Judge Randolph M. Hammock, Case 20STCV47123 2023-03-20 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.

Defendants Warlyn, Inc.; Mark Lerman; Leora Goren and Brenda Greiner, Co-Trustees of the Goren-Greiner Family Trust; Jan Goren, Trustee of the Goren, Marcus, Masino & Marsh Certified Accountants LLP Retirement Trust Account; and Mark Pollock and Sharon Lee Pollock, Trustees of the Pollock Living Trust (collectively, “Warlyn Defendants”), now demur to the fourth cause of action for quiet title in the Second Amended Complaint. [FN 1] Plaintiff Vista Land, LLC, opposed.

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.)

To plead a claim for quiet title, a plaintiff must allege: (1) a legal description of the property and its street address or common designation; (2) the title of the plaintiff and the basis of the title; (3) the adverse claims to the title of the plaintiff; (4) the date as of which the determination is sought; and (5) a prayer for the determination of the title of the plaintiff against the adverse claims. (CCP § 761.020.)

In support of their Demurrer, Defendants argue the quiet title cause of action fails against them because they were “bona fide encumbrancers” of the property, without actual or constructive notice of the prior interest. A bona fide or good faith encumbrancer is “one who acts without knowledge or notice of competing liens on the subject property” and “who has parted with something of value in consideration thereof.” (First Fid. Thrift & Loan Ass'n v. All. Bank (1998) 60 Cal. App. 4th 1433, 1440–41.) Defendants contend there “is no allegation anywhere in the [SAC] that the Warlyn Defendants knew of [the] Court’s injunctive relief orders prior to making their loan to Sillman.” (Dem. 5: 26-27.) Moreover, they argue under Code of Civil Procedure sections 405.60 and 405.61, the lis pendens in the related case cannot constitute constructive notice because it was later withdrawn. [FN 2]

As an initial matter, it is unclear—and the moving defendants cite no authority requiring—that a plaintiff must plead facts at the demurrer stage showing that a defendant was not a bona fide encumbrancer to maintain a quiet title action against them. Moreover, and perhaps most important for present purposes, because “the determination whether a party is a good faith purchaser or encumbrancer for value ordinarily is a question of fact,” it appears unlikely this court can resolve that question on a demurrer. (Triple A Mgmt. Co. v. Frisone (1999) 69 Cal. App. 4th 520, 536 [emphasis added]; Melendrez, 127 Cal. App. 4th at 1254.) [“the issue of whether a buyer is a BFP is a question of fact”].) That conclusion is true even accepting that CCP sections 405.60 and 405.61 completely absolve the moving parties of any knowledge they might have obtained from the lis pendens in the related case.

Going further, the SAC alleges that the initial “assignment from EIJ to AWBCO” is void, as the deed “was forged by backdating it so that assignee AWBCO could extort additional money from Plaintiff after the Assignment.” (SAC ¶ 60.) “It has been uniformly established that a forged document is void ab initio and constitutes a nullity; as such it cannot provide the basis for a superior title as against the original grantor.” (Wutzke v. Bill Reid Painting Serv., Inc. (1984) 151 Cal. App. 3d 36, 43.) “Under California law, a bona fide purchaser for value takes title free and clear of an improperly reconveyed deed of trust, so long as the reconveyance is voidable and not void.” (Schiavon v. Arnaudo Bros. (2000) 84 Cal. App. 4th 374, 376 [emphasis added].) But where a conveyance is void, “it [has] no effect even against a subsequent bona fide purchaser.” (Id. at 378.)

This court must “accept[] as true all well pleaded facts and those facts of which the court can take judicial notice.” (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal. App. 4th 1068, 1078.) Accepting the SAC’s allegations as true, Plaintiff has alleged that the initial assignment from EIJ to AWBCO is void due to forgery—this void conveyance would apparently infect the resulting chain of title, down to the conveyance involving the moving parties. This, of course, is just one of many void transfers alleged in the SAC. Thus, whether Defendants are bona fide encumbrancers is, for present purposes, immaterial. (Schiavon, supra, 84 Cal. App. 4th at 376.)

Accordingly, accepting the allegations of the SAC as true, Plaintiff has adequately pled all elements of a claim for quiet title against the moving Defendants. Finally, this court also rejects any contention that the SAC is uncertain, ambiguous, or unintelligible. “[D]emurrers for uncertainty are disfavored,” and are strictly construed “because ambiguities can reasonably be clarified under modern rules of discovery.” (Lickiss v. Fin. Indus. Regul. Auth., (2012) 208 Cal. App. 4th 1125, 1135.)

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.

FN 2 - Section 405.60 provides: “Upon the withdrawal of a notice of pendency of action pursuant to Section 405.50 or upon recordation of a certified copy of an order expunging a notice of pendency of action pursuant to this title, neither the notice nor any information derived from it, prior to the recording of a certified copy of the judgment or decree issued in the action, shall constitute actual or constructive notice of any of the matters contained, claimed, alleged, or contended therein, or of any of the matters related to the action, or create a duty of inquiry in any person thereafter dealing with the affected property.”

Similarly, section 405.60 provides: “Upon the withdrawal of a notice of pendency of action pursuant to Section 405.50 or upon recordation of a certified copy of an order expunging a notice of pendency of action pursuant to this title, no person except a nonfictitious party to the action at the time of recording of the notice of withdrawal or order, who thereafter becomes, by conveyance recorded prior to the recording of a certified copy of the judgment or decree issued in the action, a purchaser, transferee, mortgagee, or other encumbrancer for a valuable consideration of any interest in the real property subject to the action, shall be deemed to have actual knowledge of the action or any of the matters contained, claimed, or alleged therein, or of any of the matters related to the action, irrespective of whether that person possessed actual knowledge of the action or matter and irrespective of when or how the knowledge was obtained.”