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This case was last updated from Los Angeles County Superior Courts on 05/23/2019 at 10:16:10 (UTC).

GOGA PROPERTIES LLC VS AMY RAFTI ET AL

Case Summary

On 05/31/2017 GOGA PROPERTIES LLC filed a Property - Other Real Property lawsuit against AMY RAFTI. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are HOWARD L. HALM and ROBERT B. BROADBELT. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****3447

  • Filing Date:

    05/31/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Real Property

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

HOWARD L. HALM

ROBERT B. BROADBELT

 

Party Details

Plaintiff and Petitioner

GOGA PROPERTIES LLC

Defendants and Respondents

RAFTI AMY

RAFTI LOUIS

DOES 1 TO 100

NORTH AMERICAN TITLE INSURANCE COMPANY

NATIONWIDE CAPITAL GROUP INC

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

KERENDIAN SHAB DAVID ESQ.

CAWLFIELD CRAIG ESQ.

Defendant and Respondent Attorneys

LEVINE J. ERIC ESQ.

SQUIRE RYAN C. ESQ.

SQUIRE RYAN CHRISTOPHER ESQ.

LEVINE JENS ERIC ESQ.

 

Court Documents

STATEMENT OF DAMAGES (PERSONAL INJURY OR WRONGFUL DEATH)

1/11/2018: STATEMENT OF DAMAGES (PERSONAL INJURY OR WRONGFUL DEATH)

Minute Order

2/13/2018: Minute Order

Minute Order

2/13/2018: Minute Order

NOTICE OF CASE REASSIGNMENT

9/11/2018: NOTICE OF CASE REASSIGNMENT

Minute Order

11/17/2018: Minute Order

Request for Dismissal

11/20/2018: Request for Dismissal

Notice of Ruling

12/11/2018: Notice of Ruling

Notice

12/26/2018: Notice

Request for Judicial Notice

2/1/2019: Request for Judicial Notice

Notice of Ruling

2/14/2019: Notice of Ruling

Minute Order

2/15/2019: Minute Order

Minute Order

1/12/2018: Minute Order

Minute Order

11/28/2017: Minute Order

REQUEST FOR ENTRY OF DEFAULT

10/26/2017: REQUEST FOR ENTRY OF DEFAULT

REQUEST FOR ENTRY OF DEFAULT

9/26/2017: REQUEST FOR ENTRY OF DEFAULT

VERIFIED COMPLAINT FOR: 1. QUIET TITLE; ETC

5/31/2017: VERIFIED COMPLAINT FOR: 1. QUIET TITLE; ETC

Unknown

6/6/2017: Unknown

Unknown

9/26/2017: Unknown

51 More Documents Available

 

Docket Entries

  • 03/13/2019
  • at 09:30 AM in Department 53, Robert B. Broadbelt, Presiding; Default Prove Up Hearing (On Quiet Title) - Not Held - Advanced and Continued - by Court

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  • 03/13/2019
  • at 09:30 AM in Department 53, Robert B. Broadbelt, Presiding; Jury Trial - Not Held - Advanced and Continued - by Court

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  • 03/01/2019
  • at 08:30 AM in Department 53, Robert B. Broadbelt, Presiding; Final Status Conference - Not Held - Advanced and Continued - by Court

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  • 02/15/2019
  • at 08:30 AM in Department 53, Robert B. Broadbelt, Presiding; Hearing on Ex Parte Application ( for Order Continuing Trial Date) - Not Held - Taken Off Calendar by Party

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  • 02/15/2019
  • Minute Order ( (Hearing on Ex Parte Application for Order Continuing Trial D...)); Filed by Clerk

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  • 02/14/2019
  • (Possession); Filed by Goga Properties, LLC (Plaintiff)

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  • 02/14/2019
  • Notice of Ruling; Filed by North American Title Insurance Company (Defendant)

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  • 02/13/2019
  • at 4:23 PM in Department 53, Robert B. Broadbelt, Presiding; Ex-Parte Proceedings

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  • 02/13/2019
  • Minute Order ( (Ex-Parte Proceedings;)); Filed by Clerk

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  • 02/13/2019
  • Ex Parte Application (Defendant's North American Title's Ex Parte Application for Order Continuing Trial Date); Filed by North American Title Insurance Company (Defendant)

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96 More Docket Entries
  • 08/25/2017
  • PROOF OF SERVICE SUMMONS

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  • 08/25/2017
  • Proof-Service/Summons; Filed by Goga Properties, LLC (Plaintiff)

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  • 08/25/2017
  • Proof-Service/Summons; Filed by Goga Properties, LLC (Plaintiff)

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  • 06/06/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 06/06/2017
  • ORDER TO SHOW CAUSE HEARING

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  • 06/06/2017
  • OSC-Failure to File Proof of Serv; Filed by Clerk

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  • 06/06/2017
  • Notice of Case Management Conference; Filed by Clerk

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  • 05/31/2017
  • SUMMONS

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  • 05/31/2017
  • VERIFIED COMPLAINT FOR: 1. QUIET TITLE; ETC

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  • 05/31/2017
  • Complaint; Filed by Goga Properties, LLC (Plaintiff)

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Tentative Rulings

Case Number: BC663447    Hearing Date: July 10, 2020    Dept: 53

Superior Court of California

County of Los Angeles – CENTRAL District

Department 53

goga properties, llc ;

Plaintiffs,

vs.

amy rafti , et al.;

Defendants.

Case No.:

BC663447

Hearing Date:

July 10, 2020

Time:

10:00 a.m.

[Tentative] Order RE:

defendant north american title insurance company’s motion for summary judgment

MOVING PARTY: Defendant North American Title Insurance Company

RESPONDING PARTY: Plaintiff GOGA Properties, LLC

Defendant North American Title Insurance Company’s Motion for Summary Judgment

The court considered the moving, opposition, and reply papers.

BACKGROUND

Plaintiff GOGA Properties, LLC (“GOGA”) filed this action on May 31, 2017, against defendants Amy Rafti, Louis Rafti, Nationwide Capital Group, Inc., and North American Title Insurance Company (“NATIC”), alleging the sixth cause of action for breach of contract and the seventh cause of action for breach of the implied covenant of good faith and fair dealing against defendant NATIC.

Defendant NATIC now moves for summary judgment as to the sixth cause of action for breach of contract and the seventh cause of action for breach of the implied covenant of good faith and fair dealing. GOGA opposes the motion.

EVIDENCE

The court grants NATIC’s request for judicial notice in its entirety as to Exhibits 1 through 8.

The court grants NATIC’s supplemental request for judicial notice, filed August 16, 2019, as to Exhibit 9.

The court notes that GOGA, in its Separate Statement of Material Facts filed in opposition to NATIC’s motion, makes evidentiary objections to certain evidence cited by NATIC in its Separate Statement filed in support of its motion. California Rules of Court, rule 3.1354(b) states, in relevant part: “All written objections to evidence [in support of or in opposition to a motion for summary judgment or summary adjudication] must be served and filed separately from the other papers in support of or in opposition to the motion.” Here, GOGA has not served and filed its written evidentiary objections separately from its other papers in support of its opposition. GOGA’s evidentiary objections also do not comply with the requirement of rule 3.1354(b) that each written objection must be numbered consecutively.

The court also notes that both GOGA and NATIC’s evidentiary objections do not comply with California Rules of Court, rule 3.1354(b)(1)-(3), which require that each written objection must: “(1) Identify the name of the document in which the specific material objected to is located; (2) State the exhibit, title, page, and line number of the material objected to; [and] (3) Quote or set forth the objectionable statement or material . . . .”

The court exercises its discretion to overrule GOGA’s evidentiary objections because GOGA failed to serve and file its evidentiary objections separately from the other papers in opposition to the motion as required by California Rules of Court, rule 3.1354(b). Although NATIC’s evidentiary objections do not strictly comply with the requirements of California Rules of Court, rule 3.1354(b)(2)-(3), the court exercises its discretion to rule on NATIC’s evidentiary objections. Although NATIC’s evidentiary objections set forth the additional material facts stated in GOGA’s Separate Statement of Material Facts (instead of quoting or setting forth the objectionable statement or material in the evidence submitted by GOGA), the court treats NATIC’s objections as objections to the statements in the Declaration of Marcos Labrin and the exhibits referenced in the “Responding Party’s Material Facts and Supporting Evidence” set forth in GOGA’s Separate Statement of Material Facts (at pp. 12:14-30:27, 41:15-60:5).

The court rules on NATIC’s evidentiary objections, pertaining to Issue No.1, as follows:

Objection 1: Overruled.

Objection 2: “No objection.”

Objection 3: “No objection.”

Objection 4: Overruled.

Objection 5: Overruled as to first sentence and to Exhibit 2. Sustained as to the rest, including Exhibit 3.

Objection 6: Sustained as to the last sentence. Overruled as to the rest.

Objection 7: Sustained as to the first sentence. Overruled as to the rest.

Objection 8: Overruled.

Objection 9: “No objection.”

Objections 10 and 11: Overruled.

Objection 12: Sustained as to the last sentence, overruled as to the rest.

Objection 13: Sustained as to the last two sentences, overruled as to the rest.

Objection 14: Sustained as to the first and last sentences, overruled as to the rest. Sustained as to Exhibit 5.

Objections 15 through 17: Overruled.

Objection 18: “No objection”

Objection 19: Overruled.

Objections 20 and 21: Sustained.

Objection 22: Overruled as to the fourth and last sentences. Sustained as to the rest.

Objection 23: Sustained.

Objections 24 through 27: Overruled.

Objections 28 through 33: Sustained.

Objection 34: Overruled.

The court notes that NATIC, for Issue 2, repeated each of the above-mentioned objections (Objections “1-34” for Issue 2, pp. 23:11-44:17). Therefore, the court’s rulings on each of NATIC’s evidentiary objections for Issue 2 are the same as its rulings on each of NATIC’s evidentiary objections for Issue 1.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that that there are no triable issues of material fact.” (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant or cross-defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) “Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.) “When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Id. at p. 467; Code Civ. Proc., § 437c, subd. (c).)

DISCUSSION

  1. Allegations of the Complaint

Because the pleadings serve as the “outer measure of materiality” in a summary judgment motion, the court begins with a summary of GOGA’s allegations as set forth in the Complaint. (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381.)

GOGA’s Complaint alleges the following. On or about January 5, 2016, GOGA and defendant Nationwide Capital Group, Inc. (“Nationwide”) entered into a purchase and sale agreement for the sale of 12209 Emelita Street, North Hollywood, California (the “Subject Property”) to GOGA. (Compl., ¶¶ 10, 12.) Nationwide had previously acquired title to the Subject Property by means of a grant deed dated December 28, 2015, from defendant Louis Rafti as Trustee of the 2015 Rafti Family Trust. (Compl., ¶ 14.) Louis Rafti as Trustee of the 2015 Rafti Family Trust acquired title to the Subject Property by means of a grant deed, dated November 23, 2015, from Louis Rafti as Trustee of the 2009 Rafti Family Trust. (Compl., ¶ 15.)

On January 29, 2016, the grant deed conveying title to the Subject Property from Nationwide to GOGA was recorded in the Los Angeles County Recorder’s Office. (Compl., ¶ 13.) On the same day, GOGA entered into a written agreement with NATIC for NATIC’s provision of insurance of title to the Subject Property, Policy Nos. CA369-16-31493-01 and CA369-16-27476-01 (Schedule A) (collectively, the “Title Insurance Policy”). (Compl., ¶ 39, Exh. F.) Under the Title Insurance Policy, NATIC is required to protect GOGA against losses resulting from defective title. (Compl., ¶ 39.) NATIC issued GOGA a preliminary title report (the “Preliminary Title Report”), which failed to disclose any issues of title with respect to the Subject Property. (Compl., ¶ 40.)

GOGA subsequently discovered that defendant Amy Rafti, who occupied the Subject Property, disputed the validity of the transfer of the Subject Property from the 2009 Rafti Family Trust to the 2015 Rafti Family Trust. (Compl., ¶ 41.) Amy Rafti disputed GOGA’s title to the Subject Property and refused to vacate the Subject Property. (Compl., ¶¶ 41, 42.) Upon discovery of these facts, GOGA submitted a claim of indemnity to NATIC. (Compl., ¶ 43.)

GOGA alleges that NATIC breached the terms of the Title Insurance Policy by (1) failing and refusing to take any actions to clear title to the Subject Property on behalf of GOGA, or to defend GOGA from losses due to the apparent cloud on title or to Amy Rafti’s continued wrongful possession of the Subject Property, and (2) issuing the Preliminary Title Report which failed to disclose any issues of title with respect to the Subject Property. (Compl., ¶¶ 40, 43, 44.) GOGA alleges that NATIC breached the implied covenant of good faith and fair dealing by failing to fully investigate GOGA’s claim for coverage and forcing GOGA to perform such investigation at GOGA’s own expense, delaying resolution of GOGA’s claim by asserting coverage defenses that were legally and/or factually invalid, placing unduly restrictive interpretations of its policy terms for the purpose of denying coverage due under the Title Insurance Policy, and forcing GOGA to commence litigation to vindicate its rights. (Compl., ¶ 48.)

  1. “First Policy” Arguments and Evidence

As an initial matter, the court notes that GOGA, in its opposition, presents evidence and arguments regarding two different insurance policies issued by NATIC to GOGA. GOGA contends that NATIC first issued an earlier policy (the “First Policy”) and then a subsequent policy. GOGA contends that there is a triable issue as to which of the two policies is the subject of GOGA’s sixth cause of action for breach of contract. In reply, NATIC contends that there is only one policy that was issued by NATIC to GOGA, and that it is the policy that GOGA, in its verified Complaint, alleges NATIC breached and attaches to the verified Complaint.

In support of its sixth cause of action for breach of contract alleged against NATIC, GOGA alleges: “On or about January 29, 2016, Plaintiff entered into a written agreement with Defendant NATICO . . . for the latter’s provision of insurance of title to the Emelita Property in conjunction with Plaintiff’s purchase thereof. A true and correct copy of the Insurance Agreement is attached hereto as Exhibit F. Under the Insurance Agreement, NATICO is, inter alia, required to protect Plaintiff against losses resulting from defective title.” (Compl., ¶ 39.)

In its reply, NATIC argues that, by attaching the title policy to its verified complaint, GOGA judicially admits that policy (attached as Exhibit F of its verified Complaint) is the title insurance policy at issue for the sixth cause of action. The court agrees. The “First Policy” raised by GOGA in its opposition to NATIC’s motion for summary judgment is not alleged in the Complaint. “‘A defendant moving for summary judgment may rely on the allegations contained in the plaintiff’s complaint, which constitute judicial admissions. As such they are conclusive concessions of the truth of a matter and have the effect of removing it from the issues.’ [Citations.]” (Castillo v. Barrera (2007) 146 Cal.App.4th 1317, 1324.)

“The complaint limits the issues to be addressed at the motion for summary judgment. The rationale is clear: It is the allegations in the complaint to which the summary judgment motion must respond. [Citation.]” (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258.) Therefore, to the extent GOGA presents evidence and arguments regarding the “First Policy” in opposing NATIC’s motion for summary judgment, the court declines to consider the “First Policy” in determining whether a triable issue of material fact exists as to sixth and seventh causes of action.

  1. Sixth Cause of Action for Breach of Contract

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. [Citation.]” (Richmond v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

NATIC contends that it did not breach the Title Insurance Policy issued to GOGA because GOGA’s claim is excepted from coverage under the Title Insurance Policy. NATIC relies on two sections of the Title Insurance Policy: (1) Exception 2 in Part 1 of Schedule B (CA369-16-27476-01) (“Exception 2”), and (2) Exclusion 3(a) in “Exclusions From Coverage” of the Title Insurance Policy (CA369-16-31493-01) (“Exclusion 3(a)”). In opposition, GOGA contends that its insurance claim was not excepted by either Exception 2 or Exclusion 3(a). The express terms of Exception 2 and Exclusion 3a of the Title Insurance Policy are undisputed.

Where a motion for summary judgment involves “a dispute over the interpretation of the provisions of a policy of insurance, the reviewing court applies settled rules governing the interpretation of insurance contracts.” (Powerline Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 390.) Ordinary rules of contract interpretation apply. (Ibid.) “The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the ‘mutual intention’ of the parties.” (MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635, 647.) “Such intent is to be inferred, if possible, solely from the written provisions of the contract.” (Ibid.) “A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable.” (Id. at p. 649.) “Moreover, insurance coverage is interpreted broadly so as to afford the greatest possible protection to the insured, [whereas] . . . exclusionary clauses are interpreted narrowly against the insurer.” (Ibid. [internal quotations omitted].) To prevail, the insurer must establish “its interpretation is the only reasonable one.” (Id. at p. 655 [emphasis in original].)

  1. Exception 2

Exception 2 of the Title Insurance Policy states, in relevant part: “This Policy does not insure against loss or damage, or against costs, attorneys’ fees or expenses, any or all of which arise by reason of the following: . . . . (2) Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof.” (NATIC’s Undisputed Material Fact (“DUMF”) 14; Gomez Decl., Exh. A; Compl., Exh. F.)

NATIC has submitted the following evidence in support of its contention that GOGA’s claim is excluded from coverage under Exception 2. As of January 6, 2016, GOGA was aware that Amy Rafti was occupying the Subject Property. (DUMF 8.) As of January 29, 2016, GOGA was aware that Amy Rafti was occupying the Subject Property, but did not communicate with her prior to closing the transaction on January 29, 2016. (DUMF 12.) In direct contravention of GOGA’s repeated instructions and demands to Amy Rafti to cease her occupation, possession and use of the Subject Property, Amy Rafti continued to occupy, possess, and use the property. (DUMF 16.) In her capacity as co-trustee of the 2009 Raftiy Family Trust, Amy Rafti claimed that the 2009 Rafti Family Trust retained title to the Subject Property, and that the transfer of the Subject Property to the 2015 Rafti Family Trust is void. (DUMF 17.) On May 31, 2017, GOGA filed this action to quiet title as to Amy Rafti’s adverse claims, as well as seeking damages for her trespass and an order of ejectment to cease her occupation, possession and use of the Subject Property. (DUMF 18.)

From these undisputed facts[1], NATIC argues that Exception 2 of the Title Insurance Policy applies to except GOGA’s insurance claim. First, NATIC contends that the term “not shown in the public records” means there is no coverage for matters not shown by the public records, and that Amy Rafti’s possessory interest as co-trustee of the 2009 Trust was not determinable from the public records. Second, NATIC contends that the undisputed facts show that GOGA was aware of Amy Rafti’s occupancy and possession of the Subject Property, and that Amy Rafti asserted her adverse claims while in possession of the Subject Property. NATIC argues that GOGA’s prosecution of this action and other efforts to remove Amy Rafti from the Subject Property arise out of claims “asserted by persons in possession thereof.”

In opposition, GOGA contends that its claim is not excepted from coverage under Exception 2. GOGA contends that (1) the title defect was shown in the public record because the relevant recorded grant deeds and recorded trust show that Louis Rafti exceeded his authority as co-trustee in conveying the Subject Property, and (2) Amy Rafti’s claims were based on her status as co-trustee of the 2009 Rafti Family Trust, not as a “person in possession thereof.” GOGA submits evidence of the following: (1) a grant deed dated November 23, 2015 showing that Louis Rafti, as Trustee of the 2015 Rafi Family Trust, acquired title to the Subject Property by means of a grant deed from Louis Rafti, as Trustee of the 2009 Rafti Family Trust (the “2009 Grant Deed”) (GOGA’s Additional Undisputed Material Facts (“PUMF”) 16, Exh. 7); (2) a grant deed dated December 28, 2015 showing that Nationwide acquired title to the Subject Property by means of a grant deed from Louis Rafti, as Trustee of the 2015 Rafti Family Trust (the “2015 Grant Deed”) (PUMF 15, Exh. 6); (3) the publicly recorded 2009 Rafti Family Trust (PUMF 27, Exh. 8); and (4) the publicly recorded 2015 Rafti Family Trust (PUMF 17, Exh. 9).

  1. Title Defect Shown in Public Records

In its motion, NATIC contends that the alleged possessory interest of Amy Rafti, as Trustee of the 2009 Rafti Family Trust, was not “shown by the public records” as required by Exception 2. NATIC relies on Stearns v. Title Ins. & Trust Co. (1971) 18 Cal.App.3d 162 and Probate Code section 18100 for the proposition that NATIC had no duty to investigate the authority of Louis Rafti, in his capacity as Trustee of the 2015 Rafti Family Trust, to convey the Subject Property.

“[T]he mere fact that an instrument has been recorded does not give constructive notice thereof unless there is some statute authorizing or permitting such instrument to be placed of record and at the same time making the effect of such recording constructive notice.” (Stearns, supra, at p. 169.)

Probate Code section 18100 provides: “With respect to a third person dealing with a trustee or assisting a trustee in the conduct of a transaction, if the third person acts in good faith and for a valuable consideration and without actual knowledge that the trustee is exceeding the trustee’s powers or improperly exercising them: [¶] (a) The third person is not bound to inquire whether the trustee has power to act or is properly exercising a power and may assume without inquiry the existence of a trust power and its proper exercise. [¶] (b) The third person is fully protected in dealing with or assisting the trustee just as if the trustee has and is properly exercising the power the trustee purports to exercise.” “Section 18100 was specifically adopted to change the prior law that placed third parties on constructive or inquiry notice of possible breaches of the trust. Section 18100 protects third parties who deal with or assist the trustee by excusing them from investigating and permitting them to assume ‘“the existence of a trust power and its proper exercise,”’ except where the third parties have actual knowledge of a breach of the trust.” (Vournas v. Fidelity Nat. Title Ins. Co. (1999) 73 Cal.App.4th 668, 673.)

It is undisputed that the Rafti Family Trusts were publicly recorded. GOGA contends that a title search of the public records shows that Louis Rafti did not have authority, as a co-trustee with Amy Rafti, to transfer the Subject Property from the 2009 Rafti Family Trust to the 2015 Rafti Family, and that the Subject Property’s title history thus placed NATIC on constructive notice of the title defect and fraudulent transfer by Louis Rafti. GOGA concedes that Probate Code section 18100 might protect Nationwide. However, GOGA argues that NATIC’s reliance on section 18100 is misplaced because the applicable third party would be Nationwide, not NATIC, since it was Nationwide that dealt directly with Louis Rafti and acted for valuable consideration for the 2015 Rafti Family Trust.

The court agrees with GOGA that the express language of Probate Code section 18100 applies to Nationwide rather than to NATIC. However, the court finds that public policy and legislative intent for Probate Code section 18100 et seq. supports NATIC’s position that the recorded trust instruments do not impart constructive notice of title defects and that NATIC did not have a duty to investigate Louis Rafti’s authority as trustee.

The Title Insurance Policy at issue defines “public records” as “records established under state statutes on Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge.” (Compl., Exh. F, Definition of Terms Section 1(h).)

Probate Code section 18100.5, subdivision (i) provides, in relevant part: “Any person may record a certification of trust that relates to an interest in real property in the office of the county recorder in any county in which all or a portion of the real property is located. . . . . The recorded certification of trust shall be a public record of the real property involved. This subdivision does not create a requirement to record a certification of trust in conjunction with the recordation of a transfer of title of real property involving a trust.” Therefore, the statute does not provide that the recorded trust or certificate of trust imparts constructive notice, but only that it is a “public record” of the certificate. (See Miller and Starr California Real Estate 4th, § 10:95 [“A person dealing with a trustee is not obligated to request or review a certificate, and there is no provision in the statute suggesting that a person without actual notice either of the contents of a certificate which restrict the trustee, or of the contents of a trust instrument at variance with the certificate, even has a duty to inquire into the trustee’s authority.”].)

As stated above, “[T]he mere fact that an instrument has been recorded does not give constructive notice thereof unless there is some statute authorizing or permitting such instrument to be placed of record and at the same time making the effect of such recording constructive notice.” (Stearns, supra, at p. 169.) GOGA has not cited any authority showing that a recorded trust (i.e., the 2009 or 2015 Raft Family Trust) imparts constructive notice to third parties such as NATIC, or that NATIC would somehow have a greater duty than Nationwide to investigate a trustee’s authority upon a title search.

After considering the evidence submitted and arguments presented, the court finds that the recorded trust instruments do not impart constructive notice of title defects and that NATIC did not have a duty to investigate Louis Rafti’s authority as trustee. Thus, Amy Rafti’s alleged possessory interest in the Subject Property as Trustee of the 2009 Rafti Family Trust was “not shown by the public record” as described in Exception 2 of the Title Insurance Policy.

  1. Person in Possession Thereof

It is undisputed that Amy Rafti asserted her adverse claims while in possession of the Subject Property. (DUMF 16-18.) NATIC contends that the term “asserted by persons in possession thereof” refers to any individual physically occupying the land. NATIC contends that GOGA’s prosecution of this action and other efforts to remove Amy Rafti from the Subject Property arise out of claims made by “a person in possession of the land,” and thus the claim is excepted from coverage under Exception 2.

In opposition, GOGA contends that Amy Rafti’s claim was not made as a “person in possession,” but was instead based on her status as co-trustee of the 2009 Rafti Family Trust. But, even if GOGA were correct on this point, it does not change the fact that Amy Rafti’s claim was one “asserted by [a] person[] in possession [of the land]” under the plain language of Exception 2. GOGA concedes that Amy Rafti was in physical possession of the Subject Property before, during, and after GOGA’s purchase of the Subject Property. The court thus finds that Amy Rafti’s claim as co-trustee of the 2009 Rafti Family Trust is a claim “asserted by [a] person[] in possession [of the land].”

  1. Conclusion

The court finds that NATIC has met its burden of showing that Exception 2 of the Title Insurance Policy applies to except coverage of GOGA’s claim. Amy Rafti’s claim as co-trustee of the 2009 Rafti Family Trust is a claim “which [is] not shown by the public records but . . . which may be asserted by persons in possession [of the land].” The court also finds that GOGA has not met its burden to show that a triable issue of material fact exists as to the applicability of Exception 2 of the Title Insurance Policy.

  1. Exclusion 3(a)

NATIC also contends that it did not breach the Title Insurance Policy when it denied coverage for GOGA’s claim because GOGA’s claim is excepted under Exclusion 3(a) of the Title Insurance Policy. Because the court finds that Exception 2 of the Title Insurance Policy applies to except coverage of GOGA’s claim, it is not necessary for the court to determine whether GOGA’s claim is also excepted by Exclusion 3(a), and the court therefore declines to do so.

  1. Preliminary Title Report

In support of its sixth cause of action for breach of contract, GOGA alleges: “The Preliminary Title Report issued by NATICO failed to disclose any issues of title with respect to the Emelita Property.” (Compl., ¶ 40.)

It is undisputed that NATIC issued GOGA a preliminary title report which did not disclose Amy Rafti’s alleged possessory interest in the Subject Property. (PUMF 5, 12.) NATIC contends that the Preliminary Title Report issued by NATIC cannot serve as a basis for liability on the sixth cause of action because, as a matter of law, preliminary title reports are not representations as to the condition of title and cannot be relied upon as providing such a representation. NATIC cites Insurance Code section 12340.11.

Insurance Code section 12340.11 provides: “’Preliminary report,’ ‘commitment,’ or ‘binder’ are reports furnished in connection with an application for title insurance and are offers to issue a title policy subject to the stated exceptions set forth in the reports and such other matters as may be incorporated by referenced therein. The reports are not abstracts of title, nor are any of the rights, duties or responsibilities applicable to the preparation and issuance of an abstract of title applicable to the issuance of any report. Any such report shall not be construed as, nor constitute, a representation as to the condition of title to real property, but shall constitute a statement of the terms and conditions upon which the issuer is willing to issue its title policy, if such offer is accepted.” (See also Siegel v. Fidelity Nat. Title Ins. Co. (1996) 46 Cal.App.4th 1181, 1191-1192 [“In enacting sections 12340.10 and 12340.11, the Legislature recognized that no reliance should ever be placed on a preliminary report or a policy of title insurance to show the condition of title. (Citation.) This is because ‘“any title search or examination is performed by the insurer solely for the purpose of seeking to evaluate its underwriting decision in issuing the policy, not for the benefit of the insured.” (Citation.)’”].)

In opposition, GOGA does not dispute NATIC’s reliance on Insurance Code section 12340.11. GOGA argues that the Preliminary Title Report was negligently prepared because it failed to disclose the existence of an uninsured deed. The court notes that GOGA states it “is not claiming that the Preliminary Title Report is itself a part of the contract that NATIC breached, but merely that he was entitled to rely on the contents of the Preliminary Title Report in the course of doing his due diligence on the chain of title.” (Opp’n, p. 21:25-26.) GOGA goes on to state: “[T]he result of said negligence was [NATIC’s] issuance of policies that failed to list an existing defect in the chain of title as being among its exceptions. The absence of the 2015 deed from the Schedule B exceptions is a breach and creates a triable issue of fact as to whether NATIC is obligated to indemnify its insured against a defect in the chain of title of the Subject Property that is arguably not excepted from coverage.” (Opp’n, p. 23:10-14 (emphasis in original).)

In reply, NATIC contends that it is irrelevant for GOGA to contend that NATIC negligently failed to disclose any specific grant deed, deed of trust, or trust agreement in the Preliminary Title Report. The court agrees. Insurance Code section 12340.11 provides, in pertinent part: “Any such report shall not be construed as, nor constitute, a representation as to the condition of title to real property . . . .”

  1. Conclusion

The court finds that NATIC has met its burden of showing that GOGA’s sixth cause of action for breach of contract has no merit because NATIC has shown that an element of the cause of action (i.e., defendant’s breach of the contract) cannot be established. Exception 2 of the Title Insurance Policy applies to except coverage of GOGA’s claim. Amy Rafti’s claim as co-trustee of the 2009 Rafti Family Trust is a claim “which [is] not shown by the public record but . . . which may be asserted by persons in possession [of the land].” The Preliminary Title Report also cannot serve as a basis for liability under the sixth cause of action. The court also finds that GOGA has not met its burden to show that a triable issue of material fact exists as to the sixth cause of action for breach of contract.

  1. Seventh Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing

GOGA contends that the seventh cause of action for breach of the implied covenant of good faith and fair dealing fails because GOGA’s claim was excepted by Exception 2 of the Title Insurance Policy.

“[W]hen there is no duty to defend under the terms of an insurance policy, there can be no action for breach of the implied covenant of good faith and fair dealing. ([Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36,] 44 Cal.Rptr.2d 370, 900 P.2d 619 [when no potential for coverage and hence no duty to defend under the policy, no action for breach of the implied covenant of good faith and fair dealing lies ‘because the covenant is based on the contractual relationship between the insured and the insurer.’].)” (Liberty National Enterprises, L.P. v. Chicago Title Ins. Co. (2013) 217 Cal.App.4th 62, 81.)

“The primary test is whether the insurer withheld payment of an insured’s claim unreasonably and in bad faith. [Citation.] Where benefits are withheld for proper cause, there is no breach of the implied covenant. [Citation.] The duty imposed by law is not unreasonably to withhold payments due under the policy. [Citation.] [¶] Thus, there are at least two separate requirements to establish breach of the implied covenant: (1) benefits due under the policy must have been withheld; and (2) the reason for withholding benefits must have been unreasonable or without proper cause.” (Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1151.)

In opposition, GOGA contends that it does not need to prove that NATIC breached an express term of the Title Insurance Policy because it is sufficient to show “that coverage, or a potential for coverage exists, and that the NATIC engaged in behavior which frustrated Plaintiff’s rights to the benefits of the Policy.” GOGA cites Brehm v. 21st Century Ins. Co. (2008) 166 Cal.App.4th 1225, 1236, for the proposition that a breach of an express contract term is not a prerequisite for maintaining a bad faith action against an insurer.

The Court of Appeal in Brehm recognized the general rule that there can be no breach of the implied covenant of good faith and fair dealing if no benefits are due under the policy. (Id. at p. 1235. The Court continued: “However . . . the principle that no breach of the covenant of good faith and fair dealing can occur if there is no coverage or potential for coverage under the policy is quite different from the argument that no breach of the implied covenant can occur if there is no breach of an express contractual provision: ‘[B]reach of a specific provision of the contract is not a necessary prerequisite to a claim for breach of the implied covenant of good faith and fair dealing . . . . [E]ven an insurer that pays the full limits of its policy may be liable for breach of the implied covenant if improper claims handling causes detriment to the insured.” (Id. at p. 1236.)

The Court illustrated this rule by discussing Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, which GOGA also cites: “[T]he Supreme Court explained an insurer’s obligations extend beyond simply paying the benefits to which its insured is entitled: ‘[W]hen benefits are due an insured, “delayed payment based on inadequate or tardy investigations, oppressive conduct . . . and numerous other tactics may breach the implied covenant because” they frustrate the insured’s right to receive the benefits of the contract in “prompt compensation for losses.”’” (Ibid. (emphasis added).) Therefore, GOGA’s reliance on Brehm for the proposition that a cause of action for breach of the implied covenant can be maintained without a breach of an express term is misplaced because here, the undisputed facts show that the threshold requirement -- that “benefits due under the policy must have been withheld” -- is absent. No benefits due were withheld or delayed because GOGA’s claim to benefits was excepted by Exception 2 of the Title Insurance Policy.

The court finds that NATIC has met its burden of showing that GOGA’s seventh cause of action for breach of the implied covenant of good faith and fair dealing has no merit because NATIC has shown that the elements of (1) benefits due under the policy were withheld, and (2) the reason for withholding benefits was unreasonable or without proper cause, cannot be established. There can be no bad faith as a matter of law when no coverage is due. The court also finds that GOGA has not met its burden to show that a triable issue of material fact exists as to its seventh cause of action for breach of the implied covenant of good faith and fair dealing.

ORDER

For the reasons set forth above, the court rules as follows.

The court finds that all the papers submitted show that there is no triable issue as to any material fact and that defendant North American Title Insurance Company is entitled to a judgment as a matter of law. The court therefore grants defendant North American Title Company’s motion for summary judgment on plaintiff GOGA Properties, LLC’s Complaint. (Code Civ. Proc., § 437c, subd. (c).)

The court orders defendant North American Title Insurance Company to lodge and serve a proposed judgment within 10 days of the date of this order.

The court orders defendant North American Title Insurance Company to give notice of this ruling.

IT IS SO ORDERED.

DATED: July 10, 2020

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court


[1] The court finds that these facts are undisputed based on the admissible and uncontroverted evidence cited in NATIC’s separate statement as well as GOGA’s separate statement.

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