Judge: Daniel S. Murphy, Case: 20STCV41059, Date: 2023-05-08 Tentative Ruling

Case Number: 20STCV41059    Hearing Date: May 8, 2023    Dept: 32

BACKGROUND

            On October 26, 2020, Plaintiff Angela Hsu initiated this action against various Defendants for (1) quiet title, (2) cancellation of instruments, and (3) usury. Plaintiff alleges that she and her husband (Decedent) were joint tenants of real property located in Oceanside, California as of September 1977 (the Property). In May 2015 and October 2017, unbeknownst to Plaintiff, Decedent borrowed $100,000 and $50,000 from Defendants, secured by the Property. Decedent passed away in August 2020, and Plaintiff alleges that as a result, she wholly owns the Property without encumbrance. Defendants have refused to remove the subject liens from the Property, prompting this lawsuit.

            On March 4, 2021, Defendants Tsasu LLC and Hestter Investment, LLC (collectively, the creditors) filed a cross-complaint against Plaintiff for breach of contract and declaratory relief, alleging that Plaintiff is responsible for the loans made to Decedent.

            On August 1, 2022, Plaintiff filed the First Amended Complaint, which added causes of action for unjust enrichment and equitable indemnification against Pichi Lin (Lin). Plaintiff alleges that Decedent and Lin made the loans together without Plaintiff’s knowledge and that Lin benefitted from the money. Plaintiff alleges that if she is held liable to the creditors, then in fairness Lin should be liable to her, since Lin was the true beneficiary of the loans.

On February 17, 2023, the Court sustained Lin’s demurrer to the FAC because the facts did not support how Lin was unjustly enriched or at fault for Plaintiff’s liability, since it is undisputed that Decedent alone made the loans. However, the Court granted Plaintiff leave to amend to allege a cause of action based on Family Code section 1100(b), which allows a spouse to void an improper transfer of community property. The Court also granted leave to assert causes of action based on improper rent collection and forgery.

On March 9, 2023, Plaintiff filed the operative Second Amended Complaint incorporating the Family Code allegations and adding causes of action for conversion and fraud by forgery. On April 10, 2023, Lin filed the instant demurrer to the SAC, challenging the unjust enrichment and equitable indemnity claims. Lin disputes the conversion and fraud but does not demur to those causes of action.   

LEGAL STANDARD

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.) A complaint will survive demurrer if it sufficiently apprises the defendant of the issues, and specificity is not required where discovery will clarify the ambiguities. (See Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 608.) All reasonable inferences are drawn in favor of the complaint. (Kruss v. Booth (2010) 185 Cal.App.4th 699, 713.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court notes that Defendant has complied with the meet and confer requirement. (Parker Decl.)

DISCUSSION

Unjust enrichment is a theory of restitution that involves: (1) receipt of a benefit; and (2) unjust retention of the benefit at the expense of another. (Elder v. Pacific Bell Telephone Co. (2012) 205 Cal.App.4th 841, 857.) Courts have construed unjust enrichment claims as quasi-contract claims seeking restitution. (Rutherford Holdings LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.) “Equitable indemnity, which requires no contractual relationship, is premised on a joint legal obligation to another for damages; it is subject to allocation of fault principles and comparative equitable apportionment of loss.” (C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700, internal citations omitted.) “The elements of a cause of action for equitable indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is equitably responsible.” (Ibid.)

            It remains undisputed that Decedent made the loans on his own. As with the FAC, the facts in the SAC do not support that Lin was unjustly enriched or at fault. However, the SAC alleges that to the extent the funds derived from the Property are deemed community property, Lin must reimburse Plaintiff for the funds she received from Decedent. (SAC ¶ 41.) Under Family Code section 1100(b), “[a] spouse may not make a gift of community personal property, or dispose of community personal property for less than fair and reasonable value, without the written consent of the other spouse.” (Fam. Code, § 1100(b).) “[A] gift made in violation of section [1100] is, as against the donee, voidable by the wife in its entirety during the husband's lifetime . . . and to the extent of one-half after his death.” (Fields v. Michael (1949) 91 Cal.App.2d 443, 448.) The facts in the SAC support a reasonable inference that Decedent transferred community property to Lin without Plaintiff’s knowledge or consent. Such a transfer, if proven, would be voidable under Section 1100.

            Lin argues that the SAC admits on its face that the Property was owned by Plaintiff and Decedent as joint tenants and therefore cannot be community property. Plaintiff argues that this is her theory as well, which is why Plaintiff believes the creditors cannot pursue her for the debt in the first place. Plaintiff maintains that Decedent’s debt died with him and that she owns the Property free and clear. But Plaintiff argues that if she is held liable to the creditors based on a finding that the Property was community property, then in equity Lin should be liable for the amount because Lin benefitted from the loans.

            However, a joint tenancy deed, by itself, is not sufficient to rebut the community property presumption. (In re Brace (2020) 9 Cal.5th 903, 938.) Instead, there must be an express writing specifically indicating an intent to transmute community property to separate property. (Ibid.) “[P]roperty acquired during marriage in joint form, including joint tenancy or tenancy in common, is presumed to be community property. This presumption can be rebutted, but only by a writing meeting certain statutory requirements.” (Estate of Mitchell (1999) 76 Cal.App.4th 1378, 1385-1386.)

In this case, while the SAC alleges that the Property was owned as a joint tenancy, it does not reveal on its face that Plaintiff and Decedent executed an express written transmutation, or that there is some other circumstance rebutting the community property presumption. Thus, whether the Property was held as community property depends on a factual analysis that cannot be conducted on a demurrer. Additionally, while Plaintiff maintains that the Property was not community property, she is entitled to plead in the alternative in the event she is wrong. “A plaintiff may plead cumulative or inconsistent causes of action.” (Gherman v. Colburn (1977) 72 Cal.App.3d 544, 565.)   

In sum, the allegations in the SAC do not support the claims for unjust enrichment or equitable indemnity, but they do support a claim for voiding Decedent’s improper transfer of community property. Because Decedent is deceased, Plaintiff would at most be entitled to void half of the transfer. (See Fields, supra, 91 Cal.App.2d at p. 448.)

CONCLUSION

            Defendant Pichi Lin’s demurrer is SUSTAINED without leave to amend as to unjust enrichment and equitable indemnity and OVERRULED as to Family Code section 1100.  Defendant Pichi Lin shall file an answer within 10 days of this order.