Judge: Yolanda Orozco, Case: 21STCV38508, Date: 2022-10-06 Tentative Ruling

Case Number: 21STCV38508    Hearing Date: October 6, 2022    Dept: 31

DEMURRER TO CROSS-COMPLAINT IS SUSTAINED WITHOUT LEAVE TO AMEND 

Background 

On October 10, 2021, Jordan Young and Laura Valdivia (collectively, “Plaintiffs”) filed a Complaint against U.S. Bank N. A (“U.S. Bank”); Chartwell Escrow, Inc. (“Chartwell”); Coldwell Banker Realty (“Coldwell”) and Does 1 to 20. The operative second amended complaint (SAC) alleges: 

1)     Breach of Escrow Contract (against Chartwell and Does 1 to 20)

2)     Breach of the Implied Covenant in Escrow Contract (against Chartwell and Does 1 to 20)

3)     Money had and received Common Counts (against U.S. Bank)

4)     Breach of Fiduciary Duty (against Chartwell and Does 1 to 20)

5)     Negligence (against Chartwell and Does 1 to 20)

7) Negligence (against Coldwell and Does 1 to 20)

8) Conversion (U.S. Bank and Does 1 to 20)

9) Preliminary and Permanent Injunction (against U.S. Bank and Chartwell) 

On March 11, 2022, Defendant Coldwell Banker Residential Brokerage Company dba Coldwell Banker Realty filed a Cross-Complaint against U.S. Bank, N.A., alleging causes of action for tort of another, comparative equitable indemnity, contribution and apportionment, and declaratory relief. 

This action arises out of Plaintiffs engaging defendants Chartwell Escrow, Inc. (“Chartwell”) and Coldwell Banker (“Coldwell”) to assist them in purchasing real estate. On October 6, 2021, Plaintiffs allegedly received an email from someone purporting to be their designated escrow agent at Chartwell, directing Plaintiffs to wire funds to a U.S. Bank account. Defendant U.S. Bank is not listed in any of the documents and is a stranger to the parties and their real estate transaction. The Plaintiffs wired $920,000.09 to the U.S. Bank account number provided via email by the individual purporting to be the Plaintiffs’ designated escrow agent. The Plaintiffs spoke with Chartwell on Friday, October 8, 2021, and were advised Chartwell did not receive the funds. 

U.S. Bank recovered $843,111.62 of the funds that Plaintiffs wired to the bank. This was the amount of the settlement reached by Plaintiffs and U.S. Bank, in exchange for a dismissal with prejudice. The remaining $76,888.47 was not recovered. 

U.S. Bank initially filed a Notice of Settlement and Application for Determination of Good Faith Settlement on January 13, 2022. The settlement was rejected on April 28, 2022, because U.S. Bank failed to provide any evidence to determine if the settlement was in good faith. (Min. Or. 04/28/22.) 

On June 09, 2022, U.S. Bank renewed its application for Determination of Good Faith Settlement. On September 28, 2022, the Court granted U.S. Bank’s Motion For Determination Of Good Faith Settlement. 

On September 16, 2022, U.S. Bank was dismissed as a Defendant. 

On April 18, 2022, Cross-Defendant U.S. Bank filed a demurrer to Defendant Coldwell’s Cross-Complaint. 

On September 22, 2022, Coldwell filed opposition papers. On September 28, 2022, U.S. Bank filed a Reply. 

MEET AND CONFER 

Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred, in person or telephonically, to determine whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc. (CCP) § 430.41.) 

U.S. Bank’s counsel asserts that she communicated by email and telephone with counsel for Coldwell, including on March 29 and April 15, 2022. (Simonetti Decl. ¶ 3.) No resolution was reached, and U.S. Bank filed its demurrer. (Id. ¶ 4.) Thus, the meet and confer requirement is met. 

Legal Standard 

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  “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.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)  For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)  A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)¿¿¿ 

Request for Judicial Notice 

Cross-Defendant U.S. Bank requests Judicial Notice of:

1)     Exhibit A: First Amended Complaint and supporting exhibits filed in this action on December 15, 2021.

2)     Exhibit B: Plaintiffs’ Request for Dismissal with prejudice of all causes of action against U.S. Bank filed in this action on January 4, 2022.

3)     Exhibit C: U.S. Bank’s Application for Finding of Good Faith Settlement and attached settlement agreement filed in this action on January 18, 2022.

4)     Exhibit D: Coldwell Banker’s Cross-Complaint filed in this action on March 10, 2022.

Cross-Defendant U.S. Bank’s request for Judicial Notice is GRANTED, pursuant to Evidence Code sections 452(c), (d), (h), and 453.

Defendant Coldwell Banker requests Judicial Notice of:  

1)     Exhibit A: Ex Parte Application for a Temporary Restraining Order filed by Plaintiffs in this action on October 20, 2021.

Defendant Coldwell’s request for Judicial Notice is GRANTED, pursuant to Evidence Code section 452(d). 

Discussion 

Cross-Defendant U.S. Bank asserts that because this Court granted U.S. Bank’s good faith settlement application and all claims asserted in the Cross-Complaint are derivative, the Cross-Complaint is rendered moot. The Court agrees.

Coldwell acknowledges that its claims for comparative equitable indemnity, contribution, and apportionment do not survive as such claims are prohibited by the good faith settlement under Code of Civil Procedure section 877.6(c). Nevertheless, Coldwell asserts that its claim for tort of another survives the good faith settlement. The Court disagrees.

Tort of Another

“The tort of another doctrine holds that ‘[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.’ (Citation.)” (Mega RV Corp. v. HWH Corp. (2014) 225 Cal.App.4th 1318, 1337.) “The tort of another doctrine applies to economic damages (i.e., attorney fees incurred in litigation with third parties) suffered as a result of an alleged tort. As such ‘nearly all of the cases which have applied the [tort of another] doctrine involve a clear violation of a traditional tort duty between the tortfeasor who is required to pay the attorney fees and the person seeking compensation for those fees.’ (Citations.)” (Id. at 1339-1340.)

Therefore, in order for Coldwell’s tort of another claim to survive, U.S. Bank needs to face tort liability. The good faith settlement approved by the Court results in Plaintiff’s release of all claims, including tort claims against U.S. Bank. Consequently, there is no tort under which Coldwell’s tort of another claim survives. (See Mega RV Corp., supra, 225 Cal.App.4th at 1340 [“we disagree with the majority opinion in Manning v. Sifford (1980) 111 Cal.App.3d 7, 10-11 [168 Cal.Rptr.387], wherein the court suggested it could award tort of another damages even if no tort duty existed.”]; see also Sooy v. Peter (1990) 220 Cal.App.3d 1305, 1311.) Since CCP section 877.6 became effective January 1, 1981, the Court finds that Coldwell’s reliance on Sun'n Sand, Inc. v. United California Bank (1978) 21 Cal. 3d 671 and Manning v. Sifford (1980) 111 Cal.App.3d 7 to be unavailing.

Therefore, the demurrer for the tort of another is SUSTAINED WITHOUT LEAVE TO AMEND.

Declaratory Relief

Coldwell requests a judicial determination of its rights and the respective obligations of U.S. Bank relative to claims arising out of the event and transactions alleged in the FAC. The good faith settlement settled any obligations U.S. Bank owed. Moreover, absent a cause of action, Coldwell’s request for declaratory relief cannot survive. (See  City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80 [“‘a request for declaratory relief will not create a cause of action that otherwise does not exist.’”]; see also Gilkyson v. Disney Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1347 [declaratory relief cause of action cannot exist without valid underlying claim].) 

Based on the foregoing, U.S. Bank’s demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.

Conclusion 

Cross-Defendant U.S. Bank’s N.A.’s demurrer is SUSTAINED WITHOUT LEAVE TO AMEND. 

Cross-Defendant to give notice.