Judge: Gail Killefer, Case: 24STCV04269, Date: 2024-07-11 Tentative Ruling
Case Number: 24STCV04269 Hearing Date: July 11, 2024 Dept: 37
HEARING DATE: Thursday, July 11, 2024
CASE NUMBER: 24STCV04269
CASE NAME: Elana Cohen-Roth v. Direct Default Services, LLC, et al.
MOVING PARTY: Defendants Direct Default
Services, LLC and Esther Valenzuela
OPPOSING PARTY: Plaintiff Elena Roth
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Demurrer to First Amended
Complaint
OPPOSITION: 26 June 2024
REPLY: None
filed as of 07/08/2024 at 11:44 am.
TENTATIVE: Defendant DDS’s demurrer is sustained without
leave to amend. Defendant DDS to give
notice.
Background
On February 20,
2024, Elana Cohen-Roth (“Plaintiff”) filed a Complaint against Direct Default
Services, LLC; Ester Valenzuela (collectively “DDS”); and Does 1 to 50.
On March 20, 2024,
Plaintiff filed the operative First Amended Complaint (“FAC”) alleging four
causes of action: (1) Conversion, (2) Negligence, (3) Financial Elder Abuse
(Welf. & Ins. Code §15610.30); and (4) Declaratory Relief.
On May 28, 2024,
Defendant DDS filed a demurrer to the FAC. Plaintiff opposes the demurrer. The
matter is now before the court.
request
for JUDICIAL notice
The court may
take judicial notice of “official acts of the legislative, executive, and
judicial departments of the United States and of any state of the United
States,” “[r]ecords of (1) any court of this state or (2) any court of record
of the United States or of any state of the United States,” and “[f]acts and
propositions that are not reasonably subject to dispute and are capable of
immediate and accurate determination by resort to sources of reasonably
indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) “Taking
judicial notice of a document is not the same as accepting the truth of its
contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)
Defendant DDS
requests judicial notice of the
following:
1)
Exhibit A: A true and correct copy of the Petition and Declaration
Regarding Unresolved Claims and Deposit of Undistributed Surplus Proceeds of
Trustee’s Sale filed on or about March 11, 2024, in the Superior Court of Los
Angeles County, California as Case No. 24SMCP00138.
2)
Exhibit B: A true and correct copy of a Homestead Declaration recorded
December 12, 2022, as Instrument Number 20221158826 in the Official Records of
Los Angeles County, California.
3)
Exhibit C: A true and correct copy of a Notice of Attachment, Writ of
Attachment, Right to Attach Order recorded on November 2, 2020, as Instrument
Number 20201375621 in the Official Records of Los Angeles County, California.
Defendant’s request
for judicial notice is granted.
I. Legal Standard
Where pleadings are defective, a party may raise the defect
by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A
demurrer tests the sufficiency of a pleading, and the grounds for a demurrer
must appear on the face of the pleading or from judicially noticeable matters.¿
(CCP, § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In
evaluating a demurrer, the court accepts the complainant’s properly pled facts
as true and ignores contentions, deductions, and conclusory statements. (Daar
v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971)
5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff
will be able to prove the allegations or the possible difficulty in making such
proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d
590, 604.)
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to
show the Court that a pleading can be amended successfully. (Ibid.)
II. Demurrer[1]
A. Summary
of Allegations
Plaintiff is 78 years old and was the former
owner of a real property located in Marina del Rey (the “Property”). (FAC, ¶¶
1,4, 5) On or about April 20, 2024,
Defendant DDS conducted a nonjudicial foreclosure of the Property and paid off
the foreclosing third trust deed holder but did not pay Plaintiff the surplus
funds she was entitled to as the holder of the declared homestead trust. (FAC,
¶¶ 7, 15, Ex. B.) Plaintiff asserts she is entitled to the surplus proceeds
from the foreclosure sale in the sum of $844,824.07 due to her declared homestead interest
recorded on December 12, 2022. (FAC, ¶¶ 7, 17, Ex. A.)
Plaintiff filed this action on February
20, 2024, due to DDS's failure to give Plaintiff the surplus funds. Defendant
DDS now demurs to all causes of actions alleged in the FAC.
B. Defendant
DDS’s Statutory Compliance
Defendant DDS asserts that the FAC fails
because DDS complied with its statutory obligations as outlined in Civ. Code §
2924j(c). Defendant DDS asserts that there were surplus funds but that after
conducting due diligence, it received conflicting claims as to who is entitled
to the remaining surplus funds: (RJN, Ex. A.) Plaintiff
submitted an Affidavit of Claim for Surplus Funds on July 25, 2023, in the
amount of $845,174.07, based on a Declaration of Homestead recorded December
12, 2023. (RJN, Ex. B.) However, on August 22, 2022, Nancy Barr, a judgment
creditor and third-party beneficiary submitted a conflicting claim for
$1,566,664.45 based on a recorded writ of attachment dated November 2, 2020.
(RJN, Ex. A, C.)
As DDS was unable to determine the
priority of the written claims as to the surplus, DDS filed a declaration of
unresolved claims and deposited with the clerk of this court, a portion of the
sales proceeds as outlined by Civ. Code § 2924j(c). (RJN, Ex.
C.)
Civ. Code § 2924j (c) and (d) state in
relevant part:
(c) If, after due diligence, the
trustee is unable to determine the priority of the written claims received by
the trustee to the trustee’s sale surplus of multiple persons or if the trustee
determines there is a conflict between potential claimants, the trustee may
file a declaration of the unresolved claims and deposit with the clerk of the
superior court of the county in which the sale occurred, that portion of the
sales proceeds that cannot be distributed, less any fees charged by the clerk
pursuant to this subdivision. The declaration shall specify the date of the
trustee’s sale, a description of the property, the names and addresses of all
persons sent notice pursuant to subdivision (a), a statement that the trustee
exercised due diligence pursuant to subdivision (b), that the trustee provided
written notice as required by subdivisions (a) and (d), and the amount of the
sales proceeds deposited by the trustee with the court. Further, the trustee
shall submit a copy of the trustee’s sales guarantee and any information
relevant to the identity, location, and priority of the potential claimants
with the court and shall file proof of service of the notice required by
subdivision (d) on all persons described in subdivision (a).
The clerk shall deposit the amount with
the county treasurer or, if a bank account has been established for moneys held
in trust under paragraph (2) of subdivision (a) of Section 77009 of the
Government Code, in that account, subject to order of the court upon the
application of any interested party. The clerk may charge a reasonable fee for
the performance of activities pursuant to this subdivision equal to the fee for
filing an interpleader action pursuant to Chapter 5.8 (commencing with Section
70600) of Title 8 of the Government Code. Upon deposit of that portion of
the sale proceeds that cannot be distributed by due diligence, the trustee
shall be discharged of further responsibility for the disbursement of sale
proceeds. A deposit with the clerk of the court pursuant to this
subdivision may be either for the total proceeds of the trustee’s sale, less
any fees charged by the clerk, if a conflict or conflicts exist with respect to
the total proceeds, or that portion that cannot be distributed after due diligence,
less any fees charged by the clerk.
(d) . . .Within 90 days after
deposit with the clerk, the court shall consider all claims filed at least 15
days before the date on which the hearing is scheduled by the court . . .
(Italics added.)
Plaintiff’s opposition fails to address the
judicially noticed fact that DDS’s due diligence uncovered a competing claim to
the surplus funds and, according to its statutory duties, deposited the surplus
funds with the court.
C. First Cause of Action – Conversion
To plead a cause of action for conversion, one must allege
(1) the plaintiff’s ownership or right to possession of personal property; (2)
defendant’s disposition of the property inconsistent with plaintiff’s rights;
and (3) resulting damages. (Fremont Indemnity Co. v. Fremont General Corp.(2007)
148 Cal.App.4th 97, 119.)
As the court may take judicial notice of the fact that Nancy
Barr recorded a writ of attachment that precedes Plaintiff’s declaration of
homestead, the FAC fails to plead facts alleging she is the rightful owner or
entitled to possession of the surplus proceeds. (RJN, Ex. B, C.) Moreover,
after Plaintiff filed this action, DDS filed a “Petition and Declaration
Regarding Unresolved Claims and Deposit of Undistributed Surplus Proceeds of
Trustee’s Sale” and deposited the surplus funds with the Superior court of Los
Angeles County. (RJN Ex. A.) This filing is the proper subject of judicial
notice.
Accordingly, the court may take
judicial notice of the fact DDS exercised due diligence, found a competing
claim to the surplus funds, and pursuant to Section 2924j(c), deposited the
funds with the Superior Court. Plaintiff fails to show that DDS disposed of the
surplus funds in a manner that was inconsistent with Plaintiff’s rights.
Plaintiff disputes that Nancy Barr has a valid completing claim but asserts that,
even if this were true, DDS failed to timely comply with Civ. Code §
2924(j)(b). However, Civ. Code § 2924(j)(b) applies only if there is no
competing claim:
(b) The
trustee shall exercise due diligence to determine the priority of the written
claims received by the trustee to the trustee’s sale surplus proceeds from
those persons to whom notice was sent pursuant to subdivision (a). In the
event there is no dispute as to the priority of the written claims submitted to
the trustee, proceeds shall be paid within 30 days after the conclusion of
the notice period. If the trustee has failed to determine the priority of
written claims within 90 days following the 30-day notice period, then within
10 days thereafter the trustee shall deposit the funds with the clerk of the
court pursuant to subdivision (c) or file an interpleader action pursuant to
subdivision (e). Nothing in this section shall preclude any person from
pursuing other remedies or claims as to surplus proceeds.
(2924(j)(b) [italics added].)
As the surplus funds have been
deposited with this court in LASC Case No. 24SMCP00138, the determination of
who is entitled to the surplus proceeds transfers to the court. (Civ. Code, §
2924(j).) The FAC fails to allege facts showing DDS untimely deposited the
surplus funds with the court and constitutes wrongful dominion over the surplus
funds in a manner that is inconsistent with Plaintiff’s rights.
Therefore, the demurrer to the
first cause of action is sustained without leave to amend.
D. Second Cause of Action – Negligence
“The elements of a cause of
action for negligence are well established. They are (a) a legal duty to use
due care; (b) a breach of such legal duty; [and] (c) the breach as the
proximate or legal cause of the resulting injury.” (Ladd v. County of San
Mateo (1996) 12 Cal.4th 913, 917 [internal quotations omitted].) “A duty
may arise through statute, contract, or the relationship of the parties.” (Lichtman
v. Siemens Industry Inc. (2017) 16 Cal.App.5th 914, 920 [internal
quotations and citations omitted].) The existence of a legal duty is a question
of law for the court to decide. (Adams v. City of Fremont (1998) 68
Cal.App.4th 243, 265.) “However, the elements of breach of that duty and
causation are ordinarily questions of fact for the jury's determination.” (Vasquez
v. Residential Investments, Inc. (2004) 118 Cal.App.4th 269, 278.)
The second cause of action for
negligence hinges of DDS’s failure to distribute the surplus funds as required
by Civ. Code § 2924(K). Civ. Code § 2924(K) states in the relevant part:
(a) The trustee, or the clerk of the
court upon order to the clerk pursuant to subdivision (d) of Section 2924j,
shall distribute the proceeds, or a portion of the proceeds, as the case may
be, of the trustee’s sale conducted pursuant to Section 2924h in the following
order of priority:
(1) To the costs and expenses of
exercising the power of sale and of sale, including the payment of the
trustee’s fees and attorney’s fees permitted pursuant to subdivision (b) of
Section 2924d and subdivision (b) of this section.
(2) To the payment of the
obligations secured by the deed of trust or mortgage which is the subject of
the trustee’s sale.
(3) To satisfy the outstanding
balance of obligations secured by any junior liens or encumbrances in the order
of their priority.
(4) To the trustor or the trustor’s
successor in interest. In the event the property is sold or transferred to
another, to the vested owner of record at the time of the trustee’s sale.
As reflected above, Civ. Code § 2924(k)
requires that DDS comply with Civ. Code § 2924(j). As the FAC is devoid of any
references or allegations that DDS breached Civ. Code § 2924(j), the second
cause of action fails due to Plaintiff’s failure to show breach of duty. DDS
depositing of the surplus funds with the court is a judicially noticed fact
showing that DDS complied with the statutory requirements for disputed claims.
(Civ. Code, § 2924(j)(c).)
Accordingly, the demurrer to the second
cause of action is sustained without leave to amend.
E. Third Cause of Action – Financial Elder
Abuse
Section 15610.30
states:
“Financial abuse” of an elder or dependent adult occurs when
a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real
or personal property of an elder or dependent adult for a wrongful use or with
intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining,
or retaining real or personal property of an elder or dependent adult for a
wrongful use or with intent to defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or
assists in taking, secreting, appropriating, obtaining, or retaining, real or
personal property of an elder or dependent adult by undue influence . . . .
(Welf. & Inst. Code, §
15610.30.)
As stated above, a genuine
dispute exists as to whether Plaintiff is entitled to the surplus funds.
Accordingly, by determining that competing claims to the surplus funds exist
and depositing the surplus funds with this court, DDS complied with its statutory
obligations, precluding the showing the finding that DDS “[t]akes, secretes,
appropriates, obtains, or retains real or personal property of an elder” for
wrongful use or with the intent to defraud. (Welf. & Inst. Code, §
15610.30.)
Based on the above, the demurrer to
the third cause of action is sustained without leave to amend.
F. Fourth Cause of Action – Declaratory
Relief
To state a declaratory
relief claim, the plaintiff must allege a proper subject of declaratory relief
and an actual controversy involving justiciable questions relating to the
party’s rights or obligations. (See CCP § 1060; Jolley v. Chase Home
Finance, LLC (2013) 213 Cal.App.4th 872, 909.) “Where a trial court has concluded the
plaintiff did not state sufficient facts to support a statutory claim and
therefore sustained a demurrer as to that claim, a demurrer is also properly
sustained as to a claim for declaratory relief which is ‘wholly derivative” of
the statutory claim.’ ” (Ball v. FleetBoston Financial
Corp. (2008) 164 Cal.App.4th 794, 800.)
The fourth cause of action asserts that a
controversy exists between Plaintiff and Defendants regarding the surplus funds
and the parties' respective rights and obligations. (FAC, ¶ 46.) The relevant
provision of Civ. Code § 2924(j)(c) states: “Upon deposit of that portion of the sale proceeds that cannot
be distributed by due diligence, the trustee shall be discharged of further
responsibility for the disbursement of sale proceeds.” As DDS has deposited the funds with this
court, DDS is discharged of any responsibility related to the surplus funds.
Accordingly, there is no present controversy between DDS and Plaintiff and the
surplus funds. While
“Nothing in [Civ. Code §
2924j] shall preclude any person from pursuing other remedies or claims as to
surplus proceeds”, Plaintiff fails to show that she can continue to pursue
claims against DDS after the surplus funds have been deposited with the court.
(See Civ. Code, § 2924j.)
Therefore, the demurrer to the
fourth cause of action is sustained without leave to amend.
Conclusion
Defendant
DDS’s demurrer is sustained without leave to amend. The case is dismissed.
Defendant
DDS to give notice.