Judge Randolph M. Hammock, Case 20STCV47123 2023-04-03 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.”

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.)

Defendant first argues the entire SAC fails to comply with this court’s August 20, 2022, Order. 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.)

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, does not raise any statute of limitations arguments. Indeed, the fact that Defendant does 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 Defendant raise that pleading deficiency in his demurrer on some legally recognized basis.

Similarly, the sham pleading doctrine is inapplicable based on the facts and circumstances as alleged. This Doctrine states generally that “[a] plaintiff may not avoid a demurrer by pleading facts or positions in an amended complaint that contradict the facts pleaded in the original complaint or by suppressing facts which prove the pleaded facts false. [Citation.] Likewise, the plaintiff may not plead facts that contradict the facts or positions that the plaintiff pleaded in earlier actions or suppress facts that prove the pleaded facts false. [Citation.]” (Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal. App. 4th 336, 344). The Doctrine is not “intended to prevent honest complainants from correcting erroneous allegations ... or to prevent correction of ambiguous facts.” ’ [Citation.] Instead, it is intended to enable courts ‘to prevent an abuse of process.’” [Citation.]” (Id.) There is no abuse of process here by the amendments.

“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.)

Plaintiff alleges “[t]he first slander of Plaintiff’s title occurred on September 25, 2020 when Defendants EIJ, Chris Eskijian and Armen Eskijian recorded an assignment which had been notarized on September 13, 2020 and then altered (prior to recording) to say it was notarized on September 4, 2020 which would have been before the foreclosure sale to Plaintiff on September 8, 2022.” (SAC ¶ 81.) Plaintiff further alleges the “forgery of the assignment allowed the assignor (the Eskijians) to coordinate with the assignee (Royston) to increase the arrears demand to Plaintiff by an extortionate amount and have assignee Royston pretend to be a bona fide successor of the deed of trust, relieving EIJ of liability from the extortion.” (SAC ¶ 82.)

Plaintiff has therefore alleged Defendants’ involvement in the publication, which is sufficient for pleadings purpose to maintain a cause of action against each. By allegedly “backdating” the assignment, Defendants aided AWBCO in making an “unfounded claim of an interest in the property which thr[ew] doubt upon its ownership.” (M.F. Farming Co. v. Couch Distrib. Co. (2012) 207 Cal. App. 4th 180, 199 [disapproved of on other grounds by Baral v. Schnitt (2016) 1 Cal. 5th 376].) These allegations plead acts by Defendants constituting a false publication, without privilege, that caused Plaintiff harm. (Klem, supra, 17 Cal. App. 5th at 612.)

Defendants also contend the cause of action fails as to Armen Eskijian because he did not sign the assignment, and also fails as to Chris Eskijian because he signed on behalf of EIJ, not on behalf of himself personally.

However, Plaintiff alleges all moving Defendants played a role in the scheme to increase the payout, so that “Defendants Chris Eskijian, Armen Eskijian and Royston would all share the benefit of the increased demand.” (SAC ¶ 32.) Directors of a corporation “are liable to third persons injured by their own tortious conduct regardless of whether they acted on behalf of the corporation and regardless of whether the corporation is also liable. [Citations.] This liability does not depend on the same grounds as 'piercing the corporate veil,' on account of inadequate capitalization for instance, but rather on the officer or director's personal participation or specific authorization of the tortious act. [Citation.]” (PMC, Inc. v. Kadisha (2000) 78 Cal. App. 4th 1368, 1379–80 [emphasis added].) Put differently, the legal fiction of EIJ, Inc., as an independent entity does not “insulate [the individual Defendants] from liability for their own tortious conduct.” (Id. at 1381-82.)

Defendants also contend the fourth element fails because 1) Plaintiff admits the underlying first deed of trust was valid through the entire month of September 2020 and beyond; and 2) there can be no proximate injury caused by the assignment.

Plaintiff, however, alleges that the alleged backdating made the assignment appear to have occurred before the foreclosure sale to Vista Land so as to justify the higher demand by AWBCO, “which cause[d] direct and immediate pecuniary loss” to Plaintiff. (Klem, supra, 17 Cal. App. 5th at 612.) Moreover, “it is well-established that attorney fees and litigation costs are recoverable as pecuniary damages in slander of title causes of action when…litigation is necessary ‘to remove the doubt cast’ upon the vendibility or value of plaintiff's property. (Sumner Hill Homeowners' Assn., Inc. v. Rio Mesa Holdings, LLC, (2012) 205 Cal. App. 4th 999, 1030.) Thus, Plaintiff has alleged Defendants’ direct involvement with “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.” (Klem, supra, 17 Cal. App. 5th at 612.)

Defendants contend the Third Cause of Action for Cancellation of Instruments fails against them because they do not hold an interest in any of the instruments Plaintiff seeks to cancel. Rather, “EIJ divested its interest in the assignment to AWBCO and does not appear in any other documents.” (Dem. 12: 20-21.) Thus, “[s]ince Demurring Parties do not claim any sort of interest that they can enforce through these instruments, the reverse is true that they are not proper parties to an action to cancel the instruments.” (Dem. 12: 23-24.)

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. While this court appreciates that EIJ may no longer hold an interest in the first instrument, Defendants cite no authority stating that absolves them from the cause of action. Indeed, assuming the assignment from EIJ to AWBCO is cancelled, that cancellation would place the parties in the position they were in before the assignment—this would necessarily involve the demurring Defendants. Defendants cite no authority suggesting otherwise.

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.)

“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 presently have any “adverse claims” to the property.

Accordingly, Defendants’ Demurrer to the Fourth Cause of Action is SUSTAINED without leave to amend. 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 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.)

Importantly, as this court concluded when addressing the same argument in Defendant Royston’s demurrer, the SAC omits any allegation that Plaintiff relied on the alleged “overcharge.” (See 02/15/2023 Ruling.) Instead, the complaint actually would appear to suggest that Plaintiff 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 Fifth Cause of Action is SUSTAINED with leave to amend. When amending, Plaintiff must plead all the required elements of fraud, including detrimental reliance, with the required specificity.

Defendants demur to the Sixth Cause of Action contending that 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, as consistent with this court’s previous rulings in this case.

“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, Defendants’ 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.

Courts, however, no longer require a fiduciary relationship for an accounting. “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.) “An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” (Id.) “[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.)

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.