Judge: Theresa M. Traber, Case: 21STCV07164, Date: 2023-08-11 Tentative Ruling
Case Number: 21STCV07164 Hearing Date: March 15, 2024 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: March 15, 2024 TRIAL DATE: NOT SET
CASE: Americo Financial Life and Annuity Ins. Co. v. Michelle Lyn Smallwood, et al.
CASE NO.: 21STCV07164 
DEMURRER; AND REQUEST FOR DISMISSAL
MOVING PARTY: Cross-Defendant Americo Financial Life & Annuity Ins. Co.
RESPONDING PARTY(S): No response on eCourt as of 01/31/24
CASE HISTORY:
· 02/23/21: Complaint filed.
· 08/28/23: Cross-Complaint filed.
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is an action for statutory interpleader to deposit disputed proceeds from a set of annuity contracts.
Cross-Defendant Americo Financial Ins. Co. demurs to the Cross-Complaint filed by Michelle Lynn Smallwood in its entirety.
The Court held a hearing on the demurrer on February 5, 2024, when Ms. Smallwood appeared and contended that she had not been properly served with the papers. Counsel for Cross-Defendant submitted a declaration detailing the extensive efforts made to ensure that Ms. Smallwood received the moving papers. The Court finds that Ms. Smallwood was properly served but has filed no opposition, so it is proper to rule on the merits of the pending demurrer.
TENTATIVE RULING:
Plaintiff/Cross-Defendant’s Demurrer to the Cross-Complaint is SUSTAINED without leave to amend.
Plaintiff in Interpleader Americo Financial Life & Annuity Ins. Co.’s Request for Dismissal is re-set for this date and GRANTED.
DISCUSSION:
Cross-Defendant Americo Financial Ins. Co. demurs to the Cross-Complaint filed by Michelle Lynn Smallwood in its entirety.
Legal Standard
A demurrer tests whether the cross-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 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, 147 Cal.App.4th at p. 747.) The ultimate facts alleged in the [cross-] complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n demurrer, pleadings are read liberally and allegations contained therein are assumed to be true”].) “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.)
Meet and Confer
Before filing a demurrer, the demurring party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the demurrer and file a declaration detailing their meet-and-confer efforts. (Code Civ. Proc., § 430.41(a).) However, an insufficient meet and confer process is not grounds to overrule or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)
Counsel for Cross-Defendant filed a declaration stating that she e-mailed Cross-Complainant concerning this demurrer on September 18, 2023, and then again on September 25, 2023. (Declaration of Jill Glennon ISO Demurrer ¶¶ 2-3; Exh. A.) Cross-Defendant received no response. (Id.) The Court concludes that Cross-Defendant has complied with the statutory meet-and-confer requirements.
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Request for Judicial Notice
Cross-Defendant requests that the Court take judicial notice of (1) the Complaint in this action; (2) Cross-Defendant’s Motion for Leave to Deposit Interpleader Funds in this action; (3) Cross-Complainant’s Notice of Related Case; (4) the Petition in the probate matter In re the Matter of the Constance Hilton Revocable Trust dated May 29, 2013, LASC Case No. 21STPB02506; (5) The Notice of Deposit of Interpleader Funds in this action; (6) Cross-Defendant’s status conference statement; (7) the June 5, 2023 Minute Order in this action; (8) the July 12, 2023 Minute Order in this action; (9) the August 11, 2023 Minute Order in this action; (10) Cross-Defendant’s August 28, 2023 Notice of Ruling in this action; and (11) the Declaration of John Joplin In Support of Motion for Leave to Deposit Interpleader Funds filed in this action.
Cross-Defendant’s Requests are GRANTED pursuant to Evidence Code section 452(d) (court records).
Procedural History
Before addressing Cross-Defendant’s challenges to the Cross-Complaint, a brief review of the procedural history is appropriate. Plaintiff and Cross-Defendant Americo filed a complaint in interpleader naming Cross-Complainant Smallwood and Victor Daigle as Defendants. (RJN Exh. 1.) The complaint alleges that Plaintiff sold two annuity contracts in late 2003 to Constance Marie Hilton, who made several changes to the designated beneficiaries on those contracts several times before her death on October 10, 2020. (Complaint ¶¶ 9-13.) Until 2014, the Complaint alleges, Ms. Hilton made those alterations herself. (Id.) Afterward, Defendant Smallwood and another individual, Sandra Quiroz, submitted further change requests pursuant to powers of attorney that each claimed to have obtained from Ms. Hilton. (Id.) This dispute arose from a pair of beneficiary change requests: the first sought by Defendant Smallwood in her favor on August 5, 2019, and the second from Ms. Quiroz in favor of Defendant Daigle shortly afterwards. (Complaint ¶ 12.)
After the passing of Constance Hilton, Defendants made competing claims to the funds: Defendant Smallwood claimed that the change form submitted by Ms. Quiroz was a forgery, and Defendant Daigle claimed that it was valid and effective. (Complaint ¶ 13.) This Complaint in interpleader followed, and Plaintiff moved for leave to deposit the funds and be dismissed from the action. (RJN Exh. 2.) Defendant Smallwood sought to relate this action to a pending probate action which she also filed, and the actions were deemed related and transferred to the Judge in the probate action, the Honorable Brenda Penny. (See RJN Exhs. 3-4.) Judge Penny granted Plaintiff’s Motion for Leave to Deposit Interpleader Funds on November 1, 2021. (RJN Exh. 5.) At the close of the probate action, this matter was transferred back to this Court to enforce the dismissal, at which time Defendant Smallwood asserted her claim that Plaintiff is not a disinterested party. (RJN Exhs. 6, 7.) The Court permitted Defendant to assert her claims in the form of a cross-complaint, and, after several attempts, deemed her amended Motion for Leave to File Cross-Complaint as the appropriate pleading. (RJN Exh. 10.)
Effect of Judge Penny’s Ruling
Cross-Defendant argues that Cross-Complainant’s causes of action are all barred by Judge Penny’s ruling dismissing the interpleader. Cross-Defendant argues that the cross-claims are an improper attempt at a motion for reconsideration under Code of Civil Procedure section 1008. The Court is hesitant to adopt this conclusion where it is not apparent from the record what issues were before Judge Penny in ruling on the Motion for Leave to Deposit Interpleader Funds. (RJN Exh. 5.) The Court therefore is not persuaded that Judge Penny’s ruling serves as a complete bar to the cross-claims. In any case, this question is a moot point, because all three causes of action are fatally defective for the reasons stated below.
First Cause of Action
Cross-Defendant demurs to the first cause of action for failure to state facts sufficient to constitute a cause of action.
The Cross-Complaint alleges that Constance Holt was not empowered to request a beneficiary change as of December 10, 2014. According to Cross-Complainant, Ms. Holt was placed in a conservatorship between May 21, 2014, and June 16, 2015. (Cross Complaint p. 3:25-28.) A beneficiary change was made on December 10, 2014, allegedly without the conservator having first sought leave via noticed motion to make such a change. (Id. p.4:9-12.) The Cross-Complaint also alleges that Americo improperly rescinded Cross-Complainant’s beneficiary status based on a request received from Ms. Quiroz on September 23, 2019. (Id. p.4:13-16.) According to the Cross-Complaint, Cross-Defendant “suspected Constance’s signature was a forgery,” did not provide some unspecified “notice,” and knew that their actions “were not authorized.” (Id. p. 4:18-23.)
Cross-Defendant contends that this cause of action is defective because it does not actually allege any wrongful act by Cross-Defendant, nor any interest in this action that would deprive Cross-Defendant of the right to interplead. The Court concurs. The factual claims asserted go directly to the basis for interpleader: that there is a set of funds to which various parties have competing claims whose validity is disputed between them. (See, e.g., Lehto v. Allstate Ins. Co. (1994) 31 Cal.App.4th 60, 69-71, as modified (Jan. 13, 1995.) Moreover, the Cross-Complaint alleges no facts which would give rise to the conclusion that Cross-Defendant suspected the signature was a forgery, and none of the many statutes cited by Cross-Complainant impose any duty on Cross-Defendant. (See Probate Code. §§ 811 [basis for finding lack of mental capacity]; 2580 [conservator petitions]; 4406 [compelling third party to honor agent’s authority]; 4609 [definition of capacity].)
Accordingly, Cross-Defendant’s Demurrer to the First Cause of Action is SUSTAINED.
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Second Cause of Action
Cross-Defendant demurs to the second cause of action for failure to state facts sufficient to constitute a cause of action.
The second cause of action pertains entirely to statements and omissions made by Cross-Defendant in its filings in this action. Statements made in litigation are absolutely privileged and may not serve as a basis for liability. (Civ. Code § 47 (2).) This cause of action is therefore fatally deficient.
Accordingly, Cross-Defendant’s Demurrer to the Second Cause of Action is SUSTAINED.
Third Cause of Action
Cross-Defendant demurs to the third cause of action for failure to state facts sufficient to constitute a cause of action.
The third cause of action complains that Judge Penny did not provide Cross-Complainant with a fair opportunity to pursue her claims. These contentions are entirely irrelevant in the context of an interpleader action, where the only issue is whether the interpleader is proper. This cause of action is therefore also fatally deficient.
Accordingly, Cross-Defendant’s Demurrer to the Third Cause of Action is SUSTAINED.
Uncertainty
Cross-Defendant also demurs to each cause of action as uncertain.
A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures." (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.) "A demurrer for uncertainty will be sustained only where the complaint is so bad that defendant cannot reasonably respond--i.e., he or she cannot reasonable determine what issues must be admitted or denied, or what counts or claims are directed against him or her." (Weil & Brown, Civil Procedure Before Trial (The Rutter Group) § 7:85 (emphasis in original).) "The objection of uncertainty does not go to the failure to allege sufficient facts." (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 459.)
Although the Cross-Complaint is not especially clear or artfully constructed, the Court does not find the pleadings to be so vague that Cross-Defendant could not determine what is asserted against it. Rather, the factual allegations asserted in the Cross-Complaint are apparent; it is the legal insufficiency of those facts to constitute a cause of action that renders the Cross-Complaint defective.
Leave to Amend
When a demurrer is sustained, the Court determines whether there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) California law imposes the burden on the party who filed the pleading to demonstrate the manner in which they can amend their pleadings to state their claims. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “Denial of leave to amend constitutes an abuse of discretion unless the [pleading] shows on its face it is incapable of amendment. [Citation.] Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given." (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.)
Cross-Complainant has not responded to the demurrer and has failed to demonstrate how the Cross-Complaint could be amended to cure the defects identified by Cross-Defendant. Moreover, the factual basis for the claims shows that there is no actual challenge to Cross-Defendant’s right to interplead the funds. Cross-Complainant’s factual claims do not demonstrate any interest in the disputed funds, and largely go directly to the dispute that makes interpleader necessary in the first place. Further, the second cause of action is entirely barred by the litigation privilege, and the third cause of action does not relate to Cross-Defendant at all. The Court therefore finds that leave to amend is inappropriate in this case.
CONCLUSION:
Accordingly, Plaintiff/Cross-Defendant’s Demurrer to the Cross-Complaint is SUSTAINED without leave to amend.
Plaintiff in Interpleader Americo Financial Life & Annuity Ins. Co.’s Request for Dismissal is re-set for this date and GRANTED.
Moving Party to give notice.
IT IS SO ORDERED.
Dated: March 15, 2024 ___________________________________
Theresa M. Traber
Judge of the Superior Court