Judge: Barbara M. Scheper, Case: 23STCV25443, Date: 2024-02-27 Tentative Ruling

Case Number: 23STCV25443    Hearing Date: February 27, 2024    Dept: 30

Dept. 30

Calendar No.

Chicago Title Insurance Company v. Cassini, et. al., Case No. 23STCV25443

Tentative Ruling re:  Defendant’s Demurrer to Complaint

            Defendant Ronald Cassini (“Defendant”) demurs to both causes of action alleged in Plaintiff’s Complaint.  The demurrer is overruled.  Defendant is ordered to answer within ten (10) days of today’s date.           

In reviewing the legal sufficiency of a complaint against a demurrer, a court will treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)

When ruling on a demurrer, the Court may only consider the complaint’s allegations or matters which may be judicially noticed. (Blank, supra, 39 Cal.3d at p. 318.) The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the complaint, liberally construed, fails to state facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

Defendant demurs to the first and second causes of action of Plaintiff’s Complaint on the grounds that the causes of action fail to state facts sufficient to constitute causes of action.

First Cause of Action: Breach of Implied Warranty of Title/Covenant Against Encumbrances (CA Civil Code § 1113)

Under Civil Code Section 1113, “From the use of the word “grant” in any conveyance by which an estate of inheritance or fee simple is to be passed, the following covenants, and none other, on the part of the grantor for himself and his heirs to the grantee, his heirs, and assigns, are implied, unless restrained by express terms contained in such conveyance: [1] That previous to the time of the execution of such conveyance, the grantor has not conveyed the same estate, or any right, title, or interest therein, to any person other than the grantee; [and] [2] That such estate is at the time of the execution of such conveyance free from incumbrances done, made, or suffered by the grantor, or any person claiming under him. Such covenants may be sued upon in the same manner as if they had been expressly inserted in the conveyance.” (Civ. Code § 1113.)

The Court notes that the demurrer does not advance any arguments related to the sufficiency of the Complaint but rather appears to present defenses against the facts pled in the Complaint by introducing purported contrary facts, which is beyond the scope of a demurrer. Therefore, the Court will only address whether the Complaint is legally sufficient to support the causes of action as alleged therein.

The Complaint alleges from 2005 to 2006, Defendant acquired title to the real property consisting of vacant land located in Sunland, California that is made up of portions of Lots 40, 41, and 42 of Tract No. 9659, Los Angeles County, California, Assessor’s Parcel No. (“APN”) 2547-016-017 and 2547-016-018. (Compl., ¶ 6.) The Complaint further alleges on or about July 27, 2021, Defendant conveyed title to the Property to Haroutioun Baghossian under a purchase-and-sale transaction (“Purchase and Sale Transaction”) via a Grant Deed recorded on August 16, 2021 in the Official Records of the Los Angeles County Recorder’s Office as Document No. 20211247577. (Id. at ¶ 10, Ex. 4.) The Complaint further alleges certain Property Tax Liens for unpaid delinquent taxes and penalties assessed by the Los Angeles County Tax Collector between 2008 through 20[21] (“Property Tax Liens”) encumbered the Property in the sum of $131,404.63. (Id. at  12, Ex. 6.) The Complaint also alleges on or about August 13, 2021, before the close of escrow and prior to the disbursement of the net sale proceeds from the sale of the Property, a Final Settlement Statement was circulated to both Buyer (Boghossian) and Seller (Defendant) listing all the encumbrances that had to be paid off to effectuate delivery of clear title of the Property to Boghossian. (Id. at ¶ 13, Ex. 7.) The Complaint also alleges Defendant did not disclose the existence of the unpaid delinquent Property Tax Liens that had accrued between 2008 through 20[21] totaling $131,404.63. (Id. at ¶ 14.) Accordingly, as alleged, at the time of said conveyance the Property was not free from encumbrances (Id. at ¶ 26). Therefore, Defendant breached the implied covenant against encumbrances and warranty of title in the Grant Deed set forth in Civil Code § 1113 by failing to convey the Property free and clear of the encumbrance and the cloud on title caused by the unpaid Tax Liens. (Id. at ¶ 27.)

The Court finds that the Complaint alleges sufficient facts to support the first cause of action for breach of implied warranty of title/covenant against encumbrances.

Second Cause of Action: Restitution Based on Unjust Enrichment

“There is no cause of action in California labeled ‘unjust enrichment.’” (Sepanossian v. National Ready Mix Company, Inc. (2023) 315 Cal.Rptr.3d 373, 385.) “[A]n unjust enrichment claim is grounded in equitable principles of restitution.” (Id.) Essentially, “[c]ommon law principles of restitution require a party to return a benefit when the retention of such benefit would unjustly enrich the recipient; a typical cause of action involving such remedy is ‘quasi-contract.’” (Sepanossian, supra, 315 Cal.Prtr.3d at 386.) However, “restitution may be awarded in lieu of breach of contract damages when the parties had an express contract, but it was procured by fraud or is unenforceable or ineffective for some reason, or where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct.” (Id.)

Defendant argues Plaintiff engaged in wrongful conduct by preparing the deed and causing him to sign it without disclosing the ramifications to him.

In opposition, Plaintiff argues the elements required to plead restitution on the basis of unjust enrichment are satisfied. Plaintiff further contends Defendant fails to identify which of the tax liens are uncollectible and attempts to allude to a statute of limitations that renders these or some of these taxes uncollectible by citing Revenue and Taxation Code Section 532, which is inapplicable. Moreover, Plaintiff asserts it was Defendant’s sole obligation to clear his delinquent property taxes from the property before or at the time Defendant conveyed the property to the insured buyer. Lastly, Plaintiff argues it provided Defendant with an opportunity to resolve the delinquent property tax liens before Plaintiff was compelled to pay it in accordance with the terms of the Policy.

The Court finds that the Complaint alleges sufficient facts to support the second cause of action for restitution based on unjust enrichment. Plaintiff alleges Defendant owed back property taxes in the sum of $134,671.35 that encumbered the Property Defendant conveyed to Plaintiff’s insured buyer. Plaintiff further alleges that Defendant refused to pay these back taxes, which led to Plaintiff having to pay it under its Policy with the insured buyer. Plaintiff alleges Defendant benefitted from Plaintiff paying his back taxes.