Judge: Randy Rhodes, Case: 21CHCV00316, Date: 2023-02-08 Tentative Ruling
Case Number: 21CHCV00316 Hearing Date: February 8, 2023 Dept: F51
Dept. F-51¿
Date: 2/8/23
Case #21CHCV00316
¿
DEMURRER
Demurrer without Motion to Strike Filed: 12/2/22
MOVING PARTY: Defendant Witkin & Associates,
LLC, a Delaware limited liability company (“Moving Defendant”)
RESPONDING PARTY: Plaintiff Lucy Holdings, LLC, a
Wyoming limited liability company (“Plaintiff”)
NOTICE: OK
RELIEF REQUESTED: Moving Defendant demurs to the
second cause of action in Plaintiff’s second amended complaint (“SAC”).
TENTATIVE RULING: The demurrer is overruled.
REQUESTS FOR JUDICIAL NOTICE
Moving Defendant’s Request for Judicial Notice (RJN) is granted.
Plaintiff’s RJN is granted.
I.
BACKGROUND
This quiet title action arises out
of a dispute over certain property located at 28212 Kelly Johnson Parkway,
Santa Clarita, California 91355 (the “Subject Property”). Title to the Subject
Property is vested in Plaintiff. Defendant Krupe Industries, Inc. (“Krupe”),
and Moving Defendant, as the foreclosure trustee, attempted to foreclose on a
deed of trust encumbering the Property.
On 4/23/21, Plaintiff filed its
original complaint in this action alleging a cause of action for declaratory
relief/quiet title against Krupe and Moving Defendant (collectively, “Defendants”)
and a cause of action for fraud against Krupe. Defendants demurred to the
original complaint. On 6/9/21, Moving Defendant recorded a Notice of Sale of
the Subject Property. On 8/2/21, the Court granted Plaintiff’s request for a
preliminary injunction to stop the foreclosure sale.
8/23/21, Plaintiff filed its First
Amended Complaint (“FAC”), asserting a single cause of action for declaratory
relief/quiet title. On 9/22/21, Moving Defendant demurred to Plaintiff’s FAC. On
5/5/22, Plaintiff was notified that Moving Defendant recorded a “Notice of
Rescission of Notice of Default” as to the Subject Property, which effectively
terminated the foreclosure proceeding.
On 10/4/22, the Court granted
Moving Defendant’s motion for judgment on the pleadings, with 30 days leave for
Plaintiff to amend its FAC to sufficiently state a cause of action against
Moving Defendant. On 11/7/22, Plaintiff filed its SAC, alleging against
Defendants the following causes of action: (1) Declaratory Relief/Quiet Title;
(2) Slander of Title; and (3) Conspiracy to Slander Title.
On 12/2/22, Moving Defendant filed
the instant demurrer and request for judicial notice. On 1/26/23, Plaintiff
filed its opposition and request for judicial notice. On 2/1/23, Moving
Defendant filed its reply.
II.
ANALYSIS
Meet-and-Confer
Before filing its demurrer, “the demurring
party shall meet and confer in person or by telephone with the party who filed
the pleading that is subject to demurrer for the purpose of determining whether
an agreement can be reached that would resolve the objections to be raised in
the demurrer.” (Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and serve a meet and confer
declaration stating either: “(A) The means by which the demurring party met and
conferred with the party who filed the pleading subject to demurrer, and that
the parties did not reach an agreement resolving the objections raised in the
demurrer;” or “(B) That the party who filed the pleading subject to demurrer
failed to respond to the meet and confer request of the demurring party or
otherwise failed to meet and confer in good faith.” (Id. at subd.
(a)(3).)
Here, counsel for Defendant
declares that the parties met and conferred telephonically regarding the issues
raised in the demurrer, but were unable to come to a resolution. (Decl. of
Demurring Party re Meet and Confer.) Therefore, counsel has satisfied the
preliminary meet and confer requirements of Code of Civil Procedure section
430.41, subdivision (a).
Demurrer
As a general matter, a¿party may
respond to a pleading against it by demurrer on the basis of any single or
combination of eight enumerated grounds, including¿that¿“the pleading does not
state facts sufficient to constitute a cause of action” or is uncertain,
meaning “ambiguous and unintelligible.” (Code Civ. Proc., § 430.10, subds. (e)
and (f).)
In¿a demurrer proceeding, the
defects must be apparent on the face of the pleading or via proper judicial
notice.¿(Donabedian v. Mercury Ins. Co.¿(2004) 116 Cal.App.4th 968,
994.)¿“A demurrer tests the pleading alone, and not the evidence or facts
alleged.” (E-Fab, Inc.¿v.¿Accountants, Inc. Servs.¿(2007) 153
Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the
complaint’s properly pleaded or implied factual allegations. (Ibid.) The
only issue a demurrer is concerned with is whether the complaint, as it stands,
states a cause of action. (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740,
747.)
Here, Moving Defendant¿demurs to
Plaintiff’s SAC pursuant Code of Civil Procedure section 430.10, subdivisions¿(e)
and (f),¿arguing that the pleading fails¿to allege facts sufficient to¿state¿a
cause of action for Slander of Title against it, and is uncertain.
A.
Failure to State Facts to Constitute a
Cause of Action
Plaintiff’s second cause of action
alleges against all defendants slander of title. “The elements of a cause of
action for slander of title are ‘(1) a publication, (2) which is without
privilege or justification, (3) which is false, and (4) which causes direct and
immediate pecuniary loss.’” (RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co.,
Inc. (2020) 56 Cal.App.5th 413, 433, fn. 14.)
Here, Plaintiff alleges that Moving
Defendant proceeded with recording a Notice of Sale on the Subject Property
without any “good faith belief in the validity of the deed of trust and
recklessly disregarded the documents calling into question the deed of trust
and grant deed evidencing the true ownership by [Plaintiff] in the [Subject]
Property as such filing of the Notice of Sale by [Moving Defendant] was without
privilege.” (SAC ¶
79.)
Moving Defendant argues that
Plaintiff’s cause of action fails because Moving Defendant’s conduct was
privileged, without malice, and did not call into question the validity of
Plaintiff’s ownership interest in the Subject Property.
Privilege
Moving Defendant argues that its
“actions in recording a notice of default and notice of trustee’s sale were privileged
as a matter of law by Civil Code §47
and §2924(d).”
(Dem. 13:23–25.) Under these statutes, the performance of a trustee’s statutory
duties, including those pertaining to foreclosure procedures, is considered
privileged. (Civ. Code §§
47, 2924, subd. (d); see also Schep v. Capital One, N.A. (2017) 12
Cal.App.5th 1331, 1336.)
Moving Defendant argues that the
instant case is indistinguishable from Schep, where the Court of Appeal
affirmed the trial court’s sustaining of a demurrer against a plaintiff who alleged
slander of title against the foreclosing trustee of the deed of trust. (12
Cal.App.5th at 1338.) The Schep Court reasoned that under Civil Code
sections 47 and 2924, the recording of a notice of sale, notice of default, and
trustee’s deed upon sale are privileged. (Id. at 1336.)
The Schep Court further
noted that Civil Code section 47 creates two privileges: (1) an absolute
privilege, “and (2) a qualified privilege that ‘applies only to communications
made without malice.’” (Id. at 1337.) Here, Plaintiff argues in
opposition that the Court should distinguish the instant case from Schep because
here, unlike in Schep, Plaintiff has alleged malice which would void
Moving Defendant’s qualified privilege. (Pl.’s Opp., 12:26–28.)
Malice
As set forth under Schep, “‘malice’
means that the defendant (1) was motivated by hatred or ill will towards the
plaintiff, or (2) lacked reasonable grounds for [its] belief in the truth of
the publication and therefore acted in reckless disregard of the plaintiff's
rights.” (12 Cal.App.5th at 1337 [quotations omitted].)
Here, Plaintiff alleges in its SAC
that Moving Defendant proceeded with recording a Notice of Sale on the Subject
Property without any “good faith belief in the validity of the deed of trust
and recklessly disregarded the documents calling into question the deed of
trust and grant deed evidencing the true ownership by [Plaintiff] in the
[Subject] Property as such filing of the Notice of Sale by [Moving Defendant]
was without privilege.” (SAC ¶
79.)
In Schep, the Court found
that no malice existed despite the plaintiff’s claim that the defendants were
constructively aware of his competing claim to title due to his recording of a
wild deed. (12 Cal.App.5th at 1338.) Moving Defendant argues that the Court
should follow the same reasoning in the instant case and find no malice despite
Plaintiff’s allegation that Moving Defendant “should have been on actual or
constructive notice that the Deed of Trust was invalid merely because it ‘sent
an email’ to [Moving Defendant] after the Notice of Default was recorded.”
(Dem. 16:15–18.)
However, unlike in Schep, here,
Plaintiff has alleged actual notice to Moving Defendant rather than mere
constructive notice. (SAC ¶
78.) Moreover, as Plaintiff notes, Moving Defendant continued to move forward
with the foreclosure proceedings even after Plaintiff filed the instant action,
which further distinguishes this case from Schep. (Pl.’s Opp., 8:17–19.)
The Court notes that a demurrer
tests the pleadings alone, and not the validity of the facts or evidence
alleged. (E-Fab,153 Cal.App.4th at 1315.) As such, the Court finds that
Plaintiff has sufficiently plead malice with regard to Moving Defendant’s
conduct, which would void Moving Defendant’s otherwise privileged conduct.
Injury
Moving Defendant argues that
Plaintiff’s cause of action for slander of title necessarily fails because “foreclosure
recordings do ‘not call into question the validity of plaintiffs’ control of
the property’ or assert any legal or equitable ownership/title interest in the
property.’” (Dem. 22:23–25.)
However, “the recordation of an
instrument facially valid but without underlying merit will, of course, give
rise to an action for slander of title.” (Seeley v. Seymour (1987) 190
Cal.App.3d 844, 857.) Moreover, “a slander of title cause of action need not be
based upon an actual foreclosure,” and may be valid where a “defendant had
recorded a notice of default and published notice of a trustee's sale such that
the only injury was pecuniary.” (Chao Fu, Inc. v. Chen (2012) 206
Cal.App.4th 48, 58 (citing Broadway Federal Savings & Loan Ass’n of Los
Angeles v. Howard (1955) 133 Cal.App.2d 382, 400.) “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’ Ass’n, Inc. v. Rio Mesa Holdings, LLC (2012) 205
Cal.App.4th 999, 1030.)
Here, Plaintiff has sufficiently
pled that Moving Defendant wrongfully recorded the notice of sale, thereby
clouding title to the Subject Property, and causing Plaintiff to incur costs
and fees to litigate the instant action and clear title. (SAC ¶¶ 78–81.) Moving
Defendant’s reliance on Salazar v. Thomas (2015) 236 Cal.App.4th 467 is
misplaced, as there were no claims of slander of title in that action.
Based on the foregoing, the Court
finds that Plaintiff has alleged facts sufficient to state a cause of action
for slander of title as against Moving Defendant. Accordingly, the demurrer is
overruled on this ground.
Generally speaking, “demurrers for
uncertainty are disfavored and thus are strictly construed because ambiguities
can reasonably be clarified under modern rules of discovery. Such demurrers are
granted only if the pleading is so incomprehensible that defendant cannot
reasonably respond.” (Cal.Jur.3d § 137.) “Where the complaint contains substantive
factual allegations sufficiently apprising defendant of the issues it is being
asked to meet, a demurrer for uncertainty should be overruled or plaintiff
given leave to amend.” (Williams v. Beechnut Nutrition Corp. (2011) 185
Cal.App.3d 135, 139 fn.2.)¿¿
Here, Moving Defendant argues that
Plaintiff’s second cause of action in the SAC is uncertain pursuant to Code of
Civil Procedure section 430.10, subdivision (f). In applying the stringent
standard for demurrers filed on this ground, the Court finds that the SAC is
not “so incomprehensible” that Moving Defendant cannot respond, especially
given the extensive analyses it has offered in attacking the pleading.
Accordingly, the demurrer is overruled on this ground.¿
CONCLUSION
The demurrer is overruled.