Case Number: BC586990??? Hearing Date: May 05, 2016??? Dept: 37
CASE NAME: 450 S. Western, LLC, et al. v. Wilshire Bank
CASE NO.: BC586990
HEARING DATE: 5/5/16
DEPARTMENT: 37
CALENDAR NO.: 7
TRIAL DATE: 10/25/16
NOTICE: OK
SUBJECT: Demurrer
DEMURRING PARTY: Defendant Wilshire Bank
OPPOSING PARTY: Plaintiffs 450 S. Western, LLC and California Market, LLC
COURT?S TENTATIVE RULING
The demurrer to the third and fourth causes of action is overruled. Counsel for Plaintiffs to give notice.
STATEMENT OF THE CASE
This action concerns a commercial loan for the construction of a new multi-tenant shopping center. Plaintiffs 450 S. Western, LLC and California Market, LLC allege that in November 2009 they entered into a written loan agreement with Defendant Wilshire Bank for $20 million to fund the construction of the new shopping center, which included revamping the existing marketplace at the center. Plaintiffs allege that Defendant delayed the project for nearly two years by instructing Plaintiffs to forestall construction and demolish the existing market, and by failing to release the loan funds necessary to complete the project. As a result, the property remained empty for one year, until Plaintiffs secured alternative financing. On December 3, 2015, the court overruled Defendant?s demurrer to the first, second, fifth, sixth, and seventh causes of action, but sustained with leave to amend the demurrer to the third and fourth causes of action for intentional and negligent interference with prospective economic advantage. Plaintiff filed the First Amended Complaint (FAC), and Defendant now demurs again to the third and fourth causes of action. For the reasons set forth below, the demurrer is overruled.
DISCUSSION
I. Legal Standard
A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., ? 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading ?by raising questions of law.? (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) ?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.? (Code Civ. Proc., ? 452.) The court ? ? ?treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .? ? ?
(Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)
II. Intentional and Negligent Interference with Prospective Economic Advantage (Third and Fourth Causes of Action)
Defendant demurs to the third and fourth causes of action on the ground that Plaintiffs fail to allege that any conduct taken by Defendant was independently wrongful, that is, wrongful in and of itself, beyond the fact of interference with Plaintiffs? expectancy in an economic benefit.1 The failure to adequately allege this element was the basis of the prior ruling on these causes of action. The court determined that Plaintiffs had not alleged independent wrongfulness beyond the alleged breach of contract, reasoning, ?Plaintiffs have not sufficiently demonstrated how Defendant?s alleged interference?i.e., its breach of contract?was independently wrongful by some legal measure beyond the interference itself. Plaintiff must do so in order to allege these tort causes of action.? (12/3/2015 Tentative Ruling.) Having considered the amended complaint, the court determines that Plaintiffs have sufficiently alleged the element of independent wrongfulness.
To prevail on a claim for interference with prospective economic advantage, the plaintiff must establish that the defendant?s conduct was independently wrongful by some legal measure?i.e., that the defendant?s interference was wrongful by some measure beyond the fact of the interference itself. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392-393; Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55.) Courts require independent wrongfulness to distinguish this tort from that for interference with existing contract, and to protect the economic reality that ours is a society of free competition. (Della Penna, at pp. 392-393; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158-1159.)
To allege that an act of interference is independently wrongful, plaintiffs must allege that the act ?is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.? (Korea Supply, supra, 29 Cal.4th at p.
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1 The elements for intentional interference with prospective economic advantage are (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant?s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. (Youst v. Longo (1987) 43 Cal.3d 64, 71, fn. 6.) The tort of negligent interference with prospective economic advantage is premised not on intentional conduct but on the defendant?s failure to act with reasonable care?i.e., the defendant knew or should have known that if it did not act with due care its actions would interfere with the relationship and cause the plaintiff to lose in whole or in part the probable future economic benefit of the relationship. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.)
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1159.) For instance, in Korea Supply, the plaintiff alleged that its competitor had offered bribes and sexual favors to government officials in support of its bid for a government contract. Noting that the Foreign Corrupt Practices Act made it unlawful to pay or offer money or anything of value to a foreign official for the purpose of influencing any act or decision, the Court determined the plaintiff had sufficiently alleged that the defendants engaged in unlawful behavior to secure the contract. The plaintiff had sufficiently alleged that the defendants? acts, ?in addition to interfering with [the plaintiff?s] business expectancy, were wrongful in and of themselves.? (Ibid.) Accordingly, the defendants? conduct had gone beyond the sphere of lawful competition, beyond the fact of lawful interference.
The third and fourth causes of action are based on the relationships that Plaintiff had with third parties in connection with the new shopping center, including pre-leased tenants, potential tenants, and the vendors of the preexisting market. (FAC ?? 90, 98.) Plaintiffs allege that Defendant interfered with these relationships by virtue of the manner in which it handled Plaintiffs? loan. For instance, Plaintiffs aver that, to induce Plaintiffs to enter into the loan agreement, Defendant represented that it was in good financial condition and had the wherewithal to pay the construction costs for the project when in fact it did not. Plaintiffs allege that in May 2011, Defendant advised that Plaintiffs should move forward with the construction but then failed to release the loan funds, preventing Plaintiffs from beginning the project. (FAC ?? 17-19.) Defendant then suffered financial losses and fired top executives who were responsible for Plaintiffs? loan ?for allegedly participating in questionable lending practices and taking advantage of [Defendant?s] loan customers, including pressuring borrowers into default.? (FAC ? 20.) Plaintiffs allege that as a result of uncertainty about the project?s future, many of their pre-leased tenants demanded refunds of their down payments and backed out. In addition, the uncertainty damaged Plaintiffs? relationships with preexisting vendors. (FAC ?? 23-24.)
In the amended complaint, Plaintiffs allege that Defendant?s conduct ?falls outside the boundaries of fair competition and were wrongful by a measure beyond the fact of the interference itself. [Defendant?s] conduct was independently wrongful . . . because . . . [Defendant] fraudulently and deceptively made untrue and misleading statements and advertisements to [Plaintiffs] regarding [Defendant?s] desire and ability to loan [Plaintiffs] money to induce [Plaintiffs] to demolish the existing [California Market] and enter into agreements to construct the new California Market.? (FAC ?? 93, 101.) The allegation appears to be that Defendant engaged in fraudulent and deceptive practices to induce Plaintiffs to enter into a loan transaction that would benefit Defendant, even though Defendant?s inability to make good on its obligations would interfere with Plaintiffs? relationships with tenants and vendors. In this regard, the acts amounting to interference were independently wrongful because, as Plaintiffs allege, they were fraudulent and deceptive business practices. Thus, in addition to interfering with Plaintiffs? prospective economic advantage, the acts were wrongful in and of themselves. Accordingly, the demurrer to the third and fourth causes of action is
Case Number: BC607081??? Hearing Date: May 05, 2016??? Dept: 37
CASE NAME: Ferrette v. First Franklin, et al.
CASE NO.: BC607081
HEARING DATE: 5/5/16
DEPARTMENT: 37
CALENDAR NO.: 8
NOTICE: OK
SUBJECT: Motion for Temporary Restraining Order
MOVING PARTY: Plaintiff Phelnon M. Ferrette, self-represented
OPPOSING PARTY: Defendants PNC Bank, N.A.; National Default Servicing Corporation; and Mortgage Electronic Registration Systems, Inc.
COURT?S REVISED TENTATIVE RULING
At the initial hearing on the motion on April 12, 2016, the court issued a tentative ruling to deny the motion. The court withdrew the tentative to permit Plaintiff the opportunity to submit a reply brief. Having considered Plaintiff?s reply brief, the court now issues this revised tentative ruling, which incorporates and supplements the prior tentative decision. The requests for judicial notice are granted, and the motion is denied. Counsel for Defendants to give notice.
STATEMENT OF THE CASE
This action concerns real property located at 1838 West 84th Street, Los Angeles, California 90047. Plaintiff has filed suit to quiet title to the real property and cancel certain instruments recorded against the property, among other things. By this motion, Plaintiff seeks preliminary injunctive relief to preclude Defendants from selling the property or otherwise attempting to enforce rights under a deed of trust recorded on January 20, 2006, including unlawful detainer proceedings. Plaintiff also seeks to set a hearing date to further establish entitlement to permanent injunctive relief. Defendants oppose the motion. For the reasons set forth below, the motion is denied.
DISCUSSION
The motion for preliminary injunctive relief is denied because the foreclosure Plaintiff seeks to enjoin has already occurred. Documents recorded against the real property show that on April 23, 2015, a foreclosure sale occurred pursuant to a deed of trust executed by Plaintiff and recorded on January 20, 2006. The deed of trust secured the repayment of a mortgage loan provided to Plaintiff in the amount of $336,000. Plaintiff defaulted on her loan obligations, and foreclosure proceedings were instituted pursuant to the deed of trust. At the sale, Defendant PNC Bank, N.A. purchased the property, and on May 15, 2015, it recorded a trustee?s deed upon sale reflecting its purchase and title to the property. (Defendants? RJN.)
Defendants request that the court judicially notice the deed of trust, notice of default, corporate assignment of the deed of trust, two grant deeds, and the trustee?s deed upon sale that are recorded against the real property. The practice of taking judicial notice of a matter is appropriate only when the matter is reasonably beyond dispute. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113.) ?Strictly speaking, a court takes judicial notice of facts, not documents. [Citation.] When a court is asked to take judicial notice of a document, the propriety of the court?s action depends upon the nature of the facts of which the court takes notice from the document.? (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265.) Thus, for example, courts ?may take judicial notice of the fact of a document?s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document?s legally operative language, assuming there is no genuine dispute regarding the document?s authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.? (Ibid.)
Defendants? request for judicial notice of the documents recorded against the subject real property is granted. Plaintiff does not dispute the authenticity of the documents are present evidence showing that the documents are not what they purport to be. Accordingly, the court may, from the documents, judicially notice certain facts, including that Plaintiff obtained a loan and entered into a deed of trust in 2006, and that in 2015, the deed of trust was foreclosed upon. Consequently, it is not clear what action Plaintiff seeks to enjoin. Defendants already have instituted and concluded foreclosure proceedings under the deed of trust. In addition, it appears that Plaintiff no longer resides in the property. Because Plaintiff?s motion seeks injunctive relief precluding Defendants from enforcing any rights under the deed of trust, the motion appears moot.
The court also notes that Plaintiff?s causes of action appear to be time-barred by the applicable statutes of limitations. In the complaint, Plaintiff asserts causes of action for quiet title, breach of fiduciary duty, fraud, violation of California?s Residential Mortgage Lending Act (Fin. Code, ? 50505 et seq.), violation of the Unfair Competition Law, unjust enrichment, accounting, cancellation of instruments, and fraud in the execution. These causes of action all are premised on conduct that occurred in 2006 in connection with Plaintiff?s home mortgage loan. Plaintiff does not explain why the limitations periods on her causes of action did not expire before she filed suit in January 2016.
In addition, to the extent Plaintiff seeks equitable relief, she must herself do equity. Here, Plaintiff obtained a loan for $336,000 but defaulted on her repayment obligations. Although she alleges that the lender was not permitted to do business, a contract entered into by such a corporation is voidable, not void. (Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 669.) Consequently, Plaintiff must return everything of value she received in the loan transaction before she may seek to cancel instruments recorded against the property that arise out of the deed of trust. (Fleming v. Kagan (1961) 189 Cal.App.2d 791, 796-797.) Her failure to do equity precludes the equitable relief she seeks.
In her reply brief, Plaintiff contends that Defendants have no standing to assert the statutes of limitations or the tender rule as a defense. However, as the party seeking injunctive relief, Plaintiff bears the burden of proof on her own motion, including whether she has a likelihood of prevailing on the merits of her action. (White v. Davis (2003) 30 Cal.4th 528, 554; O?Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481 [?the burden was on plaintiffs, as the parties seeking injunctive relief, to show all elements necessary to support issuance of a preliminary injunction?].) Plaintiff?s principal argument appears to be that the original lender is no longer a legal entity. (Plaintiff?s RJN.)(FN1) In addition, she appears to argue that under paragraph 22 of the deed of trust she is entitled to excess proceeds from the foreclosure sale, and that she will tender any ?out of pocket? amount paid by Defendants. However, these arguments do not appear to address the timeliness of her complaint or Plaintiff?s ability to tender the full amount owed under the deed of trust. Similarly, the arguments do not appear to address the fact that the deed of trust has already been foreclosed upon. To the extent that Plaintiff seeks monetary rather than injunctive relief, e.g., for the excess proceeds of the foreclosure sale, that relief cannot be sought by way of an injunction and Plaintiff may proceed with such an action. This ruling concerns only Plaintiff?s request for injunctive relief and not any other relief that Plaintiff seeks in this action.
Accordingly, for these reasons, the motion is denied.
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1. Plaintiff requests that the court judicially notice a Certificate of No Record from the Secretary of State, purporting to establish that there are no recorded of a California or foreign corporation, active or inactive, of the name ?First Franklin.? The request is granted. (Evid. Code, ? 452, subd. (c); Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1478, fn. 6 [granting request for judicial notice of ?the certificate of status issued by the SOS . . . which reflects the suspensions issued by the SOS?].)