Judge Christopher K. Lui, Case 22STCV15940 2023-03-28 Tentative Ruling

Judge: Christopher K. Lui, Case: 22STCV15940, Date: 2023-03-28 Tentative Ruling

Case Number: 22STCV15940 Hearing Date: March 28, 2023 Dept: 76

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the demurrer addressed herein. As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue. Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776. If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.

Plaintiff allege that Defendants steered Plaintiff into a “hard money loan” mortgage used to evade the requirements of the Dodd-Frank Amendments to the Truth-in-Lending Act (“TILA”). Defendant lender allegedly deprived Plaintiff of use of loan funds needed to make necessary repairs to the property and caused the property to be sold a trustee’s sale.

Defendant Joe Parada demurs to the Second Amended Complaint.

TENTATIVE RULING

Defendant Joe Parada’s demurrer to the Second Amended Complaint is OVERRULED as to the entire Second Amended Complaint, SUSTAINED without leave to amend as to the third and fifth causes of action, and OVERRULED as to the fourth cause of action.

Defendant is to answer the remaining allegations of the 2AC within 10 days.

ANALYSIS

Demurrer

Meet and Confer

The Declaration of Paul Orloff reflects that Defendant’s counsel satisfied the meet and confer requirement set forth in CCP § 430.41.

Discussion

As an initial matter, the Court orders the “Second” Amended Complaint filed on December 6, 2022 stricken, as it is actually a Third Amended Complaint that was filed without leave of court. The operative complaint is the Second Amended Complaint filed on December 5, 2022.

Defendant Joe Parada demurs to the Second Amended Complaint as follows:

1. Entire Second Amended Complaint.

Defendant Parada argues that he is only pled to have been a purchaser of the property at public auction. (2AC, ¶¶ 53, 54.) This argument is not persuasive, because Plaintiff would have to analyze each cause of action to demonstrate that none of them state a cause of action against Defendant Parada.

The demurrer to the entire 2AC is OVERRULED.

2. Third Cause of Action (Wrongful Foreclosure).

A wrongful foreclosure is a common law tort claim. It is an equitable action to set aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that the foreclosure was improper. (See Miles, supra, 236 Cal.App.4th at pp. 408–409.) The elements of a wrongful foreclosure cause of action are: “‘(1) [T]he trustee or mortgagee caused an illegal, fraudulent, [*562] 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.’” (Id. at p. 408.) “[M]ere technical violations of the foreclosure process will not give rise to a tort claim; the foreclosure must have been entirely unauthorized on the facts of the case.” (Id. at p. 409.) “[A]ll proximately caused damages may be recovered.” (Id. at p. 410.)

(Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 561-562.)

Here, the 2AC alleges as follows:

53. Thereafter, on July 9, 2021, Defendants caused Plaintiff’s property to be sold to an individual named JOE PARADA at public auction. Defendant PARADA paid a total of $437,845.43 for the property, one cent over the opening bid.

54. A Trustee’s Deed Upon Sale was recorded on August 26, 2021, which transferred title of the property to PARADA.

As to the third cause of action, the 2AC alleges:

88. At all times relevant herein, Plaintiff was the lawful owner and possessor of the Property. Defendants had a legal duty to Plaintiff created by the Deed of Trust and the California Civil Code, to institute foreclosure proceedings in accordance with the Deed of Trust and the Civil Code.

89. Defendants held a Trustee’s Sale in violation of the California law and in an effort to profit off of their own fraud and misconduct.

90. In addition, Defendant failed to uphold its duties to Plaintiff in the review of her foreclosure prevention alternative and, these failures, ultimately resulted in Plaintiff losing her property at foreclosure.

Here, the 2AC fails to allege that Defendant Parada owed a duty to Plaintiff under the Deed of Trust regarding the trustee’s sale procedure, or regarding foreclosure prevention alternatives. As such, there are no facts pled whereby demurring Defendant Parada is liable for wrongful foreclosure.

The demurrer to the third cause of action is SUSTAINED without leave to amend.

3. Fourth Cause of Action (Quiet Title).

To state a cause of action to quiet title, the plaintiff must allege: (1) plaintiff is the owner; (2) in possession of the land; (3) defendant claims an interest adverse to plaintiff; and (4) defendant’s claim is without right. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 740-41.) However, “ ‘a party who would quiet his title must prevail, if at all, on the strength of his own title and not on the weakness of the claims of an adversary.’ (Citations omitted.)” (Kunza v. Gaskell (1979) 91 Cal.App.3d 201, 207.)

A quiet title judgment cannot be entered in the absence of all parties with an interest in the property at issue. (See Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662, 667 [69 Cal. Rptr. 3d 87] [“A person is an indispensable party to litigation ‘“if his or her rights must necessarily be affected by the judgment.”’”].) The judgment entered by the trial court states that “any third party individual homeowners who are affiliated in any way with Defendants [the Indian Springs and Indian Oaks HOAs] are bound by this judgment.”

(Ranch at the Falls LLC v. O'Neal (2019) 38 Cal.App.5th 155, 173.)

Defendant Parada argues that this quiet title claim fails against him because hie is a bona fide purchaser for value. However, Defendant’s bona fide purchaser status is not pled in the 2AC, and is an evidentiary matter outside the scope of this demurrer.

“Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.” (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.) “The sole issue raised by a general demurrer is whether the facts pleaded state a valid cause of action, not whether they are true. No matter how unlikely or improbable, plaintiff's allegations must be accepted as true for the purpose of ruling on the demurrer. (Citation omitted.) Furthermore, plaintiff's possible inability or difficulty in proving the allegations of the complaint is of no concern. (Citation omitted.)” (Kerivan v. Title Ins. & Trust Co. (1983) 147 Cal.App.3d 225, 229.)

The quiet title cause of action is properly pled against Defendant Parada as the current record owner of title.

The demurrer to the fourth cause of action is OVERRULED.

4. Fifth Cause of Action (Violation of Bus. & Prof. Code, § 17200).

Defendant argues that there are no facts pled whereby Defendant Parada violated Bus. & Prof. Code, § 17200.

¶ 102 of the 2AC alleges:

102. Specifically, Defendants’ fraud, wrongful foreclosure, and violation of California Usury Law as well as Defendants’ other dishonest and unscrupulous conduct as alleged herein constitute unfair business practices in violation of California Business and Professions Code § 17200 et seq.

However, there are no facts pled whereby Defendant Parada engaged in unlawful unfair or fraudulent business practices as against Plaintiff.

The demurrer to the fifth cause of action is SUSTAINED without leave to amend.

Defendant is to answer the remaining allegations of the 2AC within 10 days.