Opinion
G044047 Super. Ct. No. 07CC11310
09-30-2011
JAMES PIPER et al., Plaintiffs and Appellants, v. MKA REAL ESTATE OPPORTUNITY FUND I, LLC, Defendant and Respondent.
The Law Office of Leonard W. Stitz and Leonard W. Stitz for Plaintiffs and Appellants. Glaser Weil Fink Jacobs Howard Avchen & Shapiro, Craig H. Marcus and Elizabeth G. Chilton for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
Appeal from a judgment of the Superior Court of Orange County, David C. Velasquez, Judge. Request for judicial notice. Request granted. Judgment affirmed.
The Law Office of Leonard W. Stitz and Leonard W. Stitz for Plaintiffs and Appellants.
Glaser Weil Fink Jacobs Howard Avchen & Shapiro, Craig H. Marcus and Elizabeth G. Chilton for Defendant and Respondent.
BACKGROUND
This appeal is one small piece of the litigation ensuing from James Piper's claim that he is the victim of a real estate swindle by his former business associates, George Alvarez and Louis Trujillo. In broad overview, the story as told in the complaint is that Piper invested in a two-story office building in Irvine known as the Fitch Building. Then Alvarez or Trujillo forged his signature on various loan documents using the Fitch Building as security. The loans weren't paid, and Piper lost his investment. The main villains in the narrative are, of course, Alvarez and Trujillo, and entities purportedly controlled by them.
This appeal, however, concerns only Piper's claims against a lender, MKA Real Estate Opportunity Fund I (MKA). (To be precise, the case concerns the claims of Piper and a limited liability corporation known as "18071 Fitch Building LLC." For purposes of this appeal we will refer to both entities as "Piper.")
MKA's precise role in the scheme to defraud Piper is probably best described in Piper's opposition to MKA's demurrer. Here is that description: "MKA Real Estate knew that Alvarez and Trujillo caused Piper's name to be forged on the Forged Documents, accepted the Forged Documents as security on loans made by it to the Alvarez and Trujillo-related entities, and, knowing of the forgeries, caused the forged deeds of trust, which comprise a portion of the Forged Documents, to be recorded to its advantage, thereby furthering Alvarez and Trujillo's fraud against Piper." It is worth noting, in this regard, that the fifth amended complaint includes a cause of action against the notary public for falsely attesting to Piper's signature.
On the topic of notarization, we grant MKA's request, filed February 17, 2011, that we take judicial notice of one of the deeds of trust which are among the purportedly forged loan documents, this one securing a loan from MKA for about $1.22 million. (This particular deed of trust did not otherwise make it into the record.) MKA's point is that this deed of trust appears "properly notarized" and is "otherwise regular in every respect" (as are the others which are part of the record). On the other hand, the notary on this deed of trust attesting that "P. James Piper" was "personally known" to her and that he had indeed executed the document, was the same notary sued in cause of action No. 20. So we express no opinion as to the bona fides of the document. Forged or not, we grant the request so that there is no question as to the completeness of the record.
In this appeal Piper has chosen to press only some of the causes of action asserted against MKA in the fifth amended complaint, so we will concern ourselves only with those causes of action. (For example, we need not deal with any allegations that MKA violated the federal anti-racketeering law known as "RICO.") The causes of action which Piper still maintains to be viable are: breach of fiduciary duty (cause of action No. 9 in the fifth amended complaint), constructive fraud (No. 10), wrongful foreclosure (No. 17), and slander of title (No. 19). We note here that cause of action No. 9 for breach of fiduciary duty and No. 10 for constructive fraud are both framed as conspiracy claims.
DISCUSSION
1. Slander of Title and Wrongful Foreclosure
As framed in the fifth amended complaint, cause of action No. 17 for wrongful foreclosure is based on the theory that foreclosing on the Fitch Building was "wrongful" in light of the forged loan documents (specifically one for about $3.5 million which MKA had loaned on the property). As framed in the same complaint, cause of action No. 19 for slander of title is based on the theory that MKA has been wrongfully claiming an interest in the Fitch Building adverse to Piper.
a. additional facts bearing on the two claims
Foreclosure was originally scheduled for February 4, 2009. Piper sought a preliminary injunction to prevent that foreclosure, and the hearing on his motion was scheduled to be heard at 3:30 p.m. on February 3, 2009. Piper, in fact, filed a notice of intent to call live testimony at the hearing. MKA filed opposition to the motion for a preliminary injunction, which included the declaration of a handwriting expert who stated that the notarized signatures on the loan documents purporting to be Piper's really were Piper's.
However, literally hours before the hearing on the injunction, Piper filed for chapter 11 bankruptcy. About two months later, MKA sought relief from the automatic stay so as to complete the foreclosure.
Then, in June 2009, Piper entered into a stipulation in bankruptcy court on June 23, 2009, formally lifting the stay and allowing MKA and other creditors to "pursue their state law remedies" concerning the Fitch Building. The formal stipulation withdrawing opposition to MKA's relief from the stay motion contained recitals that (a) Piper, as debtor, was not admitting "that MKA's purported liens are valid," and (b) none of the parties "intend to waive" any of their rights under state law.
One week later, on July 1, 2009, MKA acquired the Fitch Building in a foreclosure sale. From what we can gather from the record, Piper did not follow up on his previous effort to obtain an injunction preventing the foreclosure. Indeed, in his opening brief, he candidly admits that he deliberately did not pursue any "provisional" remedies against the imminent foreclosure because any such relief would have required a bond or cash deposit.
b. analysis
The laches, defined as an unreasonable delay in asserting an equitable right to the prejudice of the other party (see California School Employees Ass'n v. Tustin (2007) 148 Cal.App.4th 510, 521) is apparent. Even though the one week interval between the stipulation and the foreclosure was a short one, there was still time to seek a state court order staying or preventing a foreclosure allegedly based on a forged document. After all, the bona fides of the forgery allegation were about to be adjudicated back in February, and the paperwork could be easily and cheaply updated. We also consider the prejudice to MKA. The issue of the forgery was about to be litigated in February, and the only thing that prevented it was Piper's own bankruptcy, clearly timed to prevent that very adjudication. Then Piper refrained from seeking adjudication of the matter when he had the chance in June, choosing instead to seek damages from MKA from a wrongful foreclosure rather than seek to prevent the foreclosure based on the alleged forgery. Moreover, if Piper really was so indigent that he could not have obtained a bond or posted the necessary cash to obtain a stay of the foreclosure, the trial court had authority, in consideration of all relevant factors, to waive the necessity of a bond or cash deposit. (Civ. Proc. Code, § 995.240.)
If a litigant like Piper has the chance to prevent something and foregoes the opportunity, he can hardly be heard to claim that that something was wrongful. (Weinberg v. Safeco Ins. Co. of America (2004) 114 Cal.App.4th 1075, 1082-1083 [insurer waived opportunity to contest arbitrator's award in excess of policy limits by not taking advantage of the opportunity to timely seek vacation or correction of arbitration award]; accord Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 33-34 [implied waiver will be found when "'party's acts are so inconsistent with an intent to enforce the right as to induce a reasonable belief that such a right has been relinquished'"].) Foregoing the opportunity to prevent a wrong was exactly what Piper did here.
There is also an allegation in the fifth amended complaint that theoretically deals with the process of the foreclosure. Namely, Piper alleges that MKA and the trustee under the deeds of trust, MTC Financial, "failed to comply with the provisions of the Civil Code of California in exercising the power of sale provisions of the [applicable deed of trust], declaring the default, and noticing and conducting the trustee's sale." There are, however, no allegations at all as to what "provisions" of the Civil Code are being referred to, or how those provisions were violated. Manifestly, these allegations are too general to support a cause of action for slander of title or wrongful foreclosure based on an already-accomplished nonjudicial foreclosure. Moreover, no argument is made in Piper's opening brief that identifies any faults in the process of foreclosure as distinct from the alleged forgery. Since we deal with, literally, Piper's sixth complaint, we may take it that Piper has no more facts to support any allegations to the effect that the trustee's sale was improperly conducted. The demurrer was properly sustained without leave to amend as to the wrongful foreclosure and slander of title claims.
If the wrongful foreclosure claim is precluded by Piper's failure to take action to prevent a wrongful foreclosure, his slander of title action necessarily falls as well. MKA can hardly be held liable for wrongfully asserting a property interest in the Fitch Building based on a foreclosure which Piper might have prevented, but choose not to prevent.
2. Breach of Fiduciary Duty, Constructive Fraud and Conspiracy Generally
Cause of action No. 9 for breach of fiduciary duty simply recounts why Alvarez and Trujillo had fiduciary duties to Piper, then asserts that MKA (and others) "were aware" of the intent of Alvarez and Trujillo to "deceive and defraud Piper," and finally claims that MKA "actively conspired and participated with Alvarez and Trujillo in performing the actions" that caused him to lose his investment.
MKA correctly points out that liability for conspiracy to commit a tort requires that the person to be held liable must be capable of committing that underlying tort. (See Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514 ["Conspiracy is not an independent tort; it cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles."].) Because, MKA, as a lender, had no fiduciary duty to Piper, it follows that MKA could not conspire to breach Alvarez's and Trujillo's fiduciary duties to Piper.
Cause of action No. 10 is framed in almost exactly the same terms as cause of action No. 9. The key phrase (again) is that MKA "actively conspired and participated" in the scheme to defraud Piper by means of forged loan documents. This time, though, the complaint puts a different label on MKA's liability, calling it "cause of action for constructive fraud." Cause of action No. 10 follows the same analysis as cause of action No. 9, so the absence of a fiduciary duty on MKA's part is dispositive. Because MKA owed no fiduciary duty to Piper, it cannot be held liable for conspiracy to commit constructive fraud. (Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1597 ["A nonfiduciary as well as a fiduciary owes a duty not to engage in actual fraud, but only a fiduciary owes a duty not to engage in constructive fraud." (Italics in original.)].)
We express no opinion as to whether Piper might have been able to plead a cause of action for MKA's aiding and abetting either Alvarez or Trujillo's breach of their own fiduciary duty, or for aiding and abetting their outright fraud against Piper. (See generally Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138.) What is significant in this regard is that this case comes to us after, literally, six complaints. Moreover, Piper, as appellant, has only supplied us with a copy of the last in that line of complaints, the fifth amended complaint. For all we know, a cause of action for aiding and abetting appeared somewhere in one of the previous complaints and Piper has subsequently abandoned it.
In any event, by the sixth attempt, the trial court was well within its discretion to deny Piper all leave to amend. (See Ruinello v. Murray (1951) 36 Cal.2d 687, 690 ["Although the deficiencies in plaintiff's complaints were raised in defendant's demurrers, after three attempts he has not overcome them. The trial court could reasonably conclude that he was unable to do so, and accordingly, it did not abuse its discretion in sustaining the demurrer to the third amended complaint without leave to amend."]; Tucker v. CBS Radio Stations, Inc. (2011) 194 Cal.App.4th 1246, 1256 ["Where several successive amended complaints have been vulnerable to demurrer on the same ground, the trial court may reasonably find the complaint is incapable of being amended to state a cause of action, and it is not an abuse of discretion to deny leave to amend."]; cf. Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175 [noting the "even if a good amendment is proposed in proper form, unwarranted delay in presenting it may of itself be a valid reason for denial" (internal quotation marks omitted)].)
DISPOSITION
The trial court correctly sustained without leave to amend the demurrers to causes of action Nos. 9, 10, 17 and 19 against MKA. Moreover, after no less than five prior attempts to state a cause of action, the trial court was well within its discretion to deny the plaintiff all leave to amend.
Accordingly, the judgment is affirmed. Respondent MKA shall recover its costs on appeal.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
O'LEARY, J.
ARONSON, J.