Judge Salvatore Sirna, Case Number: 24PSCV00548, Date: 2024-05-13 Tentative Ruling

Judge: Salvatore Sirna, Case: 24PSCV00548, Date: 2024-05-13 Tentative Ruling

Case Number: 24PSCV00548 Hearing Date: May 13, 2024 Dept: G

Defendant Breckenridge Property Fund 2016, LLC’s Demurrer to Plaintiffs’ Complaint

Respondent: Plaintiffs Kyndle Crigler and Shelia Crigler

TENTATIVE RULING

Defendant Breckenridge Property Fund 2016, LLC’s Demurrer to Plaintiffs’ Complaint is SUSTAINED with twenty (20) days leave to amend.

BACKGROUND

This is an action to quiet title. In November 1987, Plaintiff Shelia Crigler and William Crigler purchased a property in Pomona. To finance their purchase, they obtained a secured loan and subsequently mortgaged the Pomona property for additional funds. In October 2018, they executed a quitclaim deed to convey their ownership to the Family Trust of William Robert Crigler and Shelia Vera Crigler. After William Crigler passed away in 2018, Plaintiff Kyndle Crigler assumed the mortgage payments. In 2022, the Criglers applied for and were placed on a payment plan by Defendant PHH Mortgage Corporation (PHH). In April 2023, PHH removed the Criglers from the repayment plan after they allegedly failed to timely pay property charge expenses. While the Criglers allege they attempted to make payment towards the amount demanded by PHH, PHH proceeded with nonjudicial foreclosure proceedings. On December 4, 2023, Defendant Breckenridge Property Fund 2016, LLC (Breckenridge) purchased the Pomona property at a foreclosure auction.

On February 21, 2024, the Criglers filed a complaint against Breckenridge, First American Title Insurance Company (First American), PHH, and Does 1-20, alleging the following causes of action: (1) quiet title, (2) cancellation of written instrument, (3) wrongful foreclosure, (4) declaratory relief, (5) slander of title, and (6) negligent misrepresentation.

On April 5, 2024, Breckenridge filed the present demurrer. Prior to filing, Breckenridge’s counsel met and conferred telephonically with the Criglers’ counsel and was unable to reach a resolution. (Cox Decl., ¶ 2.)

On April 15, 2024, the Criglers’ counsel filed a motion to be relieved as counsel.

A hearing on the present demurrer is set for May 13, 2024. A case management conference and OSC Re: Default as to PHH and First American are set for June 10, 2024 while the motions to be relieved as counsel are set for June 18, 2024.

REQUEST FOR JUDICIAL NOTICE

Breckenridge requests the Court take judicial notice of a notice of default recorded July 8, 2022, and a notice of trustee’s sale recorded October 4, 2022. The existence and factual contents of recorded documents including notices of default and trustee’s sale can be noticed pursuant to Evidence Code sections 452, subdivisions (c) and (h), and 453. (Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919, 924, fn. 1.) Thus, the Court GRANTS Breckenridge’s request.

ANALYSIS

Breckenridge demurs to the Criglers’ first cause of action (quiet title), second cause of action (cancellation of instruments), fourth cause of action (declaratory relief), and fifth cause of action (slander of title) on the grounds that (1) they fail as a matter of law because Breckenridge is a bona fide purchaser and (2) they are insufficiently pled. For the following reasons, the Court SUSTAINS the demurrer in its entirety with leave to amend.

Legal Standard

A party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) 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 pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “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, supra, at p. 747.)

Discussion

Breckenridge argues the Criglers’ first cause of action (quiet title), second cause of action (cancellation of instruments), fourth cause of action (declaratory relief), and fifth cause of action (slander of title) fail as a matter of law because Breckenridge is presumed to be a bona fide purchaser. The court agrees.

Legal Standard

Civil Code section 2924, subdivision (c) states as follows:

“A recital in the deed executed pursuant to the power of sale of compliance with all requirements of law regarding the mailing of copies of notices or the publication of a copy of the notice of default or the personal delivery of the copy of the notice of default or the posting of copies of the notice of sale or the publication of a copy thereof shall constitute prima facie evidence of compliance with these requirements and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice.” (Civ. Code, § 2924, subd. (c).)

Thus, when a bona fide purchaser obtains a property through a trustee’s sale and the deed upon trustee’s sale contains the above required recital, the trier of fact is required find that the purchaser holds title to the property. (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1250 & fn. 17 (Melendrez).) To be considered a bona fide purchaser, the purchaser must “(1) purchase the property in good faith for value, and (2) have no knowledge or notice of the asserted rights of another.” (Id., at p. 1251.)

Discussion

In this case, the trustee’s deed upon sale for the Pomona property includes the required statement of compliance with notice requirements. (Complaint, Ex. J.) Thus, to bring a quiet title action against Breckenridge, the Complaint must allege sufficient facts to establish that Breckenridge is not a bona fide purchaser. Here, the first element determining the status of a bona fide purchaser is established in favor of Breckenridge as the Complaint alleges Breckenridge purchased the Pomona property for value. (Complaint, ¶ 26.)

As to the second element involving a lack of notice, the Complaint alleges Breckenridge “knew or should have known” that the trust deed was fraudulent. (Complaint, ¶ 43.) It alleges the trust deed was fraudulent because the Criglers never disputed payment and were never notified that they were in danger of foreclosure. (Complaint, ¶ 70.) But these allegations involve PHH, not Breckenridge. It is well established that “a bona fide purchaser is not chargeable with the fraud of his predecessors and takes a title purged of any anterior fraud affecting it and free from any equities existing between the original parties.” (Marlenee v. Brown (1943) 21 Cal.2d 668, 675.) Because the Complaint fails to allege how Breckenridge participated in the alleged fraud or how Breckenridge knew the trust deed was issued through an allegedly fraudulent process, it fails to demonstrate that Breckenridge is not a bona fide purchaser. Thus, these causes of action fail to state a claim as a matter of law.

Accordingly, Breckenridge’s demurrer is SUSTAINED with leave to amend.

CONCLUSION

Based on the foregoing, Breckenridge’s demurrer to the Criglers’ Complaint is SUSTAINED with twenty (20) days leave to amend.