Case Name:    Old Republic National Title Insurance Co., et al. v. McNeil, et al.

Case No.:        1-14-CV-258827

On January 9, 2014, Plaintiffs Old Republic National Title Insurance Company and Old Republic Title Company filed a complaint against Defendants Sylvester J. McNeil, Jr. and Esther M. McNeil, alleging that in 2013, they handled escrow for the sale of the subject property (“the Property”) and issued a title insurance policy for the buyer’s benefit, but the McNeils misrepresented that a debt owed to Gilbert Marosi and Cecilia Marosi pursuant to a deed of trust (“DOT”) recorded against the Property had been discharged.  Plaintiffs allegedly included the DOT in the title insurance policy based on the McNeils’ misrepresentations, and when the Marosis demanded payment of the debt, Plaintiffs were obligated to pay the Marosis’ demand to avoid foreclosure.  Plaintiffs allege that, due to their misrepresentation, the McNeils are obligated to reimburse them for that payment.

On April 18, 2014, the McNeils then filed a cross-complaint against the Marosis, asserting causes of action for (1) total indemnity, (2) implied contractual indemnity, (3) implied indemnity, (4) declaratory relief, and (5) “tort of another.”  The McNeils allege that, in 2003, the Marosis accepted a payment of the principal balance owed to them under the DOT, and therefore the Marosis are obligated to reconvey the DOT and indemnify the McNeils against claims arising from the Marosis’ fraudulent demand for payment from Plaintiffs in 2013.  (E.g., Cross-complaint, ¶¶ 8 & 16.)

On May 20, 2014, without first filing a response to the cross-complaint, the Marosis file a motion “for Court to grant summary judgment” and “for Court to grant punitive damages against defendants”, set for hearing on August 12, 2014 in Dept. 9 before Judge Mary Arand.  On July 25, 2014, the McNeils opposed the motion.  On July 29, 2014, the Marosis filed a document entitled “1.Amended Motion for Court to grant summary Judgment (Aug 12, dept 9, 9:00AM), 1.Reply to opposition, 2.Amended Summary Judgment, 2. Motion for Court to grant punitive damages, 3. Motion for Court to sanction.” On August 7, 2014, the Marosis filed a peremptory challenge against Judge Arand, and the matter was reassigned to Dept. 5 before Judge Carol Overton.  Thereafter, Judge Overton recused herself and the matter was set for hearing on August 19, 2014 in Dept. 2.  On August 18, 2014, a few hours before the deadline for the posting of tentative rulings, the Marosis filed a “Motion to Recuse (CCP 170.1)” which was stricken by the court for reasons set forth in that order of the same day.

The motion is not supported by declarations or any other evidence, and does not include a separate statement.  Thus, the Marosis have failed to meet their initial burden.  However, even if the court considered the statements and documents presented on the merits, the result would be the same.

Three of the claims asserted in the cross-complaint are predicated on implied contractual indemnity.  The McNeils allege that the Marosis accepted a payoff demand issued by Alliance Title Company in 2003, received such payment, and therefore agreed “to release and reconvey the [DOT] upon receipt of the amount demanded,” and that agreement gives rise to “an implied contractual indemnity obligation by the [Marosis] to indemnity and hold [the McNeils] harmless from any and all liabilities and claims arising from the Marosis’ payoff demand.”  (Cross-complaint, ¶¶ 8 & 16.)  )  Implied contractual indemnity is “available when two parties in a contractual relationship were both responsible for injuring a third party; recovery rested on the theory that ‘a contract under which the indemnitor undertook to do work or perform services necessarily implied an obligation to do the work involved in a proper manner and to discharge foreseeable damages resulting from improper performance absent any participation by the indemnitee in the wrongful act precluding recovery.’ ([Citations].)”  (Prince v. Pacific Gas & Electric Company (2009) 45 Cal.4th 1151, 1159.)

The Marosis essentially contend that they did not did not perform any contractual obligation in an improper manner, and therefore, cannot be held liable under a theory of implied contractual indemnity.  In support of their argument, the Marosis state that they received a payoff demand for $26,000 on August 1, 2003, but they never received payment and a deed of reconveyance was not recorded.  Evidence that a reconveyance of the DOT was not recorded is insufficient to demonstrate that the Marosis are not liable to indemnify the McNeils, since the indemnity claims are not based on the allegation that the Marosis failed to cause a deed of reconveyance to be recorded.  Rather, the indemnity claims are predicated on the allegation that the Marosis accepted $26,000 and agreed to discharge the balance of the debt owed under the DOT in 2003, then subsequently denied having received such payment and demanded payment from Plaintiffs in 2013.  The motion for summary judgment is DENIED.

There is no legal basis authorizing the court to grant a motion for punitive damages under these circumstances.  The motion for punitive damages is DENIED.

The motion for sanctions is not set forth in a separate document and was not served more than 21 days before the hearing.  (See CCP, § 128.7, subd. (c) [motion for sanctions must be made separately from other motions or requests and the notice must be served at least 21 days before the hearing]; see also Barrientos v. City of Los Angeles (1994) 30 Cal.App.4th 63, 70 [due process mandates adequate notice and opportunity to be heard before issuing sanctions].)  The motion for sanctions is DENIED.