Judge: Nathan Vu, Case: 2019-01072630, Date: 2022-10-17 Tentative Ruling

Please Note: The hearing on this matter has been changed to 8:30 A.M.

Demurrer

The demurrer of Defendants Hung Do and Tam Ngoc Ly (sued as Ly Tam) to the Third Amended Complaint is OVERRULED as to the 1st, 2nd, and 3rd causes of action and SUSTAINED with 14 days leave to amend as to the 5th cause of action.

When amending the complaint, Plaintiffs Doug Le and Ke Van Nguyen are ORDERED to review each and every allegation and paragraph of the complaint to ensure that the amended complaint contains all allegations necessary to support the quiet title cause of action and to correct all formatting and other errors.

Defendants Hung Do and Tam Ngoc Ly (sued as Ly Tam) demur to the 1st, 2nd, 3rd, and 5th causes of action of the Third Amended Complaint filed in the related case, Le v. Do, Case Number 30-2021-01195733.

Standard for Demurrer

In ruling on a demurrer, a court must accept as true all allegations of fact contained in the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A demurrer challenges only the legal sufficiency of the affected pleading, not the truth of the factual allegations in the pleading or the pleader’s ability to prove those allegations. (Cundiff v. GTE Cal., Inc. (2002) 101 Cal.App.4th 1395, 1404-05.)

Questions of fact cannot be decided on demurrer. (Berryman v. Merit Prop. Mgmt., Inc. (2007) 152 Cal.App.4th 1544, 1556.) Because a demurrer tests only the sufficiency of the complaint, a court will not consider facts that have not been alleged in the complaint unless they may be reasonably inferred from the matters alleged or are proper subjects of judicial notice. (Hall v. Great W. Bank (1991) 231 Cal.App.3d 713, 718 fn.7.)

Although courts should take a liberal view of inartfully drawn complaints, (see Civil Proc. Code, § 452), it remains essential that a complaint set forth the actionable facts relied upon with sufficient precision to inform the defendant of what plaintiff is complaining, and what remedies are being sought, (Leek v. Cooper (2011) 194 Cal.App.4th 399, 413). Bare conclusions of law devoid of any facts are insufficient to withstand demurrer. (Schmid v. City and County of San Francisco (2021) 60 Cal.App.5th 470, 481; see Civil Proc. Code, § 425.10, subd. (a).)

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal App.4th 612, 616.) Demurrers for uncertainty “are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) “[A] demurrer for uncertainty will not be sustained where the facts claimed to be uncertain or ambiguous are presumptively within the knowledge of the demurring party.” (Ching (Yee) v. Dy Foon (1956) 143 Cal.App.2d 129, 136.)

1st Cause of Action (Conspiracy to Commit Fraud)

In the first cause of action, the Third Amended Complaint (TAC) alleges that on or about November 2017, Defendant Triet Minh Dinh (as the borrower) and Defendant Hung Do (as the second lienholder) entered into a secret agreement in which the promissory note in the amount of $290,000 was to be fraudulently restated in the amount of $425,000. The TAC also asserts that this was done at the direction of Defendant Tam Ngoc Ly.

The elements of a civil conspiracy are: (i) formation and operation of the conspiracy; (ii) damage resulting to plaintiff; and (iii) from an act done in furtherance of the common design. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1062.) “Standing alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd (1994) 7 Cal.4th 503, 511.) “Tort liability arising from conspiracy presupposes that the coconspirator is legally capable of committing the tort, i.e., that he or she owes a duty to plaintiff recognized by law and is potentially subject to liability for breach of that duty.” (Id.)

The TAC alleges sufficient facts to support each element of a conspiracy, including an agreement between and among Defendants Hung Do, Ly, and Dinh (TAC, ¶ 104); damage resulting from the foreclosure on the fraudulent deed, (TAC, ¶¶ 115-116); and an act in furtherance of the crime, (TAC, ¶¶ 112 & 114(2)). The demurrer must be overruled as to the first cause of action.

2nd Cause of Action (Fraud)

The TAC in the second cause of action alleges that Defendant Hung Do (as the second lienholder) sent Plaintiff Doug Le a fraudulent notice of default stating that the amount of $425,000 was due and that this was done at the instruction of Defendant Ly. (See TAC, ¶¶ 47, 132, 133, 148(1) & 151.)

The elements of a cause of action for fraud are: (i) misrepresentation; (ii) defendant’s knowledge of the statement's falsity; (iii) defendant’s intent to defraud; (iv) plaintiff’s justifiable reliance; and (v) resulting damage. (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231; Witkin Summary of Cal Law, Torts § 676.) Fraud must be plead with specificity. (Scafidi v. Western Loan & Bldg. Co. (1946) 72 Cal.App.2d 550, 557.)

Here, the TAC asserts facts sufficient to support each claim and with specificity. The allegations include that a misrepresentation regarding the amount due was made to Plaintiffs in the notice of default, (see TAC, ¶¶ 132-133); Defendants had knowledge of the falsity, (TAC, ¶ 148); Defendants had the intent to defraud, (TAC, ¶ 147); Plaintiffs justifiably relied on the misrepresentation, (TAC, ¶¶ 133 & 148(6)); and that Plaintiffs were damaged as a result, (TAC, ¶ 149). This is sufficient for the second cause of action to withstand demurrer.

3rd Cause of Action (Money Had and Received)

The third cause of action of the TAC alleges that Defendant Hung Do and Defendant Ly wrongfully received the proceeds from the sale of the property. (TAC, ¶ 171.)

The elements of a cause of action for money had and received are: (i) defendant received money that was intended to be used for the benefit of plaintiff; (ii) the money was not used for the benefit of plaintiff; and (iii) defendant has not given the money to plaintiff. (Avidor v. Sutter’s Place, Inc. (2013) 212 Cal.App.4th 1439, 1454.) “Although such an action is one at law, it is governed by principles of equity. It may be brought ‘wherever one person has received money which belongs to another, and which in equity and good conscience, or in other words, in justice and right, should be returned. . . . The plaintiff’s right to recover is governed by principles of equity, although the action is one at law.’” (Mains v. City Title Ins. Co. (1949) 34 Cal.2d 580, 586, quoting Philpott v. Superior Court (1934) 1 Cal.2d 512, 522, citations and quotations omitted.)

The allegations of the TAC are sufficient to support each element of money had and received claim, including that Defendant Hung Do and Defendant Ly wrongfully received the proceeds from the sale of the subject property between Defendant Hung Do and Defendant Steven Do; that the proceeds were to be used for the benefit of Plaintiffs but was not; and that Defendants Hung Do, Steven Do, and Ly have not remitted proceeds to Plaintiffs. (See TAC, ¶¶ 171-175.) The demurrer to the third cause of action must be overruled. (fn.1)

(fn.1) The third cause of action is asserted against Defendant Dinh although there do not appear to be any allegations in the TAC that Defendant Dinh was involved in the sale of the subject property to Defendant Steven Do or the receipt of the sale proceeds. However, the demurrer is brought by Defendant Hung Do and Defendant Ly only, who do not demur on behalf of Defendant Dinh.

5th Cause of Action (Quiet Title)

The TAC’s fifth cause of action seeks to quiet title on the subject property.

To plead a quiet title claim, a complaint must be verified and must include the following:

• A description of the property including both its legal description and its street address or common designation;

• The title of the plaintiff and the basis upon which it is asserted;

• The adverse claims as against which a determination is sought;

• The date as of which a determination is sought and, if other than the date the complaint is filed, a statement why the determination is sought as of that date; and

• A prayer for determination of plaintiff’s title against the adverse claims.

(Civil Proc. Code, § 761.020; see South Shore Land Co. v. Petersen (1964) 226 Cal.App.3d 725, 740 [“In an ordinary action to quiet title it is sufficient to allege in simple language that the plaintiff is the owner and in possession of the land and that the defendant claims an interest therein adverse to him.”].)

In addition, if the quiet title action is based on the defendant’s fraud, the plaintiff must plead the factual basis for the fraud specifically. (Moss Estate Co. v. Adler (1953) 41 Cal.2d 581, 583–584; Strong v. Strong (1943) 22 Cal.2d 540, 545–546.) Further, “[a] borrower may not [] quiet title against a secured lender without first paying the outstanding debt on which the mortgage or deed of trust is based.” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86, citing Miller v. Provost (1994) 26 Cal.App.4th 1703, 1707, and Aguilar v. Bocci (1974) 39 Cal.App.3d 475, 477.)

The court previously sustained the demurrer to this cause of action due to deficiencies in pleading and those deficiencies remain. Plaintiffs fail to their title to the subject property, and even more importantly, the basis of that title. Plaintiffs only make general allegations that they are the “owners” of the subject property but do not allege or attach the title by which they are owners or the basis of that title. (See TAC, ¶¶ 1-2 & 211.) In fact, Plaintiffs concede that title to the property is held in the name of Defendant Ly. (See TAC, ¶ 213.)

Further, Plaintiffs assert that they seek to quiet title as of 04/17/2019 and as of “the date of acquisition of the property by Defendant Hung Do.” (See Compl., ¶¶ 213.) The TAC appears to allege that Defendant Hung Do took title to the subject property around 09/19/2019. (See Compl., ¶¶ 49-50.) In any case, both of these dates are different from the date of filing of the complaint, such that Plaintiffs must state why they seek that date. Such a statement is also missing from the complaint.

The TAC also fails to allege that Plaintiffs have paid the outstanding debt upon which the 03/29/2018 deed of trust is based or that they are able and willing to do so. The only allegations in the TAC regarding the tendering of payment relates to Defendant Hung Do being willing to tender payment. (See Compl., p 218(A).) In fact, the TAC repeatedly and with emphasis states, “Plaintiffs did not have any ability to pay for that $425,000 note”. (Compl., ¶ 77.) (fn.1)

The demurrer to the fifth cause of action must be sustained. It is possible that the allegations can be amended so that the claim could withstand future demurrer, so the court will grant leave to amend. However, an amended complaint would be Plaintiffs’ fifth complaint and the court previously sustained a demurrer to the fifth cause of action on similar bases. Therefore, the court is unlikely to grant leave to amend in the future.

Uncertainty

The TAC is not so poorly pled that a defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. The court will overrule the demurrer for uncertainty.

However, the TAC is lengthy and includes significant formatting mistakes and repeated allegations. For example, the TAC contains paragraphs numbered in this order: 171, 173, 174, 175, 172, and then 173, 174, and 175 are repeated. The fifth cause of action consists of paragraphs 210-217, but the sixth cause of action starts with paragraph 217 followed by paragraphs 216, 217 (again), and 218-225. There is a paragraph 144 inserted between paragraphs 196 and 197 and the TAC starts renumbering (again) at paragraph 187 immediately after paragraph 232. Further, some subparagraphs are numbered and formatted exactly like paragraphs so the subparagraphs look like out of order paragraphs. Examples of this include, but are not limited to, paragraphs 114, 148, 184, 220, the second paragraph 196, the second paragraph 219, and paragraph 251.

These errors could have had significant consequences. For example, the court might have ruled differently on the third cause of action because it initially believed that there was no paragraph 172, which contains an important allegation. Further, the court might have ruled differently on the fifth cause of action because the parties cited to paragraph 218 of the TAC, when there are 3 different paragraph 218s contained in the TAC. Therefore, in amending the complaint, Plaintiffs must review each and every allegation and paragraph and correct all formatting and other errors.

Plaintiff shall give notice of this ruling.

(fn.1) By incorporating the prior allegations of the TAC, including those relating to the fraud cause of action, (see TAC, ¶ 159), Plaintiffs plead the fraud-related allegations of the quiet title cause of action with sufficient specificity and particularity.