Judge David J. Cowan, Case Number: 18STPB04469, Date: 2024-03-01 Tentative Ruling

TENTATIVE RULING ON MOTION OF RESPONDENT FIDELITY NATIONAL TITLE INSURANCE COMPANY FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF ISSUES

Respondent Fidelity National Title Insurance Company, as successor-in-interest to Lawyers Title Insurance Corporation (“Fidelity”) contends that no relief can be granted to Petitioner Shelia Mitchell (“Shelia”) based on the causes of action to which it is a party because those are barred by a three-year statute of limitation, as well as lack of any justiciable controversy.[1] Shelia argues in response that the four-year statute applies and in the alternative that if the three-year statute applies, the statute did not begin to run until less than three years before filing of the petition when she contends she learned of the alleged fraud. Further, she contends there is an “actual and present” controversy for purposes of declaratory relief related to Fidelity’s claim of lien against the Property.

Hazel Winchester (“Hazel”) owned real property at 10610 S. St. Andrews Place in Los Angeles (“the Property”).

Hazel created the above-referenced Trust in 2004 and the Property was made an asset of the Trust.

Hazel had three children, Cynthia Wilburn (“Cynthia”), William Bernard Winchester (“Bernard”) and Shelia, each of whom was a one-third beneficiary of the Trust.

After Cynthia’s death, Bernard was not immediately able to take over as trustee and asked Shelia to act for him. Cynthia sought to sell the Property but when Bernard became aware of same the sale was cancelled and he took over his position as trustee.

In 2014, Ronald McCoy (“McCoy”), a friend of Bernard, moved into the Property.

Not being able to take monies out of the Property, Bernard asked McCoy to take out a loan under his name for the Trust, to which he agreed.

On September 15, 2014, Bernard executed a quitclaim deed to the Property to McCoy. (Ex. D to Shelia’s Opposition) In connection therewith, McCoy borrowed approximately $259,000 from Lantzman Lending secured by a deed of trust against the Property. On the same date, McCoy executed a quitclaim deed to the Property back to Bernard, as trustee of the Trust.

On September 17, 2014, according to Fidelity, the Trust was amended whereby McCoy became second successor trustee. (Ex. H to Shelia’s Opposition)

After payment of the existing loan and property taxes, the balance of $58,404.93 from the Lantzman loan was deposited into an account of the Trust at Wells Fargo Bank on which Shelia was signatory.

Shelia wrote checks from that account to herself, Bernard and others thereafter.

On June 9, 2016, a deed was executed by McCoy, whereby the Trust purportedly transferred the Property to McCoy. (Ex. I to Opposition).

On June 27, 2106, McCoy, acting as purported trustee of the Trust, executed a deed to the Property to himself, as a married man as his sole and separate property. (Ex. J to Opposition)

In November 2016, McCoy borrowed approximately $344,000 from United Mortgage, secured by a deed of trust against the Property, paying off the Lantzman loan and property taxes, and keeping the balance himself.

The United Mortgage loan was transferred to respondent Mid-America Mortgage, now known as Click N’ Close (“CNC”).

Going back in time, and on a different front, on September 16, 2010, Lawyers Title Ins. Co, predecessor-in-interest to Fidelity, obtained a default judgment against Mack McCoy, a person it contends is Ronald McCoy, in the amount of $343,639.00.[4] On September 2, 2011, Lawyers’ Title filed an abstract of judgment with the County Recorder.[5] Subsequent iterations of this abstract (including amendment of the judgment to include the name Ronald McCoy) were filed in 2013, 2017 and 2018.

On May 10, 2018, Shelia filed a petition for breach of trust, fraud, conversion, cancellation of instruments, declaratory relief, recover property and quiet title under Probate Code sec. 850 and for constructive trust. The petition is against among others Does 6 through 10 and all persons that may claim any right, title, lien or interest in the Property. Shelia claims wrongful actions by William and McCoy and seeks to undo both the deed of trust in favor of Lantzman recorded on September 22, 2014 and the deed of trust now in favor of CNC recorded on November 3, 2016.

In July 2019, Fidelity filed a notice and statement of lien in this case to recover from McCoy for any judgment in his favor.

On December 8, 2020, Fidelity filed an objection to the petition, including raising as an affirmative defense that the petition was barred by the statute of limitation.

On March 12, 2021, Shelia filed her verified first amended petition (“FAP”), seeking substantially similar relief, including against Lawyers Title and Fidelity as Does 6 and 7. Relevant here, both the seventh cause of action for declaratory relief and eighth cause of action to quiet title seek to set aside the various abstracts of judgment of Fidelity (in Exs. K though O to the FAP) as liens against the Property.[6] Paragraph 124 of the FAP alleges numerous reasons why Shelia contends the abstracts of judgment are not a valid lien against the Property.

On April 30, 2021, Fidelity filed its verified objection to the FAP, again asserting that the petition was barred by the statute of limitation.

On April 17, 2023, the Court filed an order granting a petition for approval of a settlement agreement between Shelia, CNC and Cierra, ultimately revised, whereby, among other terms not material here, Cierra disclaimed any claim of ownership to the Property, Cierra would transfer ownership of the Property to Shelia, as successor trustee of the Trust, in exchange for payment of $32,174.50 from any excess proceeds from sale of the Property, and would cause the Property to be listed for sale, all without prejudice to any claim of lien by Fidelity. In granting the motion, the Court stated it was not making any findings of fact or conclusions of law.

On November 3, 2023, Fidelity filed this motion for summary judgment, or in the alternative, for summary adjudication of the first and seventh causes of action.

Fidelity contends the first cause of action of the FAP for “breach of trust” is barred by the three-year statute of limitation for fraud in Code of Civil Procedure (“CCP”) sec. 338(d).[7] The basis of the motion is that the gravamen of the entire petition is wrongful actions by Bernard and McCoy to take monies from the Trust but that Sheila was aware of such alleged wrongdoing on September 24, 2014 (when money was deposited into the Trust bank account on which she was a signatory) (to start the statute running) – which would have required Shelia to file the petition no later than September 24, 2017. Shelia filed the initial petition on May 10, 2018.

Fidelity contends that the seventh cause of action in the FAP for declaratory relief to void judgment lien fails on the basis that there is no actual controversy as between Shelia and Fidelity.

On November 17, 2023, the Court set the hearing on this motion for February 20, 2024. Trial was set for April 8, 2024. By stipulation, the hearing was continued to March 1, 2024.

On the merits, Shelia contends that she told Bernard in 2014 that she did not agree to his borrowing against the Property (Decl., para. 15) but Bernard went ahead and did so without her knowledge or consent. (Decl., para. 19) She also contends that after Bernard died, she told McCoy in 2016 that she wanted to sell the Property but he told her he was now in charge of the Property. (Decl., paras. 22 and 24) She disputes McCoy ever becoming a trustee of the Trust. (Decl., para. 29) Shelia files a declaration of Brandon corroborating his aunt’s desire to then sell the Property. In summary, Shelia contends McCoy stole the Property from the Trust. She also filed a declaration of Cierra concluding that her father had no right to the Property and was not trustee. (Decl., para. 6)

Concerning the statutes of limitation, Shelia contends that there is a four-year statute of limitation – which would make the filing of the petition timely – or in the alternative, that if the three-year statute applies, the petition was still filed timely because the statute does not start running until 2016 when she was made aware of the alleged fraud in meeting with McCoy – which was less than three years before filing of the petition.

On February 23, 2024, Fidelity filed a Reply, together with Evidentiary Objections to the declarations filed in support of the opposition. The Reply addresses the merits of the case as opposed to stating anything further related to why the petition is barred by the statute of limitation that is the basis for this motion.

The Court has ruled on the evidentiary objections in the pleadings filed separately.

The first through sixth and ninth causes of action in the FAP are against McCoy, respondents other than Lawyers Title or Fidelity, and Doe trustees 1 through 5. The seventh cause of action for declaratory relief to void judgment lien is against Lawyers Title and Fidelity. The eighth cause of action to quiet title is against all respondents.

Notwithstanding that Fidelity is not named as a respondent to the first cause of action, the motion seeks summary adjudication as to that cause of action. It does so because it contends that the fraud alleged in that cause of action is why Shelia is contending its abstract of judgment is not a valid lien against the Property in the declaratory relief cause of action. Specifically, Shelia asserts that but for the wrongful actions of Bernard and McCoy, McCoy would not have been on title and therefore Fidelity’s judgment would not have attached to the Property by recording of an abstract. If Shelia’s claim in this regard is time-barred, she cannot then assert that Fidelity does not have a valid lien.

Assuming what Fidelity intended was to contend that Shelia cannot seek declaratory relief because she knew about the fraud more than three years before filing the petition, and the three-year statute of limitation would apply to the declaratory relief cause of action (to which Fidelity is a party),[8] the facts are nonetheless in dispute: On the one hand, Fidelity points to Shelia having “inquiry notice” about Bernard borrowing against the Property by reason of the money coming into the Trust bank account on which she was a signatory. In addition, McCoy testified to having informed Shelia about his then borrowing against the Property. On the other hand, Shelia asserts in her declaration that she did not know about Bernard having borrowed against the Property and that she specifically told Bernard she did not agree to his doing so. The Court cannot rule as a matter of law one way or another concerning what Shelia knew at that time, constructively or otherwise. It is at least possible that a jury or trier of fact might find even if she knew money came into the bank account that she did not know it was because of a loan against the Property or that Bernard would thereby try to defraud her and other beneficiaries. This is a credibility issue that cannot be decided on a motion for summary judgment.

Moreover, even if these facts concerning fraud were not reasonably in dispute, Shelia’s claim against Bernard and McCoy is not the sole basis for why Shelia is asserting Fidelity does not have a valid lien: Para. 124 of the FAP also asserts that it is not clear that the person against whom Lawyers Title obtained a judgment is the same person who held title to the Property. The motion does not address this further point with any supporting evidence. That Lawyers Title was able to secure amendment of the judgment to add McCoy’s name does not provide the evidence necessary to meet their burden of proof for summary judgment purposes that Shelia will not be able to show that they are not the same person, as she alleges.[9]

Furthermore, even assuming the order amending the judgment validly added McCoy’s name, this would still not entitle Fidelity to summary judgment: The Court disagrees with Fidelity that Shelia has not properly asserted a valid cause of action for declaratory relief. Fidelity argues that there is no present justiciable controversy that can be the basis for this cause of action and instead there is only a determination to be made of past events, i.e., the actions of Bernard and McCoy and recording of Fidelity’s lien. However, there remains an issue of quieting title and knowing who should receive any equity in the Property. These are not just a matter of damages.[10]

Though the Court does not now reach the merits, there is an “actual and present” dispute: On the one hand, Shelia contends that McCoy never had valid title to the Property, that the deeds to McCoy are voidable and therefore Fidelity does not have a valid lien attaching to the Property by reason of McCoy’s name having been as of record.[11] Contrary to what Fidelity argues in its Reply, the claim is not that Fidelity’s judgment against McCoy is invalid. On the other hand, Fidelity contends Shelia was actually and or constructively on notice of and benefitted from the actions of Bernard and McCoy in 2014, that therefore the deeds to McCoy should not be voided and that its lien is therefore valid. The Court will decide these issues after hearing the competing evidence at trial.[12]

Finally, the motion in any event does not address the eighth cause of action to quiet title. Though the FAP is not entirely clear whether that cause of action is directed to Fidelity’s lien claim, the Court cannot grant summary judgment as to that cause of action - that on its face makes claims concerning Fidelity’s claim of lien - where the motion did not seek that relief.

Consistent with the foregoing, the Court finds there are material factual issues as to the following facts as to which Fidelity contended that they were undisputed:

No. 5: Shelia’s deposition does not support the contention she admitted at her deposition that she wanted to obtain equity from the Property in 2014.

No. 7: Though McCoy testified that Shelia asked him to take out a loan against the Property, her deposition does not make that admission. Her declaration states she did not ask McCoy.

No. 9: Shelia’s deposition does not establish that she knew the details about the 2014 loan when the funds were deposited into the Trust account. She denied then knowing the details.

No. 12: As discussed above, there is a credibility issue concerning what Shelia knew about the details of the Lantzman loan in 2014. While she denies knowing them, the checks she wrote may indicate she did know.

No. 13: This erroneously assumes that Shelia would have asked where the monies were going when she had a third interest in the Property in that it is not established, as discussed above, that she knew the proceeds came from the Property.

No. 15: McCoy and Shelia have different accounts of what was discussed at the meeting they had after Bernard died.

No. 17: There are several disputes as to whether the document entitled “Amendment to Trust” designated McCoy as trustee, as outlined in the Responsive Separate Statement.

No. 18: Fidelity has not provided any evidence either that the Lantzman loan was coming due or that Shelia could not find anyone to take over the Property.

No. 21: As discussed above, there is a factual issue as to whether there was fraud or breach of fiduciary duty by Bernard and McCoy.

No. 23: Again, there is a factual issue related to whether Shelia was on “inquiry notice” as to any breach of trust.

No. 35: As discussed above, this is a legal issue over how to characterize the allegations in the FAP.

CONCLUSION

For these reasons, the Court denies both the motion for summary judgment and for summary adjudication of the first and seventh causes of action.

[1] For ease of reference, and without intending any disrespect, the Court refers to family members by their first name.

[2] Cynthia had two children, Brandon Wilburn and Deacalion Wilburn. Deacalion predeceased Cynthia, leaving two children: Daijah Wilburn and Faith Wilburn. Pursuant to Article 5 of the Trust, Brandon, Daijah and Faith stand to inherit Cynthia’s one-third interest in the Property.

[3] McCoy’s daughter, Cierra McCoy (“Cierra”), filed a Probate case (Case No. 20STPB03017) to administer her father’s assets, which included a claim to the Property. On August 5, 2020, the Court appointed Cierra as special administrator of Bernard’s estate.

[4] The motion does not attach the judgment itself nor provide any details concerning what led to Lawyers Title bringing the action that resulted in the judgment.

[5] On April 13, 2020, Fidelity renewed the judgment.

[6] However, only the prayer to the seventh cause of action addresses specifically Fidelity and the abstracts.

[7] Initially, it is not clear that Fidelity can move for summary judgment of the first cause of action when it is not a party to that cause of action. Seemingly, Fidelity is doing so to claim the three-year statute applies to the causes of action that are against Fidelity - asserting that courts are to look to the “gravamen” of the complaint to determine the relevant statute of limitation.

However, CCP sec. 343 provides a four-year statute of limitation for causes of action that have not otherwise been provided for in the Code. Fidelity does not address why the four-year statute would not apply to those causes of action, instead making a confusing argument related to a breach of fiduciary duty cause of action – as to which no specific statute of limitation applies. Here, the first cause of action is not one for breach of fiduciary duty to start with but for fraud and for fraud sec. 338(d) provides a three-year bar.

[8] The motion does not indicate what statute of limitation would apply to the declaratory relief (or quiet title) causes of action. The motion does not provide any applicable law that these causes of action would be governed by the three-year statute as opposed to the four-years provided by CCP sec. 343. See Howard Jarvis Taxpayers Ass’n v. City of La Habra (2001) 25 Cal.4^th 809, 821 (“Both mandamus and declaratory judgment are remedies available to enforce a variety of obligations; choice of the statute of limitations applicable to these remedies depends on the right or obligation sought to be enforced, and the statute's application generally follows its application to actions for damages or injunction on the same rights and obligations. (See 3 Witkin, Cal. Procedure (4th ed. 1996) Actions, §§ 624–625, pp. 802–806.)”)

Here, the gravamen of the declaratory relief cause of action – that is against Fidelity - is not that Fidelity committed fraud but that Bernard and McCoy did so. The gravamen of the declaratory relief cause of action is the validity of Fidelity’s claim of lien. Hence, the Court does not find that the three year-statute applies given the nature of the allegations in this case. (Thomson v. Canyon (2011) 198 Cal.App.4^th 594, 605-606)(where fraud is not gravamen of breach of fiduciary cause of action, four-year statute applies). Moreover, the motion is unclear as of what date it believes Shelia should have been on notice of its claim of lien. Fidelity did not file a Notice and Statement of Lien until July 2019; after the petition was filed.

[9] Shelia also raises an issue as to the validity of the 2011 and 2017 abstracts by reason of Fidelity allegedly knowing McCoy’s social security number and driver’s license number but not including those on the abstract, as required. (See Keele v. Reich (1985) 169 Cal.App.3d 1129) In addition, there is apparently a discrepancy in the social security numbers on the other abstracts.

[10] Fidelity relies on Jenkins v. JP Morgan Chase (2013) 216 Cal.App.4^th 497, 513 in this regard. But dismissal of the declaratory relief cause of action in Jenkins was specific to foreclosure procedures not in question here. The admonition of that court that the claim must have specific supporting facts is satisfied here as referenced above in para. 124 of the FAP. Moreover, the Calif. Supreme Court expressly disapproved Jenkins, supra, in Yvanova v. New Century Mortgage (2016) 62 Cal.4^th 919.

[11] She also asserts that Bernard could never have made McCoy a successor trustee – if in fact Ex. H does so – because by then (after passing of Hazel) the Trust was not subject to amendment. Further, under sec. 11.1 of the Trust, if Bernard was not the successor trustee, then Shelia became successor trustee. (On the other hand, Fidelity argues Bernard nonetheless had the power under sec. 11.2 of the Trust to designate a successor.)

[12] The Court also does not know what impact the validity of any lien in favor of Fidelity would have on CNC.