Heritage Pacific Financial, LLC v. Monroy (215 Cal. App. 4th 972, 2013)

Opinion

LAMBDEN, J.

Maribel Monroy executed two promissory notes with WMC Mortgage Corp. (WMC) when purchasing a home in Richmond, California, in 2006 (the Richmond property). After a foreclosure on the senior deed of trust, Heritage Pacific Financial, LLC (Heritage), acquired Monroy’s second promissory note from WMC. Heritage sent Monroy a letter attached to a complaint and summons advising her that Heritage had filed a lawsuit against her alleging various fraud claims. The letter admonished that any misinformation provided by Monroy on her original loan application with WMC could result in civil liability and that Heritage would proceed with a lawsuit if it were unable to resolve the matter with Monroy. Monroy filed a cross-complaint against Heritage, alleging violations of the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act; Civ. Code, § 1788 et seq.) and the federal Fair Debt Collection Practices Act (FDCPA or the Act; 15 U.S.C. § 1692 et seq.).

After permitting Heritage to amend its complaint three times, the trial court sustained Monroy’s demurrer against Heritage’s pleading on the grounds that Heritage had failed to provide or allege an assignment agreement with sufficient particularity to demonstrate that the assignment of Monroy’s promissory note included an intent to assign WMC’s tort claims against the borrower. Thereafter, Monroy moved for summary judgment or adjudication on her cross-complaint. The court denied her motion as to her claim of a violation of the Rosenthal Act but granted the motion as to a violation of the FDCPA, on the condition that Monroy agree to damages in the amount of $1. Monroy agreed to the damage award of $1 and the court entered judgment in her favor. Subsequently, Monroy requested attorney fees and costs under title 15 United States Code section 1692k(a)(3), and the court found that Monroy was the prevailing party and entitled to attorney fees and costs in the amount of $89,489.60. The court concluded that the issues regarding the cross-complaint and complaint were interrelated and could not be reasonably separated. Heritage separately appealed the judgment and the award of attorney fees and we, on our own motion, consolidated the appeals.

On appeal, Heritage argues that it sufficiently set forth allegations to support a claim that the assignment from WMC included an intent to assign WMC’s tort claims against Monroy and that the trial court improperly weighed the evidence when sustaining the demurrer without leave to amend. It also contends that triable issues of fact exist regarding Monroy’s FDCPA' claim and therefore the trial court erred in granting summary judgment. Finally, it objects to the award and amount of attorney fees. We are not persuaded by Heritage’s argument, and affirm the judgment and the award of attorney fees.

BACKGROUND

Monroy is Spanish speaking and works as a housekeeper. On November 26, 2006, she purchased the Richmond property for $425,000. Monroy executed two promissory notes with WMC. She obtained a senior mortgage loan for $340,000 and a junior mortgage loan for $85,000 (the note, the second note, or the promissory note). Both promissory notes were secured by a deed of trust on the property. The beneficiary of each deed of trust was Mortgage Electronic Servicing Corporation.

Both the first and second promissory notes provided in the first paragraph the following: “I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note will be called the ‘Note holder.’ ” Monroy signed a form stating that the information in the loan application was true and correct and acknowledged that “any intentional or negligent misrepresentation of this information . . . may result in civil liability, including monetary damages.”

On her loan application, Monroy claimed to make $9,200 per month as the owner of Maribel’s Cleaning Services. Monroy signed a certification that she did not have a family or business relationship with the seller of the property.

The seller of the Richmond property was Marvin E. Monroy, Monroy’s son. He received $53,258.49 as a result of the sale. Monroy bought the house from her son because he was not able to make the mortgage payments.

At this same time, on November 20, 2006, property in Manteca (the Manteca property) was purchased in Monroy’s name and a promissory note was executed for the amount of $312,000. According to Monroy, the Manteca property was purchased under her name as a result of identity theft. She stated that in 2006 she was unaware of this transaction. She averred that she has never been to the Manteca property. In 2008, Monroy submitted to a credit-reporting agency a verified fraud statement. In this statement, she asserted that a mortgage in Manteca was opened in her name as a result of the identity theft.

Monroy failed to make her mortgage payments on the Richmond property, which resulted in a foreclosure on the senior deed of trust on August 28, 2008.

On May 22, 2009, Heritage acquired Monroy’s second promissory note as part of a “larger pool of loans.” Heritage is a limited liability company organized under the laws of the State of Texas and its principal place of business is in Dallas County, Texas. Heritage sent Monroy a letter stating that it had purchased her second unpaid loan. Heritage was unsuccessful in speaking with Monroy. In October 2009, Heritage sent by certified mail another notice of the transfer of the ownership of the note. Heritage sent Monroy a third notice in December 2009. In this notice, it asserted that she was obligated to pay Heritage the unpaid balance on the second promissory note.

Heritage did further research and concluded that Monroy had misrepresented her income and submitted false documentation regarding her income on her original loan application. Heritage also discovered that Monroy’s son was the seller of the Richmond property. Additionally, it uncovered the documents related to the Manteca property.

On June 1, 2010, Heritage filed a complaint against Monroy for intentional misrepresentation, fraudulent concealment, promise without intent to perform, and negligent misrepresentation based on her loan application with WMC. Heritage alleged that it was not barred from pursuing its action by any antideficiency statute because it was not seeking a deficiency judgment for the balance of a promissory note following foreclosure, but was seeking a judgment for Monroy’s alleged fraud in connection with her loan application. Heritage requested actual damages in the amount of $85,000, the sum owed on the promissory note, and also asked for punitive damages.

On June 27, 2010, Monroy received a letter dated May 25, 2010, from Heritage that attached Heritage’s summons and complaint against her. The letter advised her about its civil action against her and stated in bold type: “Should you wish to voluntarily provide us with your federal tax return transcripts, a signed copy of Form 4506-T (Request for Transcript of Tax Return) and/or your proof of residency in the property made the subject of our Complaint, please contact us at your earliest convenience . . . .” The letter directed: “If you notify us of your intent to voluntarily provide us with this documentation, we may suspend actions to provide you with an opportunity to provide us with copies of the same.” The letter told Monroy to notify Heritage if she wanted to provide a copy of her promissory note as Heritage, “as assignee of the promissory note, has the right to reverify the information contained therein.” The letter admonished Monroy that “any misinformation or misrepresentations provided in the [loan] application are a violation of federal law and may result in ‘civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation’ for which Heritage . . . currently seeks.” The letter warned that if Heritage was unable to resolve the matter by the date Monroy’s answer to the complaint was due, Heritage would “have no other option but to proceed with litigation against” her. The letter declared that it was “from a debt collector” and was “an attempt to collect a debt.”

On July 28, 2010, Monroy answered Heritage’s complaint and filed a cross-complaint alleging violations of the Rosenthal Act (Civ. Code, § 1788 et seq.) and the FDCPA (15 U.S.C. § 1692 et seq.). A little more than a month later, on September 2, Heritage demurred to the cross-complaint and filed a motion to strike the pleading. On November 16, 2010, Monroy filed a motion for judgment on the pleadings on Heritage’s complaint.

On December 28, 2010, the trial court overruled Heritage’s demurrer to Monroy’s cross-complaint and denied its motion to strike. On this same date, the court granted with leave to amend Monroy’s motion for judgment on Heritage’s complaint. The court explained that Heritage had failed to allege that the lender had assigned its fraud claims to it and Heritage had conceded that no California legal authority held that the assignment of a promissory note automatically constituted an assignment of a lender’s fraud claims. The court added: “If [Heritage] chooses to amend its complaint so as to specifically allege an assignment of the lender’s fraud claims, [Heritage] shall make such allegations with the particularity required of a fraud cause of action, and [Heritage] shall attach as an exhibit to the amended complaint a full and legible copy of any written assignment agreement.”

Heritage filed its first amended complaint for the same four causes of action on December 23, 2010. Heritage attached Monroy’s second promissory note for $85,000, and alleged in the pleading that the assignment was recorded on the last page of the promissory note.

Monroy demurred to the first amended complaint. On April 7, 2011, the trial court sustained Monroy’s demurrer “with one last opportunity” for Heritage to amend. (Boldface omitted.) The court explained that Heritage had “still failed to adequately allege an assignment of the original lender’s tort claims, as distinct from an assignment of the original lender’s contractual rights under the subject promissory note.” The court cited Sunburst Bank v. Executive Life Ins. Co. (1994) 24 Cal.App.4th 1156, 1164 [29 Cal.Rptr.2d 734], The court concluded that Heritage had “not attached to its complaint a written assignment agreement, as specified in the court’s ruling on the motion for judgment on the pleadings, and [Heritage] ha[d] not alleged the formation of an oral assignment agreement.”

The trial court noted in the order that Heritage had represented at oral argument that it would amend the pleading to allege “the existence of either a written assignment of the original lender’s tort claims, or an assignment agreement implied in fact from circumstances other than the mere assignment of contractual rights.” The court admonished Heritage that its future pleading must “allege with the particularity required of a fraud cause of action all the circumstances showing the formation and terms” of an implied agreement if Heritage was relying on an assignment implied in fact. The amended complaint also needed to allege “whether the subject promissory note was assigned before or after foreclosure of the first deed of trust and the corresponding extinguishment of the second deed of trust securing the promissory note.”

On May 10, 2011, Heritage filed its second amended complaint (the SAC). The SAC again set forth claims for intentional misrepresentation, fraudulent concealment, promise without intent to perform, and negligent misrepresentation. Heritage alleged that after the foreclosure on the first deed of trust, WMC sold Monroy’s promissory note secured by the second deed of trust on the Richmond property and “assigned any and all rights WMC may have including but not limited to any right to fraud claims against [Monroy], Such assignment is evidenced by signature and stamp of the secretary of WMC . . . on the last page of the note . . . .” Heritage further alleged: “In assigning [Monroy’s] loan, [Heritage] as assignee of WMC obtained all rights, title and interest in and to the mortgage loan by [Monroy], The assignment to [Heritage] included assignment of the original lender’s (WMC) tort claim. The assignment of tort claims is implied in the language of the loan sell agreement to [Heritage] including but not limited to language such as ‘Seller does hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest in the loan.’ The loan sell agreement also provided that ‘the Seller transfers assign, set-over, quitclaim and convey to Buyer all right, title and interest of the Seller in the mortgage loan.’ ”

The SAC also added the following language: “The assignment of the tort claim is also implied by conduct of the parties in the secondary mortgage market as it is custom and practice in the mortgage industry to assign any and all rights and interests including any right to tort claim against the borrower when selling mortgage loan. [Heritage] alleges that based on the conduct of the parties and the language included in the buy sell agreement of the loan, and the custom and practice of lenders such as WMC, the assignment of [Monroy’s] loan by WMC included assignment of any and all tort claims.” The SAC also asserted that the language of the loan application signed by Monroy implied the assignment of tort claims.

Monroy demurred to the SAC, and Heritage attached a declaration of Diane Taylor, a representative for WMC Mortgage, LLC, to its “sur-reply in support” of its opposition to Monroy’s demurrer. Taylor’s declaration, dated August 4, 2011, stated: “As Assistant Secretary, I am authorized to speak on behalf of WMC Mortgage, LLC, successor to WMC . . . .” She stated that WMC relied on the information provided by the borrower applying for a loan to determine the borrower’s “eligibility for the products offered.” She stated: “When WMC sold its mortgage loans to third parties, WMC assigned all of its legal rights (in tort as well as contract), as the originating lender, to the buyer—including, but not limited to, the right to recover against a borrower for fraud.” (Underscoring omitted.)

On August 15, 2011, the trial court filed its order sustaining without leave to amend Monroy’s demurrer to Heritage’s SAC. The court explained: “Despite being afforded an opportunity to amend, [Heritage] has still failed to adequately allege an assignment of the original lender’s tort claims, as distinct from an assignment of the original lender’s contractual rights under the subject promissory note. [Citation.] [Heritage] has not attached to its complaint a written assignment agreement . . . , and [Heritage] has not adequately alleged the formation of an oral assignment agreement.”

The trial court stated that there was an independent ground for sustaining the demurrer without leave to amend. The SAC stated that the promissory note was assigned after foreclosure of the first deed of trust and the corresponding extinguishment of the second deed of trust securing the promissory note. The court found that “there was no underlying property interest supporting an incidental assignment of the original lender’s fraud claims.”

On November 18, 2011, Monroy filed a motion for summary judgment or summary adjudication on her cross-complaint. Monroy asserted that Heritage was involved in the business practice of filing invalid fraud claims to avoid California’s antideficiency laws in order to collect on nonrecourse debts or convert them into recourse default judgments. With regard, to the claim of violating the FDCPA, Monroy alleged that Heritage was a debt collector and was engaged in a deceptive debt collection practice within the meaning of title 15 United States Code sections 1692d, 1692e, and 1692f. Monroy cited the letter Heritage sent her after it had filed the lawsuit against her. Monroy also asserted that Heritage had violated provisions of the Rosenthal Act under Civil Code sections 1788.17 and 1788.13, subdivision (k). Monroy claimed that she was entitled to $1,000 for Heritage’s violation of the FDCPA and $1,000 for Heritage’s violation of the Rosenthal Act.

Heritage opposed the motion for summary judgment and also requested a continuance to conduct additional discovery. In its opposition to Monroy’s motion for summary judgment, Heritage agreed that it was a debt collector but disputed the contention that the FDCPA applied. Heritage argued that the FDCPA did not apply because Monroy bought the Richmond property from her son and also purchased a home in Manteca. It also disputed the allegation that it engaged in deceptive debt collection practices within the meaning of the FDCPA or that it violated the Rosenthal Act.

On February 21, 2012, the trial court issued its order granting in part and denying in part Monroy’s motion for summary adjudication on her cross-complaint. The court granted Monroy’s motion as to her claim that Heritage violated the FDCPA. The court found that Heritage’s conduct in threatening Monroy with the prosecution of legal claims that had no merit violated the FDCPA. The court noted that Heritage had made a binding judicial admission that it received the assignment of Monroy’s note after the foreclosure of the first deed of trust, and that event extinguished the second deed of trust securing Monroy’s note. The court advised that it could not grant summary adjudication on her cause of action for monetary damages because the issue of the amount of damages remained unresolved; it thus awarded statutory damages in the nominal amount of $1. The court added; “If Monroy insists on receiving a greater amount, then summary adjudication must be denied and the matter must proceed to trial.”

The trial court denied Monroy’s summary adjudication motion with regard to her claim that Heritage violated the Rosenthal Act. The court concluded' there was a triable issue of fact as to Heritage’s statutory “unclean hands” defense. The court also sustained a number of Heritage’s objections to the declaration of Monroy’s counsel.

The trial court denied Heritage’s request for a continuance to conduct additional discovery. Heritage’s four discovery motions were set for a hearing 10 days after the scheduled trial date and thus the court found that Heritage’s discovery requests were untimely. Further, the court found that there was no good cause for granting a continuance.

On March 12, 2012, the trial court filed its entry of judgment in favor of Monroy and against Heritage and awarded Monroy nominal statutory damages of $1 on her cross-complaint, the maximum sum she could receive without a trial on her FDCPA claim. The order stated that Monroy was the “prevailing party.”

Heritage filed a timely notice of appeal.

On March 23, 2012, Monroy filed a memorandum of costs. On May 10, 2012, Monroy filed her motion for attorney fees and costs under title 15 United States Code section 1692k(a)(3). Heritage filed its memorandum in opposition on June 6, 2012.

The trial court held a hearing on Monroy’s fee motion on June 19, 2012. At the conclusion of the hearing, the court stated it was granting Monroy’s motion. The court explained: “As the judge in this case, I did go over the billings and I didn’t see anything that I could say was unreasonable for hours spent on certain tasks. And I felt the hourly rate was within the acceptable parameters for Bay Area attorneys.”

On July 10, 2012, the court filed its order granting Monroy’s motion for an award of attorney fees and expenses. The order stated that Monroy was the prevailing party and entitled “to the full amount of her attorney’s fees relating to the FDCPA claim as well as to Heritage’s complaint.” The court added: “The issues are synonymous and interrelated and cannot reasonably be separated.” The court concluded that counsel’s hourly fee rate of $450 was “within acceptable parameters for attorneys of [counsel’s] skill and experience practicing” in the San Francisco Bay Area, and that the time spent was 194.5 hours. The court denied the enhancement requested. The court awarded fees in the amount of $87,525 ($450 x 194.5). The court awarded litigation expenses in the amount of $1,964.60.

On this same date, July 10, 2102, the trial court entered an amended judgment, stating that it had sustained with prejudice Monroy’s demurrer to Heritage’s SAC, and had granted Monroy’s motion for summary adjudication on her claim in her cross-complaint for violations of the FDCPA. The court repeated that Monroy shall take statutory damages of $1 on her cross-complaint, the maximum she could receive without a trial. The court stated that Monroy was the prevailing party and awarded her $89,489.60 for attorney fees and litigation costs and expenses ($87,525 + $1,964.60). Thus, the total judgment in favor of Monroy and against Heritage was $89,490.60 ($89,489.60 + $1 in damages).

Heritage filed a timely notice of appeal from the order awarding attorney fees. This court on its own motion consolidated both of Heritage’s appeals.

On November 8, 2012, Monroy filed a request for judicial notice of an order in a class certification lawsuit against Heritage and of Heritage’s requests for default judgments against other plaintiffs in a different lawsuit. Heritage opposed the request and argued that Monroy is asking this court to take judicial notice of facts in documents and these facts may not be true. On December 5, 2012, we issued an order that the opposed request for judicial notice would be decided with the merits of the appeal.

“ ‘Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.’ [Citation.] While courts take judicial notice of public records, they

do not take notice of the truth of matters stated therein. [Citation.] ‘When judicial notice is taken of a document, ... the truthfulness and proper interpretation of the document are disputable.’ [Citation.]” (Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375 [127 Cal.Rptr.3d 362].) Accordingly, we take judicial notice of the existence of these court documents (Evid. Code, §§ 452, subd. (d), 459, subd. (a)), but do not take notice of the disputed facts in the documents.

DISCUSSION

I. The Demurrer Against Heritage’s SAC

A. The Standard of Review, the Pleading Requirements for Alleging Fraud, and the Burden of Proof when Alleging an Assignment

The trial court sustained Monroy’s demurrer against Heritage’s SAC without leave to amend. The standard of review governing an appeal from the judgment after the trial court sustains a demurrer without leave to amend is well established. “ ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or 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 [216 Cal.Rptr. 718, 703 P.2d 58].)

Here, Heritage alleged that it had a right to pursue misrepresentations Monroy made in her loan application to WMC based on a claim that WMC assigned its torts claims against Monroy to it. “The burden of proving an assignment falls upon the party asserting rights thereunder [citations].” (Cockerell v. Title Ins. & Trust Co. (1954) 42 Cal.2d 284, 292 [267 P.2d 16].) An assignment agreement “must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Mission Valley East, Inc. v. County of Kern (1981) 120 Cal.App.3d 89, 97 [174 Cal.Rptr. 300].) An assignment is “a manifestation to another person by the owner of the right indicating his [or her] intention to transfer, without further action or manifestation of intention, the right to such other person, or to a third person.” (Cockerell, at p. 291.) As with contracts generally, the nature of an assignment is determined by ascertaining the intent of the parties. (Cambridge Co. v. City of Elsinore (1922) 57 Cal.App. 245 [206 P. 1021].)

Furthermore, the policy of liberal construction of the pleadings does not apply to fraud causes of action. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 [49 Cal.Rptr.2d 377, 909 P.2d 981].) This requirement serves two purposes. First, it gives the defendant notice of the definite charges to be met. Second, the allegations “should be sufficiently specific that the court can weed out nonmeritorious actions on the basis of the pleadings. Thus the pleading should be sufficient 1 “to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.” ’ ” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217 [197 Cal.Rptr. 783, 673 P.2d 660], superseded by statute on another issue.)

B. The Adequacy of the Fraud Allegations

Heritage argues that it adequately alleged that WMC assigned its fraud claims against Monroy to it. The trial court’s insistence that it had to attach a document establishing the assignment shows, according to Heritage, that the court improperly considered the sufficiency of the evidence when ruling on the demurrer. For the reasons discussed below, we disagree with Heritage’s contention.

Heritage cites various allegations in its SAC where it asserted in a conclusory fashion that WMC assigned to Heritage its tort claims when WMC transferred to Heritage its rights under Monroy’s promissory note. In particular it cites its allegations that WMC “sold the loan and assigned any and all rights WMC may have including but not limited to any right to fraud claim” against Monroy. It further alleged that this assignment was “evidenced by signature and stamp of the secretary of WMC” on the last page of the note. Heritage set forth in its SAC that as the assignee of WMC, Heritage “obtained all rights, title and interest in and to the mortgage loan by defendant,” including WMC’s tort claim. Heritage claimed that the assignment of tort claims was implied by the following language in the agreement between Heritage and WMC: “ ‘Seller does hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest in the loan.’ The loan sell agreement also provided that ‘the Seller transfers assign, set-over, quitclaim and convey to Buyer all rights, title and interest of the Seller in the mortgage loan.’ ” The SAC added that WMC acknowledged on May 9, 2011, that it assigned to Heritage its tort claims.

Heritage contends that its SAC also alleged assignment of the tort claims based on implied conduct of the parties, as follows: “The assignment of the tort claim is also implied by conduct of the parties in the secondary mortgage market as it is custom and practice in the mortgage industry to assign any and all rights and interests including any right to tort claim against the borrower when selling mortgage loan. [Heritage] alleges that based on the conduct of the parties and the language included in the buy sell agreement of the loan, and the custom and practice of lenders such as WMC, the assignment of [Monroy’s] loan by WMC included assignment of any and all tort claims.”

Heritage also maintains that the language in Monroy’s loan implied an assignment, as Monroy acknowledged the following: “ ‘Each of the undersigned specifically represents to Lender and to lender’s actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns and agrees and acknowledges that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application. ... (6) The Lender, its servicers, successors or assigns may rely on this information contained in the application. . . .’ ” (Boldface omitted.)

Heritage insists that the foregoing language and the attached document, which was the written indorsement containing the signature and stamp of the secretary of WMC on the last page of the promissory note, were sufficient, and the trial court should have overruled Monroy’s demurrer.

We agree that the allegations in Heritage’s SAC and the attached indorsement showed an assignment of Monroy’s promissory note. However, the assignment of this contract right did not carry with it a transfer of WMC’s tort rights. While no particular form of assignment is required, it is essential to the assignment of a right that the assignor manifests an intention to transfer “the right.” (Sunburst Bank v. Executive Life Ins. Co., supra, 24 Cal.App.4th at p. 1164.)

An assignment of a right generally carries with it an assignment of other rights incident thereto. (Civ. Code, § 1084.) The fraud claims based on Monroy’s loan application with WMC are not “incidental to” the transfer of the promissory note to Heritage. “A suit for fraud obviously does not involve an attempt to recover on a debt or note.” (Guild Mortgage Co. v. Heller (1987) 193 Cal.App.3d 1505, 1512 [239 Cal.Rptr. 59]; see Millner v. Lankershim Packing Co. (1936) 13 Cal.App.2d 315, 319-320 [56 P.2d 1295] [assignment of mortgage did not include assignment of right to recover for injury to the mortgaged property]; Schauer v. Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 956-957 [23 Cal.Rptr.3d 233] [divorce agreement awarding diamond ring purchased by husband to wife did not automatically transfer husband’s claim against jeweler for fraud].) For example, in Williams v. Galloway (1962) 211 Cal.App.2d 302 [27 Cal.Rptr. 438], the corporation’s sale and transfer to a second corporation “ ‘[a] 11 personal property’ ” and all “ ‘property held on a leas[e]hold basis’ ” did not transfer a claim for money the first corporation had against its former lessor. (Id. at pp. 304-305.)

In the present case, the indorsement and allegations established that WMC assigned the second promissory note to Heritage. The transfer of the promissory note provided Heritage with contract rights. Fraud rights are not, as a matter of law, incidental to the transfer of the promissory note.

It is true that incidental rights may include certain ancillary causes of action but the assignment agreement “must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Mission Valley East, Inc. v. County of Kern, supra, 120 Cal.App.3d at p. 97.) “[A] basic tenet of California contract law dictates that when a particular right or set of rights is defined in an assignment, additional rights not similarly defined or named cannot be considered part of the rights transferred.” (DC3 Entertainment, LLC v. John Galt Entertainment, Inc. (W.D.Wn. 2006) 412 F.Supp.2d 1125, 1144.)

Here, none of the allegations regarding assignment in the SAC specified that the assignment was transferring the ancillary right of a tort claim. The document attached by Heritage did not support any claim of an assignment by WMC to Heritage of its fraud claims against Monroy. This document was the promissory note signed by Monroy, which, on the last page, contained the signature and stamp of the secretary of WMC. Directly under “Pay to the order of’ was Heritage’s stamp. The transfer of the promissory note by indorsement did not show a clear intent to assign WMC’s fraud claim. (See Cal. U. Com. Code, § 3201 et seq.) The conveyance of the promissory note to Heritage does not establish that WMC assigned to Heritage its right to the performance of other, distinct obligations owed by Monroy, such as the obligation to provide truthful information. (See Cambridge Co. v. City of Elsinore, supra, 57 Cal.App. at pp. 249-250.)

Additionally, the allegations did not show an assignment of the tort claims based on custom and practice. “While no particular form of assignment is necessary, the assignment, to be effectual, must be a manifestation to another person by the owner of the right indicating his intention to transfer, without further action or manifestation of intention, the right to such other person, or to a third person. [Citations.]” (Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 291.) The parties’ intention is determined by considering their words and acts as well as the subject matter of the contract. (Lumsden v. Roth (1955) 138 Cal.App.2d 172, 175 [291 P.2d 88].) The assignment agreement in the present case is completely silent regarding any tort claim and nothing in the agreement suggests that the assignment included any rights other than those rights incidental to the contract rights. Heritage cannot allege general custom and practice to expand the assignment agreement to include ancillary rights not specified.

Heritage claims that the decision in National Reserve Co. v. Metropolitan Trust Co. (1941) 17 Cal.2d 827, 833 [112 P.2d 598] (National Reserve) supports its position that WMC’s tort claims were assigned with the transfer of the note. Our Supreme Court in National Reserve stated that an unqualified assignment of a contract vests in the assignee “all rights and remedies incidental thereto.” (Ibid.) Heritage then proceeds to cite portions of the following quote: “If ... an accrued cause of action cannot be asserted apart from the contract out of which it arises or is essential to a complete and adequate enforcement of the contract, it passes with an assignment of the contract as an incident thereof. Thus, the assignment of a contract passes from assignor to assignee an accrued cause of action for rescission [citations], or for reformation [citation], and a creditor’s assignee acquires the right to set aside a prior fraudulent conveyance by the debtor. [Citations.] As a corollary, if an assignor by express provision of a contract is denied the right to assert an accrued cause of action after he has assigned away his interest in the contract, the right to sue passes to his assignee. There would otherwise be no one to enforce the right.” (Ibid.)

Heritage ignores the language in National Reserve, supra, 17 Cal.2d 827, which directly preceded the paragraph it quotes. In the preceding paragraph, the Supreme Court noted that incidental rights may “include certain ancillary causes of action arising out of the subject of the assignment and accruing before the assignment is made.” (Id. at p. 833.) However, “[u]nless an assignment specifically or impliedly designates them, accrued causes of action arising out of an assigned contract, whether ex contractu or ex delicto, do not pass under the assignment as incidental to the contract if they can be asserted by the assignor independently of his continued ownership of the contract and are not essential to a continued enforcement of the contract.” (Ibid.)

Applying the legal principles set forth in National Reserve to the present case, Heritage has failed to state a claim for a cause of action for fraud based on Monroy’s loan application. Neither the indorsement nor the other allegations in the SAC authorize the assignment, specifically or impliedly, of WMC’s tort claims. As already stressed, fraud is an ancillary cause of action to the promissory note.

Heritage maintains that it did not have to allege details and could simply allege a clear statement of the ultimate facts necessary to the cause of action. (See Lyon v. Master Holding Corp. (1942) 50 Cal.App.2d 238, 241 [122 P.2d 947].) Heritage claims that it was sufficient for it to plead the ultimate fact of ownership of the property at the time it filed this action and cites a 1924 case, Commercial Credit Co. v. Peak (1924) 195 Cal. 27, 32-33 [231 P. 340]. This case does not help Heritage. Commercial Credit involved recovering the value of personal property or chattel. (Id. at p. 29.) This case did not involve a promissory note; it did not involve a claim based on the assignment of a tort; nor did it involve claims based on fraud. Thus, Commercial Credit has no application to the present case. Heritage ignores that every element of a fraud cause of action must be pleaded specifically.

Finally, Heritage complains that the trial court was assessing the veracity of the allegations in the SAC, and cites the court’s order instructing it to attach a writing to show an assignment as proof that the court improperly assessed the weight of the evidence. We disagree with Heritage’s conclusion.

“A written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. [Citation.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489 [49 Cal.Rptr.3d 227].) Since the allegations in Heritage’s pleadings did not set forth with specificity any assignment of the tort claims, the trial court properly instructed Heritage to attach the written agreement that evinced an intent to assign the tort claims.

Accordingly, we conclude that the trial court did not err when it found that Heritage failed to state causes of action for fraud based on assignment.

C. Denying Heritage Leave to Amend Its SAC

Heritage contends that the trial court abused its discretion when it did not permit it to amend its SAC.

The court abuses its discretion in sustaining the demurrer without leave to amend if the plaintiff can show a reasonable possibility of curing the defect in the complaint by amendment. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Heritage has the burden of proving that an amendment would cure the defect. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 [6 Cal.Rptr.3d 457, 79 P.3d 569].)

In support of its argument that it should have been permitted to amend its pleading a third time, Heritage argues that its SAC was sufficient and that it could have amended the pleading to indicate that WMC intended to transfer its tort rights to Heritage. In the trial court, Heritage attached a declaration of Taylor, a representative for WMC Mortgage, LLC. Taylor’s declaration, dated August 4, 2011, stated: “As Assistant Secretary, I am authorized to speak on behalf of WMC Mortgage, LLC, successor to WMC . . . .” She confirmed that WMC relied on the information provided by the borrower applying for a loan to determine the borrower’s “eligibility for the products offered.” She declared: “When WMC sold its mortgage loans to third parties, WMC assigned all of its legal rights (in tort as well as contract), as the originating lender, to the buyer—including, but not limited to, the right to recover against a borrower for fraud.” (Underscoring omitted.)

Taylor’s declaration on August 4, 2011, more than two years after Heritage acquired Monroy’s unpaid note as part of a “larger pool of loans,” does not shed any light on the parties’ intent at the time of the assignment. The assignment agreement contains absolutely no language indicating that WMC intended to transfer any rights ancillary to the right to collect on the promissory note. Contract “rights” do not exist as disembodied abstractions apart from a contract that created them. More precisely, in California, “the intention of the parties as expressed in the contract is the source of contractual rights and duties.” (Pacific Gas & E. Co. v. G. W. Thomas Dray age etc: Co. (1968) 69 Cal.2d 33, 38 [69 Cal.Rptr. 561, 442 P.2d 641].) Thus, we assess the intent at the time the agreement is formed, not years later.

The trial court provided Heritage with ample opportunity to cure the defect in its pleading; Heritage failed to demonstrate it could cure the defect. The trial court thus did not abuse its discretion in sustaining the third demurrer against Heritage’s pleading without leave to amend.

H. The Grant of Summary Adjudication on Monroy’s Cross-complaint

A. The Trial Court’s Ruling

Monroy alleged violations of the Rosenthal Act and the FDCPA in her cross-complaint. She claimed that Heritage violated the FDCPA by attempting to collect a debt not owed, by using unconscionable, false, deceptive, and/or misleading means to seek to collect a debt, and by threatening legal actions that could not be legally taken.

Monroy moved for summary adjudication on her claims and the trial court denied the motion as to her claim of violating the Rosenthal Act. It granted her motion as to her claim that Heritage violated the FDCPA, and awarded Monroy damages in the amount of $1. The court found that Heritage’s conduct in threatening Monroy with the prosecution of legal claims that had no merit violated the FDCPA.

B. Standard of Review

To prevail on a summary adjudication motion, a cross-complainant must prove “each element of the cause of action entitling the party to judgment on that cause of action. . . .” (Code Civ. Proc., § 437c, subd. (p)(l).) Only if the cross-complainant satisfies this burden will the burden shift to the cross-defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Ibid.) The cross-defendant “may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.” (Ibid.)

“In reviewing whether these burdens have been met, we strictly scrutinize the moving party’s papers and construe all facts and resolve all doubts in favor of the party opposing the motion. [Citations.]” (Innovative Business Partnerships, Inc. v. Inland Counties Regional Center, Inc. (2011) 194 Cal.App.4th 623, 628 [123 Cal.Rptr.3d 525].) On appeal, the trial court’s ruling is examined under a de novo standard of review. (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 555 [90 Cal.Rptr.2d 469].)

C. The FDCPA

The purpose of the FDCPA is “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” (15 U.S.C. § 1692(e).) “A basic tenet of the Act is that all consumers, even those who have mismanaged their financial affairs resulting in default on their debt, deserve ‘the right to be treated in a reasonable and civil manner.’ ” (Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C. (7th Cir. 1997) 111 F.3d 1322, 1324 (Bass).) Since the FDCPA is a remedial statute, “it should be construed liberally in favor of the consumer.” (Johnson v. Riddle (10th Cir. 2002) 305 F.3d 1107, 1117.)

The word “ ‘creditor’ means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.” (15 U.S.C. § 1692a(4).) “The term ‘debt’ means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” (15 U.S.C. § 1692a(5).)

The FDCPA defines “ ‘debt collector’ ” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. . . . [T]he term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. . .” (15 U.S.C. § 1692a(6).)

Under the FDCPA, “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” (15 U.S.C. § 1692e.) A violation of this section includes “[t]he false representation of’ “the character, amount, or legal status of any debt.” (15 U.S.C. § 1692e(2)(A).) A violation also includes “[t]he threat to take any action that cannot legally be taken . . . .” (15 U.S.C. § 1692e(5).) Additionally, a violation occurs if the debt collector uses “any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer” (15 U.S.C. § 1692e(10)) or makes “[t]he false representation or implication that accounts have been turned over to innocent purchasers for value” (15 U.S.C. § 1692e(12)).

State courts have concurrent jurisdiction over claims under the FDCPA. (15 U.S.C. § 1692k(d).) The FDCPA will not impose any liability for “any act done or omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.” (15 U.S.C. § 1692k(e).)

D. Heritage Violated the FDCPA

When alleging a claim under the FDCPA, a plaintiff must establish that (1) the plaintiff is a consumer, as defined by the FDCPA; (2) the debt arises out of a transaction primarily for personal, family or household purposes; (3) the defendant is a debt collector, as that phrase is defined by the FDCPA; and (4) the defendant violated a provision of the Act. (15 U.S.C. § 1692e; Heintz v. Jenkins (1995) 514 U.S. 291, 294 [131 L.Ed.2d 395, 115 S.Ct. 1489]; Wallace v. Washington Mutual Bank, F.A. (6th Cir. 2012) 683 F.3d 323, 326.)

Monroy’s claim was based on the collection letter dated May 25, 2010, sent to her by Heritage. She received the letter on June 27, 2010, and it was attached to the summons and complaint against her. The letter advised that Heritage had commenced a civil action against Monroy and admonished her that “any misinformation or misrepresentations provided in the [loan] application are a violation of federal law and may result in ‘civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation’ for which Heritage . . . currently seeks.” The letter warned that if Heritage was unable to resolve the matter by the date Monroy’s answer was due, Heritage would “have no other option but to proceed with litigation against” her. The letter declared that it was “from a debt collector” and was “an attempt to collect a debt.” In the trial court, in Heritage’s separate statement of disputed facts in support of its opposition to Monroy’s motion for summary adjudication, Heritage admitted that it was a debt collector and that it was attempting to collect an alleged debt against Monroy.

Thus, the undisputed facts established that Heritage was a debt collector and attempting to collect a debt from Monroy. Monroy’s obligation was to pay for “personal, family, or household-purposes” (15 U.S.C. § 1692a(5)), as this was a debt incurred to purchase a home in which, according to Monroy’s declaration, she intended to live. There was evidence that a Manteca property was also purchased in Monroy’s name, but there is no evidence that she ever lived in that home or intended to live in that home. Indeed, the unchallenged evidence was that Monroy was the victim of identity theft and that she did not know anything about the Manteca property. Monroy stated that she lived at the Richmond property and Heritage presented no evidence that she resided at another location.

The evidence also supported a finding that the letter Heritage sent to Monroy violated the FDCPA. The letter attached to the complaint and summons threatened Monroy with a lawsuit for any misinformation she provided on her loan application with WMC. Heritage asserted that Monroy owed it the money for any fraud on her application because it was now the owner of the promissory note. As discussed extensively above, Heritage’s claims based on fraud had no merit. Thus, Heritage violated the FDCPA when it indicated in the letter that it had the right to sue Monroy for any misinformation submitted on the promissory note and when it attempted to induce her to settle with Heritage.

Additionally, according to Ben Canter, the director of client relations for Heritage, Heritage acquired Monroy’s unpaid note as part of a larger pool of loans that included both secured and unsecured mortgage loans. He acknowledged that Heritage then “seeks to collect on the unpaid balances of the notes it purchased” and that “Heritage’s business model is collecting on the loans it purchases.” Heritage purchased Monroy’s junior loan without any knowledge about the accuracy of the loan application. Before Heritage discovered the alleged fraud, it sent Monroy letters telling her that she was obligated to pay Heritage “for the unpaid balance of the note . . . .” According to Canter, a third notice of Monroy’s obligation to pay Heritage for the unpaid balance on the Note was sent via postal mail in December of 2009. These notices clearly violated the FDCPA because, as the trial court found, Heritage had made a binding judicial admission that it received the assignment of Monroy’s note after the foreclosure of the first deed of trust, and that event extinguished the second deed of trust securing Monroy’s note under the antideficiency statutes (see Code Civ. Proc., § 580b).

Heritage complains that Monroy alleged that the complaint sent to her attached to the letter violated the FDCPA and a legal action is not a communication covered by the FDCPA. We need not address this argument because Monroy’s claim was not based on a communication under the FDCPA, but based on the debt collector’s using “false, deceptive, or misleading representation or means in connection with the collection of any debt.” (15 U.S.C. § 1692e.)

Heritage also argues that “debt,” as defined by the FDCPA, does not include tort claims. As already noted, Heritage also violated the FDCPA when it sent a notice demanding payment on the money owed on the promissory note when that debt had been extinguished under the antideficiency statutes. Furthermore, we disagree with Heritage’s argument that tort claims are never debts under the FDCPA.

In support of its argument that a “debt” does not include a tort claim, Heritage cites various cases that have held that any obligation to pay damages arising from a tort claim, court judgment, or criminal activity does not constitute a debt under the FDCPA. (See, e.g., Fleming v. Pickard (9th Cir. 2009) 581 F.3d 922, 925-926 [cause of action for tortious conversion is not a debt under the FDCPA]; Turner v. Cook (9th Cir. 2004) 362 F.3d 1219, 1227 [tort judgment resulting from business-related conduct not a debt under the FDCPA because “ ‘when we speak of “transactions,” we refer to consensual or contractual arrangements, not damage obligations thrust upon one as a result of no more than her own negligence’ ”]; Hawthorne v. Mac Adjustment, Inc. (11th Cir. 1998) 140 F.3d 1367, 1371 [holding that the obligation to pay arose from a tort, and not from a consumer transaction, and therefore was not a debt under the FDCPA]; Zimmerman v. HBO Affiliate Group (3d Cir. 1987) 834 F.2d 1163, 1167-1169.)

In the cases cited by Heritage, the obligations to pay were created by something other than a consumer transaction and were not consensual. (See, e.g., Fleming v. Pickard, supra, 581 F.3d at p. 925 [“ ‘at a minimum, a “transaction” under the FDCPA must involve some kind of business dealing or other consensual obligation’ ”].) Thus, we agree that courts have consistently excluded tort obligations or criminal activity from the FDCPA’s definition of “debt” when the tort obligations do not arise out of a consensual transaction. In Zimmerman v. HBO Affiliate Group, supra, 834 F.2d 1163, for - example, the Third Circuit held that the FDCPA did not apply to attempts by cable television companies to collect money from people who allegedly had stolen cable television signals by installing illegal antennas. (Zimmerman, at pp. 1167-1169.) There was no FDCPA “debt” in Zimmerman because the obligations arose out of a theft rather than a transaction. Neither the complaint nor the demand letter included any assertion of an offer of extension of credit and therefore no transaction had occurred. (Zimmerman, at pp. 1167-1169.)

As already stressed, a debt or obligation under the FDCPA must be based on a consumer consensual or contractual arrangement, not a damage obligation. (See, e.g., Hawthorne v. Mac Adjustment, Inc., supra, 140 F.3d at p. 1372). Unlike the cases upon which Heritage relies, the present case is not a situation in which Monroy never had a contractual arrangement of any kind with WMC. Rather, Monroy’s alleged debt to Heritage arose out of her transaction with WMC to purchase the Richmond property. The alleged fraud claims clearly arose out of a residential mortgage transaction and Heritage cannot avoid the application of the FDCPA simply because it alleged in its pleading that Monroy’s obligation to it was based on the misrepresentations she made on her loan application rather than on a breach of her obligations under the contract.

Heritage declares that the present case is similar to Turner v. Cook, supra, 362 F.3d 1219, but Turner is clearly distinguishable from the present case. In Turner, the appellees obtained a judgment against Stephen Turner and “ ‘the judgment arose from allegations of various business interference torts’ ” by Turner against the appellees. (Id. at pp. 1222-1223.) Subsequently, the appellees filed a claim that Turner fraudulently conveyed his real and personal property to prevent the appellees from collecting on the judgment. (Id. at p. 1223.) Turner claimed that the appellees violated the FDCPA when attempting to collect the judgment. (Turner, at pp. 1223-1224.) When rejecting the claim under the FDCPA, the Ninth Circuit held that a tort judgment is not a debt under the FDCPA. (Turner, at p. 1227.) Turner had admitted that the judgment was based on alleged business interference torts, not any consumer transaction, and it was immaterial that the fraudulent conveyance action involved Turner’s home. (Id. at p. 1228.)

In Turner v. Cook, supra, 362 F.3d 1219, the liability arose from tortious activity, not from a consensual transaction. By contrast, here, Monroy and WMC entered into a consensual loan agreement for the purchase of a residential home.

Heritage argues that the present liability did not arise out of a consensual transaction because WMC did not consent to mortgage fraud. Heritage maintains that the present transaction is the same as the theft of goods or services.

Heritage’s argument is contrary to the court decisions that have held that there is no automatic fraud exception to the FDCPA. (See, e.g., F.T.C. v. Check Investors, Inc. (3d Cir. 2007) 502 F.3d 159, 170; Keele v. Wexler (7th Cir. 1998) 149 F.3d 589, 595.) “ ‘Absent an explicit showing that Congress intended a fraud exception to the Act, the wrong occasioned by debtor fraud is more appropriately redressed under the. statutory and common law remedies already in place, not by a judicially-created exception that selectively gives a green light to the very abuses proscribed by the Act.’ ” (F.T.C., at p. 170.)

The breadth of the phrase “any obligation or alleged obligation” is not limited to a particular set of obligations. (See Bass, supra, 111 F.3d at p. 1325.) Thus, a replevin action, even though it is a tort claim, may be a debt under the FDCPA. (Rawlinson v. Law Office of William M. Rudow, LLC (4th Cir. 2012) 460 Fed. Appx. 254, 257.) “[A] court should look beyond the label of the debt collection practice to determine whether a ‘debt’ is being collected.” (Ibid.)

Here, WMC and Monroy consented to the loan application. The fraud action, even though it is a tort claim, arose from the consensual loan transaction, and thus it is a debt under the FDCPA.

E. No Defense to the Application of the FDCPA

Heritage contends that it has a defense, as a matter of law, to the application of the FDCPA. It claims that it relied on an advisory opinion by the Federal Trade Commission (FTC) that collecting on tort damages is not a debt for purposes of the FDCPA.

The FDCPA provides an affirmative defense for “ ‘any act done or omitted in good faith in conformity with any [FTC] advisory opinion.’ ” (Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA (2010) 559 U.S. 573, 574 [176 L.Ed.2d 519, 130 S.Ct. 1605, 1607] (Jerman), quoting 15 U.S.C. § 1692k(e).) However, “ ‘ignorance of the law will not excuse any person, either civilly or criminally.’ ” (Jerman, 559 U.S. at p. 581 [130 S.Ct. at p. 1611].)

The “advisory opinion” relied upon by Heritage is a letter dated August 27, 1992, written to an attorney in Florida. The attorney wished to know if the claim for civil damages against an alleged shoplifting offender would be covered under the FDCPA. The letter stated that these torts would not be debts as defined in the FDCPA and admonished that “[t]he views expressed herin represent an informal staff opinion. As such, they are not binding on the [FTC]____”

This letter is an “informal staff opinion” and not an advisory opinion. Furthermore, the claim of damages arising from a theft, as was the subject of the FTC’s letter, is clearly distinguishable from the present case. As already discussed, Heritage was not collecting on tort damages, but on a claim of fraud arising out of a loan contract.

Courts held as early as 1998 that there is no automatic fraud exception to the FDCPA. (Keele y Wexler, supra, 149 F.3d at p. 595 [“neither the text nor underlying legislative history of the FDCPA lends itself to the recognition of a fraud exception”].) Heritage’s ignorance of the law does not provide it with an affirmative defense to the application of the FDCPA.

F. No Triable Issue of Fact

Heritage argues that the trial court should not have granted the summary adjudication motion because there was a triable issue of fact as to whether the tort claims had been assigned. It complains that the court refused to consider its evidence of assignment.

In support of this argument, Heritage cites Cadlerock Joint Venture, L.P. v. Lobel (2012) 206 Cal.App.4th 1531 [143 Cal.Rptr.3d 96] (Cadlerock). In Cadlerock, a single lender provided a borrower with two nonpurchase money loans secured by two deeds of trust against the same real property, and then assigned the junior loan to a third party. (Id. at p. 1536.) The court held that the assignee of the junior loan was