Case Number: EC062021 Hearing Date: May 23, 2014 Dept: B

Demurrer

Ex Parte Application to Dissolve Preliminary Injunction

The Plaintiff is the owner of real property at 1725 S. Baldwin Avenue, Arcadia, CA. The Plaintiff obtained a loan from the Defendant. The loan was secured by a deed of trust on the property. Despite recording a full reconveyance of the deed of trust, the Defendant is improperly attempting to sell the Plaintiff’s real property. The Causes of action in the Complaint are: 1) Declaratory Relief ; 2) Injunctive Relief; 3) Quiet Title and 4) Fraud.

1) Demurrer

This hearing concerns the Defendant’s demurrer to each cause of action in the Complaint.

First, the Defendant argues that the causes of action are uncertain. A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. Khoury v. Maly’s of California Inc. (1993) 14 Cal.App.4th 612, 616. A demurrer for uncertainty will be sustained only when the complaint is so unintelligible that the defendant cannot reasonably respond because the defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against the defendant. Id.

A review of each cause of action reveals that the Defendant can reasonably respond to each claim. The Plaintiff has identified the cause of action, identified the Defendants against whom it is directed, identified the issues, and identified the remedy requested. The Defendant can reasonably determine whether to admit or deny the issues, e.g., admit or deny that the deed of trust was reconveyed to the Plaintiff. Accordingly, there are no grounds for a demurrer based on uncertainty.

Accordingly, the Court overrules the demurrer to each cause of action based on uncertainty.

1. First Cause of Action for Declaratory Relief

The Plaintiff seeks a declaration of the parties’ rights and duties under the deed of trust. The Defendant argues that the cause of action lacks sufficient facts.

It is general rule that in an action for declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a contract or with regards to property and requests that the rights and duties be adjudged. City Of Tiburon v. Northwestern Pac. R.R. Co. (1970) 4 Cal. App. 3d 160, 170; see CCP section 1060 (identifying the remedy of declaratory relief). Declaratory relief is a broad remedy, and the rule that a complaint is to be liberally construed is particularly applicable to one for declaratory relief. Id.

The Plaintiff alleges in paragraphs 34 and 35 that an actual controversy has arisen because the Plaintiff contends that the Defendant executed a substitution of trustee and a reconveyance of the deed of trust while the Defendant contends that the deed of trust was fraudulently reconveyed. The Plaintiff requests in paragraph 36 that the Court adjudicate the parties’ rights and duties. These allegations plead that there is an actual controversy and request a judicial declaration. This is sufficient to plead the cause of action.

Therefore, the Court overrules the demurrer to the first cause of action.

2. Second Cause of Action for Injunctive Relief

This cause of action seeks an injunction to prevent the sale of the Plaintiff’s property. The Defendant argues that the cause of action lacks sufficient facts.

Under California law, injunctive relief is a remedy and not in itself a cause of action. Shell Oil Co. v. Richter (1942) 52 Cal.App.2d 164, 168. Since injunctive relief is a remedy, it is not a cause of action.

Therefore, the Court sustains the demurrer to the second cause of action. Since this is not a cause of action, the Court does not grant leave to amend.

3. Third Cause of Action for Quiet Title

This cause of action seeks to quiet title in the property. The Defendant argues that the cause of action lacks sufficient facts.

Under California law, a cause of action to quiet title is pleaded sufficiently when the plaintiff alleges, in simple language, that the plaintiff is the owner and in possession, and that the defendant claims an adverse interest without right. Thornton v. Stevenson (1960) 185 Cal. App. 2d 708, 713.

The Plaintiff does not plead that the Plaintiff is the owner and in possession of the property. Further, the Plaintiff does not plead that the Defendant claims an adverse interest without right. This is insufficient.

Instead, the Plaintiff seeks in paragraph 42 a determination that the Defendant does not have a security interest in the property. This does not plead the quiet title claim because it does not plead the essential elements of the claim, i.e., that the Plaintiff is the owner and in possession and that the Defendant claims an adverse interest without right.

Further, the Plaintiff incorporates the prior 40 paragraphs into the cause of action. This cannot be used to overcome the lack of allegations in the cause of action. A civil plaintiff may, for the sake of convenience, incorporate by reference previous portions of the pleading for informational purposes only. Cal-West Nat. Bank v. Superior Court (1986) 185 Cal. App. 3d 96, 101. Neither the Court nor the Defendants are required to search the pleadings in order to determine whether the Plaintiff has pleaded a cause of action. Instead, the essential elements of each cause of action must be pleaded within the cause of action.

Therefore, the Court sustains the demurrer to the third cause of action. Since it is possible to correct this defect by amendment, the Court grants 10 days leave to amend .

4. Fourth Cause of Action for Fraud

The Plaintiff alleges that the Defendant entered into a fraudulent scheme by making a loan, executing a full reconveyance, suing the Plaintiff for damages, and commencing a foreclosure proceeding. The Defendant argues that this lacks sufficient facts.

The Plaintiff’s cause of action for fraud must include the following elements:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of torts of deceit must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.

The Plaintiff’s cause of action pleads none of these elements. The Plaintiff does not identify a false representation. The Plaintiff does not plead that the Defendant knew that the representation was false. The Plaintiff does not plead that the Defendant had an intent to defraud when he made the representation. The Plaintiff does not plead that he justifiably relied on the misrepresentation. The Plaintiff does not plead the damage resulting from the justifiable reliance. This is insufficient.

Therefore, the Court sustains the demurrer to the fourth cause of action with 10 days leave to amend.

2. Application to Dissolve Injunction

On May 21, 2014, the Defendant appeared with an ex parte application to dissolve the preliminary injunction that the Court had issued on March 28, 2014. The Court continued the hearing to May 23, 2014.

The preliminary injunction was issued by the Court on March 28, 2014. The injunction barred the Defendant from selling the Plaintiff’s real property. Further, the Court ordered that, in lieu of an undertaking, the Plaintiff shall pay $1,750 every 45 days to the Defendant. Further, the Court ordered the Plaintiff to maintain the property, to pay all property taxes and property insurance, and to make payments on all liens senior to the Defendant’s lien so that they remain current.

Under CCP section 533, the Court is authorized in any action to modify or dissolve an injunction or temporary restraining order upon a showing that there has been a material change in the facts upon which the injunction or temporary restraining order was granted, that the law upon which the injunction or temporary restraining order was granted has changed, or that the ends of justice would be served by the modification or dissolution of the injunction or temporary restraining order.

Accordingly, section 533 identifies three independent bases for modifying or dissolving a restraining order:

1) change in the facts;
2) change in the law, or
3) ends of justice.

The Defendant’s arguments indicate that there has been a change in the facts. When the Court issued the preliminary injunction, the Court ordered the Plaintiff to stay current with the payments on all liens senior to the Defendant’s lien. The Defendant provides evidence in the declaration of John Laraway to demonstrate that the Plaintiff has failed to comply with this requirement.

John Laraway is the lender on a deed of trust recorded on the Plaintiff’s property. Mr. Laraway’s lien is senior to the Defendant’s lien. Mr. Laraway states that the Plaintiff has not made a payment since December 2012 and that currently the entire principle of $190,000 plus interest of $12,033.28 is due. Mr. Laraway states in paragraph 4 that the Plaintiff attempted to make a payment of $12,785.36 on May 7, 2014. Mr. Laraway states that he did not accept the check because the check did not include the principle due and owing.

This is the Defendant’s second ex parte application to dissolve the preliminary injunction. On May 1, 2014, the Court denied the first application because the Plaintiff claimed that he had paid off the Laraway lien. The evidence from Mr. Laraway indicates that the loan had not been paid.

This evidence indicates that there has been a change in the facts because the Plaintiff has failed to stay current with payments on all liens senior to the Defendant’s lien. The likely result of this will be that John Laraway will commence a foreclosure proceeding to recover the amount owed through a sale of the real property.

The Plaintiff’s opposition makes a number of arguments. First, the Plaintiff claims that the Court’s order was vague and ambiguous. This argument is without merit because the Court’s order identified the Plaintiff’s obligation to keep all current on all liens senior to the Defendant. The Plaintiff has failed to meet this obligation.

Second, the Plaintiff argues that he attempted to make the payment to John Laraway on May 7, 2014. However, as discussed above, the Plaintiff has failed to make payments on the loan since December 2012. Since the Plaintiff is in default, it appears that John Laraway has elected to require the Plaintiff to pay off the loan under an acceleration clause. The Plaintiff offers no evidence that he has kept the senior lien current by paying the amount due. Further, the Plaintiff offers no explanation for failing to inform the Court that he was in default on a senior lien when the Court issued the preliminary injunction. Since John Laraway elected to require the Plaintiff to pay the full amount due on the loan, the Plaintiff’s attempt to make a payment on May 7, 2014 did not comply with the March 28, 2014 order because the payment does not keep the senior lien current.

Third, the Plaintiff argues that dissolving the preliminary injunction is too drastic. However, as noted above, John Laraway is likely to commence a foreclosure proceeding to collect the amount owed. The purpose of the preliminary injunction was to maintain the status quo pending the final determination in this case. This purpose will be thwarted when the senior lien holder, John Laraway, commences foreclosure proceedings to collect the amount owed by the Plaintiff. It is not drastic to dissolve the preliminary injunction so that the Defendant can seek to protect his own lien.

Fourth, the Plaintiff argues that the Defendant is motivated by ill will. However, the Court issued the preliminary injunction on the condition that the Plaintiff meets his obligation to keep the senior lien current. The Plaintiff fails to explain how the Defendant could prevent him from complying with the Court order. Since the Plaintiff failed to meet his obligation under the March 28, 2014 order, the Defendant has the right to seek an order dissolving the preliminary injunction.

Fifth, the Plaintiff argues that his failure to keep a senior lien current has no effect on the Defendant. This argument is false because the senior lien holder, John Laraway, can commence foreclosure proceedings and sell the property to collect the amount owed to him. Since selling the property will affect the Defendant’s lien, the Plaintiff’s failure to keep the senior lien current has a substantial effect on the Defendant.

Therefore, the Court grants the Defendant’s motion and dissolves the preliminary injunction issued on March 28, 2014 because the Plaintiff has failed to comply with his obligations under the order and because the purpose of the preliminary injunction, which was to maintain the status quo pending the final determination in this case, will be thwarted when the senior lien holder, John Laraway, commences foreclosure proceedings to collect the amount owed by the Plaintiff.