Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Defendant Nygard Foundation 

 

RESPONDING PARTY: Plaintiff 9450 Topanga Properties, LLC 

 

BACKGROUND 

This is a slander of title action.  Plaintiff 9450 Topanga Properties LLC (“Topanga”) is the present owner of real property commonly known as 9450 Topanga Canyon Blvd, Chatsworth, California (the “Property”).  Topanga claims that a deed of trust recorded against the Property and in favor of Defendant Nygard Foundation (“Nygard”) as beneficiary has slandered Topanga’s title in the Property.   

As required in a demurrer, the Court accepts as true the following allegations in the Complaint:  Peter Nygard directed his company, Edson’s Investments, Inc. (“Edsons”) to purchase the Property.  (First Amended Complaint (“FAC”) ¶ 6.)  After Edsons purchased the Property, Topanga was formed as a limited liability company to hold title to the Property.  (Id. ¶9.)  Edsons was Topanga’s sole member.  (Id. ¶10.)  Edsons then conveyed the Property to Topanga by a grant deed.  (Id. ¶11.) 

Peter Nygard later formed a Delaware company named NBH LLC.  Edsons then transferred its membership interest in Topanga to NBH LLC. (Id. ¶15.) 

On or about May 11, 2020, Nygard recorded a Deed of Trust with Assignment of Rents (“DOT”) against the Property.  (Id. ¶20, Ex. D to FAC.)  The DOT was executed on March 26, 2020 by Angela Dyborn as manager of Topanga.  (Id. ¶21.)   

The form DOT states that it is made for “the purpose of securing … payment of the sum of $7,400,000.00 with interest thereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary [Nygard] and extensions or renewals thereof ….”  (Ex. D to FAC.)  Topanga alleges that it never authorized or received the loan of $7,400,000.  (FAC ¶¶ 25, 30.)  

The operative first amended complaint alleges claims against Nygard for (1) disparagement of title and (2) quiet title. 

This hearing is on Nygard’s demurrer.  Nygard demurs to the first cause of action for disparagement of title on the ground that Topanga itself executed the DOT, and there is no allegation the DOT was forged or Topanga was deceived in the making and delivery of the DOT.  Nygard demurs to the second cause of action for quiet title on the ground that Topanga does not allege facts as to why a DOT created with authority and delivered by Plaintiff is invalid and should be canceled. 

LEGAL STANDARD 

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable.  (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 (in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents).)  For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)  

A demurrer to a complaint may be general or special.  A general demurrer challenges the legal sufficiency of the complaint on the ground it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).)  A special demurrer challenges other defects in the complaint, including whether a pleading is uncertain. (Code Civ. Proc., § 430.10, subd. (f).)  The term uncertain means the pleading is “ambiguous and unintelligible.”  (Id.)  A demurrer for uncertainty should be sustained if the complaint is drafted in such a manner that the defendant cannot reasonably respond, i.e., the defendant cannot determine what issues must be admitted or denied, or what counts are directed against the defendant. (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”).)  The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

 

 

 

DISCUSSION 

Disparagement of Title 

Nygard argues that Topanga cannot show slander of title where Topanga intentionally and with authority executed and delivered the DOT.  The Court agrees. 

Slander of title is effected by one who “without privilege publishes untrue and disparaging statements with respect to the property of another under such circumstances as would lead a reasonable person to foresee that a prospective purchaser or lessee thereof might abandon his intentions.”  (Phillips v. Glazer (1949) 94 Cal.App.2d 673, 677.)  To state a claim for slander of title, a plaintiff must allege “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.”  (Schep v. Capital One, N.A. (2017) 12 Cal.App.5th 1331, 1336.) 

A deed of trust could be the vehicle by which title to real property is disparaged.  For example, a deed of trust with a forged signature which is created and recorded without knowledge of the trustor could slander title.   

There is no such conduct alleged in the FAC.  The FAC admits that the “Topanga DOT purports to have been executed … by Angela Dyborn as a Manager of Topanga.”  (FAC ¶21.)  There is no allegation that Dyborn’s signature was forged.   

Topanga has alleged that Dyborn had no authority to execute and deliver the DOT because the DOT needed to be authorized and approved by Topanga’s sole member, NBH LLC.  (FAC ¶¶ 28-29.)  But there is no allegation that Nygard knew Dyborn was acting without authority.   

Topanga is a limited liability company.  (FAC ¶ 1.)  Every manager is an agent of the limited liability company for the purpose of its business affairs.  (Corp. Code § 17703.01 subd. (b)(2).)  The “act of any manager, including, but not limited to, the execution in the name of the limited liability company of any instrument for apparently carrying on in the usual way the business and affairs of the limited liability company of which the person is a manager, binds the limited liability company” unless (1) the manager did not have authority to act “in the particular matter” and (2) “the person with whom the manager is dealing with has actual knowledge of the lack of authority.”  (Id.)   

Topanga concedes it has not alleged any facts showing Nygard knew Dyborn was acting without authority as it seeks leave to allege such additional facts.  (Opp. at 3:25-28.)  Accordingly, the demurrer is sustained as to Topanga’s first cause of action for disparagement of title.   

Quiet Title 

Nygard argues that the second cause of action for quiet title is in fact a claim to cancel an instrument pursuant to Civ. Code §3412, and such a claim cannot survive because Topanga has stated no facts showing that the DOT is actually invalid when it was created with authority and delivered by Plaintiff.  The Court agrees.   

“A suit to quiet title must be distinguished from an action to remove a cloud on the title alleged to have been created by a designated instrument.  In a suit to remove a cloud the complaint must state facts, not mere conclusions, showing the apparent validity of the instrument and point out the reason for asserting that it is actually invalid.”  (Ephraim v. Metropolitan Trust Co. of Cal. (1946) 28 Cal.2d 824, 833-834.)   

Here, Topanga has not alleged enough facts to show the instrument is actually invalid.  The DOT was signed by Topanga’s manager, and there is no evidence Nygard knew the manager had no authority to execute the DOT.  This claim fails for the same reasons as Topanga’s claim for disparagement of title.     

CONCLUSION 

Based on the foregoing, the Court SUSTAINS the demurrer with 20 days’ leave to amend.     

   

IT IS SO ORDERED. 

 

DATED: September 18, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court