Judge: Peter Wilson, Case: 30-2022-01286808, Date: 2023-07-27 Tentative Ruling
Defendant Chicago Title Company (CTC) generally and specially demurs to the Third, Sixth and Ninth Causes of Action based on the failure to alleges facts sufficient to state a cause of action and uncertainty.
For the reasons which follow, the demurrer is SUSTAINED, with leave to amend.
As an initial matter, the Court notes that the demurrer references the First Amended Complaint as filed by plaintiffs Lila Stahl and Stephen Whang, and the Opposition purports to be filed on behalf of both Lila Stahl and Stephen Whang. However, the Request for Dismissal, with prejudice, filed by Stephen Whang as to his portion of the complaint was entered on February 23, 2023, and he is accordingly no longer a party in this action. All references to Plaintiff hereafter are to plaintiff Lila Stahl.
ROA 50, CTC’s Request for Judicial Notice for the Notice of Default and Election to Sell Under Deed of Trust recorded on February 28, 2019 [Ex. B] and Notice of Trustee’s Sale recorded on June 13, 2019 [Ex. C] is GRANTED. Although the Request for Judicial Notice was submitted with the Reply, the exhibits were referenced in the FAC and the moving papers, and there is no prejudice in granting the Request. The Court takes judicial notice of the date of recording of these documents and their legal effect but not the truth of matters asserted.
The Court disregards Exhibits A and D-H attached to the Reply as no Request for Judicial Notice was made to any of these exhibits. Likewise, the Court disregards Exhibit A to the Opposition as no Request for Judicial Notice was made.
Meet and Confer. The parties adequately met and conferred prior to filing this Demurrer. ROA 29, Hutchison Decl., ¶1-2; ROA 48, Supp. Hutchison Decl., ¶¶A-B and Ex. I.
Legal Standard for Demurrer. A general demurrer challenges the legal sufficiency of a complaint on the ground that it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc. § 430.10(e).) The allegations in the complaint as a whole must be reviewed to determine whether a set of alleged facts constitutes a cause of action. (People v. Superior Court (Cahuenga’s the Spot) (2015) 234 Cal.App.4th 1360, 1376.) A complaint need only meet fact-pleading requirements, which requires a statement of facts constituting a cause of action in ordinary and concise language, and should allege ultimate facts that, as a whole, apprise defendant of the factual basis of the claim. (Code Civ. Proc. §425.10(a)(1); Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1284.)
A demurrer on the ground of uncertainty is disfavored and should be sustained only when the complaint is so incomprehensible that the defendant cannot reasonably respond since ambiguities may be clarified in discovery. (Lickiss v. Financial indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) When the allegations in a complaint are sufficiently specific to apprise defendant of the issues to be met, the demurrer should be overruled on this ground. (Kurtz, Richards, Wilson & Co. v. Insurance Communicators Mktg. Corp. (1993) 12 Cal.App.4th 1249, 1259.) Uncertain allegations should be liberally construed in testing a complaint for adequacy against a demurrer, particularly when the facts that are uncertain are presumptively within defendant’s knowledge. (Childs v. State (1983) 144 Cal.App.3d 155, 160.) The particularity requirement in a pleading depends on the extent to which defendant, in fairness, needs detailed information the plaintiff can conveniently provide, while less particularity is required when defendant is assumed to have the knowledge. (Doheny Park Terrance Homeowners Ass’n, Inc. v. Truck Ins. Exch. (2005) 132 Cal.App.4th 1076, 1099.)
In ruling on a demurrer, the court is guided by the following long-settled rules: The court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. The court may also consider matters which may be judicially noticed. Further, the court gives 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.)
When a complaint makes both general allegations and specific allegations, and a conflict or inconsistency exists between them, the specific allegations control over the inconsistent general allegations and may render the complaint defective even though the general allegations standing alone might have been sufficient. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1235-1236; Medical Marijuana, Inc. v. ProjectCBD.com (2016) 6 Cal.App.5th 602, 619.)
The Demurrers to the 3rd, 6th and 9th COAs are SUSTAINED, with 30 days leave to amend.
CTC contends that all of Plaintiff’s claims against it are based on the failure to properly record a Notice of Sale that was a purported requirement in paragraph G of the Forbearance Agreement. ROA 29, Mem. Supp., pp. 4-5.
In support of each of her claims for declaratory relief (3rd COA), wrongful foreclosure (6th COA) and negligence (9th COA), Plaintiff essentially presents two arguments: (1) pursuant to Paragraph G of the Forbearance Agreement, a Notice of Sale must be recorded but was not; and (2) the notice requirements under Civil Code §§ 2924, including posting a written notice of the sale in a public place and in a “conspicuous place” on the property, publishing notice in a newspapers of general circulation once a week for three consecutive weeks, and recording the notice of sale at least 20 days before the date of the sale, were not met. See FAC, ¶¶7, 33-34, 38, 40, 43, 47, 72, 96, 97, 100-103, 119, 120. Plaintiff’s Opposition confirms her contention that the alleged failure to record a Notice of Sale “also violated Civil Code § 2924”. ROA 46, Opp., p. 2. Thus, CTC is correct that all of Plaintiff’s claims are based on the alleged requirement to record a Notice of Sale in Paragraph G in the Forbearance Agreement.
In that regard, the FAC alleges:
The Forbearance agreement, in paragraph G of the “Recitals,” states that: “Borrower has requested that, notwithstanding the Existing Loan Defaults, the Notice of Default, and the Borrower’s failure to cure as set forth herein, Lender forbear by delaying the recording of a notice of sale of the Collateral so Borrower has additional time to attempt to secure replacement financing for the full and complete satisfaction of all Borrower’s obligations to Lender under the Loan Agreement …” (emphasis added). The phrase “recording of a notice of sale” also implied compliance with the 2924 et seq. statutory notice requirements.
FAC, ¶34, bold and italics in original.
Contrary to Plaintiff’s contention, the quoted language from the Forbearance Agreement, which is not attached to the FAC, as well as other allegations in the FAC and judicially noticed documents, in fact contradict Plaintiff’s arguments.
First, the FAC expressly alleges that a Notice of Trustee’s Sale was recorded on June 13, 2019. FAC, ¶31. See also, ROA 50, RJN, Ex. C; ROA 29, Ex. B [also attached as Ex. C to the ROA 48, Reply]. Since a Notice of Trustee’s Sale was already recorded, CTC posits that Plaintiff must contend that Paragraph G requires the re-recording of the Notice of Trustee’s Sale. Plaintiff, like Paragraph G, ignores the June 13, 2019 recorded Notice of Trustee’s Sale and does not explain this discrepancy with her position that no Notice of Trustee’s Sale was ever recorded. See FAC, ¶38 [defendants, including CTC “fraudulently included a statement in the Trustee’s Deed Upon Sale that ‘Trustee, in compliance with said Notice of Trustee’s Sale … sold the herein described property at public auction on 09/03/2019.’ In reality, no such ‘Notice of Trustee’s Sale’ was ever recorded or even existed.”]) Consequently, even if Paragraph G does impose a requirement of a recorded Notice of Trustee’s Sale, that requirement was met by the June 13, 2019 Notice of Trustee’s Sale.
Significantly, however, Paragraph G does not set forth an obligation to record or re-record the Notice of the Trustee’s Sale before moving forward with the foreclosure sale. Based on the quoted language in the FAC, Paragraph G is a recital and simply provides the context for the agreement to forbear from proceeding with the foreclosure until after August 30, 2019 instead of as scheduled on July 11, 2019 as set forth in the recorded Notice of Trustee’s Sale. FAC, ¶31.
“The law has long distinguished between a ‘covenant’ which creates legal rights and obligations, and a ‘mere recital’ which a party inserts for his or her own reasons into a contractual instrument. Recitals are given limited effect even as between the parties.” (Emeryville Redevelopment Agency v. Harcros Pigments, Inc. (2002) 101 Cal.App.4th 1083, 1101, 125 Cal.Rptr.2d 12; accord, Hunt v. United Bank & Trust Co. (1930) 210 Cal. 108, 115, 291 P. 184 [“Recitals or preambles prefixed to an agreement may or may not have binding force. If they form part of the operative covenants of the instrument in such a way as to show it was designed and intended that they should form part of it, they will be so construed.”]; O'Sullivan v. Griffith (1908) 153 Cal. 502, 506, 95 P. 873 [“A covenant or warranty is never implied from a mere recital.”]; McDonough v. Chu Chew Shong (1937) 21 Cal.App.2d 257, 259, 68 P.2d 976 [contract to indemnify bail bondsmen was enforceable because the argued variance between the bond's guarantee and the respondent's criminal offense was in “a mere recital and form[ed] no part of the contractual obligation”].) However, “[i]f the operative words of a grant are doubtful, recourse may be had to its recitals to assist the construction.” (Civ. Code, § 1068;14 see Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 38, 31 Cal.Rptr.2d 378 [language labeled “recital” was actually covenant because it contained operative promise and recourse to language was necessary to identify real property subject to the agreement].)
(Sabetian v. Exxon Mobil Corp. (2020) 57 Cal. App. 5th 1054, 1069–70, 272 Cal. Rptr. 3d 144, 154–55, as modified (Nov. 25, 2020).)
Paragraph G does not contain language that the parties agreed or understood, or that Lender agreed to do anything. Rather, under the plain language of Paragraph G, Plaintiffs “requested” that GF Capital delay the recording of the notice of sale. An explanation of what one party requested of another party does not identify any agreed upon obligation or covenant, but merely provides factual information and context to the agreement. (Magana v. Zara USA, Inc. (9th Cir. 2021) 856 F. App'x 83, 85 [“Here, the sentence containing this limiting language (‘Upon the Effective Date, for and in consideration of the mutual promises ...’) clearly sets out an enforceable promise, not a mere factual recitation. See Golden W. Baseball Co. v. City of Anaheim, 25 Cal.App.4th 11, 31 Cal. Rptr. 2d 378, 396 (1994) (explaining that clause starting with the words ‘It is understood and agreed’ was ‘not a recital, despite its label. It is not a mere recitation of facts, but contains the operative language.’)].) Given that the FAC sets forth the express language in Paragraph G relied on by Plaintiff, the Court need not accept Plaintiff’s conclusory allegations regarding its meaning, i.e. that Paragraph G creates an obligation or covenant. (Blank v. Kirwan, supra, 39 Cal.3d at 318.)
As there is no requirement under Paragraph G to record or re-record a Notice of Trustee’s Sale, and in any event, a Notice of Trustee’s Sale was recorded, Paragraph G fails to provide support for Plaintiff’s claims against CTC.
Since CTC’s alleged non-compliance with the notice requirement of Civil Code § 2924 is based on the alleged failure to record the Notice of Sale as required under Paragraph G (see FAC, ¶38), there is no support for the allegations of non-compliance with Civil Code § 2924.
The Demurrer for Uncertainty is SUSTAINED. As discussed above, the allegations are contradictory regarding the recorded Notice of Trustee’s Sale and non-compliance with Civil Code § 2924. As a result, the FAC is impermissibly uncertain.
Leave to Amend. The parties presented documents in connection with the Demurrer to support their claims that could not be considered for the merits of this demurrer but may be considered in granting leave to amend. As such, the Court GRANTS 30 days leave to amend.
CTC is ordered to give notice.
The status conference remains on calendar.