Judge: Michael Shultz, Case: 21CMCV00341, Date: 2023-08-22 Tentative Ruling
Case Number: 21CMCV00341 Hearing Date: October 26, 2023 Dept: A
[TENTATIVE] ORDER
[TENTATIVE] ORDER
[TENTATIVE] ORDER
I.
BACKGROUND
This
action arises from Defendants’ alleged failure to secure a loan for Plaintiffs
to purchase real property encumbered by a reverse mortgage in order to save the
property from foreclosure.
Defendants/Cross-Complainants,
Alfred Louis Wheeler, Better Net, Inc. dba Keller Williams Coastal Properties
(escrow agent and realtor) filed a first amended cross-complaint (“FAXC”)
against Clear Recon Corp. CeLink (new party) for implied and equitable
indemnity and declaratory relief. Cross-Complainants allege they were
retained by Plaintiff to market and sell the real property at issue. The
property was set to be sold at a foreclosure sale by Cross-defendants, Clear Recon,
acting on behalf of Cross-defendant, CeLink. Cross-Complainants allege Cross-Defendants
went forward with the sale although Cross-Complainants informed them that the
house was under contract and the sale should be postponed.
II.
ARGUMENTS
Cross-defendant,
Clear ReCon, argues it had no duty to postpone the Trustee’s sale since its
actions are privileged. Cross-defendant did not owe a duty to Cross-Complainants
or the Plaintiff. The claim for declaratory relief is based on the first cause
of action and also fails. The parties stipulated that Cross-Complainants could
file an amended cross-complaint, but not to add a new party, CeLink.
Cross-defendant,
CeLink, files a separate demurrer to the FAXC on the same grounds. CeLink also
moves to strike it as a Cross-defendant since Cross-Complainants did not ask
for leave to amend to add a new cross-defendant.
In
opposition, Cross-Complainants contend that Clear ReCon’s demurrer relies on
facts outside the FAXC. Both Cross-Defendants owe a statutory duty to
Cross-Complainants as well as Plaintiff to postpone the foreclosure sale
without a Court order where there is a mutual agreement to postpone. Since
Cross-Defendants owe a duty to Plaintiffs, they are jointly liable for
Plaintiffs’ damages. Alternatively, the Court should grant leave to amend.
Cross-Complainants
also argue that the motion to strike should be denied because the parties
stipulated that they could file an amended FAXC. It is in the interest of
justice to permit the addition of CeLink as a necessary party since Clear ReCon
was acting as CeLink’s agent.
In
reply, Clear ReCon states that Cross-Complainants did not dispute that it is
privileged from liability pursuant to the common-interest privilege. Cross-Defendants
are not obligated to postpone the sale based on “mere knowledge” of the sale of
the property to third parties.
III.
LEGAL STANDARDS
A demurrer tests the sufficiency of the
pleading as a matter of law and raises only questions of law. (Schmidt v. Foundation Health
(1995) 35 Cal.App.4th 1702, 1706.) In testing its sufficiency, the court must
assume the truth of (1) the properly pleaded factual allegations; (2) facts
that can be reasonably inferred from those expressly pleaded; and (3)
judicially noticed matters. (Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.) The Court may not consider contentions, deductions,
or conclusions of fact or law. (Moore v. Conliffe
(1994) 7 Cal.4th 634, 638.) The Cross-Complainant must show that the pleading alleges
facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the pleading fails
to state facts sufficient to constitute a cause of action, courts should
sustain the demurrer. (Code Civ. Proc., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)
IV.
DISCUSSION
As both demurrers raise identical issues concerning
the absence of facts alleged to support a duty owed by Cross-Defendants, the
Court will discuss both demurrers and motion to strike in one tentative.
The principle behind equitable indemnity
is to allocate loss among multiple tortfeasors on a comparative fault basis. (BFGC
Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852 ["The doctrine applies only among defendants
who are jointly and severally liable to the plaintiff."].) There must be
some basis for tort liability against the proposed indemnitor (ReCon). (Id.)
Cross-Defendants’ duty to indemnify Cross-Complainants
may arise “when in equity and good conscience” the burden of judgment in
Plaintiff’s favor should be lifted from Cross-Complainants and imposed on
Cross-Defendants. (Fireman’s
Fund Ins Co. v. Haslam
(1994) 29 Cal.App.4th 1347, 1353-1354.)
The right depends on the principle that everyone is responsible for the
consequences of his or her own wrong. (Id.) Therefore, if Cross-Defendants
are not jointly liable with Cross-Complainants for Plaintiff’s injuries, then Cross-Defendants
do not owe a duty to indemnify Cross-Complainants for damages sustained by
Plaintiff.
For equitable indemnity to apply, “there
must be some basis for tort liability against the proposed indemnitor (Cross-Defendants).
(BFGC
Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852 [“Generally, it is based on a duty owed to the
underlying plaintiff [citations omitted] although vicarious liability
[citations omitted] and strict liability [citations omitted] also may sustain
application of equitable indemnity.”].)
Civil
Code section 2924 deems the statutorily required mailing, publication, and
delivery of notices in nonjudicial foreclosure, and the performance of
statutory nonjudicial foreclosure procedures by the Trustee are privileged
communications under the qualified common interest privilege of section
47, subdivision (c)(1). (Kachlon
v. Markowitz (2008) 168 Cal.App.4th 316, 333.) However, Cross-Complainants
do not base their claims against Cross-Defendants for any conduct with respect
to required mailings and notices or the performance of their duties as articulated
by statute. Therefore, the common-interest privilege is not implicated by the
allegations. Rather, Cross-Complainants allege that Cross-Defendants provided
assurances that the foreclosure sale would be postponed but foreclosed on the
property. (Cross-complaint, ¶ 8-9.)
The
Notice of Trustee’s sale sent to Plaintiff identifies Clear ReCon as duly
appointed trustee under the Deed of Trust for the real property at issue.
(Complaint, Ex 9. .pdf 61.) Cross-Complainants allege that Clear ReCon acted on
behalf of and for the benefit of CeLink. (Cross-complaint, ¶ 5.) A foreclosure
trustee acts as a common agent for the trustor and beneficiary. The scope and
nature of the trustee's duties are exclusively defined by the deed of trust and
the governing statutes. No other common law duties exist. (Kachlon
at 335.)
A
trustee’s “only” duties are to take steps necessary to foreclose the deed of
trust and reconvey the deed of trust upon satisfaction of the secured debt. The
trustee is obligated to record the reconveyance within 21 days of receipt of
the pertinent documents. (Vournas
v. Fidelity Nat. Tit. Ins. Co (1999) 73 Cal.App.4th 668, 677.) However,
if there is a postponement of sale, including by instruction by the beneficiary
to the Trustee, the Trustee is obligated to postpone the sale "(A) Upon
the order of any court of competent jurisdiction; (B) If stayed by operation of
law; (C) By mutual agreement, whether oral or in writing, of any trustor and
any beneficiary or any mortgagor and any mortgagee; or (D) At the trustee’s
discretion.” (Civ.
Code, § 2924g.)
The
FAXC does not allege any of these circumstances that would impose an obligation
on Cross-Defendants to postpone. The FAXC alleges that Cross-Defendants had
knowledge of the pending sale to the third party but proceeded with the sale.
(FAXC ¶ 6.) Cross-Complainants also
allege that Cross-Defendants produced responsive documents indicating they were
“fully aware of the pending sale” and “had provided assurances the foreclosure
would be postponed.” (FAXC ¶ 8.) These allegations do not state the existence of
a mutual agreement between any of the parties described in the statute.
The
claim for declaratory relief seeks a judicial determination of the
Cross-Defendants’ duties and obligations to defend and indemnify
Cross-Complainants for the alleged misconduct. As this claim is derived from
the first cause of action for indemnity, which is not well stated, the
declaratory relief claim also fails.
With
respect to CeLink’s motion to strike, the parties stipulated to permit
Cross-Complainants to file a cross-complaint in order to bring causes of action
against Clear ReCon to avoid having to request leave to amend. (Stip. filed 1/25/23.)
Cross-Complainants did not seek leave to amend to add CeLink as a
cross-defendant. Cross-Complainants filed their answer on March 8, 2022, at
which time Cross-Complainants were also required to file their cross-complaint.
However,
leave to file or amend a Cross-Complaint may be
granted so long as the moving party acted in good faith. The statute is
liberally construed to avoid forfeiture. (Code
Civ. Proc., § 426.50). In the interest of conservation of judicial
resources, to avoid further motion practice, and because CeLink has not shown
any prejudice resulting from the addition of CeLink as a defendant, CeLink’s
motion to strike is DENIED. (Code Civ. Proc., § 436.)
V.
CONCLUSION
Based
on the foregoing, the Court SUSTAINS Cross-Defendants’ demurrers with leave to
amend for Cross-Complainants to state a factual basis for a duty owed by both
Cross-Defendants to Plaintiff and Cross-Complainants. The motion to strike is DENIED.