2014-00697680
TENTATIVE RULING ON MOTIONS #1 AND 2:

The general demurrer of defendant Nationstar Mortgage LLC to all five causes of action in the complaint of plaintiff Maria Juanita Duarte is sustained with 20 days’ leave to amend. The joinder of co-defendant Quality Loan Service Corp. is denied for insufficient notice under Code Civ. Proc. § 1005(b).

The Court grants the request for judicial notice of both the moving defendant and the responding plaintiff.

The complaint concerns the title to real property in Costa Mesa and it contains five causes of action for: (1) quiet title (as of 7-10-10); (2) declaratory relief; (3) slander of title; (4) fraud; and (5) IIED. All of the causes of action are based on the same allegations.

The complaint alleges that, in 1974, plaintiff and her husband took title as joint tenants to the property.

It alleges that, on 5-4-06, the husband obtained a loan in the amount of $334,000 and used his undivided joint tenancy interest in the property as security for the loan evidenced by the deed of trust. Plaintiff did not sign the promissory note and did not take the loan.

The complaint alleges that, on 7-10-10, the husband died and that plaintiff, as the surviving joint tenant, took title to the property free and clear of any claim of the husband’s creditors. Plaintiff promptly notified the defendants of her husband’s death and tried to get them to acknowledge her interest in the property.

The complaint alleges that, on 12-28-12, defendants foreclosed on their expired lien but only after plaintiff filed for Chapter 7 Bankruptcy protection. During the bankruptcy proceedings, defendants Nationstar Mortgage and Quality Loan Services Corp. admitted to foreclosing on the expired lien in violation of the automatic stay provided by the bankruptcy. Defendant Nationstar Mortgage was the highest bidder at the foreclosure sale and title to the property is now shown in its name.

Moving defendant contends that the causes of action are defective for three primary reasons because, contrary to plaintiff’s allegation, both she and her husband executed the deed of trust securing her husband’s loan. It also contends that plaintiff has no standing to bring the claims because they arose before plaintiff filed bankruptcy and therefore the claims belong to the bankruptcy estate. In addition, defendant contends that plaintiff’s claims are barred by the doctrine of res judicata because the Bankruptcy Court already determined, in the context of a motion by plaintiff for sanctions for violation of the bankruptcy stay, that defendants did not knowingly violate the bankruptcy stay and immediately voided the foreclosure sale after learning of plaintiff’s filing.

Defendant has asked for judicial notice of a number of documents, including the deed of trust recorded on 5-12-16. (See Exhibit A to defendant’s RJN.) In fact, the first page of this deed of trust identifies the “borrower” as the plaintiff and her husband as joint tenants. The second page also states that the “borrower” owes the lender $334,000.

Therefore, plaintiff’s allegation that she took the property free and clear of defendant’s interest is untenable as a matter of law. While a surviving joint tenant will take free of a mortgage or deed of trust executed solely by a deceased joint tenant, this is not true where both joint tenants join the execution of the note and deed of trust. Katsivalis v. Serrano Reconveyance Co. (1977) 70 Cal.App.3d 200, 208.

Defendant’s claim that the plaintiff’s claims are part of the bankruptcy estate is also valid. Plaintiff seeks a determination of her status as owning the property free and clear of defendant’s claim as of the date of her husband’s death, i.e., 7-10-10. This predates her bankruptcy filing on 12-28-12 and her petition did not include the claims. (See Exhibits H and I to defendant’s RJN.)

To the extent that plaintiff contends that the ruling of the Bankruptcy Court has no res judicata effect on this case because the ruling was appealed and the Bankruptcy Appellate Panel issued a written opinion, she is incorrect. (See Exhibit D to the plaintiff’s RJN.) The Bankruptcy Appellate Panel upheld the decision of the Bankruptcy Court and did not limit its ruling in the manner suggested by the plaintiff. Furthermore, the opinion of the Bankruptcy Appellate Panel shows that the defendants took immediate corrective measures by voiding the foreclosure sale after learning of the bankruptcy such that title to the property remained in the plaintiff’s name. (See Exhibit D at p. 3, fn. 3.)