Case Number: EC066892 Hearing Date: January 12, 2018 Dept: NCD

TENTATIVE RULING

DEMURRER

Calendar: 7

Date: 1/12/18

Case No. EC 066892

Case Name: Sharman v. Bear Stearns Residential Mortgage Corp., et al.

Moving Party: Defendant Citibank, N.A., as Trustee

“Joinder” filed by defendant Mortgage Electronic Registration Systems, Inc.

Responding Party: Plaintiff Samantha Sharman

RULING:

Defendant Mortgage Electronic Registration System, Inc.’s “Joinder” to Demurrer of Defendant Citibank is denied to the extent said “joinder” seeks that this court grant affirmative relief in favor of defendant MERS, as opposed to urging the court to sustain defendant Citibank’s demurrer in favor of Citibank. The “joinder” fails to cite any legal authority under which a party may join in the subject motions seeking relief in that party’s favor. The court also is reluctant to view this as a stand-alone motion given that there is no reservation identification of the moving document, and evidently no filing fee has been paid.

Defendant’s UNOPPOSED Request for Judicial Notice is GRANTED.

Plaintiff’s two UNOPPOSED Requests for Judicial Notice are GRANTED.

Demurrer of Citibank, N.A. as Trustee to Plaintiffs’ First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

The causes of action to quiet title fail to state with sufficient legal or factual specificity the adverse claims as to which the plaintiff seeks to quiet title, and in some part appear directed at quieting title exclusively in other parties, such as unnamed investors. Plaintiff has also failed to comply with CRC Rule 2.112, as the pleading does not specifically state which of the defendants to whom each cause of action is directed. The causes of action also appear to be based on flawed theories of liability, as discussed in the moving papers, including that MERS lacked authority to assign the note, that any assignment was not recorded, and that the note now belongs to some unidentified investors, when Citibank is clearly sued as trustee. The amended pleading, as with the original complaint, also fails to sufficiently allege discharge or tender, or a void transaction, and the claims are barred by the statute of limitations.

As plaintiff has failed to correct the flaws in the pleading despite being permitted the opportunity to amend, with the guidance of the previous demurrer and this court’s order, and has failed in the opposition papers to meet her burden of demonstrating how the pleading might be further amended to cure it of its defects, the demurrer is now sustained without further leave to amend.

Defendant Citibank, N.A., as Trustee to file appropriate request for dismissal.

(The parties are ordered to file Notice of Related Cases in connection with other cases brought by plaintiff in connection with the subject property).

RELIEF REQUESTED:

Sustain demurrer to First Amended Complaint

MEET AND CONFER? Ok

CAUSES OF ACTION: From First Amended Complaint

1) Quiet Title

2) Quiet Title

3) Quiet Title

4) Quiet Title

SUMMARY OF FACTS:

Plaintiff Samantha Sharman, in pro per, brings this action to quiet title real property in Glendale, alleging that defendants Bear Stearns Residential Mortgage Corporation and all persons claiming right in the property have no interest in the property, as an assignment by defendant MERS to defendant Citibank is invalid, due to a failure to follow formalities imposed by the statute of frauds, and failure to satisfy the full beneficial interest test. Plaintiff alleges that defendants are not entitled to plaintiff’s payments but that the note holders are various investors, which are not disclosed and must be joined as indispensable parties.

Plaintiff also alleges that assignments are not recorded and that MERS has no authority to exercise any interest in the transaction.

Defendant Citibank filed a demurer to the original complaint, which was heard on October 20, 2017. The original pleading included only one cause of action to quiet title.

The demurrer was sustained with leave to amend.

ANALYSIS:

Procedural

Joinder

Defendant Mortgage Electronic Registration Systems, Inc. has filed a “joinder” to the demurrer which incorporates the papers filed by moving defendant Citibank.

The notice of motion seems to seek that the court determine that plaintiff does not allege any facts or legal theories sufficient to state a claim against “Defendants.” There is no provision in the code cited for a party to file a “Joinder” in a motion and seek affirmative relief not sought in the original motion.

There is also no separate reservation identification supporting the consideration of this motion as a separate motion. The joinder should not be considered by the court for any purpose other than to support the demurrer brought for relief in favor of defendant Citibank.

Substantive

The demurrer was previously sustained as follows:

“The cause of action to quiet title fails to state with sufficient legal or factual specificity the adverse claims as to which the plaintiff seeks to quiet title. In addition, the claims appear to allege a ‘voidable’ transaction, not a void transaction, such that the obligation to tender or discharge would have to be alleged. The pleading also appears on its face to be barred by the applicable statute of limitations.”

The FAC now asserts not one, but four causes of action to quiet title.

The elements of a cause of action to quiet title are: A description of the property; Plaintiff’s title or interest in the property and the basis therefor; Defendant asserts an adverse claim or antagonistic property interest; the date as of which the determination is sought; a prayer for determination of plaintiff’s title. CCP § 760.010 et seq. See also Friends of the Trails v. Blasius (2000) 78 Cal.App.4th 810, 831.

Defendant Citibank argues that the entire FAC is barred by res judicata, in apparent reliance on an order in a federal case dismissing claims brought by plaintiff Sharman against National Default Servicing Corporation and Select Portfolio Servicing, Inc. [RFJN, Ex. H].

To establish claim preclusion under a theory of collateral estoppel, it must be established that the actions arose from the same primary right, that a prior judgment was obtained, and that the matters were actually litigated in the prior action;

“First, the issue sought to be precluded from relitigation must be identical to that decided in the former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding.”

Lucido v. Superior Court (1990) 51 Cal.3d 335, 341. See also 7 Witkin, Cal. Proc. (4th Ed. 1985) Judgment section 354.

The party asserting collateral estoppel bears the burden of establishing the requirements. Lucido v. Superior Court, (1990) 51 Cal. 3d 335, 341.

Here, Citibank was not a defendant in the former proceeding, and fails to establish privity, and also fails to submit the previous pleading in order to establish what issues were determined by the court’s order, and how they are identical to those presented here. The demurrer is overruled on this ground.

However, it does appear that other actions concerning plaintiff and this same property have been pending in departments A and E and the court will require the filing of a Notice of Related Cases. [See RFJN, Exs. E, F].

Citibank also argues that each of the causes of action lack sufficient facts.

CCP section 761.020 requires that the complaint to quiet title include “(c) The adverse claims to the title of the plaintiff, against which a determination is sought.” The Law Review Commission Comment to the section states, in connection with subdivision (c): “Subdivision (c) requires the naming of specific adverse claims as to which the plaintiff seeks to quiet title.”

In Ortiz v. Accredited Home Lenders, Inc. (U.S.D.C.,S.D. Cal. 2009) 693 F.Supp.2d 1159, the federal district court, construing California law, dismissed a complaint for quiet title (without prejudice) based on insufficient specification of the adverse claim, noting:

“In order to adequately allege a cause of action to quiet title, a plaintiff’s pleadings must include a description of “[t]he title of the plaintiff as to which a determination…is sought and the basis of the title…” and “[t]he adverse claims to the title of the plaintiff against which a determination is sought.” Cal. Code Civ. Proc. § 761.020. A plaintiff is required to name the “specific adverse claims” that form the basis of the property dispute. See Cal. Code Civ. Proc. § 761.020, cmt. at P 3. Here, Plaintiffs allege the “Defendant claims an adverse interest in the Property owned by Plaintiffs,” but do not specify what that interest might be.”

Ortiz, at 1168.

Here, the pleading remains unclear, as it appears to allege not that plaintiff is entitled to title, but that the court quiet title in some unknown investor parties, that MERS has no interest in the security interest, so the assignment to Citibank is invalid, but this does not appear to warrant quieting title as to plaintiff in any cognizable fashion. The demurrer is sustained on this ground.

The demurrer also argues that the pleading fails to comply with CRC Rule 2.112, which provides:

“Each separately stated cause of action, count or defense must specifically state:

(1) Its number (e.g. “first cause of action”);

(2) Its nature (e.g., “for fraud”);

(3) The party asserting it, if more than one party is represented in the pleading (e.g. “by plaintiff Jones’); and

(4) The party or parties to whom it is directed (e.g., “against defendant Smith”).”

(Emphasis added).

The pleading is confusing as it is not clear which cause of action is asserted against each defendant, and the demurrer is sustained on this ground as well.

The demurrer also argues that plaintiff’s theories of liability are flawed.

To the extent the theory is that MERS lacked authority to assign her note, defendant relies on Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, in which the court of appeal affirmed a judgment entered for defendants after the trial court sustained a demurrer to a complaint without leave to amend, holding that plaintiff in that case had no right to bring a court action to determine whether the owner of the Note has authorized its nominee (in that case, MERS), to initiate the foreclosure process. The court examined federal district cases and the policies underlying nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy, and concluded that a general action to determine whether the owner of the Note authorized its nominee to initiate foreclosure, without more, cannot be pursued. Gomes, at 1154.

More importantly, the court in Gomes also noted that independent of any right to bring such a lawsuit, the demurrer order was affirmed because as stated in the deed of trust in that case, plaintiff had agreed that MERS could initiate foreclosure:

“As an independent ground for affirming the order sustaining the demurrer, we conclude that even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust—which Gomes has attached to his complaint—establishes as a factual matter that his claims lack merit. As stated in the deed of trust, Gomes agreed by executing that document that MERS has the authority to initiate foreclosure. Specifically, Gomes agreed that ‘MERS (as nominee for Lender and Lender’s successors and assigs) has… the right to foreclose and sell the Property.’ The deed of trust contains no suggestion that the lender or its successors and assigns must provide Gomes with assurances that MERS is authorized to proceed with foreclosure at the time it is initiated. Gomes’s agreement that MERS has the authority to foreclose thus precludes him from pursuing a cause of action premised on the allegation that MERS does not have the authority to do so.”

Gomes, at 1157.

Here, we have identical language in the deed of trust executed by plaintiff. [See RFJN, Ex. A., p. 5, para. TRANSFER OF RIGHTS…].

Plaintiff requests that the court judicially notice a federal bankruptcy court order from 2011 which suggests that a showing of MERS properly exercising its authority would also require a showing of actual instructions from the lender to make an assignment. However, plaintiff in the opposition papers fails to mention this authority, explain why this authority supports her position here, or should be persuasive to the court.

To the extent the theory is that the assignment is invalid for failure to comply with the statute of frauds, the RFJN includes a copy of the Assignment, which is in fact in writing. [RFJN, Ex. B]. To the extent the theory is that the assignment is invalid because it was not recorded, in Fontenot v. Wells Fargo Bank, NA (2011) 198 Cal.App.4th 256, the court of appeal affirmed the trial court’s sustaining of demurrers without leave to amend in an action by a borrower challenging the validity of foreclosure on the theory that the assignment by MERS had been improper, that there was lack of authority to assign the note, and that the debt itself had not been assigned.

The court noted that an assignment could have been made which was not recorded, and that “To state a claim, plaintiff was required to allege not only that the purported MERS assignment was invalid, but also that HSBC did not receive an assignment of the debt in any other manner. There is no such allegation.” Fontenot, at 271-272.

To the extent the theory is that the note now belongs to some unidentified investors, the demurrer persuasively argues that Citibank as Trustee is authorized to proceed on the part of the trust in respect to real property claims against property owned by a trust. See Galdjie v. Darwish (2003, 2nd Dist.) 113 Cal.App.4th 1331, 1346.

Accordingly, the demurrer is also sustained on the ground that plaintiff’s theories are not recognized theories upon which title can be quieted in plaintiff.

Defendant also again argues that plaintiff has failed to allege that she discharged her debt, so that any alleged cloud on title is not appropriate. There are no allegations that the debt was discharged, or any allegation of tender. The demurer is sustained on this ground as well.

The demurrer also again argues that the causes of action appear on their face barred by the applicable statute of limitations.

The quiet title claim here would be subject to a statute of limitations dependent upon the theory under which the claim is pursued. See Muktarian v. Barmby (1965) 63 Cal.2d 558, 560 (“Since there is no statute of limitations governing quiet title actions as such, it is ordinarily necessary to refer to the underlying theory of relief to determine which statute applies.” ). It appears that the claims are on some theory other than fraud or mistake, such that the cause of action would be subject to the four year “catchall” or residual statute limitations set forth at CCP § 343, applying to an “action for relief not hereinbefore provided for.” See Weil and Brown, Civ. Proc. Before Trial, Statutes of Limitations 4:850. It appears here that the action, based on a mortgage recorded on June 6, 2007, was not filed until July 25, 2017, more than four years later, in fact, more than ten years later. [See para. 96]. It accordingly appears that the claim is barred.

The opposition is fashioned a motion to strike the demurrer, when there appears to be no grounds for striking any matter in the demurrer. Plaintiff seems to argue the demurrer includes immaterial matter, but this is not clear from the face of the demurrer or the argument asserted. The argument seems to be that there was some sort of violation of trust laws and digital forgery, without explaining this theory.

These opposition papers do not appear to warrant striking the demurrer or otherwise overruling it, and plaintiff fails to request further leave to amend or explain how the pleading could be further amended to cure the numerous defects remaining, even after plaintiff was previously permitted leave to amend.

Where a complaint is successfully challenged on demurrer, it is plaintiff’s burden to demonstrate how the complaint might by amended to cure it of the defect. Association of Community Orgs. for Reform Now v. Dept. of Industrial Relations (1995) 41 Cal.App.4th 298, 302. Where a plaintiff will be unable to correct the flaws in a pleading, leave to amend should be denied. La Vista Cemetery Association v. American Savings & Loan Association. (1970) 12 Cal.App.3d 365. “Where from the nature of the defects in a complaint it is probable that plaintiff cannot state a cause of action, a general demurrer may be sustained without leave to amend.” La Vista Cemetery Association v. American Savings & Loan Association (1970, 2nd Dist.) 12 Cal.App.3d 365, 369.

Here, plaintiff has not met this burden, and the demurrer is now sustained without leave to amend.