Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

This is a slander of title action.  Peter Nygard began investing through his company, Edson’s Investments, Inc. (“Edson”) in a venture to buy and build out commercial properties to operate medical cannabis businesses.  (Second Amended Complaint (“SAC”) ¶ 5.)  To carry out this venture, Nygard directed Edson to purchase real property located at 9450 Topanga Canyon Blvd, Chatsworth, California 91311 (the “Property”).  (Id. ¶ 6.)   

After Edson bought the Property, Nygard formed Plaintiff 9450 Topanga Properties LLC (“Topanga”) as a limited liability company.  (Id. ¶9.)  Edson was Topanga’s sole member.  (Id. ¶10.)  Edson conveyed the Property to Topanga by a grant deed.  (Id. ¶11.)   

Nygard then formed a company named NBH LLC (“NBH”).  Edson transferred its membership interest in Topanga to NBH.  (Id. ¶15.) 

Tina Tulikorpi was a founding member of NBH.  (Id. ¶16.)  Tulikorpi, acting on behalf of Topanga, signed a promissory note in the original principal amount of $7.4 million in favor of Defendant Nygard Foundation as lender (the “Note”).  (Id. ¶¶23024.) 

Defendant recorded a Deed of Trust with Assignment of Rents (“DOT”) against the Property.  The DOT purports to have been executed by Angela Dyborn as a Manager of Topanga.  (Id. ¶21.)  The DOT states it is made for the purpose of securing the payment of $7.4 million with interest according to the terms of the Note.  (Ex. D to SAC.) 

The operative second amended complaint alleges two claims: (1) disparagement of title and (2) quiet title.   

The Court previously sustained a demurrer to the first amended complaint which contained the same two claims as the SAC, concluding that Topanga cannot show slander of title where Topanga intentionally and with authority executed and delivered the DOT.  Topanga now brings the SAC, which is virtually identical to the FAC but with the addition of two paragraphs alleging that (1) Defendant was aware Tilikorpi was not authorized and approved by either Topanga or its sole member, NBH, to sign the Note (SAC ¶ 28), and (2) Defendant was aware that Angela Dyborn, was not authorized and approved by Topanga or its sole member, NBH, to sign the DOT.  (SAC ¶ 30.)   

This hearing is on Defendant’s demurrer to the SAC.  Defendant argues that (1) the slander of title claim fails because Topanga has not plead malice, publication, and proximate cause, all of which are essential elements of the claim, and (2) the quiet title claim fails because Topanga has not alleged facts to show the invalidity of the DOT, and the claim is uncertain because it seeks relief under both Civ. Code §§ 3412 and 760.020 which are two separate claims with different elements.   

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.) 

MEET AND CONFER 

 

Code Civ. Proc. § 430.41 requires that before the filing of a demurrer the moving party “shall meet and confer in person or by telephone” with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.  (Code Civ. Proc. § 430.41(a).)  The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc. § 430.41(a)(2).)  Thereafter, the moving party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc. § 430.41(a)(3).)  Defendant submits the Declaration of William Stoner, which shows the parties met and conferred by telephone at least five days before the demurrer was filed.  This is sufficient to satisfy the meet and confer requirements of Code Civ. Proc. § 430.41. 

DISCUSSION 

Slander of Title 

The elements of a cause of action for slander of title are: (1) a publication, which is (2) without privilege or justification and thus with express or implied malice, (3) false, either knowingly so or made without regard to its truthfulness and (4) causes pecuniary loss.  (Howard v. Schaniel (1980) 113 Cal.App.3d 256, 263-264.)   

An essential element of slander of title is malice.  “It is essential, however, to the maintenance of such an action that the party claiming to be aggrieved by an alleged slanderous disparagement of his title should show, among other things, not only that the statements complained of were false, but that they were maliciously made with the intent to defame and thereby disparage the title involved.”  (Howard, 113 Cal.App.3d at 263; see also Smith v. Commonwealth Land Title Ins. Co. (1986) 177 Cal.App.3d 625, 630-31 (demurrer sustained to cause of action for slander of title because plaintiff failed to allege malice by a title company); Hill v. Allan (1968) 259 Cal.App.2d 470, 490 (a false communication, by itself, does not indicate malice).) 

There are no reported California cases discussing the standard for pleading malice in a slander of title action.  The courts of other states have defined malice in the context of a slander of title claim as an intent to injure or deceive.  (Eastern Motor Inns, Inc. v. Ricci (R.I. 1989) 565 A.2d 1265, 1273); Wells Fargo Bank v. Country Place Condo Ass’n (Mich. Ct. App. 2014) 848 N.W. 2d 425, 433.)   

The SAC contains no allegation that the alleged slander was maliciously made by Defendant “with the intent to defame and thereby disparage the title involved.”  Mere knowledge by Defendant that Topanga’s officers did not have authority to execute the Note or the DOT is insufficient to plead an intent to injure or deceive.  There is no allegation here of conspiracy by Defendant to the creation of a phony document.   

With a single exception, there is no decision in California where the property owner signed the document which was alleged to disparage title to the property.  The exception is Wright v. Rogers (1959) 172 Cal.App.2d 349 where plaintiff unknowingly signed a grant deed.  There, the plaintiff, an unsophisticated widow, signed a grant deed transferring her property to the defendant.  The defendant used “artifice, trick and device … by means of manipulating and shuffling a sheaf of papers which were presented to plaintiff [by defendant] in such a manner that plaintiff unknowingly placed her signature on said grant deed, believing said document to be an entirely different instrument.”  (Id. at 359.)  The facts here do not come close to those in Wright.   

The Opposition argues that malice may be implied where there is an absence of privilege or justification.  (Gunder v. Manton (1943) 21 Cal.2d 537, 544.)  However, the Complaint does not allege an absence of privilege or justification.   

The next issue is whether publication has been pled.  The SAC alleges that Defendant recorded the DOT.  (SAC ¶ 20.)  However, the DOT states the recording was requested by The Document People, not Defendant.  (Ex. D to SAC.)  Since exhibits control over contradictory allegations in the pleading, the Court must ignore the allegation that Defendant recorded the DOT.  (Holland v. Morse Diesel Int’l Inc. (2001) 86 Cal.App.4th 1443, 1447.)   

The Opposition contends the Court should not resolve a dispute over the proper interpretation of the attached documents.  But there is no dispute on the face of the document.  The document is clear.  The Court is not choosing between two different interpretations.   

The Opposition also cites to a website for the proposition that the Document People is a company that charges flat fees for legal document preparation and recording, and “it cannot reasonably be disputed that somebody hired the Document People to record the DOT.”  These “facts” are not plead in the SAC.  The Court has not been asked to and could not take judicial notice of the website.  (LG Chem. Ltd. v. The Superior Court (2022) 80 Cal.App.5th 348, 362 fn. 7 (“We may not take judicial notice of the truth of the contents of a website.”).)   

The next issue is the proximate cause of the damages.  The SAC does not allege Defendant created the deed of trust, and an exhibit to the SAC shows Defendant did not record it.  Accordingly, any impairment of title is not legally caused by Defendant.   

Quiet Title 

Topanga’s second cause of action is labeled quiet title.  But it seeks “expungement of the Topanga DOT from title pursuant to Civil Code §3412.”  These are two separate causes of action with different elements. 

An action to quiet title requires that (1) the plaintiff is the owner of real property, (2) that defendant claims an interest in the property adverse to plaintiff without any right, and (3) that the defendant has no estate, title, or interest in the premises.  (Ephraim v. Metropolitan Trust Co. of California (1946) 28 Cal.2d 824, 833.) 

In contrast, Civ. Code §¿3412¿governs actions for cancellation of¿cloud on title.  It provides: “A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.” To plead the claim adequately, “the plaintiff must allege his title or interest in the affected property, and he must allege the facts concerning the particular instrument, its apparent validity, and its actual invalidity.”  (5¿Witkin, Cal. Procedure, Pleading, § 630 at 94 (4th ed. 1997).) 

Given the uncertainty in this second cause of action and which remedy Topanga is actually seeking, the Court sustains the demurrer with leave to amend.   

CONCLUSION 

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

   

IT IS SO ORDERED. 

 

DATED: December 12, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court