Judge Michael P. Linfield, Case Number: 23STCV21920, Date: 2024-02-02 Tentative Ruling

Judge: Michael P. Linfield, Case: 23STCV21920, Date: 2024-02-02 Tentative Ruling

Case Number: 23STCV21920 Hearing Date: February 2, 2024 Dept: 34

SUBJECT: Demurrer to the Complaint

Moving Party: Defendant City of Los Angeles

Resp. Party: Plaintiffs Jose Luis Rodriguez and Guillermina Rodriguez

The Demurrer is SUSTAINED without leave to amend the Complaint.

BACKGROUND:

On September 12, 2023, Plaintiffs Jose Luis Rodriguez and Guillermina Rodriguez filed their Verified Complaint for quiet title and declaratory relief against Defendants City of Los Angeles, City of Los Angeles Housing Department, and All Persons Unknown, Claiming Any Legal or Equitable Right, Title, Estate, Lien, or Interest in the Property Described in the Complaint Adverse to Plaintiffs’ Title, or Any Cloud Upon Plaintiffs’ Title Thereto.

On November 16, 2023, Defendant City of Los Angeles (which includes City of Los Angeles Housing Department) filed its Demurrer to the Complaint. In support of its Demurrer, Defendant concurrently filed: (1) Declaration of Peter Walford; (2) Request for Judicial Notice; and (3) Proposed Order.

On January 9, 2024, Plaintiffs filed their Opposition to the Demurrer. In support of their Opposition, Plaintiffs concurrently filed: (1) Declaration of Kevin S. Sinclair; (2) Request for Judicial Notice; (3) Objection to Defendant’s Request for Judicial Notice; and (4) Proof of Service.

On January 16, 2024, Defendant filed its Reply in support of the Demurrer.

ANALYSIS:

I. Requests for Judicial Notice

A. Defendant’s Request for Judicial Notice

Defendant requests that the Court take judicial notice of: (1) City of Los Angeles Municipal Code, article 2, section 12.22.A25; and (2) Government Code sections 65915 through 65918, as of January 1, 2005 through December 13, 2005.

Plaintiffs object to the Court taking judicial notice of these items, claiming that “[t]he facts that allegedly emanate from these documents, pursuant to Defendants’ interpretation thereof, are not subject to judicial notice.” (Objection, p. 2:13–15.)

“While courts may notice official acts and public records, we do not take judicial notice of the truth of all matters stated therein. The taking of judicial notice of the official acts of a governmental entity does not in and of itself require acceptance of the truth of factual matters which might be deduced therefrom, since in many instances what is being noticed, and thereby established, is no more than the existence of such acts and not, without supporting evidence, what might factually be associated with or flow therefrom.” (Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063–1064 [cleaned up], overruled on other grounds by Lorillard Tobacco Co. v. Reilly (2001) 533 U.S. 525 and In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276.)

Judicial notice of these pieces of public statutory law of this state is required pursuant to Evidence Code section 451, subdivision (a). The Court would still take judicial notice of these items even if it were discretionary.

The Objection is OVERRULED. The Court grants judicial notice of these items.

B. Plaintiffs’ Request for Judicial Notice

Plaintiffs request that the Court take judicial notice of a deed of trust, a contract, a trustee’s deed upon sale, and a grant deed — all four of which have been recorded in the Official Records of Los Angeles County.

The Court grants judicial notice of these items.

II. Legal Standard

“The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of” various grounds listed in statute. (Code Civ. Proc., § 430.10.)

“When any ground for objection to a complaint, cross-complaint, or answer appears on the face thereof, or from any matter of which the court is required to or may take judicial notice, the objection on that ground may be taken by a demurrer to the pleading.” (Code Civ. Proc., § 430.30, subd. (a).)

“A demurrer to a complaint or cross-complaint may be taken to the whole complaint or cross-complaint or to any of the causes of action stated therein.” (Code Civ. Proc., § 430.50, subd. (a).)

“In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed. Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, citations and internal quotation marks omitted.)

III. Discussion

Defendant demurs to both causes of action in the Complaint.

A. Quiet Title

1. Legal Standard

“A cause of action to quiet title is clearly not a tort claim, and it does not seek to hold a defendant liable for damages. Rather, actions to quiet title, like true declaratory relief actions, are generally equitable in nature. A quiet title action is a statutory action that seeks to declare the rights of the parties in realty. The object of the action is to finally settle and determine, as between the parties, all conflicting claims to the property in controversy, and to decree to each such interest or estate therein as he may be entitled to. The purpose of a quiet title action is to determine any adverse claim to the property that the defendant may assert, and to declare and define any interest held by the defendant, so that the plaintiff may have a decree finally adjudicating the extent of his own interest in the property in controversy.” (Weeden v. Hoffman (2021) 70 Cal.App.5th 269, 291 [cleaned up].)

An action for quiet title may be brought “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, subds. (a)–(e).)

“[A] quiet title action against a possessor with claimed legal title may be maintained only by one with a right to immediate possession founded on legal title and may not be brought by a mere lienholder.” (Elbert, Ltd. v. McKenna (1953) 116 Cal.App.2d 480, 483, citation omitted.)

2. The Parties’ Arguments

Defendant demurs to the first cause of action for quiet title, arguing: (1) that the density bonus law applies to the property regardless of the foreclosure; (2) that the affordability covenant is part of land use regulation; (3) that allowing a foreclosure to wipe out the affordability covenant is contrary to the intent and purpose of the density bonus law; (4) that a covenant running with the land is not subject to foreclosure; (5) that equitable considerations weigh in favor of Defendant; and (6) that the Complaint is time barred. (Demurrer, pp. 6:2–3, 8:7–8, 10:18, 12:3, 12:19.)

Plaintiffs disagree, arguing: (1) that jurisprudence confirms that the contract at issue is extinguished; (2) that Defendant make novel arguments that are not viable; (3) that the contract at issue is not an exercise of police power; (4) that Defendant misconstrues the legislative intent here; (5) that the contract at issue is not a real covenant and is not immune from extinguishment by foreclosure; (6) that the Court may not weigh equitable considerations on quiet title claims, which are actions in law; and (7) that the statute of limitations argument lacks merit. (Opposition, pp. 8:14–15, 11:15, 11:23, 14:1, 15:4–5, 16:9–10, 16:22.)

In its Reply, Defendant argues: (1) that the affordability restriction is not just another stick in the bundle of rights; (2) that the Legislature’s command to ensure affordability would make little sense if the affordability covenant could be wiped out by foreclosure; (3) that the density bonus agreement touches and concerns the property; and (5) that Plaintiffs’ quiet title action is equitable in nature. (Reply, pp. 2:3, 2:27–28, 3:21, 4:9, 4:17.)

3. Legal Authority for Covenants

“Certain covenants, contained in grants of estates in real property, are appurtenant to such estates, and pass with them, so as to bind the assigns of the covenantor and to vest in the assigns of the covenantee, in the same manner as if they had personally entered into them. Such convenants are said to run with the land.” (Civ. Code, § 1460.)

“The only covenants which run with the land are those specified in this Title, and those which are incidental thereto.” (Civ. Code, § 1461.)

“Every covenant contained in a grant of an estate in real property, which is made for the direct benefit of the property, or some part of it then in existence, runs with the land.” (Civ. Code, § 1462.)

“The last section includes covenants “of warranty,” “for quiet enjoyment,” or for further assurance on the part of a grantor, and covenants for the payment of rent, or of taxes or assessments upon the land, on the part of a grantee.” (Civ. Code, § 1463.)

“A covenant running with the land binds those only who acquire the whole estate of the covenantor in some part of the property.” (Civ. Code, § 1465.)

“Each covenant, made by an owner of land with the owner of other land or made by a grantor of land with the grantee of land conveyed, or made by the grantee of land conveyed with the grantor thereof, to do or refrain from doing some act on his own land, which doing or refraining is expressed to be for the benefit of the land of the convenantee, runs with both the land owned by or granted to the covenantor and the land owned by or granted to the covenantee and shall, except as provided by Section 1466, or as specifically provided in the instrument creating such covenant, and notwithstanding the provisions of Section 1465, benefit or be binding upon each successive owner, during his ownership, of any portion of such land affected thereby and upon each person having any interest therein derived through any owner thereof where all of the following requirements are met:

“(a) The land of the covenantor which is to be affected by such covenants, and the land of covenantee to be benefited, are particularly described in the instrument containing such covenants;

“(b) Such successive owners of the land are in such instrument expressed to be bound thereby for the benefit of the land owned by, granted by, or granted to the covenantee;

“(c) Each such act relates to the use, repair, maintenance or improvement of, or payment of taxes and assessments on, such land or some part thereof, or if the land owned by or granted to each consists of undivided interests in the same parcel or parcels, the suspension of the right of partition or sale in lieu of partition for a period which is reasonable in relation to the purpose of the covenant;

“(d) The instrument containing such covenants is recorded in the office of the recorder of each county in which such land or some part thereof is situated.

“Where several persons are subject to the burden of any such covenant, it shall be apportioned among them pursuant to Section 1467, except that where only a portion of such land is so affected thereby, such apportionment shall be only among the several owners of such portion. This section shall apply to the mortgagee, trustee or beneficiary of a mortgage or deed of trust upon such land or any part thereof while but only while he, in such capacity, is in possession thereof.”

(Civ. Code, § 1468.)

“Covenants run with the land only if they are specified in the Civil Code or incidental to those specified in the code. (Civ. Code, § 1461.) Covenants for the direct benefit of the property run with the land if they are contained in a grant. (Civ. Code, § 1462.) Covenants which impose a burden upon the land run with the land if a written instrument between a grantor and a grantee or between owners of separate property meets all of the following requirements: (1) it must include a particular description of the land of the covenator and the land of the covenantee; (2) it must state expressly that successive owners of the land are to be bound by the covenant for the benefit of the land owned by or granted to the covenantor and the land owned by or granted to the covenantee; (3) it must establish a covenant which relates to the use, repair, maintenance or improvement of, or payment of taxes and assessments on, such land or some part thereof; and (4) it must be recorded in the county where the property is situated. (Civ. Code, § 1468.)” (Soman Props. v. Rikuo Corp. (1994) 24 Cal.App.4th 471, 481–482 [cleaned up].)

“A covenant running with the land is binding upon all subsequent purchasers of the covenantor’s property, including a foreclosure sale purchaser.” (Soman Props., supra, at p. 483, citing Civ. Code, § 1468 and Oceanside Cmty. Ass’n v. Oceanside Land Co. (1983) 147 Cal.App.3d 166, 175, 176, fn. 7.)

“There is no requirement that both parties sign the covenant for it to be enforceable.” (Oceanside Cmty. Ass’n, supra, at p. 175, citing Chandler v. Hart (1911) 161 Cal. 405.)

“Even when a covenant does not run with the land, it may be enforced against a transferee of the covenantor who takes with knowledge of its terms if it would be inequitable to permit him to avoid the restriction. Enforcement of these servitudes prevents unjust enrichment. Presumably, a purchaser who purchases land knowing it is burdened with a covenant will negotiate for a lower purchase price. To allow the purchaser to receive the benefit of the reduced price without the corresponding burden would constitute unjust enrichment at the expense of his neighbor who was relying on enforcement of the servitude.” (Oceanside Cmty. Ass’n, supra, at pp. 175–176, citations omitted.)

4. Discussion

For the purposes of a demurrer, the Court must assume the truth of the allegations pleaded by the non-moving party. Here, the Parties do not disagree on the relevant allegations pleaded:

(1) that there is a piece of real property (“the Property”) located at 443 West 49th Street, Los Angeles, California 90037;

(2) that on February 28, 2005, Non-Party Jose Benavidez owned the Property;

(3) that on February 28, 2005, Non-Party Jose Benavidez encumbered the Property with a deed of trust, recorded as Instrument No. 05 0441062 in the Official Records of Los Angeles County;

(4) that on January 18, 2006, Non-Party Jose Benavidez entered into an agreement with the City of Los Angeles and the Los Angeles Housing Department, recorded as Instrument No. 06 0119543 in the Official Records of Los Angeles County;

(5) that on November 26, 2013, HSBC Bank USA, National Association became the owner of the property via non-judicial foreclosure and trustee’s deed upon sale, recorded as Instrument No. 20131684571 in the Official Records of Los Angeles County; and

(6) that as of July 30, 2019, Plaintiffs own the Property by way of a grant deed, recorded as Instrument No. 20190748857 in the Official Records of Los Angeles County.

(Complaint, ¶¶ 1–5.)

Pursuant to Plaintiffs’ request, the Court has taken judicial notice of each of the four recorded instruments.

There are only two questions that need to be answered at this time: (1) whether the instrument recorded on January 18, 2006 is a covenant that runs with the land; and (2) if so, whether the foreclosure subsequent to the recording of that instrument extinguished the covenant.

a. The Covenant Runs with the Land

The agreement between Defendant and the former owner of the Property, Non-Party Jose Benavidez, is formally titled “City of Los Angeles Agreement Number 108560 of City Contracts Relating to a Rental Covenant and Agreement.” The agreement is signed by Non-Party Jose Benavidez and Defendant, dated June 16, 2005, and recorded January 18, 2006. The Court will refer to this agreement as “the 2006 Agreement.”

Since the 2006 Agreement includes burdens on the land, it must comply with all of the requirements of Civil Code section 1468 in order to be a covenant that runs with the land. (Soman Props., supra, 24 Cal.App.4th at pp. 481–482.)

First, the 2006 Agreement does describe the land at issue with particularity. (Decl. Sinclair, Exh. 2, sub-Exh. A [actual page 42 of 53].) The legal description is for 443 West 49th Street, and the particular description is as follows:

“LOT 85 AND THE WEST 2 FEET OF LOT 84 OF THE LENNOX FIGUEROA STREET TRACT, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 7 PAGE 88 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.”

Second, the 2006 Agreement does expressly bind the successive owners of the land. (Decl. Sinclair, Exh. 2, ¶ 10 [actual page 37 of 53].) The relevant section states:

“Successors and Assigns. This agreement shall be an equitable servitude and a Covenant running with the land as a burden on the Property [sic] shall be binding upon the owner and its successors and assigns in ownership of the property and shall be binding upon and inure to the benefit of City of Los Angeles, and its successors, and assigns in the ownership or administration of the adjacent public streets. City reserves the right to designate another public agency to perform City’s obligations or to exercise City’s rights under this Agreement.”

Third, the burdens placed on the Property in the 2006 Agreement relate to the use of the Property, including restrictions on one of the residential units in the Property that limit the eligibility of certain renters and the amount of rental payments that can be charged to such renters by owners of the Property. (Decl. Sinclair, Exh. 2, ¶¶ 4–7 [actual pages 33–36 of 53].)

Finally, the 2006 Agreement is recorded in the office of the recorder of the county in which the Property is situated. (Decl. Sinclair, Exh. 2, p. 1 [actual page 26 of 53].)

Since all the requirements of Civil Code section 1468 have been met here, the 2006 Agreement is a covenant that runs with the land.

b. The Foreclosure did not Extinguish the Covenant

Unlike certain liens, a covenant that runs with the land does not extinguish upon foreclosure. It is notable that the 2006 Agreement was not a lien. Rather, it is a covenant that benefitted the land in certain ways (by allowing for additional development of the property and providing a reduced parking variance, among other development incentives) while burdening the land in certain other ways (as discussed briefly above).

At this time, the Court need not, and does not, reach the other issues brought up by the Parties, including issues with the statute of limitations, the limits of the police power, the equitable nature of a cause of action for quiet title, and so on.

The Court SUSTAINS the Demurrer to the first cause of action for quiet title, without leave to amend the Complaint.

B. Declaratory Relief

1. Legal Standard

“To qualify for declaratory relief, a party would have to demonstrate its action presented two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909, quotation marks and brackets omitted.)

A cause of action for declaratory relief should not be used as a second cause of action for the determination of identical issues raised in another cause of action. (Gen. of Am. Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470.) “The availability of another form of relief that is adequate will usually justify refusal to grant declaratory relief” (Cal. Ins. Guar. Ass’n v. Super. Ct. (1991) 231 Cal.App.3d 1617, 1624), and a duplicative cause of action is subject to demurrer (Palm Springs Villas II Homeowners Ass’n, Inc. v. Parth (2016) 248 Cal.App.4th 268, 290).

Further, “there is no basis for declaratory relief where only past wrongs are involved.” (Osseous Tech. of Am., Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366, quotation marks omitted.)

2. Discussion

Defendant demurs to the second cause of action for declaratory relief on the basis that it is derivative of the first cause of action for quiet title. (Demurrer, p. 13:14–17.)

Plaintiff does not make any new arguments specifically for this cause of action.

The Court agrees with Defendant’s argument. For the same reasons discussed above regarding the first cause of action for quiet title, there is no basis for declaratory relief here.

The Court SUSTAINS the Demurrer to the second cause of action for declaratory relief, without leave to amend the Complaint.

IV. Conclusion

The Demurrer is SUSTAINED, without leave to amend the Complaint.

Since the Demurrer to all causes of action has been sustained without leave to amend, the case is dismissed.