Judge: Bruce G. Iwasaki, Case: 21STCV06748, Date: 2022-10-03 Tentative Ruling
Case Number: 21STCV06748 Hearing Date: October 3, 2022 Dept: 58
Hearing
Date: October 3, 2022
Case
Name: Tarquinio v.
Pacific 26 Management, LLC, et al.
Case
No.: 21STCV06748
Matter: Demurrer with Motion to
Strike
Moving
Party: Defendants Forbix
Capital and Emil Khodorkovsky
Responding
Party: Unopposed
Tentative Ruling: The demurrer is sustained with 20 days
leave to amend.
Background
On June 30, 2022, Robert E. Tarquinio, as trustee of the
House of Tarchnas Living Trust (Plaintiff) 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 1048
Chelsea Avenue, Santa Monica, CA 90403 (Chelsea Property) and 3110 Pennsylvania
Avenue, Santa Monica, CA 90404, (Pennsylvania Property). He alleged that Defendants Forbix Capital
Corp. and its principal, Emil Khodorkovsky (Khodorkovsky), foreclosed against
the properties on the incorrect basis that Plaintiff was in default.
The Court previously sustained a demurrer by Defendant
Pacific 26 Management, LLC, who was the purported fee simple owner of the
Chelsea Property. This dismissed Pacific
26 from the case.
The owner of the Pennsylvania
Property was broken up between twelve different defendants, with Forbix Capital
(Forbix) owning a 0.9% interest. These
entities then deeded the Pennsylvania Property to 3110 Pennsylvania Avenue,
LLC, for which Khodorkovsky was the sole owner.
3110 Pennsylvania Avenue, LLC then allegedly transferred the Property to
Bovitz Properties, LLC, who is now the fee simple owner of the Pennsylvania
Property.
Forbix and Khodorkovsky (Defendants)
demur to all causes of action for failure to state sufficient facts. They also move to strike the Paragraphs in
the Complaint as to allegations of exemplary damages and request for
rescission. Plaintiff did not oppose
either the demurrer or motion to strike.
Defendants’ counsel’s declaration satisfies the meet-and-confer
requirements. (Aron Decl., ¶¶ 5-7.)
Defendants’ request for judicial notice of 20 exhibits,
which include Grant Deeds, Deeds of Trust, Notice of Default, Notice of
Trustee's Sale, a petition for bankruptcy, docket reports, and various other
court documents is granted. (Evid. Code
§ 452, subds. (c), (d), and (h).)
The demurrer is sustained with twenty days leave to amend.
Legal Standard
Discussion
First Cause of Action – Quiet Title
Defendants assert that the quiet title action fails because Plaintiff
has not shown that the current owner of the Pennsylvania Property, Bovitz
Properties, LLC, had notice of the alleged fraud. In addition, they argue Plaintiff has failed
to tender the outstanding debt.
A claim for quiet title must contain (1) a description of
the property, (2) the title of the plaintiff as to which a determination is
sought and its basis, (3) the adverse claims to the title of the plaintiff
against which a determination is sought, (4) the date as to which determination
is sought, and (5) a prayer for determination of title. (Code Civ. Proc, §
761.020.) This cause of action also
requires a full discharge of the debt owed. (Aguilar v. Bocci (1974) 39
Cal.App.3d 475, 477-478.)
Here, the Complaint fails to allege
that Defendants have an adverse claim to Plaintiff’s alleged title to the Pennsylvania
Property. The Complaint avers that the
current owner, Bovitz Properties, LLC, is not a bona fide purchaser because it
had both “notice and knowledge of plaintiff’s verified claims regarding the
forgeries and fraud set out herein in connection with the notice of default
constituting irregularities in the sale proceedings.” (Complaint, ¶ 93.) These are not facts, but conclusions, which
are improper. (Blank v. Kirwan, supra,
39 Cal.3d at p. 318 [“‘We treat the demurrer as admitting all material facts .
. . but not contentions, deductions or conclusions of fact or law’”].) Plaintiff does not indicate how Bovitz became
aware of the alleged fraud. Regardless,
Defendants no longer hold title to the Pennsylvania Property because Bovitz is
the owner. Finally, Plaintiff fails to
plead payment of the debt under this claim.
According, the demurrer is sustained as to the first cause of action.
Second Cause of Action – Fraud
Defendants argue the Complaint’s failure to plead factual
allegations to support fraud.
The elements of fraud
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’s burden of
alleging fraud against a corporation is “even greater.” Such a pleading requires alleging “‘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.’” (Id. at p.
645.)
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 116 of the
Complaint are mere statements of law. (Green
v. Palmer (1860) 15 Cal.411, 414 [“Facts only must be stated . . . [A]s
contradistinguished from the law”].) Paragraph 102, in conclusory fashion, asserts
that Defendants conspired together with Pacific 26 Management, LLC and were
“aided and abetted by defendant BOVITZ PROPERTIES, LLC.” Paragraph 103 reincorporates the entirety of
previous paragraphs.
The fraud allegations appear to
focus on an incorrect outstanding amount that was due on the Notice of Default:
$150,812.47. (Complaint, ¶ 44.) Defendants contend that Plaintiff ignores the
information on the Notice of Default itself, which states that the outstanding
debt is: “three additional months of interest reserve due and payable on
11/17/2019 and interest and default rate interest due 03/01/2020 and all
subsequent installments/payments of principal and/or interest.” (capitalization removed)
Defendants claim that Plaintiff
agreed to pay $28,895.83 in interest per month. There was also an “Interest Reserve” of
$96,970.16 in which Defendants used to make monthly interest payments for
October through December 2019.
(Complaint, ¶¶ 32, 35.) Thus,
Defendants argue that the Notice of Default was requesting $86,687.50 (to
replenish the Interest Reserve), along with interest payments for January and
February 2020 ($28,895.83 x 2 = $57,791.66).
The total amount owed, Defendants contend, was at least $144,479.16, and
the remaining $6,333.31 was for foreclosure costs and expenses. The Court does not consider these arguments
because they are addressed to the merits of the alleged defects in the Notice
of Default.
The fraud allegations are
insufficient for a simpler reason: Plaintiff failed to plead Defendants’ knowledge
of falsity and his justifiable reliance on the allegedly invalid Notice of
Default.
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, he fails to indicate why or how
Defendants Forbix or Khodorkovsky would possess more information. As Plaintiff admits in the Complaint, he was
aware of the interest amounts and the Interest Reserve.
In addition, by grouping all
Defendants together in his fraud allegations, Plaintiff fails to adequately
apprise Forbix and Khodorkovsky of the charges against them.
The Court sustains the demurrer as
to the second cause of action for fraud.
Third Cause of Action – Wrongful Foreclosure
Defendants argue Plaintiff failed to allege a full tender
and does not sufficiently allege he is excused from tender.
“The basic elements of a tort cause of action for wrongful
foreclosure track the elements of an equitable cause of action to set aside a
foreclosure sale. They are: ‘(1) the trustee or mortgagee caused an illegal,
fraudulent, or willfully oppressive sale of real property pursuant to a power
of sale in a mortgage or deed of trust; (2) the party attacking the sale
(usually but not always the trustor or mortgagor) was prejudiced or harmed; and
(3) in cases where the trustor or mortgagor challenges the sale, the trustor or
mortgagor tendered the amount of the secured indebtedness or was excused from
tendering.’” (Miles v. Deutsche Bank
National Trust Co. (2015) 236 Cal.App.4th 394, 408.)
Exceptions to the tender requirement
include when “(1) the underlying debt is void, (2) the foreclosure sale or
trustee's deed is void on its face, (3) a counterclaim offsets the amount due,
(4) specific circumstances make it inequitable to enforce the debt against the
party challenging the sale, or (5) the foreclosure sale has not yet occurred.”
(Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062.) Under the first exception, “if the borrower’s
action attacks the validity of the underlying debt, a tender is not required
since it would constitute an affirmation of the debt.” (Lona v. Citibank,
N.A. (2011) 202 Cal.App.4th 89, 112.)
Here, the Complaint argues that tender should not be
required “because Plaintiff attacks the validity of the underlying debt, and
also because it would be inequitable.”
As to the first argument, the Complaint does not challenge the validity
of the loan, which is $3.65 million.
Plaintiff is only challenging the interest amounts in the Notice of
Default as being incorrect. (Complaint,
¶¶ 43-45.) Furthermore, Plaintiff does
not address the underlying debt or sale as void – instead, he claims that if
the allegations are proven, the “foreclosure sale is void and/or voidable.” A voidable sale does not excuse tender. (See Sciarratta v. U.S. Bank National
Association (2016) 247 Cal.App.4th 552, 568.)
The second argument invoking equity also fails. The Complaint discusses Plaintiff’s
developmental disability and autism, but he does not articulate why this should
excuse his ability to tender the debt.
Because the Complaint is unclear on this issue and Plaintiff failed to
file an opposition clarifying the matter, the demurrer as to the third cause of
action for wrongful foreclosure is sustained.
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.
For the above reasons, the demurrer to this cause of action is
sustained.
Motion to Strike
“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.)¿¿¿
As the demurrer is
sustained in its entirety, the motion to strike is granted. Paragraphs 41, 118 (exemplary damages), 57,
61, 71, 76, 78, 79 (irrelevant matter), 92, 104-116, 121, 122 (statements of
law), and the second Paragraph in the Prayer for Relief (request for
rescission) are ordered stricken.
In sum, the demurrer is sustained in its entirety. Because this is the Defendants’ first
demurrer, Plaintiff is given 20 days from the hearing date to file an amended
complaint.