30-2016-844314

Torres VS Avanesova

Defendant’s Demurrer to Second Amended Complaint

Defendant DIANA AVANESOVA demurs to the 1st cause of action for quiet title and the 2nd cause of action for fraud in the Second Amended Complaint filed on 5/08/17 by Plaintiffs PATRICK TORRES and NIKKI LEE aka Nicole Lee.

The demurrer is somewhat confusing in that Plaintiffs appear to have withdrawn their 1st cause of action for quiet title, which is no longer alleged in the SAC. However, it appears that based on the analysis set forth below, Plaintiffs are entitled to reinstate and re-allege that claim if they wish.

The court OVERRULES the demurrer in part and SUSTAINS it in part with leave to amend, as set forth below. Within 15 calendar days after service of notice of this ruling, Plaintiffs shall file a Third Amended Complaint that re-alleges the first cause of action and that cures the defect noted below, as to their failure to plead reasonable reliance.

A. 1st COA: Quiet Title; Declare Deed Void (Violation of CC 1695 et seq.)

1. Statute of Limitations; Reasonable Reliance under Equitable Estoppel

OVERRULED. Plaintiffs may reinstate and re-allege their first cause of action for quiet title.

In its prior ruling of 4/28/17, the court agreed with Defendant that the claim appeared to be time-barred by the 4-year statute of limitations. (Civ. Code 1695.7.) However, Plaintiffs have now added new allegations to plead around the statute of limitations defense.

Defendant(s) recorded a grant deed on 10/12/06 which purported to transfer title from Patrick Torres to Adrienne Baber. Plaintiffs sought to quiet title and declare that grant deed void on the ground that it violated Civ. Code 1695, et seq.

Defendant argued that the claim was time-barred on its face because the alleged violation occurred on 10/12/06, more than 4 years prior to the filing of this action on 04/04/16.
However, this argument now fails because Plaintiffs allege that they were told that the transfer was merely a financial stratagem to use a straw buyer to help them keep their property and that they still owned the property so that eventually title would be restored to them in the future.

Plaintiffs now allege that it was not until 10/30/15 that Defendant Avanesova filed a new unlawful detainer action seeking to evict them. However, in 11/01/15, Avanesova was still telling Plaintiff Lee that Plaintiff Torres still had a right to restore his name to title and still had rights in the subject property.

Plaintiffs now allege that there was a continuing series of fraudulent statements designed to dupe Plaintiffs into refraining from filing a lawsuit. In Opposition, Plaintiffs argue that the statute of limitations was tolled and/or that Plaintiffs are equitably estopped from relying on the statute of limitations by Defendant’s ongoing fraud and by the fraudulent misrepresentations Defendant was continuing to make in 11/01/15. Under this theory, the lawsuit was timely filed only about six months after the most recent fraudulent statement, which was intended to delay Plaintiffs’ efforts to seek legal redress. (CACI 456.)

Under CACI 456, even if Plaintiffs did not file their lawsuit on time, they may still proceed if Defendant did or said something false, upon which Plaintiffs reasonably relied, and which caused Plaintiffs to delay filing their lawsuit. (Ashou v. Liberty Mutual Fire Ins. Co. (2006) 138 Cal.App.4th 748, 766-767.)

With regard to equitable estoppel, it is not necessary that Plaintiffs prove that Defendant acted with bad faith or intent to mislead or a specific intent to induce Plaintiffs to defer filing suit. (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 384.)

C. 2nd COA: Fraud

1. Lack of Specificity

OVERRULED on this ground.

Defendant argues that the claim fails to plead fraud with adequately specificity. Plaintiff must plead specific allegations of what, how, where, by whom, to whom, and by what means the alleged representations were made. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

The court finds that Plaintiffs have adequately pleaded their claims and that any remaining ambiguity may be further clarified by propounding written discovery and/or by taking depositions.

2. Reasonable Reliance under Fraud Claim

OVERRULED in part and SUSTAINED with leave to amend in part.

At paragraph 47 of their SAC, Plaintiffs do allege that they relied on the various misrepresentations by Defendant and/or her associates. So Defendant argues incorrectly that reliance has not been alleged. However, Defendant argues correctly that Plaintiffs have failed to allege whether their reliance was REASONABLE.

Defendant argues that it was impossible for Plaintiffs to have been unaware of her fraudulent misconduct or to have reasonably believed that they still owned the property, because they deeded it over to her and to her associates.

However, this argument fails because Plaintiffs’ entire theory is that they reasonably believed that Defendant was trying to lower their mortgage payments and help them save their property from default, by setting up straw purchases and financial strategems. So while the documents show that Defendant was taking title to their property and seeking to evict them, this was all for show and part of the strategy to help save their home from the lender and preserve Plaintiffs’ ownership interests.

Whether Plaintiffs reasonably relied on Defendant’s allegedly fraudulent misrepresentations is a question for the trier of fact to determine at trial. It is a disputed issue of material fact that the court has no authority to determine at the pleading stage.

Plaintiffs’ theory is that Defendant scammed them and that while the fraudulent transfers did occur long ago, Plaintiffs did not actually realize they had been duped until more recently and were still being misled as recently as Nov. 2015. If these allegations are assumed to be true, the statute of limitations never ran on either their quiet title claim or on their fraud claim.

3. Statute of Limitations

OVERRULED on this ground.

Defendant also argues that the fraud claim is barred by the 3-year statute of limitations, but this argument fails for the same reasons discussed in the analysis of the 1st cause of action, as set forth above.

4. Equitable Estoppel

OVERRULED on this ground.

Defendant argues that the 11/01/15 misrepresentations or false statements could not have equitably tolled the statute of limitations because it had already long since run. However, this argument fails because Plaintiffs appear to plead that from August 2008 through November 2015 the statutes of limitations never ran, because Plaintiffs continued to reasonably rely on a long series of misrepresentations and false statements by Defendant and her associates. The court must accept these allegations to be true.

Furthermore, at trial, any disputed issues of fact related to equitable estoppel must be decided by the court, except that the court may submit the issue to the jury for an advisory finding under CACI 456. (Hopkins v. Kedzierski (2014) 225 Cal.App.4th 736, 745.)

In order to establish equitable estoppel at trial, the Plaintiffs need not prove that the most recent false statements made in November 2015 were intentional falsehoods or were specifically intended to cause Plaintiffs to delay filing their lawsuit. Plaintiffs need only show that the statements ultimately turned out to be false and the result of their reasonable reliance was that they delayed filing suit.

With regard to equitable estoppel, whether Plaintiffs’ reliance was reasonable must be determined by the court at trial.

D. Request for Judicial Notice

The court GRANTS Defendant’s request for judicial notice, but only insofar as the request shows that certain documents were filed — that is, unlawful detainer complaints, answers, and writs of possession.

Defendant argues that these documents prove that it impossible for Plaintiffs to have reasonably relied on Defendant’s false or inaccurate statements. However, this argument fails, because the court may not take judicial notice of such a disputed issue of material fact.

Such a disputed fact may only be resolved at trial, based on based on the credibility of the witnesses and based on the totality of the evidence presented by both parties. It cannot be decided at the pleading stage, where no evidence has been presented and where the court is required to accept the truth of Plaintiffs’ allegations, no matter how unlikely or improbable.

While the court may take judicial notice that certain documents were filed, the court may not take judicial notice of the truth of facts asserted in those documents are true, if those facts are reasonably subject to dispute.

“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.) But a court may not take judicial notice of the truth of factual representations, made in the recorded document, that are reasonably open to dispute. (Ibid.; See also Evid. Code 451 (e), (f); Evid. Code 452 (g), (h).)

Defendant shall give notice of this ruling.