Bank of America Corp. v. Superior Court
198 Cal. App. 4th 862
| Cal. Ct. App. | 2011Background
- Plaintiffs are borrowers with Countrywide-originated residential loans; case ongoing in trial court; first TAC claim is fraudulent concealment of a scheme to inflate values.
- TAC alleges Countrywide pooled risky loans into inflated-value pools and concealed this to investors, causing California home values to decline.
- Countrywide demurred; trial court overruled demurrer to the fraudulent concealment claim, and the ruling was certified for writ review under §166.1.
- The trial court grappled with duty to disclose, reliance, and causation, noting the high-stakes financial context and potential Perlas implications.
- Petition granted: the appellate court accepts that plaintiffs cannot state a fraudulent concealment claim against Countrywide due to lack of duty and causal nexus.
- Remittitur directs vacatur of the demurrer-overruling order and sustains the demurrer to the first cause of action without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to disclose fraudulent scheme owed to borrowers | Ronalds contend there was a duty to disclose the scheme to borrowers. | Countrywide argues no duty to disclose to borrowers; Perlas controls. | No independent duty to disclose; duty to refrain from fraud only. |
| Causation nexus between concealment and homeowner damages | concealment caused decline in California property values affecting borrowers. | Only generalized market decline; no causal link to individual damages. | No nexus between concealment and plaintiffs’ damages. |
| Application of Perlas and LiMandri to duty | Perlas does not negate borrower reliance in this context; LiMandri supports duty principles. | Perlas controls; borrowers relied on own judgment; no duty owed. | LiMandri informs duty framework; Countrywide had no disclosure duty here. |
Key Cases Cited
- LiMandri v. Judkins, 52 Cal.App.4th 326 (1997) (nondisclosure liability lacks duty when tort is not inherently fiduciary)
- Perlas v. GMAC Mortgage, LLC, 187 Cal.App.4th 429 (2010) (lender’s duty to borrowers to determine affordability not owed; reliance paradigm limited)
- Kaldenbach v. Mutual of Omaha Life Ins. Co., 178 Cal.App.4th 850 (2009) (elements of fraudulent concealment; causation and damages require nexus)
- Oaks Management Corp. v. Superior Court, 145 Cal.App.4th 453 (2006) (arm's-length loan transactions generally lack fiduciary relations)