Judge Randolph M. Hammock, Case Number: 23STCV03601, Date: 2023-08-21 Tentative Ruling

Judge: Randolph M. Hammock, Case: 23STCV03601, Date: 2023-08-21 Tentative Ruling

Plaintiff CIC Inc., as Trustee of the Serra Trust, alleges it placed a bid with Defendant Prestige Default Services, LLC, to obtain the residential home at a trustee’s sale. Plaintiff alleges it was the only party to bid on the property and that it submitted a cashier’s check sufficient to cover the bid. Defendant, however, allegedly rejected Plaintiff’s bid and offered to return the funds. Plaintiff alleges Defendant wrongfully rejected the bid in violation of California Civil Code § 2924m. The Complaint asserted a single cause of action for specific performance. This court previously sustained Defendant’s demurrer to the Complaint with 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.) This was Plaintiff’s second attempt to state a viable claim. Because the First Amended Complaint has again failed to survive demurrer, there is no reasonable possibility of successful amendment. Accordingly, no leave to amend is given.

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.)

Plaintiff CIC Inc., as Trustee of the Serra Trust, alleges that Defendant Prestige Default Services, Inc., conducted a trustee’s sale of the subject property on or about December 28, 2022. (FAC ¶¶ 10, 11.) Plaintiff alleges it submitted the only intent to bid for the property on or about January 3, 2023. (Id. ¶¶ 12, 13.) On or about February 13, 2023, Plaintiff tendered to Defendant a written bid of $476,101.01 along with a cashier’s check sufficient to cover the bid. (Id. ¶ 14.) Prestige received the bid and funds within 45 days of the trustee’s sale. (Id.) Plaintiff alleges Defendant rejected Plaintiff’s bid in violation of California Civil Code § 2924m. (Id. ¶ 18.)

Plaintiff filed this action on February 17, 2023, seeking specific performance. Plaintiff filed a lis pendens pertaining to the Property on February 27, 2023, which Defendant received on March 3, 2023. (Id. ¶ 21.) Later that day, Defendant granted and conveyed the property to Defendant Hong Morales, as Trustee of the Morales Family Living Trust. (Id. ¶ 23.) The Deed states that Morales, as Grantee, was the highest bidder at the sale conducted by Prestige on or about December 29, 2022, with a bid of $455,855.02. This bid, however, was less than the bid submitted by Plaintiff for the Property. (Id. ¶ 24.) Therefore, Plaintiff alleges Defendants “wrongfully deprived Plaintiff of title to the Property by rejecting its bid and funds submitted in compliance with Civil Code Section 2924m, and by executing a recording a transfer of the Property after Plaintiff recorded the Lis Pendens.” (Id. ¶ 28.)

In support of its First Cause of Action for “Breach of Agreement to Transfer Real Property,” Plaintiff alleges that Defendant Prestige “had a statutory duty [under section 2924m] to deliver title to the Property to the Plaintiff.” (Id. ¶ 30.) In its Second Cause of Action for Quiet Title, Plaintiff seeks a determination that it is the rightful owner of the property. (Id. ¶ 41.)

Defendant first argues that Plaintiff’s claim for breach of agreement fails because section 2924m does not impose a contractual relationship between Plaintiff and Defendant. The court agrees with that assessment.

The elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff. (Oasis W. Realty, LLC v. Goldman (2011) 51 Cal. 4th 811.) The first element—the existence of a contract—requires parties capable of contracting, their consent, a lawful object, and a sufficient cause or consideration. (Civ. Code, § 1550.)

The existence of a contract and the availability of specific performance, which Plaintiff seeks here, are interrelated. “To obtain specific performance after a breach of contract, a plaintiff must generally show: ‘(1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract.’” (Real Est. Analytics, LLC v. Vallas (2008) 160 Cal. App. 4th 463, 472 [emphasis added].)

Here, on its face, the First Amended Complaint demonstrates there was no contract to transfer real property. Plaintiff has not identified any portion of section 2924m—nor any other authority—that supports imposing a contract where none exists. Section 2924m(j) only provides that “[t]he Attorney General, a county counsel, a city attorney, or a district attorney may bring an action for specific performance or any other remedy at equity or at law to enforce this section.” This suggests that any form of relief is limited to an action brought by the “Attorney General, a county counsel, a city attorney, or a district attorney,” and that such an action should be one for specific performance.

In other words, there is nothing in the statutory regime granting Plaintiff a means to sue Defendant under these circumstances. Lacking is any underlying contract to support specific performance. The court is aware that Civil Code § 3387 imposes a presumption that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation, and therefore, that specific performance is generally an appropriate remedy. But the issue here is not the lack of a remedy—it’s the lack of a contract or agreement in the first place to support the remedy. Because Plaintiff has not alleged the existence of a legally cognizable agreement, its cause of action for breach of agreement to transfer real property fails.

Turning to the second cause of action, the quiet title claim fails for the same reasons. Based on the lack of any cognizable agreement, Plaintiff has not alleged any valid interest in the property to support quiet title.

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.