Demurrer (Judge Samantha P. Jessner)


Case Number: BC599387??? Hearing Date: August 29, 2016??? Dept: 31

Defendant Seterus, Inc.?s unopposed Demurrer to Plaintiffs? First Amended Complaint is SUSTAINED as to the entirety of the FAC asserted by Plaintiff Gabriel Louie Medina, without leave to amend. The demurrer is OVERRULED as to the first, sixth, and ninth causes of action and SUSTAINED as to the second, third, fourth, fifth, eighth, and tenth causes of action, without leave to amend.
Defendant requests the Court to take judicial notice of various documents recorded in the Official Records of Los Angeles County related to the property. Courts may take judicial notice of recorded deeds, but not the hearsay or disputable facts asserted in them. See Poseidon v. Woodland (2007) 152 Cal.App.4th 1106, 1117 (?For example, the First Substitution recites that Shanley ?is the present holder of beneficial interest under said Deed of Trust.? By taking judicial notice of the First Substitution, the court does not take judicial notice of this fact, because it is hearsay and it cannot be considered not reasonably subject to dispute.?). Courts may take judicial notice of the legal effect of such documents. Id. The requests are GRANTED subject to the above limitations.
As an initial matter, the Court notes that the FAC filed by Plaintiffs references various exhibits as being attached thereto. (See e.g. FAC ? 20.) While exhibits were attached to the original complaint, no exhibits are attached to the FAC. Therefore, the exhibits are not properly before the Court. Lee v. Bank of America (1994) 27 Cal.App.4th 197, 215 (?An amended complaint supersedes all prior complaints. It alone will be considered by the reviewing court. The original ceases to perform any function as a pleading.?) (internal citations omitted).
Defendant demurs to each of the causes of action asserted against it.
First, Defendant argues that Plaintiffs lack standing to pursue the cases of action asserted against Defendant, who is alleged to be the loan serving company for the underlying Note and Deed of Trust that served as the basis for the Trustee?s sale. (FAC ? 7.) Only a real party in interest may prosecute a cause of action. CCP ? 367. ?Where the complaint shows the plaintiff does not possess the substantive right or standing to prosecute the action, ?it is vulnerable to a general demurrer on the ground that it fails to state a cause of action.?? Schauer v. Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 955. Defendant?s standing argument is impermissibly based upon hearsay statements within the documents submitted for judicial notice. Defendant argues that non-party borrower Juliet Medina obtained a loan on June 19, 2007 from Countrywide, that the property was transferred to a trust, and that Vasquez, as successor trustee, granted the property to herself. (Dem. at 2-3.) However, the FAC specifically alleges that the loan was not procured by Medina, was secured by Defendant Vasquez via forgery, and that no trust existed. (FAC ?? 10-13, 17.) Therefore, the FAC alleges that the entire loan and deed of trust were void ab initio as a result of the forgery. See e.g. La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 478 (?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.?)
Defendant?s non-binding federal authority regarding standing is inapplicable to the facts alleged in the FAC. (Dem. at 3.) In Cabrera v. Countrywide Financial (N.D. Cal., Oct. 30, 2012, No. C 11-4869 SI) 2012 WL 5372116, the Court found that a wife lacked standing based upon her community property interest because the presumption of community property does not apply where a spouse acquires property in his name alone. No such facts are alleged here. In Brockington v. J.P. Morgan Chase Bank, N.A. (N.D. Cal., July 1, 2009, No. C-08-05795 RMW) 2009 WL 1916690, at *3, the court?s decision regarding standing was predicated on the following:
Lally Brockington was not a party to the loan transaction and has no standing to challenge defendant’s conduct in connection with extending the mortgage loan to Kimberly Brockington, or to assert a claim for unlawful concealment of facts by the defendants in such transaction to which she was not a party.

Here, the challenged conduct supporting each cause of action is the wrongful foreclosure of a property claimed to be owned by Plaintiffs, not conduct in connection with the loan transaction itself. Finally, in Cleveland v. Deutsche Bank Nat. Trust Co. (S.D. Cal., Feb. 2, 2009, No. 08CV0802JM(NLS)) 2009 WL 250017, at *2, the court found that the property was held by ?Josephine Cleveland, a married woman as her sole and separate property,? and there were no allegations that Plaintiff Jay Cleveland possessed any interest in the underlying property. Here, Plaintiffs allege that absent the forged instruments, the property would pass to Plaintiff Gabriel Medina by intestate succession. (FAC ? 13.) Therefore, none of Defendant?s cited authority demonstrates the Plaintiff Gabriel Medina lacks standing.
?The heirs or devisees may themselves, or jointly with the personal representative, maintain an action for possession of property or to quiet title to property against any person except the personal representative.? Prob. Code ? 9654. See also Olson v. Toy (1996) 46 Cal.App.4th 818, 823 (?plaintiffs have standing to maintain an action to invalidate the trust and compel delivery of the trust assets to the estate. The complaint alleges that defendants, using undue influence, took advantage of decedent’s senility and induced her to execute a trust in their favor. For purposes of demurrer, we accept these allegations as true.?) Therefore, Plaintiff Gabriel Medina, as the alleged heir and rightful owner of property subject to a void deed of trust, has standing to seek possession of the property.
However, the FAC contains no allegations establishing that Plaintiff Gabriel Louie Medina has any interest whatsoever in the property. Plaintiff Gabriel Louie Medina is only alleged to be the adult son of Plaintiff Gabriel Medina and an occupant of the property. (FAC ? 2.) Plaintiff Gabriel Louie Medina does not possess the substantive right or standing to prosecute the action. The demurrer is SUSTAINED as to Plaintiff Gabriel Louie Medina for lack of standing. Given that the demurrer is unopposed, the court declines to grant leave to amend.
Defendant also argues that Plaintiffs failed to allege tender. (Dem. at 3-5.) However, tender is not required where the alleged deed is void. See e.g. Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 113 (?no tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face.?); Sciarratta v. U.S. Bank National Association (2016) 247 Cal.App.4th 552, 568 (?Because Sciarratta properly alleged the foreclosure was void and not merely voidable, tender was not required to state a cause of action for quiet title or for cancellation of instruments.?) Therefore, Defendant?s tender argument fails.
Lack of Standing to Foreclose/Wrongful Foreclosure
Defendant relies upon the recorded documents to argue that the foreclosure was properly conducted. (Dem. at 5-6.) ?The elements of a wrongful foreclosure cause of action are: (1) [T]he 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.? Sciarratta v. U.S. Bank National Association (2016) 247 Cal.App.4th 552, 561?62. The FAC adequately alleges that the original note and deed of trust were void as forgeries, rendering the sale of the property illegal. Moreover, the Complaint adequately alleges prejudice. Id. at 565-66 (?When a non-debtholder forecloses, a homeowner is harmed because he or she has lost her home to an entity with no legal right to take it.?) As noted above, there is no requirement to allege tender in this case. Therefore, the FAC adequately states a cause of action for wrongful foreclosure and the demurrer is OVERRULED as to the first cause of action.
Slander of Title
Defendant correctly argues that the Complaint fails to allege a cause of action for slander of title. The slander of title cause of action is based upon the recording of a Notice of Default, Notice of Trustee?s Sale, and Notice of Issuance of Trustee?s Deed Upon Sale. (FAC ? 56.) Pursuant to Civ. Code ? 2924(d), these documents are privileged pursuant to Civ. Code ? 47. Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 343 (?Certainly Best Alliance’s recording the notice of default?a notice required by section 2924?was a privileged communication, and Best Alliance’s failing to rescind it is no less privileged, flowing as it does from the statutorily protected act of the recording. Thus, unless Best Alliance acted with malice, it is immune from liability under the common interest privilege.?) ?For this purpose, malice is defined as actual malice, meaning that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff’s rights.? Id. at 336.
Plaintiff has the affirmative obligation to plead facts establishing Defendant?s malice. See e.g. Noonan v. Rousselot (1966) 239 Cal.App.2d 447, 452?53 (?malice must be pleaded if the complaint reveals the existence of a privilege which the proof of actual malice is designed to defeat and that the pleading of malice must set forth specific facts which indicate the existence of personal malice.?); Lesperance v. North Am. Aviation, Inc. (1963) 217 Cal.App.2d 336, 341 (?where the complaint discloses a case of qualified privilege, no malice is presumed3 and in order to state a cause of action the pleading must contain affirmative allegations of malice in fact.?) The FAC?s conclusory allegations are insufficient to overcome the privilege. (FAC ? 60.) The demurrer is SUSTAINED as to second cause of action for slander of title, once again, without leave to amended given that the demurrer is unopposed.
Quiet Title and Cancellation of Deed
Plaintiffs seek to quiet title in the property and cancel deeds recorded in favor of Defendant Inez Vasquez and Fannie Mae. (Compl. ? 63.) The cause of action is asserted against all Defendants. However, as argued by Defendant, the FAC does not plead any adverse interest in the property claimed by Defendant. A quiet title action is only properly directed at parties who assert adverse claims to the title of the plaintiff. CCP ? 761.020(c). Therefore, the quiet title cause of action fails. The demurrer is SUSTAINED as to the third cause of action without leave to amend.
Declaratory and Injunctive Relief
The FAC seeks a determination that Defendants did not have a right to foreclose on the property. (FAC ? 66.) This issue will be determined by Plaintiffs? other causes of action and the declaratory relief claim is superfluous. California Ins. Guarantee Assn. v. Superior Court (1991) 231 Cal.App.3d 1617, 1623?24 (?an action in declaratory relief will not lie to determine an issue which can be determined in the underlying tort action.?) ?The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action. The object of the 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.? General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470. The demurrer is SUSTAINED as to the fourth cause of action without leave to amend.
Violation of Civil Code ? 2932.5
The FAC alleges that Defendants violated Civ. Code ? 2932.5. As argued by Defendant, the FAC fails to allege sufficient facts to establish that Civ. Code ? 2932.5 applies. ?It has been established since 1908 that this statutory requirement that an assignment of the beneficial interest in a debt secured by real property must be recorded in order for the assignee to exercise the power of sale applies only to a mortgage and not to a deed of trust.? Calvo v. HSBC Bank USA, N.A. (2011) 199 Cal.App.4th 118, 122. The only allegations in the FAC relate to a deed of trust. Therefore, Civ. Code ? 2932.5 does not apply. The demurrer is SUSTAINED as to the fifth cause of action without leave to amend.
Unfair Business Practices
?The unlawful practices prohibited by section 17200 are any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made. Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838?39. As noted above, the FAC adequately alleges a cause of action for wrongful foreclosure. Defendant argues that the Plaintiffs have not lost money or property sufficient to have standing. However, the FAC alleges that Plaintiff is the rightful owner of the property by intestate succession and has lost the property as a result of Defendant?s wrongful foreclosure.
Defendant argues that a cause of action pursuant to Bus. & Prof. Code ? 17200 only applies to past conduct, citing Mangini v. Aerojet?General Corp. (1991) 230 Cal.App.3d 1125, 1155?1156. However, this argument has been expressly rejected by subsequent courts. Rufini v. CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 311 (?Finally, relying upon Mangini v. Aerojet?General Corp. (1991) 230 Cal.App.3d 1125, 1155?1156, 281 Cal.Rptr. 827, CitiMortgage asserts Rufini’s section 17200 claim fails because the unfair competition law applies only to ongoing conduct. That was the state of the law when Mangini was decided, but the following year the Legislature amended section 17200 to state that it applies to any unlawful ? ?act or practice,? presumably permitting invocation of the UCA based on a single instance of unfair conduct.?) Defendant argues that the claims must be pled with specificity, citing Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612. However, the particularity requirement in a UCL claim was expressly rejected by the California Supreme Court in Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 46 (?contrary to the suggestion by amicus curiae that the court may require fact-specific pleading, the well-settled rule is otherwise except in pleading fraud.?) The demurrer is OVERRULED as to the sixth cause of action.
Conspiracy to Commit Fraud
As argued by Defendant, the there is no independent cause of action for conspiracy. ?Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.? Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510?11. Plaintiff must allege conspiracy allegations within their fraud cause of action, if applicable. The demurrer is SUSTAINED as to the eighth cause of action without leave to amend.
Set Aside Trustee?s Sale
The elements of a cause of action to set aside a trustee?s sale are identical to the wrongful foreclosure elements. ?Case law instructs that the elements of an equitable cause of action to set aside a foreclosure sale 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. Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104. As noted above, the FAC adequately alleges these elements. The demurrer is OVERRULED as to the ninth cause of action.
Unjust Enrichment
The FAC alleges that Defendants, and each of them ?have been unjustly enriched at the expense of Plaintiffs, in that Plaintiff were unjustly deprived of their equity as well as ownership of the Property.? (FAC ? 107.) As argued by Defendant, unjust enrichment is not a cause of action. See e.g. McBride v. Boughton (2004) 123 Cal.App.4th 379, 387 (?Unjust enrichment is not a cause of action, however, or even a remedy, but rather a general principle, underlying various legal doctrines and remedies.?); Hill v. Roll Intern. Corp. (2011) 195 Cal.App.4th 1295, 1307
(?Unjust enrichment is not a cause of action, just a restitution claim?). The demurrer is SUSTAINED as to the tenth cause of action without leave to amend.
Defendant has 10 days to file an answer.
Moving parties are ordered to give notice.