Demurrer with Motion to Strike in CONSOLIDATED WITH 19CECG00924| Trellis.Law

On June 30, 2020 a Motion-Secondary was filed involving a dispute between Lemons, Cheri B, and First American Title Company, Moreno, Stephany, for 42 Unlimited - Other Complaint (not specified) in the District Court of Fresno County.

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1 Jeffrey H. Lowenthal (State Bar No. 111763)
Dana M. Andreoli (State Bar No. 262068)
2 E-FILED
Jill K. Cohoe (State Bar No. 296844) 1/6/2021 10:56 AM
STEYER LOWENTHAL BOODROOKAS
3 ALVAREZ & SMITH LLP Superior Court of California
235 Pine Street, 15th Floor County of Fresno
4 San Francisco, California 94104 By: C. York, Deputy
Telephone: (415) 421-3400
5 Facsimile: (415) 421-2234
E-mail: jlowenthal@steyerlaw.com
6 dandreoli@steyerlaw.com
jcohoe@steyerlaw.com
7

8 Attorneys for Defendants
First American Title Company, a California corporation;
9 Stephany Moreno, an individual
10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
FOR THE COUNTY OF FRESNO - CENTRAL COURTHOUSE
12

13
CHERI B. LEMONS, TRUSTEE OF THE, Case No. 20CECG01868
14 BALLANTYNE FAMILY TRUST Assigned for all purposes to: Hon. D. Tyler
SEPARATE PROPERTY BYPASS Tharpe, Dept. 402
15 TRUST, CREATED PURSUANT TO
THE BALLANTYNE FAMILY TRUST DEFENDANTS’ REPLY IN SUPPORT OF
16 DATED JANUARY 6, 2006, AMENDED DEMURRER TO COMPLAINT AND
AND RESTATED JUNE 14, 2007, AND MOTION TO STRIKE PUNITIVE DAMAGES
17 AMENDED JULY 6, 2007,
Date: January 13, 2021
18 Plaintiff, Time: 2:00 p.m.
Dept: 402
19 v. Judge: Hon. D. Tyler Tharpe

20 FIRST AMERICAN TITLE COMPANY, Action Filed: June 30, 2020
a California corporation; STEPHANY Trial Date: Not Assigned
21 MORENO, an individual; and DOES 1
through 20, inclusive,
22
Defendants.
23

DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 TABLE OF CONTENTS
Page
2

3 I. INTRODUCTION ........................................................................................................... 5
4 II. DISCUSSION .................................................................................................................. 6
A. PROBATE CODE §18100 ET SEQ. SHIELDS FIRST AMERICAN
5 FROM LIABILITY.............................................................................................. 6
6 B. THE LAW IS WELL-ESTABLISHED THAT AN ESCROW HOLDER
OWES NO DUTY TO A THIRD PARTY .......................................................... 7
7 C. PLAINTIFF SEEKS TO IMPERMISSIBLY EXPAND THE WELL-
DEFINED LIMITED ROLE OF AN ESCROW HOLDER .............................. 10
8
D. THE COMPLAINT FAILS TO STATE A CAUSE OF ACTION FOR
9 SLANDER OF TITLE BECAUSE IT DOES NOT ALLEGE MALICIOUS
OR INTENTIONAL CONDUCT ...................................................................... 11
10 E. THE DEMURRER SHOULD BE SUSTAINED AS TO MORENO FOR
THE ADDITIONAL REASON THAT SHE WAS ACTING WITHIN
11 THE COURSE AND SCOPE OF HER EMPLOYMENT AT ALL TIMES
ALLEGED IN THE COMPLAINT ................................................................... 13
12
F. THE MOTION TO STRIKE PUNITIVE DAMAGES SHOULD BE
13 GRANTED WITHOUT LEAVE TO AMEND ................................................. 13
G. LEAVE TO AMEND SHOULD BE DENIED ................................................. 14
14
III. CONCLUSION .............................................................................................................. 14
15

28
2
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
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1 TABLE OF AUTHORITIES
Page
2
Cases
3 Alereza v. Chicago Title Co. (2016) 6 Cal.App.5th 551 ............................................................ 8, 9
4 Biakanja v. Irving, 49 Cal.2d 647 ...................................................................................... 8, 10, 13
5 Brousseau v. Jarrett (1977) 73 Cal.App.3d 864 .......................................................................... 14
6 Fed. Deposit Ins. Corp. v. Commerce Land & Title, Inc. (C.D. Cal. 2012) 2012 WL
1300844 ............................................................................................................................... 8, 13
7
Golden Security Thrift & Loan Ass’n (1997) 53 Cal.App.4th 250 .............................................. 11
8
Hedwall v. PCMV, LLC (2018) 22 Cal.App.5th 564 ................................................................... 14
9
Herbert v. Los Angeles Raiders, Ltd. (1991) 23 Cal.App.4th 414 ............................................... 14
10
Kirby v. Palos Verdes Escrow Company, Inc., (1986) 183 Cal.App.3d 57 ................................... 7
11
Lawrence v. Bank of America (1985) 163 Cal.App.3d 431 ......................................................... 14
12
Lee v. Title Ins. & Trust Co. (1968) 264 Cal.App.2d 160...................................................... 10, 11
13
Sanborn v. Chronicle Pub. Co. (1976) 18 Cal.3d 406 ................................................................. 12
14
Seely v. Seymour (1987) 190 Cal.App.3d 844 ................................................................... 8, 11, 12
15
Summit Financial Holdings, Inc. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705 . 7, 8, 9,
16 10
17 Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153 ........................................ 14
18 Timperly v. Chase Collection Service (1969) 272 Cal.App.2d 697 ............................................. 12
19 Triple A Mgmt. Co., Inc. v. Frisone (1999) 69 Cal.App.4th 520 ................................................. 13
20 Vournas v. Fidelity National Title Ins. Co. (1999) 73 Cal.App.4th 668 .......................... 5, 6, 7, 10
21
Statutes
22 Civil Code §47(c) ......................................................................................................................... 12
23 Probate Code §18100 ............................................................................................................. 5, 6, 7
24 Probate Code §18102 ..................................................................................................................... 6
25 Probate Code §18105 ..................................................................................................................... 6
26

28
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DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 Other Authorities
3 Miller & Starr, Cal. Real Estate (3d ed. 2010) §6:18.................................................................. 7
2
Greenwald & Bank, Cal. Prac. Guide: Real Property Transactions (The Rutter Group
3 2020), Ch. 4-F, §4:646 ............................................................................................................... 7
4

28
4
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 I. INTRODUCTION
2 Plaintiff’s 1 opposition is nothing more than a futile attempt to distinguish cases that are on
3 point and conclusively establish that Plaintiff’s claims against First American fail as a matter of
4 law. Notably, Plaintiff does not cite a single case where a court held an escrow holder owes the
5 expansive duties to a third party that Plaintiff seeks to impose on First American in this action.
6 Moreover, Plaintiff admits that any purported injuries she suffered have already been remedied by
7 the Probate Court in Tulare County ordering the return of all trust assets to Plaintiff.
8 Contrary to Plaintiff’s argument in opposition, Probate Code §18100 et seq. bars
9 Plaintiff’s claims against First American. There is no support in the plain language of the statute
10 or otherwise that Section 18100 does not apply to a situation where an individual wrongfully
11 holds herself out as a trustee. See Vournas v. Fidelity National Title Ins. Co. (1999) 73
12 Cal.App.4th 668, 673 (“Section 18100 protects third parties who deal with or assist the trustee by
13 excusing them from investigating and permitting them to assume the existence of a trust power
14 and its proper exercise, except where the third parties have actual knowledge of a breach of the
15 trust.”).
16 Moreover, Plaintiff’s arguments require the Court to impermissibly ignore years of well-
17 established escrow law, including California Supreme Court precedent, providing that an escrow
18 holder only owes a limited duty to the parties to the escrow to strictly comply with the escrow
19 instructions. Accordingly, Plaintiff’s negligence cause of action fails as a matter of law.
20 Additionally, Plaintiff cannot establish that First American acted maliciously. The facts
21 alleged in the Complaint make clear that First American reasonably relied on Janice’s
22 declarations under penalty of perjury that she was a successor trustee of the Bypass Trust with the
23 authority to transfer the Subject Property. Plaintiff’s argument that First American acted
24 intentionally to harm Plaintiff belies logic. The Complaint alleges that First American issued a
25 policy of title insurance insuring the transfer. Why would First American insure a transaction that
26 it knew or had reason to believe was fraudulent? At most, Plaintiff has alleged poor
27
1
28 The definitions set forth in First American’s moving papers also apply herein.
5
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
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1854829.1 - F.LEMONS
1 underwriting; Plaintiff certainly has not alleged malicious conduct, defeating her slander of title
2 cause of action and claim for punitive damages.
3 Finally, Plaintiff’s claims additionally fail against escrow officer Moreno because Plaintiff
4 has failed to allege that Moreno engaged in any tortious conduct.
5 Therefore, as explained in First American’s moving papers and below, First American’s
6 demurrer and motion to strike the complaint should be sustained and granted without leave to
7 amend.
8 II. DISCUSSION
9 A. PROBATE CODE §18100 ET SEQ. SHIELDS FIRST AMERICAN FROM
LIABILITY
10
Plaintiff argues, without citing to any authority, that First American is not protected from
11
liability by the provisions of Probate Code §18100 because Janice falsely claimed to be the
12
trustee of the Bypass Trust. However, the Complaint alleges that Janice executed Affidavits to
13
hold herself out as the successor trustee of the Bypass Trust, as expressly permitted under Probate
14
Code §18105, and First American relied on those Affidavits in facilitating the transaction. Per the
15
plain language of Section 18100, First American, a third party that acted in good faith without
16
actual knowledge that Janice was “improperly exercising” power over the trust, is “fully protected
17
in dealing with or assisting the trustee just as if the trustee has and is properly exercising the
18
power the trustee purports to exercise.” Vournas, 73 Cal.App.4th at 673 (“Section 18100 protects
19
third parties who deal with or assist the trustee by excusing them from investigating and
20
permitting them to assume the existence of a trust power and its proper exercise, except where the
21
third parties have actual knowledge of a breach of the trust.”) (emphasis added). The Complaint
22
does not allege that First American had actual knowledge of any breach of the Bypass Trust, and
23
as such, First American is entitled to the protections of Section 18100.
24
Moreover, Plaintiff’s argument that Section 18100 only protects third parties dealing with
25
actual trustees must be rejected in light of Probate Code §18102, which provides that a third party
26
is entitled to the protections of section 18100 in dealing with a former trustee. A former trustee
27
has no authority or power to control trust property, but third parties are nonetheless protected.
28
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DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 Why should the result be any different because an innocent third party relies on a statutorily
2 prescribed affidavit of change of trustee instead of an outdated trust document? The Legislature
3 enacted Probate Code §18100 et seq. “to give greater protection to third parties in transactions
4 involving trust property” and there is no reason why it should not apply to the circumstances
5 alleged in the Complaint. Vournas, 73 Cal.App.4th at 673, fn. 4. First American’s demurrer
6 should be sustained without leave to amend.
7 B. THE LAW IS WELL-ESTABLISHED THAT AN ESCROW HOLDER OWES NO
DUTY TO A THIRD PARTY
8
In her opposition, Plaintiff fails to cite to a single case holding that an escrow holder owes
9
a duty to strangers to the escrow. This is because no such case law exists. California courts have
10
consistently recognized and affirmed the limited duties owed by escrow holders to parties to the
11
escrow and have likewise consistently rejected attempts to impose a duty owed to third parties. In
12
Summit Financial Holdings, Inc. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 713, the
13
California Supreme Court expressly rejected the holding of Kirby v. Palos Verdes Escrow
14
Company, Inc., 2 “the only California case that holds an escrow holder can be liable to strangers to
15
the escrow for injuries allegedly caused by the escrow holder following its principals’
16
instructions.” The Court found that the “novel legal conclusion” of Kirby is “not convincing” and
17
concluded that “subjecting an escrow holder to conflicting obligations” would undermine the
18
“valuable business procedure” provided by escrow holders. Id. at 713, 716.
19
Since the California Supreme Court’s decision in Summit, courts have uniformly held that
20
an escrow holder owes no duty to third parties under California law. See First American’s MPA,
21
pp. 9:2-10:9; see also 3 Miller & Starr, Cal. Real Estate (3d ed. 2010) §6:18 (“an escrow holder
22
owes duties only to the parties to the escrow, not to third parties”); Greenwald & Bank, Cal. Prac.
23
Guide: Real Property Transactions (The Rutter Group 2020), Ch. 4-F, §4:646 (“Escrow holders
24
owe a duty of care only to the parties to and participants in the escrow. Consequently, escrow
25
holders who follow their principals’ instructions ordinarily cannot be held liable to strangers to
26

27
2
28 (1986) 183 Cal.App.3d 57
7
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
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1 the escrow on a negligence theory.”) (emphasis in original).
2 Plaintiff urges the Court to ignore years of well-established law and instead follow the 33
3 year old case of Seely v. Seymour and apply the Biakanja factors to find a duty that has not been
4 recognized in any other case and has been expressly rejected by the California Supreme Court.
5 As one court has explained, applying the Biakanja factors to determine if an escrow holder owes
6 a duty to a third party is unnecessary in light of the California Supreme Court’s holding in Summit
7 that no such duty is owed as a matter of policy:
8 [T]he [Biakanja] factors mentioned in Summit were not crafted
specifically for the purpose of determining escrow holders’ duties to
9 strangers to the escrow. Rather, the six-factor test was adopted nearly
fifty years earlier, for the purpose of determining whether as a matter
10 of policy a defendant owes a duty to a third person not in privity with
the parties to a transaction. See Biakanja v. Irving, 49 Cal.2d 647.
11 In Summit, the court merely applied these factors to the question of
liability of an escrow agent to a non-party to the escrow.
12 Accordingly, post-Summit, courts have generally not considered
it necessary to undertake this test with respect to each and every
13 case involving escrow liability to a stranger to the escrow, instead
reading Summit for the more general proposition that under
14 the Biakanja test, as a matter of policy, escrow agents are
generally not liable to third parties. See, e.g., Gateway Bank, FSB
15 v. Ticor Title Co. of Cal., No. A121398, 2009 WL 4190455, at *14
(Cal. Ct. App. Nov. 25, 2009) (noting that the court in Summit had
16 applied the Biakanja test and stating that since the instant plaintiff
was likewise not a party to the escrow, “the Supreme
17 Court's Summit analysis appears to us to be controlling”).

18 Fed. Deposit Ins. Corp. v. Commerce Land & Title, Inc. (C.D. Cal. 2012) 2012 WL 13008444 at

19 *3 (emphasis added). In any event, application of the Biakanja factors to the matter at hand

20 further compels the conclusion that First American did not owe Plaintiff a duty as a matter of law.

21 First, the transaction was not intended to affect Plaintiff because Plaintiff was not a party to the

22 escrow. See Alereza v. Chicago Title Co. (2016) 6 Cal.App.5th 551, 560 (transaction not

23 intended to affect plaintiff because “the escrow completed a sale that did not involve [plaintiff]

24 personally as buyer or seller”).

25 Second, the harm to Plaintiff was not foreseeable. Plaintiff does not and cannot allege that

26 First American had any actual knowledge that Janice was not a successor trustee of the Bypass

27 Trust at any time during the Subject Escrow, given that Janice affirmed under penalty of perjury

28
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DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 twice that she was a successor trustee. ¶¶20-21, Exs. 6-7. 3 Because First American reasonably
2 relied on Janice’s representations in believing that Janice was the successor trustee with the
3 authority to transfer the Subject Property at the time of the escrow, it was not foreseeable to First
4 American that a third party would be harmed by the transfer of the Subject Property.
5 Third, the degree of certainty that Plaintiff suffered injury militates against a finding of
6 duty. As admitted by Plaintiff in the Complaint, on November 26, 2018, the Probate Court in
7 Tulare County issued an order requiring Janice to transfer all assets of the Bypass Trust to
8 Plaintiff. ¶1, Ex. 1. Accordingly, Plaintiff has not suffered injury as a result of First American’s
9 conduct because she can enforce the Probate Court’s order and seek the return of the sale
10 proceeds and any purported damages from Janice.
11 As to the fourth and fifth factors, the connection between First American acting as escrow
12 holder and Plaintiff’s injury was not close and the moral blame for the alleged harm to Plaintiff
13 falls squarely on Janice, who represented under penalty of perjury that she was the successor
14 trustee of the Bypass Trust with the requisite authority to convey the Subject Property. First
15 American’s role was limited to acting as escrow holder for what it reasonably believed to be a
16 legitimate transaction. These factors weigh heavily against imposition of a duty. See Summit, 27
17 Cal.4th at 716 (“[c]ompliance by [the escrow holder] with its fiduciary duty to follow the
18 instructions of the parties to the escrow was not blameworthy and is, instead, a policy
19 consideration that militates against concluding [the escrow holder] had a tort duty in this case”).
20 Finally, as held repeatedly by California courts, public policy considerations support
21 limiting the duty owed by escrow holders to strict compliance with the parties’ escrow
22 instructions. Summit, 27 Cal.4th at 716 (the policy of preventing future harm does not support
23 imposition of a duty upon the escrow holder to protect nonparties to the escrow from financial
24 harm, at the cost of potentially “subjecting an escrow holder to conflicting obligations [and]
25 undermin[ing] a valuable business procedure”); Alereza, 6 Cal.App.5th at 561 (policy of
26 preventing future harm does not require imposing a new legal duty to third parties on escrow
27
3
28 All paragraph and exhibit references refer to the Complaint.
9
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 holder because “[e]scrow companies already owe a fiduciary duty to parties to an escrow to
2 properly carry out all escrow instructions” and “[f]or this reason, escrow companies already have
3 both duties and incentives to faithfully execute the escrow instructions of the parties”); Lee v.
4 Title Ins. & Trust Co. (1968) 264 Cal.App.2d 160, 163 (expanding duties owed by escrow holder
5 beyond following escrow instructions “would effectively discourage a reasonable and prudent
6 man or company from acting as an escrow holder and would ultimately defeat the very purpose
7 for which escrows originated”).
8 Accordingly, pursuant to well-established law, First American did not owe a duty to
9 Plaintiff, a stranger to the escrow. Although applying the Biakanja factors is unnecessary in light
10 of this well-established policy, a review of the Biakanja factors compels the conclusion that First
11 American did not owe Plaintiff a duty to verify ownership of the Subject Property as a matter of
12 law. The demurrer to the negligence cause of action should be sustained without leave to amend.
13 C. PLAINTIFF SEEKS TO IMPERMISSIBLY EXPAND THE WELL-DEFINED
LIMITED ROLE OF AN ESCROW HOLDER
14
Plaintiff’s argument that First American owed her a duty to confirm ownership of the
15
Subject Property entirely misrepresents the well-established limited role of an escrow holder.
16
“The agency created by the escrow is limited – limited to the obligation of the escrow holder to
17
carry out the instructions of each of the parties to the escrow.” Summit, supra, 27 Cal.4th at 711.
18
Thus, as explained in First American’s moving papers, while an escrow holder owes the parties to
19
the escrow a duty to strictly comply with the instructions of the parties, “an escrow holder ‘has no
20
general duty to police the affairs of its depositors.’” Id. Critically, Plaintiff fails to cite any case
21
law holding that an escrow officer owes a duty to confirm property ownership. Again, this is
22
because no such authority exists, as any such holding would contradict the well-established law
23
that an escrow holder’s duty is limited to complying with the parties’ escrow instructions.
24
To the extent Plaintiff contends that First American owed Plaintiff a duty to confirm
25
ownership of the Subject Property because First American Title Insurance Company issued a title
26
insurance policy in connection with the transaction, such argument is similarly misplaced. In
27
Vournas v. Fidelity Nat. Title Ins. Co. (1999) 73 Cal.App.4th 668, the court expressly rejected the
28
10
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 plaintiff’s argument that the title insurer owed a duty to investigate, holding that the plaintiff
2 “misconstrues the nature and limited scope of a title insurer’s obligations.” Id. In concluding that
3 no duty was owed by the title insurer, the Court stated: “The Legislature has eliminated any duty
4 to investigate [on the part of the title company], and we decline to undercut the legislative
5 determination by a judicial rule that imposes on [the title company] to police the activities of [the
6 trustee] merely because [the title company] sold a [] title insurance policy…” Id. at 677; see also
7 Golden Security Thrift & Loan Ass’n (1997) 53 Cal.App.4th 250, 259 (“A title policy is not a
8 summary of the public records and the insurer is not supplying information; to the contrary he or
9 she is giving a contract of indemnity.”) (emphasis in original). Moreover, like an escrow holder, it
10 is well-established that a title insurer owes no duty to third parties. Lee v. Fidelity National Title
11 Ins. Co. (2010) 188 Cal.App.4th 583, 596 (“A party who does not purchase title insurance may
12 not rely on the title insurer to protect his or her interests or to disclose all detrimental information
13 contained in the recorded files.”).
14 As demonstrated above and in First American’s moving papers, the limited duties owed
15 by an escrow holder and title insurer are well-established. Plaintiff is unable to cite to any case
16 law that supports her argument that an escrow holder or title insurer owe a duty to investigate
17 property ownership for the benefit of a third party to the transaction because no such case law
18 exists. First American did not owe Plaintiff a duty as a matter of law and the demurrer to the
19 cause of action for negligence should be sustained without leave to amend.
20 D. THE COMPLAINT FAILS TO STATE A CAUSE OF ACTION FOR SLANDER
OF TITLE BECAUSE IT DOES NOT ALLEGE MALICIOUS OR INTENTIONAL
21 CONDUCT
22 There can be no question that privilege is a valid defense to a cause of action for slander
23 of title. Indeed, Seely v. Seymour (1987) 190 Cal.App.3d 844, 857, a case relied on by Plaintiff in
24 support of her opposition, states that “California has adopted the definition of the tort set forth in
25 section 624 of the Restatement of Torts,” which provides that a slander of title cause of action
26 only lies against “[o]ne who, without a privilege to do so, publishes matter which is untrue and
27 disparaging to another’s property in land…” (Emphasis added.)
28 Whether First American’s recordation of the Affidavits and Grant Deed was privileged is
11
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
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1854829.1 - F.LEMONS
1 governed by Civil Code §47(c). Plaintiff does not argue that First American’s recordation of the
2 Affidavits and Grant Deed does not fall under the common interest privilege of Section 47(c), nor
3 could she. As explained in First American’s moving papers, the facts alleged in the Complaint
4 make clear that First American’s actions in recording the Affidavits and Grant Deeds in the
5 regular course of business at the request of the parties to the escrow fall under the three prongs of
6 Civil Code §47(c). See First American’s MPA, p. 12:7-24.
7 Instead, Plaintiff argues that the Complaint adequately alleges malice because of the
8 conclusory statement at paragraph 32 that First American acted “intentionally and without
9 justification” in causing the recordation of the Affidavits and Grant Deed. This conclusory
10 statement is insufficient to establish malice to withstand demurrer. Timperly v. Chase Collection
11 Service (1969) 272 Cal.App.2d 697, 701 (“bare allegation that respondents’ acts were ‘wilful,
12 deliberate, and malicious,’ without a recitation of facts tending to show malice, is merely
13 conclusory and thus is insufficient to support the complaint”).
14 Critically, the Complaint alleges that First American issued a policy of title insurance
15 insuring the transfer. ¶23, Ex. 9. In light of this fact, Plaintiff’s contention that First American
16 acted with malice makes no sense. Why would First American insure a transaction that it knew
17 or had reason to believe was fraudulent? Accordingly, because the Complaint fails to allege that
18 First American acted with malice, the privilege afforded by Civil Code §47(c) precludes
19 Plaintiff’s slander of title claim as a matter of law. There are no facts alleged in the Complaint
20 establishing that First American actions were “motivated by hatred or ill will towards plaintiff.”
21 Sanborn v. Chronicle Pub. Co. (1976) 18 Cal.3d 406, 413. Further, contrary to Plaintiff’s
22 argument in opposition, the facts alleged establish that First American did not “lack[] reasonable
23 grounds for its belief in the truth of the publication,” (Id.) because Janice attested to the fact that
24 she was the successor trustee of the Bypass Trust with the authority to transfer the Subject
25 Property and First American did not have actual knowledge that Janice’s statements made under
26 penalty of perjury were untrue.
27 Additionally, as stated in Seely, California has adopted the Restatement rule which defines
28 slander of title as an intentional tort. Seely, 190 Cal.App.3d at 857. Accordingly, Plaintiff’s
12
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 argument that First American cites no case authority for the proposition that slander of title is an
2 intentional tort must be rejected. 4 Plaintiff’s argument that Seely held a slander of title cause of
3 action can arise from negligent acts should likewise be rejected. The Court in Seely applied the
4 Biakanja factors in discussing a negligence cause of action, not to determine whether a slander of
5 title cause of action was established. Id. at 860-862. Because slander of title is an intentional tort
6 and the Complaint fails to allege any facts establishing that First American acted with the intent
7 to injure Plaintiff, the demurrer to the cause of action for slander of title should be sustained
8 without leave to amend.
9 E. THE DEMURRER SHOULD BE SUSTAINED AS TO MORENO FOR THE
ADDITIONAL REASON THAT SHE WAS ACTING WITHIN THE COURSE
10 AND SCOPE OF HER EMPLOYMENT AT ALL TIMES ALLEGED IN THE
COMPLAINT
11
Plaintiff admits that it is “generally true that an agent, when acting in the name of a
12
disclosed principal, is not personally liable for negligence committed within the scope of his or
13
her employment…” and that liability of an agent may arise under one of two exceptions – the
14
dual agency exception or the special duty exception. See Opposition, p. 12:9-12. The Complaint
15
fails to allege any facts establishing that Moreno engaged in tortious conduct that would bring her
16
within an exception to the general rule that a disclosed agent is not liable for torts committed
17
within the scope of her agency. Because the facts alleged in the Complaint establish that at all
18
relevant times Moreno was acting within the course and scope of her employment at First
19
American, Moreno is not personally liable for the purported tortious conduct. ¶¶19-22.
20
Accordingly, Moreno’s demurrer to the Complaint should be sustained without leave to amend.
21
F. THE MOTION TO STRIKE PUNITIVE DAMAGES SHOULD BE GRANTED
22 WITHOUT LEAVE TO AMEND
23 Plaintiff’s argument that she has sufficiently alleged malice to support an award of
24
4
25 First American also cites to Miller & Starr in its moving papers for the proposition that slander
of title is an intentional tort. “Miller & Starr is a highly regarded treatise on California law
26 commonly looked to by California courts in resolving escrow-related cases.” Fed. Deposit Ins.
Corp. v. Commerce Land & Title, Inc. (C.D. Cal. 2012) 2012 WL 13008444 at *3; see also Triple
27 A Mgmt. Co., Inc. v. Frisone (1999) 69 Cal.App.4th 520, 533-534 (“The well-regarded treatise on
California real estate law by Miller and Starr contains a detailed and extensive summary of the
28 law of agency as it applies to real estate transactions and escrow agents.”).
13
DEFENDANTS’ REPLY IN SUPPORT OF DEMURRER TO COMPLAINT AND MOTION TO STRIKE
PUNITIVE DAMAGES
1854829.1 - F.LEMONS
1 punitive damages should be rejected. As discussed in section C, supra, there are no facts alleged
2 in the Complaint establishing that First American acted with the intent to injure Plaintiff or
3 recklessly disregarded Plaintiff’s rights. Plaintiff’s conclusory statement that First American
4 acted “intentionally and without justification” is insufficient to support a claim for punitive
5 damages. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872 (conclusory allegations that
6 conduct was malicious, fraudulent, or oppressive “patently insufficient” to state a claim for
7 punitive damages). Therefore, the motion to strike the claim for punitive damages should be
8 granted without leave to amend.
9 G. LEAVE TO AMEND SHOULD BE DENIED
10 As demonstrated above, Plaintiff cannot state a cause of action against First American as a
11 matter of law. Accordingly, the demurrer is properly sustained without leave to amend.
12 Lawrence v. Bank of America (1985) 163 Cal.App.3d 431, 436 (“Leave to amend should be
13 denied where the facts are not in dispute and the nature of the claim is clear but no liability exists
14 under substantive law.”). Moreover, the burden of establishing that the Complaint can be
15 amended to state a viable claim rests squarely on Plaintiff. Tarmann v. State Farm Mut. Auto Ins.
16 Co. (1991) 2 Cal.App.4th 153, 156; Herbert v. Los Angeles Raiders, Ltd. (1991) 23 Cal.App.4th
17 414, 425-26. As held in Hedwall v. PCMV, LLC (2018) 22 Cal.App.5th 564, 579, leave to amend
18 should be denied where “the plaintiff fails to demonstrate the possibility of amendments curing
19 the…complaint’s defects.” Plaintiff fails to demonstrate how she could amend the Complaint to
20 state a viable claim against First American. Accordingly, the demurrer and motion to strike
21 should be sustained without leave to amend.
22 III. CONCLUSION
23 For the foregoing reasons, First American respectfully requests that the Court sustain its
24 demurrer to the Complaint and grant its motion to strike without leave to amend.
25

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McGuire, Rosemary Track Judge’s New Case

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January 06, 2021

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June 30, 2020

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Motion-Secondary: CONSOLIDATED WITH 19CECG00924

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