Tentative Rulings

Case Number: *******1020 Hearing Date: November 7, 2023 Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff The Estate of Lucy M. Johnson by Eric Walker, its Special Administrator ("Plaintiff") filed this action on May 17, 2023 against a number of Defendants, including Defendant Priority Title Company ("PTC"). The Complaint alleges causes of action for (1) quiet title, (2) cancellation of recorded instruments, and (3) fraud and negligence.

PTC now demurs to the Complaint. PTC also moves to strike portions of the Complaint. Plaintiff opposes both.[1]

Request for Judicial Notice

PTC requests that the Court take judicial notice of a "Deed of Trust recorded on August 28, 2019 in the Office of the County Recorder of Los Angeles County under Document Number 20190873106," and a "Substitution of Trustee & Deed of Reconveyance recorded on September 18, 2019 in the Office of the County Recorder of Los Angeles County under Document Number 20190971870."

PTC cites to Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264, disapproved on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, where the Court of Appeal noted that "courts have taken judicial notice of the existence and recordation of real property records, including deeds of trust, when the authenticity of the documents is not challenged."

Plaintiff opposes the request for judicial notice, noting that "[t]he authenticity of the documents is the very subject of this lawsuit." (Plaintiff's Opp'n to RJN at p. 2:9.) In the Complaint, Plaintiff alleges, inter alia, that certain transactions appear to be fraudulent and appear to have been initiated by or on behalf of URBAN REALTY ACQUISITION GROUP 2019 INC.," including a "purported Deed of Trust dated August 26, 2019 to secure an original indebtedness of $480,000.00, and recorded August 28, 2019 as Instrument No. 20190873106 of official records, listing URBAN REALTY ACQUISITION GROUP 2019 INC.. as the Trustor, Defendant PRIORITY TITLE COMPANY as the Trustee, and Lucy M Johnson as the Beneficiary," and a "document entitled 'Substitution of Trustee and Deed of Reconveyance' dated September 5, 2019 and recorded September 18, 2019 as Instrument No. 20190971870 of official records." (Compl., ¶ ¶ 29(b), (d).)

Based on the foregoing, the Court denies PTC's request for judicial notice.

Demurrer

A. Procedural Issues

As an initial matter, the Court notes that PTC states that it "demurs to all of the causes of action of Plaintiffs Complaint on the grounds that the Complaint is uncertain and does not state facts sufficient to constitute a cause of action" (Demurrer at p. 3.) However, the Memorandum of Points and Authorities in support of PTC's demurrer does not discuss Plaintiff's second cause of action for cancellation of recorded instruments. Thus, the Court overrules any purported demurrer by PTC to the second cause of action of the Complaint.

In addition, in the reply, PTC asserts that Plaintiff's opposition was not timely filed. Plaintiff's opposition to the demurrer was filed on September 15, 2023, seven court days prior to the original September 27, 2023 hearing date. However, PTC does not assert in the reply that the Court should disregard the opposition. Moreover, PTC does not make any additional arguments in the reply. The Court elects to exercise its discretion to consider the untimely opposition. (Cal Rules of Court, Rule 3.1300, subd. (d).)

B. Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged." (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer "does not admit contentions, deductions or conclusions of fact or law." (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

A pleading is uncertain if it is ambiguous or unintelligible. (Code Civ. Proc., ; 430.10, subd. (f).) A demurrer for uncertainty may lie if the failure to label the parties and claims renders the complaint so confusing defendant cannot tell what he or she is supposed to respond to. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) However, "[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.)

C. Allegations of the Complaint

In the Complaint, Plaintiff alleges that "[t]his matter concerns property commonly called: 4515 9th Ave., Los Angeles, California 90043" (herein, the "Subject Property"). (Compl., ¶ 2.) "The Subject Property was listed as an asset of the Estate of Lucy M. Johnson, but probate on Lucy M. Johnson's estate was never completed and title to the Subject Property was never properly transferred by Lucy M. Johnson, by her Estate, or by any person authorized to transfer title to the Subject Property." (Compl., ¶ 24.) Plaintiff allege that "The Estate of Lucy M. Johnson is the sole proper title holder to the Subject Property." (Compl., ¶ 26.)

Plaintiff alleges that Defendant Urban Realty Acquisition Group 2019 Inc. "with the assistance of witting and unwitting individuals and entities-created and recorded a series of documents attempting to fraudulently convey or encumber the Subject Property." (Compl., ¶ 28.)

Plaintiff further alleges that "[n]one of MICHAEL J. CARR's or John A. Carr's, or THE ESTATE OF JOHN A. CARR's claims to title are valid and THE ESTATE OF LUCY M. JOHNSON is the only proper title holder to the Subject Property." (Compl., ¶ 42.) In addition, Plaintiff alleges that "Defendant OLEGARIO ESCOBAR-with the assistance of witting and unwitting individuals and entities-attempted to fraudulently encumber the Subject Property" (Compl., ¶ 43.)

D. First Cause of Action for Quiet Title

In the first cause of action for quiet title, Plaintiff alleges, inter alia, that "[n]one of the claims to title made by URBAN REALTY ACQUISITION GROUP 2019, INC., LUCY M. JOHNSON, TRUSTEE OF THE JOHNSON FAMILY IRREVOCABLE TRUST DATED 08 01 2019; RONALD PERLSTEIN, TRUSTEE OF THE RONALD PERLSTEIN MONEY PURCHASE PENSION PLAN, ENTRUST IRA #01393; DANCO, INC.; WESTERN FIDELITY ASSOCIATES, LLC,; or PRIORITY TITLE COMPANY are valid and THE ESTATE OF LUCY M. JOHNSON is the only proper title holder to the Subject Property." (Compl., ¶ 51.) Plaintiff alleges that "THE ESTATE OF LUCY M. JOHNSON is entitled to a decree quieting title in the Subject Property in its name and against all defendants, whether any such claim is known or unknown." (Compl., ¶ 54.)

PTC notes in the demurrer that "[a] quiet title action is a statutory action that seeks to declare the rights of the parties in realty. The object of the action is to finally settle and determine, as between the parties, all conflicting claims to the property in controversy, and to decree to each such interest or estate therein as he may be entitled to. The purpose of a quiet title action is to determine any adverse claim to the property that the defendant may assert, and to declare and define any interest held by the defendant, so that the plaintiff may have a decree finally adjudicating the extent of his own interest in the property in controversy." (Robin v. Crowell (2020) 55 Cal.App.5th 727, 740 [internal quotations and citations omitted].)

PTC argues that "[i]n this matter, there are no conflicting or adverse claims for the subject property between plaintiff and PTC." (Demurrer at p. 4:24-26.)

In the Complaint, Plaintiff alleges that certain transactions appear to be fraudulent, including a "[a] purported Deed of Trust dated August 26, 2019 to secure an original indebtedness of $480,000.00, and recorded August 28, 2019 as Instrument No. 20190873106 of official records, listing URBAN REALTY ACQUISITION GROUP 2019 INC.. [sic] as the Trustor, Defendant PRIORITY TITLE COMPANY as the Trustee, and Lucy M Johnson as the Beneficiary." (Compl., ¶ 29(b).) Plaintiff then alleges that "[a] document entitled 'Substitution of Trustee and Deed of Reconveyance' dated September 5, 2019 and recorded September 18, 2019 as Instrument No. 20190971870 of official recordspurports to substitute Defendant "LUCY M. JOHNSON TRUSTEE OF THE JOHNSON FAMILY TRUST DATED 08-01-2019" in place of Trustee Defendant "PRIORITY TITLE COMPANY" as to the Deed of Trust described in Paragraphs 29.b and 29.c, supra." (Compl., ¶ 29(d).) PTC asserts that there are accordingly no conflicting or adverse claims being made for the subject property by PTC.

In the opposition, Plaintiff asserts that "[t]o the extent Priority Title's Demurrer rests on the argument that any harm is cancelled by the reconveyance document, that is untrue since that reconveyance document is itself a falsehood." (Opp'n at p. 4:3-6.) Indeed, Plaintiff alleges that certain "transactions appear to be fraudulent and appear to have been initiated by or on behalf of URBAN REALTY ACQUISITION GROUP 2019 INC." including the alleged "document entitled 'Substitution of Trustee and Deed of Reconveyance' dated September 5, 2019 and recorded September 18, 2019 as Instrument No. 20190971870 of official records," which "purports to substitute Defendant 'LUCY M. JOHNSON TRUSTEE OF THE JOHNSON FAMILY TRUST DATED 08-01-2019' in place of Trustee Defendant 'PRIORITY TITLE COMPANY' as to the Deed of Trust" (Compl., ¶ 29(d).) As discussed, Plaintiff also alleges that "[n]one of the claims to title made by URBAN REALTY ACQUISITION GROUP 2019, INC., LUCY M. JOHNSON, TRUSTEE OF THE JOHNSON FAMILY IRREVOCABLE TRUST DATED 08 01 2019; RONALD PERLSTEIN, TRUSTEE OF THE RONALD PERLSTEIN MONEY PURCHASE PENSION PLAN, ENTRUST IRA #01393; DANCO, INC.; WESTERN FIDELITY ASSOCIATES, LLC,; or PRIORITY TITLE COMPANY are valid and THE ESTATE OF LUCY M. JOHNSON is the only proper title holder to the Subject Property." (Compl., ¶ 51.)

Based on the foregoing, the Court overrules the demurrer to the first cause of action.

E. Third Cause of Action for Fraud and Negligence

In the third cause of action for "fraud and negligence," Plaintiff alleges that "[t]he instruments described throughout were not only fraudulent, each party knew they were fraudulent or acted with deliberate indifference to their potential fraudulent nature." (Compl., ¶ 60.) Plaintiff further alleges that "Defendant PRIORITY TITLE COMPANY not only was the title company listed on 6 of the fraudulent documents, but it is the title company associated with all three of the confirmed fraudulent notarizations." (Compl., ¶ 62.) Plaintiff alleges that "[m]oreover, Defendant PRIORITY TITLE COMPANY was once listed as a Trustee on one of the fraudulent documents. (In fact, on one of the documents disavowed by the notary.)" (Compl., ¶ 63.) Plaintiff alleges that "[m]oreover, in a recent paid title report, Defendant PRIORITY TITLE COMPANY lists the recorded instrument described in Paragraph 29.b as 'Verified,' placing a seal next to it even though it is clearly fraudulent and even disavowed by the notary." (Compl., ¶ 64, emphasis omitted.)

In the demurrer, PTC notes that "[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice. Thus the policy of liberal construction of the pleadingswill not ordinarily be invoked to sustain a pleading defective in any material respectThis particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written." (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 [internal quotations and citations omitted, emphasis in original].)

PTC asserts that here, "[t]he allegations contained [sic] in as to PTC do not meet the particularity requirement of a claim for fraud. Nor does the fraud claims against PTC reference the name of any individual at PTC who made the allegedly fraudulent representations." (Demurrer at p. 6:24-26.)

In the opposition, Plaintiff asserts that "the Complaint describes therecordings, providing for each one the document date, the recording date, the purported grantor, grantee, conveyor, trustee, beneficiary, or lender, and the recorded document number." (Opp'n at p. 5:7-10, citing Compl., ¶ 58.) Plaintiff notes that the Complaint alleges that "Defendant PRIORITY TITLE COMPANY not only was the title company listed on 6 of the fraudulent documents, but it is the title company associated with all three of the confirmed fraudulent notarizations." (Compl., ¶ 62.)

Plaintiff also argues that PTC "goes on to quote Lazar's instruction that pleading promissory fraud in an employment context: 'A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.' Lazar 12 Cal. 4th at 385. That particular instruction, however, applies to the employee bringing a claim for fraud against his employer. Priority Title's request to parlay that into a general fraud pleading rule is not supported by the law." (Opp'n at p. 6:2-11.)

But Lazar does not appear to state that such standard is limited to employment cases. In addition, the Court notes that in West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793, the Court of Appeal noted that "[f]raud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made." (Internal quotations and citation omitted, emphasis added.)

Lastly, PTC asserts that "[t]he cause of action for negligence fails since PTC did not owe Plaintiff a duty." (Demurrer at p. 6:16-17.) PTC notes that "[t]o establish a cause of action for negligence, a plaintiff must allege facts showing a legal duty to use due care, breach of the duty, causation, and damages." (Colonial Van & Storage, Inc. v. Superior Court (2022) 76 Cal.App.5th 487, 496.) Although Plaintiff's third cause of action is for "fraud and negligence," such cause of action does not allege that PTC owed Plaintiff any duty, nor does it appear to contain any allegations pertaining to a cause of action for negligence. In addition, Plaintiff does not appear to cite any legal authority demonstrating that it is appropriate to allege a single cause of action for both "fraud and negligence."

Based on the foregoing, the Court sustains PTC's demurrer to the third cause of action, with leave to amend.

Motion to Strike

A court may strike any "irrelevant, false, or improper matter inserted in any pleading" or any part of a pleading "not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court." (Code Civ. Proc., ; 436.) "The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice." (Code Civ. Proc., ; 437.)

As an initial matter, in the reply, PTC asserts that Plaintiff's opposition was not timely filed. Plaintiff's opposition to the motion to strike was filed on September 15, 2023, seven court days prior to the original September 27, 2023 hearing date. However, PTC does not assert in the reply that the Court should disregard the opposition. Moreover, PTC does not make any additional arguments in the reply. The Court elects to exercise its discretion to consider the untimely opposition. (Cal Rules of Court, Rule 3.1300, subd. (d).)

In the motion, PTC moves to strike Plaintiff's request in the Prayer for Relief for "attorney fees incurred" (Compl., Prayer for Relief, ¶ E.) PTC notes that "California follows what is commonly referred to as the American rule, which provides that each party to a lawsuit must ordinarily pay his own attorney fees. The Legislature codified the American rule in 1872 when it enacted Code of Civil Procedure section 1021, which states in pertinent part that 'Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties.'" (Trope v. Katz (1995) 11 Cal.4th 274, 278-279 [internal citations omitted].) PTC asserts that here, Plaintiff fails to cite to any legal basis that would provide for attorney's fees against PTC.

In the opposition, Plaintiff argues that "[w]hether Priority Title might ultimately be liable for attorneys' fees is not best handled via a Motion to Strike before discovery has begun." (Opp'n at p. 2:24-25.) But Plaintiff does not cite any legal authority to support such proposition.

Plaintiff also asserts that "Plaintiff has alleged that Priority Title was a participant in a scheme to defraud Plaintiff of the Subject Property. As such, attorneys' fees are part of the measure of damages." (Opp'n at p. 5:10-13.) In support of this assertion, Plaintiff notes that the Lazar Court found that "[b]ecause of the extra measure of blameworthiness inhering in fraud, and because in fraud cases we are not concerned about the need for predictability about the cost of contractual relationships, fraud plaintiffs may recover out-of-pocket damages in addition to benefit-of-the-bargain damages." (Lazar v. Superior Court, supra,12 Cal.4th at p. 646 [internal quotations and citation omitted].) But the Court does not see how this is relevant to Plaintiff's request for attorney's fees. Plaintiff does not cite any portion of the Lazar case providing that Plaintiff may recover attorney's fees in connection with a cause of action for fraud. Moreover, as set forth above, the Court sustains PTC's demurrer to Plaintiff's third cause of action for "fraud and negligence."

Based on the foregoing, the Court grants PTC's motion to strike.

Conclusion

Based on the foregoing, PTC's demurrer to the first cause of action is overruled. PTC's demurrer to the third cause of action is sustained, with leave to amend.

In addition, PTC's motion to strike Plaintiff's request for "Attorney fees incurred" is granted, with leave to amend.

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this Order. If no amended complaint is filed within 20 days of this Order, PTC is ordered to file and serve its answer within 30 days of the date of this Order.

PTC is ordered to give notice of this Order.

DATED: November 7, 2023 ________________________________

Hon. Rolf M. Treu

Judge, Los Angeles Superior Court