Edith K. Augustt v. Clear Recon Corp

(Chatsworth Courthouse: Dept. F51) August 26, 2026

COURT NORTH VALLEY DISTRICT DEPARTMENT F-51 AUGUST 25, 2026 DEMURRER Los Angeles Superior Court Case # 25CHCV04420 ¿ Demurrer Filed: 4/23/26 ¿ MOVING PARTY: Defendant Clear Recon Corp ("Moving Defendant") RESPONDING PARTY: Plaintiff Edith K. Augustt ("Plaintiff") NOTICE: OK ¿ RELIEF REQUESTED: Moving Defendant demurs to Plaintiff's entire first amended complaint ("FAC"). TENTATIVE RULING: The demurrer is sustained as to Plaintiff's first and sixth causes of action, and overruled as to the remaining causes of action, with 30 days leave to amend.

BACKGROUND ¿ This is a wrongful foreclosure action in which Plaintiff, who owns certain residential property located at 12436 Longacre Avenue, Granada Hills, California 91344, alleges that Defendants "engaged in a pattern of dual tracking, inaccurate servicing, and deceptive communications that placed Plaintiff's home in jeopardy despite her ongoing efforts to resolve the alleged delinquency." (FAC P.P. 1, 16.) Specifically, Plaintiff alleges that in 2024 and 2025, Defendants "initiated foreclosure while Plaintiff had active loss-mitigation applications pending." (Id. at P. 2.)

Plaintiff alleges that Moving Defendant acted as the foreclosure trustee for the subject property. (Id. at P.P. 10, 17.) "Defendants' conduct has caused financial harm, cancellation or disruption of Plaintiff's homeowner's insurance coverage, and the continuing threat that Defendants may proceed with foreclosure despite unresolved statutory violations." (Id. at P. 7.)

On 12/11/25, Plaintiff filed her original complaint, alleging against Defendants the following causes of action: (1) Violation of Homeowner Bill of Rights - Dual Tracking; (2) Violation of Homeowner Bill of Rights - Failure to Exercise Due Diligence; (3) Violation of Homeowner Bill of Rights - Accuracy of Foreclosure Documents; (4) Negligence; (5) Violation of Rosenthal Fair Debt Collection Practices Act; (6) Fraud/Intentional Misrepresentation; (7) Breach of Implied Covenant of Good Faith and Fair Dealing; (8) Unfair Competition; (9) Declaratory Relief; and (10) Injunctive Relief.

On 3/16/26, Plaintiff filed her FAC, alleging the same causes of action. All causes of action but the fifth are alleged against Moving Defendant. On 4/20/26, Moving Defendant filed the instant demurrer and motion to strike. On 7/13/26, Plaintiff filed her oppositions thereto. No reply has been filed to date.

DEMURRER As a general matter, a party may respond to a pleading against it by demurrer on the basis of any single or combination of eight enumerated grounds, including that "the pleading does not state facts sufficient to constitute a cause of action." (Code Civ. Proc., Sec. 430.10, subd. (e).) 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.)¿ "A demurrer tests the pleading alone, and not the evidence or facts alleged." (E-Fab, Inc. v.

Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint's properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) Here, Moving Defendant¿demurs to Plaintiff's entire FAC on the basis that she fails¿to allege facts sufficient to state any of the causes of action therein.

I. Meet-and-Confer Before filing its demurrer, "the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer." (Code Civ. Proc. Sec. 430.41, subd. (a).) "If the parties are not able to meet and confer at least 5 days before the date the responsive pleading is due, the demurring party shall be granted an automatic 30-day extension of time within which to file a responsive pleading, by filing and serving, on or before the date on which a demurrer would be due, a declaration stating under penalty of perjury that a good faith attempt to meet and confer was made and explaining the reasons why the parties could not meet and confer." (Id. at subd. (a)(2).)

Here, Moving Defendant's counsel does not attach any meet and confer declaration. However, "a determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer." (Code Civ. Proc. Sec. 430.41, subd. (a)(4).)

II. Uncertainty As a preliminary matter, Moving Defendant argues that in her FAC, Plaintiff "treats both the mortgage servicer SPS and the foreclosure trustee the same. This is improper. When making allegations against multiple defendants, a plaintiff must plead against each defendant; he cannot lump them all together indiscriminately." (Dem. 2:12-14.) In opposition, Plaintiff argues that she "specifically alleges that CRC recorded the September 30, 2024 Notice of Default (FAC P. 20), recorded the September 3, 2025 Notice of Default (FAC P. 26), acted as foreclosure trustee on behalf of the beneficiary (FAC P. 60), and is specifically named with SPS in the section 2924.17 cause of action challenging the accuracy of the foreclosure documents. (FAC P.P. 63-68.)." (Pl.'s Opp. 5:1-4.) "Thus, the FAC sufficiently distinguishes CRC from SPS and alleges CRC's own conduct in the challenged foreclosure activity." (Id. at 5:9-10.)

Based on the foregoing, the Court agrees with Plaintiff that "the FAC's use of the collective term 'Defendants' in other paragraphs does not eliminate CRC-specific allegations." (Id. at 5:4-5.) The Court further notes that Moving Defendant has failed to file any reply in support of the instant demurrer. Accordingly, the demurrer is overruled as to this issue.

III. Tender Moving Defendant further argues that "without an allegation of tender, a complaint challenging a foreclosure does not state a cause of action." (Dem. 2:18-19, citing Karlsen v. Gibralter Sav. & Loan Assn. (1974) 15 Cal.App.3d 112, 117.) Moving Defendant argues that here, "Plaintiff has not alleged tendering all amounts owed and instead admits that she is in default." (Id. at 2:22.) In opposition, Plaintiff argues that "tender is not required where no sale has occurred, and the borrower seeks to prevent an unlawful foreclosure or obtain statutory pre-sale injunctive relief." (Pl.'s Opp. 10:2-7, citing Turner v.

Seterus, Inc. (2018) 27 Cal.App.5th 516, 525-526; Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 225; Civ. Code, Sec. 2924.12, subd. (a)(1).).) Based on the foregoing, the Court finds that the instant claims do not fail for lack of tender, as no foreclosure sale has been alleged. Accordingly, the demurrer is overruled as to this issue.

IV. Homeowners' Bill of Rights Plaintiff's first, second, and third causes of action respectively allege the following violations of the California Homeowner Bill of Rights ("HBOR") (Civ. Code, Sec. 2923.4 et seq.) against Defendants: (1) Dual Tracking (Civ. Code Sec. 2924.11, subd. (f)), (2) Failure of Exercise Due Diligence (Civ. Code Sec. 2923.55), and (3) Accuracy of Foreclosure Documents (Civ. Code Sec. 2924.17). Under Civil Code section 2924.11, subdivision (f), a "mortgage servicer shall not collect any late fees for periods during which a complete first lien loan modification application is under consideration or a denial is being appealed, the borrower is making timely modification payments, or a foreclosure prevention alternative is being evaluated or exercised." (Civ.

Code Sec. 2924.11, subd. (f).) Here, Moving Defendant argues that "Plaintiff does not allege that CRC collected late fees while Plaintiff's applications were being considered by the mortgage servicer." (Dem. 3:2-3.) In opposition, Plaintiff argues that "CRC cannot obtain dismissal merely because the First Cause of Action cites the wrong subsection. The demurrer should be overruled, or Plaintiff should be granted leave to clarify the dual-tracking theory." (Pl.'s Opp. 6:11-14.) Based on the foregoing miscitation, the Court sustains Moving Defendant's demurrer to Plaintiff's first cause of action.

Under Civil Code section 2923.55, a mortgage servicer is not to record a notice of default while the borrower's complete first lien modification application is pending. (Civ. Code Sec.Sec. 2923.55, subd. (a)(3); 2923.6, subd (c).) Here, Plaintiff alleges that in 2024 and 2025, Defendants "had not properly completed the review of Plaintiff's loss-mitigation application, and had not complied with the statutory requirements of Civil Code Sec. 2923.55 at the time the Notice of Default was recorded." (FAC P. 58.)

Moving Defendant argues that "CRC as foreclosure trustee had no obligation to so contact borrower, and the declaration does not include any reference to CRC, and so no claim is stated against CRC under section 2923.55." (Dem. 3:24-26.) However, as Plaintiff argues in opposition, the statute expressly provides for liability against trustees. Based on the foregoing, the Court finds that here, at the pleading stage, Plaintiff has alleged facts sufficient to constitute a cause of action for violation of Civil Code section 2923.55.

Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's second cause of action.

Under Civil Code section 2924.17, subdivision (a), a notice of default or any declaration recorded in connection with a foreclosure proceeding "shall be accurate and complete and supported by competent and reliable evidence." (Civ. Code Sec. 2924.17, subd. (a).) Here, Plaintiff alleges that "the 2024 Notice of Default was inaccurate because SPS had not verified Plaintiff's review status or arrears amount and failed to include information necessary to support the declaration." (FAC P. 65.) "The 2025 Notice of Default was also inaccurate because SPS had not completed its review of Plaintiff's loss-mitigation application, misstated Plaintiff's delinquency and arrears amount, failed to establish its authority to initiate foreclosure, and falsely declared that Defendants had contacted Plaintiff and exercised the due diligence required by Civil Code Sec. 2923.55 before recording the Notice of Default." (Id. at P. 67.)

Moving Defendant argues that "the foreclosure trustee is entitled to rely upon the figures given to it by the lender." (Dem. 4:8-9, citing Civ. Code. Sec. 2924, subd. (b) ["the trustee shall not incur liability for any good faith error resulting from reliance on information provided in good faith by the beneficiary regarding the nature and the amount of the default under the secured obligation, deed of trust, or mortgage."].) In opposition, Plaintiff argues that good-faith reliance is a factual determination not alleged in the FAC, therefore Moving Defendant "improperly asks the Court to presume facts necessary to establish its statutory defense." (Pl.'s Opp. 7:12-14.)

The Court agrees. Based on the foregoing, the Court finds that here, at the pleading stage, Plaintiff has alleged facts sufficient to constitute a cause of action for violation of Civil Code section 2923.17. Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's third cause of action.

V. Negligence Plaintiff's fourth cause of action alleges Negligence against Defendants. To state a claim for negligence, a plaintiff must allege the elements of (1) "the existence of a legal duty of care," (2) "breach of that duty," and (3) "proximate cause resulting in an injury." (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.) Moving Defendant argues that "foreclosure Trustees do not owe a duty of care." (Dem. 4:15, citing McCann v. Lucky Money, Inc. (2005) 129 Cal.App.4th 1382, 1398 ["Generally, there is no fiduciary owed duty in a purely commercial situation."].)

In opposition, Plaintiff argues that " McCann was not a foreclosure-negligence action and did not hold that a foreclosure trustee categorically owes no duty of care for its own conduct. Rather, McCann concerned whether a money transmitter holding statutory 'trust funds' owed traditional fiduciary duties and cited deed-of-trust law only by analogy. ... CRC therefore cannot transform McCann into a categorical immunity rule." (Pl.'s Opp. 8:1-6.) The Court agrees, and notes that Moving Defendant raises no further arguments against this cause of action.

Based on the foregoing, the Court finds that Plaintiff has alleged facts sufficient to support her Negligence cause of action against Moving Defendant. Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's fourth cause of action.

VI. Fraud/Intentional Misrepresentation Plaintiff's sixth cause of action alleges Fraud/Intentional Misrepresentation against Defendants. The elements that must be pleaded in a cause of action for fraud are: (1) a misrepresentation (false representation, concealment or nondisclosure); (2) knowledge of its falsity (or "scienter"); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage. (Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.) Fairness requires that allegations of fraud be pled "with particularity" so that the court can weed out nonmeritorious actions before a defendant is required to answer. (Small v.

Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The particularity requirement necessitates pleading facts that "show how, when, where, to whom, and by what means the representations were tendered." (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Here, Plaintiff alleges that Defendants "knowingly misrepresented and concealed the true status of foreclosure by stating that no foreclosure sale would occur during the application evaluation period as well as the appeal period, despite having already initiated foreclosure through the recording of a Notice of Default the day after Plaintiff submitted a complete loss mitigation application." (FAC P. 82; see also FAC P.P. 4, 28, 32.)

Based on the foregoing, the Court finds that Plaintiff has failed to allege facts sufficient to support her Fraud/Intentional Misrepresentation cause of action against Moving Defendant. Accordingly, the Court sustains Moving Defendant's demurrer to Plaintiff's sixth cause of action.

VII. Breach of Implied Covenant of Good Faith and Fair Dealing Plaintiff's seventh cause of action alleges against Defendants a Breach of the Implied Covenant of Good Faith and Fair Dealing. Every contract contains an implied covenant of good faith and fair dealing that neither party will do anything to interfere with the other party's right to receive the benefits of the agreement. (Howard v. American Nat'l Fire Ins. Co. (2010) 187 Cal.App.4th 498, 528.) The precise nature and extent of the duty depends on the nature and purpose of the underlying contract and the parties' legitimate expectations arising from the contract. (Ibid.) "A breach of the implied covenant of good faith is a breach of the contract ... and breach of a specific provision of the contract is not ... necessary to a claim for breach of the implied covenant of good faith and fair dealing." (Thrifty Payless, Inc. v.

The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) Here, Plaintiff alleges that Defendants "unfairly interfered with Plaintiff's right to receive the benefits of her loan agreement" by "pursuing foreclosure activity while Plaintiff's loss-mitigation applications and appeals were pending, misrepresenting the status of foreclosure proceedings, mishandling Plaintiff's mitigation submissions and appeal requests, coercing Plaintiff into reinstatement or payment demands under circumstances created by Defendants' improper servicing practices, and refusing to suspend foreclosure proceedings during Plaintiff's review and appeal process as required by law and consistent with the reasonable expectations arising from the loan servicing relationship." (FAC P.P. 88, 90.)

Moving Defendant argues that this cause of action fails because "the FAC pleads no contract by which Plaintiff is in privity of contract with CRC." (Dem. 5:3.) In opposition, Plaintiff argues that "the FAC alleges a loan transaction secured by a deed of trust, identifies CRC as the foreclosure trustee acting under that instrument, and alleges that CRC exercised foreclosure powers arising from that relationship. (FAC P.P. 17, 60, 87-91.) CRC's argument therefore asks the court to make assumptions, without analysis of the governing documents." (Pl.'s Opp. 9:4-7.)

Based on the foregoing, the Court finds that here, at the pleading stage, Plaintiff has alleged facts sufficient to constitute a cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing. Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's seventh cause of action.

VIII. Unfair Competition Plaintiff's eighth cause of action alleges Unfair Competition against Defendants. To succeed on a claim for unfair business practices in violation of the Unfair Competition Law ("UCL"), a plaintiff must establish that the defendant was engaged in an "unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising" and certain specific acts. (Bus. & Prof. Code, Sec. 17200.) "In essence, an action based on Business and Professions Code section 17200 to redress an unlawful business practice 'borrows' violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under section 17200 et seq. and subject to the distinct remedies provided thereunder." (People ex rel.

Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 515.) A plaintiff alleging an "unfair" business practice under the UCL must show that the defendant's conduct is "tethered to an underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law." (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 613.) In order to have standing under the UCL, a party must "(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim." (Kwikset Corp. v.

Superior Court (2011) 51 Cal.4th 310, 322.) Here, Moving Defendant argues that "this claim fails because it is dependent on the other claims against CRC, which as discussed, themselves fail." (Dem. 5:8-9.) As the Court overrules Moving Defendant's demurrer as to Plaintiff's second, third, fourth, and seventh causes of action, it finds that Plaintiff has sufficiently alleged violations of law to constitute a cause of action for violation of the UCL under the "unlawful" prong. Based on the foregoing, the Court finds that here, at the pleading stage, Plaintiff has alleged facts sufficient to constitute a cause of action for Unfair Competition in violation of the UCL.

Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's eighth cause of action.

IX. Declaratory Relief Plaintiff's ninth cause of action alleges Declaratory Relief against Defendants. "To qualify for declaratory relief, a party would have to demonstrate its action presented two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party's rights or obligations." (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) Here, Moving Defendant argues that Plaintiff's derivative Declaratory Relief claim fails as her other claims do. (Dem. 5:10-16.)

In opposition, Plaintiff argues that she "alleges that CRC's September 3, 2025 Notice of Default remains recorded against Plaintiff's property and that the parties dispute whether the Notice was lawfully recorded and whether foreclosure may proceed." (Pl.'s Opp. 9:25-27.) Based on the foregoing, the Court finds that Plaintiff has alleged facts sufficient to constitute a cause of action for Declaratory Relief. Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's ninth cause of action.

X. Injunctive Relief Plaintiff's tenth cause of action alleges Injunctive Relief against Defendants. The elements of a cause of action for injunctive relief are (1) a tort or other wrongful act constituting a cause of action; and (2) irreparable injury, i.e., a factual showing that the wrongful act constitutes an actual or threatened injury to property or personal rights which cannot be compensated by an ordinary damage award." (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.)

Here, Moving Defendant argues that Plaintiff's tenth cause of action is a remedy, not a cause of action. (Dem. 5:18.) In opposition, Plaintiff argues that "Civil Code section 2924.12 expressly authorizes presale injunctive relief for qualifying HBOR violations." (Pl.'s Opp. 10:4-5.) Based on the foregoing, the Court finds that Plaintiff has alleged facts sufficient to constitute a cause of action for Injunctive Relief. Accordingly, the Court overrules Moving Defendant's demurrer to Plaintiff's ninth cause of action.

LEAVE TO AMEND Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, "[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend." (Youngman v.

Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245). Here, the Court notes that this is Moving Defendant's first demurrer heard against Plaintiff's operative pleading, and further notes that Plaintiff seeks leave to amend to the extent necessary. Therefore, under the Court's liberal policy of granting leave to amend, Plaintiff is granted 30 days leave to amend the FAC to cure the defects set forth above.

CONCLUSION The demurrer is sustained as to Plaintiff's first and sixth causes of action, and overruled as to the remaining causes of action, with 30 days leave to amend.

LOS ANGELES SUPERIOR COURT NORTH VALLEY DISTRICT DEPARTMENT F-51 AUGUST 25, 2026 DEMURRER WITH MOTION TO STRIKE Los Angeles Superior Court Case # 25CHCV04420 ¿ Demurrer with Motion to Strike Filed: 4/20/26 ¿ MOVING PARTY: Defendants Select Portfolio Servicing, Inc.; Towd Point Mortgage Trust 2018-5; and U.S. Bank National Association (collectively, "Moving Defendants") RESPONDING PARTY: Plaintiff Edith K. Augustt ("Plaintiff") NOTICE: OK ¿ RELIEF REQUESTED: Moving Defendants demur to Plaintiff's entire first amended complaint ("FAC"), and seek an order striking allegations relating to punitive damages, emotional distress damages, attorney fees, statutory damages, and credit impairment damages from the FAC.

TENTATIVE RULING: The demurrer is sustained as to Plaintiff's first and fourth causes of action, and overruled as to the remaining causes of action. The motion to strike is granted as to Plaintiff's allegations regarding punitive damages, and statutory damages stemming from her HBOR claims, and denied as to the remainder. Plaintiff is granted 30 days leave to amend. REQUEST FOR JUDICIAL NOTICE: Moving Defendants' request for judicial notice is granted as to the existence, but not the contents, of Exhibit Nos. 1-14.

BACKGROUND ¿ This is a wrongful foreclosure action in which Plaintiff, who owns certain residential property located at 12436 Longacre Avenue, Granada Hills, California 91344, alleges that Defendants "engaged in a pattern of dual tracking, inaccurate servicing, and deceptive communications that placed Plaintiff's home in jeopardy despite her ongoing efforts to resolve the alleged delinquency." (FAC P.P. 1, 16.) Specifically, Plaintiff alleges that in 2024 and 2025, Defendants "initiated foreclosure while Plaintiff had active loss-mitigation applications pending." (Id. at P. 2.) "Defendants' conduct has caused financial harm, cancellation or disruption of Plaintiff's homeowner's insurance coverage, and the continuing threat that Defendants may proceed with foreclosure despite unresolved statutory violations." (Id. at P. 7.)