Judge: Theresa M. Traber, Case: 22STCV31326, Date: 2023-07-10 Tentative Ruling

Case Number: 22STCV31326    Hearing Date: July 10, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     July 10, 2023                          TRIAL DATE: NOT SET

CASE:                         Avet Ter-Arysenyan v. Siwell Inc. d/b/a Capital Mortgage Services of Texas, et al.

CASE NO.:                 22STCV31326           

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY:               Defendant Siwell Inc. d/b/a Capital Mortgage Services of Texas

RESPONDING PARTY(S): No response on eCourt as of 7/5/23

CASE HISTORY:

·         09/27/22: Complaint filed.

·         10/17/22: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for quiet title. Plaintiff alleges that Defendants improperly recorded a Notice of Default on property owned by Plaintiff and improperly initiated foreclosure proceedings on the property.

            Defendant Siwell Inc. d/b/a Capital Mortgage Services of Texas demurs to the First Amended Complaint in its entirety.

TENTATIVE RULING:

Defendant Siwell Inc. d/b/a Capital Mortgage Services of Texas’s Demurrer to the First Amended Complaint is SUSTAINED with leave to amend as to the first and second causes of action and otherwise OVERRULED.

DISCUSSION:

Defendant Siwell Inc. d/b/a Capital Mortgage Services of Texas demurs to the First Amended Complaint in its entirety.

Legal Standard

A demurrer 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 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 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).)

            Defendant provided, with its moving papers, a declaration from Attorney Mark S. Blackman stating only that, on December 22, 2022 he “completed the meet and confer requirement of CCP §430.41(a)(3) by contacting attorney of record for Plaintiffs AVET TER-ARYSENYAN . . . with respect to Defendant’s anticipated Demurrer to the First Amended Complaint. The parties could not reach an agreement resolving the objections raised in the Demurrer.” (Declaration of Mark S. Blackman ISO Demurrer ¶ 2.) This conclusory statement provides no elaboration on the manner or duration of this interaction which would permit the Court to evaluate the sufficiency of this effort. The Court therefore finds that Defendant has not complied with its statutory obligations in this respect. However, as noncompliance with this requirement is not a basis to overrule or sustain the demurrer, the Court will address the demurrer on its merits.

Request for Judicial Notice

            Defendant requests that the Court take judicial notice of (1) a Deed of Trust recorded on January 15, 2021, Recorder No. 20210084122; (2) an April 29, 2022 Assignment of Deed of Trust, Recorder No. 20220468917; (3) a Notice of Default recorded that same day, Recorder No. 20220468919; and (4) a September 16, 2022 Notice of Sale, Recorder No. 20220911231. Defendant’s requests are GRANTED pursuant to Evidence Code section 452(c) (official acts).

First Cause of Action: Violation of Civil Code section 2923.5

            Defendant demurs to the first cause of action on the grounds that Plaintiff fails to state facts sufficient to constitute a cause of action against it.

            Defendant contends that Plaintiff has failed to allege the requisite facts to establish that section 2923.5 is applicable to the deed of trust that is at issue in this cause of action. Under Civil Code section 2924.15 subdivision (a):

Unless otherwise provided, Sections 2923.5, 2923.7, and 2924.11 shall apply only to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. For these purposes, “owner-occupied” means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes.

(Civ. Code § 2924.15(a).) A review of the pleadings demonstrates that, even construing the allegations in the light most favorable to Plaintiff, the First Amended Complaint only alleges that the property is owned by Plaintiff. (FAC ¶ 1.) The First Amended Complaint contains no allegations that can be construed as addressing occupancy or the purpose of the underlying loan. As allegations demonstrating these facts are a prerequisite to establishing the applicability of section 2923.5, Plaintiff has failed to allege facts sufficient to constitute a cause of action for violation of Civil Code section 2923.5.

            As the first cause of action is insufficiently pled for the reasons stated above, the Court declines to address Defendant’s substantive arguments concerning compliance with statutory obligations.

            Accordingly, Defendant’s demurrer to the first cause of action is SUSTAINED.

Second Cause of Action: Declaratory Relief

            Defendant demurs to the second cause of action for declaratory relief for failure to state facts sufficient to constitute a cause of action. Defendant contends that this cause of action survives or fails alongside the first cause of action. As the second cause of action seeks a declaration that Defendants failed to comply with their statutory obligations under section 2923.5, the Court concurs. (FAC ¶ 21.)

Accordingly, Defendant’s demurrer to the first cause of action is SUSTAINED.

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Third Cause of Action: Quiet Title

            Defendant demurs to the third cause of action for quiet title on the grounds that Plaintiff fails to state facts sufficient to constitute a cause of action.

            Construing this cause of action as seeking to invalidate Defendant’s right to enforce the deed of trust via foreclosure sale, Defendant argues that it is entitled to exercise that right of foreclosure because Plaintiff defaulted in his loan obligations in August 2021. The First Amended Complaint contains no allegation to this effect, and the existence of the Notice of Default is not sufficient to establish that Defendant was actually in default. (RJN Exh. 3.) Although Plaintiff states that he is “ready, willing and able to make tender and resume making monthly payments, if given appropriate financing or other such alternative,” Plaintiff does not explicitly concede that he defaulted. (FAC ¶ 20.) It is possible to infer from this statement that Plaintiff is, in fact, in default of his obligations. However, Defendant is not entitled to that inference under the demurrer standard. Plaintiff’s third cause of action is therefore not defective on this basis.

            Defendant also argues that this cause of action fails to state facts sufficient to constitute a cause of action because Plaintiff has not alleged tender and cannot tender the debt at issue. As stated by the Court of Appeal in Arnolds Management Corp. v. Eischen, “[i]t is settled that an action to set aside a trustee’s sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security.” (Arnolds Mgmt. Corp. v. Eischen (1984) 158 Cal.App.3d 575, 578.) However, an offer of tender is not required for an action under section 2923.5. (Mabry v. Superior Court (2010) 185 Cal.App.4th 208, 214.)

            Had Plaintiff successfully maintained a cause of action under section 2923.5, Defendant’s argument would be meritless under the binding precedent of Mabry. However, as the Court has sustained the demurrer to the first cause of action, for Plaintiff’s quiet title claim to survive, Plaintiff must allege at least an offer of tender. Here, construing the pleadings in the light most favorable to the nonmoving party, the Court finds that paragraph 20 of the First Amended Complaint constitutes an offer of tender as required by longstanding precedent. (FAC ¶ 20.) Defendant argues that the balance of the debt owed or a bankruptcy proceeding involving Plaintiff (which has not been judicially noticed) is sufficient to invalidate an offer of tender, but the Court is not persuasive. The Court therefore finds that the third cause of action is not deficient in this respect.

            Accordingly, Defendant’s Demurrer to the third cause of action is OVERRULED.

Leave to Amend

            As Plaintiff has not responded to Defendant’s demurrer, Plaintiff has not demonstrated how the complaint might be amended to cure the deficiencies addressed herein. As the referenced defects arise from an absence of detail in the allegations, however, the manner in which the pleadings must be amended is facially apparent. Applying the strong presumption in favor of amendment, the Court therefore finds that leave to amend is warranted in this instance.

CONCLUSION:

            Accordingly, Defendant Siwell Inc. d/b/a Capital Mortgage Services of Texas’s Demurrer to the First Amended Complaint is SUSTAINED with leave to amend as to the first and second causes of action and otherwise OVERRULED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  July 10, 2023                          ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@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.