Judge Michael P. Linfield, Case 23STCV00752 2023-04-27 Tentative Ruling

Judge: Michael P. Linfield, Case: 23STCV00752, Date: 2023-04-27 Tentative Ruling

Case Number: 23STCV00752 Hearing Date: April 27, 2023 Dept: 34

SUBJECT: Demurrer and Motion to Strike

Moving Party: Defendants U.S. Bank, National Association; Rushmore Loan Management Services LLC; and Attorney Lender Services, Inc.

Resp. Party: None

SUBJECT: Demurrer

Moving Party: Defendants Southside Neighborhood Stabilization 2021-7 LP and Southside Community Development & Housing Corporation.

Resp. Party: None

U.S. Bank Defendants’ Demurrer is OVERRULED.

Southside Defendants’ Demurrer is OVERRULED.

U.S. Bank Defendants’ Motion to Strike is DENIED.

Plaintiff is ORDERED to verify his cause of action for quiet title within 30 days of the issuance of this Order.

PRELIMINARY COMMENTS:

1. This demurrer is unopposed, yet plaintiff has not indicated that he is planning on filing an amended complaint. The Court finds such silence to be troubling.

The Court recognizes that Plaintiff filed this complaint in pro per and that to the pro per litigant, “law and motion proceedings . . . are baffling devices. (Bruno v. Superior Court (1990) 219 Cal.App.3d 1359, 1363 [cleaned up].) Nonetheless, as indicated below, Plaintiaff is not new to the Court system, having been involved in numerous other cases involving the same issues as presented here.

If plaintiff believed that the demurrer should be overruled, he should have filed an opposition. If plaintiff agreed that the complaint needed to be amended or should be stayed, he should have so agreed when meeting-and-conferring with defendants. Had he done so, the court and its staff would not have had to spend the time analyzing a demurrer to a complaint that even plaintiff agrees must be stayed or amended.

2. The Court originally issued a tentative ruling on this matter that: (1) denied without prejudice the Demurrers and the Motion to Strike; and (2) stayed this case in its entirety pending the outcomes of Case Nos. 21SMCV00965, 21STCV32101, and 22SMUD00173.

At the original hearing on the Demurrers and the Motion to Strike, the moving Defendants waived their affirmative defenses of res judicata (both claim preclusion and issue preclusion) and instead requested that the Court solely reach the merits of whether Plaintiff has standing to bring this suit.

The Court issues this new ruling after taking the matter under submission.

BACKGROUND:

I. Preliminary Note on Background Issues

This case arises from transactions involving a single piece of real property: a single-family residence located at 2096 Ridge Point Drive, Los Angeles, California 90049. The claims and issues underlying this case appear to already been litigated multiple times by the same parties across multiple cases.

For the sake of clarity, the Court avoids using terms like “Plaintiff,” “Defendant,” “Cross-Complainant,” and “Cross-Defendant.” The Court uses the term “Subject Property” whenever it refers to the real property located at 2096 Ridge Point Drive, Los Angeles, California 90049.

Finally, the Court notes that there is some confusion across the filings about whether the name of one of the parties is “Leon Fingergut” or “Leon Fingerhut”. The Court uses “Leon Fingerhut”, as that appears to be the party’s name in instances when he submitted filings in propria persona.

II. Background for Case No. 23STCV00752

On January 13, 2023, Plaintiff Leon Fingerhut filed his Complaint against Defendants Southside Neighborhood Stabilization 2021-7 LP; Southside Community Development & Housing Corporation; U.S. Bank, National Association; Rushmore Loan Management Services LLC; and Attorney Lender Services, Inc. The causes of action listed in the Complaint arise from transactions involving the Subject Property.

On February 28, 2023, the Court found related cases Case Nos. 23STCV00752 and 21STCV32101. The Court also found that Case Nos. 21STCV32101 and 22SMUD00173 were effectively unrelated after a prior judicial officer working on these cases accepted a peremptory challenge in Case No. 22SMUD00173.

On March 9, 2023, in this case, Defendants U.S. Bank National Association, Rushmore Loan Management Services LLC, and Attorney Lender Services, Inc. filed: (1) Demurrer; and (2) Motion to Strike. These defendants concurrently filed their Request for Judicial Notice.

Also on March 9, 2023, in this case, Defendants Southside Neighborhood Stabilization 2021-7 LP and Southside Community Development & Housing Corporation filed their Demurrer. These defendants concurrently filed: (1) Declaration of Marshall J. August; and (2) Request for Judicial Notice (submitted in multiple volumes).

No oppositions, replies, or other responses have been filed to the Demurrers or the Motion to Strike in this case.

ANALYSIS:

I. Preliminary Note

For the ease of analysis, the Court first considers the Demurrers concurrently and then considers the Motion to Strike separately. The Court also uses the term “Defendants” when discussing both sets of defendants. When necessary and appropriate, the Court distinguishes the two sets of defendants by using the terms “U.S. Bank Defendants” and “Southside Defendants.”

II. Request for Judicial Notice

A. U.S. Bank Defendants’ Request for Judicial Notice

The U.S. Bank Defendants request judicial notice of five items.

The first two items are deeds recorded in the Official Records of Los Angeles County. The Court GRANTS judicial notice of these items.

The last three items are records for Case No. 21STCV32101 in the Los Angeles Superior Court. The Court DENIES as irrelevant judicial notice of these items. “Although a court may judicially notice a variety of matters (Evid. Code, §¿450 et seq.), only relevant material may be noticed” (Am. Cemwood Corp. v. Am. Home Assurance Co. (2001) 87 Cal.App.4th 431, 441, fn. 7.)

B. Southside Defendants’ Request for Judicial Notice

The Southside Defendants request judicial notice of 22 items.

The first six items are deeds, notice, and assignments recorded in the Official Records of Los Angeles County. The Court GRANTS judicial notice of these items.

Items 7 through 14, and Item 18, are records for Case No. 21STCV32101 in the Los Angeles Superior Court. The Court DENIES judicial notice of these items because they are irrelevant to the issues left in this demurrer. (See Am. Cemwood Corp., supra at 441, fn. 7.)

Items 15 through 17 are records for Case No. 22SMUD00173 in the Los Angeles Superior Court The Court DENIES judicial notice of these items because they are irrelevant to the issues left in this demurrer. (See Am. Cemwood Corp., supra at 441, fn. 7.)

Item 19 is a record filed in this case. The Court DENIES as superfluous judicial notice of this item. Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).)

Finally, Items 20 through 22 are records filed with the California Secretary of State. The Court GRANTS judicial notice of these items.

III. Demurrers

A. Legal Standard

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to challenge the truthfulness of the complaint; and for the purpose of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true, however improbable they may be. (Code Civ. Proc., §§ 422.10, 589.)

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. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A demurrer is brought under Code of Civil Procedure section 430.10 (grounds), section 430.30 (as to any matter on its face or from which judicial notice may be taken), and section 430.50(a) (can be taken to the entire complaint or any cause of action within).

A demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted. A demurrer for uncertainty (Code of Civil Procedure section 430.10, subdivision (f)), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Id.)

B. Discussion

Defendants initially made arguments regarding res judicata (both claim preclusion and issue preclusion) in the Demurrers. (U.S. Bank Defendants’ Demurrer, p. 4:3–5; Southside Defendants’ Demurrer, pp. 11–13.)

However, at the hearing on April 21, 2023, Defendants waived these affirmative defenses. Defendants requested that the Court solely reach the merits of Plaintiff’s standing to bring this suit.

Thus, the Court disregards all of Defendants’ arguments except those that involve standing.

1. Legal Standard

“Where the complaint states a cause of action in someone, but not in the plaintiff, a general demurrer for failure to state a cause of action will be sustained.” (Parker v. Bowron (1953) 40 Cal.2d 344, 351.)

“For purposes of this section:

(1) “‘Prospective owner-occupant’ means a natural person who presents to the trustee an affidavit or declaration, pursuant to Section 2015.5 of the Code of Civil Procedure, that:

(A) "They will occupy the property as their primary residence within 60 days of the trustee’s deed being recorded.

(B) “They will maintain their occupancy for at least one year.

(i) “The mortgagor or trustor.

[Other subdivisions omitted.]

(D) “They are not acting as the agent of any other person or entity in purchasing the real property.

(2) “‘Eligible tenant buyer’ means a natural person who at the time of the trustee’s sale:

(A) “Is occupying the real property as their primary residence.

(B) “Is occupying the real property under a rental or lease agreement . . . .

[Other subdivisions omitted.]

(3) “‘Eligible bidder’ means any of the following:

(A) “An eligible tenant buyer.

(B) “A prospective owner-occupant.

(C) “A nonprofit association, nonprofit corporation, or cooperative corporation in which an eligible tenant buyer is a voting member or director.

(D) “An eligible nonprofit corporation with all of the following attributes: [subdivisions omitted]

(E) “A limited liability company wholly owned by one or more eligible nonprofit corporations as described in subparagraph (C) or (D).

(F) “A community land trust, as defined in clause (ii) of subparagraph (C) of paragraph (11) of subdivision (a) of Section 402.1 of the Revenue and Taxation Code.

(G) “A limited-equity housing cooperative as defined in Section 817.

(H) “The state, the Regents of the University of California, a county, city, district, public authority, or public agency, and any other political subdivision or public corporation in the state.”

(Civ. Code, § 2924m, subd. (a)(1)–(3).)

“Title to the property shall remain with the mortgagor or trustor until the property sale is deemed final as provided in this section.” (Civ. Code, § 2924m, subd. (f).)

2. Discussion

The U.S. Bank Defendants argue: (1) that Plaintiff does not have standing to bring a quiet title claim because he has no legal interest in the Subject Property; (2) that Plaintiff does not have standing to bring a wrongful foreclosure claim because Plaintiff does not allege that he tendered the amount of the secured indebtedness or that the foreclosure deed is facially void; and (3) that Plaintiff has no standing to assert any of the causes of action as a co-trustor. (U.S. Bank Defendants’ Demurrer, pp. 4:20–28, 7:17–23, 10:16–17.)

The Southside Defendants argue that Plaintiff lacks standing pursuant to Civil Code section 2924m, subdivision (a), because he is a trustor and not an eligible bidder. (Southside Defendants’ Demurrer, pp. 12:12–19, 15:12–28, 16:1–28, 17:1.)

The Court disagrees with Defendants’ arguments.

Plaintiff alleged that he “obtained a loan from Washington Mutual Bank, FA (the ‘Loan’) to purchase the property.” (Complaint, ¶ 10.) Plaintiff then describes a series of assignments, notices, and deeds that occurred. Therefore, Plaintiff is a mortgagor. (The Court notes that it is not clear from the Complaint that Plaintiff is a trustor. This pleading is not identical to the pleading made by Gelena Gutlin in Case No. 21STCV32101, nor does it contain the same admission of being a trustor that was made in Gelena Gutlin’s Opposition to Demurrer, filed November 15, 2022.)

As Plaintiff has alleged that he is a mortgagor, he is prohibited from being a “prospective owner-occupant.” (Civ. Code, § 2924m, subd. (a)(1)(C)(i).) Similarly, Plaintiff is prohibited from being an “eligible tenant buyer.” (Civ. Code, § 2924m, subd. (a)(2)(C).) Finally, because Plaintiff is an individual (i.e., not a nonprofit, nonprofit corporation, cooperative corporation, limited liability corporation, community land trust, limited-equity housing cooperative, or public entity) who is prohibited from being a prospective owner-occupant or an eligible tenant buyer, he is not an “eligible bidder.” (Civ. Code, § 2924m, subd. (a)(3).)

Yet, contrary to Defendants’ arguments, that does not conclude the Court’s standing analysis.

Plaintiff retains rights as a mortgagor. “Title to the property shall remain with the mortgagor or trustor until the property sale is deemed final as provided in this section.” (Civ. Code, § 2924m, subd. (f).)

Among other things, Plaintiff is suing on an argument that “the trustee’s sale of the Property was not final on the date of the sale since a prospective owner-occupant was not the last and highest bidder.” (Complaint, ¶ 13.)

An action for quiet title is allowed “to establish title against adverse claims to real or personal property or any interest therein.” (Code Civ. Proc., § 760.020, subd. (a).)

Pursuant to Civil Code section 2924m, subdivision (f), Plaintiff has standing here because he has an interest in the title of the property until the property sale is deemed final. Plaintiff’s remedy is a quiet title action through Code of Civil Procedure section 760.020, subdivision (a).)

In addition, Plaintiff alleges that “Defendants caused an improper foreclosure sale of the Property. The sale and the resulting Trustee’s Deed are therefore void.” (Complaint ¶ 26.) Because the Court takes as true the pleaded allegations when considering a demurrer, this is sufficient for the cause of action for wrongful foreclosure to withstand demur.

Plaintiff Leon Fingerhut has standing as a mortgagor to bring this cause of action, and Plaintiff’s Complaint withstands demur to the causes of action for quiet title and wrongful foreclosure.

C. Conclusion

U.S. Bank Defendants’ Demurrer is OVERRULED.

Southside Defendants’ Demurrer is OVERRULED.

IV. Motion to Strike

A. Legal Standard

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)¿¿¿

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Mun. Ct. (1979) 99 Cal.App.3d 568, 575.)¿¿¿

B. Discussion

U.S. Bank Defendants move the Court to strike the quiet title cause of action because: (1) Plaintiff failed to verify the Complaint; and (2) the Complaint does not include the required description of the property or the titles Plaintiff seeks determination of. (Motion to Strike, pp. 3:6–10, 4:7–10.)

An action for quiet title is allowed “to establish title against adverse claims to real or personal property or any interest therein.” (Code Civ. Proc., § 760.020, subd. (a).)

“The complaint shall be verified and shall include all of the following:

(a) “A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.

(b) “The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession.

(d) “The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought.

(e) “A prayer for the determination of the title of the plaintiff against the adverse claims.”

(Code Civ. Proc., § 761.020.)

Regarding the descriptions, the Court disagrees with U.S. Bank Defendants. The Complaint sufficiently describes the Subject Property and the other required items. (Complaint, ¶¶ 9–12.)

Nonetheless, U.S. Bank Defendants is correct that the pleading is not verified. However, that is not sufficient for the Court to strike the cause of action at this time.

“The court must, in every stage of an action, disregard any error, improper ruling, instruction, or defect, in the pleadings and proceedings which, in the opinion of said court, does not affect the substantial rights of the parties.” (Code Civ. Proc., § 475; Cal. Const., Art. VI, § 13.)

“The judge cannot rely on the pro per litigants to know each of the procedural steps, to raise objections, to ask all the relevant questions of witnesses, and to otherwise protect their due process rights.” (Ross v. Figueroa (2006) 139 Cal.App.4th 856, 861.) Further, “[p]roviding access to justice for self-represented litigants is a priority for California courts.” (California Rules of Court, rule 10.960, subdivision (b).)

“[W]hen a litigant is self-represented, a judge has the discretion to take reasonable steps, appropriate under the circumstances and consistent with the law and the canons, to enable the litigant to be heard.” (See also ABA Model Code of Jud. Conduct, canon 2, rule 2.2, com. 4 [“[i]t is not a violation of this Rule [regarding impartiality and fairness] for a judge to make reasonable accommodations to ensure pro se litigants the opportunity to have their matters fairly heard”].) The canons and commentary thus provide a path to ensure a self-represented litigant can be fairly heard on the merits while the court maintains its impartiality and does not assume (or appear to assume) the role of advocate or partisan. (See Cal. Code Jud. Ethics, canon 3 [“a judge shall perform the duties of judicial office impartially, competently, and diligently”].)” (Holloway v. Quetel¿(2015) 242 Cal.App.4th 1425, 1434.)

Plaintiff is in propria persona and the lack the verification for the Complaint does not affect Defendants’ substantial rights. However, as the verification for the quiet title cause of action is jurisdictional, the Court will require Plaintiff to submit a verification within 30 days. If Plaintiff does not know how to verify a complaint, he should consult with a lawyer or self-help center.

The Court DENIES U.S. Bank Defendants’ Motion to Strike.

The Court ORDERS Plaintiff to verify his cause of action for quiet title within 30 days of the issuance of this Order.

C. Conclusion

U.S. Bank Defendants’ Motion to Strike is DENIED.

Plaintiff is ORDERED to verify his cause of action for quiet title within 30 days of the issuance of this Order.