Case Number: EC062048 Hearing Date: June 06, 2014 Dept: A

McRiley v Tarver

DEMURRER & MOTION TO QUASH

Calendar: 6
Case No: EC062048
Date: 6/6/14

1. Demurrer of Defendant, Tanya Tarver
Demurrer to Complaint

2. Motion of Defendant, Verlene’s LLC
Quash service of summons

ALLEGATIONS IN COMPLAINT:
The Defendant, Tanya Tarver, obtained $70,000 under a promissory note with the Plaintiff, Maurine McRiley. The promissory note was secured by a deed of trust on the real property at 630 S. Los Robles Ave., Pasadena. The Plaintiff brought this action to seek the remedy of a judicial foreclosure on the note because the Defendant breached the agreement by failing to repay the note. The Plaintiff named all parties with an interest in the real property at issue.

CAUSES OF ACTION IN COMPLAINT:
1) Judicial Foreclosure

DISCUSSION:
This hearing concerns the demurrer of Defendant, Tanya Tarver, and the motion to quash of Defendant, Verlene’s LLC.

1. Demurrer of Defendant, Tanya Tarver
The Defendant, Tanya Tarver, argues that the Complaint is barred by the statute of limitations. When the dates alleged in the complaint show the action is barred by the statute of limitations, a general demurrer lies. Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292, 300.
The Plaintiff’s claim is based on the breach of a written promissory note. The Plaintiff alleges in paragraph 4 that the promissory note is a negotiable instrument under Commercial Code section 3104. Section 3104 defines negotiable instruments and states that they include an unconditional promise to pay a fixed amount of money, with or without interest, at a definite time. California law holds that a promissory note is a form of negotiable instrument, i.e., an unconditional promise to pay money signed by the person undertaking to pay, payable on demand or at a definite time. Saks v. Charity Mission Baptist Church (2001) 90 Cal. App. 4th 1116, 1132.
A review of the promissory note in exhibit C to the Complaint reveals that it is a straight note and that the full amount was due 140 days after the date of the agreement, which was November 13, 2007. Since it was an unconditional promise to pay the money at a definite time, the promissory note meets the definition of a negotiable instrument under Commercial Code section 3104.
Under Commercial Code section 3118, an action based upon a negotiable instrument must be commenced within six years. The Plaintiff alleges in paragraph 12 that the Defendant, Tanya Tarver failed to pay the amount due under the note on April 1, 2008. The Plaintiff had six years, or until April 1, 2014 to commence her action.
A review of the Court file reveals that the Plaintiff commenced this action on March 6, 2014. Since the Plaintiff commenced this action before April 1, 2014, the dates alleged in the Complaint do not show that the Complaint is barred by the statute of limitations.

The Defendant filed a “motion to dismiss” the opposition. Since there are no grounds to dismiss an opposition, the Court construes this as a reply.
The Defendant argues that the security of the deed of trust prevents the promissory note from being a negotiable instrument. However, the Defendant relies upon legal authority from prior to the enactment of the codes sections at issue, e.g., Grattan v. Wiggins (1863) 23 Cal. 16.
Commercial Code section 3104 was enacted in 1992. Under section 3104(a)(3) states that a negotiable instrument may contain an undertaking to give, maintain, or protect collateral to secure payment and an authorization or power to seek a judgment and dispose of the collateral. Since the deed of trust includes the power to dispose of the collateral, this argument does not offer any ground to sustain the demurrer.

Accordingly, the Court will overrule the demurrer because the dates in the pleadings do not show that the Complaint is barred by the statute of limitations.

2. Motion to Quash Service of Summons of Defendant, Verlene’s LLC.
The Defendant argues that, even though it is a lien holder on the real property at issue, the Court lacks personal jurisdiction over it. It is somewhat unclear as to the reason the Defendant would want to be dismissed from a case that may affect its interest in the property.

CCP section 418.10 permits a defendant to serve and file a notice of motion to quash service of summons on the ground of lack of jurisdiction of the Court over the defendant. Even though defendants are the moving parties, the plaintiff bears the burden of proof to demonstrate that the Court has personal jurisdiction. Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 710.
CCP section 410.10 states that the Court has authority to exercise jurisdiction over the Defendant on any basis consistent with the Constitution of California or the United States. Due process permits the exercise of personal jurisdiction over a nonresident defendant in the following four situations:

1) where the defendant is domiciled in the forum state when the lawsuit is commenced;
2) where the defendant is personally served with process while he or she is physically present in the forum state;
3) where the defendant consents to jurisdiction; and
4) where the defendant has sufficient minimum contacts with the forum state, such that the exercise of jurisdiction would not offend traditional notions of fair play and substantial justice.
In re Marriage of Fitzgerald & King (1995) 39 Cal. App. 4th 1419, 1425-1426.

A defendant may have sufficient minimum contacts when either of the following is shown:

1) The nonresident defendant is subject to the general jurisdiction of the forum if his or her contacts in the forum state are substantial, continuous, and systematic. If general jurisdiction exists, it is not necessary that the specific cause of action alleged be connected with the defendant’s business relationship to the forum because the defendant’s contacts with the forum are so wide-ranging that they take the place of physical presence in the forum as a basis for jurisdiction.
2) The nonresident defendant is subject to the specific jurisdiction of the forum, if the defendant has purposefully availed himself or herself of forum benefits and the controversy is related to or arises out of the defendant’s contacts with the forum.
Vons Companies, Inc. v. Seabest Foods (1996) 14 Cal. 4th 434, 445-446.

The Defendant offers no legal authority holding that a California Court has no personal jurisdiction over party that owns an interest in real property in California. The United States Supreme Court found that a defendant’s claim to property located in the State would authorize the State Court to exercise jurisdiction over the defendant because of the following:

1) the defendant’s possession of an interest in property indicates that the defendant expected to benefit from the State’s protection of the interest;
2) the State has strong interests in assuring the marketability of property within its borders;
3) the State has a strong interest in providing a procedure for peaceful resolution of disputes about the possession of property within its borders; and
4) important records and witnesses regarding the property will be found in the State.
Shaffer v. Heitner (U.S. 1977) 433 U.S. 186, 207-208.

The Defendant, Verlene’s LLC, admits on page 6, at lines 15 to 22, that it is a subordinate lienholder on two properties owned by the Defendant, Tanya Tarver, including the property at issue at 630 S. Los Robles Avenue, Pasadena, CA 91105. This alone makes the Defendant a necessary party to the litigation because it is a lienholder in the real property that may be subject to the judicial foreclosure.
Further, the fact that the Defendant, Verlene’s LLC, is a lienholder in property located in California indicates that it has substantial, continuous, and systematic contacts with the forum of California. It is unclear how owning a property interest could be anything other than a substantial, continuous, and systematic contact with California. Accordingly, the Defendant is subject to the general jurisdiction of California.
Finally, the Defendant has purposely availed itself of California benefits by obtaining a lienholder interest in real property located in California. The controversy arises from the Defendant’s contact with the forum, i.e., this action seeks to foreclose on the property in which the Defendant has a lienholder interest. Accordingly, the Defendant is subject to the jurisdiction of California in this matter.

Therefore, the Court will deny the Defendant’s motion to quash.

RULINGS:
1. Demurrer of Defendant, Tanya Tarver
OVERRULE demurrer to Complaint.

2. Motion of Defendant, Verlene’s LLC
DENY motion to quash service of summons