Filed 9/5/13 Sundquist v. Bank of America CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                        (Placer)
                                                            ----



ERIK SUNDQUIST et al.,                                                                       C070291

                   Plaintiffs and Appellants,                                  (Super. Ct. No. SCV0029401)

         v.

BANK OF AMERICA, N.A., etc.,

                   Defendant and Respondent.




         In this action, plaintiffs Erik and Renee Sundquist sued Bank of America and
various other defendants for the consequences of a home loan they could not afford. The
trial court sustained the demurrer of three defendants without leave to amend. On appeal,
we conclude the court erred in sustaining the demurrer as to some of the causes of action.
Accordingly, we will reverse.
                         FACTUAL AND PROCEDURAL BACKGROUND
         The Sundquists are a married couple. In July 2008, they wanted to move to a
smaller home, so they contacted defendant Christopher Harris, an employee of defendant
Ella Financial, Inc. (Ella), a mortgage loan brokerage firm, to help them obtain a




                                                             1
purchase money loan to buy a home on Feliz Way in Lincoln. Harris had previously
helped them obtain two refinances and a business loan.
      The Sundquists worked with Harris from July through September to obtain the
loan. They had several telephone calls with him each week and also faxed and e-mailed
documents to him.
      When they spoke with Harris in July, the Sundquists told him they could afford a
monthly loan payment of $2,500; Harris told them he could obtain a loan with that
payment amount. He told them to pay off their Wells Fargo credit card and their
Suburban to reduce their debt so they would qualify for the loan.
      Between July and September, the terms of the proposed loan, including the interest
rate, were constantly changing. The first loan Harris presented to the Sundquists was
completely different from the loan they eventually agreed to. The Sundquists found
themselves asking, “ ‘what happened to the loan presented to us last week?’ ”
      The Sundquists were not happy with the loan they eventually agreed to, but Harris
told them they should just take the loan and get into the new house, and they could
refinance or modify the loan immediately. During the last few weeks leading up to
closing, they felt rushed because they were told someone else was going to purchase the
house with cash and they would lose it.
      As the closing of the loan neared, the Sundquists began communicating directly
with defendant Mary Kennaugh, a representative of the lender Harris had secured for
them, defendant Mission Hills Mortgage Bankers (Mission Hills). Initially, Kennaugh
requested information about the Sundquists from Harris, but because Harris constantly
delayed in responding, Kennaugh and the Sundquists decided to communicate directly
with each other.
      Kennaugh completed the Sundquists’ uniform residential loan application for
them. Kennaugh overstated their income in the application as being $20,943 per month



                                            2
when she knew it was far less. (Erik, who owned a construction company and a real
estate company, made about $12,000 a month and Renee was a stay-at-home mother.)
       In the end, the Sundquists borrowed $587,250 from Mission Hills in September
2008 to purchase the home on Feliz Way. They made a down payment of $125,000. The
closing of the loan transaction occurred at a title company office. The entire process took
about 15 to 20 minutes. No one explained the terms and consequences of the loan to
them, and they did not have an opportunity to ask questions. The notary simply told them
where they should sign.
       The loan was for 30 years at a fixed interest rate of 6 percent and was secured by a
deed of trust on the property. The beneficiary of the deed of trust was Mortgage
Electronic Registration Systems, Inc. (MERS) acting as nominee for Mission Hills and its
successors and assigns. The loan was an FHA loan, which Harris had told them was
much easier to modify than a conventional loan.
       The monthly payment on the loan was about $4,500 per month, which was more
than the payment on their previous home. In January 2009, the Sundquists contacted
defendant Bank of America to modify the loan,1 but the bank stated that it would not
consider a loan modification unless the Sundquists were in default. To obtain a loan
modification, the Sundquists stopped making their monthly loan payments. In April
2009, the Sundquists hired a company to help them obtain a loan modification.
Throughout the summer, the Sundquists believed the company was communicating with
Bank of America and had submitted all of their financial information to obtain a




1      The complaint does not clearly explain how Bank of America became involved in
the loan only a few months after Mission Hills made the loan. There is an allegation that
Bank of America purchased the loan from Mission Hills, but there is no allegation as to
when that occurred. In their reply brief, however, the Sundquists assert that the loan was
sold to Countrywide Home Loans Servicing LP “immediately after closing” and that
Bank of America later merged with Countrywide.

                                             3
modification. When Renee called Bank of America, however, the bank said nothing had
been done.
       In July 2009, a notice of default was recorded against the house by defendant
ReconTrust Company acting as agent for MERS as the beneficiary under the deed of
trust. The notice stated that the Sundquists were more than $25,000 behind on their loan
payments.
       In late September or early October 2009, Bank of America sent a letter to the
Sundquists informing them that they did not qualify for a loan modification because their
income was too high. After reviewing some documents, however, the Sundquists
realized the loan modification company had overstated some of their assets, such that the
bank was under the misimpression that they were still making payments on their old
home, some previously owned business real estate, and an airplane. The old home and
the business real estate had both been sold through short sales. The Sundquists worked
with Bank of America to clarify their financial status.
       In late October 2009, ReconTrust recorded a notice of trustee’s sale indicating the
house was to be sold at public auction on November 12. That sale apparently did not go
forward, however. Meanwhile, the Sundquists remained in contact with Bank of
America.
       In the spring of 2010, the Sundquists began working with another company to get
a loan modification. The Sundquists spoke to Bank of America and provided financial
information over the phone. The bank told them, however, that the bank could not move
forward with the loan modification because the arrears were too high and they were too
far in default.
       On June 15, 2010, the Sundquists filed for chapter 13 bankruptcy and began
making payments to the bankruptcy trustee for the loan. That same day, ReconTrust
executed a trustee’s deed upon sale to defendant BAC Home Loans Servicing, LP,
formerly known as Countrywide Home Loans Servicing LP (BAC). Also on that day,

                                             4
MERS assigned its interest in the deed of trust and the underlying promissory note to
BAC. Both documents were notarized on June 23 and recorded on June 25.
       In July 2010, BAC commenced proceedings to evict the Sundquists from the
house. The Sundquists contacted Bank of America, and the bank admitted the house was
sold in error while the Sundquists were in bankruptcy, but fearing they would be kicked
out anyway, the Sundquists moved out of the house and into a rental home in September
2010. After they moved out, the locks were changed and “no trespassing” signs were
posted on the windows.
       In December 2010, a notice rescinding the trustee’s deed upon sale was recorded.
The Sundquists did not move back, however, because the locks had been changed and
their children were going to new schools.
       In June 2011, the Sundquists commenced this action by filing a complaint for
damages and equitable and injunctive relief against Mission Hills, Ella, Harris,
Kennaugh, ReconTrust, Bank of America, and BAC. As relevant here, the complaint
alleged four causes of action against Bank of America as the successor to Mission Hills:
deceit, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and
negligence. The complaint also included Bank of America as a defendant in a cause of
action for civil conspiracy. A cause of action for promissory estoppel was alleged against
BAC, while a cause of action for wrongful foreclosure was alleged against BAC and
ReconTrust. Finally, all three of these defendants (Bank of America, BAC, and
ReconTrust) were named as defendants in a cause of action for unlawful, unfair and/or
fraudulent business practices under Business and Professions Code section 17200
(hereafter, unfair competition).
       With respect to Bank of America being the successor to Mission Hills, the
complaint alleged that Bank of America “was the purported to subsequent successor and
assignor of the Subject Loan are [sic] liable for all acts of MISSION HILLS based on
successor liability law and particularly because it assumed all liability of the original

                                              5
lender by the terms of which it succeeded to the Subject Loan.” The complaint also
alleged that Bank of America “is liable for all misconduct as successor in interest to
MISSION HILLS. Specifically, [Bank of America] assumed all liabilities on the loan in
its purchase of the loan from MISSION HILLS.”
       The deceit cause of action alleged that Harris had misrepresented to the Sundquists
that they “could refinance or modify immediately after obtaining the loan” and that
Harris or Kennaugh had misrepresented “that the loan application prepared by Defendant
correctly stated the [Sundquists’] income.” The civil conspiracy cause of action alleged
that the various defendants “conspired and agreed to implement a scheme to defraud and
victimize [the Sundquists] through the predatory lending practices and other unlawful
conduct alleged herein.” The breach of fiduciary duty cause of action was based on the
same two misrepresentations as the deceit cause of action, as well as Harris’s failure to
disclose that Ella and Harris “received a financial benefit from the lender MISSION
HILLS for convincing [the Sundquists] to sign the loans with their particular terms.” The
negligence cause of action was likewise based on the origination of the loan.
       The promissory estoppel cause of action alleged that BAC “stated they would not
consider a modification until [the Sundquists] defaulted”; the Sundquists relied on that
statement by ceasing to make their monthly loan payments; and the Sundquists were
injured because they were denied the loan modification, “wasted time repeatedly calling
Defendants’ agents,” and “will lose their home and it will be unlikely that [they] will be
able to purchase a new home.”
       Bank of America, acting for itself and as successor by merger to BAC, and
ReconTrust, demurred to the complaint. With respect to the first six causes of action (all
but the promissory estoppel and wrongful foreclosure claims), which Bank of America
characterized as “relat[ing] entirely to the loan’s origination,” Bank of America asserted
that it could not be held liable for conduct in which it did not take part based on “[a]
conclusory allegation that [Bank of America] simply assumed [Mission Hills’] liability

                                              6
when it was assigned the loan.” Bank of America also asserted that: (1) the deceit claim
failed because the Sundquists did not allege detrimental reliance or damages; (2) the
conspiracy claim failed because they did not allege any underlying wrongdoing; (3) the
breach of fiduciary duty and aiding and abetting breach of fiduciary duty claims failed
because the bank did not owe the Sundquists a fiduciary duty; (4) the negligence claim
failed because the bank did not owe the Sundquists a legal duty and because it was time-
barred; (5) the unfair competition claim failed because they did not allege wrongful
conduct and lacked standing; (6) the promissory estoppel claim failed because the
Sundquists did not allege promissory estoppel; and (7) the wrongful foreclosure claim
failed because they did not allege tender, they did not allege that the bank had notice of
the bankruptcy, and the court lacked jurisdiction over that claim.
       The trial court sustained the demurrer on all of the grounds asserted by the bank
and, finding that the Sundquists had “failed to make a showing that the amendments they
suggest would change the legal effect of the pleading,” denied them leave to amend. A
judgment of dismissal was entered on November 10, 2011. The Sundquists timely
appealed.
                                       DISCUSSION
                                              I
                                    Standard Of Review
       “On appeal from a judgment dismissing an action after sustaining a demurrer
without leave to amend, the standard of review is well settled. The reviewing court gives
the complaint a reasonable interpretation, and treats the demurrer as admitting all
material facts properly pleaded. [Citations.] The court does not, however, assume the
truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be
affirmed ‘if any one of the several grounds of demurrer is well taken. [Citations.]’
[Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff
has stated a cause of action under any possible legal theory. [Citation.] And it is an

                                              7
abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows
there is a reasonable possibility any defect identified by the defendant can be cured by
amendment.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)
                                                 II
                                        Assumed Liability
          With respect to the first six causes of action (deceit, civil conspiracy, breach of
fiduciary duty, aiding and abetting breach of fiduciary duty, negligence, and unfair
competition), the trial court found that the Sundquists had “set[] forth no factual or legal
authority for the conclusory allegation that Bank of America assumed liability for
affirmative causes of action related to the origination of the loan when it became
successor and assignor of the subject loan.”2 In effect, the court concluded that whatever
tort or statutory liability the original lender, Mission Hills, may have had to the
Sundquists with relation to the origination of the loan, the Sundquists had not adequately
alleged (or shown that they could adequately allege) a factual basis for concluding that
Bank of America assumed or succeeded to that liability.
          On appeal, the Sundquists contend the trial court erred because they alleged in
their complaint that Bank of America was liable for the wrongdoing of Mission Hills “
‘based on successor liability law,’ ” because the bank “ ‘assumed all liability of [Mission
Hills] by the terms of which it succeeded to the Subject Loan,’ ” and because the bank
“ ‘assumed all liabilities on the loan in its purchase of the loan from MISSION HILLS.’ ”
In their view, these allegations were “neither conclusory nor do[ they] lack sufficient
facts.”



2      Although the trial court purported to apply this aspect of its ruling to the first six
causes of action in the complaint, as we have noted above the complaint expressly
alleged only four causes of action against Bank of America based on the bank’s status as
the successor to Mission Hills: deceit, breach of fiduciary duty, aiding and abetting
breach of fiduciary duty, and negligence.

                                                 8
         The Sundquists’ allegation that Bank of America was “liable for all acts of
MISSION HILLS based on successor liability law” is not an allegation of fact; rather, it
is a conclusion of law. As such, we disregard it for purposes of assessing the sufficiency
of the Sundquists’ complaint. (See Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at
p. 967.) That leaves the allegations that the bank “assumed all liabilities on the loan in its
purchase of the loan from MISSION HILLS” and that the bank “assumed all liability of
the original lender by the terms of which it succeeded to the Subject Loan.” Taken
together, and giving them “a liberal construction with a view to substantial justice
between the parties” (Miglierini v. Havemann (1966) 240 Cal.App.2d 570, 572), these
allegations can be read to assert that pursuant to the specific terms under which Bank of
America purchased the Sundquists’ loan from Mission Hills, Bank of America agreed to
assume all liability to which Mission Hills was subject in connection with that loan.
Such a broad assumption of liability would include tort liability arising from the conduct
of Mission Hills and/or its agents in the origination of the loan.
         Defendants admit that “the tort liability of one corporation can be ‘assumed
voluntarily by contract’ by another corporation.” (See Henkel Corp. v. Hartford Accident
& Indemnity Co. (2003) 29 Cal.4th 934, 941.) They contend, however, that “the
Sundquists fail to identify a contract through which Bank of America assumed liability
for Mission Hills’ torts.” But as we have explained, the allegations of Sundquists’
complaint, liberally construed, can be read to assert that Bank of America assumed this
liability under the terms of the agreement by which it purchased the loan from Mission
Hills.
         Bank of America points to the assignment of the deed of trust by which MERS
assigned its interest in the deed of trust and the underlying note to BAC in June 2010 and
contends that this assignment “does not . . . contain any language through which Bank of
America could be found to have ‘assumed liability’ for the torts of Mission Hills.” The
Sundquists did not allege, however, that this assignment document was the means by

                                              9
which Mission Hills sold the Sundquists’ loan to Bank of America, so the absence of
assumption of liability language in this particular document does not preclude the
possibility -- as suggested by the Sundquists’ allegations -- that the actual purchase of the
loan by Bank of America occurred through some other vehicle that did contain such
language.
       The conclusion that the assignment of deed of trust document was not the means
by which Mission Hills transferred the Sundquists’ loan to Bank of America is also
supported by the fact that the deed of trust itself provided that MERS was “acting solely
as nominee for Lender and Lender’s successors and assigns” in serving as the beneficiary
of the deed of trust. None of the documents appended to the complaint, nor any of the
allegations of the complaint, suggest that the loan itself was ever transferred to MERS.
Instead, from all that can be determined at this time, MERS was acting as beneficiary
under the deed of trust solely as “nominee” for Mission Hills and for Mission Hills’
“successors and assigns.” Thus, it is entirely possible that Mission Hills sold the loan to
Bank of America by means of some other agreement, and even after that transfer MERS
continued to act as “nominee” -- now on behalf of Bank of America instead of Mission
Hills -- until June 2010, when MERS assigned its interest in the deed of trust and the note
to BAC.
       In short, the allegations of the Sundquists’ complaint, sparse though they are,
suffice to allege that Bank of America assumed any liability Mission Hills had with
respect to the origination of the Sundquists’ loan. Accordingly, the demurrer to the first
six causes of action was not properly sustained on this basis.
                                             III
                                           Deceit
       The trial court concluded that the Sundquists had failed to state a cause of action
for deceit because they did not “allege any misrepresentations . . . upon which [they]
justifiably relied, and were damaged. . . . [¶] As plaintiffs signed the loan application,

                                             10
statements therein are their representations, not defendants’. The loan application exists
to protect the lender, not the borrower. [Citation.] Statements that plaintiffs would be
able to later modify or refinance the loan are statements of opinion, and refer to a future
fact. A misrepresentation must be as to a past or existing fact in order to be actionable.”
       On appeal, the Sundquists contend the trial court erred in finding that the
representation that their income was correctly stated in the loan application was not
actionable because “the broker has a duty not to make false material statements” and
“[t]he existence of a confidential relationship may justify reliance upon oral
misrepresentation of the terms of a contract.”
       The trial court’s ruling on this point was based on the understanding that the
Sundquists were complaining solely about the representation in the loan application that
their income was greater than it actually was. If that understanding were correct, then the
trial court’s ruling would likewise be correct, because a statement in a loan application is
not a statement by the lender to the borrowers, but instead is a statement by the borrowers
to the lender, and obviously a person cannot complain that a statement he made to
someone else was fraudulent. What the Sundquists’ complaint alleged, however, was
that either Harris or Kennaugh expressly misrepresented to them “that the loan
application prepared by [Kennaugh] correctly stated [their] income.” Liberally
construed, the complaint further alleged that the Sundquists relied on this representation
by signing the loan application without reading it (assuming it was in the packet of loan
documents they signed). And the complaint alleged that if their income had not been
inflated in the loan application, the loan might not have been approved and they would
not have suffered the resulting negative consequences. We conclude these allegations are
sufficient to state a cause of action for deceit.
       The Sundquists also contend the trial court erred in finding that the representation
about their ability to modify or refinance the loan was not actionable. On this point, we
also agree.

                                               11
       “To be actionable, a . . . misrepresentation must ordinarily be as to past or existing
material facts. ‘[P]redictions as to future events, or statements as to future action by some
third party, are deemed opinions, and not actionable fraud.’ ” (Tarmann v. State Farm
(1991) 2 Cal.App.4th 153, 158.) “As a general rule the expression of an opinion cannot
constitute fraud. However, this is not a hard and fast rule.” (Daniels v. Oldenburg
(1950) 100 Cal.App.2d 724, 727.) A person “may not justifiably rely upon mere
statements of opinion, including legal conclusions drawn from a true state of facts
[citations], unless the person expressing the opinion purports to have expert knowledge
concerning the matter or occupies a position of confidence and trust.” (Seeger v. Odell
(1941) 18 Cal.2d 409, 414.)
       Relying on this rule, the Sundquists argue that Harris, the person who told them
they would be able to refinance or modify the loan immediately, “occupied a position of
confidence and trust.” Defendants offer no argument on this point. Liberally construing
the complaint, we believe the Sundquists have adequately alleged a cause of action for
deceit based on Harris’s statement to them about the modifiability of the loan he had
secured for them from Mission Hills. They had worked with Harris before in securing
several other loans, and he was acting as their agent in securing this loan. When they
expressed dissatisfaction with the proposed loan from Mission Hills, Harris told them
they should just take the loan and get into the new house, and they could refinance or
modify the loan immediately. Having worked with him before, the Sundquists trusted his
statements and believed them to be true and relied on those statements in agreeing to the
loan. As a result, they found themselves in a loan “they were unable to afford.” The
negative consequences that followed have been detailed above.
       For the foregoing reasons, we conclude the trial court erred in sustaining the
demurrer to the Sundquists’ cause of action for deceit.




                                             12
                                             IV
                                  Conspiracy To Defraud
       The Sundquists’ second cause of action alleged that defendants “conspired and
agreed to implement a scheme to defraud and victimize [the Sundquists] through the
predatory lending practices and other unlawful conduct alleged herein.” Obviously this
allegation encompassed the misrepresentations alleged as the basis for the Sundquists’
cause of action for deceit.
       The trial court concluded that the Sundquists had not stated a cause of action for
civil conspiracy because they did not “adequately establish a wrongful act that would
support a cause of action without the conspiracy.” This conclusion was apparently based
on the fact that the court had already found that the Sundquists had not stated a cause of
action for deceit. We have concluded otherwise.
       Nevertheless, “[i]n order to state a cause of action based upon a conspiracy theory
the plaintiff must allege the formation and operation of the conspiracy, the wrongful act
or acts done pursuant to it, and the damage resulting from such acts. [Citation.] In
making such allegations bare legal conclusions, inferences, generalities, presumptions,
and conclusions are insufficient.” (Nicholson v. McClatchy Newspapers (1986) 177
Cal.App.3d 509, 521.)
       Here, the Sundquists’ allegations of a conspiracy to defraud them amount to no
more than bare legal conclusions. As such, they are insufficient to withstand demurrer.
Accordingly, the trial court did not err in sustaining the demurrer to the cause of action
for civil conspiracy.
                                             V
                                Breach Of Fiduciary Duty
       The trial court concluded the Sundquists had failed to state a cause of action for
breach of fiduciary duty because “there is no fiduciary relationship between a borrower
and lender.” On appeal, the Sundquists assert that “the breach of fiduciary duty was by

                                             13
the broker to [them] and the liability of the lender [is] based upon their principal/agen[t]
relationship.” Defendants do not address this point.
       In the trial court, defendants asserted that “[a]s a matter of law, an independent
broker is the borrower’s agent, and does not act for other parties such as lenders or loan
servicers.” The case law defendants cited, however, provides only that “[a] mortgage
loan broker is customarily retained by a borrower to act as the borrower’s agent in
negotiating an acceptable loan.” (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773,
782, italics omitted.) Defendants did not point to any law that necessarily precludes a
broker as acting as a dual agent of both the borrower and the lender.
       Here, the Sundquists alleged that there was an agency agreement between Ella and
Mission Hills under which Mission Hills authorized Ella “to represent and bind
MISSION HILLS in the . . . loan transaction.” The complaint further alleged that an
agency relationship exists because Mission Hills “directed and authorized the broker’s
conduct in connection with the . . . loan by directing the broker concerning what to tell
[the Sundquists] and prospective borrowers to induce them to enter into the . . . loan with
the bank.” The complaint also contained numerous other allegations supporting the
existence of an agency relationship between Ella and Mission Hills.
       We are apprised of no authority that precluded Mission Hills from being held
vicariously liable for a breach of fiduciary duty owed by its agent, Ella, to the Sundquists.
And if Mission Hills could be held liable for that breach, then Bank of America could
have assumed that liability from Mission Hills, as the Sundquists have alleged. For this
reason, the trial court erred in sustaining the demurrer to the cause of action for breach of
fiduciary duty.
                                             VI
                      Aiding And Abetting Breach Of Fiduciary Duty
       The trial court concluded the Sundquists had failed to state a cause of action for
aiding and abetting a breach of fiduciary duty because they “fail[ed] to allege defendants

                                             14
knew the broker’s conduct constituted a breach of duty and gave substantial assistance, or
that the bank’s own conduct, separately considered, constituted a breach of duty.” On
this point, the trial court was mistaken.
       “California has adopted the common law rule for subjecting a defendant to
liability for aiding and abetting a tort. ‘ “Liability may . . . be imposed on one who aids
and abets the commission of an intentional tort if the person (a) knows the other’s
conduct constitutes a breach of duty and gives substantial assistance or encouragement to
the other to so act or (b) gives substantial assistance to the other in accomplishing a
tortious result and the person’s own conduct, separately considered, constitutes a breach
of duty to the third person.” ’ ” (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th
1138, 1144.)
       As the Sundquists point out, their complaint expressly alleged that “[d]efendants
knew about one another’s breaches of fiduciary duties owed to [the Sundquists]” and
“[n]onetheless . . . actively, substantially and substantively assisted, aided, abetted, and
advanced one another’s fiduciary breaches by committing the conduct set forth herein
above and below.” This allegation was adequate to satisfy the first part of the test set
forth in Casey.
       Defendants contend that the foregoing allegations “fail[ed] to specify any actions
Bank of America took . . . in assistance of any breach of fiduciary duty by the
Sundquists’ broker during the origination of their loan. Nor can they--the Sundquists
admit that Bank of America had no involvement in the origination of their loan.” The
flaw in this argument is that the Sundquists expressly premised Bank of America’s
liability for aiding and abetting a breach of fiduciary duty on the bank’s status as the
successor to Mission Hills, not on the bank’s own actions. As the original lender,
Mission Hills was unequivocally involved in the origination of the Sundquists’ loan. If
Mission Hills aided and abetted a breach of fiduciary duty in originating the loan, then
Bank of America could have assumed that liability from Mission Hills, as the Sundquists

                                              15
have alleged. For this reason, the trial court erred in sustaining the demurrer to the cause
of action for aiding and abetting a breach of fiduciary duty.
                                             VII
                                         Negligence
       The trial court concluded the Sundquists had failed to state a cause of action for
negligence because “the allegations of the complaint show that this cause of action is
time-barred, and [the Sundquists] fail to specifically allege facts justifying tolling.
[Citation.] Further, [the Sundquists] do not allege that demurring defendants owed them
a duty of care. A lender does not owe a duty of care to a borrower where the institution’s
involvement in the loan transaction does not exceed the scope of its conventional role as
a mere lender of money.”
       On the statute of limitations issue, the Sundquists contend (essentially) that they
did not discover, and could not have discovered, their cause of action for negligence any
earlier than October 2009, when Bank of America sent them a letter telling them they did
not qualify for a loan modification because their income was too high. Thus, according
to them, their complaint filed in June 2011 was “well within the statutory period.” We
disagree.
       “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. . . .
Rather than examining whether the plaintiffs suspect facts supporting each specific legal

                                              16
element of a particular cause of action, we look to whether the plaintiffs have reason to at
least suspect that a type of wrongdoing has injured them.” (Fox v. Ethicon Endo-
Surgery, Inc. (2005) 35 Cal.4th 797, 806-807.)
       Here, the Sundquists’ negligence cause of action was premised on the allegation
that Mission Hills made a loan to them that they could not afford knowing the loan was
based on an inaccurate and overstated income figure. Although the Sundquists contend
they “could not have discovered the fraud merely by reviewing the documents,” they had
to have known -- or, at the very least, they had reason to suspect -- no later than when
they signed the loan documents that the monthly loan payment was nearly twice as much
as what they had said they could afford. Also, had they read the loan application when
they signed it -- which they do not allege they were prevented from doing -- they would
have known that it overstated their income. On the facts alleged here, the limitations
period on any negligence cause of action the Sundquists may have had against Mission
Hills began to run no later than when the loan closed in September 2008. Because the
Sundquists do not dispute that a negligence cause of action in this situation is subject to a
two-year limitations period, the statute of limitations ran in September 2010, long before
the Sundquists filed their complaint in June 2011. Accordingly, the trial court properly
sustained the demurrer to the negligence cause of action.
                                            VIII
                                   Promissory Estoppel
       The trial court concluded that the Sundquists had failed to state a cause of action
for promissory estoppel because “there is no obligation on loan services to modify
borrowers’ loans. [Citations.] Defendants’ purported promise to consider [the
Sundquists for a loan modification] was at best a conditional promise which is not clear
and unambiguous in its terms. [Citation.] Further, the allegations of the complaint show
that [the Sundquists] were considered for modification.”



                                             17
       On appeal, the Sundquists assert that “a bank or servicer may be held liable for
inducing actions with a promise of a negotiated loan modification.” In support of this
assertion, they cite Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218.
       “ ‘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.” ’ ” (Advanced Choices, Inc. v. State Dept. of
Health Services (2010) 182 Cal.App.4th 1661, 1672.)
       In Aceves, the court concluded that the plaintiff had stated a cause of action for
promissory estoppel under the following circumstances: “[P]laintiff, a married woman,
obtained an adjustable rate loan from a bank to purchase real property secured by a deed
of trust on her residence. About two years into the loan, she could not afford the monthly
payments and filed for bankruptcy under chapter 7 of the Bankruptcy Code [citation].
She intended to convert the chapter 7 proceeding to a chapter 13 proceeding [citation]
and to enlist the financial assistance of her husband to reinstate the loan, pay the
arrearages, and resume the regular loan payments.
       “Plaintiff contacted the bank, which promised to work with 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. While the bank was
promising to work with plaintiff, it was simultaneously complying with the notice
requirements to conduct a sale under the power of sale in the deed of trust, commonly
referred to as a nonjudicial foreclosure or foreclosure. [Citation.]
       “The bankruptcy court lifted the stay. But the bank did not work with plaintiff in
an attempt to reinstate and modify the loan. Rather, it completed the foreclosure.”
(Aceves v. U.S. Bank N.A., supra, 192 Cal.App.4th at p. 221.)



                                             18
       Here, the Sundquists claim they, too, have stated (or can state) a valid cause of
action for promissory estoppel because they “have alleged and can further allege that
Defendants misled them with the false promise of negotiating in good faith a loan
modification and failing to do so.” In fact, that is not what the Sundquists have alleged.
What they have alleged is that BAC “stated [it] would not consider a modification until
[they] defaulted” on the loan. Such a statement is not a promise clear and unambiguous
in its terms, like the bank’s promise in Aceves to “ ‘work with [Aceves] on a mortgage
reinstatement and loan modification’ if she no longer pursued relief in the bankruptcy
court.” (Aceves v. U.S. Bank N.A., supra, 192 Cal.App.4th at p. 226.)
       The Sundquists assert, however, that they “can further allege” a “false promise of
negotiating in good faith a loan modification.” Thus, they claim they can amend their
complaint to state a valid cause of action for promissory estoppel.
       Defendants contend that even with this new allegation, “the promissory estoppel
cause of action would still fail because the Sundquists cannot allege that Bank of
America breached such a promise.” According to defendants, the existing allegations of
the complaint “refute any notion that Bank of America failed to act in good faith.” We
disagree.
       The allegations to which defendants refer are the following:
       “In April 2009, Plaintiffs hired ProCity to help them modify their loan.
Throughout the summer, ProCity supposedly communicated with Bank of America and
submitted all of Plaintiffs’ financial information to obtain a modification.
       “[¶] . . . [¶]
       “Around late September and early October 2009, Bank of America sent a letter to
Plaintiffs stating that they did not qualify for a modification, because Plaintiffs’ income
was too high.
       “[¶] . . . [¶]
       “Plaintiffs worked with Bank of America to try to clarify their financial status.

                                             19
       “[¶] . . . [¶]
       “In Spring 2010, Plaintiffs worked with [a] HUD-approved agency, NID Housing
Counseling, to get a modification. They took Plaintiffs’ financial information and said
that they looked good to get a modification. Plaintiffs spoke to Bank of America and
provided financial information over the phone. However, they were told that since the
arrears were too high and they were too far in default, Bank of America could not move
forward with the modification.”
       Contrary to defendants’ assertions, the foregoing allegations do not “refute any
notion that Bank of America failed to act in good faith.” In fact, these allegations say
nothing about whether Bank of America or BAC fairly and reasonably considered the
Sundquists for a loan modification. All that the complaint currently alleges is that the
Sundquists asked the bank to modify their loan but the bank twice refused to do so.
Whether the bank acted in good faith in considering the Sundquists’ requests before
denying them is simply beyond the existing allegations.
       Based on the Sundquists’ representation that they “can . . . allege that Defendants
misled them with the false promise of negotiating in good faith a loan modification and
failing to do so,” we believe the Sundquists have shown that they can amend their
complaint to state a valid cause of action for promissory estoppel. The gist of that cause
of action would be this: The bank told the Sundquists that if they stopped making the
payments on their existing loan, the bank would consider in good faith a modification of
that loan. The Sundquists reasonably and foreseeably relied on that promise by stopping
their loan payments in January 2009 and attempting to obtain a modification from the
bank. The bank, however, never considered the Sundquists in good faith for a
modification of their loan, and they were injured to their detriment because the bank
ultimately told them they did not qualify for a modification because they were too far in
arrears -- a situation that existed only because they stopped making their loan payments
in reliance on the bank’s promise to consider them for a loan modification in good faith.

                                            20
       Because it appears the Sundquists can amend their complaint to state a valid cause
of action for promissory estoppel, the trial court abused its discretion in denying them
leave to do so.
                                             IX
                                  Wrongful Foreclosure
       The trial court concluded the Sundquists had failed to state a cause of action for
wrongful foreclosure because they “failed to allege tender of the obligation in full.
[Citation.] To the extent [the Sundquists] allege that their cause of action for wrongful
foreclosure is based on an improper violation of the bankruptcy stay, such claim must be
raised in bankruptcy court.”
       On appeal, the Sundquists assert that the “argument that this cause of action must
be adjudicated by a bankruptcy court is a red herring.” According to them, the exclusive
jurisdiction of the bankruptcy court was limited to rescinding the trustee’s sale that was
conducted in violation of the bankruptcy stay. A claim for damages suffered as a result
of the wrongful sale, they contend, is not within the bankruptcy court’s exclusive
jurisdiction because such a claim “requires the application of State law.” More
specifically, the Sundquists contend their “claims are for violation of Civil Code
section 2924 for wrongful foreclosing on [their] home when they had no authority to do
so.”
       Citing several cases, defendants assert that “[a] cause of action arising from a
purported violation of an automatic bankruptcy stay under Title 11 must be raised in the
bankruptcy court; state courts do not have jurisdiction over such claims.” Although we
do not find the cases defendants cite particularly persuasive on this point, we ultimately
agree that exclusive jurisdiction over the Sundquists’ wrongful foreclosure claim lay in
federal court.
       In the first case defendants cite, In re Gruntz (9th Cir. 2000) 202 F.3d 1074, a
father who had failed to pay his child support obligation was convicted of a misdemeanor

                                             21
in state court criminal proceedings in Los Angeles County. (Id. at p. 1077.) The father
filed an adversary proceeding against the county in his ongoing bankruptcy “to declare
the state criminal proceedings void as violative of the automatic stay imposed under 11
U.S.C. § 362.” (Gruntz, at p. 1077.) “The bankruptcy court dismissed the complaint as
collaterally estopped by the state judgment” and “[o]n appeal, the district court affirmed
the dismissal . . . .” (Id. at pp. 1077-1078.)
       On appeal, the Ninth Circuit defined one of the issues before it as “whether a state
court modification of the bankruptcy automatic stay binds federal courts.” (In re Gruntz,
202 F.3d at p. 1077.) The county argued that “the state court’s judgment [in the criminal
case] included a determination that the automatic stay did not enjoin the state criminal
proceedings. Therefore, the County reason[ed], if a state court has concluded that the
bankruptcy automatic stay does not apply, the resulting state judgment divests federal
courts of jurisdiction to consider that question.” (Id. at p. 1078.) In the course of
rejecting this argument, the court noted that “[n]ot all matters related to bankruptcies fall
within the orbit of those subject to federal plenary power.” (In re Gruntz, 202 F.3d at
p. 1080.) Nevertheless, the court held that “[b]ecause of the bankruptcy court’s plenary
power over core proceedings, the County’s argument that states have concurrent
jurisdiction over the automatic stay under 28 U.S.C. § 1334(b) is unavailing.” (Gruntz, at
pp. 1082-1083.) Accordingly, the court held “that federal courts are not bound by state
court modifications of the automatic stay.” (Id. at p. 1077.)
       In our view, nothing in Gruntz supports the defendants’ argument that the
bankruptcy courts have exclusive jurisdiction over a cause of action arising from a
violation of the automatic bankruptcy stay. In fact, Gruntz does not speak at all, directly
or indirectly, to whether a cause of action for damages based on a defendant’s violation
of the automatic stay must be brought in the bankruptcy court or may be brought in state
court instead.



                                                 22
       In re Davis (Bankr. 9th Cir. 1995) 177 B. R. 907 is of little more assistance to
defendants. In Davis, a chapter 13 debtor brought an adversary proceeding in the
bankruptcy court alleging willful violation of the automatic stay based on postpetition
foreclosures. (Id. at pp. 909-910.) After the bankruptcy was dismissed based on the
debtor’s failure to propose a feasible plan of reorganization, the defendants in the
adversary proceeding moved to dismiss the proceeding for lack of subject-matter
jurisdiction. (Id. at p. 910.) The bankruptcy court granted the motion (albeit on a
different ground). (Ibid.)
       On appeal, the court held that “[t]he bankruptcy court had subject-matter
jurisdiction over all claims alleging willful violation of the automatic stay. Bankruptcy
courts have jurisdiction over ‘all civil proceedings arising under title 11, or arising in or
related to cases under title 11.’ [Citation.] Appellant’s action for willful violation of the
automatic stay is created by [former] section 362(h) of title 11 of the United States Code
[now, 362(k)]. Thus, the action arises under title 11 and is within the subject-matter
jurisdiction of the bankruptcy court.”3 (In re Davis, supra, 177 B. R. at p. 912.)
       To say, as the appellate panel did in Davis, that the bankruptcy court has subject-
matter jurisdiction over a particular type of claim is not to say that the court has such
jurisdiction to the exclusion of state courts. Specifically, just because bankruptcy courts
have jurisdiction over an action for willful violation of the automatic stay arising under
the United States Code does not mean, necessarily, that state courts do not have
concurrent jurisdiction over actions for wrongful foreclosure premised on violation of the
stay. Accordingly, Davis does not directly support defendants’ assertion here that a cause




3     “[A]n individual injured by any willful violation of a [bankruptcy] stay . . . shall
recover actual damages, including costs and attorneys’ fees, and, in appropriate
circumstances, may recover punitive damages.” (11 U.S.C. § 362(k)(1).)

                                              23
of action for damages based on violation of the automatic stay must be brought in
bankruptcy court.
       Next, defendants rely on Abdallah v. United Savings Bank (1996) 43 Cal.App.4th
1101.4 In Abdallah, the plaintiffs sued the defendants in state court on various tort
claims, including “claims that [certain real] property was improperly sold in violation of
the automatic stay.” (Id. at pp. 1105-1106.) On appeal from the dismissal of the action
following the sustaining of the defendants’ demurrers, the appellate court concluded
“there was no violation of the automatic stay.” (Id. at p. 1109.) The court then stated as
follows: “Even if the foreclosure had violated the stay, appellants would have been
required to raise that claim in the bankruptcy court. ‘The bankruptcy court ha[s]
jurisdiction over all claims alleging willful violation of the automatic stay.’ [Citation.]
The existence of a federal remedy for violation of the stay must be read as an implicit
rejection of state court remedies.” (Ibid.)
       In support of the quoted language regarding the bankruptcy court’s jurisdiction,
the Abdallah court cited In re Davis. (Abdallah v. United Savings Bank, supra, 43
Cal.App.4th at p. 1109.) As we have seen, Davis does not speak to the exclusive
jurisdiction of the federal courts. For its assertion that the existence of a federal remedy
(in bankruptcy court) necessarily implies a rejection of a remedy in state court, the
Abdallah court cited Idell v. Goodman (1990) 224 Cal.App.3d 262, 270-271.
Accordingly, we turn to that case.
       “In Idell . . . , the plaintiff’s creditors brought an unsuccessful adversary
proceeding in bankruptcy court under 11 United States Code section 727(a), alleging the
plaintiff’s debts should not be discharged. The plaintiff then sued defendants in state
court for malicious prosecution of that adversary proceeding. [Citation.] In holding no



4      They also cite Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, but
Hicks relies entirely on Abdallah.

                                              24
state court action could be maintained, the court in Idell stated: ‘The existence of federal
sanctions for the filing of frivolous and malicious bankruptcy pleadings must be read as
an implicit rejection of state court remedies. The mere possibility of being sued in tort in
state court, with the potential for substantial damage awards, could deter persons from
exercising their rights in bankruptcy. Thus, it is for Congress and the federal courts, not
state courts, to decide what incentives and penalties shall be utilized in the bankruptcy
process.’ ” (Satten v. Webb (2002) 99 Cal.App.4th 365, 377-378, quoting Idell v.
Goodman, supra, 224 Cal.App.3d at p. 271.)
       The court in Idell drew its rationale for its ruling from Gonzales v. Parks (9th Cir.
1987) 830 F.2d 1033, “which upheld a bankruptcy judge’s order vacating a state court
judgment for abuse of process obtained by a bankruptcy creditor against a debtor.” (Idell
v. Goodman, supra, 224 Cal.App.3d at p. 269.) Idell quoted from Gonzales as follows:
“ ‘Filings of bankruptcy petitions are a matter of exclusive federal jurisdiction. State
courts are not authorized to determine whether a person’s claim for relief under a federal
law, in a federal court, and within that court’s exclusive jurisdiction, is an appropriate
one . . . . That Congress’ grant to the federal courts of exclusive jurisdiction over
bankruptcy petitions precludes collateral attacks on such petitions in state courts is
supported by the fact that remedies have been made available in the federal courts to
creditors who believe that a filing is frivolous. Debtors filing bankruptcy petitions are
subject to a requirement of good faith [citations], and violations of that requirement can
result in the imposition of sanctions [citations]. Congress’ authorization of certain
sanctions for the filing of frivolous bankruptcy petitions should be read as an implicit
rejection of other penalties including the kind of substantial damage awards that might be
available in state court tort suits. Even the mere possibility of being sued in tort in state
court could in some instances deter persons from exercising their rights in bankruptcy. In
any event, it is for Congress and the federal courts, not the state courts, to decide what
incentives and penalties are appropriate for use in connection with the bankruptcy process

                                              25
and when those incentives or penalties shall be utilized.” (Id. at p. 269, quoting Gonzales
v. Parks, supra, 830 F.2d at pp. 1035-1036.)
          Reasoning by analogy from Gonzales, the Idell court concluded that “[s]ince the
filing of a section 727 adversary proceeding to block the discharge of debts in bankruptcy
is within the exclusive jurisdiction of the federal courts, and because sanctions are
available to debtors when section 727 proceedings are filed in bad faith, . . . this
malicious prosecution action was preempted by federal law.” (Idell v. Goodman, supra,
224 Cal.App.3d at p. 271.)
          The question here is whether the rational of Idell and Gonzales extends to a tort
action for wrongful foreclosure based on foreclosure proceedings initiated in violation of
the automatic stay. Abdallah concluded that because there is a federal remedy for
violation of the stay, there can be no concurrent remedy of a tort action in state court.
Although the Abdallah court was short on analysis, we believe it reached the correct
result.
          The best expression we have found of why the availability of a damages remedy in
federal court precludes the prosecution of a tort cause of action in state court arising out
of violation of the automatic stay can be found in Smith v. Mitchell Const. Co., Inc.
(1997) 225 Ga. App. 383. In that case, a law firm for a construction company obtained a
judgment against the plaintiff (Smith) and then served him with postjudgment discovery.
(Id. at p. 384.) Smith did not respond, but filed a bankruptcy petition instead. (Ibid.)
The firm successfully moved to have Smith held in contempt and jailed briefly for
violating a court order compelling discovery. (Ibid.) Smith subsequently filed a state
court action against the construction company and its law firm alleging false arrest,
negligence, assault, and intentional infliction of emotional distress, claiming his arrest
violated the automatic stay in his bankruptcy proceeding. (Id. at pp. 383-384.) The state
court granted summary judgment, in part based on the finding that the action was
preempted by federal law. (Id. at p. 383.)

                                               26
       On appeal, the appellate court noted the provision of federal law (now 11 U.S.C. §
362(k)(1)) that allows for damages for willful violation of the automatic stay and noted
that whether that provision “preempts state law claims for conduct violating a stay in
bankruptcy [wa]s a question of first impression in Georgia.” (Smith v. Mitchell Const.
Co., Inc., supra, 225 Ga. App. at p. 384.) In concluding that a state court tort action was
preempted, the Georgia appellate court wrote as follows:
       “In deciding whether federal law preempts a state law, the court’s primary
consideration is whether Congress intended to exercise its authority under the Supremacy
Clause. [Citation.] The mere existence of a detailed regulatory scheme does not alone
imply intent to preempt. [Citation.] However, such intent may be inferred in an area in
which federal legislation is especially pervasive or the federal interest is ‘so dominant
that the federal system will be assumed to preclude enforcement of state laws on the same
subject, or because the object sought to be obtained by federal law and the character of
obligations imposed by it may reveal the same purpose.’ [Citation.] Other ‘special
features’ may also warrant preemption. [Citation.]
       “Cases in several jurisdictions hold that the Bankruptcy Code preempts state law
claims for abusive filings in bankruptcy court. [Citations.] Whether the Code preempts
state law actions for conduct outside bankruptcy court that violates the automatic stay,
however, has been considered in only two cases cited by the defendants: Koffman v.
Osteoimplant Technology, 182 B. R. 115 (D.Md. 1995), and In re Shape, Inc., 135 B. R.
707 (D.Me. 1992).
       “After Shape, Inc. filed a chapter 11 reorganization petition, a creditor with whom
it continued to do business raised the prices of goods it sold Shape. Shape brought suit
against the creditor in another court, claiming the price increase was a thinly disguised
attempt to recover the price of goods Shape had received, but not paid for, before it filed
its bankruptcy petition. Shape argued this was both a violation of the automatic stay,
compensable under § 362[(k)(1)], and an unfair business practice under state law.

                                             27
[Citation.] In holding that the Bankruptcy Code preempted the state law claim, the Shape
court noted that the debtor did not allege the price increase to be illegal in itself. Rather,
it was an allegedly unfair business practice only because it violated the bankruptcy stay.
[Citation.] ‘Since this federal statute is applicable here, and has its own enforcement
scheme and separate adjudicative framework, it must supersede any state law remedies.’
[Citation.]
       “Similarly, Smith does not contend that defendants’ efforts to collect on a
judgment were illegal in themselves. Their illegality arose solely from the fact that Smith
had a bankruptcy case pending, which gave rise to the automatic stay. Shape is
persuasive authority for holding that such bankruptcy-dependent claims should be
preempted as coming within the Bankruptcy Code, which ‘provides a comprehensive
scheme reflecting a balance, completeness and structural integrity that suggests remedial
exclusivity.’ [Citation.]
       “Koffman v. Osteoimplant Technology, supra, employed similar reasoning to reach
a similar conclusion. After Osteoimplant Technology, Inc. (‘OTI’) had been placed in an
involuntary chapter 7 bankruptcy, Koffman filed a collection suit against it, violating the
stay. Koffman then dismissed the suit and moved the bankruptcy court to enjoin OTI’s
president from leaving the country, allegedly making bad faith representations about the
president’s intended conduct. After the chapter 7 petition had been dismissed, OTI sued
Koffman, alleging abuse of process and malicious prosecution. (A third cause of action
was dismissed for lack of evidence.) [Citation.]
       “The Koffman court reasoned that ‘the automatic stay is imposed exclusively as a
matter of federal bankruptcy law, and the Bankruptcy Code provides a remedy for willful
violations of that stay, 11 U.S.C. § 362[(k)(1)]. State created rights have nothing to do
with the application of the automatic stay. Allowing state tort actions based on allegedly
bad faith bankruptcy filings or violations of the automatic stay to go forward ultimately
would have the effect of permitting state law standards to modify the incentive structure

                                              28
of the Bankruptcy Code and its remedial scheme. Because such a result threatens to
erode the exclusive federal authority in this area, and because it would threaten the
uniformity of federal bankruptcy law, the Court finds that OTI’s state tort suits are
preempted by the federal Bankruptcy Code.’ [Citation.]
       “We find the reasoning of Shape and Koffman persuasive. As noted in MSR
Exploration, [Ltd. v. Meridian Oil (9th Cir. 1996) 74 F.3d 910, 912-915 ], ‘Congress has
expressed its intent that bankruptcy matters be handled in a federal forum.’ The need for
uniformity in bankruptcy matters was recognized even by the framers of the Constitution,
who granted Congress the power to ‘establish . . . uniform Laws on the subject of
Bankruptcies throughout the United States’ in Art. I, § 8, cl. 4. [Citation.] From this
long-recognized need for uniformity; from the comprehensive structure of the current
Bankruptcy Code; and from Congress’ inclusion in that structure of § 362[(k)(1)], which
provides a remedy for stay violations, we infer Congress’ intent to effectuate two related
principles: Creditors should be held to a uniform standard of conduct when dealing with
bankruptcy debtors, and the bankruptcy courts are the only institutions capable of
fashioning such a uniform standard. These principles dictate our holding: § 362[(k)(1)]
preempts Smith’s state law claims against Mitchell Construction and its lawyers for the
actions they took in violation of Smith’s bankruptcy stay. The trial court was correct in
granting summary judgment to the defendants on that basis.” (Smith v. Mitchell Const.
Co., Inc., supra, 225 Ga. App. at pp. 384-386.)
       We have nothing to add to the Georgia court’s analysis. The Sundquists’ cause of
action for wrongful foreclosure is based entirely on the sale of their property in violation
of the automatic stay. Any remedy the Sundquists have for damages incurred because of
that wrongful foreclosure must be sought in federal court. The trial court here correctly
sustained the demurrer to this cause of action on the ground that it lacked jurisdiction
over the claim.



                                             29
                                             X
                                    Unfair Competition
       The trial court concluded that the Sundquists had failed to state a cause of action
for unfair competition because they did not “establish a specific law or laws that were
violated, that defendants committed fraud, or that defendants were required to modify
[their] loan. A defense to the predicate claim is a defense to the Unlawful Competitions
[sic] Law claim.”
       On appeal, the Sundquists argue that because they alleged “causes of action for
Defendants’ deceit, negligence, and breaches of fiduciary duty, and wrongful foreclosure,
[they] have stated a claim for violations of the unfair competition law.”
       For the same reason (explained above) that the Sundquists’ wrongful foreclosure
cause of action was preempted by federal law, their unfair competition cause of action
was also preempted -- at least to the extent the latter was premised on the former. As for
the remaining causes of action, we have concluded that the Sundquists have stated causes
of action for deceit and breach of fiduciary duty (although their negligence claim is time-
barred). Based on that conclusion, we likewise conclude the Sundquists have stated a
cause of action for unfair competition.
       Business and Professions Code section 17200 proscribes “ ‘ “anything that can
properly be called a business practice and that at the same time is forbidden by law.’ ”
(Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 113 . . . .) ‘[I]n 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.’ ” ’ ” (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383.)
       Here, liberally construed, the Sundquists’ complaint can be understood to allege
that defendants made it a business practice to get people like the Sundquists into loans

                                            30
they did not actually qualify for and could not afford by making fraudulent
representations in the origination of the loans -- for example, by completing the loan
applications for the borrowers with inflated income figures but telling the borrowers the
figures used were accurate. As for defendants’ argument in the trial court that the
Sundquists lack standing to pursue their unfair competition cause of action because they
“fail[ed] to allege suffering any losses beyond the amounts owed under the Note,” we
believe the Sundquists have adequately alleged damages stemming from the deceit and
breaches of fiduciary duty they claim were business practices of defendants, which
caused them to agree to a loan they could not afford, with all the negative financial
consequences that followed. Accordingly, we conclude the trial court erred in sustaining
the demurrer as to the unfair competition cause of action.
                                      DISPOSITION
       The judgment of dismissal is reversed, and the case is remanded to the trial court
with instructions to vacate its order sustaining the demurrer in its entirety without leave to
amend and to enter a new order: (1) sustaining the demurrer to the causes of action for
civil conspiracy, negligence, and wrongful foreclosure without leave to amend;
(2) sustaining the demurrer to the cause of action for promissory estoppel with leave to
amend; and (3) overruling the demurrer to the causes of action for deceit, breach of
fiduciary duty, aiding and abetting a breach of fiduciary duty, and unfair competition.
The Sundquists shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a).)


                                           ROBIE         , Acting P. J.

We concur:


      MURRAY           , J.


      DUARTE          , J.


                                             31
