Judge Stephen I. Goorvitch, Case 22STCV11182 2023-03-13 Tentative Ruling

Judge: Stephen I. Goorvitch, Case: 22STCV11182, Date: 2023-03-13 Tentative Ruling

Case Number: 22STCV11182 Hearing Date: March 13, 2023 Dept: 39

Perry Lazar v. First American Title Company

Case No. 22STCV11182

Demurrer and Motion to Strike

BACKGROUND

Perry Lazar (“Plaintiff”) filed a first amended complaint against First American Title Insurance Company and First American Title Company (Collectively, “Defendants”) stemming from a title insurance policy on his property. Plaintiff asserts the following causes of action: Breach of contract, breach of the covenant of good faith and fair deadline, negligence, breach of Business and Professions Code section 8700, and violation of Business and Professions Code sections 17200. Now, Defendants demur to the first amended complaint and move to strike certain allegations.

LEGAL STANDARD

A. Demurrer

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In ruling on a demurrer, the court must “liberally construe[]” the allegations of the complaint. (Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

B. Motion to Strike

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).) On a motion to strike, the court may: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)

EVIDENTIARY ISSUES

Defendants request that the Court take judicial notice of the complaints and rulings in Perry Lazar v. First American Title Insurance Company, et al., Case Number 20PSCV00596, as well as a complaint in Plone Trust, et al. v. Kalousd Pandazos, et al., Case Number 21STCV19845. The Court grants the request per Evidence Code section 452(d). The Court need not rule on Plaintiff’s request for judicial notice in order to resolve the motions.

DISCUSSION

Defendants demur to the first amended complaint, arguing that the causes of action are untimely. A party must bring a cause of action based on a title insurance policy within two years after discovery of the loss or damage that the policy covers. (Code Civ. Proc., § 339, subd. (1); Lee v. Fidelity Nat'l Title Ins. Co. (2010) 188 Cal.App.4th 583, 599-600.) Plaintiff alleges as follows: Defendants issued a title insurance policy for Plaintiff’s benefit when he purchased the property on March 8, 2004. (First Amended Complaint, ¶ 6.) Plaintiff discovered in 2011 that a local utility had an access easement to his property, which did not appear on the title report. (Id., ¶ 11.) Defendants paid Plaintiff $9,000 for the loss in value from this access easement. (Ibid.) Plaintiff listed the property for sale and received an offer on October 7, 2019. (Id., ¶ 13.) However, the property fell out of escrow. In late October 2019, a different title insurance company determined that the title was uninsurable due to “significant chain of title issues.” (Ibid.) In fact, the local utility claimed more than an access easement. (Id., ¶¶ 12, 14.) The local utility claimed to own a fee interest in a large portion of the property. (Ibid.) The first amended complaint also identifies a series of other problems with the title. (Id., ¶ 13(a)-(g).)

The Court cannot conclude that the issue in 2011, necessarily alerted Plaintiff that there were serious issues with his title. An access easement by a utility is vastly different in character—and minor—in comparison to the issues identified in 2019. Plaintiff learned about the issues in “late October 2019,” which means the statute of limitations ran in late October 2021. However, “[n]otwithstanding any other law, the statutes of limitations and repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.” (Cal. Rules of Court, emergency rule 9, subd. (a).) This adds an additional 178 days to the statute of limitations. Therefore, the statute of limitations ran in late April 2022, and this case was filed on April 1, 2022. The Court overrules the demurrer on this basis.

Defendants demur to the first cause of action, breach of contract. Defendants argue that the policy had a policy limit of $125,000, and Plaintiffs allege that Defendants have paid a total of $125,000. (First Amended Complaint, ¶¶ 11, 24(j).) However, notwithstanding Defendant’s tender of the policy limits, Plaintiff is entitled to recover “damages caused by a defect in title covered by the policy.” (Native Sun Investment Group v. Ticor Title Ins. Co. (1987) 189 Cal.App.3d 1265, 1274.) Accordingly, Defendant’s tender of the policy limits does not bar Plaintiff’s cause of action for breach of contract.

Finally, Defendants argue that the fourth and fifth causes of action are barred by issue preclusion based upon the litigation in Perry Lazar v. First American Title Insurance Company, et al., Case Number 20PSCV00596, which involved the same property. “‘Res judicata’ describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, ‘precludes relitigation of issues argued and decided in prior proceedings.’ [Citation] Under the doctrine of res judicata, if a plaintiff prevails in an action, the cause is merged into the judgment and may not be asserted in a subsequent lawsuit; a judgment for the defendant serves as a bar to further litigation of the same cause of action.” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896-897, citation omitted.)

In the instant case, Plaintiff’s fourth cause of action—violations of Business and Professions Code section 8700—alleges that Defendants engaged in unlawful, deceptive, and misleading business practices by preparing title descriptions without the property authority, licenses, and experiences. (First Amended Complaint, ¶ 55.) Specifically, Plaintiff alleges that Defendants stated that the title descriptions were prepared by a licensed surveyor and/or engineer. (Ibid.) In fact, according to Plaintiff, the description at issue was “not prepared by a surveyor, an engineer or someone legally authorized to prepare a title description pursuant to the business and professions code.” (Id., ¶ 56.) This issue was not raised in Case Number 20PSCV00596, so the demurrer is overruled.

Plaintiff’s fifth cause of action—violations of Business and Professions Code section 17200—alleges that Defendants engaged in unlawful, unfair, deceptive, or misleading business practices by failing to inform him of the defects in title. (Id., ¶ 61.) These issues were litigated in Case Number 20PSCV00596, and the Court (Falls, J.) sustained demurrers to the causes of action that necessarily encompass the issues raised in Plaintiff’s fifth cause of action. Therefore, the Court sustains the demurrer to the fifth cause of action without leave to amend.

B. Motion to Strike

Defendants move to strike “patently false allegations from the Complaint.” (See Defendants’ Memorandum of Points & Authorities, p. 9:3.) A motion to strike cannot be used as a “‘line item veto’ for the civil defendant . . . .” (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683.) Therefore, the motion is denied.

CONCLUSION AND ORDER

Based upon the foregoing, the Court orders as follows:

1. Defendants’ demurrer is overruled with respect to the first, second, third, and fourth causes of action.

2. Defendants’ demurrer is sustained without leave to amend with respect to the fifth cause of action.

3. Based upon the stipulation of the parties, the Court advances the case management conference from March 23, 2023, to March 13, 2023, at 8:30 a.m. and sets the following dates:

Final Status Conference: May 10, 2024, at 9:30 a.m.

Trial: May 21, 2024, at 9:30 a.m.

The Court orders the parties to comply with all pretrial procedures for Department #39. Jury fees shall be posted within ten (10) days if they have not been posted already or the parties will waive jury.

4. Defendants’ counsel shall provide notice and file proof of such with the Court.