2017-00220055-CU-PO

Tim Kenworthy vs. Old Republic Title Company

Nature of Proceeding: Hearing on Demurrer

Filed By: Brody, James

Defendant Academy Mortgage Corporation’s Demurrer to Plaintiff’s Complaint is SUSTAINED, in part without leave to amend and OVERRULED in part.

This demurrer was originally calendared for hearing on Jan. 8, 2018, and has been continued several times by the moving parties.

The declaration of moving counsel reflects compliance with the meet and confer requirements of C.C.P., sec. 430.41.

Defendant’s Memorandum of Points and Authorities exceeds the 15 page limit provided in California Rules of Court, Rule 3.1113(d). Despite this failure to comply with the California Rules of Court, the Court has read and considered the entire 19 page document. The defense counsel is admonished to abide by the page limitations in future filings, absent an ex parte order permitting a longer memorandum.

Plaintiff’s complaint for damages arising out of the financial abuse of an elder sets forth four causes of action against a dozen defendants: the 1st for Elder Abuse (Welf. & Inst. Code, sec. §15600, et seq.), the 2nd for Breach of Fiduciary Duty, the 3rd for Negligence and the 4th for Fraud. Only the first three causes of action are alleged against moving defendant Academy Mortgage Corp. (“Academy”). Defendant Academy demurs to the 1st, 2nd and 3rd.

Lack of Standing – OVERRULED

Defendant demurs to the entire complaint on the grounds that plaintiff Tim Kenworthy, named as successor in interest to Donald Kenworthy has failed to file an affidavit as required by C.C.P., sec. 377.32 and Welf. & Inst. Code, § 15657.3(d) (B).

On Dec. 19, 2017, Tim Kenworthy filed such a declaration with the Court in this action. It was served by US Mail on Dec. 15, 2017, a week after this demurrer was filed. The right to commence or maintain an action shall pass to the decedent’s successor in interest, as defined in Section 377.11 of the Code of Civil Procedure. As plaintiff has complied with the statutory requirement, his standing has been established.

Although in reply, the moving party requests judicial notice of a Docket sheet in the matter of Estate of Donald Kenworthy, Santa Cruz Superior Court, case number 17PR000237, reflecting that Tim Kenworthy is a party to both this action and the pending probate proceeding. Defendant requests that based upon this docket, the Court conclude that plaintiff lacks standing as a probate proceeding is pending.

However, the Court cannot draw the inferences requested by the defendant from the docket entries that plaintiff’s declaration filed Dec. 19, 2017 is false.

A court may take judicial notice of the existence of each document in a court file, but can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments. Bach v. McNelis (1989) 207 Cal. App. 3d 852, 865.

The demurrer on this ground is therefore OVERRULED.

Demurrer to the 1st for Elder Abuse (Welf. & Inst. Code, sec. §15600, et seq.) is OVERRULED.

Defendant Academy demurs to this cause of action on the grounds that it is not pled with the required factual specificity as to Academy and on the grounds that it is not alleged that defendant Academy took any of the elder’s property.

The Elder Abuse and Dependent Adult Civil Protection Act (“the Act”) broadly defines financial abuse as occurring “when a person or entity … [t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder… for a wrongful use or with intent to defraud, or both” (Welf. & Inst. Code § 15610.30 (a) (1).) A defendant is “deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if…the person or entity takes, secrets, appropriates, obtains, or retains real or personal property” and “knew or should have known that this conduct is likely to be harmful to the elder.” (Welf. & Inst. Code §15610.30(b).)

A person or entity that assists in the foregoing conduct is also liable for elder abuse. (Welf. & Inst. Code § 15610.30 (a) (2); Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 478.) A taking is for a “wrongful use” when a party “knew or should have known that [its] conduct is likely to be harmful to the elder… adult,” (Welf. & Inst. Code § 15610.30 (b); Bounds, supra, 478-479.) As noted, for purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult. (Welf. & Inst. Code, § 15610.30(c; Bounds, supra, 479.)

Here, plaintiff has alleged that Academy took plaintiff’s personal property (origination fees and interest payments) as part of the real property transaction. (Compl. ¶ 37)

Alternatively, plaintiff has alleged that Academy assisted co-defendant Blakeney in her taking of an undivided 50% interest in the real property. (Compl. ¶ ¶ 39-41.) Here, the elder was “deprived” of a property right, as the transfer of title occurred. (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 480.)

Plaintiff has alleged that Academy’s taking and/or assistance in the taking was for a wrongful use. Plaintiff was 85 years old, Academy knew that Blakeney has no formal relationship with plaintiff, that she had a financial interest in the transaction (20% of the real estate commission, later a 50% interest in the real property) that she was not listed as a borrower on the loan, yet Academy never corresponded by telephone, email or letter directly with the plaintiff, instead directing all communications to Blakeney and her daughter Sittner. (Compl. ¶ ¶ 38, 39, 41, 42)

Plaintiff has also alleged that a prior lender, Defendant Homestreet refused to make a loan to plaintiff, but Academy steered Blakeney to claim the property as an “investment”, increasing the fees and interest, and Academy encouraged Blakeney to claim rental income, without ever questioning why an 85 year old plaintiff wanted an investment home in Hawaii. (Compl. ¶ ¶ 34-37)

Defendant Academy further supplied Blakeney and her daughter, Sittner, who also had no relationship with Plaintiff and was financially interested in the transaction as a prospective tenant, with a special power of attorney to expedite the signing of the loan, violating Fannie Mae’s lending guidelines in several respects. (Compl. ¶ ¶ 39- 41.)

Plaintiff has adequately pled that he was harmed, as he suffered the loss of hundreds of thousands of dollars in cash and real property interests. (Compl. ¶ ¶ 27, 41, 48.)

Demurrer to the 2nd for Breach of Fiduciary Duty is SUSTAINED, without leave to amend.

Plaintiff does not oppose the demurrer to this cause of action and does not request leave to amend. (Oppo. 6:12-13)

Demurrer to the 3rd for Negligence is SUSTAINED, without leave to amend.

Plaintiff does not oppose the demurrer to this cause of action and does not request leave to amend. (Oppo. 6:12-13)

Defendant Academy Mortgage Corporation shall file and serve its Answer to the remaining causes of action not later than Monday, March 26, 2018.