Judge Mitchell L. Beckloff, Case Number: 23STCV22065, Date: 2023-12-22 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 23STCV22065, Date: 2023-12-22 Tentative Ruling

Plaintiff, Raj C. Gupta, moves for a preliminary injunction enjoining Defendants, Denis Rediger, Daren Rediger, Rediger Investment Corp., and Olive Street Investors II LP (Defendants) from conducting any trustee’s sale of the real property located at 25736 Rancho Adobe Road, Santa Clarita, CA 91335 (Property) while this action is pending.

Defendants’ request for judicial notice (RJN) of Exhibits C, 1 through 19, and 22 are granted.

Defendants’ evidentiary objections: The following objections are sustained – 1, 2, 3, 4, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16 and 17. The following objection is overruled – 18. The following objections are sustained in part – 5 (at ¶ 90 as to “Julio Garcia . . . plaintiff” and “intentionally”; at ¶ 91 as to “intentionally” and “making his disclosure deceptive”; at ¶ 95) and 8 as to “reasonably and justifiably.” (The court notes argument is not properly recited in a declaration. See In re Marriage of Heggie (2002) 99 Cal.App.4th 28, 30 n. 3.)

Plaintiff’s application related to compelling discovery responses is denied without prejudice. Plaintiff’s request does not comply with relevant statutes related to discovery. (See Code Civ. Proc., § 2017.010 et seq.)

Plaintiff’s parents, Ramdas and Gunilla Gupta, purchased the Property in 1980. Plaintiff lived in the house on the Property, along with his parents and sister, when he was young. The Property has remained in the Gupta family since 1980. Plaintiff currently lives in the house on the Property with his wife and five-year-old son. (Gupta Decl. ¶¶ 3-4, Exh. B-D.)

At issue in this application for preliminary injunction is a $375,000 loan made by Defendants in or about April 2017. The loan is secured by the Property also dated April 2017. (See Application, “Additional Exhibits part 1 of 2,” Note and Deed of Trust for the Property.)

In this action, Plaintiff disputes the validity of the deed of trust encumbering the Property. Plaintiff contends when he was signing papers related to a different real property (24603 Saint Denis Court in Valencia, California), Defendant Julio Garcia, a real estate broker, concealed that certain papers related to the Property were “tucked below” the “Saint Denis papers.” Petitioner alleges he did not intend to sign the deed of trust and “[h]ad the omitted information been disclosed, plaintiff knowingly would not have signed or dated the 4-3-2017 Rancho Adobe papers that were tucked below the Saint Denis papers on that 4-3-2017 day.” (Second Amended Complaint [SAC] ¶¶ 87-90, 94.)

with intent to defraud plaintiff, [Defendant] REDIGER's [sic] had directed their business partner defendant Julio Garcia that when plaintiff signs the Saint Denis papers on 3 April 2017 to also have in the same stack of Saint Denis papers some Rancho Adobe papers below the Saint Denis papers so that plaintiff will unknowingly be signing some Rancho Adobe papers at same time plaintiff is signing the Saint Denis papers. And Julio Garcia did as instructed by the REDIGER's, whereby on 3 April 2017 plaintiff unknowingly signed some Rancho Adobe papers that were tucked below the Saint Denis papers. (SAC ¶ 95.)

In December 2017, Defendants recorded a Notice of Trustee’s Sale for the Property. (RJN Exh. 11.) Plaintiff attests at that time he learned the Property was “involved in some kind of jeopardy, that something was wrong.” (SAC ¶ 99 [verified complaint].)

On July 12, 2018, Plaintiff filed for bankruptcy protection under Chapter 13. Importantly, under penalty of perjury, Plaintiff listed Defendants as creditors with a claim secured by property. Plaintiff’s bankruptcy schedules reported Defendants had a claim for $410,500 secured with a first deed of trust on the Property. Although he had the opportunity to do so, Plaintiff did not attest Defendants’ claim was contingent, unliquidated or disputed. (RJN Exh. 12 and Exh. 13, pp. 391-392.)

Plaintiff had counsel representing him in his bankruptcy case. (RJN Exh. 13, p. 424.) Plaintiff’s verification of the master mailing list of creditors included his counsel and Defendants. (RJN Exh. 13 pp. 424-426.)

Plaintiff voluntarily dismissed the Chapter 13 bankruptcy in or about January 2019. (RJN Exh. 19.)

On January 25, 2019, Plaintiff’s mother, Gunilla Gupta, filed a complaint entitled Gunilla Gupta v. Rediger Investment Corporation, et al., LASC Case No. 19STCV02403 (Gunilla Action). In April and August 2019, respectively, she filed a first amended complaint, and after Responding Defendants’ demurrer was sustained, a second amended complaint. (RJN Exh. 1-4.) The Gunilla Action involved the same property at issue in the instant litigation. In her second amended complaint, Gunilla Gupta alleged causes of action for slander of title, quiet title, declaratory relief, cancellation of written instrument, and unfair business practices. (RJN Exh. 1-4.)

On January 8, 2020, Defendants filed a cross-complaint against Plaintiff for fraud, equitable indemnity, comparative implied indemnity and contribution, apportionment of liability, declaratory relief, and equitable subrogation in the Gunilla Action. (RJN Exh. 6.) Plaintiff, who was then represented by counsel, answered the cross-complaint. (RJN Exh. 7.)

Shortly before trial in the Gunilla Action, Plaintiff’s attorney made a motion to withdraw based upon an actual conflict involving Gunilla Gupta and Plaintiff which she could not disclose. On June 21, 2023, counsel made a Motion to Withdraw. The court granted the motion on August 24, 2023. (Willens Decl. ¶ 6; RJN Exh. 10.)

Gunilla Gupta did not appear in any pre-trial proceedings. (Willens Decl. ¶ 6.). At the final status conference on October 19, 2023, after giving notice, the Court dismissed the third amended complaint filed by Gunilla Gupta without prejudice. (Willens Decl. ¶ 6; RJN Exh. 8-9.)[1]

On September 13, 2023, shortly before dismissal of the Gunilla Action, Plaintiff filed his original, verified complaint in the present action (23STCV22065). On October 16, 2023, Plaintiff filed his first amended verified complaint.

On October 19, 2023, Defendants recorded a new Notice of Trustee’s Sale for the Property noting Plaintiff was in default on a deed of trust dated April 3, 2017. The notice specified an unpaid balance of $1,589,473.56 and a sale date of November 28, 2023. (Appl. Exh. A.)

On November 2, 2023, with leave of court, Plaintiff filed the operative, SAC. As relevant to the application for a preliminary injunction, the SAC includes causes of action against Defendants for: conspiracy and aiding and abetting torts (with business partner Julio Garcia); slander of title; declaratory relief; cancellation of written instrument; unfair business practices; and violation of the California Homeowner Bill of Rights.

On November 21, 2023, shortly before the trustee’s sale, Plaintiff filed an ex parte amended application for temporary restraining order and order to show cause re: preliminary injunction. Rediger Defendants opposed the ex parte.

On November 27, 2023, the court granted Plaintiff’s ex parte application for a TRO, set an order to show cause (OSC) re: preliminary injunction for December 22, 2023 and a briefing schedule. On November 27, 2023, Plaintiff filed “additional exhibits” in support of the application for preliminary injunction. On December 12, 2023, Defendants filed an opposition to the OSC, evidentiary objections, a request for judicial notice, and opposing evidence. On December 18, 2023, Plaintiff filed a reply to Defendants’ opposition to the OSC.

The standards governing a preliminary injunction are well known. “[A] court will deny a preliminary injunction unless there is a reasonable probability that the plaintiff will be successful on the merits, but the granting of a preliminary injunction does not amount to an adjudication of the merits.” (Beehan v. Lido Isle Community Assn. (1977) 70 Cal.App.3d 858, 866.) “The function of a preliminary injunction is the preservation of the status quo until a final determination of the merits.” (Ibid.)

As the parties recognize, “Trial courts traditionally consider and weigh two factors in determining whether to issue a preliminary injunction. They are (1) how likely it is that the moving party will prevail on the merits, and (2) the relative harm the parties will suffer in the interim due to the issuance or nonissuance of the injunction.” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) “[T]he greater the . . . showing on one, the less must be shown on the other to support an injunction.” (Ibid. [quoting Butt v. State of California, (1992) 4 Cal.4th 668, 678].) “However, ‘[a] trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.’ ” (Law School Admission Council, Inc. v. State of California (2014) 222 Cal.App.4th 1265, 1280 [quoting Butt v. State of California (1992) 4 Cal.4th at 678].)

The burden of proof is on the plaintiff as the moving party “to show all elements necessary to support issuance of a preliminary injunction.” (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See e.g., Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.) A plaintiff seeking injunctive relief must also show the absence of adequate damages remedy at law. (Code Civ. Proc. § 526, subd. (a)(4).)

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. (See Code Civ. Proc. § 529, subd. (a); City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal. App. 4th 916, 920.)

Plaintiff’s Causes of Action for Slander of Title, Cancellation of Written Instrument and Fraud

In his ex parte application, Plaintiff relies primarily on his cause of action for slander of title to support his position he is likely to prevail on the merits of his claim. (Ex Parte 12-13.)

“Slander or disparagement of title occurs when a person, without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof ‘some special pecuniary loss or damage.’ [Citation.] The elements of the tort are (1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss. [Citations.] If the publication is reasonably understood to cast doubt upon the existence or extent of another's interest in land, it is disparaging to the latter’s title.” (Sumner Hill Homeowners’ Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1030.)

The SAC also includes a cause of action for cancellation of written instrument. (SAC ¶¶ 233-249.) Civil Code section 3412 provides:

A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.

A central allegation of these causes of action is that “Defendants have commenced unlawful foreclosure proceedings against the Plaintiff's Home through the execution and recordation of a fraudulently obtained Deed of Trust.” (SAC ¶ 236; see SAC ¶¶ 222-225.) Allegations that Defendants fraudulently obtained and recorded a deed of trust on the Property are throughout the SAC. (See e.g. SAC ¶¶ 87-95, 206-215, 258.) In the verified SAC, Plaintiff alleges, among other things, that at a document signing in April 2017 real estate broker Julio Garcia concealed that “4-3-2017 Rancho Adobe papers” were “tucked below the Saint Denis papers,” causing Plaintiff to sign the Rancho Adobe papers, including the deed of trust dated April 3, 2017. (SAC ¶¶ 92-95.) Relatedly, in his declaration in support of his ex parte application, Plaintiff declares that “obtaining plaintiffs signature on 4-3-2017 DOT through Fraud and Deceit voids an alleged contract.” (Gupta Decl. ¶ 15.)

It appears Plaintiff contends the deed of trust resulted from “fraud in the execution.” “California law distinguishes between fraud in the ‘execution’ or ‘inception’ of a contract and fraud in the ‘inducement’ of a contract. In brief, in the former case ‘the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case it may be disregarded without the necessity of rescission.’ ” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415.)

Defendants object to paragraphs 87-95 of the SAC, which are incorporated in paragraph 15 of Plaintiff’s declaration. The court largely overruled Defendants’ objections. While the court finds the evidence rather conclusory and not particularly detailed or clear, the court cannot find most of the statements are so conclusory or so lacking in foundation that they must be stricken. The evidence is not hearsay. Further, Plaintiff’s description of the signing of documents with Julio Garcia is discussed in his deposition testimony, which Defendants themselves submit into evidence and to which there is no evidentiary objection. (See Opposition Exh. 21.)

Defendants also argue “the documents themselves show they were executed on different days, with different notaries, making Raj’s contention [of fraud] in this regard highly suspect.” (Opposition 8:20-21.) The court agrees the notarization by different persons, on different days, raises significant credibility questions with Plaintiff’s testimony he was deceived into signing the April 3, 2017 deed of trust for the Property. (See Application, “Additional Exhibits part 1 of 2” [Saint Denis Deed of Trust notarized on April 3, 2017 by Janet Cerswell; Property Deed of Trust notarized on April 4, 2017 by Shirley Amaya].)

Further, Plaintiff’s failure to raise his claim of fraud earlier, for instance in his bankruptcy proceedings or in the Gunilla Action, also raises substantial questions about the credibility of Plaintiff’s evidence at paragraphs 87-95 of the SAC as well as paragraph 15 of his declaration. The court also notes Plaintiff’s evidence is conclusory in nature. Plaintiff repeatedly refers to “Rancho Adobe papers,” but does not fully explain or show which papers were signed when and which papers were allegedly “tucked below” the Saint Denis papers. (SAC ¶¶ 87-95.) Plaintiff also does not identify any evidence suggesting Defendants knew of any alleged fraud by Julio Garcia.

Despite the foregoing, Defendants do not develop a persuasive argument Plaintiff lacks any evidence of fraud in the execution of the April 3, 2017 deed of trust. Rather, Defendants rely entirely on affirmative defenses to Plaintiff’s claim. Although Plaintiff’s claim is rather anemic, he may have at least some evidence—his own testimony—to support his claim that the April 3, 2017 deed of trust was obtained by fraud in the execution.

Defendants contend Plaintiff waived his causes of action because he failed to plead them as cross claims in the Gunilla Action.

Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.

Code of Civil Procedure section 426.10, subdivision (c) defines “related cause of action” as “a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.”

“If the claim has not been pleaded by the time the case goes to trial, judgment in the underlying action will bar later recovery by the party on the related claim. Once judgment is entered, the party cannot assert his or her unpleaded claim in a separate lawsuit.” (City of Hanford v. Sup.Ct. (1989) 208 Cal.App.3d 580, 587.)

For purposes of this application, Defendants have not sufficiently developed their contention Plaintiff’s causes of action against Defendants in this action are barred by Code of Civil Procedure section 426.30. For instance, as noted earlier, there is evidence the court dismissed the Gunilla Action without prejudice. (Willens Decl. ¶ 6.) Defendants do not explain, and cite no authority addressing, whether a dismissal without prejudice constitutes a “judgment” for purposes of Code of Civil Procedure section 426.30. Further, Plaintiff filed this action before the court dismissed the Gunilla Action. Defendants do not explain, and cite no authority addressing, whether Code of Civil Procedure section 426.30 applies in such circumstances. Accordingly, the court cannot conclude, on this briefing, Plaintiff lacks any likelihood of success on the merits of his claim as a result of failing to plead his current fraud-related claims in the Gunilla Action.

Defendants argue applicable statutes of limitations bar all of Plaintiff’s causes of action against Defendants for which injunctive relief might be available. The court agrees.

The statutes of limitations for slander of title, fraud, and cancellation of instrument based on fraud are all three years. (Code Civ. Proc., § 338, subd. (g); Walters v. Boosinger (2016) 2 Cal.App.5th 421, 430.) Business and Professions Code section 17208 provides a four-year statute of limitations for violation of Business and Professions Code section 17200.

“As a general rule, a statute of limitations accrues when the act occurs which gives rise to the claim . . . that is, when ‘the plaintiff sustains actual and appreciable harm.’ Any ‘manifest and palpable’ injury will commence the statutory period.” (Costa Serena Owners Coalition v. Costa Serena Architectural Committee (2009) 175 Cal.App.4th 1175, 1195-96.) Under the delayed discovery rule, the accrual date of a cause of action is delayed until the plaintiff is aware of his/her injury and its cause. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1109.) Nonetheless, “[a] plaintiff is held to her actual knowledge as well as knowledge that could reasonably be discovered through investigation of sources open to her.” (Ibid.) Thus, “the statute of limitations begins to run when the plaintiff suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her.” (Id. at 1110.)

Here, the “wrongful act,” alleged misrepresentations resulting in Plaintiff signing the subject deed of trust, occurred no later than its execution on April 3, 2017. (SAC ¶¶ 87-95.) Plaintiff admits in the verified SAC he was aware of an injury related to such wrongful act in 2017. (SAC ¶ 99.) Specifically, Plaintiff allegess: “A few months went by after plaintiff moved into Saint Denis in April 2017, then plaintiff received some mail about Notice of Default and foreclosure auction, and that mail was pertaining to both Saint Denis and [the Property]. That's when plaintiff first heard about [the Property] being involved in some type of jeopardy, that something was wrong. So plaintiff confronted Julio Garcia about the Default foreclosure

Even assuming Plaintiff did not have enough information in 2017 to investigate the claim that the Property was in “jeopardy” such that if he investigated he would have found the fraudulent deed of trust, there can be no question Plaintiff knew about the deed of trust benefiting Defendants as of July 12, 2018 (at the very latest) when Plaintiff filed his bankruptcy petition. Plaintiff’s schedules admit the debt to Defendants is secured by a first deed of trust on the Property. (RJN Exh. 13 at 391-392.) Plaintiff swore his schedules were true and correct under penalty of perjury. Plaintiff was represented by counsel in the bankruptcy proceedings. Plaintiff did not represent the claim was disputed. Plaintiff also certified (along with his attorney under penalty of perjury) the master mailing list of creditors listing Defendants as a creditor.[2]

The evidence vividly demonstrates Plaintiff knew or should have known that he suffered injury in connection with the alleged fraudulently executed April 3, 2017 deed of trust no later than July 12, 2018.[3] In his moving and reply papers, Plaintiff has not provided any evidence to undermine this finding.

Plaintiff filed this action on September 13, 2023, more than five years after Petitioner’s own sworn statements reveal he knew of the deed of trust on the Property. The statute of limitations bars all of Plaintiff’s fraud-based causes of action.

Plaintiff argues equitable tolling should apply here because (1) attorney “Willens has stated that he voluntarily agreed to hold off on their foreclosure of the Rancho Adobe Property since 2019” and because (2) “Previous Attorney Rodriguez also seemed to be sabotaging the case” and engaged in legal malpractice. (Reply 6:13-15, 21.)

Plaintiff also asserts: “Due to the Ineffective Assistance of Counsel Rodriguez during the first case, causing the Filing this instant case during the pendency of first case, coupled with the filing of the NOTICE OF RELATED CASE, should be liberally construed similar to filing an Amended Complaint during the pendency of the first case. Thereby there is no break in the chain of pending litigation, the first case wasn't dismissed before this instant case was filed. So equitable tolling has been maintained as this principle is based on fairness and equity, and plaintiff has been diligent.” (Reply 7:3-10.)

“Equitable tolling ‘halts the running of the limitations period so long as the plaintiff uses reasonable care and diligence in attempting to learn the facts that would disclose the defendant's fraud or other misconduct.’ [Citation.] The doctrine ‘focuses primarily on the plaintiff’s excusable ignorance of the limitations period. [Citation.] [It] is not available to avoid the consequences of one’s own negligence.’ [Citation.] ‘To establish that equitable tolling applies, a plaintiff must prove the following elements: fraudulent conduct by the defendant resulting in concealment of the operative facts, failure of the plaintiff to discover the operative facts that are the basis of its cause of action within the limitations period, and due diligence by the plaintiff until discovery of those facts. [Citations.]’ ” (Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460.)

Here, as discussed, the admitted facts set forth in the SAC, as well as the sworn bankruptcy documents, establish Plaintiff knew no later than July 12, 2018 of the facts by which he could, if necessary, litigate the validity of the loan and deed of trust with respect to the Property. Contrary to Plaintiff’s suggestion in reply, the bankruptcy filings are compelling evidence in support of the statute of limitations defense. Plaintiff was represented by counsel in the bankruptcy action and, therefore, it is irrelevant whether Julio Garcia also “directed” Plaintiff to file the bankruptcy. (Reply 3:5.) Plaintiff has not provided evidence supporting all of the elements of equitable tolling, including that Defendants engaged in any fraudulent conduct resulting in concealment of the operative facts, or failure of Plaintiff to discover the facts during the limitations period.

Nor has Plaintiff shown, with discussion of authority, his filing of this action while the Gunilla Action was still pending somehow tolled or extended the limitations period.

Based on the foregoing, it appears clearly from the evidence submitted (including Plaintiff’s own sworn statements) Plaintiff’s causes of action for slander of title, cancellation of instruments, and other fraud-related causes of action, upon which this application are based, are barred by the applicable statutes of limitations. Accordingly, Plaintiff has not shown a reasonable probability of success on the merits of his fraud-based claims and a preliminary injunction cannot be granted. In light of this conclusion, the court does not reach the balance of harms or the amount of undertaking.

[1] It is somewhat unclear whether the Court in the Gunilla action dismissed Gunilla Gupta’s third amended complaint with prejudice or without prejudice. In his declaration, Attorney Willens states that the dismissal was without prejudice. (Willens Decl. ¶ 6.) Since Attorney Willens represented Defendants in the Gunilla action, the court is inclined to credit his summary of the procedural history. However, Judge Linfield’s November 7, 2023, nunc pro tunc order states that the October 19, 2023, minute order was corrected to add the following order: “The Court orders the Cross-Complaint filed by Rediger Investment Corporation, et al. on 01/08/2020 dismissed without prejudice. The Court orders the Amended Complaint (3rd)

filed by Gunilla Gupta, et al. on 11/20/2019 dismissed with prejudice.” (RJN Exh. 8 [bold italics added].)

[2] On August 6, 2018, Defendants also filed a proof of claim in the bankruptcy action asserting that Plaintiff owed them more than $400,000 and that the claim was secured by the Property. (RJN Exh. 14.) Plaintiff subsequently filed a motion for leave to sell the Property. (RJN Exh. 17-18.)

[3] In actuality, the court would likely find Plaintiff was sufficiently put on notice sometime in 2017 when he learned the Property was in jeopardy based on a notice of default he received in the mail. (SAC ¶ 99.)