Judge: David A. Rosen, Case: 19GDCV00061, Date: 2023-01-20 Tentative Ruling

Case Number: 19GDCV00061    Hearing Date: January 20, 2023    Dept: E

Hearing Date: 01/20/2023 – 2:00pm

Case No:         19GDCV00061           
Trial Date: 10/09/2023

Case Name: MEGA FINANCIAL LLC, TRUSTEE OF THE ROBLES TRUST DATED 07/26/2018 v. BARBARA WILLIAMS-BURRELL, et al.

CROSS DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ON THE FACC

Moving Party:  Cross-Defendants, Orange Coast Title Company of Southern California (Orange) and Real Advantage Title Insurance Company (Ratic) (collectively Orange and Ratic “Cross-Defendants”)

Responding Party: Cross-Complainant, Stockpile Property Ventures, LLC (Stockpile)

Proof of service timely filed (CRC 3.1300(c)): Ok

Correct Address (CCP §§ 1013, 1013(a)): Ok

Moving Papers: Notice of Motion/Memo; Separate Statement; Declaration of Jeremy T. Katz; Index of Evidence in Support of MSJ; Request for Judicial Notice

Opposition Papers: Memorandum in Opposition; Separate Statement of Disputed and Undisputed Material Facts; Request for Judicial Notice

Reply: Reply  

75/80 Days

Under 437c(2), notice of the motion and supporting papers shall be served on all other parties to the action at least 75 days before the time appointed for hearing. If the notice is served by mail, the required 75-day period of notice shall be increased by 5 days if the place of address is within the State of California. If the notice is served by facsimile transmission, express mail, or another method of delivery providing for overnight delivery, the required 75-day period of notice shall be increased by two court days. (CCP §437c(a)(2).)

Here, 75 days before the instant January 20, 2023 hearing would be Sunday, November 6, 2022. However, if service is by a method of delivery providing for overnight delivery, here email, the notice period shall be increased by two court days. With adding the two court days of Friday, November 4, 2022 and Thursday, November 3, 2022, the instant motion would have to have been served by Thursday, November 3, 2022. Here, since the moving papers were served by email on November 3, 2022, the instant motion is timely.

30 Days
The motion shall be heard no later than 30 days before the date of trial, unless the court for good cause orders otherwise. The filing of the motion shall not extend the time within which a party must otherwise file a responsive pleading. (CCP §437c(a)(3).)

Here, the trial date is scheduled for 10/09/2023. The instant motion is set for 1/20/23 and is thus timely.

RELIEF REQUESTED
Cross-Defendants, Orange and Ratic, move this Court for summary judgment with respect to the First Amended Cross-Complaint (FACC) of Cross-Complainant Stockpile.

This motion is made pursuant to Code of Civil Procedure § 437c on the grounds that the undisputed facts show Cross-Defendants are entitled to judgment on the FACC as a matter of law because (i) Stockpile’s title insurance policy only remained in force while Stockpile owned an interest in the subject real property; (ii) Stockpile conveyed its entire interest in the property to Mega Financial before any title issue came to light, and before Stockpile tendered its insurance claim to RATIC on August 28, 2018; and (iii) established case law holds that there was nothing wrongful, tortious, or “bad faith” about Cross-Defendants denying Stockpile’s post-conveyance title insurance claim when Stockpile’s policy does not provide any applicable post-conveyance coverage.

BACKGROUND
Plaintiff, Mega Financial LLC, Trustee of the Robles Trust Dated 07/26/2018 filed a verified First Amended Complaint (FAC) on 01/11/2021 for (1) Quiet Title, (2) Breach of Contract, (3) Restitution Based on Unjust Enrichment, and (4) Declaratory Relief.

Plaintiff named several Defendants in the FAC; one Defendant named was Stockpile.

On 06/22/2022, Stockpile filed a First Amended Cross-Complaint (FACC). Cross-Complainant, Stockpile, named several Cross-Defendants and asserted fifteen (15) causes of action. Two Cross-Defendants named were Orange and Ratic.

The third (Contribution/Apportionment of Fault), twelfth (Breach of Written Contract), thirteenth (Bad Faith Denial of Claim/Failure to Properly Investigate), fourteenth (Negligence), and fifteenth (Declaratory Relief) causes of action were asserted against both Orange and Ratic.

The fourth cause of action (Equitable Indemnification) was only alleged against Orange but not Ratic.

The general allegations in the FACC as pertaining to Orange and Ratic stem from Stockpile contending that Orange and Ratic wrongfully denied Stockpile’s title insurance claim.

LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”  (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

Code of Civil Procedure section 437c, subdivision (a) provides that “a party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding.” The motion shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c(c).) In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact. (Id.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

“A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (CCP §437c(p)(2).) To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (CCP §437c(f)(2).)

ANALYSIS
As established by Opposition’s Separate Statement, the following facts were undisputed by Opposing party.

In or around July 2018, Cross-Complainant Stockpile Property Ventures, LLC (“Stockpile”) purportedly purchased the subject real property in Pasadena, CA (the “Property”) from Barbara Williams-Burrell, and on July 26, 2018, a grant deed was recorded purporting to transfer Ms. Williams-Burrell’s title to Stockpile. (UMF 1.) As part of the purchase transaction, Stockpile obtained from OCTCSC [Orange] a RATIC-issued title insurance policy (the “Title Policy”). (UMF 2.) Stockpile sold the Property to Mega Financial LLC as Trustee of the Robles Trust dated 7/25/18 (“Mega”), and a grant deed purporting to convey title from Stockpile to Mega was recorded on August 14, 2018. (UMF 4.)

Under the title policy, seen in Exhibit 3 of the FACC, the relevant portion here is Section 2(b) “Continuation of Insurance.”

This section states as follows:

After Conveyance of Title by an Insured. The coverage of this policy shall continue in force as of Date of Policy in favor of an insured only so long as the insured retains an estate or Interest in the land, or hold an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of covenants of warranty made by the insured in any transfer or conveyance of the estate or interest. This policy shall not continue in force in favor of any purchaser from an insured of either (i) an estate or interest In the land, or (ii) an indebtedness secured by a purchase money mortgage given to an insured.

Cross-Defendants argue that they are not liable under the title policy because Stockpile did not : (1) retain any post-sale interest in the Property or (2) finance that purchase or hold any indebtedness secured by Mega’s purchase money mortgage.

The court finds these two arguments availing as demonstrated by the Opposition’s Separate Statement and Hovannisian v. First American Title Ins. Co. (2017) 14 Cal.App.5th 420 (Hovannisian).

As stated in Hovannisian:

“A title insurance policy is interpreted under ‘the well-established rules on interpretation of insurance agreements.’ ” (Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199 Cal.App.4th 1132, 1145, 131 Cal.Rptr.3d 596 (Dollinger ).) “In general, interpretation of an insurance policy is a question of law and is reviewed de novo under settled rules of contract interpretation. [Citations.] ‘The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the “mutual intention” of the parties. “Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. [Citation.] The ‘clear and explicit’ meaning of these **892 provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage’ [citation], controls judicial interpretation.” ’ ” (Ameron Intern. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1378, 118 Cal.Rptr.3d 95, 242 P.3d 1020 (Ameron Intern.).)

“An insurance policy provision is ambiguous when it is susceptible of two or more reasonable constructions. [Citation.] If ambiguity exists, however, the courts must construe the provisions in the way the insurer believed the insured understood them at the time the policy was purchased. (Civ. Code, § 1649.) In addition, if, after the court evaluates the policy's language and context, ambiguities still exist, the court must construe the ambiguous language against the insurer, who wrote the policy and is held ‘ “responsible” ’ for the uncertainty.” (Ameron Intern., supra, 50 Cal.4th at p. 1378, 118 Cal.Rptr.3d 95, 242 P.3d 1020.)

(Hovannisian v. First American Title Ins. Co. (2017) 14 Cal.App.5th 420, 430.)

As went undisputed in the Opposition’s Separate Statement: (1) After selling the Property to Mega, Stockpile did not retain any estate or interest in the Property (UMF 5); (2) Mega did not use a purchase money mortgage to purchase the Property from Stockpile, and Stockpile has never held an indebtedness secured by Mega’s purchase money mortgage for the Property (UMF 6); (3) Stockpile sold the Property to Mega Financial LLC as Trustee of the Robles Trust dated 7/25/18 (“Mega”), and a grant deed purporting to convey title from Stockpile to Mega was recorded on August 14, 2018 (UMF 4); (4) The first time that Stockpile learned of any potential problems with title to the Property was on August 25, 2018 (UMF 8); (5) August 28, 2018 was the first time that Stockpile submitted a claim to Cross-Defendants for coverage under the Title Policy (UMF 9); and (6) On or about September 19, 2018, Stockpile received Ratic’s claim denial correspondence, which stated, “…Stockpile no longer holds an interest in the land and is not a current insured under the terms of any title policy issued by Ratic. Thus, your claim on behalf of Stockpile is respectfully denied.” (UMF 10).

Opposition argues that UMF’s 4 – 10 are not material because (1) Stockpile suffered injury immediately when the forged deed was executed, with Stockpile having paid for the Subject Property without thereby receiving valid title; and (2) because the fact that Stockpile did not learn of its injury and did not make a title insurance claim until Stockpile had sold its interest to Mega does not render the insurance policy at issue invalid or expired.

The Court finds Stockpile’s arguments not on-point, unavailing, not based on applicable law, and not based on the plain language of the title policy at issue.

Opposition also attempts to argue that Cross-Defendants can be liable because of the language in section 2(b) of the title policy that states, “or only so long as the insured shall have liability by reason of covenants of warranty made by the insured in any transfer or conveyance of the estate or interest.”

Stockpile therefore attempts to argue that it can have liability to Mega because of covenants of warranty it made to Mega in the purchase agreement between Stockpile and Mega.

Stockpile’s argument is unavailing for several reasons.

First, as noted in the Reply, Stockpile did not proffer any facts or point to any language in the purchase agreement between Stockpile and Mega that shows that Stockpile made any covenants of warranty to Mega.

Second, the Reply notes that in the purchase agreement between Stockpile and Mega, Stockpile did not make any covenants of warranty to Mega. The Reply points the Court’s attention to sections 9(B)(2), 18(B), and 18(E) of the purchase agreement between Stockpile and Mega. [Stockpile included this purchase agreement in its Exhibit 3 within its Request for Judicial Notice. Exhibit 3 in Stockpile’s RJN is Mega’s verified FAC. Within the verified FAC is Exhibit 6 which is the purchase agreement between Stockpile and Mega.]

Section 9(b)(2) states, “Buyer shall pay for owner’s title insurance policy specified in paragraph 18E.” [In this case, the Buyer would have been Mega since the purchase agreement is between Stockpile and Mega.]

Section 18(B) states, “Title is taken in its present condition subject to all encumbrances, easements, covenants, conditions, restrictions, rights and other matters, whether of record or not, as-of the date of Acceptance except for: (i) monetary liens of record (which Seller is obligated to pay off) unless Buyer is assuming those obligations or taking the Property subject to those obligations; and (ii) those matters which Seller has agreed to remove in writing.”

Section 18(E) states, “Buyer shall receive a “CLTA/ALTA Homeowner’s Policy of Title Insurance”, if applicable to the type of property and buyer. A title company, at Buyer’s request, can provide information about the availability, desirability, coverage, and cost of carious title insurance coverages and endorsements. If Buyer desires title coverage other than that requested by this paragraph, Buyer shall instruct Escrow Holder in writing and shall pay any increase in cost.”

Therefore, as indicated by Cross-Defendants, Stockpile did not make any covenants of warranty to Mega.

Additionally, Stockpile’s attempts to distinguish Hovannisian are not persuasive.  Movants established that there are no triable issues of material fact in the operative cross-complaint as between movants and cross-complainant.  Thus, the burden to establish the existence of such issues shifted to cross-complainant.  Cross-complainant failed to meet its burden.

TENTATIVE RULING
Cross-Defendants’ motion for summary judgment as to all causes of action alleged against both Orange and Ratic is GRANTED. Cross-Defendants’ are not liable to Stockpile based on the language of the title policy and the undisputed material facts.  There are no disputed triable issues of material fact as between movants and cross-complainant.  Movants to prepare, serve, and submit proposed Judgments forthwith.

Both Cross-Defendants’ and Cross-Complainant’s requests for judicial notice are granted.