On 12/02/2016 PATRICIA M SALUTE filed a Property - Other Real Property lawsuit against CAMERON MARIE SIMINSKI AND DOES 1-5. This case was filed in Los Angeles County Superior Courts, Van Nuys Courthouse East located in Los Angeles, California. The Judges overseeing this case are JOHN J. KRALIK, FRANK J. JOHNSON, ELAINE W. MANDEL, SHIRLEY K. WATKINS and MICHAEL J. CONVEY. The case status is Not Classified By Court.
Not Classified By Court
Los Angeles County Superior Courts
Van Nuys Courthouse East
Los Angeles, California
JOHN J. KRALIK
FRANK J. JOHNSON
ELAINE W. MANDEL
SHIRLEY K. WATKINS
MICHAEL J. CONVEY
SALUTE PATRICIA M.
SIMINSKI CAMERON MARIE
PENNYMAC LOAN SERVICES LLC
PENNYMAC LOAN SERVICES LLC
FORRY CRAIG BRIAN
HAYDEN GLENN MELBOURNE
KROLL JANICE MAUREEN
CHANG CHERYL STEPHANIE
KING MICHAEL GEORGE
7/30/2019: Notice - NOTICE OF CONTINUANCE OF OSC
6/3/2019: Proof of Service by Mail
6/6/2019: Memorandum of Points & Authorities
2/13/2019: Certificate of Mailing for - Certificate of Mailing for Minute Order (Court Order) of 02/13/2019
12/2/2016: Notice of Case Management Conference
12/2/2016: Civil Case Cover Sheet
8/16/2017: Notice of Case Reassignment and Order for Plaintiff to Give Notice
4/9/2018: Substitution of Attorney
4/19/2018: Minute Order - Minute order entered: 2018-04-19 00:00:00
9/18/2018: Minute Order - Minute order entered: 2018-09-18 00:00:00
9/24/2018: Legacy Document - LEGACY DOCUMENT TYPE: Miscellaneous
10/9/2018: Statement of Decision - Statement of Decision *TENTATIVE*
11/20/2018: Minute Order - Minute Order (Court Order re: Peremptory Challenge)
12/13/2018: Substitution of Attorney
12/6/2018: Notice of Case Management Conference
9/25/2018: Order Appointing Court Approved Reporter as Official Reporter Pro Tempore -
7/9/2018: Trial Brief -
DocketNotice of Intent to Move for New Trial; Filed by PennyMac Loan Services, LLC (Defendant)Read MoreRead Less
Docketat 10:17 AM in Department U, Michael J. Convey, Presiding; Court OrderRead MoreRead Less
DocketNotice of Entry of Judgment / Dismissal / Other Order; Filed by ClerkRead MoreRead Less
DocketJudgment ([PROPOSED] JUDGMENT); Filed by Cameron Marie Siminski (Defendant)Read MoreRead Less
DocketCertificate of Mailing for ((Court Order) of 10/07/2019); Filed by ClerkRead MoreRead Less
DocketMinute Order ( (Court Order)); Filed by ClerkRead MoreRead Less
Docketat 3:00 PM in Department U, Michael J. Convey, Presiding; Order to Show Cause Re: (Entry of Judgment) - HeldRead MoreRead Less
DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore (Rose Heffernan (818)489-3478); Filed by Cameron Marie Siminski (Defendant)Read MoreRead Less
DocketMinute Order ( (Order to Show Cause Re: Entry of Judgment)); Filed by ClerkRead MoreRead Less
Docketat 08:30 AM in Department U, Michael J. Convey, Presiding; Order to Show Cause Re: (Entry of Judgment) - Held - ContinuedRead MoreRead Less
DocketAnswer; Filed by Patricia M. Salute (Plaintiff)Read MoreRead Less
DocketCross-Complaint; Filed by Cameron Marie Siminski (Defendant)Read MoreRead Less
DocketSummons-Issued; Filed by Cameron Marie Siminski (Defendant)Read MoreRead Less
DocketAnswer; Filed by Cameron Marie Siminski (Defendant)Read MoreRead Less
DocketNotice of Lis Pendens; Filed by Patricia M. Salute (Plaintiff)Read MoreRead Less
DocketProof of Service of Summons and Complaint; Filed by Patricia M. Salute (Plaintiff)Read MoreRead Less
DocketCivil Case Cover Sheet; Filed by Patricia M. Salute (Plaintiff)Read MoreRead Less
DocketComplaint; Filed by Patricia M. Salute (Plaintiff)Read MoreRead Less
DocketSummons; Filed by Patricia M. Salute (Plaintiff)Read MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
Case Number: LC105088 Hearing Date: February 04, 2021 Dept: U
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT
PATRICIA M. SALUTE,
CAMERON MARIE SIMINSKI; and DOES 1-5, inclusive,
CAMERON MARIE SIMINSKI,
PATRICIA M. SALUTE; and ROES 1-10, inclusive,
PENNYMAC LOAN SERVICES, LLC, a Delaware limited liability company,
CASE NO: LC105088
[TENTATIVE] ORDER RE:
PENNYMAC’S DEMURRER TO FACC
February 4, 2021
On December 2, 2016, Patricia M. Salute (Plaintiff) filed a complaint against Cameron Marie Siminski (Defendant) and Does 1 through 5, alleging claims for: (1) partition of real property; (2) breach of oral contract; and (3) declaratory relief.
On December 27, 2016, Defendant filed a cross-complaint against Plaintiff and Roes 1 through 10, alleging claims for: (1) cancellation of instrument; (2) accounting; (3) conversion; and (4) declaratory relief.
On March 27, 2018, PennyMac Loan Services, LLC (PennyMac) filed a motion to intervene. The Court granted this motion on April 19, 2018 and continued the trial.
A trial was held on September 17, 18, 20, 21, 24, and 25, 2018. The Court issued a final Statement of Decision on June 14, 2019, finding the February 6, 2009 grant deed to be void and ordering Plaintiff to transfer her interest in the property to Defendant via a quit claim deed. Defendant was held to be the prevailing party against Plaintiff and PennyMac.
PennyMac’s motion for a new trial was granted on December 6, 2019.
On August 14, 2020, Defendant filed a first amended cross-complaint (FACC) against Plaintiff and PennyMac, alleging claims for cancellation of instrument; (2) quiet title; and (3) declaratory relief.
The FACC alleges that Plaintiff is Defendant’s mother. Defendant’s father passed away testate on July 17, 1994, leaving Defendant the real property located at 6018 Donna Avenue, Tarzana, California 91356 (the property). (FACC, ¶ 7.) The property was free and clear of all liens except a $3,633 loan secured by a deed of trust. (Ibid.) Plaintiff claimed an interest in the property in decedent’s probate proceedings, but this claim was denied. (Id., ¶ 8.)
On March 21, 2007, Plaintiff secured a $250,000 line of credit secured by a deed of trust on the property without Defendant’s knowledge or consent. (Id., ¶ 10.) On September 27, 2007, Plaintiff secured a second loan with a deed of trust on the property for $175,000 without Defendant’s knowledge or consent. This loan was used to pay off the $101,231.03 balance on the first loan and Plaintiff netted $69,004.95. (Id., ¶ 12.)
On October 3, 2007, Plaintiff instructed Defendant to sign tax documents, but the document signed was actually a grant deed, transferring title to the property to Plaintiff. Defendant did not know what she was signing. (Id., ¶ 11.) The property was transferred back to Defendant on May 28, 2008 although Defendant was unaware that she had any interest in the property. (Id., ¶ 13.)
On February 6, 2009, Plaintiff manipulated Defendant into signing a grant deed gifting the property to the parties as joint tenants. (Id., ¶ 15.) Plaintiff obtained a third and fourth loan on the property in the amounts of $220,000 and $405,000 respectively. (Id., ¶¶ 16-17.) Plaintiff secured an interest in the property with the loans by defrauding Defendant. (Id., ¶ 22.)
On October 1, 2020, PennyMac filed this demurrer to the third and fourth causes of action in Defendant’s FACC pursuant to Code of Civil Procedure section 430.10(e) and (f).
II. LEGAL STANDARD
A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn v. Mirda, supra, 147 Cal.App.4th at p. 747.)
Code of Civil Procedure section 430.10(f) provides that a pleading is uncertain if it is ambiguous and unintelligible. (Code Civ. Proc., § 430.10(f).) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) “A demurrer for uncertainty will be sustained only where the complaint is so bad that defendant cannot reasonably respond—i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her.” (Weil & Brown, Civil Procedure Before Trial (The Rutter Group) § 7:85.) “The objection of uncertainty does not go to the failure to allege sufficient facts.” (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 459.) “It goes to the doubt as to what the pleader means by the facts alleged.” (Id.) “Such a demurrer should not be sustained where the allegations of the complaint are sufficiently clear to apprise the defendant of the issues which he is to meet.” (People v. Lim (1941) 18 Cal.2d 872, 882.)
B. Leave to Amend
“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.)
A. Request for Judicial Notice
PennyMac requests judicial notice of: (1) the full reconveyance of the property in the Official Records of Los Angeles (LA) on December 11, 2007 having document number 20072708238; (2) the May 28, 2008 quit claim deed transferring the property from Defendant to Plaintiff recorded in the Official Records of LA having document number 20080938549; (3) February 12, 2009 grant deed from Defendant to both Plaintiff and Defendant in the Official Records of LA having document number 20090198180; (4) the April 13, 2009 deed of trust evidencing the $220,000 from PMC Bancorp (PMC) recorded against the property having document number 20090528263; (5) full reconveyance recorded in the Official Records of LA on June 1, 2009 having document number 20090812278; (6) January 28, 2019 deed of trust evidencing the $405,00 loan from PMC recorded against the property in the Official Records of LA having document number 20100122334; (7) full reconveyance recorded against the property in the Official Records of LA on March 16, 2010 having document number 20100360157; and (8) the February 13, 2018 assignment of deed of trust from PMC to PennyMac recorded against the property in the Official Records of LA having document number 20180146789.
Evidence Code section 452(c) authorizes judicial notice of “[o]fficial acts of the legislative, executive, and judicial departments of the United States and of any state of the United States.” The Court may take judicial notice of a recorded deed or other recorded document under this provision. (Ragland v. U.S. Bank National Ass’n (2012) 209 Cal. App. 4th 182, 194.) Because Defendant contests the validity of many of the real property transactions reflected in these documents, the Court will take judicial notice only of their existence but not of the truth of their contents.
Plaintiff requests that the Court take judicial notice of the October 9, 2018 tentative Statement of Decision issued by the Honorable Judge Elaine W. Mandel. While the Court may take judicial notice of the existence of judicial opinions, court documents, and verdicts reached, it cannot take judicial notice of the truth of hearsay statements or factual findings in those opinions. (Johnson & Johnson v. Superior Court (2011) 192 Cal.App. 4th 757, 768 [Citations omitted].)
B. Meet & Confer Requirement
Before filing a demurrer or motion to strike, the moving party is required to meet and confer with the party who filed the pleading for the purposes of determining whether an agreement can be reached through the filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41 & 435.5.)
PennyMac’s counsel met and conferred with Defendant’s counsel via telephone on September 4, 2020 regarding PennyMac’s challenges to Defendant’s FACC. No resolution was reached, thus, the demurrer was filed. (McElroy Decl., ¶¶ 2-3.)
C. Third Cause of Action – Cancellation of Instrument & Quiet Title
Cancellation of a deed based on fraud requires: (1) grantor's signature was forged, or grantor was unaware of the nature of what is signed (void deed); or (2) grantor was aware of what is executed, but was induced through fraudulent misrepresentations to deliver the deed (voidable deed). (Schiavon v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 378.)
Quiet title requires: (1) a description of the property; (2) plaintiff's title or interest and the basis; (3) defendant’s asserting adverse claim or antagonistic property interest; (4) date as of which the determination is sought; and (5) prayer for determination of title. (Code Civ. Proc., §761.020; Lucas v. Sweet (1956) 47 Cal.2d 20, 22.)
PennyMac argues that Defendant’s claims against it are time-barred by the three-year statute of limitations under Code of Civil Procedure section 338. Defendant filed her original cross-complaint on December 27, 2016 acknowledging the 2010 Deed of Trust and claiming that Plaintiff retained all proceeds secured by this instrument after instructing her to sign documents. (Cross-complaint, ¶¶ 15, 20, 25.) Thus, PennyMac reasons that Defendant knew of the 2010 Deed of Trust by at least December 2016 meaning the statute of limitations expired in December 2019. However, Defendant did not plead any claims against PennyMac until August 14, 2020 after the statute of limitations had already expired.
“Generally speaking, a cause of action accrues at ‘the time when the cause of action is complete with all of its elements’. . . . An important exception to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action…. A plaintiff has reason to discover a cause of action when he or she ‘has reason at least to suspect a factual basis for its elements.’… Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period.” (Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal. 4th 623, 634.)
“Ordinarily a suit to set aside and cancel a void instrument is governed by section 343 of the Code of Civil Procedure . . . . The only exception to this rule …. would be as and when fraud or mistake were involved, in which case the three-year period of section 338(4) would apply.” (Robertson v. Sup. Ct. (2001) 90 Cal.App.4th 1319, 1326.)
The statute of limitations period for a cause of action for fraud is three years. (Broberg v. The Guardian Life Ins. Co. of Amer. (2009) 171 Cal.App.4th 912, 920 (citing Code Civ. Proc., § 338(d)).) Code of Civil Procedure section 338(d), effectively codifies the delayed discovery rule in connection with actions for fraud, providing that a cause of action for fraud “is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Brandon G. v. Gray (2003) 111 Cal.App.4th 29, 35.)
Claims of fraud by operation of statute are deemed accrued upon the discovery of the facts constituting the fraud, which means when the plaintiff suspected or reasonably should have suspected that wrongdoing in a lay and not legal sensec, since the specific facts can be developed in pretrial discovery. (Kline v. Turner (2001) 87 Cal.App.4th 1369, 1373-1374 (citing Code Civ. Proc., §338(d)); Brandon G. v. Gray (2003) 111 Cal.App.4th 29, 35 (“Code of Civil Procedure section 338, subdivision (d), effectively codifies the delayed discovery rule in connection with actions for fraud….”).)
The theory of relief underlying an action for quiet title determines which statute of limitations applies, and as to fraud and mistake, the cause of action is subject to Code of Civil Procedure section 338(d), which does not accrue until discovery. (Ankoanda v. Walker-Smith (1996) 44 Cal.App.4th 610, 615.)
Defendant pleads that she was not aware of the facts involved with the documentation of PennyMac’s loan and did not have all of the loan documents until July 2018. (FACC, ¶ 41.) Lisa Goldsmith (Goldsmith) helped Plaintiff perpetrate this fraud on Defendant because she was a friend of Plaintiff’s son and daughter-in-law from high school. (Ibid.) Goldsmith was not licensed as an escrow officer until seven years after the 2010 Deed of Trust was originated. However, Goldsmith acted as the loan officer processing Plaintiff’s 2010 loan without explaining to Defendant what she was signing. (Ibid.) Defendant did not understand what she was signing, and the 2010 Deed of Trust was recorded in error on January 28, 2010. (Ibid.)
The 2010 Deed of Trust is a written instrument and the allegedly fraudulent transfer of the 2010 Deed of Trust creates a reasonable apprehension that the transfer could cause Defendant injury because she did not know the true nature of the document she was signing.
PennyMac’s statute of limitations argument is not persuasive because the fact that Defendant brought claims against Plaintiff for fraudulent transfer of the 2010 Deed of Trust does not equate to Defendant having knowledge of the facts necessary to apprise her of PennyMac’s potential involvement in the fraudulent transfer.
Next, PennyMac argues the 2010 Deed of Trust is only voidable, rather than void, and, as a bona fide encumbrancer, it is entitled to rely on a deed that is voidable. The bona fide purchaser of property is entitled to rely on “voidable” as opposed to “void” deeds of trust when acquiring an interest in real property. (Schiavon, supra, at 378-379.) Thus, whether Defendant can state a claim against PennyMac turns on whether the 2010 Deed of Trust was “void” or “voidable.” This violability is dependent on what Defendant knew about the 2010 Deed of Trust when she signed it.
As to the 2010 Deed of Trust, Plaintiff pleads she “had no knowledge of what she was signing in either of these loan transactions and the documents she did sign were not explained to her and she did not know the nature or consequences of her act.” (FACC, ¶ 41.) Defendant alleges that, in executing the 2010 Deed of Trust, she “had no knowledge and very little remembrance of what she was signing and was told by Cross-Defendant Salute that anything she signed had to do with taxes,” that the escrow officer did not explain the 2010 Deed of Trust to her, and that she did “not have any independent advice” as to the 2010 Deed of Trust. (Id., ¶¶ 28, 41.) She further alleges that she was induced to execute the 2010 Deed of Trust by Salute and was “unaware” that Salute was “obtaining loans secured by the Property.” (Id. at ¶ 21.)
The overall theme of Defendant’s claim is that the 2010 Deed of Trust is void because she did not know that she was signing a deed, but rather, thought she was signing tax documents. PennyMac argues that Defendant’s allegation that she has “very little remembrance” of signing the 2010 Deed of Trust suggests she knew what she was signing, but did not understand its legal effect, making the 2010 Deed of Trust voidable. However, such pleading could mean that Defendant does not remember signing the 2010 Deed of Trust at all rather than, as PennyMac contends, that Defendant knew she was signing a deed of trust but does not recall the circumstances.
Therefore, on demurrer where all reasonable inferences must be drawn in Defendant’s favor, the Court concludes that she has alleged that the 2010 Deed of Trust is void because she did not know what she was signing, and not voidable as PennyMac urges. Based on this liberal construction, Defendant has pled sufficient facts to support a claim against PennyMac for cancelation of the 2010 Deed of Trust.
Defendant has also adequately pled quiet title against PennyMac. Defendant describes the property as “6018 Donna Avenue, Tarzana, California 91356.” (FACC, ¶ 7.) Defendant alleges she is the owner of the property because her father willed it to her when he passed away. (Ibid.) PennyMac claims an interest in the property pursuant to a fraudulently secured loan. (Id., ¶ 39.) Defendant requests a judicial determination as of January 28, 2010 that the 2010 Deed of Trust transferred to PennyMac is void and that it did not create a lien on the property.
Demurrer to this claim is overruled.
D. Fourth Cause of Action – Declaratory Relief
Declaratory relief requires that there be (1) a person interested under a written instrument or a contract; or (2) a person seeking declaration of his or her rights or duties (a) with respect to another; or (b) in respect to, in, over or upon property; and (3) an actual controversy. (Code Civ. Proc., §1060; Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 605-606.)
Procedurally, with exceptions, a demurrer must be overruled, if an actual controversy is alleged, even if plaintiffs are not entitled to a judgment in their favor. (Osseous Technologies of Amer., Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 364.) “The duration of the limitations period applicable to a declaratory relief action is determined by the nature of the underlying obligation sought to be adjudicated.” (Snyder v. Cal. Ins. Guarantee Assoc. (2014) 229 Cal.App.4th 1196, 1208.)
Here, Defendant has alleged an actual controversy between herself and PennyMac. Defendant pleads that the 2010 Deed of Trust, whereby PennyMac acquired an interest in the property, is void because it was fraudulently transferred. Thus, demurrer to this claim is overruled.
For the foregoing reasons, PennyMac’s demurrer to Defendant’s FACC is OVERRULED.
Defendant is ordered to give notice of the Court’s ruling.
DATED: February 4, 2021
Hon. Theresa M. Traber
Judge of the Superior Court
Case Number: LC105088 Hearing Date: August 13, 2020 Dept: U
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT
PATRICIA M. SALUTE,
CAMERON MARIE SIMINSKI; and DOES 1-5, inclusive,
CAMERON MARIE SIMINSKI,
PATRICIA M. SALUTE; and ROES 1-10, inclusive,
PENNYMAC LOAN SERVICES, LLC, a Delaware limited liability company,
CASE NO: LC105088
[TENTATIVE] ORDER RE:
DEFENDANT CAMERON MARIE SIMINSKI’S MOTION FOR LEAVE TO AMEND HER CROSS-COMPLAINT
August 13, 2020
Patricia M. Salute (Salute) initiated this suit against her daughter, Cameron Marie Siminski (Siminski), on December 2, 2016, raising claims for partition of real property, breach of oral contract, and declaratory relief.
On December 27, 2016, Siminski filed a cross-complaint against Salute asserting claims for cancellation of instrument, accounting, conversion and declaratory relief. In the cross-complaint, Siminski alleges that various loans were obtained by Salute who encumbered the property with these loans, all without Siminski’s knowledge or consent. Through her declaratory relief action, Siminski requests a declaration cancelling a grant deed that transferred a joint interest in the property to Salute and stating that Siminski possesses all interest in the property. She did not seek a specific declaration invalidating the 2010 Deed of Trust recorded on the property to secure a loan held by PennyMac Loan Services, LLC (PennyMac), nor did she name PennyMac as a cross-defendant.
PennyMac was apparently alerted to this action on September 29, 2017, when it was served with a subpoena to produce loan documents. On March 27, 2018, PennyMac filed a motion for leave to intervene in this action to assert claims for quiet title in favor of its Deed of Trust, for declaratory relief to the effect that the Deed of Trust is valid and enforceable, and for equitable enforcement of PennyMac’s lien on the property. In its proposed Complaint-in-Intervention and motion to intervene, PennyMac alleged that Siminski had refused to stipulate to the validity of the Deed of Trust and that its intervention was proper to protect its interest in the property against any argument by Salute or Siminski to invalidate the Deed of Trust. In opposition to the motion, Siminski argued that that there was no need for intervention because, even if she was successful, PennyMac’s trust deed would still be attached to the property. The Court granted intervention on April 19, 2018.
The matter was set for trial to begin on September 17, 2018. In her July 9, 2018 trial brief, Siminski argued that her signature on the Deed of Trust was forged and not notarized. She opposed PennyMac’s declaratory relief action, inter alia, on the grounds that she did not sign the Deed of Trust and did not have knowledge of the recording against the property, that the escrow officer was unlicensed, biased and an agent of PennyMac, and that PennyMac had unclean hands with respect to the inclusion of Siminski in the loan transaction, the Deed of Trust, and/or its recordation. Siminski also argued that, if the Grant Deed transferring title from her to Salute and her as joint tenants was found to be invalid, the Deed of Trust should be canceled and invalidated as a lien on the property, leaving PennyMac to seek recovery of an unsecured debt from Salute.
The case went to trial before the Honorable Elaine Mandel in September of 2018 and resulted in a tentative decision in favor of Siminski. Judge Mandel was transferred to another department and the Honorable Michael J. Convey issued the final Statement of Decision, ruling that the subject property belonged to Siminski free and clear of any liens by PennyMac. In both the tentative decision by Judge Mandel and the final decision by Judge Convey, there was a ruling invalidating the 2010 Deed of Trust as part of Siminski’s request for cancellation under Civil Code section 3412 and finding that PennyMac’s recovery, if any, would be against Salute personally and not as a lien against the property.
On December 6, 2019, PennyMac’s motion for a new trial was granted by Judge Convey on the primary ground that the final Statement of Decision was not issued by the trial judge, which constituted an irregularity in the proceedings that denied the parties a full and fair trial on the merits. Judge Convey also ruled that PennyMac’s other arguments warranted a new trial, including that it was improper for the Court to invalidate the Deed of Trust because Siminski had not sought that relief in her cross-complaint.
On March 20, 2020, Simiski moved for leave to amend her cross-complaint to add claims against PennyMac. The Court heard this motion on June 25, 2020 and continued the hearing to August 13, 2020 to give the parties a further opportunity to provide evidence and briefing on PennyMac’s contention that it would be prejudiced if the Court granted an amendment at this juncture in the case.
II. LEGAL STANDARDS AND DISCUSSION
A. Procedural Requirements
California Rules of Court, rule 3.1324 requires a motion seeking leave to amend to include a copy of the proposed pleadings, to identify the amendments, and to be accompanied by a declaration including the following facts:
1) The effect of the amendment;
2) Why the amendment is necessary and proper;
3) When the facts giving rise to the amended allegations were discovered; and
4) The reasons why the request for amendment was not made earlier.
Siminski included a copy of her proposed First Amended Cross-Complaint identifying the amendments as three causes of action alleging: (1) cancellation of instruments; (2) quiet title; and (3) declaratory relief against PennyMac.
Siminski’s attorney, Glenn M. Hayden (Hayden), provided evidence in a declaration. Hayden states that the effect of the amendment will be the addition of the three causes of action against PennyMac. He provides the amendment will not prejudice opposing parties because it does not plead any new parties into the case and the testimony presented will be identical to that presented in the first trial. Hayden states that the amendment is necessary and proper because it will prevent confusion and notes that PennyMac’s verified Complaint-in-Intervention raises the same issues through its request for declaratory relief seeking a judicial determination of its rights and interest in the property. Hayden reasons this is what the Court decided in the first trial when it found that PennyMac had no interest in the property.
While Hayden does not state when Siminski learned of the facts giving rise to the amended allegations, the Court infers from the procedural history that Siminski learned that her rights in the property were in conflict with PennyMac’s between its intervention in April 2018 and Siminski’s trial brief in July 2018 when she argued that the Deed of Trust should be invalidated along with the challenged Grant Deed.
The record also discloses when Siminski learned that her cross-complaint needed amendment. In opposition to PennyMac’s new trial motion, Siminski argued that the Court’s final statement of decision invalidating the 2010 Deed of Trust and denying PennyMac any lien on the property was properly grounded on the issues raised by PennyMac’s own Complaint-in-Intervention. In granting a new trial in December 2019, Judge Convey rejected this argument finding that the post-trial decision invalidating the Deed of Trust could not stand because Siminski had not sought such relief against PennyMac in her cross-complaint. Plainly it was this ruling that prompted Siminski’s motion to amend in March 2020.
The Court finds that, although the relevant procedural history was only partially explained in her moving papers, Siminski has satisfied the procedural requirements of California Rules of Court, rule 3.1324. As a result, the Court turns to the merits of the motion.
B. Request for Judicial Notice
PennyMac requests judicial notice be taken of: (1) the October 9, 2018 tentative statement of decision; (2) the May 9, 2019 minute order; (3) the June 14, 2019 final statement of decision; (4) the October 7, 2019 judgment; and (5) the December 6, 2019 order granting PennyMac’s Motion for a New Trial.
The Court takes judicial notice of these documents pursuant to California Evidence Code section 452(d) because each is a record of this Court.
C. Motion to Amend
The Court may grant leave to amend the pleadings at any stage of the action. A party may discover the need to amend after all pleadings are completed and new information requires a change in the nature of the claims or defenses previously pleaded. Such changes usually cannot be made via ex parte procedure. Rather, a formal motion to amend must be served and filed. (Dye v. Caterpillar, Inc. (2011) 195 Cal.App.4th 1366, 1380.) Motions for leave to amend the pleadings are directed to the sound discretion of the judge. “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading . . . .” (Code Civ. Proc. § 473(a)(1) & § 576.)
“If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.” (Morgan v. Super. Ct. (1959) 172 Cal.App.2d 527, 530; Mabie v. Hyatt, supra, 61 Cal.App.4th at 596; Bettencourt v. Hennessy Industries, Inc. (2012) 205 Cal.App.4th 1103, 1111 [abuse of discretion to deny leave to amend when there is a “reasonable possibility” that defect can be cured].) Prejudice exists where the amendment would result in a delay of trial, along with loss of critical evidence, added costs of preparation, increased burden of discovery, etc. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.) The fact that the amendment involves a change in legal theory that would make admissible evidence damaging to the opposing party is not the kind of prejudice the court will consider. (Hirsa v. Super. Ct. (1981) 118 Cal.App.3d 486, 490.)
This Court has discretion to permit any type of amendment. The amendment does not need to relate to the claims or defenses originally pleaded. Thus, amended pleadings may set forth entirely different claims, add new parties, or seek a different or greater remedy. However, the Court has discretion to deny leave to amend where a proposed amendment fails to state a valid cause of action or defense. (California Casualty Gen. Insurance Co. v. Super. Ct. (1985) 173 Cal.App.3d 274, 280-281, disapproved on other grounds.)
PennyMac opposes this motion by arguing that if Siminiski seeks to amend her cross-complaint to conform to proof, she should have done so during the original trial. Moreover, Siminiski fails to identify what “proof” she is referring to because no factual proof exists. PennyMac also argues Siminiski’s amendment inappropriately tries to revive the decision in the prior trial that is not binding because Judge Convey granted a new trial.
In light of the Court’s order granting a new trial, the time for amending according to proof at trial has clearly passed. Further, the proposed amendment cannot “revive” the decision following the first trial. The Court does not read the motion to amend as an effort to do so.
Still, a review of the trial proceedings strongly undermines PennyMac’s contention that the validity of the 2010 Deed of Trust is an entirely new issue that was not under consideration during the first trial. That Siminiski raised arguments in her July 2018 trial brief that are nearly identical to those now sought to be added to her cross-complaint supports the argument that these issues have been in play in this action for at least two years. The fact that both Siminski and PennyMac submitted evidence at trial regarding the validity and enforceability of the 2010 Deed of Trust fortifies Siminski’s argument that PennyMac had notice of her efforts to obtain an order voiding the trust deed and submitted evidence in opposition to this argument. Indeed, it appears from the papers submitted that loan officer Lisa Goldsmith and notary Claudia Isaza, both of whom were involved in the execution and recording of the 2010 Deed of Trust, appeared as witnesses at trial, as well as PennyMac’s handwriting expert who testified about whether Siminski actually signed various documents that she challenged as having not been executed by her. All this evidence drawn from the procedural history of this case demonstrates that PennyMac cannot claim that it lacked notice of Siminski’s contentions regarding the enforceability of the 2010 Deed of Trust or the opportunity to marshal evidence regarding those contentions.
PennyMac asserts that Siminiski’s delay in bringing this motion is inexcusable because no new facts have been discovered to warrant any amendment. As noted above, however, the new development faced by Siminski was the Court’s December 2019 ruling that she cannot seek to invalidate PennyMac’s lien simply by opposing its Complaint-in-Intervention, but instead must include claims against PennyMac in her cross-complaint. It is clear that Siminski’s motion to amend was made in response to that ruling, and it was timely made in advance of any trial setting conference for the new trial secured by PennyMac.
Finally, PennyMac urges the Court to deny the motion maintaining that it will be prejudiced if this motion is granted because it will be added as a cross-defendant for the first time and because Siminski’s amended cross-complaint would require it to litigate this case from the beginning and conduct significant new discovery, much of which is now unavailable to it.
PennyMac argues that, in preparation for the previous trial, it conducted only limited discovery which focused on the conduct of Salute and Siminski when the loan was obtained. To defend against Siminski’s cancellation of instrument claim, PennyMac argues it would need to determine whether Siminski had knowledge of or consented to the loan and whether the 2010 Deed of Trust was signed. This would require deposing the preparer of the 2010 Deed of Trust and witnesses to its execution. PennyMac contends that the records of the escrow and realty company have been destroyed due to the passage of time. PennyMac also claims it may need an expert witness to review the loan files. PennyMac previously deposed Lisa Goldsmith, the real estate coordinator on the loan, who testified that she only vaguely remembered the transaction. PennyMac argues it would also need to conduct further discovery to determine if Siminski benefited from the loan funds.
In addition to arguing that all the issues raised by the amended cross-complaint were first put at issue by PennyMac’s own complaint-in-intervention, Siminski argues that PennyMac will not be prejudiced by her first amended cross-complaint because PennyMac was present at almost every deposition conducted in the prior proceeding, hired an expert who testified at trial that lenders were loaning money based on borrower’s income if confirmed by an employer, and subpoenaed many of its own witnesses in addition to having full access to Salute’s and Siminski’s witnesses at trial. Lastly, Siminski argues that the Judge in the prior trial determined that the 2010 Deed of Trust was void, thereby, evidencing that the enforceability of the 2010 Deed of Trust is not a new issue.
The procedural history, as evidenced by PennyMac’s complaint-in-intervention, Siminski’s trial brief, and the now-vacated statement of decision, demonstrates that the validity of the 2010 Deed of Trust and whether it could be enforced against the property were at issue in 2018 when the parties were conducting discovery in preparation for trial. There is nothing submitted by PennyMac showing that any of the evidence it claims to be no longer available was lost or destroyed during the last two years since the trial commenced. The Court cannot find, therefore, that any delay in amending the cross-complaint resulted in the loss of key evidence.
Even so, given the contentions of the parties in 2018, PennyMac’s decision to conduct only limited discovery on the validity of the 2010 Deed of Trust was plainly not warranted. If the contentions laid out in Siminski’s trial brief had been wholly new allegations, PennyMac could have sought exclusion of certain evidence or arguments at trial or the reopening of discovery to fortify its position at trial. It apparently did not do so. The Court infers from this procedural history that PennyMac understood the scope of the issues to be tried and now offers a different view of the procedural history to take advantage of a pleading deficiency found by the Court.
PennyMac also argues that it will be prejudiced by the need to conduct further discovery and simultaneously contends that it should be permitted to do so. The fact that PennyMac may need to depose a few additional witnesses to defend its 2010 Deed of Trust does not amount to prejudice that should preclude Siminski from resolving all issues surrounding the property in a single action. The validity of the 2010 Deed of Trust has long been an issue in this matter as it was first raised in PennyMac’s complaint-in-intervention and forcefully challenged by Siminski in her trial brief and presumably at trial. The lost evidence cannot be considered prejudice that would bar amendment since its unavailability was apparently discovered through discovery for the original trial in 2018. What is more, because a new trial has been granted, the Court is open to the notion of providing additional time to complete further discovery before the commencement of the second trial.
Given Siminski’s prompt motion after learning of the pleading defect, the fact that the validity of the trust deed has been at issue since 2018, and that PennyMac has shown no prejudice that would result from the granting of the motion, the Court grants the motion to amend. This ruling is in keeping with the state’s liberal policy of allowing amendments to pleadings at any time, absent undue delay or prejudice, to ensure that matters are resolved on the merits rather than based on technical pleading defects.
For the foregoing reasons, Siminski’s motion for leave to amend her cross-complaint is GRANTED. The proposed First Amended Cross-Complaint is to be filed by Siminski withint ten days of this Court’s ruling.
Siminski is to give notice of the Court’s ruling.
DATED: August 13, 2020
Hon. Theresa M. Traber
Judge of the Superior Court
Get Deeper Insights on Court Cases