Judge: H. Jay Ford, III, Case: 22SMCV00203, Date: 2023-11-28 Tentative Ruling

Case Number: 22SMCV00203    Hearing Date: November 28, 2023    Dept: O

Case Name:  8^th Street MB, LLC v. Grimm Investments, LLC, et al.

SUBJECT:                 MOTION FOR SUMMARY ADJUDICATION

MOVING PARTY:   Plaintiff 8^th Street MB, LLC

RESP. PARTY:         Defendant Grimm Investments, LLC

TENTATIVE RULING

Plaintiff 8^th Street MB, LLC Motion for Summary Adjudication on the First Cause of Action for Quiet Title is DENIED. Plaintiff 8^th Street MB, LLc does not meet their burden of persuasion that the language contained in the DIL and extension agreement is reasonably susceptible to 8^th Street’s interpretation. Thus, the Motion for Summary Adjudication as to the Quiet Title cause of action is denied as a matter of law.  

Plaintiff 8^th Street MB, LLC’s RJN is GRANTED.

Plaintiff 8^th Street MB, LLC’s Objections to the Miller Declaration Nos. 1–3, 16, and 17 are OVERRULED. Plaintiff 8^th Street MB LLC’s Objections to the Miller Declaration Nos. 4–15, and 18–20 are SUSTAINED.

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.’ [Citation.]” (Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1463; see also Nalwa v. Cedar Fair, L.P. (2012) 55 Cal.4th 1148, 1153–1154.) “A plaintiff moving for summary judgment establishes the absence of a defense to a cause of action by proving ‘each element of the cause of action entitling the party to judgment on that cause of action.’ [Citation.] The plaintiff need not, however, disprove any affirmative defenses alleged by the defendant. [Citation.] Once the plaintiff's burden is met, the burden of proof shifts to the defendant ‘to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’ [Citation.] In meeting this burden, the defendant must present ‘specific facts showing’ the existence of the triable issue of material fact.” (City of Monterey v. Carrnshimba (2013) 215 Cal.App.4th 1068, 1081.)  “The court's assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court's evaluation of the opposing party's papers.  Therefore, the burden on the motion does not initially shift as a result of what is, or is not, contained in the opposing papers.” (Mosley v. Pacific Specialty Insurance Company (2020) 49 Cal.App.5th 417, 434–435 [landlord’s failure to address issue of whether they were aware of their tenant’s marijuana growing operation was not grounds to grant summary judgment where moving party failed to satisfy its initial burden as to the issue]; Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1086-1087 [court cannot grant summary judgment based merely on lack of opposition; court must first determine if the moving party has satisfied its burden].)  

            “In general, the opposing party may not rely on the opposing party's own pleadings (even if verified) to oppose the motion. CCP § 437c(p); Roman v BRE Props., Inc. (2015) 237 CA4th 1040, 1054, 188 CR3d 537.) A plaintiff may rely on the plaintiff's pleadings to resist a summary judgment motion if the defendant's motion is based on the legal insufficiency of the plaintiff's claims as alleged. Hand v Farmers Ins. Exch. (1994) 23 CA4th 1847, 1853, 29 CR2d 258.” (Cal. Judges Benchbook Civ. Proc. Before Trial § 13.24 (2023).)

I.                Plaintiff’s Burden Moving For Summary Adjudication

Under CCP §761.020, the elements of a quiet title claim are (a) A description of the property that is the subject of the action; (b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title; (c) The adverse claims to the title of the plaintiff against which a determination is sought; (d) The date as of which the determination is sought; (e) A prayer for the determination of the title of the plaintiff against the adverse claims.  “An action may be brought under this chapter to establish title against adverse claims to real or personal property or any interest therein.” (Code Civ. Proc., § 760.020(a).) “The plaintiff may recover only upon the strength of his or her own title ... and not upon the weakness of the defendant's title. “Where the plaintiff relies on a paper title alone he must trace his title (1) to the government; or (2) to grantor in possession at the time of the conveyance to the plaintiff; or (3) to a source common to the chains of title of plaintiff and defendant.” (Ernie v. Trinity Lutheran Church (1959) 51 Cal.2d 702, 706.) In the context of summary judgment on a quiet title claim, the plaintiff bears "the burden to make a prima facie case of ownership." (Thompson v. Ioane (2017) 11 Cal.App.5th 1180, 1195.) Once established, the plaintiff must then show that its title is superior to that of the defendant. (Gerhard v. Stephens (1968) 68 Cal.2d 864, 918.)

Plaintiff 8^th Street MB, LLC (“8^th Street”) argues they have superior title to the Mulholland Property based upon CC § 2953 which allegedly voided the Original Deed in Lieu of Foreclosure Agreement, as modified of amended (“DIL Agreement”) and Deed in Lieu, and therefore, voided Grimm’s Title. (Motion, p. 22.) The parties agree that the application of CC § 2953 is an issue of law for the Court to decide based on the undisputed facts of the DIL agreement, the extension letters, and the recorded DIL.

Civil Code § 2953 states, “[a]ny express agreement made or entered into by a borrower at the time of or in connection with the making of or renewing of any loan secured by a deed of trust, mortgage or other instrument creating a lien on real property, whereby the borrower agrees to waive the rights, or privileges conferred upon the borrower by Sections 2924, 2924b, or 2924c of the Civil Code or by Sections 580a or 726 of the Code of Civil Procedure, shall be void and of no effect. (Civ. Code, § 2953, emphasis added.) Statutory interpretation is a matter of law for the Court to decide. (See Hernandez v. Modesto Portuguese Pentecost Assn. (1995) 40 Cal.App.4th 1274, 1280 [“Because liability in this case turns upon a question of statutory interpretation, it is a question of law for the court to decide in a summary judgment motion.”].)

“Interpretation of a written instrument becomes solely a judicial function only when it is based on the words of the instrument alone, when there is no conflict in the extrinsic evidence … But when, as here, ascertaining the intent of the parties at the time the contract was executed depends on the credibility of extrinsic evidence, that credibility determination and the interpretation of the contract are questions of fact that may properly be resolved by the jury.”  (City of Hope Nat'l Med. Ctr. v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.)

However, resolution of conflicting inferences based solely on the text of the contract remains solely a judicial function.  “When there is no material conflict in the extrinsic evidence, the trial court interprets the contract as a matter of law … This is true even when conflicting inferences may be drawn from the undisputed extrinsic evidence … or that extrinsic evidence renders the contract terms susceptible to more than one reasonable interpretation.”  (Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1126-1128.)

When a dispute arises over interpretation of a contract, “the first question to be decided is whether the language is ‘reasonably susceptible’ to the interpretation urged by the party. If it is not, the case is over. (citations) If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean. (citations).”  (Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 847–48.) 

8^th Street argues that by entering into the DIL agreement, 8^th Street consented to Defendants Grimm Investments, LLC (“Grimm”) forgoing the foreclosure process, which waived all statutory rights or privileges afforded to 8^th Street, with some rights being unwaivable under CC § 2953. (Motion, p. 24; SUF 97.) 8^th Street further argues the DIL agreement constitutes a renewal of the second loan thus deeming the DIL agreement null and void pursuant to CC § 2953. (Motion, pp. 24–25; SUF 114) 8^th Street argues the DIL agreement is a renewal because the loan terms were substantially modified. (Id.) 8^th Street argues that if the DIL is void, 8^th Street then holds superior title to Mulholland Property. 8^th Street cites to Taniguchi v. Restoration Homes, LLC (2019) 43 Cal.App.5th 478 to clarify the argument that the DIL agreement was a loan modification agreement subject to CC § 2953 rather than just a loan extension. As Plaintiff states, Taniguchi, deals with an actual loan modification agreement, not a Deed in Lieu, where the principal balance was adjusted, the interest rate plus monthly payments were reduced, the maturity time was increased, and the modification allowed lender to declare the agreement null and void upon borrowers failure to make modified payments. (Taniguchi, supra, 43Cal.App.5th at pp. 481–82.) 8^th Street compares the DIL here to the Taniguchi loan modification because:

(i.)            “the DIL Agreement imposed new substantive, payment obligations on the 2 Kealy Entities relating to the 2nd Loan, which were not connected to any existing payment-related terms of the 2nd Note or Junior Mulholland Deed of Trust” (Motion, p. 26–27.)

(ii.)          “in order to extend the Closing Date under the 15th Extension Notice, Grimm required the 2 Kealy Entities to remit the Extension Payment in the amount of $34,015.03 as a fee for the extension. (SUF 156.)” (Id.)

            However, Taniguchi does not deal with a Deed in Lieu of Foreclosure specifically, nor in this case was the interest rate adjusted, maturity time increased, or an actual modification added allowing lender any new privileges. Furthermore, all fifteen Extension notices provided by Grimm, and argued by 8^th Street to be a modification of the loan agreement, expressly stated “[t]he foregoing extension shall not be construed as an amendment to or waiver of any other provision of the Agreement or as a waiver of or consent to any further or future action on our part,” and “[e]xcept as expressly provided in this notice, all of the terms and provisions of the Agreement are and will remain in full force and effect.” (Plaintiff’s Compendium of Evidence, Exs. 22–32, 34–37, “15 Extension Agreements”.) The language of the 15 Extension Agreements is not reasonably susceptible to 8^th Street’s interpretation that the extension agreements are modifications or waivers. The language of the extension agreements expressly states they are not an amendment, or modification, nor are they a waiver, and thus CC § 2953 does not apply.

            Thus, 8^th Street has not met their burden to show the DIL agreement and CC § 2953 is reasonably susceptible to 8^th Street’s interpretation that is comes under the protections of CC § 2953. 8^th Street’s Motion for Summary Adjudication as to the Quiet claim cause of action fails as a matter of law, and is DENIED.