on any such statements

in funding the mortgage loan.” Materiality, in plaintiffs’ telling,

is the crucial issue. They acknowledge the complaint admits

the loan application contained false information about a past

foreclosure and the use of borrowed funds to finance their

down payment. But plaintiffs argue these falsehoods could

not have been material to respondents because Tash disclosed

the true information to Ratner-Stauber, who, plaintiffs contend,

“was and is alleged to be an agent of defendants.”9

8 Respondents argue plaintiffs forfeited this issue by failing

to raise it below. The argument misunderstands the applicable

standard of review.

We apply the de novo standard of review to a judgment

of dismissal after an order sustaining a demurrer, exercising

our independent judgment about whether the complaint states

a cause of action as a matter of law. (Hanouchian, supra,

51 Cal.App.5th at p. 106.) When the trial court denies leave

to amend, we must also decide whether there is a reasonable

possibility that the defect can be cured by amendment. (Koszdin

v. State Comp. Ins. Fund (2010) 186 Cal.App.4th 480, 487.)

The plaintiff bears the burden of demonstrating a remedial

amendment is possible, and this “showing can be made for the

first time on appeal.” (Hanouchian, at p. 106, italics added, citing

City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 746.)

9 Plaintiffs also appear to contend that respondent SPS

(the original loan servicer) improperly “overreached by refusing

7

The trial court rejected plaintiffs’ attempt to impute

Ratner-Stauber’s alleged knowledge and misconduct to

respondents, reasoning plaintiffs had “not sufficiently alleged

that he, as an employee or agent for defendant BM Real Estate

[citation], was acting on behalf of [respondents].” (Italics added.)

Plaintiffs contend the court erred. Because an agency allegation

is “ ‘a statement of ultimate fact,’ ” plaintiffs argue it was

sufficient to allege that “ ‘all defendants acted as agents of

every other defendant in the scope of said agency.’ ” (See Skopp

v. Weaver (1976) 16 Cal.3d 432, 439 (Skopp).) Had plaintiffs

alleged only this ultimate fact, we would be compelled to agree.

However, as the trial court recognized, the operative pleading

alleges specific facts that negate plaintiffs’ claim that Ratner-

Stauber was respondents’ agent.

“It is well established that in the context of a demurrer,

specific allegations control over more general ones.” (Chen v.

PayPal, Inc. (2021) 61 Cal.App.5th 559, 571, citing Medical

Marijuana, Inc. v. ProjectCBD.com (2016) 6 Cal.App.5th 602, 619

(ProjectCBD.com); Perez v. Golden Empire Transit Dist. (2012)

209 Cal.App.4th 1228, 1235–1236.) As the Perez court explained,

“[w]here a pleading includes a general allegation, such as an

allegation of an ultimate fact, as well as specific allegations

that add details or explanatory facts, it is possible that a conflict

or inconsistency will exist between the general allegation and

to accept” their loan reinstatement payments in lieu of

foreclosure. Plaintiffs do not develop the argument and make

no effort to explain how this conduct violated the Rosenthal Act.

“We are not required to examine undeveloped claims.” (Allen v.

City of Sacramento (2015) 234 Cal.App.4th 41, 52.) We deem

the contention forfeited. (Ibid.)

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the specific allegations. To handle these contradictions,

California courts have adopted the principle that specific

allegations in a complaint control over an inconsistent general

allegation. [Citations.] Under this principle, it is possible that

specific allegations will render a complaint defective when the

general allegations, standing alone, might have been sufficient.”

(Perez, at pp. 1235–1236; see, e.g., Chen, at p. 572 [general

allegation that defendant acted in bad faith in placing holds

on plaintiffs’ accounts negated by specific allegation that

defendant placed holds due to decrease in plaintiffs’ “ ‘seller

rating[s]’ ” by third-party marketplace provider]; Willis v. Page

(1937) 19 Cal.App.2d 508, 512 [“The general allegation that

plaintiff had performed all of the conditions of the agreement

on his part, while specifically authorized by the code, is none

the less the statement of a conclusion and as such it is controlled

by the specific allegations which are in conflict therewith.”].)

Plaintiffs alleged that, “[a]t the time of the events at issue

here, Ratner-Stauber was an employee or loan officer (or other

agent), acting on behalf of the original lender, BM Real Estate,

in his dealings with Dr. Tash.” (Italics added.) This specific

factual allegation contradicts plaintiffs’ general averment that

“all defendants acted as agents of every other defendant in the

scope of said agency.” Plaintiffs do not (and presumably cannot)

offer any way to reconcile this critical inconsistency. The specific

allegation therefore controls and negates plaintiffs’ claim that

Ratner-Stauber acted as respondents’ (as opposed to the original

lender’s) agent when he dealt with Tash in preparing plaintiffs’

loan application. (See ProjectCBD.com, supra, 6 Cal.App.5th

at p. 619 [specific allegation that Project CBD defendants

published article on their own website and “other websites

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(but not Facebook)” controlled over “the inconsistent, more

general allegation that all of the defendants published negative

statements on Facebook”]; cf. Skopp, supra, 16 Cal.3d at pp. 437–

438 [absence of specific allegation about formation of agency did

not negate general allegation that defendants acted “ ‘as agents

for the plaintiffs’ ”]; Blickman Turkus, LP v. MF Downtown

Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 884–885 [argument

challenging “substantive soundness” of cross-claimant’s agency

theory did not negate general allegation that agency existed];

Garton v. Title Ins. & Trust Co. (1980) 106 Cal.App.3d 365, 376

[allegations “tend[ing] to show” individual was employed by

real estate brokerage did not preclude possibility that she

acted as agent for title company in relevant transaction].)

Because Ratner-Stauber’s alleged conduct cannot be

imputed to respondents, there is no reasonable possibility that

plaintiffs can state a claim for violation of the FDCPA or the

Rosenthal Act based on respondents’ role in directing the trustee

to record a notice of default on plaintiffs’ property. Although

plaintiffs urge us to focus on whether their admitted

misrepresentations were material, respondents correctly

assert the statutory privilege protecting parties engaged in

nonjudicial foreclosure proceedings is the dispositive issue.

Under section 2924, subdivision (d), a notice of default

or a notice of sale recorded as part of a nonjudicial foreclosure

proceeding constitutes a “ ‘privileged communication[ ] pursuant

to Section 47.’ ” (See Schep v. Capital One, N.A. (2017) 12

Cal.App.5th 1331, 1336 (Schep).)10 While reviewing courts

10 Our Legislature’s purpose in enacting section 2924 was

“ ‘to give trustees some measure of protection from tort liability

arising out of the performance of their statutory duties’ ” under

10

are divided over whether the absolute or qualified privilege

applies under the statute (see id. at p. 1337), the distinction

makes no difference in this case. Even under section 47’s

narrower qualified privilege, plaintiffs cannot state a claim

based on respondents’ alleged conduct. (See Schep, at p. 1337.)

The qualified privilege under section 47 applies

“ ‘to communications made without malice.’ ” (Schep, supra,

12 Cal.App.5th at p. 1337, citing § 47, subd. (c); Hagberg v.

California Federal Bank (2004) 32 Cal.4th 350, 360.) “ ‘[W]here

the complaint shows that the communication or publication

is one within the classes qualifiedly privileged, it is necessary

for the plaintiff to . . . plead and prove that the privilege is

not available as a defense in the particular case, e.g., because

of malice.’ ” (Smith v. Commonwealth Land Title Ins. Co. (1986)

177 Cal.App.3d 625, 630–631.) “For the purposes of section

47’s qualified privilege, ‘malice’ means that the defendant

(1) ‘ “was motivated by hatred or ill will towards the plaintiff,” ’

or (2) ‘ “lacked reasonable grounds for [its] belief in the truth

of the publication and therefore acted in reckless disregard of

the plaintiff’s rights.” ’ ” (Schep, at p. 1337, quoting Sanborn

v. Chronicle Pub. Co. (1976) 18 Cal.3d 406, 413; see § 48a,

subd. (d)(4) [defining “ ‘[a]ctual malice’ ” as “hatred or ill will

toward the plaintiff”].

the nonjudicial foreclosure statutes. (Schep, supra, 12

Cal.App.5th at p. 1336.) As the Schep court explained, this

purpose “is fulfilled only if all of the procedural steps attendant

to a nonjudicial foreclosure are privileged” and “only if the

privilege applies with equal force to both the trustee who actually

records the [notice of default] as well as the principal who directs

that recording.” (Id. at pp. 1336–1337.)

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Although plaintiffs base their Rosenthal Act claim on

statements appearing in a notice of default and notice of sale,

they entirely ignore the privilege in their appellate briefing,

and they do not discuss how they could reasonably amend their

complaint to allege respondents acted with malice in directing

the trustee to record the notices. Nevertheless, based on what

plaintiffs have specifically alleged, we can conclusively say it

is not reasonably possible to amend the pleading to overcome

the privilege.

Plaintiffs’ operative complaint alleges Ratner-Stauber,

acting “on behalf of the original lender,” prepared a loan

application for plaintiffs with false information about a past

foreclosure and the use of borrowed funds to finance plaintiffs’

down payment. Notwithstanding Ratner-Stauber’s alleged

misconduct, the pleading also admits that plaintiffs executed

and submitted the loan application despite knowing it contained

these misrepresentations. Within a year of obtaining the loan,

plaintiffs defaulted on payments exceeding $200,000.

Respondents acquired the loan from the original lender after

plaintiffs’ default and, consistent with the terms of the mortgage,

accelerated the debt, and directed the trustee to record a notice

of default and notice of sale on the property. The notices

disclosed plaintiffs’ admitted misrepresentations. None of these

allegations could be reasonably amended to support a claim

that respondents made a false representation in the foreclosure

notices with hatred or ill will toward plaintiffs or a reckless

disregard for the truth. The trial court properly sustained

respondents’ demurrer to the Rosenthal Act claim without leave

to amend. (See Schep, supra, 12 Cal.App.5th at pp. 1337–1338

[demurrer properly sustained based on section 47 qualified

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immunity where allegations suggested reasonable basis for

successor trustees’ belief in legitimacy of nonjudicial foreclosure

proceedings, notwithstanding recording of “wild deed” giving

trustees constructive notice of competing claim to title].)

DISPOSITION

The judgment is affirmed. Respondents Devoir Oblige

Capital Group, LLC aka D.O. Capital Group, LLC; FCI Lender

Services, Inc.; SG Capital Partners, LLC; and Select Portfolio

Servicing, Inc. are entitled to costs.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

EGERTON, J.

We concur:

LAVIN, Acting P. J.

ADAMS, J.

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