Judge Randolph M. Hammock, Case 20STCV47123 2023-02-15 Tentative Ruling

This action arises out of the sale of real property located at 5529 Vanalden Street in Tarzana, California. Plaintiff Vista Land (“Vista”) alleges it purchased the real property after being the highest bidder at a Trustee’s foreclosure sale on September 8, 2020, where it purchased the Second Deed of Trust on the property. Thereafter, Plaintiff alleges Defendants, who owned the First Deed of Trust on the property, engaged in a conspiracy to defraud Plaintiff. Plaintiff obtained a TRO on January 7, 2021, enjoining any non-judicial foreclosure action against the property.

It is further alleged that on October 6, 2021, Defendant AWBCO recorded a notice of Assignment of the Deed of Trust to R&R Real Properties, LLC (“R&R.”) Plaintiff alleges Defendant AWCBO’s attorney of record, Raymond Robinson (“Robinson”) is the Managing Member of R&R and incorporated the company. R&R allegedly conducted a nonjudicial foreclosure of the property on October 21, 2021, and then entered into a Purchase and Sale Agreement with Frank Sillman (“Sillman.”) Accordingly, Plaintiff filed a Supplemental Complaint on February 23, 2022, containing an eleventh cause of action for Embezzlement against EIJ, a twelfth cause of action for wrongful foreclosure against Robinson and eighteen other Defendants, and a thirteenth cause of action for Criminal extortion against Robinson and four other defendants.

On June 20, 2022, Plaintiff filed a “First Amended Complaint.” On September 29, 2022, Plaintiff filed the operative pleading, “Verified Second Amended Complaint and First Amended Supplemental Complaint.”

Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) Plaintiff is given leave to amend those portions of the SAC where stated herein.

The Declaration of Attorney Leland A. Wahl reflects that he “wrote to Vista’s counsel Susan Murphy pointing out deficiencies in Vista’s new pleading” on November 9, 2022, but had “not heard back from her in response.” (Wahl Decl. ¶ 3.) Defendants filed the motion five days later. While this demonstrates the lack of any substantive meet and confer, without objection by the Plaintiff and in order to conserve judicial resources, this court will address the demurrer on its merits. The parties are admonished to effectuate a meaningful meet and confer where required by law going forward.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (CCP § 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, 147 Cal.App.4th at 747.)

Defendants argue that because there are no allegations that “Royston or AWBCO conducted or participated in the sale, the complaint states no wrongful foreclosure claim against either.” (Dem. 5: 19-23.) “Rather, by the time of the sale, R&R held the trust deed and conducted that sale.” (Dem. 5: 20.)

In opposition, Vista Land argues that the wrongful foreclosure “was a result of a scheme in which the Defendants were active participants” with Defendants as mortgagee(s). (Opp. 9: 21-22.) In particular, Vista points to the allegation that Royston, as mortgagee, “participated in a 3-way conversation with Raymond Robinson and Kevin Moda in which they discussed assigning the promissory note and deed of trust to R&R and then foreclosing in order to generate more money and pay off Robinson’s legal fees.” (Opp. 9: 23-25).

“The elements of a wrongful foreclosure cause of action are: (1) [T]he trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.” (Citrus El Dorado, LLC v. Chicago Title Co. (2019) 32 Cal. App. 5th 943, 948.)

Here, Plaintiff alleges the wrongful foreclosure occurred on October 21, 2021, “when Defendants Ray Robinson, R&R, and David Robinson, foreclosed on the first deed of trust to Cadena, this sale being illegal and void as it was in violation of this Court’s Order.” (SAC ¶ 73. As to the moving Defendants, Plaintiff further alleges that “Defendant Royston switched trustees from SBS to TLS on March 26, 2021 after the debt had been satisfied,” and then “assigned the deed of trust to his former attorney Defendant Robinson so that he could order the foreclosure with the unsuspecting trustee.” (SAC ¶¶ 73, 74.) Thus, Vista Land has pled all elements for the cause of action against Defendants as mortgagee(s).

“To establish slander of title, a plaintiff must show: “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.” (Klem v. Access Ins. Co. (2015) 17 Cal. App. 5th 595, 612.)

As the parties recognize, authorities are split on whether the privilege is absolute or qualified. In Garretson v. Post (2007) 156 Cal. App. 4th 1508, that Court found the litigation privilege, an absolute privilege, was applicable to nonjudicial foreclosures. In Kachlon v. Markowitz (2008) 168 Cal. App. 4th 316, 341, however, that Court found the privilege to be applied to non-judicial foreclosure is the qualified common interest privilege of section 47, subdivision (c)(1).

Notably, the common interest privilege applies to “a communication, without malice, to a person interested therein ... by one who is also interested.” (§ 47, subd. (c).) Malice is defined as “actual malice,” meaning “that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights.” (Kachlon, supra, 168 Cal. App. 4th at 336.)

Here, the court need not resolve if the privilege is absolute or qualified, because even assuming the privilege is a qualified one, Plaintiff has pled facts demonstrating that Defendants acted with actual malice. Plaintiff alleges that Defendants knowingly violated Judge Chalfant’s February 10, 2021, Order expressly precluding a nonjudicial foreclosure sale by, among other things, “record[ing] an assignment of the deed of trust to Ray Robinson.” (SAC ¶¶ 38, 85.)

Defendants allegedly slandered the title again when they “recorded a grant deed to Defendant Sillman who was an associate of Royston and on notice of the Court’s order enjoining foreclosure in an attempt to wash all this fraud by a grant deed to a purported BFP.” (Id. ¶ 86.) Thus, Plaintiff has pled all elements of slander of title.

Defendants argue the cause of action fails because the subject instruments “pose no threat of injury to Vista,” and that “[n]o allegation touches Royston.” (Dem. 6: 23-25.) In opposition, Plaintiff argues it “was left susceptible to damage and injury by having a deed of trust [Plaintiff] already satisfied be assigned to R&R who then bought it at foreclosure sale and sold to Sillman.” (Opp. 12: 16-17.)

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.”

Plaintiff alleges that “[t]he first Void instrument is the assignment from EIJ to AWBCO which was forged by backdating it so that assignee AWBCO could extort additional money from Plaintiff after the assignment.” (SAC ¶¶ 60, 93.) Plaintiff alleges the instruments that followed should be canceled as well:

(1) The Notice of Trustee’s Sale recorded by AWBCO on November 20, 2020 through trustee SBS demanding $1,649,762.14 which was pursuant to the fraud against Plaintiff which is Los Angeles County Recorder document number 20201492405;

(2) The Notice of Trustee’s Sale recorded by AWBCO on March 26, 2021 through trustee TLS demanding $550,410.62 which was also pursuant to the fraud against Plaintiff which is Los Angeles County Recorder document number 20210480906;

(4) The trustee’s deed upon sale from Robinson to R&R, recorded on November 23, 2021 which was also pursuant to the fraud against Plaintiff which is Los Angeles County Recorder document number 20211741966;

(5) The grant deed from Robinson to Sillman recorded on December 13, 2021 which was also pursuant to the fraud against Plaintiff which is Los Angeles County Recorder document number 20211847979. (Id. 93.)

Plaintiff has therefore alleged the above recorded instruments are void, all of which stem from the initial forged or “backdated” assignment from EIJ to AWBCO. Plaintiff has also alleged transactions or assignments in which both Defendants AWBCO and Royston participated.

Defendants contend the claim fails because neither Royston nor AWBCO claim any current interest in the property. (Dem. 7: 10-11.) In opposition, Plaintiff argues only that these Defendants should remain in this cause of action because of “Royston’s involvement in the scheme” and “the complexity of the issues in this case.” (Opp. 12: 25-27.)

“An element of a cause of action for quiet title is ‘[t]he adverse claims to the title of the plaintiff against which a determination is sought.’” (Orcilla v. Big Sur, Inc. (2016) 244 Cal. App. 4th 982, 1010.) The SAC concedes that it seeks quiet title only against Defendant Sillman, who “held himself out as a bona fide purchaser” of the property. (SAC §101.) The SAC therefore fails to allege that Defendants Royston or AWBCO have any “adverse claims” to the property.

Accordingly, Defendants’ Demurrer to the Fourth Cause of Action is SUSTAINED without leave to amend as to these Defendants only. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) It appears that Plaintiff cannot allege that these Defendants presently have any adverse claims to the property. Thus, no leave to amend is given.

To plead fraud, a Plaintiff must allege “(1) a representation, (2) that is false, (3) made with knowledge of its falsity, and (4) with an intent to deceive, coupled with (5) actual detrimental reliance and (6) resulting damage.” (Lim v. The.TV Corp. Internat. (2002) 99 Cal. App. 4th 684, 694.) Fraud-based claims are subject to strict requirements of particularity in pleading. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) To advance a cognizable fraud claim, “every element of the cause of action . . . must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a fraud claim deficient in any material respect.” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331).

Plaintiff alleges that defendants “Chris Eskijian, Armen Eskijian, and Royston intentionally misrepresented that they had assigned the deed of trust prior to the foreclosure sale to Plaintiff so that assignee could inflate the amount of the reinstatement.” (SAC ¶ 104.) Plaintiff further alleges that “Defendant Royston contributed his part of the fraud by immediately intentionally inflating the amount of the payoff upon receiving the forged assignment from Defendants Chris and Armen Eskijian pursuant to the plan by defendants. (Id.) The SAC concludes that Royston “knew that this overcharge of $412,567.20 was a misrepresentation of what Plaintiff actually owed and all intended to deceive plaintiff.” (Id.)

Importantly, it appears the SAC omits any allegation that Plaintiff relied on the alleged “overcharge.” Instead, the complaint actually would appear to suggest that Vista did not rely on the “inflated” payoff amount, since the amount Plaintiff ultimately paid was prescribed by the Court and did not include the $412,000 “overcharge.” Thus, Plaintiff has not pled fraud against the moving Defendants with the requisite specificity.

Accordingly, Defendants’ Demurrer to the Sixth Cause of Action is SUSTAINED with leave to amend. When amending, Plaintiff must plead all elements of fraud, including detrimental reliance, with specificity.

Defendants demur to the Sixth Cause of Action contending because there are no allegations of fraud, there can be no cause of action for conspiracy to commit fraud. The court need not address that issue now, as the demurrer is sustained on other grounds.

“Civil conspiracy is not an independent tort. Instead, it is ‘a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.’” (City of Indus. v. City of Fillmore (2011) 198 Cal. App. 4th 191, 211–12.) Courts have disregarded a standalone cause of action for conspiracy to commit a tort, and instead construed the claim as a single cause of action together with the underlying tort. (Id.) This court will do the same.

Accordingly, the Demurrer to the Sixth cause of action is SUSTAINED without leave to amend. However, as discussed immediately above, Plaintiff may incorporate the conspiracy allegations into the Fraud cause of action if given leave to amend.

The parties agree that a lender generally owes no duty of care to a borrower. (Nymark v. Heart Fed. Sav. & Loan Assn. (1991) 231 Cal. App. 3d 1089.) However, a duty can arise when the lender “exceed[s] the scope of its conventional role as a mere lender of money.” (Id.) Thus, “[l]iability to a borrower for negligence arises only when the lender ‘actively participates’ in the financed enterprise ‘beyond the domain of the usual money lender.’” (Id.)

Plaintiff argues the facts here impose a duty because Defendants “went outside their conventional role as ‘lenders’ to foreclose when their security interest had been taken away by court order.” (Opp. 14: 20-21; SAC ¶ 44.) Plaintiff also contends and alleges that Royston “postponed the foreclosure sale twice while he waited for Robinson to get R&R set up so that it could receive an assignment of the mortgage and conduct the foreclosure sale.” (Opp. 14: 23-24; SAC ¶¶ 50-52.)

The court agrees that at least for pleadings purposes, Plaintiff has adequately alleged facts that could require imposing a negligence duty on Defendants based on Royston’s nonconventional lending role. Thus, the cause of action goes forward.

Courts, however, no longer require a fiduciary relationship for an accounting. Instead, “[a] cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin, (2009) 173 Cal. App. 4th 156, 179.) “[T]he nature of a cause of action in accounting is unique in that it is a means of discovery. An accounting is a ‘species of disclosure, predicated upon the plaintiff's legal inability to determine how much money, if any, is due. [Citation.] Thus, the purpose of the accounting is, in part, to discover what, if any, sums are owed to the plaintiff, and an accounting may be used as a discovery device.” (Id. at 180.)

Plaintiff has sufficiently alleged a “relationship” between it and Defendants to maintain the cause of action, and at least at this stage, there appears to be some dispute as to whether the sum in dispute is certain or not.

Business and Professions Code section 17200 defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice....” “The scope of section 17200 is broad, encompassing ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’ ... It governs ‘anti-competitive business practices’ as well as injuries to consumers, and has as a major purpose ‘the preservation of fair business competition.’” [Citations.] (Linear Tech. Corp. v. Applied Materials, Inc., (2007) 152 Cal. App. 4th 115, 133). Whether a practice violates the section “is generally a question of fact which requires ‘consideration and weighing of evidence from both sides’ and which usually cannot be made on demurrer.” [Citation]. (Id.)

The SAC states that “Plaintiff seeks restitution of his title to Vanalden, subject to any remaining disputed debt to Defendant EIJ which was to be adjudicated in this action.” (SAC ¶ 137.) It does not, however, apparently seek any restitution from the moving Defendants. Indeed, Plaintiff’s opposition does not address or defend the UCL cause of action at all. The claim therefore fails against these Defendants.

A motion to strike lies either (1) to strike any irrelevant, false or improper matter inserted in any pleading; or (2) to strike any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of court. (CCP § 436.)

Pursuant to Plaintiff’s request, this court takes judicial notice of the Transcript portions from the July 15, 2022, Contempt hearing. (Exhs. 1-8.) The court takes judicial notice of the existence of the transcripts, but not the truth of factual matters asserted therein. (Bach v. McNelis (1989) 207 Cal. App. 3d 852, 865.)

Defendants first move to strike the Second Cause of Action for Slander of Title, Fourth Cause of Action for Quiet Title, and Seventh Cause of Action for Negligence in their entireties.

Defendants contend they should be stricken because they were “not drawn or filed in conformity with this Court’s order of August 30, 2022.” In that minute order, this court on its own motion gave Plaintiff leave to file a Second Amended Complaint/First Amended Supplemental Complaint. (See August 30, 2022, Minute Order.) The order stated that “[i]f Plaintiff alleges new and additional causes of action against any defendant, the factual reason shall be explained in the pleading, as to when such facts were discovered, and a[n] explanation as to why such new causes of action or claims were not presented earlier.” (Id.)

Defendants note that “slander of title,” “quiet title,” and “negligence” were not pleaded in any of Vista’s three earlier complaints and contends that the operative complaint lacks “allegations describing either when Vista discovered the facts giving rise to these new causes of action or explaining why it did not present these new causes of action earlier.” (MTS 4: 24-26.)

This court’s reason for requiring that Plaintiff include these allegations in the amended pleading was to provide facts to demonstrate delayed discovery or some other equitable doctrine. By doing so, the parties would potentially avoid unnecessary motion-practice on issues that could arise from a statute of limitations challenge.

Defendants’ demurrer, however, did not raise any statute of limitations arguments. Indeed, the fact that Defendants did not point to any cause of action that is untimely would suggest that the pleading adequately complied with this court’s instruction. Had it not, it would be expected that Defendants raise that pleading deficiency in their demurrer on some legally recognized basis—not on a motion to strike now.

Civil Code section 3294, subdivision (a) permits an award of punitive damages “for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.”

“Mere negligence, even gross negligence, is not sufficient to justify an award” for punitive damages. (Kendall Yacht Corp. v. United California Bank (1975) 50 Cal.App.3d 949, 958.) Thus, where Plaintiff seeks punitive damages purely based on Defendants’ negligence, those allegations are insufficient to support an award of punitive damages and ordered stricken. (SAC § 121, Prayer for Relief.)

Defendants next argue that Plaintiff’s request for a specific amount of punitive or exemplary damages should be stricken. In the Prayer for Relief, Vista seeks damages of $10,000,000., which presumably must include exemplary damages.

Defendants next argue that allegations regarding Royston’s contempt should be stricken as the “finding is not part of any cause of action” and “irrelevant and improper.” (MTS 5: 19-20.)

In opposition, Plaintiff argues “the contempt hearing revealed new information relevant to Plaintiff’s knowledge of Defendant Royston’s intentional reckless actions,” and should be included.

This court agrees with Plaintiff that the allegations arising from the contempt hearing are, at least for pleadings purposes, relevant to the causes of action that arose after this action was filed. Thus, they need not be stricken.

Finally, Defendants contend the exhibits attached to the pleading should be stricken because many are “not relevant to stating a cause of action but instead constitute evidence that Vista thinks will help prove its claims.” (MTS 5: 24-25.)

At minimum, it appears the exhibits are related to the controversy and intended to support Plaintiff’s allegations. They are therefore properly included with the pleading and need not be stricken.

Judge of the Superior Court

FN 1 - For ease, this court refers to the “Second Amended Complaint and First Amended Supplemental Complaint” as the “Second Amended Complaint” or “SAC” herein.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.