Judge: Thomas Falls, Case: 21PSCV00617, Date: 2022-08-04 Tentative Ruling

Case Number: 21PSCV00617    Hearing Date: August 4, 2022    Dept: R

Defendant Inco Builder’s Motion for Judgment on the Pleadings

Responding Party: Plaintiff, Diana Culkin

Tentative Ruling

Defendant Inco Builder’s Motion for Judgment on the Pleadings is GRANTED with leave to amend.

Background

This case arises from an alleged wrongful disclosure.

On July 30, 2021, Plaintiff Diana Culkin aka Diana Jannette Marmolejo Corona filed suit against Defendants Fleet Capital, Inc., Best Allegiance Foreclosure and Lien Services Corp., Inco Builders (collectively “Defendants”), and Does 1 through 25 for:

            1. Violation of California’s Non-Judicial Foreclosure Statutes,

            2. Wrongful Foreclosure,

            3. Conversion,

            4. Unfair Business Practices, and

            5. Declaratory Relief.

On August 3, 2021, Plaintiff filed a Notice of Lis Pendens.

On January 5, 2022, Defendant Inco Builders (“Defendant”) filed a Motion for Leave to File a Cross-Complaint, which the court granted. 

On February 23, 2022, Defendant Inco filed the instant Motion for Judgment on the Pleadings (“MJOP”).

On February 25, 2022, a Writ of Execution was issued, as requested by Inco Builders.

On March 16, 2022, the court rejected Inco Builder’s request for entry of default judgment against Plaintiff Diana Culkin and Michael Culkin.

On Mach 16, 2022, the court granted Plaintiff’s Counsel Timothy McFarlin’s Motion to Be Relieved as Counsel.

On March 18, 2022, Defendant Inco Builder filed a Motion to Expunge Lis Pendens, which the court granted.

On May 4, 2022, Plaintiff filed a ‘Substitution of Attorney,’ replacing herself as former legal representative with Paul Orloff.

On July 22, 2022, Plaintiff filed her opposition to the MJOP.

On July 28, 2022, Defendant Inco filed its Reply.

Legal Standard

It is well established in California that either prior to trial or at the trial the plaintiff or the defendant may move for judgment on the pleadings and that the appropriate ground for such a motion is the same as that arguable by general demurrer, namely, the failure to state a cause of action or defense.  (Dobbins v. Hardister (1966) 242 Cal.App.2d 787, 791; see also Sofias v. Bank of America (1985) 172 Cal.App.3d 583, 586 [The non statutory motion for judgment on the pleadings can be made at any time, even during trial, since the grounds for a general demurrer are never waived.]; Code Civ. Proc., § 438.) 

A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 198.) Presentation of extrinsic evidence is therefore not proper on a motion for judgment on the pleadings. (Id.; Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999.)  Both a demurrer and a motion for judgment on the pleadings accept as true all material factual allegations of the challenged pleading, unless contrary to law or to facts of which a court may take judicial notice.  (Mechanical Contractors Assn. v. Greater Bay Area Assn. (1998) 66 Cal.App.4th 672, 677; Edwards v. Centex Real Estate Corp, (1997) 53 Cal.App.4th 15, 27.)  On a motion for judgment on the pleadings a court may take judicial notice of something that cannot reasonably be controverted, even if it negates an express allegation of the pleading.  (See Columbia Casualty Co. v. Northwestern Nat. Ins. Co. (1991) 231 Cal.App.3d 457, 468-469; Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549.) 

“Matters which are subject to mandatory judicial notice may be treated as part of the complaint and may be considered without notice to the parties.¿¿[Citation.]¿¿Matters which are subject to permissive judicial notice must be specified in the notice of motion, the supporting points and authorities, or as the court otherwise permits.”¿ (Schabarum¿v. California Legislature¿(1998)¿60 Cal.App.4th¿1205, 1216, fn. 5.)¿¿“Judgment on the pleadings does¿not depend upon a resolution of questions of witness credibility or¿evidentiary conflicts.¿¿In fact, judgment on the pleadings must be denied where there are material factual issues that require evidentiary resolution.”¿¿(Id.¿at¿1216.)¿ In ruling on a [motion for a judgment on the pleadings], 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.) 

Leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action.  (Virginia G. v. ABC Unified School Dist. (1993) 15 Cal.App.4th 1848, 1852.) 

Request for Judicial Notice (“RFJN”)

Defendant asks the court to take judicial notice of the Trustee’s Deed Upon Sale and the Substitution of Trustee.

Here, the California Supreme Court has recognized that the existence and factual contents of documents including recorded deeds of trust, notices of default and of trustee’s sale, and trustee’s deeds upon sale can be properly noticed under Evidence Code sections 45, subdivisions (c) and (h), and 453.  (Yvanova v. New Century Mortgage Corp, supra, 62 Cal.4th at p. 924, fn. 1.) Moreover, in determining whether to grant a motion for judgment on the pleadings, courts may consider matters of which it can take judicial notice.  (See Code Civ. Proc., § 438, subd. (d); Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216.) 

Therefore, the court grants judicial notice.

Discussion

At the outset, the court notes that the complaint is devoid of allegations against Defendant Inco. Inarguably, there are no factual allegations against Defendant Inco, but more so Defendants Fleet and Best. In fact, Plaintiff’s Opposition also makes more references to Defendants Fleet and Best rather than Defendant Inco. For that reason alone, it would be appropriate to grant the entirety of Defendant’s motion because the face of the pleadings fails to state any factual allegations against Defendant Inco. That said, the court will overlook this deficiency because Defendant Inco has advanced thorough substantive arguments as to why each cause of action fails as a matter of law. Therefore, the court will address each cause of action as all are subject to the motion.

1.      First Cause of Action for Violation of California’s Non-Judicial Foreclosure Statue(s) 

Plaintiff asserts this cause of action on the grounds that “[d]espite Defendant FLEET having constructive notice of the Plaintiff's entitlement to notice of the FLEET NOD pursuant to Civil Code Sections 2924b(c), (c)(1), and (c)(2)(A), neither Defendant FLEET nor Defendant BEST mailed a copy of the FLEET NOD to the Plaintiff as required by Civil Code Section 2924b(c)(1).” (Complaint ¶28(d)) (emphasis added).

Civil Code section 2924b(c) provides, in relevant part:

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 § 2924b(c)) (emphasis added).

Defendant Inco argues that based upon the plain language of the statute, there is a statutory presumption of a compliant notice.

In Opposition, Plaintiff avers that the failure to provide proper notice under Civil Code section 2966 creates a violation of section 2924. (Opp. p. 5.) Plaintiff continues to argue other irregularities with the manner in which the sale was conducted (such as violation of Government Code section 8224).

However, a review of Plaintiff’s complaint does not even mention Civil Code section 2966 nor section 8224. It is the complaint that creates the facts, and it is based upon said facts that parties respond. As such, Plaintiff is effectively asserting a new allegation not pled in the complaint. Therefore, the court will not consider any new allegations not asserted in the complaint.  

The court turns to Defendant’s argument there the first cause of action fails based upon the presumption of proper notice accompanying the trustee’s deed upon sale.

Indeed, as a general rule, [a] nonjudicial foreclosure sale is presumed to have been conducted regularly and fairly; one attacking the sale must overcome this common law presumption ‘by pleading and proving an improper procedure and the resulting prejudice.’” (Knapp v. Doherty (2004) 123 Cal.App.4th at fn. 4.)  “If the trustee's deed contains a recital that all default and sale notices have been given, the notice requirements are statutorily presumed to have been satisfied, which presumption is conclusive as to a bona fide purchaser at the foreclosure sale.” (Id.)

Here, the Trustee’s Deed Upon Sale (“TDUS”) states that all requirements per California Statutes has been complied with. (RFJN, Ex. 1.) Accordingly, based upon the presumption of compliant notice, Plaintiff’s claim that the notice of default was not mailed to her fails as a matter of law. To the extent that Plaintiff argues that there was no actual notice or even constructive notice (Opp. p. 7), that argument also fails as a matter of law. As one court held: “ ‘We pointedly emphasize, however, that Civil Code sections 2924–2924h, inclusive, do not require actual receipt by a trustor of a notice of default or notice of sale. They simply mandate certain procedural requirements reasonably calculated to inform those who may be affected by a foreclosure sale and who have requested notice in the statutory manner that a default has occurred and a foreclosure sale is imminent.’” (Id. at p. 89, quoting Lupertino v. Carbahal (1973) 35 Cal.App.3d 742, 746-747) (emphasis added).

Therefore, as the statute provides that the recital in the TDUS concerning the proper service of the notice default and notice of sale constitutes as prima facie evidence that service was proper and absent allegations to rebut the presumption, Plaintiff’s first cause of action fails as a matter of law.

2.      Second Cause of Action for Wrongful Foreclosure

Plaintiff asserts this cause of action based on the allegations that “Defendant FLEET failed to execute and record a substitution of trustee substituting Defendant BEST for Progressive as the trustee under the duly-assigned KangLee DOT.” (Complaint ¶34.)

The elements of a cause of action for wrongful foreclosure are: “‘(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.’” (Miles v. Deutsche Bank National Co. (2015) 236 Cal.App.4th 394, 408, quoting Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104.)

Defendant argues that the substitution of trustee was duly recorded on February 17, 2021, in the Los Angeles Recorder’s Office as Document Number 20210268149. (RFJN, Ex. 2.) Additionally, Defendant argues that Plaintiff did not offer tender.

In Opposition, Plaintiff argues “the presumption cannot be relied upon here because Sid Richman is disqualified from issuing a Trustee's Deed upon sale which he also notarized.” (Opp. p. 9.) Additionally, Plaintiff argues that “[o]nce discovering that a Notice of Default was recorded, Plaintiff tendered an offer to pay.” (Opp. p. 9.)

Here, again, Plaintiff did not assert the allegation about irregularities pertaining to Sam Ostoyan, who owes Inco and Fleet. As for the statement in its opposition that tender was paid, Plaintiff’s complaint maintains the contrary: “The plaintiff is excused from the tender requirement when the plaintiff alleges the foreclosing entity lacked authority to foreclose.” (Complaint ¶38.)

Therefore, as Plaintiff is raising new arguments in its Opposition that were not asserted in its complaint and asserting contradictory statements, the court finds the foreclosure was not wrongful.

3.      Third Cause of Action for Conversion

Plaintiff concedes it cannot assert a cause of action for conversion because the property in dispute is real property. (Opp. p. 10.)

4.      Fourth Cause of Action for Unfair Business Practices

For similar reasons above, notably that the foreclosure was not wrongful, the court grants the motion as to this cause of action.

5.      Fifth Cause of Action for Declaratory Relief

Plaintiff asserts this cause of action “to whom ownership, possession, and control of the Subject Property belongs based on the Kang-Lee DOT, the Kang-Lee Assignment 2, the FLEET NOD, the BEST NTS, and the Trustee's Deed Upon Sale” because “Defendant BEST was not the trustee of record under the Kang-Lee DOT when foreclosure proceedings were initiated.” (Complaint ¶¶47, 48.)

Here, as “the actual controversy is whether the foreclosure is void” (Opp. p. 12) and such controversy is inherently decided by the first two causes of action, the court agrees with Defendant that declaratory relief is inappropriate. (See General of Am. Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470 (Lilly) [“The object of the [declaratory relief] statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.”].)

Therefore, as the cause of action for declaratory is redundant as to other causes of action, the court grants the motion as to this cause of action.

Conclusion