Filed 3/15/16 Badiei v. J.P. Morgan Chase Bank CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
KEVIN BADIEI, D068518
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2014-00040779-
CU-OR-CTL)
J.P. MORGAN CHASE BANK, N.A.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Timothy
B. Taylor, Judge. Affirmed.
Kevin Badiei, in propria persona, for Plaintiff and Appellant.
Keesal, Young & Logan, David D. Piper and Kendra S. Canape for Defendant and
Respondent.
Kevin Badiei appeals a judgment entered after the trial court sustained J.P.
Morgan Chase's (Chase) demurrer without leave to amend. Badiei's complaint asked the
court to "render a recordable judgment against JP Morgan Chase about the accounting
and loan balances and monthly payments" of two properties subject to Chase mortgages.
Chase demurred, asserting the complaint's request failed because Badiei had not alleged
any actionable controversy or that he was owed a balance. Badiei, appearing in propria
persona, contends he should have been permitted to amend his complaint. We affirm the
judgment.
BACKGROUND
The two properties at issue are located in San Diego County at 5957 Avenida
Chamnez (Avenida Property) and 7235 Calabria Court (Calabria Property).
A. Avenida Property
Badiei obtained title to the Avenida Property in 2000. Several years later he
obtained a loan of $1,000,000 from Washington Mutual Bank, FA (Washington Mutual)
secured by a deed of trust on the property. On December 31, 2014, a Corporate
Assignment of Deed of Trust was recorded against the property indicating that all
beneficial interest in the loan was transferred by the Federal Deposit Insurance
Corporation as receiver for Washington Mutual to JP Morgan Chase Bank, National
Association.
On July 24, 2013, Badiei signed a Loan Modification Agreement providing Chase
would suspend any foreclosure activity and that the new principal balance of the loan was
$1,239,470.95. The agreement also provided that $214,600 of the balance would be
deferred and would not bear interest. The agreement required Badiei to make monthly
payments beginning on August 1, 2013, and set the payment amount and interest rate
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(increasing from 2% to 5.5% over time). The agreement also required the payment of the
deferred balance on the loan's maturity date.
Badiei's complaint attached three mortgage statements for the Avenida Property.
The statement dated December 23, 2013, includes a "Deferred Interest Balance" of
$170,432.57 that is not reflected on the November 22, 2013, statement. The statement
dated July 1, 2014, shows a "Deferred Interest Balance" of $160,529.61. Badiei asserts
the "Deferred Interest Balance" is a "phantom loan" and that the mortgage statements
show approximately $1,500 per month was applied to this "phantom loan."
B. Calabria Property
In 2007 Badiei obtained title to the Calabria Property and a loan of $389,600 from
Washington Mutual secured by a deed of trust on the property. On July 18, 2013, Chase
sent a letter to Badiei stating that under the terms of his adjustable rate mortgage, an
adjustment was made to the payment due on September 1, 2013. The letter also stated
the new payment "is based on a rate of 4.45100%," a remaining term of 408 months and a
"projected unpaid principal balance" of $412,710.99.
Thereafter, Badiei signed a Loan Modification Agreement for the property,
effective September 1, 2013, which provided Chase would suspend foreclosure
proceedings and the new principal balance of the loan was $502,941.84. The agreement
also stated $180,000 of the balance would be deferred. The agreement set the rate of
interest on the nondeferred portion of the balance at 4.625% and monthly payments at
$1,570.28. A letter dated August 4, 2014, from Chase to Badiei provided Chase was
reducing the principal balance on the mortgage for the Calabria Property by $45,491.71
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"because of a recent mortgage settlement between [Chase] and federal and state
agencies." The letter stated the loan's current principal balance of $498,691.71 was
adjusted to $453,200.
C. Procedural History
On December 2, 2014, Badiei filed a complaint against Chase requesting that the
court "render a recordable judgment against [Chase] about the accounting and loan
balances and monthly payments of the" two properties. The complaint contained no
factual allegations of wrongdoing by Chase or of any specific dispute between Badiei and
Chase. Badiei attached to the complaint both loan modification agreements; the August
4, 2014 letter from Chase indicating the reduction of the Calabria Property loan balance;
the July 18, 2013 letter from Chase notifying Badiei of an adjustment to the interest rate
and payment amount; a statement for the Calabria Property dated September 4, 2013; and
statements for the Avenida Property dated November 22, 2013, December 23, 2013, and
July 1, 2014. On February 5, 2015, Badiei filed an amended complaint changing "the
classification from 'limited' to 'Unlimited.' "
Chase demurred and also sought judicial notice of documents recorded with the
San Diego County Recorder's Office related to both properties. In its demurrer, Chase
contended the complaint was devoid of any factual detail and that Badiei had failed to
assert any ascertainable legal claim to support either an accounting or declaratory relief.
Chase asserted Badiei was seeking, "in essence, either an accounting or a declaration of
his rights and duties with respect to the two Loans at issue." Chase argued that the relief
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Badiei sought was derivative only and not available absent an independently viable legal
claim.
In response to the demurrer, Badiei argued he could amend the complaint to allege
breach of contract claims with respect to both mortgages. With respect to the Avenida
Property, Badiei asserted that instead of applying his monthly mortgage payments to
reduce the principal and interest of the loan, Chase "created a Phantom loan of
$169,025.92 . . . , to which Chase applies Plaintiff's monthly principal and interest
payments." Badiei also stated that Chase "created a false loan balance of $1,239,470 that
is based on the fraudulent indices of Washington Mutual . . . , which has been declared
illegal." Likewise, with respect to the Calabria Property, Badiei asserted that the
principal balance of the mortgage set forth in the Loan Modification Agreement of
$502,941 is "based on the fraudulent indices of Washington Mutual . . . , which has been
declared illegal." He also claimed the balance was incorrect because Chase's July 18,
2013 letter indicated the balance of the loan was only $412,710.99. Badiei further
asserted Chase breached its contract with Badiei because "Chase's monthly mortgage
payment demand of $1,924.65 is excessive . . . ."
Without any supporting factual allegations, Badiei also argued he would amend
the complaint to include claims for intentional misrepresentation, negligent
misrepresentation, fraudulent concealment, and violations of Civil Code sections 1572,
1709 and 1710. He repeated his request for an accounting and asserted that prior to filing
the complaint he asked Chase for an accounting but that his request was ignored. In
support of this assertion, Badiei submitted an e-mail chain between himself and Chase's
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attorney. The e-mails show Badiei provided the complaint to Chase before September
and that Chase's attorney indicated on December 10, 2014, that she believed she had
resolved Badiei's concerns and would call him in the next few days to discuss the
resolution.
The trial court granted Chase's request for judicial notice and sustained the
demurrer without leave to amend. The court concluded the complaint failed to plead any
facts to support a claim for relief, and specifically did not allege any actual controversy
between the parties regarding the balances on the two loans or allege Chase owed money
to Badiei. "Rather, [the complaint] evidently seeks a declaration as to the amount of
money that plaintiff owes [Chase]." Recognizing it is "ordinarily an abuse of discretion
to deny" a request for leave "unless the inability to state a valid cause of action is clear,"
the trial court concluded leave to amend was properly denied because Badiei failed to
meet his "burden to show in what manner he [could] amend the [complaint] and how the
amendment [would] change the legal effect of the pleading."
DISCUSSION
Badiei's briefing in this court is difficult to understand and includes long passages
of irrelevant commentary on corporate and government wrongdoing in the recent
financial crisis. Badiei appears to contend that the trial court erred by denying him leave
to amend his complaint because he provided "evidence that the loan balances . . . are false
and in breach of the loan agreement . . . ." He asserts "using crooked account practices
and illegal loan indices, in breach of its loan agreement and deed of trust, Chase falsely
created a loan balance of $502,941" on the Calabria Property. He contends "[b]y
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Chase[']s own admission the loan balance should have been $412,701 and in breach of
the mortgage agreement Chase is collecting monthly mortgage payments that are based
on a $502,941 loan." Similarly, Badiei asserts Chase used "crooked accounting
practices" and "crooked indices" to increase the Avenida Property loan balance from
$1,000,000 to $1,402,594.66.
I
We note at the outset that we address only those arguments that we can
reasonably discern from Badiei's briefing and that are supported by identifiable argument.
" 'Appellate briefs must provide argument and legal authority for the positions taken.
"When an appellant fails to raise a point, or asserts it but fails to support it with reasoned
argument and citations to authority, we treat the point as waived." ' [Citation.] 'We are
not bound to develop appellants' arguments for them. [Citation.] The absence of cogent
legal argument or citation to authority allows this court to treat the contention as
waived.' " (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.)
These standards are unchanged where an appellant appears in propria persona. "[S]uch a
party is to be treated like any other party and is entitled to the same, but no greater
consideration than other litigants and attorneys." (Barton v. New United Motor
Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 1210; see also Rappleyea v. Campbell
(1994) 8 Cal.4th 975, 984-985.)
This court applies the following well-established law in reviewing a trial court's
order sustaining a demurrer without leave to amend: " 'We treat the demurrer as
admitting all material facts properly pleaded, but not contentions, deductions or
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conclusions of fact or law. [Citation.] We also consider matters which may be judicially
noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it
as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we
determine whether the complaint states facts sufficient to constitute a cause of action.
[Citation.] And when it is sustained without leave to amend, we decide whether there is a
reasonable possibility that the defect can be cured by amendment: if it can be, the trial
court has abused its discretion and we reverse; if not, there has been no abuse of
discretion and we affirm. [Citations.] The burden of proving such reasonable possibility
is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A plaintiff
must show "in what manner he can amend his complaint and how that amendment will
change the legal effect of his pleading." (Goodman v. Kennedy (1976) 18 Cal.3d 335,
349.)
II
Badiei contends the court erred by denying his request to amend the complaint to
add claims for breach of contract, intentional and negligent misrepresentation, fraudulent
concealment and violations of Civil Code sections 1572, 1709 and 1710.1 To state a
claim for breach of contract, a plaintiff must allege "(1) the existence of the contract, (2)
plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the
resulting damages to the plaintiff." (Oasis West Realty, LLC v. Goldman (2011) 51
1 Badiei's briefing does not assert the court erred by sustaining Chase's demurrer to
his request that the court "render a recordable judgment against JP Morgan Chase about
the accounting and loan balances and monthly payments of" each loan.
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Cal.4th 811, 821.) Badiei's has not provided any factual allegations as to how Chase
breached the loan modification agreement for either property.
With respect to the Calabria Property loan, Badiei states only that the loan balance
is too high. He does not provide any factual allegations as to what agreement Chase
breached or why the higher amount constitutes a breach. (See Cooper v. Leslie Salt Co.
(1969) 70 Cal.2d 627, 636-637 [Affirming denial of leave to amend where plaintiff
"insinuates multiple wrongs by respondents, [but] he never points out in what manner
those insinuations could be combined to state a cause of action"].) Likewise, with respect
to the Avenida Property, Badiei asserts that Chase increased the loan balance and that the
line item labeled "deferred interest balance" on his monthly statements is a "phantom
loan," but he does not assert any factual allegation as to how this constituted a breach of
the loan modification agreement by Chase.
Badiei's claims for intentional and negligent misrepresentation, fraudulent
concealment and violations of Civil Code sections 1572, 1709 and 17102 fair no better.
" ' "The elements of fraud, which gives 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." ' " (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167,
2 Civil Code section 1572 defines what constitutes "actual fraud" in the making of a
contract. Section 1709 states: "One who willfully deceives another with intent to induce
him to alter his position to his injury or risk, is liable for any damage which he thereby
suffers." (Civ. Code, § 1709.) Section 1710 defines what constitutes deceit within the
meaning of section 1709.
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173.) "These elements may not be pleaded in a general or conclusory fashion. [Citation.]
Fraud must be pled specifically—that is, a plaintiff must plead facts that show with
particularity the elements of the cause of action." (Glaski v. Bank of America, National
Association (2013) 218 Cal.App.4th 1079, 1090.)
"The tort of negligent misrepresentation does not require scienter or intent to
defraud. [Citation.] It encompasses '[t]he assertion, as a fact, of that which is not true, by
one who has no reasonable ground for believing it to be true' [citation], and '[t]he positive
assertion, in a manner not warranted by the information of the person making it, of that
which is not true, though he believes it to be true' . . . ." (Small v. Fritz Companies, Inc,
supra, 30 Cal.4th at pp. 173-174.) In both causes of action, the plaintiff must plead
actual reliance on the misrepresentation. (Cadlo v. Owens-Illinois, Inc. (2004) 125
Cal.App.4th 513, 519.)
Badiei has not asserted any factual allegations of a fraud by Chase or that support
the Civil Code violations he contends he should have been permitted to add. Badiei
states only that there are inconsistencies in the various documents he attached to the
complaint and that these inconsistencies are "prima facie evidence . . . of . . . crooked
accounting practices" that should be considered fraudulent. These vague assertions are
not sufficient to show how Badiei would amend his complaint to assert an actionable
claim. (See Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024,
1031 ["plaintiff has the burden of showing that the facts pleaded are sufficient to
establish every element of the cause of action"].)
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Because Badiei has not shown a reasonable possibility that he can allege facts
sufficient to state a claim for breach of contract or fraud, he has not established that it was
an abuse of discretion to deny leave to amend.
DISPOSITION
The judgment is affirmed. Respondent shall recover costs on appeal.
IRION, J.
WE CONCUR:
HUFFMAN, Acting P. J.
O'ROURKE, J.
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