Judge Walter P. Schwarm, Case 30-2020-01124778 2022-12-06 Tentative Ruling

Judge: Walter P. Schwarm, Case: 30-2020-01124778, Date: 2022-12-06 Tentative Ruling

Motion No. 1:

Defendant’s (United Lender, LLC) Demurrer to Plaintiff’s Third Amended Complaint (Demurrer), filed on 8-25-22 under ROA No. 870, is SUSTAINED in part and OVERRULED in part.

The court GRANTS Defendant’s Request for Judicial Notice (RJN), filed on 8-25-22 under ROA No. 868, as to Exhibits 1, 2, 3, 5, 6, and 8 pursuant to Evidence Code sections 452, subdivisions (c), (d), and (h). (See, (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (disapproved on other grounds in Yvanova v. New Century Mortgage Corporation (2016) 62 Cal.4th 919, 939, footnote 13.) The court GRANTS the RJN as to Exhibit Nos. 4 and 7 as to the existence of Exhibit Nos. 4 and 7 under Evidence Code section 452, subdivision (d). (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1570.)

“A demurrer tests the pleading alone, and not the evidence or the facts alleged. . . . To the extent there are factual issues in dispute, however, this court must assume the truth not only of all facts properly pled, but also of those facts that may be implied or inferred from those expressly alleged in the complaint. [Citations.]” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) Code of Civil Procedure section 452, states, “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” Perez v. Golden Empire Transportation Transit District (2012) 209 Cal.App.4th 1228, 1238, provides, “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. [Citations.]” William S. Hart Union High School District (C.A.) (2012) 53 Cal.4th 861, 872, provides, “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged. [Citation.]”

The Demurrer challenges the First (Fraud and Deceit—Intentional Misrepresentation), Fourth (Quieting Title), Fifth (Cancellation of Written Instruments), Sixth (Declaratory Relief), and Seventh (Unfair Business Practices) causes of action contained in Plaintiff’s (Anh Thy Song Nguyen, Trustee of Mother Nature Trust) Third Amended Complaint (TAC), filed on 6-22-22 under ROA No. 795, pursuant to Code of Civil Procedure section 430.10, subdivision (e).

First Cause of Action (Fraud and Deceit—Intentional Misrepresentation):

Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar), states, “ ‘The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ [Citations.]” “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.] A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’ [Citation.]” (Id., at p. 645.) Italics in Lazar; See also, Robinson Helicopter Co., Inc. v. Dana Corp. (Robinson) (2004) 34 Cal.4th 979, 993.) “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representation, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. [Citations.]” (Tarmann v. State Farm Mut. Auto. Ins. Co., (1991) 2 Cal.App.4th 153, 157.)

Alliance Mortgage Company v. Rothwell, (1995) 10 Cal. 4th 1226, 1239 (Alliance), provides, “Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff's conduct which altered his or her legal relations, and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction. [Citations.] ‘Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff's reliance is reasonable is a question of fact.’ [Citations.] ‘However, whether a party's reliance was justified may be decided as a matter of law if reasonable minds can come to only one conclusion based on the facts.’ [Citation.] [¶] ‘Negligence on the part of the plaintiff in failing to discover the falsity of a statement is no defense when the misrepresentation was intentional rather than negligent.’ [Citation.] ‘Nor is a plaintiff held to the standard of precaution or of minimum knowledge of a hypothetical, reasonable man.’ [Citation.] ‘If the conduct of the plaintiff in the light of his own intelligence and information was manifestly unreasonable, however, he will be denied a recovery.’ [Citations.] ‘ “If the plaintiff and defendant are in a confidential relationship there is no duty of inquiry until the relationship is repudiated. The nature of the relationship is such as to cause the plaintiff to rely on the fiduciary, and awareness of facts which would ordinarily call for investigation does not excite suspicion under these special circumstances.” ’ [Citation.]”

Stueve Brothers Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 323 (Stueve) explains, “ ‘Although conspiracy to commit a tort is not a separate cause of action from the tort itself, alleging a conspiracy fastens liability on those who agree to the plan to commit the wrong as well as those who actually carry it out. [Citation.] The elements of a civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act done in furtherance of the common design. [Citation.]’ [Citations.]” City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 212 (City of Industry) provides, “The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages. [Citation.]”

Civil Code section 2295 states, “An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.”

Harley-Davidson v. Franchise Tax Bd. (2015) 237 Cal.App.4th 193, 214 (Harley-Davidson), explains, “ ‘ “[T]he existence of an agency relationship is usually a question of fact, unless the evidence is susceptible of but a single inference.” ’ [Citation.] ‘An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.’ [Citations.] ‘An agency relationship “may be implied based on conduct and circumstances.” ’ [Citation.]” (Italics in Harley-Davidson.) Violette v. Shoup (1993) 16 Cal.App.4th 611, 620, provides, “ ‘An agent “is anyone who undertakes to transact some business, or manage some affair, for another, by authority of and on account of the latter, and to render an account of such transactions.” (3 Cal.Jur.3d, Agency, § 1, p. 10.) “The chief characteristic of the agency is that of representation, the authority to act for and in the place of the principal for the purpose of bringing him or her into legal relations with third parties. [Citations.]”

Reusche v. California Pacific Title Insurance Company (1965) 231 Cal.App.2d 731, 736-737 (Reusche), provides, “A principal who puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud. The principal is liable although he is entirely innocent, although he has received no benefit from the transaction, and although the agent acts solely for his own purposes. Liability is based upon the fact that the agent's position facilitates the consummation of the fraud, in that, from the point of view of the third persons, the transaction seems regular on its face and the agent appears to be acting in the ordinary course of the business confided to him [citations]. The law reasons that where one of two innocent parties must suffer, the loss should be accepted by the principal who is responsible for the selection of the agent and for the definition of his authority [citation].”

The Demurrer states, “Plaintiff cannot meet the first element of fraud: that United made any misrepresentation. United had no communications with Plaintiff. Further, Plaintiff’s attempt to rope United into HOI/Zucaro’s alleged misrepresentations by alleging Zucaro was United’s agent, fails . . . .” (Demurrer; 24:21-23.) The Demurrer also states, “Plaintiff cannot meet two additional elements: actual reliance and justifiable reliance.” (Demurrer; 25:3-4.)

The TAC pleads liability under conspiracy and agency theories. (For example, see TAC at ¶¶ 12-15.) Plaintiff’s Opposition to Defendant United Lender LLC’s Demurrer (Opposition), filed on 11-21-22 under ROA No. 918, directs the Court to communications made by Defendant—Megan Zucaro to Plaintiff in ¶¶ 73, 74, 75, 76, 77, 82, 85, 87, and 89 of the TAC. (Opposition; 10:3-4.) For example, paragraph 75 of the TAC states, “Subsequently, Shawn communicated to Zucaro on or about April 15, 2019, that Shawn and Albert made the decision to loan $1,900,000 to Helping Others for the purchase of the Subject Property based on her prior excellent payment history and Zucaro communicated these facts to the Plaintiff also on April 15, 2019. . . .” (TAC, ¶ 75.) The TAC further alleges, “Based on the agency relationship between Zucaro and United Lender, Shawn and Albert agreed to fund the First Trust Deed for $1,900,000 with Helping Others as the Trustor. Zucaro repeatedly communicated to plaintiff prior to the close of escrow on or about May 2, 2019, that Zucaro had good credit and that Zucaro had never defaulted on any prior loans with Shawn, Albert, and United Lender and that because of Zucaro’s good payment history, Shawn and Albert agreed on or about April 15, 2019, for Zucaro to be approved for the loan of $1,900,000 for the purchase of the Subject Property.” (TAC, ¶ 81.)

These allegations are sufficient to plead that Defendant—Zucaro misrepresented that United Lender would fund a 1.9 million dollar loan based on Plaintiff’s prior good credit and payment history. Liberally construing the TAC, Defendant knew that Defendant—a Zucaro would not make the payments on 1.9 million dollar loan as this was part of their conspiracy to profit off of a later foreclosure sale by recouping the loan amount plus interest. (For example, see TAC at ¶¶ 37, 38, 39, 41, 42, 98, and 99.)

Plaintiff directs the court to paragraphs 2, 13, 14, 15, 16, 17d, 31, and 32 of the TAC to support that Defendant— Zucaro was acting as an agent of United Lender. (Opposition; 4:15-18.) These allegations are sufficient to support conspiracy/agency theories in addition to paragraphs 30-42, and 56 of the TAC. One allegation of conduct in furtherance of an alleged conspiracy is that “. . . United Lender does not report Zucaro to any of the credit bureaus for missed payments and continues to fund Zucaro to purchase additional properties from September 2016 through November 25, 20192019. [sic] . . . .” (TAC ¶ 41.)

To establish justifiable reliance, Plaintiff directs the Court to paragraphs 103 and 104 (Opposition; 10:26-11:2), which state, “Plaintiff was not aware of this illegal scheme and justifiably relied on the representations of United Lender, Shawn Ahdoot, Albert Ahdoot, Zucaro and Helping Others that Zucaro and Helping Others International qualified for a loan of $1,957,000. Plaintiff also relied on Zucaro making payments on the First and Second Trust Deeds as they come due. [¶] This justifiable reliance by the plaintiff was further enforced when Zucaro executed the First Trust Deed on behalf of Helping Others International and United Lender agreed to fund the loan and recorded the First Trust Deed on or about May 2, 2019. Plaintiff also discovered United Lender under the direction and management of Shawn and Albert, funded another loan to Zucaro for the purchase of 422 N. Soto, Los Angeles, CA. Despite filing a Notice of Default on the Subject Property, Exhibit F, recorded 09/18/2019, United Lender still unlicensed, financed a loan of $994,500 on 11/25/2019 to Zucaro/Helping Others for the purchase of the Soto property. This accentuates their fraudulent activities and further enhances the Agency relationship between Zucaro and United Lender.” (TAC ¶ 104.)

Although Plaintiff’s reliance on Defendant’s agreement to provide a loan to inform Plaintiff’s decision to agree to carry the second carryback loan was not justifiable, it is reasonable for Plaintiff to have relied on these statements to induce her to sell the property. It was reasonable for Plaintiff to expect, based on the represented relationship and payment history between Defendant and Defendant-Zucaro, that the first mortgage would not immediately go into default and accrue interest and default charges that would decrease Plaintiff’s recovery at a foreclosure sale.

If Defendant-Zucaro paid the mortgage payments, the principal and interest would be paid to Defendant incrementally over the term of the loan and Defendant’s lien would not increase. However, because Zucaro and had no intention of paying the mortgage, the defaulted payments (which include interest) would come from the sale proceeds instead of from Defendant—Zucaro. (TAC, ¶ 101.) Plaintiff alleges that United Lender was set to make a profit of $250,000 out of a foreclosure sale and that this was “stolen equity.” (TAC ¶¶ 101-105.)

Based on the foregoing, the court finds that the TAC sufficiently pleads the first cause of action under agency and conspiracy theories, and OVERRULES the Demurrer as to the first cause of action.

Fourth Cause of Action (Quieting Title):

Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 524 (Deutsche), states, “The purpose of a quiet title action ‘is to finally settle and determine, as between the parties, all conflicting claims to the property in controversy, and to decree to each such interest or estate therein as he [or she] may be entitled to.’ [Citation.] Actions to quiet title are governed by section 761.010 et seq. The quiet title plaintiff must file a verified complaint including a description of the property, the basis for the plaintiff's claim of title, the adverse claims the plaintiff seeks to adjudicate, the date as of which the plaintiff seeks to adjudicate those claims, and a prayer for the determination of the plaintiff's title against the adverse claims. (§ 761.020.) A quiet title plaintiff must name as defendants “the persons having adverse claims that are of record or known to the plaintiff or reasonably apparent from an inspection of the property.” (§ 762.060, subd. (b).) Any person who has a claim to the property may appear as a defendant, whether or not they are named in the complaint. (§ 762.050.) ‘Immediately upon commencement of the action’ a quiet title plaintiff must record a lis pendens. (§ 761.010, subd. (b).) [¶] Before entering a judgment quieting title, ‘The court shall examine into and determine the plaintiff's title against the claims of all the defendants. The court shall not enter judgment by default but shall in all cases require evidence of plaintiff's title and hear such evidence as may be offered respecting the claims of any of the defendants, other than claims the validity of which is admitted by the plaintiff in the complaint. The court shall render judgment in accordance with the evidence and the law.’ (§ 764.010, italics added.)”

Code of Civil Procedure section 760.010 states, “As used in this chapter: [¶] (a) ‘Claim’ includes a legal or equitable right, title, estate, lien, or interest in property or cloud upon title. [¶] (b) ‘Property’ includes real property, and to the extent applicable, personal property.” Code of Civil Procedure section 760.020, subdivision (a), states, “An action may be brought under this chapter to establish title against adverse claims to real or personal property or any interest therein.”

On 5-4-22, Plaintiff stipulated to modifying the Preliminary Injunction and Order to allow the receiver to sell the property. (RJN, Exhibit 5.) Based on Plaintiff’s stipulation to sell the property, Plaintiff cannot claim that it has an equitable or legal interest in the property within the meaning of Code of Civil Procedure section 760.010. The court also notes that Plaintiff’s did not object to the court’s 6-3-22 Order that authorized the Receiver to conclude the sale of the property. (6-3-22 Minute Order and ROA No. 766.)

Since Plaintiff does not have an equitable or legal interest in the property, the court SUSTAINS the Demurrer to the fourth cause of action.

Fifth Cause of Action (Cancellation of Written Instruments):

Thompson v. Ioane (2017) 11 Cal.App.5th 1180, 1193-1194 (Thompson), states, “ ‘Under Civil Code section 3412, “[a] written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.” To prevail on a claim to cancel an instrument, a plaintiff must prove (1) the instrument is void or voidable due to, for example, fraud; and (2) there is a reasonable apprehension of serious injury including pecuniary loss or the prejudicial alteration of one's position. [Citation.]’ [Citation.]”

Rosenthal v. Great Western Financial Securities Corporation (1996) 14 Cal.4th 394, 415 (Rosenthal), states, “California law distinguishes between fraud in the ‘execution’ or ‘inception’ of a contract and fraud in the ‘inducement’ of a contract. In brief, in the former case ‘ “the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case it may be disregarded without the necessity of rescission.” ’ [Citation.] Fraud in the inducement, by contrast, occurs when ‘ “the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable. In order to escape from its obligations the aggrieved party must rescind . . . .” ’ [Citation.]” (Italics in Rosenthal.)

People v. Schmidt (2019) 41 Cal.App.5th 1041, 1058 (Schmidt), states, “The People resist this conclusion, arguing that the quitclaim deeds were induced by fraud. That may be so, but the People have not directed our attention to any authority establishing that fraud in the inducement renders an instrument ‘false’ within the meaning of section 115, and we decline to so hold. We reiterate that section 115 reaches instruments which, ‘if genuine, might be filed, registered, or recorded under any law of this state . . . .’ (§ 115, subd. (a), emphasis added.) A fraudulently induced deed, though voidable, is nevertheless ‘genuine’ in the sense that it conveys title and can be relied upon and enforced by a bona fide purchaser. (See, e.g., Fallon v. Triangle Management Services, Inc. (1985) 169 Cal.App.3d 1103, 1106, 215 Cal.Rptr. 748 [‘If a grantor is aware that the instrument he is executing is a deed and that it will convey his title, but is induced to sign and deliver by fraudulent misrepresentations or undue influence, the deed is voidable and can be relied upon and enforced by a bona fide purchaser’].) By contrast, ‘a forged document is void ab initio and constitutes a nullity; as such it cannot provide the basis for a superior title as against the original grantor.’ (Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43, 198 Cal.Rptr. 418; see City of Los Angeles v. Morgan (1951) 105 Cal.App.2d 726, 733, 234 P.2d 319 [‘An instrument that is void ab initio is comparable to a blank piece of paper and so necessarily derives no validity from the mere fact that it is recorded’].) Likewise, a deed altered without authority before delivery or recording (see, e.g., Montgomery v. Bank of America Nat. Trust & Savings Ass'n (1948) 85 Cal.App.2d 559, 563, 193 P.2d 475), or a deed procured by fraud in the inception (as opposed to fraud in the inducement) (see, e.g., Erickson v. Bohne (1955) 130 Cal.App.2d 553, 555-557, 279 P.2d 619), is void and conveys no title to the grantee. (See generally 3 Miller & Starr, Cal. Real Estate (4th ed. 2019) §§ 8:53-8:54, pp. 8-155 to 8-160 [discussing the difference between void and voidable instruments in the context of altered and fraudulently induced deeds].) (Italics in Schmidt.)

Here, Plaintiff’s fraud theory against Defendant is based on fraud in the inducement. As discussed above, Plaintiff stipulated to the sale of the property to a bona fide purchaser. (RJN, Exhibit 5.) Therefore, Plaintiff’s cause of action for cancellation of written instruments is MOOT because Plaintiff does not contest the transfer of title to a purchaser by the Receiver based on the Stipulation. Therefore, the court SUSTAINS the Demurrer to the fifth cause of action.

Sixth Cause of Action (Declaratory Relief):

“ ‘The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.’ [Citation.]” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79 (City of Cotati); Italics in City of Cotati.) “ ‘To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party’s] rights or obligations.” ’ [Citation.] (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) “ ‘ “ ‘The purpose of a declaratory judgment is “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation.” ’ [Citation.] ‘Another purpose is to liquidate doubts with respect to uncertainties or controversies which might otherwise result in subsequent litigation [citation]’ [Citation.]” [Citation.] “ ‘One test of the right to institute proceedings for declaratory judgment is the necessity of present adjudication as a guide for plaintiff’s future conduct in order to preserve his legal rights.’ ” ’ [Citation.]” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (Osseous) (2010) 191 Cal.App.4th 357, 364-365.)

The cause of action for declaratory relief only seeks equitable remedies based on quiet title and cancellation of instrument. Based Plaintiff’s Stipulation to sell the property, the court SUSTAINS the Demurrer to the sixth cause of action because there is no longer a controversy regarding Plaintiff’s legal or equitable title to the property.

Seventh Cause of Action (Unfair Business Practices):

Business and Professions Code section 17204 states, “Actions for relief pursuant to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by the Attorney General or a district attorney or by a county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association, or by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.”

Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 351-352 (Bernardo), states, “An ‘unlawful’ business practice or act within the meaning of the UCL ‘is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law. [Citation.]’ [Citation.] The California Supreme Court has explained that ‘[b]y proscribing “any unlawful” business practice, “[Business and Professions Code] section 17200 ‘borrows’ violations of other laws and treats them as unlawful practices” that the unfair competition law makes independently actionable. [Citation.]’ [Citation.]” (Italics in Bernardo.)

Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 80-81 (Lueras), states, “The UCL permits civil recovery for ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. . . .’ (Bus. & Prof. Code, § 17200.) ‘ “Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. . . .” ’ [Citation.] [¶] By defining ‘unfair competition’ to include any unlawful act or practice, the UCL permits violations of other laws to be treated as independently actionable as unfair competition. [Citation.] ‘ “[A]n ‘unfair’ business practice occurs when that practice ‘offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’ [Citation.]” [Citation.]’ [Citation.] An unfair business practice also means ‘ “the public policy which is a predicate to the action must be ‘tethered’ to specific constitutional, statutory or regulatory provisions.” ’ [Citation.] A fraudulent practice under the UCL ‘require[s] only a showing that members of the public are likely to be deceived’ and ‘can be shown even without allegations of actual deception, reasonable reliance and damage.’ [Citation.]” “The Kwikset court held a plaintiff can satisfy the economic injury prong of the standing requirement in ‘innumerable ways’ but listed four injuries that would qualify under section 17204: (1) the plaintiff surrendered more or acquired less in a transaction than the plaintiff otherwise would have; (2) the plaintiff suffered the diminishment of a present or future property interest; (3) the plaintiff was deprived of money or property to which the plaintiff had a cognizable claim; or (4) the plaintiff was required to enter into a transaction, costing money or property, that would otherwise have been unnecessary. [Citation.]” (Id., at pp. 81-82.)

The court OVERRULES the Demurrer to the seventh cause of action for the same reasons as stated for the first cause of action.

Based on the above, the court OVERRULES Defendant’s (United Lender, LLC) Demurrer to Plaintiff’s Third Amended Complaint, filed on 8-25-22 under ROA No. 870, as to the first and seventh causes of action. “The court abuses its discretion in sustaining the demurrer without leave to amend if the plaintiff can show a reasonable possibility of curing the defect in the complaint by amendment. [Citation.] Heritage has the burden of proving that an amendment would cure the defect. [Citation.]” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.) The Opposition does not request leave to amend and does not offer facts to demonstrate that Plaintiff can cure the defects identified above. Thus, the court SUSTAINS the Demurrer to the fourth, fifth and sixth causes of action without leave to amend.

Defendant shall file an answer no later than 12-22-22.

Defendant is to give notice.

Motion No. 2:

Defendants’ (Shawn Ahdoot and Albert A. Ahdoot) Demurrer to Anh Thy Song Nguyen’s Third Amended Complaint (Demurrer), filed on 8-17-22 under ROA No. 860, is SUSTAINED in part and OVERRULED in part.

The court GRANTS Defendants’ Request for Judicial Notice (RJN), filed on 8-17-22 under ROA No. 858, as to Exhibit B pursuant to Evidence Code sections 452, subdivisions (d), and (h). (See, (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (disapproved on other grounds in Yvanova v. New Century Mortgage Corporation (2016) 62 Cal.4th 919, 939, footnote 13.) The court GRANTS the RJN as to Exhibit A as to the existence of Exhibit A under Evidence Code section 452, subdivision (d). (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1570.)

First Cause of Action (Fraud and Deceit—Intentional Misrepresentation):

Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar), states, “ ‘The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ [Citations.] [¶] ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.]” “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.] A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’ [Citation.]” (Id., at p. 645.) Italics in Lazar; See also, Robinson Helicopter Co., Inc. v. Dana Corp. (Robinson) (2004) 34 Cal.4th 979, 993.) “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representation, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. [Citations.]” (Tarmann v. State Farm Mut. Auto. Ins. Co., (1991) 2 Cal.App.4th 153, 157.)

Stueve Brothers Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 323 (Stueve) explains, “ ‘Although conspiracy to commit a tort is not a separate cause of action from the tort itself, alleging a conspiracy fastens liability on those who agree to the plan to commit the wrong as well as those who actually carry it out. [Citation.] The elements of a civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act done in furtherance of the common design. [Citation.]’ [Citations.]” City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 212 (City of Industry) provides, “The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages. [Citation.]”

Civil Code section 2295 states, “An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.”

Harley-Davidson v. Franchise Tax Bd. (2015) 237 Cal.App.4^th 193, 214 (Harley-Davidson), explains, “ ‘ “[T]he existence of an agency relationship is usually a question of fact, unless the evidence is susceptible of but a single inference.” ’ [Citation.] ‘An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.’ [Citations.] ‘An agency relationship “may be implied based on conduct and circumstances.” ’ [Citation.]” (Italics in Harley-Davidson.) Violette v. Shoup (1993) 16 Cal.App.4^th 611, 620, provides, “ ‘An agent “is anyone who undertakes to transact some business, or manage some affair, for another, by authority of and on account of the latter, and to render an account of such transactions.” (3 Cal.Jur.3d, Agency, § 1, p. 10.) “The chief characteristic of the agency is that of representation, the authority to act for and in the place of the principal for the purpose of bringing him or her into legal relations with third parties. [Citations.]”

The Demurrer states, “Plaintiff can cite no authority for the proposition that a plaintiff may hold one defendant liable for fraud based on statements made by a completely different defendant through a conclusory agency allegation. In sum, Plaintiff may wish that a conclusory agency allegation were enough to assert fraud claims, but there is no authority for creating such a loophole to the heightened pleading standard that must be satisfied to state a fraud claim.” (Demurrer; 10:1-6.)

The TAC pleads liability under conspiracy and agency theories. (For example, see TAC at ¶¶ 12-15.) Paragraphs 73, 74, 75, 76, 77, 82, 85, and 87 of the TAC allege communications between Defendant—Megan Zucaro and Defendants. of the TAC. For example, paragraph 75 of the TAC states, “Subsequently, Shawn communicated to Zucaro on or about April 15, 2019, that Shawn and Albert made the decision to loan $1,900,000 to Helping Others for the purchase of the Subject Property based on her prior excellent payment history and Zucaro communicated these facts to the Plaintiff also on April 15, 2019. . . .” (TAC, ¶ 75.) The TAC further alleges, “Based on the agency relationship between Zucaro and United Lender, Shawn and Albert agreed to fund the First Trust Deed for $1,900,000 with Helping Others as the Trustor. Zucaro repeatedly communicated to plaintiff prior to the close of escrow on or about May 2, 2019, that Zucaro had good credit and that Zucaro had never defaulted on any prior loans with Shawn, Albert, and United Lender and that because of Zucaro’s good payment history, Shawn and Albert agreed on or about April 15, 2019, for Zucaro to be approved for the loan of $1,900,000 for the purchase of the Subject Property.” (TAC, ¶ 81.)

Plaintiff directs the court to paragraphs 2, 13, 14, 15, 16, 17d, 31, and 32 of the TAC to support that Defendant— Zucaro was acting as an agent of United Lender. (Plaintiff’s Opposition to Shawn and Albert Adhoot’s Demurrer to Third Amended Complaint (Opposition) filed on 11-21-22 under ROA No. 920; 4:2-9.) These allegations are sufficient to support conspiracy/agency theories in addition to paragraphs 30-42, and 56 of the TAC. One allegation of conduct in furtherance of an alleged conspiracy is that “. . . United Lender does not report Zucaro to any of the credit bureaus for missed payments and continues to fund Zucaro to purchase additional properties from September 2016 through November 25, 20192019. [sic] . . . .” (TAC ¶ 41.)

To establish justifiable reliance, Plaintiff directs the Court to ¶¶ 103 and 104 (Opposition; 10:1-4), which state, “Plaintiff was not aware of this illegal scheme and justifiably relied on the representations of United Lender, Shawn Ahdoot, Albert Ahdoot, Zucaro and Helping Others that Zucaro and Helping Others International qualified for a loan of $1,957,000. Plaintiff also relied on Zucaro making payments on the First and Second Trust Deeds as they come due. [¶] This justifiable reliance by the plaintiff was further enforced when Zucaro executed the First Trust Deed on behalf of Helping Others International and United Lender agreed to fund the loan and recorded the First Trust Deed on or about May 2, 2019. Plaintiff also discovered United Lender under the direction and management of Shawn and Albert, funded another loan to Zucaro for the purchase of 422 N. Soto, Los Angeles, CA. Despite filing a Notice of Default on the Subject Property, Exhibit F, recorded 09/18/2019, United Lender still unlicensed, financed a loan of $994,500 on 11/25/2019 to Zucaro/Helping Others for the purchase of the Soto property. This accentuates their fraudulent activities and further enhances the Agency relationship between Zucaro and United Lender.” (TAC ¶ 104.)

Although Plaintiff’s reliance on Defendant’s agreement to provide a loan to inform Plaintiff’s decision to agree to carry the second carryback loan was not justifiable, it is reasonable for Plaintiff to have relied on these statements to induce her to sell the property. It was reasonable for Plaintiff to expect, based on the represented relationship and payment history between Defendants and Defendant-Zucaro, that the first mortgage would not immediately go into default and accrue interest and default charges that would decrease Plaintiff’s recovery at a foreclosure sale.

If Defendant-Zucaro paid the mortgage payments, the principal and interest would be paid to Defendants (through Defendant—United Lender, LLC) incrementally over the term of the loan and Defendant—United Lender,, LLC’s lien would not increase. However, because Zucaro and had no intention of paying the mortgage, the defaulted payments (which include interest) would come from the sale proceeds instead of from Defendant-Zucaro. (TAC, ¶ 101.) Plaintiff alleges that United Lender was set to make a profit of $250,000 out of a foreclosure sale and that this was “stolen equity.” (TAC ¶¶ 101-105.)

Fourth Cause of Action (Quieting Title):

Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 524 (Deutsche), states, “The purpose of a quiet title action ‘is to finally settle and determine, as between the parties, all conflicting claims to the property in controversy, and to decree to each such interest or estate therein as he [or she] may be entitled to.’ [Citation.] Actions to quiet title are governed by section 761.010 et seq. The quiet title plaintiff must file a verified complaint including a description of the property, the basis for the plaintiff's claim of title, the adverse claims the plaintiff seeks to adjudicate, the date as of which the plaintiff seeks to adjudicate those claims, and a prayer for the determination of the plaintiff's title against the adverse claims. (§ 761.020.) A quiet title plaintiff must name as defendants “the persons having adverse claims that are of record or known to the plaintiff or reasonably apparent from an inspection of the property.” (§ 762.060, subd. (b).) Any person who has a claim to the property may appear as a defendant, whether or not they are named in the complaint. (§ 762.050.) ‘Immediately upon commencement of the action’ a quiet title plaintiff must record a lis pendens. (§ 761.010, subd. (b).) [¶] Before entering a judgment quieting title, ‘The court shall examine into and determine the plaintiff's title against the claims of all the defendants. The court shall not enter judgment by default but shall in all cases require evidence of plaintiff's title and hear such evidence as may be offered respecting the claims of any of the defendants, other than claims the validity of which is admitted by the plaintiff in the complaint. The court shall render judgment in accordance with the evidence and the law.’ (§ 764.010, italics added.)”

On 5-4-22, Plaintiff stipulated to modifying the Preliminary Injunction and Order to allow the receiver to sell the property. (RJN, Exhibit B.) Based on Plaintiff’s stipulation to sell the property, Plaintiff cannot claim that it has an equitable or legal interest in the property within the meaning of Code of Civil Procedure section 760.010. The court also notes that Plaintiff’s did not object to the court’s 6-3-22 Order that authorized the Receiver to conclude the sale of the property. (6-3-22 Minute Order and ROA No. 766.)

Since Plaintiff does not have an equitable or legal interest in the property, the court SUSTAINS the Demurrer to the fourth cause of action.

Fifth Cause of Action (Cancellation of Written Instruments):

Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415 (Rosenthal), states, “California law distinguishes between fraud in the ‘execution’ or ‘inception’ of a contract and fraud in the ‘inducement’ of a contract. In brief, in the former case ‘ “the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case it may be disregarded without the necessity of rescission.” ’ [Citation.] Fraud in the inducement, by contrast, occurs when ‘ “the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable. In order to escape from its obligations the aggrieved party must rescind . . . .” ’ [Citation.]” (Italics in Rosenthal.)

Here, Plaintiff’s fraud theory against Defendant is based on fraud in the inducement. As discussed above, Plaintiff stipulated to the sale of the property to a bona fide purchaser. (RJN, Exhibit B.) Therefore, Plaintiff’s cause of action for cancellation of written instruments is MOOT because Plaintiff does not contest the transfer of title to a purchaser by the Receiver based on the Stipulation. Therefore, the court SUSTAINS the Demurrer to the fifth cause of action.

Sixth Cause of Action (Declaratory Relief):

Seventh Cause of Action (Unfair Business Practices):

The court OVERRULES the Demurrer to the seventh cause of action for the same reasons as stated for the first cause of action.

To the extent Defendants based the Demurrer on Code of Civil Procedure section 430.10, subdivision (f), the court OVERRULES the Demurrer because the Complaint is not so uncertain as to prevent Defendants from providing an informed response.

Based on the above, the court OVERRULES Defendants’ (Shawn Ahdoot and Albert A. Ahdoot) Demurrer to Anh Thy Song Nguyen’s Third Amended Complaint, filed on 8-17-22 under ROA No. 860, as to the first and seventh causes of action. “The court abuses its discretion in sustaining the demurrer without leave to amend if the plaintiff can show a reasonable possibility of curing the defect in the complaint by amendment. [Citation.] Heritage has the burden of proving that an amendment would cure the defect. [Citation.]” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.) The Opposition does not request leave to amend and does not offer facts to demonstrate that Plaintiff can cure the defects identified above. Thus, the court SUSTAINS the Demurrer to the fourth, fifth and sixth causes of action without leave to amend.

Defendants shall file an answer no later than 12-22-22.

Defendants are to give notice.

Motion No. 3:

Cross-Defendant’s (Anh Thy Song Nguyen, Trustee of the Mother Nature Trust and Anh Thy Song Nguyen) Demurrer to United Lender LLC’s First Amended Cross-Complaint (Demurrer), filed on 6-23-22 under ROA No. 805, is SUSTAINED in part and OVERRULED in part.

The court GRANTS Cross-Defendants’ Request for Judicial Notice, filed on 6-23-22 under ROA No. 801, pursuant to Evidence Code section 452, subdivisions (c) and (h). (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (disapproved on other grounds in Yvanova v. New Century Mortgage Corporation (2016) 62 Cal.4th 919, 939, footnote 13.) The court GRANTS Cross-Complainant (United Lender, LLC) Request for Judicial Notice, filed on 11-21-22 under ROA No. 924, pursuant to Evidence Code section 452, subdivision (d).

The Demurrer challenges the first (Quiet Title), second (Declaratory Relief), third (Equitable Lien by Subrogation), and fourth (Tort of Another) causes of action in Cross-Complainant’s First Amended Cross-Complaint (FACC), filed on 4-26-22 under ROA No. 695, pursuant to Code of Civil Procedure section 430.10, subdivision (e).

First Cause of Action (Quiet Title):

Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 524 (Deutsche), states, “The purpose of a quiet title action ‘is to finally settle and determine, as between the parties, all conflicting claims to the property in controversy, and to decree to each such interest or estate therein as he [or she] may be entitled to.’ [Citation.] Actions to quiet title are governed by section 761.010 et seq. The quiet title plaintiff must file a verified complaint including a description of the property, the basis for the plaintiff's claim of title, the adverse claims the plaintiff seeks to adjudicate, the date as of which the plaintiff seeks to adjudicate those claims, and a prayer for the determination of the plaintiff's title against the adverse claims. (§ 761.020.) A quiet title plaintiff must name as defendants “the persons having adverse claims that are of record or known to the plaintiff or reasonably apparent from an inspection of the property.” (§ 762.060, subd. (b).) Any person who has a claim to the property may appear as a defendant, whether or not they are named in the complaint. (§ 762.050.) ‘Immediately upon commencement of the action’ a quiet title plaintiff must record a lis pendens. (§ 761.010, subd. (b).) [¶] Before entering a judgment quieting title, ‘The court shall examine into and determine the plaintiff's title against the claims of all the defendants. The court shall not enter judgment by default but shall in all cases require evidence of plaintiff's title and hear such evidence as may be offered respecting the claims of any of the defendants, other than claims the validity of which is admitted by the plaintiff in the complaint. The court shall render judgment in accordance with the evidence and the law.’ (§ 764.010, italics added.)”

The Demurrer states, “Pursuant to the sale of the Subject Property by the Receiver appointed by the court, United Lender’s claim of Quiet Title to the Subject Property have been extinguished. United Lender’s claims to the Subject Property pursuant to its First Trust Deed no longer exists as United Lender has executed and recorded a Deed of Reconveyance and Substitution of Trustee. See RJN.” (Demurrer, 7:5-13.) Cross-Complainant’s Opposition to Anh Thy Song Nguyen, Trusted of Mother Nature Trust and Anh Thy song Nguyen’s Demurrer to First Amended Cross-Complaint (Opposition), filed on 11-21-22 under ROA No. 926, asserts, “United’s QT claim asserts that any adverse claims which purport to challenge United’s (pre-sale) lien interest in the Property are without basis in law or equity, and United was a bona fide encumbrancer who paid value without any notice of Plaintiff/HOI’s fraud as to the self-dealing regarding the inflation of the purchase price of the Property. [FAXC, ¶¶ 75-77.] As such, United’s lien interest was in fact valid. Similarly, United’s DR claim seeks a judicial determination as to the rights and duties of the parties with respect to the validity and enforceability of each and every provision in United Lender’s Note and the UL DOT. [FAXC, ¶ 84.] These are fair claims: Plaintiff’s challenges to United’s lien are, and always have been, without any legal basis.” (Opposition to Demurrer, 15:7-14.)

Here, on 2-23-22, parties did not oppose the sale of the subject property by the receiver during the ex parte hearing. (ROA 644). On 2-23-22, the Court ordered the receiver to consummate the sale. (Ex. 6 to RJN of United Lender’s Demurrer) On 5-4-22 the parties stipulated to modifying the Preliminary Injunction and Order to allow the receiver to sell the property. (Ex. B to RJN Ahdoots’ Demurrer)

On 6-3-22, with the parties’ consent (6-3-22 Minute Order, the court issued an order with the following key terms: (1) the court approved the approving sale of the Property “. . . free and clear of all claims, liens, or encumbrances . . .” held by the parties. (RJN, Exhibit 1, ¶¶ 4 and 5.); (2) the Receiver was authorized to accept the offer made by the buyer of $3,465,000. (RJN, Exhibit 1, ¶ 3.); and (3) the Receiver cannot distribute net sales proceeds until the court orders the disbursement. (RJN, Exhibit 1, ¶ 7.) The order states that the Ex Parte Order Approving the sale “. . . free and clear of all claims, liens, or encumbrances, if any, held by those parties shown on the Exhibit ‘C’ hereto, but subject to those claims, liens, or encumbrances described on Exhibit ‘C’ hereto, is hereby GRANTED.” (RJN, Exhibit 1, ¶ 1.) Exhibit C lists Cross-Defendant (Any Thy Song Nguyen, Trustee of Mother Nature Trust) and Cross-Complainant. Thus, the court sold the property to a bona fide purchaser, free and clear of Cross-Complainant’s claim, and with Cross-Complainant’s approval.

The Opposition also states, “United had no objection to the Court ruling that all parties’ pre-sale causes of action relating to interests in the Property are moot.” (Opposition; 15:3-4 (Emphasis in Opposition.).) Since the court sustained the quiet title causes of action as to the demurrers that are the subject of Motion Nos. 1 and 2 above, Cross-Complainant concedes that this cause of action should be sustained as well.

Based on the above, the court SUSTAINS the Demurrer to the first cause of action because Cross-Complainant cannot claim that it has an equitable or legal interest in the property within the meaning of Code of Civil Procedure section 760.010.

Second Cause of Action (Declaratory Relief):

The FACC pleads, “United Lender desires a judicial determination of the rights and duties of the parties with respect the validity and enforceability of each and every provision in United Lender’s Note and UL DOT. The FACC sufficiently pleads a controversy between the parties as to the validity and enforceability of Cross-Complainant’s Note and Deed of Trust. Therefore, the court OVERRULES the Demurrer to the second cause of action.

Third Cause of Action (Equitable Lien by Subrogation):

JP Morgan Chase Bank, N.A. v. Banc of America Practice Solutions, Inc. (2012) 209 Cal. App. 4th 855, 860–861 (JP Morgan) provides, “Banc is correct in its assertion that ‘California follows the ‘first in time, first in right’ system of lien priorities. ( [Civ.Code,] § 2897.)’ [Citation.] ‘Other things being equal, different liens upon the same property have priority according to the time of their creation. . . .’ (Civ.Code, § 2897, italics added.) It appears the Legislature used the words ‘other things being equal’ to refer to the equities involved in a competing liens situation. The doctrine of equitable subrogation is an exception to the first in time, first in right rule and applies in those situations where equity requires a different result. [Citation.] [¶] The Supreme Court stated the general rule applicable to a lender's entitlement to equitable subrogation almost 84 years ago: ‘ “One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incumbrance, either on the express understanding, or under circumstances from which an understanding will be implied, that the advance made is to be secured by a first lien on the property, is not a mere volunteer; and in the event the new security is for any reason not a first lien on the property, the holder of such security, if not chargeable with culpable and inexcusable neglect, will be subrogated to the rights of the prior encumbrancer under the security held by him, unless the superior or equal equities of others would be prejudiced thereby, and to this end equity will set aside a cancellation of such security, and revive the same for his benefit.” [Citations.]’ [Citations.] In doing so, equity gives effect to the intentions of the parties. [Citation.] [¶] ‘ “[C]ourts look with favor upon equitable liens, and frequently such liens are employed to do justice and equity and to prevent unfair results. [Citations.]” [Citations.]’ [Citation.] Consequently, equity will generally ‘give a lender the security for which he bargained in the situation when there is mistake or fraud with respect to an intervening right which cuts off a preexisting encumbrance which has been satisfied by the loan proceeds.’ [Citation.] Chase paid off the Siemses' first and second deeds of trust on their property at their request, was to receive a first deed of trust in return, and is entitled to equitable subrogation unless Chase is chargeable with culpable and inexcusable neglect, or superior or equal equities on Banc's part would be prejudiced by granting Chase equitable subrogation. [Citation.]” (Italics in JP Morgan.)

The Opposition states, “The situation here is the classic situation where equitable subrogation should apply: United extended a loan to HOI only because Plaintiff had agreed to sell the Property to HOI; consequently, United’s loan proceeds were used to pay almost $1.1 million of Plaintiff’s pre-existing mortgage debt. Now, Plaintiff exploitively seeks a massive windfall. She wants to keep the benefit of United’s payoff of her pre-existing debt, while also trying to invalidate United’s lien rights without any credit to United for the nearly $1.1 million payoff it made in reliance on Plaintiff’s agreement to sell the Property to HOI. This is a highly inequitable result. [¶] Here, Plaintiff seeks to prosecute her claims and either get back fee title (as alleged in her operative Third Amended Complaint), or obtain the sales proceeds from the Receiver’s sale. Both are equitable claims. Either way, United’s payoff of Plaintiff’s debt must be taken into consideration, at a minimum, as a credit against Plaintiff’s alleged (but non-existent) ‘damages.’ ” (Opposition 16:24-17:6.)

Cross-Defendants’ Reply to United Lender LLC’s Opposition to Demurrer to First Amended Complaint (Reply), filed on 11-28-22 under ROA No. 930, responds, “Here United has been charged with fraud and is not entitled to equitable subrogation.” (Reply, 8:18-20.)

Although Plaintiff has alleged a fraud cause of action against Cross-Complainant, the fraud cause of action has not been adjudicated. Thus, at the pleading stage, the FACC sufficiently pleads a cause of action for equitable subrogation, and the court OVERRULES the Demurrer to the third cause of action.

Fourth Cause of Action (Tort of Another):

Prentice v. North American Title Guaranty Corporation, Alameda Division (1963) 59 Cal.2d 618, 620 (Prentice), provides, “(2) General rule: In the absence of some special agreement, statutory provision, or exceptional circumstances, attorney's fees are to be paid by the party employing the attorney. [Citations.] [¶] (3) Exception: A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney's fees, and other expenditures thereby suffered or incurred. [Citations.]” (Italics in Prentice.)

Cross-Defendant contends, “The Tort of Another doctrine is an exception to the general rule each party bear’s [sic] its own fees and costs absent a contractual provision or statute authorizing prevailing party attorney’s fees.” (Demurrer, 8:12-16.) Cross-Defendant further contends that Cross-Complainant has failed to plead breach of fiduciary duty, fraud, or damages. (Demurrer, 9:12-11:3.)

Cross-Complainant asserts, “United was forced to file its Cross-Complaint seeking to enforce its lien because of Nguyen’s self-dealing and breaches of fiduciary duty against Plaintiff as broker and trustee, and Plaintiff’s ratification of Nguyen’s wrongful and fraudulent self-dealing conduct. [FAXC, ¶¶ 93-103.] Further, Plaintiff defrauded potential subsequent purchasers/encumbrancers of the Property by pretending to sell the Property, while secretly planning to rescind it if Plaintiff’s fraud scheme, and Plaintiff’s sham transaction, blew up in Plaintiff’s face. [Id.]” (Opposition, 17:17-22.) Cross-Complainant further contends: “Nguyen committed the tort against Plaintiff, but United is called upon to pay the damages for Nguyen’s tort.” (Opposition, 17:25-26.)

Here, the allegations regarding the breaches of Cross-Defendant—Any Thy Song Nguyen are sufficient to allege the tort of another cause of action. The damages are the $1,957,000 in loan proceeds that Cross-Complainant provided and immediately benefited Cross-Defendant—Any Thy Song Nguyen. (FACC, ¶ 102) The damages alleged are also “. . . attorneys’ fees and costs for [United Lender’s] defense.” (FACC, ¶ 101.)

Thus, the court OVERRULES the Demurrer to the fourth cause of action.

Based on the above, the court SUSTAINS Cross-Defendant’s (Anh Thy Song Nguyen, Trustee of the Mother Nature Trust and Anh Thy Song Nguyen) Demurrer to United Lender LLC’s First Amended Cross-Complaint, filed on 6-23-22 under ROA No. 805, as to the first cause of action without leave to amend based on Cross-Complainant’s concession. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.) The court OVERRULES the Demurrer as to the remaining causes of action. Cross-Defendants shall file an answer to the FACC no later than 12-22-22.

Cross-Complainant is to give notice.