Case Name: Wong. v. Wong, et al.
Case No.: 2012-1-CV-235777

After full consideration of the evidence, the separate statement submitted by the parties, and the authorities submitted by each party, the court makes the following rulings:

According to the allegations of the second amended complaint (“SAC”), in early 2001, Naomi Wong (“Naomi”) and Paul Wong (“Paul”) asked Keith Tai Wong (“Keith”) to build a new house for them at 4039 Moreland Avenue in San Jose (“Moreland property”), and promised to reimburse him for all his construction costs after they sold the property. (See SAC, ¶ BC-1.) Keith expended $600,000 of costs to build the house, but upon sale of the property, Naomi and Paul only reimbursed Keith $90,000 and refused to reimburse the remainder. (See SAC, first cause of action, ¶¶ BC-1-2.) In April 2003, Naomi asked Keith to allow use of his property at 295 N. San Tomas Aquino Road in Campbell (“San Tomas property”) to secure a mortgage loan, the proceeds from which would be used to pay the costs of constructing a house at 1857 W. Campbell Avenue in Campbell (“Campbell property”). (See SAC, third cause of action, ¶ BC-1.) Naomi promised Keith to pay off the mortgage loan and reimburse him for the costs incurred on the mortgage loan when she sold the property; however, Naomi did not do either when she sold the Campbell property. (See SAC, third cause of action, ¶¶ BC-1-2.) Naomi also fraudulently abused her power as executor of her sister Alina Wong’s (“Alina’) estate to deprive Keith of $1.9 million. (See SAC, fifth cause of action, ¶¶ FR-2-6.) In April 2004, Keith lent $150,000 to Jason Lin (“Lin”), Alina’s estranged husband, through agents Naomi and Paul, who named themselves as beneficiaries of the trust deed issued by Lin against the property on which Lin was seeking financing for the completion of a home construction project at 1022A North Stelling Rd. in Cupertino (“Stelling property”). (See SAC, ¶ sixth cause of action, ¶ IT-2.) After Lin failed to repay the loan, Keith retained an attorney who filed a judicial foreclosure action, naming Naomi and Paul as the nominal plaintiffs as they were the named beneficiaries. (See SAC, sixth cause of action, ¶ IT-3.) Keith asked Naomi and Paul to sign a reconveyance to him of the trust deed, and in November 2011, they did so. (See SAC, ¶ IT-4.) However, before the intended substitution, a settlement was reached where Lin would pay $125,000 in installment payments, and from January 2013 to Mach 2014, those payments were made. (See SAC, sixth cause of action, ¶¶ IT-5.) On March 14, 2014, the court heard a motion to enforce the settlement brought by Naomi in which Naomi alleged that she had made the involved loan from her own funds, not funds from Keith, and that ensuing payments should be made to her. (See SAC, sixth cause of action, ¶ IT-6.) The Court ruled that payments should be made to Naomi, but Keith believes that Naomi should be deemed to be the constructive trustee of all payments. (See SAC, sixth cause of action, ¶¶ IT-6-8.) On July 3, 2014, Keith filed the SAC against Naomi and Paul, asserting causes of action for: breach of contract; fraud; breach of contract; fraud; fraud; intentional tort; intentional tort; and, intentional tort.

On April 21, 2015, Naomi filed a second amended cross-complaint (“SAXC”). According to the allegations of the SAXC, Keith purchased the San Tomas property on November 27, 2002. (See SAXC, ¶ 13.) In 2003, Keith were contemplating divorce, and in an effort to hide his assets from the marital community, Keith transferred titles of his properties to friends and relatives, including the San Tomas property which was conveyed to Naomi, her younger brother Quan Wong (“Quan”) and Alina. (See SAXC, ¶¶ 14-15.) In February 2004, an employee of Keith’s construction contracting business was seriously injured, and he did not have workers’ compensation insurance. (See SAXC. ¶ 16.) In March 2004, Keith asked Naomi, Quan and Alina to sign a grant deed to transfer title to Paul, T.C.P. Wong (“T.C.P”) and H.T. Wei, but Naomi did not understand the exact nature of the document. (See SAXC, ¶ 17.) On April 6, 2004, the injured employee filed a claim against Keith’s business. (See SAXC, ¶ 19.) On August 24, 2004, H.T. Wei secured a $550,000 Deed of Trust and Assignment of Rents in favor of Jade Wong against the San Tomas property. (See SAXC, ¶ 20.) At the end of 2004 or early 2005, Naomi opened a checking account for personal expenses. (See SAXC, ¶ 18.) On June 28, 2005, Keith orchestrated that Paul, T.C.P., and H.T. Wei to add Naomi to the title of the San Tomas property; Naomi was unaware that she was put on the title to the property. (See SAXC, ¶ 21.) In July or August 2005, Keith contacted Naomi to co-sign mortgage documents related to a property in Jamestown (“Jamestown property”) but the document was actually related to the San Tomas property. (See SAXC, ¶¶ 22-23.) On October 11, 2005, Keith filed a petition for bankruptcy under Chapter 7, falsely stating under oath that he did not own any real property and was not a party to any executory contracts. (See SAXC, ¶ 24.) In March 2006, Naomi moved out of the Bay Area to San Diego, but kept her Citibank checking account and turned over control of the account. (See SAXC, ¶ 25.) On May 12, 2006, the mortgage on the San Tomas property was refinanced (“Second San Tomas Deed of Trust”) with CitiMortgage as the lender, and the documents were signed by Tho Huynh as attorney in fact for Naomi Wong. (See SAXC, ¶ 26.) From 2006 to 2010, Alina and Keith arranged for payments on the San Tomas property to be made on the mortgage from Naomi’s bank account without Naomi’s knowledge. (See SAXC, ¶ 28.) In March 2010, Naomi finally learned that Alina had taken the Second San Tomas Deed of Trust in Naomi’s name by instructing Tho Huynh to sign as Naomi’s attorney in fact. (See SAXC, ¶ 29.) In November 2010, Naomi learned that Keith was using funds from her bank account to make the mortgage payments and she then confronted Keith, who promised to assume the loan or refinance it in his name if she would execute a grant deed transferring title of the San Tomas property back to him. (See SAXC, ¶ 30.) On November 29, 2010, Naomi executed a grant deed transferring title to her interest in the San Tomas Property to Keith and delivered the executed and notarized deed to Keith to record; however, Keith failed to record the deed until May 5, 2011. (See SAXC, ¶ 31.) Naomi then inquired several times as to whether he had refinanced the San Tomas property or otherwise taken steps to remove her name from the Second San Tomas Deed of Trust, and Keith assured her that he would do so once his bankruptcy was off his credit history, which she believed to be 7 years from the filing of his bankruptcy, or October 2012. (See SAXC, ¶ 32.) However, Keith did not refinance the San Tomas property or otherwise remove Naomi’s name from the Second San Tomas Deed of Trust, despite Naomi’s repeated demands, and, on April 9, 2013, Naomi realized that Keith would not willingly remove her name from the Second San Tomas Deed of Trust when Keith filed the complaint against her. (See SAXC, ¶ 33.) On April 21, 2015, Naomi filed the SAXC, for the first time alleging a cause of action against cross-defendant CitiMortgage, Inc. (“CitiMortgage”). The lone cause of action asserted against CitiMortgage is the tenth cause of action for declaratory relief, which alleges:

Ms. Wong did not have knowledge of, or give her informed consent to enter into the Second San Tomas Deed of Trust with CitiMortgage. CitiMortgage has been informed of Ms. Wong’s lack of consent, and has failed to remove her as a borrower on the Second San Tomas Deed of Trust….

As a result, a declaratory judgment is both necessary and proper at this time in order to determine the respective rights of the parties regarding liability for the Second San Tomas Deed of Trust.

(SAXC, ¶¶ 147-148.)

Cross-defendant CitiMortgage moves for summary judgment on the SAXC against it on the grounds that: the tenth cause of action for declaratory relief is time-barred as to CitiMortgage; and, the tenth cause of action is without merit because CitiMortgage is a bona fide encumbrancer.

CitiMortgage’s request for judicial notice

CitiMortgage’s request for judicial notice is GRANTED. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1382, quoting Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal. App. 4th 1106, 1117; see also Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549; see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (stating that “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… [and, f]rom this, the court may deduce and rely upon the legal effect of the recorded document”)

Naomi’s objections to the documents that are the subject for judicial notice are OVERRULED.

The SAXC is time-barred as against CitiMortgage.

CitiMortgage asserts that the tenth cause of action is time-barred. “A plaintiff must bring a claim within the limitations period after accrual of the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806.) “The general rule is that a cause of action accrues when the wrongful act is done and not at the time of plaintiff’s discovery.” (Prudential Home Mortgage Co. v. Super. Ct. (Diaz) (1998) 66 Cal.App.4th 1236, 1246.) “An important exception to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Fox, supra, 35 Cal.4th at p.807.) “A plaintiff has reason to discover a cause of action when he or she ‘has reason at least to suspect a factual basis for its elements.’” (Id.) “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action.” (Id.) “The discovery rule… allows accrual of the cause of action even if the plaintiff does not have reason to suspect the defendant’s identity… because the identity of the defendant is not an element of a cause of action.” (Id.) “The Legislature, in codifying the discovery rule, has also required plaintiffs to pursue their claims diligently by making accrual of a cause of action contingent on when a party discovered or should have discovered that his or her injury had a wrongful cause.” (Id. at p.808.)

The parties agree that the applicable statute of limitations is three years. (See CitiMortgage’s memorandum of points and authorities in support of motion for summary judgment (“CitiMortgage’s memo”), p.9:21-28; see also Naomi’s opposition to CitiMortgage’s motion for summary judgment (“Opposition”), p.7:2-5.)

As previously stated, Naomi’s tenth cause of action of the SAXC is for declaratory relief. Damages is not an element of a declaratory relief cause of action; rather, the cause of action requires the existence of an actual controversy relating to the legal rights and duties of the respective parties and the request for a declaration of a declaration of those rights and duties. (See Code Civ. Proc. § 1060; see also Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947 (stating that “[a] complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the parties under a written instrument or with respect to property and requests that the rights and duties of the parties be adjudged by the court”), citing Cal. Code Civ. Proc. § 1060 and Maguire v. Hibernia Savings & Loan Society (1944) 23 Cal.2d 719.) If “the rights of the complaining party have crystallized into a cause of action for past wrongs [such] that a money judgment will fully resolve the dispute, and that no continuing relationship exists to justify a declaration of future rights… an actual controversy which can be resolved by means of declaratory judgment” is not presented. (See Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 618 (stating that “[d]eclaratory procedure operates prospectively, and not merely for the redress of past wrongs”); see also Code Civ. Proc. § 1061 (stating that “[t]he court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances”); see also General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470 (stating that “[t]he declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action”; also stating that “[t]he availability of another form of relief that is adequate will usually justify refusal to grant declaratory relief”); see also Pacific Electric Ry. Co. v. Dewey (1949) 95 Cal.App.2d 69, 73 (stating that “declaratory relief is unavailable for the determination of issues involved in an already pending action or to prevent such issues from being presented to a jury”); see also Warren v. Kaiser Foundation Health Plan, Inc. (1975) 47 Cal.App.3d 678, 683 (stating that “the court may refuse to entertain the action where ‘the rights of the complaining party have crystallized into a cause of action for past wrongs, [and] all relationship between the parties has ceased to exist’”).)

In support of its assertion that the tenth cause of action for declaratory relief is time-barred as against it, CitiMortgage presents Naomi’s deposition testimony in which she admits that: she first learned that CitiMortgage had made a loan secured by the San Tomas property in 2010 through Keith; when she discovered that Keith and Alina had been making mortgage payments to CitiMortgage from her Citibank account, she confronted Keith about it and demanded that he remove her name off the loan; although Keith said that he would remove her name off the loan as soon as she transferred title to him, after multiple demands, Keith still has not removed her name; Keith claimed he would be able to refinance the loan after his bankruptcy record was off his credit history, which would have been October 2012, but instead, he filed a lawsuit against her . (Peeters decl., exh. 28 (“Pl.’s depo”), pp. 369:9-25, 370:1-5; 371:6-25, 372:1-10, 385:4-12.) CitiMortgage also presents the SAXC in which Naomi alleges that “[i]n March 2015, Ms. Wong learned in that her sister, Alina Wong[,] had taken out the Second San Tomas Deed of Trust in Ms. Wong’s name by instructing their brother Thomas Wong a.k.a. Tho Huynh to sign as Ms. Wong’s attorney in fact…. In or about November of 2010, Ms. Wong learned that Keith Wong was using funds from her bank account to make monthly mortgage payments. Ms. Wong confronted Keith Wong, and he promised to assume the loan or refinance it in his name if Ms. Wong would execute a grant deed transferring title of the San Tomas Property back to Keith Wong.” (SAXC, ¶¶ 29-30.) CitiMortgage also presents Naomi’s discovery responses in which Naomi admits that she learned that Keith was using funds from her bank account to make monthly mortgage payments on the San Tomas Property in November 2010, and confronted Keith about the situation. (See Peeters decl., exh. 32, response to RFA 18 (Naomi admitting that she “learned of the existence… that false documents and legally deficient documents had been used without my knowledge or consent to sign the CITIMORTGAGE DEED OF TRUST… in or about November 2010”); see also Peeters decl., exh. 33, response to FI number 17.1, RFAs 19 and 20 (Naomi admitting that “[i]n or about, November 2010, Ms. Wong learned that Keith Wong was using funds from her bank account to make monthly mortgage payments on the San Tomas Property, which is when she learned that there was a mortgage on the property… Ms. Wong confronted Keith Wong about the situation, and he promised to assume the loan or refinance it in his name…”); see also Peeters decl., exh. 34, response to SI 7 (stating same).) CitiMortgage meets its initial burden to demonstrate that the tenth cause of action of the SAXC—the lone cause of action asserted against it—is time-barred as to it.

In opposition, Naomi does not dispute that she knew that the CitiMortgage Deed of Trust was in her name in November 2010. (See Naomi’s separate statement in opposition to CitiMortgage’s separate statement, undisputed material fact number 5.) Instead, Naomi asserts that the statute of limitations on the tenth cause of action for declaratory relief “did not begin to run until April 9, 2013, when [Naomi] learned that [Keith] had broken his promise to remove her from the Second San Tomas Deed of Trust.” (Naomi’s opposition to CitiMortgage’s motion for summary judgment (“Opposition”), p.6:19-21.) Plaintiff asserts that she “did not sustain any damages until April 9, 2013, when she learned that Keith had broken his promise to remove her from the Second San Tomas Deed of Trust.” (Id. at p.7:6-10.) In support of her assertion, Naomi cites to Thomas v. Canyon (2011) 198 Cal.App.4th 594. There, the court stated that “[w]here as here, ‘damages are an element of a cause of action, the cause of action does not accrue until the damages have been sustained.’” (Thomas, supra, 198 Cal.App. 4th at p.604.) “Mere threat of future harm, not yet realized, is not enough.” (Id.)

However, unlike the breach of fiduciary duty cause of action in Thomas, damages is not an element to the declaratory relief cause of action. Thus, Naomi’s argument relying on Thomas, supra, is unavailing. Moreover, it is apparent from Naomi’s opposition that the basis for the claim as against CitiMortgage is CitiMortgage’s failures to recognize “the multiple red flags indicating that something was amiss with the loan” and nevertheless, issuing the loan. (See Opposition, pp.4:8-27, 5:1- 9.) Thus, CitiMortgage’s alleged failures, including the reliance of the power of attorney, the residence of Paul and Naomi at the San Tomas property, the failure to meet certain underwriting condition, and the failure to verify Naomi’s identity with Naomi—again, the basis for Naomi’s cause of action against CitiMortgage—occurred on May 28, 2006. Naomi was immediately affected by the alleged failures when her name was placed on the Second San Tomas Deed of Trust and it was recorded. Naomi had a reason to suspect a factual basis for her claim no later than November 2010 when she learned that she was on the Second San Tomas Deed of Trust and that Alina and Keith had been allegedly making payments from her account as to it. CitiMortgage did nothing to prevent Naomi from filing any claim against it. Instead, Naomi apparently relied on the fraudulent promise of Keith; however, this establishes a cause of action against Keith, not against CitiMortgage. Moreover, to the extent that the cause of action is premised on the alleged fraudulent promise by Keith, as such a cause of action crystallized into a cause of action for a past wrong such that a money judgment will fully resolve the dispute, an actual controversy is not presented here as to CitiMortgage as to that alleged fraudulent promise.

Naomi also argues that the SAXC is not time-barred as against CitiMortgage because the SAXC relates back to the initial cross-complaint, filed on May 7, 2013, as the initial cross-complaint included Roe allegations and, although the summons served upon CitiMortgage did not state it was being sued as a Roe Cross-Defendant, that is a sheer technical and clerical error. (See Opposition, pp.9:1-28, 10:1-228, 11:1-19.) However, “[a]n amended complaint relates back to a timely filed original complaint, and thus avoids the bar of the statute of limitations, only if it rests on the same general set of facts and refers to the same ‘offending instrumentalities,’ accident and injuries as the original complaint.” (Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 415.) Here, the initial cross-complaint did not contain any claim against any bank or lender. In fact, the initial cross-complaint does not involve the Second San Tomas Deed of Trust whatsoever; it instead involves a loan Naomi made to Jason Lin and Keith’s purported interest in the Moreland property. (See initial cross-complaint, ¶¶ 1-27.) The SAXC neither rests on the same general set of facts, nor to the same offending instrumentalities, accident and injuries as the initial cross complaint. Further, as CitiMortgage argues, it is undisputed that Naomi was aware of CitiMortgage’s identity in November 2010 when she discovered that she was on the Second San Tomas Deed of Trust and Naomi learned that Alina and Keith had been allegedly making payments from her account to CitiMortgage. Thus, at the time that the initial cross-complaint was filed, Naomi knew CitiMortgage’s identity and was not genuinely ignorant of its identity. (See Woo v. Superior Court (1999) 75 Cal.App.4th 169, 177 (stating that “[a] further and nonprocedural requirement for application of the section 474 relation-back doctrine is that [the plaintiff] must have been genuinely ignorant of [the Doe defendant’s] identity at the time she filed her original complaint”).) Here, it is clear that the SAXC does not relate back to the filing of the initial cross-complaint.

Accordingly, Naomi has failed to demonstrate the existence of a triable issue of material fact as to whether the SAXC is time-barred as to cross-defendant CitiMortgage, and CitiMortgage’s motion for summary judgment is GRANTED.
As the Court grants CitiMortgage’s motion for summary judgment on the ground that the SAXC is time-barred as to CitiMortgage, it is unnecessary to determine whether CitiMortgage establishes that it is a bona fide encumbrancer.

As the Court did not address the motion as to whether CitiMortgage is a bona fide encumbrancer, the Court did not rely on the portion of the Wood declaration to which Naomi objects.

CitiMortgage’s objection numbers 3 and 6 to Naomi’s declaration are SUSTAINED. The remainder of CitiMortgage’s objections are not the basis for the Court’s order.