Court of Appeals of California, Second District, Division One (LoanSafe.org) – Dunn alleged that Cobb, a mortgage broker and employee or agent of Wells Fargo, agreed in April 2004 to procure a loan for him to purchase the Manhattan Beach residential property. According to Dunn, the Truth in Lending Disclosure Statement that he obtained prior to escrow indicated that the loan carried a maximum monthly payment of $3,245 and no prepayment penalty. Nevertheless, Dunn alleged, the Truth in Lending Disclosure Statement that was part of his escrow package and formed the terms of his loan, which funded on May 17, 2004, differed in material respects by providing for 300 monthly payments of $4,221.55 after the initial 60 payments and the potential for a prepayment penalty.- Courts
LAURENCE I. DUNN, Plaintiff and Appellant,
WELLS FARGO BANK NATIONAL ASSOCIATION et al., Defendants and Respondents.
Filed January 27, 2011.
Law Offices of Eugene Alkana and Eugene Alkana for Plaintiff and Appellant.
Barry Gardner & Kincannon and Laura J. Petrie for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
Plaintiff Laurence Dunn appeals from the judgment entered after the trial court granted summary judgment for defendants Wells Fargo Bank National Association, Wells Fargo Home Mortgage1 and Daniel Cobb in this action based on Dunn’s financing of a loan for his purchase of residential property in Manhattan Beach. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Complaint
On May 16, 2007, Dunn filed a complaint against Wells Fargo and Cobb asserting eight causes of action: (1) fraudulent misrepresentation; (2) constructive fraud; (3) breach of fiduciary duty; (4) unfair business practices under Business and Professions Code section 17200; (5) violation of the Truth in Lending Act (15 U.S.C. § 1601 et seq.); (6) intentional infliction of emotional distress; (7) negligent infliction of emotional distress; and (8) rescission. Dunn alleged that Cobb, a mortgage broker and employee or agent of Wells Fargo, agreed in April 2004 to procure a loan for him to purchase the Manhattan Beach residential property.
According to Dunn, the Truth in Lending Disclosure Statement that he obtained prior to escrow indicated that the loan carried a maximum monthly payment of $3,245 and no prepayment penalty. Nevertheless, Dunn alleged, the Truth in Lending Disclosure Statement that was part of his escrow package and formed the terms of his loan, which funded on May 17, 2004, differed in material respects by providing for 300 monthly payments of $4,221.55 after the initial 60 payments and the potential for a prepayment penalty. Dunn claimed that he was misled by Cobb to his detriment to enter a loan agreement that was not as favorable to him as the one he had expected based on the initial document presented to him. Dunn sought compensatory and punitive damages, interest and injunctive relief.2
2. The Motion for Summary Judgment
Wells Fargo and Cobb moved for summary judgment, contending that all of Dunn’s causes of action fail as a matter of law because the terms of the loan he obtained were disclosed as required and any expectations that Dunn, an attorney, real estate broker and licensed contractor, had for different loan terms were the result of his failure to read the loan documents. Wells Fargo and Cobb further maintained that any reliance by Dunn on purported oral statements made by Cobb during the loan negotiations was improper because Dunn did not plead any such statements by Cobb or his reliance thereon in the complaint.3
3. Dunn’s Opposition
In opposition to summary judgment, Dunn focused on his cause of action for breach of fiduciary duty. He abandoned the claim pleaded in his complaint that Cobb breached a fiduciary duty by failing to alert him to the changed terms between the first disclosure statement and the one he ultimately signed. Instead, his new claim was that Cobb breached a duty by failing to explain to him that the three-tier payment schedule in the Truth in Lending Disclosure Statement signed by him was not fixed, and thus the monthly payment amounts could exceed those listed, that the interest rate could reset every six months of the loan and that the loan contained a prepayment penalty under certain conditions. Dunn admitted in a declaration that he had “looked over the documents” at closing, “found them to be as Mr. Cobb had represented” and, therefore, signed them, apparently implying that he did so without realizing the loan contained terms that Cobb had not explained to him. In addition to his own declaration, Dunn submitted the declaration of Alan Wallace, a real estate attorney and broker, who had reviewed the loan documents and opined that Wells Fargo and Cobb had breached their fiduciary duties to Dunn by failing to make adequate disclosures to him regarding the loan terms.
4. The Reply and Objections to Dunn’s Evidence
Replying to Dunn’s opposition, Wells Fargo and Cobb objected to the declarations of Dunn and Wallace on the grounds that they contained irrelevant information and purported facts that were outside the scope of the complaint. Wells Fargo and Cobb further objected to Dunn’s declaration, contending that many of his statements regarding the representations made to him and the terms of the allegedly promised loan contradicted his deposition testimony and thus were inadmissible to defeat summary judgment. Wells Fargo and Cobb argued that Dunn had not presented argument to oppose summary resolution of any of his causes of action except breach of fiduciary duty and his arguments as to the breach of fiduciary duty cause of action were insufficient to defeat the motion.
5. The Trial Court’s Order Granting the Motion and Entry of Judgment
The trial court sustained the objections of Wells Fargo and Cobb to the those portions of Dunn’s and Wallace’s declarations that related to Dunn’s theory of liability first proposed in opposition to summary judgment because they were outside the scope of the complaint. Additionally, with respect to Dunn, the court sustained objections to the statements in his declaration that contradicted those he had made in deposition. The court determined the cause of action for breach of fiduciary duty fails as a matter of law because Wells Fargo and Dunn did not misrepresent the terms of Dunn’s loan, and summarily resolved Dunn’s other seven causes of action, concluding that Dunn had not addressed their merit in opposing the motion. The court granted summary judgment for Wells Fargo and Cobb, and judgment was entered. Dunn timely appealed.
1. Standard of Review
A trial court must grant a summary judgment motion when no triable issue exists as to any material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) We independently review the trial court’s decision, “considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.] In the trial court, once a moving defendant has `shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established,’ the burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff `may not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . .’ [Citations.]” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477.)
2. The Trial Court Properly Granted Summary Judgment for Wells Fargo and Cobb
On appeal, Dunn contends the trial court erred in granting summary judgment on his causes of action for breach of fiduciary duty, constructive fraud, fraudulent misrepresentation and negligent infliction of emotional distress. Even assuming that Dunn is not limited on appeal to challenging the court’s decision only as to his cause of action for breach of fiduciary duty because he failed to oppose summary resolution of the other causes of action, none of his contentions shows that he has a viable cause of action that survives summary judgment.
As to his breach of fiduciary duty cause of action, Dunn’s theory of liability is that Cobb never explained to him that the terms of the loan would include frequently fluctuating monthly payment amounts, varying interest rates and the possibility of a prepayment penalty. That theory of liability, however, is outside the scope of Dunn’s complaint. In his complaint, Dunn limited his allegations to claiming that Cobb did not disclose a discrepancy between the Truth in Lending Disclosure Statement that he was provided at the outset of the loan negotiation process and that signed by him during escrow of the loan he obtained. Dunn cannot use opposition to summary judgment to make new claims not contained in his complaint, and he never sought to amend the complaint: “[T]he pleadings set the boundaries of the issues to be resolved at summary judgment. [Citations.] . . . A summary judgment or summary adjudication motion that is otherwise sufficient, `cannot be successfully resisted by counterdeclarations which create immaterial factual conflicts outside the scope of the pleadings; counterdeclarations are no substitute for amended pleadings.’ [Citation.] Thus, a plaintiff wishing `to rely upon unpleaded theories to defeat summary judgment’ must move to amend the complaint before the hearing. [Citations.]” (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 648.) Dunn, therefore, cannot rely on his unpleaded theory of liability to defeat summary judgment. (Id. at p. 649 [plaintiff cannot defeat summary judgment by claiming breaches of fiduciary duty that it did not allege in the complaint].)
In any case, the evidence Dunn relies on to claim breach of fiduciary duty was excluded by the trial court pursuant to evidentiary objections. Dunn does not argue on appeal that the court erred by sustaining the objections. As such, he cannot rely on the excluded evidence to argue that the trial court erred in granting summary judgment. (Roe v. McDonald’s Corp. (2005) 129 Cal.App.4th 1107, 1113-1114 [on review of summary judgment, appellate court does not consider evidence to which objections were made and sustained when plaintiff does not challenge those evidentiary rulings on appeal].)
Dunn does not claim that the documents he signed, including the disclosure, inaccurately described the terms of his loan. Rather, he claims that, because Wells Fargo and Cobb owed him fiduciary duties, providing him documents that accurately described the loan terms was not sufficient, he had no obligation to thoroughly read the documents before signing them and Cobb was obligated to orally explain the terms to him. But the cases on which he relies do not support his sweeping claim.
In Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, the Supreme Court affirmed a judgment after a jury verdict for plaintiffs on their breach of fiduciary duty cause of action against their mortgage broker because, even though they did not read their documents before signing them, their mortgage broker, in response to plaintiffs’ questions about their loan terms, provided “materially misleading and incomplete information,” taking advantage of the plaintiffs as “persons of modest means and limited experience in financial affairs.” (Id. at pp. 782-784.) Here, none of the admitted evidence suggests that Cobb materially misrepresented loan terms or gave incomplete information in response to any inquiries by Dunn regarding his loan or that he took advantage of Dunn, an attorney and real estate broker.
And Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938 involved the enforceability of an arbitration provision in a stockbroker agreement of which the plaintiffs—an elderly couple where the husband was legally blind and thus unable to read—said they were unaware. The appellate court held that, while stock brokers generally have no duty to “read or explain their initial agreements to prospective customers,” such a duty may exist “when the facts establish that an investment professional has previously voluntarily induced a vulnerable individual to repose and trust and confidence in the professional.” (Id. at pp. 961-962, italics omitted.) Again, none of the admitted evidence suggests that Dunn was a vulnerable individual in relation to this transaction or that Cobb took advantage of him. Dunn thus has demonstrated no basis on which he can pursue his breach of fiduciary duty cause of action.4
Dunn’s cause of action for fraudulent misrepresentation also lacks merit as a matter of law. In his complaint, Dunn alleged fraudulent misrepresentation based on Cobb’s failure to disclose differences between the two disclosure statements. But his theory on appeal appears to be that Cobb made certain untrue representations to him regarding loan terms, including that the loan would not have a prepayment penalty, on which he relied to his detriment. As with the breach of fiduciary cause of action, this theory of fraudulent misrepresentation is outside the scope of Dunn’s complaint, and he, therefore, cannot rely on it to defeat summary judgment. (Oakland Raiders v. National Football League, supra, 131 Cal.App.4th at p. 648.) Moreover, as discussed above, the trial court excluded Dunn’s statements regarding Cobb’s purported representations that the loan would not have a prepayment penalty because they contradicted his deposition testimony, and Dunn does not challenge those evidentiary rulings on appeal. (Roe v. McDonald’s Corp., supra, 129 Cal.App.4th at pp. 1113-1114.) In addition, given the written disclosures presented to Dunn throughout the loan process, which accurately described the terms of the loan he obtained, no evidence suggests that Cobb made promises to Dunn regarding the loan terms that he would obtain for Dunn with knowledge that they were false and without intent to keep them—a required element of a fraudulent misrepresentation cause of action. (Vogelsang v. Wolpert (1964) 227 Cal.App.2d 102, 109 [elements of fraudulent misrepresentation include knowledge of falsity, scienter, by the defendant].)5
The judgment is affirmed. Respondents shall recover their costs on appeal.
MALLANO, P. J.