Sayegh v. Citizens Business Bank CA4/1 ( 2023 )

Filed 1/30/23 Sayegh v. Citizens Business Bank CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
HANI SAYEGH et al. D080013
Plaintiffs and Appellants,
(Super. Ct. No. CIVDS1929734)
v.
CITIZENS BUSINESS BANK
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Bernardino
County, Gilbert G. Ochoa, Judge. Affirmed.
Law Office of Gary Kurtz and Gary A. Kurtz, for Plaintiffs and
Appellants.
Best Best & Krieger, Richard T. Egger and Avi W. Rutschman, for
Defendant and Respondent.
INTRODUCTION
This appeal arises from Hani and Frances Sayeghs’ acquisition of a
foreclosed commercial property (the Koala Property) subject to a lis pendens
from an intermediate owner, and loss of that property when litigation arising
from the foreclosure was resolved for the lis pendens claimant. The Sayeghs
brought this action against the foreclosing lender, Citizens Business Bank
(CBB), for negligence and financial elder abuse. As we shall explain, the
Sayeghs cannot establish either cause of action against CBB, and we affirm
the judgment of dismissal entered upon the trial court’s grant of CBB’s
demurrer.
CBB had foreclosed on the Koala Property in 2014, when commercial
borrowers, the Dunagans, failed to pay loans secured by deeds of trust. The
Dunagans sued CBB and recorded a lis pendens later that year. In 2016,
Western States Development and Construction, Inc. (Western) bought the
property from CBB. The Sayeghs bought the property from Western the
same year, both with actual knowledge there was a foreclosure dispute and
constructive knowledge of the lis pendens. In 2019, the Dunagans prevailed
against CBB, and the court in that action ordered the Koala Property
restored to the Dunagans and the trust deeds restored to CBB. CBB settled
with the Dunagans and agreed not to foreclose on the deeds.
The Sayeghs then sued CBB for negligence and financial elder abuse.
The trial court sustained CBB’s demurrer to the operative complaint without
leave to amend. On negligence, the court ruled CBB had no duty of care to
the Sayeghs, and they could not establish causation because they purchased
subject to a lis pendens. On elder abuse, the court ruled there was no taking
of property, because a court (not CBB) restored the property interests to their
pre-foreclosure status and the Sayeghs did not establish any equitable or
beneficial interest in the restored deeds.
On appeal from the judgment of dismissal, the Sayeghs contend CBB
did owe them a duty of care and they did have, or could establish, an
2
equitable and beneficial interest in the restored trust deeds, among other
arguments. We reject these contentions and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
I.
Notice Of Lis Pendens
For context, we begin by describing what a lis pendens is, and how it
works in California. “ ‘A lis pendens is a recorded document giving
constructive notice that an action has been filed affecting title or right to
possession of the real property described in the notice.’ ” (Kirkeby v. Superior
Court (2004) 33 Cal.4th 642, 647.) “Under the common law doctrine of lis
pendens a prospective purchaser is on constructive notice of any litigation
raising a claim to real property . . . anywhere in the state. . . . Lis pendens
statutes were enacted to soften this doctrine by requiring that a recorded
notice be filed in the county where the real property is located.” (The
Formula Inc. v. Superior Court (2008) 168 Cal.App.4th 1455, 1461.)
“California’s notice of pendency of action, or lis pendens, scheme is
codified in Code of Civil Procedure section 405.1 et seq.” (Park 100
Investment Group II, LLC v. Ryan (2009) 180 Cal.App.4th 795, 808.) Under
this system, a “ ‘[c]laimant’ ” is a “party to an action who asserts a real
property claim and records a notice of the pendency of the action.” (Code Civ.
Proc., § 405.1.) “From the time of recording the notice of pendency of action,”
a “purchaser . . . of the real property described in the notice shall be deemed
to have constructive notice of the pendency of the noticed action as it relates
to the real property[.]” (Code Civ. Proc., § 405.24.) The “rights and interest
of the claimant in the property, as ultimately determined in the pending
noticed action, shall relate back to the date of the recording of the notice.”
(Ibid.) Accordingly, “ ‘any judgment later obtained in the action relates back
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to the filing of the lis pendens.’ ” (Mira Overseas Consulting Ltd. v. Muse
Family Enterprises, Ltd. (2015) 237 Cal.App.4th 378, 383.)
A “lis pendens clouds title until the litigation is resolved or the lis
pendens is expunged, and any party acquiring an interest in the property
after the action is filed will be bound by the judgment.” (Slintak v. Buckeye
Retirement Co., L.L.C., Ltd. (2006) 139 Cal.App.4th 575, 586–587 (Slintak);
see Deutsche Bank National Trust Co. v. McGurk (2012) 206 Cal.App.4th 201,
214 (Deutsche Bank) [“[I]f a third party obtains a partial assignment from a
. . . defendant while the action is pending, and the . . . plaintiff ultimately
wins . . . , the third party’s assignment would be invalid, as the . . . defendant
had no interest to assign as of the date of the complaint.”].)
II.
The Sayeghs Purchase, and Lose, Property Subject to a Lis Pendens1
A. CBB’s Predecessor Forecloses, and the Lis Pendens Is Recorded
The Koala Property is commercial property on Koala Road, in Adelanto,
California. Members of the Dunagan family (the Dunagans) purchased the
property in 1993.
In February 2006, the Dunagans executed a promissory note and
business loan agreement for $570,000 with American Security Bank (ASB),
secured by a deed of trust on the Koala Property. In April 2011, the
Dunagans executed another promissory note with ASB for $94,471.68,
secured by another deed of trust on the Koala Property. The Dunagans and
1 Because this appeal arises from a judgment of dismissal after
demurrer, we take the relevant factual background from the operative third
amended complaint (TAC), the attached documents, and judicially noticed
materials. As we later discuss, if there are inconsistencies, we rely on the
documents and noticed materials. (See Hoffman v. Smithwoods RV Park,
LLC (2009) 179 Cal.App.4th 390, 400 (Hoffman).)
4
ASB had other loans, too. By 2012, ASB believed the Dunagans had failed to
make required payments, and demanded payment of certain loans, including
those secured by the Koala Property. In October 2013, ASB recorded notices
of default.
In February 2014, ASB caused the Koala Property to be sold in a
trustee’s sale, and purchased the property. The trustee’s deed upon sale was
recorded in March 2014. CBB acquired ASB in May 2014.
In June 2014, the Dunagans sued ASB in San Bernardino Superior
Court (Dunagan Action).2 Their operative pleading had “two causes of action
for breach of written contract, two causes of action for declaratory relief, and
causes of action to set aside trustee’s deed, cancelation of instruments[,] and
intentional infliction of emotional distress[.]” The Dunagans recorded a
notice of lis pendens in August 2014.
B. CBB Sells to Western
In January 2016, Western offered to buy the Koala Property for
$650,000 in cash, which CBB accepted. Western and CBB extended escrow
multiple times. The grant deed was recorded on April 8, 2016.
C. Western Sells to the Sayeghs
On April 18, 2016, Western signed a letter of intent with Christopher
Goodman to purchase the Koala Property, with escrow to close by April 20.
Goodman was unable to complete the transaction, but told Katherine Hall,
chief executive officer of Western, that the Sayeghs had funds to purchase the
property. Hani Sayegh “had a phone call with [Hall] . . . prior to closing the
deal for the Koala Property,” and she “informed the Sayeghs there was
2 Edward Dunagan, et al. v. American Security Bank, et al., San
Bernardino Superior Court No. CIVDS1408267.
5
nothing to worry about regarding the Dunagan[s’] litigation, as the [CBB]
foreclosure on the Koala Property was a ‘clean foreclosure.’ ”
On April 22, 2016, the Sayeghs purchased the Koala Property from
Western, for $850,000 in cash. The grant deed was recorded on April 26,
2016.3
The Sayeghs spent over $1,000,000 on improvements to the Koala
Property. They also established long-term leases with businesses for use of
the property.
D. The Dunagans Prevail and the Court Restores Their Title
In February 2019, the trial court in the Dunagan Action entered
judgment for the Dunagans.4 The court’s statement of decision explained
CBB’s predecessor, ASB, “wrongfully exercis[ed] its power of sale when it
foreclosed” on the Koala Property. The judgment declared the 2014 trustee’s
deed upon sale void and cancelled; restored title to the Dunagans, subject to
the 2006 and 2011 trust deeds; and awarded $1,080,996 to the Dunagans
from CBB.
The Dunagans and CBB engaged in mediation while the Dunagan
action was on appeal. Their settlement agreement stated CBB would pay the
Dunagans $895,000 for a release of all claims. The TAC alleged ASB’s
insurance carrier was the source of this payment. The agreement also stated
3 The Sayeghs contend “a double escrow was opened whereby the
Sayeghs provided all the money for both transactions, i.e., the sale from CBB
to [Western], then the sale from [Western] to the Sayeghs.” This “double
escrow” allegation is not in the TAC, and we do not consider allegations from
prior complaints. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 884
[an “ ‘amended pleading supplants all prior complaints’ ” and “ ‘alone will be
considered by the reviewing court’ ”].)
4 The trial court here took judicial notice of the judgment and statement
of decision in the Dunagan Action.
6
CBB would “cooperate with [the Dunagans] regarding transfer of title,” and
would “not seek to foreclose on the [p]roperty under either of the deeds of
trust which were reinstated by the [j]udgment.” The Sayeghs were not a
party to the Dunagan Action. They attended the mediation, but were
“isolated in a separate room” and “not given any opportunity to
participate . . . in a substantive way.”
In September 2019, the Dunagans filed an unlawful detainer action
against the Sayeghs and their tenants in San Bernardino Superior Court.
The TAC does not address the outcome of that action.
In September 2020, CBB recorded a “Substitution of Trustee and Deed
of Full Reconveyance” (some capitalization omitted), as to each trust deed,
which stated in pertinent part: “Beneficiary hereby appoints [CBB] . . . as
successor trustee under the above Deed of Trust, and the undersigned does
hereby RECONVEY WITHOUT WARRANTY, TO THE PERSON OR
PERSONS LEGALLY ENTITLED THERETO, all the estate now held by it
under said Deed of Trust.”
III.
The Sayeghs Sue CBB
A. Operative Third Amended Complaint
In October 2019, the Sayeghs sued CBB for negligence and financial
elder abuse, among other claims. After multiple demurrers by CBB, the
Sayeghs filed the operative TAC in January 2021. We focus on the
allegations pertinent to their arguments on appeal.5
5 The Sayeghs also sued the Dunagans, Western, and Hall. None of
those claims are at issue here.
7
The Sayeghs alleged CBB “was negligent when it wrongfully foreclosed
on the Koala Property as evidenced by the judgment in the [Dunagan
Action].” They asserted CBB “knew all subsequent owners would rely on the
validity of the foreclosure process.” They also asserted CBB was aware
Western lacked “the funds to purchase the property” and would “immediately
transfer” it to a third party. The Sayeghs further alleged CBB’s “negligence
was a substantial factor in causing [them] harm, because but for the wrongful
foreclosure, [they] would not have purchased the Koala Property for $850,000
and would not have made subsequent investments in excess of $1,000,000,”
and that they suffered damages “[a]s a proximate result of [CBB’s]
negligence.”
On their claim for financial elder abuse, the Sayeghs alleged their
“payment of the $850,000 purchase price for the Koala Property and the
execution of a purchase and sale agreement invested them with a ‘beneficial
interest’ in the two Trust Deeds secured against the [p]roperty.” They
alleged CBB “wrongfully reinstated” and acquired the trust deeds in the
Dunagan Action settlement agreement (citing the language stating CBB
would not foreclose on the trust deeds); then “wrongfully kept” the deeds; and
then “gave away [their] property” when it reconveyed them. The Sayeghs
were over 65 years old at all relevant times.
B. CBB’s Demurrer
CBB demurred to the TAC. On negligence, CBB argued the Sayeghs
“had nothing to do with [the] 2014 foreclosure” and CBB, as a foreclosing
lender, had no duty of care to subsequent purchasers. CBB also argued the
Sayeghs caused their own damage, because they chose to buy and improve
the Koala Property despite the lis pendens, and any damages were the “result
of their own . . . wager” that the Dunagan Action “would turn out well” for
8
them. On elder abuse, CBB argued the trial court, not CBB, reinstated the
trust deeds, and the TAC did not show any wrongful use of the deeds by CBB.
In opposition, the Sayeghs argued as to negligence that, although CBB
claimed it had “no duty to any subsequent buyer,” there can be a duty of care
to third parties and the TAC “detail[ed] a plan between CBB and [Western]”
to sell the Koala Property to the Sayeghs, in light of Western’s financial
situation. The Sayeghs also argued the lis pendens did not excuse CBB’s
misconduct. On elder abuse, the Sayeghs argued they became beneficial
owners of the trust deeds when the Dunagan foreclosure was vacated, and
maintained CBB wrongfully took and retained them.
C. The Trial Court’s Ruling
In March 2021, the trial court sustained CBB’s demurrer without leave
to amend.
For negligence, the trial court agreed with CBB that it owed the
Sayeghs no duty of care. The court began by explaining certain duty
principles, including that a trustee’s duties in conducting a nonjudicial
foreclosure sale “run[ ] to the beneficiary, trustor, and participants in the
sale, including prospective bidders,” and that a property seller has duties of
disclosure. The court found the Sayeghs were not involved in the foreclosure
sale, and did not directly purchase the property from CBB. The court
acknowledged the Sayeghs alleged CBB knew Western was in “serious
financial straits” and “anxious to find” a buyer, but stated the allegation was
based on belief, rather than facts, and, regardless, there were no allegations
CBB was aware Western was “in negotiations with [the Sayeghs] for them to
acquire the Koala Property[.]”
Turning to causation, the trial court found the Sayeghs admitted that,
before they bought the Koala Property, “Hall disclosed [the Dunagans’]
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litigation against [CBB],” and allegedly told Hani Sayegh that “the
foreclosure was clean.” The court determined the Sayeghs’ damages were the
“risk [they] took when [they] purchased the [Koala] Property knowing it was
the subject of litigation.”
On financial elder abuse, the trial court found CBB “did not restore the
Trust Deeds,” but, rather, “[i]t was the [Dunagan Action] judgment that
restored the state of the parties’ interest in the property to pre-foreclosure
interests.” The court also rejected the Sayeghs’ asserted equitable interest in
the trust deeds, stating “nothing is offered to support entitlement” to such
interest, “merely because [the Sayeghs] purchased the legal title in the
[Koala] Property while it was the subject of litigation addressing the legality
of the trustee’s sale.”
The trial court entered a judgment of dismissal, and the Sayeghs timely
appealed.
DISCUSSION
The Sayeghs contend they can establish negligence, because CBB was
already found negligent in the Dunagan Action, CBB had a duty of care to
the Sayeghs, and the lis pendens was no barrier to damages. We reject their
arguments regarding the Dunagan Action and duty of care, and so we do not
reach causation. The Sayeghs also contend they can establish financial elder
abuse, because CBB took the restored trust deeds after the Dunagan Action
despite the Sayeghs’ beneficial interest in them. We reject this argument as
well.
I.
Standard of Review
“In reviewing an order sustaining a demurrer, we examine the
operative complaint de novo to determine whether it alleges facts sufficient to
10
state a cause of action under any legal theory.” (T.H. v. Novartis
Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162 (Novartis).) And if it does,
we ask whether that complaint nevertheless discloses some defense or bar to
recovery. (See Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183.)
“ ‘We treat the demurrer as admitting all material facts properly pleaded, but
not contentions, deductions or conclusions of fact or law. [Citation.] We also
consider matters which may be judicially noticed.’ ” (Blank v. Kirwan (1985)
39 Cal.3d 311, 318 (Blank).) We “consider the complaint’s exhibits” as well.
(Hoffman, supra, 179 Cal.App.4th at p. 400.)
Although we accept as true all properly pled facts, “[u]nder the doctrine
of truthful pleading, the courts ‘will not close their eyes to situations where a
complaint contains allegations of fact inconsistent with attached documents,
or allegations contrary to facts which are judicially noticed.’ ” (Hoffman,
supra, 179 Cal.App.4th at p. 400; cf. Brakke v. Economic Concepts, Inc. (2013)
213 Cal.App.4th 761, 767 [“ ‘facts . . . in exhibits attached to the complaint
. . . , if contrary to the allegations in the pleading, will be given precedence’ ”];
Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751−752
[“allegations . . . may be disregarded if they are contrary to facts judicially
noticed”].)
“In considering a trial court’s order sustaining a demurrer without
leave to amend, ‘ “we review the trial court’s result for error, and not its legal
reasoning.” ’ ” (Morales v. 22nd Dist. Agricultural Assn. (2018) 25
Cal.App.5th 85, 93 (Morales).) We “ ‘affirm the judgment if it is correct on
any theory.’ ” (Ibid.) “And when [a demurrer] is sustained without leave to
amend, we decide whether there is a reasonable possibility that the defect
can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we
11
affirm.” (Blank, supra, 39 Cal.3d at p. 318.) “The burden of proving such
reasonable possibility is squarely on the plaintiff.” (Ibid.)
II.
The Sayeghs Cannot State a Cause of Action for Negligence
“ ‘Actionable negligence involves a legal duty to use due care, a breach
of such legal duty, and the breach as the proximate or legal cause of the
resulting injury.’ ” (Beacon Residential Community Assn. v. Skidmore,
Owings & Merrill LLP (2014) 59 Cal.4th 568, 573; accord Brown v. USA
Taekwondo (2021) 11 Cal.5th 204, 214; see Artiglio v. Corning Inc. (1998) 18
Cal.4th 604, 614 [describing the “well-known elements of any negligence
cause of action” as “duty, breach of duty, proximate cause and damages”].)
A. The Dunagan Action Does Not Establish Negligence
The Sayeghs begin by arguing that based on the Dunagan Action, the
trial court was “bound to accept [CBB’s] negligence,” and CBB is collaterally
estopped from denying negligence. Both arguments lack merit.
First, the Sayeghs contend that “[a]s a result of [CBB’s] negligence, a
judgment issued in favor of the Dunagans,” and a trial court judge “is without
power to . . . change a decision” by a judge in another department. But there
was no negligence cause of action in the Dunagans’ operative pleading; there
were no express negligence findings in the judgment or statement of decision;
and the Dunagans were borrowers, not subsequent purchasers, which would
have warranted different analyses on the issues here (i.e., duty and
causation).6 Thus, nothing the trial court did here could constitute a change
to the decision in the Dunagan Action. The authorities cited by the Sayeghs,
6 As noted above, the causes of action in the Dunagan Action were breach
of contract, declaratory relief, set aside trustee’s deed, cancellation of
instruments, and intentional infliction of emotional distress.
12
which involve changes or attempted changes to other court’s rulings, are
inapposite. (See, e.g., Greene v. State Farm Fire & Casualty Co. (1990) 224
Cal.App.3d 1583, 1588−1589 [trial court erred by granting motion that had
the effect of vacating a prior general order by a different judge].)
Second, the absence of a negligence cause of action in the Dunagan
Action, and the differences between that case and this one, also foreclose the
Sayeghs’ argument for collateral estoppel or issue preclusion.
“The law of preclusion helps to ensure that a dispute resolved in one
case is not relitigated in a later case. . . . We now refer to ‘claim preclusion’
rather than ‘res judicata’ [citation], and use ‘issue preclusion’ in place of
‘direct or collateral estoppel.’ ” (Samara v. Matar (2018) 5 Cal.5th 322, 326.)
“Claim and issue preclusion have different requirements and effects.” (Ibid.)
“Claim preclusion ‘prevents relitigation of the same cause of action in a
second suit between the same parties or parties in privity with them.’ ” (DKN
Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.) “Issue preclusion
prohibits the relitigation of issues argued and decided in a previous case,
even if the second suit raises different causes of action. [Citation.] Under
issue preclusion, the prior judgment conclusively resolves an issue actually
litigated and determined in the first action.” (Ibid.) “[I]ssue preclusion
applies (1) after final adjudication (2) of an identical issue (3) actually
litigated and necessarily decided in the first suit and (4) asserted against one
who was a party in the first suit or one in privity with that party.” (Id. at
p. 825.)
With offensive issue preclusion, a plaintiff “seeks to prevent a
defendant from relitigating an issue determined adversely to defendant in
another action.” (Abelson v. National Union Fire Ins. Co. (1994) 28
Cal.App.4th 776, 787; Tennison v. California Victim Comp. & Government
13
Claims Bd. (2007) 152 Cal.App.4th 1164, 1180 [“ ‘the offensive use of
collateral estoppel is more closely scrutinized than the defensive use of the
doctrine’ ”].)
The Sayeghs argue the “judgment in the [Dunagan Action] voided the
trustee’s title because the foreclosure was negligently and, therefore,
wrongfully conducted” and CBB had a “ ‘full and fair opportunity’ ” to litigate
the issue. Neither assertion has merit. The Dunagan Action did not
expressly involve negligence, and the duty and causation analyses would be
different regardless, because the Sayeghs are subsequent purchasers.
Accordingly, CBB had no opportunity to litigate the negligence elements at
issue here. (See Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th
1497, 1513 [when “ ‘previous decision rests on “different factual and legal
foundation” than the issue . . . in the case at bar, collateral estoppel effect
should be denied’ ”].)
B. CBB Did Not Have a Duty of Care to Subsequent Purchasers
The parties agree no California case has addressed whether a
foreclosing lender like CBB owes a duty of care to subsequent
purchasers⎯with whom it does not have privity of contract or privity of
relationship⎯like the Sayeghs. So we begin by reviewing general principles
of duty, as well as the factors set forth in Biakanja v. Irving (1958) 49 Cal.2d
647 (Biakanja) and Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370 (Bily) to
consider duty in the absence of privity. We then consider the allegations of
the TAC in light of these factors. Doing so, we conclude the trial court
properly determined CBB owed no duty of care to the Sayeghs.
1. Applicable Law
“The general rule in California is that ‘[e]veryone is responsible . . . for
an injury occasioned to another by his or her want of ordinary care or skill in
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the management of his or her property or person[.]’ ” (Cabral v. Ralphs
Grocery Co. (2011) 51 Cal.4th 764, 771, quoting Civ. Code, § 1714, subd. (a).)
“Whether a party has a duty of care in a particular case is a question of law
for the court, which we review independently on appeal.” (Novartis, supra, 4
Cal.5th at p. 163.) “ ‘ “ ‘[D]uty,’ is not sacrosanct in itself, but only an
expression of the sum total of those considerations of policy which lead the
law to say that the particular plaintiff is entitled to protection.” ’ (Dillon v.
Legg (1968) 68 Cal.2d 728, 734, quoting Prosser, Law of Torts (3d ed.)
pp. 332–333.)” (Bily, supra, 3 Cal.4th at p. 397.)
“Privity of contract is no longer necessary to recognition of a duty in the
business context and public policy may dictate the existence of a duty to third
parties.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26,
58.) In Biakanja, the California Supreme Court “employed a checklist of
factors to consider in assessing legal duty in the absence of privity[.]” (Bily,
supra, 3 Cal.4th at p. 397, citing Biakanja, supra, 49 Cal.2d at p. 650.) The
Court explained this determination “is a matter of policy and involves the
balancing of various factors, among which are [1] the extent to which the
transaction was intended to affect the plaintiff, [2] the foreseeability of harm
to him, [3] the degree of certainty that the plaintiff suffered injury, [4] the
closeness of the connection between the defendant’s conduct and the injury
suffered, [5] the moral blame attached to the defendant’s conduct, and [6] the
policy of preventing future harm.” (Biakanja, at p. 650; id. at pp. 648−651
[notary public who drafted will owed duty of care to intended beneficiary].)
In Bily, the California Supreme Court considered the Biakanja factors
in holding that an auditor’s “liability for general negligence in the conduct of
an audit of its client financial statements is confined to the client.” (Bily,
supra, 3 Cal.4th at p. 406; see id. at pp. 377−379 [reversing judgment for
15
investors in computer company, who sued accounting firm after company
filed for bankruptcy].) In declining to “permit all merely foreseeable third
party users of audit reports to sue the auditor,” the Court focused on “three
central concerns”: “(1) . . . the auditor . . . faces potential liability far out of
proportion to its fault; (2) the generally more sophisticated class of plaintiffs
. . . (e.g., business lenders and investors) permits the effective use of contract
. . . [to] adjust the relevant risks through ‘private ordering’; and (3) the
asserted advantages of more accurate auditing and more efficient loss
spreading . . . are unlikely to occur[.]”7 (Id. at p. 398.)
2. Analysis
Applying these factors, we conclude CBB, as a foreclosing lender, had
no duty of care to the Sayeghs as subsequent purchasers.
We start with what we view as a critical factor here: the ability of
subsequent buyers to protect themselves. (Bily, supra, 3 Cal.4th at p. 398
[second factor].) In Bily, the California Supreme Court explained that a
“third party in an audit negligence case has . . . options—he or she can
‘privately order’ the risk of inaccurate financial reporting by contractual
arrangements with the client.” (Id. at p. 403; ibid. [third party might, among
other things, “bargain with the client for special security or improved
terms”].) The Court elaborated:
“As a matter of economic and social policy, third parties should be
encouraged to rely on their own prudence, diligence, and contracting
power, as well as other informational tools. This kind of self-reliance
promotes sound investment and credit practices and discourages the
careless use of monetary resources. If, instead, third parties are simply
7 To the extent the parties use the term “Bily factors” to mean the
Biakanja factors (or some combination of the Biakanja and Bily factors), we
decline to follow suit and instead distinguish between the factors as
applicable for our analysis.
16
permitted to recover from the auditor for mistakes in the client’s
financial statements, the auditor becomes, in effect, an insurer of not
only the financial statements, but of bad loans and investments in
general.” (Bily, supra, 3 Cal.4th at p. 403.)
These principles squarely apply to subsequent purchasers of foreclosed
property. If there is a lawsuit, and a lis pendens is filed, use of a title insurer
offers at least notification of the title defect—and, thus, an opportunity to
renegotiate terms or decline to proceed with the purchase. (Cf. Diediker v.
Peelle Financial Corp. (1997) 60 Cal.App.4th 288, 290, 296 [trustee had no
duty to later purchaser to locate Internal Revenue Service (IRS) lien and
notify IRS prior to nonjudicial foreclosure sale, by statute or under Biakanja];
id. at p. 296 [usually “each purchaser . . . obtains title insurance”; insurer
“will either locate the lien . . . and except it—in which case the purchaser can
negotiate a new price . . . or cancel the transaction—or it will fail to locate
the lien, or for other reasons choose not to except it from coverage, and the
purchaser will be protected by the policy”].) If a lis pendens is not filed,
protection is available through title insurance (ibid.) or, potentially, bona fide
purchaser status (see Hochstein v. Romero (1990) 219 Cal.App.3d 447, 451 [“a
bona fide purchaser for value who acquires his interest in real property
without notice of another’s asserted rights in the property takes the property
free of such unknown rights”].)8
Thus, subsequent purchasers have the ability to protect themselves,
including through their “own . . . contracting power,” and, as Bily teaches,
8 Although we do not reach causation, we note the Sayeghs argue in that
context that the “risk [they] assumed, if any,” in buying subject to the lis
pendens, was “the risk that they might be stripped of title, not that they
would be left without a damages remedy.” Buyers who purchase subject to a
lis pendens are bound by the judgment (Slintak, supra, 139 Cal.App.4th at
pp. 586–587), and their ability to order risk encompasses potential future
monetary damages, as well as potential loss of title.
17
encouraging such self-reliance “promotes sound investment[.]” (Bily, supra, 3
Cal.4th at p. 403; cf. Tsasu LLC v. U.S. Bank Trust, N.A. (2021) 62
Cal.App.5th 704, 710, 719–720 [addressing Quiet Title Act; “entire system of
real property law in California . . . places upon real estate buyers a duty to
inquire into the validity of their prospective ownership claim [citation], and
to heed—not ignore—any ‘ “reasonable warning signs” ’ ”].) Accordingly, we
conclude that strong public policy considerations militate against imposing a
duty of care in this context.
We now consider the remaining Biakanja and Bily factors, and
conclude they do not compel a different result.
The first Biakanja factor concerns the “extent to which the transaction
was intended to affect” the plaintiff. (Biakanja, supra, 49 Cal.2d at p. 650.)
There, the California Supreme Court focused on the “ ‘end and aim’ ” of the
will drafting at issue (i.e., to provide for the passing of the estate to plaintiff).
(Ibid.) In a later case involving an escrow holder, the Court focused on the
“primary purpose” of the escrow. (See Summit Financial Holdings, Ltd. v.
Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 715 [under Biakanja
test, escrow holder was not liable to third party for issuing check pursuant to
escrow instructions; “any impact . . . on [non-party assignee] was collateral to
the primary purpose of the escrow”].) Both the “end and aim” of a foreclosure
sale, and its “primary purpose,” is to sell the foreclosed property. There is no
basis to conclude the aim is to affect subsequent purchasers, or anyone
besides the parties to the trust deeds (the Dunagans and CBB’s predecessor
ASB), and the successful bidder (ASB). (Cf. Heritage Oaks Partners v. First
American Title Ins. Co. (2007) 155 Cal.App.4th 339, 346 (Heritage Oaks)
[trustee owed no duty to later purchaser to confirm trustee status before
recording deed, under nonjudicial foreclosure statutory scheme or Biakanja
18
factors]; id. at p. 343 [trustee’s “interest was in selling the property to the
highest bidder, regardless of whether the bidder planned to hold or to sell the
property”; there was “no reason to conclude that the foreclosure sale was
intended . . . to affect anyone other than the parties to the deed of trust and
the successful bidder at the sale”].)
The Sayeghs claim this conclusion ignores economic realities, because
given that foreclosing lenders want to sell the property, the “validity of the
foreclosure process . . . is intended to affect subsequent buyers.” According to
the Sayeghs, “[e]xtending the duty of care to subsequent buyers minimizes
the risk involved in buying property subject to litigation,” and “future
marketability would . . . facilitate higher prices for the banks.” They seem to
be saying lenders would benefit from having a duty of care to subsequent
buyers, so should conduct foreclosures with such buyers in mind. But that
does not establish lenders like CBB do have such intent.
We now turn to the Biakanja factors concerning foreseeability. (See
QDOS, Inc. v. Signature Financial, LLC (2017) 17 Cal.App.5th 990, 1001
[describing “ ‘foreseeability of harm’ ” (second factor), “ ‘certainty . . . [of]
injury’ ” (third factor), and “ ‘closeness of the connection’ ” (fourth factor) as
relating to foreseeability, and considering them together].) The Sayeghs
argue CBB “created a chain of title based on a void trustee’s deed,” which
became part of “the stream of commerce,” and it is “foreseeable that the
person holding title at the end of the game . . . would be the loser.” They
further argue there is a “high degree of certainty” a person would have to
litigate or incur costs to hold or recover title, with nothing to mitigate the
“direct[ ] connect[ion]” from the injury to CBB’s conduct. CBB contends
impact to third parties is “ ‘not at all foreseeable’ ” or at least “negligible,”
19
because “anyone acquiring the parcel of real property after the completion of
the trustee’s sale will be blanketed in protections.”
We do not disagree that clouded title has harmful consequences to
subsequent purchasers. But as our high court said in Bily, “ ‘there are clear
judicial days on which a court can foresee forever and thus determine liability
but none on which that foresight alone provides a socially and judicially
acceptable limit on recovery of damages for [an] injury.’ ” (See Bily, supra, 3
Cal.4th at p. 399.) It is precisely because clouded title has potentially
harmful consequences to subsequent purchasers that there are protective
measures like the lis pendens system and title insurance. (Cf. Heritage Oaks,
supra, 155 Cal.App.4th at p. 347 [“if the title flaw and resulting damages
were foreseeable to [defendant], they were equally so to [plaintiff]”].) Those
protective measures are also what undergird our conclusion that public policy
considerations do not support a duty of care here, notwithstanding
foreseeability.
As for moral blame and disproportionate liability, these factors do not
support a duty of care here, either. (Biakanja, supra, 49 Cal.2d at p. 650
[fifth factor]; Bily, supra, 3 Cal.4th at p. 398 [first factor].) There is nothing
inherently blameworthy about a lender foreclosing on a property, and then
selling it. If the lender improperly directs a nonjudicial foreclosure, it may be
subject to legal action by the borrower—just as CBB was liable to the
Dunagans. (See Anderson v. Heart Federal Savings (1989) 208 Cal.App.3d
202, 205−206, 209–210 [traditional method to challenge nonjudicial
foreclosure is suit in equity to set aside sale]; Miles v. Deutsche Bank
National Trust Co. (2015) 236 Cal.App.4th 394, 398, 410 [“tort action lies for
wrongful foreclosure”].) But there is no basis for expanding liability to all
subsequent buyers when there is no intended effect on them, and they can
20
protect themselves by privately ordering any risk. This would impose
“potential liability far out of proportion to . . . fault.” (Bily, at p. 398.)
The Sayeghs argue CBB “had the underlying information to predict an
unfavorable outcome in the Dunagan litigation, which . . . no third party
would have had.” They also contend “[b]anks should not be entitled to . . .
plac[e] the entire risk of loss on the property owner dispossessed of title,” and
should at least have a duty “to the extent of the money it collected when it
sold the property with a defective title.” But, again, buyers who purchase a
property subject to a lis pendens can and should manage their own risk. It is
irrelevant to such buyers whether a foreclosing lender retains any sale profits
after a foreclosure is voided.
Finally, imposing a duty of care on foreclosing lenders to subsequent
purchasers neither limits harm, nor confers other advantages. (Biakanja,
supra, 49 Cal.2d at p. 650 [sixth factor]; Bily, supra, 3 Cal.4th at p. 398 [third
factor].) As noted, a foreclosing lender may already face liability, so broader
liability is unnecessary to encourage careful foreclosure practices, and
subsequent buyers have multiple protections. Rather, expanding liability to
subsequent buyers could lead lenders to increase loan costs, and decrease
availability of loans, to the detriment of the public. (Cf. Heritage Oaks,
supra, 155 Cal.App.4th at pp. 345–346 [“ ‘The nonjudicial foreclosure statutes
. . . reflect a carefully crafted balancing of the interests of beneficiaries,
trustors, and trustees. Beneficiaries, of course, want quick and inexpensive
recovery of amounts due under promissory notes in default.’ ”]; Bily, at p. 404
[auditors “may rationally respond to increased liability by simply reducing
audit services”].) At the same time, it could encourage subsequent buyers to
disregard available protections and engage in risky investments, knowing
they can sue lenders if things go awry—also to the detriment of the public.
21
(See Bily, at p. 403 [“self-reliance promotes sound investment” and
“discourages the careless use of monetary resources”].)
The Sayeghs contend imposing a duty of care could “deter [lenders]
from marketing properties during the pendency of actions challenging title.”
This contention rests on the dubious assumption that a lender would still
willingly make loans secured by real property, with no impact on loan cost or
availability, when it might have to carry property for years after foreclosure.
(Cf. Heritage Oaks, supra, 155 Cal.App.4th at pp. 345–346; Bily, supra, 3
Cal.4th at p. 404.) The Sayeghs also contend risk of loss is “best borne” by
the bank, as the “loss can be amortized and spread into interest rates, fees
and other sources of income,” and elsewhere argue banks are “able to reduce
their risk through insurance.” Even assuming banks have these options,
subsequent purchasers remain in the best position to manage their own risk
and protect themselves.
The Sayeghs make two additional points, which we find not persuasive.
First, they contend the trial court erred by focusing on purportedly inapposite
issues (e.g., seller duties of disclosure), and failing to analyze the relevant
factors. They also contend the duty analysis here implicates “[competing]
factual allegations,” and, “[a]t a minimum, the action should be remanded”
for evaluation of those factors. But duty of care is an issue of law that we
evaluate independently, and our review of the trial court’s order sustaining
the demurrer is for its result, not its reasoning. (Novartis, supra, 4 Cal.5th at
p. 163; Morales, supra, 25 Cal.App.5th at p. 93.) We also assume the truth of
the Sayeghs’ allegations (to the extent consistent with judicially noticed facts
and complaint exhibits). (Blank, supra, 39 Cal.3d at p. 318; Hoffman, supra,
179 Cal.App.4th at p. 400.)
22
Second, the Sayeghs argue on reply that if we do not remand for
evaluation of the relevant factors, they should be permitted to “amend the
complaint to allege facts supporting the imposition of a duty based on those
factors” (and claim they did not address amendment in their opening brief
because “the facts necessary to establish a duty do not need to be alleged with
specificity”). They forfeited the amendment issue by not addressing it in
their opening brief, and, in any event, do not identify any facts that would
change our analysis. (American Drug Stores, Inc. v. Stroh (1992) 10
Cal.App.4th 1446, 1453 (Stroh) [“[p]oints raised for the first time in a reply
brief will ordinarily not be considered”]; Blank, supra, 39 Cal.3d at p. 318
[burden of proving possibility of amendment is squarely on plaintiff];
Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [plaintiff “must show . . .how
that amendment will change the legal effect of his pleading”].)
In sum, we conclude the Biakanja and Bily factors do not support
imposing a duty of care here. And because we have concluded CBB did not
have a duty of care, the Sayeghs cannot establish negligence. We need not
and do not reach the Sayeghs’ arguments regarding causation, and proceed to
their elder abuse cause of action.
III.
The Sayeghs Cannot State a Cause of Action for Financial Elder Abuse
“The Legislature enacted the Elder Abuse [and Dependent Adult Civil
Protection Act (Welf. & Inst. Code,9 § 15610, et seq.; (Elder Abuse Act))] ‘to
protect elders by providing enhanced remedies which encourage private, civil
enforcement of laws against elder abuse and neglect.’ ” (Arace v. Medico
9 Further statutory references are to the Welfare and Institutions Code,
unless noted.
23
Investments, LLC (2020) 48 Cal.App.5th 977, 981–982.) An “ ‘[e]lder’ ” is “any
person residing in this state, 65 years of age or older.” (§ 15610.27.)
Financial abuse under the Elder Abuse Act occurs 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.”
(§ 15610.30, subd. (a)(1).) Financial abuse also occurs when a person or
entity “[a]ssists” in such conduct, or engages in such conduct by “undue
influence.” (§ 15610.30, subd. (a)(2), (3).) A plaintiff must show the person or
entity “knew or should have known that [the] conduct is likely to be harmful
to the elder . . . adult.” (§ 15610.30, subd. (b); Paslay v. State Farm General
Ins. Co. (2016) 248 Cal.App.4th 639, 656 [describing knowledge
requirement].)
Here, the trial court properly determined the Sayeghs could not
establish financial elder abuse, because a court judgment, not CBB, restored
the pre-foreclosure interests and the Sayeghs did not establish any equitable
interest in the restored trust deeds. We reject the Sayeghs’ arguments to the
contrary, as well as their claim that they can establish their equitable
interest on remand.
First, the Sayeghs cannot establish CBB took or retained their
property. (§ 15610.30, subds. (a)–(b).) They concede the trial court “correctly
noted that ‘[i]t was the judgment that restored the parties’ interest in the
property to the pre-foreclosure interests,’ ” but argue the court “erred when it
disregarded events that occurred after the wrongful foreclosure,” including
CBB’s purported loss of interest after it sold to Western and later agreement
not to enforce the restored deeds. Not so. The 2019 judgment in the
Dunagan Action not only restored the pre-foreclosure interests in the Koala
Property, but it also rendered all interests taken subject to the 2014 lis
24
pendens void—including any interest acquired in 2016 by Western from CBB,
and by the Sayeghs from Western. (See Deutsche Bank, supra, 206
Cal.App.4th at p. 214 [third party assignment was invalid, because after
judgment, there was “no interest to assign”].) When CBB agreed not to
foreclose on the restored trust deeds (and later reconveyed them), the
Sayeghs had no interest in or relating to the Koala Property. CBB’s
treatment of the deeds could not have constituted a taking or retention of the
Sayeghs’ property.10
Second, the Sayeghs’ insistence that they were the equitable or
beneficial owners of the restored deeds does not compel a different result. In
their TAC, the Sayeghs alleged their $850,000 purchase price and signing of
a purchase and sale agreement “invested them with a ‘beneficial interest’ in
the two Trust Deeds secured against the [Koala] Property.” The trial court
determined the Sayeghs offered “nothing . . . to support entitlement” to such
an interest, “merely because they purchased the legal title in the [Koala]
Property while it was the subject of litigation.” We agree.
To the extent a purchaser acquires any interest in property, it is
subject to superior interests. (Miller & Starr, Cal. Real Estate (4th ed. 2015)
§ 10:1, pp. 10-9, 10-10 [property interest “may be judged superior or inferior
10 On reply, the Sayeghs also argue CBB “assisted in taking [their]
money” (capitalization and boldface omitted) by putting property with
clouded title into the market, citing the “[a]ssists” basis for financial elder
abuse (§ 15610.30, subd. (a)(2)) and using the analogy of a three-car collision.
They cite no cases, and engage in no reasoned statutory interpretation, for
this belated, strained use of the term “assists.” We do not consider it further.
(Stroh, supra, 10 Cal.App.4th at p. 1453; Badie v. Bank of America (1998) 67
Cal.App.4th 779, 784−785.) We likewise decline to address assertions by the
Sayeghs regarding purported takings in their opening brief, which are not
supported by record citations, authority, or reasoning (such as CBB’s alleged
“refusal to honor a modification agreement”).
25
to other interests”; general rule is “ ‘first in time, first in right’ ”]; see RC
Royal Dev. & Realty Corp. v. Standard Pacific Corp. (2009) 177 Cal.App.4th
1410, 1419 [real estate purchaser generally “ ‘acquires, except against
interests prior in right, a conditional, equitable title to the property,’ ” on
signing purchase and sale agreement (italics added); legal title passes once
conditions precedent are complete].) Any interest acquired by the Sayeghs in
or relating to the Koala Property, beneficial or otherwise, was invalidated by
the judgment entered in the Dunagan Action. (Cf. Stagen v. Stewart-West
Coast Title Co. (1983) 149 Cal.App.3d 114, 123 [a “judgment favorable to the
plaintiff relates to, and receives its priority from, the date the lis pendens is
recorded, and is senior and prior to any interests in the property acquired
after that date” (italics added)].)
The Sayeghs’ reliance on the restoration of the trust deeds is
unavailing. They contend that when the Dunagan Action judgment restored
the pre-foreclosure interests, CBB “received bare legal ownership of the
original notes secured by deeds of trust, as recited in the Dunagan/CBB
judgment,” and because the Sayeghs held legal title at the time, they “should
have been found to hold the equitable or beneficial ownership of the
exchanged value (i.e., the notes and trust deeds).” But the Dunagan Action
judgment did not distinguish between legal and equitable or beneficial
ownership, or between the notes and deeds. CBB received the trust deeds
because, prior to foreclosure, its predecessor was the beneficiary of those
deeds.
The Sayeghs cite no authority that supports their position. The cases
they do cite mainly involve differences between legal and beneficial interests
in other contexts, and are inapposite. (See, e.g., Reilly v. City and County of
San Francisco (2006) 142 Cal.App.4th 480, 489 [for property taxes, “relevant
26
inquiry is who has the beneficial or equitable ownership of the property, not
who holds legal title”]; Hansen v. Bear Film Co., Inc. (1946) 28 Cal.2d 154,
168, 172–173 [mother’s transfers of stock to son were of beneficial ownership,
not just legal title, such that she had to transfer stock to his estate
representative upon his death]; Finkbohner v. Glens Falls Ins. Co. (1907) 6
Cal.App. 379, 380, 387 [conveyance of equitable, but not legal, interest in
property voided cancellation clause in insurance contract triggered by change
in “ ‘interest, title, or possession’ ”]; Bounds v. Superior Court (2014) 229
Cal.App.4th 468, 471–472 [plaintiffs could establish elder abuse claim based
on allegedly abusive conduct to cause the sale of property in trust, even
though transaction did not close and title did not transfer, as escrow
instructions allegedly impaired property value].)
Finally, the Sayeghs argue they could establish their equitable or
beneficial interest on remand by amending their complaint to plead
constructive trust and/or equitable mortgage theories. We disagree.
“A constructive trust is an involuntary equitable trust created by
operation of law as a remedy to compel the transfer of property from the
person wrongfully holding it to the rightful owner.” (Communist Party v. 522
Valencia, Inc. (1995) 35 Cal.App.4th 980, 990.) Three conditions must be
satisfied: “(1) the existence of a res (property or some interest in property);
(2) the right of a complaining party to that res; and (3) some wrongful
acquisition or detention of the res by another party who is not entitled to it.”
(Ibid.)
The Sayeghs contend each element exists, because the “notes secured
by trust deeds are the res”; they have the “superior beneficial interest” in
them; and “CBB’s detention of the res, . . . was wrongful because CBB
extinguished an asset that equitably belonged to [the] Sayeghs.” CBB
27
responds that a constructive trust is a remedy, not a cause of action, and the
Sayeghs have not established an equitable interest to support it. The
Sayeghs reply that they never suggested it was a cause of action, and they
can plead the doctrine in their elder abuse cause of action.
We conclude that regardless of whether a constructive trust is viewed
as a remedy, cause of action, or doctrine, it requires a property right. (See
Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal.App.4th 1018, 1023, fn. 3
[constructive trust “is not an independent cause of action but merely a type of
remedy”]; Higgins v. Higgins (2017) 11 Cal.App.5th 648, 658, 659, fn. 2
[disagreeing with Glue-Fold; action for “constructive trust is a suit in equity
to compel a person holding property wrongfully to transfer” it to the rightful
owner].) We therefore agree with CBB that the Sayeghs “have it backwards”
when they claim they can use a constructive trust to establish their property
interest.
We also reject the Sayeghs’ assertion that their TAC allegations
“support the imposition of an equitable lien . . . attached to the notes secured
by trust deed.” “An equitable lien is a right to subject property not in the
possession of the lienor to the payment of a debt as a charge against that
property. [Citation.] It may arise from a contract which reveals an intent to
charge particular property with a debt or ‘out of general considerations of
right and justice as applied to the relations of the parties and the
circumstances of their dealings.’ [Citation.] ‘The basis of equitable liens is
variously placed on the doctrines of estoppel, or unjust enrichment, or on the
principle that a person having obtained an estate of another ought not in
conscience to keep it as between them; and frequently it is based on the
equitable maxim that equity will deem as done that which ought to be done,
28
or that he who seeks the aid of equity must himself do equity.’ ” (Farmers
Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 453 (Farmers).)
Relevant factors for imposition of an equitable lien include both parties
acting “under the assumption that a [property] interest exist[s]”; “conduct
[that] deserves the protection of a court of equity”; “detrimental[ ] reli[ance]
on the existence of a [property] interest”; and “unjust[ ] enrich[ment].”
(County of Los Angeles v. Construction Laborers Trust Funds for Southern
California Admin. Co. (2006) 137 Cal.App.4th 410, 415 (Trust Funds); ibid.[attorney, who provided services to company on mutual assumption he would
be paid from settlement funds, was entitled to equitable lien on interest in
such funds].)
The Sayeghs argue the Dunagan Action judgment “switched a real
property interest (title to the Koala Property) for a personal property
interest,” and equity supports having that interest “flow to the person(s) . . .
deprived of the real property interest”—that is, themselves. They cite
authorities for general propositions relating to equity, including that the
propriety of an equitable lien turns on the circumstances, and jurisprudence
favor remedies for wrongs. (See, e.g., Hicks v. Clayton (1977) 67 Cal.App.3d
251, 265 [“propriety of granting equitable relief in a particular case” rests on
trial court discretion, which “should be exercised in accord with . . .
precedents of equity jurisprudence”]; Brunson v. Babb (1956) 145 Cal.App.2d
214, 229 [“equity courts look with favor upon equitable liens when employed
to do justice and equity, and to prevent unfair results”]; Civ. Code, § 3523
[“For every wrong there is a remedy.”].)
But the Dunagan Action judgment did not switch real property for
personal property. It restored the Koala Property to its pre-foreclosure
status. The Sayeghs’ argument otherwise amounts to a conclusory assertion
29
that the equities favor them, because, as they put it, CBB wrongfully kept
“ill[-]gotten profits,” while they lost “millions.” We disagree. Focusing on
relevant factors for equitable liens, CBB and the Sayeghs did not directly
interact, and CBB never recognized a property interest by the Sayeghs in the
trust deeds; the Sayeghs’ refusal to accept the impact of a lis pendens does
not “deserve[ ] the protection” of an equity court; and any reliance by the
Sayeghs on their temporary interest in the Koala Property was unreasonable.
(See Trust Funds, supra, 137 Cal.App.4th at p. 415; see, e.g., Farmers, supra,
53 Cal.App.4th at pp. 450−451, 456 [insurer not entitled to equitable lien on
payments received by attorney from third party tortfeasors, where “obligation
to pay . . . benefits was independent of any right of reimbursement,” and
“matter [did] not involve considerations of detrimental reliance or unjust
enrichment”].)11
In sum, we conclude the trial court properly granted CBB’s demurrer
without leave to amend.
11 The Sayeghs also contend lis pendens law has improperly expanded
beyond its role in quiet title litigation, and binding a non-party to a judgment
violates due process. They do not establish they raised this issue in the trial
court, and we decline to address it. (Greenwich S.F., LLC v. Wong (2010) 190
Cal.App.4th 739, 767 [reviewing court “not required to consider . . . new
theory” on appeal, “even if it raised a pure question of law”]; Jackpot
Harvesting Co., Inc. v. Superior Court (2018) 26 Cal.App.5th 125, 154
[generally “ ‘constitutional issues not raised in earlier civil proceedings are
waived on appeal’ ”]; Fourth La Costa Condominium Owners Assn. v. Seith
(2008) 159 Cal.App.4th 563, 585 [declining to reach due process and equal
protection arguments not raised in trial court].)
30
DISPOSITION
The judgment is affirmed. Citizens Business Bank is entitled to its
costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
DO, J.
WE CONCUR:
McCONNELL, P. J.
DATO, J.
31