Judge: Barbara M. Scheper, Case: 24STCV13415, Date: 2024-08-19 Tentative Ruling

Case Number: 24STCV13415    Hearing Date: August 19, 2024    Dept: 30

Dept. 30

Calendar No.

Bank of Hope v. Lee, et.al., Case No. 24STCV13415 

Tentative Ruling re: Defendant’s Demurrer to Complaint

Defendant demurs to Plaintiff’s Verified Complaint. The Court overrules the demurrer and orders Defendant 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 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 Verified Complaint on the grounds that Plaintiff’s action is barred by California’s One-Action / Security-First Rule found in the California Code of Civil Procedure § 726 which requires a lender to pursue the security first before seeking a personal judgment against the debtor.

California Code of Civil Procedure § 726 provides:  “There can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein, which action shall be in accordance with the provisions of this chapter. In the action the court may, by its judgment, direct the sale of the encumbered real property or estate for years therein (or so much of the real property or estate for years as may be necessary), and the application of the proceeds of the sale to the payment of the costs of court, the expenses of levy and sale, and the amount due plaintiff, including, where the mortgage provides for the payment of attorney's fees, the sum for attorney's fees as the court shall find reasonable, not exceeding the amount named in the mortgage.” (Code Civ. Proc., § 726(a).)

Here, the promissory note is not secured by real property. (Complaint ¶ 16.) The loan is secured by personal property which includes the assets of La Flor De Mayo Market. (Complaint ¶ 12, Ex 3.) Additionally, Jennifer Sang Young Lee, doing business as, La Flor De Mayo Market is listed as the grantor under the commercial security agreement. (Id.) Seung Hyeon Pak is not listed as a guarantor under the agreement and real property has not been offered as collateral to secure the loan. Defendant’s contention that the loan is a sham guaranty in which Seung Hyeon Pak served as the true guarantor is not supported. Testimony as to the nature of agreements between Jennifer Sang Young Lee and Seung Hyeon Pak is not relevant. The Bank of Hope was unaware of the terms of any agreements between the couple and did not offer the loan pursuant to any arrangement between them.

            Accordingly, Code Civ. Proc., § 726 is inapplicable and Defendant’s demurrer is overruled.