Case 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 1 of 7 Page ID #:8598

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 1617 WESTCLIFF LLC, 11 Plaintiff, CASE NO: SACV 14-1941 JVS 12 v. (DFMx)

13 WELLS FARGO BANK N.A., etc., et al., 14 FINDINGS OF FACT AND Defendants. 15 CONCLUSIONS OF LAW 16 17 18 19 20 21 22 23 24 25 1 Case 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 2 of 7 Page ID #:8599

1 This case involves a dispute between plaintiff 1617 Westcliff LLC 2 (“1617 Westcliff”) and Wells Fargo Bank N.A, etc., et al. (collectively “Wells 3 Fargo”) concerning a commercial loan which Well Fargo issued to 1617 Westcliff. 4 The Court now enters its Findings of Fact and Conclusions of Law pursuant to 5 Rule 52(a)(1) of the Federal Rules of Civil Procedure with respect to 1617 6 Westcliff’s sole remaining claim for violation of California Business and 7 Professions Code § 17200 (“Section 17200”). 1617 Westcliff contends that Well 8 Fargo promised but failed to perform its obligation to negotiate for a modification 9 to the loan. 10 11 JURISDICTION 12

13 1. The Court has jurisdiction pursuant to the diversity statute. 28 14 U.S.C. § 1332(a). 1617 Westcliff is a Delaware limited liability company; all of 15 its members are citizens of California. Therefore, 1617 Westcliff is a citizen of 16 California. Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 17 (9th Cir. 2006). Wells Fargo is a citizen of South Dakota. The amount in 18 controversy exceeds $75,000. 19 20 PROCEDURAL BACKGROUND 21 22 2. 1617 Westcliff filed suit in the California Superior Court for the 23 State of California, County of Orange asserting various state law claims. (Docket 24 25 2 Case 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 3 of 7 Page ID #:8600

1 No. 1-3.) The case was removed to this Court. (Docket No. 1.) The operative 2 complaint, the Second Amended Complaint, asserts claims for a false 3 representation or a representation made recklessly or without regard to the truth; 4 negligent misrepresentation; violation of Section 17200; and unjust enrichment. 5 (Docket No. 56.) 6 7 3. The misrepresentation, negligent misrepresentation, and unjust 8 enrichment claims were tried to a jury. (Docket No. 216, 218, 219, 222, 227.) The 9 jury returned a verdict on each claim in favor Wells Fargo and against 1617 10 Westcliff. (Docket No. 228; redacted.) The Section 17200 claim was reserved to 11 the Court. 12

13 4. Following the jury trial, the parties submitted trial briefs on the 14 Section 17200 claim. (Docket Nos. 230, 231, 232.) No further evidence was 15 taken. 16 FINDINGS OF FACT 17 18 5. The parties are: 19 • 1617 Westcliff, the owner of a commercial real estate building at the 20 same address in Costa Mesa, California. 21 • Wells Fargo, a national bank and the successor lender in this case. 22 • Torchlight Loan Services, LLC (“Torchlight”), a loan servicer. 23 24 25 3 Case 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 4 of 7 Page ID #:8601

1 6. In July 2004, Well Fargo’s predecessor made a $6.9 million to 2 1617 Westcliff, secured by a deed of trust. 3 4 7. In 2011, 1617 Westcliff fell into financial difficulties and 5 voluntarily defaulted on the loan by failing to make the monthly loan payment and 6 remittance of rents to a lock box. 7 8 8. 1617 Westcliff attempted to renegotiate the loan. 9 10 9. On behalf of Wells Fargo, Torchlight negotiated a Pre-Negotiation 11 Agreement (“PNA”) with 1617 Westcliff. Well Fargo required the PNA before it 12 would enter into any discussion concerning modification of the loan terms.

13 14 10. Based on its independent review of the trial evidence, the Court 15 finds that Wells Fargo and Torchlight fully discharged their duties to negotiate 16 under the PNA. There was no breach; hence there were no fraudulent or negligent 17 misrepresentations. The Court reaches the same conclusion as a matter of 18 collateral estoppel, based on the jury verdict in favor Well Fargo and Torchlight on 19 the claims that they had falsely or negligently represented them would negotiate as 20 they were required to do under PNA (Docket No. 228, Questions 1, 3, 5, 7). 21 Teutscher v. Woodson, 835 F.3d 936, 944, 950 (9th Cir. 2016). 22 23 11. On the same two bases, the Court finds that Wells Fargo was not 24 25 4 Case 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 5 of 7 Page ID #:8602

1 unjustly enriched. 2 3 12. On appellate review following the first jury trial, the Ninth Circuit 4 held that the PNA was illusory and unenforceable. (Docket No. 47, p. 4.) The 5 Court is bound by this determination. 6 7 13. The Court finds that no injury flowed from the making of an 8 illusory promise. First, as a matter of fact, Wells Fargo and Torchlight performed 9 the contract, and discharged their duties to negotiate. Second, any injury is 10 identical to the injury claimed by 1617 Westcliff in the jury trial, and any claim for 11 such injury under the Section 17200 claim is barred by collateral estoppel. 12

13 14. Where the defendants in fact performed their illusory and 14 unenforceable promise, there was no unfairness because 1617 Westcliff received 15 exactly what it bargained for. 16 17 15. Because 1617 Westcliff abandoned its claims under the unlawful 18 and fraudulent prongs of Section 17200, the Court does not address the facts 19 related to these theories.1 (See Docket No. 230, p. 2.) 20 21 1However, any claim based on the fraud prong would be barred by collateral 22 estoppel. (See ¶ 10 , supra.) Moreover, 1617 Westcliff has offered no evidence 23 24 that the conduct of Well Fargo and Torchlight was unlawful. 25 5 Case 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 6 of 7 Page ID #:8603

1 CONCLUSIONS OF LAW 2 3 16. Wells Fargo and Torchlight performed their obligation under the 4 PNA. There was no breach of the PNA. 5 6 17. Neither Well Fargo nor Torchlight made a representation which 7 was false, negligent, reckless, or made without regard to the truth. 8 9 18. Section 17200 provides three bases for liability: fraudulent, 10 unlawful, and unfair conduct. Cel-Tech Communications v. Los Angeles Cellular 11 Telephone Co., 20 Cal. 4th 163, 180 (1999). The sole basis for liability under 12 Section 17200 asserted by 1617 Westcliff is the unfair prong.

13 14 19. In light of 1617 Westcliff’s abandonment of its fraudulent and 15 unlawful theories, Well Fargo and Torchlight are entitled to judgment on these 16 theories. 17 18 20. The conduct of Wells Fargo and Torchlight was not unfair. 19 20 21. Well Fargo and Torchlight are entitled to judgment on the Section 21 17200 claim. 22 23 24 25 6 Clhse 8:14-cv-01941-JVS-DFM Document 234 Filed 12/27/22 Page 7of7 Page ID #:8604 2 CONCLUSION 4 Wells Fargo shall lodge a proposed form of Final Judgment 5 || encompassing all dispositive rulings in the case within ten days. 6 ( 7 || Dated: December 27, 2022 a “4 / /he gi ames V. Selita / 8 United States District Judge. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25