Case Number: KC066670    Hearing Date: September 30, 2014    Dept: O

Guerrero v. Andrade, et al. (KC066670)

1. Defendants Andrade and Andrade Financial, Inc.’s DEMURRER

Respondent: Plaintiff Guerrero

2. Defendants Andrade and Andrade Financial, Inc.’s MOTION TO EXPUNGE LIS PENDENS

Respondent: Plaintiff Guerrero

TENTATIVE RULING

1. Demurrer

Defendants Andrade and Andrade Financial, Inc.’s demurrer is OVERRULED as to uncertainty and individual Defendant Michelle Andrade’s “individual” demurrer, SUSTAINED with 10 days leave to amend as to the 1st, 3rd, 5th-6th, and 10th – 13th causes of action; and SUSTAINED without leave to amend as to the 8th cause of action.

UNCERTAINTY:
Demurrer on grounds of uncertainty will not be sustained unless the complaint is so bad that the defendant cannot reasonably respond. (Koury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)

The court finds the complaint is not so uncertain that Defendants cannot reasonably respond. Demurrer on this ground is OVERRULED.

DEFENDANT MICHELLE ANDRADE:
Defendant contends individual Defendant Andrade should be dismissed because M. Andrade was an agent, acting on behalf of the corporation. However, Pars. 20-23, 26-31 specifically allege conduct undertaken by individual Defendant M. Andrade. The conduct is not alleged to be undertaken on behalf of the corporate entity, but is alleged to be made by both the individual Defendant and the corporate Defendant. Accordingly, at this pleading stage, the allegations are sufficient to state a claim against Defendant Michelle Andrade individually. Demurrer is OVERRULED.

1st CAUSE OF ACTION: FRAUD:
The elements are: 1) misrepresentation (false representation, concealment, or nondisclosure); 2) knowledge of falsity (scienter); 3) intent to defraud or induce reliance; 4) justifiable reliance; and 5) damages. (See CC 1709.) Fraud actions are subject to strict requirements of particularity in pleading. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 216.) A plaintiff must allege what was said, by whom, in what manner (i.e. oral or in writing), when, and, in the case of a corporate defendant, under what authority to bind the corporation. (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.)

Pars. 20-23, 26-31 allege that on 9/9/13, Defendants Andrade Financial and Michelle Andrade represented to Plaintiff that they would use their expertise to assist her in stopping the foreclosure of her house. Defendants represented that they “would attempt to help” her keep her house and her $200,000 in equity. Par. 27 alleges that her bank represented that a woman purporting to be Plaintiff made multiple calls to the bank on 9/13/13, 9/30/13, 1/22/14, 1/24/14, and 1/27/14, to obtain loan payoff information. On one of these calls, the fax number given to the bank belonged to Defendant Andrade Financial. Pars. 32-33 allege scienter and intent to defraud. Par. 34 alleges reliance. Par. 36 alleges damages of $200,000 in equity.

The court finds the allegations are not sufficiently specific. It is unclear what “attempt to help” means. Did Defendants make any affirmative representation that they would give Plaintiff her $200,000 in equity once Graser transferred title to them? Demurrer is SUSTAINED with 10 days leave to amend.

3rd CAUSE OF ACTION: BREACH OF ORAL CONTRACT:
The elements for a breach of contract cause of action are: (1) the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damages. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.) In alleging a breach of contract cause of action, it is necessary to specify whether the contract is written, oral or implied by conduct. (CCP 430.10(g).) In order to plead a written contract (the first element listed above), a plaintiff must, in addition to alleging the making of the contract, do one of the following: (1) set forth the contract in haec verba; or (2) plead the contract’s legal effect by alleging the substance of its relevant terms. (4 Witkin, California Procedure 4th Edition, 479-481.) In order to plead an oral contract, a plaintiff must plead its legal effect, i.e., allege the substance of the contractual terms. (Id., at 483.)

Par. 46 alleges that Defendants orally promised to help Plaintiff keep her home by causing Defendant Graser to grant deed title back to Elizabeth in return for some type of payment based upon a successful restructuring of the property. The payment Defendants would earn would be determined once title was restored to Elizabeth. The court finds this allegation of consideration is speculative, too indefinite and inadequate. Plaintiff merely alleges that Defendants would receive some unspecified type of payment at some unspecified time. Further, Plaintiff’s Bankruptcy filing is not adequate consideration. Even if Plaintiff did not file for Bankruptcy, the property would have proceeded to trustee’s sale based on Plaintiff’s and Graser’s default on their mortgage obligation.

Finally, because this claim relates to an interest in real property, the oral contract violates the Statute of Frauds per CC 1624(b). Plaintiff contends the part-performance exception applies, however, Plaintiff failed to demonstrate that there was any performance on her part. “To constitute part performance, the relevant acts either must unequivocally refer to the contract or clearly relate to its terms. Such conduct satisfies the evidentiary function of the statute of frauds by confirming that a bargain was in fact reached. In addition to part performance, THE PARTY SEEKING TO ENFORCE THE CONTRACT MUST HAVE CHANGED POSITION in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.” (Secrest v. Security national Mortgage Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544.) Plaintiff has not changed her position in any way. Plaintiff was in possession of the property prior to the alleged oral agreement, and did not allege any payment of money or other services. Even if payment of money was properly alleged, “the payment of money is not sufficient part performance to take an oral agreement out of the statute of frauds, for a party paying money under an invalid contract has an adequate remedy at law.” (Secrest v. Security national Mortgage Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544, 555.) Further, Plaintiff’s Bankruptcy filing is not adequate reliance. Even if Plaintiff did not file for Bankruptcy, the property would have proceeded to trustee’s sale based on Plaintiff’s and Graser’s default on their mortgage obligation.

Demurrer is SUSTAINED with 10 days leave to amend.

5th CAUSE OF ACTION: INTERFERENCE WITH CONTRACT:
The elements are: 1) VALID contract between plaintiff and third party; 2) defendant’s knowledge of that; 3) defendant’s intentional acts designed to induce disruption of the relationship; 4) actual disruption; and 5) resulting damage. (Reeves v. Hanlon (2004) 33 Cal. 4th 1140, 1148; Scripps Clinic v. Superior Court (2003) 108 Cal. App. 4th 917, 929.)

Par. 58 alleges a contract between Plaintiff and Defendant Graser. Par. 59 alleges Defendant’s knowledge of the contract and intent to disrupt the contract. Par. 60-61 allege the disruption because Graser transferred title to Defendants Andrade Financial rather than Plaintiff, as he was required to do under his contract with her. Par. 62 alleges damages.

Defendants contend Graser was already in breach of the contract before Defendants ever became involved. However, such is an issue to be tried, and not appropriate at this pleading stage.

However, Plaintiff’s underlying contract with Defendant Glaser must be a “valid,” enforceable contract. Since the contract concerns real property, it fails to satisfy the statute of frauds, and the complaint fails to allege any part-performance. Accordingly, demurrer is SUSTAINED with 10 days leave to amend.

6th CAUSE OF ACTION: BREACH OF FIDUCIARY DUTY:
The elements are: 1) Fiduciary duty; 2) breach of the duty; and 3) damage caused by the breach. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182; Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.)

The court finds Plaintiff has failed to allege any fiduciary relationship that would give rise to any duty owed to Plaintiff. Demurrer is SUSTAINED with 10 days leave to amend.

8th CAUSE OF ACTION: RESTITUTION:
Restitution is not a cause of action, and Plaintiff failed to address the demurrer to this cause of action in her Opposition. Accordingly, demurrer is SUSTAINED without leave to amend.

10th CAUSE OF ACTION: UNFAIR BUSINESS PRACTICES: B&P CODE 17200:
The Unfair Business Practices Act shall include “any unlawful, unfair or fraudulent business act or practice.” (B&P Code 17200.) A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.) Even a single incident – a one-time act that is unfair, unlawful or fraudulent – is sufficient to state a claim under 17200. (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969 fn. 3.)

Since Plaintiff’s 17200 claim is based on her defective fraud claim, demurrer is SUSTAINED with 10 days leave to amend.

11th – 13th CAUSES OF ACTION: QUIET TITLE, INJUNCTIVE RELIEF and CANCELLATION OF INSTRUMENTS:
Quiet Title will not lie between an owner of equitable title against an owner of legal title. (GR Holcomb Estate Co. v. Burke (1935) 4 Cal.2d 289, 297.) Further, a borrower cannot quiet title without discharging his debt. (Aguilar v. Bocci (1974) 39 Cal.App.3d 475, 477.)

Plaintiff contends an exception exists when legal title has been acquired through fraud. (Warren v. Merrill (2006) 143 Cal.App.4th 96, 113.) However, there are no allegations that Defendants obtained legal title through fraud. Legal title was in Graser, not Plaintiff. Graser has not claimed that his transfer of legal title to Defendants was based on a fraud committed against him. Further, Plaintiff’s fraud claim is based on the supposed false promise to help her keep her $200,000 in equity, which is separate and distinct from a situation where legal title is obtained though Fraud.

Finally, Plaintiff has not tendered the debt owed, and failed to cite any legal authority or facts that would entitle her to an exception to the tender requirement.

Since the 12th – 13th causes of action are based on the defective Quiet Title claim, these claims are similarly defective.

Demurer is SUSTAINED with 10 days leave to amend.

2. Expunge Lis Pendens

Defendants Andrade and Andrade Financial, Inc.’s motion to expunge lis pendens is GRANTED. Sanctions are imposed against Plaintiff in the sum of $3,500.00, payable within 30 days.

Any notice of pendency of action shall be void and invalid as to any adverse party or owner of record unless the requirements of section 405.22 are met for that party or owner and a proof of service in the form and content specified in Section 1013a has been recorded with the notice of pendency of action. (CCP 405.23.)

The proof of service states that the notice was served on 6/23/14. Notice is proper.

In proceedings under this chapter, the court shall order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim. (CCP § 405.31.) A lis pendens is a recorded instrument, recorded in the office of the county recorder where land is located, that gives constructive notice of a pending lawsuit affecting title to the described real property. (Gale v. Superior Court (Gale) (2004) 122 Cal.App.4th 1388, 1395.) A real property claim is any cause of action which would affect title to, or right to possession of, specific real property, or the use of an easement identified in the pleading. (CCP § 405.4.)

In a motion to expunge a notice of lis pendens, the claimant who filed the lis pendens has the burden of proof. (CCP § 405.30.) Thus, that CLAIMANT, IN OPPOSING THE MOTION TO EXPUNGE THE LIS PENDENS, HAS THE BURDEN OF PROOF and must demonstrate the following: (1) the action affects title to or right of possession of the real property described in the notice; (2) in so far as the said notice is concerned, the party recording the notice has commenced the action for a proper purpose and in good faith; and (3) the PROBABLE VALIDITY OF THE REAL PROPERTY CLAIM BY A PREPONDERANCE OF THE EVIDENCE. (Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 70; see also CCP § 405.32.)

Defendants contend Plaintiff failed to establish probable validity of her real property claims. Plaintiff acknowledges in her complaint that she does not hold any legal interest in the property.

Plaintiff bears the burden of proof in demonstrating the probable validity of her claim. Plaintiff admits that Quiet Title will not lie between an owner of equitable title against an owner of legal title. (GR Holcomb Estate Co. v. Burke (1935) 4 Cal.2d 289, 297.)

However, Plaintiff contends an exception exists when legal title has been acquired through fraud. (Warren v. Merrill (2006) 143 Cal.App.4th 96, 113.) However, Plaintiff presents no evidence that Defendants obtained legal title through fraud. Legal title was in Graser, not Plaintiff. Graser has not claimed that his transfer of legal title to Defendants was based on a fraud committed against him.

Instead, Plaintiff claims Defendants committed fraud against her by not restoring title to her, once the property was deeded from Graser to Defendants. (Guerrero Decl., Par. 14.) This promise violates the statute of frauds.

Plaintiff contends the part-performance exception applies, however, Plaintiff failed to demonstrate that there was any performance on her part. “To constitute part performance, the relevant acts either must unequivocally refer to the contract or clearly relate to its terms. Such conduct satisfies the evidentiary function of the statute of frauds by confirming that a bargain was in fact reached. In addition to part performance, THE PARTY SEEKING TO ENFORCE THE CONTRACT MUST HAVE CHANGED POSITION in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.” (Secrest v. Security national Mortgage Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544.) Plaintiff has not changed her position in any way. Plaintiff was in possession of the property prior to the alleged oral agreement, and did not present any evidence of payment of money or other services. Even if payment of money was properly alleged, “the payment of money is not sufficient part performance to take an oral agreement out of the statute of frauds, for a party paying money under an invalid contract has an adequate remedy at law.” (Secrest v. Security national Mortgage Loan Trust 2002-2 (2008) 167 Cal. App. 4th 544, 555.) Further, Plaintiff’s Bankruptcy filing is not adequate reliance. Even if Plaintiff did not file for Bankruptcy, the property would have proceeded to trustee’s sale based on Plaintiff’s and Graser’s default on their mortgage obligation.

Finally, Plaintiff has not tendered the debt owed, and failed to cite any legal authority or facts that would entitle her to an exception to the tender requirement.

Motion is GRANTED.

ATTORNEYS FEES:
The attorney fees provision was enacted to control the misuse of the lis pendens procedure… Because section 405.38 does not define prevailing party or expressly authorize or bar recovery of attorney fees in the event the lis pendens is withdrawn before a ruling on a motion to expunge, we adopt the practical approach to determine the prevailing party for purposes of awarding attorney fees. Under the practical approach, a trial court must determine whether the moving party is the prevailing party under section 405.38 by analyzing the extent to which each party has realized its litigation objectives. To determine litigation objectives, it is not enough simply to consider that the lis pendens has been withdrawn; the court must consider and decide whether the moving party would have prevailed on the motion. (Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1022-23.)

Defendants are entitled to attorneys fees because they prevailed on the motion. The court finds Defendants’ request of $3,500.00 is reasonable. Accordingly, sanctions are imposed against Plaintiff in the sum of $3,500.00, payable within 30 days.