STATEMENT OF THE CASE Plaintiffs and appellants MOHAMMED ABDELSALAM AND MONA MOFLEH filed a Second Amended Complaint

on April 24, 2011. Seeking Damages for Fraud and Misrepresentation, Damages for violation of Californias Unfair Competition Law, Bus. & Prof. Code 17200 et seq., Unfair and Fraudulent Business Acts or Practices, Damages for Intentional Infliction of Emotional Distress, Damages for Fraudulent Omissions, and Breach of Contract, and Breach of Implied Covenant of Good Faith and Fair Dealing . (Second Amended Complaint in Augmented Record, hereafter SAC). On 9 May 2011, Defendants filed a

Demurrer (CT) and Motion to Strike Portions of the Second Amended Complaint. Plaintiff filed his oppositions to the Demurrer and Motion to Strike on 14 October, 2011 Plaintiffs Brief in Opposition to Defendants Motion to Strike Portions of Second Amended Complaint; Memorandum of Points of Authorities in Support Thereof in Augmented Record- hereafter OMS). Defendants filed their reply briefs on the Demurrer and Motion to Strike on 7 November 2011. Hearings were held on the Demurrer and Motion to Strike on 15 November, 2011. The Court sustained the Demurrer without leave to amend and ruled the Motion to Strike as moot on 15 November, 2011. The Courts Judgment and Order of Sustaining without leave to amend. On 6 Feb 2012.

STATEMENT OF APPEALABILITY This appeal is from the judgment of the Sacramento County Superior Court and is authorized by the Code of Civil Procedure, section 904.1, subsection (a)(1). STATEMENT OF THE FACTS Plaintiffs and appellants MOHAMMED ABDELSALAM AND MONA MOFLEH filed a Second Amended Complaint on April 24, 2011. Seeking Damages for Fraud and Misrepresentation, Damages for violation of Californias Unfair Competition Law, Bus. & Prof. Code 17200 et seq., Unfair and Fraudulent Business Acts or Practices, Damages for Intentional Infliction of Emotional Distress, Damages for Fraudulent Omissions, and Breach of

Contract, and Breach of Implied Covenant of Good Faith and Fair Dealing . (Second Amended Complaint in Augmented Record, hereafter SAC). A key allegation throughout the SAC was that 1. the defendants among other things: (i) the deception in inducing Plaintiffs to enter into loans and mortgages (iii) Defendants failure to perform their obligations required pursuant to accepting TARP funds; (iv) Defendants breach of Plaintiffs statutorily protected rights; (v) Defendants breach and willful violation of numerous consumer and homeowner protection statutes, and willful violations of unfair business practices statues (vi) accepting money, transferring alleged assets and foreclosing upon alleged assets in instances where the alleged assets do not exist, and which these Defendants have no right, title, or interest upon which they can act; and (vii) Defendants continuing tortuous conduct intended to deprive Plaintiffs of their rights and remedies for the foregoing acts, described below. 2. Defendants, among other things, violated laws, breached contracts, and repeatedly and intentionally failed to honor its agreements with borrowers. 3. Moreover, Defendants, wrongfully acted and continue to act as if they are either the owner, beneficiary, successor, assignee, servicer, or have some right, title, or interest in Plaintiffsnotes, mortgages, or deeds of trust. In reality, the Defendants, are committing and continuing a fraud, by utilizing and foreclosing upon assets that do not exist. 4. This action seeks remedies for the foregoing improper activities, including a massive fraud perpetrated upon Plaintiffs by the Defendants business that devastated the values of their residences, in most cases resulting in Plaintiffs loss of all or substantially all of their net worths. Defendants filed a Demurrer (CT) and Motion to Strike Portions of the Second Amended Complaint. Plaintiff filed his oppositions to the Demurrer and Motion to Strike on 14 October, 2011 Plaintiffs Brief in Opposition to Defendants Motion to Strike Portions of Second Amended Complaint; Memorandum of Points of Authorities in Support Thereof hereafter OMS). Defendants filed their reply briefs on the Demurrer and Motion to Strike on 7 November 2011. Throughout their pleadings, the defendants falsely claimed that the first, second, third and fourth causes of action for Fraud (Concealment, Deceit, Negligent, Intentional Misrepresentation and Omission) failed to state a cause of action because plaintiff failed to allege specific facts
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indicating that any representation was made with knowledge of its falsity, and plaintiffs could not have actually relied on any alleged representation, and failed to adequately pled elements of reliance. (CT page 3 line 7-28, page 4 line 1 -27, page 5 line 1-28 page 6 line 6-28 page 7 line 113). In fact, all of the allegedly non-existent allegations are found in (OMS page 6 through page9) and ( paragraphs 23 through 38 paragraphs 39 through 40, paragraphs 41, through 52 and paragraph 53-55 of the SAC.) . With respect to the eight cause of action for Injunctive Relief and eleventh cause of action for Declaratory Relief and the twelfth cause of action (Wrongful Foreclosure the defendants falsely claimed that it should fail because plaintiffs failed to state a cause of action, because plaintiffs do not contend that they tendered all of their payments under the loan (CT page 11 line 1-28, page 12 line 1-20) Again, all of the allegedly missing allegations are contained in (Page 20 through 22 of the SAC) . With respect to sixth cause of action for violation of Californias Unfair Competition Law, Bus. & Prof. Code 17200 et seq., Unfair and Fraudulent Business Acts or Practices, defendants falsely claimed that the cause of action must fail because plaintiffs alleged no facts indicating outrageous conduct, and alleged no facts showing ongoing unlawful, unfair and fraudulent business acts by the defendant (CT page 9 line 1 through 28). In fact, all of the supposedly missing allegations were contained in (paragraph 5661 of SAC).. The demurrer asserted that the seventh cause of action for Breach of Contract, and Breach of Implied Covenant of Good Faith and Fair Dealing must fail because there were no contract and a false assertion that plaintiffs failed to plead facts supporting any entitlement to damages caused by defendants conduct (CT page 10, line 6 through, line 24). Plaintiffs argued that, Defendants breached the written contractual agreement by failing to apply any portion of Plaintiffs monthly payments towards their principal loan balances.. Plaintiffs, on the other hand, did all of those things the contract required of them. Plaintiffs made monthly payments in the amounts required under the terms of the Note and reflected in the payment schedule prepared and provided by Defendants.. As a result of Defendants breach of the agreement, Plaintiffs have suffered harm. Furthermore, Defendants breaches have caused Plaintiffs to losing their homes through foreclosure. The defendants Motion to Strike sought to eliminate the allegations regarding attorneys fees without any authorities based upon a false claim that the plaintiffs failed to allege a contractual or statutory provision entitling them to such recovery, and the allegations regarding punitive

damages based on essentially the same reasoning stated in the Demurrer to the sixth cause of action. (MTS page 2, line 3 through 28). The plaintiffs fully opposed the Motion to Strike in their Plaintiffs Brief in Opposition to Defendants Motion to Strike Portions of Second Amended Complaint; Memorandum of Points of Authorities in Support Thereof. Hearings were held on the Demurrer and Motion to Strike on 15 November, 2011. The Court sustained the Demurrer without leave to amend and ruled the Motion to Strike as moot, specifically. There were numerous other arguments made about the other allegations of the complaint, including a ridiculous assertion by the defendants that the Commercial Code applies only to consumer goods and not to mortgages of real property, but the court apparently hung its hat on these findings alone: the blatantly false claim that the judgment in unlawful detainer action is res judicata and that failure to produce the note is (according to the defendant and the honorable superior court) not a basis on which to attack a foreclosure. The Courts Order of Sustaining demurrer Without Leave to Amend was entered on 6 February 2012.

ARGUMENT

Issue 1
THE COURT ABUSED ITS DISCRETION IN DISMISSING THE SECOND AMENDED COMPLAINT WITHOUT LEAVE TO AMEND

A.

The Standard of Review: On review of an order sustaining a demurrer without

leave to amend, our standard of review is de novo, i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law. [Citation.] (Santa Teresa Citizen Action Group v. State Energy Resources Conservation & Development Com. (2003) 105 Cal.App.4th 1441, 1445.) 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
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complaint a reasonable interpretation, reading it as a whole and its parts in their context. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126). When analyzing a demurrer, the court is to look only to the face of the pleadings and to matters judicially noticeable and not to the evidence or other extrinsic matter. (Knickerbocker v. City of Stockton (1988) 199 Cal.App.3d 235, 239, fn. 2.). The appellate court is not bound by the trial courts construction of the complaint . . . . (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.) Rather, the appellate court is to independently evaluate the complaint, construing it liberally, giving it a reasonable interpretation, reading it as a whole, and viewing its parts in context. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The appellate court must determine de novo whether the factual allegations of the complaint are adequate to state a cause of action under any legal theory. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) In the event that the complaint is found to not state a cause of action, but there is a reasonable possibility that amendment can cure the defect, leave to amend must be granted. (Id. at p. 39.) B. Causes of action to be discussed independently: Plaintiffs/appellants will discuss each

cause of action independently below, demonstrating that each element of each cause of action has been fully plead. Further, plaintiffs/appellants contend that if the court determines that any element was lacking, an amendment could provide the necessary allegation(s), so that leave to amend should be granted. C. California Has Well-Established Precedent Allowing Leave To Amend A basic rule of appellate review requires this Court to construe the allegations of a complaint liberally in favor of the pleader. See Code Civ. Proc. 452; Buxbom v. Smith (1944) 23 Cal.2d 535, 542, 145 P.2d 305. A demurrer tests only the legal sufficiency of a complaint, not its factual

truth. Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497. On appeal, this Court must deem to be true all material facts properly pled. Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501. A plaintiff need plead only those facts showing that he may be entitled to some relief. Alcorn v. Anbro Engineering ,Inc. (1970) 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216. Whether the plaintiff is entitled to any relief at the hands of the court against the defendants is "a pure question of law." CAMSI IV v. Hunter Technology Corp. (1991)230 Cal.App.3d 1525, 1530, 282 Cal.Rptr. 80. If it is reasonably possible that a plaintiff can cure a defective complaint by amendment, or that the pleading liberally construed can state a cause of action, the trial court should not sustain a demurrer without leave to amend. Minsky v. City of Los Angeles (1974) 11 Cal.3d 113, 118 113 Cal.Rptr. 102, 520 P.2d 726. A trial court abuses its discretion by sustaining a general demurrer without leave to amend if it appears from the complaint that under applicable substantive law there is a reasonable possibility that an amendment could cure the complaint's defect. Heckendorn v. City of San Marino (1986) 42 Cal. 3d 481, 486 (citing Vater v. County of Glenn (1958) 49 Cal.2d 815, 82,323 P.2d 85; C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062,211 Cal.Rptr. 765). Here, Appellant offered to amend his complaint. The court below should have given Appellant the opportunity to amend his complaint. D. THE DEMURRERS TO THE COMPLAINT LACKED MERIT 1. The Lower Court Refused To Consider The Cause Of Action For (B&P17200) Instead of providing a reason for its ruling, or guidance about how the violation of Californias Unfair Competition Law, Bus. & Prof. Code 17200 et seq., Unfair and Fraudulent Business Acts or Practices cause of action might be amended, the lower court merely expressed

befuddlement and stated that it just doesnt fit. . Appellant appropriately pled Unfair Competition Law, Bus. & Prof. Code 17200 et seq., Unfair and Fraudulent Business Acts or Practices as required.

Issue 2 THE ELEMENTS OF DEFENDANTS FRAUDLANT OMISSIONS AND ITS UNLAWFUL, UNFAIR BUSINESS ACTS AND PRACTICES AND ENGAGMENT IN CAMPAIN OF DECEPTIVE AND CONCEALMENT PLED PROPERLY. A. Elements of the action are :

(1) Defendants engaged in unfair, fraudulent and/or deceptive business acts and/or practices. by selling their Option ARM loan product to Plaintiffs in a false or deceptive manner knowing that if they sold these loans in such a manner, their Option ARM loan product would be a hugely popular and profitable product for them. Defendants also knew, however, that they were selling their product in a false and deceptive manner. applicable duty of any contracting party to disclose important material facts, and on the duty to refrain from unfair and deceptive business practices. (2) , Plaintiffs never actually received the benefit of the loan promised to them because

immediately, Defendants began secretly taking away Plaintiffs equity. Defendants initiated this scheme in order to maximize the amount of the loans issued to consumers and to maximize Defendants profits. Defendants perpetrated this bait-and-switch scheme uniformly and in the same manner on Plaintiffs. (3) As a direct result of Defendants unfair and/or fraudulent conduct alleged herein, Plaintiffs have lost their homes. Plaintiffs are direct victims of the Defendants unlawful conduct, and have suffered injury in fact, and have lost money or property as a result of Defendants unfair competition. B. The elements of Fraudulent Omissions and Unlawful, Unfair Business Acts and Practices and Engagement in Campaign of Deceptive and Concealment were properly plead. All of the necessary elements are plead in paragraphs 19 through 21 (pages 4 line 27 through 5 line 8) of the VFAC, with incorporation by reference of paragraphs 1 through 18. The defendant specifically argued that there was no pleading of outrageous conduct, but the outrageous conduct was plead using the phrase intentional, unreasonable, and so outrageous that they
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exceed all bounds usually tolerated by a decent society in Paragraph 21 (page 6 lines 19 through 23) and more fully described in the numerous prior paragraphs that are incorporated by reference into the Intentional Infliction of Emotional Distress cause of action (including, but not limited to, paragraphs 10, 12, 13, 14, 16, and 18) of the First Amended Complaint.

Issue 3 THE ELEMENTS OF FRAUD WERE PROPERLY PLEAD A. Elements of the Action: The elements of an action for fraud are (1) a false

representation about a material fact, (2) knowledge of the falsity, (3) intent to defraud, (4) justifiable reliance, and (4) damages. (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109; Gonsalves v. Hodgson (1951) 38 Cal.2d 91, 100-101.) B. The Elements of Fraud were fully plead: The allegations of specific facts that

representations were false are found in Paragraph 18 (page 4 line 23 through page 6 line 6), as well as in Paragraph 10 (page 2 line 26 though page 3 line 10), Paragraph 13 (page 3 lines 20 through 26), and Paragraph 16 (page 4 lines 12 through 16), of the VFAC. The allegations that the defendants knew of the falsity of the representations are found in Paragraph 18 (page 5 lines 1 through 3, page 5 lines 13 through 16, page 6 lines 2 through 6), as well as portions of Paragraphs 10, 13, and 16, of the VFAC. The allegations of ratification are found in Paragraph 18 (page 5 lines 12 through 13, and page 6 lines 1 and 2) of the VFAC. The allegations of reliance on the misrepresentations/ fraud and damages are contained in Paragraph 18 (page 5 lines 3 and 4, page 6 lines 6 through 9) of the VFAC.

C.

The defendant again improperly offered irrelevant extrinsic evidence

to support its arguments on this issue: Wells Fargo relies on Nymark v. Heart Fed. Savings & Loan Assn., 231Cal.App.3d 1089 (1991) for the proposition that, as a general rule, a financial institution owes no duty of care to a borrower when the institutions involvement in the loan transaction does not exceed the scope of its conventional role as a mere
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lender of money. Id. at 1095 (CT page 6 line 20-21). Despite Wells Fargos misleading suggestions to the contrary, Nymark does not support the sweeping conclusion that a lender never owes a duty of care to a borrower. Rather, the Nymark court explained that the question of whether a lender owes such a duty requires the balancing of various factors, among which are [1] the extent to which the transaction was intended to affect the plaintiff, [2] the foreseeability of harm to him, [3] the degree of certainty that the plaintiff suffered injury, [4] the closeness of the connection between the defendants conduct and the injury suffered, [5] the moral blame attached to the defendants conduct, and [6] the policy of preventing future harm. Id. at 1098 (citations omitted). Here, Wells Fargo makes no attempt to establish or address these factors in its moving papers, and the Court declines to do so (TR page 3)
Issue 4 THE ELEMENTS OF INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS WERE PROPERLY PLEAD A. Elements of the action: The elements of a cause of action for intentional infliction

of emotional distress are: (1) the defendant engaged in extreme and outrageous conduct with the intention of causing, or reckless disregard of the probability of causing, severe emotional distress to the plaintiff; (2) the plaintiff actually suffered severe or extreme emotional distress; and (3) the outrageous conduct was the actual and proximate cause of the emotional distress. (Cervantez v. J. C. Penney Co. (1979) 24 Cal. 3d 579, 593). B. The elements of intentional infliction of emotional distress were properly plead: All of the

necessary elements are plead in paragraphs 19 through 21 (pages 4 line 27 through 5 line 8) of the VFAC, with incorporation by reference of paragraphs 1 through 18. The defendant specifically argued that there was no pleading of outrageous conduct, but the outrageous conduct was plead using the phrase intentional, unreasonable, and so outrageous that they exceed all bounds usually tolerated by a decent society in Paragraph 21 (page 6 lines 19 through 23) and more fully described in the numerous prior paragraphs that are incorporated by
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reference into the Intentional Infliction of Emotional Distress cause of action (including, but not limited to, paragraphs 10, 12, 13, 14, 16, and 18) of the First Amended Complaint. C. Defendants assertion of a privilege constitutes a defense, not an element, and does not

overcome the allegation of intentionally fraudulent statements and conduct based thereon: The defendant argued that it had a qualified privilege as a creditor (CT 11, line 19 through CT 12, line 9). However, this is merely a defense to the cause of action and therefore should not affect the complaint on demurrer (Cervantez v. J. C. Penney Co. (1979) 24 Cal. 3d 579, 593). Further, none of the authorities cited by the defendant allowed fraudulent statements and other misconduct based thereon to fall within the qualified privilege. D. The defendant again asserted and the trial court may have considered improper and

irrelevant extrinsic evidence: Defendant yet again argued in its Demurrer that the court should consider plaintiffs/appellants statement in their Ex Parte Application for a Preliminary Injunction that they are having difficult financial times and were having trouble making ends meet to be proof that they were in default on their mortgage (CT 12, lines 12-15). Again, this should not have been argued by the defendant nor considered by the court. Issue 5 IF THE DEMURRER IS OVERTURNED, THE MOTION TO STRIKE WILL NO LONGER BE MOOT, SO THAT THE TRIAL COURT SHOULD RECEIVE INSTRUCTIONS REGARDING THE LAW ON THOSE ISSUES A. The Trial Court ruled that the Motion to Strike was Moot due to the sustaining of

the Demurrer: The trial court first sustained the demurrer (RT 4, line 22 through 5, line 4). Then the court ruled that the Motion to Strike was moot (RT 5, lines 9 through 11). B. If the sustaining of the Demurrer and the order of dismissal are overturned, the Motion to

Strike will no longer be moot and the court may need to instruct the trial court: Plaintiffs/appellants are seeking the overturning of the sustaining of the Demurrer and the resulting order of dismissal. If that happens, the Motion to Strike will no longer be moot. Since the Motion to Strike was not granted, plaintiffs/appellants are not briefing those issues. However, plaintiffs/appellants request that this court consider reviewing the portions of the record and

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augmented record that include the Motion to Strike and the plaintiffs/appellants opposition thereto and further consider making appropriate instructions to the trial court on those issues. CONCLUSION The trial court erred in sustaining the demurrer without leave to amend and entering a judgment of dismissal. The rules of a non-judicial foreclosure proceeding and litigation to set aside a nonjudicial foreclosure do not apply to a quiet title action that is filed prior to a foreclosure sale. The Commercial Codes requirements that the entity enforcing a note must possess the original note (with limited exceptions) applies to a Note Secured by Deed of Trust. The Commercial Codes requirements that the perfection of a security interest in real property requires possession of the original note applies to a Note Secured by Deed of Trust. Even in the context of a non-judicial foreclosure, there is no breach unless the entity that did not receive the mortgage payments had a right to receive the mortgage payments through possession of the original note or compliance with another recognized exception under the Commercial Code. Any other result would cause an unnecessary conflict of laws and allow fraudulent lenders to engage in non-judicial foreclosures and sales of property so long as they complied with the technical requirements of a non-judicial foreclosure. All of the causes of action of the second Amended Complaint are properly plead.

RESPECTFULLY SUBMITTED,

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DATED: By: ____________________________ Mohammed Abdelsalam

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