Judge: David A. Hoffer, Case: 30-20221270209, Date: 2022-10-31 Tentative Ruling
Defendants County Records Research, Inc., CC&N Investment LLC, and Peony Investments LLC’s (“Defendants” together) Demurrer to plaintiff Henry Chen’s (“Plaintiff”) Complaint is SUSTAINED with 20-days leave to amend.
Defendants bring their demurrer as to all three causes of action (“COA”) on the basis that they 1) fail to state facts sufficient to constitute a cause of action (Civ. Proc. Code § 430.10(e)); 2) the pleading is uncertain (Civ. Proc. Code § 430.10(f)); and 3) Plaintiff has failed to join indispensable parties (Civ. Proc. Code §§ 430.10(a) and (d)).
1) COA No. 1 – Breach Of Civil Code § 2924m
Civ. Code § 2924m provides means and requirements for the sale of property containing between one to four residential units through a foreclosure sale. For purposes of this matter, Plaintiff has alleged he is an “eligible tenant buyer” and provided a declaration meeting the requirements of such pursuant to Civ. Code § 2924m(a)(2). However, the declaration only notifies the trustee that Plaintiff is an eligible prospective tenant buyer. It does not imbue the right to purchase a property without the tenant actually providing notice of intent to place a bid or placement of an actual bid.
Under Civ. Code § 2924m(c)(2) an eligible tenant buyer must submit to the trustee a bid or a nonbinding written notice of intent to place such a bid 1) by 5:00 p.m. 15-days after the trustee sale; 2) must be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date; 3) be accompanied by the Civ. Code § 2924m(a)(2) declaration; 4) contain the current telephone number and return mailing address for the person submitting the bid or nonbinding written notice of intent. Additionally, the bid must be equal to the full amount of the last and highest bid at the trustee’s sale and must be, “in the form of cash, a cashier's check drawn on a state or national bank, a cashier's check drawn by a state or federal credit union, or a cashier's check drawn by a state or federal savings and loan association, savings association, or savings bank specified. . .” (Civ. Code. § 2924m(3)(A).)
The Complaint indicates Plaintiff sent a Declaration of intent to purchase the Property and attached the Declaration. (Complaint ¶¶ 2, 11; Ex. 2.) Plaintiff claims the Declaration was sent on 07/14/22, but was denied by Defendants as being untimely.
The Declaration does not contain most of the requirements of a bid under Civ. Code § 2924m(c)(2). Most importantly, nothing in the Declaration states it is a bid (or provides a monetary amount) or an intent to place a bid. The Declaration is simply that Plaintiff is an eligible tenant buyer. This does not meet the requirements of Civ. Code. § 2924m(c)(2). There are also no allegations as to the amount that Plaintiff bid or that the bid was in the proper form pursuant to Civ. Code. § 2924m(3)(A).
There is no evidence or allegation the incomplete Declaration was timely served on the trustee. Defendants produced judicially noticeable evidence showing the Property was sold at trustee sale on 05/19/22, which the complaint confirms. (Demurrer, Ex. 2; Complaint ¶ 2). The notice of trustee sale states the ultimate winning bid was an individual who provided an affidavit pursuant to Civ. Code § 2924m(3) and who tendered a bid amount of $926,888 as the highest bid. (Demurrer, Ex. 2.) Even assuming for arguments sake that the Declaration was an actual bid and Plaintiff served the Declaration on 07/13/22, the date it was signed, the Declaration was served approximately 39-days after the 15-day deadline, or approximately 56-days after the foreclosure sale.
Plaintiff also alleges that he was not given notice of the trustee sale. The only notice of sale required pursuant to Civ. Code § 2924m(d)(1) is that the trustee shall put notice that the sale took place and certain information about the sale on a website no later than 48 hours after the sale took place. Plaintiff did not allege any facts showing Defendants failed to provide the notice required under Civ. Code § 2924m(d)(1).
Plaintiff has failed to state sufficient facts to support this COA.
The COA is also uncertain as it failed to identify any act(s) on the part of defendant County Records Research, Inc.
The demurrer is sustained as to this COA.
2) COA No. 2 – Quiet Title
A complaint for quiet title must contain a) A description of the property that is the subject of the action; b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title; c) The adverse claims to the title of the plaintiff against which a determination is sought; d) The date as of which the determination is sought; and e) A prayer for the determination of the title of the plaintiff against the adverse claims. (Civ. Proc. Code § 761.020.)
Plaintiff alleges Civ. Code § 2924m creates an ownership interest in favor of Plaintiff that is superior to any interest Defendants may possess as a lien holder and subsequent owner by virtue of a foreclosure sale. (Complaint ¶ 17.) Plaintiff believes his ownership interest in the Property is valid and was not waived. (Complaint ¶ 18.) Plaintiff seeks an order for quiet title finding Plaintiff’s interest is valid. (Complaint ¶ 19.)
Nothing in Civ. Code § 2924m creates an ownership interest for any party absent a valid highest bid. Plaintiff has failed to allege he placed a bid as the Declaration does not contain any information regarding Plaintiff’s bid, nor does it show Plaintiff timely tendered the bid amount as required under the code. Further, the Property is currently owned by one Na Dong (Demurrer, Ex. 2) and Plaintiff has not pled any specific adverse claims on the Property by any of the named Defendants.
Plaintiff has failed to state sufficient facts to support this COA. It uncertain as to any ownership interest on the part of any of the Defendants. Finally, it appears Plaintiff failed to join the present owner of the Property (Na Dong) as a necessary party.
The Demurrer is sustained as to this COA.
3) COA No. 3 – Declaratory Relief
“To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party's] rights or obligations.’ ”” (Jolley v. Chase Home Fin., LLC (2013) 213 Cal. App. 4th 872, 909.) “Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs.” [Emphasis added.] Id. “A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a written instrument and requests that these rights and duties be adjudged by the court.” (Maguire v. Hibernia Sav. & Loan Soc. (1944) 23 Cal. 2d 719, 728.) “The purpose of a declaratory judgment is “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation.”’” (Id., at 729.)
Nothing in Civ. Code § 2924m gives an ownership interest to anyone that has not properly and timely bid pursuant to the terms of the code. As with the above COA, Plaintiff has failed to plead sufficient facts to support this COA. It is also uncertain as to the ownership interest for the named Defendants, and there appears to be a necessary party that Plaintiff failed to join.
The Demurrer is sustained as to this COA.
Plaintiff is given 20-days from written notice of the court’s ruling to file an amended complaint.
Defendants are ordered to give notice of this ruling.