Cansino v. Bank of America, 224 Cal. App. 4th 1462

Background

In 2005 Carlos and Resurreccion Cansino refinanced their Milpitas home with a $496,000 adjustable-rate mortgage (negative amortization risk disclosed); earlier loans in 2000 and 2002 increased total borrowing against the property.
Plaintiffs allege a July 2005 appraisal and lender representations valued the home at $620,000 and predicted future appreciation enabling sale or refinance before higher payments or an increased principal would arise.
By 2010 plaintiffs learned the home’s value was about $350,000–$400,000, stopped payments, sought modification, and sued in 2011 alleging fraud and UCL violations; second amended complaint filed March 2012.
Defendants included Bank of America and subsidiaries; CTC Foreclosure Services and MERS were named but had no role in origination.
The trial court sustained a demurrer to the second amended complaint without leave to amend for failure to plead fraud and UCL claims with required specificity and for untimeliness; plaintiffs appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether alleged statements about future home appreciation are actionable fraud	Statements promised future appreciation and ability to sell/refinance before harm; reliance was reasonable	Future forecasts are opinions about future events and not actionable misrepresentations of existing fact	Court: Forecasts of future market appreciation are nonactionable opinion/speculation and cannot support fraud
Whether the alleged $620,000 appraisal and value representations were pleaded with required particularity	Plaintiffs relied on an appraisal and lender statements that the home was worth $620,000; identity of speaker not required because documents involve institutions	Fraud pleading must identify who made representations, when, to whom, and authority to speak; plaintiffs failed to identify appraiser or lender personnel	Court: Pleadings lack the specificity required by Lazar/Tarmann; dismissal proper as Bank cannot defend against unidentified speakers
Whether the fraud and UCL claims were timely under discovery rule	Plaintiffs allege they did not discover falsity until "sometime in 2010" when they learned home value fell	Statutes of limitations bar claims unless plaintiff pleads when and how discovery occurred and that they exercised due diligence	Court: Conclusory, vague discovery allegations insufficient; claims untimely under Code Civ. Proc. §338 and B&P Code §17208 discovery rule
Whether UCL claim survives separate from fraud claim and based on loan terms/negative amortization	UCL alleges unfair/deceptive practices arising from misrepresentations and loan terms causing increased negative equity	UCL requires specificity and injury within four years; many UCL allegations mirror deficient fraud claims or are contradicted by judicially noticed loan deeds	Court: UCL claim fails for lack of specificity, untimeliness, and some factual allegations contradicted by judicially noticed documents
Whether dismissal without leave to amend was an abuse of discretion	Plaintiffs said defects could be cured by further amendment	Defendants argued plaintiffs already had chance to amend and still failed to plead required detail	Court: No abuse of discretion; plaintiffs failed to show a reasonable possibility amendment would cure defects

Key Cases Cited

Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797 (2005) (discovery rule and pleading requirements for tolling statute of limitations in fraud cases)
Lazar v. Superior Court, 12 Cal.4th 631 (1996) (fraud elements and particularity requirement)
Bily v. Arthur Young & Co., 3 Cal.4th 370 (1992) (when expert opinion may amount to actionable representation)
Hobart v. Hobart Estate Co., 26 Cal.2d 412 (1945) (discovery rule: burden to plead when and how fraud was discovered)
Gentry v. eBay, Inc., 99 Cal.App.4th 816 (2002) (statements about future events are generally opinions, not actionable)