Calendar Lines 1-4

Case Name: GUY CAVICCHIA v. JEANETTE TAGGART, ET AL.
Case No.: 17CV315744

This matter is part of a dispute that began in the Probate division of this court (case no. 2014-1-PR-17905, “Probate Action”). Decedent Patricia Lynn Hairston (“Decedent”) died on May 15, 2014. Plaintiff Guy Cavicchia (“Plaintiff”) is Decedent’s son. Decedent’s daughter Tracy Infante (“Infante”) was appointed Administrator of the Estate on September 14, 2014 and she retained Defendant Jeanette Taggart (“Taggart”) as her attorney. On March 25, 2016 the Probate Court removed Infante as Administrator and appointed Plaintiff as special administrator of the Estate. Plaintiff was appointed Administrator of the Estate on May 27. 2016. On July 18, 2016 the Probate Court granted a petition brought by Plaintiff against Infante to recover funds she had taken from the Estate Bank Account.

On July 22, 2016 Plaintiff Cavicchia, in his capacity as administrator of the Estate, filed a further verified Petition in the Probate Court stating claims for 1) Breach of Fiduciary Duty/Professional Negligence (against Jeanette Taggart); 2) “Breach of Duty” (against Fidelity National), and; 3) “Breach of Duty” (against U.S. Bank). On November 28, 2016 Defendant Taggart filed a Cross-Complaint in the Probate action, stating cross-claims for: 1) Implied Indemnity (against U.S. Bank, Fidelity National and various Roe cross-defendants); 2) Equitable Indemnity (against the same parties as the first cross-claim); 3) Fees/costs under Probate Code § 10810 et seq. (against the Estate only), and; 4) Declaratory Relief (against U.S. Bank, Fidelity National and Roes).

Various challenges to these pleadings were filed in the Probate Action. On May 9, 2017 the Probate Court (Hon. Pichon) issued an Amended Order Transferring Proceeding to Civil Court. The Order stated in pertinent part that “Cavicchia does not seek to recover assets of the Estate within the ambit of Probate Code section 850. The cause of action in that pleading [the “Petition”] are classic tort claims for breach of fiduciary duty and negligence. . . . Thus, the Petition should be determined in a separate civil action. As for the Cross-Complaint, the first, second and fourth causes of action for indemnity and declaratory relief necessarily flow from the claims in the Petition, and consequently should also be determined in a separate civil action together with the Petition. . . . Pursuant to Probate Code section 801, the Court orders that the Petition in its entirety as well as the first, second and fourth causes of action in the Cross-Complaint shall be transferred to a civil department. The third cause of action in the Cross-Complaint for recovery of fees and costs shall remain in the probate action.” Pursuant to the Probate Court Order the matter was transferred to the civil division and assigned case no. 17CV315744, with the Petition (hereafter the verified Complaint) deemed filed on September 15, 2017. Pursuant to a further Order of the Court (Hon. Zayner) the various pleading challenges (which had been refiled in this civil action) were set for hearing on January 23, 2018.

Currently before the Court are four demurrers: 1) Defendant/Respondent Fidelity National’s demurrer to the Complaint’s second cause of action (line no. 1 on the calendar); 2) Defendant/Respondent U.S. Bank’s demurrer to the Complaint’s third cause of action (line no. 3); 3) Fidelity National’s demurrer to the Cross-Complaint’s first, second and fourth causes of action (line no. 2), and; 4) U.S. Bank’s demurrer the Cross-Complaint’s first, second and fourth cause of action (line no. 4).

In ruling on demurrers the Court treats them “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.) Allegations are not accepted as true on demurrer if they contradict or are inconsistent with facts judicially noticed. Similarly, facts appearing in exhibits attached to the complaint (part of the “face of the pleading”) are given precedence over inconsistent allegations in the complaint. (See Holland v. Morse Diesel Int’l, Inc. (2001) 86 Cal.App.4th 1443, 1447. See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1474 [rejecting allegation contradicted by judicially noticed facts]. See also Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 [“[T]o the extent the factual allegations conflict with the content of the exhibits to the complaint, we rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.”])

In ruling on demurrers the Court cannot consider extrinsic evidence. Accordingly, except to the extent they refer to the mandatory meet and confer efforts the Court has not considered the declarations filed by Fidelity National’s counsel Armand Estrada or the exhibit A attached to both declarations.

1. Fidelity National’s Demurrer to the Complaint’s second cause of action
Fidelity National demurrers to the second cause of action (“Breach of Duty”) on the ground that it fails to state sufficient facts. Despite the title given to the cause of action in the Complaint, it is apparent that the second cause of action alleges negligence against Fidelity National rather than breach of a fiduciary duty.

“An action in negligence requires a showing that the defendant owed the plaintiff a legal duty, that the defendant breached the duty, and that the breach was a proximate or legal cause of injuries suffered by the plaintiff.” (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673.) “The elements of a cause of action for negligence are well established. They are (a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.” (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.) Whether a duty of care exists and its scope is a question of law for the Court even at the pleading stage. (Strong v. State of Cal. (2011) 201 Cal.App.4th 1439, 1449.) Fidelity National is alleged to have been the escrow holder during the sale of certain real property owned by the Estate. The Complaint at 26 admits that “on or about December 15, 2014 Fidelity National made a wire transfer of approximately $261,954.38 into the Estate Bank Account.” The Complaint at 20 identifies the Estate Bank Account as an account opened at Defendant U.S. Bank on November 18, 2014 by Tracy Infante in her capacity as Administrator of the Estate.

The express limitations on the duties of escrow holders have been explained by the California Supreme Court: “An escrow holder is an agent and fiduciary of the parties to the escrow. The agency created by the escrow is limited—limited to the obligation of the escrow holder to carry out the instructions of each of the parties to the escrow. If the escrow holder fails to carry out an instruction it has contracted to perform, the injured party has a cause of action for breach of contract. In delimiting the scope of an escrow holder’s fiduciary duties, then, we start from the principle that an escrow holder must comply strictly with the instructions of the parties. On the other hand, an escrow holder has no general duty to police the affairs of its depositors; rather, an escrow holder’s obligations are limited to faithful compliance with the depositors’ instructions. Absent clear evidence of fraud, an escrow holder’s obligations are limited to compliance with the parties’ instructions.” (Summit Financial Holdings v. Continental Lawyers Title Company (2002) 27 Cal.4th 705, 711, internal quotation marks and citations omitted.)

No cause of action for fraud is alleged in the Complaint and there are no allegations that Fidelity National failed to comply with any depositor instruction. The only basis for the claim as alleged against Fidelity National is that it allegedly failed to comply with the Probate Court’s December 4, 2014 “Order Confirming Sale of Real Property,” which the Complaint and the parties refer to as the Property Sale Order, a copy of which is attached to the Complaint as Exhibit B. Plaintiff alleges that pursuant to the Order Fidelity National “was ordered to deposit the net sale proceeds into a blocked account,” and “failed to comply with the Property Sale Order and did not wire the money into the a blocked account, and instead wired the $261,954.38 into the Estate Bank Account that was not blocked.” (Complaint at 50 and 53.) As noted above the contents of exhibits to the Complaint control over any inconsistent or contradictory allegations in the Complaint. The proper interpretation of Exhibit B, a court order, is a question of law for the Court. The Property Sale Order does not expressly mention Fidelity National or direct it to take or refrain from taking any action. Instead it ordered the Personal Representative of the Estate at the time, Tracy Infante, to “execute and deliver a conveyance of the estate’s interest in the real property described in item 9,” and that “Net sale proceeds must be deposited by escrow holder in a blocked account to be withdrawn only on court order. Receipts must be filed.” (Exhibit B at 10-11.) The financial institution for the deposit is identified as U.S. Bank. (Exhibit B at 11.) The terms of the Property Sale Order contradict and control over the Complaint’s allegations that the Court expressly ordered Fidelity National to wire the sale proceeds into a blocked account.

The Complaint notably does not allege when or if Tracy Infante (or Defendant Taggart on her behalf) delivered a copy of the Property Sale Order to Fidelity National, instead alleging that at some unspecified point in time Fidelity National “had possession of the Property Sale Order and knew it had to wire the proceeds into a blocked account.” (Complaint at 51.) However the Complaint is read as a whole and it admits at 58 that Defendant Taggart did not deliver a copy of the Blocked Account Order (exhibit A to the Complaint) to U.S. Bank until “on or about April 17, 2015,” more than four months after Fidelity National deposited the property sale proceeds into the Estate Bank Account. This means that no blocked account existed when Fidelity National deposited the sale proceeds into the Estate’s U.S. Bank account and it had no obligation to ensure one existed even if it was aware of the Property Sale Order on or before December 15, 2014. The Complaint further admits that it was Defendant Taggart (as counsel for Infante) who was obligated to ensure that court orders were delivered to necessary parties and admits that Taggart failed “to timely deliver the Blocked Account Order to U.S. Bank” and “never prepared the Receipt and never delivered it to U.S. Bank.” (See Complaint at 32-36.)

Therefore the Complaint fails to state sufficient facts to allege that Fidelity National failed to comply with the Property Sale Order, that it breached the very limited duty of care owed by an escrow holder or that any alleged breach of duty by Fidelity National (rather than the alleged acts of Infante and Defendant Taggart) was the proximate cause of the Estate’s injury. Even if it were alleged that Fidelity National knew or should have known that Tracy Infante and/or Defendant Taggart were somehow fraudulently delaying delivery of any court orders, Fidelity National had no duty to convey any concerns to Plaintiff, who was not, per the Complaint at 8, appointed special administrator or administrator of the Estate until early 2016. (See Lee v. Title Ins. & Trust Co. (1968) 264 Cal.App.2d 160, 163-164; 3 Miller & Starr, California Real Estate (3rd ed. 2007) Escrows, § 6:26, p. 69 [“As a general rule, an escrow agent does not have a duty to disclose fraud being committed on the principal by another agent of the principal.”].)

Fidelity National’s demurrer to the second cause of action on the ground that it fails to state sufficient facts is SUSTAINED with 10 days’ leave to amend.

The Court reminds Plaintiff that when a demurrer is sustained with leave to amend, the leave must be construed as permission to the pleader to amend the causes of action to which the demurrer has been sustained, not add entirely new causes of action. (See Harris v. Wachovia Mortg., FSB (2010) 185 Cal.App.4th 1018, 1023 [“Following an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court’s order. The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.”]) Plaintiff is also bound by the verified factual allegations in the current Complaint. (See Shoemaker v. Myers (1990) 52 Cal.3d 1, 12-13 [“The general rule . . . is that material factual allegations in a verified pleading that are omitted in a subsequent amended pleading without adequate explanation will be considered by the court in ruling on a demurrer to the later pleading.”])

2. U.S. Bank’s Demurrer to the Complaint’s third cause of action
U.S. Bank demurrers to the third cause of action (“Breach of Duty”) on the grounds that it is both uncertain and fails to state sufficient facts. (See U.S. Bank Demurrer at 3:5-13.) The third cause of action is also properly understood as a negligence claim.

The demurrer on uncertainty grounds is OVERRULED. Uncertainty is a disfavored ground for demurrer and is typically sustained only where the pleading is so bad the responding party cannot reasonably respond. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616 [“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.”]) Here, it is apparent from U.S. Bank’s more substantive arguments that it fully understands what the Complaint’s third cause of action at least attempts to allege and that there is no true uncertainty.

As for the demurrer on the ground of failure to state sufficient facts, the premise of the third cause of action is that U.S Bank breached a duty of care allegedly owed to its depositor, the Estate, by failing to comply with the December 4, 2014 Blocked Account Order once it was finally delivered to it by Taggart “on or about April 17, 2015.” (See Complaint at 58-61.) U.S. Bank correctly notes that it owed no fiduciary duty to the Estate or to Plaintiff in his capacity as Administrator of the Estate. (See Chazen v. Centennial Bank (1998) 61 Cal.App.4th 532, 537 [“It has long been regarded as axiomatic that the relationship between a bank and its depositor arising out of a general deposit is that of a debtor and creditor. A debt is not a trust and there is not a fiduciary relation between debtor and creditor as such. Accordingly, banks are not fiduciaries for their depositors.”])

As with the Property Sale Order the terms of the Blocked Account Order (exhibit A to the Complaint) control over any inconsistent or contradictory allegations by Plaintiff in the Complaint. The proper interpretation of the Blocked Account Order is a question of law for the Court even at the pleading stage. The Blocked Account Order makes no mention of U.S. Bank or any other financial institution and does not order any specific financial institution to perform any action. It instead states (at 6) that the “petitioner or petitioner’s attorney” (Infante or Taggart) “shall deliver a copy of this order to each depository in which funds are deposited under this order. The depository’s acknowledgement of receipt of this order and the funds shall be filed with this court within 15 days of deposit.” The apparent intention of the order, which was issued in response to a petition by Infante as Estate administrator, was for Infante (with or without Taggart’s assistance) to create a blocked account at a financial institution of her choosing. Infante’s (and possibly Taggart’s) alleged failure to do this is not attributable to U.S. Bank.

Again the Complaint admits at 58 that Defendant Taggart did not deliver a copy of the Blocked Account Order to U.S. Bank until “on or about April 17, 2015,” more than four months after Fidelity National deposited the property sale proceeds into the Estate Bank Account, which the Complaint admits (at 1 and 20) already existed at U.S. Bank. Estate funds that may have already been deposited in the Estate Bank Account at U.S. Bank prior to the December 4, 2014 would not be “funds deposited under this order,” and the order does not direct U.S. Bank or any other financial institution to transform an existing account into a blocked account. If that had been the intention the Order would have expressly identified the existing account or accounts to be blocked and the financial institutions involved. The Complaint also admits (at 36) that Defendant Taggart “never prepared the Receipt and never delivered it to U.S. Bank.” The Complaint does not identify any duty imposed on U.S. Bank by the Blocked Account Order or identify any failure to comply with the terms of the Blocked Account Order (such as a failure to file the Receipt) that can reasonably be attributed to U.S. Bank.

Therefore, U.S. Banks’s demurrer to the third cause of action on the ground that it fails to state sufficient facts is SUSTAINED with 10 days’ leave to amend.

3. Fidelity National’s Demurrer to the Cross-Complaint
Fidelity National demurrers to the first, second and fourth causes of action in the Cross-Complaint.

Fidelity National’s demurrer to the first cross-claim, Implied Indemnity, is SUSTAINED with 10 days’ leave to amend.

“Although the . . . categories of indemnity were once recognized as distinct, we now recognize there are only two basic types of indemnity: express indemnity and equitable indemnity. Though not extinguished, implied contractual indemnity is now viewed simply as ‘a form of equitable indemnity.’ . . . Express indemnity refers to an obligation that arises ‘by virtue of express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances.’ Express indemnity generally is not subject to equitable considerations or a joint legal obligation to the injured party; rather, it is enforced in accordance with the terms of the contracting parties’ agreement. . . . Unlike express indemnity, traditional equitable indemnity requires no contractual relationship between an indemnitor and an indemnitee. Such indemnity is ‘wholly derivative and subject to whatever immunities or other limitations on liability would otherwise be available’ against the injured party. This rule ‘is often expressed in the shorthand phrase . . . there can be no indemnity without liability.’ . . . [I]mplied contractual indemnity, like traditional equitable indemnity, is subject to comparative equitable apportionment of loss. . . . [I]mplied contractual indemnity is and always has been restitutionary in nature . . . Indeed, our recognition that ‘a claim for implied contractual indemnity is a form of equitable indemnity subject to the rules governing equitable indemnity claims’ corrects any misimpression that joint liability is not a component of such claims.” (Prince v. PG&E (2009) 45 Cal.4th 1151, 1157-1166, internal citations omitted.)

Post-Prince, a claim for indemnity where (as here) there is no alleged contractual relationship between the parties can only be one for equitable indemnity. Implied indemnity is now limited to situations where parties are in contract but the contract does not expressly address indemnity. While leave to amend is granted, unless Taggart can amend to allege a direct contractual relationship between herself and the Cross-Defendants there is no basis for an implied indemnity claim.

Fidelity National’s demurrer to the second cross-claim, Equitable Indemnity, is SUSTAINED with 10 days’ leave to amend.

“Equitable indemnity is an equitable doctrine that apportions responsibility among tortfeasors responsible for the same indivisible injury on a comparative fault basis. . . . A right of equitable indemnity can arise only if the prospective indemnitor and indemnitee are mutually liable to another person for the same injury.” (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1176-1177, internal citations omitted, emphasis added. See Also Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573-574 [“[U]nlike express indemnity, neither traditional equitable indemnity nor implied contractual indemnity is available ‘in the absence of a joint legal obligation to the injured party.’ [Citation.] Under this principle, ‘ “ ‘there can be no indemnity without liability,’ ” ’ that is, the indemnitee and the indemnitor must share liability for the injury. [Citation.] Thus, no indemnity may be obtained from an entity that has no pertinent duty to the injured third party [citation], that is immune from liability [citation], or that has been found not to be responsible for the injury [citation].”] )

As the Complaint as presently pled fails to sufficiently state any claim against Fidelity National, there is also at present no possibility of Taggart and Fidelity National being jointly liable to Plaintiff for the same indivisible injury.

Fidelity National’s demurrer to the fourth cross-claim, Declaratory Relief, is SUSTAINED with 10 days’ leave to amend.

A declaratory relief claim has two essential elements: (1) a proper subject of declaratory relief, and (2) an actual present controversy involving justiciable questions relating to the Plaintiff/Cross-Complainant’s rights or obligations. (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.) In order for a party to pursue an action for declaratory relief, the actual, present controversy must be pleaded specifically. Thus, a claim must provide specific facts, as opposed to conclusions of law, which show a controversy of concrete actuality. (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 513-514.) A party may not use a claim for declaratory relief to create a cause of action that otherwise does not exist. (Id. at 513.) A party also cannot establish the existence of actual, present controversy by pointing to the lawsuit in which he or she seeks declaratory relief. (See Cotati v. Cashman (2002) 29 Cal.4th 69, 79-80.)

As presently pled the declaratory claim has no supporting allegations, it simply incorporates by reference the preceding causes of action. As the first and second cross-claims presently fail to state sufficient facts against Fidelity National, the declaratory relief claim fails to state sufficient facts against Fidelity National as well.

4. U.S. Bank’s Demurrer to the Cross-Complaint
Like Fidelity National, U.S. Bank demurrers to the first, second and fourth causes of action in the Cross-Complaint on the ground that all three fail to state sufficient facts. U.S. Bank’s demurrer to all three cross-claims is SUSTAINED with 10 days’ leave to amend for the same reasons as Fidelity National’s demurrer, described above.

The first cross-claim for Implied Indemnity fails to state sufficient facts as alleged against U.S. Bank because (Post-Prince) there is no basis for such a claim unless Cross-Complaint Taggart can allege that a contractual relationship existed directly between herself and U.S. Bank (as opposed to one between Infante and/or the Estate and U.S. Bank). The second cross-claim for Equitable Indemnity fails to state sufficient facts as alleged against U.S. Bank because the underlying Complaint presently fails to state a claim against U.S. Bank. The fourth cross-claim for Declaratory Relief fails to state sufficient facts against U.S. Bank as it includes no supporting allegations of its own and simply incorporates the Cross-Complaint’s prior allegations by reference.