Judge: David A. Hoffer, Case: 30-2022-1265002, Date: 2022-11-28 Tentative Ruling
Defendants Deutsche, PHH, and WP’s demurrer to the complaint is SUSTAINED with 20-days leave to amend.
Request for Judicial Notice: Under Evidence Code section 452, subdivisions (c) and (h), this court may take judicial notice of the recorded documents to the extent they were recorded but cannot take judicial notice of the truthfulness of the statements within those documents. (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. 1.)
Plaintiffs as Bona Fide Purchasers (“BFPs”): The parties dispute whether plaintiffs qualify as BFPs. “[A] BFP ‘is one who pays value for the property without notice of any adverse interest or of any irregularity in the sale proceedings.’” (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1250 (Melendrez).)
“[T]he two elements of being a BFP are that the buyer (1) purchase the property in good faith for value, and (2) have no knowledge or notice of the asserted rights of another. [¶] … [¶] The second element required to establish BFP status is that the buyer have neither knowledge nor notice of the competing claim. [Citation.] The rationale for this requirement is that ‘[t]he recording laws were not enacted to protect those whose ignorance of the title is deliberate and intentional ... Their purpose is to protect those who honestly believe they are acquiring a good title, and who invest some substantial sum in reliance on that belief.’ [Citation.] ‘A person generally has “notice” of a particular fact if that person has knowledge of circumstances which, upon reasonable inquiry, would lead to that particular fact.’” (Melendrez, supra, 127 Cal.App.4th at pp. 1251-1252.)
The issue here is whether
plaintiff had knowledge or notice of the competing claim – the first DOT for
$799,999. As stated in Melendrez, plaintiffs would have notice of that
first DOT if a reasonable inquiry would have disclosed that fact. The March
2014 Reconveyance had inconsistent information, listing the recorded
instrument number of the first DOT but the amount ($200,000) and the lender’s
information of the second DOT. T
his inconsistency should have
put plaintiffs on notice to further investigate whether the first DOT was
fully reconveyed and extinguished. Additionally, the September 2014
Reconveyance should have placed plaintiffs on further alert since it
reconveyed and extinguished the same $200,000 amount.
The fact that plaintiffs aver they lacked notice does not change the situation because the recorded title history (of which this court takes judicial notice) controls over contrary allegations in the complaint. Del E. Webb Corp. v. Structural Materials Company (1981) 123 Cal.App.3d 593, 604 (“a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless.”). In light of the title history there are insufficient facts alleged to show plaintiffs qualify as BFPs. (See In re Marriage of Cloney (2001) 91 Cal.App.4th 429, 441-42 (2001) (“A party to a real estate conveyance is not entitled to ignore any information pertinent to title that comes to him or her . . . to the extent such information puts him or her on reasonable inquiry notice of information that may bring into question the state of title.”).
Since the entire basis of the causes of action – quiet title, declaratory relief, and slander of title – are premised on plaintiffs’ status as BFPs, the demurrer to the entire complaint is sustained with 20-days leave to amend.
Defendants are ordered to give notice of this ruling.