Akinshin v. Bank of America CA1/2

Filed 7/29/14 Akinshin v. Bank of America CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

FIRST APPELLATE DISTRICT

DIVISION TWO

WALTER AKINSHIN et al.,

Plaintiffs and Appellants,

A138098

v.

BANK OF AMERICA, N.A., (Marin County

Super. Ct. No. CIV1103188)

Defendant and Respondent.

Walter and Nina Akinshin (the Akinshins, collectively, and Walter or Nina,

individually) sued Bank of America, N.A. (BANA), and others who are not parties to this

appeal, based on circumstances attendant to the 2007 refinance of their home mortgage

loan and their failed attempt to obtain a loan modification in 2010, after they had ceased

making their mortgage payments. The defendants successfully demurred to the

Akinshins’ original complaint and first amended complaint. The Akinshins filed a

second amended complaint (SAC), stating causes of action for fraud and deceit,

negligence, promissory estoppel, and violation of the Unfair Competition Law (UCL).

BANA again demurred and the trial court sustained the demurrer without leave to amend,

because causes of action based on the 2007 loan origination were time-barred and the

SAC otherwise failed to plead facts necessary to maintain the remaining causes of action.

The court subsequently dismissed the Akinshins’ lawsuit.

On appeal, the Akinshins maintain that the statute of limitations should be tolled

by application of the discovery rule and that they alleged facts sufficient to maintain each

of their causes of action. We agree that the trial court erred in sustaining BANA’s

1

demurrer as to each of the causes of action stated in the SAC and reverse. Because all of

the causes of action survive without considering the allegations concerning the 2007 loan

origination, we do not reach the issue of whether remedies based on the loan origination

are time-barred.

BACKGROUND

I. Factual Background 1

In 2007, the Akinshins contacted Freedom Financial Center, Inc. (Freedom), a

mortgage broker, to refinance a prior mortgage loan on their residence at 28 Ayala Court,

San Rafael, California. They communicated primarily with Charles Teed.2 The

Akinshins told Charles that their combined monthly income was about $7,666 per month

from Nina’s work at Nordstrom’s and Walter’s work as the owner of a service station.

On March 1, 2007, a uniform residential loan application was signed with the

Akinshins’ names but the Akinshins believe those signatures to be forgeries. The

application was prepared by William Teed as an employee of Freedom. A second loan

application was signed on March 21, 2007, this time by the Akinshins themselves. The

second application was also prepared by William, identified as an employee of

Countrywide Bank, FSB (Countrywide). Both applications indicated that the Akinshins

had a combined monthly income of $24,200.

On March 18, 2007, the Akinshins received an $825,000 7-year fixed rate and 23-

year adjustable rate mortgage, as well as a $165,000 home equity line of credit (HELOC)

from Countrywide. The loan closing occurred at the Akinshins’ home with only the

Akinshins and a notary public present. The closing process lasted between 45 minutes

and one hour and no one explained the terms and consequences of the loan to the

Akinshins. The Akinshins were unaware that the loan contained a large balloon payment.

1

As we discuss below, in an appeal from the grant of a demurrer, we accept as

true the facts as stated in the complaint. Accordingly, the facts stated here are those

alleged in the SAC.

2

The Teed’s first names are used for the sake of clarity. No disrespect is

intended.

2

Even though Charles told the Akinshins that the interest rate would be fixed for the first

seven years, their payments were to increase after three years. The “TILA disclosure

statement”3 also stated that the payments would be fixed for seven years.

When the Akinshins realized they were receiving a HELOC, they called Charles

for clarification and left a message. Charles returned the call a few days later and said

that he did the best he could for the Akinshins, even though they had not previously

discussed a HELOC. Charles explained that the HELOC was necessary because the loan-

to-value ratio would be too high for the underwriters to grant the entire $880,000 loan

amount that the Akinshins had requested. Charles decided to obtain the HELOC to

reduce the size of the primary loan.

Charles did not notify the Akinshins that he and Freedom would receive yield

spread premiums and other fees from Countrywide in the amount of $27,843.75.

BANA is the successor in interest to Countrywide. At the end of 2008 and

beginning of 2009, the Akinshins contacted BANA for a loan modification. They

completed the loan modification application, but 30 days later were told they did not

qualify. In early 2009, the Akinshins worked with an organization called ACORN, to

which they paid no fees, to help them apply for a modification, but they were again

denied. In July 2009, the Akinshins hired a third party to help them obtain a

modification.

In July or August 2009, the Akinshins stopped making their regular monthly

mortgage payment.

In January 2010, Eric John, an employee of BANA, informed “Daly, agent for

plaintiffs” that the Akinshins qualified for a loan modification. On February 18, 2010,

“Gail #NBKRZVW,” an employee of BANA, informed Daly that the Akinshins qualified

for a loan modification so long as they made timely payments throughout a 90-day trial

3

The SAC does not define “TILA,” which we assume refers to the Truth in

Lending Act. (15 U.S.C. § 1601 et seq.)

3

period. On the same day, Tiffany Fletcher, another employee of BANA, confirmed that

the Akinshins were accepted into the trial modification program.4

On March 10, 2010, “Jacob #9359,” an employee of BANA, told Daly that the

Akinshins’ loan modification was under consideration. Jacob instructed Daly to call back

periodically.

On May 14, 2010, Gail told Daly that the Akinshins qualified for a loan

modification and would receive the necessary paperwork. On the same day, a BANA

employee named Taz contacted the Akinshins, requested additional financial

documentation, and assured them that they qualified for a loan modification.

The trial modification period was extended to end in December 2010. During the

trial modification period, the Akinshins timely made each payment of approximately

$1,891. The Akinshins made their final trial payment in December 2010, but BANA

denied them a permanent loan modification, stating that their income was insufficient.

BANA had been aware of the Akinshins’ income throughout the entire time that their

application for a loan modification was under consideration.

II. Procedural Background

On June 24, 2011, the Akinshins filed a complaint, asserting nine causes of action

and naming as defendants BANA, as successor in interest of Countrywide; Freedom;

Charles; William; and BAC Home Loans Servicing, LP (BAC). On October 4, 2011,

BANA filed a demurrer, which the Akinshins opposed.

On December 19, 2011, the Akinshins dismissed their suit against Charles.

On February 23, 2012, the court sustained BANA’s demurrer with leave to amend.

The Akinshins then filed a first amended complaint, asserting five causes of action, with

BANA the only named defendant. On March 28, 2012, BANA filed a demurrer, which

4

The SAC contains no allegation that the trial modification program was related

to the federal government’s Home Affordable Modification Program (HAMP).

Accordingly, we regard the trial program at issue in this case as an in-house program that

is not governed by HAMP regulations.

4

the Akinshins opposed. On July 17, 2012, the court sustained BANA’s demurrer, again

with leave to amend.

In August 2012, the Akinshins filed the SAC. This complaint again named

BANA, Freedom, Charles, William, and BAC, even though no cause of action was

asserted against BAC. The complaint asserted four causes of action: (1) fraud and deceit

against Freedom, Charles, William, and BANA, but specifically alleging only statements

made in 2010 as being false or misleading; (2) negligence against BANA; (3) promissory

estoppel against BANA; and (4) violation of the UCL (Bus. & Prof. Code, § 17200 et

seq.) against BANA.

The Akinshins attached a copy of the deed of trust as an exhibit to the SAC. The

deed of trust refers to an adjustable rate rider, which was not attached as an exhibit.

Although the allegations in the SAC refer to two uniform residential loan applications

and the TILA disclosure statement, these documents were also not attached as exhibits.

In September 2012,5 BANA “for itself and as successor by merger to BAC Home

Loans Servicing, LP (sued erroneously as ‘Bank of America, NA as successor in interest

of Countrywide Bank, FSB’),” filed a demurrer to the SAC. The Akinshins opposed the

demurrer. In their opposition, the Akinshins noted that the first cause of action

incorporated the general allegations that preceded it and their arguments make clear their

intention that the first cause of action include alleged deceptive conduct and concealment

related to the 2007 loan origination, even though only alleged misrepresentations

concerning the 2010 loan modification application were directly included under the first

cause of action. As they had previously argued, the Akinshins maintained that the first

cause of action was not barred by the statute of limitations because “equitable tolling

under the discovery rule applies.”

On December 14, 2012, the court sustained BANA’s demurrer without leave to

amend. The court stated that “[p]laintiffs do not explain how any claim arising from the

5

The demurrer in the record before us is internally dated September 26, 2012, but

a copy date-stamped by the clerk of the court to show the filing date was not provided in

parties’ appendices.

5

loan origination would not be barred by the statute of limitations.” The court sustained

BANA’s demurrer to the first cause of action because BANA’s representations to the

Akinshins did not amount to a promise that BANA would grant a permanent loan

modification and the Akinshins also failed to plead facts demonstrating reliance. The

court sustained BANA’s demurrer to the second cause of action because the SAC “still

does not specify BANA’s alleged duty or the particular ‘conduct’ by BANA which was

negligent and caused plaintiffs harm.” The court sustained BANA’s demurrer to the third

cause of action because “the alleged promise continues to be unclear and ambiguous” and

the SAC failed to plead facts that demonstrated detrimental reliance. The court sustained

BANA’s demurrer to the fourth cause of action because any claim arising from the loan

origination would be time-barred, no facts were alleged to support other conclusory

allegations, and the cause of action was otherwise derivative to the other failed causes of

actions.

On January 2, 2013, the Akinshins dismissed William and Freedom as defendants.

On January 14, 2013, the court entered judgment, dismissing the Akinshins’ action

against BANA with prejudice.

On March 8, 2013, the Akinshins timely filed a notice of appeal.

DISCUSSION

“On review from an order sustaining a demurrer, ‘we examine the complaint de

novo to determine whether it alleges facts sufficient to state a cause of action under any

legal theory, such facts being assumed true for this purpose.’ ” (Committee for Green

Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) We do not,

however, assume as fact contentions, deductions or conclusions of fact or law that may be

stated in the complaint. (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th

497, 506.)

In reviewing an order sustaining a demurrer, “we look ‘only to the face of the

pleadings and to matters judicially noticeable . . . .’ [Citation.] We are ‘not bound by the

trial court’s construction of the complaint . . . .’ [Citation.] Rather, we independently

evaluate the complaint, construing it liberally, giving it a reasonable interpretation, if

6

possible, and reading it as a whole, while viewing its parts in context. [Citation.]” (Cobb

v. O’Connell (2005) 134 Cal.App.4th 91, 95.) “[A] demurrer [is not] the appropriate

procedure for determining the truth of disputed facts or what inferences should be drawn

where competing inferences are possible.” (CrossTalk Productions, Inc. v. Jacobson

(1998) 65 Cal.App.4th 631, 635.)

We examine each of the Akinshins causes of action and conclude that even though

the SAC is not a model of clarity, the complaint alleges facts sufficient to state each

cause of action.

I. Fraud and Deceit

“The elements of fraud, which give rise to the 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.” (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts,

§ 772, p. 1121; see also Civ. Code, § 1709.)6 A plaintiff must plead “ ‘facts which “show

how, when, where, to whom, and by what means the representations were tendered.” ’

[Citation.] A plaintiff’s burden in asserting a fraud claim against a corporate employer is

even greater. In such a case, the plaintiff must ‘allege the names of the 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.) Plaintiffs pleading fraud or deceit must also

“specifically allege their damages and how their reliance on [the misrepresentation]

caused those damages.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th

1481, 1501.)

Among the SAC’s general allegations, the Akinshins alleged that BANA told them

that if they made timely payments during a trial modification period, they would be

granted a permanent loan modification. The Akinshins alleged four misrepresentations.

6

The Akinshins have not argued and the parties have not briefed an alternative

fraud claim based upon a promise made without intention to perform. Consequently we

do not examine the SAC for any such claim.

7

First, in January 2010, BANA informed the Akinshins’ agent that they “qualified” for a

loan modification. Second, in February 2010, BANA told the agent that the Akinshins

were accepted into a trial modification program and that they were “qualified” for a loan

modification if they made the trial payments. Third, in March 2010, while participating

in the trial modification program, BANA told the agent that the Akinshins’ loan

modification was being “considered.” Finally, in May 2010, BANA told the agent that

the Akinshins “qualified for a loan modification [and] would receive the necessary

paperwork” and on the same day separately asked for additional financial documentation

to support the application. In December 2010, BANA denied the loan modification

because of insufficient income.

The alleged misrepresentations are pleaded with specificity. In each case, the

representation is clearly stated along with why the Akinshins believe it to be a

misrepresentation; the identities of the speakers are provided, along with their roles as

employees of BANA; the person to whom the representations were made is identified;

and the dates of the representations are provided.

In sustaining BANA’s demurrer, the trial court stated: “[T]he allegations remain

insufficient to show that the February 18, 2010 representation by [Gail]—that plaintiffs

‘qualified for a loan modification so long as plaintiffs made timely payments throughout

the Trial Period’ [citation]—had the same meaning that “if [plaintiffs] made their

payments on time during this Trial Period, BAC would grant a permanent modification’

[citation]. . . . The SAC sets . . . forth [further] representations by [Gail] and [Jacob] as

consistent representations—but the only way to reconcile them is to view Gail’s use of

the word ‘qualified’ to mean some type of eligibility, not final approval.”

At oral argument on appeal, the Akinshins’ counsel criticized the trial court for

giving the word “qualify” a fixed meaning when the word can have multiple meanings.

He quoted Justice Traynor: “The exclusion of testimony that might contradict the

linguistic background of the judge reflects a judicial belief in the possibility of perfect

verbal expression. [Citation.] This belief is a remnant of a primitive faith in the inherent

potency and inherent meaning of words.” (Pacific Gas & Elec. Co. v. G. W. Thomas

8

Drayage & Rigging Co. (1968) 69 Cal.2d 33, 37, fns. omitted.) We find this quotation

apt, because in focusing on “qualify” as denoting eligibility and not final approval, the

trial court rejected other reasonable interpretations of the alleged representations, in

violation of the principle that demurrer is not the procedure for determining which

inferences should be drawn when competing inferences are possible.

Here, another possible meaning of Gail’s representation that the Akinshins

“qualified for a loan modification so long as [the Akinshins] made timely payments

throughout the Trial Period” is the meaning that the Akinshins ascribed—that making

timely payments throughout the trial period was all that was necessary to be offered a

permanent loan modification. We disagree with the trial court that the other

representations necessarily contradict that meaning. On March 10, 2010, Jacob told the

Akinshins’ agent that the loan modification was being “considered,” but this was still

during the trial period, so the Akinshins’ ability to satisfy the condition of making timely

payments during that period was still in question. On May 14, 2010, Gail told the

Akinshins’ agent that they “qualified for a loan modification [and] would receive the

necessary paperwork”—a representation that reinforces the Akinshins’ understanding.

That they were also separately asked, on the same day, to provide additional financial

documentation does not necessarily call that understanding into doubt because the

content of the documentation is not specified. BANA may simply have requested up-to-

date bank and credit statements that would not have affected the Akinshins’ qualification

for a loan modification unless they materially differed from earlier statements already

provided to BANA.

We note that whatever was said by the BANA representatives was communicated

to Daly, not the Akinshins, and that we do not know what was actually said. However, as

already noted, on demurrer we are bound to accept plaintiffs’ allegations as facts. We

conclude that the Akinshins sufficiently pleaded the element of misrepresentation.

The trial court also held that the Akinshins did not adequately plead justifiable

reliance or damages. We disagree because the SAC alleges that the Akinshins “held off

making alternative arrangements with regard to their loan and their living situation” and

9

“passed up opportunities to declare bankruptcy.” “Forbearance—the decision not to

exercise a right or power—is sufficient . . . to fulfill the element of reliance necessary to

sustain a cause of action for fraud or negligent misrepresentation.” (Small v. Fritz

Companies, Inc. (2003) 30 Cal.4th 167, 174.) We may infer the element of damages

from the alleged forbearance7—that the Akinshins, paid money to BANA during the trial

period that they would not otherwise have paid had they made “alternative arrangements”

or declared bankruptcy.

BANA contends that the Akinshins were already contractually bound by their

mortgage to make (even larger) payments to BANA during the trial period and rely on

Auerbach v. Great Western Bank (1999) 74 Cal.App.4th 1172, 1185 (Auerbach):

“Respondents’ theory of recovery is based on the premise that a party duped into

performing an existing contractual obligation has suffered damage. More specifically,

they believe a borrower’s reliance on a lender’s fraudulent promise to engage in good

faith negotiations to modify a loan, which causes the borrower to continue to make

payments on a note secured by a seriously undervalued property, supports the reliance

damages necessary to a fraud claim. [¶] Generally speaking, a commitment to perform a

preexisting contractual obligation has no value. In contractual parlance, for example,

doing or promising to do something one is already legally bound to do cannot constitute

the consideration needed to support a binding contract. [Citations.] [¶] The same

understanding has carried over to the tort area.”

The defendants in Auerbach were not in default on their loan, nor does the opinion

indicate that they even considered bankruptcy proceedings. (Auerbach, supra, 74

Cal.App.4th at p. 1179.) Because possible bankruptcy proceedings are alleged here, we

find Aceves v. U.S. Bank (2011) 192 Cal.App.4th 218 (Aceves) more relevant to our

analysis. In Aceves, the borrower was in arrears on a residential home loan and filed for

bankruptcy. (Id. at p. 221.) “Plaintiff contacted the bank, which promised to work with

7

The damages we infer here are explicitly stated in the cause of action for

promissory estoppel.

10

her on a loan reinstatement and modification if she would forgo further bankruptcy

proceedings. In reliance on that promise, plaintiff did not convert her bankruptcy case to

a chapter 13 proceeding or oppose the bank’s motion to lift the bankruptcy stay.” (Ibid.)

After the bankruptcy court lifted the stay, the bank foreclosed on the property instead of

working with the plaintiff to reinstate and modify the loan. (Ibid.) The trial court

dismissed the case on demurrer, but the Aceves court reversed, holding that the complaint

demonstrated detrimental reliance. (Id. at pp. 221-222.)

While it is true that the Akinshins had a contractual obligation to make payments

to BANA, they were already in default on their loan. We infer from their complaint that

they considered bankruptcy, an option they did not pursue because of BANA’s

representations that they qualified for a loan modification. In light of these

representations, they resumed making (reduced) payments to BANA—payments they

would not have made absent BANA’s representations. Considering the totality of the

alleged circumstances and the example of Aceves, we are unable to determine at the

demurrer stage that general principles, as a matter of law, preclude the Akinshins from

alleging reliance and damages related to their payments to BANA. A trier of fact might

conclude, after both sides have presented their evidence, that the Akinshins suffered no

cognizable damage, but that is not a matter for determination at demurrer.

II. Promissory Estoppel

“Promissory estoppel is ‘a doctrine which employs equitable principles to satisfy

the requirement that consideration must be given in exchange for the promise sought to

be enforced.’ ” (Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation

Authority (2000) 23 Cal.4th 305, 310.) “The elements of a promissory estoppel claim are

‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the

promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the

party asserting the estoppel must be injured by his reliance.’ ” (US Ecology, Inc. v. State

of California (2005) 129 Cal.App.4th 887, 901.) “The party claiming [promissory]

estoppel must specifically plead all facts relied on to establish its elements.” (Smith v.

City and County of San Francisco (1990) 225 Cal.App.3d 38, 48.)

11

In sustaining the demurrer to the cause of action for promissory estoppel, the trial

court stated: “The court’s prior order observed that plaintiffs had not alleged a ‘promise

clear and unambiguous in its terms’ or injury resulting from their reasonable and

foreseeable reliance. As explained above [referring to the discussion sustaining the

demurrer to the cause of action for fraud], the alleged promise continues to be unclear

and ambiguous.”

As we discussed in relation to the cause of action for fraud, BANA’s

representations can be understood with the meaning that the Akinshins attribute to them.

Although the trial court understood those representations, considered together, in another

way, the February 2010 representation that the Akinshins were qualified for a

modification if they made timely payments during the trial period is sufficiently clear and

unambiguous for pleading purposes. Whatever the meaning of the word “qualify,” the

Akinshins relied on the representations and made timely payments during the trial period,

only to be told in December 2010 that they did not have sufficient income for a loan

modification.

“To be enforceable, a promise need only be ‘ “definite enough that a court can

determine the scope of the duty[,] and the limits of performance must be sufficiently

defined to provide a rational basis for the assessment of damages.’ ” (Aceves, supra, 192

Cal.App.4th at p. 226.) Here, the duty on the part of the Akinshins is definite—to make

timely payments during the trial period (initially 90 days and then extended to the end of

the year). If the Akinshins performed their duty, they were “qualified” for a loan

modification—implying a duty on the part of the bank to offer the Akinshins a loan

modification unless the bank learned new facts that would affect their “qualification.”

Here the bank ultimately told the Akinshins that they had insufficient income, but this

was not a new fact because the Akinshins alleged that the bank was at all times aware of

their income. Accordingly, we conclude that the Akinshins have pleaded an enforceable

promise.

The Akinshins alleged that they relied on BANA’s promise by making payments

during the trial period. There is no doubt that such reliance was foreseeable because it

12

was an explicit condition on the promise. The trial court held that “it was not reasonable

for plaintiffs to rely on a mere oral promise,” but we disagree. Whether reliance was

reasonable is a disputed question of fact that is not appropriately decided on demurrer—

otherwise, it is hard to see how an oral promise could ever survive demurrer.

The Akinshins alleged that they were injured “in that [they] made the modified

payments and never received a permanent modification” and were damaged “in that they

will lose their home and will unlikely be able to purchase a new home.” We concluded in

discussing the cause of action for fraud that making payments during the trial period is a

sufficient allegation of damage to survive demurrer.

We conclude that the Akinshins complaint alleged facts sufficient to state a claim

for promissory estoppel.

III. Negligence

“The complaint in an action for damages for negligent injury to person or property

must allege (a) the defendant’s legal duty of care toward the plaintiff [citation]; (b) the

defendant’s breach of duty—the negligent act or omission [citation]; (c) injury to the

plaintiff as a result of the breach—proximate or legal cause [citation]; and (d) damage to

the plaintiff [citation].” (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 576, p.

701.)

The Akinshins alleged that BANA “acted negligently, in failing to provide

plaintiffs with accurate information regarding the status of their loan modification when it

was in a position to do so.” In sustaining BANA’s demurrer to the cause of action for

negligence, the court stated: “Plaintiffs’ pleading still does not specify BANA’s alleged

duty or the particular ‘conduct’ by BANA which was negligent and caused plaintiffs’

harm . . . .” We disagree. Construing the complaint liberally and reading it as a whole,

we construe the cause of action for negligence as one for negligent misrepresentation,

providing an alternate legal theory to fraud (intentional misrepresentation) and

promissory estoppel. Under this construction, BANA’s duty not to negligently make

misrepresentations is clearly implied and the misrepresentations are explicitly alleged.

13

BANA relies on the general rule that “a financial institution owes no duty of care

to a borrower when the institution’s involvement in the loan transaction does not exceed

the scope of its conventional role as a mere lender of money.” (Nymark v. Heart Fed.

Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.) “Such ‘general rule’ has

often been repeated, including in . . . cases decided in the context of loan modification

applications.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 898,

fn. omitted.) However, “[e]ven when the lender is acting as a conventional lender, the

no-duty rule is only a general rule. [Citation.] As a recent federal case put it: ‘Nymark

does not support the sweeping conclusion that a lender never owes a duty of care to a

borrower. Rather, the Nymark court explained that the question of whether a lender owes

such a duty requires “the balancing of [the ‘Biakanja factors’] . . . .” ’ ”8 (Jolley, at

pp. 901-902, quoting Newson v. Countrywide Home Loans, Inc. (N.D. Cal. Nov. 30,

2010, No. C 09-5288) 2010 WL 4939795, at p. *5.)

A bank does have a duty, even when acting within its conventional role as a lender

of money, “to not make material misrepresentations about the status of an application for

a loan modification . . . . It is foreseeable that a borrower might be harmed by an

inaccurate or untimely communication . . . about the status of a loan modification

application, and the connection between the misrepresentation and the injury suffered

could be very close.” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th

49, 68-69.) We have already dealt with the elements of injury and damage in considering

the causes of action for fraud and promissory estoppel. Accordingly, the SAC

sufficiently states a cause of action for negligent misrepresentation.

8

The Biakanja factors are six nonexhaustive factors: (1) the extent to which the

transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the

plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of

the connection between the defendant’s conduct and the injury suffered, (5) the moral

blame attached to the defendant’s conduct, and (6) the policy of preventing future harm.

(Biakanja v. Irving (1958) 49 Cal.2d 647, 650.)

14

IV. Unfair Competition

The UCL “prohibits, and provides civil remedies for, unfair competition, which it

defines as ‘any unlawful, unfair or fraudulent business act or practice.’ ([Bus. & Prof.

Code,] § 17200.) Its purpose ‘is to protect both consumers and competitors by promoting

fair competition in commercial markets for goods and services.’ [Citations.] In service

of that purpose, the Legislature framed the UCL’s substantive provisions in ‘ “broad,

sweeping language” ’ [citations].” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th

310, 320.) “[A]n individual may not prosecute a UCL claim unless the individual ‘has

suffered injury in fact and has lost money or property as a result of the unfair

competition.’ ([Bus. & Prof. Code,] § 17204.)” (Schwartz v. Provident Life and Accident

Ins. Co. (2013) 216 Cal.App.4th 607, 611.)

In sustaining BANA’s demurrer to the cause of action for violation of the UCL,

the trial court stated: “[T]he cause of action depends on prior allegations, which are

deficient as stated above.” Because we have determined that the Akinshins’ complaint

sufficiently states causes of action for fraud and negligent misrepresentation, we conclude

that the alleged misrepresentations by BANA are also sufficient to maintain a cause of

action under the UCL. Construing the complaint liberally, the modified loan payments

alleged in the preceding causes of action constitute injury in fact and lost money.

V. The 2007 Loan Origination

In their opposition to BANA’s demurrer, the Akinshins argued that the cause of

action for fraud was meant to incorporate the earlier allegations concerning the 2007 loan

origination, despite the fact that under that cause of action the SAC listed only alleged

misrepresentations concerning their efforts to obtain a loan modification in 2010.

However, at oral argument on appeal, the Akinshins’ counsel conceded that allegations

concerning the 2007 loan origination relate only to the cause of action for violation of the

UCL.

Actions for relief on the ground of unfair competition are subject to a four-year

statute of limitations. (Bus. & Prof. Code, §§ 17208, 17200.) The Akinshins received

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their loan on March 18, 2007, but they did not file a complaint until June 24, 2011. The

Akinshins argue that the “discovery rule”9 should apply to toll the statute of limitations.

Because we have determined that all four of the Akinshins’ causes of action

survive demurrer based on allegations concerning their efforts to obtain a loan

modification in 2010, we have no cause to further consider whether any claims related to

the 2007 loan origination will be time-barred as this matter proceeds.

9

“Generally speaking, a cause of action accrues at ‘the time when the cause of

action is complete with all of its elements.’ [Citations.] An important exception to the

general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of

action until the plaintiff discovers, or has reason to discover, the cause of action.

[Citations.] [¶] A plaintiff has reason to discover a cause of action when he or she ‘has

reason at least to suspect a factual basis for its elements.’ [Citations.] Under the

discovery rule, suspicion of one or more of the elements of a cause of action, coupled

with knowledge of any remaining elements, will generally trigger the statute of

limitations period. [Citations.]” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th

797, 806-807 (Fox).)

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DISPOSITION

The judgment is reversed, and the matter is remanded with directions to the trial

court to vacate its order sustaining the demurrer to the SAC and to enter a new order

overruling the demurrer. The Akinshins are awarded their costs on appeal.

_________________________

Brick, J.*

We concur:

_________________________

Kline, P.J.

_________________________

Richman, J.

* Judge of the Alameda County Superior Court, assigned by the Chief Justice

pursuant to article VI, section 6 of the California Constitution.

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