Case Name: Jian Jun He, et al. v. Citimortgage, Inc., et al.

Case No.: 18CV329986

Demurrer to Cross-Complaint

Factual and Procedural Background

First Amended Complaint

Plaintiffs Jian Jun He and Li Rong Liang (“Plaintiffs”) acquired real property commonly known as 2056 Ensign Way in San Jose (“Ensign Property”) on or about March 5, 2013 from JPMorgan Chase Bank National Association (“JPMorgan”) pursuant to a grant deed. (First Amended Complaint (“FAC”), ¶¶9 and 11.)

JPMorgan acquired the Ensign Property on or about January 8, 2013 pursuant to a Trustee’s Deed Upon Sale following a duly noticed foreclosure sale of the Ensign Property under a Deed of Trust dated June 11, 2007 (“Foreclosed Deed of Trust”) and recorded on or about July 2, 2007 executed by To Thi Nguyen and Candice Triet Nguyen (collectively, “Nguyens”). (FAC, ¶12.)

On information and belief, the Nguyens entered into a separate lending transaction with CitiMortgage, Inc. (“Citi”) around the same time but prior to the execution of the Foreclosed Deed of Trust. (FAC, ¶13.) The Nguyens executed a Deed of Trust dated May 25, 2007 (“Citi Deed of Trust”) and recorded on or about June 1, 2007. (Id.) While the address listed on the Citi Deed of Trust is 2056 Ensign Way in San Jose, the legal description of the property and the APN number encumbered by the Citi Deed of Trust described an entirely different parcel of real property commonly known as 1534 Hervey Lane in San Jose (“Hervey Property”). (FAC, ¶¶14 – 15.) The Citi Deed of Trust contained two inconsistent descriptions of real property and is void for uncertainty. (FAC, ¶16.)

The beneficiary rights to the Citi Deed of Trust would change hands no less than five times subsequent to its recording. (FAC, ¶¶17 – 19.) Beginning on or about January 16, 2014, various entities commenced foreclosure proceedings under the Citi Deed of Trust only to later cancel foreclosure and/or rescind the default. (FAC, ¶¶20 – 26.) Defendant Attorney Lender Services, Inc. (“ALS”), purporting to be the trustee appointed under the Citi Deed of Trust, recorded a Notice of Default on or about February 5, 2018 and a Notice of Trustee’s Sale dated May 22, 2018. (FAC, ¶¶28 – 29.) Plaintiffs seek to prevent foreclosure.

On June 18, 2018, Plaintiffs filed a complaint against defendant Citi, ALS, and others asserting causes of action for:

(1) Quiet Title
(2) Cancellation of Instruments
(3) Slander of Title
(4) Declaratory Relief

On July 31, 2018, Plaintiffs substituted defendant US Bank National Association as Legal Title Trustee for Truman 2016 SC6 Title Trust (“US Bank”) for a Doe defendant.

On November 8, 2018, Plaintiffs filed the operative FAC which asserts the same four causes of action asserted in the original complaint.

Cross-Complaint

On February 8, 2019, defendant US Bank filed an answer to Plaintiffs’ FAC and also filed a cross-complaint against Plaintiffs and the Nguyens. The cross-complaint alleges the Nguyens were owners of the Ensign Property and borrowed $549,000 secured by the Citi Deed of Trust which was recorded on June 1, 2007. (Cross-Complaint, ¶¶3 – 4.) The Citi Deed of Trust was indexed to the Nguyens. (Cross-Complaint, ¶4.) According to the Cross-Complaint, the Citi Deed of Trust correctly describes the real property which secures the loan as the Ensign Property but, due to an inadvertent typographical error, the legal description in the Citi Deed of Trust mistakenly identifies the Hervey Property. (Cross-Complaint, ¶5.) The Nguyens and US Bank (as successor in interest to the original beneficiary of the Citi Deed of Trust) intended the loan to be secured by the Ensign Property and not the Hervey Property. (Id.) The Nguyens acknowledged, affirmed, and represented that the Citi Deed of Trust was a valid and enforceable lien against the Ensign Property. (Cross-Complaint, ¶6.) Plaintiffs now claim some right, title, or interest in the Subject Property. (Cross-Complaint, ¶7.)

US Bank’s cross-complaint asserts causes of action for:

(1) Declaratory Relief
(2) Reformation
(3) Quiet Title
(4) Equitable Subrogation

On March 5, 2019, Plaintiffs filed the motion now before the court, a demurrer to US Bank’s cross-complaint.

II. Plaintiffs’ demurrer to US Bank’s cross-complaint is SUSTAINED.

A. Request for judicial notice.

In support of its demurrer, Plaintiffs request judicial notice of various recorded documents. Of relevance to this court’s ruling on the demurrer are exhibits A – D. “[A] court 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.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265.) Accordingly, the request for judicial notice in support of demurrer to cross-complaint, exhibits A – D, is GRANTED. The request for judicial notice in support of demurrer to cross-complaint is otherwise DENIED. (See Duarte v. Pacific Specialty Insurance Company (2017) 13 Cal.App.5th 45, 51, fn. 6—denying request where judicial notice is not necessary, helpful or relevant.)
B. Merits.

According to Plaintiffs, the cross-complaint admits the Citi Deed of Trust upon which defendant US Bank relies upon in asserting the cross-complaint contains the description of two different properties and is, therefore, void for uncertainty. In relevant part, the cross-complaint alleges, “the [Citi] Deed of Trust correctly describes the real property which secures the Subject Loan as 2056 Ensign Way, San Jose, California 95133. However, [US Bank] is informed and believes that, due to an inadvertent typographical error, the legal description in the [Citi] Deed of Trust mistakenly identifies the Subject Property as 1534 Hervey Lane, San Jose, California, APN 343-28-080.” (Cross-Complaint, ¶5.)

It is undoubtedly true that where a deed on its face contains two inconsistent descriptions either of which would identify a different piece of property from that described by the other, there is disclosed a patent ambiguity which, as a general rule, parol evidence is not admissible to remove and the instrument is void for uncertainty.

(Hall v. Bartlett (1910) 158 Cal. 638, 641–642 (Hall); see also Edwards v. City of Santa Paula (1956) 138 Cal.App.2d 375, 382—“a description that is equally applicable to two different parcels is fatally defective;” 3 Miller & Starr, Cal. Real Estate (4th ed.) §8:61—stating the same.)

In opposition, US Bank contends the Citi Deed of Trust is not void as a matter of law because it correctly identifies the Ensign Property by address and is the same address identified in the Adjustable Rate Rider and Adjustable Rate Assumption Rider which area attached to the Citi Deed of Trust. However, this argument wholly ignores the patent ambiguity presented by the attached legal description which US Bank concedes identifies an entirely different property.

US Bank directs the court’s attention to Hall, supra, 158 Cal. 642 where the court wrote, “whether the description is uncertain or not is to be determined from an inspection of the entire deed, and in considering it the construction to be put upon it must not only be a reasonable one (Civ. Code, sec. 3542) but such an interpretation must be indulged in as will give effect to the deed rather than defeat it.” However, the court does not agree with US Bank’s premise that the Citi Deed of Trust “makes very clear that the property it encumbers is” the Ensign Property. Thus, the court cannot reach the conclusion that the Citi Deed of Trust is effective against the Ensign Property. Nor does the court agree with US Bank’s assertion that there is no ambiguity in the Citi Deed of Trust because there is only one address corresponding to 2056 Ensign Way in San Jose. Again, this entirely ignores the legal description attached to the Citi Deed of Trust which corresponds to the Hervey Property.

US Bank argues next that the cross-complaint is not subject to demurrer because it remains a question of fact as to whether Plaintiffs were bona fide purchasers for value without notice that the Citi Deed of Trust encumbered the Ensign Property. (Triple A Management Co., Inc. v. Frisone (1999) 69 Cal.App.4th 520, 536—“The determination whether a party is a good faith purchaser or encumbrancer for value ordinarily is a question of fact.”) However, the court does not reach this question where the deed is void. (Cf. Leonard v. Osburn (1915) 169 Cal. 157, 160—“The deed not being void for uncertainty, we come now to the second question arising—and which we think is the principal one for decision—viz., Is the record of such a deed, containing though it does an inaccurate description of the property conveyed, sufficient to put subsequent purchasers upon inquiry so as to charge them with notice of what that inquiry if duly prosecuted would have disclosed?”)

Accordingly, Plaintiffs’ demurrer to US Bank’s cross-complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] is SUSTAINED with 10 days’ leave to amend.