Judge Bruce G. Iwasaki

Department 58

Hearing Date: July 26, 2022

Case Name: Robert Tarquinio, Ph.D. v. Pacific 26 Management, LLC, et al.

Case No.: 21STCV06748

Matter: Demurrer with Motion to Strike

Moving Party: Defendant Pacific 26 Management, LLC

Responding Party: Plaintiff Robert Tarquinio

Tentative Ruling: The demurrer is sustained in its entirety without leave to amend. The motion to strike is granted.

After the Court sustained a demurrer against his First Amended Complaint, Plaintiff filed a Second Amended Complaint and made minor revisions, including adding in two defendants and adding a series of paragraphs reciting propositions of law. Because the Second Amended Complaint fails to allege any specific and substantive facts that assert liability against Defendant Pacific 26 Management, the Court sustains the demurrer without leave to amend. The allegations against Defendant Pacific 26 Management are dismissed with prejudice.

Background

On June 30, 2022, Plaintiff Robert E. Tarquinio Ph.D., as trustee of the House of Tarchnas Living Trust, filed a Second Amended Complaint (Complaint) against Pacific 26 Management, LLC, Forbix Capital Corp., Sherman Way ventures, LLC, Emil Khodorkovsky, DV International, LLC, NUPI Profit Sharing Plan, Vladimir Roizen as Trustee of the Vvroizen Family Trust, Good Fellas Pawn Shop, LLC, Gavaty Inc., Artur Galstian, Krasimira Krasteva, Alex Dunaev and Inna Dunaev Revocable Living Trust dated 1/27/2008, Litco Investments, LLC, Edward S. Fine Cash Balance Plan, Velma Anderson, Bovitz Properties, LLC, and 3110 Pennsylvania Avenue, LLC for (1) quiet title, (2) fraud, (3) wrongful foreclosure, and (4) to set aside foreclosure sale.

Plaintiff alleged that he was defrauded of his title to 3110 Pennsylvania Avenue, Santa Monica, CA 90404, (Pennsylvania Property) and 1048 Chelsea Avenue, Santa Monica, CA 90403 (Chelsea Property). Defendants Forbix Capital Corp. and its principal allegedly and wrongfully foreclosed against the properties on the incorrect basis that Plaintiff was in default.

The owner of the Pennsylvania Property has been broken up between eleven different defendants. The purported fee simple owner of the Chelsea Property is Pacific 26 Management (Defendant or Pacific).

Pacific demurs to all causes of action for failure to state sufficient facts, and moves to strike the Complaint as to allegations of punitive damages and attorney fees. Plaintiff opposed, principally arguing that res judicata does not apply. Pacific replied, arguing that Plaintiff already these issues in the unlawful detainer action.

Defendant indicates that he attempted e-mail contact with Plaintiff on June 7 and June 9, 2022. (Pugh Decl., ¶¶ 4-7.) Plaintiff argues this is insufficient for meet and confer efforts. Even if this were true, this “shall not be grounds to overrule or sustain a demurrer.” (Code Civ. Proc., § 430.41, subd. (a)(4).) The Court considers the merits of the demurrer.

Defendant requests judicial notice of 33 documents, which include Grant Deeds, Deeds of Trust, Notice of Default, Notice of Trustee's Sale, Trustee’s Sale, a petition for bankruptcy, docket reports, verified complaint in a separate unlawful detainer action, and various other court documents. The Court grants the request. (Evid. Code § 452, subds. (c), (d), and (h).)

Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

First Cause of Action – Quiet Title

“ ‘An element of a cause of action for quiet title is “[t]he adverse claims to the title of the plaintiff against which a determination is sought.” ’ ” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 1010.)

The Court previously held that Plaintiff’s quiet title claim was barred by res judicata. In an unlawful detainer action, “[b]ecause the buyer must prove that the title to the property was acquired by foreclosure proceedings that were properly conducted, when the trustor attempts to challenge the foreclosure in a second action subsequent to an adverse judgment in the unlawful detainer proceeding, the factual issues concerning the propriety of the foreclosure sale are res judicata.” (5 Miller & Starr, Cal. Real Estate (4th ed. 2021) § 13:254); Cheney v. Trauzettel, 9 Cal. 2d 158, 159; Malkoskie v. Option One Mortgage Corp. (2010) 188 Cal.App.4th 968, 975-976.)

In the unlawful detainer case against Plaintiff, Judge Mark H. Epstein ruled against Plaintiff, finding that merely because Plaintiff informed Pacific of the fraud, this is insufficient to prove that Pacific had actual notice of the fraud. (RJN, Ex. 15.)

In his Second Amended Complaint, Plaintiff added this allegation to the quiet title cause of action:

97. Furthermore, PACIFIC 26 MANAGEMENT, LLC was fully aware of all of plaintiff's claims because it hired Realtor Michael Moore (DRE #02013546) of Rodeo Realty as their agent to make an offer to plaintiff one day before the public sale, August 9, 2020, at 10:46 p.m., and its agent’s knowledge regarding plaintiff’s claims regarding fraud in connection with the notice of default (of which plaintiff told Realtor Michael Moore all about) is imputed to PACIFIC 26 MANAGEMENT, LLC. (Hanlon, supra [agent’s knowledge that property was subject to a deed of trust was imputable to principal, so as to prevent him from being a BFP].)

Nothing in this paragraph addressed the res judicata effect in the unlawful detainer action. The facts in this paragraph are substantively the same arguments that Plaintiff raised in the unlawful detainer action, which was ruled on by Judge Epstein. Simply adding the name of the realtor does not revive his claim, which is still predicated on Plaintiff allegedly informing Pacific “all about the abject fraud regarding the 1) false Notice Of Default and 2) the false addendum to trust and 3) the false doctor's letters and 4) the fact he was being taken advantage of.” (Complaint at ¶ 94.)

Plaintiff’s cited cases are inapposite because “preclusion applies if the issues raised in the subsequent suit were fully and fairly litigated in the unlawful detainer action.” (Struiksma v. Ocwen Loan Servicing, LLC (2021) 66 Cal.App.5th 546, 556.) Judge Epstein considered and disposed of Plaintiff’s argument, stating: “First, the evidence is not clear as to exactly what was said and by whom during this meeting. Second, and more pertinent, even if defendant said that the sale was a fraud, that is not enough. A mere unsubstantiated statement by the owner before a foreclosure sale is finalized is not sufficient. As plaintiff argues, were it enough, any trustee's sale could be thwarted by the owner appearing at the auction and yelling ‘I am the current owner and this sale is a fraud.’ Knowledge of the fraud requires more.” (RJN, Ex. 15.) Therefore, res judicata applies and the Court sustains the demurrer as to the cause of action for quiet title.

Second Cause of Action – Fraud

The elements of intentional misrepresentation are “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631.)

Plaintiff asserts that he is alleging conspiracy to defraud based on the underlying tort of intentional misrepresentation. “To support a conspiracy claim, a plaintiff must allege the following elements: ‘(1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct.’ ” (AREI II Cases (2013) 216 Cal.App.4th 1004, 1022.) Bare allegations and mere conjecture are not enough, and a party alleging conspiracy must “ ‘show that each member of the conspiracy acted in concert and came to a mutual understanding to accomplish a common and unlawful plan, and that one or more of them committed an overt act to further it.’ ” (Ibid.)

Paragraphs 104 through 115 are improper, mere statements of law. (Green v. Palmer (1860) 15 Cal.411, 414 [“Facts only must be stated . . . [A]s contradistinguished from the law”].)

The only added allegation against Defendant Pacific is in Paragraph 102 of the Second Amended Complaint, which is identical to Paragraph 91 of the First Amended Complaint except for the added language that Defendant Pacific conspired with Defendants Forbix Capital Corp, Sherman Way Ventures, LLC, and 3110 Pennsylvania Avenue, LLC, and were “aided and abetted by defendant BOVITZ PROPERTIES, LLC.” (Complaint, ¶ 102.)

While Plaintiff is correct that less specificity is required when “it appears from the nature of allegations that defendant must necessarily possess full information,” or if the “facts lie more in the knowledge of” opposing parties, it does not appear from the allegations in the Second Amended Complaint that Defendant Pacific necessarily possesses full information. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) The allegations are conclusory and there are no specific assertions of wrongful conduct by Defendant Pacific. The Complaint does not state what communications were made between Pacific and the other defendants to support a “reasonable inference” that Defendant Pacific was aware of the supposed plan to defraud Plaintiff. (AREI II Cases, supra, 216 Cal.App.4th at p. 1022.)

Further, because the underlying tort is fraud, there must be some misrepresentation. It is not clear on the face of the Complaint what those misrepresentations are and to whom they were made, at least with respect to Defendant Pacific. From the Court’s reading of the Complaint, Defendant is simply a purchaser of the Chelsea Property with no connection to any of the other Defendants, outside of the conclusory allegation that it was in a conspiracy with them. To the extent Plaintiff’s conspiracy allegations are premised on him allegedly informing Pacific’s real estate agent of the defective notices of default and reportedly fraudulent documents, this still fails to show how Pacific relates to the other Defendants to support a theory conspiracy.

By grouping all Defendants together in his allegations, Plaintiff fails to properly apprise Defendant of the charges against them such that Defendant is incapable of responding to the Complaint. If Plaintiff is alleging that material facts were concealed from him by Defendant, Plaintiff fails to allege the source of Defendants’ duty to disclose those facts.

The Court sustains the demurrer as to the second cause of action for fraud as against Defendant Pacific.

Third Cause of Action – Wrongful Foreclosure

The Court previously ruled that the Complaint did not allege that Pacific was the trustee or mortgagee. The Court stated:

“Here, the FAC does not allege that Pacific was the trustee or mortgagee. The Complaint alleges that Forbix loaned money to Plaintiff in August 2019. (FAC ¶ 23.) In March 2020, Plaintiff alleged that he received a fraudulent notice of default from Forbix. (Id. at ¶ 37.) Subsequently, Plaintiff asserts that “FORBIX CAPITAL CORP proceeded to sell Plaintiff Tarquinio’s two properties at public auction in August 2020.” (FAC ¶ 54.) On the face of the Complaint, Pacific cannot be liable for wrongful foreclosure because it did not act as the trustee or mortgagee in connection with the mortgage/deed of trust. Again, Plaintiff’s opposition does not contest the issue.” (Minute Order 4/8/22, p. 4.)

Plaintiff’s Second Amended Complaint did not allege any new facts to cure this. Accordingly, the demurrer as to the third cause of action for wrongful foreclosure as against Defendant Pacific is sustained without leave to amend.

Fourth Cause of Action – Set Aside Foreclosure Sale

This cause of action is an equitable remedy and derivative of the wrongful foreclosure cause of action. Again, Plaintiff did not allege additional facts in his Second Amended Complaint and for the same reasons above, the demurrer as to the fourth cause of action is sustained without leave to amend.

Motion to Strike

Defendant Pacific requests the Court to strike Paragraph 118 regarding exemplary damages and the fourth prayer for relief as to attorney’s fees.

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any 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 must “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.)¿¿¿

Because the demurrer to Plaintiff’s fraud cause of action against Pacific is sustained, Paragraph 118 of the Second Amended Complaint is ordered stricken as to “all defendants.” Plaintiff does not oppose striking the attorney fee prayer, so page 28:12 (Paragraph 4 of the Prayer for Relief) is stricken as to Pacific.

In sum, the demurrer is sustained in its entirety without leave to amend and the motion to strike is granted.