Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, Ct. No. 07CC05110, Kim Garlin Dunning, Judge.
Weiss & Hunt, Thomas J. Weiss and Hyrum K. Hunt for Cross-complainants and Appellants.
Gibbs, Giden, Locher, Turner & Senet, and James I. Montgomery, Jr., for Cross-defendant and Respondent.
O’LEARY, J.
Royale Westminster Retirement, LLC (Royale) and its sole member, Reza Safaie (Safaie) appeal from a summary judgment entered in favor of a title insurance carrier, Commonwealth Land Title Insurance Company (Commonwealth). Royale, Safaie and Commonwealth were all sued by Desmond Fischer, a victim of real estate fraud. Simply stated, Royale was one of several entities that purchased Fischer’s property based on a forged deed, and they resold it to a third party. This appeal however concerns only the cross-complaint Royale and Safaie filed against Commonwealth seeking insurance coverage in response to the cross-complaint Commonwealth filed against Royale for fraud and equitable indemnity. We conclude the trial court properly granted summary judgment and also find no merit in the contention the trial court’s order was procedurally invalid. We affirm the judgment.
I
This action arises out of real estate fraud involving Fischer’s real property. The wrongdoer, Nicholas Herbert, forged a deed conveying title to Fischer’s property to Herbert’s company, Gold Coast Investments, Inc. (Gold Coast). Herbert then promptly obtained two loans on the property ($750,000 and $500,000) secured by two deeds of trust.
Approximately one month later, Royale took title to the property under a grant deed executed by Herbert and Gold Coast. Twelve days after that, Texmark Enterprises, LLC (Texmark), owed by John Kia, took title to the property under a grant deed executed by Royale and its sole member, Safaie. In addition, the parties recorded a deed of trust encumbering the property for $1,450,000 and designating Texmark as trustor, Royale as beneficiary, and Burrow Escrow Services as trustee.
Commonwealth issued a title insurance policy to Texmark relating to the transfer of property from Royale to Texmark. Neither Royale or Safaie were named insureds to this standard CLTA (California Land Title Association) Homeowners Policy of Title Insurance. A separate lender’s policy of title insurance was also issued to Edge Capital Inc. (Edge) regarding a loan it made to Texmark secured by the property. Edge recorded a deed of trust encumbering the property for $3,550,000. On this deed, Texmark is described as the trustor, Edge as the beneficiary, and New Century Title Company as the trustee.
When Fischer discovered Herbert’s forged grant deed, he sued everyone in the false chain of title, including title and escrow companies involved in the various transactions. In December 2007, Fischer moved for summary judgment seeking to clear title by voiding all the instruments purporting to transfer and encumber his property. In response to the motion, on March 19, 2008, Royale and Safaie filed a disclaimer of any interest in the property in a pleading titled “limited non-opposition to motion for summary adjudication” of Fischer. The court granted Fischer’s motion for summary adjudication to quite title to his property and cancelled all instruments purporting to transfer the property.
Fischer settled his claim against Commonwealth, and in June 2008, it obtained from the trial court a good faith settlement and order barring cross-complaints not based on express indemnity. Commonwealth filed a cross-complaint against Safaie for fraud and equitable indemnity, seeking reimbursement for payments made to its insured (Edge). Royale was not a named party to this cross-complaint.
Thereafter, Safaie and Royale filed a cross-complaint against Commonwealth for declaratory relief and indemnity, claiming to be insured under a joint protection title policy. They sought indemnity and a defense in actions filed against them, including the cross-complaint filed by Commonwealth.
Commonwealth filed a motion for summary judgment against Safaie and Royale contending they were not entitled to indemnity or a defense as a matter of law. It argued summary judgment should be entered because: (1) Safaie and Royale were not insured under any title insurance policy issued by Commonwealth; (2) they are not a third party beneficiary to any policy; (3) Royale lacks standing to pursue the cross-complaint; (4) a joint protection policy would not provide coverage for indemnification because the title issues were resolved and also barred by the good-faith settlement; (5) Safaie and Royale never tendered a defense to Commonwealth; and (6) they failed to request leave of court before filing the cross-complaint. Safaie and Royal filed an opposition.
Presiding Judge Kim G. Dunning considered the motion and argument of the parties before taking the matter under submission. The parties later received a minute order granting summary judgment. The order stated the parties agreed to facts one to 16 in the separate statement of undisputed facts, and there was no dispute that on March 19, 2008, Royale and Safaie disclaimed any interest in title to the property and in April 2008 the court quieted title by voiding various deeds, “including those purporting to transfer title to and from [Royale].” The trial court determined the June 2008 good faith settlement order “constituted a bar to any cross-complaint for equitable indemnity.” Moreover, the court noted Fischer was not making any title claims against Safaie or Royale when they first tendered their request for a defense (which occurred in August 2009 when they filed their cross-complaint). And finally, the court noted Fischer’s remaining causes of action against Safaie and Royale were for slander of title, Racketeer Influenced and Corrupt Organizations Act (RICO) violations, and restitution. Commonwealth’s title insurance policy would not give rise to a duty to indemnify or defend these claims.
The trial court stated the claim for declaratory relief was limited to the issue of whether Commonwealth issued a joint protection lender title insurance policy in favor of Safaie and Royale for $4,139 in February 2007, and whether that policy requires Commonwealth to defend and indemnify Safaie and Royale “‘against potential liability arising out of existence or recording of the February 15, 2007 trust deed in favor of [Royale] as beneficiary, and Safaie as successor-in-interest of the beneficiary, including defense and indemnity for [Commonwealth’s] cross-complaint... in this action, and for all other relief provided to [Royale] under the lender’s policy of title insurance....’”
The court determined there was a triable issue of fact as to whether Commonwealth was paid to issue the joint title policy, but these facts were not material and did not preclude summary judgment for the following reasons: (1) Claims based on equitable contribution or indemnity were barred by the earlier good-faith settlement finding; (2) Commonwealth met its burden of establishing Safaie had no standing, and he failed to meet this burden; (3) Royale was not seeking to assert, defend, or protect any right or title in the subject property because it disclaimed any interest in the property and the court determined the deed was void long before Royale tendered its defense to Commonwealth; and (4) if the policy had been issued, Royale was not entitled “to defense or indemnity coverage for the causes of action alleged by [Fischer]. Those causes of action assert conduct by [Royale] that, if proven, would result in [Royale’s] liability to [Fischer]. Any loss [Royale] may suffer would be as a result of a finding of legal liability based on its own conduct. Such loss would not be as a result of the existence of the February 15, 2007 trust deed [transferring title from Royale to Texmark], which has been voided, or of a loss covered under its own title insurance policy to real property in which it disclaimed [all] interest.”
II
A. The Order Granting Summary Judgment was Valid
Safaie and Royale assert the March 18 minute order granting the summary judgment motion was void because it was issued by a disqualified trial judge, and therefore, so was the resulting judgment. Not so. The case was initially assigned to Judge Peter Polis. When Judge Polis retired from the bench, Judge Dunning held the hearing on the summary judgment motion and considered argument from the parties on January 28, 2010. Judge Dunning took the matter under submission.
The case was then assigned to Judge Luis Rodriquez. Safaie and Royale filed a Code of Civil Procedure section 170.6 affidavit against Judge Rodriguez and on March 9, 2010, the case was reassigned to Judge Randell Wilkinson.
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.
On March 18, 2010, the parties received a minute order granting the summary judgment motion. The heading typed on the top of the minute order indicated Judge Rodriguez was presiding. However, the text of the ruling noted there were no appearances and, “The [c]ourt, having taken the above-entitled matter under submission on [January 28, 2010, ] now makes the following ruling:...” Judge Dunning, not Judge Rodriguez, took the matter under submission in January 2010. To confirm and clarify this fact, the last paragraph of the order clarifies in bold type, “It appearing to the [c]ourt that through error or inadvertence, the minute order of this [c]ourt dated [March 18, 2010, ] does not properly reflect the judge presiding over the hearing. Said minute order is ordered corrected [n]unc [p]ro [t]unc as of [March 18, 2010], as indicated below: [¶] The Judge presiding over the hearing was the Honorable Kim G. Dunning.” In short, the minute order was corrected to reflect the March 18 ruling was made by Judge Dunning, not Judge Rodriguez. Judge Dunning signed the final judgment, entered May 3, 2010.
Safaie and Royale maintain “for reasons not apparent from the order” disqualified Judge Rodriguez issued the minute order in violation of section 170.3, subdivision (a)(1). Royale submits case authority stating the order and resulting judgment is void. However, it offers no reason why this court should ignore the correction made nunc pro tunc clarifying Judge Dunning in fact issued the ruling.
In their reply brief, Safaie and Royale discuss the nunc pro tunc correction. They assert it merely clarifies Judge Dunning presided at the January hearing, not that she issued the March ruling after the hearing. They reason the minute order was not executed by Judge Dunning and “[t]he only reasonable inference to be drawn from the text of the minute order is that, as indicated, Judge Rodriguez issued the order, initially showing that he was presiding at the hearing, and that he then noted that it was not himself, but Judge Dunning who was presiding at the hearing. Indeed, if Judge Dunning had written the minute order, it is very doubtful she would have been ignorant of the fact that she had presided over the January 28 hearing.” We disagree.
When viewed as a whole, the minute order clearly reflects Judge Dunning issued the ruling and either she or the clerk preparing the written order mistakenly failed to change the printed heading at the top of the page. One does not need to engage in reasonable inferences to determine which judge issued the ruling because the order begins with the clear statement, “The [c]ourt, having taken the above-entitled matter under submission on [January 28, 2010, ] now makes the following ruling....” There is no dispute only Judge Dunning took the matter under submission in January and thus, she wrote the subsequent order granting summary judgment. After reviewing the reporter’s transcript, we note Judge Dunning ruled consistently with the comments she made from the bench at the January hearing. And finally, Judge Rodriguez did not execute the order, his name is merely mentioned in the typed heading. The order was valid.
B. Summary Judgment Standard of Review
A motion for summary judgment is properly granted where there is no triable issue as to any material fact and the moving party is entitled to judgment as a matter of law. (§ 437c, subd. (c).) We review the ruling on a summary judgment motion de novo. (San Diego Unified Port Dist. v. Gallagher (1998) 62 Cal.App.4th 501, 503.) “In reviewing an order granting summary judgment, we independently examine the record to determine whether triable issues of material fact exist. [Citation.] We view the evidence in the light most favorable to the party opposing the motion. [Citations.]” (Block v. Golden Eagle Ins. Corp. (2004) 121 Cal.App.4th 186, 191.)
C. The Nature and Purpose of Title Insurance
An insurance company’s obligation to indemnify an insured depends upon the nature of the risks covered by the insurance policy. “In insurance coverage cases, ‘the proper initial focus must be the language of the policy itself....’” (Golden Security Thrift & Loan Assn. v. First American Title Ins. Co. (1997) 53 Cal.App.4th 250, 255 (Golden Security).)
Title insurance is defined by statute to mean “insuring, guaranteeing or indemnifying owners of real or personal property or the holders of liens or encumbrances thereon or others interested therein against loss or damage suffered by reason of: [¶] (a) Liens or encumbrances on, or defects in the title to said property; [¶] (b) Invalidity or unenforceability of any liens or encumbrances thereon; or [¶] (c) Incorrectness of searches relating to the title to real or personal property.” (Ins. Code, § 12340.1.)
If we assume a title insurance policy was issued to Royale in this case, the policy insured the “title to the land.” Specifically, it insured Royale against certain “covered title risks” set forth in the policy. Like all title policies, Royale’s policy would have been a contract of indemnity by which Commonwealth would promise to indemnify the insured against losses resulting from defects in title or from liens or encumbrances affecting the title as described in the policy at the time the policy was issued. In other words, the function of this title insurance was to protect against the possibility that liens or other items not found in the title search or disclosed in the preliminary report existed. (Siegel v. Fidelity Nat. Title Ins. Co. (1996) 46 Cal.App.4th 1181, 1191.) Title insurance does not insure against the conduct, or the alleged conduct, of the insured. (Safeco Title Ins. Co. v. Moskopoulos (1981) 116 Cal.App.3d 658, 665-666.) Moreover, title insurance does not cover “matters involving personal dealings between individuals[.]” (Barczewski v. Commonwealth Land Title Ins. Co. (1989) 210 Cal.App.3d 406, 410.)
Finally, title insurance is fundamentally different from other types of insurance because it is not prospective in nature. It does not insure against title defects or liens that arise after the effective date and time of the policy. (Elysian Investment Group v. Stewart Title Guaranty Co. (2002) 105 Cal.App.4th 315, 322 [Title insurance does not insure against future events, but rather insures against defects in title existing at the time the policy was issued].)
D. The Duty to Defend
To be entitled to a defense, an insured need not show that the underlying claims are unquestionably within the coverage of the insurance policy. This is because an insurance company’s duty to defend an insured is broader than its duty to indemnify. “An insurer must defend its insured if... a lawsuit against its insured pleads, facts which give rise to potential liability under the policy. The duty arises so long as the facts—either as expressed or implied in the complaint or as learned from other sources—give rise to a potentially covered claim.” (Rosen v. Nations Title Ins. Co. (1997) 56 Cal.App.4th 1489, 1496 (Rosen).) The burden is on the insured initially to prove that a claim potentially falls within the scope of the basic coverage. (Golden Security, supra, 53 Cal.App.4th at p. 255.)
An insurer’s duty to defend is not absolute. It is measured by the nature and kinds of risks covered by the policy. (Rosen, supra, 56 Cal.App.4th at p. 1496.) Despite the broad scope of an insurance company’s duty to defend, “[w]e may not impose coverage by adopting a strained or absurd interpretation in order to create an ambiguity where none exists. [Citation.]” (Id. at p. 1497.)
E. None of the Causes of Action Alleged in the Complaint Gave Rise to Potential Liability Under the Title Policy
The trial court determined Royale could not, as a matter of law, show that Fischer’s remaining causes of action potentially came within the coverage provisions of the purported title policy because the remaining actions were based on willful fraudulent conduct. Royale asserts a defense was required of the slander of title claim because there are allegations it intentionally or negligently published a false statement that disparaged Fischer’s title. It recognized intentional conduct would not be covered by the title insurance policy but argued (without the benefit of any supporting case authority) negligent conduct slandering title would fall within the scope of a title policy. This is legally incorrect.
We accept for the purpose of this argument, without deciding, the trial court correctly decided there was a triable issue of fact raised that Commonwealth issued a policy to Royale. Assuming there was a policy, the court concluded the slander of title cause of action would not be covered. As explained above, we agree.
“The elements of the tort [of slander of title] have traditionally been held to be publication, falsity, absence of privilege, and disparagement of another’s land which is relied upon by a third party and which results in a pecuniary loss.” (Appel v. Burman (1984) 159 Cal.App.3d 1209, 1214.) It is well settled, “The cause of action for slander of title requires that the owner prove that the disparaging statement was made maliciously.” (5 Miller & Starr, Cal. Real Estate (3d. ed., 2010) § 11:47.) “Mere negligence, without more, is not a basis for the tort.” (Ibid.) Thus, in the absence of an allegation or evidence of malice, Fischer does not state a cause of action for slander of title. In California there is no liability for negligent slander of title. (Ibid.) “Where undisputed facts establish that the policy does not cover a claim, the insurer will not be required to defend the action. [Citations.]” (Ray v. Valley Forge Ins. Co. (1999) 77 Cal.App.4th 1039, 1043 (Ray).)
We reject Royale’s contention the expense of defending a slander of title claim should be covered by title insurance because the defense would be based on evidence of negligent conduct, i.e., it did not know the deed was forged. Royale misunderstands the duty to defend. An “insurer has a duty to defend only if the facts disclosed to the insurer raise a potential that the lawsuit against its insured seeks damages within the scope of policy coverage. [Citation.] We determine whether there is a potential for coverage by ‘comparing the allegations of the [underlying] complaint with the terms of the policy.’ [Citations.]” (Ray, supra, 77 Cal.App.4th at pp. 1043-1044, italics added.) In short, damages for the intentional tort slander of title are not within the scope of policy coverage. Accordingly, there is no duty to defend.
F. Remaining Claims
In light of our ruling above, we need not address Safaie’s claims the court incorrectly determined he lacked standing to maintain the cross-complaint. We also need not address whether Safaie and Royale’s delayed tender was a defense to coverage. Assuming solely for the sake of argument Safaie had standing, and the delayed tender was irrelevant, summary judgment was properly granted for the other reasons given by the trial court and discussed above.
III
The judgment is affirmed. Respondent shall recover its costs on this appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., ARONSON, J.